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Heads A Deflationary Implosion - Tails A Hyperinflationary Depression...

Economics / Global Economy Jun 18, 2012 - 08:41 AM GMT

By: Clive_Maund

Economics

The acute global economic crisis today is the direct result of the continued willful obstruction and overriding of the normal checks and balances that should operate within a capitalistic system of commerce. This interference has been perpretated by powerful banks and governments acting in collusion, for reasons of profit and power. At every instance in recent years when it looked like the economy was slipping into a necessary recession they have assumed a godlike role and stepped in to head it off.


These periodic recessions are necessary to prevent excess debt building up within the system, but the banks liked the ever growing debt, because it meant ever bigger profits for them as they created money out of thin air and then lent it to everyone and everything and raked in massive interest payments. Being immensely powerful they exerted more and more control over governments and succeeded in bending them to their will, culminating in them "coming out" by actually maker bankers into Presidents and Prime Ministers, as has recently occurred in Greece and Italy. So there you have it - the world is now controlled and governed by bankers. The problem with this situation is that their objectives, which are the accumulation of ever greater profit and power, are at odds with those of the population at large.

The reason that things are coming to a head now is that global debt has grown to such gargantuan proportions that the parasites, the banking elites, are now killing their hosts, which is everyone else - Federal governments, State governments, businesses and ordinary citizens. Even the parasites realize that if they kill their hosts, their profit potential is going to be reduced, which is why they have clamped interest rates in interest years - the hosts are totally maxed out on debt and the idea of the interest rate controls is to allow them just sufficient resources to survive, while siphoning off as much profits as possible from their labor. To put it in a nutshell, the banks are farming the world for huge profits, and reducing the global population to a state of feudal serfdom - rather like some sports shoe companies have done with their laborors in places like Indonesia.

The situation has now become dangerously unstable, because everyone and everything is maxed out with debt, which we should not forget is frequently leveraged to far greater extremes via derivatives, and in many instances victims have gone way beyond their capacity to repay. This can only mean one of two things - default or repayment or servicing of debt in devalued coin. In such circumstances it only takes some spark - a catalyst - to bring the whole system crashing down, what we might term a "gigantic global reset", which is actually necessary and is going to happen as a deflationary implosion, or happen later as a result of accelerating QE via hyperinflation and its resulting economic wasteland. That catalyst is Europe. The discordant buffoons running Europe have created such an unholy mess that it is unravelling at extraordinary speed. Realizing that their creditors are not going to be able to repay them, the banks are scrambling to push the bill for their excesses onto governments and taxpayers via bailouts and austerity measures, which they are able to do because of the power they wield over politicians, many are who are severely compromised. The citizens of Greece and Spain don't need to be told that a deflationary implosion is already underway in their countries, with a vicious circle of falling productivity and reduced tax revenues well underway that is getting worse and worse, so the austerity measures look set to backfire on the bankers and their political representatives. If these austerity measures and associated deflation spread we are looking at a global depression, since Europe is the world's biggest economy. European leaders, which is to say Central Bankers, are well behind the curve with this and need to get cranking the QE money pumps without delay, in order to put off the onset of depression. This will buy time, and is thus the most attractive option for them, but will still lead to a collapse that is first preceded by hyperinflation.

What is set out above is "The Big Picture" of the world economy. The world needs a long and deep depression in order to purge itself of excess debt and the distortions, inefficiences and misallocation of capital resulting therefrom, and it is going to get it, QE and hyperinflation first or not. All the daily noise in the media about the Greek election, or any elections, or the hyped up Fed meetings and pronouncements, or what Mrs Merkel thinks and says etc is just irrelevant fluff, detail and distraction for the unthinking masses, and ultimately is not going to avert the grim outcome of this appalling mess. Not until all this debt is repudiated and the world has gotten the usurious banking system off its back, with its tentacles reaching deep into government everywhere, will the world be able to move forward again. Then at long last we will be able to hail the return of true capitalism and the free market.

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2012 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

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