The New York Stock Exchange on Wall Street in New York City, USA.

Jeffery Gundlach: Next Recession Will Bring “Extraordinary National Debt Problem”

The national debt keeps increasing tremendously despite Larry Kudlow and President Trump telling us it’s the best economy we’ve ever seen. Such rhetoric is complete GARBAGE. Nearly 80 percent of Americans are living paycheck to paycheck. Credit card, auto and other consumer debts are at record highs, which means a rise in interest rates on universal loans will cause a shattering of the thin ice.

The 2008 Financial Crisis

The housing and stock market crash (panic or ’08) occurred because people who had no business buying homes, owned them with unsustainable debt-to-income ratios, resulting in a total collapse of the economic system when the average homeowner couldn’t afford the mortgage.

All banks under the Federal Reserve (central bank) in the United States operate via fractional reserve banking. This means that only a fraction of bank deposits are actually backed by cash. Likewise, they can loan money which they do NOT have and demand interest payments in return. The danger is that if everyone withdrew their money at once the bank would not have the available funds for each person. This insane method of running financial institutions enables more capital to be readily available for loaning out, while putting the economy at risk due to unsustainable monetary structure. It makes neither mathematical nor logical sense.

A Reputable CEO with a Warning

Jeffery Gundlach, CEO of Doubleline Capital shares his views on bond maturity, corporate debt, and national debt in the United States today. He remarks that the next economic recession will be “extraordinary.” What has Peter Schiff been saying all along?

Mainstream media pundits and others, like the Trump administration, keep touting that our economy is booming at highs like we’ve never seen before. This is what such establishment figures were saying before the 2008 economic crisis—apparently no one saw it coming.

Image: Carlos Delgado [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)]

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