One of my favorite sources for real statistics is John Williams' site: Shadowstats.com. For those not familiar with his work, Williams' is a highly respected U.S. economist, who has previously been invited to speak to the U.S. Congress.

Williams has dedicated his site to producing authentic, U.S. economic statistics. By this, I mean that Williams has discarded all of the methods of lying-with-numbers which the U.S. government has invented over the last thirty years – and calculates real statistics, using the same methodology employed before this “pollution” of statistics began.

Thus, his calculations are not only extremely useful for getting a genuine picture of the current state of the U.S. economy, but unlike all other current, calculations his numbers can also be directly compared to previous eras – because the methodology in the calculations is the same.

It was Williams who first coined the phrase “hyperinflationary depression” a few years ago to describe what he saw as the certain future for the U.S. economy. More recently, he did an updated essay on this subject one year ago.

Williams has foreseen two dynamics in the U.S. economy. First, crippling levels of debt, combined with gigantic, excess-inventories of numerous, U.S. asset classes means that these assets will continue to deflate – no matter how much money the U.S. government stuffs into Wall Street vaults. Thus, an asset “depression” will continue in the U.S.

Second, insane levels of money-supply growth (i.e. more new debt) in the U.S. and most of the rest of the world ensures that there will be a dramatic surge in prices of all assets in relatively scarce supply, meaning primarily commodities – and especially precious metals. In countries with very weak currencies (like the U.S.), rapid rises in commodity prices combined with rapid devaluation of the currency will lead to extremely high inflation. With the highest debt-levels in the industrialized world, and the weakest economy, Williams expects the U.S. to bit hit hardest - with hyperinflation.

With this context, the recent spike in U.S. interest rates, despite all-out efforts to manipulate these rates lower by the U.S. government, is a clear sign of Williams' prophecy coming to fruition.

The first consequence of this spike was immediate: U.S. mortagage-applications are plummeting. Mortgage applications from two weeks ago sunk by a sickening 14% week-over-week – and 37% since the most recent peak in activity only one month earlier. With U.S. interest rates still rising, expect the next report to be even worse.

This immediately torpedoes the wishful thinking by the Obama regime that “distressed”, U.S. homeowners would somehow be able to “refinance” their way out of foreclosure. Looking ahead, as the next, huge wave of mortgage-resets approaches (see “U.S. mortgage-crisis to get MUCH worse in 2010-11”), millions of homeowners who can barely manage their payments today are doomed to lose their homes as these resets kick-in – in roughly six months time (and for two years after that).

While the U.S. propaganda-machine tried to hype a tiny up-tick in U.S. existing home sales last week, the reality is that even this “good news” is actually merely setting up the U.S. market for another crippling, down-leg (see “U.S. housing-sector stability dependent on vultures”). Speculators are buying over-priced, U.S. homes at foreclosure sales – duped into believing a “bottom” is near, thanks to incessant propaganda which fraudulently predicts this (again and again).