It is very late in the day. Since World War II, and particularly since 1971 once the link in between the dollar and gold was broken, governments all over the world have accepted the Keynesian theory of economics that boils down to a belief that printing cash can stimulate the economic climate and produce prosperity. The outcome has been to make massive amounts of individual and government debt. It has turned out to be insupportable. All it has done is buy a couple of additional years of artificial prosperity, and we're proceeding deeper into a very real depression consequently.
Now let me explain the word "depression."
We happen to be consuming more than we have been creating and residing above our means. This has been produced feasible by: 1) borrowing against projected future revenues and 2) utilizing the financial savings of other individuals. The entire thing is going to fall apart. A brand new monetary system of some kind is going to have to necessarily rise from these ashes.
Can more quantitative easing (QE) give us an additional couple of years of artificial prosperity? Most improbable. We're in the end of the story, certainly not the beginning. More QE - I hate to call it that because it is truly just printing cash. I hate euphemisms, words that are intended to create some thing sound better than it truly is. Euphemisms, like exaggerations, would be the realm of politicians and also comedians. In any case, the next round of cash printing is going to result in radical and fast retail price rises. There's no prosperity feasible from this; rather the reverse.
We're getting into a depression higher than in 1933. What we experienced in the 1930s was a deflationary depression exactly where billions of dollars had been wiped out having a stock marketplace collapse, bond defaults, and bank failures. Inflationary cash that was produced since the formation of the Federal Reserve in 1913 was wiped out. Prices went straight down. This depression will probably be different because governments have a lot more power. They will attempt to help keep uneconomic operations from collapse; they will prop them up, as we saw with Fannie Mae and General Motors. They will produce more cash to help keep the lifeless men walking. They will not allow the defaults of cash marketplace instruments. They'll make efforts to preserve the dollar mark on cash marketplace funds. They will try to help keep developing the pyramid greater. It is foolish, indeed idiotic. But that is what they will do.
Which unfortunately they've been performing by printing cash. The first rounds of cash printing have gone in to the banking system, however the banking system has not permitted it to trickle back out into bank financial loans. Does that open the possibility of deflation if cash isn't moving out in to the common economic climate? The government produced trillions in currency to save the banks. The banks have taken it in to shore up their balance sheets, however they have not lent it out because they are afraid to lend, and many individuals are afraid to borrow. That currency is essentially in Treasury securities at this point. Even though cash has been produced, it isn't circulating.
"I think that governments have the power to make sufficient new currency to help keep prices from going down." Sooner or later, it is going to move out. One consequence of this really is that interest rates have been artificially suppressed so that retail inflation is running a lot greater than interest rates are compensating for it. Sooner or later, instead of sitting on hundreds of billions of dollars that are going to become inflated from under them, the banks are going to do a little something with that cash. It'll go out in to the economic climate. Retail prices will start increasing.
Do we need to determine another round of cash printing to place us over the brink into a collapse? Or perhaps will it occur even when they do not print more, because it is presently sitting in the banks? They really do not have to make more cash. It is just a question of whether or not the banks start lending it and individuals start borrowing it. Another possibility is the fact that the foreigners holding about $7 trillion outdoors the US get panicky and start dumping them. I do not see any way around a lot higher levels of inflation unless, obviously, we have a devastating deflation, which we nearly had with the real estate downfall. My suggestion is to buy silver and buy gold today before the prices escalate out of reach. Your paper money will soon be even more worthless than it is today. How High Will Silver Go? Learn More Kitco Silver >> http://silverdollar.cc