Supernova, War And $64 Trillion Gold

As we approach the beginning of the greatest wealth destruction in history, it is an absolute certainty that no one will escape the suffering that will be brought upon the world. The ones who will suffer the least financially are of course the poorest since they have very little to lose. At the same time, many of the poor will die of famine and disease. The middle class will also suffer since many will lose their jobs. They will lose pensions as well, since pension funds will become insolvent. Also, there will be no social security since governments will run out of money. In financial terms, the wealthy will lose the most since virtually all the assets they own will go down by at least 90% in real terms. This includes stocks, bonds and property. In addition, a lot of trophy assets like art and collectors’ cars will collapse. The holders of productive real asset like agricultural land will fare a lot better. The holders of physical precious metals such as gold and silver will do extremely well as long as they are held outside the financial system.

In the last 100 years, governments, central bankers and bankers have created a supernova.

Supernova

“A Supernova is an astronomical event that occurs during the last stellar evolutionary stages of a massive star’s life, whose dramatic and catastrophic destruction is marked by one final titanic explosion.” (Wikipedia)

The only question is if this “final and titanic explosion” will be slow or happen very quickly. What is clear is that the $500 trillion of more of debt and unfunded liabilities will need to implode together with the derivatives of $1.5 quadrillion. In addition, central banks will have to print a few additional quadrillions in a futile attempt to save the world. All that will of course disappear too. And as the Supernova of debts explodes, the assets backed by these debts will implode. The consequence will be a wealth destruction of massive proportions, making the world suffer for a very long time.

Debt must be cleansed

But a cleansing of the overindebted and corrupt system is the only way for the world to start from a sound debt free base. It is like a having a fire of an old forest to clear out the deadwood and create the right conditions for green and strong shoots. As long as the debt is still there, the world can never grow soundly. In the last couple of decades, there has been no real growth since for every one dollar increase in GDP several dollars of debt must be created. This is not just the law of diminishing returns but the law of negative returns. We have a world running on empty and until the debt is cleaned out, it will never be possible to show real growth again.