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Guest Post: Bankrupt Nations Try To Stop The Future From Happening, Fail

Tyler Durden's picture




 

From Simon Black of Sovereign Man

Bankrupt Nations Try To Stop The Future From Happening, Fail

Debt is slavery… or at least indentured servitude of the worst kind. 
That looming mortgage, the high interest credit card debt, the
short-term car loan– these are the forces that keep people from breaking
free and taking action.

Ironically, debt begets more debt. According to FinAid, the average
US student loan debt for a four-year private university graduate is
nearly $36,000, and $24,000 for public. Throw in that first car loan and
maybe a mortgage, and suddenly you’re staring at hundreds of thousands
of dollars in demoralizing claims on your future income.

At this point, most people figure… ‘hey, I’m already in debt up to my
nose, might as well get in up to my eyeballs and buy a new plasma
screen on credit.’

Debt is an enormous psychological burden that influences life’s major
decisions. It’s why so many people stay committed to jobs that are
unfulfilling in cities they detest under conditions they find
disheartening. Nobody wants to rock the boat too much… take too many
risks and you could lose your job, and hence the ability to make those
monthly payments.

This familiar story has been playing out across the developed world
for years. This is not an ill, however, that exclusively affects
individuals and families. Even at the macro level, debt has the power to
subjugate entire nations to the whims of their creditors.

Enter the IMF.

In July 1944, world leaders gathered in Bretton Woods, New Hampshire
to be dictated terms of the new global financial system. The US dollar
was set as the global reserve currency, and the International Monetary
Fund was established to shower the world’s nations with the dollars they
needed to participate in this system.

Like most governmental and non-governmental organizations, however, the IMF eventually took on a life of its own.

(The CIA is a perfect example of this; formally established in
1947, the CIA was charged with… wait for it… being the ‘central’ agency
to coordinate US intelligence. It grew quickly into its own beast,
culminating in the creation of the post-9/11 National Intelligence
Directorate. It’s job? You guessed it: being the ‘central’ agency to
coordinate US intelligence.)

Over the years, the IMF became the roving economic police force of
the ruling class, coercing developing nations to take enormous loan
packages they had no hope of paying off.

As a result, the local IMF (or World Bank) representative in
developing countries became extremely powerful figures. Leaders in poor
countries were so terrified of loan default, the IMF was able to shape
policy and allocate national resources as the west saw fit.

Clearly the tables have turned.

By 2011, the IMF’s biggest customers have become ‘developed’ (i.e.
contracting) countries like Greece which are relying more and more on
the generosity of China. Now with the IMF’s former chief locked up in
disgrace for the foreseeable future, the race is on to see who will
replace him.

The new order of things is very clear. The western hierarchy of the
past is insolvent, and its capital has migrated south and east. Western
leaders refuse to acknowledge this reality and are clinging desperately
to antiquated institutions like the IMF in order to retain control of a
now defunct financial system.

Newsflash: the IMF is only relevant to western leaders who live in
the past. French Finance Minister Christine Lagarde’s official bid to
become the new IMF chief only shows how pathetic their intentions are.
It’s like someone trying to take command of the Titanic as she’s headed
toward the ocean floor.

China, the world’s second largest economy, is routinely relied upon
to bail out the west… yet it has a paltry 3.65% of the IMF’s voting
power. Europe, however, is arguably the most insolvent region on the
planet, though it insists on remaining at the helm. Ultimately, the
market doesn’t care and has been orienting itself towards the developed
world for years.

Little by little we are seeing signs of a revolution in the financial
system– grumblings from Zimbabwe about establishing an asset-backed
currency, new exchange-traded gold contracts in Asia, more bank wiring
routes that bypass New York City, and corporations in the developing
world issuing debt on the international market in local currency with
ease.

I’ve written extensively that China’s renminbi is being increasingly
considered a reserve currency to compete with the dollar and euro. Other
developing countries have already entered into swap agreements to
accumulate renminbi reserves, and even western companies are issuing
renminbi-denominated debt.

There are signs of more liberalized exchange controls all the time;
it’s possible for individuals and corporations to hold savings in
renminbi through a variety of ways… you can even walk into the New York
City Bank of China branch and open an account.

The latest move is American Express’s new renminbi-denominated
Travelers Cheques– a ‘cash equivalent’ issued by a non-Chinese financial
institution. This is a major step, and its implications are far, fare
more important than whichever white person is jonesing to head an
irrelevant organization of the past.

Western leaders simply don’t want to accept their loss of primacy;
they’ve become enslaved themselves, not only by the insurmountable
sovereign debts they’ve accumulated, but by their stubborn refusal to
acknowledge the simple reality of a new system they can’t stop and don’t
control.

 

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Sat, 05/28/2011 - 15:58 | 1319650 Joe Sixpack
Joe Sixpack's picture

Crash JP Morgan (and the IMF), Buy Silver!

 

www.gold-silver.us/forum

Sat, 05/28/2011 - 16:43 | 1319717 Shell Game
Shell Game's picture

Excellent article on the silver playing field and on the possibility the silver market has been cornered again:

http://fofoa.blogspot.com/2011/05/costatas-silver-open-forum.html

There is only anecdotal evidence that JPM has actual silver short positions. Furthermore, it is information JPM themselves have divulged.  Are we to assume they are being honest and are not trying to mislead the public?  If JPM is lying about their shorts, are they trying to drive the public into silver and away from the real safe-haven of gold?  Caveat emptor, folks.  Don't forget to hedge this possibility with a good portion of physical gold..

 

Sat, 05/28/2011 - 17:28 | 1319758 Shell Game
Shell Game's picture

Ah yes, my itchy-bearded, OT friend. Up to your usual ways of parasitizing the top of the comments I see..  ;-)

Edit:  spot on re: Bubble Univesity

Sat, 05/28/2011 - 21:49 | 1320114 TruthInSunshine
TruthInSunshine's picture

Prepare for game over for global economy (not because it's a U.N. Report or because it's being widely reported by Reuters, AP and every other major wire service, but because the velocity is there on a psychological level).

For anyone thinking the woes of the U.S. and Eurozone will be net accretive to the economic prosperity of the BRIC nations or any others, think again, too.

We're entering a global black hole:

http://www.reuters.com/article/2011/05/25/us-economy-un-idUSTRE74O6EI201...

Sat, 05/28/2011 - 22:27 | 1320166 cosmictrainwreck
cosmictrainwreck's picture

holy shit! we really are in trouble if even the fuckin' UN can see it. Ben, yer petticoats are showin'

Sat, 05/28/2011 - 23:03 | 1320189 nmewn
nmewn's picture

Whaaa?...wait a minute...

"As a result, further (expected) losses of the >>>book value<<< of the vast foreign reserve holdings could trigger a crisis of confidence in the reserve currency, which would put the entire global financial system at risk," it said."

does this mean that something of value, that is attempted to be paid off with something of no value, is not an acceptable medium of exchange?

Huh.

Sun, 05/29/2011 - 00:31 | 1320238 tiger7905
tiger7905's picture

Don Coxe Basic Point May 2011 touches on why gold is definitely not a barbaric relic.

http://goldandsilverlinings.com/?p=1085

Sat, 05/28/2011 - 19:15 | 1319928 Fiat2Zero
Fiat2Zero's picture

Fairly long and rambling article with some good points.

However, it's easy to get lost in the world of hocus pocus.

Gold and silver are money in most of the world, and have been since people have found them. In the developing countries this is second nature. High inflation is driving these populations reflexively into PMs as it has historically. Paper currency always goes to zero, historically, as we are witnessing a world wide race to the bottom.

Most people on ZH probably own both gold and silver.

Silver will trade at 10:1 GS ratio when the music stops, by 2015 (my wild guess).

Worrying too much about the near term manipulation will give you conniption fits. Organic investment demand is driving price action.

If you want a wild ride with higher profits - buy silver, the devils metal, if you can stomach the volatility.

Buy and hold as much physical as you can, because paper money will not repair itself (without gold and silver)

Sat, 05/28/2011 - 20:50 | 1320056 Shell Game
Shell Game's picture

Most people on ZH probably own both gold and silver.

A lot more new faces all the time, I wouldn't bet on that.  Also, the 'Crash JPM' army are zealots with a good cause for sure, but that kind of fanatisicm could be played upon.

Sun, 05/29/2011 - 09:53 | 1320431 Use of Weapons
Use of Weapons's picture

Could? There is no could about it.

If you believed something different, you wouldn't be sitting where you're sitting

http://video.google.com/googleplayer.swf?docId=-4827358238697503

Infamous Chomsky - Marr interview. Marr later went on to become the #1 political pundit for the BBC, which just goes to show.

Whilst we can suggest that Max Keiser genuinely believes what he says, RT (or rather, the real owners of) is using him, and by proxy, his mainstay US audience as political edge against Washington. Silver bugs should be aware of the politics being used, even if it is to agree with it. But don't think that it isn't really one set of TPTB vrs another. I'd also dig into a few of the more autre Fiat sites for their seeds as well... But that's tin foil hat territory.

 

Tin foil territory: Max is sponsored by Hugo Boss, you work it out.

Sun, 05/29/2011 - 13:36 | 1320735 Fiat2Zero
Fiat2Zero's picture

Yes but believing that _all_ or even most silverbugs are fond of Max Keiser is a bit preposterous.

Many think he is a useful idiot.

If you are blindly following anyone, it'll probably end blindly.

However, just because the motives of Max Keiser may be impure, doesn't change the overall story for the investment demand of silver.

Follow the facts, ignore the dog and pony show.

Again, for _most_ of the world for _most_ of it's human history, gold and silver are/were money. The paper games being played out will eventually be futile. Don't get lost in the mirror world.

Sun, 05/29/2011 - 15:44 | 1320962 Chuck Walla
Chuck Walla's picture

I have wondered about the use of the current mania against us. It requires a devious and sinister mind to pull it off, but there seems to be no shortage there.  Soros is very capable of it for one.

Sun, 05/29/2011 - 20:39 | 1321506 Xavier Doe
Xavier Doe's picture

Que?

Please elaborate.  Your comment is meaningless as it stands.

Sun, 05/29/2011 - 22:53 | 1321715 Temporalist
Temporalist's picture

It seems that RT wants any alarmist anti-US pundits on.  It's just an angle.  Max has on many reputable guests and he does not put words in their mouths.  Also he and Stacy report on mainstream media news so they are pointing out and highlighting what are to them major stories but are avoided or disregarded by the masses.

Hillary Clinton herself mentioned that foreign news sources such as RT and Al Jazeera are supplanting US outlets.  I don't think she meant it to be complimentary but rather a warning that the US propaganda machine needs to dial it up a few notches.

Sat, 05/28/2011 - 22:11 | 1320146 Manthong
Manthong's picture

Yuan (yin) means silver in Chinese.

The Chinese characters (yin hang) for bank translate into "silver house".

http://mandarin.about.com/od/dailymandarin/a/yinhang.htm

Sat, 05/28/2011 - 22:49 | 1320180 Quixotic_Not
Quixotic_Not's picture

¿Tienes puta plata?

Sat, 05/28/2011 - 23:12 | 1320197 Manthong
Manthong's picture

Yo soy hijo de puta plata.

Sun, 05/29/2011 - 00:17 | 1320233 Manthong
Manthong's picture

Also, the acronym for U.S. dollar is FRN.

That is Bernankese for “Fraudulent Rectal Napkin”.

Sat, 05/28/2011 - 21:40 | 1320106 asymptote
asymptote's picture

Indeed. I have noticed that all of the documents that indicate 'who has the short' indicate that one of two HSBC or JPM holds  90% of the toal of the two, but we are never able to get he exact numbers on who it is. There is an equal statistical probability that HSBC is the massive short. 

In fact when I watch the COMEX movements vi Harvey's daily blog I se continued net outflows from HSBC, and inflows to JPM's new vault. There is a real possibility that HSBC is the holder of the short, and potentilly could be covering a problem in the LBMA. Also not that he LMBA stopped reporting a few years ago. We have no idea of what is going on over there now. I once suggested, that what we 'could' be seeing is JPM move away from HSBC? 

Perhaps a possibility.

One other thought I had after spending a few days reading over those two gian comment lists at the costata thread is that you can take two positions:

1) Gold and olny gold can be used to 'back' a currency as it allows a unilateral balance of trade transfer method.

2) If silver is also included, then realistically -anything- in the commodity space that has a few years of longevity can back a currency. This would eb a mess to administer. Peru backed by Silver, Vietnam backed by roughrice, Australia backed by Steel or Coal or Gold(from ore). 

To me, #2, while far messier to trade each others backing is probably more robust. A pure floating gold standard is likely to be subject to manipulation of a degree far greater than backing by 20 different commodities. Just look at Ft Knox. 

 

I'm hedged both ways, with a slight preference to gold. But even if FOFOA gets his fabled Reference Point Gold standard, in my heart I know it'll still be rife with scandal, fraud and manipulation. The system we have today didn't -make- the evil we see, sure it gave a good framework for abusive fraud. The biggest probelm we have today is the lack of will to exercise the laws we have to punish financial crimes. No system we can invent will stop the type of people we have today from attempting it again. The best we can hope for is to minimise the theft. 

 

Sun, 05/29/2011 - 00:45 | 1320252 Fiat2Zero
Fiat2Zero's picture

C'mon, JPM owns SLV, HSBC owns GLD. There's a lot of irrelevant info compared to these gargantuan facts.

Sun, 05/29/2011 - 10:25 | 1320502 downwiththebanks
downwiththebanks's picture

And they own the CRIMEX, too, right?  Or is it the CME that JMP owns?

Sun, 05/29/2011 - 13:34 | 1320739 Fiat2Zero
Fiat2Zero's picture

JPM has seats on the board of CME.  So yes, they are the ones doing the hikes.

Sun, 05/29/2011 - 06:05 | 1320357 The_Euro_Sucks
The_Euro_Sucks's picture

It is possible that the flow of silver is cornered. It is quite obvious that the flow of gold is cornered for decades if not longer. Its obvious that the above ground supply of silver is not cornered. It is not hard to realise that the above ground supply of gold is cornered. I do agree one needs to hold both metals in physical form. 

Sun, 05/29/2011 - 12:24 | 1320472 ToNYC
ToNYC's picture

 

Great news! When they finally corner all the Gold, they can box it up or bury it and build a moat. Later on, they can sell it to churches to cover themselves as if there was anything more to spirit than to worship the Sun (Aton), the source of all life...and respecting the rights of others. Precious metal believers need to keep passing kindergarten final exams each year of their education.

 

Sat, 05/28/2011 - 16:50 | 1319723 Jasper M
Jasper M's picture

And how's that workin' out fer ya?

JPMorgan will crash on its own, and the IMF is a broken reed, no need/point in buying more physical Ag. I will keep selling my silver into any strength. 

 

I like most of this article, but I notice the author seems to (fashionably) reserve his economic skepticism for the West – as if China's current rise (itself a function of Western debt) was somehow assured continuity into that same future he discusses. 

Sat, 05/28/2011 - 20:23 | 1320026 legal eagle
legal eagle's picture

You make a great point. It is a stand alone point though. I agree that China has purposefully pagged the Reminbi low against the dollar b/c they saw it was making them rich and us poor. This is true above and beyond the debt they acquired. They have bankrupted the US like we bankrupted the USSR.

We will soon see if they have gotten beyond the Mutually Assured Destruction phase by hedging against their US Treasuries.

Sat, 05/28/2011 - 21:54 | 1320121 asymptote
asymptote's picture

I wrote a long email to a friend on Friday about this very point. Specificaly on why Australia has done so well has nothing specifically to do with us being a 'great nation'. Australia is, like the chinese addicted to US monetary expansion. The chinese peg forces them to build things to soak up the inflation the peg created. To build things, the closest pile of dirt is Australia that gives them the resources needed to do so. The situation is unstable, as it relies on continued US debt growth and trade with China keeping the peg where it is as well as the AUD not rising so far it prices out commodities out of the market

Note the Baltic Dry Index and how Australia beat out Chile as being a major supplier in 2008 and you see a recipe for the next economy to reverse in to stagflation with it's commisurate real estate pop... and boy will this be a painful one. The sheep here feel invulnerable. All it take is the continued rise of the AUD, which is assured, or China breaking the peg, which it could well do on Qe3. 

Sat, 05/28/2011 - 19:24 | 1319943 max2205
max2205's picture

The new female IMF chief: "she walka like a girl but she talka like a man...Lola"

Sat, 05/28/2011 - 19:25 | 1319947 max2205
max2205's picture

The new female IMF chief: "she walka like a girl but she talka like a man...Lola"

Sat, 05/28/2011 - 19:26 | 1319949 max2205
max2205's picture

The new female IMF chief: "she walka like a girl but she talka like a man...Lola"

Sat, 05/28/2011 - 19:24 | 1319954 max2205
max2205's picture

The new female IMF chief: "she walka like a girl but she talka like a man...Lola"

Sat, 05/28/2011 - 23:18 | 1320200 TempFlashback
TempFlashback's picture

Is the fifth time going to be the charm? Stay tuned...

Sun, 05/29/2011 - 02:07 | 1320291 Hook Line and S...
Hook Line and Sphincter's picture

A charm? It might be as long as Lola keeps her pants on.

Sun, 05/29/2011 - 06:50 | 1320374 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

Do the illuminati accept chicks these days??

Secondly, there are many cases of female rapists...I hear they often spike drinks with a mixture of zanex and viagra...

Sat, 05/28/2011 - 16:02 | 1319653 IdioTsincracY
IdioTsincracY's picture

Debt is slavery .... right on!!!

Parents are indebted because of the great Real Estate ponzi scheme ...

the children are indebted because of College Loan scheme...

entire Countries and indebted because of the Natural Economics growth paradigm ...

Who the fuck is gaining from all of this???

Where is all the money going? .... follow the trail of the reverse-trickle-down flow ....

It's the fucking Oligarchy!!!

Everyone's got debt ... they're swimming in wealth extracted at the detriment of entire Nations ....

Do we need a new System? ... you bet .... but for that to happen we need to fuck them all!!!!

Sat, 05/28/2011 - 18:05 | 1319846 Freewheelin Franklin
Freewheelin Franklin's picture

Our entire monetary system is based on debt.

http://mises.org/daily/4631

Sat, 05/28/2011 - 19:11 | 1319926 Cursive
Cursive's picture

Yes, and I for one would prefer a return of the true "Greenback" issued by our very own UST, not the FRB.

Sat, 05/28/2011 - 19:49 | 1319986 Libertarian777
Libertarian777's picture

Not sure why there seems to be such a backing behind 'Lincoln's greenback'.

 

With the Fed monetising US Treasry issued debt currently, the US dollar printed by the Bureau of Engraving and Printing is effectively that issued by the US Treasury.

Since most people already agree monetising debt is a bad thing, why would allowing the US Treasury to flat out print debt currency be any better? It would completely remove the minor roadblock they have with the FRB.

Sat, 05/28/2011 - 21:40 | 1320107 robertocarlos
robertocarlos's picture

It's interest free "money".

Sat, 05/28/2011 - 22:04 | 1320135 asymptote
asymptote's picture

Australia's RBA was given independency from politics a few decades ago. Whilst I won't suggest it's a good model, as I detest Fractional Reserve lending on principal, it is probably an exmaple of the best of the worst. You will do better than you curently do, on that system, but you still have two problems as I see it:

1) If your government is allowed to issue bonds, it'll be fiscally imprudent and you will end up with high taxes. My highest tax band here is 47%, plus GST(Like vat), fuel excise, etc. I loose more han half of my wage to my governments desire to spend my money for me. The Private\Public central bank won't help you.

2) The environment the country exists in is a stabliser. If every other country in the world decides to dilute their currencies, then be ready to watch you economy get crushed as the exports continually have to lower costs to remain competitive externally. Sure, BHP can sell steel at market rates, but the business denominated in the local currency will suffer as it needs to operate within the realm of the stringer currency (as in paying wages). Remember, wages go up easily, and down with a lot of pain and cost (retrench, then rehire lower paid workers). 

 

The only soluton I see is a global reset, the people who will do it will be the ones who will benefit the most from the new system. 

Sun, 05/29/2011 - 06:26 | 1320366 BigDuke6
BigDuke6's picture

'Global reset'  ... like the rapture?

Its got its fans.

Sat, 05/28/2011 - 22:03 | 1320138 Cursive
Cursive's picture

@Libertarian777

With the Fed monetising US Treasry issued debt currently, the US dollar printed by the Bureau of Engraving and Printing is effectively that issued by the US Treasury.

Your analysis ignores the that the FRN is debt-backed money and productive capacity is drained from our economy by the rentiers (banksters).

Since most people already agree monetising debt is a bad thing, why would allowing the US Treasury to flat out print debt currency be any better?

Again, the return to the Greenback has abolutely nothing to do with debt.  That is what makes it great.  So, it a.) would not be monetising debt or b.) debt-based money/currency.

It would completely remove the minor roadblock they have with the FRB.

The FRN seems to have been something less than a very small pothole rather than a minor roadblock.  Also, perhaps if the FRB were removed, most Americans would have a more straight foward understanding of government finance.  The level of complexity added by the banksters via the Creature from Jekyll Island has obfuscated the problem for most Americans.

Sun, 05/29/2011 - 02:40 | 1320311 Libertarian777
Libertarian777's picture

all the articles i've read concerning the 'Greenback' still don't 'jive' with me.

I'm more for a 'competitive' market based money system (i.e. people individually decide what they wish to transact in; maybe facebook credits become the de facto standard).

A greenback would still be fiat (defined as legal tender) by the government.

What stops the US treasury from just issuing infinite streams of greenbacks? To fund the budget?

If we say well they are accepted by the US government as payment for tax debt, then it still basing the note on the 'faith' of the US Treasury (to tax US citizens).

Or if a greenback is not a US Treasury issued IOU, what then is it? What stops the Treasury from just printing infinite greenbacks? If it is just a 'note', unbacked by debt, then why would I accept it? I wouldn't. Except by 'fiat' (mandate). I would sooner accept someone's coat check ticket, as I could give that in for a coat, whereas a greenback I could exchange for... nothing.

 

I thought the sole role of the government was to certify the weight and fineness of the coins issued (i.e. a silver coin contains exactly x number of oz of .999 silver; gold coin is 22kt etc), and NOT to issue 'money'. (You should be able to take your raw gold/silver to the US Treasury and for a small fee, have them coin it into certified weights). That is the only 'faith' you'd need in the government (that they measured correctly).

Will Treasury issued greenbacks be certified to be of a certain linen vintage?

I understand that having a Treasury issued greenback will skip the middleman banker who gets zero % FRB funding to loan out to main street at 5%, but still don't see how it is NOT fiat.

Sun, 05/29/2011 - 03:19 | 1320319 WakeyWakey
WakeyWakey's picture

If the Greenback is introduced again, it's success depends on the level of debt with which it starts again. If it is sustainable, say 30% of GDP, and strict rules that it can never go higher than 40% of GDP then there should be no reason why it shouldn't work. 

It is still backed by debt, only it is interest free debt so no payments to the banksters and they get to re-use all their tax reciepts.

Which brings us to the next thing. The G20 governments should outlaw offshore tax havens. It is the filthy stinking rich who avoid paying taxes, leaving that little inconvenience to the poor and is the sole reason why Greece is in the situation it is in, but adds massively to the debt of all nations.

Ofcourse it will take a revolution to bring all this about as it is the filthy stinking rich who are running things in their own interest at the moment. Until they are replaced, nothing will ever change.

Sun, 05/29/2011 - 09:31 | 1320452 Cursive
Cursive's picture

@Libertarian777

but still don't see how it is NOT fiat.

Total agreement and that is the main point of the greenback.  It is pure fiat.  You could do worse than fiat and that is to print debt-based money like the FRN.  I agree with your main points and I would favor a dual or multiple money system as a means of keeping each system honest.  Let consumers decide which currency is the best.

Sat, 05/28/2011 - 20:17 | 1320022 nmewn
nmewn's picture

Its time to turn the tables over.

The crux of the matter is simply this, the Federal Reserve Bank is holding a lot of debt (bonds) that the taxpayer cannot and will not ever pay back.

Which is an odd circumstance for them when you think about it because they have never had any taxing authority to collect the debt owed.

None.

That is held by the consent of the people through their elected representatives.

What will we do? ;-)

Sat, 05/28/2011 - 21:32 | 1320095 Greenhead
Greenhead's picture

You have to remember that the Fed gives the Treasury most of its profits.  Interest on T's has to be paid by taxpayers, which is funneled to the Fed as they now hold the notes.  It is then funneled back to the Treasury dept and spent on this and that.  The big interest due bill is a slick way to demand higher taxes from the productive class.  "Look, look, we have this compounding mountain of interest due, we need more revenues... Guess we need higher taxes, etc."

Sat, 05/28/2011 - 22:24 | 1320159 nmewn
nmewn's picture

"You have to remember that the Fed gives the Treasury most of its profits.  Interest on T's has to be paid by taxpayers, which is funneled to the Fed as they now hold the notes."

Understood.

Not being a Princeton economist, I would have to say its going to be awful hard to make any payments on compounding debt obligations (rolling over to even zero interest) with the fact that wage earners comprise only half of the total population of this country. as a whole, and still half of them are exempted from any tax obligation whatsoever due to tax credits or some other form of tax avoidance to the Treasury.

Its a ledger entry in my estimation, nothing more.

Hell, if I could wave a magic wand and make fiat appear from nowhere all my problems would be solved as well ;-)

Sat, 05/28/2011 - 23:02 | 1320183 Quixotic_Not
Quixotic_Not's picture

nmewn,

In 1933 FDR pulled off a currency revaluation that screwed everyone, but the FED.

What if O-Blah-blah annouces, oh say Feb. 2013, that 'MeriKa is gonna have a banking holiday, and the U$D is repudiated as a failed currency scheme?

What is $15 trillion when refactored @ 1/100?

Of course, the FED will find a way to dump the counterfeit paper before then, but to whom?

Sun, 05/29/2011 - 00:00 | 1320227 nmewn
nmewn's picture

Well, to my way of thinking, it won't be to me (us). It will be defaulted on most likely, which means nothing to the productive.

We are sovereign unto ourselves and any alliances we choose to conduct for commerce are ours and ours alone, as is the medium of exchange.

It has always been a question of labor and services amongst us...this other theater we witness daily is just something the nation states consume themselves with.

Again, I truly believe we, as a people, will be fine...it is they who are pretty much fucked. They did this to themselves, as they have done throughout time, I have zero desire to bail them out or the people who support theft.

But like you (I suspect) I'm hangin around to see if anythings salvageable because I do love my people, even the ones who have been misled. If they can't see it now they never will and they will have made my choice for me.

Nations & empires come and go, the people remain, that's where I'm at...a withholding consent pattern.

Sun, 05/29/2011 - 00:36 | 1320245 Quixotic_Not
Quixotic_Not's picture

Objectivism says there are only two kinds of people in this world; creators and parasites.

Unfortunately, for us, the fleas have won in regards to the American Experiment.

I'm not seeing this working out long-term for the productive...

Perhaps after another dark age.

Sun, 05/29/2011 - 06:35 | 1320371 BigDuke6
BigDuke6's picture

i think nmewn is right.

as we interact nothing much may change unless there is public disorder and thats unlikely on a massive scale.

my mum in law lives her life happy knowing nothing about the big picture - justs goes about her business with family dominating everything - and why not?

the standard of living will flatline with less affordable gadgets.

and soylent green will get popular.

Sun, 05/29/2011 - 08:00 | 1320404 Hephasteus
Hephasteus's picture

What is not new are attempts to diagnose Rome's particular problems, with Satire X, written by Juvenal in the early 2nd century at the height of Roman power, criticizing the peoples' obsession with "bread and circuses" and rulers seeking only to gratify these obsessions.

Sun, 05/29/2011 - 09:59 | 1320470 nmewn
nmewn's picture

"Unfortunately, for us, the fleas have won in regards to the American Experiment."

When an experiment is altered intentionally, it then produces a different outcome than when it first began.

Every society struggles with what to do with its parasites, that is, the unproductive.

They are in every society.

To over tax the productive, in order to take care of the unproductive, is just as unfair as the compensation committeeof any corporation allowing stock issuance (thereby diluting the exisitng shareholder) for the purpose of paying its executives ever higher amounts...the implication is real...someone is going to get the shit end of the stick eventually...in this example, the existing shareholder and the taxpayer.

Our "experiment" has been under assault from its very founding IMHO.

Its hard to say when it finally went off the rails but 1913 is as good a year as any to look at. The income tax became permanent, the Federal Reserve came into being. Coincidently, in 1913 the seventeenth amendment was passed (legally) that allowed popular election of federal senators.

It was not the intent of our founders to have a full blown democracy. The House was intended to be the democracy aspect, the Senate more deliberative composed of people sent by the legislatures of the states, not popularly elected by citizens, but chosen by legislatures to represent the individual states interests at the federal level. The president, the final check on both.

But for today and tomorrow, I'm going to relax, do some grillin & chillin with the ones who matter to me most ;-)

Seeya

http://www.youtube.com/watch?v=KUwjNBjqR-c

Sun, 05/29/2011 - 05:36 | 1320348 OldPhart
OldPhart's picture

Out of curiosity, and a perverse sense of humor...

Let's pretend that there's a plan in place to correct our current national financial situation.

What would be the effect of the following?

US Government (USG) nationalizes the Federal Reserve.

USG announces that all debt to foreign institutions is the responsibility of former FED member banks, not the USG.

All FRN's in circulation are worthless, the US Dollar has been resurrected.

USG announces that all debt to internal (US) holders will be paid in lump sum by US dollar.

USG announces that US Dollar is pegged 1/100,000 ounce of gold.

Question is what are the effects?  Who would we be at war with (besides China).  How would we benefit?

 

Mon, 05/30/2011 - 00:18 | 1321834 Seer
Seer's picture

I'm glad that we're finally getting around to this conversation.  I'd brought this up many months ago.  It's been my take that the Fed will be the bag holder and that it'll take the fall.  It's going to happen, so why not load up the banking system with all the debt and then wipe it out?  Clearly, the conversation has been managed toward nationalization; what else do TPTB do other than sign up for a controlled reset?  As much as people here don't want to hear it, we ARE part of TPTB.  Yes, we're writing off the debts by dumping fiat (moving to PMs and other real assets).  We are clearly NOT part of the world's masses, we're not the 2/3's of the world's population (4 billion) who live on $3/day or less.  Granted, we are not TPTB, more like tptb.  In essence we are doing what THEY are doing; shouldn't be too hard to see where it will go...

Mon, 05/30/2011 - 00:54 | 1321856 blindman
blindman's picture


Steve Keen: Will there be a double dip in the USA?
http://maxkeiser.com/2011/05/29/steve-keen-will-there-be-a-double-dip-in...
Bev | May 30, 2011 at 3:02 am |

Ask about Byron Dale
http://www.moneyaswealth.blogspot.com/
Don’t let them side-track you by talking economics. It’s about MONETARY POLICY. It’s about how money gets into the economy that matters most.
http://moneyaswealth.blogspot.com/2010/07/focus-on-problem-not-side-issu...?

Best Political Quote in Over 100 years!
?“If men can create electronic bookkeeping entries representing debt and loan them into circulation, men can surely create electronic bookkeeping entries as a payment and spend them into circulation with no debt. Which do you prefer?”?- Gregory K. Soderberg, Rep. Candidate MN. Lt. Gov., 2010

MONETARY POLICY??
How money gets into the economy.??
This is the key to the solution.??
There are only 3 ways money can get into the economy and all 3 have their own set of consequences. Those 3 ways are:??
Gift it in??
Lend it in
??Earn it in
snip

Lend It In??
There is NO money created in this process to pay interest with – only principal is created when a loan is made. So, it’s unworkable from the start. Looks OK at first – easy money! But, it’s a Ponsi scheme. A Bernie Madoff heist. It institutionalises corruption and criminality and leaves the Nation without a permanent money system while guaranteeing its people eventual economic destruction.??

Earn It In??
First, this way, there’s no debt. Government would create the money (same as the banks do now) and enter it on their books as an asset, instead of a debt. Contractors get paid for production that we need (infrastructure) and they pay their workers – who buy stuff. No debt, no borrowing, no bonding, no tax increase, no tolls, good modern roads, safe bridges and a huge debt-free stimulus. That means JOBS!
snip
?
Make One Small Change??

This could be implemented within 72 hours (maybe less) of passage. The bill is TWO PAGES! Congress could actually read it for a change.??
Nothing but an accounting procedure needs to change. Oh, and your mind.
……..

Ellen Brown
http://webofdebt.wordpress.com/
She is building a Public Bank movement, state by state, built on the successful plan of North Dakota.

Bill Still
http://www.secretofoz.com/
Whose video shows that we have won this same battle (Money controlled by government–a Debt Free Monetary system) six times in the past, fought by the likes of George Washington, Abe Lincoln and John F. Kennedy among other Presidents who were then warred against, assassinated, or attempted to be assassinated.
……….

So, we need to win again for the 7th time.

………..

Also, silver and gold are like the Wealth Based Monetary System of Public Banks in that all of these are cash, a persistent wealth which keeps circulating in the system. Though if like the original gold bugs, if gold is loaned as debt into society, we will have the same problems as we do with the current fiat debt based money system.

…….

Have you seen the new 100 dollar bill design
http://www.roadtoroota.com/public/261.cfm
with all the gold symbols and revolutionary language. It seems to me that the US with the biggest gold reserve (perhaps) has already planned to gold back its paper currency and maybe use all that gold ink to make it hard to counterfeit.

What are they waiting for.

And, again, the big difference is whether that gold back currency is part of a DEBT based Monetary System or part of a WEALTH based Monetary System that matters the most.
………..

And, Jim Sinclair has an interesting formula for the top price of gold which he challenged readers to figure out based on the formula that worked in the 1980?s which is:
from:
http://www.jsmineset.com/2011/05/26/the-mathematics-of-gold/print/

Assumption:

Because gold is held by many central banks, once as a reserve currency but now as an inventory currency, it functions as a swing asset to balance the International Balance sheet of the US.

Central banks are sellers of dollars but still hold, by default, large dollar inventories.

China has hedged its dollar position 50% through commitments to long term dollar commercial agreements, pay in, mineral, and energy deals internationally. That is an act of pure genius.

We can assume other central banks still hold 90% of their reported dollar positions, on average unhedged by commercial obligation positions.

In crisis times, the US dollar price of gold ALWAYS seeks to balance the International Balance Sheet of the USA.

Therefore:

Take 90% of international US dollar debt less China and then add 50% of the US debt owned by China. Then divide that number by the ounces supposed to be owned by the US Treasury. The result is where gold wants to go.
……..

So, if the international balance sheet is corrected by increasing the price of gold, and the US has a new gold back currency, then don’t we still need the Public Banks, the Wealth Based Monetary System (which is what silver and gold coins are) to start to improve the economy fast, as a Debt Based Monetary System even if gold backed is still debt and so not solving our debt problems–you cannot get out of debt with debt.

Sun, 05/29/2011 - 09:28 | 1320451 Stuck on Zero
Stuck on Zero's picture

Obama will repudiate the debt and revalue the greenback when it suits the occasion.  The Gummint will create an "incident".  An explosion at the mint, and the claim that Iran, Venezuela and North Korea have counterfeited $100 trillion in notes and bonds and destroyed the whole currency system.  We will issue a new Amero currency and rush off to bomb all our enemies out of existence.  The illuminati will continue in power and all the dollar-based creditors in the country will be done-in. 

Sun, 05/29/2011 - 12:03 | 1320594 thriftymost
thriftymost's picture

Monetizing the debt is much easier, however, and will prove the more convenient solution.

Owing a trillion $ isn't a problem if you can print a trillion any day of the week.

Mon, 05/30/2011 - 00:16 | 1321836 Seer
Seer's picture

I think that you're pretty close.

Sun, 05/29/2011 - 10:14 | 1320489 bigkahuna
bigkahuna's picture

The fed is about to make a play on all real property that it has an interest in plus any gold that the US govt owns. The coup will move from the background into the foreground.

Sun, 05/29/2011 - 09:35 | 1320453 Freewheelin Franklin
Freewheelin Franklin's picture

Yes, and I for one would prefer a return of the true "Greenback" issued by our very own UST, not the FRB.

I would prefer private bank notes that are convertable on demand.

Sat, 05/28/2011 - 18:07 | 1319856 cossack55
cossack55's picture

The best summation of what is happening in under 1 minute:

http://www.youtube.com/watch?v=4KvzuDbG-TQ

Think Iraq, Iran, Egypt, Libya, Syria, Afghan, Yemen, Somalia

Think HSBC, JPM, GS, UBS, IMF, ECB, FED

Sat, 05/28/2011 - 19:17 | 1319932 Miss Expectations
Miss Expectations's picture

Thanks.

Sat, 05/28/2011 - 19:46 | 1319981 tom a taxpayer
tom a taxpayer's picture

Thanks. Looked and sounded like DSK revealing the dirty IMF secrets.

Sat, 05/28/2011 - 20:38 | 1320044 nmewn
nmewn's picture

I can't pass up another kick in the teeth of a prostrate DSK ;-)

A picture says a thousand words...

http://2.bp.blogspot.com/-6E3b--k0Zx4/Td_e-7AE8yI/AAAAAAAAQ4Y/I3jyhI7lK9k/s1600/dominiquestrausskahnmichelleobamaandobama.JPG

Sat, 05/28/2011 - 22:21 | 1320144 tom a taxpayer
tom a taxpayer's picture

WOW!!!! That picture is amazing...priceless. Thanks for finding that gem!

Obama is restraining DSK who is trying to make a move on Michelle. DSK has an uncontrollable appetite.

Sat, 05/28/2011 - 22:33 | 1320171 nmewn
nmewn's picture

I should say, the attribution goes to Jessie at his cafe ;-)

The shriveled up, lecherous scumbag shown as he is.

Sun, 05/29/2011 - 04:46 | 1320335 WaterWings
WaterWings's picture

Yeah. There's some serious-instinct knee-jerking right there.

Sun, 05/29/2011 - 06:41 | 1320372 BigDuke6
BigDuke6's picture

Brilliant.

Shows up the history of french colonialism nicely.

Sun, 05/29/2011 - 10:13 | 1320487 NumberNone
Sun, 05/29/2011 - 11:53 | 1320581 blindman
blindman's picture


Peter Sellers: A Hard Day's Night
http://www.youtube.com/watch?v=zLEMncv140s
.
Peter Sellers - She loves you (German version)
http://www.youtube.com/watch?v=w3iY6rpHjfA&NR=1
.
The Doomsday Machine in Dr. Strangelove
http://www.youtube.com/watch?v=cmCKJi3CKGE
.
but this is the one.
dr. strangelove - survival plan
http://www.youtube.com/watch?v=iesXUFOlWC0&NR=1

Mon, 05/30/2011 - 00:29 | 1321847 Seer
Seer's picture

No closer truth than fiction...(or, life imitates art).

Sat, 05/28/2011 - 16:03 | 1319662 Rynak
Rynak's picture

Well, IF we were to be fair, the involved consumer nations shouldn't default on all their debt, for the simple reason that they willfully took part in this perverse relationship... and stayed in, until SHTF. "Fair" would probably be the consumer nations defaulting on as much debt as necessary to safely repay the rest of the debt, while not taking any more debt and getting out of this fucked up relationship.

Sat, 05/28/2011 - 16:11 | 1319668 IdioTsincracY
IdioTsincracY's picture

How 'bout this:

we go to the people who benefitted from the last 30 years of capital-extraction economy, and we say: sorry dudes, you are hereby declared a threat to national security .... followed by a loud: Die, fucking leeches!!!

I think that would solve the problem ....

Sat, 05/28/2011 - 16:19 | 1319682 Bindar Dundat
Bindar Dundat's picture

I agree. They have called it mutant capitalism and it has nothing to do with Democracy or building a nation. It is simple and total GREED!

Sun, 05/29/2011 - 10:29 | 1320503 downwiththebanks
downwiththebanks's picture

What you call mutant capitalism goes by another name:

Capitalism.

Sat, 05/28/2011 - 16:30 | 1319695 CH1
CH1's picture

I understand the sentiment, but remember that these people have a silent partner - the state. It is the state that enforces these systems upon us all.

"National security" is what we have now. The bankers, IMF, etc. are a fundamental part of it.

Sat, 05/28/2011 - 16:39 | 1319709 cosmictrainwreck
cosmictrainwreck's picture

yep - that's the fuckin' trump card; can't wait to see how/when they play it. the ultimate intervention, when things make any hint of following the natural course of events, it's Exec Orders out the wazoo, "special regulations", martial law..... take yer pick

Sat, 05/28/2011 - 17:32 | 1319788 Caviar Emptor
Caviar Emptor's picture

Exec Order #2683: No more comments on Exec Orders or the Patriot Act without permission. 

Sat, 05/28/2011 - 18:13 | 1319860 cossack55
cossack55's picture

Permission from whom?

Sat, 05/28/2011 - 22:30 | 1320170 cosmictrainwreck
cosmictrainwreck's picture

if you have to ask.... "permission denied!"

Mon, 05/30/2011 - 00:32 | 1321852 Seer
Seer's picture

+2683

Sun, 05/29/2011 - 06:56 | 1320377 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

This kind of demand can only be about 3 years away. The people will always let themselves be screwed before reacting appropriately.

As ever I think our arab cousins will be leading the way. So expect lot of headlines about mad muslims, extreamism etc etc

The only way out for the elites is WW3

Mon, 05/30/2011 - 09:32 | 1322247 buzzard
buzzard's picture

Break: ... I have a probably naive question here. To whom are "WE" supposedly paying this "debt"? Banks? Hedge Funds? Pension Funds? Soros et. al.?

I will note here that I can't bring myself personally to feel obligated in any way for this debt. I felt that I have bartered my labor all my life for whatever remuneration which I could get. It is mine alone. I owe nothing to any abstracted middle man who wishes to take a cut.

Sat, 05/28/2011 - 16:14 | 1319669 Segestan
Segestan's picture

To bad we don't have a time machine, send this joker bad to the 1700's...... "Debt is slavery… or at least indentured servitude of the worst kind. That looming mortgage, the high interest credit card debt, the short-term car loan– these are the forces that keep people from breaking free and taking action".  ...... WTF!!!

Sat, 05/28/2011 - 16:34 | 1319704 Shell Game
Shell Game's picture

Self-reliance and modest living is a bitch.

Sat, 05/28/2011 - 16:45 | 1319720 cossack55
cossack55's picture

I actually enjoy it. Trying to figure as many ways possible to stay out of the game, to take markers off the table, to not be manipulated.  Not winning yet, but "light at the end of the tunnel".

Sat, 05/28/2011 - 16:50 | 1319726 Shell Game
Shell Game's picture

Well done.  It's the only way to live outside of the system, and live as free as possible under the current circumstances.

Sat, 05/28/2011 - 17:34 | 1319792 Caviar Emptor
Caviar Emptor's picture

Debt Shall Make You Free. New sign over the gates at Auschwitz. 

Sat, 05/28/2011 - 18:02 | 1319841 cossack55
cossack55's picture

Dette Macht Frei?

Sat, 05/28/2011 - 23:07 | 1320193 ToNYC
ToNYC's picture

 

 

Wahrheit macht frei.

Sun, 05/29/2011 - 05:28 | 1320342 Mec-sick-o
Mec-sick-o's picture

Walmart make fries.

War-hate market fried.

Sun, 05/29/2011 - 17:50 | 1320647 ToNYC
ToNYC's picture

 

 

Truth makes (you) Free. Life without Truth is not worth living.

Sun, 05/29/2011 - 20:43 | 1321502 Mec-sick-o
Mec-sick-o's picture

Danke shön!

I have found difficult to talk truth only.

People scratch heads, get uneasy or may even turn aggressive.

What I have done is give them the truth dosified, so they will not react and be more receptive.

This cannot be done all the time, on every case, though.

Sun, 05/29/2011 - 22:49 | 1321713 ToNYC
ToNYC's picture

 

 

The Truth is that you are trying.

Sun, 05/29/2011 - 06:55 | 1320378 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

Hell yes!

I make a game of it. I skip train fares, steal small items from the supermarket, leave restaurants without paying, steal flowers from peoples gardens...the money I save goes into silver

Sun, 05/29/2011 - 19:22 | 1321386 thriftymost
thriftymost's picture

All of you well-meaning clowns turning to "self-reliance" and "modest living" and similar modalities fail to see that you're regressing into a dog-eat-dog, monkey-eat-banana primitive past.  You fail to see/understand that Karl Marx foretold your regressivist anti-revolution all the way back 150 years ago.  You fail to see that self-reliance and modest living will not produce the next generation cell phone, yet alone the next generation space travel, longevity drugs, etc.

China soars headlong into a mutually reliant and increasingly less modest way of living each day.  I know this first hand, as an American expatriate living quite happily, and ever more progessively, a bit upriver from Shanghai.

Bye, bye, America.  Hello future, hello China, hello world, hello cosmos, hello communism!

Mon, 05/30/2011 - 09:36 | 1322252 buzzard
buzzard's picture

Who needs cell phones and space travel? They are symptoms of our problem -- the problem of civilization.

Mon, 05/30/2011 - 13:25 | 1322774 Shell Game
Shell Game's picture

Oh, how wrong you are.  Open your eyes to actual history and you will see the foundation for the technological advances you speak of did not come on the shoulders of a debt-addicted and debt-burdened populace.  But rather, a post-WWII generation who still remembered the Great Depression and lived within their means.

You easy money clowns brought it all down. Congratulations.

Mon, 05/30/2011 - 02:51 | 1321968 Seer
Seer's picture

What is "self-reliance?"

And, what is a "modest living?"  Consider that you're in front of a computer typing and that the majority of the world's population has never even made a phone call...

The bottom line is that we have to maximize our energy expenditures.  This is no different than what the rest of nature does.

But, stating that we're living modestly is relative, in most cases it's comparing ourselves to the very tip top, something that plays into the game's hand (suckered into continuing to play the lottery, hoping to become one of the very top). NOTE: this is generalized, you may not aspire to this, but the majority do (not realizing that this very belief enslaves them).

Sat, 05/28/2011 - 18:43 | 1319899 Smartie37
Smartie37's picture

So sorry but classic troll psy-op technique of "ridicule" does NOT work here 

Sat, 05/28/2011 - 20:31 | 1320038 Id fight Gandhi
Id fight Gandhi's picture

Debt is paper, it's nothing, you default and walk away. Hold and hide gold and cash it in for paper when you need it.

Sat, 05/28/2011 - 16:20 | 1319684 MrBinkeyWhat
MrBinkeyWhat's picture

"The Road to Serfdom"...a real page turner. ;-)

Sat, 05/28/2011 - 16:22 | 1319685 YHC-FTSE
YHC-FTSE's picture

Yep. It's a familiar tune these days. And this article merely scratches at the cesspit of corruption, hypocrisy, megalomania, greed, fraud and outright delusions by those in power in Washington. The stuff that I've learned from ZH members who seem to be far more knowledgeable about these matters than I ever want to be are the basis for nightmares.  

Debt is slavery, knowledge is power. It's also disheartening to know that just a few people reading this cannot make the smallest dent against the system, and hoping that when the edifice crumbles it will take those responsible with it, is just wishful thinking. The rats have already left the sinking ship.

Sat, 05/28/2011 - 16:29 | 1319693 pitz
pitz's picture

Burn the motherfucking bankers.  Just burn them.  Give them a taste of their own medicine.

Sat, 05/28/2011 - 16:39 | 1319707 CH1
CH1's picture

Why don't we just leave them behind to rot, along with the states that employ them? 

Mon, 05/30/2011 - 04:05 | 1322007 Seer
Seer's picture

To me this is the ONLY "solution."  Seeking "revenge" only results in giving the system some sense of legitimacy: keep in mind that they control the military forces in the world- you cannot touch these folks without the threat of mass destruction/deaths.  Walk away and never look back.  Be the new way.

Sat, 05/28/2011 - 18:08 | 1319851 Freewheelin Franklin
Freewheelin Franklin's picture

You know who else tried to burn all of the bankers, don't you?

Sat, 05/28/2011 - 20:14 | 1320010 serotonindumptruck
serotonindumptruck's picture

Here, you can start with these people.

http://www.group30.org/members.shtml

You were going to lead this charge, correct?

Sun, 05/29/2011 - 05:54 | 1320354 OldPhart
OldPhart's picture

They're pretty powerful....as are their supporters.

 

http://www.group30.org/contributors.shtml

 

Sun, 05/29/2011 - 10:27 | 1320506 downwiththebanks
downwiththebanks's picture

You'll have to get through a lot of their servants on these pages, first.

Sat, 05/28/2011 - 16:33 | 1319694 terryfuckwit
terryfuckwit's picture

i always like the analogy of how the natives used to catch monkies... making a small hole in a tree.. big enough for the monkey to get its hand in but to small to get his hand out.. once he has grabbed the nuts. How stupid is the monkey not to let go and be free.. and yet we are no differant we make our own handcuffs... and walk into the traps every time....

Sat, 05/28/2011 - 18:12 | 1319867 knowless
knowless's picture

i've never heard that, but it is awesome.

Sat, 05/28/2011 - 20:02 | 1320002 tom a taxpayer
tom a taxpayer's picture

Touching Dieter's monkey is also awesome.

http://www.youtube.com/watch?v=Jc7lPwfQAKk&feature=related

 

Sat, 05/28/2011 - 16:35 | 1319697 lunaticfringe
lunaticfringe's picture

All debt is paid- by the debtors or by the lenders.

Sat, 05/28/2011 - 16:32 | 1319699 oklaboy
oklaboy's picture

sun screen anyone?

Sat, 05/28/2011 - 16:35 | 1319700 kevinearick
kevinearick's picture

America’s Memorial:   Economic Resistance & Torque

Wealth is transferred from corporation to corporation until it reaches its ultimate beneficiaries, by whatever means of misdirection is necessary, which is why the law grows more and more complicated, but never really changes. You just have to get over the founding father BS mythology. War is always misdirection; it’s a loss leader.

Of course the kids, generally, are resisting, because there are no resistors in the rest of the circuit to provide the necessary torque to pick them up. If you think about it, until you were “right-sized” by the education/propaganda system, you lived in a different economy from the adults, in a kid economy. What you are looking at now is a conveyor system accelerating toward a cliff for most adults, addicted to their bred behavior, many adults and kids struggling in the economic churn pool, and a group of kids building a new conveyor system.

The machines didn’t create the problem; they are just compounding it, in quantum leaps. What created the problem was the Fed maximizing monetary expansion, Congress maximizing its return to the fewest number of people, and the middle class breeding on the resulting ponzi promises of free money, all to be extracted from the talented kids in the future, who are the primary determinate of the NPV window / income value multiplier.

The Fed was specifically built to prime the pump from the end of the assembly line, back, and has had little choice but to prime shallower and shallower with each iteration, more and more frequently, as the talented kids got smarter and more independent, while the adults got dumber and more dependent, in a natural bifurcation process, until it has now reached its conclusion, with the Fed doing nothing but priming itself.

The nexus is backfilling with more and more exotic / artificial delay mechanisms, competing with evolution, measuring productivity and profit by machine efficiency. They had their chance to bring in Volcker, and out-smarted themselves, again. In a TBTF system, all the participants get screwed when the music stops, and it always stops.

When a middle class is liquidated, the pump has to be primed from beginning to end of line, which is why a depression lasts so long, if the system is to be restored (not treated as a sunk cost). A cohort group of talented kids has to be brought from beginning to end as the example necessary to restore induction. Do-as-I-say-not-as-I-do management doesn’t work on talented kids.

Extending the old system has effectively resulted in a global coliseum in which the Navy performs mock wars with its redundant ships (China is doing the same stupid-a** sh**), fighting yesterday’s war with tomorrow’s money, to which it has no access, on a global IC chip. 10 million kids going out for football to usher 15 of them into professional contracts does not an economy make.

The scarcity economy must be balanced with an abundance economy, directly connected to the planetary economy. SLAVE LAW DOESN’T WORK, IT HAS NEVER WORKED, AND IT WILL NEVER WORK, except to grow the virus. That’s History. Communities cannot be simple extensions of the nation/state scarcity system, which is why the Internet and purely municipal law were developed, to trump the nation/state idiocracy. The Internet was not designed to house the nexus. That bridge is collapsing, and the machines are driving the herd into the abyss.

So, the nurses at the top are getting a 40% pay cut and the builders are complaining about the inflation inherent to government growth, as the speed of cannibalization increases another notch. Surprise, surprise. In a rigged lottery economy, the jackpots sizes increase as the number of jackpots decrease, for a decrease in net payouts, and parasitic behavior grows exponentially accordingly, consuming everything in that environment.

“a roller-coaster ride of balance: chaos versus order; well-laid plans versus inevitable disaster, both large and small.”

Sat, 05/28/2011 - 16:59 | 1319740 blindman
blindman's picture


word !

Sat, 05/28/2011 - 17:16 | 1319764 DoChenRollingBearing
DoChenRollingBearing's picture

Wow, that was beautifully written.  I wish I could write like that.

You should start a blog if you have the time.

Sat, 05/28/2011 - 19:52 | 1319987 NOTaREALmerican
NOTaREALmerican's picture

> The Fed was specifically built to prime the pump from the end of the assembly line, back, and has had little choice but to prime shallower and shallower with each iteration, more and more frequently, as the talented kids got smarter and more independent, while the adults got dumber and more dependent, in a natural bifurcation process, until it has now reached its conclusion, with the Fed doing nothing but priming itself.

Yeah, good description. It was inevitable that more and more people would figure out how to game the scams. Oh well, we had a good run.

Sat, 05/28/2011 - 20:27 | 1320033 Dugald
Dugald's picture

A nice piece of elucidation, sets a bench mark for those who just waffle!

Sun, 05/29/2011 - 19:07 | 1321364 adeptish
adeptish's picture

 "fighting yesterday’s war with tomorrow’s money, to which it has no access, on a global IC chip. 10 million kids going out for football to usher 15 of them into professional contracts does not an economy make."

Poetry...

Well said mate...

Sun, 05/29/2011 - 19:25 | 1321397 YHC-FTSE
YHC-FTSE's picture

+1

 

Lovely. The NPV isn't merely determined by tomorrow's talented kids, it's determined by everyone's future output - that's what a debt-as-assets economy is - a promise to the bond holder that the slaves will keep on producing.

 

As for "The scarcity economy must be balanced with an abundance economy, directly connected to the planetary economy. " Very nicely put, except the nature of too many individuals on the planet is not working for need, necessity, or betterment, but for pure greed. The Americans measure everything - from political candidate races to individual self-worth with money, and it's a point system that exists on a positive feedback loop, just as you used to see in arcade gaming addicts who could not leave until they got a high score. Make money the means to a goal instead of the goal itself, and we might finally get somewhere sane.

Sat, 05/28/2011 - 16:42 | 1319710 Rodent Freikorps
Rodent Freikorps's picture

So the answer isn't don't spend money you don't have?

Why not just refuse to borrow?

 

Sat, 05/28/2011 - 16:48 | 1319719 Shell Game
Shell Game's picture

++

A:  It is, and, one should.

Sat, 05/28/2011 - 17:17 | 1319767 DoChenRollingBearing
DoChenRollingBearing's picture

Yes.

Sat, 05/28/2011 - 16:48 | 1319725 cossack55
cossack55's picture

Add only spend the money you do have on food and PMs.

Sat, 05/28/2011 - 17:18 | 1319770 DoChenRollingBearing
DoChenRollingBearing's picture

Yes.

Sat, 05/28/2011 - 18:19 | 1319877 Freewheelin Franklin
Freewheelin Franklin's picture

Well, there's two kinds of debt: good debt, and bad debt. Good debt is generally short term debt. Ex: A farmer has a field of cucumbers that are ready to be picked. He has a local retailer who is interested in buying them. They draw up an agreement for purchase, and the farmer takes that to the bank and asks to borrow (x) amount of dollars to hire the workers to pick and pack the cucumbers. The bank loans him the money, and the farmer repays the loan when the sale of the produce is finalized. That's the way things used to be done, but not any more. That's not an "efficient" management technique.

Now, the trick is to borrow long term, at low interest rates, and agree only to pay the interest, and refinance over specific time intervals. But only the "big" players can do that. That's why they created the Federal Reserve; to keep the big, big, facilitate the big to get bigger and allow the bigger to get biggerer, and eventually, too biggerer to fail.

Sat, 05/28/2011 - 19:55 | 1319990 NOTaREALmerican
NOTaREALmerican's picture

> good debt, and bad debt.

Wouldn't bad debt be: debt used for consumption?
And good debt be: debt used for production?

Not sure if the duration matters as much as the use. Seems the US as failed because of debt used badly (misallocated capital).

Sun, 05/29/2011 - 02:42 | 1320313 AnAnonymous
AnAnonymous's picture

Were you serious when you wrote this bit?

 

Most farming works as you depict, that is farmers borrowing to meet short term goals. Firms might work on the same model.

 

As to people clinging to the false opposition between production and consumption, maybe time to admit that their propaganda is too cheap to endure:

 

production is consumption. You cant produce without consuming. Production is simply a specific kind of consumption.

Sun, 05/29/2011 - 09:32 | 1320442 Freewheelin Franklin
Freewheelin Franklin's picture

Yes, I was serious. It was based on Palyi. Specifically, An Inflation Primer, with a twist. The twist being that, corporations now operate similarly to the government.

 

http://mises.org/books/inflation_primer_palyi.pdf

II THE "MODUS OPERANDI" OF INFLATION, page 10

 

Mon, 05/30/2011 - 04:33 | 1322020 Seer
Seer's picture

AnAnonymous is right.  You're seeing the same symptoms but mis-diagnosing.  Production does mean consumption.  You cannot produce (real goods that is) without physical resources.  Go ahead and try and identify a product that is produced without depleting physical resources.

What is happening is a battle for resources (and resources = power/control).  As you correctly note, corporations are opperating just like govts.  And it's always been the real underlying function of govts to ensure that their nations have the necessary resources.  Problem is, and it's nothing new of course, nations have to keep expanding, and the expansion always requires more govt activity (management, or, perhaps more appropriately, mis-management).  Corporations are in the same predicament: requiring more and more resources in order to grow a larger consumer base.

It IS all about consumption.  Production is primarily "extraction," as we don't really produce the raw materials (we just extract and process them).

I don't see any of this as being sinister.  It's just the expected outcome of attempts to perpetuate growth.

It's nit-pick stuff though, as it's a fine line as to whether something is production or consumption.  In raising cattle the cattle are consuming and then in turn are consumed by humans; the process, however, is identified as "production."

Sun, 05/29/2011 - 10:32 | 1320507 downwiththebanks
downwiththebanks's picture

It's not hard to take what's needed from the asses of the Banker-Gangsters you service nightly.

I know that's beyond the scope of your consciousness, but that's hardly difficult to surmount.

Sat, 05/28/2011 - 16:48 | 1319727 Smokey1
Smokey1's picture

Europe eats shit. USD eats shit. Go long pm, oil, and when TSHTF short the big banks.

Sun, 05/29/2011 - 12:06 | 1319746 blindman
blindman's picture


if possible the people, as many as possible,
should corner the smallest market first, then
move up the ladder. silver
rock me.
http://www.youtube.com/user/peacsees#p/u

Sat, 05/28/2011 - 17:32 | 1319782 RobotTrader
RobotTrader's picture

Debt is not nearly as bad as people are making it out to be.

I remember my Dad buying our house in Atlanta for $56,000 back in 1974.  He was stressing out about how big the mortgage payment was, and he was also having to pay for private school tuition for me and my little brother.

To make a long story short, my Dad invested in some small commercial buildings, his broker had him fully invested in stocks.  My parents eventually got divorced 5 years later, my Dad ended up making over $200k/yr. for awhile and retired at age 50.  My mom got the house in the divorce, and she sold it for $450,000 in 2006.

My dad was also a car buff, he always bought muscle cars and the day one of those cars cost more than $7,500 he thought the prices were totally insane and unsustainable.

Now you cannot even buy a Lexus for the price my Dad paid for our house in 1974.

To this day, both my mom and dad have been retired for over 20 years retired, and all those debts that seemed "huge" at the time I was a kid now look miniscule by today's standards.

Same thing is happening now, only faster.

Today's debts will be inflated away and 10 -20 years from now, the staggering debts people are carrying will look much smaller.

I don't understand why so many people are freaking out about debt.  The Bernank is just going to keep inflation at a controlled ascent and gradually the debts will be melted away.

As long as the Fed balance sheet keeps getting hockey-sticked, then I'd just continue living life normally and not stress out about debt.  Life is way too short, as both of my parents are in their 80's now, so you must live life right now and enjoy every day.

Guys like "The Angriest Man in the World" are consuming way too much negative energy to the point where he may end up having a nervous breakdown or a heart attack one day, and it simply is not worth it.

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/5/27_G...

 

Sat, 05/28/2011 - 17:36 | 1319795 Rodent Freikorps
Rodent Freikorps's picture

Where is RobotTrader, and what did you do with him?

That was rational, and not intentionally offensive.

What rate of inflation to you think they'll acheive? On average?

Sat, 05/28/2011 - 17:45 | 1319810 Rynak
Rynak's picture

You may recognize him again, if i summarize one of his arguments:

He implies that by inflating the currency, the debt does not need to be paid back, or to a lesser extend. In other words: He's saying that monetization isn't stealth taxation.

Sat, 05/28/2011 - 17:44 | 1319815 Rodent Freikorps
Rodent Freikorps's picture

Depends if salaries keep up.

A big if, I'll grant.

If they don't, then all bets are off.

Sat, 05/28/2011 - 17:58 | 1319834 Rynak
Rynak's picture

Yes, but not just that. In the big picture, what happens in such a case is that debt is taken in a given currency, and then the currency gets slowly (or faster) destroyed/devalued... thus reducing monetary debt as well as monetary savings (in addition to the salaries/wages reduction).

If one were really evil and egoistic, the only way to strongly profit in such a scenario, is to as quickly as possible convert all the monetary debt to material assets which have low "spoilage" (a car for example DOES lose value rather quickly).... thus, commodity hoarding.

But ironically, the USA is doing exactly the opposite, while it is China which ironically advises its population to store wealth in commodities.

Sat, 05/28/2011 - 18:15 | 1319870 knowless
knowless's picture

you mean like the people that get in on the ponzi first are actually benefited or something?

Sat, 05/28/2011 - 18:42 | 1319873 Rynak
Rynak's picture

;-)

EDIT: Oh, one more thing..... i may have been too quick in saying that the USA does not convert debt to hard assets. It may not exactly be "buying" them..... but..... ummm...... helping others with getting rid of their assets, with a little force.

Sat, 05/28/2011 - 18:20 | 1319875 cossack55
cossack55's picture

In 1974 there were not 1 in 6 amerkans on food stamps and 1 in 7 unemployed/underemployed, and 3 wars going on concurrently and a nuke meltdown at 3 reactors and worldwide food shortages and about 2.5 billion less hungry mouths to feed.

Sun, 05/29/2011 - 05:46 | 1320352 sethstorm
sethstorm's picture

Thank business with all those layoffs.

Sat, 05/28/2011 - 17:46 | 1319805 Shell Game
Shell Game's picture

Today's debts will be inflated away and 10 -20 years from now, the staggering debts people are carrying will look much smaller.

Me thinks it will be much sooner. A hyper-inflation endgame that will save the TBTF balance sheets and maybe even that pesky national debt.  One little problem, they will still be in charge.

 

I don't understand why so many people are freaking out about debt.  The Bernank is just going to keep inflation at a controlled ascent and gradually the debts will be melted away.

Each person has to figure the ethical reason why on their own.  But, here's the practical reason why:  timing and competence.  Some can manage their own debt fine.  But as has now been proven, a good portion of society cannot.  One can see their lives ruined by debt before some HI stick save comes along..

Mon, 05/30/2011 - 04:46 | 1322024 Seer
Seer's picture

"A hyper-inflation endgame that will save the TBTF balance sheets and maybe even that pesky national debt."

And endgame means that the game is over.  When the price of admission to the carnival becomes too great people won't be going and the carnival itself will fail.

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