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Kyle Bass: Fallacies Such As MMT Are "Leading The Sheep To Slaughter" And "We Believe War Is Inevitable"

Tyler Durden's picture




 

Below are some of the key highlights from Kyle Bass' latest, and as usual, must read letter:

On central banks and the final round of global monetary debasement:

Central bankers are feverishly attempting to create their own new world: a utopia in which debts are never restructured, and there are no consequences for fiscal profligacy, i.e. no atonement for prior sins. They have created Potemkin villages on a Jurassic scale. The sum total of the volatility they are attempting to suppress will be less than the eventual volatility encountered when their schemes stop working. Most refer to comments like this as heresy against the orthodoxy of economic thought. We have a hard time understanding how the current situation ends any way other than a massive loss of wealth and purchasing power through default, inflation or both.

 

In the Keynesian bible (The General Theory of Employment, Interest and Money), there is a very interesting tidbit of Keynes’ conscience in the last chapter titled “Concluding Notes” from page 376:

 

[I]t would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity value of capital. Interest today rewards no genuine sacrifice, any more than does the rent of land. The owner of capital can obtain interest because capital is scarce, just as the owner of land can obtain rent because land is scarce. But whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital.

 

. . .

Thus we might aim in practice (there being nothing in this which is unattainable) at an increase in capital until it ceases to be scarce, so that the functionless investor will no longer receive a bonus[.] (emphasis added)

This is nothing more than a chilling prescription for the destruction of wealth through the dilution of capital by monetary authorities.

 

Central banks have become the great enablers of fiscal profligacy. They have removed the proverbial policemen from the bond market highway. If central banks purchase the entirety of incremental bond issuance used to finance fiscal deficits, the checks and balances of “normal” market interest rates are obscured or even eliminated altogether. This market phenomenon does nothing to encourage the body politic to take their foot off the spending accelerator. It is both our primary fear and unfortunately our prediction that this quixotic path of spending and printing will continue ad?infinitum until real cost?push inflation manifests itself. We won’t get into the MV=PQ argument here as the reality of the situation is the fact that the V is the “solve?for” variable, which is at best a concurrent or lagging indicator. Given the enormity of the existing government debt stock, it will not be possible to control the very inflation that the market is currently hoping for. As each 100 basis points in cost of capital costs the US federal government over $150 billion, the US simply cannot afford for another Paul Volcker to raise rates and contain inflation once it begins.

Hayek was, of course, right:

The current modus operandi by central banks and sovereign governments threatens to take us down Friedrich von Hayek's “Road to Serfdom”. Published in 1944, its message, that all forms of socialism and economic planning lead inescapably to tyranny, might prove to have been prescient. In the 1970s, when Keynesianism was brought to crisis, politicians were vociferously declaring that attempting to maintain employment through inflationary means would inevitably destroy the market economy and replace it with a communist or some other totalitarian system which is the “perilous road” to be avoided “at any price". The genius in the book was the argument that serfdom would not be brought about by evil men like Stalin or Hitler, but by the cumulative effect of the wishes and actions of good men and women, each of whose interventions could be easily justified by immediate needs. We advocate social liberalism, but we also need to get there through fiscal responsibility. Pushing for inflation at this moment in time will wreak havoc on those countries whose cumulative debt stocks represent multiples of central government tax revenue.

 

The non?linearity of expenses versus revenues is what will bring them down.

"Pavlov's Party" is ending, and when it does, it will happen so fast no reaction will be possible:

Through travel and meetings around the world, it has become clear to us that most investors possess a heavily anchored bias that has been engrained in their belief systems mostly through inductive reasoning. Using one of the Nobel Laureate Daniel Khaneman's theories, participants fall under an availability heuristic whereby they are able to process information using only variables that are products of recent data sets or events. Let’s face it – the brevity of financial memory is shorter than the half?life of a Japanese finance minister.

 

Humans are optimistic by nature. People’s lives are driven by hopes and dreams which are all second derivatives of their innate optimism. Humans also suffer from optimistic biases driven by the first inalienable right of human nature which is self?preservation. It is this reflex mechanism in our cognitive pathways that makes difficult situations hard to reflect and opine on. These biases are extended to economic choices and events. The fact that developed nation sovereign defaults don’t advance anyone’s self?interest makes the logical outcome so difficult to accept. The inherent negativity associated with sovereign defaults brings us to such difficult (but logical) conclusions that it is widely thought that the powers that be cannot and will not allow it to happen. The primary difficulty with this train of thought is the bias that most investors have for the baseline facts: they tend to believe that the central bankers, politicians, and other governmental agencies are omnipotent due to their success in averting a financial meltdown in 2009.

 

The overarching belief is that there will always be someone or something there to act as the safety net. The safety nets worked so well recently that investors now trust they will be underneath them adinfinitum. Markets and economists alike now believe that quantitative easing (“QE”) will always “work” by flooding the market with relatively costless capital. When the only tool a central bank possesses is a hammer, everything looks like a nail. In our opinion, QE just doesn’t stimulate private credit demand and consumption in an economy where total credit market debt to GDP already  exceeds 300%. The UK is the poster child for the abject failure of QE. The Bank of England has purchased over 27% of gross government debt (vs. 12% in the US). UK bond yields have all but gone negative and are now negative in real terms by at least ?1%. Unlimited QE and the zero lower bound (“ZLB”) are likely to bankrupt pension funds whose expected returns happen to be a good 600 basis points (or more) higher than the 10?year “risk?free” rate. The ZLB has many unintended consequences that are impossible to ignore.

 

Despite reading through Keynes’ works, we didn’t find a single index referencing the ZLB or any similar concept. In his General Theory, there are 64 entries in the index under “Interest” but no entry for the ZLB, zero rates, or even “really low rates”.

 

Our belief is that markets will eventually take these matters out of the hands of the central bankers. These events will happen with such rapidity that policy makers won’t be able to react fast enough.

On the lunacy of such "modern" "economic" "theories" as MMT (which may or may not stand for "Magic Money Trees")

The fallacy of the belief that countries that print their own currency are immune to sovereign crisis will be disproven in the coming months and years. Those that treat this belief as axiomatic will most likely be the biggest losers. A handful of investors and asset managers have recently discussed an emerging school of thought, which postulates that countries, as the sole manufacturer of their currency, can never become insolvent, and in this sense, governments are not dependent on credit markets to remain fiscally operational. It is precisely this line of thinking which will ultimately lead the sheep to slaughter.

The inevitable end of that supremely flawed monetarist experiment - the Eurozone:

Each subsequent “save” of the European debt crisis has been devised by the Eurocrats coming up with some new amalgamation of an entity that is more complex than its predecessor that is designed to project size, strength, and confidence to investors that the problem has been solved. Raoul, a friend of mine who resides in Spain, put it best:

 

“Let’s just clear this up again. The ECB is going to buy bonds of bankrupt banks just so the banks can buy more bonds from bankrupt governments. Meanwhile, just to prop this up the ESM will borrow money from bankrupt governments to buy the very bonds of those bankrupt governments.”

 

The EFSF, the IMF, the ESM, and the OMT (and who knows what other vehicles they will dream up next) have all been developed to serve as an optical backstop for investors globally. The Eurocrats are sticking with the Merkelavellian playbook of hiding behind the complexity of these various schemes. All one has to do is review the required contributions to said vehicles from bankrupt nations to realize that the circular references are already beginning to show in broad daylight. Does anyone stop to consider that the two largest contributors to the IMF are the two largest debtor nations in the world? Are things beginning to make sense now?

 

...

 

In the end, the EMU won't look the same, if it exists at all.

And finally, a less than rosy outlook for the entire "developed" world.

Trillions of dollars of debts will be restructured and millions of financially prudent savers will lose large percentages of their real purchasing power at exactly the wrong time in their lives. Again, the world will not end, but the social fabric of the profligate nations will be stretched and in some cases torn. Sadly, looking back through economic history, all too often war is the manifestation of simple economic entropy played to its logical conclusion. We believe that war is an inevitable consequence of the current global economic situation.

All this and much more, including the usual detailed summary depicting the Japanese ultra slow-motion trainwreck (which is picking up speed as none other than Seiji Maehara, state minister for economic and fiscal policy, admitted yesterday when he said that "[The Japan economy] is in a dire state") in the full letter below:

 

 

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Sat, 11/17/2012 - 15:40 | 2992074 centerline
centerline's picture

Yeah, but in the early 2000's it stepped up a kicked us in the head for real.  In 2008 took the world it's knees.  Fair to say that the next blow will be the kill shot for the current system.  The anticipated end to the Bretton Woods era.

Sat, 11/17/2012 - 17:27 | 2992256 HurricaneSeason
HurricaneSeason's picture

It will happen when they try negative growth. More and more people(corporations are people too) will not get their interest payments. The housing charade was to maintain growth and so was the war charade. They don't have a plan C other than world war 3 and we'd lose, probably quickly.

Sat, 11/17/2012 - 18:08 | 2992329 sessinpo
sessinpo's picture

It will end when you can't feed yourself, can't defend yourself and are about to die. Are you prepared?

Sat, 11/17/2012 - 18:51 | 2992413 Dr. Sandi
Dr. Sandi's picture

 

Can we get a prediction of which year from Mr. Bass when the endgame will finally arrive?

Sometimes a really BIIIIG dump takes time.

Sat, 11/17/2012 - 19:43 | 2992509 Peter Pan
Peter Pan's picture

Predicting the date of the meltdown would have been very easy had it not been for the tremendous ignorance shown by the general population as to what is really going on.

Sat, 11/17/2012 - 15:31 | 2992057 Yen Cross
Yen Cross's picture

 

"We Believe War Is Inevitable"... Where have you been for the last 20 years?  IraqX2, Afghanistan, Eastern Europe, Libya, Egypt, Cental Africa, ect...
Sat, 11/17/2012 - 18:12 | 2992332 sessinpo
sessinpo's picture

Take in context. Most nations have had conflicts internal or external over their lifetimes. We are talking WWIII here. Not wars were we have thousands dying, but millions - soldiers and civilians.

Sat, 11/17/2012 - 18:47 | 2992402 Yen Cross
Yen Cross's picture

 Yes, you are correct. I fully expected that someone such as yourself would question what "magnitude" of conflict constitutes an actual "WAR"...

   That just goes to show how desensitized the sheep are...

Sat, 11/17/2012 - 22:04 | 2992735 Cosimo de Medici
Cosimo de Medici's picture

Exactly.  The old saying about recession being when your neighbor loses his job, and depression being when you lose your job applies here.  "Conflict" is when there's fighting and death over there.  "War" is when there's fighting and death over here.

You only die once.  That fellow (above you) is only talking about beating the rush.  Semantics.

Sat, 11/17/2012 - 15:36 | 2992071 sangell
sangell's picture

Was watching NHK a half hour ago. The LDP candidate, Mr. Abe, is calling for inflation targetting and negative interest rates. It would be as if, in American terms, Mitt Romney was insisting Bernanke to engage in that kind of hocus pocus. I can imagine the more liberal PM Noda is going to advocate anything more sensible. Japan is going to go off the rails very shortly.

Sat, 11/17/2012 - 15:52 | 2992090 lunaticfringe
lunaticfringe's picture

From Hayek: 

The current modus operandi by central banks and sovereign governments threatens to take us down Friedrich von Hayek's “Road to Serfdom”. Published in 1944, its message, that all forms of socialism and economic planning lead inescapably to tyranny, might prove to have been prescient. In the 1970s, when Keynesianism was brought to crisis, politicians were vociferously declaring that attempting to maintain employment through inflationary means would inevitably destroy the market economy and replace it with a communist or some other totalitarian system which is the “perilous road” to be avoided “at any price". The genius in the book was the argument that serfdom would not be brought about by evil men like Stalin or Hitler, but by the cumulative effect of the wishes and actions of good men and women, each of whose interventions could be easily justified by immediate needs. We advocate social liberalism, but we also need to get there through fiscal responsibility. Pushing for inflation at this moment in time will wreak havoc on those countries whose cumulative debt stocks represent multiples of central government tax revenue.


 

From the God of the Machine: 

 

"Most of the harm in the world is done by good people, and not by accident, lapse, or omission. It is the result of their deliberate actions, long persevered in, which they hold to be motivated by high ideals toward virtuous ends."

 

Sat, 11/17/2012 - 17:16 | 2992240 tenpanhandle
tenpanhandle's picture

So, "do-gooders" are the new face of facism.  That has been self evident for  a generation.  After all, fascism is alright if it's for the children and the environment and gay rights and afirimitive action and on and on until it becomes just plain fascism is alright, no ifs ands or buts.  Soon coming to a theatre near you.

Sun, 11/18/2012 - 09:49 | 2993365 e-recep
e-recep's picture

good people... bad people... what a childish way to describe the actors involved. sorry, i can't take it seriously.

Sun, 11/18/2012 - 13:11 | 2993698 JR
JR's picture

We advocate social liberalism, but we also need to get there through fiscal responsibility. –Kyle Bass

Advocating social liberalism, whoever says it, should not be associated with Friedrich A. Hayek in light of the current interpretation of the world “liberal.”

This from the forward to Hayek’s 1972 renewal of “The Road to Serfdom”:

“I use throughout the term ‘liberal’ in the original, nineteenth-century sense in which it is still current in Britian. In current American usage it often means very nearly the opposite of this. It has been part of the camouflage of leftist movements in this country, helped by the muddleheadedness of many who really believe in liberty, that ‘liberal’ has come to mean the advocacy of almost every kind of government control.”

Sat, 11/17/2012 - 15:53 | 2992092 Atomizer
Atomizer's picture

 

 

Knock knock. Who’s there? I’m looking for a chap named Michael Norman. This is Michael, what can I do for you? Can we have an interview comparing MMT in 2012 vs. your video in 2011? umm, sure..

We won!! Modern Monetary Theory (MMT) got everything right...EVERYTHING!!

Sat, 11/17/2012 - 17:24 | 2992251 Blankenstein
Blankenstein's picture

Here he is in 2006 sharing his wisdom:

 

http://www.youtube.com/watch?v=1G0tfb8ZefA

Sat, 11/17/2012 - 17:37 | 2992276 Defiant1968
Defiant1968's picture

To Michael Normam

 

Wow until you who calls good evil

and evil good

 

Sat, 11/17/2012 - 18:58 | 2992425 fuu
fuu's picture

RAH RAH!

Sat, 11/17/2012 - 20:28 | 2992586 Implicit simplicit
Implicit simplicit's picture

MMT didn't win because the game is far from over. The T in MMT stands for "Theory" not fact, and that is all it is. It is not some kind of religion like this guy believes. Bottom line, no one knows for sure what is going to happen. However, common sense dictates, you can't print money and buy your own debt without repurcussions, especially in a slowing world economy. It is simply not fair to future generations, or to the future in general. Economics is not a true science.

Sun, 11/18/2012 - 00:57 | 2993052 HungryPorkChop
HungryPorkChop's picture

If you watch the late 2011 MMT videos they forecasted gold prices would collapse in 2012.  So are they just sweeping that call under the rug and hoping no one notices?

 

Sun, 11/18/2012 - 07:29 | 2993063 Radical Marijuana
Radical Marijuana's picture

Implicit simplicit wrote, "Economics is not a true science."

Consider the following: Economics is primarily social science.

The oldest and best developed of social sciences is warfare.

However, the basic theory of war is that success in war depends on deceits, and therefore spies are the most important soldiers. Plug that insight into the idea that "economics is not a true science" and see what you get! Of course economics is a "true science." BUT, any and all "true" social sciences are INSIDE MILITARISM.

One of my favourite concepts in social sciences is the "Oedipus Effect," which is like a games theory proposition that predictions can change the outcomes. Economics is a hyper-complicated "true" science because its "success" is based on controlled frauds, backed up by force. Generally speaking, social engineering works extremely well to achieve what it is designed to do. That is to say, economics IS a true science, and an effective one. BUT, what it has done is build a social pyramid system, based on organized lies, backed by violence, that has controlled more people in more ways, so that an overall system of social slavery was built and built and built, to reach the astronomically size proportions it has today ... with the future looking like that will result in the most spectacular failure from too much success there has ever been.

Paradoxically, IF economics was a more true science, then it would axiomatically be based on recognizing that reality was always organized lies, operating organized robbery, since IT ACTUALLY ALREADY IS! However, the "success" of that system depends on tricking other people to not understand that!  That is what makes economics as hyper-complicated as warfare. There has to be some truth within the group, in order that that group can lie more effectively to those outside that group. Economics is basically organized crime, in which different crime gangs compete with each other, while paradoxically attempting to cooperate within their own group.

The "units of survival" there are in flux. The subtraction is never absolute, and so, the robbery is never finished. Anyway, my point is that "economics" is a real science like warfare is a real science, BUT, as in all social sciences there is an awesome amount of deliberate dishonesty tangled up inside of the application of that science. That is the problem which inherently contradicts the scientific method, since there is constant DELIBERATE falsification, which works to do the opposite of what that scientific methods is supposed to do in all other, non-human, sciences.

Economics is a paradoxical HUMAN science, because it primarily works by, or is based upon, deceiving some other people! The "conquest of nature" was always some men conquering other men, using nature as an ally. There is always some dishonesty inside the honesty, and some honesty inside the dishonesty, and those keep spinning around and around, in a never ending dance! The relative success of all other sciences has made the infinite tunnel of deceits through human sciences become an awesomely bigger problem now than ever before!

Economics, like warfare, has worked fantastically well to make a social pyramid system in which a few people are extremely wealthy and powerful, while many, many other people are extremely poor and powerless. That was what those social science were designed to do, and so, that is what they DO DO! We are now drowning in that shit! We desperately need paradigm shifts in all social sciences, and especially in those that run the money/murder systems! However, those needed paradigm shifts are as profoundly paradoxical as the "units of survival" are!

Basically, the whole established system is based on there being a vast herd of Zombie Sheeple, who are brainwashed to believe the lies of their rulers, who are Vicious Wolves. "Economics" is a human science that operates inside of that human ecology.

THEORETICALLY, we need profound paradigm shifts in human sciences, IF we are going to survive the success of the prodigious series of paradigm shifts in all of the other sciences, which then enabled technologies to become billions, trillions and quadrillions of times more powerful than ever before in human history. HOWEVER, that is mostly just my vainglorious irrationality operating when I suggest that kind of creativity is what "we" should do.

To return to the main article in this thread:

... It is precisely this line of thinking which will ultimately lead the sheep to slaughter. ... We believe that war is an inevitable consequence of the current global economic situation. ... The overarching belief is that there will always be someone or something there to act as the safety net.

THAT LAST LINE CAPTURES MY IRRATIONAL HOPES, THAT MY RATIONAL MIND KEEPS ON TELLING ME IS WRONG, AND SO, I AM 100% OBJECTIVELY DEPRESSED! HOWEVER, I STILL KEEP ON DAY DREAMING ABOUT SOME "MIRACLES" WHICH SHOULD STILL "SAVE ME," ALTHOUGH THERE ARE NO GOOD GROUNDS FOR THAT.

Using more intellectual integrity, the most logical conclusion is clearly that WAR is the inevitable consequence! Again, to try to think with an intellectual integrity, that war shall probably go utterly out-of-control, and finally prove how insane "we" were to make many thousands of weapons of mass destruction!

The ONLY theoretical solutions are BETTER death controls, to back up the debt controls. The ONLY theoretical solutions are for a BETTER murder system to back up the money system. The ONLY theoretical solutions is for economics to become a BETTER human science, which means that militarism must become a BETTER ideology!

None of those things seems to have a hope in hell of actually happening. Instead, the runaway insanity of the collapse into chaos of a global system of electronic fiat money frauds, backed by atomic weapons, appears to be the most probable future. Given that, there are NO sane ways to prepare. No guns nor gold, nor whatever stored food, etc., is remotely close to the order magnitude of collective social insanity that will be caused by genocidal wars, and their matching democidal martial law, when global electronic monetary frauds, backed by weapons of mass destruction, finally drive themselves through too much "success" into final failure!

The main thing I have learned from worrying about these problems for several decades is that one can count on ~99% to continue to be Zombie Sheeple, and ~1% to continue to be Vicious Wolves, and therefore, NO sane creativity to resolve the human ecology and political economy problems is realistically practical, other than default through psychotic breakdowns into suicidal social stupidities.

I WISH I was wrong, and I keep on attempting to maintain some irrational hopes with respect to those things, however, there is not the slightest shred of good evidence or logical arguments to believe anything else than runaway financial frauds, ending in almost totally omnicidal orgies of mad murders! The ONLY alternatives are to make economics and warfare become BETTER sciences, by taking them through a profound series of paradigm shift. That IS theoretically possible, but, quite apparently, that seems politically impossible, since the Zombie Sheeple do NOT WANT TO KNOW, while the Vicious Wolves DO NOT WANT THEM TO KNOW!

Sun, 11/18/2012 - 14:05 | 2993826 Things that go bump
Things that go bump's picture

removed

Sun, 11/18/2012 - 01:40 | 2993104 Daily Bail
Daily Bail's picture

And you Atomizer are a fucktard propenent of MMT, and never-ending deficit spending to keep your team (who's the same as the other team) in power.

Trillion-dollar deficit spending at this point in our cycle is nothing less than generational RAPE of the young and unborn.

Galbraith, Marshall Auerback, probably that fucktard Brad Delong, and other MMT dipshits can kiss my ass.  Why don't you move to Zimbabwe, I hear there are job openings.

Meanwhile In Zimbabwe: 9 Million Percent Inflation

Sun, 11/18/2012 - 12:54 | 2993671 Atomizer
Atomizer's picture

Is that you Timmy? Your sniffing the wrong dog's asshole. Thanks for the good Sunday morning laugh.

Sat, 11/17/2012 - 15:55 | 2992100 Hannibal
Hannibal's picture

Fiat or digital "money-debt-stocks-bonds" etc are social constructs, invented platonic abstracts, meaningless and not real. Growing your own veggie garden on the otherhand is something real.

Sat, 11/17/2012 - 15:57 | 2992105 busted by the b...
busted by the bailout's picture

So when the JGBs blow up, what happens to USTs?  I'm thinking there will be one last flight to safety here -- to the world's last lender of last resort Central Bank.  And when USTs blow up?  Then it looks to me like Germany will be the the last man standing: the victor. 

Sat, 11/17/2012 - 16:04 | 2992112 falak pema
falak pema's picture

A man who benefitted from the crime now wants to get off the gravy train before it hits the wall, evoking all sorts of economic logic to justify why his country, his oligarchy world, has achieved what it has achieved.. trillions of dollars restructured having achieved nothing and making war inevitable...

What an epitaph to stick on the crazy gravy train of thirty years : Reaganomics. And nobody else is to blame than the leaders of the first world : USA/EUROPE/JAPAN, a tragedy of bankers and governments feeding the same bubble of speculation; PONZI.

Its too easy now to say its the "Keynesian experiment which is the road to Serfdom", and to forget it was supply side Friedmanian model that fed the bonfire of vanities, of which he is, like it or not, a true icon.

Alcibiade of financial world, now blaming his predecessors for their errors and proposing to attack surrogate Japan financially by shorting it; just like Alcibiade attacked Syracuse colony in Sicily as diversion. Remember how that ended? 

War of the Peleponnese and defeat, slow destruction of Athens; beacon of democracy and architect of hegemony.

Alcibiade deemed subsequently the traitor to his class. 

 

 

Sat, 11/17/2012 - 22:15 | 2992746 DosZap
DosZap's picture

Falek,

Really? , seriously?,  Reganomics?

Dude that is SO weak.We were Barney Franked 50yrs before Regan.................try starting at Wilson, and then FDR, 1913, Xmas Eve.

That's when we started to really get screwed.

 

Sun, 11/18/2012 - 12:09 | 2993354 falak pema
falak pema's picture

the current mind set changed with Reagan : supply side deregulated capitalism, based on monetarism and then FIRE economy with industry outsourced. It fed the currrent Financial construct as the deregulation increased in the hubris of berlin wall collapse, NWO Irak and Clinton Internet, all encouraging "go to china with your smokestack" meme. 

That mindset was prudent upto JFK, miltarist and monetarist under LBJ/Nixon/ Carter, but stayed under big state control all along. Not that big state and welfare and war and importing oil were compatible, but the people's representatives control national policy.

What Thatcher and Reagan decided was to scuttle the state and open the flood gates to big business; aka go back to pre 1929 days; all the while FIAT USD was without any PM back stops.

And now its gone BOOM!

So the big step change in Pax Americana and moral outlook change occurred under Reagan-Thatcher. THe catholic kings of supply side Oligarchy intransigence. Game over. 

Paul Craig Roberts is spot on and he was father of Reaganomics, think of that! 

You were not Barney Franked 50 years before Reagan, you could have moved back if government had imposed due diligence.

The problem today is that government is now surrogate to big business which bows no more to nation state. That's the canary in the coal mine. The nation cannot control its destiny, and it'll take a lot of pain to set the ship of state right.

They won't die easy the Oligarchs....and they were put there by Reaganomics meme that created the neo-feudal off shore oligarchy age. It was their MOST PRECIOUS OBJECTIVE. The death of welfare state and inevitability of middle class decay. 

Don't forget FDR's keynesian fiscal brake was supposed to balance/redirect the FED's monetary accelerator. That was the deal at the top of the US oligarchy political left/right divide in the 30s. As with the gold exchange standard brake to trade imbalance in the post-WW2  US-USD hegemonial UN/BW construct. 

Sorry to be so repetitive but the same hundred headed hydra of "freedom without responsibility, accountability" meme keeps popping up. You cannot condemn the consequences; hubris, without comprehending the premises; dire neo-feudal planning and mind set.

Sun, 11/18/2012 - 14:59 | 2993981 Things that go bump
Things that go bump's picture

So we are heading back to where we were 100 years ago when we were slaves and worked 10 hour days 6 days a week so we could live in hovels and barely eat or clothe ourselves. Our children worked right along with us and were often given the most dangerous jobs.  Joe Hill will have to rise again for other generations who will have to fight and die to recover what was given to us on a silver platter by our grandparents and great grandparents when they risked their lives to unionize. My grandfather stood in the picket lines during the Great Teamsters' strike of 1934.  My grandmother, with a baby on her hip, and her neighbors cooked and carried food to the strikers. God knows where they got the money for it. Men were beaten to death or shot outright by cops and the Pinkerton men who were hired as strike breakers. Standing together was the only reason they were able to wrest any sort of a decent living wage from the owners of manufacturing.  Do you think that was given to us from the goodness of their hearts? The stories from those days were told around the dinner table when I was growing up.  We have forgotten where we came from. We have thrown their sacrifice away for cheap toys.    

Sun, 11/18/2012 - 00:22 | 2992987 Crisismode
Crisismode's picture

Falek Pema,

You have lost so much credibility over the last 6 months with your facile and lame bullshit,

you used to have brilliant comments,

what happened?

What addictive substance ate your brain?

 

 

Sun, 11/18/2012 - 12:04 | 2993296 falak pema
falak pema's picture

history and historic parallels beguile you, but I like the feel of historic rhymes that is my poetic licence in these slanted times.

Thanks for the slap on the back that precedes the kick up the ass. Stimulating both ways! 

I stand by what I wrote, HF managers are the bane of this financialista age, conquistadors of modern leveraged debt servitude, they are like Cortes the leading edge of imperial mayhem, notwithstanding their brilliance. Alcibiade was the most brilliant yet sterile son of Athens. 

If you have more cogent arguments to make of substance I'd love to hear them as my lost brilliance awaits your enlightenment.

Where have all the libertarian flowers gone? ZH has become a catalogue of stale platitudes on this Keynes bashing, euro bashing themes. Not saying it does not treat stimulating themes, but it tends to be dead-end repetitive on pet bogey men. 

So fire away...

Sat, 11/17/2012 - 16:04 | 2992117 Jason T
Jason T's picture

Smart man Bass is.  

Sat, 11/17/2012 - 18:00 | 2992313 Snidley Whipsnae
Snidley Whipsnae's picture

Yes, Bass is usually by far the smartest man in the room.

 

Sat, 11/17/2012 - 22:21 | 2992755 knukles
knukles's picture

Kyle?  Oh, he's next door.

Sat, 11/17/2012 - 16:06 | 2992123 Atomizer
Atomizer's picture

Receiving Modern Monetary Theory … macroeconomic reality emails is similar to being in a Obama chain mail circle. Sometimes, we must be strong willed. You don't need to blackout their latest intent, just be good observers.

Sun, 11/18/2012 - 01:42 | 2993110 Daily Bail
Daily Bail's picture

Dear Mr. Generational Rapist...

Go peddle your 'deficits are good for you' BULLSHIT somewhere else.

Sat, 11/17/2012 - 16:13 | 2992129 the grateful un...
the grateful unemployed's picture

the likely final outcome is complete privatization of government services, to separate the income producing part of the business from the debt, which is M&A 101. consumers will pay for fire, police and other regulatory services, and the point of all this will be to allow consumers to choose which services they want to pay for. ex) rather than having the FDA regulate drug compounding companies like NEC, they will simply do research and print reports, available online. (as for military spending and WAR!!!, the US has a edge in technology, and weapons which could last 100 years without spending a single dollar but an all mercenary fighting force is the way to go, but what is the point of war. we're in Afghanistan to prevent some tribal warlords from plotting attacks on America? we can do that with drones, we don't need boots on the ground halfway around the world.) I do worry about Japan which has almost nothing to stop Chinese aggression, but a monolithic China is no more likely to expand than a centrally planned USSR.

the history of Europe is the repeated cycle of internecine warfare. Europe is more at peace with several million Muslim immigrants then they are with themselves. and yet there is no war in Europe either. America has the shortest fuse, state secession movements were gaining momentum BEFORE 9/11. this time civil war will involve Mexico but these things are always positive economic and cultural events. finally the time if war is really over, and life on this planet will become simple peaceful and very boring probably. that could be the challenge. once we separate the services from the debt, we can write off the debt, and the currency will gain in value.

Sat, 11/17/2012 - 20:52 | 2992633 Angus McHugepenis
Angus McHugepenis's picture

consumers will pay for fire, police and other regulatory services, and the point of all this will be to allow consumers to choose which services they want to pay for

I can only hope, because I will NOT pay for any gov't services, period. In fact I may just send THEM a bill and demand my fucking money back (in silver) from the police thugs that stole it from me at the point of a gun over the years (speeding, parking fines, etc).

Hey, I can dream, can't I?

Sat, 11/17/2012 - 16:17 | 2992143 Pretorian
Pretorian's picture

Nothing new here same gloom doom stories.

Sat, 11/17/2012 - 18:50 | 2992411 Shigure
Shigure's picture

As Kyle Bass writes:

"It is this reflex mechanism [optimism] in our cognitive pathways that makes difficult situations hard to reflect and opine on"

 

Sat, 11/17/2012 - 16:31 | 2992157 cdude
cdude's picture

Let's not forget MMT also stands for:

Magical Mystery Tour and Methadone Maintenance Therapy 

Both of which are apropos here. 

 

Sat, 11/17/2012 - 16:43 | 2992180 geewhiz190
geewhiz190's picture

In january 2007 the current U.S. editor of the FT wrote a piece about the CDO market that scared the crap out of me. I still have the article.  In it she said that the massive explosion of credit through the creation of CDOs had grown "beyond the capacity of central banks to control".  At this point it seems that the central banks have put themselves in a position that is worse than 2007 in that there really doesn't seem to be a way to unwind their  positions without massive capital losses or debt restructurings that stretch the time horizen of resolution into the next century.

Sat, 11/17/2012 - 16:44 | 2992183 zebra
zebra's picture

send cullen this link..

 

Sat, 11/17/2012 - 17:49 | 2992298 TPC
TPC's picture

Someone answered your wish.  :-)

I've actually had some pretty public debates with MMT about why I think parts of their theory are wrong.  I've detailed the conclusions here.  http://pragcap.com/mmt-critique

We started Monetary Realism precisely because of these disagreements with MMT.  In the end, MR is just a description of the monetary system.  And it starts with the fact that banks are the primary issuers of money and the fact that the monetary system exists for private purpose (unlike MMT which states that money is a creature of the state and the system exists for public purpose).  

Our core tenet is S = I + (S-I) which is a simple rearrangement of the sectoral balances equation that shows why PRIVATE INVESTMENT is the key piece of any economy.  

I don't think there's much in MR that Zero Hedgers would disagree about.  After all, it's almost purely descriptive.  

http://pragcap.com/understanding-modern-monetary-system

Hope that helps.  

Sun, 11/18/2012 - 01:27 | 2993088 Radical Marijuana
Radical Marijuana's picture

I took at look through your link to this:

Part V – Understanding Modern Money

... Technically, anything can serve as money. And historically, many things have served as “money”. As a social construct “money” is really nothing more than a tool that helps us interact in our everyday lives. The history of “money” is lost in time, but scientists have discovered forms of monetary systems in primitive monkeys in which sexual favors are traded in exchange for protection, grooming and other “bonds”.

Of course, I regard that theory as too superficial, and not nearly REALISTIC and scientific enough. My "realistic" understanding of "money" begins with the concepts of SUBTRACTION and ROBBERY. Those concepts can be integrated more with physics and biology. (Which is why I liked the bit I quoted above, about how the idea of "money" could be seen to go both before, and beyond, human consciousness, into any value creating consciousness.)

My view is that "money" is based on robbery.

To understand that takes a deeper understand of the concept of subtraction.

I have been developing those ideas here:

http://www.marijuanaparty.ca/forum/showflat.pl?Cat=&Board=CMPmarijuanapa...

Sun, 11/18/2012 - 01:46 | 2993117 Daily Bail
Daily Bail's picture

Cullen

Trillion-dollar deficit spending at this point in our cycle is nothing less than generational RAPE of the young and unborn.  The economy will not respond UNTIL the private-sector deleveraging is complete.  Give up the fantasy that the GOVERNMENT can somehow magically make the hangover from a 30-year debt bubble disappear.

Galbraith, Marshall Auerback, probably that fucktard Brad Delong, and other MMT dipshits can kiss my ass.  They should move to Zimbabwe, I hear there are job openings.

Meanwhile In Zimbabwe: 9 Million Percent Inflation

Sat, 11/17/2012 - 16:51 | 2992192 Quarky Gluon
Quarky Gluon's picture

But wouldn't purchasing power increase if there is public debt default or restructuring without any bailout through money creation?  There could come a time where interest on government bonds could go through the roof but there would be no buyers because the bailouts just stopped happening.  At that point de facto austerity would kick in because governments just wouldn't have the money to pay the bills because no one will lend them the money they need to pay those bills.  At the same time, however, our basic systems of government and commerce may still continue to crawl along albeit feebly.  While bartering may increase greatly, if the law of the land continues that only one particular currency will be allowed then that currency will increase in value under such a scenario, not fall.  Remember, almost our entire system of commerce is built around the exchange of designated currencies such as Euros and Dollars, not gold and beans.  But, having said that, I am working under the assumption that the basic systems of commerce will be able to be maintained.  If things were to get so bad that bank closures are allowed along with a failure of such insurers as the FDIC or NCUA to be able to cover the accounts contained therein, I would be concerned that a complete breakdown of the usual systems of commerce could occur.     

 

Sat, 11/17/2012 - 17:06 | 2992215 THE DORK OF CORK
THE DORK OF CORK's picture

 

"This is nothing more than a chilling prescription for the destruction of wealth through the dilution of capital by monetary authorities."

 

The CBs can't destroy capital by reducing interest rates on the money supply.

 

The free banks destroyed the physical capital base through the issuing  of credit which so happens to be in the goverment unit of account.

 

This guy wants to prevent the circulation of money by charging a rent on it.

He is a rentier.

Money as a village medium of exchange is not a private asset.

If you charge a rent on it in such circumstances the village will cease to exist and therefore your life support base will begin to break down...

You will most likely DIE.

As very few lone wolfs can survive.

 

The Bond market is not some social fucking good - it survives through custom - the use of double entry money.

 

A greenback where the note is as good as the bond would destroy the cartel claims on wealth which indeed the CBs are trying to preserve at all costs.

Sun, 11/18/2012 - 00:19 | 2992977 css1971
css1971's picture

Temptation. Could you resist?

And the next guy? Remember, politicians are hardly paragons of virtue.

Sat, 11/17/2012 - 17:09 | 2992228 Seasmoke
Seasmoke's picture

Debt Jubilee or War.....pretty obvious which one we will get

Sat, 11/17/2012 - 17:28 | 2992258 tenpanhandle
tenpanhandle's picture

Right!  Simple as ABC.  Debt Jubilee and War.

Sat, 11/17/2012 - 18:25 | 2992350 Supernova Born
Supernova Born's picture

Win war, jubilee and reserve currency prosperity!

Lose war, maybe "quite" ugly for the survivors. That mercy, compassion and charity stuff never caught on much in China. I think they'll be looking to get back the decades of labor that were stolen from them by the Bernank and his ilk.

Sat, 11/17/2012 - 19:34 | 2992489 Aurora Ex Machina
Aurora Ex Machina's picture

My first post, so I expect some assault & battery.

The war is already over; if you've missed the current 'cold' war, then the Titan(s) has awoken, from the labs of the US' Manhatten project (a nod there, of course, to the source of the dominant weapon of the 20th C, being superceded by that of the 21st C). That's not to mention all that data processing in Camp Williams. Hint: compare the stated power draw of the un-named William's model of 65 MW to the K computer's 12.7 MW (the SC Titan is over-taking to the #1 spot) to get a small inkling the scales involved, although of course GPUs take less power than CPUs, but no-one seems to know the composition of the CW layout. (For bonus points, OLCF's logo isn't exactly the most subtle use of color theory we've seen. Out of the White, the Green, the Red, the Blue, the Yellow).

Talk is that the deadline for transition to a more... equitable, stable and rational market model is 2013 March, which means those 160,000 banker jobs lost this year could well be the flight of swans you all missed. Or are those dragon-kings? As for Krugman's Aliens... try "Alice and AliEns". They're not LGM, but they're certainly not human.

Bonus round ~

Of course, reality is non-linear. Even the smallest amount of introspection reveals non-linearities in one’s own thinking. But our ability to model non-linear systems is, in my view, destined to fail. Recall that several decades ago there was a move to try to distinguish non-linear deterministic systems from linear stochastic ones. This caught many people’s fancy, including mine. But after playing around with this for a while, most of us realised that statistical tests had zero power – and I mean zero power – to distinguish the non-linear from the linear. The reason is simple: everything is locally linear, so what you need to find non-linearity is a large amount of data in what appears to be the tail of the distribution of the stochastic model. But the tail events that could identify the non-linearity are sparse. So, in the end, the econometrician trying to find convincing evidence of non-linearity is dead in the water.

Stephen Cecchetti, BIS Papers, 65, Threat of Fiscal Dominance

 

We politely suggest to the BIS that modelling has improved in the last several decades. Ahem. Quantum Decision Theory (needs work).

Sat, 11/17/2012 - 20:18 | 2992566 AllWorkedUp
AllWorkedUp's picture

Hey Aurora

 I've no intention of flaming you. Then again, I've no clue what you're talking about. Simple plain English would be much appreciated. Sounds like it might be interesting.

Sun, 11/18/2012 - 13:49 | 2993793 Aurora Ex Machina
Aurora Ex Machina's picture

In my (rather ignorant) opinion, all of the current crises' are being modelled on "old way" thinking (call it linear). Thus my linking to a current BIS paper, which devotes a large section of itself to outlining the history of UK fiscal policy, and includes the frankly scary quotation I included where a prominent contributor to the paper essentially admits that they've no real idea how to model the current crises, despite work that has also come out of Switzerland (Google - dragon-kings, you'll find the papers / talks).

I was pointing to the new Titan Super Computer (and the ten others around the world, including CERN / ALICE) which form the Tier 0 network as a potential tool in all of this.

Kyle Bass' position seems to be "well, they're all fucked"; I was attempting to suggest that there's a more radical path that many have already started to take, cf Basel III [I saw someone on here state that it had been killed by US interested actors ~ I could only find a "grass roots" (*cough*) anti-Basel petition network for "local" banks with the FDIC's own minutes suggesting it had been accepted, but I've not done the leg-work on it]. There's also some extra snark, but it won't really translate (see post below).

 

Tl,dr:

Tin-foil class rumour has suggested that the current crises will be resolved by a more direct input into fiscal policy; this would require modelling on a scale of SC type resources. It would also, more than likely, mean that your average trader on here, even with a B.Terminal would be out of the game entirely.

Sun, 11/18/2012 - 01:54 | 2993131 Radical Marijuana
Radical Marijuana's picture

Aurora, I take that to be talking about the evolution of more supreme ALGOS, or the development of computers way smarter than human beings, which then are maybe given the job of looking after the human pets? ... Is that a good guess?

If so, I agree, except those will still have the basic problems that all finite entities do. Although it is possible to imagine super-duper computers able to integrate all data, from satellites to shopping, in order to have a virtual model of the world that was way more awesomely accurate than any one human being could, STILL, such a being is limited to its own finitude. It still has limits to measurement. (Although that may well be far removed from ours.) It still has all the infinite tunnels of deceit problems that we do, indeed, probably orders of magnitude worse ones!

Of course, reality is non-linear. For sure! Energy is apparently conserved, but can direct its own transformation, and so can loop around more and more times, in non-linear functions, in ways that become more alive and conscious, by definition. The more awesome the computing power becomes, the more interesting the basic questions ... IF a being constructs a sufficient model of the world, which has a model of itself inside of its model of the world, THEN, that being has all the same problems that human beings do, and networks of those entities would have all the same problems that human societies do! I.e., the map is in the territory being mapped. IF I understand what you are suggesting, then I agree with you. However, I then believe that we will have created a new kingdom of life, which has all the same old chronic psychological and political problems that human beings always did! ...

OF COURSE, ability to model non-linear systems is destined to fail.

However, that does not stop us trying, and neither will that stop super-duper computers from attempting to do that!

Anyway, I liked your first post, Aurora. Delightful cutting edge science fiction, which is something that numerous articles on Zero Hedge referencing NANEX http://www.nanex.net/ research reports indicating ALGOS and HFT are becoming extremely important in the real world, extremely fast! Us human beings are now barely able to keep up with how FAST science fiction is becoming scientific fact!

Sun, 11/18/2012 - 13:51 | 2993759 Aurora Ex Machina
Aurora Ex Machina's picture

Human pets? Sounds like you've read some QDT, good. Now parse out the tri-ambiguous emergent properties of that phrase. Slaves; sexual kink (BSDM subtype); animals kept in enforced childhood to control them (which is the essence of domestication).

We're not talking about Strong AI here, merely the Weak AI that Google et al are all working on. At the moment, the markets (as far as I can tell, happy to admit a lack of expertise) are 56-70% (depending on source) formed by rather primitive algos that form a balance that is subject to both human error (sf Knight Capital), inherent instability (flash crash) with a bias towards stagnation. My post was an attempt to highlight the moves that might be required to move beyond stagnation - any brief over-view of Europe shows that stagnation is being caused by the linear input/models of all actors involved (and in fact, massive resources are being used to keep said stagnation from erupting). Greece, Spain and so on seem to be slouching towards Bethelem with all the actors involved unable to move beyond old paradigms. I've not seen much new thinking going on - much talk of "growth", shackled to an ancient method of it.

Kyle Bass sees war ahead; I'm unsure if his definition of war is the 20th C version or something else; if it is the former, then his insight isn't helpful.

Soundtrack of the day

Oh, and the joke was ~ LGM (disambiguate - Little Green Men, aka Hollywood 1950's Aliens) + Titan (newest Super Computer) = that which heralded both M.A.D and the Space Age.

Loops and the eternal return indeed.

Mon, 11/19/2012 - 05:27 | 2995361 Radical Marijuana
Radical Marijuana's picture

QDT Quantum-Defect Theory?

I am not sure that I have ever read that specifically before.

The "human pets" phrase was simply from Apple's Steve Wozniak, being quoted in a mass media interview saying that. It seemed a simple way to explain what could be possible, IF enough civilization survived long enough for strong AI ???

My opinion is that strong AI will emerg out of weak. The crucial thing is simulating enough of a good model of the world, that includes a model of the modeler inside of that model. From all practical points of view, that would open a tunnel through to the infinite for that modelling to discover. The computer would have found its own rabbit hole of self-consiousness to go down, or its own tornado of self-consciousness to go up. I do not know if, or how, it would FEEL anything, but that would not matter as long as it had enough loops to have its model of itself inside its model of the world, ... enough to start to worry about its own energy supply, and everything that meant! HOWEVER, I really know nothing realistic about the mechanisms of that.

Regarding your comments on European situation: I figure the stagnation can only be overcome by external shocks, enough to push through an activiation energy, to tilt the systemic equilibria through crises, until they are "strangely attacted" to another different system equililbrium system. Right now, the stagnation appears to be attempts to stay the same, or go back to what can no longer be.

As you wrote: I've not seen much new thinking going on - much talk of "growth", shackled to an ancient method of it.

As I said before, I am a New World Order out of Chaos kind of guy.

However, I do not work for the international banksters' versions!!!

Regarding your view that: Kyle Bass sees war ahead; I'm unsure if his definition of war is the 20th C version or something else; if it is the former, then his insight isn't helpful.

His paragraph predicting war also said: Again, the world will not end, but the social fabric of the profligate nations will be stretched and in some cases torn.

That sounds like an old age view of what this "war" might be. I wrote about my concerns regarding that in a couple of replies I posted to the more recent article, reprinted on Zero Hedge from George Washington about how many other financial experts also predict some kind of "war."

I believe that almost everybody, including me, is unable to imagine just how out of control, and unprecedented in so many ways any such postmodern "war" could become. ... IF civilization survives enough, then I am quite sure we shall see many more science fiction ideas become fact eventually! BUT, so far, way too many of them are the nightmare distopian versions, with disgenics, etc.! ... Meanwhile, I like to day dream about theoretically possible New Age Warfare alternatives. Hah!

P.S. I liked the music video you linked.

Also, regarding

https://en.wikipedia.org/wiki/LGM-25C_Titan_II

I had tried searching for that, when I first read your post, but could not find it then ...

I can see what you meant that the first ICBMs, with computerized guidance, were the beginning of M.A.D., and the even more insane threats of the runaway militarization of space, all of which makes stupid little monkeys way too powerful for their own good!

Sat, 11/17/2012 - 17:11 | 2992229 terryfuckwit
terryfuckwit's picture

yes iindeed bass is a proper astute commentator... for me he is a alot better than my fellow countryman hugh hendry. Hendry and his hedge talk is for people who like comlexity talk for the sake of complexity. Over the last 10 years max rant a lot keiser and bass straight forward honesty about the metals precious... ye calling spades spades my type of analysts

Sat, 11/17/2012 - 17:14 | 2992233 I am Jobe
I am Jobe's picture

But wait, Biz Fucking Insider is painting a rosy pic

PRESENTING: The Powerful Force That Could Save The Economy In 2013

Read more: http://www.businessinsider.com/balance-sheet-recovery-2012-11#ixzz2CW6D5qKK

 

 

Sat, 11/17/2012 - 17:14 | 2992235 scrappy
scrappy's picture

Something smells fishy Mr. Bass - Perhaps a Red Herring?

Putting out the FIRE (Financial, Insurance, and Real Estate)

https://libertyrevival.wordpress.com/2011/01/09/ending-poverty-and-political-turmoil/

Sat, 11/17/2012 - 17:25 | 2992249 DR
DR's picture

Another hedgefund guy lamenting the very Fed policy that allowed him to speculate his way to wealth.Of course he wants his subprime, derivative funny money bet to be monetize into real interest bearing wealth so he calls out  for prudent money policy.  

 

Financial prudent savers can't realize a return because they are competing with the Basses of the world for the ever diminshing opportunities of a real return.

 

Sat, 11/17/2012 - 18:59 | 2992427 Dr. Sandi
Dr. Sandi's picture

Hypocrites who have some rubber in their morality tend to become a lot richer than those who tenaciously cling to their moral compass in rough weather.

Sun, 11/18/2012 - 00:27 | 2992997 Crisismode
Crisismode's picture

Financial prudent savers can't realize a return because they are competing with the Basses of the world for the ever diminshing opportunities of a real return.

 ----------------------------------------------------------------

 

Financially prudent savers invested in physical gold and silver over the past 15 years and are doing very well, thank you very much.

 

Sun, 11/18/2012 - 08:59 | 2993331 Snidley Whipsnae
Snidley Whipsnae's picture

Why Kyle Bass took physical delivery of 1 billion of physical gold... Or, why Mr Bass understands Fiduciary Responsibility and the clowns at the fed/treasury/gov do not know what it means.

Here is a short video of Mr Bass discussing his decision.

'Financially prudent savers' are not the Fiduciary Responsibility of Mr Bass... iows, Mr Bass is for hire like all people that work for a living. He is not present on this earth to insure that YOU, personally, become wealthy.

If you have a problem with this concept they you do not understand capitalism and the division of labor... try econ 101.

http://www.theblaze.com/stories/heres-why-the-university-of-texas-had-that-1-billion-in-solid-gold-delivered/

Sat, 11/17/2012 - 17:30 | 2992263 supafuckinmingster
supafuckinmingster's picture

My marmalade pot doth runneth over, and I cannot swim through it!

Sat, 11/17/2012 - 17:30 | 2992264 Ardeet
Ardeet's picture

Ostrich, EMU
http://imgur.com/Ze5t5

Sat, 11/17/2012 - 17:32 | 2992266 djrichard
djrichard's picture

Regarding MMT espousing that "governments are not dependent on credit markets to remain fiscally operational."

Governments are not dependent on credit markets.   It's the other way around.

At the end of the day, fractional reserve banking is a counterfeiting operation, with the Fed Reserve underpinning it all as the head-end of the liquidity pump.  The US Gov happens to be in the unique position of being able to counterfeit the same currency at will.  And in the process the US Gov sterilizes the operation through taxes and bond issuance.

Ask yourself, who in the marketplace has more risk?

  • Those that are dependent on fractional reserve process, which entails all the same risks as naked short selling (primarily the risk of the naked short sell going in reverse)?
  • Or the entity which sits aside it and can issue the same counterfeit at will?

There's only three players in this game: the Fed Reserve, the US Gov, and everyone else.  The so called credit markets are in the category of "everyone else". 

Sat, 11/17/2012 - 18:11 | 2992331 linrom
linrom's picture

Excellent analysis. That's is why I am such a critic of ZH. They exclusively present propagandistic views of "what is only good for hedge funds profits." It's all such rubbish. MMT is a game changer for these guys.

 

This and Dork of Cork's post above are real gems in that they show the false premises that guys like Bass like to use.

 

The way I think about what is going on with the monetary authorities is also based on a comment made by the head of Zimbabwe Central bank. When he was asked why they printed so much money, he answered  that they were simply 'trying to keep people alive." I also think about US and that 50% of the people have no savings and no wealth, "how would these people fare in debt/deflation environment?"

Sat, 11/17/2012 - 18:41 | 2992391 djrichard
djrichard's picture

Thanks!

I view zerohedge as being the flip-side of businessinsider.com.  They both land on different sides of the coin in terms of their attitudes towards MMT.  But I think they're both genuinely interested in getting a resolution of sorts on MMT, and I'd be willing to wager that zerohedge would become a strong proponent of MMT if they could just be convinced.  In the mean time, both web sites stir the pot and provoke discussion on the issue, which is great.

But we really need some leaders in thinking to lead the charge on MMT and advocacy for commonwealth fiscal governance.  We really need a John Kenneth Galbraith, somebody who can wield expertise and authority on the issue and battle the otherside into submission.  Until then the marketing campaigns will win the day, and we know which side the money has allied itself to as far as marketing campaigns go.

"how would these people arein a debt/deflation environment"?  As long as the US Gov safety net is kept in tact they're good (though it would have to be liberalilzed even further I imagine in a deflation environment, just like is being done with unemployment).  If the US Gov chooses to dismantle its safety net and let these people die on the vine, that would not only be a tragedy, but a self-inflicted tragedy.

Sun, 11/18/2012 - 01:56 | 2993135 Daily Bail
Daily Bail's picture

Fuck you.  Seriously.  MMT is not a game changer unless you define the game as 'your sanity.'

In that case MMT is indeed a game changer because your belief in it proves that you are FUCKING insane.

You propose never-ending deficit spending to keep your team (who's the same as the other team) in power.  Trillion-dollar deficit spending at this point in our cycle is nothing less than generational RAPE of the young and unborn.

It was a 30 year debt bubble and the deleveraging has barely begun.  Deal with it.  And stop trying to enslave my future generations in your ridiculous debt.

Galbraith, Marshall Auerback, probably that fucktard Brad Delong, and other MMT dipshits can kiss my ass.

I'm normally pretty polite, but these trillion-dollar annual deficits need to stop, and this never-ending printing nonsense you punks are espousing is the most dangerous shit I've ever heard.

Sun, 11/18/2012 - 09:28 | 2993350 Snidley Whipsnae
Snidley Whipsnae's picture

Daily Bell... +1

I would add...

Too much fantasy land, video games, tv, jack ass 'economists' putting forward 'new' economic ideas that have failed on many occasions in the past, all under the tent of bread and circus, has brought us clowns that believe unlimited printing of more debt instruments can lead us out of the desperate situation that the world economy has become.

Yeah, keep printing butt head. Print some for Beavis too.

"When you see reference to a new paradigm you should always, under all circumstances, take cover. Because ever since the great tulipmania in 1637, speculation has always been covered by a new paradigm. There was never a paradigm so new and so wonderful as the one that covered John Law and the South Sea Bubble — until the day of disaster." John Kenneth Galbraith

 

Sun, 11/18/2012 - 11:50 | 2993551 Daily Bail
Daily Bail's picture

Outstanding comment, Snidley.

But my website is the Daily Bail, not Bell.  Hope to see you around there in the future.

Sun, 11/18/2012 - 13:12 | 2993699 Atomizer
Atomizer's picture

What happened there little fella? Your site resembles a fiscal cliff. Need a little traffic ya say? hehehehe

Sun, 11/18/2012 - 11:10 | 2993445 djrichard
djrichard's picture

DB,

  • The deficit is not supposed to be paid off.  Otherwise your comment on generational rape of the young and unborn would be true.
  • MMT is not changing the game.  The Fed Gov is essentially an MMT operation already
  • Neither team wants you to recognize the above.  They prefer a populace that thinks that the Fed Gov can't spend money into existence.  They like it when the populace assumes money can only be lent into existence.
  • It's not public debt (the deficit) but rather private debt which is causing our economic problems.  Nobody has anymore capacity to increase their private debt load.  But instead of talking about how to de-leverage private debt, we talk about de-leveraging public debt.  When we're going to need the public debt to keep us from sinking too far when we de-leverage on private debt.  That's where the game needs to be changed.
  • Edit: the tell on all this will be when the de-leveraging in the private sector starts happening again in earnest.  Then, opening up the public purse strings will be at the top of everyone's lips.  And we'll all look back at the debate we have now on the deficit cliff and think, "geez what the fuck were we thinking?"
Sun, 11/18/2012 - 11:53 | 2993539 Daily Bail
Daily Bail's picture

DJRichard

"It's not public debt (the deficit) but rather private debt which is causing our economic problems."

Wrong.  The national debt will hit $21 TRILLION in 2016.  That IS a problem, despite your platitudes.  I don't ever expect the debt to be paid off, but I do expect us to stop adding $5 TRILLION every 4 years. When Treasury rates return to a normal range, the interest on $21 TRILLION is going to be our single largest budget expense.

You also wrote the following which I disagree with:

"The tell on all this will be when the de-leveraging in the private sector starts happening again in earnest.  Then, opening up the public purse strings will be at the top of everyone's lips."

Wrong again.  It will be at the top of your lips, and your insane MMT counterparts, but not mine or anyone else with a shred of personal responsibility.  Let's not mince words here.

Here's the truth.

MMT is an excuse for never-ending governemnt giveaways and deficit spending on behalf of politicians.  MMT advocates believe the govt. should give an $8 per hour job to everyone who needs it.  It's the New Deal 2.0.

It's irresponsible and immoral.  We're broke.  Stop the spending.

$17 TRILLION IS ENOUGH!

Sun, 11/18/2012 - 11:14 | 2993472 linrom
linrom's picture

I think that you got your facts backwards. DEBT is MONEY is the status quo. Under MMT money is DEBT free and parasites can't make a living of 'money for nothing.' According to Martin Armstrong, 80% our national debt consists of accumulated interest. Armstrong also stated that if our government had simply printed the money, our debt would be only 40% of what it is now.

 

In order to even the keel after 30 years of banker credit expansion, debt is not the only thing that will deflate--assets and net worth will also decline by same amount. But people like you always fail to even consider that!

 

Your response to my post is no different than how Public Union members reacted in Wisconsin after realizing that the gravy train called 'bargaining rights' was about to end.

You must accept that debt deflation will also entail destruction of your savings and assets. People like Kyle Bass and you live in a fantasy land: Kyle wants to collect return on his ASSETS(debts) forever, you want to spend your money(debt) forever.

 

Good Luck!!

 

 

Sat, 11/17/2012 - 17:47 | 2992295 q99x2
q99x2's picture

Can't happen before the technological singularity. Otherwise, the code being added by the UFO's that looks like balls of light would have to include the postponment of armegeddon. Prepare to be transmigrated.

Sat, 11/17/2012 - 17:49 | 2992299 Skateboarder
Skateboarder's picture

The common man got thrown under the bus.

Sat, 11/17/2012 - 19:00 | 2992430 Dr. Sandi
Dr. Sandi's picture

And the bitch of it is that another common man was driving the bus.

Sat, 11/17/2012 - 17:57 | 2992309 scrappy
scrappy's picture

Dr. Paul Craig Roberts, the former Reagan economist and former classical conservative, has finally gone completely renegade. Dr. Paul Craig Roberts can be now considered a true renegade economist for an article he posted by Herman Daly, “Nationalize Money, Not Banks.”

Critique

https://libertyrevival.wordpress.com/2012/08/05/kudos-to-paul-craig-roberts-and-herman-daly/

Sat, 11/17/2012 - 18:25 | 2992355 falak pema
falak pema's picture

Now here is a man and a financial logic that makes sense and goes to the heart of the illness.

Nationalise money...wow,wow! Brillant! 

Sat, 11/17/2012 - 18:33 | 2992370 scrappy
scrappy's picture

Can you go a little deeper falak for those of us that can't read your mind, in other words explane your comment.  Did you read theoriginal article and the the ccritique in what 28 seconds after my post?  Troll Alert!

Sat, 11/17/2012 - 18:41 | 2992392 fuu
fuu's picture

28 minutes...

Sat, 11/17/2012 - 18:56 | 2992421 falak pema
falak pema's picture

nationalise money : take the private FED OUT OF THE LOOP. Break the link to the PDs; print money for the real economy. Reinstall Glass steagall and let the investment banks, spun off, assume their derivative risks on their own.

Let them burn. Print money with other National central banks for the real economy. Adjust monetary balances to reflect strucutural balances and shut down/regulate tight the assets markets until it all blows over. Ban all naked derivative commodity plays, install tobin tax. Tell WS to just fukk off.

Money should be a utility and backed by the bancor type system. 

Sat, 11/17/2012 - 21:27 | 2992677 forexskin
forexskin's picture

nicely stated - except for the bancor thing.

only problem with this is the power to issue merely changes hands - ergo, whoever does the printing has huge corrupting power - unless the issue of money is limited to increases in productivity.

or the issue of money is limited by being fully convertible in Au.

Sat, 11/17/2012 - 19:18 | 2992470 falak pema
falak pema's picture

learn to count time it might help clear your brain...!

Sat, 11/17/2012 - 18:04 | 2992318 natty light
natty light's picture

Buy a canoe and be very careless with your property.

Sat, 11/17/2012 - 23:48 | 2992915 Dr. Sandi
Dr. Sandi's picture

The ZH slogan: Tippy Canoe, and Tyler Too!

Sat, 11/17/2012 - 18:18 | 2992344 BovineCapital
BovineCapital's picture

The day Bass puts out an overwhelmingly positive letter will be a great day indeed.

Sat, 11/17/2012 - 18:19 | 2992346 BovineCapital
BovineCapital's picture

fail double

Sat, 11/17/2012 - 18:37 | 2992373 Yen Cross
Yen Cross's picture

 Just wait until crude goes parabolic next year. Japan sources out 90% of it's energy needs after "Fuckyoushima".

  Japan is trying to devalue the yen through outside/foreign aquistion schemes. How is Japan going to service that debt when the yen goes to  usd/jpy 95 or 100, with a debt GDP of close to 250%!

   Japan is an export economy with a high savings rate, via the postal system/KAMPO. Very few of those foreign workers are going to, or are eligible to invest in KAMPO! The only reason Japan has been able to maintain that insane GDP number is because of it's internal savings rate. Most of those savers are older demographic, Mrs. Watanabe as well...

Sat, 11/17/2012 - 18:34 | 2992375 scrappy
scrappy's picture

Yea thought so...

 

Sat, 11/17/2012 - 18:45 | 2992398 scrappy
scrappy's picture

http://michael-hudson.com/2012/03/mmt-as-the-austerity-alternative/

Have a nice weekend ZHers!

Oh and ...

Bye Bye Fishy Trolls!

 

 

Sat, 11/17/2012 - 18:49 | 2992407 Roark12
Roark12's picture

A Safety Net only works when no one needs the Net

Sat, 11/17/2012 - 21:21 | 2992667 forexskin
forexskin's picture

or...

if everybody needs the net, there is no one left to hold it.

Sat, 11/17/2012 - 19:09 | 2992447 Shigure
Shigure's picture

BTW Re: the birth rate chart in the Hayman newsletter - if anyone is curious (as I was) why the birth rate in Japan dropped in 1966, it was because it was the Year of the Fire Horse, Hinoe Uma

http://www.seiyaku.com/reference/hinoe-uma.html

 

Sat, 11/17/2012 - 19:11 | 2992450 Zer0head
Zer0head's picture
Kaiser (not so)Permanente to layoff 530 employees in Southern California

http://www.cbs8.com/story/20125945/kaiser-permanente-to-layoff-530-emplo...?

Sat, 11/17/2012 - 19:17 | 2992464 antidisestablis...
antidisestablishmentarianismishness's picture

"Again, the world will not end..."

Stop smoking the hopium, Kyle! You need to fully embrace hopelessness & misery.

Sat, 11/17/2012 - 19:24 | 2992480 Yen Cross
Yen Cross's picture

 What is that old fallacy?   "misery loves company"

Sat, 11/17/2012 - 19:27 | 2992483 kill switch
kill switch's picture

http://www.youtube.com/watch?v=ZpY54NOYZJ0

Sat Music DO THE WHOLE FUCKING THING ,,,,,,YOU WILL LOVE IT

 

Sat, 11/17/2012 - 23:56 | 2992922 TNTARG
TNTARG's picture

Beautiful. Those solos... That saxophone. That battery!

Sat, 11/17/2012 - 19:36 | 2992498 reader2010
reader2010's picture

 Money itself isn't lost or made, it's simply transferred from one perception to another. 

 

- Gordon Gekko

Sat, 11/17/2012 - 19:37 | 2992500 Sandmann
Sandmann's picture

[I]t would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity value of capital. Interest today rewards no genuine sacrifice, any more than does the rent of land. The owner of capital can obtain interest because capital is scarce, just as the owner of land can obtain rent because land is scarce. But whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital.

 

Nice theory from Kyle Bass but where are Interest Rates low outside the banking sector ? Most people face Credit Rationing from Banks which proves Keynes' point. Banks are the Rentiers exploiting households and businesses with Government serving Banks in return for favourable loans.

Sat, 11/17/2012 - 19:48 | 2992512 Riquin
Riquin's picture

Look mathematically is impossible to pay the debt the sooner we accept that the better we are going to be. We need to get the best mathematical, accounting, financial and legal minds in the nation and come out with a gracious plan of debt forgiveness.  The more we wait the worst it going to get. We are going the way of Spain (taxes and cuts) and that is not fun.

Read this, this guy have more or less the same figures that I have, same conclusion: 

http://www.youtube-nocookie.com/embed/EW5IdwltaAc?rel=0 

 

If you know Spanish read this article “At the end of the day, we cannot avoid “una quita” debt forgiveness ….of the Greek debt.

 

Comisario de UE cree inevitable la reestructuración de la deuda griega:

 


http://www.emol.com/noticias/economia/2012/11/17/570110/comisario-de-ue-cree-inevitable-la-reestructuracion-de-la-deuda-griega.html

 

Sat, 11/17/2012 - 23:07 | 2992845 Ginsengbull
Ginsengbull's picture

"Forgive us our debts, as we forgive our debtors"

 

Those banksters got bailed out. Our children paid for it. Now they will owe the banksters?

 

Fuck them.

Sun, 11/18/2012 - 07:06 | 2993269 WTFx10
WTFx10's picture

"We need to get the best mathematical, accounting, financial and legal minds in the nation and come out with a gracious plan of debt forgiveness.

"We need to get the best mathematical, accounting, financial and legal minds in the nation and come out with a gracious plan of debt forgiveness."

We need to get a multinational special forces unit to to accomplish a hit. Because thats how gangsters solve their problems. Organized crime must be dealt with without prejudiced take out the owners ,declared war on the private shareholders of the worlds fiat banking system. Base the cleansing on removing financial terrorism from the financial system. Pass a law in secret just like the puppets do now.  Seal team six all their asses. Their heirs too need elimination there would be 100,000 deaths, maybe the others would just ask to be put in prison. Just like any Organized criminal enterprise once you start taking down the leaders the others will squeal like pigs. SURPRISE ATTACK, SHOCK AND AWE for the private Banking Cartel Shareholders a "We the People" forced bankruptcy, ahh the only American dream we have left.
After the system has been totally cleansed and the criminal element has been eliminated and has no chance of redesigning the enterprise that was just destroyed.
Then
We need to get the best mathematical, accounting, financial and legal minds in the NATIONS and come out with a financial system that does NOT benefit it's creators above all others.

"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks". John Dalberg Lord Acton



 

 

 

 

 

 

 

'

Sat, 11/17/2012 - 19:58 | 2992530 Yen Cross
Yen Cross's picture

 The: Rule of 72?  Screaming}  Hey Bernanke <   ---Crickets

Sat, 11/17/2012 - 20:20 | 2992572 Wave-Tech
Wave-Tech's picture

The Countdown to Total Collapse is well underway - Brace for Impact and hope you don't need to...

http://www.elliottwavetechnology.com/2012/11/countdown-to-total-collapse...

Sun, 11/18/2012 - 02:04 | 2993146 Radical Marijuana
Radical Marijuana's picture

Yes, Wave-Tech, that link was to another good summary of the insanity of the numbers!

This sentence from there sort of summarizes the more learned article that started this thread of comments:

"the powers-that-be insist upon believing that they can still pull magic rabbits from their empty hat of totalitarian deceptions."

Sat, 11/17/2012 - 20:28 | 2992587 Michelle
Michelle's picture

Of course war is inevitable, duh! Our elders used to say that the only way to turn around an economy is through war. What really needs to be asked is of us all is will you be willing to serve? Will you be willing to fight? Will you be willing to help a neighbor in need?

The answer need not be answered, it's obvious by the posts I read over and over on this board...you are on your own, fight for your possessions, not your liberties, kill your neighbor, cheat, rob, and steal because that's what's good for you and only you in the short term. Pray for war as you have placed bets that will make you wealthy if war comes.

What a sickening world we live in, to place money and possessions over life and the well-being of others.

Take my money, take my possessions, but I will die knowing I did all I could do to change just the attitude of one person. That in and of itself is success.

Sat, 11/17/2012 - 20:54 | 2992637 Jugdish
Jugdish's picture

Where are your possessions and money you are giving away? Send address, I'll be by in the morning. Thx.

Hopefully your souless, collectivist nightmare will come to an end. It's not about money and people wanting liberties. It's about a global criminal cabal that already has all the money/means of production and is not concerned with your worthless dollars, they want your soul.

Sat, 11/17/2012 - 21:56 | 2992716 Michelle
Michelle's picture

Wrong, they don't want my soul as that has no worth to them, it's always about the money whether outright theft and/or slavery.

Our souls are worth fighting for and aren't easily bargained, money on the other hand....

Sat, 11/17/2012 - 23:34 | 2992891 willwork4food
willwork4food's picture

Right on M!

i think i like this chick...

Sun, 11/18/2012 - 10:36 | 2993409 falak pema
falak pema's picture

Now I wonder what Jill Kelley thinks about that. There is a face that launched a 280 car cavalcade, all four stars and minute-man underweared. Oh the heart throbs there, the soul was in the punch bowl before the jump into the haystack. 

Sun, 11/18/2012 - 14:31 | 2993905 wahrheit
wahrheit's picture

Nah, it's more about the souls.  They are having an easy time getting them, too.  But you're right, you have to make the choice.  Trouble is, so many are so star-struck with having celebrity status due to effective propaganda that they will easily make that choice.

They can print all the money they want.

Sat, 11/17/2012 - 21:25 | 2992674 jomama
jomama's picture

it's a harsh, unfair world out there. 

what exactly should one do, when all others are killing, cheating, robbing, and stealing with impunity?

emulate ghandi?

Sun, 11/18/2012 - 02:08 | 2993154 Radical Marijuana
Radical Marijuana's picture

Attempt to negotiate a better balancing rate of robbery between the different organized crime gangs?

Of course, that is tough to do, since the worst gangs of robbers pretend that they are not robbers, because they somehow have the legal right to engage in their kinds of robberies. The toughest problem with negotiating a saner balance between the different organized crime gangs dominating the world is that the biggest and best at doing that are those who most refuse to admit the facts that they are doing that!

Sat, 11/17/2012 - 23:16 | 2992858 willwork4food
willwork4food's picture

Take heart Michelle, there are many people here that share your views.Yes war is inevitable but we will survive together if-big if- tptb do not succeed in dividing us.

One of the things that drives me crazy are comments here and in MSN that suggest the government is 1. stupid, 2. clueless, 3.  unqualified, 4. idiots.....

Bullshit, the power that be that run the alledged gov agencies, be it the Central banks, FEMA, CDC, FBI, CIA, HS have unlimited funds to pay for the brightest and most sold out talent to authority that money can buy.

They know exactly what they are doing. They just don't know that *God* might have different plans.

Sun, 11/18/2012 - 00:43 | 2993031 Amagnonx
Amagnonx's picture

I guess we can pray that soldiers simply don't follow orders  -  thats a prayer ..

 

The only fight thats worth while, would be to fight against tyranny - external threats are purely conjured up by the controllers.

Sat, 11/17/2012 - 20:29 | 2992592 IMA5U
IMA5U's picture

If I was Kyle Bass I'd think 2x about ordering Sushi

Sat, 11/17/2012 - 20:32 | 2992600 yogibear
yogibear's picture

For Bernanke, Yellen, Evans, Dudley and the rest of the Fed printing to infinity fixes everything for them. Only thing to to stop the Fed  Keynesian zombies is a complete collapse of the value of the US dollar. A loss worldwide dump of US dollars. Like thge Soviet Union. 

Sat, 11/17/2012 - 21:34 | 2992692 Everybodys All ...
Everybodys All American's picture

I'm afraid you are correct.

Sat, 11/17/2012 - 22:01 | 2992725 Yen Cross
Yen Cross's picture

Now, Kyles' head is tilted?

Sat, 11/17/2012 - 22:18 | 2992750 123dobryden
123dobryden's picture

not inevitable, but unfereseeable, sometimes we have to climb a mountain of conflict to walk the road of peace..:)

Sat, 11/17/2012 - 22:32 | 2992778 Yen Cross
Yen Cross's picture

 My way forward is , FREE WILL!

 

   The variables, are innumerable.

Sat, 11/17/2012 - 22:30 | 2992780 nordrhein
nordrhein's picture

Does anyone remember the tallystick? It was used before the 1600s in Britain before the Bank of England was created.   Now we have Bitcoin which is the closest thing to a tallystick I've seen. 

Here's the kicker.  You can't put tungsten or lead into a bitcoin!

Sat, 11/17/2012 - 22:41 | 2992800 BlackholeDivestment
BlackholeDivestment's picture

..same ending Carmen Reignhart showed on the chart pattern she presented to the Simpson Bowels Committee. Hey could of said, of course you know this means war, and just canned all the other bullshit. We were over due on Carmens historic chart pattern for war, going back to WW1. She could have gone all the way back to Babylon and found the same point of ''tax'', if I recall the tax for the year reached 22% on top of everything else and labor was overcome at that point and your kingdom got invaded and fell. This happen to the King of Babylon and of course the famous 'writing on the wall'' was Numbered Numbered Weighed and Divided, meaning you have been found wanting. Amazing to see a global economic reality in the same image of Babylon. LMAO, and it's 2012. Hmmm, could be prophetic. This time may be different huh? Lol. Look at that world reserve currency, what a 666 mark of the beast bitch that is. LMAO. Hypothicated ZIRP QEnfinity MBS CDS HFT Twister and over 100% Debt to GDP gone wild. Yeah, it don;t look good fer the Yankees or the Dodgers, and everything in the squeeze with them Black Hole Swans dropping bombs.

Sat, 11/17/2012 - 22:49 | 2992813 Yen Cross
Yen Cross's picture

 You are Brilliant!   RAW and truthful!

Sat, 11/17/2012 - 22:55 | 2992827 Yen Cross
Yen Cross's picture

 Kyle Bass, needs a vacation.   

Sat, 11/17/2012 - 23:14 | 2992853 polo007
polo007's picture

Is this the lousiest recovery of all time?

Check it out: The number of people currently on food stamps in the US is at a record-high of 47.1 million. That’s more than twice as many recipients than in 2007 when the crisis began. And the percent of Americans living below the poverty line has skyrocketed, too. It’s gone from 12.3 percent in 2006 to 16.1 percent today. According to the Census Bureau, nearly 50 million people in America are now living below the poverty line. In other words, if you’re poor in America your numbers are growing and things are getting worse. Some recovery, eh?

And it’s not just the poor who are hurting either. The middle class is getting clobbered, too. Unemployment is still way too high (7.9 percent) and, according to the Fed’s Survey of Consumer Finances, middle income families have seen nearly 40 percent of their net worth go up in smoke since 2007. The bulk of the losses are attributable to the giant housing bust of ’07 which wiped out $8 trillion in home equity leaving the majority of baby boomers unprepared for retirement. It’s a desperate situation that no one seems to want to talk about, but the reality is that millions of people are going to have to figure out how to scrape by on next-to-nothing or work until they’re too senile to punch a clock. As far as these folks are concerned, the recovery is just a big joke.

So who’s really benefited from the so called recovery?

Well, that’s a no brainer: Wall Street and the 1 percenters, that’s who. Fed chairman Ben Bernanke has pumped enough uber-cheap money into financial markets to fill a small ocean, all with the clear intention of keeping stocks bubbly so his fatcat speculator friends can cream the system and take home even bigger bonus checks. The Fed’s quantitative easing program has sent stocks into the stratosphere, in fact, all three major US indices have more than doubled since the program was first launched in 2008. There’s only one drawback; it doesn’t do jack for the real economy. Oh, and another thing, its effect on stocks is only temporary, the equivalent of a sugar rush.

.....

Bernanke’s smart enough to know that more-of-the-same (QE) won’t get the economy back on track. He knows that Koo is right. But that doesn’t mean there will be a change in policy. There won’t be, mainly because QE reinforces the caste system where all the goodies go to the silk-stocking hotshots at the top and everyone else gets table scraps. It’s just plain old class warfare. And, guess what: their class is winning.

http://www.albanytribune.com/16112012-welcome-to-the-lousiest-recovery-of-all-time-oped/

Sat, 11/17/2012 - 23:33 | 2992887 willwork4food
willwork4food's picture

1. The unemployment rate is over double the official bullshit stats, as is real inflation.

2.Bernanke is very smart, but he is following orders from those that know EXACTLY what they have done, where this is going and how they will handle it. Do you remember the Hagelian Dialectic?

3. Their class is winning because the ones they want to win always win.

Until they don't. BlackSwan anyone?

Sat, 11/17/2012 - 23:44 | 2992907 Yen Cross
Yen Cross's picture

 Hey now!  We know each other! I'll discuss those "helilonic thoughts" any  day!   /Duck/

 

    Just kidding. You are brilliant ! :-)

Sun, 11/18/2012 - 10:29 | 2993405 falak pema
falak pema's picture

lets not haggle about Hegel or cackle about swans n ducks, black or white. 

Inflation is under the carpet like the derivatives. The current belief is the carpet never becomes magical and flies away exposing the rest. 

Now that delusion...is what happens when you don't read the arabian nights, black and mystical as inflationary arabian oil. 

Sat, 11/17/2012 - 23:16 | 2992859 polo007
polo007's picture

http://www.randycass.com/blog/five-things-i-learned-this-week-november-18th-2012/

According to Morgan Stanley:

First, Governments are in a fiscal mess because of pro-market policies over the last couple decades (Less regulation, lower taxes, etc…)

Second, they need to transfer that mess to the private sector by reversing the investor friendly policies that contributed to the current situation.

Third, because politics are as polarized as they have ever been, this process will be lengthy and full of uncertainty and drive people to hold less risky assets until it is completed.

In short, Investors are in the awful position of waiting for multiple shoes to drop but are faced with uncertainty about when and how those shoes will kick them in the rear. If you believe in the thesis none of it bodes well for earnings or multiple expansion going forward.

Sat, 11/17/2012 - 23:46 | 2992913 Never One Roach
Never One Roach's picture

 

 

 

Old Paradigm: Flip that House!

 

New Paradigm: Flip that Twinkie!

Sun, 11/18/2012 - 00:03 | 2992945 Yen Cross
Yen Cross's picture

 You"re 1/2 way there. Get creative, and risk your well-ness.

Sun, 11/18/2012 - 00:06 | 2992955 Yen Cross
Yen Cross's picture

 I wish I was gay!  Girls are nasty

 

Sun, 11/18/2012 - 07:32 | 2993282 Setarcos
Setarcos's picture

True - about girls - but gays tend to be even more nasty and messy ... I leave it to your imagination, except for suggesting that you have sex with Elton John.

BTW I am not a homophobe, but I do cringe about the antics of some gays, including the female variety, i.e. lesbians.

Live and let live I say, but I cringe when it is "in your face".

Sun, 11/18/2012 - 00:13 | 2992966 steve from virginia
steve from virginia's picture

 

Kyle Bass: anyone who buys nickels by the ton has a sense of humor! (applause)

 

 - The US and other countries that borrow in their own currencies cannot be forced into involuntary default. This fact has been turned into a license to produce astronomical amounts of credit, beyond the ability of any entity to retire.

 

 - Industry needs debt, no debt no industry. Sorry Charlie.

 

 - The current amount of debt requires all the capacity of the debt-creation regime to service and roll-over maturing issues. The system is saturated (Japan, UK, states in US). Europe is subject ot a credit embargo (because there is no sovereign European ability to provide credit in the place of outside financiers).

 

 - One approach to US debt is to redenominate: that is, remove two or more zeros from the total debt (then sneakily add one or more to 'certain' economic factors). The current US$55 trillion total debt loses two zeros, the debt becomes $550 billion. A very modest amount. $4/gallon gas becomes just 4 cents ... right? WRONG! It stays at $4! How about wages? That $50,000/year job now pays a little over a dollar a day. US wages are now competitive with those in the rest of the world! Let's make wages $2 a day. That can't hurt ... right?

 

 

Sun, 11/18/2012 - 01:50 | 2993014 cranky-old-geezer
cranky-old-geezer's picture

 

 

That's a lot of words to describe "looting spree", looting the economy & the people via currency debasement.

It doesn't take lots of words to say "currency collapse".  No, there won't be debt collapse, Bennie will print all he needs to prevent it.   But there will be currency debasement then hyperinflation then currency collapse.

Bennie isn't creating wealth.  He can't do that. He can only move wealth around. And that's what he's doing, moving wealth from the economy and people to the government and Wall Street.

It works just like a company issuing more stock and giving it to insiders.  It dilutes the value of stock held by the public, effectively transferring wealth from the public to crony insiders.

Bennie is dong the same thing with the currency.

Sun, 11/18/2012 - 01:04 | 2993070 Jalaluddin
Jalaluddin's picture

In front of the enthalpy cliff is a BIS hole full of hot Keynesian air which is in general equilibrium with the sides of the hole, preventing their collapse; Nobel certified economists lead prayer meetings at the edge, proving that the hole is not there; the hole is deeper than the sum of its "central" bank parts perhaps due to BIS accounts never balancing; the lemmings rush forward ...

Sun, 11/18/2012 - 01:27 | 2993092 hawk nation
hawk nation's picture

If you have a morgage stop paying and use the money to buy pms

It will take at least two years to be foreclosed apon and by then the pms should be triple their original value and the economy will be in a depression so the government is liable to suspend foreclosures because so many people would be out on the streets

Worse case use some of the pms to buy a house that is foreclosed for pennies on the $10000.00  

This sucker is gonna blow up real soon 

Sun, 11/18/2012 - 01:40 | 2993107 muppet_master
muppet_master's picture

greetings from CA

where its only 2130 PST.  By the way I just had my first TWINKIES in like over 5 years...i eat healthy..

anyways KYLE BASS is absolutely correct...HOWEVER that doesn't mean that the spx currently at 1360, won't be pumped up to 1470ish BEFORE TANKING HARD to NEW LOWS (below March 2009).  The good thing is that all this will happen under KENYANOMICS watch...yes odummer's. Well it was the QEorganizer that came up with PRINT BABY PRINT !!

Just saying...casino didn't go straight down from 2007 (1500) to early 2009 (666)...there were plenty of 10% to 20% PUMPS before NEW LOWS were made.

Sun, 11/18/2012 - 01:46 | 2993115 ghostfaceinvestah
ghostfaceinvestah's picture

Bass, what a genius

http://www.businessinsider.com/nomura-on-shorting-japanese-government-bo...

 

Nomura Explains Why Kyle Bass's Most Famous Trade Has Been A Disaster

Sun, 11/18/2012 - 03:44 | 2993209 scaleindependent
scaleindependent's picture

nice to hear from you ghostfaceinvestah.

It's been a while.

I think Bass was way too early. A premature Cassandra, if you will.  But once inflation starts kicking hard here and in Japan, I think he will be proven right.

Unsustainability is by definition finite.

Sun, 11/18/2012 - 01:55 | 2993133 scaleindependent
scaleindependent's picture

Is Tyler et. al. Kyle Bass's alter ego?

Sun, 11/18/2012 - 01:56 | 2993134 Die Weiße Rose
Die Weiße Rose's picture
Betting with Trillions -                                                                                        Prison of Debt Paralyzes West

 

Be it the United States or the European Union, most Western countries are so highly indebted today that the markets have a greater say in their policies than the people. Why are democratic countries so pathetic when it comes to managing their money sustainably?

Creating Money out of Thin Air

Until 1971, gold was the benchmark of the US dollar, with one ounce of pure gold corresponding to $35,and the dollar was the fixed benchmark of all Western currencies. But when the United States began to need more and more dollars for the Vietnam War, and the global economy grew so quickly that using gold as a benchmark became a constraint, countries abandoned the system of fixed exchange rates. A new phase of the global economy began, and two processes were set in motion: the liberation of the financial markets from limited money supplies, which was mostly beneficial; and the liberation of countries from limited revenues, which was mostly detrimental. This money bubble continued to inflate for four decades, as central banks were able to create money out of thin air, banks were able to provide seemingly unlimited credit, and consumers and governments were able to go into debt without restraint.

This continued until the biggest credit bubble in history began to burst: first in the United States, because banks had bundled the mortgages of millions of Americans, whose only asset was a house bought on credit, into worthless securities; then around the globe, because banks had foisted these securities onto customers in many countries; and, finally, when these banks began to totter, debt-ridden countries turned private debt into public debt until they too began to totter, and could only borrow money from banks at even higher interest rates than before. At the moment, the world has only one approach to getting out of this labyrinth of debt: incurring trillions of even more debt.

http://www.spiegel.de/international/business/playing-poker-with-trillion...


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