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Global Debt Saturation- a Final Bubble to Burst

April 9, 2010

Global Money-Debt System Collapse by 2012?

There is a strong prevailing wind that has been blowing for at least a couple decades now through our global, debt based system of money creation which is now becoming a howling storm destined to re-structure everyone’s economic paradigm. Yes, that even includes you and the country you reside in. As I have written about the fundamental principles of this antiquated, lopsided, monetary system (here and here) and because of how it operates, we are quickly approaching a culmination, a bankruptcy within the system of money creation world-wide.

“Essentially from a mathematically oriented view, the cost of servicing and maintaining the debt can no longer continue as the income required to do so cannot keep pace with the constant accumulation of newly added debt.

This is a perpetual cycle, an inherent part of this failed system’s design, which feeds upon itself in a death loop until ultimately imploding altogether.”

This subject at hand is related to 2012 changes and although not all Hollywood hyped up and glamorous, nonetheless, it is here and very important. We are to look only at our collective selves and recognize the magnitude of impact the money-system has done to hinder our next evolutionary jump that we are quickly closing in upon. We can and will survive even prosper once we address completely this obstacle.

With all the discussions surrounding the 2012 shift and various associated events, it is my opinion that our economic systems will not be spared drastic overhauls. For most of us in the developed world, money and individual economic well-being is of paramount importance for life. Fortunately, this topic is becoming more critical in nature being in our face everyday requiring our participation even if many do not yet grasp the magnitude of the storm we are all now in. Simply put, we are going to hit the proverbial wall. Those with the ability to manipulate financial markets, politicians along with the general populace can only adjust the speed at which a collision will take place. They cannot re-direct this age old economic vehicle avoiding the inevitable crash. All sign posts on this highway are telling us we are now close to the destination of our own design.

Who’s Next?

And in some countries, (not to mention millions of individuals worldwide) this is already happening and is what some would call- death by design; this was set in motion years ago and is well on its way to maturity. Remember its worth considering the global inevitability of debt-money systemic problems leading to monetary death as certain, since the entire world operates within such a system. Know that what has begun recently in Europe will “go west” as they say.

We see the beginning effects of collapse within this global debt-based system today. America and the United Kingdom along with other nations are accelerating their demise through massive stimulus induced spending since the collapse of the private sectors in 2007. You only have to look at Greece, Ireland, Spain or Iceland etc. and see what lies down this road. Or look back to what ultimately happened in Argentina with the privatized pillaging of that country which began in 1999.

Although there were other factors involved in the Argentinean collapse, the main culprits known and identified as the “financial terrorists” from New York and the City of London, engineered much of the economic chaos that ensued. Of course they are still in business today working “their” system. We need not necessarily blame them entirely for “working” the debt-money system to their economic advantage; it is through understanding the fallacy of just such a system that we initiate not a reform of, but implement an entirely new equitable way to create money globally.

The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger – but recognize the opportunity.”

-John F. Kennedy

Create a New Monetary System?

And yes, there are a few good recommendations for creating sound monetary policy out there, but in this post we will put our attention on the current underlying issues to better understand what we don’t want out of a new money system. For now to contrast some of the existing issues, below is a glimpse of 13 points of interest courtesy of These are a part of their “Freedom’s Vision” idea of what should realistically be included and the results of a new monetary system. One component not expressly implied in this group of 13 points and one I would advocate, is to transition most banks into not-for-profit public utilities on a national or state level.

1. End the practice of debt backed money for our Federal Government. Lower taxes and more productivity result.

2. Provide direct and immediate relief for people in debt, accomplished in a way that’s fair to everyone including those who are not in debt and without creating excessive price inflation, deflation or a giant “moral hazard.”

3. Provide direct and immediate compensation for those who are savers and have been damaged by past practice.

4. Provide relief for States, almost all of whom are in deep debt trouble.

5. Cleanse the banks and financial businesses of unserviceable debts and derivatives and would ensure that they stay that way. All banks would survive the transition, immediately benefiting from improvements in our citizen’s balance sheets. The same process would be used to cleanse other financial like businesses.

6. Businesses, both large and small, would immediately benefit from our citizens and the banks improved balance sheets.

7. Unfunded liabilities would immediately get better with zero percent price inflation.

8. Limits on special interests would separate their money from politics lessening the pressure to continually increase the quantity of money. This allows long term decision making. Special interests associated with the banking, oil, defense, food, insurance, and other industries would no longer have their huge pull. Thus politicians would not have to focus on spending our resources on special interests, but instead on the interests of the people. Budget pressures would decrease as a result.

9. States would exercise more control over their own destiny. Lower taxes on the state level, more productivity. Low cost money would become available to repair and upgrade current infrastructure and to build the infrastructure of tomorrow’s commerce.

10. The powers possessed by the central banks would be greatly diminished freeing our country and others from their methods of control via debt, now even issued worldwide by the IMF. Countries would no longer be working to pay central banks interest. Instead they would work to develop their own rule of law. Their productive labors could be used to improve their own infrastructure, to feed and clothe themselves, and to build a future for themselves. In other words, they need to be taught how to fish, not simply given a fish and asked to pay it back forever and ever.

11. No price inflation eroding away future savings. People who take on reasonable debt could once again make progress towards paying it off.

12. Massively supports education, underpinning progress so that we may continue to lead the world in innovation and the production of meaningful technologies.

13. Provides a national mission – focused on creating the energy and infrastructure of the future. REAL and meaningful economic growth would ensue and massive new employment would result.

Debt Money Goes Broke

In the recent post on the The most important chart of the century, which among other important points, showed the USA is now (3RD Quarter 2009) in a phase where every dollar of additional debt produces ZERO positive effect on GDP. In fact, each new dollar of debt subtracted 15 cents from GDP (Gross Domestic Product). This is overall economic debt saturation that has virtually hit the “wall” of impact mentioned earlier and clearly shows the USA is on track to do this very soon. The chart below indicates this and is based on yearly Z.1 data from the Treasury Department. The trend line is clearly targeting the year 2015 as the time at which each new dollar of added debt produces ZERO positive impact on GDP. This chart visually shows how the economy historically behaves and reacts to more debt based stimulus. 

Here is a short clip from the guys Joe and Pete over at discussing a March 20th, 2010 post from Nathan’s Economic Edge’s titled- The most important chart of the century. This 8 minute clip contains a high-level discussion of the primary causes and imminent danger we face in complacency.

The Question to Ask

In the grand view of all these economic issues now being discussed and examined on Capitol Hill in Washington D.C. between those in power and those given the power to create money, one question must be asked and a reasonable, workable answer obtained. That question is: Since we create all our money through the issuance of debt, and the facts show the more debt we create the worst off we are economically, what would you propose we do to change this system and avert total collapse?

Please don’t be shocked if you receive a familiar answer: deficit-spending reductions, additional or higher taxes, entitlement restructuring etc, etc. Yawn!

Remember these are old, worn out, no longer effective strategies for our future that come wrapped in traditional austerity measures. Those suggestions do not address the critical, underlying monetary problems which created these seemingly insurmountable issues and has so far, remained unscathed until now.

Again, this is all we are hearing both in the USA and also in Europe. It has always been a given to extract the costs to feed this beast out of the public’s pocket. Only this time the driving force middle class in America will no longer accept these answers and certainly will not lay down to drastic austerity measures. It appears the money trust as well as some in government in reality, refuse to genuinely seek change or identify and address the systemic problems within this monetary system. If this is not the reason, and the real issue is one of ignorance or the inability of these individuals to effect change for the better, then they must step aside. There are many well qualified men and women of reason and skills anxiously waving their arms and raising their voices ready to replace and transform the broken components of our monetary system. Their time has come!

The second American Revolution has already begun and is based primarily in the economic realm supported by a cross section of Americans totally void of any one political party’s allegiance. This long overdue revolt is against a too-big government and its too-big-to-fail financial overlords with a sharpening focus on issues caused by our current debt based monetary system. The question remains how fast are we approaching a head on collision with our economic wall of change? Before 2012 is over, expect drastic changes and the birth of a new economic landscape.

As always- your comments are welcomed and encouraged. If you like what you see and read here at Shift of The Age, be apart of the awareness- share! Be sure to forward, subscribe via RSS feed or email direct to your inbox. Thanks!

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