Wednesday, November 3, 2010
The Final Countdown
It is strangely calm, considering that the Great Doomsday machine is about to spurt out its message to the world in less than 94 minutes.
QE2, it’s called, but I think I will go with Mr. Becks name and just call it the “Weimar moment”. Why do I say this? And why isn’t it fringe to discuss collapse-style inflation anymore? Because if it pans out as planned, the Federal Reserve will monetize the entire US budget deficit the coming year. That comes on top of a previous sweet trillion thats lying around at the US commercial banks, called excess reserves. This is the final shoe to drop. Do this, and you get rampant inflation AS WELL AS collapsing banks and governments. Maybe those men in black suits already visited the Chairman, no?
Yet it is remarkable that probably 99.9% of the population in any country do not know what is going on. Since 1971, the destruction of civilization has gone into overdrive. Since then, we haven’t had any money. We’ve had paper. And while it may seem like it was solved in the early 80′s by Paul Volcker, it wasn’t. He stopped inflation – yes. But Greenspan quickly restarted it, and what is worse – the US government and governments worldwide realized how much they could borrow when inflation was subdued. After that, they realized that if they faked consumer price inflation (CPI) statistics, they could both have the cake and eat it. We have now reached peak debt+taxation in the Western world. What remains? Cutbacks, depression and misery. We have borrowed 20 years of future wealth and spent it. It’s payback time.
Our political system does not allow for payback, though. Instead, enter collapse. Enter wealth-destruction. At the height of Weimar hyperinflation, despite zeroes constantly being added to the currency, the entire money-supply was worth only a seventh of what it was before it started, when measured in gold. If you think about this, you realize what it means, in terms of collapsing savings rates, collapsing capital formation, and collapsing society. Welcome to the second age of moral collapse. Welcome, after 80 years since last time, to the Weimar Cabaret. Possible exits include war, civil unrest, famine, infrastructure collapse, crime explosions, and all the other things no one teaches you could ever occur in the Panglossian western world. Batten the hatches, and we’ll see you again in a generation or so.