The Truth about the Debt
Whether you are a government, corporation or individual, when you have Debt, it all works the same.
By: Lynette Zang
You get a paycheck; you live within your means, pay your bills on time and in full every month and you have a perfect credit rating. Banks send you pre-approved credit cards and you begin to use them as you begin to live just a little above your means. The bank says you can qualify for a bigger house, a better car, no need to wait and save the money. You now live beyond your means. Your family and friends are so impressed with how well you are doing. New house, fancy car, nice dinners, pretty clothes. Everything looks like you are so prosperous, but you did it with ever expanding debt.
Now your debt takes most of your paycheck so you can’t save and your car breaks down. You put that on your credit card. Now your card is maxed out and you have to carry a balance because your income isn’t enough to pay all your current debt and this new debt. You go out and get a new credit card (roll it over). Before long the new card is maxed out too. You are barely generating enough income to cover all the debt, let alone the interest on those credit cards, but you make the minimum payments, so you are now compounding interest. Your employer cuts your hours; therefore your income is cut.
You are now having trouble paying your debts but your daughter needs a new pair of shoes. You try to get more credit so you can buy those shoes with credit since you don’t have enough income to buy them, because all of your income is servicing the debt you already took on, but no one will give you any more credit. You’ve become accustom to your new standard of living and so has your family. No one wants to change their shopping habits, but you are the bread winner, it is your responsibility to keep everything going and you don’t want your family to suffer or even know what you’ve done. You have to do something; you have to maintain your standard of living. What are your options? Generate more income by getting an additional job (increase taxes) or selling some assets or not pay some bills. Those options can keep your situation hidden from your family and friends a little longer, but at some point, it becomes obvious. So then you declare bankruptcy.
This is exactly where we were with the recent debt ceiling situation. The government maxed out its “credit cards†and was “applying†for new credit. They were successful at raising the ceiling and therefore more debt will be created.
The entire world operates on a fractional reserve system, which means that in order to create money, you must first create debt. That debt is redeemed for fiat currency that is supported by the “full faith and credit of the governmentâ€. Translation: as long as you trust them and have “faith†you will continue to loan them money, extend them “credit.†Therefore, currencies are supported by the ability of governments to create more debt. The fact that sovereign debt is now becoming suspect is a clear indication that governments are beginning to lose that ability and therefore, support their currencies. Stocks and bonds are dollar denominated paper assets. If the dollar is in trouble, so are any assets with that foundation. And there is the problem.
Gold is the primary currency metal. It has no debt attached. Gold protects your standard of living from inflation. Hyper inflation is a government and central banker’s way of declaring bankruptcy. It is the masses that pay the price. We don’t have a say in the choices coming out of Washington, but we can protect our family with gold and silver and avoid debt.