As discussed previously, we are getting ever closer to massive debt monetization by central banks and or the IMF due to the ever worsening fiscal position of ‘developed world’ sovereign entities. It seems to me a reminder for us all on the history and theory from specialists in the area would be useful here and now. I post up a couple of very informative links to this end.
Firstly, below is a 4 minute interview with Marc Faber (from early 2010). Here he very neatly explains the inevitable process we will walk through. The historical precedents are very clear and well trodden. There should be no surprises here for us. Volatility is at extreme levels so timing is always tricky but the direction should be clear to all.
The link i would like to add to Marc’s thesis explains the process of ‘financial repression’ which is critical in understanding the strategy of the world’s central bankers and political elites. We have to acknowledge that this strategy successfully ‘worked’ in the 70s to balance sovereign books. Mathematically it’s possible it could work again though the odds are narrowing ‘yoy’ for the success of this strategy due to the immense volatility the system is under. Here a good explanation of the process of ‘financial repression’ care of Jim Puplava.