Money Under Fire: A Reminder of the Great Wealth Transfer Underway

Editor’s Note: The following is guest post from Chris Martenson with PeakProsperity.com

One serious predicament we face is that the current leaders in the halls of monetary and political power do not appear to understand the dimensions of our situation. The mind-boggling part about it is that the situation is easy to understand.

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 it considers 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:

Debt-to-GDP-Hoisington

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 D.C. or on 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 D.C. 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.

The Math

As a thought experiment, let's explore the math a little bit to see where it leads us. After all, I did just say that a poor end to all of this is a "mathematical certainty," so let's test that theory a bit. I think you'll find this both interesting and useful.

To begin, Total Credit Market Debt (TCMD) is a measure of all the various forms of debt in the U.S. That includes corporate, state, federal, and household borrowing. So student loans are in there, as are auto loans, mortgages, and municipal and federal debt. It's pretty much everything debt-related.

What it does not include, though, are any unfunded obligations, entitlements, or other types of liabilities. So the Social Security shortfalls are not in there, nor are the underfunded pensions at the state or corporate levels. TCMD is just debt, plain and simple.

As you can see in this next chart, since 1970, TCMD has been growing exponentially and almost perfectly, too.

(The R2 is over 0.99, for you science types):

Total-Credit-MD-10-24-2013 1-46-39

I've pointed out the tiny little wiggle that happened in 2008-2009, which apparently nearly brought down the entire global financial system. That little deviation was practically too much all on its own.

Now debts are climbing again at a quite nice pace. That's mainly due to the Fed monetizing U.S. federal debt just to keep things patched together.

As an aside, based on this chart, we'd expect the Fed to not end their QE efforts until and unless households and corporations once more engage in robust borrowing. The system apparently 'needs' this chart to keep growing exponentially, or it risks collapse.

Okay, one could ask: Why can't credit just keep growing?

Here's where things get a little wonky. But if you'll bear with me, you'll see why I'm nearly 100% certain that the future will not resemble the past.

Let's start in 1980, when credit growth really took off. This period also happens to be the happy time that the Fed is trying to (desperately) recreate.

Between 1980 and 2013, total credit grew by an astonishing 8% per year, compounded. I say 'astonishing' because anything growing by 8% per year will fully double every 9 years.

So let's run the math experiment as ask what will happen if the Fed is successful and total credit grows for the next 30 years at exactly the same rate it did over the prior 30. That's all. Nothing fancy, simply the same rate of growth that everybody got accustomed to while they were figuring out 'how the world works.'

What happens to the current $57 trillion in TCMD as it advances by 8% per year for 30 years? It mushrooms into a silly number: $573 trillion. That is, an 8% growth paradigm gives us a tenfold increase in total credit in just thirty years:

Credit-market-debt-grown-8-pct

For perspective, the GDP of the entire globe was just $85 trillion in 2012. Even if we advance global GDP by some hefty number, like 4% per year for the next 30 years, under an 8% growth regime, U.S. credit would be twice as large as global GDP in 2043 (!)

If that comparison didn't do it for you, then just ask yourself: Why, exactly, would U.S. corporations, households, and government borrow more than $500 trillion over the next 30 years? The total mortgage market is currently $10 trillion, so might the plan include developing an additional 50 more U.S. residential real estate markets?

More seriously, can you think of anything that could support borrowing that much money? I can't.

So perhaps the situation moderates a bit, and instead of growing at 8%, credit market debt grows at just half that rate. So what happens if credit just grows by 4% per year?

That gets us to $185 trillion, or another $128 trillion higher than today – a more than 3x increase:

Credit-market-debt-grown-at-4-pct

Again, What might we borrow (only) $128 trillion for, over the next 30 years?

When I run these numbers, I am entirely confident that the rate of growth in debt between 1980 and 2013 will not be recreated between 2013 and 2043. With just one caveat: I've been assuming that dollars remain valuable. If dollars were to lose 90% or more of their value (say, perhaps due to our central bank creating too many of them?), then it's entirely possible to achieve any sorts of fantastical numbers one wishes to see.

Think it could never happen?

Zimbabwe-100-trillion-note

The Case For Hard Assets

This is the critical takeaway from all of the math above: For the Fed to achieve anything even close to the historical rate of credit growth, the dollar will have to lose a tremendous amount of its purchasing power. I truly believe this is the Fed's grand plan, if we may call it that, and it has nothing to do with what's best for the people of this land. Instead, it's entirely about keeping the financial system primed with sufficient new credit to prevent it from imploding.

That is, the Fed is beholden to a broken system; not anything noble.

GDP growth is very unlikely to support the rate of credit expansion that the Federal Reserve wants (or, more accurately, needs). And what will happen if it indeed doesn't? A lot of painful, awful things – but central among them is a currency crisis.

Amidst the ensuing unpleasantness will be an awakening within today's hyper-financialized markets to the huge imbalance now existing between paper claims and ownership of real things. A massive wealth transfer from those with 'paper wealth' (stocks, bonds, dollars) to those owning tangible assets (the productive value of which can't easily be inflated away) will occur – and quickly, too.

Suggesting the key objective for today's investor is answering: How do I make sure I'm on the right side of that wealth transfer?

An important component of that answer is holding some of your financial wealth in hard assets (they value of which can't be inflated away), the precious metals (e..g, gold and silver) being most easy for investors to easily obtain.

There's a preponderance of data that shows the world's major asset markets are dangerously overvalued. And when these asset bubbles start to burst, the 'save haven' markets -- like gold and silver -- that investment capital will try to flee to are ridiculously small. Investors who do not start moving their capital in advance of crisis will be forced to pay much higher prices for safety -- or may find they can't get into these haven assets at any price:

In Part 2: Using Gold to Protect Yourself In Advance of the Greatest Wealth Transfer of Our Lifetime we detail out the specifics of how much of your net worth to consider investing in gold, in what forms to hold it, which price targets are gold and silver most likely to reach, and which eventual indicators to look for that will signal that it's time to sell out of your precious metal investments.

The battle to keep gold's price in check is truly one for the ages. Not because gold deserves such treatment per se, but because the alternative is for the world's central planners to admit that they've poorly managed an ill-designed monetary system of their own creation -- which they'll avoid at any cost.

Read Part 2 of this report (free executive summary, enrollment required for full access)

Soros is trying to elect MORE TEXAS RINOs. Here's how YOU can stop him.

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Texas is under threat of a George Soros-backed takeover.

Soros-funded RINO judges have been elected in some of the highest courts in Texas. These judges implemented restrictions that have blocked nearly a thousand cases of voter fraud from being investigated or prosecuted from across the state. These new restrictions are similar to ones in place in states like George, Arizona, and Wisconsin, leaving Texas more susceptible to election corruption than ever. If Texas falls to corruption, America will lose its largest bastion of conservative electoral power in the nation. Without Texas, Republicans WILL NOT be able to win national elections and liberal corruption will go unchecked across the country.

Fortunately, there is a way to stop this: YOU.

If you live in Texas you have a chance to stand up against corruption and to fight back! Starting Tuesday, February 20th, early voting for the primaries begins, where three of these judges are up for election. Go out and vote. If the right people are voted in, there's a good chance the restrictions will be lifted and election fraud can once again be prosecuted.

But remember, you can't just go in and vote for anyone who has an "R" next to their name. Sorors knows that a registered Democrat would never stand a chance in Texas, so his lackeys register as Republicans and ride the little "R" right into office. So who do you vote for?

Fortunately, Glenn had Texas Attorney General Ken Paxton on his show today and Ken gave us his list of judges that he vouches for. His list is as follows:

  • Gina Parker
  • Lee Finley
  • David Schenck
The Primary Election runs from February 20th to March 5th. This is your chance to get out there and make a difference. It might be the most important election you ever participate in. If you need to know where your nearest polling location is, or any other information regarding the election, you can go to votetexas.gov to find out more.
It's time to stand up.

Hypocrisy EXPOSED: The 'Amazon Files' and what WE are doing about it

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Who is really banning books?

For years now, Conservatives have been taking flak from the left for supposed "book bans." The left likes to compare these "bans" to Nazi book burnings, accusing the right of sweeping authoritarian decrees designed to suppress information. In reality, this is a movement largely motivated by parents, who want to remove inappropriate books from children's libraries.

But if you want to discuss authoritarian book bans, look no further than the White House. As Glenn recently covered, the Biden administration has been pressuring the world's largest bookseller, Amazon, into suppressing books they disagree with.

On February 5th, 2024, Ohio Representative Jim Jordan released a slew of subpoenaed documents that exposed pressure placed on Amazon by the Biden Administration. The documents, which Jordan dubbed "The Amazon Files" after Elon Musk's "The Twitter Files," revealed an email conversation between Andrew Slavitt, a former White House senior adviser, and Amazon employees. In these emails, Slavitt complained that the top search results for books on "vaccines" were "concerning" and then requested that Amazon intervene. Amazon initially refused, not out of some altruistic concern for the free exchange of information. They thought any action taken would be "too visible" and would further exasperate the “Harry/Sally narrative,” referring to the outrage that followed Amazon's removal of Ryan T. Anderson’s book When Harry Became Sally.

Despite this initial refusal, Amazon agreed to meet with the White House a few days later. The number one item on their agenda was removing books from the website. An Amazon employee even admitted that the reason they even took this meeting was due to the pressure being placed on them by the Biden Administration.

What was the result of this meeting? Amazon caved. They began to implement ways of limiting the outreach of books that challenged the mainstream vaccine narrative and other books the White House might not like.

The White House was caught red-handed pressuring the world's largest bookseller to restrict the sale of books they consider in opposition to their narrative, and they have the gall to accuse conservatives of information suppression. This is just ONE of many actions committed by the Biden Administration that are more characteristic of a dictator than a president.

What can you do about it? Fortunately, you are not dependent on Amazon and its corrupted algorithm to help you find books. Every week right here on GlennBeck.com, we highlight books that Glenn is reading or talking about in our "Glenn's Bookshelf" series. Here you can find a wide selection of books free from Amazon's filters. Be sure to sign up for Glenn's newsletter to find out about new additions to "Glenn's Bookshelf" every week.

10 times Biden has acted like a DICTATOR

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The left-wing media's most recent tirade is accusing Trump of being a dictator. But, as Glenn said, "Everything they're accusing us of, they're doing."

Since day one, the Biden administration has overstepped the bounds placed on the executive branch set by the Constitution. In Glenn's most recent TV Special, he examined ten times Biden acted like a dictator, NOT a president. Here are 10 of Biden's Dictator Moves, and click HERE to get ALL of the research that went into this week's Glenn TV special:

5 ways to protect your First Amendment rights. Number 4 will surprise you.

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Every day it seems Glenn covers another story revealing how people across the world at all levels of power DESPISE the fact that YOU have rights, and they are actively trying to curtail them. Recently, there has been a string of attacks against the rights outlined in the First Amendment: the freedom of religion, the freedom of speech, the freedom of press, the freedom of assembly, and the freedom to petition.

As a refresher, the First Amendment reads as follows:

"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."

This is powerful stuff, there is a good reason the Founding Fathers made it the FIRST Amendment. It's also the reason why power-hungry elites are attacking it. These attacks are designed to control the way you think, speak, and believe, vote, what you read, and who holds your representatives responsible. The First Amendment is our strongest weapon against tyrants, and they know it.

So what can you do about it? Hope that some wig in Washinton will eventually do something? We know how well that works. The best thing to do is to stay active, engage in the issues you care about, and exercise your rights.

So where to start? Here are a few things YOU can do to protect your First Amendment rights:

Religion

The best way to flex your Freedom of Religion is to—you guessed it—practice your faith. Become an active member in your place of worship, go to scripture studies, invite your friends to that late afternoon event, and walk the life. This can impact the way you spend money as well. Shop the businesses and brands that share your values, and don't shop at the ones that scorn them. Keeping the community alive and healthy is the best way to ensure that generations to come will be able to experience the freedom you enjoy.

Speech

Much like religion, the best way to protect your freedom of speech is... to speak. Engage your friends and family in polite, civil conversation. Stand up for what you believe in, and make your case to your peers. Just remember to keep it friendly. No one ever won an argument by shouting down their opponent. The civil exchange of ideas is the cornerstone of our republic, and a dialogue where the participants are well-informed, considerate, compassionate, and open-minded can have permanent impacts on all involved.

Press

Freedom of the Press seems a little tricky at first. Unless you work for the media, what are you supposed to do? Quit your job and go work for the local newspaper? The good news is that exercising this right is not nearly that difficult. In fact, you are currently doing it. The best thing you can do is to read from outlets that produce informative content. Want to know what Glenn consumes to stay informed every day? Sign up for Glenn's Morning Brief newsletter to get all the stories Glenn gets sent to his desk every day sent straight to your inbox.

Assembly

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Freedom of assembly is one of the more impactful yet underutilized freedoms in the First Amendment. Peaceably assembling and protesting with like-minded individuals can hugely influence politicians and policies while simultaneously creating community and fellowship between attendees. It's understandable why more people don't turn out. We're all busy people with busy schedules, and flying out to D.C. for the weekend seems like a daunting task to many. Thankfully, you don't have to go out all the way to D.C. to make a difference. Gather some like-minded people in your town and bring awareness to issues that impact your community. Big change starts locally, and exercising your freedom to assemble can be the catalyst to lasting impact.

Petition

If you've been a long-time listener of Glenn, then you will have heard a few of his calls to action where he asks his audience to contact their representatives about a particular piece of policy. There is a good reason Glenn keeps on doing those: they work. Whether it's your local mayor or your senator, a call and an email go a long way. If you really want to make a change, convince your friends and family to reach out as well.