Debt has become the currency of the world at this point.
No longer is money the prime driver of individual, national or corporate wealth.
It seems that now that the central banks run the world, and low interest rates are the norm — money is no longer as important as it used to be.
Corporate and sovereign debt are at record levels because there are ways for financial institutions to make money from this debt mountain.
People talk about the $19 trillion U.S. deficit but don’t realize that one single bank — Deutsche Bank — is holding $42 trillion in derivatives. And the thing about those derivatives is they are leveraged plays on the underlying value of the currencies and companies they represent.
They’re not hard assets… they do not indicate or contain the value of anything in reality. They are like Facebook friends compared with real, live friends. They exist, but they aren’t really a reflection of you as a real person.
And this is the danger of a derivatives-driven market and debt-driven society.
Bob Livingston has been saying for years that there is a larger effort at play here to supplant money and replace it with debt for individuals and so allow the state and corporations to reign over the citizenry, since they control all aspects of the currency economy. A recent piece of his really hit the nail on the head. Here’s an excerpt:
“Since U.S. “money” (and the money of the whole world) is bank credit and since bank credit is created by government and commercial banks, then the “national debt” represents bank credit passed or “loaned” upon an unsuspecting public for their real assets and labor.
Translated: Modern money (bank credit) expropriates wealth. In truth then, the huge reported “national debt” is how much wealth the government has stolen from the American people — not how much the government owes.
The “national debt” propaganda covers the fraud that our real assets and real wealth are flowing to the government for exchange of government-created credit. Just try to get it back!
Yes, indeed, this is witchcraft that reverses our thought processes. And yes, the national debt is an asset to the government, not a liability. Real assets stolen with bank credit are assets to the government, not debt.
Proof: When the local commercial bank “loans” you money (credit) that they create with a bookkeeping entry, this transaction appears on their books as an asset (a deposit) to the bank and a liability (debt) to the borrower who pledged real assets as collateral. Yes, your debt is the bank’s asset. This same system works with the U.S. monetary system.”
This is the system we all now live under — not just Americans, but everyone in the world, First World to Third World.
And it means you want to get out of this cycle as soon as possible. Because the pendulum always swings in both directions and we’re getting close to a point of inflection regarding interest rate manipulation with zero and negative interest.
When it swings the other way you can be prepared by sitting with cash, precious metals and other hard assets. Basically, you have to reverse your thinking in this area as well, and realize that all the stores of value that are ‘worthless’ today, will become increasingly valuable in coming months and years.
For example, recently gold was pushed down — although it’s still up 20 percent for the year — because people are expecting the Fed to raise rates by the end of the year.
But longer term, even if the Fed raises, it won’t be by much and Europe and Japan certainly will not follow suit. Short term gold may be hurt, but long term it will be the dollar that takes the brunt of it and gold will start its rally again.
— GS Early