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Paul Brodsky: Central Banks Are Nearing The 'Inflate Or Die' Stage

Tyler Durden's picture




 

Submitted by Chris Martenson of Peak Prosperity

 Paul Brodsky: Central Banks Are Nearing The 'Inflate Or Die' Stage

"It's impossible to have a political solution to a balance sheet problem" says Paul Brodsky, bond market expert and co-founder of QB Asset Management.

The world has simply gotten itself into too much debt. There are creditors that expect to be paid, and debtors that are having an increasingly difficult time making their coupon payments. No amount of political or policy intervention is going to change that reality. (Unless a global "debt jubilee" transpires, which Paul thinks is unlikely).

Looking at the global monetary base, Paul sees it dwarfed by the staggering amount of debts that need to be repaid or serviced. The reckless use of leverage has resulted in a chasm between total credit and the money that can service it.

So how will this debt overhang be resolved?

Central bank money printing -- and lots of it -- thinks Paul.

At this point, the danger posed by the instability of our monetary and fiscal house of cards is so great that trying to time an investment program to when this avalanche of printing will occur is too risky, in Paul's opinion. It's time to shift your remaining capital into hard assets and sit on the sidelines to watch the carnage play out.

On The Imbalance Between Debts and Money Supply

We are seeing -- not only in the US but in Europe and in Asia, as well -- separating bank assets and base money. Base money is comprised of currency in circulation plus bank reserves that are held at central banks -- at the Fed or that is at the ECB, the Bank of Japan, so on and so forth. This is how the global economy rolls, as they say.

 

Bank assets are loans mostly. And the amounts globally are staggering: something approaching $100 trillion in global bank assets. And in the US we think that is somewhere around $20 trillion held in the US and abroad. And the numbers for the monetary base are much, much lower. Specifically in bank reserves -- that is the amount of reserves that are collateralizing, if you will, all of those $100 trillion in bank assets -- something about $8.5 to $9 trillion dollars. So that gives you a sense of perspective as to how much the global banking system is leverage. We are in a baseless monetary system.

 

The marketplace forces deleveraging, and there are two ways to deleverage. One is to let credit deteriorate on its own in the marketplace. And the other is to manufacture new currency or bank reserves. Those are the only two ways to deleverage a balance sheet.

 

What policy makers do not want to see is bank asset deterioration. That would lead to all sorts of bad things. You would see banks fail. You would see bank systems fail. You would see debtors fail and it would just feed on itself in an accelerating fashion. And so monetary policy makers have no choice but to deleverage in the other way, which is to colloquially print money; to manufacture electronic credits and call them bank reserves.

 

And to the degree that that extends into the private sector where debtors begin to fail en masse, that would increase failures of the bank assets in turn. And it would end the mortgage bond securities market, for example, and the leveraged loan markets, and end the private sector shadow banking system. So it does not work for anybody to have credit deteriorate. The only way to deleverage an economy is as we are saying: to create new base money with which to do it.

On The Wisdom of Owning Gold & Hard Assets

The point here is you can either monetize debt or you can monetize (sell) assets. Or you revalue an asset on the balance sheet already of the Treasury or the Fed. And obviously that asset, we think, is gold. And that is the monetary asset that they have always reverted in the past. And that is the one we think that currencies, currently baseless currencies will be devalued against.

 

And so that we think is the mechanism that is ultimately going to play out whether in the marketplace or through some policy administered devaluation. Currencies are going to be devalued and that is where we sit right now. Timing this is impossible. We think the amount it would have to be devalued by, getting back to your original question, has got to be the amount of or something close to the amount of the gap (tens of US$ trillions) between bank assets and bank reserves. So it is a significant number.

 

And Treasury ministries, being the ultimate issuers of obligors on the hook for currency repayment, we see them as lending the gold to their central banks so that this mechanism, this asset monetization devaluation can take place. And so we think it is the only way out ultimately. And we will see that happen either in the marketplace or through proclamation at some point. And it is really what has to happen.

 

nd so there is no physical limitation on the amount of currency that central banks may manufacture. And so this is a completely viable way to deleverage the system -- by purely destroying the currency that we have. It is debt currency, so we are going to destroy the debt in real terms behind them but not destroy them in nominal terms. That is the net effect of all this.

Click the play button below to listen to Chris' interview with Paul Brodsky (44m:37s):

Click here to read the transcript

 

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Sat, 07/07/2012 - 12:34 | 2594860 Bansters-in-my-...
Bansters-in-my- feces's picture

Personally I would prefer the Die stage.

Sat, 07/07/2012 - 13:04 | 2594911 francis_sawyer
francis_sawyer's picture

  "Inflate" or "Die" isn't an "either/or" scenario... It's a BOTH scenario...

Sat, 07/07/2012 - 13:32 | 2594949 veyron
veyron's picture

Will we get a celebrity campaign a la http://www.youtube.com/watch?v=pMGu4pbivkY

Sat, 07/07/2012 - 15:43 | 2595205 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

Nice video veyron!

 

I vote for gold...

Sat, 07/07/2012 - 13:35 | 2594954 ArkansasAngie
ArkansasAngie's picture

Right

Door Number Three Please Vanna.

I pick put the Ponziers in jail.  And yes I want to confiscate those assets that they stole in the first place.

Print or die?  That lesser of two evils is Horse manure

Sat, 07/07/2012 - 13:54 | 2594993 The Monkey
The Monkey's picture

Inflate AND die. Anything big enough to move gold, in a big way, off $1,600, is also going to move crude oil and commodities.

This is getting stupid. The Fed needs to allow a good correction before ramping up stimulus. Action takes impetus off fiscal authorities who need to act and it magnifies the picture of demand via price, creating incentives for greater supply, further distorting markets.

Bernanke knows this.

Sat, 07/07/2012 - 14:24 | 2595047 Oracle of Kypseli
Oracle of Kypseli's picture

Three guys were caught by an angry tribe in the jungle and were give an ultimatum. Death or bunta. Not knowing what bunta was the first guy said bunta. he was taken behind the bushes and was violated repeatetly.

The second guy the same.

The third guy seeing what happened he just wanted to die, so he chose death. Then the chief said: "Death by bunta" 

Don't think that there is a choice. It's both inflate and die as some already have pointed out.

Sat, 07/07/2012 - 15:14 | 2595160 TrainWreck1
TrainWreck1's picture

Remember what happened when Al Gore was faced with the 'Inflate Or Die' choice.

 

Sun, 07/08/2012 - 12:48 | 2596386 FreeNewEnergy
FreeNewEnergy's picture

You've gotten the crux of that joke correct, but the punch line is supposed to be:

The chief declares, "he chooses death... but first, a little bunta."

Fixed it for ya.

Sat, 07/07/2012 - 13:54 | 2594991 All Risk No Reward
All Risk No Reward's picture

Exactly right.  Inflating away the debt kills the banks, too.  But that doesn't fit with the narrative, so it is left out.

What else doesn't fit with the narrative?

1. The TBTF banks are giving out 3.6% 30 year fixed mortgages.

2. The TBTF (& Jail) banks control the Federal Reserve by stacking the Board of Directors with their operatives.

3. The TBTF&J mega banks ultimately control the money supply - and whether we see serious inflation right away or if we see a deflationary spiked pit ahead of the ultimate serious inflation.

4. The TBTF&J OWNERS OWN trillions in societal debt and trillions in cash via the front corporation that they control.

5. No moron, let alone human predator geniuses, would zero out their trillions in debt holding and cash while giving out 3.6% 30 year mortgages.

This isn't even a difficult call.

When they are done looting, they will withdraw the money supply, crash the economy and their competition, foreclose on their debt holdings, spend their trillions buying up everything for pennies on the dollar (that's your chit if you are in debt) AND THEN they will "blance their books" via serious inflation...  after they have taken control of the real world.

The debt slaves will not be bailed out and anyone who thinks so simply has NO IDEA regarding the true power structure of the system...  and that's by design.

 

The Ultimate History Lesson:   http://www.youtube.com/playlist?list=PL463AA90FD04EC7A2

The Ultimate history Lesson Commentary: https://www.tragedyandhope.com/th-films/the-ultimate-history-lesson/comm...
Sat, 07/07/2012 - 14:31 | 2595066 Doña K
Doña K's picture

We are selling everything we do not need and only buying what we need and in short supply. The proceeds go to PM's.

BTW: You can actually buy gold and silver coins and have them delivered in several other countries, insured and guaranteed. Find out which ones have no restrictions and no fees.

As soon as I find a list, I will post the link. If anyone already knows please post

 

Sat, 07/07/2012 - 15:41 | 2595203 DoChenRollingBearing
DoChenRollingBearing's picture

+ $55,000

Please do, Doña K!

Sat, 07/07/2012 - 15:09 | 2595147 Marco
Marco's picture

Personally I think the banks will simply be allowed to fail ... it removes the figure heads to satisfy the public, but leaves the top creditors. Who will still mop up all the loans and thus the collateral as everyone, including the banks, start defaulting.

The banks are simply fronts ... when they stop being useful as a means of theft there is no reason to preserve them. Once you own everything a gold backed currency and minimal government (other than a large police force) becomes very attractive. Feudal governments were pretty minimal ...

Sat, 07/07/2012 - 21:24 | 2595709 All Risk No Reward
All Risk No Reward's picture

Marco, this is a critical point.  The front corporations are similar to chess pieces, NOT the Big Finance Capital chess player.

I don't know the detailed play book, just the general rules the game.

Sat, 07/07/2012 - 15:26 | 2595174 bernorange
bernorange's picture

Sounds like a tumor.  Grows uncontrollably until it kills the host.

www.pmbug.com

Sat, 07/07/2012 - 13:13 | 2594924 Sudden Debt
Sudden Debt's picture

I prefer the print stage where my silver and gold go through the roof!

Sat, 07/07/2012 - 13:41 | 2594969 algol_dog
algol_dog's picture

Sudden Debt - Help me to figure out how you get ahead owning gold in light of the above. I can see how the basic necessity's of life will be inflated to high hell, for you have to eat, clothe, drive,etc. to survive and you will chase those things if you have to, but I sure don't need to do that for gold. I can't eat it, live in it, travel on it, etc. What's my, or anybody's interest in chasing the price on that? I would say you'd be better owning real-estate, oil, basic materials, and that sort, than gold.

 

Go ahead, unleash the dogs on me ...!

Sat, 07/07/2012 - 13:51 | 2594987 HoofHearted
HoofHearted's picture

The nice thing about gold (and to a lesser extent silver) is that they are portable and easily traded for other items, i.e. very liquid. Real estate is very illiquid. Oil is hard to carry around with you. Basix materials are a good idea, if you are going to use them. Barter may be hard.

I'd also recommend having a bunch of .22 ammo. It has been usd as currency before. I'm stocked up, as they work well in my son's little plinking rifle, and I have a MP-15 that uses the same stuff. (A good strafing gun for just scaring the hell out of people without really trying to hurt anyone. If they don't get the picture you bring out the bigger brother...)

Sat, 07/07/2012 - 14:07 | 2595011 algol_dog
algol_dog's picture

Ok - I follow you there. On further thought I was thinking that the real danger in printing is the potential crisis of confidence it produces, isn't it? If I have a devalued dollar now, but know it can be further devalued tomorrow, I probably need to buy something "hard" today, don't I? On the same token a merchant will be reluctant to sell something today, for something that will be worth less tomorrow. Vicious circle. Maybe I answered my own question.

Sat, 07/07/2012 - 14:42 | 2595081 Doña K
Doña K's picture

If you own real estate outright and you are not planning to move anywhere you're good. But real estate also has dangers. Bad neighbors, crime, high taxes, eminent domain take over, can not sell and go elsewhere, high maintenance and god knows what else. 

 

Sat, 07/07/2012 - 14:48 | 2595096 Freewheelin Franklin
Freewheelin Franklin's picture

It depends on the type of real estate. If it has some POS McMansion on it, then yes, it is illiquid. But, if it has income generating potential, like agriculture, then it can be very liquid.

Sun, 07/08/2012 - 12:04 | 2596305 yofish
yofish's picture

Why would anyone want a MP-15 when you can get a 10-22 for less than half the price? If you just want to feel butch, you can add a 'tactical' stock to the 10-22 and still be cheaper.

And this is one of the dumbest comments ever: "A good strafing gun for just scaring the hell out of people without really trying to hurt anyone."

Sat, 07/07/2012 - 14:09 | 2595016 El Tuco
El Tuco's picture

Gold should be considered a basic material. A lot of folks think of gold as just a hedge but in reality it plays a very important part in the daily lives of billions.

Here is a clip from an article on eWaste.

With respect to gold alone, electronic and electrical products consumed 5.3% (197 tons) of the world's supply in 2001 and 7.7% last year (320 tons -- equal to 2.5% of the US gold reserves in the vaults of both Fort Knox, Kentucky, and the of New York).

In that same decade, even as the world's annual gold supply rose 15% -- from about 3,900 tons in 2001 to 4,500 tons in 2011 -- the price per ounce leapt from under $300 to more than $1,500.

 

It's use in electronic and electrical products is only going to grow unless of course something else comes along to replace it.


Sat, 07/07/2012 - 15:10 | 2595152 DosZap
DosZap's picture

but I sure don't need to do that for gold. I can't eat it, live in it, travel on it, etc. What's my, or any body's interest in chasing the price on that? I would say you'd be better owning real-estate, oil, basic materials, and that sort, than gold.

 

 Simple,heard of underground economy, or black markets?.

Forget the others you mentioned, those will be seized.You think with an illegal fascist state, that people will be declaring sales, and returns?.

Dream on.

They will have to fight, and kill at least 50-60 million Americans alone.

A MULTITUDE of Fed agencies have already been given the powers to do whatever they want in regards to ALL of the things you mentioned.

Sat, 07/07/2012 - 13:14 | 2594927 Sudden Debt
Sudden Debt's picture

Ps: history shows that in 110% of all cases where the same shit happened, THAT THEY PRINTED!!!!
just bing it or google it and catch up on your history lessons.
so printing it is!

Sat, 07/07/2012 - 13:19 | 2594934 francis_sawyer
francis_sawyer's picture

110%... really?

So they 'printed', actually more times than they actually had occasion to?

I guess I'll buy that premise (especially if it's on Google)...

Sat, 07/07/2012 - 14:03 | 2595010 All Risk No Reward
All Risk No Reward's picture

Sudden Debt, who is this "they" of which you speak?

Name one case where the MONEY POWER behind the Central Bankers controlled the money supply and hyperinflated away their trillions in debt holdings and cash holdings (through their corporate fronts) and baile dout debtors?

Try none.

The government does not control the money supply in America like in Weimar or Zimbabwe.  The DEVIL truly is in the details.

Guess what?  Weimar and Argentina and Greece, etc...  are DEFLATIONS from the perspective of the money held by the MONEY POWER. 

Stop thinking from a Muppet perspective and start thinking from a Muppet Face Ripper perspective.

Hyperinflation is the end game, but between now and then the MONEY POWER will strip as much physical wealth as they can from society...  and bailing out the indebted IS NOT in their game plan.

Devaluing the money only works in the MONEY POWERS' INTEREST so long as two conditions are met:

1) Their LEVERAGE more than compensates for the devalued currency losses.  IOW< double my money and give me a 20% currency hit any day - I'm still up 60% net and fewer Muppets have faces.

2) Their LOOTING more than compensates for the devalued currency losses.  IOW< double my money and give me a 20% currency hit any day - I'm still up 60% net and fewer Muppets have faces.

What you fail to understand is that these criminals despise the proles and ripping off our faces is a bonus to them, not something they are afraid of.  Given th elevel of Stockholm Syndrome, apathy and incredible ignorance with the proletariat, I can't say their view isn't irrational.  I try to change that every day and it is an uphill battle.

 

The Ultimate History Lesson:   http://www.youtube.com/playlist?list=PL463AA90FD04EC7A2

The Ultimate history Lesson Commentary: https://www.tragedyandhope.com/th-films/the-ultimate-history-lesson/comm...
Sat, 07/07/2012 - 16:26 | 2595281 RockyRacoon
RockyRacoon's picture

"The word patriotism is thick in the air on days like this. But a better word for it is patriautism.

Patriotism is defined by Reference.com as "a person who loves, supports, and defends his or her country and its interests with devotion." and autism is defined by Wikipedia as being "a disorder of neural development characterized by impaired social interaction and communication, and by restricted and repetitive behavior.

Putting the two together, patriautism can be defined as "a disorder of neural development characterized by a love and defense of your slaveowner or captor often including repetitive behavior such as repeatedly stating that their country is the freest country on Earth despite all evidence to the contrary".

It's sort of a Stockholm Syndrome with flag waving."

Gary Gibson

 

Sat, 07/07/2012 - 21:31 | 2595718 All Risk No Reward
All Risk No Reward's picture

Rocky, excellent insight.  I spent last week arguing with someone who said I don't know the government was protecting the Big Finance Capital mobsters because I didn't know how hard it was to bring a case.

Admitted Jefferson County bribery (a VP of a company tried to argue that trying to bribe county officials must not be a crime, only accepting the bribe), $10s of billions in Wachovia drug money laundering, 100k admitted perjured documents, insider trading, Libor, stolen private accounts, and on and on and on...  not to mention William Black being blacklisted.

The warm cackles in the hearts of the human predators must just twinge whenever those faceless Muppets rush in to defend their "honor."

People just can't admit it is that bad and their government is the enemey...  The key idea behind the founding of this nation.

 

 

 

Sat, 07/07/2012 - 15:29 | 2595182 verum quod lies
verum quod lies's picture

According to Reinhardt and Rogoff ("This Time Is Different") and others, it's roughly 99%+ of the time it's inflate then die vs. deflate (of course there are the head fake deflate, just kidding, then inflation then die). Can you think of the one case of deflate then economic crash? Well that would be the Great Depression from a U.S. perspective. But, of course, we are sooooo different and this "time is different". In short, the norm is Argentina style inflation and crash, not Great Depression U.S. syle cicra 1930s (which by the way had an inflationary spike when gold was confiscated then revalued). In short, only a fool would bet on a repeat of the Great Depression deflation (i.e., from the U.S. not Weimar perspective).

 

Sat, 07/07/2012 - 15:21 | 2595169 Peter Pan
Peter Pan's picture

I hate to spoil the inflate/die/debt jubilee party but we have all overlooked the slight problem of ever increasing unfunded liabilities which ensures that we would still find ourselves in a mess following any or all of the above solutions.

Expectations exceed means so the problem becomes one of priorities and therefore "logistics".

Do we cull expectations, do we cull non-productive ependitures such as military expeniture, do we ban or over tax harmful activities such as smoking and soft drinks etc etc etc?

In short, the greater challenge is not to reduce debt but to find a sustinable level of existence.

Sun, 07/08/2012 - 08:49 | 2596062 Bendromeda Strain
Bendromeda Strain's picture

Do we cull expectations, do we cull non-productive ependitures such as military expeniture, do we ban or over tax harmful activities such as smoking and soft drinks etc etc etc?

What a character. Two chances to spell expenditure with a spell check available to boot. "Non-productive expenditure such as the military", huh? All Federal spending is by definition a reallocation of productivity, and as for the states, see below.

http://www.youtube.com/watch?v=luo40WjBKWI

Sat, 07/07/2012 - 12:39 | 2594867 GMadScientist
GMadScientist's picture

P(WWIII) > P(Jubilee)

And how do you take someone who looks like the Skipper from Caddyshack seriously anyway?

"And it would end the mortgage bond securities market, for example, and the leveraged loan markets, and end the private sector shadow banking system. So it does not work for anybody to have credit deteriorate."

Speak for yourself, paper-pusher.

Sat, 07/07/2012 - 12:39 | 2594870 Conrad Murray
Conrad Murray's picture

Off Topic, but of Interest:

Project Mayhem begins...

http://open.salon.com/blog/watchingfrogsboil/2012/07/05/project_mayhem_2...

Sat, 07/07/2012 - 13:48 | 2594981 CrockettAlmanac.com
CrockettAlmanac.com's picture

I clicked on some of the links in that article and I don't have the slightest idea what those people are talking about. Is a concise, kool-aid free summary available?

Sat, 07/07/2012 - 14:38 | 2595069 Conrad Murray
Conrad Murray's picture

https://rt.com/news/anonymous-leaks-fight-club-057/

http://galatorg.com/index.php/project-mayhem-2012

Follow the twitter hash tags, and find/explore some of the darknet IRC channels.

Sat, 07/07/2012 - 12:39 | 2594872 Quinvarius
Quinvarius's picture

New money creation is for the general economy and banking system is almost zero.  That is very bad for debt based fiat monetary systems.  Ben needs to get mortgage assets off of bank books ASAP.  The bad loans are about to start ramping up again.

http://nowandfutures.com/images/m3b_long_term.png

They can not let the money creation rate go negative or we risk hyperinflation and bank collapse.  Yes.  Hyperinflation comes from bad debts.

Sun, 07/08/2012 - 08:55 | 2596066 Bendromeda Strain
Bendromeda Strain's picture

Some idiot down voted you without proffering an argument? Typical example of how even astroturf paymasters don't get their money's worth these days.

Sat, 07/07/2012 - 12:50 | 2594889 Snakeeyes
Sat, 07/07/2012 - 12:52 | 2594892 swanpoint
swanpoint's picture

Die Bitchez! DIE!!!

Sat, 07/07/2012 - 12:52 | 2594894 Bansters-in-my-...
Bansters-in-my- feces's picture

Off topic but....Mmmm  ..mMMMM fITNESS BUM

Sat, 07/07/2012 - 12:54 | 2594896 Der Hund
Der Hund's picture

The Bernank is screwed as he cannot QEIII ahead of the election as he would get kicked straight out by Mittster (who despite having Bernak lovers on his staff will be forced by the Tea Party to get real).  He needs to save up the fireworks for the Cliff face - but does it all come too quick.  Bundesbank is owed E729bln by the social welfare leeches - and Finland is going to leave it to them.  Bank of Japan, Bank of England will all join in the game as Draghi tells the Bundesbank to poke it

 

Sat, 07/07/2012 - 13:17 | 2594930 Vet4RonPaul
Vet4RonPaul's picture

Der Hund, I think you under estimate the strength of Obama over Romney.  The white collar welfare state and those directly or indirectly on the government dole are the majority in the US (and the EU for that matter).  They will vote for the most socialist candidate and while Obama is only slightly more socialist than Romney, he is still more socialist.  Thus, there is political cover for the Bernank to print and indeed doing it before the election will give him the surprise factor he personally and deparately seeks.  We and our children are being transformed into serfs before our very eyes; fucking sheeples.

Sat, 07/07/2012 - 14:54 | 2595114 allocater
allocater's picture

> Bundesbank is owed E729bln by the social welfare leeches

 

That is not what target-2 says. target-2 says: The Bundesbank has printed 729 billion and given it to German Banks. To not feel bad about this, the Bundesbank has - in addition to printing 729 billion - inserted a 'claim' (which really is not a claim, it's an alibi) to collect 729 billion from South Europe. Now the Bundesbank can say: We did not print 729 billion for German banks, because the two accounting lines balance each other out to 0.

 

What happened in the real world? 729 billion were sent _TO_ Germany. Germany is now 729 billion richer. South Europe in 729 billion poorer. In fact it is exaclty backwards from what you say. The 'social welfare leeches' have sent 729 billion to Germany, not the other way around. And - brace yourself, this is very unusual for these times - the 729 billion that were sent, were JUSTIFIED. It's not a loan, it's not a debt, it is money with which goods, products, machineries were bought. The money will not be returned. The 729 billion will remain in Germany, because they belong to Germany. The target-2 imbalance will stay. It is the evidence of real money flow from South Europe to Germany. There is no 729 billion to collect from South Europe. It already was collected.

 

 

Sat, 07/07/2012 - 20:14 | 2595611 Der Hund
Der Hund's picture

are you dreaming?  The banking system doesn't work like that.  here is wiki's version - which though simple is sort of correct Central Bank. In terms of the value processed, TARGET2 is one of the largest payment systems in the world.

A Greek importer, for example, might place an order with a German company. Payments to and from the accounts of the buyer and seller are channeled via central banks, so the German exporter's bank gets a credit with the Bundesbank, which in turn has a claim on the ECB. The Greek importer's bank owes its local central bank, leaving the Bank of Greece with a debit at the ECB.[1]

You sell me washing machines - i send you money from my santander a/c madrid as a retailer/dept store to your DB a/c frankfurt as a mittelstand maker of blah blah.  but santander accounts for this with its national central bank for a foreign transfer...that's where it all gets spicy...happens between Federal reserve banks in US

Sun, 07/08/2012 - 10:03 | 2596123 allocater
allocater's picture

Yeah so? That's what I wrote. "gets a credit with the Bundesbank" = Bundesbank printed/created money. "which in turn has a claim on the ECB." = That is the claim/alibi line.

The Mittelstand company in Germany has the euro now. That euro was created in Germany and delete in Greece. Everything is fine. The transfer is complete. What more do you want?

Sat, 07/07/2012 - 12:59 | 2594902 q99x2
q99x2's picture

They have to print or collapse it now and use military force against the people around the world. Its a judgement call because the longer they wait (the collapse will happen) the greater the opposition to "them."

I vote for October 2012 since that is the favorite month and the natural onset of winter in the Northern Hemisphere. It would also save a lot of people from having to kick themselves later for voting for Obama or Romney.

Sat, 07/07/2012 - 13:08 | 2594917 AnAnonymous
AnAnonymous's picture

Its a judgement call because the longer they wait (the collapse will happen) the greater the opposition to "them."

____________________________________

Its a judgement call because the longer they wait (the collapse will happen) the greater the support to "them."

US citizens sit on the top of the world and will fight and side with anyone who offers them to maintain the status quo or slow down the decline.

US citizen elite is empowered by US citizen middle class. US citizen middle class is king class in US citizenism.

Sat, 07/07/2012 - 13:54 | 2594992 GMadScientist
GMadScientist's picture

Pawn to E4, check.

Sat, 07/07/2012 - 13:56 | 2594994 Vet4RonPaul
Vet4RonPaul's picture

bully for you q99x2!  But I think it will be September 2012 because we'll have distractions like back to school, severe US drought and complete implosion of the EU.  It will be presented just like the other bailouts; no time to debate and besides with GOP and Dems firmly socialist, there would be no difference in outcome anyway.  Time to get sheared again sheeple so bow your heads and line up like good serfs.

Sat, 07/07/2012 - 13:04 | 2594912 humblepie
humblepie's picture

Do or Die? If it were that easy, you'd think it is done already. Mr. Market always surprises and inflicts the most pain.

Sat, 07/07/2012 - 13:10 | 2594918 Hype Alert
Hype Alert's picture

It's criminal!  Let's say you have $1,000,000 and you store that value in assets (stocks, gold, whatever) and they kick in inflation to counter the debt.  Now you have $2,000,000 worth of assets, but you don't because they are going to tax you on that $1,000,000 gain you made!  The more they inflate, the worse it gets.  The only winners again are the bankers and an ever growing government.

 

The other problem is national debt which is mostly because of entitlement programs.  These do not get solved with inflation because they are costs (think health care, SNAP, etc) and will go up as inflation goes up.  Inflation will just make more people dependent on the government, who screwed up the money supply in the first place.

 

All this will effectively do is wipe out savers, the prudent, the retirees.

Sat, 07/07/2012 - 13:38 | 2594962 Hulk
Hulk's picture

Yes, inflation is a double taxation. Fucking Maddening...

Sat, 07/07/2012 - 13:57 | 2594997 HoofHearted
HoofHearted's picture

So, if you are convinced that the inflationary event is coming, there is only one thing to do...get into debt up to your eyeballs buying things that will be useful on the other side. Read Jens Parsson's _The Dying of Money_. The people who did best in Weimar Germany were those who borrowed a shitload to buy real things- arable farmland, gold and silver, factories, bricks, ammo, grains or other foodstuffs, cattle, pigs, you get the idea. Then when the Reichsmark hit the fan, the people very easily paid back the debts by selling a couple of bricks, leaving them with 997 free bricks left.

Max out the credit cards, take out the home equity loan, buy a third or fourth house, a tractor, a small farm, whatever you can get your hands on...

Sat, 07/07/2012 - 15:02 | 2595137 reload
reload's picture

I have given this strategy very serious thought. But the flip side of the coin as explained further up the thread by All Risk No Reward continues to haunt, and is far from incredible. Deflation is often called the mother of Hyperinflation, and I think we will see a viscious deflationary cycle. Weak hands (debtors) will be relieved of their hard assets, the masses will scream for printing, and it will come, but only once the bank ballance sheets are replete with hard assets.      

Sat, 07/07/2012 - 21:36 | 2595724 All Risk No Reward
All Risk No Reward's picture

The only way I can read a 3.6% 30 year loan is "I dare ya to take this loan, 'cause I'm going to steal this home from you before it is paid off!"

Control over the necessities of life is the PRIME OBJECTIVE.  Once that is done, getting into hard assets (including gold and silver) during the deleveragin cycle makes sense.

Money in the bank is at risk now - so I wouldn't keep much there.

Treasury Direct in the cash portion of the account (roll a short term bill over to the Treasury Direct cash account).  However, I'm not sure what happens when banks limit cash withdrawals and whether Treasury Direct transfers will be limited by the account limits.

Sun, 07/08/2012 - 04:47 | 2595982 Likstane
Likstane's picture

How can I pay taxes on appreciating assets when I can't find them in the surf?

Sat, 07/07/2012 - 16:27 | 2595288 Hulk
Hulk's picture

Looks like I need a factory...

Sat, 07/07/2012 - 13:57 | 2594996 GMadScientist
GMadScientist's picture

Unless the trip through their currency is side-stepped entirely.

What $1M profit?!

Sat, 07/07/2012 - 14:03 | 2595008 Ropingdown
Ropingdown's picture

Yep.  It is the automatical COLA's on SocSec pay, and on federal, state, and local government employee wages that make inflation such an attractive solution to that whole crowd and the politicians they now serve.  The CEO's can raise their pay to the limit their reputations can stand, but private sector employee wages will stay lower, which will cause severe political disruptions.  During the '70's the politicians built permanent mechanisms which should have been short-term.  CREDITORS are going to take a hit.  Lots of "homeowner" borrowers are going to have to become tennants.  Lots of bond holders will have to become equity holders, and that goes for Frannie too.  Inflating away debt in a hurry can't work fast enough and for all the obvious reasons: Markets will crash, capital will flee, and Treasuries won't get bought/held.  Of course the shadow banking system will get hit hard. It should.  The Fed can keep the necessary banking functions going by rapidly splitting off the investment/speculative activities of banks and regulating fees.  It's only main street manufacturing, farming, and basic services which have to have funding.  Risk insurance, the derivatives, will be meaningless and should be simply outlawed, made unenforceable as "against public policy."  It will work out.  Eventually.

Sat, 07/07/2012 - 14:13 | 2595026 All Risk No Reward
All Risk No Reward's picture

Yes, but THE OWNERS who control the money supply have TRILLIONS in debt instruments and TRILLIONS in cash stored up in their front companies.

Would you hyperinflate that wealth away or would you orchestrate an eventual collapse, foreclose on your Muppet debtors, spend the trillions on hard assets as the Muppets are unemployed and puking up debt and then hyperinflate to "balance your books?"

The mega banks control the money supply and Federal Reserve...  and they are giving out 3.6% 30 year fixed mortgages.

Do you **really** think they are that ignorant / stupid / kind and compassionate to those they criminally saturated with debt?

Or, was Henrey Ford right?

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. The one aim of these financiers is world control by the creation of inextinguishable debt.” Henry Ford

 

To learn more about the human predators, their justifications and some of their methods, check out...

The Ultimate History Lesson:   http://www.youtube.com/playlist?list=PL463AA90FD04EC7A2

The Ultimate history Lesson Commentary: https://www.tragedyandhope.com/th-films/the-ultimate-history-lesson/comm... To learn about the human predator financial frauds: Debt Money Tyranny (fraudulent monetary system structure) http://www.keepandshare.com/doc/3325954/debt-dollar-tyranny-2-54k?tr=77 Weapons of Mass Debt (criminal Federal Reserve activity and cover up) http://www.keepandshare.com/doc/3324744/wmdebt-graph-3-79k?tr=77
Sat, 07/07/2012 - 22:09 | 2595767 vincesilver
vincesilver's picture

So AllRiskNoReward,

 

All you have to do is borrow at the highest loan-to-value possible at a fixed 3.6% for 30 years and not sell when the deflation hits right?!  And then when the inflation finally kicks in, the house is basically free or easily paid off with some PM?!

 

Thanks.

 

Vince

Sat, 07/07/2012 - 13:14 | 2594922 jimmyjames
jimmyjames's picture

Bank assets are loans mostly. And the amounts globally are staggering: something approaching $100 trillion in global bank assets. And in the US we think that is somewhere around $20 trillion held in the US and abroad. And the numbers for the monetary base are much, much lower.

************

Not sure where he gets his numbers from-but i believe his calculations are misplaced and way too low-

Total credit in the US alone is 3 times what he states-

http://research.stlouisfed.org/fred2/series/TCMDO

Base is not even 3 trillion-

http://research.stlouisfed.org/fred2/series/BASE

So the ratio is more like 20-1 credit over base and they will not print the debt away-

That would amount to doing themselves in-to bail out the peasants-

Sat, 07/07/2012 - 13:17 | 2594931 Sudden Debt
Sudden Debt's picture

actually somewhere between 360 and 470 trllion but who's counting with numbers like that.
your assets are the banks assets which they uses as collateral x16

Sat, 07/07/2012 - 13:43 | 2594973 jimmyjames
jimmyjames's picture

actually somewhere between 360 and 470 trllion but who's counting with numbers like that.

***********

Shhhhh--those $ figures are safely tucked away in the bad banks-we're supposed to forget about them-

Sat, 07/07/2012 - 13:23 | 2594940 kito
kito's picture

brodsky doesnt get it......he wants to bridge the deposit/asset gap so that the world will be wonderful again......perhaps mr. brodsky can explain how the banks will cover their "hedged" investments gap, to the tune of hundreds and hundreds of trillions??? perhaps $700 trillion in "base" money bank reserves can be deposited and all will be well? ......brodsky also thinks that the cbs will even have the opportunity to print enough to cover his calculations of what is necessary......he fails to account for the law of diminishing returns in lsaps.....more is bringing less....the market will shirley collapse in a rapid and armageddonish manner long before the cbs can print to the moon.......brodsky doesnt take into account that a sudden loss of confidence in the u.s. bond market will unleash a fury that will ravage the worlds banking systems, leaving the cbs impotent and running to their own shelters.......

Sat, 07/07/2012 - 15:40 | 2595201 tsx500
tsx500's picture

don't call me shirley

Sat, 07/07/2012 - 13:24 | 2594941 A Lunatic
A Lunatic's picture

Too many greedy fingers and not enough pie = printing, war, and death on a massive scale.

Sat, 07/07/2012 - 13:26 | 2594942 Bam_Man
Bam_Man's picture

Makes perfect sense, but didn't we already know this?

Sat, 07/07/2012 - 13:34 | 2594952 ebworthen
ebworthen's picture

So does this mean my $1 bill will be worth $10 or 1 cent?

I suppose they will tell me it is worth $10 but it will be good for toilet paper, eh?

Sat, 07/07/2012 - 14:03 | 2595007 GMadScientist
GMadScientist's picture

2-sheet 1-ply or 1-sheet 2-ply. Limit 3 to a customer.

Sat, 07/07/2012 - 14:12 | 2595025 jimmyjames
jimmyjames's picture

But it gets worse. What will happen when the “multiplier effect” takes effect? I’m talking about the potential for massive inflation when all those huge quantities of reserves (stimulus) get lent out instead of shelved on balance sheets? How about massive inflation.

Heaven help us if all these macro crises are fixed quickly. The flood of idle cash and credits globally will make past inflationary bursts look like a 40-yard dash compared to miles and miles of potential problems ahead of us.

*************

I'm not sure there's much chance that those reserves will be loaned out any time soon with the world economies in contraction

I think the biggest danger of uncontrolled inflation will be when CB's try to unwind their expanding balance sheets (essentially printing) that are filled with worthless garbage marked at full $ value-

http://bit.ly/L9EotK

Sat, 07/07/2012 - 13:53 | 2594989 Getting Old Sucks
Getting Old Sucks's picture

I love ZH and get the real news here.  I also enjoy all the comments.  However, no matter what the topic, IT'S GAME OVER! 

Sat, 07/07/2012 - 14:08 | 2595014 Vet4RonPaul
Vet4RonPaul's picture

Getting Old Sucks (indeed!), you raise a fair point about the constant it's over theme.  But let's consider a different angle, what if it is already over and we simply don't realize it?  This happens all the time in history where one group will soldier on not believing that fate has already sealed the outcome.  Historians can and do reasonably look back and make compelling arguements that once some event happened (eg. "the turning point", the decisive battle, etc.), the outcome was assured regarless of the actions of the actors.  Is it not possible that indeed this has already happened to us with bailouts 1 and 2?  For the EU, many have argued that the creation of the Euro was indeed the beginning of the end of the Eurozone.  Many of the posts on ZH are more about what to do now that the conclusion is foregone than they are about what and when the conclusion will be.

Sat, 07/07/2012 - 14:24 | 2595049 All Risk No Reward
All Risk No Reward's picture

Correct.  The system will collapse and the only question who gets the knife inserted and twisted.

Straight to hyperinflation means the richest, most powerfule people on the planet, the very same people that control the money supply and will direct monetary actions, will be wiped out and debtors will be bailed out.

A well placed deflationary spiked pit ahead of the deflation is a mechanism the richest, most powerful people on the planet can use to, quite simply, asset strip the debtors and buy up much of the planet for pennies on the dollar ahead of the hyperinflation they will use to "balance their books."

Now, which would you do if enjoyed ripping Muppet faces off?  They are the ones in control NOT GOVERNMENT.  Government that tried to get control will be Kennedyed, Lincolned, Jacksoned ('cept they don't misfire now), Garfielded, McFaddened...  these human predators don't mess around.

The Ultimate History Lesson:   http://www.youtube.com/playlist?list=PL463AA90FD04EC7A2

The Ultimate history Lesson Commentary: https://www.tragedyandhope.com/th-films/the-ultimate-history-lesson/comm...
Sat, 07/07/2012 - 17:00 | 2595340 sschu
sschu's picture

They are the ones in control NOT GOVERNMENT.

This is the fly in the ointment to your theory, who is in control?  In your scenario the money people make the call, in real life it may not be so.  The politicians still have significant power, and who knows how they will react.  Right now the money people seem to have the edge, not sure that will remain so forever.  

Your ideas ring true and are very thought provoking, thank you!

sschu


Sun, 07/08/2012 - 12:51 | 2596388 johny2
johny2's picture

I dont know what is going to happen, but one thing that makes me doubt your scenario, is that the richest people are not going to be hurt either by hyperinflation or deflation. They are probably prepared for every outcome. While on other hand, most of the rest us are going to be in trouble, either way

Sat, 07/07/2012 - 13:59 | 2594999 JackT
JackT's picture

If all the major players inflate then wouldn't the tide rise evenly? I don't know of any country that uses specie for money - so it seems the entire world will be adrift.

Soon we'll have stories to tell our children about how we use to buy a gallon of gasoline for $3.50 or a loaf of bread for $3.00 and they will look at is in amazement.

Unfortunately our currency has been so debased there isn't anything left to take from it. Perhaps they will permit Free Banking by simply letting individuals issue their own clods of dirt or grass clippings.

And to think just 50 years ago children use to have actual silver coins in their pockets to buy candy or go to the movies.

Sat, 07/07/2012 - 14:07 | 2595012 Getting Old Sucks
Getting Old Sucks's picture

Expecting a nice raise in salary when it happens? 

Sat, 07/07/2012 - 14:26 | 2595053 All Risk No Reward
All Risk No Reward's picture

Maybe if you are a slave in China high up on the organ donor van list...  as in, your organs are needed by a human predator...

China's hi-tech 'death van' where criminals are executed and then their organs are sold on black market

http://www.dailymail.co.uk/news/article-1165416/Chinas-hi-tech-death-van-criminals-executed-organs-sold-black-market.html#ixzz1zxkBApzT Of course, "criminal" is a euphamism for "informed citizen under the illusion s/he has rights." Same as it ever was, people.
Sat, 07/07/2012 - 13:59 | 2595000 JackT
JackT's picture

If all the major players inflate then wouldn't the tide rise evenly? I don't know of any country that uses specie for money - so it seems the entire world will be adrift.

Soon we'll have stories to tell our children about how we use to buy a gallon of gasoline for $3.50 or a loaf of bread for $3.00 and they will look at is in amazement.

Unfortunately our currency has been so debased there isn't anything left to take from it. Perhaps they will permit Free Banking by simply letting individuals issue their own clods of dirt or grass clippings.

And to think just 50 years ago children use to have actual silver coins in their pockets to buy candy or go to the movies.

Sat, 07/07/2012 - 16:10 | 2595259 BidnessMan
BidnessMan's picture

In the early 70's gasoline was 24.9 cents a gallon, and bread was 25 cents a loaf....  a Whopper, Fries, and Coke at the campus Burger King was 99 cents.  Krystals for a dime, fries for 15 cents.  Just not that long ago.  

Sat, 07/07/2012 - 14:02 | 2595006 loveyajimbo
loveyajimbo's picture

A similar warning from a sharp guy:  http://www.bullionbullscanada.com/gold-commentary/25571-crash-warning  I think I will write in Paul... I don't see enough difference between the dangerous fool Obama and Big-Money Mitt... they are both 100% owned by the corporations anyway...

Sat, 07/07/2012 - 14:15 | 2595030 loveyajimbo
loveyajimbo's picture

Here is a news flash... there is no gold in the US depositories... it has all been sold or leased and will never return... otherwise, the Obama-mama could do a revaluation of our supposed massive gold reserves and it would really help... can't do it if there is no gold to exchange one ounce for $10,000 of fiat... bummer.

Sat, 07/07/2012 - 14:32 | 2595048 Tom Green Swedish
Tom Green Swedish's picture

Didn't feel like reading this. Was this a gold pump article?  $460 an ounce to mine $1600 an ounce to buy.

 

Debt is money and money is debt. Its called a fractional reserve system. There is nothing wrong with debt.  There is no reason to print when debts go bad, you need to make people pay for the debts instead.

Sun, 07/08/2012 - 09:39 | 2596098 Absinthe Minded
Absinthe Minded's picture

So you don't mind paying interest on credit that gets created out of thin air by an entity that does no work to reap the benefit of your labor? Awfully nice of you and I'm sure your overlords think your a wonderful servant.

Sat, 07/07/2012 - 14:28 | 2595057 slewie the pi-rat
slewie the pi-rat's picture

i just double-checked:  it is now 20012 and the bank assets have been completely deteriorated beyond repair for at least 4 years...

...and yes, they tended to print 'money' to try to hide this very problem right along...

...as the banksters and pols continue to fund & write checks and to generate these data in ever-more-alarming arrays...

 

...oh, my! 

Sat, 07/07/2012 - 15:22 | 2595170 francis_sawyer
francis_sawyer's picture

& yes...

For every 10 times they were given the opportunity to print, they did so 11 times... SUDDEN DEBT says so above... After all ~ it's on Google (& Bing)...

 

Sat, 07/07/2012 - 16:39 | 2595309 slewie the pi-rat
slewie the pi-rat's picture

look sawyer!

the sta-puff instaaaahbeeeelietaaay man!

we're doomed?

Sun, 07/08/2012 - 05:02 | 2595986 Likstane
Likstane's picture

Sounds like sawyer got butt-hurt over simple math.  It's easily 110%, maybe more.

Sat, 07/07/2012 - 14:36 | 2595073 JR
JR's picture

If we don’t have a political decision, spelled solution, to the world’s debt problem, then THEY will be the political solution, i.e., global control.

Sat, 07/07/2012 - 14:57 | 2595121 mick68
mick68's picture

The one question which nobody is asking:

Every nation can't be in debt simultaneously and equally, and considering how much debt many nations have, there must be some countries which many trillions are owed to. Sure China has 3-5 trillion in receivables, but we're talking 50tn at least here.

Who are the ultra rich nations/entities which trillions and trillions are owed to?

Sat, 07/07/2012 - 15:13 | 2595158 Getting Old Sucks
Getting Old Sucks's picture

Strange as it seems, it appears that every country sells bonds, even China.  It's amazing that Japan owns our bonds and sells their own to raise capital.  Then I read that they were buying government bonds from China last March.  Maybe we're all gonna be even somday?  LOL

Sat, 07/07/2012 - 16:23 | 2595233 Tom Green Swedish
Tom Green Swedish's picture

Central Banking along with other things are communist ideas.  We for the most part live in a psuedo communist world. 

Here are the 10 tenets of Communism and my analysis of the features we have in the USA.

Central banking system - Check
Government controlled education - Half Check
Government controlled labor - Half Check
Government ownership of transportation and communication vehicles - Half Check
Government ownership of agricultural means and factories - Half Check
Total abolition of private property - Half Check
Property rights confiscation - Half Check
Heavy income tax on everyone - check
Elimination of rights of inheritance - Half Check
Regional planning - Uncheck

 

To answer your question. 

There are two types of debt,  

 Amoung ones own country - Money owed to the people.  Essentially this "debt" is on the books only because it is assumed it must be paid by others down the chain.  If everybody of Social Security age died tomorrow all these debts would go away, so its tecnically (Queue Justice Roberts), not a debt because somebody else pays it.  Even if everybody of Social Security age died tomorrow either there would be no Social Security or the money owed to the person paying into it would be owed something.  I am confused why these things are even factored in, somebody will always pay into it just at variable rates.  The problem is the money has been promised, and is at fixed rates (you can't get a lowering paying social security like a lower paying job, or you can't get fired from social security), which makes these programs particularly troubling, because they do not react with the rest of the economy.

Owed to other countries.  All countries own external debt to different degrees.  Most of the time export dependant countries have larger foreign reserve holdings because their economies revolve around external demand and currency changing factors to give advantages.

 

China, Japan, The Eurozone, Saudi Arabia and Russia have 7 trillion in foreign reserves, they along with Switzerland and Germany are creditor nations.

 

http://imagesize.financialsense.com/http://www.financialsense.com/sites/...

 

If you view the picture you will notice all the PIIGS countries are debtor nations like the USA, and all exporter nations and Northern Europe, sans UK similar USA Policies are debtor nations.  Obviously Spain and Italy are in some real major trouble.  Spains and Italys debt is about the size of the USA's and is a fraction of the size economically.  I was surpised to see Australia on this list, but once again it is like the USA/Canada/UK with crazy regimes.

 

Foreign holding of US debt equal around 5 trillion dollars.  As you can see The USA owes the rest of the world quite a bit of money, A large chunk of the debt. Lets say on the order of 1/3 your salary for the year for everybody.  The problem is not the money.  The USA could easily repay this just by cutting back or enacting a tax.  After all the rest of the world would majorly suffer if we paid the debt back (since we consume all their crap and would not have the kind of money to spend on their crap if we cut back on 1/3 of our salaries for a year, but it would also effect our trade because most of the crap we buy from them is in fact just produced there for us, besides Japan, Germany and the Oil Countries) or they try to collect (they would be uncompetitive overnight ,  there is always a cheaper alternative in the world and always will be). Thus the debt will probably accumulate until somebody with a brain decides to stop it.

Thats why nothing seems to happen, because the USA is in the drivers seat, but eventually somebody is going to have to stop it or it will become unsustainable, like with Greece.

 

 

Sat, 07/07/2012 - 18:03 | 2595429 headless blogger
headless blogger's picture

The "Central Planners" and bankers are really just playing games with our money. They take out thousands over a lifetime in SS, yet are now spreading the bitching around that we only pay so much into the system yet take out (upon old age) way more than we put in. BUT, they keep it hush-hush on how much that money we've paid has compounded in interest IF WE DID TO THE SYSTEM WHAT THE BANKERS DO TO ALL OF US WHEN THEY LOAN US MONEY.

If you were charging compound interest for the GOVERNMENT TO USE YOUR MONEY, then what you take out in old age is seriously probably not even close to what you deserve!!

Basically, they are SCREWING everyone, and notice that none of these people are having a hard time; no, they have more money than ever, and they don't even work that hard for it, if at all.

Sun, 07/08/2012 - 02:16 | 2595927 Tom Green Swedish
Tom Green Swedish's picture

Good Point.  The returns on SS are next to nothing somewhere in the order of 3 percent per year for someone around 30, but much higher for an older worker 3.26 for someone 60, but 5.27 for someone 80.  On the other hand the market hasn't returned even that much in the past few years, so SS is actually decent compared to the overall market.  Social Security is really screwing the younger workers though, its a bad insurance policy. I don't udnerstand why they changed SS later from 1 percent to 6.4 percent other than they decided it wouldn't cover it.

 

For example, when Social Security was first launched, the tax supporting it ran just 1% of a person's paycheck, with their employer required to match the contribution. Today, 6.4% of a person's paycheck goes to Social Security, again with their employer paying an additional 6.4% into the fund as well. Since benefits are more-or-less calculated using the same formula regardless of when an individual retires, the older worker, who has paid proportionally less into Social Security, comes out ahead of younger workers!

Sat, 07/07/2012 - 14:57 | 2595122 mick68
mick68's picture

The one question which nobody is asking:

Every nation can't be in debt simultaneously and equally, and considering how much debt many nations have, there must be some countries which many trillions are owed to. Sure China has 3-5 trillion in receivables, but we're talking 50tn at least here.

Who are the ultra rich nations/entities which trillions and trillions are owed to?

Sun, 07/08/2012 - 10:09 | 2596126 Bendromeda Strain
Bendromeda Strain's picture

but we're talking 50tn at least here

The HUNDREDS of trillions are actually leveraged vaporbux owed by sharks to other sharks and whales. That they hold communities, pensions and annuities hostage at this point is the only reason that people should care.

See this useful infographic shared here many times, then imagine The Joker with a torch:

http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html

 

 

Sat, 07/07/2012 - 14:59 | 2595128 Mad Mad Woman
Mad Mad Woman's picture

I say let it crash and burn and we start fom scratch. Major debt forgiveness for the people!! We must get rid of the ones who caused this mess in the first place.

Sat, 07/07/2012 - 20:36 | 2595636 itstippy
itstippy's picture

Debt forgiveness and starting from scratch is already available via personal bankruptcy (except for back taxes and student loans).

Sat, 07/07/2012 - 15:15 | 2595163 tlnzz
tlnzz's picture

 Once again, this would support Wall Street, maintain the fraud and further destroy Main Street. Judging by the record of firearms sales since Obungo was elected, Main Street sees what is coming and will be ready to effect massive change in our current criminal Government.

Sat, 07/07/2012 - 17:03 | 2595344 GOLDTEETHSILVER...
GOLDTEETHSILVERFILLINGS's picture

Follow the yellow brick road...

Sat, 07/07/2012 - 15:27 | 2595176 Nachdenken
Nachdenken's picture

There is inflation - in equities, commodities, luxury goods and real estate in for instance east european countries.  And we are dead, but talking about it. 

We will wake up in paradise, ushered in with Krugman trumpets and dancing PIIGS. 

Sat, 07/07/2012 - 15:29 | 2595181 EmileLargo
EmileLargo's picture

I didn't understand his argument about real estate. Asset backed securitisation as a machine is broken. So how is what he says relevant now? Also, how much of the real estate market depends on overnight funding as he indicates?

Sat, 07/07/2012 - 16:04 | 2595251 RobotTrader
RobotTrader's picture

Peak Prosperity?  LOL!!!  What happened to the "Crash Course", Peak Oil and all the rest?

Sun, 07/08/2012 - 10:14 | 2596132 Bendromeda Strain
Bendromeda Strain's picture

Hey Sunshine, how about them June numbers? 85k joining you on the disabled list... BULLISH!

LOL

Sat, 07/07/2012 - 17:25 | 2595385 world_debt_slave
world_debt_slave's picture

Don't think that the TBTF and Politically Connected have not prepared for this coming event horizon. They are ahead of the curve b/c they pull the levers.

Sat, 07/07/2012 - 18:02 | 2595424 mach777
mach777's picture

gd dmn whiners! If you got the computional power of a legion quants, hang in there.

If you don't, which is 99.9% of you all, use your fiat paycheck to get tangible goods, use exeters pyramid, cuz thats whats gonna be playing out.

Loads of funny money will be looking to convert into tangible, be ahead of that, for your own sakes.

Sat, 07/07/2012 - 18:19 | 2595449 headless blogger
headless blogger's picture

Exactly. They've been the orchestrators of this entire economic collapse. Looks like they are using it for another Geo-political shuffle (like after WWI and II), and to solidify their consolidation of power over all aspects of our lives. Will they succeed? I think they are going to get real close, but ultimately it is a "utopian" like dream on the part of the Elites and Utopianism is a total illusion. But in the process they are going to do irreprable damage to the rest of us.

Sat, 07/07/2012 - 17:57 | 2595418 DanDaley
DanDaley's picture

 

 

Vote:  (Hyper)inflation comes first -up arrow

Vote: Deflation comes first, then (hyper)inflation -down arrow

 

Sat, 07/07/2012 - 19:27 | 2595537 UrbanBard
UrbanBard's picture

Where Paul Brodsky goes wrong is in thinking that there is no external reality which we must obey. Hence, he believes that there is always an escape clause for foolish activity. Well... The chickens always come home to roost. We must always pay the price for perfidy.

Fiat money is always destroyed; it is merely a question of how long it takes. Therefore, we must be out of paper. Out of stocks, bonds, CDs, contracts, etc. Out of Real Estate, except for a personal home. 

The question is, only, how bad the break down in the markets will be and how much the government will interfere in the correction process.

Not having a crystal ball, I place 10% of my funds in a bet on Armageddon: guns, precious metals, food storage and self protection. Meanwhile, I hope that the US won’t dissolve into chaos. The above items look like cheap insurance.

Sat, 07/07/2012 - 20:50 | 2595560 pavman
pavman's picture

Great info.  Audio is kind of annoying; it would be nice if Paul Brodsky would learn not to move his mouth away from the microphone when he's doing interviews.  Seems a bit amatuerish...but of course its free so guess choo get what choo pay for!

One relavently convenient difference this time around... I noticed the other day while buying coffee... had video screens instead of static price boards inside.  Guess companies are gearing up to be able to adapt to changing prices on the fly.  Bet the South Americans are jealous of how high tech we'll get to be during our currency destruction!

Sat, 07/07/2012 - 21:05 | 2595678 robertocarlos
robertocarlos's picture

I want my money back! The interst I paid was based on LIBOR.

Sat, 07/07/2012 - 21:10 | 2595684 robertocarlos
robertocarlos's picture

You can't create base money unless someone takes a loan. Govt is broke so they cannot borrow any more money (at interest). Get to the Choppah!

Sat, 07/07/2012 - 23:59 | 2595868 proLiberty
proLiberty's picture

In order to inflate, as long as they roughly coordinate the relative rates of money printing, the FX cross will not change by much and all the nomal alarm bells will stay silent.

 

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