Guest Post: Disinformation Fog Intensifies As Economic Turmoil Develops

Tyler Durden's picture

Submitted by Giordano Bruno of Neithercorp Press

Disinformation Fog Intensifies As Economic Turmoil Develops

In the past few years, the concept of economic globalism has revealed
itself as quite the Trojan horse; once posing as the next step in the
evolution of “free market” capitalism and the savior of third world
nations striving for development status, now revealed as a fiscal plague
spreading delirium and destruction wherever it touches ground. There
is no denying that the economies of the world are irrevocably tied to
one another, but until recently, this was always thought of as a “good
thing” in mainstream financial circles. Today, the great failings of
engineered interdependency are painfully apparent. The EU’s many
peripheral nations are dropping one after another like flies in a fog of
DDT, rising economies in Asia are bloated with investment capital
escaping from debt default in the West, causing impressive levels of
inflation, and the U.S. is on the verge of a currency implosion as the
Federal Reserve opens the floodgates of fiat in a bid to hide our
system’s extreme destabilization and maintain what little international
faith is left in our ability to service our rampant liabilities.
Globalism has led us to disaster…

Of course, this disaster is not quite so obvious if you only follow
the MSM’s version of events, or the pithy, watered down observations of
mainstream economists, central bank officials, and puppet politicians.
In fact, it’s difficult for the average person only mildly versed in
economics to understand just what is going on! The closer we get to the
edge of the ravine, the deeper the deception becomes. Most Americans
feel the danger intuitively, and see the warning signs in their local
communities, but clear, concise information in the midst of this
‘Gordian Knot’ of lies is difficult to come by.

Treasury Secretary Timothy Geithner claims that the Fed’s
quantitative easing programs are no threat to the dollar and that our
country “will not engage in devaluation”, all while commodity and energy
prices skyrocket to record levels and numerous nations threaten to dump
the Greenback as the world reserve currency. China claims that their
inflation is manageable, releasing CPI data that is even more arbitrary
and skewed as our own, while the Chinese masses grow louder in their
anger over a lack of purchasing power to match exploding housing and
food prices. The U.S. blames the lack of global recovery on China’s
undervalued Yuan and its unfair trade imbalance. China blames the lack
of global recovery on the overprinting of the dollar. Europe sits
across the Atlantic hoping both China and the U.S. will keep printing
and sending currency care packages to keep the EU afloat, all while
claiming every three months or so that the “crisis has passed”.

So, what’s the truth in all of this?

In the following, I will attempt to dismantle the latest
disinformation campaigns, explaining the most important factors
surrounding the developing calamity between the world’s major economic
powers in the easiest terms possible; including how these factors will
directly and indirectly affect you…

Truth: Dollar Devaluation Is Occurring, Inflation Is Here

As we have covered in recent articles, widely visible inflation in
the U.S. has been steadily developing for at least one and a half years.
Food, energy, and metals prices across the board are soaring, and
commodities actually outperformed stocks, bonds, and the dollar in 2010:

Wholesale prices (according to “official” numbers) rose 1.1% in
December, following a 1.5% gain in November. These figures are diluted,
to be sure, but the fact that inflation is being reported at all
signals probable danger for the coming year:

Grain prices surged in 2010. Corn gained nearly 60%, while soy and wheat gained around 40%. Cooking oil prices jumped 62%:

Anyone today who denies inflation is evident in our economy is either
blind, dishonest, or mentally deranged. In any case, they are not to be
trusted. The question now is, is this inflation being caused by
devaluing world currencies like the dollar, or a myriad of random
chaotic “coincidences”…

Lie: Current Inflation Is Caused By “Global Recovery”, And “Rising Demand”

The great lie surrounding these inflationary warning signs is that
they are a product of “recovery”, and increasing demand in the U.S. and
developing countries. While the “demand” argument may be partly true
for gold and silver’s rise, it is certainly not true for oil and grains.
Global demand for goods overall is dropping off a cliff, as is evident
in the Baltic Dry Index, which measures shipping and freight rates
around the world. The BDI has suffered a 20% decline in the past three
weeks alone:

If shipping demand is falling around the world, then demand for goods is
falling around the world. If demand for most base goods is falling,
then demand is not the cause of our current price spikes. Period.

More Americans filed for consumer bankruptcy in 2010 than in any year
since 2005. Keep in mind that the government’s new rules making
bankruptcy filing far more difficult took effect after 2005. This means
that even with harsher bankruptcy guidelines, we still saw a massive
wave of filings last year. If demand is actually a substantial factor,
then U.S. consumers are burying themselves in red ink in order to
support it:

Considering that over 8 million Americans have stopped using credit
cards just since Christmas 2009, I think it much more likely that
consumer demand in the U.S. is flat, or, still falling, despite the
claims of the MSM:

Mainstream analysts are often quick to point out that annual retail
sales for 2010 were up over 6%, claiming this is a sure sign of
recovery. Unfortunately, in their effort to ignore inflationary factors
in 2010, they forgot to consider that perhaps rising retail sales were
not due to increased consumption, but INCREASING PRICES on goods we
already buy daily. Black Friday and Christmas season sales were
generally unimpressive compared to 2009. Black Friday sales were flat
and December sales were up only 0.6%. Are Americans really buying more,
or are they forced to spend more on goods they need due to inflation?

Lie: The BDI Is Falling Because Of An Expanding Shipping Fleet

A new disinfo tactic I’ve noticed in the past two weeks is the
suggestion that the BDI is not falling because of decreasing demand for
raw goods, but a growing fleet of idle freight vessels in an already
tight market. That is to say, some analysts are suggesting that it is
not demand that is falling, but the supply of ships that is growing.

While it is true that world freight fleets are to add 200 new ships, this is not to occur for another year and a half:

The BDI plummeted in 2008, and has not shown any signs of recovery
since. This was not due to a new supply of ships, but directly tied to
the global economic collapse. The “growing fleet” argument seems to be a
distraction designed specifically because of the public’s growing
awareness of the Baltic Dry Index and its implications.

Another poorly conceived argument is that the BDI is inaccurate
because it does not take into account that smaller fleet vessels are
seeing increased freight rates while larger ships are falling out of
favor. It’s true, that if you only count the shipping frequency of
smaller boats, demand appears to be rising (barely). However, I hardly
see how this is a good thing. Increased demand for smaller boats means
no one is shipping enough volume to make leasing a large vessel
worthwhile. Smaller volume still equals smaller demand.

Lie: Food Inflation Caused By “Bad Growing Season”

It would appear that the “mystery” of exploding food prices has been
solved, and according to a USDA report released this month, the culprit
is “weak agricultural output” causing a diminished supply of staple
grains in the U.S.:

This release was so shocking to markets because the report’s figures
were so far below the USDA’s original estimates for harvest at the
middle of this year, but why should we care about the USDA’s estimates?
Are they not arbitrary? Why not look at the actual output for previous
years compared to 2010 and get a real sense of what is happening?

If we are going to compare the crop outputs of 2010 to 2009, we
should also keep in mind that 2009 was a record year for agricultural
production. Did the USDA really assume that 2010 would meet or surpass
such a bumper crop?

Corn harvests reportedly dropped 5% compared to last year, however,
2010 was still the third largest crop on record. Soybean production was
down only 1% from 2009. Cotton (not edible, but still important) was
up 50% from 2009. Wheat was down less than 1% from 2009. One of the
only grains affected in a substantial way in 2010 was Sorghum. The crop
yield for Sorghum dropped 10% compared to 2009, but the planting area
used in 2010 was 19% less than a year before, so this drop was to be

What does this mean? The U.S. had a GOOD year for crop output, not a
bad one. And what about Russia’s summer disaster wheat crop? Are our
exports picking up the slack of bad harvests overseas, causing prices to
rise? Actually, warmer Russian weather in November spurred wheat
production, helping alleviate the weaker summer yields:

Are there dangers in world grain output due to weather? Yes, but not
enough to warrant a doubling of commodity prices. The REAL concern of
agriculturalists, not just in Russia but in many nations, has not been
the weather, but the ever expanding costs of production itself! From
fuels to fertilizers, the process of growing food is becoming more and
more expensive. What is facilitating this surging cost of production?
How about the one factor that no one seems to want to discuss; the
devaluation of major currencies, most especially the dollar? I find it
interesting that so much disinformation on supply and demand in
commodities is hitting the news streams just as the Dollar and the Euro
begin to unhinge. In my view, this engineered hysteria is meant to
distract us from the collapse of our currency, and to create plausible
scapegoats for the inevitable ill effects that devaluation will bring.

Lie: Oil Inflation Caused By Rising Demand

Same argument, different commodity. Oil output has been more than
ample in light of the fact that oil consumption in almost every nation
has fallen substantially in the past three years:

What about the surprise shutdown of the Alaskan pipeline this month?
Is our supply in danger? No. According to the EIA (Energy Information
Administration), the U.S. exports (that’s right, exports!) over 2
million barrels (2009 figures) of petroleum and petroleum byproducts a
day, most of it from the Alaskan fields!

Apparently, Americans didn’t need that oil when the pipeline was
working, so shutting it down certainly wouldn’t diminish supply here at

Oil is pegged to and traded in the world reserve currency; the
dollar. Any devaluation in the dollar will have immediate effects on
the value of oil. OPEC nations can and have been absorbing the
inflationary costs, but they can only succeed in this for a short time.
Eventually, the fundamental expenses will overwhelm them, and they will
be forced to allow the price per barrel to take flight. That time has
essentially come. Prices are likely to climb at breakneck speed in
2011, not because of demand, but because of the crumbling Greenback.

Truth: China Is Preparing To Dump The Dollar

Most economists should have seen the Chinese problem back in 2005,
when their central bank started issuing Yuan denominated treasury
securities called “Panda Bonds”:

Maybe the cute name threw mainstream pundits for a loop, or maybe they just couldn’t see the true purpose behind such a move.

China is the largest holder of U.S. debt and dollars. It is also the
largest holder of forex reserves in the world. China’s coffers are
bloated with savings. So then, why would the Chinese government
introduce a plan to sell their own debt securities? They don’t need
constant inflows of foreign cash to stay afloat like we do here. Their
currency was pegged to the dollar so issuing a Yuan denominated security
would have been pointless, at least in the eyes of the common investor.
What did the Chinese central bank know that we didn’t?

It took some connecting of dots, but in 2008, when the ASEAN trading
bloc took shape and they began to allow Yuan bonds for cross border
trades, the reason was clear; China was planning to de-peg from the
dollar. China was going to allow their currency to valuate. China was
going to move towards a consumer based economy. China was going to drop
the dollar as its reserve currency for international trade. And,
eventually, China was going to dump their U.S. Treasury holdings

Why would China start preparations for this all the way back in 2005?
It seems like a serious gamble, unless they KNEW what was coming in
2008. Unless they knew that the credit crisis would strike hard, that
U.S. consumption would falter for years, not months, damaging Chinese
exports. Unless they knew that the Federal Reserve would recklessly
pour fiat into the system. Looking back at China’s actions, one can
only conclude that their central bank was made aware of coming events by
others, or, they are all Jedi, and deserve some kind of award for their
incredible powers of foresight.

So far, the Chinese have de-pegged from the dollar, Yuan bonds are
now being issued by the World Bank, and China has dropped the dollar in
bilateral trades with Russia. We are only a step or two away from a
global shunning of the dollar and a treasury dump by our biggest

Truth: China Is Suffering From Inflation

Concise data on Chinese inflation is even more impossible to obtain
than it is here in the U.S. The “official” inflation rate in China
increased by 5.1% last year, however, some estimates double that figure:

Chinese property prices rose for the 19th month in a row last
December, while Chinese demand for housing remained low. Government
subsidization of residential construction has created modern day “ghost
towns”; entire complexes of apartments and retail spaces devoid of

China has introduced its own stimulus measures in the face of the
global credit crunch. While our fiat dollars have all been stuffed into
the pockets of corporate banks and foreign entities, their fiat Yuan is
going directly into their real economy. This is why China’s inflation
is so immediate, while ours is still partly subdued.

Does this mean China is in the midst of its own bubble, ready to pop and rain down financial havoc? Not necessarily…

Lie: China Can Counter Inflation Without Boosting The Yuan

China has one option; extreme Yuan appreciation boosting the buying
power of their populace in order to counter rising prices. China denies
this possibility in public forums, but their central bank’s actions
tell a different story.

Reserve requirements (the amount of money Chinese banks must hold as a
safety net) have been upped several times, mushrooming to 19%. This is
meant to remove excess liquidity from the economy, but so far the move
has failed miserably. China has also raised interest rates to curb
lending several times to no avail. As noted above, inflation continues.

I believe Chinese as well as Western central bankers are well aware
that the Yuan will have to spike considerably if inflation is going to
be halted, but currency valuation is not something that can be enacted
without consequence. Generally, for one currency to rise quickly,
another currency tends to fall. In this case, that currency will be the

Forget about all the empty rhetoric you hear in the MSM or are liable
to hear during Chinese President Hu Jintao’s visit this week in
Washington. Already, Hu has called for greater cooperation between the
U.S. and China while at the same time stating that the dollar based
system is a “product of the past”:

The U.S. government has called for greater cooperation with China
while the Senate has issued a statement demanding Congress institute a
bill that would label China as a “currency manipulator” on the eve of
Hu’s visit:

The meeting between Hu and Obama will generate nothing, because
neither Hu nor Obama actually have any say in the financial decisions
they will discuss. Those decisions are made by the central bankers of
our respective nations, and the central banks want an end to the dollar.
When it comes down to it, the banking elites of China and the U.S. are
both working towards this goal, while the masses are led to believe
that they stand opposed.

Most revealing has been China’s support of the EU. Why are the
Chinese suddenly so interested in propping up European economies that
are destined to default? It’s definitely not out of the kindness of
their hearts. First, China gains greater proliferation of the Yuan by
tying itself closer to Europe, Africa, and the rest of Asia. Greater
Chinese investment in the EU makes a switch to the Yuan (or a basket of
currencies) and a move away from the dollar more acceptable to the
citizenry of Europe. (Notice that all the American taxpayer dollars
that were sent to tide over the EU were made secret, while all that
Chinese money sent to the EU is loudly paraded for all to see. China:
good guy. America: bad guy). Second, the greater the proliferation of
Yuan bonds, the faster the Chinese can begin to dump their U.S.
Treasuries. This is the key!

China must shrink its forex and T-bill reserves in order to drive an
appreciation of the Yuan able to cut off inflation concerns. Timothy
Geithner claims this will be good for the U.S. Hu claims it would be
bad for China. They are both liars. Ultimately, inflation will be used
by China as the excuse to drop the dollar completely, which is what
they have been planning to do since at least 2005. The private Federal
Reserve and our government will announce victory and a “managed”
devaluation of the dollar, only to have the treasury bubble snap and
bury us in hyperinflation, which is what they wanted all along, for many
reasons, but most importantly to allow for the birth of the IMF’s SDR
as the new global currency (amply supported by the new improved Yuan).

The Saga Of Disinformation Continues

I thought the economic situation was confusing two years ago. I
never dreamed the pretzel could become so twisted so fast. The reason
it is vital to stay on top of the fog and misdirection should be
evident; deception in the economy can be used to steer the public and
our country towards terrible ends. While many of us might become
exhausted with the constant reminders of the dark road ahead, we cannot
take for granted that the battle for the truth is far from over. We
have made great headway over the years, far more than I dared imagine
possible, but this is a beginning, one that must be cradled carefully,
like the embers of the first fire.

The nature of propaganda is to strut, to pound its chest and wail the
closer we get to reality. The more Americans stumble upon the facts
behind the false statistics and false smiles of establishment pundits,
the more we will be subjected to globalist think-tank fancies and
elaborate insanities. In this, we find our most reliable gauge of
impending jeopardy, and salvation. Bigger grifts signal precarious
times, but also desperation amongst the perpetrators and con men. There
does come a time when people become weary of being fooled, and they
turn their blunderings from a hindrance into an education. Ironically,
lies very often destroy themselves, by frustrating their intended
victims into action.

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ak_khanna's picture

The blame for causing the financial crises is to be shared by all the parties involved.

Individuals kept on spending even in face of declining incomes by using the cheap and easily available loans handed over to them by the bankers.

The bankers kept on lending to the individuals, who they knew would never be able to repay their loans, because they were getting commission and charging exorbitant interest on the loans. Moreover they were able to sell the poor loans (after getting them fraudently rated as AAA) to Freddie Mac and Fannie Mae. The bankers also sold these toxic products to the pension funds and fixed income investors for commissions knowing very well they will go down in value when the borrowers default. The bankers were confident that the government would route tax payers collections to them in case of any mishap as they had become too big to fail and controlled the politicians, rule-makers and the rule enforcers.

The politician­­s around the world are nothing more than auction items which can be sold to the highest bidder. They will do whatever they can for the lobbyist paying them the maximum amount of money or votes, be it the unions, the banksters, the richest corporatio­­ns or individual­­s. They are in the power seat to extract maximum advantage for themselves in the small time frame they occupy the seat of power.

The rest of the population is least of their concerns. The only activity they do is pacify the majority of the population using false statistics and promises of a better future so that they do not lynch them and their masters while they are robbing the taxpayers.

66Sexy's picture

QE has failed in its objectives, and has only resulted in commodity inflation; there has been no improvement to jobs, housing, or the real economy.

Unemployment will likely go up again once the holdiay reports start phasing out in feb.. Oil prices going up; bad for everyone. Food prices going up, bad for main street. Housing is a complete disaster.

It all brings to light the false assumption that digital control in a credit-debt system is the end all- be all of economics.

hedgeless_horseman's picture

Truth:  The OJ at McDonald's contains much less orange juice (up 11.7% in a month), and much more water than it did a month prior.

How long before they revert back to that "orange drink" we grew up with?

Hephasteus's picture

Quick sell the orange juice ADD drugs. It's LOSING CONCENTRATION.

kridkrid's picture

It doesn't matter who gets the blame... the end result would have been the same.  Our monetary system requires that credit/debt be in a state of constant expansion.  It isn't the players bringing us down, it's mathematics.

midtowng's picture


Fiat currency systems can be built either on printing, or on debt. Printing always leads to inflation. Debt always leads to implosion.

We would be better off with printing because at least that wouldn't lead to such enormous inequality.

Sean7k's picture

No, the blame is squarely on the FED. It is the FED that is responsible to control inflation, maintain employment levels and monitor banks. It is the FED that sets reserve requirements, the overnight rates and interest rates. It is the FED that determines safe levels of capitalization for the leveraging of money for new loans.

It is not "everyones" fault. It is the FED. They could have mopped up the liquidity, but instead they blew the bubble larger. They could have monitored the capital in banks, but instead allowed banks to max out the credit card so it could be dumped on the economy. The FED could have interceded in the derivative markets and exercised some discipline in the construction and sale of these tranch time bombs, but they didn't.

If the FED is incapable of following it's own mandates, if the FED is functioning in a way that benefits bankers to the detriment of society at large, it is the FED that should pay the piper. 

Quit being a banker shill!

the not so mighty maximiza's picture

Great Article!!!!  I would give my left nut to know when the "braking point" is achieved.

Sudden Debt's picture

Just cut if off, put it in a jar, fedex it and I'll tell you :)

Strike Back's picture

But, but, prices are rising due to rising demand!

LooseLee's picture

Hey. Like your avatar. Lee wouldn't recognize the world we live in now...

sushi's picture

Lie: The USA is a representative democracy.

Read the prior post on the number of multi-millionaires in Congress. They must be making out like bandits on The Chairman's market boost. Do you really think they will enact any legislation that benefits the populace and has a negative impact on them?


SheepDog-One's picture

The US is certainly is not a 'representative republic' as it was established any longer, and 'democracies' are what the founders dreaded most. We know have a Kleptocracy at best, those who gain power similar to mafia dons look at 'the people' as things to extort more money out of until we've reached this point where basically everything you produce is confiscated in one way or another.

Sudden Debt's picture

That doesn' t sound so democratic.

Why won't you just follow the line and do what the rest of the hive is doing?

AnAnonymous's picture

The US is certainly is not a 'representative republic' as it was established any longer


A representative republic? Awesome. Try your luck at the local circus. They must look for contortionist talents, you'll do great.

Savonarola's picture

I blame Pharoah and his policies for making a bad situation much worse.

Most important lesson which they don't teach at Harvard or Yale:  Never trust money to a thief, liar, or man with a beard.


JW n FL's picture

I gave you a 5 for effort... the major hole in the china will bite the hand theory is, we financed everything vertical of scope, scale and / or real value... Bush would not let American's re-patriot monies from China, ala' Blackstone and so on...,+Blackstone+2007&spell=1&fp=ddb181364976507e


The fact that not even the fringe media wants to cover what the facts are gets boring...


I think I need to buy a gun's picture

this was by they have all the money and all the gold at the fuckin end. No one in their right mind would have let all these jobs go years ago....Whatever let the implosion begin.

umop episdn's picture

While I like the article in general, it has a few faults, imho.

Weather has affected the BDI as well as crop prices. Many mines in Austrailia will be shut in for quite some time, especially the mountaintop removal coal mines which collected the rainwater. The flooding has been severe in Aus.

Oil is magic stuff. If there were $50 barrels of oil out there, demand would skyrocket. $90 barrel oil, not so much. Oil production has declined since the 2005 to 2008 plateau and is likely to get worse. Getting oil up from holes a mile under the sea and up to six miles under the sea bed requires a *lot* of expensive suckage.

N_Jones's picture

Your post insinuates that the current monetary policies would have worked if it wasn't for some bad luck.  I suggest to you that the bad luck has just exacerbated the underlying problem of trying to print our way out of debt.

SheepDog-One's picture

The only delusion is believing anyone thinks we can 'service the debt' of $14 trillion, throw in unfunded liabilities of 100 trillion more and only a lunatic would extend the Roach Motels bar tab.

Bob's picture

Interestingly, China holds 7% of our debt--the Social Security Trust Fund holds at least 15% (bought and paid for.) The vast majority of total Treasury Debt is held by American individuals and institutions. 

I think it important to bear this in mind as the evolving meme of cutting SS benefits grows louder on the bullshit rhetoric of "fiscal responsibility."  As if fiscal responsibility is threatening to break out ANYWHERE else!  I think this pressure is effectively an effort to impose a selective default that places average US citizens first on the chopping block . . . while couching it in other, more high-minded language. 

Paper CRUSHer's picture

The ECB has begun its recruiting campaign.To join forces in the gold sales program,one tough SOB.....Estonia.Hah,armed with a measly 0.2 tonnes of .9999 fine caliber munitions.

Sudden Debt's picture

+100 tyler, you best post this year!

I hope everybody reads it at least 2 times!

Mad Mad Woman's picture

Excellent well-written post!  The writer nails it, the actual truths and where the lies are. Kudos!

Eternal Student's picture

An excellent summary of our current economic clusterf*ck.

Perhaps the title should be changed to "Globalization for Dummies"? :)

whatz that smell's picture

Two distinct behaviours are used by inking squids. The first is the release of large amounts of ink into the water by the squid, in order to create a dark, diffuse cloud (much like a smokescreen) which can obscure the blogger’s view, allowing the squid to make a rapid retreat by jetting away.

The second response is to release ‘pseudomorphs’ (‘false bodies’); smaller clouds of ink with a greater mucus content. These are expelled slightly away from the squid, which will often release several pseudomorphs and change color. The pseudomorphs are roughly the same volume and look similar to the squid that released them, and many bloggers have been observed attacking them mistakenly, allowing the squid to escape (this behavior is often referred to as the ‘Bernank-Ink-Jet Maneuver’).

johnnynaps's picture

There definitely is a "smokescreen" going on right now. Me thinks, it's actually more devious than the obvious. "Hope and Change" as the slogan should be changed to "Loaded Corporations and Indentured Servants".

Downtoolong's picture

Globalism, successful or otherwise, inevitably involves some wealth transfer from those who have to those who have not, particularly in the early phases, before the promised long term benefits to all can be realized. The financiers of the world love it because they make money off transfers and exchanges, a lot of money. It’s all well and good, as long as it’s some other guys wealth that is being transferred.

AnAnonymous's picture

Globalism, successful or otherwise, inevitably involves some wealth transfer from those who have to those who have not, particularly in the early phases, before the promised long term benefits to all can be realized.


Solid footing. In a period like this... And the Moon is the Sun etc...

Poor people in the world are squeezed out of their resources. The transfer is from the poorest regions of the world to the richer. Not the reverse.

No riots if that was not the case...

Oh regional Indian's picture

Excellent article as always.

Here is the rub, the food price rub:

Grain prices surged in 2010. Corn gained nearly 60%, while soy and wheat gained around 40%. Cooking oil prices jumped 62%:

No way that genie can be put back in the bottle. And we are not collectively at a stage yet where the photograph of a tomato on an iPhone is the same thing as having it. Better yet, if it were grown on prime Second Life land (ha!) and paid for with Linden Dollars?

reality, so relentless in it's efforts to bite us in our collective asses. Meanwhile, we just keep padding it up to dull the pain.

Exporting inflation, such a sign of a bizzaro world we live in.


alter ego's picture

Remember that the devil works using twisted ideas, manipulations and moreover, half-truths.


teichman317's picture

Great post

"Second, the greater the proliferation of Yuan bonds, the faster the Chinese can begin to dump their U.S. Treasuries. This is the key!"


Can someone explain the above to me. Thanks


Sean7k's picture

The more people buy the bonds, the more yuan that will need to be spent. It will allow the Chinese to trade in their own currency globally (essential to an export driven economy). 

Presently, they are tied to the dollar to complete trades as there are not enough yuan for the volume of trade they are conducting. 

People will only trade in a currency if they think they can use it later (in another trade or to buy products). The acceptance of bonds means that people are confident they will be using your currency in trade.

The dollar had been fulfilling this function as it is so liquid. As the Yuan bonds increase, the Chinese can sell their treasuries and gain more control over their future.

metastar's picture

"Panda Bonds" is cute is kinda like saying that the PatRIOT Act is patriotic!

MiddleMeThis's picture

My question is this:  "What does the common man/woman do?"  Seems to me we are virutally powerless and are simply along for the ride.  What action can we take to protect ourselves?

LFMayor's picture

Stock up weapons and food.  Learn to use them efficiently.  Standby to run riot.

Are you like me? I don't have the capital to invest in PM's.  I'm screwed.  If the power fails, my IT job will. Maybe sooner.  The only reason I'll keep my roof is because there are millions of other foreclosures log-jamming the paperwork river.  Since victory gardens are now legislated illegal and subject to "confiscation", how in the hell will I feed my family?

So I'm planning on the Sampson Option:

If I'm screwed then at least I can act up... maybe even be that little fish bone that lodges sideways in some bastards throat when I get swallowed whole.  Anything better than that I'll consider a happy bonus.

topcallingtroll's picture

Join the new religion of St. vincent and help do battle against the 47 named demons.

hedgeless_horseman's picture

Standby to run riot.

Running riot is when poorly-trained hounds chase the wrong prey.

Lower Class Elite's picture

Check out, I say.  In whatever fashion is available to you.  For some, that can mean physically bailing out to Montana or Argentina or wherever.  For most (myself included in this group), I think it means getting as many friendlies as close by as possible, and really working on how to take care of you and yours completely outside of the "normal" way that has been ingrained in us since birth.  For example, in my case I have a small piece of land owned free and clear.  It is surrounded by family and friends and woodlands.  It is in the town where I was born and raised, so I am intimately familiar with the area and a good number of the people/families nearby.  It is not by any means prime real estate, but it has decent water and trees, it's within walking distance to a rail line, it has great topsoil, but it is otherwise completely unremarkable and under "normal" conditions not particularly valuable.  I have no financial "assets" whatsoever (not even PM's, sorry, but I need other things worse), but I also have no debt.  I am personally building my own house on the land, cash and carry, no mortgage, no Home Depot card.  Even with experience, this is a demanding task.  I am fortunate in that I grew up on a farm, but even then we took full advantage of cheap and easily obtained pesticides, fertilizers, and farm equipment.  I am also fortunate that I am a fairly skilled and experienced carpenter/woodworker/bodger, and I have quite a collection of useful tools (my "precious" metals).  I still have my "normal" day job, but I am in fact checking out of BAU in plain sight.  I hold no illusions that I'm headed for some utopian Amish-without-the-religion "Good Life".  Cars are freaking cool.  Computers are awesome.  Refrigerators are kick ass.  Air conditioning is wonderful.  Hot and cold running water 24/7/365 is quite nice.  Zipping down to the Ultra Mega Mart and buying 40 pounds of strawberries in January if I feel like it is fantastic.  Now barring an actual no-shit extinction event, I don't think all those things will just disappear from the world entirely one day.  But I am increasingly convinced that they will disappear from MY world at some point.  Soon perhaps.  So I'm checking out of the entire thought process that has enabled me to come to expect all that cheap, easy, neato stuff.  I'll use it while it's still available to me, and I'll try to be as ready as I can for when it's not.  Even then, there are absolutely no guarantees.  I'm OK with that.      

Oh regional Indian's picture

Awesome post LCE. Dripping with honesty. Awesome attitude to life also.


Lower Class Elite's picture

Thanks ORI.  On a long enough timeline, etc., eh?

Salinger's picture

great article, reminds me of that Obama website that was set up to fight smears

proLiberty's picture


We should also recall the extent to which subsidies for ethanol and biodiesel distorts the prices of corn and oil-rich seed crops like soybeans.  These distortions in market prices are not only on a per gallon basis as is the case with ethanol, but also in large 7 and 8 figure grants to private investor groups to build facilities, as well as in running interference with local agencies for rapid and favorable terms and approvals of permits, especially for water resources.

The more government intrudes in multiple areas of the economy, the less anyone can accurately judge true market conditions. It is like trying to measure the height of waves in a lake from a motor boat circling in its own wake. Worse, one government bureaucracy will then attempt to intrude in the market based on prices and conditions that were partly the result of intrusion of some other government bureaucracy down the block. The result is always the dissipation of wealth and liberty, and the squandering of what remains of our future.

Obama is the first post-solvency president. We have clearly moved beyond merely squandering our blessings. Thanks to big and Bigger government, we have moved to squandering our credit line.


Beatscape's picture

Great post.  One thing missing from this analysis that belongs here... the pressure on wages from globalization.  We are all competing with Chinese wages.  This is one of the key factors that is preventing hyperinflation from kicking in. And, is a critical factor that is starting to lower standards of living in 1st world countries--and raise them in 3rd world countries.  There is a great equalization of wages going on and it's impact is significant.