The debt deception: How the banks have perverted the global economy

Moneyman in Debt | Moneyman Series

Much of the developed world is not built on money, whether you consider that fiat currency, metals, bitcoin, wampum. It’s built on debt.

I think it must be scandal fatigue at this point.

First, it was the housing scandal (from which we have yet to recover) that almost collapsed the entire global economy.

Then, it was revealed that the same banks that caused that scandal — and were bailed out by all of us — doubled down in the obscure interest-rate swap market. The LIBOR scandal was reported; but outside the financial community and the geeks that follow it, it didn’t make much noise.

So here’s the deal. LIBOR is a $379 trillion market. That’s nearly 100 times bigger than the U.S. economy. It has to do with virtually every interest rate on the planet. That means every loan, credit card and national debt on the planet is part of this scandal. But it’s such an “inside pool” that most people don’t grasp how massive this scandal has been — or what its long-term implications are.

Then, there’s the admission that the gold markets, the silver markets and auto loans have been manipulated.

By whom were they manipulated? That’s the most galling part. They were manipulated by the same too-big-to-fail players behind all these crooked schemes.

And the U.S. government continues to allow them to get away with it. And individuals are ignorantly happy to keep their shoulders to the grindstone, flashing the plastic for the newest iPhone.

At this point, the institutions that we couldn’t let fail are now more powerful than ever. As Matt Taibbi reported in an excellent article on the LIBOR scandal for Rolling Stone, the top six U.S. banks now hold assets equivalent to 60 percent of the U.S. gross domestic product.

These are true robber barons in every sense of the words.

But what is below these scandals is even more significant.

Most of us rarely stop to take in the big picture as it relates to the global financial picture. But the big financial institutions think about it every day, because they are building it.

And if we’re not saying anything, they’re going to continue to build it to their advantage.

It would be like hiring a contractor to build a house. You trust the contractor will hire skilled labor, use quality materials and build it all to code. But the contractor is connected to the inspectors, gets kickbacks from his material suppliers and knows he can do substandard work with substandard materials and make a killing. You don’t watch over him; and after the house starts to fall apart, the court tells you it’s your fault for trusting the contractor.

This is where we are with the global financial system.

Much of the developed world is not built on money, whether you consider that fiat currency, metals, bitcoin, wampum. It’s built on debt. This infographic may help get your mind around what I’m talking about.

There’s about $15 trillion in the broadly defined currency markets of the world.

There’s about $200 trillion of debt in the world markets.

And there’s about $630 trillion of derivatives on that debt.

Cash is no longer king. Debt is. The bankers are thoroughly convinced that credit equals money. And the bankers are happy and consider it a success when they feel they have provided enough credit for the world.

The same people who control this $830 trillion in debt and derivatives are also fixing the interest rates.

There are few things that can help get you outside this massive financial tsunami. Go off the grid and wait. But it could take years more of manipulation, collusion and distortion before something big changes everything.

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