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Posted in [Gold], [Silver], [USD], [Inflation], [Depression], [Federal Reserve], [Hyperinflation], [Recession], [Euro], [Yuan], [China], [Europe] By "The Elemental Economist" Jim Purnell reports: [While not news to Zero Hedge readers who knew about the final debt settlement of US debt about 10 days ahead of schedule, it is now official: according to the US Treasury, America has closed the books on 2011 with debt at an all time record $15,222,940,045,451.09. And, as was observed here first in all of the press, US debt to GDP is now officially over 100%, or 100.3% to be specific, a fact which the US government decided to delay exposing until the very end of the calendar year. We wonder, rhetorically, just how prominent of a talking point this historic event will be in any upcoming GOP primary debates. And yes, technically this number is greater than the debt ceiling but it excludes various accounting gimmicks. When accounting for those, the US has a debt ceiling buffer of... $14 billion, or one third the size of a typical bond auction. ]

The official numbers are in and the US is now sitting at 100.3% Debt/GDP ratio and it is not looking good for the economy, but the White House has decided to wait until the right time to tell the public. How exactly does the US get to have a ridiculous debt/GDP ratio and its magically not a big deal, but when one of the European nations is working with the same ratios they are destined for collapse and must beg the IMF to bail them out with US tax dollars footing roughly 60% of the funding? The truth is that the United States is also in a very impossible mathematical scenario as far as the budget deficit is concerned. This is possible because the global media mouthpieces are all too willing to sing the same song that the US will be able to get away with this dynamic in an effort to keep the stability of the global financial system the dollar manages to preserve its global reserve currency status, for now.

The most concerning issue is that if the media talking heads were able to saturate the entire world with this ‘Orwellian double speak’ they would be able to pull the wool over the entire world’s eyes, but they don’t have total media saturation. Roughly one year ago we saw the Russia and China arrange the largest energy deal in human history and the fine print in this trade agreement specifically stated that they would NO LONGER TRANSACT IN USD FOR ANY ENERGY TRANSACTIONS BUT THE CHINESE YUAN INSTEAD! Now we see the same Chinese powerhouse making yet another trade agreement with Japan now that also removes the FED’s US dollar from the reserve currency status. We are witnessing a tale of two realities emerging, one where the western media is spends every waking moment convincing you that the economic laws DO NOT apply to the United States and the US dollar and sing in unison that we are in a recovery, and one where the major economies of the world are now running not walking away from the US dollar and the collision course with reality that western economics seems to be on.

This is a concerning development, but what’s more concerning to me is that the western citizens are none the wiser that soon we will find ourselves alone in the world drowning in the tens of trillions of newly printed fiat (paper) dollars that have come into existence purely for the purpose of propping up the western banks that have overleveraged themselves and need to be bailed out. What happens when the world no longer is willing to transact their labor and goods created by that labor for the US dollar? What happens when the banks have created a dynamic where the US dollar has little or no value as the world turns it’s back on the very thing that defines our wealth? The answer unfortunately is that we will be drowning in those tens of trillions of US dollars as there will be copious amounts of US dollars dumped on the US citizens forcing us to deal with ever rising inflation as those dollars diminish in value as no nation in the world wants to be stuck holding them. You will watch prices skyrocket for everyday items you need to survive and this will diminish your net worth simply to provide food and shelter for your family. This can and often does turn into a panicked hyperinflationary environment where the average person quickly realizes that they will soon no longer be able to preserve their purchasing power and so they embark upon a mission to acquire those things they will need to survive and then we see a scenario where high demand goods skyrocket in price as demand rises while the purchasing power quickly fades. This economic nightmare has never ended well for anyone or any nation throughout history so it seems a little suspect to assume that it will be different for the United States.

The ONLY way to preserve your purchasing power is to remove yourself from the collateral damage zone of the US dollar and to put your wealth into a true wealth preservation tool that will do just that, preserve your wealth. The ONLY wealth preservation tool that will preserve the purchasing power of your dollars will be gold & silver and this message of salvation soon will be the talk of the town so one would do well to establish your position in the precious metals now before the hysteria begins. The good news is that the reduction in the net worth’s of Americans, and citizens of the world, can and will be offset by the dramatic appreciation of gold & silver and the impossible feat of being made whole again after the housing crash has never been so simple. Establish your ‘Depression Proof Insurance Policy’ today in gold & silver and begin to sleep better at night as you no longer will be tossed around like a rag doll as the stock market has violent fits of wealth destruction. There will be swings in the metals markets as the banks do all they can to steer investors back into dollars and ultimately the stock market, but stay the course as the profitability of being in the metals first will create unspeakable wealth while allowing you to hold and actual hard asset that has NO COUNTER PARTY RISK instead of paper derivatives in stocks and bonds that are nothing but counter party risk.

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