Depression vs. “Helicopter Money”

QUESTION:  You wrote the Socrates site on 3/23/2016: “Once the “confidence” in government cracks for the BULK OF THE SILENT MAJORITY who do not listen to money supply and conspiracy theories, then we move into game over. That is when we will see assets rise as confidence shifts from a corrupt government for the majority will no longer trust then and they will turn to the private sector.” Mr. Armstrong can you please name the private assets that will appreciate? and if there are similarities with 1929, where we are now in 2016? Thank you for all your efforts to teach us the world economy.

DS

ANSWER: There is absolutely no correlation with 1929 from the USA perspective. The people who see that nonsense do not know the facts or the history. The 1931 sovereign debt crisis was omitted from the history books. John Kenneth Galbraith blamed corporations in his book “The Great Crash” in which he states they ignored government defaults. There was no “helicopter money” for it was exactly the opposite – massive DEFLATION. There was a shortage of money to the point that hundreds of cities began to issue their own “Depression scrip.”

All of these forecasts projecting hyperinflation are based solely upon a misguided notion of what caused the German hyperinflation. The USA suffered massive DEFLATION because of a contraction in money supply — not inflation — so we are not facing a 1929 scenario. The analysts that claim this event is commingled with the German hyperinflation are creating a hybrid of something that has NEVER taken place in history.

Everything hinges upon the confidence of the silent majority. They are starting to rumble. That is the key to the future. We are watching this begin with Trump, which is precisely in line with out model that calls for political chaos to emerge in 2016.