The most serious of these ramifications is the financial collapse that we now living through, which has resulted in a complete and utter gutting of many businesses, resulting in what will come to be in the following weeks, the highest unemployment that the Western world has ever seen.
This means that big government is being looked to more and more to help support and sustain the system in the short term, printing copious amounts of fiat money in the hope that they can plug as many holes as possible, while new leaks continue to spring up all around them.
I don't envy this position and unfortunately they are truly stuck between a rock and a hard place.
Save the economy and keep business open as usual, or shut down the whole globalized world and crash the markets, potentially destroying millions of jobs forever, while saving millions of lives in the short term. These are their choices at the moment.
Clearly, governments have chosen the latter and sprung into action, going into full blown bail-out mode.
This has resulted in a monstrous spike in government debt levels, as they continue to debase their currencies and print money out of thin air.
Dwarfing all others, as would be expected, is the Federal Reserve, who have expanded their balance sheet by ungodly levels in just three short weeks.
As can be seen from the chart above, the Federal Reserve has added a staggering $1.6 trillion to their balance sheet since March 13th, when the bailouts kicked into high gear.
This brings their current total levels to $5.81 trillion, which highlights just how rapidly the Federal Reserve is being forced to intervene in the markets.
Just to put this into perspective, as of the close of the trading session on Friday, April 3rd, in which the Fed's balance sheet is estimated to be approximately $6.0 trillion. The Federal Federal Reserve will of added more than the entirely of QE3, in just three weeks!
This truly is fiat money printing at a level we have never before seen.
Unfortunately, we haven't seen nothing yet, as this crisis is far from over and the Federal Reserve, along with countless other governments around the globe are going to be forced to intervene time and time again, unless they wish to not only being facing one of the greatest health crisis of our times, but also complete anarchy, if the financial system is allowed to fully implode within itself.
Still, I believe they are only slowing the inevitable, as many markets are also currently reflecting, such as the oil markets which have been completely devastated in the matter of just one month.
One example of this devastation was highlighted this week, as numerous media outlets began to point out the fact that you could buy a barrel of Canadian heavy oil, for less than one pint of beer at a pub.
Think about just how absurd that is for a moment. Then think about what it going to take to get the jobs that are centered around getting this oil out of the ground to return. This is a massive part of the Canadian economy.
Meanwhile, one commodity that has continued to hold strong, in the face of just about everything else collapsing, is gold bullion, which is currently trading at $1625.70 USD per oz, despite the historic amount of liquidation that is occurring within the system.
What is even more stunning, is that gold bullion is able to hold these strong levels, while the USD continues to strengthen.
Historically this is not the case, as a strong dollar, typically results in a weakening gold price.
If the USD ever begins to trend lower again, you can rest assured that gold bullion is going to blow off the charts, rocketing higher at an extreme velocity.
Even if this does not happen however and the USD continues to show strength, I still strongly believe that gold and silver bullion are going to trend higher, as more and more people continue to seek these commodities as safe haven assets, preparing for the eventual day when this historic amount of fiat money begins to flood back into the system.
Apparently many people agree with my assessment, as physical bullion remains incredibly hard to get your hands on, with many mines, mints and others in the industry being forced to close their doors due to COVID-19, just as the demand for physical metals hits new highs.
This is why you are seeing such a staggering difference in the price of physical precious metals and the price of paper metals, the two of which have begun to decouple from each other, with silver being the most noticeable of the two.
As previously stated, I don't envy our political leaders in these dire times, as I truly do believe that we have passed the Rubicon, a point I have highlighted many times before.
The debt levels are simply too high and never, ever, will this money be repaid in whole, meaning that the only way out of this is an eventually default.
Remember these words:
"What cannot be repaid, will not be repaid."
This however does not mean that you cannot protect yourself financially for that coming day. Now more than ever, I believe that people need to be moving their money into tangible, hard assets such as gold and silver bullion, as they are able to do so.
For over 10,000 years, precious metals have weathered each and every financial storm and without a doubt, they will weather this one as well, rewarding those who took action early, handsomely for doing so.
Stay safe and keep stacking.
- Source, Nathan McDonald via the Sprott Money Blog
