All Your Savings Belong to Debt

 

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  • #8630

    ashvin
    Participant

    The great myth of the last few decades is that people can establish sustainable savings by investing in other people’s debt. That is how relatively as
    [See the full post at: All Your Savings Belong to Debt]

    #720

    el gallinazo
    Member

    “As a whole, the post war baby boomers and their immediate forebears are relatively well placed, with gold plated pensions “

    I I owned one of those pensions, I would be busy scrapping off the gold plating and burying it in my back yard.

    #723

    Supergravity
    Participant

    Also, since our contemporary money is a debt derivative leveraged off bankable assets at some absurd ratio, these assets cannot be liquidated in mass without collapsing the money supply and depressing the price of those assets.
    This monetary system yields fractional reserve assets which cannot be fully redeemed during deflation, one asset leveraged on another, is that right?

    #725

    ashvin
    Participant

    Supergravity,

    Yes, that is typically the near-term progression of a collapsing debt system. Physical currency in your possession ends up preserving purchasing power the most effectively during these years (as well as paying down necessary debts). Eventually, even the currency is consumed by the black hole, after enough debt is deflated and enough confidence lost due to government spending/printing. The UK is a tricky situation, because their economy is extremely weak right now, their private and public debt levels are enormous and they are already starting to feel some pressure on its AAA sovereign rating. Along with France and Austria, it was just put on negative outlook by Moody’s, which means it could be downgraded in the next 1-1.5 years.

    TelegraphLiveBlog wrote: 23.10 In a statement, Moody’s said the key drivers of the ratings action on the United Kingdom were:

    1.) The increased uncertainty regarding the pace of fiscal consolidation in the UK due to materially weaker growth prospects over the next few years, with risks skewed to the downside. Any further abrupt economic or fiscal deterioration would put into question the government’s ability to place the debt burden on a downward trajectory by fiscal year 2015-16.

    2.) Although the UK is outside the euro area, the high risk of further shocks (economic, financial, or political) within the currency union are exerting negative pressure on the UK’s Aaa rating given the country’s trade and financial links with the euro area. Overall, Moody’s believes that the considerable uncertainty over the prospects for institutional reform in the euro area and the region’s weak macroeconomic outlook will continue to weigh on already fragile market confidence across Europe.

    #730

    Patrick
    Member

    I’ve got two words for you: hyper hypothecation (or is it one?) Regardless, the giant inverted pyramid that is financial wealth–as opposed to real wealth–is teetering on the brink right now. When it collapses there won’t be anymore savings, especially in Britain where the “city” has no constraints on how far out “assets” may be leveraged.

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