Every day I find more evidence that people are starting to understand and accept that the global economy is indeed a massive, serial credit/trust Ponzi scheme. Today’s exhibit is the embedded chart which came as part of one of my many newsletters. As you can see, the first to be hurt were the marginal players but the circular progression chart below shows how it starts small and then ends with sovereign default, including the USA. The progression is from consumer to corporate to sovereign to the whole concept of fiat currency itself. At some point the fiat currency will not be worth the paper it was printed on. Real stuff in your physical possession is how people will measure wealth at that time. 401ks and pensions and other future promises to pay will be greatly devalued and perhaps even made completely worthless.
The culprit according to this chart is fiat currency structure failure but the truth is that fiat currency is just a support mechanism for the real scam which is fractional reserve lending in which money is conjured from thin air at a rate of 50 or 70:1 relative to the fiat currency. You can blab about the real evils of fiat currency all day (and they are real and evil) but with such massive leverage the real problem is that banks can create money far more money from thin air than the federal reserve can which they lend out to “earn” fees and interest. I wish I could create something from thin air and then rent it out for real money. It would allow me to earn something from nothing – true modern alchemy. That is exactly what our corrupt politicians have allowed banks to do with our dishonest money and credit system.
At some point the world is going to have a massive jubilee of some sort; a massive debt repudiation along with a great rebalancing of wealth and of importance in the global pecking order. Those who get paid nothing for their labor will move up the chain and those who are overpaid will move down the chain. That is not to say that a Chinese laborer will become rich or that a US engineer will become poor but the world is going to have to rethink who gets paid how much for doing what. The rebalancing will have to be global in order to avoid war; everyone will have to agree to the terms. I just hope that those like China who end up getting defaulted on recognize that they too were a key part of the whole sham. If they did not over lend to others so that others could buy their goods then their exposure would be small. But they were greedy too and they could not sell all of their own production in their own country so they lent money to people to buy their goods even though it was clear that the customers could never pay the bill.
Standing back and looking at it all the whole thing seems like a bad joke. The US is broke, in fact far worse than broke. Broke is when you have no money. But we are in debt 13 trillion (as opposed to 7 trillion during Bush II’s 1st term which was not all that long ago), and yet still we loaning others money via the IMF to keep the Ponzi floating. The whole world is one big interconnected system of robbing Peter to pay Paul and then doctoring up the books in order to make it all appear legit. Nobody is really innocent in all of this. For our part, we knew we were racking up debt that we had no intention or capacity to repay yet every year the deficit and the debt expand dramatically.
The more people begin to see all of these explanations and the more they increase their understanding of the fraud the less they are going to believe in the system and the markets and the words of our leaders and the value of our money. I strongly believe that at some point the herd will head south in a big way and only the paranoid will survive financially.
