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When The Tidal Wave Hits, Part I

by Jeff Nielson, Sprott Money:

Disaster is nearly upon us. This has been a regular theme in these commentaries for several years. Increasingly, however, these warnings draw reactions of apathy rather than alarm. The fact that our house-of-cards economies (and societies) have not already unraveled does not mean that this was a false alarm. It means that disaster has gotten much more imminent.

When straight discourse fails to convey a message, writers typically resort to a metaphor. But which one? The phrase “the perfect storm” has been popularized in our culture. However, to an audience which perceives itself to be standing on dry land, that metaphor would likely fall flat.

A much more illuminating metaphor is the tidal wave.

Readers who are warned that an economic crash is coming think to themselves, “I’ve seen an economic crash before.” That would be the Crash of ’08. Call that a once-in-a-generation event. They’ve heard of the Crash of ’29 and the Great Depression that followed. Call that a once-in-a-lifetime event.

The average person has a vague understanding of the Crash of ’08, but that was a very understated dress rehearsal of what is coming. Except for the most elderly members of our societies, we have no personal recollection at all of either the Crash of 29 or the Great Depression. Yet most people reading this will tell themselves they “understand” what is coming.

Now think about a tidal wave. People living on islands in the ocean or particularly exposed coastlines will have witnessed terrible storms – and the magnitude of the waves that such storms generate. Perhaps once in a generation they will witness a truly horrific storm and commensurately greater waves. Recorded history may describe once-in-a-century (or longer) “perfect storms”, supposedly producing the ultimate waves.

Residents of these islands and coastal areas prepare for terrible storms. Many will prepare for truly horrific storms. A few may even prepare for the perfect storm. But no one anticipates a tidal wave, a wave greater than anything that is possible, under normal circumstances. There is only one way to prepare for a tidal wave: escape to higher ground before the wave hits.

What evidence is there that an economic tidal wave is approaching – an event for which there is no historical precedent ?

We’re saturated with the evidence. We’re assaulted with the evidence. We’re drowning in the evidence.

Debt

There is no historical precedent for the endemic levels of debt which exist around most of the world, and which reach their sickening pinnacle in the West. Readers have been warned that a Debt Jubilee is coming.

Many nations now have levels of debt which could never be brought under control, let alone ever retired. If these nations were corporations they would have already been forced to declare bankruptcy. Instead, thanks to the fraud of the fiat-currency printing press, they delay those bankruptcies – through flooding our economies with their absolutely worthless paper .

Judging by the apathetic response to warnings of “Debt Jubilee”, apparently a mistaken impression has been created. Debt Jubilee: everyone’s debts are wiped clean. A cause for celebration, right? Wrong.

Before we ever see a Debt Jubilee, we will see a level of economic pain which few people reading this can imagine. It will have to be a level of economic pain sufficient to cause our corrupt governments to collectively emancipate us from our current Debt Slavery .

Look at Greece. Look at the level of economic pain which has already been inflicted upon that population. Official unemployment is greater than 20%. Official youth unemployment is over 50%. The real numbers are significantly worse. Ninety percent of the unemployed are paid no unemployment insurance.

The suicide rate in Greece has more than doubled. At one point, it increased by more than 40% in just five months. Greece and its citizens still have their Debt Slavery. Debt Jubilee is a necessity, but to get there we will likely have to live through a nightmare beyond comprehension.

Asset bubbles

We’ve all seen asset bubbles before, right? We’ve seen them pop. We understand what that means. Wrong.

The number of asset bubbles which currently surround us and the magnitude of these bubbles is historically unprecedented. The rupturing of these bubbles will be an event for which there is no historical precedent.

Look at our interest rates ! They have not simply been taken to the lowest levels in the entire history of our nations. They have been taken to these reckless levels and left there, permanently. Low interest rates fuel asset bubbles, the definition of “easy money”.

The lowest interest rates in history, permanently frozen there by the criminal central banks , are rocket fuel for asset bubbles. What happens when these rockets run out of fuel – and start plummeting back toward Earth?

We don’t simply have the largest bond bubbles in history in the Western world. As already noted, all of these governments are bankrupt. Their bonds are not “overvalued”. They are worthless. Tens of trillions in supposed “assets” are about to go poof!

Then we have the stock market bubbles. People look at the bubbles in Western equity markets in absolute terms and think to themselves: they’re not that bad. Wrong.

In typical stock market bubbles, back when we had at least semi-legitimate economies and semi-legitimate markets , valuations would get inflated during economic booms.

Read More @ SprottMoney.com

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