Global Debt, The Wealth Divide & Precious Metals
In a time of skyrocketing debt, precious metals offer us a safe haven to store value.
Global debt is spiralling out of control and the situation is exacerbated by the growing divide between wealthy and poor. The process behind this deterioration is intimately linked to our fiat monetary structure, and the insidious manner it leaches value. However, the situation is seemingly contrasted by the apparent rise in stock market values. In truth, one is a reflection of the other, and in times of economic uncertainty, we must look to precious metals to maintain the value of our savings.
“I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” ― Thomas Jefferson
During 2020 the total global debt rose to over $258 trillion, which equates to 331% of global GDP. Gross domestic product (GDP) represents the monetary measure of all the goods and services produced within a year. This means that global debt equalled the value of all the goods and services that could be produced for 3 years and 111 days. Although these statistics are openly publicised, what is never identified is to who this enormous amount is owed? This spiralling debt burden is in part due to the economic depression created by the global lockdown of 2020.
It is logical to assume that this unprecedented volume of debt should be the catalyst for a deepening global depression. However, so far, this has not appeared to manifest. The reason for this discrepancy is that central banks around the world have been on a money creation spree. The central bankers have taken the fiat currency creation concept of Quantitative Easing and extrapolated it to infinity. Almost a quarter of all US dollars that have ever been created were done so during 2020. This is reflected in the rising volume of the US M1 Money Stock.
There are currently 16 countries whose debt equates to more than 100% of their GDP. It may surprise some readers that the country with the greatest debt to GDP ratio is Japan, whose debt is 237.54% of GDP. Japan’s GDP fell 27.8% last year on the back of the economic lockdown. To free themselves from debt, the Japanese economy would have to work continuously for 2 years and 137 days.
The growing debt crisis is mirrored in the widening gap between the wealthy and the poor. This reflects the rigged nature of a monetary system that favours bankers and their corporations at the expense of the wider public. The wealth gap is rapidly increasing and now the wealthiest 50 Americans are worth as much as the poorest 165 million. This gap has grown during the economic lockdown where most people are getting poorer while a few are experiencing enormous increases in wealth. As an example, Amazon’s CEO Jeff Bezos’ fortune grew by $24 billion during 2020. The wealth gap reflects broader racial and demographic wealth inequalities, with the vast majority of the wealthiest 400 Americans being caucasian males.
During this period of increasing debt, stock prices have been rising. This rise is a function of the increasing volume of fiat currency being created by central banks. Increased liquidity (based on debt), allows banks to invest in the stock market and realize profits from rising prices. How long this situation can continue is difficult to determine, but will depend on the policies of central banks.
The current economic system is unsustainable. There are no theories or real-world examples which justify the unlimited creation of fiat currencies. At MetalStream, it is our perspective that the final result of these economic policies will be the reshaping of our financial system. The new system may be driven by the introduction of Central Bank Digital Currencies (CBDCs). We have covered the potential factors involved with the introduction of CBDCs in our article Central Banking & The Great Reset.
As the fiat monetary system falters, it will be necessary to position a new structure in which the populace will have confidence. Reverting to currencies backed by precious metals would deliver confidence and could be the backing for CBDCs. However, any real value for new currencies will require public auditing rather than the opaque “self-auditing” we have seen so far.
Global debt rates are untenable and it is doubtful they can ever be repaid. During a system reset, the prices of precious metals should reflect their true value. It is very likely that when a reset happens the prices for precious metals will rise. When the central banks are buying and holding gold bullion, it is wise for investors to follow suit!
MetalStream is the issuer of the innovative gold-backed MSGLD token. Please visit our website for more information, and contact email@example.com for enquiries related to the purchase of tokens.