there is 100 trillion in official bonds and probably another 100 trillion in hidden debt, 50% of that is USD denominated, so 100 trillion in USD debt tied to USD denominated assets.
In a credit crunch there is a shortage of money, because the fractional reserve system destroys money as the economy shrinks , like it creates money during credit during expansion
$1 creates $10 of credit during fractional reserve expansion and $1 of debt default destroy $10 of credit during the contraction (simple explanation of credit crisis)
So the fractional reserve system is high leverage debt monetary system
savers dont equal borrowers in a fractional reserve system, borrowers can outnumber savers many times over
Minsky set out 3 waves of credit
a)borrow to create wealth (factories and innovation) b)borrow to speculate (shares and RE) c)borrow to survive (QE where bad debts are transferred to the people to keep the system going)
as we move through a, b and c greater and greater levels of malinvestment occurs, diverting funds from a to b to c (why build a factory if you can flip a house)
Having all the gold gives massive leverage, US holds all the gold under Bretton Woods, German, English, French, BIS, World Bank, US Gold...if even if they dont hold it physically they control it
American new all along that if they held all the gold they would always remain the reserve currency
at the end of WW2 they held all the card and the played them at Bretton Woods 1 & 2
Hoarding gold has been a US strategy since the beginning of the 20th century
Even if the US faced hyperinflation they could stop it in a second with their gold.
and very correctly they can use it as a weapon.
thats whats happening with China at the moment, the Americans are exporting their inflation to the Chinese who sterilize each transaction and swap USD for RMB on the way through.
Mean while with printed money they are building a military superiority never before seen in history
the rest of the monetary world will blow up way before they even get close
