The rational thinker understands that in markets there is no such thing as a guaranteed return. Under a sound monetary system, where consumers benefit from price deflation brought about by technological deflation, the only returns on capital investment come from successful speculation or entrepreneurship.
There is a lie at the bedrock of the inflationary global fiat reserve system which props up the fallacy of risk free return. That lie is government debt. Government bonds are the chains by which every other financial instrument’s stability is yoked.
Historically lauded as a risk free investment, government debt is the largest bubble in the history of mankind, teetering on the edge of world wide insolvency. Since that fateful day in 1971 global bond yield of first world nations has trended to zero. But we must ask the question, who buys the bonds in a world where the real return is negative? Who buys the bonds in a world where the nominal return is negative? Why the lender of last resort, of course.
In Human action, covered in the Sphere of Economic Calculation Mises said the following about the great deception about the illusions of government debt …
If the expeditious outcome of a global sovereign debt default still seems unlikely to you, then you aren’t yet thinking clearly. It is only after the inevitable sovereign debt default that the extent of wealth extortion by the nation states will become readily apparent. The day of reckoning draws ever closer.
Book of the Month:
The Ethics of Money Production by Jorg Guido Huulsman
-“Money production entails a tendency for prices to increase, but this increase occurs step by step in a process spread out through time and affects each price to a different extent”
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