By Charles Hugh Smith
July 15, 2022
The destruction of ‘phantom wealth’ via default has always been the only way to clear the financial system of unpayable debt burdens and extremes of rentier / wealth dominance.
The notion that the world could always borrow more money as long as interest rates were near-zero was never sustainable. It was always an unsustainable artifice that we could keep borrowing ever larger sums from the future as long as the interest payments kept dropping.
The only real solution to over-indebtedness since the beginning of finance is default. There are pretty names for variations on default that sound much less gut-wrenching–debt jubilees, refinancing, etc.– but the bottom line is the debts that can’t be paid won’t be paid and whomever owns the debt as an asset absorbs the loss.
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