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Economic Reality Now Catching Up To Market Fantasy

Tyler Durden's picture




 

Submitted by Brandon Smith via Alt-Market.com,

In the mind of a schizophrenic person, internal elements of fantasy (negative and positive) are made manifest in the psyche and projected out onto the real world. Often, the daydream images of the mind are not merely images to them. Rather, what they imagine subconsciously becomes reality. Their faculties of observation become so limited, either due to a reaction to trauma or merely an inherent inability to cope, that they cannot decipher between fact and fiction. A person could go on like this for quite some time if all his needs are provided for by someone else. But the moment that support ends (and it will), the realities of necessity, not to mention supply and demand, take hold. One cannot live in a schizophrenic world indefinitely.

The current global mishmash of interdependent and socialized economies are, at bottom, schizophrenic. Our markets are not based in any fundamental reality. There is very little tangible foundation left to stand on, and this has been the case for several years. Yet some people might argue that since the derivatives crash of 2008, most of the world has continued to walk on air and there is little for us to worry about.

The power of fantasy is that it is self-perpetuating. Fantasies are fueled most commonly by misplaced hopes and unhealthy or unrealistic desires, and such things are darkly and grotesquely energizing. Fantasies can indeed keep economies around the world functionally alive even when they are clinically dead. But again, there is always an end.

Equities and commodities markets in particular have levitated despite economic fact, making their eventual fall ever more spectacular. That fall has now begun halfway through 2015.

Let’s look at the cold hard truths of our current situation.

New signals of market crisis are generating every two to four weeks as we grind on into the third quarter. This is in stark contrast to the relatively predictable and "stable" market behavior of the past three years. I realize that we are experiencing a “slow boil” and that many people may not even be taking note of the exponential increase in negative economic signs, but really, think about it - at the beginning of 2014, what was the general financial sentiment compared to today?

Europe has just experienced the worst “near miss” yet with the Greek crisis, a crisis that is still not over and will likely end in chaos as the last-minute deal with the European Central Bank is derailed by International Monetary Fund intervention.

Keep in mind that Europe is overwhelmed with debt as peripheral countries border collapse and core nations like France float in a recessionary ether they refuse to openly acknowledge.

Asia is the biggest story right now, with Chinese markets in veritable free fall despite all attempts by the communist government to quell stock selling and shorting, to the point of threatening arrest and imprisonment for some net short sellers.

China’s Shanghai Stock Exchange has experienced a 30% drop in market value in a month's time. The mainstream argument meant to marginalize this fact is that less than 2% of China’s equities are owned by foreign investors; therefore, a crash there will not affect us here. This is, of course, pure idiocy.

China is the largest importer/exporter in the world; and it’s set to become the world’s largest economy within the next two years, surpassing the United States. China’s economy is a production economy, and the nation is a primary supplier for all consumer goods everywhere. Thus, China is a litmus test for the fiscal health of the rest of the world. When Chinese companies are struggling, when exporters are seeing steady overall declines and when manufacturing begins to crawl, this is not only a reflection of China’s economic instability, but also a reflection of the collapsing demand in every other nation that buys from China.

Collapsing demand means collapsing sales and collapsing market value. For a global economic system so dependent on ever growing consumption, this is a death knell.

In the U.S., markets have experienced a delayed reaction of sorts, due in great part to the Federal Reserve’s constant injections of fiat fantasy fuel since the credit crisis began. This kind of artificial support for markets has become an expected and essential part of market psychology, resulting in utter dependency on easy money siphoned into big banks that then use it to bolster equities through massive stock buybacks (among other methods). Now, however, quantitative easing has been tapered and zero interest-rate policy is nearing the chopping block.  The stock buyback scam is nearing an end.

Already, U.S. stocks are beginning to feel the pain as reality slowly nibbles away once dependable gains. There is a good reason for this - Wages are in constant decline; manufacturing is in steady decline; retail sales are in decline, and government and personal debts continue to rise. We are not immune to the financial chaos of other nations exactly because we have been railroaded into a highly interdependent global economic system. In fact, much international fiscal uncertainty is tied directly to the fall of the American consumer as a reliable cash cow and economic engine.

So where is this all headed?

Commodities tell part of the story, with oil sliding steadily, signaling what we in the alternative economic community have been saying for years: Fiat stimulus propped up markets (including energy markets) that should have been allowed to deflate long ago, and now we are suffering the consequences. Crude oil prices fell 19 percent in July alone as energy companies the world over scramble to adapt. Gold and silver have taken considerable hits to their paper value while physical purchases continue to skyrocket, meaning the street price of metals may soon decouple from illegitimate and manipulated market prices.

Smaller and some medium-sized economies will continue to “surprise” markets with volatile debt issues, like Puerto Rico (nearing possible default) and Venezuela (nearing certain doom). These are more canaries in the coal mine to watch carefully.

It is also important to keep in mind that prices on necessities including food and housing remain high despite deflation in other areas (like wages).  This suggests we are in the midst of a stagflationary fiscal environment.

Centralization is the key to every single economic development we’ve seen since the 2008 crash. Venezuela, in particular, is a marker for where we are all headed: total price controls, food confiscation from farms, rationing and even computer-chipped ration cards in order to thwart any attempts by citizens to stockpile essentials.  Do not assume that such draconian measures are limited to third world socialist hellholes.  Or, at the very least, do not assume that a country like the U.S. is not on the verge of becoming a third world hellhole.

As for Europe, French president Francois Hollande has openly called for a centralized “eurozone government” in order to deal with the ongoing economic crisis there (something I have been warning about for several years).  Supranational government is the endgame for sovereign humanity, and the EU is on the fast track.

In China, the march continues toward the inclusion of the yuan in the IMF’s SDR currency basket, the greatest economic centralization scheme of all time. The recent suggestion by an IMF panel to "delay" inclusion until 2016 only reinforces the likelihood that the Yuan will be entered into the basket.  If the IMF had no intention to bring China into the fold, they would have suggested a 5 year delay just as they did back in 2010.  For those who think China’s recent market crisis will somehow thwart their inclusion into the SDR, think again. The IMF has already announced that the market route in China will have no bearing on the SDR conference, which is set to end in November.

In the U.S., the markets wait for the Federal Reserve’s rate hikes. The rate hike issue is an underestimated one by some analysts, who seem to think that initial hikes will be "minor" and will result in little to no reverberations.  Interest rates affect more than just overnight bank lending; they are the primary pillar supporting current market psychology.  There is NO other financial element giving positive influence to investor psychology.  There is no good economic news out there to warrant the bull market of the past few years.  There is no open form of QE (and future QE seems unlikely as renewed stimulus would only be an admission that the first three attempts at QE failed miserably, derailing any point to new easing).  There is no recovery.  And when any even minor or engineered "good news" is presented in the mainstream, markets have reacted NEGATIVELY for fear that this will hasten higher interest rates.

Beyond psychology and false hopes, even minor increases in interest rates will essentially kill most large scale bank lending.  We know through the limited audit of the TARP bailouts that trillions in fiat was created simply to feed international banks and corporations through ZIRP and that this kind of free money lending has been a mainstay ever since.  ZIRP is the primary driver of stock buybacks and the equities bull market.  But this will only continue as long as the Fed loans remain free (or almost free).  Trillions in loans can equal billions in interest even with a minor rate rise, meaning, with the end of ZIRP and free money, banks and corporations will stop borrowing, stock buybacks will dissolve, and equities will lose the artificial support they have so far enjoyed.

Even mainstream financial news outlets are beginning to question why the Fed would push at all for rate hikes and pretend that the American fiscal system is in recovery, when ALL other information would lead the rational person to the contrary conclusion. I would point out that in order to understand central planners and globalist motives, you need to look at what they chase.

The Fed’s job is to destroy the U.S. economy and the dollar, not save them, which is why the Fed continues to deny economic turmoil and charges headlong into a rate hike scenario even though no one in the mainstream asked them to. The Chinese central bank’s job is to make all arrangements for Yuan inclusion in the SDR, despite the fact that China is supposedly in conflict with Western banks. The ECB and Europe are obsessed with centralized government even if they have to break several eggs to get it. And the IMF and Bank of International Settlements are set up to be the economic heroes of the day, warning us all (too late, of course) of the potential downfall of central bank stimulus policies and government debt obligations.

In a murky world of market fantasy, our first guideposts are the fundamentals themselves. Supply and demand can be misrepresented for a time through manipulated statistics, but the tangible effects of decline cannot be. Our secondary guideposts are the paths that internationalists and central banks bulldoze through the fiscal forest. To anyone with any sense, the endgame is clear: Total centralization is the goal, and economic fear is the tool they hope to use to get there. I have written on numerous solutions to this threat in past articles; but the first and most important action is for each of us to acknowledge, wholeheartedly, that the system we know is ending. It is over. What replaces that system will either be up to us or up to them. Only by admitting that there is an end to the fantasy, a painful end, will we then be able to help determine our future reality.

 

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Fri, 08/07/2015 - 22:39 | 6403548 Nutflush60
Nutflush60's picture

Relax buddy, they are not raising rates

Sat, 08/08/2015 - 00:45 | 6403872 Hope Copy
Hope Copy's picture

The Fed has to increase rates (a small amount). It is the STAGFLATION plan (that has never worked anywhere else).

Sat, 08/08/2015 - 01:01 | 6403898 Nutflush60
Nutflush60's picture

They are not rasing rates with the 10 year at 2.25%. Flattening yield curve would kill banks. 

We see central banks now tripping over themselves, as the Fed cannot raise rates with US yields depressed, in part becasue the Fed still holds a full inventory, and in part because of the ECB and BOJ still printing. The end game will come at some point

Sat, 08/08/2015 - 14:18 | 6405182 tommylicious
tommylicious's picture

"just the tip..."

Sat, 08/08/2015 - 04:24 | 6404143 OldPhart
OldPhart's picture

"In the mind of a schizophrenic person, internal elements of fantasy (negative and positive) are made manifest in the psyche and projected out onto the real world. Often, the daydream images of the mind are not merely images to them. Rather, what they imagine subconsciously becomes reality. Their faculties of observation become so limited, either due to a reaction to trauma or merely an inherent inability to cope, that they cannot decipher between fact and fiction. A person could go on like this for quite some time if all his needs are provided for by someone else. But the moment that support ends (and it will), the realities of necessity, not to mention supply and demand, take hold. One cannot live in a schizophrenic world indefinitely."

Damn, that's pretty cold to describe us gold/silver bugs.  Had to say it, watching the shinanigans, I do feel a bit schizo.

Sat, 08/08/2015 - 05:32 | 6404188 negative rates
negative rates's picture

You havn't been doing cocaine w/ the Dr. now have ya? Doing that can make you feel that way.

Sat, 08/08/2015 - 09:48 | 6404478 doctor10
doctor10's picture

The world's problem is NOT a credit shortage.
It is a COLLATERAL shortage.

In a world of multi-layered governments, monopolies, regulation, taxation, licensing and insurance mandates, there is no money left for constructive investment in the uncontrolled proliferation of ideas and creativity.

Until the world is shed of its 20th Century oligarchy and their centralized control freak mentality nothing happens.

Its a beautiful paradox in a way-to get what they need-collateral-they have to give up what they got-control.

Fri, 08/07/2015 - 22:41 | 6403552 The Merovingian
The Merovingian's picture

Right, but when you can print money endlessly it doesn't matter about what should happen. TPTB can warp time and stretch this out forever.

Fri, 08/07/2015 - 22:49 | 6403574 Nutflush60
Nutflush60's picture

What happens when their holdings mature in a few years. Rollover or expose the debt ot the market. That is when the shit hits the fan.

Fri, 08/07/2015 - 23:49 | 6403756 El Vaquero
El Vaquero's picture

The Fed is in a real pickle here.  If it unwinds or just lets the debt mature, it pumps USTs onto the market or lets the government pump them onto the market when it rolls its debt over, which will drive up interest rates, regardless of whether or not the Fed raises the Fed Funds Rate.  OTOH, shadowbanking needs those USTs for collateral in their insane banking schemes, hence the reverse repos.  That is why it cannot do QE4, yet rising interest rates will require QE4.  At some point, just staying steady with its balance sheet won't be enough, it will have to increase it, but this will be at the expense of its owner's ability to stay afloat.  

 

Barring a major war and all that entails, the SHTF when the Fed has to choose.  

Sat, 08/08/2015 - 00:44 | 6403867 Nutflush60
Nutflush60's picture

And when the bad news hits, I go to my roof top and yell: Hey Bernanke? Hey Krugman?  Hey CNBC bitches? What happened you loathsome morons?

Fri, 08/07/2015 - 23:50 | 6403761 El Vaquero
El Vaquero's picture

The problem for TBTB is that there is a real world out there that requires real physical inputs, and they focus on the currency as though it is the end all.  When all of the dust settles, we'll find that they've put the cart before the horse.

Sat, 08/08/2015 - 04:39 | 6404154 Kprime
Kprime's picture

When the dust settles we'll find out the cart ain't got a horse.

Sat, 08/08/2015 - 07:27 | 6404274 NoPension
NoPension's picture

El Vaquero, you have touched on exactly what comes to my mind.
Paper pushing is a real necessity in financial circles, I'm not nieve. But when the "market makers" get to a point where the paper supplants the real and physical, we've got a problem. Paper should support and facilitate the production of real physical goods and labor. At some point (it happened slowly, plenty of blame) , the paper became the whole game, with seemingly no real consideration of the physical reality.

Gold is a perfect example. Everyone knows the "price" of gold, stated in paper is a joke. If one takes the value of paper (fiat currency) , and places a value on the currency relative to what it will purchase, you can barely mine gold for that trade. The paper market is said to be 100 times the existing physical supply. And the paper price is the one that is used? That should tell yo all you need to know.

In my opinion, the only real glue is the idiocy of the imbeciles that are elected to run the show, and the nitwits that elect them.

An example of that would be the after effects of Super Storm Sandy, in the New York and New Jersey area. Power was out. Supplies dwindled or stayed in stock because of lack of power to move them. And right on cue, the idiots in power implemented price controls and stupid "anti-gouging " decrees. All this did was dissuade the store owners and gas station operators from renting generators and paying cash to draw in new supplies. Lines where miles long to get gas, while tens of thousands of gas sat under ground with no way to pump, or trucks from Pennsylvania stayed away. The net effect being the first in line gets all he wants at the artificial pre-storm price. These fucking idiots don't even understand basic market principles.
You will even have smart people who read this site make arguments for price and supply controls.

The natural immutable laws of nature and of supply and demand will win in the end. The question is how much damage will be done trying to resist them.

Sun, 08/09/2015 - 14:32 | 6405587 Radical Marijuana
Radical Marijuana's picture

No Pension

has written:

"The paper market is said to be 100 times the existing physical supply. And the paper price is the one that is used?"

http://www.zerohedge.com/news/2015-08-03/comex-edge-deliverable-gold-drops-record-low-124-ounces-paper-every-ounce-physical

Paper Gold "Dilution" Hits A Record 124 For Every Ounce Of Physical

Such roughly 100 to 1 ratios apply pretty well to everything being dominated by fundamentally fraudulent financial accounting systems, that are based upon being able to make the public "money" supply out of nothing, as debts, which can then also disappear back to nothing, when those debts disappear. The existing accounting systems are based upon governments ENFORCING FRAUDS by privately controlled banks. Those systems have an inherent structure which drives that debt slavery towards becoming debt insanities. At the present time, there are no realistic resolutions of those problems other than provoking death insanities, since the ratios of roughly 100 to 1 fictional to physical are otherwise still automatically headed towards becoming 1,000 to 1 ...

As doctor10 already commented above:

"The world's problem is NOT a credit shortage. It is a COLLATERAL shortage."

"Credit" created out of nothing has automatically outstripped its "collateral" by ORDERS OF MAGITUDE, due to the systems of incentives that drive those privileged few who can legally create the public "money" supply out of nothing to do so to the maximum possible degree. The public "money" supply being created out of nothing as debts is backed up by governments defining that "money" as legal tender, that people must use to pay their taxes with. Therefore, the power of governments to kill those who resist paying taxes using that form of legal tender is what gives that kind of "money" its value. (Otherwise, such "money" made out of nothing would become nothing more than an absurd joke.) For a long, long time, civilization was based upon being able to back up lies with violence, which gradually became the current systems of legalized lies, backed by legalized violence. Since the police and armed forces are being "paid" with that form of "money" (as well as were promised pensions to be "paid" with the same form of "money") those continue to be the actual powers that drive everyone else to have to accept that "money" too.

No Pension

has written:

The natural immutable laws of nature and of supply and demand will win in the end. The question is how much damage will be done trying to resist them.

Every day, the contradictions between progress in physical science, without any surpassing progress in political science, continue to automatically get bigger and BIGGER. The primary reasons for that are such genuine progress in political science would require assimilating the paradigm shifts that have already been achieved in physical science, in ways that resulted in paradigm shifts in political science that surpassed those which previously were achieved in physical science. Every day, the contradictions between physical science better understanding general energy systems, while political science dismally and deliberately fails to better understand human general energy systems get bigger and BIGGER. Hence, the existing situation of globalized electronic monkey money frauds, backed by the threat of force from apes with atomic bombs.

Human beings are NOT actually violating the laws of nature, when human laws become based on backing up lies with violence. However, the longer term consequences of civilization being controlled in those ways necessarily results in society as a whole becoming more psychotic and criminally insane. It is equally political impossible for people to surmount their tendencies towards indulging in "magical thinking" as it is for that "magical thinking" to stop being the biggest bullies' bullshit. Human beings and civilizations continue to actually be manifestations of general energy systems, which have developed to think about themselves in the most absurdly backwards ways possible, due to the long history of social successfulness being based upon backing up lies with violence. At no time does that actually violate the basic laws of nature. However, at the same time, each short to medium term increment of social successfulness based upon being able to operate through integrated systems of legalized lies, backed by legalized violence, as ENFORCED FRAUDS, drives that society as a whole to become sicker and more insane.

The currently existing, globalized political economy is almost totally dominated by the "magical mathematics" of being able to make the public "money" out of nothing. The established political economy is based upon ENFORCING FRAUDS, in ways that "work!" At the present time, the ways that those debt slavery systems will stop "working" appear to necessarily be that they will generate numbers which become debt insanities, that then provoke death insanities. It is in that context that the only genuine solutions for the longer term consequences of so much "magical thinking," for so long, must necessarily become some series of psychotic breakdowns, which will include various ways that the previous established energy supply systems, and their bogus "alternatives," will go through various sorts of psychotic breakdowns, due to those being engineered with the use of ENFORCED FRAUDS, as the "magical mathematics" which calculated what was supposed to be worthwhile to do.

Of course, the background, basic laws of nature will continue to exist and operate. However, the human abilities to operate by deliberately misunderstanding those, in the maximum possible, absurdly backward ways, are headed for some "corrections" of those ENORMOUS ERRORS due to everything becoming based upon the "magical thinking" advanced by ENFORCING FRAUDS. By and large, there are no good grounds to believe that human civilization is willing and able to overcome its penchant for "magical thinking," due to the ways that there have been ENFORCED FRAUDS for generation after generation. So far, our social pyramid styles of civilization depend upon that money is measurement backed by murder. Therefore, the "magical thinking" that pertains to the monetary systems also embraces the military systems within which that monetary system actually existed. Although, of course, human "magical thinking" does NOT change the underlying laws of nature, social successfulness based upon lying about the laws of nature is ubiquitous and pervasive.

There continue to be growing and GROWING profound contradictions between progress in physical science, versus nothing remotely like that in political science. Political science continues to almost totally stay within taking for granted the biggest bullies' bullshit world views, regardless of the degree to which those require deliberately ignoring, as much as possible, how human beings and civilizations actually operate as general energy systems. While it is theoretically possible to go through profound paradigm shifts in the ways that we perceive politics, that requires recognizing extremely radical truths, that pretty well totally reverse the biggest bullies' bullshit world views, although, of course, those radical truths also can still embrace how and why the biggest bullies were able to develop their kinds of bullshit social stories.

There are ridiculous disconnections between the "magical thinking" common throughout politics, that takes ENFORCED FRAUDS almost completely for granted, without recognizing that those actually ARE ENFORCED FRAUDS. That cartoon illustrated the apparent absurdities that exist whenever one attempts to connect the world of physics with the world of politics. Of course, those are connected, but the ways that they are actually connected are through ENFORCING FRAUDS TO THE DEGREE THAT RELATIVELY FEW ARE PUBLICLY WILLING AND ABLE TO ADMIT AND ADDRESS THAT BEING THE SITUATION. While it is theoretically possible to understand human beings and civilizations are manifestations of general energy systems, in order to do that one has to appreciate the radical truths regarding how the currently dominate globalized civilization is based upon the biggest bullies' bullshit world views presenting everything in the most absurdly backward ways possible. Ironically, while human beings have made prodigious progress in physical science, that kind of profound paradigm changing progress has not been allowed to happen in political science. Rather, the trends have been more the opposite, so far, that the philosophy of science has more been corrupted and become crazier, in order to compromise with the dominance of the biggest bullies' bullshit world views, rather than the bullies' bullshit has been corrected by progress in physical science.

IN MY VIEW, ALL OF BRANDON SMITH'S ARTICLES CONTINUE TO TAKE TOO MUCH FOR GRANTED THE DUALISTIC PRESUMPTIONS THAT RELY UPON FALSE FUNDAMENTAL DICHOTOMIES AND RELATED IMPOSSIBLE IDEALS.

While I tend to agree with Brandon's Smith's analysis, I find that it never goes deep enough, and therefore the "solutions" proposed are bogus, due to the degree that those alleged "solutions" still stay within the biggest bullies' bullshit world views. In that way, Brandon Smith's article above actually defaults to still being an expression of controlled opposition, in the following sense, as was expressed previously on Zero Hedge by Cognitive Dissonance:

"The absolute best controlled opposition is one that doesn't know they are controlled."

More radical truths are quite paradoxical! UNITARY MECHANISMS replace old-fashioned DUALITIES, in ways that encompass those, in the manner that previous scientific revolutions have been achieved. Brandon Smith, as well as pretty well all the rest of the content published on Zero Hedge, provide superficial analysis, which tends to be relatively correct. HOWEVER, because that tends to stay within taking for granted the basic dualities, false fundamental dichotomies, and related impossible ideals, their "solutions" are always too superficial, due to them still being the kind of "controlled opposition" as defined above.

No Pension

has written:

... the only real glue is the idiocy of the imbeciles that are elected to run the show, and the nitwits that elect them.

The international banksters have almost totally succeeded in capturing control over the public "money" supplies. That has resulted in situations where almost the only successful politicians are those banksters' puppets, who are voted for by enough the masses of muppets. However, the few that perceive that still tend to be controlled opposition groups, or reactionary revolutionaries, like Brandon Smith, et alia. Those who bother to do enough research recognize that the existing political economy is based upon what Carroll Quigley described as being:

"...powers of financial capitalism
had another far-reaching goal,
nothing less than to create a
world system of financial
control in private hands
able to dominate the
political system of
each country and
the economy of
the world as
a whole ..."

The international banksters were able to apply the methods of organized crime to the political processes, in order to accomplish the establishment of the deeply entrenched systems of ENFORCED FRAUDS, within which all of the currently living politicians and voters have been inside, for generation after generation. Therefore, social successfulness has become more and more based upon being able to operate INSIDE ENFORCED FRAUDS, in ways which took those almost totally for granted.

To repeat:

No Pension

has written:

The natural immutable laws of nature and of supply and demand will win in the end. The question is how much damage will be done trying to resist them.

In my view, we should endeavour to stop using DUALITIES, and instead start using UNITARY MECHANISMS. We should go through series of intellectual scientific revolutions, which then apply to political science in generals, as well as the combined money/murder systems in particular. "Resisting" the international banksters' systems of ENFORCED FRAUDS, which they are attempting to consolidate, and advance through a more globalized agenda, should NOT be done by promoting false fundamental dichotomies, and the related impossible ideals. Instead, we should recognize that the only things that actually exist are the dynamic equilibria between different systems of organized lies operating robberies. We should recognize that citizens are members of an organized crime gang, that they call their country. The politicians and the voters will continue to be the banksters' puppets and muppets to the degree that they continue to be "controlled opposition" that does not understand that they are being controlled by the biggest bullies' bullshit world views having been built into the dominate natural languages and philosophy of science that those forms of controlled opposition are using to think with and communicate through.

There now EXIST globalized systems of electronic frauds, backed by atomic bombs. However, nothing like that change in thinking, that enabled electronics and atomic energy, EXISTS within the context of political science, due to the ways that the vast majority of people think about politics quite deliberately having no relationship with the profound paradigm shifts that have been achieved in physical science, which were what made it possible to create the EXISTING globalized electronic frauds, backed by atomic bombs.

In my view, Brandon Smith's articles are more typical examples of the work of reactionary revolutionaries, or controlled opposition, due to not pushing through sufficient paradigm shifts in the ways that he perceives political problems. While he is superficially correct, at the same time, he is orders of magnitude off! Systems of electronic frauds, backed by atomic bombs, have enabled the fictional "credits" to exceed the physical "collateral" by orders of magnitude, and those are still growing Grand Canyon Chasms, which reflect the deeper levels of the problems that progress in physical science, through series of profound paradigm shifts, has had nothing like that yet occur in political science.

Theoretically speaking, it is OVERWHELMINGLY OBVIOUS that the ways that we perceive political problems should go through series of profound paradigm shifts. However, that appears to be politically impossible at the present time, given the degree to which almost everyone continues to be some degree of controlled opposition, who do not recognize the degree to which they are being controlled by the ways that they think and communicate, and moreover, mostly do now want to recognize that! On the one hand, there EXIST globalized electronic frauds, backed by atomic bombs, while, on the other hand, nothing whatsoever in political science has gone through corresponding paradigm shifts comparable to those that physical science went through.

Attempting to "resist" globalized electronic frauds, backed by atomic bombs, ought not continue to be done according to old-fashioned false fundamental dichotomies, which then promote bogus "solutions" based upon impossible ideals. Still doing that is guaranteed to continue to backfire badly, and therefore, cause even more "damage." Rather, we should be engaged in attempts to reconcile natural laws with human laws. However, doing that can not be done without series of intellectual scientific revolutions, which are based upon profound paradigm shifts.

Fri, 08/07/2015 - 22:45 | 6403555 SillySalesmanQu...
SillySalesmanQuestion's picture

QE & ZIRP was Viagra for equities and stock repurchases.
They have maintained an erection for seven years...it's time to see the doctor.

Fri, 08/07/2015 - 23:06 | 6403636 Make_Mine_A_Double
Make_Mine_A_Double's picture

We are clearly headed to some sort of break point. I don't know if it's Sept or when. But there has not been a month this year so far without a head line event like China, oil, Greece and now every high note in U.S. Equities is getting hit - bio, media, social is getting sold off.

Just to name a few and Fed either goes all in or raised rates - I don't think they fence sit much longer and try to ride/hide it out behind their bullshit 10%er stats. Events are clearly getting ahead of them in real time.

Fri, 08/07/2015 - 23:57 | 6403779 fascismlover
fascismlover's picture

There are no fundamentals.  It is all make believe and the goal of the game is to make others believe.  It has nothing to do with producing ANYTHING.  If you can fool a lot of people, you will be rich.  I have to think that at some point the pitchforks and torches are going to show up.  I hope the elite consider that day when they make their next "killing".   They wont though because that is not their nature.  A sad story from all sides.  

Sat, 08/08/2015 - 00:25 | 6403835 El Vaquero
El Vaquero's picture

The torches and pitchforks won't come out until there is another crisis that totally fucks the masses.  There are a lot of people who, deep down, know that something is terribly wrong, but they refuse to accept that because it terrifies them.  

Sat, 08/08/2015 - 01:38 | 6403952 techpreist
techpreist's picture

I think it goes even farther; people have accepted that there is something wrong, but they either don't know or don't want to admit what it is. Just today I was listening to one of my favorite radio shows and people were calling in and blaming all sorts of different things for social ills, but a grand total of zero were looking at 1) the underlying evil philosophy (We can create prosperity by simply making a law that says so! Forcing everyone to do the 'right thing' with propaganda and force will totally work!), and 2) themselves for buying into it.

#2 is the harder part to live down. However, you are much better off facing your own ignorance now, before reality forces it on you.

Sat, 08/08/2015 - 01:51 | 6403968 El Vaquero
El Vaquero's picture

We aren't allowed to face our own ignorance in full yet, only to acknowledge it and take its measure.  In time, we will all be forced to face it, whether we're ready or not.  Some can come closer to facing it than others, society is always unequal like that, but in the end, while history rhymes, for those living today, the future will not be the past of living memory.  It will either be something new, or it will be the past of ancient memory. 

 

If you want to understand what I mean by not being allowed to face our ignorance in full, I pose this question to you:  During the dark ages/medieval times, most steel sucked.  But, there was some that didn't. How was it made without modern technology?  Without induction heating and precise scales.  Because in a world without modern technology, quality steel is valuable. 

Sat, 08/08/2015 - 00:05 | 6403799 mijev
mijev's picture

The beginning of the end for me will be when Vancouver and Sydney home prices tank. Obviously there will be many other indicators and catalysts but they're the two that seem most frothy at the moment.

Sat, 08/08/2015 - 00:08 | 6403806 ebworthen
ebworthen's picture

Fall collapse, clean the sheeples chips off the table (401K's, IRA's, Pensions, "savings") - then bail-in's for the banks and bail-out's for any TBTF's - then QE4 and almost infinite liquidity with a return to ZIRP if they ever even rose rates 0.25%.

Lather, rinse, repeat - until we need wheelbarrows for the cash - digital wheelbarrow's - 52 EBT card stack for a loaf of bread type of thing.

Sat, 08/08/2015 - 06:46 | 6404246 LawsofPhysics
LawsofPhysics's picture

No. The supply lines won't hold. WWIII.

Sat, 08/08/2015 - 11:23 | 6404662 Hope Copy
Hope Copy's picture

Cash and carry is the BRICK intention (credit limited to stocked metals).

Sat, 08/08/2015 - 00:19 | 6403825 benb
benb's picture

"I have to think that at some point the pitchforks and torches are going to show up."

I would think that is why the Fascist Entity runs annual martial law exercises with the military.

That would be one reason why they medicate the drinking water supply and are running psychotronic warfare to tranquilize the American people. (This was announced by the Pentagon 15 years ago that they were experimenting on us in this manner.)

In 2001 The Sunshine Project (Comprised of UT professors) stated (And posted the supporting documents) that the US government had helicopters on 24 hr. standby with both opiate based knock out gas and just plain nerve gas in every major metro area of the US. 

Sat, 08/08/2015 - 00:24 | 6403833 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

I aleady destroyed the US economy, Brandon. Moreover, the FED is attempting to stay above water by printing money because that's all they can do. They are only saying they will raise rates to pump markets up and give everyone a false sense of ease. When it comes time to raise rates they will backpeddle, and throw up the start to World War Three.

 

The zero sum end game is a destroyed USA, and FED, with me at the helm ensuring that you all go over the cliff at full throttle like Thelma & Louise laughing all the way.

 

Alternatively, you could imagine the US as Illinois Nazis in the Bluesbrothers where the two guys are falling to Earth in that little compact car.

Sat, 08/08/2015 - 00:31 | 6403838 novictim
novictim's picture

" This suggests we are in the midst of a stagflationary fiscal environment."

Nope. Wrong!

Come on Tyler!  There is no supply shock!  The last time we saw stagflation it was due to an artificial shortage of Oil back in the 1970s.  OPEC cut output to raise prices.  We know this.

This is a clear and obvious liquidity trap situation. Monetary policy has been maxed for so long and the price of assets/commodities went so high that banks, businesses and citizens are HOARDING their wealth because they don't trust any particular avenue to which it could be invested. Monetary policy has failed and there is a lack of will to step over the dead corpse that is austerity and to pluck the flower of fiscal spending to boost infrastructure investments.

You folks here all rooted for the monetary guys and booed the Keynesian stimulus that would have helped ease this situation. Hence we have this liquidity trap of digital money being socked away before it ever touches the economy.

Think about it, Durden.  QE!  ZIRP!  Negative interest rates even!  And still we see people finally losing confidence (as theyr should) in the speculative value of the stocks they hold.  Certainly, the Chinese have every reason to use their iPhones apps to sell sell sell! 

The entire Chinese economy is a Potemkin village, both figuratively and metaphorically.  Whatever dreams that were once held that the Yuan would supplant or compete with the US Dollar DIED over the July 4th weekend...what we see is an inevitable run on their MASSIVE debt!

You think that Europe has a high debt?!  China has a Debt to GDP that now surpasses 3:1 !! Holy crap-oh!ly!! 

 

Corruption that is rampant and expected, a punitive system that demands lying about results, a kleptocrat class of inner party diaper babies who siphon off wealth to invest in US real estate....Warehouses of precious and rare earths that are found to be empty...cities built simply to boost perceived GDP that have no productive activity..Show trials of people that have no responsibility...Capital flight in massive numbers now requiring Big Brother to stop...do I need to go on?

I'm sorry that Putin tried to make buddies with China but he looked left when he should have been looking right. 

The situation is dire because of the speculative economy not having been reigned in and more effort and investment not having been put into the real economy.  It is that simple.  We have massive wealth disparities as a result and the world simply cannot move forward until those are resolved and equilibrium is restored. 

The ECB is and the Fed folks are the exact folks that your investment community put in place to engineer their personal wealth at the expense that we are now confronting.  That is the truth. That they, the investment community, know this is manifest in the liquidity trap behavior you have confused with Stagflation.  

Frankly, I expected more from ZH on this.

Sat, 08/08/2015 - 01:39 | 6403953 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

It's not as simple as a mere liquidity trap alone. I enjoyed your comments, you are smart.

Sat, 08/08/2015 - 00:38 | 6403856 Yen Cross
Yen Cross's picture

 As much as I hate to say this, rates are going higher.

 The reason I'm shorting corporate debt isn't because of the Fed.

 Doc is correct, in that the Fed. isn't going to directly raise rates. The Fed. is going to tighten money supply, through interest paid on excess reserves.

 Banks will be forced to lend, and the banks will lend at higher rates to the "Middle Class". This is why you're seeing a secondary credit market and sub-prime loans being given away.

 I unequivocally stated tat the $usd would drop with U.S. equity markets, as U.S. bonds are NOT the same investment safe haven they've been in the past.

 Even though CL,copper tanked last week. The higher yielding currencies are moving higher. It's extremely important that traders realize funding currencies generally offer lower swap rates. Hence, those currencies have to be hedged. ;-)  Delta Bitchez

Sat, 08/08/2015 - 00:51 | 6403882 El Vaquero
El Vaquero's picture

So, you're saying that IOER is going to increase or be removed?  If the latter happens...FUUUUUCK!

Sat, 08/08/2015 - 01:35 | 6403908 Yen Cross
Yen Cross's picture

El Vaq,

 I'd never insult you intelligence.

 The Fed. balance sheet isn't shrinking. I just don't see how buying back(retiring short term debt) bonds in an already illiquid market is going to help raise demand for cash/borrowing.

 I think the Fed. is going to cut excess reserve interest payments to banks. That is the only "rational way" the ponzi can work.

 NO-one is borrowing at ZIRP, and no-one has any cash. It's just smoke and mirrors for the foreign credit markets.

 Buybacks have halted, and CapEx is a joke.

 

Sat, 08/08/2015 - 08:56 | 6404384 LawsofPhysics
LawsofPhysics's picture

Forcing banks to make more bad loans...?  You may be right.  The question is, will they get another bailout when all the loans default?  If you knew the answer to that, then you know how to trade.  Honestly, considering what happened in 2001, I honestly thought that numerous heads would roll in 2008/2009.  I was wrong and as soon as Bernanke announced the "twist" I knew we were going "full retard" and went "all-in".   I have spent the last six month trying to figure out how not to get fucked by the IRS...

this shit sucks, can we please return to fundamentals, price discovery and "mark to market" already?

Sat, 08/08/2015 - 01:09 | 6403909 Ms No
Ms No's picture

"The Fed’s job is to destroy the U.S. economy and the dollar"...

Yep, now we're talking and then take a good look around your community and imagine all of those living on private pensions, government anything and 401ks and then imagine it all going up in smoke.  Until then reality hasn't set in yet.  Remember now, all of the orange faced oracles said "pension money has to go somewhere".


Sat, 08/08/2015 - 07:45 | 6404285 NoPension
NoPension's picture

B B B Iiiiinngooooo!!!
When that Government cheese stops of significantly slows down, holy shit, look out!!!
And that includes any Fed, State or Local "worker". Hero cops and firefighters. Gold Plated " I FuckingEarned It" gov pensioners. The Mailman. Anyone on EBT. Socialble Security. Disability. Government funded unemployment benefits. And ...drum roll...the Military. And all of its leaching, blood sucking fucking contractors that " employ" millions on the government tit.
Hell, the more I ponder it, probably 60-70% of the country is supported by Uncle Sugar.

We who actually produce, in and for the private sector, are slaves to the mass of imbeciles in this country.
I suspect it is the same everywhere.

Sat, 08/08/2015 - 08:50 | 6404371 LawsofPhysics
LawsofPhysics's picture

As you already pointed out, the public/private sector bullshit is just that, bullshit.

There are productive people everywhere in all sectors and there are lazy fuckers and sociopaths in every sector.

 

Fuck it, let it collapse and let' s sort this shit out right now.  If you don't do real work, you don get to eat.  Sounds good to me.

Sat, 08/08/2015 - 02:42 | 6404035 suzannacuahjsouiqxxg
suzannacuahjsouiqxxg's picture

"China’s Shanghai Stock Exchange has experienced a 30% drop in market value in a month's time."

Yeah, right!

Sat, 08/08/2015 - 03:09 | 6404078 gregga777
gregga777's picture

Rigged elections are not going to save America and the American People. POSEDs* and POSERs** and the rest of the elites are all tools of the Richie Rich. They are the mortal enemies of America and the American People. Only action by the American People will save America and the American People.

Fuck your rigged elections America! Fuck your POSEDs and POSERs! Fuck all of the elites and their Richie Rich masters!

*POSEDs—Piece Of S*** Elitist Democrats
**POSERs—Piece Of S*** Elitist Republicans

Sat, 08/08/2015 - 08:30 | 6404328 Eyeroller
Eyeroller's picture

Only action by the American People will save America and the American People.

That won't happen until people wake up one day and their 401k balance is zero or their savings have been frozen.

Until then, I can't see the average person who gets their news from The View and FaceBook feeling the same magnitude of outrage towards the Feral Reserve as they do about what happened to Cecil the lion.

 

Sat, 08/08/2015 - 08:47 | 6404366 LawsofPhysics
LawsofPhysics's picture

You sir are an optimist...

the reality is...

"That won't happen until people are starving" - fixed.

Sat, 08/08/2015 - 06:41 | 6404243 LawsofPhysics
LawsofPhysics's picture

That which cannot be sustained won't be. Thanks to money printing without real collateral requirements and "mark to fantasy" accounting we are heading towards global Weimar.

Do not overthink this folks.

Sat, 08/08/2015 - 07:02 | 6404252 22winmag
22winmag's picture

Brandon, nobody in their right mind is going to disagree you that an AR10 "combat overwatch" rifle is the most versatile choice for the widest variety of applications, but you'll never convince me that 7.62x51 Nato is the finest general purpose rifle cartridge ever devised. That title belongs to the 7.92x57 Mauser.

Sat, 08/08/2015 - 07:47 | 6404289 NoPension
NoPension's picture

Are you saying I should get a gun?

Sat, 08/08/2015 - 10:26 | 6404541 SmedleyButlersGhost
SmedleyButlersGhost's picture

Nah - no need.  But you might want to leave all of your shite out front at night just so no one has to wake you or the Mrs.  if the marriage is rocky, you might ask her to stand watch over the stuff.

Sat, 08/08/2015 - 08:45 | 6404363 LawsofPhysics
LawsofPhysics's picture

Long range, yes.  for close range path-clearing in an urban setting there are now several automatic shotgun options...

Sat, 08/08/2015 - 10:21 | 6404528 SmedleyButlersGhost
SmedleyButlersGhost's picture

Nothing is more distinctive than the sound of the first round  hitting the chamber in a slide shotgun.  I also have an old side by side but the front 1/3 of the barrels fell off. 

Sat, 08/08/2015 - 08:21 | 6404313 SMC
SMC's picture

No problem for those who are ready.

Sat, 08/08/2015 - 09:44 | 6404469 Dadburnitpa
Dadburnitpa's picture

It is a ponzi for sure.  During the past five years, corporate balance sheets show a 5% annual increase in cash holdings but a 10% increase in annual debt holdings. 

Sat, 08/08/2015 - 10:56 | 6404602 wholy1
wholy1's picture

1) " . . . but the first and most important action is for each of us . . ." [is to] REPENT.

2) the second is PREPARE.

3) the third is GIVE to fellow repentants in greater need.

If One has "prepared" physically, mentally, socially and spiritually, One has already established the parameters of "needs" to other Repentents still unprepared.

What are "the Blessings from the Beginning" being revealed?

Are You having fun yet?!

Sat, 08/08/2015 - 11:01 | 6404613 sam site
sam site's picture

 

You state, "The recent suggestion by an IMF panel to "delay" inclusion until 2016 only reinforces the likelihood that the Yuan will be entered into the basket"

The US-controlled IMF delayed the Yuan decision a year because it didn't want the Yuan included in the SDR.  There's

nothing to be gained by it and much to lose because of China's massive gold hoard threatening the ability to counterfeit.

Gold is kryptonite to counterfeiting central bankers.  Before this is all over the world is going to be so sick of counterfeited paper currencies including the SDR, that the

global community will be scrambling for physical G & S much like they are already doing under the MSM radar.

What Brandon consistently fails to acknowledge and recognize is that China is hoarding gold because it doesn't intend to join the globalists in a NWO but only wants the

yuan to gain the status as a global reserve currency as it replaces the dollar in banks aroung the world.  It's about rebellion in the long run - not cooperation.

 

 

 

Sat, 08/08/2015 - 11:31 | 6404684 wholy1
wholy1's picture

good analysis!

the "hat trick" - keep focus on the INANIMATE hand.

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