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Steve Keen: Why 2012 Is Shaping Up To Be A Particularly Ugly Year

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Submitted by Chris Martenson

Steve Keen: Why 2012 Is Shaping Up To Be A Particularly Ugly Year

At the high level, our global economic plight is quite simple to understand says noted Australian deflationist Steve Keen.

Banks began lending money at a faster rate than the global economy grew, and we're now at the turning point where we simply have run out of new borrowers for the ever-growing debt the system has become addicted to.

Once borrowers start eschewing rather than seeking debt, asset prices begin to fall -- which in turn makes these same people want to liquidate their holdings, which puts further downward pressure on asset prices:

The reason that we have this trauma for the asset markets is because of this whole relationship that rising debt has to the level of asset market. If you think about the best example is the demand for housing, where does it come from? It comes from new mortgages. Therefore, if you want to sustain he current price level of houses, you have to have a constant flow of new mortgages. If you want the prices to rise, you need the flow of mortgages to also be rising.

 

Therefore, there is a correlation between accelerating and rising asset markets. That correlation applies very directly to housing. You look at the 20-year period of the market relationship from 1990 to now; the correlation of accelerating mortgage debt with changing house prices is 0.8. It is a very high correlation.

 

Now, that means that when there is a period where private debt is accelerating you are generally going to see rising asset markets, which of course is what we had up to 2000 for the stock market and of course 2006 for the housing market. Now that we have decelerating debt -- so debt is slowing down more rapidly at this time rather than accelerating -- that is going to mean falling asset markets.

 

Because we have such a huge overhang of debt, that process of debt decelerating downwards is more likely to rule most of the time. We will therefore find the asset markets traumatizing on the way down -- which of course encourages people to get out of debt. Therefore, it is a positive feedback process on the way up and it is a positive feedback process on the way down.

He sees all of the major countries of the world grappling with deflation now, and in many cases, focusing their efforts in exactly the wrong direction to address the root cause:

Europe is imploding under its own volition and I think the Euro is probably going to collapse at some stage or contract to being a Northern Euro rather than the whole of Euro. We will probably see every government of Europe be overthrown and quite possibly have a return to fascist governments. It came very close to that in Greece with fascists getting five percent of the vote up from zero. So political turmoil in Europe and that seems to be Europe’s fate.

 

I can see England going into a credit crunch year, because if you think America’s debt is scary, you have not seen England’s level of debt. America has a maximum ratio of private debt to GDP adjusted over 300%; England’s is 450%. America’s financial sector debt was 120% of GDP, England’s is 250%. It is the hot money capital of the western world.

 

And now that we are finally seeing decelerating debt over there plus the government running on an austerity program at the same time, which means there are two factors pulling on demand out of that economy at once. I think there will be a credit crunch in England, so that is going to take place as well.

 

America is still caught in the deleveraging process. It tried to get out, it seemed to be working for a short while, and the government stimulus seemed to certainly help. Now, that they are going back to reducing that stimulus, they are pulling up the one thing that was keeping the demand up in the American economy and it is heading back down again. We are now seeing the assets market crashing once more. That should cause a return to decelerating debt -- for a while you were accelerating very rapidly and that's what gave you a boost in employment --  so you are falling back down again.

 

Australia is running out of steam because it got through the financial crisis by literally kicking the can down the road by restarting the housing bubble with a policy I call the first-time vendors boost. Where they gave first time buyers a larger amount of money from the government and they handed over times five or ten to the people they bought the house off from the leverage they got from the banking sector. Therefore, that finally ran out for them.

 

China got through the crisis with an enormous stimulus package. I think in that case it is increasing the money supply by 28% in one year. That is setting off a huge property bubble, which from what I have heard from colleagues of mine is also ending.

 

Therefore, it is a particularly ugly year for the global economy and as you say, we are still trying to get business back to usual. We are trying to rescue the creditors and restart the world that is dominated by the creditors. We have to rescue the debtors instead before we are going to see the end of this process.

In order to successfully emerge on the other side of this this painful period with a more sustainable system, he believes the moral hazard of bailing out the banks is going to have end:

[The banks] have to suffer and suffer badly. They will have to suffer in such a way that in a decade they will be scared in order to never behave in this way again. You have to reduce the financial sector to about one third of its current size and we have to also ultimately set up financial institutions and financial instruments in such a way that it is no longer desirable from a public point of view to borrow and gamble in rising assets processes.

The real mistake we made was to let this gambling happen as it has so many times in the past, however, we let it go on for far longer than we have ever let it go on for before. Therefore, we have a far greater financial parasite and a far greater crisis.

And he offers an unconventional proposal for how this can be achieved:

I think the mistake [central banks] are going to make is to continue honoring debts that should never have been created in the first place. We really know that that the subprime lending was totally irresponsible lending. When it comes to saying "who is responsible for bad debt?" you have to really blame the lender rather than the borrower, because lenders have far greater resources to work out whether or not the borrower can actually afford the debt they are putting out there.

 

They were creating debt just because it was a way of getting fees, short-term profit, and they then sold the debt onto unsuspecting members of the public as well and securitized their way out of trouble. They ended up giving the hot potato to the public. So, you should not be honoring that debt, you should be abolishing it. But of course they have actually packaged a lot of that debt and sold it to the public as well, you cannot just abolish it, because you then would penalize people who actually thought they were being responsible in saving and buying assets.

 

Therefore, I am talking in favor of what I call a modern debt jubilee or quantitative easing for the public, where the central banks would create 'central bank money' (we cannot destroy or abolish the debt, which would also destroy the incomes of the people who own the bonds the banks have sold). We have to create the state money and give it to the public, but on condition that if you have any debt you have to pay your debt down -- no choice. Therefore, if you have debt, you can reduce the debt level, but if you do not have debt, you get a cash injection.

 

Of course, this would then feed into the financial sector would have to reduce the value of the debts that it currently owns, which means income from debt instruments would also fall. So, people who had bought bonds for their retirement and so on would find that their income would go down, but on the other hand, they would be compensated by a cash injection.

 

The one part of the system that would be reduced in size is the financial sector itself. That is the part we have to reduce and we have to make smaller.  That is the one that I am putting forward and I think there is a very little chance of implementing it in America for the next few years not all my home country [Australia] because we still think we are doing brilliantly and all that. But, I think at some stage in Europe, and possibly in a very short time frame, that idea might be considered. 

Click the play button below to listen to Chris' interview with Steve Keen (48m:50s):

 

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Sat, 06/09/2012 - 21:42 | 2511374 veyron
veyron's picture

2008 was a particularly ugly year

2009 was a particularly ugly year

2010 was a particularly ugly year

2011 was a particularly ugly year

Applying Birinyi's Ruler on my time series of ugliness

2012 will be a particularly ugly year

2013 will be a particularly ugly year

2014 will be a particularly ugly year

...

 

Wake me up when a year isn't particularly ugly 

Sat, 06/09/2012 - 21:46 | 2511384 CPL
CPL's picture

Frogs being boiled slowly alive are also skeptical of their situation and over estimate their resilience.  Every one of them ends up with butter on their legs.  Wouldn't even doubt the last one in the pot mistakes an empty pot as an invitation that things have settled down.

Sat, 06/09/2012 - 22:07 | 2511412 ElvisDog
ElvisDog's picture

I've read that frog analogy is an urban myth, that a frog will not stay in a pot of rising temperature water and be oblivious to what is happening.

Sat, 06/09/2012 - 22:16 | 2511422 thiscreepingmalaise
thiscreepingmalaise's picture

yeah, well I read there was no Santa Claus and I know that is a bunch of crap.

Sat, 06/09/2012 - 22:41 | 2511462 withnmeans
withnmeans's picture

BBC says that the Spanish Bailout is internationally WELCOMED!  

 

Hmmm, GREEN LIGHT ON MONDAYS MARKETS. Tuesday, "HA" is when they figure out that there is no money to fund it all !!!

 

 

Go and smoke some HOPIUM boys !

Sun, 06/10/2012 - 00:04 | 2511551 Michael
Michael's picture

Declare, "Universal Bankruptcy Act of 2012".

Sun, 06/10/2012 - 02:01 | 2511663 markmotive
markmotive's picture

This is what the long descent looks like. The end of the industrial age. 

Welcome to the other side...

http://www.planbeconomics.com/2012/06/09/the-long-descent-the-end-of-the-industrial-age/

Sun, 06/10/2012 - 11:17 | 2512031 The Big Ching-aso
The Big Ching-aso's picture

 

 

Mayan calendars are going 4 next to nothing in 2013.

Sun, 06/10/2012 - 05:48 | 2511761 Rip van Wrinkle
Rip van Wrinkle's picture

There's a surprise. The BBC backing the socilaist option.

 

Where have you been the last decade and a half? The BBC IS the Blolshevik Broadcasting Corporation.

Sun, 06/10/2012 - 08:56 | 2511869 Chaffinch
Chaffinch's picture

Internationally welcomed - and that is before they know how much it is going to cost! Any guesses how much the 'independent auditors' are going to be asking for in 2 weeks time (after adding on their fees of course)?

Now there's a thought - do you reckon the auditors have requested cash up-front?
; ))

Sun, 06/10/2012 - 12:09 | 2512148 Rich Bagg
Rich Bagg's picture

There is no cost Bro.  Free money created by the printing press.  Don't short the stock market.

 

 

Sun, 06/10/2012 - 14:17 | 2512433 Overfed
Overfed's picture

I'm hoping that PMs are gonna get hammered next week so I can stack up some more.

Sun, 06/10/2012 - 18:28 | 2512863 koperniuk666
koperniuk666's picture

You listen to the beeb?

RT turns out better stuff these days, or Irish Times, or Haaretz or Handelsblatt.

The Beeb is just europhile marxist spin. No content.

But that Emily is quite hot though.... and I quite fancy the skinny Pakistani anchor.

 

Sat, 06/09/2012 - 23:32 | 2511525 The Monkey
The Monkey's picture

What do you mean by, "there is no Santa Claus"?

Sun, 06/10/2012 - 01:32 | 2511632 Sudden Debt
Sudden Debt's picture

Sorry... The easter bunny killed him...

Sun, 06/10/2012 - 01:42 | 2511644 Michael
Michael's picture

Why do I not see;

"Anybody but Gordon Gecko Romney for President" bumper stickers everywhere?

Sun, 06/10/2012 - 07:20 | 2511800 WP45
WP45's picture

Pay no attention! There is always a jackass or two on every forum trying to start rumors or spreading lies.

Sun, 06/10/2012 - 00:14 | 2511562 Stuck on Zero
Stuck on Zero's picture

If the frog analogy is a myth then that only proves that frogs are smarter than people. 

 

PS You are referring to the little green flippered critters and not the French, right?

 

Sun, 06/10/2012 - 01:06 | 2511609 RafterManFMJ
RafterManFMJ's picture

It is an Urban Myth. But research shows a White Man will sit in a pot till everything he has worked for is burning.

Sun, 06/10/2012 - 03:34 | 2511712 Olympia
Olympia's picture

Due to the German behaviour, Europe has become the “bedroom” where Jewish loan sharks rape the Europeans. The first time, they have served the Americans at the expense of the Europeans and the second time round they serve the Asian Jews at the expense of the European people again. It is because of them that in 1945 the American occupation of Europe started and in 2012 –again it is them to blame- the Jewish occupation begins …An occupation that did not come out of the blue but it was the result of a war attack. In 1989, Jew Greenspan levelled his “assault” against both USA and Europe from his position in FED …the cheap money “assault”, the result of which is now obvious. Cheap money destroyed the productivity of the western countries and forced them into unemployment. Peoples without employment got involved in huge debts and now, loan sharks are infesting their countries.

http://eamb-ydrohoos.blogspot.nl/2012/02/germany-disgrace-of-europe.html

…Germany betrayed Europe once again. Germany handed all the European countries over to the Jewish loan sharks, by naively believing that this way they would let Germany free. Germany put the European family at the “target” of the “markets” and it is collecting profits every time one of its members gets “executed”. The loan sharks who pretend to be the “hunters” are shooting safely in the European “hen house” because Germany has managed to “raise walls around” Europe. One after the other, Europeans are destroyed so that Merkel can pay the stupid and artificial German debts to the loan sharks. 

Sun, 06/10/2012 - 08:41 | 2511859 BlankfeinDiamond
BlankfeinDiamond's picture

Go sell crazy somewhere else.

Sun, 06/10/2012 - 19:32 | 2512976 Totentänzerlied
Totentänzerlied's picture

We're all stocked up here.

Sun, 06/10/2012 - 09:28 | 2511884 CPL
CPL's picture

I've heard that myth from all three sides of the "winner".  It just not that interesting blaming religious wackadoos for the state of the economy.  It would be like blaming the Universal Life Church for the collapse of health care.

 

Go peddle that crap to someone that cares on one of the numerous poorly managed stormfront-faggotry boards.  You assholes ruin perfectly good news forums that are fun, until one of you loons show up because you end up dragging along the Jewish community into the groups and it all breaks down into a sky god arguement eventually.  I'm sick of it, 20 years of both side of batshit crazy.

Sat, 06/09/2012 - 22:25 | 2511437 Go Tribe
Go Tribe's picture

Nobody boils frogs alive. We gig them and then saute their legs in butter and garlic.

Sat, 06/09/2012 - 22:48 | 2511470 LFMayor
LFMayor's picture

This is very true, you have to take some pliers and pull the skin off the legs before you fry them.  That's after they're cut off, too.

Sat, 06/09/2012 - 23:10 | 2511496 Oh regional Indian
Oh regional Indian's picture

According to one of my teachers, the cruelty to frogs prior to eating their legs is a prime "bad karma" animal kinetic action, if there ever was one.

Ponder that. Frog's legs are the epitome of "Jump", of movement. Plus, they de-insectisize.

Anyway, 2012 has been shaped up to be a particularly ugly year. We could all have been working together to create innovative solutions that would help people survive this current series of earth-changes (LOT WORSE COMING).

Instead, world is having  the rug pulled from under it's feet so there is no place or time to be steady, forget prepared.

And time is running faster. Anyone doubt that, ponder this: We are at near mid-june 2012.

2008 seems like yesterday.

ori

Sun, 06/10/2012 - 01:42 | 2511642 Ahmeexnal
Ahmeexnal's picture

ORI,

It is indeed a cruel process.  While they are still alive, they "take the pants off" the little fellows. Then they are tossed into salted water before slowly turning on the heat.

Word on the street is the Annunaki are coming back.  They will skin alive the power elite and cover their exposed flesh with salt.

 

 

Sun, 06/10/2012 - 08:40 | 2511858 Oh regional Indian
Oh regional Indian's picture

Ugh! The things we do to satiate our "tastes". I watched one episode of Iron Chef, years ago (perhaps 6-7 years ago).

The day's dish was eel, which was pressure cooked live.

It was a bunch of Japanese Iron-chefs. When the cookers were opened (with much fanfair, then they nail them to the table or some such), it was a horribel sight, all the eels reaching up...tch.

I have never seen anything like it.

Karma... it comes around. 

ori

Sun, 06/10/2012 - 09:58 | 2511906 zipfish
zipfish's picture

Fuck em, they're only eels.

Sun, 06/10/2012 - 06:46 | 2511791 BluePill
BluePill's picture

VIVEK BABA , how is your doomsday business going along?, baba saheb  why dont you walk naked on street and pay some money to stupid indians , you can create publicity man

 

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

 

He is your inspiration Vivek

You can fool millions of indians and illiterate women and bone them

 

You fool lost your job and wife because you are impotent and have no skills

 

 

Sun, 06/10/2012 - 07:52 | 2511815 taraxias
taraxias's picture

I red arrow every asshole who puts up garbage like this and immediately green arrows himself.

You should have at least waited a couple of minutes to make it believable but I guess you were afraid of a flood of red coming your way after posting that shit.

Sun, 06/10/2012 - 10:22 | 2511937 Oh regional Indian
Oh regional Indian's picture

If this is what it descends to, then I'm actually done here.

;-)

Good luck everyone, you're going to need it.

If any of you guys want to play, make something happen, you know where to find me.

Vivek aka ori

Sat, 06/09/2012 - 22:21 | 2511434 ACP
ACP's picture

There's a simpler answer as to who 2012 will be ugly...DOOMSDAY BITCHEZ!

Sun, 06/10/2012 - 00:51 | 2511592 RockyRacoon
RockyRacoon's picture

Maybe 2015 will be better?  

Barry Ritholtz:

June 3, 2015

Dear Banker,

Thank you for your cooperation in our most recent series of bank stress tests. We had hoped that these would not be necessary, but after the credit crises of 2007-08 and the banking crises of 2014, the FDIC simply had no choice.

The results of these stress tests, especially as applied to our largest banks, are terribly troubling. Trading losses of billions of dollars have made it apparent that nearly every major depository bank is in a far more precarious financial condition than previously believed. It is as if many of our largest banks never fully recovered from the earlier crisis and now lack sufficient capital to withstand any further pressure.

This is especially concerning if the economy takes yet another turn for the worse or housing begins its third leg down.

Capital reserves are insufficient to support the trillions of insured deposits at these banks. Ever since interest rates hit record lows and the 10-year Treasury bond broke 1.5 percent, leveraged speculation has become the primary business of the largest FDIC-insured banks. We have grave concerns about the safety and soundness of these insured depositories. The ongoing collapse in Europe, the wild currency swings around the world, and that recent turmoil in China have all made the current state of finance extremely risky.

Following the most recent bank failures, the reserve position of the FDIC Deposit Insurance Fund (DIF) has fallen to perilously low levels. This pool of capital is the backstop for public money deposited in demand accounts at large and small banks around the nation. Given these exigent circumstances, the FDIC cannot sit idly by while speculation in derivatives and other complex financial instruments exhausts the DIF, thus putting taxpayers’ money at great risk. Nor can we assume unlimited liability in guaranteeing deposits at firms where trading in derivatives is creating additional liabilities to the FDIC (and taxpayers) that is measured in the trillions of dollars.

Therefore, as chairman of the FDIC, with the full support of my board of directors, we have decided upon the changes in the regulations covering federal deposit insurance:

1. Effectively immediately, we have increased the FDIC deposit insurance for any U.S. bank that engages in ANY trading of derivatives or underwriting securities or other investment banking activities by threefold. This threefold fee increase goes into effect immediately. It applies whether these trades are hedges for proprietary trades or are made on behalf of clients.

2. Effective in 90 days, we are LOWERING the maximum insured deposit liability to $100,000 per account for derivative trading firms. Effective in 180 days, the insured maximum insured deposit liability will drop to $50,000 per account.

3. Effective one year from today, on May 23, 2016, we will no longer offer deposit insurance for any firm that engages in derivative trading or securities underwriting or that engages in investment banking.

4. Any bank with fewer than 1,000 depositors or less than $1 billion in assets may apply for a discretionary waiver of these rules.

We have been forced to make these changes because of the very real risks that your leveraged derivative trading has created. One or more of you may suffer an enormous loss, and that poses a risk to the DIF. Our governing statute requires the FDIC to act in such circumstances.

It is not our position to tell you what sort of non-depository banking activities you may engage in. Those are business choices you and your firm are free to make. However, it is our position not to engage in foolish insurance underwriting. We have elected to be more conservative in our risk management as well as the underwriting assumptions we make. Therefore, we cannot guarantee the kinds of risks that your firms have been undertaking.

This action should delight many of you. In the recent speeches of several bank CEOs, many of you have longed for a return to the days of less regulation and a truer free market. Once you no longer qualify for our insurance due to your other businesses, you will be freed up from all of the onerous bank reviews and regulations that are part and parcel of FDIC insurance.

As a bonus, without the intervention of government guarantees, those of you who continue to have depositors will finally be able to compete in a free and open market. Without FDIC insurance, your depositors will be making their decisions based on your reputation and their assessment of the safety and security of your operations — and not Uncle Sam’s willingness to continually bail you out.

You have the FDIC’s best wishes for success in the future — just not our insurance.

If you have any further questions, feel free to contact my office.

Thomas Hoenig

Chairman, Federal Deposit Insurance Corporation

Sun, 06/10/2012 - 11:01 | 2511996 grid-b-gone
grid-b-gone's picture

Perfect. Now find 534 like-minded people spread across all 50 states who excel at fundraising and campaigning to eventually change the balance of power.

The fact is, Congress is generally content with the current situation. If they weren't, they would have made Finreg look more like this sensible proposal years ago. 

Sun, 06/10/2012 - 12:04 | 2512138 mtomato2
mtomato2's picture

Effing Ayy, Rocco.

Effing Ayy.

Sun, 06/10/2012 - 08:18 | 2511833 AnAnonymous
AnAnonymous's picture

Wake me up when a year isn't particularly ugly
____________________

You will be woken up. Some year, it will be ugly.

It has to be. Over a life time, there is at least one ugly year.

Being 69 times wrong does not mean the 70th will be not right.

That is how US citizen economics work: attrition.

Sun, 06/10/2012 - 09:35 | 2511894 CPL
CPL's picture

...and systemic entropy as the conductor.

Sun, 06/10/2012 - 09:50 | 2511903 darkpool2
darkpool2's picture

So remind me now....why am i personally deleveraging? Yes its the sensible strategy, but if i re- leverage to the hilt, wont these ass-wipes and inflation ( in that order) bail me out with some kind of debt jubilee. Oh the conundrum!
( the answer however is clear i think )

Sun, 06/10/2012 - 12:42 | 2512215 Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

Unexpectedly!

Sun, 06/10/2012 - 22:46 | 2513243 Monk
Monk's picture

Likely, it will be a permanent global recession, with any "recovery" temporary and based on credit added to the system then vaporized. Thus, the trend line in the long term is downward.

It's similar to the Zero Hedge motto.

 

Sat, 06/09/2012 - 21:44 | 2511377 CPL
CPL's picture

No body has finished counting tax recipts yet.  Won't either, all that offshored processing has been in a rolling black out for the last six months.

 

I'm particularily skeptical that anything happens but the obvious.  Payments and paychecks will start to bounce well before the ceiling limit...of every country with a central bank.

Sat, 06/09/2012 - 21:46 | 2511382 zorba THE GREEK
zorba THE GREEK's picture

If you think 2012 is going to be ugly, 2013 will make the elephant man look like Johnny Depp.

Sat, 06/09/2012 - 21:53 | 2511396 Cursive
Cursive's picture

@zorba THE GREEK

There are a lot of option ARM and interest-only ARM's that reset in 2013.  Even with interest rates currently at historic lows, the special introductory interest rates on these loans are still lower than the probable reset.  Should be interesting.

Sat, 06/09/2012 - 22:10 | 2511416 zorba THE GREEK
zorba THE GREEK's picture

@ Cursive

 And if Congress doesn't act soon, there will be massive spending cuts and Bush era tax cuts will expire

reducing GDP and putting us back in recession, even with bogus BLS numbers.

Sat, 06/09/2012 - 23:11 | 2511497 Lucius Corneliu...
Lucius Cornelius Sulla's picture

There is no doubt in my mind that Congress will find a way to kick the can.

Sat, 06/09/2012 - 23:38 | 2511531 The Monkey
The Monkey's picture

Agreed on stimulus. The roadmap is clear.

Sat, 06/09/2012 - 23:45 | 2511535 Sockeye
Sockeye's picture

Congress? What capacity does Congress have to kick the can?

Sun, 06/10/2012 - 00:22 | 2511548 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Congress must create and approve all spending bills.  They will blink on the fiscal cliff and postpone tax and spending cuts.  There will be plenty of deception as usual. so I'm not sure how, but it is a certainty.

Sun, 06/10/2012 - 01:19 | 2511620 RockyRacoon
RockyRacoon's picture

There will be much wailing, gnashing of teeth, and partisan finger-pointing, but you are undoubtedly right.

Sun, 06/10/2012 - 03:57 | 2511724 GreatUncle
GreatUncle's picture

Totally agree ...

Johnny Depp is an ugly one because before that the elephant man was kind of sexy. This is what we are told about finances, therefore it must be true.

Cynically all of 2011 fed into 2012 and look how that is shaping up.

So take all the positives we are currently being told at the moment or lack of them and use that as the feed for 2013.

No stability and a deteriorating situation feeding into 2013. 

This ain't over, if it has ever really begun. A bit like a warm up for the real contraction coming soon.

 

Sun, 06/10/2012 - 14:09 | 2512417 kekekekekekeke
kekekekekekeke's picture

lol! his cheekbones are to die for!

Sun, 06/10/2012 - 14:39 | 2512492 DosZap
DosZap's picture

Financially things are butt ugly, and we know it will get far worse.........read the article "WHERE IS THE OUTRAGE", by Judge Napalitano.

We have a much bigger tsunami coming and if this plays out, it will be really bad news.

 

http://www.jsmineset.com/

Sat, 06/09/2012 - 21:49 | 2511383 AUD
AUD's picture

Keen is a greenbacker. He completely misses that central bank 'money' is credit that has the same dynamics as all other credit.

Central bank & government 'money' is not a standard, it can & will fail. Just don't try & pick the top, it's a mania of unprecedented proportions, the biggest credit bubble in human history. Completely & hopelessly irrational.

Sat, 06/09/2012 - 22:17 | 2511424 Manthong
Manthong's picture

Greenbacks are ok, like all things, in moderation as long as real money (metal) is out there too and the banks and government do not have absolute and despotic control. 

Keen is good to listen to (takes concentration).. a bunch of stuff out there..  I think this is a good one:

http://www.youtube.com/watch?v=js9WBi_ztvg&feature=related  

Sat, 06/09/2012 - 23:53 | 2511539 narnia
narnia's picture

Keen mises the boat on the relationship of government spending to the ponzi which clouds his off base recommended solutions.

Sun, 06/10/2012 - 01:49 | 2511651 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Keen's plan shrinks the banking sector. That's the main objective. It would work.

Sun, 06/10/2012 - 03:43 | 2511716 bkh
bkh's picture

Keen wants to replace one idea of central planning with another. It's easy to shrink the banking sector - just don't bail them out and arrest any banker involved in criminal behaviour (ie. attempting to interfere with the market by artificial means to tilt the economy in their favour). Stop trying to engineer the global economy and let the apple fall where it will and that's where sustainability can be found.

Sun, 06/10/2012 - 07:57 | 2511816 taraxias
taraxias's picture

Shirley, pay the man !!!!

Sun, 06/10/2012 - 08:01 | 2511798 Sean7k
Sean7k's picture

Keen is a Keynsian. Ultimately, his solutions are as well. 

His entire analysis reads extremely well, until you get to the solution: hyperinflate to counteract deflation. As if deflation is a boogieman. Hyperinflate, but pay back all debts- meaning making bankers whole. 

He ends up missing the point. The money must have VALUE. A debt jubilee works off the principle of eliminmating malinvestment. There has to be LOSSES. Debtors have to be made whole- not by QE, but by eliminating malinvestment and taking haircuts.

You don't punish the financial sector by giving them all their money back (they don't really care anyway, they can just print more). Keen is punishing all those that have saved and invested capital, by trashing their values. The debt jubilee would be taken from all people through hyperinflation. Spreading the pain throughout the entire community of responsible investors.

A debt jubilee is a deflationary tool that recognizes that the people will always have debtors. These debtors will again borrow from those with assets, whom will again power production through capital investment. Keen is not just wrong, he is a tool for the bankers.

Sun, 06/10/2012 - 08:55 | 2511868 SWCroaker
SWCroaker's picture

Thanks for your post.  Between it and my coffee, I'm finally getting the grey cells in action. 

I keep re-reading your post.  Trying to nail down a tickling something.  (I personally have little debt, and sort of liked the "get some cash" aspect, and was liking that part of it but suspicious that I'd somehow get the shaft on my savings).  After about the 5th re-read, and several response-no-delete-that resets, I've arrived at a happy place and merely wish to compliment you on nailing it.

A system that has rewarded and promoted bad behavior will continue to reward and promote bad behavior as long as the rules don't change.  Resetting the levels of monopoly money held by the players at a point in the game, but leaving the rules unaltered, just asks for a repeat outcome.  And the best deterrent to bad behavior isn't regulation, it is competitive failure.

Thank you, Sean7k.

Sun, 06/10/2012 - 11:01 | 2511997 Sean7k
Sean7k's picture

Glad you appreciated it, more importantly, glad you get it. Have a great sunday.

Sun, 06/10/2012 - 13:06 | 2512045 DaveyJones
DaveyJones's picture

Enjoyed it as well. Keen also avoids the physical, resource and energy realities pushing inflation and redefining modern credit based economies.. Ironic for Martenson. Deflation and inflation also coexist as money continues to crowd toward the front end.

Sun, 06/10/2012 - 15:41 | 2512608 blindman
blindman's picture

a couple of things. keen does not suggest that
hyperinflation is the solution to deflation.
his attempt is to deal with a number of givens.
one, there is a place for government in the monetary
system of local, national and international
economies, finance and trade. that makes him a
nationalist, i suppose, who believes in the sovereignty
of national government who must have a very important
role in the currency and investment of said
constrained "people". i'm not saying that is good
or bad, just that that is a given in his argument and
analysis. two, his solution attempts to deal with
fraudulently induced debt; that is fraudulently
created money and fraudulently created investments.
to date the perpetrators of the fraud have been bailed
out and enriched by the current system, at the expense
of those defrauded or unborn, yet to be born.
our problem includes the fact that we have already
legitimized the fraud at the systemic level of money
creation, have largely seen (hyper?)-inflation as a result, and keen describes this better than anyone,
so now the perfect tool of the banker would be the
person arguing, based on ideology, that markets must
clear according to outstanding nominal debts. well,
that was an argument that made sense in 2008.
it could still make sense if we could evaluate the
debts in terms of the amount of fraudulent inducement
contained and then subtract that out. keen is making
his own personal assessment with regards this and incorporating it in to his recommendations as a possible
solution.
the other horror here is that criminals and con artists
have been given the privilege of writing the codes and
laws of the land. this should be our final undoing.
.
very well written post, sean7k.
ps. the lack of response in the interview re: physical
pm is unfortunate. whether he be a banker plant,
payroll guy? he obviously believes there is a place,
1/3 the size, for the sector. beyond that i couldn't
say if he has an unstated agenda, i suppose everyone
does, mostly.

Sun, 06/10/2012 - 17:48 | 2512798 Sean7k
Sean7k's picture

Blindman, thank you for your response. People rarely comment in such a civil fashion. Still, I see a defense of the man without associating his comments with his ideology. It could be a huge mental fart on his part, but I think that gives credit where credit is not due.

Inorder to have a debt jubilee, as described by Keen, is to expand the monetary supply to include all existing debt. This IMPLIES numbers in the tens and possible 100's of trillions. That is hyperinflation by definition.

Second, Keen is an intelligent guy. He is very aware that bankers and corporatists determine the make up of all governments (we can put the idealism of democracy to bed here). Consequently, support of government is a support of banking. Further, how would you determine what is fraudulent and what is not? Have the bankers broken the laws? Laws with loopholes they created? 

When people suggest this, it is just another means of eliminating competition. 

There are historical reasons for debt jubilees. Originally, when debtors could no longer pay their debts, they would escape out to pastoral economies they came to the cities from. If you get enough angry hunters, the cities came under threat and were often overrun. The first change by the conquerors? Cancellation of all past and present debt and the redistribution of wealth/property.

The debt jubilee was a pressure relief valve that protected both creditor and debtor alike (and allowed new kings to gain favor with their new subjects).

Keen may not be aware of this. Still, the payment of all debts with newly created money would be the opposite of what he claims he wants. One, it recapitalizes the creditors (read: bankers). This is not punishment nor is it a means to clip their wings so to speak.

Second, it robs the people that have been savers and investors by diluting their wealth, while rewarding behavior that helped create the debt in the first place. Worse, regulation or government cannot correct the problem (or it would have by now, this is not new- read the congressional speeches or books from Lindberg Sr- some which were not allowed to be published by the government and he was a senator)

Wealth is always the result of production (supply) not demand. You cannot solve the problem with more liquidity. I suggest you consider the Austrian business cycle for a better explanation of the need to clear malinvestment. 

Keen is a brillant guy, but it matters not how brillant you are if you start with the wrong set of assumptions. Keynsianism is a pile of steaming doodoo simmering in a fabian, technocratic, socialist stew of doublespeak.

Sat, 06/09/2012 - 21:48 | 2511389 Gully Foyle
Gully Foyle's picture

28 Banks failed this year.

https://en.wikipedia.org/wiki/List_of_bank_failures_in_the_United_States...

26 in 2008, 140 in 2009, 157 in 2010, 92 in 2011.

No one seems to be worried the pace may be slowing because it is harder and harder to find anyone to buy up the failures.

 

Sun, 06/10/2012 - 01:42 | 2511645 Uber Vandal
Uber Vandal's picture

Since 2008, 443 banks have failed in the USA.

I wonder what the number would be if BRANCHES were included, or how many branches have closed in additon to the banks closing themself.

I think the number of closed  branches would be in the thousands, which may be getting closer to the amount of banks that closed in the last Depression.

 

 

 

Sat, 06/09/2012 - 21:48 | 2511390 Bill D. Cat
Bill D. Cat's picture

New borrowers ...... heh . So that's what the cool kids are calling the unborn .

Sat, 06/09/2012 - 21:50 | 2511392 Cursive
Cursive's picture

I'm down with Steve Keen's plan, but it is far too logical and simple to be implemented.  First, we have to get our collective heads from up the bankers collective asses.  Then, maybe we could do it.

Sat, 06/09/2012 - 22:34 | 2511455 Tom Green Swedish
Tom Green Swedish's picture

I'm down with his plan too but you're right since it makes sense it will not be in the Bankers (Jewish / Italian Mafia Wall Street's) best interest.  They make money the old fashioned way. They fuck you over.

Sun, 06/10/2012 - 00:26 | 2511572 JackT
JackT's picture

It's not the blood it's the mentality

Sun, 06/10/2012 - 00:01 | 2511546 JackT
JackT's picture

Which means it has to crash first

Sat, 06/09/2012 - 21:56 | 2511400 Tom Green Swedish
Tom Green Swedish's picture

2012 is 2008 Part 2, just with Europe in USA's shoes this time.

 

 

Italy is the next domino. It is envitable.  The people will either get swallowed up by the Mafia or by the simple fact they belong to the the Eurozone.

 

Plus UniCredit guy just had to lie and say Italian banks are in good shape.  What did the Mafia loan them some money?

 

"In this country," Fara added, "much more money goes around than whats actually represented by official statistics". "Italy's black economy has grown to a staggering 35% of GDP, approximately $540 billion euros".

 

According to the Confesercenti, a major business association in Italy, organized crime in Italy represented the "biggest segment of the Italian economy", accounting for €90 billion in receipts and 7% of Italy's GDP.

 

You think people have money to support the Mafia?

Sat, 06/09/2012 - 23:08 | 2511495 New_Meat
New_Meat's picture

"It is envitable."

Yes, sir, it is.

- Ned

Sat, 06/09/2012 - 22:05 | 2511401 lolmao500
lolmao500's picture

- Election solving nothing.

- Europe going under.

- Debt ceiling extended again.

- No QE3.

- War with Iran/Syria.

Yeah great fucking year.

On a scale of 1 to Greece, how broke are we?

Spain.

Well then forget it, abandon ship!

Sat, 06/09/2012 - 22:22 | 2511418 BigDuke6
BigDuke6's picture

Steve Keen is one of these doomers who will eventually be right but with my doomers i like them to be within 5 years of their predictions...

i think someone of his intellect should be telling how long they can kick the can down the road for.

(when i say intellect he's a professor in the university of western (less visited, gun crime side) sydney so that aint a lot.)

thats more useful.

But not as useful as this

http://www.youtube.com/watch?v=YCP5vyomTeE

one of oakenfolds greatest sets, at his and trance musics' zenith.

take a big hit of what floats your boat on a saturday night, plug in your headphones and let your troubles float away....

Sat, 06/09/2012 - 22:34 | 2511454 Spastica Rex
Spastica Rex's picture

Oakenfold is cool.

I'll be listening to A Suacerful of Sercets tonight, though.

Peace.

Sun, 06/10/2012 - 01:49 | 2511653 xtop23
xtop23's picture

Syd Barrett was a god

Sat, 06/09/2012 - 22:15 | 2511419 jimmyjames
jimmyjames's picture

We have to rescue the debtors instead before we are going to see the end of this process.

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

Keen is correct about deflation but falls off the rails as to the fix- imo-

Debtors bodies need to float along side failed bankers and corporations-

The market wants to teach-let it-

Sat, 06/09/2012 - 23:02 | 2511489 Bicycle Repairman
Bicycle Repairman's picture

"Debtors bodies need to float along side failed bankers and corporations."

Worth repeating.

Sun, 06/10/2012 - 18:36 | 2512881 koperniuk666
koperniuk666's picture

while we heap the politicians into huge funeral pyres and burn them alive.

They caused this - they were in charge, set the rules, interest rates etc.

Not the debtors or bankers - who were simply players.

 

 

Sun, 06/10/2012 - 00:10 | 2511559 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Fools, liars and cheats deserve eachother's company.

Sun, 06/10/2012 - 14:57 | 2512526 DosZap
DosZap's picture

Keen is correct about deflation but falls off the rails as to the fix- imo-

Debtors bodies need to float along side failed bankers and corporations-

The market wants to teach-let it-

 

 

This is exactly what it would take, PLUS  J_O_B_S  IF,it were in the master plan.......its not.

Your seeing it at work. If anyone here thinks these dudes do not know what & why they have done what they are, I have some swampland for you in Phoenix.

( Bankers were just used to implement the plans)

Otherwise they could have jump started the economy long ago by dumping most of the QE funds into the peoples pockets.

Spending it, would create millions of  jobs, cause debts to be paid off,and we would have been well on our way out of this,again, IF it were in the master plan.

IMHO & FWIW

Sat, 06/09/2012 - 22:16 | 2511423 Redhotfill
Redhotfill's picture

Create  "Government Money?!"   YES just what we need more DEBT based currency.  That will fix things!  Cash "injection"  why not just authorize me to stamp this note is legal tender for all debts public and private on my Monooply money?  I think that would be easier.

Sat, 06/09/2012 - 22:36 | 2511458 jimmyjames
jimmyjames's picture

Create  "Government Money?!"   YES just what we need more DEBT based currency.

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

Keen and Micheal Pettis are both working (separately) on inventing a new money system-

Basically where--the government prints money and pays out monthly dividends to us peasants and then we spend it (after debt is paid down)  and when the new money comes back into the bank-it is destroyed-which theoretically nullifies inflation-

Some of it has merit--but--

There is a 5000 year old-never fail goldbug quote-

When the alchemists appear--

Load the friggen boat-

Sun, 06/10/2012 - 03:12 | 2511698 daily bread
daily bread's picture

If Con-gress is involved in creating a jubilee, you can be sure the lobbyists will end up inverting the implementation.  Anything sold as a jubilee for debtors will, behind the scenes, be a secret jubilee for the creditors.  So I say the only solution is something done outside of government.  And I think that means we all end up with a global black market.

Sat, 06/09/2012 - 22:19 | 2511430 lailapa
lailapa's picture

The end of the world is near... The ten plagues of Pharaoh “have been brought upon” the USA.

http://eamb-ydrohoos.blogspot.gr/2010/02/ten-plagues-of-pharaoh.html

.

World War III - The first private war in history

Those who won all battles shall lose the war.

http://eamb-ydrohoos.blogspot.gr/2012/02/world-war-iii.html

Sat, 06/09/2012 - 22:32 | 2511449 BigDuke6
BigDuke6's picture

 

OK man,

i looked at yer link.

if i was after a rambling article, 10 pages long in pidgen english with no references that would definately be it.

Sat, 06/09/2012 - 22:58 | 2511484 Pure Evil
Pure Evil's picture

Beware of Greeks speaking in metaphorked tongue.

Sat, 06/09/2012 - 23:39 | 2511532 TheFourthStooge-ing
TheFourthStooge-ing's picture

Pure Evil said:

Beware of Greeks speaking in metaphorked tongue.

Beware of Greeks spamming with metamorphosed sock puppets.

Behold the striking similarity of the comments by the "three different" people below:

http://www.zerohedge.com/search/user_comments?name=Alexandros

http://www.zerohedge.com/search/user_comments?name=Olympia

http://www.zerohedge.com/search/user_comments?name=lailapa

What an amazing coincidence that so many comments begin with "The end of the world is", "Global Debt Crisis The", and "Germans plunge Europe into a".

Absolutely amazing.

Sun, 06/10/2012 - 00:13 | 2511561 Pure Evil
Pure Evil's picture

Its the end of the world as we know it, and I feel fine.

REM

Sun, 06/10/2012 - 03:53 | 2511722 Amagnonx
Amagnonx's picture

These kind of posts are made by people who's only intention is to discredit ZH and its users - soon youll see something in the MSM regarding 'economic apocalypse nutters' and youll see that post as an example of what goes on here on ZH.

Sat, 06/09/2012 - 22:25 | 2511438 bugs_
bugs_'s picture

its half over already.  only half left to go.

Sat, 06/09/2012 - 22:32 | 2511450 zorba THE GREEK
zorba THE GREEK's picture

@Bugs....And the next half is going to happen a lot quicker than the first half.

Sat, 06/09/2012 - 22:31 | 2511448 RobotTrader
RobotTrader's picture

What if the market takes off and never looks back?

What if we make new highs next year>

What if Europe's situation is gradually restored and the crisis is long forgotten next year?

Then what will these scroom-screechers be saying?

Five years ago Martenson was screeching about resource scarcity, skyrocketing hard asset prices, peak oil and all the rest.

What happened?  Uh, er, oh......

Back to square one.

LOL....

Sat, 06/09/2012 - 22:36 | 2511457 BigDuke6
BigDuke6's picture

Your point about Bernanke now laughing about gold and commodity prices is very valid.

He can pull the trigger for QE3 in time for barry's re-election now quite easily.

Sat, 06/09/2012 - 23:19 | 2511507 Pure Evil
Pure Evil's picture

Yep, Dow at 36,000 will solve all.

Not that anyone is counting the boomers retiring at 10,000 a day for the next twenty years or so, it eventually adds up to approximately 70 million plus old farts.

We should be more than able to pay those SS, Medicare and Medicaid bills with less than a third of the population paying into treasury coffers.

How much liability is estimated?   Just a measley 70 trillion?

Yes, Uncle Ben, print baby print.

And, exactly how do we put the 100 million unemployed back to work, maybe they can all become day traders in their parents basement.

 

Sun, 06/10/2012 - 00:01 | 2511545 Cosimo de Medici
Cosimo de Medici's picture

Sounds like 65 will be the new 95...everybody is, or should be, gone by that age.

In the spirit of never let a crisis go to waste, I believe you have hit on the Jobs of the Future, and we can make a dent in that 100 million unemployed figure.......with 10,000 Americans per day turning 65 for the next twenty years, the jobs of the future are:

Mortician

Gravediggger

Monument Carver

And for you, Pure Evil, in the spirit and words of Oscar Wilde, I will say, "A man who calls a spade a spade, should be made to use one".

Can you dig it?

Sun, 06/10/2012 - 00:26 | 2511558 Pure Evil
Pure Evil's picture

I thought the spade was set free after the American Civil War?!

But, who wants to use a spade nowdays, they don't want to work anyway, just collect welfare benefits and sell or use drugs.

I want to dig it, but I aint got no black ho.....oops, I mean back hoe!

Sun, 06/10/2012 - 13:32 | 2512326 WmMcK
WmMcK's picture

But what of us who prefer to call a spade a fucking shovel?

Sat, 06/09/2012 - 23:11 | 2511499 New_Meat
New_Meat's picture

RT-good to see the contrary "red-team" point of view. - Ned

{got pix?}

Sat, 06/09/2012 - 23:22 | 2511516 Broomer
Broomer's picture

You know, none of us would be sad if everything went well, but this seems to be extremely unlikely.

Sun, 06/10/2012 - 00:59 | 2511601 The Monkey
The Monkey's picture

Houston there is a problem.

The Fed can't print earnings.

Sun, 06/10/2012 - 12:59 | 2512255 mtomato2
mtomato2's picture

Robo, aside from it being nice to see you here again, the answer to your question is math and human nature.  Both unstoppable forces that assure your prediction to either be a.) just plain wrong, or b.) the catalyst that makes the actual end even worse than it would be if it would all just settle up right now.

But maybe I'm playing into your ruse.  I can never tell if you're trolling or just stupidly optimistic.  Which means that you're a very good troll if nothing else.

The only reason you've been "right" about anything the past four years is because of printing.  And helicopters.

"To the moon, Alice!!! To the MOON!!!"

Sat, 06/09/2012 - 22:33 | 2511452 Lokking4AnEdge
Lokking4AnEdge's picture

He is 100% correct!!!

Giving new cash to individual tax payers to reduce their debt is way better than crediting the banks and putting the tax payer even more into debt.

It is so simple but politically impossible to implement......

Sat, 06/09/2012 - 23:03 | 2511490 Goldtoothchimp09
Goldtoothchimp09's picture

You would have to abolish the Federal Reserve, which would be the first real step in the right direction.

Sun, 06/10/2012 - 04:06 | 2511728 GreatUncle
GreatUncle's picture

Catch 22 won't work.

A modest person with no debt, what happens if they don't spend it? Easy really it is put under the matress and the only way to claw it back is inflate the economy more to make it worthless.

As I am not in debt, don't want any and being a miser if you give me money I will hoard it. The only way to get it back is make it inflate and make it worthless while at the same time all those in debt will be detrimentally affected again and the problem resets itself.

Great idea though free money I'll have some of that please.

Sun, 06/10/2012 - 13:04 | 2512264 mtomato2
mtomato2's picture

Someone please help me understand why there are down arrows on this guys post.

Bernanke?  Geithner?  You out there?

I used to make fun of guys like him.  Not no more.

Sun, 06/10/2012 - 15:09 | 2512556 Hedge Hog
Hedge Hog's picture

maybe....

 

miser1

 

n
1. a person who hoards money or possessions, often living miserably 2. selfish person
[from Latin: wretched] - Dictionary.com --- (PS. I did not dow-arrow it)

 

Sun, 06/10/2012 - 15:31 | 2512614 SWCroaker
SWCroaker's picture

I wouldn't give him a down arrow.  He's honest, shows good survival tendencies.  As for miser, it describes a behavioral leaning, nothing more.  That leaning being "good" or "bad" lies entirely with the observer....

Maybe a few didn't read his post right?

One point regarding hoarding.  Rothbard rather eloquently smashes "the ancient bugbear of hoarding" as being destructive to society in his classic "What Has Government Done to Our Money".  Link to the relevant chapter here: http://mises.org/money/2s9.asp   <-- For those who've never read Rothbard, today is as good a day as any to start.  He's fun.

To paraphrase: hoarding merely pulls money from circulation, decreasing its supply.  Given supply and demand's impact on pricing, that means that money held by others gains a bit more buying power.  So there isn't anything bad or wrong about hoarding; just an individual's free choice, and the slight deflation resulting from hoarding should be welcomed, not viewed as somehow traitorous.

Mon, 06/11/2012 - 12:49 | 2515159 mtomato2
mtomato2's picture

Both your points make sense.  I guess I thought he was just using a bit of hyperbole in his self-description.  Or, maybe, like Lynnybee, he is overcompensating, having learned of how long and badly he's been fleeced. 

I know it makes me feel like hoarding...

Sun, 06/10/2012 - 09:22 | 2511883 SWCroaker
SWCroaker's picture

It hoses anyone who has savings; the degree of their hosing is dependent upon the relative magnitude of the reset amount.

The way to see this is to look at examples.  I would suggest that if the size of "reset amount" to be distributed "matters", or aids one group over another, then it is inherently biased and therefore going to hose someone.  So try imagining a $3k distribution, a $30k distribution and a $3m distribution.  If it was fair, you'd be in the same boat relative to others after any of them....

Say I have $1m in savings.  In today's world, the vast majority of those around me comparatively have squat, but the typical household debt is probably less than $100k.  Gov steps in, and gives every household $3m; those who owe pay off their debts, those who don't owe get to keep.  After the "jubilee", I have $4m in savings, but everyone else around me suddenly has approximately $3m.  My hard earned $1m kitty has been incredibly marginalized.  Generalized conclusion: For high levels, the "reset" wipes out much of the value of stored wealth for the class of individuals who were savers, not debtors.

Taken to the limit at the other end of the scale, a $0 distribution puts us right where we already are, so no effect.  So a simplistic conclusion is that the "reset" process sticks it to savers in a fashion that gets worse and worse as the reset amount gets larger and larger.  There is no "happy" spot for savers where they benefit in equal proportion to debtors, other than $0.  So this debt jubliee looks like the "be happy to pay your neighbor's mortgage 'cause you wouldn't want to live in a world where they all default" argument all over again...

Sun, 06/10/2012 - 17:30 | 2512785 css1971
css1971's picture

Not necessarily. There is a way to replace the debt with money without causing massive inflation. It does involve something which bankers can't create out of nothing. I mean paper, not gold.

Print money. physical paper rather than borrowing money into existence. This is inflationary.

At the same time require banks to hold an increasing reserve ratio of this paper money. Eventually increase the reserve ratio to 100%, they can't lend money unless they have in their vault an equivalent amount of cash. At this point they become what they should have been from the word go, mere intermediaries between savers and borrowers.

Banks found to be exceeding their limit are closed down for fraud.

Sat, 06/09/2012 - 22:34 | 2511453 Goldtoothchimp09
Goldtoothchimp09's picture

 

 

You can think of it as a modern feudal system with Banks as King as they literally own the currency.  The serfs pay tribute (interest) to the King for use of the King's currency in our debt-based money system.  It's trickle down economics on the grandest scale.

In our debt-based system - money is ONLY created as loans from the King (banks).  Therefore, the banks solely determine where new money gets allocated (think largest corporate borrowers).  Is it no wonder we have such poisonous concentrations of wealth in our society. 

Now, say the gov't wants to stimulate a lagging economy.  In our system, the money gets allocated to the banks.  In a non-debt based system, you could send a stimulus check to every household and then the stimulus would actually work and get to Main Street. 

Folks, the problem is with the very core of our financial system -  the Banker as King - Federal Reserve system.

Jamie Dimon is using the newly created money to refresh his banks 'excess reserves' so as to maintain bank "solvency" and perpetuate the Banks as King system status quo.
The people get the bill in the form of a devalued dollar (devalued savings, commodity inflation) -- you see, the newly printed money is free for the King Bank but is a costly tax on the population.

It's all a rather simple exercise -- the parasitic banks steal from We the People. But our country is so complacent and dumbed down -- that MBAs and Economics majors are, ironically, the last people to recognize what's going down because they have been indoctrinized and go on television blathering on about the failures of We the People rather than helping the public understand that they are being stolen from. PATHETIC!

Interestingly, Ron Paul has consistently won the 30 and under vote in the primaries.

The young instinctively know that they have been born into debt servitude.  They may not be able to explain all the details - but they know, instinctively, that Ron Paul is fighting for We the People, rather than the status quo system of Fed Bankers as King.

It used to be that only the man of the household had to work to comfortable support a household.  Federal Reserve theft has gradually devalued the dollar so that now, generally, both spouses have to work.

There is nothing 'American' about the FED.  The Constitution says 'all men created equal'  Folks, the Federal Reserve Act of 1913 created a superior class of citizen - the banker class.  the Act gave ownership of the currency and financial system to a cartel of private bankers.  It is, literally, unconstitutional.

The Federal Reserve system is a poison to Americans’ standard of living to the benefit of the banker class.

 

 

 

Sat, 06/09/2012 - 23:03 | 2511474 Tom Green Swedish
Tom Green Swedish's picture

You are right.  The USA has turned from We the People into We the 1 percent.  It is a disgusting disgrace of the foolishness of the government since the countries inception, with some notable exceptions; JFK, Lincoln, Jackson.  What a pathetic bunch of retaded losers.

 

Don't count on these fucking asshats when the country really needs it.  They will be hoarding their jackass cash still fucking you over.

 

The intentionally are creating competition against you by giving money to other countries. They will sell the USA out for a dollar.

Sun, 06/10/2012 - 03:58 | 2511726 Seer
Seer's picture

"The USA has turned from We the People"

If you're wanting to stretch this story to this point (that it really was about EVERYONE) then you're going to have to reconcile the fact that only the 1% pushed this all through (and that many were in opposition [no, not talking the British!]).

Sun, 06/10/2012 - 23:44 | 2513340 Tom Green Swedish
Tom Green Swedish's picture

Don't be a fool. The 1 percent back in the day put their lives and money on the line for the country.  Washington (risked his life). Morris (gave up his entire fortune to the millitary, and subsequently ended up in jail because of it).  You will not see any of the modern 1 percent even come close to this.  It would be like Bill Gates going to fight in Afghanistan, and Warren Buffett putting his money where his mouth is.

Sun, 06/10/2012 - 15:01 | 2512534 Lednbrass
Lednbrass's picture

Lincoln may be the biggest retarded loser of the bunch, he laid the foundation for everything we have now. Thanks to him we have central planning uber alles backed by Monopoly money, any fan of Lincoln should love what we have how- its the logical extension and end stage of everything he wanted.

Sat, 06/09/2012 - 22:55 | 2511477 bnbdnb
bnbdnb's picture

Steve is right except for one thing....I don't think large corporate debts are falling, only small business, private individuals. The 1% vs everyone else.

Sat, 06/09/2012 - 23:22 | 2511514 Sandmann
Sandmann's picture

Corporate DEbts are re-financing where they can except the LBO Wall of Debt is on the horizon competing with Bank re-financing needs

Sat, 06/09/2012 - 23:14 | 2511504 walcott
walcott's picture

Flood the bitch with cash. Instant recovery. 

Sat, 06/09/2012 - 23:26 | 2511520 Pure Evil
Pure Evil's picture

Ah yes, money for nothing and chicks for free.

Dire Straits

Sun, 06/10/2012 - 00:22 | 2511566 walcott
walcott's picture

Radio.. Radio... Radioactive... 80's part deux...

The Firm

Sat, 06/09/2012 - 23:20 | 2511513 Sandmann
Sandmann's picture

Keen is refreshingly clear and Hyman Minsky has a great explanation of the mess. The fact that Government did not cap credit card interest rates when crashing savings interest rates reveals the problem of 0.2% interest on deposits to service 26% interest on credit cards yet expecting Consumption to lead growth as Banks are flooded with liquidity at 0.5%.

So the Banks get pork barrel and the public gets gruel yet these idiots expect revival ?

The syustem is skewed to running an Economic Museum with Bank EXhibits in some Defunct Civilisation

Sat, 06/09/2012 - 23:50 | 2511537 q99x2
q99x2's picture

Repudiate the debt. Arrest the banksters. Those involved in usary must repent for the end is near.

The crooks run the judicial system. Good luck. Wonder if he gets paid for his thoughts.

I'm all for the cash injection for those that don't have any debt.

YeeeHaaa says Slim Pickens as he rides the ICBM to nirvana.

2012 is going to be a particularly ugly year.

Sun, 06/10/2012 - 00:11 | 2511560 jimmyjames
jimmyjames's picture

I'm all for the cash injection for those that don't have any debt.

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

Cash injections are debt-

No monetary anchor--no fix-

Sun, 06/10/2012 - 00:19 | 2511564 Pure Evil
Pure Evil's picture

But, I want my thingamajigs damn it. Baracky promised.

Sun, 06/10/2012 - 00:32 | 2511577 walcott
walcott's picture

You a communist? How'd you like it? You want to be like a cheep? bahhh bahhhh You work all day you got nothing.

I got fucking octopus coming out my fucking ears.


Scarface (1/8) Movie CLIP - Political Prisoner (1983) HD

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

Sun, 06/10/2012 - 01:27 | 2511629 headless blogger
headless blogger's picture

They have to do something before 2014, when they plan to force Americans to buy their own health insurance. By that time people will be struggling even more to make all their debt payments such as student loan payments, credit card payments, mortgage or rent payments, etc, and then along comes the Mandated Health Care OR ELSE the government will stick you with a "fine". By this time people are going to literally have to live in a tent so they can pay the Student loan payments and Mandated healthcare or government fines.

Now, this article is talking jubilee, but if they do this, they will probably allow something like $1000 per person of debt wipe-off OR you get to keep it if you are a rare bird with no debt.

It actually looks like another give-away to the banks and creditors.

Sun, 06/10/2012 - 01:46 | 2511649 Sudden Debt
Sudden Debt's picture

Debt write off will never happen. Where does it start and where does it stop? What is enough for who? Nop, I can't find and logical sollution for it.

Sun, 06/10/2012 - 17:20 | 2512774 css1971
css1971's picture

Debt write off will never happen. Where does it start and where does it stop?

Yes it will. It will start with the biggest debtor. Government.

It will end with the replacement of the currency.

Sun, 06/10/2012 - 01:44 | 2511637 Sudden Debt
Sudden Debt's picture

In 2 weeks all the state garanties for the european banks will end. This will throw them back into the ground like in 2009.
It will again take not longer than 1 week before massive cash injections will be done and the inflation game is restarted!
Spain will be a joke against this. Try 1 trillion to backstop it again. And where will that money come from?

Sun, 06/10/2012 - 01:38 | 2511638 Peter Pan
Peter Pan's picture

Poor old Steve Keen lost his bet in relation to real estate prices and as a result had to walk over 200 kilometres. His solution will not work if it entails handing out cash. Is he for real? Even Mugabe has given up on that one.

Mon, 06/11/2012 - 03:37 | 2513624 sherryw
sherryw's picture

He lost bet because the government interfered with the deleveraging process and restarted the real estate bubble with the first homeowners scheme, idiot! Didn't you read the interview????? Now that all the demand has been pulled forward the real estate market has come off again - about 7.5 percent in the last year. so far.

Sun, 06/10/2012 - 01:45 | 2511648 Ancaeus
Ancaeus's picture

A Modest Proposal

Steve Keen is suggesting an injection of money which wipes out debt, and which, for fairness, also is given to those who don't have debt.  This sounds about right.  However, there is another way to fix the real estate part of the debt.

Consider that the main problem with most "problem" mortgages is that they are under water.  If the intrinsic value of the underlying asset (the property) could be raised, then these assets would be liquid.  How can we increase the value of the property?  And, especially, how can we do so in a manner that seems fair?

Suppose the owners of each acre of property receive an annual (and fixed) stipend from the Fed.  The present value of even modest stipend payments, stretching out forever, would be quite large.  We could easily increase the value of all property in this manner so that the typical under-water mortgage is saved.  In this scheme it is important that the amount of the annual stipend remains fixed.  At current rates of return even a very small stipend has a huge present value.  But, as the economy recovers (suppose) the typical rates of return will increase, and the net present value of the stipend will decline dramatically, until it becomes economically irrelevant.

Sun, 06/10/2012 - 01:52 | 2511652 Sudden Debt
Sudden Debt's picture

Give money to people in debt and give money to people who don't.... Sounds like communisme to me. They promised it and it never happened, all they've got was a dictator.
Money only magicly apears in a inflation scenario. Otherwise it needs to come from somebody. Who will give all that money?
And fairness? I have a lot more than what the officials think, officially I have more debt than what I'm worth.

Sun, 06/10/2012 - 10:08 | 2511918 Jim in MN
Jim in MN's picture

It's all about letting markets clear.  Or failing.  Interventions with no end point are interesting to think about, but ultimately continue to misallocate productive capital. And after 30 years of drastic misallocation due to horribly misguided interest rate interventions, productive capital is something we have precious little of, and market-based investment incentives, even less (as in NONE). 

We have to stand back and let markets clear.  Even if it wipes out super-elite wealth (gasp).  The middle class wealth, well, you know, it's under the gun regardless because the elite scams aren't going to help you or me any. 

I say let's all take a bath and get this goddamn global reset over with.  These idiot psychopaths in charge think they can parlay it into global domination, but they are totally wrong.  They're just fucking things up for an extra 20 years for NOTHING.

Sun, 06/10/2012 - 10:26 | 2511942 Ms. Erable
Ms. Erable's picture

Housing is already subsidized through the mortgage interest deduction allowance on the ol' 1040. More of the same won't increase the value of anything, but will funnel more money to the rentier class.

Sun, 06/10/2012 - 02:20 | 2511672 ebworthen
ebworthen's picture

I am ready for my bailout, seeing as the banks, insurers, and corporations have had theirs.

Sun, 06/10/2012 - 02:42 | 2511685 Yes_Questions
Yes_Questions's picture

 

 

You know, I'll take my bailout in the form of the repeal of the Patriot Act and its atrocious little kid the NDAA, free energy, laws banning corporate person hood, withdrawal from the ~600 US military bases on foreign soil, mass arrests of the fuckers who put us here, release of the Warren Commission report, UFO disclosure, mass arrests of the fuckers who put us here, and mass arrests of the fuckers who put us here.

 

+mothballing the rat race and the man behind the curtain.

Sun, 06/10/2012 - 04:17 | 2511732 Seer
Seer's picture

Actually, we should DEMAND this else we'll take it ALL down!  It's pretty easy to crash the system.

Sun, 06/10/2012 - 09:49 | 2511902 Winston of Oceania
Winston of Oceania's picture

All depends on which "ism" you/they intend to replace the current fascist/socialist progressive oligarchy with really; put a dream/false hope in a sheeps head and you can turn them into zombies...

Sun, 06/10/2012 - 16:26 | 2512711 scrappy
scrappy's picture

I think we should choose our own "ism"

http://www.henrygeorge.org/isms.htm

Marx and the Oligarchs both didn't like this idea.

That means it must be good.

 

 

Sun, 06/10/2012 - 02:24 | 2511675 ItsDanger
ItsDanger's picture

Deflation & deleveraging?  I see the opposite everywhere.

Sun, 06/10/2012 - 03:31 | 2511709 Olympia
Olympia's picture

The end of the world is near.

When Barack Obama announced the US (2010) national budget for this year, we experienced unprecedented feelings. Never before had an imperialistic power moved them to pity. This is unthought-of. This year’s deficit is estimated to be $1.6 trillion and its foreign debt has gotten completely out of hand. It hits numbers that only mathematicians and astrophysicists knew existed few decades ago. There is no space for these numbers in the electronic boards so it is driven to add new elements on them.

 It all started with the big crisis of 1929. The American economy reached a deadlock because of its social "pathogenesis"; a deadlock that led it to economic crisis in a different - faster- pace than the rest of the industrial forces of that time. Important decisions had to be made - mostly social - and the Whites didn't like that, especially the Whites' rulers, the Anglo-Saxons.

 

www.eamb-ydrohoos.blogspot.com/2010/02/ten-plagues-of-pharaoh.html

Authored by Panagiotis Traianou

Sun, 06/10/2012 - 04:51 | 2511744 TheFourthStooge-ing
TheFourthStooge-ing's picture

Olympia copied and pasted:

The end of the world is near.

Hey kook, you already spammed this article with your 'lailapa' sock puppet account.

Sun, 06/10/2012 - 04:28 | 2511717 Negro Primero
Negro Primero's picture

You ain't seen nothing yet!

"Keep an eye on the skies for saucers during the Olympics Games..uh huh"

http://seeker401.wordpress.com/2012/06/10/keep-an-eye-on-the-skies-for-s...

 

...btw, just last night (in Toledo-Spain):

https://twitter.com/navedelmisterio/status/211621247489015809/photo/1

Yesterdays' Trend In Spanish Twitter:

Today's: Alerta Ovni 2012

Sun, 06/10/2012 - 04:44 | 2511742 uhb
uhb's picture

I love ZH, but Sometimes i really wonder what nuts are getting airtime from Tyler... 

Sun, 06/10/2012 - 06:17 | 2511774 hazek
hazek's picture

There's more and more of this type of shit on ZH lately, almost as if they got coopted to spew that bullshit propaganda the corporate media propaganda machine spews on a daily basis. As if their plan is for us not to notice how they are slowly changing the tune around here..

 

I was shocked when I was listening to this interview last night, and I had to turn it off after about 25min because I couldn't stand to listen to some Keynes loving bullshit. I hope CM doesn't really think Keynes is getting a bad rep here..

Sun, 06/10/2012 - 07:53 | 2511813 GCT
GCT's picture

Hazek it is an election year so the pundits come out of the woodwork, of course paid by someone to spew stupid shit.  But you and others here see through it.  Actually I prefer the freedom of comment here over other sites where you may disagree with them, and get banned.  Olympia used to actually write some good blogs and now as with almost everyone else he wants to lay blame on everyone and anyone instead of taking blame for being just stupid and playing the debtor's game.

Often times I see robo trader here and at times his comments do make sense.  He is junked. There are times he indeed needs to be junked and we are all junked from time to time.  This site allows people to interact and comment or link their blogs.  What we do with them is a different matter.  Freedom of speech is like that.  I will take this over a controlled environment anytime. 

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