John Williams of Shadowstats.com is forecasting a possible dollar sell-off by the end of 2014. Williams predicts this will trigger the beginning of hyperinflation. Are we on track for this prediction? Williams contends, “Everything the Fed has been doing to pump this extraordinary amount of liquidity into the system, since the panic of 2008, has been aimed at propping up the banks. . . . The banks are still in trouble. From here on in, it’s going to get worse, and as it does, the Fed is going to have to pump more liquidity into the system. . . . They will use the poor economy as a political shield. As the economy turns down . . . the Fed has to do more, and all these factors will come together in a great confluence, and that will give us selling pressure in the U.S. dollar. With this selling pressure, there will be upside pressure on commodity prices, and that will be the early trigger for hyperinflation.”
On the issue of bank bail-ins, will they happen? Williams says, “Nope, the Fed’s basic mandate is to keep the banking system afloat. I can’t envision a Fed that would want to see people losing their money because of what it does to the banking system. The problem with depositors bailing out the banks is that it encourages bank runs. It’s the run on the banks that the central banks have to avoid. . . . I doubt they would take actions that would trigger a big run on the banks.” So, instead, Williams says the Fed will just keep printing money to keep the banks afloat.
Join Greg Hunter of USAWatchdog.com as he goes One-on-One with economist John Williams.