The world finds itself immersed in the depths of an economic crisis. This crisis however, is unlike any other experienced in recent history. What is at stake is the very foundation of our monetary system, the currency.
Today's un-backed fiat currency experiment is at the very root of an emerging global monetary problem. While the talk of "recovery" in recent months now populates headlines, the desperate actions of politicians and central bankers show the contrary.
More than ever, this saying applies: "Do not believe what they say, rather observe the actions of those who say it".
Since the onset of the "Great Recession," we have witnessed a spectacular 'dead cat bounce' in everything from stocks to real estate markets. This is undoubtedly attributable to the unprecedented currency debasement (currency expansion) launched by central banks, in addition to an explosion in government spending aimed at counter-acting the inevitable.
Since 2008, the Federal Reserve has more than tripled its balance sheet, while the U.S. national debt has just about doubled in the same time frame. As central banks attempt to provide life support to an ailing system, the eventual outcome is evident. A system based on the unsustainable cannot be spared, as the problem itself lies in the medium of exchange which facilitates all economic activity: The un-backed fiat currency.
Recently, surfacing evidence of decelerating growth in the United States, the permanent tensions in the Eurozone, and Japan's deteriorating economic environment are but a few examples of the events that have triggered governments to move beyond their traditional spheres of influence and into the business of monetary policy. A flashing indicator that the so called 'recovery' is all but real.
Central banks across the globe have come under the influence of their respective governments like never before.
To be clear, these institutions are under siege in a battle that, by definition, they tend to lose: The battle of politicization.
Under a political methodology, a policy conflicting with government interests must be quickly altered. In today's environment, central bank mandates are falling under question by political forces who pose a short-minded resolution through limitless credit expansion (currency debasement), without thought to long-term consequences (rapid price inflation).