"The history of government loans is really a history of government defaults."
–MAX WINKLER, author of "Foreign Bonds: An Autopsy"

"Financial disaster is quickly forgotten. There can be few fields of human endeavor in which history counts for so little as in the world of finance."
–JOHN KENNETH GALBRAITH

The prevalence of negative yielding bonds, sub-prime zero-down mortgages, sub-prime auto loans, a deeply inverted yield curve, collateralized loan obligations, US corporate junk bonds, and soaring interest costs on US federal debt are flashing economic warning signals.

Underscoring just how out-of-control the debt proliferation situation has become, in 2007 total global indebtedness was $112 trillion; today, that number stands at $250 trillion.

The combined debt of the world's four largest economies increased more than ten times as much as their economies grew last year.

Instead of getting spending and debt growth under control while the economy is healthy, US federal government outlays surged 30% in the most recent fiscal year at the same time that revenues fell by 3%.

As a result, the Treasury is issuing over $1 trillion of new debt annually to fund the deficit.

And the corporate bond market doesn't paint a prettier picture.

BBB-rated debt has roughly doubled as a percentage of the size of the economy since 2007.

Similarly, the outstanding amount of high-risk corporate bonds and loans has also blown past the peak seen before the 2008 meltdown.

During this stealth MMT era, many investors have been lulled into thinking that staying concentrated in an S&P index fund is surest way to generate high returns.

But as the debt bubble unwinds and the market cycle flips, gold and other hard assets might be the best protective options for investors.