A not seen in living memory event...

[Charts referenced are not available]

Disclaimer* If you believe in the Curiosity that killed the cat then don't go any further run for your life... If you think you can handle it then step right up...

If you don't change the operation of the economy It does not matter if you are left or right you will always be dead wrong in the end...

It doesn't matter if you are a dictator or an elected representative those who control the money/debt supply are your true rulers and masters...

Borrow all they want, print all they want but consumer debt is the fuel of the commercial banking system the back bone of the US economy… The government has to figure out away to pay off all the debt back down to zero then bump it back up double… The deficit gamble is the game they have been playing all along… Everything that can be done has been done except dump trucks full of cash plopped on street corners…

1971 was the start of the “Bernanke” printing press game… It is nothing new, the deficit gamble? It was also started in 1971… The New Economy? NASDAQ 1971… This is just another sign that the maximum potential for debt inflation has been reached… Walls of money? Walls of debt is more like it and compound interest is the mortar…

They are gone, kaput, finished… By the time this reaches the climax they will be herding people into pits of burning diesel… I’ve explained numerous times how the fractional reserve system works… Not good enough... and not enough pictures I guess…

Why did Nixon let this happen? Because they told him at the time that under this system the FED has an invention called the “printing press” and we can just print cash or bonds and exchange them for whatever we need like oil or loyalty… But won’t that lead to massive deficits? Don’t worry we have a plan it’s called the Deficit Gamble we can just keep off loading the payment into the future 'indefinitely'… Sounds great!!!!

Nixon is dead… so I guess he won’t be around to explain his actions or see what the end game is going to look like…

All the history created by and all the achievements of the United States prior to 1974 “needed” 1 trillion dollars to accomplish or provide a stable functioning economy… The United States survived on an economy of a Trillion dollars for 198 years…

Then just 7 years later by 1981 it cost 2 Trillion. Then 4 years later in 1985 it cost 3 Trillion. 5 more years and it was 1990 and the cost to exist jumped to 4 Trillion dollars, but now we have a slight problem…

I’m not going to get into the reasons why the great depression of 1990 started other than to say that debt backed (Fiat) Fractional reserve banking caused it and if it was allowed to continue it would have been game over and Dr. Ravi Batra would have been able to say I told you so… But how did we escape certain doom then? I don’t know why Dr. Ravi Batra thought at the time that it was “impossible” to drop interest rates to “REFLATE/Refinance the credit bubble”, maybe I should read his book which I found in a garbage can a few years back… There can be wars and oil shocks but as long as you can drop interest rates that is all that matters… Debt backed (Fiat) fractional reserve banking lives for one thing and one thing only... exponential debt inflation, that’s it, that’s all that matters… The compound interest stream from CONSUMER CREDIT is the food that banks feast on… if it stops for any reason the banks starve to death…

Back to the problem: how to get consumer credit (Debt) growing again… Just open up the FED book to page 1 and do like all the other times... drop interest rates to reflate (printing press trick), encourage greater consumer credit debt inflation than debt deflation, and refinance (Deficit Gamble or off loading the payment into the future 'indefinitely') to make payments lower… the destiny of consumer credit debt inflation hinged on the refinancing and construction of new real estate “INDEFINITELY” The fate of the world economy became dependant on the construction and refinancing of real estate in the U.S. to provide the necessary exponential debt growth to sustain the world and the U.S. FOREVER…

Fact#1 all the interest rate cuts that I have studied in the context of the debt backed (Fiat) fractional reserve system since 1971 are in response to the impending collapse of CONSUMER CREDIT… Fact #2 Is that once high interest rate debt inflation ended in the 90’s and real estate became the main driving force of exponential CONSUMER CREDIT creation all the cuts were implemented to sustain the rise of real estate INDEFINITELY…

The Federal funds rate was basically lowered from 10% in 89 to 3% in 93 then up to 6% by 95 as the reflation/refinancing worked its magic. Then the real estate market started to soften (First dark purple line, middle right, on chart #1) so rates were lowered from 6% in 95 to 4.63% in 1999 and now the amount of CONSUMER CREDIT in the system had literally exploded like an atomic bomb and every sector of the economy and stock market was in full fledged raging growth and the growth in the economy/CONSUMER DEBT pile from 1993 to 1999 had in fact almost equaled the entire growth in CONSUMER DEBT since the United States was created or what took 217 years to accomplish was now done in 6 years… But it wasn’t over yet….

By the year 2000 the Federal funds rate was back up to 6.54% and the real estate market began to collapse again (Second dark purple line, top right, on chart #1) so it was time to lower rates again and again and again… until the Federal funds rate stood at 1.24% and real estate took off again before the end of 2000. During this time Debt deflation in the form of a stock market crash, the NASDAQ primarily, showed up signaling that the “New Economy (Started in 1971 also)” based on the “printing press trick” and the “deficit gamble” was not able to support the necessary exponential CONSUMER CREDIT debt inflation to support never ending or “indefinite growth” the result? An estimated 7 trillion dollar wipe out which by the way was almost equal to the amount of CONSUMER CREDIT created from 1993 to 1999… But real estate is where the real money is and that is shooting to the moon and by the time 2003 arrived CONSUMER CREDIT was at 17 Trillion dollars… so what took 217 years to create by 1993 = 7 Trillion dollars of CONSUMER CREDIT, Just 9 years later 10 Trillion dollars more was added or 70% using the “printing press trick” and the “Deficit gamble”.

Something else showed up in 2003 also… Just like in 1990, visible CONSUMER CREDIT debt deflation or the beginning of financial doomsday… now depending on where you get your info, economagic’s numbers show the consumer debt deflation while the FED’s own numbers read flat, but the smoking gun #2 is found on chart # 1… Notice how the expansion of M3 after 1974 by a trillion is a smaller box? And then the next one from 81 to 85 is smaller? That is the effect of exponential debt inflation or reflation… In order for that to be carried on “INDEFINITELY” each trillion dollar box has to be smaller then the last one… When they get bigger it means that DEBT creation is slowing and if something is not done about it then the boxes will get longer and then the growth will turn down and keep going down until the maximum potential is reached or economic doomsday…

The only tool in the tool box of debt backed (Fiat) fractional reserve banking to work on this problem is the interest rate switch, first you raise interest rates to combat inflation then you lower interest rates to combat deflation… Simple. From the looks of Chart #1 the U.S. has been combating CONSUMER debt deflation since around 1981 and almost lost the battle in the 90’s… But by the last quarter of 1995 it appears that the battle had been won and the boxes were once again getting small again… “Real small” But in order to accomplish that feat the FEDERAL FUNDS rate had to be dropped from it’s high of 19.08% in 1980 to 2.92% in 1993 and to maintain the boxes getting continually smaller INDEFINITELY the rate was further dropped to 1.24%, by the time 2003 (Today) rolled around…

We are once again at the doorstep of debt deflation, but when we started combating it in 1980 we had 1,908 basis points and now we find ourselves at the point that we have only 124 left!!!!!!

Do you see a problem Yet? Do you understand the “true” gravity of the situation? What do you think the federal government of the UNITED STATES OF AMERICA is going to do with their budget deficits? Buy basis points from the basis point fairy? It is past the point of no return right now... If you look at the top of chart #1 you will notice that from 2002 to 2003 did not equal 1 trillion like 2001 to 2002 which means the boxes are getting bigger, which means it’s time to drop interest rates to 0… But that would collapse the commercial banking system… and maybe buy a few more milliseconds at most and raising rates would collapse the printing press, deficit gamble tricks which depend on the "symbiotic" relationship between CONSUMER CREDIT expansion and real estate…

Q and A

Stage 1 of Debt backed (Fiat) fractional reserve banking is inflation of debt

Why did rates rise prior to 1980?

To combat the price inflation that was caused by the switch from the old gold based economy to the debt backed “new economy”

But once that was accomplished the economic growth of the “New U.S. economy” was based on the systematic lowering of interest rates to prevent debt deflation…

Debt deflation?

Yes the commercial debt backed (Fiat) fractional reserved banks profit from exponential consumer debt inflation, if debt inflation slows or stops debt deflation takes over and the banks go “bank”rupt and the economy collapses…

How do you prevent or stop debt deflation?

With debt inflation…If you find your self in a debt deflationary scenario you lower interest rates to encourage consumer credit (Debt) to be created faster than the debt deflation that exists and resume debt inflation to its maximum potential…

Maximum potential?

When you run out of basis points from your supply of basis points or once consumers have consumed all that they can consume it is game over…

Game over?

The point at which you can not inflate debt any longer and debt deflation becomes unstoppable…

Well then what?

Stage 2 of debt backed (Fiat) fractional reserve banking starts and if you can not reflate the system by lowering interest rates any more or the consumers have consumed all that they can consume then it will run to it’s maximum potential and stage 3 of debt backed fractional reserve banking will take place…

What’s that?

Stage 3 of debt backed (Fiat) fractional reserve banking is “Bank”ruptcy of the commercial banks and collapse of the economy…

[Capitalism has] nothing to do with capital? Then why the heck is it called Capitalism?

To confuse you...

Religion not Capitalistic? sure it is...

There's nothing capitalist about religions in states where citizenship and/or rights are denied to people who do not follow the official religion. It's coerced membership just like socialism is coerced distribution of goods and services.

Do not worry my son, I will (capitalize on your ignorance to) show you the true path...

Where does money come from?

Printshops, mints, and central bank computers. That’s where paper and coin currency comes from… central bank computers are used for accounting...

What is money?

Paper, round metal, and electrons.

Money is debt created out of thin air by banks with compound interest attached when an individual, business, organization, or Government borrows or creates debt.

You get paychecks right? Where do they come from?

They come from the revenue generated by the company I have freely chosen to work for.

Where does the revenue come from? If money is debt and has to be borrowed to create it then revenue is debt also…

In order for the economic system to function enough debt has to be created to equal the paychecks which you receive… If everyone stopped borrowing tomorrow the pay checks would have to shrink or begin to disappear… Since the compound interest is not created when debt is created the only way to pay it back is to shrink the debt supply or borrow more...

If you shrink the debt supply paychecks disappear or shrink and if you borrow more your paychecks lose purchasing power...

The US is at the cliff edge of a decline that will be worse than the Great Depression currently... in the next 11-15 months the freefall will start for real... What has been happening in the US from 2000-Now [2003] is child's play compared to what is coming...

Money is debt created out of thin air by banks with compound interest attached at the request of consumers...

The prices you pay when you spend money or circulate debt are set by the amount of debt creation...

Consumer debt inflation which is the effect of creating new debt in greater quantities then old debt leads to price inflation...

Consumer debt deflation which is the effect of creating new debt in smaller quantities then old debt leads to price deflation...

In a society that uses a debt backed system as a money supply previously created debt is the operating expense and new debt is the profit

Or Previously created debt is current income and newly created debt is future income...

The ability for consumers to create new debt is based on current income...

Debt backing debt but under such a system the consumer will consume their ability to consume...

You can only use a certain % of your current income which is previously created debt to service the cost of new debt creation which is future income...

Once the consumers have reached their maximum potential to service greater amounts of new debt in relation to previously created debt then their future income has to drop or interest rates have to drop...

Once interest rates drop to near zero there is no way to expand the debt supply in greater quantities so income has to drop...a self feeding death spiral...

What the US is in the process of doing... rates have been systematically dropped in the US for 23 years to prevent a hyperdeflationary implosion...

On average rates have dropped 83 basis points/year to expand the money supply which is debt...there are 100 basis points left...

The game is almost over... Rates can't drop past zero. Prime and mortgage rates can not go low enough to produce the required volume of consumer debt consumption to "sustain" exponential debt inflation which is the fuel that powers economic growth in the US...

The key word is "sustain" the current "recovery" talk is just slick marketing...It can't be sustained for more than a few months...

Interest rates must keep dropping significantly to sustain it... Mortgage rates are rising in the US and are having a serious impact on the refinancing industry... which was in blow off mode since around March...

Soon the massive amounts of liquidity (Debt) which was being created will start drying up... just another nail in the coffin...

The system from 1945-71 was called the Bretton Woods Gold backed fractional reserve banking system and when the US ran out of gold to back the system they decided to switch to a debt backed system called The Floating exchange rate debt backed by debt fractional reserve system.

The system that you people thought was going to collapse doesn't exist anymore because it was replaced before it could cause a devastating collapse...But the current system which you know nothing about and refuse to want to know anything about...Is in the collapse phase right now and there is no new system that can be put in place to prevent the ugly realities which you think can not happen from happening...

Gut wrenching reality is coming whether you think so or not... You can't escape but you can prepare but if you don't, then too bad I guess?

Don't worry you'll see how wrong you are...

Deflation would destroy the US...it is destroying the US...

The only way to maintain a stable or expanding money supply which is debt is with debt inflation...consumers signing on the dotted line...

You have all been fooled your entire lives...no amount of positive thinking or denial will save you from witnessing a not seen in living memory event... Not a human alive on the planet has seen such an event or is able to comprehend it... A run of the mill hyperdeflationary implosion of debt which vaporizes a debt backed by debt system...

I've studied the Floating exchange rate debt backed by debt fractional reserve system for 10 years... It wasn't until last year that I fully comprehended how the system worked to be able to back up my claims.

The above mentioned system is the cause and when you open your eyes in the morning that is the effect...

At what point in your education did you hear the words Fractional reserve banking?

It is the system that provides you with the current fantasy which you have mistaken for reality...

Paranoia? You are the one that is paranoid because if what I am saying is true (It is unfortunately) then the very foundation of your just think positive religion is about to blow away in the wind...

None of you prople can even begin to comprehend what I'm talking about...

6-10 months max left in the good old days, maybe less...

Don't worry you don't have a hope in hell of countering my arguments...

It has taken decades to get to this point of weakness it will take decades to get back here again...

I know more than bankers and economists... because they know how the system works...I comprehend how it works...

I have a supreme understanding of the subject...

Well Hyper why don't make money from your knowledge?

The system needs a mass of ignorant victims to function...

If "they" taught the basic system mechanics in school no sane person would submit to such a system...

As soon as you comprehend how the system works, and I've laid it out numerous times in my posts but you just don't seem to get it...

The basic mechanics...once again

Fractional reserve banking has 3 stages

Stage 1 inflation of debt and the destruction of savings
Stage 2 deflation of debt and the destruction of equity
Stage 3 Bankruptcy of the banks and collapse of the economy

We are at the tail end of stage 1 in the last gasp of the system...

Stage 2 should begin to be evident in the next 6-10 months...

All social, political and economic realities are fueled by consumer debt creation... and unfortunatly consumers have a finite ability to consume debt... the system has reached maxout...

Don't worry, unless you die real soon you have a front row seat...to the greatest financial collapse in modern history, maybe history itself.

It will make the Great Depression look like a joke...

Hard to believe... better start clicking those ruby slippers together double time...because your time is running out...big time.