Tuesday, May 13, 2008

300 year debt bubble ready to burst

Triage In Financial Markets

Capital markets built on credit and debt need to continually expand in order to service previously created compounding levels of debt. When only England was on a credit-based system, as long as England 's empire expanded its increasing debts could be absorbed; but when England 's expansion slowed, so too did its economy. The conundrum of the necessity of continual economic expansion is now being played out on a global scale. Now, the entire world is based on England 's debt-based central banking system; and, consequently, unless the world economy continues to expand, the commensurate expanding edifice of global debt will collapse.

Posted by sold 2 rent 1 @ 10:23 AM (1690 views)
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18 thoughts on “300 year debt bubble ready to burst

  • sold 2 rent 1 says:

    This is Robert Prechter’s vision too.

    See the debt graph
    http://www.thelongwaveanalyst.ca/downloads/NonPublicDeptPerGDP_multi.doc

    US Total Debt peaks
    1835 – 150pc of GDP
    1933 – 270pc of GDP
    2008 – 350pc of GDP and still rising at 20pc

    This is Elliott wave 5 to round up a 300 year cycle
    At best we have 1 year left before this debt bubble bursts

    Martin Armstrong’s model marks a top in April 2009
    Could it be then?

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  • sold 2 rent 1 says:

    I regularly talk about real creativity/change can only emerge from chaos.
    The same thing also seems to apply to knowledge and understanding.

    Calleman’s model is essentially a positive outlook for the future but very difficult to understand.
    I only really understood the model once I had explored other ideas about massive crashes and destruction.

    Accepting Prechter’s view is the first step.
    His work basically incorporates Kondratieff’s longwave cycles

    The next step is to understand Oswald Spengler’s book: The Decline of the West
    http://www.gold-eagle.com/editorials_05/chapmand062506.html

    Only when you have truly explored and accepted the possiblity of the end of civilization can you start to search for positive ways forward.

    The alternative is you carry on believing we will have a UK 1990’s style crash or a Japan 1990 style deflation. These 2 outcomes are just wishful thinking based on fear of anything worse. The physical evidence is building that things will be much much worse.

    Anyone blogging on this site for more than 18 months has demonstrated a “contrarian” personality.
    You are not affraid to have an opinion that goes against the crowd.

    Maybe it is time for some of you to go to the next contrarian level.

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  • S2R1, how does it bust-up? Hyperinflation? And what implications does this have for paper savings?

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  • sold2rent, you’re being far too optimistic. The next ‘contarian level’ goes way beyond any fear of the wheels falling off the global economic system. It goes straight to ‘die-off’ ; a point not far beyond where we now find ourselves – supporting massive global over-population (to stimulate consumption and ‘growth’), made possible by access to natural non-replenishable resources which are now fast running out. Oil production has effectively peaked against rising demand, food shortages are rife – and that’s just the start of it.This is going to be a permanent crash – with only a relatively small number of people emerging on the other side of it. House prices will be the least of their concerns.

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  • sold 2 rent 1 says:

    harold,

    “S2R1, how does it bust-up? Hyperinflation? And what implications does this have for paper savings?”

    Hyperinflation? Deflation? It could be either depending on the gov policies and who gets elected.
    Ron Paul is not dead yet!!!!!!!

    Calleman’s model says we will have the “end of money” – my guess in summer 2011 – but it is only a guess.
    I will be looking to trade my gold in for useful things including property by 2010-2011

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  • sold 2 rent 1 says:

    lierbag,

    “The next ‘contarian level’ goes way beyond any fear of the wheels falling off the global economic system. It goes straight to ‘die-off'”

    You have described Oswald Spengler’s book: The Decline of the West
    http://www.gold-eagle.com/editorials_05/chapmand062506.html

    I know it sounds crazy but once you can get beyond this level of contrarian thinking, things start to improve and everything become very metaphysical indeed.

    The contrarian steps can be ordered

    Fred Harrison (18 year cycle)
    Kondratieff (60-70 year cycle)
    Robert Prechter (300 year cycle, Elliott waves)
    Oswald Spengler (1500-2000 year cycle, civilizations)
    Martin Armsrong PI cycle (8.6 year global cycle)
    Calleman/Lungold (9 layers, 16 billion year evolution pyramid model, point of singularity, exponential change)

    Ask yourself which models do you believe in?
    Then try researching the next one on the list.
    Understanding is a much better way to combat fear than hope.

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  • Not sure that this is a problem that has grown inexorably over 300 years. Much has to do with deregulation of finance and the competition to regulated banks from unregulated finance organisations which has increased enormously over the past 20-odd years and has caused excessive risk-taking, credit-creation and bubble behaviour. A very small proportion of the debt created over the last few years is self-liquidating (i.e. generating future income from which the debt can be repaid). In recent years in the US, for example, about 50% of debt has been used by consumers (consumer loans and mortgages), about 25% has been used by governments and 25% by companies. Only the last category generates the future income to pay off debts but even there relatively little has been used for capital investment to generate future income – much was used instead to cover unfunded liabilities and to buy-back shares that management printed to reward itself. Under these circumstances the repayment of principal+interest requires a massive amount of new debt creation. The danger point is when interest charges become greater than the growth of debt, causing marginal debtors to need to liquidate. As long as there are savings or current account surpluses this situation can be sustainble – e.g. savings can finance the new debt growth and this can keep down interest rates. The US now has very little savings and a huge current account deficit, so the battle to keep debt growth greater than interesr charges is being lost and the result is avalanches of chain-reaction defaults.

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  • sold 2 rent 1 –

    I’m in agreement with your thoughts and someone with a bit of vision often takes a fair bit of ridicule.

    Keep it there my man.

    We are working to release previously withheld information that will enable independent thinkers to make wonderfully informed ethical decisions.

    The powerful few who exploit the majority have nearly come to the end of the road. The tank is empty.

    This will be universally accepted before very long and a new equilibrium will be discovered.

    Wonderful times to be alive.

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  • Gardenia Dot Net says:

    > S2R1, how does it bust-up?

    Answer: A global run on the banks.

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  • sold 2 rent 1 says:

    icarus,

    “Not sure that this is a problem that has grown inexorably over 300 years”

    It is about perspectives and thinking of the bigger picture

    The 1987 stocks crash is now seen as a blip in a 25 year bull run.
    The 1970s is seen as a blip in a golden post WW2 era.
    The 1930s depression should be seen as a blip in a 300 bull run in stocks and industrial revolution advancement.
    The fall of Rome was just a blip in the development in civilisations using the written word.
    The extinction of neanderthals was just a blip in the development of early man.

    When all of these events happened they were seen a disaster, but evolution shows they were a blip.
    Elliott wave theory says we are in the 5th of the 5th of the 5th of the 5th…….. wave
    Exponential evolution – point of singularity – 2012 – here we come.

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  • s2r – you could look at it from the 300-year perspective, in which fractional reserve banking and central banks are seen as the root of the problem, but all I’m saying is that changes in the financial system over the last 20 years have moved things on rapidly.

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  • sold 2 rent 1 says:

    Neo-serf @8,

    Cheers for the support.

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  • sold 2 rent 1 says:

    icarus,

    The last 20 years from 300 have been the final Elliott wave 5 blow-off stage (5th of the 5th in fact)

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  • Falsifiable predictions? What you are describing is a belief system. It has nothing to do with economics and less to do with house prices.

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  • s2r1 – thank you for that.

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  • james – here’s some simple economics – It has everything to do with economics and everything to do with house prices.

    no predictions here to confuse you, just clear observation of history

    When the central banks create money out of thin air, they do not create the interest. They could, but they choose not to.

    Consider the implications of this over three hundred years if you can and let us all know what you come up with please.

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  • malct – no, economics is a science. Scientists observe and then theorise. These theories can be tested with falsifiable predictions.

    s2r1 has a graph that leads him to a theory and then he fits it to what he wants to see. He refuses to make falsifiable predictions, so his ‘theory’ can’t be tested. His belief system is therefore an article of faith, something to come to a belief in if one wants to.

    It is not economics.

    It has nothing to do with house prices.

    s2r1 did let one falsifiable prediction slip. Gold at $1500/oz at the end of June. I look forward to proving him 100% wrong.

    Emperor, you have no clothes.

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  • As for – “Consider the implications of this over three hundred years if you can and let us all know what you come up with please”

    Here I call Adam Smith, Malthus, Ricardo, John Stuart Mill, Keynes, Hayek, Friedman and all those ‘mainstream’ economists malct and s2r1’s poxy little crackpot theories disagree with.

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