Guest Post: The Economic Death Spiral Has Been Triggered

Submitted by Gordon T. Long

The Economic Death Spiral Has Been Triggered

For nearly 30 years we have had two Global Strategies working in a symbiotic fashion that has created a virtuous economic growth spiral. Unfortunately, the economic underpinnings were flawed and as a consequence, the virtuous cycle has ended.  It is now in the process of reversing and becoming a vicious downward economic spiral.
   
One of the strategies is the Asian Mercantile Strategy.  The other is the US Dollar Reserve Currency Strategy.

These two strategies have worked in harmony because they fed off each other, each reinforcing the other. However, today the realities of debt saturation have brought the virtuous spiral to an end.

One of the two global strategies enabled the Asian Tigers to emerge and grow to the extent that they are now the manufacturing and potentially future economic engine of the world.

The other allowed the US to live far beyond its means with massive fiscal deficits, chronic trade imbalances and more recently, current account imbalances. The US during this period has gone from being the richest country on the face of the globe to the biggest debtor nation in the world.

First we need to explore each strategy, how they worked symbiotically, what has changed and then why the virtuous cycle is now accelerating into a vicious downward spiral.

ASIAN MERCANTILE STRATEGY

The Asian Mercantile Strategy started with the emergence of Japan in the early 1980s, expanded with the Asian Tigers in the 90s and then strategically dominated with China in the first decade of this century.

Initially, Japan's products were poor quality and limited to cheap consumer products. Japan as a nation had neither the raw materials, capital markets, nor domestic consumption market to compete with the giant size of the USA. 

To compensate for its disadvantages, Japan strategically targeted its manufacturing resources for the US market.  By doing this, the resource poor island nation took the first step in becoming an export economy - an economy centered on growth through exports versus an economy like the US, where an excessive 70% of GDP is dependent on domestic consumption.

The strategy began to work as Japan took full advantage of its labor differential that was critical in the low end consumer product segment, which it initially targeted. Gradually, as capital availability expanded, Japan broadened its manufacturing scope, moving into higher levels of consumption products requiring higher levels of quality and achieving brand recognition.

Success soon became a problem as the Yen began to strengthen. To combat this the Japanese implemented the second critical component of what became the Asian Mercantile Strategy template. It began to manipulate its currency by aggressively intervening in the forex market to keep the yen weak.

Further success forced Japan to move to a more aggressive forex strategy to maintain a currency advantage. It was strategically decided that Japan's large and growing foreign reserves were to be re-invested back into the US.  By buying US Agency and US Treasury debt instruments it kept the dollar strong relative to the Yen. The more successful Japan became, the more critical this strategy became.  In the 80s Japan dominated global expansion as it brought US automotive and consumer electronics' manufacturing to its knees.

By the early 90s the Japanese labor advantage was quickly being lost to the Asian Tigers because the Yen versus the Asian Tiger currencies was too strong.  The Asian Tigers were following the Japanese model. The Asian Crisis in 1997 re-enforced to all Asian players the importance of holding large US dollar denominated reserves. This further accelerated and reinforced the strategy of purchasing US Treasury and Agency debt.

With China's acceptance into the World Trade Organization (WTO),  China emerged on the scene in full force. Armed with the lessons of the last twenty years, China took the Asian Mercantile Strategy to another level in its ongoing evolution.

The results were one of the largest and fastest transfers of industrial power ever to occur in history.  In ten years, China assumed the role of the world's undisputed industrial powerhouse in the world.

The virtuous cycle further accelerated as Asia became more dominant because its reserves, reinvested back in the US, began to have a larger and larger impact. The more Asia bought US Treasury and Agency debt, the lower US interest rates were forced, allowing Americans to finance more and more consumption. The more Asia bought US securities, the stronger the US dollar was against Asian currencies, and therefore the cheaper Asian products were relative to US manufactured products. It was a self reinforcing Virtuous Cycle.

The result was  a staggering 46,000 factories transferred from the US to Asia over the same 10 year period.  The transfer  set the stage for chronic unemployment and public funding problems,  but it was temporarily hidden by equally massive increases in debt spending.

The low interest rate driven housing bubble, being of historic proportions, made Americans feel richer than they were. They took on excess debt in various forms such as Home Equity Loans (HELOCs) at unprecedented levels. The acceleration of debt  materially impacted both the GDP and employment  of the nation through Real Estate, Construction and Mortgage Finance job growth further hiding underlying problems.

US DOLLAR RESERVE CURRENCY STRATEGY

Since President Richard Nixon took the US off the Gold Standard in 1971, the US has adopted what I refer to as the US Dollar Reserve Strategy.  After the Second World War, at the Bretton Woods Conference, the US dollar was accepted as the world's reserve currency and as such was pegged to Gold at a fixed rate of $35/oz. due to massive Vietnam  war costs and President Johnson  Great Society, the US could no longer honor its agreement.  In 1971, when France demanded conversion payment in Gold, the US refused. At this point the US become a fiat currency,  not backed by anything other than the full  faith and credit of Washington politicos. 

What were other countries to do in retaliation? What quickly became evident was there was little they could do. The fact was that international trade was conducted in US dollars as a matter of necessity due to the dominance of US export trade;  and as such, nations were forced to have US dollars to transact international trade.

Additionally, the US established agreements with oil producing Middle East countries that oil could only be sold in US dollars. Since energy is a dominant import cost for most nations, this secured the strategic position and requirement that the US dollar would be maintained as the preeminent reserve currency by trading nations.

What this strategy meant to the US was that it could now print money, and effectively export the potential inflationary consequences of its actions. The 1970s were initially marked by dramatic increases in US inflation as the strategy took hold and was implemented. By the time of President Reagan's presidency, the strategy was working thanks to some herculean efforts by Chairman Volker at the Federal Reserve. This well executed strategy is what I refer to as the US Reserve Currency Strategy.

The strategy allowed Regan to implement 'Reaganomics' and his new Supply Side economic policies which launched the longest bull market in US history.  Further enhanced by an extremely loose monetary policy under Greenspan, relaxed reserve requirements under Clinton, and tax cuts under George Bush II, the US moved quickly from being the world's richest country to being the world's largest debtor. 

Historic debt growth was built up without the disease of inflation infecting the US economy. This is explained by inflation that was effectively exported whenever increasing levels of US dollars were printed by the US Treasury.

Any threat to this strategy was rapidly challenged by US military power. As an example, when Saddam Hussein, President of Iraq, decided to sell Iraq oil denominated in Euros, he was invaded by US forces three months later and removed from power. When Libyan leader Muammar Gaddafi wanted gold in exchange for Libyan oil, he almost immediately found himself the target of US planned military intervention.

Presently, oil is still sold only in US dollars, but more and more trade deals are being negotiated between China and its trading partners. This is a serious threat to the US and the US Dollar Reserve Strategy.

THE SYMBIOTIC RELATIONSHIP

One of the reasons the US Reserve Strategy has worked for as long as it has, is because there was an incentive by other countries to sterilize the US dollars they received.  This, in the case of Asia, was because of the Asian Mercantile Strategy they were executing. By sterilizing US dollars, they held down their currency's exchange rate, which helped their exports though creating potential domestic inflation. Until recently, these inflation pressures have been manageable.

In the case of Europe, the Euro was only coming into existence in the late 90s, but then quickly moved from well below par to nearly 1.50 to the US dollar, causing competitive problems for European export trade for many peripheral countries (PIIGS).

The Asian Export Strategy and the US Reserve Dollar Strategy were symbiotic for a number of reasons:

1.    Though the Asian Export Strategy was an Export Trade Imbalance game and  the US Dollar Reserve Strategy a Volume Trade game,  both were centered on global trade. The US won by increased global trading and the growing requirement for the US dollars it required - dollars that could be increased to pay for the military industrial complex without increasing taxation and used as reserves for global banking growth. Asia won by getting an ever increasing share of a growing volume of trade.

2.    The US as a 70% consumption economy needed cheap financing to sustain its insatiable consumption. Asia needed consumption to absorb its growing exports.

3.    The US needed a strong dollar to attract financing for its debt. Asia saw US debt as a store for its growing reserves that additionally reduced financing costs for its export products. In a way Asia was offering a form of vendor financing or 'lay away' financing.

4.    US corporations saw 'off-shoring', 'outsourcing' and 'rightsizing' as major productivity improvements. The Asian Mercantile Strategy offered American corporations an opportunity to significantly increase profitability while Asia needed every increasing and larger market segments to penetrate. US corporations brought know-how, branding and capital to the Asian economies who desperately needed these strengths to employ unskilled populations, increase standards of living and reduce the always present and potential social unrest. 

5.    The US economy which had shifted from an industrial economy to a services economy was quickly becoming a financial economy with 44% of the stock market being financials. The financial economy needed increasing capital inflows to sustain itself.

WHAT HAS CHANGED

So what could possible stop this ideal symbiotic relationship from continuing to feed on itself?

A number of factors, all of which are now coming together to end this Virtuous Cycle.

DEBT SATURATION

I recently authored a paper entitled  Debt Saturation & Money Illusion , that if you have not read, I encourage you to read since it would take up too much space here.  It makes the case that the global economy has reached the point where annual debt costs are now outstripping the global economy's ability to support the exponentially increasing burden.

Additionally, stimulus spending by governments has now reached the point where it is actually counterproductive.

The above chart shows that even using government numbers for inflation (which are disgracefully inadequate and understated) the real rates in the old industrialized economies are negative. By contrast, rates in emerging economies are positive.

This means central banks are effectively paying banks to take money, yet commercial banks cannot find sufficient investments to actually absorb the money.  Like pushing on a string, the global economy simply cannot absorb debt at the levels required to sustain required growth rates which must exceed inflation rates.

The level of nonperforming bank assets is growing at such a rate that global banks have serious concerns with their existing loans and potentially their own solvency.

Growth in Non Performing Bank Loan Levels is shown below.

MALINVESTMENT

I found a recent article entitled: Technology firms struggle to cover interest payments in the Korean Times to be very instructive. Despite Asian economies growing rapidly and now dominating the global electronics industry, the study by the Korean Times found alarmingly that:

a.    One in three firms traded on the Kosdaq stock exchange failed to earn sufficient money to cover their interest payments in 2010.

b.    280 out of 876 Kosdaq-listed corporations, or 32 percent, could not reach the benchmark reading of one in the interest coverage ratio. The interest coverage ratio, otherwise dubbed times interest earned (TIE), refers to the measure of a firm’s ability to honor its debt payments.

This is classic mal-investment in the truest sense of the Austrian School of Economcis.

Corporations now have balance sheets so leveraged with debt that their business models are barely able to cover debt payments even when interest rates are at historic lows. What does this suggest for possible debt default and forced unwinding going forward?

Private Equity corporations with leveraged takeovers and buyouts dominated the US financial landscape for years. These takeovers left corporate balance sheets severely damaged and barely able to pay the debt burdens they were forced to assume.

Additionally, we have learned since the days of Enron, there are significant amounts of debt held off balance sheets today in Special Purpose Entities (SPEs). There is no investor transparency to these obligations. This debt and other forms of 'contingent liability' reporting presently allow corporations to assume ever larger amounts of debt without impacting their corporate credit ratings. Everything works fine until growth slows.

Corporations over the last decade are acting more as highly leveraged hedge funds with the consequential exposure of margin or collateral calls. This is a highly risky and unstable situation in the longer term.

CONSUMPTION IMBALANCES

Another factor causing the unwind is a tapped out US consumer.  This has been forecast for over a decade as an eventuality, but the US consumer continued to surprise everyone with their willingness to consume and take on debt.  However, since the 2008 financial crisis things have changed. The US real disposable income has fallen and US consumer debt loads are now impacting their ability to consume.

Consumption growth rates in the US have slowed.  The Asian economies have consumption rates below forty percent. The consumption growth rates of these Asian economies, though growing,  are increasing from a much smaller absolute size. This imbalance is placing further pressures on the symbiotic relationship.

A VIRTUOUS RISING CYCLE BECOMES A VICIOUS DOWNWARD SPIRAL

Slowly, the cycle is reversing. What was once a virtuous cycle is now a potentially vicious downward spiral.

The death knell for the cycle will be:

1.    A deteriorating  US dollar,

2.    Rising US interest rates,

3.    Sustained and chronic US unemployment,

4.    Asian inflation, especially in food where 60% of Asian disposable income is spent.

5.    Pressures on Asian currency pegs

6.    Collapsing values of US Reserve holdings.

BERNANKE'S BOX

I recently published another paper entitled BERNANKE'S QE^x BOX! where I argued what Chairman Ben Bernanke was likely to do at his critical April 27th FOMC 'Signal' meeting.  I was proven right as he delivered precisely on cue. It was not a difficult call.

The reason I was so sure is because the real problem was clear. It is about what the Basel BIS (Bank of International Settlements) Bankers are more than aware of.

As I point out in Debt Saturation & Money Illusion, the Shadow Banking liabilities have fallen by $5 Trillion since the financial crisis, which is a crushing blow to global liquidity and in fact global financial banking solvency.

An analysis of data by Fathom Consulting for the US Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England, showed their assets swelled from around $4 trillion at the start of 2006 to just short of $9 trillion by the end of February this year.  The increase in the size of G4 central bank balance sheets since mid-07 has ALSO been around $5 trillion to end February 2011, or 8 percent of global GDP.

It is my view that the Basel BIS Bankers have orchestrated their balance sheet growth to offset the contracting Shadow Banking System liabilities. For those that are not aware, Federal Reserve Chairman Ben Bernanke, Bank of England Governor Mervyn King,  ECB President Jean-Claude Trichet and Bank of Japan Governor Masaaki Shirakawa all sit as Board Members and meet regularly.

FED'S DUAL TRIPLE MANDATE

To do this the central bankers have increased their balance sheets to their political limits which can be seen in the following Federal Reserve chart from Zeal.

In the case of the US Federal Reserve, this has meant such significant changes that effectively the Fed's dual mandate has now expanded to three.  Besides the official  mandates of Full Employment and Price Stability, a third has been added: Asset Appreciation.
   
This is clearly evident when we overlay the above balance sheet growth with US equity market appreciation, as represented by the S&P 500 in the chart below.

The top of the red Treasury series (chart above) represents the total Treasuries, MBSs, and agencies the Fed purchased in its quantitative-easing campaigns.  That red line above is then transferred to the second chart below as total QE.  Superimposed on top of it is the US stock markets as represented by the SPX (blue).  The strong correlation between the Fed’s monetization and the post-panic stock-market recovery is remarkable, perhaps even scary.

The Federal Reserve is no longer the "Lender of Last Resort"

The Federal Reserve is now the "Buyer of First Resort"

INHERENT LIMITER: INFLATION

There can be little doubt, despite Federal Reserve rhetoric, that Quantitative Easing , ZIRP (Zero Interest Rate Policy) and negative real interest rates have caused  a surge in global inflation rates.

Recently Oil was at a 31 Month high and up 22 percent Year-on-Year. Corn was up 90 percent,  Wheat and  Soybeans up 45 percent and Rice at yet another high.

This inflation has been acutely felt throughout Asia which has to combat this in parallel with trying to keep their currencies competitive as part of their Asian Mercantile strategy.

Across Asia, interest rates and bank reserve requirements have been increased, and in some instance capital control restrictions implemented.  Pressures are such that many, including China, are now at the point of surrendering sacrosanct currency appreciation.

The problem is food inflation. Food must be imported and a stronger currency would help avoid consumer sensitive food inflation, at the expense of assisting with its own export strategy.

Sixty percent of disposable income in Asia, according to the Asian Development Bank (ADB) in a major report entitled: Global Food & Price Inflation & Developing Asia, is spent on food.  Food is presently expected to average 10 percent inflation in 2011. This has created tremendous pressures on the population and potential social unrest for Asian governments.

64 Million people have already been moved into the category of poverty, which the ADB classifies as  below $1.25/day. With 3.5 Billion consumers, it is expected that 190 Million will be pushed into poverty if food inflation continues. Food prices were up 30% in February's report, so the 10 percent Asian food inflation is no doubt seriously too low.

GLOBAL SLOWDOWN -  Q1 GDP SIGNALS

The efforts to fight inflation are now impacting the 7.8% Asian growth rate, which is now demonstrating the expected signs of slowing.

US Gross domestic product was recently reported as rising only 1.8 percent from January through March, after a 3.1 percent pace in the last three months of 2010. Taking out inventory builds this number as only 0.8 percent.

Britain reported 0.5 percent growth and is now on the edge of a double dip.
 
The Federal Reserve and most economists are all revising 2011 GDP growth lower, as a steady stream of negative news hits the markets.

If GDP numbers were adjusted for true inflation, rather than the suspect government CPI distortions, real GDP would be negative. Considering government deficit spending is now 20-25 percent of the US economy, can there be any question that we have effectively very negative economic growth?

The Basel BIS Bankers are acutely aware of this. 

QE^X WILL HAPPEN - 'The Risk-Off that Refreshes'

So what is to be done?

I believe a decision has been taken to temporarily remove some of the pressures off increasing money supply before resuming expansion of money and credit later in Q3 or Q4. There is little choice.

Make no mistake about it however, central bank money printing must continue and at an accelerated rate.  I suspect it will emerge not as QE III, but in another form to address the massive and growing problems with non-performing assets, foreclosures and REOs occurring at Fannie, Freddie and the FHA.

Don't get fooled. Watch the balance sheets of the central banks. They will by necessity continue to grow to stop the vicious spiral from accelerating.

CONCLUSIONS

The Basel BIS Bankers fully understand the underpinnings of the shift from a Virtuous Cycle to a Vicious Spiral presently underway.

They are doing everything within their power to offset it. Policies of "extend and pretend" and "kick the can down the road" are all just attempts at buying time.

Unfortunately time is working against them, as existing debt only increases as interest owed is relentlessly and cumulatively added.

The Basel BIS Bankers have no real answers. The eventuality of a fiat currency crisis is ordained and has been since the early warnings in 2007 of the Financial Crisis. The roadmap has been clear to all that actually wanted to look.

Comments

[DoChenRollingBearing]

Trolls from Gaza are cheap I hear...

[JW n FL]

http://en.wikipedia.org/wiki/Jewish_Internet_Defense_Force

the Trolls from Gaza dont have a dime to spend educating their own verses Israel's un-limited U.S. Tax Payer Funded Information War!

[Samsonov]

Care to address his point?  Death spirals aren't what they used to be if fashion retailers are seeing brisk business.  And it's many retailers: I'm seeing nice gains in AutoZone, Disney, and TJ Maxx that I picked up.  Perhaps rather than saying the economy is in a death spiral, it would be more accurate to say it's having mild doldrums.

[akak]

RoboTroll's "points" are never anything more than anecdotal, highly selective and extremely short-term (usually daily) upticks in various equities.   His arguments and analyses, to the extent to which he has any, are laughably shallow and specious.

[Quixotic_Not]

RoboTroll's "points" are never anything more than anecdotal, highly selective and extremely short-term (usually daily) upticks in various equities.   His arguments and analyses, to the extent to which he has any, are laughably shallow and specious.

Perhaps he's a talking head from CNBC?

[Quixotic_Not]

Care to address his point?

Here ya go buckeroo banzai...ya think this might explain people buying cheap shit in a lame attempt to escape their personal nightmares?

Housing Apocalypse Tomorrow – 675,000 homes in foreclosure have made no payment in over two years.

Welcome to the party, pal.

[Samsonov]

Yeah, there's no way to spin that as good news, although I was aware of it.  My thinking regarding that fact is that it's a good thing.  It's entirely rational to not make payments on a house that's upside down and to buy needless things with the money.  Even better, it's also another way of joining the underground economy.  It's opting out of the government-controlled economy to a new, free economy.

[clymer]

You're too funny - a good buddy of mine has been doing contracting work for the former CEO of TJ Maxx here in MA (real contracting work - as in remodeling) and he says he is getting peppered with questions like "how do you see it out there?" Always asking him about the general economy.

I am not shitting

[sun tzu]

The DOW and NASDAQ hit new highs in March 2000. The DOW hit new highs in late 2007. What happened a year later? Autozone hitting new highs means fewer people are buying new cars and can't afford to take their cars in for maintenance. DIY

[goldsaver]

You are right Samsonov... I see huge gains in many stocks. You know where I saw huge gains a few years ago? Zimbabwean stocks! Prices were smoking hot!

[Samsonov]

We're not Zimbabwe yet, although I won't argue with anyone who says we're going that way.  I bet we'll wind up like Argentina.  I don't know what to do to prepare for either scenario, but for the scenario we are in today, I think RT is correct.

[Stuck on Zero]

Hey.  I resent that.  I'm a minimum wage troll doing the bidding of nefarious entities. 

[alien-IQ]

the amount of things you "don't see" could just about fill the grand canyon.

[lieutenantjohnchard]

from your post last night: "And speaking of Newport Beach/Irvine area, I saw three syndicated loan deals go through our credit committee which were interest-only loans in the billions of dollars, priced at LIBOR + 175.  And the agent banks arranging these syndications give banks like ours 48 hours notice to approve our participation interests, otherwise we are out of the game."

so you still have time to post while multi-tasking at the bank while either servicing or analyzing loans. do you use the banks system or your own while posting, or maybe work from your apartment? or are you really a retail industry troll paid to rebut bearish articles?

must be nice to surf the internet and post at zh on the bank's dime. or act like a neutral observer posting on the issues of the day.

fraud.

[slewie the pi-rat]

RT is an riddle, wrapped in an enigma, dressed in a bra...

[akak]

Now THAT was funny!

[RoRoTrader]

 +

[MayIMommaDogFac...]

'bout covers it.  +10

[WallStreetClass...]

what he was saying does make much sense. 2 business days is a fairly typical syndication closing timeframe. the loans are not actual borrowings, but rather the total credit line, heck, could even be unfunded. LIBOR+175 is a fair spread for Baa credit. this reads like someone had looked at Bloomberg screen, or found a bank pitch with comps in a trash dumpster...

[America- Some A...]

Hard to see anything when your head is stuck that far in your ass.

[Cthonic]

'Twas a cycle, even self-reinforcing, though there was nothing virtuous about it.  Rather, it squandered real capital on an epic scale, as was intended.  There's more than one way to become the biggest ape in the cage.

Yesterday, the American people won a tremendous victory as a majority of the House of Representatives joined me in adopting our plan to revitalize American's economic future. Today, Members of Congress have joined me to announce a new chapter in United States policy toward China.

China occupies an important place in our nation's foreign policy. It is the world's most populous state, its fastest growing major economy, and a permanent member of the UN Security Council. Its future will do much to shape the future of Asia, our security and trade relations in the Pacific, and a host of global issues, from the environment to weapons proliferation. In short, our relationship with China is of very great importance.

Unfortunately, over the past 4 years, our nation spoke with a divided voice when it came to China. Americans were outraged by the killing of pro-democracy demonstrators at Tiananmen Square in June 1989. Congress was determined to have our nation's stance toward China reflect our outrage.

Yet, twice after Congress voted to place conditions on our favorable trade rules toward China--so-called most-favored-nation status--those conditions were vetoed. The annual battles between Congress and the Executive divided our foreign policy and weakened our approach over China. It is time that a unified American policy recognize both the value of China and the values of America.

Starting today, the United States will speak with one voice on China policy. We no longer have an executive branch policy and a congressional policy; we have an American policy. 

-- President Clinton 1993

[Hacksaw]

The forgotten scoundrel in all of this, you rule slick.

[Yen Cross]

 Lets get Financial!  REAL TIME!!!

[SwingForce]

Rising Rates? In the US? Where?

[Yen Cross]

Swing force. Would you buy a 7 or a 10 Tuesday? You could sell a 2 or 5! Hint ?

[Henry Chinaski]

the bigger they are the harder they fall

[Dr. Richard Head]

From the forest itself comes the hand for the ax
Chop 'em down, chop 'em down.

The tool of oppression and war - fiat dollars - will be the tool of the downfall.  Poetic justice no?

[Imminent Collapse]

ZH should be renamed Cassandra after the prophetess of the same name whose fate was to predict the future but not be believed until it was too late.

"Nevertheless, we struggle madly, without thought or sight, to plant the ruinous monster within our holy citadel.  Even now Cassandra reveals our overhanging doom, and as before we ignore her words by the gods' fiat."  Quoted in a Florida  appellate decision Bernard v. Kee, 409 So.2d 1047 (Fla. S.Ct. 1982)

[Mec-sick-o]

+1

Κασσ?νδρα

[SwingForce]

All these nonsense "SCARY STORIES" are written by little rich kids, punks on dope becuz Kool=Aid has too much sugar or something. As long as the XRT is green Americans don't have a clue as to what is going on in the financial world, they just want to look good in the coffin. I remember an interview with Ozzy, he said that after seeing a movie poster with Boris Karloff on it, him and guitarist Tony decided to write music that scared the shit out of people. It worked for Black Sabbath, why not this author? Its all entertainment.

[Quixotic_Not]

If you aren't slightly scared, you either:

A>  Haven't been paying attention.

B>  Work for the military industrial nightmare and love warmongering.

C>  Are stupid high

D>  Or have overdosed on (D)(R) Free Shit Empire koolaid ™

Could be a combination of one, several or all of the above.

[Ruffcut]

+1 I pick E.

Fuck no, I'm not scared at all, but did think about changing my handle to; loose stool, though.

[DoChenRollingBearing]

+ 100 to both of you Quixotic and Ruffcut.  LOL loose stool!

[SwingForce]

You missed a few:

E> Been in foreclosure 3+ years

F> Claimed Chap 7 Bankruptcy

G> Closed business because Florida real estate circles the drain

H> Unemployed 3 years w/o UI

In other words, I have nothing else to lose! Which is LESS than you, obviously. I'm scared, but not for me. I won't be paying the $14Trillion National Debt, I'm not "donating" parts of my salary to SS and Medicare, I don't even have a car so I'm not paying Insurance, Finance charges, or absurd gasoline prices. I don't have a retirement account to worry about (why can't you TreasuryDirect from IRA"S? Duh, think about taxes). This US Gov't has been in Scam Mode for many years, I remember my boss Huey Long at Pru-Bache Smithtown POUNDING my desk SELL THIS! Gold Company of America, a limited partnership, had to be 1985 or 86. "The GOV'T Monetizes the debt! You need to sell gold!" Yeah sure, only Ben-arroya was short and making money. Fast-Forward 25 years and the soundtrack synches with the picture, "OK FIRE ME PLEASE!" Hey, I love you guys, too bad nobody hears the bottom-side of this story. Nice job, Sorkin, showing how they fucked us. Keep the money up there, please.

I allude to this above, that these articles all being written by "the well off" well, THEY should be scared, I'm not. Problem is most people like me don't have computers or internet, can't type, and most of all, don't read Zero-Hedge. I'm not really even scared for you, you get most of it, I'm scared for those people Robo talks about- the buyers of friggin' shoe companies and apparel compainies, have you seen the list of XRT component stocks? Its rediculous, like throw-away your money junk stores. Whatever. Thanks for your comments, I think sometimes nobody sees what I write.

BFF: Evey Hammond

[Rynak]

Of course, the thought that things which do affect others, may affect you, never crossed your mind.

[Yen Cross]

  (+10

[g]

They have to realize that 'kicking the can down the road' can last for only so long. So what is their plan when this is no longer possible? Enlightening article, still regurgitating it, some thoughts later perhaps.

On a side note, I had decided a few years ago (just prior to the market panic) that I would manage my retirement myself, rather than rely on a 401k. So in preparation I began to research the economy, the stock market, etc. It was plain to me at that point in time that a large correction/crash was coming, via Shiff, Celente, Mish, ZH'ers, and CM. My first glimpse into the real world of economics etc, was via CM, which led me here, have been reading ZH for a few years now. Very disheartening to say the least. I still fell like there are no good options to manage one's retirement at this point in time. I am a long way off from retiring. Since that time economics has become my hobby, its amazing to see how misguided the government and mainstream economists are, how flawed Keynesian economics is, and the many virtues of the Austrian perspective.

I am left in awe as to what options the average person like me has, it seems that all we can do is wait and see what happends.

[SwingForce]

Or sell, nobody says you need to stay invested. Matter of fact that's the only advice that's MISSING here: everybody says buy this & buy that. Even the pension pulse guy never states that any funds anywhere are afraid of another big slide- I think that's strange. Move to cash, and I don't mean money market, CASH. No auto sweeps, cash balance earning 0.00% which is not a negative number. THIS line is the shortest.

[g]

Great advice and that is actually what I am doing, is sitting in cash. However, as we all know at the moment savers are getting spanked and that does not appear to be changing any time soon. I think though that you are right everyone thinks they have to be invested 100% at 100% of the time.

[SwingForce]

Savers will never have a negative return. The rate curve is spanking bankers too. Its pathetic that the world wants to loan the US so much money that rates are as low as they are. But who will pay them all back? That's the part that I can't figure out, its $Trillions.

[g]

They will never be paid back, the question is probably how will we default. If they do get paid back it will be at the expense of the sheeple through the form of one tax or another (inflation). Truly, amazing times we live in. I was truly amazed (not in a good way) when I figured out how the system worked, since its inception. Amazingly, most people have no clue, and when it is explained to them, they do not care, as long as times are prosperous. The great awakening will happen but it will be to late. Freedom comes with responsibility, the responsibility of holding others accountable, and that was abdicated long ago.

[Ruffcut]

The worst part about this is, the more you know doesn't seem to help much. More guessing is all you can call it.

Real markets, don't like uncertainty. THis ponzi is far from real, not even memorix

[DoChenRollingBearing]

Make this part of the thread:

+ $1520

Great observations!

[g]

Indeed!

[Quixotic_Not]

They will never be paid back, the question is probably how will we default.

Intentional planned currency devaluation.

How many dollars would you get when they're only worth 1-2 cents on $15 trillion?

Here's a hint, $150-300 billion...

How many happy meals will you be able to buy with that SS check?

Ag/Au/Pb are the ONLY safe assets to be holding when that happens, btw...

[g]

Good feedback, my plan is to hold Ag and Au long term. It is the only protection that I have been able to find, historically to protect from fiat currency collapse.

[SwingForce]

You can't say that in expect to be inside the USA when it happens.

[Quixotic_Not]

It'll probably beat say living in some third-world shit hole like Mexico, Greece, France or Spain!

At least you can somewhat arm yourself, fire up the BBQ and watch the libtard free shit empire all burn on a big screen LCD...

Should be a show to remember!

[SwingForce]

With your starving neighbor and his family banging at your door....

[boiltherich]

Don't bother, anyone that uses the term libtard has no sense of humanity, no morality, not even a sense of humor or common decency.  They are ethically compromised and secretly wish the fascists would get the upper hand and do a gangbusters business in privatized concentration camps.  They can't even grok the fact that they are in the vanishingly small minority.  They don't get the fact that they are the problem and would not care even if they had the intellect to realize that. 

[Quixotic_Not]

If the shoe fits, wear it apparatchik! Redistribution of wealth is not an "American" concept comrade; neither is looting the Treasury or printing a debt-based currency.

Unfortunately, this once great Democratic Republic has been malignantly infected by you and your ilk, and the looters are running scot-free...

I sincerely hope you live long enough to see the end result!

[boiltherich]

The looters and free riders are the GOP tax cutters that think they can live in a clean safe modern society and not have to pay taxes to get it.  They are the bankers that rob us every month on credit card interest, bank fees and charges, bailouts for criminal activity, inside traders that have made our "free markets" into the worlds largest scam, and the wealthy who have so many loopholes in the tax code they already pay NOTHING in income tax (unless they are really stupid). 

This nation generates enough wealth for the average worker to earn $125,000.00 per year yet the average pay is only $40,000.  The other 65 thou per year per working person is being looted out of the hands of the people who get up every day and make this country happen.  As to "grasping and devious" persons who refuse to work just to see the wealthy exploit them and rip them off and then not even have to pay reasonable taxes on their grand theft of labor I for one do not blame one of them.  Give a fair wage or go fuck yourself.  Pay YOUR taxes for public goods and services rendered or go to another country and then fuck yourself!

[g]

"[T]he term libtard has no sense of humanity, no morality, not even a sense of humor or common decency." are you implying that liberals have these virtues? I do not think so, they pander to public sentiment, to meet their own ends, to imply that they hold the moral high ground is simply erroneous.

Neither the liberal nor conservative parties are good for this country, they are both running this country into the ground so to speak. This is not to say that either party does not have a few good points.

It is high time we move beyond the narrow minded thought processes and concepts of these two parties, because change will not be affected through either of them. I do not align politically with either party. I basically vote against the party that is in power, hoping to keep the system grid locked politically, because as soon as one gets control we start getting some really bad legislation.

I support candidates, (there are very few), irrespective of political affiliation, for example I would vote for Ron Paul regardless of the party he runs under.

Don't be so sensitive, sounds like someone struck a cord there, eh. It is easier to pick on liberals, they are so sensitive.

[boiltherich]

People who self identify as liberals are almost always quite open minded, about most things anyway, have good educations, even if they had to educate themselves, and it has been my experience that I have never met a progressive or liberal person that was such because they wanted to exclude people, or punish them simply for being. 

On the other hand, "conservatives" seem to hold their sentiments as a form of hatred.  They are usually not very well educated, they hold strong opinions because they are told those opinions are the right ones and everyone else is an object to be made fun of or called names, such as libtard, they will not discuss any subject truthfully and probably could not argue a point better than to parrot their leaders talking points anyway, whether they understand them or not.  When they do display logic is is perfectly circular.

Most of the people I have known well who describe themselves as conservatives/republicans are really using the cover of the right leaning politics as a way to be racist while pretending to deny it. 

I am a left leaning person who no longer belongs to the democratic party, but I would never in my worst nightmares self identify as a republican because in my opinion there just is no difference between republicans and fascists.  In Germany it was the right leaning parties and persons that went on to form and support Nazism, and that extreme behavior had it's roots in "conservative" politics.  Here in America there was a large Nazi movement in the 30's and I doubt if 1% of the participants in it would describe themselves as liberal or progressive or democrats. 

What I am saying is yeah, I am a liberal and you are a fascist, I love people and you hate them, worse you fear them and are jealous of them, just own what you are.  You live in America so you can choose to hate others, be a racist, hold very plastic definitions of good and evil, be immune to spotting the bad in yourself or others like you.  I personally dislike Obama, think he is not a good president, I think global warming is a scam of mistaken labeling of what is really happening in the environment, I think that we need to go back to a gold standard and a debt jubilee.  I think there are mistakes made not only on both side but by all people and friendly debate and discussion will be needed to fix the problems, but I will not mix words with people who call me names or pass discriminatory laws that damage my basic human rights as a citizen.  I did not vote for Obama, and do not plan to, but if forced to choose between the worst democrat and the best republican I would vote democrat just because anyone calling themselves a republican in my book is seriously in need of mental help.

[g]

Ugh huh, get some help man.

[Yen Cross]

 Kurt you are being played. Walk away!

[Yen Cross]

 Swing Force, you are really ( ANTI MATTER)

[topcallingtroll]

Kicking the can down the road may go on longer than any of us expect.  China has no interest in a hard landing.

[g]

I think that is a very viable perspective. I think things will linger much longer than most people think is possible. That does not mean there will not be bumps along the way. Gives more time for preparation.

[StychoKiller]

How will the market(s) react when the final card gets turned up (The Joker!), i.e., either raising the debt ceiling or failing to...?

[Montgomery Burns]

Cash and physical silver and gold.

[g]

Agreed.

[DoChenRollingBearing]

Agreed again.  Consider adding guns & ammo and survival goods.  Food & water.

[g]

Working on that as we speak, figure to be where I would like to be, will take about a year.

[scratch_and_sniff]

What about forgetting the guns and ammo and survival goods and just buying a plane ticket to a country where guns are banned and things are looking a little rosier? If you get out now, find a job in another country, a wife perhaps if you are not already married, there is a chance you will get permanent residence when( IF ) the shit is coming down in the US.

[g]

I have periodically looked into living in other countries, problem is that most countries I would consider, operate the same way this country does, for example, has a central bank, entitlements out of control, large debt loads, etc.

I need to find that perfect like ocean island, surrounded by my family and friends, and a few ZH'ers, and we can eat coconuts until this mess works itself out.

Seriously though, this plague seems to have stricken the entire world. I follow Iceland very closely, considering the big 'insert gratuitously inappropriate phrase here' they gave the their EU creditors, we will see if it lasts. Waiting to see how many more countries step into the same mold.

[Roger Knights]

"They have to realize that 'kicking the can down the road' can last for only so long. So what is their plan when this is no longer possible?"

They'll wait until populism and parliaments refuse to continue throwing good money after bad, and then blame the collapse on them. (They aren't following an actual ethic of responsibility; they're just concerned with LOOKING responsible.)

[g]

Just about everyone is culpable for this catastrophe, myself included (for taking such a long time to become informed), obviously some are much more culpable than others. And you are right about "(They aren't following an actual ethic of responsibility; they're just concerned with LOOKING responsible.)"

[Quixotic_Not]

For some of us, we became fully aware of the trend back in 1992 when Ross Perot ran Indie for U.S. Prez.

Too bad, so sad that 84% kept voting for the (D) & (R) Free Shit Empire™...

You all realize that 1/4 of 'MeriKans currently working are gonna retire in the next ten years, living off savings and their devalued SS checks?

Sounds deflationary, don't it?

Well Banana Ben and the Banksters won't have it, so they're gonna hyper-inflate the currency as their last ditch scorched-earth policy!

Wonder how many still can't see it?  lol

[g]

"Wonder how many still can't see it"

The vast majority I suspect, however I think that is beginning to change. Hopefully, more and more individuals will discover ZH and some of the other outlets and enlighten themselves!

[SwingForce]

Sum Total is probly less than the American Congress who are the screwdrivers.

[Yen Cross]

 Do you own a screw driver? Tell me the brand.

[James]

As I bounce around the web lately I'm seeing ZH refrenced more and more.

[Quixotic_Not]

Web traffic results:

ZH = 500k & climbing

Mish = 50k & falling

Denninger = 15K & falling like a rock

Now you know why all the wannabes are spamming their blog links on ZH  ;-)

[g]

How does one submit an article to ZH? I have been working on a paper for some time and in a few weeks I may like to share it.

[DoChenRollingBearing]

g, I do not know, but there are email links to zerohedge, probably send out an email re your article.  Good luck!

[g]

Thanks!

[James]

G - Check "create content" under your screen name upper left.

[g]

I get "Access Denied" on all of those items, cordial thanks for your help though. When I am ready to submit I will try sending it via email to ZH. If they judge it worthy I suppose they will post it, if its not worthy then thats ok to ;)

Will not be ready for a few weeks anyways, as many others, I would love to provide some content and contribute to the community here at ZH.

[Turkey]

CM?

[N57Mike]

G, what is "CM"...

I too, started searching.. wound up here, the mainstream media is all the "Ocean of Samsara" the sea of illusion.

[g]

CM = Chris Martenson

CM was kind of my gateway away from the MSM, and led me here to ZH. ZH is one of my greatest resources in staying informed. I appreciate the work of TD and all the commentors.

[N57Mike]

Thanks............

[FriedEggs]

One day ZedHeds - we will need not to discuss how much PM's we can obtain...(because we will have lots:-)

But -

how to defend it from thieves,

looters,

thugs, criminals, bad folks, banks, etc...

Its all fine and dandy that we got it - but we need to keep it in our possession.

Thats the only problem i see in the future. Because we arent going to put it in a bank, people will eventually find out you have a supply of PM's when you start bartering for other GOODS&SERVICES using your pm...

Time to sharpen your blade...

Fried(e)

[Quixotic_Not]

If you're behind enemy lines, in say CA, NJ, NY, ILL, et al., you're toast!

If you move to a state like AZ, CO, UT, WY et al., and become part of a local armed community, you'll probably be fine (with the right resources).

That is, unless the .GOV goes 100% ferel, then it's every man for himself!

[g]

Part of my plan (trying to educate my wife), is to relocate to a more stables/rational state. I have been doing a lot of thinking/researching with regards to location.

[Blano]

Personally, at this point I'm planning on heading to Alabama, but if things get too oppressive there as well, I'll probably bail on the US completely, maybe for Chile. 

Don't have a wife/girlfriend/mistress to educate, so for me it's just a matter of making and exchanging enough FRN's to make it happen.

[g]

I have a wife and kids, so I have to consider everything from a family based perspective. Trying to get my wife to educate herself with regard to the economy, preparedness, etc. I think most people are aware that there are problems and the system is sick, but they simply do not want to face or acknowledge this is the case, let alone delve in and understand the core issues.

My grandmother told me that when she was a child they did not go through the winter without storing enough food ahead of time. This was in a way an epiphany for me because I had never really considered that we live in a just in time world and take a lot for granted. It would not take much to cause serious disruptions to our way of life.

I am trying to get my wife to see the worth in being well prepared, even if the circumstances we live in now, did not exist, because it is simply the smart thing to do. I would love to learn and am striving towards, a more self sufficient lifestyle, trying to make it appeal to my wife as well.

Choosing a location to 'settle' is a pretty important beginning goal here, as this affects everything from land/farming, jobs, fire arm laws, taxes, state/community debt loads, basic services, etc, the list goes on.

I am not, nor to I intend to be a doomer (although a great case can be made for being a doomer!), however I want to be prepared for anything and as self sufficient as possible. Living in a community of like minded individuals would be a bonus.

[DaddyO]

Hey g,

This link http://www.survivalblog.com/redoubt.html is a great start to seeing other places from a prep standpoint. the website is a great resource as well. I go there every morning and get good info on prepping.

DaddyO

[Max Cynical]

g, ping me at mbcris2006 at gmail about this. I'm doing some of the same research and would enjoy comparing notes.

[FriedEggs]

Hi Q,

I'm up here in the great north...southern Ontario:)

Lots o' room to roam and spread out here in Canada.

Our gun laws are not as flexible as American and obtaining a firearm isnt as easy either.

But again, in all honesty, holding your own PMs does come with its risk from the other perspective as i mentioned - looters and thieves and liars...

How many ZedHed are in physical shape to run with your 25kilo PM stash when you need to run? Or knock somebody sqaure in the face with a fist full of steel?

Sounds kinda funny - but ask Mr.Durden and im sure he would agree and have respect for that. Mental awareness is good...add some physical and your really good to go.

More to PMs then just meets the eye (buy some protein powder:)

Fried(e)

[Quixotic_Not]

FOAD Torrie.

I'm an American with 2+ families on the Sons of the Revolution Charter - If I see a royalist POS like you in my hood, post collapse of the dollar, it'll be wtf and ask questions later...

Piss off!

[FWM]

http://www.appleseedinfo.org./

Went from barely a barn door to a head-shot at 300 yards, with iron sights.

Mike

[James]

John Wesley, Rawles - owner of survivalblog.com suggests this as a option.

http://www.survivalblog.com/redoubt.html

[Al Gorerhythm]

Too far right religious. Just another clique in the making.

[StychoKiller]

The small town in which I live will find out real quick what the Golden Rule is...cooperation will become even more valuable than ever.

[boiltherich]

Yu left out presidential executive orders.

[espirit]

Pump and dump Fed, algo's are already feeding on each other.

They're going to blame it on the weather.

[JP McManus]

Up, Down, Up, Down, Left, Right, Left, Right, A, B, A, B, Select, Start = Unlimited FRNs

[g]

I tried that, and its no working for me, I must not be TBTF, must be TSTS (to small to succeed).

[Cthonic]

Congratulations, you have defeated the vile Red Falcon and saved the universe.  Consider yourself a hero.

[J_Perkins]

If the above code is not working for you, try the following, *guaranteed to work

Up, Up, Down, Down, Left, Right, Left, Right, B, A, Select, Start

[Cthonic]

Ah, this one is truly wise in the ways of Konami.

[jal]

Thank you for this great explanation.

I particularly liked your conclusion.

"CONCLUSIONS

The Basel BIS Bankers fully understand the underpinnings of the shift from a Virtuous Cycle to a Vicious Spiral presently underway.

They are doing everything within their power to offset it. Policies of "extend and pretend" and "kick the can down the road" are all just attempts at buying time. 

Unfortunately time is working against them, as existing debt only increases as interest owed is relentlessly and cumulatively added.

The Basel BIS Bankers have no real answers. The eventuality of a fiat currency crisis is ordained and has been since the early warnings in 2007 of the Financial Crisis. The roadmap has been clear to all that actually wanted to look."

Its still the new normal

Two steps back one step forward.

jal 

[StychoKiller]

Exponential functions and geometric growth...there's no getting around Physics and Biology, even for Banksters!

[poydras]

One should add that the govi is essentially the guarantor of only resort for RRE financing.

As stated since 2007, all roads lead to devaluation.

[bbq on whitehou...]

It would be nice if there was such a thing as an integrity fund.  A fund that you could invest in that would match inflation and match the fluctuation found in commodities and currencies.

A fund that would be honest and never cheat you out of your gains. A fund that would never harm or allow you to be harmed by management.   A fund that would only want your wellness and seek your happyness.

A fund that would never steal or allow you to be stolen from.

Does a fund like this exist?

Well yes. In hard metal. Gold, silver, any metal that you forge or trust. 

Only that what you can felt and hold in your hand will not be stolen form you. Hopefully.

[Bay of Pigs]

London fix @ $1533. 4th highest close ever. Less than 1% from an all time high. 

And do I hear anything on MSM about this? NO.

Bullish...

[StychoKiller]

Pb, steel, Cu and brass also...

[TruthInSunshine]

Imagine Ben Bernank, standing at the foot of a 3,000 foot tall dam, that has developed an extremely pervasive and complete vertical crack with water slowly beginning to seep through, while the wall of water on the other side keeps building, adding more and more pressure to the dam.

Ben has on his body:

1) Some bubble gum.

2) A Montblanc pen.

3) The latest edition of Modern Money Mechanics.

4) A copy of The Creature From Jekyll Island.

5) Wallet.

How does Ben Bernkancklecide make the repair to the dam and save the valley from catastrophe?

[Duuude]

"How does Ben Bernkancklecide make the repair to the dam and save the valley from catastrophe?"

He does not care about those downstream.

The Fed's shareholders are tha Banksters...in tha Gulfstreams.

Jeebus.

[Ag1761]

Thank you for this, puts it firmer in my head.

So are team Basel amassing gold and raping the sheep in the runup to hitting the reset button in 2012.

Thing is, what will the reset be, WWIII, Plague, Single NWO Currency, Gold Standard,

One thing for sure, I'm going to keep on stackin until the end.

[viator]

Well, that cheered me up.

[the grateful un...]

 there are a number of outcomes to anticipate, and no one is really certain how they play out. the debt market could be rationalized, like cap and trade, if you qualify for points on a mortgage you can sell those points. The market in debt is currently a monopoly, and not a consumer directed business model. (to allow you a zero APR loan is not the same thing as allowing you to trade your access to credit for something you need)

instead of buying a treasury bill, consumers might opt for a 20 year loan at a fixed rate, transferable. right now banks control this market, for the reason that they perform the legal functions and due diligence, which is absolute crap. the banks regulating of credit is probably inferior to an open market in loans in which consumers make their own deals.

we're probably coming to that, the market may not be free buts its open. what happened in 2008 was runaway monetization of debt in the private sector. the private sector was printing money faster than the Fed. The Fed and its twin the UST crashed the market to get control of things. (call it preemptive war on a free credit market)

eventually we get back to that moment but right now the Fed has all the players right where they want them. meanwhile they print their propaganda about economic growth, to keep the consumers from asking, hey wheres my ZIRP? Obama of course was the manchurian puppet is all this, not a populist thought in the mans head. a real screw job on America. and black America in spades, pardon the pun.

anyway its time to put the chicken on the grill.

[topcallingtroll]

I just think that these things go on longer than people anticipate.  If we devalue the dollar a little more in the next two years we are competitive again with the third world, albeit with a lower standard of living.

That is the best option.  The optimistic scenario.  We muddle through and learn to eat all those strange cuts of meat that we now export to the third world.  No more living high off the hog, but we will be employed and productive.

[the grateful un...]

http://www.youtube.com/watch?v=hXXrB3rz-xU

watch this about meat glue. pretty soon they will do this with workers.

[blunderdog]

We muddle through and learn to eat all those strange cuts of meat...

Oh, sure, that's great for all you top 5%'ers, what the hell are the rest of going to do? 

Evolve a second stomach so we can live on straw?!?

[topcallingtroll]

I actually prefer a lot of the wierd cuts like fried pig tail and mountain oysters if they are cooked the right way. Even if we drop to a south american standard of living most people will still consume too much protein.

[Yen Cross]

  Yuck! Hope you are doing well. That was daring!  I'll eat beaks before nuts! 

   Just kidding. I have had Moose nuts. They are like breaded walnuts.

[takinthehighway]

Red beans and rice...cheap, filling and together make a complete protein.

Lots of hot sauce, maybe a little pork sausage if you can swing it...

"I ga - ron - tee!" (RIP Justin Wilson)

[cowdiddly]

+1 wid a bodl of pop wid de foam on de top.

[Things that go bump]

Screw that.  If that is the best we can expect somebody is going to burn for it.  In fact a lot of somebodies, preferably with their families right next to them as object lessons. 

[Yen Cross]

 Easy Jean, it's a long weekend.

[Quixotic_Not]

Hahaha!

Wish in one hand, and shit in the other!

Time for that option passed when dumbfucks kept voting (D) & (R) Change you can bleet in.

Sorry Gene (can I call you Gene?), now that we're all out of .GOV options to prevent the inevitable *reset* you really think TBTF won't finish the crime they've started, and get away with it?

HA!

Without a unified culture - bound by inate ethics & morals - the options for lawful recourse, revenge, payback, et al. will be out-of-the-question.

When TSHTF, the banksters and their politeer lackeys will be firmly ensconced into walled communities and protected by .GOV thugs, who will be salivating with the thought of murdering the lawful citizenry that would dare raise even their voice in disent.

Take a look around, you think the paramilitary gestapo pulling you over and collecting protection ca$h are joking?

Me thinks a few of the "enlightened" are still asleep, 'cause this ain't your regular banana republik kleptocracy in motion - This scheme is globally co-ordinated Class warfare, and the braindead 'MeriKans keep consenting to it, over & fucking over again!

[delivered]

Just one comment on the article and it relates to the statement of "watching the central bank's balance sheets". If the central banks were honest with impartial and accurate audits completed in a timely fashion, I would agree with this statement. But this is as far from reality as you can get as these central banks are masters of "managing" their balance sheets by using SPEs, contra accounts, manipulating reserves, managing the timing of transactions (and when they have to be reported), etc., etc., etc. to produce the desired political and economic results. I've seen just about every trick accountants and financial types use to manage financial information as I'm one of those types that can turn the simplest question of what does 2 plus 2 equal into the proper answer of "What do you need it to be".

As for QEx, it's already happening/started but just in a stealth mode. The CB's will stop at nothing and use every tool, proxy, and resource available to continue with their monetary missions (just not in view of the public). Extend and pretend and lie and deny are short-term phenomena. In the end, the only quote that will hold true was made by Tim Robbins playing Andy Dufrain in the Shawshank Redemption - Geology is just the study of time and pressure. No different for the current economy as its now just a matter of time and pressure.

[alexanderstollznow]

As for QEx, it's already happening/started but just in a stealth mode. The CB's will stop at nothing and use every tool, proxy, and resource available to continue with their monetary missions (just not in view of the public).

explanation? evidence?

[NotApplicable]

I hear the BOJ is printin'. While not technically a Fed QE3 operation, money is fungible and cannot be quarantined. Just as water seeks its own level, money will seek out the greatest return.

[slewie the pi-rat]

the Treasury is writing checks;  the FED is covering them? 

[Yen Cross]

   So where do those liquidated dollars go? The Piig's of europe? The rinse wash of small ACB's ? The preservation of North Africa? Australia? There is a reason for settlements.

[StychoKiller]

Re-read the article, the Banksters are shoveling cyber-currency into a black hole as fast as the computers can create it!

[bbq on whitehou...]

Where does a man go who only wants to be left alone.

"Where are you going to run, where are you going to hide; No where, because there is no where to run to."

-body snatchers.

Banks are everywhere and will not allow you to run without screaming.

[Yen Cross]

  I'm not telling!

[catch edge ghost]

Naw.

Fundamentalist borrowers stole our jobs and are trying to kill our unborn oil because special interests married a prayer at a gay football game.

[BandGap]

Best post I have read anywhere in six months.

Get your war on.

[NotApplicable]

I was going to post a link to the 'Get Your War On' comic strip, but wouldn't you know it, he quit making them when Obama was inagurated. Turns out he is just another stupid, partisan fuck.

[alexanderstollznow]

question:  IF the US reserve currency policy was responsible for the US living beyond its means etc, how is that europe, initially with a number of currencies, and essentially 2 for the last decade, has also managed to do the same thing?

[topcallingtroll]

mercantilists don't discriminate

[catch edge ghost]

I'm not an expert on this. I think I understand that it works kind of like..

Print fiat. Buy US fiat. Repeat as soon as possible.

[alexanderstollznow]

ok, i will say it again s l o w l y  for people who cannot understand the question...

IF the US reserve currency 'strategy' was what enabled the USofA to live beyond its means (ie because the USD is ITS currency), how is it that other countries which did not own the world's reserve currency, manage to live beyond their means too?

ie, if the same self damage could be done WITHOUT owning the world's reserve currency then PERHAPS IT HAD NOTHING TO DO WITH OWNING THE WORLD'S RESERVE CURRENCY?

like, maybe this is just what happens to countries whose governments borrow for consumption?

[topcallingtroll]

Yes that is what i said. If the mercantilist country prefers capital infows over goods and services they will accept it in any stable currency.

So it didnt matter if we were the main reserve currency.

[Rynak]

It does allow to charge the spiral much harder though. Its not a requirement, but a force-multiplier

[THE DORK OF CORK]

Excellent article but is perhaps too Pacific oriented - the selling of CB gold and subsequent lowering of sovergin debt yields with their signal to the commercial banks to massively increase credit needs to be studied.

This was chiefly a effort by the global bankers to release the Euro experiment using much of Friedrich Hayek's work on "The denationalisation of money" as their dogma.

(I believe the FED joined the BIS in the early 90s....................... very strange timing don't you think ?)

This destruction of old nation state structures has been devastating to Europe.

It may never recover in this Century - the internal contradictions withen these now very sad ,even pitiful states is just too great now.

[Rynak]

As i described the setup elsewhere: "Take my money and buy my goods, and i'll become rich!"

Really, in the big picture, it's not much more than that: Country A exports goods to country B, which buys them with money lended from country A". In the fairytale world of economics and things like GDP, everything seems to work fine - until you take into account, that the supposed money was never "lended".... it was given away for free by knowing exactly that this is not sustainable longterm. What happens to the balance sheet, once this is acknowledged? Ooops, looks humans just bullshitted themselves once again.

[FreeNewEnergy]

Today's rally fizzling into the close, just like the past two days.

Gonna finish higher, but not by much, and on extremely low volume.

Have a great weekend, loyal ZHers.

[cainhoy]

it will go on until it can't and then the world will be FUBAR. you won't know your own gran ma sonny.

[Jab Cross Hook]

Agreed.  I joined my first band in five years the other week, may as well fiddle like everyone else while Rome oxidizes.

So yesterday, drummer was worried about his credit score.  Common thing for drummers.  I asked if he knew his blood type.  Answer returned "no."  That really bugged me.  Knowing your credit score, but not your blood type.  I have some work in front of me.

(intended as a reply to SwingForce @ 14:55, not new post.)

[High Plains Drifter]

man, everyone needs to go to jesse's americain  cafe  and check out that picture he has on there ............ha ha ha ha

[alien-IQ]

the body language in that picture is PRICELESS!

[High Plains Drifter]

hey buddy,keep your hands off my big bootay.......

ha ha ha

[N57Mike]

.... pervert.......