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Napanee, Ontario | Well I don't know what real world martin lives in, and while I agree with some of his views.... the real world supported by historical FACT, is that anytime a country, or empire, or world (as it is now) embarks on a strategy of counterfeiting the currency to make debt payments, which is exactly what is happening today, it is the beginning of the end for said currency(ies).
Yes, interim fluctuations in allocations between assets classes, like the move from Euros and Yen to the USD currently, or out of commodities to currencies, risk on/off -can stave off the result for some time, but the result is mathematically impossible to be avoided.
If Martin wants to call mathematical realities "linear thinking" that doesn't "grasp" the situation, perhaps he should take it up with mathematics. You can't print money to pay debt indefinitely and expect there to be no repercussions for the underlying currency being printed. It is mathematically impossible. It is why historically speaking, it has ALWAYS resulted in hyperinflationary currency collapse.
You can't get something for nothing, but it seems governments and financial administrations throughout history seem bent on challenging this notion.
The hang-up in many of these arguments seems to be a non sequitur that deflationists hold about inflationist's positions. The inflationist, at least myself, understand the deflationary perspective... ie the pressure from deflationary forces stacked against asset classes and the economy as a whole. Deflationary pressure is the natural response and occurrence that would be- SHOULD BE - occurring in a regular credit deleveraging cycle.
But it's NOT happening. And the reason is because of government and central bank intervention to prop up markets. It is this intervention, in the form of truckloads of counterfeit liquidity, that will be the undoing of the currency, and hyperinflationary end. This is the position of the inflationist.
Please do understand, that in both instances, through either currency destruction, or asset value destruction, the net value loss is equal. There is no way to avoid the consequences of the unwinding of an overleveraged propped up market. It is WHERE the value loss will be allocated that is the KEY. Pinning the value loss on the holders of the currency, vs holders of the assets, is the route that has been chosen, at least from the observations that I and others have recognized. It is unsurprising given that the rich people hold the assets and the poor people live on fixed income (jobs) denominated in currency.
We have empirical evidence that this IS occurring: they ARE printing money, assets values ARE being propped up and elevated. And while a deflationary asset collapse is what WOULD happen, it is being prevented. But it cannot be prevented indefinitely. Either they stop and let the crash unfold, or continue and the currency is destroyed. THAT is a linear outcome, and although Martin might not like to admit that, it is the ONLY two possibilities facing our scenario today.
Edited by OldMcdonald 1/30/2015 12:30
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John - inflation/deflation - probably one after the other
