Tag Archives: savings

On foreclosures fraud, QE and coming new spiral of deflationary forces.

There isn’t anyone at the (nominal) helm who didn’t understood from the very git-go that the only possible way out was a resumption of organic credit growth. All the fraud, lies, deceit, corruption and violation of centuries old jurisprudence were justified (at least in their minds) by national security concerns.

The power-elite have always know that there was a black whole comprised of many different elements, one of which being title insurance, related to challenges in re-securitizing the ponzi. More importantly, they knew that they had at most two years in which to blow another bubble, anywhere/any kind, to get the herd moving once again in a speculative fashion.

The Lowdown on Deflation.

Deflation is the contraction (reduction) of money and credit. It occurs when the economic system is carrying too much debt to be supported by the level of income generated by economic activity. It occurs because too much debt has been incurred to create unproductive assets that don’t generate income. Deflation is a corrective process, it’s simply the market (you and I) not being able to service debt, so we must forfeit.

Does the world have the courage to deal with its debts?

Quite a sensible article from an MSM source, Telegraph of UK, that aptly discusses the real state of things on the Central Banks’ front of deflationary fighting and suggests several solutions out of this global economic crisis. I, however, do not agree with the proposed solution ouf of indebtedness problem that we the people should pay down the debts as the author puts it “very slowly, by sweat and toil”. This contradicts the very natural economic self-interest of the majority of hundreds of millions of people that were either duped into borrowing by financial wizards or had to do it as they saw no other way of being able to afford things as the wages stagnated for decades. No, I propose to default on all the debts, walk away and let the owners of this world financial system have it. I in essense call for a debt revolt, stick it to them and let them be crushed under their own debts.

How did the US economy get itself into deflation and why we are going through a deflationary crash.

One important aspect of this mechanism that is seldom mentioned is that the modern debt inflation implies that debt is never payed back and that every year it increases by at least the amount of interest. That means that millions of borrowers simply borrow more to pay off previous principal + interest as dutiful debt slaves they are. That is why debt levels are roughly doubling every decade or so. But what happens when debt growth stops? It is not just that nobody is taking on more debt, the actual principal is being destroyed either via defaults or pay downs. That is, if level of debt is staying constant that means that the principal is actually shrinking by the rate of interest, roughly speaking. This is very deflationary in and of itself. And this is what the privately owned Federal Reserve statistics are showing with regards to most privately held debt in USA. More precisely the consumer and other private debt outstanding is actually shrinking since the beginning of 2009 according the reports that are regularly published by this privately owned Federal Reserve and can be verified on its own website.

The Power Of The FED And Deflation.

This article from GoldSeek makes good points and explains quite clearly why US is going to stay in deflation much longer than most people and so called “economists” think, and why the privately owned FED is unable to reinflate the debt bubble.

Loans Shrink as Fear Lingers.

The banks are reluctant to lend and consumers, the creditworthy ones, are reluctant to borrow in this depressed and worsening economic environment. And finally, after years of credit frenzy, both banks and consumers are acting responsibly. The deflation has a strong disciplining effect on economic agents and that is what is needed to restore the bubble devastated global economy.

Black Swan Capital on Deflationary Spiral.

Deflation = Massive Government Stimulus (eating private stock of capital) + Increases Money Supply + Plunging Monetary Velocity + Huge Reserves + High Savings + Tight Lending Standards + Private Deleveraging of Bad Paper + Global Tax of Rising Commodities Prices + Rising Unemployment + Obliteration of the Export Model

CPI deflation coming to USA.

CPI deflation coming to USA. Savings need to be replenished and savers need to be rewarded not punished. Responsible behavior builds nations, reckless one destroys them. Reckless spending and lending and bubble blowing what got us into this mess in the first place, so recklessness cannot possibly be the solution.