Hindsight is always 20/20 but I sure wish I had gotten sucked into this bubble five years ago, I would have made hundreds of thousands in real estate appreciation and the stock market. Instead I played it safe and betted on fundamentals, and I’m paying for it now. But I also understand that when the end finally does come, all of those financial gains will be wiped out. But if you could time it even remotely right you can make a lot of money – ride the bubble up, get out at some point before the crash and buy hard assets like gold. Of course we were all expecting an imminent crash 5 years ago, 10 years ago, and it never happened, just keeps on going up, all the while I’m slaving away at work watching my savings go nowhere or down year after year. Will it last another 5 years?
I am of the opinion that the Fed / ECB / whatever you want to call it, is in full electronic control of the stock market and and can inflate and hold it wherever they want, for as along as they want, and could do this indefinitely as long as the rest of the world remains standing. If there is a dis-inflationary crash, it will be done intentionally, just like it was in 2008 as revealed by the statistically impossible occurrence of 7’s in the markets at that time (the elites worship the number 7 because either they are Satanists, or they haven’t grown beyond Sesame Street – seems crazy but the evidence is overwhelming and Christine Lagarde openly talks about it).
There is only one trigger that will force a collapse – when the gold runs out. Analysts have been documenting the gold supply / demand imbalance for years now and wonder where it keeps coming from – it’s a mystery. But when the elites have finished their pilfering and the gold is all where they want it to be, then that’s when we’ll see it burst.
I also don’t think that after this crash there will be a massive lucid moment of public awakening to the truth and blame paced where it belongs squarely in the laps of the financial and political elites. Instead, just like with 9/11 and all of the more recent false flag “terror attacks”, blame will be placed elsewhere. In times of crisis, people will be even more likely to believe it as they grasp for guidance, answers and certainty from our “leaders”. Clearly the western elites have decided to destroy and falsely slander the Muslim world, as a continuation of the thousand-year war between religions, and with the side benefit of Muslims being a lightning rod to deflect away public scrutiny and criticism of the western elites’ own failing policies and criminal activities.
I envision another 9/11-type false flag “Muslim terrorist attack”, but of much larger magnitude. The story we will be fed is that it was so much bigger than 9/11 that it managed to take down the global financial system!!! Those poor poor green shoots that we’ve been nurturing for the last decade got snipped off too early!! All by those barbarous Muslims, and the evil “Russian hackers” too as the computer-techno collaborators of the Muslims!!!
After this event, we will be told that clearly all of the previous security measures since 9/11 weren’t enough to deter terrorism, so full martial law will be instituted “for our own protection”. That will be the final end of democracy, what little of it we still retain. This will be used as justification for heavy internet controls to further stifle dissent and truth-spreading. Dissenters will be locked up as being sympathetic to and tied with the “terrorists”.
It will be good to own gold during that crash but I also envision strict restrictions on using it which may make it not a very good store of wealth. They will also try to institute digital currency which will give them complete control over your ability to spend your gold on anything beyond eggs from the farmer down the road. Whether that digital currency will be able to stick in a world that’s falling apart, I am not so sure.
Follow the oil:
So on the level of numbers, QE and credit expansion look the same.
However (you gotta love the “however”), they can have different effects on the economy.
Practically speaking, credit expansion always causes inflation in whatever market the credit was expanded in. That’s (typically) because people don’t borrow money to park it in the bank; they had a reason to borrow the money, and after they get it, they typically spend it on something.
Note: its only “net new borrowing” that’s inflationary. Rolling over existing debt: not inflationary.
home loan [inflation in home prices + some bleed-through to consumer inflation]
car loan [consumer inflation]
float a bond for a stock buyback [inflation in equity prices]
make a credit card purchase [consumer inflation]
float a bond to buy durable goods [consumer inflation]
sell a bond to fund government (deficit) spending [consumer inflation]
QE may or may not cause inflation. If the Fed buys bank-held assets with new money, and the banks are content to park the new money at the Fed in excess reserves, then it causes no inflation. If the banks want to buy something with the new money, then of course that causes inflation in whatever it is they want to buy. [In today’s case, banks buy “stuff with a yield” - which covers a whole lot of areas.]
Of course if QE is used to buy new government debt (either directly, or indirectly) that is promptly spent into the economy by the government, well then that causes inflation. However its the act of government spending that actually causes the inflation, not the QE.
Rule of thumb: if the new money is spent into the economy, regardless of where it comes from, that causes inflation.
If the new money sits on a balance sheet and does nothing, then there’s no inflationary impact.
This assumes velocity remains constant. Rising velocity alone can cause inflation without any new money arriving on the scene. Likewise, falling velocity can cause deflation even if no money is destroyed.
Inevitably we must brace for a long slow decline of failing opportunity and growing discontent as our establishment and institutions do whatever it takes, legitimate or corrupt, to keep the train wreck moving.
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