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This Funny Cartoon Economy: Forgive us our debts, as we forgive our debtors
Deflation is the inevitable natural corrective result of inflation.
Many banks, corporations and governments still fight the last century war of the Roses, when the dollar devalued 98% in terms of the price of gold.
CPI is a lagging indicator, not a leading indicator.
GDP contracts while government debt increases. Thus may raise the debt to GDP ratio to new heights with fatal overleveraging and insolvency of the big bank corporate government consumer economy media monopoly complex. They may not go down without a fight.
Not Brazil, not China, not India, not Russia, not the Congress, not the Courts, not the President, not the Fed, not the Treasury, not the Pentagon can change the facts of life and nature.
It is The Way Things Are, as Lucretius suggested over 2000 years ago.
If central planning worked, Cuba would rule the world.
There may be no new highs in anything except more bad debt during this unfolding depression. This contracting economy may lead to foreclosure and liquidation of every dollar of bad debt before this Greatest of depressions is over, if history is any guide.
Government is swapping an ocean of new Treasury IOUs for bad Agency IOUs, rearranging the deficit deck chairs on the economic Titanic. Nothing has changed despite headline news to the contrary.
First the bubble, then the deflation, then increasingly desperate attempts to reinflate, trying to put spilled milk back in the cow.
That’s the way it has always been. There is no free lunch, only theft.
The natural economy peaked in 2000, the Jubilee Year declared by the Pope. Now, generations of debt must be repaid with repossessed property. Reread Leviticus 25 and 27 for the time-honoured truth.
A new round of deficit debt inflation created unreal artificial highs in real estate (2005), stocks and bonds (2007) and commodities (2008).
This time we are neither on a gold and silver standard, nor do we have many leaders who defend and protect the Constitution. Many are on the bribe, dole or mercenary soldiers. Long live our Independence from King George.
September 10th, 2009 at 9:18 am
Rich…I have read that Alt A loans and option ARMS are ready to re set and thus, we have not begun to see the foreclosures yet to come
With 17 trillion in debt,,no country will but our worthless bonds..the dollar will be worth dimes….and yet the public swallows the US lies that we are ” turning the corner” I am buying gold and reducing debt…its gonna get ugly very soon
What do you suggest?
September 14th, 2009 at 7:07 pm
Well Jay, we certainly appreciate your comments
You are quite right we have not yet begun to see the full extent of bloodshot mortgage foreclosure ARMS, eyes and limbs…
FHA is trying to replace underwater FNM, FRE and GNMA, banks make fewer loans, debt and tax bailouts try to forestall bank broker holidays, FDIC, OPIC, PBGC and other agency failures.
Some might be forgiven for thinking 0Care is really about reducing Medicare benefits, raising taxes and confiscating wealth here and abroad.
The Good Book says “Enter through the narrow gate. For wide is the gate and broad is the road that leads to destruction, and many enter through it.”
In the case of $12.8 Trillion in Treasury Debt, much of it intergovernment IOUs for Medicare and Social Security, more private debt being crowded out by the US Treasury, $100 Trillion in unfunded government mandates, another $200 Trillion in off balance sheet unregulated over the counter American Bank derivatives and $600 Trillion in BIS Global Derivatives, no wonder Chinese students from a surplus trade partner nation holding the most Treasury Debt of any nation, laughed at our Treasury Secretary when he spoke to them in Mandarin and told them dollar debts were safe.
Apparently the Rotsa Ruck message was not lost on the current administration, who just announced 35% tariffs against Chinese auto imports, including 17% of the tires sold in the USA. The Chinese immediately retaliated with auto and chicken import restrictions, hurting what’s left of GM in China and maybe bringing down the price of American chicken, unless Brazil, India or Russia step up to the market. We recall friends making a killing importing Russian chickens when their economy collapsed.
So it looks like the lessons of Smoot Hawley Trade Tariffs may be lost on the current union-backed Administration, Congress and Courts signing off on the largest debts and trade declines in the history of the world.
Corporate Insiders have been selling like there is no tomorrow, including secondary offerings liquidating as much as 14% of stock capitalizations.
There is a worldwide scramble for good cash. People are hoarding cash in safes rather than banks or security boxes. They no longer trust big corporate government.
$50 B of IMF Special Drawing Rights recently announced as committed by the Chinese hardly replace the trillions of dollars held around the world. The new XDRs are still paper: one SDR is the sum of 0.6320 US Dollars, 0.4100 euro, 18.4 Japanese yen and 0.0903 pound sterling.
Gresham’s Law states good money drive out bad money.
In other words, if we have a choice between spending a Federal Reserve Note based on usury, and keeping a silver dollar, for most, it’s a No Brainer.
Surplus BRIC nations and Japan found commodity, copper, gold, silver and platinum markets are very small markets compared to dollars, bonds and stocks. They spent some of their surplus dollars on T Bonds at 5.066% and S&P500 Stocks at 666 since last March 2009.
The $64 Quadrillion question is: Are they willing to create and puncture yet another less liquid bubble in commodity and precious metals markets, cutting their economic noses off to spite their financial faces?
After all, it’s tough to eat crude or metal, notwithstanding conspiracy theories of population control via H5N1 or H1N1.
We ask ourselves, does former Treasurer Hank Paulson still hold the $480 Million in Treasury Bonds he swapped Goldman Sachs stock for tax-deferred? Is he hedged against rising interest rates?
In honor of Matthew 7:13 and 7:14 we ask ourselves: Why are a few rich smart traders currently long the dollar and oil, but short gold, silver and platinum? Is it a clever Nathan Rothschild Waterloo false flag feint ruse offset by undisclosed Bank Derivatives?
Or has the biggest money figured out there is nowhere else to go but the dollar and some safe oil?
After watching Japan go nowhere for twenty years with neoKeynesian prescriptions, most of us realize the government tail cannot fix the domestic dog, let alone save the world economy. Despite repeated official pronouncements of green shoots to rival the Five Year Great leap Plans of central command economies during the Cold War, we may be on the verge of further collapse, already down -33% year over year on durable goods production.
The -33% deficit implosion so far created a real usury rate of 33% plus nominal 6% mortgages, 39%. 39% APR is more than most mortals can comprehend or pay, almost more than mafia loansharks or cash advance credit card charges. Banksters are busy canceling credit lines, knowing the next wave of defaults could be commercial real estate loans in the trillions.
We think the narrow gate to more life abundant may be understanding deliberate government hyperinflation does not really change anything.
Hyperinflation makes people lose their housing and life savings. They still owe money they are unable to pay. Government lobby lenders tomorrow could abrogate dollar credit contracts as easily as FDR Congress and Courts allowed FDR Executive Orders to kill gold contracts and the Constitutional currency of gold and silver.
Imagine making three thousand a month, if we still have a job, but having cable, food, heating, insurance, internet, medical, telephone and transportation bills of $100,000 a month.
This is what Argentina, China, Germany, Hungary, Mexico, Russia, Thailand and Vietnam faced. They become barter economies because they were not even world reserve currencies.
WalMart does not accept, change or exchange Gold, Platinum or Silver Eagles or take ammo or jewelry as payment for their goods and groceries, even though the price of ammo doubled with the largest purchases by the FBI and Homeland Security in history. Hmmm.
Rather, we think what’s more likely is that increasing debts and decreasing economy and equity produce an even more overleveraged American economy, overburdened by trade deficits, doubled Treasury debts and quadrupled budget deficits.
All this may prove that too much unserviceable leverage cuts both ways, on the way up, and now on the way down. Centenarian adults during the Great Depression understand we are no way out of the Greatest Depression. Nobel laureate Joseph Stiglitz echoed Paul Volcker and Stanley Fischer over the weekend saying the Credit Crisis is nowhere near over, and we face an extended period of economic malaise until we let banks fail.
A 10% additional drop in overvalued asset collateral prices including bonds, real estate and stocks, would wipe out big bank balance sheets a second time.
That might account for why the world’s smartest traders are currently short bonds, commodities, currencies, Fed Funds, gold, platinum, silver and stocks, and long ammo, dollars, food, notes, oil and gasoline.
We base our $1000 Annual Seasonal Top Ten Outlook on what the rich smart money is doing, not what they say.
One can subscribe in time for the Autumn Edition with a PayPal Invoice or other preferred payment mode via JubileeProsperity@gmail.com.
In the last year, individual idea returns ranged from 16 to 875%. Past performance is no guarantee of future results, maybe better…
January 23rd, 2010 at 4:45 am
I would take great delight to write and say what a great job you did on this.