Financial topics

[Higgenbotham]

Another way to look at the same data. Absolutely nothing can go wrong because Dr Bernanke said so. People may not have faith in God anymore, but they have faith in Dr Bernanke so nothing can go wrong...right?

For the time period covered by Vince's graph the left and right scales are proportional - a 7 fold increase in net worths is matched by a 7 fold increase in M1. However, before 2007, net worths were growing faster percentage-wise than M1, as they should.

For the time period covered by my graph, let's just look at the area after the drop in net worths where the correlation between net worth and M1 begins again. Here we see that it took about an 86% increase in M1 from 1,400 to 2,600 billions to get a 34% increase in net worths from 57,000 to 75,000 billions. This means that the base money is not multiplying wealth as it has in the past and that it is taking excessive amounts of base money to create small increases in wealth relative to any past data point since the collapse began in 2007. It also means that without the excessive M1 temporarily juicing the economy (before its ill effects set in), net worths would be falling rapidly. Once the money begins to devalue or deflate (either one or both), the US and world monetary systems and economies will collapse.

Bernanke has not saved the world; he has destroyed it.

Vince, I have not cheated by reading your blog. Now you can grade my response. Realizing that the first paragraph is tongue in cheek.

fredgraph.png (27.66 KiB) Viewed 3411 times

[Higgenbotham]

Addiction to Monetary Heroin

The economy and government get addicted to cheap money. If at any point the cheap money is removed the economy and government will nearly fall apart. But over time a larger and larger dosage is needed. Eventually the patient dies.

http://howfiatdies.blogspot.com/2013/09 ... -many.html

This explanation on the blog seems to match my post above. Recently we are seeing it takes an 86% increase in cheap money to grow wealth at 34%. If the cheap money that has been added since 2008 were removed, devalued by the market, or deflated by the market, net worths (or wealth) would drop by 50% and probably more, as the economy has been reconfigured so that the source of wealth is mostly coming from the pursuit and capture of the cheap money. The cheap money still has the characteristics of excess quantity and excess value but these characteristics are inherently temporary until the market either destroys the excess quantity or devalues the excess value. In my explanation it doesn't matter which path is taken. Destroying the excess quantity will be some version of deflation. Destroying the excess value will be some version of inflation. There may be one or both, but the end result is that the US will be a destitute country and probably (in my view) no country.

Analyzing the graph you posted is another way of getting at the core issue, which is that the core of the US economy is insolvent; it is no longer capable of operating at a profit without government support. This began in earnest in the 4th quarter of 2008 when the S&P 500 companies reported a loss. Since then, in order to get the core of the US and world economy as represented by the S&P 500 companies back to profitability, it has been necessary to borrow and steal money from the rest of the world outside those companies, including individuals and small businesses in the US. That in my view, for example, is what Obamacare is all about; it is a way to steal money from individuals and small businesses and transfer it to health care companies that operate inside the S&P 500 group of companies. Likewise, increasing the money supply has the effect of increasing the sales of the S&P 500 companies, making them temporarily profitable, while at the same time decreasing the relative net worths of individuals and small businesses.

Yet isn’t Bernanke a disciple of Friedman and Schwartz? He publicly refers to them as mentors, and, thanks to their scientific breakthrough, he has famously declared that “the Great Depression will not happen again.” Bernanke is right about the past, Schwartz says, “but he is fighting the wrong war today; the present crisis has nothing to do with a lack of liquidity.”

http://www.city-journal.org/2009/19_2_e ... wartz.html

The optimistic explanation would be that, "There was a crisis and net worths temporarily fell relative to M1. M1 was increased to help stop the crisis. The crisis is now over and net worths will start growing faster than M1 once again." From what I can see, this is what most people seem to believe.

[aedens]

Chilling. http://www.youtube.com/watch?feature=pl ... MuXgpl2Sxg

“The ultimate test of a moral society is the kind of world that it leaves to its children.”
Dietrich Bonhoeffer

[Higgenbotham]

Just check out what billionaire hedge fund manager Stanley Druckenmiller told CNBC about quantitative easing the other day...

"This is fantastic for every rich person," he said Thursday, a day after the Fed's stunning decision to delay tightening its monetary policy. "This is the biggest redistribution of wealth from the middle class and the poor to the rich ever."

http://theeconomiccollapseblog.com/arch ... -while-too

The precedent that was set in Cyprus is being used as a template for establishing bail-in procedures in New Zealand, Canada and all over Europe.

http://theeconomiccollapseblog.com/arch ... -the-globe

QE is the inflationary side of the theft of money for the benefit of the core group of S&P 500 companies while bail-ins are the deflationary side of the theft process. The element in common is that it is all theft by the core from those outside of it.

[gerald]

Just check out what billionaire hedge fund manager Stanley Druckenmiller told CNBC about quantitative easing the other day...

"This is fantastic for every rich person," he said Thursday, a day after the Fed's stunning decision to delay tightening its monetary policy. "This is the biggest redistribution of wealth from the middle class and the poor to the rich ever."

http://theeconomiccollapseblog.com/arch ... -while-too

The precedent that was set in Cyprus is being used as a template for establishing bail-in procedures in New Zealand, Canada and all over Europe.

http://theeconomiccollapseblog.com/arch ... -the-globe

QE is the inflationary side of the theft of money for the benefit of the core group of S&P 500 companies while bail-ins are the deflationary side of the theft process. The element in common is that it is all theft by the core from those outside of it.

Until there is no option but blood in the streets, then even worse-----------

[aedens]

23. Create bigger distractions. If the above does not seem to be working to distract from sensitive issues, or to prevent unwanted media coverage of unstoppable events such as trials, create bigger news stories (or treat them as such) to distract the multitudes.
http://search.yahoo.com/search;_ylt=Ajm ... =yfp-t-900

Not hard to see and ask the third party here or there that got arrested. Facts are meaningless now in the silent war.
Anyway we already posted the thought map being utilized.

It doesn't matter if a cat is black or white, so long as it catches mice.
Taxpayers who think? Nope. Back to Platos cave or row well 41

[Higgenbotham]

"Fields were covered with dead bodies, no man, woman or child were seen in the open, smell of burning rubbles covered the land, crops were laying unpicked, still people were hungry, people had abandoned their homes and ran to the forest or hills.

Society crumbled and everything that stood for a strong state stopped to exist. New alliances were forged, old cities ruined. Hoards of mercenaries who lost their employer shrouded the land in terror…"

--Rudolf Horvat “Croatian history” (and you are probably not going to find English translation).

This is not section from some some science fiction post apocalyptic novel, or movie. It is taken from a book of medieval history where the author speaks about years after the fall of Roman empire.

http://shtfschool.com/general/the-end-of-the-world/

tim had quoted this earlier and this is the source.

You ask what event might trigger a collapse. Looking around the world it has been everything from plague, famine, religious uprisings, government coups, civil war, invasions, inflation et al.

There are many triggers but the bottom line is that in all these trigger events the result is the corruption and fall of a culture.

This is a comment near the end of the page at the link above. It's the corruption and fall of a culture that leads to the "even worse" outcome. The US is probably there in my estimation.

[vincecate]

This explanation on the blog seems to match my post above.

Yes.

So I have a new post showing a graph of the size of the potential sources for hyperinflationary money in the USA. The graph is going up sharply.

http://howfiatdies.blogspot.com/2013/09 ... -risk.html

fredgraph.png (15.06 KiB) Viewed 3326 times

[Higgenbotham]

Addiction to Monetary Heroin

The economy and government get addicted to cheap money. If at any point the cheap money is removed the economy and government will nearly fall apart. But over time a larger and larger dosage is needed. Eventually the patient dies.

Tonight I've noticed a lot of hand wringing on the financial sites over the realization that the Fed can't end QE or the US economy will collapse. I believe the Fed tilted the economy too far away from real production and toward the pursuit and capture of the cheap money. Also, the Summers withdrawal probably has to do with the recent realization on the part of the establishment that even bigger doses of QE will need to be forthcoming rather than the smaller doses Summers was advocating. We may be able to move my projected timeline for the death of the patient from 2016 to an earlier date.

The public is making more comments recently like the ones at the bottom of the page. Blind faith is being lost around the world.
http://www.scotsman.com/news/bill-jamie ... -1-3105725

[at99sy]

Addiction to Monetary Heroin

The economy and government get addicted to cheap money. If at any point the cheap money is removed the economy and government will nearly fall apart. But over time a larger and larger dosage is needed. Eventually the patient dies.

Tonight I've noticed a lot of hand wringing on the financial sites over the realization that the Fed can't end QE or the US economy will collapse. I believe the Fed tilted the economy too far away from real production and toward the pursuit and capture of the cheap money. Also, the Summers withdrawal probably has to do with the recent realization on the part of the establishment that even bigger doses of QE will need to be forthcoming rather than the smaller doses Summers was advocating. We may be able to move my projected timeline for the death of the patient from 2016 to an earlier date.

The public is making more comments recently like the ones at the bottom of the page. Blind faith is being lost around the world.
http://www.scotsman.com/news/bill-jamie ... -1-3105725

Who could have possibly been surprised that the fed did not reduce the QE? The day they started down this road was the point of no return. Once the patient is addicted.......

sy