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Anatomy Of The End Game

Tyler Durden's picture


Authored by Martin Sibileau of 'A View From The Trenches' blog,

“…We cannot arbitrage fiat money, but we can repudiate the sovereign debt that backs it! And that repudiation will be the defining moment of this crisis…”

(click here to read this article in pdf format: November 22 2012)

About a month ago, in the third-quarter report of a Canadian global macro fund, its strategist made the interesting observation that “…Four ideas in particular have caught the fancy of economic policy makers and have been successfully sold to the public…” One of these ideas “…that has taken root, at least among the political and intellectual classes, is that one need not fear fiscal deficits and debt provided one has monetary sovereignty…”. This idea is currently growing, particularly after Obama’s re-election. But it was only after writing our last letter, on the revival of the Chicago Plan (as proposed in an IMF’ working paper), that we realized that the idea is morphing into another one among Keynesians: That because there cannot be a gold-to-US dollar arbitrage like in 1933, governments do indeed have the monetary sovereignty.

Is this true? Today’s letter will seek to show why it is not, and in the process, it will also describe the endgame for the current crisis. Without further ado…

After the fall of the KreditAnstalt in 1931, with the world living under the gold-exchange standard, depositors first in central Europe, and later in France and England, began to withdraw their deposits and buy gold, challenging the reserves of their respective central banks. The leverage that linked the balance sheet of each central bank had been provided by currency swaps, a novelty at the time, which had openly been denounced by Jacques Rueff. One by one, central banks were forced to leave the gold standard (i.e. devalue) until in 1933, it was the Fed’s turn. The story is well known and the reason this process was called an “arbitrage” is simply that there can never be one asset with two prices. In this case, gold had an “official”, government guaranteed price and a market price, in terms of fiat money (i.e. schillings, pounds, francs, US dollars). The consolidated balance sheets of the central bank, financial institutions and non-financial sector looked like this before the run:

And like this after the run:


Indeed, those who claim that today is different and make the dangerous case that “…one need not fear fiscal deficits and debt provided one has monetary sovereignty…” refer to this crucial difference in the balance sheet of the central banks then (i.e. in the ‘30s) and now:


And they are right: There cannot be any arbitrage, because there is no real asset to exchange fiat currency against. Only fiat vs. fiat (i.e. currency vs. government debt). But does this mean that the governments have monetary sovereignty? Does this mean there will not be an end game? I don’t think so. We cannot arbitrage fiat money, but we can repudiate the sovereign debt that backs it! And that repudiation will be the defining moment of this crisis. The key to understand how this will occur lies in focusing in the shadow banking system, rather than the banking system. In the universe of shadow banking we do not back fiat currency with real assets, but we provide sovereign debt as collateral to obtain the fiat currency necessary to establish positions in the commodities markets.

Some preliminary details

Our first assumption is therefore that the debt of the sovereign that issues the world’s reserve currency is repudiated. We can think of many events that would trigger that reaction: A monetary policy of the Fed that continues to enable fiscal deficits (something that already Jacques Rueff explained in the ‘30s) or the coming burst of the European Yankee market bubble (i.e. US dollar denominated debt issued by European corporations). Whatever the reason, the repudiation will have an impact in the repo market, which finances positions in the commodities markets.

Consider a trader in the commodities futures market. To finance his trading activity, he pledges collateral in the repo market, and receives cash. The collateral is often US sovereign debt and those supplying the cash in exchange for it are money market funds, under repurchase agreements. This secured financing entails the actual exchange of ownership, title on the collateral, which is “warehoused” in the balance sheet of the “lender”.

With the funds, the trader enters into a futures contract in the commodities market, but facing a central counterparty (clearinghouse). The trader has to post an initial and a maintenance margin. While the futures contract is in place, the trader (and his counterparty, the clearinghouse) will have an unrealized gain or a loss. As long as the contract is on, the trader will have to adjust the margin according to the gains or losses. At maturity of the contract, the trader can settle in cash or by delivery. At a consolidated level, however, there has to be a delivery of the commodity, at an auction, for the market (usually not higher than 1% of contract settlements). In the end, the trader must repurchase the collateral it had given to the money market funds, at a price equivalent to the principal plus accrued interest (i.e. repo rate). Below we show these steps in a chart, with real samples of how a hedge fund would show these transactions in its financial statements:


The End Game

Now that we are familiar with the steps above, think what would happen, if the US sovereign debt began to be repudiated, just like the debt of Italy or Spain. At the beginning, the repo rate (i.e. the interest rate charged by the money market funds) to lend to the commodity markets players would increase, making trading in commodities futures more onerous. Immediately after, however, liquidity would disappear as those investing in money market funds seek only short-term exposure with minimum risk. As well, given that most central banks hold US sovereign debt as reserves, one would expect an increase in global concern and a flight to safety in real assets.

With the rise in the cost of funding (i.e. repo rate) and the rise in commodity prices, it is to be expected that one trader short of a futures contract may suffer substantial losses. The increase in counterparty risk or the increase of a failure by a central counterparty (i.e. clearinghouse) would jump. And I think the jump would be so significant that even the delivery of physical commodities at auctions would be at risk.

The failure of a central counterparty is not new. In 1974, the Caisse de Liquidation failed on margin calls defaults associated with sugar futures contracts. In 1983, the Kuala Lumpur Commodities Clearinghouse crashed on palm oil futures and in 1987, the Hong Kong Futures Exchange clearinghouse failed also due to futures contracts, in equities.

Should a scenario like the above unfold, the Fed would likely be forced to intervene, inter-mediating between the money market funds and the commodities futures market. It could do so by issuing its own debt to money market funds (or any lender in the repo market) and using the proceeds to enter into repurchase agreements with traders in the commodities markets. The chart below illustrates this scenario:


Let’s take a close look at the balance sheet of the Fed, once it enters the repo market. A few observations are relevant:

a)      The Fed would now fund positions in the commodities markets

b)      Operationally, the Fed would probably mark the repoed Treasuries to model, not to market. Like the European Central Bank does today with Greek or Spanish bonds.

c)    The Fed would not “print” money. They would simply raise funds from the shadow banking system by issuing its own debt. Therefore, they would have to pay an interest rate high enough to entice money market funds to buy it.

d)     The Fed would not be able to “refuse” US Treasuries repoed. It would have to buy all the US Treasuries offered in repurchase agreements at their “marked-to-model” rate. But the money market funds could refuse to lend to the Fed, if a market rate is not offered.

And here is the catch, because in order to raise US dollars from the shadow banking system, the Fed would have to pay a higher rate than it would charge for its repurchase agreements. Otherwise, there would be no need to intervene the broken repo market, to start with!

And what would traders in the commodities markets do with the “cheap” financing provided by the Fed? Why, buy gold among other real assets!



This would constitute a much worse scenario, than the laughed at arbitrage that Keynesians so proudly say today is not possible, from fiat currency to gold.

Under this scenario, the rest of the world would get their hands on the reserves of central banks (i.e. US Treasuries) to dump them in the Fed’s balance sheet via the repo market and recycle the US dollars it obtains with money market funds, to receive Fed debt! (See chart below). In the process, the rate the Fed would have to pay to raise US dollars from the shadow banking system would have to spiral, sending a wave of bankruptcies across the US dollar zone, including the Yankee market. The Fed would be forced to increase its currency swaps and at the same time continue doing unlimited quantitative easing. The currency swaps would be extended to delay the inevitable defaults in global US dollar denominated bonds and the quantitative easing would be necessary because, given the high interest rates and defaults, even with austerirty, the fiscal deficits would continue, as tax revenues fall driven by the collapse of activity.

And now, the cherry on the top: How would the Fed cover its net interest losses, between its debt and the US Treasuries it would repo? By issuing currency!! This quasi fiscal deficit would lead us to double-digit inflation and if left unaddressed, would end in hyperinflation. The process would end when the US dollar loses its status as a global reserve currency, a status that the Fed would seek to defend at all costs, repoing Treasuries in the commodities futures markets.



Final comments

For the sake of intellectual honesty, I want to end this exercise laying out the main assumptions:

The first and foremost critical assumption is that there will be a repudiation of US sovereign debt. The second assumption is that this repudiation will break the repo market enhancing counterparty risk in those markets where the funding is sourced from the repo market. I think these two assumptions are reasonable and the spike in the price of gold to $1,900/oz was in my view triggered first by the speculation and later by the confirmation of the downgrade to AA+ of the US credit rating by Standard & Poor’s. It has also seemed very curious to me that since that moment, and in a very strange way, the gold market became more volatile, with violent triggered sales, on no relevant news (But this is pure speculation, only proper to myself, of course).

The third assumption is that the Fed would intervene in the way I suggest. And this, indeed, is more debatable. It is certainly not the only way the Fed could act. There are other “versions”, but this is the more likely in my opinion and others have led to the same results, in other countries at other times (refer for instance, the “Cuenta de Regulación Monetaria” implemented by Argentina in 1978, where the central bank paid a subsidy on interest-bearing deposits and cashed a penalty on chequing accounts). Also, bear in mind that if this scenario unfolded, nobody would want to take the other leg of the long futures contracts on commodities (for instance, by 1981, the central bank of Argentina had to absorb and finance a loss $5.1BN in foreign exchange swaps from failed counterparties, refer Communication “A” 31 (May 6th, 1981).  At the end of 1982, this loss was estimated at $10BN), converting the markets into a one-way ticket to high inflation: The link between forward rates, commodity prices and inflation expectations would be lethal!

Finally, the fact that US policymakers have been busy lately trying to regulate money market funds is to me an indication that I am not alone with these concerns. After a failed attempt by SEC Chairman Mary Schapiro to regulate money funds, on November 13th, the Financial Stability Oversight Council put forth new recommendations to regulate the industry. Of course, some of these recommendations (see “minimum balance at risk”, on page 6 of the document) do not apply to Treasury money market funds, because US sovereign debt is not risky, right?


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Thu, 11/22/2012 - 09:40 | 3004289 FoolsAdvice
FoolsAdvice's picture

Be humble in your thankfulness today.

Thu, 11/22/2012 - 10:26 | 3004293 GetZeeGold
GetZeeGold's picture



It's a 106 miles to the endgame, we've got a full tank of gas, a half a pack of cigarettes. we're thankful, it's dark, and we're wearing sunglasses.........HIT IT!

Thu, 11/22/2012 - 12:03 | 3004555 Enslavethechild...
EnslavethechildrenforBen's picture

Endgame is when we the people are homeless, jobless, out of gas and with nothing to eat. Coming to your neighborhood soon. The criminals are enjoying watching us squabble for scraps from their mega yachts and private islands. They should be thankful the sheeple haven't woken up yet.

Thu, 11/22/2012 - 12:55 | 3004694 blunderdog
blunderdog's picture

Nah, that's just the START of the parallel society which'll be in competition with the government monopolies on "law."

There are tent-cities all over the US already.  It's worth looking at how a group of refugees like the Occupy yer Ass crew feeds themselves--it'll be handy to know if you find yourself joining the huddled masses someday.

Fri, 11/23/2012 - 04:50 | 3005848 Never One Roach
Never One Roach's picture

You just reminded me; it's almost end oif year record high bank bonus time. I wonder if these massive perks will be posted soemwhere?

Fri, 11/23/2012 - 05:10 | 3005855 old naughty
old naughty's picture

Well, time to balance those T Accounts...No ?

Thu, 11/22/2012 - 12:09 | 3004567 Svendblaaskaeg
Svendblaaskaeg's picture

"......HIT IT!"

Strike her! (Airplane)

Thu, 11/22/2012 - 09:51 | 3004307 BLOTTO
BLOTTO's picture

Both J.F.K. and A. Huxely died today.


November 22nd.


Thu, 11/22/2012 - 10:13 | 3004329 duo
duo's picture

note that the live oaks have grown to obscure the path of the fist shot.

Thu, 11/22/2012 - 09:55 | 3004309 BLOTTO
BLOTTO's picture

Woops...double-post...double trouble.


Im baked.


Thu, 11/22/2012 - 09:53 | 3004312 overmedicatedun...
overmedicatedundersexed's picture

the empty stomachs of the poor is the sword of God...those that rape the people, the 1%, who grow richer and more powerful- it will turn to dust in your mouths. 

THE FRN is debt owed the FED..the pols (.gov) think in the end they can default on the nations debt..the get out of jail free card.

what then changes? that my friends is unk. for so much is interlinked from 401K's to central banks assets across the globe..someone will be very unhappy perhaps many someones.

I hope many on ZH understand the USA has had many forms of money over our history, from silver and gold certs to treasury notes, bank notes....why could that not happen again? China knows it can.

Thu, 11/22/2012 - 12:02 | 3004553 Disenchanted
Disenchanted's picture



Quote below from:

From Fantasy To Fact: Four Ways The Fake Media Creates A False Reality


The latest mantra that the mainstream media is using in a domestic context is the "fiscal cliff." Media messengers for the tyrannical establishment do not discuss how the Federal Reserve's private money machine, Wall Street bailouts, and the military-industrial complex's wars have caused the skyrocketing of U.S. debt. They just keep repeating "fiscal cliff," and then offer bipartisan solutions that will benefit the banksters in power while destroying the living standards of middle class taxpayers and workers.

By focusing on the "fiscal cliff," rather than the Grand Canyon of Deception that is the unconstitutional Federal Reserve system, the mainstream media legitimizes the looting and pillaging of the American people by the transnational banksters.



Fiat justitia ruat caelum
Thu, 11/22/2012 - 12:42 | 3004668 Enslavethechild...
EnslavethechildrenforBen's picture

If any single country went on the Gold Standard today, all the other criminals paper would be worthless tomorrow. Clearly all the criminals are on the same team

Thu, 11/22/2012 - 13:41 | 3004798 MillionDollarBoner_
MillionDollarBoner_'s picture

...and who is the biggest accumulator of PMs in the world today?!?

Go figure ;o)

Thu, 11/22/2012 - 12:36 | 3004645 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

"...why could that not happen again?"

Because it would take someone in authority having the knowledge, brains, balls and who has the best interests of the Country and it's people at heart.

Are we fucked or what?

Happy Thanksgiving, maybe next year!

Thu, 11/22/2012 - 09:58 | 3004317 SheepDog-One
SheepDog-One's picture

In short, you can do whatever you want, people apparently like being debt slaves.

Thu, 11/22/2012 - 12:00 | 3004549 bonderøven-farm ass
bonderøven-farm ass's picture

"It's hard to free fools from the chains they revere....." ~ Voltaire

Thu, 11/22/2012 - 12:23 | 3004607 FeralSerf
FeralSerf's picture

It isn't a matter of liking, (or not) being debt slaves.  The "People" know nothing else.  This is by design.  They have been conditioned, educated by the public school system and MSM, brain-washed to know nothing else.

Do a poll amongst the ordinary people that you come in contact with.  Ask them what "Note" means in "Federal Reserve Note" or "This Note is Legal Tender for All Debts Public and Private".  I would bet that much less than half of them recognize that "note" in this context means a debt of the Federal Reserve.

Thu, 11/22/2012 - 14:03 | 3004866 unrulian
unrulian's picture

They still wouldn't know what that means

Thu, 11/22/2012 - 10:09 | 3004331 Jafo
Jafo's picture

Does it really matter whether it is the Fed that fumbles it or the politicians that fumble it?  The more that the Fed and/or the ECB juggles the more likely it is that something is going to be fumbled.  At some point someone is going to fumble it and that is when the systemic reset occurs.  That point is getting closer and closer.

Thu, 11/22/2012 - 10:42 | 3004391 Winston Churchill
Winston Churchill's picture

Whole lot of plates up in the air right now, and the jugglers are getting tired.

White and Black swans flocking prior to arrival.

The turkey in the White House doesn't help either.

Happy metaphor day.

Fri, 11/23/2012 - 11:24 | 3006311 TruthHunter
TruthHunter's picture

"The turkey in the White House doesn't help either."

Yeah, whats with this yearly turkey reprieve? Some celebrity turkey gets to

to live, while plebiean turkey gets served on the table?


They don't call it Turkey Auschwitz day for nothing!


Oh, you were talking about Obama? Never mind the edit, same sentiment works!

Thu, 11/22/2012 - 10:19 | 3004340 doomandbloom
doomandbloom's picture

waiting for banzai's version

Thu, 11/22/2012 - 10:28 | 3004350 overmedicatedun...
overmedicatedundersexed's picture

the next NEW money is here now and it's plastic..will the tax units accept bet: those welfare benefits plastic cards are" like money man"..obuma bucks. the coins and paper FRN's we knew are soon gone. will PM's still have value? each card will start with the number 666.

Thu, 11/22/2012 - 11:25 | 3004474 akak
akak's picture

I was talking to my local bank manager yesterday, and she told me that traveler's checks are apparently now history, and no longer available ---- oh, and also that there is talk in the banking industry of charging customers fees for engaging in ANY form of physical cash transaction.  Welcome to the Borg Collective ...

Thu, 11/22/2012 - 12:37 | 3004654 Enslavethechild...
EnslavethechildrenforBen's picture

Precious Metals have absolutely no value at all. Period.

I'll be happy to take them off your hands for nothing so you won't have to pay someone to haul them to the dumps


Thu, 11/22/2012 - 13:52 | 3004828 ebworthen
ebworthen's picture


Look for the end of physical currency (bills and coins) much sooner than you would think possible.

Everything forcefully locked into a bank account, track-able and taxable down to the last penny.

Banks charging fees and a % cut for the privilege of them holding your money.

Thu, 11/22/2012 - 15:02 | 3004998 Overfed
Overfed's picture

Picture if you will that scenario coupled with upward rocketing food and fuel costs. A new combination debit/credit card comes out that gives that gives it's use a little "leeway" to run up debt when the bank account is empty. It's a whole new play on owing your soul to the company store.

Thu, 11/22/2012 - 16:39 | 3005141 andrewp111
andrewp111's picture

Once  they eliminate currency and coins, they will give money a "color" as a form of rationing to prevent hyperinflation. Food can only be purchased with food stamps, only rent credits can be used for rent, gas credits for gas, etc... and it will be global. Only the central bank cartel moneychangers will be able to convert one flavor of money to another, with heavy restrictions and a heavy cut for TPTB.  The full global "mark of the beast" digital currency will last for 3 years and 7 months before all hell will break loose.

Thu, 11/22/2012 - 19:14 | 3005265 Stuntgirl
Stuntgirl's picture

Spain just illegalised cash payments over 2500€, yet no accompanying law regulating how much banks can charge for transfers was even discussed.

Meanwhile, the new Euro notes security measures were presented a few weeks ago. Old (???) Euros will be substituted for these new notes starting next year. Not all notes at the same time, for now, the lowest denomination, the 5€. It'll be interesting to see in terms of units issued.

Thu, 11/22/2012 - 10:26 | 3004347 buzzsaw99
buzzsaw99's picture

absurd premise and microscopic result-view. if mountainous meteorite, then commodity markets roiled. farce.

Thu, 11/22/2012 - 10:38 | 3004352 THE DORK OF CORK
THE DORK OF CORK's picture

A treasuary can just issue (taxable) central bank needed.


However it will have no call on resourses beyond its own political bounderies.

Oil does change many things.

Abe Lincoln essentially used domestic coal and turned it into raw currency which held its power.

Thu, 11/22/2012 - 12:08 | 3004566 Enslavethechild...
EnslavethechildrenforBen's picture

Paper backed by chicken eggs, tomatoe seeds, 3/4" gravel, anything would be better than paper backed by thin air

Thu, 11/22/2012 - 12:27 | 3004618 FeralSerf
FeralSerf's picture

". . . tomatoe . . ."

Dan Quayle, is that you?  Long time, no see!

Thu, 11/22/2012 - 12:31 | 3004631 Enslavethechild...
EnslavethechildrenforBen's picture


Thu, 11/22/2012 - 10:30 | 3004354 woggie
woggie's picture

the beast is on the gobble and all that matters is we're all headed for it's belly

Thu, 11/22/2012 - 10:33 | 3004359 rsnoble
rsnoble's picture

Fuck it im just a rat in a cage im gona eat turkey and drink beer all day.

Thu, 11/22/2012 - 10:35 | 3004366 Diesel Seven
Diesel Seven's picture

Good article. Too many PHD economists and politicians skipped the first paragraph of their high school econ texts . . . where economics is defined as the "science" of the efficient allocation of scarce resources. On a macro sense, fiat may be controlled, but it is not scarce. Commodities are the scarce resources that are the constraint to the sustainability of current economic policy.

Thu, 11/22/2012 - 10:46 | 3004383 lieto
lieto's picture

Ratings are garbage, throw them out with the turkey carass.

Real things are the only things that are really AAA starting with gold.

Paper and derivitives will do us in.

God help us.

Happy Thanksgiving to all at Zero Hedge.

Thu, 11/22/2012 - 11:04 | 3004425 JustObserving
JustObserving's picture

Rich nations have arrogated the power to issue ratings.  Then they rate themselves highly lowering borrowing costs and developing countries lowly, imposing a tax on them.  It is theft from the poor to the rich - but that is the organizing principle of the world economy today.

Dagong rates USA as A, the same level as Russia or South Africa.  But, of course, Western nations will not recognize Chinese or Indian or Brazilian rating agencies - it will be an abrogation of Western power to loot developing countries.

Interestingly, Dagong claims that the size of US economy is padded up by fake financialization:

"In addition, due to the high economic financialization, more than half of the profits in the real economy come from the returns of financial activities. If we exclude the factor of virtual economy, the U.S. actual GDP is about 5 trillion U.S. dollars in 2009, per capita GDP about $ 15,000."


Thu, 11/22/2012 - 10:41 | 3004387 Shevva
Shevva's picture

You know your funked when, food stamps>dollars.

Back of the line paper boy.

Thu, 11/22/2012 - 10:45 | 3004395 Diesel Seven
Diesel Seven's picture

One last thought for this US Thanksgiving day: a study conducted by the College of Domesticated Animal Culinary Science found the 97.64% of cats found in the homes of deceased owners fed on their owner's corpse. Enjoy your turkey and beware of your cat.

Thu, 11/22/2012 - 11:53 | 3004534 Zaydac
Thu, 11/22/2012 - 10:48 | 3004407 gjp
gjp's picture

The 'market' will not reach its end game through the internal shenanigans of the financial players / central bank with repos and derivatives etc. ... the end game will only be wrought when society repudiates the currency and nobody takes the paper anymore.  Hard to imagine that happening, and that's why the 1% can squeeze so much through their control of fiat, but it's not limitless, and the exponential path fiat is on leads me to believe the US dollar system won't make it to 2015 in its current form.

Thu, 11/22/2012 - 10:51 | 3004413 Confundido
Confundido's picture

True, but the society will start repudiating when they see the cost of food and other commodities spiralling. The post explains one of the ways that can happen. Once it happens, what you have in mind will happen.

Thu, 11/22/2012 - 10:56 | 3004429 agNau
agNau's picture

That would be "Dollar crises and plan to extend it" honorable Harken.

Hope they pass it soon, so we may see what's in it!

Give thanks today for what you had.

Thu, 11/22/2012 - 11:46 | 3004517 RobD
RobD's picture

Hmmm I knew the door that Chief Justice Roberts opened would be exploited. Another mandate(i.e. tax) that you have to pay. Fucking thieves.

Thu, 11/22/2012 - 13:45 | 3004813 ebworthen
ebworthen's picture

Did you mean "honorable Baron Harkonnen"?

Thu, 11/22/2012 - 18:16 | 3005214 Urban Redneck
Urban Redneck's picture


Harkin aint honorable.

He wants an even bigger "lock box" to pick and he wants to pay banksters big bucks to do so.

Furthermore, he fails to even mention that ZIRP destroys risk appropriate pension investment options, and consequently would do nothing but create another fraudulent state sanctioned PONZI scheme.

What is beyond disingenuous, to the point of kleptocratic, is the intentional conflation of the second and third. IRAs and 401(k)s are NOT pensions, they are SAVINGS. 

Here in Switzerland, the three pillar pension system is law and functions, and it makes Harkin's broken three-legged stool analogy seem apt and humorous.  However, his implied sacrifice of personal savings and wealth to prop up a failed government and failed financial services providers is anything but humorous.

Harkin aint honorable.   Neither is his family.   Neither is anyone who works for him.


Thu, 11/22/2012 - 20:43 | 3005407 RockyRacoon
RockyRacoon's picture

From the Harken "plan"....  I smell a rat.  A big, slobbering, mean, trecherous rat:

Over the past two years, the Senate Committee on Health, Education, Labor and Pensions
has held a series of hearings on the retirement system.18 The hearings have taken a hard look
at key aspects of the retirement system, and they have provided a clear picture of the kinds of
changes we need to ensure the system can work for everyone. Those changes can be boiled
down into the following four basic principles:
1. The retirement system should be universal and automatic.
Most people realize that they should be preparing for retirement, but it is often difficult
because they have more immediate concerns, like paying the bills and putting food on
the table. And people are frequently overwhelmed by the complexity of the financial
decisions they have to make.19 However, when saving is easy and automatic, people are
much more likely to put money aside.20 By ensuring that every American has access
to a retirement plan at work and making participation automatic, we can drastically
reduce the retirement income deficit and promote retirement security.
2. The retirement system should give people certainty.
The retirement system should give people certainty that they will have a reliable source
of income in retirement. It needs to provide people with the opportunity not just to
save for retirement but also to secure a predictable stream of retirement income that
they cannot outlive.
3. Retirement is a shared responsibility.
Individuals, employers, and the government all have a role to play in ensuring that
every American has the opportunity to retire with dignity and financial independence.
It is unfair for any one party to shoulder the burden alone.
4. Retirement assets should be pooled and professionally managed.
The retirement system should not force people to become investment experts. Most
people simply do not have the background, interest, or time to manage their retirement
funds effectively. Instead, it should give everyone access to prudent, professional asset
management and allow people to pool their assets with others to reduce costs and risk,
including the risk of living longer than expected.
These four principles should form the framework for developing comprehensive solutions
to the retirement crisis. With a retirement income deficit of $6.6 trillion, the crisis is simply
too big to ignore. We cannot continue to stand idly by as average Americans struggle to save
for retirement and our seniors continue to slip into poverty.

Thu, 11/22/2012 - 20:50 | 3005422 akak
akak's picture

I could almost have taken all of that disingenuous, Big Brother bullshit as just so much parody .... almost .....

Thu, 11/22/2012 - 23:27 | 3005585 RockyRacoon
RockyRacoon's picture

Item #3 is the most odious.  Shared my ass.  We all know what that means.

Thu, 11/22/2012 - 23:34 | 3005600 akak
akak's picture

And Cain did ask the Lord (i.e., the US federal government) "Am I my brother's keeper, that I must pay for his food and his housing and his medicine and now his savings too?"

And the Lord replied "Yes, you are indeed.  From each according to his ability, to each according to his need."

Thu, 11/22/2012 - 11:00 | 3004432 Mississippi Truth
Mississippi Truth's picture

At this time oil is the only currency we have and it will be our saving grace....... In one move we could turn this country around. This would not only halt our further slip into 3rd world country status but create jobs, boost this shattered and scared economy, gain the poorest of our nation buying power immediately with just the reduction of gas prices, and make a huge statement to the extortionists in the middle east. The truth is less than 4% of our reserve would clear us of debt along with gaining back all of our losses regarding the dollar..... unless he wants us to crash... In that case, along with the many other horrendous additions to what our future will hold at that point, we will be bought out as a country by the people that liberals hate the most. The only fear I have is once that cork is popped...... What kind of damage would he do with the greatest asset this country has other than land and people?

Thu, 11/22/2012 - 11:14 | 3004455 agNau
agNau's picture

There is no light switch for oil.
Continuing exponential currency creation (and future repatriation of currency)will burst any thoughts of salvation from said massive reserves of oil. Only with painfully higher prices of oil is that recovery worthwhile. With higher oil prices comes hand in hand higher everything prices.
Perhaps with higher inflows of hard assets into the country in trade for that oil, the dictator will allow more of us to live out of his stash in the decades ahead.

Thu, 11/22/2012 - 12:13 | 3004575 Enslavethechild...
EnslavethechildrenforBen's picture

We are out of fucking oil. What, did you think "fracking" was actually going to produce more than it costs?

Also, the price of keeping the power grid up is going to be ten thousand Fukushima's. Your great grand children will have three eyes because of your short sightedness

Thu, 11/22/2012 - 13:14 | 3004743 Ginsengbull
Ginsengbull's picture

I have a few gallons of used motor oil, if anyone is interested.

Thu, 11/22/2012 - 20:46 | 3005415 RockyRacoon
RockyRacoon's picture

Your selfless generosity brings a tear to my eye.

Thu, 11/22/2012 - 12:42 | 3004667 FeralSerf
FeralSerf's picture

"Only with painfully higher prices of oil. . . "

Prices measured in what unit?  US dollars?  How is that meaningful?

"With higher oil prices comes hand in hand higher everything prices."

Then there's really not higher prices afterall. It's all relative.   Comprende?

Gasoline still costs about the same as it did in 1964, a silver quarter for a gallon.  

Thu, 11/22/2012 - 14:02 | 3004861 Walter_Sobchak
Walter_Sobchak's picture

too bad wages don't rise fast enough to meet prices, numbnuts.  in fact real wages have gone down while prices keep rising.  but keep sleeping and taking your blue pills.

Thu, 11/22/2012 - 14:34 | 3004949 FeralSerf
FeralSerf's picture

Whose "real wages"?  The Washington bureaucrats and residents of the Hamptons?  Or the poor bastards that your red (and blue) pill friends employ in their fast food restaurants, Walmart and the meat packing plants?

I found it difficult (but not impossible) to feed my family and buy gasoline to get to work on my salary 50 years ago.  It's not any more difficult now than it was then if you still have a traditional skilled job that American labour used to excel at (that hasn't been sold to the Chinese by the Koch Bros. or one of their ilk).

Thu, 11/22/2012 - 11:01 | 3004433 boooyaaaah
boooyaaaah's picture

Another Solution

Brought to you by

William Black - Bill Moyers -- Patric Byrne

See video 1/2 of the way down

Thu, 11/22/2012 - 11:02 | 3004436 boooyaaaah
boooyaaaah's picture


Categorized | Our Captured Federal Regulator the SEC, The Deep Capture Campaign Professor William Black Flunks Bethany McLean for Giving Hall Passes to Goldman Sachs and Wall Street Posted on 18 August 2012 by  

I first heard of William K. Black over 20 years ago as the regulator who had stood up to the “Keating 5? and come out the hero of the S&L crisis (in which I gained some early experience: hence my awareness of him). Later, as a professor of law and economics at University of Missouri in 2005, Black wrote a book about control fraud,  “The Best Way to Rob a Bank is to Own One,” available here. You should read it.

Yet I had never heard Black speak until one night in April, 2009, when he appeared on Bill Moyers. How refreshing it was to see the tabloid analyses be at last replaced with discourse about the system itself (and remember that while the following claims now seem barely controversial, in 2009 most were still heretical):  Banksters. Fraud versus trust. Moral hazard and pathological incentives in the financial system (e.g., lending firms’ Ninja Loans + investment bankers pooling mortgages + captured ratings agencies = toxic waste = systemic risk).  FBI warned on mortgage fraud in 2004, but the Machine failed to react. Bank lobbyists. Glass Steagall. Brooksley Born and Credit Default Swaps. Bailout of the elites. Bank CEOs. Cover-up. Strategy to keep the public from understanding how bad the problem is. Prompt Corrective Action Law: Nationalize zombie banks. WHERE IS OUR PECORA COMMISSION? Scared of insolvent banks being revealed. Mimicking the strategies of Japan’s Lost Decade.  AIG-to-Goldman bailout.  Increasingly horrific give-aways of taxpayer money. Stop hiding the losses.  The current bleak numbers still vastly underestimate the fraud problem.

Black had me at “control fraud.”  I leave it to the community of readers to judge the familiarity of the other claims he made:



Alas, Bethany McLean and I are not so sympatico, and in fact have had a challenging relationship. Her side of the story is told  here:

Is Overstock the new Amazon?


DeepCaptures’ side, here:

Bethany McLean: your benefit of the doubt is hereby revoked

Rocker Partners and Bethany McLean: the smarmiest guys in the room

David Einhorn, Cheryl Strauss, and the “Unavailable” Bethany McLean

One interesting aside: in the last year I have had numerous journalists bring up to me Bethany’s emails wherein she schemes with a hedge fund (emails obtained by DeepCapture from a New Jersey courthouse and published in Bethany McLean: your benefit of the doubt is hereby revoked). These journalists have told me that they know about it and see it as a tremendous breach of journalistic ethics. So there it sits, an open secret, although not, apparently, a secret anymore, but just something about which one whispers.  In a similar fashion, Jim Cramer’s video sat on DeepCapture for a couple of years drawing no comment, until Comedy Central confronted Cramer with it.

In any case, this week on CNBC Maria Bartiromo invited William Black and Bethany McLean on as guests to discuss the Justice Department’s decision not to pursue criminal charges against Goldman Sachs for its role in the financial crisis in general, and for selling financial products from whose specific failure Goldman profited. Truly remarkable performances were delivered by all, albeit in different ways.

Black responds to Maria’s opening by stating the obvious: Generating liar loans and packaging them for resale is fraud. There is no evidence that there was a significant federal investigation, or that a grand jury was convened. There is an absence of  accountability.  Goldman has been given a pass by Obama and Bush.

Bethany responds with bromides delivered with a dulcet confidence intended to suggest that she knows what she is talking about. Her analysis: I don’t think anybody is giving  Goldman Sachs a pass to be honest. I think this is a tough case to make. I do think integrity needs to be restored to the financial system, but you don’t do that by bringing a case that shouldn’t be made. Goldman Sachs didn’t make liars’ loans -  they actually among the Wall Street firms were not on the ground making mortgages. So if you can’t bring a case against Countrywide how can you possibly bring a case against Goldman Sachs?  … From an overall perspective Goldman Sachs as a firm lost money in the mortgage business. Awfully tough to bring that case to a jury and win, I think… I’m not giving Goldman a pass or any of Wall Street a pass. I think I’m with Bill on that. But I don’t think this was a criminal case.  I think Goldman’s customers should make the call: Do we want to do business with this firm? …

These vapid apologetics draw Maria Bartiromo’s stammering, nodding approval: As you said earlier, stupidity does not mean criminality.

Bethany: Greed and venality do not make a criminal case.

There are two remarkable items about Bethany’s performance. First, note the air of confidence she exudes when in fact (as will become clear) she has essentially no idea of what she is talking about (hence the expression “a journalistic understanding”). Second, note that Bethany is apparently unaware that the man she is debating on-air, Professor William K. Black, knows a lot about what she is talking about. In fact, he is perhaps the nation’s foremost expert on precisely the issue she and Maria are trying to spin to Goldman’s behalf: the federal prosecution of white collar crime at financial institutions.

Professor Black continues like a gentle professor with two weak students: Critical area here…. First, I’m the type of person that was involved in training the FBI agents, the assistant US attorneys, serving as the expert witness in these successful prosecutions where we had a 90% successful rate. Um, clearly people are not understanding fraud mechanisms. In accounting control fraud, the firm – loses – money. Indeed that is one of the defining elements because the way you maximize it is by making bad loans. And Goldman did make liar’s loans, it did it through subsidiaries, and Goldman purchased loans that it knew to be fraudulent, and it packaged them and sold them as if they were good loans. This belief that this is the first virgin crisis in which fraud was not driving it is amazing. Nobody believes it about the savings and loan debacle. No one believes it about the Enron era fraud. And given what you’ve seen in the last three weeks, how can you believe it out of the current…”

Bethany appears to panic slightly then, unable to respond substantively to a single one of Black’s arguments, simply locks into a repetitive, droning regurgitation of the talking points she just delivered a moment earlier (which amplifies my suspicion that some Goldman PR flack gave them to her to memorize). Behold Bethany McLean’s verbatim analysis of legal culpability in the greatest financial collapse of our lifetime (so far):  

Maria, I think there was a hue and a cry and a lot of political pressure to bring charges in this case. And I think that if they could have, they would have. And I don’t think that any of our interests are served… I think it’s just as dangerous to bring a case that shouldn’t be made as to not bring a case that should be made. Neither one helps with the integrity of the financial system. I agree – peoples’ behavior during this crisis was unethical, it was abhorrent, it was every word you can come up with for ‘wrong.’ But if you are going to bring a case against Goldman Sachs you have to bring a case against every single other Wall Street firm as well as every mortgage originator as well as every home owner who lied on his or her mortgage application. You cannot single out one firm and say we are going to charge Goldman and we’re not bringing charges against everybody else. That’s wrong.

Maria Bartiromo: That’s a great point.

William Black (like a professor exasperated with dull students he can no longer humor): No, it’s not a great point. It’s a terrible point. You’ve got to start with somebody. Your first prosecution is always your first prosecution. And you can always say where there’s been an epidemic of fraud…”



Bethany’s nails-on-a-chalkboard apologetics have received a fair bit of shocked attention this week:

Columbia Journalism Review: “Bill Black goes on CNBC and shreds Maria Bartiromo and Bethany McLean on whether Goldman Sachs (and others) could and should have been prosecuted for fraud related to the financial crisis…”

Bill Black vs Goldman Sachs Apologists

WATCH: Bill Black On CNBC Debates Wall Street Fraud-Deniers Maria Bartiromo, Bethany McLean

Bethany McLean Demonstrates her Profound Lack of Understanding of Control Fraud, Gresham’s Dynamics, and Justice: “In this painful CNBC segment, former Goldman Sachs employee Bethany McLean provides a heartfelt apologia for her much-maligned former employer. Bethany says it is time for us all to move on for the good of confidence in the economy…In the process of prostrating herself for GS, she demonstrates her complete lack of understanding of control fraud, Gresham’s Dynamics, and how white collar crime can be pursued.”

I think this interview was unusual in that her panic drew Bethany into baring her biases incautiously (though frankly, the first sentence she uttered the first time she called me in 2004 conveyed to me that she is a shill and a Mean Girl). Asserting without argument that  political pressure supported bringing charges against Goldman, Bethany appears literally incapable of considering the possibility that net political pressure ran in the opposite direction, and that in fact were it not for “political pressure” Goldman Sachs would have been prosecuted years ago.

But personally, I think Bethany is not really incapable of considering such a possibility, and that her adamancy thus has other motive.

Daily headlines disappoint with lack of prosecution, making clear that this will go down as history’s “first virgin financial crisis” (in Professor Black’s phrase) in which fraud played no role.  When you read these headlines, imagine Bethany McLean, or someone very much like her, standing in an oak-paneled room in Washington, DC, droning through the same set of talking points to some senior decision-maker, and that decision-maker slowly getting snowed in under the same dulcet non sequiturs as appear in this remarkable exchange.

This post was written by:
Thu, 11/22/2012 - 11:11 | 3004439 falak pema
falak pema's picture

if the US starts the ball by repudiating sovereign debt, it means all other first world countries can do it; and it means the private banking system implodes. 

Good bye WS. Its EITHER can kicking and eternal debt slavery of first world sheeple; like Greece today OR its sovereign debt jubilee and end of private sector banking. All the socialised debt has as counter party the off-shored corporate profits.

One or the other, has to win.

I still believe as a prerequisite the Treasury should end the FED monopoly, reinstate G-S; ban all naked derivatives; aka shadow banking OTC; then scuttle the FED. And take over the money printing monopoly itself BEFORE pulling the plug on PDs via debt repudiation. 

Thu, 11/22/2012 - 21:02 | 3005440 RockyRacoon
RockyRacoon's picture

On your last paragraph:  Point by point, it's too late for any of it.  Did you ever play with a classic spinning top?  The kind with the string you pull to get it started.   It spins wonderfully for a long time, entertaining everyone with it's steady, mesmerizing blending of colors.  Then it becomes unstable as it slows down, it begins to swing from side to side just before its side touches the floor.  Then it goes totally wild and unpredictable, this way and that, before it ends up spent... inaccessible under a piece of very heavy furniture.  Today is just a short time (since 2008) after the side of the top hit the floor for the first time.  Tomorrow will be hell to pay.

Thu, 11/22/2012 - 11:12 | 3004452 Robslob
Robslob's picture

The part that always confuese me as a bullion holder:

If US Dollars (phyisical not ddigital) became scarce (as in $1 Trillion in physical dollars versus $10 Trillion in digital dollars) how am I going to be able to "redeem my gold when I need to i order to get cash to buy stuff, assuming we do not go straight to a barter economy?

Just can't figure out how things work out after the collapse...

Thu, 11/22/2012 - 11:57 | 3004542 Ms. Erable
Ms. Erable's picture

After collapse but before implementation of a new monetary standard, your PMs will hold little practical value. Barterable items - food, smokes, booze, toilet paper, ammunition - will be of more use to you than 'money'.

Thu, 11/22/2012 - 12:15 | 3004581 Enslavethechild...
EnslavethechildrenforBen's picture

Gold for arable land

Thu, 11/22/2012 - 13:10 | 3004733 Ginsengbull
Ginsengbull's picture

It will go from dollars to ameros to gold links cut from jewelry chains.


Scales will be a hot market.

Thu, 11/22/2012 - 14:19 | 3004918 dinastar2
dinastar2's picture

The ultimate holder of your gold is not you; you are very naive to believe that a busted Government, a printing like crazy Federal Reserve, a US T bonds  market crashing with Chinese Japanese rushing to sell their T bonds, will let you FREELY exchange your gold for fiat money then go around shopping as if nothing dramatic ever happened. The one and only holder of your gold is your governement because it will be prohibite to own gold , or to exchange it, all physical gold will be confiscated : FDR did it in 1933 and it was only in 1974 that this law was canceled and US citizens were allowed to own gold.

Thu, 11/22/2012 - 15:00 | 3004996 nofluer
nofluer's picture

Yep. Owning physical gold in the US is analogous to having a 401k in Argentina.

Kirtchner confiscated all private pension funds, and I fully expect Obama or his successor (IF he ever leaves office) to do the same. Why would the US govt do this? Because the amount of funds nominally held in US Pension accounts is pretty close to equivalent to the total US national debt. (Actual at present - does NOT include contingent liabilities.) And the gold in private hands could possibly finance a switch to GBC... thus preserving the USD as global reserve currency, or more yachts for the elite and a reset of the Magic Money Machines in DC/NYC. Whichever.

Thu, 11/22/2012 - 18:27 | 3005224 Urban Redneck
Urban Redneck's picture

The money supply isn't made of gold anymore, and the last thing the FED or any other Power wants is a monetary system that they cannot expand (or contract) AT WILL.


They will come for your fiat/debt savings (401k/IRA) while claiming to protect you from the evils of Wall Street, and they will come for your guns while claiming to protect you from the evils of your neighbor.  


Both of these efforts will begin long before anyone in power tries to publicly seize privately held gold, and one of these two efforts will be their undoing.


Thu, 11/22/2012 - 11:15 | 3004457 Seize Mars
Seize Mars's picture

Hey all you wankers. Read this article, and then read it again. Read this thing carefully.

They don't teach this in government school.

Thu, 11/22/2012 - 11:19 | 3004466 mess nonster
mess nonster's picture

The autor's point holds, because anything with (or arbitrarily given) value can be arbitraged. As he points out, the mechanism gets more complicated, but if some differential profit can be found, it will be found.

Four things lead to tyranny, er, state central planning of the economy and a collectivist socio/economic model.

1. Peak Oil. Tight oil is already on the hubbert plateau, because of an economic coffin corner. Tight oil can't be profitably pumped below $95/barrel. Prices above $100/barrel reduce demand significantly enough and/or impact the rest of the economy to keep oil prices at or below the break-even point for tight oil. As TO drops off the right-hand side of the H-curve, the cost to pump goes up. Bye-bye tight oil. Hubbert controls our destiny with an iron fist.

It takes energy and machinery to service usury. No oil, no debt service, no economy.

2. A fall off a fiscal cliff (meaning a cutback of govt services and a tax hike) by any other name is still subject to the law of gravity. When taxes go up and services go down, the economy is squeezed- less jobs, less income, less ecnomic growth... that means less demand for oil, (Peak oil gets an economic boost), less debt service, more defaults, more deflationary pressure.

3.Obamacare. As more people are out of work, and make no money, they get put on the gov't dole, just when the gov't is experiencing less revenues (despite tax hikes), and more demands for services. Gov't is committed to QE-forever, and ZIRP. Stagflation has a picture. It is Wil-e-coyote running in air.

4. Destruction of the Rentier. All you Baby-boomers- kiss you retirement goodbye. All interest-derived income will evaporate in a climate of interest-free money. If you have to buy any growth stock, make it Purina, because that is what old people will be eating, or its gov't analog.

What will be the result of all this? Hyper inflation will not happen. Deflation will not happen What willl happen will be deflatin in the form of nazi-communism. It will be Collectivisation. First the 402k's get natinalized. then the unions get nationalized. Then all productive capacity gets nationalized. Then the debt is repudiated, and in the place of a fiat-debt-driven economy will be a central-planning totalitarian state, buttressed by the surveillance and police apparatus, and controlled by the RFID chipped credit ration card system.

Remember that the laws of economics can be temprorarily suspended by the gun. Power is the ultimate arbiter. Whoever controlls the power base (guns and thugs) will have the most successful arbitrage position. (Obama) The rest of us must fall back on some form of power that transcends death, or there will be no recourse save to take your chip and stand in your queue.

Happy Thanksgiving. Be grateful for what you have, and lay up your treasures somewhere else entirely.

Thu, 11/22/2012 - 11:42 | 3004510 Bicycle Repairman
Bicycle Repairman's picture

Have to agree with much of this.  However your falling for the "generational warfare" meme makes me laugh.  "All you Baby-boomers- kiss you retirement goodbye"?  LOL.  In that kind of scenario, kiss your entire future good bye, sonny.

And if you make a grab for my Purina, there will be consequences.

Thu, 11/22/2012 - 16:27 | 3005129 Lednbrass
Lednbrass's picture

Going to eat the next 40 years of seed corn instead of just 35?

Those behind you with a functional brain already know our futures are effectively gone, your threats are hollow. Oh no, threatening what we aready don't have- whatever shall we do?

Thu, 11/22/2012 - 15:13 | 3005017 nofluer
nofluer's picture

Then all productive capacity gets nationalized.


Sorry. Nazi Germany was fascist, not either communist or pure socialist. Productive capacity was "owned" by the private sector, controlled by the State. Yeah... it's a quibble but an important one. (Suggest "The Vampire Economy - Doing Business Under Fascism" by Gunter Reimann, Vanguard Press, 1939.)

Thu, 11/22/2012 - 16:30 | 3005134 Lednbrass
Lednbrass's picture

As a further quibble, it wasn't even controlled effectively by the state at all until Speer took over and at that point they were already close to destruction.

Thu, 11/22/2012 - 11:23 | 3004471 grid-b-gone
grid-b-gone's picture

Nice piece with some fresh concepts. 

It struck me though, that the forward-thinking citizen corollary to layers of fiat, leverage, shadow banking, and arbitrage is to double-up on that which is real and will survive a reset.

Take stackers, for instance. PMs are real, but its owners still live in the present and need to transact in fiat. Dollars in PMs do not replace dollars still needed for day-to-day expenses.

Paying down personal debt to prepare has the same effect of sucking up spending power. Dollars spent reducing debt are in addition to dollars needed for current financial needs.

Even for those who own homes and assets outright with the thought that they only need to cover property taxes to maintain ownership, fiat plus a post-reset stored wealth backup plan is needed.

It would seem that allowing PMs to be freely used as a legal transaction alternative would free up spending by the prudent who now effectively double-save to protect anything they don't want to lose in a reset.

The bottom line is still the same. Fiat soverignty and reserve currency status are needed to keep the system stable. If they pull back in time, preparation will have been wasted expense and effort.

For many, though, the bet remains that modern financial wizzards will be no more capable of pulling back than any historical entities who also pushed their envelopes to collapse.  

Central bankers did not earn their positions due to their resumes showing careers of prudence.

Thu, 11/22/2012 - 12:02 | 3004554 Icantstopthinki...
IcantstopthinkingaboutNINJAs's picture

Yes, food banks running low, what with 70% overweight and 40% obese, golly, I wonder why the food banks are low.


Endgame indeed...


"Attention! Attention!
All citizens are ordered to report to their District detention centers!
Do not return to your homes;
Do not contact anyone!
Do not use any cellular or GPS devices!
Surrender all weapons at once!
Attention! This way to the camps!

I woke up in a black FEMA box
Darkness was all around me, in my coffin
My dreams are all nightmares anymore
And this is what I dream every night

The Leader of the New World Order, the President of the United States
Has declared anyone now residing inside the US of A
Without the RFID chip, you're just an illegal alien
An enemy combatant of America, welcome to the New World Order

This is the end of the road; this is the end of the line
This is the end of your life; this is the...

A society in a society, inside the fence life as you know it stops
They got their rules of conduct and we got ours
Be quick or be dead, you crumble up and die, the clock is
Ticking so slowly and so much can happen in an hour

This is the end of the road; this is the end of the line
This is the end of your life; this is the Endgame

I learned my lessons the hard way, every scar I earned
I had to bleed, inside the day yard
A system of controlled movement, like a giant ant farm
Any time is long time, now you're not in charge of your time anymore

This is the end of the road; this is the end of the line
This is the end of your life; this is the end

The Ex-President signed a secret bill that can
Land a legal US Citizen in jail and the
Patriot act stripped away our constitutional rights
They say a Concentration camp just popped up, yeah, right!

Refuse the chip? Ha! Get persecute and beat by the
Tyranny of Mind control, for the mark of the beast
All rights removed, you're punished captured, and enslaved
Believe me when I say, "This IS the Endgame!""

Fri, 11/23/2012 - 01:17 | 3005722 groundedkiwi
groundedkiwi's picture

Be an optimist and tell yourself that the Patriot Act, the NDAA, and the Fema camps are for the Bankers.

Thu, 11/22/2012 - 12:06 | 3004557 foodstampbarry
foodstampbarry's picture

I got laid off two months ago, my credit rating sucks and I just got approved for  a Chase Visa card with a 3000.00 limit! America is back baby!

Thu, 11/22/2012 - 12:23 | 3004608 foxenburg
foxenburg's picture

anyone who thinks a country having a printing press means they cannot default etc would do well to read up on the fortunes of the zimbabwean central bank over the last 25 years or so.

Thu, 11/22/2012 - 12:54 | 3004692 FeralSerf
FeralSerf's picture

How many countries used Zimbabwe dollars as their reserve currency?

Thu, 11/22/2012 - 16:32 | 3005135 Lednbrass
Lednbrass's picture

True, but that only extends the life of the shell game- it does not change the end result.

Thu, 11/22/2012 - 12:23 | 3004610 Dr. Gonzo
Dr. Gonzo's picture

There's a reason the people in the U.S. had to go from free citizen valuing thrift, and control of their lives to moron consumers on food stamps who are powerless and in debt for life...If you owe money in clown bucks you still have to dance and hussle to pay it...Getting the public to drown themselves in clownbuck debt was the most clever way of ensuring a worthless irredemible currency last much longer than it should have. Otherwise people who have power (don't owe money, own their house and have positive savings) would have no use or interest in accumulating clown bucks to save and pass on to their kids. Amazing how smart people are who don't have mountains of debt crushing them. It's also why we have so much welfare because it's all so crooked and wreaks so much destruction on the people that the govenment knows it and distributes to the suckers  that it fleaces a safety net so they keep playing. It also allows them to borrow unlimited money for unlimited war. Best thing to do is just repuditate the entire fraud fiat system and prosecute the people in charge of it for subverstion and or high crimes and treason IMHO.

Fri, 11/23/2012 - 04:31 | 3005841 GoinFawr
GoinFawr's picture

+1 for Frogmarchism!

Thu, 11/22/2012 - 12:29 | 3004624 blindman
blindman's picture

21 November 2012
Chris Hedges and Marc Maron On Break Room Live
"When I despair, I remember that all through history the ways of truth and love have
always won. There have been tyrants, and murderers, and for a time they can seem
invincible, but in the end they always fall. Think of it--always."

Mohandas K. Gandhi
have a (good and thankful) day .

Thu, 11/22/2012 - 13:01 | 3004708 sasebo
sasebo's picture

Seems that the true REALITY is beyond the comprehension of even the delusional Keynesians ---- in fact they don't even have a clue about what's really going on with the stupid fed.

Thu, 11/22/2012 - 13:38 | 3004788 ebworthen
ebworthen's picture

The chart of reserve currencies from Portugal to France to the U.K. to the U.S. is instructive.

China moving into Africa and the Middle East and building it's Navy is a harbinger; the rise of Asia is the end of the U.S. Dollar world currency reserve status.

Thu, 11/22/2012 - 15:48 | 3005070 nofluer
nofluer's picture

"one need not fear fiscal deficits and debt provided one has monetary sovereignty…”

I first became aware of the idea of "Monetary Sovereigns" (MS) about a year ago in a comment thread. Following soon after was the awareness of the "new" economic theory of MMT - aka Modern Monetary Theory. So I looked into it. I was told by one of the people who dreamed up this fancy bit of BS that "There is no constraint on a MS's ability to print currency" Thus, the "expert" said that a MS cannot go broke, and will always have as much money to spend as it wishes.

I responded that as far as they went, no constraints on printing, they were mostly correct. But the flaw in the theory is not the printing, but in the ability to convince others to accept this paper as something that has value - something that they would be willing to exchange goods or services for. ie a MS can print money - but that doesn't mean that anyone has to TAKE it.

Of course, the proponent sneered at my comment because of course the MS is a government and if it tells the people to take their worthless paper in exchange for value, of course they would have to do so. At that point, I decided that proponents of MMT are cognitively challenged and gave up trying to teach them anything. For those who might have missed it, forcing a citizen to provide value for worthless MMT print-until-you-run-out-of-ink-and-paper "money" is theft.

Thu, 11/22/2012 - 16:39 | 3005143 Lednbrass
Lednbrass's picture

The idea that a huge black market will spring up where people just barter real goods and services will make a strong comeback never occurs to any of them.

I have also never gotten a satisfactory answer from any of them on what will happen when the population realizes that under their theory there is nothing to stop them from just quitting work and taking newly created currency from the government. It would only require electing people who would give them ever larger amounts of cost free government largesse and if our political class has shown a willingness to do anything it is exactly that.

Thu, 11/22/2012 - 21:22 | 3005470 RockyRacoon
RockyRacoon's picture

You are right about the black markets making a strong comeback.  I can only add that those markets will have a currency of their own, not just commodity-for-commodity barter.   Today, in most real farmers markets (not those in urban areas that sell tomatoes from Mexico and green beans from a shipping container) a junk silver dime or silver quarter will be gladly taken in trade for its spot value.  It is happening already.   I saw one merchant with his handy pocket-guide cheat sheet for conversion of silver coinage to fiat "value".   There are fools in the world but most of them seem to cluster in and about Washington DC.

Thu, 11/22/2012 - 16:07 | 3005104 Drachma
Drachma's picture

I wish I could loan money I never had and book it as an asset.

Fri, 11/23/2012 - 04:51 | 3005850 Never One Roach
Never One Roach's picture

Excellent article! Please keep us updated with your insightful analyses.

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