The End Of The Inflation Deflation Debate
Most arguments are are controlled in a Hegelian Dialectic
This controls debate between only two choices that two sides passionately debate about, never looking outside of the dialectic to another answer. This is most obvious with the Republican/Democrat debate in the US. These Dialectics usually offer two false choices that keep you in stuck with the same fundamental paradigm/problem. (This is why nothing changes in Washington.) Another Hegelian Dialectic is brewing with this Occupy Wall St, that wants a stronger Washington to beat those "bad" bankers without addressing the fundamental problem of usury, fractional reserve banking, and the privately owned central banks. This inflation/deflation debate is a little different, most Hegelian Dialectics argue two different outcomes and most offer two different solutions. I would like to end this debate once and for all by offering one solution for both.
Let us put this to bed once and for all by first stating my case for inflation
Our paradigm is based off of a debt based currency that must create more debt every year in excess of the debt AND interest accrued the year before. This is because every dollar that comes into existence is a debt with a certain amount of interest attached on to it. When debt is created, money is created. When debt is paid off, money is destroyed. The real trick is that the money that is owed for the interest does not exist, since only the principle of the loan is put into the economy. The ONLY way this interest can be paid is by more debt being created to pay the previous debt AND interest. This is why we have an ever expanding debt that cannot stop.
The dollar collapse is a mathematically inevitable event
It will also be the largest single event of human history. At some point the debt incurred will be more than the economy can bear and there will be a default. Or the other way out, is that we constantly print more money to keep the system going, that we eventually destroy the value of the currency and people lose faith in it, which leads to a rush out of it and a hyper inflationary depression. Either way the debt, the dollar, the economy, the stocks, the real estate, the pensions, our entire way of life, ends.
We can at this late date have a deflationary crash or a hyper inflationary depression, nothing is written in stone
We can have a deflationary depression if the politicians stop creating more debt or refuse to raise the debt ceiling. With no more debt coming into the system, we would have the mother-of-all margin calls the world over almost immediately. The highly leveraged world of banking would be forced to de-leverage to meet their debt obligations. We could also have a deflationary depression if a nation like Greece goes bankrupt. By defaulting on their debts the banking system would seize up as banks become blatantly insolvent, as the equity in their positions are destroyed. This again would force everyone to sell their assets in a cascading mess. The deflation in the system is the most obvious and destructive choice. It is easy to find who caused it and it is difficult for people’s confidence to return after it starts.
I believe that we will have a hyperinflation for simple 6 reasons
I strongly believe that we will have a hyper inflationary depression, but if we do have a deflationary depression, the cure is still the same, gold and silver
In either case the unsustainable stops and the entire complex, debt based, system collapses. There will be no functioning currency, no functioning economy, no trade, no earnings to value stocks, no rents to value properties. Then there are the very real and very dangerous social consequences of this collapse, riots, starvation, disease and war. The entire paper wealth of the world will implode in either case. The only choice they have is to how long and how much energy are the Elite going to put into sustaining the unsustainable?
The only thing that will be left standing is stuff that has REAL tangible, intrinsic value
Things that people need to live like food, water, and guns. Commodities will have value, but most will get destroyed since so much of their wealth is determined by credit and trade. Without a functioning economy, what is corn in Iowa worth if there is no market that will buy it, or worse how do they plant the corn if they cannot buy the seed from Monsanto or get the fertilizer?
Gold and silver need nothing to show their value
They are worth something simply because they are rare and have uses. Actually a collapsing credit market may actually catapult gold and silver by eliminating the major players that have held gold and silver down through paper manipulation schemes. It may also help the gold and silver market as people lose faith in all other paper assets and rush into the very small precious metal market.
Say we do have a grinding deflation, and the nominal price of gold and silver goes down
The REAL purchasing power of the metal can actually go up in value as all other credit/debt based assets collapse. For example if we get a market that has no credit available or mortgage rates are 24% and only for 10 years, what do you think the value of your house will be relative to silver. What would the economy and the job market be like if someone could afford that property? What do you think that would do to the thousands of other properties that are going to be flooding the market? What do you think of all of that debt tied to it? What do you think that is going to do to the property taxes as towns become desperate to find money? I could see a house that was once sold for $300,000 only sell for $30,000. Silver on the other hand might go up, because of the rush into real tangible value, but let us say it does go down in price from $30 by 70% to $9. The ratio to buy that house went from 10,000 ounces of silver to buy that house to 3,333. A huge increase in REAL purchasing power during a deflation. I believe that we will see more significant increases in REAL purchasing power in the more predictable hyper inflationary depression.
Can we finally more on from this inflation/deflation debate and just say that either way, the paper debt paradigm is done?
Bonds, will not save you as more money is thrown on to the fire to keep the economy going, destroying the real returns of the bond. Bonds will not be paid if nations default and we have seen even the highest rated bonds are junk in reality. This is not a shift from equity to debt markets, it is a shift from paper wealth to real wealth. Nothing will stop this train and only those that can see it coming will be able to prepare for it.
I have constantly encouraged people to break free from their 2 step slave thought and embrace the logical thought of the Trivium
When people are able to think using this 3 step process they become immune to pied piper manipulators who seek to lead them down the wrong path that usually benefits them. The combination of the Hegelian Dialectic and not logically thinking leads people to slavery. Be very careful listening to all of these "experts" out there who tell a good story about the end of the dollar but only lead you into paper assets.
Case in point:
You can read about Peter Schiff tearing these guys apart about their business model here.
"Listen to all, follow none, walk your own path the best that you can." -Silver Shield
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