For sure Marc. Moreover, we are happy you are finally aligned with our economic thinking. The blog below (Economic Collapse 2020: A Failed Theory) sets out our view from over a year ago, when we forecasted a financial collapse by 2020. A forecast that compares to Mr. Fabers' and again affirms why First Financial Insights have been accurately predicting events over the past couple of decades. Sorry - just tooting our horns a bit.
To summarize here are a few of the critical drivers:
Outdated abstractionist economic theory prevails - experts slow recognizing that physical economics will override their neo-classical theory. Print money and add more debt. Too bad for everyone.
Not much has changed since 2008, and the leverage and risk may be greater now. Memories are short.
There are imbalances in trade and finance that continue to grow, despite sluggish activity. Some Banks and Brokers assets are still growing at unsustainable rates relative to global GDP - there will be a reckoning.
Interest rates are too low, too long - setting the stage for a mathematical deflation in asset values that could have staggering implications; turning into social unrest - and then, geo-political confrontation. History at it again.
Resources deplete while populations grow. In the end, this will never pencil out.
Euro crisis is still chugging along. Using outdated fiscal and monetary measures cannot affect real or physical economy.The whole thing never made sense because it distorted the benefits of comparative advantage, and the cultural and historical aspects were not homogeneous thereby also impeding free flowing labour. It encouraged inefficiencies, but concentrated power.
While in the short term large abstractionist institutions are too big to fail, it is naive to think that anything is ever physically too big to fail. Economic entropy is a cruel mistress .
Dr Peter G Kinesa
November 21, 2012