What is Money
Company after company has announced that they are cutting workers. Many of you know I have documented hundreds of these announcements. It seems practically every company in America is cutting more or less about 10% of its workforce....some major business are shutting down completely and letting everyone go.....such as Circuit City on Friday......
But the day before, without much fanfare Saks announced the following:
ATLANTA, Jan 15 (Reuters) - Department store chain Saks Inc said on Thursday it would cut 9 percent of its workforce, lower capital spending and reduce other costs as demand for luxury goods declines in the tough U.S. economy.
Most of you don't understand how to count money. Just like you I learned about M1, M2, and M3 in my Economics classes. However, after developing Alstrynomics, I learned these numbers were actually very small components of total money. Money actually equals cash PLUS debt.....and the majority of money is created by debt creation....not government printing.
And so long as people, businesses, and municipalities CAN'T borrow.......total money is actually contracting as EXISTING debt continues to implode. Never in American history has debt imploded to the magnitude we are experiencing. Yes the government is printing cash, but no where near the rate that debt is evaporating. Not only is it evaporating, very little new debt is being created to supplement the government printing.
As a result, prices and wages are crashing everywhere.......and they will continue to crash until debt reaches sustainable levels or new debt starts to ramp up.......
The Motley Fool writers have done a terrible job of explaining this concept to you.....as well as most mainstream news publications....but I doubt many of them have studied Alstrynomics. As debt continues to evaporate.....so is total money......and as this process continues to run its course.....expect much more deflation and economic shutting down.