Consumers aren’t the only ones defaulting on their debts: Corporate bond defaults were up massively in 2023, especially for high-risk junk debt, and the trend is continuing this year at a pace not seen since the 2008 global financial crisis. Unsurprisingly, companies selling low-rated junk debt are being hit the worst.
At the end of 2022, investors all around the world who had bet big on cryptocurrency and had their cryptocurrency stored by the crypto exchange, FTX, received bad news. Sam Bankman-Fried and other leaders of the exchange had been using cryptocurrency that was supposedly stored by the exchange to make bets on financial markets. And the FTX leadership was bad at trading and racked up huge losses. FTX declared bankruptcy and many of FTX leaders were convicted of financial crimes. For the investors of FTX, it was a painful experience that came from betting on cryptocurrency and the viability of crypto institutions that managed such assets. Expected losses were claimed to be in the billions.
With President Biden’s Saving on a Valuable Education (SAVE) plan set to extend more student loan relief to borrowers this summer, the federal government is pretending it can wave a magic wand to make debts disappear. But the truth of student debt “relief” is that they’re simply shifting the burden to everyone else, robbing Peter to pay Paul and funneling more steam into an inflation pressure cooker that’s already set to burst.
With a stunning trillion dollars added to the national debt in only three months, projected to reach an incomprehensible $54 trillion within 10 years, and America’s interest payments on track to exceed defense spending next year, the question must be asked: How much longer can the debt bubble go?
Everyone’s heard of Javier Milei, the new president of Argentina, called by Fox News the world’s first libertarian president. He has been in the news for his denunciation of leftism, Marxism, and the sprawling bureaucracy that has trapped Argentina in debt. He’s also taken aim at run-away inflation in Argentina. Inflation in the last year was over 200% in Argentina, a rate that the United States hasn’t reached, even with Biden-levels of inflation.
Ron Paul’s recent op-ed from the Ron Paul Institute for Peace and Prosperity, reprinted in the Orange County Register, breaks down the profound damage caused by central bank money printing: it pits savers against speculators, encouraging consumers to use debt to fund basic needs since their savings are constantly evaporating due to monetary debasement.
Even as central banks buy more gold than ever, coin premiums have been driven lower throughout the retail precious metals market. One of the big factors: is disappointing sales from the US Mint.
The collapse of Chinese real estate giant Evergrande is being called, by some, China’s “Lehman Moment.” Whether or not it will be enough to trigger a cratering of China’s broader economy, it’s a massive reality check for a country that has transformed itself over the decades with unprecedentedly massive urbanization and economic growth. Evergrande, since its creation in 1996, has been at the forefront of that rise.
It’s no surprise to readers of this site that metals are often worth more than fiat currency. Gold, silver, and other precious metals are known for their value. But sometimes fiat currency can’t even compete with zinc.
ESG, or “Environment, Social, and Governance,” is the new feel-good buzzword in the halls of global corporations and megabanks. It’s a PR push to cloak morally disastrous firms in a veneer of social and environmental responsibility — lip service — but at the end of the day, I believe the market will speak.