Meltdown America: The Movie

Tyler Durden's picture

Listening to the Canary, submitted by Casey Research

By Terry Coxon, Senior Economist

During World War II, the British Royal Air Force (RAF) undertook a plan of misdirection to allow a squadron of bombers to approach an exceptionally valuable target in Europe undetected. The target was so heavily guarded that destroying it would require more than the usual degree of surprise.

Although the RAF was equipped to jam the electronic detection of aircraft along the route to the target (a primitive forebear of radar was then in use), they feared that the jamming itself would alert the defending forces. Their solution was to “train” the defending German personnel to believe something that wasn't true. The RAF had a great advantage in undertaking the training: The intended trainees were operating equipment that was novel and far from reliable; and those operators were trying to interpret signals without the help of direct observation, such as actually seeing what they were charged with detecting.

At sunrise on the first day, the RAF broadcast a jamming signal for just a fraction of minute. On the second day, it broadcast a jamming signal for a bit longer than a minute, also around sunrise. On each successive day, it sent the signal for a somewhat longer and longer time, but always starting just before sunrise.

The training continued for nearly three months, and the German radar personnel interpreted the signals their equipment gave them in just the way the British intended. They concluded that their equipment operates poorly in the atmospheric conditions present at sunrise and that the problem grows as the season progresses. That mistaken inference allowed an RAF squadron to fly unnoticed far enough into Europe to destroy the target.

People will get used to almost anything if it goes on for long enough. And the getting-used-to-it process doesn't take long at all if it's something that people don't understand well and that they can't experience directly. They hear about Quantitative Easing and money printing and government deficits, but they never see those things happening in plain view, unlike a car wreck or burnt toast, and they never feel it happening to themselves.

QE has become just a story, and it's been going on for so long that it has no scare value left. That's why so few investors notice that the present situation of the US economy and world investment markets is beyond unusual. The situation is weird, and dangerously so. But we've all gotten used to it.

Here are the four main points of weirdness:

1. The Federal Reserve is still fleeing the ghost of the dot-com bubble. It was so worried that the collapse of the dot-com bubble (beginning in March 2000) would damage the economy that it stepped hard on the monetary accelerator. The growth rate of the M1 money supply jumped from near 0% to near 10%. This had the hoped-for result of making the recession that began the following year brief and mild.

2. A nice result, if that had been all. But there was more. Injecting a big dose of money to inoculate the economy against recession set off a bubble in the housing market. Starting in 2003, the Fed began gradually lowering the growth rate of the money supply to cool the rise in housing prices. That, too, produced the intended result; in 2006, housing prices began drifting lower.

But again, there was a further consequence—the financial collapse that began in 2008. This time, the Federal Reserve stomped on the monetary accelerator with both feet, and the growth of the money supply hit a year-over-year rate of 21%. It's still growing rapidly, at an annual rate of 9%.

3. The nonstop expansion of the money supply since 2008 has kept money market interest close to zero. Rates on longer-term debt aren't zero but are extraordinarily low. The ten-year Treasury bond currently yields just 2.7%; that's up from a low of 1.7%.

The flow of new money has been irrigating all financial markets. In the US, stocks and bonds tremble at each hint the Fed is going to turn the faucet down just a little. And it's not just US markets that are affected. When credit in the US is ultra-cheap, billions are borrowed here and invested elsewhere, all around the world, which pushes up investment prices almost everywhere.

4. US federal debt management is living on borrowed time. The deficit for 2013 was only $600 billion, down from trillion-dollar-plus levels of recent years. But this less-terrible-than-before figure was achieved only by the grace of extraordinarily low interest rates, which limit the cost of servicing existing government debt. Should interest rates rise, less-than-terrible will seem like happy times.

Almost no one imagines that the current situation can continue indefinitely. But is there a way for it to end nicely? For most investors, the expectation (or perhaps just the hope) that things can gracefully return to normal rests on confidence that the people in charge, especially the Federal Reserve governors, are really, really smart and know what they're doing. The best minds are on the job.

If the best minds were in charge of designing a bridge, I would expect the bridge to hold up well even in a storm. If the best minds were in charge of designing an airplane, I would expect it to fly reliably. But if the best minds were in charge of something no one really knows how to do, I would be ready for a failure, albeit a failure with superb academic credentials.

Despite all the mathematics that has been spray-painted on it, economics isn't a modern science. It's a primitive science still weighted with cherished beliefs and unproven dogma. It's in about the same stage of development today that medicine was in the 17th century, when the best minds of science were arguing whether the blood circulates through the body or just sits in the veins. Today economists argue whether newly created cash will circulate through the economy or just sit in the hands of the recipients.

Let's look at the puzzle the best minds now face.

If the Federal Reserve were simply to continue on with the money printing that began in 2008, the economy would continue its slow recovery, with unemployment drifting lower and lower. Then the accumulated increase in the money supply would start pushing up the rate of price inflation, and it would push hard. Only a sharp and prolonged slowdown in monetary growth would rein in price inflation. But that would be reflected in much higher interest rates, which would push the federal deficit back above the trillion-dollar mark and also push the economy back into recession.

So the Fed is trying something else. They’ve begun the so-called taper, which is a slowing of the growth of the money supply. Their hope is that if they go about it with sufficient precision and delicacy, they can head off catastrophic price inflation without undoing the recovery. What is their chance of success?

My unhappy answer is "very low." The reason is that they aren't dealing with a linear system. It's not like trying to squeeze just the right amount of lemon juice into your iced tea. With that task, even if you don't get a perfect result, being a drop or two off the ideal won't produce a bad result. Tinkering with the money supply, on the other hand, is more like disarming a bomb—and going about it according to the current theory as to whether it's the blue wire or the red wire that needs to be cut means a small failure isn’t possible.

Adjusting the growth of the money supply sets off multiple reactions, some of which can come back to bite. Suppose, for example, that the taper proceeds with such a light touch that the US economy doesn't tank. But that won't be the end of the story. Stock and bond markets in most countries have been living on the Fed's money printing. The touch that's light enough for the US markets might pull the props out from under foreign markets—which would have consequences for foreign economies that would feed back into the US through investment losses by US investors, loan defaults against US lenders, and damage to US export markets. With that feedback, even the light touch could turn out not to have been light enough.

To see what the consequences of economic mismanagement can be, and how stealthily disaster can creep up on you, watch the 30-minute documentary, Meltdown America. Witness the harrowing tales of three ordinary people who lived through a crisis, and how their experiences warn of the turmoil that could soon reach the US. Click here to watch it now.

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Groundhog Day's picture

Coming in 2014? 2015? 2016?

I just don't believe it anymore 

i've been institutionalized....Shawshank Redemtion

wisefool's picture

If you like fiction check out Cowboy Beebop. The salient quote is "You are going to carry that weight spike"

espirit's picture

Meh, Matrix Metrics.

On a long enough timeline...

The Gooch's picture

"His judgement cometh and that right soon"


Manthong's picture

Oh, this is cool..

Those of us who are knowledgeable in particle physics understand that strangeness at the hadron level and below involves weird interactions throughout the fundamental know.. baryons, leptons, dimons, goldman saxons, quarks etc.. 

SafelyGraze's picture

item 1. in the list makes a good point

wallstreetaposteriori's picture

Who needs a movie about this shit.... I am living it in real time.

The Navigator's picture

item 1. in the list makes a good point

So does item 1, item 1, and item 1.


Pool Shark's picture



Maybe, but item 1. seems unsupportable to me...


MontgomeryScott's picture

Pavlov did some interesting experiments in this regard. Of course, the PTB took off with it, and you are seeing the results of their implementation being metasticized before your eyes.

The term used clinically is 'desensitization'. One of the classic examples might be the one of Boiling Frogs. if you throw a frog in to a pot of boiling water, it will immediately leap out. If you put a frog in to a pot of cold water, and very slowly turn up the heat, it becomes desensitized to the rise in temperature, and will literally sit in the pot until it boils to death.

Sibel Edmunds has a blogspot named 'Boiling Frogs'.


Item 1 seems to be rational (as well as 1 and one and 1, and one as well).

If Casey Research ever posts a followup article, I hope that they consider recruiting Number Two. If they can wrest Number Two from Dr. Evil, the whole paradigm might shift.

medium giraffe's picture

Lol Manthong.  The quarks being up, down, strange, POMO, BTFD and BTFATH :)

Carpenter1's picture

Yeah, real soon. 2000 years later not a flicker,  not a sign.


"Soon" and "quickly" have no inherent meaning, how convenient.

Bendromeda Strain's picture

not a flicker,  not a sign

sez you... read The Harbinger, or don't. Your comprehension is likely compromised anyway. Next year, 2015, is 7 years after the financial convulsion which was 7 years after the towers came down. Keep munchin your popcorn, pal. May you live in interesting times...

gonetogalt's picture

I can't upvote you due to the italics, but you're right, the harbinger well defines the situation.

mvsjcl's picture

We're reduced to numerology now? Well, just as effective as any other method, I suppose.

MontgomeryScott's picture

BUT... BUT... BUT...

I loaded George Herbert Walker Bush's name in to the number thing, and it spelled SATAN!

I loaded Barack Hussen Obama's name in to the number thing, and it ALSO spells SATAN!


LITTLE RICHARD... what, again? YES... SATAN!

Henry Kissinger? Well, that one's a little tricky. It resulted in 'THE GREAT SATAN'.

ALBERT GORE? An extremely strange result here. I never realized that the numerological code contained the word 'DICKWEED'.

My computer is still working the name 'TYLER DURDEN'. Damned thing is getting a little warmer than normal, and the internet speed seems to have slowed somewhat.

SO, SIX years ago, the 'crash of 2008' happened, and six years before THAT, the CONUS was talking shit about 'mobile scud missile launchers' and 'Yellowcake Uranium from Nigeria', and six years before THAT, the 'Moral majority' had just taken over Congress in the CONUS.

THAT shit spells 'SIX, SIX, SIX'. The 'number of the Beast', isn't it?

Fucking Iron Maiden! FUCK, YEAH!

WHAT'S the name of the 'rebel supporters' or 'government supporters' in the Ukraine, again? 'MAIDAN' or some shit? They ALWAYS telegraph their punches to the deluded, sick, and twisted masses. Wake the fuck UP. In the financials, there used to be an entity called 'Maiden Lane', or some crap. Do you think that the names chosen might have some importance?

Here is some REAL SHIT:

In numerological circles, the number '7-7-7' is a perfect number, given to the Creator.

The number '6-6-6' is the number of man; fallen from grace, and self-destrucive to the point of death. It is ALSO the number of the Prince of the Power of the Air. The current Earth cannot sustain a '7-7-7'; as it is corrupted and wholly unfit and would destruct upon contact (like matter and antimatter annialate ech other).

It is much more feasable for the numbers here on Earth to work in sixes (until it implodes).

Oh, hell, it's ALWAYS about the numbers and the names. IF, for example, I tell you that toilet paper is money, and name myself THE BANK, and tell you that I have a trillion TP dollars for you to use (at interest, of course), wiill you use it to trade with? YES... YOU DO, RIGHT NOW, AND HAVE BEEN FOR AS LONG AS YOU HAVE BEEN EXISTENT ON THIS EARTH...and will continue to pursue, sell your soul for, worry over, and try to take with you when you DIE.

WHAT the fuck do you think MATHEMATICS is?

On a long enough timeline, the Second Law Of Thermodynamics takes effect, and every thing goes from the complex to the simple state, decaying until there is no life left in the 3-dimensional universe that you seem to think is 'all there is'.


Son of Loki's picture

"If you like your Meltdown, you can keep your Meltdown."

StychoKiller's picture

"...Mother used to say: 'If you want, you'll find a way.',

but mother never danced through a fiery shower..."  "In the Rain", from "Cowboy Bebop"

Buck Johnson's picture

Loved Cowboy Bebop, to bad spike got killed on the finale of the series.  I'll watch this documentary.

ZH Snob's picture

there's no if about it.  this financial system will tank hard, whether the Fed stopped all QE tomorrow or not, the damage has already been done.  the looming threat is not the excess domestic dollars, it is the 15 trillion foreign held dollars.  people have no idea whatsoever the mechanism that has enabled the good life Americans have enjoyed for so long.  it is the ablility to export our debt while also exporting our inflation.  we can only do this because of the reserve currency status of the dollar, but when that changes--forever--look out.  there will be no end to the hyper-inflation.  it will be tragically comical.

mumbo_jumbo's picture

"ablility to export our debt while also exporting our inflation"


and exporting our well paying jobs

Cattender's picture

i don't know WHAT to believe anymore.. i just keep buying Gold and Silver.

jefferson32's picture

This movie is pro-gov "good management" vs "corrupt management" bullshit.

1ifbyland's picture

I choose not to watch...was someone hawking a book at he end?

A Dollar Short's picture

Naw, just the free video.  It mighta been a real documentary for once.  

trader1's picture

i applaud the effort they make, but what a shitty overused title.  

does this casey crew propose any solutions that will actually benefit the united states of america, or are they just in the game to enrich their own bank accounts?

Keyser's picture

You didn't follow the link at the end of the video because yes, there was a sales pitch on how to avoid the boogieman. Must be partners with Simon Black... 


Xibalba's picture

Good thing gold doesn't reflect M1

Cornholiovanderbilt's picture

I used to dig ZH and its community. Now it seems like nothing more than an anti American rag. The banksters own all the countries not just the us. The American people are tops. Suck a dick ruskie Intel!

Yen Cross's picture

  corn/hol/io/van/der/bilt    Only Six syllables?     

GetZeeGold's picture




Access denied

You are not authorized to access this page.


Adios amigo!

nmewn's picture

You haven't heard?

A newly minted midget nationalist chess player ("formerly" a and the chi-coms are the newest embodiment of social engineering enlightenment and of course, neither own printing presses.


Awww, I have offended someone.

Apparently a nationalist or a communist has a problem with what I wrote?

TheReplacement's picture

As someone who sees value in nationalism I object.  Blind nationalism=bad.  Justified nationalism=good.  It is what you make of it.  The ideals I was taught long ago in school had me believe my country was the best and only had the best interests of all in mind, when practical.  The ideals of our nation are not the lie.  We have failed as we have not held people accountable for their actions.  Yes, they have certainly lied to us about so very many things but we have looked the other a good number of times.

The ideals of my nation are not guilty.  I am guilty of not living up to them.

Tall Tom's picture

Idealism versus realism. Is that what is at hand?


The ideals of the Nation may be valued but when nobody ACTS UPON THEM then the words just ring empty and hollow. THAT IS THE REALITY.


Now I prefer to deal in the Real World. Striving for the ideal is noble, yes, I will agree. But striving is an ACTION WORD. It is a verb.


You can remain living in the idealism of Fantasyland, a suburb of Disneyland, which is otherwise known as JAIL in the Real World. (Look it up. It is slang for jail and it is not by accident.) Of course the Jail you may choose is one created by your own volition, one made by your own choice.


Personally I will opt for reality over that of fantasy, FREEDOM and LIBERTY over that of IMPRISONMENT, no matter how dismal that reality may be. Because in all of the ugliness the inherent beauty of TRUTH rings solid, has real utility, real value. and is the most wonderful of all to behold.


Your level of participation is up to you. You still have some freedom left. Choose wisely.

shovelhead's picture

How glorious is truth when it tastes like a cooked stray dog in your home under a bridge?

Armchair philosophers invest a great deal in truth and it's beauty but, in reality, she's a hard cold bitch and very unforgiving.

nmewn's picture

Plus one, its a good discussion to have.

"It is what you make of it.  The ideals I was taught long ago in school had me believe my country was the best and only had the best interests of all in mind, when practical."

Why only when practical?

A just nation-state (meaning, any) can't pick & choose under what circumstances it will allow the best interests of the individual citizen to flourish, seemingly on whims. For one thing, that implies the nation-state always knows what is best (as a sentient being) as opposed to the individual knowing what is best for themselves. For another, which department within it (of the thousands that comprise it) decides this course of action, as opposed to any other and under what or who's authority?

What you're really talking about is the destruction of the Rule of Law, where just because one has a position or title (given to him or her by another reprobate) they gain immunity for their wrongs against the individual or society or the world for that matter.

That died when the state decreed its facilitators had the option of being above the individual citizen and above the Rule of Law itself, as applied to everyone else, which is nationalism.

But only when practical, of


Which got me to thinking, can a communist be a nationalist as well?

The answer is yes.

Exhibit A: This "nationalist" propaganda article from the Washingtonian of the Jay Carney family. Real "All-American types"...he and his wife Claire Shipman at home...yes, that Claire Shipman.

Here is what they wanted you to see:

Here is what you actually saw without realizing it:

Forward Soviet! ;-)

imapopulistnow's picture

You know difference between midget chess team and women track team?

Hint:  One group is cunning runts.....


TheReplacement's picture

By "when practical" I mean when attacked we fight to win, period.  When not attacked we don't fight, period.  We don't do things like intervene in Rwanda or Iraq.  On the flip side we certainly should have not problem selling arms to serfs of the world so they can defend themselves against tyranny.  We should not arm tyrants who abuse their people and claim to be anti-whatever-ology suits the day.

It would behoove a free people to promote freedom for all and to actively seek to level the playing feild for the people and their rulers.  If this means giving guns to the lowest stratum so be it.  The more power is spread at the bottom the less of a threat those at the top are to us.  This is quite the opposite of our foreign policy for the last 60 years and look how much tyranny there is now.

Avoid war.  When we must fight we must fight to win - total war.  Let there be nothing in between.  I suspect we would fight many fewer wars this way.  Instead of liberating countries we should help provide the means for people to liberate themselves.  Freedom given is never appreciated.  Freedom earned is held dearly.

I guess it is hard to define in a black and white way.

nmewn's picture

And mine was looking more at domestic, not so much foreign. But you can tell a lot about any nation by how it treats its own.

Does it try to keep them docile by lavishing "gifts" on them (or the reverse) keep them docile by terror.

But to your point about nation-states and their foreign interventions, they all do it. The US just seems (of late) to want to kill off any witnesses of Chris Stevens.

Like I said, you can tell a lot about nations/governments by how they treat their own.

Ralph Spoilsport's picture

And....he's gone. That was a quick ban-hammer. Gonna be some more ban-hammer action tonight from the mood around here.

LetThemEatRand's picture

Ban solid.  It's wide shape goes on super dry.

The difference, is the dryness.

Ralph Spoilsport's picture

I remember that stupid commercial unfortunately.

LetThemEatRand's picture

Time flies when you're being fucked in the ass by the Man.  Or something like that. Life is short.  

zhandax's picture

Shorter than we think.  I spend way too much time here every day, and that username doesn't even register.

Ayr Rand's picture

Let me point out that under Putin, Russia's wealth per capita is only 1/2 that of China. And far less than any developed nation. Putin is a disaster.

Let the banning begin. I'm a member of various other communities, and they will be delighted to know if ZH is a stooge for Russian dictatorship and incompetence. 

xiphius's picture

I'm not sure what you mean by "wealth" per capita but according to the IMF, GDP/capita (PPP) 2013: Russia $ 17,844,  China $ 9,844

xiphius's picture

The UN's Human Development Index for 2013 shows that Russia is ranked 55th out of 185 countires while China is ranked 101st

Infinite QE's picture

Thanks for pointing out the facts. The khazar new bolshevik Ayr Rand will not appreciate that! LOL!