Debt It Doesn't Matter! Not Yet At Least
Settles for Yesterday
We saw this Debt chart floated and shared quite a bit, so let’s break it down:
Many pundits still think that the debt levels matter and that there is a limit and we are close. As many of our favorite analysts continue to say this, we have to say we respectfully disagree.
Let us be very clear though, we aren’t disagreeing that debt IS NOT A PROBLEM, because it most certainly is. What we are saying is, that NOBODY knows the limit, nobody knows how high the debt can go until it actually breaks the system.
If its one thing we do know, its that the very system that creates our utility, is the very system that billions of people are reluctant to let go of and its in this very intrinsic, yet forced demand that not only REQUIRES ever increasing debt, but actually proves we are all to BLAME, we are all COMPLICIT. Why?
Because the majority fail to have the audacity to stand up and demand change. Yea its just easier to accept things the way they are, and if you truly feel that way, then don’t worry about it, its why the system continues to exist. Yet the reality is that the majority and we mean probably well north of 98% have zero clue on how modern monetary mechanics actually work and that is both a problem and an opportunity.
A problem for those clamoring for income equality, for equality of any outcome and a simple opportunity for those who have direct control over our monetary policy.
So as much as every fundamental economic analyst out there pounds the table on our debt levels, they fail to realize that,
“if the debt doesn’t rise, EVERYTHING COLLAPSES! That is 100% guaranteed”, yet that collapse will bring about the necessary purging that all Austrian Economists warn against trying to prevent. Basically prevention just means factorization of the overall subset of underlying problems!
A prime example of rising debts and lower rates and how that mechanism assists in the wealth creation, debt demand, look no further than this chart:
Well we know where this saw tooth pattern leads next now don’t we? We certainly don’t need a quant AI & ML system to extrapolate that presumption now do we???
As far as today we are seeing a relief rally, plain and simple. You know where Magnelibra Econemotions stands, if you were a Founding Subscriber you would know that the Global Futures Benchmark Program continues in defensive hedged posture and doesn’t expect that to change anytime soon. We are overvalued by all metrics, period and with the election coming and an almost guaranteed disgruntled response, well, that’s not something we think the Federal Reserve wants to backstop just yet, they will need more ammo for when things start to go really South.
Not that you guys need them now, but yesterday’s settlement picture looked like this for trade day ending September 23rd 2020:
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-Magnelibra Econemotions
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