It would be nice to pretend that today's thought dealers know what they are doing, but since they stood by and watched as the 2007/2008 bubble inflated and then collapsed, we can say with absolute certainty that they have no clue what the hell they are doing...
Debt IS Deflation
Debt is future consumption brought forward to today which seems highly intuitive until the future rolls around and everyone stands around like a dumbfuck wondering why no one is spending. Policy-makers needed to get elected, shopping sprees needed to occur, we all had to pretend that the status quo was indefinitely sustainable, so ever-more debt was encouraged along the way, now featuring negative interest rates - essentially paying people to borrow money.
"Dude, Where's the Economy?"
There is no way to possibly describe how dumb our policy-makers are at this juncture. Sorry, but no one has adequately described their level of incompetence. I've tried my best, using every expletive known to man, but I have fallen short in my attempts. As stated above, debt of course involves an "intertemporal" shift in spending from the future to the present. This is all highly intuitive to anyone with any commonsense or kindergarten education, however, somehow our thought dealers always act surprised when economies with total debt at 400% of GDP somehow lack "demand". Then they subsidize the inflation of financial assets while jobless "consumers" struggle to roll-over their bloated loans taken during the last cycle of this never-ending clusterfuck. As I showed, recently, half of all Americans are still struggling to afford their current home. Half. Those decisions were made for the most part 7+ years ago during the last iteration of this insanity.
Half of Americans STILL can't afford mortgage rates near their lowest level in 35 years:
Half of Americans STILL can't afford mortgage rates near their lowest level in 35 years:
Now in Europe interest rates are going negative, to encourage even more carried forward consumption and depletion of savings. It's unbelievable. What would it take to get these abject morons running this economy to finally admit that this is all end game. They don't know what they are doing, because they never knew what they were doing. It was all one big conspiracy of dunces.
"It didn't work last time, so let's borrow MORE money and see if it works this time. The economy has to be out there somewhere..."
DEBT IS DEFLATION - Mind the output gap
European wages are stagnant. The jobs market is stagnant. Demand is stagnant, yet supply capacity keeps growing. All of which is extremely deflationary as we see below. This means that real interest rates keep rising despite nominal interest rates at all time low levels. Historical debt loads are weighing down the European economies like a 400% of GDP ton of bricks.
This could be a problem right here...
Let me guess, European thought dealers said that unemployment was going down. I'm sure these people are all retiring...
Fewer jobs, but more people. Sounds familiar:
Total Debt to GDP
http://www.mckinsey.com/insights/global_capital_markets/debt_and_deleveraging_the_global_credit_bubble_update
I am sure lower interest rates are just what is needed to fix this problem...
Borrowing our way out of a debt crisis, now featuring negative interest rates. The dumbest fucking society EVER.
