Economic pressures

[Danny B]

"Creditism",,, 2% of how much?

The conditions and inputs are changing wildly and it is getting harder and harder for me to try to correlate what they mean. Friedrich Hegel wanted all of us to work for, and be controlled by the State. .
J.M. Keynes advocated the death of the rentier Nobody would loan money at interest. A pure democracy is Socialism lite because politicians must listen to every person who whines for some kind of freebee. It eventually morphs into straight socialism and has always broken the bank. Is it different this time?

Socialism always runs out of other people's money. Is it possible to avoid this grand finale? LBJ wanted his Great Society“Creditism” and the Death of Capitalism, Part I - The Daily Reckoning

[Danny B]

The cost of socialism and kicking the can down the road

We have crashing / shrinking consumption and wages. Because of the interest drain, we MUST have a 2% or more growth in the credit / money supply just to tread water. GOV is printing $ trillions to keep the credit supply growing BUT, there are no takers. The prime interest rate is dependent on consumption and has been dragged down by the lack thereof. How can the credit bubble grow when consumption is falling?

NIRP was supposed to stimulate consumption. It did the opposite;
"When you go to negative interest rates, you do not stimulate consumption, you necessitate saving," Gundlach said. "You cannot fight deflation with deflation. Negative interest rates are the definition of deflation. You cannot put out a fire by pouring gasoline on it," he added."
Negative rates encourage saving,,, something the central bankers never considered. Jeff Gundlach: "Things Are Going To Get Pretty Scary" | Zero HedgeSnowden Sums Up The Presidential Campaign With Just One Tweet

Can GOV just print money and have everything work out?

,,,U.S. national debt will soon surpass $20 Trillion.

Just as was the case before the Crash of 2008, all of the signs are there. And just like before, the stock market continues to hover near all-time highs. Peter Schiff Warns: "The Whole Economy Has Imploded... Collapse Is Coming" | Zero HedgeThe Stock Market Crash Of 2016: Stocks Have Already Crashed In 6 Of The World?s 8 Largest EconomiesBrexit: All Eyes On European Banks | Zero Hedge

http://www.naturalnews.com/049964_Obamacare_health_insurance_premiums.html

Vladimir Lenin: "Socialized Medicine is the Keystone to the Arch of the Socialist State."

Too much capital was pulled out of the producing economy. GOV tried to replace this with more debt money. It isn't working too well.

[Danny B]

How many people are needed for our future?

In Star Trek, the Enterprise encounters a drifting cryogenic capsule with a frozen dead guy. They take him aboard and cure his disease that had caused him to check out. Captain Kirk explains to him that people don't use money any more. Everything is made in a replicator. Mind you, this is the 23rd century. Considering the astounding advances in 3-D printing, we won't have to wait 220 years. The guy asks about work if everything is done by machines. Kirk tells him that people learn and enrich their lives.
Roddenbury never explains what the 430 people are doing on the Enterprise.

In Flight of the Navigator, a young boy encounters an interstellar drone ship that goes around the galaxy gathering information and samples. It has no beings aboard. This seems a more likely scenario.
In Alien, the Nostromo travels all the way to the galactic rim to pick up refined ores. What about the asteroid belt just past Mars?

We aren't yet to a world without money or work but, we are on our way. 102 million Americans of working are are not in the labor force. Agriculture is doing fine without them. Transportation and construction are functioning. The education system is working,,, after a fashion. The Encyclopedia Britannica is no longer offered in a printed version because it would be incorrect shortly after it was distributed. The school system suffers from entrenched BS.

America produces 138% of it's necessary food supply. The cost of producing electricity is coming down. The cost of desalination is coming down. The cost of mining is coming down ( for equivalent grades of ore). Science is bringing us potential price deflation in so many areas. This potential price deflation has been strangled stillborn by financialization.
The cost of healthcare is a good example. The financial industry and the lawyers and bureaucrats make all the money. The doctors get nothing.

We work harder and longer and earn less. We have responded by cutting back on reproduction. The financiers never imagined this. The interest rates have crashed as reproduction and consumption have crashed.
Free energy was anathema to the bankers and oil producers because it would cut back on our consumption,,, and their profits.

The man who can only offer his labor to earn his daily bread is much disadvantaged by the financier. The financier can withhold his capital and still survive. The laborer can not withhold his labor if he wants to continue to eat.
102 million Americans not in the labor force and things are still humming along. We have cut WAY back on our consumption. They have dragged out the liar loans once again to keep things going. The finance system always assumed that consumption would continue and grow unabated. This is true to a point. The "Amish" economy for basics will chug along as long as people can afford to eat. But, with a falling population of prime consumers, even this will contract.
The consumer economy that is layered on top of the basic economy is dependent on discretionary spending. The financiers have successfully reduced labor's share of the GDP . ZIRP and NIRP were supposed to stimulate consumption but, have done the opposite.
Our discretionary spending is gone and "they" want to drop money from helicopters to make up the difference. In Japan, the people refuse to procreate and the country is in a financial death spiral.
Evidently, America has no particular need for the 102 million who are not in the labor force. Or, so the PTB believe.

If the economy is structured to support finance, man will wither away. If the economy is structured to support man, finance will wither away.

Bonnie Faulkner: What is the aim of the Trans-Pacific Partnership Treaty and how is it at odds with the Asian Infrastructure Bank, the AIIB?

Michael Hudson: I could give a glib answer and say the aim is to reduce the population by 50%, to starve people, abolish pensions and spread poverty. That actually is the effect.
The Commanding Heights | Michael Hudson

We are moving inexorably towards an economy that needs very little human labor input but, still requires a lot of human consumption. IF The population is to be reduced by 1/2 (Hudson) or 80% (Georgia Guide stones), the trauma, destruction and revolution that this entails will scar mankind for centuries. IF the most modern weapons are used, there will be no flora or fauna left on earth, other than a few hardy insects.

https://en.wikipedia.org/wiki/Dead_Hand_%28nuclear_war%29

[Danny B]

Credit bubble bursts,,, population bubble bursts?

Here is a graph of money creation; http://www.24hgold.com/24hpmdata/art...-06-13-003.gif
Here is a graph of world population; http://www.24hgold.com/24hpmdata/art...-06-13-002.gif
If the credit bubble pops and falls back to earth, will the population bubble also crash?

http://www.24hgold.com/english/news-gold-silver-abnormal-risks-have-abnormal-consequences.aspx?article=8584090682H11690&redirect=false&contributor=Egon+von+Greyerz&mk=1

The number of smart people in the world is falling and the number of stupid people is rising. There are countries with millions of vacant jobs and millions of unqualified immigrants. The Anglo-Saxon model was to accept only smart immigrants. The rest of Europe is accepting stupid immigrants. In States with a "youth bulge", they are trying to ship out their excess population of young men,,, those most responsible for revolutions if they can't find position and wealth.
Almost all of Europe is importing millions of young men who will never find employment, or position or wealth. Orban in Hungary didn't drink the koolaide. These are the future revolutionaries that will destroy Europe and make it resemble their $hithole home countries.
Obummer is doing his best to bring in loads of human garbage before he loses influence. The West is paying mothers in these $hitpot countries to have millions of "extra" kids.
Interview: A Continent of Losers - trykkefrihed.dk

The youth/home population is leaving to find greener pastures. Greece is a good example where the youth with talent have left the country.
The ECB is buying up all the bonds. A collapse in the credit bubble would mean that GOV bonds were worthless. The credit collapse will bring down the welfare state.

[Danny B]

The experiment was a success but, the lab blew up.

At one time, we used accumulated savings to fund capital intensive projects. When we switched from capitalism to creditism (Bonner), we no longer needed capital formation. Also, we no longer had savings and capital formation due to wholesale job losses. Treasury and FED are creating zillions of dollar debt notes. They never expect to pay them back. This is one BIG experiment to see if the economy can be carried on top of a permanent bubble. This is not to be confused with the infinite stack of turtles that are carrying the Earth.

Previously, the economy expanded at about the same rate that the gold supply expanded. It was a good match that kept things pretty well balanced. The socialists wanted a welfare society and the fascists wanted a warfare society. LBJ wanted both and took us off of a gold back (fractional) dollar.
This allowed great expansion of the dollar supply. BUT, this is/was just an experiment facilitated by the Bretton Woods agreement.
Can America and the West continue to prop everything up with printing?

The charging of interest is to compensate for risk of loss. Interest rates are at zero but, the risk is rapidly growing. At the same time, this giant flood of capital (I won't say tsunami) is looking for return in a ZIRP world. This forces people to invest in bad ideas/ventures to get a rate of return that is above the inflation rate. ZIRP forces malinvestment. The FED has decreed that nobody will lose in the market for stocks and bonds. More and more money flows into mal-investment at the same time that default pressures build up from the proliferation of zombie enterprises.

Since labor's share of GDP keeps dropping, consumption keeps dropping and zombie enterprises (funded by all that hot money) just don't have any earnings. The PPT and ESF held up the share prices but, couldn't do anything about sales and earnings. The can was given a massive kick in the last few years but, employment dropped and the can rolls back down the hill to where it started. The defaults return with a vengeance.
"It's Only A Matter Of Time Before Many Of Them Blow Up" - The Default Cycle Has Begun | Zero Hedge
The defaults are led by metals and mining
and oil and gas.."You Are Living Through The Dumbest Monetary Experimental Endgame In History..." | Zero Hedge

The abolition of the gold standard allowed a massive expansion in the money supply. As we saw in the dot-com crash, the hot money had no secure place to be invested. It flowed to mal-investment. Once again we find ourselves in a position of massive investments in non-productive enterprises. Once again, the default cycle has turned upwards. Only 3 companies in America have AAA rated credit. Darwin is highly shunned in the public sector but, he is alive and well in the private sector. Japan has tried to keep all the zombies alive and fed. Socialism for the rich. With a falling population, the zombie ranks grow daily. The people are further impoverished to support the zombies so, they cut back on procreation and consumption. The zombies survive,,, the people die out.
Total U.S./ debt is $ 65 trillion. National debt is $ 19 1/4 trillion. Debt per taxpayer, $ 161,000. Unfunded liabilities $ 212 trillion (Kotlikof)
The European debt is much higher.
Reportedly, the bank of China has more zombies that Japan,, Japan more than Europe,,, Europe more than America. China isn't carrying any external debt. The default cycle is picking up. Because of leverage and derivatives, it will blow a hole in everything,,, except precious metals.

[Danny B]

more brexit

Europe was growing more socialist. The European Union was envisioned as being "good" for Europe. On the contrary, the EU was a draconian, fascist overlay to stop ALL democracy. It is the antithesis of socialism.
Boris Johnson writes eloquently about how badly Britain needs to exit the EU.
Please Vote Leave on Thursday, because we'll never get this chance again

The Greeks borrowed money from privateMathew D. Rose: Brexit – The End of the Universe | naked capitalism
"The first is a specifically German one: Authority should not be questioned. In other words when such powerful figures as the German Finance Minister and the presidents of the European Commission and Council tell you to vote Remain, then there can be no doubt what you should do."

The Anglo-Saxons aren't too keen on being pushed around by the Germans. Germany gains a lot from being in and controlling the EU. The French don't like the idea either.


Edit Letter from the Greeks to the British; Greeks Send An Open Letter To UK Citizens About Brexit | Zero Hedge

[Danny B]

The dependency society,,, the Liquidity trap

Creating the dependency society; HOGS TO SLAUGHTER – The Burning Platform
Fleecing the taxpayers so the bureaucrats can live the good life; A Palace For Fannie (Mae)—–Why The Imperial City Must Be Sacked | David Stockman's Contra Corner
The liquidity trap;
"Signature characteristics of a liquidity trap are short-term interest rates that are near zero and fluctuations in the monetary base that fail to translate into fluctuations in general price levels."
The Economy Is Not What It Seems | Zero Hedge
John Williams is a smart guy. He is calling for hyperinflation. I have to disagree. In the Consumer economy, every time that prices rise, people stop buying. In the survival economy, people continue to spend money but, they cut back to cheaper food. The segment of the economy that depends on discretionary spending will just die out. As the consumer economy dies out, money velocity will fall. With low velocity, there isn't much likelihood that food prices will rise.
We won't see hyperinflation without BIG wage hikes and/or helicopter money.
Shadowstats' John Williams: Prepare For The Hyperinflationary Great Depression | Zero Hedge

[wayne.ct]

Why have we not had a collapse already?

If you can answer this question you may have an idea why things may continue as they are for a while. My suggested answer(s) 1. The majority of people don't know or care. 2. The majority of people are powerless to do anything but live one day at a time. 3. The majority of people don't look beneath the surface of things. 4. The majority of people, though suffering, find food to eat and are entertained by the entertainment media. ("bread and circus") 5. The majority of the Wall Street crowd are sold out to the FED and are afraid to be the trigger that brings down wrath. Did I miss anything? I'm not trying to say anything specific. I am open to hear both pro and con.

[Danny B]

Just where is the limit to money printing?

Congrats Wayne, you are post 1500. I've been asked the same question. I reply, Rome wasn't destroyed in a day. We were rich and now, we are spending ourselves down. The crash is already here if you are one of the ,,over 100 million who are not in the labor force. Those who had savings are spending themselves down. The breakaway from the gold standard allowed rapid currency inflation. There was limited wage inflation.
ALL currency inflation is a cut in wages. The currency supply rises at the rate that the bankers want it to. Wages rise at the rate that is allowed/tolerated by the market. As labor has become more and more of a global market, wages are "sticky".

GOV doesn't want our standard of living to drop,,, we might get restless. Our trade deficit grows $ 1.5 billion a day. We're still importing lots of stuff but, we aren't paying for it. Since the FED inflated quite a bit less than other CBs, the U.S. dollar is fairly attractive.
The best-looking horse in the glue factory.

It's very difficult to say what the limits is to GOV printing new money to keep Guns & butter and bread & circuses. We might actually last for quite a while as everybody else falls.

[Danny B]

the big shakedown from the non-producers

Every time that the bankers printed more money, our wages / effective purchasing power declined. Since the bankers were "first spender", this didn't matter much to them. As our wages and the economy started downhill, the income of the bankers was reduced. In an effort to keep their income steady, they invented lots of new instruments (derivatives) to keep the fees flowing. The sequentially extended our credit terms to keep us buying stuff. Big companies like GE and GM took their cash and put it to work as investments. GOV helped them out with big injections of cash. Everybody in finance started selling tons of financial instruments to each other.

Much of this paper was junk rated but, the ratings companies were allowed to use their very high ratings as an overlay on the financial junk that they were peddling. The big banks knew it was junk and bet against their clients who bought it. The bubble popped in '08 and the banks dumped their garbage in D.C.
"They" continue to print lots more money and "We" continue to lose purchasing power. The credit system needs at least 2% growth to stay alive. This continual growth drives down our wages. "They" print more money to save the upper loop of the economy while killing the lower loop. Still, the bankers can't get the inflation that they need. They desperately need to grow the credit bubble. They have fired up sub-prime RE loans again. They don't care about the default rate.

"Cumulative default rates on subprime mortgages spiked to 25% in 2007," "Now, the machinery is even crazier, subprime mortgages are even bigger, and mortgage-backed securities, chock-full with subprime, are hotter than ever. Only this time, the taxpayer is on the hook.
NY Fed Warns about Booming Subprime Mortgages, now Insured by the Government | Wolf Street
The same people who brought us Sub-prime one are in the process of bring us sub-prime two; The New Subprime Meltdown

As the bankers printed even more money, they hollowed out the middle class. When the bottom of the food chain collapses, the top soon follows. The ongoing fascist takeover of trade agreements is an effort to squeeze us for missing profits. The same is true for GOV. They want total control to squeeze out every dime. The French police will stop you on the train if it looks like your jewellery looks to be on the heavy side. They will weigh it. U.S. GOV took more in asset seizures that burglars took in loot.
They will go to extreme efforts to shake you down but, it's all perfectly leagal.

https://www.armstrongeconomics.com/international-news/north_america/americas-current-economy/supreme-court-just-created-a-full-blown-police-state-end-of-the-usa-cannot-now-be-far-behind/

[Danny B]

Offsetting inflation

Quite a few writers are writing that we will have hyperinflation. We have quite a load of deflation so, it will be difficult to hyper inflate. When an asset crashes in value, that is deflation.
From Investment-Grade to Bankruptcy in 4 Months: Why Ratings Agencies are Still a Joke | Wolf Street
The emergence of wind and solar is making a big dent in finance;
Three Years Ago This Coal Mine Was Worth $624 Million. Now It Sold for $1 - Bloomberg
We will have both inflation and deflation in prices but, we won't have hyperinflation.

Post script, I have one more post to do. It must contain some sort of objectionable material because I failed 3 times trying to post it. I did these 2 posts to see what would happen.

[Danny B]

The Eurozone-- a fatal system to destroy everybody

Nope, won't post. Just goes to a blank page. I can go back but, It just won't post. Everybody should read and understand this link... IF it will post. This isn't the first time that this has happened.
The European Union: Government by Deception - The Automatic Earth

[Danny B]

The evisceration of Sears, Roebuck and company

A corporation is a pile of money looking to grow larger. It has no brain, heart, soul, compassion, etc. Lee Iacoca personally made the decision to build the Pinto knowing that maybe hundreds would burn to death. He is called a great manager/executive. The problem with corporations is; they are functionally immortal and have almost zero liability exposure. Not exactly but, close enough. This breeds a "class" of people with the same, awful attributes.

Seagulls are known to peck out the eyes of their prospective next meal. The vulture capitalists are no better. When GOV created tons of new money, this offered opportunists for the vultures to destroy good companies.
Sears had about a $ 6.1 billion capital flow and a lot of cash. Eddie Lambert found this to be very tempting. He raised artificial instruments and did a hostile takeover. Then, he loaded up Sears with TONS of debt and congratulated himself for being so astute. Sears was formerly the biggest retailer in the world.
Ayn Rand killed Sears - Salon.com

This has made it necessary for companies to load up on debt so that they won't be taken over. This is just more fallout from creating too much "money". There just aren't enough legitimate opportunities for making a profit. Rape & pillage makes good sense to the corporate mentality.

[Danny B]

The dependency class meets the shrinking economy

Global wealth is at an all-time high. Interest rates are at a 5,000 year low. EVERYBODY overcharged us and is now trying to live off the rental of their money. The law of supply-and-demand is catching up to both investors and pensioners. The investors are/were on the receiving end of the free money pumped out of the FED. The pensioners must use their accumulated savings to try to earn interest. The thin air money must compete with the earned money. The thin-air money can be rented out more cheaply because, it was created without effort.

The non-producers have the money spigot and they keep opening it a bit wider to keep debt service going. Almost ALL of the money loaned to Greece is used for debt payment on previous loans.
Private investors have mostly deserted the markets. The central banks are trying to buy up everything to keep the party going.
Tyler Durden Blog | Hawkish Fed Looms As Initial Jobless Claims Plunge Near 42 Year Lows | Talkmarkets

"Real incomes in the United States have been drifting down for 30 years because there is slower and slower market demand."
The Slow Crash. The Shrinking of the Real Economy | Global Research - Centre for Research on Globalization
Employment is down,, wages are down,,, market demand is down. The people with lots of money have been selling financial instruments to each other. The non-producers have lots of cash. The people who actually work in the producing economy have next to nothing. Some 66 million Americans have ‘zero’ emergency savings - MarketWatch

The CBs are buying stocks and bonds handover fist. What is the long-term prognosis of this? Creeping socialism and galloping automation created a dependency class that nobody knows what to do with. Either they will die or GOV will print free money to support them.

[Danny B]

Bill Bonner, GHraham Summers,, the zombie index

This is a very good vid from Bill Bonner. It moves a bit slow but, covers a lot of ground. Bill, and Agora Financial have predicted all of the major changes accurately. He lays out what to expect. Urgent Public Announcement from the President of Agora

Graham Summers, Financial Repression Authority
Well, yes. It happens all the time.

The zombie index; Worst “Zombie States” in America “Deteriorate Faster, Further” | Wolf Street
GoldGold Lower Despite "Panic" Due To "Supply Issues" In Inter Bank Gold Market