The deflationary "hypothesis" is premised upon Third Grade logic and observation, which is now obvious in broad daylight. There are natural limits as to how much consumption can be stolen from the future, even - or indeed especially, in a 0% interest rate environment. When standards of living are falling versus rising, as they are now, then nominal interest rates can remain at zero, whereas real rates of interest/debt service are actually rising. Again, none of this is rocket science, it's all highly intuitive and unavoidable. Only by wiping out the legacy debts can the deflationary burden be lifted. And additionally, in PonziWorld, trade with Third World nations must also be curtailed or else unlimited labour deflation aka. poverty, will continue to be imported, destroying the Middle Class.
Peak Debt Visualized
1. There are natural limits to debt accumulation
U.S. Total debt as ratio of GDP - versus Fed Funds Rate
2. Once the maximum borrowing threshold is reached then additional monetary reserves will not enter the real economy
Velocity of Money
3. Any additional monetary stimulus is deployed for financial asset speculation aka. leverage aka. risk
Jedi Mind Trick for Stoned Masses, visualized i.e. stocks versus Fed balance sheet
4. In PonziWorld, Third World poverty importation aka. outsourcing, adds to the crushing deflationary burden on the Middle Class
Manufacturing Employment versus Fed Funds Rate:
End Result:
Nominal Interest rates keep falling, while real interest rates keep rising:
Nominal Interest rates keep falling, while real interest rates keep rising:
Nominal Treasury Yields:
In summary, "we" stole from the future, and the future happens to be "Now"
All very obvious and intuitive, but since most people are still ignorant to deflation and the risks of debt, their personal fate is inevitable. And suffice to say, the charts above are from the U.S., however deflation is a global phenomenon.
