Before you trash me in the comments, hear me out.
It started off with Ray Dalio’s “beautiful deleveraging”, which inspired this post.
Since the financial crisis, the Fed has increased its balance sheet from $900 billion to $2.9 trillion (red line in below chart). The difference is $2 trillion (or 13% of GDP).
When the asset side of the Fed’s balance sheet grows, so must liabilities. The Fed’s liabilities consist mostly of money in circulation. So we can assume that $2 trillion in additional money has been pumped into the economy.
Or has it?
When the Fed buys bonds, it does so from “Primary Dealers” (21 global financial institutions). They hand over the bonds and get a corresponding credit on their account with the Fed. The Primary Dealers might then purchase some other securities with that money (which then gets credited to another bank’s account with the Fed).
And that’s where the buck stops. Three quarters of the money “printed” never make it into the economy. They remain as excess reserves (reserves in excess of banks’ minimum reserve requirements, blue line) in accounts at the Fed.
Hence, of $2 trillion additional money, only $500 billion (yellow line) ended up outside the Fed. Why? Banks could use those reserves for lending, but there is no demand for additional loans (from customers with sufficient debt bearing capabilities).
So if the money can’t find its way out of the Fed – how is money created then? What is money?
To understand, we have to take the example of buying a car.
In the US, literally nobody purchases a car with money form a savings account. The ability to purchase a car depends on the availability of credit. No credit, no car.
Credit availability depends on issuance of debt. Take a look at debt outstanding by ABS (asset-backed securities) issuers over the last 30 years:
ABS Credit market debt outstanding fell from $4.5 trillion at the peak in April 2007 to $2 trillion. That’s a decline of $2.5 trillion. This is money not available for purchases. It dwarfs the $500 billion pumped into the economy by the Fed.
Debt is money. The amount of debt outstanding controls the amount of money available for purchases, and hence for the size of the economy.
In addition ABS issuers there is debt by households, non-financial and financial corporations as well as the government sector. By adding them up you get the big picture: the total credit market debt outstanding (TCMDO):
TCMDO is the blue line, on a log scale. The red line is the change in the annual growth rate of TCMDO, measured from the prior post-recession peak growth rate. You will notice that every recession over the last 60 years, with the exception of 1970, coincides with a slowing of the growth rate by at least 2%-points. The red triangle depicts the 1987 crash, which followed a period of serious slowing in the rate of TCMDO growth.
Up until 2009, total credit market debt outstanding has never declined. The ratio of TCMDO to GDP continued higher and higher, at accelerating speed:
Has debt-to-GDP, or the debt-bearing capability of the US economy, hit a ceiling?
Look at how little additional GDP (blue area, below) we obtained in comparison to ever increasing amounts of additional debt (red area):
The dotted black line is the marginal utility of debt (right-hand scale). Think of it like this: how much additional GDP do you get out of one dollar of additional debt (in %). In 1992, for example, you get $0.30 in additional GDP for every additional dollar of debt.
Problem: this marginal utility of debt has trended lower and lower over the years, and actually reached zero in 2009.
Meaning: you can add as much debt as you want, and it still won’t give you any additional GDP.
To repeat: no amount of additional debt seems to be able to get economic growth going again.
That is a dramatic revelation. We might have reached the maximum debt-bearing capability of the economy. If true, no growth is possible unless debt-to-GDP levels fell back to sustainable levels (in order to restart the debt cycle). This could take years.
At this point, the only way to reset the debt cycle is to get rid of debt.
Ray Dalio correctly describes the three options available:
1. Austerity: this would be painful and take quite some time (the Europeans are going down this path)
2. Restructuring: requires write-downs and losses for bond investors (which are not being allowed to happen for fear of systemic risk)
3. Printing money: Inflation. Better yet: hyper-inflation. You have to destroy the value of debt fast enough before debt service costs, due to rising interest rates, drive the government into insolvency.
In the US, (1) and (2) are not happening. That leaves (3).
As shown above, the amounts needed for the Fed to be able to create inflation are much, much higher than what we have seen so far. And it is not guaranteed to work. Destroying the trust in the value of a fiat currency is a dangerous experiment with mostly adverse consequences.
@ Crash. You keep repeating this mantra that Natural Gas can't do the work. There are MANY American companies introducing Long Haul Natural Gas Powered Trucks.
I know you think it's impossible but IT IS POSSIBLE.
Here's just one which already exists. Search for long haul natural gas trucks and you'll find plenty more due to come online very soon.
http://seekingalpha.com/article/522741-big-trucks-lead-use-of-natural-gas-as-a-transportation-fuel
http://www.bloomberg.com/news/2012-02-29/trucks-run-on-natural-gas-in-pickens-clean-energy-drive.html
http://press.ihs.com/press-release/energy-power/natural-gas-vehicles-poised-penetrate-us-long-haul-trucking-fleet-ihs-cer
Yes, trucks and their refrigeration units can run on natural gas ... some already do, you need about 5 times as much volume for fuel tank for the same distance but that still wouldn't make a dent in the total carrying capacity of a truck. At slightly reduced efficiency you can also make diesel any way (it all starts with carbon monoxide, from there making methane is easiest ... but more complex hydrocarbons possible, just like Hitler did).
The energy balance of solar panels (or solar thermal electricity plants) is easily positive and if we act now we still have access enough oil to construct the new energy infrastructure without having to sacrifice too much consumption in the time before we actually get net energy out of the project. How are BTUs relevant?
Marco, I will discuss your post point by point,
"are within an order of magnitude of cost and efficiency necessary to actually undercut oil prices and I don't really see any fundamental problem with getting to that point." Wow, what a crazy statement! I'm guessing that you've been confused by the fact that computing speed has increased by an order of magnitude several times in the last 60 years. Pushing electrons around is not the same as conjuring up resources in the real world. The fundamental problem is that the world is already extracting reources (including the energy needed to fabricate photovoltaics) at a rate that cannot be much increased.
"With a moonshot type redirection of the economy the US could do it within a decade IMO." Please think things through before you write. The US has no political will to make that kind of sacrifice (as I recall, the moon landing program consumed about 5% of GDP for YEARS). The American public has been sold propaganda to the effect that no such effort is required. Further, the moon landing program was conducted at the pinnacle of American prosperity, before US internal oil production peaked and started the US on the road to ballance-of-payment ruin. Finally, what part of "capital impared" don't you understand? The US gov't is already running a 1.5 trillion dollar annual deficit, where will they find another trillion a year to throw at your project? The US has offshored much of its manufacturing and is a massive oil importer; it no longer has a productive surplus to devote to a moonlanding-scale project.
"Of course the capacity for growth is still constrained by other things, we will still need much better recycling, population stability or decline and an political/economic system which can survive without continually increasing debt ... " Ok, now a whole list of additional conditions that there is NO WAY will ever be met! For future refernce, on this site we use a shorthand to refer a list of prerequisits that will never be met: "when unicorns shit skittles".
Here's the staight story: in the early months of Bush Jr's first term, Cheney chaired an energy strategy meeting, the minutes of which he and his sucessor have refused to release. They looked at all the options, and decided on one: kill as many people as necessary to retain access on favorable terms to the world's remaining oil resources. Any bullshit you hear/read about "bringing freedom" to Iraq, Libya, and Iran is just that, bullshit.
Make your alternative arrangements personally, the goobermint ainta gonna do it for you!
Pushing electrons around is what a PV panel does too :p Their cost per Watt is on it's own exponential curve too, the exponent is only half that of Moore's law, but close enough.
Good analysis. Would be nice to see inflation numbers and real value of GDP and debt. Divergence first visible in late 70s, starts to get better in late 80s. Time to stop living beyond our means was late 80s or 90s. Notice reappearance of derangement in late 90s.
Great post.
"We might have reached the maximum debt-bearing capability of the economy. If true, no growth is possible unless debt-to-GDP levels fell back to sustainable levels (in order to restart the debt cycle). This could take years."
We have hit the wall, we are in a Biflationary Depression. GDP=M*V. For a constant REAL GDP, if M goes up you'd expect inflation, but everyone knows its all a Ponzi, so what also happens is V crashes because real credit collapses. In other words, the Fed is pushing on a string, it's a big fucking limp dick.
This should be obvious to anyone who knows a little physics. If the fed could create prosperity by tapping extra zeros on a keyboard, it would have created a perpetual motion machine. No can do.
Biflationary Depression. http:www.futurnamics.com/biflation.php
It's called stagflation.
To bring the problem to the point:
The banks don't need more money to lend. The customers need more to spend.
And stop policing the shit out of the American people!
What country in the world can assemble 80-100,000 people every Saturday and Sunday from September through November for Tailgating and some football. The American people are peacful. It's this psycho sado masochistic police state that's fucking everything up.
Would be nice to see George Soros who saw the same crap first hand stand up against it and say cut this shit out right now! I've talked with people who went through the nazi scourge absolutely horrendous!! End the nazi shit now!
It doesn't matter what effect debt has on the U.S. economy so long as the illuminati get wealthier and gain more power. That is the criteria for all Fed actions.
Isn't it time we all became Iceland?
My trawler is in the shop.
No borrowers to convert 'reserves' into spending money today, no borrowers tomorrow either. At some point the lending becomes irrelevant (and the lenders, fools).
There is no argument (it is self-undermining), no inflation either. It presumes that creditors won't understand what is underway and will do nothing to defend their interests.
Most likely is systemic unraveling ... it's already underway. The cost of defending against it is greater than what the unraveling itself costs. Diminished marginal utility ...!
This morning, I worked up a Paul Krugman turd and flushed the toilet. I'm still spending money..
I take it, they have finally published first MDB article, as he was not content with comments only?
There is only one flaw in the theory:
"Debt is money"
Debt is promise of money, but it is not money.
When debt is created from "thing air" it remains "thin air" until paid. "Debt is money" is strongly subjective to who is the borrower.
If you give someone $100 (money) and someone does not pay (null, void, zero) you back (declares bankruptcy), how that debt would be considered as money?
1. If US defaults, Chinese will be holding worthless paper - Debt is not money
2. If US prints $1,000Trl Chinese will still hold worthless paper - Debt is not money
3. If US goes into austerity Chinese eventually will hold "good" paper - Debt is money
When people use the term "Debt is money" what is meant is that funny created out of air credit functions as money.
A freshly created bank "loan" of 25k purchases a car just as easily as 25k in cash.
That is what is meant when people use the term "Debt is money."
Sure China is taking a risk holding USTs, but it ain't like they can be zero valued overnight, as their slave manufactured goods are sort of critical to the functioning of the USSA.
pods
I'll pit our wage slave manufactured goods against China's wage slave manufactured goods any day.
Increasing debts on any level are nothing more than a claim on future income and profits. At some point, and perhaps we have arrived there, income and profits cannot be used to sustain growth in the economy. As a country, our debts, current and foreseeable, already lay claim to at least 7-10 years of GDP. As we increase our debts, we suck more and more future dollars into the vacuum of space; thus they are not available to fund current expansion and growth. The dollars created by the FED are indeed worth less and less.
When labor plays football with capital, labor has to play on its knees, spot capital a big lead, and skew the rules in capital's favor, just to make a game of it...
when time comes, ac reconnection, interest on legacy capital will be jacked and stimulus will be fed to new labor income...
think about where you want to build a home for your heart...
interesting though unrelated. I went looking for articles on backwardation this morning and found Tyler's post on Goldman's recommendation to short May13 Wheat and buy May13 Corn: http://www.zerohedge.com/news/goldman-enters-corn-trade
The spread closed that day at -117.19. It reached a high close of -67.12, for a gain of $50x(117.19-67.12) = $2,503.50
Friday's close of this spread is -110.81 for a gain of 6.38*50 = $319.
Doing the opposite would have caused some pain, but may still work out to be a profitable trade. I don't recall seeing a follow-up to that post so if Goldman advised their clients to close that trade at its high point, that would certainly be interesting. If the spread continues on its current trend then perhaps we can get a follow-up from Tyler once this trade goes negative.
Come on! We've got some economic 101 candidates here. In some ways, the statement is untrue. What we're doing is offering free debt with no strings. In this way, of course marginal utility is net zero.
But if we were running this "company"? We'd demand that any debt be used to stimulate R&D, build productive output and protect intangible rights.
Since We've APPL'd all of our abilities and sercrets and know-how to FoxCon, of course yes. We're cooked.
This and other articles in a similar vein do a great job pointing out that what we're doing isn't going to fix the problem we all see. I think it's pretty clear that total credit market debt outstanding (TCMDO) has gotten where we've hit the point of debt saturation. Due to other factors like stagnant incomes, the lack of new continents to pillage, the lack of a new continent full of people who can afford to buy refrigerators; we can't earn the money needed to pay down all that debt at interest.
The Fed's tactic of creating T-Bonds (etc.) to create digital money, and then giving it to the banks iin return for worthless instruments is not going to help that problem, as this author and others point out, because all the money never gets into the real economy. It sits on the balance sheets of the big banks, to make it look like they have reserves.
So is this unknown to the Fed and the big banks? I don't think so. I don't think they're that stupid. I think they know perfectly well that this money isn't going to "fix" the economy, because I don't think that's their goal.
If their goal were to "fix" the US economy, the obvious thing to do is to zero out most of the TCMDO, because it's unpayable anyway. Take the $12 trillion someone said we've run through the banks one way and another since 2008, and instead write a check to every man, woman and child in America for $40,000. A family of 4 gets $160,000. Most people would pay off all their credit cards, student loans, and make a big dent in their mortgage with that money, so it all goes right back to the banks anyway. Some people would spend it on hookers and blow, but the hookers and drug dealers have debts to pay off, too. And some people would just waste it. But still; monstrous amounts of TCMDO get paid off, rendering the rest of it more likely to be paid off eventually.
That's a radical approach, but it's one nobody at all proposed, even facetiously.
So that tells me the point of all of this has never been to "fix" the economy.
If "fixing" the economy was never the point, what was? I don't know, but I can guess. Knowing these bastards, I would guess the point was to more or less merge the balance sheets of the government and the banks; not to nationalize the banks but to privatize the government, or better still, to turn the government into the "bad bank" of last resort; a sinkhole for all the worthless debt instruments. A sinkhole with no bottom, because government has the power to tax. So there's no end to the amount of worthless debt instruments that can be run through government; it's an endless source of revenue, in an "addition by subtraction" way, for the banks. This way, the TCMDO never is reduced, and since they all know it can't be repaid anyway, the principal is shifted onto the government, while the interest and fees remain to be farmed for as long as possible, until the sheep run out of fleece to shear. Then the sheep are skinned. But that doesn't happen until at least next quarter's bonuses are distributed, so we don't care anyway. Besides, money is abstract now, so we'll change the rules and do something else the next time the fact that TCMDO is still unpayable becomes too obvious to ignore.
I don't think they're worried about inflation, since the money they're printing isn't going to get into general circulation anyway. They won't allow inflation to get to the point where that TCMDO loses its value to them--not as debt that will be repaid, since it won't be, but as a license to continue to skim off whatever there is to be skimmed off in the economy. Since it can't be repaid, they also can repossess whatever they want, whenever they want to.
They're not trying to solve an financial economic problem, because in their eyes, there isn't one. This is the situation they've been working to create in the first place. They might as well farm us for energy, like in "The Matrix" movies.
Deflation or hyperinflation? According to Gonzalo Lira,
http://gonzalolira.blogspot.com/2010/08/how-hyperinflation-will-happen.html
we'll have both at the same time. People will be desperate to sell assets for money (deflation), but no one will think of Ben's toilet paper as "money", and they'll be dumping that too (hyperinflation).
There are no unfilled preconditions for hyperinflation to happen. There does not need to be an uptick in the economy, nor do banks have to start lending. Merely increasing EBT allotments to keep up with rising food prices could spark a hyperinflationary spiral. Can't let those poor children starve, you see.
At some point, stores and banks will start offering "gold accounts" that don't lose value day by day. If the government bans this, all commerce will stop until the ban is
lifted. Even threatening to execute business owners will not persuade them to operate at a loss:
http://mises.org/daily/5886/Withholding-Consent-from-the-Khan
http://www.chinasmack.com/2012/pictures/shenyang-shops-close-en-masse-fe...
"................ Some people would spend it on hookers and blow, but the hookers and drug dealers have debts to pay off, too. And some people would just waste it. "
Yep. I spend all MY money on booze, gambling and women. THE REST, I WASTE!
The Fed probably cannot save the economy at this point but they can (with the help of their friends overseas) probably get us through the election. Vote for the Presidential candidate you hate the most. That way, he and his party get blamed for what's coming.
No body wants to address what we really need and that is to give the power to create Money back to Congress without interest.
Cancle all interest on the Debt Owned by the Federal Reserve and cancle any Dividends paid to private Bankers. Isn't it rediculous on its face that the Treasury issues Debt at Interest and the Federal Reserve buys it all up and then pays it out as a Dividend to the Private Bankers?
I believe that every penny that people pay in Income Tax goes to the Interest on the Debt. Which in turn goes to the Private Bankers that Own the Federal Reserve. Not one penny goes to pay the National Debt or to provide Money to the Government to pay for services.
3. Printing money: Inflation. Better yet: hyper-inflation. You have to destroy the value of debt fast enough before debt service costs, due to rising interest rates, drive the government into insolvency.
The hyperinflaintion is what Benny Bernanke, Dudley and Yellen are gambling against. When it occurs they'll be happy the stock market is up though.
Beranake, and the government are debt junkies. More and more debt until an overdoes occurs.
BREAKING: Leading Expert – LIBOR Scandal started by Secrretive US Government Agency to keep interest rates low to keep dollar as reserve currency
Eric deCarbonnel's
http://www.youtube.com/watch?v=2ssrcD5GdPQ
The ESF and Its History_Part 1
The ESF is an extremely important organization!
I believe that it certainly had a hand in the LIBOR rigging, since I believe the ESF acts like a secret board of directors behind all the biggest banks.
P.S. Given the intelligent software placing the ads, I do not know if you see what I see, but when I click on your link, then, covering that story is a RBC Royal Bank advertizing. RBC is Canada's biggest, and most internationalized bank. RBC is one of the 16 banks that were overt players in setting the LIBOR.
Thus, the irony of clicking on alternative news media, only to have the big boys' ads pop up with the articles. I am finding that quite a lot lately. It reminds me of watching various other documentaries, like things on Peak Oil, spliced in with advertizing to buy automobiles. The fundamental problem is that the people engaged in these frauds make billions and billions of dollars, while those against them are going broke. That is one of the main reasons why these frauds can only end through the madness of final failure from too much "success."
Hey Ben....about this little QE thing: GO BIG, as in MASSIVE or stay home!
No half-measures please.
I always find it amusing when someone goes into some "in depth" analysis for a conclusion but contradicts and invalids the analysis and the article itself.
From article: "And that’s where the buck stops. Three quarters of the money “printed” never make it into the economy. They remain as excess reserves (reserves in excess of banks’ minimum reserve requirements, blue line) in accounts at the Fed."
---
Thus the premise of the Fed not printing enough makes no sense. There is a reason the money isn't making it to the economy and if the author investigates that, then he'll come to some truly thoughtful and astounding conclusions.
Consider all the money that has been created. We are talking $16 tillion plus and that doesn't include trillions in off book numbers. If that money were in circulation, which the author admits isn't, we'd have hyperinflation out the waazoo already. Yea, I know many prices are up, but considering the amount of money created, prices are low compared to what has been done monetarily.
Ben is paying Interest On Reserves (IOR) that gives banks an incentive to keep the printed money stuck in their reserve accounts. He is doing this deliberately in order to prevent uncontrolled inflation. Ben wants a slow, controlled deleveraging that preserves the existing banking system. Consider what would happen if the Fed stopped paying IOR, or even charged negative IOR. All banks would be working overtime to dump their excess reserves as fast as they could. The would buy assets or lend more money. Any financial asset they purchased would put those excess reserves on some other bank's balance sheet. The amount of reserves total would not go down, but the money would circulate faster. A hell of a lot faster.
Ultimately, money is exchangable for useable energy. Useable energy is the ultimate in natural wealth. Real GDP growth can come only from more energy or more efficiency in using available energy. The global economy may have nearly reached its limits on energy extraction, at least under current technology. If this is so, the real GDP growth (on a global basis) is impossible once that limit is finally reached. Some countries can grow while others contract, or funny money can be printed that never leaves the Federal Reserve, but real GDP cannot grow beyond a small growth that comes from more efficient utilization. Congress has the power to inflate the debt away if it so wishes, but it still can't grow real GDP without forcing other nations into contraction .
ANYONE EVER READ WHEN MONEY DIES? IF YOU HAVEN'T, YOU NEED TO.
DEBT IS NOT MONEY IN THE TRADITIONAL SENSE OF PRINTING MONEY AND INJECTING IT INTO THE ECONOMY. ALSO, DEBT TYPICALLY IS NOT VIEWED AS INFLATIONARY BECAUSE THE 'MONEY' ISSUED IS BALANCED EXACTLY WITH A VALUE THAT HAS BEEN ALREADY CREATED. SO MOST PEOPLE VIEW DEBT AS ONLY A 'PULLING FORWARD' OF DEMAND AND HAVING LITTLE CONSEQUENCE ON INFLATION.
BUT. AND THIS IS A BIG BUT. IF PEOPLE LOSE FAITH IN THE CURRENCY, ECONOMY AND/OR DEBT THEY ARE HOLDING; THEN WE HAVE A SERIOUS PROBLEM. IF DEBT HOLDERS NO LONGER BELIEVE IN THE SYSTEM AND SELL THEIR DEBT, THAT IS WHEN THE SHIT HITS THE FAN. SURE, INTEREST RATES WILL RISE, BUT THAT IS A SMALL IMPACT. THE MONEY SUPPLY WILL SWELL TO UNBELIEVABLE LEVELS AND UNLESS PEOPLE JUST SIT ON THE CASH, THAT MONEY WILL SEEK NEW VALUE. PRICES OF SOMETHING/EVERYTHING WILL ACCELERATE AND THE POTENTIAL FOR HYPERINFLATION IS REAL.
SO DEBT 'MONEY' IS A HUGE, HUGE STORE OF LATENT INFLATION. IF FAITH IN THE DEBT IS LOST, HYPERINFLATION IS VERY REAL. THIS IS THE SOLE REASON, THAT THE EUROZONE AND THE US WILL DO EVERYTHING THEY CAN TO NOT ALLOW LOSS OF FAITH IN THE CURRENCY. AND THE ONLY THING THEY CAN DO IS PRINT WHEN NECESSARY TO SUPPORT THAT GOAL. THEIR PRINTING IS NOTHING IN COMPARISON TO THE LATENT INFLATION BUILT IN THE HUGE DEBT RESEVOIR THAT HAS BEEN ALLOWED TO FORM.
Your caps lock is on
It would be easier to read without all of the caps. I realize he or she was maybe trying to make a point but I scanned over it because of the Caps Lock. Not a good way to present an argument.
I much prefer the posts that type in normal type and put in caps words or statements to make a point. It is so much more effective.
As you said, we're fucked.
Bernanke's game is very dangerous and when the levy breaks, it's over. Inflation IS the increase in the monetary base and for now is just showing up in financial and hard asset prices but, at some point, it shows up in the inflation benchmarks these jackasses actually look at. Their understanding of the concept of inflation is narrow and naive.
Looking at asset prices, gold prices, oil prices, rent prices, healthcare, education and the looming tax increases tells you sub 2% inflation is obviously bullshit. Markets are telling them it's bullshit and the planners are chosing not to listen.
we have austarity here. Its called 98 crude on no fundamentals whatsover.
Ink on paper being traded for real goods - the biggest scam invented by humans! Get yourself a couple of bottles of ink and a couple of rolls of butcher paper and you'll be RICH!
Bullish on ink and paper.
Excellent analysis! However, the fourth way would be to start world war.
Here is an old link to something superficially dubious, but more compelling on a deeper level:
http://www.conspiracyarchive.com/NWO/silent_weapons_quiet_wars.htm
Silent Weapons for Quiet WarsNatural science is the study of the sources and control of natural energy, and social science, theoretically expressed as economics, is the study of the sources and control of social energy. Both are bookkeeping systems: mathematics. Therefore, mathematics is the primary energy science. And the bookkeeper can be king if the public can be kept ignorant of the methodology of the bookkeeping. ...
In this structure, credit, presented as a pure element called "currency," has the appearance of capital, but is in effect negative capital. Hence, it has the appearance of service, but is in fact, indebtedness or debt. ... if balanced in no other way, will be balanced by the negation of population (war, genocide)..
They must eventually resort to war to balance the account, because war ultimately is merely the act of destroying the creditor ...
War is therefore the balancing of the system by killing the true creditors (the public ...) the economy has been transformed into a guided missile on target.
The metaphorical isomorphism of economics and electronics makes general systems sense. The most labile component controls the system. The most labile human components are the most dishonest and violent people.
WE ARE BEING CONTROLLED BY THOSE WHO WERE THE BEST AT BEING DISHONEST, AND BACKING THAT UP WITH VIOLENCE. HOWEVER, THERE CAN NOT BE NO CONTROLS INSTEAD!
I maintain that the ONLY real solutions are to do that better, which is more or less what that alleged document linked above also discussed. The REAL systems are ALWAYS organized lies, operating organized robberies. Militarism was the self-driving supreme ideology. Militarism made War King, which then morphed to make Fraud King. The money system was backed by murder. It was always a combined money/murder system, and it must necessarily be.
Therefore, the ONLY future solutions are different death controls, to sustain different debt controls.
THE PROBLEM IS THAT DECEITS TRIUMPHED, AND THEREFORE, DESTRUCTION CAN RUN AMOK!
The established elites were the best at lying about what they were actually doing, and they built the system that we are living in NOW! Almost all of their controlled opposition are various reactionary revolutionaries, who want to go backwards to various old-fashioned impossible ideals, as the "solutions." I.e., the opposition reveals that there actually is a murder system, behind the money system, but then asserts that there should not be any. I.e., reveals that the reality is based on fraud and robbery, but then says the solution is that there should not be any, and that we should stop that which exists and is operating NOW.
I repeat, the ONLY real solutions to these runaway debt problems have to face the facts that civilization is operating according to the principles and methods of organize crime. There are no real solutions which can change that. The ONLY good solutions are radically different death controls, in a radically different murder system, which then can sustain different debt controls, in a different money system.
What we ARE going to get is a changing of gears, in one way or another, sooner or later, to DIFFERENT DEATH CONTROLS, like the outbreak of world war, and the use of weapons of mass destruction. The ONLY possible future survival of the human experiment requires that we adapt through that, and develop a better human ecology on the other side, IF we survive through that ...
The established systems are based on presuming endless exponential growth, funded by endlessly more credit and debts. However, there must necessarily be some limits somewhere, and those must, by definition, be death controls. However, so far, almost all the public discussions about this take place within the biggest bullies' bullshit impossible ideals, and, by and large, the opposition stays within that too!
There are no real solutions which can exist other than changing the combined money/murder systems BOTH. However, there is an almost infinitely deep tunnel of deceits through militarism, and that is the primary problem, which makes solutions almost infinitely difficult to implement. However, I believe, we ARE on the way to world war, and that IS the way the established systems evolved to cope with their own contradictions.
The Federal Reserve Board, and central banks in general, were unadmitted and unrecognized transfers of the sovereign power to rob, backed by murder, to private banksters. That worked because the vast majority of people act like brain dead sheep. Most of the people who propose solutions say that we should all be better sheep. However, I say that the only real solutions are for us to become better wolves. BUT, as I said, the profound paradox is that the established systems were based on the triumph of past deceits, and public discussion of better murder systems is practically impossible. Therefore, it looks like we are going to blunder through the madness of world war, and whether we survive on the other side is unknown. But nevertheless, IF we do survive, then adapting to electronic and atomic powers, many orders of magnitude greater than anything before in human history, is going to be necessary. That means that our currently established global electronic fiat money frauds, backed by atomic bombs, has to be better understood and thereby better done.
Of course, I do not foresee that actually happening. I can not readily imagine the central banks doing their job better, to better balance the rates at which their fiat money is created out of nothing, and destroyed back to nothing. Their whole system is a runaway triumph of frauds, which fundamentally refuse to admit or recognize that their debt controls were based on death controls. Our money system could only work better if we simultaneously made our murder system work better. Militarism continues to be the single most important ideology, that we can not ignore! That successful militarism was based on deceit makes doing that almost impossible to understand. Therefore, we have hyper-complicated rates of the creation and destruction of fiat money, from nothing and to nothing, which deliberately are NOT related to real world, although they ARE, since they actually were based on the sovereign powers to rob and kill, having been transferred to privately owned central banks, through the historical process of the triumphs of organized crime.
I believe this article was about the problem of how much fiat money is enough? I do not think one can answer that question unless one answers how much murder is enough! Out of control fraudulent money will end in out of control insane rates of murder. Better controlled money systems can not exist without better controlled murder systems.
But you can't print that much money. There is not enough trees in the world. And you just said that credit has decreased $2 trillion. That is money that disappeared. Unless BB starts dropping notes from choppers not much will change.
If they literally printed the huge amounts of money needed to cause enough inflation
in the dollar (world's reserve currency; ie petro dollar) , it would actually help bring down
the unemployment number because they would have to hire thousands of people to cut down trees,
make the paper and ink, transport the new currency, and guard it , build large facilities to house it.
But to really get the economy going, they need to get that money to the people, who would spend
it on goods right away, before it loses most of it's buying power. But the Fed is not interested in
helping people, only bailing out their master's banks. After all, that's who the Fed was created by
and answers to.
They pretend not to be able to solve all the problems, yet it is easy to solve and maintain the system - but to do so means to cut the private debt - and they don't want to do that until deflation has robbed everyone of their assets and transferred them to the banks.
Its very possible to solve all of the issues in the US.
Here is an alternative method for solving the entire problem, and one that could be done if the govt is siezed by the people out of the hands of the international bankers.
1) Declare fractional reserve banking to be fraudulent.
2) Retroactively prosecute and seek damages from those who have profited from fractional reserve banking, mainly the bond holders of large banks.
In conjunction, or separately the following could be done.
1) Nationalize the Fed and all private banks - exchange non transferable 30yr treasuries for the banks bonds (then extinguish the bonds), prepare to raise reserve requirements. Declare banking to be a public service, but allow private competition (the reasons will become clear later).
2) Credit every US citizen with say $20K US per month for 12 months, and require by law that they use it only to pay down debt, or deposit it into the banking system as 'special' term deposits with capital controls applied ot them (money must remain, 1yr minimum before withdrawal, $10k per month withdrawal rate).
3) Raise reserve requirements on the banks to match the capital inflow, stop paying interest on reserves at the Fed.
4) After 12 months set bank reserve requirements to 100%, create money through the treasury to bring the reserves to 100%.
5) Spin off all banks to local communities - require a bank charter that returns all bank profits to depositors - except that local govt can take as much of the profit as they wish to fund local projects.
6) Eliminate all taxation, requiring communities to fund themselves with banking profits.
7) Allowing private competition with community banks will ensure that the amount that is taken by the govt will be low - otherwise deposits will fall.