Nielson: Probability of U.S. Hyperinflation or a Debt Implosion Increasing by the Day – Got Gold?

The collapse of U.S. economy is a certainty – only the manner of the economic collapse has yet to be determined. In time the global derivatives bubble will produce the same result which has occurred to every other currency not backed by gold throughout history: those currencies, our “money”, will become worthless.  Words: 1433

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com, provides below  further reformatted and edited excerpts from Jeff Nielson’s (www.BullionBullsCanada.com)  original 7000 word speech* at the “World Money Show” in Vancouver for the sake of clarity and brevity to ensure a fast and easy read as follows:

Derivatives: An Unregulated $1 Quadrillion Market
Warren Buffett famously described derivatives as “financial weapons of mass destruction”, and for a very good reason. While U.S. “unfunded liabilities” are larger than the entire global economy, the derivatives bubble is twenty times as large as the entire global economy.

The derivative market is unregulated. It is totally lacking in “transparency”, meaning that all we know about this $1 quadrillion mountain of banker-paper is what the bankers tell us. During the 2008 U.S. financial crisis, the Wall Street banks required $10 trillion in loans/hand-outs/guarantees just to temporarily prevent their bankruptcy – more than all other bail-outs/hand-outs for all the rest of the world, for all of history, combined – and the entire crisis was based upon settling the derivatives positions of only one company: Lehman Brothers – a Wall Street investment bank.

Even that $10 trillion was not enough to prevent the collapse of the U.S. financial sector. The Wall Street banks also needed to have the U.S. accounting rules changed, so that they could assign their own “fantasy valuations” to the debts/assets on their books, instead of the actual market value of those assets. Keep in mind that without the most-radical accounting changes in history, instead of these Wall Street banks reporting (supposed) “record profits” they would be reporting their own bankruptcies.

All Is NOT As It Seems

While they brag about “billions” in supposed profits, there are still trillions of dollars of “toxic assets” being hidden off of their balance sheets. We know there has been no increase in the real value of these “assets” through the reports of failed U.S. banks. In just two years, the average amount of losses sitting on the books of these banks when they collapse are now five times as large (relative to the value of their assets) as when the first bank-failures occurred. Thus, if anything, these “toxic assets” are even more worthless than when the collapse began.

Despite this huge mountain of unstable debt, Wall Street actually increased the size of the derivatives bubble by 30% since the U.S. housing-bubble first burst causing Neil Barofsky, the U.S. “watch-dog” assigned to oversee the “TARP” bail-out of U.S. banks, to exclaim recently that the risk of collapse of the entire U.S. financial sector has increased not decreased saying:

“Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding road, but this time in a faster car.”

A Serious Dilemma Faces Investors 

There is no solution for the U.S.’s economic problems. With U.S. hyperinflation likely, but a deflationary collapse still possible, this not only creates a frightening scenario for us to face as individuals…. (Go here to continue reading this article. No registration will be required. It is a direct link.)

*http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=11900:debt-denial-and-default&catid=64:presentations&Itemid=141

Editor’s Note:
– The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
– Permission to reprint in whole or in part is gladly granted, provided full credit is given.