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Guest Post: The Pernicious Dynamics Of Debt, Deleveraging, And Deflation
Submitted by ChrisMartenson.com contributing editor Charles High Smith
The Pernicious Dynamics Of Debt, Deleveraging, and Deflation
At this moment, the news media is constantly clamoring about the "Three Ds" that are buffeting the markets: debt, deleveraging, and deflation. We intuitively sense that they're linked -- but how, exactly?
Understanding this linking is critical; as debt has fueled the global expansion, it will also dominate its contraction.
Debt and Deleveraging
To illustrate the forces of debt and deleveraging, let’s consider a home mortgage.
Suppose a buyer of a $100,000 home qualifies for a mortgage that requires only a 3% down payment in cash. The buyer ponies up $3,000 in cash and obtains a $97,000 mortgage. The cash collateral is thus leveraged about 33-to-1: Each $1 in cash has been leveraged into $33 of borrowed money.
Let’s say the owner wants to refinance at a later date, and to qualify for the new loan he must have 20% collateral for the new loan. (This is a simplified scenario; we will consider more complex examples later.) If the house value remains around $100,000, then the owner must boost collateral by paying down the mortgage $17,000. This boosts collateral to $20,000 (20%) while reducing the mortgage to $80,000.
The leverage has been slashed from 33-to-1 to 4-to-1: now each $1 of collateral leverages $4 of borrowed money. This is deleveraging.
Another common example is a margin stock-trading account. J.Q. Speculator can leverage his cash collateral 2-to-1 via margin: If he has $100,000 cash in his account, he can buy $200,000 of stocks. If (heaven forbid) the stocks he purchased decline in value by $50,000, then his collateral has shrunk to $50,000. Since margin accounts cannot exceed a 2-to-1 leverage, he must either sell enough of his portfolio to return the leverage to 2-to-1 (that is, $50,000 in cash value and $100,000 in stocks), or he must deposit another $25,000 in cash (that is, $75,000 in cash/cash value) to collateralize the $150,000 in stocks he owns.
When credit is cheap and abundant, prices of assets tend to rise in self-reinforcing bubbles. If J.Q. Speculator’s portfolio of $200,000 rises by 50% to $300,000, then his collateral increases to $200,000. This expansion of collateral enables him to buy another $100,000 of stocks, as $200,000 in cash value can leverage $400,000 in stocks.
The same mechanism enabled home owners to leverage up their rising equity to buy additional homes.
When the debt cycle turns and asset bubbles pop, collateral declines and lenders are stuck with losses as over-extended borrowers hand the keys to underwater houses back to the lenders. These losses are subtracted right off the bank’s own equity (cash reserves), which are typically a modest 4% of loans outstanding. That is, the bank leveraged each $1 of cash collateral into $25 of mortgages.
If mortgage losses eat away that 4% of cash, then the bank is technically insolvent. As a result, banks become wary of extending risky loans in eras of credit contraction: Their fiscal survival focuses their attention on dumping liabilities and building cash reserves (collateral). The credit spigot is turned off, and all those down the line who were counting on easy abundant credit to bankroll their leverage are left high and dry. As credit contracts, demand for assets and commodities contract, and a wave of selling begins as cash is desperately in demand.
Leverage and Derivatives
In an extreme example, if a bank has $1 million in outstanding loans and has suffered losses such that its cash has declined to $1, it is leveraged 1-to-1-million. It must liquidate enough liabilities and concurrently raise enough cash to restore its 1-to-25 leverage (i.e., 4% of the outstanding loans are in cash reserves).
The problem is that liquidating liabilities requires the bank to absorb any losses generated by the sale/write-down of loans. If the bank sells a house for $50,000 that carried a $100,000 mortgage, the $50,000 loss is subtracted from its cash reserve.
The bank has a difficult mandate: Get rid of as many liabilities as possible without incurring losses that will bankrupt the bank. The alternative strategy is to sell unleveraged assets to raise cash or slowly build cash by earning interest.
To restore the 1-to-25 leverage of its $1 million in loans, the bank needs to raise at least $40,000 in cash. It has two basic ways to reach this goal: Either keep all of the impaired loans it owns on the books at full value—in other words, ignore the declining market value of the homes underlying the mortgages—and slowly accumulate cash from deposits and interest, or sell non-leveraged assets such as gold, bonds, or property it owns free and clear to raise the $40,000. (Again, this is a simplified example.)
If the bank’s management is dominated by wise-guy “operators,” then it might pursue another strategy, selling derivatives against assets it doesn’t own. The derivatives are sold for cash and hedged against losses by buying derivatives covering the other side of the trade from another institution. The difference between the revenues from selling the derivative contract and the cost of the hedging contract is pure profit that bolsters the bank’s collateral.
If the derivative contract expires or executes as planned, the cash earned from the sale of the derivatives is pure gravy.
If the derivative contracts trigger losses, then the bank turns to the other institution that it bought the hedge from to make good the losses. If that institution fails to make good, or the losses of the bank’s derivatives are not fully covered by the hedge, then the bank must raise enough cash to pay the buyer of the derivative.
The need to raise cash by selling assets leads back to the original problem. Liquidating liabilities, such as mortgages, by selling the underlying assets (houses) forces the bank to book losses it is ill-prepared to absorb.
Deleveraging and Deflation
This example illustrates the pernicious dynamics of debt and deleveraging. The bank cannot declare the true value of its assets (houses that have fallen in value), nor can it sell the houses and take the resulting huge losses, as its cash reserve (collateral) is already at dangerously high levels of leverage (or even negative -- i.e., the bank has no real collateral at all and is insolvent).
Ascertaining the true collateral of any household or enterprise is straightforward. Sell all of the assets on the open market and pay off all of the liabilities. The cash remaining is the collateral.
In highly-leveraged households and enterprises, the impaired assets are held, as the sale of the underlying asset would force the entity to declare its insolvency. So homeowners who are “underwater,” i.e., their mortgage exceeds the value of their home, continue paying the mortgage because selling the house would require them to come up with the difference between the value and the loan in cash. The alternative is to declare bankruptcy and give up any hope of leveraging future income into new loans.
The same basic mechanism is at work in companies and banks.
Ironically, perhaps, the process of raising cash by selling assets inevitably places a premium on unleveraged assets such as precious metals, collectibles, Grandma’s house that is now owned free-and-clear by her heirs, etc. Everything that has been leveraged is held, lest its true value be disclosed by the market, while everything that has retained some measure of its cash value is unloaded to raise cash—either to pay the interest on debt or to recollateralize the entity’s shaky finances.
The key point here is that the outstanding debts far exceed the cash value of the underlying asset; selling everything including the kitchen sink doesn’t even come close to paying off the entire debt. Selling everything that isn’t nailed down simply maintains the much-valued illusion of solvency and puts the reckoning off for another day. The hope of course is that assets will reinflate to their old bubble valuations, but the forces of deleveraging outlined above power relentless selling that eventually overwhelms supply.
The market “discovers” price as demand transparently interacts with supply. When supply exceeds demand, prices fall. And since price is set at the margin, even modest imbalances of supply and demand can lead to cascading declines in prices.
For example, the value of a neighborhood of 100 houses is not set by the sale of all 100 homes; it is set by the last few sales. Thus the last five sales determine the value of the other 95 homes.
Deflation is simple to define: Cash buys more real goods and services than it did last year. Cash is what’s in demand, and assets that depend on credit are not in demand. Rather, they are being sold to raise cash. It’s simple supply and demand: Cash rises in value as it’s in demand, and assets decline as the demand is lower than the supply.
In Part II: The Deleveraging Pain Is Just Beginning, we look at how much longer the U.S. might need to recover from its long deleveraging hangover from multiple global asset bubbles, and why building cash (and cash equivalents) at this time is especially prudent.
Click here to access Part II of this report (free executive summary; paid enrollment required for full access).
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And what happens when everyone defaults or the debt is purged during a jubilee? What about the death of the fiat with which all you "D's" are being accounted? FAIL.
"Jubilee"?
That just means that irresponsible debtors get off the hook and that creditors (and we SAVERS!) get stiffed - again...
So you really believe that all the government debt (and hence your debt) is legit? Never heard of the socialization of losses huh? I for one didn't vote to spend what we did (on the credit card) on the wars and AIG, GM, TARP, TALF, etc.
Fine, kick the irresponsible debtors to the curb. They will still be unemployed and starving, their debt is fucking minuscule next to sovereign debt.
FYI- QE and ZIRP is what is raping the savers. Wake the fuck up.
+1
And thus, the case for gold
PRAISE THE LORD FOR QE AND FUTURES CONTRACTS, gold, melt, melt in the firey pits of hell.
Yes, Bay, the usual + 1.
+I...
"Ironically, perhaps, the process of raising cash by selling assets inevitably places a premium on unleveraged assets such as precious metals, collectibles, Grandma’s house that is now owned free-and-clear by her heirs, etc. Everything that has been leveraged is held, lest its true value be disclosed by the market, while everything that has retained some measure of its cash value is unloaded to raise cash"
Huh? First the author says unleveraged as opposed to leveraged assets will command a premium. Then he says everyone will hoard leveraged assets. How does this compute? As everyone sells the unleveraged assets for cash this would cause them to drop, no?
in reality non-leveraged assets belong to people who have no debts and leveraged assets belong to people who are in debts.
No one hoards leveraged assets, they are just _held_, because if they are sold, the debtor has to come up with additional collateral cash to cover up the loss of selling the underwater house.
The unleveraged assets are the ones being hoarded.
At least this is how I understood the article...
LawsofPhysics makes far more sense then this blog post, I'm sorry to say.
The way that public banking, and private banking has been actually working in America is as follows:
the (especially private) bankster loans himself $100,000 through a colluding bank or financial entity (I'm tremendously lowballing the numbers here), then pays back the loan to his account, thus ending up with $110,000 on account.
Now that $10,000 is tax deductible, since loan interest repayments are tax deductible so, in effect, the bankster has stolen that money from the tax base --- what they refer to as having "earned" it --- which explains the colossal national debt, the underlying causes of deficit financing, trade imbalances, etc., etc., and especially America's incredibly shrinking tax base.
Now that's reality. Plus that $700 trillion in worthless derivatives they sold.
Arrest them.
With 4% cash reserves... the bankster commits fraud by lending you the same 4% 25 times...
Fractional Reserve <=> Counterfeiting
The Citizen (Us) will not be free until the last Bankster (Dimon) is strangled with the entrails of the last Politician (Soetoro)...
So you're one of those that takes a loan from the bank then doesn't pay it back , (the little old man whoes saving you borrowed through the bank) loaned you. we are not talking about sovereign debt here just yours to your borrower..??
Hey idiot, I have no debt, served my country and know precisely who has sacrificed for whom. Grow the fuck up, life is hard, deal with it.
Why should we deflate our wallets to see part 2 of this article when you didn't provide us any useful info for inflating our wallets in part 1?
Isn't the current number of (90+ day late ... ie. never to be paid again) mortgages something like 7-12% of the total depending on the state with an average of 9%...
If you're still paying your mortgage and you don't have ironclad proof that the recipient of the booty is the true holder in due course ... with valid claim to the security you are a moron. (Set up an escrow account with your lawyer, keep making payments while you file quiet title)
Chris: you titillate us with these articles, but we want to see more!
He forgot the most important "D's", Death and Default. There is also the issue of derivatives...
I think you are in the wrong chat room.
What this article tells you:
Money == Economy.
Ben's printer < Changes in fiat demand
Therefore: If economy goes down (but i thought we were recovering slowly and had slow growth???) and fiat demand goes up, your money will be worth more. Especially since the response of CBs will not be more printing.
Yeah, riiiight......
If there is 1.9% growth and 2.1% inflation, this means in reality that there is a Real Change of -0.2%. The only growth is inflation. There is no real growth happening. At least, that is what I'm seeing.
That's what almost everyone has been seeing in their personal lifes for at least the last 20 years...... yet the official numbers (nominal as well as pseudo-real (CPI-adjusted - those bullshit 2,1% you just mentioned)) tell them that things have gone up, and that everyone is just imaginating things.
"Don't believe your own eyes - believe in our concepts and numbers."
loanable funds theory extended to derivatives.
Always failed to xplain price discovery and this article doesnt either - demand and supply for cash? the implicit assumption in this article is that the cash supply in the economy is fixed - it isnt
Does this mean that last year's summer of recovery was just bullshit ?
It was every bit as real as you imagined it to be.
Very funny! Does no one get it?
Perception is a curious beast...
http://www.youtube.com/watch?v=v9eD7oSX7dg
Moreover, how can cash money become rare when there is no cost fot it's creation (a.k.a ZIRP). Is Chris suggesting physical piles of cash? I think physical piles of PMs would be better, even pennies and nickels (especially in a deflationary environment).
Actual, physical cash is very rare. Literally it's true, d/t fractional reserve banking. But additionally 99.99+% of what is thought of/treated like money now is subject to profound collapse/evaporation d/t price discovery, credit collapse, delevaraging, etc. It's a huge house of empty cards built over a very limited amount of the real stuff.
Real cash is what people will be racing for when the music stops and all the fake, layered, hypothecated, promised, electronic b.s. cash evaporates. What happened after stocks collapsed in 1929?
Hence the nickels. There is an old guy on 40+ acres nearby that does have piles of physical cash for just that reason. He also grows a lot of trash can potatoes for food and fuel. I keep telling that he should have been stockpiling has heart medicine too.
Futures do not like this post .
Fucking Glengarry Glen Ross post. First prize / post - A trip for two to Hawaii !!!!! Second prize/ post / paid for shill info - A set of Ginsu steak knives !!!!!!!! Third prize / post / paid for shill info - There is no fucking third prize - YOU 'RE FIRED ! And, all your monies is belonging to us !
if you're gonna quote a classic at least get it right.
You stupid fucking cunt. You, Williamson, I'm talking to you, shithead. You just cost me $6,000. Six thousand dollars, and one Cadillac. That's right. What are you going to do about it? What are you going to do about it, asshole? You're fucking shit. Where did you learn your trade, you stupid fucking cunt, you idiot? Who ever told you that you could work with men? Oh, I'm gonna have your job, shithead.
-100000000
So I should buy gold so I will have an asset to delever with??????
Or do I buy gold so I can hedge inflation????
Im sorry I could not resist.
You buy gold because when this fiat system finally crashes and a new system arises to take it's place you aren't a penniless serf who made it through with nothing intact.
Gold will come through the other side with value.
The real story is $1 of actual value leveraged to control $1 trillion worth of derivative contracts. Or how the world pledged 1000 years of economic activity to make a couple thousand people filthy rich now.
there you go. Borrowing from the future to make a few rich now. Well guess what, it's the future.
This thing is going to end in tears and blood, I am afraid.
The fourth D, DEFAULT connects the other three.
I have found the following extremely helpful in understanding what deflation means on a practical level and for information on what best to do to prepare:
* Quick summary of what can happen in a deflationary collapse in the US:
http://theautomaticearth.com/Lifeboat/40-ways-to-lose-your-future.html
*** And some extremely helpful essentials for practical preparation (not a "gold and guns" theme):
http://theautomaticearth.com/Lifeboat/how-to-build-a-lifeboat.html
doesnt work that way.
develevergaing = debt paydown/credit withdrawal = shrinking of Loanable funds.
should high powered money supply shrink (cash in the article) then the implication WOULD be massive develeraging and deflation as it is the basis for high powerd money underpinning the loanable funds in the first place.
Deflation =>
1. loss of control of money supply since CBs cant set negative interest rates to kickstart the economy HENCE CB targets always POSITIVE inflation
2. deflationary recession is possible (and very difficult to get out of, yet, wouldnt the average man on the street love prices to go down?) as in demand side delays of purchases
3. vicious cycle (as article suggests) of credit contraction which is the IOU flesh and blood of the capitalist system so could lead to more REAL CONTRACTION as supply side investment spending drops from a combination of higher interest rates, lower confidence, lack of confidence to invest
The COUNTER to this is to increase money supply.
The CBs do this through open market operations - take in the IOUs as collateral for releasing CASH.
They transfer the falling asset values of the loans from the private sector to their balance sheets, in the hope that enough money starts to inflate the system/prices and restart the investment/growth cycle and grow the loanable funds again.
RIGHT NOW we are in a situation where the CBs themselves have taken on so much crappy IOUS that are underwater, that the system itself if being questioned.
So their response will be MORE printing.
No economy I am aware of, collapsed from DEFLATION. MANY economies collapsed from HYPERINFLATION.
the worst case scenario is a hyperinflationary deflation where worthless money is coupled with declining asset values and real value of necessities due to lack of demand and starvation. in other words a loaf of bread can only be sold for one silver dime instead of 2 but the dime is worth 50 dollars of fiat currency.
Global outstanding dept is in the multiple 10's of trillions - CB printing cannot counteract its tidal collapse. The CB's, as agents of the .001%, might still try and print some now, if only to eke out even more debt creation while the balloon, though leaking, can still take a little more air. But when full collapse goes, it cannot be stopped. And they might not actually want to stop it.
The .001% are the creditors of most of the global debt. They, via the CB, and to the degree greed guides them, might actually (though not openly) welcome a deflationary collapse. Why? Any creditors left standing after a collapse will have every debtor (personal, corporate or sovereign) just that much more by the throat as their effective indebtedness is deepened and their ability to repay nearly vanished.
What are the richest corporations/sovereigns trying to hoard? Not assets, which they'll be able to vacuum up later at pennies on the dollar. But cash and to a lesser extend gold. Corporate cash hoarding is at a 50 year high as mentioned several times on ZH. Why would they do that (or offer 3.5% 30 year mortgages) if they're expecting hyperinflation?
Hyperinflation will likely come AFTER a period of deflation.
A fiat dies when the value of the government promise behind it is zero.
Well that was depressing.
Damn! Somebody figured it out!
Great Article.
I've learned more here on ZH than I ever did in my economics class in college. Of course I stopped listening to the instructor when she said that you could quantify happiness into a working model in order to determine future potential for growth, but only when all things were equal. I tried to understand if she lived in the same world I did, where nothing, no one, no country is equal; and realized then that economist were all full of shit. (my background is psychology/sociology- so yeah, you go with quantifying 'real' happiness)
This helped me to understand a little bit more. As I'm not the quickest wit when it comes to all these descriptions and 'vehicles' this helped me to put it into a bite-sized mental chunk.
And as always, I'll get a better picture from the comments which approaches everything on here from all sides. Even MDB helps me to understand how the propogandists paint there realities.
Thanks Again.
You seem bright enough if you were able to figure out that Econ is a bunch of BS so get an engineering degree. Then you might actually get a real job with a real future when you graduate. Everything you have studied so far is a waste of time and money. Anybody can get a liberal arts education from being well read.
the foreclosure market is beginning to ramp up again. get set for another downturn in real estate values. bank reserves have built up enough for a much larger dump. this could be the cathartic dump the market needs.
I think that's the point. Banks are holding onto the properties for as long as they can so as to not realize their losses. It's a self feeding cycle, and one that I believe leads to riskier and riskier plays (re:JPMorgan). The same could be said for the individual.
One may say "but rates are so low everyone has access to free money". When in reality rates are so low because no one is borrowing, either because they don't have enough collateral (actual collateral, not the thing they are trying to buy) or because they've wrecked their credit worthiness by trying to hang on since 2008 (or later).
normally, you are suppose to buy when there is blood in the streets but this real estate market is like a hollywood death scene where the guy is shot six times in the heart but he keeps flopping around. in this market it is probably best to wait until he is bloated and smells a bit before jumping in. there is no hurry. it ain't going up much when it does recover.
Bloomberg just did a piece on student loans. The term "Subprime 2.0" was used. And the usual IB banks were mentioned as the primary non-govt.-gtd lenders. Sadly, student loans are just another unsustainable trajectory.
Sorry for the bad news baby boomers. Deleveraging requires a shit ton of new buyers. At 24 years old I don't have a single friend that owns a home. Most of them can't pay off student loans. The bottom of housing isn't even close. Too bad for those federal pensions. Doesn't anyone understand calculus anymore? Fuck it, I'm going to get another ipad.
Hear ya MunX. Our kid (25) is not in the housing market either.
+ 1
once upon a time there were hardly any kids in the real estate market in their twenties. that time is back even as a home can be bought for as much as a third under replacement costs which are rising even with the latest commodity dump. the fact that homes are so affordable without buyers points to an income issue as much as a supply issue, as in, no one has any or any that is stable and potentially rising. the kids are screwed unless they go to where the money is which won't be in the usa for a long time.
at 24 you likely don't understand diddly. your generation is the one that is fucked. baby boomers who aren't prepared only have 20 or so years to feed themselves and may have to work as wal mart greeters for a few more years. baby boomers who are prepared are pretty well set even if their assets get cut in half. your generation, on the other hand, have a life time of toil and trouble ahead making your way in a post growth declining economy in a declining empire which interprets as a declining standard of living. doesn't anyone study economic history anymore? so buy that ipad. it tastes good with catsup between two slices of wonder bread.
I'm not fucked. I'm stacking PM's. And the ipad thing was a total joke (I will never buy any ishit). My parents on the other hand think a good play right now is to buy another home because of ZIRP (which is what many baby boomers think is a good play right now). They don't realize the seriousness of this financial crisis, and on top of it, they grew up getting a free lunch every day, so they don't know the alternative. All in all I know my generation is fucked, and honestly in some ways it is a blessing! I don't need ishit or a home in suburbia with a lawn and pool. I'm happy with some land to provide and a family for company. Everything else is bullshit.
Agreed MunX - I'm not in your age bracket, but I can clearly see the fault of the boomers normalcy bias. Does anyone here really think that this shit-show joke of a monetary system will continue as we all toil to support it?!?
A constant in nature is change, sorry if others can't endure and adapt...
i make a good chunk of money in real estate. this is not the market for amateurs. talk to your parents. they are probably pissing away a good chunk of your inheritance.
Right on MunX, you figured it out. You'll be fine.
_
All your houses are belong to Benron!
Not to diminish your point (as it's accurate), but the only 24 year olds I've ever known that owned a house got it when grandma moved out, or bought a cheap old trailer. Twenty-somethings and large mortgages (as compared to their net worth) are not a good mix.
Of course, once all of you get into your thirties and still can't afford a house, well... I'm sure fedgov can find you a bunk somewhere.
I got rocked over the past few days trying to go short the aussie dollar,long the dollar starting monday, and long natural gas. I've always been a gold bear thanks to old Warren Buffett but now its strictly cold hard cash stored at the crib alongside my ever growing bullion collection
Where's the value to be had playing in a rigged casino? Pennies... bulldozers... and all that.
That's "pennies in front of steamrollers" but I agree with your sentiment.
From now on, I go straight to the end of the article. If it requires a paid subscription in order to read Part Deux, I will skip the first in its entirety. What a CF!
Gave you a rating of one, your worse than Graham Summers. At least his stuff is free.
Just wanted to again point out that historical housing valuation is 3x average household income, which does not account for swings below that average in recessionary periods. We have not actually even hit that 3x valuation number yet, so yeah, housing still has a long fucking way to go downwards before the market can really be declared cleared. Part of what I think is still lifting it is that houses are physical assets, and are benefiting a bit from their tangible value vs. computer digits that can be magically erased from futures accounts. That said, I think the counterparty risk in your house value, that being your broke local government looking for tax money and/or your MERS "officer", "transferring your title", is not well understood or appreciated.
You sure about that. The "average" salary is below 50K. Gotta be close.
Funny how he uses the a mortgage as the vehicle of doom.
The crash will happen here in Canada when the Chinese finish buying up Vancouver...
Archimedes: "Give me a lever, a fulcrum, and a place to stand on and I will raise the world."
Bernanke: "Give me a printing press, helicopter, and muppet citizens and will raze the world."
Two things. I read somewhere that 70% of physical US dollars are overseas and not in US.
As to Glengarry Glenross, my favorite cliche all time in 20 plus years of sales, "There is only one letters difference between Closer and loser.
Deerhunter, that 70% is correct. What is more frightening is that only 8% of the total money supply is in paper/metal coinage. Thank goodness for digitization.
Real cash, notes and coin + tradeable precious metal will see you safe.
they're already asking for the US FED to bail out the European banks - to stop the bank runs that are already happenind in Spain, Italy, and now France -
once the bank runs start here in the US - there will be no more political will for further "bailouts" -
the goose is cooked. Asset prices (including RE) will fall to pre-1980 levels.
yup, implying, wrongfully that there is or ever could be, equillibrium. One of the biggest lies ever told is that there is such a thing as equillibrium.
Sounds like no more printing money and lending it into existence-actually that game has been pretty much dead since 08-
http://research.stlouisfed.org/fred2/series/EXCRESNS
Disclosure: This is a advertisement for me whoring for + clks.
If you don't feel the comment is worthy of your subscription/+clk read no further.
I read the article and wanted more but felt like a fish. Emmmm food. So I bit and ug a hook. Now I'm caught.
Its tough being a fish. Now the fish has to decide. 50$ to pay for a new social security card so I can renew my drivers license or 20$ for more fish food?
This is another case of big gov taking fish out of the basket of fishermen.
Vitalchek for 50 it is.
Yes hold on to your dollars because the great deflation is coming. Something that the government has the incentive and ability to create in any quanitity they want and distribute to anyone they want will soon become more precious. I have been saving dollars since 1900 and thank goodness because while I can only buy 1/50 of the gold I could with the dollars in 1900 I know one day they will be cherished by all.
All hail the dollar. It may not have yet but it is for sure going to server its purpose as a store of value.
I thought is was a very good example. Thanks.
Man, I hate getting into these things and then find the hook at the end.
I gave him a "1"
Scam alert below!
McAfee: http://www.siteadvisor.com/sites/makecash10.com/msgpage
********************
Many thanks to whoever removed the spammer. Those sites are full of malware.
I suggest we down arrow them like crazy to alert the Tylers.
"If something can't go on, it won't." - Economist Herb Stein
+5... Good work CM...
Understanding this linking is critical; as debt has fueled the global expansion, it will also dominate its contraction.
______________________________
Nope. What has fueled the global expansion is availability of space to expand. Debt is just a means to boost expansion, to speed up expansion.
As to the rest, it is a convoluted report on what is happening now:
as US citizens have reached saturation point on a global scale, they have now to determine who is part of the US citizen gang and who was conned into believing belonging to US citizen gang would be an inborn dynastic right.
Hence emergency of valid points like the future will be made of people who inherit from people who consumed much and from people who consumed much less.
That's just gibberish, and yu[Eng.\plural form]need to go into conference and figure out what is going screwy with yur programming of the Chinbot's command of English grammer - or yu (all) can look forward to a career-long posting to a filthy Uyghur town as public security officials whom the local populace spit pumpkin seeds shells onto everytime yu trundle out of the bunkhouse.
Get it togther boys!....or no tickee to San Fran for yu\all!
SPX rally warning & USDX retracement warning now confirmed & good (counter trend) equity upside expected.
http://www.zerohedge.com/news/2012-12-24/market-analysis