We are now definitely living in a high inflation world. I remember that I could take a lunch for about HKD 5 dollars （about 0.7 USD) when I was in the first year of secondary school. It was about 1982. Now, we need to spend about HKD40 to 60 to have lunch at the fast food restaurant. I remember that the price of a flat of the area of 500 square feets is about HKD300,000 in 1984 and the price of the same room would be about HKD5,000,000 to HKD6,000,000 in 2016. The purchasing power of the fiat currency continues to fall. The rate of money printing in the quantitative easing (QE) to infinity is getting much much higher in recent years. We are walking towards the road of Hyperinflation.
There is no clear line to define the difference between inflation and hyperinflation. People refer the hyper-inflation to the situation of Weimar government in Germany in pre-world war II. History record shows that the inflation rate at that time was more than 50% within one month.
Imagine what if the inflation rate increase to more than 50% in a month. It is not possible to cover the living cost by the monthly salary.
Webbot data shows that there is a high possibility that the hyperinflation will come to the US by next year (2017). People will lose all of the confidence in US dollar. Once this trust lost, everything will change. The price of a simple drink may rise 50% from morning to afternoon. All the major construction stopped because there is no worker willing to do the works.
The rate of losing confidence in fiat currencies may come suddenly and shock the public because no one expected it would happen. So, no one store food in a home but the transaction of the supply chain stopped.
When no one believes the fiat currencies, people will buy precious metals like physical gold and physical silver to protect their wealth. However, the supply of physical gold and silver will dry out suddenly. China, Russia, and other parts of the world bought a lot of gold and silver in previous years. I guess there is little physical gold and silver left in the West. People will also buy bitcoins as it is another mean to store the wealth. Therefore, we shall feel the fever of Bitcoin, gold, and silver in this circumstances.
How about stocks and real estates? The price of properties will certainly fall because the bubble is too large. People overleverage their credits to buy one flat, two flats for more. When Real estates are composed of 80% of the loan in the mortgages from the bank, it has already been not “real.” They are loans rather than the assets.
Stocks? My views are the same. CEOs in the super companies use the dividends to buy back the companies stocks shares in the equity markets implies the demand are fragile. QE to infinity already kill the capitals. There is very few business which can make the profit. It means the present price of the stocks cannot reflect their value. They cannot reflect the real business difficulties of their business. Or, we may say that they use the cash to pump up the market artificially. All those are an illusion.
Yes, we are living in the world that all of the visualized pictures are illusions which are created by the billionaires. One day, if you are waked up by the sudden market collapse, and you have not prepared for the extreme economic situation, you will be tough.
Friends, please learn to read the weak signals which have shown before the economic collapse. You may take a look at the number of advertisements on the street to sell second-hand properties. You may count how many empties stores in the crowded street. You may record how many discount packages for the hotel promotions. All those are the weak signals before the economic collapse.