Debt is among the most common words used in the English language today. But what exactly is debt?
That is a harder question than you might imagine.
Most people think of debt as an amount of money that is owed to another person or company. However, over recent decades the new reality of debt has permeated all aspects of our lives through a complex process of financial wheeling and dealings.
Because governments around the world decided to move away from the 'gold standard', all currencies around the world are now 'fiat currencies'. That is to say that the notes in your wallets are no longer backed by a promise to pay the bearers in gold. Currencies have become detached from real assets like precious metals and allowed to fluctuate in perceived value as 'the market' dictates.
This means that ultimately, the value of money only carries a worth equivalent to the confidence that every participant has in the scheme at any particular time.
After the gold standard was abandoned, currencies were allowed to float freely and competitively against each other. Over time, this detachment has caused a psychological disconnection between the value of money and the value of real things. This detachment process has been exacerbated by the introduction of digital money transactions and time stretched credit options.
We all know how easy it is to buy something using a credit card or a bank transfer or paypal. The detachment process has made everyone buy and sell in a new way. The reality only reappears periodically when we get statements, or letters from our banks or overdraft repayment requests or defaults or bankruptcies or credit crunches or sovereign debt crises or world economic meltdowns.
You see, what we were convinced was money is actually now being realised for what it is. Debt. This new reality is true for every layer of the world economy. From the IMF right down to the peasant in Mozambique.
Because we have all participated in the scheme (actively or in some contrived secondary processes), we have all fallen into the same trap. The trap that enslaves us all.
From the federal reserve bankers that print new money (both digitally and on paper) to the idiot buying the latest Justin Bieber merchandise on eBay, we have all just been participating in some form of ponzi scheme based on fractional reserve banking and fractional reserve spending.
Since the 1930's when the gold standard was abandoned the financial processes that have brought us to where we are today, have created a financial system where nobody can begin to calculate how much money is out there (real and digital) or how much debt is out there.
It is estimated that about 99% of all money is actually really debt. That would also account for why prices have increased about 100 fold since 1930. In other words, we are no richer, only 100 times more in debt.
The tipping point is so close now. The curve can go in one of two directions. Either fiat currencies will collapse under their own weight of debt or a rapid consolidation of debt repatriation demands will cause an equal and opposite degree of hyperinflation.
Which way will it go?
It matters not. Either scenario will be a disaster.
Showing posts with label gold. Show all posts
Showing posts with label gold. Show all posts
Thursday, 7 July 2011
Friday, 26 November 2010
GLOBALISATION - Chickens coming home to roost - ( FROM CLUCK TO FUCK! )
Globalisation has had many critics over the years.
Arguments against the concept include inequality, environmental impact, sweatshops, cultural normalisation, dumbing down through uniformity etc....
However for the majority first world perspective, it has facilitated a perceived rise in standard of living, choice, cheap food, goods and services. All this has become possible through communication advances in interconnectivity across the globe. The whole ponzi scheme is clearly based on convincing people to buy loads of tat that nobody really needs and only really want on the basis of its easy availability, brand marketing brainwashing techniques, availability of cheap credit etc.....
During the 'good times', this interconnectivity offers a dumbed down feeling of well being; an increased happiness quotient and an illusion of being able to buy freedom.
This model is so new that it has never been tested during the bad times.
What could happen if things went bad in the Global Village ? :
Firstly the connectedness of world financial markets means that if an economic boom or bubble emerged, the whole connected world would feed this bubble. This bubble would become bigger than any bubble experienced in the post industrial revolution period.
This bubble could for instance be cheap credit.
The banks may push the envelope by lending to riskier borrowers. They might even lend large sums to people who would have no means to repay.
The bubble might only stretch so far due to finite limits.
A nervousness might set in.
Banks might feel twitchy about the amounts on the wrong side of their balance sheets.
As if by magic the debt has moved from personal loans to private company debt.
They might stop lending to each other.
Credit availability may stall.
Some banks might fail.
Governments might have to rescue banks using hundreds of billions of taxpayers monies. Government might be forced to nationalise banks. In other words Governments would be nationalising debt and privatising profit.
As if by magic the debt has been moved again. From private companies to the public purse.
This might be called sovereign debt.
Interest rates may have to be slashed.
This could cause cash flow problems further down the food chain.
Businesses, large and small, could fail because their creditors refuse to supply goods and services on existing credit length terms.
Unemployment could rise.
Government spending could rise due to increases in benefits, lower taxation revenues, bank bail-outs.
Banks could restrict mortgage lending.
House prices could fall.
Economic growth might fall.
There could be a recession.
Entire countries could get nervous. They might feel that other countries may default on their debts.
They might buy the debt in form of government bonds at higher interest rates.
Their debt to earnings ratios might rise.
Their bond yield spreads might rise.
They might have to print more money.
Their currency may have to be devalued if it has its own fiat currency.
Other countries may drive down the value of their own currencies in order to maintain an export trade advantage.
A currency war could cause uncertainty in equity markets.
Financiers might switch to gold, looking for a perceived safe haven.
A secondary gold market may emerge. There could be high street gold buying shops. There may even be TV ad campaigns asking people to send their jewellery in the post in exchange for cash.
Gold prices could rise five fold or ten fold or ......
A secondary commodities bubble could emerge.
Agricultural commodities could get caught up in this speculative market. As could fossil fuel commodities.
Food and energy prices could be driven higher.
Governments may feel pressurised to accept rescue monies from other countries. There may be strings attached.
Those strings might be an austerity program.
That program may be painful to everyone living in that country.
They may have to take pay cuts.
They may have to cut millions of jobs in the economy.
Arguments against the concept include inequality, environmental impact, sweatshops, cultural normalisation, dumbing down through uniformity etc....
However for the majority first world perspective, it has facilitated a perceived rise in standard of living, choice, cheap food, goods and services. All this has become possible through communication advances in interconnectivity across the globe. The whole ponzi scheme is clearly based on convincing people to buy loads of tat that nobody really needs and only really want on the basis of its easy availability, brand marketing brainwashing techniques, availability of cheap credit etc.....
During the 'good times', this interconnectivity offers a dumbed down feeling of well being; an increased happiness quotient and an illusion of being able to buy freedom.
This model is so new that it has never been tested during the bad times.
What could happen if things went bad in the Global Village ? :
Firstly the connectedness of world financial markets means that if an economic boom or bubble emerged, the whole connected world would feed this bubble. This bubble would become bigger than any bubble experienced in the post industrial revolution period.
This bubble could for instance be cheap credit.
The banks may push the envelope by lending to riskier borrowers. They might even lend large sums to people who would have no means to repay.
The bubble might only stretch so far due to finite limits.
A nervousness might set in.
Banks might feel twitchy about the amounts on the wrong side of their balance sheets.
As if by magic the debt has moved from personal loans to private company debt.
They might stop lending to each other.
Credit availability may stall.
Some banks might fail.
Governments might have to rescue banks using hundreds of billions of taxpayers monies. Government might be forced to nationalise banks. In other words Governments would be nationalising debt and privatising profit.
As if by magic the debt has been moved again. From private companies to the public purse.
This might be called sovereign debt.
Interest rates may have to be slashed.
This could cause cash flow problems further down the food chain.
Businesses, large and small, could fail because their creditors refuse to supply goods and services on existing credit length terms.
Unemployment could rise.
Government spending could rise due to increases in benefits, lower taxation revenues, bank bail-outs.
Banks could restrict mortgage lending.
House prices could fall.
Economic growth might fall.
There could be a recession.
Entire countries could get nervous. They might feel that other countries may default on their debts.
They might buy the debt in form of government bonds at higher interest rates.
Their debt to earnings ratios might rise.
Their bond yield spreads might rise.
They might have to print more money.
Their currency may have to be devalued if it has its own fiat currency.
Other countries may drive down the value of their own currencies in order to maintain an export trade advantage.
A currency war could cause uncertainty in equity markets.
Financiers might switch to gold, looking for a perceived safe haven.
A secondary gold market may emerge. There could be high street gold buying shops. There may even be TV ad campaigns asking people to send their jewellery in the post in exchange for cash.
Gold prices could rise five fold or ten fold or ......
A secondary commodities bubble could emerge.
Agricultural commodities could get caught up in this speculative market. As could fossil fuel commodities.
Food and energy prices could be driven higher.
Governments may feel pressurised to accept rescue monies from other countries. There may be strings attached.
Those strings might be an austerity program.
That program may be painful to everyone living in that country.
They may have to take pay cuts.
They may have to cut millions of jobs in the economy.
There could be civil unrest, demonstrations, protests and even riots.
The government's revenues might fall again due to even lower tax revenues.
Economic growth may fall again.
Other countries may begin to falter.
The contagion could spread like a fire.
Firstly it could just be a few kindling republics and small countries.
Then maybe some larger countries may be affected due to their trading reliance with that failed country.
Recessions could turn into depressions.
And then..................................Protectionism.... Hyperinflation.........Nationalism.........War
Sound familiar ?
GLOBALISATION ! Forget the old arguments. THINGS HAVE MOVED ON !
Wednesday, 26 May 2010
DON'T BUY GOLD. Buy PV.
Over 99% of all clever things invented, produced, and consumed since WW2 are now in landfill or causing chaos in the atmosphere.
It took 100 million years of ancient sunlight to produce sufficient rotting biomass to create the world’s oil reserves but only 100+ years to use this supply.
If we had had to wait for all of these processes to happen in the future, rather than robbing it from the past, the commodities futures market would price a single barrel of crude at approx $100,000. This figure sounds ludicrous but as we descend the peak oil curve, that mad price will be realised by the market.
Suddenly solar power seems very efficient indeed.
It took 100 million years of ancient sunlight to produce sufficient rotting biomass to create the world’s oil reserves but only 100+ years to use this supply.
If we had had to wait for all of these processes to happen in the future, rather than robbing it from the past, the commodities futures market would price a single barrel of crude at approx $100,000. This figure sounds ludicrous but as we descend the peak oil curve, that mad price will be realised by the market.
Suddenly solar power seems very efficient indeed.
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