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Guest Post: The Fed Can Only Fail

Tyler Durden's picture





 

Submitted by Chris Martenson of Peak Prosperity,

The basic predicament we are in is that the current crop of leaders in the halls of monetary and political power do not appear to understand the dimensions of our situation.

The mind-boggling part about all this is that it's not really all that hard to grasp.

Our collective predicament is simply this: Nothing can grow forever.

Sooner or later everything must cease growing or it will exhaust its environs and thereby destroy itself.  The Fed is busy doing everything in its considerable power to get credit (that is, debt) growing again so that we can get back to what they consider to be "normal."

But the problem is -- or the predicament I should more accurately say -- is that the recent past was not normal.  You've probably all seen this next chart.  It shows total debt in the U.S. as a percent of GDP:


(source)

Somewhere right around 1980, things really changed and debt began climbing far faster than GDP. And that, right there, is the long and the short of why any attempt to continue the behavior that got us to this point is certain to fail.

It is simply not possible to grow your debts faster than your income forever. However, that's been the practice since 1980; and every current politician and Federal Reserve official developed their opinions about 'how the world works' during the 33 year period between 1980 and 2013.

Put bluntly, they want to get us back on that same track and as soon as possible. The reason?  Because every major power center, be that in DC or Wall Street, tuned their thinking, systems and sense of entitlement during that period. And, frankly, a huge number of financial firms and political careers will melt away if/when that credit expansion finally stops.

And stop it will; that's just a mathematical certainty. It's now extremely doubtful that the Fed or DC will willingly cease the current Herculean efforts towards reviving this flawed practice of borrowing too much, too fast. So we have to expect that it will be some form of financial accident that finally breaks the stranglehold of failed thinking that infects current leadership.

The Math

As a thought experiment, let's explore the math a little bit to see where it leads us. After all, I did just say that a poor end to all this is a "mathematical certainty", so let's test that theory a bit. I think you'll find this both interesting and useful.

To begin, Total Credit Market Debt (TCMD) is a measure of all the various forms of debt in the U.S. That includes corporate, state, federal, and household borrowing.  So student loans are in there, as are auto loans, mortgages, municipal and federal debt. It's pretty much everything debt-related.

What it does not include, though, are any unfunded obligations, entitlements, or other types of liabilities. So the Social Security shortfalls are not in there, nor are the underfunded pensions at the state or corporate levels. TCMD is just debt, plain and simple.

As you can see in this next chart, since 1970 TCMD has been growing exponentially and almost perfectly, too (the R^2 is over 0.99 for you science types):

I've pointed out the tiny little wiggle that happened in 2008 - 2009 which apparently nearly brought down the entire global financial system.  That little deviation was practically too much all on its own. 

Now debts are climbing again, at a quite nice pace. That's mainly due to the Fed monetizing US federal debt just to keep things patched together.

As an aside, based on this chart, we'd expect the Fed not to end their QE efforts until and unless households and corporations once more engage in robust borrowing. The system apparently 'needs' this chart to keep growing exponentially or it risks collapse.

Okay, one could ask: Why can't credit just keep growing? 

Here's where things get a little wonky. But if you'll bear with me, you'll see why I'm nearly 100% certain that the future will not resemble the past.

Let's start in 1980 when credit growth really took off. This period also happens to be the happy time that the Fed is trying to (desperately) recreate.

Between 1980 and 2013 total credit grew by an astonishing 8% per year, compounded.  I say 'astonishing' because anything growing by 8% per year will fully double every 9 years.

So let's run the math experiment as ask what will happen if the Fed is successful and total credit grows for the next 30 years at exactly the same rate it did over the prior 30.  That's all. Nothing fancy, simply the same rate of growth that everybody got accustomed to while they were figuring out 'how the world works.'

What happens to the current $57 trillion in TCMD as it advance it by 8% per year for 30 years?  It mushrooms into a silly number: $573 trillion.  That is, an 8% growth paradigm gives us a tenfold increase in total credit in just thirty years:  

For perspective, the GDP of the entire globe was just $85 trillion in 2012.   Even if we advance global GDP by some hefty number, like 4% per year for the next 30 years, under an 8% growth regime U.S. credit would be twice as large as global GDP in 2043(!)

If that comparison didn't do it for you, then just ask yourself: What exactly would US corporation, households and government borrow more than $500 trillion for over the next 30 years? The total mortgage market is currently $10 trillion, so might the plan include developing an additional 50 more US residential real estate markets?

More seriously, can you think of anything that could support borrowing that much money? I can't.

So perhaps the situation moderates a bit and instead of growing at 8%, credit market debt grows at just half that rate. So what happens if credit just grows by 4% per year? 

That gets us to $185 trillion, or another $128 trillion higher than today -- a more than 3x increase:

Again, What might we borrow (only) $128 trillion for over the next 30 years? 

When I run these numbers I am entirely confident that the rate of growth in debt between 1980 and 2013 will not be recreated between 2013 and 2043. With just one caveat: I've been assuming dollars remain valuable. If dollars were to lose 90% or more of their value (say, perhaps due to our central bank creating too many of them?), then it's entirely possible to achieve any sorts of fantastical numbers one wishes to see.

Think it could never happen?

Conclusion (to Part I)

This is the critical takeaway from all the math above: for the Fed to achieve anything even close to the historical rate of credit growth, the dollar will have to lose a lot of value.  I truly believe this is the Fed's grand plan, if we may call it that, and it has nothing to do with what's best for the people of this land. Instead, it's entirely about keeping the financial system primed with sufficient new credit to prevent it from imploding.

That is, the Fed is beholden to a broken system; not anything noble.

In Part II: The Near Future May See One of The Biggest Wealth Transfers In Human History, we dive fully into the logic why GDP growth is very unlikely to support the rate of credit expansion the Federal Reserve wants (more accurately: needs). And what will happen if it indeed doesn't? A lot of painful, awful things -- but central among them, a currency crisis.

Amidst the ensuing unpleasantness will be an awakening within today's hyper-financialized markets to the huge imbalance now existing between paper claims and ownership of real things. A massive wealth transfer from those with 'paper wealth' (stocks, bonds, dollars) to those owning tangible assets (the productive value of which can't easily be inflated away) will occur -- and quickly, too.

Suggesting the key objective for today's investor is answering: How do I make sure I'm on the right side of that wealth transfer?

Click here to access Part II of this report (free executive summary; enrollment required for full access).

 


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Fri, 10/25/2013 - 22:05 | Link to Comment zorba THE GREEK
zorba THE GREEK's picture

Looking around at the jobs market and the increase in foodstamps in the last 5 years,

I would say the Fed has already failed.

Fri, 10/25/2013 - 22:31 | Link to Comment markmotive
markmotive's picture

Got your McJob?

Next up is the fiscal cliff.

Peter Schiff on how to spot the edge of the cliff:

http://www.planbeconomics.com/2013/10/the-real-fiscal-cliff-how-to-spot-...

Fri, 10/25/2013 - 23:15 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Boris on spot edge of cliff... see two crazy lady drive blue 1966 Thunderbird convertible full throttle.

Fri, 10/25/2013 - 23:23 | Link to Comment yogy999
yogy999's picture

Boris,

Thank you so much for bringing smiles on my face during these horrific time. You are as funny as MillionDollarBonus, (albeight in a different way):-) God Bless you my friend!!

 

You are always welcome at my home!!

 

Fri, 10/25/2013 - 23:32 | Link to Comment SafelyGraze
SafelyGraze's picture

Gideon Gono for fed chair

Sat, 10/26/2013 - 01:51 | Link to Comment flacon
flacon's picture

The more they print the less money there is. QED. Same problem happened in Germany. It dumbfounds the pH Dees but that's what happened. So they print even more and even less money is available. So they print even more and even less is available. So they print enough money until it is worth less than they printed it for, so the people burn money to keep themselves warm. But still there isn't enough... 

 

Keyens... destrying mankind one dollar at a time until mankind sacrifices itself at the altar of money and is terminated in an epic battle of man vs. money. 

 

Money wins when there is nobody left alive to use it, then money itself dies. Our goal is to keep at least one male and one female alive... 

Sat, 10/26/2013 - 05:31 | Link to Comment AldousHuxley
AldousHuxley's picture

fed failed when gold prices skyrocket

 

meaning bunch of PhDs working long hours with the best tools available can't beat simple old bar of shiny metal.

Sat, 10/26/2013 - 04:56 | Link to Comment Seer
Seer's picture

Their ONLY goal was to prolong the collapse.  While some may view this as being bad, I believe that it was the only thing that the System COULD do else it would have ceased to be The System (TPTB require the System to survive, in which case they're going to do all they can do to keep the game going for as long as they can- but, as Martenson has been pointing out for quite some time now, the game is going to run out).  I'm NOT endorsing any of it, just trying to rationalize why TPTB are doing what they are doing: I do NOT believe that they're wantingly "destroying" the system that has allowed them to ride high; our infrastructure is so HUGE that TPTB have no place to go to escape its fall.

Yeah, there are, like at any other point in time, carpet-baggers, opportunists (hell, I see such people here on ZH).  People do what people do...  But on the whole I believe that most of TPTB are trying to pilot the crashing plane (vs. bailing out and not telling the passengers).  If anyone is to survive I'd hope that the focus would be on the failures of the plane (seek out the engineers*) more than on the pilots, who might have done only a so-so job of crash landing it.

* Some people might believe the engineers to be the originators of the Fed, and while this is clearly PART of the system, it's not the begining of it's bad design.  I'm pretty sure that Martenson would agree here, that the growth paradigm existed way before the Fed was even a thought in anyone's brain.

The Fed is a symptom.  Kill the Fed and you still have the disease.

Sat, 10/26/2013 - 07:02 | Link to Comment highly debtful
highly debtful's picture

A thoughtful and interesting post. Thank you for that.

Sat, 10/26/2013 - 10:55 | Link to Comment spinone
spinone's picture

Excellent post.  I would add one further concept: The dollar is debt saturated.  Most of the people in the US can't or won't assume more debt.  They are already full up, or the last crisis destroyed their collateral.  In a debt based fractional reserve currency like the dollar, if people won't borrow more the currency is finished.  The debts have to be forgiven, but the debts are TPTB assets.  They want to stay rich and keep their assets, so they won't allow a jubilee.  So we are stuck at a point where the Gov has to go into debt to keep the dollar machine going, and the Fed has to purchase the Treas debt issued to keep interest rates low enough to be rolled over ad infinitum.  This is the endgame for the dollar, its just an issue of how long they can keep the monopoly game going once they own all the hotels and properties.

One alternate outcome I see is that the Fed monetizes all TPTB debts and becomes the bad bank, and they pass a jubilee and wind down the Fed (who better to be the patsy than Yellen?).  That way TPTB have assets other than debts, and the people are debt free to borrow again.  This would require a new (and probably less valuable) dollar.  It may be the currency crisis that Martenson is speaking of.

Fri, 10/25/2013 - 22:10 | Link to Comment LetThemEatRand
LetThemEatRand's picture

Fuck You BernYellen.

Fri, 10/25/2013 - 23:23 | Link to Comment OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Abu BenBoobie

 

I can't remember where that's from but I think it was in a movie when I was growing up

Sat, 10/26/2013 - 00:02 | Link to Comment americanreality
americanreality's picture

Yep, Hardware Wars.  Augie Ben Doggie.  Great movie.

Fri, 10/25/2013 - 22:16 | Link to Comment Running On Bing...
Running On Bingo Fuel's picture

MOAR Fiat! Feed ME FED!

Fri, 10/25/2013 - 22:17 | Link to Comment NoDebt
NoDebt's picture

So..... buy stocks?  Hey, they're a claim on ownership, right?  Bonds/Debt is just a promise, not ownership.

Oh yeah, and that gold thing.

Fri, 10/25/2013 - 22:28 | Link to Comment Frozen IcQb
Frozen IcQb's picture

...and political power do not appear to understand the dimensions of our situation.

 

They know what's going on but don't give a fuck

Fri, 10/25/2013 - 23:13 | Link to Comment NoDebt
NoDebt's picture

Agreed.  Even they couldn't be that blind.  They know.

Sun, 10/27/2013 - 00:18 | Link to Comment Nick Jihad
Nick Jihad's picture

I don't think they know. Look at the stuff Krugman writes - more stimulus is the key to recovery says he, and if it doesn't work, that just means we didn't spend enough.  Look at the talking heads on PBS - "austerity didn't work in Europe, and it won't work here" is what they truly believe. And if you point out that we are following Japan's path, they just say "Japan is doing fine, isn't it?"  No windshield in sight.

Fri, 10/25/2013 - 22:29 | Link to Comment Hedgetard55
Hedgetard55's picture

"This is the critical takeaway from all the math above: for the Fed to achieve anything even close to the historical rate of credit growth, the dollar will have to lose a lot of value.  I truly believe this is the Fed's grand plan, if we may call it that, and it has nothing to do with what's best for the people of this land. Instead, it's entirely about keeping the financial system primed with sufficient new credit to prevent it from imploding."

 

     You're 4 years late and a trillion dollars short, asshole.

Sat, 10/26/2013 - 04:35 | Link to Comment Seer
Seer's picture

Martenson has been writing about this for quite a while now (I believe that Crash Course has been out for at least four years now).  That he might be "new" to you, thus your "conclusion" that he's "late," does not make him "late," "asshole."

Fri, 10/25/2013 - 22:37 | Link to Comment joego1
joego1's picture

I want to own a 100 trillion zimbabwe note. Ebay maybe?

Fri, 10/25/2013 - 23:02 | Link to Comment are we there yet
are we there yet's picture

I bet a 1 zimbabwe note is harder to get now.

Sat, 10/26/2013 - 00:23 | Link to Comment Zero Point
Zero Point's picture

Heh. Yeah, I might add a couple to my collection of Iraqi Dinar. lol.

I like the cool N's on that note though, it's like the guy that did the KISS logo, did Zimbabwes notes. And what's with the rocks? Representation of the brains of Zimbabwean CBers?

Sat, 10/26/2013 - 01:41 | Link to Comment Skateboarder
Skateboarder's picture

Boy Scout marker dawg!

Fri, 10/25/2013 - 22:59 | Link to Comment Schacht Mat
Schacht Mat's picture

The Fed's logic still confounds me.  When American dollar hegemony is lost, the American dollar will significantly devalue, and thus the value of T bills held abroad will similarily erode when redeemed back to foreign currencies, which means that dollar devaluation can diminish the value of monetary debt; however, this debt represents, roughly, only about 10% of the total national liability.  The remaining 90% represents social security and a myriad of medical support programs, which, although denominated in current dollars, actually represent a quantity and quality of service, which means that as the dollar devalues, the cost of these services will necessarily comensurately increase, when measured in these now devalued dollars (this increase will likely be a little less than 1:1, but at 200 trillion current dollars, that piece of the argument is merely a minor distraction).

This means that the vast majority of the nation's liability cannot be inflated away through monetary devaluation, which leads to only one conclusion - there is no moral solution to the problem (plenty of non moral ones - plague, nuclear aggression, outright theft of foreign national assets, etc) and thus, as this cannot continue much longer, it will not continue much longer.  And unfortunately, we, as a nation, are very poorly prepared, both physically and intellectually, for the reality (whether moral or immoral) that is to come. 

Sat, 10/26/2013 - 01:18 | Link to Comment socalbeach
socalbeach's picture

Fed purchases of US Treasuries and MBS* effectively (if they aren't undone in the future) retires US debt since the majority of interest gets sent back to the Treasury, and the debt never has to be repaid.  Another way of looking at it is that $1 of Fed monetization acts as $0.9X of revenue to the Treasury.  In addition, Fed purchases of securities lowers interest rates over what they would have been otherwise, saving the Treasury interest expense.  We don't need price inflation for these benefits to be achieved.

Price inflation does help though if that results in higher receipts to the Treasury.  For example, increasing stock prices would increase capital gains taxes, as people sell their stocks.  Lower interest rates, a consequence of Fed bond buying, increases housing prices which also results in increasing revenue to the Treasury as flippers and others sell at a profit.

What about social security? Yes the government had higher expenses due to SS COLA increases of 1.7%.  With total SS expenditures of $800 b / year, that amounts to $13.6 b, or about 5 calendar days of QE.

(* How do Fed purchases of MBS retire US debt?  Because the MBS interest sent back to the Treasury can be used to pay the interest due on debt.)

Sat, 10/26/2013 - 05:02 | Link to Comment Seer
Seer's picture

And meanwhile, back in the real world...

Production isn't happening.  More revenues aren't being generated.  The basis of the system, growth, is gone.  With growth gone the system DIES.

All that you refer to is virtual shufflings: hell, it's been virtual growth pretty much since 1971.  Such shufflings are meaningless when they have no real binding to the physical world: this is why fiat money is "problematic" (a BIG FAIL).

Sat, 10/26/2013 - 06:58 | Link to Comment 29.5 hours
29.5 hours's picture

 

 

"Production isn't happening."

Seer, your point here and elsewhere on this topic seems to be that monetary policy, as destructive and wrong-headed as it may be, is not the key problem: that even if nation-states return to sane monetary regimes, we would still have the underlying problem that all assumptions regarding world economic health and stability depend on growth into perpetuity.

I think I agree--but this makes the situation seem even worse. All countries cannot export their way out of the crisis simultaneously. What is the alternative? Even China, ostensibly non-capitalist, depends entirely on the growth assumption for its own stability and prosperity. If even planned economies depend on growth into the infinite future, there does not appear to be a way out of this slow-motion train wreck.

 

 

Sat, 10/26/2013 - 11:09 | Link to Comment socalbeach
socalbeach's picture

But revenue is increasing ...

 

http://research.stlouisfed.org/fred2/series/FGRECPT

 

Yes QE is a wealth distribution scheme, or shuffling as you call it, I never said it wasn't.  The goals of the Fed are to fund government and enrich the banks, in that they have been successful so far.  Federal gov't net interest expense over net revenue has been going down from at least 2006 through 2012.  Will update when 2013 figures are available.

Sat, 10/26/2013 - 01:07 | Link to Comment ebworthen
ebworthen's picture

Default on the debt obligations.

A little history on previous defaults: 

http://mises.org/daily/5463/A-Short-History-of-US-Credit-Defaults

Especially read "The Liberty Bond Default of 1934".

It's been done before, it will be done again.

Sat, 10/26/2013 - 07:16 | Link to Comment negative rates
negative rates's picture

I think they want to turn Brazil and  Africa into a concrete jungle and pile the debt up over there, then just move on to the next project.

Fri, 10/25/2013 - 23:05 | Link to Comment The Merovingian
The Merovingian's picture

'More seriously, can you think of anything that could support borrowing that much money?'

Obamacare ...

Sat, 10/26/2013 - 05:14 | Link to Comment Seer
Seer's picture

Underneath it all there's a more troubling current/projection, and that's our demographics.  Aging to be more specific.  I'm just going to state the fact: older populations are less "productive" and require more medical resources.  Obamacare or not, we would be facing this reality one way or another...

Fri, 10/25/2013 - 23:10 | Link to Comment polo007
polo007's picture

According to Macquarie Research:

https://app.box.com/s/pzbyrvapbxjs27ql0lnw

Banking on Unconventional Monetary Policy

Event

- We analyse the implications of maintaining current unconventional monetary policy (UMP) mechanisms in the major developed economies for some time into 2014.

Impact

- Financial markets are now expecting the US Federal Reserve to maintain its current program of QE bond purchases until at least March 2014. At the same time, several other major central banks have recently signalled an intention to maintain highly accommodative monetary policy settings for the foreseeable future. Consequently, the medium-term outlook for global liquidity has shifted and should be seen as supporting the strengthening cyclical upturn in the developed economies.

Outlook

- Recent actions and comments from the major central banks indicate that unconventional monetary policy (UMP) can be expected to remain a key feature of the global landscape well into 2014. This reflects a combination of factors, many of which have both domestic and global economic dimensions.

- Notwithstanding concerns in some quarters of financial markets that UMP is an unsustainable policy approach, central banks appear to assess the near-term risks of macroeconomic instability as being better managed through the protracted use of extraordinary policy measures.

- Moreover, the complicated nature of exit strategies for the major central banks, including the likelihood of further unsettling capital outflows from some emerging market economies, is leading to an acceptance that UMP will be sustained for longer than originally anticipated.

- We noted previously that the market consensus in respect to the US Fed’s commencement of a wind back in its quantitative easing (QE) asset purchase program has shifted into 2014. Indeed, market expectations have now aligned with our base case of Fed QE tapering commencing at the 18-19 March 2014 FOMC meeting – although the risks are still skewed to an even later date.

- Given the ‘general equilibrium’ spill-over effects of any shift in the stance of US monetary policy, it is not surprising that most of the other major central banks have acquiesced with the financial markets expectation for a protracted deployment of UMP.

- In our view, there are three key macro implications for global investment markets in the extended use of UMP, namely:

- ongoing elevation of investor risk appetite and a focus on ‘capital growth’ driven assets;

- near-term abatement of ‘capital account’ pressures in several key emerging market economies; and

- persistent concerns about competitive exchange rate devaluations and asset price bubbles.

Fri, 10/25/2013 - 23:42 | Link to Comment DOGGONE
DOGGONE's picture

"... the recent past was not normal."
Damn right.
Look at the first chart here:
http://www.showrealhist.com/RD_RJShomes_PSav.html

Fri, 10/25/2013 - 23:49 | Link to Comment Dre4dwolf
Dre4dwolf's picture

See, last time debt got to be this high (as a % of gdp) we had a World War in which we sold goods to the rest of the world (the profits let us pay off our debts and let us become the worlds biggest creditor).

 

If we have another World War (one that we take no part in) and we let the rest of the world destroy themsevles, we can sit back and get rich again and pay off our debts with war goods.

 

BUT if we start the next WWar, and we are fighting in it, it will equate to a death sentance for the American economy as we waste resources we do not even have to fight a war.

Sat, 10/26/2013 - 03:40 | Link to Comment Squid-puppets a...
Squid-puppets a-go-go's picture

problem widjer theory dude. This time around, the rest of the world makes shit for US. So by the time you got your manufacturing industry back up and running any war would be over. no profits for US this time around

Sat, 10/26/2013 - 07:13 | Link to Comment 29.5 hours
29.5 hours's picture

 

 

Yes, some economists and historians see incredibly destructive world war as the ultimate Bastiat "broken window."  Eliminating a large proportion of the world's wealth thru war brings a situation (if the world survives) where growth again becomes a central fact that powers world stability. It worked once before, why not try it again, eh?

That end may seem repugnant to our current crop of leaders (scumbags all) but every time they kick the can down the road, we may be getting closer to it.

 

 

Sat, 10/26/2013 - 01:38 | Link to Comment are we there yet
are we there yet's picture

Peter Shiff summary, my take.... he implies the reset may inflate 50 to 90 percent of fiat value away, and that the thing to watch is bond prices shooting up and the Fed unable to control it with buying their own treasuries. Investors may get ahead of the Fed and flee bonds and flood already overpriced equities, accelerating inflation, pushing up bond interest, starting a cascading feedback the Fed can not contain.

Fri, 10/25/2013 - 23:50 | Link to Comment Dre4dwolf
Dre4dwolf's picture

Lol I like how the Zim Dollars have a bootleg pyramid made out of stones.

Its like the cartoon version of illuminati money haha.

Sat, 10/26/2013 - 06:30 | Link to Comment Singelguy
Singelguy's picture

Oh, is that what that is. I thought it was a big elephant turd.

Sat, 10/26/2013 - 00:15 | Link to Comment q99x2
q99x2's picture

The problem with the Zimbabwe buck was that they put what looks like a pile of pooh on it. 

We've got the George Wash and the Illuminati on our dollar.

In God We Trust for Chrissakes.

Sat, 10/26/2013 - 00:58 | Link to Comment Radical Marijuana
Radical Marijuana's picture

I enjoy Chris Martenson's insights, and have listened to many of his Podcasts. However, like almost all of us, he attempts to remain more optimistic about things than is actually reasonably possible to do, after an adequate effort to be more objective about the magnitude of the underlying problems!

The basics are that the Federal Reserve Board represents the standing ways that Neolithic Civilization has been running away with itself, since it began many thousands of years ago, with agriculture, and slavery. The development of the social pyramid systems, that we still live within, on down from Babylon to now, through all of its migrations, and conquest of almost the whole world, through its kinds of advances systems of organized lies, backed up with organized violence, IS the foundation for all our current problems. Not by coincidence, a lot of the ruling classes appear to believe in some of the most ancient religions (although they do not publicly admit that) and many of the members of the ruling classes subscribe to some sacred books, which, from a practical point of view, are merely historically developed books of rules for how to operate an organized crime gang (while, of course the professional liars doing that have a well-developed system of immaculate hypocrisy to explain and defend what they are doing.)

The Federal Reserve Board manifests the ways that the best organized criminals, the biggest gangsters, the international banksters, were able to systematically apply the methods of organized crime in order to take control over the government of the USA, so that they could legalize their lies, and legalize the violence necessary to back up those lies. Thus, the Federal Reserve Board is simply force backed fraud, which has been accelerating at an exponential rate, for a Century, with a nearly perfect exponential growth of total USA debts since 1971, when the last limitations of that fundamentally fraudulent financial accounting system were divorced from the laws of nature, and thus, enabled it to become what it is now, a global electronic fiat money fraud, backed by nothing except weapons of mass destruction, like atomic bombs.

The history of warfare enabled the War Kings to established the powers of sovereign states, which then were covertly taken over by the Fraud Kings, the central banksters, with the Federal Reserve Board being the biggest of that gang of Fraud Kings. The FED is the expression of some basic social facts. There is a combined money/murder system, because money is measurement backed by murder, and the debt controls depend on the death controls. The FED represents the ways that methods of organized crime could be persistently employed, such as through bribery and intimidation, as well as assassination, so that almost all successful and surviving politicians would end up being puppets for the banksters, (so that systematic implementation of legalized lies, backed by legalized violence, could be achieved.) Meanwhile, the majority of American "citizens" were systematically reduced to being incompetent political idiots, or muppets, that were brainwashed by the mass media, and school systems, which were also covertly taken over by the domination of their funding and control by the banksters ruling classes.

Therefore, the REALITY of American today is that enough Zombie Sheeple, who are manipulated muppets, can be fooled enough, enough of the time, in order to maintain a fake democracy, that is a false front for a runaway fascist plutocracy, building a fascist police state, wherein the greatest achievement of the organized criminals that took control over the USA government was the legalization of the established monetary system based on privatized fiat money, made out of nothing, as debts, which automatically must increase the total indebtedness, since that is the fundamental structure of that system, in which, IF there was no more debt, then there would be no more money.

That is the deeper reality regarding the Federal Reserve Board: it is totally based upon the government being a system of organized crime, covertly controlled by the best organized gang of criminals. As I started this comment, I REPEAT, that once one fully faces those social facts, and the history that created the currently entrenched and established social pyramid systems, we are almost infinitely screwed beyond the ability to image how BAD THAT IS! The whole world is controlled by HUGE LIES, backed up with LOTS OF VIOLENCE. The monetary and taxation systems are the main symbolic way that that dominated and controlled the lives of almost everybody, so that they are forced to live within the runaway DEBT ENGINE, which is operated the Federal Reserve Board in the USA, (while all the national debt engines are supervised by the Bank of International Settlements, which is the King of Kings of FRAUD.)

Not only do we operate within a fundamentally fraudulent financial accounting system, which violates common sense and the laws of nature, but which nevertheless was able to be backed up with coercion, with systematic reinforcements, in the form of patterns of social rewards and punishments, that almost everyone has been conditioned to believe in the biggest bullies' bullshit social stories, or, at least, required to accept, if not adopt them, due to the constant enforcement of legalized lies, with legalized violence. However, since that force can never make those frauds be anything else than fundamentally fraudulent, the entire society that operates itself through the established systems of HUGE LIES, necessarily becomes more and more INSANE.

The primary reasons why things are WAY WORSE than intelligent and well-informed people like Chris Martenson fully face is that they are not consistent enough to embrace that MONEY IS MEASUREMENT BACKED BY MURDER, AND IT CAN NOT BE ANYTHING ELSE. Therefore, they keep on hoping that the people who have been selected and trained to operate as the best professional liars, and immaculate hypocrites, within the well-established and entrenched social pyramids systems, BASED ON legalized lies, backed by legalized violence, are miraculously going to go through sufficiently profound paradigm shifts to suddenly recognize the utter insanity of the runaway fascist plutocracy juggernaut that they they are driving, in ways that are turning more and more people into its road kill, while that runaway debt engine machine itself is going to hit a wall, and then bounce off a cliff.

The ruling classes have been both genetically and culturally selected for many thousands of years to be able to maintain their kind of special deliberate ignorance, as were the people they ruled over. They are easily able to ignore any evidence or logical arguments which would lead them to any conclusions that they do not like. Meanwhile, their established systems ARE well-prepared to continue to employ legalized violence to back up their established legalized lies, and thereby, keep the entire society growing upon the basis of forced backed frauds, despite the fact that those frauds are FALSE, since they can still be backed up with force, and doing that for generation after generation created the well-established social habits, which enable the FED, et alia, to continue to function. Therefore, the entire social system automatically becomes increasingly insane, but there are NO practical solutions to those problems.

It is especially the case that there are no practical political solutions because almost nobody is willing and able to embrace the degree of paradigm shifts that they would have to go through, in order to understand just how far off track Neolithic Civilization has gone, after millennia of being able to build social systems based on lies, backed by violence, in the form of one state religion after another, with the current state religion being our faith-based monetary system, enforced by the taxation and legal tender laws, to become FINANCIAL FRAUD, BACKED BY FORCE, within which the FED is the leading player in the USA, as well as globally.

Generally speaking, the biggest bullies' bullshit social stories dominate every aspect of our world view, from our basic coordinate systems, to our chronology, and so on and so forth. We understand the science of steam engines BACKWARDS, the same as we understand the operation of the debt engines BACKWARDS. Again, that is WHY our real problems almost infinitely worse than people like Chris Martenson are able and willing to fully face. Since the debt controls are backed by the death controls, there are no other solutions to the debt slavery systems generating numbers which are so NUTS that they have become debt insanities, than those solutions to be found in changing the death control systems, which will probably become death control insanities, like more genocidal wars, along with democidal martial law. Furthermore, there are NO genuine solutions to these problems than to develop better death controls, operating better systems of organized crime, (which is what it would really mean to have any better government.)

Although it has always been the case, since Neolithic Civilization began, for several decades it has become painfully OBVIOUS that almost everything to do with the human population and activities were on exponential growth curves, which were overshooting towards collapsing into chaos. However, the established systems were based upon triumphant force backed frauds, which were adapted to continue to operate through deliberate ignorance. Therefore, nothing within those established systems is effectively able to fix its own runaway insanities. The basic human ecology/political economy is operated by the ruling classes, Vicious Wolves, employing Domesticated Dogs, to herd the masses of Zombie Sheeple, despite the controlled opposition of a few Black Sheep, who protest that, by bleating their morality that we should all be better sheep, which is the morality that the Zombie Sheeple were originally taught to bleat in the first place by the Vicious Wolves in sheep's clothing.

The ruling classes are more and more obviously promoting debt slavery, backed by wars based on deceits, which are spinning out of control towards extremely genocidal wars, along with democidal martial law. However, the ruling classes excel at denying that, while their controlled opposition promoted the same old false fundamental dichotomies, and related sets of impossible ideals, as somehow being the "solutions" despite the certainity that those impossible ideals will continue to make the opposite happen in the real world, as they always have before for Centuries and millennia. Therefore, NOT ONLY DO "the current crop of leaders in the halls of monetary and political power not appear to understand the dimensions of our situation" BUT ALSO, people like Chris Martenson, as well as most of the other reactionary revolutionaries whose writings get posted on Zero Hedge, DO NOT APPEAR TO EITHER!

Indeed, those who attempt to be much more serious about continuing to be consistent with their deeper discoveries with respect to the real social facts, and the real environmental problems, often end up left with nothing but, perhaps, a macabre sense of humor to laugh at the magnitude of the absurd evil which Neolithic Civilization has manifested. The FED is simply the runaway exponential growth of systems of legalized lies, backed by legalized violence, becoming more blatantly insane, but which therefore, is too terminally insane for society to be able to recover, since the only theoretical solutions would be more radical truth, which can not actually operate successfully, nor even barely survive, within the context where EVERYTHING that almost everybody thinks, and the very language that they use to think with, is the result of the historical triumphs of the biggest bullies' bullshit dominating civilization, from the depths of the philosophy of science, on up to the pinnacles of the superstructure of the established money/murder systems, which results in almost all of us thinking about everything BACKWARDS, in almost every possible way, as a reflection in the Bizarro Mirror World, that the FED is based on force backed fraud, through privatized public powers, by which means that parasite is killing its host, as those predators degenerate, since they were too successful in driving their prey to degenerate.

Any intelligent individual can look at the mathematics of the exponential growth of debt slavery, becoming numbers which are debt insanity, and know that there is a serious problem with that surreal triumph of mathemagical thinking! However, there are no practical solutions, since almost nobody can agree upon what those solutions should be, while the current ruling classes are not good any anything, except continuing to back up their dishonesty with violence, which drives us all on a tragic trajectory, for which I have no respite, other than to cultivate my macabre sense of humor, to be bemused by the awesome magnitude of the absurd evils which dominate human behaviors.

Sat, 10/26/2013 - 01:48 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

+1 for insight. Some constructive feedback: Needs trimming down for more conciseness and remove repetition.

Sat, 10/26/2013 - 04:06 | Link to Comment Seer
Seer's picture

RM, I'd like to thank you for being here, I think that we need more people who can actually THINK (rather than sling arrows).

I believe that the "game" is set based on us swallowing the premise of perpetual growth.  It's this notion -THE BIGGEST LIE- that everything rests upon.  As Derrick Jensen advises: "ALWAYS question the premise."  The "trick" is to, as Jensen puts it, "blow the premise by you" such that you sign right up to what they want you to sign up for.

IMO violence resides in the quest for required resources.  No matter, humans HAVE to engage in violence on one level or another: kill a plant or animal for sustenance.  The question, however, is whether humans have to engage in violence between themselves, and if so, why.  The first part of this question is tough to answer; I figure that coming at it by first answering "why," as in "why would humans engage in violence against one another" as being an easier path for answering the first part.

Most certainly there are "defective" humans, ones like a Jeffery Dahmer, whom appear to violate the norms of nature, but on the whole humans are NOT pre-programmed for violence against ourselves (kind of hard to achieve 7+ billion of us if that were the case).

TPTB and their continued systems are the ones that require human sacrifices for themselves to survive.  This is pretty much as you state.  So...

The violence of humans on humans occurs as sacrifices to the "leaders" and "systems."  The "leaders" and "systems" BOTH require growth in order to survive.  If there is any single point or message which is hammered more than the need for "growth" I do not know of it.

I therefore believe that as long as we buy into the BIG LIE of perpetual growth we ensure that we have "leaders" and "systems" predicated on violence.  That is, I believe that it's the PREMISE of the need for perpetual growth that enables the "leaders" and "systems" to orchestrate violence and oppression.

Even IF there were no such recognized systems or leaders, if humans populations continued to grow it could only come to some point where there would be a struggle over resources.  It is for this reason that I believe that the issue of growth is more central to the "problem."  I believe that the tricksters spotted the loop-hole and have found a way to herd the sheep... the "instructions" were to: "go forth and multiply."  The premise that was blown by us was that we could do this forever.  And maybe this was always the "test;" clearly if not from some omnipotent being, then a test we have to manage for our own sake.  Religious texts and philosophical writings all talk about dealing with issues of morality; perhaps no greater morality question exists than that of when it can be viewed as being acceptable to take the life of another human being.  Our "leaders" and "systems" must come up with the reasons for us as we encounter ever-increasing needs for more and more resources.  If they (the "leaders" and "systems") can get us to kill then you can pretty much bet that the window is opened for morality to fly out of.

So, we've all managed to accept "42" as our "answer," though, as in that fictional work by Douglas Adams' Hitchhiker's Guide to the Galaxy has it, the QUESTION wasn't known.  Our quest has been "42."  The "leaders" and "systems" have all managed to tie us to this most idiodic of premises, without, of course, us asking "what is the question?"  So, as we run toward "42" we can be expected to do just about anything, with that "anything" best serving the "leaders" (operating under their "systems").  Would we, however, if not for such "leaders" and "systems," end up at this point anyway, like the Infinite Monkey Theorem suggests, come up with "42?"  Again, we're not questioning the premise, we're failing to ask the "question."

Sat, 10/26/2013 - 18:09 | Link to Comment Radical Marijuana
Radical Marijuana's picture

Thanks, Seer, although I would also agree with Kirk2NCC1701, that my writing could use better editing. (Hah! Whenever I try that, it usually ends up being worse, by getting longer, rather than shorter.)

My point is that death controls are central to human ecology. However, the real history of the murder systems manifested through warfare, where success depended upon deceit, backed by destruction. THERE MUST BE SOME SYSTEM OF HUMAN ECOLOGY. However, ours operates through militarism based upon the maximum possible deceits, which evolved over thousands of years to make and maintain a monetary system based upon the maximum possible frauds. Our real human ecology consists of matching bookends of the ruling classes, and the ruled, BOTH of whom operate within the same systems of huge lies. There IS, and MUST BE, some human murder systems, central to human ecology, and that sustains the monetary system central to political economy. However, due to the way that human energy systems actually operated, those most successful ones evolved to express the maximum possible lies about themselves, throughout almost everybody operating within those systems.

Of course, Seer, I agree with your statement that: "Religious texts and philosophical writings all talk about dealing with issues of morality; perhaps no greater morality question exists than that of when it can be viewed as being acceptable to take the life of another human being." THE PROBLEM is that nobody guards the guardians, but rather, it is never about who abstractly should, but rather who actually DOES. That is where the real history of warfare resulted in what the oldest book on the Art of War says, namely, success in war is based on deceits, and spies are the most important soldiers. That went on for thousands of years, to create sovereign states, which were controlled by those who continued to be the best at deceits, and operating covertly. That explains why the Federal Reserve Board exists, and how it truly operates.

That is why I say that the only genuine solutions MUST be better organized crime, operating better death controls, to sustain better debt controls, because no other set of solutions actually addresses the real nature of the problems. People who propose realizing impossible ideals (such as present in all the world's dominant religions and ideologies) are spouting bullshit, which actually always backfire. Zero Hedge articles are usually written by those kinds of classic reactionary revolutionaries, who analyze the problems well enough, but then propose "solutions" which are based upon false fundamental dichotomies, and their related impossible ideals.

OF COURSE, "no greater morality question exists than that of when it can be viewed as being acceptable to take the life of another human being." Since money is measurement backed by murder, the almost totally abject failure to answer the death control questions better means that the money questions run away into realms of insanely triumphant frauds, as demonstrated by the ways that the Federal Reserve Board actually operates.

Sat, 10/26/2013 - 05:05 | Link to Comment SunRise
SunRise's picture

RM:  I've just got to know - Did you inhale before and/or after this radical insight?

Sat, 10/26/2013 - 18:30 | Link to Comment Radical Marijuana
Radical Marijuana's picture

Neither.

Sat, 10/26/2013 - 07:24 | Link to Comment 29.5 hours
29.5 hours's picture

 

 

"reactionary revolutionaries whose writings get posted on Zero Hedge"

So, we are all going to die? We are not getting off this planet alive?

Anyone see any shred of optimism or solidarity with the human condition in that verbiage? I confess to failure.

 

Sat, 10/26/2013 - 18:40 | Link to Comment Radical Marijuana
Radical Marijuana's picture

Yes, 29.5 hours, I always found that the more one learns, the worse it gets ... I spent several decades mostly learning about these kinds of problems, and working upon them. Apart from the sublime consolations of philosophy, I do not see the slightest realistic chance that the established systems of exponential growth can mellow out in any other ways than, perhaps, AFTER severe social storms, involving murders through genocides and democides on scales never before seen in known human history.

I continue to presume that some human beings will survive, in some special environments, however, I believe that the human population in 2100 will probably be less than 1 billion, rather than more than 10 billion. As I said, the only theoretical solutions would be better death controls, which must be understood through profound paradigm shifts in basic aspects of the philosophy of science, which are then applied to politics and militarism. While those are theoretically possible, I see no practical political ways to actually have enough people go through those processes, before the severe social storms that have been building break out and blow through first.

Sat, 10/26/2013 - 21:37 | Link to Comment Tall Tom
Tall Tom's picture

There is no political solution

To our troubled evolution

Have no faith in Constitution

Or in Bloody Revolution

 

Our so called leader speak

With words they try to jail you

They subjugate the meek

But it is the rhetoric of failure

 

Where does the answer lie? (Meaning dishonesty....double entendre)

We live from day to day

Is there something we can buy

There must be another way.

 

We are Spirits in the Material World.

 

The Police

http://www.youtube.com/watch?v=8wtQvbA0WC4

 

It is much simpler that way...elegant...and actually entertaining.

Sat, 10/26/2013 - 23:26 | Link to Comment Radical Marijuana
Radical Marijuana's picture

Yeah, I liked the song, Tall Tim. However, I disagree with that basic dichotomy between the spiritual and the material. I say that Energy IS Spirit. Therefore, the special theory of relativity reveals that the material world is extremely concentrated energy. Hence, we are Spirits, living in an extremely Spiritual World.

Sat, 10/26/2013 - 08:32 | Link to Comment Took Red Pill
Took Red Pill's picture

Seems like you understand "how the world works" better than TPTB. I agree with you for the most part except I think it's important to try to hang onto some amount of hope. However, I think things will get much worse before they can get better and there will be a lot fewer people on this planet. I like some models such as a resourced based economy as in the Zeitgeist Movement, Venus Project, and The Free World Charter. I doubt everyone will be able to agree on one system and several different ones will emerge. I think we all need to try to have some optimism or otherwise it all gets too depressing.

Sat, 10/26/2013 - 23:47 | Link to Comment Radical Marijuana
Radical Marijuana's picture

Well, Took Red Pill, I get by with an irrational hope in some series of political miracles. I do not actually expect those to happen, but I still maintain an irrational hope that they will. From a sublime point of view, it appears that human beings can not create energy out of nothing, nor destroy energy to nothing, which is a package deal of both the best and worst things stuck together. Although the total universe may be perfect, in the sense of being infinite infinities, which have Supreme Being preserved throughout all, nevertheless, the finite life of human beings also tends to be another package deal, where most of the good bits are nearer the beginning, while most of the bad bits are nearer the end, like in the rise and fall of civilizations. Hence, I too "think things will get much worse before they can get better and there will be a lot fewer people on this planet." Yet still I am able to maintain some sorts of spiritual consolations from philosophy, even though I can not see those stopping what looks like it has to happen now, which is the serious overshooting of exponential growth collapsing. I like to day dream that maybe we could do things that prevented that from becoming as bad as it otherwise would, and maybe enable the recovery from that to be better. However, we are so, so far into debt insanities, due having fundamentally fraudulent financial accounting systems, that I can NOT believe anything but that "The Fed Can Only Fail."

Sun, 10/27/2013 - 08:10 | Link to Comment Took Red Pill
Took Red Pill's picture

I'm glad you can hang on to some sort of hope. I, for one, don't believe in the Supreme Being idea, at least at this point in my life. But if that helps you then great! I also don't put any faith in politicians. I'm sure there are well meaning, good people who get into it, but the machine is too powerful for them to do anything. If there was any hope of a political solution, it would have to start on a local level and build from there. That would take a long time. I have more hope in the people. People waking up, putting aside our petty differences and uniting on the big issues. Look at how we stopped the attack on Syria (at least for now). I don't think they expected that. Maybe the Mayans were right. This is a period of transition, the dawning of a new age. We have the solutions for our problems (or are close). We just don't want to make the drastic change. We will be forced to make the change at some point. You are correct about energy. But we could make tremendous strides through conservation alone. The technology exists to design homes that use virtually no energy, for example. But big corporations are too greedy to let that happen. How do we bring about the change needed? I don't know. I kind of like Gandhi's methods of passive, non-violent resistance. We just need to get the masses behind us. Hang in there and be strong!

Sat, 10/26/2013 - 00:59 | Link to Comment ebworthen
ebworthen's picture

Nearly every chart shows a dramatic steep rise in debt post 1972, when the dollar was unhinged from Gold.

Sat, 10/26/2013 - 04:12 | Link to Comment Seer
Seer's picture

1971 is the apex.  Same year US oil production peaked: the other side of the parabola has oil export revenues dropping and oil import expenses rising; keep in mind that REAL wealth comes from Natural Capital.  Also, 1971 was the year in which Kissinger et al pried open China.  So, there you go, the trifecta: all three tie in perfectly well for describing the path that has been travelled.

Sat, 10/26/2013 - 01:09 | Link to Comment yogibear
yogibear's picture

"I truly believe this is the Fed's grand plan, if we may call it that, and it has nothing to do with what's best for the people of this land. Instead, it's entirely about keeping the financial system primed with sufficient new credit to prevent it from imploding."

Exactly! A currency crisis is straight ahead. All the warning signs are flashing (Germany asking for it's gold back, Bernanke's son taking on over $400,000 school debt ).

These Fed members are well aware their destroying the US dollar. It's intentional. Germany knows as well as other nations.

Sat, 10/26/2013 - 04:20 | Link to Comment Seer
Seer's picture

They have NO choice in the matter.  The USD dies no matter how you slice it.  All that the Fed is doing is to make it a slow death.

As far as Germany goes, well, they're fucked, even if they get "all ze gold" that is theirs.  They're an exporting nation in a contracting world, an exporting nation highly dependent upon energy imports.  They, just like Japan, were no more than elements set up post WWII to serve the new industrial masters.  And, just like Japan, Germany's demographics also show the clear cliff ahead of aging population bases: this is pretty much the same everywhere, but Germany and Japan (as well as the US) are a bit further along.

Sat, 10/26/2013 - 02:10 | Link to Comment q99x2
q99x2's picture

They know and they know we know they know.

That is why they are preparing to kill us instead of storing grain so we can get through what is coming.

Sat, 10/26/2013 - 04:30 | Link to Comment Seer
Seer's picture

How much grain do you think it would take to "get through what is coming?"

How "long" is the "through?"

Do you know about grain storage?

What about water (with "fresh" being one of the most scarce of resources)?

Even if there were no "them" we'd still end up, as growth would eventually dictate, killing ourselves, suffering from pestilence and famine (pretty well enumerated in various religious texts).

The "them" is really "us."  "We've met the enemy and he is us." (Walt Kelly - Pogo)

Sat, 10/26/2013 - 07:18 | Link to Comment PaperBear
PaperBear's picture

Total debt has to grow every year otherwise everything implodes. What idiot designed a system like that ?

Sat, 10/26/2013 - 11:23 | Link to Comment moneybots
moneybots's picture

"Total debt has to grow every year otherwise everything implodes. What idiot designed a system like that ?"

 

A banker.

Sat, 10/26/2013 - 08:30 | Link to Comment tuku2400
tuku2400's picture

Has the fed become to big to fail?

Sat, 10/26/2013 - 10:46 | Link to Comment moneybots
moneybots's picture

"Our collective predicament is simply this: Nothing can grow forever."

 

Every cycle has an up phase and a down phase.  It has always been that way.

Sat, 10/26/2013 - 10:59 | Link to Comment moneybots
moneybots's picture

"The basic predicament we are in is that the current crop of leaders in the halls of monetary and political power do not appear to understand the dimensions of our situation."

 

Appear is the operative word.  The appearance is deceiving.

When Cheney said deficirs don't matter, he was lying for political purposes.  The politicians are all lying for political purposes.  Obama said we need to pay down the debt, but Obama has no plan for a surplus, which is what is needed to pay down the debt.  It is all a word game lie.  The other week senator Lyndsey Grahm said we had a 17 trillion dollar debt and needed to pay it down, but in his next breath said we need to INCREASE military spending.  It is all a word game lie.  These politicians know what is really going on and yet continue to play political games, so their political cheering section will keep them in office.

Sat, 10/26/2013 - 11:04 | Link to Comment moneybots
moneybots's picture

"And, frankly, a huge number of financial firms and political careers will melt away if/when that credit expansion finally stops. And stop it will; that's just a mathematical certainty."

 

There is no if/when with mathematical certainty.  There is only when.

Sat, 10/26/2013 - 11:13 | Link to Comment moneybots
moneybots's picture

" It's now extremely doubtful that the Fed or DC will willingly cease the current Herculean efforts towards reviving this flawed practice of borrowing too much, too fast. So we have to expect that it will be some form of financial accident that finally breaks the stranglehold of failed thinking that infects current leadership."

 

There has been financial "accident" after financial "accident", so what makes anyone think that annother "accident" is going to change anything?  Abe just doubled down in Japan and that isn't working, yet Yellen is waiting in the wings presumambly to do the same thing here, when she has the benefit of seeing how well it doesn't work in Japan.

Sat, 10/26/2013 - 11:22 | Link to Comment moneybots
moneybots's picture

"They have NO choice in the matter.  The USD dies no matter how you slice it.  All that the Fed is doing is to make it a slow death."

 

They do have a choice.  It is nonsesnse that they have no choice.  They willfully and deliberately are doing what they are.

Sat, 10/26/2013 - 11:35 | Link to Comment moneybots
moneybots's picture

"Now debts are climbing again, at a quite nice pace. That's mainly due to the Fed monetizing US federal debt just to keep things patched together.

As an aside, based on this chart, we'd expect the Fed not to end their QE efforts until and unless households and corporations once more engage in robust borrowing. The system apparently 'needs' this chart to keep growing exponentially or it risks collapse."

 

You don't get out of a hole until you stop digging one.  They are still digging a hole, as the total debt chart shows.

College students are greatly in debt before they have a job.  What robust borrowing are they going to be doing as workers?  KNX news noted the other day, that people will be paying off college debt until they are 33 years old, at which time they are expected to have only 2,500 saved up for retirement.

 

All exponential moves collapse, as a matter of simple math.  The only question is when.

 

Sat, 10/26/2013 - 11:40 | Link to Comment moneybots
moneybots's picture

"Suggesting the key objective for today's investor is answering: How do I make sure I'm on the right side of that wealth transfer?"

 

Be a corporate, Wall Street or government insider, so you know where the money is going, in advance.

Sat, 10/26/2013 - 12:01 | Link to Comment FreeNewEnergy
FreeNewEnergy's picture

Lack of moral courage is the real culprit.

Sat, 10/26/2013 - 12:23 | Link to Comment Cycle
Cycle's picture

The basic predicament we are in is that we have a financialized and militarized economy. Historically, it doesn't end well.

Sat, 10/26/2013 - 12:36 | Link to Comment venturen
venturen's picture

porblem could be solved quit easily. Stop printing money. Break up major banks. If something fails....let bankrupcty wipe the debt away. Let oil, corn and homes go to their "normal" price. FUCK let capitalism work! Instead we have a tax code where it is possible to get back more money than you put in and loopholes so that Goldman, GE and Jp morgan pay Nothing, buffet and gates pay a fraction of the rate normal people pay. A flat tax where the only credits are health(I am not for bankrupting people for not trying to die) and children. Why do we have deferred income or 401k so CEO making millions can avoid tax?? Or income through dividends and capital gains don't pay the same as income? All games deferring capital gains should END! 

Honest work and fiscal prudence got use through 200 years.... The FED and a corrupt central planned government is throwing the average guy off the cliff! 

Sat, 10/26/2013 - 13:59 | Link to Comment ThisTimeIsDifferent
ThisTimeIsDifferent's picture

How many currency debasements did England have since 1694?

Correct: 0.

How many crash gurus have predicted gloom & doom since 1971?

Have stopped counting since Ravi Batra.

 

Sat, 10/26/2013 - 15:40 | Link to Comment experimentals
experimentals's picture

Since every dollar of the future is gonna be worthless, why not leverage to the hilt and buy as much real estate one can buy. Take the caahflow and store it by buying a shiny metal. 

Borrow todays dollars, and pay the bank back slowy with "tomorrow's" dollars which will be worth less.  

As the dollar craters the price (not value) of your tangible asset will skyrocket. It's no secret that the 1%ERS have been doing this recently. They already own all the big commercial and industrial properties. Now that they shook the average joe to death, they have borrowed hundreds of millions in todays dollars and have bought up joe sixpacks only chance of participating. 

Sat, 10/26/2013 - 19:41 | Link to Comment Lord Koos
Do NOT follow this link or you will be banned from the site!