Tag: debt crisis
Assuming the debt ceiling is eventually raised, the move will make the coming debt reckoning that much bigger. Officially, the national debt now comes in at $18.1 trillion – about equal to the nation’s total economic output for a year. Adding in all projected unfunded liabilities brings the total to about $210 trillion, as calculated by economist Lawrence Kotlikoff.
The world has added approximately $60 Trillion in debt since 2007, much of it sovereign debt created from deficit spending on social programs, wars, and much more. In that time the world has mined perhaps 30,000 tons of gold, or about 950 million ounces, worth at September 2015 prices a little more than a $Trillion. It is easy to create debt. Debt increases, currency in circulation increases, and until it crashes, life is good for the financial and political elite. But debt increasing 60 times more rapidly than gold indicates that debt is growing too rapidly and due for a reset.
Gold prices could (I doubt it) fall further in the short term, since High Frequency Trading dominates trading action, and central banks need to hide the fact that their policies and currencies are failing, which usually means they suppress gold prices. Gold was formerly the “canary in the coal mine” indicating the failure of monetary and fiscal policies. But active suppression of gold prices has replaced the “canary” with a plastic look-alike that disguises the warning signal which tells us that something is very wrong with our monetary policies.
We started with the statement ‘simply print more Fiat currency, and you inflate away the debt’… and the first part ‘simply print more Fiat currency’ fails the Trinity of Truth test. Under our current system it’s impossible to ‘simply print more Fiat currency’. How about the rest? Can we ‘inflate away the debt’? Well, if each new Dollar created is of necessity accompanied by a newly created Dollars’ worth of debt, this does not seem likely, does it? Any effort to ‘print away’ existing debt will result in ever larger debt. This is the road to bankruptcy.
The price for gold and silver is being artificially and purposefully suppressed by central bankers. The Western world is falling apart at the fiat financial seams, and those in control will resort to whatever means necessary to remain in control, evidenced by the unending proxy wars and Middle East disruptions started by the US. A Third World War cannot be taken out of the equation as the bankers are scrambling for their greedy lives, stealing as much wealth from people as possible.
I have mentioned countless times that the world is drowning in debt and the implications of this are obvious. We are either going to experience a debt deflation driven depression or we will experience a complete collapse of the current currency system, and some form of hyperinflation. People have been buying gold and silver to protect their wealth from monetary crisis for thousands of years. It’s the only way to keep your wealth safe when banks close, stock markets crash, and the government won’t let you touch your own money.
So how would any of this debt ever be settled were it called in tomorrow? The U.S. currently holds “only” 8,133.5 tonnes of gold in its reserves, a significant decline from the all-time high of over 20,000 tonnes in the 1950s. This amount calculates to about $340 billion—nothing to sneeze at, but a far cry from the current U.S. debt level. It’s unlikely that gold will ever reach $33,900 per ounce but the fact that supply has not kept up with debt levels suggests that prices might very well rise.
Assuming that revenue increases 4.6% per year, public debt increases 14% per year, and that a maximum of 1/3 of revenue can be used for paying interest, the blended interest rate in 2030 cannot exceed 2%. This tiny exercise tells me that western economies are accelerating toward a wall, there are only a few years or perhaps a decade or two remaining before a major reset must occur, and that the time for delusional thinking is nearly gone. What have you done to prepare for when one or many western economies “hit the wall?” Gold and silver might be better answers than devaluing currencies, overpriced bonds, or levitated stocks.
When the inevitable correction/crash occurs, the exits will be crowded, the herd will fall over the cliff, a few financial “dead bodies” will float to the surface, and banks will need bail-ins from depositors, so the “war on cash” is designed to force more assets into banks in anticipation of coming bail-ins.
The status quo is heavily slanted in favor of fiat currencies, against gold, and maintaining their power and wealth. The anti-gold sentiment is quite strong. It reminds me of two thoughts. If everyone is thinking the same thing, no one is thinking. If everyone is leaning over the same side of the boat, watch out.
We know that the Federal Reserve cranked up their digital printing presses and created over $16 Trillion in new currency, swaps, loans, bailouts, gifts, etc. in response to the 2008 financial crisis. If you invested in stocks and bonds, the various QE – “money printing” programs were probably successful for you. Examine the following chart and note the impact of QE on the S&P 500 Index.
A few words come to mind: anger, anguish, bankruptcy, betrayal, depression, recession, repression, riots, stagflation, and trauma. In a saner world, we will depend far less on fiat currencies that are devalued easily and inevitably. Instead we will trust gold and silver more and paper much less. My advice: Create your own financial sanity!
JPMorgan Chase very recently began test driving new rules in Cleveland as well as other markets.The bank will no longer accept cash from customers who want to use it to make mortgage payments, pay credit card balances or to cover their automobile loan. More and more people will be looking for ways to make it stop. This is where things promise to get interesting for gold and silver investors.