The man who predicted and shorted the housing market crash before 2008, is now warning of hyper inflation ahead.
Only this time, he has proof of his warnings in the form of tweets.
Michael Burry, investor and founder of Scion Capital, warned financial institutions and investors of the coming housing market collapse before 2008, once he realized the extent of the mortgage crisis. No one listened. He shorted the housing market making $100 Million and making his investors roughly $750 Million in the process.
Today, he is screaming from the rooftops about the looming inflation crisis.
People say I didn’t warn last time. I did, but no one listened. So I warn this time. And still, no one listens. But I will have proof I warned.
What does he mean by Weimar Inflation?
Weimar as is Weimar, Germany. As you may know, Germany racked up substantial debt when fighting WWI which they obviously lost. To pay off all their debt they started printing money like crazy and became a horror story of hyper inflation.
Their currency became worthless. They started using their bank notes as wall paper because it was worth more as that.
This picture shows a man wheeling in a wheelbarrow of money just to purchase milk and bread. This is how bad their inflation became.
The worst case scenario may be right around the corner and even Bank of America’s CIO is heading their warning:
One week ago, Bank of America hinted at the unthinkable: the tsunami of monetary and fiscal stimulus, coupled with the upcoming surge in monetary velocity as the world’s economy emerges from lockdowns, would lead to unprecedented economic overheating…
“Most epic, extreme analog of surging velocity and inflation following end of war psychology, pent-up savings, lost confidence in currency & authorities“
The Federal Reserve
The federal reserve has historically been used to balance the economy. They did this by raising and lowering interest rates, printing money, etc. They used to go against the wind.
Now they are going WITH the wind. They are adding fuel to the already blazing fire.
The US government is inviting inflation with its MMT-tinged policies. Brisk Debt/GDP, M2 increases while retail sales, PMI stage V recovery. Trillions more stimulus & re-opening to boost demand as employee and supply chain costs skyrocket. #ParadigmShift
— Cassandra (@michaeljburry) February 20, 2021
“The life of the inflation in its ripening stage was a paradox which had its own unmistakable characteristics. One was the great wealth, at least of those favored by the boom..Many great fortunes sprang up overnight…The cities, had an aimless and wanton youth”
“Prices in Germany were steady, and both business and the stock market were booming. The exchange rate of the mark against the dollar and other currencies actually rose for a time, and the mark was momentarily the strongest currency in the world” on inflation’s eve.
“Side by side with the wealth were the pockets of poverty. Greater numbers of people remained on the outside of the easy money, looking in but not able to enter. The crime rate soared.”
“Accounts of the time tell of a progressive demoralization which crept over the common people, compounded of their weariness with the breakneck pace, to no visible purpose, and their fears from watching their own precarious positions slip while others grew so conspicuously rich.”
“Almost any kind of business could make money. Business failures and bankruptcies became few. The boom suspended the normal processes of natural selection by which the nonessential and ineffective otherwise would have been culled out.”
“Speculation alone, while adding nothing to Germany’s wealth, became one of its largest activities. The fever to join in turning a quick mark infected nearly all classes..Everyone from the elevator operator up was playing the market.”
“The volumes of turnover in securities on the Berlin Bourse became so high that the financial industry could not keep up with the paperwork…and the Bourse was obliged to close several days a week to work off the backlog” #robinhooddown
“all the marks that existed in the world in the summer of 1922 were not worth enough, by November of 1923, to buy a single newspaper or a tram ticket. That was the spectacular part of the collapse, but most of the real loss in money wealth had been suffered much earlier.”
“Throughout these years the structure was quietly building itself up for the blow. Germany’s #inflationcycle ran not for a year but for nine years, representing eight years of gestation and only one year of #collapse.”
The punchline: This was “written in 1974 re: 1914-1923.”
If a gestation period is roughly 8 years, Burry is claiming ours has been from 2010-2021. This means adding that
“when dollars might as well be falling from the sky… management teams get creative and ultimately take more risk… paying out debt-financed dividends to investors or investing in risky growth opportunities has beaten a frugal mentality hands down.”
Ray Dalio is saying the same thing: every country who racked up a ton of debt then tried to print their way out of it completely destroyed their currency in the process.
We can lose the status as being the reserve currency of the world by printing our money until it’s worthless. This is what we are doing now.
So what should you do with your money? Get it out of the stock market or stay in a bit longer?
Gold is the ultimate hedge against inflation. Get your FREE gold buying kit here so you are prepared for when Weimar-like inflation hits.
