From Birch Gold Group
At some point, an economic problem deepens so much that the piper has to be paid. Both in the U.S. and globally, one of those problems appears to be mountains of debt.
Jim Rickards recently issued a dire proclamation about the global debt situation:
Current global debt levels are simply not sustainable. Debt actually is sustainable if the debt is used for projects with positive returns and if the economy supporting the debt is growing faster than the debt itself. But neither of those conditions applies today.
In other words, most of the global debt we’re racking up isn’t being used for productive purposes. Instead it’s being used to service “benefits, interest and discretionary spending,” according to Rickards.
This debt growth should continue. According to the Institute of International Finance (IIF), global debt is expected to pass $255 trillion by the end of this year, and they don’t see the pace of debt accumulation slowing down.
In fact, you can see below how the official global debt has already skyrocketed from about $80 trillion in 1999 to this new record:
Zero Hedge reports that, by year’s end, the global debt will be “roughly equivalent to a record 330% of global GDP.”
With debt outpacing growth by such a large margin, we are fast approaching a day of reckoning. And when that day arrives, it could be disastrous.
Rickards: “It’s a Catastrophic Global Debt Crisis Waiting to Happen”
Another Zero Hedge artjcle reports:
The world bank looked at the four major episodes of debt increases that have occurred in more than 100 countries since 1970 — the Latin American debt crisis of the 1980s, the Asian financial crisis of the late 1990s and the global financial crisis from 2007 to 2009.
The bank says that we’re in the fourth episode now, and their prognosis isn’t good. In fact, they called the failure to properly manage the global debt “complacency”:
“The increase in debt globally has already been larger, faster, and more broad-based since the Great Financial Crisis than in the previous three waves. This should be seen as a leading indicator for the possibility of financial crises ahead and shake up the complacency that is evident in macroeconomic policy making today with regard to increasing levels of both public and private debt.”
Jim Rickards thinks the “trigger” for an imminent global debt crisis, if one happens, would boil down to rates:
Low interest rates facilitate unsustainable debt levels, at least in the short run. But with so much debt on the books, even modest rate increases will cause debt levels and deficits to explode as new borrowing is sought just to cover interest payments.
He also thinks that if these debt levels and deficits spiral out of control, it won’t take much to trigger a debt crisis not seen since the 1930s.
World Bank President David Malpass sounded another alarm that if a crisis were to hit: “Emerging and developing economies are already more vulnerable on a variety of fronts than they were ahead of the last crisis.”
Put simply, that means disaster for those economies if the global economy is upended. The ripple effects from such a crisis would also hit the U.S. economy hard.
Once it hits, no amount of wishful thinking, denial, or ignorance will make this problem go away.
Make Sure Your Retirement Stands On Solid Ground
Unabated debt fueled growth on a global scale has put the world economy on a “knife edge of a debt crisis,” if Jim Rickards ends up being right.
So now is an ideal time to consider fortifying your own “economy.” Market optimism is almost always pushed until it’s too late.
If you want to hedge against that, don’t wait to start preparing your exit plan. Consider adding precious metals like gold and silver to your savings, which tend to perform well under uncertain economic conditions.
After 8 long years of ultra-loose monetary policy from the Federal Reserve, it’s no secret that inflation is primed to soar. If your IRA or 401(k) is exposed to this threat, it’s critical to act now! That’s why thousands of Americans are moving their retirement into a Gold IRA. Learn how you can too with a free info kit on gold from Birch Gold Group. It reveals the little-known IRS Tax Law to move your IRA or 401(k) into gold. Click here to get your free Info Kit on Gold.
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And water could get you wet, bullets could kill you, and buying a used car from this guy could cause you to regret that decision.
It makes no sense that we will not see a deflationary dollar; rather than an inflationary one. A deflationary dollar in my opinion will avert an inflationary depression. Why?
Consider this… This week I bought a snickers candy bar. It was a small one; smaller than the size I bought as a young teenager around 1961. I put a dime on the counter and waited for the cashier to respond. He said the snickers bar would cost $1.80. I told him there was a time when I could purchase two of those candy bars for 10 cents. So I pulled out two dollar bills and paid for it. I thought in my mind those two dollar bills are about worthless; like in the time of Weimer Germany when it took a wheel barrel of money to purchase a loaf of bread. The only reason today we don’t need a wheel barrel is digital money.
Inflation is here and real. It just took longer like boiling a frog starting with cold water. In 1960 one could rent a one bedroom apartment on minimum wage. Today on minimum wage you are homeless.
The only way things are going to get normal again is a deflationary dollar. It makes sense when one thinks about it.
The course of inflation is over. Look at what QE did. It inflated the price of everything under the sun and ruined the spending power of the service class; but it did not increase production. It takes a middle class with money to spend to increase demand for production.
What we have is worthless money. That is what is most noticeable among the service class that is suffering the most because of this worthless money. They are living in an inflationary depression yet we have full employment.
It is so different than 1929.
So the real solution to this depression is to deflate the money so it can purchase more. So how is it going to deflate? By the federal reserve slowly taking it out of circulation? How about by introducing a gold backed currency and using it to buy back the near worthless green backs on pennies on the dollar. This will take time as the new currency begins to circulate through the economy and is used to pay off debt that would be worth pennies on the new dollar.
Consider this: The current value of the dollar is 2 cents. The national debt is 23 trillion dollars. At 2 cents on the dollar the national debt is 460 Billion in real money.
Do you see why the congress has no problem running up the debt? They need to to keep the government going. The FRN has done it’s job as legal tender in payment of debts since the national emergency of June 5, 1933. It is time to go back to the gold standard.
How to profit if true?
Read Adam Smith’s “The Wealth of Nations” then realize how far off we are to the real idea of profit.
You folks are thinking in status quo math. This is not a math problem. This is a people problem. How would your average African try to profit on this? How did the Vandals profit off of Rome? Profits Are Obvious. Of course, the police will form warlord gangs and take the ‘profits’ for themselves.
So how is it going to deflate? By the federal reserve slowly taking it out of circulation? How about by introducing a gold backed currency…”
Won’t happen. The fed is a tentacle of the vampire squid. Its very purpose is to use the jewbuck for maximum theft of wealth, then abruptly dump it to induce the goyim to accept, even beg for, a regional, then global electronic currency, all the better for security, fairness, and tracking.
The ((overlords)) intend to keep the gold for themselves, presumably to settle accounts among themselves. The debt-money itself doesn’t matter to them. They already own it. What they want is the collateral which they can “legally” acquire when debtors inevitably default: natural resouces like water, minerals, agricultural land; and productive assets like factories, mines, and infrastructure, and human worker-serfs.
A “gold standard” or a “gold-backed currency” imply government coercion and meddling in the marketplace. Matters would more rapidly rectify themsleves by simply letting vountary buyers and sellers use whatever medium of exhange or barter they agree upon.
Reality Doug’s idea of bullion precious metal rounds with nothing more than their weight, content, and purity indicated would be ideal. In gold’s case, a small admixture of copper, as in the Krugerrand, would make them more resistant to marring and wearing.
The reign of fiat money is almost over. Countries have been stock piling gold to prepare for the new really coming to the world of going back to real money. What I see is the time when the fiat greenback will no longer be the reserve currency of the world. Right now every country is printing and using their fiat currencies to purchase as much as they can of any value until they no longer can.
Our economists of all brands like Rickards are still thinking in the past. They see doom because they don’t get it. Countries like Russia, China, and Iran know where the train is going; and it isn’t off the cliff for them. They have been stockpiling gold in preparation for the new reality. Meanwhile they use the fiat to build infrastructure until they can’t.
Who are the fools? The West?
I’d like to see coin like the Krugerrand in circulation. No fiat money units, just x amount of precious metal content as it’s own currency. Unlike other gold coins, the Krugerrand is hard and suitable for circulation. It does not deform from being dropped like all the other sovereign gold coins, total crap design. Can’t bureaucrats do anything right? Well, they are pretty good at screwing over the masses. Funny how the best gold coin came from a place of such ill-repute. What would Elijah Cummings do? mwahhahaa
Don’t forget silver coins. They will be the dramatic currency when deflation bottoms out.
Yup for sure Silver is far more undervalued as TPTB fear it more than gold Its the poor guys money after all isn’t it?
I’ll see you and raise you a couple of quadrillion.
Why would you not borrow as much as possible if you have no intention of paying it back? (In real terms)
Unless you are part of the “ club” you will have to pay it back Dont delude yourself into thinking otherwise