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Old 02-24-2019, 06:15 PM
Danny B Danny B is online now
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,494
Runaway debt creation

Here is a chart of interest rates, http://fm.cnbc.com/applications/cnbc...REST_RATES.png
Here is a chart of personal savings, https://si.wsj.net/public/resources/...0501170150.gif
Originally, banks would take savings and loan them out carefully to finance commercial projects that promised a return. Credit was extended for personal finance that was well qualified to repay the loan. Interest rates were driven down by the FED and people lost motivation to save. The money-renters just couldn't find enough capital to keep commercial ,loans funded. This was also true for loans to the State.

The bank regulators like the FED and SEC allowed the banks to drop their reserve requirements WAY down. The SEC allowed people to buy stocks on a very small margin. The State did away with fractional reserve money creation tied to gold. The various restrictions on debt creation were tossed out to keep the State and the money-renters well financed. This allowed the welfare-warfare State to blossom to it's current level. It also allowed the finance industry to go from 7% of the economy to ~ 40%
An ounce of gold would buy you 39$ in 1970.
Today, an ounce of gold will buy you 1350$
The southern border was left open to depress wages. Outsourcing and automation were implemented as much as possible. 95 million people of working age are not in the work force.
"The unemployment rate is often called the most important barometer of a coming recession."
This is all falsified but, how long can a recession be held at bay?

"And then Friday from the Financial Times (Sam Fleming): “Slow-inflation Conundrum Prompts Rethink at the Federal Reserve: Ten years into the recovery and with unemployment near half-century lows, the Federal Reserve’s traditional models suggest inflation should be surging. Instead, officials are grappling with unexpectedly tepid price growth"
NOBODY in the lower loop has any desire to see price inflation. The upper loop lives to see price inflation because it indicates that their portfolio will see gains.

Powell tried to initiate a controlled demolition of the markets to avoid an uncontrolled demolition. He underestimated the fragility of markets.
" The Federal Reserve’s promise in January to be ‘patient’ about further interest rate hikes, putting a three-year-old process of policy tightening on hold, calmed markets after weeks of turmoil that wiped out trillions of dollars of household wealth."
Credit Bubble Bulletin : Weekly Commentary: Dudley on Debt and MMT
"John Williams, the New York Fed president, said on Friday that persistently soft inflation readings over recent years could damage the Fed’s ability to convince the general public it will hit its 2% goal. "
The FED now plans to do targeted inflation increases to get confidence back.

So, that is the means and the history of a long sequence of price inflation.
There is no sequence of wage inflation. The banks can withhold credit but, WE can no longer withhold our labor. Finance has worked hard at destroying collective bargaining.
This slow-burn of price inflation has reduced the average consumer to poverty. The demands of the runaway State bureaucracy have also robed the working man.
" A German earning just $75,000 annually ends up in the 50% tax bracket"
https://www.armstrongeconomics.com/w...ecord-surplus/

Armstrong, " Under Marxism, we pay between 300 and 800 times more than previous historical periods of taxes. The Roman Empire had taxes that would rise from 1% to 7% — not 50%+. ALL Republics collapse into oligarchies because once one person pretends to represent many, they will NEVER put the interests of the many before themself"
Regulatory capture allowed banks and corporations to issue unlimited bonds and debt.
100% of the rise in the European stock market is due to ECB printing. 50% in the U.SD. is due to FED printing. The CBs really have no escape. Earlier Trump said the that the unemployment rate with the 95 million included was 42%. Don't forget that 22 million work for the government and GOV spends about 20% of the GDP.
Various writers speculate that investor may some day lose confidence in buying sovereign debt. That happened long ago. The FED and ESF are buying both State debt and stocks / bonds.
We'll see how much longer this can go on. The CBs flooded the world with "money" expecting it to flow into every market. So far, this is working. QE for everybody.
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