Sample #1273
In the years after the Second World War, the economy of the Western world, and especially the economies of Europe, started to recover and to show growth. The rebuilding of factories, of roads and bridges, of cities and houses, of harbors and airports had started. The economy of Europe had become an engine of growth for the whole Western world. Countries, companies and people prospered, and a great period of economic growth, rising wages, and improved living standards started in Europe.
The combination of rebuilding and new investment made Europe a great place to do business. For companies, Europe was a vast market, with its members more or less unified in terms of market regulation, infrastructure, investment policy, and culture. Firms set up factories, invested, and found new markets, and these investments were largely debt-funded.
The easy availability of cheap money, however, also led to over-indebtedness, as it always does. Since 1945, Europe has had two serious debt crises, in the 1970s and the 2000s. The roots of both crises can be found in over-indebtedness.
Today, the European Union, which in reality is more of a bureaucracy than a country, is facing yet another debt crisis. This crisis was caused by a combination of over-indebtedness and the collapse of a housing bubble.
Housing prices in Ireland, Spain, and the United Kingdom, for example, rose rapidly from the mid-1990s until 2008, creating a bubble. When the bubble burst, banks found themselves holding too many bad debts, and countries found themselves with unsustainable levels of public debt. In the following two years, the economies of these countries contracted by more than 5 percent, and the European economy was pulled into a recession, which, combined with the debt crisis, led to a series of political crises.
It is unlikely that the European Union will ever again experience the growth of the post-war period. The economies of Europe are simply too different and too regulated for that to happen.
It is also unlikely that the United States will experience growth on the same scale as in the post-war period. In fact, the U.S. may never experience economic growth again.
For this reason, the events of this period are of great importance to us, and we can learn from them.
In the next decade, there will be a major debt crisis in the United States, and the crisis will force the American government to cut spending. It will be a period of cutbacks, consolidation, and defaults.
This period will be a great time for savers, as interest rates will be lower, and returns on savings accounts, bonds, and equity investments will rise.
What caused the debt crises in the 1970s and 2000s?
The reason for the debt crisis in the 1970s was a combination of falling interest rates, rising inflation, and rising inflation expectations. This caused the value of the debt to increase, since the nominal value of the debt increased faster than the cost of debt. This meant that the government could finance more spending, and that households could buy more cars and houses, and it also meant that companies could invest more.
The same cause caused the debt crisis of the 2000s, but this time the debt crisis was bigger, since more debt had been created since the 1970s.
The same cause is present today.
The United States is experiencing low interest rates, high inflation, and high inflation expectations. This has already caused a housing bubble. It will also create a consumer-debt bubble and a corporate-borrowing bubble.
These are the three things that caused the crises in the 1970s and 2000s, and they are the three things that cause all debt crises. This is why it is very likely that there will be another debt crisis in the United States, and probably soon.
Most countries have been running big budget deficits for a long time, and this has forced central banks to create money out of thin air, to fund these deficits. This has resulted in a bond bubble, and it has also caused the monetary base of the United States, which consists mostly of bank deposits at the Federal Reserve, to rise from around $1.2 trillion to almost $4 trillion in the last ten years.
This is the cause of inflation and inflation expectations, and this is the cause of the coming debt crisis.
The United States will experience a debt crisis within the next few years. Interest rates are set to rise, and bond prices are set to fall.
This will cause a huge increase in the interest cost of the national debt. It will also cause the value of the dollar to fall, which means that the purchasing power of U.S. dollars will fall, which will reduce consumer spending and cause deflation.
These are the three things that cause all debt crises, and they are all present today.
Since the debt crisis is approaching, it is wise to take steps to protect yourself.
In a previous article, I suggested how you could protect yourself, so you should take a look at that article, if you have not done so already.
Protecting yourself
There are three ways that you can protect yourself.
You can move your savings into cash, or even gold.
You can diversify your savings so that your savings are not tied up in any one currency.
You can start your own business, and you can take your salary in the form of dividends.
You should do all three of these things, and you should start doing them as soon as you can.
Conclusion
The world is entering a period of debt deflation. This will cause a major economic contraction. The cause of the economic contraction is the over-indebtedness of the United States and other countries.
Over-indebtedness is always a problem for debtors, because it forces them to reduce spending. The most obvious way to reduce spending is to default on debt, but this can also be done by defaulting on promises to the voters, such as pensions and other entitlements.
Many people and countries will suffer as a result of the coming economic contraction, but there is nothing that can be done to avoid it. The economic contraction is not a natural disaster, but rather a man-made problem that was caused by government policies.
Government debt and promises are not wealth. They are simply promises to pay, and promises to pay are unsecured liabilities, which means that they are promises to make somebody else’s life worse.
It is important to understand that a default, or a series of defaults, will be the necessary outcome of the current situation. No government has ever repaid its debt, and there is no reason to believe that the United States will be the first to do so.
So what should we do to protect ourselves?
We should diversify our savings, so that our savings are not tied up in any one currency. We should also keep savings in physical cash, and in gold.
We should take control of our own lives, and start our own businesses, and then we should take a large part of our salary in the form of dividends.
A good dividend stock is a way to hedge against a debt crisis.
This article was originally published at the Dollar Vigilante here: http://dollarvigilante.com/blog/2015/07/31/coming-debt-crisis-in-the-united-states/
The combination of rebuilding and new investment made Europe a great place to do business. For companies, Europe was a vast market, with its members more or less unified in terms of market regulation, infrastructure, investment policy, and culture. Firms set up factories, invested, and found new markets, and these investments were largely debt-funded.
The easy availability of cheap money, however, also led to over-indebtedness, as it always does. Since 1945, Europe has had two serious debt crises, in the 1970s and the 2000s. The roots of both crises can be found in over-indebtedness.
Today, the European Union, which in reality is more of a bureaucracy than a country, is facing yet another debt crisis. This crisis was caused by a combination of over-indebtedness and the collapse of a housing bubble.
Housing prices in Ireland, Spain, and the United Kingdom, for example, rose rapidly from the mid-1990s until 2008, creating a bubble. When the bubble burst, banks found themselves holding too many bad debts, and countries found themselves with unsustainable levels of public debt. In the following two years, the economies of these countries contracted by more than 5 percent, and the European economy was pulled into a recession, which, combined with the debt crisis, led to a series of political crises.
It is unlikely that the European Union will ever again experience the growth of the post-war period. The economies of Europe are simply too different and too regulated for that to happen.
It is also unlikely that the United States will experience growth on the same scale as in the post-war period. In fact, the U.S. may never experience economic growth again.
For this reason, the events of this period are of great importance to us, and we can learn from them.
In the next decade, there will be a major debt crisis in the United States, and the crisis will force the American government to cut spending. It will be a period of cutbacks, consolidation, and defaults.
This period will be a great time for savers, as interest rates will be lower, and returns on savings accounts, bonds, and equity investments will rise.
What caused the debt crises in the 1970s and 2000s?
The reason for the debt crisis in the 1970s was a combination of falling interest rates, rising inflation, and rising inflation expectations. This caused the value of the debt to increase, since the nominal value of the debt increased faster than the cost of debt. This meant that the government could finance more spending, and that households could buy more cars and houses, and it also meant that companies could invest more.
The same cause caused the debt crisis of the 2000s, but this time the debt crisis was bigger, since more debt had been created since the 1970s.
The same cause is present today.
The United States is experiencing low interest rates, high inflation, and high inflation expectations. This has already caused a housing bubble. It will also create a consumer-debt bubble and a corporate-borrowing bubble.
These are the three things that caused the crises in the 1970s and 2000s, and they are the three things that cause all debt crises. This is why it is very likely that there will be another debt crisis in the United States, and probably soon.
Most countries have been running big budget deficits for a long time, and this has forced central banks to create money out of thin air, to fund these deficits. This has resulted in a bond bubble, and it has also caused the monetary base of the United States, which consists mostly of bank deposits at the Federal Reserve, to rise from around $1.2 trillion to almost $4 trillion in the last ten years.
This is the cause of inflation and inflation expectations, and this is the cause of the coming debt crisis.
The United States will experience a debt crisis within the next few years. Interest rates are set to rise, and bond prices are set to fall.
This will cause a huge increase in the interest cost of the national debt. It will also cause the value of the dollar to fall, which means that the purchasing power of U.S. dollars will fall, which will reduce consumer spending and cause deflation.
These are the three things that cause all debt crises, and they are all present today.
Since the debt crisis is approaching, it is wise to take steps to protect yourself.
In a previous article, I suggested how you could protect yourself, so you should take a look at that article, if you have not done so already.
Protecting yourself
There are three ways that you can protect yourself.
You can move your savings into cash, or even gold.
You can diversify your savings so that your savings are not tied up in any one currency.
You can start your own business, and you can take your salary in the form of dividends.
You should do all three of these things, and you should start doing them as soon as you can.
Conclusion
The world is entering a period of debt deflation. This will cause a major economic contraction. The cause of the economic contraction is the over-indebtedness of the United States and other countries.
Over-indebtedness is always a problem for debtors, because it forces them to reduce spending. The most obvious way to reduce spending is to default on debt, but this can also be done by defaulting on promises to the voters, such as pensions and other entitlements.
Many people and countries will suffer as a result of the coming economic contraction, but there is nothing that can be done to avoid it. The economic contraction is not a natural disaster, but rather a man-made problem that was caused by government policies.
Government debt and promises are not wealth. They are simply promises to pay, and promises to pay are unsecured liabilities, which means that they are promises to make somebody else’s life worse.
It is important to understand that a default, or a series of defaults, will be the necessary outcome of the current situation. No government has ever repaid its debt, and there is no reason to believe that the United States will be the first to do so.
So what should we do to protect ourselves?
We should diversify our savings, so that our savings are not tied up in any one currency. We should also keep savings in physical cash, and in gold.
We should take control of our own lives, and start our own businesses, and then we should take a large part of our salary in the form of dividends.
A good dividend stock is a way to hedge against a debt crisis.
This article was originally published at the Dollar Vigilante here: http://dollarvigilante.com/blog/2015/07/31/coming-debt-crisis-in-the-united-states/