by John Rubino
Dollar Collapse
The Fiat Currency Age is nothing if not repetitious.
There are dozens of charts that illustrate how closely today’s financial bubble resembles its predecessors. But simple is better when expressing a hard truth, so let’s go with that old standby, margin debt. This is debt created when over-stimulated investors borrow against their stocks to buy more stocks. At its high extremes, the result is always the same: A price decline that forces overleveraged investors to liquidate at any price, turning correction into bloodbath. Note that the steeper the rise in margin debt, the more severe the resulting plunge in share prices.
[…] The next chart illustrates more clearly the “steep” thing. The current spike is one for the record books.