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What is credit inflation?

This chart contains some of the worlds biggest indices. It clearly shows, that every other country except the USA is still trying to recover from the 2008 crash. Even countries like China and Germany are still struggling and can not come close to the point they were before the crash. On the other hand the USA has fully ” recovered ” and even has a 13 percent ” stronger ” economy. How is this possible?

credit inflation

The FED has been pumping bad credit into the economy at a very low interest rate. People are borrowing money for almost everything and this insane borrowing will lead to a massive default for most debtors. Americans now owe more in student loans than both credit card and automobile loans combined. The amount of student loan debt has nearly quintupled in the last 10 years alone.

credit inflatio

This easy (BAD) credit makes a temporary credit inflation and a mirage that the economy is growing. But when will it all end ? When people are full of bad credit and stop borrowing money, the economy will stop its ” growing ” and chaos will reign. The Fed does not “inject” liquidity; it only offers it. If nobody wants it, the credit inflation game is over. Debtors will default and deflation will rise.



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