In a recent micro-documentary Chris Duane of The Greatest Truth Never Told and Don’t Tread On Me discusses the coming collapse of our debt-based monetary system and provides a simple, yet succinct argument for why it cannot be prevented.
There’s $8 Trillion in global sovereign debt that needs to be rolled over in 2012. This does not include state, local, corporate or personal debt. There’s simply not enough cash in the world to buy all this debt.
What is worse – who would? Who in their right mind would loan cash today for ten years for a guaranteed return of 1.85%. We know inflation is at least running at 10% in the real world, and you’re taxed on the gains you make before inflation, making bonds a very bad choice for anybody.
But, this debt must be funded or our entire way of life ends. What most people do not know is that our money is debt. Every dollar that comes into existence has a dollar of debt and interest attached to it. The only way to pay back this debt and interest in this debt-based monetary system is that we need to create more debt every year in excess of the debt and interest accrued the year before, or we suffer the mother of all margin calls.
When that mother of all margin calls does finally happen – and it will because it is a mathematical inevitability - the paradigm shift that will follow promises to fundamentally alter our entire way of life. We’re not just talking about losing jobs, we’re talking about all of those worst case scenarios you’ve imagined about hyperinflation, no gas, no food, no government safety net, no emergency services and a complete breakdown in the rule of law.
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5 comments:
This person is obviously ignorant of economics. The very fact that long term interest rates are so low, shows that there is much more interest in buying our debt than we have to sell.
Very, very simple.
if interest rates start to rise (because lenders have to entice scarce buyers), then you'll have a debt crisis. Until then, it's steady as she goes.
@3:22
Are you viewing our debt as a commodity?
Where does the federal reserve get the money to purchase debt?
School me.
@3:22
Is that you Obama
4:32 - The Federal Reserve does not purchase debt, it issues bonds for others to purchase.
Sometimes it loans more money, sometimes it loans less, depending on how it's trying to manipulate interest rates.
On occasion, it will pay off debts and buy our bonds back, using money from the US Treasury.
10:03
Wrong. The treasury issues bonds and the pieces of paper in your pocket say "Federal Reserve Notes". Treasury borrows. The Fed lends.
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