Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
Stock Market Calm Before The Storm - 20th Oct 17
GOLD Price Creates Bullish Higher Low - 20th Oct 17
Here’s the US’s Biggest Vulnerability in NAFTA Negotiations - 20th Oct 17
The Greatest Investing Lesson Learned from the 1987 Stock Market Crash - 20th Oct 17
Stock Market Time to Go All-in. Short, That Is - 19th Oct 17
How Gold Bullion Protects From Conflict And War - 19th Oct 17
Stock Market Super Cycle Wave C May Have Started - 19th Oct 17
Negative Expectations, Will the Stock Market Correct? - 19th Oct 17
Knowing the Factors Affect your Car Insurance Premium - 19th Oct 17
Getting Your Feet Wet In Crypto Currencies - 19th Oct 17
10 Years Ago Today a Stocks Bear Market Started - 19th Oct 17
1987 Stock Market Crash 30th Anniversary Greatest Investing Lesson Learned - 19th Oct 17
Virgin Media Broadband Down, Catastrophic UK Wide Failure! - 19th Oct 17
The Passive Investing Bubble May Trigger A Massive Exodus from Stocks - 18th Oct 17
Gold Is In A Dangerous Spot - 18th Oct 17
History Says Global Debt Levels Will Lead to Another Crisis - 18th Oct 17
Deflation Basics Series: The Quantity Theory of Money - 18th Oct 17
Attractive European Countries for Foreign Investors - 18th Oct 17
Financial Transcription Services – What investors should know about them - 18th Oct 17
Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures - 18th Oct 17
Surge in UK Race Hate Crimes, Micro-Racism, Sheffield, Millhouses Park, Black on Asian - 18th Oct 17
Comfortably Numb: Surviving the Assault on Silver - 17th Oct 17
Are Amey Street Tree Felling's Devaluing Sheffield House Prices? - 17th Oct 17
12 Real-Life Techniques That Will Make You a Better Trader Now - 17th Oct 17
Warren Buffett Predicting Dow One Million - Being Bold Or Overly Cautious? - 17th Oct 17
Globalization is Poverty - 17th Oct 17
Boomers Are Not Saving Enough for Retirement, Neither Is the Government - 16th Oct 17
Stock Market Trading Dow Theory - 16th Oct 17
Stocks Slightly Higher as They Set New Record Highs - 16th Oct 17
Why is Big Data is so Important for Casino Player Acquisition and Retention - 16th Oct 17
How Investors Can Play The Bitcoin Boom - 16th Oct 17
Who Will Be the Next Fed Chief - And Why It Matters  - 16th Oct 17
Stock Market Only Minor Top Ahead - 16th Oct 17
Precious Metals Sector is on Major Buy Signal - 16th Oct 17
Really Bad Ideas - The Fed Should Have And Defend An Inflation Target - 16th Oct 17
The Bullish Chartology for Gold - 15th Oct 17
Wikileaks Mocking US Government Over Bitcoin Shows Why There Is No Stopping Bitcoin - 15th Oct 17
How to Wipe Out Puerto Rico's Debt Without Hurting Bondholders - 15th Oct 17
Gold And Silver – Think Prices Are Manipulated? Look In The Mirror! - 15th Oct 17
Q4 Pivot View for Stocks and Gold - 14th Oct 17
Gold Mining Stocks Q3’17 Preview - 14th Oct 17
U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold - 14th Oct 17
Yuan and Gold - 14th Oct 17
Tips for Avoiding a Debt Meltdown - 14th Oct 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

Distorted Financial System Expect Deflation, Inflation And Hyperinflation

Stock-Markets / Global Financial System Apr 23, 2015 - 03:02 PM GMT

By: GoldSilverWorlds

Stock-Markets

Which ‘flation will it be? Deflation or inflation or both? Looking at the BIG PICTURE …

CRB: Deflationary pressures are clearly seen in commodities prices, which are currently at 2009 levels, at the depth of the collapse, as evidenced by the CRB (a proxy for commodities).


Other indicators are confirming this deflationary trend.

The Baltic Dry Index, which measures the cost of global maritime transport, is below crisis levels (2008/9, 2012 crisis), and falling.

Dr. Copper, the indicator of global economic activity and health, is flashing a similarly unhealthy signal; prices have created a huge descending triangle.

Countries experiencing deflation and inflation: Further confirmation of deflation can be seen in the chart below which shows an increasing number of countries experiencing deflation.

Governments and central banks are so indebted that excessive debt has destroyed their economy’s ability to generate wealth. The marginal utility of paper money is truly sinking, as shown by the fact that in 1950-60 every US$ of debt created 2.41 US$ of growth while today only 0.03 US$ is created with an additional dollar of debt.

The velocity of money is collapsing and shows no sign of reversing.

The above charts show that the last six years of monetary expansion have produced no significant positive impact on the real economy.

While commodity prices and economic activity have been falling, equities and bonds have been rising due to that monetary expansion.

All these signals are firmly laying out the direction: we are heading to the endgame. Note that the timing of the collapse is impossible to foresee, but the direction is clear.

Conclusions

  1. Quantitative Easing, artificially low interest rates, “printing money” and other such monetary policies have seriously distorted our financial systems.
  2. Asset bubbles, mal-investment, economic and financial distortions and other craziness such as negative interest rates on sovereign debt have resulted from those monetary policies.
  3. Deflationary forces in commodity prices have been dominant for several years. See charts above.
  4. However, inflationary forces in bonds and equities have been dominant for over six years. See charts above.
  5. Based on the massive increase in global debt of over $50 Trillion since the 2008 crisis, the often stated intention of central banks to create inflation (they fear deflation in bonds and equities), and the need for government to inflate away their debts, we can be assured of more monetary and price inflation in our future.
  6. But we can also be assured of more price deflation in our future – the consequence of asset bubbles, mal-investment, and the inevitable corrections.
  7. So we should expect more inflation (thanks to “printing money” and massive debt increases) and more deflation as the bubbles collapse. The correct answer to the inflation/deflation question, in our opinion, is both.
  8. Since US (and other) equities have been levitated into bubble territory during the past six years and bonds have climbed to generational highs, we should expect considerable deflation in those “paper” assets. Central banks, on behalf of the financial elite, will fight those deflationary forces with more “money printing” that will eventually fuel inflationary increases in commodity prices, which have been depressed for several years.

The End Game

Expect deflationary forces to eventually overwhelm the stock and bond markets, probably soon, and expect the deeply over-sold commodity markets to move higher.

Depending on the magnitude of additional “money printing” that the world’s central banks will unleash upon the global financial community, we could see hyperinflation in several countries within a few years.

Why?

Central banks will try everything to avoid or reverse a deflationary collapse in paper asset markets because a deflationary collapse is “game over” for their credibility, governments, and politicians. They will print and print more and continue to fuel the inflationary boom, and … the bigger the boom, the larger the distortions, and the deeper the collapse.

Expect more distortions, a correction in the equities and sovereign debt markets, and significant increases in the gold and silver markets as people search for safety in a dangerous sea of devaluing currencies and erratic stock and bond markets.

Courtesy of Global Gold Switzerland. Subscribe for future updates on http://www.globalgold.ch. To read more about wealth protection by holding physical gold outside the banking system, please visit http://welcome.globalgold.ch/physicalgold and request an investor kit for free.

Source - http://goldsilverworlds.com/economy/expect-deflation-inflation-and-hyperinflation-in-this-distorted-financial-system/

© 2015 Copyright goldsilverworlds - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife