Deadly Dow 36,000 & The Secret History Of A 70% Market Loss (Iran, dollars)

[CK78]

Deficits, Debt, "Printing" Money & Higher Inflation

As with asset deflation, when it comes to monetary inflation, there are powerful and unfortunate differences between the 1970s and now.
The Federal government has had its credit rating downgraded because it is borrowing an amount equal to almost 10% of the total economy each year, with no end in sight, to fund ever-growing government promises. As documented in my article, "Six Layers Of Deficit Impossibilities" (linked here), the current national debt amounts to $152,000 per able-to-pay US household, and the total amount owed increases to $640,000 per household when we include unfunded US government promises to future retirees.
The global financial system is being kept from collapse only by the direct creation of trillions of dollars and euros which are being passed to financial institutions and other favored corporate insiders on non-market terms.

Impossible promises to retirees and government bond buyers from effectively bankrupt governments are all too likely to be repaid with inflation. If we assume not the historical 65% destruction of the value of money - but a 90% destruction (which is consistent with the Federal Reserve's creating dollars by the trillions out of thin air), then a dollar becomes worth ten cents.
As shown below, if a dollar is worth ten cents, then the Dow must rise (in nominal terms) to 36,000, in order for it to be worth 3,600 in real terms.


The blue in the graph represents reality, with the purchasing power of our investments dropping 70% from our starting point on the left, to our ending point on the right. However, when we include the "Illusion Of Inflation" in the column on the right, and we combine 70% asset deflation with 90% dollar destruction - then we get Dow 36,000.

From: Deadly Dow 36,000 & The Secret History Of A 70% Market Loss by Daniel R Amerman

[GregW]

If we can keep the Magic Money Game operating for another 30 years I'll be fine.

I suggest a book titled "Debt: the fFirst 5,000 Years" but I don't remember the author's name. He points out that in modern economies Debt = Money and to pay off the debt would result in complete economic collapse.

[CK78]

Originally Posted by GregW

If we can keep the Magic Money Game operating for another 30 years I'll be fine.

Don't think so. I think we're at the end game now. If they can make it another 5 years to 2017-2018 without another major dislocation I'd be shocked. But I'm not that smart so we'll see.

The only reason we've made it this far is the U.S. Dollar is still the international currency but that's changing and could change in a hurry if we mess with Iran and China, Russia and the BRIC decide to make their own rules.

Most fiat currencies only last 30-35 years. We're well past that but the Dollar is also the only option for the world right now. Although other countries are trying to swithch to gold.

[CK78]

Originally Posted by GregW

If we can keep the Magic Money Game operating for another 30 years I'll be fine.

I suggest a book titled "Debt: the fFirst 5,000 Years" but I don't remember the author's name. He points out that in modern economies Debt = Money and to pay off the debt would result in complete economic collapse.

Exactly, people don't get it. If there is interst owed on every dollar "borrowed" into existence, which there is, than there is always more money owed than in circulation. Ergo, it's impossible for everyone to pay off their debts. Mathematically impossible.

But the first users of newly printed money like the banks and favored corporations get to use the maximum value of the new dollars since they're the first to spend them into the economy before they lose further value. While they're spending the next new batch of fresh fiat the middle class and workers are the last to get their hands on the freshly created money so they're hurt the worse and feel most of the brunt of inflation.

The whole system is criminal fraud.