Will it be inflation,deflation,or economic collapse?

The economy of the world is very uncertain.Nobody really knows what is going to happen.Main stream economists and “celebrity” economists are saying things are improving and that the economy is entering “escape velocity” for take-off. There has been no “take off” and there will be no take off.The US and the world economy are in slow motion collapse.The Federal Reserve cannot fix the economy because they do not know how. If they did,they would have fixed it by now. Zero interest rates and quantitative easing have propped up the system,but not repaired it or rejuvenated it. After the Winter sleep,comes the awakening and rebirth.There has been no rejuvenation of the economy. There is lethargy, except for the bond market,the stock market,and high end real estate. In other words there is shunting in the economy. Liquidity is being shunted into financial assets based on debt. This has driven the dollar higher. Money from the rest of the world, both legitimate and illegitimate is running into US financial assets. Salto mortale is just around the corner…

The reason I say that economic salto mortale is around the corner is because energy entering the US economic system is decreasing,not increasing. Whatever energy is available is being shunted into paper. In other words, the US economy is suffering from a financial shock. In medicine septic shock is a  well known condition, a very serious one. Patients end up in the ICU. The patient suffers from an infection and goes into sepsis, a generalized infection throughout the body. It is usually a complication of a surgical procedure. The patient suffers hypoxemia even though the patient is on oxygen.This is due to shunting. The right ventricle pumps venous blood into the lungs to get oxygenated but the alveoli of some lobes are collapsed and then blood does not get oxygenated. The patient develops hypoxemia and acidosis. Then they are intubated and placed on a respirator with controlled respiration, on post end expiratory pressure, or PEEP. Very careful monitoring is needed: the US and world economies are ready for the ICU.

It is immaterial whether it is deflation or inflation. One thing is certain: the living standard of Americans is rapidly deflating. Rents are going up. Health care costs are going up. Food prices  are going up (or the size of packaging is getting smaller but the prices are remaining the same). But wages are not keeping up. American corporations,as well as European have embraced the principle of the PRECARIAT: total uncertainty for workers. Society is being frayed.Socio-economic conditions are worsening. Violence is increasing.This is now becoming a socioeconomic problem. The Federal Reserve is doing plenty of talking,but cannot do any walking,because it is in a wheel chair. It does not matter whether it will be inflation or deflation,salto mortale is around the corner. We shall see and time will tell…


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