Unthinkable!

Miles Franklin sponsored this article by Gary Christenson. The opinions are his.

Sometimes we must consider the unthinkable.

Official US national debt is $21.6 trillion. Unfunded liabilities are five to ten times higher. Global debt is about $250 trillion. US national debt has doubled every eight to nine years for decades.

  1. National debt in 2018 – $21.6 trillion
  2. National debt in 2026? – $40+ trillion
  3. National debt in 2040? – $100+ trillion
  4. How much will prices rise when the dollar is devalued by an additional $80 trillion in new US government debt plus more private debt?
  5. What interest rate will be needed to sell that debt? 5%, 10%, 15% or higher?
  6. Annual interest payments on current debt run about $500 billion. Both rates and debt are rising. One $ trillion per year in interest payments is coming soon. Six percent interest on $40 trillion requires $2.4 trillion per year, a large smoking hole in the federal budget!
  7. The government can never pay the debt with dollars of current value. Soon the interest will be difficult to pay.

THE OBVIOUS CONCLUSIONS:

  • Sovereign debt (Europe, Japan, the US and others) will default or be hyper-inflated.
  • This explosion of debt is everywhere visible and understood by many.
  • Nothing is working—that we see—to reverse this accelerating debt-train wreck.
  • The political and financial elite know and understand the implications of massive and unpayable debt accumulation.
  • Hence they WANT the system to reset, OR… they can’t stop the reset so they are extracting as much wealth in advance as possible.

IMPLICATIONS FOR HYPER-INFLATION AND DEFAULT:

Hyper-inflation destroys more than savings, businesses, retirements and hope. People abandon morality and look for strong leaders or dictators. Governments adapt to survive. They increase taxes, forfeitures, surveillance and police state tactics. Hyper-inflation has occurred many times in the past hundred years in Europe, Asia, Africa and South America. Hyper-inflation creates ugly consequences for the bottom 99%!

Default on $20+ trillion in government debt would write down the value of those bonds to pennies on the dollar, or less. Insurance companies, public and private pension funds, individual savers, hedge funds, Wall Street, many corporations and pensioners would be devastated. Social Security, Medicare, defense contractors and others dependent upon federal tax collection and government spending may be destroyed.

A society that depends upon fake money—unbacked debt based Federal Reserve Notes—could implode when they devalue fake money to near-zero purchasing power. The powers-that-be want to delay the inevitable.

THE UNTHINKABLE SCENARIO – SPECULATION:

 

If the system can’t continue, and it must implode or hyper-inflate someday, then today seems like a good day to default.

  1. Declare on a Friday afternoon that the US government will no longer pay interest on debt. Bonds and notes will not be redeemed. The reset will be disastrous for almost everyone. Expect blood in the streets and huge riots within days or weeks. Governments will implement martial Law. Stock and bond markets and Wall Street might take years or decades to recover.
  2. The titanic pools of fake money – $trillions in debt and levitated stock values – will reset with much lower purchasing power.
  3. The US economy runs on credit, and most credit will vanish. Cash machines, credit cards and EBT cards might cease working in hours or days. Expect supply disruptions, massive lay-offs, unpaid wages, bank failures, power outages, empty stores… and then it turns worse. People will be desperate and angry.
  4. The Federal Reserve and politicians will blame anyone and everyone, except themselves, for the devastation, loss of life, imploded economy, market crashes, collapsed pension funds and coast-to-coast misery.
  5. Digital dollars might purchase little or nothing. Paper dollars will buy a few goods, but food and gasoline might not be available.
  6. The powers-that-be may declare war, lock-down the economy, expand their control over the media, establish martial law, issue a new paper currency and incarcerate those who resist. (What constitution?)
  7. From the ashes of an economic disaster might come a new and better world, or another dark age.
  8. Silver and gold will have tremendous value, but few individuals will physically own either.

The above in not an appealing scenario and it might be optimistic. The consequences of a hyper-inflation are similar, but take longer to manifest. Almost everyone wants to avoid both hyper-inflation and default…

Conclusions:

 

  • The unthinkable scenario is this: Default now, default later or hyper-inflate later!
  • The government and Federal Reserve policy of “extend and pretend” is attractive compared to the above “unthinkable” scenario which results from sudden federal debt default.
  • The hyper-inflation scenario is equally destructive but extends over several years.
  • The 99% want to believe such devastation can’t happen in the United States. That belief is politically correct, comforting, and potentially catastrophic.
  • The “Four G’s” are important in either scenario: God, Gold, Guns and Grub. Add silver coins to the “Four G’s” and trust divine intervention.
  • Nothing lasts forever, and that includes “reserve currency status,” the credibility of central banks, fiat currency purchasing power, corporate buybacks, unsustainable pension plans, ever-increasing debt and bull markets.
  • Silver bullion and coins may not be available except at sky-high prices.

Silver coins are available at Miles Franklin in exchange for fiat dollars. They will recycle Federal Reserve Notes (debts of the Federal Reserve) for silver coins and bars. Call 1-800-822-8080. Email me if you have questions: deviantinvestor “at” gmail.com.

Gary Christenson, hoping “extend and pretend” will survive a long time because few want to face the ugly reality of either hyper-inflation or federal debt defaults.

19 thoughts on “Unthinkable!

  1. Worldwide, there appears to be sufficient food and energy available to satisfy current basic needs, assuming the will, ex-sanctions, allows for distribution to places that from time are deficient, seriously so. Can we take that for granted? With the worldwide tensions we are experiencing, mostly for geopolitical jostling and desire for control of a bigger piece of the pie, and with human ego being as self-destructive as it has shown to be over ages, can we assume the financial elite will always find a way out?



  2. As long as the common man/woman can service their debt ,the statis quo will continue. Things cost 10 times more than when I was young and I make 10 times more than then. It’s a wash . Fast forward to the future, if the same can be said and the debt is serviced it doesn’t matter if the national,personal,or corporate debt is 40 trillion , 100 trillion or even 1 quadrillion. It will be a wash. Just keep your insurance current (stacking pms)


  3. The California fires are the first eviction notices being issued for the liquidation of the US … those who were burned alive got no grace period.
    The FED is “destroying cash” to bend the supply and demand problem they
    have in the bond market… The Feinstein organized construction of the CA high speed railroad is likely being paid for with secret US bond redemption, most likely coming from China.. by bartering off pieces of America, taking bonds as payment, this not only destroy dollars, it revalues them through a diminishing supply curve… so, how many outstanding bonds are there? and which state will be “volunteered” next ? I first predicted this 9 years ago… though I expected a more direct encroachment from the Chinese, not the Marcus Cicero approach.
    If you were waiting for a dramatic collapse, I would say that microwave weapons burning people alive would qualify as a serious downturn in optimism.


  4. Collapse in Amerika will be in slow motion. It’s happening now. Media and daily life appears normal.
    But….
    Each year 10% of the American “Middle Class” move into the “Poverty Class”.
    Hardly noticeable.
    In America homelessness increases about 10% each year.
    2018 statistics estimate 1% of U.S. population are homeless right now which is about 3 million individuals.
    Much of homelessness is due to increased rents for livable dwellings due to inflation.
    Governments greatly understate homeless counts to keep social costs from rising.
    Hardly noticeable.
    2018 the federal government will issue $1.35 trillion in new debt.
    Hardly noticeable.
    For the last 20 years real inflation has been at least 10% each year.
    2018 the inflation rate has averaged about 20%.
    Hardly noticeable.
    For 2018 rental prices have been increasing at double the pace of wage growth, causing renters to allot more of their income to housing and limiting their ability to save to buy a home. They also have less discretionary money and as a result closing of many retail stores.
    The record-high rate of store closures that rocked the retail industry last year 2017 has continued into 2018, with more than 8,828 closures expected.
    Hardly noticeable.
    U.S. trade deficit increased more than expected in October 2018 and is now up 10% for 2018.
    Hardly noticeable.
    The U.S. economy GDP grew 2.3% in 2017 but given inflation at 10% the net result is 10% – 2.3% = 6.7% actual contraction.
    Hardly noticeable.
    Paying more for everything…little harder to keep your standard of living???
    Stay in denial…it’s more comforting. Stay comfortably numb you little sheeppeople.


  5. You make some very strong points, we need the FED. With out the FED we would be already in a depression. Big business is failing , ,Gov. is failing,, etc.-etc I still believe we need a new Gov.
    Meaning the right people running the country, not the corruption we have.
    silverbill


  6. Hyperinflation and hyperdeflation are only the two opposite extreme ends of an infinite spectrum of possibilities the future can unfold. Lowering interest rates by a factor of 10 gives us the option to increase the debt limits by a factor of 10. That is one option. Next, the government can confiscate too large accumulations of debt declaring them illegal similar to what president Roosevelt did in 1933 when he declared gold ownership to be illegal. The Fed is already forced to transfer 90% of all interest collected to the US Treasury. The same policy can be extended to all government debt holders. The US government declares all government debt to be 100% secure from default. In return the government interest rates could be orders of magnitude lower than commercial paper. The US government could declare that all gevernment debt must be held and administered by a government agency in the interest of national security. After this is accomplished, the government can determine at what rate debt is repaid and taxed.

    In the end all of this does not really matter. The elites in finance will always come up with a new idea to extend the life of the paper system. In order for hyperinflation to take place, food production in the US must collapse. Basic necessities like fuel and toilet paper must become very scarce. The hyperinflation in Zimbabwe and in Weimar Germany was not the result of overprinting. No, the hyperinflation was the result of collapsing production of food and other basic items. In Zimbabwe food production collapsed after Mugabe took away the land from white farmers and gave it to black farmers. In Germany, agricultural and industrial production collapsed due to Germany losing WW I and found liable for huge reparations in the Versaille treaty.

    Right now, food production in the US is stronger than ever. The oil production is booming. So there is no chance of any hyperinflation during the next 26 years. In 50 years, maybe.




  7. Gary: My scenario is gov. won’t default, personal debt will, it has already started : As for what is important the 4 G’s are wrong, I practice the 3 G’s from the late 60’s , silver not Gold will be money , your forgetting something, the Gods didn’t make these problems, man did. Corruption will never stop, until there is blood in the streets. Yes there will be unthinkable things taking place more so than you can think of, what people that are left will form a new gov.
    The FED- BANKS-and GOV.
    silverbill


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