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Guest Post: The Nightmare After Christmas

Tyler Durden's picture


By Detlev Schlichter of The Cobden Center

The Nightmare After Christmas

The pathetic state of the global financial system was again on display this week. Stocks around the world go up when a major central bank pumps money into the financial system. They go down when the flow of money slows and when the intoxicating influence of the latest money injection wears off. Can anybody really take this seriously?

On Tuesday, the prospect of another gigantic cash infusion from the ECB’s printing press into Europe’s banking sector, which is in large part terminally ill but institutionally protected from dying, was enough to trigger the established Pavlovian reflexes among portfolio managers and traders.

None of this has anything to do with capitalism properly understood. None of this has anything to do with efficient capital allocation, with channelling savings into productive capital, or with evaluating entrepreneurship and rewarding innovation. This is the make-believe, get-rich-quick (or, increasingly, pretend-you-are-still-rich) world of state-managed fiat-money-socialism. The free market is dead. We just pretend it is still alive.

There are, of course those who are still under the illusion that this can go on forever. Or even that what we need is some shock-and-awe Über-money injection that will finally put an end to all that unhelpful worrying about excessive debt levels and overstretched balance sheets. Let’s print ourselves a merry little recovery.

How did Mr. Bernanke, the United States’ money-printer-in-chief put it in 2002? “Under a paper-money system, a determined government can always generate higher spending…” (Italics mine.)

Well, I think governments and central banks will get even more determined in 2012. And it is going to end in a proper disaster.

Lender of all resorts

Last week in one of their articles on the euro-mess, the Wall Street Journal Europe repeated a widely shared myth about the ECB: “With Germany’s backing, the ECB has so far refused to become a lender of last resort, …” This is, of course, nonsense. Even the laziest of 2011 year-end reviews will show that the ECB is precisely that: A committed funder of states and banks. Like all other central banks, the ECB has one overriding objective: to create a constant flow of new fiat money and thus cheap credit to an overstretched banking sector and an out-of-control welfare state that can no longer be funded by the private sector. That is what the ECB’s role is. The ECB is lender of last resort, first resort, and soon every resort.

Let’s look at the facts. The ECB started 2011 with record low policy rates. In the spring it thought it appropriate to consider an exit strategy. The ECB conducted a number of moderate rate hikes that have by now all been reversed. By the beginning of 2012 the ECB’s policy rates are again where they were at the beginning of 2011, at record low levels.

So why was the springtime attempt at “rate normalization” aborted? Because of deflationary risks? Hardly. Inflation is at 3 percent and thus not only higher than at the start of the year but also above the ECB’s official target.

The reason was simply this: states and banks needed a lender of last resort. The private market had lost confidence in the ability (willingness?) of certain euro-zone governments to ever repay their massive and constantly growing debt load. Certain states were thus cut off from cheap funding. The resulting re-pricing of sovereign bonds hit the banks and made it more challenging for them to finance their excessive balance sheets with money from their usual sources, not least U.S. money market funds.

So, in true lender-of-last resort fashion, the ECB had to conduct a U-turn and put those printing presses into high gear to fund states and banks at more convenient rates. While in a free market, lending rates are the result of the bargaining between lenders and borrowers, in the state-managed fiat money system, politicians and bureaucrats define what constitutes “sustainable” and “appropriate” interest rates for states and banks. The central bank has to deliver.

The ECB has not only helped with lower rates. Its balance sheet has expanded over the year by at least €490 billion, and is thus 24% larger than at the start of the year. This does not even include this week’s cash binge. The ECB is funding ever more European banks and is accepting weaker collateral against its loans. Many of these banks would be bust by now were it not for the constant subsidy of cheap and unlimited ECB credit. If that does not define a lender of last resort, what does?

And as I pointed out recently, the ECB’s self-imposed limit of €20 billion in weekly government bond purchases (an exercise in market manipulation and subsidization of spendthrift governments but shamelessly masked as an operation to allow for smooth transmission of monetary policy) is hardly a severe restriction. It would allow the ECB to expand its balance sheet by another €1 trillion a year. (The ECB is presently keeping its bond purchases well below €20 billion per week.)

Deflation? What deflation?

It is noteworthy that there still seems to be a widespread belief that all this money-printing will not lead to higher inflation because of the offsetting deflationary forces emanating from private bank deleveraging and fiscal austerity.

This is an argument I came across a lot when I had the chance in recent weeks to present the ideas behind my book to investors and hedge fund managers in London, Edinburgh and Milan. Indeed, even some of the people who share my outlook about the endgame of the fiat money system do believe that we could go through a period of falling prices first, at least for certain financial assets and real estate, before central bankers open the flood-gates completely and implement the type of no holds barred policy I mentioned above. Then, and only then will we see a dramatic rise in inflation expectations, a rise in money velocity and a sharp rise in official inflation readings.

Maybe. But I don’t think so. I consider it more likely that we go straight to higher inflation.

The deleveraging in the banking sector is the equivalent of austerity in the public sector: it is an idea. A promise. The reflationary policy of the central bank is a fact. And that policy actively works against private bank deleveraging and public sector debt reduction.

Consider this: The present credit crisis started in 2007. Yet, none of the major economies registered deflation. All are experiencing inflation, often above target levels and often rising. In the euro-area, over the past twelve months, the official inflation rate increased from 2 percent to 3 percent.

From the start of 2011 to the beginning of this month, the U.S. Federal Reserve boosted the monetary base by USD 560 billion, or 27 percent. So far this year, M1 increased by 17.5 percent and M2 by 9.5 percent.

Below is the so-called “true money supply” for the U.S. calculated by the Mises Institute.

As the Mises-Institute’s Doug French pointed out, total assets held by the six biggest banks in the U.S. increased by 39% over the past 5 years. Maybe this is not surprising given that in our brave new world of limitless fiat money, credit contraction is strictly verboten.

In the UK the official inflation reading is at around 5 percent, but nevertheless in October the Bank of England embarked on another round of “quantitative easing”. It has so far expanded its balance sheet by another £50 billion in not even three months, which constitutes balance sheet growth of about 20 percent.

What we have experienced in the UK in 2011 provides a good forecast in my view for the entire Western world for 2012: rising unemployment, weak or no growth, failure of the government to rein in spending, growing public debt, further expansion of the central bank’s balance sheet, rising inflation.

Death of a safe haven

And what about Switzerland? Here the central bank expanded its balance sheet by 40 percent over just the first three quarters of the year, and almost tripled the monetary base over the same period of time. Most of this even occurred before the 6th of September, the day on which Mr. Hildebrand, the President of the Swiss National Bank, told the world and his fellow Swiss countrymen and women that the whole safe-haven idea was rubbish and that Switzerland was now joining the global fiat money race to the bottom.

Deflation has become the bogeyman of the policy establishment. It must be avoided at all cost! Of course for most of us regular folks deflation would simply mean a tendency toward lower prices. It would mean that the capacity of the capitalist economy to increase the productivity of labour through the accumulation of capital and to thus make things more affordable over time (a true measure of rising general wealth) would accurately be reflected in falling nominal prices. The purchasing power of money would increase over time. This, however, would require a form of hard and apolitical money. Instead we are constantly told that our economy needs never-ending monetary debasement in order to function properly. We are constantly told to fear nothing more than deflation, which can only be averted by a determined government and a determined central bank. And the never-ending supply of new fiat money.

Appropriately, there is no talk of exit strategies any longer.

Given the size of the already accumulated imbalances I think a stop to this madness of fiat money creation would be painful at first but hugely beneficial in the long run. I am the last to say that no risk of a very painful deflationary correction exists. But a correction is now unavoidable in any case, and every other policy option will make the endgame only worse. Even if I am wrong on the near-term outlook on inflation and even if all this money-printing does not lead to higher inflation readings imminently, it will still be a hugely disruptive policy. Money injections obstruct the dissolution of imbalances and invariably add new imbalances to the economy, including new debt and capital misallocations, that will make even more aggressive money printing necessary in the future.

The nationalization of money and credit

Herein lies a fundamental contradiction in our present system: The desire for constant inflation and constant credit expansion requires that the banks be shielded from the effects of their own business errors. Allowing capitalism’s most efficient regulators, profit and loss, to do the regulating, would mean that banks could face the risk of bankruptcy – this is, of course, the ultimate disciplinary force in capitalism. This could then lead to balance sheet correction and thus periods of deflation. Ergo, banks cannot be capitalist enterprises at full risk of bankruptcy as long as constant credit growth and inflation are the overriding policy goals. The constant growth of the banking sector must be guaranteed by the state through the unlimited provision of bank reserves from a lender-of-last resort central bank.

That banks get ever bigger, that they routinely hand out multi-million dollar bonuses, and that they frequently get bailed out, is not a result of the greed of the bankers – a stupid explanation anyway, only satisfactory to the intellectually challenged and perennially envious – but is integral to the fiat money system.

Banking under state protection ultimately means banking under state control. In the end it means state banking. And this is where we are going.

Last week the Federal Reserve and the Bank of England announced plans to tighten the control over the balance sheet management and the risk-taking of private banks. This is just the beginning, believe me. The nationalization of money and credit will intensify in 2012 and beyond. More regulation, more restriction, more control. Not only in defence of the bankrupt banks but also the bankrupt state. We will see curbs on trading, short-selling restrictions and various forms of capital controls.

A system of state fiat money is incompatible with capitalism. As the end of the present fiat money system is fast approaching the political class and the policy bureaucracy will try and defend it with everything at their disposal. For the foreseeable future, capitalism will, sadly, be the loser.

The conclusion from everything we have seen in 2011 is unquestionably that the global monetary system is on thin ice. Whether the house of cards will come tumbling down in 2012 nobody can say. When concerns about the fundability of the state and the soundness of fiat money, fully justified albeit still strangely subdued, finally lead to demands for higher risk premiums, upward pressure on interest rates will build. This will threaten the overextended credit edifice and will probably be countered with more aggressive central bank intervention. That is when it will get really interesting.

We live in dangerous times. Stay safe and enjoy the holidays.

In the meantime, the debasement of paper money continues.


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Mon, 12/26/2011 - 09:05 | 2011574 Oh regional Indian
Oh regional Indian's picture

Thin ice is so true. 

One possible shock is the rug being pulled from under the developing world's feet, if the dollars need to rush home. They can RUIN India/China/Thailand/Malaysia just like that. Reverse the liquidity pump.

Interesting visual. the BRICS were built as flat bottom boats, to float on thinly spread liquidity. When it's gone, they'll just sit there and rot. It's already happening here. 



Mon, 12/26/2011 - 10:12 | 2011644 EhKnowKneeMass
EhKnowKneeMass's picture

But, but, but, the Sensex went up by close to a 1000 pts in the last 5 days. So, all must be well in India, a place where people are more fertile than the land.

Mon, 12/26/2011 - 10:30 | 2011659 Oh regional Indian
Oh regional Indian's picture

What a weird last line in your comment. Un-less, seeing your carefully crafted handle, that you were trying to be funny?


But anyways, the Sensex is susceptible to as much manipulation as the DOW.


Mon, 12/26/2011 - 12:28 | 2011716 ratso
ratso's picture

Mr. Schlichter makes some interesting points, however, he fails to prove that fiat monetary systems are incompatible with capitalism.  He asserts his conclusion in the end without have demonstated its validity. SImply talking about banks getting bigger and giving out bigger bonuses etc proves nothing except that shareholders have little to say about how large corporations are managed - this pertains to all large corporations not just banks as well as big elected governments. 

When the values of accountability to shareholders and citizens have vanished this does say anything about capitalism except to say that capitalism is an inherently amoral system that easily spawns self destructing off spring that threaten its own mechanisms of operation. 

Disproportionate bonuses and salaries are an insult and injury to the citizens and shareholders of every country and corporation where they are inflicted, as is tax evasion and neglect of the poor and less fortunate.

Happy New Year

Mon, 12/26/2011 - 14:27 | 2011953 sof_hannibal
sof_hannibal's picture

There are several good points (in the article), but I would add this also: greed of banks vs. State/central planners and bank control becomes somethong like a what came first the chicken or the egg argumemt; as I see deregulation policies as leading corporate monies to put political pressure on the system to keep the illusion going not necessarily the other way around.

I am not saying that I am 100 percent right here either; however, the original article above says that bank CEOs get million dollar bonsues because of central bank panning. Well, the stupidity and greed of many CEOs, regardless of it being a bank [CEO] or not is -- that many CEOs or corporate leaders who rountinely bankrupt their companies are given multi-million dollar bonsues; not just bank CEOs. MF global walking away with 1.2 billion dollars of investor money is another example of this no rules, cronyism, and "good ol' boys system," which seems to be the direct result of a no regulations/ no rules policy -- both of our current system and the fiat currency isssue(s).

Should countries be allow to carry sham debt balances?, no. Should central planning be allowed to (currently) bail out banks at wim?, no. However, shawdow banking and gambling with trillions one or a corporate entity at (100:1) does not have should also be illegal, as well as things such as shawdow banking (should be outlawed). It would seem to me that these 2 concepts, for instance, are related to regulation, not de-regulation policies ; but also tied to less intervetion of the state in business. Meaning that we still need strong regulations, or cronyism/ robber barron capitalism will continue. And clearly, people in general are vastly losing all confidence in the financial markets... Bullish on shotgun shells... haha

Mon, 12/26/2011 - 17:18 | 2012201 Dr Hackenbush
Dr Hackenbush's picture

any monetary reformist knows that currency today is private and debt is nationalized to pay for it.  

Mon, 12/26/2011 - 16:32 | 2012135 AnAnonymous
AnAnonymous's picture

he fails to prove that fiat monetary systems are incompatible with capitalism.


Made me laugh?

Prove? US citizens need no proof for capitalism.

US citizenism postulate: capitalism is success, capitalism is good.

When something bad happens, when something fails, it can not be capitalism (by previous US citizenish postulate)

No proof needed. Only US citizenism.

Mon, 12/26/2011 - 17:07 | 2012180 TheGardener
TheGardener's picture

Sure no cynicism in your "citizenism"? Citizenship has become a much eroded concept lately, but why add an "ism"
which almost always indicates something really dirty or
outright repugnant.

Mon, 12/26/2011 - 17:28 | 2012213 Cathartes Aura
Cathartes Aura's picture

perhaps he's referring to the "citizenism" imposed upon birth, with the assigned socially secured #. . .

repugnant indeed.

Mon, 12/26/2011 - 12:44 | 2011824 vamsy
vamsy's picture

what are you saying? Manipulation is 'mandated' in order for the 'free markets' to continue <sarcasm>. Look at this outrageous article:

so only the banks are authorized to print money by short selling the Rupee (just like the holy man of India Dr Manmohan Singh said two years ago that it is not good that speculators make money in  a bear market, market movement should be completely random); so we see 10% spike in stocks if the profit of a large software firm falls by 30-40% and stocks free fall after they report a 100% increase in profits. Death to all the banks! Let the system restart which it desparately trying to do...

Mon, 12/26/2011 - 14:06 | 2011946 Oh regional Indian
Oh regional Indian's picture

True Vamsy.

And look at the current depression of the rupee. IT firms not so firm bottom lines get help, indian connedsumer gets hammered on essentials and smothered with cheap, toxic crap!


Mon, 12/26/2011 - 10:47 | 2011677 johnu78
johnu78's picture

Everything is still going to sh*t despite what CNBC is telling us!!!



Mon, 12/26/2011 - 11:49 | 2011756 DaveyJones
DaveyJones's picture

in order to call out shit, you must first be something else

Mon, 12/26/2011 - 17:04 | 2012174 Esculent 69
Esculent 69's picture

Oh boy! I wonder what new war we will get for the new year. I'm so excited I think its time for a not very sexy party!!!

Mon, 12/26/2011 - 09:13 | 2011581 pineyard
pineyard's picture

I have ONE OBJECTION to the CONTENT of this Article ..and that is:

EUROPE COMBINED has had a POSITIVE TRADING AND CURRENT ACCOUNT BALANCE for the Time of The European Unions Existance .

This means that EUROPE has financed what it spent and what it invested  ..ITSELF.. in an overall  ( and Austrian School ) Calculation .. because it EARNED the Money spent by its own LABOUR and EFFORT .. in the first place  .. It is true ..this  surpluss has been UNEVENLY distributed ..INSIDE the EU .. nevertheless was and is .. a SURPLUSS ..

That is a FACT .. which should be taken in consideration .. when PROGNOSTICATING ... but is so conveniently OMITTED .. by the TSUNAMI of PUBLICATIONS emanating from the ANGLOSAXON WORLD .. which for as long as I can remember NEVER produced MORE then they spent ... but on a constant basis ..was forced to BORROW ..from the external  world .. in order to make ends meet means

Mon, 12/26/2011 - 09:30 | 2011600 CPL
CPL's picture

Europe hasn't gotten around to paying for the crusades you dumb fuck, the US just made it's last payment on WW1.  When does this bullshit stop?  Never.  For longer than a millenia europe has been the piss pot of the planet and it will REMAIN the pisspot of the planet.


Africa has less debt incurred over time, there are small pacific islands where pigs are used as capital than have more equity invested in themselves and they don't even use fiat.  Just pigs.


This is why we can't have nice things, people sweep truth under the rug constantly to make the universe line up with their belief structure.  Fucking makes me sick.

Mon, 12/26/2011 - 09:47 | 2011616 tim73
tim73's picture

Eat shit, yank.

Mon, 12/26/2011 - 13:51 | 2011924 CPL
CPL's picture

Canuck actually.   You would be surprised how many of us refer to her majesty as the old cunt and the soon to be king her crotch fruit.  Canadian taxes remain high to make sure some tart across the pond on a golden throne is entitled to keep fucking and spending her own people's money with nothing but a vague promise she's connected to God by some ancient Papal sanction decreed 1500 years ago.


Fuck Europe.  It's not an investment strategy unless you are the king or queen of a country.  That's Europe, 2000 year old mentality of sea piracy and theft by decree of a political force only driven by whos cunt you drop from.  Nothing more.  It's dump and it wasn't turned into a dump by foreigners, last time I've been through London and the area the white people were doing a fine enough job of shitting in their sandbox.  France isn't much different, nor is Germany. 


Mon, 12/26/2011 - 14:09 | 2011949 Worker Bee
Worker Bee's picture

Hey CPL,remember that time you were running around screaming like a little girl about your insider info on an imminent nuke attack?

Mon, 12/26/2011 - 14:51 | 2012009 CPL
CPL's picture


It's still going to happen whether you want to believe it will or won't.  Here's a job position for you.


You can either leave the compound at night or you can stay.  Your perspective depends on who you are working for once someone is dumb enough to pull the trigger.  There certainly is no shortage of stupid.  Unending universal well to draw from.


Did you think they were not going to use the nukes?  Russia is doing something they haven't done in 15 years.  They are testing the sea to surface missiles.  Without all that ice in the way of the north pole, nothing is stopping the military juntas from turning each other into ashtrays and their populations into shadows on pavement.

All this hedges on the US and Israel behaving themselves regarding Iran.  Iran currently couldn't give a rats ass about Europe.  in fact NOBODY cares about Europe except the people running Europe and the chattel that live under their kings and queens.

Iran is already making plans to cut the nuts off of Europe.  Japan is sneaking out the back door from the US Hegemony.  European reaction is to have "die-ins" as a protest to their mouths running against the oil producer in the area running at capacity next to the house of Saud.

Funny thing is the dying currently is voluntary.  Just wait a year, then the option goes from voluntary to compulsory.


So what news have you got to the contrary that the world is improving and international relationships are strengthening in this dismal time? 


None but you got a new iPad/android appliance so the world is okay.


I would suggest that you take all your money out of your savings and spend it today.  It's boxing day, so take the next step and become what I expect you to be and consume...then borrow some money...then buy some more stuff.





Mon, 12/26/2011 - 14:01 | 2011938 Hapte
Hapte's picture


Mon, 12/26/2011 - 11:33 | 2011734 Green Leader
Green Leader's picture


I am reading this agronomical book "More Food From Soil Science, The Natural Chemistry of Lime in Agriculture".

The Russians had figured it out by 1850, the rest is just fertilizer company sales propaganda.

I will be able to defeat chemtrails and grow beautiful, vibrant, healthy plantains once again. Purple and yellow taro, too!

Mon, 12/26/2011 - 13:57 | 2011929 CPL
CPL's picture

It's basically what every grave digger since time began knows; calcium, protein and lime make healthy lawns in graveyards.


Name a graveyard where they use fertilizers?  They don't, unending supply of fertilizer shows up daily in various sizes and shapes daily.


If you want to pick a fertilizer, breakfast cereal and cat food.  It has everything people need and plants to.  Government figured out  a while ago people eat both food in great quantities then started regulating the minerals and vitamins that go into human chow so their respective population wouldn't die of rickettes and scurvy.

Mon, 12/26/2011 - 16:41 | 2012144 Green Leader
Green Leader's picture

In order to boost production you actually need to reach a specific base saturation threshold in the soil particles and the realationship between lime applied and bushels of corn produced is NOT linear.

It's not as simple as you wish to portray.

Mon, 12/26/2011 - 16:10 | 2012117 Mariposa de Oro
Mariposa de Oro's picture

Tell me about the pigs, CPL.  I live in the Republic of the Marshall Islands.  I've never heard the islanders here using pigs as capital.  This is a serious question.  There are plenty of pigs on the outer islands.  I'm on Kwajalein so none here (usually).  Those that do show up are very short term visitors if you know what I mean. thx

Mon, 12/26/2011 - 18:02 | 2012252 TheGardener
TheGardener's picture

Don`t mind the swine. Those leftists are immune to hard facts. Marshall Islands ? Must be ruled by some U-Boot
survivors , if they dare to counter my stories...

Mon, 12/26/2011 - 18:10 | 2012263 Mariposa de Oro
Mariposa de Oro's picture

Leftists=swine, lol indeed. no U-boat survivors here, just Americans and the locals.

Mon, 12/26/2011 - 09:53 | 2011625 Sean7k
Sean7k's picture

You seem to be ignorant of the debt obligations created by derivatives by european banks on malinvestment and sovereign debt for excessive social spending and the bailing out of those same private banks. Your current account balance deals only with foreign trade. 

Europe has NOT financed what it has spent. It has borrowed sums beyond comprehension.

Mon, 12/26/2011 - 10:22 | 2011651 Marco
Marco's picture

He's not ignorant, he is simply saying it's an internal issue. The EU as a whole pays for what it consumes.

Lets say the entirety of the EU would default but find some way to keep it's factories and service industries providing it's exports running ... would they be able to import the same amount of goods they are importing now? Yes, because it has trade balance ... the EU exports products to pay for its consumption, internal distributions of debts and credit are irrelevant to that fact.

Lets say the US would do the same, would it be able to import the same amount of goods they are importing now? No, because it isn't in trade balance ... the US exports debt (and military protection) for it's consumption, not product.

Mon, 12/26/2011 - 10:34 | 2011664 Sean7k
Sean7k's picture

If the EU paid for what it consumed, it would have no sovereign debt. What part of that is hard to understand? If the EU paid for what it consumed, it wouldn't have a 3.5 trillion debt on the balance sheet. 

You cannot take a part of the economy and separate it from all the other parts and scream, "We're solvent". You have to look at the WHOLE balance sheet. You cannot separate out the costs of socialism that you are unable to pay, not able to tax for  and have people believe you are solvent. If that was the case, your bond rates in the PIIGS would not be hitting 7%.

It is not an internal issue when your banks continue to feed at the FED swap lines. Trade balances are meaningless without a consideration of the national wealth. Nations have negative and positive trade balances all the time and for periods of history, it means nothing until they are exposed and people refuse to accept their currency at the rates the nation wants to trade at.

This is a reflection of sovereign debt and the ability to pay on that debt. Thus, Greece, Ireland, Spain and Italy. Soon to be France, Britain and Germany. I am not saying the US is any better- see my comment below.

Mon, 12/26/2011 - 11:01 | 2011697 francis_sawyer
francis_sawyer's picture

Not really arguing with you here, but when you say something like this...

You cannot take a part of the economy and separate it from all the other parts and scream, "We're solvent". You have to look at the WHOLE balance sheet.

Isn't that what they do with LABOR numbers & CPI numbers all the time? Keep fudging out elements until it kinda sorts looks palatable...

Half the time I think they do all the somersaults for nothing... A report of a bad number of anything quickly bets buried on page 4... Even if it stayed on page 1, people would be like, "HUH"... They have no capacity to aggregate these things... Especially when DWTS is on the other channel...

Mon, 12/26/2011 - 11:03 | 2011701 LawsofPhysics
LawsofPhysics's picture

I think you all are missing the point. "the E.U. pays for what it consumes" - really? With what? Gold? Oil? Or simply more bullishit paper? The answer is the latter morons. Let's see how ANY sovereign country does when the oil, coal, and natural gas stops flowing. I'll be impressed with the E.U. when they start "paying" for what they consume with real hard assets. Until then, they are simply more paper-pushing fucknuts.

Mon, 12/26/2011 - 11:49 | 2011755 Socratic Dog
Socratic Dog's picture

Yeah.  I was thinking yesterday about how much corn I can buy for an ounce of gold.  It's well over 5,000 pounds at retail prices (50 pound bags).  Thats over 5,000 man-calorie-days (my own units, I think it makes sense) of nutrition, or 14 man-calorie-years.  14 years of food for an ounce?  Something wrong with this picture.

What's wrong, it seems to me, is that the price of gold reflects the worthlessness of fiat; the price of corn doesn't.  Yet.  When it does, it's game over.

Mon, 12/26/2011 - 12:30 | 2011810 LongBallsShortBrains
LongBallsShortBrains's picture

You will find it much easier to replace that corn through your hard work than trying to replace one ounce of gold with your own work. The amount of corn in the world is constantly changing. It gets eaten, burned, lost, popped, or planted and harvested. The gold is mined and very little is consumed. However, as said here before..... You can't eat it...

Disclosure: long gold krugs til the boating accident(s), still hoping to find them.

Mon, 12/26/2011 - 12:22 | 2011793 Socratic Dog
Socratic Dog's picture

Double post

Mon, 12/26/2011 - 12:45 | 2011825 Marco
Marco's picture

Financial paper isn't counted into trade balance calculations, financial services are ... but that's mostly the UK. The Euro zone pays it's dues with real services and products.

Mon, 12/26/2011 - 12:39 | 2011818 Marco
Marco's picture

The EU is not just it's governments or it's banks ... it's it citizens and corporations as well. Which one of us is looking only at part of the economy? If you net the internal credit and debt within the EU then you end up with the EU being a net creditor to the world ... that's what it means to run a cumulative current account surplus.

The EU is in trouble because it allowed internal imbalances to be created and it refuses to solve them itself at the national and fiscal levels. The US is allowing EU banks to feed at FED swap lines because they know that in the end if trade deficit countries in the EU start to default people will start really considering the national wealth of the greatest debtor of all.

In a sane world productive capacity, education levels and infrastructure are national wealth ... and in that respect the EU is quite wealthy as a whole. The US as well, but not nearly wealthy enough for it's current standard of living ... it's enjoying that standard of living because reserve currency ownership and military might has become wealth in this insane world.

Mon, 12/26/2011 - 14:49 | 2012008 Sean7k
Sean7k's picture

Well, why don't you produce those numbers with a citation, cause I call bullshit. The EU is not a net creditor- not even close.

Mon, 12/26/2011 - 15:00 | 2012025 gjp
gjp's picture

Precisely. People just don't seem to understand the current account, what it represents and how important it is. It is the most damning of the metrics for many of the PIIGS (Italy excepted) and the US is the worst of all in this department. Yet everyone focuses narrowly on federal government budgets. Frustrating, but just the usual in our Orwellian world where nothing is at it is presented.

Mon, 12/26/2011 - 11:51 | 2011757 JOYFUL
JOYFUL's picture

The "fact" of surplus is value neutral once you engage your full faculties.

"Trade" in the sense that you have used the word, is a euphemism for the serial extraction of resources from the peripheries of empires to the core. As lately as the 70s* that process of exporting disease and trinkets and importing valuable resources was still in full swing. Europe is in the terminal phase of it's imperialist cycle - the resources available increasingly must be paid for on terms other than of it's own making. There is quite simply a period of abeyance right now - an interlude between total command and total collapse - that will soon enough come to an end. 

It's illogical and to pose the discussion in terms of USA vs. European interest.  Amerika has been in the forefront of helping the combined powers of the European imperialist residue to try and stage one last grand theft...Libya, Syria, Tunisia, Egypt, Iraq, and soon Iran, are graveyards of Italian, French, English ambition. Watching the pathetic efforts of these hasbeen powers to raid the tomb one more time has been both shocking and enlightening.  There is, indeed, no honour amongst thieves.

The reserve currency status has given Amerika a few more rounds to stand upon it's own legs before it too goes down.  That empires are retracting and going through death throes is normal and unstoppable, no matter what military might is employed to stave off the inevitable.

Lest this observation be misunderstood as an anti-colonial diatribe, the simple fact is that all nations nurture ambitions to prey upon weaker neighbours...we are not so far removed from our beginnings, by a long shot. Neither India nor China nor any other so called developing nation have any moral high ground to stand upon. That Germany and other northern European nations stand relatively free of colonial payback is an interesting articulation of the perils of empire and the advantages of 'defeat.' They, and they alone, did learn to live off of their own labor; but this is Europe we speak of-the grand experiment in post colonial consumer fetishism...did they really believe it would work out?

*arguably a decade either way, depending upon one's stance

Mon, 12/26/2011 - 15:36 | 2012082 TheSilverJournal
TheSilverJournal's picture

While the Euro is in a world of hurt, the USD is in much worse shape and has a bigger debt problem. The difference is political in the sense that the Euro could be the one to bust the world fiat ponzi if they decide not to save one of the big countries such as Italy or Spain, whereas in the US, the states aren't seceeding any time soon. However, if the the Euro is held together, the Euro countries have much more road to kick the can down than the US. No matter what is done in the US, there isn't much time left.

Mon, 12/26/2011 - 09:14 | 2011583 Miles Kendig
Miles Kendig's picture

Balance sheet considerations should not seriously constrain central bank operations

- Ben Bernanke May 31, 2003

Mon, 12/26/2011 - 09:15 | 2011584 innsbrooklad
innsbrooklad's picture

The world financial system is broken. The present mess remonds me of a golf club I used to belong to. They would have a capital assessment every year. We all thought it was for new machines and mowers. Unfortunately it was used to pay operating expenses and the club went broke and the Directors were all sued and they lost in court.

We borrow long term to pay national operating expenses. It is terminal. Only when the markets do not buy our debt anymore will the mess come to a head, but I imagine it will be far too late. The solvent nations like Canada and Switzerland will see a rush into their currencies, but that has bad omens also. Remember when the Swiss devalued at 1.40 SF?????

Mon, 12/26/2011 - 09:44 | 2011613 bozzy
bozzy's picture

Solvent? Switzerland? The numbers do not say this - Switzerland has a debt shaping up to look like Iceland

Mon, 12/26/2011 - 10:38 | 2011667 duo
duo's picture

I want to see that TMS graph on a log scale.

Mon, 12/26/2011 - 10:48 | 2011682 duo
duo's picture

found it.  M2 up by 15x since 1971[1][id]=M2NS&log_scales=Left


Mon, 12/26/2011 - 17:01 | 2012169 Almost Solvent
Almost Solvent's picture

Canada eh?


Other than their ballet  - eh.

Mon, 12/26/2011 - 16:53 | 2012158 PontifexMaximus
PontifexMaximus's picture

Federal and cantonal rel GDP 35%

Mon, 12/26/2011 - 11:40 | 2011744 pain_and_soros
pain_and_soros's picture

Canada may look good by comparison, but they aren't exactly solvent either ...

take away the construction jobs once the overbuilt housing/condo market bubble implodes in Toronto & Vancouver and you'll see just how "solvent" Canada really is. 

The only thing the country has going for it is the oil sands in Alberta and some other natural resources that are being increasingly bought out by foreigners...

The largest province, Ontario, has been put on credit watch, its manufacturing (read auto) sector has been gutted and it now relies on the financial services sector for jobs...sound familiar?  it should.

worst of all, there is a smugness to Canadians who think the global financial crisis can't or won't affect them...

Mon, 12/26/2011 - 12:54 | 2011837 ucsbcanuck
ucsbcanuck's picture

"worst of all, there is a smugness to Canadians who think the global financial crisis can't or won't affect them..."

Agreed. It's that which pisses me off more than anything else.

Mon, 12/26/2011 - 14:55 | 2012018 CPL
CPL's picture

Yup, a Canucks with Nationalism...personally I thought I would never see the day.  The social dynamic is unsettling.

Mon, 12/26/2011 - 17:13 | 2012163 ucsbcanuck
ucsbcanuck's picture

It is unsettling, very unsettling. Canadians often complain how Americans don't know anything about Canada. Well how much do you know about America, other than what you're fed by the Canadian MSM?

I work in high-tech, and am currently looking for a new job in both the US/Canada. When I tell people in Canada about this, they straightaway say "OMG who would want to live in that country?" despite the fact that most Canadian high-tech companies export to the US. When you honestly point out that the following high-tech companies are American:








and that RIM and Nortel will bite or have bitten the dust shortly, they still don't get it.

The part that makes me laugh all the time - when Canadians say "Americans are so stupid" on Facebook, from their iPhone or their Intel powered laptop. Ever heard of irony?

Mon, 12/26/2011 - 18:14 | 2012270 Bay of Pigs
Bay of Pigs's picture

I might add that consumer debt levels are shockingly bad. Worse than Americans. Oh, a nice big fat housing bubble too.

Ontario is simply toast. Manufacturing has been gutted out. Oh, and the $240B or so of debt?

And then there's Mr Carney, the Goldman Sachs guy running the bank. Most Canadians have no idea who this guy is.

Great shape indeed.

Mon, 12/26/2011 - 14:57 | 2012019 StormShadow
StormShadow's picture

Be patient, hubris bats 1.000 over a long enough timeline

It cracks me up how snobby some Canucks are, particularly those w a French accent. Come on, you're "America Jr." and always will be. (this is not to say many Americans are not equally snobby, we are)

Mon, 12/26/2011 - 16:24 | 2012075 akak
akak's picture

Come on, you're "America Jr." and always will be.

That neatly sums up the essence of Canada, no matter how vehemently kneejerk Canadian nationalists may protest.

As a people, I have been uniformly impressed by Canadians, but come on --- you're not that different from USAians!  (aside from your nationalized medical industry --- I REFUSE to call it "health care" (death management?), and your  phobia of handguns).

There is less difference between the average Michiganian and the average Canadian than there is between that same Michiganian and the average Texan, for example.  The contrived and artificial hypernationalism of certain (inevitably diehard statist) Canadians is unbecoming and, truth be told, rather pathetic.  Get over yourselves.

Mon, 12/26/2011 - 17:01 | 2012170 Svener
Svener's picture

As I am in Michigan, given a choice between Texas and Canada; I'd run not walk to Canada. Texas is a whole nuther country. Let them hang and shoot each other till they're all gone.

Mon, 12/26/2011 - 16:47 | 2012152 ucsbcanuck
ucsbcanuck's picture

"Come on, you're "America Jr." and always will be. (this is not to say many Americans are not equally snobby, we are)"

Yeah you just demonstrated your snobbiness there.

Listen - we're our own people, not America Jr. We're closer to Australia/UK than America when it comes to our political system and legal systems than America. Sure there's a lot of American influence in Canada, but we're not your younger brother.

I have a visceral hatred of snobbishness and complacency. I don't like it when Americans think we're their younger bros, and can ruffle our hair and push us around. I also hate it when Canadians think we're somehow oh-so-superior to the US, and therefore nothing will ever hurt us up here in the Great White North.

Snobbishness, complacency and hubris are traits to be avoided at all costs

Mon, 12/26/2011 - 18:33 | 2012290 TheGardener
TheGardener's picture

Sorry, but I beg to disagree.

Old story but probably still relevant:

Spanish language schools in Guatemala;

Real gringos were hoarded up in the old capital Antigua, while all others gathered in Xela , Quetzaltenango or how they call their second largest city.

Canadians too ,eager to stay apart from their US-brothers , all over the place, but still VERY MUCH ISOLATED . Brits, Aussies, and even Israelis preferring to stay with the
folks from mainland Europe.No mixed schools, parties or bars, except for some real cute canadian chicks.

Mon, 12/26/2011 - 09:15 | 2011585 MSimon
MSimon's picture

Capitalism is still possible. You just have to be careful.

Mon, 12/26/2011 - 09:27 | 2011592 Element
Element's picture

I'm sure you have a lot of perfectly good and well reasoned views to think that, and are a smart person.

But it's a bit like birth control ... you just have to be careful ... else you get 7 billion plus hairless horny omnivores, who endlessly want shit they don't need, and that is very destructive to create.

Which makes Capitalism rather tricky.

May I suggest you listen to all 11 parts of this video interview, as it will give you shivers at what we're doing as this unfolds.


Mon, 12/26/2011 - 10:54 | 2011689 MSimon
MSimon's picture

Who said it was easy? You just have to reduce costs faster than the money is inflating. So you look to places in the economy where that is possible and capitalize on it.

Mon, 12/26/2011 - 09:27 | 2011594 cossack55
cossack55's picture

Careful? Maybe more like "moral".

The only nightmare I can see is the existance of the CBs.  Carthagize their asses.

Mon, 12/26/2011 - 14:58 | 2012021 CPL
CPL's picture

I'm really tired of that word.  Capitalism.  It holds no meaning anymore.  Trading and Trader are just as muddled.  Business is just as good as a swear word in certain circles.


All it took was a bunch of thieves and retards to wreck it all.

Mon, 12/26/2011 - 09:20 | 2011587 HD
HD's picture

My question is not "If" it's "when"...and why does it take so long? The larger the bubble the bigger the pop.

Mon, 12/26/2011 - 14:16 | 2011959 Smiddywesson
Smiddywesson's picture

Central banks will step in at the same time and print.  So, when everyone is ready, they will make their move.  What's holding them up?  My guess is they have to have enough gold on their asset side of the balance sheet to do business under the system to come.  

One consideration is the biggest players get the most say as to when they reset the system.  I wouldn't be surprised to see this happen before May.  If they want the "recovery" created by a devaluation in the dollar and a revaluation of gold to come to the public's attention in time to save the Obama administration in November, they have to make their move early, so my guess is no later than May.

Not that I'm saying the US President is in complete control of the situation, quite the opposite, he's owned by the bankers, but in a crisis where everything has to go right, he has a lot of bargaining power to force Bernanke's hand.  And now you know why nobody is being prosecuted or investigated.

Mon, 12/26/2011 - 18:23 | 2012281 Green Leader
Green Leader's picture

Look up Trifecta Theory (no it's not the band) for the 'reset' agent.

Mon, 12/26/2011 - 09:23 | 2011590 GeneMarchbanks
GeneMarchbanks's picture

That is some hardcore 'Austrian' perspective of monetary policy. The deleveraging will continue simultaneously with printing/sterilizing resulting in ongoing biflation or stagflation. Interesting how the hyperinflation argument is now gone for most of these analysts.

Mon, 12/26/2011 - 09:28 | 2011595 Fips_OnTheSpot
Fips_OnTheSpot's picture

Just show me where souverign deleveraging actually _happens_.

Mon, 12/26/2011 - 10:34 | 2011665 Marco
Marco's picture

Ireland ... of course they had a functional economy before their government sold them into debt slavery.

A country like Greece has lacked investment in education and infrastructure for so long it's standards of living have to drop far further before they can think about running a surplus.

Mon, 12/26/2011 - 09:47 | 2011617 ZDRuX
ZDRuX's picture

I agree with your view. I think things will be patched up as they happen on a case-by-case basis rather than a full-on printing run. This will allow them to "save" banks and governments "as they happen" rather than come out and say "Hey, we're just gonna print to prevent deflation."


This will allow them to say they haven't really done any money printing and are only in the bussiness of rescuing only the most dire of situations.


This is what will perpetuate this whole fight between deflation and inflation.

Mon, 12/26/2011 - 14:31 | 2011977 Smiddywesson
Smiddywesson's picture

I agree with your view. I think things will be patched up as they happen on a case-by-case basis rather than a full-on printing run.

I once thought that too, however the deflationary forces are much too powerful now to escape the vortex without full throttle printing.  

But hey?  Don't listen to me, listen to what Ben Bernanke thinks.  He lays it all out in his 11/21/2001 speech on deflation, and his 10/31/2003 speech on Japan and deflation.  If you haven't read these, it's time to stop Internet surfing and get the plan straight from the horse's mouth:

 On 11/21/2002, he said he's do exactly what he's done so far (buying MBSs, QE, Operation Twist, etc.) and then devalue the dollar by linking it to gold, ramping the price of gold, engaging in gold purchases, and then printing like mad like FDR.

On 10/31/2002, he said he would establish price targets and print to drive prices back up to pre deflation levels.


When the central bankers tell you what they would do in a given situation, and then proceed to do exactly that when presented with that situation, you can be pretty sure of what is coming. 

Mon, 12/26/2011 - 09:29 | 2011596 Sudden Debt
Sudden Debt's picture

Better spend it while it's still worth somethIng!

Mon, 12/26/2011 - 10:17 | 2011648 cherry picker
cherry picker's picture

Two packs of cigarettes, two bottles of clamato juice and two bags of potato chips cost me $35 at Vons.  It is cheaper to eat at fast food than go grocery shopping.

I told the kid behind the counter, "I can remember when I could buy this for under $15"

He surprised me when he replied, "So can I"

"All within the las ten years huh?" I judged him to be in his early twenties.

"Uh huh," he replied.

That tells you deflation does not exist in this world.


Mon, 12/26/2011 - 11:06 | 2011704 francis_sawyer
francis_sawyer's picture

Clamato Juice, Chips, & Smokes...

Glad to see you'll be happy when it all goes down...

Hear that ROBO?... Go long 'Clamato'...

Mon, 12/26/2011 - 13:04 | 2011850 TheGardener
TheGardener's picture

Grocery shopping ?! Sounds like a tough diet to me. Are you
getting geared up to eat tree bark at the camp ? The latter
sounds more nutritious to me...Seasons Greetings

Mon, 12/26/2011 - 14:26 | 2011968 RockyRacoon
RockyRacoon's picture

Half of that was the cancer sticks.   That's not "groceries".   Jeebus Granola.

Mon, 12/26/2011 - 15:46 | 2012086 akak
akak's picture

I pretty much buy the exact same basket of groceries as I did 30 years ago (mostly fresh fruits, vegetables, raw meat, whole-grain bread and cereals, cheese [not previously sliced or "food product" or in a spray can], dried legumes of all kinds, yogurt, tea, skim milk), yet more and more I get the comment from the cashier when I check out: "Boy, are you some kind of health nut?"  But 90% of what is in the grocery stores nowadays is total crap, and completely off my shopping (or consumption) radar.  I do notice how the weekly fliers have increasingly focused on processed foods over the years rather than the basic staples of raw fruits, vegetables and meats that they did back in the 70s and 80s.

PS: And I always pay with cash.

Mon, 12/26/2011 - 15:59 | 2012107 TheGardener
TheGardener's picture

Glad I grow and hunt the basics myself.
But I do enjoy that trip to town to check out all those specials they advertise. Next spring I`ll be there again
even though I tend to buy not much except toilet paper.

Mon, 12/26/2011 - 17:08 | 2012179 DaveyJones
DaveyJones's picture

and crap isn't genetically modified ...yet

food always was and always will be the ultimate weapon

Mon, 12/26/2011 - 19:02 | 2012328 Cathartes Aura
Cathartes Aura's picture

not sure what you mean by "crap isn't genetically modified. . .yet" - but what the hell, I'll reply anyhow!

virtually all corporate food products - boxed or bagged - have some form of soy or corn derivative, which will be 100% guaranteed GMO varietal - if it's not "organic" then it's GMO, and yes, even the "organic" label is suspect nowadays. . .

unless meat is specifically labeled "organic, grass fed, antibiotic free" then it will most likely be feedlot meat, and that means stuffed with meds & GMO fattening fudstuffs - be it alfalfa, corn, etc.

if corporations were made to label their food ingredients, whether irradiated fruits 'n' veg, or GMO altered fudstuffs, I think most would be "horrified" - for a bit at least, then it would be a shoulder-shrug and back to the troughs. . .

and yes, food IS the ultimate weapon.

Tue, 12/27/2011 - 11:32 | 2013535 DaveyJones
DaveyJones's picture

meant crap is the only thing not modified. That said, given the yet unkown reactions, who knows.

Mon, 12/26/2011 - 17:22 | 2012205 ucsbcanuck
ucsbcanuck's picture

Agreed - $35 buys me a week of groceries up here in Ontario, Canada. And that's in a country where locally-grown fresh fruit and veg doesn't exist 5 - 6 months of the year. I don't smoke (no cancer sticks), eat junk rarely (potato chips rarely). I buy beer from Quebec or upstate NY/Vermont. I'm not letting the Ontario government gouge me. 

Get off the death sticks dude. It'll do you a world of good financially, not to mention healthwise. 


Mon, 12/26/2011 - 17:46 | 2012235 akak
akak's picture

It never fails to astound me just how well, and cheaply, one can eat when one prepares one's own food at home vs. eating out at restaurants, even (or especially) compared to eating "fast food".  While I do enjoy eating out on occasion, notably at ethnic restaurants whose foods are beyond my experience or knowledge to prepare, such meals are much the exception rather than the rule for me, and I'm always amused by those who complain about being short on money and yet routinely eat out at 8 or 10 times the cost of meals prepared at home.

Mon, 12/26/2011 - 19:43 | 2012379 dolph9
dolph9's picture

As much as I agree with your assessment on inflation, if you are wasting your money on that shit you are putting in your body, you don't really have anybody to blame.

Mon, 12/26/2011 - 21:53 | 2012526 RiverRoad
RiverRoad's picture

We'll have out and out inflation all right; it's sitting there waiting for us around the corner.  We just haven't gone through all the dance steps yet.  When confidence in our counterfeit money is finally gone and fear sits on our shores then you'll see it:  15% rates in money market funds, etc.  Back to the 70's.  Ashes, ashes, it doesn't end until we all fall down.  And that includes China.

Mon, 12/26/2011 - 09:37 | 2011607 Ironmaan
Ironmaan's picture

It will all come down, that is without question, or is it? It never ceases to amaze me how long they can successfully drag it out. We have been reading here on ZH for the last couple of years that the collapse is imminent.

Its like that boxer Randall (Tex) Cobb who was budgeoned and battered by Larry Holmes for 10 rounds. There was never a doubt in my mind that he was going down, but he never did.

Mon, 12/26/2011 - 10:26 | 2011657 Implicit simplicit
Implicit simplicit's picture

Tex still has a lot of his brain left, and uses it-

" in Philadelphia and is a recent graduate of Temple University where he graduated Magna Cum Laude"

Mon, 12/26/2011 - 10:48 | 2011684 e-recep
e-recep's picture

Anyone who expects a sudden collapse is wrong. What's going on is more analogous to the rotting process. The western lower class is rotting, the western middle class is rotting. Soon the upper middle class who could not go global will rot, too. The average member of USA and the Eurozone is getting poorer day by day. Days of a unipolar world are counted, but it will take some time. Be patient.

Mon, 12/26/2011 - 13:13 | 2011869 TheGardener
TheGardener's picture

You're right. No need to travel third world countries no more. It`s coming to us, the west, and that will be the new normal. The US always kept that stench, others have higher
to fall.

Mon, 12/26/2011 - 19:40 | 2012374 dolph9
dolph9's picture

If anything Americans have the furthest to fall.

Even in rich places in Europe and Asia, people live in small quarters, drive small cars, and do not have much leftover income to spend on Cheez Doodles and trips to the NASCAR race or NBA game.

When all is said and done, America will be left without a military empire and without any welfare system at all, and we'll see how well these supposedly rugged individualists can get by.

Mon, 12/26/2011 - 14:42 | 2011997 Smiddywesson
Smiddywesson's picture

1.  Global derivatives grew $107 trillion to $707 trillion in just 6 months.  Can the system survive an annual rate of increase of 30%?


2.  MF Global:  Can the financial world survive a complete loss of confidence in markets?


3.  Are the central bankers failing to print for no reason at all, or are they stalling to buy gold and will similarly coordinate their printing?



Mon, 12/26/2011 - 09:38 | 2011609 q99x2
q99x2's picture

Schlichter this back to the UN.

"That banks get ever bigger, that they routinely hand out multi-million dollar bonuses, and that they frequently get bailed out, is not a result of the greed of the bankers – a stupid explanation anyway, only satisfactory to the intellectually challenged and perennially envious – but is integral to the fiat money system."

AIG's former CEO is sueing for $25 billion because he was a victem of the fiat money system. The Bernank, the Goldman Sachs, the JP Morgue and others should sue the Fed for all the US citizens descendant's money because the politicians made them use a fiat money system.

Mon, 12/26/2011 - 10:02 | 2011635 q99x2
q99x2's picture

And another thing...What's with this inflation generalization. The top .01% are reaping the benefits of deflation while the rest are suffering from inflation. Sounds like a Goldman psy-ops group are writing articles while they sit around waiting to collect their year end bonuses.

Mon, 12/26/2011 - 12:40 | 2011820 LongBallsShortBrains
LongBallsShortBrains's picture

Bite the hand that feeds (and controls) them???? NEVER!

Bernank sue the fed?????

Lay off the eggnog so early in the day....

Mon, 12/26/2011 - 09:46 | 2011614 Wakanda
Wakanda's picture

"proper disaster"

Much better than a rude or improper disaster?

Mon, 12/26/2011 - 09:53 | 2011624 GeneMarchbanks
GeneMarchbanks's picture

He's a proper German, Schlichter is.

Mon, 12/26/2011 - 09:47 | 2011615 Sean7k
Sean7k's picture

As central banks are now lending money to private banks and then those banks buy the sovereign debt bonds which are then used as collateral for more funding from central banks- does the system need private capital?

If the system has no need for private capital, where will private capital go? Equities?

If companies are producing less product, if profits continue to stagnate, why would you own equities? Especially if all the profits are in debased currency? Ditto bonds.

As taxes are not increased and debt continues to grow, but doesn't need to be paid as it is financed through additional bond sales, at what point does the system break? What would be the driver? 

Is it possible we have an international currency already? Sovereign debt. The Interest being the degree of taxation the people will tolerate and the decline in living standard as currency buys less and less value?

Unemployment is resolved through debt funding. Starvation is resolved through debt financing. No one is screaming about CB balance sheets. Bankers just continue to claim a greater amount of the currency available to stay ahead of inflation.

This is a nightmare without a waking moment...


Mon, 12/26/2011 - 10:02 | 2011636 SheepDog-One
SheepDog-One's picture

What point would the system break....what would be the driver.

Well when bankers get in a bind, historically they sure seem to love their false flag 'disasters' which then call for wars. And they can decide at any time it is time for that, the idea that it just draws on and on assumes too much. Now their 'big fixes' only last for a day or 2.

Mon, 12/26/2011 - 10:40 | 2011668 WonderDawg
WonderDawg's picture

I think the driver will be a loss of confidence. There are no solutions for the EU. If there was a solution, it would have been offered by now. All they can do is try to delay the inevitable, and they can't do this forever. At some point, the collective social mood will overtake the efforts to reflate, negative mood will cause a loss of confidence and drive up interest rates (Italy, anyone?), selling ensues and turns to panic, and then we'll have deflation as all asset classes are sold off. It all comes down to confidence, and it is evident that confidence is starting to crumble.

Mon, 12/26/2011 - 11:00 | 2011695 GeneMarchbanks
GeneMarchbanks's picture

Plenty of solutions in Europe, just no will and no co-ordination. In theory, the ECB can print but is held back by Germany. You could kick out the PIIGS and keep a core Union or return the local currencies and forget the whole thing. We're past the point of limiting the 'pain' though, but it will not be the end of days.

Mon, 12/26/2011 - 11:08 | 2011706 WonderDawg
WonderDawg's picture

The lack of will and coordination is a symptom of a negative mood trend. Friction between EU countries, conflict, civil unrest, expect all these to increase dramatically in 2012.

Mon, 12/26/2011 - 11:20 | 2011723 GeneMarchbanks
GeneMarchbanks's picture

"Negative" is of course very subjective, relative terminology. I'm here and do travel around, so personally I only see a return to the norm. My advice is: read "The Black Swan of Cairo" which also applies to Europe. Europe is always unsteady in terms of 'mood', it doesn't mean much. By 'unsteady' I mean in relation to the US or Japan which is more homogonous socially...

Mon, 12/26/2011 - 11:27 | 2011730 WonderDawg
WonderDawg's picture

Not saying you're wrong, but I definitely don't see a return to the norm, as a new normal is emerging. From what I can tell, we're balanced on a razor's edge and confidence is deteriorating. I expect a market crash in early 2012, and I'm betting that way. But we all have our own views, and have to make our own decisions. Best of luck.

Mon, 12/26/2011 - 16:47 | 2012151 Calmyourself
Calmyourself's picture

No banker will ever push that button as they know what lies on the other side..  Hungry people push buttons marked reset and only hungry people will fix this after a long bout of suffering of course.

Mon, 12/26/2011 - 09:56 | 2011628 rbg81
rbg81's picture

Let's face it,  the Federal Reserve has just one purpose anymore:  to keep the US Government solvent enough to continue the deficit spending binge.  This means Bernake will do whatever it takes to keep short term US Treasury interest rates < 2%.  Everything else is window dressing.  If the yield on 10Y UST ever rises about 4%, then the house of cards comes crashing down.  The USG will be forced to cut entitlements and there will be widespread panic and unrest.  I doubt they can keep the lid on till 2020, but they will try their darndest to do it. 

Mon, 12/26/2011 - 10:45 | 2011674 CH1
CH1's picture

Bernake will do whatever it takes to keep short term US Treasury interest rates < 2%.

I agree, and I think that means killing the Euro, Yuan, and whatever else he must. He needs the holders of those currencies to run into dollars for safety.

When that ends, however, all the 2% Treasury holders get destroyed and/or run to gold.

Mon, 12/26/2011 - 15:24 | 2012073 rbg81
rbg81's picture

It probably also means prosecuting the Ratings Agencies Execs for treason if we ever lose our AAA.

Mon, 12/26/2011 - 10:48 | 2011683 SheepDog-One
SheepDog-One's picture

Nah I dont agree, the purpose is not to continue a deficit spending binge going as long as possible, its just to bankrupt everything enough so that theres no way out and no turning back. We're there already now.

Mon, 12/26/2011 - 11:59 | 2011766 DaveyJones
DaveyJones's picture

that's how the biggest bad boys see it

Mon, 12/26/2011 - 14:43 | 2011991 Max Fischer
Max Fischer's picture



The USG will be forced to cut entitlements and there will be widespread panic and unrest.....

No need for panic. 

Spearheaded by Reagan and Greenspan, the social security tax was increased in the early 80's to create a reservoir of excess funds, so that when all the baby-boomers retire (beginning now), there will be no threat to their retirement funds.  As long as those excess funds weren't looted by Reagan in an effort to balance his budget after cutting taxes for the rich ("fuzzy math"), all will be fine.  Otherwise, that was a sneaky, evil, surreptitious scheme to make the American workers pay for the tax cuts of the rich.  And given how much the current GOP presidential nominees worship at the Reagan alter and given their eagerness to demonstrate they truly sympathize with the plight of the American middle class, I'm certain Reagan - and all the presidents thereafter - never actually did that. 

Wouldn't it be just so fucking cruel if your retirement funds were LOOTED by all these WHITE, Ivy-league educated politicians to pay for their pet projects and tax cuts for the wealthy?  

Max Fischer, Civis Mundi


Mon, 12/26/2011 - 15:22 | 2012067 rbg81
rbg81's picture

Spearheaded by Reagan and Greenspan, the social security tax was increased in the early 80's to create a reservoir of excess funds, so that when all the baby-boomers retire (beginning now), there will be no threat to their retirement funds. 

Are you being funny?  There are no "excess funds"--the $$ has been spent.  The SSA just holds a bunch of IOUs from the UST.  And these IOUs are such that they can't even be traded like regular UST bonds.  It is, of course, possible to replace these IOUs with REAL UST bonds that can be sold on the open market.  But then that would drive up the yield.  Oops--can't have that. 

Also, lets not forget that SS is just one of many flavors of entitlement.  Medicare and Medicaid are already in the red (as is SS).

Mon, 12/26/2011 - 16:22 | 2012119 Max Fischer
Max Fischer's picture





Mon, 12/26/2011 - 18:46 | 2012309 rbg81
rbg81's picture

Because they view the Eighties as the Golden Age of Conservative Politics.  Like every President, Reagan did some stupid things. 

Mon, 12/26/2011 - 19:25 | 2012357 Cathartes Aura
Cathartes Aura's picture

lol, well played Max.

stay away from the Ronnie thread, yer head will 'splode!!

Mon, 12/26/2011 - 23:57 | 2012663 tmosley
tmosley's picture

Yes it was, and it was purpetrated and followed through by both parties.

When will you ever learn?

Mon, 12/26/2011 - 22:11 | 2012543 RiverRoad
RiverRoad's picture

Social security just like Medicare will ultimately be means tested.  Actuarially, when social security was invented very few were supposed to be alive to collect it.  Now 100 is the new 80.

Mon, 12/26/2011 - 10:16 | 2011647 tony bonn
tony bonn's picture

fiat debt based money requires constantly debased currency which is why its purchasing power has declined nearly 99% under the stewardship of the central bankster politburo....

this in turn creates the massively concentrated wealth we have experienced since 1981.....

our currency is nothing more than the fabulously failed british consols of the late 19th c....

deflation is would be a welcome thing as it represents honest price discovery but that is anathama to the rockefeller-mic-yale-cia racketeers...

Mon, 12/26/2011 - 10:41 | 2011670 hnaparst
hnaparst's picture

The article is a rant/flame.  It is though he has taken some evidence and then jumped to the apocalyptic conclusion he wants (which could be said for Zero Hedge in general).

The tough exercise is to start with an unbiased view of the outcome and try hard to understand all the things that are going on, and how much they are going to affect the outcome.  How much is the growth in the U.S. going to help?  How much inflation will be generated by the QE in Europe?  How much deflation?  Not just running around like chicken little.

Mon, 12/26/2011 - 11:12 | 2011713 WonderDawg
WonderDawg's picture

How much is the growth in the U.S. going to help?

Kind of a dangerous assumption. The US recession will re-emerge and by the end of 2012 will be referred to as a "depression". I didn't think anyone that reads ZH on a regular basis didn't know this, it's pretty obvious to anyone who has their eyes open.

Mon, 12/26/2011 - 12:05 | 2011771 DaveyJones
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"The tough exercise is to start with an unbiased view of the much is the growth in the US going to help"  

thanks for the demonstration 

Mon, 12/26/2011 - 13:50 | 2011922 knowless
knowless's picture


Mon, 12/26/2011 - 13:45 | 2011914 ucsbcanuck
ucsbcanuck's picture

"The tough exercise is to start with an unbiased view of the outcome and try hard to understand all the things that are going on, and how much they are going to affect the outcome."

I've tried and believe me - for an "outsider" looking in, it is not easy at all. This is not like 2002 - things were bad, but not 2008 - so you knew that if you picked a few winners, long term you'd be OK.

Now, it's much tougher because the very thing that is holding everything together i.e. the financial system, may itself collapse. So how do you make predictions?

I don't think it will play out the way a lot of people here on ZH think it will i.e. apocalypse. What I do see is the potential for a lot of pain and suffering in 2012. Not total collapse, just a lot of pain. However we will barely maintain the fabric of society, and come out on the other side a lot worse than we went in. Parts of the US will be like the favelas in Brazil or the townships in SA, but the US will on the whole be OK. 

However all countries have to ensure no re-run of the events after the Great Depression ie WW2. I think here we have learnt our lesson from history. 


Mon, 12/26/2011 - 17:05 | 2012177 WonderDawg
WonderDawg's picture

Not to be a pessimist, but I don't think we've learned anything from WWII, except that the bankers provide financing for the entire conflict and make tremendous profits from the war machine. Therefore, I conclude that major war is inevitable, it's just a question of when.

Mon, 12/26/2011 - 10:47 | 2011673 Belarusian Bull
Belarusian Bull's picture

Not a word about derivatives?

I think some prudent deflationists see deflation kicking in only after derivatives start to fail.

As the result, every bank will be desperate for cash to cover their positions in derevatives.

Can anybody elaborate on this view please? Thanks

Mon, 12/26/2011 - 11:12 | 2011712 francis_sawyer
francis_sawyer's picture

The derivative "bets", in a world of rehypothecation, are only a matter of financial socialism...

The "winners" get Hanks bazooka, the "losers" get to go home...

Mon, 12/26/2011 - 14:37 | 2011987 falak pema
falak pema's picture

Hank's bazooka and socialism are diametrically opposed realities in theory, as based on past history. One is feudalism, the other is statism; its antithesis. But in today's world they are one and the same thing as the feudals control the state. Funny how all roads lead to Rome!

Mon, 12/26/2011 - 10:46 | 2011675 Georgesblog
Georgesblog's picture

If there was any doubt about the dysfunction of perception in this crisis, that has been dispelled by now. Clearly the world has been sent strong delusion. Fiat currency has drugged people into stupor.

Mon, 12/26/2011 - 10:47 | 2011681 Ray Elliott
Ray Elliott's picture

Can the FEDSTERS continue to manipulate precious metals through the endgame?

Mon, 12/26/2011 - 10:50 | 2011686 Zola
Zola's picture

"When concerns about the fundability of the state and the soundness of fiat money, fully justified albeit still strangely subdued, finally lead to demands for higher risk premiums, upward pressure on interest rates will build. This will threaten the overextended credit edifice and will probably be countered with more aggressive central bank intervention. That is when it will get really interesting."

I thought August was that moment on the S&P downgrade coupled with operation twist. It looks like they were able to succesfully control the situation along with their brilliant hit job on Gold . What will it take to break this ? Stay tuned for 2012 action - as they say a sequel is better and bigger !

Mon, 12/26/2011 - 11:00 | 2011696 Freegolder
Freegolder's picture

'A committed funder of states and banks. Like all other central banks, the ECB has one overriding objective: to create a constant flow of new fiat money and thus cheap credit to an overstretched banking sector and an out-of-control welfare state that can no longer be funded by the private sector.'

Nonsense, it it was funding govts, how come yields have soared? Central banks are supposed to lenders of last resort to banks.


Mon, 12/26/2011 - 11:09 | 2011708 Ponzi Unit
Ponzi Unit's picture

Schlicter writes clearly in well-crafted sentences. Quibbles in the thread aside, the content of the piece is uncontroversial: a sound recap of recent events and a reasonable forecast for 2012.

I wish Tyler had more writers of Detlev's caliber.

Well done!

Mon, 12/26/2011 - 11:13 | 2011717 toadold
toadold's picture

"my fiat money is better than your fiat money, nyanyayanyana."

"Hey honey I'm takining the air rifle out tonight and try to pot some birds."

Mon, 12/26/2011 - 11:15 | 2011718 mess nonster
mess nonster's picture

"Of course for most of us regular folks deflation would simply mean a tendency toward lower prices."

This sentence could only be written by a troll. If inflation is a slow squeeze, deflation is a rabid rottweiler tearing your balls off.

Deflation is not "a tendency toward lower prices",as if it were a blue light special at K-Mart.

Deflation is prices falling into a fucking black hole, as a self-reinforcing dynamic begins to take shape, like the funnel cloud of a giant tornado. Bernanke and his ilk at the ECB are not the sharpest crayons in the box, but they do know that they have to pull on the emergency brake, which is a printing press in their case. They think that if hyper-inflation comes, well, they'll just cross that bridge when they get to it.  But deflation, embedded in the derivatives contracts, peak oil (maybe shale gas will save us!) and debt insolvency everywhere, is something else besides. It is soup lines, armies of homeles men riding frieght trains and actually listening to dirty gutter- punk kids about the usefullness of joining the Wobblies.

Deflation is the holders of commodities contracts dumping their now-worthless food products into rivers instead of feeding it to starving Americans everywhere.

This guy is a fucking idiot.

Mon, 12/26/2011 - 11:48 | 2011753 Vint Slugs
Vint Slugs's picture

You don't get it; your level of "understanding" of economics is abysmal.

In the sentence you reference, he is talking about deflation in the sense that was seen during the second half of the 1800s in the USA - when economic wealth creation was the greatest in the history of the world.  That rate and level of wealth creation has never been matched and it was accompanied by falling prices. 

Mon, 12/26/2011 - 11:42 | 2011743 Winston Smith 2009
Winston Smith 2009's picture

The EMU is toast in 2012, 2013 on the outside.  Without a fiscal union with central taxing authority (WON'T happen) and massive, voluntary debt restructuring (highly unlikely to happen), their situation is mathematically hopeless.  Using simple math, Japan is also toast.  They are already in an absolutely hopeless budget/demographics position.  China's monstrous real estate bubble is imploding and when that is combined with the already projected 2012 export growth at zero, a figure which does not assume the end of the EMU and the recession/depression in some or many of the EU nations and in the US, China is also in for big troubles in 2012/13.

So, I disagree that the dollar is toast in the near term.  It will be the only sufficiently large safe haven during the coming storm.  The danger will be, as Kyle Bass said, that the ability to sell treasuries at 0% to fund US fedgov deficits will prevent pols from doing the right thing and greatly cutting the deficit.  Instead, they may continue to follow highly flawed Keynesian theory and continue to spend borrowed money in a hopeless attempt to stimulate.  Hopefully, after the Keynesian dogma has proven to be what got us into this mess, they'll integrate into it the now so obviously correct theories of Minsky and Fisher.



Mon, 12/26/2011 - 12:20 | 2011790 JW n FL
JW n FL's picture



so that I am clear.. Keynesian's are to Blame and Austrian Theory will save us? Right?

see.. I thought that if you had a thief handling the till that no matter what system or Theory someone could implement.. would not change the behavior of the thief.

we could use sesame street math.. or maybe some space monkey math.. or even magic math..

but as long as the thieves are handling the money.. the outcome will be the same as before.

but it is interesting to see people hooked on a feeling ( of Hope and Faith!

there will be no change or no stopping the theft until the thieves are removed from power.. and no matter what system is employed to cull the angry mob.. no real answer to the real problem will be made available.


Here is a post from yesterday.. see if it helps you see thru the bullshit in your own mind.


I understand that everyone wants to be right..

the ego demands it!

the red v blue.

the Keynesians v austerity.

it doesn’t matter.. it is all just entertainment.

if you are dumb, you run towards what you can comprehend which would be red v blue.. faith! one must have faith and spread the word! killing babies is bad.. for all those who would not normally sling mud.. faith is used to drive then, herd them into a mudslinging match..

what do they all have in common? they are stupid, poor and fighting for a feeling..

they are not fighting for reality, changing an abortion law means nothing to the leaders of this world we all suffer.

so.. then we move onto the pseudo intellectuals.. the geniuses! of the crowd.

some of which are the smartest in their families (or so they have talked themselves into believing, ego!)

those who want NOTHING! more than to protect their wealth (the very little they have) and maybe (if they are egotistical enough) to protect their lineage.

regressive v progressive.

and we have very clever (so they would fill themselves up with thoughts of being) each side.. still slinging mud.. and with NO! real baring reality!

We should be responsible with money! that’s how they eeked out the very little they have..


the print and spend and thusly all ships rise when the tide comes in.

all bullshit.

all drivel.

all swill.

all so that the lesser beings may be provided mud to sling.

all for the entertainment of the masses.

and it is always! always!! the lesser attacking the lesser while the leaders step over the brawls, walk around the violence to pick pocket everyone while they are busy not paying attention to the larger robbery.

but alas!

you have your souls! v you have your freedom!


The facts are these..

No matter which meme is followed.. the same old rats will be steering the ship and putting the masses onto the rocks.

That is the only way that the few can have more for them and their families.

Ego drives the lucky sperm club too, dontchya know?

Fraud is celebrated!

Wall Street is Governed almost exclusively by Civil Process.

Main Street is Governed almost exclusively by Criminal Process.

The more they can steal from you the higher up the ladder they go!

Psycho’s are rewarded for not having any feeling for their fellow human beings.. for being able to squeeze the most life / production they can out of as many as they can.. and the consequences be damned! The harm caused be damned!

Only a sick person can cause harm on that scale and not have a break of some sort.

A normal person, a healthy person would not be able to cause wide spread harm and still function or highly function especially!


Those are facts.

What can be done to change those facts?

Almost certainly no more than 5 seconds after you read this something that makes you feel more strongly will come along and drive you, or they will herd you in some tail chasing meme against your fellow peer(s).


There are not enough smart people that are disciplined enough to stay the course to see real change brought about.


Oops! I feel like eating cookies because it is more gratifying than trying to educate an egotistical group who would rather create an argument where they feel empowered.


Merry Christmas to ALL!

And if Jesus is not your Savior I will Pray for you in Hell!



Mon, 12/26/2011 - 14:22 | 2011958 Winston Smith 2009
Winston Smith 2009's picture

"Keynesian's are to Blame and Austrian Theory will save us? Right?"

Neither Minsky nor Fisher that I mentioned are from the Austrian School, so what are you talking about?

The primary mission of central banks in a time of crisis is to save banks and that will typically result in everyone but bankers being screwed.  And the Ponzi fraud casino that is now Wall Street also played a huge part.  But it was the severely flawed (i.e. for one, total private debt levels don't matter) Keynesian economic theory used by the central banks combined with an ignorant Austrian School religious faith in unregulated markets (i.e., free markets self-regulate - as if we even have free markets and as if that was true on a macro scale even if we did) that enabled all of this to come to pass.

Debunking Economics: The Naked Emperor Dethroned

Mon, 12/26/2011 - 11:47 | 2011750 daxtonbrown
daxtonbrown's picture

The amount of time the Fed and central banks can kick the can is longer than everyone thought because what we have is biflation - simultaneous inflation of commodities and deflation of assets and the value of labor. This averages out to the rosy statistics Bernanke and the Ministers of Disinformation pump out, but it is just as devastating as hyperinflation or a deflationary depression.

GDP = M * V That is a two variable equation, both of which variables are independent. In a stagnating or declining economy, increases in M will either cause inflation, or drops in V to maintain a constant total GDP, or you can get both simultaneously. But in the end, You can't fool Mother Economic Nature. In other words, all the Central Bank money pimping is absolute bullshit, the Fed is at it's foundadation a mechanism of theft for the politicians and bankers no matter how they frame their Keynesian fantasies.

The only way out for the normal guy is to bulletproof his assets and lifestyle by Going Galt. That means a lot more than just buying gold, It means setting yourself up to be as independent as you can of the collapsing welfare state. It doesn't mean you have to drop out and live in a bunker, just that every chance you have to get yourself off the grid should be taken. That might mean fixing your old classic car, or doing some gardening, or it might mean moving your assets internationally. Whatever it takes, you know what I'm talking about.

Mon, 12/26/2011 - 19:32 | 2012365 dolph9
dolph9's picture

Yeah I agree.  Security, water, and food storage are essential.

Also, I think only those with alot of leftover wealth should even bother messing with these manipulated markets.  For most, cash, gold, and silver, maybe some land owned outright is what will get you through.

Also going galt has the additional benefit of starving the beast.

Refusing to participate is one of the best ways to fight back and it's amazing how few understand this.

Mon, 12/26/2011 - 11:48 | 2011754 yabyum
yabyum's picture

Wonder if the coin guy is open today? ( I doubt it) Time to buy a fist full of ASE's. Real $ for real times.

Mon, 12/26/2011 - 12:12 | 2011780 WilliamD
WilliamD's picture

Oh it's like one of those rambling connect-the-dots-as I-see-things screeds by some guy on a barstool telling us how the world works.

Mon, 12/26/2011 - 12:26 | 2011803 ExpendableOne
ExpendableOne's picture

The article has it backwards.  It's not the governements taking over the banks, the banks have bought the politicritters and have been running things for some time now.  


Mon, 12/26/2011 - 12:57 | 2011842 Alpha Monkey
Alpha Monkey's picture

They also bought the people, an integral part in controling the politicos, leading them to believe if they just shut up and kept going with the plan that they would reap the rewards of the ever expanding "wealth" machine.  People are just now starting to realize they've been lied to.  Many are still in the clutches, unable to imagine that anybody would intentionaly work to screw them over on such a large scale.  I don't know what the wake up calls will be, but I'm certain it won't be pretty.

Mon, 12/26/2011 - 12:51 | 2011829 oldmanagain
oldmanagain's picture

"Corporations are people", let us bow to the "job creators".  The solution offerred is reducing retirement funds, health care, education, while funding more defense and tax cuts for the newly crowned "people".  It began with "tax cuts pay for themselves" and ended with laying off and collapse of government.  The false idealogy of "Austrian" offshoots has failed.  It is amazing that so many allow themselves to be further manipulated by these false prophets.

Interest rates will go up, and up.  The question is will this be before the collapse or after.  We know the basics.  The world is consuming more than it can physically mainain. We also can figure that high rates will be the curtain. We owe more than we can print or are near that point.


It is of more than passing interest that many on CNBC and its guests blame the poor for our problems.  After robbing Social Security funds for two and half decades, it is blamed for the problem when it needs to be paid back is just one instance of the completely false assumptions being promoted by the NeoAustrians.  Others maintian we have offended the Gods, hence are being punished.

We have completely lost sight of the reality we are all in this mess together. The opponents may have bloody TV pulpit almost to themselves but no longer is it the sole avenue of thought.


The Fed did not cause this mess.  The poor did not cause this mess.  Nor baby killers, gays, etc.  The Neo Austrian, facist concepts are smashing us.  There has been a corporate coup.

Mon, 12/26/2011 - 13:05 | 2011854 yabyum
yabyum's picture

^^^^^^+1000 Corporations are people, money is frre speech.

Mon, 12/26/2011 - 13:38 | 2011900 FMR Bankster
FMR Bankster's picture

Where the hell do you get NeoAustrian from? The only Austrians I know are for a return to a real gold standard. (the money of the PEOPLE, not the major banks)And with a solid monetary system you can't produce enough goverment income to f*ck over average people by waving some imaginary goverment benefit in front of them while spending huge amounts of money on crony capitalist wars and silly a** green boondoggels like Solydra that are handouts to crony capitalist political contributors. Wake up.

Mon, 12/26/2011 - 19:23 | 2012350 dolph9
dolph9's picture

The blame can certainly be shared and I'm not normally one to assign it.  I certainly don't blame the poor or gays, and I think you are mistaken in confusing the issue in this regard.

Republicans and "conservatives" in America are most definitely not Austrian thinkers.  They keep increasing debt, and keep us tied to a false fiat money system.

You really need to get the facts straight before going off on a meaningless rant.

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