September 8, 2011 in Finance
In my last article in this category, I asked why the world’s financial system, led by the United States hasn’t collapsed. One reader surmised that, “Maybe it is like jumping out of a tall building and it does appear one is flying and everything is just fine—until one plows into the ground.”
That is a distinct possibility. Or maybe, just maybe, something else is going on with this situation.
I am aware of many businesses that run at a loss for numerous years. Investors continue to pump funds into the business to keep it alive. This is done for several reasons including the perceived potential for success, the desire to keep the work going, and the additional cost incurred if the business failed. Many financial experts believe this is why the United States is able to continue to attract investors. I’m beginning to think there is another perspective.
This is the perspective that what we call debt is actually energy and the powers that be may see debt as wealth.
I think any person can see the energy associated with debt. The lender has the energy of acquiring an asset. The borrower has the energy of acquiring the liability plus the power of using someone else’s asset to create a better life. This better life may include building a business, buying a house, or paying a bill now instead of having to wait until payday.
The argument against increasing government debt is that it creates currency without creating wealth. Those who insist that all bills must be paid on time also believe that currency shouldn’t increase unless there is a related increase in wealth. They define wealth as hard assets such as gold, silver, and, in some cases, land. They blame inflation on the printing of money (debt notes) by the FED without a subsequent increase in wealth. They are correct in their assessment.
The Federal Reserve Bank (The FED) is NOT a government enterprise. It is a private bank. Therefore, many people believe its goal is to destroy the American economy so it can foreclose on the country and control it. This is the basis of Illuminati-related conspiracy theories. Of course, this happened in the 1930s (see the United States Section of this site) and the world didn’t end so maybe those conspiracy theorists worry too much.
On the surface, these arguments appear reasonable. However, they still don’t answer the question of, “Why doesn’t the United States financial system collapse if it has incurred debt that is too much for it to ever pay?”
Is it possible that the debt, as energy, is actually a form of wealth? It is possible that those who understand this are growing their wealth while those who don’t are being dragged kicking and screaming into this method of accumulating wealth?
I’ll explore this perspective in an upcoming article.