• he will never pay down the debt
• he will not balance the books
• he will not deliver real growth
and people will not see their wages rise in real terms anytime soon either. What you are going to see at some point is a reset or collapse.
The world is more indebted now than ever. The McKinsey report earlier this year showed there is more world debt now than when Lehman's went under. An unending expansion of the Federal Reserve's balance sheet which currently stands at a whopping $4 trillion is only pushing the can down the road. It is a game that will not end well for millions of people the world over. The banks are living in an illusional world of no consequences. Banking and the markets are all based on confidence and when enough people cotton on to what is actually happening it will all unravel very quickly. In the meantime the central banks continue to annihilate our purchasing power with money printing, which does not end up in productive pockets. It is squirrelled away by the financial elite, ensuring the 0.1% maintain their extraordinary wealth at the expense of everyday people.
The world economy has hit a brick wall, because there is no growth. The Economist Intelligence Unit (EIU) say it has grown by 2.9% this year (2015). In addition it adds that the world economy is held back by weakness in Japan and the Euro area. Dubai too, is down 13% this year which of course is tied to the oil price. The massive rounds of QE (quantative easing) and extended investment which were put into play to revive the world economy are failing. The fact is no one is buying! American businesses are said to be stock piling at recession error levels, i.e. no one is buying.
Keeping the banks alive through money printing and 0% interest rates is not the answer. Government needs to take a lead role in investment in order to get the money into the hands of business and entrepreneurs, to lay the ground for wealth creation. But this is not happening. Without the necessary routes for new investment to find its way into businesses/people's pockets we will continue to see little to no growth. It appears the government wants the consumer to take on the debt. Banks and government need to play a larger role in creating new investment for growth. Both appear happy sat on a permanent bailout program using zero interest rates and QE to prop up the banks. One suggestion would be working side-by-side with the Bank of England (BoE) to get investment money where it is needed. Much reform is required in government, the treasury and the BoE. Tax laws also need to be changed to ensure the corporations pay an appropriate percentage of tax. Small businesses too, need to get the same access to credits and incentives as the large corporations. We need an end to this enforced austerity. Shouldering the people of the world with the debt from the bankers' fraudulent practices and market manipulation is both immoral and misguided.
So how did we get here?
The Japanese invented QE nearly 3 decades ago, to try and bump start its economy when they went into recession in 1989. They did not get rid of the failing banks and debt back in the 90's. They have kept them alive with money printing. Since then Japan's yearly GDP from 1980 to 2015 has averaged 0.49 percent, proof positive that money printing is a rabbit hole. So with the benefit of this hindsight, why are we emulating a model that clearly does not work? This year Japan's economy contracted in the third quarter as business investment fell. It has now entered it's second recession. This is what economists had predicted since Shinzo Abe took office in 2012. Abe-economics is not working. Our 'elected' institutions are failing to serve. In Iceland they saw through this fraud, flung the bankers in jail, let the banks fall and refused to pay the debt, and, although it is not paradise, they are actually making real headway. This would be a better model to follow. It says a lot about the interdependent relationship between politicians and the bankers. Why wouldn't you follow in the steps of Iceland who's government showed no fear in cleaning the house of all three of the failed banks, putting in new boards and management. In addition new financial supervision has been rigorously put in place. Changes have also been made to protect the interest of customers, shareholders and the wider economy. Unemployment levels have fallen to 4%, and their current GDP for this year is 4.1 percent. They are in fact one of the fastest growing countries in Europe and, even more remarkably, they are actually paying down their enormous loan from the IMF. Credit to them.
Time for action
We have to protect our wealth in these precarious times and not leave it to chance. There is a firestorm coming in this fiat currency race to the bottom. With negative bank interest rates, bank bail-in's and cashless society on the horizon we need to act with diligence, we need to act now. You can begin right now. We realise it is a leap of faith buying precious metals for the first time. You can begin your journey of wealth preservation with just one coin or bar, just to see how seamless a process it is. Remember precious metals are not just for the wealthy, they are for everyone looking to hedge in times of uncertainty. Gold and silver have been considered something of real value since before 600 BC. Not only do they rise with inflation, they are free from government intervention and historically perform well.
If this has been of any interest or help please share. As always your comments are most welcome!
McKinsey report 2015