This page has been archived and commenting is disabled.

Steve Keen (Briefly) Explains Why Janet Yellen Won't See The Next Big One Coming

Tyler Durden's picture





 

"Conventional economic theory says 'crisis don't happen' unless they are hit by an [outside] shock" exclaims Steve Keen, adding that numerous Nobel Prize winning economists have suggested that "capitalism is stable..." and "the problem of avoiding depressions has been solved for many decades."

But as Keen explains in this brief but extremely succinct interview, they are wrong - and simply won't (or can't) see the next one coming. "People in the public think economists are experts on money; but, in fact, they are experts in finding ways not to include money, debt, and banks in their models"

And yet, despite their failed forecasts and dismal 'scientific' models, we trust they can enter (and exit) the greatest monetary experiment in history with no bad outcome...

 

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 12/29/2013 - 14:17 | Link to Comment U4 eee aaa
U4 eee aaa's picture

Capitalism isn't stable. It is creative destruction and trying to dope up the coping mechanism (price discovery) only pushes creative destruction into otherwise stable areas

Sun, 12/29/2013 - 14:26 | Link to Comment PR Guy
PR Guy's picture

 

 

beware of blue flag events in Russia leading up to the winter olympics

http://www.youtube.com/watch?v=39X4sXc0Ubc

Sun, 12/29/2013 - 15:09 | Link to Comment flacon
flacon's picture

Keen hits the nail on the head. It's about FRACTIONAL RESERVE BANKING and the CREDIT COLLAPSE when the leveraged credit expansion goes into reverse. He's right, mainstream economists NEVER want to talk about this problem. 

Sun, 12/29/2013 - 16:41 | Link to Comment wintermute
wintermute's picture

!00% correct. FRB makes capitalism unstable, and CB-backed FRB makes FRB unstable.

 

Sun, 12/29/2013 - 19:04 | Link to Comment Gromit
Gromit's picture

Of course it's unstable. But a hugely positive force for economic growth.

But for FRB we'd be speaking Arabic. Assuming the Caliphate could be bothered to colonize the New World.

 

Sun, 12/29/2013 - 19:43 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Your comment is just plain dumb. It suggests that the unfettered production of currency NOTES, their value and issuance controlled by a group of manipulators in a back-room hideaway, is the over-arching reason for economic growth. I was going to qualify my response but I'd be wasting my breath, other than to say that to suggest that the Fed Reserve Board (FRB) has the power to prevent cultural impossibilities (all of us speaking Arabic but for them, hallelujah), is utter hyperbole. By the tenor of your post, you are either a shill or drum-banging usefull idiot. End this nonsence. End the Fed.

Sun, 12/29/2013 - 20:12 | Link to Comment OutLookingIn
OutLookingIn's picture

The system is inherintly unstable

Fractional reserve banking is debt based.

In order to have growth it must create debt.

Eventually the pyramid is stood on its head and becomes dangerously unstable.

Steve Keen understands this.  

Mon, 12/30/2013 - 09:01 | Link to Comment markmotive
markmotive's picture

Others think the Fed DOES see this bubble, but is too handcuffed to do anything about it.

http://www.planbeconomics.com/2013/12/peter-schiff-fed-knows-this-bubble...

Sun, 12/29/2013 - 21:13 | Link to Comment Gromit
Gromit's picture

Perhaps I can help you cast off the carapace of your ignorance.

My point is that Islam was the dominant expanding force in the Mediterranean area (we're talking 15th century) until opposed by armies financed by new banking ideas, primarily FRB.

Sun, 12/29/2013 - 21:34 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

So fucking what? So they paid their armies in IOUs, is that what you claim saved the west (Europe) from the marauding Arabic hordes and that was what saved us? Phhhttt. Unsubstantiated conjecture. 

Sun, 12/29/2013 - 21:40 | Link to Comment Gromit
Gromit's picture

Yes banking "saved" the West from the expansion of Islam. And continues to do so.

Seems like some commentators here support "Sharia" banking principles, (no FRB etc.) so I say to you and to them, be careful what you ask for. 

Sun, 12/29/2013 - 21:52 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Still opinion only. 

Mon, 12/30/2013 - 08:15 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Instead of the marxists and fascists killing us....I vote we do it to them first this time.

 

Could work.....just sayin.

Sun, 12/29/2013 - 21:53 | Link to Comment Sam Clemons
Sam Clemons's picture

Or people in the West (traditional Anglo-Saxons) simply will not become Islamic...whether we have a similar banking system or not.  Religion is a cultural thing, not a banking thing.

Sun, 12/29/2013 - 23:55 | Link to Comment putaipan
putaipan's picture

twain twain.

 

calling henry george ....

 

(tesla was robbed).

 

fuck edison and the bankerz biaaah tches.

Mon, 12/30/2013 - 08:39 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Word up dawg.....edison was a hack and Tesla was robbed in American history.

 

We're still finding out new stuff about Tesla to this day.

 

Tesla sabotaged his own work during the Philadelphia Experment....a lot a seamen owe their lives to him for doing that.

Mon, 12/30/2013 - 07:41 | Link to Comment daemon
daemon's picture

" Religion is a cultural thing, not a banking thing. "

Aren't there some rules about money/finance in the bible ? 

 

Sun, 12/29/2013 - 22:08 | Link to Comment e.blair
e.blair's picture

I could waste my breath telling you how full of shit you are, but I think it would be easier to just have you demonstrate it.  Why don't you fill in your little historical thesis with some dates, names and figures?  Since you act as though you have some great and deep command of Mediterranean history, why don't you give us oh about 2000 words of detail?  A powerful intellect like yours should be able to spit that out in about an hour.  Please include the expulsion of the Muslims from Spain and Sicily and the Venetian sacking of Constantinople in your account.

 

Sun, 12/29/2013 - 22:48 | Link to Comment bigdumbnugly
bigdumbnugly's picture
Steve Keen (Briefly) Explains Why Janet Yellen Won't See The Next Big One Coming

 

... or could it be its because the next big one she sees coming will be her first.?.

Mon, 12/30/2013 - 10:24 | Link to Comment Jafo
Jafo's picture

The big one she will be looking for will have different characteristics altogether

Mon, 12/30/2013 - 00:00 | Link to Comment Gromit
Gromit's picture

Wasn't it the Ottoman Turks who sacked Constantinople?

Mon, 12/30/2013 - 00:24 | Link to Comment wintermute
wintermute's picture

Only after the Christians of the Fourth Crusade disgracefully sacked Constantinople.

http://gbgm-umc.org/umw/bible/sack.stm

Mon, 12/30/2013 - 06:25 | Link to Comment e.blair
e.blair's picture

As I thought, it was easier to let you demonstrate your own idiocy.  You posture as somebody entitled to make sweeping claims about the history of the Mediterranean, yet you don't even know how many times Constantinople was sacked.  You are drunk on the lies your mother told you and your Islamophobia and you are suffering under the weight of a low IQ.

Mon, 12/30/2013 - 02:54 | Link to Comment Zero Point
Zero Point's picture

There is some merit to what you say.

Unfortunately, I guess your purpose is to continue the Arab hate mongering that goes with MIC (and apparently FED) propaganda.

I for one fully condone the Sharia concept of Halal money:

Gold and silver.

As to whether or not one empire would have been a better ruler than another is purely specious.

The "West" (whatever the fuck that means given the historical period) were a bunch of stinking savages at the time by most of their contemporary standards.

But, you know... MURIKKA and all that.

Mon, 12/30/2013 - 08:01 | Link to Comment Urban Redneck
Urban Redneck's picture

In a long line of ignorant posts, that one finally motivated me to log in...

Sharia finance is no different from western finance except semantically.

Substitute the word "rent" for "interest".

And since you fully support Sharia finance and concentration of economic power within the rentier class, I have a bunch of friends in the House of Saud you'd probably love to spend some time with.

Lastly, if you have any objection to the FRBNY and LBMA's decades of manipulation of the gold price, then you really shouldn't be singing the praises of Sharia-compliant financial structurings (Hint see "rent" above and how it relates to repos, hypothecation, and GOFO).

Islam is Submission, and Sharia-compliant finance is all about YOUR SUBMISSION to TPTB so they can increase their hoard of black and yellow barbarous relics.

Mon, 12/30/2013 - 08:17 | Link to Comment Zero Point
Zero Point's picture

Read again champ. I said I endorse their concept of Halal money. It's english, try reading.

Gold and silver. I never mentioned interest or banking even once.

Ignorant? Try logging in even less, you might cut down on the noise factor around here.

Mon, 12/30/2013 - 14:09 | Link to Comment Urban Redneck
Urban Redneck's picture

And from what passage of the Quran or text from the Sunan are you pulling "their concept of Halal (i.e. Sharia complaint) money"?

My English is fine, and my comprehension of all major forms of international finance is well above exceptional... You might want to try looking in the mirror (or learning more Islamic finance before complaining about the noise factor on ZH... for anything less, and everything else- there's Yahfool! Finance).

Since a goat (used by Muslim for either eating or fucking) can be Halal money, how is that money any better than Uncle Ben's one-ply that he using to mercilessly fuck the sheeple while enriching the rentier class?

Mon, 12/30/2013 - 14:38 | Link to Comment putaipan
putaipan's picture

salt? yes. dates? yes. gold and silver? yes and yes. goats and camels ... not so much. source- sheik imram hussein .... still waiting for him to weigh in on bitcoin.

Mon, 12/30/2013 - 19:56 | Link to Comment Urban Redneck
Urban Redneck's picture

I'll ignore the fourth rule of fight club, just because that's such a twisted and insightful answer (on several levels).

I also happen to agree with Sheikh Imram on some the BS that passes for Sharia-compliant these days, but he's both contemporary and somewhat counter-culture.

The goats and camels might fall short in contemporary scholarly discussion because of certain distinctions between currency, money (and other "not quite" synonyms, which I often ignore the distinctions between myself). However, I haven't ever come across anyone (much less of substance) who would argue that a goat herder couldn't contribute his zakat in goats (or that doing so would would might have negative consequences for him from the Almighty).

Historical perspectives are even clearer because so much of historical trade was in the form of barter (which also introduces some complexities to the basic distinction between a medium of exchange and store of value).

Regardless, I do believe even Uncle Imram would rate goat fucker currency as far more acceptable than Uncle Ben's sheeple fucking paper...

Mon, 12/30/2013 - 06:45 | Link to Comment DFCtomm
DFCtomm's picture

So you're going to take a banker over fucking Napoleon who took Egypt with 40k men. He took Alexandria with little to no resistance. You're an idiot.

Sun, 12/29/2013 - 18:36 | Link to Comment BigJim
BigJim's picture

Why does Keen act like this is all new? The Austrians have had a fully-developed understanding of the relationship between the credit- and so-called 'business'- cycles for decades. And, he makes no mention of Minsky, either...

I think Keen's broadly right, but his pompous self-aggrandising is tiresome. And his answer - State money creation - is just asking for more of the same that got us where we are now.

The market - i.e., you and me - should determine what is money... which means we need competitors to choose from, not a currency forced on us by government diktat.

Sun, 12/29/2013 - 19:36 | Link to Comment PT
PT's picture

The amount of times I've read Keen, his message hasn't changed in a long time.  I assume he keeps saying it because none of the "important" people are listening.  If you read any of his stuff then you know that he does acknowledge Minsky.

Sun, 12/29/2013 - 19:39 | Link to Comment myne
myne's picture

Steve always talks about Minsky. His software is even called Minsky. Is this the first time you've seen Steve?

Sun, 12/29/2013 - 20:04 | Link to Comment BigJim
BigJim's picture

I've seen a few of his videos, but in every one he always refers to these theories as if they were uniquely his own. And they're not.

Nice to hear he gives Minsky a nod on occasion.

Sun, 12/29/2013 - 20:43 | Link to Comment PT
PT's picture

Try looking around here for starters:

http://www.debtdeflation.com/blogs/

Sun, 12/29/2013 - 20:50 | Link to Comment BigJim
BigJim's picture

Thanks for the link, I'll check it out.

Sun, 12/29/2013 - 20:41 | Link to Comment myne
myne's picture

http://www.debtdeflation.com/blogs/manifesto/

That's his site's manifesto. 24 mentions of Minsky among many other names.

You should also see his modeling program called Minsky because it's built on the maths of Minsky.

Not trying to be a dick here. Just educating you a bit. :)

Sun, 12/29/2013 - 20:48 | Link to Comment BigJim
BigJim's picture

Thanks for the link, I'll check it out.

Sun, 12/29/2013 - 21:46 | Link to Comment Gromit
Gromit's picture

Minsky will be the most admired economist in the second half of the 21st. Century.

He is now partially accepted for his thoughtful exposition of business cycles, perhaps his writing on eradicating poverty will earn the respect that it may deserve also.

Mon, 12/30/2013 - 00:14 | Link to Comment Ludwig Van
Ludwig Van's picture

.

"Minsky will be the most admired economist in the second half of the 21st. Century."

If Minsky, then Fekete also.

.

Mon, 12/30/2013 - 11:56 | Link to Comment tip e. canoe
tip e. canoe's picture

hypothesis:

IF what Keen (and most on the Left) considers as should be belonging to the State

+ what you (and most on the Right) call the market (or Market depending on the author)

= neither AND both and could be redefined as the Commons (or commons), with BOTH the State & the Market being derivatives of,

THEN the Left and the Right might stop its endless volleys of pompastic bitching back and forth and start discussing potential solutions for a monetary systems redesign that incorporates the best of both sides, while minimizing the inherent weaknesses in each.

BUT THEN, we wouldn't want to anything like that to happen, now would we?

 

Sun, 12/29/2013 - 19:41 | Link to Comment Buck Johnson
Buck Johnson's picture

Your exactly right, when it reverses it can deleverage exponentially to the downside.  They know it and it's crazy.

Sun, 12/29/2013 - 15:15 | Link to Comment Popo
Popo's picture

Increasing confidence breeds increasing leverage. Stability breeds instability. All actions to guarantee a market rise, ultimately guarantee it's destruction because greed will always take advantage of a sure thing.

Put another way, it would be foolish to *not* maximize leverage in a market which is being rigged to always go up. So the central planners ultimately and ironically guarantee the market's destruction in their efforts to preserve stability.

Sun, 12/29/2013 - 16:07 | Link to Comment Deathrips
Deathrips's picture

U4..either you forgot your medicine or you forgot the sarc tag..which is it?

 

RIPS

Sun, 12/29/2013 - 15:06 | Link to Comment kchrisc
kchrisc's picture

Comments like this are just plain amusing.

We live in a world of dominated by big government run by big companies, fascism, and owned by central banks. Capitalism--people still trying to produce and save--is hanging on by its finger nails.

Capitalism is production dominated by the use of labor saving machines that enable mass production. A tractor on a farm, etc. Capital comes only from savings.

The banksters and their government puppets are stealing so much of today's and tomorrow's product that little is left for savings and capital production.

Nope, the golden goose, capitalism, has been killed, leaving nothing but a fascist corpse.

Sun, 12/29/2013 - 15:31 | Link to Comment dexter_morgan
dexter_morgan's picture

I don't see them as amusing, but rather as dangerous. Shows how pervasive Marxist thought and ideals have become amongst the masses..........despite a global history strewn with its failures.

Sun, 12/29/2013 - 19:01 | Link to Comment kchrisc
kchrisc's picture

Yup and fascist thought as well.

I don't know how many articles, books and comments that I have read where the basic jest is that "this" pool of pols and crats is bad, but only if they were...[fill in the blank.]

They are basically saying that big government is bad so let's replace that big government with a big government that "I" can approve of. LOL "If they were only more left/right, conservative/liberal nice/mean...etc.

I call that "pasture " thinking, as they think that they are free because they aren't in the barn and can't see the fences from most places in the pasture. But really, they are just watching shadows drift by on the cave wall and imagining what it all means.

Liberty and slavery are not divisible, you are either free or a slave--Serf or sovereign.

Mon, 12/30/2013 - 08:35 | Link to Comment g speed
g speed's picture

Again I am impressed by your clear thinking--

May I add---fascism (corporatism), communism (socialism), and theocracy(Islam et al) are branches of the same tree--that is repressive authoritarian tyranical murderous gov't and the antithesis of life. 

Sun, 12/29/2013 - 20:31 | Link to Comment Squid-puppets a...
Squid-puppets a-go-go's picture

history may be littered with failed socialist 'experiments', but marx's take on  the endgame of capitalism was flawlessly prescient.

once again, though, its easier to point out the flaws in a system than it is to design a better one

Sun, 12/29/2013 - 18:44 | Link to Comment Gromit
Gromit's picture

@U4:  I agree 100% with what you say - except that doping down rather than doping up would be clearer, at least to me.

Edit - don't really understand why his comment is so unpopular, to me it concisely states what many here believe - that to print 85B a month (or 75B or 100B whatever) distorts price discovery, and,

 with no-one apparently allowed to fail, massive malinvestment will continue until the whole thing blows up in 5-10-15 years whenever.

(Give me some more well deserved reds for whining. I don't always get reds but when I do I prefer a lot of them!)

 Edit: Thanks to the ZHers who have shown me love today but let's get U4 positive here. I'm kinda sad that a previous poster can make an incoherent post about FRACTIONAL RESERVE BANKING and go 32-0.

I mean, let's be serious here, abandon FRB and we're going negative GDP maybe 40% in a heartbeat.

Yes the Federal Reserve is far from perfect, but it's a necessary institution unless we really want to go back to the days of the Crash of the 1870s. Which we really don't do we?

Of course we'd like to remove the over educated lunatics who run it, but please let's be clear. The institution is fine, we just need to chnge the people who run it. 

Sun, 12/29/2013 - 19:53 | Link to Comment Playtime's Over
Playtime's Over's picture

Nothing could be further from the truth.  The fed is private banks given a cartel monopoly and allowed to print fiat.  Do you really think these banks would do anything other than steal if they had "good people"...?  An insane statement.  The good people don't rise to the level of theft.  Banks create money out of thin air and loan it to you and you PAY them interest on money that didn't exist before.  Hell, they don't even have to have the fiat in the vault to loan you the money.  Your paying them for air.  Its a ponzi. Now if these banks get crushed the fed will hit the enter button and create a clean slate, no, better than clean, Instead on negative ledger they now have positve digits and many zero's.  Do your self a favor and read "The creature from Jekyll Island".  Or watch some youtube videos.  BTW the feds goal is to crush wealth/capital formation with the printing press and they are doing a damn good job.  To think we would go back to the stone ages without crooks manipulating the money supply is laughable.  We could have unimaginable wealth and living standards instead of the 1%

Sun, 12/29/2013 - 20:06 | Link to Comment Gromit
Gromit's picture

I've read it.

Do you ever wonder why USA is the top dog?

Unimaginable living standards?  Not in the sense I think you mean but actually I agree with you. Yes I believe they are unimaginable to you, how much lower they would be..

 

.

 

Sun, 12/29/2013 - 20:18 | Link to Comment BurningFuld
BurningFuld's picture

"Do you ever wonder why USA is the top dog?"

You need to get out more dude.

Sun, 12/29/2013 - 20:39 | Link to Comment Squid-puppets a...
Squid-puppets a-go-go's picture

Ani Di Franco:

"take away our Playstations, and we are a 3rd world nation'

Gromit, dude, paying interest (from actual capital) to banks that make credit out of nothing, over the decades and centuries, results in nothing but a massive redistribution of wealth to a class that produces absolutely nothing. Banking should be relegated to a utility. They should be nothing more than the sewerage pipes of transactions. Strip them of any and all power except for this basic function.

And especially strip them of the respect you seem to have for the Fed

 

 

Sun, 12/29/2013 - 21:09 | Link to Comment Gromit
Gromit's picture

The fed is a necessary institution improperly directed.

Sun, 12/29/2013 - 21:16 | Link to Comment nmewn
nmewn's picture

Only for statists and their cronies, they get first dibs on any "new money" created, the remainder is just a compounded devaluation of the original.

Look to who profits most, there is your answer.

Sun, 12/29/2013 - 21:19 | Link to Comment Gromit
Gromit's picture

@nmewn: I respect your contributions.

But tonight this "two legs bad" interpretation of FRB and FED is getting my goat so I'm ranting to the moon.

Sun, 12/29/2013 - 21:38 | Link to Comment nmewn
nmewn's picture

Empowering elites & statists, who dole out ever decreasing value for labor at their leisure & discretion (after skimming theirs off the top, of course) doesn't seem like a long term viable solution to inequality at the bottom rung.

It looks more like slavery ;-)

Mon, 12/30/2013 - 08:28 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

The fed is a necessary institution improperly directed.

 

So the creature from Jekyll Island is an institution now? Would you like to double down tack the word Federal to it?

 

Mon, 12/30/2013 - 08:50 | Link to Comment Ghordius
Ghordius's picture

then call it "the most important game in town"

 

fact is that the FED is the kingpin out of 110 central or national banks

fact is that it's differently handled than most

fact is that it's not owned by the state, as for example the Bank of England that was nationalized after WWII

fact is that all this "Jekyll Island" agitprop is utterly irrelevant in the global discourse, and just a facet of "US exceptionalism" mythology

fact is that many ZH commentators would be furious about a gold-backed currency, then hard money makes hard debt servicing

fact is that the dollar and it's connected debt would have to die in some way, before any alternative is viable

fact is that this guy says (simplified) that (unsustainable) debt levels will go down through a crisis. this points the index digit to the banking system, not the FED

Mon, 12/30/2013 - 08:55 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

 

Preach it Gordo!

 

I just showed this to my grandkids......man are they pissed.

http://www.youtube.com/watch?v=5hfEBupAeo4

Mon, 12/30/2013 - 11:59 | Link to Comment tip e. canoe
tip e. canoe's picture

G, humble alternative to one of your most excellent facts (italicized i presume to highlight that they are filtered through your perception, yes?):

all this "Jekyll Island" agitprop is only relevant to the global discourse in illustrating how a small group of individuals can hatch a plan over a secret weekend in a place straight out of a Austin Powers movie to create a veritable golem that muscles its way into being a kingpin over a global monetary system driven on an inherently unstable and unsustainable model and thus proving its own exceptionalism in the process and entitling it to all the gross & unequal privileges, exceptions & attention given to it thereof, due to a miguided cultural meme that the entire planet should be controlled & dominated by those who find their way to the top of the Pyramid -- this meme being most virulently spread & accurately illustrated in the last 2000 years of largely European-dominated history.

(of course, this agitprop is only truly revelant when the global populace truly understands that this cautionary tale can happen anywhere at anytime, regardless of nation, culture, class, ideology, race or gender.)

any better?


Mon, 12/30/2013 - 12:02 | Link to Comment Ghordius
Ghordius's picture

halleluja! this is really an excellent answer. facts italicized in the sense that are facts enough for debate. all judgments are filtered through perception, after all

let me put it this way: central banking is similar to nuclear power. if one group has it, it has an edge, and the others will want it, too

fact is that the FED was founded 1913, it aided the funding of WWI and was not the kingpin - in fact it was a quite marginal affair - until the Bank of England, the Banque of France and the German Reichsbank lost their grip

yet as with nuclear power, there is a difference between a peaceful power plant, a sub and a bomb or missile. and the way you wield them

control and domination is done through weapons, btw. banking, including central banking, are at the end just forms of accounting

the Wonder of the World called American Middle Class was not complaining about the setup as long as it was favoured by it, for example

Mon, 12/30/2013 - 13:36 | Link to Comment tip e. canoe
tip e. canoe's picture

indeed, one never complains until/once one receives the short end of the stick, most especially when it becomes accustomed to getting whatever it wants, whenever it demands.     such is the spoilt crybaby complex that is such an integral piece of our shared human nature.

as long as we can agree that the US and its weapons are simply the expression in our lifetimes of that archetype, and not the first one by any means, then it's probably not worth the time and effort to quibble over the sordid details of a story of which we already know the ending.

it seems a more essential question from a global standpoint is, given the assumptions that:
- we live under a global monetary system that requires exponential growth for the monetary system to function,
- we have reached a point in history where reasonable people would most likely agree that humanity is near/at/beyond (depending on one's personal perception) the carrying capacity of the planet.
- central banks are the only drivers sanctioned by Law to drive that monetary system and under their expert guidance, that system has been pushed to unsustainable levels,

are central banks a necessary and effective tool at all or do the reins of that system need to be opened up and decentralized beyond the central banks themselves, so that it may organically transform into a system that can handle the challenges in which modern humanity finds itself?

if i'm correct, it is your contention that simply by decentralizing amongst the central banks themselves and away from the dominance of the latest Empire du Jour aka USAInc. + FED will be enough to manage the situation.   if so, please understand that some of us crybabies (myself included) believe that trusting the central bank model at all, no matter who rules the roost, is like HOPEing that the scorpion will not bite the frog.

if we are somehow overzealous in our fears, then i for one would be open to hearing how so.

 

Sun, 12/29/2013 - 21:08 | Link to Comment Gromit
Gromit's picture

Off to Argentina for a month.

Cheers!

Sun, 12/29/2013 - 21:36 | Link to Comment samcontrol
samcontrol's picture

try lake Stefen

Mon, 12/30/2013 - 08:49 | Link to Comment g speed
g speed's picture

nice work there Gromit--you got um going just like MDB used to do--your arguments are just as foolish as his were--I hope you don't burn out as quickly as he did--I guess he just ran out of talking points --If you're original, just a little bit, you might keep going for months on ZH---I gave you a TU for todays efforts--good luck. 

Sun, 12/29/2013 - 20:42 | Link to Comment Playtime's Over
Playtime's Over's picture

So you think this money trust cartel ponzi is the best we can do..huh? I do have some imaginination as to what could happen without the smoke filled rooms and magicians with magic keyboards hooked up to magic servers which can transmit 0101010101 and poof .........your made whole Mr. bancrupt banker, mr, bancrupt tin horn dictator, Uncle Sam......etc.

Sun, 12/29/2013 - 21:09 | Link to Comment Ckierst1
Ckierst1's picture

You may have read it, but I don't think you got the points very well!  I'd go back to the Panic of 1873 in a flash.  At least the crazies got their due.  At least your money could be gold and silver (again) and you could save your money knowing that it would hold its value if it was specie rather than the "greenback dollar".  The USA is supposed to enjoy laissez faire free markets.  It was supposed to be a level playing field for all who wanted to part I c update in commerce.  Instead, for several reasons, we wound up with a home grown rendition of mercantilism, replete with elites of fatcats protected by politicians.  After the Progressive Era it became a socialist mercantilism of welfare for the rich, to include an income tax and central bank (for the banksters) and then it was off to the races to corrupt the courts and dilute the utility of the constitution.  The closest the USA ever came to laissez faire free enterprise was in the 25 years before the "War between the States".

Sun, 12/29/2013 - 21:17 | Link to Comment Gromit
Gromit's picture

Be careful what you ask for, lest you receive it.

Edit: The 1870s are far from living memory.

For ordinary working people thiee devastasion was vastly greater than the "Great Depression"

Gimme more reds.. Good for the soul.

Mon, 12/30/2013 - 15:13 | Link to Comment Ckierst1
Ckierst1's picture

Bring it on.  At least then we will see if the disenfranchised middle class has any guts anymore and are worth worrying about as being worthy of liberty. We'll also find out where our "best and brightest" stand in these matters. Part of the solution or much of the problem?  Also, the panics were much shorter lived, they were more sector specific and business specific and the associated facilitating politicians were more likely to be turned out.  The last "good red" was Grover Cleveland.  Socialist swine since then. BTW, don't assume I take the blue either!  I may use the biggies, but I don't support the biggies.

Sun, 12/29/2013 - 21:13 | Link to Comment El Vaquero
El Vaquero's picture

Other countries don't have central banks?  Oh, wait, nevermind, there are other central banks out there.  Why aren't they top dog? 

Sun, 12/29/2013 - 21:32 | Link to Comment Gromit
Gromit's picture

God bless them they're trying (it's a jungle out there) but the US has certain advantages...including but not limited to 12 Aircraft Carrier Groups.

Sun, 12/29/2013 - 22:15 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

For someone who has obviously spent a lot of time considering FRB as a money system, your take on money is the most flawed that I have seen in a long time. Money is a token of exchange that allows one party the opportunity to asses the value of another person's claims to authentic value. Fractional Reserve Banking undermines that trust by its al goreythmic basis. It is inately, a means of the destruction of wealth and capital of savers and a transfer mechanism of someone else's purchasing power. It seems as if you haven't even listened to the vid.

The US is top dog in the debt stakes and using armies to keep it sustained says a lot about its credibility. USA, USA! Fuck Yeah!!!

Sun, 12/29/2013 - 22:36 | Link to Comment El Vaquero
El Vaquero's picture

And in the meantime, the middle class has been getting squeezed for quite some time, and that squeezing has been getting worse on a very steady basis.  

 

http://research.stlouisfed.org/fred2/graph/?id=GINIALLRH,

Sun, 12/29/2013 - 22:46 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

.

God bless them they're trying (it's a jungle out there) but the US has certain advantages...including but not limited to 12 Aircraft Carrier Groups.

Yep, those fleets of economic sea lampreys are just what the medieval barber ordered. There's nothing wrong with the economy that a good bleeding won't fix.

Sun, 12/29/2013 - 22:15 | Link to Comment Sam Clemons
Sam Clemons's picture

Crash of the 1870s is essentially the same as the crash since 2000.  Simply change the measuring stick.  In one GDP was measured in a hard currency, gold.  The other, it was measured in a ever-flexible currency.  Measure GDP since 2000 in gold and see if it's any different.

Mon, 12/30/2013 - 00:50 | Link to Comment disabledvet
disabledvet's picture

meh. we had to be really smart to get this stupid this time. in 1870 we were confused because we actually thought gold would make great money. Turned out to be true (although had to get a Democrat elected President to make it happen.) That Depression was bad...really bad actually...but nothing like what the English (who had a gold standard then) had to endure. There are striking parallels to the GB's "Long Depression" actually and what Japan is going through actually. The USA? "we've got a big backyard." Remains to be seen if we've got a recovery to bank on though. When healthy and confident they can be a powerful asset indeed.

Sun, 12/29/2013 - 23:26 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

You've read it, and you aren't disgusted?!!!

Maybe this will help.

http://www.mcgraw-hill.co.uk/sra/reading_for_understanding.htm

A course for kids who can't read good. (Zoolander)

Sun, 12/29/2013 - 22:20 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Consider yourself doped down. Mission accomplished.

Sun, 12/29/2013 - 15:23 | Link to Comment CarrierWave
CarrierWave's picture

Corrections happen.

When? - No one really knows.

How big? - No one knows.

Just keep repeating an article every day, with Stats in 'evidence' of a crysis coming until one day the natually-occuring event happens.

That's when the doomer-gloomers will come and say "Told ya so".

Those who followed this sort of Articles for the past 4+ years (on ZH and other sites) stayed out of, or worse - on the wrong side - of the market, and missed out big time.

Instead, stay with the trend until it changes, practice proper Stop Loss triggers, and don't fight the FED.

Sun, 12/29/2013 - 15:47 | Link to Comment bozzy
bozzy's picture

crane date booked in your name

Sun, 12/29/2013 - 20:46 | Link to Comment Squid-puppets a...
Squid-puppets a-go-go's picture

you think your stop loss triggers are some kinda guarantee an out when the exits are crowded ??

we all take out chances.

Goldbugs may have to wait longer, but their payoff is likely to be much better than those 'Surfing with the AlYellen'

Sun, 12/29/2013 - 23:27 | Link to Comment DR
DR's picture

 

Well Jamie Dimon suggests a financial crisis happens every 5 to 7 years so the next  crisis should be just around the corner...

 

 

http://www.firstpost.com/topic/person/jamie-dimon-jamie-dimon-financial-...

Sun, 12/29/2013 - 16:06 | Link to Comment pcrs
pcrs's picture

What capitalism are you talking about? The centrally planned one from the capitals?

Mon, 12/30/2013 - 11:31 | Link to Comment Euro Monster
Euro Monster's picture

65+ narrow-minded capitalism lovers! Please broaden your thinking and then you will see what you worship...

Sun, 12/29/2013 - 14:18 | Link to Comment Bagbalm
Bagbalm's picture

It's ALWAYS different this time.

Sun, 12/29/2013 - 14:50 | Link to Comment max2205
max2205's picture

Feds Motto:  Dont fix it until it's broke.......

Sun, 12/29/2013 - 15:34 | Link to Comment new game
new game's picture

why do we need a phd'd economist to tell us 3-4x debt to gdp is a serious problem?

what is so FUCKING difficult about that?

fuck these fuck sticks, called economists...

Sun, 12/29/2013 - 14:23 | Link to Comment PR Guy
PR Guy's picture

 

 

beware of blue flag events in Russia leading up to the winter olympics

http://www.youtube.com/watch?v=39X4sXc0Ubc

 

Sun, 12/29/2013 - 15:04 | Link to Comment Jack Burton
Jack Burton's picture

Good catch PR guy. We are all familiar with the Saudi Arabian Intelligence Minister visting Mr. Putin in Russia and issuing the direct threat to unleash the Saudi/Israeli controlled Chechen Terror Army against Russia and the Winter Olympics. This is not conjecture, the mainstream media even reported on this important meeting in which Saudi Arabia arrived in Russia to tell Mr. Putin to hand over Syria to the Terror army that has invaded that nation. When told by Putin that Russia would not hand over the Syrians to the NATO/Saudi/Israeli armed and funded terrorists and Jihadists, the Saudi issued a direct threat to unleash HIS Chechen terror army aginst Russia. This has now clearly happened. Volgagrad is an easy target as it is the major Russian city in the southern regions but is far enough away from the Caucuses as to not have had any direct involment in the muslim seperatist fighting there.

Russia so far has shown a very weak hand, using law enforcement and special forces to track individual terrorists and confront them in opne battle after attempting an arrest. This may change since Mr. Putin has it on record that the terrorist are part of Saudi intelligence apparatus. Given that proof, I think a direct attack on Saudi intelligence assets and terrorist training camps inside Saudi Arabia are legitimate targets. A Russian Naval vessel equiped with the naval version of Iskander missiles could level any target in Saudi Arabia. It is time to send a message to America's Terrorist Training camp, and Israeli's al-qeda allied forces in Saudi that the game is up.

A good question to ask is "How often does Al-Qaeda make an attack on Israel of any Jewish entity around the world? I believe not very often in recent times. Al-Qaeda has been flipped to a US asset. I am fairly certain of this. The winter olympics should be called off in order to save lives, it is going to be the biggest terror target on earth. The USA/Saudi/Israel all stand to gain much by an all out terror war on Russian soil. Why Russia sits by and takes it muct mean they are weaker than I suspect they are militarily.

Sun, 12/29/2013 - 21:58 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

I think the Putin responds fairly toughly, maybe sending some guys back to Saudi with genitals stuffed in their mouths.

The Putin man crush team here at ZH will cream themselves with joy....

Mon, 12/30/2013 - 00:21 | Link to Comment putaipan
putaipan's picture

hey. i can write a good spy novel as good as the last guy- i always call mine: "unthinking the unthinkable"

in playing out  Jack Burton 's version above ... the ben bush bandir's do what they're gonna do and putin (with the help of snowden and about a meeelion cell phones and dash cams, max keiser and rt) poots it out there for the whole world to see and judge for themselves. after that, our little brown brothers, sherrifs, russians with blue helmets and the 'constitutionalist' faction of these united states military all come to our rescue and defend us from the bankers' ze/blackwater drones and google bots.

edit: and the chinese just kind of mass military migrate and siege, without much shooting, and then opressively occuppy the 'holy land'. you know, in case they try somethin' funny. if they kind end up with the oil....well, we kinda deserve it. happy ending, much rejoicing. worldwide implimentation of the 'rentier' tax.

Sun, 12/29/2013 - 22:49 | Link to Comment SolarSystem1932
SolarSystem1932's picture

Certainly aware of the problem, and attempting some detection of explosives.

http://finance.yahoo.com/news/implant-sciences-trace-detection-equipment...

Implant Sciences Corporation (IMSC), a high technology supplier of systems and sensors for homeland security and defense markets, announced today it has shipped eight QS-H150 handheld explosives trace detectors for deployment at the Media Center during the upcoming Sochi games.

Might need more than 8...

Sun, 12/29/2013 - 14:23 | Link to Comment Peter Pan
Peter Pan's picture

So when is the next one coming Steve?
Or can't you see the date either?

By the way, you have to admit that your prediction on the Australian property market has been dismal even though I agree it is overvalued.

The point of course is that a manipulated market makes a mockery of all our predictions.

Sun, 12/29/2013 - 14:35 | Link to Comment Xibalba
Xibalba's picture

4/14/2014

Sun, 12/29/2013 - 14:50 | Link to Comment Peter Pan
Peter Pan's picture

Thanks for that. I will keep the day free.

Sun, 12/29/2013 - 14:58 | Link to Comment Xibalba
Xibalba's picture

IT's the beginning of the 4th Blood Moon Tetrad in 500 years.  Have a look at what happened the last 3 times...1492, 1949, 1967......

Sun, 12/29/2013 - 15:06 | Link to Comment bania
bania's picture

Never go 4th Blood Moon Tetrad.

Sun, 12/29/2013 - 15:53 | Link to Comment Xibalba
Xibalba's picture

just tryin to follow the script.  You know these fuckers worship that shit.  Just look at history. 

Sun, 12/29/2013 - 20:46 | Link to Comment Squid-puppets a...
Squid-puppets a-go-go's picture

OMG please dont go 4th blood moon Retard on us

Mon, 12/30/2013 - 00:28 | Link to Comment putaipan
putaipan's picture

i think that's what bania was getting at and gettin' all those greenis for.  i owe ya' a bowl of soup, as dinner.

Sun, 12/29/2013 - 14:49 | Link to Comment kridkrid
kridkrid's picture

Until it doesn't, then look the fuck out.

Sun, 12/29/2013 - 15:39 | Link to Comment HardlyZero
HardlyZero's picture

Keen is just saying it is part of the Debt Supercycle.   The more finance/debt (which by conventional economists is net zero), the higher the overall risk.  The trillions in finance is actually a 'off book' dreadnaught which if cracks up will cause many external events.   The mortgage derivatives in 2007 were probably 10% of the overall risk in the markets, the other 90% is still out there operating and possibly a super-external-risk.

Because the largest of known risks can not be included in economic models, then this opens the path to allow many unforseen unknown events (e.g. Fukushima).

The best econmic case given this situation may be an Austrian style crack-up-boom.

Sun, 12/29/2013 - 15:07 | Link to Comment Jack Burton
Jack Burton's picture

Peter Pan, I agree his housing call in OZ was wrong. But would you accept that if not for direct government manipulation in the markets, via interst rates and other direct aid to home buyers, that he would have been right? Imagine for a moment that OZ housing worked as an unmanipulated market, price discovery and ability to buy set prices. Do you think Steve would have been more right in that case?

Sun, 12/29/2013 - 20:01 | Link to Comment gilligan
gilligan's picture

Exactly. Both sides of Australian government are committed to stopping OZ house prices imploding through manipulation of the market. Record low interest rates; first home buyer grants; relaxed and unenforced rules on foreign (read: Chinese) investment in Australian homes; and the latest, self-managed superannuation funds buying up property.

Despite the last few years we are again pushing record median house prices in many capital cities. Yes, Steve has been very wrong on his house price outlook, as have I, but the outcome has been driven by massive levels of manipulation that nobody here wants to admit.

Over 20 years without a recession means many younger Australians have no idea of what unemployment and an economic downturn looks like. They take out their massive mortgages assuming nothing will ever go wrong. The OZ property market is a massive disaster waiting to blow - however, I truly believe that our government will likely sell us lock, stock and barrel to the Chinese before they will allow house price deflation to make us take our medicine.

Sun, 12/29/2013 - 20:09 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Pete shoots the messenger, no doubt out of frustration. Pete needs to adjust his sights. Keen called the event (but not the timing, he's not Nostradamus, Pete) and provided the rationalé for why it would happen. Pete wants his hand held. ("Oh, he was right but he didn't save me" mindset). Keen warned, Pete didn't listen or take preventative action by the sound of it. Not Keen's fault.

The issue at large is: Keen or the rest of us wouldn't need to be second guessing a group of sociopathic bastards with their armed protection guarding their debt system, if the Fed didn't exist. We could better value the integrity of another person's promise if we all used money that was measured for fineness and weight.

History of central banking failure is 100% quantifiable. What the heck is wrong with us that we continue to allow it?

Aim lower, Pete.

Mon, 12/30/2013 - 00:20 | Link to Comment Peter Pan
Peter Pan's picture

I agree with you and the other gentlemen, that is why I said:

1. I agree that hosuing is overvalued

2. A manipulated market makes a mockery of our predictions.

What Steve has miscalculated is the ability of the crooks to keep the ship afloat despite the rotteness of the system.

By the way I am not shooting Steve Keen. He is still my preferred economist compared to most others.

Nor did I want him to hold my hand. In fact if I let him I would have lost money based on his timing.

His theory though is pretty good. His timing would get better if he went out into the market place and saw a little more closely what is going on.

Mon, 12/30/2013 - 06:15 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Then I don't get why you're pissing on his parade? We're fortunate to have him discrediting the Keynesian models.

Mon, 12/30/2013 - 08:22 | Link to Comment Peter Pan
Peter Pan's picture

I am not pissing on his parade. In fact I had an argument with one of his colleagues some months ago who was calling him a crackpot. And his colleague is a close friend of mine.

Once again read my comments and you will see that I am only stating the obvious. Steve is not infallible and neither am I.

Mon, 12/30/2013 - 04:27 | Link to Comment thestarl
thestarl's picture

The cash rate in Oz at the moment is I think 2.5% latest talk by end of 2014 as low as 2%.

Reserve Bank Governer Glenn Stevens was quoted as saying in 2008 when the cash rate fell to its lowest 3% that it was only likely one would see rates this low due to an economic crisis situation.

I can tell you this about the Oz property market shit loads of foreign capital flowing in hey Jack its frothy mate.

Mon, 12/30/2013 - 04:30 | Link to Comment thestarl
thestarl's picture

And I'm forgetting the massive mining capex is winding down and a clueless fucking moron running the country.

Sun, 12/29/2013 - 15:40 | Link to Comment edwardo1
edwardo1's picture

Steve Keen is, ultimately, a deflationist who can't drop all his preconceived
notions aka baggage to see that things are not going to play out as they did the last time The West faced a Great Depression.

Sun, 12/29/2013 - 17:03 | Link to Comment smacker
smacker's picture

The essence of Steve Keen's argument is that levels of personal debt have to be factored into the equation to see a shock coming. He does this but economists don't. But the timing is never easy to predict.

Given that levels of personal debt have hardly fallen since the crash of 2008, it looks like there's a lot more deleveraging needed before any meaningful recovery happens. Or as I put it in 2008 "this recession will take a generation to recover from". And I'm not an economist.

Sun, 12/29/2013 - 19:49 | Link to Comment PT
PT's picture

Steve once "predicted" a time for the Australian house price crash.  But he could not predict that the Federal Aussie govt would start giving first home buyers 7 grand with which to push up house prices.  He also did not predict that the "First Home Buyers Grant" would be jacked up to 14 grand and later 21 grand.  Coming to think of it, I could never have predicted that either.  Before that, the govt was always calling itself near broke.  At the time, I never understood how it changed and suddenly could print magic money whenever it felt like it ...

So instead of saying, "House prices will crash this year", he should have said, "Either house prices crash this year or the govt pumps a heap of money into housing to keep it afloat".  Then he would have been right. 

Steve acknowledges the true purpose of the "First Home Buyers Grant", which he calls something like the "First Home Sellers Vendors Boost".  After all, with an extra 7 grand deposit, you can borrow ~ an extra 70 grand, and given the tight supply of housing, what is really happening?

Mon, 12/30/2013 - 03:13 | Link to Comment joe90
joe90's picture

Housing affordability a social problem?  Tackle sell or buy side.  Which solution generates greater debt (and feeds the monster?)

Sun, 12/29/2013 - 22:07 | Link to Comment PT
Sun, 12/29/2013 - 14:28 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Trust me on this one. If need be 'they' will manufacture an outside shock. False flags are not just used to justify war.

Sun, 12/29/2013 - 15:34 | Link to Comment Ignatius
Ignatius's picture

I noticed your parenthetical use of the word 'they' and have been thinking about this of late.  While there are individuals and institutions we can identify by name, there are just as many or more that we can't specifically identify and who have under estimated power and pursue undeclared agendas.   Why?  As soon as a powerful entity or individual declares itself it becomes a target.  Plausable deniability is a sly and powerful cloaking tool.  Actually naming and identifying the real power is a dangerous profession, hence the paucity of, say, penetrating investigations into the global drug trade (see tragic Gary Webb).  Taibbi points up the blatant hypocrisy of the HSBC Settlement, but God help the journalist who dares dig into exactly how $300 billion in annual illicit drug profits enters the banking system and economy each year and what it means.

Sometimes and often 'they' is the only tool we have and we shouldn't blush when we unfortunately have to rely on it.

Sun, 12/29/2013 - 16:45 | Link to Comment DaveyJones
DaveyJones's picture

it's almost as if some of these things and some of these people are just fronts

been thinking a lot about flags lately. maybe it's just the constitutional groupie in me but I still think the next one will be about information systems. Just to give that extra umph and that "well we have no other choice" to the global 24/7 monitoring of every living thing fed by further and further (and they should be) paranoia 

Sun, 12/29/2013 - 17:17 | Link to Comment ZerOhead
ZerOhead's picture

They need to consolidate support from the great unwashed masses behind their vile agenda.

Probably an attack on FaceBook or Twitter... social media is one addiction that the sheeple simply cannot live without.

 

Spoiler Alert:  It was Iran

Sun, 12/29/2013 - 14:26 | Link to Comment Joebloinvestor
Joebloinvestor's picture

The global warming model excuse when the reality hits.

Sun, 12/29/2013 - 14:31 | Link to Comment Bay of Pigs
Bay of Pigs's picture

Comforting to know we have Janet "Cannonball" Yellin taking the helm of the USS Titanic soon.

Sun, 12/29/2013 - 14:32 | Link to Comment Fuh Querada
Fuh Querada's picture

Whose dick is the title referring to?

Sun, 12/29/2013 - 16:26 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Does it really matter? The ass is always John Q. Taxpayer.

Sun, 12/29/2013 - 14:31 | Link to Comment Smegley Wanxalot
Smegley Wanxalot's picture

One could try to argue that the artificially super-low interest rates on all that overwhelming debt is an "external shock" ... but any economist who ignores that is a fucking idiot.

Sun, 12/29/2013 - 14:38 | Link to Comment A Lunatic
A Lunatic's picture

Yellen won't see the next big one coming because IT IS HER JOB TO NOT SEE THE NEXT BIG ONE COMING......

Sun, 12/29/2013 - 14:39 | Link to Comment El Vaquero
El Vaquero's picture

She won't see it coming because of the brain damage she suffered during whatever accident it was that flattened her face. 

Sun, 12/29/2013 - 14:52 | Link to Comment A Lunatic
A Lunatic's picture

Have a little empathy. Your face would be flat too if it were constantly colliding with bankster scrotum.......

Sun, 12/29/2013 - 15:11 | Link to Comment USA USA
USA USA's picture

Thats one hell of an UGLY vision!

Sun, 12/29/2013 - 14:46 | Link to Comment Racer
Racer's picture

The ChairSatan didn't see the last subprime problem coming, so it is highly unlikely SatansEcho will see any problems whatsoever!

Sun, 12/29/2013 - 14:39 | Link to Comment FredFlintstone
FredFlintstone's picture

WTF? It is astonishing to think that the econometric models may not include the effects of finance.

Sun, 12/29/2013 - 14:50 | Link to Comment realWhiteNight123129
realWhiteNight123129's picture

Keen is cute.

Inflation is repressed since 1982. The interest rates are repressed since 1982, allowing inflation of hte currency supply through credit. This defalcation benefits people borrowing at below real rates to buy company which reprice true inflation, LBOs, Buffet, Hedge Funds. 

The results is cheating people living out of wages and people exporting to the US. No wonder the Gold bugs have sympathy for China, China is getting cheated too.

Since there is no room to inflate the currency supply out of repressed cost of debts because we hit zero, now the fed is increasing the currency supply through money priting. Currency can be created against base money or against credit. 

However the commercial capital of the US is what? The net productive assets net of debt of the country + gold (liability of nobody). However the bank account of someone is the liability of the bank so net net it is worth nothing for a country. Right now the total net commercial capital, net of foreign debts and of all debts is probably negative for the US.

Every month the US gets a trade deficit larger than its increase in commercial capital (and there is no capex right now), the balance gets more negative and economy more hollow.

In other words, Equities are completly hollow in real terms, but should not be shorted. Hyperinflation results in massive increase in stock prices, so Tyler please stop advising the ZHedgers to short stocks, it is too dangerours

The Nemesis to short are the Treasuries but the best point is past. The housing slowdown might actually push junk credit down and TSY up for a short while, but the bias is that US government debt are worth nothing and interest rates will rise unles the Fed let leveraged investors go bankrupt, brings interest rates above true inflation (at 6% in the short term). If the Fed does that massive bankruptcies around, huge pain, dollar strengthen, internal price fall, hedge fund get creamed and yes Gold would go down. However the Fed is composed of hand-picked idiots by teh big banks to ensure continuous inflation of currency (market monetarism BS). The Fed members are precisely chosen for the erroneous views on permanent inflation. PoBC is letting money market rates shoot to the roof which is the only way to do a deleveraging, making the cost of credit real, making bad credit suffer and paying real rates to the savers. PoBC is the responsible central bank here.

Keen seems to be another of those guys confusing bank created currency (against base money or credit) with actual money (base money, i.e. M0).

Currency fails (Cyprus) money (ECB bank notes) do not.

In the old days base money was Gold coins.

Money is the ultimate form of payment is not redeemable in something else, can not fail (unlike currency) and should not pay interest.

Fiat money can be good if:

1. Government do not abuse the facility of borrowing.

2. Government is not hostage to the business interests and can tell bad borrowers to go to hell (PoBC).

3. Government is not hostage to election cycle forcing untenable fiscal promises to campaign funding (special interests) and to voters (entitlements).

In other words democracies + fiat money = explosive mix.

Democracy has nothing to do with rule of law. No democracy is neither equivalent to absence of republic, nor anarchy, nor dicatorship, nor absence of rule of law.

 

 

Sun, 12/29/2013 - 14:58 | Link to Comment TrulyStupid
TrulyStupid's picture

Every fiat currency regardless of democratic or autocratic control... have always eventually been reduced to their intrisic value=nothing.

As for your last sentence... huh?

 

Sun, 12/29/2013 - 15:42 | Link to Comment realWhiteNight123129
realWhiteNight123129's picture

Yes my last sentence was not clear. Apologies. 

Theorically fiat can work if the conditions are fullfilled, but they are rarely fullfilled if ever, agreed. 

Pure paper currencies which are not fiat can work. You have the XIX century scottish paper of very good quality which was practically using no Gold. Today the best paper currency is Hong-Kong dollar probably but it is pegged to the wrong thing. Hong-Kong dollar is a redeemable currency, a survivor of the XIX century banking system.

Actually the Hong-Kong banking system has the least crisis since teh 1930s, ahead of the Canadian banking system. With a bid price and ask price, the Hong-Kong system works like the bid price of Gold at the BoE and the ask price at the mint.

In the old days, when the exchange rate would turn adverse (external drain, trade deficit and weakening of currency) due to over-extension of credit and currency creation, gold would trade above the ask price, as a result people would redeem the currency for Gold and ship it oversees. The result would be a contraction of the currency supply in the country with excess credit, pushing interest rates up (the opposite of Fed´s money printing), forcing bad credit in bankruptcies, forcing internal prices down, that woud be your XIX century bank panic. It would be short an painful but very effective at wiping off bad debt and deleveraging.

The same applies in Hong-Kong today, when people sell HKD for USD, that results in contraction of currency supply in Hong-Kong and rising interest rates. Because of the peg, the loan to value on mortgages are low (50%), bank capital is very high, about twice what is required by Basel III. There is no Hong-Kong gov debt stuffed in the banking system.

 

This contraction would have restored internal prices and trade balance in 1971, but it would have cost the elections for Nixon to accept a contraction and internal price falling. However internal price falling would have restored US manufacturing competitive prices against Japan and Germany. So short-termism trumped long-term interests. The result would have been a deep recession but a restoration of trade balance. 

The only banking system which could cope with restauration of Gold standard is Hong-Kong, it would just need to peg to Gold with a bid ask instead of USD. 

 

 

Sun, 12/29/2013 - 15:57 | Link to Comment Anusocracy
Anusocracy's picture

"fiat can work if the conditions are fullfilled"

Rape can work too...

if it is voluntary.

Sun, 12/29/2013 - 16:26 | Link to Comment A Nanny Moose
A Nanny Moose's picture

I don't know about it's value being nothing. I have trouble imagining a world without toilet paper.

Sun, 12/29/2013 - 16:40 | Link to Comment Winston Churchill
Winston Churchill's picture

Most of the world still manages with a can of water ,and fingers.If there is no water,

well........

I haven't tried USD dollars ,but I think they would be painfull.

Sun, 12/29/2013 - 23:32 | Link to Comment A Nanny Moose
A Nanny Moose's picture

What a waste of water.

As for the dollar, I suppose it could be said they've chaffed the rear twice.

Mon, 12/30/2013 - 00:33 | Link to Comment putaipan
putaipan's picture

eewwwh. tha's worse than a 'double dip'.

c'mon man. rinse.

Sun, 12/29/2013 - 19:11 | Link to Comment caShOnlY
caShOnlY's picture

Every fiat currency regardless of democratic or autocratic control... have always eventually been reduced to their intrisic value=nothing.

Economic history.  It cuts through the bullshit of "four score....." and teaches reality.   All war is economic war, regardless of the spark.  Economic history is not taught at America schools but you find degrees in Russian History.  What a fucking waste!! but some asshole paid for it!!

Sun, 12/29/2013 - 20:08 | Link to Comment spooz
spooz's picture

You seem to be one of those guys who thinks there is some predetermined "base money" behind bank loans. Or do you have some other definition for what you call "actual money"? Keen supports the endogenous view of money, which differs from the orthodox view you seem to support.  Per wikipedia:

"Jaromir Benes and Michael Kumhof of the IMF Research Department report that the “deposit multiplier“ of the undergraduate economics textbook, where monetary aggregates are created at the initiative of the central bank, through an initial injection of high-powered money into the banking system that gets multiplied through bank lending, turns the actual operation of the monetary transmission mechanism on its head. Most times when banks ask for replenishment of depleted reserves, the central bank obliges. Reserves therefore impose no constraints as the deposit multiplier is simply, in the words of Kydland and Prescott (1990), a myth. And because of this, private banks are almost fully in control of the money creation process."

http://en.wikipedia.org/wiki/Reserve_requirement#The_endogenous_money_view

"Keen seems to be another of those guys confusing bank created currency (against base money or credit) with actual money (base money, i.e. M0)"

Sun, 12/29/2013 - 23:17 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Keen is cute; you're cuter. ECB bank NOTES are money? ECB bank notes can't fail? Base money is a credit note? Keen confuses bank created currency (FRB) with base money? There is no base money. There is only base currency, redeemable for nothing, backed by nothing, created from nothing, traceable to nothing, promising nothing. These notes are extracted from thin air in a shell game well documented by Mike Maloney in his Hidden Secrets of Money series. Money is a token of stored wealth not an IOU. You said it yourself but seem confused.

Mon, 12/30/2013 - 05:16 | Link to Comment Sandmann
Sandmann's picture

ECB does not issue Banknotes

Mon, 12/30/2013 - 06:21 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Fine, but whoever does has nothing to back them and the ECB has nothing on its balance sheet. Sorry about the mistake and thanks for the correction.

Mon, 12/30/2013 - 09:14 | Link to Comment g speed
g speed's picture

at White Night--

the truth is in your "there is no capex right now" ---it clearly states that "faith and trust" (the necessary component of any fiat) is on the wain--combine that with "civil disobediance" which will be the result of ObamaCare and you have your "explosive mix".  just sayin--

Sun, 12/29/2013 - 14:54 | Link to Comment alfbell
alfbell's picture

 

 

These supposed "outside the box" economists or financial analysts (Steve Keen, etc.) who are assumed by so many to have such deep intelligence and insight are just more of the same. Focusing on politicians, government leaders, bank cartel front people (like Yellen) is a total distraction and waste of time. That doesn't show any deep insight or intelligence to me. These people are just the puppets who are wittingly or unwittingly doing the bidding of the puppet masters (aka: the big capital owners, the families of generational wealth, the international bankers, etc.). Steve Keen is focused on the wrong people and areas (he's watching the magician's left hand, when it is actually the right hand that is setting things in motion). It's the principle of legerdemain on a global socio-economic level. Why bother listening to any of these guys.

Sun, 12/29/2013 - 17:54 | Link to Comment putaipan
putaipan's picture

hey alf and the four misguided people who greenied him - WRONG.period/exclaimation point.keen is one of the very few that is pointing to the magicians' other hand. read his work, look up his new modeling project. understand before you post.

Mon, 12/30/2013 - 09:22 | Link to Comment g speed
g speed's picture

alf--Marxsist yet??  ---lol --big (bigger, biggest) capitol owners) would be the evil wealth created from production and savings crowd -right?? transparent to a fault.

Sun, 12/29/2013 - 15:04 | Link to Comment DOGGONE
DOGGONE's picture

Steve Keen, Tyler Durden:
Hey you guys, smarten up the chumps!!! Show these histories.
The Public Be Suckered
http://patrick.net/forum/?p=1230886

Just because you did not do it earlier is NO EXCUSE ...!

Do NOT follow this link or you will be banned from the site!