The Economic Road Map Ahead

By: Gordon Long | Mon, Feb 24, 2014
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It Isn't That Complicated!

Global Economics is not as complicated as the Ivy trained Keynesian economists would have you believe.

As Goldman Sachs gleefully illustrates, the world is presently divided into two financially warring camps.

  1. The Emerging Markets (EM) who have Inflation problems and
  2. The Developed Markets (DM) that have a Disinflation to Deflation problem.

Inflation in some countries is currently lcose to extreme levels

Global Inflation Rates


Don't Be Confused by the Mis-directing Labels

It actually is not an "Emerging Markets" problem but rather a "Peripheral Nations" problem.

The Peripheral nations are those nations who are not yet fully "Industrial" nations but rather still "Resource" nations. Industrial nations consume Resources and hence "Resource" nations are very dependent on the economies of the "Industrial" economies and are desperately trying to get there because it historically offered higher levels of employment (a big political problem in Resource nations), higher value add product pricing and economic stability (versus the roller coaster commodity cycles).


The Emerging Markets have become the Economy

But something has quietly happened over the last decade other than continuous financial turmoil and "bubble" economics.

The willingness of the Emerging Markets (Peripheral Nations) to accept the currency that is being endlessly printed to finance economies, that consume more than they produce, has allowed an over expansion and over-reach by these EM's trying to become Industrial nations.

Share of Global Nominal Consumption


Excess Capacity & Insufficient Aggregate Demand

As a consequence today we are left with Output Gaps in the DM's and Current Account payment deficits in the Peripheral nations.


A Pathway to a Globalization Trap

All of this has placed the world on a destructive path towards what can best be termed a "Globalization Trap" and eventually a global fiat currency crisis. The road map is easy to discern and quite evident if you actually study the sign posts without wearing Keynesian filtering glasses and a dose of common sense

Globalization Trap


Profound Implications to Global Financial Markets

 

The road map has profound implications for the financial markets as economies of both the Developed and Emerging Economies move through an almost preordained cycle shown and labeled in the chart below.

Road Map

 


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Gordon Long

Author: Gordon Long

Gordon T. Long
Publisher - LONGWave

Gordon T. Long

Gordon T. Long has been publically offering his financial and economic writing since 2010, following a career internationally in technology, senior management & investment finance. He brings a unique perspective to macroeconomic analysis because of his broad background, which is not typically found or available to the public.

Mr. Long was a senior group executive with IBM and Motorola for over 20 years. Earlier in his career he was involved in Sales, Marketing & Service of computing and network communications solutions across an extensive array of industries. He subsequently held senior positions, which included: VP & General Manager, Four Phase (Canada); Vice President Operations, Motorola (MISL - Canada); Vice President Engineering & Officer, Motorola (Codex - USA).

After a career with Fortune 500 corporations, he became a senior officer of Cambex, a highly successful high tech start-up and public company (Nasdaq: CBEX), where he spearheaded global expansion as Executive VP & General Manager.

In 1995, he founded the LCM Groupe in Paris, France to specialize in the rapidly emerging Internet Venture Capital and Private Equity industry. A focus in the technology research field of Chaos Theory and Mandelbrot Generators lead in the early 2000's to the development of advanced Technical Analysis and Market Analytics platforms. The LCM Groupe is a recognized source for the most advanced technical analysis techniques employed in market trading pattern recognition.

Mr. Long presently resides in Boston, Massachusetts, continuing the expansion of the LCM Groupe's International Private Equity opportunities in addition to their core financial market trading platforms expertise. GordonTLong.com is a wholly owned operating unit of the LCM Groupe.

Gordon T. Long is a graduate Engineer, University of Waterloo (Canada) in Thermodynamics-Fluid Mechanics (Aerodynamics). On graduation from an intensive 5 year specialized Co-operative Engineering program he pursued graduate business studies at the prestigious Ivy Business School, University of Western Ontario (Canada) on a Northern & Central Gas Corporation Scholarship. He was subsequently selected to attend advanced one year training with the IBM Corporation in New York prior to starting his career with IBM.

Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

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TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/