29/12/17

The True Consequence of Ending the Gold Standard (In One Chart)



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The True Consequence of Ending the Gold Standard (In One Chart)
// Silver For The People

gainspainscapital.com / Graham Summers / December 28, 2017

The single most important chart for understanding the current state of the US financial system is the following:

US Gross Domestic Product vs. US Total Debt Securities, Trillions US Dollars (1945-2016).

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In simple terms, the above chart reveals that once the US abandoned the Gold Standard completely in 1971, the amount of debt in the US financial system skyrocketed relative to the real economy.

As a result of this, by the time the mid-1990s rolled around, debt levels in the US financial system had become a systemic risk: with this much leverage in the system, even a brief bout of debt deflation (when debt markets deflate) would induce a systemic crisis.

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