Fitzwilson: Hyper-Devaluation, the Electronic Age & Gold
March 16, 2012
Today 40 year market veteran, Robert Fitzwilson, discussed the electronic age and how it will impact inflation as well as the eventual hyperinflation. He also believes that we have lived through an age when we talked in terms of millions and then billions, then trillions and that quadrillions cannot be far behind. Robert is the founder of The Portola Group, one of the premier boutique firms in the Unites States, and today King World News was given exclusive distribution rights to the following piece:
“Currency & Long-Term Wealth Preservation”
By Robert Fitzwilson, President & Founder of The Portola Group
March 16 (King World News) – For most of us alive today, the currency in our wallets has always functioned as a medium of exchange. It will do so going forward. Where one could find fault with it would be as a form of wealth preservation.
As we have discussed before, the value of a dollar has declined by about 95% in the last 100 years. This decline has been mostly gradual and almost invisible. Most people did not care as their wages were rising. From the mid-‘70s until the latter part of the last decades, home prices were also rising which offset the decline in the currency and then some.
Both of those factors no longer apply. We all know that wages have not been rising and the housing market is in shambles. The decline in the currency is now being felt, particularly at the grocery store and at the filling station.
As defined by a rate of decline of 50% per month, all of the world’s experiences with “hyperinflation” have occurred in the last 100 years. Stories abound about the experiences in post-WWI Germany with wheelbarrows full of money, and people racing around their cities frantic to exchange the paper for any real goods that they could find….
There are many causes from which panic can ensue such as being unable to buy food and goods at any price. What would cause the particular form of panic and “hyperinflation” that we address above? We would toss out the possibility of utility. The utility of cash is that it can be carried around and exchanged conveniently for goods and services. What is called “hyperinflation” in our view is really “hyper-devaluation” instead.