There are two camps right now: those clinging to their gold bars, expecting hyperinflation any minute now. And those just assuming this can all continue forever. If the Dow falters, we'll just print up another batch of money and carry on seamlessly. No one wants to believe that Depression is inevitable and has been merely avoided by human history's biggest Jedi Mind Trick: printing money to buy stocks (and other insolvent risk assets). On top of that, we bailed out lenders by giving borrowers more debt.
Circling the drain
Currently, in the Twilight Zone, the countries with the highest debt levels i.e. the entire developed world, have the lowest interest rates. Meanwhile, countries with low levels of debt aka. the 'emerging markets' all have high interest rates. Again, there's been zero root cause analysis for why this is happening. As usual, it's a tale of 'haves' and 'have nots'. The 'haves' in the developed world are seemingly defying the laws of economic gravity, by propping up their bloated lifestyle using borrowed money at 0% which is printed out of thin air by Central Banks. We then just blithely assume that the rest of the world will accept these newly fabricated dollars/Euros in exchange for the goods they provide to us for ten cents on the dollar in wages. Even though inflation is being exported to them via printed money, and deflation is being imported by us via cheap crap. Everyone ignores the quid pro quo. What do they get in return for worthless IOUs? They get the economy. The jobs, the factories, the technology, the management expertise, the intellectual property. They get the REAL gold that Mercantilists have wanted since the beginning of time. Not the barbarous metal that has zero intrinsic value.
Atlas Shrugged. Indeed.
We get a casino in exchange for an economy. Until it all ends very suddenly and violently. Out of nowhere. The Jedi Mind Trick loses its power. Why? Because we forgot that most people on this planet don't have an economy to trade for printed money, therefore they have to remain solvent without the help of ponzi borrowing. The submerging markets are the weak link in this clusterfuck. They can't support our bloated way of life indefinitely. We're seeing that via commodities and collapsing Emerging Market demand. But we don't care about them because they don't exist other than to stock the shelves at Walmart.
We get a casino in exchange for an economy. Until it all ends very suddenly and violently. Out of nowhere. The Jedi Mind Trick loses its power. Why? Because we forgot that most people on this planet don't have an economy to trade for printed money, therefore they have to remain solvent without the help of ponzi borrowing. The submerging markets are the weak link in this clusterfuck. They can't support our bloated way of life indefinitely. We're seeing that via commodities and collapsing Emerging Market demand. But we don't care about them because they don't exist other than to stock the shelves at Walmart.
The economic part of the depression is already well underway. The financial side of it will catch up overnight. Any night.
