Debt Rattle May 29 2014: The New Normal is Negative
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Arthur Rothstein President Roosevelt tours drought area, Bismarck, North Dakota August 1936 No, the nonsense will not stop, and neither will the tortu
[See the full post at: Debt Rattle May 29 2014: The New Normal is Negative]Its time to change the numbers. If the numbers are not positive then they should not get used.
Where are the ladies of the night when you need their numbers.
Frederick Soddy on Endogenous Money & Debt-Deflation
https://monetaryrealism.com/frederick-soddy-on-endogenous-money-debt-deflation/
Although I have been following this blog for years, I just registered and posted my first comment yesterday. Thank you to Raul and Nicole for your tireless efforts.
I have a question about today’s post, and specifically the words: “that is fully due to QE, which won’t last forever” — my question is “Why won’t it last forever?” As I see it, the only reason that QE is being cut back is so that the Fed has at least one arrow in its quiver (more QE) when the next wave of loan defaults comes rolling in. The response of course will be QE ad infinitum until the system breaks. The System MUST grow, and if it cannot grow in real terms then it WILL at least grow in nominal terms, and let the chips fall where they may when the real and the nominal go their separate ways. Austerity leads to revolution and violence. QE is the path of least political resistance. Yes, in real terms we are at the end of growth. But in nominal terms we are all on the road to becoming trillionaires.
Boogaloo, you largely answer your own question. Aside from that, QE must of necessity start feeding on itself, Japan today is a good example. Soaring prices combine with plunging consumer spending. Like in the asset markets, bonds and stocks rise at the same time.
Raul, thank you for the response. What then is the end game? I always thought of your site as warning of a deflationary outcome. That also seems to be the message that others get too. By a deflationary outcome I mean a deflationary crash -> civil unrest -> war? -> reset to a no-growth economic system. But in a hyper inflationary sequence it could go deflationary crash -> civil unrest -> currency destruction -> reset to a no-growth economic system with a monetary reset too (from a debt based system to an equity based system). Although these sequences are very simplistic and there are many variations, I think it is foregone conclusion that the latter theme is the 99% likely outcome. I think Japan only survives for now because the entire global system is interconnected with a lot of duct tape. Do they become the first domino? Or does the whole system come down together?
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