John Williams Talks To BNN About The "Great Hyperinflationary Collapse"

Tyler Durden's picture

Any interview that starts off with John Williams saying "Eventually it is going to be a hyperinflationary great depression" is sure to be controversial. While not necessarily news to those who subscribe to the editor's newsletter, sometime we wish that Blackhawk Ben was among them, because despite his 100% confidence that rates will never do the kind of move that they exhibited in the past two days, they, well, did. To quote Williamss, who actually keeps track of the US economy as if it were a GAAP audited corporation: "The annual deficit is running $4-5 trillion a year, that includes the Y/Y change in the NPV of unfunded liabilities... There is no political will to deal with this." The catalyst is well-known: "When you see panic selling of the US dollar, that's when you have to be really careful. But what's already been done with the dollar has spiked oil prices, and other commodity prices." On the question of why Bernanke would not be able to pull off what Volcker did in the early 1980s, Williams' explanation for why this time it is different, mostly focuses on the size of the US trade and budget deficits, which are not even remotely comparable on both an absolute and relative basis. Most specifically what consumers should do in the post-apocalypse world, Williams is not too optimistic. Ironically, he notes that Zimbabwe in its hyperinflation may have been lucky in that it had the dollar to fall back on in the black market, and now every market. However the US does not have that facility, and this "will get very difficult when food starts disappearing from shelves." Having goods for storage and barter would be critical. However, there may be a snag...

It appears that Mountain House, which is one of the better purveyors of freeze dried food and holds over 30 servings and last for 20 years because they are packed with nitrogen rather than oxygen, is now sold out of all #10 cans -link.

And for those who go to NitroPak, which sells these products, they have the following message:

***CURRENT INVENTORY UPDATE*** There is currently EXTREMELY high demand for all of our Mountain House foods nationwide due to current economic uncertainty and inflation fears. With this increase in demand, our food order processing times have increased also. As Mountain House’s leading distributor, we are receiving huge shipments weekly to fill our customer orders. We are shipping as quickly as we can. Your charge card will not be charged-up until we are ready to process your order. Thank you for your understanding and patience! Harry R Weyandt President

It appears that the battle lines have already been drawn, and the cheap optionality is gradually being eliminated. At this point the best the world can do is hope that Williams is wrong.

Full BNN interview with John Williams (after the jump):

h/t Robert

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deepsouthdoug's picture

Sorry, can't listen to Palin for 5 minutes. 

Malcolm Tucker's picture

lol I don't blame you. It's the same horrified fascination i have with watching a train derailing...

More Critical Thinking Wanted's picture
The "Great Hyperinflationary Collapse"


This guy sure knows how to make an idiot of himself, now documented for eternity.

Lets do some pre-school math. The US has how much debt? Around 100% of GDP. Lets assume you are a paranoid anti-government conspiracy theorist - so lets be generous and make it 150% of GDP.

Iceland had how much debt? 700% of GDP.

Did Iceland get into hyperinflation? Not at all - and now its economy is growing again.

Anyone who thinks the US cannot print US dollars to print their way out of debt or cannot default in other ways, with a measly one year's US productivity of debt is kidding themselves. Iceland of all places was able to do it, and they are not the center of the financial world, the Krona is not the reserve currency of the world and Iceland has no atomic bombs and a strong military force either - just a few erratic volcanos.

Cindy_Dies_In_The_End's picture


Real simple dude:

When the Icelandic bank failed, the British and Dutch governments stepped in to repay their citizens who had deposits in the Icelandic bank. When they in turn, demanded their money back from Iceland, the people said "no".


Um, who exactly steps in and pays OUR deposits when the US TBTF fail?




That is just one of many differences.

More Critical Thinking Wanted's picture


You appear to have missed my point:

  • the US still prints its own money, and all its debt is denominated in USD

[Considering how big and central this point is it must have taken quite some effort to miss it :-) ]

Greece does not print its own money - the ECB does. Ireland does not print its own money, the ECB does.

The US can only default on its USD denominated debt if the printers run out of ink.

Ireland and Greece can default very easily: if they cannot earn enough hard euros, plus interest, plus interest's interest, etc. it's game over. Those euros are kept hard as per France's and Germany's interest.

You dont even have to use your brain to understand it. Just check US CDS prices against Greece's and Ireland's CDS prices. What do you see when you compare them?

(and nothing but the cricket chirp.)

More Critical Thinking Wanted's picture


Um, who exactly steps in and pays OUR deposits when the US TBTF fail? [...]

I guess we need to go back to economics kindergarten. Do you realize that 'your deposit' of USD is simply a few bits set in various computers, which computers are owned by US banks and by the Fed?

Do you think it will be hard for them to keep those bits constant at your current "$585" value, regardless of what investors in other countries do or dont do?

The problem Iceland had was that after the 2008 crash its banks sat on ~700% of GDP debt, denominated in euros and dollars, not in Iceland's own currency. Iceland could not print dollars and euros (and they could not reliably control the eruption of their volcanos either, to use them as a blackmail tool) so Iceland had a big problem.

(Ireland and Greece has a similar problem as well - and they don't even have volcanos.)

This latest "the US will be unable to print USD and will default" line of right-wing argument is beyond comical. Is it really that hard to sometimes ... think? I just sit here laughing - and I wholeheartedly welcome you as a counterparty to my trades.



Wolf in the Wilds's picture

Actually your numbers are wrong.  Lets do the math:


US Govt debt : US$13.8 trn

Municipal Govt debt: US$2.85 trn

Social Security unfunded:  US$14.7trn (a lot of which is due in the next 5-10yrs)

Medicare liability unfunded : US77.4trn

Prescription Drug liability unfunded : US19.5trn


US GDP : US$14.6trn

How is an economy worth US$14.6trn going to fund liabilities of US$128.25 trn


FYI I have not included GSE debt or Govt Guaranteed bank debt cos i don't want any disagreements on actual vs contingent liabilities


steve from virginia's picture

The US doesn't pimp yield any more, rather hopium.

Everyone is waiting for the US 'consumer' to get back to work. The world is in for a long wait.

The establishment will monetize as it has for a long time (since Vietnam War) and everyone will drink the hopium. People have been buying into the utopia- fantasies of industrial mass- production since 1750, why not buy into some Hollywood for a while longer?

BTW, Williams' basic premise is wrong. One cause of Zimbabwe's (and Weimar's and Hungary's and Brasil's, etc.) hyperinflation was the presence of a currency alternate to the national security in circulation. Zim had the Zim dollar, the US dollar and rand. Weimar had sterling and the goldmark, Hungary had the florint and the dollar as did Brasil as an alternate. Peeps sell the local buck @ any price to get the black market alternate ...

Hyperinflation is taking place now in China not in the US. Price rises of some consumer goods is not hyperinflation.

Central bank issuers cannot create enough funds to offset debt nor do excess reserves represent anything other than excess costs to the banks that hold them. Don't believe me, look @ the gold market!

The dollars 'created' do not appear in circulation or endure but are destroyed in liquidity/currency traps by highly- leveraged balance sheets of insolvent asset markets.




Wolf in the Wilds's picture

Read this.

Inflation is taking place in China and EM because they are still attempting to "peg" themselves to the dollar.  Freedom of capital flows mean that all the money that the Fed printed has flowed out to health countries, making them like.. well.. like the US before it blew up.  Hyperinflation will take place in the US.  Its a matter of when.  Hyperinflation is NOT an mathematical economic phenomena.  It is a psychological response to unsustainable economic conditions.  Most people forget Economics is a social science based on human behavior.  Its not about the production gap, Taylor's rule.  There are circumstances when hyperinflation can exist with full employment.  We are fast approaching such a circumstance.  The causes of hyperinflation are always the same.  Relentless monetisation of debt.  Either QE3 or QE4 will be the trigger for this to occur.  And there will be QE3 and QE4.. and so on so forth.  I have outlined why.  Tell me what you think.


jakethesnake76's picture

Yep i am always concerned when people think that bad behaviour and business practice can go on forever . And i liked yer take.. eventually there won't be a big enough fire extingusher to put out a fire with gasoline being sprayed on it ....

Spalding_Smailes's picture

That guys a fucking moron. They can't break the peg, they funded the manufacturing complex on cheap yuan .... The banks would get monkey hammered.

They are on the other side of a 25 year credit orgy in the USA. Securitization market = cheap credit = ninja loans = house =sheeple = 2nd mortgage = big screen = river boat = 2nd home = big screen .... = Boom.......

Who's on the other side of that epic credit/debt gang~bang..?


QE~ 4.0, book it.



Wolf in the Wilds's picture

Guess who owns more US Treasuries than China....the Federal Reserve.  And China can walk out if they choose to.. There will be pain no doubt.. but better than getting screwed.  Why do you think think they are beginning to trade for basic commodities in RMB?  I suggest you take a good look around the world.  Things are moving, slowly but surely.

dehdhed's picture

The dollars 'created' do not appear in circulation or endure but are destroyed in liquidity/currency traps by highly- leveraged balance sheets of insolvent asset markets.

so if they do pomo to infinity does all those newly created dollars vanish after the fed buys the bonds?   geesh, what a rip-off ... must be using disappearing ink, no wonder bonds are tanking, no one wants to front run the fed if all they get in exchange is dollars that disappear.   it's not printing money, they just digitally credit accounts ... it's not hyperinflation, your dollars just disappear.

next they'll say it isn't even dollars, it's just numbers on a computer screen.  although it's still possible to trade the number 1400 for an ounce of gold, i bet it won't be long before numbers on a computer screen become worthless too.

my advice is exchange your digital wealth, which will be lost someday, and keep stacking.


Red Neck Repugnicant's picture

When the Fed buys bonds, and is able to hold that bond indefinitely, it is not creating money; it is simply an asset swap on a balance sheet.  Without the Fed, those bonds could have been exchanged for money in the open market if the bondholder had wanted the dollars instead.  A dollar bond can be exchanged into a dollar bill instantaneously.

QE2 simply allows our government to replace the lost treasury demand from China, and allows the US to issue debt, nearly interest free.  All interest earned by the Fed on those bonds is returned to the Treasury at year end. 

QE2 is not inflationary, despite the protests from all the green bean wingnuts around here. A simple glance at the DXY over the past few weeks will validate that. 


Wolf in the Wilds's picture

Seriously, do you read what you write.  Where do you think the money raised from the Treasury is going to?  INTO CIRCULATION.  They use it to pay federal salaries, buy military goods, spend on bridges and pork-barrel projects, etc.  Unless you tell me they just keep the money in the bank.  WAKE UP.

Red Neck Repugnicant's picture

In terms of money supply, please explain the difference between a bond and a dollar. 

To your points:  The bank does keep the cash in reserves.  It is just sitting there. Had the bank wanted to create cash to lend, it could have exchanged that bond for a dollar at any point in the open markets instantaneously.  A US bond and a dollar are basically identical.   

But banks don't want any more cash because the velocity of money is nearly zero. The cash is, indeed, just sitting there with nowhere to go.   

Have you ever wondered why the bankers were quiet during QE1, but openly critical of QE2?  Remember the open letter from all those Republicans a few weeks ago?  QE2 doesn't do anything for the banks - which, of course, is the only time you'll read full page criticisms in our national newspapers, spearheaded by angry Republicans.  

Apparently, if there is no advantage for the banks, then there is no advantage at all.  

Crisismode's picture

You are so full of bullshit it must be leaking out of every orifice in your body.

And you still didn't answer his question . . . but instead provided nothing by psychobabble that is all you are capable of mouthing.


Red Neck Repugnicant's picture

He asked me two questions:

Do I read what I write?

Answer: yes.

Second question:

Where do you think the money raised from the Treasury is going?

I can only assume this is the question you're referring to, and I answered it thoroughly both above and below this post.  Do I need to state the obvious: Money raised by the Treasury goes to all sorts of fucking stuff.  

But QE2 has no influence on that, nor does it have any influence on the money supply.  The money that touches the Fed in QE2 is already part of the money supply - those treasuries have already been purchased, and those dollars are already in circulation; it is simply an accounting gimmick that allows us to borrow money from ourselves at zero per cent.

I repeat again and again:  QE2 does not affect money supply, at all.

You should educate yourself before you tell others they are full of shit.  If you don't believe me, do some simple research on the internet - Google is your friend. 


Wolf in the Wilds's picture

Look, I don't even know why I bother to talk to someone like you, but if just to educate other readers in the blog, here it is. 


QE2 create money.  Why?  Simple.  It is the expansion of the Federal Reserve balance sheet, whose liabilities are, to a the large extent, base money.  What is the dollar?  It is an IOU issued by the Federal Reserve backed by the faith of the US goverment.  Now, how can you say the money is already in existence?  The Fed, in the action of monetisation of Treasuries (to the layman, BUYS Treasuries) it creates an additional asset in its balance sheet.  On the flipside, there has to be a balancing item.  Have you looked at the balance sheet of the Fed? Notice the first item in the liability side?  It says CURRENCY IN CIRCULATION.  Interesting eh?  And then there are a whole lot of other stuff but the biggest other item on the Fed liabilities is (guess what), Reserve balances with Federal Reserve Banks.  That is the excess reserves that the banks are keeping with the Fed.  Now, if the Fed buys Treasuries, and is completely offset by these Reserve Balances, you can possibly say that base money has not increased.  But of course, that isn't the case.  Furthermore, evidence of M0 and M2 increases indicate that already, we are seeing the impact of the failure of the mechanism.   Funny thing abt excess reserves:  they are not mandatory.  In fact, if the banks were to start lending money out, the excess reserves would drop and the money multiplier will increase.  What happens to the Fed balance sheet then?  Well, in order to hold the same amount of assets, another category of liability will have to increase to offset the decline in reserves.  Guess what that category is?  How about Currency in Circulation?

 That is the main risk of Federal Reserve policy.  When there is mediocre pick up in lending and economic activity, these excess reserves will no longer remain in the Fed balance sheet and the "other liability" item will suddenly increase.  That item is M0.  Well, some have argued (smarter people than you clearly) that the Fed can always sell off the Treasuries it owns into the market (ie reduce Asset size, vs liability substitution), but I really doubt Bernanke will actually do that since it would be TIGHTENING monetary conditions and as we know Bernanke is Helicopter Ben after all.

You have no understanding of what is really going on and clearly, it behooves people who do to make sure you don't influence people with your propaganda based views and illogical conclusions.  Google is your friend, only if you can distinguish reality from lies.  And clearly you either cannot distinguish the logical truth from lies, or you are part of the lying propagandarists. 

fiddler_on_the_roof's picture

You are wrong. If US Treasury issues bonds and banks/ China buy it, it is not money printing. But if FED buys from US Treasury, new money comes into the system(FED credits US Govt which spends on expenses).

Red Neck Repugnicant's picture


I'm sorry to inform you, but you are wrong. I think it would behoove you to understand how the supply of money comes into existence, how it exits and the difference between monetary base and money supply.   

QE2 does not increase money supply.  Money supply is neither created nor destroyed when a bond is exchanged for a dollar, regardless of where the money came from.  Anytime the Fed wants, it can sell bonds and pull money back out of supply.  Instantaneously.  And back again.  And again.  And again.  

QE2 is simply an exchange of assets, from the bondholders savings account to their reserve account at the Fed.  It's just a transfer of an asset on a balance sheet, much like taking out a HELOC on your house.  If you convert your house to a HELOC, has your wealth been inflated?  No.  It's nothing but an accounting issue on your own personal balance sheet.  

The only difference the Fed makes in that equation is in regard to the interest expense.  If China or a bank holds the bond, the Treasury must pay them interest on it.  If the Fed holds the bond, the interest is refunded to the Treasury at year end, thereby adding nothing to our debt. 


Wolf in the Wilds's picture

I understand where you are coming from.  You are referring to the balancing item in that is the reserves that banks place with the Federal Reserve.  You are right, to only an extent.  IF the increase in US Treasuries in the Fed is equal to the increase in said reserve, it is not inflationary.  But what if it isn't?  You see, you rely a lot on Fed data to make your presumptions.  What if those numbers are false?  Even if those number are real, there is an implied 1x increase in M2 from it because the US govt will have to spend the money they borrowed once.  Look at the M2 chart.   And you HAVE to ask why they discontinued M3.  I am pretty sure you have bloomberg.  So no, I don't agree with you.  Anecdotal evidence and alternative data points to an export of liquidity to EM, and overall increase in prices of goods across the board (using pre-1999 methodology to calculate inflation). 

Wolf in the Wilds's picture

And one more thing, have you ever wondered why the Fed has not be audited for such a long time?

deKevelioc's picture

Then let's do more of this "accounting issue," shall we?

Why not?  If funding shortfalls at auction don't matter, let's fill the ever-widening gap forever.

John Williams has got it right, unless, of course, the political will that's needed somehow emerges.  It's not likely to happen. 

This is not a game of "cry uncle" when the situation with the dollar becomes unbearable, a collapse comes unexpectedly, quickly and from an unexpected source.

A collapse in the dollar will be brought on by a political event not an economic event.  That's why the timing of the event is so tough to predict.

"Money for nothing and the chicks are free."

Grill Boss's picture

When you guys learn uniform commercial code (UCC) and when money starts (when you are born) you will understand that much more money than the measly trillions (as we undertand it is being played with) just think 1 million in the states alone for everyone with a birth certifiate. Then the borrow into existence on that. The reason they can print forever is because this is chump change compared to what is really going on. They play a whole different game it is different when they dont tell you the rules it is way different when you dont even know there is a whole other game going on (btw this is canada, england, france etc.)

Real bonds are the bonds that are issued when a person is born none of this other stuff, this is what the big boys own.... YOU... where do your tax dollars go again? Has anyone really looked into how much money the govt raises vs what they tell you? Why is it they never seem to have enough?

You can think "Conspiracy" all you want which is the most clever way of saying "i will just deny it and not look into it"


UCC birth (or) berth certificate... as in when you are born you are berthed (like a ship) (your mother) the cargo needs a certificate (birth) to keep track of where it goes (you)

MARITIME ADMIRALTY LAW since people are being born everyday in countries these guys for the most part own.... there will never be a shortage of money (or debt that interest can be charged on) cops agents etc. do nothing but balance books and protect assets

that is all that is going on.

Do you know the difference between a human and a person? a driver and a human?

Do you know why every document or license you have is in CAPITAL LETTERS?

Do you understand the rights you lost when you created the CERTIFICATE

You are the corporate representative of what was formerly a human.

There are no laws there are only statutes posing as laws... only corporations can be charged in violation of statute so are you a corporation?

You Fuckn bet your ass you are (strawman) at this point ALL YOUR RIGHTS DISAPPEARED, this is part of why they dont give a shit because they technically dont have to answer to anyone (but the corporate reps of which they own)


Deny all you want it is for real

dehdhed's picture

i'm not an english major so this will be too brief.  debt money is not inflationary because the funds used to service debt negate the inflationary impact of debt money.  to have deflation, debt money needs to be defaulted upon and destroyed.   when defaults aren't allowed and bailouts or pomo to infinity are used instead, then the debt money is replaced with inflationary money supply.

they may only do it to a point where deflation isn't allowed to happen, but the result will be that the inflationary money will be much greater than it was previously in relation to non-inflationary debt money.  the end result won't be deflationary,  it borders criminal, but it's not deflationary unless defaults are allowed.

in defaults, the non-inflationary debt money portion of the money supply shrinks and prices collapse as too many goods chasing too few dollars.  but they aren't allowing that to happen.  me thinks they are buying time by suggesting deflation would happen if they didn't do what they're doing around the world.   but once the system is stabilized, the inflationary portion of the money supply will be much greater than it is today,  the economies will have slowed to the point where there is nowhere to go but up, and we'll have a situation where there is now too much inflationary money supply chasing too few goods.

i don't know if this will be hyperinflationary but unless defaults are allowed and wealth detroyed,  it won't be deflationary.

as i proof read this, okay that was too long and incoherent.  ah well, but i get it anyway.


Wolf in the Wilds's picture

I don't think there is such at thing as debt money, there is only money.  The only difference is money in circulation vs money not in circulation.  I had once made the argument that QE1 is not inherently inflationary if the banks excess reserves in the Fed increases equivalently.  One only has to track this in the Fed weekly balance sheet.  In fact one can see how much leakages from the Fed POMOs from the tables presented everyweek by the Fed. 

As for deflation/inflation, deflation can occur when the money multiplier decreases as when there is debt default or deleveraging.  I think deleveraging now is the main factor with debt default being extended out as a strong second reason.  It is a natural progress from a drug-induced high before the crisis but the Fed is hell-bent on trying to prevent that from occuring.  I had given examples before on how expanding M1 to reduce this impact can be a bad policy due to the multiplier effect.   In any case, the mechanism of the multiplier implies even the slightest pick up in economic activity will lead to massive inflation which will lead to hyperinflation.  Which is like what you said.  The international nature of capital these days complicates the analysis somewhat but I think its a question of where the inflation shows up first rather than whether its deflation or inflation.

Your analysis is not wrong (from what I can understand) but there is not inflationary or deflationary money.  Only creation or destruction of money.


dehdhed's picture

QE2 is not inflationary, despite the protests from all the green bean wingnuts around here. A simple glance at the DXY over the past few weeks will validate that.

you do realize that the dxy is just a relationship to other currencies right?  although i do love green beans,  i think it's better to glance at a more relevant chart rather than the one that just compares pieces of paper to one another.

Red Neck Repugnicant's picture

you do realize that the dxy is just a relationship to other currencies right..

Yes. I know that.

This conversation is about hyperinflation, which is entirely a 4X phenomenon.  That is why the DXY is relevant.

If QE2 was inflationary or hyperinflationary, the DXY would have moved in the exact opposite direction that it did.  

Seer's picture

Good points, but isn't gold becoming that "other" currency? Once upon a time gold was valued at $35/oz; it's now close to $1,400/oz.  At some point the inflection point occurs, in which case the debate ceases.

jmc8888's picture

Well first you have to realize your numbers are fucked up. 


US Gov't Debt: Lots can be cancelled (should be)

Municipal Gov't debt: can be defaulted (should be)

Social Security unfunded? It's not part of the budget (thus = 0)

...when you say unfunded, you mean expected payouts....and the number is big....and the funny thing is...the cost goes up with inflation....what is making this number bigger? Bailouts.  Now I haven't seen a figure, but whatever NPV dollars are printed in the billions (or tens of more likely), the amount that needs to be funded in total decades later is TRILLIONS more.  Want to cut the amount needed for social security? Overly concerned about it like a fascist whore?  Than stop The Bernank from printing now, and making bad debt whole and social security needed later will be LESS.  Not to mention, quit taking the surplus out and adding it to the budget.  Overall the numbers on this are BULLSHIT, statistical sophistry that is wholly dependant on how many rich people get bailed out in the next 40 years, as they have been for the past 40 and especially the past two.

Medicare liability unfunded: see social security

Prescription Drug: Bush's giveaway to for profit big pharma.  Can be axed (and replaced)

Now it's not very hard.  Most of what you included and didn't include can be WIPED away, because it's USELESS, NOT NEEDED, and FRAUD.

Fuck austerity, lets just stop the hemorraging from the banksters, and watch how everything suddenly isn't so bad.

So again, when the vast majority of your numbers are in question, so should be the response.

They've got you BELIEVING THEIR BS, and now you want to cut (most likely). 

IT"S ALL BULLSHIT THAT THEY CONTROL.  You forget that.  Then since people are fucking clueless they say we need to cut, when really we need to EXPAND.

Cancel the GSE and guaranteed debt by the gov't as well.

Suddenly your numbers look more like this

5 trillion debt vs 128.25+off balance sheet shit

As you can see the banksters have you believing the bathtub is FULL.  Sorry, there's only one legitimate inch in it.  The rest is bullshit.  Either fraudulent, or statistically based.

Anyone remember Back the FUture II?  50 dollars for a Pepsi in 2015. 

It's all about how much they print, the timing, and when they are forced to stop it. 

You can't take numbers from 2040 and say see how can we afford 70 trillion.  Well in 1970-1980 they'd be saying the same about the current costs.

Again though, this is because of the printing.

So first you have to understand the numbers, how they are bullshit, and how much is determined by The Bernank right now. 

Truly anyone who puts out the numbers you did, do not understand the situation.  Rethink the MANY flaws in your fucked up PHD style equation. 

Glass-Steagall will wipe away 80-90 percent of all your fake debt. Stopping The Bernank from fraudulently printing will stop the increases. 

If a loaf of bread costs 10,000 dollars, how much will all these cost?  Hundreds of quadrillions.  So as you can see, your numbers are full of subjectiveness. 

NONE OF IT HAS TO DO WITH THE SUSTAINABILITY OF THESE PROGRAMS, that's just republican, fascist, bullshit.  Don't buy a line that only the Palin's and Bachman's should listen to.  Use your head. 

Again, Social security, IS IN TRUST, it's NOT part, and NEVER HAS BEEN, part of the budget.  However the fascists are trying to change that, so that they can cut it.  Needlessly, by listening to the SAME PHD IDIOTS that got everything else wrong.

So if you don't believe the BLS, or other bullshit statistics, you shouldn't believe the ones you just wrote above.  Because they are even MORE FUCKED UP and DETACHED FROM REALITY than 1950's Soviet production quotas. 



Wolf in the Wilds's picture

Agreed.  I am assuming here they try to pay it back.  I know they can't.  Nice rant btw. 

Debt jubilee is definitely an option but you don't quite understand the ramifications.  If you have time, go read my blog.


ClaymoreStoor's picture

Your rant ignores certain political realities unfortunately.  But what I'd really like to pick at is this statement:

"Again, Social security, IS IN TRUST, it's NOT part, and NEVER HAS BEEN, part of the budget.  However the fascists are trying to change that, so that they can cut it.  Needlessly, by listening to the SAME PHD IDIOTS that got everything else wrong."

Wrong.  Lyndon Johnson put the social security trust "on-budget" making it a part of the general budget.  It's gone through a complicated history since then but what's certain is the social security surpluses no longer exist.  The "trust fund" has been pillaged by Congress for decades.  The social security surplus is little more than a line item on an excel spreadsheet maintained by the Treasury.  That's why this year, when social security started paying out more than it was taking in, the US government had to issue debt to pay the difference.  They didn't go into some trust fund and take money out of some fictional bank account.  Why?  Because that money doesn't exist, and hasn't existed for decades.  True, social security has built up some 25+ years worth of surpluses, but unfortunately that money is long gone, spent by your wise leaders in Congress.  Oh but rest assured, those IOUs are backed by the full faith and credit of the US.  

traderjoe's picture

Thanks for that. I was going to mention essentially the same point. In addition, in one line the author argues all of the other numbers are made up, but then declares the SS fund to be "IN TRUST" and therefore demonstrates inherently faulty logic - that there's no credibility in one aspect but that there would/is credibility in another. As you so aptly reference, the SS 'lock box' exists only electronically and is subject to the same lies and BS as anywhere else in government. 

In reality, there is no "money" backing any of this. Our debt-money unit of account exists only in the collective conscience. It is not "real". Furthermore, our unit of account can be taken, de-based, hypothecated, pledged, etc. without our direct consent, representation, etc. The vast majority of our "wealth" exists as 1's and 0's on a computer controlled by the government. 

FreedomGuy's picture

Very good point. Social Security was never "invested" in the traditional sense of the word. If it had, it would have had an independent board of advisors to allocate investments for long term growth to meet its fiduciary requirements. Certainly, a large percentage would have been in U.S. gov't bonds, but not all. It would not be linked to the U.S. Gov't or budget. The Soc. Sec. fund has been raided and gutted to fund government overspending. It is also a legal ponzi scheme. It has never been a solvent design. Since LBJ it has been openly raided to reduce the actual annual deficits. Without it, even Clinton would not have shown budget surplusses. Social security is bad design, bad execution and essentially an insolvent lie. It is in fact, just part of the tax base and government spending.

Ben Bernanke is doing what Congress should do but defers to the Fed. He will pay the bills by inflating the currency, up to an including hyperinflation. I don't think he will do hyperinflation on purpose but once you have large inflation, hyperinflation is the wet watermelon seed you are squeezing between your fingers. Financially, it is equivalent to a 100% tax rate and a full default on all debt.

mtomato2's picture

I don't necesarily agree with your position here, for several reasons, but I appreciate you putting it up.  I look forward to reading long discourse rebutting your missive, and learning from all of it.



jakethesnake76's picture

i KNOW your the smartest guy in the room now because you just told me lol but you couldn't predict what has already happened. Sure there is no reality in your world and what you determine but actions have consequences and when people pay for something and don't get it (SSI) etc and when the peeps start into the street like Great Britain or worst Greece want you think in yer bubble doesn't matter.

fasTTcar's picture

Actually, you forgot a little nugget on your debt round up.

Iraq (n) is an off balance sheet expense. 

Probably a couple of bux spent there too.

fat tony slim's picture

when you say worth $14.6trn, is that net equity where this might assume?

assets: $142.85trn
less debt: 128.25trn
equity: $14.6trn

Wolf in the Wilds's picture

Nope.  Not ignoring it.  Its like saying if the US sold Alaska, all problems will be solved.  Never going to happen.  Look at the blocks that have been put up for US assets.  If you allow China to buy your assets and cancel you debt.. Can YOU see that happening?


I can't.  So I excluded that as a possibility.



student for life's picture

Must consider Iceland's size and that the US$ is the world reserve currency. The govts. around the world could dump the $ if it reaches their stop loss and other big players could jump in. In the international market the $'s value will approach zero causing hyperinflation in the US. All the goods produced in EM will cost so much they will either use it domestically or find other market will to pay their price. We will have to start producing the things we want ourselves. Hyperinflation could come on very fast all it will take is just one big players' stop loss to be triggered. IMHO

laughnow's picture

The only one making a fool of themselves here, is you. There are dozens of respected

pundits that have said the same thing for a long time. Your figures are

fatally flawed. The real US debt is at least as 3-400 % of GDP..worse the

GDP is fake...all govt spending. YoY consumer spending, and real

economic growht has not picked up and has been replaced by govt spending. The only

thing keeping this train to hell on the tracks is the QE that keeps govt spending

massively in excess of real revenues.

Looks like you'll be one of zombies, friend. Better wake up before its too late.


Vendetta's picture

trains derailing are more pleasant

Bagbalm's picture

She can go out and shoot a Moose. Not an option around here...

curly's picture

Put some antlers on Barney Fwank?

snowball777's picture

And get her hunting equipment with an EBT card!