We are now in the very final stages of the most remarkable era of alchemy in the history of finance. This cycle started in 1913 with the creation of the Fed and had its death knell in 1971 when Nixon took away the gold backing of the dollar. It has been a long and slow 50 year death of the world economy and the patient has only been kept alive due to the creation of fake money, fake assets, fake (paper) gold, fake wealth, fake valuations, fake balance sheets, fake bankers, fake politicians all built on a colossal mountain of fake debt.
What will be the trigger for the coming biggest financial crisis in history? There are so many time bombs around the globe that it really doesn’t matter where and how it starts. Because when it starts, there will be a chain reaction that will lead to the most spectacular economic fireworks in history.
FAKE GROWTH BASED ON FAKE MONEY
Central banks around the world have already set the coming fall in motion. What has kept the world going for so long, in spite of being bankrupt, is the massive liquidity that all central banks have added to the system. The world economy can only grow, albeit artificially, by a constant injection of liquidity. Without that the patient would die quickly. This has created an illusion of growth but all that has grown is debt. In real terms the world economy is hardly growing and how could it just based on fake money.
But central banks are now creating the perfect situation for the coming collapse. They are taking away the punch bowl that has fed all the asset and debt bubbles in recent years. It is not just the US where liquidity growth has reversed abruptly by the quantitative tapering. Also in the Eurozone, Japan, and China liquidity growth is slowing down…