Loading ...The Central Banks will inflate away the debt
I’m watching my Dividend portfolio declining in value. It’s a choppy decline but no less a decline. Owned them for a decade or more with great appreciation and use the DRIP program.
The dividends were in the range of 3 -5% before the decline. Good income, tax friendly.
If Canada and the US settle into a 6% controlled inflation, it makes sense that the underlying stock price of those shares will decline until they throw off 6 or 7% dividends or investors may be tempted to invest in bonds once they stabilize.
Then on the other hand, what currency will we have when the system fails. So will they choose to inflate away the debt with inflation or move to a new currency and reprice everything.
During these periods the DOW/Gold ratio declines. This is when Gold shines.
“The Central Banks will inflate away the debt”
Is that the oroboros?
Since inflation IS debt creation BY DEFINITION, you wind up with even more debt rather than less.
So the only way to reduce debt loads is by Brady style restructuring.
Or outright liquidation/bankruptcy and writedowns and writeoffs.
So if you want to cut down to say half of the current $300T in global debt, owners of those bond “assets” would have to take 50% haircuts. Pension funds would be a big chunk of that, so retirees would take the hit.
Yes the bond holders will take a haircut and savers.