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The Everything Bubble is about to turn to the Everything Collapse!
This is the inescapable outcome for the Western world.
The world economy should have collapsed in 2008 were it not for a massive Hocus Pocus exercise by Western central banks. At that time, global debt was $125 trillion plus derivatives. Today debt is $325 trillion plus quasi-debt or derivatives of probably $2+ quadrillion.
The US is today running bigger deficits than ever at a time when: The interest rate cycle is strongly up. There is only one buyer of US debt – the Fed. De-dollarisation will lead to a rapid decline of the dollar.
The financial system should have been allowed to collapse 15 years ago when the problem was 1/3 of today. But governments and central bankers prefer to postpone the inevitable and thus passing the batten to their successors thereby exacerbating the problem.
The world is now desperately clinging on to a false prosperity, based on false money, false moral values, false financial values, false politics and politicians, false media, false reporting of reality whether vaccines, climate, genders or history, etc.
Let’s look at some synonyms to false or falsehood according to Thesaurus: Cover-up, deceit, deception, dishonesty, fabrication, fakery, perjury, sham, fraud, etc.
Yes, all of the above fits today’s West and especially the US. But as I often point out, history repeats itself so this is nothing new. But since most major cycles can take 100 years from boom to bust and back again, very few people experience a severe depression in their lifetime.
In the West, the last major depression was in the 1930s followed by WWII.
Yes, I have repeated a similar message for quite a while. My purpose with this repetition is obvious. The world and in particular the Western economies are facing a wealth destruction never before seen in history and very few people are prepared for it.
As the Romans said “repetition is the mother of learning”.
Debt is not the sole reason for the problems which the world is now facing. Instead debt is a consequence of the falsehood culture that that is toxifying the world.
Unacceptable increases in sovereign debts arise when governments can no longer tell the truth, if they ever could!
So the end of the current economic cycle started when Nixon closed the gold window on August 15,1971. At that point, he realised that the US could no longer continue to run budget deficits as they had done since the early 1930s. To get rid of the disciplinary shackles of gold allowed the US government and most central banks to create “finger-snapping” money. This is what a Swedish Riksbank official called creating money out of thin air.
By 2030, debt could be as high as $3 quadrillion. This assumes that the quasi debt of global derivatives of $2 – $2.5 quadrillion has been “rescued” by central banks in order to stop the financial system from imploding.
The bank failures in mid-March starting with Silicon Valley Bank were just a warning shot. Banks need high rates and a reduction in the loan portfolio to survive. But borrowers, both commercial and private, need lower rates and more credit to survive.
This is a dilemma without solution. It will end up with both sides losing. Borrowers will default and banks will go bankrupt.
Before that there will be the biggest debt feast in the history of the world. It requires no skill, no assets, no security to create the quadrillions of dollars which will temporarily defer the problem. All that is needed is a bit more finger-snapping before the whole insolvent corrupt system collapses.
https://www.zerohedge.com/personal-finance/von-greyerz-its-all-about-economic-survival-got-gold