Endgame: The End of the Debt SuperCycle and How It Changes Everything

Like many other small European countries, it borrowed money very cheaply from abroad and paid very high interest rates on foreign deposits. Icelanders could borrow Japanese yen for close to 0 percent, and they paid foreign investors very high rates. For instance, Kaupthing Bank’s (an Icelandic bank) Isle of Man subsidiary offered 7.15 percent on on

The classic definition of deflation is a period of actual decline in the general price level and an economic environment that is characterized by inadequate or deficient aggregate demand.

People who think inflation isn’t possible point to high unemployment in the United States, the United Kingdom, and Europe. But as we’ve shown earlier in this book, many of the unemployed in the developed world are unskilled or will be unemployed long enough that their skills will be totally rusty and, hence, they will be unemployable. The slack, in

Equity volatility follows the credit cycle. If you push commercial and industrial (C&I) loans forward two years, it predicts increases in the Market Volatility Index (VIX) almost down to the month. We should expect heightened episodes of volatility for the next two years at a minimum.

In fact, for a long time, individual banks issued notes promising the holder to exchange the notes for gold. The idea that a currency should exactly equal national territory is really one that came about very late in history.

In the depths of the recession in March 2009, 3.9 million people were hired and 4.7 million were fired. That gives us a loss of 800,000 jobs in one month, but notice that 3.9 million people were hired! So the economy produces jobs. The issue is at what price does labor clear. In a globalized economy, wages are falling for the unskilled as they comp

The credit crisis is not yet fixed. We have shifted the crisis from homebuyers to banks and then finally to governments. There is no one else to step in. We are at endgame.

Now the United Kingdom is on the hook for some of the largest banking institutions in the world. (RBS’s balance sheet alone when it was nationalized was bigger than the United Kingdom’s GDP.) Indeed, the banking sector in the United Kingdom is one of the world’s largest: Assets of U.K. banks are more than five times the country’s GDP. In the United

If you believe in inflation, then you should seek to buy things that the government cannot print or create at will. Gold is an obvious choice, but in the 1970s other commodities did just as well, if not better. Hard commodities and even real estate can be very good hedges against inflation.