Deflation, It’s Deflation

The financial markets have taken center stage in the lives of many people as of late. They are not sure what’s accurate or fiction. We hear commercials telling us to hurry up and accumulate more debt buying a house before “historically low rates rise”. The problem with these commercials is that mortgage rates keep dropping. Should we trust mortgage brokers who don’t understand why this is the case?

We hear from people how the US dollar is “worthless paper” and how the dollar will weaken into oblivion. They base these “facts” on the US Dollar Index, which is a really poor indicator of the dollar’s strength or weakness. As an example, if their premise is correct then the US dollar index should have plummeted with today’s sharp market selloff. Instead, the dollar index performed better than it has in months. Why is this?

We should have seen gold and silver prices increasing at a rapid rate today. Instead, the price of silver dropped almost 7%, while gold was down $12/oz. Why? It’s being blamed on people selling precious metals to meet other margin calls. Really? Is there proof of this? Or is it a convenient excuse in order to clasp to an incorrect inflationary hypothesis?

We’ve been fed news article after news article about how major inflation will be raining down upon us, and it would only be a matter of time before hyperinflation kicks in. Where is the evidence? Investors would be fleeing from US Treasuries if this were true. Instead, investors are buying all of the securities they can get their hands on right now. Treasury interest yields are plummeting to historic lows. Why is this?

Prices of some goods and services have been increasing, so people automatically attribute this to inflation – when rising prices have no direct correlation to inflation. Rising prices can just as easily be related to deflation, as entities see their revenues decreasing rapidly and increase their prices to stave off bankruptcy. Inflation is directly measured as an increase in the supply of money against a level of goods and services, while deflation is a decrease in the supply of money against a level of goods and services. Some commentators have tried to say that we’re having both inflation and deflation. This can’t happen. It’s mathematically impossible. The question is this…is the overall money supply increasing or decreasing?

We’re being told that the money supply is increasing dramatically as the government and the Fed keep “printing more money”. That’s a falsehood. The Fed manages “currency”, which is only a small component of “money”. The money supply is the total sum of all promises of future labor (the total of all debt). Is total debt increasing, or decreasing? It’s decreasing – as an enormous amount of debt around our nation goes into default. The government’s debt is increasing rapidly as they unsuccessfully attempt to replace as much of the defaulted debt as they can. They have failed in their effort.

We’re told that cutting spending without raising taxes will fix the economy by igniting the engine of economic growth. Little thought is giving to the reality that international banks have cut off lending (the creation of new debt) in order to foster an economic reset.

We’re told that we need a balance budget. How can a “balanced budget” amendment to the US Constitution fix anything when the entire monetary system is based on debt? Debt needs to be serviced through interest payments, which mandates an ever increasing money supply in order to pay it back. Balanced budgets can only succeed in an economy where the money supply is based on completed labor instead of promises of future labor.

We’re told that we should strive to “get out of debt”. We hear that this will keep us financially strong. There are a few concerns with this concept. First, how does one get out of “implicit debt” that is created on our behalf every time our government sells a Treasury security? Second, let’s assume that one paid off all of their “explicit” debt and had $10 million left over. Wouldn’t that be great? They’d be rich!!! There’s only one little issue that few people realize. That $10 million dollars is simply a claim against future labor. What if that future labor defaulted? The “rich” man would be left penniless, without means of coercing payment.

I’ve been writing for a number of years now regarding the deflationary future that awaits us as banks run the world’s economies. There have been very few writers that have agreed with the assessment I put forth. What I write is through no special “insight” of my own. Instead, it is what I understand God’s inspired Word of the Bible to teach. It is my intense desire to write in the fear of the Lord, and to make His Word the only standard which can be deductively applied. My inductive economic hypothesis seeks to be built on that structure.

Is what I write accurate? Only the passage of time will tell, but I have attempted to stay true to the framework as I understand God’s teachings. Some aspects of my hypothesis have changed slightly as I pray, seek, and study the application of God’s Word to economic structures.

In many ways I pray that my hypothesis eventually falls flat. It is sobering to have such a clear and vivid picture in my mind’s eye that includes the breakout of international warfare as banks eventually transition back into lending (historically, another seven years or so). This will happen as banks continue to gather the physical assets of defaulted loans until the money supplies of the developed world are reduced to a “reset” status. Banks will then fund international tensions on both sides of conflicts in order to fuel international war. After all, warfare is the fastest way to reintroduce inflation back into the world’s economic structure. It is my hypothesis that many people will die in this war, and that the soldiers being killed will unknowingly lose their lives to further the riches of the banks. Patriotism amongst nations will be propagandized to give the participants the “proper” fighting spirit.

It was quite some time ago that I wrote about how the European Union would eventually spin apart due to a deflationary spiral. A rereading of A Greek Tragedy and Europe - Proselytizing a Propagandized Populace offers insight into past thoughts.

Are we heading for a fairly immediate downturn in America’s economic structure? I don’t know, but all should be prepared. Please understand, I don’t see a complete collapse like many talk about. It would be foolish of the international banks to let it get to that point. Their goal is to own the riches amassed through all of our future labor – not anarchy in the streets of every major city.

People often state that they don’t believe international banks could have this much power and/or planning. History shows otherwise, beginning in earnest in 1694 with the chartering of the Bank of England.

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