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Why the World Is Financially Doomed in Four Charts

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Donnachaidh Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-07-11 09:50 AM
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Why the World Is Financially Doomed in Four Charts
http://www.oftwominds.com/blogjan11/why-financial-doom0...

The global economy is doomed to implosion, and here are four charts which explain why.

Though the complexities may appear endless, the global economy's coming implosion is really fairly easy to understand: here are four charts which do the heavy lifting. It boils down to these basics:

1. When money is dear and difficult to borrow, then productivity and capital accumulation are encouraged, speculation, malinvestment and debt-based consumption are discouraged.

2. When money is "free" (zero-interest rate policy) and liquidity is unlimited, then the opposite conditions hold: speculation in risk assets, malinvestment and debt-based consumption are all encouraged, and productivity and capital accumulation are heavily discouraged.

3. When debts exceed the value of the underlying assets, the only way out of the Tyranny of Debt is to write off the debt on both the borrower and lender's balance sheets, wiping out their capital via liquidation and bankruptcy.

4. The "extend and pretend" policy pursued by all major nations is simply transferring the impaired debt from private hands to the taxpayers (public debt), crippling the economy with higher taxes and higher debt service.

5. The Central State's "extend and pretend" policy requires heavy borrowing every year to prop up the status quo, pushing the Central State (or equivalent, i.e. the Eurozone) into an inescapable double-bind: either continue increasing public debt and cripple the economy with high taxes and high public-debt servicing costs, or let the financial status quo of "profits are private, losses are public" implode.

MORE at the link --
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femrap Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-07-11 11:25 AM
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1. This has been the
plan all along....put all the debt/failed investments on the taxpayer's back....and by taxpayer, I mean those serfs who are stuck working for the Corporations who demand complete compliance.

Eventually the wealthy can buy back the failed investment for pennies on the dollar.

Since the US no longer manufactures anything, maybe it would be best just to return to a farming society....for example, take a look at Detroit. Lots of green areas sprouting up.

Of course farmland has been an excellent investment of late...the Chinese have been buying it up like crazy.
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felix_numinous Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-07-11 11:51 AM
Response to Original message
2. This should be called
vampire capitalism, because that's sure what it feels like.
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azul Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-07-11 12:12 PM
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3. The global economy based on debt is failing.
The economy has to change to survive. If it is changed by the very interests that destroyed it, things will just get worse. Why leave it to these interests when they have proved to be incompetent and destructive and abusive?

The chance needs to come from people to reject debt and usury as the financial basis of the economy. An ever-growing population with a growth-dependent economic system in a single world with limited resources is not sustainable.

The current economic system increasingly uses people/labor as assets or property. A form of control on their lives and direction to their activities that may not be at all what they want for their persons ans community.

Do people, regular workers, have the right to be free of debt and usury? When the only jobs available in some area are from the company store, do the people there have any choice but to go into debt and have their lives controlled by that store?

Why is this broken economic system allowed to forgive debts to the big gamblers that are too big to fail when the small debtors are never let off the hook?

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lumberjack_jeff Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-07-11 05:43 PM
Response to Original message
4. Kicking.
This is an epiphany.
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Poboy Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-07-11 05:45 PM
Response to Original message
5. Recommend.
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