Life Blood

Money is the lifeblood of the economy. In the last boom cycle bankers created tons of money through credit expansion, naturally with the help of homebuyers (wanting to make fast money on a second and third home), consumers and fast expanding businesses.

Snakes and banks have a few things in common, they both have a lot of muscles. If you ever had a python snake around your neck you can feel it has a lot of muscles. Banks have the muscles to create money through credit expansion. Central banks have the mucles to create money and to set the official interest rates, manage the currency reserves etc.

When the credit bubble busted the short-term fix was relatively simple. Central bankers and politicians could replace much of the shrinking credit-money (credit contraction) with fresh money from the central bank “electronic printing press”. The money was used to bail out banks and financial institutions that based on horrible risk management (of credit) suddenly were imploding and still keep imploding. Well only the too big to fail got bailed out, the small banks went bankrupt or got swallowed up by super banks that had got billions and billions in fresh bail out money.

Fresh money is also used to buy the countries own debt. This to keep interests down and avoid further panic.

Many snakes can also be poisonous (luckily the python around my neck is not). If the central banks print too much electronic money it could at some point become poisonous for the lifeblood of the economy. The potential poisonous lifeblood of the economy is now congested around the heart of the economy. If the congested lifeblood dose not spread out in the economy it could at some point cause another heart attack with a lot of chaos in the world economy. In a big body (the world economy) it normally takes a lot of time for the lifeblood to spread out. Unemployment is up in most countries and consumer spending is down, the blood is simply congested around the heart of the economy. If the congested potential poisonous lifeblood should reach out in the economy it could down the road cause high inflation and or weakening of certain currencies.

If you fear the lifeblood of the economy could be poisoned you should consider investing in antidotes now. Personally I would think a good antidote diluted in water is reddish in color, it looks like wine, but do not taste like wine (few people have tasted it, but most people have touched it), I say no more….

To understand a snake you have to feel it, touch it, smell it. A true serpent master does not fear snakes. Snakes should fear him!