Its long been the solution in the current global financial system that instead of letting it collapse to sort out the debt, the printing press is turned on and another bubble created until the next crisis. On and on it goes creating a bigger bubble of debt. Now we are  at a point that the debt bubble is just to big. Robert Fitzwilson wrote this exclusive piece for King World News outlining his view that rather than kick the can further down the road the PTB are about to finally collapse it.

“We know that the world’s debt-based, fiat money system can only be revived and sustained by the combination of more debt creation and consumption.  We have arrived at a critical point in history.”

“It has been a common belief, ours included, that there are two alternatives, print more fiat money or risk a catastrophic global depression.  A sane person will only choose the ‘print’ option that leads to the avoidance of an economic Armageddon, even if the effect is just temporary.

But, what if this is a flawed scenario and set of assumptions?  What if there is another path, and that path is to effectively crash the system?  We all know that the accumulated and accrued obligations cannot be repaid and paid, respectively. 

We are in a destructive feedback loop in which new fiat money is created to pay for current and growing expenses, effectively creating even more obligations for future taxpayers.  Individuals are told that other people will be taxed to pay for their entitlements when the reality is that they are creating future obligations for themselves.

While not a prediction, it is wise to consider another alternative….

Collapse it now rather than money printing.

Any thinking person with a calculator knows that the current global monetary system is going to fail given enough time.  Rather than going through the charade of more quantitative easing, what if the central banks, the collaborating Western governments, and the financial elites decide to let the system fail now?

We know that the stock market has risen on the supportive hands of the U.S. Federal Reserve.  This has been a publicly stated policy designed to engender a ‘wealth effect’ making consumers more likely to ramp up their spending.  We know that Treasury bonds have also benefitted from the Fed’s largesse.

We also suspect that the markets for paper gold and silver have been ‘massaged’ by the same institutions.  Not wanting to see high gas prices for the coming election, we also suspect that the recent decline in the price of oil and the jawboning from Saudi Arabia are not coincidental.

….

 We also found out last week that cracks were appearing for the players in the derivatives game.  Greece is threatening to renege on their outstanding obligations to European banks.

New dollar to preempt other countries attempt to undermine the dollar’s reserve status.

Investors need to consider the possibility that people in control are not simply trying to scare the public as they have done during the last 8 trading days, but a larger plan might be afoot.  That plan could be to accelerate the emergence of a new dollar.

Other countries are taking actions that are designed to dethrone the dollar’s dominance.  Some of these actions are making headway, perhaps too much headway.  If the threat of success becomes too great, a preemptive strike to bring down the financial and commodity markets before strong rivals emerge is a possibility to consider.

It would not be the end of the dollar as the king of currencies, just the end of the current dollar as we know it.  The new dollar could be realigned not only against other currencies, but would allow for the effective repudiation of the massive piles of debt and derivatives.  Interest rates would be allowed to return to more normal levels and all assets would be re-priced in terms of the new dollar.

It might seem crazy to sane people, but to insane people running global government and finance, it might seem rational to them.  Their constituencies will not care.  They vote for a living and will not care about the colors and digits on their checks.  It will sound Utopian, a return to fixing the problems of the past and restoring functioning markets at the same time.  Debts go away as does the dreaded austerity.  Wealth will be destroyed, but the vast majority of people have no wealth to preserve.

Precedence to crashing the system.

There is precedence for crashing the system as a technique.  It was the leaking of information about the financial condition of AIG in 2008 that sent markets into a tailspin.

We will see.  Portfolio allocations should continue to over-emphasize assets where the prices have been suppressed and avoid assets where prices have been manipulated higher.  The latter could prove quite dangerous until the question of whether the original path of more QE or the hypothetical situation above is known to investors.”

Advertisements