The Check-Kiting Economy: Opinion

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (BullionBullsCanada) -- To date, I and every other economic commentator have failed dismally in our efforts to communicate the insane manner in which all Western economies have been mismanaged (and effectively bankrupted). Specifically, we have failed to convey to the average person the inherent fraud of the Western (and now global) monetary system.

The reason for this failure is obvious. Decades of saturation-brainwashing have programmed the ordinary person to regard our current monetary system as normal or even proper. Efforts to explain this fraud have been doomed to failure. What is needed is a real-world analogy to pierce this brainwashing, and fortunately such a perfect analogy already exists: "kiting" checks.

Most people are familiar with this colloquialism, as it is an expression which is frequently encountered alongside another, ever more present Western colloquialism: deadbeat. Deadbeats kite checks -- it's as natural to them as breathing. They write one (bad) check to supposedly cover another one. And as long as people are foolish enough to accept checks from a deadbeat, the deadbeat can continue to delay his (or her) own bankruptcy.

Since Western economies went off of the gold standard and began a new era of permanent deficits, all Western economies have been "check-kiting economies." The only way in which all of these economies have been able to delay their own bankruptcy is by "kiting" ever larger checks.

There are literally only two differences between how Western governments kite checks versus how ordinary deadbeats do so. First of all, unlike the average deadbeat, our governments are literally able to get away with writing checks to themselves. Indeed, that is the exact process for creating every single dollar of our worthless paper currencies.

Our government writes a check to our central bank -- with absolutely nothing to back/cover the check -- the central bank hands our government money (i.e. worthless fiat currency which they print out of thin air), and suddenly everyone is rich. Without our governments kiting these checks, and without our governments conjuring money out of thin air, every Western economy would have already been bankrupted decades earlier. However, as horrible/fraudulent as this monetary system has been for all of these years, our crooked and fiscally irresponsible governments have literally made their fraud ten times worse since the Crash of '08 and the creation of a new bankster euphemism: "quantitative easing."