Wednesday, December 30, 2015

The Great Deflationary Collapse Continues........A MUST READ!

The Great Deflationary Collapse Continues

There's simply way too much debt in the world. At more than $200 trillion of official total global debts — there is simply no way printing money could offset the deleveraging process that must occur.

Simply put, $3 trillion of Fed money printing, combined with another $2.4 trillion from other central banks over the past several years — a total of $5.4 trillion of printed money — is merely like throwing a coin in the middle of a lake and expecting a tsunami of inflation. It's not going to happen.

Combined, all the central banks of the world would have to print far more than $200 trillion for hyperinflation to ever strike.

To make matters worse, the deleveraging that started with the real estate crisis of 2008-09 has barely gotten started.

Quite the contrary, the total global debt burden has gotten worse, much worse. Since 2007, government debt has grown a whopping $25 trillion, more than $3 trillion per year.

Total global debt has mushroomed $57 trillion since 2007, more than $7 trillion per year.

Combined with austerity programs rammed down people's throats in places such as Europe and Japan, total global debt to GDP has increased an amazing 17 percentage points since 2007.

Some of the most indebted countries are absolute basket cases: Japan, debt to GDP: 517%. Spain, 401%. Germany, 258%. And the U.S., with official debt to GDP at a whopping 269%.

I say "official" because all the figures above are gathered from reliable statistical sources and do NOT include the effect of securitization, leverage upon leverage, and shadow banking, which exists even in the U.S.

Add in a rough but conservative estimate of another $200 trillion in unofficial debt, and you have a global economy getting crushed by over $400 trillion of debt, something that can never turn out to be anything but deflationary!

Europe was, is and will be the biggest threat to global growth and the biggest force behind deflation.

Europe's problems began way back in 1998 with a half-brained attempt to create a United States of Europe with a single currency.

A currency that did not have the proper banking or reserve infrastructure in place to work.

A currency that forced 19 different countries and 24 different official languages into one label …

And a currency that made it way too easy for weaker economies to join the Union, borrow loads of money at low rates, setting the stage for the collapses you are seeing now in countries such as Greece, Spain, Portugal, Italy, and soon, even France.

The single currency experiment in Europe is the most ill-conceived economic/social experiment of all time. Europe is crashing and burning.

The attempted manipulation of the monetary systems there, of the cultures, of the different peoples and their traditions, their individual sovereignty and more …

Has caused most of the problems you are seeing today, most of the deflation. And it has also set the stage for civil wars and even the potential for international war as entire societies and cultures break apart as Germany and Brussels continue to insist on austerity and holding the Union together.

By 2020, the year war cycles peak, a short five years from now, you will see Europe torn apart at the seams, the euro fail as a currency, wars break out between member countries, and even secession movements succeed within countries.

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