The amount of debt in the world has expanded hugely since 2007, when financial institutions started failing. They failed because they had too much debt. Now, there’s even more debt. There’s far more debt in all sectors, including the automobile, student loan, mortgage, and consumer sectors, not to mention government debt.
But there is also more corporate debt. Corporations have borrowed extensively, not to build new factories, but to buy back their stocks. Why? Quite simply, to make management stock options more valuable.
The whole situation is worse, and the timing is far more on the edge, than it was back in 2008. Interestingly, the Federal Reserve is now trying to reel in all the money that it created at the height of the crisis, trying to normalise things. They’re trying to both raise interest rates and reduce the money supply simultaneously, while the government is also running a trillion-dollar deficit. This cannot end well.
In the meantime, all the money that was created to bail out failing corporations is filtering down from the financial markets into the regular economy. But, with the financial markets at crazy highs, rich people don’t care if the price of a hamburger goes up.
In the meantime, all the money that was created to bail out failing corporations is filtering down from the financial markets into the regular economy. But, with the financial markets at crazy highs, rich people don’t care if the price of a hamburger goes up.
The rich have gotten much richer in recent years, as they stand much closer to the stream of newly created money by the central banks. They get to drink first before it trickles down to the little folks.
In conclusion, this is just a moving paper fantasy that will end in a disaster, with a total credit collapse, when there is a default on this debt. Then, all the fake money that’s been created out of thin air will simply disappear. This will occur because the money is credit, or more precisely, debt money. It no longer represents, or is backed by a specific amount of gold or other valuable assets. It’s merely an accounting fiction. Alternatively, this could end in a catastrophic deflation event. In that case the remaining dollars/euros, etc. would go up in value for a short period of time.
READ MORE: http://finalwakeupcall.info/en/2018/10/24/the-monetary-transition/
READ MORE: http://finalwakeupcall.info/en/2018/10/24/the-monetary-transition/