Portrait of Deflation — An Update

In September of 2013, I posted the following:

We are careening into the Black Hole of Zero Interest Rates (and zero capital), unless permanent gold backwardation short-circuits the process and forces the world to rebuild from barter.

Or we could just open the Mint.

The Black Hole of Zero Interest

Graph showing 30+ year decline in US 10YR Treasury bond yields

Avert your eyes or grab some popcorn. Bond bears will be gored.


UPDATE — January 2015

Now, more than two years later, looking at the following updated chart of the monthly average yield of 10 YR US Treasury bonds, we see that my prediction was indeed correct, and that the alleged bond experts and talking heads in the financial media saying that the bond bubble had burst were dead wrong. The bond bull is nowhere near over. Inexorably we are being sucked into the Black Hole of Zero Interest, from which no capital can escape. We are in a pernicious hyper-deflationary spiral. We are in the Greatest Depression.

greatest-depression

The only defense against the maw of this deflationary depression is to reopen the Mint to free and unlimited coinage of gold, as wisely mandated by the US Constitution, and for the government and corporations to refinance the Himalayan mountain of irredeemable and unpayable debt by reissuing it in the form of gold bonds, to stabilize the interest rate structure.

Barring that, the runaway bond bull will continue to surreptitiously siphon capital off of the balance sheets of savers and producers, bleeding them white, until permanent gold backwardation ultimately slays the bond bull without warning, causing the debt and derivatives towers to implode into nothingness (for they are already nothing), the world monetary system to vaporize, and specialization and division of labor to collapse. Absent money to facilitate indirect exchange, the world economy will flatten into direct exchange — barter — an unmitigated and needless catastrophe that will cause billions to suffer.

The Second Dark Age will descend upon humanity.

Suggested reading:

Causes and Consequences of Kondratiev’s Long-Wave Cycle, by Antal E. Fekete, 2005

The Revisionist Theory and History of Depressions, by Antal E. Fekete, 2009