Clear Signs of Deflation Chinese Vendors forced to raise prices: Bitcoin struggling to bounce back, Gold above $1900 but facing resistance – May 28, 2021,
All signs are pointing to the economy deflating and the only tool the governments and the Central banks of the world have at their disposal is providing liquidity. Business people in China because of the lack of imports into China are being forced to raise prices and this is going to lead to even more deflation as more dollars will buy fewer goods and services.
Now, adding fuel to the fire is the lack of productivity in the global economy, which is another sign of deflation, now although most people claim that central banks are printing money, what’s actually happening, central banks are proving liquidity to the commercial sector, which unlike the central banks have to balance their books.
From my vantage point, it’s pretty obvious why central bankers want to push through a central bank digital dollar, but that concept is already failing in China, furthermore, Bitcoin and other decentralized currencies are going to have their values tested during this deflationary cycle because the reason why the gold standard was abandoned was that it didn’t allow for the central bank wizardry that exists today.
Being that Bitcoin is a digital version of hard money, what I think could happen, during a deflationary cycle is that people get out of it altogether. even during the gold standard, for some, bartering was better than using cash and that’s terrifying for a government because what tends to happen is that the people might create their own version of cash and that could be based on something governments can’t touch.
Why governments don’t like people creating their own cash is that it can’t be taxed, being that Bitcoin is digital and the government at the very least can trace the point of sale I don’t know how Bitcoin stands up during a deflationary cycle. Regarding Gold, I base my financial opinions on the value of Gold and the charts appear to show that Gold will be retreating in price, as more and more people run out of physical cash.
I also like to remind people that there is no perfect money, no perfect money exists and even if it did some people wouldn’t want to use it. What gives gold its value is its properties that for whatever reason appeal to a large chunk of Western Civilization and the world
But if you’re not rich and you’re experiencing negative cash flow, you have to sell your gold, just like you have to sell your bitcoin. Near zero percent interest rates have created speculators all of the markets, the price of Gold should be at around $1200, the reason it’s near $2000 has to do with zero percent interest rates, a lot of people have already priced in the price INFLATIONARY crash and quite frankly I don’t blame people for pricing in an inflationary crash, because I don’t trust the government either.
Where I differ from most people is that I operate in the private sector and I’m not in the finance sector, I deal with tariffs, currency exchanges, manufacturers, logistics all of it. Everyone is in debt, a lot of companies are overleveraged and the economic toilet bowl is clogged.
What needs to happen are austerity measures, but how we get there is beyond me, governments can keep printing money and prices are going to keep going up, but do not confuse that with an INFLATIONARY ECONOMY. The economy is deflating and the currency is being debased, and prices are going up because trade deficits from a bartering perspective are becoming very problematic and for me, this is what a lot of people are going to have to learn the hard way.
Whether cash, bitcoin, or gold, once real goods and services are detached from any authority, prices start to take on a life of their own. Meaning some vendors will simply be forced to sell certain goods or services for a price that allows them to make a profit.
Governments might enact price controls, but that doesn’t matter, because property rights allow me to hoard what I own. What I’m getting at here is that this is a deflationary mechanism and I think people forget that in a free market, prices are what they are and any entity that interferes with true value eventually learns about the power of the market.
During any deflationary cycle, the gold price goes down too, people start saving everything, if the government prints money people will save it, if the government gives away digital money, vendors to avoid complicating their tax situation might reject it. I personally don’t accept Bitcoin, because I can see what the government is going to do once it becomes obvious that the global economy is deflating and the only cure is AUSTERITY MEASURES!
The free market is powerful and although I’m not entirely sure, the numbers show global deflation, I again have to point out that China will soon be raising prices on EVERYTHING! This means your currency will buy less in China irrespective of the value the forex markets put on the Renminbi. This is DEFLATIONARY! I like watching the price of Bitcoin because it trades 24/7/365 and if that price continues to slide, it’s a clear sign to me that the deflationary death cycle has begun!
Interesting times ahead!
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