The world is heading towards an economic depression. A depression we are not going to leave. Trade deficits and over-borrowing destabilizing have created an economic situation that can only result in economic collapse.
In the past, this was not possible. On average was global trade balanced. But when the Gold standard was completely abolished it was possible to run deficits. Which is handy for politicians and other people who cannot balance a budget. It is a step where we could have not taken, we can now say that enough is enough. All it takes is reintroducing the Gold standard.
All came to an end in 2007/2008. The private sector was no longer keeping the bubble going on. So what happened. The government took over the role of the debtor. Unfortunately, no one asks the question of how it is going to be repaid.
The money creation happened by buying up newly issued government bonds at artificially low-interest rates. You can stay that this money creation needs to lead to inflation. Maybe even hyperinflation. But this didn’t happen. Why? Global trade.
In Asia and Africa are people happy to work for 5 USD a day? The created money was going around the world. Deflationary pressure comes on the USA economy. Prices went down. So to put it in other words. Every time you shopped at a discount store, Trader Joe, ALDI, WallMart you added pressure down.
So what are we heading to? Well, we can have a look at Japan. Japan had all happening. The bubble popped and for 30 years the country is going nowhere. Monetary stimulus, government spending, protectionism. This is exactly the world we are heading to.
So what is best for you to do right now? While people are terrified it is best to simply be prepared for it. When the mutated COVID virus returns, like Sars mutated to Mexican flu which mutated into Coronavirus, are you prepared? We will, once again simply close the world economy. Driving everyone out of work and out of assets.
First, you need to understand that the government manages the macroeconomy. When money is created the economy or the financial markets, are going up. So what would happen when governments don’t respond? When they didn’t spend billions. Well, it protects us from the complete collapse. How much money will governments pump in the economy? When enough is printed and bought into the economy they can try to avoid the complete collapse.
A collapse with no one paying rent, a collapse with no one paying credit card debt, a collapse with small and medium-sized enterprises going down. Large corporations are collapsing. Banks are collapsing and with it destroying your savings.
But when governments are no longer stimulating this will happen.
But with the stimulus, something crucial changed. Who is bailing out the FED? Do you remember the implosion of the repo market? A market that is kept alive by the FED. But who is keeping the FED? Well, it is the USA government and all other governments are just bailing out the local central bank.
In the past, this was not possible. Currencies were covered by Gold. But this is no more the case. Currencies are worthless.
We have the ongoing deflationary pressure on the markets. Governments need inflation to inflate the debt away. A good method is to end the global economy. By simply pushing prices up. The deflationary pressure from half a century could be undone.
Bankrupt governments get the disaster they are hoping for