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Date Posted: 16:04:36 4/27/23 Thu
Author: Jasper
Subject: John Rubino writes about the ponzi in the house.

.
he key takeaway is that a Ponzi scheme dies when the inflow of new money is insufficient to pay off existing investors victims. To understand why this matters today, let’s do a thought experiment. Say that in the coming year, the US has to pay out 5% more for Medicare and Social Security, and 7% more for its global military empire. Meanwhile, businesses with debts coming due have to roll them over at higher interest rates, while homeowners with adjustable-rate mortgages see their monthly payments rise.

In the aggregate, that’s a lot of new dollars — let’s say half a trillion — that didn’t exist a year ago but are needed now. And they have to come from somewhere. In a normal fiat currency system, the central bank simply creates the needed currency out of thin air, everyone gets paid, and the resulting decline in the value of the currency is small enough that few are bothered.

But that’s not what’s happening today. As the above obligations come due, the amount of available money is … shrinking. The following chart of the M2 money supply growth rate shows a massive spike from all the covid lockdown stimmy checks (which partially accounts for last year’s surge in consumer prices) and a correspondingly dramatic plunge this year. Note that during the entire fiat currency era, M2 has never before gone down.

https://www.howestreet.com/2023/04/you-cant-taper-a-ponzi-scheme/

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