It seems to me that there is a magnitude more money than there needs to be. There is a concept of money on the sidelines which never really comes into play then there is the money which is actually in play, then there is money which through credit default swaps and derivatives etc, which mirrors other money but is more along the lines of imaginary money (until a crash), when it suddenly becomes very real and very serious.
My thinking is that debt is the bull in the china shop. Most Americans agree that default is better than inflation, which means the derivatives and credit swaps come into play as millions of individuals and businesses fail and their debts are made whole in a bizarre world where debt and money are created and destroyed with little relationship to it’s underlying value.
For the banks this is great as they loaned nothing and get paid with real dollars and thus will end up owning more than 100% of everything. For the people this is very bad as we have seen the middle class in America strip mined for the last 30 years since Regan started us down the path of deregulation.
