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Debt is Financial Life – Nonsense!
by Gary Christenson, Deviant Investor:
Examine the picture below. The global economy thrives on debt and credit. We purchase essential products using debt/credit. The U.S. dollar bill is a debt of the Federal Reserve. All debt based assets have counter-party risk.
The St. Louis Federal Reserve publishes data on “Total Debt Securities” in $ millions. Note the rapid rise since 1971 after President Nixon encouraged rapid devaluation of the dollar.
es, the total U.S. increases debt rapidly – about 9% per year on average since 1971. A graph of U.S. national debt looks similar and shows about the same rate of increase.
Gold bullion and coins are NOT debt and have no counter-party risk, in contrast to debt based assets. But who cares about gold?
- Central banks profess little interest in gold, although they own a substantial quantity.
- Wall Street makes little profit from gold – no interest there.
- The middle class struggles to pay debts and shows little awareness of gold. (A change in attitude is coming!)
How does increasing debt affect us?
- Rapidly increasing total debt means more dollars in circulation and higher consumer prices.
- Increasing debt service for the masses. How much do you owe for mortgage debt, auto loan debt, student loan debt, credit card debt? How much interest do you pay each year?
- More profits for Wall Street.
