Credit is now funneled increasingly into market speculation as opposed to productive innovation. Asset price appreciation as opposed to simple yield or “carry” is now critical to maintain the system’s momentum and longevity. Investment banking, which only a decade ago promoted small business development and transition to public markets, now is dominated by leveraged speculation and the Ponzi finance...When does money run out of time? The countdown begins when investable assets pose too much risk for too little return; when lenders desert credit markets for other alternatives such as cash or real assets.Comments:
If there's a hyperinflation, it may happen pretty fast.
This article reads a lot like the book I reviewed: Why things are falling apart. A lot like it, but not exactly like it. For example, it the economy can produce a "surplus", growth can resume. Without it, then you have this scenario here.
My take is that you need a growth driver that can produce a surplus. Hugh-Smith, the author of mentioned book, believes that we took all the low hanging fruit---this is what produced the surplus. To contrast with Hugh-Smith, if you were to develop something like a aneutronic fusion device ( or something even more plausible, a molten salt reactor ), it could spark a boom in economic activity because of the new surplus.
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