More pointedly why we sink into deflation, not hyperinflation.
AGAIN THIS IS THE MOST IMPORTANT THING YOU NEED TO KNOW NOW.
SEE ARMSTRONG's 100s OF CORRECT PREDICTIONS NEAR BOTTOM OF THIS EMAIL.
Click this first link below to read the following in context of larger discussion about hyperinflation vs. deflation as how fiat dies when empires die.
http://blog.jim.com/culture/radish-explains-what-racism-means.html/comment-page-1#comment-344394My prior explanation didn't pointedly clarify what is recognizably distinct (different) between hyperinflation and the deflation where people discard the fiat (for anything they can until no one will accept it). In both cases, there is deflation relative to the value of hard assets (e.g. gold and land that wasn't fiat financed overvalued, e.g. undeveloped rural land that banks won't provide loans for).
The pointed distinction is that in the hyperinflationary case the government prints 10,000, 100,000, 1 million notes (or physically debased the physical coin to the same effect). Thus you see the value of gold go to 10,000, 100,000, etc. You will not see $100,000 dollar notes during this crisis.
The debasement of storing QE generated reserves at the Fed by the banks, caused massive dollar loans (leveraged on those reserves) in the developing world (not in the USA). Now those (fractional reserve created) dollars are returning home causing this bounce in the USA that will end 2015.75 because of the
feedback loop effect I described upthread. That feedback loop is causing rest of world to collapse in deflation.
At the death of the empire, the powers that be maintain control by squeezing the middle class between inflation and deflation simultaneously. The currency is debased (but not exponential spiral unless they create a
two-tier currency where the monetary unit for paying taxes isn't debased, note even 500 A.D. Roman coin was only debased 1/50, not 1/100,000) while increasing taxes. The middle class eventually disappears and flees the cities where the powers are extracting unlivable taxes, to places where they can produce without interference of the pathological end-game of statism.
The key difference is there is no state to run to with the collapse of the global empire, you can only run away to the mountains (the Madmax outcome depending on how the handoff from one empire to the next transpires, hopefully we won't get a Dark Ages this time, probably not because Asia is so rich in billions of educated youth with good family values that the western empire hasn't destroyed yet). Whereas, with hyperinflation, you can run to another state and its currency and continue functioning normally.
The global empire collapses in deflation and then the center of the empire transfers to where there isn't this huge statism taxing the economy, i.e. as
Heritage Foundation data shows Asia (including China) has much lower government share of GDP than the West (with the exception of Switzerland). I
explained why China and Asia are the future.
Anarcho-capitalism is the technological mountains this time around.
James A. Donald, you were there at the beginning with Satoshi. Now stay with me as I fix Bitcoin. But you won’t be able to prove it is me doing the work
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Another line of summary at the following link:
http://relativisticobserver.blogspot.com/2013/07/observing-microsoft-part-3.html?showComment=1375616451672#c6434436042918130550First a macro-economic point w.r.t the relative trajectories of Microsoft, Apple, and Google. Some details were in the prior blog.
The western empire is dying (
empires move periodically from Europe to America to Asia to Europe...), but
empires never collapse with hyperinflation, rather always deflation and onerous taxation (police states devolution into abandonment of the cities).
The future (after 2016 when the USA begins its big economic collapse) after
China has its 1929 handoff depression in 2016, is consumer economic volume and growth will be focused in the developing world predominantly Asia. The stock valuation of these companies should be based on their market share in Asia. The collapse starting in 2016 (maybe ending 2020 for Asia, 2033 for West) will do that.
I hope Tim Cook (Ballmer is hopeless) is aware. You may not agree, yet I have studied the evidence that this repeats every 78 and 224 years. The Google people may not understand this, but they understand that global market share is the future, so they arrive at the same optimum long-term strategy.
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Here is a general rebuttal for anyone who thinks the above is not coming from a real economist who has successfully predicted every major turn in the global economy since the 1970s (except his own imprisonment):
https://bitcointalk.org/index.php?topic=226033.msg2865057#msg2865057birdbrain, it will be proven by 2016 that everything about the coming deflation is correct. Now stay on ignore with your other dimwitted commentators who have nothing intelligent to say.
All of what I wrote is just a re-summary of Martin Armstrong's Pi model of international capital flows. It has enabled him to make the following correct predictions
years in advance of the predictions coming true. He spent $100 million developing the research and having his computer find all the correlations. That is when he discovered that human nature and thus international capital flows also move in waves, just like everything else in the
The Universe (my blog) does. That doesn't mean we can predict what any individual human will do, only that we can predict the macro waves. Martin Armstrong helped me to make a public prediction that
gold would decline from $1550 to under $1200. I was also the person who exactly
predicted the 2011 price moves of silver back in Oct 2010. So shut your birdmouth. It is also allowing me to predict that the DJIA will go to 39,000 before 2015.75 and that gold will probably go up to 1424 - 1550, then crash back down to 1050 or below. Gold will not make new highs under after 2015.75. Now you just wait and see if I am correct again or not. I made one mistake betting too early on China's collapse last year, because I wasn't reading Armstrong (who makes it very clear China won't collapse until 2016).
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Note I was starting to lean towards Armstrong's cycles when
I INDEPENDENTLY discovered his 78 year cycle in Feb. 2013. The key was looking at long-term charts for strange patterns that stand out like a bloody nose. This caused me to integrate his 3 x 26 = 78 year model
into my understanding of technological unemployment (follow the sub-links at the above linked pages to get to a table of historical dates evidence of the 78 year cycles).
