The interrelationships between money, credit and the banking system mean that the stability of the current system is dependent upon the ability to service credit expansion, or in general the debt/GDP ratio.
With very few exceptions, every country and financial system in the world share the same fiat money platform with credit-money creation through fractional reserve banking.
Due to its lack of diversity and a solid base, the entire system is at great risk, and has already started to implode as evidenced by the current steaming pile of economic turmoil which exists in the European Union. These very same dynamics helped to create the problems that built up in the global economy between countries running trade surpluses and those absorbing ever-rising credit flows.
Credit Expansion and the Risk of Systemic Failure
Due to the consolidation of the banking system into larger and larger corporate entities, the system has become less diverse where banking activity has become more concentrated in only a tiny fraction of banks. These ‘too-big-to-save, too-big-to-fail’ banks have become the norm in the current financial quagmire.
Reducing diversity in the financial system effectively removes the buffers which prevent contagion caused by coupling sovereign financing and the banking system ever more tightly. The result can be read in the explosive increase of the "money supply" of every nation since 1971.
Credit expansion is a large part of why a problem exists in the first place. Further credit expansion could exacerbate the risk of systemic failure. Debt deflation — the direct result of credit over expansion — can also increase the risk.
As Woodrow Wilson stated toward the end of his term “A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men who, even if their action be honest and intended for the public interest, are necessarily concentrated upon the great undertakings in which their own money is involved and who necessarily, by very reason of their own limitations, chill and check and destroy genuine economic freedom.”
Your Money is Debt
According to the U.S. National Debt Clock, as of this writing the Outstanding Public Debt of the United States was $15,918,095,632,283.34, which brings the average amount owed by each U.S. citizen towards the National Debt to $50,810.10.
The 14 digit figure and the amount owed by every man, woman and child in the country is in large part due to the mismanagement of funds by the government and the fact that the government borrows money at interest from the privately owned Federal Reserve.
Before 1971, the redeeming feature for most of the "common people" in the civilized world was that they couldn't afford to buy the paper that the kings and queens were selling, or afford to use the banks.
For most of recorded history, the preponderance of people held whatever savings they managed to accrue in the form of physical coins. A gold or silver coin is the hardest form of money to degrade.
Deficits have mushroomed; credit expansion has gotten to the point of no return, gutting the purchasing power of the currency it is denominated in. All channels for saving have been shut off.
Now Everyman is a debt carrier and a speculator. He has been duped by the casino - given comps and treated like a high roller - eating from a buffet of misinformation and poor guidance emanating from the in-house information system called the mainstream media.
The irony is that once the paper derivative options (SLV, ZKB Silver ETFs and PSLV) and offshore storage options (GoldMoney, Bullion Vault, Perth Depository) become swept up in the growing insecurity and diminishing confidence, the only option that will be left for the mainstream saver or investor is the physical gold or silver coin.
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