Debt Rattle May 20 2014: May The Rate Rise With You


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    Maurice Terrell Sinatra in gambling scene from “Guys and Dolls” July 1955 If global financial markets cannot set interest rates, they are distorted an
    [See the full post at: Debt Rattle May 20 2014: May The Rate Rise With You]

    Diogenes Shrugged

    Long post here. Could use some cleaning-up, but it’s only a comment after an article, not a Master’s thesis.

    Say what you will about Milton Friedman, and I do agree with you concerning Allende, but at least Friedman understood the importance of free markets to the prosperity of mankind. Anybody who states, “Freedom is my God” can’t be entirely misguided.

    The hallmark and holy grail of “free markets” isn’t growth. It’s unregulated price discovery. Price discovery gives rise to economy.

    Without price discovery, free markets don’t exist. Without free markets, labor and resources become grossly misallocated. Without price discovery, prices are set by people in power. This isn’t merely inimical to economy, it is sheer absence of economy.

    Thieves love disruptions to price discovery (or absence of price discovery) because it enables them to steal from honest people. This is because rigged prices are dishonest, and thieves name OUR prices. The biggest thieves of all, by many orders of magnitude, are those who abuse positions of political and financial power to rig prices.

    Economic systems are not all the same. The drawbacks to any economic system are directly proportional to the amount of price rigging going on. Human beings are free only in an environment where unfettered price discovery takes place, and are enslaved when prices are set by authorities. The reason the USSR was not free, and the reason it eventually collapsed is because prices were set by the government. Labor (much of it resembling slave labor) and scarce resources were utilized and developed inefficiently, favoring those at the top of the political structure and those who stole from the public, all at the expense of the public.

    You see, prices are supposed to reflect a consensus on the value of things. When prices are rigged, they bear no relationship to any value other than the one conferred by some pompous authority. It doesn’t take huge variations from the free-market price to cause destructive, accretive misallocations of wealth in the economy.

    What we witness today are myriad institutionalized VIOLATIONS of price discovery in what were formerly known as “free nations.” These are criminal violations of human freedom itself. Examples abound: refusal to “mark to market,” interest rate rigging, precious metals price rigging, no-bid government contracts, high frequency trading, bank issuance (from thin air) of the nation’s money at interest, off-budget government expenditures, farm subsidies, bank bailouts, socialized medicine, socialized public schools, a drug war that serves ONLY to provide outrageous price supports, and pretty much every single thing government spends money on, including salaries. NONE of those things (the list was by no means exhaustive) reflect prices that were discovered through free market bid-and-ask negotiation. All of those things reflect prices that are imposed by people with political authority.

    The U.S. is racing toward a similar cliff-edge as the U.S.S.R. was in the late 1980s. Many of the details are different, but the hell that an absence of economy has wrought on the citizenry is much the same – – especially the vanishing middle class. There is no way out from this mess other than various forms of widespread suffering and strife. The price-riggers are depending on their heavily militarized Homeland Security department, militarized USDA, militarized FBI, militarized CIA, militarized IRS, militarized BLM, militarized Forest Service, militarized NASA, militarized Border Patrol, militarized police departments, militarized NSA, and countless other militarized agencies of government to protect them from the impoverished masses when the U.S. suffers its own Soviet-style collapse. Do what you can to ensure that their confidence in these bloodthirsty agencies is misplaced.

    If you don’t want colossal financial crimes to be perpetrated on humanity again and again every thirty to sixty years for perpetuity, then advocate bringing the price-riggers to justice every chance you get – – and note that extreme vigilante justice (like their cops increasingly mete out) will make the memory of this historic period endure.

    The Second Amendment should have been the First. The First should have been second. And the third should have enshrined free market price discovery and severe penalties for anybody trying to circumvent that indispensable underpinning to all commerce. But maybe that’s a moot point because the Constitution and Bill of Rights don’t have teeth. If they did, if infringements against free market price discovery were promptly and severely punished, we would still have a burgeoning middle class and fluctuating, free market interest rates. (Hat tip to Bill Black for being America’s greatest advocate for criminal prosecutions of the price riggers.)


    Diogenes – very well said! I think your post illustrates perfectly the criminality taking place. “…enshrined free market price discovery and severe penalties for anybody trying to circumvent that indispensable underpinning to all commerce.” Bingo, put it right in the Constitution, with severe penalty clauses (no piddly fines) – huge jail time.

    Ilargi – great post! “Free and properly restructured markets, having gone through needed defaults to clean the herd of disease, markets cleared of zombies, are the only thing that’s actually good for you. Unless you have a big mortgage. Well, that’s just too bad, you should have paid attention.” I can’t even begin to add up the amount of people I’ve read who vehemently disagree with that statement. They’re screaming with joy that their assets and 401K’s are up, and the only thing that would make them happier is a good old-fashioned debt jubilee. Karl Denninger pointed out that when things are rigged, one side ends up winning the lottery while the other side (the side that would have won in a free market) loses. Did I ever get shot down when I posted his article. People don’t want to hear that, and they don’t realize that if they got rid of the chain around their neck (debt), prices would come down considerably, enabling them to buy again at a much lower price.

    Everything is turned upside down, and people are in for a rude awakening. I wish nobody had to lose.


    Over at Mish’s site, he said: “Long-term, hikes are longer off than most realize. Also, the Fed will never sell anything. Assets will be held to term.” So many differing opinions, so much collusion between central banks, so much money floating around. It’s dizzying.

    Another poster said: “It’s a magic money machine! The Fed will never sell anything; they’ll keep buying at whatever pace they choose from here on in. Sure, this is money creation – inherently inflationary – but it will continue to be so dribblingly slow the dull-witted consumer, investor and markets will never detect the price inflation resulting from it…

    Keeps the big, leveraged banks, governments and other players happy, though, doesn’t it!? A buyer of last resort for their junk.”

    When this goes down, it will be painful. But as Morris Berman said, “You don’t get history for free.”

    Dr. Diablo

    Great article on how without honest price discovery, everything is fraud. It’s really the definition of a “Con”, where you sell something the buyer believes is valuable, but isn’t, or you take something from them they believe is impinged or worth less, but isn’t. Then you name it “voluntary”, and thus legal. But it’s not, it’s fraud, theft, and a felony requiring prison time to protect society — you and me — from those that would kill it, and us, dead.

    On Antarctic ice, I read the collapsing sheet articles in a few places and I’m lost here. So the ice sheet is collapsing. Okay. And will raise sea levels 10 feet. Okay. Over 900 years? That’s like 2cm a year. Add to that humans don’t have a real good record of prediciting what will happen in 10 years, much less 1,000.

    But although this hasn’t seemed to have started, it’s already unstoppable? How can you know that? We only got decent records of ice and flow a few years ago and we’re still struggling to model them accurately. Okay. So it’s unstoppable. But if it’s unstoppable, why bother telling me? By definition, that means it’s too late to do anything about it. Seems to be some panic bubble surrounding this story as they transfer to the new name for Global Warming, “Climate Chaos.” Wow. Hyperbole much? Even in a 100 year melt of 1/10th ft/year rise, move back from the beachfront a little, will ya?

    But that’s not the part that makes my head hurt. It’s that after unexpectedly icing in the Global Warming scientists and the world’s largest icebreaker a few months ago, Antarctic Sea ice is at a 35-year high.

    So the ice is both highest we’ve seen, the antarctic is the snowiest and has the highest build we’ve seen, while the ice sheets are melting the fastest we’ve seen. I give up. This is all science-by-agenda/science-for-hire. I can’t keep up with the data as they can’t agree on dead opposites. Without becoming a scientist myself, how am I supposed to know?

    Besides, they already said it’s too late to do anything. So smoke ’em if you got ’em! Right? Jeez.


    U.S. officials cut estimate of recoverable Monterey Shale oil by 96%


    that is brilliant, koso.


    Someone posted it in a comment under….pfff goes another dream i guess.


    Well, both Nicole and I popped that dream lots of times here, and we”re to going to be found wrong: shale is a land speculation scheme. How can you be an energy source with depletion rates of 80%+ for the average well? It’s ridiculous. But of course you do get all these lofty predictions from the EIA, that’s their job, to make things look sunny and great and all.

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