Monday, July 2, 2018

Need for global financial reset growing since IMF analysis shows GDP has only doubled in last 20 years while debt has grown by over 320%

One of the primary reasons why we are seeing more and more rumblings about both a global financial and currency reset is in large part due to the fact that central banks have lost control over their monetary policies.  By this we mean that over the past 20 years, the ever growing use of debt and credit to stimulate economies has resulted in less return on their dollars/euros/yen/yuan, etc..., or a validation of the Law of Diminishing Returns.

Chart courtesy of SRS Rocco
Over the last 20 years, the IMF estimates that global debt has increased from $74 trillion to $238 trillion while the global economy has grown at about half that rate, from $36.5 trillion to $79.6 trillion. This process is creating financial claims on the real economy that far exceed the increase in production of goods and services. - Equities
At some point, this ratio of debt creation to gdp growth will reach exponential proportions, and is a significant factor in governments and central banks all beginning to conduct serious talks on bringing about a reset to the financial and monetary system.
The Bank recognises that a new economy, a new world and new demographics demand a new financial system. 
While we prepare for great change, we will be guided by one constant: our mission to promote the good of the people we all serve. 
This infrastructure must be overhauled now that the economy is on the cusp of the fourth industrial revolution and our demographic challenges are intensifying. 
And rebalancing of the global order is proving as dramatic as it was in Montagu Norman’s time. 
Such profound changes demand a new finance. 
We now have a balance sheet fit for a new world order with greater reliance on markets in a wider range of reserve currencies. – Silver Doctors
However how each individual nation to preparing for this is an interesting dichotomy unto itself.  In the East for example, nations like China, Russia, the Brics, and Turkey are accumulating gold at a record pace, while also constructing financial platforms such as CIPS and the AIIB to absorb the functions of both SWIFT and the IMF should these institutions collapse during a black swan event or through mutual decision.

Unfortunately in both the U.S. and in Europe, their answer appears to be the doubling down on their debt creation until the system simply implodes upon itself as it nearly did 10 years ago.

Both the world and individuals nations have gone through financial and currency resets numerous times over the course of history, and primarily when a particular empire no longer has the capability of dominating the world's financial system.  But unlike previous times such as with Spain, Rome, France, or Britain, the current system is not run on a gold or silver standard, which means that the reset will be much harsher to the common person since it will require a halving or worse of their current standard of living.

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