Thanks for the Memories

When the growth rate of the money supply increases significantly due to consumer desperation a surge of money enters the bond markets causing Bonds to be bid up and yields (interest rates) down...But when the growth rate of the money supply decreases significantly due to consumer exhaustion...money does not enter and or leaves the bond markets causing bonds to be bid down and yields up...

It's based on volume...

If you sell 10 houses for $200,000 each and yield 5% or $100,000 and house prices drop due to consumer exhaustion...then you have to either sell more houses at the lower price or increase the yield off of the cheaper houses to obtain the required 5% or both...

Because the money needed by consumers to purchase houses does not exist...It has to be created for them to keep them buying and selling. And if they can't afford to service the existence of $200,000 then the amount of money they request a commercial bank to create for them must be dropped...While the yield has to be raised to obtain the required yield to sustain the commercial banking operations.

Yields are not going to drop until consumers begin desperation consumption after the exhaustion phase of the cycle...And only if there is enough volume to support significantly lower yields.

Rates are raised and lowered by consumers...Either you all (consumers) will be able to top the last desperation cycle...or you won't. And if you don't...It's the end of the world as you see it now...If the top can't obtain the yield they require from you all (bottom) with lower rates because you all can't supply the top with what they require from lower rates...the rates will have to rise higher and higher...

You know when you watch TV or read the Newspaper and there is Talk of the FED raising or Lowering rates? That is a farce...The FED does not raise or lower yield rates...Consumers do...you all do...The FED just follows along...

When consumers become exhausted...The FED is forced to raise rates...and When consumers become desperate...The FED is forced to lower rates...Volume...volume...volume...

Volume decreases/exhaustion...rates are forced up.

Volume increases/desperation...rates are forced down.

BUT rates can't drop below ZERO...

And if that's what is required to sustain the USA/Global economy...It's the end of the world as you all have known it.

It costs your employer $100 a day to sustain you and the "yield" from you is $90 or -10%...It's game over...employer forced to cut your pay/lay you off in search of a positive yield...

But I currently believe it's possible to keep this whole mess from imploding for another few years...I think there's one more desperation cycle before game over...Game over is where rates have to drop below zero to sustain the USA/Global economy which is impossible...It just boils down to the volume...Do you all have one more desperation phase left in you?

I don't really know...But don't really care much either.

Greenspan and the FED does nothing to lower or raise rates...When the FED lowers or raises rate...they are playing catch up with the bond markets...It's consumers that dictate where rates are headed...but when consumers dictate that rates have to drop below zero...Game over...It can't be done.

Imagine you are an employer...Of course your only source of Income or yield is from your employees...What if your employees demand $100 a day to work for you but only yield $90 a day...that's roughly a -10% yield...

"I bet the top will take a negative for a couple years, to supply total control over little demand for freedom."

They ain't going to survive years...They will mass liquidate the system...like every time before in recorded history...Of course the cause of the mass liquidation will be obscured like all the times before...

The system itself...It's impossible to sustain inflation greater than previous inflation forever or past maximum potential. But in order for the system to be sustained it requires inflation greater than previous inflation to be sustained forever basically.

Unfortunately once inflation greater than previous inflation to maximum potential (What you all generally call inflation) reaches maximum potential it transforms into inflation less than previous inflation to maximum potential. (What you all generally call deflation)

The top rides the wave...and the bottom is the surfboard....The top already controls the world...they just employ you all to help them maintain control...

And you all want more and more compensation to help them control the world...Unfortunately there comes a point where it's impossible for the employer to sstisfy the demands of the employees...

Then the operation has to be liquidated...

Whether it's a lemonade stand or a Global empire...makes no difference...the only difference is the magnitude or scale of the liquidation.


The FED did stablize the currency and does fight inflation...Without a central banking system to regulate the credit system the currency rapidly inflates to maximum potential and implodes...Germany after WW1 is what it looks like when there is no regulation...

But with regulation all that is accomplished is a postponement of the inevitable...What took 3 years or so in Germany in an unregulated system has taken 70 years so far in our regulated system...A very long temporary prosperity...Most likely the longest in history.

Prior to 1900 the boom bust cycle was around 10 to 15 years start to finish...So far this boom phase of the boom bust cycle has been 70 years in the USA.

The primary cause of inflation...is reproduction...Most of us could/would not exist under a (actual) fixed standard...

The fixed standard only existed/exists on paper...no one has ever really followed it.

You want to punch my face in but according to the "rules of the game" you have to pay 1 ounce of gold to be allowed to...Is that going to stop you from doing what you want to do?

Murder is against the "rules of the game" as well...

It does not stop the murderers...


The Denarius was the Coin of Rome like the British pound stirling is of Britain and the US Dollar is iof the USA.

It was first struck in 211 BC and last struck around 270-275...They started out 95% silver and ended 0%.

And no one seems to know why coins debase.

Population of the the city of Rome area according the the Roman census.

294 B.C. 262,321

14 A.D. 4,937,000

In around 300 years the silver requirement to sustain the city of Rome area increased 18.8 times...

Ultimately conquest in search of resources reached the point where the output was less than the input and Rome unable to continue inflating greater than previous inflation reached maximum potential then began inflating less than previous inflation...imploded.

The input of one Denarius to obtain two is/was profitable...Until the silver mines ran dry or became negative yielding...

Then game over...No civilization can be sustained on negative yields...None ever has been or ever will be...The planet is coated with the ruins of civilizations that discovered this the hard way over and over again and again.

The primary cause of inflation in human affairs is reproduction. The primary cause of monetary inflation is consumers requesting commercial banks to manufacture money for them to buy things with...If there was no expansion of the money supply a ghost town would be the result...Same as when a gold or silver mine runs dry...


If there was no expansion of the money supply a ghost town would be the result...Same as when a gold or silver mine runs dry...Like what happened to Rome when they utilized all the silver mines they had to maximum potential...

What happened to Rome when it ran out of silver to produce the money required to sustain the inflation of Rome?...It began deflating to the ruins you can still see...

When Inflation greater than previous inflation to maximum potential reaches maximum potential It becomes inflation less than previous inflation to maximum potential.

And when Inflation less than previous inflation to maximum potential reaches maximum potential it becomes Inflation greater than previous inflation to maximum potential...

The world you see today is what the inflation greater than previous inflation phase after the maximum potential of inflation less than previous inflation phase was reached...looks like.

Who is going to sell goods and services to consumers with no money? How can you hire and pay employees if there is no money to pay them?

In an inflating economy...there are positive yields...In a deflating economy there are negative yields...Those who desire to sustain positive yields, at some point, leave a negatively yielding economy in search of a positive yielding economy...

Ultimately all that's left are employees with no way to acquire employment and they leave in search of a positive yield...A ghost town is the result...

Sorry folks there's no more money to sustain your employment...

But we ran the numbers and you have at least 1 million silver dollars...

Yes I do...but you all worked hard supplying me with 3 silver dollars...I paid you all 2 and paid myself 1...(Inflationary)

But now you all only produce 1 silver dollars...(Deflationary)...If I were to continue paying you to produce nothing for me...I would get nothing...and be unable to pay all my bills...

But if you cut our pay in half so that you could maintain your yield we would all not be able to pay all our bills...

Exactly...Sure I could continue to pay you all to produce nothing for me but ultimately I would run out of silver and you would be right back at this point again and I would be broke...

Again...Sorry folks there's no more money to sustain your employment...thanks for the memories...