Friday, October 21, 2016

The Crisis Of Deflation
There Are A Cocktail Of Dependent Challenges 
To The Emerging Financial System Crisis
"The crisis of deflation has very loose ties to the financial crisis, but its tentacles spread far and wide. It is also a direct factor of the decline and fall of western society — our moment with destiny. The entire structure of government social programs is predicated upon a Ponzi scheme that uses Marxism to justify robbing one generation for the previous one. Stir in Keynesianism, and you have a lethal cocktail we cannot survive .. To start, the leveraging of housing was far more significant than just real estate. For example, people would often take home equity loans for various purchases in many categories that were expensive .. Then there is the crisis in pensions mixed with the crisis in demographics. All the pension systems were based upon a Ponzi scheme whereby the assumed population would always increase, so the young would pay for the old. Obamacare was constructed on the same fatal flaw. Note that the trend in lower interest rates did not begin with the financial crisis. Pension funds WRONGLY assumed that government debt was safe, and as a result, many pension funds simply bought 30-year bonds in an effort to match maturity dates for pensions. That led to a strong bull market and the break-even was 8%. They kept bidding to try to lock in rates for pension payment in the future and their lack of management skills led to this 35-year bull market. Rather than picking stocks, they just believe government is the best thing since sliced bread. Now, they can no longer survive with rates this low, which is why the Fed keeps saying we must 'normalize interest rates' for we will see a massive wholesale collapse in pensions .. The interest expenditures have soared despite the fact that interest rates have declined. Under Reagan, the national debt was $1.029 trillion, and under Obama, as of September 2016, it stands at $19.528 trillion. If interest rates today were 8% as they were under Reagan, the interest expenditures along for the year would be $1.6 trillion .. Government is growing and it is consuming all the productive forces within the economy, and regulation is destroying international trade. There is nowhere to go but down. This was not set in motion by the financial crisis .. That was simply the catalyst, but not the total cause."
- Martin Armstrong
link here to the commentary

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