Perhaps the greatest indicator that the end is near for a fiat currency is the return of the clarion call: "We owe it to ourselves!" Such is the ultimate capitulation and politically unifying mantra. Once the debt ceiling is raised literally, figuratively once and for all, the great gates of fiat money velocity will be opened wide.
The Ultimate Rationalization
An entire monetary science was born from the phrase "we owe it to ourselves." That economic growth comes from credit expansion, and not through the actual production of good and services, has become empirical fact. Along with it has come the age of broken promises to pay.
And ultimately it is we who have made these promises by allowing the actions of our government. Yet all of these promises will go unfulfilled because we "owe it to ourselves."
On the nature of debt money
The fact is that most people in a position to make investment decisions today were raised in a world where understanding the origin of money didn't matter. Most people, rich and poor, live under the assumption that the exchange of money completes a transaction with no loose ends.
But today there is nothing literally behind the money-except a promise to pay. Accepting a promise to accept a debt. Here we have a basis of money that circulates today.
Obviously, it is so far widespread-cutting across the board from public to private and world wide. The growth of an untethered money supply does far more damage to the poor and elderly. It enables those positioned best (or closest) to the money the advantage of using it to accumulate assets that must be continually offered as collateral.
The Final Default
For almost a century, the west has made promises and calling them ‘money.’ The United States now owes more than $17 trillion and all other nations have a similar history. Many nations have issued even more relative to population.
Default or bankruptcy will be the ultimate mechanism by which these unfinished transactions (held by creditors or bond holders) will be finalized. Via credit expansion, new debt has been piled on top of old and we've reached the limits of this expansion facility. Whether it is caused by the rise of interest rates or the collapse of overnight lending from collateral scarcity is a moot point.
And the timing is impossible. The current fiscal debates and debt ceiling expansion may signify the end but for the political posturing which seems more about using any crisis for the advantage.
We owe it to ourselves to live in reality, rooted in all of life's joys and difficulties. While time will be the ultimate unknown, indications that the basis for money velocity has been captured can be read in the world of social memes. In a confidence based system of money, the equivalent of a reverse jubilee has been unleashed in the ultimate shedding of responsibility. With that sentiment, so goes the currency representing it. The time to prepare with some amount of precious metals and other survival assets was yesterday.