Sunday, March 31, 2013
The Fed has extended its balance sheet by over 3 trillion printed dollars.
The US government has added 5 trillion printed dollars of printed debt to its balance sheet.
China has printed 3.5 trillion dollars to sterilize its current account surplus with the US and pumped that printed money back into US assets.
The Fed has pumped an addtional 29 trillion printed dollars of liquidity facilities to service the global banking cartel.
The ECB has pumped and additional 2 trillion dollars of printed euros into various European bailout facilities.
ALL THIS PRINTING HAS SUCCEEDED IN A GLOBAL GROWTH RATE OF UNDER 2 PERCENT. AND THAT IS USING ABSURD INFLATION FIGURES. REALISTIC INFLATION FIGURES WOULD DEFLATE GLOBAL GDP INTO NEGATIVE TERRITORY.
The pace of printing money and pumping it into the global banking cartel can and must only accelerate. Global growth is entirely dependent on accelerated credit creation.
The more credit we create the greater the debt. We can not cut back on a cent of debt without crippling global growth prospects. This is the catch 22.
Even government debt can not be cut. In eras past, if you cut government debt rates would drop thus encouraging business investment. With nominal rate at 0 for the past 5 years and real rates negative, cutting government spending will do nothing for business investment.
Furthermore The global banking cartel has accumulated close to 500 trillion dollars of notional value in debt derivative instruments. These appear to be under control because they appear on bank balance sheets at 50 billion in assets and 40 billion in liabilities for example. Yet these may repersent 10 trillion dollars worth of notional value. This makes them appear manageable. However, in a crisis if a large institution goes down holding 10 trillion dollars of notional value debt derivatives, it makes no difference how these are represented on a balance sheet. They will all be worthless if a counterparty goes under.
How long before the next counterparty crisis?
How long before the cumulative debt burden slows even nominal growth back below 0?