Grand Rapids, MI -- (SBWIRE) -- 05/15/2013 -- Financial advisor Dennis Tubbergen can usually be found helping his own clients. When he has a few free minutes, he is busy writing his daily blog, his weekly newsletter Moving Markets or interviewing his next guest expert for his weekly radio show.
Tubbergen's next guest is Karl Denninger, an American technology businessman, finance blogger and political activist. Denninger is sometimes referred to as a founding member of the Tea Party movement in the U.S.
Denninger was the founder and CEO of MCSNet in Chicago, a company that became one of the area's first commercial internet service providers. He is also a founding contributor to the libertarian-oriented finance blog www.marketticker.org and has used the internet to bring attention to his concerns with the financial system.
Tubbergen, who is an author, radio show host, and CEO of PLP Advisors, LLC, spends a lot of time giving his opinions on the economy in his online financial blog. On May 7, 2013 his blog was titled Europe: Deflation Looming?.
"Reuters reported that the European inflation rate fell to its lowest level in about three years as unemployment rose," began Tubbergen.
He quotes below from the April 30, 2013 article.
Inflation in the euro zone has fallen to a three-year low and unemployment has hit a new record, cementing expectations of an interest rate cut by the European Central Bank later this week.
With the bloc's economy mired in recession, inflation tumbled to 1.2 percent in April, the lowest level since February 2001 and the biggest monthly drop in more than four years, the European Union's statistics office Eurostate said on Tuesday.
That put the annual rate of increase in the cost of living well below the ECB's target of close to, but below 2 percent, raising pressure on the central bank to act to aid growth.
Euro zone unemployment meanwhile reached a record 12.1 percent of the working population in March.
EU leaders are already trying to shift away from the budget cuts that have dominated the response to the debt crisis since 2009, and the data will raise the specter of deflation as companies slash prices to entice shoppers.
But the European Commission, which polices countries' debts and deficits, defended its insistence on sustainable public accounts that many economists blame for deepening the two-year recession, saying it had "no austerity dogma."
"Unemployment is rising and inflation is falling -- both are symptoms of an economic winter season," explains Tubbergen. "The response of central banks, reducing interest rates and printing money, is simply an attempt to add money to the financial system in order to create inflation faster than money disappears from the financial system, which causes deflation."
Tubbergen claims the trouble with that philosophy is that it doesn't work. He gives an analogy below.
"You have a relative that is deeply in debt; so much so that they can't meet their monthly payments to service the debt," states Tubbergen. "This person is so deeply in debt that no matter how great the terms might be on a new loan, he is so far in debt it doesn't matter, he can't afford the payments that he has."
Tubbergen continues his story by saying you, the concerned kin, now provide the relative some cash in order to take some of the pressure off. You give this person enough in cash to make his debt payments for three months.
"For three months it might seem as if the problem is solved," continues Tubbergen. "Debt payments are made on time, creditors stop the harassing calls and life seems to have returned to normal. Then reality sets back in. There is not enough money to make the payments."
Tubbergen believes that, in essence, is where many governments, businesses and individuals are all around the world. While there is hope that things will kick in again economically speaking and provide enough in new income to make debt payments, that won't happen. The economic stagnation is a result of the debt: until the debt is dealt with, nothing can change.
"To continue with this analogy, printing money simply provides the struggling relative with money to make the payments," concludes Tubbergen. "The debt doesn't go away. And, until it does, nothing changes."
To read the blog in its entirety go to http://www.dennistubbergen.com and select his May 7, 2013 entry.
Tubbergen’s syndicated radio show can be heard on metro Michigan stations WTKG 1230 AM and WOOD Newsradio1300 AM and 106.9 FM.
About Dennis Tubbergen
Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in Grand Rapids, Michigan. Tubbergen is CEO of PLP Advisors, LLC and has an online blog that can be read at www.dennistubbergen.com. To view Tubbergen’s latest Moving Markets? newsletter, go to www.moving-markets.com.
The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.