This page has been archived and commenting is disabled.

Guest Post: Shhhh… It’s Even Worse Than The Great Depression

Tyler Durden's picture


Submitted by Mark McHugh from Across the Street

Shhhh…It’s Even Worse Than The Great Depression

According to Wikipedia, Narcissistic personality disorder (NPD) affects one percent of the population and has little to do with looking at yourself in the mirror.  It has a lot to do with unrealistic fantasies of success, power and intelligence.   Some NPD sufferers become cult leaders or mass murderers, the rest become  economists and policy-makers.   Despite having a highly elevated sense of self-worth,  narcissists have fragile self-esteem and  handle criticism unpredictably, so let’s keep this to ourselves….

Velocity of money is the  frequency with which a unit of money is spent on new goods and services.   It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling).  In a healthy economy, the same dollar is collected as payment and subsequently spent many times over.  In a depression, the velocity of money goes catatonic.  Velocity of money is calculated by simply dividing GDP by a given money supply.  This VoM chart using monetary base  should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face:

In just four short years, our “enlightened” policy-makers have slowed money velocity to depths never seen in the Great Depression.  Hard to believe, but the guy who made a career out of Monday-morning quarterbacking the Great Depression has already proven himself a bigger idiot than all of his predecessors (and in less than half the time!!).  During the Great Depression, monetary base was expanded in response to slowing economic activity, in other words it was reactive  (here’s a graph) .  They waited until the forest was ablaze before breaking out the hoses, and for that they’ve been rightly criticized.  Our “proactive”  Fed elected to hose down a forest that wasn’t actually on fire, with gasoline, and the results speak for themselves.  With the IMF recently  lowering its 2012 US GDP growth forecast to 2%, while  the monetary base is expanding at about a 5% clip, know that velocity of money is grinding lower every time you breathe.

The Fed’s refusal to recognize the importance of velocity of money quickly goes from idiotic to insidious.  Here’s a question:  If I give you 50¢ and as a result of that transaction, you owe me $1.00, what interest rate have I charged you?  Obviously, I’ve charged you 100% interest and I don’t give a rat’s ass about you or your kids.  I’m pure evil and you’re pure stupid.  But believe it or not, this kind of master-slave  arrangement isn’t enough to satisfy a true narcissist.   The narcissist needs to be exalted for his actions, no matter how unjust. 

He likes to be thought of as “accommodative.”

In 2011, every dollar of GDP growth created $2.08 in debt.  In real life, that’s 108% interest plus the nominal rate, and our twisted leaders want  you say, “Thank you sir, may I have another!”

2011 wasn’t an anomaly either; it’s the new normal.  Since the Bush deficit increases (to call a spade a spade) went into effect,  the rise in debt has exceeded the rise in GDP 6 of the last 10 years (the four years of positive GDP-minus-Debt can be directly attributed to the housing bubble).  That never happened in the U.S. during Great Depression/WWII era.  One place where it did happen was in the Weimar Republic (which shortly thereafter became known as Nazi Germany) .  No one’s ever done a better job of explaining how quickly things unraveled there than Art Cashin (this is an absolute MUST read):

In 1920, a loaf of bread soared to $1.20, and then in 1921 it hit $1.35. By the middle of 1922 it was $3.50. At the start of 1923 it rocketed to $700 a loaf. Five months later a loaf went for $1200. By September it was $2 million. A month later it was $670 million (wide spread rioting broke out). The next month it hit $3 billion. By mid month it was $100 billion. Then it all collapsed.

 ….In 1913, the total currency of Germany was a grand total of 6 billion marks. In November of 1923 that loaf of bread we just talked about cost 428 billion marks.

So I’ve got a whole bag of “Fuck You!” for anyone who still thinks nothing could be worse than another Great Depression.  The path we’re on ends with mountains of corpses when the great experiment fails. 

America’s most prestigious education institutions have become grooming salons for malignant narcissists.  Men and women high on their own self-important sense of entitlement, but short on any sense of honor or duty (like passing a budget or arresting someone who stole a billion dollars) and devoid of any real insight or achievement.  So far it’s working out quite nicely for them:

Fun fact:  Washington DC now boasts, by far, the highest and fastest growing income per capita in America.

No matter what color Kool-aid you prefer, a Harvard Law School graduate who wipes his ass with the constitution will occupy the White House  until 2016.   Any flavor difference you think you detect is artificial.  Neither party has any intention of balancing the budget or stopping the generational rape of America.  They exist only to give you the illusion of choice.

There’s another reason nobody wants you thinking about velocity of money and triple-digit principle-based interest rates.  When you get comfortable with the idea that the same dollar gets spent over and over in the economy,  you’ll begin to reconcile that notion with the fact that total government spending (Federal, State and Local) accounted for over 40% of GDP  in 2011.  Then it becomes clear that you are already living in on of those countries where the government controls everything (call it whatever -ism you want).   Next thing you know,  you’ll start connecting the dots between the nation’s skyrocketing public debt and the private fortunes amassed by a select few, and no one who’s in on the fix wants that.

Better than one in seven Americans are now on food stamps thanks to Washington’s disastrous policies, but narcissists refuse to recognize the consequences of their own actions.  That’s how they sleep at night.  They see themselves as saviours, feeding the inferior huddled masses too stupid to fend for themselves, so of course they deserve more money.  The only thing they learn from shitty results is that they need more power, more control and more money.  

The so-called “fiscal cliff” represents nothing more than a return to policies proven far less dysfunctional than the current ones, but Washington doesn’t see it that way. Instead they want you to beg them to save you from this horrific monster and adore them when they double down on policies that serve to increase your dependency on them.

By any and all reasonable measures, it’s worse than the Great Depression, and still deteriorating.  Just remember that truth is the narcissist natural enemy before you speak.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 08/20/2012 - 16:49 | 2721632 fireangelmaverick
fireangelmaverick's picture

So what u r saying is Buy the fucking dip?

Mon, 08/20/2012 - 16:51 | 2721644 Nadaclue
Nadaclue's picture


Mon, 08/20/2012 - 16:59 | 2721682 vmromk
vmromk's picture

I take umbrage with the Bernank being labled an idiot.

More appropriately, he should be called a MOTHERFUCKING IDIOT.


Mon, 08/20/2012 - 17:04 | 2721690 nope-1004
nope-1004's picture

The word "billion" gets thrown around today like it's some small number.  Is a billion cars a lot of cars?  Is a billion people a large crowd?  What about a billion dollars?  Some perspective:

A billion seconds ago it was 1980.  A billion minutes ago was the time of Jesus.  A billion hours ago was the stone age.  A billion days ago no one walked upright.

Yet a billion dollars ago was 8 hours and 20 minutes at the present clip that Ben hyper-depresses the world.  Fiat is clearly worthless.

This government is sick!!  Massive depression we are in, held together with paper clips and perception economics.  What a joke.

Mon, 08/20/2012 - 17:08 | 2721709 Abiotic Oil
Abiotic Oil's picture

Whatever ails the economy, it is nothing that 750 million hollow points can't solve.

Mon, 08/20/2012 - 17:18 | 2721736 idea_hamster
idea_hamster's picture

A month later it was $670 million (wide spread rioting broke out)

...because, as everyone knows, $669,999,999 for a loaf of bread is where we all draw the line, dammit!

Mon, 08/20/2012 - 17:28 | 2721773 francis_sawyer
francis_sawyer's picture

The Social Security Administration got 174,000 too (in case granny gets upset with how much less catfood her check buys her now ~ they'll bust a cap in her ass)...

& NOAA (the weathermen), got 46,000 rounds incase people who need to grow a potato in their back yard start bitching about the lack of rainfall...

Mon, 08/20/2012 - 17:43 | 2721818 Precious
Precious's picture

"The Hero" by Roger Lowenstein of The Atlantic.

What does that tell you.  

It tells me the Zionists are one giant, concerted propaganda machine.

Mon, 08/20/2012 - 17:51 | 2721845 ratso
ratso's picture

The assumption here is that Bernanke is causing or is responsible for the slow down in the velocity of money.  The slow down is a measure of how deep the recession was and how the recession destroyed the some of the underlying financial structure of our economy.  Blaming Bernanke for it is tantamount to blaming him of bad weather and HIV.  

Mon, 08/20/2012 - 18:18 | 2721911 sumo
sumo's picture

Blaming Bernanke is tantamount to holding one of those responsible to account.

But wait, the new improved USA-brand of fascism-light doesn't believe in holding those in power responsibile for their actions.

Carry on, enjoy the coming bloodbath from your delightful getaway home in the Caymans,



Mon, 08/20/2012 - 21:09 | 2722292 FEDbuster
FEDbuster's picture

"Whatever ails the economy, it is nothing that 750 million hollow points can't solve."

American civilian gun owners (90-100 million) own enough guns (est. 300 million +) to arm every American citizen, and US civilian ammo sales are estimated at 5 billion rounds per year vs. government purchases (including military) of 1.5-2 billion rounds, just sayin.

Mon, 08/20/2012 - 21:17 | 2722310 economics9698
economics9698's picture

Enough to kill some politicians and central bankers.

Mon, 08/20/2012 - 23:02 | 2722576 AldousHuxley
AldousHuxley's picture



Fed uses a simple formula to calculate the rate. Used to be Taylor rule, but now Mankiw Rule.


inflation - unemployment with some political pull....

Thu, 08/23/2012 - 17:32 | 2731761 Dark Space
Dark Space's picture

The domestic agencies such as DHS (and to a lesser extent NOAA and others) actually ordered over a billion rounds, it's just that 750mm were hollow points. They're ordering the same amount of ammo for domestic use than the ENTIRE US military is ordering for two active war zones and 146 countries that we are NOT at war with... People keep coming back at this like it's not a big deal that they're ordering this much ammo for use against Americans, but it is a REALLY big deal.

To make the math easy those 100mm civilian gun owners (using your numbers) are buying 5 billion rounds per year, that's only 50 rounds per gun owner. That isn't surprising - I bought 10 times that this past weekend and burned through half of it at the range getting ready for deer season and just having fun plinking targets (mostly the latter). DHS just bought enough to shoot every American in the head 3.87 times, and nearly 3,000 rounds for each employee AND contractor on DHS' payroll - that is obscene.

Mon, 08/20/2012 - 21:54 | 2722306 economics9698
economics9698's picture

Wow ratso got a -38 on the counter.  Beats my record.

Mon, 08/20/2012 - 22:23 | 2722464 Carp Flounderson
Carp Flounderson's picture

Agree, impressive!  Thats my +1 there.  Hedgie group-think on economics is a great market indicator.  Back in the housing bubble days, someone saying the bubble was about to pop would easily get a -100 on a system like this.  Nowadays, all the noobs watch a 5 minute ron paul clip on economics and think the world will end soon.  Anyone who disagrees is obviously wrong lol.  For the record, time is near for all in.

Mon, 08/20/2012 - 19:46 | 2722115 Roandavid
Roandavid's picture


Is that you?

Mon, 08/20/2012 - 21:20 | 2722314 WhiteNight123129
WhiteNight123129's picture

MDB stop your bullshit alright?


Mon, 08/20/2012 - 23:01 | 2722572 JeffB
JeffB's picture

"Blaming Bernanke for it is tantamount to blaming him of bad weather and HIV. "

No, I think it's a little more like blaming a drunk driver for killing a family after he hit their car head on while driving the wrong direction on the highway.

The results of some decisions are predictable.

It's been known for more than a century that when a central bank gooses an economy by artificially holding down interest rates, that the artificial boom will be followed by a crash as surely as night follows day.

YouTube - Austrian Theory of the Trade Cycle

It has also been known for many decades that the resultant malinvestments caused by such destructive central bank actions must necessarily be liquidated for an economy to begin the healing process.

Bernanke has been the "doctor" trying to save the heroin addict from a painful crash by administering ever higher and higher doses of heroin to minimize the pain.  in the short run.

Mon, 08/20/2012 - 23:30 | 2722613 HardAssets
HardAssets's picture

'velocity' of money ?


Here's one good explanation of why its not worth mentioning:

Economists like to number crunch all sorts of crap. It helps to confuse everyone.

Despite this, - IMO the upcoming Greatest Depression will make the 1930s look like a picnic

Mon, 08/20/2012 - 17:53 | 2721852 johnQpublic
johnQpublic's picture

so what yer sayin is bring on the nazi's?

Mon, 08/20/2012 - 19:33 | 2722081 Precious
Precious's picture

Aww fuck off you stupid, pre-programmed tool. Nobody said anything about that, except you.  But you're too ignorant and brainwashed to even know what a motherfucking jackass chump you are.  You just match patterns with your snotty, lefty, junk infested head.

Mon, 08/20/2012 - 22:06 | 2722410 masterinchancery
masterinchancery's picture

Lowenstein should commit suicide for writing that article.

Mon, 08/20/2012 - 20:53 | 2722257 WhiteNight123129
WhiteNight123129's picture

LOL.... I am going to die laughing....

Mon, 08/20/2012 - 18:16 | 2721899 El
El's picture

LOL! My first thought on reading that was...they waited until bread was 670 million before they rioted? Seriously?

Mon, 08/20/2012 - 19:10 | 2722039 ersatzteil
ersatzteil's picture

But their salaries adjusted to the rate of inflation, right? 5,000% raise bitchez! Marks in my backpack, Berlin for the weekend!

Mon, 08/20/2012 - 21:51 | 2722369 smlbizman
smlbizman's picture

they must of had double coupons....

Tue, 08/21/2012 - 00:15 | 2722762 Demologos
Demologos's picture

Its the Germans!  They are a well-disciplined bunch.  Look at how quiet they are now as Merkel sells them down the river to the banks, again.

By the way, I don't know the mechanism, but they somehow added zeros to the paper money to somewhat keep pace with the price of bread.  The riots must have started when there was no room to add zeros.

Tue, 08/21/2012 - 01:11 | 2722854 Vendetta
Vendetta's picture

When it was only $2 million a loaf, that was okay.  However, if they only had Walmart supercenters they could have gotten a loaf for 659 million and saved 11 million marks... enough for 1/8 of a pat of butter.

Wed, 08/22/2012 - 02:09 | 2726405 AustriAnnie
AustriAnnie's picture

I don't think they rioted at a certain PRICE.

They rioted after a certain period of TIME (the amount of time probably to eat what was in the pantry and start getting really hungry)


Mon, 08/20/2012 - 17:50 | 2721835 Precious
Precious's picture

Hollow point bullets for the citizendum.  

This is what happens when a country abandons morality.  

History demonstrates it time and time again around the world.  And all the while, people rationalize it away.  In fact, it's going to get a lot worse before better.

Mon, 08/20/2012 - 20:12 | 2722178 rocker
rocker's picture

New guys in town will take social security, medicare and medicaid money.

Will place in stock market.  Puff, all gone, sorry citizens of the NWO.

Mon, 08/20/2012 - 18:47 | 2721970 BlackSunshine
BlackSunshine's picture

Effects of inflation....

Being a millionare is now meaningless (that's right, won't get you in any Forbes list anymore).

Billion is the new million.

Trillion is the new Billion....etc.


Mon, 08/20/2012 - 19:19 | 2722053 JustObserving
JustObserving's picture

"Yet a billion dollars ago was 8 hours and 20 minutes at the present clip that Ben hyper-depresses the world."

Debt and unfunded liabilties increase by $1 billion every 63 minutes and 45 seconds in the US of A. Or by $22.6 billion a day.

Mon, 08/20/2012 - 20:03 | 2722150 Al Gorerhythm
Al Gorerhythm's picture

Let me condence for you;

"This government is sick!!  Massive depression we are in, held together with paper clips and perception economics.  What a joke."

government is sick!!  a joke.

Mon, 08/20/2012 - 20:12 | 2722163 Freddie
Freddie's picture

Hope & Change Depression.  ZH is filled with plenty of libtards who still love the muslim.

Mon, 08/20/2012 - 21:30 | 2722329 Almost Solvent
Almost Solvent's picture

I heart U

Tue, 08/21/2012 - 13:00 | 2724264 RKDS
RKDS's picture

They're in fine company with the conservitards who worship the dollar.

Tue, 08/21/2012 - 00:14 | 2722759 fasTTcar
fasTTcar's picture

Here is some perspective.

You want a million dollars?  Save $500 per week for 40 years.

You want a billion dollars?  Save $500,000 per week for 40 years.

Mon, 08/20/2012 - 22:48 | 2722534 monad
monad's picture

Prisoner of the Year

Mon, 08/20/2012 - 16:53 | 2721651 nope-1004
nope-1004's picture

No, what he's saying is "your money won't buy much during this dip".


Mon, 08/20/2012 - 16:54 | 2721656 Vincent Vega
Vincent Vega's picture

Not to put words in anyone's mouth but I think what he is actually saying is: Fuck You Bernanke!

Mon, 08/20/2012 - 17:05 | 2721703 Manthong
Manthong's picture

Bernanke Bucks Belong Buried in Bullion Boxes.

Mon, 08/20/2012 - 17:46 | 2721827 TrillionDollarBoner
TrillionDollarBoner's picture

Bernanke's Buck-Fuck will Bury a Billion Bullion Boxes

fixed it

Tue, 08/21/2012 - 20:40 | 2725847 franzpick
franzpick's picture

We should be as wise, in not being enticed into the dark, overgrown Bernanke financial forest, as was the female doe who, upon emerging from the woods, declared "I'll never go in there for two bucks again...".

Mon, 08/20/2012 - 17:41 | 2721811 withnmeans
withnmeans's picture

Unfortunately it is about what he is not saying, "This is the beginning of an all out World War".

Bad things do happen in cycles as well as the good things. Time to get rid of the riff raff ? 

Mon, 08/20/2012 - 23:53 | 2722712 JeffB
JeffB's picture

or "Your money won't buy anything, dip."

Mon, 08/20/2012 - 18:56 | 2722001 Careless Whisper
Careless Whisper's picture

His initial investment in Facebook was $500,000 --- he sold $600 million of stock in the (very well played) IPO; last week he sold another $400 million of stock. He still owns 5 million shares, currently worth $100 million. So he's either a really smart guy or a master of the pump and dump.

Mon, 08/20/2012 - 19:21 | 2722057 JackT
JackT's picture

If I was eating $650bn dollar loaf of break I still would have spat it out laughing. Although I would have picked up each bit and started eating it again.

Mon, 08/20/2012 - 16:51 | 2721642 falak pema
falak pema's picture

the face that launched a trillion fiats.

Mon, 08/20/2012 - 19:25 | 2722065 hidingfromhelis
hidingfromhelis's picture

...and sunk one world economy.

Mon, 08/20/2012 - 23:55 | 2722715 JeffB
JeffB's picture

and ushered in one world government.


Mon, 08/20/2012 - 16:54 | 2721653 economicfreefall
economicfreefall's picture

Of course it's worse than the depression! Unemployment is almost as high already, but instead of pretty much only the States and western Europe affected, we have tho whole West in the same hole. Back in the 30's at least prices were falling roughly 50% and provided a cushion for the ones who had to dig into their savings while ensuring the other 70% of the population who still had a job to actually be better of on a strictly purchasing power basis. Today we have more global inflation than ever seen in history. People on fixed incomes are getting crushed and savings are diminishing in value each and every day. History will prove this to be a far bigger mess than anything we've seen since the world of finance started in medieval Italy. -portfolio tracker & analysis of gold and silver stocks

Mon, 08/20/2012 - 17:23 | 2721750 LawsofPhysics
LawsofPhysics's picture

Yep, all thanks to "mark to fantasy" accounting, ZIRP and soon NIRP.  Totally fucking stupid.  At what point was the word collateral removed from banking and finance textbooks anyway?  All things physical while we clear out all the worthless paper promises.  Could be a while.  Fuck the useless paper pushers.

Tue, 08/21/2012 - 21:31 | 2725974 franzpick
franzpick's picture

Credit for the NIRP concept should go to the American mob of the 1920s, who, after paying someone else to smash a few store windows near your place of business, then offered you "protection" from further damage, in return for the payment of a small per centage fee of your weekly gross, thus generating a small negative return for you on your business investment in store and equipment. 

But NoBamaCare, along with other federal regulatory regimes, should be granted recognition for elevating such a local practice to the national level, and extending protection racket 'benefits' to businesses as well as a hundred million or so tax-paying citizens, wage-earners, as well as non-wage-earners, nationwide.

I'm a political agnostic, but I'll vote for the American.


Mon, 08/20/2012 - 17:22 | 2721762 LetThemEatRand
LetThemEatRand's picture

And back in the 1930's there were still a lot of small farmers who could eek out a living and at least feed themselves and a few neighbors.  Not so now in the world of Big-Agriculture.  The government can print foodstamps but it cannot print food and Big-Agri gives exactly one flying fuck if people starve.  They will sell to the highest bidder.

Mon, 08/20/2012 - 17:30 | 2721776 LawsofPhysics
LawsofPhysics's picture

Yes, I might also add that a much greater percentage of the population also held physical coinage to trade with what farmers were willing.  Lots of farmers markets in my area.  I guess we need to start demanding only gold, silver, and copper coinage.  What could possible go wrong?  Oh wait...  ...what was the catalyst for WWI again?

Mon, 08/20/2012 - 18:02 | 2721879 LetThemEatRand
LetThemEatRand's picture

It really does make you wonder. I'm sure most people before the World Wars didn't think a big war was right on the horizon when the water first started to boil.

Mon, 08/20/2012 - 19:28 | 2722070 stocktivity
stocktivity's picture

Did you know that there is over 2.2 cents worth of copper in a U S penny minted before 1982?

Tue, 08/21/2012 - 10:36 | 2722737 JeffB
JeffB's picture

We were helping my father-in-law fix the corrugated roof over a garage addition after some high wind had pulled out some screws.

He had some new screws and a couple of small bags of washers we were using to screw a few sheets of the roof back down. He mentioned that the washers were 6 cents each and that he would have drilled holes in pennies to replace them if it wasn't against the law.

I had to laugh as it reminded me that a brother-in-law had mentioned a former colleague of my wife complained that she pinched pennies so hard she made Abe Lincoln squeal. I guess she learned from a pro. Her Dad wanted to drill holes in Honest Abe's head.

But it was interesting that those 6 cent washers probably had 1/10th the metal in a penny or less.

It's hard to store much value in pennies and nickels, but they look like one of the best investments around as far as I can tell. They can't go below the face value of what you paid for them and the metal in them is already some 60% or more of their purchase price.


Mon, 08/20/2012 - 20:34 | 2722220 msmith9962
msmith9962's picture

I've heard people back then would only take a handout from government to keep their family from starving.  It was a major hit on pride to take a handout.  Today people seem proud to show what they can take from the govermnment. 


I've posted this equation before.

(cheap energy) x (cheap money/credit) x (politicians learning to spread that cheap money in their favor see The Law Bastiat) leading to and multiplied by (technological/agricultural/medical advances) = exponential population growth which cannot/does not know how to live without the above.

Really no solution other than reversion to the mean.  Cheers to the Tylers!  Whatever the readers glean from the articles and posts, they are saving lives, no doubt.

Mon, 08/20/2012 - 18:20 | 2721912 bankruptcylawyer
bankruptcylawyer's picture

History is littered with wars. How many history books out there discuss the many financial panics of history. How many financial panics are even recorded from hundreds of years ago.

-------WARS are the big moments of history. If you are predicting a world war soon, I would disagree. Mututally assured destruction might be one of the longest lasting strategic impediments to full scale global war , blocking full scale war for hundreds of years. 

Mon, 08/20/2012 - 23:25 | 2722635 BooMushroom
BooMushroom's picture

Yeah, when USA tells China to eff off, China's going to say "oh, okay. Sorry to have bothered you, great sirs."

Just like Russia and India will.

Tue, 08/21/2012 - 07:14 | 2723057 HardAssets
HardAssets's picture

Unfortunately, that's one why TPTB use war as an instrument - it diverts people's attention. Very few people understand the economics of how the business cycle works - of how they were impoverished by the actions of banksters pursuing their own narrow interests. As an example, the U.S. entered WW1 - a war with no value to the American people - because bankers feared not having their loans repaid if England lost the war. If the US hadnt entered into WW1, there likely would have been a stalemate among the exhausted European states. Instead, Germany lost and was burdened by war debts. This impoverishment would provide fertile ground for Hitler and eventually lead to WW2.

As for mutually assured destruction preventing a world war - Just research the history of the Cuban Missile Crisis. It took backdoor diplomacy between Kennedy and Khruschev to prevent nuclear World War 3. The US military wanted to invade Cuba, and the Russian military was determined to do whatever necessary to defend them. Both world leaders feared overthrow by their own military if the secret peace negotiations between them became known. Before the Cuban Missile Crisis, the US military had plans for a nuclear first strike against the Soviet Union and many generals wanted to go with it.  They thought enough of the US leadership structure (including them) would be able to survive a nuclear exchange. When Kennedy was briefed on those plans, he walked out in disgust commenting "And we call ourselves human beings."

Study current US global strategic actions to encircle Russia and China. This creates great tensions in the world. This creates the possibility of great miscalculation or things getting out of hand. (Its unlikely that a Obama or Romney would have the kind of vision and fortitude that Kennedy showed against the war mongers.) Unfortunately, some of those at the wheel of the 'car' we all find ourselves sitting in - - -are crazy bastards.

Mon, 08/20/2012 - 23:38 | 2722675 HardAssets
HardAssets's picture

But hey . . . they did offshore to China where they could use slave labor.  They could then sell you cheap stuff at Walmart.  Heck, you didnt even notice how fast your standard of living was dropping. (But maybe you noticed the quantity of stuff you got for your dollars kept going down, as did the quality. - - Afterall, slave labor can only do so much in a fiat, print like crazy world)

Mon, 08/20/2012 - 16:54 | 2721655 Spaceman Spiff
Spaceman Spiff's picture

But, but, but the stock market is doing soooo well!!!!


I'm so sick of this shit.    Even the cnbc people look bored as hell reporting on the latest algorithim up trend (they even admit it these days.)

Mon, 08/20/2012 - 16:57 | 2721674 RockyRacoon
RockyRacoon's picture

CNBC has become all the Apple/Google/Facebook news all the time.  I have it on mute and whenever I look up somebody is talking about one of these 3 companies.  Evidence indisputable that the market is running on fumes.

Mon, 08/20/2012 - 19:34 | 2722084 stocktivity
stocktivity's picture

Turn on Fox Business network instead...they aren't just paid cheerleaders.

Mon, 08/20/2012 - 20:30 | 2722213 Freddie
Freddie's picture

ALL of TV is shit along with Hollywood.  Watched by morons who like being brainwashed and who support the Matrix with their cable and sat TV bills.  Stupid serfs.

Tue, 08/21/2012 - 00:43 | 2722811 Bringin It
Bringin It's picture

Freddie - I agree.  It is all designed to mislead and control the serfs.  The fact that people volontarily open the sewer pipe into their homes to spew all over their families is amazing.

Tue, 08/21/2012 - 01:21 | 2722870 Vendetta
Vendetta's picture

Watching hyenas eating a live waterbuffalo's ass while it is stuck in mud on Animal Planet is easier to take than watching TV 'news'. 

Tue, 08/21/2012 - 00:28 | 2722787 Demologos
Demologos's picture

You need to learn to use the \sarc at the end of a comment like that.

Mon, 08/20/2012 - 23:45 | 2722698 HardAssets
HardAssets's picture

Watch Lauren Lyster on the 'Capital Account' show   via

Mon, 08/20/2012 - 18:00 | 2721871 MrSteve
MrSteve's picture

The Spiffy Spacer should note that cause and effect MAY BE getting confused in this article. This line

In 2011, every dollar of GDP growth created $2.08 in debt.

Should read- Each $2.08 in debt created only one dollar of GDP growth.

The original article had the cart before the horse. The GDP is grinding along in parallel with whatever the FED does, with mutual cross-channel effects, but the growth in GDP or its decline is only partly connected to debt creation. McHugh needs more nuance which GW eshewed but which also never negates blunt force trauma. The growing ineffectiveness of FED policy is the real issue, showing a reality-based crash or panic is increasingly likely. Then reality will truly be a bitchez!

Mon, 08/20/2012 - 21:11 | 2722296 mark mchugh
mark mchugh's picture

I'll accept your bolded edit.

But as for this "... the growth in GDP or its decline is only partly connected to debt creation"  I'll give you the "No Shit, Sherlock" award.  VoM is the key ingredient in GDP growth. 

I'd love to be more nuanced too, but all's I'm really trying to do is get people to think for themselves.  So I just try to make my points as quickly as possible.  Hopefully they can find nuance elsewhere.


Mon, 08/20/2012 - 21:57 | 2722382 Spastica Rex
Spastica Rex's picture

Nuance is un-American and homo-gay.

Mon, 08/20/2012 - 19:16 | 2722045 FinLen
FinLen's picture up on Tuesday?...........


 A currency can only be stable if its future existence is not in doubt, ” said Jorg Asmussen , the powerful German member of the ECB’s executive board .

He signalled full backing for the bond rescue plan of ECB chief Mario Draghi,  brushing aside warnings from the German Bundesbank that large-scale pruchases would amount to debt monetisation and a back-door fiscal rescue of insolvent states in breach of EU treaty law.



Mon, 08/20/2012 - 16:54 | 2721658 Cranios
Cranios's picture

The velocity of money fell off a cliff mostly because the money supply went to the moon in response to the 2009 crisis. Hence if the GDP stayed the same, the turnover of each dollar (on average) would drop dramatically.

All this chart shows is that money supply was increased by the Fed, without any corresponding increase in economic activity.

Mon, 08/20/2012 - 17:12 | 2721723 Quinvarius
Quinvarius's picture

Indeed.  Large bursts in money supply creation automatically make velocity drop by virtue of the math used to compute the results.  Velocity charts tell you nothing useful these days. 

Mon, 08/20/2012 - 17:15 | 2721731 poor fella
poor fella's picture

Soooo, it went to where it wasn't needed (if one was in fact concerned about the economy)?  hmm

Mon, 08/20/2012 - 17:16 | 2721740 css1971
css1971's picture

I think the point being they did the same thing as they did during the 30s. Because it worked so well.

Mon, 08/20/2012 - 17:16 | 2721741 PeterLemonJello
PeterLemonJello's picture

Ummmm, that's the point

Mon, 08/20/2012 - 17:18 | 2721745 arkady
arkady's picture

My thinking exactly, I think the author may have blown this chart slightly out of proportion.  One can say that its similarity to the Great Depression is notable, but this is just a correlation - nothing more.

Besides, according to Rothbard's work the myth that the Fed contracted money supply as posited by Friedman has been largely debunked.

Mon, 08/20/2012 - 17:36 | 2721797 Quinvarius
Quinvarius's picture

I don't know why people are down voting that post.  The guy is correct.  If they increased the money supply 25% tomorrow, the velocity chart would have another massive leg down.  It is just the math they use to come up with the number.

Mon, 08/20/2012 - 17:49 | 2721832 poor fella
poor fella's picture

I didn't, but it's been YEARS now and nothing but down. Any improvements could even be drowned out by money-printing and speculation elsewhere. If you increased supply 25% tomorrow, but the graph goes nowhere or continues down, is Bernank just throwing poo?

Meanwhile POO rises (price of oil) continually. It's more a statement of B's policies (because he can turn things around in 15 minutes), not the comment.

Mon, 08/20/2012 - 17:51 | 2721848 poor fella
poor fella's picture

damnit...   short version

bernank doesn't need anyone making excuses for him.

and he would LOVE for this chart to turn upward....

Mon, 08/20/2012 - 20:19 | 2722194 NidStyles
NidStyles's picture

Yes, the math is correct, the conclusion to what the math is saying isn't though. 

Mon, 08/20/2012 - 22:47 | 2722529 mark mchugh
mark mchugh's picture

You're missing the point.  Everybody who went to fourth grade understands that ratios go down when denominators go up.

When you target GDP and ignore VoM you wind up contracting 9.3 Trillion in National Debt to get 4.8 Trillion in GDP growth. Those are the real numbers 2002-2011. 

Are the next $10T on you?


Tue, 08/21/2012 - 00:56 | 2722837 Demologos
Demologos's picture

The wet ink money isn't moving into the economy because the banks are borrowing at 1%, stuffing the bread into the Fed which then pays them 3% interest.  The Fed doesn't lend any of the deposits out (except in currency swaps to prop up the Euro) which means the money/debt sits there.  That is why there is no velocity!  Forget the math, spending has fallen off a cliff from spending on infrastructure improvements that increase efficiency/lower cost of doing business, to credit card debt which is being paid off by people who aren't stupid, to the lack of car and house sales.  No house sales?  No need to buy furniture and appliances.  No  consumer (except Walmartians) - no economy.

Mon, 08/20/2012 - 21:15 | 2722303 mark mchugh
mark mchugh's picture

No, the debt burden of our kids was increased dramatically and we don't have anything to show for it.

I think the "Notes for Nerds" section of the original post may be for you.


Tue, 08/21/2012 - 00:21 | 2722777 BooMushroom
BooMushroom's picture

Liberal solution: don't get pregnant, and if you do, have an abortion!

No kids to pass the debt to! No harm, no foul, right?

The republicans will come up with their own excuse by 2016, or 2020.

Mon, 08/20/2012 - 16:55 | 2721661 Jlmadyson
Jlmadyson's picture

But you see the austeirty experiment failed in Europe so we must now pour more gasoline err I mean money into the system.

Man oh man how little I knew in graduate school when they were spoon feeding me Keyesnian 101.

These people are crazy.

Mon, 08/20/2012 - 17:35 | 2721793 reload
reload's picture

Are you being sarcastic?

Lets get this straight anyway: there has been no austerity in Europe.

Sure the Greeks are suffering badly, their wages and pensions are being diverted to banks. But mostly this talk of austerity is bullshit. Governments are still spending like drunks, playing the timeless game of disadvantaging one group of constituents for the benefit of another. For the disadvantaged it is called austerity, but overall spending remains out of control. The advantaged groups are mainly corporate interests and government boddies. How much austerity is going on at the EU commission? none. Have any of the paper pushers and liars at the ECB taken a wage cut or lost their tax free for life benefits, NO. Do mandarins in the UK civil service still pretend to be contractors to gain tax breaks? Yes. Austerity is just a new word for redistribution, its `trickle up` ecconomics disguised as prudent ecconomics. Its full speed ahead looting.

Show me a single nation who is shrinking its national debt through austerity, there are none because none are doing austerity. None are shrinking government as a % of GDP. In fact governments continue to take more out of their host ecconomies and borrow more on behalf of their citizens. Many of the host ecconomies are so hollowed out by government intervention and crony interests that they could not survive at all without government. But it is runaway government spending and corruption which has made it so. Bring it down and start again, but dont tell me austerity does not work, it has not been tried. Nobody dares.  

Mon, 08/20/2012 - 17:42 | 2721815 Jlmadyson
Jlmadyson's picture

Yea that was /sarc.

Trying to do my best Krugman.

Mon, 08/20/2012 - 17:46 | 2721828 reload
reload's picture

fair enough, I was being sarcastic also. Governments and central banks are great really, thank heavens they are on the ball and looking out for all of us.

Mon, 08/20/2012 - 20:54 | 2722260 Freddie
Freddie's picture


The bailouts have been politcians and banksters bailing out unionized govt workers.  obama has been doing it for almost 4 years in Calif, IL, Detroit and other places.   We cannot lay off any union govt workers.   There is no "austerity" for the elites which include unionized govt "workers."

Mon, 08/20/2012 - 22:01 | 2722392 Spastica Rex
Spastica Rex's picture

Austerity isn't for everybody! Sheesh, give it a chance. At the very least, you'll eventually be able to burn the useless eaters like cord wood.

Mon, 08/20/2012 - 16:54 | 2721662 Newsboy
Newsboy's picture

There's way more to buffer against this time.

Mon, 08/20/2012 - 17:22 | 2721761 Rainman
Rainman's picture

don't worry, the FDIC got your back

Mon, 08/20/2012 - 18:18 | 2721907 XitSam
XitSam's picture

I think the government has ahold of something, but it isn't my back.

Mon, 08/20/2012 - 18:28 | 2721929 cougar_w
cougar_w's picture

You won't have account anymore though, by the time they show up with a checkbook to bail you out.

Mon, 08/20/2012 - 18:38 | 2721953 LMAOLORI
LMAOLORI's picture



"Rainman don't worry, the FDIC got your back"

Older but worth the read

How Safe is My FDIC-Insured Bank Account?


especially since the banks seem to think they still need the additional protection to stop bank runs

Trillion dollar bank insurance program may sneak into legislation

Mon, 08/20/2012 - 16:56 | 2721670 YesWeKahn
YesWeKahn's picture

Bernanke president, Bernanke president ...

Mon, 08/20/2012 - 16:57 | 2721675 francis_sawyer
francis_sawyer's picture

Shalom bitchez!

Mon, 08/20/2012 - 16:58 | 2721678 Jlmadyson
Jlmadyson's picture

Shalom indeed.

Mon, 08/20/2012 - 22:27 | 2722472 krispkritter
Mon, 08/20/2012 - 16:59 | 2721684 Wynn
Wynn's picture

Don't say this on FaceBook or you'll be looking at 30 days (to start) in some mental ward.  /sarc

Mon, 08/20/2012 - 17:30 | 2721779 poor fella
poor fella's picture

Good idea with the '/sarc' in case the NSA-Facebook police are perusing for dissidents on ZH.

Just to put this out there now, I never mean to do nothin' - I'm a 'ranter' only and when I sound rebellious, I'm being sarcastic. Really.


Mon, 08/20/2012 - 18:29 | 2721934 cougar_w
cougar_w's picture

Damn okay that does it. I'm going back and adding /sarc to all my comments back 2 years.

Mon, 08/20/2012 - 19:44 | 2722105 Ness.
Ness.'s picture

Too late cougar.  We already got ya.







Mon, 08/20/2012 - 21:39 | 2722346 Almost Solvent
Almost Solvent's picture

Wait, I thought we were sexting over on the SEC website . . . 


Mon, 08/20/2012 - 17:02 | 2721694 Seasmoke
Seasmoke's picture


Mon, 08/20/2012 - 17:13 | 2721728 MSimon
MSimon's picture

More zeros.

Mon, 08/20/2012 - 18:30 | 2721939 cougar_w
cougar_w's picture


We be burning up down here in the streets.

Mon, 08/20/2012 - 17:04 | 2721698 arkady
arkady's picture

Serious question.


Why does the velocity matter?  Why doesn't this come up in any of the Austrian literature?  Why is this the first time I am seeing this?  I agree, the chart looks striking and is *may* be super important...but why?

That is who cares how much does one dollar get changed in the economy?

Mon, 08/20/2012 - 17:09 | 2721712 Jlmadyson
Jlmadyson's picture

Because in essence it is a true measure of the real economy.

Real simple: If money is not moving then goods and services are not being sold.

One can cook GDP all you want but you cannot cook how money in real dollars are moving.

Mon, 08/20/2012 - 17:19 | 2721747 arkady
arkady's picture

So this chart is showing economic activity then?

But are you not concerned that it is deriving that information by using gdp + money supply?  If you badly distort one (money supply in our case) then you generate a picture of the economy that is not quite accurate.  Particularly because we know that in the past several years the base money has not actually entered into the economy and is still parked in reserve banks.

Mon, 08/20/2012 - 17:40 | 2721807 poor fella
poor fella's picture

You pretty much answered it at the end there.

An institutionalized bailout of the large banks and Ponzi Street Casinos don't have a damn thing to do with the Main Street economy (the one where people live).

Bernanke will remain the hero of elites - to think, Mozilo is out walking free and bathing in strange flavoured Kool-Aid..

Mon, 08/20/2012 - 18:02 | 2721875 arkady
arkady's picture

Ok, thanks.


I guess it begs the question as to what this graphic and article is showing beyond what we already all knew. 

Mon, 08/20/2012 - 21:22 | 2722319 mark mchugh
mark mchugh's picture

The graphic just confirms what you already knew. 

I think you left a question at my blog,  Here's my answer:

Imagine a small, self-sufficient town of one thousand people with a million dollars in currency ($1,000 per person). That town could be hell on earth, with all the wealth concentrated in a few hands (and thus a GDP of zero), or it could be bustling with activity, with each person earning their keep and then spending on other businesses. If everyone in the town earns $1000 and spends $1000 each month the GDP of the town is twelve million, so velocity of money is twelve.

If they lose confidence in one another, they’ll spend less. If everyone spends less, everyone earns less. If avtivity drops to $500 per person per month, GDP drops to $6 million and VoM is now 6.

And as I said before, if the town allows a few citizens to hoard all the money, velocity goes to near-zero, and people starve.

Hope that makes sense.

Mon, 08/20/2012 - 17:44 | 2721822 Missiondweller
Missiondweller's picture

we know that in the past several years the base money has not actually entered into the economy


That answers your own question. Money is not circulating. Despite a flood of new money there is very little economic activity. Banks aren't lending and lenders aren't borrowing, thus, no new economic activity. This epitomizes zombie banks and a deleveraging economy.

Mon, 08/20/2012 - 18:45 | 2721966 optimator
optimator's picture

How about the money Bernie wires to the banks?  It doesn't even exist (yet).  The banks are simply investing that invisible money.

Mon, 08/20/2012 - 20:21 | 2722197 NidStyles
NidStyles's picture

They aren't investing that money (currency), they are investing the credit that creates that currency. 

Mon, 08/20/2012 - 17:46 | 2721829 Ghordius
Ghordius's picture

Bingo. You answered your own question.
Picture a lake on a mountain.
Only a trickle comes down.
Compared to how huge this new lake is.

Mon, 08/20/2012 - 18:41 | 2721952 cougar_w
cougar_w's picture

The banks sitting on the money were told to do so. Even more money is coming their way. But they can do as they like when they want to with all that free money.

One day soon, when the wheels fall off the world, they will take those reserves and buy up every real asset on the planet at bk prices. The price of anything of real worth will go to the moon, including food and raw materials. As things get more expensive the CBs will just print them more money and they will go on buying everything in sight. Once they own everything (including every farm and road and bridge and park bench in the world) they will collect rents for any use you plan to put these. They will take payment in gold or labor or healthy children as slaves.

You will work at whatever they need done, just to have a loaf of bread for your family each day and nothing more, for the rest of your natural life. And your children after you. And their children after them. For a thousand years.

Get it now?

Edit: Story writer senses ... tingling.

Mon, 08/20/2012 - 19:25 | 2722068 i-dog
i-dog's picture


Congratulations, Cougar! You are the first (and, so far, only) person I've seen on here that truly 'gets' it: What the combination of 'Agenda 21' and a single world electronic currency really means for the people of this planet.

"You will work at whatever they need done, just to have a loaf of bread for your family each day and nothing more, for the rest of your natural life."

This is how the Luciferian Khazarians plan to "manage" the planet. Welcome to the New World Order. The invitations to the grand opening party should be in the mail shortly.

Mon, 08/20/2012 - 21:44 | 2722353 Almost Solvent
Almost Solvent's picture

I've said this many times:


50 years from now will look (and feel) like 150 years ago

Tue, 08/21/2012 - 00:54 | 2722834 Bringin It
Bringin It's picture

I'm pricing ox-carts as we speak.

Mon, 08/20/2012 - 22:15 | 2722443 Spastica Rex
Spastica Rex's picture

Hey! I say it all the time: RE-FEUDALIZATION.

Well, I only ever used that exact term just now.

Peasantry: it's the new middle-class.

Mon, 08/20/2012 - 22:50 | 2722538 Jena
Jena's picture

I'm re-reading "The Jungle", by Upton Sinclair.  Just to get an idea.

Mon, 08/20/2012 - 22:48 | 2722535 kekekekekekeke
kekekekekekeke's picture

but will there be gluten-free bread

Tue, 08/21/2012 - 00:59 | 2722840 Demologos
Demologos's picture

Like I said upthread.

Mon, 08/20/2012 - 17:16 | 2721739 g speed
g speed's picture

money ain't worth shit till you spend it

Mon, 08/20/2012 - 17:16 | 2721742 Dr. Engali
Dr. Engali's picture

If money is not changing hands then there isn't any economic activity. Everybody is sitting tight.

Mon, 08/20/2012 - 18:11 | 2721890 LMAOLORI
LMAOLORI's picture



"Dr. Engali If money is not changing hands then there isn't any economic activity. Everybody is sitting tight"


The US Rich are hoarding Cash

Mon, 08/20/2012 - 22:55 | 2722551 Spastica Rex
Spastica Rex's picture

+1 for Dr. E., with one point of disagreement: not everyone is sitting tight.

Mon, 08/20/2012 - 17:48 | 2721833 TheCanadianAustrian
TheCanadianAustrian's picture

Low money velocity = cash is being hoarded = too much value is being placed on cash = cash is in a bubble = the cash bubble is going to burst = the value of cash is going to collapse = massive inflation is coming

Mon, 08/20/2012 - 17:51 | 2721844 Ghordius
Ghordius's picture

Either that or the fairies of productivity do their magic ballet.

Mon, 08/20/2012 - 18:02 | 2721878 poor fella
poor fella's picture

Who's hoarding cash? I think many people continue to live paycheck to paycheck and service debt. Is it possible that deveraging looks like cash hoarding?

The savings rate still sucks butt, and although people are trying to build up emergency funds, that's probably nothing compared to the PM stackers (another form of hoarding cash that doesn't necessarily cause inflation like an inflated money supply).

My disclaimer is I don't know jack

Mon, 08/20/2012 - 19:36 | 2722086 i-dog
i-dog's picture


"Who's hoarding cash?"

The central banking system ... ie. those controlling it. They're now in the last stage of vacuuming up all cash from the markets, mortgage and debt holders and tax slaves.

Mon, 08/20/2012 - 18:21 | 2721915 Implicit simplicit
Implicit simplicit's picture

I don't know about hoarded, but a lot goes towards paying down debt wich is deflationary. We have biflation: inflation in the the things you need, and deflation in the those you want. Regardless, the mojo is decelleratting.

Mon, 08/20/2012 - 17:04 | 2721700 Hype Alert
Hype Alert's picture

Counterfeiters are always well off, until they are caught.

Mon, 08/20/2012 - 17:07 | 2721705 dolph9
dolph9's picture

Washington D.C. is where idiots go to run this country into the ground and make pretend that they are rich and smart, when in reality most of them are marginally more connected government peons who couldn't run a lemonade stand.

Mon, 08/20/2012 - 18:58 | 2722007 The Fonz...befo...
The Fonz...before shark jump's picture

Dolph9 spot on...

Has Bernarke ever created a business from scratch and turned it into a sustainable productive enterprise?

Has Obama?


Harry fuckin Reid?

I think not...they and many in washington and the fed never created business....yet they feel That they should be minding everyone else's business.....

Lesser human beings all of them

Mon, 08/20/2012 - 20:25 | 2722205 NidStyles
NidStyles's picture

By that, it's every politican that fits that particular role. Yep, even the Romster himself. He never started a business, he simply bought other business's. 

Mon, 08/20/2012 - 21:46 | 2722358 Almost Solvent
Almost Solvent's picture

Thank you. Some still see red/blue republican/democrat instead of the muppet masters . . . 

Mon, 08/20/2012 - 17:07 | 2721706 adsanalytics
adsanalytics's picture

High levels of indicators of excess liquidity (after the jump) do indeed hide the shockingly-low level of velocity in the system. Simply stated, the money is staying put in reserves due to bank regulatory deleveraging and general lack of interest on the part of cash-rich companies to borrow, given (among many other things) the level of policy uncertainty over the next few years.


Mon, 08/20/2012 - 17:56 | 2721860 LMAOLORI
LMAOLORI's picture




Oh geez and here I thought it was because the Fed is paying the Banks $4 Billion a year not to lend.  

This is interesting...



Debating the Best Way to Track Small-Business Lending





"In a recent post, I introduced my company’s effort to grade American banks on their small-business lending activity.

The Financial Services Roundtable, an association that represents some of the largest banks in America, has taken issue with our grading system. We decided to have a discussion with the organization — and share it with our readers — in the hope that it might bring some clarity to the important issue of whether big banks are committed to lending to small businesses.

A big part of the discussion involves what constitutes a small-business loan. On our report cards, we calculated the grades as a ratio of the banks’ domestic deposits to their small-business loan balances — which we define, as does the Federal Deposit Insurance Corporation, as those with a balance of $1 million or less. By contrast, when the big banks issue their own small-business lending report cards, they define loans as those made to companies with revenue of $20 million or less. 

As we dug into our debate, we learned that business credit card balances are included in the small-business loans that banks report to the F.D.I.C.  We realized this after the big banks defended their small-business lending records by stating that they held 80 percent of all the loans under $100,000. But the average balance of these loans is just $6,323 — which raises an interesting question: Is it fair for the big banks to equate credit card lending with the much more rigorous process of qualifying a business for a more substantial loan with a balance of, say, $100,000 to $1 million?"

When Banks Won’t Lend, There Are Alternatives, Though Often Expensive


Do NOT follow this link or you will be banned from the site!