It’s Just A Mountain of Debt
The post-Bretton Woods era began in 1971 when the U.S. dollar was de-pegged from gold. This era, which continues today, was initially called the “Great Moderation.” Lucky for us, it allowed us to accumulate precious metals and offset the government’s debt nightmare.
Central banks have increasingly used the financial markets as tools for macroeconomic stabilization – finance is leading the economy, not the other way around. It’s akin to the tail wagging the dog. They’re watering weeds and letting the flowers die.
Over the past 50 years and particularly during the past thirteen years, the result has been a severe imbalance in national account deficits. The U.S. and U.K. have continued to grow their deficits, while creditor nations like China and Germany have quietly shored up their power in the ongoing global currency war.
Courtesy: Incrementum
Because of that, there has been a complete lack of trust in the U.S.’s ability to repay even the interest on its debts, not to mention the principal.
The ending of the Bretton Woods system (which had the U.S. dollar tied to physical gold) coincided with a ramp-up of U.S. debt, both in nominal terms and relative to the GDP.
We’re in too deep: with the debt load supporting a large share of the economy, it’s a cycle that cannot be stopped – and it can’t be allowed to fail.
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Those policies are meant to support the markets in the short term, such as in 2008 and 2009, when the financial crisis was decimating people’s retirement accounts.
They’re not meant to be a “new normal” or a permanent change to be implemented in good and bad times. Since the American people are not revolting, we must protct ourselves and we are.
Courtesy: Incrementum
Central banks aren’t supposed to purchase vast quantities of bonds, junk-bond ETF’s, or mortgage-backed securities on a year-round basis, as a matter of routine policy, yet we are seeing this playing out and we must be aware by now of the way this system freezes up in panics and leaves the uneducated without a way out.
Central banks are now creating not just billions, but trillions of new currency units every year.
It’s an unsustainable system that keeps the financial markets running smoothly so that the ultra-wealthy can continue to reap the capital gains, while the 99% are susceptible to the devastating impact of hyper-inflation. Every few months, the system has a glitch and every few years it implodes; one must be ready to develop himself, in order to sustain the blows.
That’s the injustice of a broken monetary system, which we didn’t choose.
It’s a dire but clear warning that the print-and-spend regime is on its last leg – and so are the fiat currencies that benefit the elite while enslaving the rest of us.
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PortfolioWealthGlobal.com
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