4 Aug 2011

Man the Life Boats

In an appearance at the Casey Research Spring Summit, Michael Maloney takes a look at the recent contraction of the money supply—it’s not pretty.
“This is an emergency – there’s something going wrong here,” Mike tells the crowd.
The dilemma of the U.S. Federal Reserve is that it’s damned if it does, damned if it doesn’t:
“If they end quantitative easing, it’s going to go into deflation—a huge implosion. If they continue it, the dollar continues losing value, and we go into a crisis of confidence… Any way this turns out, the dollar is going to go into a crisis of confidence. There’s no escaping that; you can’t do what they’ve done to the monetary system over these years, you can’t cheat gold the way they have done, and not have it come back to haunt you someday. “
Mike goes on to look at the money supply, particularly the part of the money supply represented by debt. (Remember, the growth of our global economy depends on continual borrowing.) See the GoldSilver.com knowledge centerwebinar for the charts Mike talks about. 
“The reason the Fed is panicked and inflating the money supply is because of this,” Mike says. “Deflation is [Fed Chair] Ben Bernanke’s worst nightmare, and it’s happening right now.”
The portion of the money supply represented by debt has collapsed by more 12 percent in the past few months. Real estate loans at all commercial banks, collapsing. Total revolving credit, collapsing—by 20%, Mike continues, based on the Fed’s own data.
“From World War II to today, this has never happened before. This hasn’t happened since the onset of the Great Depression. These are alarm bells going off saying that you’d better man the life boats.”


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