People are not willing to spend money [Dit is een gevolg - van welke toestand, wlenke factoren, welke dynamiek]. They save or repay debt. Economic activity is slowing down: Retail, transportation, industry [gevolg van voorgaande of aparte factor?]. In southern Europe this trend is clear. In the US, the government has created a fake image of economic growth [hoe?]. The stock market is propped up by the large amount of QE money [wat is dat?] that is seeking returns. Job numbers are counting part time jobs and do not reflect the reality that 90 million people of working age do not participate in the labour market [dat heeft vermoedelijk met het voorgaande te maken?]. The main stream media are not questioning the economic recovery narrative [idem].

This low demand and underutilisation of the production [gevolg of aparte factor?] capacity creates a push towards reduced prices and creates a risk of deflation. Both government and private debt is sky high in the Western world. Deflation would increase the debt levels in real terms and would make it more difficult to repay. The current situation has a risk of debt default. Large scale private debt defaults could trigger problems in banks who own these debts and derivate products based on these debts.

The book value of the world's entire derivatives market is estimated to be about ten times the world's GDP or 1,200 trillion USD. In one way or other, these derivates are a claim on physical assets or services in the real world. And there is simply not enough physical goods and services in the real world to justify this derivatives valuation. The classic example are Gold derivatives. There are more than 70 times more paper gold contracts than there is physical gold in the entire world. Once confidence breaks, only 1 in 70 people will get their physical gold. These derivates are just a house of cards that can collapse if anyone converts a significant position into cash or physical assets. None of the large financial institutes want to break the confidence, because it will result in the bankruptcy of all large banks. And this time there is nobody to save them. Nobody is credible enough to put 1.2 quadrillion USD on the table and bail out the banks.  However, there are signs that the large money interests are preparing for the collapse. London banker Jacob Rothschild stated earlier in 2016 that he moved to gold and other cash and that the FED's money printing is an experiment that could spin out of control. MSNBC stated that "bank insiders" are preparing for a "financial nuclear winter".

Besides above mentioned risk of bank defaults, there is a specific risk associated with the large government debts of the EU, Japan and the US. Only the current low interest rates enable the governments to keep borrowing money and servicing their debts. But the situation is unstable. The deflation risk would result in reduced tax revenue and make it more difficult to service their debt. World history has shown that governments in this situation always resort to increased borrowing and increased government spending resulting in hyperinflation.  

So given this state of the world economy, what is the way out? Central banks want to fix the problem by creating moderate price inflation so that the governments and private debtors can gradually inflate our way out of their debts. Stated objective from the FED is 2% price inflation. That's what Quantitave Easing should accomplish. But QE does not result in inflation yet. First of all, FED only brings money into circulation between banks. That money goes into bonds and derivative and stays locked up between the large banks. The money is not injected into the real economy. The actual M2 money supply (money in circulation in the larger economy) is decreasing in the last few years. People are not taking out new loans. They are losing confidence. They are saving or repaying debt. And people are not spending the money that they do own. Money velocity and the

demand for products and services in the real economy is decreasing. For price inflation to occur the product of M2 and Money Velocity needs to increase. And currently both are going down. We are in a deflationary situation. So despite massive QE, the central banks are not realising their objective of limited price inflation. Central planners in government and central banks are at a loss. They do not seem to have a plan.

So what is likely to happen within the next year or so? The large debt continues to have a stranglehold over the economy. Growth of the real economy is not possible. There are two ways out of this situation:

1) Private individuals default on debt and banks get into trouble. This would result in bank runs and temporarily closing of the entire financial system. This is the Greek scenario where each person can withdraw only 60 EUR per day from the ATM. This will trigger a deflationary collapse. Cash is king of the crash. This is the scenario where you can buy an apartment for one tenth of its current value. That is, provided that you have cash outside the banking system.

2. Another scenario is Hyperinflation. The QE will finally result in so much money that all debt will evaporate. But this does not happen just like that. Hyperinflation requires also that people start spending money (money velocity) and they are right now simply not willing to. However a system crash like scenario 1 above may result in a crash of derivatives, bonds and stocks. That money might start looking for physical assets like gold/land/ports. This may be the trigger for that money that is now locked up in funny derivate constructions to enter the real economy. And cause hyperinflation. What will project you against that scenario? Owning gold/silver/land/houses. From these assets only physical gold and silver in your own possession are an option or land in Sweden or stocks/currency in Russia (who is not in the western system and doesn't have the massive debt problem; China is also not in the system, but they have a massive debt problem and might go down as well).