flow5

Central Banks Are Destroying Traditional Risk Spread Methodologies

a very literate commentary. but I don't understand why banks would borrow in the Euro-dollar system, which is unregulated (no legal reserves, only "prudential" or liquidity reserves) which has been allowed by the governments and central bankers to create trillions of new inter-national units of account. this deluge of international money has imposed excessive inflationary pressures on prices (e.g., housing, etc.).

Hyperinflation, Here We Come

There are various degrees of hyperinflation. The U.S. will experience a loss in the faith and credit of the Federal Government (unsupportable Federal Debt interest payments), followed by debt repudiation and the issuance of a new currency). There is no time table but at some point the increase in tax collections necessary to cover the Federal, State, & Local debt payments will be exhausted and all debt (public & private) will go into default.

And at the same time, a surfiet of Euro-dollars (dollar denominated assets) will cause a flight from the dollar and a economic catastrophe of unprecedented proportions. It is in no way inevitable but it seems the most probable outcome considering nothing, no nothing, is being done to avert this senario.