We've Run Out of Future
The following is an excerpt. The full piece can be accessed on straightlinelogic.com or by clicking the link above.
The economy and financial system have reached debt saturation. We’ve run out of future. Additional debt can no longer produce even tepid economic growth or further asset price elevation as the headwind of servicing existing debt has become too great. Debt must be reduced. After such a massive and lengthy buildup, it will not go gently into that good night. Inevitably, debt contractions are quick relative to the expansions that preceded them, their severity directly related to the magnitude of the buildup. Virtually every asset on the planet is some entity’s debt. It may be pledged, and in the financial system re-pledged, as collateral for more debt (see “Danger Lurks In The Shadows,” October 7, 2013). The descent from this Everest of debt mountains will not be the mountaineer’s methodical climb down, rather it will be the terrifying plunge after a misstep.
The economy and financial system have reached debt saturation. We’ve run out of future. Additional debt can no longer produce even tepid economic growth or further asset price elevation as the headwind of servicing existing debt has become too great. Debt must be reduced. After such a massive and lengthy buildup, it will not go gently into that good night. Inevitably, debt contractions are quick relative to the expansions that preceded them, their severity directly related to the magnitude of the buildup. Virtually every asset on the planet is some entity’s debt. It may be pledged, and in the financial system re-pledged, as collateral for more debt (see “Danger Lurks In The Shadows,” October 7, 2013). The descent from this Everest of debt mountains will not be the mountaineer’s methodical climb down, rather it will be the terrifying plunge after a misstep.
I am not, nor have I ever been a “Doomsday Prepper” but the thought occurs to me that if you or your family is near death would you, or would you not trade a $20,000 car for a meal? IMO everyone should be preparing as much as possible for this possibility. If this real calamity happens the best media of trade may not be gold or silver. It may very well end up being food and/or ammunition as currency, at least until the reestablishment of society.
The only problem with this analysis is that the government can print it's way out of the debt. This of course has it's own issues, namely hyper-inflation, which causes the money to be valueless, though technically the debt can be paid.