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Bank says to prepare for 'global collapse'

banker is overwhelmed
This “idea” that an economy must be based on debt and “lent money at interest” is absurd. A monetary system would work well with usury outlawed. In this scenerio, it operate exactly like the stock market: when a lender makes a loan to a borrower to the lender gets some “stock” in the profits that the borrower generates from this money. In this way both lender and borrower to take risk. The current system is “safe” on the side of bankers, and is rape of the public.

The reason the world adopted fiat money (government issued money) is that gold can not be loaned. Compound interest increases exponentially, but gold production only increases linearly. Debt based on gold *must* inevitably default. That is why the world experienced panics every 20 years or so when currencies were pegged to gold. The aggregate debt was defaulted because there was insufficient gold to pay the accumulated interest.

The flip side is that fiat money can be created too quickly, which is the current case. It takes extraordinary judgment and integrity to correctly manage fiat money. Only Ronald Reagan could accomplish it.
The answer is simple: evolution. We must seek self-sufficiency and information sharing. Debt is a fiction. There are just as much resources on Earth now as there was 100 years ago.

Do away with the monetary exchange and dependencies and replace it with self-sufficiency and information sharing. We all share a similar self-interested goal.

Société Générale tells clients how to prepare for potential ‘global collapse’

Société Générale has advised clients to be ready for a possible “global economic collapse” over the next two years, mapping a strategy of defensive investments to avoid wealth destruction.
By Ambrose Evans-Pritchard
Published: 6:12PM GMT 18 Nov 2009

In a report entitled “Worst-case debt scenario”, the bank’s asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems.

Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of “deleveraging”, for years.

“As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse,” said the 68-page report, headed by asset chief Daniel Fermon. It is an exploration of the dangers, not a forecast.

Under the French bank’s “Bear Case” scenario (the gloomiest of three possible outcomes), the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 in 2010.

Governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105pc of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade.

(UK figures look low because debt started from a low base. Mr Ferman said the UK would converge with Europe at 130pc of GDP by 2015 under the bear case).

The underlying debt burden is greater than it was after the Second World War, when nominal levels looked similar. Ageing populations will make it harder to erode debt through growth. “High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt,” it said.

Inflating debt away might be seen by some governments as a lesser of evils.

You can read the full story at The Telegraph

One Comment

  1. Bryon Bryon March 31, 2010

    The aggregate debt was defaulted because there was insufficient gold to pay the accumulated interest.

    And of course with Fiat currency it can be repaid because we can run the presses, but hyperinflation ensues.

    Maybe the problem is interest itself, eh? Maybe there is a reason usury should be regarded as what it is.

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