Chris Martenson: The basic predicament we are in is that the current crop of leaders in the halls of monetary and political power do not appear to understand the dimensions of our situation.
The mind-boggling part about all this is that it’s not really all that hard to grasp.
Our collective predicament is simply this: Nothing can grow forever.
Sooner or later everything must cease growing or it will exhaust its environs and thereby destroy itself. The Fed is busy doing everything in its considerable power to get credit (that is, debt) growing again so that we can get back to what they consider to be “normal.”
But the problem is — or the predicament I should more accurately say — is that the recent past was not normal. You’ve probably all seen this next chart. It shows total debt in the U.S. as a percent of GDP:
Somewhere right around 1980, things really changed and debt began climbing far faster than GDP. And that, right there, is the long and the short of why any attempt to continue the behavior that got us to this point is certain to fail.
It is simply not possible to grow your debts faster than your income forever. However, that’s been the practice since 1980; and every current politician and Federal Reserve official developed their opinions about ‘how the world works’ during the 33 year period between 1980 and 2013.
Put bluntly, they want to get us back on that same track and as soon as possible. The reason? Because every major power center, be that in DC or Wall Street, tuned their thinking, systems and sense of entitlement during that period. And, frankly, a huge number of financial firms and political careers will melt away if/when that credit expansion finally stops.
And stop it will; that’s just a mathematical certainty. It’s now extremely doubtful that the Fed or DC will willingly cease the current Herculean efforts towards reviving this flawed practice of borrowing too much, too fast. So we have to expect that it will be some form of financial accident that finally breaks the stranglehold of failed thinking that infects current leadership.(...)Click here to continue reading the original ETFDailyNews.com article: The Fed Can Only FailYou are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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