Source: SRSrocco Report
The coming GREAT DEFLATION will impact the value of Gold and the Dollar much differently than what most analysts are forecasting. Unfortunately, most analysts do not understand the true underlying value of gold or the U.S. Dollar, because they base their forecasts on information that is inaccurate, flawed or imprecise.
This is due to two faulty theories:
- monetary science
- supply-demand market forces
While some aspects of monetary science and supply and demand forces do impact the prices of goods and services (on a short-term basis), the most important factor, ENERGY, is totally overlooked. You will never hear Peter Schiff include energy when he talks about the Federal Reserve, Commercial Banks, money printing or debt. Schiff, like most analysts, is stuck on studying superficial monetary data that does not get to the ROOT OF THE PROBLEM.
Furthermore, the majority of folks who believe in the Austrian School of economics, also fail to incorporate ENERGY into their analysis. For some strange reason, most analysts believe the world is run by the ENERGY TOOTH FAIRY (term by Louis Arnoux). Without cheap and abundant energy, monetary science and supply-demand forces are worthless.
That being said, as the debate on whether the world will experience, inflation, hyperinflation or deflation will continue to go on and on, I guarantee we are going to experience the MOTHER of all DEFLATIONS. Again, this will be due to the disintegrating energy sector and its inability to provide sufficent profitable net energy to the market.
The falling net energy and declining EROI – Energy Returned On Investment, are totally gutting the entire market. This can be seen quite clearly as the U.S. added $4 of debt for each $1 of GDP growth in 2016. According to the Zerohedge article, It Took $4 In New Debt To Create $1 In GDP:
As a reminder, according to the latest BEA revision, nominal 2016 GDP was $18.86 trillion, an increase of $632 billion from 2015; the question is how much credit had to be created to generate this growth. Well, according to the Z.1, total credit rose to a new record high $66.1 trillion. This was an increase of $2.511 trillion in the past year. It means that in 2016, it “cost” $4 in new debt to generate just $1 in new economic growth!
As we can see, adding $4 of debt to create $1 of artificially inflated GDP is not a long-term sustainable business model. I get a laugh hearing “Conspiracy Theorists” explain how the ELITE have been planning this take-over all along and have the markets totally under control. While conspiracies do indeed take place, the ELITE have been SHOOTING FROM THE HIP and WINGING IT just to keep the entire market from imploding.
For those who believe that the elite want to crush the market to buy assets for pennies on the Dollar, I am here to tell you… it CHAIN’T gonna happen. When the Ancient Roman Metropolis collapsed from a population of one million people down to 12,000, I can assure you, the majority of the ELITE were wiped out…. KAPUT.
Real Estate values and revenue streams in Ancient Rome evaporated into thin air. There was no “RECOVERY” or “PLAN B.” Death had come to the once great Roman Empire… for good.
Regardless, the coming GREAT DEFLATION will destroy the value of most assets shown in the chart below:
Of the $369 trillion in global asset values (2015), gold and silver accounted for $3.1 trillion or 0.8%. That’s correct, not even 1% of total global assets. Savills Research, who put together the data shown in the chart above, recently published figures on Global Real Estate Investment:
Now, this chart does not represent total Real Estate values, but rather shows how much money is being invested in the Global Real Estate Market (minus China). Interestingly, global real estate investment has never regained its previous peak set back in 2008. Furthermore, the data shows that global real estate investment has rolled over and declined since the first quarter of 2016. This is not a good sign.