Martin Armstrong
This is part of the final stages of DEFLATION. As debt defaulted in 1931, the INFLATIONARY turn around took about two years to unfold. As it stands right now, this downgrade is still reflecting the collapse in asset values. As sovereign debt is downgraded, the resale value of existing debt declines. This not only undermines the banks giving them incentives to avoid sovereign debt investment, but pension funds are hit as their asset values also decline. Thus, this is very much the final stage of DEFLATION. Inflation starts only when the majority of bond holders begin to realize that they are better off with private assets. This will make the shift from PUBLIC to PRIVATE asset investment come alive.
No government debt will be safe! Nobody will ever pay off anything. It is merely a question of time. That appears to be coming next year – 2013. By 2017, we may end up with a new World Monetary System.
This is part of the final stages of DEFLATION. As debt defaulted in 1931, the INFLATIONARY turn around took about two years to unfold. As it stands right now, this downgrade is still reflecting the collapse in asset values. As sovereign debt is downgraded, the resale value of existing debt declines. This not only undermines the banks giving them incentives to avoid sovereign debt investment, but pension funds are hit as their asset values also decline. Thus, this is very much the final stage of DEFLATION. Inflation starts only when the majority of bond holders begin to realize that they are better off with private assets. This will make the shift from PUBLIC to PRIVATE asset investment come alive.
No government debt will be safe! Nobody will ever pay off anything. It is merely a question of time. That appears to be coming next year – 2013. By 2017, we may end up with a new World Monetary System.
So what are your reasons for this? And don't you mean this is the final stage BEFORE deflation?
ReplyDeletewhiskyseventyfour@gmail.com
Whisky Seventy four
ReplyDeleteMy guess is that we will have a period of deflation for the next 18-24 months or so. After the system is cleansed, I suspect the economies around the world will recoup and we will see a new uptrend in inflation !
But since the capacities for hard commodities are well built up, you might find.......soft commodity inflation now-food inflation !
My suggestion to investors is not to focus too much on inflation versus delation scenario.
Don't bias yourself. Believe in human fallibility.... your own. Just focus on the present. As the opportunity unfolds, move in accordingly. Good Luck.