The U.S.
economic system is riddled with more debt now than in 2008 when a de
facto financial collapse the Great Financial Crisis occurred. Debt
behaves like printed money until the time at which the debt has to be
repaid. The Federal Government never repays the debt is issues. It
rolls over maturities while at the same time it issues more debt.
This happens every two weeks. There’s now $19 trillion in
Treasury debt outstanding. That number was about $10 trillion when
Obama took office in 2008.
Perpetual
debt refunding and increased issuance is NO DIFFERENT THAN OUTRIGHT
MONEY PRINTING. Until of course, the creditors will no longer
tolerate the refinancing of existing debt. That’s what happened in
2008. The market forced the issue and the financial system was
collapsing until the Treasury facilitated an eventual $4.4 trillion
in outright money printing.
The
difference between then and now is that the amount of debt issued is
significantly greater today than it was in 2008. While everyone was
watching the Fed’s printing press to monitor the creation of money,
no one was keeping track of the spending “power” being created
by the fractional banking system’s credit market funding mechanism.
This
illusion of economic “wealth creation” is perhaps best
represented by the auto market, in which sales have soared to record
levels over the past few years. The problem is that the amount of
auto loans issued to drive this level of sales is, by far, at an
all-time high. At least one-third to half of this debt issued since
2010 can be considered sub-prime, even though the bankers may not
have labelled it as such. While the headlines today might herald
“strong” auto sales in February, bear in mind that it is
primarily funded by artificially low interest rates and non-income
verification 100%+ loan to value debt. Private market credit
companies that are now offering “equity” loans to people who own
cars with little or no debt.
Full
analysis and diagrams:
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