The debt pass the parcel and the 1930s

The one matter which global elites have been saying to anyone who will listen, to the point it has become a Litany, is that they do not want to push the world 'back to the 1930's', or at least the grim parts of it, namely mass unemployment and fascism etc, but also in the economic sense of not wanting to carry out 'beggar thy neighbour' economic policies- tariffs, devaluation of currency etc. But what is not really being discussed is that in the 1930s the world developed into various trading and currency blocs (Dollar, Franc, Sterling, Yen) or into attempt autarky (Soviet Union/Nazi Germany).

The development of several trading blocs being replaced by the current globalisation/free trade/dollar as the world's reserve currency system we have now. This is because each part of the globe which counts (US, Eurozone, China, Japan) in economic terms (relative and absolute) are each suffering in their own way with debt problems and with 3 of these areas also suffering from  the decision to unleash  cheap fiat money, either through the central banks literally printing it (US, Japan) or lending massive amounts to banks (China) further problems are being built into the current global economic order .

Until last week what was happening in the debt money markets was a kind of pass the parcel in terms of whose debts seems the most attractive (or not). Thus when the US first undertook Quantitative Easing, the Euro and Yen soared as investors switched currencies. Now the Eurozone is the bad boy and there is talk of bailouts and it breaking up or of countries like Germany being bankrupted by saving the whole pet project of the European elites. Further afield there is also rumblings from the East, where China has pumped so much cash into its banking system that inflation and asset prices are going through the roof, or Japan where the economy is stagnant and state debt breaches 100% of GDP.

What appears to be happening now is that this pass the parcel is ceasing, that investors are frightful of both sides of the Atlantic when it comes to parking cash. If they do invest it is into the economies of Brazil and other growing economies (which has produced its own set of problems for these countries) or into 'hard' assets such as silver, gold, oil (hence why it is now £1.25 a litre for petrol in the UK) etc . It will also dawn on investors that the Chinese economy is overheating and that Japan is simply stuck in the quicksand as it has been for the past 20 years.  Many other countries  outside of the big economic powers are imposing capital controls to stop the inward flow of dollars and liquidity which these economies simply cannot absorb without massive price inflation (inflation is as we know an effective tax on the poor, who are quite a large part of these countries populations).

The end result of this could be that the big economies simply cannot fund their debts except through the use of the printing presses  such as in the US or in Europe the bankruptcy of a major nation such as Spain. The result is still the same though; the destruction of the currencies value (or given that all currencies are now fiat- paper- money- what we think they are worth). This scenario would, of course, deal to China a massive blow (40% of GDP is exports, chief partners EU and US) and to Japan (already struggling with mass debts of its own).  If this were to happen the world could simply fold into itself as it did in the 1930s and we could well have several trading blocs, whose currencies are fixed (to what who knows) or ones which do not 'float', in which world trade generally collapses into regions or self sufficiency states, e.g. a Yuan bloc (China/South East Asia?),  the Mark (Germany, West/Northern Europe?), the Dollar (the American continent?).