Friday, January 30, 2009

Financial Crisis "Has Destroyed 40 Percent of World Wealth"

At the World Economic Forum in Davos, it was revealed that Forty Percent of the World's Wealth has been destroyed by the financial crisis so far.

As writers like Mish have repeatedly pointed out, even though the forces which could create hyperinflation (printing gzillions of dollars) are gigantic, the deflationary forces are - at present - even more enormous.

In other words, when you are Pumping Dollars Into an Airplane with a Hole in the Side, cabin pressure is not going to increase very fast.

Indeed, the whole plane might go down before cabin pressure is ever restored to normal.

If the pilot manages to avoid crashing into the ocean, then we might have to worry about excess cabin pressure (hyperinflation created by too many dollars).

But - as of today - the plane is still quickly losing altitude.

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3 comments:

  1. +BakerJanuary 30, 2009 at 7:17 PM

    Good post. The dollar is toast. Many people can't except this fact, because we never seen a dollar become worthless in our lifetime.

    This is the time to move into commodities that hold real value, such as silver and gold.


    http://bakerswealth.blogspot.com/

    ReplyDelete
  2. PastorJanuary 31, 2009 at 12:43 AM

    While paper wealth may suffer inflationary and deflationary cycles, real wealth is not lost in a recession or depression, it is simply "transferred". Through stock market and commodities manipulation, wealth is transferred from the working class to the pockets of the wealthy. We are living in a day of unprecedented wealth transfer. It is almost strange to think that we are actually viewing (albeit in slow-motion) the enslavement of average Americans to the ultra-wealthy class. If you don't believe this, ask yourself who owns your home? Your car? Your bank account? Your property? Your student loan? Your credit cards? This country is in HUGE trouble. And it is all just beginning.

    Godspeed.

    ReplyDelete
  3. Bluegrass PunditJanuary 31, 2009 at 11:12 AM

    If this doesn't make you want to fly to Washington and slap your legislator, nothing ever will. Congress gives itself a $93,000 raise to stimulate the economy. It must be nice to have that kind of extra petty cash laying around. Instead of tightening your belt in this recession, wouldn't you like an extra $90,000? Never mind the record deficits. Never mind that ordinary Americans are struggling to pay their bills. Our Congress thinks it is far more important to be able to dole out perks to itself.

    ReplyDelete

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