Charting The Ten Year Prelude To The Keynesian Endgame

Tyler Durden's picture

From John Lohman

2001-2010: Ten Year Prelude To The Keynesian Endame

Alas, one hundred years of the government’s attempts to mute the natural business cycle are slowly and painfully coming to an end.  A period where the government proactively encouraged consumption until it became 70% of the economy, we produced very little, and our savings rate reached zero.  A period where home ownership was promoted as the ultimate supreme goal until the last citizen that could fog a mirror yet was least able to afford it was suckered in.  As this leveraged consumption pyramid is finally ending, the government and central bank have embarked on one final mission to prop it up using the same tools that got us here in the first place: more leverage.  Only this time on a logarithmic scale.  Unfortunately, the scale is so large that it will not only guarantee an endgame, but it will accelerate it.  The visual below contains a few pieces of evidence that seem to confirm this, namely that over a ten year period: the consumer is stuck with an underwater balance sheet and the Fed’s attempt to create yet another bubble is only making it worse; outside of government efforts, the economy is unable to generate  sustainable job growth; and finally, the leverage scheme is so large that it no longer has a positive impact on growth (“debt saturation”).


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
TruthInSunshine's picture

Paul Krugman just sent me a text proclaiming that he likes this article and the analysis contained within quite a bit, but there's nothing presented that some massive fiat printing won't resolve.

Zero Govt's picture

Krugman knows about as much of economics as the socialist politicians of the Norwegian Govt (ie. the Nobel Committee)

jesse livermoore's picture

I got an extra ticket to the charlie sheen show .............  anybody wanna make me an offer..?..

chumbawamba's picture

I offer tree fiddy.

I am Chumbawamba.

TBT or not TBT's picture

Involving one of the porn actresses?

Hulk's picture

Got Gold? Silver? The love of a good woman?

string's picture

+3 ?!?! That's WAY too expensive.

Hulk's picture

DoChen and I went the cheaper, import route...Great way to increase ones swear word vocabulary too!

slewie the pi-rat's picture



it was love of/for women that made me what i yam today, unfortunately, hulk.  so, fortunately, i can say, today, that 3 outa 3 ain't bad...but sometimes i think 2 outa 3 might be a bit more stable for old slewie...

but, cupid just loves to nail my black little heart;  i yam trooly blessed!

Cleve Meater's picture

Si... Mutually exclusive.  Love of a good woman = no gold/no silver.

So Close's picture

Who is John Gault?

flacon's picture

Wow. Looks like a quality production. Can't wait. 

Matte_Black's picture

see: Atlas Shrugged, Ayn Rand (1957)

Some Libertarians cream themselves over Ayn. She completely legitimizes sociopathy under a bullshit rubric she calls objectivism.

John Gault is the intrepid hero of the story... you'll have to read it for yourself to understand the reference.

Andy_Jackson_Jihad's picture

If you thougt that was a question and not a statement it indicates you never read the novel and are regurgitating what youread elsewhere.  Fail.

Matte_Black's picture

oh. My bad. I forgot you guys like to just slip into character like that. Fail.

Sensitive much? lol...

Lord Koos's picture

Thousands of ditto-heads on this site.

Matte_Black's picture

Dittoheads, lol... do you think that is what is is? Perhaps. I always wondered, though, how Rand-lovers on this site explain Greenspan, a Rand protege. I dunno. Cognitive dissonance.

eftian's picture

I have a hard time understanding how someone who wrote "Gold and Economic Freedom" could have abandoned his core values so thoroughly.

I like this instead.

oklaboy's picture

Jeesuz H cryist, how smart can greenspan be? Hell he marries Aaaaannndddreea  Mitceull   reporting. not alot of smart there

NidStyles's picture

Hardly, the difference is at one time he was a real person that didn't work for the beast of the NWO.

rich_wicks's picture

I always wondered, though, how Rand-lovers on this site explain Greenspan

How do you explain:

  • Judas
  • Brute
  • Benedict Arnold
  • Jonathan Pollard

Pretty simply - they are traitors.

It's been suggested that Greenspan might not be a traitor, but the most insidous person in the world to have used his influence and power to force the world back onto a gold standard by purposely destroying the world's reserve currency in such a magnificent way, that it will be centuries before humanity tries John Law's experiment again.

Vagabond's picture

Greenspan joined the EE decades ago.  Read his 1967 article on gold and you'll get a good idea what happened to him.  He should not be lumped in with the libertarians.  He may have some of the rhetoric but his actions mark him as a player in the EE.

Richard Head's picture

You've "always wondered", for 2 weeks and 6 days?  Fucking troll.

Matte_Black's picture

"You've "always wondered", for 2 weeks and 6 days?  Fucking troll."

rflmao... yes, you are right. I was born 2 weeks and sixs days ago and had never read zero hedge before that - ever - never even heard of it... really.

Who is the fucking troll now?  lol...

Lord Koos's picture

I read it when I was 15 and thought it was a great story, plot developement, etc.  As an ideology -- major fail.

akak's picture

Yes, we certainly cannot have people thinking that their existence is self-justified without constantly having to sacrifice itself to the wishes and power of the mob and the sociopathic ponerists who masquerade as "leaders", both political and religious.

Matte_Black's picture

lol. And it comes with free energy to boot. Sounds like stealth socialism to me. hahahahahahahahahahahaa

Xkwisetly Paneful's picture

Shhh the FED as the largest consumer, employer, borrower, lender, landlord, tenant, real property owner and parents to 50million people in the country has nothing to do with anything.

Matte_Black's picture

lol... me too. I loved the story. And The Fountainhead as well. Great stories, lousy people.

CPL's picture

Most people are lousy and have been given ample opportunity to illustrate the fact.

bluebare's picture

It must get really good after the first 868 pages but I quit reading around there because by that point I really didn't give a rats ass about John Galt.

jimijon's picture

Maybe he meant DeGault?

Council of Economic Terrorists's picture

Prometheus, the one who changed his mind...

indio007's picture

This illustrates the difference between human want and need.

When people go to preservation mode we can operate on very little resources. 

That doesn't create jobs or raise GDP. Especially when discretionay income

is all going to get out from underwater. That is.... money going to a source that produces nothing . Let's coin it "residual bubble debt".


Chuck Walla's picture

That doesn't create jobs or raise GDP.

Apparently, neither does the Fed.

UGrev's picture

I feel oddly in favor of the crash with the understanding that the replacement system will be.. well, at I hope will be.. far more rational than what we have to endure now. 

tgatliff's picture

I doubt at this point that the FED will throw in its cards... My guess is that the great crash is still 5ish years away.  

History is clear on the end game, though... First, the financial crash which signifies the end of the 3rd turning.  The final end comes about 10 years later when a great military response marks the end of the previous era...

lordbyroniv's picture



Winter IS coming.

UGrev's picture

You think it will take that long? Things seem to be ramping up in a f(x) fashion. The time-line looks like it compresses every iteration. But I don't want to try to predict anything.. anticipation is the mother of insanity. So I'm just going to keep moving on 30 day resets. 

tgatliff's picture

Absolutely... The ultimate end, in my opinion, will be politically based.  Meaning, the current powers will sacrifice anything to keep their current financial system in place.  Hence, why they are ignoring the cost of living issue.  Only a political response will force them to do otherwise. 

The new group of politicians have one key difference than what we have seem previously... They are quietly working and seem less interested in sound bites.  That would indicate that they are more "Nomad" personalities than "Awaken" personalities.  Historically, this would indicate that the process of change from the 3rd turning has already started...

In my opinion... Historically speaking... I would expect things to essentially remain the same until the end of 2012.  After the next election cycle which will bring in another wave of the "nomad" personalities, they will continue to clamp down on government spending and the FED's tools.  Ultimately these actions will be the final blow into the 4th turning...


Psquared's picture

I think that makes a lot of sense ... unless these nomad personalities are actually interested in the betterment of society.

As to the next iteration, I believe that each incarnation simply brings a new set of rulers and oligarchs. No matter how noble the intent. The Founding Fathers, particularly John Adams and Benjamin Franklin knew this and stated their concerns early. Even Adams caved in when he tried to appoint the midnight judges before Jefferson took office.

slewie the pi-rat's picture


hi, UG rev @ #1076853!

yes, as we "wait" for the fiat currency/debt/QE "endgame", don't be too detached and hopeful of something "better". 

if i yam correct in seeing that our bankster-owned pols have sold us completely out to the "New World Order" of inter-national SUPER-fiat currency and, uh, basically, complete loss of nationhood and (yes, i'll say it!) God-given equal birth before the law, and the legally-protected liberties of free PEOPLE, then perhaps we should be a bit more aware of the downside, ok?

Liberty's American People!   armed to the freaking rafters, too!

ebworthen's picture

You just reminded me I really need to order that Mini-14 and ammo before it's too late.

Just the shotgun won't be enough, need to have something with more reach and penetration.

I'm thinking 9mm and .223 so I can scavenge ammo from the establishment if needed.

RockyRacoon's picture

I like my Mini-14 and keep in mind that it eats 5.56 as well as .223.