Chris Martenson
Executive Summary
- Which countries are next in line to "go Greek"?
- Which major countries will be hit by deflation next? Which will instead see massive inflation?
- How individuals should start preparing
- Why huge massive losses and wealth transfer are inevitable for many
If you have not yet read Part 1: Greece Exposes The Global Economy's Achilles Heel, available free to all readers, please click here to read it first.
At a high level, the suite of predicaments we face are as obvious as they are serious.
Perhaps the largest predicament we face is that infinite economic growth on a finite planet is an impossibility and yet that's exactly what our monetary and banking systems require.
Not merely because the bankers and politicians want it, which they do, but because that's how the system itself is designed. When you loan money into existence, you get an exponential increase of that money over time. Actually you get an exponential increase in debt too, only at a faster pace which translates into larger quantities.
For as long as debts are growing at an exponential pace, everything is fine with the world, the economy hums along, politicians get re-elected and the big banks churn out profits year after year.
However, when the debt growth stops, financial panic sets in, the banking system threatens collapse, and the fiscal and monetary authorities pull out all the stops in their efforts to prevent these various ills from getting any worse.
What the political and banking folks are desperately seeking to prevent is nothing less than a Great Unraveling.
Their task is impossible.
The Great Unraveling will be a set of related economic and financial crises that end up taking inflated expectations and reducing them to match reality. Perhaps this process will take years, or maybe it will take decades, or maybe it will take months. Nobody knows. But the longer that…
The Approaching Great Unraveling – Are You Prepared?
PREVIEWExecutive Summary
- Which countries are next in line to "go Greek"?
- Which major countries will be hit by deflation next? Which will instead see massive inflation?
- How individuals should start preparing
- Why huge massive losses and wealth transfer are inevitable for many
If you have not yet read Part 1: Greece Exposes The Global Economy's Achilles Heel, available free to all readers, please click here to read it first.
At a high level, the suite of predicaments we face are as obvious as they are serious.
Perhaps the largest predicament we face is that infinite economic growth on a finite planet is an impossibility and yet that's exactly what our monetary and banking systems require.
Not merely because the bankers and politicians want it, which they do, but because that's how the system itself is designed. When you loan money into existence, you get an exponential increase of that money over time. Actually you get an exponential increase in debt too, only at a faster pace which translates into larger quantities.
For as long as debts are growing at an exponential pace, everything is fine with the world, the economy hums along, politicians get re-elected and the big banks churn out profits year after year.
However, when the debt growth stops, financial panic sets in, the banking system threatens collapse, and the fiscal and monetary authorities pull out all the stops in their efforts to prevent these various ills from getting any worse.
What the political and banking folks are desperately seeking to prevent is nothing less than a Great Unraveling.
Their task is impossible.
The Great Unraveling will be a set of related economic and financial crises that end up taking inflated expectations and reducing them to match reality. Perhaps this process will take years, or maybe it will take decades, or maybe it will take months. Nobody knows. But the longer that…
Executive Summary
- Desperate central banks are dangerous central banks
- Why wealth disparity will get worse
- The list of what comes next as central banks lose control
- What you should do in advance
If you have not yet read When This Ends, Everybody Gets Hurt available free to all readers, please click here to read it first.
What’s really happened since 2008 is that central banks decided that a little more printing with the possibility of future pain was preferable to immediate pain. Behavioral economics tells us that this is exactly the decision we should always expect from humans. History says as much, too.
It’s just how people are wired. We’ll almost always take immediate gratification over deferred, and similarly choose to defer consequences into the future, especially if there’s even a ridiculously slight chance they won’t materialize.
So instead of noting back in 2008 that it was unwise to have been borrowing at twice the rate of our income growth for the past several decades — which would have required a lot of very painful belt-tightening — the decision was made to ‘repair the credit markets’ which is code speak for: ‘keep doing the same thing that got us in trouble in the first place.’
Also known as the ‘kick the can down the road’ strategy, the hoped-for saving grace was always a rapid resumption of organic economic growth. That’s how the central bankers rationalized their actions. They said that saving the banks and markets today was imperative, and that eventually growth would return, justifying all of the new debt layered on to paper-over the current problems.
Of course, they never explained what would happen if that growth did not return. And that’s because the whole plan falls apart without really robust growth to pay for it all.
And by ‘fall apart’ I mean utter wreckage of the bond and equity markets, along with massive institutional and sovereign defaults. That was always the risk, and now we’re at the point where…
The Consequences Playbook
PREVIEWExecutive Summary
- Desperate central banks are dangerous central banks
- Why wealth disparity will get worse
- The list of what comes next as central banks lose control
- What you should do in advance
If you have not yet read When This Ends, Everybody Gets Hurt available free to all readers, please click here to read it first.
What’s really happened since 2008 is that central banks decided that a little more printing with the possibility of future pain was preferable to immediate pain. Behavioral economics tells us that this is exactly the decision we should always expect from humans. History says as much, too.
It’s just how people are wired. We’ll almost always take immediate gratification over deferred, and similarly choose to defer consequences into the future, especially if there’s even a ridiculously slight chance they won’t materialize.
So instead of noting back in 2008 that it was unwise to have been borrowing at twice the rate of our income growth for the past several decades — which would have required a lot of very painful belt-tightening — the decision was made to ‘repair the credit markets’ which is code speak for: ‘keep doing the same thing that got us in trouble in the first place.’
Also known as the ‘kick the can down the road’ strategy, the hoped-for saving grace was always a rapid resumption of organic economic growth. That’s how the central bankers rationalized their actions. They said that saving the banks and markets today was imperative, and that eventually growth would return, justifying all of the new debt layered on to paper-over the current problems.
Of course, they never explained what would happen if that growth did not return. And that’s because the whole plan falls apart without really robust growth to pay for it all.
And by ‘fall apart’ I mean utter wreckage of the bond and equity markets, along with massive institutional and sovereign defaults. That was always the risk, and now we’re at the point where…
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