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- Economic collapse is inevitable without the gold standard - debt proves
- US economic decline is inevitable - empirics demonstrate the vulnerability of the global economy
- Debt and unemployment make US economic collapse inevitable - consensus of experts
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2NC - US Econ2NC DebtUS economic collapse is inevitable - debtPelerin 13 (Monty Pelerin, AB, MBA and PhD degrees from Duke University, the University of Chicago and Syracuse University in finance and economics, "Extreme fear is reasonable: Economic collapse is inevitable", July 26 2013, http://www.sott.net/article/264399-Extreme-fear-is-reasonable-Economic-collapse-is-inevitable) It is nearly impossible to convince people that an economic collapse is likely, perhaps inevitable. It is beyond anything they have seen or can imagine. I attribute that to a normalcy bias, an inherent weakness of experiential learners. For many, accepting something that has not occurred during their time on the planet is not possible. The laws of economics and mathematics may shape history but they are not controlled by history. The form of cataclysm and its timing is indeterminable. Political decisions continue to shape both. The madmen who are responsible for the coming disaster continue to behave as if they can manage to avoid it. Violating Einstein's definition of insanity, they continue to apply the same poison that caused the problem. These fools believe they can manage complexities they do not understand. We are bigger fools for providing them the authority to indulge their hubris and wreak such damage. Apocalypse In One Picture James Quinn provided the following graph. If a picture is worth a thousand words, this graph is worth millions. The route to economic demise is depicted below: The relationships in this graph are terrifying! Debt is shown relative to GDP. GDP growth has been one-third the growth in debt for the period. That is, the economy required $3 of debt to produce $1 more in real GDP. In recent years diminishing returns to debt required $6 of debt to increase GDP a $1. Whatever the benefits of debt, they have clearly diminished, almost to zero. Debt expansion has gone exponential in order to salvage the weak growth in GDP. To put this into a perspective the average reader can understand, think of GDP as a household's spending. The "family" depicted above has to borrow each year in order to maintain its spending level. Imagine the condition of your family if you borrowed 6 times the amount of incremental spending each year. Then imagine the condition of your family after forty years of continuously increasing your debt levels substantially in excess of your income. It is impossible for a family without a printing press and a cooperative Federal Reserve to engage in such behavior. The government is different, you say? Surely it is, but not necessarily in a meaningful financial manner. Just as you would not survive such behavior, governments cannot either. History is full of examples of government collapses resulting from excessive debt and overspending. A printing press only provides the luxury of more time before the failure. You may object that a macroeconomy is different from a family. Debt (parroting the political claim) makes an economy grow faster. The evidence shown to the right does not support this claim. Government reported GDP growth rates are shrinking as the debt expansion accelerates. Since 1965 the growth rate of the economy has been declining. Even if you accept government GDP reporting, the chart to the right shows a trend this is pointing to an average declining standard of living. That point will be reached when the GDP growth falls below the population growth. The US economy has been underperforming since the 1970s according to government's statistics. That is after all the games have been played with these numbers. How much longer can these trends continue and what happens at the end? No one can reasonably answer either of these questions. What Is Known And Not Known Two things are known: So long as borrowing increases faster than GDP, the ability to repay diminishes. That has been occurring for more than forty years and the differential growth rates have widened dramatically in recent years. Not borrowing at this pace would likely have decreased reported GDP dramatically. While that may have been a proper economic response, it is now politically impossible (or highly unlikely). Continuing to increase debt at a rate greater than GDP ensures financial collapse. Stopping or slowing down at this point likely leads to the same point. This country has maneuvered itself into a no-escape situation. What would happen to GDP and the standard of living if borrowing were dramatically reduced? How much of the last $10 trillion in debt borrowed between 2000 and 2009 went directly into reported GDP? Is it possible that reported GDP for this period could have been $10 trillion lower? If there is indeed a monetary/fiscal multiplier as Keynesians insist, then results would have been worse. Answers to these questions are speculative. Those in favor of more debt argue that a calamity would have occurred had the massive rise in debt and its accompany stimulative effects not happened. For the Paul Krugmans of the world, more debt and stimulus is always the answer. All problems look like nails when you own only a hammer. Rapidly increasing amounts of debt since 1965 have been accompanied by falling rates of growth. One may speculate what this growth would have been with different rates of debt expansion. Whether the rate of debt expansion increased or decreased the rate of real GDP is moot. Economists can use their competing paradigms to duel over this issue, but cannot come to a conclusion that is acceptable to most. Mathematics, on the other hand, is definitive. There are mathematical limits that control the ability to service debt. Once these limits have been breached, some amount of the debt will be defaulted on. The breach point is referred to as a debt death spiral. The US has passed this mathematical point and is in a death spiral. The political class in America, either via misguided economic policies or a deliberate attempt to hide the true condition of the country, has put us here. They will continue to employ whatever policies they believe will keep things going for a while longer. The tragic ending has been cast. Economics cannot trump mathematics. Economic collapse is inevitable without the gold standard - debt provesSprott 6/16 (Eric Sprott, Bachelor of Arts / Science at Carleton University, formed a brokerage firm before setting up his own money management firm two decades, regarded as one of the country’s legendary precious metals’ investors, "Twelve Numbers that Prove Economic Collapse is Inevitable", June 16 2014, http://sprottmoneyblog.com/twelve-numbers-that-prove-economic-collapse-is-inevitable/#) The total debt of the US government stands at roughly 17.5 trillion dollars and is growing as each second passes. This number is so staggering that the average man on the street has difficulty understanding it. Sadly, the reality of the situation is bleak. This ballooning debt is completely unsustainable and cannot be repaid. Remember, what cannot be repaid will not be repaid. The US government is on a path towards total collapse. The debt levels have gone over the cliff and like the infamous cartoon character Wile E. Coyote, it is only a matter of time before gravity takes hold and the economy comes crashing down. Even more shocking is the fact that there are numbers even bleaker than those of the US debt level. The Economic Collapse Blog has compiled a list of economic numbers that everyone should take the time to read and understand: -$1,280,000,000,000 - Most people are really surprised when they hear this number. Right now, there is only 1.28 trillion dollars worth of U.S. currency floating around out there. -$17,555,165,805,212.27 - This is the size of the U.S. national debt. It has grown by more than 10 trillion dollars over the past ten years. -$32,000,000,000,000 - This is the total amount of money that the global elite have stashed in offshore banks (that we know about). -$48,611,684,000,000 - This is the total exposure that Goldman Sachs has to derivatives contracts. -$59,398,590,000,000 - This is the total amount of debt (government, corporate, consumer, etc.) in the U.S. financial system. 40 years ago, this number was just a little bit above 2 trillion dollars. -$70,088,625,000,000 - This is the total exposure that JPMorgan Chase has to derivatives contracts. -$71,830,000,000,000 - This is the approximate size of the GDP of the entire world. -$75,000,000,000,000 - This is approximately the total exposure that German banking giant, Deutsche Bank, has to derivatives contracts. -$100,000,000,000,000 - This is the total amount of government debt in the entire world. This amount has grown by $30 trillion just since mid-2007. -$223,300,000,000,000 - This is the approximate size of the total amount of debt in the entire world. -$236,637,271,000,000 - According to the U.S. government, this is the total exposure that the top 25 banks in the United States have to derivatives contracts. But those banks only have total assets of about 9.4 trillion dollars combined. In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 25 to 1. -$710,000,000,000,000 to $1,500,000,000,000,000 - The estimates of the total notional value of all global derivatives contracts generally fall within this range. At the high end of the range, the ratio of derivatives exposure to global GDP is about 21 to 1. After reading these numbers, read them again. Take a moment to let reality sink in. Since going off the gold standard, Western governments have entered into a Ponzi scheme-based economy. The only savior for your finances will be precious metals. Take a moment to consider that all the gold in the world is only worth $6,647,314,169,784. A drop in the bucket compared to the numbers listed above. If you read these numbers and believe that the government has a magical solution, then you live in a fantasy world. These numbers point to one conclusion only. An inevitable, eventual collapse. US economic decline is inevitable - empirics demonstrate the vulnerability of the global economyBiancuzzo 13 (Marty Biancuzzo, Chief Technology Analyst at Tech & Innovation Daily, previous Director of Trading Services at Money Map Press and Associate Director of Trading Services at Oxford Club / Wall Street Daily / Money Map Press, "The Inevitable Economic Default", April 25 2013, http://www.capitolhilldaily.com/2013/04/economic-default/) Most people think that the story of the ultimate economic collapse has already been told. The Great Depression… The dot-com bust… The housing and credit crisis of 2008… But the greatest economic collapse is a story that’s still being written. It started when Presidents Bush and Obama spent over $1 trillion in stimulus aid – and lowered interest rates to near 0% levels – to fix the economic crisis. By doing so, they essentially solved the problem with the same exact measures that created the problem in the first place. They created another bubble. Only this time, it’s within our Federal Reserve. And when it pops, like every bubble does, it will take us all down with it. The Stakes Have Never Been Higher All it will take for this next bubble to burst is a debt default. And when it happens, we won’t be able to solve our problems with the same old methods. We can’t lower interest – it’s already at rock-bottom lows. We can’t further stimulate, as that would require larger stimulus packages and deepen our burden even more. Ultimately, our foreign creditors will do one of two things: They’ll either stop lending us money, or they’ll devalue the newly printed dollars we’re using to pay off our debt. Either way, once our creditors expose the true value of the dollar – game over. Countries will look to exchange with a currency of greater value, and the United States will be forced to say goodbye to the Federal Reserve. This isn’t something that might happen, either. It’s inevitable. So inevitable, in fact, that the Fed can no longer hide it. The federal government recently issued a call to action to all 50 states – and five of our nation’s largest banks – to prepare for the coming collapse. And states aren’t taking any chances… An Awakening of the State Some states saw the writing on the wall long before any official warning came from the Fed. Take Texas and Wyoming, for example. They took the first proactive measures toward what is now becoming a nationwide, state-by-state internal assessment. They formulated “Doomsday Preparation Bills” that, once passed, would establish crisis committees. The Bills: Texas – HB 568 “Self Sufficiency Act” Wyoming – HB 85 “State Run Government Continuity Task Force” They seek to establish measures that protect the state and its citizens in the event of federal default. Furthermore, the bills initiate the necessary steps to becoming a sovereign state. The states have decided to: Analyze how dependent they are on federal funding. Begin stashing “emergency funds” for surviving without federal aid. Prepare a state-run army to defend against the imminent resource scarcity and threats that will arise from federal default. This includes stockpiling military technologies. Arrange the issuance of alternative currency. And they aren’t the only ones working on alternative solutions… Virginia, Utah, North Carolina and South Carolina have already legislated the use of gold and silver as currency for intra-state transactions. Utah was the first to introduce the currency bill that allows residents to use U.S.-minted gold and silver coins. They’re currently developing a system where citizens could use debit cards linked to their gold and silver holdings. South Carolina took it one step further by allowing any form of gold and silver coin, including other currencies like the Philippine peso. And Paul Broun, Jr. of Georgia reintroduced Ron Paul’s “Competition in Currency Act” at the beginning of this year. CICA2013 intends to repeal the illegal use of foreign gold and silver coins nationwide. As the Fed continues to devalue the dollar, it’s the logical step to take when considering using another form of legal tender. Something to Consider… It seems absurd to think the United States – the world’s most powerful nation – could be facing economic collapse. It’s a concept that seems radical to most people, especially when the United States has a AAA rating and the markets are at all-time highs. But think about it. The 2008 crisis brought the world economy to its knees. We witnessed the destruction of big businesses – Lehman Brothers, Behr Sterns, AIG, Fannie and Freddie. And we’ve seen prosperous nations falter – Iceland, Greece, Italy, Spain and Portugal. Our government has taken on a suicidal amount of burden and injected worthless money into a broke system – all in an effort to delay the inevitable. Remember, people once laughed at the thought of the housing and credit market failing. Things appeared to be going too well for any such talk. But with major players in the government and private sector making preparations, it’s pretty clear that our worst fears are quickly coming to fruition. Debt and unemployment make US economic collapse inevitable - consensus of expertsNewsmax 6/25 (Newsmax, website and magazine that covers the latest developments in politics, national and world news, health, faith, personal finance, and technology with a unique American perspective, June 25 2014, "Billionaire Tells Americans to Prepare For 'Financial Ruin'", http://www.moneynews.com/Outbrain/Trump-Aftershock-American-Economy/2012/11/06/id/462985/) The United States could soon become a large-scale Spain or Greece, teetering on the edge of financial ruin. That’s according to Donald Trump, who painted a very ugly picture of where this country is headed. Trump made the comments during a recent appearance on Fox News’ “On the Record with Greta Van Susteren.” According to Trump, the United States is no longer a rich country. “When you’re not rich, you have to go out and borrow money. We’re borrowing from the Chinese and others. We’re up to $16 trillion in debt.” He goes on to point out that the downgrade of U.S. debt is inevitable. “We are going up to $16 trillion [in debt] very soon, and it’s going to be a lot higher than that before he gets finished. When you have [debt] in the $21-$22 trillion, you are talking about a downgrade no matter how you cut it.” Ballooning debt and a credit downgrade aren’t Trump’s only worries for this country. He says that the official unemployment rate of 8.2 percent “isn’t a real number” and that the real figure is closer to 15 percent to 16 percent. He even mentioned that some believe the unemployment rate to be as high as 21 percent. “Right now, frankly, the country isn’t doing well,” Trump added, “Recession may be a nice word.” While 15 percent to 16 percent unemployment, a looming credit downgrade, and ballooning debt are a bleak outlook for the United States, they are hardly as alarming as the scenario laid out by another economist. Without earning celebrity status or having his own television show, Robert Wiedemer did something else that grabbed headlines across the country: He accurately predicted the economic collapse that almost sank the United States. In 2006, Wiedemer and a team of economists foresaw the coming collapse of the U.S. housing market, equity markets, private debt, and consumer spending, and published their findings in the book America’s Bubble Economy. Editor’s Note: But Wiedemer’s outlook for the U.S. economy today makes Trump’s observations seem almost optimistic. Where Trump sees ballooning debt and a credit downgrade, Wiedemer sees much more widespread economic destruction. In a recent interview for his newest book Aftershock, Wiedemer says, “The data is clear, 50% unemployment, a 90% stock market drop, and 100% annual inflation . . . starting in 2012.” When the host questioned such wild claims, Wiedemer unapologetically displayed shocking charts backing up his allegations, and then ended his argument with, “You see, the medicine will become the poison.” The interview has become a wake-up call for those unprepared (or unwilling) to acknowledge an ugly truth: The country’s financial “rescue” devised in Washington has failed miserably. 2NC Laundry ListA US financial crisis is inevitable - 6 reasonsDenning 13 (Steve Denning, Director of knowledge management (1996-2000) at the World Bank, director of the Scrum Alliance, fellow of the Lean Software Society, and contributor to Forbes, citing Alan S. Blinder, the Gordon S. Rentschler Memorial Professor of Economics and Public Affairs at Princeton University, Vice Chairman of the Promontory Interfinancial Network, and regular columnist for The Wall Street Journal, "Alan Blinder: Six Reasons Why Another Financial Crisis Is (Still) Inevitable", September 12 2013, http://www.forbes.com/sites/stevedenning/2013/09/12/alan-blinder-six-reasons-why-another-financial-crisis-is-still-inevitable/) As we approach the five-year anniversary of “Lehman Day”—September 15, 2008—the day when Lehman Brothers collapsed, financial markets froze and the global financial system almost disintegrated, it’s good to get a reminder that the underlying issues that caused the debacle still haven’t been fixed. The reminder comes from Alan S. Blinder, professor of economics and public affairs at Princeton University, former vice chairman of the Federal Reserve, and the author of the excellent history of the financial crisis, After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead. He has now written an interesting article in the Wall Street Journal, entitled “Alan Blinder: Five Years Later, Financial Lessons Not Learned.” Earlier this year, I explained in this column why another financial crisis is inevitable. Now Professor Blinder presents six “smoking gun” reasons why the problems of the financial sector still aren’t fixed and in effect, why another financial crisis is still inevitable. First, the Dodd-Frank Act of 2010 hasn’t been implemented. Even this “comparatively weak” legislative attempt at reform is “withering on the regulatory vine. Far from being tamed, the financial beast has gotten its mojo back—and is winning. The people have forgotten—and are losing.” Second, the requirement that Wall Street firms have some “skin n the game” in the securitization of mortgages has been hamstrung. The Dodd-Frank law included a risk-retention rule that would require issuers of asset-backed securities to keep at least 5 percent of the credit risk, rather than pass it all on to investors. But regulations implementing the provision have still not been issued. The proposal now being reviewed “would exempt almost 95 percent of all mortgages from the skin-in-the-game requirement.” Even an alternative “strong” proposal would exempt 75 percent of all mortgages. Result: the intent of the law is gutted. Third, the $5 trillion banking assets in derivatives are still off-balance sheet and unregulated. Bad mortgages were a serious problem in 2008, but it was unregulated derivatives that turned the problem into a global disaster. “Derivatives based on mortgages were a principal source of the reckless leverage that backfired so badly during the crisis, imposing huge losses on investors and many financial firms.” Yet the Dodd-Frank law “exempts the vast majority of derivatives” from any regulation. Since the $5 trillion that the big banks have in derivatives are undisclosed and off their -balance sheets, no investor can evaluate the risks involved. Elementary transparency is lacking, as Sandy Weill noted earlier in the week. Fourth, a serious reformer of derivatives is being hounded out of town. “Gary Gensler, the chairman of the Commodity Futures Trading Commission… ran into a wall of resistance from the industry, from European regulators, and from American colleagues when he tried to implement even the weak Dodd-Frank provisions for derivatives. And Mr. Gensler’s days leading the CFTC look numbered.” The fate of any other would-be reformers looks similarly dim. Fifth, the rating agencies are “still hired and paid by the very companies whose securities they rate.” The credit-rating agencies “contributed mightily to the financial mess… they blessed financial junk with coveted triple-A ratings… The rating agencies are still hired and paid by the very companies whose securities they rate.” The Dodd-Frank Act called on federal agencies to study the situation and make improvements. Those studies that have been done are “gathering dust.” Action to date: none. Sixth, the Volcker Rule forbidding proprietary trading by banks has not been implemented. The idea of the Volcker Rule was to “prevent banks from gambling with FDIC-insured funds… Dodd-Frank was signed into law in July 2010. The Volcker rule has been tied up ever since by internal bureaucratic squabbles and external pressure from the banking industry.” In short, Professor Blinder concludes that the principal problems that led to the financial meltdown of 2008 remain unresolved. Is there any reason to think that yet another massive financial crisis is not inevitable? Some would argue that we will not see a repeat of the recent financial crisis because it was driven by mortgages being extended to people who should have never received them, partly at the behest of government. There is now little risk of that particular kind a mortgage crisis for the foreseeable future. But that’s not to say that there won’t be other financial crises in the future; in particular from the massive hidden activity in derivatives. Download 1.08 Mb. Share with your friends:
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