In order not to have to start just yet on what can only be called the mother of all dishes after feeding about 25-30 people throughout the Sunday on what was a beautiful day with beautiful people celebrating our good fortune in life, I thought I’d put down a couple of thoughts about why we are heading towards the perfect financial storm on a global scale in simple terms.
Let’s start with a close up and personal and recognizable situation any of us could find themselves in. If you borrow money you need an income to pay back the loan and you hope that by having a job long enough you can pay back the loan plus interest.
This is something almost all of us do with regularity. We buy a house, a car or something else we need or think we do and we hope we will have sufficient income to pay back the loan plus he the interest the lending institute charges you for the privilege.
If you lose your job and can’t find another you inevitably will lose your house and other assets when you go in default on your loan. If the assets are worth more than the loan you may still be OK. If the economy around you has enough people needing a house or a car and they or you can sell the underlying asset to another party and the debt gets repaid in time you might still walk away without damage other than to your self esteem.
If on the other hand you or the banks are unable to solve your predicament this way you will lose the asset and you will be hounded by the bank for the money they loaned you until they have regained the money.
If you find a new job in time you may still solve the slippery slope towards financial annihilation but if not bankruptcy awaits.
If you are not protected by bankruptcy laws which allow for your debts to be cancelled in order to give you another chance you will be forced to pay back until the debt has been repaid and if that takes a long time the interest will accumulate on top of it making it even harder to pay back the loan and if it takes a really long time or if the loan is so big, the interest is accumulating faster than what you are able to pay back the loan you will find yourself paying back money you owe until your dying day and if the lender is particularly cruel he will force your offspring to do the same for your debt.
I hope that most people who read this understand that this is a brutal situation and while you might feel that if you take on a debt the lender should be able to hold you accountable and you should have thought long and hard before you signed the dotted line and you are in a situation of your own making it still would be cruel to subject your children to eternal debt slavery which is not of their own making yet this is exactly the situation which is being created on a global scale.
Too most people who work for a living and who on occasion have lend some of their hard earned cash to say a friend in need who then went on to live a life and never bothered to pay the money back this is an understandable reaction but what if you had been able to print the money in your back room and it hadn’t cost you anything to make it and he had paid you back say half of it and after he had lost his job and was sincerely unable to pay you back the money?
Enter the world of banking and international finance.
In order to understand why an economic collapse is inevitable I would like to extrapolate the situation I described above to a global scale.
Without going into to much detail about why and how let’s assume that governments are the borrower and that the too big to fail banks and the IMF and the World Bank are the local bank.
We are (or so we are told) in debt to the big banks and we have to pay back our debts. The problem is that we are losing our jobs. Factories that used to sustain whole communities have disappeared and jobs are being axed at an alarming rate. Examples of this are the plans for axing the hospital kitchens for example. In fact a thousand people a week are leaving New Zealand because they can’t find a job in New Zealand anymore. The same is happening in every country in the world. In some it’s slower and in some it’s faster but even in the mainstream media the global economy can be seen to be diminishing at an alarming rate.
So how are we going to pay back the debt?
The only solution if we wanted to perpetuate this financial system is to get back to economic growth and based on the picture I painted above that means getting well paid jobs which allow us to pay taxes and help pay off the debt which (so we are told) was created to help us build up our civil society.
In order to do so we have to build factories which actually made something people want to buy and to build economies which where growing in real world terms.
And that is not happening and what’s more it will never happen again. Well, maybe in isolated local communities something of a local economy might be feasible but in general it will be impossible to return to the days where one could start a factory locally and produce something that people needed and grow enough to pay back the loan you needed to start the factory and pay the interest on that loan.
Low paid jobs working in a MacDonald’s simply do not create enough income to pay back the loans plus the accumulating interest needed to service the global debt EVER!!!!
What is more there is no such thing as a legal debt forgiveness law for any country in the world and our governments are expected to keep up their legal obligation to pay back the debt they created on our behalf (So we are told) which means they are obliged to keep on extracting our wealth and if they can’t do that via taxes they will have to sell our assets in order to repay our debt and as the global economy crumbles I hope you realize that this means we are very much in the situation of the character above who is trying to sell his assets in a market where everybody else is very much in the same boat.
Well, you say, we voted them in and we are adults and we got ourselves knowingly in this situation so we have to bite the bullet and get on with it and pay our debt so shut up and bear it. But what if the banks are able to print the money out of nothing and have to do absolutely nothing to make it and give it to us while making us sign on the dotted line and making us pay an interest on top for the debts they created with the push of their computer buttons?
And that is the crux isn’t it?
We are living in a global society which can only function if there is perpetual economic growth. This is so because our finance system is based on debt. In this system we borrow money which is created out of thin air by one party when the borrowing party signs their name on the dotted line of a financial contract and promises the underlying real world asset (House, car, business) as collateral and also promises to pay back the main sum and interest on that main sum.
The interest is money not yet brought into existence by a signature on a dotted line and this means that in order to pay it back the economy has to grow in order for it to facilitate the creation of the interest payable.
If you need more insight into how money is created and why it will be impossible to pay back debts created out of thin air in the first place you might want to watch this excellent animation called Money as Debt: