Sunday, 5 February 2012

Today QE, tomorrow Weimar, the day after the Nazis

The Fed, the ECB and the Bank of England are now indulging in money printing on a scale even Robert Mugabe never managed. Its the easy short term way out for the political elite as its dire consequences for the electorate do not all appear immediately.

One consequence of near zero interest rates, a necessary condition for QE however has been noticed. People with savings receive almost zero interest and those with large debts including sovereign governments pay almost nothing in interest repayments. As inflation continues unabated at 4% plus this means negative real interest rates for savers so what your savings will buy is steadily diminishing

Meanwhile those with large debts secured on real assets will benefit when the price of these assets rise because of inflation

So what we have now is a hidden transfer of wealth from the prudent saver to the feckless and  imprudent debtor. This will continue and will accelerate as it did in the German Weimar Republic in the late 1920s until the prudent middle class find their wealth has been largely destroyed  and only the spivs and feckless thrive. In those conditions far right parties will thrive They will have the support, explicit and tacit, of the great silent majority, the middle class.

Its a frightening prospect but already we have had two democratic European governments replaced by EU politburo puppets. Who will be next? Not one of our politicians has objected to the EU Nazi behaviour so far. When they come for us it will be too late


Paul Coombes said...

How can an ordinary person mitigate this potential for hyper-inflation? I have been fortunate enough to pay off my mortgage so that they cannot take away the roof over my head and I have started to buy gold with what I currently have spare. Any other suggestions?

Eric Edmond said...

I wish I knew. Gold is traditional thing to hold along with other real assets, land property etc but come the revolution these can and will be confiscated as in Zimbabwe

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