I. Global Debt Nearly Doubled Between 2007-2014

From the statistics we have, global debt has almost doubled since 2007:

Global bailouts have helped financial institutions improve their financial condition at the cost of governments and households.

We now have over 39 countries with Debt/GDP ratios of more than 100%:

Whereas before the bailouts, the developed world was highly leveraged, now it is both the developed and developing economies. Developing countries have significantly increased their debt loads during this period.

II. Accessible Statistics on Debt are Insufficient to See Our Situation Clearly

The available information on global debt is spotty. Statistics on who issues debt (that is, borrows) are easier to locate than statistics on who lends (that is, is the creditor).

Official data on global sovereign debt issued by government borrowers is accessible. However, at least in the case of US sovereign debt, we know that the numbers are not reliable and that outstanding debt may be significantly higher than reported. There is less information on debt issued by corporations, small businesses and households.

There is significantly less data available on debt as a financial asset – both who owns it and who calls the shots related to decisions and control issues. This information is essential as debt at such high levels functions as a governance system for creditors who control from behind the scenes. Debt is an important mechanism with respect to covert funds, which flow into the overt economy – often with invisible strings attached.

There is also insufficient information regarding assets that have been financed with debt. As an example, governments may issue debt and use the proceeds to fund secret projects, technologies or advanced weaponry. This debt appears on government balance sheets, but the assets are not recorded on the balance sheet. In some cases, they may have been reverse-engineered into the hands of private companies or investors.

III. Global Debt is an Essential Component of the Central Banking Warfare Model

When reviewing debt statistics, it is essential to appreciate the relationship of debt and its issuer to the currency in which the debt is denominated.

If the US issues debt denominated in dollars, which it can repay by simply printing dollars, there is little risk of default. If Mexico, however, borrows Euros it must earn Euros to repay the debt. The first instance involves a promise to print currency, which the issuer controls. The second instance is an actual debt which requires borrowers to deliver a currency that is not in the debtor’s control. That country must earn those Euros because they can’t be printed out of thin air.

Consequently, it is not surprising that size of global military spending is a meaningful portion of the amount of global debt issued. The larger a country’s military, the greater its capacity to create currency and to sell debt in the currency it creates.

IV. Understanding the Economy Requires Financial Statements Which Integrate Covert Cash Flows and Assets

There is an enormous “black hole” on the planetary balance sheet:

• Government debt is issued
• Sometimes this debt is recorded on government balance sheets, sometimes it is not recorded
• In some cases, the assets which are financed by this debt completely disappear from the planetary balance sheet

We can document this missing money, but we can only guess as to where it went.

Is debt as a % of GNP growing? Or are certain assets and portions of the GNP missing from the official financial statements? An accurate picture of our financial situation requires integration of both overt and covert financial statements. At this time, we do not have such a picture.

Perhaps the global population has been encouraged to spend beyond their means so that they do not ask “sensitive” questions. In essence, debt used to finance government spending can buy cooperation.

This is one of the reasons why transparency regarding missing money and assets will be critical to finding solutions to government deficits and growing debt.

V. Invasive Digital Systems Have Fundamentally Altered the Nature and Economics of Debt

This insight is a new one – and it’s important.

A significant development occurred in the 1980’s and 1990’s: American cable, internet, software, and telecommunications companies created and built out what Glen Greenwald referred to in his interviews with Edward Snowden as “a one way mirror.”

US corporations and intelligence agencies were then able to integrate these systems with the application of entrainment technology, subliminal programming, artificial intelligence and relational database marketing. This created the capacity to apply “economic hits” on a much more granular level. It was now possible to target households and individuals on a highly economic basis.

This is how it works:

A financial institution originates a mortgage for a family of four which they sell to Fannie Mae after collecting the origination fee (the institution is not liable on the mortgage). The father works at a local manufacturer that the financial institution knows will be moving to Mexico soon (they are financing the transition) and they anticipate that the father will lose his job. But they don’t inform him, hence committing a material omission in the transaction.

Twenty-four hours after losing his job, the father’s credit card interest rate is raised to 30%. One of his children becomes ill and the father must use his credit card to pay these expenses (the family lost its medical coverage after he lost his job).

The father pays the 30% interest rate on the medical expenses and eventually falls behind on his mortgage payments. At this point, unemployment compensation and food stamps are the family’s sole source of income. These are insufficient to cover the family’s overhead despite significant reductions in spending.

Mysteriously, a local marijuana dealer is inspired to pay the father a visit – a marketing call of sorts. The father begins to smoke again in order to handle stress. One night while he is getting high, an associate of the drug dealer steals his car. Insurance covers most of the cost, but insurance premiums go up. Because the father’s credit score has fallen from 800 to a very low one, he doesn’t qualify for an auto loan. So he buys a used car which is financed at a predatory rate.

Desperate, the family sells their home for equity to pay living expenses. The financial institution originates another loan and (once again) sells it to Fannie Mae. The auto loan and the Fannie Mae pools are securitized and sold to a fund held in the father’s IRA…before he liquidates it to help pay his mortgage and auto loan.

When Fannie Mae goes bust in 2008, taxpayers (including this family) are called upon to finance its bailout.

When a banker at the financial institution suddenly warns about the compromise of client financial data and predatory practices, she is murdered on the path where she jogs each morning.

In a short period of time, the family goes from being a successful, middle class family with savings to a family that has been profitably harvested by the financial system.

What the father and those around him cannot fathom is that the financial institution, the credit card company, the marijuana dealer, the car thief, the car dealer and the insurance company were all drawing from what was essentially one relational database operation designed to profitably harvest people in locations.

The banker who could fathom this and who wanted to do something about it is dead.

Via televisions, computers, smart phones and smart meters, American households have provided access to intimate personal and financial data to syndicates of intelligence agencies and large corporations. And this information is being integrated with a vast array of what is supposedly confidential data and funneled to government and financial institutions to be used in predatory ways.

What this “one way mirror” has built is a mechanism that allows the “economic hit man” game, which once operated at a county level to be applied at the household and individual level. The result has been an explosion in outstanding debt because the institutions that create currencies find it highly economic to loan money that can never be paid back. These loans may appear to be un-economic, however this is not the case when the ancillary profits of controlling and liquidating the target are integrated into the economic picture. This includes the control of local government political positions and financial flows and assets.

In essence, creditors can make money from engineering the failure of those to whom they lend.

VI. Consolidating the Global Economy Necessitated That the War on Terror Target Financial Institutions and Islam

Enforcement of War on Terror laws, regulations and administrative policies has been instrumental in expanding US jurisdiction over global banking and wealth management.

Islam is the fastest growing religion in the world – particularly in Eurasia where the growing trade between Asia and Europe threatens American global hegemony.

Prior to the War on Terror, significant financial flows in the Islamic world were invisible to Western financial institutions and intelligence agencies. In addition, Islamic principles reject bank interest, particularly usurious levels of interest.

Islam had to be brought into the West’s central banking warfare model.

VII. Digital Systems & Revisions of Usury, Bankruptcy and Student Loan Laws Made it Possible for the US To Create and Maintain an Enormous Divergence in the Cost of Capital Between Preferred Players and the Average Person

Since the mid-1990’s, we have seen a remarkable divergence in the cost of capital to various sectors of the economy which cannot be explained by credit strength or market forces of any kind. This divergence has been engineered with numerous efforts to prevent local and alternative forms of currency, access to financial data, and liquidity of local equity.

For example, in the late 1990’s, hedge funds were borrowing on the yen carry trade at 0% while small businesses were paying 15-30% interest rates, were not allowed to issue local currency, or (as a practical matter) were prevented from raising equity with securities. Another example is Senator Elizabeth Warren’s description of borrowing costs on federal education loans relative to bank’s borrowing rates at the Fed window.

This divergence is one of the critical components of engineering the slow burn.

VIII: The National Security States Integration of Invasive Digital Systems Has Expanded the Use of Debt as a Weapon of Economic Warfare and Financial Coup d’Etat

There are important relationships between the debt system and other tools of economic warfare, including market interventions (quantitative easing, suppression of the gold price), financial sanctions, expansion of global regulatory authority and cyber-warfare. The goal of many of these actions is to ensure that players cannot create liquidity outside the control system.

IX. The Growth of Debt as an Entrapment System Since WWII Has Inspired Significant and Growing Blowback

The bailout period from 2008-2012, as well as subsequent quantitative easing, has contributed to a growing appreciation that the dominant debt system is a control system: there is no privacy - there are no markets. Along with high debt levels and a growing understanding of the “one way mirror,” this is contributing to the creation of alternative systems outside the G-7 and the slowing of the global economy.

It would appear that the Hegelian dialectic is at work: Mr. Global is permitting a Plan B. Another way to say this is that the Americans are now facing a much more informed global audience and growing economic competition.

X. Global Debt: Who Controls?

High debt loads managed behind a one-way mirror represent a critical component of governance systems. Which brings us to the question, who controls? How much centralization and consolidation of power has the debt system facilitated (clearly a great deal) and into whose hands?

Is our global debt system open or closed? The answer to who controls ownership of debt (whether as investor or agent) and how this relates to our current governance arrangements has powerful implications for the evolution of civilization.

XI. Houston, We Have a Problem!

My thesis is that debt in the United States is being used to affect a financial coup’ d’etat.

Populations have been targeted with predatory lending and financial entrapment along with other tools of economic warfare. As a result, a significant number of people now have minimal assets or savings and they are highly dependent on large banks, government subsidies and government jobs.

This situation permits leadership to further implement invasions of privacy and a reengineering of the financial system to corporate control. This includes mandating a much greater penetration of health care and education by digital systems, making it possible to reengineer and privatize a sizeable portion of these sectors. In addition, large corporations and intelligence agencies will be given direct access to children’s health care and education in a manner which can only be described … as terrifying.

XII. Global Debt: What is the End Game?

The answer is: we don’t know.

This will be an ongoing conversation on the Solari Report as we attempt to understand where the continued growth of debt will take us, what it means to you and me, and what we should do about it.

My Expectations of the General Direction in Which Planet Debt is Taking Us:

1. Reengineering global governance: Expect to see further centralization of currencies and the implementation of digital currencies.
2. Increased “piratization”: “Piratization” is my word for privatization at prices that are not at market levels. High debt loads will be used to insist that countries and municipalities privatize valuable assets and operations, often at below market values and terms and conditions. This will support continued growth in the number of large corporations and their earnings and assets.
3. Abrogation or re-negotiation of retirement benefits and pension obligations in the developed world; pressure to direct pension fund assets to serve centralized interests.
4. Increased global activity on large infrastructure projects.
5. Increased military expenditures by the developing world.
6. Continued high levels of global indebtedness for some time to come.
7. Continued growth in the size of global equity markets. An effort will be made to “crash up” the global equity markets in a manner that attracts the emerging middle class in developing countries to participate in the stock market broadly.
8. Continued inquiry as to where missing assets and money are disappearing and whether or not the debt system on planet earth is open or closed.

The greatest risk to you and to those you know is the use of debt, which would compromise one’s individual sovereignty. Consequently, it is advisable that we understand that personal debts should be sound financial transactions with lenders who operate lawfully. We need to be able to avoid situations where debt is a vehicle for entrapment or economic warfare by the syndicates which certain lenders serve.