## Would You Like To Steal 128 Million Dollars?

What would you do with 128 million dollars?  Many people like to daydream about winning the lottery, and I have to admit that when I was much younger I would do the same thing.  If you were suddenly financially set for life, you could quit your job, buy your dream home, travel the world and spend your days doing whatever you felt like doing.  We only get one trip through this crazy journey called life, and an enormous mountain of cash could make the journey a whole lot nicer.  So if you could steal 128 million dollars and be absolutely certain that you could get away with it, would you do it?

You would probably be surprised at how many people out there would answer that question affirmatively.  Money is a very powerful motivator, and if the fear of getting caught was out of the equation a lot of people out there would certainly be willing to “bend the rules” for a cool 128 million dollars.

But let’s turn this around for a moment.

What if someone stole 128 million dollars from you?

How would you feel about that?

Every crime has a victim, and losing that amount of money would be unimaginable.

Perhaps you think that this scenario is way too outlandish to even be considering.  After all, who in the world could steal 128 million dollars from someone and get away with it?

Well, what if I told you that this has been happening every day?

And what if I told you that this has actually been happening every single hour of every single day for many years?

When Barack Obama entered the White House, the U.S. national debt was just over 10.6 trillion dollars, and when he left the White House 8 years later it was sitting just shy of 20 trillion dollars.

So during those 8 years more than 9 trillion dollars was added to the national debt.  But for purposes of this example we will round down to an even 9 trillion dollars.

When you divide 9 trillion dollars by 8, you get an average of 1.125 trillion dollars that was added to the national debt per year during the Obama era.

Dividing that figure by 365, you find that an average of \$3,082,191,780 was added to the national debt every single day during the Obama administration.

And since there are 24 hours in a day, that means that an average of \$128,424,657 was stolen from our children and our grandchildren every single hour of every single day while Barack Obama was president.

When you borrow and spend 128 million dollars that you do not have every single hour of every single day, of course that is going to have a huge impact on the economy.  I am often asked why we are not in a horrendous economic depression yet, and this is one of the biggest reasons.  If we were to go back and take 9 trillion dollars of government spending out of the economy over the last eight years, we would be in the worst depression in American history right now.

But even with all of this added debt, the U.S. economy has still only grown at an average yearly rate of just 1.33 percent over the past 10 years, and that is absolutely terrible.

Our leaders in D.C. were able to prop things up in the short-term by going on the greatest debt binge in U.S. history, but of course they have also made our long-term financial problems much, much worse in the process.

Many people don’t realize this, but the growth of the national debt was actually accelerating as the Obama era drew to a close.  In fact, we added more than 1.4 trillion dollars to the debt during fiscal year 2016.

Once upon a time a lot of people out there would get really upset about the growth of our debt, but these days most Americans seem to have accepted that this is how we do things.  This fiscal liberals seem to have won, and our nation is steamrolling down a road toward financial oblivion.

When you point out the economic disasters in Greece, Italy, Cyprus, Venezuela and Zimbabwe, it doesn’t seem to register with most Americans that our country is on the exact same path.

By borrowing money, you can live way above your means for a while, but eventually you have to pay a price for being so reckless.  This has been true all throughout human history, and it will be true in our case as well.

In a letter to John Taylor on November 26th, 1798, Thomas Jefferson explained that he wished that he could have added one more amendment to the U.S. Constitution…

I wish it were possible to obtain a single amendment to our constitution; I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of it’s constitution; I mean an additional article taking from the federal government the power of borrowing.

Jefferson wrote extensively about how government debt is a way for one generation to steal money from another generation.

And what we are doing to our children and our grandchildren is absolutely inexcusable.

The term “child abuse” is not nearly strong enough to describe what is taking place, and I don’t know why more people are not seething with anger over what is being done to them.  I am going to do whatever I can to stop this madness, and I hope that you will help me.

Have you ever run up a lot of credit card debt?  If you really wanted to, you could go out today and start living like a millionaire by running up huge credit card balances.  But eventually a day of reckoning would arrive, and you would get to a point where your debts were no longer sustainable.

It is the same thing on a national level.  We have been living way beyond our means for quite a while, but we have been stealing from future generations in order to do it.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

## Is This The Generation That Is Going To Financially Destroy America?

Did you know that the federal government is going to spend more than 4 trillion dollars this year?  To put that into perspective, U.S. GDP for the entire year of 2017 is going to be somewhere between 18 and 19 trillion dollars.  So when you are talking about 4 trillion dollars you are talking about a huge chunk of our economy.  But of course the federal government doesn’t bring in 4 trillion dollars a year.  At the beginning of Barack Obama’s first term, we were 10.6 trillion dollars in debt, and now we are nearly 20 trillion dollars in debt.  That means that we have been adding more than a trillion dollars a year to the national debt.  When you break that down, that means that we have essentially been stealing more than a hundred million dollars from future generations of Americans every single hour of every single day to pay for our debt-fueled lifestyle.  Even Federal Reserve Chair Janet Yellen is warning that this is not sustainable, and yet we just keep on doing it.

Nobody can pretend that what we have today is the kind of limited federal government that our founders intended.  When federal spending accounts for more than 20 percent of GDP, it is hard to argue that we haven’t moved very far down the road toward socialism.  As I mentioned above, total federal spending will surpass 4 trillion dollars for the first time ever in 2017…

Both the Congressional Budget Office and the White House Office of Management and Budget project that federal spending will top \$4 trillion for the first time in fiscal 2017, which began on Oct. 1, 2016 and will end on Sept. 30.

In its “Update to the Budget and Economic Outlook: 2017 to 2027” published last week, CBO projected that total federal spending in fiscal 2017 will hit \$4,008,000,000,000.

I was recently asked how we are going to pay for a 4 trillion dollar government if we abolish the income tax like I am proposing.

Well, the truth is that we would have to dramatically reduce the size and scope of the federal government.  Our founders always intended for the individual state governments to be much stronger than they are right now, and it is time for us to restore that constitutional balance.

Something desperately needs to be done, because we have a federal government that is completely and totally out of control.  Even the Congressional Budget Office agrees that we are headed toward absolute disaster if our leaders in Washington don’t start displaying some fiscal responsibility…

A large and continuously growing federal debt would increase the chance of a fiscal crisis in the United States. Specifically, investors might become less willing to finance federal borrowing unless they were compensated with high returns. If so, interest rates on federal debt would rise abruptly, dramatically increasing the cost of government borrowing. That increase would reduce the market value of outstanding government securities, and investors could lose money. The resulting losses for mutual funds, pension funds, insurance companies, banks, and other holders of government debt might be large enough to cause some financial institutions to fail, creating a fiscal crisis. An additional result would be a higher cost for private-sector borrowing because uncertainty about the government’s responses could reduce confidence in the viability of private-sector enterprises.

It is impossible for anyone to accurately predict whether or when such a fiscal crisis might occur in the United States. In particular, the debt-to-GDP ratio has no identifiable tipping point to indicate that a crisis is likely or imminent. All else being equal, however, the larger a government’s debt, the greater the risk of a fiscal crisis.

The likelihood of such a crisis also depends on conditions in the economy. If investors expect continued growth, they are generally less concerned about the government’s debt burden. Conversely, substantial debt can reinforce more generalized concern about an economy. Thus, fiscal crises around the world often have begun during recessions and, in turn, have exacerbated them.

I get so frustrated with Republicans in Congress, because they are supposed to be watching out for us.

During the 2010 elections, one of the biggest mid-term landslides of all time gave Republicans control of the House of Representatives and they have had it ever since.  One of the pillars of the “Tea Party revolution” was fiscal responsibility, but the national debt has just continued to explode.

When the Republicans took control of the House in early 2011, we were about 14 trillion dollars in debt, and now we are nearly 20 trillion dollars in debt.

We have been betrayed, and those that have done this to us need to be held accountable.

Of course the big reason why our politicians never want to control spending is because they know what it will do to our economy.

During the Obama years, we spent more than 9 trillion dollars that we didn’t have.  If we could somehow go back and take 9 trillion dollars out of the economy over those 8 years, we would be in the worst depression in U.S. history right now.

Nobody in Washington wants to be responsible for plunging us into an economic depression, and so they just keep stealing from the future in order to prop things up in the short-term.

And a similar thing could be said about central bank intervention.  If the Federal Reserve and other global central banks had not pumped trillions upon trillions of dollars into the financial system over the past 8 years, we would be in the midst of a horrific economic nightmare right now.

But now all of that “hot money” has created epic financial bubbles all over the planet, and when they finally burst the ensuing crisis will be far, far worse than if they had never intervened in the first place.

Global central banks now have more than 20 trillion dollars in assets on their balance sheets and the world is more than 217 trillion dollars in debt.  The desperate measures that national governments and central banks have been taking have delayed the coming crisis, but they have also guaranteed that it will be far worse than it could have otherwise been.

The stage is set for the worst financial crisis in world history, and the only way that it can continue to be delayed is for our leaders to continue to inflate the bubbles larger and larger and larger.

But of course no bubble can last forever, and the bigger they become the harder they burst.

## The World Is Now \$217,000,000,000,000 In Debt And The Global Elite Like It That Way

The borrower is the servant of the lender, and through the mechanism of government debt virtually the entire planet has become the servants of the global money changers.  Politicians love to borrow money, but over time government debt slowly but surely impoverishes a nation.  As the elite get governments around the globe in increasing amounts of debt, those governments must raise taxes in order to keep servicing those debts.  In the end, it is all about taking money from us and transferring it into government pockets, and then taking money from government pockets and transferring it into the hands of the elite.  It is a game that has been going on for generations, and it is time for humanity to say that enough is enough.

According to the Institute of International Finance, global debt has now reached a new all-time record high of 217 trillion dollars

Global debt levels have surged to a record \$217 trillion in the first quarter of the year. This is 327 percent of the world’s annual economic output (GDP), reports the Institute of International Finance (IIF).

The surging debt was driven by emerging economies, which have increased borrowing by \$3 trillion to \$56 trillion. This amounts to 218 percent of their combined economic output, five percentage points greater year on year.

Never before in human history has our world been so saturated with debt.

And what all of this debt does is that it funnels wealth to the very top of the global wealth pyramid.  In other words, it makes global wealth inequality far worse because this system is designed to make the rich even richer and the poor even poorer.

Every year the gap between the wealthy and the poor grows, and it has gotten to the point that eight men have as much wealth as the poorest 3.6 billion people on this planet combined

Eight men own the same wealth as the 3.6 billion people who make up the poorest half of humanity, according to a new report published by Oxfam today to mark the annual meeting of political and business leaders in Davos.

This didn’t happen by accident.  Sadly, most people don’t even understand that this is literally what our system was designed to do.

Today, more than 99 percent of the population of the planet lives in a country that has a central bank.  And debt-based central banking is designed to get national governments trapped in endless debt spirals from which they can never possibly escape.

For example, just consider the Federal Reserve.  During the four decades before the Federal Reserve was created, our country enjoyed the best period of economic growth in U.S. history.  But since the Fed was established in 1913, the value of the U.S. dollar has fallen by approximately 98 percent and the size of our national debt has gotten more than 5000 times larger.

It isn’t an accident that we are 20 trillion dollars in debt.  The truth is that the debt-based Federal Reserve is doing exactly what it was originally designed to do.  And no matter what politicians will tell you, we will never have a permanent solution to our debt problem until we get rid of the Federal Reserve.

In 2017, interest on the national debt will be nearly half a trillion dollars.

That means that close to 500 billion of our tax dollars will go out the door before our government spends a single penny on the military, on roads, on health care or on anything else.

And we continue to pile up debt at a rate of more than 100 million dollars an hour.  According to the Congressional Budget Office, the federal government will add more than a trillion dollars to the national debt once again in 2018…

Unless current laws are changed, federal individual income tax collections will increase by 9.5 percent in fiscal 2018, which begins on Oct. 1, according to data released today by the Congressional Budget Office.

At the same time, however, the federal debt will increase by more than \$1 trillion.

We shouldn’t be doing this, but we just can’t seem to stop.

Let me try to put this into perspective.  If you could somehow borrow a million dollars today and obligate your children to pay it off for you, would you do it?

Maybe if you really hate your children you would, but most loving parents would never do such a thing.

But that is precisely what we are doing on a national level.

Thomas Jefferson was strongly against government debt because he believed that it was a way for one generation to steal from another generation.  And he actually wished that he could have added another amendment to the U.S. Constitution which would have banned government borrowing…

“I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.”

And the really big secret that none of us are supposed to know is that governments don’t actually have to borrow money.

But if we start saying that too loudly the people that are making trillions of dollars from the current system are going to get very, very upset with us.

Today, we are living in the terminal phase of the biggest debt bubble in the history of the planet.  Every debt bubble eventually ends tragically, and this one will too.

Bill Gross recently noted that “our highly levered financial system is like a truckload of nitro glycerin on a bumpy road”.  One wrong move and the whole thing could blow sky high.

When everything comes crashing down and a great crisis happens, we are going to have a choice.

We could try to rebuild the fundamentally flawed old system, or we could scrap it and start over with something much better.

My hope is that we will finally learn our lesson and discard the debt-based central banking model for good.

The reason why I am writing about this so much ahead of time is so that people will actually understand why the coming crisis is happening as it unfolds.

If we can get everyone to understand how we are being systematically robbed and cheated, perhaps people will finally get mad enough to do something about it.

## \$21,714 For Every Man, Woman And Child In The World – This Global Debt Bomb Is Ready To Explode

According to the International Monetary Fund, global debt has grown to a staggering grand total of 152 trillion dollars.  Other estimates put that figure closer to 200 trillion dollars, but for the purposes of this article let’s use the more conservative number.  If you take 152 trillion dollars and divide it by the seven billion people living on the planet, you get \$21,714, which would be the share of that debt for every man, woman and child in the world if it was divided up equally.

So if you have a family of four, your family’s share of the global debt load would be \$86,856.

Very few families could write a check for that amount today, and we also must remember that we live in some of the wealthiest areas on the globe.  Considering the fact that more than 3 billion people around the world live on two dollars a day or less, the truth is that about half the planet would not be capable of contributing toward the repayment of our 152 trillion dollar debt at all.  So they should probably be excluded from these calculations entirely, and that would mean that your family’s share of the debt would ultimately be far, far higher.

Of course global debt repayment will never actually be apportioned by family.  The reason why I am sharing this example is to show you that it is literally impossible for all of this debt to ever be repaid.

We are living during the greatest debt bubble in the history of the world, and our financial engineers have got to keep figuring out ways to keep it growing much faster than global GDP because if it ever stops growing it will burst and destroy the entire global financial system.

Bill Gross, one of the most highly respected financial minds on the entire planet, recently observed that “our highly levered financial system is like a truckload of nitro glycerin on a bumpy road”.

And he is precisely correct.  Everything might seem fine for a while, but one day we are going to hit the wrong bump at the wrong time and the whole thing is going to go KA-BOOM.

The financial crisis of 2008 represented an opportunity to learn from our mistakes, but instead we just papered over our errors and cranked up the global debt creation machine to levels never seen before.  Here is more from Bill Gross

My lesson continued but the crux of it was that in 2017, the global economy has created more credit relative to GDP than that at the beginning of 2008’s disaster. In the U.S., credit of \$65 trillion is roughly 350% of annual GDP and the ratio is rising. In China, the ratio has more than doubled in the past decade to nearly 300%. Since 2007, China has added \$24 trillion worth of debt to its collective balance sheet. Over the same period, the U.S. and Europe only added \$12 trillion each. Capitalism, with its adopted fractional reserve banking system, depends on credit expansion and the printing of additional reserves by central banks, which in turn are re-lent by private banks to create pizza stores, cell phones and a myriad of other products and business enterprises. But the credit creation has limits and the cost of credit (interest rates) must be carefully monitored so that borrowers (think subprime) can pay back the monthly servicing costs. If rates are too high (and credit as a % of GDP too high as well), then potential Lehman black swans can occur. On the other hand, if rates are too low (and credit as a % of GDP declines), then the system breaks down, as savers, pension funds and insurance companies become unable to earn a rate of return high enough to match and service their liabilities.

There is always a price to be paid for going into debt.  It mystifies me that so many Americans seem to not understand this very basic principle.

On an individual level, you could live like a Trump (at least for a while) by getting a whole bunch of credit cards and maxing all of them out.

But eventually a day of reckoning would come.

The same thing happens on a national level.  In recent years we have seen examples in Greece, Cyprus, Zimbabwe, Venezuela and various other European nations.

Here in the United States, more than 9 trillion dollars was added to the national debt during the Obama years.  If we had not taken more than 9 trillion dollars of consumption and brought it into the present, we would most assuredly be in the midst of an epic economic depression right now.

Instead of taking our pain in the short-term, we have sold future generations of Americans as debt slaves, and if they get the chance someday they will look back and curse us for what we have done to them.

Many believe that Donald Trump can make short-term economic conditions even better than Obama did, but how in the world is he going to do that?

Is he going to borrow another 9 trillion dollars?

A big test is coming up.  A while back, Barack Obama and the Republican Congress colluded to suspend the debt ceiling until March 15th, 2017, and this week we are going to hit that deadline.

The U.S. Treasury will be able to implement “emergency measures” for a while, but if the debt ceiling is not raised the U.S. government will not be able to borrow more money and will run out of cash very quickly.  The following comes from David Stockman

The Treasury will likely be out of cash shortly after Memorial Day. That is, the White House will be in the mother of all debt ceiling battles before the Donald and his team even see it coming.

With just \$66 billion on hand it is now going to run out of cash before even the bloody battle over Obamacare Lite now underway in the House has been completed. That means that there will not be even a glimmer of hope for the vaunted Trump tax cut stimulus and economic rebound on the horizon.

Trump is going to find it quite challenging to find the votes to raise the debt ceiling.  After everything that has happened, very few Democrats are willing to help Trump with anything, and many Republicans are absolutely against raising the debt ceiling without major spending cut concessions.

So we shall see what happens.

If the debt ceiling is not raised, it will almost certainly mean that a major political crisis and a severe economic downturn are imminent.

But if the debt ceiling is raised, it will mean that Donald Trump and the Republicans in Congress are willingly complicit in the destruction of this country’s long-term economic future.

When you go into debt there are consequences.

And when the greatest debt bubble in human history finally bursts, the consequences will be exceedingly severe.

The best that our leaders can do for now is to keep the bubble alive for as long as possible, because what comes after the bubble is gone will be absolutely unthinkable.

## The Bankruptcy Of The Planet Accelerates – 24 Nations Are Currently Facing A Debt Crisis

There has been so much attention on Greece in recent weeks, but the truth is that Greece represents only a very tiny fraction of an unprecedented global debt bomb which threatens to explode at any moment.  As you are about to see, there are 24 nations that are currently facing a full-blown debt crisis, and there are 14 more that are rapidly heading toward one.  Right now, the debt to GDP ratio for the entire planet is up to an all-time record high of 286 percent, and globally there is approximately 200 TRILLION dollars of debt on the books.  That breaks down to about \$28,000 of debt for every man, woman and child on the entire planet.  And since close to half of the population of the world lives on less than 10 dollars a day, there is no way that all of this debt can ever be repaid.  The only “solution” under our current system is to kick the can down the road for as long as we can until this colossal debt pyramid finally collapses in upon itself.

As we are seeing in Greece, you can eventually accumulate so much debt that there is literally no way out.  The other European nations are attempting to find a way to give Greece a third bailout, but that is like paying one credit card with another credit card because virtually everyone in Europe is absolutely drowning in debt.

Even if some “permanent solution” could be crafted for Greece, that would only solve a very small fraction of the overall problem that we are facing.  The nations of the world have never been in this much debt before, and it gets worse with each passing day.

According to a new report from the Jubilee Debt Campaign, there are currently 24 countries in the world that are facing a full-blown debt crisis

■ Armenia

■ Belize

■ Costa Rica

■ Croatia

■ Cyprus

■ Dominican Republic

■ The Gambia

■ Greece

■ Ireland

■ Jamaica

■ Lebanon

■ Macedonia

■ Marshall Islands

■ Montenegro

■ Portugal

■ Spain

■ Sri Lanka

■ St Vincent and the Grenadines

■ Tunisia

■ Ukraine

■ Sudan

■ Zimbabwe

And there are another 14 nations that are right on the verge of one…

■ Bhutan

■ Cape Verde

■ Dominica

■ Ethiopia

■ Ghana

■ Laos

■ Mauritania

■ Mongolia

■ Mozambique

■ Samoa

■ Sao Tome e Principe

■ Senegal

■ Tanzania

■ Uganda

Should we have the “wealthy” countries bail all of them out?

Well, the truth is that the “wealthy” countries are some of the biggest debt offenders of all.  Just consider the United States.  Our national debt has more than doubled since 2007, and at this point it has gotten so large that it is mathematically impossible to pay it off.

Europe is in similar shape.  Members of the eurozone are trying to cobble together a “bailout package” for Greece, but the truth is that most of them will soon need bailouts too

All of those countries will come knocking asking for help at some point. The fact is that their Debt to GDP levels have soared since the EU nearly collapsed in 2012.

Spain’s Debt to GDP has risen from 69% to 98%. Italy’s Debt to GDP has risen from 116% to 132%. France’s has risen from 85% to 95%.

In addition to Spain, Italy and France, let us not forget Belgium (106 percent debt to GDP), Ireland (109 debt to GDP) and Portugal (130 debt to GDP).

Once all of these dominoes start falling, the consequences for our massively overleveraged global financial system will be absolutely catastrophic

Spain has over \$1.0 trillion in debt outstanding… and Italy has €2.6 trillion. These bonds are backstopping tens of trillions of Euros’ worth of derivatives trades. A haircut or debt forgiveness for them would trigger systemic failure in Europe.

EU banks as a whole are leveraged at 26-to-1. At these leverage levels, even a 4% drop in asset prices wipes out ALL of your capital. And any haircut of Greek, Spanish, Italian and French debt would be a lot more than 4%.

Things in Asia look quite ominous as well.

According to Bloomberg, debt levels in China have risen to levels never recorded before…

While China’s economic expansion beat analysts’ forecasts in the second quarter, the country’s debt levels increased at an even faster pace.

Outstanding loans for companies and households stood at a record 207 percent of gross domestic product at the end of June, up from 125 percent in 2008, data compiled by Bloomberg show.

And remember, that doesn’t even include government debt.  When you throw all forms of debt into the mix, the overall debt to GDP number for China is rapidly approaching 300 percent.

In Japan, things are even worse.  The government debt to GDP ratio in Japan is now up to an astounding 230 percent.  That number has gotten so high that it is hard to believe that it could possibly be true.  At some point an implosion is coming in Japan which is going to shock the world.

Of course the same thing could be said about the entire planet.  Yes, national governments and central banks have been attempting to kick the can down the road for as long as possible, but everyone knows that this is not going to end well.

And when things do really start falling apart, it will be unlike anything that we have ever seen before.  Just consider what Egon von Greyerz recently told King World News

Eric, there are now more problem areas in the world, rather than stable situations. No major nation in the West can repay its debts. The same is true for Japan and most of the emerging markets. Europe is a failed experiment for socialism and deficit spending. China is a massive bubble, in terms of its stock markets, property markets and shadow banking system. Japan is also a basket case and the U.S. is the most indebted country in the world and has lived above its means for over 50 years.

So we will see twin \$200 trillion debt and \$1.5 quadrillion derivatives implosions. That will lead to the most historic wealth destruction ever in global stock, with bond and property markets declining at least 75 – 95 percent. World trade will also contract dramatically and we will see massive hardship across the globe.

So what do you think is coming, and how bad will things ultimately get once this global debt crisis finally spins totally out of control?

Please feel free to add to the discussion by posting a comment below…

## A Quadrillion Yen And Counting – The Japanese Debt Bomb Could Set Off Global Panic At Any Moment

How much is 1,000,000,000,000,000 yen worth?  Well, a quadrillion yen is worth approximately 10.5 trillion dollars.  It is an amount of money that is larger than the “the economies of Germany, France and the U.K. combined“.  It is such an astounding amount of debt that it is hard to even get your mind around it.  The government debt to GDP ratio in Japan will reach 247 percent this year, and the Japanese currently spend about 50 percent of all central government tax revenue on debt service.  Realistically, there are only two ways out of this overwhelming debt trap for the Japanese.  Either they default or they try to inflate the debt away.  At this point, the Japanese have chosen to try to inflate the debt away.  They have initiated the greatest quantitative easing experiment that a major industrialized nation has attempted since the days of the Weimar Republic.  Over the next two years, the Bank of Japan plans to zap 60 trillion yen into existence out of thin air and use it to buy government bonds.  By the time this program is over, the monetary base in Japan will have approximately doubled.  But authorities in Japan are desperate.  They know that the Japanese debt bomb could set off global panic at any time, and they are trying to find a way out that will not cause too much pain.

Unfortunately, the only way that this bizarre quantitative easing program will work is if investors in Japanese bonds act very, very irrationally.  You see, the only way that Japan has been able to pile up this much debt in the first place is because they have been able to borrow gigantic piles of money at super low interest rates.

Right now, the yield on 10 year Japanese bonds is sitting at an absurdly low 0.76%.  But even with such ridiculously low interest rates, the central government of Japan is still spending about half of all tax revenue on debt service.

If interest rates go up, the game is over.

But now that the Japanese government has announced that it plans to double the monetary base, it would be extremely irrational for investors not to demand higher rates on Japanese government debt.  After all, why would you want to loan money to the Japanese government for less than one percent a year when the purchasing power of your money could potentially be halved over the next two years?

Amazingly, this is exactly what the Japanese government is counting on.  They are counting on being able to wildly print up money and monetize debt, but also keep yields on Japanese bonds at insanely low levels at the same time.

For the moment, it is actually working.  Investors in Japanese bonds are behaving very, very irrationally.

But if that changes at some point, we could potentially be looking at the greatest Asian economic crisis of all time.

And there are some very sharp minds out there that believe that is exactly what is going to happen.

For example, the founder of Hayman Capital Management, Kyle Bass, has been sounding the alarm about Japan for a long time.  He correctly predicted the subprime mortgage meltdown, and in the process he made hundreds of millions of dollars for his clients.  Now he believes that the next major crash is going to be in Japan.

According to Bass, the bond bubble in Japan is so large that once it begins to implode fear is going to start spreading like wildfire…

Remember, Japanese banks in general have 900% of their tangible assets invested in JGBs that are the most negatively convex instrument you can put into a portfolio. Assume for instance that a bank holds a 10 year bond yielding 80 basis points. A 100 basis point move will cost the JGB investor about 10 years of expected interest payments.

Think about the psychology of all the players and financial implications if rates do move 100 basis points. Think about the solvency of a nation which currently spends 50% of its central government tax revenues on debt service, half of which earns the lowest yields of any country in the world.

You can’t look at this as a simple question. You need to think about this as a multivariate equation. You have to think about the incentives and the fears of all the participants. And you need to think about the fiscal sustainability of the government.

If rates even rise by a full percentage point, it could start a stampede toward the exits that nobody in the entire world would be able to control…

I ran a survey of 1,009 Japanese investors where we asked: “If rates were to move up 100 basis points, would that engender more confidence and make you want to buy more JGBs?” or, “Would you take your money elsewhere, even if it were hamstringing your government’s ability to operate?” 8 – 9% of respondents that said that they would buy more bonds and almost 80% said they would run, not walk the other way.

For much more on this, you can watch a video of Kyle Bass discussing why Japan is doomed right here.

And of course Japan is not the only “debt bomb” that could potentially go off over in Asia.  As I mentioned in another article, the major problem over in China is the level of private debt…

In China, the big problem is the absolutely stunning growth of private domestic debt.  According to a recent World Bank report, the total amount of credit in China has risen from 9 trillion dollars in 2008 to 23 trillion dollars today.

That increase is roughly equivalent to the entire U.S. commercial banking system.

There is simply way, way too much debt in our world today.  Never before has there been so much red ink all over the planet at the same time.

Many in the mainstream media insist that this party can go on indefinitely.

But that is what they said about the housing bubble too.

Sadly, the truth is that every financial bubble eventually bursts, and this global debt bubble will be no exception.

I hope that you are getting prepared while you still can.