For those more theoretically inclined in economics, read my latest, 3rd installment in a series from my concluding chapter of my 2016 book, ‘Systemic Fragility in the Global Economy’ In the chapter I explain my theory of how debt and income interact to create financial crises causing the economy to grow more ‘fragile’ (i.e. prone to financial instability). That process of deepening fragility has been continuing since the last crisis in 2008. At least $20 trillion more private and government debt has been added to the US economy since 2008; another $40 trillion in emerging markets; and trillions more in China and Europe. More than $10 trillion in non-performing bank loans exist now worldwide. Stock and bond and derivatives markets are in bubble mode. Income for financing government debt (tax and foreign T-bond sales), household debt (wages stagnating), and business debt (interest rates rising) are approaching limits and about to decline. With decline will come inability to refinance extreme debt levels, and lead in turn to defaults. Asset prices will then collapse, leading to real economy contraction.
In this third in the series, the discussion focuses on the relationship between financial and real asset investing and how price plays a role as a transmission mechanism. The ‘two price theory’ is explained, and contemporary Keynesian and Classical economist views that money causes inflation are debunked.
To Read go to my website, http://kyklosproductions.com/articles.html
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