This article really hits the mark...
Marketwatch Article Hits the Mark
I think this will happen, and very soon. Nothing prevents a society with a fiat currency from taking on debt and devaluing that currency. Nothing prevents voters from switching to socialism despite freedoms guaranteed by their constitutions. All of it is bad, but socialism is the consequence for policies that lead to indebtedness and a maldistribution of wealth.
Governments won't go bankrupt. They will just find ways to inflate their debt away. Who gets hurt? Savers, especially retirees, and those nearing retirement. Anyone relying on a pension will get crushed, as will the expectations of people with savings. It's just not going to buy what they think. This is a huge problem in America. Most people of working age have not experienced the destruction caused by inflation.
Central banks are now in negative real interest rate territory -- a savings destruction mode. Now forced into stocks, the next step will be to erode savings through "asset price" declines. Japan since 1990 provides an excellent model. The parallels between their society then, and ours now, are striking.
The new game will be socialism. Wealth will get redistributed by having asset prices tumble with inflation. This will be done by simply printing and handing out money without a measurable increase in productivity. We have the model for this right now during the pandemic, and we can see the results. Prices at the grocery store yesterday were sky high. The contents inside packaging was often reduced to deceive the buyer. The inflation is hidden.
It is starting folks. Get ready for old people joining the homeless on the streets. Millennials will vote for it.
Marketwatch Article Hits the Mark
I think this will happen, and very soon. Nothing prevents a society with a fiat currency from taking on debt and devaluing that currency. Nothing prevents voters from switching to socialism despite freedoms guaranteed by their constitutions. All of it is bad, but socialism is the consequence for policies that lead to indebtedness and a maldistribution of wealth.
Governments won't go bankrupt. They will just find ways to inflate their debt away. Who gets hurt? Savers, especially retirees, and those nearing retirement. Anyone relying on a pension will get crushed, as will the expectations of people with savings. It's just not going to buy what they think. This is a huge problem in America. Most people of working age have not experienced the destruction caused by inflation.
Central banks are now in negative real interest rate territory -- a savings destruction mode. Now forced into stocks, the next step will be to erode savings through "asset price" declines. Japan since 1990 provides an excellent model. The parallels between their society then, and ours now, are striking.
The new game will be socialism. Wealth will get redistributed by having asset prices tumble with inflation. This will be done by simply printing and handing out money without a measurable increase in productivity. We have the model for this right now during the pandemic, and we can see the results. Prices at the grocery store yesterday were sky high. The contents inside packaging was often reduced to deceive the buyer. The inflation is hidden.
It is starting folks. Get ready for old people joining the homeless on the streets. Millennials will vote for it.
