Tuesday, November 6, 2012

One day, There will be a Deflationary Collapse that will blow all the levers and deflate Assets Prices






One day, There will be a Deflationary Collapse that will blow all the levers and deflate Assets Prices


Faber is bang on. Fisrt, once interest rates rise -actually double - from historic lows, the mathematics kicks in, and brings asset values down by 30% or more. Yep. Then watch the finanancial system collapse under the weight of depleted banking capital that cannot be restored in short order.

Rates will rise due to cost driven inflation that is caused by the physics of scarcities in critical elements that create economic activity, and related outputs. Thus the basis for economic activity will be severely constrained by the exhaustion of critical rsources - thereby restricting the ability to restore the banking system's capital.

If this sounds like Greece, Europe, Japan, Nauru and ... oh yes, - Easter Island, you may be starting to see the message and understand the highly probable outcomes set to unfold.


Dr Peter G Kinessa

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