The West’s Debt-Bomb
In the news today; we saw the Corporate media engage in a typically Machiavellian attempt to present the West’s “debt problem”. It did this by first hiding the explosion of Western debt within the total growth of overall global debt.
The amount of debt globally has soared more than 40 percent to $100 trillion since the first signs of the financial crisis as governments borrowed to pull their economies out of recession…
This was followed by a convoluted presentation of “creative statistics” (i.e. gibberish numbers, which mean nothing), cobbled together to present the following message: things were pretty bad with Western governments back when the Crash of ’08 took place, but “we’re much better now, thanks.”
With the United States being the apex of this propaganda, the Corporate media (as usual) made particular effort to “explain” how much stronger the U.S. economy was now versus then. In other words, the picture in the U.S. was a particularly extreme perversion of reality.
Below, we see Step 1 in going from that media fantasy-world to the real world; our official numbers on GDP and debt for the Anglo banking “Axis of Evil”:
(* - excludes state/provincial debts and other liabilities)
Because the numbers above for the U.S. and Canada require a considerable, additional amount of translation; let us first look at the UK numbers – where the picture is (somewhat) clear. No change in GDP between 2007 and 2014, while total debt exploded to more than 250% of its previous level. But even these numbers understate the horrific debt-bomb constructed by the UK government over the past seven years, as we’ll see when we examine the doctored numbers for Canada and the U.S.
Relative to the UK; things look pretty good in Canada, until one pokes their finger through that phony façade of health. The first point to note is that Stephen Harper and his Conservative government inherited the strongest economy in the Western world, with a high rate of growth, huge trade surplus, and the only budget surplus of any major Western economy. Thus it took considerable sabotage just to reverse all that positive momentum.
However, much of the improvements in Canada’s debt picture at the federal level had come through reduced transfer payments to the provinces from the federal government. This made balancing the books difficult (for the provinces) when Canada’s economy was strong and healthy. Since Stephen Harper’s “reign of error” began in 2007 and destroyed this economy, it has become totally impossible.
Total provincial debt has exploded to approximately $550 billion for Canada’s provinces, taking total Canadian debt to over $1.2 trillion. This is nearly as large as the total (official) debt of the UK, which has a considerably larger economy, and almost doubles Canada’s debt-to-GDP ratio.
But “debt-to-GDP” ratios have become nearly meaningless, because they are based upon fantasy GDP numbers. To fully appreciate the magnitude of lying-with-numbers with respect to GDP; it is most illuminating to look at the terminal U.S. economy.
In a recent two-part series (The U.S. Greater Depression Exposed), readers saw conclusively that there has never been a “U.S. economic recovery”. It was explained to readers how GDP numbers could be exaggerated – and even distorted extremely – merely by playing with one number: the rate of inflation. To be specific; every percentage-point by which inflation is understated exaggerates GDP on a point-for-point basis.
In particular; it is the governments of the U.S., the UK, and Canada which have been crowing the loudest about their supposedly low inflation-rates. Indeed; these shameless liars regularly have their parrots in the Corporate media proclaim that inflation is “too low”. This comes as food manufacturers engage in the largest wave of product down-sizing in 40 years – to hide massive price-increases in most food items.
Over that same 40 years; the standard of living has crashed by more than 50% in these nations, meaning (in general terms) that the average household now spends twice as large a percentage of total income on food. This means that the “basket of goods” these statisticians use to calculate inflation should be weighted twice as heavily with food costs.
Instead; the Liars have dramatically (and perversely) reduced their weighting of food items in their mythical baskets, to hide what is now officially a global food-inflation crisis. Illustrating the magnitude of lying-with-numbers with respect to inflation; in the same month in 2012 where the World Bank was warning that actual global food prices were increasing at an annualized rate of 120%, the official U.S. “inflation rate” was 0%.
If you believe these “official” inflation numbers from our governments, then yes, these economies have been growing over the past seven years (except for the UK). However, for those of us who live in the real world, these economies have been contracting sharply over those past seven years – while the debts of all three have exploded. This brings us to a closer look at the Big Lie: the U.S. economy.
With (in reality) a relentlessly shrinking GDP, and an official doubling of its “national debt”; by itself this presents a picture of a hopelessly insolvent nation. However, as sophisticated readers already know; the U.S. “national debt” is itself just another tip-of-the-iceberg statistic. Actual U.S. debts and liabilities exceed $200 trillion (according to a former Reagan economic advisor), simply by using the same accounting rules (“GAAP”) which we require of all corporations.
How can a government with over $200 trillion in debts and liabilities pretend that is has a “national debt” of $17 trillion – less than 10% of reality? Simple: lots of very big lies. Previously, when the U.S. government used to obey its own laws; the Treasury Department was required to calculate the real “U.S. deficit”, once per year, using GAAP accounting rules.
During one year of particularly egregious lying-with-numbers in the previous Republican regime; the “official deficit” was only 5% of the actual increase in debts and liabilities calculated by the Treasury Department. Put more simply, the real U.S. deficit was about twenty times as large as the official lie from the Bush government.
Digging through layers and layers of massive lies piled atop more massive lies; we begin to get a glimmer of the truth. We see three dying economies, with gigantic debts; yet each with Liar Governments eager to produce their phony numbers showing they are supposedly “stronger” than before – and stronger than their other, Western neighbours.
The only thing preventing all of these Anglo deadbeat governments from immediate declarations of bankruptcy is massive interest-rate fraud. With all of these economies much less solvent (even using phony “official” numbers); this means that all these nations should be paying a much higher risk-premium on their massive debts – i.e. a much higher interest rate.
Yet as all of these Deadbeat Debtors pretend to be solvent; the Western banking cabal (the One Bank) has manipulated these interest rate/risk-premiums to the lowest levels in history. Indeed; the official U.S. interest rate has been permanently/fraudulently frozen at 0%.
Regular readers are fully familiar with the interest-rate manipulations of the One Bank. It was through fraudulently and relentlessly manipulating the interest rates on the bond debts of European economies higher that the One Bank artificially induced the “Euro debt crisis”. And the moment those interest rates were manipulated back to lower levels, the “crisis” magically disappeared.
This is all just simple arithmetic. If U.S. interest rates were pushed as high as Greek interest rates (during the worst of those interest-rate crimes); the U.S.’s interest payments on its debt alone would have been greater than total revenues.
Even shutting down all government services completely; it wouldn’t be able to merely pay the interest on its debts. The U.S. would not simply be “bankrupt”; it would be absurdly bankrupt – as was the economy of Greece when it was pushed into debt-default.
To summarize; it is only through (fraudulently) pretending that their economies are “growing”, (fraudulently) concealing the actual magnitude of their indebtedness, and (fraudulently) maintaining interest rates on their debts at absurdly low levels that these Anglo Axis nations can even feign solvency.
Simply forcing these Deadbeat Debtors to pay “market rates”(i.e. legitimate rates) of interest on their debts would force them into immediate debt-default. This was publicly conceded by former Fed chairman B.S. Bernanke, in September of last year, when he explained why it wasn’t possible to even begin to “taper” the additional money-printing he promised to end five years ago.
Why is this preposterous, Western debt-bomb being perpetuated, when any corporations as insolvent as these governments currently are would have been forced into bankruptcy proceedings long ago? Simple: to bleed dry the people of these nations with “interest payments” to the One Bank (not to mention “bail-outs” and “bail-ins”) for as long as possible, and to maintain debt choke-holds on our servile governments.
Bankruptcy (and Debt Jubilee) is already absolutely inevitable for all of these Western governments. Thus the greatest fraud of all from these governments is their refusal to detonate this Debt Bomb – and in so doing, release their people from Debt Slavery. It is solely because our governments are servants of the One Bank that we remain Slaves to their debts.
Jeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers/investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but soon decided this was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.