Panic! at the Debt Disco
Posted July 29, 2022
Chris Campbell
What’s bigger than infinity?
It’s not a trick question. Apparently, there’s actually an answer.
German mathematician Georg Cantor showed that no matter how large a mathematical set you have…
You can always make one that’s larger.
So, his answer to “What’s bigger than infinity?” is…
Another infinity that’s bigger than the infinity you began with.
In other news…
The European Central Bank (ECB) is worried about the debt markets.
ECB policymaker Ignazio Visco said this yesterday: “This is crucial: if tomorrow we start seeing… something that (means) there is panic in the market, we act and kill the market."
Oof.
He meant to say “kill the panic” and not “kill the market.”
Freudian slip?
Bigger Than Unlimited
How does the ECB “kill panic” these days? They ramp up their unlimited bond buying program.
(What’s bigger than unlimited? A bigger unlimited than the unlimited you began with.)
The ECB is trying to get ahead of any potential panic in the markets, soothing Mr. Market’s fears. But it’s also acting like a trapped animal. One that knows it’s a trapped animal.
Just like the Fed. Just like the Bank of Japan. Just like many other central banks.
They know that the debt markets are completely out of control. Cumulative debts have dwarfed the total currency supply, meaning there are more claims for currency than there is actual currency.
In the past, central banks could just offset the increase in debt by reducing interest rates. That way, the cost of servicing the debt never went up.
But what happens when all major central banks hit zero or negative interest rates? The cost of servicing that debt has nowhere to go but up. ←You are here.
Ultimately, this means that the entire system is built on a lie: That the global economy can be successfully micromanaged top-down by unelected bureaucrats forever.
When asked how the ECB will get the balance sheet down, Christine Lagarde said, “It will come. It will come. In due course, it will come.”
“How?” the interviewer asked, puzzled.
“In due course,” she said, refusing to elaborate, “it will come.”
We know what that means: There’s no plan.
And it prolly won’t come.
Fair Warning
Although Europe’s looking ugly…
Things aren’t much better here in the Land of the Free.
All week, Jim Rickards has been hastily preparing his readers for what he believes will be “the greatest crash ever.”
Any attempts by the Fed for a “soft landing,” he says, will backfire.
In case you missed it…
Everything you need to know to learn how to begin preparing is right here at this link.
Fair warning: Our publishers are pulling the introductory video on this page from the Internet on Monday morning.