We All Know We Live in a Fiat Currency World

We All Know We Live in a Fiat Currency World

The government can print as much money as they want with the only limiting factor being how fast the printing presses can operate. And, there is nothing that backs up Sterling, like for example, gold, so the big risk they run is inflation.

Now in the private sector we can’t print money and if we did, it would be called counterfeiting. We have to repay our debts as they fall due or we go bankrupt. This counterbalance leads to deflation in the economy when bankruptcies increase, which they are. In the UK, the public sector is 50% of the economy whereas in the US, it is only 20% which normally limits the reach of the authorities on their ability to reduce the impact of the recession. However, in both countries, colossal private debt from the banks and insurers has been channelled back to the government as toxic debt. Will Sovereign debt be the next major crisis for the private sector to bail out, as ever, funded by the business owner? Can you reduce debt by increasing it? We think not.

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