Jim Grant Asks When The World Will Realize "That Central Bankers Have Lost Their Marbles"

Tyler Durden's picture

Authored by James Grant via Grant's Interest Rate Observer,

April 15 comes and goes but the federal debt stays and grows. The secrets of its life force are the topics at hand— that and some guesswork about how the upsurge in financial leverage, private and public alike, may bear on the value of the dollar and on the course of monetary affairs. Skipping down to the bottom line, we judge that the government’s money is a short sale.

Diminishing returns is the essential problem of the debt: Past a certain level of encumbrance, a marginal dollar of borrowing loses its punch. There’s a moral dimension to the problem as well. There would be less debt if people were more angelic. Non-angels, the taxpayers underpay, the bureaucrats over-remit and everyone averts his gaze from the looming titanic cost of future medical entitlements. Topping it all is 21st-century monetary policy, which fosters the credit formation that leads to the debt dead end. The debt dead end may, in fact, be upon us now. A monetary dead end could follow.

As to sin, Americans surrender, in full and on time, 83% of what they owe, according to the IRS—or they did between the years 2001 and 2006, the latest period for which America’s most popular federal agency has sifted data. In 2006, the IRS reckons, American filers, both individuals and corporations, paid $450 billion less than they owed. They underreported $376 billion, underpaid $46 billion and kept mum about (“nonfiled”) $28 billion. Recoveries, through late payments or enforcement actions, reduced that gross deficiency to a net “tax gap” of $385 billion.

This was in 2006, when federal tax receipts footed to $2.31 trillion. Ten  years later, the U.S. tax take is expected to reach $3.12 trillion. Proportionally, the 2006 gross tax gap would translate to $607.7 billion, and the net tax gap to $520 billion. To be on the conservative side, let us fix the 2016 net tax gap at $500 billion.

Then there’s squandermania. According to the Government Accountability Office, the federal monolith “misdirected” $124.7 billion in fiscal 2014, up from $105.8 billion in fiscal 2013. Medicare, Medicaid and earnedincome tax credits accounted for 75% of the misspent funds—i.e., of those wasted payments to which government bureaus confessed. “[F]or fiscal year 2014,” the GAO relates, “two federal agencies did not report improper payment estimates for four risk-susceptible programs and five programs with improper payment estimates greater than $1 billion were noncompliant with federal requirements for three consecutive years.” It seems fair to conclude that more than $125 will go missing in fiscal 2016.

Add the misdirected $125 billion to the unpaid $500 billion, and you arrive at a sum of money that far exceeds the projected fiscal 2016 deficit of $534 billion.

Which brings us to intergenerational self-deception. The fiscal outlook would remain troubled even if the taxpayers paid in full and the bureaucrats stopped wiring income-tax refunds to phishers from Nigeria. Not even a step-up in the current trudging pace of economic growth would put right the long-term fiscal imbalance. So-called non-discretionary spending, chiefly on Medicare, Medicaid and the Affordable Care Act, is the beating heart of the public debt. It puts even the welladvertised problems of Social Security in the shade.

Fiscal balance is the 3D approach to public-finance accounting. It compares the net present value of what the government expects to spend versus the net present value of what the government expects to take in. It’s a measure of today’s debt plus the present value of the debt that will pile up if federal policies remain the same. To come up with an estimate of balance or—as is relevant today, imbalance—you make lots of assumptions about life in America over the next 75 years. Critical, especially, is the interest rate at which you discount future streams of outlay and intake. Jeffrey Miron has performed these fascinating calculations over the span from 1965 to 2014.

The director of economic studies at the Cato Institute and the director of undergraduate studies in the Harvard University economics department, Miron has projected that, over the next 75 years, the government will take in $152.5 trillion and pay out $252.7 trillion —each discounted by an assumed 3.22% average real rate of interest. Add the gross federal debt outstanding in 2014, and—voila!—he has his figure: a fiscal imbalance on the order of $120 trillion. Compare and contrast today’s net debt of $13.9 trillion, GDP of $18.2 trillion, gross debt of $19.2 trillion and household net worth of $86.8 trillion. Compare and contrast, too, the estimated present value of 75 years’ worth of American GDP. Miron ventures that $120 trillion  represents something more than 5% of that gargantuan concept.

There’s nothing so exotic about the idea of fiscal balance. In calculating the familiar-looking projection of debt relative to GDP, the Congressional Budget Office uses assumed rates of growth in spending and revenue, which it also discounts by an assumed rate of interest. It’s fiscal-balance calculus by another name, as Miron notes.

Nor is the fiscal-balance idea very new. Laurence J. Kotlikoff, now a chaired professor of economics at Boston University, has been writing about it at least since 1986, when he shocked the then deficit-obsessed American intelligentsia with the contention that the federal deficit is a semantic construct, not an economic one. This is so, said he, because the size of the deficit is a function of the labels which the government arbitrarily attaches to such everyday concepts as receipts and outlays. Thus, the receipts called “taxes” lower the deficit, whereas receipts called “borrowing” raise it. The dollars are the same; only the classification is different.

Be that as it may, Miron observes that the deficit and the debt tell nothing about the fiscal future. Each is backward-looking. “The debt,” he points out, “. . . takes no account of what current policy implies for future expenditures or revenue. Any surplus reduces the debt, and any deficit increases the debt, regardless of whether that deficit or surplus consists of high expenditure and high revenues or low expenditure and low revenues. Similarly, whether a given ratio of debt to output is problematic depends on an economy’s growth prospects.”

Step back in time to 2007, Miron beckons. In that year before the flood, European ratios of debt to GDP varied widely, even among the soon-to-be crisis-ridden PIIGS. Greece’s ratio stood at 112.8% and Italy’s at 110.6%, though Ireland’s weighed in at just 27.5%, Spain’s at 41.7% and Portugal’s at 78.1% (not very different from America’s 75.7%). “These examples do not mean that debt plays no role in fiscal imbalance,” Miron says, “but they illustrate that debt is only one component of the complete picture and therefore a noisy predictor of fiscal difficulties.”

So promises to pay, rather than previously incurred indebtedness, tell the tale. Social Security, a creation of the New Deal, did no irretrievable damage to the intergenerational balance sheet. It was the Great Society that turned the black ink red. Prior to 1965, the United States, while it  had run up plenty of debts related to war or—in the 1930s—depression, never veered far from fiscal balance. Then came the Johnson administration with its guns and butter and Medicare and Medicaid. From a fiscal balance of $6.9 trillion in 1965, this country has arrived at the previously cited $120 trillion imbalance recorded in 2014. And there are “few signs of improvement,” Miron adds, “even if GDP growth accelerates or tax revenues increase relative to historic norms. Thus, the only viable way to restore fiscal balance is to scale back mandatory spending policies, particularly on large health-care programs such as Medicare, Medicaid and the Affordable Care Act.”

We asked Miron about the predictive value of these data. Could you tell that Greece was on the verge by examining its fiscal imbalance? And might not Japan be the tripwire to any future developed-country debt crisis, since Japan—surely—has the most adverse debt, demographic and entitlement spending profile? Miron replied that comparative statistics on fiscal imbalance among the various OECD countries don’t exist. And even if they did, it’s not clear that they would tell when a certain country would lose the confidence of its possibly inattentive creditors. The important thing to bear in mind, he winds up, is that the imbalances— not just in America or Japan or Greece but throughout the developed world—are “very big and very bad.”

Of course, government debt is only one flavor of nonfinancial encumbrance. The debt of households, businesses and state and local governments complete the medley of America’s nonfinancial liabilities. The total grew in 2015 by $1.9 trillion, which the nominal GDP grew by $549 billion. In other words, we Americans borrowed $3.46 to generate a dollar of GDP growth.

We have not always had to work the national balance sheet so hard. The marginal efficiency of debt has fallen as the growth in borrowing has accelerated. Thus, at year end, the ratio of nonfinancial debt to GDP reached a record high 248.6%, up from 245.4% in 2014 and from the previous record of 245.5% set in 2009. In the long sweep of things, these are highly elevated numbers.

In the not-quite half century between 1952 and 2000, $1.70 of nonfinancial borrowing sufficed to generate a dollar of GDP growth. Since 2000, $3.30 of such borrowing was the horsepower behind the same amount of growth. Which suggests, conclude Van Hoisington and Lacy Hunt in their first-quarter report to the clients of Hoisington Investment Management Co., “that the type and efficiency of the new debt is increasingly nonproductive.”

What constitutes a “nonproductive” debt? Borrowing to maintain a fig leaf of actuarial solvency would seem to fill the bill. Steven Malanga, who writes for the Manhattan Institute, reports that state and municipal pension funds boosted their indebtedness to at least $1 trillion from $233 billion between 2003 and 2013. Yet, Malanga observes, “All but a handful of state systems have higher unfunded liabilities today than in 2003.”

Neither does recent business borrowing obviously answer the definition of productive. To quote the Hoisington letter: “Last year business debt, excluding off-balance-sheet liabilities, rose $793 billion, while total gross private domestic investment (which includes fixed and inventory investment) rose only $93 billion. Thus, by inference, this debt increase went into share buybacks, dividend increases and other financial endeavors, [although] corporate cash flow declined by $224 billion. When business debt is allocated to financial operations, it does not generate an income stream to meet interest and repayment requirements. Such a usage of debt does not support economic growth, employment, higherpaying jobs or productivity growth.”

The readers of Grant’s would think less of a company that generated its growth by bloating its balance sheet. The composite American  enterprise would seem to answer that unwanted description. Debt of all kinds—financial and foreign as well as nonfinancial— leapt by $1.97 trillion last year, or by $1.4 trillion more than the growth in nominal GDP; the ratio of total debt (excluding off-balance-sheet liabilities) to GDP squirted to 370%.

The United States is far from the most overextended nation on earth. Last year, Japan showed a ratio of total debt (again, excluding off-balancesheet items) to GDP of 615%; China and the eurozone, ratios of 350% and 457%. Hoisington and Hunt, who dug up the data, posit that overleverage spells subpar growth. In support of this proposition (a familiar one in the academic literature), they observe thataggregate  nominal GDP growth for the four debtors rose by just 3.6% in 2015. It was the weakest showing since 1999 except for the red-letter year of 2009.

The now orthodox reaction to substandard growth is hyperactive monetary policy. Yet the more the central bankers attempt, the less they seem to accomplish. ZIRP and QE may raise asset prices and P/E ratios, but growth remains anemic. What’s wrong?

Debt is wrong, we and Hoisington and Hunt agree. With the greatest of ease do the central bankers whistle new digital money into existence. What they have not so far achieved is  the knack of making this scrip move briskly from hand to hand. Among the big four debtors, the rate of monetary turnover, or velocity—“V” to the adepts— has been falling since 1998.

“Functionally, many factors influence V, but the productivity of debt is the key,” Hoisington and Hunt propose. “Money and debt are created simultaneously. If the debt produces a sustaining income stream to repay principal and interest, then velocity will rise because GDP will eventually increase by more than the initial borrowing. If the debt is a mixture of unproductive or counterproductive debt, then V will fall.
Financing consumption does not generate new funds to meet servicing obligations. Thus, falling money growth and velocity are both symptomsof extreme over-indebtedness and nonproductive debt.”

Which is why, perhaps, radical monetary policy seems to beget still more radical monetary policy. Insofar as QE and ultra-low interest rates foster credit formation, they likewise chill growth and depress the velocity of turnover in money. What then? Why, policies still newer, zippier, zanier.

Ben S. Bernanke, the former Fed chairman turned capital-introduction professional for Pimco, keeps his hand in the policy-making game with periodic blog posts. He’s out with a new one about “helicopter money,” the phrase connoting the idea that, in a deflationary crisis, the government could drop currency from the skies to promote rising prices and brisker spending. Attempting to put the American mind at ease, Bernanke assures his readers that, while there will be no need for such a gambit in “the foreseeable future,” the Fed could easily implement a “money-financed fiscal program” in the hour of need.

No helicopters would be necessary, of course, Bernanke continues. Let the Fed simply top off the Treasury’s checking account—filling it with new digital scrip. The funds would not constitute debt; they would be more like agift. Or the Fed might accept the Treasury’s IOU, which it would hold “indefinitely,” as Bernanke puts it, rebating any interest received—a kind of zero coupon perpetual security. The Treasury would then spread the wealth by making vital public investments, filling potholes and whatnot. The key, notes Bernanke, is that such outlays would be “money-financed, not debt-financed.” The “appealing aspect of an MFFP,” says he, “is that it should influence the economy through a number of channels, making it extremely likely to be effective—even if existing government debt is already high and/or interest rates are zero or negative [the italics are his].”

Thus, the thought processes of Janet Yellen’s predecessor. Reading him, we are struck, as ever, by his clinical detachment. Does the deployment of helicopter money not entail some meaningful risk of the loss of confidence in a currency that is, after all, undefined, uncollateralized and infinitely replicable at exactly zero cost? Might trust be shattered by the visible act of infusing the government with invisible monetary pixels and by the subsequent exchange of those images for real goods and services? The former Fed chairman seems not to consider the question— certainly, he doesn’t address it.

To us, it is the great question. Pondering it, as we say, we are bearish on the money of overextended governments. We are bullish on the alternatives enumerated in the Periodic table. It would be nice to know when the rest of the world will come around to the gold-friendly view that central bankers have lost their marbles. We have no such timetable. The road to confetti is long and winding.

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Wow72's picture

Jim is Great! Thanks Jim!

"We are bullish on the alternatives enumerated in the Periodic table."

Me too!  He is one of my favourites, all business.  Jim Grant is Good! 

Cognitive Dissonance's picture

Markets Global governments can remain irrational insane far longer than you can remain fiat solvent.

Got milk gold and silver?

abyssinian's picture

Everybody knows, except that clown Steve Liesman libtard !  

tc06rtw's picture

 …  The question is:      Who Gets Dead?

HalinCA's picture

In the long run, as some famous pedophile said, we all do.  Or more recently:


OldPhart's picture

And, right on time, as I expected in the 80's when Congress considered 'fixing Social Security' and decided to ignore it...my social security will be canceled about a month or so before I'm eligible.

Now, in my 'excess income' years, I have nowhere that I can safely invest except for personal metal trinkets.

My biggest investment this month was a (Big Fucking SafeTM) that I can store those metal trinkets in.  Last APMEX buy was 4.75 pounds of silver eagles.  Delightfully heavy little box. Waiting for the gold to show up.

I have the feeling that the dollar isn't going to make it for another sixteen and a half years.

tarabel's picture



You know, I've thought about getting some big ass safe myself.

But I wouldn't put anything in it other than a gallon jar of liquified shit and maybe some jack-in-the-box thing that sprays it all over whoever opens the door the wrong way.

Then I'd hide everything else in the floorboards underneath it. Let some bunch of apes drag that sucker back to their crack shack and bust it open.

August's picture

If anyone at all knows of your interest in PMs, a safe containing a modest amount thereof is wise.

But leave the lion's share out on the veldt somewhere or other.

John Kich's picture

Obama will not finish his second term! Banned independent documentary reveals the truth. This will scare millions! 


Withdrawn Sanction's picture

Even Stevie knows...his last name says it all.  His paycheck, however, requires him to "think" otherwise.

RaceToTheBottom's picture

Archaic language.  "Libtard" gives the impression that only one pig is at the trough.

insanelysane's picture

In past decades other nations would have punished the nation that was manipulating their currency excessively.  Nowadays they just take turns manipulating their currency and boosting their economies.

Cognitive Dissonance's picture

Desperate (or greedy and power hungry) men do desperate (or manipulative and sociopathic) things.

Escrava Isaura's picture



insanelysane: In past decades other nations would have punished the nation that was manipulating their currency……

You forgot to put the sarcasm sign.

You also forgot to tell us that, the world learned with the master of currency manipulation, USA. 

John  Connally: “Dollar is our currency, but your problem." 



Yen Cross's picture

 Cog, if I had a copper penny for every time I've heard that comment.

 Margin management Bitchez. [ live to fight another day]

Cognitive Dissonance's picture

I drink milk everyday while stacking.

adanata's picture


Articles like this drive me nuts as they attempt to rationalize the insanity they profess to be insanity. "The debt dead end may, in fact, be upon us now".. ya think? Yessiree bob.. we have reached "debt saturation"; debt creation being the base of the global central banking Ponzi. Everyone 'drowning in debt' cannot support the game in the west much farther... or longer. However, the bottom line is there is no "debt". It's all a scam. The author notes the intrinsically worthless fiat but goes on to lament the loss of confidence in it. Where did the banksters get the hundreds of trillions of dollars, pounds, yuan, euro, yen et al to "lend" to all the bank owned 'governments'? The author notes, out of thin air; worthless digits on worthless pieces of paper. That's not business; that's simply fraud. The bank owned 'governments' then tell the Sheeple they owe a debt of trillions they don't owe at all. It's all crap. Let the Sheeple lose 'confidence' in the con game; let's not attempt to keep it going. The support for gold and silver is appropriate because it's real money. Let's see the Sheeple get their real money back from the global banksters... Central bankers haven't lost their marbles. If you focus on their goals of personal empowerment and endless riches, they're right on target.

Radical Marijuana's picture

“helicopter money,” the phrase connoting the idea that, in a deflationary crisis, the government could drop currency from the skies to promote rising prices and brisker spending ...


This Incredibly Reckless Policy Is Gaining Momentum

The MAD Money As Debt systems are based upon public governments ENFORCING FRAUDS by private banks. That MADNESS has grown at an exponential rate, so that the globalized political economy built on that foundation has become exponentially more FRAUDULENT, to the point where it became increasingly psychotic, runaway criminal insanities.

It is within MADNESS that the established systems operate:

Too much "money" made out of nothing as debts is inflation.

Too little "money" made out of nothing as debts is deflation.

The bankers who have captured control over the public powers of governments, through the vicious spirals of political funding ENFORCING FRAUDS, have far more valid reasons to worry about deflation, rather than be concerned about inflation. Indeed, they have every incentive to make too much "money" out of nothing, rather than to make too little "money" out of nothing.

So-called "helicopter money" would be another excuse to create more "money" out of nothing, in order that enough "money" was made out of nothing to forestall deflation. Similarly, ZIRP & NIRP were ways to cope with the total debts doubling and doubling, within the MAD Money As Debt systems. However, no matter what was done within the established systems, there continues to be FUNDAMENTALLY FRAUDULENT MADNESS at the foundation of the current political economy, which has become based on globalized privatization, which has been growing MORE FRAUDULENT AT ABOUT AN EXPONENTIAL RATE.

Central bankers and their intellectual mercenaries are required to be the best available professional hypocrites, in order to be able to continue to operate inside the MADNESS of the established systems. They can NOT publicly admit that the entire political economy has become based on public governments ENFORCING FRAUDS by private banks, which effectively privatizes the powers of governments, which became operated through globalized electronic "money" frauds, backed by the threat of force from atomic bombs.

More philosophically speaking, the monetary and taxation systems operate as combined money/murder systems, whereby the debt controls are backed by the death controls: MONEY IS MEASUREMENT BACKED BY MURDER. The existence of central banks, able to engage in the central planning of monetary policies, is due to those being the best organized gangs of criminals, the banksters, who were able to apply the methods of organized crime through the political processes. Hence, globalized, privatized, MAD Money As Debt is the result of the excessive successfulness of controlling civilization by the methods of organized crime, which results in civilization manifesting runaway criminal insanities.

Although civilization does NOT violate the laws of nature, the political economy based upon ENFORCING FRAUDS requires that the vast majority of people deliberately ignore the principle of the conservation of energy, and misunderstand the concept of entropy in the most absurdly backward ways. "Money" made out of nothing as debts is actually negative capital, which continues to be publicly presented as if that were positive capital. Similarly, although some human beings are understanding some energy systems better, the established human systems based upon ENFORCING FRAUDS deliberately misunderstand themselves in the most absurdly backward ways possible!

In general, civilization has fundamentally fraudulent financial accounting systems, which automatically must become exponentially more psychotically out of touch with the physical world, as the virtual world of electronic "money" made out of nothing as debts becomes many orders of magnitude greater than the physical world, such that there is less than 1 unit of any actual collateral for ~100 units of MAD "money," and moreover, that is automatically headed towards a ratio of 1 unit of physical economy to ~1,000 units of electronic fraud "money," mostly being used to speculatively gamble with!

Meanwhile, the threats from weapons of mass destruction keep that MAD system going, because the governments which ENFORCE FRAUDS actually do have an overwhelming abundance of weapons of mass destruction. The MADNESS of Mutual Assured Destruction continues to back up the MADNESS of Money As Debt. Hence, those combined murder/money systems have become trillions of times worse than the previous systems of paper money frauds, backed by gunpowder weapons.

As those MAD systems become exponentially more psychotic, we are headed towards series of psychotic breakdowns, because being able to ENFORCE FRAUDS never stops those from still being fundamentally FRAUDULENT. Being able to enforce electronic frauds with the threat of force from atomic bombs has enabled the resulting debt insanities, backed by the threat of death insanities, to be amplified to astronomical sizes, many orders of magnitude greater than ever before in human history. Exponentially increasing overall fundamental FRAUDULENCE is certainly headed towards some unpredictable series of tipping points ...

However, most people continue to want to think about that situation as if it was still the same as previously, when there were only paper money frauds backed by gunpowder weapons, rather than think more deeply about what it means to have privatized, globalized, electronic frauds, backed by the threat of force from weapons of mass destruction.

Although I can sympathize with those who like to pretend that they could become prepared, in order to protect themselves, in my opinion they are only able to do that to the degree to which they do not face the facts that what actually exists are electronic frauds, backed by atomic weapons, inside of globalized civilization that has become too criminally crazy to fully comprehend! Those who continue to think that they can become prepared and protect themselves tend to only be able to do that because they continue to think in ways that developed when there were only paper frauds, backed by gunpowder weapons.

The vast majority of people do not understand how the monetary and taxation systems really work, and moreover, have been conditioned to feel like they do not want to understand. Therefore, there are no good grounds to expect that most people would understand what "helicopter money" really means. Furthermore, in my view, even those who write superficially correct analysis of the problems with "helicopter money," such as presented in the article above, do NOT come remotely close to comprehending what it means to have electronic frauds backed by atomic bombs. Ultimately, the underlying issue is how to operate the human murder systems after the development of weapons of mass destruction, which is imperative because what actually exists are combined money/murder systems.

I REPEAT: Neolithic Civilization social pyramid systems have always been based on being able to back up lies with violence. Progress in physical science has enabled the development of an oxymoronic scientific dictatorship that primarily applies advancing technologies to become better at ENFORCING FRAUDS, and therefore, civilization has become exponentially more FRAUDULENT. The ruling classes (metaphorically, the Vicious Wolves and their more Domesticated Dogs) have become increasing psychotic psychopaths, while those they rule over (metaphorically, the Zombie Sheeple and controlled opposition Black Sheeple) have become increasingly impotent, incompetent political idiots.

The article above by James Grant was another of the typical kinds of superficially correct analyses which grossly understate the problems driven by exponential progress in physical science, without that being matched and surpassed by any progress in physical science. The banksters that made and maintained the previous systems of paper frauds backed by gunpowder weapons have lost control of the exponentially growing systems of electronic monkey money, backed by the threat of force from apes with atomic bombs. Although we can be confident that natural laws will continue to operate, since the only connections between human laws and natural laws are the abilities to back up lies with violence, and those have become electronic lies, backed by the threat of force from atomic bombs, there are deeper and deeper levels of seriousness regarding the degree to which those systems have become runaway psychotic criminal insanities going OUT OF CONTROL.

At the present time, the first generation that grew up with the development of electronic frauds, backed by atomic bombs, is still alive today, and mostly, they are still thinking about that as if there were still only paper frauds backed by gunpowder weapons. Theoretically, it would take series of intellectual scientific revolutions and profound paradigm shifts in order to better understand the MADNESS which we are now surrounded by. However, due to the nature of that MADNESS, the vast majority of people do not understand, and do not want to understand. Indeed, even most of those whose articles are republished on Zero Hedge tend to only present superficially correct analyses of that MADNESS, which often end with recommending that individuals should attempt to become prepared and protect themselves from that MADNESS.

"Good luck with that!"

Since the overall FRAUDULENCE is getting worse, faster, at about an exponential rate, "we" are rapidly running out of time to go through the kinds of intellectual scientific revolutions that "our" political processes would have to go through, in order to maybe cope with the development of technologies like electronics and atomic energy, which are many orders of magnitude greater than all of the chemical energy systems which civilization was previously used to, including ourselves as flesh and blood human beings ...

Of course, I am NOT asserting that the laws of nature are going to stop working, but rather, that natural selection pressures drove the development of artificial selection systems to become based on the maximum possible deceits and frauds. The best organized gangsters, the banksters, are headed towards the paradoxical FAILURE FROM TOO MUCH SUCCESS BASED ON BEING ABLE TO ENFORCE FRAUDS.

While the globalized political economy operates through fundamentally fraudulent financial accounting systems, the short to medium term results of public governments ENFORCING FRAUDS by private banks enable triumphant FRAUDULENCE manifesting as the symbolic robberies of the many by the few, whose longer term consequences are social polarization, and even worse destruction of the natural world. Since systems based upon ENFORCING FRAUDS are operated by the best available professional hypocrites, who, for generation after generation, have developed their abilities to lie to themselves, while they were lying to everyone else, we are living inside a globalized civilization that is almost completely crazy and corrupt to the core.

Although civilization continues to operate inside the laws of nature, it deliberately does NOT understand itself according to those laws of nature, but rather, deliberately misunderstands itself as much as it possibly can, in order to continue to operate the established systems based upon ENFORCING FRAUDS. The great paradox of contemporary politics is the growing Grand Canyon Chasm between progress in physical science, without any progress in political science, due to the ways that history drove successful warfare to become based on deceits, which morphed to become successful finance based upon ENFORCING FRAUDS.

Although those developments were always consistent with the laws of nature, and the laws of nature will continue working, nevertheless, civilization based upon the excessive successfulness of organized crime has become runaway criminal insanities. Although what the banksters originally did to make paper money frauds, backed by gunpowder weapons, may have appeared to be more successful for them to actually do back then, what they have done since to create globalized electronic money frauds, backed by the threats of the force of atomic bombs, have amplified the degree to which civilization is based upon being able the ENFORCE FRAUDS to astronomic sizes, trillions of times greater than ever before in human history!

The banksters are NO longer "controlling" those developments! Therefore, the degree to which "The Central Bankers Have Lost Their Marbles" is TRILLIONS OF TIMES WORSE THAN WHAT JAMES GRANT INDICATED.  Furthermore, that is also much more serious than those who still believe that the banksters getting "wealthier," when their "wealth," based on being able to make "money" out of nothing, is actually the exponential growth of FRAUDULENCE, which is actually becoming exponentially more PSYCHOTIC.

Meanwhile, I do not believe that it is generally possible "The World Will Realize" that the banksters have become criminally insane, because almost everyone basically takes for granted (pun intended) thinking about everything in basically the same ways that that the biggest bullies always did, and so, the banksters still do. Almost everyone has already been brainwashed to take for granted (pun intended) thinking about "economics" within the banksters' bullshit, as well as that almost everyone takes for granted (pun intended) thinking using the biggest bullies' bullshit world views and languages regarding pretty well everything­.

The relationships between natural selection pressures and artificial selection systems are first and foremost represented by the combined human money/murder systems. While those continued to develop within natural laws, and natural laws continue to work, almost everyone became socially successful in proportion to the degree that they could operate as professional hypocrites, living INSIDE ENFORCING FRAUDS.

I REPEAT that what EXISTS are globalized electronic monkey money frauds, backed by the threat of force from apes with atomic bombs. Pretty well NONE of those monkeys and apes want to understand what they are really doing any better, because almost all them became socially successful by being the best available professional hypocrites, whose lives were always INSIDE ENFORCING FRAUDS. It is NOT just the banksters that have become criminally insane, the entire civilization that they were able to dominate has become criminally insane. While that does NOT mean that the laws of nature are going to stop working, it does mean that the longer term consequences for civilization behaving in exponentially more psychotic, FRAUDULENT ways will become TRILLIONS OF TIMES WORSE THAN EVER BEFORE IN HUMAN HISTORY.

Of course, none of the "corrections" to the criminal craziness of civilization are going to go outside of natural laws, and natural laws are never going to stop working. However, the magnitudes of civilization becoming almost totally based on exponentially increasing FRAUDULENCE requires "corrections" that are currently impossible to completely comprehend or fully imagine. At the present time, it is politically impossible for human beings and civilization to start to understand themselves more scientifically, but rather, only politically possible for progress in physical science to be applied through a scientific dictatorship that is based upon being able to ENFORCE FRAUDS.

I REPEAT that there we are stuck going around and around, in vicious spirals of political funding ENFORCING FRAUDS, while the deeper levels of the consistent contradictions that we face are how and why natural selection pressures drove the development of artificial selection systems to be operated through ENFORCING FRAUDS, while progress in physical science enabled those to become EXPONENTIALLY MORE FRAUDULENT.

At the present time, "political science" can NOT cope with those sets of consistent contradictions! By and large, the only thing which happens is that the more one learns about the political economy based upon public governments ENFORCING FRAUDS by private banks, the worse that gets! Indeed, articles like those above by James Grant conclude with ridiculously superficial, old-fashioned "solutions." Similarly, those who think that the banksters are successfully becoming "wealthier" are also rather ridiculous regarding what civilization is actually doing to itself!

Every day, the increments of greater and greater ENFORCED FRAUDS automatically become more FRAUDULENT. Civilization is actually thereby becoming more psychotic and criminally insane at about an exponential rate. While that will never stop the laws of nature from working, and indeed, the laws of nature are the deeper reasons for how and why that happened, the "corrections" to those degrees of the runaway criminal insanities of globalized electronic frauds, backed by the threat of force from weapons of mass destruction, are "corrections" which would have to cope with those levels of INSANITIES.

As adanata commented:

"Articles like this drive me nuts as they attempt to rationalize the insanity they profess to be insanity."

Civilization based upon ENFORCING FRAUDS does not violate the laws of nature, but rather, THAT was driven by the laws of nature. But nevertheless, the results are runaway criminally insanities, because of the ways that the social successfulness of ENFORCING FRAUDS requires that the vast majority of people do not understand THAT, and feel like they do not want to understand THAT. Those systems were developing every possible way in which the people actually living INSIDE ENFORCED FRAUDS could become as FRAUDULENT as possible in the ways that they thought, and therefore, continuing to do everything they could to continue to think in the most FRAUDULENTLY possible ways.

It is the SYSTEM AS A WHOLE, with its matching bookends of the ruling classes and those they rule over, who are BOTH adapted to living INSIDE ENFORCED FRAUDS, becoming exponentially more FRAUDULENT. The only ways to become relatively socially successful are to adapt to live INSIDE ENFORCED FRAUDS, and furthermore, those who are most socially successful therefore must become the best available professional hypocrites, who excel at lying to everyone, including themselves.

Both the banksters, and the Sheeple that they have being fleecing to exhaustion, while setting those Sheeple up to be slaughtered, are stuck INSIDE the same overall runaway criminal insanities, based upon ENFORCING FRAUDS, which deliberately ignore and misunderstand the laws nature as much as humanly possible. At the present time, it is politically impossible for that kind of scientific dictatorship to become any more genuinely scientific about itself, because of the degree to which everyone continues to be socially successful proportional to the degree to which they can operate as professional hypocrites.

Almost everyone is taking for granted (pun intended) thinking using the DUALITIES of false fundamental dichotomies and the related impossible ideals. Almost nobody is interested in starting to think using more UNITARY MECHANISMS based upon better understanding human beings and civilization as manifestations of general energy systems. Despite that human beings and civilization actually do live as entropic pumps of environmental energy flows, doing so has been paradoxically driven to develop sociopolitical systems based upon the maximum possible frauds and deceits, through combined money/murder systems.

Human civilization is way more psychotic than appears to be appreciated sufficiently by most of those who superficially begin to understand the entrenched systems based upon bankster dominated governments ENFORCING FRAUDS. While much of the content published on Zero Hedge recognizes the degree to which the political economy is becoming exponentially more FRAUDULENT, and somewhat recognizes the problems associated with civilization actually doing that, in my opinion, there is pretty well ZERO profound paradigm shifts presented on Zero Hedge, but rather, only presentations of the increasingly blatant anomalies driven by ENFORCING FRAUDS.

blindman's picture

Ray Price - Don't You Ever Get Tired of Hurting Me.wmv

FreeShitter's picture

When you ask? When they are going hungry/starving, fuckbook doesnt work, ebt is shut down, kim k can no longer post selfies, and the sports' teams are not playing. Until these happen, its just fucking dandy.

DontWorry's picture

The threat of force is all that props up the dollar now

Secret Weapon's picture

The threat of force is all that props up any government.  Kind of like organized crime, yes?

tarabel's picture




On the other hand, the fear of counter-force from an armed American populace is all that deters them from really getting with their program.

The one desire of any tyrant is to gain a monopoly of force. After that, his powerless slaves must submit.

Europe has proved that again and again. And they're now in reruns.

Yen Cross's picture

 We already have Jim.  

  Unfortunately we don't own the printers [ CTRL-P}

Billy Shears's picture

Bow down and tremble before the all powerful FED!

Paul Kersey's picture

I'll believe that "central banks have lost their marbles", when the banking oligarchs start getting poorer and the middle class folks start getting some clawback.  If the central banks were really screwing up, then the big banksters wouldn't be genarational wealthy.  The main job of the central banks is to funnel middle class wealth to the non-working, useless eater class and to the ultra wealthy, financial engineering kletocratic class.  Central banks have been wildly successful in doing their main job.

Peter Pan's picture

First they lose their marbles and then they lose their balls and finally they lose their heads.

WTFUD's picture

Marbles have been underrated for too long!

gunsnmoney's picture

Marbles....the future is marbles!

Paul Kersey's picture

William Dudley, President of the Federal Reserve Bank of New York, is worth an estimated $215 million.   No, that central banker did not lose his marbles.  He just took ours?

HalinCA's picture

True, except two things:


1 - it is easy to find out where he and his family live

2 - there are many more of us than of him

Lies All Lies's picture

HalinCA ... Another ZH keyboard warrior. In Iceland they might just do that stuff. In CA, well, not so much.


Atomizer's picture


Many people don't follow geopolitics. I was born in 1967. Small rural town outside downtown Cleveland. I hated the community as a child, everyone wants to know when you take a shit. Left to go to college and bailed out of the noisy neighborhood. I have nothing to hide. 

So we now have a Internet platform of sharing your thoughts and feelings. Back in the day, women wrote in dairies. Men would communicate by saying, it's non of your business, we'll work thru it. 

Facebook, Twitter, and the other asshats didn't have dialup computers in 1977. Shall I remind you that Facebook is a glorified BBS with graphics and fake content. Twitter is no different. Just pretending to offer better TOS to steal your IP and ram ram Netzero advertisers onto the smartphone and multiple users device accounts. 

Tyler, I just deleted that special free book advertising email. Does that asshole really think I am going to send a address to be sold to a third party marketing firm. Fuck that. Just deleted ZH Email. That's why I didn't reply. 

That fucking 21 year old must of thought we are going to fall for Edward Bernays. 

Propaganda by Edward Bernays (1928) - History Is A Weapon

At somepoint, the robots, VR, and driverless technology will be compromised. 

Just read a interesting piece. It's a daily booked site to read. 

Don't forget, business, network, infrastructure tabs on top. 


Rant off. Jim, always admired your forward thinking. Never lose the flame. 


Withdrawn Sanction's picture

Most concise and accurate description of the difference between productive and unproductive borrowing I've read in many moons.  Well done, Mr. Grant.  

Of course most government borrowing falls in the latter category.  Add to that the burden of taxation eventually required to service that debt, and the excess burden that practically all taxes generate, and it's very easy to see why economies are swirling the drain worldwide.

The situation will not and cannot improve until a substantial portion of that unproductive debt is simply repudiated. 

GreatUncle's picture

Well said on the whole concept of the debt and what it means.

Lies All Lies's picture

"....The situation will not and cannot improve until a substantial portion of that unproductive debt is simply repudiated...." 

= Chaos... Anarchy...Re-Boot. 

bunnyswanson's picture

When rich assholes such as yourself cease playing their game.  That is when.

GreatUncle's picture

As soon as you helicopter money does it not imply it is worthless?


If we are playing the helipcopter money game though I prefer to be paid in gold and silver or will exhange into that ASAP on the grounds once started you will do it again.

Yen Cross's picture

     Lets look at the  "exchange stability fund" ?

  Why is that the rate differential dives at the end of every quarter? [ Stress Test much?]

GreatUncle's picture

A non productiver debt ... think of an overvalued share in a corporation where you get a meagre return if any for the money invested.

Mini-Me's picture

It's even worse when you consider the benchmark for much of the analysis is GDP, an altogether bogus compilation of all sorts of things, not the least of which is government spending. 

The government takes private wealth through direct taxation, borrowing or inflation, then squanders the loot on F-35s that can't fly, $5 billion floating targets called aircraft carriers, hundreds of billions of handouts for the Free Shit Army and countless other insanities.  Funnel all this baloney into the Bureau of Lies and Scams (BLS) and you can conjure up pretty much any outcome you want. 

What can't be created by fiat is actual prosperity, because that takes hard work, under-consumption, and an accumulation of capital.  The a-holes in Washington either don't know any of this or they do know, but would rather suck the rest of us dry rather than doing something meaningful.

VWAndy's picture

 Me? I just assumed they were trippin on LSD. Turns out they are just crackheads.

GUS100CORRINA's picture

Unfortunately we are so lost. I posted this once before and it is time to post it again.

When I look at these charts, I have to agree with the data. What would make this information useless is if indeed the CBs are pulling out all the stops to prop up these markets. What is stunning is when one realizes that we are actually no futher ahead after all this BS and have actually dug a pretty deep financial pit for future generations. Case in point, FED balanace sheet is now 4+ Trillion bigger, America's Debt is now 10+ Trillion larger, Student loans are about 2 Trillion higher, 80% of the S&P500 has corporate balance sheets that are in the worse shape in history due to debt-leveraged stock buy backs, healthcare costs are soaring and our foreign policy is an utter disaster. And guess what ... the S&P is no higher than it was in 2008!!!!! 

In Solomon's prayer, 2Chr6:12-42, he lays a petition before GOD to have mercy on Israel when they commit sins that will result in judgments from GOD. Below are the seven Marks of God's judgment outlined in Solomon's prayer found in 2Chr6:12-42:

1. The First Mark: Removal of God's Blessing (How is that working out for everyone? Are you better or worse of today when compared to 20 years ago?)

2. The Second Mark: Injustice (Are people being jailed by corrupt government policies and laws? YES ... JUST LOOK AROUND.)

3. The Third Mark: Military Defeat (IRAQ, AFGHANISTAN, VIETNAM, etc..)

4. The Fourth Mark: Drought  (Remember California and Texas to name just two? How about much of the western United States?)

5. The Fifth Mark: Hardship, Death, Attacks on Our Cities (Remember 911 and Other terrorist events in America Recently. Regarding hardship, how about Detroit, MI or Flint, MI? Does 2015 San Bernardino attack, CA ring a bell?)

6: The Sixth Mark: Abuse of Immigrants (I would say we are there today, wouldn't you? What a mess!)

7. The Seventh Mark: War and National Collapse (How is the war on terror going? How about American deficits and debt? Does anyone think the 250 Trillion dollars in derivatives carried by 5 largest US banks is a good idea? Can anything go wrong with our "Too Big To Fail" G-SIFIs?

Based on the above, we are at "DEFCON 1". Or to use a football analogy: "It is fourth down with four seconds left on the clock and we are on our own 4 yard line behind by 6 points." Can America score a touchdown or will it lose the game? We have hope, but the odds are heavily against the us. The Charts above only confirm the fact that financial collapse looks ready to happen. All that is needed is a spark to set it off. We have stolen from the next generations to keep things proped up based on 'FAILED' Keynesian economic theories! WE ARE AT THE SEVENTH MARK!!

May GOD have mercy on America!!!




Lies All Lies's picture

"...May GOD have mercy on America!!!..."

Why GUS? Don't we get what we deserve; isn't that the Law or is it all by accident and it isn't our fault yada yada...?

Gotta take the shit with the strawberries old chum(p)

gregga777's picture

Subnormal IQ deviant elite Benjamin S. Bernanke should be taken up in a helicopter and thrown out from a high altitude without a parachute to go splat on a parking lot. That's what I think of his "helicopter counterfeit currency" drop. The United States Feral Reserve note is just a piece of paper and the Feral Reserve can replicate digital dollars at an even greater rate than the US Treasury's Bureau of Engraving and Printing could ever dream of printing Feral Reserve notes. There are fewer than a half-cent of vault cash in the banks for every dollar of US broad true money supply. If the subnormal IQ deviant elites want to create a dollar destroying hyperinflation all they need to do is adopt that idiot Bernanke's helicopter money idea. Maybe it would be best if they do. Because in the resultant societal collapse following the hyperinflation many of these subnormal IQ deviant elites will be lynched by irate mobs of angry Americans.

Lies All Lies's picture

"... resultant societal collapse following the hyperinflation many of these subnormal IQ deviant elites will be lynched by irate mobs of angry Americans...."


That worse is to come is inevitable. We're heading for CAR - Chaos - Anarchy - Re-boot.

It's how the re-boot happens that's the key. Didn't Plato say that dictatorship follows 'democracy'? 


gregga777's picture

As of March 2016 US bank vault cash was $59.303 billion. That's $0.00475 in cash per dollar of US broad true money supply, TMS-2, of $12.47280 trillion, or less than half of a penny. I'm getting my fiat Feral Reserve notes out of the banks before the subnormal IQ deviant elites at the US Feral Reserve embark on NIRP or helicopter fiat currency drops. In fact, I'm getting mine out before Germany, the Bundesbank and the European Central Bank admit that Deutsche Bank, with its $52 trillion in derivatives exposure, is insolvent and takes down the worldwide banking gangster system. Because if you are still in line during a bank run when the bank's doors close, as Gene Wilder said, "YOU GET NOTHING, GOOD DAY, SIR!" Then exchange those fiat Feral Reserve notes for real money—gold, silver or even copper—bullets, non-perishable food stocks and other barter able goods. Time is running out!!!