I haven't had any significant money in a bank for a couple of years now. Just use them for transit.

As far as I can see, the essence of the problem is this:

[1] - most of the fiat money supply is backed by debt of one sort or another

[2] - much or most of that debt is secured over assets of various grades (for example, when the bank issues a mortgage, it creates new money which is backed by your promise to work your a*ss off for 25 years. However just in case you don't they secure it on the value of your property so they become the owners in case you fail to pay)

[3] - whats starting to happen in the world economy is that that asset base is beginning to shrink

Think of it like this. The Dash network has 3500 masternodes. Each of those needs 1000 Dash of collateral to stay on. If the Dash money supply started to magically "shrink" - i.e. 1 Dash overnight turned into 0.9 Dash in a kind of Cinderella hardfork, then the next morning all the masternodes would have gone and we'd have to quickly consolidate 10% of the money supply to get some of them back up and running. (Or Evan would have to do a quick rewrite of the rules to make it ok to only have 900 Dash instead of 1000 which would equate to a debt write off in my little analogy).

This is what's happening in the world economy. Debt is masternodes and asset prices are the collateral. Debt is staying the same but the asset values propping it up are shrinking. The equivalent of a worldwide margin call is then in effect but since there isn't enough collateral to go round defaults must ensue.

That's ok up to a point (which nobody knows where is) but if defaults get too prolific then confidence starts to crater. That's your Weimar scenario.

So the sequence is: Excess Debt --> Drag on Growth --> Deflation --> Defaults --> Loss of Confidence --> Hyper Inflation --> End

So I think Mike Maloney is right in principle. What nobody knows is is where we are in the "dance". He's alluding to the fact that there is something blowing up under the hood of the world economy - who knows. The thing about these things - as he points out - is that nobody knows about it until it's arrived because if "they" told us anything meaningful they'd just be bringing about a self fulfilling prophecy triggered by massive bank runs so no official pronouncements can ever afford to tell the truth.


EDIT: Freaky !

A moment after posting that I get this:



Maybe Mike Malloney's onto something after all.   (Or maybe I just haven't paid my hosting bill    )