How can less earned money pay more debt repayment?
Boom economies produce excesses
Final chapter of biggest real estate shakeout
Our choice determines the future
Bubbles always burst
Debt has grown, due to massive deficit spending programmes that have destroyed all financial obligations. So there is no other way out of this misery than to abolish all paper currency!
Until people wake up and recognise what is happening, the world will never be able to end this ridiculous game.
Mr. Market is having his say. He always does. Underneath the fake market, created by artificial intervention, lies a market of real buyers and real sellers.
At some point, supply exceeds demand. Then the smartest businessmen get worried. They quietly make their way to the exit. Then the next smartest ones notice that the geniuses have left – and they too start heading for the exit. Then the short sellers come. Prices fall. And soon the market is in free fall.
It happens all the time. Bubbles burst without question. It happened with the dotcoms, with housing, with subprime mortgage companies, with oil and with the oil debts. We are now in what appears to be the last gasp. It may go on for a while … even go a little further. Often a boom of this magnitude needs an all-consuming, last-stage, a ‘super-duper‘ before it explodes!
How can less earned money pay for more debt repayment?
It is a guess – just a guess – that another big shock may follow before the final peak of the equity bubble is reached. – Expect a frightening fall – a quick response from the Central Banks – and then the great race to ruin will have begun, i.e. entered its ‘Final Lone Round’.
Without more real income growth, the huge debt cannot be paid off. So, in the end, everything will go down. How can less money earned produce more money to pay the debt that should have led to higher incomes?
You can ask the same question of the folks who bought $500 billions of subprime debt from the energy sector, or those who bought €1 trillion of European peripheral government debt. Or “investors” in $4 trillion of emerging market debt? The answer is the same everywhere: they can’t do it!
Almost every developed economy has followed the same path from debt to more debt.
“The developed world added $50 trillion to its debt burden in the first eight years of the 21st century. As a result, the debt-to-GDP ratio has risen from 260% to 390%.”
Households have tried to shake off the burden of debt. But government and businesses have borrowed more than ever. Now the debt-to-GDP ratio is 415%, adding another $15 trillion. Logic, mathematics and experience tell us that too much debt – not supported by higher real incomes – will collapse on the heads of the people below. When? That is the only question that cannot be answered now.
But here is an overview of what to expect in the coming months, as a result of the above facts:
- The stock market will fall sharply and may eventually reach 3,300 – 3,800 before another prolonged bull market begins.
- Unemployment will rise to 15% or more as the labour pool continues to shrink and companies prefer people with experience, not newcomers.
- House prices will fall again, by as much as 50%…. the so-called “recovery” will abate faster than expected as mortgage rates rise and the wrong set of investors – also known as speculators – lose interest in the market.
- With continuing demographic decline, economic problems and crisis, many states and municipalities will be short of income, especially at lower levels.
- Faced with huge revenue shortfalls, government deficits are going up.
- The crisis in Europe is only getting worse as the housing bubble bursts, more banks are collapsing in every Member State of the European Union, which are also sliding over the demographic cliff and declining rapidly, with Germany the biggest surprise.
- Despite the lessons learned in 2008, mortgage companies and financial institutions have started offering low-interest promotional loans with no repayment obligation, riskier investments, which will lead directly to a new and final financial crisis, this time without a bailout.
Research suggests that the effects of these events will reach a climax quite soon. Before that happens, “the market will tend to rise. Many investors will make the mistake of thinking that the recession is over – that markets will be buzzing with life again.
Boom economies produce excesses
All boom economies have produced excesses, whether it is excessive spending and debt by homeowners caused by the misguided belief that house prices will go up forever – developers building too much, hiring too many people with the belief that their market will continue to grow forever – “or twenty-somethings and thirty-somethings making two, three and ten million dollars a year moving money on Wall Street”.
The biggest credit bubble in modern history is causing Deflation, not Inflation, which is on the horizon. Here is why deflation – not inflation – will be the order of the day.
History shows that severe recessions and depressions have three phases;
- A severe crash, as we saw from late 2007 to early 2009, when the Dow fell 55%, from 14,280 to 6,440.
- A market recovery, stimulated by renewed economic activity as a result of government stimulus measures. That’s where we are now.
- And a final crash, deeper depression, and a deflationary phase lasting several years.
Most of us have experienced some kind of deflation in recent years, especially in wages. Once credit bubbles go to extremes, they always burst and deflate – resulting in a sudden tightening of the money supply (credit) – followed by deflation as massive debts are written off and financial wealth disappears as markets crash.
It happened in the 1930s. It happened again in Japan. Because no government can stop that kind of overwhelming debt with any kind of stimulus without making its currency worthless. Which will probably happen this time as this economic cycle continues to unfold.
Final chapter of biggest real estate shake out
The world is about to see the final chapter of the biggest real estate shake out in history. One of the classic rules of bubbles is that they usually deflate to at least the level at which they started – and often a little lower.
That means that “house prices must fall 55% to 65% from their highs in 2005. House prices could fall back to 2000 levels, or even 1990 levels. As a result, as many as half of the homes would fall into “negative equity” – “which will again increase the number of defaults and foreclosures.”
These economic truths combine to form the components of the perfect storm raging through the economy today.
The last of the greatest generation of spenders in history – the affluent baby boomers – are leaving their prime spending years behind…. Deflation will increasingly become the dominant trend as the economy slows and debts fall apart….
The consequences of these events all lead to one thing: a severe tightening of credit – and the write-off of tens of trillions in loans and claims. That means less money in the system – less spending – less demand – falling prices – and ultimately: Depression and deflation.
This is the reality of today’s economy – and the likely path it will take, based on examination of historical and empirical data.
Hundreds of years ago, people travelling accepted banknotes called traveller’s cheques because they believed the banks that issued them had a good reputation. Once these cheques were presented to a local bank, notes were returned to them in the local currency, with no central authority to authenticate them. But today, people do not think that way. They believe that a government is needed to ensure the value of money.
Real money, however, is based on natural characteristics, such as being intrinsically valuable, durable, divisible, uniform, portable, scarce and widely accepted. These characteristics are essential for a medium of exchange to be accepted as a fair standard for payments, which is not the case with currencies issued by Central Banks today.
Unlike central bank currencies, gold has always been valuable, whereas today’s debt money is someone else’s burden, backed by unreliable promises that ultimately cannot be kept.
Money backed by debt is a crime against humanity. It was invented by Mayer Amschel Rothschild and is based on the fact that money is a flow of energy – also known as currency – generated from the combination of raw materials, goods, services, and human labour.
The Rothschilds developed a global slave labour system by issuing debt money through their privately owned central banking system infiltrated in every country. Because the flow of money was designed to be funnelled back to them, this gave them a powerful opportunity to be the first to intervene in financial and economic control.
By controlling the flow of money and bribing governments, they have made their worthless debt money equal to the people’s energy money, which is a fraud of scandalous proportions.
By having this accepted, the Rothschild money changers have transferred the valuable energy of the people’s labour to themselves.
Money created out of nothing and backed by debt should not buy valuables, because it is a fraud. As long as the illusion exists that “debt money” has value, and we sheep continue to consent to this illusion by participating in it, we will not be freed from our debt bondage.
When people wake up and realise that most banks are not only bankrupt but corrupt as well, they will switch en masse to gold as a means of payment, just as they have done for centuries. Read more about it here.
Our choice determines the future
We have arrived at the most important crossroad in world history; our choices will determine the course of the future. On the one hand, the continuation of the Deep State power control structure is on its way to erasing our freedoms, as we can now see happening with the wearing of masks, social distancing and travel restrictions, designed to crush our morale and end our prosperity step by step.
On the other side is the creative termination of corrupt governments and politicians of the Deep State, leading us to prosperity, freedom and friendship.
This will be the most important collective decision we have to make at this time.
Soon we will see all paper and electronic forms of debt of wealth evaporate, levelling the playing field to implement GESARA with the new gold/asset backed monetary system known as the Quantum Financial System (QFS), free from any institutional interference.
It will be a completely new future for everyone on Earth, one built on truth, honesty, creativity, friendship and complete freedom.
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