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Unlimited Credit is the Real Threat to the Global Economy

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Real money in US dollars accounts for $1.2 trillion worldwide. Of that, only about $250 billion are in circulation in the US. The rest of the US dollars circulating around the country are worthless. The same situation occurs around the world. What’s the problem with that? The US government alone spends $3.5 trillion a year. The same US government has spent over $14 trillion to unsuccessfully deal with the ongoing economic crisis. Where has all that cash come from, if there are only $1.2 trillion worth of real money out there? It has been printed out of thin air. What would happen if the excess, worthless dollars suddenly disappeared? The only thing that has kept the United States and anything else attached to the US dollar alive for decades is the global credit system. Some people would prefer to call it, the global debt slavery system. Although the value of the US dollar has fallen by 96% since the creation of the Federal Reserve Bank, the currency continues to be the reference worldwide. Most assets are priced in dollars. Oil, raw materials, property, and credit are all priced in US dollars. The reason why America seems to get richer and richer even though in reality it is quite the opposite, is because the country, and much of the world work on credit, not real money. Different from real money, credit can be almost infinite. It has been so for decades. That is why more dollars circulate around the world than the total amount of real dollars. Consumer spending alone is said to be worth over $11 trillion a year, but in reality it is not, because consumers use credit as their tool to acquire property and assets, for example, as supposed to real money. Right now, credit-based spending in the US is three times as high as all the taxes collected by the US government. It is twice as high as the value of the real money that circulates around the US alone. As you may have imagined by now, this gigantic, seemingly infinite credit bubble is also America’s greatest liability. Remember the question I posed before about money disappearing and what would the result be if that were to happen? It is not real money what would disappear, but artificial cash credited to people and companies. Since much of all money circulating in financial transactions is part of the worthless, made-up-from-thin-air money, a sudden contraction in credit availability would have catastrophic consequences for the financial system and therefore for the real economy. The disappearance of credit money from the real economy has already started. We saw it in Greece, Portugal and other European nations in 2014, after governments mandated banking holidays while they attempted to deal with their deepening credit crisis. That’s right. Governments in Greece, Portugal, Spain, Italy and others are in crisis because their operations depend heavily on large amounts of artificially created money whose real value is zero, but that the financial system and the real economy have adopted as real money, even though it does not exist. The dire consequences of what would happen to the global economy if credit lines began to be cut or completely eliminated have been seen in Greece and Portugal, for example. People were not able to access cash from their bank accounts because they had been frozen by the central government. Pensions and unemployment checks were not paid to people who depended on them to live, because the government did not have real money to provide the cash to them. You are probably thinking, how can it be that so much worthless money is allowed to circulate, even though it has no real value? The answer to that is two-fold. First, it is allowed to circulate because it allows for the very rich people to make tons of money, which in turn allows them to acquire real assets. This system is what allowed 62 people to became billionaires. It is also how the number of billionaires is smaller every year. Those in the 0.1% use fake money to buy real assets while consolidating wealth and influence, while leaving the 99.1% in debt. These people have mastered the art of using someone else’s money to get richer. The existent credit mechanism not only relieves them from bad, worthless money, but it also enables them to become owners of tangible property in the form of land, raw materials, profitable companies and so on. The other reason why fake money is allowed to circulate in such large amounts is because there is a general understanding that all that debt created by the credit system will be paid someday, somehow. But what if the expectation of the debt being paid is no longer held? What if the debtors are incapable of paying their debt? It is not hard to see how uncomfortable government representatives must be with most assets, resources and raw materials priced in US dollars all over the world with the perspective that most of the debt that has been created may not be paid ever. With very few exceptions, most countries in the world function within the debt-based system, which means that a sudden correction in the availability of debt to finance government programs such as social security, pensions, payment of salaries for government employees, etc, would have a strong impact on the social fabric of civilisation. This is why […]

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