State Debt Since 2008 Has Exploded — and Hovers over us Like the Sword of Damocles

But it was not just the real economy that got into trouble. The bursting of the real estate bubble caused extreme losses for the banks. But these losses were also only partly recognized, and banks were saved all over the world by their respective national governments. As a result, the bad debt was transferred from the banks to their governments, but this does not mean that these debts have disappeared. Or do you believe that a hot potato just disappears when it is handed off? Someone has it. Ultimately it is all of us who have it, as will become obvious sooner or later. In the meantime, additional bad state debt has been added: for example through the increase in “social expenditures” in the form of support for the unemployed and through numerous economic programs meant to jump start the economy. State debt since 2008 has exploded — and hovers over us like the Sword of Damocles.

In other words: The losses stemming from malinvestments were to a large part just shifted to the nation-states and to the balance sheets of the central banks. Neither the original investors nor the bank shareholders nor the bank creditors nor the holders of government bonds have yet written off the losses. The bad debt just keeps piling up in the form of national debt. But shifting around bad debts does not bring back lost wealth. The debts remain. When and how do you think the debt will catch up to us?

—Andreas Marquart and Philipp Bagus, Blind Robbery! How the Fed, Banks and Government Steal Our Money (Munich: FinanzBuch Verlag, 2016), e-book.

The State Money System Makes It Possible to Hide the True Costs and Losses which the System Itself Creates

The cycles of artificial booms and recessions caused by the privileged banking system bring immense suffering to people. The financial crisis of 2008–2009 revealed the enormous amount of resources that disappeared into the chasm of the money system. Forever.

Was it really so bad, you think? Certainly you are overstating what happened!

The 2008 bailout orgy was without historical precedent. Banks, businesses, and even governments were rescued. Without pain, right? But have you noticed something strange? Did you lose your job or your savings? Were your taxes brutally increased in the past few years? Did your tax burden double? Probably not. How is the ongoing bailout financed? You already know: by new debt, by new money. This is what is so insidious about the state money system: it makes it possible to hide the true costs and losses which the system itself creates. It lulls people into a false sense of security. This false sense of security has been taken away from you. We warned you in the introduction to this book that unpleasant realities awaited you.

The big collapse did not happen in 2008. After the collapse of Lehman Brothers and the subsequent financial crisis, only part of the malinvestments were liquidated. Enterprises such as the troubled auto manufacturers and mortgage banks were rescued by the state; either by direct capital injections or indirectly through subsidies and state orders for goods and services. Bad private investments were turned into bad public debt — the process silent and lubricated with new money. This is because the state debt was financed indirectly with new money production. Central banks created new money with which the (commercial) banks and other economic “agents” then bought government bonds.

—Andreas Marquart and Philipp Bagus, Blind Robbery! How the Fed, Banks and Government Steal Our Money (Munich: FinanzBuch Verlag, 2016), e-book.