The health of the world economy is tied to the health of world leaders. This clearly raises the following dilemma: is it sick leaders that make an economy sick, or is it a troubled economy that makes leaders sick?
However, it doesn’t really matter which goes first and which goes second, as the case of the global economy tends to become incurable, given that its population is also becoming more and more unhealthy, says Gold Switzerland in a recent information note.
Weak leaders focus on regional political issues, be it the climate, ESG criteria, Covid vaccines, the gender gap and other issues, which mainly concern the woke community – like someone arranging the berths on the Titanic while the ship was sinking.
In any case, says Gold Switzerland, the health of a nation is clearly reflected in the health of its leaders.
Health leaders in the US, Belgium, Canada and Britain are certainly not signaling ‘mens sana in corpore sano’, as the Roman poet Juvenal wrote 2000 years ago. Or as the Greek philosopher Thales said 2,600 years ago: “Which man is happy? He who has a healthy body, a resourceful mind and an obedient nature.’
We also need to ask whether the poor health of the global financial system is linked to the choice of head of the Bank for International Settlements (BIS, the central bank of central banks).
The BIS’s latest quarterly review addresses the opaque derivatives market. As Gold Switzerland’s Egon von Greyerz reports, “I remain of the view that derivatives, including the shadow market, could easily equate to $2-3 trillion in debt, precariously backed by $2 trillion USD of gold.“
So it seems that the Gargantua ravenous monster is a model for many of the aforementioned leaders. But unhealthy living is not just the prerogative of leaders.
Only 10% of the US adult population was obese 50 years ago, while today the figure is 45%. But why does Gold Switzerland talk about obesity in a financial newsletter?
“Because, as I said above, it is due to the complacency and greed that characterizes the economy of the West today. As I have discussed many times, we are coming to the end of a great economic and cultural cycle. Only future historians will know whether this is a 100, 300 or 2,000 year cycle. If I were to venture a guess, I’d think it could be a very long cycle, e.g. 2,000 years,” says Egon von Greyerz.
There are many similarities with the end of the Roman Empire such as, debt, deficits, taxes, decadence, self-indulgence, vigilantism, etc.
Empires don’t disappear overnight – it’s a long process
If we could pick a starting date for the beginning of the decline of today’s US-dominated Western Empire, it would probably be the creation of the FED in 1913.
This private central bank allowed bankers and industrialists to control the system.
As Mayer Amschel Rothschild said in the late 1700s:
“Give me control of a nation’s money and I care not who writes the laws.”
The USA after World War I emerged as a major economic power, while the European continent suffered from the effects of the war. But despite strong economic performance, the US began to accumulate budget deficits as early as the early 1930s – buying the popular vote was the number one criterion, not a balanced budget.
The empire of debt
Corsica was ruled by the Republic of Genoa from 1284 to 1768, when it was ceded to France. Napoleon was born to Italian parents in Corsica in 1769, a year after the island became French. So, for just one year, history could have been very different, with Napoleon as the Italian General and leader.
Napoleon was not the only famous Corsican, Christopher Columbus was born there 3 centuries earlier and became famous for leading to the colonization of America when in 1492 he sailed across the Atlantic thinking he would reach Asia.
But alas, those glorious periods of history are long gone. Today there are no heroes and few politicians or explorers can make history. Not one of today’s “glorious leaders” will be remembered by history.
Unfortunately, today’s world is made up of a motley crew of would-be politicians who will be forgotten the day after they leave. But all will have left a memorable legacy – a debt of $340 trillion plus derivatives and a shady banking system of at least 2 quadrillion. It is this debt and irresponsible deficit spending that leaders must focus on if they intend to heal their economies.
But unfortunately no one has the courage to rein in unlimited deficit spending.
Because buying the favor and votes of the people is the only way to stay in power.
So, destiny is impossible.
As the chart below shows, the US debt will reach at least $40 trillion by the start of the next presidential term. You don’t need to be a genius for this prediction, just see the trend. US debt doubles on average every 8 years. But $40 trillion in debt by 2025 is just the beginning.
Since it doubles every 8 years, the debt will be $100 trillion in 2036. As the interest rate cycle continues to rise, we will see them at least 10% by 2036.
“I’d be surprised if the budget deficit in 2036 is less than $10 trillion!” says Gold Switzerland.
Higher interest rates and inflation – markets are crashing
According to the Swiss house, interest rates peaked in 1981, with the 10-year Treasury at 16%.
“We saw the bottom of the cycle in 2020 at 0.5%. However, from now on interest rates will rise for decades, with the usual violent volatility.
Long-term inflation has just started a new uptrend – no one should be fooled by the temporary uptrend correction.
Since fracking yields have now peaked, the world is seeing a rise in the price of oil.
Add to that the increased cost of energy production and we have the perfect energy storm.
The bubble of everything will turn into a bust of everything. Everyone will lose in the next few years. Those who lose the least will be the winners,” Gold Switzerland concludes.