Be prepared for the next great transfer of wealth. Buy physical silver and storable food.
mybudget360.com / by mybudget360 / May 4, 2016
Remember a time when people used to be cautious when it came to taking on debt? Probably vaguely since the entire U.S. economic system is built on “gold” and “platinum” credit cards being shelled out to people that can’t afford an ounce of either. In the mail I’m receiving overwhelming offers for credit cards and personal loans. The last time credit was flowing this easily was in 2005 and 2006. I’m not sure if people realize that the Great Recession was caused by excessive debt. Too much leverage. So it should be sobering to hear that since 2008 bank credit is up 44 percent while GDP is up 21 percent. What is basically happening is that for every $2 in lending GDP is moving up by $1. In other words, we are building a house of cards once again.
Making $2 out of $1
You have to realize how much power is in the hands of banks through the lending mechanism. Banks are able to create money out of thin air. Take credit cards for example. A consumer is basically spending future earnings with interest for consumption today. What you are doing is pulling in future GDP for immediate gratification. This works if there is a careful balance but that balance is not to be found today.
The post New banking normal where lending $2 increases GDP by $1: US bank credit up 44 percent since 2008 while GDP up 21 percent. appeared first on Silver For The People.
Thanks to BrotherJohnF