Armstrong Economics Blog/Gov’t Incompetence Re-Posted Feb 14, 2023 by Martin Armstrong
QUESTION: Dear Martin
Could you please describe more in detail what you are expecting when talking about the breakdown of the monetary system?
Will there be differencies between countries like Germany and Switzerland for example? Especially regarding pension systems.
I asume, there might be big differences by countries.
Many thanks and best regards,
ANSWER: The collapse of the monetary system is the result of a comedy of errors. It boils down to the problem that governments since World War II have adopted Keynesian Economics whereby they took Keynes’ suggestion that they should run a deficit during a recession/depression to compensate for the fall in demand because people are hoarding their cash in times of uncertainty. The problem was that they merged that with Marxism and began to run deficits annually and then took the Quantity Theory of Money that claimed an increase in the money supply would be inflationary. So, they borrowed rather than printed falsely believing that they could spend whatever they wanted without it being inflationary.
However, because debt suddenly became collateral post-1971 when it had been illegal to use government bonds as collateral for borrowing, then the debt was transformed into money that now paid interest as it had begun during the American Civil War.
Thanks to the stupidity of locking down the economy for COVID, the escalation in national debts has been insane. This has added stress to the monetary system for you see, the entire government structure depends on being able to sell its debt. As the demand for their debt is declining when they look at this deliberate push for war and handing Ukraine unlimited amounts of money, the inability to sell the debt has increased their search for taxes – hence hiring 87,000 IRS agents armed!
The system is collapsing. They cannot continue to fund all the social programs under this system where the Primary Dealers are not large enough to continually buy government debt. That impacts everything from Pension to Life Insurance. Absolutely everything from investments to interest rates and taxation is all interconnected so we are looking at the end game of 2032. I believe Schwab has taken our forecast for the collapse of the monetary system and we will have a great reset with our opportunity to redesign government he is trying to take that event and push it to totalitarianism ending even our right to vote on anything. Of there will be a Great Rest, but not the way Schwab hopes it to unfold.
The only option is central banks must monetize the debt which defeats the entire purpose of borrowing that was supposed to be less inflationary, and then they must raise taxes dramatically to attempt to remain in power until they compel the people to rise up in revolution as is always the case. Almost every revolution in history has begun with taxation.
Remember the Biblical story where they show a denarius to Jesus complaining about Roman taxes? That is why this coin of Tiberius is known as the Tribute Penny – “Render unto Caesar the things that are Caesar’s and unto God the things that are God’s.” It always comes down to the abuse of power using taxation.