The flip side of credit is debt, and this is where the problem lies. There’s no limit to how much real money can be created. In a world of real money: each additional currency unit represents additional wealth. But with fiat credit or debt-money it is different. With credit, spending can be increased dramatically. But there is a limit to how much can be borrowed. Eventually, a point is reached where the cash flow dries up to service the interest on the debt. Then the system is insolvent, and broke.
Fiat Currencies lead to corruption and a crushing debt-burden, both are at the root of world’s troubles. Virtually everywhere, governments and their citizens are borrowing more than ever before, and in many cases, they are far beyond any chance of orderly repayment. The point of no return has been passed – where interest payments drown the ability to generate free cash to cover those payments. Consequently, the debt burden is growing greater and greater. It must be clear by now; Banksters thrive spectacularly when fiat currencies are in place.
When interest rates are pushed down by central banks to artificially low levels and held there for an extremely long period of time, credit expands and the burden of debt grows. That has been happening for almost four decades. And now, the entire economy depends on something that cannot continue, as debt cannot grow forever.
As long as rates stay low, the system is maintained and supported, but as the amount of debt increases, the quality decreases. Debtors’ balance sheets become weaker and weaker. Eventually, the credit markets change direction. Interest rates start rising. Then the weight of all that debt comes crashing down like an avalanche. And once it gets started, there is no stopping it.
Real money versus credit money
With real money, the more you have, the richer you become. But as the quantity of credit money increases, the economy becomes more and more vulnerable to a turn in the credit cycle. And that’s what’s happening with debt now. There’s a very simple reason why the credit cycle has turned. Because the economic cycle has turned too. The back wind that was working for the markets from 2009 through mid-2015, has turned into a head wind and is now working against the cabal.
To put this into perspective; The central banks cannot print real money. They can only issue more tickets for seats that don’t exist. So, they only make the underlying problem worse, by lending more money to more people who will not be able to pay it back. Most importantly – the wealthy are first in line when the counterfeit tickets are distributed. The result being, should you go to the stadium, you would find them sitting in your seat.
When the housing bubble popped in 2008, it is estimated that about $800 billion worth of homes went into foreclosure. Homes are real assets. When owners couldn’t pay, the homes went to the banks that had lent the ‘money’ against them.
These banks hadn’t built the houses. They never owned them. They never earned the money that they lent to buy them either. Nor did the money come from savers who had deposited their money in the bank. It was money that no one had ever earned. It was fictional.
But this didn’t stop the banks from using this fake money to capture real wealth – people’s homes.
End of fiat money hegemony is in sight
The banking system is a fantastic business-model; they lend money they don’t have and charge lenders interest on it. Add to this, the ‘fractional reserve lending’ that allows the banks to lend ten times more than what they have on deposit. In other words, they lend ‘money’ they don’t have and which doesn’t even exist, correctly called – credit money– while they are legally authorised to charge interest on it.
The financial system is in a tight corner with many fingers stuck in the dyke, but it isn’t known in advance, which finger, if removed, would cause the dyke to burst. But it does look increasingly certain that the end of the fiat money hegemony is in sight. The only questions at this point are: When does it end, and when does the real panic begin?
Regardless of the timespan, the demise of paper currencies is a certainty.
“The economic law of honest exchange, demands only things of real value as currency and cannot be repealed. The chaos that will one day ensue from our almost 50-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or the equivalent thereof, for their oil, rather than dollars or euros.” Ron Paul.
The credit market drives the entire economy
The credit market is where all types of debt – government, consumer, and corporate – are bought and sold. Because the credit market, isn’t as exciting as the stock market, investors often ignore it altogether. The last financial crisis began with one type of consumer debt, the subprime mortgages. These started going bad, causing massive sell-offs of troubled loans.
It’s critical to understand what’s happening in credit. The credit market is the largest financial market around the globe, it drives the entire economy. It is highly cyclical. When interest rates are low and credit is cheap, “booms” are experienced. When rates rise and credit tightens “busts” are experienced. Since the 2008 financial crisis, credit has been kept cheap and easy to access. Creating, in the current credit cycle, the biggest excesses that ever have occurred in corporate debt. When the credit market starts to turn, as more and more high-yielding corporate “junk” bonds i.e. debt turns bad, the next crisis will be kicked off.
EU is under Debt Threat and more
Brexit isn’t the only big threat to the EU, at least three more big debt storms are looming, and any one of them could shatter the crumbling EU. Although not an EU-member, Turkey is in a depression and defaulting, while it is a big debtor to EU-banks. The implosion which is already underway will strike the EU severely. Brexit has been from the beginning of the process clearly shown that no one in power either in the U.K. or EU wanted Brexit to happen, despite the fact UK-voters had delivered it, in a stunning rebuke of the EU’s drive for a continent-wide empire.
The Greek debt crisis is out of the news cycle, but that doesn’t mean their debt has magically vanished. Greek banks have over 100 billion in nonperforming loans, confirmed by the plunging bank stocks.
Italian banks are swimming in billions worth of debt, making Italy another debt victim. Its economy is in recession and is in the first phase of collapse. Italy’s largest banks are on the brink of failure, causing other EU banks into the disaster zone as well. Deutsche Bank is probably the canary in the coal mine, with its share price below €10, down from the high of ten years ago of € 150 per share. Overall, bank shares in Europe have plunged to all-time lows.
The EU is in trouble from more sides: The Yellow Vest Anti-EU protests are intensifying in France, and other EU nations. In Italy and Germany these are inclined to become intensified. The UK is still on course to withdraw from the EU on March 29, with a NO deal.
Next May, the European Parliament will hold elections. Anti-EU parties are expected to gain control or near control, empowering them to elect the next members of the powerful European Commission (EC) and the European Central Bank.
As frequent readers already know, the banks are in control. Most companies can’t afford to pay off their debt when it comes due. Instead, they rely on banks to refinance it. But, banks have been undoing credit and refinancing the debt continuously. Even as corporate debt has ballooned and credit quality has weakened. The banks have been kicking the can down the road. Many companies can barely afford their interest payments. This game can’t go on forever.
Interest rates are rising at the same time massive amounts of debt are coming due. Suddenly, many companies won’t be able to refinance their debt, forcing them into bankruptcy. The default rate will rise sharply, causing investors to dump their bonds.
And as many people have become aware of, thanks to their corrupt bookkeeping, banks don’t worry much about huge credit losses. In the meantime, Global sovereign debt will peak this year at $50 trillion.
When this debt crash occurs, it will be the largest destruction of wealth in history. There has never been a bigger bubble in bonds. That is being projected at $1.6 trillion of bonds and loans that will default.
Student debt poses another looming bubble threat. Over the past 10 years, students, most of whom have virtually no income, have racked up enormous debts. As of 2017, student debt totals more than $1.5 trillion, the second-largest source of household debt after home mortgages. All the signs show that the debt piled onto the youth will morph into another catastrophic bubble in the western economy.
The subprime car loans bubble is poised to cripple the economy. Most people have no idea how pervasive subprime loans have become in car loans. Over 90% of car sales is financed by loans or leases. These total in the US alone to more than $1 trillion.
Property bubble trouble
The property bubble is in trouble again. It is set to repeat itself with even more unsold and half-finished houses. Spain in 2008 was stuck throughout the country with over 3,5 million unsold properties. That number is set to grow again with new and unfinished properties from the upcoming crash ten years later.
Debts of this magnitude cannot be financed normally. Debts that can’t be repaid won’t be paid. In other words: It’s not just the magnitude of all the debts that’s the problem, but it is more who owes the money which is the bigger concern.
When the rich – a tiny percentage of the population – get in trouble with debt, it’s not a big economic problem. But when the poor and middle class get in trouble with debt – a huge percentage of the population – it’s a large economic and political problem. That’s what makes a GESARA “Debt Jubilee” inevitable.
Debt is needed to feign rise in GDP
The world’s so-called richest nations need $7 of debt to produce 50 cents of GDP growth. The world is bankrupt, and all of the financial statistics that are being published are just a mirage of a castle built on a foundation of worthless paper money. The world can of course never pay back the debt with real money, and the world can’t even pay the interest with real money.
Every 1% increase in the interest rate means additional costs for the G-7 of a staggering $1.4 trillion. That is absolutely massive. To put this into perspective, $1.4 trillion is only slightly less than the entire GDP of Canada. If interest rates increase by 10%, then this increase in interest expenses equals for the G-7 nations a quantity as large as the GDP of the entire United States.
Anyone with a sane mind will realise that this whole situation is untenable, and sadly, this will end very, very badly for the world’s population. An economic bankruptcy is not yet unfolding, but a moral and ethical bankruptcy is taking place at this very moment, on top of the continuous threat of fake wars. Added to the fact that most governments are taking away all freedoms and personal initiatives, rendering the people of the world dependent on state hand-outs, making matters even worse.
As explained here, the debt problems the world is facing are actually no problem at all, as the privately-owned central bank system created the money out of nothing over which we, the people are expected to pay interest, sanctioned by heavily bribed governments and politicians who make this happen.
GESARA is going to correct this treasonous, insidious misbehaviour of the cabal’s puppet governments, as they were all, in effect, initially appointed to govern their nations in an honest manner. Meanwhile, it has been revealed that they have extorted billions of our tax money for themselves and bribed politicians even more to keep the deception going.
For at least the past one hundred years, the monetary system has been manipulated, bringing the world to its knees through financial engineering that should have been alarming on its own for every well-educated economist. But the majority of economists have been masterfully kept in the dark about the hidden agenda, despite the occasional ringing of bells by people who had gained insight into the deception.
Through in-depth analyses, we have come to learn that the whole monetary system is – by design, – intentionally destructing itself. The excessive printing of fiat currency debt-money has arrived in its final ‘reflation’ stage of self-destruction, because the debt in the world has grown so excessively that the credit-system has gone into reverse mode, as the paradox occurs that no liquidity is left to pay back the debt.
Reflation is no longer possible and the deflationists are being proven correct. They are correct in regards to a credit system working in reverse with a negative feedback loop, stoking a deflationary death spiral.
There is just one small problem, what will happen to the currencies of these central bank issuers, who are also caught up in the negative feedback loop?
This is the main and most pressing financial question that has ever been faced. Will the fiat currencies survive and thrive during the deflation or will they be seen by the masses for what they are, IOU’s of bankrupt issuers at the very centre of the credit crisis quagmire? If you answer this question incorrectly, you have finished your own financial life.
The key question is against what assets will the currency “deflate”? The answer of course is as it has always been; “gold”. – While the pundits will have you believe “gold was devalued versus the dollar in 1934″, this for sure was quite the opposite. And while certain experts now will have you believe the “dollar” was the best investment in the 1930’s, for sure they are wrong!
The people are being brainwashed and kept in the illusion that debt is good and is unquestionably money with value, against which you can buy valuables, which of course isn’t true. It is time we start educating ourselves to discover that all that has been taught to us is wrong, and learn to change our thinking to see things as they really are. A good guide is THE GREAT AWAKENING, part 1 and part 2 that explains and corrects the wrongs we have become accustomed to living with. Once your eyes are opened and you awaken to the Truth, you’ll notice the world is on course to changing with regard to all aspects of life. People that are educated about this will understand and enjoy the upcoming historical changes, that will liberate us from tens of thousands of years of debt enslavement.