Paul Craig Roberts: Gold Wars
The central economic problem in the world today is debt saturation. This is a direct offshoot of the current monetary system – fractional reserve banking. The public has almost no understanding of how money is created and that’s extremely unfortunate. “It is well enough that people of the nation do not understand our banking and money system,” Henry Ford said. “For if they did, I believe there would be a revolution before tomorrow morning.” Money, in today’s world, is created from debt. All money is created when a bank loans it into existence. It is extinguished when the loan is paid off, but sufficient money to also pay the interest (bank profit) is not created. Consequently, there is always much more debt than money to pay it – scarcity is built in to the system. Numerous problems result, some obvious, some not. We will explore this strange system in much greater detail, but one salient fact is most disturbing. It requires perpetual growth at an increasing rate to sustain the system without implosion because of the inbuilt shortages of money. It inevitably leads to a debt crisis, as Ludwig von Mises postulated six decades ago. He called it a systemic crack-up – a global reset. Leaders have greatly increased sovereign debt in response, but the solution to debt is not more debt. It is default. What cannot go on forever not only must but will end.
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