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The collapse of income and living standards in the G7 (trough misstated inflation) is combining with the “something for nothing†broad social trend to push the “Crack-Up Boom†into a higher gear. Mal-Investments are collapsing at an increasing rate, and public servants and central banks are reacting predictably. They are printing the money as they always have and always will, accelerating the arrival of the global CRACK-UP BOOM. They are explicitly saying they will print the money.

Since the middle of 2008, over $12.9 trillion in the US and $5.7 trillion in the Euro zone have been spent, guaranteed, borrowed or printed out of thin air to prop up G7 economies and financial systems, and it is only a down payment on what is required since the toxic assets and un-payable obligations are still mushrooming. Here is an excerpt from a recent article by Bill Bonner on www.lewrockwell.com:

"While the private sector during the bubble years brought U.S. debts to a record 3.7 times the entire nation’s output, now it’s the public sector that does the borrowing. The Obama Administration is adding to the accumulated U.S. debt at a suicidal pace – four times faster than the record set just last year. And America’s central bank hands the borrower a loaded pistol; it is adding bank reserves – which allow the money supply to expand geometrically – at a 4,500% rate.

That last number is not a typo. It’s an alarm. If the Federal Reserve were a heart patient, the defibrillators would be on already. If it were a normal bank, it would be closed down immediately.

But neither Karl Helferich nor Ben Bernanke set out to ruin their economies. Central bankers don’t do it intentionally; they do it inevitably. Not because they want to, but because they have to. Like the Germans in the ’20s, America has no politically acceptable way to pay her growing debts – except by printing more money. And now, her leading intellectuals urge her onâ€

For decades, public servants and socialists in the G7 have quietly been socializing the economies in which they reside, destroying the wealth creation of the formerly capitalist economies in which MIDDLE CLASSES were healthy and growing and their wealth was accumulating and savings were growing. They are transferring the wealth production of the private sector into public sector hands through one means or another. To name a few, these means are high and rising taxes -- directly through taxes and fees and indirectly through the confiscation of wealth from FIAT money and credit creation (stealing the purchasing power of your savings and wages while it sits in your bank accounts).

Because of current and previous money printing, there are now TRILLIONS upon TRILLIONS of the aforementioned currencies sitting in bank accounts and bonds around the world. They are constantly being debased and inflated away by the respective governments, public servants and central banks. The compounding of this debasement over many years is now really coming home to roost.

With the global financial meltdown, these rates of debasement are increasingly going VERTICAL. It’s now getting to the point that a few people are WAKING up to the facts. As people realize this, more and more money moves off the sidelines and seeks shelter from the coming maelstrom by seeking the indirect exchange which marks every “Crack-Up boom†as outlined by Ludwig Von Mises:

“The course of a progressing inflation is this: At the beginning the inflow of additional money makes the prices of some commodities and services rise; other prices rise later. The price rise affects the various commodities and services, as has been shown, at different dates and to a different extent.

This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy.

But then finally the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against "real" goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them.

It was this that happened with the Continental Currency in America in 1781, with the French Mandats Territoriaux in 1796, and with the German Mark in 1923. It will happen again whenever the same conditions appear. If a thing has to be used as a medium of exchange, public opinion must not believe that the quantity of this thing will increase beyond all bounds. Inflation is a policy that cannot last.â€

When Von Mises wrote this, Crack-up Booms were typically limited to one country or another. This is the biggest Crack-up Boom in history as the whole world is aboard, rather than one irresponsible government. We are looking at mass insanity at the highest levels of leadership and central banks in the world, as well as the broad public sector. The world is operating under the illusion that money has the definitions and functions outlined previously, and this IS NOT true. In this case, I believe this process will take a decade or more and when done, the FACE of the world will be quite a different place financially and economically.

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That there are no rules increasinly appears to be true.

I'm not convinced though that a system with no rules has a fixed outcome.

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vote for me i promise everything will be free

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The crack-up boom appears. Everybody is anxious to swap his money against "real" goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them.

Good post. Not just individuals though - Chinese seem very keen on swapping their dollars for any real assets they can lay their hands on.

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