Giant Ponzi Scheme
On the box yesterday I saw a Swiss economist describe the current world economic crisis as like a giant Ponzi scheme. The awful truth is that he is right.
The inevitable and much-postponed "pain" is being postponed and postponed and postponed by the desperate politicians and central bankers with what appears to be a never-ending series of magic "measures" - interest rates cut and cut ; then liquidity injection; then bank bailouts; then massive borrowing ; finally "quantitative easing" (printing money).
As with a Ponzi scheme, there will in the end be no rabbits left to pull out of the hat and at that point we will get the denouement of this crisis. The economist said that it would be a "Zimbabwean" denouement.
There will be a sudden surge in inflation ; the last "play" of the bankers/polticians Ponzi scheme will be to raise interest rates sharply to choke off hyperinflation . That interest rate increase will cause a massive slump in real economic activity. The pain will finally have arrived.
He recommended buying gold.
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