Sometimes information hits me that I have to write about because it hits me so hard that I don’t want to forget my thought. I have written many times about the all-time record debt globally and have mentioned the number $220 trillion in global debt. (Bloomberg) I know that that is an astronomical number that 99.9% of people on our planet cannot visualize in their minds.
This may help:
$200,000 Two Hundred Thousand
$2,000,000 Two Million
$2,000,000,000 Two Billion
$2,000,000,000,000 Two Trillion
$220,000,000,000,000 Two Hundred twenty trillion
Now you can actually see the number so I hope this helps when I tell you the following.
I believe that if there were ethics and morals in business- as at one time there actually were- we could never have come to the point where we find ourselves today where a few who consider themselves elites can “print” money and get astronomically rich, at what appears to me, the expense of the masses. They can “print” money or electronically produce currency to purchase or sell assets to manipulate the price of virtually any and all assets. Anyone who still thinks this is a conspiracy theory reference the $38 billion in fines paid already by major banks for manipulating most markets. (Forbes) This is with authorities, in my opinion, turning a blind eye to many commodity markets.
Since 2008, this has become a global phenomenon that has led to bubbles in stocks and bonds created by the tsunami of money “printing” and orgy of buying all types of financial assets.
This has gone on for so long now that many consider this normal. It is far from normal. Who in their right mind- if you told them 10 years ago that in 7 years there would be negative interest rates would have believed you? Nobody. Why? Because who in their right mind would purchase an asset that would guarantee a loss if held to maturity? My answer is only someone who could “print” the money and whatever it is worth down the road it is more than they started with which was ZERO. No effort, no mining, no sweat- NADA. 10 years ago we could not have fathomed what just happened!
So why can’t they just keep “printing” forever? Why can’t prices just keep rising and rising- just add a few more zeros?
To me, the answer which should be obvious is that this “printing” benefits a few and disenfranchises the many. Earlier this week I wrote about 25% of Americans with NO financial assets. 14% of Americans on Food Stamps (US Debtclock.org). This in the most affluent country in the world?
This whole system is based upon the confidence of those in charge. That confidence is seriously in question in my mind right now. I believe the reason that 99% of people don’t share my concern is that they are bombarded 24/7 by what I believe to be nothing more than propaganda posing as news. It is always time to buy! All is well! Tell that to those in Venezuela, Spain, Greece, Italy, etc.
Keep this in mind every time you think that there is not a cliff in the distance.
That $220 Trillion in global debt equals, if we were to have to pay off the debt equally, $31,000,000.00
(that is 31 MILLION DOLLARS) for every person on the planet. 220 Trillion divided by 7 billion people.
This takes me back to the ethics discussion. There is not ANY chance that 7 billion people could pay off $220 trillion in debt. How many people do you know with $31 million in assets?
To actually have ANY chance at paying off this debt fiat currencies globally would have to be debased so bad that no one would be able to purchase almost anything with them. Don’t forget that most nations, companies and state and local governments continue to add to this debt daily. In amounts that are hard to believe. If they stop the inflation it is likely that there would be a deflationary outcome that would dwarf 1929-1938.
Next time anyone tells me that I can’t eat gold or silver- I can’t eat fiat currencies either. For those in Venezuela, Zimbabwe, Turkey, Indonesia and many other places where their currencies are already collapsing the ONLY things that could save them are real assets that produce things people need like farmland, factories, food, water, etc. or a form of money that has been around for 5000 years and has held its value throughout history- gold- and its little brother silver. Those who had the foresight appear to be far better off than those who trusted in paper promises. Just a few years ago in Russia gold gained over 60% against the ruble. In the unfortunate situation in Venezuela and Zimbabwe gold and silver has gone up hundreds of thousands of percent as their fiat currencies go their intrinsic value of ZERO. According to bullionrates.com the price of gold is up 859,311% in the last 2 years.
Think about the assets that anyone who has purchasing power in a time of crisis like these could pick up.
Real Estate, businesses, stocks and bonds can be bought for pennies on the dollar (or Bolivar or Zimbabwe dollar) and… when the recovery arrives the wealth has been shifted from those who had it to those who now have it.
How confident are you that the $220 trillion in global debt won’t be defaulted on? That is reneging on a promise to repay- which is what a bond is. If they “forgive” the debt- which I will only believe if I see it-all those that hold those bonds get stiffed- likely wiped out. So how does that work?
If you, like me, cannot bet on each person on the planet contributing their $31 million share of the debt I suggest you start loading up on real stuff now while you still can. Because of the manipulation of the metals markets in particular you are still not at all late to the party. In an instant you could be too late. That instant may be Monday morning or 5 years from now but anyone with a time horizon of more than a few years ought to think long and hard about the gravity of this situation. The US is NOT immune from this- as a matter of fact WE are the most indebted nation in the history of the world. Therefore, it appears to me that in the long run we are most likely the most at risk.
Many ask- why would they keep gold and silver suppressed. I believe the reason is to mask what is happening with the debt and the value of fiat currencies (currently all falling in value at different rates and being compared to each other- never to gold). Why would they do that? Maybe because since we left the gold standard “temporarily” in 1971 and gold traded at $35.00 an ounce our once proud US dollar has exactly 2.77% of its value left against gold. That means that 97.23% of the value of the US dollar has been lost against gold in the last 47 years. Who would want to let that information out?
$1300.00 (Current gold price)-$35.00 (1971 gold price)= $1265.00 35 divided by 1265= 2.77. OUCH!
*Gold price on 5-31-2018
Is it really that prices go up or are we seeing a slow-motion destruction of our currency?
Don’t forget that inflation is a relatively current event. With the advances in technology our prices should be falling. As a hypo I use an example of a basket of goods in 1800 that cost $200.00 to buy only cost $100.00 to buy in 1900 because of the advent of new technologies in farming and transportation. Just think how our innovation these days dwarf that and yet still our prices skyrocket- it’s not the “stuff”- it is what we are buying it with.
I am not saying that everyone should go out and buy metals hand over fist but I do believe it is a prudent move to get yourself prepared for the unexpected because one day those in charge will be looking for repayment and according to my calculations that will be impossible.
Mike Savage, ChFC, Financial Advisor
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