This post continues from the previous post - Part 1 & Part 2. In my earlier posts, I wrote about the artificial harvest of the past because of the loose monetary policies. In other words, increased borrowings. In this article, let us take a look at the global financial system of today, where the advanced economies of the world are leveraging up at a rapid rate.
Monetary system of the past
Since 1971 when the world went off gold standard, it has never been the same.
Imagine you held currencies worth US$35 since 1970. Fast forward more than 40 years today, while the paper US$35 currencies are still the same dollar notes, the purchasing power of the currencies have fallen dramatically. In retrospect, if you bought 1 ounce of gold in 1970 which cost US$35, the dollar value of that ounce of gold is worth US$1,350 at present time. This ......