U.S. Hyper-Inflation Bomb to Detonate in NZ?
Dear Friends
Matthew Gilligan
If two blog posts in one week seems a bit OTT, I’m sorry. But I believe that if you’ll find my message and this information below to to useful as an important follow up to my blog last week about NZ Interest Rates.
An inflation time-bomb is ticking in the US. And in my view we may face hyper-inflation. The financial crisis is not over - we all know that.
While it looks like the money supply coming out of Obama’s Govt is stabilising things, its more likely to cause hyper-inflation that may potentially make the early 70’s woes look like a barbeque at John Key’s pad in Hawaii.
Go ahead and watch these videos below; the second video is the best I think. It’s an explanation on hyper-inflation (from the US senate this week). The first video is a it of a commentarty rave highly relevant.
Concern Over US Economic Policy
Hyper-Inflation Explained (US Senate)
Many financial people (including Dr Bollard) are ringing the hyper-inflation bell. America is broke and printing cash, so is Britain.
Hyperinflation = huge interest rates. We could face 20%+ interest rates if the hyperinflation bomb detonates in the USA.
And we must ask ourselves, why will hyper inflation not emerge when the U.S. and Britain are paying their bills printing cash ? I know it seems a long way away from where we are now with historically low interest rates….but its not.
If China pulls America’s $4.5 trillion in funding it has coming up in bonds to roll over this year, or the printing machine devalues their currency pushing up their foreign debt and debt funding costs…….its game on. Buy gold that week…and sell the dow short.
My advice is lock up long and shield yourself from the potential of this - 5 year interest rates are cheap and won’t go down much further. As I said last week long term rates are much more likely go up in the short term than down.
By locking in cheap money now you de-risk yourself from inflation’s effects for 5 years (on debt) and lock in a low rate of around 6.5% ( compared with the 10 year average of 8% in NZ). By the way, we find interest.co.nz is a useful site for getting up-to-the-minute interest rates in New Zealand.
Please note: It’s not my intention to scare anyone or be alarmist, however if these unfolding events are not acted on quickly (where appropriate) then they may have potentially tragic effects on homeowners and investors later on.
I plan NOT to bother you with the ‘chicken little’ story again 
Finally, please help to spread public public awareness on this subject by forwarding this article - especially if you havefriends or family who are homeowners, business owners or investors.
Thank you for reading this.
Matthew Gilligan CA CPP
Director
Gilligan Rowe + Associates Ltd
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Disclaimer: © Gilligan Rowe & Associates Ltd This article is intended to provide only a summary of economic issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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