NIA Answers Questions About Inflation

Jan 04, 2010, 19:28 ET from National Inflation Association

FORT LEE, N.J., Jan. 4 /PRNewswire/ -- The National Inflation Association today announced the ten most important new NIAnswers recently added to its database. Sign-up today for the free NIA newsletter at

What do you think about Elliot Wave theorists like Robert Prechter and Harry Dent who say we're in the 3rd wave down in a Grand Super Cycle? They claim that the government will not be able to "print" their way out of the deflation. What are deflationists missing?

The Federal Reserve, if it wanted to, could print the money needed to have the Treasury send a check for $1 million to every U.S. household. In this scenario, would Robert Prechter still believe we will see deflation?

It is not difficult to print your way out of deflation. It is the easiest thing in the world for the Federal Reserve to do. We went through the worst period of forced liquidations in history yet we don't have lower prices of any consumer goods. What we do have is gold near $1,200 per ounce, which is the best indicator that massive price inflation in consumer goods is coming.

Don't believe the government's phony CPI index that says we don't have inflation. Inflation is already here right in front of our faces.

Will U.S. coins in circulation today be worth more than their current value during hyperinflation?

Pennies minted before 1982 are made of 95% copper and are already worth about $0.0218. After 1982 they started making pennies with 97.5% zinc and currently they are worth about $0.0065.

Nickels that have been produced from 1946 up until today, have surpassed a value of 5 cents and are now worth about $0.0509.

During hyperinflation, the metal value of all coins will likely rise higher than their denomination values.

For Americans who don't have the money to buy gold and silver coins, saving up large amounts of nickels, pennies and other base metal coins, may be their next best option.

Please be aware that the U.S. government has made it illegal to melt down nickels and pennies.

Why is it never mentioned in the mainstream media how Bernanke and others attend the annual Bilderberg Group meetings and about their ulterior motives especially regarding NWO?

We are very concerned about how Ben Bernanke and many government officials can meet together with powerful business leaders in one place yet the mainstream media fails to mention it. It's obvious that these meetings are used to try and influence national policy decisions. It should be illegal for these meetings to be kept secret with no disclosure to the public of what is said and discussed.

Would it be better to leave the U.S. now and apply for dual citizenship somewhere such as Australia where the standard of living is better?

We don't want to encourage anybody to leave the U.S. The purpose of NIA is to educate Americans about the crisis that is ahead, so that hopefully we can encourage our elected officials to reverse course immediately and save the country before hyperinflation arrives.

If you choose to apply for a dual citizenship somewhere, we believe Australia should be one of your top choices. Australia's central bank was ahead of the curve as the first to raise interest rates. We believe Australia will have one of the strongest currencies and economies for the next decade out of all English speaking countries.

There is currently labor shortages in Australia. Construction is beginning on their largest ever development, the Gorgon liquefied natural-gas project, and there aren't enough qualified workers.

The Australian government estimates an extra 70,000 workers will be needed for about 80 new resource projects to be developed over the next decade.

If we don't see hyperinflation could we still see a substantial increase in the value of gold?

First of all, gold does not increase in value. Gold is real money and when gold rises it is because the dollar is losing its purchasing power. Gold simply retains its purchasing power.

After the really bad inflation of the 1970s, gold rose to a high of $850 per ounce, which is $2,300 per ounce in today's dollars. We believe inflation will definitely be worse than the 1970s and gold will most certainly rise above $2,300 per ounce.

If we see hyperinflation, then there is no limit to how high gold could go. With hyperinflation, gold could rise to billions of dollars per ounce.

When we speak about gold potentially rising to $5,400 per ounce, we are speaking about a best case scenario for the U.S. economy where Washington reverses course immediately and prevents hyperinflation.

Is their any information on how gold might act if the collapse of the dollar happens and we move to a new currency called the Amero?

The Amero is just a rumor and any discussion out there in regards to the Amero is nothing but speculation.

If the dollar collapses and a new currency is created, we believe gold will have to play a major role in backing this currency. Nobody is going to trust a new currency unless it is backed by gold.

Therefore, we believe those who buy gold now will be best off and the creation of a new currency won't negatively affect gold in any way.

What will happen to gold's bull market if the Fed raises interest rates in early 2010?

Anything can happen to gold on a day to day basis. If the Fed raises interest rates, there's always a chance gold could decline for days or weeks afterwards. However, we don't believe the Fed raising interest rates will put a damper on the long-term secular bull market in gold.

When the Fed starts raising rates, they will likely ease rates higher very slowly, possibly a quarter basis point at a time. Interest rates of 1% or 2%, although higher than 0%, are still very inflationary.

We would need to see artificially high rates of 10% or more for an extended period of time, to counteract the damage being done today. Of course, that would mean a tremendous increase in the interest payments on our national debt, which we would have no way of paying without printing money.

Therefore, we don't think it is possible to put a stop to inflation and gold's bull market unless the government dramatically reduces its size and cuts spending, which we very much doubt will happen.

I own a $24 million business in telecom and wind energy. Does it make sense to sell now and diversify out of dollar based assets while the business has value allowing me to be flexible and portable?

Right now is a great time to sell a business because bankers have plenty of excess capital on the sidelines looking to use for acquisitions. We believe this is probably just a small window of opportunity. If it was your goal to eventually sell your business to begin with, you should definitely consider selling it now and using the money to diversify into precious metals and mining companies.

Long-term, we are very bullish on the future of the wind energy industry worldwide. However, in the short-term we have natural gas inventories at record highs. Many developers of wind farms are having trouble finding financing and we don't see the situation improving until natural gas prices rise substantially higher, making wind energy more attractive.

How much silver would I need to survive per day if hyperinflation hits the U.S.?

If you are supporting only yourself, then you should be able to survive pretty well with an ounce of silver per day.

The current poverty guideline in the U.S. is $10,830 per year in income. However, we all know that's only enough money for food. To live on your own in the U.S. today you probably need to earn at least $24,000 per year.

1 ounce of silver per day or 365 ounces per year is only worth about $6,200 at $17 per ounce, but we expect to see about a four times increase in purchasing power for those with silver compared to gold.

Therefore, we believe if you have 1 ounce of silver per day, you will be able to afford food, shelter and heat.

If I were to buy a silver mining company stock and it went up 1,000%, yet the dollar had become worthless wouldn't the dollars received from selling this investment be worthless offsetting any gains?

It's possible that there could be some silver mining stocks that gain 1,000% or more with the dollar just losing 50% of its purchasing power. In that case, you could see a tremendous increase in your purchasing power.

If the dollar loses all of its value, companies will likely delist from the U.S. and list on foreign exchanges, allowing you to sell your shares for a more stable foreign currency.

About us:

The National Inflation Association is an organization that is dedicated to preparing Americans for hyperinflation. The NIA offers free membership at and provides its members with articles about the economy and inflation, news stories, important charts not shown by the mainstream media; YouTube videos featuring Jim Rogers, Marc Faber, Ron Paul, Peter Schiff, and others; and profiles of gold, silver, and agriculture companies that we believe could prosper in an inflationary environment.

    Gerard Adams
    1-888-99-NIA US (1888-996-4287)

SOURCE National Inflation Association