The world economy in 2014 (time of writing) is teetering on a knife edge. Sovereign debt is indescribably high while, at the same time, expanding more rapidly than ever before. Banking 'debt' (if you still can call those rip-off sales outfits banks) is hundreds of trillions - of dollars, pounds, euros etc. The nightmare in the background for financial institutions is derivatives. I like to refer to them as gambling contracts. They are mostly loss-making but not fully written down in annual accounts at this stage. But this whole debt mountain is unsustainable and unpayable, so it has to be written off somehow. That is, unless 'money printing' destroys currencies sufficiently to enable historic debt to be regarded with impunity.

Update November 2014: The DEFLATION word is appearing frequently now. The fear of it has caused both Europe and Japan to launch new money floods. Why do they do it, you may well ask, considering that the U.S and U.K.have both demonstrated the ineffectiveness of such a policy? Any first year economics student will remind you, printing money only delays bankruptcy while increasing the national debt. You need an increase in borrowing to expand an economy these days and that can't happen while debt is unmanageable. I can only guess that many sovereign nations are pushing into the future the day when they'll renege on repayments. The longer it goes on, the bigger the crisis to come, in my view.

March 2017: Several other updates (on this page) have been superseded since the deflationary impetus has been accepted. Still, very few people have accepted principle that printing money delays the inevitable serious financial dislocation to come. This dislocation becomes potentially more disastrous while debt is added to with impunity, in a 'dream' that the debt problem will be resolved by increasing it. The only hope for governments is super inflation for a few years. But inflation is not short term price rises. True inflation is caused by one principle only: Too much money chasing too little goods. That is not the case now, by any stretch of the imagination.

January 2019: There's been very little news about the possibility of a global slump setting in. Possibly that's due to the alternative headline subjects currently in vogue, i.e. Brexit, China & USA protectionism, Italy's populism, N Korea, Germany's recession, U.S government closure  .. and all that. But there are distinct signs of a slump that hasn't crowded the headlines, viz: stock markets down generally around 20% in 3 months, retail closures galore, car sales down globally (big layoffs imminent), real estate dips, student loans debacle, major banks facing insolvency .. and the like. The public seem to have little awareness about these result of profligate lending and borrowing, which caused the 'prosperity' from easy money availability since the credit crunch started in 2008. (See 'deflation'). It's like 'no cloud in the sky' at the moment, just like in 1920s. Watch out!

May2020: Well, the sky suddenly fell in, as expected. Although the stock market current dip (biggest ever) is being blamed on a pandemic, the rot actually set in last year, globally, and we were looking over the edge of the cliff in January. Then, suddenly along came a flu from China which the West over-reacted to, shutting down economies right left and centre. It seems too convenient economically to have 'The Great Pandemic' to blame for future economic catastrophe, which is what is now expected. It kind of gets governments off the hook, doesn't it, for overspending indiscriminately for decades. Slump could possibly set in a lot quicker now, than otherwise would have happened because money printing is frantic everywhere and unemployment skyrocketing. What shall we expect? Heaven knows. Sovereign debt looks unpayable now with tax receipts nose-diving and outgoings rocketing. It's impossible to continue. Solutions? I can only guess either 1) Hyper-inflation or 2) some sort of new currencies enabling sovereign debt to be managed. In either case it's the taxpayer who will pay because either of the options would decimate our savings, asset values, pension pots et al. I keep reminding myself that gov't doesn't have any money of its own. It has buildings and warships etc but these are not transferable into money. The people have all the wealth and it has to be sequestered somehow  for gov't to remain solvent. Hyperinflation of course would cause another rout for the populace but enable the national debt to look like pocket money. So that'll be favourite strategy I'm guessing. The virus will excuse that too I suspect. Scary times!

March 2023: a big shift took place since 2022. Now there's plenty of talk of hyperinflation although money doesn't outstrip available goods - yet! There have been occurrences of price inflation in certain commodities and food stuffs but there remains a lot of competition on the supply side so we're not exactly galloping into inflation. There's talk of USA reneging on their debt. There are new currencies appearing in the BRICS countries which, it's rumoured, will take over from the Dollar as a world-leader currency. Plus much talk of a massive crash about to happen. Well, what everybody knows doesn't usually happen. But, if it does, it's deflation all the way on a scale not seen before I think.