I have decided to update the Q3 forecast.. previously I gave three scenarios, and after some observation and listening to various opinions, I have decided that there is a #4, but it is NOT good.. I have reason to believe this will be a combination of #2 and #1, occurring in that order.
We are entering into what I term DEBT_USURY_FIAT_CURRENCY_ENDGAME.
These types of currency systems, BOTH in theory and in actual reality (Zimbabwe, Argentina, former USSR for examples.. there are many more too numerous to name), end either in hyper inflationary or deflationary collapse, depending upon the poison the central bank takes. If you will recall and/or review what I have said before, you will know that loans need to be constantly made in order to replace currency that is sucked out of the currency system.
When you get up to the point we are at and there are so many currency units in the system that they literally become astronomical numbers, It becomes harder and harder and harder still for the central bank to maintain this balance between the loans being made (currency IN) and loans being paid (currency OUT).
It becomes analogous to trying to stand a sharpened pencil on it's point.. as that point becomes sharper, the force needed to knock over that pencil becomes so small and so minute it becomes impossible for that pencil to stand. So what happens next? It is only logical that you make the opposing force stronger to hold that pencil up until it begins to fall in the opposing direction. Rinse and repeat.
I believe that this is what the Federal Reserve is about to try and do.
God help ANYONE if it be his will, who actually thinks their long term portfolios backed by nothing but paper are going to protect them in these incredulous economic times.
