The Second Phase
publication date: May 21, 2010
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author/source: Brad Hamill
The economies of the industrialized world have now reached the point where the
second phase of major upheaval is set to possible take place. I say “possibly”
since there are still means of kicking the can down the road a little while
longer. However, most all indicators now point to severe economic hardship in
the coming days – not weeks, not months, but days.
It is extremely important that people don’t use the stock market as a gauge of economic health right now. It’s not an accurate barometer since it can be so easily manipulated by those with the resources to do so. Instead, folks should be following the currency and bond markets for a more accurate picture.
The second phase of the downturn will be much more severe than the first phase that we experienced in late 2008 through early 2009. It must be realized that the first phase involved the initial shutting off of the “credit valve” across the industrialized world by the international banks. This has continued to put many into major financial hardship, but it has only been a precursor to what we are now facing.
This second phase will be very different, since it can be measured by the economic implosion of various governments at all levels. These governments will find themselves unable to maintain their power structures without either seeking extremely arduous taxation upon their citizenry, or by taking loans from the international bankers (i.e. International Monetary Fund) that are tied to provisions bringing about an immediate deflationary depression.
The new phase will bring about lots of government instability all over the world, with the very real danger of major warfare at some point in an effort to drive economies through inflationary military spending.
People don’t understand that developed nations of the world have no other choice but to create as much new debt as quickly as they can. In fact, governments can’t create new debt fast enough – they have to deceive their citizenry into helping them out. President Obama can now be heard encouraging the nation to refinance their mortgages through government organizations such as Fannie Mae and Freddie Mac. He’s not trying to help anybody – instead, he’s seeking to have the populace assist him in creating a new debt pile.
Remember, money is completely based on debt. The international banks have shut off the credit (debt) valve, which means that money supplies are shrinking across the globe. This is highly deflationary and debilitating to governments since it makes their existing debt structure more expensive to pay off. Governments can only hope to offset the bank-caused debt destruction by filling in the void with new debt until the bankers decide to open the credit value again. The problem with this is that the time period will most likely be another eight to ten years – at least! There is no way that governments can survive economically until then without undergoing major transformations of power and control.
Where does this leave the common citizenry? On the one hand, existing debt will become more expensive to pay pack since it will now take more hours of labor to pay off the same amount of money. Workers will continue to see layoffs, salary freezes or reductions, and reduced benefits. On the other hand, governments will need to squeeze as much blood out of their citizens as they possibly can in an attempt to maintain their power structure and fend off the international bankers. As you can see, the citizenry will be getting squeezed in a major way from both ends.
It is imperative that people retire their debt obligations as quickly as possible and maintain a very “liquid” investment paradigm. This means that a great majority of any funds would be accessible within a very short timeframe – days, not weeks.
All of this is my economic opinion and should not be treated as investment advice. Buckle your seat belts. We’re quite possibly in for a very wild ride.
Your comments are appreciated…
If you are not currently on the Economic Update email list you can email me at: brad@newfamilyeconomics.com to be added.
There is no charge and your email address will never be shared.
-Brad Hamill
It is extremely important that people don’t use the stock market as a gauge of economic health right now. It’s not an accurate barometer since it can be so easily manipulated by those with the resources to do so. Instead, folks should be following the currency and bond markets for a more accurate picture.
The second phase of the downturn will be much more severe than the first phase that we experienced in late 2008 through early 2009. It must be realized that the first phase involved the initial shutting off of the “credit valve” across the industrialized world by the international banks. This has continued to put many into major financial hardship, but it has only been a precursor to what we are now facing.
This second phase will be very different, since it can be measured by the economic implosion of various governments at all levels. These governments will find themselves unable to maintain their power structures without either seeking extremely arduous taxation upon their citizenry, or by taking loans from the international bankers (i.e. International Monetary Fund) that are tied to provisions bringing about an immediate deflationary depression.
The new phase will bring about lots of government instability all over the world, with the very real danger of major warfare at some point in an effort to drive economies through inflationary military spending.
People don’t understand that developed nations of the world have no other choice but to create as much new debt as quickly as they can. In fact, governments can’t create new debt fast enough – they have to deceive their citizenry into helping them out. President Obama can now be heard encouraging the nation to refinance their mortgages through government organizations such as Fannie Mae and Freddie Mac. He’s not trying to help anybody – instead, he’s seeking to have the populace assist him in creating a new debt pile.
Remember, money is completely based on debt. The international banks have shut off the credit (debt) valve, which means that money supplies are shrinking across the globe. This is highly deflationary and debilitating to governments since it makes their existing debt structure more expensive to pay off. Governments can only hope to offset the bank-caused debt destruction by filling in the void with new debt until the bankers decide to open the credit value again. The problem with this is that the time period will most likely be another eight to ten years – at least! There is no way that governments can survive economically until then without undergoing major transformations of power and control.
Where does this leave the common citizenry? On the one hand, existing debt will become more expensive to pay pack since it will now take more hours of labor to pay off the same amount of money. Workers will continue to see layoffs, salary freezes or reductions, and reduced benefits. On the other hand, governments will need to squeeze as much blood out of their citizens as they possibly can in an attempt to maintain their power structure and fend off the international bankers. As you can see, the citizenry will be getting squeezed in a major way from both ends.
It is imperative that people retire their debt obligations as quickly as possible and maintain a very “liquid” investment paradigm. This means that a great majority of any funds would be accessible within a very short timeframe – days, not weeks.
All of this is my economic opinion and should not be treated as investment advice. Buckle your seat belts. We’re quite possibly in for a very wild ride.
Your comments are appreciated…
If you are not currently on the Economic Update email list you can email me at: brad@newfamilyeconomics.com to be added.
There is no charge and your email address will never be shared.
-Brad Hamill
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