For a couple years now I have been reminding people that Friedman predicted the Euro union could break down at the first real financial crisis (AKA credit bust). It seems we are coming closer and closer to that point and such an event is right in line with Prechter’s view of a massive deflationary depression (AKA credit bust).
If it seems like every bad sounding economic phrase generally translates into “credit bust” then you are starting to get it. Money is not the root of all evil, credit is. Credit pulls in future demand AND creates higher prices. It does this by increasing the money supply. It also allows people who would normally not be qualified to make a decent living the opportunity to make a fantastically good living off of the misery of others (the financial scammers of wall st). I wouldn’t let most of those guys mow my lawn for fear that they would mess it up but credit allows them to make many multiples of the salaries of anyone that I know. Once the peak of credit is hit, the money supply then contracts and anyone who was not able to grab a pile of cash at the top gets creamed as jobs evaporate and pensions dry up. In other words, the rich get richer and the middle class becomes lower middle class or even just plain old poor.
Sooner or later everyone will figure out what a scam this is and then we will see what we will see.
