When The Deflation Tsunami Hits, Losing The Least Is A Winner
SNIP
However, there are some very bright people, Nicole Foss (Stoneleigh) of The Automatic Earth comes first to mind, who believe that the collapse of the global Ponzi, which began in 2008, and which is slowly accelerating, will result in the short term, perhaps several years, in a global deflationary depression.
She maintains that this deflation is already under way, in the Austrian School use of the word, as a net reduction in the sum of money, credit, and velocity. Mish also believes this. The continuing collapse of the shadow banking system and consequent credit destruction are the current cause though it is soon to spread to the TBTF banks and sovereign treasury bonds. This will lead in the short term to a price deflation of paper and physical assets in terms of the USD, which can already be seen in regard to US residential real estate.
The inflationistas will counter that the Fed and the other central banks will never allow a deflationary collapse. They will "print" their way eventually into hyperinflation (HI). (I put print in quotations because expanding debt through a central bank is really quite different from actually printing paper currency for which there is no true debt holder, but simply a dilution of the currency value.) This assumes that first they would want to, and second that they can. As to the first point, probably only the Rockefellers and the Rothschilds have an accurate idea of what the cartel's long term strategy is.
A severe deflation, which they would have prepared for as they have engineered it, would allow them to buy up the remaining physical assets of the globe for pennies on the dollar. And could they prevent it even if they wished to? The growth of the central bank's balance sheets of the USA, ECB, UK, and Japan since the collapse started in 2008 is less than $5T. (I am leaving China out as their statistics are moot). The collapse in global real estate values alone is considerably larger, and when you include all asset classes and throw in the quadrillion dollar derivative market, it is many times that. There are many expert analysts who predict that when the defaults begin in earnest, Uncle Ben and Don Capo Draghi will be as helpless as the Wizard of Oz to stop it. They will be overwhelmed by the collapse of the Ponzi resulting in a tsunami of default.
But let me regress for a moment to contemplate the strategic plans of the NWO. Some might say that the capos of the global banking cartel have no long term strategy. That they do not even discuss this concept with each other and all their actions are based upon fear and greed with a time horizon of 72 hours. They might even argue that the Bilderbergers, like Wendy's, simply wish to compete with McDonalds, and the Trilateral Commission and the CFR are just watering holes with good leather upholstery. But for those people who believe that the people who possess most of the world's wealth and coercive power might deem it as useful to construct a long term business plan as a garage based entrepreneur, we might give it a little thought.
My conclusion is that the final goal is to subject the global 99% into permanent debt serfdom. But if they permit the currencies upon which those debts were structured to go into hyperinflation, then the potential debt serfs could divert a wheelbarrow full of said currency from their home heating systems and buy their way out of life long debt servitude into the bright light of freedom, if one of debt free poverty. Ah yes, as Janis wailed, "Freedom's just another word for nothing left to lose." So I must conclude that the NWO capos regard HI as a potential disaster to be avoided.
But any intelligent economist, meaning one of the Austrian School, will freely admit that the natural consequence of the world's all time hugest bubble bursting is a deflationary collapse, as in deflation. And that the only way that could be conceivably avoided would be for the central banks to "print" stupendous amounts of offsetting credit. But this could lead to a global HI which are the bankers' worst nightmare as it would essentially lead to a jubilee for the 99%.
In a severe deflationary collapse, most assets will drastically lose value in nominal terms. In my opinion, the S&P 500 is absurdly overpriced. Every time the Fed or the ECB expands their balance sheets, whether covertly (currency swaps) or openly, the so call risk assets surge. So what are the options of a person with some savings? We have the general risk assets of equities and commodity futures, physical assets such as land and buildings as well as assorted junk from China, bonds excluding the US Treasury, US Treasuries, and the precious metals.
So if deflationary collapse, which I predict, does come to pass, then all but the last two will be obvious losers in both nominal and real terms. As to precious metals, it is my opinion that they will maintain their real value over the longer term, as they have since the time of Rome. However, I believe that during the collapse, PMs will lose nominal value for two basic reasons. First, their current nominal value is artificially high because it is propped up by extreme margin leverage extended primarily by the commodity brokers (such as MF Global) and their backers (JPMC). What do you think the value of paper gold would be if there were no credit to buy it on margin? And I think we are rapidly entering a world where most credit is disappearing.
Second, I think that many during the collapse will be forced to sell PMs, particularly gold, to meet margin calls, trying to stave off insolvency. Gold may be the only thing that anyone might be interested in buying at that point in time, and it would become a buyer's market. I do believe, however, that gold will be the first physical asset to recover.
So here we are with US Treasury Bills as the last of the list. Let me state for the record that I am a retiree with modest savings; that most of my savings are in 13 week treasuries purchased through Treasury Direct, and that I am currently living in Mexico in very modest comfort on my Social Security checks. In short, I am one of Robert's idiots.
Now let me direct my idiotic blather to several of his points as well as supporting commenters:
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