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Paul Craig Roberts Warns "The US Economy Is A House Of Cards"

Tyler Durden's picture


Authored by Paul Craig Roberts,

The US economy is a house of cards. Every aspect of it is fraudulent, and the illusion of recovery is created with fraudulent statistics.

American capitalism itself is an illusion. All financial markets are rigged. Massive liquidity poured into financial markets by the Federal Reserve’s Quantitative Easing inflates stock and bond prices and drives interest rates, which are supposed to be a measure of the cost of capital, to zero or negative, with the implication that capital is so abundant that its cost is zero and can be had for free. Large enterprises, such as mega-banks and auto manufacturers, that go bankrupt are not permitted to fail. Instead, public debt and money creation are used to cover private losses and keep corporations “too big to fail” afloat at the expense not of shareholders but of people who do not own the shares of the corporations.

Profits are no longer a measure that social welfare is being served by capitalism’s efficient use of resources when profits are achieved by substituting cheaper foreign labor for domestic labor, with resultant decline in consumer purchasing power and rise in income and wealth inequality. In the 21st century, the era of jobs offshoring, the US has experienced an unprecedented explosion in income and wealth inequality. I have made reference to this hard evidence of the failure of capitalism to provide for the social welfare in the traditional economic sense in my book, The Failure of Laissez Faire Capitalism, and Thomas Piketty’s just published book, Capital in the 21st Century, has brought an alarming picture of reality to insouciant economists, such as Paul Krugman. As worrisome as Piketty’s picture is of inequality, I agree with Michael Hudson that the situation is worse than Piketty describes.

Capitalism has been transformed by powerful private interests whose control over governments, courts, and regulatory agencies has turned capitalism into a looting mechanism. Wall Street no longer performs any positive function. Wall Street is a looting mechanism, a deadweight loss to society. Wall Street makes profits by front-running trades with fast computers, by selling fraudulent financial instruments that it is betting against as investment grade securities, by leveraging equity to unprecedented heights, making bets that cannot be covered, and by rigging all commodity markets.

The Federal Reserve and the US Treasury’s “Plunge Protection Team” aid the looting by supporting the stock market with purchases of stock futures, and protect the dollar from the extraordinary money-printing by selling naked shorts into the Comex gold futures market.

The US economy no longer is based on education, hard work, free market prices and the accountability that real free markets impose. Instead, the US economy is based on manipulation of prices, speculative control of commodities, support of the dollar by Washington’s puppet states, manipulated and falsified official statistics, propaganda from the financial media, and inertia by countries, such as Russia and China, who are directly harmed, both economically and politically, by the dollar payments system.

As the governments in most of the rest of the world are incompetent, Washington’s incompetence doesn’t stand out, and this is Washington’s salvation.

But it is not a salvation for Americans who live under Washington’s rule. As all statistical evidence makes completely clear, the share of income and wealth going to the bulk of the US population is declining. This decline means the end of the consumer market that has been the mainstay of the US economy. Now that the mega-rich have even more disproportionate shares of the income and wealth, what happens to an economy based on selling imports and off-shored production of goods and services to a domestic consumer market? How do the vast majority of Americans purchase more when their incomes have not grown for years and have even declined and they are too impoverished to borrow more from banks that won’t lend?

The America in which I grew up was self-sufficient. Foreign trade was a small part of the economy. When I was Assistant Secretary of the Treasury, the US still had a trade surplus except for oil. Offshoring of America’s jobs had not begun, and US earnings on its foreign investments exceeded foreign earnings on US investments. Therefore, America’s earnings abroad covered its energy deficit in its balance of trade.

The economic stability achieved during the Reagan administration was shattered by Wall Street greed. Wall Street threatened corporations with takeovers if the corporations did not produce higher profits by relocating their production of goods and services for American markets abroad. The lower labor costs boosted earnings and stock prices and satisfied Wall Street’s cravings for ever more earnings, but brought an end to the rise in US living standards except for the mega-rich. Financial deregulation loaded the economy with the risks of asset bubbles.

Americans are an amazingly insouciant people. By now any other people would have burnt Wall Street to the ground.

Washington has unique subjects. Americans will take endless abuse and blame some outside government for their predicament–Iraq, Afghanistan, Libya, China, Russia. Such an insouciant and passive people are ideal targets for looting, and their economy, hollowed-out by looting, is a house of cards.


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Sun, 05/11/2014 - 13:53 | 4748354 stant
stant's picture

I got this piece of paper with a picture of a yanky general on it. That folks in a town that used to be in Maryland says is worth 50 of something I will use it to wager he is right. Any takers?

Sun, 05/11/2014 - 14:11 | 4748405 Chris Jusset
Chris Jusset's picture

Paul Craig Roberts writes:

The US economy is based on manipulation of prices, speculative control of commodities, support of the dollar by Washington’s puppet states, manipulated and falsified official statistics, & propaganda from the financial media ...

Yes ... testify, brother!

Sun, 05/11/2014 - 14:31 | 4748460 hobopants
hobopants's picture

Dr Roberts sees right through the bullshit for sure, wish he was still in kicking ass in DC.

Plus you should see him coach baseball.



Sun, 05/11/2014 - 17:35 | 4748916 max2205
max2205's picture

I'll take SPY for 1,000 shares  at market Alex......

Sun, 05/11/2014 - 14:38 | 4748476 rubiconsolutions
rubiconsolutions's picture

PCR states the obvious to most of us. If every single dollar created since 1913 is based on debt than the entire thing is a sham. Or scam. All wealth in the US is merely an illusion. All banks, especially the central one, are engaged in a massive skimming operation designed from inception to rob the people while providing just enough creature comforts and distractions so that they don't know they are victims of the largest fraud in human history. 

Sun, 05/11/2014 - 14:43 | 4748486 duo
duo's picture

I'll x-post my comment from Naked Capitalism re: the DJIA (or should it be the Dow Jones Post-Industrial Average)

"Dow Jones “Industrial” index? Let’s see… McDonalds manufactures hamburgers, GS and JPM manufacture fraud, Visa and WMT manufacture human misery, and KO (Coca-cola) manufactures customers for Merck, Pfizer, etc."

Sun, 05/11/2014 - 15:59 | 4748662 fonzannoon
fonzannoon's picture

Michael Snyder should take some notes. this is how u rant without some gay list that makes everyone roll their eyes. 

Sun, 05/11/2014 - 16:52 | 4748795 rubiconsolutions
rubiconsolutions's picture

Brilliant, simply brilliant.

Sun, 05/11/2014 - 22:10 | 4749633 Oliver Klozoff
Oliver Klozoff's picture

Double dipper - are you a teacher?

Sun, 05/11/2014 - 22:39 | 4749691 duo
duo's picture

the sig pic  is Pashha aka Strelnikov from "Dr. Zhivago".  No, I'm a lowly engineer.

Mon, 05/19/2014 - 23:06 | 4776111 Oliver Klozoff
Oliver Klozoff's picture

Mine's a selfie.

Sun, 05/11/2014 - 16:12 | 4748699 Seer
Seer's picture

If 1913 didn't happen it would have, in order, that is, for the Ponzi (perpetual growth on a finite planet) to continue.

Sun, 05/11/2014 - 20:14 | 4749333 All Risk No Reward
All Risk No Reward's picture

We have one that can see!


The more company I have the more the misery is spread around.  ;-)

Sun, 05/11/2014 - 13:56 | 4748363 Haole
Haole's picture

Yeah, yeah, we know.


How the hell does one get a Happy Ending around here?

Sun, 05/11/2014 - 14:00 | 4748379 I am Jobe
I am Jobe's picture

When the dollar collapses , Happy ending

Sun, 05/11/2014 - 14:13 | 4748412 Chris Jusset
Chris Jusset's picture

Q: "How the hell does one get a Happy Ending around here?"


A: When Obama, Congress, the Fed, and Wall Street are done destroying America.

Sun, 05/11/2014 - 16:12 | 4748698 kchrisc
kchrisc's picture

"When Obama, Congress, the Fed, and Wall Street are done destroying America."

You forgot prior offenders.

When all the guilty pols and crats, banksters and Wall Street execs, prior or current, are split to ground and basket, then and only then will there possibly be a "happy ending."

Sun, 05/11/2014 - 14:20 | 4748435 sleigher
sleigher's picture

If so many, and more each day, are becoming aware that the US/global economy is going to fail and bring about a SHTF scenario, how come there isn't a movement among liberty lovers or even ZH'ers about what to do AFTER the failure.  How are the people of the world going to keep this synagogue of satan from grabbing control and doing it all over again?  Am I a naive idealist?  Maybe a dollar failure is a happy ending, but it should be a BEGINNING.   

Sun, 05/11/2014 - 17:28 | 4748875 F0ster
F0ster's picture

"How are the people of the world going to keep this synagogue of satan from grabbing control and doing it all over again?"

Good point. I'm no racist but we have to start addressing today's 'Jewish' problem. Jews through out history have evolved to survive in other peoples countries by sticking together and jointly undermining the society's they inhabit in order to dominate, control and enrich themselves. The ultimate Jews in history, the Rothschilds, Warburgs, Lehmans etc created this evil banking system. Their system has enslaved us by making us work for their fake currency's. The Jews have been persecuted through out history because they unfairly tip the balance of power into their favor (using their religion as the glue to be loyal to each other and screw all others) and suck the blood out every state they inhabit. Now they have Israel and their autodidactic survival schemes are infecting the entire planet. The Jew has become a very serious problem, and we can't fight this problem because they have taken over all forms of power, media, banks politics etc.

Yeah, I said it!!

Sun, 05/11/2014 - 18:05 | 4748982 Optimusprime
Optimusprime's picture

Thanks for taking the trouble.  The Tylers have expelled many for raising, or even hinting at, such realities.  But facts are indeed stubborn things, and even the ADL and AIPAC cannot hide them forever.

Sun, 05/11/2014 - 18:14 | 4748989 jbvtme
jbvtme's picture

"has become a serious problem"?  they've always been a problem.  read what Cicero, Thomas Aquinas, Martin Luther, Francis Bacon, George Washington, Ben Franklin, Thomas Jefferson, Mencken, Shaw, Fitzgerald, Emerson, Twain have said about the jews.

Sun, 05/11/2014 - 18:57 | 4749110 LasVegasDave
LasVegasDave's picture

They are successful in everything they do.  And they are hated for it.  As a tiny percentage of the population, their contributions to society are unmatched.


But concur; the wall street and hollywood big Yids are a particularly evil bunch and Ill shed no tears when the long knives come out for them.

Sun, 05/11/2014 - 20:10 | 4749321 sleigher
sleigher's picture

I don't agree that people hate them for being successful.  People may hate them for how they became successful though.  

Sun, 05/11/2014 - 21:12 | 4749490 jbvtme
jbvtme's picture

"The Jews belong to a dark and repulsive force. One knows how numerous this clique is, how they stick together and what power they exercise through their unions. They are a nation of rascals and deceivers." Cicero

Sun, 05/11/2014 - 21:15 | 4749496 jbvtme
jbvtme's picture

"The Jews should not be allowed to keep what they have obtained from others by usury; it were best that they were compelled to worked so that they could earn their living instead of doing nothing but becoming avaricious."

Thomas Aquinas

Sun, 05/11/2014 - 21:17 | 4749507 jbvtme
jbvtme's picture

"The day will come when all nations amidst which the Jews are dwelling will have to raise the question of their wholesale expulsion, a question which will be one of life or death, good health or chronic disease, peaceful existence or perpetual social fever." Franz Liszt

Wed, 05/14/2014 - 01:02 | 4757902 SeattleBruce
SeattleBruce's picture

And if we can't scapegoat the Jews, we would/will scapegoat another group, as what they do, and what we do is all part of the same human nature - corrupt, frail - separated biologically by only .5% of the genetic code. Those are the facts boys and girls. Hard to face the truth, or look your critique square in the eye - in the mirror - isn't it?

Sun, 05/11/2014 - 19:37 | 4749203 Promethus
Promethus's picture

I think anti-Semitism is a good tell that you are dealing with a hard core member of the tin foil hat crowd.  Burn any good books lately?

Sun, 05/11/2014 - 20:03 | 4749303 sleigher
sleigher's picture

It isn't anti-semitism if they aren't semites.  Dig just a little deeper...

Mon, 05/12/2014 - 00:13 | 4749845 kchrisc
kchrisc's picture

Fantastic and well articulated comment.

It also highlights why more of big government is not the answer in dislodging them, as they will just co-opt that government as well, or have it killed off.

The answer is to get rid of their instrument of destruction, big government.

Mon, 05/12/2014 - 01:21 | 4749927 All Risk No Reward
All Risk No Reward's picture

Somehow lumping my very efficient Jerwish neighbor who runs an efficient auto body shop with the Rothschild head honchos seems to on the far side of absurd.

If only people weren't so simple minded and craved the desire to over generalize to the point beyond irrationality.

Maretin Luther King was right - this is an issue of content of character.

All freedom loving Jewish people that thirst for liberty are on my team.

You see, value systems are important to me, not superficial, simple minded groupings.

The average Jewish person in Israel can't stand their government as evidenced by 500k people hitting the streets and protesting their corrupt Jewish government back in 2009.

Since most people can't seem to wrap their mind around it, with or without some help, this is about the oligarchs vs the rabble.

The non oligarch Jewish person is haviong their home foreclosed upon legal paperwork, too.

The oligarchs financed Hitler and his little campaigns of eugenics extermination.

Are the Rockefellers Jewish?

The ignorance, it burns.

An ancient Roman once observed that different tribes would fail to unite against a common enemy even if it meant all the tribes were eventually extinguished by the common enemy.

The oligarchs understand this, hence, they do all they can to divide us into tribes.

I respect organization and hard work when it is ethically performed.

When one is at the top of the pyramid, though, and is organized and hard working in trying to achieve their evil, well, then I don't respect that, regardless off whatever irrelevant characteristic the irrational masses want to pin on the bad guys that only covers up the real problem - a psycho/sociopathic evil pathology...  or, if you will, a lack of character.

It is that simple.  It is not complex.



Mon, 05/12/2014 - 02:04 | 4749988 hobopants
hobopants's picture

I really think it's a dangerous distraction as well, look at the person not the group...I know I would be ashamed as hell if somebody judged me by what my dumbass country does.

Sun, 05/11/2014 - 17:26 | 4748890 Zoomorph
Zoomorph's picture

ZH needs to publish a series of moral arguments first, because I strongly doubt that we should agree on what to do following a SHTF scenario.

For example, you would want to eliminate the power game from life, get rid of those "evil satanic rules" and convert humanity in a herd of happy, peaceful, nihilistic sheep. Some others would want to replace the current powers that be with something more powerful, rather than something more degenerate.

Sun, 05/11/2014 - 19:17 | 4749155 naughtius maximus
naughtius maximus's picture

storm clouds gathering

Mon, 05/12/2014 - 01:12 | 4749911 Dr. Destructo
Dr. Destructo's picture

"how come there isn't a movement among liberty lovers or even ZH'ers about what to do AFTER the failure."

I'm glad you asked that question, as it is one that I have oftentimes asked as well. I firmly believe that the core of any new beginning comes from our food; controlling your food by growing your own organic garden AND TEACHING OTHERS HOW TO DO SO is a very powerful act of defiance. I have worked hard by learning sustainable agriculture, volunteering at my local farm, learning permaculture, intentional community building from those who have lived in them, and animal husbandry (along with survival skills) so that when the SHTF there will be some embers left that will create a society that empowers the individual while promoting cooperation.

Let's face it: If we are to break free from tyranny we will need to learn how to think in terms of community rather than in terms of me, myself, and I. Our government wants us to divide us into groups and pit us all against one another; it's their sick definition of "diversity". However we are able to unite since we all face the same problems of a proxy government that serves the rich, while leaving us with a fascist regime that revokes more freedoms with each passing day. Everyone faces this, but the word needs to get out that there is an alternative to what we have today, and even though we cannot build one system that makes everyone happy we could at least empower as many as we can to make their own little enclaves while we use sound economics to increase cooperation with one another.

For those who are helping out as many as they can in order to weather the coming storm I applaud you. By helping and enlightening others to what is truly happening you're actually speeding up the demise of the Empire.

Sun, 05/11/2014 - 14:31 | 4748457 Normalcy Bias
Normalcy Bias's picture

Dollar Collapse => Martial Law. That's not going to be a joyful release for a vast majority, I suspect.

Sun, 05/11/2014 - 14:55 | 4748503 daveO
daveO's picture

Martial law leads to seccession. Happy ending. Lincoln nearly broke the northern union last time with his greenback printing. There'll be no way for DC to fund a war against it's people this time. It'll probably go down like the USSR in '91. 

Sun, 05/11/2014 - 15:13 | 4748534 Normalcy Bias
Normalcy Bias's picture

I applaud your optimism. DC has unimaginable treasure and weaponry stockpiled, and with the advent of robotics/drones/other tech, they wouldn't even have to do much of the dirty work themselves...

I hope you're right.

Sun, 05/11/2014 - 16:43 | 4748762 bigkahuna
bigkahuna's picture

NB - you are correct.

In law enforcement they have what is called a "thin line". There are only so many cops that can respond to crime at any prticular time. The thin line works becauce of organization and force. 

The same is true of any enforcement organization wether it is lawful or not. Organization is key and Force is the next important factor.

In the US - the DoD has both Organization and Force.

The DoD has been in a fruitless war which is now beginning to unwind. There has been no overall victory and it is safe to say that people in the DoD are upset with that.

The politicians continue to find ways to "employ" the DoD in unwinnable scenarios.

What you may see in the end game is that our own politicans/media foment a civil type of conflict over here. People think because they have a rifle or a pistol and some ammo that they will be able to win a shooting conflict or at least maintain some type of defense. Yes, it is true - people can win or defend against an adversary which is similiarly or less well equipped. What people cannot win against are drone fired missiles, gps munitions, large artillary type rounds,and things of this nature.

My point is this: The DC tyrants are trying to start a civil war which they will then put down with an angry DoD. There is no force in the US that is capable of standing against the DoD. We all need to make sure that we do not follow our crazy politicians into a civil war. If we DO - it is the Agenda 21 depopulation that we will be helping along.

Sun, 05/11/2014 - 17:18 | 4748863 nightshiftsucks
nightshiftsucks's picture

Nonsense,they need infastructure to use those weapons.Where you are wrong is that you assume that all of the DOD would be on the govt side and I don't think that's true.What do you think the sheep will do when they realize the dollar has no value and that they won't be getting their pensions? What will the govt have that they just couldn't take ?

Sun, 05/11/2014 - 17:40 | 4748925 bigkahuna
bigkahuna's picture

They've been walking rounds in on unfortunate targets for centuries - with no gps required. 

The DoD has its own infrastructure and logistics. If the USD fails, they will be the first to get the new fiat. The NWOs only other option away from dividing and conqering in order to achieve Agenda 21 population goals is to release some type of virus. 

I am guessing that the DoD and their co-horts would be easier to control though.

Sun, 05/11/2014 - 18:01 | 4748969 Eternal Complainer
Eternal Complainer's picture

"....and that they won't be getting their pensions?..."

This would be the proverbial 'straw' that breaks the camel's back IMO.
That will be the flash point that ignites the powder keg.

Sun, 05/11/2014 - 20:14 | 4749334 lasvegaspersona
lasvegaspersona's picture

if the dollar collapses who will feed and shelter and transport the DoD stooges? If supermarkets close if there a special program to feed the soldiers and Homeland Security forces? Do you think the majority of unpreparred folks will rush to supply an occupying army?

Or do you see government workers walking off the job (as they did in the USSR) when they realize the dollar gig is up?

If something happens quickly there could be a few days of martial law...then 'no law' I would guess.

What is left of the government would have to respond to basic needs in a hurry or it would have no authority. The hungry masses will not tolerate usless leaders then.

Mon, 05/12/2014 - 01:31 | 4749936 Dr. Destructo
Dr. Destructo's picture

"if the dollar collapses who will feed and shelter and transport the DoD stooges? If supermarkets close if there a special program to feed the soldiers and Homeland Security forces? Do you think the majority of unpreparred folks will rush to supply an occupying army?"

People who depend on the system will do whatever it takes to perpetuate it. The military in general relies on indoctrinating their people in being loyal to the organization, and many people within will do whatever it takes to defend and perpetuate the organization and support those within. You also gotta take into account that many people within the military are in it because they got a family to feed, and that just adds to the fealty. The military only tells their people what they need to know to complete the mission -nothing more. Some will defect (we need to build an underground railroad of sorts to facilitate that), but many will remain.

Yes people will supply an occupying army because people are being conditioned to believe that the military/law enforcement are protectors from the cradle on up. People don't wanna rock the boat because they have hope that things will get better and will ignore any logic that says otherwise. Terror keeps people in line, and they will tolerate tyrants if they perceive that the alternative is much worse.

Sun, 05/11/2014 - 14:09 | 4748400 1stepcloser
1stepcloser's picture

When you pay for happy endings with a mercury dime..

Sun, 05/11/2014 - 18:32 | 4749044 realWhiteNight123129
realWhiteNight123129's picture

Well just ending will make me happy even if it is painful short term.

Sun, 05/11/2014 - 22:52 | 4749714 TheFourthStooge-ing
TheFourthStooge-ing's picture


How the hell does one get a Happy Ending around here?

Happy Ending: when the cursed earth known as Vichy DC is cleansed by fire.

Sun, 05/11/2014 - 13:56 | 4748365 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

I too was once "insouciant" and naked in my shorts.  Now I just don't give a fuck.

Sun, 05/11/2014 - 14:04 | 4748389 Winston Churchill
Winston Churchill's picture

Did she cut it off ?

Sun, 05/11/2014 - 14:05 | 4748393 Comte d'herblay
Comte d'herblay's picture

The last naked short I attempted was buying TZA at 90, after two years of reading the posts of this blog.

That was indeed careless.



Sun, 05/11/2014 - 14:02 | 4748378 deflator
deflator's picture

The fraud was gradual for a long time, hardly noticeable to most. Now it is blatant everyday SOP.

 People are insouciant until they get handed the bill.

Sun, 05/11/2014 - 14:27 | 4748447 CrashisOptimistic
CrashisOptimistic's picture

This article is blah blah blah blah blah Fed did this Fed did that blah blah blah.

Except that -- of the total QE done, all but a few hundred billion was redeposited at the Fed as Excess Reserves.  It didn't get "pumped into the economy" creating a "flood of liquidity" to boost stock and bond prices.  It left the Fed and went right back into the Fed.

There is no House of Cards -- because there is no house and there are no cards.  Money is an invented construct.  It's a mere convenience.  There is not going to be a collapse of the house of cards.  There is no moral hazard.  If something looks like it's going to destroy the system, it will be stopped, and if someone is harmed in that process they will be silenced.  Period.

It's Not Going To Happen.  Billions are not going to be allowed to die because of numbers on a screen.  The numbers will be changed by decree, or the screen will be removed.  If you are hurt by that happening, too bad.  They will not let billions die from this, nor their own power dissolve from this.

Only oil can take it all down.  And it will.


Sun, 05/11/2014 - 14:44 | 4748478 all-priced-in
all-priced-in's picture

You may be missing the part about the FED monetizing a couple trillion of US government debt.

Cut through the BS and you have the FED handing the treasury stacks of freshly printed dollars.

But if you repeat the same post on every thread maybe it will become true.

Banks borrow from the FED at zero interest rate - use loan  to buy treasury securities - sell securities to the FED   - the bank is just a middle man so the FED can claim they are not monetizing the debt because they define monetization as buying directly from the treasury.












Sun, 05/11/2014 - 15:06 | 4748524 CrashisOptimistic
CrashisOptimistic's picture

dood, that's not the point. The point is the monetary stimulus didn't really happen.  It was just redeposited back into the Fed as excess reserves.  It left the Fed for about 72 or 96 hours and then re-entered the Fed.

So what if they are monetizing the debt.  Why does this matter?  Who is going to stop this?  All CBs are cooperating and agreeing with it. 

Money is imaginary stuff.  It didn't exist in the Garden of Eden.  It's not physics.  It has value only via agreement.  If it poses a problem, you just change its numbers by decree -- or eliminate whoever disagrees.

And if you were faced with the death of billions, you'd do the same thing.


Sun, 05/11/2014 - 15:17 | 4748537 all-priced-in
all-priced-in's picture

So the treasury didn't spend all of these trillions?

If the FED just loaned the banks a few trillion and then the banks deposited it back at the FED then your view would be correct -

But this cash was spent by the federal government - and then found its way back into the banks as deposits -


 Do you know what excess reserves are?  

Sun, 05/11/2014 - 15:51 | 4748637 Variance Doc
Variance Doc's picture

Spot on with .GovCo's a.k.a. USSA spending and the private FED's printing.  Also, CO confuses money with currency.  They are not always the same.

Sun, 05/11/2014 - 15:58 | 4748658 Everybodys All ...
Everybodys All American's picture

Dude, No I would not have chosen this path. The banks who were over their heads with bad debt would have been forced to declare bankruptcy and the solid banks who did not make these bad loans would have been supported going forward if necessary. I'd also abandon every free trade agreement ever written as they do not favor the US worker or US corporates long term. The Icelandic approach for banks and jail for those Blankfeins and Bernankes of the insane approach we are on today.

Sun, 05/11/2014 - 16:36 | 4748734 Bay of Pigs
Bay of Pigs's picture

Good Lord, are you fucking serious? Imaginary?

Sun, 05/11/2014 - 16:50 | 4748783 CrashisOptimistic
CrashisOptimistic's picture

Absolutely nothing.

That's what abrogating mark to market did.  It eliminated the threat via redefinition.

That's what will happen every time something imaginary threatens to kill billions.

Sun, 05/11/2014 - 17:28 | 4748888 hobopants
hobopants's picture

I think you're ignoring that whole human element part of the money thing. People work for that money stuff and so it takes on a different meaning than just another piece of paper. If it was a simple matter of changing the system then they wouldn't be doing all these financial acrobatics in order to prolong the inevitable.

When the dollar takes a shit the social fabric will be torn, and thanks to it's reserve status it will be a world wide phenomenon. I think you're right on the oil thing, but the reality of our financial situation reasserting itself in a population with much different expectations isn't going to be very pretty at all.

Sun, 05/11/2014 - 19:19 | 4749159 naughtius maximus
naughtius maximus's picture

sounds like a case of "it couldn't happen here-ism"

Sun, 05/11/2014 - 14:02 | 4748383 Jack Sheet
Jack Sheet's picture

Correction: as Jim Rogers pointed out, all gold futures sales on the Comex are "naked"because there is no obligation to possess gold at the time of contract.

Sun, 05/11/2014 - 14:04 | 4748392 Mrs. Cog
Mrs. Cog's picture

Rickards says the risk is exponential, it doesn't even matter what the catalyst is at this point... a bigger implosion than the world has ever seen. Financial doom porn at its finest.

Sun, 05/11/2014 - 14:15 | 4748416 Jack Sheet
Jack Sheet's picture

"inflation nowhere in sight"
J Rickards, same source

Sun, 05/11/2014 - 14:07 | 4748397 Intelligence_In...
Intelligence_Insulter's picture

A house of cards is right, a socialist experiment gone very very wrong.  They have run out of other people's money and just you wait until the welfare runs out.

Sun, 05/11/2014 - 14:59 | 4748515 daveO
daveO's picture

Open season!

Sun, 05/11/2014 - 15:02 | 4748404 falak pema
falak pema's picture

this damnation of what US capitalism has become from the man who is purported to have invented the term REAGANOMICS; virulent advocate condemning its new spawning, does not lack by its content of supreme irony.

Imagine when Caesar crossed the Rubicon his most trustworthy General during the Gallic campaign, Labienus, fought him tooth and nail up to his death at last battle of Munda.

PCR is today's Labienus. 

Sun, 05/11/2014 - 21:57 | 4749613 Cathartes Aura
Cathartes Aura's picture

phew!  someone else with a sharp, pointy stick to poke a few holes in this gas-bag of flag-wavery!

The America in which I grew up was self-sufficient.


The economic stability achieved during the Reagan administration was shattered by Wall Street greed.

oh my, so everything was moving right along, nothing swept under the rugs, no numerous nations globally pillaged for their resources *cough* Shock Doctrine, trickle-down Reaganomics,  phony "War on Drugs" provided by the  CIA . . .

Pfffttt!  how soon we forget.

the amrka yer looking for never existed, except on telly-vision & the controlled-meme HollyWood movies.  *hint* RayGun was an actor!

I thought we already settled this???

Sun, 05/11/2014 - 14:12 | 4748411 Tulpa
Tulpa's picture

"Profits are no longer a measure that social welfare is being served by capitalism’s efficient use of resources when profits are achieved by substituting cheaper foreign labor for domestic labor, with resultant decline in consumer purchasing power and rise in income and wealth inequality."

Oh look, another leftist "humanitarian" who insists that Chinese and Indians go back to living on dirt floors and 1000 calories a day so that Americans can make $20/hr turning a bolt all day and retire at 55 with a fat pension.  I guess "social welfare" of brown people doesn't count, eh?

Sun, 05/11/2014 - 14:23 | 4748443 Comte d'herblay
Comte d'herblay's picture

His remarks only address the American economy.

In that, he is not all wrong. Nor is it any indication of his being right or left.  Looks pretty neutral to me.

Sun, 05/11/2014 - 15:17 | 4748545 Tulpa
Tulpa's picture

The outsourcing pout (along with placing the blame on private interests rather than the corrupt bureaucrats who enable them) is more common on the left.  Don't you people see that he's calling for BIGGER government?  I thought ZH considered that a bad thing -- maybe I was wrong.

Sun, 05/11/2014 - 17:42 | 4748927 hobopants
hobopants's picture

He criticizes those bureaucrats a good deal too in many of his interviews.

I don't get your oursourcing you think that being on the wrong end of a parasitical relationship with the US benefits people in the third world?

Better for everyone if we traded actual goods for goods, instead of goods for Federal Reserve Note toliet paper. 


Sun, 05/11/2014 - 20:08 | 4749317 Tulpa
Tulpa's picture

FRNs are quite valuable for the time being.  Few Chinese or Indians are using them to save for retirement, they're more interested in converting them to food and shelter.

Sun, 05/11/2014 - 20:09 | 4749320 Tulpa
Tulpa's picture

What's his plan for stopping outsourcing and importing industrial goods, btw?  I bet it's got a lot of government coercion in it.

Sun, 05/11/2014 - 14:31 | 4748465 l8apex
l8apex's picture

We never owed folks in India, China, and elsewhere anything.  Let them build their own country and standard of living on their own.  I'd prefer not to see America and Americans sacrificed for the benefit of a few and somebody's strawman argument that a middle class in the US and elsewhere are mutually exclusive. 

Sun, 05/11/2014 - 15:14 | 4748536 Tulpa
Tulpa's picture

So let me get this straight -- India and China are supposed to build up their industrial base without exporting anything?  You do realize the US developed into an industrial powerhouse largely via exports.

Sun, 05/11/2014 - 15:46 | 4748619 loonyleft
loonyleft's picture

you do know that as a whole, ie, the earth, nobody exports anything. I am not sure what logic you have to think that an industrial base cannot be built without exporting. 

As for the US being an industrial powerhouse via exports, it really isn't a simple explanation and has to do with timing (the industrial revolution), huge resources (a mostly empty continent and oil bubbling up from the ground), opportunity (a world war or 2), undestroyed infrastructure (didnt' get dresdenized, or hiroshima'd)

Sun, 05/11/2014 - 20:00 | 4749294 Tulpa
Tulpa's picture

If you start from poverty, then yes you have to export to build an industrial base.  There was no wealthy class in China or India to buy domestically-produced value-added products in 1980.  If you insist on no exports, then you insist on them remaining in poverty forever.

3 of the 4 reasons you give for US industrialization have to do with exports, btw.  We exported oil for many years, exported arms, food, clothing during the wars, and dominated postwar global trade with Japanese and European industry obliterated by WW2.

Mon, 05/12/2014 - 06:30 | 4750152 Global Observer
Global Observer's picture

We never owed folks in India, China, and elsewhere anything.

Those US companies setting up their production/services in China and India don't do that because they feel an obligation to Chinese or Indians, but because it gets them what matters most to them: their bottom line or share price. Just as they don't feel any obligation to Chinese and Indians they don't feel an obligation to provide other Americans with jobs either. They only feel an obligation to themselves, to maximize whatever they seek, usually their wealth.

I'd prefer not to see America and Americans sacrificed for the benefit of a few

Are you a leftist? Everyone working for his/her benefit is supposed to be the essence of capitalism. When those with capital invested in the US, they did so to benefit themselves, not the US middle class. It is the same reason, their personal benefit, that may make them take their capital elsewhere. They neither shored up the US middle class in the past out of some sense of patriotism nor is the US middle class being sacrificed now. The capital never belonged to anyone other than the one with access to it, for someone else to decide where it should be invested. The US middle class was the beneficiary of its interests and those of capital being aligned. Those interests are no longer aligned. That is all. No one is "sacrificing" the US middle class, at least not any more than any other powerless group whose interests were out of sync with the interests of capital.

Sun, 05/11/2014 - 15:04 | 4748521 daveO
daveO's picture

Poor little freeloaders. They've almost killed the goose that lays their golden eggs. Then, they'll go back to dirt floors, anyway. 

Sun, 05/11/2014 - 15:15 | 4748542 Tulpa
Tulpa's picture

Working ridiculous hours in a physically demanding job for low wages makes one a freeloader?

Sun, 05/11/2014 - 15:48 | 4748630 loonyleft
loonyleft's picture

killed the goose that lays the worthless fiat pieces of paper and treasuries worth jack shit. 

Then they'll go, 'holy fuck, we have all the manufacturing base and technology, but with none of the burden of people pretending to pay us' 

Absolutely China especially will have trouble switching, but the idea that the US is doing any country a favour by consuming is just laughable...ha ha...ha........ha. 

Sun, 05/11/2014 - 20:06 | 4749311 Tulpa
Tulpa's picture

The dollar isn't worthless now... and there are needs in the present that exporting to the US is taking care of.  We're so wrapped up in fretting over our retirement planning and financial advising here that we don't understand what it's like for folks to whom having a full stomach, a warm bed, and indoor plumbing is a luxury.

Sun, 05/11/2014 - 15:52 | 4748638 tsuki
tsuki's picture

Oh look, another rightest "humanitarian" who insists that Chinese and Indias go to factories to work for slave wages and die by jumping off building and fires so that he can go to Walmart and fill his shopping cart full of cheap shit.

Sun, 05/11/2014 - 19:48 | 4749251 Tulpa
Tulpa's picture

They're working those jobs voluntarily, not being kidnapped and chained to the machines in the factory, so it's obviously better than scratching a living off a bamboo farm or whatever other options in life they had (that American leftists want to force them back into).

Sun, 05/11/2014 - 14:16 | 4748419 q99x2
q99x2's picture

Up my FAFSA there are no western nations and the world is ready for conquest. The yellow man come take my land and put me on reservation. Woo woo woo woo woo woo woo woo. Our leaders speak with forked tongue. woo woo woo woo woo woo woo woo woo woo. Only one enemy exist. Call him NATO. All the world hate NATO and his UN uncle. Legend has it that they are run by suicidal bankers that print fake money. Woo woo woo woo woo woo woo woo. Cut deals with Xi man. Spontaineous arizing say time is short tor the NATO man. East have enough wampum and safe haven to purchase uncle banksters so that they turn on Nato man. The ancient one says, "during free for all get an education". Up my FAFSA Yellen M'Fer.

Sun, 05/11/2014 - 14:17 | 4748425 Tulpa
Tulpa's picture

"Capitalism has been transformed by powerful private interests whose control over governments, courts, and regulatory agencies has turned capitalism into a looting mechanism."

And of course the governments, courts, and regulatory agencies are populated by poor innocent bureaucrats who have no way of resisting said private interests? Baloney. Private interests would have no way of controlling policy were it not for corrupt "public servants".

Sun, 05/11/2014 - 14:18 | 4748428 yogibear
yogibear's picture

David Einhorn's interview with Bernanke proves this QE pump is one large PhD experiment.

Sun, 05/11/2014 - 14:20 | 4748431 BlueStreet
BlueStreet's picture

A house of cards built on a foundation of quick sand designed by Chuck Ponzi.  

Sun, 05/11/2014 - 14:19 | 4748433 Comte d'herblay
Comte d'herblay's picture

You're absolutely right, Mr. P.C.  Roberts.  

But you are forgetting about the complicity of Big Media in spending or investing trillions of dollar per year to distract us from our bread, with galactic circuses.

Nothing will happen to Wall Street until the Media----whose owners are a significant part of the 1%----fall down on their job.

I don't think anyone believes they have a ghost of a chance to do anything but forsake their futures and embrace the chaos.

Or just outlive it.


Sun, 05/11/2014 - 14:23 | 4748444 sleigher
sleigher's picture


Harold Wallace Rosenthal.  1976 interview.

Sun, 05/11/2014 - 14:22 | 4748438 I am Jobe
I am Jobe's picture

Keep the masses with never ending entertainment. This is how things end. 


Sun, 05/11/2014 - 14:22 | 4748440 free_lunch
free_lunch's picture

I don't see a house of cards, I only see an artificial economy, controlled trough monetary policy and big time fraud (probably much bigger then we can imagine)

Someone is pulling levers and pushing buttons, fine-tuning the transfer of wealth to a specific elite. Under cover of Orwellian information provided by media and economists who's job it is to make simple things look overly complicated so no one sees the obvious, and to act surprised after the damage is done...again.

Economics: the biggest fraud ever perpetrated on the world?

But that's just my view.. There's always a 0,00000000001% chance i'm wrong..

Sun, 05/11/2014 - 14:30 | 4748464 Bioscale
Bioscale's picture

Economics starts to make sense once you have read some works of Ludwig von Mises.

Sun, 05/11/2014 - 15:13 | 4748514 free_lunch
free_lunch's picture

Economics are dead simple: If Joe wants a new roof made by John, John makes the roof and Joe writes him an IOU (worth of a new roof). So next time John want something done he knows Joe is good at, John can use this IOU to trade for Joe's work.


When it becomes ridiculous is when Joe can't write this IOU, but only James has the power to write IOU's. Now Joe has to lend an IOU (worth of a roof) from James who writes this IOU with his magic pen. So now Joe uses the IOU to pay John.

What happened?

Joe is in debt with James (who has done no work) equal to the worth of a roof + interest
John has a IOU equal to the worth of a roof.
Joe has to work for James to repay the IOU (worth one roof + interest)


So John has worked hard to provide Joe with a new roof, Joe is breaking his back doing work for James.

And James is best of, doing no work at all but getting Joe to work for him with a strike from his magical IOU pen.


One could say 2 slaves and one master were created, with the power of writing IOU's

Now James can control the economy of their little community, since only he can write IOU's. If he wants a lot of activity, he will write IOU's easily without questioning. But if he wants to create a crisis, he refuses to write a single IOU, without these IOU's Joe and John can't trade, so all activity stops..

Sun, 05/11/2014 - 15:55 | 4748645 loonyleft
loonyleft's picture

Economics are dead simple: If Joe wants a new roof made by John, John makes the roof and Joe writes him an IOU (worth of a new roof).

How about if Joe wants a new roof he trades what he has now in his hands the equivalent of a new roof. How about no IOU's. 

IOU's sound great because they allow you to buy based off of future earnings, but no business is going to be run that way.

You can't go to work and say, hey, pay me for the next year now, and I will give you an 'IOU', cause, hey I'm good for it.


Sun, 05/11/2014 - 21:50 | 4749588 naughtius maximus
naughtius maximus's picture

banking will make sense after a few viewings of this

Sun, 05/11/2014 - 14:58 | 4748506 Savyindallas
Savyindallas's picture

No-it's a house of cards. When dollar hegemony ends and $10 trillion in dollars comes back to the US, people will lose everything through massive devaluation of the currency and/or hyper-inflation. Good luck buying anything Chinese made at Walmsrt (essentially everything) with American dollars.  Look at the $1.2 trillion in student loan debt  -look at the stagnation of wages while real inlfation (food, energy, medical, tuition, commodoties, etc. ) have increased. Look at real unemployment which is well over 20%. They have systematically turned us into debt slaves and their Fascist feudalistic system will only get more oppressive.

The reset of America when dollar hegemony ends-will be brutal and shocking. Why else do you think Homeland Security has been massivley arming for the future war in America  -and it won't be to fight off an invasion from mexico or Canada.

Sun, 05/11/2014 - 15:23 | 4748565 newworldorder
newworldorder's picture

You are probably/mostly correct. however - the present Western Financail system is designed for two primary reasons.

1. It is a transfer mechanism of paper wealth into "permanent wealth" The paper price of the transfer not being important. Paper can and will always be printed. Think of these - Energy. Land, Chemical resources, water, major world wide population decreases. The 1% have been busy since Bush 1, was in the WH.

2. The flow of commerce protected by the US military. Low cost protection for every exporting nation, as long as the fiat dollar reigns supreme.

Sun, 05/11/2014 - 14:25 | 4748449 Polymarkos
Polymarkos's picture

Well thanks, Paul. Glad we go you to tell us these things.


WE KNOW ALL THIS ALREADY. At least, anyone not deluding themselves knows it.


I theorize the reason the shooting hasnt' started is because the American people sense it is not necessary. There may be an invisible internet effect propping up things in a way not yet measured and understood.


Or, it could be Americans are gutless nutless wankers who haven't got the stomach for a fight and deserve their totalitarian enslavement.

Sun, 05/11/2014 - 21:51 | 4749593 naughtius maximus
naughtius maximus's picture

Most of us are poor, get the news from the TV, and are bribed by the government with benifits. So unless you have some other ideas....

Mon, 05/12/2014 - 15:10 | 4751781 Polymarkos
Polymarkos's picture

Just a general comment about revoutionary/insurrectionary warfare--in just about every revolt, 85% plus of the people don't do much either way. That 15% decides EVERYTHING. It is composed of BOTH sides of the fighting and much of the passive support element for BOTH sides. The vast bulk of human beans are just useles formless lumps.

Sun, 05/11/2014 - 14:29 | 4748458 Ban KKiller
Ban KKiller's picture

Not news. the masses care? No, as they do not know what they don't know. Ignorance is bliss to the Wal-Wart crowd as designed. 

Honest accounting has been dead for how long? 30 years at least. The perception, thanks to massive propaganda, is that all is well!

Sun, 05/11/2014 - 16:41 | 4748757 Bemused Observer
Bemused Observer's picture

The popularity of a recent book on, of all things, economics, leads me to believe that things might be changing. Normally such a book would have gotten notice among a few academics and economy-wonks. But this one made the best-seller list, usually reserved for things like Harry Potter and 50 Shades of Gray. Anyone paying for a 700 page book on economics has some interest in the topic, and even if some don't finish it, they WILL pick up something. And the topics WILL be discussed...people may have their eyes opened, and start asking the right questions...And THAT will scare the hell out of TPTB. When the questions reveal that people are wising-up, these guys are gonna start soiling their drawers.

But as long as people fall for crap like the 'household budget' analogy, their laundry bills won't go up...

Sun, 05/11/2014 - 14:35 | 4748470 I Write Code
I Write Code's picture

Once I respected PCR, then I thought he went nuts, but on this post - can't hardly disagree with a thing.  Don't know about these naked gold shorts, but hey why not.  As the prophet HST said:

When the going gets weird, the weird turn pro.

Sun, 05/11/2014 - 14:48 | 4748494 Savyindallas
Savyindallas's picture

Did you think he was "nuts" because he admits 911 was an inside job? I think that showed honesty and courage. He knows he's at the top of the list to be blackbagged and hauled off to some secret FEMA camp (or worse) when the house of cards falls. He is a patriot and a great American.  

Sun, 05/11/2014 - 16:49 | 4748600 Seeing Red
Seeing Red's picture

So ... our corrupt MIC/Finance oligarchy blows up buildings where many financial types work?  Are you aware that the Concorde stopped flying because so many of the regular customers died (or so I've heard)?


Down-voters:  My avatar sneers at your tin-foil hats!

Sure, some aspects of the official explanations of the building collapses are suspect -- but I prefer logical explanations ... junk away ....

Sun, 05/11/2014 - 14:51 | 4748498 SharkBit
SharkBit's picture

Need to get up to speed mate.  Do a bit more research.  Connect the dots for yourself.  What this guy says is spot on.

Sun, 05/11/2014 - 14:36 | 4748473 rickv404
rickv404's picture

Roberts may think that, but he's not an advocate of a free economy, based on statements I've heard him make.

Mon, 05/12/2014 - 07:29 | 4750215 Global Observer
Global Observer's picture

Evidently he is not an advocate of a free economy, few are. Anyone who advocates a particular outcome, like a prosperous US middle class, is not an advocate of a free economy. For an advocate of a free economy everything, including a complete destruction of the economy of one's own country or impoverishment of majority of its people, is a completely acceptable outcomes as long as that is what is determined by the market.

Sun, 05/11/2014 - 14:42 | 4748484 esum
esum's picture

wat... got mah bama phone, reboks, ebt, bamacare for free... and all the otha free shit.... 8 baby mammas making babies and signing for welfare, is gooood sukka gotta go now and sell some crack in mah droptop benz... fuk you very much... and yeah ill vote for whoever gives me free shit .. and fuk work... thats for you.....

Sun, 05/11/2014 - 14:44 | 4748488 esum
esum's picture

obumbler crony kickback "capitalism".... adolph obumbler and heinrich holder... complian and well audit your fuikin white ass... now get bak to work asshole... and be double sure to pay yo taxes... 

Sun, 05/11/2014 - 14:45 | 4748490 Ser Bronn
Ser Bronn's picture


1. the action of deluding or the state of being deluded

2. an idiosyncratic belief or impression maintained despite being contradicted by reality or rational argument, typically as a symptom of mental disorder

A lot of talk about delusion on this article..... dont come to a college campus the amount and state of delusional beings, hell maybe even me, is disturbing. If its not anything about snapchat, twitter, Bravo, the NFL or NBA most dont want to talk about it or dont understand it..... 

Sun, 05/11/2014 - 14:48 | 4748496 Seeing Red
Seeing Red's picture

So Paul ... what's your point here?

Sun, 05/11/2014 - 17:25 | 4748874 Seeing Red
Seeing Red's picture

Wow -- you really didn't see the sarc in that?!?  OK <sigh>, I'll use more tags ... sheesh.

p.s.  But, but, it was such a marvelously concise and comprehensive PCR rant that ... never mind.

Sun, 05/11/2014 - 17:33 | 4748909 bunnyswanson
bunnyswanson's picture

I am sorry, I am mentally weary from thinking too much.

Please forgive me.  Here's a tune, "You take no interest, no opinions too dear, you make the rounds, try to be so sincere.  You got your hopes, and you pocket your avoid an unpleasant scene."

In The Dark (Billy Squier)

Sun, 05/11/2014 - 19:18 | 4748929 Seeing Red
Seeing Red's picture

My avatar is MOST impressed with your honor and fortitude!  But seriously, no worries and thanks for the tune; I've been reading this site for years but have only been posting since today (gasp)!  I can't believe I haven't been accused of being a shill yet ....


p.s.  By being nice, you have destroyed my overly-vindictive plan to put "(for bunnyswanson)" after all future /sarc tags.  I hope you can live with yourself.

Sun, 05/11/2014 - 22:34 | 4749678 Cathartes Aura
Cathartes Aura's picture

your obsession with your "avatar" barbie-doll is a *tell* newb.

what is it with you boys and yer dolly-pics?  must be some bonding ritual, designed to attract each other. . .

Mon, 05/12/2014 - 01:50 | 4749841 Seeing Red
Seeing Red's picture

Picked it because lots of *red* in picture (note cape).  Gosh, I must REALLY be messed up!  You sure put me in my place din'cha!

p.s.  Actually, I LIKE your post; it's funny!  Thanks!

p.p.s.  Good thing I'm the only one here using a voluptuous woman as an avatar; otherwise it might be distracting ....

Sun, 05/11/2014 - 14:54 | 4748502 Kirk2NCC1701
Kirk2NCC1701's picture

By rights, true Christians would not tolerate the regime that we have, if you take the position of "What would Jesus do?". 

In the 70s and 80s Latin America had "Liberation Theology", which sought personal, social justice and political justice and equity (not equality).  To prevent this from taking root in the US, they front-ran it with the Think Tank creation of a "Neocon Jesus", who is getting branded and promoted by these people.  But don't fool yourself, the "Jesus" being promoted/marketed by the big promoters/marketers on TV, has nothing to do with the original Jesus, and everything to do with preserving the lifestyle of Statists.  The "Neocon Jesus" of upscale Americans is nothing more than a designer brand to wear at their comfy private, country-club events and gated communities.  Pff!

True followers of Christ and genuine Clergy (ministers, priests, bishops and cardinals) would be speaking out against the fascist, NWO Neocons.  They would and should also be speaking out against Christians fighting Christians, and against Usury (compound interest).  BTW, we see Muslims fighting Muslims and Christians fighting Christians.  But you don't see Jews fighting Jews, do you?  Well, not outside a boardroom, that is.  Have you ever noticed that, or really thought about it?  Anyway, the extent to which the Clergy is not speaking out, is a testament to their guilt and selfish duplicity.  Lay people need to call them on it. 

I rather suspect that this has been attempted many times, but squashed each time -- lest it gain critical (pun intended) mass and become a large movement of "American Liberation Theology".

Sun, 05/11/2014 - 15:22 | 4748560 Seeking Aphids
Seeking Aphids's picture

Usury aka compound interest is a huge problem...perhaps the biggest economic problem of our time. A reset is the only way out...that or an endless downward spiral which ultimately benefits no one...does anyone honestly think Japan, USA, Greece, etc. will ever pay the debt?

Sun, 05/11/2014 - 17:05 | 4748833 Last_In_Line
Last_In_Line's picture

Compound interest is not a problem.  Not paying down debts is a problem. Compound interest is merely an automatic renewal on a debt contract willing entered by both parties. Unfortunately we have no control over the debts our gov masters make on our behalf. That a big problem. I like the reset/jubilee option. Better than violent revolution. Will be bad for creditors and the FSA, but good for the next generation of industrious folks.

Sun, 05/11/2014 - 17:29 | 4748897 Seer
Seer's picture

"Compound interest is not a problem."

Exercised within a finite environment it is.

Mon, 05/12/2014 - 04:58 | 4750091 hobopants
hobopants's picture

Not really, finite environments have a tendency to solve man made problems of unsustainable growth. It looks like we may get to see an example of it soon actually.

Sun, 05/11/2014 - 22:53 | 4749718 Seer
Seer's picture

Pope Francis is starting to warm up...  For him I suppose he needs to be a bit more established, get more people really believing that he's a real deal: the church is questionable, but individuals CAN have an affect.

MLK Jr. was one of the last few to really speak out, and it cost him his life.

I wonder if Mark Twain's War Prayer is ever read by any of the religious "leaders."

Sun, 05/11/2014 - 14:56 | 4748504 Hugh_Jass
Hugh_Jass's picture

It's not if it's going to end, it's when is it going to end?

Sun, 05/11/2014 - 15:48 | 4748628 kchrisc
kchrisc's picture

More like a "tyranny of cards."

Sun, 05/11/2014 - 16:01 | 4748643 withglee
withglee's picture

I really like PCR's thinking. But in one sentence he either reveals the flaws of capitalism or displays a complete misconception of what money is ... "a promise to complete a trade".

Massive liquidity poured into financial markets by the Federal Reserve’s Quantitative Easing inflates stock and bond prices and drives interest rates, which are supposed to be a measure of the cost of capital, to zero or negative, with the implication that capital is so abundant that its cost is zero and can be had for free.


  • With a properly managed Medium of Exchange (MOE), there is no distinction of "massive liquidity". Liquidity is always massive. Why? Because "liquidity" is freely certifying trading promises (i.e. traders create the money). This is always done as long as traders want to make trading promises.
  • With a properly managed MOE there is no distinction of "financial markets". There is one market. It is a trading market. Trades are facilitated with money which is created by traders making promises to deliver. In such a market, INFLATION of the MOE itself is "guaranteed" to be zero. So it becomes a perfect item of barter. And supply and demand for it are always in perfect balance ... it's the nature of a trading promise. If there were such a thing as a "financial market" it would be for deadbeat traders ... like pawn shops.
  • In properly managed MOE there is no QE (we used to call it monitization of the debt). Rather, if a trader fails to deliver we have a DEFAULT. DEFAULTed money is recovered with an equal amount of INTEREST collections. QE as described here is "counterfeiting" and is DEFAULT on its face. Why? Because there is no underlying trading promise. What's happening is that people who manipulate the MOE are bailing out their friends' (and certainly their own) bad trades and making the whole marketplace pay their losses through INFLATION.
  • Freely certifying trading promises does not inflate anything. Traders must still deliver on their promises. If they don't, INTEREST is imposed making their trading proposals nonviable. It's an automatic negative feedback mechanism.
  • INTEREST rates don't get "driven up". Rather, if DEFAULTs begin to escalate, INTEREST collections go up in lock step. The actual interest rate can not even be realistically estimated.
  • INTEREST rates are not "supposed" to measure anything ... and certainly not the "cost of capital". When traders can get their trading promises freely certified, they enjoy zero INTEREST if the don't DEFAULT. Thus, the prevailing cost of capital is zero. For irresponsible traders, DEFAULTs result in INTEREST collections. They are still free to have their trading promises certified but they pay INTEREST up front. Or they can go to someone else who has a store of money and pay whatever he is willing to pay to make his trade. Obviously, his trades will not be competitive with responsible traders paying no INTEREST. So he'll have to work harder, smarter, or more deceptively to compete. There are limits and he'll likely be driven completely out of the marketplace. Under a properly managed MOE, governments fall into this category of deadbeat trader.
  • It's hard to imagine in a properly managed MOE, negative INTEREST collections (i.e. someone giving away certified trading promise certificates ... money). It could only happen in tiny amounts and short instances where INTEREST collections exceed DEFAULT experience. It's the nature of maintaining a control system at a zero level. The error term is DEFAULT - INTEREST. The process drives it to zero ... and that zero is INFLATION. Collection of INTEREST is an actuarial problem.
  • For responsible traders using a properly managed MOE, capital cost "is" zero. It can be had for free ... just by making and delivering on a trading promise.


Sun, 05/11/2014 - 17:04 | 4748827 kchrisc
kchrisc's picture

There are no "flaws" in capitalism. The only "flaw" is that people continue to believe that surrendering Liberty to a cabal of thieves, government, will somehow reward the same people with more than they gave up.

Sun, 05/11/2014 - 17:25 | 4748883 Seer
Seer's picture

ALL ideologies fail.  Nothing can be pure.  That which is intellectually pure stops being so once it's shifted from the mind to operate in the physical world.

Mon, 05/12/2014 - 00:02 | 4749832 kchrisc
kchrisc's picture

Capitalism is not an ideology, it is an outcome.

The criminals of government have only cast it as an ideology to enable them to contrast it with the lies they use to hide their crimes.

Keynesianism, communism, socialism, fascism...all covers for theft and murder.

Sun, 05/11/2014 - 17:18 | 4748864 Seer
Seer's picture

I think that there's an issue with there being a huge disconnect between "traders" and "consumers."  At some point "buyers" turned into "consumers" and the other end of the "trade" got to be handled by yet more "traders."  Seems what we have going on is traders trading to traders, with a loss in buyers/consumers.

The failings were always there, ready to meet the wall.  Pushing surplus goods on undeveloped countries (as a way of then extracting valuable raw natural resources) was always going to exhaust itself.

Interesting read about "free trade" from Pat Buchanan:

Just like with PCR, I see that Buchanan also is suffering a bit from not understanding what the real drivers to our problems are:

the United States has not run a trade surplus in four decades, whereas, in the first 70 years of the 20th century, we never ran a trade deficit.

"four decades" puts us back to the early 1970s.  Hm.... it was the early 70s that saw: 1) USD decoupled from gold; 2) Peak US oil production; 3) Opening of trade relations with China.

Sun, 05/11/2014 - 15:56 | 4748646 The Econ Ideal
The Econ Ideal's picture

Roberts/Piketty trash capitalism in support of what? There can be no failure from free market/laissez faire capitalism if it wasn't in existence to begin with. What we've had to endure is ever-increasing crony socialism, fraught with corrupt bureaucracies, penalizing regulations, lobbied subsides/welfare, not to mention the monetary and market manipulations courtesy of the Fed. 

Sun, 05/11/2014 - 16:54 | 4748799 Seer
Seer's picture

So, the critique isn't valid because one does not have some "answer?"

Capitalism, even it it were totally embraced, would FAIL if it were operated under the premise of a socieity seeking perpetual growth (on a finite planet).  I downplay PCR's suggestions for "solutions" based on his inability to grasp this notion.

Sir John Glubb's paper "THE FATE OF EMPIRES and SEARCH FOR SURVIVAL" ( digs through 3,000 years of human history and pretty much concludes that ideologies have little to do with the eventual collapses of empires.


The chief cause of problems is solutions.

- Eric Sevareid

Sun, 05/11/2014 - 18:03 | 4748976 Last_In_Line
Last_In_Line's picture

Thanks for posting. An excellent read from an old experienced Brit living at the end of the Brit Empire.

Loved this:

Men can scarcely be blamed for not learning from the history they are taught.
There is nothing to learn from it, because it is not true.


Sun, 05/11/2014 - 19:40 | 4749212 Optimusprime
Optimusprime's picture

Thanks for the Glubb Pasha link.


Sun, 05/11/2014 - 22:59 | 4749728 Seer
Seer's picture

It was another ZH poster that linked it a month or two back, and I will forever be greatfull for him/her for doing so.  I place it up on the top tier of things that have influenced me (in this case it gave support for what I'd strongly suspected though never really having been able to find the research on).  My "payback" is in carrying it forward...

Yeah, it really is worth spending one's time reading (though fairly short).

Sun, 05/11/2014 - 15:57 | 4748654 moneybots
moneybots's picture

"Capitalism has been transformed by powerful private interests whose control over governments, courts, and regulatory agencies has turned capitalism into a looting mechanism."


Then it isn't capitalism, so call it something else.  Oligarchy in the 21st Century, or whatever it should be called, if that is the incorrect term.

Sun, 05/11/2014 - 16:06 | 4748679 Everybodys All ...
Everybodys All American's picture

Absent free markets and bankruptcy for failure there is absolutely no hint of capitalism.

Sun, 05/11/2014 - 16:57 | 4748809 Seer
Seer's picture

Good luck getting the entirety of the planet to adjust to some new term.

Pure Capitalism never has existed.  Same could be said for Socialism.  Both "camps" spend plenty of time spelling it all out.  And never will the text book work in the real world: I could point out that both have failed to survive the real world.

Sun, 05/11/2014 - 21:07 | 4749478 libertysghost
libertysghost's picture

It's corporatism/ all its uber progressive manifestation. It's not even a complicated econ/political philosophy. It goes...Elites are elite because they are smarter than everyone lets have those elites in govt, corporations, & large unions 'work together' to create the most efficient society. Straight out of social Darwinism...think ' but Mussollini made the trains run on time' kind of rationalizations.
SEE the merger of the three in Obamacare so perfectly...and hence it's failure to serve many other interests outside the elites and their armies of patrons.

Sun, 05/11/2014 - 23:16 | 4749749 Seer
Seer's picture

I don't think that any of this is necessarily new human behavior.  It's always been about "gatekeepers" making sure that the System that their masters run continue to operate.  I'm not so certain that TPTB really care so much about an "efficient society" as much as having a reliable system that serves them (TPTB) such that they continue to wield power.  Govt & business interests have been around for quite a while (think East India Trading Company).

Always appropriate to single out Cecil Rhodes for review in things like this.

Sun, 05/11/2014 - 16:00 | 4748664 Westcoastliberal
Westcoastliberal's picture

Thanks for telling it like it is, Dr. Paul.  Sure hope you have some armed security or at the least a booby-trapped perimeter at your home.

Sun, 05/11/2014 - 16:06 | 4748677 Gusher
Gusher's picture

I agree with some of it, but, this constant rant to blame corporations, is tiring so give me a break.  We Americans own those corporations.  Who made it more expensive to employ Americans? Was it Big Corp? Or Big Government?  The government is killing the economy PERIOD!  

Sun, 05/11/2014 - 17:02 | 4748820 Seer
Seer's picture

"The government is killing the economy PERIOD! "

There are "symptoms" and then there are "diseases."

What we are currently seeing is GLOBAL, which would pretty much temper the notion of this being only about "The [US] government."

The "cycle" is pretty clear if one really wishes to look for it.  History shows the "broken record:" growth and collapse; eventual decay into large wars, once it's clear that debts cannot be repaid, in order to obtain needed resources to support the growth meme.

Sun, 05/11/2014 - 17:31 | 4748901 honestann
honestann's picture

The problem is those large corporations who essentially buy regulations (through campaign contributions, indirect payoffs and bribes) that enrich those large corporations, empower the predators-DBA-government, and suck the life out of small corporations and individuals.  Sadly, at this point in history, virtually ALL large corporations participate in this blatant fascist tyranny.

The other problem of "corporations" is... they are FUNDAMENTALLY EVIL by their very nature (as codified in the USSA).  Think about it.  One of the terms that exposes one of the inherent evil aspects of corporations is "limited liability".  This lets predatory individuals lie, cheat, steal, defraud, abuse and otherwise trash endless other individuals without being at risk personally.

And increasingly, hyper-predators find ways to take over corporations and bleed the assets of that corporation for themself and their fellow predators.

No matter how you look at it, at this point in history, the triad of EVIL is:

 - predators-DBA-government
 - predators-DBA-corporation
 - predators-DBA-NGO

At this point in time, regular old individual human predators are rarely more than a minor inconvenience.  The predators who control these fictions are destroying everything good about the world.

Sun, 05/11/2014 - 17:58 | 4748958 Seer
Seer's picture

I don't so much see the "problem" being due to "corporations" per se; rather, it's when they contionue to amass power and size (which really just goes hand-in-hand).

Like I often say: BIG = FAIL  (in the long-run)

It seems to me that capitalism requires growth.  I wonder how capitalism can work in a non-growth environment.  I've asked this question many times but never seem to get an answer: pointing out the flaws in other systems is NOT an answer to this question.

Sun, 05/11/2014 - 21:59 | 4749173 honestann
honestann's picture

ANY scheme that enables and facilitates "consequences shifting" always empowers human predators, and harms human producers.  And the concept at the root of the most powerful, effective, destructive schemes is: FICTION.

And the most overtly, blatantly destructive instance of fiction is... fictitious entities, which certainly include "government" and "corporation" (the two most harmful, along with various NGOs that operate as "tax-exempt catalysts" for the predators who control large corporations and government).

No, capitalism does not require growth.  In fact, there is absolutely NO reason that the existence of the human species requires population growth.  Hell, I'd go as far as to say that human beings would be vastly better off if 99.9% of them fell over dead tonight.

You say "pointing out flaws in other systems does not help [or answer the question]".

Well, I pointed out (in a message above) that this system cannot be fixed.  And since this system cannot be fixed, I will not waste my time babbling about stupid, unrealistic, impossible ways to fix the unfixable.  Humans are finished.  Get used to it.

What I can do is identify ways for those vanishingly few individuals who WANT a better life, and ARE WILLING to take the steps necessary to achieve a better life... to do so.  But this "solution" is inherently NOT available to the masses.  I explained why in a long message above.

NOTE:  The facts and necessary conclusions stated in that message are VERY ANNOYING to put it mildly... to me as much as anyone else.  But that does not change the facts stated, or the conclusions drawn.  ALL time, effort and resources spent by good people to attempt to "fix the system" will necessarily be wasted.  I explain why.  There is no way around it any longer (especially now that predators-DBA-government brainwash the vast majority of kids for most of their first 20 years alive).

Some battles CANNOT BE WON.  This is one of those cases.  The only solutions that are even possible can only apply to a tiny minority of individuals... at best.  The only choices individuals have today are: "conform and be a slave", "fight impossible battles and lose", "escape and live life in a different way, isolated from most other humans", and one other possibility that is only possible for a few individuals and therefore not worth mentioning.

Sun, 05/11/2014 - 23:41 | 4749803 Seer
Seer's picture

I get what you're saying, it's just that I don't believe that the notion of corporations is necessarily to blame so much as it is that humans are deceptive (owing to the FACT that nature is all about decpetion- it's about survival).  No one is likely going to change this, and, eliminating corporations (or government or just about anything else) doesn't change this equation.

As humans we will fall prey to some drugged-up crackhead or some drug-pushing medical company.  Someone (Stalin?) once said that the death of one person is a tragedy and that the death of thousands is a statistic.  I think that it's an issue of scale.  Although the one person who is killed by the crackhead is a tragedy it's not like the crackhead can do that to thousands of people.  Small corporate failures hurt, but not so much as big ones: think Dow Chemical in Bhopal.

"You say "pointing out flaws in other systems does not help [or answer the question]"."

Don't take everyhing as being pointed directly at you.  I included this as a preemtive for others who would come along.

"No, capitalism does not require growth."

Would you be so kind as to provide a reference that makes this point (clear)?

"In fact, there is absolutely NO reason that the existence of the human species requires population growth.  Hell, I'd go as far as to say that human beings would be vastly better off if 99.9% of them fell over dead tonight."

"Go forth and multiply."  And, "The Selfish Gene," to borrow from a book's title.  Procreation is a fundamental function of life.  With no predators (other than human) to check the human population it has pretty much come down to a near-mass-extinction event for reductions in human numbers.  I'll pass on commenting about this being a "vastly better" thing...

"ALL time, effort and resources spent by good people to attempt to "fix the system" will necessarily be wasted.  I explain why."

I have never seen the System as being saveable for the very reasons I've stated (for years here).  If you remove the problematic parts then it's really not The System anymore.  That then would leave anyone wishing to describe some model or outcome to state it from the ground up (don't assume that there's anything of the existing available).  I have never pushed any "solution" (I don't believe in the word- it has a strong connotation with "permanance," and nothing, as long as the clock keeps running, is "permanant").  Ultimately it comes down to what's sustainable; I'll work on my notion of it, but I'll end up dying anyway...

BTW - I didn't down-arrow you.  I don't do so when people take the time to actually voice something from inside themselves (rather than toss out some sort of party-line shit).

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