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TITLE: "IMPORTANT GOLD CHART: Every Investor In The West Needs To See"
dtd 23 March 2015
The Western powers are in serious trouble.
The once great British Anglo-American Empire, the envy of the world, now resembles more of a phony Hollywood Set backed by a mountain of worthless derivatives and debt.
The only thing holding up the Western Financial Empire’s House of Cards is faith that market will continue to believe increasing debt and monetary printing are practical solutions for long-term prosperity.
originally posted by: zvezdar
inflation has hit, but it's in asset price and ultra-luxury goods for the most part. The trick is that those who are closest to the point of money creation get the benefit of first use (known as the Cantillon Effect in economics). Asset classes around the world that benefit from the creation of debt have increased significantly, as well as the luxury goods that are bought by those who profit. There are bubbles in real estate, bonds and stocks all over the globe. These are the asset classes that can be most separated from the economy. You have price deflation in commodities, oil, gas etc...those goods where real demand plays an important role in setting price (ie the real economy is deteriorating, the debt fuelled false economy is bubbling).
The reason that reported inflation is so low (aside from the shenanigans involved in coming up with the number, which has the effect of reducing the reported inflation) is because the new money doesnt have the velocity necessary to then wash through the economy, it gets caught up in banks at the end of the day or as reserves on a central bank balance sheet. Banks have excess deposits on hand (last time I checked, JP Morgan had over $500bn....this is why the London Whale incident happened), and money isnt bidding up the price of goods and services, only rentier assets.
When the assets that have been purchased start falling in value, suddenly the money created is not backed by anything and the sale of assets doesnt pay off debt. The issuers of the debt take huge losses, or must be bailed out. This is why inflation is so important, and why deflation is demonised. The system collapses without inflation and increasing debt.