By Gregory Mannarino, TradersChoice.net

Today, at its core, the world financial system is in crisis. More specifically, liquidity in the system is drying up. What this translates to is this, without world central banks both issuing, and then buying back exponentially more debt the entire system implodes.

Of course, this is the end game of central banks collectively, and that endgame is to become THE buyers and lenders of last resort—to own it all.

What do we know? Central banks have, by design, allowed to metastasize a global environment of rapidly rising inflation. They have done this by VASTLY increasing global debt, and now they are charging more for that debt. Think for a moment, central banks have pumped the system with their product, debt, and now they are charging more for that debt in the form of rate hikes. 

Central banks’ ONLY product is debt, that is how they run the system which is debt based, and now they are charging more for that debt.

Where is the outrage?

The fact is this. Without ever expanding debt the entire system collapses. The debt MUST be exponentially expanded on, just to maintain the system at its current level.

Look at the chart below.

This demonstrates how just to maintain a certain level of stability in the global financial system, debt must continuously inflate, and it MUST inflate faster.

The main driver of the global economy, the entire financial system, and world markets IS the debt market, which is nothing more than a circus act of IOU’s.

Today the entire world financial system teeters on an illusion, and that illusion is some kind of stability in the global debt market which again MUST be fueled with more debt just to function… the fact is that no matter how much debt is pumped into the system—it’s never enough.

The world financial system, the economy, and the markets, only function so long as the illusion of stability in the global debt market is maintained, which requires an ever expanding debt. Ever expanding debt is itself, massively inflationary, and we are approaching a moment of maximum saturation.

The “moment of maximum saturation” is achieved when the amount of debt issued, which can never be enough, creates an environment of rising inflation which cannot be controlled, something we are seeing now. 

The end result is a massive, uncontrollable sell-off in global debt which causes bond yields to spike rapidly. A rapid spike in global bond yields will precipitate a violent sell-off in world stock markets which in turn will lead the world into a global depression, and war.