In a secular world, the operative “Golden Rule” is “He Who Has the Gold Makes the Rules”. The condition of the global financial banking system is untenable. The aggregate amount of debt worldwide is anyone’s guess. The introduction of derivatives and counter claims pushes the chain of obligations into the unknown. All that is left is for central banks to create mountains of uninterrupted counterfeit money to roll over and delay the inevitable. The IMF chart of World Currency Reserve is a skyrocket line to oblivion. It does not reflect a healthy stockpile of treasure, but certainly manifests a new debt machine running to infinity. The Bullion Vault explains this reality in the following manner.
“Sure, the Fed can create money. But it can’t create credit (from the Latin credere, “to trust, have faith”). And it sure as hell can’t let America’s outstanding debts – both private and public – simply get written off now, neither at home nor abroad. Not after all that crashing and banging in ER from 2007-09.
So never mind the record-large cash pile sitting at non-financial corporates. Never mind that their problem is too much debt, not the $1.8 trillion in cash they’ve already got. Never mind the 50-fold growth since 2007 to $1 trillion in US banks’ cash holdings either. Again, debt is their problem – not a lack of money – but it doesn’t matter. New money is the only fix Dr. Ben now has to hand (he’s all out of interest-rate cuts). So those foreign reserves, US corporates and domestic banks already drowning in money will get flooded with more”.