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The eternal debt, great daughter of the fiat model

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Image from First Quarter Finance

After presenting the reasons why the dollar as well as the fiat model are collapsing, it becomes necessary to talk about his great work: debt. A few years ago, a former boss recommended that I and the other workers get into heavy debt, only then would we work harder to pay off our credit card deficits.

This is the fiat model, it encourages consumption and eternal debt, considering the fact that money will always be printed to infinity because its only value is reduced to the confidence of the one who receives it in the entity or economy that distributes it. Thus, an infinite emission of money implies per se a great indebtedness, which grows so much that it becomes unpayable.

With the crisis generated by the Covid-19 pandemic, the governments assume that the main measure to keep their economies afloat is to approve the so-called "stimulus packages," that is, the governments request money from their central banks, these print bills and give it to them at a price, then it is distributed among the population, and these in turn use the money to pay the debts they have incurred. It seems like a perverse endless cycle, the money that leaves the Federal Reserve ends up precisely in the banks, the big beneficiaries of the fiat model.

This eternal impression of money is usually referred to as Quantitative Easing (QE), it is a desperate resource that is usually used by governments and central banks to increase the money in circulation, the problem of invoking it is that as this constant emission of money is abused it is devalued, therefore goods and services become more expensive stimulating inflation and of course the debt.

It is a reality, the system is built so that all the money that comes out is destined directly to help the richest and indirectly to pay previous debts. Each old debt will have a new one and so on until the end of time (or until it becomes so unpayable that there is no other remedy than the cancellation of these debts). This is how the model has generated this brutal bottomless sack that the world economy has become, where in order for each people of the world to have food on the table, the workers have a salary at the end of the month and a bridge is built in a short time, it is necessary to go to them and ask for credit.

Today the countries are no longer divided into rich and poor, developed or developing, the parameter to follow is simply indebted and very indebted. According to the following graph provided by Visual Capitalist, the total world debt is $69 trillion, which is far from being reduced:

Image from Visual Capitalist

The most perverse thing about debt is that no matter how big it is, it was all designed to: 1) grow forever, 2) those who contract it will never pay it, 3) your children, grandchildren and future generations will be destined to live to pay a debt for which they are not responsible. Unfortunately today countries devote a large part of their Gross Domestic Product (the profits they generate in a year) to pay the interest on their debts. For example, Greece devotes 208% of its Gross Domestic Product to paying the interest on its debt, that is, 100% of the money generated by the economy of that country, plus 108% from requests for credit, this country transfers it to the pockets of the banks, forcing the government to contract a new debt to pay next year's. If this is not crazy, then I don't know what is?

Another example is the United States, the most powerful economy on the planet and also the most indebted. In order to maintain the so-called "American way of life" that country has a debt that exceeds 23 trillion dollars, almost a million dollars per second, so when Mr. Trump announces a "stimulus package" for the population basically what he is saying is that more debt is coming, but don't worry, you enjoy that money today and you will pay your children tomorrow. This year, for the first time in its history, the debt will exceed the gross domestic product.

As you can imagine, Covid-19 only anticipated a crisis that had already been announced; the system is simply destined to collapse like a house of cards in the face of a tornado. The problem is that the possible solutions do not involve the eradication of the fiat-debt model but rather the forgiveness of debts and starting everything from scratch, as if nothing had happened. Fortunately, there is Satoshi Nakamoto, Bitcoin and crypto-currencies as a strong alternative to break the slavery to which humanity is subjected to the eternal emission of worthless money and unpayable debts.

Carlos D. Pérez Guerrero / @waraira777