In a recent article, Charles Hugh Smith noted the seriousness of one such economic problem when he said:
When debt-asset bubbles expand at rates far above the expansion of earnings and real-world productive wealth, their collapse is inevitable. The supernova model of financial collapse is one way to understand this.
Smith went on the explain the supernova model as a:
… key feature of a pre-supernova super-massive star is its rapid expansion. As the star consumes its available fuel via nuclear fusion, the star’s outer layer expands. Once there is no longer enough fuel/fusion to resist the force of gravity, the star implodes as gravity takes over.
This collapse ejects much of the outer layers of the star in an event of unprecedented violence.
The financial analogy is easy to see: when rapidly expanding debt consumes a critical threshold of earnings (fuel), the equivalent of gravity (default, inability to service the enormous debt) triggers the collapse of the entire debt/leverage-dependent financial system (he said).
Smith explained how it diminishes the fuel of expanding debt. As debt saturation expands and debt servicing with falling income increase the pressure, this leads to a recession. With declining sales, profits, employment, and wages a vicious cycle ensues and the fuel shrinks further. He went on to explain why neither inflation nor deflation can hold off the effects of financial gravity.
Smith concluded by illuminating the fate of the wealthy who own the collapsing debt.
Gravity eventually overpowers financial fakery. Central banks can add zeroes to currency and the super-wealthy can use their unlimited lines of credit to buy up everything in sight, but when the Empire collapses, the debt-assets of the super-wealthy are blown off in the supernova along with all the other artificial constructs of our corrupt, corrupting, rapacious, exploitative system.
A supernova financial collapse is in our future. Prepare by expanding your skill sets in order to protect your family.