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James Turk: Government overspending causes hyperinflation

Section: Daily Dispatches

2:35p ET Friday, December 25, 2009

Dear Friend of GATA and Gold:

In commentary published this week, GoldMoney founder James Turk, consultant to GATA and editor of the Free Gold Money Report, argues that hyperinflation is not caused by too much bank lending but rather by government overspending. Turk writes:

"Much has been made of the huge bank excess reserves 'sitting idle' at the Federal Reserve. It has been said that hyperinflation is not possible when the banks are sitting on such huge reserves, instead of lending them into the economy. This thinking is flawed because it ignores that there are two sides to the Fed's balance sheet. Those reserves are not just sitting there, as if they were in a vacuum. Those reserves have funded the Fed's purchase of U.S. government debt, putting it and the U.S. dollar on the road to hyperinflation."

Turk's commentary is headlined "Hyperinflation Watch" and you can find it at the FGMR Internet site here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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