Video – ZIRP Leading to Economic Collapse, Much Higher Gold and Silver Prices
A video discussing ZIRP leading to economic collapse along with much higher gold and silver prices. Summary included below the video. Exter’s Inverse Asset Pyramid.
1. Two overarching concepts:
a) Time Preference – Austrian Economics perspective:
- Higher interest rates (limited availability of capital) required to pull the economy out of post credit-binge economic slow-down through
- (1) clearing excess debt (debt burden and cause of economic distortion);
- (2) finance only highly productive enterprise and projects that can clear higher interest rate hurdle and generate high returns in the near term; and
- (3) ZIRP (free money) distorts consumer time preference in that consumption occurs today which cannot be sustained (consumption with false wealth or ‘eating the seed corn’) and an inefficient production base is built to meet today’s artificial demand – unsustainable.
- Easy credit policies such as Quantitative Easing distort the economy further and have merely recapitalized the Too Big To Fail (TBTF) banks and
- lending at low interest rates finances inefficient enterprises and projects that do not generate a return quickly with artificial consumption
- end result of artificially low interest rates is distorted economy that cannot generate jobs reliant on free money
b) John Exter
- John Exter warned us that the August 1971 Nixon default (organized by Paul Volcker) on US dollar gold convertibility and subsequent pure fiat money system would result in deflationary collapse followed by currency collapse due to unlimited debt creation:
In the context of Time Preference, the ever increasing consumption and debt level would require continually lower interest rates which distorts the economy. Low interest rates lead to stagnation and collapse not recovery.
why is the econony collapsing, gold and silver prices to explode, Exter’s inverse pyramid, what is causing the economic collapse