Q: Given an unending supply of inflationary medium, how long can a balloon keep expanding?
A: Exactly until the internal inflationary forces overcome structural integrity, causing balloon to burst.
- jbreher, proud monetary armageddonist nutjob since long before the turn of the millennia
Noted: Jbreher admits to being one of the armagaeddon nutjobs. Hopefully, you, jbreher, are not staking too much of actual value (more than 10% - or even up to 20% in really seemingly stupid-ass crazy dedication) on such an unlikely scenario.
Imagine for a moment that ALL bonds in developed countries (or at least up to 30 year) are with negative yield (like in Germany right now).
What would it mean?
To me, it would almost certainly mean that you would be charged for deposits. In a big picture this would look like system malfunction.
El-Erian recently said that fin system is not set up to operate with negative yields. Think of insurance and pension funds, for example.
In this situation, who would have deposits larger than a month or two of expenses?
Reset where and how would reset affect those negative rates?
I don't think that the CBs/IMF/etal have WarRoomed the possibilities sufficiently in order to be ready when the offal hits the oscillator. Accordingly, they will likely react in panic. Which would indicate the reset could go in any direction.
That said...
I think the most likely reset (should it occur within the near or mid term) would be a return to gold as the ultimate basis of world monetary system. I suppose there might be an interim step of 'backed by SDR', but I don't expect that particular sleight of hand to last more than a decade itself.
Agree again, since they (CB) got lots of gold, and no bitcoin.
However, I subscribe to Jim Rogers notion that when stocks would get smashed, gold would decline as well (temporarily), albeit it could rally 10% more first.
Eventually, SDRs would probably be based on precious metal basket (or just gold) plus, hopefully, bitcoin (once CB get some).
Methinks that your vision of 'monetary armageddon' is considerably tamer than is mine.