From Kristin Hannah, author of “The Nightingale,” a novel.
“In love we find out who we want to be; in war we find out who we are.”
She wrote about WWII, but her insight applies to debt and gold.
Miles Franklin sponsored this article.
The world has created over $200 trillion in debt, more than $30,000 for every person on the earth. The global financial system loves debt and craves the temporary thrill of excessive spending.
What’s not to love?
- The commercial banking system and central banks create the debt. Borrowers pay interest. Even at a low rate of 2.5%, over $5 trillion in interest is sucked out of economies each year for interest.
- Governments spend more on welfare and warfare. They never extinguish the debt and increase liabilities every day. The political payoffs continue, people believe they receive something for nothing, and voters support the status quo.
- Corporations borrow inexpensively, repurchase shares of their stock, boost bonuses and dividends, and management and shareholders increase their paper wealth.
- Deficit spending supports large corporations that depend upon Federal contracts. No one wants the “gravy-train” derailed.
- Based on economic practices we love ever-increasing debt, continuous revenue growth, near zero interest rates, government giveaways and rising stock markets.
THE PROBLEMS THAT RESULT FROM A LOVE OF DEBT:
- Inflate or Die!
- Interest must be paid.
- Fiat currencies are devalued, or the system implodes.
- Debt can’t increase forever.
- Debt creates a moral hazard. People trust the Fed will support the system with created currency units, and no one will be held responsible for bad decisions.
- Those who can’t protect themselves suffer devaluation of their savings, retirements, and wages.
THE SYSTEM WORKS, DON’T CHANGE IT. NOT TRUE!
- If the financial system depends on “stimulus,” “money printing,” “QE,” and other artificial supports, the system is not working well, nor is the economy strong.
- If the average person earns more currency units, but is poorer because the currency units purchase less, the system is not working well. (Venezuela, Argentina and much of the western world come to mind.)
- If the upper 0.1% of the population accumulates the lion’s share of income and assets, while the lower 50% struggles to survive, the system is not working well.
- Student loan debt has grown to about $1.5 trillion—guaranteed by the Federal government. This massive debt will weaken future purchasing power and home sales. Much of it will default because of politics as usual—create short-term benefits for the few and long-term problems for many.
HOW DOES THIS AFFECT GOLD?
- Gold has been money for thousands of years. When bankers and politicians changed circulating currencies from gold to debt based digital and paper notes issued by central banks, they damaged the financial system. Gold is limited, real and valuable, while debt based paper is unlimited, artificial and intrinsically worthless.
- Central banks have increased their balance sheets—created from “thin air”—about $20 trillion. To maintain confidence in their debt based currencies, they suppressed gold prices and ignored its importance. Otherwise gold prices would have shown the folly of central banking and debt based fiat currencies.
- Bankers determined it was important to wage war against gold, demonetize it, eliminate it from circulation and promote the digital and paper notes the world uses for currency and trade.
- The world’s bankers and politicians are in love with debt. They are masters who preside over an empire of debt.
But in the war against gold, the financial system discovered the reality of debt. The consequences to our financial systems are not encouraging.
OUR FINANCIAL SYSTEMS:
- Depend upon central banking, increasing debt and debt based currencies.
- Encourage out-of-control spending by politicians.
- Create trillions in sovereign debt and unfunded liabilities that are paid only by issuing more debt.
- Need low or negative interest rates for survival.
- Have inflated their unbacked currency units. Venezuela, Argentina and tens of other countries proved the fallacy of “printing” currency units.
- They show we love spending in a delusional world of ever-increasing debt. Another financial train-wreck approaches.
THE BOTTOM LINE:
We will delude ourselves by loving ever-increasing debt, or we must address the reality of gold. The world will discover, once again, that economic systems based on debt, unbacked currency units, central banking credit cycles and economic nonsense will self-destruct.
Thoughts from others:
From Mark Spitznagel:
“The real black swan problem of stock market busts is not about a remote event that is considered unforeseeable; rather it is about a foreseeable event that is considered remote. The vast majority of market participants fail to expect what should be, in reality, perfectly expected events.”
“Our central bank monetary-led boom has made debt replace wealth for a long time. That’s not sustainable, of course.”
From David Stockman (Deep State Declassified):
“When the next big ‘correction’ happens, Corporate America will plunge into another frenzy of ‘restructuring.’ That means inventory and capital expenditure cuts. And it means job cuts.”
When the financial “train-wreck” (black swan or big correction) occurs, owning silver and gold will be necessary.
Miles Franklin sells silver and gold—insurance against the delusions of fiat currency units, out-of-control spending and ever-increasing debt.
Miles Franklin: 1–800-822-8080.