Future of the crash: Brown’s Hyper inflation?
This crash is beginning with deflation - house, car, and product prices are going down.
It was caused by the USA and EU governments deregulating banks 10 years ago, resulting in an explosion of loans, deals and derivatives. The M4 measure of money supply tripled between 1997 and 2007, tripling house prices and creating massive bubbles in every other market too.
The M4 measurement doesn’t stoop to counting many “minor” instruments like derivatives, which have gone from nothing to £681 trillion, 13 times the GDP of the entire world. Nearly half of them are written by London banks, and as they go bad they are debt that cannot be repaid.
As the bubbles burst and the crash started, Gordon Brown's reaction has been the opposite to what it should have been – he’s poured good money after bad. He's again increasing the money supply, borrowing to cover an exposure of 1.5 times Britain's GDP in just six months, merely to bail out a few stunningly corrupt banks.
Brown is another Nick Leeson (the trader who broke Baring’s Bank) doubling up on already bad investments. The Royal Bank of Scotland alone is estimated to owe a disgusting £1.3 trillion, one year's GDP for the entire British nation.
The proper course was to transfer depositors’ bank accounts into a new good bank owned by the British people, and let the corrupt ones go bust. That way existing debt would have been extinguished, and Brown would not have foolishly created masses more.
Officially Britain has a £100 billion budget deficit, and the national debt is going up to £800 billion. The true total figure will be nearer five times that, and Brown’s hidden approaching a trillion in off balance sheet financing before we start. High interest rates are now inevitable.
With the amount Brown will have to borrow to waste on the banks he could have paid off all the nation's mortgages (about £2 trillion), or given every British worker £71,000 each.
The debt, of both the government and the banks, is now so massive it can never be repaid. Not to mention the debts and mortgages of households sucked in by bank greed.
Gordon Brown will choose only one course now: this vast new money supply can lead to hyper inflation, possibly beginning in 6 months and lasting 2-3 years. Instead of £1 we could be paying £10 or £100 for a loaf of bread.
That will suit Gordon nicely; RBS's debts will go down from £1.3 trillion to a manageable £13 billion; the government's to about £40 billion in today’s money.
The problem is hyper inflation forces super high interest rates, so most houses with a mortgage will be repossessed; millions will be unemployed and on static benefits; people will be on the same salaries but paying 10 - 100 times more for food; many could be starving.
With high taxes, increasing power of the state over the economy, exploding bureaucracy and choking EU regulation, the communist EU will keep us in poverty, as the Soviets did for 70 years. Gordon Brown could truthfully say he had no choice in all this because the EU made the decisions; but then he's the traitor that signed the Lisbon treaty imprisoning us inside. His excuse may be he was personally controlled and compromised, but he didn't have to obey.
David Noakes http://eutruth.org.uk