There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

Ludwig von Mises - Economist

There may be no means to avoid the collapse but there are actions you can take to protect yourself and your business.

With New Zealand already in recession what comes next?

Is there any need to worry about the NZ Reserve Bank printing $1 billion of new money a week or that the government plans to increase its debt from 19% in 2019 to 54% of GDP by 2024?

Peter Bernholz has studied 29 hyperinflations.  They have remarkably similar characteristics:

• 28 have taken place in the last 120 years (the other was the Assignats launched during the French Revolution.)
  
  
• All took place outside of a gold-standard, that is with fiat money like the NZ dollar
  
  
• All are associated with huge budget deficits.  He says: all hyperinflations, and there are very many other high inflations, have usually been caused by deficits of the government financed by money creation.
  
  

Do these attributes sound familiar?  What makes the NZ dollar different so it will not share the same fate?

Bernholz says severe inflations begin when enough people realise, in the words of billionaire hedge fund manager, Ray Dalio, cash is trash and start getting rid of their fiat money as fast as they can in exchange for more durable money and other assets.

RedPill money is designed as an insurance policy against such events.  The currency, owned by Kiwis, is designed to track the price of gold so that 1,000 RedPill equals 1 ounce of gold.  Unlike fiat money supply of the currency is also capped so that no more can ever be issued.

New Zealanders can prepare themselves and their business by becoming RedPill Ready.  It is free and anonymous for all who wish to participate.

Egon von Greyerz from Matterhorn Asset Management AG enables people to preserve their wealth by storing gold in Swiss underground vaults.  In this interview he explains the surge in new deposits this year and why gold is not just for the rich. 

• Fiat currencies have already lost 98% of their value since 1971.  It is now a race to the bottom of the last 2%.
• The more “helicopter money” printed the faster the end comes – inflation followed by hyperinflation.
  
• The USD will lead the way but all fiat currencies are in the same race.
• The outcome is inevitable – there is nothing the central banks can do about it.

New Zealand is a long way from Switzerland but as COVID-19 has shown we are subject to the same global events.  This is why RedPill money is designed as an insurance policy.  Like von Greyerz’s clients, RedPill understands that wealth preservation has to do with gold because gold has kept stable value for thousands of years.  The price of gold is not going up so much as fiat currencies are debasing. 

If you are one of the Kiwis that has not yet received their 10,000 RedPill free, no strings attached, you can do so from the website.  The resources section then shows how you can make yourself and your business “RedPill Ready”

For those of your who wish to simply sample some of the von Greyerz’s highlights:

2:22 the collapse of the financial system, the collapse of the currency system.

5.10 central banks are exacerbating the debt problem by printing more money – there is no way out.

7:00 and 35:45 we are in the exponential phase of money printing with “unlimited money”.
8:20 people will see the value of their currencies fall.

25:99 the risks are unknowable.  Embrace uncertainty.  Probabilities are unlikely to work because we are in unprecedented times.

26:30 gold is not just for the rich.

28.20 people in Venezuela could have saved themselves.

32:00 the US has had a budget deficit for 90 years.

35:00 US deficit currently $27 trillion.

RedPill - Kiwis creating their own insurance against troubled times.

The over-riding sense I have from reading When Money Dies – The Nightmare of the Weimar Collapse is how similar the time was to our own: money printing that cannot be stopped and official blindness that money printing is the cause of the problem.  The main difference is that this time the monetary inflation is global with the Reserve Bank joining in by printing $1 billion of new money a day.
 
In Germany the result was the utter destruction of the economy, society and morality as the money became worthless. 
 
Another key take-away for me was the "miraculous" ability for hyperinflation to stop as soon as people are provided with money they believe is stable (23rd November 1923).  I created RedPill money as an insurance policy for this very reason. However, as Alistair Macleod points out in a recent post, the stabilisation with the new rentermark came only AFTER people had given up on the old mark because it had become worthless.

In this article I suggest hyperinflation is the only likely outcome of the current economic situation over which central banks have no control.

I think it is a fallacy to believe central banks are in control of financial markets, or that there can be any outcome to the current situation other than hyperinflation.  If we set aside for a moment the psychological need to believe someone is in control lets us take a look what is in fact some very simple logic.  If the logic stands up it relieves the need to analyse much of the current information overload and helps us make better current and future financial decisions.

Continue reading here.

Did you know the Reserve Bank is printing about $1b a week? Newsroom Managing Editor Bernard Hickey has put together a thoughtful piece about the huge rise in government debt funded by Reserve Bank money printing.  I highlighted this earlier and agree with Hickey it should be a key election issue. Why is it not?

Hickey points out that once people begin to understand what the government and Reserve Bank are doing it could further undermine the credibility of the NZ dollar.  The Reserve Bank’s money printing is:

like having your a son or daughter living in the basement who is able to print the money you need to buy the house off the landlord.

Not only can the scale of the money printing make people lose confidence in the NZ dollar, it also increases the gulf between rich and poor:

 money printing has had the effect of increasing asset prices and inequality.

This is due to what is known as the Cantillon Effect. 

New Zealand is already experiencing the worst recession in living memory.  Will the Reserve Bank’s actions add inflation to the mix? The RedPill Ready program is designed for those who want to stay one step ahead of whatever comes next.

Finally some good news about covid-19.  John Mauldin has put together an exhaustive resource of evidence based research on the virus.  The virus is dying out naturally….lockdown is of no value and only delays herd immunity…children have practically no risk and do not spread the virus…wearing masks serves no useful purpose…. Clearly the majority of governments have got their response badly wrong.  The good news is that with this definitive reference source, if you choose, you can easily distinguish reality from fiction.

RedPill Money is not politically correct because no amount of saying the “right thing” is going to recreate a vibrant NZ society and economy.  I still consider truth a virtue but it is only found as we re-learn how to think for ourselves and base decisions on evidence.

For example I wrote to the Prime Minister and Chief Medical Officer on 27th March, 31st March, 6th April and 14th April urging them to take an evidence based approach to the coronavirus.   No reply.  The result has been the devastation of the economy, huge increase in government spending, and no end to lockdowns in sight as the government has no face saving way to extricate itself from the ‘threat fantasy’ they have spun around what is after all, just the flu.

In May I suggested this denial of basic facts about the virus would inevitably lead to more lockdown.   The post illustrates that when we follow evidence, not political correctness, we can make better sense of what is happening now and what is likely to happen in the future. 

That has to be a good thing for NZ.

2020 has forced me to ask a lot of questions, uncomfortable questions, that I would have otherwise ignored.  The questions have driven me to look for evidence to find answers.

If there is no real threat to the flu why the lockdown?

Why have most governments, with the triumphant exception of Sweden, followed the same formula?

If everyone is reacting in the same way is this orchestrated? 

If it is orchestrated who is really in control of NZ?  The elected government?

Why media censorship and the single politically correct messaging from MSM?  What are they frightened of?

Why has this happened at exactly the time we witness the end of free market capitalism?

If every experiment with fiat money in the past has ended in hyperinflation what is likely to happen this time?

Why with the amount of money printing going on by central banks do we not have hyperinflation already?

Why do people either continue with actions that perpetuate crisis or complain about crisis but do nothing?

Who gives money its value?

Does money depend upon governments and their central banks?

Why have countries prospered when their money was pegged to gold?

Can people create their own money?  If so would it be any good?
 
 
Asking of questions like these, let alone the answers, is forbidden in a politically correct world.  Yet if we don’t start asking them and acting on our answers we are still expecting others to do our thinking for us.  I do not think that is good for us, our business, or New Zealand.  For this reason don’t look for political correctness at RedPill.  Look instead for evidence based solutions.

Money determines most of our lives but the one question no one asks is who gives money its value? 

The government?  No, otherwise money could not lose its value during hyperinflation as we have seen in Zimbabwe. 

Actually people like you and me give value to money.  As soon as we realise that it is we, not government or banks that give value to currency then the idea of going for a loan to the bank where they can charge you interest on money they create starts to look slightly ridiculous. 

When we start to understand we are the source of monetary value how does this change our perception of central banks like the NZ Reserve Bank printing ever larger quantities of money?  If we owned the money we used could we do a better job than the inflation/hyperinflation the over-issue of money usually brings?

 If you like the idea of having more control over the money you use consider joining other people in creating your own money.  750,000 Kiwis can now receive 10,000 RedPill free, no strings attached.  When all RedPill have been distributed we can start using it as gold-pegged money own by people with no central control.  Now there is a thought!