Europe's Debt Ponzi Scheme 2.0—Default or Forced Loan | Martin Armstrong

During the Panic of 1893, which became a global contagion, Italy couldn't roll over its short-term debt, as it was unable to sell new bonds to pay off maturing ones. When faced with circumstances similar to what we see today, Italy did not officially default in the classic sense of failing to pay. Still, it executed a coercive debt restructuring that is widely considered a selective default or soft default in 1893–1894. This is what we refer to as a forced loan.

» We are living in a perpetual Ponzi scheme. « 

 

Italy was facing a run on its short-term debt and unable to roll over the maturing paper because there were no buyers. The Italian government, led by Prime Minister Francesco Crispi, did not formally declare a default. Instead, it passed a law (Legge 11 luglio 1894, n. 386) that forcibly converted the short-term Buoni del Tesoro into a new long-term bond. The law mandated that holders of the short-term Treasury notes could not be repaid in cash upon maturity. Instead, they were forced to exchange their maturing short-term paper for a new long-term government bond, called the “Rendita Italiana 5%” (5% Italian Annuity).

Where inmates run the asylum, insanity rules.

This new bond had a 5% coupon but was issued at a price below par (effectively giving a higher yield to compensate, somewhat, for the forced nature of the deal. Crucially, it was a perpetual bond, meaning it had no final maturity date.

The Italian government unilaterally changed the terms of its debt. Investors lent money for 30 days, expecting to be repaid in cash at the end of that term. The government broke that promise. Investors had no choice. They could not get their cash back; their only option was to accept the new long-term instrument. While they received a new security, it was illiquid (perpetual), and its value was uncertain. This action caused significant financial losses for many Italian banks and citizens who held the paper.

I would expect that Europe will do this when it can no longer issue new debt to pay off its old debt. We are living in a perpetual Ponzi scheme. There is only one way this ends, and that is a default or a forced loan. 
 

Reference:
Martin Armstrong (August 28, 2025)  - What Happens When Governments Cannot Sell Their Debt?

 

» Europe needs war as a distraction, and stablecoins are, in fact, war bonds. « 

 Martin Armstrong, August 28, 2025.

 

See also:

Martin Armstrong (July 17, 2025) - Trump’s GENIUS Act Sets the Stage for US CBDC.

 Martin Armstrong (March 21, 2025) - Europe's Date with Destiny: Collapse by 2029 is Inevitable.

Martin Armstrong (March 1, 2025) - Europe Will Go to War around May 15, Lose, and Euro Will Become Extinct.

TPR (March 11, 2025) - The ECB's Dystopian Digital Euro Dictatorship Set to Launch in October 2025.  

Modern Fractional Reserve Banking - A Ponzi Scheme | Murray N. Rothbard

The banker issues fake warehouse receipts and lends them out as if they were real warehouse receipts represented by cash. At the same time, the original depositor thinks that his warehouse receipts are represented by money available at any time he wishes to cash them in. Here we have the system of fractional reserve banking, in which more than one warehouse receipt is backed by the same amount of gold or other cash in the bank’s vaults.

 

It should be clear that modern fractional reserve banking is a shell game, a Ponzi scheme, a fraud in which fake warehouse receipts are issued and circulate as equivalent to the cash supposedly represented by the receipts.

Quoted from:
Murray N. Rothbard (1983) - The Mystery of Banking.

 

See also:

Anthony C. Sutton (1974) - The Banksters' Paradise Conspiracy Theory.

 Nikolai Starikov (2013) - The Conspiracy of the Counterfeiters.

The Global Financial Ponzi Scheme

$1,280,000,000,000 = There is only 1.28 trillion dollars worth of U.S. currency floating around out there.
$17,555,165,805,212.27 = 17.5 trillion dollars is the size of the U.S. national debt. It has grown by more than 10 trillion dollars over the past ten years.
$32,000,000,000,000 = 32 trillion dollars  is the total amount of money that the global elite have stashed in offshore banks (that we know about).
$48,611,684,000,000 = 48 trillion dollars is the total exposure that Goldman Sachs has to derivatives contracts.
$59,398,590,000,000 = 59.4 trillion dollars is the total amount of debt (government, 

corporate, consumer, etc.) in the U.S. financial system.  40 years ago, this number was just a little bit above 2 trillion dollars.
$70,088,625,000,000 = 70 trillion dollars is the total exposure that JPMorgan Chase has to derivatives contracts.
$71,830,000,000,000 = 71.8 trillion dollars is the approximate size of the GDP of the entire world.
$75,000,000,000,000 = 75 trillion dollars is approximately the total exposure that German banking giant Deutsche Bank has to derivatives contracts.
$100,000,000,000,000 = 100 trillion dollars is the total amount of government debt in the entire world.  This amount has grown by $30 trillion just since mid-2007.
$223,300,000,000,000 = 223.3 trillion dollars is the approximate size of the total amount of debt in the entire world.
$236,637,271,000,000 = 223.3 trillion dollars is - according to the U.S. government - the total exposure that the top 25 banks in the United States have to derivatives contracts.  But those banks only have total assets of about 9.4 trillion dollars combined.  In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 25 to 1.
$710,000,000,000,000 to $1,500,000,000,000,000 = 710 to 1,500 trillion dollars are the estimates of the total notional value of all global derivatives contracts.  At the high end of the range, the ratio of derivatives exposure to global GDP is about 21 to 1. Credits: Michael Snyder