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US Household Net Worth Plunges $11 Trillion Dollars

• ZeroHedge.com
 
Since the beginning of the greatest depression, US household net worth has plunged nearly 11 trillion dollars. All the while we continue to experience price inflation and expanded government spending. In a normal economy that isn’t run by a bunch of criminals, we should expect to see price deflation as malinvestment is wiped out. Since our money is based on debt, as debt is reduced though defaults and write-downs, the monetary base should contract, thereby leading to price deflation. Of course, this is not what we are actually experiencing at the present moment since the criminal central bankers and politicians have decided to prevent the liquidation of malinvestment through a nearly endless series of bailouts, guarantees, and deficit spending. Contrary to what the criminal Keynesians would have you believe, price deflation is a good thing. It does not lead to economic collapse. In a normal non-criminal monetary system, deflation will sink the paper money stock back down to the “real” money stock, which is a 1 to 1 ratio of paper issuance to the gold stock (or at least closer to this point). There is some debate about how far the money stock would sink to in our current system of fraud and theft, but I personally think it would shrink until everything that can be considered waste is liquidated from the economy. At the most, it would shrink back down to the existing money stock we had prior to the abolition of the gold system back in the 1960s since this is the existing stock of money that is not based on debt (I highly doubt it would shrink this far though.) It should be noted that it takes very little fiat money to have a functioning economy since prices will adjust back down meet the amount of currency in circulation. As money becomes more scarce, prices will fall until a market balance is achieved between the demand for money and its supply. Once all the bad investments are liquidated, the economy will once again begin experiencing a normal demand for credit and lending can resume in a much more sane fashion. In a non-criminal currency (ie. gold), inflation is caused by banks lending out more money than they have in gold reserves or by an increase in the gold stock. Business cycles are directly related to this fraudulent activity of excessive lending since the act of lending more paper money than the banks actually have in gold reserves artificially reduces interest rates, which leads to “booms” in the cycle.

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