The amount of debt that is on the shoulders of each American now is unsustainable. Would you believe me if I told you that Americans are over $60 trillion in debt? It's actually $3.5 trillion worse. If you add up all forms of debt, including government debt, mortgages, and consumer debt, we are looking at a total debt of $63.5 trillion, which does not even include the $100 trillion (or so) in unfunded liabilities, which are just as much of a future burden as the official debt that is reported – but I digress.
Actually, the majority of this debt has been created in the last 45 years of our nation's 240-year history. Even if you were to go back 45 years ago, our total debt was only at around $2 trillion, and now it's 30 times larger.
Most of us think of the $19.2 trillion official debt and disregard the private debt, which is a tad more than 2 times the official public debt. We wonder about how the national debt will get paid down and panic, but disregard private debt as if it's an issue of each individual household. But public debt and private debt are one and the same in terms of needing to be paid through earnings or by debasement of the currency. And really, debasement of the currency works for the maniacal government, inflating their way out of their debt problems by covertly stealing the purchasing power of the subordinate citizens. Private citizens will get shafted either way.
Check this chart out…
Take a look at the blue line, which indicates total debt, and notice how it went vertical after Nixon closed the gold window and officially took the dollar off of the gold standard.
You can call what we've seen over the past 45 years "growth," or call it a ponzi scheme, whatever suits you, because the jobs and the gains that we have seen throughout the years in the markets have come at a great cost and there is a diminishing rate of return that we are seeing for each dollar of debt the country undertakes. Total debt used to pace GDP pretty closely under the gold standard, and under our fiat system today, to achieve anemic GDP growth, we are ramping up our debt levels like never before as the gap between debt and GDP continues to widen.
It's a parabolic economic deficit!
The debt-to-GDP has exceeded 100% and now sits at 104%, meaning the amount of total government debt is now larger than the yearly economic output of the entire country. Notice in the chart above the rate at which our debt overtook GDP and how the situation is spiraling out of control as we are on the verge of the next recession.
China is approaching a debt-to-GDP of 300%, which grew 150% over the last decade alone. The U.S. is on a similar course, and the odds of our leaders turning this ship around are slim to none.
Here is the situation… the massive indulgence in debt, what the Austrians refer to as a “credit-induced boom,” has now reached its inevitable conclusion.
Nothing lasts forever, and the reset is certainly on the way. Fiat money has monetary value because the governments have decreed it with such power and we all agree upon its value – hard assets have economic value regardless of who decrees it. Even if politicians made it illegal to own gold, it would still have value in the market.
The worse off the nation gets, the more intrinsic value shifts towards finite real assets and out of the financialized system that is ready to implode.
Own real assets…