Breakdown of Debt

Debt-US Holdings 2014

QUESTION: 

Mr. Armstrong, I have been eagerly awaiting your Solution and am trying to wrap my head around it. Can you explain more about the debt to equity swaps? What exactly would the debt be swapped for? PS: In your latest blog, you mentioned repealing the “13th” amendment. That gave me quite a shock until I realized you meant the “16th”!!

RF

ANSWER: Well yes I meant the 16th, but ironically we are all economic slaves from their view anyway so it would abolish our slavery as well under the 13th.

A debt-equity swap is what you do to make a transition. In the case of Mexico, it was a swap of debt types. In Eastern Europe, it was a swap for state owned assets. Poland implemented an extensive privatization program in 1990 and had privatized half of all state-owned enterprises by the end of 1994.Debt-equity swaps were introduced into the Polish process in 1994, primarily for use by Polish banks in converting their non-performing loans into equity stakes in the debtor companies. Foreign debt was not eligible for use in these Polish debt-equity swaps.

In this case, we would swap out the federal debt of $18 trillion into coupons that are redeemable for the purchase of private equity. You would then take the coupons and invest in stock. Since large corps are buying back their shares now, they do not need the money. This will go to entrepreneurship starting up businesses or expanding small business. It would provide a stake in the nation for all for the lower class would actually become investors. The “rich” make money from investment, not wages.

Of course there will be people who criticize this idea. They have no practical solution for there is no other choice. You reach the point of no return. Governments are causing DEFLATION and destroying everything as they hunt money. That will collapse the world economy and they are TOO STUPID to comprehend what they are doing until it is too late. The hard money guys have already sent nasty emails, but their world is precisely what Germany is imposing in Europe. They are handing the people over to the bankers for go ahead, back bonds with gold and how do you pay your mortgage.

There is no practical solution and EVERY debt crisis has involved either a DEFAULT or some sort of haircut. Any way we slice it, the next downturn will present solutions that hand more money to the bankers and you will see revolution next time. We either seriously look at how to end this cycle of perpetual borrowing, or go build a cabin in the woods far from everything. We are rapidly reaching the point of no return.

Mainz

The city of Mainz was where the Gutenberg Press was invented. That created a economic boom like the internet today. The politicians spend wildly assuming taxes would never end. So they borrowed heavily against expected future revenue. As taxes rose, people left town. Their debt kept rolling as new issues were sold to pay off the last one. When nobody showed up for the next issue, they could not pay. They collapsed and eventually the creditors sacked the city and burned it to the ground. I sup[pose that is a solution.