However, as has been pointed out various times in this thread, higher aggregates will evaporate in our economy, which was not possible in the Axis economies. Paper money just kept piling up.
those paper marks were not debt and could never be cleared from the economy thru default. USD debt however is vaporizing as we speak decreasing the amt of virtual USD's.
Sure, if debt were simply debt. Securitization has changed debt into a form of money - it now functions as such.
There is a difference between debt that is simply extended credit which can be withdrawn, and debt that is effectively monetized by market actions. The Fed's printing is really just a formality, so it doesn't matter whether it continues or not (although pressure will persist for it to proceed).
gold bulls are making a big deal about Operation Twist and how the extra liquidity is going to drive gold much much higher.
Cause and effect are reversed here. Again, the functional monetization has already taken place. Gold is not dependent upon the formality of the Fed introducing monetization to maintain liquidity; everything is already in place for gold's upward revaluation. The base monetary inflation is reactive and simply locks that fate in.
the contraction in the shadow banking system of securitized debt argues against those same securities effectively acting as money. they're contracting from defaults:
