Credit isn’t wealth. A lot of people are discovering that the hard way. Welcome to the credit deflation prelude to hyperinflation.

Mr. Gideon Gono, head of the Reserve Bank of Zimbabwe, suddenly shifted from adding zeros to subtracting them leading the world in deflation.

A few weeks ago, when the U.S. Federal Reserve announced a strategy designed to bring down long-term interest and home mortgage rates through unlimited Treasury bond purchases, government debt staged a spectacular rally.

Ed Bugos examines the outlook for gold in the short and long term. The government’s spending binge is fundamentally bullish for gold via its impact on inflation and the US dollar. However, it could take time for these negative effects to emerge. And that means another short-term correction in gold remains possible.

The Fed and Treasury are doing untold damage to the US economy and the dollar with their unprecedented bailout spending, says Martin Hutchinson. That’s why there will soon be a stampede to the exits from the Treasury bond market. Martin gives four ways for investors to prepare for the coming crash.

One of the biggest fears today is that the US is entering a Japanese-like slump that could last a decade. But Justice Litle says we have learned the lessons from that crisis. This time, the government fears doing too little, but gives little thought about the risks of doing too much. And this is why we should be more scared of one day ending up like Zimbabwe…

Tuesday was the third day in a row that gold and silver got sold off as soon as trading began in the Far East…and as I write this, Wednesday morning in Asia is shaping up the same way. Gold was down about $15 when the Comex opened in New York on Tuesday…and a ferocious $25 rally (tech funds?) got stopped dead in its tracks at precisely 9:00 a.m. Eastern time…the second day in a row it didn’t get past $830 the ounce. Silver’s fate was similar. Both sold off from there and both finished basically unchanged from Monday. The HUI traded as low as 218…but managed to tack a 5% gain onto that number to close in slightly positive territory…

And this time in history we have gone one step farther down the path of True Economic Insanity (TEI) in that we not only created and spent all that money on gluttonous consumption, but we borrowed it all into existence, too! Hahaha!

“All of the nations that have resorted to money-printing in the past, ultimately saw a total economic collapse,” says Puru Saxena. The government bailouts and stimulus packages may provide some short-term relief, but the long-term hyperinflation and damage to the dollar will be much, much worse.

Since July, the US dollar has converted into one of the world’s strongest currencies. Eric Roseman says the greenback could continue to rally if stock markets decline again. But this upswing should not be confused with fundamental strength in the US economy. The buck has been a “liquidity haven” as credit dries up, but the government’s spending blitz will eventually take its toll on this fiat currency.