Cry Gold – Cry Wolf

LOAN SCHEMES – “A GIANT BONFIRE OF TAXPAYERS’ MONEY”

The trillions of debt that central banks and governments have created this year obviously exacerbates the world’s debt trap.

Debt comes from the Latin “debitum” which means something owed. But no one must believe that this debt will ever be repaid and nor will interest payments be met.

In the UK for example, the pandemic loan schemes are a farce. Due to enormous pressure on the state to hand this money out quickly, a lot has gone to unsound or fraudulent borrowers. One scheme called the Bounce Back Loans Scheme for £43 billion was launched in May. It is estimated that as much as 60% will be lost to defaults and fraud.

A senior London banker described the schemes as “a giant bonfire of taxpayers’ money with banks just handing out matches”.

The President of the ECB Supervisory Board Andrea Enria recently said that many of the 117 banks it oversees are ”all over the place” on provisioning for non-performing loans. The ECB has warned banks that they could face an extra €1.4t of these loans compared to the 2008 crisis.

If we look at the $280 trillion total global debt, the value of this debt is linked to the assets that were acquired with the debt. When bubble assets such as stocks, bonds, and property falls by 50-90%, which is very likely, this $280t debt will be worthless.

UP LIKE A ROCKET – DOWN LIKE A STICK

As I pointed out in my article last week, out of the $280t global debt, $200t has been created since 2000! That is absolutely astounding and is a clear warning that all the wealth which has been created in the last and 20 years is likely to fall like a stick.

We know from the saying that anything that rises like a rocket will fall a lot faster than it rose. So once the fall starts, it could easily happen in say 2 years and probably not more than 5.

I also showed in my article last week how quickly an over-indebted country’s currency can collapse and how quickly hyperinflation can rise. My good friend Alasdair Macleod has taken the King World News readers through these types of scenarios many times in his superb pieces.

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