Sunday Bollard reported that our economic woes were over. Not that we could expect to ever take out loans as easy as before and we had to learn to live within our means but basically we could go back to sleep. But is that a wise thing to do?
Let’s start with the fact that rather than buying the big cooperate insiders are selling of shares faster than you can say depression and that the price of gold is rising indicating a loss of faith in the economy and the buying of gold as a save way of ensuring economic viability in the future.
Does that give you faith in the economy? No I didn’t think so.
In fact let’s go back to the fact that Bollard tells us that the time of big loans is over.
Our entire financial system is based on the fact that money is created by the banks as debt. In other words if nobody borrows the money supply dries up. So if Bollard tells us that we can not borrow money he actually tells us that the money supply will dry up.
Does that give you confidence that we are looking to a brighter future. No, I didn’t think it did.
Take a look at this article in Bloomberg one of the most eminent financial publications. If they publish an article stating that the dollar is nothing more than Mickey Mouse money because so much of it has been created out of nothing how does that mean economic revival?
In pre- WWII German inflation was so rampant that people had to bring a wheelbarrow of money to buy a loaf of bread.
Not a good look for economic revival eh?
For those of you who believe that China is going to be the next superpower to sell our products to the news is equally bleak.
According to even the NZ mainstream news the Chinese stock market is falling and it appears that they have stopped stockpiling metals and other commodities. That doen’t bode well for their economic growth does it?
To top it all up a Russian economist of repute has once again predicted the collapse of the US as we know it. He is not alone; Roubini, Celente, Stiglitz and many more reputable trend predictors are saying the same thing.
I confess I am happy to have a piece of land were I can grow my own food but I worry about my piggies. Rustling is up were I live.
Update: If you want to know what America’s future looks like have a look at this.
Update 3: And why are their banks performing so badly.
Update 4: And we haven’t even talked about the state of the economies in Europe and the UK.