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Fed Hike Will Unleash "Panic And Turmoil" And A New Emerging Market Crisis, Warns World Bank Chief Economist
If it was the Fed's intention to make the upcoming rate hike seem like a welcome event, one that presaged a new Golden Age in the US (and global) economy because, lo and behold, the wise Fed would never hike unless the economy is flourishing and thus create a self-fulfilling prophecy in which the rate hike itself - an event of tightening financial conditions even when inflation expectations are the lowest they have been in years - becomes a catalyst for growth, then it has failed spectacularly.
First, it was the IMF warning a rate hike would be a big mistake, then Larry Summer (who for some reason progressives thought was hawkish when it was a choice between him and Aunt Janet), then even China got into the fray saying the Fed should delay its rate hike as it could push emerging markets (such as China) into crisis.
But it wasn't until today that we got the most glaring confirmation there had been absolutely zero coordination at the highest levels of authority and "responsibility", when the World Bank's current chief economist (a position previously held by such 'luminaries' as Larry Summers, Joseph Stiglitz and Stanley Fischer), Kaushik Basu warned that the Fed risks, and we quote, triggering “panic and turmoil” in emerging markets if it opts to raise rates at its September meeting and should hold fire until the global economy is on a surer footing, the World Bank’s chief economist has warned.
While apparently the World Bank economist is unfamiliar with the concept of reflexivity, and does not understand that the only reason the global economy is not on "surer footing" is because of the 12+ month , near endless pricing in of the Fed's first rate hike since 2006, which has unleashed an unprecedented capital flight out of all emerging markets, a record series of rate cuts across the globe including NIRP in Europe, and China's first official currency devaluation in years not to mention the first stock market correction in 4 years, what is critical is that by making this statement, Basu destroys with just two words the narrative that i) the Fed knows what it is doing and that ii) contrary to logic, a rate hike at a time when the world clearly and desperately needs, and is addicted, to global central bank liquidity, will lead to even further asset price plunges.
In fact, Basu may have just admitted, in not so many words, that Deutsche Bank's sinking feeling that the Fed's rate hike is nothing but a "controlled demolition" of the market, one which would send global equities 20-40% lower, is spot on.
This is what else Basu told the FT:
Rising uncertainty over growth in China and its impact on the global economy meant a Fed decision to raise its policy rate next week, for the first time since 2006, would have negative consequences.
His warning highlights the mounting concern outside the US over the Fed’s potential “lift-off”. It follows similar advice from the International Monetary Fund where anxieties have also grown in recent weeks about the potential repercussions of a September rate rise.
That means that if the Fed’s policymakers were to decide next week to raise rates they would be doing so against the counsel of both of the institutions created at Bretton Woods as guardians of global economic stability.
And just in case casually tossing the words "panic in turmoil" was not enough, Basu decided to add a few more choice nouns, adding a rate hike "could yield a “shock” and a new crisis in emerging markets... especially as it would come on the back of concerns over the health of the Chinese economy that have grown since Beijing’s move last month to devalue its currency."
He said that, even though it had been well-advertised by the Fed, any rise would lead to “fear capital” leaving emerging economies as well as to sharp swings in their currencies. The likely strengthening in the dollar would also hamper US growth, he said.
Finally at least one person in a position of authority realized just what Quantitative Tightening means:
“I don’t think the Fed lift-off itself is going to create a major crisis but it will cause some immediate turbulence,” Mr Basu said. “It is the compounding effect of the last two weeks of bad news with that [China devaluation] . . . In the middle of this it is going to cause some panic and turmoil.
Precisely, and as a reminder between the Fed's tightening and China's QT, the world would suddenly find itself starting at a finacial liquidity abyss, and abyss which for Deutsche Bank means the S&P could trade at "half its value."
His conclusion: "The world economy is looking so troubled that if the US goes in for a very quick move in the middle of this I feel it is going to affect countries quite badly,” he said.
And if someone should know (clearly not the Fed whose predictions have become the butt of all jokes even for tenured economists), that would be the chief economist of the World Bank.
But fear not: recall that over the weekend Goldman made it very clear that a September rate hike (and maybe December) is not coming. And what Goldman wants, Goldman always gets, even if it means the Fed ends up losing all credibility in the process.
Finally, just in case there is still any confusion what a Fed rate hike means, we repeat what Bank of America said last week:
Should the Fed decide to raise interest rates, it will be the first Fed hike since June 29th 2006. In the 110 months that have since past, global central banks have cut interest rates 697 times, central banks have bought $15 trillion of financial assets, zero [or negative] interest rates policies have been adopted in the US, Europe & Japan. And, following the Great Financial Crisis of 2008, both stocks and corporate bonds have soared to all-time highs thanks in great part to this extraordinary monetary regime.
As noted above, a rate hike with a stroke ends this era.
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Like there's not panic and turmoil already? Who elects these guys?
They're just tryin' to help us peasants
A 1/4 point raise and a 600 billion dollar a month treasury buying spree by Upper Volta.....Is that still a country?
zactly. If markets cant handle a piddling quarter percent rise, they have no business being in business. They deserve neither prosperity nor stability
No President should have their two terms at ZIRP!
The idea of course is to be able to say, post-crash, that the IMF and WB "saw it coming" and "warned the world" against what caused the shit's trajectory to intersect with the fan. Therefore, while the Fed is utterly discredited, the Bretton Woods institutions (and the BIS) remain blame-free and are the best suited to manage the new (one-world) currency order.
Its all BS. Why the feigned surprise? The Chief Economist of the World Bank of course could see a China sharemarket crash coming, a Yuan devaluation coming, stagnant world growth (evidenced by declining world trade), EM capital flight on the horizon. Anyone with a heartbeat could see them coming, and enough people have been predicting them.
So, why feign surprise? Whats the real agenda here?
The Fed doesn't give a fuck about China.
In fact... The PBOC is the Federal Reserves arch NEMESIS.
For those not paying attention we have been balls deep in monetary/financial warfare with Beijing since about 2006.
This whole pipeline war in the Levant is nothing more than a proxy over who ultimately (East or West) holds the testicles of Europe in their hands.
Up until this year I would have said the East was winning, especially as Putin utterly dominated geopolitics. But since the oil glut took hold the Anglosphere seems to have positioned itself to once again strangle and suffocate the whole world of capital.
The New York - London axis is on the cusp of ripping the heart out of EM and showing it to them.
The message? Do NOT challenge us, you cannot win here. And if you want to get cute we are the worlds leading exporters of organised violence.
No, Upper Volta isn't still a country. Thomas Sankara killed post colonial Upper Volta and turned into the most successful Marxist/Socialist nation in modern history. The CIA couldn't let that stand, so they had him killed and turned Burkina Faso into a fiat debt colony.
Great. Bring it on. I want my interest income,
and plenty of public hangings.
The FED may raise interest rates, but you wont get any.
Doesn't matter. The implied point was to push money out of low interest bearing accounts and into the market, but the muppets were content to earn nothing. Actually, too scared to move the money out and be left with nothing. Same reason retirees kept working, they couldn't live on their savings earning nothing.
Note to Fed: unintended consequences.
Diversity has diluted the white man's will to fight tyranny. Americans no longer have the balls to hold corrupt public officials accountable. White countries USED to revolt.
the dividend of comfort is cowardice
The Italians might have been on to something with the hanging by the feet. Little old ladies could whack 'em upside the head with their canes while they're still breathing. (In a perfect world, last four words would be italicized)
Elected... LOL
If a .25% rate hike is enough to cause worldwide panic, then China selling Treasurys should be enough to blow the planet to pieces.
Hillary: ‘I’ll JAIL some employers for wage theft’http://tinyurl.com/nwfdjsf
Precisely.
Just how leveraged up is this idiotic "global economy" that a 0.25% U.S. Fed Funds rate hike would cause fire & brimstone calamity? Would the World Bank Chief Economist care to comment on how the World arrived at such an utterly fucked up state of affairs?
Who is responsible for putting the EM nations into this incredibly fragile and dangerous situation? ISIS? Putin? Obama? Caitlyn? FIFA? Snowden? Van Rompuy? Carrot Top?
Perhaps it's a vast conspiracy and they're all in it together? The World Bank should form a blue-ribbon commission to investigate this matter.
It's because they know that it's not One and Done...they know there will have to be increase after increase after increase until there is capitulation on the other side before they can even think about lowering rates. All the while the hypnotized Pavlovs will be buying EVERY dip down into the abyss...SPY 1400.
Cut off the heart (Central Banks) and the Global Financial Monster dies!
Precisely their objective!
The Fed is helpless because to the USD status as the world's reserve currency. The Triffin Dilemma implies Fed tightening will create massive deflation and stagflation in the emerging markets, which will be exported back to the US. However, if the Fed doesn't raise rates, they are setting up the environment for the next round of moral hazard, which will lead to another (final) financial crisis. Damn if they do, damn if they don't, which is why the markets peaked months ago. A new equilibrium point has been reached along the edge case, predicted by Triffin.
Cristiandom peaked when Popes started to sell indulgences. It was the apex of an Era. We have passed another apex, now that Central Banks have handed out cheap credit carte blanche for decades. There is no escaping the super debt cycle whether it be in indulgences or fiat currency.
The 21st century is ultimately about what strain of capitalism will survive: American or Chinese capitlism. That is why what's happening in China is so interesting. And why the Fed will not help save their or emerging markets despite being trapped in a Triffiin Dilemma. The next several years will be about what strain of capitalism survives, and who ultimately leads the second half of this century.
Ponzi Casino Capitalism will not survive because I fucking killed it March 10th 2008 around 11:00am Bear Stearns time New York Shitty. Furthermore, no variant of Ponzi Casino Capitalism will manifest in the future given that there will be no future after the final upcoming collapse of a half century of Ponzification of Global markets.
Note: We are Hobbesian Brutes destined for slaughter en masse.
TRANSLATION:
must.....keep......parasitical......fractional reserve banking....paradigm.....alive........continuing to enrich.....the Khazar owners....
while destroying.....and enslaving.....HUMANITY.
Do they all have Brain Slugs?
No, but I'd prefer they be 12 gauge.
How ironic! All the pumpers are singing how the US economy is doing great, but at the same time .25% rate increases will cause Apocalypse. Unreal!
you need to keep logic and common sense out of this
Who needs logic and common sense when you can have panic and turmoil? P&T is much more entertaining.
-IF .25% KILLS YOU than you were probably already long dead and just didn't know it...
Let's bury these stinking corpses and get on with life.
Sounds like a healthy system to me.
Sky is falling! All over what should be a normal old school 25bps uptick.
The New Normal don't tick like that.
The country with by far the greatest debt in this world, $210 trillion, will cause a major shock if it raises rates from near zero by a minuscule 0.25%.
This is a Bizarro World
...
THEY
WILL
NEVER
RAISE
RATES!!!!
Don't be a MOOK...!!!
Bring it on Jew bitch
"Fed Hike Will Result In "Panic And Turmoil" And A New Emerging Market Crisis, Warns World Bank Chief Economist"
I DO NOT FUCKING CARE.
I'M IN THE UNITED STATES, NOT THE FUCKING EM.
6% OR BUST.
yep--I think 5% to 7% would be fair-----then casturate the "managers" and eviscerate the "boards of directors" of corportions and start paying dividends again in stead of stock options, buybacks and M&As out the butt. put mortagages at 15% to 20% with 1/3 down. make lending banks and investment banks seperate again and take personhood from the corporations ----its a start---
These world bankers are INSANE and totally DISHONEST!
Does anyone remember 1974-78 when residential real estate mortgages were 18%, commercial 23% and AA-AAA bonds 12-14%
The REAL reason the bankers CANNOT raise interest rates is the funding of the $18.46 TRILLION in NATIONAL DEBT.
Anything close to normalized 5-7% would but the USA in bankruptcy and make it the next Greece!
Why can't folks, and the (independent) press, wake up to the real reason and facts?
Because football.
...and we both feel integrity, such as, that of healthcare in the America of the U.S. and therefore. Yes. Thank you.
@ time hill,
Past, we're already Bankrupt.
Ha Ha! Stupid Bankers!
We have really crossed the rubicon and are FUBAR if every banker on the planet is shitting their pants over a lousy 25 basis point rate hike.
Pitchfork sharpeners could be a hot Christmas gift............
Depends...
Not a chance in hell they will raise rates. The world is falling apart.
Dr. Peter Venkman: This city is headed for a disaster of biblical proportions.
Mayor: What do you mean, "biblical"?
Dr Ray Stantz: What he means is Old Testament, Mr. Mayor, real wrath of God type stuff.
Dr. Peter Venkman: Exactly.
Dr Ray Stantz: Fire and brimstone coming down from the skies! Rivers and seas boiling!
Dr. Egon Spengler: Forty years of darkness! Earthquakes, volcanoes...
Winston Zeddemore: The dead rising from the grave!
Dr. Peter Venkman: Human sacrifice, dogs and cats living together... mass hysteria!
Mayor: All right, all right! I get the point!
The following NEVER gets olds.
The Bankruptcy of The United States
United States Congressional Record, March 17, 1993 Vol. 33, page H-1303
Speaker-Rep. James Traficant, Jr. (Ohio) addressing the House:
"Mr. Speaker, we are here now in chapter 11.. Members of Congress are official trustees presiding over the greatest reorganization of any Bankrupt entity in world history, the U.S. Government. We are setting forth hopefully, a blueprint for our future. There are some who say it is a coroner’s report that will lead to our demise.
It is an established fact that the United States Federal Government has been dissolved by the Emergency Banking Act, March 9, 1933, 48 Stat. 1, Public Law 89-719; declared by President Roosevelt, being bankrupt and insolvent. H.J.R. 192, 73rd Congress m session June 5, 1933 - Joint Resolution To Suspend The Gold Standard and Abrogate The Gold Clause dissolved the Sovereign Authority of the United States and the official capacities of all United States Governmental Offices, Officers, and Departments and is further evidence that the United States Federal Government exists today in name only.
The receivers of the United States Bankruptcy are the International Bankers, via the United Nations, the World Bank and the International Monetary Fund. All United States Offices, Officials, and Departments are now operating within a de facto status in name only under Emergency War Powers. With the Constitutional Republican form of Government now dissolved, the receivers of the Bankruptcy have adopted a new form of government for the United States. This new form of government is known as a Democracy, being an established Socialist/Communist order under a new governor for America. This act was instituted and established by transferring and/or placing the Office of the Secretary of Treasury to that of the Governor of the International Monetary Fund. Public Law 94-564, page 8, Section H.R. 13955 reads in part: "The U.S. Secretary of Treasury receives no compensation for representing the United States?’
Gold and silver were such a powerful money during the founding of the united states of America, that the founding fathers declared that only gold or silver coins can be "money" in America. Since gold and silver coinage were heavy and inconvenient for a lot of transactions, they were stored in banks and a claim check was issued as a money substitute. People traded their coupons as money, or "currency." Currency is not money, but a money substitute. Redeemable currency must promise to pay a dollar equivalent in gold or silver money. Federal Reserve Notes (FRNs) make no such promises, and are not "money." A Federal Reserve Note is a debt obligation of the federal United States government, not "money?’ The federal United States government and the U.S. Congress were not and have never been authorized by the Constitution for the united states of America to issue currency of any kind, but only lawful money, -gold and silver coin.
It is essential that we comprehend the distinction between real money and paper money substitute. One cannot get rich by accumulating money substitutes, one can only get deeper into debt. We the People no longer have any "money." Most Americans have not been paid any "money" for a very long time, perhaps not in their entire life. Now do you comprehend why you feel broke? Now, do you understand why you are "bankrupt," along with the rest of the country?
Federal Reserve Notes (FRNs) are unsigned checks written on a closed account. FRNs are an inflatable paper system designed to create debt through inflation (devaluation of currency). when ever there is an increase of the supply of a money substitute in the economy without a corresponding increase in the gold and silver backing, inflation occurs.
Inflation is an invisible form of taxation that irresponsible governments inflict on their citizens. The Federal Reserve Bank who controls the supply and movement of FRNs has everybody fooled. They have access to an unlimited supply of FRNs, paying only for the printing costs of what they need. FRNs are nothing more than promissory notes for U.S. Treasury securities (T-Bills) - a promise to pay the debt to the Federal Reserve Bank.
There is a fundamental difference between "paying" and "discharging" a debt. To pay a debt, you must pay with value or substance (i.e. gold, silver, barter or a commodity). With FRNs, you can only discharge a debt. You cannot pay a debt with a debt currency system. You cannot service a debt with a currency that has no backing in value or substance. No contract in Common law is valid unless it involves an exchange of "good & valuable consideration." Unpayable debt transfers power and control to the sovereign power structure that has no interest in money, law, equity or justice because they have so much wealth already.
Their lust is for power and control. Since the inception of central banking, they have controlled the fates of nations.
The Federal Reserve System is based on the Canon law and the principles of sovereignty protected in the Constitution and the Bill of Rights. In fact, the international bankers used a "Canon Law Trust" as their model, adding stock and naming it a "Joint Stock Trust." The U.S. Congress had passed a law making it illegal for any legal "person" to duplicate a "Joint Stock Trust" in 1873. The Federal Reserve Act was legislated post-facto (to 1870), although post-facto laws are strictly forbidden by the Constitution. [1:9:3]
The Federal Reserve System is a sovereign power structure separate and distinct from the federal United States government. The Federal Reserve is a maritime lender, and/or maritime insurance underwriter to the federal United States operating exclusively under Admiralty/Maritime law. The lender or underwriter bears the risks, and the Maritime law compelling specific performance in paying the interest, or premiums are the same.
Assets of the debtor can also be hypothecated (to pledge something as a security without taking possession of it.) as security by the lender or underwriter. The Federal Reserve Act stipulated that the interest on the debt was to be paid in gold. There was no stipulation in the Federal Reserve Act for ever paying the principle.
Prior to 1913, most Americans owned clear, allodial title to property, free and clear of any liens or mortgages until the Federal Reserve Act (1913)
"Hypothecated" all property within the federal United States to the Board of Governors of the Federal Reserve, -in which the Trustees (stockholders) held legal title. The U.S. citizen (tenant, franchisee) was registered as a "beneficiary" of the trust via his/her birth certificate. In 1933, the federal United States hypothecated all of the present and future properties, assets and labor of their "subjects," the 14th Amendment U.S. citizen, to the Federal Reserve System.
In return, the Federal Reserve System agreed to extend the federal United States corporation all the credit "money substitute" it needed. Like any other debtor, the federal United States government had to assign collateral and security to their creditors as a condition of the loan. Since the federal United States didn’t have any assets, they assigned the private property of their "economic slaves", the U.S. citizens as collateral against the unpayable federal debt. They also pledged the unincorporated federal territories, national parks forests, birth certificates, and nonprofit organizations, as collateral against the federal debt. All has already been transferred as payment to the international bankers.
Unwittingly, America has returned to its pre-American Revolution, feudal roots whereby all land is held by a sovereign and the common people had no rights to hold allodial title to property. Once again, We the People are the tenants and sharecroppers renting our own property from a Sovereign in the guise of the Federal Reserve Bank. We the people have exchanged one master for another.
This has been going on for over eighty years without the "informed knowledge" of the American people, without a voice protesting loud enough. Now it’s easy to grasp why America is fundamentally bankrupt.
Why don’t more people own their properties outright?
Why are 90% of Americans mortgaged to the hilt and have little or no assets after all debts and liabilities have been paid? Why does it feel like you are working harder and harder and getting less and less?
We are reaping what has been sown, and the results of our harvest is a painful bankruptcy, and a foreclosure on American property, precious liberties, and a way of life. Few of our elected representatives in Washington, D.C. have dared to tell the truth. The federal United States is bankrupt. Our children will inherit this unpayable debt, and the tyranny to enforce paying it.
America has become completely bankrupt in world leadership, financial credit and its reputation for courage, vision and human rights. This is an undeclared economic war, bankruptcy, and economic slavery of the most corrupt order! Wake up America! Take back your Country."
Absolutely true and point on, however.....................James Anthony Traficant, Jr. (May 8, 1941 – September 27, 2014) was a Democratic, and later independent, politician and member of the United States House of Representatives from Ohio. He represented the 17th Congressional District, which centered on his hometown of Youngstown and included parts of three counties in northeast Ohio's Mahoning Valley. He was expelled after being convicted of taking bribes, filing false tax returns, racketeering and forcing his aides to perform chores at his farm in Ohio and houseboat in Washington, D.C.[1] He was sentenced to prison and released on September 2, 2009, after serving a seven-year sentence.
yup......he was obviously a very evil man......just re read that post above.....he had to be punished......hehehehhehehehehhhehehehehehe........jail was to good for him after challenging our masters..........
Youngstown is close to Pittsburgh and birthplace of the Q99X2 on this planet. My dear father worked in Youngstown. We do things differently over there.Traficant was simply acting like a typical human in that part of the world. Forcing aides to perform chores was not such a bad idea except when they had to milk the cows because that's when they got the idea they weren't doing what they had planned to do as aides. So they turned him in.
FED owns the stock market. They can do what they want to. If you don't like it then they'll own more of it until they own all of it. And, all the NATO militaries; All of your pension funds; All of your property and all of your future before they kill you. What are you going to do about it sucker.
They should at least give us a "Hut one, hut two" first
They will have to raise rates or the people that depend on interest and dividends are hurting big time and will push for shit canning the Fed.
Plus they are like the last goose in winter that froze to death with indecision. Stupid as well as dumb and full of Keynesian brain worms, they are.
They never intended to hike and that assumes you call 25 basis points an actual hike.
They allowed central banks to invest in the market, gave them zero interest money to do it and the market sets new records.
DUH.
The great "pump" being the sucess it is, the "dump" will be very interesting.
Heard on radio today:
"We'll see Elvis before we see a rate hike"
I still believe rates rise, because, credibility is at stake.
Also, don't be surprised if it's closer to 100bps (I know...I know) right out of the gate. I mean, if it's not, we'll just repeat this in a few months otherwise.
You either rip the band-aid off quickly, or slooooowly...
What happens next?
Does it really matter?
m
BTW: got all my Great Depression 2.0 gear shined up and ready to go.
Just waiting on my Tom Joad economic nomad's cap to be FedEx'd (Steinbeck's Outfitters).
Should be here this week...
m
Read between the lines. The direct correlation is as follows: as America abandoned its Christian moral principals of conduct and behavior as its foundation, the nation has been allowed by God to go its own way.
If you desire a biblical reference it is spelled out loud and clear, then read Romans 1:18-32 and into chapter 2. Note the phrase "God gave them over"; it is the Wrath of Abandonment and when we reached (past tense) the third, "God gave them over to a useless mind", that is the point on NO RETURN for the nation.
But in His kindness & patience He still leaves the open door of mercy & grace wide open, which is salvation via simple child-like faith in Jesus. People seem to hate the truth because, as it is written, men love darkness (evil) because their deeds are evil and will not come to the Light. Very sad epitaph isn't it?
Christian Rock music is enough to make any country abandon Christian moral principles of conduct & behaviour.
Note: Peak Christian Rock music coincides with America's abandonment of Christianity. One can hardly blame them IMHO.
They can't raise rates because the US gov can't pay the interest charge. But maybe now that they and their overlords have gotten out of the markets they will crash everything just so that they can buy whatever they don't already own for nothing.
Can't put any depravity beyond these ass wipes.
It won't be any different in December or next spring or summer.Pull the plug for god sakes and let the dirty bathwater flush down the drain.Either that or become Japan2.
Come on Janet you can do it. Just a tiny 1/4% rate hike to show the markets who's the boss. Please do it and get this show started.
Don't worry about the stock market collapses around the world. HA, HA, HEH. JOHNLGALT. Who is John Galt?
"...against the counsel of both of the institutions created at Bretton Woods as guardians of global economic stability. "
Are you referring to the guardian wolves? Guardian elites? Guardian privileged?
The guardians, in 1944 that agreed to create the gold-backed/ gold-convertible World Reserve Curency to settle international trade balances that fish-hooked the other sovereign treasuries that issued currencies? That World Reserve Currency paper-money was a promise to pay the holding country's treasury in gold, i.e., it was a legal claim on gold if the beaarer so chose to convert it.
Thus in 1944 setting the trap so that, later, removing the gold-bait would leave only the USA free-to-print its privileged World Reserve Currency, but now with no promise to redeem it in gold , yet have guaranteed demand for its fiat paper by so-called sovereign treasuries around the world who had accumulated it, because per Bretton Woods 1944 it was convertible into gold, to back their own currencies ?
By renegging on the promise to redeem in gold, the USA could effectively create unlimited paper-USDs for bribery and influence in world affairs? And spend unlimited amounts of unbacked paper- on military weaponry and bases around the world to force its tyranny, if it so desiired, on other sovereign states?
Roosevelt about 1933 had already withdrawn American gold convertibility from internal USA trade/transactions. But then, in 1971, Nixon et al sprung the trap and withdrew the USD gold- convertibility from international trade settlement so that all trade imbalances could no longer be settled.. In fact, all paper-monies are fiat backed only by faith, promises and intimidation.
Thus in present time, any payment using currency creates a perpetual claim that the currency can be traded for something. That claim [currrrency] can only be transferred to another holder but never finally settled/extinguished [as it could have been by redeeming the paper for gold]..
In 1944, gold was the agreed-upon way to settle paper-money claims. Only USD were backed by gold, so when USD could no longer be converted into gold, all paper-money became fiat, i.e, no currency had a legal claim on gold. Thus there could be no final settlement, as the fiat was backed by nothing.
The U S Dollar became the tyrannical privilege to dominate the world. So, here we are.
Here are some more signs of a recession.
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record...
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
http://michaelekelley.com/2015/02/24/would-you-pay-39-more-than-asked/
http://www.zerohedge.com/news/2015-07-27/when-will-we-ever-learn/
Here is how to respond.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!