MONEY: Printed “money” doesn’t represent real wealth

Posted on November 17, 2017 by Egon von Greyerz

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Total US debt in 1913 was $39 billion. Today it is $70 trillion, up 1,800X. But that only tells part of the story. There were virtually no unfunded liabilities in 1913. Today they are $130 trillion. So adding the $70 trillion debt to the unfunded liabilities gives a total liability of $200 trillion.

In 1913 US debt to GDP was 150%. Today, including unfunded liabilities, the figure becomes almost 1,000%. This is the burden that ordinary Americans are responsible for a burden that will break the US people and the US economy as well as the dollar. 

Whilst ordinary people have been landed with liabilities that they can never repay, the bankers and the 1% elite has profitably (ab)used the leverage that the debt expansion has created and thus amassed massive fortunes.

That is why we are seeing this enormous inequality in wealth. Ordinary people have not yet realised that they are liable for this debt. They will of course never repay it, nor will anyone else. Governments will try to solve the problem by printing even more money, thus exacerbating the problem. Eventually this will lead to high inflation turning to hyperinflation with interest rates going to at least 15-20% but probably higher. At that point central banks have lost total control of their interest rate manipulation.

The world will then discover that this time the money printing will have no effect as manufactured money can never create wealth.

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When you look at the absolute dollars of debt and liabilities, it’s absolutely terrifying.

I’m glad I’m old and won’t see the crash. It’s going to make the Great Depression look like just a very bad day.

Clearly the debt will be repudiated by inflation, defaults, and unilateral abrogation of contracts. Clearly mere “understandings” (i.e., social security; Gooferment pensions; State Gooferment “constitutional” provisions, “promises”) will be “cannon fodder”.

I feel sorry for future generations.

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2 thoughts on “MONEY: Printed “money” doesn’t represent real wealth

  1. As it has in Venezuela, Zimbabwe, and yes even here in the USA. The dollar has lost most of its value in out lifetime thanks to the politicians and bureaucrats. Argh!

  2. Paper money is a construct based on the assumption that you trade your time and skills for pieces of paper that you expect will allow you to trade in turn for goods or services. There is an assumption of value in these pieces of paper. In the 1920’s, in Germany, the assumption collapsed beyond anyone’s capability to believe. Still have the 500,000,000 Mark note my Dad gave me when I was ten. Lesson learned. “Keep your powder dry and your assets liquid”.

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