Jun 142013
 June 14, 2013  Posted by at 10:46 am Finance

Photo top: Dorothea Lange Broke, Baby Sick February 1937
"Tracy (vicinity), California. U.S. Highway 99. Missouri family of five, seven months from the drought area. Broke, baby sick, car trouble."

Little by little the realization is seeping through that, provided we can agree a recovery cannot be purchased outright, there is no such thing as a recovery anywhere in the western world. Mind you, I said seeping, and I could even have said trickling; it's a slow process. And that is a direct consequence of various vested interests in producing the illusion of recovery and growth which exist in the realms of politics, finance and media.

A few days ago, in the shadows of its revelations concerning Edward Snowden, The Guardian – in its Sunday sister The Observer – ran another piece that warrants scrutiny. The core line in it is this:

Trying to solve a debt problem with more debt has created a bigger bubble, (and it's hard to see what the central banks can do).

(The core term in it of course is "stonking crashes", I love that.) And then Wednesday Jill Treanor, also for the Guardian, quoted Bank of England director Andy Haldane:

"Let's be clear. We've intentionally blown the biggest government bond bubble in history … "

Combine the two, and you get a peek into the reality of what moves our economies these days, and it's not a pretty peek once you think it through. It shows you that all the talk of recovery is just empty air, whether you're in Europe, Japan or the US. That is, again, if we can agree that a recovery cannot be purchased. i.e. that you cannot solve a debt problem with more debt.

As reasonable as this may sound, it's not something everyone will easily agree to; there's a whole camp around Paul Krugman that would disagree. What they don't understand is that no amount of stimulus can lead to a real recovery if the initial debt levels are too high, because you would need to achieve absolutely miraculous growth levels just to avoid being overrun by interest payments. Such growth levels are nowhere in sight. That means that the bottom line of Bernanke's QEs and Draghi's OMT and Japan's Abenomics will prove to be just another transfer of public funds to the private sector disguised as measures to benefit the general public.

It seems obvious enough these days in Japan. The third "arrow" of Abenomics won't arrive until autumn, and already lots of disappointed questions are being asked about the entire program, but Bank of Japan chief Kuroda still came out to say the BoJ won't do anything right now. Sure, the Japanese GDP number looked somewhat alright, but how fleeting is that? Perhaps what we should read into this is that Japan will not act until it's absolutely if not tragically necessary, simply because it's gotten stuck in a no-man's land located between interest rates and bond yields. The Bloomberg headline "Kuroda Stares Down Bond Volatility" speaks volumes in that regard; "Kuroda Stares Into Headlights" would have been a much more appropriate choice.

And maybe this is a good moment to revive the strangely silenced discussion about the importance of central bank independence. Not a soul has talked about it for a long time now, not when it comes to what Abe and Kuroda are concocting. When Hungary PM Victor Orban last year proposed laws to draw the central bank closer to the government, he was accused of every sin known to mankind, and the EU wanted to take him to court and impose all kinds of sanctions, but now Japan dissolves all barriers between its government, its central bank, and now its largest pension fund, nary a word is heard. And of course Ben Bernanke doesn't have an inch of independence left in him either; he's a tool to transfer taxpayer funds to the private sector, because that's the only source of profit for that sector.

It's becoming increasingly obvious to an increasing number of people both inside the finance community and outside of it that the financial markets we see today exist only by the grace of central banks buying various shades of paper. If these no longer independent but instead highly politicized institutions would start to purchase less bonds or derivatives such as MBS, what is presently advertised as a recovery would disappear in the wink of an eye, and reality would set in once more.

Since neither the central bankers nor the financial community are responsible for paying down the debt these purchases add, and those who will have to pay – the people of the countries involved – have no political ways of halting the practice, the QEs and other stimulus measures may go on for a while. But that won't help the illusionists either, because their purchase schemes come with their own inbuilt demise. And that is what we're starting to see lately.

In the words of the Guardian:

Cheap credit has inflated the markets, and we could be in for a crash landing

During the past four centuries, there have been five occasions when major credit bubbles have led to stonking crashes. Tulip mania in 17th-century Holland was the first; the South Sea bubble in the 18th century was the second; the US real estate crash of the 1830s was the third; the 1929 Wall Street Crash and the Great Depression was the fourth. The sub-prime crisis that began in 2007 was the fifth.

As the world approaches the sixth anniversary of the freezing up of credit markets, a terrible idea has occurred to investors: we might only be part-way through the crisis. This has come as something of a shock. For the best part of the year markets have been pushing asset prices higher in the belief that the worst of the crisis is over. They have given a big round of thanks to Ben Bernanke, Sir Mervyn King et al for keeping monetary policy ultra-loose and avoiding a repeat of the 1930s.

Doubts are now starting to set in, and rightly so. Cheap credit has done wonders for equity and bond markets but precious little to revive real activity. This has been the weakest recovery from a slump in living memory. And financial markets have become dependent on central banks keeping the money taps wide open, even though the evidence is that each additional dose of easing is less effective than the last.

[..] An extremely aggressive and highly dangerous dependency culture has developed and it is not easy to see how central banks get out of the problem that they have created for themselves.

There is clearly a risk that if the Fed, the Bank of England, the ECB and the Bank of Japan started to nudge up interest rates towards pre-crisis levels and gradually reversed QE, over-leveraged households and banks would not be able to cope. Yet, there is also a risk that seeking to solve a debt problem with still more debt is creating the conditions for an even bigger bubble, which could go pop at any time.

Support for this idea is growing. John Kay noted last week that the world was heading for a second crisis because the financial sector was inherently prone to instability. "Prices are driven to silly levels, but everyone makes a load of money in the meantime, and then you get a correction."

[..] Charlene Chu at Fitch has noted that total lending by banks and other financial institutions in China was almost 200% of GDP in 2012, up from 125% four years earlier. Not only is credit twice as big as China's economy, it is growing twice as fast. [..] debt-fuelled growth on this scale can work for a while but eventually proves unsustainable as debts become unpayable.

[..] Europe's banks are pretty much insolvent and kept going only by unlimited liquidity provided by the ECB. What's more, they are far bigger in relation to the size of the eurozone economy (350% of GDP) than are the American big banks (80% of GDP).

[..] … something very nasty is lurking out there. Investors would do well to take note.

No matter what happens next, the chance that central banks will be able to continue to manipulate down both bond yields and interest rates is getting slimmer by the day. Nonetheless, they'll keep on doubling down on their bets: the more they lose control (or the more it's obvious they never had any), the bigger the losses for the financial community will get, and the more they will clamor for more stimulus.

And though in theory – relatively – low rates and yields could be accomplished as a consequence of economic growth, in this instance that is obviously not the case. Instead, yields and rates rise for the simple reason that investors fear they will rise. And that is a mechanism, especially because it happens in the middle of the biggest stimulus spending in history, that will prove extremely hard to suppress.

Abenomics is already being recognized as desperate, and that can't work in a game based entirely on confidence, or even just the perception of it. And with confidence in Abenomics fading, who will continue to believe in the Fed's QE? They're from the same illusionist handbook. As for the ECB's chapters from that book, the German courts may take care of those even before the markets do. Bundesbank head Jens Weidmann said in court this week that – in part because of the case in front of the German Constitutional Court – the ECB cannot give an absolute guarantee it will be able to keep purchasing. That may be enough to sink the whole enterprise.

The finance community has increasingly come under the illusion that in reality they are the economy, and drawn a large part of the deluded public with them, but the real economy is still driven not by banks and investors, but by the 70% of GDP that depends on consumers. Whose debt rises with every bond their central bank purchases, whether they're told so or not.

Or the finance community may fool themselves into believing that at least when they are doing – relatively – well, the real economy will also be better off, but that's not true either. The opposite is true: the financial world is doing well at the cost of the consumers responsible for 70% of GDP, since everything finance would be a disaster if not for the stimulus measures paid for by today's consumers and their progeny.

Everybody in finance understands that piling more debt onto a system drowning in debt is at the very least a risky adventure. But they are not the ones bearing that risk, so why should they care? And those who do carry the risk, the population at large, continue to float somewhere between ignorance and gullibility until it's too late.

We can reach the end of this game in one of two ways. First, the people in the streets can call a halt to the illusionary circus that has become our financial system, by refusing to have more of their wealth transferred to the private sector. Since this hasn't happened to date, it's probably more likely it will end the second way: Since stimulus is not just an addiction, but one that requires ever more of the fix provided, and there is no limitless supply of it, interest rates and bond yields, which have been held at historic lows at great cost to society, will rise as the financial community will increasingly demand returns on investments.

You can restructure debt on a voluntary basis; we haven't done that, we've instead chosen to hide it as far and as deep as possible. But it will be restructured – and defaulted on – regardless: higher interest rates and sinking bond prices will inevitably and inexorably start to draw bad debt from its hiding places. Therefore, the tangible desperation of Abenomics simply hastens a process which would have happened anyway.

It's a shame for the people in the street that it must come to this, because the costs for them will be many times higher than if they had made their voices heard earlier. But perhaps, given the entanglement of governments, central banks, the financial community and the media, this was unavoidable.

What's positive for those people is that it means the entire investor model of the economy as we know it is dead (though I don't think many are ready to accept this), once it's obvious it was only held standing up through ever larger injections of taxpayer funds. At least they won't have to worry so much about vultures picking at the carcasses of their lives, even as these lives will in most cases be pretty destitute.


Home Forums Five Stonking Crashes

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    Photo top: Dorothea Lange Broke, Baby Sick February 1937 "Tracy (vicinity), California. U.S. Highway 99. Missouri family of five, seven months fr
    [See the full post at: Five Stonking Crashes]

    Golden Oxen

    What a total complete mess. Amazing the whole thing doesn’t just go to zero today from the insanity of it all.

    And the stock markets roar to new heights daily, and the press screams recovery, even housing is supposed to be great again. We also have enough oil for hundred more years as well.

    Could we be in an insane asylum and not know it?



    The greater the desperation, the greater the illusion.

    Ken Barrows

    It will blow up when the marginal cost of extracting a barrel of oil exceeds what the marginal consumer can pay. If it’s quite a number of years away, then let the redistribution upward continue (/sarc). If it is not, hold onto your hats.


    On the american front, PRISM is revealed as the largest surveillance program in human history, intercepting and storing the contents of all [digital] telecommunications of billions of people worldwide for decades.

    Apologists of this diabolical NSA crime against humanity invariably exhibit signs of deep terror psychosis and engage in politically extremist speech utterly destructive of those ends of liberty.
    Public advocation of this integral destruction of privacy, inflicting grievous mental harm against all citizens, is an act of criminal collaboration with the federal regime.

    Besides being used for the usual purposes of wholesale market manipulation and political persecution/blackmail, the PRISM program is also another preparation for genocide on the american people. The shadow government is compiling convenient purge lists for systematic extermination of tens of millions of dissidents/resistors during the civil war/collapse.

    Political and personal privacy are requisite for cognitive liberty and moral volition, regardless extenuating circumstances of terror psychosis, those who advocate the destruction of privacy are a threat to democracy and personal liberty and mortal enemies of the republic.

    Under soviet relativity,
    light bends you!




    What a great new word I learned today. Five stonking crashes, soon to be six. 🙁


    “The more desperate, the greater the illusion.”

    The more desperate, the more dangerous the desperado’s. We have been living the illusion since 1913.

    This all leads to final destruction of the currency now. Their chance to prevent that has passed.

    Out of that come wars and genocides. The only diversion power brokers know.

    On that note, I’ll stay close to the exits, thanks all the same.


    Correct, professor. They will lop two, or more likely three zeros off the dollar and call it the ‘new dollar’. This is how it always ends, and this time around will be no different.

    The problem is that the dollar is the world’s reserve currency. So dollar holders, like China, that are using trillions of dollars as the backstop for their otherwise bankrupt financial systems, have a small problem. If they dump the dollar too early, they precipitate its demise, and the demise of their own assets. If they wait too long, they get nothing.

    Once this thing turns down, it is going straight down, as dollar holders rush to buy ‘stuff’ at any price.


    So you are saying I should cash out my 401k? Hasn’t the FED programed people to think that what ever happens they have the power to fix it and they will be there to manipulate any and all markets if we have to. Not that any of it is true but as long as you convince people it is true there is no problem; mankind was able to convince people that it is ok to have slaves or kill as long as they are from a different tribe. The level of this game can go on for a long…long time


    The [strike]dollar holders[/strike] credit “worthy” have already [strike]bought[/strike] claimed all existing, future and imaginary stuff.
    There’s no money to buy all this stuff.


    I think the dollar demise will await the failure of other, less systemically important nations. Failure moves from the periphery to the core – but only after the periphery has taken its beating first.

    The grand move in the US stock market is partially about international capital flows into the US (which have reversed recently), and partially about extremely low interest rates being very profitable for US companies. Along with low wages paid to US employees too, of course. They sell a lot of stuff overseas, pay low interest rates, pay low wages, and as a result make historically better-than-average profits. So naturally the stock market goes up.

    I’m watching the indicators; we aren’t quite yet there for a move down, but things are definitely looking worrisome. Projections of 10-year annual returns are currently predicted to be about 3.5%/year (based on two different methods – both of which have done well historically in predicting longer term market returns), including dividends of 2.2% that says SPX will likely be only 15% higher 10 years from now. Given the market’s annoying habit of dropping 30-40% during corrections, this would seem to be a bad bargain. Or more colloquially, picking up nickels in front of steamrollers.

    And I believe these projections to be optimistic, since the models have never experienced peak oil, etc.

    However, only one of my five indicators has turned down. Patience.


    Golden Oxen – “…even housing is supposed to be great again.”

    Fake Housing Market Recovery Explained:

    “The average American Joe isn’t participating in the U.S. housing market. As a matter of fact, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, investors purchased 69% of “damaged” properties in April 2013, while first-time home buyers accounted for only 16% of “damaged” purchases. […]

    Rising prices on homes in various pockets of the U.S. housing market are a direct result of large institutional investors buying in.”



    If you’re not concerned about PRISM, ignore this post and go lick the hand that gropes your privates.

    The markets are irrelevant for your profitability, all your financial transactions are monitored and intercepted for insider trading and manipulation, you cannot gain anything openly or anonymously that will not be stolen by the tyranny, you cannot hide your equity.
    Absense of financial and commercial privacy destroys all propensity to novelty.

    If no legal recourse would remain to reestablish a constitutional rule of law to protect citizens private lives, every citizen ought to be willing to die in political protest to ensure general privacy, and to a lesser extent, should be willing to kill the government [intelligence capacity] to ensure their own privacy, if that would help.

    Many of you do not realise what has happened to the ideals of liberty, how close we are to the largest instantaneous genocide in history. Most americans who are not willing to suffer tyranny or collaborate are certainly targeted for elimination during the collapse in the US.

    An inevitable dollar collapse causing at least half a billion starvation deaths worldwide by cascading logistical collapse is the only remaining reason the federal regime should not be overthrown immediately.
    Otherwise, if dollar collapse is guaranteed already, an immediate 2nd civil war against the federal regime is the only reasonable recourse to limit casualties domestically due to this dollar collapse, providing domestic casualties would be initially limited to 20-30 million when DC is overthrown, less than would otherwise be murdered by the tyranny.

    The PRISM program alone, by directly facilitating preparations for genocide, would move the founding fathers to revolutionary recourse, even if no other transgressions were committed by government tyranny, this alone would be enough to justify their plight.

    Join the resistance in their noble pre-violent struggle to kill DC or get out of the way to avoid collateral damage. A hypothetical ultimatum for legitimate self-defense is in order; if DC does not voluntarily dismantle its intelligence capacity by the 21st of june 2014, all DHS assets, FEMA camp sites, threat fusion centres and data aggregates will be hypothetically rendered legitimate military targets for sabotage and destruction. Throw the body patriot onto the machinery to stop the COG from turning.




    Don’t take this to be overly paranoid, but
    I have no [perception of] personal privacy and do not expect to regain it during my lifetime. I’ve personally been under constant surveillance since 2009 or so, not just digital, auditory but visual surveillance, facilitated by intelligence agencies in conjunction with private corporations, who I’ve come to hate passionately. If I thought it would stop the tyranny for others, I’d be willing to personally die or kill to stop this, in lieu of more legitimate self-defense or political protest.

    On at least one occasion, I’ve been harrassed by local freemasons who know who I am and what I write on this very blog, which is only possible by sustained criminal invasion of my privacy. Esoteric hierarchies are an integral part of this global surveillance tyranny, and I hold a minor world record for self-initiation which annoys some of them.
    I’ve come to understand that initiation is corruption. Initiation does not entail corruption, initiation is corruption. Lightwise, it should be purification, but its quite the opposite in political terms.

    Esoteric hierarchy is principally incompatible with democracy, all who swear secret oaths of fidelity cannot [be trusted to] uphold public oaths unconditionally and cannot be citizens in an open society, expect maybe in a stateless society. All institutional manifestations of the mysteries can be made politically corrupt and corruptive, and must be purged of political extremism if possible. The mysteries themselves, being a multidimensional recursive algorithm embedded in the nature of reality, cannot be destroyed, but their institutional structures can be persecuted into oblivion if need be, if revealed as intractably extremist. The only benefit of the doubt afforded to modern freemasonry as an organisational structure is their historical persecution by authorities, such as by the nazi syndicate, which has two possible reasons, one of which might render them more sympathetic in resistance to tyranny.

    I used to believe esoteric societies and occult hierarchies might be unique among institutions by deliberately avoiding the formation of clustered sociopathy and gross abuses of power, but I”m not so sure anymore. All institutional structures are more conductive to evil than to good unless constantly reinformed by a moral memory, but no institutional memory seems safe from corruptive pressures from the state and markets. Maybe a stateless society could produce ideological dynamics that don’t corrupt institutional morality.
    As there is no state-enforced separation of power possible within esoteric structures, precisely because of their protected privacy, it remains problematic that intelligence communities actively recruit from esoteric hierarchies, and esoteric hierarchies recruit from all branches of government, producing a democratically erosive convergence of interest between branches, and conflict of interest between public and private oaths without oversight or accountability.
    Charity is only possible as a private function, omnipresent oversight by moralising authorities renders true moral volition impossible.

    Would demonstrative self-immolation help to fight for privacy?
    At this point, I’m willing to set myself on fire in the town square if this would motivate people to care about privacy, but the point would likely be lost on them.

    Give me privacy or give me Gravity!


    Here’s a great in-depth article re the so-called housing recovery: Time to Buy a House? Not on Your Life!


    Oh me, oh my!

    And “stonking” is a fantastic word. Stonk: A concentrated artillery bombardment.


    Yeah, pipefit, all one needs do is ask oneself, how many great nations have been destroyed by hyper deflation, as opposed to how many have been decimated by currency value obliteration 😉

    And, as China is investing those green paper products in gold and gold production, now being the worlds largest producer of the stuff, it just could become the new holder of a gold backed reserve currency, replacing the dollar, in future. Not to mention it’s acquisition of energy production facilities.

    And Ted, yes these “confidence” things can go on a long time, true…or turn on a dime. Seems to me this Coyote, after stepping off the cliff years ago, has been walking on air a long time already. What happens when he looks down?

    On housing, I’m on the sell side at present. We’ll see how it goes.


    Ilargi writes, “there’s a whole camp around Paul Krugman that would disagree. What they don’t understand is that no amount of stimulus can lead to a real recovery if the initial debt levels are too high, because you would need to achieve absolutely miraculous growth levels just to avoid being overrun by interest payments.”

    And I just can’t help wondering how Krugman doesn’t understand this. Ain’t he smart or something? It seems rather obvious that the numbers don’t add up–interest will consume our “growth profits”. Krugman seems to argue that we just have to stimulate ENOUGH and we reach some kind of magic escape velocity that WILL create exactly enough miracle growth to repay the debt and the interest. Or rather we will attain enough miracle growth so that we can perpetually service the debt forever (because he really doesn’t seem to care that we have debt as long we can service the interest payments, even if that relationship extends forever). You just have to ask how on earth one believes such a state of affairs could be spun forever–won’t we eventually reach some other insurmountable obstacle in the road sometime later, crushing growth and forcing default all over again? So we’re supposed to just put that off until some indeterminate date later (maybe next week or next year) and hope for the best until then? I don’t see how such projections don’t lead to eventual default. And I ain’t stupid neither.

    Krugman wants us to drink enough poison until somehow it becomes a cure. Even while, thus far, increasing the poison levels seems to do no measurable good. We’re just supposed to have faith that if we just take more–a lot more, even–then we will be all better.

    It’s truly absurd.

    How can the man be so deluded? Has he no doubts at all? Are his frantic tweets–he apparently comments on everything these days–the signs of a desperate academic whose ivory tower is showing some cracks?

    Mark T

    How Do You Say “Housing Bubble” In Canadian?

    Mark T

    Canadian readers of the blog may be interested in the following article:

    How Do You Say “Housing Bubble” In Canadian?


    The ‘liberal’ school of denial is matched by the ‘conservative’ school. I am speaking in US political terms.

    For our purposes conservative means the populist or pseudo populist Tea Party conservatives. The conservative school is only partly economic however so it gets very muddled.

    At heart conservatives want a proper, conservative, social order where people know their place. It is more than seeping into conservative minds, its how a healthy flow, that austerity means a large and growing underclass. What is only seeping in is the knowledge that a large and growing underclass precludes growth. They are getting OK with that however because they think a large underclass living in fear of losing everything will be more conservative. Will keep their heads down, know their place.

    That is why there is no direct conservative argument with Krugman. Krugman has a plan for growth. We all agree here it won’t work but that’s his story.

    You never hear a conservative argument for growth that addresses policy, besides cutting taxes of course, which is a non sequitur. Obviously 35 years of tax cutting has not caused growth but no matter. That’s their story and they are sticking to it. Their advantage is that there is no alternative to austerity. So they are, if only by coincidence, more in tune with reality, on this score.

    Their problem is non growth is a political loser. Well that’s the problem for both sides. In my history of recent US politics there was a brief moment in the late 80’s where Carter gently suggested limits. The American people crushed any talk of limits. Saudi Arabia pumped a hundred years worth of oil in 20 years in the denial of limits and everyone else embraced debt as the substitute for cheap oil.


    Skip–My guess is that Krugman knows all that. Again, just guessing, but his agenda is probably to get liberal democrats elected to various state and federal offices. When viewed in this context, I think his comments are consistent with his agenda.

    There’s no way out. Anyone with 5th grade math skills could tell you that. Come on. Debt plus the present worth of unfunded liabilities greater than 10 times GDP. But who wants to vote for a situation worse than Greece or Spain?

    Much better to draw paychecks and receive invitations to fancy White House parties, right, lol?

    Golden Oxen

    Skip–My guess is that Krugman knows all that.

    Pipefit ,Respectfully disagree with you. The gent is an imbecile in my view, plain and simple, just as he appears, nothing mysterious.


    Great AP report:

    Forget Prism : NSA Tapped Straight into Internet Pipeline

    Interviews with more than a dozen current and former government and technology officials and outside experts show that, while Prism has attracted the recent attention, the program actually is a relatively small part of a much more expansive and intrusive eavesdropping effort.


    golden–It doesn’t really matter whether Krugman is an imbecile or a thinly disguised spokesman for the Democratic Party. The bottom line is that we’re gonna have one those ‘stonking’ type crashes soon.

    Ironically, it also doesn’t matter much if it is deflationary or hyper inflationary in nature. The scale of the destruction will be so vast, and rapid, that it will quickly annihilate the financial sector. This would actually be a good thing, if we actually had a manufacturing sector as the bulk of our economy. Unfortunately, we’re mainly a FIRE and Government type economy, so I would suggest that one plans accordingly.


    Internet monitoring is somehow seen as less intrusive, even having your private emails read [algorithmically] is tolerated by too many people. The software terms and conditions no one ever bothers to read do often trick into relinquishing protected privacy over digital communications, mostly for commercial purposes. As most human behaviour and social interactions are now commercialised, and the private commercial data is trafficked back and forth between agencies and corporate, being spied on for commercial purposes by corporations is no less invasive and destructive than being spied on directly for purposes of political persecution. It all ends up being used against you.


    Warrantless wiretapping of telephones, being obviously criminal, is a step too far for most. Its not just that your phone calls are recorded and indefinitely stored for automated voice analysis, keyword searches and political blackmail, but intelligence agencies can use all phones as microphones to listen live to the conversations in your home. I should know, I’ve received confirmed feedback [targeted ads and such] from private conversations I’ve had in peoples homes which cannot be overheard or monitored except by cellphones which aren’t even in use. You wouldn’t have believed me before PRISM broke, but I assure you, this is happening.



    The CIA’s professional psychotics now say they’ll install microphones in all household appliances to terrorise you good and proper. Even the new Xbox is an integrated NSA enabled spying platform, will monitor [by mandatory motion sensors] how many people are in your living room to allocate licencing fees, and listen to conversations to target commercial advertisements or a droning of your dissident family.


    Mark T

    Thanks Nassim


    I tried a few years ago to project what would happen if countries all knew that they and everyone else were, for want of a better word, screwed.

    Lets say you knew that the system was going to fail and have a really hard reset. If you followed demographics and depletion of resources you might be thinking this way. News flash back in 1990 the economics prop stopped the lecture to have a class debate about a projected problem for 2015. Turns out the government has been watching this and understood the problem prior to 1980. I have spoken to Senators about it and there is no solution,

    Back to what I was saying what if you knew that everyone was in the same boat. Colin Campbell stated the international banking community fully understood this and was playing hot potato. No one has a hope of being untouched, everyone is connected, so you attempt to be in better shape than competing interests.

    Imagine if countries are taking the same approach. If we all knew the money would be worthless in the end spending crazy amounts now won’t hurt. They are playing hot potato. Since the US will not be the world currency of trade everyone is trying to keep up to their debt level as it will be the new norm. Once everything settles and you did not take out crazy amounts of debt your country will be at a loss when the whole thing restructures and the debts are erased.

    Sound crazy? I believe this logic guides not only banking but democratic governments around the world.

    Just like to point out something flawed. Should interest rates go up there is no sound theory for deflation. Higher interest rates by definition mean inflation.


    Just like to point out something flawed. Should interest rates go up there is no sound theory for deflation. Higher interest rates by definition mean inflation.

    No. As interest rates rise, an increasing part of available capital will be needed to serve interest payments, and that will very much drive deflation (defined as money and credit supply x velocity of money).

    Once everything settles and you did not take out crazy amounts of debt your country will be at a loss when the whole thing restructures and the debts are erased.

    There is no UN for erasing everyone’s debt. Japan can hardly take any increase at all in bond yields. Before “everything settles” there will be victims. And they may not be the expected suspects. The entire game is based on an illusion of control that doesn’t actually exist. Because they’re so focused on this illusion, a lot of parties won’t see what’s coming.

    Golden Oxen

    There is no UN for erasing everyone’s debt. Japan can hardly take any increase at all in bond yields. Before “everything settles” there will be victims. And they may not be the expected suspects. The entire game is based on an illusion of control that doesn’t actually exist. Because they’re so focused on this illusion, a lot of parties won’t see what’s coming.

    The amount and caliber of people who should know better, and currently base all their judgements and actions on what they perceive to be the next move or interpretation of their leaders next and last round of babble is very alarming Sir.

    We are currently having a debate amongst the financial titans and gurus of Fantasy Land on what the word TAPERING means. How disgusting and frightening at the same time.


    william post=7493 wrote: Higher interest rates by definition mean inflation.

    TAE Summary, quit posting incognito!

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