The Recent Market Corrections Point to Our Achilles Heel – Massive Debt

Is Donald Trump falling into the same debt trap that has generated our nation’s massive current national debt? Our Federal Reserve easy money policy has led to a pile of debt. In fact, since central banks dominate our global finance system, the problem is global.

Our U.S. stock market is a reflection of the Fed’s easy money policy and its correction is inevitable. You cannot build an economy on debt and expect it to continue. It is an economy built on sand, not solidity.

Peter Schiff says the fake financial news is clueless about the recent stock market downturns.

He thinks Trump will be forced to back off austerity measures and continue the easy money gravy train whereby the Fed continues to issue money from nothing. The political class is talking about massive infrastructure spending that will add to our already massive pile of debt. Our debt generating wars continue. Recent U.S. bombing is now spurring fears of opening up yet another war front insuring continued generation of yet more debt.

Obama Doubled Our Record National Debt

Let’s not forget that Obama added nearly $10 Trillion to the already $10 Trillion debt he inherited. Some say this is more than all other Presidents combined. Now, unfortunately it appears that Trump is falling into the debt trap delusion as well.

Peter Schiff and a few others (cast aside as doom and gloomers) have been pointing out the dangers of our debt producing system for many years now. Few have listened and certainly none in power.

Commodity Backed Currency- Real Money

Ron Paul has been calling for a move to a gold backed currency. His point being that when you tie a currency to a limited commodity, you also place a brake on the amount of money that can be generated from that currency.

If our money were backed by gold (and silver as well), our money could not be created on demand. People and nations would have to engage in honest trade with another party that already has gold in their possession.

Hyper Inflation

The more fiat (by decree) money in circulation and accumulated debt, the lower the value of the currency.

As it stands now, money can be generated from the Fed with no redeemable commodity value upon demand. The people at the top running this system benefit the most.

However, as we are now seeing in nations like Venezuela debt leads to hyper inflation as more and more money is generated to pay off the pile of debt left behind by the past bills.

Hyper inflation ruins the currency and causes economic collapse as with Venezuela, Zimbabwe, Chile, Greece, Germany (after WW1 – Weimar Republic) and others. Nothing new. Debt collapsed the Roman empire.

Painful Landing is Inevitable

Unless we take it on the chin and shrink our massive debt, our economic system will collapse taking down a whole lot of others with it.  A readjustment will be marked with rising unemployment, falling stock prices, and even bankrupt businesses. Although painful in the short term, it is actually a healthy process. If we don’t allow an adjustment in the massive debt to shrink and kick the can down the road, the inevitable will get worse when the “chickens come home to roost” as they eventually must.

Reinflation AKA continued debt based spending only kicks the can down the road. We can not just run the money/credit spigot continuously without real consequences.

Debt and central banks are global so we are not alone. There are houses of cards stacked up all over the planet. Our correction will be felt globally which may be why Trump is falling into a dangerous trap by continuing to promote spending as a way out of our shaky financial set up.

The landing will not be soft and will only worsen if we continue along the current path of debt building. Any way you cut it, there is no easy way out. Unfortunate but economically realistic.

Are we beginning to see the signs of collapse with the recent market activities? Time will tell.

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