Many people do not realise this but if the whole world were to pay off its debt, there would exist no more currency because the interest that is to be paid back extracts more currency out of the system than ever existed in the first place. Thus without perpetuating debt expansion, those that benefit from the debt would consequently suffer from its contraction.

So the banks and governments have painted themselves into a corner where monetary policy must be implemented to jump start the economy and increase the velocity of currency to a ‘healthy’ state. Their evidence for needing this is the CPI’s lack of inflation, by their definition:

Velocity = GDP / money supply 

It is apparent that from the formula above, velocity is inversely related to money supply, thus their current approach to print to stimulate the economy clearly decreases the velocity of currency as opposed to increasing it. In fact, their response to inflate the money supply has transferred energy out of the velocity of currency, which in turn transfers energy out of CPI inflation and directly injects it into finite resources and asset prices.

It is now evident that ‘stimulating’ the economy merely causes a hyperinflation of assets such as housing, commodities and stock markets. This hyperinflation thus holds a direct correlation with the broad money supply and an indirect correlation to the benchmark 10-year yield indicating the demand is increasing in assets that do not move easily, such as housing. Now, if rent or mortgage becomes a greater part of one’s wage, at the same time as wages stagnate, this leaves exponentially less currency for CPI items and consequently a less vibrant economy moving forward in time, according to the central banks’ economic formulas. 

Now, when the government issues a bond to the central bank, it increases the money supply in bank reserves coupled with decreasing the yield on the issued bond and hence devalues the currency as not only is there now an increased supply of currency, but foreign buyers have less demand for the now lower yielding bonds which must be bought in the issuer’s currency. What is interesting is that despite currency sitting in reserves, there still maintains a direct correlation between asset prices and money supply which are tied to the inverse correlation with the benchmark yield, velocity and CPI inflation, of which the latter all have steadily decreased since the 70’s (gold standard???). 

Avoiding any bias and cynicism, it appears that the only place these formulas and monetary designs lead to is a decoupling of the upper echelons of the socio-economic matrices from the middle and lower classes, which slowly merge into one class, burdened with intrinsic strain and unrest. The debt machine must continue to expand until those that issue the debt move higher above the pyramid, those that hold the units of debt are left with screen digits and those that exchanged it for other tangible assets become untouchable to those that possess the debt units which inevitably become the dust of money.