From Jim Sinclairs website today:

Dear Green Hornet,

The key to the transmission of latent money creation such as the payment to AIG in bailouts which moves into AIG from bailout schemes out the back door to winners on the toxic OTC derivatives is velocity of money. As velocity of money increases, the latent M3 becomes present time M3.

Normally it takes a recovery in business activity to stimulate the Velocity of Money, which is an engine of inflation price wise.

These are not normal times.

Never has any government dared to create in one year monetary inflation equal to the GDP of that country. This is going to be an accomplishment of the USA in this year.

Every hyper-inflation that has ever occurred has happened when Velocity of Money was stimulated by a loss of confidence in the currency unit in the midst of a period of horrid business activity.

This is what will bring hyperinflation to the US dollar and price inflation in the midst of a deflationary depression. There is no means to drain this liquidity regardless of what the Fed would have you believe. There is no exit on this Highway to Hell as the president of the EU labelled it.

From Wikipedia:

* M0: The total of all physical currency, plus accounts at the central bank that can be exchanged for physical currency.

* M1: The total of all physical currency part of bank reserves + the amount in demand accounts (”checking” or “current” accounts).

* M2: M1 + most savings accounts, money market accounts, retail money market mutual funds,and small denomination time deposits (certificates of deposit of   under $100,000).

* M3: M2 + all other CDs (large time deposits, institutional money market mutual fund balances), deposits of eurodollars and repurchase agreements.

When the Federal Reserve announced in 2005 that they would cease publishing M3 statistics in March 2006, they explained that M3 did not convey any additional information about economic activity compared to M2, and thus, had not been used in determining monetary policy for years. Therefore, the costs to collect M3 data outweighed the benefits the data provided.[12] Some politicians have spoken out against the Federal Reserve’s decision to cease publishing M3 statistics and have urged the U.S. Congress to take steps requiring the Federal Reserve to do so. Congressman Ron Paul claimed that “M3 is the best description of how quickly the Fed is creating new money and credit. Common sense tells us that a government central bank creating new money out of thin air depreciates the value of each dollar in circulation.”[17] Some of the data used to calculate M3 are still collected and published on a regular basis.[12] Current alternate sources of M3 data are available from the private sector[18].

Jim Sinclairs JSMineset

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