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To: ctdonath2
“when GDP / M2 drops < 1 it is game over for Capitalism”
Please elaborate.

When GDP/M2 <1 then
the incremental change in GDP for injected Capital is less than zero
Return on Investment (ROI) goes globally negative

Capitalism operates by using Capital to make Capital
When the ROI on injected Capital is <0 then
Entrepreneurs cease to invest
due to expected losses on investment

Industry ceases to create Jobs
Industry ceases to grow
Industry seeks to cut losses,
by cutting Jobs and liquidating

This continues until there is a +ROI on investment, but
in the process, societal degradation accelerates
The Health Care System Collapses as Hospitals close
Death, Despair, Anger follows

There is a potential for the return of the Dark Ages

68 posted on 12/09/2012 11:39:36 AM PST by HangnJudge
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To: HangnJudge

The wording’s a little different, but I believe Karl Denninger (market-ticker.org) has written extensively on that.


69 posted on 12/09/2012 12:11:18 PM PST by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
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