Sunday, October 19, 2008

Deflation vs Inflation (DEBT DOLLARS)

Months ago we spoke about de-leveraging of banks and how dangerous this could be.

Well here it is we are in the Grip of deflation now. Our banks are leverage 9 to 1 as dictated by the Federal Reserve's Fractional Reserve Banking Policy. Meaning a bank can lend 9 times what they actually have on deposit in the bank. The money they lend is actually just digital credits it doesn't exist. This is why now that the FED has started the proverbial elephant down a hill side in its wave of defaults created since the 17 rate hikes its has run over every bank in its path.

Prices are dropping in every market; gas prices, commodities, equities, and currencies all falling in unison. The US dollar recently being the strongest currency out there in the G8 is perceived to be that we are the safest of the G8 to be but this is not true.

This USD strength is a false strength; it is actually a result of deflation or the scarcity of US Dollars in the system that is causing it as the leveraged US debt vanishes from the system. THE FACT IS EVERY DOLLAR WE HAVE IS A DOLLAR CREATED AT INTEREST OR DEBT MONEY.

What happens when the deflation runs its course? There won't be any money left. Gas might be cheaper but you will also have relatively less dollars to work with thereby keeping the benefits of price drops from truly being realized.

Once deflation runs its course then the remaining inflationary pressures of the central banks' money creation will take over. Since we must continue to finance defense, fight on going global conflict/wars with dubious origin and rational, and protect the people that pay the central bank's interest, the citizens of the nations, well enough for them to get their money back from us through government taxation. They will continue to flood the system with this fiat tsunami. This will put us at risk of mirroring the Pre-World War 2 era in Germany when the Mark was pretty much worthless. This is the future we face if the powers that be are left to their own devices.

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