Study: If The Debt Machine Was Turned Off, The U.S. Would Immediately Plunge Into A Horrifying Depression

Michael Snyder – The Economic Collapse Sept 1, 2019

A new study has discovered that we are far more dependent on America’s great debt creation machine than most of us would have ever dared to imagine.  Today, debt is involved in most of our major transactions.  In order to purchase a home, most of us go into debt.  The same thing is true when most of us buy a vehicle.  Total credit card debt is well over a trillion dollars, and total student loan debt is now over a trillion and a half dollars.  Corporate debt has more than doubled since the last financial crisis, state and local governments are absolutely drowning in debt and unfunded pension liabilities, and the federal government is more than 22 trillion dollars in debt.  The Federal Reserve and the “too big to fail” banks are at the core of this insidious debt-based system, and it has been systematically destroying the bright future that our children and our grandchildren were supposed to have.  But if we suddenly turned off America’s great debt creation machine at this point, our entire economic system would totally collapse because we have become so dependent on it.  In fact, a study that was just conducted by Bloomberg discovered that “gross domestic product per capita would plunge into negative territory” if the ability to borrow was suddenly removed…

The nation’s health as measured by gross domestic product per capita would plunge into negative territory without its dependence on borrowed money, according to data compiled by Bloomberg.

In fact, the U.S. would fall almost to the bottom of a ranking of 114 economies by GDP per capita. Only Italy, Greece and Japan would fare worse. That’s a seismic shift from America’s comfortable No. 5 spot on a list based on conventional measures.

Our massively inflated debt-fueled standard of living is completely and utterly dependent on the continual creation of more debt.

In essence, this study found that without debt we wouldn’t have much of an economy at all.  In fact, Bloomberg says that U.S. per capita income would collapse from $66,900 a year to negative $4,857

To get this somewhat dystopian measure, Bloomberg took each economy’s 2020 GDP as projected by the International Monetary Fund as a starting point. We then adjusted the number by removing the ability to borrow, while adding reserves to create an alternative wealth measure.

U.S. per capita income of $66,900 would be slashed to a negative $4,857 using this measure. That’s a total loss of almost $72,000 for every man, woman and child.

So the only thing keeping us from complete and total economic collapse is the fact that debt is flowing like wine.

But what would happen if some sort of major national crisis erupted someday and all of a sudden everyone was afraid to lend money?

That is something to think about, because such a scenario may be a whole lot closer than many people might think.

As it stands, we appear to be on the precipice of the worst economic downturn since the last financial crisis, and our trade war with China just went to an entirely new level as the month of September began

The biggest reason for last week’s torrid stock market rally was rekindled “optimism” that the escalating trade war between the US and China may be on the verge of another ceasefire following phone conversations, fake as they may have been, between the US and Chinese side. This translated into speculation that a new round of tariffs increases slated for this weekend may not take place or be delayed.

However, that did not happen, and with no trade deal in sight, at 12:00am on Sunday, the Trump administration slapped tariffs on $112 billion in Chinese imports, the latest escalation in a trade war that’s ground the global economy to a halt, sent Germany into a recession, and given the market an alibi to keep rising because, wait for it, “a trade deal is imminent.”

Only, it isn’t, and 1 minute later, at 12:01am EDT, China retaliated with higher tariffs being rolled out in stages on a total of about $75 billion of U.S. goods. The target list strikes at the heart of Trump’s political support – factories and farms across the Midwest and South at a time when the U.S. economy is showing signs of slowing down.

The Chinese knew that these tariffs were about to go into effect, and so they were ready and waiting to retaliate just one minute later.

Of course many U.S. companies will be hit extremely hard by these tariffs that the Trump administration just implemented.  The following comes from CNBC

That means that when an electronics company imports a TV, or a smart speaker, or a drone from China starting September 1, it will have to pay a 15% tax to the U.S. government.

Eventually, this will end up raising prices on gadgets and other products for people in the United States, said Bronwyn Flores, a spokeswoman for the Consumer Tech Association (CTA), a trade group that represents 2,000 different companies in the electronics industry, including brands like Apple and LG and retailers like Walmart and Best Buy.

Basically, people are not going to be able to buy as much stuff during the holiday shopping season, and overall economic activity will be slower than it otherwise would have been.

Meanwhile, President Trump continues to sound hopeful that trade talks with China will bear fruit

President Donald Trump said trade talks with Beijing are still planned for September after a new round of tariffs went into effect on Sunday.

“We are talking to China, the meetings in September, that hasn’t changed,” Trump told reporters Sunday on the White House South Lawn after returning from Camp David.

These sorts of comments helped stabilize the financial markets last week, but if there was any hope that a trade agreement was imminent we would not have seen both sides impose new tariffs on Sunday.

And now we are moving into the month that is traditionally the worst for Wall Street.  The following comes from Fox Business

Investors may breathe a sigh of relief that August, typically a volatile month for stocks, is over, but history shows that September could be even worse for Wall Street.

Since 1950, September has been the worst month for the S&P 500 Index, which has dropped, on average, 0.5% during the month, a phenomenon referred to as the September effect. According to Dow Jones market data, the average decline of the Dow Jones Industrial Average in September is 1%, while the Nasdaq Composite generally sees an average fall of 0.5%.

We shall see what this September brings.  Certainly things are really shaky on Wall Street right now, and any piece of really bad news is likely to set off another wave of panic.

Without a doubt, the market is more primed for a crash than it has been at any point since 2008, and it definitely will not take much to make this a “September to remember”…

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

 

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8 responses to “Study: If The Debt Machine Was Turned Off, The U.S. Would Immediately Plunge Into A Horrifying Depression”

  1. Easy answer (and it must come to this sooner or later). Arrest the bankers and their treasonous enablers in government, cancel all fraudulent debt, take the issuing banks into public ownership (hence no interest charged on the nation’s money) and declare all existing and future money the absolute property of the nation (meaning the people).

    The existing banking system is based on TREASON. Deal with that and we’ll have our countries back.

  2. This article is spot on, the only thing keeping the game going is more debt. But inflation is low and interest rates even lower. Right now 30 year Treasury bond yields trade for only 1.9 % return. Imagine that, lending money to the insane Amerikan state for almost no return, but how high is the risk? What if inflation comes back like the 1970’s?

    There is a huge disaster in the making, no one and no state can borrow money forever. Annual deficits means the nation state is broke, and with the State of Illinois, they don’t have the power to print, so they will go bust first. Pension funds are now being robbed to pay for debts that can’t be paid.

    If you have any common sense, if interest rates were sky high in the late 1970’s when borrowing was only 200 billion a year, what might interest rates go to if borrowing is 2500 billion a year. (NOT ME TALKING, JIM ROGERS)

    What about Trump and his out of control budget? Trump dumps record monies into the Pentacon black hole. Like Reagan the “conservative” President is running up record debts. Is the Federal Reserve to big to fail? It is a private bank and it can fail. It seems to me that ultra caution is logical at this juncture, hold assets that the Federal Reserve and the Federal Government can’t confiscate or destroy with their insane policies.

  3. The simple truth is that banks, including Fed, creates money in the US. Modern monetary system in this country is a little bit unconstitutional:

    Article I Section 8
    1: The Congress shall have Power (…)
    5: To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

    According to their Constitution the Congress should have the power to create money. Official explanation is that the Congress had „deleated” this power to a private gang. Was Congress allowed to do so?

    Money=Debt and this order is unconstitutional.

    And now Protocol XX.20:

    20. Economic crises have been produced by us for the GOYIM by no other means than
    the withdrawal of money from circulation. Huge capitals have stagnated, withdrawing
    money from States, which were constantly obliged to apply to those same stagnant
    capitals for loans. These loans burdened the finances of the State with the payment of
    interest and made them the bond slaves of these capitals ….

    Everything is clear. Reduction of money supply results in economic crisis. No surprise.

  4. Mostly this hysteria about financial crises is a function of miss-identification of what money is.

    Money is a creature of the law. Aristotle got it right thousands of years ago, and we have not learned. Or, rather, the worst humans have spewed narrative about money at variance with facts, and for their benefit.

    In the U.S., the money power was purposefully given to Congress, not to private banking corporations.

    All the U.S. has to do is reclaim the money power under law as per the Constitution. The Federal Reserve act is a money trust of private banking corporations.

    The U.S. in order to run government operations must issue public debt, such as TBills, and said Tbills are eventually monetized by the FED.

    Public debt is thus a burden to the taxpayer rather than a benefit. The FED does rebate interest held on public debt (TBills) it holds, and this rebate goes to Treasury. However, the FED always takes its cut first and the amount they take is secretive.

    Bill Still has videos on his channel explaining how the public debt can be paid. It is pretty simple: You just issue new U.S. dollars debt free from Treasury. This is in accordance with the law.

    TBill is actually a bond (a debt instrument) and as this debt comes due, you simply pay it off with new dollars. The TBill is then ripped up, and the dollars enter into the money supply.

    There are methods for paying off private debts as well, we only lack understanding and will.

    We are constantly being gas-lighted about debt, when it is a man made problem and there are plenty of solutions.

    The debt money system BY ITS NATURE, will grow debt instruments faster than the credit they spawned. The only time a debt instrument and its credit (Federal Reserve Notes) mirror each other at moment of hypothecation.

    Hypothecation is a fancy word for creation of new credit and debts simultaneously, when YOU sign a new debt instrument.

    After birth, debt instrument begins to makes claim, and more claims, and grows with usury. The money spawned by debt instrument, on the other hand DOES NOT GROW.

    This conflict in growth differential between money and debt instruments are at the core of money magick, and is a fundamental problem with debt money system, meaning debt money is fraudulent in concept. It is fraudulent in order to “take” on a system wide scale.

    People like Michael Hudson have a sophisticated understanding of debt and how it infects civilizations. One would do well to read and try to understand what he has to say.

  5. @ Yukon Jack

    Are you aware of the fact that usury is a mortal sin? Are you ready to risk eternal damnation of your soul?

    Are you familiar with teachings of saint Thomas Aquinas on usury?
    http://www.newadvent.org/summa/3078.htm

  6. Aristotle was right but „money as a legal (domestic) concept” was only a postulate in his era. Athens was a part of globalist cabal using international money (gold) in trade – in contrast to Sparta.

    Money defined and administered by the state has a value limited to this state ONLY. The state (unless global) – by definition – is limited in space and does not have all resources necessary for existence. For this reason the state is dependent on INTERNATIONAL trade. And international trade is based on exchange of curriencies or regional/global currency.

    International trade is administered by global mafia, world hidden power as Russians call it. Terms of money exchange or a status of global/regional currency is ruled by this mafia. Now they use USD but may swich to Renminbi or Sh*tcoins 🙂

    This mafia works for millenia. Below a map of international trade routs a millenium ago:
    https://upload.wikimedia.org/wikipedia/commons/7/75/Radhanites2.png

    Now this mafia is so strong that plenty of countries have no (even nominal) control over their currency – European Union is a perfect example.

    //Bill Still has videos on his channel explaining how the public debt can be paid. It is pretty simple: You just issue new U.S. dollars debt free from Treasury. This is in accordance with the law.//
    Very simple. JFK was trying to do so but happened to die in the meantime…

    3Reich and Japan used government money (Japan – social credit). Japan social credit could have been the reason they got nukes. Soviet Block also used government debt-free money. I am more than sure that government debt-free money still exists in (independent) Korea. Such countries cannot create value out of nothing, this is a skill of the tribe, magic of money.

    //We are constantly being gas-lighted about debt, when it is a man made problem and there are plenty of solutions.//
    Deuteronomy 15 (https://sacred-texts.com/bib/kjv/deu015.htm):

    1 At the end of every seven years thou shalt make a release.
    2 And this is the manner of the release: Every creditor that lendeth ought unto his neighbour shall release it; he shall not exact it of his neighbour, or of his brother; because it is called the LORD’s release.
    3 Of a foreigner thou mayest exact it again: but that which is thine with thy brother thine hand shall release;

    I believe Hudson was also mentioning of the (un)Holly Bible but went further to Babylon.

  7. Peace be with the reader.

    The world financial system is on the brink of collapse.

    And the light of a candle shall shine no more at all in thee; and the
    voice of the bridegroom and of the bride shall be heard no more at all in thee:
    for thy merchants were the great men of the earth; for by thy sorceries were
    all nations deceived.

  8. @ Patrick

    “Are you aware of the fact that usury is a mortal sin? Are you ready to risk eternal damnation of your soul?”

    I’m not for usury or central banks. I don’t believe that sin is a real thing, I do not believe that sin keeps us separate from God like so many theists claim. I am not worried about mortal sin or venial sin or any sin because none of it is real.

    As far as my soul is concerned, it is eternal by definition, so I am not worried about it, and the fact that I can not remember any of my past lives makes me believe that the soul is just another false theological construct.

    “Are you familiar with teachings of saint Thomas Aquinas on usury?
    http://www.newadvent.org/summa/3078.htm

    No, but growing up Catholic and spending 12 long years in Catholic school makes me not believe in any God but that men are willful hellions that try to brainwash children into their religion because they live in fear.

    Catholics hold up Thomas Aquinas as the great intellectual of all time, but he wasn’t because he couldn’t overcome his own indoctrination. A truly brilliant mind soon realizes that religions are all mind control mechanisms used by the wealthy to control the masses. I’m sure the Roman state that authored the Gospels was not concerned about usury being a sin since they were slave masters.

    In the referenced link Gospel verse is referenced, but who wrote the Gospels? Jesus? Nope. Josephus was the primary author (see Caesar’s Messiah by Atwill) who was a Jew, so I am never going to take the word of the Jew as my guide or hold it reverent like a gospel.

    The Gospel is a state sponsored slave manual. That is one thing Saint Aquinas never said, so he ain’t my guru.

    Cheers.