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Discussion: (3 comments)

  1. Tom Sullivan

    Oh boy! Another happy-face prediction about our virtual socialism economy! Comrades, I’ve heard this dozens of times already.

  2. Joe Bannister

    But only if inflation does not rise above 1.7 percent or so. Otherwise the Fed is committed to suffocate the economy….

  3. Please consider the concept that derisking out of debt leveraged equity investments, and deleveraging out of currency carry trade investments, is going to stop any economic growth dead in its tracks.

    Liberalism featured the sovereignty of Banker Regime of democratic nation states, which provided policies of investment choice and schemes of credit in fiat money, producing seigniorage in Equity ETFs, and Credit ETFs, where the investor was the centerpiece of economic activity. Not only did Dividend Excluding Financial Investment, DTN, but also Nation Investment, EFA, and Small Cap Nation Investment, SCZ, figured prominently in the age of credit, through debt trade investing, seen in H&E Equipment Services, HEES, and United Rental, URI, and currency carry trade investing, seen in Eurozone Small Cap Dividends, DFE, and presented in their combined Yahoo Finance Chart.

    An inquiring mind asks what is the cost of a forklift from either one of the two aforementioned companies? This is a question implicit in the Robert P Murphy Econolog article The Importance of Capital in Economic Theory.

    Since the GFC, through money manager capitalism, we have had investors strongly buying the Small Cap Pure Growth companies, H&E Equipment Services, HEES, and United Rental, URI, the two providers of forklifts, which began trading lower in April 2014 on the failure of credit. These companies represent short selling opportunities.

    These providers of forklifts are toxic assets in the sense that they both have a Debt To Equity Ratio and a LT Debt To Equity Ratio that cannot be repaid, which suggests that the forklift providers are zombie companies.

    The price of forklifts to businesses is the cost of a business loan, that is interest, secured by inventory and other assets that can be claimed and sold; it is in this economy, that is the May 2014 economy, zero.

    These lynchpin companies became liabilities not assets to society, when they were transformed by Global ZIRP and became Frankensteins of the Creature from Jekyll Island. Once investors start aggressively disinvesting and derisking out of these and other debt leveraged and currency carry trade leveraged investments, economic deflation will commence; and what was in the age of credit, inflationism, becomes in the age of debt servitude, destructionism.

    With the death of fiat money, defined as Aggregate Credit, AGG, and Major World Currencies, DBV, and Emerging Market Currencies, CEW, the new money, that being diktat money, defined as the mandates of regional leaders to establish regional security, stability, and sustainability, will serve as the wheels for the economy.

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