Hyperinflation Warning with Economist John Walter Williams
Among the specters lurking in ShadowStats.com's Editor John Williams' gloomy outlook for the U.S. are the demise of the dollar, hyperinflation and the ongoing lack of political will to take sound corrective measures. Still, as he tells The Gold Report in this exclusive interview, investors have options. Williams contends that turning to gold, silver and strong foreign currencies would protect wealth and position savvy investors to take advantage of extraordinary opportunities likely to flow out of the turmoil ahead.

The Gold Report: When we talked in May, you predicted that hyperinflation could be a reality as soon as 2014, something you addressed at length in your Hyperinflation Special Report. Have six months of euro debt crises, Middle East revolts and U.S. Treasuries' downgrading altered your outlook?John Williams: Not a bit. We still seem to be moving down that road to a relatively near-term break toward hyperinflation. The most important thing that's happened since we last talked was the global response to the U.S. legislators' negotiations over the debt-limit ceiling and the deficit reduction problems at that time. Clearly, no one controlling the White House or Congress was serious about addressing the nation's long-term solvency issues. That sparked a panic selloff on the dollar against currencies such as the Swiss franc, and of course gold, which made the gold price rally sharply.TGR: Did the politicos learn anything from those "negotiations," as you just described them?JW: Not at all. In fact, I'll contend that everything that's happened since then has been just a playing out of what resulted in a complete collapse in global confidence in the dollar. The ensuing rapid shift of market focus to crises in the euro area was really more of a foil to distract the global markets from the dollar. Following that horrendous performance by Congress and the White House, the global markets indicated a major loss of confidence in the dollar that had been coming. I think that's now established and in place. The dollar is doomed to lose its reserve status eventually, and any day now, we may see things heat up again over the deficit negotiations.TGR: What steps would we see on the way to the dollar losing its reserve status?JW: Probably the biggest thing would be heavy selling pressure against the U.S. dollar, along with a spike in the stronger currencies such as the Swiss franc. The more the pressure builds for selling of the dollar, the more expensive and disruptive it will be for the Swiss National Bank to keep supporting the euro so I don't think that intervention will last long.As heavy selling of the dollar develops against the Swiss franc, the Canadian dollar and the Australian dollar, and the gold price rallies, we'll see a very strong effort by those who are dependent on the dollar-such as the Organization of the Petroleum Exporting Countries (OPEC)-to have the dollar removed from the pricing of oil. Along with that will come a movement to change the dollar's reserve status.TGR: If other countries start demanding payment in alternative currencies, how can investors protect themselves against a shift from the dollar standard?JW: I'm not a day-to-day timer in this. My outlook has been consistent that we're heading into U.S. dollar hyperinflation, and the effective purchasing power of the currency as we know it will disappear. If you're living in a U.S. dollar-denominated world, you don't want to be in dollars-you want to move to protect the purchasing power of your assets, your wealth.To do that, I look very specifically at physical gold, preferably gold coins and silver, and assets outside the U.S. dollar. The currencies I like the best are the Swiss franc, the Australian dollar and the Canadian dollar. This is something you do for survival over the long haul because you're likely to see all sorts of volatility in the short term.But once you ride through the storm, if you've been able to preserve your wealth and assets in terms of their purchasing power and to maintain liquidity-which the physical gold and the currencies will give you-you'll be in a position to take care of yourself and take advantage of some extraordinary investment opportunities that likely would flow out of the turmoil ahead.In the interim, I wouldn't start betting that next week we're going to see the dollar do this or that. This is a long-term hedge strategy, an insurance policy against the hyperinflation that I view as inevitable due to the long-range insolvency of the U.S.Click here for complete article:http://news.goldseek.com/GoldSeek/1322550360.php