Monday, December 20, 2010

Unintended Consequences

I personally don't believe the country will see hyperinflation. I see deflation. We have 53 trillion in total debt in the system both public and private. 100 trillion in unfunded liabilities which will be reduced drastically(Medicare/Social Security). There's actually over 600 trillion in derivative contracts in the system. Most derivatives are on the books of the international banks and brokerage houses. The derivative contracts need ripped up or a clearing house that has transparency needs to be created to reserve for losses. JP Morgan Chase has over 80 trillion in derivative contracts which is greater than the world's collective GDP estimated at 60 trillion. Anytime you have the supply of credit decreasing faster than the supply of money is growing, the net result is deflation.

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