ALL HELL WILL BREAK LOOSE FOR HUMANITY by Egon von Greyerz
March 22, 2022
We are now at the end of an era of economic and moral decadence in a debt infested world built on false values, fake money and abysmal leadership. All hell will break loose.
The consequences will be fatal for the world.
There are eras in history which have produced great leaders and thinkers. But sadly, the current era has produced nothing of that kind. The end of an economic cycle produces no great leadership or statesmanship but only incompetent leaders.
Looking at the Western world, the only notable statesman in the last few decades in my view is Margaret Thatcher, prime minister of the United Kingdom from 1979 to 1990.
But political leaders are of course instruments of their time. Sadly times as the current don’t produce Superior Men.
As Confucius said:
“The Superior Man thinks always of virtue, the common man thinks of comfort.”
It is the buildup of a massive debt mountain which has given the Western world a false comfort based on false values.
As I have pointed out many times, the US has increased its debt every year since 1930, with a couple of minor exceptions in the 1950s and 1960s. The Clinton surpluses in the late 1990s were fake and in fact deficits.
In history, when there is undue economic pressure, starting wars is popular and often felt necessary. It is convenient to blame the war for the increasing debts.
The Gold Standard was an excellent method for preventing governments to spend money they didn’t have. Since money couldn’t be printed at will, deficits then had to be financed by settling debts in physical gold.
THE GOLD WINDOW HAS BEEN “TEMPORARILY” CLOSED FOR 50 YEARS As Nixon in the late 1960s had to meet the US debts to France in gold, he decided in 1971 to close the gold window temporarily. He clearly didn’t want to hand all the US gold to de Gaulle. Over 50 years later that gold window is still temporarily closed with fatal consequences for the US and the world.
The chart below shows the exponential growth of US debt since 1971. As we reach the final stages, the debt curve is explosive since 2019.
All hell will break loose
Creating debts of this magnitude is only possible without the discipline of gold backed currencies.
THE FAT LADY HASN’T SUNG YET
But as I have explained before, the debt explosion is not finished until the fat lady sings. And sadly a lot will happen before she finally sings.
Because like most economic eras, this one will finish with a number of spectacular events, many of which will take place concurrently.
Only a few months ago, Powell and Lagarde were singing from the same hymn sheet about transitory inflation.
But as these Central Bank chiefs prove consistently, they are always wrong. For years they are trying to get inflation to two percent and then, all of a sudden, it is approaching 10% and they don’t understand what has hit them.
They haven’t even understood that Keynesianism was dead before it started.
Even a monkey would understand that if you print $10s of trillions and keep interest rates at zero or negative for years, the end result will be spectacular inflation.
Initially we saw unprecedented asset inflation in stocks, bonds and property but it was always clear that the exponential increase in money supply would eventually reach consumer prices.
THE PERFECT STORM
What is coming next is the inevitable perfect storm.
A perfect storm means that everything that can go wrong will go wrong. And that is not just obvious failures in many parts of society but also totally unforeseen consequences.
Let’s just look at some of the obvious events that will take place in the next few years:
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Poster Comment:
Bill Clinton caused to be borrowed all the money in the Social Security Trust Fund. They left IOUs in the fund. Now all Social Security payments must be budgeted.
Charts at source.
