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Old 02-11-2014, 05:15 AM
Danny B Danny B is offline
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 3,175
Winding down society

Currency has 2 factors that are affected by trade. Quantity and velocity. Americans are debt saturated and have cut back on spending. A drop in velocity acts the same as a drop in quantity. As velocity drops, the FED increases quantity. Since our currency is a debt note, SOMEBODY has to take on more debt to increase the velocity and quantity of currency and debt in circulation.

Commercial bank money (debt with interest) is inflationary at inception. It also raises velocity. BUT, the repayment is deflationary. FED money can be inflationary. Senator Inhoffe reports that much of the TARP money was not paid back. This was deliberately inflationary to offset the deflation of consumer loan defaults.

The wealth transfer to the 99% has been very deflationary for the rest of us. Japan has had falling wages for many years BUT, corporate Japan sits on a $ 70 trillion nest egg.
BUT, what is that wealth? It is paper debt notes.... for the most part, bonds. Public and private bonds are serviced and repaid by profits and taxes. An impoverished populace does not generate adequate wealth to pay profits and taxes. GOV will resort to confiscation as a short term solution.

As deflation digs deeper, there will be far fewer people with money. Since all stores of wealth are subject to supply & demand, the rich will find that their stores of wealth are not in demand. Those who have the highest percentage of non tangible wealth will lose the highest percentage. Even now, we see the auction houses for high dollar items setting new records. People with money are dumping debt instruments to overpay for tangibles.

The rich are starting to understand that a prosperous middle class is necessary to a functioning economy. Without a functioning economy, all those debt instruments are worthless. Warren Buffet came out and said that the rich should pay more taxes. There is a growing appreciation for what will happen when the middle class becomes the poverty class.
ALL credit/debt instruments become worthless when only the 1% have any wealth.

The corporatocracy robbed everybody's wages and interest income. They have starved the goose that laid the golden eggs. Commerce is dying. The birth rate is falling. There is only ONE way to turn this around. Massive price deflation. Energy is the master resource. Oil consumption is used as a predictor for societal collapse.
ClubOrlov: How To Time Collapses

The only way to bring massive price deflation is to free up ZPE.
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