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The Greatest Debt Crisis The World Has Ever Seen Is Coming

U.S. National Debt 2013

The largest mountain of debt in the history of the world just continues to grow even larger, and everyone knows that this colossal debt spiral is not going to end well.  But we all keep playing along because nobody wants the party to end.  Right now, there is an unprecedented ocean of red ink covering the planet.  Globally, governments have never been in so much debt, corporations have never been in so much debt and consumers have never been in so much debt.  But every time someone suggests that this is a problem and that we should at least try to get debt levels to settle down a bit, people start screaming that “austerity” will hurt the global economy.  And of course it will.  But we can’t continue to live way, way above our means indefinitely.  Well, we can try, but at some point this entire house of cards is going to come crashing down and we are going to be facing the greatest economic crisis the world has ever seen.

It is kind of like watching a slow-motion train wreck that you have no chance of possibly stopping that you know will end up killing lots of innocent people.  This debt crisis is going to end up destroying the global financial system, but there is not a thing that you or I can do to prevent it from happening.  The unprecedented debt binge that we are witnessing right now is going to continue until someday we hit a brick wall of financial disaster.  We can yell and we can scream, but it isn’t going to stop what is happening.

As the Telegraph recently noted, even the Bank for International Settlements is warning that debt levels are way too high.  According to the BIS, total public and private debt levels are now 30 percent higher than they were in 2008…

“This looks like to me like 2007 all over again, but even worse,” said William White, the BIS’s former chief economist, famous for flagging the wild behavior in the debt markets before the global storm hit in 2008.

“All the previous imbalances are still there. Total public and private debt levels are 30pc higher as a share of GDP in the advanced economies than they were then, and we have added a whole new problem with bubbles in emerging markets that are ending in a boom-bust cycle,” said Mr White, now chairman of the OECD’s Economic Development and Review Committee.

The BIS can see the disaster coming, but even they have no chance of preventing it.

For the rest of this article, I am going to focus on government debt, but please keep in mind that corporate debt and consumer debt are also totally out of control globally.  It would be very hard to overstate the nightmare that we are facing.

But of course national governments are the biggest offenders when it comes to debt…

Asia

Japan now has a debt to GDP ratio of more than 211 percent, and as Simon Black of the Sovereign Man blog recently detailed, they are rapidly heading toward a national financial meltdown…

Looking purely at the numbers, Japan’s medium-term fundamentals are among the bleakest in the world.

Total government debt amounts to over 200% of the country’s entire GDP– a figure so large that the Japanese government spends 51.5% of the 43 trillion yen ($430 billion) they collect in tax revenue just to pay interest!

Perhaps even more astounding is that ‘primary balance expenses,’ i.e. normal government expenditures, totaled 70.3 trillion yen, or 163% of tax revenue.

The only way they’ve managed to stay afloat is by issuing more debt, which makes the problem even worse. In fact, 46% of the 2013 budget is being financed by debt.

These guys are running out of rope. And fast.

China is facing a different sort of a problem.  In that nation, the growth of private domestic debt is wildly out of control.

According to a recent World Bank report, private domestic debt in China has grown from 9 trillion dollars in 2008 to 23 trillion dollars today.

There is no way that is sustainable, and at some point that massive bubble is going to burst.

Europe

Even though some European nations have supposedly implemented “austerity measures” in recent years, debt levels continue to rise rapidly.  The following are some numbers that were recently released which show that government debt to GDP ratios for some of the most financially troubled nations in Europe are absolutely soaring

  • Euroarea: 92.2%, up from 88.2% a year ago
  • Greece: 160.5%, up from 136.5% a year ago
  • Italy: 130.3%; up from 123.8% a year ago
  • Portugal: 127.2%, up from 112.3% a year ago
  • Ireland: 125.1%, up from 106.8% a year ago
  • Spain: 88.2%, up from 73.0% a year ago
  • Netherlands: 72.0%, up from 66.7% a year ago

Anyone that tells you that the crisis in Europe is “over” is lying to you.  The debt crisis is getting worse, not better.

The United States

The biggest mountain of debt of all can be found in the United States.

30 years ago, the national debt was a little bit above a trillion dollars.

Today, it is rapidly approaching 17 trillion dollars.

At this point, the U.S. already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.  And since Barack Obama entered the White House, the debt to GDP level has soared to unprecedented heights…

National Debt As A Percentage Of GDP

Sadly, this is just the beginning.

One reason for this is that the U.S. is facing some tremendous demographic challenges in the years ahead.

In other words, our population is getting older.

It is being projected that the number of Americans on Social Security will rise from 57 million today to more than 100 million in 25 years.

How in the world are we possibly going to pay for that?

Already, we are very heavily dependent on foreigners to pay our bills.

According to the U.S. Treasury, foreigners hold approximately 5.6 trillion dollars of our debt at this point.

China and Russia account for about one-fourth of that total.  Right now, China owns approximately 1.275 trillion dollars of our debt, and Russia owns approximately 138 billion dollars of our debt.

So what would happen if we went to war with Syria and they decided to quit borrowing from us and they started dumping our debt instead?

That is a very good question.

And actually, according to Zero Hedge foreigners have already started to dump a little bit of our debt…

Today’s TIC data showed something disturbing: for the fourth month in a row, foreigners were net sellers of US Treasury paper in July, as total foreign holdings declined from $5.600 trillion to $5.590 trillion which represents 49% of total marketable debt (including the debt owned by the Fed of course). In other words, since peaking at $5.724 trillion in March, foreign-held debt has declined by $134 trillion, at a time when yields have surged on fears the Fed’s tapering of its own purchases of bonds will mean less Fed frontrunning opportunities.

We certainly cannot afford for that to continue, because we desperately need other nations to finance our reckless spending.

Our debt is wildly out of control, and the only way we can keep the entire system from collapsing is to go into even more debt.

As I noted recently, if the U.S. national debt was reduced to a stack of one dollar bills it would circle the earth at the equator 45 times.

That is a whole lot of money.

But most Americans do not consider it to be a problem because disaster has not struck yet.

Unfortunately, they simply don’t understand how quickly an exponential problem can overwhelm you.  I think that the following illustration from Simon Black is particularly helpful…

Let’s say you’re at a party in a small apartment that’s about 500 square feet in size. Then suddenly, at 11pm, a pipe bursts, starting a trickle into the living room.

Aside from the petty annoyance, would you feel like you were in danger? Probably not. This is a linear problem– the rate at which the water is leaking is more or less constant, so the guests can keep partying through the night without worry.

But let’s assume that it’s an exponential leak.

At first, there’s just one drop of water. But each minute, the rate doubles. So by 11:01pm, there’s 2 drops. By 11:02, 4 drops. And so forth.

By 11:27pm, there’s only six inches of standing water. Yet by 11:31pm, just four minutes later, the entire room is under nearly 8 feet of water. And the party’s over.

For nearly half an hour, it all seemed safe and manageable. People had all the time in the world to leave, right up until the bitter end. 11:27, 11:28, 11:29. Then it all went from benign to deadly in a matter of minutes.

By the time that our politicians and the talking heads on the mainstream media admit that we have a debt emergency on our hands, it will probably be far, far too late.

The greatest debt crisis the world has ever seen is coming, and there is nothing that anyone can do to stop it.

But you can take measures to get prepared for it.

Please get prepared while you still can.

About the author: Michael T. Snyder is a former Washington D.C. attorney who now publishes The Truth. His new thriller entitled “The Beginning Of The End” is now available on Amazon.com.

Michael T. Snyder's Shocking New Novel About The Future Of America

The Beginning Of The End - The New Novel About The Future Of America By Michael T. Snyder
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  • Tim

    Personally, I wonder how many more times Congress can raise the statutory debt limit before foreign nations just stop buying our debt, or, worse, dump their holdings altogether. I don’t think many Americans understand just how precarious the situation is. We are just a hair’s breadth away from disaster.

    • Hammerstrike

      Few countries will stop lending, otherwise the banksters will attack their foreign trade by keeping the dollars they need for that purpose and launch military action, mount coups and “color revolutions” against those that doesn´t.

      Also, if lending stops, the US collapse and this could be bad on world trade, so they keep lending although it bleeds them White, like for Japan, which is starting to sink under the Plaza Accords tax on their GPD.
      China can, hovewer, when they do, it would start a chain reaction, with country after country stopping the flow of lending and starving the parasites.

  • Rodster

    As i’ve said many times this collapse doesn’t appear to be a coincidence but more like a planned orchestrated. When every nation is doing the SAME thing there’s more to it than just a ponzi scheme. I still see this on coming global collpase as a way to move the world towards a one world currency with a one world govt where the UN would control the players.

    The new UN ambassador Samantha Powers is a lover of all that is the UN and has mentioned she would love to abdicate US Sovereign authority to the UN.

    I’m also glad Michael mentioned China because everyone now looks to China and says how GREAT they are doing and their economy is humming along. But they too have underlying problems as well.

    All I can say is prepare for the worst and pray for the best because humanity needs it.

    • Hammerstrike

      Not quiet, China´s problems aren´t that big and the biggest problem they do have is that they have, for over a decade, been lending much hard-earned wealth they will not be getting back.

      To keep international trade from being shut down by an economic collapse, China is currently supporting hundreds of millions of foreigners with first-world standards of living, indeed greater in numbers than the Chinese middle-class.

      China is not self-sufficient for both agriculture and industry, unless it included tropical Africa or North America, only way they can get that…

      • A Dodgy Bloke

        China has massive issues. China has one of the fastest aging populations on the planet. It’s has a debt and housing bubble bigger than the one we had here in the states. Look up Ghost Cities China, China is building entire cities with no one in them and still building them.
        What most people don’t understand is most of China’s government debt is rising in the provinces. Nobody really knows how much debt is really out there because the provinces tells the capital what it wants to hear.
        China has a problem in regards to US debt. The US and Europe are China’s biggest export markets that goes away, or is greatly reduced China will have to find market for it’s goods elsewhere. That’s a problem where? Africa? hardly India? India’s currency in imploding as I write this. China doesn’t have the internal market for it’s goods and I don’t think it ever will. China has to keep supporting US debt because it doesn’t have a choice. It need markets for it’s goods to keep a restless population employed.
        China isn’t going to take over the world. The same bull corn I heard about Japan in the 1980′s and early 1990′s I hear about China now. Anybody paying attention and ignoring the MSN will figure out nobody on the planet is going to get out of what’s coming unscathed. Everybody is to connected and there are no backups, and no desire to see the problem.

        • Hammerstrike

          No, that is the thing, already back in 2001 there was talks about a housing bubble and the imminent collapse of Chinese model. Much propaganda in the “free” medias.
          Hasn´t happened, there is no housing bubble, housing bubbles doesn´t last that long.

          What is really happening is that Chinese own living standards remains low because they increasingly back first world living standards outside of their country.
          They are preparing for the day when they aren´t supporting the US and Eu system anymore and keep their own wealth.
          A lot of 2nd, 3rd and 4th Children have been born since 1980.

          Not much news about the great underground wall of China, thousands of kilometers of underground tunnels hundreds of meters below the Earth.
          Not much news on how large their thermonuclear arsenal really is, and the accumulation of a large strategic reserve of materials.
          They are rapidly getting ready for a major confrontation, even a nuclear one.
          Why? At best, if China have access to Africa south of the tropic, there is no need for population limitation policies and their standards of living rises tremendously too.
          At worst, if atomic war happen, the population at home is also massively reduced, no need for 1 child policies either.

  • DJohn1

    When money becomes worthless no matter what you do it will not be enough. Our entire society is dependent on our retail system of buying goods at stores. Not trying to grow your own food. Not having a good supply of gasoline. Not having a food supply that is dependent on power in our electrical lines to keep things frozen.
    A generator takes too much fuel to be a long term solution.
    So canned goods and foods that do not go off is the only real alternative. Nuts of any kind have a long shelf life. Honey does.
    The Amish have attempted to live without the benefits of electricity for a long time. They are one of the only groups that will survive intact.
    The problem as I see it is that the government will step in and confiscate(nice word for steal) food and anything else they want by the power of might(guns).
    The Amish use propane for their needs in heating homes a lot. Though I am sure there are a few old buck stoves out there that use wood.
    The problem being that it is below freezing when the power goes out. All your plumbing will be at risk.
    Hueston in the late 80s is a good example of what can happen when an economy goes south(bankrupt).
    Bankrupt banks foreclosed on people that could not get to the money they had in the same banks. Might figure out if those rules are still in place. Because even if you are prepared, there is a good chance the parasites will be right there to steal whatever they can.

  • Hammerstrike

    youtube.c o m/watch?v=iVbCLcX7QZ8

    • Charlie

      Pretty retarded.

      • Hammerstrike

        Indeed but the beginning is here, is it not?

  • Randy Townsend

    The Obamanoids will tell you this increase in the debt was necessary to “save the economy”. Problem is, Bernanke told us two days ago that the economy is so bad, the Fed can not stop artificially pumping up the economy. IT ISN’T WORKING. This house of cards is going to fail spectacularly, and when it does, it won’t just be the poor/middle class that is hurt. The rich that think they are too well off to be affected will watch their stock holdings evaporate overnight. Congress is criminally liable for failing to be honest with Mr and Mrs America about how bad things really are, but hey, I’ve got my 6-pack and my flat screen and the big game is getting ready to start….

    • Tim

      Go Ravens!

    • Hammerstrike

      It is already failing spectacularly, has for a long time now for things to turn out as they do now.

  • http://lissnup.com/ Anita Hunt

    ZeroHedge “foreign-held debt has declined by $134 billion”

  • MindNinja

    i’ve been a student of man for too long to not see the invariable change that faces us. We do no stand on the brink of financial collapse as some would assert; rather we are already in the tailspin that leads to disaster. The key to this change is adaptability and whether you can manage the change. I recommend that everyone here become familiar with their immediate surroundings and begin making the preparations to live like “our forefathers” did. There are a number of publications available and you should educate yourselves. But, alas, I suppose a number of you have already done so, as you are already here.