SOS Fiat Money, Precious Metals, Energy, Soft Commodities

Fiat Money arises from the supply of new paper money + credit creation by bankers. Over the past few decades, the credit creation or paper money created in far more than the last century (at least this is what I believe).

The question is what will happen next if most central bankers starts this CREDIT CREATION at an unprecedented rate? Credit creation is only good if it can result in additional economic benefit to the people. So, there is good and bad in credit creation, the good part is it helps businesses to expand (increase capacity in a manufacturing line) and eventually create employment. What BAD or not so good side is, easy credit will allow the consumers get hooked and result in borrowing. It is also BAD if the credit is given to hedge fund to speculate in the financial markets, which, technically speaking, the hedge fund manager does not create any economic benefit to the economy as compared with a car or phone manufacturer.

Over the last two decades, many hedge funds is established and highly unregulated and allow to leverage to the tilt until it becomes too big to fail. If we look at the issue from a VALUE ADDED perspective, most paper trading in financial markets is UNPRODUCTIVE i.e. does not bring much economic value to the people, other than creating a BIG BIG CASINO for more people to play in.

Of course, one of the ALL time legalised casino in the world is DERIVATIVES. This is the ultimate of credit creation without limit. And this is one of the most unregulated area in the "casino markets." Compared this with Las Vegas casinos, the real casinos is nothing but a drop of sweat in the ocean.

MyView

Nearly in every asset classes, there is a paper market for it, which are disconnected with the real demand and supply of such assets. You have precious metal, oil, sugar, cotton, copper, cocoa, orange, and anything we can name it, can be traded trough the financial "casinos" and can be leveraged should you enter the game.

This financial "casinos" have multiplied into a level that it is TOO BIG TO HANDLE. The question is can this phenomena continue indefinitely? The clear answer is no, it is a matter of time before it BURST. Wherever the money/credit created into productive or non productive sector, it will eventually deflate. Let just say, the money borrowed, went into speculative play in energy, and, if it eventually the price collapse, those involved in long energy will suffer. Same with share market.