Economic pressures

[Danny B]

Wallace Klink

Since there are at least 2 sides to every story, I'll present another side.
Worldwide productivity is rising fast and most stuff is made or harvested by machines. There are claims that it is no longer correct to link reward to work performed. We should just turn on the machines and enjoy great bounty.

Wallace Kinck -- answering those who say the purpose of economic policy should be to "create jobs,"



The policy of creating "jobs" is by its fundamental nature retrogressive--a socialist, communist, fascist, labour--and finance-capitalist policy of sabotage of the rapidly growing productivity inherent in our vast Cultural Heritage. The policy of creating work increasingly for the mere sake of distributing financial incomes is totally irrational, destructive and specifically anti-Christian. Making an end of a means is a major sin within the boundaries of Christian morality. A formal State policy of full or near-full employment is based upon the Doctrine of Salvation through Works (known as the philosophy of "do ut des") which is diametrically opposed to the Christian Doctrine of Salvation through Grace.

Our existing financial system is squarely based upon the Doctrine of Salvation through Works. That is why it issues money or effective demand in the first instance only for production and never for consumption. We could through technology eliminate virtually all need for human participation in production and the financial system, and the Puritanical influence behind it, would still demand that no one should eat because they had no job to justify drawing from the surfeit of goods produced through non-labour processes. The problem is not a lack of "jobs" but rather a lack of effective consumer demand due to a fundamental and intrinsic flaw in the costing methods used in the price-system.

Production will naturally respond to effective consumer demand but demand is increasingly incapable of responding consequent to the evermore inadequate incomes distributed by the modern capital-intensifying economy. Need creates demand and effective consumer demand is a call upon produced goods which in an efficient economy will be increasingly provided with evermore diminishing need for human intervention.
But effective demand in a money economy requires that consumers possess enough unattached financial income to claim the entire output of industry. We do not need more work but rather more real financial purchasing power. Increasing consumer debt does NOT qualify as genuine purchasing-power because it merely transfers financial costs as a charge against future production. Your barber should obtain some automated orbital hair cutters. Of course this would displace more labour and increase the need for sane and practical distributive reform of the existing defective financial price-system.

Real need does not decrease with inadequate financial income. Need decreases with satiation provided by adequate real wealth. If the financial system does not provide sufficient effective financial purchasing-power then this inadequacy requires to be investigated and rectified--a task that requires application of a certain amount of intellectual effort. Unfortunately, however, as one Social Credit author was moved to observe, it seems that most people would rather die than think.

Sincerely
Wally

[Danny B]

Productivity and consumption

I've tried to show both sides to the argument on productivity and distribution.
Gandhi said "there is enough for everybody's need but not enough for everybody's greed".
EVERY attempt at disbursing wealth equally has failed dismally. Decades ago, a business owner made about 15 times what his workers earned. Today, that has grown to 50 or 60 times. Depends on the business. The income inequality is being twisted into class warfare.
Why The Haves Have So Much : NPR

Equality doesn't work. Runaway inequality doesn't work too well. What other option is there? There is Mondragon.
"At Mondragon, there are agreed-upon wage ratios between the worker-owners who do executive work and those who work in the field or factory and earn a minimum wage. These ratios range from 3:1 to 9:1 in different cooperatives and average 5:1."
Mondragon Corporation - Wikipedia, the free encyclopedia
Mondragon has been around for a while. It seems to work pretty well.

The health and vitality of a society is dependent on the surpluses that it generates. Take a good look at North Korea and you can see what the productivity of a police state is. Socialism necessitates a police state and a command economy. Those two destroy all surpluses and any viable future.
What happens to the finance industry when surplus is destroyed? The parasites don't produce for themselves and must depend on SURPLUS production from the producers.

Socialism carries it's own destruction in it's game plan. Vladimir Putin warned obummer NOT to try socialism. Russia had it for 70 years and it was a colossal failure.
History runs in cycles. One name for the economic cycle is the Kondratieff cycle. Elloit waves is another area of study.
Strauss and Howe write about generational cycles.
Strauss–Howe generational theory - Wikipedia, the free encyclopedia
We are at the fourth turning.

[MonsieurM]

thank you for the interesting Thread and taking the time to share your Knowledge

are you familiar with :

History's Hidden Engine - Socionomics Institute

History's Hidden Engine - YouTube

History's Hidden Engine is the result of more than three years of research and creativity by filmmaker David Moore. Moore traveled North America to capture the insights of 17 brilliant minds, then wove them into this film. In just 59 minutes and with the help of pop songs, news footage and cultural images that are familiar to everyone, this documentary shows how social mood drives trends in movies, music, fashion, finance, economics, politics, the media and war.

ps: like you ..... electronics and i seem to not be very compatible

also if you observe the rhythm of crisis has accelerated since the Asian Crisis ( 1997 Asian financial crisis - Wikipedia, the free encyclopedia ) ... each crisis preceded or followed by war .... today we are at a convergence point ..... knowing the "bright minds" on top .... they will try to dance to the same tune as usual when in fact as you so kindly shared ..... the whole rules of the games need to change ... as they seem to be the only ones still playing at fool the plebs when in fact everyone is seeing that the king is naked ( http://en.wikipedia.org/wiki/The_Emperor's_New_Clothes )

[Danny B]

Monsieur M, thanks for the link. The vid is fascinating.
You should look at the noosphere.
Global Consciousness Project -- consciousness, group consciousness, mind
And the hundredth monkey
The Hundredth Monkey
Brian Josephson has plenty to say on the subject too.
Brian Josephson's home page

[Danny B]

Banking and currency creation

10 characters

[Danny B]

Banking and currency creation

Many decades ago, Howard Hughes built an empire based on aviation. He designed and built planes. He owned airlines. He became the first billionaire entrepreneur.
In 1992, George Soros created synthetic instruments to "short" the British pound. He kept attacking and finally broke through. He collapsed the pound and profited about $1 billion dollars.
Black Wednesday - Wikipedia, the free encyclopedia

This has been an increasing trend for decades. Rather than do anything productive, the financial industry bets back and forth and makes a killing.
Mergers and acquisitions, hostile takeovers followed by asset gutting of the target.
Often, there wasn't enough profit to be made legally. The S&L scandal is a perfect example. Power groups got the law changed and made off with $! trillion. About 1,000 went to jail. Fraud became endemic. It took the bankers 19 years to get rid of the Glass-Stegal law. That and a few other changes have made it very difficult to put anyone in jail for fraud.

This short vid explains the early genesis of banking.
The Goldsmiths Tale - YouTube
Banks originally started out as a safe place to store valuables. Today, they store very little of any intrinsic value. The only legitimate function of a bank is to allocate credit.
Since they have the power to create credit out of thin air, they naturally create lots of credit for them selves. As long as they invest it wisely, they can't lose. This is a great temptation to buy up everything in sight with all that free money. They profit in many ways. You and I have to work to produce currency. They just print it.

They have been getting away with it for quite some time.

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."
Henry Ford

The trend is; more and more people invest money rather than actually do something productive.
Fewer and fewer people are actually employed in the productive sector.
Employment participation has been going down for decades.
Productivity has been going up but, that INCLUDES the financial sector. The financial sector accounts for about 9% of GDP.

The only possible way that it can do that is by printing. The banks have another way to gain money. They push credit on people they know can't pay. They foreclose on the property and sell it again. This is especially lucrative when GOV backs the loans. Now the banks are insolvent. GOV can't rescue them because GOV is insolvent.

Nobody actually wants to work.
"Cash settlement” instruments are synthetic devices. They have no other purpose than to transfer cash from one entity to another by manipulating an underlying index number from
one moment to the next, one month to the next.

Nothing REAL is produced, created or even traded. On expiration, money is just transferred automatically into or out of accounts of those who have placed their bets. No more, no less."
Charleston Voice: The Role of Cash Settlement in Market Manipulation and in the Panic of 1987

GOV liabilities are at $211 trillion.
Kotlikoff Sees U.S. Fiscal Gap of $211 Trillion: Video - Bloomberg
The situation has been compared to; two drunks holding each other up.

Then there are the states. They've dug a big hole for them selves.
"In the West Contra Costa Schools' case, that $2.5 million bond will cost the district a whopping $34 million to repay."
Only In California: School Owes $1 Billion On $100 Million 'PayDay' Loan | ZeroHedge

Too much money borrowed too stupidly.

[Danny B]

All that money and no wealth

In 2008, the bank of international settlements warned of a coming collapse.
They were one of the very few who spoke up.
Now they are warning of a collapse in the bond market.
Swiss-based BIS warns of another 2008-style credit bubble about to burst « ArabianMoney

The world economy is about $ 50 trillion a year.
The current total estimated notional value of all the derivatives is $1.5 quadrillion. There is an estimated 10 quadrillion worth of contracts denominated just in dollars.
The money supply in America rose at 6 times the rate that the GDP rose.
We see an enormous amount of currency and money-substitutes being created without underlying wealth.

The world is awash in paper instruments. These instruments have no intrinsic value. They can only be "vitiated" by wealth skimmed off in taxes and profit from the production-consumption cycle.
The various banks have had to extend credit farther and farther out to make up for the lost purchasing power in the West. We promised tomorrow's wages for today's luxuries.

The credit super-cycle is coming to an end. Consumers are using credit for survival. Wealth is moving from the West to the East.
The standard of living is dropping.
Too many people failed to save.
"#7 One recent survey discovered that 40 percent of all Americans have $500 or less in savings.

#8 A different recent survey found that 28 percent of all Americans do not have a single penny saved for emergencies."
15 Signs That The Economy Is Rapidly Getting Worse As We Head Into 2013

Manufacturing is the primary value-added industry. It moved East. Our standard of living will drop quite a bit.
GOV promoted itself as the ultimate security-blanket. That promise is soon to be proved a fraud and a lie. When the bond market blows, it will take EVERYTHING with it. It's hard to say whether the bond market or the derivatives market will blow first.
The Coming Derivatives Crisis That Could Destroy The Entire Global Financial System

Robert Wiedemer accurately predicted the crash. He is predicting the next crash. This is what he is predicting;
"In a recent interview for his newest book Aftershock, Wiedemer says, “The data is clear, 50% unemployment, a 90% stock market drop, and 100% annual inflation . . . starting in 2012.”
Faber: ‘Massive Wealth Destruction’ Coming, Well-to-Do ‘May Lose 50%’ | The Total Collapse

While it is more-or-less safe to predict economic events, it is very risky to set a timeline. Wiedemer is off by a bit.
A collapse in the bond market would make almost all paper assets worthless. There is a very good chance that U.S. dollars would still have good value. Keep cash at home.

This is an article on the current financial operating system.
Guest Post: The Economic Death Spiral Has Been Triggered | ZeroHedge
This is an excellent vid on the longer term forecast;
Bucky's Vision of the Coming Better World, Dollars and Sense Show 27 - YouTube

Keep in mind that a bond market collapse will cause a bank holiday.
During a bank holiday, NO credit transactions can be posted. That means no EBT cards, no credit.

[Danny B]

Inflation, deflation and the 2 loop economy

Inflation only has one definition: an increase in the supply of currency and credit.
Deflation is, of course, a decrease. Price-inflation is an independent animal.
When GOV prints and banks lend, they must do so to create the currency to pay for both principle and interest. Keynesian economics demands a continuous increase. They need enough inflation to keep the system running.
This also serves to keep repayment easier. GOV debt is alleviated 50% on average by currency inflation.

As global wage competition lowered American wages, we still got price inflation commensurate with currency inflation but, we learned a new term.
Stagflation is a wage-price spiral without the wage part.
Currently, we learn another term, Biflation.
Everything you own goes down in value and everything that you buy goes up in cost.

When the housing bubble petered out, the consumer was no longer able to make the credit-and-money supply grow. The housing bubble was the jump-start to the economy after the tech bubble burst. The bond bubble is the jump start that was necessitated after the housing bubble burst. This is the last bubble. The FED admitted that it was doing things that it would have considered crazy 10 years ago.

To keep Keynesian credit growth going for the banks, GOV (you and me) gave them ABOUT $27 trillion. That didn't begin to fix things. The FED said that it is going to print an extra $ trillion.

Consider that unfunded GOV debt is at $ 202 trillion and grows by about $ 7 trillion a year. To put that in perspective, GOV claims that there is about $ 2 trillion in the SS fund. Actually, the SS fund holds that sum in NON-negotiable treasury debt. GOV needs to rollover about $ 2.8 trillion in debt. The FED is already printing about 80% of that and the percentage is expected to rise. It remains to be seen just how long this can go on.

One would think that with huge amounts of currency inflation, there would be dramatically higher price inflation. While the currency inflation is on a tear, there are 2 reasons why price inflation is muted.
Prices are influenced by the amount of money in circulation and also the velocity that this money changes hands. So, while supply is up, velocity is down. This dampens price inflation.

The financial people need inflation but, hyperinflation would destroy the currency and society. They have just the plan.

We live and operate in a 2-loop economy. GOV and banks move around
$ trillions every day. This moves in the upper loop. The PTB created about
$ 51 trillion worldwide for this crisis. GOV pisses and moans about $2 billion spent for food stamps. Bernanke promised to drop currency from helicopters. He did that alright. He dropped it to bankers.

The lower loop is starved out. Look at the austerity that is demanded by the bankers who lent imaginary money to the PIIGS. The job of a bankers is to convert imaginary money into tangible rewards. Since the imaginary money is ALWAYS deposited into a bank somewhere, it doesn't matter how much they create. The bankers get quite irate when the punters are no longer able to make the conversion. The bankers went overboard and created TOO much imaginary money.

The bankers are currently in the process of starving the goose that lays the golden eggs. They like to imagine themselves as being productive but, that is not the case. They would like to think that the trickle-down from their loop is enough to sustain the lower loop. This is no longer the case. Globalism took the wind out of the lower loop and it can no longer sustain the upper loop. Like a plane with shrinking wings (shrinking employment), it will no longer fly.

They got carried away in their greed and all their precious paper is in danger. Their cure is to create more paper. They certainly can't create wealth and they can't get us to create adequate wealth.
They have meetings and they announce that they have fixed the problems.
You're on your own.

[MonsieurM]

.
You're on your own.

ps: thank you for the new term Biflation

[Danny B]

Insiders, outsiders and objectivity

MonsieurM, glad you like it.

Promises Will be Broken
By Bill Bonner
When wealth was easy to identify and easy to control — that is, when it was mostly land — a few insiders could do a fairly good job of keeping it for themselves. The feudal hierarchy gave everybody a place in the system, with the insiders at the top of the heap.

But come the industrial revolution and suddenly wealth was accumulating outside the feudal structure. Populations were growing too...and growing restless. The old regime tried to tax this new money, but the new ‘bourgeoisie’ resisted.

“No taxation without representation,” was a popular slogan of the time. The outsiders wanted in. And there were advantages to opening the doors.

Rather than a small clique of insiders, the governments of the modern world count on the energy of the entire population. This was the real breakthrough of the French Revolution and its successors. They harnessed the energy of millions of citizens, who were ready to be taxed and to die, if necessary, for the mother country. This was Napoleon’s secret weapon — big battalions, formed of citizen soldiers. These enthusiastic warriors gave him an edge in battle. But they also ushered him to his very own Waterloo.

Napoleon Bonaparte himself was an outsider. He was not French, but Corsican. He didn’t even speak French when he arrived in Toulon as a boy. But there never is one fixed group of people who are always insiders. Instead, the insider group has a porous membrane separating it from the rest of the population. Some people enter. Some are expelled. The group swells. And shrinks. Potential rivals are brought in and bought off. Weak members are pushed out. Sometimes, a military defeat brings a whole new group of insiders into power. Elections, too, can change the make-up of the core group.

The genius of modern representative government is that it allows the masses to believe that they are insiders too. They are encouraged to vote...and to believe that their vote really matters. Of course, it matters not at all. Generally, the voters have no idea what or whom they are voting for. Often, they get the opposite of what they thought they had voted for anyway.

The common man likes the idea that he is running things. And he pays dearly for it. After the insiders brought him into the voting booth, his taxes soared. In America, taxation with representation proved far more costly than without it. Before the War of Independence, government spending was as little as 3% of GDP. Now, according to the figures above, US government expenditures tote to 38.9% of GDP. And if you live in a high-tax jurisdiction, such as Baltimore or New York, you will find your state, local and federal tax bill will run to nearly 45% of your income.

In short, the insiders pulled a fast one. They allowed the rube to feel that he had a solemn responsibility to set the course of government. And while the fellow was dazzled by his own power...they picked his pocket!

It didn’t stop there. Under the kings and emperors, a soldier was a paid fighter. If he was lucky, his side would win and he’d get to loot and rape in a captured town for three days. Relatively few people were soldiers, however, because sensible people despised them and societies were not rich enough to afford large, standing armies.

The industrial revolution changed that too. By the 20th century, developed countries could afford the cost of maintaining an expensive level of military preparedness, even when there was not really very much to be prepared for. But the common man was skinned again. Not only was he expected to pay for it, still under the delusion that he was in charge, he also was made to believe that he had a patriotic duty to defend the homeland insiders! That is the real reason that the modern democratic system has spread all over the world. It allows the insiders to mobilize more of the resources and energy of the country on their behalf. Nothing can compete with it.

You may wonder, though, why the real insiders would devote so much of national output to programs that benefit people other than themselves. The answer is obvious; because that is how they retain power. They must buy it. And since every vote is equal to every other one, they bid for votes on the basis of price, not quality. Everyone really knows his vote is not worth very much. That is why so many are cast on the basis of what seem to be cultural or symbolic issues of little material consequence — such as gay marriage or abortion. But other voters use their votes to get the material benefits that they want. Naturally, the elites want to buy them at the cheapest prices, so they begin the bidding in poor neighborhoods. Trouble there is that poor people tend not to vote at all...so they have to aim a little higher and pay a little more, which ends up in the middle and lower-middle classes...where health and retirement benefits are key election issues. In order to win an election, all major political parties solemnly swear to do what none can do honestly...or reliably — to keep the money flowing to these voters. The party that wins is the one that makes its promises most convincing...the one that seems most able to deliver.

But now the insiders are in trouble. The typical citizen is beginning to realize that he’s been had. As long as the insiders could plausibly promise him more and more benefits, he was willing to go along. But now, growth has stalled. With more and more people retiring, social costs are rising faster than revenues. Public finances can’t keep up. Democracies can’t deliver. And since the recipients of social spending are also the deciders, the faux- insiders who vote for the candidates of their choice, the government can’t adapt. It can’t avoid its own suicide. It will continue spending, diverting energy from the people who produce to the people who consume, until the system collapses. The ‘complexity’ of the system now strangles it.

Today, no major government in the developed world can make good on its promises. The US, for example, has committed itself to pay $86 trillion in debt as well as unfunded health and retirement benefits. In 2012, the feds added another $7 trillion to this figure. GDP, meanwhile, grew by about $320 billion. Financial obligations are now growing 21 times faster than the economy that will have to pay them.

Growth rates have trended down over the last half a century. It doesn’t seem to matter who was in the White House, or what was the price of oil, or whether interest rates were high or low, or whether the government ran deficits or surpluses. The same thing happened in France as in the US. From GDP growth around 5% in the 1960s and 1970s, growth rates in the developed world have been cut in half.

Nor is the current financial crisis to blame. Growth rates began to decline at least 40 years ago. Today’s rates are not extraordinarily low. And nobody really knows why this is happening. A steadily declining GDP growth rate seems to defy our assumptions about the way the world works.

The world now has more scientists, more accumulated knowledge, more money spent on research and development. These things should mean accelerated growth rates. They should allow people to get richer and richer at a faster and faster pace. Why has growth stagnated?

We don’t know. But we don’t have to know. The question is: where’s the downside? The US used a lot more energy in the period 1920-1980. Its GDP grew fast too. Now, energy use and GDP growth have both leveled out. So what?

This discussion might be merely inconsequential; instead, the future of the United States of America, Europe, Japan and the entire world economy hangs on it.

Growth — more GDP...more jobs...more revenue...more people — is also what every government in the developed world desperately needs. Without it, their deficit spending (all are running in the red) leads to growing debt and eventual disaster.

Growth over the last hundred years — in population, GDP, wages, prices — made it possible to expand government spending greatly, anticipating larger, richer generations that would support their smaller, poorer parents.

“Without growth,” we observed last week, “this system of public financing is doomed to spectacular failure. More spending will not be better; it will be calamitous.”

Western governments have bet heavily on high rates of growth. But those bets are starting to look like losing wagers. And it was not only government that bet heavily on high rates of growth. Private households bought bigger houses than they could really afford — counting on growth to raise housing prices. They also went deeply into debt, expecting wage growth (and perhaps inflation) to bail them out.

Investors, too, were “long growth.” That is, they bought stocks in anticipation that growth would make their holdings more valuable. They took it for granted. Over the long run, they said to themselves, stocks always go up. Why? Because the economy always grows.

In a stagnant economy, stocks are only worth whatever their stream of dividend payments deserve. One company might become more valuable than others, thanks to luck or better management. But if the economy itself is not growing, a company can only grow by taking market share away from another company. Overall, investors will be even. But that’s little comfort.

When you’re headed for The Downside, you don’t want to speed up.

[Danny B]

Cloward-Piven

A lot of what is happening is very strange and also difficult to understand.
Here is an example;
"Over the last 4 years the number of people on disability has risen more than 7 times faster than the number of people with jobs. The number of people on food stamps has increased by 17 million during Obama’s term in office. From the beginning of Obama’s first term to the end of it, approximately 4.6 million jobs disappeared. But the number of additions to food-stamp and disability roles jumped 21.2 million.

Why were so many more people suddenly disabled? Was there a plague that struck the nation? Were millions crippled in a nationwide auto pile-up? Of course not. Instead, in a low-growth economy, $1,000-a- month without working had begun to look pretty good."
The Entitlement Cliff

Here is another stat;
"#17 The total amount of money that the federal government gives directly to the American people has grown by 32 percentsince Barack Obama became president."
» Thanks Obama – Here Are 24 Stats That Show How Much You Have Royally Messed Up Our Economy Alex Jones' Infowars: There's a war on for your mind!

This "strategy" is an outgrowth of the radical Chicago school of economics.

The Cloward–Piven strategy is a political strategy outlined in 1966 by American sociologists and political activists Richard Cloward (1926–2001) and Frances Fox Piven (b. 1932) that called for overloading the U.S. public welfare system in order to precipitate a crisis that would lead to a replacement of the welfare system with a national system of "a guaranteed annual income and thus an end to poverty".
Cloward–Piven strategy - Wikipedia, the free encyclopedia

Here is a pic from a SS office that doesn't include one single gray head.
http://constitutionjake.com/wp-conte...0/Unknown.jpeg
It all fits very well. Crash the whole thing down and replace it with something fair, equitable and socialist.
Just to add more proof of the stupidity of these people, here is a quote from another of obummers pals.
"Barack Obama’s science advisor John Holdren explains his plan to return the United States to nature, eliminate civilization, cooperate with global socialism, transfer our wealth to other countries."
Barack Obama’s science adviser Holdren’s plan to de-industrialize the U.S.

Holdren isn't the only crazy advisor. Goolsbee (now departed) said;
"Prof. Goolsbee has a bizarre idea that is promoted by many liberal Democratic economists. That idea in effect is that your money, all of it, every last penny, belongs to the federal government in the first instance and only if the government feels generous, it might let you keep some of your money "
The Crazy World of Prof. Goolsbee - Illinois Review
If the economy seems confusing, consider the source.

[Danny B]

Currency war

Almost all of the central banks are printing like crazy,,,, and crazy it is.
Zimbabwe proved once again that you can't print your way to prosperity.
The FED has admitted that they are taking actions that they would have considered crazy just 10 years ago. They're doing it anyway.
Peter Schiff: The Federal Reserve is Now 100% Committed to the Destruction of the Dollar | munKNEE.com

The FED is on their way to printing an additional $ 1.02 trillion this year (2013)
2013 The Final Act | International Forecaster Weekly Bob Chapman The International Forcaster | Economy News | Investing | US Market Information | Gold | Silver | Wall Street Bailouts | Investment Trends | Money Resources | US and Worldwide Politics
Bank of Japan has gone off the deep end with printing.
The European central bank is doing the same.
They're crashing their currencies in unison so that investors won't notice or won't have any place to flee.

The exception is Russia. Russia is now circulating gold and silver coins that are denominated in Rubles.
Central Bank of Russia issues gold and silver legal tender | DGC
This is the equivalent of a thermonuclear attack on Western currencies.
Gresham's Law states that bad currencies will drive good currencies into hiding.
Gresham's law - Wikipedia, the free encyclopedia

Since the Russian coins are stamped with a number, the Russian currency will never lose purchasing power,,, as long as it retains convertibility.
No fiat currency has ever survived for very long. The average lifespan is 30--40 years. The U.S. dollar is 42 years old as a non-convertibility currency.
Theoretically, people will hoard Russian currency to avoid losing "value" from inflation.
The Chinese have taken all those 400 ounce "good delivery bars" and recast them into 0ne kilo bars. It is expected that they will use them for trade rather than hoarding. China is also buying and selling enormous amounts of gold trying to position themselves as the main trader. They are doing the same with oil.

Western bankers are willing to kill the dollar to save the banking system.
It's possible that they have a plan where they will come out OK even after the dollar is destroyed.
I do not believe that they will survive. Banking and credit are, for the most part, just information services. In the information age, that doesn't require a big organization. This huge reduction was coming and the bankers tried to avoid it. They blew credit instruments up to the stratosphere.
OTC-Derivatives extrapolated estimates | Flickr - Photo Sharing!
There is no possibility that the producing economy can support the whole big mess.

[Danny B]

Rise and fall of U.S. manufacturing

After WW II, America had a lock on manufacturing. Our standard of living rose way up. At one point, the U.S. treasury held 25,500 tons of gold.
All species expand their population commensurate with their perceived supply of resources. We doubled the size of the average house.
Size of Average American House Doubled Since 1950s

We had bigger families and bought more cars and STUFF.
By about 1970, the rest of the world had rebuilt much of their manufacturing capacity. U.S. wages froze to reflect low-wage arbitrage from emerging Western competition. We limped along on stagnant wages. We papered over the problem with an increase in credit.
We lost our lock on manufacturing but, we maintained our standard of living by borrowing 80% of the savings from foreigners.

Then came competition from the East. We didn't want to surrender our standard of living but, we lost 500,000 jobs a year just to China.. About 155,000 people try to enter the job market every month. Even schooling didn't seem to help.
55% of all Americans with a bachelor's degree under the age of 25 were either unemployed or underemployed last year.

#23 Back in 1950, more than 80 percent of all men in the United States had jobs. Today, less than 65 percent of all men in the United States have jobs.

This page is loaded with statistics that illustrate that Western countries have simply lost their jobs.
Activist Post: 75 Economic Numbers From 2012 That Are Almost Too Crazy To Believe
There is no magic formula that brings back jobs to over-priced labor.
The Chinese make 1/10 what we do.
Average Cost Of A Factory Worker In The U.S., China And Germany [INFOGRAPHIC]

OK, so we lost our job decades ago. ALL residential real estate prices are determined by the wages in the same area. The average person has to be able to afford the average house. Unfortunately, house prices continued to inflate even after wages stagnated,,,, and then fell.
Residential RE has fallen but that has only helped those who still have a job.
Unemployment is up to 23%;
Alternate Unemployment Charts

2,273,392 jobs were outsourced in 2011.
Job Outsourcing Statistics | Statistic Brain
Even the R&D jobs are leaving in large numbers.
We lost our job and our standard of living is going to fall dramatically.
GOV has tried to hold back the tide by printing currency and over-paying people to work for GOV.
The B.I.S. says that the bond market is going to crash. That will take out treasury bonds and GOV won't be able to pay salaries and retirement to all those GOV workers and contractors.

[Danny B]

Martin Armstrong and OZ

This doc is from Martin Armstrong. He had 240 people working for him worldwide. GOV wanted him to stop because he was TOO accurate. They threw him in prison for 7 years for contempt. He did a total of about 9 years and was never convicted of anything. He makes a very good explanation of current account deficits.
http://www.martinarmstrong.org/files...08-23-2010.pdf

The other interesting thing is his explanation of double counting by GOV.
GOV prints currency and spends it into the economy. That counts for almost 40% of the GDP currently.
GOV counts the wages of GOV employees when figuring the GDP. GOV counts the money once when they print it and counts it again when they pay wages.

[Danny B]

borrowing for consumption

Borrowing money for prudent investment is generally a good idea.
Borrowing money for basic consumption is never a good idea. That's why banks never loan money to those who desperately need it. GOV steps in to borrow money to give to those who desperately need it. Then, GOV takes up a collection (forced) from those who do have money.
Alternatively, GOV prints money and collects from EVERYBODY by way of currency inflation.

ALL of this money injected into the economy is debt. Many decades ago, when GOV injected a dollar of new debt money into the economy, it stimulated close to a dollar in new productivity. As time went on, these new dollars injected into the economy were used for consumption rather than for prudent investment. These new dollars carried an interest cost. This means that new debt is still a debt BUT, it has a declining return-of-investment.

In the early 60s, when a new dollar was created as debt, it resulted in about a dollar of GDP increase. In 1982, when a new dollar was injected into the economy, it created about 50 cents of increased productivity.
In the last several years, there has been NO INCREASE in productivity.
Every new dollar of debt created is pure debt that also carries an interest cost as well. We get a new dollar of debt plus a new interest burden so; every new dollar results in LESS wealth available for consumption.
http://3.bp.blogspot.com/_pCDyiFUv9X...ty+of+DEBT.jpg

GOV is printing about $ 85 billion a month. There is a fast-decreasing amount of wealth at the same time that there is a fast-increasing amount of currency. The productive economy is experiencing deflation and price deflation.

GOV is a different story.
"All political power comes from the barrel of a gun" chairman Mao
GOV continues to raise taxes and fees, You have no choice about paying.
Both GOV and banks can create currency from thin air. They have plenty of currency. This gives them an ever-increasing claim on an ever-decreasing amount of wealth. They can drive prices up with their wet-ink money.
Since they are the source of currency inflation, they CAN be the source of price inflation. The PTB prefer to keep price inflation low.

The natives get very irate when food gets too expensive. There are claims that food prices will continue to rise;
Watch: "The Global Food Crisis You Need To Prepare For Is Now Imminent"

The PTB need to inflate enough to rescue the financial system but, not so much that people starve. I don't trust them.