"When I think of repression I think of the
Psychological concept that repression is the suppression (or pushing
back) of something that is too painful to deal with in sort of a
conscious way. That is exactly what the central banks of the world have
been doing essentially since 2008. What we had in 2008 was the beginning
of a debt deleveraging cycle o the dreaded debt deflation. The
economists often like to argue that deflation is terrible but they are
being overly general because deflation is actually a wonderful thing (we
all want to have things we want to buy be cheaper) but the issue for
the economists or Keynesian's is 'debt deflation'".
When debt begins to deflate you run the risk of becoming insolvent particularly in the bond market.
"Because we have
been in this debt leveraging cycle for over 30 years ( a bond bubble
would be the simplest way of putting it) the central banks are all
terrified of a bond bear market because that means that almost instantly
all developed nations are bankrupt because the way they have papered
over the decline in living standard is by issuing more debt. It has
gotten to the point now where because we don't have the money to pay the
debt back we are issuing new debt to roll over the old debt (or pay
back the old debt)."
"It sounds like a Ponzi scheme and it actually is! It
works relatively well while the bond or underlying asset is rising in
value because the debt is getting cheaper and the yield is falling
"When it reverses
if you don't have the money to pay back the bond so you start to enter a
deflationary cycle which is what we had in 2008.
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