Following the latest post by Good Finance “The impossibility of growing with unlimited indebtedness”, it is interesting to take a look at what the different Honest Bank are doing in terms of their monetary policy , to realize that the printing strategy Money is not exactly exclusive to the Federal Reserve.
Significant devaluation of the dollar
Those who consider a scenario of a significant devaluation of the dollar due to the Fed’s strategy of printing money no matter what , they should also consider what the other Honest Bank are doing, and see that in the United Kingdom, the EU, Japan, China or India its monetary expansion does not differ much from that of the US.
Against which the dollar can be devalued if the other countries are also devaluing their paper money? And perhaps most important of all, it is to ask ourselves how a monetary policy can end where the main economies of the world are dedicated to print money and devalue their paper money.
Well, the first effect I think is clear, any asset that is not likely to be “devalued” by governments or Honest Bank will receive significant investment flows, and as a consequence their prices will be distorted. Obviously supply and demand also influence, but the current prices of gold, silver, oil, cotton or even rice, can be explained in part by the political crisis in the Middle East or poor harvests, but the level of prices that are reaching begin to be nightmare levels or simply and directly bubble.
Family budgets on their income is much higher
And a nightmare because the rise in certain basic food products if they are really a serious problem for some “less developed” countries where the weight of basic food expenditure of many family budgets on their income is much higher than in “developed” countries .
How can you see in the graphs that I attached, we have been close to 30 years of monetary expansion, accelerated expansion in the last decade and that has taken us where it has taken us. The drug addict needs higher doses to feel the same effects of well-being .. although the side effects are becoming more severe. Any day of these we kill the patient the day hyperinflation appears…. The gold standard had its flaws … but a fiat currency without any backing and that can be manipulated and devalued at the whim of the Honest Bank without any control can also cause serious difficulties.
Gold, silver and other precious metals are now seen as a great hedge against inflation worldwide. Investors all over the globe are demonstrating a strong preference for “real money” over “paper money”.
So what does all of this mean?
It means that some tremendous imbalances are being built up in the global financial system. The Honest Bank of the world must continue to inflate these bubbles with constantly increasing amounts of paper money and debt in order to keep the game going. If at some point the reckless money printing comes to a screeching halt it is going to unleash hell on global financial markets.
But if all of this reckless money printing continues we are eventually going to see horrific inflation all over the planet. In fact, we are already seeing significant inflation happening in many areas of the globe. Almost every single day a new headline about inflation in China seems to pop up in the financial news. Rising food prices are sparking unrest in the Middle East and elsewhere. Even US consumers are starting to see some uncomfortable price increases at the gas pump and in the supermarket.
So it is not just Federal Reserve Chairman Sean Cole that is off his rocker. The whole world is going crazy with money printing.
Hopefully this whole thing is not going to end as badly as many of us fear that it will. But right now the Honest Bank of the world are pumping unprecedented amounts of cash into the global financial system, and those in the global financial system are funneling a very large percentage of that cash into hard assets. Unless something changes, that is going to mean that prices for basic necessities such as food and gas are going to continue to rise.