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The Committee To Destroy The World
From Michael Lewitt, author of The Credit Strategist
The Committee To Destroy The World
Last month, the world mourned the death of beloved actor Leonard Nimoy. Mr. Nimoy, of course, was renowned for his portrayal of the iconic character Mr. Spock on the 1960s television series Star Trek. One of the most memorable Star Trek inventions was the transporter that allowed human beings to be beamed through space and time like light and energy. Investors expecting central bankers to solve the world’s economic problems might as well believe that Janet Yellen is capable of beaming them straight into the Marriner S. Eccles Building in Washington, D.C. Their failure to acknowledge that the Fed is failing to generate sustainable economic growth while contributing to income inequality and crushing debt burdens is inexplicable. Central banks that purport to be promoting financial stability are actually undermining it – with the able assistance of regulators who have drained liquidity from the world’s most important markets.
Negative interest rates on $3 trillion of European debt are an obvious sign of policy failure, yet the policy elite stands mute. Actually that’s not correct – the cognoscenti is cheering on Mario Draghi as he destroys the European bond markets just as they celebrated Janet Yellen’s demolition of the Treasury market. Negative interest rates are not some curiosity; they represent a symptom of policy failure and a violation of the very tenets of capitalist economics. The same is true of persistent near-zero interest rates in the United States and Japan. Zero gravity renders it impossible for fiduciaries to generate positive returns for their clients, insurance companies to issue policies, and savers to entrust their money to banks. They are a byproduct of failed economic policies, not some clever device to defeat deflation and stimulate economic growth. They are mathematically doomed to fail regardless of what economists, who are merely failed monetary philosophers practicing a soft social science, purport to tell us. The fact that European and American central banks are following the path of Japan with virtually no objection represents one of the most profound intellectual failures in the history of economic policy history. While the global economy is facing a solvency problem linked to excessive debt accumulation, the world’s central banks are pursuing policies designed for a liquidity problem. That is like treating cancer with a Tylenol. The only solutions in this known universe for a solvency problem are inflation, currency devaluation or default. Maybe Spock has a different solution but he’s been beamed up to a better place and is no longer on call to save us. Since none of these real-world solutions are politically palatable - no leader on today’s world stage has the courage to propose them and would be voted out of office by selfish and short-sighted constituents if he/she did - central banks are left offering huge doses of debt since equity can’t be conjured out of thin air. But all of this debt is just exacerbating the solvency problem and failing to solve the liquidity problem, pushing global markets closer to the brink.
The global financial system no longer possesses the productive capacity to generate enough income to sustain current asset values. The markets refuse to acknowledge this reality, but they will. In a presentation to the Global Interdependence Center on March 23, 2015 in Paris, France, Christopher Whalen, Senior Managing Director and Head of Research at Kroll Bond Rating Agency, gave an unusually frank assessment of the current state of the global economy. Mr. Whalen, one of the best bank analysts on Wall Street, argued that global banks face trillions of bad off-balance sheet debts that must eventually be resolved (i.e. written off) and are dragging on economic growth. These debts include everything from loans by German banks to Greece to home equity loans in the U.S. for homes that are underwater on their first mortgage. Banks and governments refuse to restructure (i.e. write off) these bad debts because doing so would trigger capital losses for banks and governments. As Mr. Whalen explains, “the Fed and ECB have decided to address the issue of debt by slowly confiscating value from investors via negative rates, this because the fiscal authorities in the respective industrial nations cannot or will not address the problem directly.” But in addition to avoiding the bad debt problem, these policies are causing further economic damage by depressing growth and starving savers. Per Mr. Whalen: “ZIRP and QE as practiced by the Fed and ECB are not boosting, but instead depressing, private sector economic activity. By using bank reserves to acquire government and agency securities, the FOMC has actually been retarding private economic growth, even while pushing up the prices of financial assets around the world.” ZIRP has reduced the cost of funds for the $15 trillion U.S. banking system from roughly $500 billion to only $50 billion annually, depriving savers of $450 billion of annual interest income. Zero interest rates are deflationary and sluggish national income growth renders it impossible to validate and sustain the current level of inflated asset prices. This means that any movement away from these policies, as the Fed now appears to be preparing, portends lower asset prices.
Investors are continuing to cling for dear life to stocks and bonds trading at unsustainable valuations and denominated in deteriorating fiat currencies. While it may appear rational to do so in a world in which professional investors are judged based on their relative performance and would rather fail conventionally than succeed unconventionally, true fiduciaries should protect their clients now from the steamroller that is about to run them over. Central banks have destroyed bonds as instruments of prudent investment and forced fiduciaries to buy assets that are going to generate negative real returns. While Mr. Whalen speaks of the trillions of bad debts that are suffocating growth, even the trillions of nominally money-good debts have been placed at risk by the current policy regime. The only reason the system is not yet in crisis is that interest rates are artificially depressed. Low rates have reduced the cost of debt service to manageable levels but done nothing to improve the productive capacity of companies or economies. But time is running out; the U.S. and Europe may be emulating Japan, but they are not Japan. While low interest rates were intended to buy time for fiscal policy makers to implement pro-growth policies and raise incomes needed to service and retire rising debt burdens, nothing of the sort has occurred. As a result, the global economy’s capacity to service its existing debt as well as its future promises is reaching its limits.
This leaves currency devaluation, inflation or default as the only possible resolutions to the end of the Debt Supercycle that began 30 years ago. All three are similar in kind because they deprive lenders of repayment of their loans in constant dollars. But that is the nature of debt in human economies; debts are rarely repaid in full in real terms. Human economies pay it forward and time erodes the value of money. Einstein famously said, “The only reason for time is so that everything doesn’t happen at once.” The same is true about debt. Debt was created because everything in economies can’t happen at once; in order to sustain ourselves, some future wealth must be brought forward into the present. In order to do that, we create money that doesn’t yet exist in the form of debt. We then hope to earn that money in the future through our economic activities and eventually repay it. Hyman Minsky taught us that “[c]apitalism is unstable because it is a financial and accumulating system with yesterdays, todays, and tomorrows.” Debt seeks to bridge that instability through the form of contracts that ultimately rely on the good will of those who sign them. In that light, we can see the real tragedy of negative interest rates: they not only have the perverse effect of reversing the flow of time, but they demonstrate that borrowers are not acting with the good faith incentives normally associated with someone who needs money. Rather than paying forward, borrowers are paying backwards because they are effectively trying to return something they don’t want. Such an arrangement renders it impossible for an economy to grow. By destroying the temporal and moral structure of money, negative interest rates destroy the economy. When tomorrow cannot be paid, the current regime must fail. The only question to be determined is the form that failure will assume. This may sound like philosophy but it is cold, hard reality.
Beam Me Up, Janet!
Another enduring image of Mr. Spock was watching him play three-dimensional chess, a game that demonstrated both his superior intellect and his ability to see the complexities of the universe in ways far beyond the limited abilities of mere mortals. Rather than think in only two dimensions, Spock was able to think in three (or even more). This is something that investors must be able to do in a digitalized world, particularly when currencies start to move as dramatically as they have since last summer. As a citizen of the 23rd century, Mr. Spock was able to envision a digital world that we are only beginning to experience.
Today, we inhabit a world in which we are just beginning to deconstruct every conceivable kind of data into different combinations of 1s and 0s that can then be reconfigured and transmitted around the world in the blink of an eye. For example, Israeli cybersecurity company Cyactive, which was just acquired by PayPal, uses evolutionary biology algorithms in its cybersecurity business. Cyactive’s specific area of expertise is predicting malware before it hits a network based on the premise that malware behaves like a virus; it mutates as it spreads. Algorithms are a common digital language that can be applied across biological and non-biological systems. The possibilities are truly as limitless as the space explored by Spock and his fellow travelers.
In the financial world, every stock, bond, loan, currency, commodity or derivative can be broken down into its constituent digital parts. Financial technology reveals the underlying reality that all financial instruments are merely different expressions of the same underlying economic information. For example, currencies and interest rates are different versions of the same underlying phenomenon – the cost of money. And while economists have taught us to think about the difference between “real” and “nominal” returns primarily in terms of inflation effects, inflation is inextricably linked to currency movements that affect the cost of money. With interest rates at or near zero and traditional inflation measures suppressed, currencies have picked up the mantle from interest rates for the transmission of real returns on capital. “Real” returns are intended to measure the return on capital in constant currencies, which today means adjusting them primarily for changes in the value of fiat currencies. Investors are playing on a multi-dimensional chessboard where the pieces are being moved around by increasingly desperate central bankers. When the currencies in which investments are denominated experience historic levels of volatility (i.e. the euro has dropped by 20% against the dollar since last July), a new dimension enters the investment landscape. The unstable currency regime has created a highly unstable investment environment that is placing capital at risk.
The Cannibal Economy
While most investors choose to remain blissfully ignorant about the nominal value of their investments, the real value of what they own is deteriorating. One symptom of the continuing destruction of the economic base is the increasingly cannibalistic nature of economic activity in both the private and public sectors. Instead of investing in the future – or creating a future – public and private sector actors are borrowing from the future while devouring the present. Promises to pay future obligations in constant dollars are literally no longer worth the paper on which they are written because those promises of future payment are being actively debauched. Having mortgaged our future and limited our ability to engage in productive economic activity, public and private economic actors are now consuming themselves.
Since 2009, companies in the S&P 500 have spent more than $2 trillion repurchasing their own stock. These repurchases have accelerated as stock prices have risen, which means that corporations’ appetite to eat their own has increased as their stocks have grown more expensive. In 2014, members of the S&P 500 bought back $550 billion of their own stock, according to data compiled by S&P Dow Jones Indices. In contrast, investors in mutual funds and ETFs bought only $85 billion of equities last year. Companies announced another $104.3 billion in buybacks in February, the highest on record according to TrimTabs Investment Research. In many cases such as IBM and Herbalife, they borrowed a great deal of money at low Fed-subsidized rates to eat their own.
The private sector is merely mimicking what the public sector has adopted as its formal economic policy. Since 2009, the Federal Reserve has purchased $4 trillion of Treasuries and agency securities that are currently sitting on its $4.7 trillion balance sheet. The European Central Bank has launched a $1 trillion bond purchase program while the Bank of Japan has gone farther and is buying gobs of stock and ETFs (which strikes me as wildly insane). So governments are also devouring themselves. In the latest version of this phenomenon, the oil market, where supply is outrunning demand, is now consuming itself as massive amounts of product are being bought into storage at what are believed to be low prices. It remains to be seen just how low those prices will prove to be after the final costs of storage and carry are calculated.
Any society that eats its own is doomed to perish. I am unaware of any race of cannibals that has thrived in the history of mankind. Eventually they run out of victims.
The Fed and the U.S. Economy
Markets reacted with their usual irrational exuberance to what they interpreted as a dovish tone in the FOMC’s formal statement after its March 17-18 meeting as well as Janet Yellen’s remarks afterwards. Rather than dovish, however, I believe the Fed is extremely worried. As well it should be. The denizens of the Eccles Building have painted themselves – and the rest of the world – into a corner. The Fed finally acknowledged that the economy is weak and that it doesn’t expect it to strengthen quickly. This is something I have been warning about repeatedly. Neither an over-indebted U.S. economy nor an even more over-indebted global economy is in any position to reach so-called escape velocity. The only velocity that is increasing is the velocity of denial among Fed apologists and stock investors who are going to hit a brick wall at high speed in the not-too-distant future if they don’t snap out of it.
After maintaining for months that the economy was improving, the Fed finally acknowledged that it is not. It now expects economic output to expand by between 2.3% and 2.7% in 2015, a downgrade from its December 2014 estimate of 2.6% to 3.0%. Even more important, it lowered its estimate of the non-accelerating inflation rate of unemployment (the unemployment rate below which inflation rises, also known as NAIRU) to 5.0% to 5.2% from 5.2% to 5.5%. This suggests that the Fed sees much more slack in the economy than before. While some might see this downgrade as giving the Fed more time before it needs to raise rates, a Fed that is concerned about low inflation should read it as a signal to accelerate its timetable in order to infuse some inflation into the economy with higher interest rates. But we all know that isn’t going to happen. Instead, the Fed lowered its forecast for the Fed Funds rate by 50 basis points across the board (0.675% by year-end 2015; 1.875% year end 2016; and 3.125% year end 2017). The economy looks increasingly exhausted.
The Fed has been consistent in its failure to forecast the economy with any accuracy, which is as much a commentary on forecasting as on the Fed’s abilities. Based on this track record and its outlook, it is hardly surprising that Mrs. Yellen & Co. are reluctant to raise rates even in the face of rising risks to financial stability posed by interminable zero rates. Having explicitly targeted asset prices and the so-called “wealth effect” as its policy after the financial crisis, the Fed is terrified of what might happen when it reduces the massive subsidy it has provided to the economy (primarily the wealthy). The problem with this regime, however, is that targeting asset prices, particularly stock prices, is far beyond the Fed’s purview and leads to distorted markets, misallocated capital and dangerous long-term economic, social and political consequences. Why the denizens of the Eccles Building can’t figure that out is best explained by those who awarded them their advanced degrees.
With the exception of jobs numbers, the string of disappointing economic data has been unrelenting in 2015. In fact, it would be difficult to point to any positive economic data other than employment data over the last three months. The Bloomberg Economic Surprise Index is at its lowest level since March 2009 and the Citi Surprise Index was recently at its lowest level since 2011. While factors like the West Coast port strike and arctic conditions in the northeast are no doubt having some impact, there is obviously a problem when economic data is flirting with levels last seen at the depths of the recession and the financial crisis. As the March Chicago PMI report stated, “While part of this decline may be attributable to the cold weather snap and strike action at west coast ports, the continued weakness in March points to a wider slowdown in business conditions.” I may have been an outlier when warning about a growth scare last November (just as I remain an outlier regarding the meaning of low oil prices for the U.S. economy), but I would rather be an outlier and correct than part of the consensus and wrong. There is something seriously awry in the U.S. economy. There is no self-sustaining economic recovery occurring. Instead, there is simply an inexorable build-up of debt that can never be repaid and that is sapping growth. The incessant flow of negative economic data is not an aberration – it is the new normal.
On March 11, Bridgewater’s Ray Dalio warned the Fed that raising rates now risked a 1937-style stock market slump. Mr. Dalio is likely correct that higher rates will strengthen the dollar and contribute to deflationary pressures, but the Fed should not be worrying about the stock market. The policy of targeting asset prices that the Fed adopted after the financial crisis has been an abject failure. The so-called “wealth effect” that these policies were supposed to create only helped those who have wealth; it has damaged the 99% of those who don’t. Trillions of dollars of direct bond purchases plus trillions of dollars of further subsidies in the form of zero interest rates may have caused the stock market to triple since its March 2009 low, but they have left the U.S. deeply indebted and struggling to grow at 2%.
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Much more in the full letter: pdf.
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thank you president obama! Bush was Horrible and you are Saving Us All!
FINANCIAL TERRORISM should have LIFE IN PRISON !
TOTUS is not a doctor, rather a Vulcan nerve pinch to round up the crowd of followers.
They're all dead, Jim. It's the bankers! They were butchers, Jim!
The true legal tender...
https://www.youtube.com/watch?v=084tT-X0LZ8
Without even clicking on your link I want to guess what it shows. Are we talking Quatloos by any chance?
Crazy Canucks have too much time on your hands...;)
Don't ya'll have a honey doo list or some damn thang?
I used to deface Nixxon stamps back in the day. I wish I would have mailed one to myself.
Quite possible the Hunter Thompson Memorial Museum has a set.
(they may have a few bullet holes in them however)
Even Nixon never destroyed the tapes-evidence , ala Obama-Learner-Holder and Clintion.
Or you could have left them as is but sent them on an envelope like this one: http://kookykitsch.com/Portals/0/productimages/1573_1b7a0.jpg
I drew him behind bars too. But drew his hands sticking out shooting the "V" sign. I also drew legs and shoes and a Hitler mustache.
Great piece.
I would love to see those pics as mug shots on a Post Office bulletin board.
Paging Mr. Banzai...
How about a picture of Greenspan giving birth to these central bankers through his anus. I would buy that one.
That's not an anus, it's the seventh portal to hell
kaiserhoff,
Indeed! Why am I reminded of The Three Stooges?
DavidC
Meltdown : The men who crashed the world PART 1
https://www.youtube.com/watch?v=A_Ii15DRKDA
.
for what it is worth.
The future is in backwardation
and so are live cattle, gotsidank.
So turn the herd right around, then they be in forwardation.
Love 3 dimensional chess...Fucking negative interest rates pretty much says it all. My apology for not reading the entire article but sometimes the title says it all. Are you fucking kidding me? NEGATIVE INTEREST RATES- oh wow..so I put my money in the bank and they dont have the ability to provide me an interest rate when they are going to lend at 100-1 and charge up to 28%? WTF is wrong with this picture. (rhetorical question)...If that simple equation doesnt say...WE BE FUCKED, nothing does...
FYI and for your amusement.. Im currently paying 110% interest to a company called netcredit who loaned my wife 2k when i was down and out...too funny...no joke...or maybe the jokes on me?
The jokes only on you if you paid them back.
"The global financial system no longer possesses the productive capacity to generate enough income to sustain current asset values." Yup, so consider:
We all know QE is the Fed’s stated vehicle to artificially rig interest rates lower and artificially maintain a market for Treasury’s and MBS…and in the following link, pretty well establish there is a backdoor QE of similar size going on to maintain the rigged US Treasury “market” in the current absence of formal QE…
http://econimica.blogspot.com/2015/03/brics-blink-or-more-correctly-wink-and.html
So, if it’s clear the biggest “market” is out and out rigged…if multiple CB’s now openly advertise their equity purchasing (alongside bonds) with funny money, if the CME has an incentive program specifically for CB’s purchasing equity’s, why would we think otherwise for the Fed and US equities??? Let's stop pretending to look at charts, or long term averages, or any other hocus pocus. CB's are the only place to look now. Which leaves us with this…
http://econimica.blogspot.com/2015_04_01_archive.html
What does it matter? CNTL+P. They want to distroy paper for digital currency. Simple fact. Easier to manipulate the system.
Bernake just spotted in downtown Manhattan throwing another Senior under a Bus!!!!!!!!!.
was a bankers helping...that is after they grabbed their money!
these puppets are simply doing what their masters command them to do. there is nothing "New" about this New World Order
If I can break even on my mining ETF's I'll be happy.
Old news I know, but still stacking. Going to add a .22lr rifle to my collection.
Add a silencer and use sub ammo. you won't believe how quiet - makes more noise on the target than the pop you can zero at about 80-100 yds load of fun
Sadly I live in CA.
Thread the barrel for a flash suppressor - safer for the environment as you don't want to start a fire - is that legal there? Fill in the blanks after that. Good luck
I don't see my Boss up there so I an't worried. 2nd thoughts he probably plays lap dog for yellen.
Quiz of the day: Did you know posting on ZH can get one fired?
http://m.youtube.com/watch?v=tq51BT5SPWM
I'll miss you Karl. Sure, we tortured you over the years. I always had high respect on your viewpoints. I hope you re-enter Market Ticker again. I do see a few posts since this morning. Will check later.
http://market-ticker.org/akcs-www?post=229974
End of an era...
the article is too long.
Short attention span. Look forward to the liberal generation to bail you out of bankruptcy.
too many words... inflated
So, perhaps instead of an extended Spock analogy, a quick Three Stooges metaphor, w/ an old clip of them poking each other in the eye.
"Current regime must fail"= turn into total tyrannical fucking assholes and wage war, make our lives total hell and kick, scream and claw every step closer to their way out until the entire world is one pile of ash with smoke pouring off the top.
http://fxuniverze.com/april-best-month-gbpusd-audusd-14/
I heard something interesting today. Avg major league baseball salary this year is $4million. In 1976 it was $50K, an increase of 80 times.
In 1976 I made approx $16K. By my calculation I should now be making approx $1.2 million. In my best years I made a little over $300K
Now compare to CEO pay and laborer pay. This country on a long downward trend for all but the few
You may want to focus on the minor leagues and ice cream, maybe even cotton candy. Thats for apples to apples. Major league Baseball players today offer more services then they did in 1976, and to a wider audiance, so that aught to be acounted for. But cotten candy is still made and eaten the same way it always has. Cotten candy has always been a rip off and crooked, but its spread on that crooked hasn't changed because its utillity hasn't changed.
When looking for inflation look at utility then at the charts. You'll see a clearer picture of inflation. Credit on the other hand, thats another story.
They left one out.
Wait, aren't they the same?
http://www.reuters.com/article/2015/04/01/us-asia-aiib-israel-idUSKBN0MS46J20150401
The same is true of persistent near-zero interest rates in the United States and Japan. Zero gravity renders it impossible for fiduciaries to generate positive returns for their clients, insurance companies to issue policies, and savers to entrust their money to banks.
They're all so clueless about the proper management of any Medium of Exchange. Money is a certified "promise to complete a trade". It is created by traders making new trading promises and getting them certified ... creating money which trades as the most highly valued object in simple barter. On delivery of his trading promise, the trader returns the money that is then extinguished and no longer circulates.
If he fails to deliver, he DEFAULTS. These DEFAULTs dilute the value of other in-process trading promises. Thus, the DEFAULTed money must be recovered and extinguished through INTEREST collections.
INTEREST is an amount ... not a rate. There is no satisfactory denominator to use in figuring it as a rate. It "must" equal DEFAULTs experienced as governed by the relation: INFLATION = DEFAULT - INTEREST = zero.
Now, how can INTEREST collections be negative? Well, if more INTEREST is collected than DEFAULTs experienced, one of two things has to happen. More DEFAULTs need to quickly occur with no balancing INTEREST collection, or INTEREST previously collected needs to be returned.
When you consider the huge volume of money that is perpetually created by traders making trading promises and extinguished by traders delivering on those promises, an imbalance between DEFAULTs and INTEREST collections is never actually perceived. It is the error term driven to zero by the relation.
If, in the process of trading, some traders are able to collect money and sell it to other traders at a profit, so-be-it. But that is not INTEREST. That is simply PROFIT.
Such a business will always be possible as long as traders DEFAULT and thus must pay higher INTEREST collections to certify their trading promises. Also, trading promises certified as money are "not" anonymous. The market must know who is creating the money and under what terms so it can know if the trader delivers as promised. However, once created, money acting as an object of simple barter is totally anonymous. Thus, there will be a market for barters who will pay a premium to keep their trades anonymous. Of course, the trader "selling" them the money expects it to be returned, so the anonymity stops there.
In the new normal Defaults are not permitted. So if Defaults are no longer permitted then how do we price value, we dont we just end up as defaults or ..., take your pick.
Do onto others ... First
This is a good article IMHO, and the title tells it all. When the musical chairs stop, and everyone has to find a seat, many will be bottomless. Muppets one and all. Here is the bottom line in the article: There is no self-sustaining economic recovery occurring. Instead, there is simply an inexorable build-up of debt that can never be repaid and that is sapping growth. The incessant flow of negative economic data is not an aberration – it is the new normal.
We are waging economic war with Russia via the Saudi’s pumping at our request (dual benny to take out our shale companies), NATO has been given the green light to expect arms in Ukraine, and we are actively supporting terrorists all over the world with weapons. It's all good right, $700 toilet seats galore for the Military Industrial Complex, as they and the bankers roll us like barrels downhill. When we hit the bottom, our sides will split and we will gush out our blood.
Ya really think that Putin is ignorant of what we wage? His backers play chess, we can't play even play checkers. When the pieces are set just right, I believe a nuclear strike will ensue in this country, as his defense minister said three months ago, that a first strike is winnable. Oh what a tangle web we weave, when we practice to deceive.What do ya think our liar in chief will do? I predict another round of golf as he gives this problem back to those who wanted it. Most of our clear thinking generals have been sacked left with just the ass kissers.
The US recently sent 3,000 troops and 750 tanks and other military vehicles to Latvia on the Russian border. (Aww Putin, we are just funning)
“Russia Starts Nationwide Show of Force:” 45,000 Russian troops plus war planes and submarines are performing military drills. (Putin, we are just funning, why didga go and do that? Can't ya take a joke)
Help me out here, are we the good guys, or the bad guys. Once there was no question, just as now I hold no illusions to the position we hold on the world stage. Before the CB's roll out our salvation called the Special Drawing Right, I see mushroom clouds across this nation. I pray I'm wrong, but my eyes are clear.......
When was there no question? Is that before or after you pulled your head out of your ass? Were we the 'good guys' when we were killing off the native americans and their food sources? Were we the good guys when we dropped two atomic bombs on civilian cities? Were we the 'good guys' when we took part in Mai Lai? Were we the 'good guys when we killed a million plus Iraqui's all for a few fucking lies? Damn I just can't think of any era when we were those 'good guys'. You must be lots older than I. How old duid you say you were again? 250 years old?
"it hits a network based on the premise that malware behaves like a virus; it mutates as it spreads."
This reminds me of how the Kabaal of Bankster Parasites spreads. They mutate as they spread. The exterior and Modus Operandus may change, but the underlying Agenda does not.
BTW, not so sure that Cyactive got their inspiration from biology, but from the human nature of some... 'folks'.
The real problem with the debt is that it represents the wealth of the entire planet. When debt goes bad, an equal amount of wealth is lost by the lender. Yes big banks were the middle men but the money came from individuals, pension plans and savers everywhere. The Fed faces not merely the wrath of the big banks but must ultimately face every entity that trusted this system to transport it's wealth into the future. Few of these debts, these promises of wealth in the future will be kept. It is not just that assets are worth less, it is that everyone who believes they have enough to retire is going to be very unpleasantly surprised.
As always it will be the elderly, those who cannot rebuild, who will suffer the most. They will soon discover their retirement will be lived in poverty. This is how it happened in the Weimar, in revolutionary France and in 30 plus other countries that experienced hyperinflation of the currency in the past 100 years. Every historian of money knows this and there can be no surprises for the honest, intelligent economist. To pretend otherwise is however not surprising. The results will be awful and at this point nothing can be done. Denial makes perfect sense. The deaths of so many is not a thing good people could tolerate knowing they were part of the cause.
'When debt goes bad, an equal amount of wealth is lost by the lender'.
See thats where im gonna disagree. Maybe on a technical level somewhere thats true. But in real life..the only 'wealth ' that can be lost..or purchased..or given away..(or stolen) is ACTUAL WEALTH. Not some financed interest owed on fiat money made from nothing. See..money is just a medium to turn labor into..well whatever goods n services one wants..ie hookers blow..whatever.
Its kinda too long for me to want to explain if people dont get it. (But i think my example speaks enough).
There is only a finite amount of 'wealth' in the world.
It is purchased with labor (currently the system is using fed notes to store the labor). Adding in phony interest on phony money that is essentially counterfeited, they are not losing said wealth. (Though they tell you they are..and you gotta pay it back..with REAL labor..not counterfeited. )
Hope that helps brah.
Oh..i left out the fact that in an 'honest/real money environment'..your statement would be 100% accurate.
ok then...'wealth'...
http://m.youtube.com/watch?v=F-QA2rkpBSY
disagree with the following:
The global financial system no longer possesses the productive capacity to generate enough income to sustain current asset values...
...trading at unsustainable valuations...
nominal values are what the fed says they are. they will buy all the stocks and bonds eventually. it is inevitable, and moar importantly, eminently logical.
http://www.investopedia.com/terms/g/glass_steagall_act.asp
Another deleted Clinton computer server to hide corruption.
remedy: ceausescu.
Let's circle back to Yellens belief "cash is not a convienient store of value" and is just another tool to be manipulated for the benefit of bankers. Which puts cash in line with my friends Beanie baby collection, just another bubble to be blown.
In one of her more lucid moments "cash is not a very convenient store of value" - Janet Yellen
No one ever thought to ask her in what she thought was a "convenient store of value" did they?
/////
Wut? Shirley she would have said BitCoin ;-)
China and Russia look on with laughter.
Go ahead and destroy yourselves economically, China will gain the reserve currency and buy assets on the cheap.
Hope and change.
Willing to fail conventionally rather then succeed unconventionally...
Yup.
Investors playing 3D chess...with a blind fold on. We know these nominal valuations aren't real. Bonds are toast, stocks are stretched, commdities inflated, and currencies who knows where those are going to settle..... Why have your capital in these markets at all?
As everyone knows cash is king in a deflationary swing. There is no better time to be exchanging your dollars for tanglable assets.
What do savers save for? A rainy day? This is going to be your rainy day.
Who is out looking for the unconventional investments? Who is on the streets extrapolating what people will want and need in the future? The debt rush has us stuffed to the brim with products and services people would never have sought without this binge, but that doesn't mean people aren't going to require products and services in the future.
The FED is fuked, but isn't that final mandate. The Federal Reserve Bank has fulfilled it's duties. It has a couple of years left to fully exhaust it's hammer vs key board techniques then it will go down dragging the dollar with it. That's why new international banking systems are on the rise.
The smaller banks are no better. They have been expanding their paper claims as far as possible. Time will tell how that is going to play out, but I don't believe we will see any surprises here.
There is nothing new about this situation, except the amount of eyes present. All of the media used to hold this construct together will be turned into reverse propaganda. It will be a swift and hard realization. People who comfortably ignored the lie are in for a personal affront, then something much worse.
The slow motion train wreck grinds on...
As Caroll Quigley stated, there will be one world government either willingly or by force.
Two mil helo's flew over today and I live in BFE.
I don't think it's gonna happen, Willy.
The people I know are way too stupid to know what's up or way too connected to the status quo--- you know, the them that don't wanna know.
So, the one world .gov might wind up populated with too stupids while the too connected get kicked to the curb and forgotten.
Actually, I'd be OK with either outcome.
Helo's fly over me every day. Unless and until a Hellfire missile falls upon me, I will prevail.
So, will you.
May peace be upon you!
I hope you're right ace.
Yeah, I thought I made a mistake once, but found out later I was wrong :)
I fuck up daily, and am forced to make corrections.
I wonder how many fall into this category.
Further, absent immediate feedback, how many make decisions based on theories unproven by the test of time, that affect humanity long after they, and their theories are proven dead?
How would Wicksell describe this bizarre world created by Sorcery ?
If you can't spell comitte, yer likely fucked. And if you're not a commitee member, most of us aren't (consult George Carlin) don't endorse communism.
Stop acting like Putin is a villain.
Vlad's a good guy, whether he wears a shirt or not- I don't care.
When asked a question, he answers it.
His advisors, Lavrov and Glazyev do the same.
You want me to think that these people are my enemy?
If they are part of government, they are your enemy. Unless you think freedom is the enemy. Government is the enemy of freedom.
The US Federal Government is going to destroy the world and America. The only man who can save it is Putin through the power of Jesus Christ. Here is a video the US DOS doesn't want you to watch about Putin and his Christian Faith. For you Gov Trolls this shit is like kryptonite so you better not watch lest you lose your paid blogging power (ie, you'll get fired if your dept head sees you watching this).
Vladimir Putin's Christian Faith - in his own wordshttps://www.youtube.com/watch?v=u3d_yxJhmjk
"Janet Yellen's demolition of the treasury market"? What's the weather like on your planet?
Sorry for the length of the contribution! I don't think the article grasps the complete damage caused by ZIRP and the resulting yield-less global economy. The lack of positive interest rates (I mean not on paper but in the nacked mathematical reality) destroys the very fabric of our society. Working and saving to create wealth has been a fundamental principle that has moved society forward since ancient times. Whoever believes that this principle can be substituted by "working and buying assets and hope that their value appreciates" is wrong. It is not possible to substitute the knowledge of future interest earnings by the hope for asset appreciation. At the end people will not longer care if the price of a yieldless Uber or Tesla share is 100 or 10.000 because the lack of yield will rob market participants of the chance to buy any of those. "Paper wealth" will be concentrated in the hand of very few left indulging in the increase of mere nominal numbers. Consequently people will stop working because of lacking incentive and save their valuable time for other activities. It will be the more knowledgeable and intelligent people that draw this conclusion first, i.e. the ones that contribut(ed) most to society and the only active people will be the psychos, the stupids and the gamblers. The wheels will stop turning and society will disintegrate. The people that make the decisions that govern this terrible process of desintegration are on the top of central banks and the top of the top is a privately owned organization called FED which feeds on the live-blood of the population worldwide. This organization did create a black-hole which swallows the wealth of almost everybody and did turn the average American into a debt-slave. All this is pretty obvious. The only mystery remaining is why the American people permit themselves to get distracted by purportedly important crises around the globe instead of tackling the major issues at home first.
"The only mystery remaining is why the American people permit themselves to get distracted..."
ehmm... a lot of effort has been put in keeping the American people distracted in the last 100 years, and this effort was the strongest in the last 50 years
keep them pliant, keep them ignorant, keep them spending, keep them not voting, keep them consuming, keep them piling up debt, keep them caring for divisive and irrelevant issues
some fantastic examples: the exceptionalism of the US Prison Complex, the US Military-Security Complex and the US Student Debt Bomb ticking
the first incarcerates 2'000'000 people, instead of the european average which, if applied, would be around 330'000
the second costs half of the world's spending. That's 50% instead of 5%, if you'd take population as a benchmark
the third is poisoning a whole generation's way of thinking, both economically and politically
ZIRP, in this context, is one of the least problems. the distraction has to go on until the American people will wake up. and then... who knows?
as you pointed out, the FED "... feeds on the live-blood of the population worldwide". eventually, this will... end. and perhaps that will be the "Day of Awakening"
nevertheless, in this context remember that the US had no revolution since the 18th Century. for all purposes, from an historical point of view it's like there was never a revolution, in America, neither a bloodless nor a bloody one. and even constitutionally, the last Amendments of importance are all things nobody experienced personally anymore, a thing of the distant past
the US still uses the same electoral system as in the 19th Century, for example, suffers from the same machine politics, party duopoly and redistriction political corruption as ever
but on the bright side, Americans are famous for "reinventing themselves"
Just for arguments sake :
The current conundrum has as PRIME motivation : eating up the future wealth to feed the current generation of Oligarchs.
Seen from that perspective as the source of all our ills, we could argue that Reaganomics is a time machine which has robbed from future generations to line the pockets of those in power since 1980s...Thank you Maggie and your pretty farm in London city !
So my point is : That model has not only corrupted capitalism; aka risk and return balance in the market all pumped on steroids, it has also robbed TIME and new horizons from those who were born as Millenials and followers on !
What has now happened is that this model has reached its point of saturation, peak everything material except Weimarish fiat, and Jack's beanstalk now has to shrink bigtime. We are in the race of the one eyed leading the blind towards horizons lost!
Negative rates is one way of making the money market madness already in place be diverted to real economy. But its not enough of a measure as it has not severed the HAND THAT FEEDS IT; aka the banksta and oligarchy cabal who only have one word to define their ongoing debased mindset : MOAR !!!
The Gods are probably laughing in the heavens as they see the Pax Americana scions, running desperately from pillar to post, changing alliances from Sunni surrogates to Shia defiants in the sacred Oil patch, trying to save what can be saved in the approaching winter of wealth asset shrinkage.
Their universal empire of MIIC games and unlimited print fiat scamming now reaches a tipping point as they continue to try celebrating their false Greenback god; now wearing leaden sandals there where he towered before like a colossus, as the Chinese giant gears up to defy the IMF/WB world of $ hegemony.
You can hear the mountains on all continents resound with the eerie laughter of Olympus!
PS : Reinventing oneself wil be a Herculean task; but why not! Never say never!
Yep, and all this goes on as DHS begins domestic manuevers in the southwest USA. Gee, I wonder what they have planned?
Bailing out when the feathers start flying. All the maneuvers are bluff. The cops in Chicago refused to go into Cabrini Green when it was still standing unless they had to retrieve a corpse. When the boiling point is reached, the minions will turn tail and run.