Thursday , 28 March 2024

The Global Economy is Doomed to Implosion & These Charts Explain Why

Though the complexities may appear endless, the global economy’s coming implosion is really fairly easy to understand: here are four charts which do the heavy lifting. Words: 445

So says Charles Hugh Smith (www.OfTwoMinds.com) in edited excerpts from his timeless original article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.)

Smith goes on to say, in part:

It boils down to these basics:

  • When money is…[expensive] and difficult to borrow, then productivity and capital accumulation are encouraged [and, conversely,] speculation, malinvestment and debt-based consumption are discouraged.
  • When money is “free” (zero-interest rate policy) and liquidity is unlimited, then the opposite conditions hold: speculation in risk assets, malinvestment and debt-based consumption are all encouraged, and productivity and capital accumulation are heavily discouraged.
  • When debts exceed the value of the underlying assets, then the only way out of the Tyranny of Debt is to write off the debt on both the borrower and lender’s balance sheets, wiping out their capital via liquidation and bankruptcy.
  • When “extend and pretend” policies are pursued by…nations they are simply transferring the impaired debt from private hands to the taxpayers (public debt), crippling the economy with higher taxes and higher debt service.
  • When “extend and pretend” policies are implemented they necessitate heavy borrowing every year to prop up the status quo, which then push the Central State (or equivalent, i.e. the Eurozone) into an inescapable double-bind: either continue increasing public debt and cripple the economy with high taxes and high public-debt servicing costs, or let the financial status quo of “profits are private, losses are public” implode.

The first path leads to default, as the Tyranny of Debt cannot be masked for long, while the second path wipes out the Financial Power Elite which feeds the politicians.

Automatic Delivery Available! If you enjoy this site and would like to have every article sent to you then go HERE and sign up to receive Your Daily Intelligence Report. We provide an easy “unsubscribe” feature should you decide to opt out at any time.

Pass it ON. Tell your friends and co-workers about us! We think munKNEE.com is one of the highest quality (content and presentation) financial sites on the internet and our current readers seem to be confirming that. Visits have been doubling yearly and pages-per-visit and time-on-site continue to reach record highs.

Spread the word. munKNEE should be in everybody’s inbox and MONEY in everybody’s wallet!

Here are the charts. Note how the speculative economy created the illusion of rising wealth for the bottom 90%, an illusion stripped away by the Default Economy.

In essence, the Financial Power Elites profited immensely from creating this illusory wealth which gave the bottom 90% the false sensation that their declining earnings and purchasing power were being offset by the “magic” of asset bubbles.

Then, when the bubble popped, the Financial Power Elites transferred the impaired assets to the taxpayers, a process which is still underway. The politicos of both parties are complicit; behind the simulacra of toothless “reforms,” this process proceeds in myriad ways (Bank of America transferring toxic debt to Fannie/Freddie, etc.). Behind the smokescreen of conjuring a “wealth effect” to foster more consumption, the Fed’s purchase of Treasuries (QE2) serves this transfer-of-debt-to-the-public process.

This same process is playing out throughout the global economy: Greece, Ireland, the U.S., and eventually, in China when its monumental property bubble pops.

*http://www.oftwominds.com/blogjan11/why-financial-doom01-11.html  (To access the article please copy the URL and paste it into your browser.)

Editor’s Note: The above article has been has edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

Related Articles:

1. “Money Illusion” is Blinding You to Reality! Here’s How

Ways-to-make-money-1

Despite the practical impossibility of real comparisons we know perfectly well that the value of a dollar or a pound, shekel, rouble or euro isn’t what it used to be…This fact, however, doesn’t stop us from almost exclusively focussing on how much money we have today rather than what it can purchase for us: we think about money in nominal terms rather than real ones [- and that is what is known as money illusion. Let me explain.] Words: 873

2. Your Stock Market Gains Are Just an Illusion! Here’s Absolute Proof

investing1

In my opinion, the greatest threat to long-term and retirement investors is the wealth-destroying triple combination of monetary inflation, asset deflation, and inflation taxes. Fully understanding [these factors] is absolutely essential for financial survival because history shows us quite clearly that when all three of these major wealth destroyers are working together in the real world then conventional investing methods cannot withstand the destruction of investor wealth that occurs. [Let me explain why, then, your past and future stock market gains actually have been, and will continue to be, absolutely nothing more than a mirage – a cruel illusion that has and will continue to only benefit our governments – unless you develop a drastic out-of-the-box investment strategy that is radically different from anything that currently exists (or is in the public domain).] Words: 3456

3. Exposed: The Evolution of Fake Wealth Creation, Accelerating Debt Expansion and Inevitable Financial Implosion

Financial_Armageddon_3

Only in a debt-based money system could debt be curiously cast as an asset. We’ve made “extend and pretend” a quaint phrase for a burgeoning market for financial lying and profiteering aimed toward preventing the collapse of a debt- (or lack-) based system that was already doomed by its initial design to collapse. This primer will detail the major components and basic evolution of fake wealth creation, accelerating debt expansion, hollowing out of the economy, and inevitable financial implosion. Words: 1583