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Chris Martenson Interviews John Mauldin: "It's Time to Make the Hard Decisions"
Submitted by Chris Martenson
Back in the 1930's, Irving Fisher introduced a concept called the 'debt supercycle.' Simply put, it posits that when there is a buildup of too much debt within an economy, there reaches a point where there simply is no other available solution but to let it rewind.
We are at that point in our economy, as are most other major economies around the world, claims John Maudlin, author of the popular Thoughts from the Frontline newsletter and the recent bestselling book Endgame: The End of the Debt Supercycle and How It Changes Everything.
For the past several decades, excessive and increasing amounts of credit in the system have allowed us to live above our means as both individuals and nations. We've been able to have our cake and eat it, too. Now that the supercycle has ended and the inevitable de-leveraging cycle is staring us in the face, we will be forced to set priorities in a way that has been foreign to our society for over a generation.
On The Debt Supercycle
You can’t look to monetary policy for help (which will try to stimulate businesses to get more debt) because debt is the problem. If you are drunk and you need to cure yourself; another fifth of the whiskey is not the answer. So when debt becomes the problem, when it gets to be too much, more debt is not the issue. You've just simply got to work it off. There’s no easy way out of it. And, it takes years to work through it. It takes a long time, generally -- 60 to 70 years, in the US's case -- for these debt cycles to build up. It’s when you can no longer adequately service your debt and the market loses confidence in your ability to service the debt at a price that it finds adequate.
On the Slow-to-No-Growth Future
The problem is, there are only really two ways that you can deal with the debt. You can grow your way out of it, which is what you can do in normal business cycles. For most times in most places, we can grow our way out of debt problems, which is what the central bank is coming in and trying to do. The problem is, when you’re at the end of the debt supercycle, when you’re running up against your ability to borrow money, that liquidity no longer works.
As Fisher pointed out, the time to solve the debt bubble is before it becomes a bubble. He was wanting separation of commercial banks and lending. He wanted a much less fractional-reserve-based banking because he wanted the debt to keep from building up past levels that we saw in the 1920’s. He saw that as something that was so bad that it created the Depression.
So you can either repudiate the debt, you can default on it, you can monetize it, you can try to grow your way out of it; but you’re going have to deal with it. And there’s no easy way, when you’re at the end of the debt supercycle, when debt has become too much. Printing money doesn’t work.
Now, upon reflection and thinking about it, we’ve gone too far. And, this is where they are in Europe. Japan is getting very, very close to that moment. I keep saying, I think Japan is a bug in search of a windshield. I think they’re going to collapse. Quite frankly, the credit crisis that Japan is going to have is going to be far more serious than Greece. Japan makes a difference. They’re a big country. Greece is an ant hill.
We in the US can solve our problems, but not without paying a large price. We’re going to be locking in a slow-growth economy. It’s going to be very frustrating for politicians, because they are going to want to come in and sprinkle pixie dust on the economy and make something happen. And the reality is, we can’t. And, that’s a frustrating position. It’s five or six years of slow-growth economy.
On Confidence (or Lack Thereof) in Our Leadership
There's a great line that people do not accept change until they see the necessity, and they only see the necessity in moments of crisis.
Now, sadly, simultaneously we’re seeing that much of the developed world is going to have this crisis all at the same time, you know within three to four years of each other. That’s not good for world growth. It’s not good for globalization. We’re at a place where we have to make hard decisions.
And when you get politicians with a crisis, it’s hard to say what they’re going to do. When you read the stories of how decisions are made by politicians in the middle of a crisis, it’s not comforting. I mean, they’re picking up the phone to each other and saying, "What do you think we should do?" They are working it out as they go along. There’s no master plan here. There’s nobody with a playbook.
Click the play button below to listen to Chris' interview with John Mauldin (runtime 38m:34s):
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"Back in the 1930's, Irving Fisher introduced a concept called the 'debt supercycle.' Simply put, it posits that when there is a buildup of too much debt within an economy, there reaches a point where there simply is no other available solution but to let it rewind. "
The same Irving Fisher who said, three days before the 1929 crash: "Stock prices have reached what looks like a permanently high plateau."
What a reference...
The debt supercycle is going to be colliding with the Federal Reserve's financial repression. I think it is impossible to know whether inflation or deflation will win in this battle but I think that it is interesting that gold went up 70% in the early 1930's during our last deflationary period. This is a great article explaining the other side of the debt supercycle battle, financial repression:
http://www.ftense.com/2012/01/what-is-financial-repression.html
Centrally planned economies become inherently unpredictable in crisis because individual decisions made by handful of central banker madmen can send ripples throughout the entire system. Like a butterly effect those ripples can have massive intended and unintended consequences that are chaotic, and thus unpredictable, in nature. It is the anti-thesis of a healthy, predictable free market with millions of individual actors which have the effect of constantly rebalancing things. Central planners can never achieve this, and the harder they try, the worse things get.
Endorse Liberty Ron Paul (Pac ad) in Florida:
http://www.youtube.com/watch?v=vts0tqsFcJ0
I guess we all missed Mauldin's endorsement of Ron Paul.
Failing to endorse Paul is prima facie proof of un-seriousness. Try again, John.
The entire planet is circling the drain, but old newsletters and 'foreign policy' worries prevent people who should know better from endorsing Paul. When will we see a major figure (aside from Jim Rogers and Mark Faber) endorse sanity? What do they have to lose?
Exactly, Mauldin has been implicitly backing Fed policy and MMT all along. He has no stance, a totally 'pragmatic' whore.
Mauldin too wants to escape pain. But you can't. The only way to remove a cancer is to cut it out. The debt cancer needs to be removed, not slowly shrunk or decrease the rate of it's growth. As Dr Paul always says, you need to liquidate the debt, painful-yes but necessary
> There's a great line that people do not accept change until they see the necessity, and they only see the necessity in moments of crisis.
Here's another good quote simiar to the one in the article:
"People change when the pain of staying the same is greater than the pain of change."
Ron Paul is the only US senator worth paying attention to.
But I am actually astonished that anyone thinks (1) he is electable and (2) if elected, he could make any significant changes.
The political system here is beyond hope and beyond repair. Only a systematic economic collapse will lead to changes. And what emerges will be a political system with even less respect for liberty than what we see today. As Celente says, when people lose everything, they lose it. I see social upheaval that will bring on only more surveillance, coercion and repression. Except for the bankers and warmongers, of course.
A while back Mish posted a blog listing all the things that would have happened (or not happened) if only Ron Paul had been elected instead of Obama. Wishful thinking !
The political system is completely broken and can't be fixed "from within".
FYI Ron Paul is a representative not a senator.
Reserve currency status of the dollar = print to prosperity for America. Take away the ability to buy stuff from others with worthless IOUs, and the US economic and governmental system collapses overnight. Until that happens, we will continue to have a functioning "matrix" to keep the sheeple calm.
The way to American prosperity is to lose reserve currency status and to become self-sufficient.
There is too much debt tethered to this economy for pitiful little interest rate adjustments to have any effect.
I didn't listen to the interview, but I would venture to guess that, as usual, the real 800 pound gorilla was absent from the room: the fact that the whole construct is based on a foundation of essentially-free energy. Oil folks, that is the basis for our civilization as it exists. You can do whatever you like with finances, but oil remains a finite resource with no replacement in sight. That's why we are looking total collapse, rather than a few lean years, in the face. This year? Next year? Next decade? I have no idea, all I know is that it's coming.
There's no more cheap energy, but there are many available sources: natural gas, coal, wood, for the short term and nuclear for the long term.
When you say Total Collapse, do you mean Mad Max or 1930s?
We are at the apex of two charts: please imagine them.
1) Creation of debt/credit.
2) Peak oil
Let's use the term cheap energy if you wish, but cheap energy is light/sweet crude. NG will not mitigate the backside of oil production. Coal will not mitigate the backside of oil production. This is peak oil.
The debt/credit cycle is past its point of no return. Japan is done. They are dead weight on the world economy. Europe is a dead weight on the world economy. And then there is America. Everyones last hope. Well, America just past the point of no return (100% debt/gdp) and so there goes the Fiat Ponzi system.
Yet the debt/credit system was never real in the first place (hence the term Fiat Ponzi). Gold/oil traded for nothing for at least 40 years (domestically since '33). Now that supply is less for both YoY, the growth graph has peaked, and at the same time as the debt/credit graph. They are like two waves crashing against each other, and we are caught in the middle.
Why do you feel that the availability of more expensive energy sources will not lessen the severity of declining production of cheap oil?
I am not saying there will not be a negative effect, I'm saying that these other energy sources will lessen the blow (mitigate). I fully expect energy prices in North America to catch up with much of the world - $0.50 per Kwh, $10 per gallon gasoline.
With Austerity for the next 20 years, and a 1 percent coupon rate on US Treasuries, they would only need 1 percent of GDP in taxes to cover the interest payments. If they took in 10 percent of GDP in taxes, and spent 2 percent on debt - 1 for interest and 1 for principle reduction, it would be doable; This part I have substantially less faith in politicians to be able to reduce deficit spending in America. Where the Sovereign Debt Bubble ends up, and when, I don't know.
"With Austerity for the next 20 years, and a 1 percent coupon rate on US Treasuries"
So, meaningful austerity in the US is a Social Security retirement age set at 78, the elimination of Medicare A through D (especially D) and, a military sized just big enough to protect the coasts and borders. Assuming for a moment that we could elect more than three politicians that had the stones, that translates into a 10% GDP hit and a real unemployment rate north of 25% for a looooooong time. How, exactly, does a permanent 1% rate happen in that world?
First of all, counting government spending created through borrowed money as part of GDP is kind of BS.
The 1 percent rate is created by the Fed; they issue the bonds, the banks buy them, then the Fed buys them back; its how they have been doing it for the last 2 years more or less.
US taxes 24 percent of GDP; Canada about 32 percent, so America could raise federal taxes 33%, so it covers 80 percent of the current budget, and only need to cut 20 percent of the budget. A 5 percent VAT might be a viable option on the income side. On the cuts side, a 50 percent reduction in the military budget would get you half way there.
When we last went into austerity 1997 - 2007, investment grew, unemployment shrunk, and gdp grew while we paid down debt to gdp from around 68 percent to around 29 percent. I don't understand why you assume austerity means massively rising unemployment.
The Fed can't continue quantitative easing for five more years let alone twenty.
On the one hand you characterize as BS a GDP that includes government spending and then on the other you advocate the evisceration of the real economy and the absorbtion of its productivity by shoving the tax burden to the great white north quadrant of the Laffer Curve; that's rich.
The only employment gains we have seen in the last decade have been through the expansion of government debt. Austerity means shrinking the government and eliminating government jobs which means more unemployment. Raising taxes to pay debt means less money in the economy, less money to buy stuff, less money to pay wages and, more unemployment.
As for your 1997-2007 example ... it's void. In the last 6 decades, we have never even come close to attempting austerity in the US. When it comes it will come because we have run every other option into the ground, including killing the dollar.
Double military budget and conquer the desirable parts of the world, destroy the undesirable and enslave the remainder.
Only way to maintain standatd of living.
IOW, stay the course and full steam ahead.
I'm talking more like Operation Twist than actual QE: running federal surpluses and only using Fed intervention to keep government interest low. You would have higher rates for fed funds rate, deposits at the fed, mortgages, etc.
I reject your claim that the United States is somehow different than every other country in the world. Cutting government spending and paying down the debt causes increased investor confidence, lower unemployment and GDP growth.
So what do you purpose as a solution? complete collapse? default?
gawf! ... how the fuck old are you kid? ... old enough to look up what austerity actually is?
geezus cryst the US has not experienced ANY genuine austerity since at least 1945.
Idiot
Let me know when you're wearing secondhand socks, undies and shoes, if you can still afford them, and eating onion and cabbage soup, three times a week, and weigh about 110lbs wet, and haven't had a steak in 4 years, can't afford the bus, and a bike is way out of the question, and you've begun to exhibit signs of chronic malnutrition as skin lesions from the endless hunger that you can't afford to make go away, and the lack of ability to afford soap.
I'm in Canada. We're going back to austerity again, because of you clowns.
Austerity doesn't mean living in absolute poverty.
http://en.wikipedia.org/wiki/Austerity
and its success:
http://online.wsj.com/article/SB10001424052970204409004577156463828589248.html
Why do people assume mass unemployment, poverty, etc due to cutting government spending? I guess you're not from the school of thought that "government doesn't create jobs".
You want austerity and zirp for twenty years, and you think gas will stay at $10/gal? While we make up BS scenarios, let's elect a unicorn as POTUS.
You don't need ZIRP; you can pump the overnight rate to 5 percent. You only need to issue new bonds to roll over the old ones until the debt is paid off; TBTF buys the new bonds at 1 percent yield and flips them to the Fed.
The big part is reducing the federal budget. I couldn't find US Taxes as percent of GDP for federal government alone; all levels it works out to 24 percent. If half the taxes are federal, then I'm talking about a 15 percent reduction in overall taxes. The big part is about 50 percent cut in government spending.
At a 5 percent cut per year, it would take 10 years just to get to the point where the debt is being paid down, and then 20 years at that budget level, so 30 years total.
So what do you propose, you have some magical way of spending more than you take in taxes, in perpetuity?
ZIRP is the keynesian end game and once ZIRP is entered, the only way out is to restructure, Bitchez!
[...]
The inflation strips the real from your stack
It's too much debt Jack, it's a liquidity trap
You'll never get out of your longs
The bankers don't care, baby, nominally they've won
(apologies to Mr. Springsteen)
ZIRP is "financial repression" in big bold letters; they don't care if you know about it.
Roll the debt and reduce the budget? Um, the debt is the budget. If you jack the rate the interest on the debt would bankrupt the Tes. Rock and a hard place, I know.
The debt is paid by the yield on the bonds, not by the benchmark rate? Either way, Bernanke is going ZIRP to at least 2014 anyways.
The 100 percent debt-to-GDP everyone quotes is for gross debt, right? Canada was at 101.6 percent at peak in 1996; I couldn't find the average interest being paid on the debt at the time, but the benchmark rate averages around 5 percent through the late 90s, so it is possible even with higher yields on the debt.
right now, America is borrowing for 40 percent of its budget. A 33 percent increase in government revenues and 20 percent spending reduction would get the budget balanced; a little more needed to start paying off the debt instead of just rolling it. Manipulating the bond rates to keep interest low optional, but at 100 percent debt to GDP, each percentage point of interest is a percentage point of GDP.
I don't think this is likely, but it is well within the realm of the possible for austerity to work and the debt to be reduced, as Canada did in the past and is in the process of doing once again.
Europe is not the rest of the world. Energy prices are generally cheaper in the rest of the world. Prices are higher in Europe maily due to taxes.
Don't we already have $10 gasoline if you correctly add in the cost of marauding around the middle east to protect supply. Half the military budget ain't cheap
Fuel is higher in Europe because of the taxes on that pay for public health care, etc. Here it all just goes in the pocket of Big Oil.
Peak Oil, lol.
And how is the little slave wage China man going to pay for $10 a gal. gas. So solly, no can do. Americans stop driving at $5. a gallon so it will never be ten dollah a gallon and vehicles still move. I cut my driving in half at $3.50.
Oh but there is. A near endless supply of cheap energy that will make coal, oil, nuclear, solar all obsolete as energy sources. If you do a search of recent U.S. Patents, you can find it.
TESLA, BITCHEZZZ???
Why don't you share your research with us?
Energy is stil cheap when compared in terms to gold the past 10 years. In fact, the prices of energy would have gone down if the currency was not debased. Gold was at $200 in 2002. Oil was around $30. Now gold is $1,600 and oil is $100.
gold up 8x
oil up 3.3x
apples and oranges. gold is the ultimate fall back currency but oil builds the entire economy. our oil price is falsely low and subsidized profoundly by our military. That system is failing as we speak and can not keep up with source decline and demand both accelerating
Not apples and oranges at all. What would be the real price of oil if not for the runaway inflation the past 10 years? I'm not talking about the official BLS stats. Copper was $0.60/lb in 1999 and is now nearly $4.00/lb. It's called inflation. Have you been to the grocery store? Packages are getting smaller while prices keep rising.
Our oil prices are no lower than the prices in the rest of the world. What is oil trading for in Hong Kong and Frankfurt? MY guess is it's the same price over there.
We have half the people claiming that oil companies and traders are propping up the price of oil. Now we have the other half claiming the the price of oil is artificially low.
With the world's economy collapsing, how can demand be accelerating?
it's not collapsing or accellerating equally everywhere. The first world is having an interesting ride down for all sorts of reasons but the rest of the world is coming to the trough with less price history and lots of demand. If our military adventures are not related to oil its pricing and its secure supply what are they for?
" That system is failing as we speak and can not keep up with source decline and demand both accelerating "
Not to mention the rapidly changing political scene in the ME. Enlist and get a free trip to the ME fighting a people fed up with being ripped off.
Total Collapse= Soylent Green?
"as usual, the real 800 pound gorilla was absent from the room: the fact that the whole construct is based on a foundation of essentially-free energy."
---
I haven't listened to the interview yet either, but don't sell Chris Marenson short. He has 3 chapters of his Crash Course devoted to energy:
Part A: Peak Oil
Part B: Energy Budgeting
Part C: Energy And The Economy
I'm so sick of hearing about 'peak oil'.
Venezuela moved ahead of Saudi Arabia in proven reserves this year. I guess that's all old discoveries that are just now being made public. Or it's not Libyan light, sweet crude, so it's irrelevant, right? And the Keystone pipeline? Thank God Obama killed it, even talking about new supplies is mental masturbation, now that peak oil is here.
Here's the bottom line: Talking about impending doom due to 'peak oil' is a species of Malthusian economics. Everyone who said that we'd see mass starvation by now was WRONG, and the same will be true of the 'peak oil' crowd. 'Peak oil' also feeds our current foreign policy enthusiasts - we're doomed unless we take over Libya, Syria, Iraq, Iran, etc. Innovation is irrelevant, even though it's staid every other impending 'resource crisis'. Why don't you peak olilers grab a gun, jam it in your massive blubbering mouths, and pull the trigger? After all, we're all doomed, so we might as well cut to the chase.
Please, someone, reply with the old saw that you can't get infinite growth from a finite system. D U H. The same argument applies to water and oxygen, eventually. Some morons probably said the same thing about peak whale oil, just before we swallowed the Fed. Why not learn to live with the Fed, since peak oil dooms us anyway?
The only thing keeping us down is the insistence of working within the 'statist quo' framework, where everyone who wants to do anything productive has to suck off legions of bureaucrats to get anything done. Rather than simpering and whimpering about peak oil, why not challenge elements of the system which we can easily change, and then see where we are at? Or just kill yourselves. That works too, as it will depress oil demand. Kiss my oily ass, peakers.
buyingsterling, it's good that you mentioned Malthus. The exploitation of oil provided a reprieve from his endgame for a while, but did not invalidate his premis. Actually, oil put humanity on a higher plateau from which to decline; the die-off will be unprecedented in planetary history.
buyingsterling, I'll also spend a moment explaing about Saudi Arabia vs Venezuela. Saudi Arabia has been pumping millions of barrels/day Arabian Light for about 60 years; it was easy and cheap so we used that up first. The huge Venezuelan reserves of sour tar were discovered in the 1930's, but it's expensive to get out of the ground and full of sulfur (EROEI is low single digits). So we saved that crap for later. A big part of why our economic system is failing is that its lifeblood is getting more expensive in real term with every passing day.
Water and oxygen are never consumed. They are constantly used and recyled. Your obvious scientific illiteracy is why you don't understand peak oil, and cling to your "hope and pray" religious thinking. Idiots always think science will ride in like the lone ranger and save them.
I wouldn't say that. I think an adjustment of, say +10 to 15% on interest rates would fix this problem permanently in about 6 months.
Have you considered how much this would send interest payments on the national debt skyrocketing? Try to think of the whole picture.
Optimus, I am glad I saw what may be both ends of the extreme on mending the economy. One said be done over ten years and the other was six months. Fast or slow are the choices? Any others?
Yeah, it might force fiscal discipline among the government and masses
It isn't debt tethering the economy, it's uncontrolled fraud and theft.
The most devastating aspect of central planning is its distortion of value by replacing choice with fiat. As economies become increasingly politicized, uncertain expectancy becomes the norm. Since markets do not determine interest rates and value through the constant rebalancing you mentioned, an economy cannot operate efficiently or with certitude. Maybe this is what you mean by chaotic.
Our children's children will look back at us with disbelief that we were so stupid, arrogant and myopic.
If any make it...
It's likely they won't be smart enough for that, and no one who wants to remain in power will suggest they look into "what happened" because it will just stir up inconvenient questions, which the power trolls won't want asked. The dumb-them-down-ruling-elites-school-system will just roll along as it is, collecting money but essentially baby sitting idiots. Probably the parents will be in FEMA camps...
James-Morrison. I'll take the opposite side of that trade but would you or could you please narrow the timeline into something like say, five years? Do we all die or not in those five years and can I still trade or no?
Ancient civilized cultures made much of showing annual and customary respect to their Ancestors. The children and children's children, and so on, made a place in their hearts and memories to thank those who went before them and prepared their way.
In most countries now, Mammon has taken control but the practice still exists to some degree; mostly in Asia. For Amerika, a truly fallen race and nation, there is no such regard whatsoever.
Our grandchildren will instead curse those who ate up everything before they got there.
Amerika is Babylon the Great; "she who made all the nations drink of the wine of the wrath of her fornication."
you're betting our children won't think we were stupid about energy and debt? They already do
BISPHENOL-A IN EVERYTHING, BITCHEZZZ!!!
If any make it...
Maybe. But more likely, our children's children will note how resilient and strong those who LIVED through the 'teens and into the twentys. They will hear more stories of resilient communities, community energy projects and a renewed spirit of self-sufficiency - just as we don't hear near as many stories of the leadings up to the Great Depression. Instead, we hear of the miles walk in the snow to get to the small school-house. lol
Which is why there will be an avalanche of laws and other restrictive measure which criminalize the individual for making (selfish) economic choices outside the parameters set by the central planners.
Microeconomic Theory, in which businesses operate in a void of profit maximizing with no recognition of the interactions and dependencies of businesses in the economy as a whole, is much more destructive than central planning ever thought about being. Microeconomics, as practiced today, is as wrong headed as the earth is flat myths of the Middle Ages.
The application of Microeconomics is more damaging than Centrally planned government? Worse than Moa's China or Castro's Cuba? Are you sure? By what measure?
I am no expert in Microeconomics but a government being bought to not enforce regulations is called what?
I believe macro economics can better explain why or why not and micro economics explains details. My opinion is both are useful in applying economic brakes or accelerators. Got an axe to grind? Don't lie I will know.
This Mauldin guy didn't say anything correct or important. Martenson's podcasts are usually pretty good. This one wasa waste.
Too much debt is why god made bankruptcy court.
Arrest Bernanke, arrest Corzine, let the Jew bankers go under.
Ze problem, she is solved.
yup, hand the bankers their ticking time-bomb back.... & let them go bankrupt . we'll be better off without these people & their "wealth extraction business model."
Too bad they run the whole system
redpill,
Exactly.
Centrally planned agriculture starved millions to death in Communist Russia and China.
Central banks and crony capitalism are having the same effect on Western economies.
The bailouts, usurpation of bond and shareholder rights, and overall privatized gains with socialized losses leaves little incentive to "plant", to accurately report "crop yields", or to "grow" more than you yourself need to eat.
What band of fools thought this would work long term and how can they not connect the dots?
Astounding.
power corrupts
absulute power corrupts absolutely
The big government idiots will never learn this lesson. They are all too willing to give away personal freedoms and liberty in exchange for false promises of a utopia
The unutopia specter has the same effect when people also give it up and if they don't it's taken anyway. see current events. Redpill's point is excellent. Why wouldn't the best systems emulate nature where ever competing, decentralized balancing and checking systems create redundancy, resiliency and health
People should always strive for better themselves and the world around them. Believing the government can create a perfect world for everyone is the ultimate naivety.
My point is, everytime the government has too much power, millions of innocent people end up slaughtered. It doesn't matter if it's left-wing or right-wing. We have example after example from Nazi Germany, USSR, North Korea, Cambodia. The leaders always promised to create a perfect society. The result was always misery and death
Why is that? Those who rise to power are rarely the nice guys.
I think we're agreeing
The purpose of a System is what it does.
Black Swan of Cairo
"if you think gold is over-priced now...wait till prices fall." I would argue that the banksters truly were the big winners in the Great Depression...but we had no Federal Government to speak of then. Not true now...and of course there is no comparing "gangsters" when you're up against the government. As such "Yes We Can" has a whole new meaning when "over-laying debt upon debt" relative to "hard choices" and "the GOVERNMENT." And this is where i disagree certainly with John but also pretty much with everyone else. the GOVERNMENT is "house money"...and the assumption must be...and now we know it's true just by looking at rates..."the house always wins." simply put there is no precedent for the USA's current foreign policy. NONE. The fact that we are LOSING does not equal less war. It means MORE. I can solve the problem of massive underemployment and crime in the USA with a stroke of the pen...and so can the current occupant of the White House...and should there be a next so can the next. Obviously this Administration has made it policy to dramatically reduce head count (100,000 is the number now) in the infantry. Just as obviously this Adminstration should be doing the exact opposite--in order to "cover the withdrawal" (a policy i happen to agree with.) Unfortunately the entirety of the Federal Government has ignored Senator McCain (there is no better expert) and i take it as a simple axiom in security policy "nature abhors a vacuum" and though we do abandon ship for political reasons...the result will be the exact opposite of what the politician seeks IN THIS INSTANCE.
http://www.youtube.com/watch?feature=player_detailpage&v=7S_oso_J6dE
Nice vid.
didn't you hear? the bankers, and the government went to vegas, and got married.
and then divorced and government to pay full spousal support to bankers
dv:
"exact opposite?" How sure are you about that?
- Ned
Whatever happens wars are one fairly quick way to reduce populations. That fact might please central planners and governments with too many dependants.
You really are a dummy if you think one person can solve any country's problems.
John McCain is an expert on being a senile and corrupt old fool
McCain farts dust.
McCain is a globalist fuck who will try to disarm us - and not with his skeletor smile...
Zombie Banking System is also discussed by FT ...good explanation:
http://www.ftense.com/2012/01/us-money-supply-and-credit-running-on.html
Reckon he was capable of learning from his mistakes? The error was 1929, the theory was in the 30's. Can you expalin your problem with the theroy?
I agree it's a tad unrealistic to expect a human being in their life not to make some mistakes, especially when predicting the future.
Please, no hard decisions! I speak for all when I say that a nice, slow, debaucherous decline would be better and way more fun.
Yes, a couple of sucky decades as we rebalance would be preferable to a sudden collapse. But the way global finances are intertwined, I don't see that as a possiblilty. Its gonna be a world-wide financial and monetary collapse, folks.
I also believe that s slow unwind would leave many of the same a-holes we have now in power.
A collapse without resetting property would leave the same ass holes in power any way.
The elite don't just own financials ... they own most of everything. The financials which will go broke when the derivative/debt bubble collapses are all insulated from their real holdings, the bubble will not drag them down. If the actual collapse is deflationary the opposite will happen in fact, they will pick up the last couple of scraps they don't already own ... because if they don't own something outright, it's most likely collateral to a loan they own.
An inflationary collapse is preferable ... it won't really remove their power either, but at least everyone else will be able to hang on to the scraps they have.
There are two ways to remove the "a-holes" from power, remove their wealth or remove their heads ... taxation or the guillotine, take your pick.
I agree...
That disturbing thing about this article is that it does not talk about the effects that cheap credit has on distorting productive business. For a number of years, it have been much more profitable to move money around than actually do productive business. Ultimately, this does nothing by create a small number of very wealthy individuals how lower the living standards of everyone else. Unless interest rates are allowed to rise, these players will continue to leach off of the system.
I see the two largest obstacles as follows:
One, they own the military and through the unions probably much of law enforcement.
Two, laws are nor applied uniformly.
And the schools/teachers!
How do you think they could sell the crap they're selling were it not for a dumbed-down population where victory and accomplishment has been replaced with participation.
No doubt.
s2Man:
I think so too.
Agreed, and quicker than the masses can even imagine. How anyone can honestly think that this quagmire gets managed is beyond me.
"There are two main schools of thought on what may happen next with Europe’s debt crisis. Some well-informed people strongly believe that everything will work out just fine, and without much of an economic slowdown. Other, equally well-informed people believe just as strongly that the euro area will break apart in a traumatic manner. When it comes to predicting Europe’s future, not many people occupy the middle ground."
http://www.bloomberg.com/news/2012-01-23/europe-debt-crisis-still-likely...
What is the solution?
Beans, Bullets, and Bullion.
And Beer.
Just don't get them mixed up...
I just heard about this thing called shelf life. All the beer and Doritos I buried in the backyard for Y2K may have gone bad...
12-year-old Doritos may well prove to be a lethal dose of nacho cheesiness.
...but we all gotta go sometime.
I'm quite sure that the Doritos' shelf life is second only to that of bullion. After all, you've all heard of the 5 year old big mac that still looks brand spanking new...
Edit: let it be said that I wrote this reply before having read below comment. I guess this should double the weight of it...
Nice. Dude, don't forget the Mountain Dew!
Just go buy McDonalds burgers - guaranteed to Never mold or rot........
Well...not outside the stomach.
Hahahaaha. Can't stop laughing....you made my day!
Self-reliance, solidarity and sagacity.
There is not solution. This isn't a problem, this is a predicament. Here is a nice video from Chris Marteson, basically saying the same: http://www.goldmoney.com/video/martenson-presentation.html -
The reason there's not solution... We use a system of credit/debt money to facilitate our economic interaction. Virtually all "money" in the system is loaned into existence with interest that begins to accumulate at its creation. Only the interest that is due doesn't exist. So more "money" i.e. debt must be created. At all times, aggregate debt must expand. When it stops, you get cascading defaults, deflationary depression and the destruction of the currency. - This is where we are and what we have coming.
Which (referencing the above comment by KK) is why I am wondering how someone like Maudlin can go along thinking about solutions without ever questioning the construct of the monetary system itself??? Is it too much to ask one of these experts to take a look at this fractional reserve, debt based, central banking model and question whether this is actually the best we can do as a monetary system? If we are looking for solutions then everything should be on the table to include scrapping the whole system and starting fresh with something that actually works longer than 100 years.
What do you propose as an alternative system? Before you say Gold, keep in mind:
1.) International Trade - particularly prolonged trade deficits
2.) Wars
3.) Retirement
You can go back to gold, but you have to have a jubilee first. See my post below.
I don't know why you associate gold redeemable money with trade deficits, wars and some kind of retirement problem. Perhaps you could explain.
I second that... Matt what are you talking about?
These are the problems I see with using Gold (or paper notes redeemable for gold) as a currency:
so USA goes back to using Gold as a currency. People still go to Wal-Mart and buy stuff, so the gold goes to China in exchange for cheap stuff. Over time, USA has less and less gold.
If you have gold as a currency, what do you do if you are fighting a major war and run out of gold? Do you just stop fighting until next years taxes come in?
Retirement: If you no longer have government bonds and a system backed by debt, what do people do to save for retirement? hoard gold? If so, when you have a demographic wave like the baby boomers, they will pile up gold over their lives, causing price deflation as there is less and less money in the system. Then when they retire, they spend the money, causing more and more money to be loose in the system, causing prices to go up rapidly.
Well, if the gold starts to leach out to China due to Walmart, the economy will get the feedback and adjust. Or it won't, and we go broke, which is as it should be. As it is now, the whole feedback loop is disconnected, which is why the situation is like it is now in the first place.
War? Well, if war makes you go broke maybe you won't embark upon it so recklessly. This is a good thing.
Retirement? People "hoard" gold. Gold becomes more "dear". Other people find more gold, diminishing the deflationary effect of the gold hoarders. What is the alternative? Money that promises something that never delivers? That's what we have now. It's a disaster.
Gold redeemable money isn't a panacea. But it's sane, unlike the current regime.
See,e.g.
http://strikelawyer.wordpress.com/2010/12/11/money-iii/
Open the mint to gold and silver. Have all prices in fiat dollars and grains of silver and gold. Gresham's law will work in reverse, over time, and eventually we will have sound money. People won't give up actual value to get Chinese plastics. Fort Nix doesn't have to hold a grain of gold for this to work.
Great question and logical answer.
Chubbar, it's simple; Mauldin is committed to orthodoxy. He moves within the circle of White Amerikan Xtian Orthodoxy. He cannot, will not express himself outside those parameters.
By Orthodoxy I mean, whatever keeps the rails on and keeps the wagons in line. Whatever was known before and is, ultimately agreed upon by lizard brain instinct.
It's a subtle form of herd instinct that makes human sociability and cooperation possible. Only god help you if you take another direction.
This Maudlin guy seems like a shill with endless chatter about where he is flying off next to dine with in the know bankers ,investors and like minded intellectual writers. You are correct that he never addresses or mentions the kernel of the issue which is fractional reserve banking and the case for gold in a monetary system.
There IS a solution, but it's legal, not economic:
http://strikelawyer.wordpress.com/2011/12/27/saving-the-world-revised-ed...
http://strikelawyer.wordpress.com/2011/12/27/saving-the-world-revised-ed...
http://strikelawyer.wordpress.com/2011/12/31/brief-history-of-jubilees/
Professor's England Dan and John Ford Coley, of the grooved vinyl institute, state clearly that love is the answer
That is all for now, carry on...
Too late for solutions walkure.
Ya. Too bad Walkure, may as well roll over and kibby. We are all stoopid are we Dizzyfingers?
Walkure. Yes, the American cowboys have a plan. Coming very soon. Piss off Dizzy coward. Go whimper and curl up like a cur, some of us are busy.
The Japan story is now officially overdone.
It's time to face that your daddy abused you.
my daddy never touched me, but my Uncle sure did
Grandma get off my lap - you're crushing my smokes!
With most of the world’s major economies as well as the financial system bankrupt, there is only one solution that can save the world economy. Like in the Greek tragedies, Deus ex Machina is now the only way that the world can avoid a total economic collapse. This would involve God being lowered down onto the world stage and miraculously saving the plot.
For those few who believe in this, may God bless them. But since this is a very unlikely solution most people will instead rely on governments and central banks to save us. But how can anyone possibly believe that totally incompetent and clueless politicians and central bankers could solve anything. They created the problem in the first place and are therefore totally unsuitable to play the role of Deus. The main objective of governments is to stay in power and thus to buy votes. Therefore they are incapable of taking the right decisions.
More:
http://www.mmnews.de/index.php/english-news/9031-deus-ex-machina
Disclosure-ex-machina!
5 or 6 years of a slow growing economy?
Hell we're Already there.....
The economy is NEVER coming back if the vampires and predators continue to rule the economy and governing apparatus - they will continue to suck the average American that MAKES things dry.
Banking used to be a means to an end and was around 10% of the economy - now banking is around 40% of GDP.... That is false output .... It doesn't really exist except in a kleptocracy....
So our GDP is actually around 12 trillion if ot less, not the 15 trillion reported - we're living the reality on Main Street but the jackals on Wall Street refuse to end their thieving ways so We the People Are SCREWED.
We tarred and feathered them during the revolution.....the ruskies lined them up against the wall..... The allied forces of ww2 hung their asses from the nearest light pole and the Rep Eisenhower taxed them at 90%....
the choice is theirs but due to their unending, insane greed I'm thinking they're pushing for the Allied method.
http://www.custermen.com/ItalyWW2/ILDUCE/Mussolini.htm
"The economy is NEVER coming back if the vampires and predators continue to rule the economy and governing apparatus - they will continue to suck the average American that MAKES things dry."
That is the essence of the problem and it will never come back. The Amerikan sheeple have leeches arrayed upon their necks and yet they are told, again and again, that they are not there.
They will adjust. Eventual enslavement is right on target.
The Chinee say our actual GDP is about $5 trillion. Since official 'GDP' includes government spending, financials (wealth shuffling) and all of the billions paid to accountants to figure out our taxes for us (not to mention lawyer leeches), they're probably about right.
Don't forget medical.
Nothing much new being said here .....slow day?
Bearish posts on ZeroHedge with a long dated time horizon are an indicator of an bull market. They aren't wrong, they just aren't today.
Yeah, but these days it feels like a bull market lasts for weeks, a month if we're lucky... with every rubber band stretched to breaking point, 6 months away is long term enough!
4 years of bearish posts and collapse talk are getting to be old news.
The new news for me is Mr. Market pushing the NDX last week to 11 year highs, and the emerging possibility that companies that can survive 10 more years of credit contraction and still pay dividends (like gold companies during the 1930s) or maintain cash flow for cap-ex during the prolonged slow motion crash, may be rewarded with upward multiple revisions and higher equity prices.
Just a crazy alternate view, but if the other equity indices follow suit to 1 year, 4 year and 11 year recovery highs, maybe there's more to it?
So if they double the monetary base again, we're all saved! The stock markets will double, proving all the naysayers wrong, right?
Having arrived in recent years (or earlier) at unpayable debt levels means that what "they" do to the monetary base no longer matters: down the corrupt kick-the-can road, the final credit/trade/commerce/bank collapse is inevitable.
The issue is what happens in the meantime, and my hypothesis, that assumes an ongoing 10 year credit contraction, is that surviving companies that can maintain dividends, or have cash-flow to fund further tech growth thru cap-ex, will be given higher multiples of EPS or sales.
As the collapse enfolds, the revenues and net of the majority of companies declines, but increasing revs and net of the companies in leading sectors is gradually awarded higher price multiples of EPS and revenues, cap rates change, and higher prices are awarded to equities in previously unrecognized sectors, such as Facebook and other social network services.
Maybe it's "Be careful what you pray for...": You get your answer, but not in the form you envisioned, forcing you to react to new conditions and position yourself for the next most likely development in the ongoing, unforesable, fiat-money, federal credit-binge theatrics.
Mauldin is a pompous, name-dropping, self-promoting windbag.
As usual, he does nothing here but state the obvious with an air of authority.
Seconded. I wish I could piss as easily as he speaks. No wiser at the end of the interview than at the beginning. Maybe he is related to Sol Sanders.
I wish I could piss as easily as he speaks....
Try Flomax.
When you ride down the Pacific coast highway in a convertible full of old men, are you the one who always has to stop and piss (much to your chagrin)? If so, flomax might be right for you. Stop worrying, and start living!
Right on Bam. He loves to sayy how he has faith in politicians to eventually make the right decisions because he had lunch with senator douchebag. And senator douchebag is aware of the problems. And senaator douchebag spoke with senator colon cleanse who also knows the gravity of the situation.....righhhhht mauldin, righhhhhtt...
Agreed he is a pompous ass. He just wrote an article saying the Fed was doing a good job under difficult circumstances and that they worked very hard researching and staying in touch with business. He should fuck off for another permanent holiday to Italy.
Screw this fathead.
“...we will be forced to set priorities in a way that has been foreign to our society for over a generation.”
The setting of priorities has already been accomplished. And the selection of winners and losers has been made. Bankers are the winners. Taxpayers who played by the rules are the losers. Many have been given no choice but to suffer the “priorities” of the private cartel known as the Federal Reserve.
Example: Letter to the Editor in this morning’s San Francisco Chronicle:
“Federal Reserve chair Ben Bernanke drove another nail into the coffin of retirees living on fixed incomes when he declared his intention to keep short-term interest rates near zero through 2014. As an octogenarian, i am speaking for a generation who did everything right and now are being thrown under the bus. Please remember that we do not have any choice on a future and cannot invest for the long term. Pulling the rug out from under us amounts to a death knell. Thanks, Ben.”
Barbara Krings Carmichael, Sacramento County (California)
"in a way that has been foreign to our society for over a generation."
I thing "over" is an understatement. How about "for over 50 years."? Iwas listening to NPR and they were talking about the economic situation in Nebraska. Funny there is little impact so far on the economy there. No housing crisis and land on the upswing in price to feed the world's mushrooming population. Farmers have not been taking out home equity loans to go on vacations or buy their girlfriends flashy baubles. If Nebraskans have a particularly profitable year they will pay down their mortgages, spruce up the place or buy better equipment.
I know, you are thinking this is un-American! Just move along you debt pigs on the way to the slaughter house.
If you work for yourself, you can always invest in your own productivity. If you work for someone else, you'll probably spend on consumption.
On the other hand Nebraskans have been the beneficiaries of government handouts and mandates for awhile now.
They call them "Cornheads" because of the football team they're known for, the Nebraska Cornhuskers.
They grow a lot of corn.
Meanwhile, the federal government has been subsidizing the price of ethanol (made from corn), and mandating that all motor fuel have at least 10% ethanol. They're also talking about raising those requirements to 15% over the load objections of many consumers.
The government has also been pumping quite a bit of research money into universities, like the University of Nebraska, for biofuel research.
Corn prices have gone through the roof. Much of it courtesy of federal intervention.
That boom in home and land prices may be good at the moment for current farmers, but could come back to bite them if the bubble bursts.