It is interesting which psychology is currently in the world economy. In the West, we have now financially borrowed the real value 25 times. This is a pyramid game that will eventually have to smoke. The naivety that now emerges is not exactly among certain central banks or private financial institutions, but rather among those who eventually have to pay the bill.
Central banks print money to stimulate the economy – today this is done at the touch of a button (see front page). But if someone asks for their money – only a 5-10 per cent withdrawal of deposits in the banks due to the banks' own borrowing – will cause the banks to collapse within the chains and networks they operate with between them. This is, for example, the Greek government is aware of; therefore, they recently proposed setting up a limit on withdrawals from banks, and also asked people to give away part of their savings – so that the banks would not collapse. The money is not really there.
In today's money race, states print or borrow money. This will in turn reduce the purchasing power of the money where the bill is actually sent on into the future. In Greece, they are now pushing for a debt of around NOK 2700 trillion – mainly to the European Central Bank (ECB) and the International Monetary Fund (IMF). With new international rescue packages to temporarily prevent the country from collapsing financially, Greece is also required to collect more taxes, lend more money to businesses and consumers, and free up more business. But Greek banks already have so many bad loans – and creditors are queuing up outside the door. The need for another financial "rescue package" is now estimated at NOK 250-400 billion. It's just that they'll never be able to repay all this debt – especially as Europe approaches deflation with falling prices. Now after months of negotiations, Greece's Finance Minister Yanis Varroufakis said in a comment: "Everyone focuses too much on what ties are placed on a liquidity injection, but far too little on a vision of how Greece can recover and develop sustainability." Yes, how in the world will Greece – or other countries in the same situation – ever be able to pay their creditors, when they become impatient at the top of the pyramid? Greece may eventually have to withdraw from the eurozone and start printing drachmas again, have to file for bankruptcy or demand that the loans be written down.
Greece is just one example among many in the world economy. Today's debt spirals will probably soon cause "paper investments" to fall in value. When investors base share prices on expected value, they have confidence in a so-called price / earning where investments will pay for themselves within a certain number of years. But if expectations of growth or future profits fall, so does the credit market.
For example, much of what the Norwegian Pension Fund – of NOK 7000 billion – has invested in "securities" will almost collapse. In this country, the citizens have also largely given the banks confidence because they really believe the economy will continue to grow. It has been experienced that a three-room apartment that in the 70s cost a gross annual salary of 160 kroner, can now be sold for ten times the annual salary.
There is a feeling that everything will go well if you just push most things in front of you. But in reality, one is fooled by the cynics in the back room. Financial tools such as so-called hedge funds currently amount to 21 kroner – or 000 trillions. The top three on these funds' so-called "alpha list" earned nearly $ 10 billion each last year – Americans Kenneth C. Griffin (Citadel), James H. Simons (formerly NSA, now Renaissance Technologies), and Raymond Dalio (Bridgewater Associates).
Can one survive the bottomless debt of financial austerity? And is it the euro or the dollar that will do best? The US Federal Reserve has been pressing the keys diligently for some time, ie pushing up extra dollars, while the EU has held back for the euro. Money printing is called "quantitative easing" and is used to buy bonds to stimulate the economy when interest rates fall to zero. In the US, the economy thus increased by 2,4 per cent last year, while the eurozone economy increased by only 0,9 per cent. Germany now predicts that the euro will fall below the dollar this year, and down to 85 percent during 2017. So then we can expect that the European Central Bank will soon print even more money on it as well, and as before push the bill into the future. With higher prices, inflation and some economic growth, people and companies should get more in their hands – for a while. Before they discover that with this, purchasing power actually fell.
When will someone shout that the emperor is not wearing clothes? The fact that many in Norway are now experiencing payment difficulties and more bankruptcies due to falling oil prices may not be enough. With today's naivete, you may first have to experience that you need a wheelbarrow of money to get a loaf of bread. When the banknote presses run wild, you will eventually have to rake in the worthless money (see photos above) before using them to fire up the stove.
Economist Ragnar Frisch says on the back (Orienteringcolumn) in which he discusses credit purchases and the exploitation of the opinion that "economic development is only a means to an end." As then, one can quickly forget the "cultural, spiritual and moral values."