In 2007, Iceland was celebrated for attaining the world’s highest standard of living according to the U.N.’s annual Human Development Index report. In less than a generation, the tiny North Atlantic island had transformed from a traditional fishing and tourism-based economic backwater into a finance and banking powerhouse, rocketing the country’s wealth and living standards to enviable new heights. Sadly, Iceland’s economic boom was an illusion based on a reckless credit and asset bubble that led to a terrifying financial crisis when it popped in 2008.
It has been just five years since the Global Financial Crisis, and the world – in brazen defiance of the lessons of 2008 – is already back to blowing massive bubblesand naively praising the countries that are benefiting from these “fool’s gold” economic booms. The Southeast Asian island nation of Singapore is currently inflating one of the most egregious examples of these post-2009 bubbles, and is displaying parallels to Iceland’s bubble that are causing me to believe that its boom will end in a similar (but not necessarily identical) manner.
Like Iceland in its heyday, Singapore’s economic stability and vitality – on the surface at least – has made it the envy of the world at a time when most Western economies are languishing under feeble growth, and high rates of unemployment and poverty. Singapore’s booming finance and real estate-focused economy has earned it the moniker “The Switzerland of Asia”, and finance professionals from all over the world are flocking to work there to take refuge from the hard-hit financial sectors in their home countries. Singapore’s unemployment rate is a mere 1.8 percent even as the country’s red hot construction sector has been attracting overseas workers, and a growing number of wealthy citizens are hiring domestic helpers from neighboring countries like the Philippines and Indonesia. The ranks of Singapore’s wealthy are growing rapidly thanks to the country’s asset bubbles, which is helping to fuel a luxury consumption boom in everything from high-end apartments to exotic supercars.
Even though Singapore is no longer an emerging market nation, I consider its bubble economy to be part of the overall emerging markets bubble that I have been warning about due to its strategic role and location in Southeast Asia, which is also known as ASEAN (Association of Southeast Asian Nations). My recent reports on Malaysia, Thailand, the Philippines, and Indonesia show that the entire region is caught up in a massive bubble, and Singapore is benefiting from this bubble by acting as ASEAN’s financial center.
The emerging markets bubble began to inflate in 2009 after China launched a $586 billion stimulus plan to boost its economy after the Global Financial Crisis threatened the country’s economic growth. China’s stimulus plan aimed to drive economic growth with an ambitious debt-funded infrastructure and residential real estate construction boom that led to the building of countlessempty and unused cities and other wasteful projects. The stimulus plan caused Chinese growth to surge, and sparked a global raw materials boom and eventual bubble that provided an economic windfall to commodities exporters such as Australia and emerging market nations at a time when the rest of the global economy was suffering very heavily. International investors soon took notice and piled into emerging market investments to reduce their exposure to investments in deeply indebted and troubled Western economies.
Extremely low interest rates in the West and Japan, combined with the U.S. Federal Reserve’s multi-trillion dollar quantitative easing or QE programs resulted in a $4 trillion torrent of speculative “hot money” that flowed into emerging market investments from 2009 to 2013. An international carry trade arose in which investors borrowed significant sums of capital at rock-bottom interest rates from the U.S. and Japan, and directed the proceeds into high-yielding emerging markets assets with the intention of profiting from the difference in interest rates or the spread.
The sudden surge of demand for EM investments led to a classic “too much money chasing too few goods” scenario, which inflated bubbles in those countries’ assets, especially in bonds, which led to record low borrowing costs for emerging market governments and corporations. These ultra-low interest rates have helped to finance government-driven infrastructure spending booms while inflating an unprecedented wave of dangerous credit and real estate bubbles in emerging nations across the globe.
Hot money inflows, combined with central bank policies that allow currency appreciation to temper inflation, have contributed to an approximate 22 percent increase in the value of the Singapore dollar against the U.S. dollar since the financial crisis:
Foreign direct investment (net inflows, current dollars) into Singapore immediately surged to new highs after the financial crisis:
The stimulative global monetary environment and resultant bond bubble have helped to push 10 year Singapore government bond yields to record lows since the financial crisis, though yields have nearly doubled in the past year after news of the U.S. Federal Reserve’s QE taper plan surfaced:
Why Singapore Has A Dangerous Credit Bubble
Like many countries that have experienced economy-wide bubbles and busts – including the U.S. from 2003 to 2007 – Singapore currently has a ballooning credit bubble that is helping to drive economic growth and create an illusion of prosperity. Ultra-low interest rates are the primary reason why credit bubbles inflate in the first place, and Singapore’s bubble is no exception to this pattern.
An idiosyncrasy of Singapore’s interest rate policy makes their low interest rate-fueled credit bubble particularly acute: Singapore’s benchmark interest rate, known as the Singapore interbank offered rate or SIBOR, is tied to the U.S. Fed Funds Rate for the purpose of minimizing large swings in the U.S. dollar-Singapore dollar exchange rate.
Unfortunately, there are extremely dangerous side-effects of Singapore’s interest rate policy ever since the U.S. Federal Reserve has pursued its zero interest rate policy, or ZIRP, after the financial crisis in 2008. Near zero interest rates, which are intended to boost depressed economies like the U.S.’, are much too low for fast-growing economies like Singapore’s (I have shown how ZIRP is even creating another bubble in the U.S.). The SIBOR is used as a benchmark for pricing numerous types of loans in Singapore, from mortgages to commercial loans, so its ultra low level since 2008 has been fueling explosive rates of credit growth.
The chart of the SIBOR interest rate shows that it has been held at all time lows of under one percent for an unprecedented period of time:
The chart of the U.S. Fed Funds Rate shows how closely it is tracked by the SIBOR:
It is no coincidence that Singapore’s private sector loan growth began to surge immediately after the SIBOR dropped below one percent, causing total outstanding private sector loans to rise by a worrisome 133 percent since 2010:
Singapore’s M3 money supply, a broad measure of total money and credit in the economy, has been growing at a very high rate as well:
This chart from Nomura shows that Singapore’s loan growth has far outpaced its nominal GDP growth in recent years, making for the worst credit-GDP growth gap in Asia:
Low interest rates are helping to inflate a credit bubble in numerous sectors of the Singaporean economy, but the country’s household debt bubble is particularly alarming. Singapore’s ratio of household debt to gross domestic product recently hit approximately 75 percent, which is up from 55 percent in 2010 and 45 percent in 2005. Singapore’s household debt has risen by 41 percent since 2010, while household income has increased by only 25 percent and wages by a paltry 15 percent in comparison.
This chart shows that Singapore’s household debt to GDP ratio is one of the highest in Asia:
Source: Denise Law, FT
As concerning as Singapore’s credit bubble is already, it may grow far worse in the coming years because there is a strong probability that the U.S. Federal Reserve – with Janet Yellen now at the helm – will maintain its zero interest rate policy until as late as 2017.
Singapore Has An Epic Residential Property Bubble
The growth of Singapore’s credit bubble is inextricably linked to the country’s soaring property bubble because Singaporeans are going into debt to invest in property or buy more expensive houses than they can afford, similar to Americans during the U.S. housing bubble of 2003 to 2007.
Singapore’s property prices have approximately doubled since 2004, and are up by 60 percent since 2009 alone:
Singapore’s property bubble has inflated the average price of a new 1,000-square-foot condo to approximately $1 million to $1.2 million Singapore dollars ($799,000 to $965,638 U.S.), effectively pricing out many middle class and younger workers, while transferring wealth – at least until the bubble pops – to older and wealthier Singaporeans.
A 2013 study by The Economist magazine showed that Singapore has the world’s third most expensive residential property market on a price-to-rent basis, making it 57 percent overvalued versus its long-term average, behind only Canada and Hong Kong (which I consider to have property bubbles of their own). Singapore’s rental yields are miniscule at under 4 percent, and the country’s 25.38 average house price-to-income ratio confirms the overvaluation reading given by the price-to-rent ratio. In contrast, the U.S.’ average house price-to-income ratio is 2.16, while Germany’s ratio is 4.78, the U.K.’s ratio is 6.73, and Japan’s ratio is 6.99.
Singapore’s rapidly rising housing costs have resulted in an inflation problem in recent years, which is unsurprising considering how much the country’s money supply has risen. An increasing money supply leads to the dilution of a currency’s value, which manifests itself in the form of inflation or higher living costs. As a result, Singapore now ranks as one of the world’s ten most expensive cities.
Naturally, both domestic and foreign property speculators have had a field day buying and selling properties as prices soared. The majority of Singapore property buyers are local citizens, while 7 percent of transactions in the third quarter of 2013 were made by foreigners, which is down from 17 percent in 2011. In 2013, 34 percent of foreign property-buyers in Singapore were from China, 32 percent were from Indonesia, and 13 percent were from Malaysia. All three of the aforementioned countries have dangerous economic bubbles that are creating false and temporary prosperity, which has helped to inflate Singapore’s property bubble in turn (see my reports on the bubbles inIndonesia and Malaysia for more information).
Property developers quickly mobilized to profit from the property bubble as prices soared, which is now resulting in a glut of properties. Singapore’s Urban Redevelopment Authority estimates that nearly 95,000 private units are expected to hit the market over the next five years, in addition to 25,000 to 27,000 public housing flats each year.
According to Barclays analyst Tricia Song, “Total housing supply could average 40,000 units per annum and peak at 47,000 in 2015 – significantly above the historical average annual supply of 12,300 units.” Song added, “Assuming occupier demand of 15,500 units of private housing per annum, we expect the private vacancy rate to rise from 5.6 percent currently to 9.9 percent in 2016.” Ms. Song further stated that Singapore’s rents and property prices have typically declined after vacancy rates hit 8 percent.
Pricey property prices have led to the increasing construction of small “shoebox” apartments with floor areas of 500 square feet or less, which have become a popular vehicle for property speculation. In some new housing developments, 50 percent to 80 percent of apartments are shoebox units.
The fuel for Singapore’s property bubble is provided by a growing mortgage bubble, which has greatly contributed to the rapid rise in household debt that was discussed earlier. Singapore’s mortgage rates – which are based on the SIBOR interest rate – are at all time lows, which is encouraging the country’s mortgage borrowing binge. Mortgage loan growth rose by 18 percent each year over the last three years, bringing total outstanding mortgages to 46 percent of Singapore’s gross domestic product (GDP) from 35 percent. Nearly a third of Singapore’s mortgages are utilized for speculative property purchases rather than owner occupation, which is an indication of the level of speculative fervor in the country’s property market.
Even more worrisome is the fact that the “vast majority” (nearly 70 percentaccording to CIMB Research) of Singapore’s mortgages have floating interest rates, which will result in higher monthly mortgage payments when the U.S. Federal Reserve eventually raises interest rates, thereby causing the SIBOR to rise in tandem. Singapore’s mortgage market faces the risk of replicating the U.S. mortgage market’s crisis of 2007 and 2008, when adjustable rate mortgages or ARMs reset to higher interest rates after the Federal Reserve tightened its monetary policy.
According to the Monetary Authority of Singapore (MAS), Singapore’s central bank, 5 to 10 percent of borrowers may have over-extended themselves to buy property, as measured by borrowers whose total debt service payments account for more than 60 percent of their income. The MAS estimates that the proportion of over-extended borrowers could reach 10 to 15 percent if mortgage rates rise by 3 percentage points. A 2013 report showed that Singaporeans spend a large proportion of their income on housing, making it the 72nd worst out of 103 countries for this metric.
Singapore’s banking system faces a crisis when the country’s property bubble pops because its banks hold almost half of their credit portfolios in property-related loans, with residential mortgages accounting for nearly a third of their overall loan portfolios – an all-time high. While non-performing loans are at cyclical lows, this is par for the course in an abnormally low interest rate environment like the current one, and is not a reason for complacency and comfort; the risk is that non-performing loans will increase when interest rates eventually normalize.
The chart below shows which banks are the largest players in Singapore’s mortgage market, and therefore face significant risk when the mortgage and property bubble bursts:
Residential property development companies such as CapitaLand Ltd., City Developments Ltd., and Keppel Land are also highly vulnerable to the popping of the property bubble, and will likely replicate the experience of U.S. homebuilders in 2007 and 2008.
Singapore’s government has enacted various cooling measures to slow the residential property bubble’s growth, such as requiring foreign buyers to pay a 10 percent Additional Buyer’s Stamp Duty, capping loan tenures at 35 years, and mandating more conservative loan-to-value (LTV) limits. While these cooling measures have slowed the property bubble’s growth to an extent, they do not address the bubble’s root cause: abnormally low interest rates. Furthermore, these measures do not change the fact that Singapore’s property bubble has already been inflated to economy threatening levels, nor do they help to deflate the existing bubble. The damage (to be realized in the future) has already been done and is “baked into the cake”; Singapore’s property bubble cooling measures are tantamount to putting a Band-Aid on a flesh wound.
Cheap Credit Is Fueling A Construction Bubble
Abnormally low interest rates often lead to construction booms and bubbles because construction is a capital-intensive economic activity that benefits from low borrowing costs. Anyone taking a quick glance at Singapore’s skyline in recent years would see numerous construction cranes towering across the city. Singapore’s construction boom has been the most significant contributor to the country’s economic growth since the Global Financial Crisis by far, as the chart below shows:
Total construction demand hit a record S$35.8 billion in 2013, and the Building and Construction Authority (BCA) of Singapore recently announced that total construction demand could reach S$31-S$38 billion in 2014, with nearly 60 percent of the demand coming from public sector projects. The BCA expects similar levels of construction demand in 2015 and 2016 as well. Residential construction, which has been boosted by the previously discussed property bubble, accounts for most of Singapore’s non-public sector construction demand. Construction activity was expected to rise 4.9 percent in 2013, after an 8.6 percent increase in 2012. Construction industry work permits rose to 306,500 in June 2013 from 180,000 at the end-2007, which was the peak of Singapore’s prior economic boom before the financial crisis hit.
Singapore’s construction boom has been driving an over 18 percent annual increase in total outstanding building and construction loans in recent years:
Bank loans for building and construction, and mortgages surged to 79 percentof Singapore’s GDP, up from 62 percent in 2010.
According to BCA Chairman Mr Quek See Tiat, public sector construction demand will be driven largely by infrastructure projects such as “the Thomson MRT line, Eastern Region Line, North-South Expressway and the various healthcare infrastructural developments, as well as key commercial and institutional developments such as Project Jewel and Changi Airport Terminals 4 and 5.”
Singapore has been experiencing a surge in airport construction activity, including the building of a free movie theater, a butterfly garden, a children’s play areas, and a 300-meter-long shopping mall in Changi International Airport. A large bubble-shaped glass complex (symbolic of Singapore’s construction bubble?) will be built in the areas between the existing terminals, which will include additional space for travel facilities, more stores, gardens and a waterfall.
At a time of global crisis, opulent public construction projects – a common hallmark of a bubble economy – have become common in Singapore, such as the S$1.035 billion 103-acre Gardens by the Bay park that is part of the government’s plan to turn the country into a “City in a Garden.” Gardens by the Bay features eighteen biometric “Supertrees” that are 80 to 160 feet tall and cost three quarters of a million U.S. dollars each to build.
Singapore’s Marina Bay, which is located next to Gardens by the Bay, is a hotspot for public construction projects such as three new MRT rail lines that are expected to be completed this year, as well as six more more MRT stations by 2018 that are less than five minutes away from each other. In addition, numerous other amenities will be built such as a network of shaded or covered sidewalks for pedestrians, and a water taxi system that will provide an alternative means of transportation.
Singapore has also been experiencing a casino and resort building boom ever since casinos became legal in the country four years ago for the purpose of attracting wealthy high-rollers and vacationers from China. Singapore is on track to become the world’s second-biggest gambling market after the Marina Bay Sands and Resorts World Sentosa were opened in 2010 at a cost of over $10 billion.
Singapore’s casino boom is another way that China’s economic bubble and false prosperity is spilling over into the country. The eventual popping of China’s unsustainable bubble will certainly put a damper on the desire and ability of Chinese high-rollers to splurge in Singapore’s casinos. Relying on and catering to wealthy Chinese in 2014 is equivalent to relying on wealthy Japanese during Japan’s bubble economy of the late-1980s before it popped and plunged the country into a two-decade long (and counting) economic stagnation.
Singapore’s Financial Sector Is An Unsustainable Bubble
In cheap credit-driven bubble economies, the financial sector is always one of the largest beneficiaries. As Singapore’s bubble economy inflated in the past half decade, its booming financial sector earned the country the nickname “The Switzerland of Asia.” Singapore’s financial services industry grew 163%between 2008 and 2012. After construction, financial services have been the second most important driver of Singapore’s economic growth in recent years (light green line):
Singapore’s services sector, which is heavily weighted toward financial services, has been responsible for generating the majority of the country’semployment and wage growth in recent years. Finance professionals from all over the world have been clamoring to work in Singapore’s booming financial sector, which has contributed to the island’s population explosion that will be discussed in greater detail later in this report.
Singapore’s financial sector is now six times larger than its economy, with local and foreign banks holding assets worth S$2.1 trillion (US$1.7 trillion). The Singaporean financial sector’s assets under management (AUM) have increased at a 9 percent annual rate from 2007 to 2012, but surged 22 percentin 2012.
The primary reason for the country’s rapid AUM growth is its growing role as a banking hub in Asia, especially in booming Southeast Asia. A full 70 percentof assets managed in Singapore were invested in Asia in 2013, which is up from 60 percent in 2012. Rather than a reason for optimism, I view this fact as a reason for alarm and more proof that Singapore’s financial sector and overall economy are experiencing a bubble because Malaysia, Thailand, the Philippines, and Indonesia are all experiencing economic bubbles (including asset bubbles) of their own that are creating false prosperity in the region.
As Asian economies have bubbled up since the global financial crisis, Singapore developed a reputation as a safe-haven and tax-haven that is posing a threat to Switzerland’s dominance as a banking center. While Singapore is to be commended for its low tax rates and low corruption, its money management firms are naively investing their clients’ wealth in regions that have massive economic bubbles, and will be responsible for significant investment losses when the Chinese/emerging markets bubble truly pops.
As discussed early, Singapore’s banks are also exposed to the ultimate popping of the country’s property bubble because they hold almost half of their credit portfolios in local property-related loans, with residential mortgages accounting for nearly a third of their overall loan portfolios – a record high. Approximately 70 percent of Singapore’s mortgages have floating interest rates and almost a third of Singapore’s mortgages are used for speculative property purchases.
After three years of 18 percent annual mortgage loan growth, total outstanding mortgages rose from 35 percent of Singapore’s gross domestic product (GDP) to 46 percent, which poses a significant threat to the country’s banking system. To make matters worse, bank loans for building and construction combined with total outstanding mortgages surged from 62 percent to 79 percent of Singapore’s GDP in the past three years.
Like U.S. and Icelandic banks during their countries’ housing bubbles of 2003 to 2007, Singapore’s banks are experiencing good times as the bubble inflates, but are heading for a crisis when interest rates eventually rise. Singapore’s government is limited in its ability to bail out its financial institutions due to its significant public debt, which is one of the world’s highest at over 110 percent of the city-state’s GDP – a figure that is worse than the U.S.’ 106 percent public debt to GDP ratio. While most of Singapore’s public debt is owed to its own citizens as part of a mandatory savings-funded pension and healthcare plan, it still impairs the government’s ability to backstop the country’s highly-leveraged financial system.
As one of the 25 financial centers that the IMF regards as systemically important, a financial crisis centered in Singapore would put the entire global financial system in jeopardy.
Singapore’s Sovereign Wealth Funds Are At Risk
Singapore’s government runs two large sovereign wealth funds for the purpose of managing and investing its foreign reserves: Government of Singapore Investment Corporation, or GIC, and Temasek Holdings, which have U.S.$285 billion and U.S.$173.3 billion in assets under management respectively. GIC and Temasek Holdings’ assets under management have risen considerably in recent years as many Asian financial markets climbed to new heights. Singapore’s sovereign wealth funds invest heavily in Asia, with nearly three-quarters of Temasek’s portfolio invested in Asian equities. The growing bubbles in China and emerging markets (as well as other bubbles) are a major reason for the strong performance of Singapore’s sovereign wealth funds since the global financial crisis, which means that these funds are exposed to the eventual popping of these bubbles as well.
Singapore’s sovereign wealth funds experienced severe losses in the Crash of 2008: Temasek’s portfolio plunged by S$55 billion ($U.S. 43.4 billion) or about 40 percent by March 2009, while GIC lost S$59 billion ($U.S. 41.60 billion). Temasek and GIC were able to recoup their losses quickly, however, when the world began inflating a series of new bubbles in an attempt to grow its way out of its last bubble-induced crisis.
Singapore Has A Wealth Bubble
As Singapore’s economic and asset bubbles inflated in recent years, its citizens’ wealth has soared like Icelanders’ and Americans’ wealth in the mid-2000s. After rising 8.7 percent y-o-y by mid-2013, the country’s total wealth hit a record U.S. $1.1 trillion (S$1.37 trillion) or an average of U.S.$282,000 per adult. Over 183,000 or approximately 1 in every 30 Singaporeans is a now millionaire – a figure that roughly doubled from 2008 to 2012.
Singapore currently has the highest number of millionaires per capita in the entire world, and mainstream analysts – who are not aware of Singapore’s dangerous economic bubble – are predicting even more growth of the millionaire population in the next few years. Of course, the assumption that Singaporean citizens’ wealth will continue to grow at high rates requires further inflation of the country’s asset bubbles, to say nothing of the very real risk that these bubbles will pop and cause wealth to decline significantly.
Singapore Has As Population Bubble
Singapore’s high cost of living and extremely competitive education system has helped to push birth rates down to one of the lowest in the developed world –1.20 children per woman, which is well below the 2.1 children per woman replacement rate required to maintain the native population. Fearing a demographic crisis, Singapore’s government opened up the floodgates to immigrants, which caused the country’s population to grow by more than 1.2 million to a total of 5.3 million people in the past decade. Approximately 2 million people or just under 40 percent of Singapore’s current population are foreign residents.
Foreign workers in Singapore fall into two primary categories: semi-skilled or unskilled workers who commonly work in construction or domestic service, and highly-paid professionals who tend to work in the financial services sector.
According to the chart below, 21 percent of immigrants are S Pass and Employment Pass holders, who are members of the professional class, while 59 percent of immigrants are semi-skilled or unskilled workers:
Despite a roughly 25 percent increase in Singapore’s population in the past decade, the country’s ultra-low unemployment rate of 1.8 percent means that many new jobs were created to employ the sudden influx of immigrants. Here’s where Singapore’s bubbles come into play: most of the new jobs that were created are in sectors that are experiencing bubble-driven growth, namely construction and financial services.
In mid-2013, there were 306,500 construction workers on work permits in Singapore, hailing from countries such as Bangladesh, China and Myanmar. The growth of Singapore’s domestic servant population – which includes maids, chauffeurs, and private cooks – is a byproduct of the country’s soaring wealth, which is due in large part to the inflating economic bubble.
Singapore’s population increase of the past decade is essentially a bubble in its own right because it requires a continuation of the past decade’s economic trends – from rapid financial services sector growth to high rates of construction activity – in order to keep the country’s foreign workers employed. The continuation of the past decade’s economic trends requires further inflation of Singapore’s asset and credit bubble, which is ultimately unsustainable with property prices and household debt at such high levels already, as well as the perpetuation of the current abnormal low interest rate environment.
Rather that addressing the sustainability of its large existing immigrant population, Singapore’s government published a white paper in 2013 that detailed a plan for increasing the country’s population to 6.9 million by 2030. Contrary to the Singapore government’s hopes and expectations, the city-state may actually see a decrease in population when the bubbles in financial services and construction finally pop, leading to the loss of many bubble-era jobs that were created in those sectors.
How Singapore’s Bubble Economy Will Pop
Singapore’s bubble will most likely pop when the bubbles in China and emerging markets pop and as global and local interest rates continue to rise, which are what inflated the country’s credit and asset bubble in the first place. It is important to be aware that Singapore’s bubble economy may continue inflating for several more years if the U.S. Fed Funds Rate and SIBOR continue to be held at such low levels. Also, while I compared Singapore’s bubble economy to Iceland’s bubble economy before its collapse, I am not implying that these two bubbles are exactly alike or that their crises will play out identically. My argument is that both countries had or have finance and real estate-heavy island economies that were seen as safe-havens while their bubbles inflated and created an illusion of economic vitality.
As I’ve been saying even before this summer’s EM panic, I expect the ultimate popping of the emerging markets bubble to cause another crisis that is similar (though not identical in every technical sense) to the 1997 Asian Financial Crisis, and there is a strong chance that it will be even worse this time due to the fact that more countries are involved (Latin America, China, and Africa), and because the global economy is in a much weaker state now than it was during the booming late-1990s.
I will end this report with a relevant quote from economist Ludwig Von Mises:
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”