The Edge of the Cliff
From 1971 until recently, most of the world knew only good times. The baby boomers thought they were financial geniuses as they bought big homes, German cars, and spent money they didn't have simply because they knew inflation would allow them to refinance their home and pay off their credit cards. This consumer spending and consumer debt fed the rest of the world's economy.
Today, the bubble is deflating. Deflation is in charge. Those playing by the old rules of money will financially die. This economic donwturn is a disaster spurred by greed and the arrogance of government officials, international corporations, big banks - and now oil.
Inflation is easy to control. Our leaders merely have to raise interest rates and inflation is tamed. Deflation, which we are now experiencing, is a different beast. They can't lower interest rates below zero. So, now the government has only two viable options. They can print even more money, which may lead to a German Depression - a depression of too much money. Or they can default on their debt, which will also destroy the economy. Whatever they do, the few people who are positioned well will prosper while most people will be financially destroyed.
Debtors with good debt - debt that makes them money - will win. Debtorw with bad debt - debt that makes them poorer - will lose.
Even now those with bad debt are walking away from their homes, boats, and cars. This "giving the bank back their toys" will turn into a financial tsuname, which will result in a panic for the banks and a bonanza for people with cash who are looking for new toys.
Every day we're edging nearer and nearer to the cliff. This is the biggest financial crisis in world history. This crisis is not an isolated incident - and it won't go away soon.
Be kind and know that crisis can build character and that out of this crisis a stronger, smarter, wiser person can emerge.
Today, the bubble is deflating. Deflation is in charge. Those playing by the old rules of money will financially die. This economic donwturn is a disaster spurred by greed and the arrogance of government officials, international corporations, big banks - and now oil.
Inflation is easy to control. Our leaders merely have to raise interest rates and inflation is tamed. Deflation, which we are now experiencing, is a different beast. They can't lower interest rates below zero. So, now the government has only two viable options. They can print even more money, which may lead to a German Depression - a depression of too much money. Or they can default on their debt, which will also destroy the economy. Whatever they do, the few people who are positioned well will prosper while most people will be financially destroyed.
Debtors with good debt - debt that makes them money - will win. Debtorw with bad debt - debt that makes them poorer - will lose.
Even now those with bad debt are walking away from their homes, boats, and cars. This "giving the bank back their toys" will turn into a financial tsuname, which will result in a panic for the banks and a bonanza for people with cash who are looking for new toys.
Every day we're edging nearer and nearer to the cliff. This is the biggest financial crisis in world history. This crisis is not an isolated incident - and it won't go away soon.
Be kind and know that crisis can build character and that out of this crisis a stronger, smarter, wiser person can emerge.
