China’s Unilateral Debt Jubilee?

Western nations are bankrupt. This is “old news” to regular readers, as is the (obvious) conclusion that these corrupt/insolvent regimes will once again have to resort to History’s economic get-out-of-jail-free card: Debt Jubilee.

What has been far less-obvious is what form such a “jubilee” would take. We live in a Crime Syndicate system. Literally every facet of our economies has now been warped into a paradigm of giving-to-the-Rich (generally the very, very rich), and stealing from everyone else. In such an environment, would we really expect a blanket Jubilee, meaning that everyone’s debts would be wiped clean?

That would be the fair thing to do. That would be the economically rational thing to do. And it is precisely for those reasons that readers have been previously warned not to expect such a Jubilee in the West. It would be recklessness of the highest order for us to begin to (deliberately) amass debts of our own, in the naïve expectation that our treatment would be the same as that of the Fat Cats above us – in our two-tier, double-standard societies.

This brings us to China. China’s own debt-levels, both inside and outside of government, have also been soaring. Indeed, debt-levels have been spiraling in China (in recent years) at an almost Western rate.

This is peculiar. While China’s government has only partial and indirect control over the levels of private and corporate debt which are accumulated in China, it has much greater control over the rate at which its sovereign debt is rising.

This Could Be A Problem: China’s Debt-To-GDP Rises To a Gargantuan 346%

Note the hyperbolic analysis which accompanies the hyperbolic headline:

When debt-to-GDP rises as rapidly as it has, and to as high (and rising!) a level as it has in China, a weaker currency invariably follows.

Wrong.

The analysis above assumes that we live a world of markets (and thus market fundamentals). As regular readers know all-too-well, we no longer have “markets” – at all, anywhere. What we have, instead, are systemic price-rigging operations, in all of our (former) markets, all of the time.

This systemic price-rigging is done via the computerized trading algorithms of the banking Crime Syndicate, more specifically, the single Master Algorithm, by which the bankers play the role of Pied Piper in these former markets – and then lead all the “rats” around by the nose. Observe the chart which accompanies the hyperbole above:

What we see is that United States’ debt-to-GDP level is roughly the same as that of China. But those are the laughable, “official” numbers. Unofficially, in the real world, the U.S.’s “debts and liabilities” now exceed$200 TRILLION. In the real world, many of these $trillions in supposed “liabilities” are pure debt, fraudulently misreported as mere “liabilities.”

In the real world (i.e. a world of legitimate accounting), the U.S.’s sovereign debt-to-GDP ratio is somewhere around an order of magnitude worse than that of China. Yet look outside the window. In this world of fraudulent accounting and systemic manipulation of pseudo-markets, the U.S. dollar is perched at an all-time, historic, extreme.

Why is there absolutely no relationship between economic fundamentals (including debt levels) and the exchange rate of the world’s paper, fiat currencies? Look no further than the convicted currency-manipulators of the Big Banks.

China saw that in this world of fraud, it could be the poster-boy for Fiscal Responsibility, and still see the exchange rate of its currency driven down by the One Bank. This is precisely what we saw when the bankers manufactured a “currency crisis” in Brazil, and a “currency crisis” in Russia, and a “currency crisis”in India, and a “currency crisis” in South Africa.

With no reward for fiscal prudence, China has engaged in the rational policy of cashing-in on the short-term benefits of recklessly(?) accumulating debt. Yet even here, appearances can be deceiving. Look at China’s current, overall debt-to-GDP level, and what immediately leaps out is the huge figure for “non-financial corporate” debt: 125% of GDP. This is significantly higher than even the numbers in the Corrupt West.

However, look back in time. Since 2000; this category of debt has increased by ‘only’ 50%. Indeed, between 2000 and 2007, this category of debt actually declined slightly. In comparison, during the reign-of-error of George Bush Jr. between 2000 and 2008, the U.S.’s sovereign debt increased by more than 200% -- and those are the absurd “official” numbers.

In the private sector, excessive levels of U.S. corporate debt are simply rolled-over, in what is known (even inside the U.S.) by the euphemism of fraud: “extend and pretend”. This comes in the context of an economy which is mired in a Greater Depression – i.e. ever-rising levels of debt, but no growth.

Conversely, even if we account for the fact that China exaggerates its own GDP almost as much as the Corrupt West, this is still an economy with a robust (real) rate of economic growth. A nation with real growth can obviously sustain rising debt levels for a much longer period of time than nations, like the U.S., which have only pretend-growth.

The West is in an out-of-control debt spiral. China is engaging in a controlled debt spiral. But what is its end game? As noted previously, the only (mathematically feasible) “end game” for any debt spiral is Debt Jubilee.

One way of interpreting this scenario is that China is merely tagging along with the Corrupt West. As these bankrupt regimes stumble-and-bumble their way to Debt Jubilee, China will then proclaim: “me too.” However, this is certainly not the only way in which one could read these tea leaves.

What if China’s plan is not to follow the West into Debt Jubilee, but rather to lead the way? Note the pessimism expressed previously. Based on everything we know about the puppet governments of the Corrupt West, any supposed debt default/Debt Jubilee initiated by these regimes would simply be another stacked-deck of corruption.

Those on top, meaning our governments, our mega-corporations, and the Oligarchs hiding behind those corporate fronts, would see all of their mega-debts erased. For everyone else, Debt Slavery would continue: there would be no “forgiveness” for those in the lower tier of our two-tier societies.

However, if China was first to declare Debt Jubilee, and thus set the precedent, it would be much more difficult for the Corrupt West to perpetrate this sort of fraudulent, quasi-Jubilee, where only some debts were erased. If China declared Debt Jubilee first, and made it a blanket program of debt-forgiveness, it would be very difficult for the Corrupt West to ignore that precedent.

Western governments are very familiar with precedents. When the Big Bank crime syndicate perpetrated its first “bail-in” (with the help of the puppet government in Cyprus), Western government mouthpieces were tripping over each other, as they all rushed to call that “a precedent”. But what’s good for the Goose is also good for the Gander.

If it’s a (binding) “precedent” that the Big Banks can lawlessly steal funds from their account-holders, with nothing more than a rubber-stamp from some puppet regime, then the Corrupt West would have great difficulty arguing that it would not be a “precedent” if/when we saw the first Debt Jubilee. It would be doubly hard for the regimes of the Corrupt West to ignore China’s (potential) precedent in this area once the forgiveness of all that debt led to a “prosperity honeymoon.” This would be the inevitable result of the Debt Slaves of China being liberated from their financial yokes.

If China freed all of the Debt Slaves within its own economy, while the West’s financial Slaves saw their own yokes-of-debt remain intact, there would be two, obvious consequences. First of all, there would be millions and millions of angry Debt Slaves in the West. Watching as China freed its Debt Slaves, and then watching as that entire economy prospered is a lesson simple enough for even the stunted minds of our Zombie populations to comprehend.

The other, obvious consequence if there was a full Jubilee in China, but only a partial, corrupted Jubilee in the West is that the Corrupt West would further undermine its capacity to compete with the East, in the global economy. A massive burden of debt – and the parasitic “interest payments” which accompany it – is no different than a massive, punitive, permanent tax on that economy.

It is an economic Millstone which would/must drag the West lower and lower, even as a buoyant, debt-free China soared higher. Furthermore, it must be assumed that much of the Rest of the World would look to quickly emulate China. For all of these non-corrupt governments (or, at least, less corrupt governments), playing “follow the leader” with China’s Debt Jubilee would be the ultimate, political no-brainer.

Acting first, and unilaterally, our fear would be that any Western “Debt Jubilee” would be simply another program of give-to-the-Rich corruption. However, acting last (and belatedly), it would be much more difficult for the Corrupt West to avoid a real “jubilee” – one where its own Slaves are also liberated.