SHRINKING REVENUE GROWTH RATE
THE FALLING DOMINOES AHEAD
- While the wealth effect can reverse, debts have to be paid regardless. Debt payments are forever while the wealth effect is fleeting..
The current mass delusion is that the Fed can bail everyone out with cost-free cash. But we have to keep in mind what my co-host in this video, Charles Hugh Smith emphasizes the Fed can’t do:
- It can’t reverse the unprecedented wealth inequality its policies have pushed to the point of civil breakdown.
- It can’t make people take on the risks and heartaches of starting new businesses.
- It can’t force employers to hire more employees.
- It can’t make unprofitable businesses profitable.
- It can’t force people to buy assets at prices that no longer make financial sense.
- It can’t make insolvent businesses and local governments solvent.
- It can’t force people who now realize their priority is to save money to spend their cash, even if the Fed forces negative interest rates so it costs money to have savings.
- It can’t lower the unaffordable cost structure of the entire economy.
- It can’t de-link all the financial dependencies in the financial system that make it so vulnerable to the first domino falling.
- It can’t stop people from selling their assets.
- In summary, it can’t stop the reverse wealth effect. We are entering The Greatest Depression because there is no exit. Either the phantom wealth of asset bubbles completely vanishes, or the phantom purchasing power of fiat currency vanishes. Both paths lead to the same destination: systemic collapse.
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