The Economic Roadmap Ahead: "It Isn't That Complicated"

Tyler Durden's picture

Submitted by Gordon T. Long of,

Global Economics is not as complicated as the Ivy-league-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.


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).


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.


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


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 roadmap 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

Click to Expand


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

Click to Expand


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VD's picture

moarer QE will solve all issues for all nations...bc EM's have been vociferously begging for untaper....

Umh's picture

Being dead solves a lot of problems too.

TBT or not TBT's picture

A variation of the ZH masthead slogan.

N2OJoe's picture

Long Nailguns and Military uniforms.

knukles's picture

If it's Goldilocks explaining it, then it's simplicity shrouded in a false mystery wrapped in an enigma, veiled with intellectual pomposity presented with artificial humility intended to generate commissions from other people's money for free.
Meaning it may be the truth, but them tellin' ya's oughta make ya' real suspicious.

Suspicious as sayin' to a fella in backwoods of Arkansas you "Friended" his sister.

ElvisDog's picture

Hah, too bad the Fed is the dog that wags the tail, and too bad the Fed doesn't give a shit about the hopes and dreams of the EM. In fact, it probably serves their purpose if the EM economies collapse.

RaceToTheBottom's picture

MOAR Reason for Emerging markets to jettison Bankster World inflated currency.


A Lunatic's picture

The end result of this fiat ponzi scheme is evident indeed. Nonetheless, MOAR FORWARD, BITCHEZ........

The Gooch's picture

That's it. I'm gonna become a swamp logger and build guitars.


Yes_Questions's picture



Swimsuit Models!



So US is an Emerging Market now?


Or has inflation not hit here, yet?


Nevermind, baitn'



johnQpublic's picture

The Developed Markets (DM) that have a Disinflation to Deflation problem



been grocery shopping much?

concept fail

akak's picture

I just got back from the grocery store, and I noticed that most of the breads are now $0.50 higher than they were a week or two ago.  A number of other items had also risen in price --- along with many others having had their packaging shrunk.  At this rate, in a couple of years a bag of potato chips will be a bag of potato chip.

PS: Nothing was lower in price, except for a sale on celery.  Put that in your pipe and smoke it, you deflationary flat-earthers.

rosiescenario's picture

Well, you should just have your chauffeur do the shopping, like Alan and Ben, then you have no inflation might also wish to have him handle paying your medical bills, too.

ElvisDog's picture

And god damn it, Hempler's nitrate-free bacon was $1.00 more per 20 ounce package....

AynRandFan's picture

Inflation of imported goods, and deflation of domestic assets like real estate.

10mm's picture

Deflation smashian, Inflatian smashian.

Stuck on Zero's picture

Is the U.S. a post-developed nation?  What's the opposite of emerging? Submerging?


TBT or not TBT's picture

Argentina, Greece, Venezuela, Spain, certain inland parts of Mexifornia, long list....

AdvancingTime's picture

Whether by design or merely as a byproduct of globalization we have weaved a web of financial transactions that circle the globe. Over the last several years as money was printed by the central Banks it was not contained in the countries where in was printed. This money flowed across borders influencing and distorting markets and prices across the world.

Some people have been calling for a "world currency" for years. the saying "one should never let a good crisis go to waste" means a meltdown with high levels of fear would present a perfect opportunity to advance this agenda down the field. Remember many people with agendas have a lot to gain when a major shift in the currency markets takes place.

Caviar Emptor's picture

Well if you have deflation in the cold northern hemisphere plus inflation in the hot Southern Hemisphere, the net effect gives you Biflation.
Simply put, gravity pulls income downward while convection pushes prices upward. There will never be a deflationary collapse nor a hyperinflation supernova. Just a slow grind down of your buying power and standard of living

TBT or not TBT's picture

Agreed. On the other hand, black swans can undo all sorts of plans when there is enormous stress built up and little resiliency in our flailing systems. Note that there was a previous period of expanded global trade and internationalism that ended in vastly destructive paroxysms of hypernationalism and countervailing states of total war.

AynRandFan's picture

I think you should add a reference to trade winds.

ptolemy_newit's picture

I think most of you investors really don’t see the macro, of course timing is everything!!!!!!

You will see metal deflation proper when JPM sells that metals division off to some EM.  They can pay the manipulation legal bills no problem.  Buffet would pay him more for his skills.

Average person deflation benefit = ability to buy more with savings, do not need gold, do need ATM's

Average corporation deflation benefit = input cost down, do not need gold, do need open markets

Average empire family deflation benefit = pump and dump over longer cycles. Need Gold bath tubs, do not need peak population

It’s not rocket science, export production and investment to emerging markets (15 years).  Make huge gains on trade from low cost inputs (20 years).  Make them EM people feel rich and get them to buy MOAR of everything.  Then dump the world and move production to sub-Sahara Africa.


We had a good long run in the Americas and short prosperous con in Asean.


falak pema's picture

ha ha ha, when thieves fall out...

Give em enuff rope...and even the Pope poops.

4 Freedoms's picture

Please fix the Click to Expand graphics.

pilager's picture

Does that mean I can get 2 Greeks or 3