This post is definitely worth reading!
In regards to the level of debt at the government level, since many western governments are facing a similar crisis I will discuss with reference to the UK.
As always the level of debt alone in the economy isn’t an issue, its more the debt /income ratios especially when it becomes skewed. That ratio has slowly gone out of whack since 2008, its almost a guarantee that the debt cannot be paid back under normal circumstances, external forces are required…therefore we now adjust the ratio to focus on the main issue which I think is debt interest/income. Which is how servicable is the interest, for now we are ok based on statistics but to delay the inevitable of a fiat system the government has a number of interesting options available which can be utilised with the assistance from the bank of england.
A debt jubilee is a radical solution, but that could have unintended consequences so lets park that one aside for now.
Given the low interest rate environment, the govts can keep rates low issuing more and more debt (funded by corporations, individuals, or even the bank of england itself)….any higher rate debt that comes due will be refinanced at ultra low rates….. effectively if the BOE bought it, it would be a form of quantitative easing, but the governments could also implement a rule whereby all pensioners must own a small % of govt bonds forcing individuals to own some and effectively finance the refinancing of the debts. Whilst the interest rates remain very low, the inflation that creeps into the economy would effectively devalue the debt levels over time as is currently the case. If however the bank of england were to purchase all the new bonds issued at say zero rates…then the government ultimately would never need to pay them back as it could always be refinanced at zero rates, so we could keep the hocus pocus going and the general population wouldn’t really catch on as everything would be fine. Ideally this would need to be co-ordinated with other governments/central banks otherwise it could lead to political issues.
The UK government itself can then also start taxing primary residences to boost the income aspect re: Debt/income ratios. Government housing schemes, low interest rates, quantitative easing has led to a big rise in asset prices like housing. The UK government and BOE have essentially created paper wealth for homeowners so it could claw some of it back via a capital gains tax on a primary residence once sold or some form of a mansion/land value tax. The government could collect a tremendous amount of wealth this way. House price increases trap value in the asset and isn’t of benefit to the government or the economy unless they tax it.
The other solution is that the pensioners who worked for the government till about a decade ago have been on a defined benefit scheme i.e (final salary schemes) the government should consider undertaking a scaled partial default to claw some money back. Most the pensioners have their houses fully paid for (bought during the cheap years (when house price/income ratios were about 1/3 of what they are now)….most now receive excess money which they give to their kids/grandkids as a gift or to pay for a deposit on a flat/house propping up house prices….so for the most part it is excess, so I would suggest some form of a yearly partial default which would help restore the balances from that side of things. Effectively its a way to hit the older generation without penalising the young, who are really the backbone of the british economy.
As a side now The UK government should also print money and buy gold to prepare the eventual mess that is inevitable, but all of the above can put the chaos off for many many years perhaps decades before the day of reckoning. Also to survive a country just needs to be less bad then other countries….zimbabwe solely went through hyper inflation as it was the worst of all fiat systems and confidence was lost.
The central bankS also have tools to utilise negative interest rates etc….to help reduce debt burdens as well as banning cash to lock people into bank accounts, where a charge can be implemented to restoring debt/income balances.
Helicopter money is another option to use but it would need to be geared towards the lower income families as they have a higher marginal propensity to consume. So maybe crediting £x to families earning under £xk who have kids. Giving £x to a millionaire is meaningless they’d just save it, they wouldn’t spend more. So calculated helicopter money would induce the inflation the central banks and government require to inflate away some of the debt.
Everything above should be considered and balanced out finely so it can be executed effectively
The government got us into this mess I highly doubt they will find a reasonable way out. The only way that this situation can be rectified is by doing what works, let the system crash and cleanse, then punish the worst wrong doers with jail time. What the government did in 2008 only made things worse and if they keep meddling expect the same result. The government and the central banks are self serving and following their lead will result in one disaster followed by another. DT
Definitely a very bad situation imposed on societies by various government officials.
I agree and believe at best these governments can only postpone the day of reckoning. And the more they postpone the worse it will be. Not sure why most people can’t see this.
Hate to be repetitious Eddie, but I do agree with ou yet again.
Never going to happen – house price bubble and public sector pensions are the two drugs with which ALL UK political parties bribe people to get votes.
“Bribe” UK Bob?
Bread and circuses Al – if people who own houses have them rising in price every year they feel content with the govt that is enabling that. Ditto public sector pensions – here in the UK a self-employed person has to pay in 3 times as much as a public sector worker to get the same pension… and has the added risks of stock market volatility.
Thanks Bob UK, I have believed that for years.
They were not anarchists rioting in the streets of Athens they were pensioners seeking promised payments not forthcoming.
Funny………Man and govt will never fix the present problem…..guaranteed……
The Man could fix the problem, but then again he did give us free will!
believe or not to believe…
Can you imagine the UK government printing money and then buying gold, to prepare for the eventual mess that is inevitable. That is what Fundamental analysis say’s, if they couldn’t figure out gold’s value when Brown was finance minister given all his financial largesse what makes anyone trust their judgement now. Yes tax the pensioners they aren’t productive and maybe the government would be better off if all grey haired people disappeared just before age 65, after all they aren’t necessary, they have become too old and are a drag on the economy but they have all those assets after most worked to support their country all their lives. DT
Google the “Liverpool Pathway” and then read between the lines to see how the UK cuts NHS expense.
“I’m too old and a drag on the economy”? Boy o boy are my feelings hurt! But you probably didn’t mean me because I have no grey hair only a white beard!
I believe the Governments are fully aware of the problem, at least at executive level. i.e. the permanent civil servants.
That explains, in the US, the militarization of police forces. increasing drone surveillance and increased monitoring of emails, phones and the like.
In many parts of urban England, the use of CCTV everywhere only goes unnoticed by those that don’t bother to look.
I walk from my English home to the local library, in a suburban setting near the UEA and pass 6 surveillance CCTVs in about a mile.
Walking from my home in Indiana to a university campus on a clear day, I have a chance of seeing a drone in the air, with its large US flag on the side.
I believe the governments are paranoid, but they know lots of things I don’t.
I think it entirely possible there will be civil unrest sometime, which will probably be put down quite viciously and go mis-reported by the press.
WOW CFS,
Government drones with flags on their side?
I see nothing like that over here where I live,
Only drone I see a couple of times a year is operated by a local Real Estate agent taking aerial photos/movie of his next listing for sale.
Cheers.
Depends on who causes the “civil unrest”
So you own homes in the UK; Indiana: and, the Sonoma area? As you know Sarah graduasted from DePauw University. Gotta say Professor, hard state for me to warm up to. She loved DePauw however!
The first time we were on our way to Greencastle we could not stay in the city but had to stay in a Holiday Inn about five miles out of town. We arrived after being in the air for way too long and I rally want a bit of good red wine. I asked the gal at the front desk if there was an Italian restaurant close by and her eyes lit up as she said: “Why right across the street. Turned out to be pizza and bad spaghetti. I asked the server what they had to drink and she replied cola, orange and root beer. That says it all!
In the UK, I saw a drone fly over near my home the other day, from my back garden. It’s the kereport listener targeting spy drone.
Governments, banksters, mega rich, and the elites alike all know what is going on. Alot of these people are actually very intelligent and cunning in their chosen fields. They just so happen to be a part of the system that is totally entrenched with corruption and unfairness.
These people lose their sense of conscience, perspective and consequence. Delusions of grandeur warp their way of life. They are driven by greed, power and lust for money. The system has festered this trait into them. They also learn that they are a law into themselves and the level of accountability for their actions is entirely absent. Hence we see these power players continually clean out the average folk. Think of the bank CEOs and what happened to them after the 2008 GFC??? The same applies for our politicians in Australia. Once a prime minister has finished his or her term, they continue to receive “royalty” payments for the rest of their parliamentary existence regardless of performance or longevity in the top job.
Unfortunately the pessimist in me sees this continuing for some time. I agree what others say, that there needs to be a cleansing like crash to filter throughout the system so we can somewhat wipe the slate clean and start afresh. Suffice to say, there would be a high level of collateral damage to come out of such an event and many would be left suffering financial hardship.
I personally think that the event you are alluding to is eventually inevitable.
The French politicians are all going to gang up on Marine LePen. When she loses, they will go on for a few more years and eventually France will get a leader that makes her father Jean-Marie LePen look like a leftie.
RETAIL Bubble has now burst………8640 store closings…….shop till you drop has a new meaning……………………………..zerohedge
If not now big time in the future. Little Bellingham is loosing stores that have been there for years.
Surely the whole system was designed to bring us to this point. The bankers in charge aren’t dummies. And they get what they want.
Bankers should not be in charge of society. It isn’t their job.
Re: “Giving £x to a millionaire is meaningless they’d just save it, they wouldn’t spend more.”
That’s just Keynesian propaganda. Savings drive sustainable prosperity, increased spending is the result. This used to be common sense.
Technically I agree with you Matthew. But, if it’s an increasingly small portion of the populace that captures the benefits of productivity gains, while most are living paycheck to paycheck, what kind of prosperity is the ‘millionaires’ savings going to drive?
GH, whether it’s a millionaire’s savings or not, savings tend to be available, directly or indirectly, for capital investment. That’s where sustainable prosperity comes from, not from consumer spending.
If money is printed and handed out to everyone, society pays and those who’ve been disciplined and intelligent with money would pay the most as part of the value of their savings would get transferred to those who’ve been terrible with money. No lasting benefit would result from such a scheme since most of it would be spent on consumer goods, not capital goods.
It is important to understand that savers only get accused of “hoarding” by those who don’t understand economics and those who want to manipulate those who don’t understand economics.
The overwhelming majority of millionaires earned their money by providing a good or service that people wanted. No one is poor because they’ve been successful and no one has less because they have more. If anything, it’s just the opposite. The richest poor people in the world live in countries that have the most rich people.
The overwhelming majority of millionaires earned their money by providing a good or service that people wanted”
And all to many people do not accept that fact!
If the millionaire or billionaire invests in the means of production and good paying jobs are created and the investor gets a decent rate of return then there is a social benefit. Otherwise there is a natural limit to the needs of the wealthy investor that dictate his spending practices. For the wealthy there are two things. Self interest and something called noble obligation to society. It helps the wealthy to not be seen as a plunderers and also to be seen as a benefit to society.
Again, I agree.
I do have a problem with current distribution of wealth in the US. But whereas liberals look to socialist redistribution to address the matter, I believe it is more an issue of the ultra-wealthy using gov’t to destroy their competition, and to skim the cream from productive society’s labors.
The most talented and disciplined can still prosper in the US, which makes it better than many, perhaps most, places. But does it compare to the US of a century ago, or even 50 years ago? I’m glad I’m not a millennial.
I only have a problem with the distribution of wealth where cronyism is a factor. When market forces are allowed to “distribute” the wealth, there’s nothing wrong with the results.
Big Al and GH, I agree. We are approaching a precipice from which the fall from grace could be catastrophic.
Is it any wonder that each market crash/downturn/crisis seems more disastrous than the preceding crash? We all remember how bad and far reaching the GFC was. With that in mind, whats going to be the end result of the next financial crisis when it strikes?
Good questions, Oz. I find it interesting how we seem utterly unable to change course.
By the GFC I assume you mean the 2008 financial crisis? Although it was much larger in scale than the 1980’s savings and loan crisis, there was barely a fraction of the accountability.
https://www.youtube.com/watch?v=mMzsJFnh9KU&list=PLC3E9660BFB0C104D
A big piece of the puzzle is the media, imo. If the media is owned/controlled by those who have buried us in debt slavery, then it can’t serve as a forum for viable public discourse to resolve our predicament. Without that, we’re up the creek without a paddle.
As far as end result, it brings to mind ‘out of chaos, order’. Maybe it’s a leap, but my guess is that the goal is a new monetary system with a cashless economy under the direction of a one-world-bank, and that both the banks (no, not every little community bank and credit union) and the mass media are working toward that goal.
A cashless society is certainly their goal GH. It is almost guaranteed too.
I just can’t see being resigned to absolute tyranny.
“A debt jubilee is a radical solution”
Actually from a biblical stand point that turns out not to be the case. It is in fact a commandment from God. If in doubt read the old testament or ask Bo Polny.
A good read as well Fundamental Analysis. Cheers!
I have been unable to verify all info in this article:
http://www.riskhedge.com/post/exclusivedid-russia-shoot-down-us-missiles-syria
http://themacrotourist.com//macro/the-end-game
Found at 321gold.com
Here we go again:
NEW YORK (AP) — New York billionaire Michael Bloomberg urged world leaders not to follow President Donald Trump’s lead on climate change and declared his intention to help save an international agreement to reduce carbon emissions.
Bloomberg, who considered a presidential bid after serving three terms as New York City’s mayor, addressed his intensifying focus on climate change in an interview with The Associated Press. He said there was no political motive tied to last week’s release of his new book, “Climate of Hope: How Cities, Businesses, and Citizens Can Save the Planet,” co-authored by Sierra Club executive director Carl Pope.
“I’m not running for office,” the 75-year-old Bloomberg said.
Instead of helping to re-ignite his political career, he said the new book offered a specific policy objective: To help save an international agreement, negotiated in Paris, to reduce global carbon emissions.
The Trump administration is debating whether to abandon the pact as the president promised during his campaign. Under the agreement, the U.S. pledged that by 2025 it would reduce its annual greenhouse gas emissions by 26 to 28 percent below 2005 levels, which would be a reduction of about 1.6 billion tons.
Bloomberg said he believed the U.S. would hit that goal regardless of what Trump does because of leadership at the state level and market forces already at play in the private sector.
“Washington won’t determine the fate of our ability to meet our Paris commitment,” he said in an email Saturday to the AP. “And what a tragedy it would be if the failure to understand that led to an unraveling of the agreement. We hope this book will help to correct that wrong impression — and help save the Paris deal.”
Why do “scientists” march on Earth Day?
They were not colleagues marching.
They were comrades marching.
Big difference!
LePen first round victoire:
https://youtu.be/95in3HhRDOI
Analysis of the vote says there were too many Muslims voting, so LePen CANNOT win second round…..
France will join the European Caliphate. The only question is exactly how soon.
Macron now projected top win more votes than LePen and win second round.
RT coverage of French election:
https://www.youtube.com/watch?v=iWMTZrFfxvk
FRANCE 4 live coverage of Election:
https://www.youtube.com/watch?v=1Ydto3Iyzic
WHAT ARE THEY CRAZY……..GOLD DOWN$19………..
OH, just election in France……Dow futures up 200 pts………
“and pass 6 surveillance CCTVs in about a mile” I have 14 on my home alone. With room for two more.
So the US$ falls off a cliff going from 99.80 towards the 98.60 mark and gold also suffers a similar precipitous fall???Fundamentals take a back seat to fear, manipulation and a herd mentality.
The US dollar is mostly an inverse measure of the Euro, and because of the French election reult the Euro has shot up. However, it is very short sighted. Greece is still a basket case, and Italy’s banks are still in bad shape.
The French election was TOTALLY misrepresented by the media. The reason why Macron won the first round and WILL win the second round is because of the Islamic vote. He was a middle of the line candidate promoted by the press, but but did anyone think Islamic voters were going to vote for either of the major candidates who would limit immigration?
Greece is headed to extension ……..seems they are not having enough babies to keep up with the birth to death model. To bad for the bankers , they will not have anyone to collect from
Gold is being knocked down, simply because the bullion banks still can knock it down and the Comex settles on Tuesday and LBMA on Friday, this week.
Nothing apparently has yet changed! I was hoping that this time enough Hedge funds would take deliery, but apparently not. And so it goes as usual.
Taking delivery is not going to change anything…….until the CFTC,, COMEX ,& LBMA are abolished ,which it never will, nothing is going to change. Oh, it might change for awhile, long enough for the sheeple to believe they can change things…. Comex has proven to be a joke, LBMA is a joke. The paper price is still in control, and everyone bases the pretend price on the pretend paper price. As long as the pretend govt is in charge of the pretend CFTC….This game will continue.
WISHFUL THINKING,…….or STINKEN THINKEN
Dollar Down…….gold Down………wonder why……….
Listen to David Morgan.
WHY?
Epstein morning TA:
https://youtu.be/HVeEA4686y8?t=33
FundamentalAnalysis says: