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Guest Post: How Far To The Wall?

Tyler Durden's picture




 

Submitted by Terry Coxon of Casey Research

How Far to the Wall?

Decades of manipulation by the Federal Reserve (through its creation of paper money) and by Congress (through its taxing and spending) have pushed the US economy into a circumstance that can't be sustained but from which there is no graceful exit.

With few exceptions, all of the noble souls who chose a career in "public service" and who've advanced to be voting members of Congress are committed to chronic deficits, though they deny it. For political purposes, deficits work. The people whose wishes come true through the spending side of the deficit are happy and vote to reelect. The people on the borrowing side of the deficit aren't complaining, since they willingly buy the Treasury bonds and Treasury bills that fund the deficit. And taxpayers generally tolerate deficits as a lesser evil than a tax hike.

Deficits are politically convenient for a second reason. They can take a little of the sting out of a recession. That effect is transient, and it's not strong – more like weak tea than Red Bull. But it can be enough to help a struggling politician get past the next election.

Yes, sometimes there's a big turnover in the personnel, such as with the 2010 election, when a platoon of self-styled anti-deficit commandoes parachuted into Congress. As soon as they had taken their seats, they began offering proposals to deal with the government's trillion-dollar revenue shortfall. But none of the proposals were serious. They were merely tokens intended to make politicians wearing anti-deficit uniforms look less ridiculous. Cut a ginormous $2 billion out of this program and a great big $500 million out of that program. Reduce spending by half a trillion dollars... over ten years. Balance the budget to the penny, but later. No one proposed anything close to dealing with the deficit now.

So stay up as late as you like on election night to see who wins, but the deficits aren't going to stop anytime soon. The debt mountain will keep growing. The part of it the government acknowledges is now approaching $16 trillion, which is more than the country's gross domestic product for a year. Obviously, the debt can't keep growing faster than the economy forever, but the people in charge do seem determined to find out just how far they can push things.

Inflation as Savior

At some point, personal and institutional portfolios will be glutted with Treasury securities, and the government will be forced to pay higher and higher rates to induce investors to take more of the paper – and the accelerating interest cost will make the deficits that much bigger. When that happens, the problem will be feeding on itself. The only way for the politicians to buy time will be through price inflation, to reduce the real burden of the debt, and whether they admit it or not, inflation is what they will be praying for.

The Federal Reserve will hear their prayer. It is 100% committed to protecting the value of the dollar, except when it is debasing the dollar in an effort to cure a recession or prevent a depression. It's been doing that important work since 1971, when the dollar slipped the leash of the gold standard. With every downturn in the economy, the Fed speeds up the creation of new cash. Each time, the economy does seem to recover, but the economic distortions that caused the recession are allowed to linger to one degree or another. They accumulate like the grotesqueries in the picture of Dorian Gray and predispose the economy to further and deeper slowdowns.

For the last three years, the Fed has been performing an additional service to help keep the system going. Whether or not you believe that suppressing interest rates with newly conjured dollars stimulates the economy in a healthy way, the practice certainly makes it easier for the Treasury to sell bonds to cover its deficit. And as total debt grows, the Fed will be biased more and more toward printing in order to retard any rise in interest rates. In short, the cost of postponing the bankruptcy of a government engaged in nonstop deficit spending will be progressively higher rates of inflation. There is no inherent stopping point in the process short of hyperinflation and the destruction of the currency.

Will it actually go that far? My guess is that it won't, but that's a guess about politics, not about economics. At some point, perhaps at an inflation rate of 30% or 40%, the turmoil that comes with runaway inflation will become so painful that the public will accept, and the politicians will find it wise to deliver, a balanced budget and a return to a stable currency. But even a year or two of such high inflation rates, while not a Weimar experience, would be a calamity. Most people's savings would be destroyed. Most businesses would be badly damaged, and most investment portfolios would be ruined. It would be like the economy hitting a wall.

But when will the economy reach the wall toward which it is headed? Not soon, I believe, but in the meantime there will be plenty of excitement.

The twin motors driving the economy toward the wall are deficits and money printing. Let's take them in turn and try to foresee their pace.

Danger Zone

When federal debt recently overtook a year's worth of gross domestic product, the US government crossed over into the zone at which, by historical experience, governments can get caught in a debt trap. High debt raises doubt about creditworthiness; doubt raises borrowing costs; higher borrowing costs add to deficits and day by day to the total debt burden; growing debt increases doubt about credit worthiness. Once in the cycle, it is hard to escape.

But Debt = GDP is not a formula for certain doom. It's possible to spend some time in a bad neighborhood without getting shot. Japan's ratio of government debt to GDP, to cite an extreme example, is over 230%. Perhaps the Japanese government is living on borrowed time as well as on borrowed money, but it is still able to find buyers for its debt at low yields.

The US may outdo Japan's ratio before hitting the wall. The capital markets will tolerate an especially high debt-to-GDP ratio for the US for a simple reason – it's safer than most other places. It doesn't get invaded, it doesn't get blown up in wars, it doesn't have revolutions and it hasn't destroyed its currency recently. Still, there is a limit to what the capital markets will tolerate.

How rapidly the US ratio of debt to GDP will grow depends on a list of barely-guessables, including how long the recovery from the recent recession drags on, the time elapsed until the next recession and the level of the public's actual tolerance for deficits. Assuming that the recent level of deficits continues indefinitely, it would take on the order of ten years for the US debt-to-GDP ratio to get where Japan's is now, which would bring us near 2022. After that, the safety factor still should buy the government a few years more.

That adds up to a long time to wait for the end of the world. Fortunately for the impatient, there is the Federal Reserve, and what the Fed will be doing, what the effects will be and when they will be felt all can be anticipated with a bit more clarity than the doings of Congress, although it remains guesswork.

Approaching the Wall

The M1 money supply has grown by 52% since the Federal Reserve opened the spigot in October of 2008. That alone is reason to believe that the current recovery, though painfully slow, is real. It has been held to a snail's pace by the fear of deflation that so many people learned in 2009. Fear of deflation is a reason to hold on to cash, but as 2009 becomes more distant, that fear is waning, and the holders of that 52% are becoming more and more disposed to think of it as excess cash that should be spent on something. That feeds the recovery.

Given the slow pace, it should be perhaps two years until the economy seems more or less normal, but the excess cash will still be at work. Give it one more year, and price inflation will emerge as a noticeable complaint. Then the Federal Reserve will let interest rates rise, but only slowly at first. By the time it tightens in earnest, price inflation will be approaching double-digit rates. It will look like the 1970s. And despite all the statistics it publishes, the Fed will only be feeling its way in the dark, since there is no reliable, real-time indicator of how much excess cash there is in the system. So inflation will keep rising, and the Fed will keep tightening until it produces a rerun of 2008-2009, with crashing investment markets announcing a new recession.

But there will be two important differences vis-à-vis 2008-2009. First, it will be happening with the US government far deeper in debt than it was when the last recession began. In the tightening phase, the government's interest expense will move above $1 trillion per year, and the budget deficit will jump to new record highs. Second, it will be happening with the rate of price inflation already at a troubling level. Another round of the monetary therapy the Fed applied to cure the last recession would push price inflation to levels beyond those reached in the 1970s. They'll do it anyway.

This gets us to 2016 or 2017 with the system in turmoil but still functioning. No wall yet, and there will be room for at least one more cycle of reflation. But it will be a fast cycle, since in an environment of already high inflation, people will be quick to spend the newly created cash. That means a quick recovery from the 2017 recession and a catapult into the 20% plus range for price inflation. Then the wall may be in sight.

In the Meantime

Did you hear about the 60-meter-wide rock? Asteroid 2012 DA14, with the kinetic energy of a thermonuclear bomb, is headed toward us. In February of next year, its approach path, as recently estimated, will bring it to within 17,000 miles of the Earth. What I haven't seen mentioned in any of the reports is that the closer an orbiting body is expected to get to the Earth, the less precise and reliable the estimates of its path become. Its path may veer this way or veer that way. And in astronomical terms, 17,000 miles is very, very close – closer than most man-made satellites. So it's not just the economy we need to anticipate.

 

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Wed, 04/18/2012 - 19:15 | 2356539 The Alarmist
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My money is on the Asteroid.

Wed, 04/18/2012 - 19:37 | 2356617 ACP
ACP's picture

Doesn't Tepper already have his balls to the wall?

Wed, 04/18/2012 - 19:47 | 2356641 SilverTree
SilverTree's picture

vis-à-vis 

Wed, 04/18/2012 - 20:22 | 2356745 johnu1978
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Now I can see why people drink!

 

-John
Primitive Skills Classes - Edible Plant Tours
http://www.heartrootnatureconnection.com

 

Wed, 04/18/2012 - 22:24 | 2357014 Transformer
Transformer's picture

Left out of this article, and its possible time line, is the repudiation of the dollar as the world's currency.   It's happening now and creates a whole different time line.

Wed, 04/18/2012 - 23:33 | 2357130 Manthong
Manthong's picture

In regards to government projections, my tendency is to wait for the revisions.

Wed, 04/18/2012 - 19:52 | 2356663 skepticCarl
skepticCarl's picture

This article was excruciatingly lame until the asteroid thingy.

Wed, 04/18/2012 - 20:42 | 2356793 LowProfile
LowProfile's picture

Why oh why can't these obviously intelligent people see that THERE WILL BE NO RAISING OF INTEREST RATES BECAUSE THE FED WILL SIMPLY BUY EVERY LAST SCRAP OF DEBT.

 

Wed, 04/18/2012 - 21:24 | 2356914 AUD
AUD's picture

And why can't they see that you go bankrupt slowly, then all of a sudden?

Wed, 04/18/2012 - 22:04 | 2356979 chubbar
chubbar's picture

"At some point, personal and institutional portfolios will be glutted with Treasury securities, and the government will be forced to pay higher and higher rates to induce investors to take more of the paper – and the accelerating interest cost will make the deficits that much bigger. When that happens, the problem will be feeding on itself. The only way for the politicians to buy time will be through price inflation, to reduce the real burden of the debt, and whether they admit it or not, inflation is what they will be praying for."

Can someone unpack this a bit for me and explain how "price inflation" translates into a reduction of the "real burden of debt"? Is he saying that price inflation will translate into wage inflation? With a weak dollar, imports become more expensive (price inflation) but that money goes overseas, not into increased wages. That transmission has become drastically reduced over the past decades of offshoring production. Can anyone convince me otherwise? I'm wide open to other explanations.

Wed, 04/18/2012 - 22:38 | 2357040 smb12321
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OK, supposedly price inflation allows one to pay off existing debt with cheaper dollars.  Salaries may rise 50% but old debt remains the same.  Voila!  That is why folks in societies with rampant inflation take on debt - it can be paid in cheap currency.

What Tyler (not sure which one) is saying on the other end is that the FED has trapped itself into permanent low interest rates since raising them would exploded the deficit.  And yet at some point they must, thus the quandry.

Thu, 04/19/2012 - 01:26 | 2357348 LowProfile
LowProfile's picture

That only works with WAGE inflation, not PRICE inflation.  See below http://www.zerohedge.com/news/guest-post-how-far-wall#comment-2357345

Thu, 04/19/2012 - 01:27 | 2357345 LowProfile
LowProfile's picture

 

Can someone unpack this a bit for me and explain how "price inflation" translates into a reduction of the "real burden of debt"?

It's unpackable because it's phundementaly phucked.

 

For starters, he makes a fatal error in thinking that "investors" are buying Treasury debt.

Investors are buying less.  The Fed is taking up the slack, and then some.  They are monetizing the debt.  This will ultimately be very inflationary (as in super-hyper).

 

He makes another error in thinking that PRICE inflation will somehow ease the burden of debt.

This is a monumental error.  WAGE inflation would do that, but not price inflation.  Price inflation without wage inflation will lead to less cash available to pay down debt, and would result in deflation.

 

This guy is seriously confused.  I'm surprised this came out of Casey Research, they've always seemed pretty astute.

Wed, 04/18/2012 - 23:32 | 2357129 NotApplicable
NotApplicable's picture

That was the instant I quit reading. Anybody who doesn't understand ZIRP has little else of value to offer on the subject.

We'll be well beyond WWIII before there's anything remotely close to the idea of meaningful sovereign debt service costs.

Wed, 04/18/2012 - 21:27 | 2356920 ShankyS
ShankyS's picture

I could not take the article. Anyone that does anaysis that is solely US based and does not include global systemic risk is missing 50% + of the equation. Then you mentioned the Ateroid thingy and I had to go back and check that out. 

Wed, 04/18/2012 - 21:41 | 2356937 AbelCatalyst
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Comparing the US and Japan makes no sense. Most of Japan's debt is held by their own citizens who had a high savings rate until recently. As they begin to float this debt on the international stage they will quickly hit the wall. There is no way the US could come close to the Japanese can kicking! Plus, the real US debt is far higher if you add in the unfunded liabilities.

This article is not making a legitimate comparison and if I had to guess the US hit the wall before the asteroid hits us. By the time the asteroid arrives things will be so screwed up people will not even care about the f'ing incoming rock!!!

Thu, 04/19/2012 - 23:12 | 2360259 Goolie
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Japan realized they can't go to the international stage to sell their debt.  They can't afford to service higher interest rates.  So they simply will do what the Fed and Europeans do, print Yen in their case, and buy their own JGB's.  And while all of the world's central banks do the same, there will be no rising interest rates.  Just competitve devaluations.  I only see this ending when folks finally realize that it's all a ponzi scheme and no longer accept the currency.  Of course the Kleptocrats will have one more lever to pull.  They'll impose capital controls and unleash their military and police forces to quell civil unrest and try to protect the reserve currency.  In the end the currency will have buyiing power one day, and the next, not.  The only way I see to protect oneself is to have a stock pile of gold, silver & lead.  And a pad somewhere outside your devolving country to land when it all hits the fan.

Wed, 04/18/2012 - 21:48 | 2356952 Cabreado
Cabreado's picture

"This article was excruciatingly lame until the asteroid thingy."

I beg to differ.

It was morose.

Appropriately so.

If you're looking for excitement, it's on its way, at which point you may find yourself preferring this so-called lameness.
Or, maybe the asteroid thingy.

 

Wed, 04/18/2012 - 22:38 | 2357041 Creepy Lurker
Creepy Lurker's picture

I'm hoping the asteroid thingy hits DC. Poetic justice.

Wed, 04/18/2012 - 20:44 | 2356800 WoodMizer
WoodMizer's picture

Not unless its made of gold and silver.

Wed, 04/18/2012 - 19:16 | 2356549 CvlDobd
Wed, 04/18/2012 - 19:41 | 2356631 centerline
centerline's picture

Carlin was a genius.  He saw the writting on the wall so early.  Funny that most people still think it is just comedy.  I saw him once on TV in his later years doing a presentation sometime back in the early 2000's on CSPAN or something.  It was actually a more seriouos platform.  He was outstanding.  And no one really had any idea then how accurate and insightful he was.  Actually, let me retract that... I think that many didn't get it, and a bunch more just didn't want to admit it.

RIP Carlin.

Thanks for clip.

Wed, 04/18/2012 - 19:57 | 2356679 CvlDobd
CvlDobd's picture

He saw the writing on the wall well before most people. As usual.

 

 

Wed, 04/18/2012 - 21:45 | 2356947 Yes_Questions
Yes_Questions's picture

 

 

and he went out swinging, unlike (so far) the sell out Dennis Miller.

 

 

Wed, 04/18/2012 - 23:37 | 2357149 NotApplicable
NotApplicable's picture

Dennis is a stooge.

Thu, 04/19/2012 - 00:10 | 2357224 Joseph Jones
Joseph Jones's picture

The "wisdom" of Dennis "The Hack" Miller:

  1. Kill all the Muslims now and often. 
  2. Vote Republican and all will be right in the world.
  3. What's good for Israel is great for the USA. 
  4. Let the Generals run the world.

Scum bag of the month award winner.  

 

 

I loved the late George Carlin with Doris Day and the late Brian Keith in "With Six You Get Egg Roll".  Vick Tayback made a short appearance too.  RIP dear George and Brian...

 

 

 

Wed, 04/18/2012 - 20:37 | 2356782 xela2200
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I saw him as an aluminum foil hat wearing lunatic, until I grew up. Now, I am not laughing. As a matter of fact, I am not laughing at a lot of people that I thought crazy for speaking up (Eisenhower, Schiff, Black, even those back wood paranoid founding fathers).

Wed, 04/18/2012 - 21:20 | 2356904 Dr. Engali
Dr. Engali's picture

+1

Wed, 04/18/2012 - 21:37 | 2356930 CvlDobd
CvlDobd's picture

Yeah I've found that to be the typical response. Most people laugh but deep down they hate George. Once they start to understand what is going on they like his work more and more.

Wed, 04/18/2012 - 19:19 | 2356556 The Alarmist
The Alarmist's picture

60m will be on the order of a "meteor crator" of Arizona event ... life will be inconvenient for most of us, but we'll get along just fine.

Wed, 04/18/2012 - 22:38 | 2357046 akak
akak's picture

If it should happen to land on a certain district on the Potomac River, we'll all get along much finer.

Wed, 04/18/2012 - 19:23 | 2356571 Change-In-Trend
Change-In-Trend's picture

Moving gradually down into 23-26 April low.

http://change-in-trend.blogspot.com/

Wed, 04/18/2012 - 19:33 | 2356606 American34
American34's picture

Mr. Durden. It would be nice if you had a place where we could post questions to you and you could reply if you like. I understand that thousands of questions would likely be posted but it would still be nice to read your answere to the few you decided to reply to.

Wed, 04/18/2012 - 19:35 | 2356609 Everybodys All ...
Everybodys All American's picture

That wall is coming at an exponential rate of speed. Trust me.

Wed, 04/18/2012 - 20:12 | 2356723 CURWAR2012
CURWAR2012's picture

Parabolic is the term, parabolic my friend.

Thu, 04/19/2012 - 03:48 | 2357455 StychoKiller
StychoKiller's picture

F(x) = x2  is NOT the same as G(x) = ex

Thu, 04/19/2012 - 13:10 | 2358769 The Disappointed
The Disappointed's picture

Kinda reminds me of one of Zeno's paradoxes, the the that proves that the arrow in flight never hits the wall bacause it must first go half of the distance, but it never takes into account that the arrow must doulbe its speed each time.

Buy silver while you still can afford it, gentlefolk (I was raised better than to use the word 'B****es'.

The Other Dave in SF (where all of thed swans are pink and we're f***ing proud of it!)

P.S. Everyone knows Ayn Rand was a dyke, don't they? Married, but no kids, she just was tired of getting ripped-off (like me).

Wed, 04/18/2012 - 19:36 | 2356619 TooBearish
TooBearish's picture

the most interesting part of this post was the space rock thingy- the other shite like  the government will be forced to pay higher and higher rates to induce investors to take more of the paper ...caused me to laugh out loud - why on earth does anyone think the FED will ever allow that to happen?  There aren't any markets dood, and the "market" doesnt set interest rates...Benny does !

BTW - the FED will able to take care of the space rock too - just expand the balance sheet another trillion...

Wed, 04/18/2012 - 19:46 | 2356640 StockHut
StockHut's picture

I definitely think we have at least 1 or 2 reflationary cycles before the game runs out.  It's a shame this shit has to get dragged out.  Hopefully more people become aware and revolt against the government

Thu, 04/19/2012 - 02:16 | 2357393 The Navigator
The Navigator's picture

If we get 1 or 2 reflationary cycles, BTFD - I'd love to see silver go below $25 or $20, even though I bought SOME at $35 (most at $10, $12, & $15) - at $25 or $20 I could rebalance the purchases at higher levels AND and more stacks.

Either way, I monthly-cost-average and buy some every month.

Wed, 04/18/2012 - 19:48 | 2356642 ebworthen
ebworthen's picture

Dunno, seems like the wall might be approaching faster than that, more like the asteroid.

Wed, 04/18/2012 - 19:48 | 2356649 skepticCarl
skepticCarl's picture

The inflationary spiral, and the devaluation of the dollar, is a process, not an event, like hitting a wall.  It has been ongoing, thoughout the lives of everone alive today.  Don't sweat it, just prepare for it by owning your own home, some precious metals, some large cap international stocks, and maintaining family ties and personal friendships.

Wed, 04/18/2012 - 19:50 | 2356657 SayTabserb
SayTabserb's picture

Good analysis, I think. One reason Japan may not be a good comparison for debt tolerance: Japan has survived with its very large deficits/total debt because until recent years it was a powerhouse exporter. This is how the United States got out of the very large natl debt (larger as a % than it is now) following World War II - a big export market to the destroyed rest of the world. The U.S. does not have that leeway now. So where does the U.S. get the wherewithal to convince investors they will be paid back with other than hyper-inflated printed dollars? I think the wall is much closer than 12 or 15 years out. I think the "cliff" that Bowles-Simpson was talking about (2015) is closer to the mark.

Wed, 04/18/2012 - 19:54 | 2356670 seek
seek's picture

I had been predicting a 2018 wall, much like Casey appears to be, but in the intervening months I think that's too far away. Some of the above posters are right -- we're on an exponential path, and it's making the call a lot harder since it's coming faster and faster.

Plus this is still based on an exponential but linear progression. The thing is, right before the boom this system will go non-linear and be very unpredictable, and I keep seeing hints (Europe, in particular) of that non-linear instability appearing. The key will be when the rate of change is faster than the PPT/TPTB/Fed can adapt to manipulating it, and I think one can argue that the darkest day of 2008 with the massive fund outflows crossed that threshold for a few hours.

When this one hits, a little change in FDIC rules isn't going to fix it like last time did. They'll have to shut the system down, and once that happens, restart will be difficult -- they might as well attempt whatever change they're going to try during that shutdown.

Wed, 04/18/2012 - 21:10 | 2356876 Errol
Errol's picture

Seek, I agree that the article makes an unwarranted assumption that things will continue in a linear trajectory.  I can think of a couple of things right off the top of my head that could make things non-linear in a hurry:

A derivatives panic.  The speed of data processing & communications makes it possible that the firetrucks could be late in bailing out counterparties, leading to cascading defaults that might require a "holiday" to sort out.

The fact that the EROEI of oil, nat gas, and coal are declining makes genuine growth a thing of the past.  Increasing the leverage on an ungrowing stock of productive assets makes the system less stable with every QE and LTRO.

Wed, 04/18/2012 - 19:56 | 2356674 XitSam
XitSam's picture

"At some point, perhaps at an inflation rate of 30% or 40%, the turmoil that comes with runaway inflation will become so painful that the public will accept, and the politicians will find it wise to deliver, a balanced budget and a return to a stable currency."

The public will insist that the politicians do something. In response the politicians will do everything except balance the budget or return to a stable currency. The ability of politicans to avoid doing the right thing is infinite.

Wed, 04/18/2012 - 19:55 | 2356675 Gringo Viejo
Gringo Viejo's picture

Off Topic: I want to thank Tyler and ZH. I'm a radically conservative old man and I've been censored by most websites, even banned from posting at breitbart (I'm at a loss as to why). ZH has allowed me to speak MY truth as I see it and I'm most grateful. Unlike many of the younger readers, I remember a free America...where you could get into a bar fight and the cop would ask...do either of you want to press charges?....No. Then get out of here and don't let me see either of you assholes again. Now I live in a Nation where EVERYONE is a "criminal in waiting."

Thank you Tyler and thank ALL of you that keep speaking YOUR truth as YOU see it.

Wed, 04/18/2012 - 20:01 | 2356691 centerline
centerline's picture

You sound like a lot of fun.  Feel free to rant!  I will watch for you and join it - or argue - or whatever works.  At this point, ranting here and there is pretty much like therapy for what Charles Hugh Smith so properly termed "the burden of knowing" some time ago.

+1 for the ZH appreciation.

 

Wed, 04/18/2012 - 22:06 | 2356982 Gringo Viejo
Gringo Viejo's picture

centerline: wanted to share with you my old  sense of "fun". My bud (Larry) and I walked into a bar in Martinez, Calif. called "Oscar's" in 1978 at closing time (2:00am). There was 1 (and only 1) guy sitting at the bar with a swollen jaw. We bought him a drink and he allowed as he had an impacted wisdom tooth. We took him outside, had him lay down, and attached a nylon fishing line to his tooth and had him lay in the street, and tied the other end to the bumper of my '74 dodge p/u truck. I pulled away in 2nd gear (manual shift), and pulled the tooth... but we damn near left him a "hare lip".

Wed, 04/18/2012 - 22:35 | 2357030 centerline
centerline's picture

Good old days for sure.  I cringe now at some of the stupid things I got away with.  At the same time they are some of my fondest memories.  Half of those things I am not sure I can share with my kids until they are much, much older.  LOL.

 

edit: Visualizing your story has me laughing.  Thanks.

Wed, 04/18/2012 - 20:28 | 2356755 NullShrub
NullShrub's picture

Yes, It used to be a free country...well said Gringo, see you South of the border one day soon.

Wed, 04/18/2012 - 20:44 | 2356798 lynnybee
lynnybee's picture

 "  I want to thank Tyler and ZH. "   ... & i'm an old woman who got the education of a lifetime on this website, who now understands what the hell has happened to our country & our lives.     bless all the TYLERS' hearts & the comments that helped me to understand the articles better.    sincerely ...

Wed, 04/18/2012 - 22:29 | 2357022 centerline
centerline's picture

Nice to see you around LB.  Hope all is well and folks are starting to listen to you a little more.

Thu, 04/19/2012 - 13:54 | 2358924 The Disappointed
The Disappointed's picture

Gringo & centerline,

I just feel like some stupid, old queer yelling 'MOVIE!' in a crowded fire house.

No one will listen until it is too late.

Then the asteriod hits.

The Other Dave in SF (where all of the swans are pink and we're f***ing proud of it!)

P.S. Yesterday was the 106th anniversary of the big quake here. For the history buffs, the first person killed was the fire chief of SF at the time, whiile he was in bed in the firehouse. The brick chimney from next door collapsed thru the roof killing him, (eventhough he didn't croak until a few days later). Talk about someone who should have known the risk, but would rather sleep instead! How much good did that do him?

Wed, 04/18/2012 - 20:53 | 2356832 Cursive
Cursive's picture

@Gringo Viejo

Welcome to fight club.  Preach it!

Wed, 04/18/2012 - 21:15 | 2356887 Dr. Engali
Dr. Engali's picture

I hear you. I remember getting pulled over leaving the local pub and the cop asked where I lived , which was just a couple miles away, and he said "I'll follow you home. Don't do it again." it's a whole new ball game now.

Wed, 04/18/2012 - 22:08 | 2356989 gtb
gtb's picture

I once told a cop, after failing the field sobriety test, I could make it home safely.  I told him "hell yes, I've driven drunker than this."  He let me go.

Wed, 04/18/2012 - 22:53 | 2357076 CvlDobd
CvlDobd's picture

I got a $252 ticket on my 50cc scooter last week. That's just less than half then value of the bike. Fuckin' cops!

Thu, 04/19/2012 - 02:29 | 2357403 The Navigator
The Navigator's picture

I thing you meant fucking inflation - china bike, not so expensive...... ticket for cops (govt) retirement programs, not so cheap - welcome to the USSA.

Wed, 04/18/2012 - 22:06 | 2356973 TruthInSunshine
TruthInSunshine's picture

Gringo Viejo -

 

 

This is the best feature of Zero Hedge.

I've yet to see anyone banned for the substance of what they say, whether they're to the left of John Stuart Mill, to the right of Ghengis Khan, or as libertarian as I am.

I've suspected that some may have been banned/warned for the form of their posts (repeating the same, devoid-of-substance drivel many times, in every thread, like a spambot, ala RoboTard) - and this - I haven't a problem with. This is necessary because if the one liner imbeciles post the same drivel, requiring no original content and nothing requiring intellectual input of even the barest minimum, numerous times in every thread, the actual volume of completely meritless posts would render Zero Hedge impossible to read and navigate.

Zero Hedge is the only forum I know of that has what appears to be a nearly unconditional free speech policy, as long as expression relates to something of significance, no matter how awful, offensive, wrong, politically incorrect, abrasive, or otherwise grating the content of the expression is, and thank God for it.

Free, unfettered, flowing expression and opinion stimulates debate, intellectual rigor, and leads to a better discourse, no matter how many people have their feelings, sentiments, preconceived opinions/notions, theories, hypotheses, conjecture or arguments hurt or disproven/gutted in the process.

Wed, 04/18/2012 - 22:33 | 2357028 Dr. Engali
Dr. Engali's picture

TruthinSunshine

I agree whole heartedly that unfettered free speech is a must when it comes to debate. I have to disagree with you on examples like RoboTrader. As annoying as he was he still brought a lot to the table. Maybe not in direct debate but in what he presented. We all know that the markets are rigged and should not be functioning in the manner which they do. Most of us believe that the markets should be far lower than they are now . Robo simply pointed out on a regular basis how the market was defying all logic. He got junked a lot but after a while people began to grudgingly acknowledge he was right. I could go on about a couple other trolls but I won't. My point is that sometimes free speech can be a pain in the ass, and sometimes you don't want to hear what the person is saying but if you look at it from another perspective you can find value in what they are presenting.

Wed, 04/18/2012 - 22:40 | 2357052 centerline
centerline's picture

Robo was great.  I miss him. There have been some great trolls too - and posters who act like lightning rods.  All playing a role to draw out real debate, emotions, etc.  Gloves off - no holds barred - no sissys.  Good stuff all around.  ZH embraces the offensive, because... quite frankly... how else are we going to noodle through tough subjects like the fact most of us are screwed?  Ha, ha.

Thu, 04/19/2012 - 00:00 | 2357090 TruthInSunshine
TruthInSunshine's picture

HamyWanger & MillionDollarBonus are worthy trolls. They actually put substantive thought into their musings, and in the process of posting the epitome of conventional modern day economic doctrine taken to its ultimate (and ridiculous) conclusion, expose the current sham for that which it really is; a complete & utter Ponzi Scheme, sponsored by fractional reserve banking, aka Modern Money Mechanics.

RoboTard barked momo ticker symbols and empty catchphrases.

Thu, 04/19/2012 - 00:17 | 2357251 WonderDawg
WonderDawg's picture

I miss Trav777, he was amusing, if a bit radical at times. And he did provide food for thought.

Thu, 04/19/2012 - 01:27 | 2357355 respect the cock
respect the cock's picture

Did Trav get banned - or did he simply disappear?

I miss that guy - he was highly amusing.

Thu, 04/19/2012 - 01:35 | 2357361 Yes_Questions
Yes_Questions's picture

 

 

April is Troll Holiday month.

 

They'll be back like TAXES.

Thu, 04/19/2012 - 02:33 | 2357409 The Navigator
The Navigator's picture

I'm sure Trav didn't get banned - you gotta do some serious banging to get banned from ZH. I think he got tired of seeing his posts low ratings.

He was different and didn't agree with what he said but it sometimes opened the mental passageways.

Thu, 04/19/2012 - 01:38 | 2357363 Lednbrass
Lednbrass's picture

Alot have realized that MDB is pulling their ...ermm...leg, Hamy seems to catch more fish because few seem to recall the original Harry Wanger retail tycoon extraordinaire.

I do wish that Johnny Bravo would make a curtain call, he was unfortunately serious but all the more entertaining for that.

Wed, 04/18/2012 - 20:03 | 2356687 Paul451
Paul451's picture

Good to read some speculation on WHEN the end will happen. We're all agreed it's upon us, but picking the time for it is more interesting, AFAIC.

I think the dates are about right but I also believe it underestimates the ability of global politics/economics to fuck us up a lot sooner. When you throw that into the mix, I'd say we'e got about 5 years.

Maybe not a perfect analogy, but consider when you played Musical Chairs as a kid. As more and more players get eliminated, it takes less time (I have no idea WHY, other than a fundamental human need to CLEAR the deck) for the feew that are left at the end to get wiped out.

First Europe, then Asia, then the US - with inreasingly less time in between wipeouts. Classic death Spiral, boys.

 

Wed, 04/18/2012 - 22:41 | 2356700 centerline
centerline's picture

It also all depends on what one terms "the wall" I suppose.  The approach could be the real shit storm and the event itself just the eye of said storm.  I am with you though on the fuck-up potential.

Wed, 04/18/2012 - 20:00 | 2356688 goforgin
goforgin's picture

Several years ago ZH posted an article by Casey Research on Russia, It's research characterized Russia as populated by uneducated Slavic drunks--certainly no place place for one to invest. On the other hand, the paper described Muslims living in ex-Soviet republics as enlightened, cafe book readers wanting nothing more than to better and educate themselves. 

That's Casey Research, research inspired by Mein Kampf.

Wed, 04/18/2012 - 20:15 | 2356727 Paul451
Paul451's picture

Was that the study indicating the average lifespan for men in the former soviet union to be about 60? Because, IIRC, that's about the right number and that is a total disgrace for an industrialized country.

"Fat, drunk, and stupid is no way to go through life, son" - Dean Wormer

Wed, 04/18/2012 - 21:10 | 2356870 Paul451
Paul451's picture

Not the one, but that was a good read.

If you really want to understand just how fucked up the FSU is, then just date a woman from there.

Thu, 04/19/2012 - 04:48 | 2357495 RECISION
RECISION's picture

+1

Wed, 04/18/2012 - 20:04 | 2356701 asteroids
asteroids's picture

Asteroid 2012 DA14 is not a threat. Asteroids frequently dip below 23,000 miles where geosync satellites live.

Wed, 04/18/2012 - 23:55 | 2357204 TBT or not TBT
TBT or not TBT's picture

And if its kinetic energy is merely that of a standard thermonuclear bomb....

....it would have to strike a city, or a nuke plant, to be a much of a hit to the global economy.   Now if it hit DC(really long odds but better than a lottery ticket), it could actually help us out, if I understand the slant of the article.

Wed, 04/18/2012 - 23:57 | 2357208 NotApplicable
NotApplicable's picture

Did you read what he wrote? It isn't about it passing that close, but rather the closer the ESTIMATE is, the less accurate it becomes, meaning it could be further away, or it could be closer. Much closer.

Yet, as a rebuttal, you claim it's not a danger.

Wed, 04/18/2012 - 20:15 | 2356703 El
El's picture

So the S is NOT going to HTF in the next year or two? And here I was rushing to be prepared.

 

It occurs to me that this won't be like any other time in history, because we aren't talking about 1 or 2 countries here. We are talking about many countries facing the same issues. If several of the PIIGS fall, seems to me that throws your whole time prediction out of whack. Seems to me like the domino effect could start in any number of areas.

Wed, 04/18/2012 - 22:41 | 2357050 Cheduba
Cheduba's picture

The PIIGS came on my radar almost two years ago and every single day since then, I've woken up and wondered if this was the day the market would be obliterated.  The long slog to armageddon continues and if this does continue for five more years, I will probably go clinically insane.  I feel very sorry for the people who knew about the collapse back in the early 2000's and have had to wait so long.

Wed, 04/18/2012 - 20:11 | 2356724 youngman
youngman's picture

I like this analysis also...but he does leave out the rest of the world....China´s ambitions...Russia´s also....Sharia Middle east....the EU, Britain, Japan....if one fails it could speed things up...I am with the 5 more years crowd....but it will not be a smooth ride....crisis after crisis will seem to be averted...they won´t ..just kicking the can

Wed, 04/18/2012 - 20:19 | 2356738 DavidC
DavidC's picture

"...the Federal Reserve...have pushed the US economy into a circumstance that can't be sustained but from which there is no graceful exit".

There was an opportunity in 2008/2009, categorically, where this could have been done, namely to let the TBTFs go under. It could still be done, but it won't (particularly when the Fed itself is leveraged at about 53 to 1).

It's over.

DavidC

Wed, 04/18/2012 - 20:24 | 2356748 Oh-Globits
Oh-Globits's picture

does writer of this post make the "assumption" that the US dollar will remain the reserve currency? which is a really big assumption...somehow I think not. 

Wed, 04/18/2012 - 20:47 | 2356804 dick cheneys ghost
dick cheneys ghost's picture

More information about the "Petrodollar" system please...........To me (im sure im wrong) the Petrodollar system is what these sociopaths seem most intent on saving.........

 

Any thoughts?

Thu, 04/19/2012 - 09:51 | 2358054 Eugend66
Eugend66's picture

IMVHO, the USD for OIL was agreed upon by most govt`s, as the USD was the currency they hold their savings in. Also how the oil producers should act with their gains, by buying USTs.

Now, the deal is almost gone .... . The USD today is better used by non-americans, making deals allover the world, while the US offers are shuned. The wealh without a country is fighted right now by the BRICS and not only by them.

Peace.

Wed, 04/18/2012 - 20:32 | 2356764 Oh-Globits
Oh-Globits's picture

"The WALL was too high as you can see and no matter how he tried he could not break free...and the worms ate into his brain" -Roger Waters

Wed, 04/18/2012 - 20:37 | 2356779 Bluntly Put
Bluntly Put's picture

How can the government be forced to pay higher and higher rates to induce investors to take more of the paper while at the same time the fed or their proxies are buying up the debt to keep interest rates low? Seem implausible. Also left out the effect of rampany crony fraud, err financialized speculation upon the economy resulting in bigger and more numerous bailouts from which crony corporations and banks sink right back into mal-invested debt or over-leveraged sectors of the econony.

Why not just say it's all broken but can limp on in some zombie state for a decade or more simply because the dollar is still the world's reserve currency. Now should that change....

Wed, 04/18/2012 - 22:45 | 2357061 delacroix
delacroix's picture

interest rate derivatives create a false demand for treasuries,  watch them grow, in the near future. from billions, to trillions, to?  www.youtube.com/watch?v=yUthe4VHuHg

Wed, 04/18/2012 - 21:00 | 2356847 yummi
yummi's picture

Thanks for the insight.  Question:  This appears to be based strictly on "status quo" ie: Just the math.  What happens to the timeline if there is a shock to the system like Iran / Isreal or China gets grummpy and stops buying bonds or Euro failure?  Anyway to account for some of the variables like that?  

 

Thanks as always

Wed, 04/18/2012 - 21:32 | 2356868 Dr. Engali
Dr. Engali's picture

I don't know why these people who look at the debt level of Japan and try to compare us to them. They don't seem to understand the fact that the size of our debt dwarfs theirs. There isn't enough money out there, without serious serious printing, for the U.S to obtain those same debt levels. Our economy is three times the size of Japan. Who out there is going to buy another 20 trillion dollars of U. S. debt? Everybody is chocking on the crap already.And that is before we get to the unfunded liabilities. The other problem in comparing us to Japan is that we produce nothing but consume everything.

Wed, 04/18/2012 - 21:19 | 2356895 dwdollar
dwdollar's picture

No one knows when we hit the fucking wall, but half the fun is guessing.

Wed, 04/18/2012 - 21:23 | 2356911 Dr. Engali
Dr. Engali's picture

I predict Tuesday June 8th at 9:43am.

Wed, 04/18/2012 - 23:58 | 2357211 Yes_Questions
Yes_Questions's picture

 

 

6, 8, 9, 4+3?

6, 8, 9, ..7...

thats freaky.

I am only afraid of two things.  One of them is an oddly placed primary number.

Wed, 04/18/2012 - 21:27 | 2356917 Fix It Again Timmy
Fix It Again Timmy's picture

Perhaps, just perhaps, Asteroid DA14 will ring Washington, D.C.'s bell... We can hope, can't we?

Wed, 04/18/2012 - 21:33 | 2356923 Monedas
Monedas's picture

Guns and Butter !  Fiat makes it easy for our elected leaders to compromise and make the real tough bargains !  Yeah, everybody gets what they want !  They lock themselves in a room....smoke cigars, drink and play cards....and everyone comes out a winner !  Oh yeah, and they don't forget to deal themselves in with generous salaries and incredible perks !   Monedas  2012   Federal Court Services and Offender Services has exceeded it's black equal opportunity quota by over 800% again ! The primates are running the inmates !  Hit the wall ?  Let me just say:  Today is April 18, 1929 !

Wed, 04/18/2012 - 21:34 | 2356929 q99x2
q99x2's picture

How Far to the Wall?

It is infinite unless you take the first step.

Wed, 04/18/2012 - 23:54 | 2357202 Yes_Questions
Yes_Questions's picture

 

 

Are we infinite yet?

Wed, 04/18/2012 - 21:45 | 2356942 mickeyman
mickeyman's picture

The asteroid is transitory.

Thu, 04/19/2012 - 01:50 | 2357380 TheMerryPrankster
TheMerryPrankster's picture

On a long enough timeline the survival rate drops to zero.

Wed, 04/18/2012 - 21:47 | 2356946 Monedas
Monedas's picture

12 of Obama's elite "Head Start" Secret Service detail were compromised for $47 by some street smart Colombian coke hookers ! That less than $4 per Negro....and they haven't been put before the firing squad wall ?  Monedas  2012   Comedy Jihad Surreal Word Cartoons

Wed, 04/18/2012 - 22:17 | 2356948 BlackholeDivestment
BlackholeDivestment's picture

Thingy http://news.gather.com/viewArticle.action?articleId=281474981270167   

Thingy http://video.msnbc.msn.com/nightly-news/47035488/#47035488  

http://www.israelnationalnews.com/News/News.aspx/154836#.T49vsqtI-a2  

http://www.jpost.com/NationalNews/Article.aspx?id=266524 

http://www.jpost.com/Headlines/Article.aspx?id=266587

http://www.croatiantimes.com/news/Around_the_World/2012-04-15/26423/Quake_Expert:_Earth_Cracking_Up

http://theextinctionprotocol.wordpress.com/2012/04/17/did-n-sumatra-earthquakes-set-off-a-chain-reaction-planet-shaken-by-shocking-number-of-tremors-since-april-11-2012/

http://www.kwch.com/weather/kwch-kansas-hit-by-more-than-months-worth-of-tornadoes-20120415,0,1312799.story

http://hisz.rsoe.hu/alertmap/site/?pageid=event_desc&edis_id=EP-20120331-34728-CHN  

http://www.foxnews.com/scitech/2012/04/17/spectacular-solar-flare-erupts-from-sun/ 

http://www.volcanodiscovery.com/sangay/news/8079/Sangay-volcano-Ecuador-activity-update-growing-lava-dome-lava-flows-and-ash-explosions.html

http://www.ansamed.info/ansamed/en/news/sections/politics/2012/04/18/MidEast-2-states-only-solution-Israel-commit-Jordan-King_6737728.html 

http://bible.cc/1_thessalonians/5-3.htm

...American debt? Lol. Take a look around, like say the EU. Lol. Uh, it's a global bubble and 2013 is when it hits like an Iranian bomb going off in a tornado during an earthquake with a tsunami, as a flu outbreak happens, as a solar storm rains down in a flood while roits rise in the cities etc...Lol. http://www.youtube.com/watch?v=YdpllAHo0ng

Wed, 04/18/2012 - 23:51 | 2357196 Yes_Questions
Yes_Questions's picture

 

 

hug the ones you love:

http://www.youtube.com/watch?v=vN1SyaSdCeM

Wed, 04/18/2012 - 21:51 | 2356955 Monedas
Monedas's picture

Obama's SS detail are used to pimpin' hos.....not payin' fo' 'em !  Monedas  2012   Comedy Jihad Failure To Communicate

Wed, 04/18/2012 - 21:58 | 2356963 Yes_Questions
Yes_Questions's picture

 

 

people will be quick to spend the newly created cash

 

Paging Sheila Bair..

 

WTF, this made me pause.  Money is not to be in the hands of people.  Unless there will be a Universal Primary Dealer Act 2012-AD14.

Got a pulse?, well step right up to the window.

Wed, 04/18/2012 - 22:03 | 2356972 Monedas
Monedas's picture

I want to see a "perp walk" in front of a wall !  It's a SS detail....not a deep cover CIA cell....they're in public....they're picked to be in public....put Eric Holder in the line up as well !   Monedas  2012  Comedy Jihad Pimping Michelle

Wed, 04/18/2012 - 22:15 | 2357005 buzzsaw99
buzzsaw99's picture

this is usa-centric rubbish. foreigners allow we in the usa to live beyond our means, not the congress or the fed. when that arrangement will end is anyone's guess.

Wed, 04/18/2012 - 22:19 | 2357007 xcehn
xcehn's picture

"As the calm spreads like a fog over the financial sphere, the level of risk rises. As the phony recovery stories propagate like a disease from the host, the level of risk rises. As the US political race takes center stage and the stakes increase, the level of risk rises. Events are catapulting in a loose coordination that is very difficult to observe, except for the quicksand in Spain."

http://news.goldseek.com/GoldenJackass/1334260800.php

Wed, 04/18/2012 - 22:23 | 2357015 Red Heeler
Red Heeler's picture

In Memory of Cisco - Man's Best Friend

http://www.dailymail.co.uk/news/article-2130834/Caught-camera-Moment-police-shoot-mans-dog-dead-responding-911-WRONG-address.html

Too many more incidents like this and a financial wall won't be the one that comes down.

Wed, 04/18/2012 - 23:49 | 2357191 Yes_Questions
Yes_Questions's picture

 

 

Dominoes.

Wed, 04/18/2012 - 22:37 | 2357038 Paul Atreides
Paul Atreides's picture

How far to the wall?

How long is a piece of string?

Thu, 04/19/2012 - 01:45 | 2357375 TheMerryPrankster
TheMerryPrankster's picture

how long is a ruler?

Wed, 04/18/2012 - 23:01 | 2357081 Bansters-in-my-...
Bansters-in-my- feces's picture

Balls to the wall....It's a fucking Ponzi

And they are all criminals.....the bankers and the politicians.

Funny what a suit can do.

Wed, 04/18/2012 - 23:45 | 2357175 Yes_Questions
Thu, 04/19/2012 - 00:31 | 2357098 sitenine
sitenine's picture

"The US may outdo Japan's ratio before hitting the wall. The capital markets will tolerate an especially high debt-to-GDP ratio for the US for a simple reason – it's safer than most other places. It doesn't get invaded, it doesn't get blown up in wars, it doesn't have revolutions and it hasn't destroyed its currency recently. ..."

 

This is the most ignorant paragraph I've ever read.

A few points that might interest you, Mr Terry Coxon:

1) Americans are so not Japanese.

2) The US is safer - yeah, sure, that's because everyone is in jail.

3) No invasion?  There are as many Mexicans in the US as in Mexico City - maybe more.

4) The US perpetually blows itself up financially in wars all over the World.

5) Revolution is inevitable, given a long enough time line.

6) Hasn't destroyed its currency recently??  Are you even remotely serious?

[edit] you can redact point 2.  It just occurred to me that there are no bankers in jail.  My humblest apologies for the oversight.

Wed, 04/18/2012 - 23:22 | 2357110 essence
essence's picture

poster CvlDobd

Thanks for the George Carlin link.

I was aware that his comedy was anti-establishment, but in these videos he took his awareness to a whole 'nother realm.

"The owners of the U.S." .... yeah, he was speaking the truth.
Everything he said still applies.

RIP George,  the now fascist U.S. is now no country for old, free-speaking men.

Wed, 04/18/2012 - 23:43 | 2357161 Yes_Questions
Yes_Questions's picture

 

 

nope, just old-free range psychotic and psychopathic ones.

Dennis Miller once commented on that "good fucking luck look" in the eyes of those on their way out to the great unknown.  Carlin embodied it.

After the Reset, may there be a paid holiday in honour of ole George, and a sad song in regret of poured out ole Dennis.

 

Wed, 04/18/2012 - 23:36 | 2357141 worbsid
worbsid's picture

Here is a George Carlin Moment for you in graph form.

http://205.153.117.210/consumption/images/petromap.jpg

Thu, 04/19/2012 - 00:26 | 2357165 bluebare
bluebare's picture

Just a reminder of the oft-cited premise by some of zhers that, historically, immoral financial walls have frequently mutated in non-linear fashion and been flushed unclean and obscene away by the profoundly greater evils of war. 

George Carlin - We Like War

Wed, 04/18/2012 - 23:51 | 2357197 Joseph Jones
Joseph Jones's picture

Tyler,

Hope you are well.  Blessings to you for such a fine blog and your hard work.

 

 

Thu, 04/19/2012 - 00:31 | 2357269 michael_engineer
michael_engineer's picture

If the asteroid trajectory was randomly distributed in a 17 K miles circle centered on the earth with a radius of 4 K miles, then the probability of it hitting would be approximatly the ratio of 4 K squared divided by the 17 K squared which would be around one in 18.  But the 17 K estimate at closest approach even with a little variance is probably almost negligible.  But be on the watch for any keyhole redirections that could bring it back later, like how Shoemaker Levy returned to Jupiter after being split into a string of pearls. 

 

http://www.google.com/search?q=shoemaker+levy&hl=en&client=safari&rls=en...

Thu, 04/19/2012 - 00:55 | 2357301 michael_engineer
michael_engineer's picture

Regarding the debt and GDP thingy, the below is an interesting quote on new debt's relation to GDP from this article :

http://articles.businessinsider.com/2010-03-21/markets/29960893_1_new-de...

Back in the early 1960s a dollar of new debt added almost a dollar to the nation’s output of goods and services. As more debt enters the system the productivity gained by new debt diminishes. This produced a path that was following a diminishing line targeting ZERO in the year 2015. This meant that we could expect that each new dollar of debt added in the year 2015 would add NOTHING to our productivity.

So is that collision in around 2015 the real bad boy that we should be looking out for?  It does appear to be on a collision course with the targeted zero.

Thu, 04/19/2012 - 01:47 | 2357376 upb
upb's picture

spain auctions!!!  who gives a sh*t  http://bit.ly/InjmWd

Thu, 04/19/2012 - 01:58 | 2357383 cranky-old-geezer
cranky-old-geezer's picture

 

 

Why all these "what if" articles?

It's obvious what's ahead, more currency printing to fund more debt and more bailouts, steadily diluting the dollar, silently robbing more wealth from everybody using the dollar, till the dollar simply becomes worthless, or till other nations say "enough" and start dumping the dollar en masse, whereupon the dollar will suddenly collapse to nothing.

Steady debasement to nothing, or sudden rejection by the rest of the world and collapsing instantly, who can say?

50 years ago America was the strongest economic power on the planet and the dollar was a strong stable currency.

Not anymore.  America is a second-rate has-been now, relying on currency printing rather than production, living on borrowed wealth rather than producing things and creating wealth,  and the dollar has lost it's strength too from all the currency printing needed to fund ever growing debt and never ending bailouts of criminal bankers.

It's sheer insanity what the federal government is doing, growing 10% a year while the economy is shrinking 10% a year and tax revenue is shrinking 10% a year, making up that ever growing gap by printing more currency.

No, the federal government will never default.  They don't have to.  The Fed has a printing press and can print all the dollars the government needs to borrow.

But it's destroying the dollar, losing 40% of its value in the past 4 years.

There is no "wall" out there somewhere we're gonna hit.  It's not a wall, it's a pit we're sliding into, a 3rd world sorta pit, as the government drains more and more wealth from the people, reducing the people to poverty so the federal government can go on living like kings, having everything they want.

We're already under feudal rule.  It started with property taxes.  You don't own your land anymore, the government owns it, and you have to pay rent on it every year or they'll kick you off it and rent it to someone else who pays the rent.

Between taxes and inflation Americans have already been reduced to sharecroppers under a feudal government that owns pretty much everything, and if you don't think so just stop paying that property tax (land rent) and see what happens. 

What they don't steal thru taxes they steal thru inflation.  Take whatever your effective tax rate is and add 20% to it for the silent never-mentioned inflation tax, which means you're probably paying upwards of 60% of your earnings in taxes now, certainly way more than half.

And STILL no "revolution".

What's it gonna take?  80% taxation?  90%?

You think 90% is crazy?  Never will happen?

Wait till the dollar collapses, and watch 90% of your wealth vaporize right before your eyes.

We don't need any more "what if" articles, we KNOW what's gonna happen, CURRENCY COLLAPSE, either steadily from never-ending currency printing, or suddenly when other nations decide to reject the dollar once and for all, and yes they'll all do it more or less at the same time.  When one nation rejects it, everybody else will stampede for the door too, nobody wants to be the last one holding a bunch of worthless dollars (or treasuries).

Thu, 04/19/2012 - 07:50 | 2357657 DanDaley
DanDaley's picture

Why can't anyone see?  Because like Keynes said, "Not one person in a hundred can detect the government stealing your money through inflation."  It's a great scam and they know it.

Thu, 04/19/2012 - 02:45 | 2357420 Hobbleknee
Hobbleknee's picture

We went straight through the wall and off the cliff behind it.  It's a long drop to the bottom.

Thu, 04/19/2012 - 03:38 | 2357446 Thomas Jefferson
Thomas Jefferson's picture

I found the article to be a bit optimistic.  If we are lucky enough to get the scenario outlined in the article then I would be ecstatic.  There are too many other things going on in the world that could impact this timeline.  What impact would an inevitable greater war in the Middle East have?  What about a disorderly default in Europe?  What impact will the BRIC nations barter/trade initiatives bring to the table?  I agree with the concept of what money is needed will be printed but at what cost?

I'm leaning towards an international financial implosion followed by a bank holiday in 5 years.  Debt restructuring and currency revaluations to follow.  US dollar to take a 30-50% hit in that endeavor.

Good article and thought provoking but timing is always a b_tch.

Thu, 04/19/2012 - 09:41 | 2358013 Raging Debate
Raging Debate's picture

Jefferson - For timing I beleive one watches the emerging Chinese currency reserve and interbank trading which is revealing a defacto situation. It all started when Nixon went to China. 2014 will be the year of rapid Yuan evaluation upward and Dollar devaluation. I belive your figure sounds about right. It will become $7 gas and $5 loaf of bread. The U.S. will become protectionist.

If we have no world war perhaps recovery in 2018. I believe recovery will begin in 2021 post WW3. Time to work on a basic trade like electrician.

Thu, 04/19/2012 - 04:52 | 2357500 RECISION
RECISION's picture

In February of next year, its approach path, as recently estimated, will bring it to within 17,000 miles of the Earth... Its path may veer this way or veer that way. And in astronomical terms, 17,000 miles is very, very close – closer than most man-made satellites. 

Umm... No...?

Most man-made satellites are Low-earth-orbit I believe.

Which is a lot closer than 17,000 miles.

But I stand to be corrected.  If you have better info, feel free to share it.

Thu, 04/19/2012 - 06:21 | 2357564 orangegeek
orangegeek's picture

Barry knows that if he keeps spending, the markets have a CHANCE of staying up.

 

These markets don't look so healthy as it is:  http://bullandbearmash.com/index/djia/daily/

 

If Barry stops spending, we are likely to see markets slide.

 

Why are the markets so important?  Because Barry knows Barry won't have a chance in h* of getting re-elected if the markets tank.

Thu, 04/19/2012 - 06:56 | 2357608 writingsonthewall
writingsonthewall's picture

Why are the markets so important?  Because Barry knows Barry won't have a chance in h* of getting re-elected if the markets tank.

Is that because American voters are so dim they think the President / Congress / Senate control the Economy?

 

The idea that anyone is in control contradicts the idea of a market - and is also a demonstration of irresponsibility (usually from those who command others to show it) - as it's always "someone else's fault".

 

Capital and money is all around - truth is the rare commodity these days - and no more so than 'self honesty' from the voter.

Fri, 04/20/2012 - 09:32 | 2360838 IToldYouSo
IToldYouSo's picture

writings....

its a sign of the times we live in. Most people know there is some kind of problem out there, unfortunately too many dont want the solution to include anything that remotely affects them

By the way, are you the the legendary WSOTW of RP fame?

Thu, 04/19/2012 - 06:53 | 2357602 writingsonthewall
writingsonthewall's picture

Deficits are particularly useful for politicians as it's one of the few 'differentials' between parties.

 

It allows one side to take the position of 'debts don't matter if you own your own currency' - and the other side to scream about the catastrophe of the mounting debts.

 

The truth is neither of these positions help anything but elections - the debts are caused by surplus value (and always have been) as Governments try to avoid angry workers striking by subsidising their falling wages with 'bounty' - AKA handouts and welfare.

 

The right want to go back to a world of strikes and anger - the left will risk bankruptcy to avoid it. Both paths are strewn with cowpats and holes and neither will address the underlying contradictions of Capitalism.

So you have competing parties arguing for the electorates attention for solutions that will never work.

 

Until someone is brave enough (or independent enough) to expose these contradictions then all solutions offered wil be false - or will cause so much turmoil you will wish you hadn't bothered.

Sadly with corporations benefiting so much from Capitalism - and it's inevitable monopoly of capital - and the Government pandering to their wishes - then this is unlikely to change until the people's needs outweigh the corporations desires.

 

I still laugh at those who say we need a different kind of capitalism - people who show their lack of understanding of what capitalism is, does and will always and inevitable morph into - Fascism.

 

However I hear denial is all the rage these days - even on Zh where most people have recognised the 'doom' which is coming - we still get those who want to merely tweak the system in the hope that a 'return' to past practices will result in a return to past economic growth.

Again - these people misunderstand how we got here and why we got here - and how 'returning' will simply make the problem start all over again - and create new problems.

Thu, 04/19/2012 - 09:38 | 2358010 TheEmperor
TheEmperor's picture

That's not an asteriod.....Thats a space station!

Thu, 04/19/2012 - 09:55 | 2358059 Smokey1
Smokey1's picture

This article sucked shit.

If that stupid cocksucker thinks the USA has until 2022 before the serious problems begin, he needs to find another profession. My 6 yr old niece knows more about the economy than that asshole.

Thu, 04/19/2012 - 14:19 | 2359030 Hondo
Hondo's picture

We all know, or should know, that with debt as large as it is there is absolutely NO way to inflate debt away.  In the US total debt is 4X the size of GDP.  The increase in interest rates associated with higher inflation would be highly correlated.  Deficits would increase as the interest on debt would be increasing faster than revenues, and would replace discretionary expenditures in a very short period..........In a nutshell it will not work..

Thu, 04/19/2012 - 20:41 | 2359979 blueridgeviews
blueridgeviews's picture

It is sad for me to think , but I still do, that inflation is the only path thats seems reasonable for the Fed to take. Considering the Fed is an appointed position I guess he or she works for the President, not the people. There's something to chew on for a while. Did your represeentative vote for the last debt increase to fund all the suicidal spending the gov't deems necessary? If they did, then vote them out!

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