When debt-asset bubbles expand at rates far above the expansion of earnings and real-world productive wealth, their collapse is inevitable. The Supernova model of financial collapse is one way to understand this.
As I noted yesterday in Will the Crazy Global Debt Bubble Ever End?, I've used the Supernova analogy for years, but didn't properly explain why it illuminates the dynamics of financial bubbles imploding.
According to Wikipedia, "A supernova is an astronomical event that occurs during the last stellar evolutionary stages of a massive star's life, whose dramatic and catastrophic destruction is marked by one final titanic explosion."
A key feature of a pre-supernova super-massive star is its rapid expansion. As the star consumes its available fuel via nuclear fusion, the star's outer layer expands. Once there is no longer enough fuel/fusion to resist the force of gravity, the star implodes as gravity takes over.
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Debt based money always ends.
ReplyDeleteIt is simply an unfair system of running an economy.
Those who have the access to the debt end up with all of the real assets.
That is why it always implodes.
Finally, the regular people realize what the You's have done to them and they rebel against it.
Once people refuse to accept the US Dollar, its hegemony will end.
Simple as that.
Better have some real money once that happens!
Gold, silver, Diamonds, Rubies, so on