Dawn J. Bennett, host of Financial Myth Busting, recently interviewed John Rubino, a financial columnist, author and publisher of dollarcollapse.com. In his interview with Bennett, John Rubino discusses the global economy.
“When you borrow too much money, if you’re a country or an individual or a family, it kind of plays out the same,” says Rubino. “Your life becomes unmanageable. And for a country, what that means is that the old ways of buying votes for constituencies stop working because you’ve used up all the money that you have to play with so you can’t provide good jobs for people and elections become harder and harder to run, and that’s what we’re seeing around the world right now.”
Rubino explains that Brexit wasn’t supposed to pass in Britain. Britain had voted to leave the European Union, though the polls right until the end said they would stay. Similarly, Donald Trump wasn’t supposed to win the U.S. Presidency. The reason for this is many people no longer trust the big systems to work for their benefit.
“And that’s the world we’re moving into now where these big systems don’t work and every election is this major cultural upheaval, so we’re headed that way fast and it’s only going to get worse,” Rubino explains. “There’s a long series of elections scheduled for 2017, possibly the biggest of which might install an anti-Euro, anti-EU administration in France and also possibly in Italy. So, yeah, turmoil as far as the eye can see which will feed back into the financial side of life and cause financial problems which in turn will cause political problems. We’ve got a system that’s spinning out of control at this point.”
Rubino says the spinning out of control of the Eurozone and European Union is a big deal for us. The EU is the world’s biggest economic entity. It’s looking like more countries will leave the EU. It’s all interconnected and a when a big entity runs into trouble, all of the other big entities do too. The trouble in the Eurozone in 2017 could be the big story for the global financial system, says Rubino.
He explains, “To take just one possible outcome, trillions of dollars of supposedly high-grade bonds are denominated in euros but for instance, the Italian part of that bond market would have to go back to lira if they left the European Union and the Eurozone and then those bonds would be devalued really dramatically because they’d be paying in a weaker currency, so the big banks and hedge funds on those bonds would have to report massive losses and that would possibly screw up the financial system of Europe which in turn would screw up the U.S. and so on around the world.”
Here in the United States, a market crash has been years in the making and forecasted for some time now. Rubino says Trump cannot fix what’s coming because we’ve already borrowed the money that’s going to cause nightmares in the future.
“We can’t pay back our current debts so it doesn’t really matter if we borrow more and try to grow the economy in the future, which is Trump’s strategy,” Rubino says. “You can’t fix excessive debt with more debt. So that crisis that’s heading our way is baked in the cake already.”
He continues, “What’s happening now in the financial market is just a typical political honeymoon. We’re seeing the potential benefits of new stuff and we love new things, the human mind is designed to focus on new stuff, so for a little while the new stuff is what we focus on but the negative side of future policies will only become apparent with time. Sometime in 2017 I think there’s going to be a reckoning in which it becomes clear that the system is broken and nothing that Donald Trump or anybody else around the world is doing will fix it and then at that point you get this massive panic. That’s what’s out there, you know, everybody heading for the exits.”