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Guest Post: Here's Why The Market Could Crash - Not in Two Years, But Now

Tyler Durden's picture




 

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Markets crash not from "bad news" but from the exhaustion of temporary stability.

Yesterday I made the case for a Financial Singularity that will never allow stocks to crash. We can summarize this view as: the market and the economy are not systems, they are carefully controlled monocultures. There are no inputs that can't be controlled, and as a result the stock market is completely controllable.
 
Today I make the case for a crushing stock market crash that isn't just possible or likely--it's absolutely inevitable. The conceptual foundation of this view is: regardless of how much money central banks print and distribute and how much they intervene in the markets, these remain complex systems that necessarily exhibit the semi-random instability that characterizes all complex systems.
 

This is a key distinction, because it relates not to the power of central banks but to the intrinsic nature of systems.

 

One of the primary motivators of my work is the idea that systems analysis can tell us a great deal about the dysfunctions and future pathways of the market and economy. Systems analysis enables us to discern certain pathways of instability that repeat over and over in all complex systems--for example, the S-Curve of rapid growth, maturation and diminishing returns/decline.
 
One ontological feature of complex systems is that they are not entirely predictable. An agricultural monoculture is a good example: we can control all the visible inputs--fertilizer, seeds, water, pesticides, etc.--and conclude that we can completely control the output, but evolution throws a monkey wrench into our carefully controlled system at semi-random times: an insect pest develops immunity to pesticides or the GMO seeds, a drought disrupts the irrigation system, etc.
 
The irony of assuming that controlling all the visible inputs gives us ultimate control over all outputs is the more we centralize control of each input, the more vulnerability we introduce to the system.
Those arguing that central banks (and their proxies) can control the stock market have the past six years as evidence. Those of us who see this heavy-handed control as increasing the risk of unpredictable instability have no systems-analysis model that can pinpoint the dissolution of central bank controlled stability. As a result, we seem to be waiting for something that may never happen.
 
Despite its inability to predict a date for the collapse of stability, I still see systems analysis as providing the most accurate and comprehensive model of how complex systems function in the real world. If the economy and the market are indeed systems, then we can predict that any level of control will fail no matter how extreme, and it will fail in an unpredictable fashion that is unrelated to the power of the control mechanism.
 
Indeed, we can posit that the apparent perfection of central-bank engineered stability (i.e. a low VIX and an ever-rising market) sets up a crash that surprises everyone who is confident that central-bank monocultures never crash. In the real world, manipulated stability is so vulnerable to cascading collapses that crashes are probabilistically inevitable.
 
That raises the question; why not crash now? After all, all the good news is known and priced in, and all the bad news has been fully discounted. Why shouldn't global stock markets crash big and crash hard, not in two years but right now?
 
Markets crash not from "bad news" but from the exhaustion of temporary stability. The longer that temporary stability is maintained by manipulation, the greater the severity of the resulting crash.
 

As I noted in The Coming Crash Is Simply the Normalization of a Mispriced Market, this line from songwriter Jackson Browne captures the ontological falsity of permanent market stability: Don't think it won't happen just because it hasn't happened yet.

 

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Fri, 09/05/2014 - 10:25 | 5184337 junction
junction's picture

Eek, the sky is falling!

Fri, 09/05/2014 - 10:27 | 5184346 Mr Pink
Mr Pink's picture

Wait...now WHO is going to reign in Wall St.'s power?

Fri, 09/05/2014 - 10:42 | 5184429 pods
pods's picture

What if there was a crash and nobody noticed?  (well except when it came time to eat)

Since the "tip" of injecting fiat into the system has been slipped in, what is to stop them from doing anything now?

Stocks could be at 20k and yet Long Pig could become a staple in the hood.

The "Market" is a parking lot for slush money seeking rent.  It could still be at ATH and TSCHTF.  

Hell, everyone on earth could die and the machines would just play pong with one another for a couple months.

pods

Fri, 09/05/2014 - 11:00 | 5184539 Spastica Rex
Spastica Rex's picture

YES

The "market" is simply an abstraction, and  its meaning isn't fixed.

Fri, 09/05/2014 - 11:56 | 5184882 Beam Me Up Scotty
Beam Me Up Scotty's picture

Correct.  The "market" is meaningless with regards to our economic health.  Its like using a thermometer to measure wind speed.  They can goal seek any number they want, because they have the ability to print an infinite amount of money.  Its all 1's and 0's, and throw in a bit of paper for good measure.  We have no idea how much money the Fed is pumping into the system and have no idea what their true balance sheet is.  When is the last time anyone got to audit the Fed?  They could be buying everything and anything they want to prop up the system with their out of thin air created Fiat.  We have no clue what they are really doing.  You think that's air you are breathing??  You think thats the truth they are telling you???

Fri, 09/05/2014 - 12:20 | 5185052 Four chan
Four chan's picture

post o the day.

Sat, 09/06/2014 - 14:06 | 5188506 Muh Raf
Muh Raf's picture

My theory is that the market starts small at the beginning, goes up and bigger for a bit and then goes small again after a little while. Hmm, where have I heard that theory before? https://www.youtube.com/watch?v=U6zWjUhfj-M

Fri, 09/05/2014 - 11:14 | 5184623 NoDebt
NoDebt's picture

"Those arguing that central banks (and their proxies) can control the stock market have the past six years as evidence."

Disagree.  I'd peg is a lot closer to 30 and Volcker's term.  That was the turn, and every "crisis" after that was "managed" and pushed back with ever lower rates and lever more liquidity.

As for Wall St. shrinking back to it's pre-financialization levels by "losing" to the deep state, I have to disagree again.  First, Wall St. is part of the deep state.  Second, merry old England has a HUGE financial center to this day, long after the British Empire is no more and their currency long ago lost it's world-reserve status.  Far out of proprtion to their population, GDP and status on the world stage.

Fri, 09/05/2014 - 11:29 | 5184713 atomp
atomp's picture

Agreed. "Deep State moves to rein in Wall Street's Power".  WTF is he talking about!?!

Fri, 09/05/2014 - 12:07 | 5184957 lasvegaspersona
lasvegaspersona's picture

NO Debt

Yes, Volker was the first to have to 'fix' the system. In 4 days after being told by the European Central Bankers that the dollar was toast if he didn't act...he acted. Everything that has followed has been the result of that intervention and certain arrangements with oil. Now oil is unhappy, they get shitty paper for a substance that cannot be had again once it is burned.

That is the essence of our problem. Producers are no longer satisfies with mere paper promises. The US dollar simply cannot deliver what it currencly promises. There are already too many dollars and too few goods. We get deflation, default or the #1 choice of all printers....hyperinflation.

Door #3 please..

Fri, 09/05/2014 - 12:25 | 5185073 El Vaquero
El Vaquero's picture

What's that old saying about markets and solvency and sanity?

 

IMO, the end is nearer rather than further, but I'm not holder of crystal balls. 

Fri, 09/05/2014 - 12:36 | 5185118 The Most Intere...
The Most Interesting Frog in the World's picture

"Yes, Volker was the first to have to 'fix' the system. In 4 days after being told by the European Central Bankers that the dollar was toast if he didn't act..."

 

IMHO, in present day that same call has come but in a different form, via the BRICs and ever-growing threat to US $ reserve status.  Primarily Russia and China.  If US dollar hyperinflates reserve status is gone and I just don't see the federal government (the folks with the fire power) allowing this to happen.  US is not Zimbabwe or 1930's Germany, and cannot afford the same solution.

Recently, in the face of a sub .5% 2 year, the Fed is talking about raising rates, QE is ending and I do not see it coming back, the writing is on the wall.

Fri, 09/05/2014 - 11:20 | 5184671 Golden Rule
Golden Rule's picture

Growth now and for the last 7 years is sadly and simply a function of debt.  Our government and corporations have to aquire more and more to simulate or give the illustion of growth.  Every time there are diminsihing returns.  It can't continue for much longer.

 

Fri, 09/05/2014 - 12:22 | 5185065 El Vaquero
El Vaquero's picture

The S&P could hit 20M with Long Pig becoming a staple.  It could also be the case that we wake up one morning it it is just frozen, permanently.  My bet is on the central planners letting it crash, at least somewhat, and then herding all of that fleeing money into USTs.  I'm not putting any FRNs on it, but that's my guess as to what is going to happen.  Extreme can kicking. 

 

Of course, all of that is in the absence of nuclear war.

Fri, 09/05/2014 - 10:47 | 5184464 RaceToTheBottom
RaceToTheBottom's picture

Hmmmm, I see "Deep State" as being the same as "Wall Street".

When did they become different?

Fri, 09/05/2014 - 10:53 | 5184512 Cpl Hicks
Cpl Hicks's picture

I think of an expedition into Michelle's butt crack when I think of "deep state".

Hope I didn't make you vomit too much with that.

Fri, 09/05/2014 - 11:15 | 5184647 Eyeroller
Eyeroller's picture

Coughing fit.  Thanks.

Fri, 09/05/2014 - 10:57 | 5184536 dontgoforit
dontgoforit's picture

I believe the author is correct and I believe most ZH'ers know it's true:  the time is coming, it always does, it's just a matter of when.  If you have a good enough crystal ball, you can play this tune for some time racking up big gaines, if you know when to jump before the train derails.  Most of us don't know when to jump - our crystal is cloudy at best.

Fri, 09/05/2014 - 11:18 | 5184657 Eyeroller
Eyeroller's picture

I believe this is exactly the 'strategy' the sheeple are using.  They aren't as stupid as most believe:  they know the gubmint numbers are BS, and all bad news is ignored or converted to good news for the benefit of a rally.  But, as they say, a little bit of knowledge is a dangerous thing.  The sheeple have decided to ride the crazy train and believe they can jump off before it crashes. 

Fri, 09/05/2014 - 11:52 | 5184869 barre-de-rire
barre-de-rire's picture

you are so fucking overoptimistic.

 

take 10 000 people. 9980 dong know/give a shit about what is going on. they are mind controled, the very sense of reality about eocnomic is unplugged from their concentrated, limited, circled, reality, and the  global environment they are evolving within.

 

this is why the system as crappy as it is remain 100% working, the 20 ppl remaing are those who rule the system or designed it.

 

system is working coz of ignorance.

 

 

Fri, 09/05/2014 - 14:49 | 5185813 StandardDeviant
StandardDeviant's picture

-1 for "sheeple".  Makes you sound like an idiot.

Fri, 09/05/2014 - 11:01 | 5184555 Groundhog Day
Groundhog Day's picture

NEWS ALERT CHARLEY:  NO CRASH IN SIGHT!

Fri, 09/05/2014 - 10:38 | 5184398 Seasmoke
Seasmoke's picture

Nope. Thats just the floor, under your feet, rising higher

Fri, 09/05/2014 - 11:54 | 5184880 assistedliving
assistedliving's picture

not another one of these...havent you heard DRAGHI tell us the Germans are Kaputski and the ECB is taking over

for the FED PRINT FOREVER joining China, Japan, Brazil, India, Nigeria, Indonesia, Russia need i continue?

Fri, 09/05/2014 - 10:28 | 5184342 lester1
lester1's picture

The FED trying to raise interest rates in 2015 will be the trigger that starts the crash. OR the FED will have to bring out QE4 and admit they were wrong about the economic recovery. (We all know the truth is this phony market is FED driven.)  The reality is you have 40+ million people on food stamps, and gigantic trade deficits. So how can there be a recovery?

Investors and economists have to eventually see the FED is lying about everything.

My advise is to pull your money our now, store it in small banks that have low risk, and some buy gold and silver.

Wait for the crash to happen and deflation kicks in. Then buy when there is a real recovery.

Fri, 09/05/2014 - 10:30 | 5184360 Market Rage
Market Rage's picture

It doesn't matter what they do anymore, as they are losing control.  

Fri, 09/05/2014 - 10:35 | 5184379 LawsofPhysics
LawsofPhysics's picture

For "losing control" they are living pretty god damn high on the hog.

Wish my operation was experiencing such "failure"...

Fri, 09/05/2014 - 10:44 | 5184438 pods
pods's picture

Could you imagine a business where all you had to do was talk, and you covered the bills by checks that were accepted but never cashed?

pods

Fri, 09/05/2014 - 11:21 | 5184673 Eyeroller
Eyeroller's picture

If they cash out now, they will be living high on the hog.

If they are still holding when the big one hits, that's another matter.

Fri, 09/05/2014 - 10:42 | 5184425 Jonas Parker
Jonas Parker's picture

Methinks "they" have lost control...

Fri, 09/05/2014 - 10:37 | 5184387 RattNRoll
RattNRoll's picture

There wont be anything left to buy when the next crash happens. You need to start preparing now for food, water, and tactical weps. Its that simple.

Fri, 09/05/2014 - 10:58 | 5184547 JRobby
JRobby's picture

"OR the FED will have to bring out QE4 and admit they were wrong about the economic recovery."

Most likely scenario. They are not voluntarily raising rates.

Fri, 09/05/2014 - 10:26 | 5184343 nightshiftsucks
nightshiftsucks's picture

The next crash is the last,they won't let it crash until the whole system does.

Fri, 09/05/2014 - 10:38 | 5184395 Headbanger
Headbanger's picture

You mooks don't get the fact that "they" MADE this """market""" all set to crash by pumping it way up now

And "they" have run out of collateral (as said here many times) to keep pumping it higher from here.

So how can "they" keep it from crashing when "they" had the "pedal to the metal" for years now with no brakes!?

"THEY" HAVE NO FUCKING CONTROL NOW!

DUH!

Fri, 09/05/2014 - 10:45 | 5184446 nightshiftsucks
nightshiftsucks's picture

We are Venezuela

Fri, 09/05/2014 - 12:52 | 5185181 rosiescenario
rosiescenario's picture

No, Argentina.

Fri, 09/05/2014 - 10:53 | 5184509 TheReplacement
TheReplacement's picture

National parks, rivers and lakes, military protection... still some collateral left.

Fri, 09/05/2014 - 11:24 | 5184682 Eyeroller
Eyeroller's picture

Yellen and her mob pray every day for a Black Swan.  They have lost control, and desperately need a Black Swan to blame for the collapse.  Either that or admit to a failed $4 Trillion Keynesian experiment (never).

Fri, 09/05/2014 - 12:11 | 5184987 shovelhead
shovelhead's picture

Are you callin me a mook?

Did he just call me a mook?

 

What's a mook?

Fri, 09/05/2014 - 10:47 | 5184457 lester1
lester1's picture

After the crash, Congress will do tax reform which will restore confidence in the markets. Then we can have a real recovery.

No more stimulus from the Federal Reserve.

Fri, 09/05/2014 - 10:27 | 5184345 IridiumRebel
IridiumRebel's picture

We are not even supposed to be here right now....

Fri, 09/05/2014 - 10:47 | 5184463 pods
pods's picture

My thought on a $ collapse was ~2013.

Turns out the world is run by scumbags so if everyone prints, nobody looks bad.

You would think game theory would predict that a dissenter would act and make the most gains.

Guess that means there are not multiple players in this game, and we are already acting as one world unit in banking.

pods

Fri, 09/05/2014 - 10:56 | 5184527 TheReplacement
TheReplacement's picture

Who is buying physical assets (China/Russia)?  There are your dissenters.  While US Gov pays for EBT and illegal invasions they are buying gold and such. 

Fri, 09/05/2014 - 14:01 | 5185570 pods
pods's picture

In terms of credit fluffing, China has been worse than the US by a long shot.  They might be buying stuff, but they are devaluing with the best of them.

pods

Fri, 09/05/2014 - 10:28 | 5184349 ekm1
ekm1's picture

No such thing as 'market could crash'.

 

Market will be MANUALLY going though Triple Lehman by central command, otherwise world abandons the whole system

Fri, 09/05/2014 - 10:34 | 5184372 LawsofPhysics
LawsofPhysics's picture

Yes, and the cognative dissonance on ZH seems to be rising today.

Fri, 09/05/2014 - 10:37 | 5184399 kliguy38
kliguy38's picture

you can't really blame the plebes with full retard pumps in place. any trained rat is gonna run in the matrix when conditioned to this degree

Fri, 09/05/2014 - 10:30 | 5184350 RisingSun
RisingSun's picture

How many times the market will "crash", any day now? I guess this time it will be for real, i mean those previous 9999 articles on how market will crash any second....did work right? 

Fri, 09/05/2014 - 10:56 | 5184524 Cpl Hicks
Cpl Hicks's picture

Yeah, this sort of story is pretty much the coin of the realm here at ZH.

Fri, 09/05/2014 - 11:00 | 5184556 JRobby
JRobby's picture

So Hicks, nuke it from orbit? It's the only way to be sure.

Fri, 09/05/2014 - 14:51 | 5185833 StandardDeviant
StandardDeviant's picture

No, just trade what you see.

Fri, 09/05/2014 - 11:27 | 5184698 Eyeroller
Eyeroller's picture

If the markets had been based on fundamentals, then it would have happened by now.

Trouble is, for those looking at fundamentals and calling for a crash, they are unable to factor in just how much Fed/dark pool/Belgium manipulation is going on.

Fri, 09/05/2014 - 10:34 | 5184356 LawsofPhysics
LawsofPhysics's picture

This bullshit again?  Look you stupid fuck, if the "market" in question is 100% manipulated or 100% dominated by people that are forced to buy into it (be it a central bank or 401k sheep), this market is then;

1) fucking irrelevant...

or/and

2) never going to "sell off".

and/or

3) even if it did "sell off", see #1 and most likely the purchasing power of the fiat that said market is priced in will not be accepted for shit anywhere.

 

Trade is the only thing that prevents war, period.  People who deliver essential goods and services want to be paid in something real motherfucker.

Fuck all the useless paper/financial "products".

 

In my humble opinion, this is an orchstrated collapse of all fiat in order to bring about a new global control mechanism, period.

Fri, 09/05/2014 - 10:37 | 5184391 Lawn.Dart
Lawn.Dart's picture

... and what will the new global control mechanism hinge upon?

Fri, 09/05/2014 - 10:48 | 5184460 LawsofPhysics
LawsofPhysics's picture

calories.  Specifically, calories that are available for consumption.

 

Same as it ever was....

Fri, 09/05/2014 - 10:53 | 5184499 ekm1
ekm1's picture

reality is reality and reality never changes.

Fri, 09/05/2014 - 11:02 | 5184562 dontgoforit
dontgoforit's picture

Everything changes, but nothing ever changes the same.

Fri, 09/05/2014 - 11:04 | 5184574 LawsofPhysics
LawsofPhysics's picture

Perhaps, but without calories and commodites that you can consume.  You won't actually do shit, period.

Fri, 09/05/2014 - 10:48 | 5184465 Bryan
Bryan's picture

I would agree that a new global control mechanism is inevitable.  I disagree that's it's 'orchestrated.'  That gives TPTB too much credit.  This is simply human nature (fear and greed, lust for power and control, lust for wealth) at work, and crash is the end-game.

Fri, 09/05/2014 - 10:51 | 5184494 LawsofPhysics
LawsofPhysics's picture

So, same as it ever was then.  Yes, the laws of physics and Nature can never be "orchestrated", but then again everthing that is released for public consumption by the government or MSM, very much is.

Fri, 09/05/2014 - 12:28 | 5185086 Bryan
Bryan's picture

True.  The lies and coverup by TPTB that try to deny the human nature.  ;-)

Fri, 09/05/2014 - 10:51 | 5184483 ekm1
ekm1's picture

Everything is about barter.

Deficits and surplusses are very termporary.

Eventually surplus countries learn the game and stop providing goods for electronic cash.

 

That is now

 

I don't see 'global control'. Humans are not capable to get along that fine. 4000 years of documented human history is an irrefutable proof for that

Fri, 09/05/2014 - 10:54 | 5184515 LawsofPhysics
LawsofPhysics's picture

Those that pull the levers of control always try to make this work, that's always the trigger as absolute power corrupts absolutely.  Of course they always fail, so, same as it ever was.

Fri, 09/05/2014 - 10:57 | 5184535 ekm1
ekm1's picture

Bank lobby is actually trying to replace USD with SDR openly. 

That's why I say we'll see bank lobby executives assassinated soon if they don't surrender.

 

MIC doesn't have to do that directly. Saudis can do it with lots of pleasure.

Fri, 09/05/2014 - 11:04 | 5184568 LawsofPhysics
LawsofPhysics's picture

Unfortunately, my ARMY experience and knowledge of my brothers in arms, which includes at least two former Delta operatives can confirm this.  They have a certain expertise and know nothing else when it comes to making a living, which they must do, just like everyone else.

 

Remember, all stimulus is fungible.

 

Interesting times indeed.  Lot's of opportunity, for everyone with the right expertise.

Fri, 09/05/2014 - 11:07 | 5184586 ekm1
ekm1's picture

:-)

Fri, 09/05/2014 - 10:54 | 5184516 BeetleBailey
BeetleBailey's picture

I'm afraid...you're 100% correct Law

Fri, 09/05/2014 - 10:57 | 5184541 TheReplacement
TheReplacement's picture

Idea for unrecognized crash:  Market gains 20% per year.  Inflation gains 50% per year.  After how long would the market have lost enough real value to be considered a crash?

Fri, 09/05/2014 - 10:30 | 5184361 flow5
flow5's picture

Virtually all major changes are due to an excessive fall in the rate-of-change in money flows (our "means-of-payment" money times its transactions rate-of-turnover).   We have another one immediately in front of us.  I.e., all recessions since the Great-Depression are the Fed's fault.

Fri, 09/05/2014 - 10:44 | 5184439 ekm1
ekm1's picture

You assume that Fed data is correct.

Fri, 09/05/2014 - 10:35 | 5184378 SheepDog-One
SheepDog-One's picture

It crashes when the central banksters decide to throw their next tantrum, who knows when.

Fri, 09/05/2014 - 11:43 | 5184812 StupidEarthlings
StupidEarthlings's picture

Which is when the lemon has been squeezed to death and theres nothing more to take.

Fri, 09/05/2014 - 10:38 | 5184396 There is No Spoon
There is No Spoon's picture

when you see that s-curve graph you know it's chs

Fri, 09/05/2014 - 10:39 | 5184407 flow5
flow5's picture

The next inflection point is 10/1/2014.  There should be a 500-600 point drop (actually flash crash as MVt drops 8 percentage points).

Fri, 09/05/2014 - 10:46 | 5184450 ekm1
ekm1's picture

Your calc is based on fake federal reserve data about money supply.

600 S&P points drop, yes

If you are talking about dow, that is peanuts

Fri, 09/05/2014 - 10:44 | 5184437 Carpenter1
Carpenter1's picture

The "market" is not all that's in play, so whether the FED can manipulate it forever is irrelevant. 8 billion people on the planet, all with their own agenda. If you wanna control the "Market" forever, you'll have to control all 8 billion.
Control creates winners and losers, and the winners category decreases as time passes, until the losers look around, realize there's far more of them, and pull out the knives.

So much for your market control.

Fri, 09/05/2014 - 10:46 | 5184454 kliguy38
kliguy38's picture

careful with the analogies partner. Dont bring a knife to a gunfight.and the matrix counts on that

Fri, 09/05/2014 - 10:58 | 5184540 LawsofPhysics
LawsofPhysics's picture

Yes, "let the majority eat cake, while we print money for ourselves" policies have been tried before.  Too bad the French have forgotten the appropriate response.

Fri, 09/05/2014 - 10:45 | 5184444 Bryan
Bryan's picture

There are too many plates spinning in the air.... ah heck, let's add another couple anyway.  It's different this time.

Fri, 09/05/2014 - 10:45 | 5184448 undercover brother
undercover brother's picture

any of us who have been reading ZH could have written that article. Nothing new, just rehashing old stuff. These days, even a 100 point intraday drop in the dow has people freaking out and looking for intervention. Whether that's self-fulfilling or actual intervention remains to be seen. I for one will be curious to see how this all shakes out when the dow drops 400-500 pts intraday. Then we'll finally see whether there is any substance behind these prices.

Fri, 09/05/2014 - 10:52 | 5184500 BeetleBailey
BeetleBailey's picture

true dat!

Fri, 09/05/2014 - 10:53 | 5184510 RaceToTheBottom
RaceToTheBottom's picture

"I for one will be curious to see how this all shakes out when the dow drops 400-500 pts intraday. "

They might pull a Zandi:  "I don't believe that data"

 

Fri, 09/05/2014 - 10:48 | 5184466 Thomas Aquinas
Thomas Aquinas's picture

It will crash when the powers that be decide - probably once the Obamacare slave system is in place next year:

 

"For a long time I felt that FDR had developed many thoughts and ideas that were his own to benefit this country, the United States. But, he didn't. Most of his thoughts, his political ammunition, as it were, were carefully manufactured for him in advanced by the Council on Foreign Relations - One World Money group. Brilliantly, with great gusto, like a fine piece of artillery, he exploded that prepared "ammunition" in the middle of an unsuspecting target, the American people, and thus paid off and returned his internationalist political support.

"The UN is but a long-range, international banking apparatus clearly set up for financial and economic profit by a small group of powerful One-World revolutionaries, hungry for profit and power.

"The depression was the calculated 'shearing' of the public by the World Money powers, triggered by the planned sudden shortage of supply of call money in the New York money market....The One World Government leaders and their ever close bankers have now acquired full control of the money and credit machinery of the U.S. via the creation of the privately owned Federal Reserve Bank."

Curtis Dall, FDR's son-in-law as quoted in his book, My Exploited Father-in-Law

 

"Under the Federal Reserve Act (financial) panics are scientifically created. The present panic is the first scientifically created one, worked out as we would figure a mathematical problem." - Congressman Charles A. Lindbergh, Sr.


"Lindbergh on the Federal Reserve"
p.95 Chapter 11. A reprint published by Noontide Press in 1989. The book was formerly entitled "The Economic Pinch" and it was originally published in 1923.


"We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the FED. They are not government
institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers..."

Congressman Louis McFadden, Speech in Congress, June 10, 1932

"The Federal Reserve (Banks) are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this Nation is run by the International Bankers."

Louis McFadden, Speech in Congress, June 10, 1932.

"Mr. Chairman, I see no reason why citizens of the United States should be terrorized into surrendering their property to the International Bankers who own and control the Federal Reserve."

Louis McFadden, 9 March 1933, in his Speech to the House of Representatives, Congressional Record

"It was not accidental [the 1929 stock-market “crash”].
It was a carefully contrived occurrence. ... The international bankers sought to bring about a condition of despair here so that they might emerge as rulers of us all."
 
Louis McFadden, testified in Congress, 1933.

"The conclusion is impossible to escape that the State and Treasury Departments are willing to pool the banking system of Europe and America, setting up a world financial power independent of and above the Government of the United States.... The United States under present conditions will be transformed from the most active of manufacturing nations into a consuming and importing nation with a balance of trade against it"

Louis McFadden, New York Times, June 1930.

Louis McFadden, (1876-1936),
US Congressman (R-PA) (1915-1935),
Chairman of House Banking and Currency Committee.

There were two attempts on his life by gunfire. He died of suspected poisoning in 1936 after attending a banquet. One of the greatest unsung heroes and truth tellers. Interesting that not many people know about him.

The Bankers Manifesto of 1892

(Revealed by US Congressman Charles A. Lindbergh, Sr. from Minnesota before the US Congress sometime during his term of office between the years of 1907 and 1917 to warn the citizens.)

We (the bankers) must proceed with caution and guard every move made, for the lower order of people are already showing signs of restless commotion [that would be us]. Prudence will therefore show a policy of apparently yielding to the popular will until our plans are so far consummated that we can declare our designs without fear of any organized resistance [that would be SOON]. The Farmers Alliance and Knights of Labor organizations in the United States should be carefully watched by our trusted men, and we must take immediate steps to control these organizations in our interest or disrupt them.

At the coming Omaha Convention to be held July 4th (1892), our men must attend and direct its movement, or else there will be set on foot such antagonism to our designs as may require force to overcome. This at the present time would be premature. We are not yet ready for such a crisis. Capital must protect itself in every possible manner through combination (conspiracy) and legislation.

The courts must be called to our aid, debts must be collected, bonds and mortgages foreclosed as rapidly as possible.

When through the process of the law, the common people have lost their homes, they will be more tractable and easily governed through the influence of the strong arm of the government applied to a central power of imperial wealth under the control of the leading financiers. People without homes will not quarrel with their leaders.

History repeats itself in regular cycles. This truth is well known among our principal men who are engaged in forming an imperialism of the world [that would be SENIOR politicians]. While they are doing this, the people must be kept in a state of political antagonism.

The question of tariff reform must be urged through the organization known as the Democratic Party, and the question of protection with the reciprocity must be forced to view through the Republican Party.

By thus dividing voters, we can get them to expand their energies in fighting over questions of no importance to us, except as teachers to the common herd. Thus, by discrete action, we can secure all that has been so generously planned and successfully accomplished.

 

 

With part thanks to Jeff Nielson - Bullion Bulls

http://www.bullionbullscanada.com/us-commentary/230-qthe-bankers-manifes...

Fri, 09/05/2014 - 11:12 | 5184621 JRobby
JRobby's picture

What was the middle part?

Fri, 09/05/2014 - 10:51 | 5184479 Spungo
Spungo's picture

It's impossible to know when the system will crash. As the article notes, randomness is part of every system. There needs to be some random event that changes the mindset of investors. It will crash when people believe the top is in. It can crash tomorrow, or it can crash a year from now. During all of the previous bubbles, the market did not immediately crash when interest rates rose. There was a bit of a delay between rising interest rates and the market responding to those rates.

I wouldn't tell anyone to stay out of the market. All I would say is that people need to look for value. Buying index funds works great at market bottoms, but it's an easy way to get wiped out near market tops. Buy stuff that nobody else wants. Right now, some mining companies are profitable and trading far below book value. Some retailers are already down 50%, so now might be a good buying opportunity, assuming the business makes sense (not Radioshack).

Fri, 09/05/2014 - 11:01 | 5184554 Al Huxley
Al Huxley's picture

Miners might be profitable, some trading for 1/2 book value, but if you're buying here you need to be psychologically prepared to take a 50% loss on your position before a big snapback.  It's the way the sector works, its a little club run by insiders for insiders (think Wall Street x10).  This month, maybe the next few months, are going to be 2008 revisited for gold and the fucking idiot miners.

Fri, 09/05/2014 - 10:53 | 5184508 CRYBABY
CRYBABY's picture

Sell S&P VS buy Dax or pan European stock index......and sell German Bunds @ sub 100bp's. 40% of EUR bonds owned by non European institutions...50% balance sheet expansion by ECB basically a currency depreciation move in all but name (ECB will never admit that). Foreign bond owners will be heading for the exits v shortly.

Fri, 09/05/2014 - 10:53 | 5184514 Alternative
Alternative's picture

Okay, I'm looking for upvotes here:

Market will lose 70% of its current value on Monday!

Fri, 09/05/2014 - 11:31 | 5184724 Grinder74
Grinder74's picture

Get a naked chick avatar and you'll get more upvotes than you can handle.  

Fri, 09/05/2014 - 15:13 | 5185938 Bear
Bear's picture

-70% Red on Monday is music to the ears of The Bear

Fri, 09/05/2014 - 10:56 | 5184525 glossolalia
glossolalia's picture

"Could". pretty fucking worthless.

Fri, 09/05/2014 - 10:56 | 5184532 Felix da Kat
Felix da Kat's picture

The analysis assumes the dynamic of totally free-market forces. With the Fed's massive QE program, this is no longer the case. The Fed will not/cannot permit markets to collapse beyond levels that will re-entice investors back into the market. Corrections; Yes... Collape; No. This is the new norm. There is no alternative for the Fed. In fact, any alternative would mean the end of the Fed. And why would they stupidly vote themselves out of existence and power ? They won't. You can thoroughly rely on the motherly Janet Yellin to come to the rescue as needed.  

Fri, 09/05/2014 - 10:58 | 5184538 CHX
CHX's picture

The metals (or lack of metals) will trigger a monetary crisis that can't be controlled by CBs at some point. That's why they keep such a vicious lid on the metals lately. All that is paper they can control, but not the metals, and silver in particular. Happy stacking, and good luck to all. 

Fri, 09/05/2014 - 13:27 | 5185394 MeelionDollerBogus
MeelionDollerBogus's picture

That's never been the whole picture before so it can't be now.
Metals, energy, shipping control, border control & taxing authority / effectiveness aka property confiscation - none can be ignored.

Fri, 09/05/2014 - 11:05 | 5184577 EyesWise Shut
EyesWise Shut's picture

Can the market still crash if shares are mostly owned by "controlled" entities like:

-Central banks

-Corporations (buybacks)

-Sovereign funds

-State controlled pension funds

-etc...

????

 

Fri, 09/05/2014 - 12:17 | 5185022 The Most Intere...
The Most Interesting Frog in the World's picture

And don't forget the legislation to lock people in to their investments.  I don't know what is going to happen, but you only have to look at soverign bond markets and the Nikkei in particular to realize that the outcome surely can be controlled.

Fri, 09/05/2014 - 13:26 | 5185382 MeelionDollerBogus
MeelionDollerBogus's picture

It did last time.

The trick is that once the actors in control benefit from a crash, they'll cause one deliberately.

Fri, 09/05/2014 - 11:22 | 5184607 withglee
withglee's picture

 

Some simple control system theory issues:

  • Deadband: Can the input change in some gap without an output change (e.g. gear lash. e.g. dark pools)
  • Feedback poles and zeros: Depending on the order of the system, where are the instabilities (are there points of positive feedback, e.g. herding instinct)
  • Gain: How much amplification of output errors is applied in feeding them back into inputs. High gain leads to instability
  • Frequency response: How quickly can output changes be fed back into inputs (i.e. what are the lags ... e.g. HFT)
  • Noise: What do we see in the inputs and outputs that have nothing to do with what we're controlling.

Anyone with control system analysis skills will quickly see the natural control of the market (normally negative feedback and high stability) is totally compromised by inept tweeking. When the belt breaks; the flywheel spins off; the governor disengages; the shock absorber breaks; the pressure relief fails ... whamo ... game over.

Fri, 09/05/2014 - 11:39 | 5184763 forwardho
forwardho's picture

Agree Withglee, The statement; "One ontological feature of complex systems is that they are not entirely predictable." is a non-sequitur.

Chaos Theory dictates that the more complex the system is the less predictable and thus controllable it will be.

 That anyone could believe that "The Market" with it's unknown myriad variables can be controlled is the very height of hubris.

It is a pleasure to read a comment based in logic.

Fri, 09/05/2014 - 13:20 | 5185349 MeelionDollerBogus
MeelionDollerBogus's picture

And then there's the active-denial of intelligent systems aka intelligent agents: not only is information misrepresented deliberately but hostile actions are taken to remove people trying to gather information. Add that into the complex systems analysis models.

Fri, 09/05/2014 - 13:05 | 5184616 JRobby
JRobby's picture

I would hope that people would see that the "crash any day now" thinking is a normal reaction for people that are seeing something that a short time ago (in modern history) would have been viewed as unbelievable and not possible.

This is a normal mechanism of the human psyche.

Why don't you (downvoting cunt) stop sniping at them and ZH lest you be viewed as trolls with nothing to contribute. If you don't like what is posted here, take a hike over to HP or some other forum that has "evolved" more in the manner that will comfort you?

Fri, 09/05/2014 - 11:15 | 5184642 Moe Hamhead
Moe Hamhead's picture

When I see Chuck say the market is going to crash, I know we're good to go for quite awhile longer!

Fri, 09/05/2014 - 11:26 | 5184697 saveUSsavers
saveUSsavers's picture

GOLDMAN opening Alibaba IPO trading, THEY ARE PROPPING TIL $$$PAYDAY$$$ biggest in history, watch and say I'm wrong.

Fri, 09/05/2014 - 11:30 | 5184718 Grinder74
Grinder74's picture

Huh, huh, huh, you said Deep Stacy...er...wait...State?  Boner down.

Fri, 09/05/2014 - 11:40 | 5184745 huggy_in_london
huggy_in_london's picture

Who is talking crash?  I'm just looking for a 20% pull back (aka where the market was mid last year)

Fri, 09/05/2014 - 11:44 | 5184825 El Hosel
El Hosel's picture

SPY now down four daze in row and just below "the key 2000 level"...  Any day not down 3% with curbs in is the same old shit we have seen for six years, the crime of the century continues.

Fri, 09/05/2014 - 11:41 | 5184802 db51
db51's picture

Yawn.    Has anyone besides me noticed how big Kim Karashian's ass has gotten.?

Fri, 09/05/2014 - 11:56 | 5184889 The Big Ching-aso
The Big Ching-aso's picture

Kanye doesn't look to me like he has gained alotta weight, man.

Fri, 09/05/2014 - 12:21 | 5185048 Professorlocknload
Professorlocknload's picture

Charles. You might want to concentrate on an attempt at developing some sort of systems analysis model of Human Action. Because therein lies the natural evolutionary process that will, in the end, set all of this straight.

Good luck nailing that one down.

Fri, 09/05/2014 - 13:15 | 5185325 MeelionDollerBogus
MeelionDollerBogus's picture

Unnecessary: human action is not the entirety as nature itself plays every role.
Animals become food. Weather dictates which animals & plants will be around long enough to be our food, and how costly it is to ship or if it can be shipped at all depending on storms & seasons.
Again with the pest insects: they can devour our crops before we harvest them.
Limiting yourself & wasting computational effort on only a human-action model would be pointless, fruitless and inaccurate.

Fri, 09/05/2014 - 12:32 | 5185099 AdvancingTime
AdvancingTime's picture

Many people work hard for their money and even harder to save a bit of it but are lulled into complacency when it comes to protecting it. One of the saddest thing to witness is someone who has worked so hard loose all their money when an investment turns south.

This market has far exceeded the upside expectations of many bulls while the economy has languished and in many respects failed to regain all the ground lost since 2007. The question I put forth below is, are we reaching the turning point?

 http://brucewilds.blogspot.com/2014/09/the-turning-point-may-be-soon-upo...

Fri, 09/05/2014 - 13:16 | 5185117 daedon
daedon's picture

The Fed Club provokes crashes when it suites them, since history repeats, there will be more. So how about this scenario for the next crash (my apologies to Ron Paul supporters):

Ron and Rand appear different, but they are just like the Republicrats. Ron and Rand are a Tag Team. Rand panders to the oligarchs, Ron panders to the 99.9%.  Ron is the backup plan. If ever the time comes the Oligarchs need to unload the Fed because they've sucked everything out of it and life support no longer works, Ron will ride to their rescue and on behalf of the 99%, he will make his final and successful push END THE FED, thereby "nationalizing" the carcass of the Federal Reserve.

Of course, if they could get an electronic currency in place, call it Bankville (a la Farmville), then who knows how long they could prolong this scam ?  People could plug into their computers and mine all the Gold they want, after all, some people are having difficulty telling the difference between the real world and the virtual one(s).

Fri, 09/05/2014 - 12:47 | 5185159 Random_Robert
Random_Robert's picture

The reason Economics will never be justified as a true science is that all valid science acknowledges that any system or order is temporary, and is eternally subservient to entropy.

 

Rather than simply studying the forces of nature, Economics rather attempts to "tame" them- particularly  entropy...

 

The unfortunate consequence of this is that the the more energy that is applied to the preservation of the failing order, the more energy that will be released when entropy ultimately prevails (as it always has, and always will)

 

Fri, 09/05/2014 - 13:11 | 5185301 MeelionDollerBogus
MeelionDollerBogus's picture

It's a criticality type of event, something which gets more likely as each new snowflake adds to the mountain just prior to the avalanche.
Timing it is hard but isn't necessary. Simply be elsewhere, don't get snowed in & buried.
For those willing to profit the likely best will come from uvxy, hvu, inverse ETF's to the market while claiming to be "vix ETF's" they really aren't in the mathematical sense.
10.55 inverse is what my last read was, trend at 256.85 = hvu 1/10.55 x spy

and roughly 9.8 x SPY = S&P500 and roughly 1.81 x HVU = UVXY,

http://stockcharts.com/h-sc/ui?p=D&yr=3&mn=1&dy=4&id=p07627077907&s=uvxy:hvu.to

http://scharts.co/1wtWY7j

Fri, 09/05/2014 - 13:20 | 5185346 swass
swass's picture

Some of what the author says I agree with, but I do think that the size and scope of controlled inputs has a lot to do with the size and scope of the inevitable counter-action.  Additionally, I think his premise of collapse occurring due to the exhaustion of temporary stability is off.  It seems to me that this is, of course, inevitable, and that it is due to the natural counter-balances and actions that occur in everything when all inputs cannot be completely controlled.  Central banks provide an illusion of control, which is that they can compensate for these natural tendencies by managed interventions.  In the end, this will prove to be impossible.

Fri, 09/05/2014 - 17:17 | 5186497 jal
jal's picture

Why not crash now? 

 

Because I'm not ready for a crash

Fri, 09/05/2014 - 17:51 | 5186595 numapepi
numapepi's picture

Complex systems are characterized by long periods of stability puctuated by short episodes of instability, they are called long tailed events. In a complex system, the distribution curve of probable events is not the typical bell curve but an arc, where most of the time it operates withing a certain parameter but once in a while a long tailed event occurs, sometimes far outside what anyone could have expected.

 

Fri, 09/05/2014 - 19:13 | 5186859 AdvancingTime
AdvancingTime's picture

Most investors think that even if things go downhill fast that they will be smart enough to get out of the markets. After the debacle in 2008 where they saw the market do nasty and violent swings they learned a few things, this time they figure they will make the right moves before it is to late. But what if it hits like the flash crash on steroids? 

 For a long time I have been trying to develop a scenario for a market "super crash" and a reasonable map that would arrive at such a situation. Below you will find more on why this scenario could happen. We know that can't happen because circuit breakers have been put in place to arrest panic style moves, but imagine a market that falls, trade is halted, and the market simply does not reopen for days, or even weeks.

http://brucewilds.blogspot.com/2013/01/flash-crash-on-steroids.html

Sat, 09/06/2014 - 01:17 | 5187682 Tom Green Swedish
Tom Green Swedish's picture

They are fearful be greedy and BTFD. If you want hoard gold and consumer staples stocks. Both safe easy bets.  Should consist of at least 25 percent of your diversication strategy.  The other 25 cash, the rest a mix of mid small and large caps and some bonds mixed in.

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