Worldwide Debt Default is the Only Solution

Sunday, July 22, 2012
By Paul Martin

By: Jason Hamlin
Market Oracle
Jul 21, 2012

Sovereign nations, state governments, Californian cities, small businesses, homeowners, middle-class families, recent graduates and all types of other individuals and entities around the world are facing the same growing problem… DEBT. While the European Union is in the spotlight at the moment, the debt crisis is arguably worse in the United States and reaches its nasty tentacles into just about every nook and cranny of modern society.

It is sucking the life out of economies, stagnating growth, leading to central bank debt monetization, which leads to inflation and higher food prices, job cuts, furlough days, rising unemployment, harsh austerity, record small business failure, record foreclosure rates, depression, stress and an overall sense of anxiety throughout most of humanity.

The only two solutions being debated for the Eurozone at present time are additional austerity measures/tax hikes or a massive new round of debt monetization and quantitative easing. But it does not take an economic expert to conclude that neither one of these courses charted above will resolve the crisis. They have confined the debate to these two options in the same manner that we are presented with the false left vs. right illusion of choice in our political elections.

It should seem obvious to anyone with a pulse that reducing government debt via inflationary policies is nothing more than theft from current holders of the currency (savers) or past purchasers of said debt. Intentionally devaluing the currency to pay back creditors with significantly less valuable money is really just a stealth form of default, without all the fanfare. The only real difference with this approach is that just about everyone in society suffers, rather than solely those that made the bad lending decisions.

It is another no-lose situation for the banks which get to privatize gains and socialize losses. How would you like to walk up to a blackjack table in Vegas, betting $10,000 per hand, keeping the money when you win and spreading the losses to the rest of the casino whenever you bust? This is ‘moral hazard gone wild’ and only leads to bigger bets, bigger losses and a continued attempt to stick the rest of society with the bill.

The Rest…HERE

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