Exploring Hydrocarbon Depletion
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In modern credit-based economies, a deflationary spiral may be caused by the (central bank) initiating higher interest rates (i.e., to 'control' inflation), thereby possibly popping an asset bubble or the collapse of a command economy which has been run at a higher level of production than it could actually support. In a credit-based economy, a fall in money supply leads to markedly less lending, with a further sharp fall in money supply, and a consequent sharp fall-off in demand for goods. Demand falls, and with the falling of demand, there is a fall in prices as a supply glut develops. This becomes a deflationary spiral when prices fall below the costs of financing production. Businesses, unable to make enough profit no matter how low they set prices, are then liquidated. Banks get assets which have fallen dramatically in value since the (mortgage) loan was made, and if they sell those assets, they further glut supply, which only exacerbates the situation. To slow or halt the deflationary spiral, banks will often withhold collecting on non-performing loans (as in Japan, most recently). This is often no more than a stop-gap measure, because they must then restrict credit, since they do not have money to lend, which further reduces demand, and so on.
So existing real assets/property will be more "valuable"/"desirable" in relation to previous availability (but not more costly). This is a consequence of declining energy to mine/extract resources, and manufacture products. This does not cause inflation because unemployment rises from automation/declining consumer-economy. Essentials--food, water, heat, security--will be kept artificially cheap with rationing/outright gov. control/ownership to defuse revolt.Pops wrote:Commodities dependent on energy will be worth relatively more, assets like cars, houses, stocks, bonds and by extension; jobs, will necessarily be worth relatively less.
I have no idea how "money" will react.
Revi wrote:I think it will be a combo of both. The prices of most of the things people need to buy will go up, while meanwhile the prices of a lot of big things go down. Houses are dropping, but good land seems to be holding its value. I think the economy is like a big yard sale. People are selling off anything they can, and spending it on necessities.
dolanbaker wrote:Until all of that QE money is released into the wild! (it's resting in the banks at the moment)
The inflation is likely to go through the roof, the banksters final throw of the dice.
Yeah. Money supply/GDP. Scary how bad the economy really is.dorlomin wrote:Slowing of the velocity of money... deflation. Destruction of the value of notional assets... deflation. Going to take a lot of printing to keep up.
Revi wrote:I am still not sure which way it will go.
Peak oil has not materialized as an all out trend
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