by B9K9 on Wed, 12/23/2009 - 19:27 #173249

At the risk of repeating myself, you guys are just too emotionally involved. During this Xmas break, please take the opportunity to step back, smoke a joint and/or have a drink (or two+), and consider the large, macro perspective. To wit, our entire global economy is, and has been for quite some time been, based on nothing more than credit driven asset inflation. That's it; no mystery, no games, just simple mathematics. Now, in order for us (by that, I mean the world) to return to "economic growth", we need to collectively be able to add yet another layer of debt on top of our existing pyramid of promissory notes & derivatives to fuel investment, production & consumption. There's only one hitch: we need to have sufficient productive output in which to service the additional financing costs of these incremental loans. So the question then becomes one of how are we to achieve greater energy optimization and/or economic efficiencies to fulfill the required output gains, or is this even physically possible in a closed system (ie the Earth)? Any accurate modeling of potential outcomes would conclude that we have a relatively straight-forward set of binary alternatives: we either pull it off, or we don't. If we pull it off, then all the extra-Constitutional activities undertaken by this and previous administrations, which incidentally comprise the key nutrients for blog sustenance, will soon be forgotten. However, if we don't, then a long cascade of defaults and bankruptcy proceedings will accompany the great debt deflation of the 10s. So there it is in a nutshell: the entire game comes down to technology & productivity. If we don't see something emerging fairly quickly, then these little parlor game debates will become quaint memories as we (re)discover our inner-savage. by B9K9 on Tue, 12/01/2009 - 18:56 #148605

No one expects the spanish inquisition. Only in our common era. (Boy, did I enjoy those early episodes!) This thread is getting ready to die, and I've mentioned this before, but grab a copy of Robinson Crusoe and quickly (re)read the first few chapters. What is immediately striking is the pervasive, overriding concern for personal safety and awareness that at any time, in any place, if someone could harm, capture/enslave or kill you, they would do so without the slightest compunction. Take a look at Boswell's journal (he was the author of Life of Samuel Johnson); right out of the box, he's fearful of highway robbery and murder. I mean, this shit happened every day. If our schools only taught two things, we'd be a much better country:

* law of exponents (h/t KD); * the philosphical underpinnings of the state (ie promises of "protection" in exchange for servitude) We were once free men but are no longer. When everyone expected "the spanish inquisition" at any time/place, there wasn't any room for shenanigans. The long knives came out at the first hint of trouble, especially if it came from the direction of "city slickers". by B9K9 on Tue, 12/01/2009 - 01:13 #147301

DH, I appreciate your lucid and insightful comments, but you really should take some time to study a little history. The inherent tension between monarchy & democracy has been debated and discussed since at least from the days of Pericles. Once a democratic state is empowered with monopoly power over territory & laws, it becomes a natural target by those who would exploit its position for their own personal benefit. To state that you are a "free enterprise, capitalist person at heart my entire life" is nothing more than an admission that you are either naive, ignorant or both. We The People created Goldman Sachs and their ilk. How come commercial banks held no power in Nazi Germany, Imperial Japan or the defunct USSR, nor currently exert any influence in "modern" fascist, state controlled China? (While, in the mean time, a dictatorial Russia has stripped assets from anyone not towing the country line?) Does anyone want to live in those types of societies? Of course not. Which is why the squid is always looking for emergent democracies in which to exploit the people's passions & desires. The illusion of comfort & wealth is just as an important driving force as sex, food & shelter. The bankers merely supply the drug (FRB driven inflation) for a desire that is simply insatiable. Once you understand this basic fundamental component of human nature, then you will clearly see why events play out the way they do. In a democratic state, politicians get elected who successfully deliver the high. Bankers are merely the "growers & distributors"; legalization is accomplished with full accordance, no, demand by The People. There will always be fraud & corruption; there is no force of law (or Constitution) that is strong enough to withstand the corrosive temptations of human nature. Stop blaming others and identify the true culprits: ourselves. Blaming others for one's own mistakes is the hallmark of a juvenile behavior. ZH and other financial blogs are simply infested with this type of thinking. There will always be criminals and corruption. It is the duty of free people to defend against such actions. The fight for freedom should have taken place long ago upon recognition that some fellow citizens would sell their birthright for the illusion of inflated wealth.

SW, I generally like your comments, as they tend to be unique & insightful, but like a few other intelligent posters, you really need to dispense with the naivete. Mises, to his everlasting credit, was an intellectual, much like Rothbard, who believed in the product of his work. Hence, his conclusions that command economies fail primarily due to technical reasons such as misallocation of resources, etc. Hayek has much better insight and gets right down to the crux of the issue: forget such niceties such as inefficient pricing signals, etc. The bottom line is that ANY top heavy social structure will INEVITABLY produce a Hitler-esque environment. The assignment of monopoly power to various state functions, to the detriment of the private sector, simply ensures that pathological criminals will be attracted to the most valuable, yet weakest link in the economic system. Our servants, as you call them, no more believe that they can lie their way out of this mess than they believe in Santa. The point is that they simply DO NOT CARE whether or not you recognize that they are looting in broad daylight. The criminal class are "all in" that nothing will personally happen to them. Right now, it's getting to the point of a wolf pack killing frenzy, where the predators are experiencing an endorphin high of complete nihilistic behavior. A few posters @ ZH get it; others who aren't so subtle get banned/regulated. I am patiently waiting for you, Deadhead, et al to stop with the "if they just did this, then perhaps things could get better" line of reasoning. There's only one solution, and that is a complete re-build after this sucker goes down.

by B9K9 on Mon, 12/07/2009 - 14:56 #155655

The neo-Keynesian term is "functional finance". It was expostulated by Lerner to counter-act arguments put forth by naive free market thinkers who thought there really was a debate. Rather, it was just pleasant wrapping used to extract maxium returns from helplessly clueless 'Mericans. As the wheels continue to come off, the PTB are simply becoming more honest in their prescriptions. Health care, cap 'n trade, nationalized fraud, etc, are all means whereby the public sector controls employment, output, debt sevice & tax receipts. In a "democracy", "leaders" have the legal mandate via rule of law and popular support to fully excercise their monopoly power. Super-smart predators understand this dynamic and don't waste any time dancing around pretending otherwise. They go right to the source with their corrupting siren song of wealth & power. As I've metioned to SW, Deadhead and others, there isn't any intent or belief that we can "grow" our way out of a solvency crisis. Those are just palliatives offered up to the masses; no different from a hospice worker assuring that you will be "all right" as she swaps out the morphine drip.

There's only one way out of this mess, 'course, it can't be said here @ ZH for obvious reasons. But here's a word to the wise: study history. As Tommy J famously said "Experience hath shown that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same object evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security."

by B9K9 on Thu, 11/05/2009 - 12:13 #120892

(Gov't) Employment - check Food - check Housing - check Healthcare - check Finance - check Manufacuturing - check If we are honest, we need to admit that the progression to complete state-control is shear genius. Evil, yes, but genius nonetheless; and all done in plain site. Someone carefully studied history to avoid making past mistakes. by B9K9 on Tue, 01/19/2010 - 10:17 #198209

A lot of sound & fury, signifying nothing. There's only one thing we need to know: when will the money printing end? Actually, an even more critical point in time is that first incipient movement which eventually concludes with termination of QE. What is the tell? IMHO, it's the election taking place today in NE. Forget health care. While certainty a significant issue, the much bigger element is the budding resistance to illegal Treserve actions. This will only grow and likely become the one overriding issue in Nov '10. The antics of the last 9 mos have been like one, long interminable intermission. Until March '09, the market was doing its thang engaging in price discovery, risk discounting, etc. And then the Treserv had to get involved. Yawn. Wake me when it's over. We have a rendezvous with history; she is getting impatient. The debt-deflation tsunami is yearning to break free from its political bounds. Let it run free! Because when it is finally freed, it will sweep clean the entire state apparatus that has enslaved us, the children of the original revolution.

by B9K9 on Thu, 01/21/2010 - 12:47 #200861

If there is any grain of truth in the notion of a controlling cabal dating all the way back to the Illuminati, then we are all mere pawns in a huge game of chess played out by those so bored with life that their only joy (if they even experience that emotion) is to fuck with other people just for fuck's sake. Don't think they exist? How does a Tiger Woods, Michael Jordan, et al rise above all others in their respective fields? Are there not financial super-predators so innately attuned to their chosen calling that they perform such feats with, dare I say it, artistic genius? If so, then recent events are merely the trap being sprung to extract the last piece of wealth before the bottom drops out. The game has always been about monetary expansion - the day monetary expansion ceases, the modern global economy dies. So now, in quick succession, we get the election results in MA, leaked information about the Fed and other central banks, notice that Ben's confirmation hearings have been suspended, and new proposed rules regarding Wall St leverage and prop activities. What does it all mean? It means monetary CONTRACTION! What does that mean? It means DEFLATION! So yes, question why these events & news releases are now taking place - cui bono - who benefits? The shit storm that is about to engulf us all will take all of our individual & collective resources and will power to overcome. Let us take a mutual vow to make sure that those that did this to us are never allowed to do so again. Don't let them benefit. by B9K9 on Thu, 12/24/2009 - 11:48 #173696

What is the difference between Stalin & Hitler? Both were mass murderers responsible for crimes against humanity, yet one died a natural death (stroke) while still at the height of his power, while the other died from a bullet through his skull as his world came crashing down upon him. So what can we take away from this lesson? That the key differentiating determinant regarding punishment is power - whether it is extant or extinct. You are wasting your time pursuing traditional representational channels - our republic no longer represents our interests. It is a false choice. The personal safety of the PTB is literally at risk. If they fail to successfully blow another asset bubble, they will not be able to survive the chaos induced by the resulting debt-deflationary spiral. OTOH, if they do pull off a miracle, nothing will ever come of these activities. They will GET AWAY WITH IT. The best advice I ever got was this: "He who complains has already lost". The Soviets didn't complain about Hitler - they killed him. But millions upon millions complained about Stalin - and he got away with his crimes. Think about it. Please can the calls for action and watch the trends - it all comes down to whether or not we can create sufficient output to service the next layer of debt. If not, then we won't even have a republic left in which to petition our "leaders".

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by Cognitive Dissonance on Thu, 12/24/2009 - 12:46 #173759

In essence, what you're saying is that we should be rooting for the Ponzi. For if they fail in their efforts, all hell will break loose and we will all suffer terribly. Sadly, I suspect you're correct and this is the fundamental reason why so many people remain "asleep" at the wheel. They aren't really asleep but rather captured and dependant upon the Ponzi to continue. The time to call for a stop to the insanity was decades ago. However, I don't think they will succeed without great pain and destruction and they know this. Thus the reason for the wholesale theft by everyone and anyone who can. by Anonymous on Tue, 12/15/2009 - 14:25 #164829

Yesterday a huge article on HYPERINFLATION and the resulting chaos. Today this article on DEFLATION and the not so much on the resulting chaos. It is one or the other - pick your poison- but it can't be both. One necessarily negates the other. Perhaps all the hyperinflation fear is too focused on the money being printed and not on the larger and ever intensifying wealth destruction. .02$

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by B9K9 on Tue, 12/15/2009 - 14:59 #164878

Of course you can have both, as is evidenced by what we are currently experiencing. Many people tend to forget that we have an underlying nominal fiat currency regime and a huge credit derivative bubble. The numbers vary greatly, but for simplicity, assume there's something like $1-2T of currency vs $50-100T -> 12QT in extended credit. Clearly, the pyramided credit bubble dwarfs any measure of the currency basis. The deflation camp points to declining asset values (eg housing) that are driving creditors (ie mortgage holders vis-a-vis MBS portfolios) to insolvency. The inflation camp points to out-of-control monetary expansion.

That's why we are seeing both price declines in many credit driven asset sectors, such as property, occurring simultaneously with price increases in monetary senstive sectors like gold, etc. The question everyone is wondering is whether or not there will be a break in any one direction. by B9K9 on Tue, 01/26/2010 - 20:36 #207092

I almost feel sorry for the pathetic dupe (Obama); a true scion of affirmative-action. All that time rising up through the ranks without nary an ounce of expended effort. Always protected by a group of enablers and fixers to ensure the next step up. (See both state senate and Senator campaigns.) Imagine being admitted to Harvard law without achieving any undergraduate distinctions and/or honors? Imagine being commonly known as Barry Dunham in high school, yet no one seems to care nor notice that he adopted some weird ass radical name later on in life? The best part of being the ultimate dunce is that he seems to actually believe his shit. Boy, I can only imagine the dossier from the scouts who were checking out the next-gen talent for the PTB: a narcissist who will never see it coming. by SWRichmond on Wed, 01/27/2010 - 08:46 #207483

As I read B9's post, I slowly nodded. Like W before him, Clinton before him, and GHWB before him, Obama is sadly underqualified to lead anything and thus makes a perfect dupe. Bill had Hillary to make decisions, W had Cheney, who, as the consummate insider for the MIC, is nothing less than evil incarnate, and GHWB was an internationalist from the word go and had a lot to do with marginalizing Reagan's small-government populism. GHWB's thousand points of light are going to turn out to be torches in the distance, and the number "thousand" doesn't adequately describe them. I recently attended a AA hockey game where the home crowd has an interesting tradition: as the names of the visiting team are announced, after each one the announcer pauses and the crowd yells "Sucks!", and at the end, after the coach's name, they shout "He sucks too, they all suck!" This is the reaction I have when I watch television and see politicians, with very few exceptions. In Obama's case, his race made him the perfect vehicle for implementing a very extreme and rapid agenda: takeover the last vestiges of the economy and implement a full-blown command economy. Charge "Racism!" when opposition surfaces, and ride political correctness to victory. It almost worked, didn't it? Obama is a know-nothing, done-nothing, accomplished nothing, unskilled but pretty mouthpiece, and that is all. The WH is filled with old school insiders, just like W's WH, and the agenda hasn't changed one tiny little bit, it has only been accellerated. War, or more war? Socialism, or more socialism? Internationalism, or more internationalism? Wall Street, or Wall Street? All that remains is for Obama to utter the words "they hate us for our freedoms". by Mako on Mon, 02/01/2010 - 12:13 #213325

Ending the Fed is only going to stop the current system from expanding immediately. The system was and is and always will be unsustainable as long as you guys continue to think you can attach compounding interest to your medium of exchange. The Fed is not the problem, it's all you stupid people that think you can build a system that steals further and further from the future to supply the equation exponential growth. It's over, see Fed Z1 report. Basically the whole population is a counterfeiter but now it's over and the pain will be a whole generation this time. You will use the Fed as your scape goat. You will never provide the equation what it needs past a generation or so. http://www.adambreckler.com/wp-content/uploads/2009/08/exponential_growt... You can bitch at your Congressman, you can bitch at the Prez, you can bitch about the Fed, you can bitch at Timmay, etc. it's simply over, the amount of power needed to supply the equation is not linear. by B9K9 on Mon, 02/01/2010 - 12:38 #213372

Hey Mako, I always enjoy your posts. There only seem to be a handful of people at ZH who really "get it". It has always been about money/credit growth - money/credit growth to pay for the previous cycle of money/credit growth (compounding interest). I'm of two minds regarding the Fed. On the one hand, you are correct in that they are simply a vessel by which the collective dreams of the global population believed in the illusion that they were becoming more 'wealthy'. On the on the hand, who maneuvered/conditioned everyone to accept & play this game? Or has it always been this way (ie the desire to attain riches/comfort without commensurate effort), and the PTB are merely controlling/exploiting deeply-embedded (residual evolutionary effects) emotional trigger points? Regardless of who is or isn't at fault, you are entirely correct regarding the end result. The debt must be defaulted, price discovery must return, risk must be measured, and the "real" value of capital must be resolved. Benron is wrong - money is a store of value, not a psychological device. Destroy the value of money, and the downside offsets any temporary advantage gained by government's first access to newly counterfeited tokens. This fucker is going to crash so hard they'll be telling stories about it 1,000 years from now.

by JR on Mon, 02/01/2010 - 12:50 #213398

Usury and manipulation of the currency and the use of debt for private interests have now coalesced into the institution of the secret activities of the Central Bank. Paul Warburg might have been a bad influence in Europe but his power became legion when a nation's entire financial system was taken over by himself and a handful of private bankers. Heres how amacfly on 2008-12-09 09:06:25 capsulized it on RGE Monitor: "With fully half the world's wealth in the hands of the Rothchild's, the Rockerfeller's, Warburg's and Morgan's of the world, we are in their grip since they basically own the NY Fed, which is the real hub of the Fed system. (Mullins, Griffin etc) "We really need to create a better banking system that breaks this terrible cycle of debt slavery that these wicked masters have created, but who has the courage to go into the temple and throw over the money changer's tables in our time? "They have created a system that holds them aloft while keeping us indebted to them using the IRS, the Government and the Treasury as their 'attack dogs' (Animal Farm - Orwell). We are living in a time of great evil, and that evil is born of the will and greed of these bankers. Until we can break this terrible privately owned Central Bank Cartel and in its place create a fair, efficient and honest national financial system we are bound to remain debt slaves to our master's greed."

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by B9K9 on Mon, 02/01/2010 - 13:37 #213465

At the risk of referencing pop culture, it really is eerily similar to the Matrix. If one were to dissect core human drivers, we are biologicall programmed to satisfy our impulses for safety/comfort, sex, stimulation & fear of mortality. The desire for safety & comfort is assauged by the illusion of wealth. Only later do people realize that they are really (debt) slaves. The crime committed against humanity is the use of state power against the very people it is supposed to represent. Our masters have woven a very tight web, but history has shown that it repeatedly breaks during various periods of peak stress. by B9K9 on Mon, 02/01/2010 - 13:14 #213429

At the risk of being a pathetic fan boy, hear hear. I never understood the argument that fractional reserve banking creates inflation, to the exclusion of other private lending activity. To wit, before there were banks, there were people willing to lend. Go back 5,000 years, and assume a hut costs 10 gold talons. If a wealthy merchant (let's call him Shylock) observes that Joe is a big, strong worker (forefather of today's NFL players), he calculates that Joe would be able to pay off a 10 year loan (with interest) that would let him sell one of his investment huts for 50 talons - 5x the going rate.

Joe will go for it because, while he doesn't have 10 gold talons today, he knows he is highly admired for his strength & stamina, and will easily be able to cover the 'nominal' annual tribute. Even better, the hot virgin down the row will marry him if he has a nice hut in which to offer as an abode. Things work out so well for the merchant & Joe that other lenders & borrowers get into the game. And so it goes until the ability of the marginal buyers to service their respective notes erode either due to injury, sickness or laziness, and threaten to bring the whole system down. That's where we are today. Make FRB illegal, abolish the Fed, and we'd still have credit growth in the private economy. It almost always works well in the beginning, since lending tends to be limited to only those with absolutely prime credentials. But once the threshold is crossed where less able borrowers can no longer cover the accumulating interest + principal, game over. In the end, the real crime of the Fed/fedgov and other central banks/states is to institutionalize the exploitation of known human weaknesses. The masses are manipulated by banks & governments to service their own selfish ends on a grand scale.

by B9K9 on Mon, 12/28/2009 - 19:08 #176357

Sigh, I expected more from you. (And for those of you wishing & hoping for some type of end-of-70s/Volcker outcome as well.) Here's how it plays out: US military planners are well aware that our economy, as it is currently constructed (ie with key industries nationalized) does not, and cannot, generate sufficient real "wealth" production to afford both guns & butter. Riddle me this: Which duty is specifically proscribed in the Constitution, that "dead letter" to which all servicemen & women swear allegiance? The types of news items & trends that are discussed ad infinitum @ ZH and across the interwebs are not only more than well understood by the officer corps, but have probably been war gamed an endless number of times, by RAND & other think tanks, with the same exact set of outcomes: Fail. As Trav and a few other macro aficionados have noted, just possessing/controlling the ME oil reserves (yes, Virginia, now you know why we are there) only maintains the status quo. Without some key technological breakthroughs, it doesn't buy you shit in terms of the oh-so-necessary pyramiding of new debt tranches to keep the fractional reserve system going. So guess what happens when the great engine begins to really slow down and show some wear & tear? With US nationalization of key industries & massive, unfunded social programs scarfing up all available investment capital, where is the next "big thing" gonna come from to save our collective bacon this time around? What if there isn't anything? Then what gets cut first & foremost? Defense? LOL! The real shit has yet to even be extruded, much less hit the fan. Unless things turn around pretty quickly, many cannot comprehend how readily & rapidly our society can fail - as all others have done throughout recorded history. If/when our security situation becomes untenable, that's when we'll really begin to see a full range of outlying possibilities suddenly become our reality.

As for you 70s buffs, try this on for size:

US domestic peak oil production had only been reached a few years before US auto mfg still had something like an 80-90% market share US off shoring was only a dream in some financial engineer's head US demographics still provided for only a "slightly" bankrupt SS, not the complete & utter shell that it is today

The 10s are going to look nothing like the 70s; they are going to look like the 90s. That is, the 1790s in France. Bring it on, bitch. by B9K9 on Mon, 12/28/2009 - 22:56 #176505

Who is they? That is, those who, in your words: will run out of ability to fund the military The MIC? I wish ZH space monkeys would wake and realize that the first group in line for whatever welfare spending remains will be the military. Even if it requires a coup. Walk through the logic. Both guns & butter cannot be supported under the current economic model. Even worse than nationalization (the short-term effect) is the longer-term effect of diverting capital away from crucial, yet to be developed/discovered technologies & industries. This has been extensively modeled - it's not like the guys at RAND are sitting up, going, wow that B9K9 is really insightful. LOL! Thus, one has to give way to the other. Which one is specifically referenced as a direct Constitutional duty? Which group actually has the guns? Unless we come up with something really damn clever that can produce the necessary economic output required to support another layer of debt that is essential to the fractional reserve (Ponzi) model, this fucker is coming down. Wake up. Even many of those at ZH are still walking around thinking that things could return to normal. Sure. And the Reich was supposed to last 1,000 years, while the USSR could barely muster 70. What got us here was 180 degrees opposite to what we are currently doing. Command economies have never worked in the entire history of mankind. We're supposed to think that this time is gonna be different? Watch the big trends. If something doesn't come up pretty quickly, that noise you hear is a 225 year-old society rolling over and going tits-up. by B9K9 on Sun, 12/27/2009 - 11:07 #175379 Actually, there's a whole contingent of rationale ZH space monkeys who tend to focus on larger issue macroperspective trends. We leave the political hand-wringing to others who still believe in a world where the US government represents their collective interests.

Ultimately, it all comes down to the ability of the world economy's productive output to service the next tranche of debt necessary to propel the global FRB system to new levels of investment, production & consumption. Historically, the servicing of pyramided debt has been achieved over and over again by either new discoveries of core energy sources and/or improved utility and maximization of existing proven reserves. Unfortunately, even if we were to have 100-500 years of existing energy reserves, it doesn't do anything for us other than to service the existing layer of debt. We need to be able to add an additional layer of debt in order to inflate asset values and depreciate/roll-forward current principle+interest balances so that they may be repackaged and sold off as FI investments (ie bonds). (Some call this Ponzi finance; I call it the reality of our global economic system which has been extant for at least 200 years, if not longer. It is what it is, so in order to keep the game going, we need to repeat the same steps that got us here. Yes, I know it sounds crazy, but if the music were to stop, we would looking at a 30-50% contraction. Is it any wonder then that central banks + governments have abandoned all pretenses about following traditional trade practices, laws & customs? They are neither crazy nor stupid - they know damn well what's in store if we don't pull off a miracle.) So let us focus instead of what's out there on the horizon in terms of a paradigm shift in energy optimization and/or economic efficiencies. If something shows up, we're good to go; all of this little 'unpleasantness' will be soon forgotten. But if we, as a global community, don't have something lined up pretty soon, then political matters may begin to gain their own momentum that would foreclose future consideration of possible solutions. That is, until the blood letting has run its course. A few super-doomers are convinced there is nothing that can save our bacon this time around. I'm still holding out judgment, but I will admit it needs to be pretty damn impressive; a real game changer if you will. This would include a massive new source of energy controlled by the US that would be equivalent to gas at $.25 cents/gallon. Or some form of genetically altered food supply/health care solutions that reduced current costs by 1/100. Moving production off-shore to China provided a huge boost over the last 20 years - it really drove down production costs. However, unless we find another planet in which to off-shore production away from China, I don't believe this trick will work again. So, to recap, unless we come up with something pretty darn quick, we simply will not have sufficient productive output to service the next tranche of debt necessary to cover baseline investment, production & consumption. If this thing really tilts over & goes tits-up, then the US gov't will resemble those slow-mo shots of the Twin Towers as they collapsed inward, gaining momentum all the way down. by B9K9 on Tue, 03/16/2010 - 19:38 #267939

I'm rapidly becoming a fanboy - you wouldn't happen to know Mako would you? Yes, you are absolutely correct. The only way to beat the exponential math of compounding principle+interest is to generate sufficient wealth by achieving output levels (productivity) in excess of capital costs. See my comment to CD below - the normal cycle before reset has historically been around 50 years. (It takes about that amount of time for the original debt to double, thereby exceeding the carrying capacity/value of the underlying asset.) However, and this is a mighty big however, the eon's long cycle has been interrupted (postponed actually) a few times since 1694: the exploitation of the new found Americas, including massive emigration; the discovery of

coal, followed by oil & gas; two massive capital destroying world-wars; and finally, the incorporation of billions of slaves (globalization) into core production. Now it appears we really have reached the end of the line. Unless we come up with some miracle in either food production, resource extraction/utilization, or some incredible production optimization scenario, we are going to experience the largest default in both recorded & unrecorded history.

by B9K9 on Tue, 03/16/2010 - 15:50 #267723

it's clear we're in uncharted territory Since the avg human lifespan is only around 72 years, this statement is true with regards to inferring the personal 'we' as in you & I. However, as a civilized people dating back 10k years or so, this path has been so repeatedly (re)traveled that one would think it was practically impassable due to the resulting erosion. Here's the simplest trick I know of explaining exponential math to those who don't understand what is occurring ie those who don't work in banking and/or cruise the interweb financial sites: You have a real asset, like land. I have a piece of paper that states, using your land as collateral, I have lent you 100 talents @ 1.5% interest over the rate of inflation. (BTW, I didn't even really lend you any "money" ie gold, I merely printed some fraudulent tickets that say "Talents".) Question: how long does it take for the loan to double in value if the interest is rolled over each year into a new principle balance? Answer: around 50 years. If the paper note is unpayable, which by definition it is since credit is always created/loaned at a rate exceeding price inflation (ie the rise in value of the real underlying asset), then I get to foreclose and take the land you pledged as collateral. The process works the same exact way every damn time without exception. The only time the technique fails is when the legal basis covering contract law is abrogated. We've seen it just recently occur in Iceland, but this mechanism is by no means the first. When Edward I (Longshanks) returned from the Crusades in 1274, he discovered that practically the entire country of England was dispossessed and now in the hands of money-lenders. His solution: creditors were no longer liable for certain debts. But wait, it wasn't just some Anglos ragin' on a minority group. For in point of fact, around 5,000 years ago the same minority group itself pioneered the concept of jubilee (debt forgiveness), which, get this, occur ed at ... 50 years. Poetic, no? Or just math? We are soon nearing the default stage, whether it is actual non-payment and/or inflation. Next will be repudiation - the Chinese have already shown the way, so now it is our turn to return the favor. Back and forth it will go all over the globe - the final reset. Once everyone is sufficiently pissed-off at everyone else, then the war(s) begin. Sh!t, I should write history books before the events have even transpired.

by B9K9 on Sat, 04/03/2010 - 06:54 #285044

the entire purpose of the ZH blog is to expose the lies of the Ponzi and to speak truth to power. CD, I have a slightly different take, as I recently expounded on the dying payroll report thread. ZH may have originally set out to expose the lies and 'speak truth to power', but given the speed and rapidity of recent affairs, that function has already been surpassed. The events we are currently experiencing were set in motion decades ago. As Mako has stated not infrequently, the end game we are now part of was launched before we were even born. So actions are going to transpire as they must, regardless of what we may or may not do, whether we accept or deny they are occurring, or even protest against or advocate for necessary changes. If this is the case, and I believe it to be so, then the real opportunity is to begin preparing for the post-war rebuilding period. By way of example, how many people know that post-WWII planning began only months after the USA entered the global fray? What, you thought there was any chance the Allies might lose? LOL So in this regard, we have two knowns:

The system is going to crash - hard; and The American republic is going to be re-established. (IOW, I believe the 'preppers are going to prevail.)

So the real opportunity is to begin preparing for the re-building phase. A shattered people are going to need to understand not only why the past events occurred, but what necessary controls & precautions will need to be put in place to prevent any future recurrences. by Cognitive Dissonance on Sat, 04/03/2010 - 09:52 #285100

B9K9, I have spent (and continue to spend) considerable time following this train of thought to it's end point as well and I've also come to the inevitable conclusion that this freight train is beyond the point of no return and will eventually run off the tracks. In fact, I came to the same conclusion from many different directions after I decided either that my original thinking was flawed or I missed something along the way. So I tried alternative paths to prove or disprove the theory. Same result. Being extremely aware of the presence of my own ego I then began to explore if I was intentially creating the same outcome in order to remain passive and safely buried in my bunker with my years supply of emergency food and my back issues of Playboy. But then I realized that man's decadence will assure me an ever lasting supply of porn regardless of what happens so I jettisoned the Playboy, freeing up room enough for another 10 years supply of food. But then I saw the flaw, which was suddenly so obvious I became furious with myself. Damn, I could have had a V8. :>) Of course, your speaking of the ultimate lesson in The Matrix trilogy, that Neo wasn't the first and won't be the last. Unless! You speak of henchmen and operatives departing on planes to waiting lairs when the apocalypse is upon us. You speak of cycles, small ones inside larger ones inside even larger ones. Which means those

operatives will eventually depart from the safety of their enclaves and begin the enslavement of the human race once again. And if the cycles are to be, there is nothing you can do to stop them. This is why I have been focusing on and will continue to focus on personal development and why I speak publicly about it here on ZH. Because as long as the slave stock remains the same in each cycle, the powers that be will always be able to round us up for their productive purposes and to our detriment. Our only hope is that we develop mentally, spiritually and emotionally faster than they can corral. I think we can. Thus I try. by B9K9 on Sat, 04/03/2010 - 06:27 #285036

**Wondering** I enjoyed reading your late posts. Since this thread is becoming stale, I'm going to post a reply here in the off chance it might catch your eye. When I (and I presume a few others) refer to those who do not understand the workings of the machine, I am not referring to the obvious surface level events we see transpiring on a daily basis. Nor am I positing an opinion on the effectiveness of the mass propaganda campaign designed to encourage people to resume leveraging their various portfolios (or lack thereof). No, what I am addressing is the lack of understanding regarding the basic underlying nature of our money-credit system. That is, the absence of recognition that the ultimate purpose of our credit-lending system is to transfer all productive assets to a few. This results from the inevitable outcome of the exponential function of compounding principal+interest that dictates, over time, that all underlying collateral is forfeited. Full.Stop:This.Is.The.Reason.For.The.Entire.Exercise. This game has been repeated countless numbers of times over thousands of years. Riddle me this: why does the world's leading theological tome concern itself with numerous prohibitions regarding a certain business practice? What does it have to do with the real juicy stuff like coveting some forbidden ass, or taking out an annoying neighbor? Can we, by inference, assume that perhaps various authors, from ages long past, might have been issuing warnings they believed to be of critical importance to future and unborn generations? My concern is not to read the people's mood. I care not a whit how they may or may not feel because it has absolutely no bearing on the final outcome of the game. That's why I believe it's an utter waste of time to participate in any level of political activity or discourse. The sheep can rail, whine & complain all they want, but awareness doesn't prevent the stun-bolt gun from being applied to their cranium. The end results we are currently experiencing were already baked in when this short-term cycle was begun some 65 years ago. (The medium-term cycle is 97 years old & long term cycle is 316 years old.) We are merely witnessing the last 'takings' before the jets depart for safe houses spread around the globe in various extraditionproof locales. My objective is to be part of the reformation. I want to help capture and bring these criminals back to justice. I want to help reform, design & implement a new, more just economic system after this one collapses. I have no concern about the coming social chaos, only a hope of surviving so as to participate in the re-building. Hopefully, among the first things that will be changed, along with the obvious things like abolishing the Fed, IRS & implementing term limits, will be an emphasis on teaching about the dangers of the prior corrupt monetary economic system and its enslaving effects on previously free people.

by B9K9 on Sun, 02/07/2010 - 10:50 #221110

I've got contagion for you - try this on for size: 1. 10, 20, 50 thousand years after wiping out practically all European mega-fauna, emigrants 'discover' a completely undeveloped continent (unintentionally) held in preservation by indigenous peoples. 2. Up to a mere 120 years ago, until the western frontier was 'closed', the raw, untamed land and plentiful natural resources fueled an incredible period of human history which saw millions upon millions of people, of all nationalities & cultures, move thousands of miles to engage in the process of transforming the very environment upon which we currently reside. In fact, the abundance of natural resources was so great that it was only around 1973 that the most precious resource of all, the one that leads countries to fight extended global, foreign wars, only began to peak within the lower 48 states. 3. Concurrent with the realization of domestic peak oil, and that we were now subject to the vicissitudes of imported oil (supply & price), was the recognition that in the face of global wage arbitrage, the US could no longer maintain its fantasy position enjoyed since the end of WWII. 4. As Carter learned much to his chagrin, 'Mericans didn't really like anyone telling them about #3. So Reagan, not nearly being the dunce he is made out to be, in order to substitute for the effects of lower real-incomes and mask the reality the future held for the USA, made certain decisions (there were eagerly approved by the masses) that replaced production with (financial) speculation. And so began the long, long process by which the USA was transformed from a balanced economy to one completely & utterly focused on the process of credit-leveraged asset-inflation in order to instill an illusion of wealth (ie the 'wealth effect') to stimulate consumer spending activity. 5. We are now at the end of the ponzi era. Th PTB knew back in 1980 that it couldn't last for long, but as Keynes said, in the long run we're all dead. In case anyone is wondering, a significant number of people dating from that era are indeed "dead". But we, the living, must deal with the aftermath. What we have is a tapped out environment, 300m+ individuals grouped into 4 major, distinct groups that never integrated, and are in fact capable of taking out their frustrations on those perceived as 'other'. Many of those 'others' (from all 4 groups) are dependent on public assistance for their very sustenance. But public assistance is dependent on economic output, which as described above, is no longer extant in any form, production and/or consumption. Thus, we print. Oh, yes dear reader, don't make the mistake of thinking the Fed is independent and/or owned by foreign interests. Sure it is. But all of those foreign/domestic banks, seeing that they are insolvent, could/should be nationalized. In reality, fed.gov uses the Fed (and Fannie/Freddi as well) to mask that it is actually the driving force behind currency debasement. (And are in fact the very magicians holding up what remains of our illusionary world.) So here we are; we have no way forward. Whatever chance(s) we had of making important technological discoveries & advances have evaporated with the very investment capital now being spent to satisfy current consumption. In ancient times, this was called 'eating your seed corn'. So, Leo and whoever else hold the bull perspective, good luck.

by B9K9 on Thu, 03/04/2010 - 13:17 #253783

Slightly OT, but where are we to go from here? To warm-over an analogy I used yesterday on a different thread, if informed people understand a hurricane is going to be making imminent landfall, what's the use of endlessly analyzing & debating either confirming and/or contrary reports? To continue the analogy & address the relevant point of the question: Yes, buy gold & withdraw your money from the banks in order to have accessible, ready cash. Now what? Get out of Dodge? Is that it - just return when the dust has settled? How does this apply to the world in which we actually reside? I would assume many, in not most, ZH space monkeys are interested in two primary goals: (a) make some money; and (b) fix the system. Fixing the system entails applying corrective measures so that capital efficiencies are restored in which to gain real wealth productivity improvements. Making money involves having a proper understanding of fundamental factors governing capital & production and investing accordingly. OK, enough with Polical-Econ 101. How do we get there from here? Just voting in November? That ain't gonna do it. Yes, it may (unintentionally) start us down the long road towards an eventual solution, but how do we survive (and thrive) during & after the storm? The survival sites cover the basic tactical requirements perfectly well. There are endless lists of the types of resources one must have/protect in order to survive. But what about regional location reports and ongoing daily/weekly/monthly assessments? Since I am a big fan of both metaphors and WWII analogies, consider the Battle of Britain as a working model. (No, I'm a Calif native, but I did spend my junior year in HS at a British sovereign base school on a small island in the Med, and have spent a lot of time in GB before and afterwards.) The endless discussion of how we got here or deflecting the ongoing 'green shoots' propaganda campaign could be compared to people wasting their time after the fall of France with regards to Camberlein, Hitler, Stalin, etc, etc. Where does it get you? Likewise, the survival blog sites could be compared to actual, specific hands-on manuals regarding operating, maintaining & repairing armaments, airplanes, etc. But, and this is what I'm driving at (and sort of looking to the board for some ideas), where are the coastal spotters, the radar installations, the lo-freq radio fields, the relay stations, in short, the entire command-control structure for conducting this period of the war? How would this apply to a place like California? As many might well imagine, there are thousands of state, local, district, etc muni bonds issued in this state alone. They are all tied in one way or another to the Big 3 taxes: personal income tax (PIT), sales & property taxes (corporate comes in a distant 4th). The ratings agencies tend to merely look at the various revenue streams pledged against the respective bonds, with a nod to general economic conditions, and make their ratings accordingly which are targeted at their investor subscription audience. But where is the more concrete feet-on-the-ground 'coastal spotter' information necessary for those who wish to both survive & thrive? For example, out of thousands of bonds, if I knew tiny Bond A secured by property taxes in little city B had a certain demographic composition, that its economic base was subject to various other factors all coming under tremendous pressure, and that the city had engaged in some particular arrangements with various public sector unions, what information could I glean to my advantage to both survive the ensuing crime onslaught (from huge service cutbacks), the resulting deflationary effects of reduced spending, and escalating bond pricing spreads?

Now, multiply this type of G2 times hundreds of thousands of instances across our fair land. Is the information useful ie is it filling a gap, and if so, is there an opportunity in creating this type of resource? Clearly, it's a network model scaled to a very high degree. Comments, questions & observations welcomed. by B9K9 on Thu, 02/25/2010 - 10:35 #244847

California is simply a precursor to what is going to occur at the Federal level when Ben is finally forced to quit printing benjamins. The harsh reality is that the $USD is linked to a very hard oil peg. We **think** we can print, but in actual fact, we're no different than Greece. So what happens when fed.gov has to implement the exact same set of cost reduction measures that are occurring in California and the other states? Deflation, baby, deflation. Right now, the only thing propping this sucker up is QE. Once Mr Market forces Ben's hand, it's all downhill from there. With no/limited UI benefits, reduced welfare/food support, high unemployment, and a pissed-off & armed public angered at the $trillions lavished on the banker/politico mafia, it's gonna be an epic SHTF moment. They'll be teaching this shit as critical history 200 years from now in all elementary schools. by B9K9 on Wed, 02/24/2010 - 12:46 #243431

I'm sensing a general level of disappointment on this thread. But really, what did everyone think the outcome would be? A full confession along the lines of "Yeah, the money/credit system is utterly dependent on perpetual asset-inflation in which to provide another tranche of credit leverage in order to roll over & pyramid existing (and un-payable) principal+interest balances"? The bottom line is we're dealing with consummate professionals. There is NO WAY the ridiculous perfumed princes (and princesses) we call our elected representatives have any chance at besting these people. They've had thousands of years to perfect the message; rhetoric will not win the day. The only way to defeat the beast is to let nature take its course. Over the last millenium, every time the moneycredit system was on its last legs, a new continent was discovered, or incredible stores of energy in the forms of coal, oil & gas were exploited, or entire nations of people numbering over 2 billion strong were willing to work like slave in order to keep the asset-inflation engine humming. However, this time around really, really seems like the final curtain call. Unless something utterly stupendous comes to the rescue of mankind, nature is going to foreclose our account. And that, my friends, is when the SHTF.

by B9K9 on Mon, 04/12/2010 - 17:45 #297182

It goes way further back than Bush - more like 2,500 years & longer. I posted this reply to Mako on another thread which appears to be going stale. Same appeal for comments & suggestions applies: *** Mako and others, I've been working on a short & succinct manifesto that has two-fold aims:

Address the defensive concerns Cognitive Dissonance has raised; and Provide some sort of road map for the future.

I'm trying to tighten it up so that it provides a quick & easy read for any & everyone - informed and uninformed alike. Comments, criticisms & helpful suggestions would be greatly appreciated. *** Don't allow yourself to be placed in a position of defending that which is obvious & self evident. It is the odious task of economic holocaust deniers to take the morally repugnant position of defending crimes committed against humanity. The historical record of usury is quite clear, with specific admonishments dating back over 2,500 years: (Exodus 22:25-27) 25If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury. 26If thou at all take thy neighbour's raiment to pledge, thou shalt deliver it unto him by that the sun goeth down: 27For that is his covering only, it is his raiment for his skin: wherein shall he sleep? and it shall come to pass, when he crieth unto me, that I will hear; for I am gracious. The exponential math is irrefutable; compounding principal+interest always outruns loan serviceability. Thus, the end result is preordained: usurers take possession of forfeited real property and productive assets pledged as collateral while borrowers are reduced to a state of debt peonage. Deniers are merely earning their respective thirty pieces of silver as paid apologists for their banking masters. Let deniers make ridiculous spectacles of themselves attempting to explain the unexpected hoocoodanode. *** More to the point - it doesn't matter if the money-lenders' collateral is seized and re-distributed to the People. They still have their bullion reserves safely stored in Zurich & Tel Aviv, along with the ability to restart the money-credit game. Yet it doesn't really matter either if these countries are invaded and the respective gold holdings seized & re-distributed to national entities, because the money-credit game can still be re-instituted via pure fiat.

No, the real game changer, the one thing that would spell their ultimate doom, would be the permanent destruction of the money-credit system via some impersonal, scientific means of creating & maintaining a medium of exchange, unit of account, and store of value. Nathan has the right idea with Freedom's Vision, but he is hopelessly naive in intent. It's about as rationale as arguing with Heinrich Himmler that it would really be a much better idea not to try & exterminate certain peoples. The bankster's will never willingly give up their advantage. It will have to be taken from them and denied in perpetuity by permanent controls. by B9K9 on Sun, 03/21/2010 - 16:02 #271583

Once one understands the truth, the great philosophical question then becomes one of whether to fight or join. Are the American people worthy of freedom & liberty, or do they deserve to be robbed of their very birthright and sold into slavery? What favorable traits, behaviors and general worthiness recommends Americans? What warrants such an exercise in futility as that of attempting to restore basic rights? Did not Americans long ago collectively sell them all for the proverbial bowl of porridge? Why not, as was so presciently noted, join the dark side? The few who understand the system will either be so interested in its profits, or so dependent on its favours, that there will be no opposition from that class, while on the other hand, the great body of the people, mentally incapable of comprehending the tremendous advantages that capital derives from the system, will bear its burden without complaint, and perhaps without even suspecting that the system is inimical to their interests. Remember the line from Patton "Rommel you bastard, I read your book!"? Once you understand what is occurring, every thing begins to make perfect sense. Therefore, why not copy & mimic in the shadows? Like the sharks' remora, why would the power elite care if you were eating leftover crumbs by following their same exact set of strategies, as long as you got nowhere near to threatening them in any manner? Why bother fighting TARP and the various bailout bills? Why waste one's time opposing health care? Once the parlimentary tricks are perfected for H/C "reform", both amnesty and cap n' trade can be rammed through regardless of political opposition. Sure it's going to destroy the middle-class and bring on, shall we say, widespread poverty & social chaos, but isn't that their point? What one really needs to think through is by what means will assets be captured & profits harvested by the power elite when the SHTF? How hard is it to be a well paid agent who willingly drops Zyklon B on fellow citizens if, in the final analysis, it's what they deserve? After all, they're just fucking sheep, right? by B9K9 on Mon, 03/15/2010 - 17:06 #266374

Actually, I'm a little disappointed with the breathless sensationalism. Look fellas (and gals too), in order to understand the world around us, and what is ultimately directing our historical events, it's really fucking simple:

The US, like the British Empire before it, the Spanish Empire before it, ad infinitum, is an imperialistic enterprise that utilizes its technological advantages to extract, utilize & otherwise exploit opposing regions, peoples & cultures for its own benefit. The country itself can trace its founding back to the original colonies which were created as a result of granting royal charters to independent investment groups. Never mind that pre-existing indigenous peoples already 'owned' the land. Like Australia, which as recently as 1967 officially classified Aborigines as fauna (!), Indians were viewed by Europeans as nothing different than hostile deer & bears. Fast forward to today. We have two mutually dependent groups that require the complete direct assistance of the other to survive: the Fed and the MIC. Without the ability to deficit finance (ie print money in which to purchase debt), the DoD could never hope to cover a fraction of the operating & capital expenditures necessary to maintain world-wide military domination. However, OTOH, without the ability to break the hard oil peg (ie print money in which to purchase debt), the Fed could never hope to cover a fraction of the operating & capital expenditures necessary to maintain worldwide financial domination. Get it? Both GWI & GWII were, and have always been, about oil. We are in Afghanistan not to pursue the Taliban and/or (de)stabilize Pakistan, but rather to surround Iran. One can bitch & moan about our state of affairs, but without our military ensuring the power of the Fed (and by extension the $USD), I don't think many ZH space monkeys would really enjoy paying the true market price for oil and all that that entails. Let's just say that the only world we currently know right now is fairly peaceful compared to the alternative. We've got 3rd generation welfare queens & their broods 'quietly' staying on their side of the tracks, we've got vast armies of unemployed 'quietly' sitting in their homes drinking & watching daytime TV, we've got huge numbers of "students" 'quiety' warehoused at attending schools, we've got millions of public employees going to "work", etc. If any and/or all of these groups ever woke up from their collective stupor, they could cause a bit of a head-ache for the types of smarty-pants that inhibit ZH (myself included). As Denninger so eloquently states, we are all Lehman. by B9K9 on Fri, 03/05/2010 - 20:25 #255720

will the Greeks tire out and go back to their old, and much poorer, ways? I've got news for you: everyone is going back to their old ways, some poorer, some richer. It's all simply a function of productivity - the efficient application of capital + labor. The only thing the last 20-30 year period of credit-leveraged asset-inflation accomplished was creating a false sense of entitlement amongst an awful lot of people. And I don't mean just foreigners; I'm referring specifically to many of my fellow Californians. A lot of immigrants (including my dear wife - a NYC transplant) only know the California of the last generation - the cleaned up, gussied version. I've told her, and I'll tell the board, if you want to know what California really looked like as recently as 1975, there is no better snap-shot of that period than the original "Gone in 60 Seconds". Shot on the streets of LA

County's South Bay, today home to some of the most expensive real estate in the USA, it looks no different than a generic suburb of a mid-western city such as Chicago. The reason for this appearance, of course, is that the Bay Area & SoCal were NO different than generic midwestern suburbs! We're talking major extractive industries like oil, gas & commercial fishing, large scale manufacturing (not the least being aerospace), huge military bases and construction. High-tech (my biz) & entertainment (ie Hollywood) get a lot of attention (because it sells media), but they represent a fraction of the 'real' economy. But as California shifted away from a productive economy, towards one centered around financing serial debt expansionary bubbles, we saw the effect that old magic of asset (housing) inflation had on the overall demographic composition. Middle-class moved out, to be replaced with lower class immigrants to serve those who had carved out a slice at the top. So now we have nice 'clean' FIRE industries with none of that hurly burly going on. The gardeners & nannies are allowed in during the day (special dispensations are granted to evening restaurant workers) and everything seems hunky dory. Except it isn't. The opportunity, which I've hinted at on other threads, lies in identifying not only the resulting applications, but the processes by which we will return from whence we came. These will provide the core drivers for goods & services as we all take this collective journey back to our roots.

by B9K9 on Fri, 05/07/2010 - 15:56 #337180

I'm glad you have the correct perspective on the various actions being undertaken by the Fed. Denninger is incorrect - there was never any way to fix the problem back in 2008. We were dead then, and we are dead now. What does it matter if the system ultimately blows up? It's not really extend & pretend, it's just extend. Some may still cling to the belief that public sector credit demand is only a temporary state of affairs until the private sector recovers. Problem is, the private sector is never going to recover for the very simple reason that government deficit spending destroys both incentive and (private) capital formation.

At this stage in the game, public sector spending is now a key component of overall GDP. Take it away, and the system crashes. Print Benjamins & take on $trillions more in sovereign debt and the system still crashes ... just further down the line. The only true hope is some kind of miracle that would produce sufficient real wealth in excess of our compounding debt loads. A new energy source, advances in food production, etc, anything really would do the trick. by B9K9 on Thu, 05/13/2010 - 10:59 #349277

Bro, we all go through a period of libertarian belief in free markets. There's only one catch, but it's a good one (sort of like Catch-22): individual income/wealth or aggregations (aka "the economy") must continually grow at an exponential rate in excess of debt in order to service compounding principle+interest. To re-phrase, it doesn't matter what interest rate the market sets, because no matter what it is, it must always by exceeded by absolute economic growth so that in nominal terms the debt is satisfied & extinguished. But unlike the unthinking math expressed in payment terms clearly stated on a debt covenant (contract) collateralized with real productive assets, the nominal economy must constantly search, develop, exploit & grow to avoid foreclosure. Hence, the image of a someone running faster & faster on a hamster wheel, yet never "getting ahead". Like life itself, one can run swift and/or long, but eventually entropy catches up. But what about the contract? It doesn't care, it simply keeps accruing the promised payments. And when they can't be met? Foreclosure & debt peonage. We have documented histories of these events repeating endlessly over & over again for over 5,000 years (called the "Bible"). It always ends this way - there are NO HISTORIES IN EXISTENCE that differ in the telling of the eventual outcome. The power-elite well understand these principles. They have been repeatedly admonished, as usury was considered an act of war. We know who is prosecuting this war on humanity. Right now we're experiencing a brief interregnum while mankind becomes reacquainted with reality.

by B9K9 on Thu, 04/29/2010 - 09:44 #323557 Enough - enough of having the entire world paying for the stupidity, mistakes, and greed of the banking elite. Tyler/Dan, David & Dylan are getting oh so close. Yet they still periodically revert back to type by characterizing these actions as "stupidity", or worse, "mistakes". Look guys, I gonna spell it out for you one more time. This entire farce was designed, launched and executed as a take-down from the very start. Consider some of the points made by the more astute commenters.

Travis continually observes that the global economy had entered a mature phase where new products/services lacked any real "economicalness". If you understood this important fact generations ago, you would clearly see that debt gaming (eg leverage, derivatives, etc.) would be the only alternative to earning above average returns. However, once the decision to engage the credit-leverage ponzi was made, we have to deal with the facts that Mako (and to a more naive extent, Denninger) continuously raises. That is, you cannot beat the exponential nature of compounding principle+interest. So you know for an absolute fucking fact that the system is going to eventually reach a terminal stage. Thus, it is trivial to desconstruct what happened in a few easy steps:

Encourage the build-up in private credit-leverage, then short as debt collapses; After private sector reaches saturation point, transfer debt to public, then short public debt as it collapses. Utilize media throughout the entire process: during private phase, "real estate never goes down"; during public phase, "green shoots & stimulus".

If ZH is to maintain any relevance, it needs to consider fully embracing what is actually occurring. This was a pre-meditated take-down from the start. It is still being executed. by Mako on Thu, 04/29/2010 - 10:24 #323641

B9K9 Yep. They are blaming what they see last as the fatal mistake, the fatal mistakes were made at the beginning. Matter of fact generation after generation keep making the same exact choice expecting a different outcome. The Math is always the same, humans can't supply and demand exponential growth long term, and when you can't it collapses into a death spiral. The current system is just like the previous system, matter of fact, the old system never completely collapsed. Housing or real estate blowoff top is usually the top of the credit creation. Why? because the most of amount of credit is generated that way and requires the owner to continue to work for 30 years. I have no idea why everyone is mad now, you have the same system in place the next time... housing will top.... system will crash... people will die. If the system is done correct and efficiently, 60-80 years tops then collapse. I love it when these guys out here scream, "but the debt/credit will never be paid off"... no kidding exactly what do you think it's going to be paid off with? I don't know whether to laugh or cry. It's a one way road and eventually the road hits a dead end after about 60-80 years. Current US debt/credit $52.7T worldwide like $200T... exactly what would you pay that off with? Well, you have to create it... then you are up to $105.4T and $400T. There is no paying off. by B9K9 on Thu, 04/29/2010 - 13:03 #324094

The last 150 years of technical innovation have been nothing more than leveraging fossil fuels. Take out the fuels, and we have nothing. Computers are just an update to the telegraph. Cars & airplanes merely optimizations of steam locomotives. Where/what are the next paradigm shifts? How do we communicate faster, or transport ourselves more efficiently? I'm actually a super-optimist. I think humanity is gonna be around for a long time. Only it's going to look a lot different. First of all, why are we 6' tall? Why not 3'? That would cut our caloric requirements in half. All it takes is a little genetic engineering. Why not transport brainwaves via tele-communications? After all, our senses are simply a function of electricalchemical baths sloshing around in our heads. We could experience the reality of surfing in Tahiti without actually even being there. Think about the tremendous energy savings that would accrue. I have no doubts about the limits of mankinds' ingenuity; it's just that our current phase is based solely on fossil fuels. That's why the current era of growth has ended and gamesmanship was shifted to finance. by B9K9 on Sun, 04/18/2010 - 08:22 #306505

Systemic failure is a design feature of the credit-money system. Exponential math dictates that compounding principle+debt always outruns loan service capacity. It doesn't matter what the underlying property & productive assets pledged as collateral are: individuals (mortgages->jobs), companies (capital>products+services), or nations (sovereign debt->taxpayers). It was always going to fail - the only open questions are:

Was the transfer of private debts to sovereigns intentional or hoocoodanode? That is, were Keynesian policies cynically implemented knowing they would ultimately result in an even bigger crash or was there a sincere belief in their efficacy? Will the crash be precipitated by facts (eg banks are insolvent and exist only due to public support; unsustainable debt levels v national output; etc.) and/or politics?

Personally, I tend to lean towards premeditated, intentional acts. The GS mini-drama so widely discussed doesn't seem like a true, fundamental factor. However, fundamentals may come into play as a by-product of political action taken in an (futile) attempt to reduce pressure. That being said, at some point we must turn our attention to what happens afterward ie true reform. Whether they want to or not, our children must become the vanguard of the (youth) revolution. Repudiating the debt, terminating the Fed, and implementing a new monetary/taxation system are going to be huge tasks. by B9K9 on Tue, 04/20/2010 - 12:06 #309488

I know Dan has to keep fresh information flowing in order to continue driving traffic to Zero Hedge, but at some point it all becomes very mundane. Bucky Fuller said it best, and I quote: "You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete." ZH has made its mark by exposing the existing reality. Not surprisingly, it seems that every hour of every day there is a revelation of some new outrage, some new assault on liberty, some new affront to basic constitutional provisions. No shit! It's like complaining about lions eating zebras - it's what the power-elite do. It's time to focus our energies on building a new model. Actually, we don't really have to build a new model at all, since a paradigm shift is going to occur regardless of anyones particular desires. What is this new model going to look like? Well, that's pretty easy - it will simply be the opposite of what exists today. So, I would suggest one should begin to consider the various functions observed today in current society, and plan on responding to an entirely different set of circumstances. At some point, this new model will become the norm, and the old model will become a faint memory of some incredibly corrupt, decadent system. Here's a starter list:

Single family home -> multi-generational: kids, parents & grandparents Hospitals/nursing homes -> home care (hospice) Cars -> mass transit Suburban -> urban Welfare -> poverty Deficit spending -> austerity Democracy -> republic (limited franchise) Debt -> savings Imports -> local production

See the pattern? Here's the big secret: the "new" model is actually a very ancient model. In fact, it's the way humanity has lived for millions/thousands of years before the miracle of fossil fuels was discovered a short 150 years or so ago. If something this obvious is staring you in the face, how can you not profit? Feel free to add to the list; here's another example:

Fiat -> hard money (gold)

Now, what does this mean beyond those storing gold & lead for their own personal safety & survival? What does it mean on a macro scale when an economy transitions from one form of exchange to another? What new/old products & services (re-)emerge in this type of environment?

by B9K9 on Tue, 04/20/2010 - 14:14 #309718

Unlike a trippy hippy, I'm not arguing or advocating. Rather, as an enterprising anarcho-capitalist, I'm merely pointing out the obvious.

Here's a mild thought exercise: do doctors argue or advocate that patients should age & suffer ill health? Of course not; they simply let nature do its dirty work. Many people have a false image that doctors make their money from helping those who are basically healthy. Nothing could be further from the truth - doctors make really big money administering to the elderly & soon to die. Essentially they are just front-running the morticians. Likewise a true entrepreneur should be able to evaluate the situation we have unfolding and make certain, unemotional bets as to the inevitable courses of action. Step back and determine what is as opposed to what you believe is desirous or what should be.

by B9K9 on Tue, 04/20/2010 - 16:31 #309981

I'll try one more time: it doesn't matter what we want and/or desire. What matters is reality. The reality is that we are living a false illusion, one that is being propped up and maintained at any cost, including shredding basic constitutional provisions, so as to avoid the final reckoning. Here's an interesting anecdote: Ferfal noted that one of the first things to emerge were black/gray markets operating in previous retail and/or form warehouse space. Well, guess what? Fairly recently, it seems all over SoCal, 'bandit' grocery outlets are operating in former retail outlets; essentially they are indoor swap meets. Sometimes I wonder if they are even paying rent. I mean, if a mall is BK and the ownership is hard to track down, how hard would it be to change some locks & print up a false lease agreement? There's one place a few miles from us that doesn't even have a cash register. But that doesn't deter customers who know what they are looking at - it's the same exact produce as at any major super-market, yet the price is discounted by up to 75%. (For example, monster artichokes that regularly sell for $3 are available for $1.) Hell, I wonder if they're total fly-by-month operations that are planning on stiffing their suppliers. Anyway, take note of what is going down. Here's a few more bullets:

Integration -> segregation Police/fire -> self-protection/local volunteers Prisons -> roving gangs

I think you get the picture. Now, how does one harness this power and turn it into a new political movement that will overturn the old order? Kunstler has ID'd what is going to occur, but I don't think he likes the answer. by trav7777 on Thu, 02/18/2010 - 10:00 #235348

What did FDR do during the last depression? He devalued.

There is no way out of the mathematics here - a rise in the real value of the dollar, the drop in tax receipts and all the rest of it will crush the USG. Period. How many times do I need to get banned from TF for saying this? The economy CANNOT pay the gov's debts back in dollars with today's value, much less in more valuable dollars. If the sovereign defaults, its notes and those of its central bank are going to be worthless.

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by B9K9 on Thu, 02/18/2010 - 11:23 #235490

Trav, Treasuries, Agencies and FRNs are all worthless regardless whether default or (hyper)devaluation is chosen (or imposed). In one case, $1 is reset to -0- by a declaration of repudiation. In the other, $1 becomes worth $.0000000000000000000001 or -0- as a result of hyper-inflation. As has been stated countless times, oftentimes boring many to the point of tears, there is simply too much debt in the system. But what a lot of people don't seem to understand is that all that debt represents claims (assets) by others. Ahem, cough, that would be ... savings, pensions, reserves, etc. All going to -0-. Think about it.

by B9K9 on Mon, 04/19/2010 - 08:51 #307749

Let me explain a little further by what is meant by the term: Systemic failure is a design feature of the creditmoney system. At its heart, it means exponential math dictates that compounding principle+interest will (eventually) outrun loan serviceability. These basic principles are very old; recognized by various civilization thousands of years ago. In fact, the ancient Hebrew word for "usury" is "neshek," meaning literally "a bite". The poison starts slowly, almost unnoticeable, until it spreads and consumes the entire body. So what does this have to do with the volcano? Simple - when a debt is incurred, it is almost always under conditions where future projections are quite optimistic. For the individual (eg mortgages), future considerations of possible job losses, health, illness, or other setbacks seem to be summarily dismissed.

So too national/global economies - there isn't any buffer for the types of natural events we see occurring today. But unfortunately, compounding interest keeps accruing automatically in an unthinking, unemotional & relentless process, regardless of any particular underlying economic conditions. This is what the ancients were warning about across the ages: it all looks great within a 1, 5 even 10 year window, but then the inevitable hits come at 15, 25, 35, 50 years. These might seem like long time lines to most, but to the power-elite schooled from the beginning to understand the truth, it all fits within their planned designs. This process, which has been repeated countless times over thousands of years, always ends when productive assets & real property pledged as collateral are forfeited, and the borrowers are reduced to a state of debt peonage. We all seem to be waiting for a precipitating event, perhaps a natural disaster like the volcano, that will finally unleash the last stage(s) of the awful truth about our credit-money system. Perhaps people thousands of years from today will pass note about some long-forgotten civilization that discovered the truth the hard way. by B9K9 on Thu, 05/13/2010 - 10:39 #349222

The current issue of Nat'l Geographic has an article on Mt St Helens - 30 years later. The biologists all confirm your observation: new life emerges & grows quickly, reaches maturity while depleting its primary resources, then dies out/is replaced by other forms. The scale they were using was bacteria through incipient fungi, plants and finally animals, but of course it parallels our human experiences ie the cycle of life. Mako may appear repetitive, but that's only because there is still a significant number of people (such as tmosley) who still believe there is some way out. There isn't - free, open markets, abolishing the Fed, restoration of the gold standard, etc - nothing is going to work. (I've suggested to Mako that he tone down his combativeness in order to get his message through. You are both in agreement, yet look how far your side discussion has degraded into personal insults.) If we were somewhat self-sufficient and prepared, perhaps we could deal with the credit-boom echo, but our government and its enablers (masters?) is actively conspiring against the citizenry to suppress the knowledge they are going to require to survive the coming ordeal. That is why they are criminals and are engaged in crimes against humanity.

by B9K9 on Tue, 06/29/2010 - 09:28 #441259

I typically don't respond to trolls, but you provide a useful handle in which to hang & characterize another analogy.

Imagine a passenger car traveling at 100mph crashing head-on into a sold concrete wall. It's all over in seconds, with the predictable results of gore, dismemberment & death. Yet with a very high-speed camera, this event can be filmed & captured @ over 1,000 frames per second. Right now, people who should know the inevitable outcome are mesmerized by watching one frame per day. This shit's been going on now for over 3 years, so we're only just getting past the first second. As for jealousy, I've been around since the first few weeks on the old blog site. Who knows which Tyler it was, but I was exhorting him via a series of email exchanges to become the Deepthroat of our day. Like almost everyone else, I'm amazed at both the lengths of what the power-elite have been able to pull off, and the amount of back-channel information that is being fed (pun intended?) to ZH. CogDis frequently writes about, well, cognitive dissonance. One aspect of this phenomenon is rarely discussed however: what if you are a manufacturer of lies, but you still want the truth to reach certain readers? ZH is that chosen medium. One can only imagine the lengths taken to hide/shield indentities. Crap, Bernanke himself is probabaly a key contributor. LOL Now, back to the original analogy. Many of us should know better, but here we are, collectively watching oneframe-per day. The end always repeats the same way, friend against friend as each engages in a mad scramble for scarce resources, but still, we can't break our gaze from the daily dance of suspended death. by Cognitive Dissonance on Tue, 06/29/2010 - 10:03 #441402

"CogDis frequently writes about, well, cognitive dissonance. One aspect of this phenomenon is rarely discussed however: what if you are a manufacturer of lies, but you still want the truth to reach certain readers? ZH is that chosen medium.One can only imagine the lengths taken to hide/shield identities. Crap, Bernanke himself is probably a key contributor. LOL" B9K9, Very astute of you. I'm becoming more convinced on a daily basis that at the very least there are many people in corporate, governmental and military positions that are doing everything they can under cover of darkness to expose the insanity and bring this Ponzi down. Including some in high positions that feel trapped in their "positions of responsibility" which prevents then from publicly talking. But they still feel they can anonymously leak information to undermine this out-of-control dump truck. What do you do if you wake one day to the realization that you are part of the problem. After recognizing that to shout from the top of your building would only destroy yourself economically and politically, you then begin to understand you might be able to help slip the camels nose under the tent flap. by B9K9 on Thu, 07/22/2010 - 11:14 #483710

Mish, Denninger & TAE have been right about this all along. The total value of credit vs money in the aggregate credit-money system is orders of magnitude greater than money. I think Steve Keen mentioned last year that the Fed would have to print $25T to even begin making a dent. At this point, it could conceivably be $100T. So what happens if Ben prints anything near the levels required? Well, it's simple arithmetic: if he increases the money supply by 10X, we should expect to see monetary (not credit eg home) prices increase by 10X. So gas would be $30/gallon, etc. All this QE talk is pure nonsense - it's just jawboning. Money printing does nothing absent a desire by hundreds of millions of individuals to resume engaging contracts for credit (ie going into debt). I think Ben's jawboning is a signal to the insiders that the jig is just about up. Some final gunning of the equities markets in (false) anticipation of printing, then the collapse. Printing does nothing for those who have already cashed out. TARP and the other programs instituted over the last 2 years made sure the power-elite got out & were made whole. What do people desire when holding cash? For prices to drop. A Republican majority which embraces & implements "austerity" is exactly what the power-elite want. What they want is what they will get. Their only gamble is whether we go 1789 on their asses. Wake me when repudiation is on the table.

by B9K9 on Thu, 07/22/2010 - 10:50 #483640

I just got back from a most excellent fishing trip in the eastern Sierra. When fishing for wild trout (we're talking humping it 10 miles one-way over the Sierra crest @ 11-12,000' to get to naturally spawning Golden trout waters), the key is to get a reaction in order to induce them to strike. For example, some of the most popular flies are termed 'attractants' because rather than mimic the appearance of a fly, they simply anger/annoy the shit out of the fish (they are extremely territorial) to cause them to strike. (GT aren't stupid-ass planter trout that lazily bite on bait.) The point of this missive? ZH keeps throwing out these frequent updates to keep the Goldens' biting. Note that I classify ZH space monkeys not as sheep, but rather the premier fresh water game fish available. Beautiful, intelligent & highly desired, yet still at heart a simple animal that predictably reacts to certain stimuli. People should take heed to Mako's post(s). These hourly/daily distractions are all noise. We had our inflation it lasted from 1945-2008. There isn't any incipient or organic credit demand remaining simply because there isn't any economy activity by which people @ large believe they can generate a sufficient return. Hence credit is contracting - a death spiral for any fractional reserve system, gold or fiat based. Mish has it completely right - Bernanke & all the other theorists have been trumped by human nature. Attitudes have changed - both Boomers & X are in full savings mode. Not only for self preservation, but the simple fact that with ZIRP, it's almost like earning the spread by paying off whatever debt one may have.

Absent the emergence of some incredible new economic driver, this baby is toast. Review what happened in Argentina/Russia; we are going to be reduced to pulling this thing around from a complete reset point. All the rest is just a distraction. by B9K9 on Sun, 07/25/2010 - 11:52 #487630

It's all just a big-assed circle jerk designed to buy time in order to preserve the existing status quo. The bottom line is either humanity stumbles upon some new miraculous economic driver that will induce/encourage the global population to willingly contract new debt, or this fucker is going down. The banking-political-bureaucratic triumvirate is absolutely committed to the current course of action because each benefits to a tremendous degree in their own respective fashion. However, like any three-legged stool, it's a very unstable arrangement due to the weakest link: the political leg. If the central bankers are unable to create another publicly subsidized credit-leverage vehicle like Fannie, Freddie, Sallie, FHA, etc, AND successfully blow another illusionary bubble utilizing this tool, the political monster(s) may finally begin to show its face(s). Once a new breed of true representatives are placed in power which did not benefit from the prior arrangement, then not only do they have nothing to lose (very important!), but they will also be propelled by the building public resentment & rage. (Jealousy & envy are two of the seven cardinal sins - never underestimate the power of revenge.) That's why we haven't seen any indictments so far - each group is protecting the other. Shit, they probably quote Franklin to each other to remind themselves of their predicament. ("We must all hang together, or assuredly we shall all hang separately.") We will only live to see thousands of financial/political/governmental officials frogmarched if & when we get regime change. I really enjoy ZH because it's just about the only place anywhere where anyone really gets what's goin' down. But still, it's also a bit of a waste of time. Either we get reflation, in which case it's "sayonara suckers" as the smart money loads up on every leverageable vehicle possible. Or, most likely, math, physics & logic prevail, in which case we get to live through "interesting times". Being able to say "I told you so" & a $1.50 will only get you a coffee. The key is to be one of those who can articulate to the mob exactly what crimes were committed and why the culprits must pay (literally & figuratively, if you get my drift).