Ok, let me help you know what to expect for our economic future. We are headed to a recession and hyper DEFLATION. Not inflation. You will hear FOX news tell everyone we will soon deal with hyper inflation and their reasons are that the Fed is printing a ton of money. It kind of makes sense except that this money isnt in the hands of the regular person, so all it really does is keep what is considered a healthy level of inflation. (We can get into why some inflation is good later if you want) But what the Fed is actually doing right now is hiding what is reality. And that is that we are in a recession, and that the we should be struggling with hyper deflation. The problem with deflation (because it looks great thinking about the dollar having more buying power), but where the economy is hit is actually on the lending side. Bank lending drops since borrowing money makes less sense in regards to the real cost. This is because the loan would be paid back with money that is worth more than it is now. The more indebted you are, the worse your condition since your salary will likely decline while your loan payments remain the same. Unemployment rises and wages decline as demand drops and companies struggle to make a profit. This has a compounding effect throughout the entire economy. And honestly as much as this is what effects the average person the most, what would wipe out the economy is the derivatives market. Now if you imagine that our nation debt is big, being about 17 trillion dollars, the Bank of America has 75 trillion dollars in the derivatives market. Derivatives are highly volatile financial instruments that are occasionally used to hedge risk, but mostly used for speculation. They are bets upon the value of stocks, bonds, mortgages, other loans, currencies, commodities, volatility of financial indexes. So with just one bank having 4 times as much debt as our whole country, just imagine what would happen when things go south, people cant pay their obligations, and this whole gamble market collapses. This is what would cause a total reset for the economy. And not just ours, this would wipe out the worlds economy. Get your debt paid down, get your wealth into hard assets, like owning your home and owning silver, and you will be better off when this happens.
Posted on: Mon, 22 Dec 2014 16:15:22 +0000
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