• Knave Dave
    05/23/2016 - 18:16
    This past Thursday marked the one-year anniversary of the US stock market’s death when stocks saw their last high. Market bulls have spent a year looking like the walking dead. They’ve...

Guest Post: Death By Debt

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Wed, 06/08/2011 - 11:36 | 1351055 oogs66
oogs66's picture

Yes, we need to stop "fixing" a debt problem by issuing more debt!

Wed, 06/08/2011 - 20:27 | 1353072 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

The debt fix will end in tears. Deflation bitchez!!!

Wed, 06/08/2011 - 11:40 | 1351064 ursus.peracto
ursus.peracto's picture

There will no longer be any faith in paper after this scheme implodes.

Wed, 06/08/2011 - 12:01 | 1351111 topcallingtroll
topcallingtroll's picture


Wed, 06/08/2011 - 11:47 | 1351114 topcallingtroll
topcallingtroll's picture

There may still be paper, but there will be no faith in governments. This lack of faith, a huge cultural shift, will be the end of socialism and transfer payments.

Argentines still use fiat even after a fifty percent collapse and the certainty of a future devaluation.

Wed, 06/08/2011 - 11:53 | 1351123 ursus.peracto
ursus.peracto's picture

Good point, but I mean the entire system, not just one component.


The Government of Argentina has promised that it will be different this time.

Wed, 06/08/2011 - 14:01 | 1351650 tiger7905
tiger7905's picture

A great Turk interview on gold and hyperinflation and how what the US is living now is exactly like when they lived thru the continental currency.


Wed, 06/08/2011 - 12:36 | 1351307 chartcruzer
chartcruzer's picture

This is a great article - and yes a currency crisis is inevitable.   Throughout time fiat currencies have allways failed.  What's amazing is that the breadth of the worlds major economies are all beyond the tipping point of the fiat/debt pozi play.  Read this.


The question that kills me is; how long will these debt loaded economies be able to extend and pretend?

Im monitoring long term interest rates, the price of gld, and the $ for clues...





Wed, 06/08/2011 - 11:40 | 1351065 Spastica Rex
Spastica Rex's picture

Jesus would never have created a world with limits. Limits are for atheists and pussies.

Wed, 06/08/2011 - 11:48 | 1351104 ursus.peracto
ursus.peracto's picture

They come in handy for calc.

A champagne bottle is about the limit for a pussy though.

Wed, 06/08/2011 - 11:52 | 1351120 US Uncut
US Uncut's picture


Wed, 06/08/2011 - 11:50 | 1351126 ursus.peracto
ursus.peracto's picture


Wed, 06/08/2011 - 12:46 | 1351346 falak pema
falak pema's picture

talc or bubble

Wed, 06/08/2011 - 13:04 | 1351412 ursus.peracto
ursus.peracto's picture


Wed, 06/08/2011 - 16:36 | 1352317 falak pema
falak pema's picture

I prefer Hegel he was more bubbly and incomprehensible sober or drunk...also closer to god than calculus...so infinitesimal as to be devilish.

Wed, 06/08/2011 - 11:39 | 1351073 alien-IQ
alien-IQ's picture

Debt is slavery and a nation that commits itself to endless debt commits it's people to endless slavery.

Wed, 06/08/2011 - 11:46 | 1351109 monkeys.pick.bottoms
monkeys.pick.bottoms's picture

You have described the last 300+ years of our civilization. Where is John Galt when you need him? Hurry up, will he?

Wed, 06/08/2011 - 12:55 | 1351388 Whalley World
Whalley World's picture

Who is John Galt?

Wed, 06/08/2011 - 14:44 | 1351843 ursus.peracto
ursus.peracto's picture

I hate to break the news but Galt died of a massive coronary after the end of Bretton Woods.

Wed, 06/08/2011 - 11:46 | 1351113 Hedgetard55
Hedgetard55's picture

Debt = cancer.


Hard to get cured unless removed early. We haven't removed it, but let it grow.

Wed, 06/08/2011 - 12:17 | 1351227 TruthInSunshine
TruthInSunshine's picture

Not just cancer, but cancer suffered under slavery.

Wed, 06/08/2011 - 11:53 | 1351118 Azannoth
Azannoth's picture

Remember the scene from Titanic where the Captain asks the Architect, if the ship can float with 5 ruptured containers, and the Architect says no it can't, the Captain asks 'are you sure?' the Architect responds, 'yes it's a mathematical certainty'


Wed, 06/08/2011 - 11:53 | 1351125 Cui Bono
Cui Bono's picture

Volunteer philosophy on the velocity of time or something....

Chung Mee: Opium is my business. The bridge mean more traffic. More traffic mean more money. More money mean more power.
Lawrence Bourne III: Yeah, well, before I commit any of that to memory, would there be anything in this for me?
Chung Mee: Speed is important in business. Time is money.
Lawrence Bourne III: You said opium was money.
Chung Mee: Money is Money.
Lawrence Bourne III: Well then, what is time again?

Wed, 06/08/2011 - 12:27 | 1351264 WonderDawg
WonderDawg's picture

Classic scene in a hilarious movie that largely flew under the radar. Laughed myself to tears the first time I saw it, and I'm sure it had nothing to do with what I was smoking at the time.

Wed, 06/08/2011 - 15:00 | 1351912 Mad Cow
Mad Cow's picture

I love that movie, thanks for the chuckle.

Wed, 06/08/2011 - 11:55 | 1351127 LawsofPhysics
LawsofPhysics's picture

True price discovery will come eventually, so long as fraud remains the status quo, that coming will be much more chaotic then if we had actually dealt with it 30+ years ago.

The world economy depends on cheap energy and exponential growth, neither is sustainable for extended periods of time.  Without drastically changing our monetary and economic systems the BRIC countries have the choice of bailing out the rest of the world, taking a big haircut on the poor investments (in all debtor countries), or invading the rest of the world and taking all physical assets by force.  There simply are no other alternatives moving forward with the current system.


Possession of real value added assets rapidly becoming 100% of the law around the globe.  Even the folks in the middle east are considering the possibility that their oil may be more valuable to them instead of being sold for anything, including gold.  

Wed, 06/08/2011 - 12:12 | 1351200 Bay of Pigs
Bay of Pigs's picture

Especially when some countries invade others for their oil and gold, you know, like Libya.

Wed, 06/08/2011 - 12:36 | 1351303 Nonanonymous
Nonanonymous's picture

Accruing to the benefit of the status quo, and not the general weal.

Wed, 06/08/2011 - 12:37 | 1351312 MolotovCockhead
MolotovCockhead's picture

How can it be worth anything when it can be so easily taken away, whether Oil or Gold? Look at Iraq, Afghanistan, Libya....

Wed, 06/08/2011 - 14:29 | 1351753 akak
akak's picture

Hey BoP, how went the Vancouver Cambridge House Investor's Conference?  Did our hero Jon Nadler dare rise to the podium, and was he soundly heckled if he did so?

Wed, 06/08/2011 - 16:08 | 1352210 Bay of Pigs
Bay of Pigs's picture


As usual, he was completely irrelevant, but the crowd was polite (as they usually are). He's lucky he doesn't post here. He would get torn to shreds. LOL.

Sadly, I wasn't able to confront him publically as I had hoped to do.

I might try again at the Silver Summit in Spokane, WA in October. 

Thu, 06/09/2011 - 14:33 | 1355189 akak
akak's picture

Thanks for the update, BoP!

But I must admit, I have a very hard time believing that ANY semi-informed investor audience would or could politely sit through any presentation of the disingenuous anti-gold propaganda endlessly spouted by that lying, pro-bankster shill Nadler.  Where is the outrage?  Where are the rightfully indignant challenges to mindlessly pro-status-quo disinformation and lies?  Had I been in that audience, you can be sure that I would NOT have sat quietly and let that bastard repeat his vile anti-gold bullshit!  Did NOBODY at least snort or guffaw in contempt?  What is WRONG with these meek Canadians anyway?

Wed, 06/08/2011 - 11:51 | 1351128 SheepDog-One
SheepDog-One's picture

The world fiat usury fractional banking system is collapsing. Theyre doing everything they can to keep it alive, because its the only way 'those people' know how to make a living in the world, but make no mistake its imploding.

Wed, 06/08/2011 - 12:20 | 1351233 TruthInSunshine
TruthInSunshine's picture

The Bernank is searching high and low for that killer app algorithm that allows him to ignore the fact that he can flood the system with more liquidity, even though demands for loans/debt/credit and the willingness to issue loans/debt/credit is contracting against a backdrop of weakening employment and wage trends (you could say employment is in a secular bear market).

Wed, 06/08/2011 - 11:52 | 1351129 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

acceptance of the fact that the economy can't be fixed

But, but, but...

I am still amazed at the (il)logical extremes some people will go to to try and explain some scenario by which it "corrects itself."

Actually after thinking for moment longer about it, most of these folks are just dutifully repeating some convoluted meme that they've attached themselves to.  I think this is to keep themselves from totally freaking out.

Wed, 06/08/2011 - 11:54 | 1351138 topcallingtroll
topcallingtroll's picture

But there is rebirth after collapse and contraction.

Doesnt that fix the problem eventually?

Wed, 06/08/2011 - 12:12 | 1351201 ursus.peracto
ursus.peracto's picture

Hegelian Dialectic?

Wed, 06/08/2011 - 13:38 | 1351566 DosZap
DosZap's picture


hell yeah, been using this scam for YEARS.

What do you think all this QE shite is?

Wed, 06/08/2011 - 11:56 | 1351147 SheepDog-One
SheepDog-One's picture

Theyll freak out one morning soon when they announce all their 401K's and pensions have been seized.

Wed, 06/08/2011 - 13:19 | 1351480 Dr. Richard Head
Dr. Richard Head's picture

They'll be pleasantly suprised one morning when it is annouced that all all 401K's and pension have been reallocated in the form of lifetime income distribution options and will be required for defined contribution plans.  Uncle Sam loves you and you will love him.

There you go...muuuuuuuuuuuch better. 


Wed, 06/08/2011 - 14:12 | 1351678 JailBank
JailBank's picture

They have already kicked that off by confiscating government TSP 401k.

Wed, 06/08/2011 - 11:55 | 1351131 Mentaliusanything
Mentaliusanything's picture

August 15th 1971 - He did it ! He unleashed the anchor and said farewell. We can't grow debt being tied to it, they pleaded. Thnx Tricky

Wed, 06/08/2011 - 11:52 | 1351132 topcallingtroll
topcallingtroll's picture

The economy cant be fixed?

Kondratiev winter always turns to spring eventually doesnt it?

Now i wonder if the fifty year jubilee throughout the middle ages was their solution to the kondratiev winter.

Wed, 06/08/2011 - 13:59 | 1351641 NotApplicable
NotApplicable's picture

I think he means it can't be fixed within its current broken paradigm. Which is why he probably thinks The Bernank can't just write a check for $5T a year to re-engage the debt tower (which I believe to be the likely outcome). Why? Because I expect the current system to be replaced by the paradigm, "ZIRP Along the Entire Yield Curve," ending the idea of lending at interest as a profit seeking endeavor (nationalizing all financial entities in the process).

To me, Martensen's "chart that explains everything" is indicitive of the cumulative cost of debt service overtaking the ever shrinking marginal utility of debt, (which has gone negative as a result), along with the debt driven consumption and malinvestment he mentions.

While ZIRP4EVA will not occur overnight, I see it being ushered in because first, "We have to do something!", and second, "There Is No Alternative" (TINA). Over time, as the "muddle-through non-recovery" progresses people will start to think it normal for the Central Banksters of the world to provide interest free loans to governments to spend, because, "why else would they need to exist?"

It's really all about changing the perspective known as "conventional wisdom" over time as they change the underlying convention. While a 30 year Treasury paying .0000001% may seem asinine today, well so did the idea of $14T in US gov. debt back in 1971.

Yet here we are today, squarely in Asinieland.

Wed, 06/08/2011 - 11:54 | 1351143 nobusiness
nobusiness's picture

The real purpose of our massive military might just be to protect us from the Chinese debt collectors who are coming either because we default or print so much that the debt they hold is worthless.

Wed, 06/08/2011 - 12:01 | 1351156 SheepDog-One
SheepDog-One's picture

A military more overextended than the Roman military was, and also troop morale at all time lows, military suicides all time highs.

Wed, 06/08/2011 - 16:45 | 1352370 falak pema
falak pema's picture

they say the roman legions in Africa declined due to sexual exhaustion. They found the Numidian women too enticing. Imagine that beaten by a pussy, or a pack of pussies...

Wed, 06/08/2011 - 19:41 | 1352967 Ben Dover
Ben Dover's picture

Being beaten by a pack of pussies is a tradition that goes back at least to the Greeks - http://en.wikipedia.org/wiki/Lysistrata

Wed, 06/08/2011 - 12:02 | 1351163 A_MacLaren
A_MacLaren's picture

Not when jack-booted thugs in Government are the debt collectors...


Acting on orders from the U.S. Department of Education, a S.W.A.T. team broke into a California home Tuesday at 6 a.m. and reportedly roughed up a man — all because of his estranged wife’s defaulted student loans. She wasn’t there.


Yet, Kenneth Wright of the city of Stockton was grabbed by the neck by handcuffed before he and his three young children were put in a police car as the officers searched his house, he told ABC News10. He said he was in his underwear the whole time.


“They busted down my door for this. It wasn’t even me,” Wright told the local news station. “All I want is an apology for me and my kids and for them to get me a new door.”


Local police were reportedly not involved in the incident.

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