Wednesday, August 10, 2016

4 Stages Of Monetary Madness
Michael Pento identifies 4 stages of fiat money printing that have been used by central banks throughout history, taking away the market-based value of money & borrowing costs .. "It is a destructive path that began with going off the gold standard and historically ends in hyperinflation and economic chaos .. Stage one .. monetary credit creation uses the central banks' artificial savings to set short-term interest rates through the buying and selling of short-duration government debt .. The second stage of monetary madness has been around for decades but is now commonly known as Quantitative Easing (QE) .. The third level of monetary madness is now being threatened to be imposed upon the population by central banks across the globe. This stage is called 'Helicopter Money' and is the brainchild of noted economist Milton Friedman. But in reality, versions of it have been used many times prior to Mr. Friedman's appellation of central bank money drops. Friedman argued the use of Helicopter Money to combat deflation, but it has been traditionally used to help an insolvent government service its debt .. The final stage of central bank intervention is the interminable and direct purchase of sovereign debt by a central bank for the sole purpose of keeping interest rates from spiraling out of control .. Surging debt service payments will render debt-saturated governments completely insolvent, which forces central banks into stage 4. Sadly, this is the conclusion that lies ahead for the developed world. Investors should not become complacent with the current innocuous state of global bond yields. In reality, they have become incendiary bombs that will inevitably explode with baneful implications for those that are not fully prepared."
LINK HERE to the essay

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