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Guest Post: A Matter Of Trust - Part Two

Tyler Durden's picture




 

Submitted by Jim Quinn of The Burning Platform

A Matter Of Trust - Part Two

This is Part 2 of my three part series on trust. Part 1 addressed the history of bubbles and busts and the role trust plays in these episodes. In the end, truth is what matters.

“Trust starts with truth and ends with truth.” - Santosh Kalwar

Hundred Year Bust

 

“Debasement was limited at first to one’s own territory. It was then found that one could do better by taking bad coins across the border of neighboring municipalities and exchanging them for good with ignorant common people, bringing back the good coins and debasing them again. More and more mints were established. Debasement accelerated in hyper-fashion until a halt was called after the subsidiary coins became practically worthless, and children played with them in the street, much as recounted in Leo Tolstoy’s short story, Ivan the Fool.” – Charles P. Kindleberger – Manias, Panics, and Crashes

The Holy Roman Empire debased their currency in the early 1600s the old fashioned way, by replacing good coins with bad coins. Any similarities with the U.S. issuing pennies that cost 2.4 cents to produce and nickels that cost 11 cents to produce is purely coincidental. I wonder what the ancient Greeks would think of our Olympic gold medals that contain 1.34% gold. The authorities have become much more sophisticated in the last one hundred years. Digital dollars are so much easier to debase. The hundred year central banker scientifically manufactured bust relentlessly plods towards its ultimate conclusion – the dollar reaching its intrinsic value of zero.

 

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford

Henry Ford made this statement decades before the debasement of our currency entered overdrive. The facts reflected in the chart above should have provoked a revolution, but the ruling class has done a magnificent job of ensuring the mathematical ignorance of the masses through government education, mass media propaganda, and statistical manipulation of inflation data to obscure the truth. Mainstream economists have successfully convinced the average American that inflation is good for their lives and deflation is dangerous to their wellbeing. There are economists like Kindleberger, Shiller and Roubini who have brilliantly documented and predicted various bubbles, despite being scorned a ridiculed by the captured mouthpieces for the oligarchs. But even these fine men have a flaw in their thinking. They can see speculative manias spurred by irrational beliefs and delusional thinking, but are blind to the evil manipulations of bankers, politicians, and corporate titans. They believe that humans with Ivy League educations can outsmart markets and through the fine tuning of interest rates, manipulation of the money supply and provision of liquidity through a lender of last resort, can control the financial system and avoid panics.          

Kindleberger understood the dangers, but still concluded that the Federal Reserve lender of last resort was a desirable entity which would be a benefit to the smooth functioning of the economic system and people of the United States.  

“I contend that markets work well on the whole, and can normally be relied upon to decide the allocation of resources and, within limits, the distribution of income, but that occasionally markets will be overwhelmed and need help. The dilemma, of course, is that if markets know in advance that help is forthcoming under generous dispensations, they break down more frequently and function less effectively.

The dominant argument against the a priori view that panics can be cured by being left alone is that they almost never are left alone. The authorities feel compelled to intervene. In panic after panic, crash after crash, crisis after crisis, the authorities or some “responsible citizens” try to bring the panic to a halt by one device or another. The learning has taken the form of discovering the desirability and even the wisdom of a lender of last resort, rather than relying exclusively on the competitive forces of the market.” -– Charles P. Kindleberger – Manias, Panics, and Crashes

Kindleberger’s reasoning seems to be that since egomaniac busy bodies in power always interfere in markets in order to convince voters they care; it is desirable to institutionalize this intervention. Book smart academics always think they can outsmart the markets and correct the errors caused by the flaws endemic across all humanity. Well-meaning brainy economists like Kindleberger, Shiller, and Stiglitz easily identify the irrationality of human nature in creating havoc with our economic system, but somehow conclude that human constructs like the Federal Reserve, tinkering with interest rates, controlling money supply, and applying fiscal stimulus can be managed to the benefit of the American people. This is a foolish notion and has been proven to be disastrous for the majority of the American people.

Why wouldn’t the same human flaws that lead to booms and busts manifest themselves in the actions of bankers and politicians selected to manage and control our economic system? Therein lays the problem and the need for a true free market method of dealing with our human frailties. The false storyline of Democratic socialism versus Republican free market capitalism is nothing more than propaganda talking points designed to keep the non-critical thinking public distracted from the looting and pillaging of the nation’s wealth by our owners – the wealthy powerful elite who have captured our political, economic and financial system. The “solution” to create a private central bank has created more crises than it has prevented.

When examining Kindleberger’s list of manias, panics and crashes, you will note that prior to 1913 almost all of these crashes occurred over the course of two years or less. The creation of the Federal Reserve was supposedly in response to the 1907 panic, created by J.P. Morgan, who then nobly came to the rescue of the banking system. He then secretly led the effort to create a central bank that would function as the lender of last resort during future panics. Forbes magazine founder B.C. Forbes later described the meeting that hatched the malevolent plan for the creation of a banker controlled Federal Reserve:

“Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily riding hundreds of miles South, embarking on a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned, lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing; I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written.”

The American people should have been alarmed that a small group of powerful bankers designed the Federal Reserve and it was passed into law in the dead of night on December 23, 1913 with 27 Senators not even in Washington D.C. to vote on the bill. Something done this secretively never leads to a positive outcome. It is beyond question the creation of a private lender of last resort has not ended the boom and bust cycles of our economic system, but it has intensified and protracted them.

The Great Depression, which was precipitated by Federal Reserve easy money policies during the 1920s, Federal Reserve missteps in the early 1930s, and FDR driven government intervention in the markets, began in 1929 and did not truly end until 1946. The easy money Federal Reserve policies during the 1970s, along with Nixon’s closing the gold window, and commencement of our welfare/warfare state, led to a prolonged crisis from 1973 through 1982. The Federal Reserve easy money policies in the late 1990s and early 2000s, along with the repeal of Glass Steagall, belief that bankers could be trusted to regulate themselves, and capture of regulators, rating agencies, and politicians by Wall Street, has led to two prolonged epic busts between 1999 and 2009, with the biggest bust still coming down the track. Putting our trust in a secretive society of bankers has worked out exactly as expected, with bankers and their cronies becoming obscenely wealthy, while the average person has seen 96% of their purchasing power inflated away since the Federal Reserve’s inception.

The illusion of prosperity through debt and inflation does not change the fact that the inflation adjusted wages of blue collar manufacturing workers are lower today than they were 40 years ago. Luckily for your owners, 98% of Americans don’t know or care what the term “inflation adjusted” means. As long as they can keep buying stuff with one of their 15 credit cards, life is good. Ignorance is bliss.

 

The debate regarding whether markets should be allowed to correct themselves or be saved by the authorities has transcended the centuries. Kindleberger poses the dilemma succinctly:  

“There is of course much truth in these contentions, and some danger in coming to the rescue of the market to halt a panic too soon, too frequently, too predictably, or even on occasion at all. The opposing view concedes that it is desirable to purge the system of bubbles and manic investment but that a deflationary panic runs the risk of spreading and wiping out sound investments that may not be able to obtain the loans necessary to ensure survival.” – Charles P. Kindleberger – Manias, Panics, and Crashes

The lack of historical understanding and politically correct education doled out in public schools perpetuates the myth that Herbert Hoover was a do nothing non-interventionist that allowed the Great Depression to worsen because he refused to intervene. The truth is that FDR just continued and expanded upon the massive intervention begun by Hoover. It was Hoover, not Roosevelt, who commenced the policy of piling up huge deficits to support massive public-works projects. After declining or holding steady through most of the 1920s, federal spending soared between 1929 and 1932, increasing by more than 50%, the biggest increase in federal spending ever recorded during peacetime. Public projects undertaken by Hoover included the San Francisco Bay Bridge, the Los Angeles Aqueduct, and Hoover Dam. His description of the advice of his Treasury Secretary has been passed down to the ignorant masses as his actual policy. But it’s another false storyline propagated by the mainstream media.  

“The leave-it-alone liquidationists headed by Secretary of Treasury Mellon felt that government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula: ‘Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.’ He insisted that, when the people get an inflationary brainstorm, the only way to get it out of their blood is to let it collapse. He held that even panic was not altogether a bad thing. He said: ‘It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.” – Herbert Hoover

In retrospect, Andrew Mellon’s advice, if followed, would have resulted in a short violent collapse, with a true recovery within a year or two (aka Iceland). This exact scenario had played out over the prior three centuries, as detailed by Kindleberger. The monetary intervention, tariffs, mal-investments, price controls, intimidation of businesses, and overall interference in the markets kept a true recovery from happening. Unemployment was still 19% in 1938, after years of stimulus. It wasn’t until 1946 that the U.S. economy started a real recovery, and that was due in part to the rest of the world being left in a smoldering ruin.

Based on the catastrophic results over the last hundred years, you would think the non-interventionist view on markets would be gaining traction. But, the interventionists gain even more power as they propose and implement more resolutions to the disasters they created with their previous solutions. The belief in the wisdom and ability of a few men to control the levers of a $70 trillion world economy for the good of the many is staggering in its naivety and basis in delusion. “Experts” can barely predict tomorrow’s weather, this month’s unemployment rate, the value of Facebook stock, or the next $5 billion snafu from the Prince of Wall Street – Jamie Dimon. But, we trust that Ben Bernanke, his fellow central bankers, and bunch of political hacks like Geithner know how to micro-manage the world economy.

Kindleberger understood exactly the risks in having an institutionalized lender of last resort:        

“One objection to helping either the borrowing banks and industry or lending to capitalists abroad was that it made both less prudent. In the insurance area this effect is called “moral hazard.” It is a strong argument for letting a financial crisis recover by itself, provided one is willing to take a long term view and worry equally, or almost equally, about a future financial crisis, as opposed to the present one. It requires a low rate of interest for trouble.” – Charles P. Kindleberger – Manias, Panics, and Crashes

And there is the rub. It is a rare case when faced with an immediate crisis that a leader will step back and assess the long-term implications of the short-term solutions which will avert or delay the crisis at hand. The present-day economic situation around the world is a result of no one ever worrying about a future financial crisis, because it was never a good time to bite the bullet and accept the consequences of our mistakes and failures. The solution for the last thirty years has been to kick the can down the road. This is how you end up with $100 trillion of unfunded liabilities, with the bill being passed on to future unborn generations.

 

When you combine this lack of leadership, courage and forethought with the fact that Federal Reserve governors are appointed by partisan political hacks, you produce a deadly potion for the trusting American populace. You end up with spineless weasels like Arthur Burns, who was bullied into easy money policies by Tricky Dick Nixon, with the result being out of control inflation and a stagnating economy for ten years. You end up with a once staunch proponent of a currency backed by gold – Greenspan – turning into a tool for the Wall Street elite and rescuing them from their folly and extreme risk taking with other people’s money. You get a former Bush White House toady like Bernanke whose only solution to every problem is to fire up the helicopter and drop gobs of cash into the clutches of his Wall Street puppeteers. Whenever human nature is allowed to interfere with and tinker with the free market economic process, miscalculation, error, over-confidence, desire to please, self-interest, greed, and hubris lead to disaster.

Those who scorn the notion of a currency backed by gold are believers in the false premise that highly educated arrogant men are smarter than the markets and are capable of making the right decisions that will benefit the most people. These are the same people who prefer the actual results since Nixon closed the gold window in 1971 to be obscured, miss-represented and ignored. In 1971 total credit market debt outstanding was $1.7 trillion. Today it stands at $54.6 trillion, a 3,200% increase in the 40 years since there were no longer immediate consequences for politicians over-promising, Wall Street over-lending, consumers over-borrowing and central bankers over-printing.    

 

The GDP of the U.S. was $1.1 trillion in 1971, with consumer spending only accounting for 62% and capital investment accounting for 16%. Today, GDP is $15.6 trillion with consumer spending accounting for 71% and capital investment only 12%. Trade surpluses of the early 1970s are now $600 billion annual deficits. Total debt to GDP has surged from 155% in 1971 to 350% today. The illusion of prosperity has been built on a mountain of debt with an avalanche imminent.

 

The truth is that human beings cannot be trusted to do the right thing. We are weak and susceptible to irrational and short-term thinking that now imperil our entire economic system. Did the gold standard prevent booms and busts prior to 1913? No. Since we are human, booms and busts cannot be prevented. Did the gold standard prevent politicians and bankers from making foolish self-serving short-term decisions that would have long-term negative consequences? Yes. A currency backed by nothing but the hollow promises of liars, swindlers and racketeers is destined to fail. Gold functioned as an alarm bell that revealed the machinations and frauds of politicians and bankers. It can be trusted because it has no ulterior motives, no ego, no desire to be loved, and no plans to run for re-election. It is an inconvenient check on do-gooders, warmongers, inflationists, and Keynesians. That is why it will never be embraced by either party or any central banker. It’s too truthful.

Kindleberger’s fears regarding the moral hazard of rescuing those who have taken excessive risk have been fully realized ten times over. The maestro – Alan Greenspan – should have his picture next to the term moral hazard in the dictionary. His entire reign as savior of American crony capitalism was marked by his intervention in markets to protect his bosses on Wall Street. His solution to every crisis was to lower interest rates and print mo money: 1987 Crash, Savings & Loan crisis, Gulf war, Mexican crisis, Asian crisis, LTCM, Y2K, bursting of internet bubble, 9/11. The Greenspan Put guaranteed the Federal Reserve would always come to the rescue with unlimited liquidity to prop up stock prices. Investors increasingly believed that in a crisis or downturn, the Fed would step in and inject liquidity until the problem got better. Invariably, the Fed did so each time, and the perception became firmly embedded in asset pricing in the form of higher valuations, narrower credit spreads, and excess risk taking. The privatizing of profits and socialization of losses continued and accelerated under Bernanke. These helicopter twins talked a good game, but their game plan only had one play – print money. Those Ivy League educations have proven to be invaluable.  

The Federal Reserve’s last shred of credibility and illusion of independence has been obliterated by their increasingly blatant backstopping of recklessly criminal Wall Street banks and secretive machinations with Washington politicians and foreign central bankers. Bernanke has lied to the American public, encouraged accounting fraud by Wall Street banks, overstepped his legal authority in purchasing toxic assets from Wall Street banks, been involved in the manipulation of LIBOR, screwed senior citizens and all savers with his zero interest rate policy, and used quantitative easing as a method enrich Wall Street at the expense of the general public that bear the heaviest burden of higher food and energy prices. The Bernanke Put is the only thing keeping a clearly overvalued stock market from crashing today. But delaying the inevitable through easy money policies will only exacerbate the pain of the ultimate crash. Bernanke is caught in a liquidity trap and his one weapon of choice is shooting blanks. Bernanke along with his banker and politician cronies have crossed the line of lawlessness in their futile efforts to retain their power and wealth. Jesse eloquently describes how a few evil men have captured our economic and political system:  

“The Fed is now engaged in a control fraud, and what appears to be racketeering in conjunction with a few big investment banks. They may have entered into it with good intentions, but they seem to have been turned towards deceit and corruption. This is not an historical event, but an ongoing theft in conjunction with a number of Wall Street banks, and politicians whom they have paid off through a corrupt system of campaign financing and influence peddling. This is nothing new in history if one reads the un-sanitized version. But people never think it can happen today, that somehow yesterday things were different, as if one is looking at some distant, foreign land. This is a facet of the illusion of general progress.

We are now in the cover-up stage of a scandal, similar to Watergate when the White House was stone-walling. The difference is that the corruption and capture of the government is much more pervasive now, and includes a significant portion of the mainstream media, so meaningful reform is difficult. Most of what has transpired so far has been designed to distract and placate the people in their righteous anger. The Fed deceives the Congress and the public, turns a blind eye to glaring conflicts of interest, and is essentially debasing the currency while transferring the wealth of the nation to their cronies. And still the regulators do not enforce the laws they have, and Washington drags its feet while accepting buckets of cash from the perpetrators.”Jesse

Putting our trust and faith in a few unelected bureaucrats and bankers, who use their obscene wealth to buy off politicians in writing the laws and regulations to favor them has proven to be a death knell for our country. The captured main stream media proclaims these men to be heroes and saviors of the world, when they are truly the villains in this episode. These are the men who unleashed the frenzy of Wall Street greed and pillaging by repealing Glass Steagall, blocking Brooksley Born’s efforts to regulate derivatives, encouraging mortgage fraud, not enforcing existing regulations, and creating speculative bubbles through excessively low interest rates and making it known they would bailout recklessness. They have created an overly complex tangled financial system so they could peddle propaganda to the math challenged American public without fear of being caught in their web of lies. Big government, big banks and big legislation like Dodd/Frank and Obamacare are designed to benefit the few at the expense of the many. The system has been captured by a plutocracy of self-serving men. They don’t care about you or your children. We are only given 80 years, or so, on this earth and our purpose should be to sustain our economic and political system in a balanced way, so our children and their children have a chance at a decent life. Do you trust that is the purpose of those in power today? Should we trust the jackals and grifters who got us into this mess, to get us out?    

 

“This story is the ultimate example of American’s biggest political problem. We no longer have the attention span to deal with any twenty-first century crisis. We live in an economy that is immensely complex and we are completely at the mercy of the small group of people who understand it – who incidentally often happen to be the same people who built these wildly complex economic systems. We have to trust these people to do the right thing, but we can’t, because, well, they’re scum. Which is kind of a big problem, when you think about it.” - Matt Taibbi – Griftopia

Thus concludes Part 2 of my three part series on trust. Part 1 addressed our bubble based economic system and Part 3 will document a multitude of reasons to not trust bankers, politicians, government bureaucrats, corporate chieftains, or the mainstream media, while pondering the unavoidable bursting of our debt bubble and potential consequences.

 

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Tue, 08/07/2012 - 17:37 | 2685872 Central Bankster
Central Bankster's picture

PCLN down 100 bucks after hours muppets!

Tue, 08/07/2012 - 17:49 | 2685905 Blythes Master
Blythes Master's picture

Bullish!!

Wed, 08/08/2012 - 01:39 | 2686829 4horse
4horse's picture

" . . . and Part 3 will document a multitude of reasons to not trust bankers, politicians, government bureaucrats, corporate chieftains, or the mainstream media, fog, vapor, ether, nebula, cumulonimbus and all that is The Cloud around us while pondering the unavoidable bursting of our" r-r-rr-rrretched f-fucking BrainPan over MegaMinds like me and just these kinda metanalyses

 

me. not just another serial killer 

 

Part 4  whom do you suspect

 

Part 5  the usual suspects

 

Part 6  the list exists . . .

 

Part 7  let's get down to specifics bankers, politicians, government bureaucrats, corporate chieftains...the mainstream media, fog, vapor, ether, nebula, bloviation, cloudformation and my very own circumlocumulonimbus all around us you mouthy motherfucker! 

Wed, 08/08/2012 - 03:24 | 2686917 jeff montanye
jeff montanye's picture

wretched, wordsmith.

Tue, 08/07/2012 - 20:38 | 2686330 The trend is yo...
The trend is your friend's picture

Like amazon's miss which was viewed to be positive, PCLN too shall be up tomorrow.  You should buy all you can in after hours to make a killing tomorrow, I know I am

Tue, 08/07/2012 - 20:52 | 2686364 Central Bankster
Central Bankster's picture

I own a number of 630 Aug puts so I already made my killing... and I assume you're being sarcastic about it being up tomorrow right?

Tue, 08/07/2012 - 22:59 | 2686595 aint no fortuna...
aint no fortunate son's picture

Captain Kirk must be devastated!

Tue, 08/07/2012 - 17:41 | 2685879 bob_dabolina
bob_dabolina's picture

I don't know about you all but I trust 'em.

I trust them like I trust a hog sized tick on my ass to suck me dry.

Tue, 08/07/2012 - 17:53 | 2685913 slaughterer
slaughterer's picture

Can we get Banzai in to visualize for us that "hog-sized tick" on the ass sucking someone dry?

Tue, 08/07/2012 - 17:41 | 2685881 A Lunatic
A Lunatic's picture

Yet you continue to play their fucking game. Not you of course, but people like you..........

Tue, 08/07/2012 - 17:43 | 2685891 stiler
stiler's picture

hey, we reserve the status of "scum of the earth"!

Tue, 08/07/2012 - 17:44 | 2685894 same old story
same old story's picture

I'm confused, didn't Tyler post an article a few days back suggesting the Fed was the good guy until Johnson took away its independence and made it a muppet of the treasury?

 

yet here we have the view that the Fed from its inception was just a tool of the bankers and TPTB.   Hmm, which view is correct?

Tue, 08/07/2012 - 17:55 | 2685918 resurger
resurger's picture

trust your instinct same old story, you will find the answer.

Tue, 08/07/2012 - 18:19 | 2685971 CrockettAlmanac.com
CrockettAlmanac.com's picture

It was Truman and the point was that prior to the Fed-Treasury Accord of 1951 the Fed was independent from the Treasury not that it was "a good guy."

Tue, 08/07/2012 - 19:29 | 2686162 silverserfer
silverserfer's picture

mmmm. you have much to lern still grasshoppa

Tue, 08/07/2012 - 17:44 | 2685895 mr_bad
mr_bad's picture

So...you're saying, "we're fucked?"

Tue, 08/07/2012 - 17:47 | 2685897 DOGGONE
DOGGONE's picture

ZH/TD,
You have nothing to complain about -- until you show ongoingly
http://www.showrealhist.com/yTRIAL.html

Tue, 08/07/2012 - 17:51 | 2685909 resurger
resurger's picture

"When you can't borrow the last buck from the bank,  you light a match.

and burn the whole joint out."

Fuck the FED!

Tue, 08/07/2012 - 18:25 | 2685942 falak pema
falak pema's picture

"Truth" is a relative concept. For the Oligarchs "truth" means their version of truth : protecting the movers and shakers of the world; irrespective of whether you have to cheat and dissimulate to get there. Being part of that club is in itself a "badge of truth". If you are a member, your version of truth is stronger than those of non members.

All empires were built on that rule. "God mit uns " expressed that perfectly. In fact as in history, belonging to the inner circle of power was always the key to being a holder of "sacred" truth that none could question.

Today that sacred truth is being part of the US dollar empire. All power and therefore the "real truth", the only truth that counts is derived from that.

By saying or implying that "that" truth is "lies" you declare the sacred circle of power to no longer generate that values the ALL must adhere to. Thats heresy to those in power and their shills.

And, they no longer bow in reality to that old meme of "we the people", to justify their claim on power and the truth that it generates. That meme died when Reaganomics was born. The old meme's decay started on November 22 1963, and the interim period of Johnson/Nixon years saw the birth of the new value system of overt US military hegemony, oil oligopoly, USD fiat monopoly and current financialista oligarchy. 

You hear a lot of people on ZH saying : "democracy is dead and should never have been spawned in the USA, as we as a nation are achievers, and as individuals we don't want to share power with people of IQ <100 who just live off the state hand outs."

There is the basic justification meme of this or any other two tier society. We are moving more and more to its official installment in first world, where the 1% believe their power makes them the uber IQ club and the 99% the under IQ club.   Your article only addresses the decay of US society under the spell of greed and runaway concentration of excessive riches. It does not address the issue of social decomposition of society and value systems.

It is debatable that a "market" could be symbolised as representing the be all and end all of civilization's and people's well being. It is just a tool, a mechanism to achieve a balance between needs of different social groups in society. Its regulation and orientation is not the will of divinities or of the people as a whole; it is always the expression of those who control power. Its has been that since dawn of history. So controlling the market and ensuring it functions to the interest of the "general" public or to those of a "particular" subset is an eminently political decision based on power play within society. Presuming it is self regulatory is like affirming human interests will never be out of phase. Our current dilemma as all other phases of history prove exactly the contrary. Free markets never exist once they become of "political" and strategic importance.

In the final analysis its always the will of people that defines good from bad, progress from decadence. Nothing else, as innovation and technology are just the means that can be misused as today to achieve the opposite to society's progress. Without a sound political framework that allows the general will to express itself the two edged sword of innovation and technology becomes a destructive tool in the hands of the greedy.

It'll take a world crisis for this NWO to win or for it to lose. Tipping point of welfare state/democracy civilization is where we are heading to.

Tue, 08/07/2012 - 18:28 | 2685989 gnomon
gnomon's picture

Welfare State-soon to be dead, (deservedly so as it was a stalking horse to gut the Republic).

Democracy-already dead, (going through the motions now).

Civilization-?? does not compute, (implies a moral base from top to bottom, less at the top, but still there to act as a brake on outliers).

It is back to Wolves and Sheep, me boys.  Sharpen your knives or prepare to be sheared and speared.

Tue, 08/07/2012 - 18:42 | 2686030 nmewn
nmewn's picture
"Every normal man must be tempted at times to spit on his hands, hoist the black flag and begin to slit throats."-HL Mencken
Tue, 08/07/2012 - 18:07 | 2685952 extendedorder
extendedorder's picture

I found a free pdf version of this book . Thanks for pointing it out, excellent read, especially during work.

Tue, 08/07/2012 - 18:08 | 2685956 km4
km4's picture

The GDP of the U.S. was $1.1 trillion in 1971, with consumer spending only accounting for 62% and capital investment accounting for 16%. Today, GDP is $15.6 trillion with consumer spending accounting for 71% and capital investment only 12%. Trade surpluses of the early 1970s are now $600 billion annual deficits. Total debt to GDP has surged from 155% in 1971 to 350% today. The illusion of prosperity has been built on a mountain of debt with an avalanche imminent.

Bingo and Yikes for 98% of Americans

Tue, 08/07/2012 - 18:10 | 2685959 yrad
yrad's picture

I wonder if Ben would read this article. And, if he did, would he feel anger or shame?

Anger on TV, shame in private. My guess...

Tue, 08/07/2012 - 18:46 | 2686017 francis_sawyer
francis_sawyer's picture

Ben???... Read???... Does he know how to do that or does he just sit there waiting for his masters to tell him when to push the CTRL+P button?...

Tue, 08/07/2012 - 18:11 | 2685961 Clint Liquor
Clint Liquor's picture

"We live in an economy that is immensely complex and we are completely at the mercy of the small group of people who understand it"

Matt Taibbi

Bullshit! I know people who didn't even graduate from High School who had this shit figured out 15 years ago.  Just because they are holding you down and raping you doesn't mean they are smarter than you.

Tue, 08/07/2012 - 18:31 | 2685996 Híppos Purrós
Wed, 08/08/2012 - 01:48 | 2686788 Bringin It
Bringin It's picture

Curiously enough, Matt, like the author is also a 9/11 denier.

Someone's gotta collect and herd those stray doggies back onto the rez.

Tue, 08/07/2012 - 18:15 | 2685965 Meesohaawnee
Meesohaawnee's picture

im not sure i  agree with complex. it would be complex if markets worked on fundamentals. whats complex about programming an algo every morning and tagging a finish. Pretty easy if you ask me. I must admit taibbi and BP are great reads. Wonder if bubble vision would ever get Matt on??

Tue, 08/07/2012 - 18:21 | 2685976 Slightly Insane
Slightly Insane's picture

Over the course of my career, I have become greatly disappointed in the direction our Government has taken, particularly in the last 10 years.  It appears that the Government has indeed become the Leviathan of nefarious designs.  The folks there (not all, but a good many) have forgotten that they indeed work for US, and now operate in self satisfying, self indulgent behavior, at our expense.  It also appears that the improper actions of the Government goes without punishment or EVEN TAKING RESPONSIBILITY!  This has to stop, or I surmise that folks will go Galt or Barnhardt (to use a contemporary personage).  Even the "two party system" is shot .... as the alternatives are both bad .... and choices have become the lesser of two evils, neither of which I can subscribe.  Even the mainstream media (whose life cycle is nearing an end), is run by shills and propagandists, and as such is worthless for able body thinkers.  The whole educational system (98% of it) is run by Socialists and Communists, and the basics of logic, and analytical thinking is no longer taught, and the failings of these political philosophies is never discussed (except on sites as this).  I would suggest to those in elected (or appointed) office understand that when the productive members of society decide to either "shelve their ideas, and constructs", or simply "pull the switch" .... that indeed things will grind to a halt.  We have the talents and skills necessary to survive in any environment, however, it will become clear to them that we are no longer "carrying the water".  I suggest also that the "cat is out of the bag", as I see others "waking up" to the reality of the failures of these government paradigms which were once taken for granted as being true, are merely myths and falsehoods.  It also appears that nefarious folks in our Government have decided that we can be ignored, hence I see only a few options left, the primary one being that we exit the game entirely.  I salute Tyler for these posts, as it reminds me that there still are free thinking people out there, and perhaps we may get the ship righted before hitting the proverbial iceberg. 

Tue, 08/07/2012 - 18:28 | 2685988 The Alarmist
The Alarmist's picture

Wow, those covers gave me a great idea for a new FPS!  Game ... I'm talking game here.

Tue, 08/07/2012 - 18:35 | 2686009 Meesohaawnee
Meesohaawnee's picture

"I salute Tyler for these posts, as it reminds me that there still are free thinking people out there, and perhaps we may get the ship righted before hitting the proverbial iceberg. "  I hear ya loud and clear iceberg. Bravo. I feel the same. When i come here and i read the intellect level hear of which i personally, cant compete, but just read and try to learn have some hope for this country. Thats its not just brainless zombies texting on Iphones all day. ZH tyler .. this place is a refuge of truth and if you have any desire for real thinking is the place to be! But one other word of "hope" and the cat being out of the bag. If you go to other MSM msg boards, it is encouraging to see that is indeed the case. Yes the MSM is in a death spiral. If you look at your local news, its obvious newspapers like here in chi. Just outsourced PR advertising for gov,corp and even sports.

Tue, 08/07/2012 - 18:36 | 2686011 youngman
youngman's picture

Its all about the faith in the currency...once that goes away...and I again say it will happen very fast...overnight..or over a weekend....then all hell breaks lose as people...countries try to get out of it...and scramble to "buy" another "safe haven" so to speak....but we are losing those left and right....and gold and silver are the final game i think...they speak all languages...and are accepted all around the world during a time of SHTF...and unfortunatly can fit on Gulfstream jets of the wealthy..

Tue, 08/07/2012 - 18:44 | 2686034 nmewn
nmewn's picture

lol...I've got a picture in my head of DP doing the "I gotta pee dance" dying to jump this thread ;-)

Tue, 08/07/2012 - 20:44 | 2686349 DavidPierre
DavidPierre's picture

Fuck You and all you slimy bastards that are kiss ass tools for the Nazis that run ameriKlan society and politics.

You and SmokeyQuinn are aiding and abetting genocidal criminals and traitors.

Your Strength is Ignorance!

http://www.youtube.com/watch?v=yuC_4mGTs98&feature=player_embedded

 

 

Tue, 08/07/2012 - 20:58 | 2686374 Blythes Master
Blythes Master's picture

Right on que, the Douche Penis drops the hot pocket, and pauses WOW long enogh to punk Jimmy. You're a tool, DP.

Tue, 08/07/2012 - 19:06 | 2686099 q99x2
q99x2's picture

Thanks for the posting. Nice read.

Fuck it. Let's just take the stolen wealth from the top .000001 percent and throw those fuckers in jail. If that doesn't fix it then we move on to the top .00001 percent and throw those fuckers in jail. And, so on.

The needs of the many outweigh the needs of the few.

Live long and prosper.

Tue, 08/07/2012 - 21:02 | 2686388 adr
adr's picture

I prefer:

The needs of the one are the responsibility of the one

Calls for democracy follow this creed:

The needs of the many always ends with the rule by the few

Tue, 08/07/2012 - 19:13 | 2686119 Phat Stax
Phat Stax's picture

Hell - to - the - no.

Tue, 08/07/2012 - 19:44 | 2686176 TrulyBelieving
TrulyBelieving's picture

Truth is not  relative , but is an absolute concept. Truth will always be truth and lies will always be a subversion of truth (always done to protect an evil purpose.)     Every man knows this in his heart and this is the standard we all judge from.       Problem is every man is a liar and the more lies the more blind we become to truth until we actually believe the lie. This is how far it has gone for these folks in power and that is why they believe this corrupt social order is the answer to our problems.  This lie has permeated thru all stratas of sociaty, beginning in our compulsary state schools to the state run universities and then to media we are told this lie. And now most of us believe it. There is only one antedote to this disease, and that is truth, adminstered in great doses. Now the problem we face now is that when truth exposes the lie, then those who have benefited from the lie get angry and with the wealth and power they have  gained will now be used against this truth and any that espouse it. Somehere thru our time on earth we will be face to face with this conflict and decision will be made.  

Tue, 08/07/2012 - 20:57 | 2686375 adr
adr's picture

When you live the truth while the rest live by lies, it becomes nearly impossible to succeed.

It is always possible to lie about being better than another person. It is always possible to cheat in order to make that lie appear to be the truth.

Often times the truth is not revealed in time to reward the honest. I'm sorry doesn't change the truth that the lies caused irreparable damage.

If you are in truth more qualified for a job, yet a liar pads his resume and is rewarded with the job, you aren't going to be called a few months later when the liar is fired for not being able to do the job. He may have lost the job,but he got paid for a while. He'll just lie at the next interview and continue the same scam.

The moral code is gone. The only reward for honesty is pain.

Tue, 08/07/2012 - 22:06 | 2686499 TrulyBelieving
TrulyBelieving's picture

Yes, what you say does happen, but it is never the end of thte story. Honesty is  always rewarded just not on a timeline of your choosing. 

Tue, 08/07/2012 - 19:40 | 2686184 Hedgetard55
Hedgetard55's picture

This was a superb summary.

Tue, 08/07/2012 - 19:56 | 2686221 silverserfer
silverserfer's picture

the interesting think with this topic is the ability of people with power to STEAL  money from others with the use of technology. digitizing currencies allows them to steal in new and exciting ways. The only was to fix this is to program Skynet with strict moral code. Otherwise it will be anarchy and opression. Skynet is coming one way or another. Technology will evolve and we must have vision in order to do it right. HFt's shadow banking, E-everything, its not going away unless we go all out nuclear.  

Tue, 08/07/2012 - 20:48 | 2686360 adr
adr's picture

Skynet is programmed by those with no moral code. How will they program a moral code, when they have no knowledge of one?

Tue, 08/07/2012 - 20:04 | 2686244 jumbo maverick
jumbo maverick's picture

One of the best articles I have read here. It will printed and taken to work for, hopefully, others to read.

Tue, 08/07/2012 - 20:05 | 2686250 rosiescenario
rosiescenario's picture

The "media" cannot afford to offend any advertisers.

 

Rolling Stone today appears to be the only publication willing to print anything negative on the banksta class.

 

If someone had told you that 10 years ago you would never have believed it....Rolling Stone, the only source of investigative reporting on WS.....

Tue, 08/07/2012 - 20:28 | 2686254 NuYawkFrankie
NuYawkFrankie's picture

 

"The Committee (Greenspan, Summers, Rubin) To SAVE the World" - TIME Magazine

Uugghhh??????    More like....

The PUNKS That PLUNDERED The PLANET !

Tue, 08/07/2012 - 20:31 | 2686313 UP4Liberty
UP4Liberty's picture

Okay - here is my rant on this topic - and goes out to all who scoff at the founders rationale for ONLY CONGRESS BEING ABLE TO AUTHORIZE THE COINING OF GOLD AND SILVER - AS WELL AS ESTABLISH ROCK SOLID WEIGHTS AND MEASURES...

THEY ALREADY WITNESSED IN THEIR TIME THE DEBASING OF THE MONETARY UNIT - THEY KNEW THE ONLY WAY TO RESTRAIN BUREAUCRATS WAS TO BIND THEM TO THE CHAINS OF THE MONETARY METALS.

IF YOU ARE READING THIS AND WANT TO EXIST IN A FIAT BASED, CASINO LIKE MONETARY SYSTEM - GO AHEAD AND BE MY F****ING GUEST - JUST DONT' TRY TO STOP THOSE OF US WHO WANT TO CREATE - AND RUN WITH - A SOUND CURRENCY SYSTEM WHICH CANNOT BE DEBASED!

F**K YOU BERNANKE, F**K YOU GREEN-SHAM AND DOUBLE F**K YOU OBAMA, ROMNEY AND ALL YOU FIAT F***HEADS!

Whew...that feels good!

:)

Tue, 08/07/2012 - 20:44 | 2686350 adr
adr's picture

I always liked Andrew Mellon and I went to his university, which is one of the only business programs that has professors that teach Austrian views. Econ 101 at Carneige Mellon was pretty much dedicated to destroying Keynesianism.

Mellon enacted a federal budget to try and get government spending under control. He lowered tax highest tax rates from 70% to 24%. He saw that any tax rate over 25% caused the wealthy to figure out ways to avoid paying taxes.

Although Mellon was a banker he paid the 3rd highest amount of tax in the country. He said many times that using his skills as a banker, he could have avoided paying the majority of his tax, but doing so would violate the law.

Mellon's view is the correct one. The problem is that so much of the country has so little wealth, that a collapse would harm the miniscule minority that holds the wealth much more than anyone else. They use their wealth to corrupt the system and prevent a collapse at all costs to preserve what they have stolen.

If a normal person loses $5k in a collapse, but the bust is short and a real recovery takes place, he wil make that $5k back in short order. If a bust destroys the paper wealth of a billionaire, he probably isn't going to make that back.

Tue, 08/07/2012 - 23:27 | 2686635 toomanyfakecons...
toomanyfakeconservatives's picture

So true... and the banksters and "billionaires on paper" are going to get pennies on the dollar, if they get anything at all, when FRNs are outlawed and required to be exhanged for legitmate Treasury Notes. The average citizen on the other hand, will get a 1:1 exchange after the MASS ARRESTS and dissolution of the FED takes place... http://tinyurl.com/cd5cyjo/

Tue, 08/07/2012 - 21:48 | 2686467 doc_in_the_house
doc_in_the_house's picture

Aah yes

 

the mainstream hypocritic media LIE-berals:  PRINT and rape the peasants with INFLATION and O-DEBT-BOMB !!!

 

RAPE U CAN BELIEVE IN !!

Tue, 08/07/2012 - 22:52 | 2686586 Titan Uranus
Titan Uranus's picture

Jim Sinclair says, "QE to infinity." 

Three words that have a high probability of being true.

Four words that have a higher probability of being true:

"Bankers always get paid."

Wed, 08/08/2012 - 07:12 | 2686628 toomanyfakecons...
toomanyfakeconservatives's picture

Decades of pissing on the Constitution will mean the death penalty for many and prison for thousands. The MASS ARRESTS, the dissolution of the the FED and the illegitimate federal government, and the restoration of the Constitution and legitimate Treasury Notes are all right around the corner... http://tinyurl.com/cd5cyjo/

Wed, 08/08/2012 - 00:19 | 2686725 Go Tribe
Go Tribe's picture

Men, to arms!

Wed, 08/08/2012 - 05:34 | 2686980 145
145's picture

"Chinese dress,"   adidas original shoes and the word back to the Chinese peoples lives, from the Han Chinese clothing movement. Since the media acknowledged that the revival of Han Chinese clothing is the advocates of the concept of "Chinese clothing", then you should respect the interpretation of the concept advocated by the advocates of their Han Chinese clothing, 0 defined from the outset is the national adidas original shoes dress adidas shoes 2012 of the Han nationals, instead of the Han Dynasty clothing. Hanfu movement in recent years, there is no the Renhe Han clothing revival of those Han Chinese clothing is defined as the clothing of the Han Dynasty. This is a very clear concept, there is no ambiguity. For reasons known to the beginning of the movement of jeremy scott mickey Han Chinese clothing, some media misunderstanding concerns deliberately Han Chinese clothing is the clothing of the Han Dynasty, this is understandable, can also be forgiven. Han clothing revival of those who adidas shoes 2012 have taken the trouble to declared: we wear the national costume of the Han, not Han Dynasty clothing, pure dynasty costumes, we have no interest. As we adidas original harland said, taken the trouble to issue deafen the voice of deaf, to breakdown lesions, the selective deafness of the eardrum. Chinese clothing and movement are rational, good faith, tolerance. However, the era such as the mighty water, will adidas shoes eventually move forward. If we say that a few years ago, even last year, media hanfu the Han Dynasty costumes, understandable. Then, in 2006, today, the media hanfu said Han Dynasty clothing is   jeremy scott shoes online not understood and can not be excused. Today, even the Xinhua News Agency, jeremy porsche design Peoples Daily, CCTV, and other government media have been able to face up to the concept of the national dress of the Han people, the Central Government of the Peoples Republic of China to the letter of the Han Chinese citizens to give a serious response and  adidas shoes  promptly correct the page publicity deviation of individual media are still using the concept of the Han Dynasty culture of the Han Dynasty clothing to misinterpret the propaganda of the movement of Han Chinese clothing adidas porsche is bizarre, puzzling. Today, July 30, 2006, to Baidu search for "Chinese clothing", has been up to 482,000 pages, 3450, news media, at this time, still confuse or unwilling to understand the concept of Han Chinese clothing media can not be do not say, is the lack of basic journalistic practitioners qualities and qualifications, or even a departure from the basic journalistic ethics. News pen still today in 2006, "Chinese clothing Han Dynasty costumes this text, it is shameful. This is an extremely adidas porsche irresponsible behavior. Han people, Han citizens of the national feelings of insult. Han clothing revival are engaged in the cause of unreasonable distortion. No more than hanfu movement to love our country, love of the Chinese nation, no jeremy scott michkey mouse more than hanfu movement firmly adhere to the national unity, there is no more firmly than hanfu movement advocating national reconciliation and common prosperity, face up to history Looking jeremy porsche design to the future, our jeremy scott shoes online beliefs from the true faith and unforgettable love. History must be addressed, China must also look to the future. This is our faith. Who create ethnic divisions and social unrest, we first do not agree. Wearing the national dress, inheritance and development of the nations customs and jeremy scott mickey culture, is a constitutionally jeremy scott shoes protected right of every citizen. Han citizens rights. The fault of the  jeremy scott michkey mouse  Han Chinese National Costume Culture, is a historical tragedy. National unity, should not be jeremy scott shoes an end to this tragedy it? We want to locate the national culture, which is hundreds of jeremy scott mickey 0 millions of Han Chinese citizens the power and firm determination. Media, you have no right to misinterpret the original meaning of the movement of the legality and constitutionality of Han Chinese clothing, you have no right to respect for the feelings of the   jeremy scott mickey Han nationals.

Wed, 08/08/2012 - 08:52 | 2687159 goat
goat's picture

speaking of goats...

 

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

 

edit: wrong story, but always a good link...lol

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