20 Signs That The Global Economic Crisis Is Starting To Catch Fire - The Economic Collapse
By Michael Snyder, on February 13th, 2014
The next two years (2014 and 2015) are going to represent a major "turning point" for the global economy. By the end of 2015, things are going to look far different than they do today.
None of the problems that caused the last financial crisis have been fixed. Global debt levels have grown by 30 percent since the last financial crisis, and the too big to fail banks in the United States are 37 percent larger than they were back then and their behavior has become even more reckless than before.
As a result, we are going to get to go through another "2008-style crisis", but I believe that this next wave is going to be even worse than the previous one.
So hold on tight and get ready. We are going to be in for quite a bumpy ride.
Yes this formula, derived by me, predicts gold price precisely over the last 12 years.
It does not predict the day to day movements. But long term, the gold price is pretty right on spot precisely where the predicted price trend is. See the chart.
But first here is how the formula is derived. It applies accurately to ALL hyperinflations ever occured in human history, including the Weimar Republic and Zimbabwe inflation.
Let's consider how inflation happens. Gold is considered a constant valuation. Gold price appreciation indicates inflation, nothing more and nothing less.
The gold price can be written in the following generic formula, which is generally correct, as prices change in percentage, i.e. geometric term. You just need to choose the proper time dependent function Y(T):
P = P0 * exp(Y(T))
The time function Y(T) increases over time. The increase of Y(T) is the inflation and depreciation of the currency. So let's look at what Y(T) should look like.
In the constant inflation scenary, gold price should increase the same percentage each year, therefore Y(T) would simply be proportional to the time, t, therefore
Y(T) = C*T (constant inflation)
But the inflation is not constant. At first, there is almost no inflation. And then inflation increases over time. The rate of inflation also increases in percentage term. Thus Y(T) = exp(y(T)). So we should write gold price as:
P = P0 * exp(exp(y(T))),
with an increasing y(T) reflect increasing inflation rate.
Finally, the acceleration of inflation itself is not a constant. The faster the inflation accelerates, the faster they need to print more money and it speed up the acceleration of inflation further. So we expect that y(T) itself increases geometrically. Thus we can expect that acceleration of inflation is:
y(t) = exp(C*(T-T0))
Put everything together, we obtain an elegant math formula of gold price under inflation. Elegant because there are only two adjustable parameters: