In short, governments and central banks deluded themselves into thinking that unlimited deficit spending financed by unlimited money printing won't do what they've done for literally millennia — plunge the economy into stagflation.

They are, of course, wrong. And we're seeing the catastrophe unfold before our eyes.

From Nixon to $33 Trillion in Debt

The story begins in the 1970s when Nixon broke the global gold standard, unleashing permanent deficits worldwide. But the latest chapter starts in 2008 when central banks bailed out the financial system by effectively printing trillions of dollars.

At the time, everybody knew that much printing would cause inflation, perhaps with a 12 to 18-month delay. But it didn't. Why? Banks held on to the free trillions to plug the trillion-dollar-sized holes in their balance sheet. Combined with a freebie, China's manufacturing miracle lowered the cost of consumer goods.