“Every Time Someone Says They Don’t Believe In Fiat Money, A Central Banker Loses His Wings”

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Zero Hedge: What’s got me worried this morning is the headline in the FT: UK Public Debt tops £2 trillion for first time on Covid Spending Boom.

Should we worry or should we not? (Clue: the first one…)

Let me ask the question: how long can governments continue to spend their way out of the Coronavirus crisis? The bills for long-term furlough programmes and sectoral bailouts and support, increased social services as unemployment rises, and the urgent need for health spending are going to come due at some point. Is it going to be a problem, and if yes, how big?

Government debt is rocketing higher – but does it matter? Conventional thinking, based on Reinhart and Rogoff, is when debt/GDP exceeds 77% there will a significant slowdown in growth.

Through this crisis we’ve seen helicopter money in action with direct government cheques to individuals to tide them over and spur consumption. We’ve seen direct central bank lending. Governments and central banks assure us they are committed to doing “whatever it takes”. The crisis could go on for years” Read More …

Opinion: It is not the Covid crisis that should worry us. It is the next crisis, the one we don’t know yet, that could be the tipping point. Here’s why:

Beginning in 2008 Joe Biden, I am using Joe because this week the message from the DNC was that Joe solved the 2008 financial crisis, the Ebola crisis, and may have even signed the Declaration of Independence.

Joe did it all. The guy is a financial genius. What Genius Joe will not admit is the next crisis will have to be solved in the same manner he supposedly used in 2009, and Donald Trump used in March. Print, baby, print.

Fiat money is backed by nothing except the full faith and credit of the government issuing it. When the world loses faith in that country’s ability to back the currency with value, the currency will collapse causing instant hyperinflation.

Life in Lebanon under Hyperinflation

Yes, Virginia, it can happen that fast, and even Joe will not be able to stop it.

See our paper “The 1% and Revelation: Do Not Harm the Oil and Wine” here