Does Koo's Statement That "Sustaining Fiscal Stimulus In Democracy During Peacetime Is Difficult" Mean War Is Coming?

Tyler Durden's picture

With the recent surge in geopolitical volatility (which nobody could have foreseen of course), it is easy to forget that the US economy is still deep in the abyss of a transfer process that sees trillions in capital needed to be funded by the government and plug holes in the private sector. This is not news and anyone who has followed Richard Koo over the past two years is fully aware of this: all of this is fully recreated in his latest presentation reproduced below. What is interesting is the addition of exhibit 23, which notes something very important: namely reality. Koo observes, very keenly, that "sustaining fiscal stimulus in democracy during peacetime is difficult" (of course, in authoritarian regimes nobody cares about stimulus until inflation surges to the point where the bulk of the population, which knows it has no other recourse, sees no other option than to revolt). Which leads to the question: so what? If fiscal stimulus is difficult (and virtually impossible after trillions have already been spent with little/no effect) in peacetime, does this mean that democracies are forced to turn to war as the only possible recourse (it worked with the Great Depression)? Or, alternatively, continue relying on the Fed for monetary stimulus, which however as we have all too vividly seen, is the bluntest instrument available, and tends to lead to the very same regime destabilizing revolutions that one may say are pursued by the abovementioned "democracies." The natural outcome is that instead of building up resentment against the political system, the population personifies the chairman of the Federal Reserve with the Devil, thereby deflecting anger from an impotent cadre of politicos. Yet regardless of the nuances, the bottom line is that without continued trillions of debt-funded injections in some form, the economy stagnates, and becomes another Japan case study.

Koo's prophetic exhibit:

Latest always informative Richard Koo presentation:


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Motorhead's picture

Silver, bitchez!

snowball777's picture

Beating those plowshares into swords, are we?

tmosley's picture

Well, that is what you do once you have been conquered and enslaved.

Bob's picture

Abrams M1A2's rolling up Wall Steet, bitchez!

TooBearish's picture

Bens gotta engineer a run into the greenback quick to knock down these commds and quick cause earl is primed to rocket, reckon might pull the bid in the spoos

tony bonn's picture

"Does Koo's Statement That "Sustaining Fiscal Stimulus In Democracy During Peacetime Is Difficult" Mean War Is Coming?"

that is precisely what those words mean. there are so many assholes in the pentagon and cia who believe that war is a remedy for depression that they are actively pursuing war...of course they have been doing that since 9/11/2001....the bush crime syndicate still runs dirty tricks for the plutocrats - fuck you david rockefeller....

Michael's picture

Oh please lets start our 3rd war soon. I need to see the quickening of US Bankruptcy II.

topcallingtroll's picture

I hope you are kidding because you sound young enough to be drafted.

Michael's picture

A 3rd war for the US would mean an immediate crash in the treasury market. What part of broke don't people understand? Lets get this bankruptcy party started.

Confused's picture

All kidding aside, no one really wants war now, do they? Bankruptcy would be devastating enough for some, but in this day and age war will be much worse. 

CH1's picture

Consider this scenario:

Start a proxy-ish war with China, in some out of the way corner. Then as soon as some dead American boys show up on the news, we declare all debts with the evil Chinese government null and void.

Poof! A whole lot of the problem vanishes with a pen stroke!

War: Serving liars and killing sheep for 6,000 years. A long and glorious tradition.

SilverRhino's picture

And the Chinese immediately retaliate by offering a gold backed currency and nationalize every western company in operation over there. 

RKDS's picture

Good.  Fuck the globalists.

Mikey3211's picture

Problem with that plan is that the Chinese know this is coming. You can't start a war on your own.

The Chinese have studied very carefully how the USA beat the USSR - though forcing the USSR to 'keep up' with the apparent spending of the USA, however the USSR didn't have the economic strength and innovation to keep up due to its own massive, overbearing beaurocracy, and decades long stifling of innovation through supression of intellectual freedoms. Political freedom of thought is not that different from any other freedom of thought after all.The USA exploited weaknesses of the (predominately) Russian mentality where their people crave highly authoritarian power structures. Russia was literally a Feudal government until 1914 after all.

Now the Chinese are doing similar tricks to the USA. Out competing economically while encouraging innovation. The Chinese are still trying to control political freedom of thought while opening up intellectual freedom of thought. It seems to be working. China is exploiting the USA's weakness where it gives in to the worship of 'Money' in a Scrooge McDuck kind of way.

China knows what is going on, and they've been watching it and probably encouraging it, as well as snarfing up every bit of gold, precious metals, and strategic goods (food multinationals, resources, manufacturing) as possible.

prophet_banker's picture

communism would have failed with out any help from the west; that's socialism's end result.  I think the concept of war saving economies is the greatest lie of history, war saves for the profit of the owners, and saves nothing for the rest of us.

fx's picture

In the very moment China will likely drop its entire Treasury bonds holdings - and will telegraphe the move for everybody else to run for the exit door asap. All those $$ printed by the fed will suddenly buy a lot less oil, metals, etc. And prices in the US will skyrocket one all these cheap chinese garbage disappears. I'd guess the guy sitting in the white house at that time will have a hard job rallying the people behind him

Ragnarok's picture

War is Peace.  Re-read that chapter last night, Orwell was on to something.

topcallingtroll's picture

I will second that fuck you. Whe need to track down all the rockefellers.

SilverRhino's picture

They're the ones busy giving rimjobs to the Rothschilds.  

zaknick's picture

Man, you're finally making some sense. It's not anti-Americanism but anti-fascism.

Misean's picture

First, we get the underwear....step2???...step 3 PROFIT!

Damned cartoons have it right, again.

Pladizow's picture

Celente and Faber have been well documented saying Washington will turn to War.

hardcleareye's picture

They have been calling for a complete collapse since 2009.  Are you saying that C&F have been well documented to have "SAID" or that C&F "HAVE" documentation that Washington will turn to War?  If so can you share a link to that documentation I would like to "explore" that line of thought...


Raymond K Hessel's picture

It's in English. They're on the record for saying Washington will turn to war.  Does Cass sign your paycheck personally or does he PayPal it to you?

NOTW777's picture

put Exhibit 2 on the front page of every newspaper and internet news page

Jack's picture

I reject Koo's premise.


Maintaining stimulus is extremely easy peacetime or wartime, boom or bust.  Withdrawing the stimulus is the hard part.  

Once you are obviously going bankrupt from constantly pouring temporary stimulus into the economy, that's when you start reaching the difficulties we see now.

topcallingtroll's picture

My thesis too. If true, it means china suffers more because they are further along the malinvestment cycle than we are.

digitlman's picture

So, what the fuck to Iraq and Afghanistan count as?  Haven't we been at war, technically, for a few years already?

Misean's picture

Noo, silly, those aren't wars. Those are democracy spreading actions. Our imperial storm troopers have flowers thrown at there feet by the locals for all the freedom they spread around.

The Pentagram and other delusional statist and keynsian ebbublegnomist only see war when an entire ebbublemy is turned into a vast military camp, and millions on all sides die.

aheady's picture

I reject your reality and substitute my own.

Misean's picture

The Pentagram always prefers a big boom!

tmosley's picture

Ah, Mythbusters quote.  I loved the early years.  Sadly, they seem to have run out of myths...

aheady's picture

They could audit the Fed?

Misean's picture



That is friggin' sweet!

And test the myth of gold in Fort Knox as well.

penisouraus erecti's picture

Oddly enough, the one guy that has been pushing that they are now trying to paint as a 'vicious anti-Semite'. Go figger

blindfaith's picture

Econ 101: can't have guns and butter too.

Why can't we learn this simple truth?

There was a time in recent memory where the Military told the politicians if there was a need for an 'encounter'. 

Now, the politicians tell the Military to go 'encounter'. 

THIS is why we have these wars that no one wants to declare, it is a politians' and special interests wars, not a defensive action which WAS the military's prime directive in the past.

Pringsh Peensh's picture

No...we're talking FORMAL declaration of war where all manufacturing activity and efforts/output are dedicated to the war effort. Including scrap drives, austerity, etc. Conservation and focus are impossible (not whiney wisconisn) , but austerity might be possible if they wrap a flag around it?

silver_serf's picture

The real wars are now economic, technology ensures M.A.D. on a real battelfield, so the empires seek financial domination.  The invasions and occupations of these 3rd world nations are all battles taking place in the global economic war.

hardcleareye's picture

The following is an example:

The Pakistan military says it needs more nuclear weapons to counter and deter India's more conventional military might.

The U.S. analysis is based on the recent increase in the production of plutonium and highly enriched uranium and some experts put the figure for nuclear weapons as high as 110.

Many of these have been miniaturised to be mounted on ballistic missiles with ranges of more than 1,245 miles bringing many Indian cities within reach.

The revelation of the growing size of its nuclear weapons will throw the spotlight on the massive aid packages given to Islamabad by the West, especially the U.S..

China is thought to have played a critical part in Pakistan's nuclear programme, and is said to have helped it manufacture many of its weapons.

Pringsh Peensh's picture

No...we're talking FORMAL declaration of war where all manufacturing activity and efforts/output are dedicated to the war effort. Including scrap drives, austerity, etc. Conservation and focus are impossible (not whiney wisconisn) , but austerity might be possible if they wrap a flag around it?

asdasmos's picture

Does anyone have a download link?

demsco's picture

We go to war with Libya 

bunkermeatheadprogeny's picture

Yes! Yes! And, Yes!

So formulaic, our sit-com writing elite.

velobabe's picture

i have fear with this empending war, guess that means they have won. we have to figure out how to take back our country back. the natives will help us, i am sure. why can't someone come and arrest these idiots in dc and wall street. just get our constitution back by rule of law, by men that know how to do this.

topcallingtroll's picture

The people willing to do it are probably too crazy and extreme to be trusted with the resultant power.