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It’s Time to Collapse the System

Gordon_Gekko's picture




 

For previous articles by the author go to: Gordon Gekko's Blog - http://www.gekkosblog.com

 

First they came for the communists,
and I didn't speak out because I wasn't a communist.
Then they came for the socialists,
and I didn't speak out because I wasn't a socialist.
Then they came for the trade unionists,
and I didn't speak out because I wasn't a trade unionist.
Then they came for me,
and there was no one left to speak for me.

 

-- Martin Niemöller, Nazi camp prisoner                  
    

                                                                                    

‘I’m furious with myself,’ he said. ‘I had so many opportunities to move my money abroad but was taken in by all the promises that any attempt to raid my savings was a red line not to be crossed. Experts said it was against the law. Now, I’ve lost several thousand euros. As someone who is retired, the money in my account is all I have to live on for the rest of my life.

 

 ‘What’s really upset people is that they’ve been lied to. They were told that their money was safe and that they shouldn’t move it and then they announce this. Everyone’s accounts are frozen and the ATMs have no money. Some people are struggling to get enough cash together to buy food and water...[people] just feel that they’ve been robbed by the Government.’

 
--Chris Drake (Former BBC Middle East correspondent, retired to Cyprus) via dailymail.co.uk

 

(All emphasis mine)
 

So what are you going to do? Are you going to place your faith in the "authorities" like Mr. Drake did? Will you wait for them to rape and pillage you? Or are you going to take matters into your own hands. It's time to take responsibility for yourself and your loved ones. The Government and the Banksters ain't gonna save you. And if you think what happened in Cyprus this weekend is a "one-off" and it can't happen to you - even if you're outside the Eurozone - think again. The fact of the matter is that this was THEFT of private property - pure and simple. And just because it was performed by mafia dressed up in Government regalia and bearing authoritative three letter acronyms (ECB, IMF et. al. – all banker fronts) doesn't mean it wasn't one. This shows us that the Government and the bankster mafia who control them are willing to go to any length to have the public reimburse their “losses” and transfer public wealth into their own pockets. And they just declared outright war against the public.

Anybody in Spain or Italy who's watching what's happening in Cyprus and doesn't withdraw their money RIGHT THIS MOMENT from their banks deserves what's coming their way. This is as loud and clear as it gets folks. And it’s not just Spain or Italy or Greece or even the entire Soviet European Union – it’s the whole world. You won't get a personal warning letter from your feudal overlords government. And you can't say you weren't warned.

But it's not just enough to withdraw your money from the banks. That's just the first step. A global financial tsunami has been brewing and the waters have been receding for a while. It is upto you to pay attention to the signs and get as far away from the coast as possible which means you need to withdraw completely from the system to safeguard your hard earned wealth. The global monetary system today is nothing more than a giant global pyramid scheme which is now collapsing (hence all the "crises"). Just as in a Ponzi scheme, those who get out first will suffer the least amount of losses. But before I explain how to get out of the system, we need to understand what “the system” is. Also remember, this system is same in all countries today.

 

Will you be one of these people?

A Crisis Created by the Banksters

So what is this "crisis" in Europe that we all keep hearing about? That every one of the citizens must sacrifice an arm and a leg if we are to avert Armageddon? What would happen if we don't bail out the banks and let them collapse? Would it really be so bad? The "authorities" in our academia and government would have us believe that "the crisis" is born of "natural" causes i.e. it is simply a fact/force of nature. It's nobody's fault! Greed is simply human nature and these things happen. It's the damned "business cycle". Now we must all come together like the obedient little slaves that we are and engage in shared sacrifice to "solve it" and save everyone, especially the banks.

One word: BULLSHIT.

Well, the cause of "the crisis" goes to the very heart of how our monetary/currency system operates today.

 

The Money

If we are to understand the crisis, first we must understand money - a topic which the masses have deliberately been kept ignorant about. A complex economy such as ours consists of a multitude of goods and services which can be in varying demands at various points of time. Hence a medium of exchange is required that acts as a proxy for all the goods and services in the market (so as to enable complex exchanges) and in the process provides information about their relative demand and supply in the market via price signals (even interest rates are nothing but price signals - the price of money and since money is a proxy for all the resources in an economy - the price at which excess capital in the economy is available for utilization). Producers and consumers then use this information to decide on the allocation of resources - what to produce, how much to produce, etc. For this allocation process to be efficient (i.e. satisfy the wants and needs of everyone with the least amount of wastage) it must be essentially decentralized, since a single entity CANNOT know what everyone wants. This is why the Soviet Union collapsed.

 

Money, then, is an information mechanism which lets the producers and consumers perform calculations as to the most efficient allocation of resources at any given point of time (a software, if you will, controlling the hardware of the economy). It must be some good that is universally acceptable - that the market has "elected". And just as you need a standard scale of unvarying length to perform measurements of distance, you need a substance whose supply remains fairly constant over long periods of time to perform calculations of economy. Fortunately, the market discovered such a substance fairly long ago - Gold (as evidence that it is the substance, I present Gold's highest stocks to flow ratio of any "commodity" and the only one whose demand does not vary with supply). Unfortunately, somewhere along the line, it all went horribly wrong.

 

How It All Went Wrong

 

Now imagine someone wanting to control the economy for their benefit; wanting to have something for nothing i.e. somebody who wants to STEAL from those who are productive. Enter the mafia banksters. All they would need to do is control the medium of exchange or money and voila! But there's only so much Gold to go around. What if you want to appropriate unlimited resources from the economy for your benefit? You need something you can create at will. Enter paper money. So gradually, over period of time, operating behind the curtains, banksters in cahoots with the politicians replaced paper receipts for Gold (just take a look at the higher denomination US dollars circa late 1920’s) with paper tickets backed by NOTHING. An IOU for Gold became an I-O-U-Nothing. Knowing their worthless paper money wouldn't be a voluntary choice, they enlisted the Government as their enforcer and accomplice using bribes and threats (hence the legal tender laws, and for those of you who don’t know or remember, I present the Executive Order 6102). Hurrah! Now they could print and spend as much as they wanted! But alas, there is a fly in the ointment - if they directly used this paper money, the currency would quickly dilute and the scam would fall apart. What to do? Yup, "lend" the money. Thus began the creation of the biggest Empire of Debt backed by the most powerful mafia the world has ever seen.

 

A Global Ponzi Scheme

So this is how the scam works. Realize that the bankers need to do two things:

  1. Keep creating new money supply
  2. Keep extracting the already created money

Make no mistake, the second is as essential as the first otherwise the money supply would increase too fast in relation to the goods and services produced, the currency would decline in purchasing power too quickly and the scam would fall apart. They first need to ensure that you do the work and create production for them to appropriate via the extracted money (and maybe some freshly printed money on the side – who’s watching anyway?).

They achieve the first by loaning new money out of thin air (mostly via entries in a computer today). The Banks1 "lend" "money" to both the Government (government bonds) and the citizens (credit card, home loans, etc.). Lending to the government is an important part of the scheme as they have to bribe the enforcer of their scheme. The politicians don’t give a shit, its free money so far as they are concerned - it is the citizens who will pay it back. Plus who doesn’t love unlimited free money? The Government can issue as many bonds as it desires knowing the Central Bank2 stands ready to buy all of them with freshly printed money, if other morons don’t. The banksters also ensure that there will always be a demand for loans as lending means they demand paying back of the principal as well as the interest. But realize this: they NEVER created money for the interest, only the principal. So how will someone – whether government or citizens – ever pay back the interest? They can’t. They’ll have go bowl on hand to – you guessed it – the banksters. This is why debt in all the nations (both government and private) always increases. Increasing debt is a feature of the system, not a bug. The system is operating exactly as was designed -  to trap the people in perpetual debt slavery. And contrary to what you may hear from “experts” and the MSM, the amount of debt in the society will never go down and will never be repaid but - as I will explain below – only end with the collapse of the currency system.

Now this demand for repayment also ties in to the second part of their scheme – extraction. This is how they do it:

  1. A huge portion of the Government taxes you pay go towards paying the interest on the government bonds which the bankers own i.e. indirectly your taxes are being paid to the bankers. No wonder the IRS and the Federal Reserve came into being together.
  2. A huge section of the society is always in debt. This is not hard to fathom – a huge portion of your income is extracted via taxes and loan payments on your personal debt. Now, personal debt is not a choice under such a system as availability of unlimited money (credit) for goods in the economy creates price inflation making them out of reach for most people unless they take on debt. Just ask around – how many of your colleagues, friends, relative are in debt? Yup.

Do you see the sheer evil genius of it? Basically the banksters have created a system where they give money from one hand, take it back from the other – all the while making you run on the treadmill of jobs (slavery) – THEIR slavery. They are free to spend the extracted money-out-of-thin-air as they want but you have to do productive work for it. Make no mistake – this is modern day slavery - earlier they used chains and whips, now they use debt.

 

But What Does All This Have To Do With “The Crisis”?

Everything. Because there remains yet another fly in the ointment, which even the bankers don’t have a solution for as its genesis lies in the very system they have created – central control of money. This central control of money causes huge misallocations in the economy. What is a misallocation?  There is a lot to this which I can’t cover in this article such as manipulation of interest rates, so I recommend you do a bit of your own research (especially refer to the work of Austrian economists such as Mises), but briefly: Since the money is now centrally controlled for the benefit of the few (government and the banksters), all the price signals go haywire. Money is handed out to connected but incompetent people who produce NOTHING, people who produce are taxed to death and money is transferred to insiders in the money system, investments are made where none are required (e.g. real estate) which results in things being produced which have no demand whereas things that have demand (e.g. food) are not produced. The inefficiencies in the system become huge and vast productive resources are wasted. There is a whole bunch of consumers and spenders (including the banksters) but not a lot of producers. All of which means that over time two things happen in such a system:

  1. Overall money supply increases but the extractions start to decline. This is because loans are being made but not as many of them get paid back.
  2. The amount of goods and services (which people want anyways) available in the economy also start to decline.

An increasing money supply and declining production results in the decimation of the currency’s purchasing power as evidenced in the charts below. These charts are for the USD, but hold true for every currency in the world today:

Unlimited Money...

.... Leads to Unlimited Debt

And the corresponding chart for price of Gold:

Gold price since 1973 (before this it was “fixed” at $35 an ounce after the 1933 robbery). Just to be clear, it is not the gold that is rising, but the USD that is declining.

The Dollar's Purchasing Power Since the Creation of the Federal Reserve in 1913

If you take the limit case for the last chart, you get hyperinflation – the currency becomes worthless (which correspondingly means Gold becomes literally priceless – remember, it is the real money) and the game is over – and as you can see, we are VERY close to it. No more looting. This is what the banksters are so afraid of and this is “the crisis” their desire to continue pillaging the people. They NEED the extractions to continue, not only because it is their “income” and to prevent “losses” (both these terms mean nothing to someone who owns the money supply as they can always create more) but because otherwise the money supply would increase exponentially (the bad loans already made). This would kill their franchise - the currency. This is also why they can’t just print up and use any amount of currency they need.

But eventually the misallocations become so huge that there is nothing left to extract. The productive citizens have already been bled dry. This need for extractions is what is behind all the demands for “austerity”, the reason for directly robbing the bank accounts of the people. But no matter how much they extract, it doesn’t make a difference because the misallocations will always keep on increasing. The currency is doomed. They might be able to slow the process but hyperinflation is guaranteed in a fiat money system. Eventually, it only matters who gets out first before the currency collapses. So the only question is:

Will you get out in time?

What happened in Cyprus is simply an overt manifestation of what they've been doing all along. It’s just that up until now there were enough productive resources in the economy for them to extract. But as the malinvestments increase and the productive base of the economy keeps on shrinking, as it must for reasons outlined above, they will directly try to appropriate private assets to "cover their losses" (keep the franchise alive). Which means they will need to employ ever more forceful tactics to subdue the populace. Cyprus is just a test run by the global banking oligarchs. Once they are aware of and have prepared for the fallout, they WILL implement this in every nation on earth. How long before you think they will come for you? It’s only a matter of time.

 

So What to Do?

By now it must be clear that if this looting scheme has to ever end, this fake money system has to end. And whether you like it or not, end it will because as outlined above, the system contains in itself the very seeds of its destruction. Think of it as virus - a parasite - that has infected an otherwise healthy global economy which must be rid of. A forest fire, if you will, that must clear the dead plants (malinvestments) to make way for the new. It is the law of nature. But if the host - YOU - doesn't fight back, the parasite of global banksters will kill the host alongwith itself. If you don’t collapse the system, the system will collapse you. Do you wish to sink with the collapsing system or be one of the survivors to begin a new one?

There are two interdependent objectives at play here. If you choose to take steps for one, the other automatically follows:

  1. Healing the economy: The system must be collapsed for the much needed capital reallocations to productive hands to begin. Sure, collapse is a guaranteed outcome, but the sooner it happens, the lesser the damage to the economy and faster the recovery.
  2. Preservation of wealth: By this I don’t mean preservation of the fiat digits in your account. Wealth is not currency notes but the real resources and people of this world. When the reallocations start you need to be ready either by already owning productive assets (whatever is left of them) such as farmland etc. or claims to them that will be universally honored (Gold).

Yes, the global bankster oligarchy is powerful. It’s David vs. Goliath, I know. But as powerful as the Goliath is, he has a weak spot you can hit:

The Currency

Think of this as guerrilla war. There is no sense in outright confronting a huge and powerful enemy because you will be decimated. But there are peaceful and strategic yet powerful steps you can take, namely: Vote with your feet. Reject the currency. The system cannot survive if you don’t participate. I know you can’t do it overnight but you can start to minimize your participation. And know this: If a majority of you does even one of the below, the system will collapse overnight without so much as a shot fired. Here is what you need to do:

1. Leave as little cash as practically possible inside the banking system. As a rough guide, keep only that much which you are willing to lose (as in 100% loss). Yes the banks will collapse, but that is the desired outcome. Contrary to what the authorities want you to believe, we will survive just fine without the banks. Sure, there will be some short-term hardships involved but think of it as an alcoholic recovering. Longer term it will be healthier. Don’t fear “the contagion”

"Clearly this is a negative development for European assets but in the terms of contagion we think it is quite limited,"

 

                                                 --Guillermo Felices, Head Euro Asset Allocation, Barclays

What this guy means is that he thinks people aren’t clever enough to realize that the banksters are going to loot everyone. He expects people to bend over and take it. Prove him wrong. Let the damn contagion begin!

2. DO NOT be invested in any paper securities inside the system such as bonds, stocks, derivatives of ANY kind, even though they may be "guaranteed" by the mafia government and/or may carry "AAA" ratings. If you still trust "sovereign guarantees" or rating agencies after all that has happened, I'm sorry but you deserve to lose your money. Dump ALL paper assets. Now.

3. Convert the maximum possible amount of your fiat money into Gold and Silver, but remember to pay cash only and hide them in a secure location which you can access anytime (and as of the great Cypriot robbery, no bank lockers are safe anymore). If you need to understand why it is important to buy Gold and why this will preserve your wealth – especially during a currency collapse - please read this and this. If the country you reside in is making hard for you to buy PM's  - MOVE, for this is an indication of depredations to come. If they are requiring identification/ tracking if you buy over an X amount, just keep buying a little below it as many times as required (guerrilla warfare). But keep it discreet. And, yes, I know the government can confiscate PM’s but nothing’s stopping them from confiscating your fiat digits either. There are no guarantees in life. At least this way you still have a chance.

4. Although precious metals in your own possession is the safest place to park your hard earned savings, if you wish or need to diversify beyond the precious metals, invest only in real assets in safe jurisdictions. By safe I mean which are furthest from the control of feudal lords of western "civilization", although I'm not sure there are many these days. The best real asset I can think of aside from PM's is cultivable farming land, but I’m sure there are many others.

5. Where practically and legally feasible for you, stop paying back bankster debt. Starve them of the interest payments. If its cheaper to fight them in court than paying back, do it. Use their system against them. If you want to double the impact, use the fake debt-money you just appropriated from them to buy Gold and Silver3.

6. Minimize usage of bankster money in daily transactions by using alternative currencies (such as Bitcoin) which they cannot track and tax. Disclaimer: I haven’t done much research on Bitcoin or other such p2p currencies, so do your due diligence. The only guarantees I can make are for Gold. If your circumstances permit, try to start making a living outside the bankster controlled wage-slave economy. The lesser number of slaves there are to exploit, the faster the system will collapse.

7. Wake up as many people as you can. Let's make this shit viral.

So, unless you want a bankster at your doorstep with a gun to your head – like it happened in Cyprus - it’s time to take the fight to them. Rip them banksters a new one! Let this not happen to you:

 

 

He who panics first, panics best. Clearly, these people didn’t know it!

 

And if there ever was a picture worth a thousand words – or 3,835 in this case :-) – this is it:

 


1The Banks refer to both the Central Banks and ordinary commercial banks such as Citibank, JP Morgan etc. The latter are simply fronts for the Central Bank.

2 The Central Bank is nothing but just a façade for creating money out of thin air and a front for the global banking aristocracy.

3 I forgot to include this point earlier. If you can think of any more ideas, feel free to email me at the email address provided on my blog or post them in the comments section below (or on my blog) and I will include them in a subsequent post.

 

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Thu, 03/21/2013 - 16:38 | 3359136 Mediocritas
Mediocritas's picture

Long time no see GG! Haven't lost the fire I see. Good.

Some mates and I have a little tradition where we stack fresh metal then head out to a bar in the CBD to enjoy some booze while watching the deadhead suits floating around like depressed ghosts, chasing their paper dreams. Feels good.

Next beer gets raised for GG.

Thu, 03/21/2013 - 12:03 | 3357461 Prisoners_dilemna
Prisoners_dilemna's picture

Well this article got sent out to family, friends, and the local tea party mailing list.
I hope this goes viral. It's certainly of the proper caliber.

Thu, 03/21/2013 - 17:39 | 3359404 Tall Tom
Tall Tom's picture

Unfortunately it is misinformation and it is not complete. It is just a rehash of the same incoreect story.

 

I am NOT a Keynesianist in my approach. But the system is whether you like it or not. (I do not like it. But I will report REALITY.)

 

So I must disagree with GG's premise that the Interest to pay back loans is never created. The Interest is created by the failure of Borrowers to perform upon their Loans and Default.

 

When a Default happens the Debt that was created, the Currency that was created, is not retired and, thus, not destroyed. The Currency is a Debtor's Note. GG is quite correct in that statement.

 

The function of Interest is to absorb all of the Bad Debt, to retire excess Currency. During periods of instability, when businesses fail, the Interest Rate must be allowed to rise to a point of stasis so that it realizes the retirement all of that Bad Currency. Otherwise the Economy gets an Inflation in the Currency and thus a corresponding decrease in Purchasing Power of the Currency.

 

That is if the System is going to work. But we have Interventionists that will depress Interest Rates and not allowing that vital part of the Keynesian Plan to happen. Thus we get Inflation and Unsustainable Growth of the Monetary Supply as a result.

 

So no I do not like rehashes of the same topic repeatedly when it contains misinformation. It demonstrates a lack of Depth in understanding.

 

And if this is widely distributed without the corrections then it will tend to misinform people as to the Reality. Interest Rates must rise. They will rise. The Bond Market is doomed to a bust. Or we will get a Hyperinflation. It is their choice.

 

Thu, 03/21/2013 - 14:50 | 3358459 Fish Gone Bad
Fish Gone Bad's picture

Money is SUPPOSED to represent debt.  What makes people think it is not just printed with nothing to back it?  Honestly, no one would know. There is no oversight.  Think about it for a minute.  Somewhere some agency is doing just that.   

 

 

 

Thu, 03/21/2013 - 22:05 | 3360320 MsCreant
MsCreant's picture

I have assumed this for a long time.

Thu, 03/21/2013 - 08:55 | 3356419 rsnoble
rsnoble's picture

Fuck the US gov't.  Run off and kill hundreds of 1000's of innocent people in Iraq and stab the Exxon mobile oil flag in the middle of it and then tell us we need to turn our guns in cause a couple dozen kids got killed?  Oh I don't fucking think so.

Thu, 03/21/2013 - 11:47 | 3357373 monad
monad's picture

1. The FBI knew in advance about the Oklahoma City Bombing and let it happen;

2. The whitehouse, NSA, CIA and FBI knew in advance about both WTC bombings and let them happen;

3. Herr Hickenlooper's unconstitutional, unenforceable decree would not have prevented Aurora (sloppy black op? But don't let the barely adequate be the enemy of quality) or Sandy Hook. But it does set in motion the same sequence of events that caused the murders of thousands of Germans who opposed the NAZIs, including the flight of such 'mentally unfit' people as Albert Einstien.

4. In the history of firearms, politicians have ordered the deaths of almost everyone killed by firearms.

Keep the guns, get rid of the Statists.

Thu, 03/21/2013 - 08:20 | 3356305 Poor Grogman
Poor Grogman's picture

Dup post

Thu, 03/21/2013 - 07:39 | 3356175 zipit
zipit's picture

Is that a gold chart or a bitcoin chart?

Thu, 03/21/2013 - 08:07 | 3356260 stacking12321
stacking12321's picture

is that a bitcoin chart or are you just happy to see me?

Thu, 03/21/2013 - 07:01 | 3356131 Element
Element's picture

Eurozone giving Cyprus to Monday to agree to their deposit theft, or the offer expires:

http://www.nakedcapitalism.com/2013/03/ecb-to-push-cyprus-over-the-brink...

In or out of the Eurozone, we will know by Tuesday morning.

My guess is Cyprus will not pass a vote under these terms and duress.

Looks like default and deposit destruction is coming.

Thu, 03/21/2013 - 04:04 | 3356024 JimmyRainbow
JimmyRainbow's picture

russian government accounts now frozen in cyprus

near the balls of the story

nice globalisation effect: aoutsource state functions. just lol.

so europe paying for russian government accounts on failed europe banks.

just lol.

Thu, 03/21/2013 - 03:34 | 3355974 Tall Tom
Tall Tom's picture

A terrorist attack can cause a Banking Collapse. Yes it can. A Financial Terrrorist can withdraw their funds making Bank Reserve holdings feel a pinch. However a Financial Terrorist can create a Bank Insolvency through the following method.

 

Deposits. Yes by depositing Cash a Financial Terrorist can create roughly 10 Times as much for the Bank to have available to loan. So if the Financial Terrorist withdraws, then redeposits, then withdraws againm, then redeposits and continues the process through numerourous iterations the Bank will record ever increasing reserves that it just does not have.

 

For instance withdrawing $9000 from the Bank removes $9000 from a Banks reserves. (If a Financial Terrorist is going to do this then they will want these amounts lower than $10,000 to avoid IRS Red Flags.) Then the Financial Terrorist redeposits that same $9,000.

Now the Bank believes that it can loan out $90,000 Dollars because of that deposit. Withdrawing that $9,000 again leads to the Bank believing that they have $81,000 to loan.

 

Redepositing the $9,000 again yields another $90,000 in reserves. Now the Bank believes that it can loan out $171,000. Withdrawing the $9,000 again and that sum decreases to $162,000. Depositing the same $9,000 the sum that the Bank believes that are available for loans increases to $252,000. The Financial Terrorist can just repeat the process continuously. 

 

Thus he can create Millions of Dollars that the Bank just does not have available for Loans. the Bank's Balance Sheet swells and they do not have the reserves to back it.

 

As you can see the amount of for loans available can be created by this activity grows exponentially. Of course the Bank does not have the funds and this just helps it on its way to a quicker insolvency. That is a flaw that can be exploited with Fractional Reserve Banking by a Financial Terrorist.

 

If one did this the impact might be minimal. But a coordinated attack can be devastating upon the Fragile Banking System The system might just collapse.

 

Is there a Law against Depositing and Withdrawing your money at a Bank?

Thu, 03/21/2013 - 06:14 | 3356093 The Heart
The Heart's picture

Ahhhhhh...ha! Nice hypothesis?

So, that is how a bankser, er rather, a financial terrorist thinks maybe?

Then, to surmise and say, if the Financial Terrorist, something that is entirely different than a Muslim terrorist of course, and no where even related to a govt created terrorist named Osama, or nothing like the govt labeled American terrorist patriot, or like anything else that moves that the war on terrorism is declared on, making the entire world a battleground for drone assassinations at any time any place at all, but then to say if that financial terrorist was three or four, or more in number doing the same thing, and made up a big fat balance and then the bank crashed, does that mean, the bail out is a larger one than what it would normally be because the financial terrorist that was not a terrorist that could be prosecuted because the financial terrorist was to big to fail and therefore was not really a terrorist, but just another politician in the disguise of a lawyer working for the Queen all along, who is not really a Financial Terrorist to be taken seriously at all?

Naw, say it ain't so Joe.

Thu, 03/21/2013 - 17:52 | 3359320 Tall Tom
Tall Tom's picture

The System only works in a stste of Moderation. For instance I disagree with GG's premise that the Interest is never created. The Interest is created by the failure of Borrowers to perform upon their Loans and Default.

 

I am NOT a Keynesianist in my approach. I am merely pointing out the flaws of the plan. So please bear with me. You will the the Elegance of the presentation at the end.

 

When a Default happens the Debt that was created, the Currency that was created, is not retired and, thus, not destroyed. The Currency is a Debtor's Note. GG is quite correct in that statement.

 

The function of Interest is to absorb all of the Bad Debt. During periods of instability, when businesses fail, the Interest Rate must be allowed to rise to a point of stasis so that it realizes the retirement all of that Bad Currency. Otherwise the Economy gets an Inflation in the Currency and thus a corresponding decrease in Purchasing Power of the Currency.

 

Of course, conversely if the Ecomomy is doing well, then Interest Rates must be allowed to fall to a point of stasis. Everything does well as long as there is no maniulation of the system and the Economist takes the Lassiez Faire approach. This actually will work in accordance to the Keynesian Plan.

 

Except for the condition of Human Folly...People will not behave in the way that the Keynesian Plan wants them to behave. Outside Manipulations do happen. Short Term Gains are opted over Short Term Pain. Long Term Benefits are pushed aside.

 

As long as the Dynamics of System is in Boundaries it will work quite well. But when those Boundaries are violated then the system becomes unstable and tends to dysfunction alarmingly.

 

What does this have to do with my initial post you may be asking? Everything. As long as Deosits and Withdrawals are in a set of Boundaries then the Reserve System FUNCTIONS.

 

However if those Boundaries are violated then the System is Distorted, Unstable, and all of Hell breaks loose.

Thu, 03/21/2013 - 02:05 | 3355897 Escapeclaws
Escapeclaws's picture

Nothing like preaching to the choir. GG probably amassed all his gold at $400 an ounce and wants you to buy gold at $1600 an ounce. I'm not saying he's wrong, but is there anything in this article we haven't heard a thousand times before on ZH?

If you want insight, may I recommend reading Webster Tarpley at his blog? Tarpley has the best grasp of history on the net and is able to apply it to current events. There are always surprising nuggets of truth in his articles. For a sample, read his latest at Tarpley.net--I think you will agree.

Practically the only economist who seems to have genuine new insights is Steve Keene, who humbly acknowledges that the giant on whose shoulders he stands is Hyman Minsky.

But this guy? Not much there unless you just like hearing your own half-baked ideas repeated to you to get that warm , fuzzy feeling. But then, when you're right all the time, you don't need insight.

Thu, 03/21/2013 - 01:45 | 3355861 q99x2
q99x2's picture

Is Mr. Durden building an army? --Fight Club 1999

Thu, 03/21/2013 - 03:22 | 3355975 Leto II
Leto II's picture

I see all this potential, and I see it squandered. God damn it, an entire generation pumping gas, waiting tables - slaves with white collars. Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don't need. We're the middle children of history, man. No purpose or place. We have no Great War. No Great Depression. Our great war is a spiritual war... Our great depression is our lives. We've all been raised on television to believe that one day we'd all be millionaires, and movie gods, and rock stars, but we won't. We're slowly learning that fact. And we're very, very pissed off.

Thu, 03/21/2013 - 10:44 | 3357029 shovelhead
shovelhead's picture

Not me.

You need to get out more.

Thu, 03/21/2013 - 01:25 | 3355831 Element
Element's picture

People have been saying since Lehman's to collapse the TBTFs immediately, so that it's less-worse than if it collapses under its own weight, later.

And I totally agreed, it was obvious, the later it happened the worse it would be.

But now I think it's basically moot, the Cyprus bail-in, and earlier bail-outs, show the system is already so far gone and primed for more mayhem that collapsing now is not going to be much less-worse than later.

Getting hit by a Cat 4 storm is no less damaging than a Cat 5 storm if your trailer-home can't even cope with a Cat 2 storm.

And I look around at the society we're in now, and it can't cope with a Cat 1 financial storm!

Am I right?

So enjoy your dinner, bed and clean sheets tonight, and be good to those you are close to.

Thu, 03/21/2013 - 06:19 | 3356098 The Heart
The Heart's picture

Thank you Element.

Spoken well from the heart.

One day at a time.

 

Thu, 03/21/2013 - 01:17 | 3355825 Joebloinvestor
Joebloinvestor's picture

Deja Vu to the Japanese Americans.

Thu, 03/21/2013 - 00:14 | 3355696 Thoreau
Thoreau's picture

First they came for the communists... then they came for the gekkos... good to see you back on the hedge.

Wed, 03/20/2013 - 23:57 | 3355662 boeing747
boeing747's picture

Looks the current system: Rhodium is cheaper than Platium and Gold, unbelievable. BTFD.

Wed, 03/20/2013 - 23:00 | 3355478 monad
monad's picture

The IRS and its fraudulent roots
Http://www.hourofthetime.com/bcmp3/728.mp3

Wed, 03/20/2013 - 22:22 | 3355302 steveo77
Wed, 03/20/2013 - 22:10 | 3355246 ebworthen
ebworthen's picture

It may raise flags about you, but tell your bank as well.

I called up mine and told them I was paying attention, and that I would act accordingly.

They feigned ignorance but knew exactly what I was talking about.

Thu, 03/21/2013 - 03:43 | 3356002 Tall Tom
Tall Tom's picture

Yeah...You are right. Who cares about that Suspicious Activity Report that your Banker will file on you anyway?

 

Maybe I will want that Audit by the IRS. I mean I have nothing but time to entertain a hard working IRS Agent out to steal my Bank Account.

 

(Do it quietly...Shhhh...They are just working stiffs that do not know any better.)

Wed, 03/20/2013 - 21:43 | 3355138 decon
decon's picture

Gordon, welcome back old friend!  Excellent piece, I personally favor the productive land w/water but nothing wrong with other forms of swag.

Wed, 03/20/2013 - 21:16 | 3355016 Zer0head
Zer0head's picture

counterpoint (where ZH meets Daily KOS -- well maybe ZH meets HuffPo / surrogate)

When the Money Gets Too Big

http://www.newyorker.com/online/blogs/books/2013/03/when-the-money-gets-...

Thu, 03/21/2013 - 04:48 | 3356060 lewy14
lewy14's picture

Wow, the cartoonists who did Beavis and Butthead now apparently work for The New Yorker.

Who knew?

Thu, 03/21/2013 - 08:04 | 3356249 stacking12321
stacking12321's picture

not even close.

more like edward gorey illustration.

 

Wed, 03/20/2013 - 21:12 | 3355007 walküre
walküre's picture

Deposits in Cyprus are guaranteed up to 100,000 EUR by this "scheme" (it's really called that)

DEPOSIT PROTECTION SCHEME

http://www.centralbank.gov.cy/nqcontent.cfm?a_id=8158&lang=en

Frequently asked questions - cute (EROTIMATOLOGIO - the hot, hot, hot and steamy kind?)

http://www.centralbank.gov.cy/media/pdf/EROTIMATOLOGIO_DPS_IN_ENGLISH_VE...

The Centralbank of Cyprus that can't come up with 7 billion EUR to activate the bailout plan is supposed to back stop and guarantee the deposits of less than 100,000 EUR

Nice "scheme". I'm sure every account holder or tax payer has paid into the "scheme" over years. Hopefully it works.

Now, where is FDIC and who is funding them?

Wed, 03/20/2013 - 21:11 | 3355002 Dr. Gonzo
Dr. Gonzo's picture

Huge fan Gordon. Alway read your stuff. 

Wed, 03/20/2013 - 20:52 | 3354922 Seer
Seer's picture

"vote with your feet"

Can there be any better advice than this?  I don't think so.

Wed, 03/20/2013 - 20:37 | 3354864 kaiserhoff
kaiserhoff's picture

OT but only a little.  Our tax dollars at work, on an 11 year old, no less.

http://refreshingnews99.blogspot.com/2013/03/father-takes-pic-of-11-year...

Wed, 03/20/2013 - 21:03 | 3354975 Seer
Seer's picture

I dislike extremists.

Both sides here are extremists.

The "authorities" we're pretty straight on as to why they're fucked up (threat to the 2nd Amendment and all).  BUT! WTF? An assault rifle?  The fucking irony in all of this!  The father gives a replica of the "authorities'" primary weapon to his son (and dresses him in military garb too?) and then doesn't like the response from the "authorities?"

I went through this before, so I'll be quick to the point here...

Buy your kids HUNTING weapons and teach them to hunt.  DON'T BE just like the "authorities" and shove militaristic weapons in to their hands!  You want to get govt OFF your back?  Make them irrelevant, be self-sufficient.  Challenge them and get crushed: this just gives them MORE reason to round up hunting weapons in the future!

And, I'm sorry, he argument that it's only a ".22" doesn't fly.  If you want ".22" capability there are PLENTY of weapons out there that are likely better and that don't taunt the fucking authorities!

I don't want a revolution.  I want govt to shrink until it doesn't exist.  This is NOT helpful!

Thu, 03/21/2013 - 00:44 | 3355762 SubjectivObject
SubjectivObject's picture

Sorry Seer, but I think you're blind. Your boundaries of propriety are of your own subjective making, as are anyone else's.  If fear is the basis for where your lines are  drawn, then by default you're only trying to save your world view, your propriety, your boundaries.  You might get a hint if you realize that the adversaries could care less what you think, until such time as you are willing to risk something of yourself.  Life's an experiment, and because words and protocol will never do justice to possibility,  so experiment with lines drawn now.

Wed, 03/20/2013 - 23:18 | 3355544 Professorlocknload
Professorlocknload's picture

And government has you right where they want you. They abhor in- their -face resistance.

Bet on it, if you kowtow on big black 22's they will have you spread eagle on the dirt over a bolt action 22. Bend on that and they will cuff you up for an unregistered slingshot.

Give 'em an inch, they will take miles. These thugs don't compromise when you submit. They take that as a victory!

That's the picture of a kid who is very fortunate to have learned early, what some never figure out in a lifetime.

 

 

 

Wed, 03/20/2013 - 23:55 | 3355652 MsCreant
MsCreant's picture

The kid has good trigger discipline. Folks over reacted. You can stand up to that calmly, understanding that they are scared and ignorant.

Thu, 03/21/2013 - 00:49 | 3355771 OngoingNightmare
OngoingNightmare's picture

Scared? Everybody is scared these days. I wonder why. There is nothing, nothing to be scared at all. There is a wonderful, great world outside of your room. Full of opportunities. And after a while you get used to this smell of desperation and human suffering.

Instead of buying his son a rifle, he could've bought him a whole company in Bangladesh, Somalia or Angola. Now that should've frightened the shit out of those authorities. Just do it. Don't think about it. Be part of the productive cycle. Before the authorities know that the garment you are using  contains radioactive shit, you are a zillionaire. And then you can basically bribe your way out. It works. How is Jon Corzine doing? Not that I am advising to do any of that stuff above. All fun. Don't worry. Just be a happy kitten. Just be a...

Wed, 03/20/2013 - 22:25 | 3355310 CH1
CH1's picture

Both sides here are extremists.

Start over Seer.

One side sends armed thugs to strangers' houses and threatens to steal their children.

The other engages in peaceful commerce and sends a photo to friends.

Thu, 03/21/2013 - 10:32 | 3356946 shovelhead
shovelhead's picture

but ...but  it looks scary and oogy.

Oogy looking guns are badder than dead tree guns.

Wed, 03/20/2013 - 21:48 | 3355169 masterinchancery
masterinchancery's picture

Idiot. Who are you to tell people what rifles they can own or how to raise their kids? And the "authorities" backed off from their illegal raid when a lawyer showed up--no warrant, no anything.

Thu, 03/21/2013 - 00:50 | 3355067 Leto II
Leto II's picture

An assault rifle?

No, its a semi-auto Smith and Wesson M&P15-22, no more fire power than a Ruger 10-22, a very common HUNTING rifle.

The fucking irony in all of this!

The only irony I see is yet another uninformed person trying to chime in on the topic of guns that has no idea what the  fuck they are talking about.

If you want ".22" capability there are PLENTY of weapons out there that are likely better

.22lr ballistic performance has nothing to do with looks.  It is entirely barrell length, optics, ammunition, and skill of the shooter.

I don't want a revolution.  I want govt to shrink until it doesn't exist.

Name one government that has voluntarily shrunk itself...our current mafia is shitting its pants over a 2.3% reduction in the growth of spending

Thu, 03/21/2013 - 09:48 | 3356700 madcows
madcows's picture

1776, the original reduction in government.  1778 is another story.

Wed, 03/20/2013 - 20:04 | 3354758 Legolas
Legolas's picture

Making one more withdrawal tomorrow and I'll be at the level where 100% loss is okay. Been doing it in small increments over time at differing branches.  Started before the Cyprus incident.

Long physical PM's.

Feels good, and I now sleep good at night.

Wed, 03/20/2013 - 19:59 | 3354750 Tsunami Wave
Tsunami Wave's picture

Good to see ya again man.  I remember reading your good words at the very hight of the sliver 'contango' back in Late April of 2011.... right before the comex did the 5 margin calls in 1 week and crashed the price.  Keep writing and don't forget to comment every now and then on the regular articles.

Wed, 03/20/2013 - 19:54 | 3354740 WTFUD
WTFUD's picture

In romania and eastern europe Smithfields international meat banksters make it impossible for smallholders to do business, as they stack 2 million Pigs lame diseased or otherwise in warehouses without shitting room, Bloat them up on Barbs from Mosquito Monsantossers and Flog it to Wallymart & SooperMarkets calling it Organic.

In Jamaica the Smallholder farmers are Given Quotas as to how many mangos they should produce on Their land. Calculating the possibility of unforseen wastage if they come in say 10% above quota they must Destroy Excess as per Bankster Contract!

Izzzz an Injustizzzz it izzzz

Wed, 03/20/2013 - 20:47 | 3354900 Seer
Seer's picture

Farming is TOUGH!

Dealing with food has extremely tight margins.  Lots of stuff goes down in that long assembly line...

The bigger they are the harder they'll fall. 

I follow folks who do grass-farming, and these folks, after struggling to stay in the markets for years, are now actually showing to be far more resilient to all the market fluctuations.  Reason being is that the key cost -feed- can be better dealt with.  It was late last fall that I saw some numbers on the beef industry that showed them with big per-head losses- this could not hold!

BIG = FAIL.

Getting BIGGER is NOT the solution.

Small farmers just need to hang in there.  Their day will come...

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