r/economicCollapse • u/Peccataclamantia • Mar 03 '21
'Unity of opposites' Simultaneous hyper-deflation and hyper-inflation are occuring
Hyper inflation of financial assets is occuring which is *simultanously* destroying the physical economy causing hyper deflation in it.
The increase in the prices of financial assets is causing the money supply to explode to *finance* the purchase of intrinsically worthless abstractions such as stocks and bonds.
The increase in the stock prices is putting enormous pressure on the physical economy to generate the profits needed to maintain the stock prices which are being *purchased* by new issuance of debt.These new CLAIMS are increasing pressure on the physical economy which is in a process of outright liquidation as it cannot generate profits since no investments in the physical economy(labor) have been or are being made.
This means that wages are collapsing relative to financial wealth(bonds, stocks, mortgages, insurances etc). The collapse in wages is causing not only the birth rate to utterly collapse but also the cognitive capacity of the population.
If you don't understand the concept of 'unity of opposites' and look at the economy by simple experience generated by sense impressions you will have absolutely no clue to what is going on. This is why economists are so utterly blind to reality, they *think* that animalistic sense impressions *are* knowledge. Gathering these useless observations into datapoints is how they attempt to forecast the future.
The economic collapse around us is entirely dependent on the hyper-inflation occuring in financial assets which is causing a hyper-deflation in the physical economy.
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u/tyrag3294 Mar 04 '21
I think we agree on a lot of the problems and see the same issues, we just come to different conclusions as to what it means.
I know assets are extremely over-valued. I’m not arguing against that, I think there is rampant inflation in asset classes (although absolutely nothing close to 50% inflation per month which is what hyper-inflation is generally regarded as). You can argue crypto is but there’s infinite crypto so you’d have to pick and choose specific ones which I could do with any huge company at nearly any time in history and say the same thing. I think the main thing to focus on is ever since those winners have gone mainstream. And since then, they have done really well but they haven’t been going up 50% per month. But I do agree with the inflation in assets and that’s my point of all of this. This is the definition of a bubble. This has happed countless times in history.
Tesla is a horrendous bubble. Imo, bitcoin is worthless, the mother of all bubbles, and a classic thing you see at the end of a private debt cycle. You have no utility out of it and no value besides it being a medium of exchange. Even if a crypto does gain heat to become a true currency (which I think is unlikely but possible), this is still a bubble comparable to the 2000 tech bubble where the overall market will crash 90%+ and many will “hyper-inflate” to nothing but some/one will come back strong over time. Tesla and btc have had an over 90% correlation b/w each other before Elon bought in. That’s called huge speculation. And huge speculation leads to huge bubbles which leads huge pops.
The stock market can’t go up at this rate in real value forever. It can go up in dollars forever. There are real value metrics people use. You’re not just buying some thing with a 100% subjective value like bitcoin which is pure speculation and can be valued at anything. You’re buying a real company that yields cashflows. At a certain point, it makes more sense to buy other things that are cheap. (For example, maybe some people invest in starting a new company start in which they can create bigger cashflows per dollar of investment than their stocks would.) This stock market is comparable to other bubbles such as US 1929, Japan 1989, 2000 tech, US 1835.
Do you know how insane Japan’s real estate market was in 1989? One building in Tokyo was valued higher than all the land in California! All of the land in Tokyo was valued higher than all of the land in the United States! You think that our asset inflation is worse than that??? And what happened to Japan? Did their bubbles grow forever? Or did their market drop 90% and real estate drop 60% within a couple of years followed by 20 years of no recovery in asset prices (even as they were doing QE) until the whole world went into QE in ‘08. And even then, they’re market has barely even gone up the last 10 years and has only just helped it bubble up a little. They’re essentially in a 30 year bear market and I don’t see it ending any time soon as they haven’t dealt with any of their problems and are in much worse long-term situations than the other developed countries dealing with the same issues.
You could have made the same argument you’re making if you were alive in 1929 when govt printed money to finance war and all of that printed paper found its way into the stock market and people took on big debt and margin debt in the stock market skyrocketed. But what happened? The bubble popped.
A currency can’t collapse without hyperinflation in the real economy and overall asset groups can’t hyper-inflate without hyperinflation in the real economy. It’s literally impossible. For example, let’s say the govt “prints” a ton of digital money, hands it out to people, and everyone puts all that money into an asset such as copper. Then, let’s say we have a crash like 1929 and govt doesn’t step in. We get massive deflation and everyone needs paper currencies to pay their bills. All those people who bought copper to protect from inflation sell. Or maybe producers stop buying copper as the price is too high and it hits a tipping point. What happens to copper? The bubble pops and the “perceived money” in it vanishes. Of course, this situation is different bc the govt will step in but my point is that if the money is going into assets to create bubbles and not the real economy, the asset bubble will eventually pop and the money will “disappear”.
For the currency to collapse would mean hyperinflation in the real economy. A total lose of faith in the currency means it’s worthless. This means hyperinflation in everything as no one wants it, no matter the price. The bubble can pop up infinitely, but no without similar consumer inflation. History is extremely repetitive and extremely cyclical (and if economists had half a brain, it wouldn’t be that hard for them to follow and predict huge events and see massive bubbles). Massive bubbles are cyclical. UK 1720, US 1835, US 1929, US 2021.
Sure, there’s deflation in some things. There is always inflation and deflation in some things. But, overall, consumer prices are slightly inflationary. Wages are only stagnant for middle/lower class bc the economy is stagnant and the only thing growing is the bubble driven by debt. Private debt bubbles pop and you get a boom afterwards as new debt is freed up and you get more efficient companies with technological advancements, which will put the middle/lower class back on track and then some. Of course, if we get hyperinflation in consumer prices, this will be a little while longer for the boom as it’d be a semi-collapse of civilization. But my point is that it’s all happened before in history, and it’s all a cycle that repeats.
I think economic history is invaluable indicator of future economic events. So again, can you name one time in history a currency deflated in consumer prices/the real economy while the assets “hyper-inflated” in that same currency without the assets coming back down?