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<\/a><\/p>\nOn Thursday, Donald Trump\u00a0told CNBC that his solution to dealing with the $19 trillion-plus national debt involves a form of default such as repurchasing existing bonds at a discount.<\/p>\n
The media jumped all over him calling his idea \u201cinsane\u201d and warning that it would tank the economy or set off an \u201cunprecedented financial crisis.\u201d<\/p>\n
They are right that it would set off an unprecedented financial crisis\u2026 but, believe it or not, that is the best-case scenario at this point. Not defaulting would lead to hyperinflation which would be even worse.<\/p>\n
There is no easy way out of the US government\u2019s predicament\u2026 something we\u2019ve been talking about here since 2010. \u00a0The path is unsustainable and the dollar will collapse at some point. \u00a0The only question is whether it is through outright default or through hyperinflation.<\/p>\n
Of course,\u00a0if there is anyone better at knowing how to default on debt and go into bankruptcy, we can\u2019t think of one.\u00a0Trump himself said as much. \u00a0\u201cI am the king of debt,\u201d he said, alluding to his corporate bankruptcies and use of leverage to build his real estate empire. \u201cI love debt. I love playing with it.\u201d<\/p>\n
America may have found the right man for the job, then! \u00a0Because the US federal government debt will be over $20 trillion before he could even begin to \u201cplay with it.\u201d<\/p>\n
His \u201ccrazy\u201d idea of defaulting on the debt, if he lived up to his promise, is actually the best-case scenario for the American people if that means allowing\u00a0interest rates and other prices to \u201cnormalize\u201d through a liquidation.\u00a0A default might allow\u00a0the economy to return to sustainable patterns of production. It could\u00a0fix the savings-investment dilemma and fix other imbalances\u00a0that rely\u00a0on interest rate suppression, which in turn is intended to hide the true extent of the government\u2019s insolvency.<\/p>\n
The alternative, as I said, is hyperinflation\u2026 and that would be far worse. Economic activity would essentially cease to occur.\u00a0Nearly everyone, except those who owned hard assets like gold and silver\u00a0\u2013 or\u00a0even\u00a0bitcoin\u00a0\u2013\u00a0would be brutally impoverished. \u00a0I just returned from Venezuela where they have now entered into hyperinflation and, believe me, you don\u2019t want to go there.<\/p>\n
So, if Trump somehow gets past the rigged election process, the rigged voting machines and hanging chads, evades assassination attempts, becomes President AND defaults on the debt without Congress, the media and even the American people filibustering and rioting to stop him\u2026 what would happen?<\/p>\n
The plain answer is: nobody knows. \u00a0Even Trump doesn\u2019t have a clear idea on how to, what he calls \u201crestructure\u201d, the debt. \u00a0Anything less than defaulting on 50% of the current debt may\u00a0not be significant given the\u00a0\u00a0US government\u2019s overall financial situation. \u00a0But, if he does default on 50% or more of the current debt, what would happen?<\/p>\n
Again, nobody knows. \u00a0US Treasury debt is so massive and widely held that there is no saying what such a dramatic write-down would set off. \u00a0Pretty much, overnight, most major banks, corporations and even governments would be potentially insolvent as a large amount of their assets were heavily \u201cdiscounted.\u201d<\/p>\n
And, no one would know who was or wasn\u2019t insolvent. Haircuts could\u00a0occur across the board!\u00a0It\u2019d set off a cascading effect of fear as everyone tried to sell everything all at once, certainly causing a stock market collapse that could easily be well over 90%. \u00a0The bond market would be similar.<\/p>\n
Interest rates would skyrocket into the double digits, and maybe higher. \u00a0Instantly, US consumers, loaded with debt and mortgages would be bankrupt\u2026 which would set off a further\u00a0sell-off.<\/p>\n
By the time it all settled there quite easily could be nothing left.\u00a0And, remember, this is the BEST case scenario! \u00a0Hyperinflation would be worse.<\/p>\n
This is the \u201crock and the hard place\u201d we\u2019ve been talking about since the beginning of this decade. \u00a0Some call us \u201cdoom and gloomers\u201d but these are just facts. \u00a0If you don\u2019t want facts then just keep watching CNN and CNBC. \u00a0We have reached the end of this debt-based, fractional reserve, Keynesian central banking, socialist\/fascist democratic nation-state system. \u00a0Economic law always wins in the end and the economics of this system were doomed since the beginning.<\/p>\n
It got bad when the US went from a republic to a democracy; it got worse when the US instituted a federal income tax and formed its third central bank, the Federal Reserve in 1913; and it got downright chaotic\u00a0when any vestige of gold backing the US dollar, and henceforth all fiat currencies, was removed in 1971.<\/p>\n
And now we\u2019ve reached a point where a Presidential candidate is talking about a US government default\u2026 one that would lead to the worst worldwide depression in human history. \u00a0And, yet, this is the best case scenario!<\/p>\n
On the bright side, no matter what the US government does, if you are prepared (via prudent ownership of gold, silver and other assets)\u00a0to\u00a0survive this biblical collapse, you could be the beneficiary of a historical, generational\u00a0transfer of wealth, maybe the greatest ever.<\/p>\n
It is clear it is coming, yet your average American is more preoccupied with who should be forced to use which bathroom, or the NBA playoffs, than\u00a0preparing for a collapse of biblical proportions.<\/p>\n
Trump has made a dollar default part of the\u00a0public conversation now \u2013 and this will make the dollar itself even more shaky. And that brings a default closer.\u00a0The reality is that the dollar is in an untenable position due to domestic political and economic actions.\u00a0Serial wars, a further socialized health care system and other\u00a0massive expenditures have undermined any hope of US fiscal solvency.<\/p>\n
What is most important to realize in this Jubilee Year is that the dollar\u2019s position is not an accident. Globalists want an international currency and are gradually destabilizing the dollar to get one. It\u2019s not a coincidence that the\u00a0Bush\/Obama policies were so similar and destructive. They are doing what they are told.<\/p>\n
Here at TDV we don\u2019t take anything for granted when it comes to the US paper dollar and have been suggesting alternative, non-fiat holdings for years now. Bitcoin, gold and silver are all non-government money and much more likely to hold value than paper currency. \u00a0We\u2019ve already been making a fortune with our stance and we think it is just the beginning. \u00a0Our metals picks have virtually doubled, and subscribers, new and old, have made significant profits.<\/p>\n
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