Deadbeats Bailing Out Deadbeats

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) -- A few weeks ago I wrote a piece noting that Western regimes that had mismanaged their economies to the point of structural insolvency are now only able to forestall their own debt-defaults by resorting to "check-kiting."

By that, I meant it has been many decades since most of these nations have actually been paying their bills.

Instead, Western economies have been financed by these Western governments simply writing new checks with nothing backing them to cover the old checks they wrote that also had nothing backing them. This is cheque-kiting, pure and simple.

And the only reason that these sovereign deadbeats haven't yet suffered the inevitable fate of all deadbeats -- having their credit refused and thus being forced into bankruptcy -- is because somehow their propaganda machine has been able to prevent that realization from sinking in with the masses.

This apathy and/or lack of comprehension by the citizenry is disturbing but not surprising. However, where we move past "disturbing" and into the realm of the totally absurd is when media propagandists write about these economies being "bailed out."

Once again, to truly illustrate this insanity we need to define our terms. A "bailout" implies some entity which possesses financial assets bestowing those assets, either via gift or loan, on some entity lacking financial assets. Immediately upon engaging in this simple exercise, we can state a definitive conclusion: none of these deadbeat-debtors have been "bailed out." Indeed we can go farther than that: it is not even theoretically possible to bail out any of these deadbeats.

Why? That's because all Western entities are net-debtors with their "national account balance" less than zero. Surely even the media drones and market "experts" can understand the concept that one deadbeat with no money cannot financially bail out another deadbeat with no money?

Apparently not. This begs the question: How is it possible that people whose profession it is to understand such concepts are totally incapable of comprehending the simplest possible proposition of logic and arithmetic: You can't "bail out" someone else with nothing? In this case, these people or so-called "experts," are incapable of grasping such elementary premises because they are brainwashing victims. Specifically, they have been deluded into thinking that the banker-paper being conjured-up on the bankers' printing presses (at zero cost, and in near-infinite quantities) has value.