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Global Debt Tops $188,000,000,000,000

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  • Global Debt Tops $188,000,000,000,000

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    The world is now 188 trillion dollars in debt
    , and that number continues to grow rapidly each year.

    It is a form of enslavement that is deeply insidious, because most of those living on the planet do not even understand how the system works, and even if they did most of them would have absolutely no hope of ever getting free from it. The borrower is the servant of the lender, and the global financial system is designed to funnel as much wealth to the top 0.1% as possible. Of course throughout human history there has always been slavery, and the primary motivation for having slaves is to extract an economic benefit from those that are enslaved. And even though most of us don’t like to think of ourselves as “slaves” today, the truth is that the global elite are extracting more wealth from all of us than ever before. So much of our labor is going to make them wealthy, and yet most people don’t even realize what is happening.

    Let’s start with a very simple example to help illustrate this.

    When you go into credit card debt and you only make small payments each month, you can easily end up paying back more than double the amount of money that you originally borrowed.

    So where does all that money go?

    Well, of course it goes to the financial institution that you got your credit card from, and in turn that financial institution is owned by the global elite.

    In essence, you willingly became a debt slave when you chose to go into credit card debt, and the hard work that it took to earn enough money to pay back that debt with interest ended up enriching others.

    On a much larger scale, the same thing is happening to entire nations.

    Today, the United States government is nearly 23 trillion dollars in debt. In essence, we have been collectively enslaved, and we have been obligated to pay back all of that money with interest. Of course at this point it is literally impossible for us to ever pay back all that debt, and every year we add another trillion dollars or so to the balance. The global elite are now extracting more than 500 billion dollars in interest from this debt on an annual basis, and it is expected that number will greatly escalate in the years ahead.

    It is not an accident that the Federal Reserve and the federal income tax were both instituted in 1913. The Federal Reserve system was designed to create an endless debt spiral that would get the federal government in as much debt as possible, and since that time the size of our national debt has gotten more than 7000 times larger. And the federal income tax was needed as the mechanism through which our wealth is transferred to the government to service all of this debt.

    It is truly a deeply, deeply insidious system, and the American people should refuse to back any politician that does not favor shutting it down, but at this point this isn’t even a major political issue in our nation.

    And of course the United States is far from alone. Even though we can’t get the whole world to agree on much of anything, somehow virtually the entire planet has been convinced that debt-based central banking is the way to go.

    Of course at some point this debt bubble is going to burst in a global disaster of epic proportions, but meanwhile the global elite are going to continue to milk all of us for as long as they possibly can.

    Here in the United States, we have been on the greatest debt binge in the history of our nation since the last financial crisis. U.S. government debt has more than doubled, state and local government debt has ballooned to ridiculous proportions in much of the nation, corporate debt has doubled, student loan debt has more than doubled, auto loan debt just keeps hitting new record highs, and U.S. consumers are now 14 trillion dollars in debt.

    Our mountain of debt has become so colossal that the only way to keep the game going is to borrow even more money, but by borrowing more money we make our enslavement even worse.

  • #2
    Former Central Banker: "As A Young Man I Would Have Never Imagined This Would Be Our Destination"

    Submitted by Eric Peters, CIO of One River Asset Management

    “Hmmm,” said the former central banker, leaning back in a chair. I’d asked how his thinking on the meaning of money had changed over these last three decades. We both started this journey in 1989, and our paths somehow led us to this long table in Tokyo. In that time, much changed. Back then, Japan’s gov’t debt-to-GDP was roughly 50%, 10yr JGB yields were 5%, the dollar was worth 127 Yen. But now, debt/GDP is roughly 250%, the central bank has printed enough money to buy half of it, 10yr yields are -0.07%, the Yen has strengthened to 109.

    "You are correct, as a young man I would have never imagined this would be our destination," he said, after some consideration. “And I am trying to think about how my views changed over so many years, because I cannot recall a moment when I realized everything was not as I had previously understood,” he said. "Perhaps, over such a long span of time our thinking gradually evolves, and we’re not aware that it has." I nodded, quietly considering my long wander. "But here we are, and while I do not understand it perfectly, it makes some sense."

    Fishy
    We were discussing equity markets over sushi. America’s has had an extraordinary run. In the 30yrs from Japan’s 1989 Nikkei high, the S&P 500 gained 925%, and from the 2009 GFC crisis lows the S&P 500 gained 464%. The Nasdaq gained 1,948% since 1989 (+655% from 2009 low). They say the reason for this recent extraordinary march is the Fed’s QE and a policy of low rates that has combined to push America’s CEOs to buy back stock, while forcing global investors to pay any price for growth in an ageing economy, where growth is scarce.

    “I suppose that explanation for America’s bull run makes sense in isolation,” said the CIO in Tokyo. But Japanese rates are -0.10%. The BOJ printed enough money to make an Italian central banker blush and continues buying stocks directly on the open market. Japan is the ultimate ageing economy, with slow growth, world-class technologists, researchers, and plenty of entrepreneurs. “Investors have come to accept that overall explanation without reservation. Yet, if it is true, how can it also be true that the Nikkei remains 40% below its 1989 high?”

    Hump Day

    The Japanese work culture is notorious for its long hours. Microsoft Japan conducted an experiment in August with 2,300 workers. It paid them to not work on Fridays. It encouraged online chats in place of meetings or emails. It insisted meetings include five people or fewer and last no longer than 30mins. Microsoft saw a 40% increase in sales/worker, a 59% decline in paper usage, and a 23% drop in electricity consumption. Asked what day employees would like off if the firm moves to a 4-day workweek, 50% answered Wednesday.

    Minnows

    The dynamism in Japan’s economy is not to be found in the conglomerates,” said the CIO, focused on small cap stocks. “To find the interesting companies, you must look at the small and mid-sized firms that supply the large players – they’re the ones where you find the creativity, the risk takers, innovators.” Japan spends 3.5% of GDP on Research & Development, the US spends 2.8% and China 2.0%. Only South Korea spends a larger percentage of its GDP on R&D (4.3%). “The very big firms here have grown to resemble state owned enterprises.”

    Anecote

    “We move slowly here,” said the executive, chain smoking Seven Stars. “We have refined the art of flawless production,” he explained. “But there was a time when it was not so.” Two Asahi Extra Dry’s arrived, the thick foam head in each glass identical, poured deliberately, in perfect proportion, beautiful beer. “We once copied the chemical compounds designed in America,” he admitted. “As we amassed knowledge, we developed our own, and accumulated manufacturing know-how, capital.” In the distance, Japan’s factories spewed smoke, but at a pace that made the past appear more frantic than the present. “We produced chemicals and materials for the world to incorporate into nearly every product, and in pursuit of perfection, we introduced quality controls. Then controls on controls. And controls on controls on controls, ensuring that our final output was flawless.” The executive smiled, drawing deeply, his wrinkled face aglow. “But this pursuit of perfection slowed our ability to develop new compounds. And now the Chinese outpace us. They copy our formulas as we once copied yours. They produce at a pace that ensures higher impurities, but greater throughput, wider margins. And without having to bear the costs of R&D investment, they slash prices savagely.” The executive lit another Seven Star, turned his head slowly, exhaled. “The Chinese test their compounds with scant regard to safety. Then iterate again and again. Racing to produce compounds that may not be great but are perhaps good enough. They scale production overnight. They do what they must to capture market share,” he said, growing quiet, contemplative. I matched his silence, waiting for him to fill the void. Across the world’s third largest economy, the mighty conglomerates lumbered onward, industrial inertia. "And while we know this, and see this all unfolding, we appear unwilling to respond, unable to change course, accelerate."

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