Monday , 25 September 2017


To Believe That Debt Has No Consequence Is To Believe In Magic – Believe At Your Own Risk!

America’s national philosophy has become relying on debt to pay today’s expenses. Nothing’s easierDebt-130x90 than borrowing money, especially at super-low interest rates but believing that debt has no consequence, that the status quo is permanent, that all the promises based on soaring debt can be paid—it’s all an appealing fantasy. Believe at your own risk.

The U.S. is now completely dependent on expanding debt for the maintenance of its society and economy. Every sector of the economy borrows vast sums just to maintain the status quo for another year. Personal, corporate, politicians and government—it’s the same story. Borrow to buy a car; borrow to buy back shares; float a bond to pay for what was once paid out of tax revenues.

Borrowing money is easy and requires no trade-offs or accountability until the economy collapses under the weight of debt service and insolvency. We want to believe in financial magic because we want things to remain easy but:

  • eventually the cost of servicing even low interest-rate debt squeezes spending.
  • eventually capital tires of chasing negative interest-rate bonds.
  • eventually lenders realize that leverage has skyrocketed along with the debt, and risk is piled up like dry tinder in a forest.

Central banks realize they can’t even limit the expansion of their balance sheets without triggering a panic that would collapse all the debt-based contraptions and manipulated markets they’ve held aloft with limitless liquidity.

If you believe that going from a total debt burden per household of 79% of median household income to debt per household to 584% of median household income will have no consequences, you believe in magic.

Unfortunately, thinking something will be easy forever, and will have no consequences, is not the same as the real world of skyrocketing debt and leverage having no consequences.

Believing that debt has no consequence, that the status quo is permanent, that all the promises based on soaring debt can be paid—it’s all an appealing fantasy. Believe at your own risk.

The comments above are an edited and abridged synopsis bmgbullion.com by of an article by Charles Hugh Smith

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