Central Banks and Governments Will Keep Issuing Debt Until the System Collapses

“I know this can’t go on forever.”

This must be the nagging echo in the back of every politician’s and central banker’s head as they proceed down the incredibly long debt-paved road, arm in arm with their borrowed-money betrothed to…where, exactly?

And this is where the limitations of our species come to the fore. If something didn’t happen in our lifetimes, if we haven’t personally experienced it yet, we have a very hard time internalizing the lessons of the past in any real way.

I know The Great Depression happened. I know World War I and II happened. Can I act in ways today that are driven by the experiential difficulties and horrors earned in such dire circumstances by members of my own family, just a couple of generations ago?

I can. But there’s nothing in me that feels the visceral level “The last time we went down this road, remember how horrible it was.” That mental muscle memory just doesn’t exist.

So as Mike Maloney so strikingly and eloquently demonstrated in Hidden Secrets of Money 9: Fall of Empires: Rome vs. USA and Hidden Secrets of Money 10: American Bread & Circus, we know where our current course of governmental and central bank currency policy takes us. There is past precedent, and it’s clear.

But because it happened so long ago, it has the practical resonance in our communal minds that an old movie does. If that.

The world over, central banks are going to keep pursuing their doomed-from-the-start debt-addicted policies until something breaks. All because if they told the truth, if they told their citizens that they needed to immediately begin a prolonged period of extreme austerity to pay for things other people have already enjoyed, they would definitely not get reelected.

So they will issue still more debt until that tipping point when the world realizes that debt is worthless. It always comes. It is the fate of all fiat currency.

The lessons of such a profound event will be generation-defining, as the lessons of The Great Depression were for my grandmother, whose experience informed every decision she made thereafter. Nothing was too small to repurpose, nothing was worthless…because she remembered a time when that was true in her own life, and understood, deeply and personally, that it was a reality that could return.

Imagining a day when all the dollars you have in the bank or stock market or stuffed under your mattress are nearly worthless overnight, victim to a hyperinflationary nightmare, is extremely difficult.

Investors, during times of global stock market uncertainty, still flock en masse into the seeming safe harbor of the US dollar. And there, bathed in the pacifying security of the full faith and credit of the US government, the only thing standing behind that dollar, they wait out the storm.

This has worked, time and time again. And it will. Until it won’t.

Whenever that day comes, which it will (and nobody knows when), I can’t tell you what will happen to the price of gold and silver. But when the world comes to understand, deeply and personally, that the once-world-dominant fiat currency is winding down to its inevitable hyperinflationary end…how many US dollars would you be willing to pay for an ounce of something that has proven will hold its value tomorrow, next year, and 1,000 years from now?

I’ll leave you with this chart, which tells you how many Venezuelan bolivars people were willing to pay in a real world, real-time hyperinflationary environment for gold. This chart starts in February after Maduro revalued the bolivar:

Keep in mind, that 211,000,000 bolivar price was in August. As I type this? Gold is worth over 300,000,000 bolivars three months later.