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How Long Does This Go On Before There's A Currency Crisis?
Submitted by Simon Black of Sovereign Man blog,
How’s this for irony -
In our modern monetary system, the term ‘fiat currency’ refers to this absurd notion of paper currency that is conjured out of thin air by central bankers and backed by nothing but hollow promises.
‘Fiat’ is a subjunctive conjugation of the Latin verb ‘fi?’; literally translated, it means “let it be” as in “Let there be light.”
Or in this case… ‘let there be paper money,’ which pretty much crystalized the absurdity of our monetary system.
Former Fed Chairman Ben Bernanke summed this up nicely in a 60 Minutes interview he gave a few years ago in which he said, “We can raise interest rates in 15 minutes. . .”
And he was right. Central bankers can change interest rates whenever they want.
If you think about it, interest rates are nothing more than the ‘price’ of money. It’s the rate that people pay when they ‘demand’ money in the form of loans based on the supply of money available.
But this price of money is incredibly influential around the world. Interest rates affect the prices of shares in the stock market. Oil. Agricultural commodities. Real estate. Automobiles.
Almost everything we touch is affected by interest rates.
So in setting the price of money, we have given central bankers the power to effectively set the price of… everything.
Make no mistake, this is a form of price controls. And there’s not a doubt in my mind that one day (probably soon), future historians are going to look back and wonder how so many people could be bamboozled.
We have somehow been conned into believing that the path to prosperity is for the grand wizards of the financial system to conjure paper currency out of thin air.
Yet this notion of ‘money backed by nothing’ is an absurd fantasy that has failed every single time it has ever been tried before in history.
I bring this up because I want to share a chart with you that I presented yesterday to a savvy group of investors.
Bear in mind first that a central bank, like any bank or business, has both assets and liabilities.
Central bank assets are things like gold and government bonds (e.g. US government Treasuries).
Central bank liabilities are the ‘notes’ that they issue. And if you’re wondering what a central bank ‘note’ is, just look in your wallet.
If you’re in the US, those aren’t dollars. The dollar was defined by the Coinage Act of 1792 as 416 grains of standard silver.
Rather, you’ll see the paper in your pocket says “Federal Reserve Note”– a liability of the US central bank.
The difference between assets and liabilities is called equity, or the bank’s capital. And well-capitalized banks maintain substantial capital as a percentage of their assets.
You could think about this as a margin of safety. The less ‘capital cushion’ a bank has as a percentage of its assets, the less it will be able to withstand shocks to the system.
I tracked this data for the US Federal Reserve. And as the chart below shows, there has been an astounding decline in the Fed’s ‘margin of safety’ over the last few years.
The lower this line goes, the more the Fed gets pushed into insolvency.
Note that the trend levels out in early 2012, only to start another steep decline a few months later just as they told us the economy had ‘recovered’. This is apparently what recovery looks like.
The question I ask is: how low does this go before there’s a currency crisis?
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We have another 10-14 years.......a tough 10-14 years none the less. Things will slowly decline, ala Japan.
The only difference between us and Japan is that they sludge to the finish line like a snail. We will acclerate towards demise like a meteor falling from the sky.
I would put the timeline closer to 2-5 years myself, but yeah, what you said.
Nonsense, sweetie. Our unusually accomodative posture to the markets has resulted in strengthening balance sheets across all sectors of America.
O/T but important and timely. It makes a difference where you get your gold. Tulving just went down. He committed fraud earlier than this (I don´t recall the date of his first bankruptcy):
http://webcache.googleusercontent.com/search?q=cache:http://www.ocregist...
I buy from two LCS...
'What's It Like To Be the Last Black President?'
http://www.nationaljournal.com/white-house/zach-galifianakis-asks-obama-what-s-it-like-to-be-the-last-black-president-20140311
more like the first oreo president
How long? Well, longer than it takes to recite the Declaration of Independence in Quechua!
In our modern monetary system, the term ‘fiat currency’ refers to this absurd notion of paper currency that is conjured out of thin air by central bankers and backed by nothing but hollow promises.
Backed by nothing?
http://2.bp.blogspot.com/-bgZ6vlUceRQ/TsJxOKcMTTI/AAAAAAAAMd4/Vx0tCAaqc-A/s1600/US+Military+Bases+Around+The+World.jpg
Eventually Americans will stop being childish and acknowledge the truth about their economy and their history..
"How long is this go on!?" - Devo, Working in the Coal Mine
Boris!
I is of discover abundance of copper, in Chicago!
Go on any donut shop, inside is copper -- eating donut. Copper is easily detect.
Also, make walkings down streetside with ZH ballcap, and copper will detect and come to you instead. Copper arrive in cars with flashings of light.
Is many years of copper in Chicago!
A ZH cap is worth 10-20 years I think. The USD has dropped below its last uptrend. Support awaits fearfully at about 79.1 and below that the last line defense at 73. Two lines of defense is not mich when you're about to go to war with Russia. That old idea of the $ being the target for the flight to safety hasn't worked so well since Libya. It won't be years.
"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." Henry Ford 1914
Call me crazy, but aren't we already in the beginning stages of a currency crises?
It's already unfolding around in the most exposed countries. Expect it to work it's way to the center.
Notice how Geopolitical events are heating up also.
I think it's already begun. I think we're within 12 months before everything falls apart.
Agree, I think China is going to have to take drastic steps soon, either fold and adopt an Rothschild CB or initiate a gold based currency.
Pray they pick gold.
No doubt.
I think you're right - I just went to King World News and they reckon things are on the very cusp!
They've been saying this for a good five years so I'm pretty sure they must be right by now.
I've heard many of those "shocking" interviews too. But sometimes it just feels good to hear it.
WHAAAAA?
Holy hell, man...Damn.
Yeah I gave up on Gainsville a while back when they took over a month to delivery after I did a wire transfer to them and the pisser was I could have driven to them in 3 hours and picked it up. No more. I deal with the LCS and they have nice specials waiting for me because they recognize me.
Yeah, Gainesville Coins was good, like, two years ago, BUT NOT ANYMORE.
They took TWO MONTHS to deliver my coins after I had wired the funds to them.
TWO MONTHS.
Not good. Not good at all.
LCS is the only way to go nowadays.
I've used Provident, JM Bullion and Scottsdale Silver and been happy with all. I use APMEX when they have a killer sale (.89 over spot for silver) but that doesn't happen much.
Or let's say Russia and China for whatever reason they don't like petrodollars or T-bills anymore. The crisis could be much sooner than we all expect.
Gosh, whatever could give them such a notion?
Dear EU, dear NATO bitchez,
We are delighted to introduce our new cashless gas payment program: GAS FOR GOLD.
No fiat Euros, no fiat Dollars, no Italian Fiats. Only Investment Grade Gold, (0.995 or better).
Sincerely,
Gazprom
ps. Papa-Bear Putin sends his hugs.
It would be game over for the EU and the UK. Russia knows it, the EU and UK both know it too. Not too smart to show up to a gun fight with only your dick in your hand.
Good post.
If the U.S. and the Fed, which IS the U.S. government, are going to use the world reserve currency for strategic politics, i.e., politically, then they have no right to have the world's reserve currency.
The question is, what are they waiting for?
IMHO I'd look more to the Energy markets, nothing moves without the reapers black goo. When the average joe is priced out of market and talk of QE, recovery doesnt shift it; the games change.
Finally the women broke the glass ceiling just as the floor caves in < Fed, IBM, GM, Yahoo > .... Billary '16
10 to 14 years? I think ICBM's take about 40 minutes....
And SLBMs can be even faster.
DC turns to vapor in less than 5 minutes from launch if a boomer is sitting off the east coast and nothing will stop it.
DC is the safest place on earth. There is no way Putin would harm the spineless Kenyan guy. Who else would be as likely to surrender?
Quit teasing.
they have many tools still left in the toolbox for example FWD guidance and communication
revaluation around 2020...https://www.google.com/search?q=dow+gold+ratio+chart&safe=off&source=lnm...
It is not the currency that is the issue. It is the shady operations of the economy that is the problem. If everything is run without transparency and honesty, it all becomes meaningless. No one trusts it after a while.
I think the tipping point will be when nobody pays taxes anymore, just like in Europe.
Rather difficult in the US as taxes are withheld from the majority of people's pay check by their employer. This was made an employer requirement as they knew that individuals would cheat the system at every opportunity.
"freedom's just another name for nothing lef to lose."
Not going to happen.
Using SWIFT as a weapon ,against Iran , was the biggest strategic mistake the US
could make.
Shot itself three times in the back of the head with a rifle.
How can the Fed be "insolvent"? Their owners are worth 100's of trillions. The dollar collapses when it benefits them, then and only then.
Print the post above and place it above your trading terminal.
Mr. Pink, Mr. Black has lots of other advice he can share with you -- for a group of fiat Notes -- if you want to find out who will be 'insolvent' first: You, Black or the Fed.
Wishing you lots of tan & pink ;-)
Kirk
That's easy! I'm already my very own zombie bank
Japan was lucky enough to have a growing world economy for a couple of decades,we will not.We are not Japan and I think it hapens a lot quicker.
And Japanese citizens tended to save. Granted those savings are well on their way to being looted via various (government) means.
We, on the other hand, have (personal) debt. Yes there are 401Ks and IRAs and, yes, MyIRA is perhaps the first shot across the bow for accellerated looting here but that reservoir should empty quickly when it is tapped by our government.
As long as people accept fed notes in exchange for goods and services, there's no crisis (just you having fun).
It will go on until there's a viable alternate currency.
"It will go on until there's a viable alternate currency."
Hmmm, where's fonestar? I'm sure he has some "insight" on this matter?
Or all of those dollars oversea's come home to roost.
Death by 1,000 cuts. As the BRICS and other countries sign bi-lateral trade agreements settled in non-USD currencies, the FRN will lose it's value slowly at first, then as momentum gains, all at once as the last holders dump their reserves attempting to preserve some of their value. Can you say $20 "value" meals at MickeyD's?
Give the (rhymes with schmooze) a break. They broke and they can fix it. Can't blame them for slicing off some fat for themselves while they work at it, or placing one of their gang in the PM seat in Kiev. Just play along it will all work out.
Now there is a man who knows who butters his bread.
Thanks for the honesty.
We have had a long slow currency crisis since the FED was spawned.
Unless you like the bankers and government making the skim off your backs through currency depreciation.
pods
It goes on FOREVER... Joobux RULE!... [& if you dare to say OTHERWISE ~ you're 'ANTISEMANTIC' & thus ~ get kicked off of web blogs ~ whilst OTHERS distract you with useless banter about SHITCOINS]... It's POWER, amazingly, has somehow managed to defy all laws of PHYSICS & nestle its way into a LINEAR TIME PARADIGM... Which NEVER ENDS & instead, only MULTIPLIES [on a HOCKEY STICK 'x'/'y' axis progression graphic]...
~~~
& THAT's why they RULE!
It's all scripted you see... Started about 6,000 years ago... [which ~ notwithstanding the fact that it was MANY hundreds of thousands of years AFTER human civilization initiated... Nobody, BEFORE, had ever thought to PROPAGANZIZE the whole affair ~ & create an 'OSCARS CEREMONY' to celebrate it]... Well ~ in those terms, at least those who were lucky enough to avoid having lived during epochs WITHOUT annoying meteor strikes on planet Earth & are thus buried under the sea at the moment...
~~~
& THAT's why they RULE!... [which ~ as George Carlin mused, is ALSO why ~ YOU'RE NOT INVITED into their 'club']
So SMILE... & GO HOME... & DON'T WORRY ~ BE HAPPY! [just like they, who have systematically monopolized the airwaves for their agenda... told you to do on TV ~ so it MUST be true]...
They ALL agree that that's what you should do... [especially VD]... Here ~ I'll PROVE IT...
http://www.youtube.com/watch?v=KZ1mA1NeUmU
wut? dude ...
"wut? dude .."
Semantics. That pretty much says it all. (as in anti-semantic)
When you rule Wall St., Hollywood and DC AND the TeeVee (..plus add hiding Germany's gold), it's all hidden in plain view, sorry to say. Now let Charles Hughes Smith play his guitar and blather about the "deep state"...
Nothing goes on forever. Whhen the energy runs out, that is when it will end. When you are out of gas, you are out of luck.
Francis? Dat you?
Japan was a saving and producing nation. Much of their own debt was financed internally.
It will be a lot sooner than 10 years. With 10,000 baby-boomers retiring daily the Fed must print more to make up the loss of purchases, Almost all of the stimulus is government borrowing and pcrinting by the Fed.
The Fed follows it's member banks with much more than $4 trillion off-balance sheet debt.
Money for nothing and the chicks are free.
who needs money if the chicks are free
Free chicks? Sounds legit.
Even for the Fed the Chicks aren't 'free'. But the Checks are.
[Kirk does the Priceline Negotiator karate moves]
If that exact trend continues... looks like 4-6 yrs to me.
It's when China says so, no?
Bankruptcy occurs slowly at first and then all of a sudden.
2020ish...https://www.google.com/search?q=dow+gold+ratio+chart&safe=off&source=lnm...
There isn't a the crisis; there's millions of little crises which begin one family at a time, starting with the most vulnerable and eventually climbing until it engulfs everyone but the plutocrats and their praetorians. For millions of families in this country - black, poor, undocumented (why ZH loves labor control in the form of government borders while criticizing them in all else is beyond me) - the crisis began in the 60s, 70s, 80s, 90s. If the crisis hasn't hit you yet be thankful and store as much seed corn (silver and gold) as you can and spare at least pity for those who got left behind 20 years ago instead of some indeterminate point in the future where the crisis allegedly begins.
With all the toxic bonds Fed bought from Banks, I suppose if Fed Marked-to-Market, as an entity, they would already be insolvent. It really frys me that the Fed ponzi scheme is allowed to continue and drag the rest of the world to hell. Central Banks = Elite's money machine. Only one thing. ABOLISH CENTRAL BANKS. ABOLISH THE FED.
Debt is simply a promise to pay, so of course it is imaginary when conditions dictate. Now that the Fed has taken hold of all the crap debt in the U.S., we ought to just drop any pretense that debt exists or ever existed.
That's the ticket.
They pretend they are lending me 'money' and I pretend I'll pay it back someday. Easy come, easy go!
Why so complicated? You can always pay them back, as long as they are willing to lend you fresh funds to pay them back with. Think of it as a "virtuous circle".
How? The bankers own the politicians, the administration, all regulatory agencies, the judges, and even police departments (JPM and NYCPD as an examlple). Just how do we go about removing this roadblock to a better future? Is it possible to use their meme of Order Out of Chaos? Like we start our own order, when their chaos is upon us? Or shall we blindly trust DC to suddenly have a change of alliance and start working for us?
I guess we all know what is coming, just not the date, nor the outcome of such devastation. Will the knowledgable few, rise to the moment or will the gullible masses follow some tin-pot dictator with promises of grandeur? Or perhaps it will be TPTB that win and we will have only 2 classes, the truely needy, and the truely greedy.
So many questions, so little time.
"10 years", "4 years", "2 years"
If I thought that any of you had a clue, then I'd be pretty down about a minimum 2 more years of this shit. Luckily I know that you are all as clueless as I am, so there's still hope that it will be tomorrow.
Finally someone who gets it.
sorry, posted in the wrong place
Here is a clue...
If the fed was not injecting mass quantitys of make believe fiat into the market chances are good you would not be reading this, your timeline would have been terminated. The worlds population is now dependent on the belief that those "majic" notes have value. The production of value "goods" has crashed yet we all are living a normal life. This in and of itself is a mass delusion,. Our very existance depends upon this charade. THE WORLD IS BROKE. The Fed allows us to pretend this is not so.
The quaint term "reset" does not come close to discribeing the chaos and mass death that will come should the world lose faith in the U.S. dollar.
Thank you for each day the fantasy continues.
Life goes on beyond fucked-up currencies.
Don't believe ? Check history...
FED's Solution : NEGATIVE INTEREST RATES & Cashless Society
aka ... BIG BROTHER's End Game
Cue fonestar.
more heresy
The asset that the CBs hold is the promise to repay. In the case of a mortgage backed security it might be your promise, or mine.
Most here have simply not thought things through. Fofoa has. If you let governments or CBs dictate the price of gold by putting a number on it then they control the price of gold and eventually we will be back in the same situation we are in now evwn if gold is revalued upward for a time.
The ECB has addressed this issue by holding gold marked to market. It is not the CB that sets the price it is the marketplace.
When you understand this you will be able to see that fiat, instead of being a curse, actually 'sets gold free'. These were the words of a blogger Aristotle on the USGold forum from the late 1990s.
Once you 'get' this you will never view fiat, or gold, the same way.
What Simon is arguing for is a return to the gold standard....he just doesn't see it yet. I think Mike Maloney is starting to realize it as he speaks against the gold standard and of a market price of gold.
It takes a while to give up old ideas but the effort is well worth it. Freegold is the name (I don't personally care for the name but 'm stuck with it) of this system of fiat currencies restrained by gold. Gold must be free to find it's market value unrestrained by governments or CBs.
you could begin here: http://fofoa.blogspot.com/2010/11/dilemma.html?
Gold, silver, oil, wheat, pork bellies ... all are just stuff ... just commodities. Their price is determined by traders who exchange them. In a properly managed Medium of Exchange (MOE), traders would like to use a constant value entity (i.e an entity whose own exchange value never changes over time and space). We call this entity money and it represents a trader's "promise to complete a trade".
This is obvious from examining trade: (1) Negotiation; (2) Promise to deliver; (3) Delivery. In simple barter, (2) and (3) happen simultaneously on the spot. Money allows (2) and (3) to happen over time and space ... thus it stands for trading promises. And there is always a perfect balance between the supply and demand of a properly managed MOE ... it's the nature of trade.
Once a trading promise is "certified" (either as currency or an account balance), it can circulate in the marketplace as an item of barter, just like gold, silver, or pork bellies. Actually it is better than those commodities because it costs nothing to create the accounting record. This doesn't mean it's worth nothing. Its worth is in being a promise to complete a trade. It's worth is in the guarantee that it will never change "its" value. Its worth is in its universal acceptance in trade all the time everywhere. Its worth is in its unrestriced supply (constrained only by traders' willingness to make trading promises).
To properly manage any MOE, monitor DEFAULTed trading promises. Collect an equal amount of INTEREST to recover the certificates. Thus you assure INFLATION is zero at all times everywhere by the relation: INFLATION = DEFAULT - INTEREST.
It's really very simple.
Todd Marshall
Plantersville, TX
Does anyone care whether the Fed is insolvent? I thought it was the Ministry of Magic now. More money? Poof! Make debt disappear? Poof!
Story is BS..... When you have a credit card, that is open ended you can take a cash advance and leave it in checking....
The dollar will become worthless long before the fed becomes insolvent.
have more fun run the same graph express it in Euros or JPY.....
People like Charles Evans, William Dudley and Janet Yellen are well aware of their destructive processes they are using to boost the upper 20% of the population. To them it's for the banks.
Bernanke and Greenspan should also be held accoutable.
" well aware of their destructive processes they are using to boost the upper 20% of the population."
20%? More likely 0.2%. Middle Class and even most of the upper class are getting squeezed too.
We've found her....Million Dollar Bonus's long lost mother--Mr. Chairwoman.
+1
How long? we when they monitize the Grand Canyon, we still won't be close.
Money is "a promise to complete a trade". It always has been and it always will be. And yes, trading promises come out of thin air, so money naturally comes out of thin air.
The problem we have is "counterfeit money" ... money for which there is no originating trading promise. To any Medium of Exchange (MOE) this looks exactly like DEFAULTS.
To properly manage any MOE, DEFAULTS must be immediately recognized and countered with INTEREST collections to guarantee INFLATION of the MOE to be zero. The relation is: INFLATION=DEFAULT-INTEREST.
We have a major mess going on in our marketplace. The government creates DEFAULTS (counterfeit money not representing real trading promises) and then collects nowhere near enough INTEREST to guarantee zero INFLATION of the MOE. Thus, we have what is becoming pretty huge INFLATION.
But the government plays with the numbers (i.e. they lie) to hide the obvious INFLATION that results.
What should we do with such scoundrels?
Todd Marshall
Plantersville, TX
Maybe Colorado will have a great hemp crop this year. Hemp fibers are about the strongest. This means good quality rope could be coming to a store near you. Lamp posts are abundant, so are oak trees. Does anyone need me to get my crayons and draw a picture?
"The question I ask is: how low does this go before there’s a currency crisis?"
Not being the brightest crayon in the box, how do I know for sure that it isn't already in progress? Maybe the crisis is nothing more than a slow spiral into the abyss, and you know it's over when you've bounced off the bottom?
I don't really get the whole Federal Reserve "capital as % of assets" thing.
The Fed just makes shit up as they go. Who cares if Fed capital goes negative? You think that changes Janet's money-printing mojo in any way?
We don't know how long this will go on.
A "rational" analysis would have had people back to using sea shells and barbaric metals long ago. But day after day more people are told the Fed "king" is wearing fewer and fewer clothes, and yet noone wants to believe.
Until it takes an unlikely boy to point out the obvious.
A long long way. The chart can actually go negative, and by a lot. The currency crisis will happen when oil prices shoot the moon. Money is just a representation for consumable energy, anyway. When you run out of gas, that is when you are in real trouble.
On the FED's book's asset side, there are MBSs and TSYs (and even who knows what). On the liabilities side, there is the USD. When assets lose some of their value, the liabilities' value should also decrease.
You would think that tapering should strengthen the dollar, because it points to an end of money-printing, and even rate hike in the future. However, there may be another "drive" for the dollar, but in the opposite direction: when US gov. bonds' prices go down (yields go up), the dollar weakens. Watch out for when this correlation is showing up. On the 27th of December, when EURUSD suddenly ran 200 pips and tested 1,39, that was also the day when 10yr Treasury yield hit 3%. It was interesting.
The tapering puts pressure on bonds, the market expects higher yields should the FED stop being the biggest buyer of treasuries. If yields go up, the FED's balance sheet shrinks. Liabilities' side should also suffer... And that may put pressure on the dollar.
The USD-strengthening effect could be a stronger driver for the dollar than the effect tapering has on bonds (which then could lead to a weakening dollar), but only if economic recovery would be real (which is not), and the unemployment levels in developed countries had not been much-much worse (which are) than the picture governments' manipulated and goalseeked hopium propaganda suggests.
This trade would be a logical sequel to the classic risk-off play: dollar strengthens, yields go down. When yields go up, the greenback could weaken - that can be a new risk-off trade.
‘Fiat’ is a subjunctive conjugation of the Latin verb ‘fi?’; literally translated, it means “let it be” as in “Let there be light.”
So... Semper Fi = Always Let it Be?
Semper Fi = Shortened from original moto Semper Fidelis = Always faithful.
Fee fi fo fo fee fi fo = Mike Tyson's phone number
"So in setting the price of money, we have given central bankers the power to effectively set the price of… everything."
Who is this "we?!" It is "they" that has given "them" carte blanche to steal.
"It is 'they' and 'them' that will know the guillotine."
"It is 'they' and 'them' that will know the guillotine."
We can only hope and pray there is a massive public display of these thieves being "guillotined!"
I am not certain that a central bank cannot proceed with a negative capital account. In any case, the shrinkage in the PERCENT of the Fed's liabilities represented by paid-in capital is due entirely to the increae in the asset side, represented by government and agency bonds. If interest rates rise, then correct accounting would require the Fed to reduce the recorded value of its bond assets. This would wipe out their capital. But I understand that the Fed records its bond assets at par value, thereby closing this possibility. Would the Fed require the commercial banks to increase their paid-in capital to meet any shortfall? That is an interesting question.
Not to fear.
Apparently the Ukraine CB shipped their gold to the US last night.
Model says 2015.75 = SHTF, 94% R-sq.
Every time I start to read one of his articles I forget what he's selling. How long can this model go on?
what was that ROTHSCHILD quote?
Give me control of the money supply, and I care not who runs the government.
or something like that.............
Thanks internet - Give me control of a nation's money and I care not who makes the laws."
same thing, I guess.
http://chasvoice.blogspot.com/2012/10/death-penalty-for-debasing-currenc...
This shit goes on until we, all of us understand.
Every single honest person on the planet.
Needs to know.
Make a qt of good booze from scratch, drink said booze and then you will know how an organic economy is sure to work. For all the honest folks. The rest will figure it out or not.
Long as the gubment check still spends and wees gets our babies fed, we tight.
I liked this little video as a metaphorical illustration of the answer to the question "How low can this go, before there is a crisis?"
http://www.youtube.com/watch?v=wvcGM6maGGk
Exploding iceberg in Antarctica!
Bit by bit, the people that control the people that control the government of the USA have been hollowing the system out. They appear to want to destroy the republic, and they are clearly succeeding in doing so. I can not think of anything but implausible series of political miracles that could change the path that we are on … Hence, there MUST come some time in the future when that video above is a good metaphor for what finally has to happen. However, the difference is that the collapse of the American economic system is on an astronomically amplified scale, with consequences that are quite impossible to imagine.
"... in setting the price of money, we have given central bankers the power to effectively set the price of everything ..."
By legalizing the banksters' frauds, civilization has developed in such a way that every decision we have made was based on evil deliberate ignorance, since that attitude was the basis of enabling a fundamentally fraudulent financial accounting system to constantly rig everything, in always more and more distorted and demented ways. Industrialization as a whole was steered into mad self-destruction, as the maximization of the privatized profits caused the maximization of the socialized losses, which overall losses are going to become many orders of magnitude greater than the privatized profits.
As usual, guys like Simon Black are correct in their articles, regarding the relatively superficial level of the analysis that they present. However, they are still grossly optimistic regarding the magnitude of the real problems which they somewhat recognize, but understate. We are headed towards non-linear points where the entire system will go through drastic changes of state. We are constantly pumping more and more energy into a system which is based on legalized lies, backed by legalized violence. So far, that energy has been linearly increasing the overall magnitudes of those force backed frauds. However, as we continue to do that, there will come some points, with moments of apparent calm, before their perfect storms, when the established systems suddenly change in drastic ways.
Since everything we have been doing during the industrial revolution, for a few Centuries in England, and then in the USA, was dominated and directed by triumphant financial frauds, which automatically got worse, faster, because that was their basic structure, the overall "success" of the industrial revolution was more and more built on a foundation of fraudulence, which is far worse than merely a house built on sand, or a house of cards.
When a globalized system of electronic frauds, backed by atomic bombs, goes from its grand boom, to its grand bust, the gradual hollowing out of that system will suddenly go like a pyramid of dominoes. It is not merely the social pyramid system that has been driven to have insanely unsustainable proportions by the triumphs of financial frauds being more and more able to command and control everything that society did, it was also that that enabled an overall attitude of evil deliberate ignorance towards the real consequences upon the natural world that that financial fraudulence enabled.
The bender of financial frauds that we have been on, during the whole of the industrial revolution, is not merely going to leave us with a bad hangover, after that party is over. Rather, we are going to discover that our civilization has developed itself in the direction of terminal sickness and insanity.
The "absurd fantasy" of our monetary system is based on being able to operate with evil deliberate ignorance towards the laws of nature, because the laws of man were actually based upon backing up lies with violence. CENTRAL BANKS OPERATE ON THE BASIS OF ENORMOUS LEGALIZED LIES, BACKED BY EVEN MORE ENORMOUS THREATS OF VIOLENCE. That only "works" because almost everyone is forced to agree with frauds, which means that they are forced to operate with an evil deliberate ignorance towards the consequences of those frauds. Therefore, not only does social polarization run away to automatically get driven to be worse and worse, at the same time the destruction of the natural world is also driven to automatically become worse and worse. Every day, the endless triumphs of financial frauds controlling what civilization does are building up the potential for its mad self-destruction. Every time that the established systems are able to leverage up their triumphant legalized lies, backed by legalized violence, to have even BIGGER legalized lies, backed by MORE legalized violence, the entire civilization as a whole is becoming more madly self-destructive.
However, since the real world continues to actually be controlled by lies, backed by violence, the truth about that continues to make no real difference to anything that happens. The "market correction" that is coming is coming from outside of the frame of reference of that market, because that market has become too terminally sick and insane to be able to be corrected by anything within itself. The corrections to the madness of our runaway civilization based on being able to back up frauds with force are now only possible by factors beyond human control. The success of the established social systems of runaway legalized lies, backed by legalized violence, makes it practically impossible for any truth about anything to make any real difference to what that kind of civilization is going to continue to do anyway.
Money made out of nothing was actually backed by murder. That is what enabled society to become totally dominated by financial frauds, and to end up directing everything it did with decisions made inside of a fundamentally fraudulent financial accounting system. In my opinion, it is practically impossible for anyone who has been relatively successful within that system to comprehend how crazy that system as a whole really is, and therefore, they can not comprehend the degree to which that system could collapse into chaos, when its frauds are finally corrected by factors beyond human control, since everyone who was relatively successful within that system was able to do so to the degree that they shared in the general attitude of evil deliberate ignorance, which is the central characteristic of a civilization which is dominated by financial frauds.
....they used to care That Someone Was Paying Attention.
They don't care any more.
Kids at the park were talking about this today. It turns out they think about this stuff when they are looking for jobs.
Purported banking systems endure therefore only by our irreverence for veritable economy; and thus to appreciate how unwarranted dispossession precipitates in inevitably terminal defeasance, we must first understand that it is altogether rationally, legally, and ethically impossible to "borrow" money into existence from purported banking systems.
In pretending both "to lend" from a necessarily prior legitimate possession of entitlement, and yet while likewise pretending "to issue" the same previously non-existent "money," never therefore in the preposterous contemporary lie of economy do purported banking systems give up property commensurable to debts which are therefore only falsified to the banking system. Obligations to pay and to retire principal indeed inhere from our promissory obligations to each other. But an obfuscation of the underlying obligations can never legitimately result in obligations to repay mere impostors, who never in the whole ruse give up commensurable property.
Furthermore, as the payment of principal inherently nullifies further redeemability from the issuance in which the redeemability once depends, thus it is altogether rationally, legally, and ethically impossible also that principal paid by the obligor can ever legitimately represent the further rightful entitlement of anyone. Because the obfuscation is neither a legitimate loan nor debt to a purported banking system which merely publishes further representations of our promissory obligations to each other, payment of the principal by the actual issuer of the whole substance of money therefore inherently retires that money from circulation. "Banking" therefore has no legitimate claim to the principal whatever — neither from purported issuance, or ever afterward.
In its wholly intentional falsification of indebtedness then, contemporary banking is first a preposterous scheme to launder all the principal of eternity into its unwarranted possession. Yet as the principal is never a legitimate property of purported banking, neither can any actual risk ostensibly justify interest; and thus no legitimate claim to either principal or interest exists in the entire falsification.
Yet this unjustifiable imposition of interest imposes an implicit obligation to maintain a vital circulation by perpetually re-borrowing principal and interest from the ever-unwarranted re-possession of "banking" — with re-borrowed principal perpetually restoring every prior sum of falsified debt we might otherwise presume resolved; and with re-borrowed interest therefore perpetually increasing prior sums of falsified debt by ever greater sums of periodic interest — with ever more of a remaining circulation therefore disposed to a perpetual escalation of unjustifiable dispossession, until an inevitably terminal sum of falsified debt destroys purported "credit-worthiness" to borrow further; and vast, wholly artificial deflation, dysfunctionality, and dispossession manifest from the outrageous lies we routinely call "banking," "money," and "economy."
Not only therefore is banking's purposed obfuscation of money the very root of the world's artificial monetary failure; banking's indispensable dependence upon political betrayal is the death knell of representation.
perfectedeconomy.org
To the counterfitters the value of all labor is 0. Think on that for a bit. We are the ones trading our labor for 0.