In this interview with the former president of the European Central Bank, some astute comments are found.
The most relevant parts are occur between the 11 and 16 minute marks.
Perhaps the most critical remark is the growth of sovereign and private debt from 250% of GDP in 2000 to 275% in 2007 just before the last crisis to over 300% in 2015. This fact alone suggests we are due for another financial crisis in the near future.
Because the next crisis will be upon us soon, likely in the next 12 to 18 months, we will need to be aware that governments and central banks will attempt to rapidly introduce digital currencies with instant bank clearing. The purpose of digital currency is twofold: first, to prevent bank runs on individual institutions (the banks are so interconnected that when one fails they could all fail); as physical cash will not be available to withdraw, and secondly, to give governments new totalitarian taxation power.
Consider that every single transaction you do will be recorded. Every tip you give to a waitress, every dollar you give to your child in college, every dime you earn from mowing the neighbor's lawn while they are out of town. Furthermore, it would then be easy for the authorities to tax your bank account directly. In fact, the IMF has a working paper on this topic published in 2013 (link here) where they propose a 10% wealth tax on positive net worth to bring debt down to 2007 levels.
Here we see with clarity the true agenda of central planners and the left's deeply embedded totalitarian view. They want to control absolutely every aspect of our lives by most critically controlling the currency itself in a digital form.
Notice that there has been no real reform since the great financial crisis of 2008.
There has been no reduction in the debt that drove the world to the brink.
Instead there has been an undercurrent over these past few years to concentrate even more power into the unelected Central Bankers and members of the IMF.
Now, we have arguably, the greatest misallocation of capital that has occurred in history as interest rates have plunged to zero and into negative territory.
Soon we will have the next financial crisis, and it will be a bond market crisis as interest rates rise and the value of bonds fall.
You may recall from some years ago we mentioned that the bond market is twice as large as the stock market. So we may consider that this next crisis will also be twice as bad as the last one.
Where does this leave us?
What can we do?
In our opinion, hard assets are the last refuge in a mad, mad world.
As governments become more tax driven, digital money will be consumed by them at a rapid rate.
Hard assets such as shovels, grain, tools, hay bales, livestock, and precious metals can be bartered and exchanged away from the thieving reaches of out of control spending governments. Real estate, although it is a hard asset, is immovable, and property taxes often apply, making it vulnerable to increased tax rates particularly in a digital monetary regime.
Building useful skills, such as carpentry, welding, metal working, and livestock rearing can be bartered for food or other services.
We need to realize, the left has forgotten what is real, so as long as they are able, they will fight for greater authoritarian control. So as long as we can avoid the worst of their madness by being well grounded in what is real and useful, we can ride out the coming collapse.