When governments run out of money, they don't tighten belts - they borrow and print. That's called "debasement," and it quietly drains value from every dollar we earn and save. Here's how the "debasement trade" is changing the investing landscape...

What does the average person do when they run out of money before the end of the month? According to Federal Reserve data, nearly half of U.S. households report spending every penny (or more) than they earn in a typical month. Like families juggling credit cards, governments often rely on borrowing to fill the gap -- only on a much larger scale."

TRUTH LIVES on at https://sgtreport.tv/

Some people, unfortunately, turn to more desperate means to cover their debt repayments if they can no longer borrow enough money to repeat the cycle.

Why people think that governments, which are run by people, act any differently, is one of the great mysteries of our time.

The key difference is that governments can disguise overspending through complex financial mechanisms and jargon - like "quantitative easing." That's when the central bank creates dollars to buy government debt with this brand-new cash. It's easy to see this expands the money supply, which dilutes the purchasing power of every other dollar in existence. And that's just one piece of jargon - there's a lot more. "Fiscal stimulus" or "yield curve control."

The result, however, is the same: The government's purchasing power grows as the public's purchasing power quietly declines.

The cycle usually begins innocently enough. A government is short on tax revenue for something that they want to get done, so they borrow money.

Like any good money drunk, the government doesn't ever really repay the debt, though. They just try to pay the interest so that they have more money on hand to spend while continuing to borrow more to meet more campaign promises made by politicians.

Then, when they can no longer borrow enough money to pay for programs and handouts that they want to fund, they move into theft.

Of course, it's never called outright theft. They use terms like "quantitative easing," which is just a fancy way of saying that they are printing more money. Of course, that has the effect of making the money in your pocket and in your bank account worth less in real time.

Call it quantitative easing, call it inflation, call it what you want. It is theft of your purchasing power that they didn't even tell you about before doing it.

As the Financial Times recently observed, analysts are increasingly calling this a new age of "fiscal dominance" - in which governments with large debts pressure central banks to keep rates low to lower debt service costs.

The thinking behind the low interest rates is that it will encourage borrowing by consumers and businesses to spur spending in the economy, which is how governments tend to think of the economy growing.

The problem with this situation is that the pressure to keep interest rates low is due to a perceived soft economy, and this perception makes global investors nervous about financing the debt of the governments over those soft economies.

Bloomberg has reported that political volatility in France and Japan is now imposing a "politics premium" on government debt - investors are demanding higher rates to compensate for governance risk.

Which is why governments start to debase their currencies so that they can continue to service the debt and borrow more.

And that's why central banks and major investors like Ray Dalio are both buying gold and other precious metals and also recommending others to do the same. Bloomberg calls it the debasement trade:

"Sell government debt, as well as currencies... Buy gold, silver... In a nutshell that's the 'debasement trade' that's become the talk of the town."

This is a major reason government debt and currencies are down - and on the other side of the debasement trade, gold price is up over 50% this year alone - and as of October 17, silver's price up over 78% year-to-date. A clear reflection, according to any number of analysts, of capital fleeing debt-based financial assets in favor of tangible, physical precious metals.