IG: Treasury ‘failed’ to adopt bailout safeguards

A few months ago, I wrote: “What is going on – my opinion and not so improbable scenario“.  This was an essay that was written as much out of frustration as the desire to show whomever might want to see, that our leaders are truly acting not only irresponsibly but criminally.

Today, we have no other than the top government watch dog weighing in with his findings.


The truth is that our “leaders” have, wittingly or not, entered into a bargain with the devil. The moment a government accepts and adopts a monetary system that is by fiat, it by extension has made the conscious decision to debase the national currency. Debasing the national currency inherently and by necessity brings about an increase in debt (personal or at government level – ultimately there is no difference). An increase in debt brings demand forward in time. If demand is accelerated, industrial capacity expansion accelerates too. All great dynamics in principle if managed and modulated.

But, aggressive, pervasive and unrelenting inflation pumping over several decades, will bring about a debt mountain that ultimately becomes unsustainable. The point at which economic activity is no longer sufficient to service debt, that is the moment inflation has reached the limits of its expansionary effect. At that moment, government is bankrupt. If government is bankrupt, it can no longer provide the services that society has come to expect. As unemployment rises and as social expenditure is reduced and ultimately cut, social unrest is sure to follow.

The problem with social unrest is that it forces a denouement of the irresponsible if not criminal activity of government. However, just like I and some other people know this to be the case, so do some bankers and politicians.

I can tell you now that as self proclaimed holders of the moral high ground, there is no way any Western government or politician will admit to what ultimately is the logical consequence of an unchecked fiat monetary system. Effectively, governments have been running a Ponzi scheme for self serving reasons. Because, that’s what an unchecked fiat monetary system is: it is THE ultimate Ponzi scheme. And as you know, Ponzi schemes only work for as long as you can bring in new contributors at the bottom to feed the pyramid. In forty years from the abrogation of Bretton Woods (the US in the late 60s was exactly where we are today globally – i.e. bankrupt), via the introduction of the Euro to Globalization we have just about brought every country in the world in on the US$ based fiat monetary system.

This is not opinion. This is fact and if you are interested in understanding what is going on, you can read more about it here, here and here and in many other essays on my blog or the blog of Steve Keen for example.

Today, globally, we have outstanding obligations worth five hundred Trillion Dollars and a world economy worth about fifty Trillion Dollars. To put it in perspective, think of having debts for one Million Dollars and a yearly income of one hundred thousand Dollars.

That’s where we are today.

Will the West swollow its pride and set about doing what anyone in their right minds would do in this situation?

I think not. It is far easier for the all mighty West to start a war somewhere and then expand it into a world war.

I say by 2013 or, latest, by 2015


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