Friday, February 22, 2008

An Extinction Level Economic Event


We need one last refi so Mortgage rates would have to drop below 5% to around 4.5% which would equal a ten year yield of around 2.5% before real estate prices collapse. It's hard to refi if you are under water too far...once Real estate prices cave the volume needed will dry up quick [September 2004]


You can't prevent deflation you can only postpone its appearance...

In a debt backed by debt compound interest system the medium of exchange is debt which must be perpetually inflated by the required amount and there is a finite limit to the ability to manipulate the other equations in the algorithm to supply the compound interest equation with the required inputs.

Ultimately the required amount of debt inflation required by the compound interest system becomes infinite...the system destabilizes, collapses, then implodes.

2000-2003 was a destabilization and partial collapse...

To sustain debt inflation you need to get the required amount of people to sign on the dotted line when demand outstrips supply it's over...

Rates drop when debt inflation rises and rise when debt inflation drops...

[US mortgage rates rose 1/8 pt on Friday - BestInfo
Fri Feb 22, 2008 3:37pm EST
NEW YORK, Feb 22 (Reuters) - The average rate on a 30-year U.S. mortgage with no upfront points rose 1/8 percentage point on Friday to 6-1/2 percent, according to BestInfo Inc.

The 30-year mortgage rate with one upfront point increased 1/8 percentage point to 6-1/4 percent. The 30-year mortgage rate with two upfront points also rose 1/8 percentage point, to 6 percent.

The Mortgage Point Monitor is provided exclusively to Reuters by BestInfo, Inc., a Dover, Vermont-based provider of mortgage market analysis.]


But they can't drop below zero...that is the game over line.

The compound interest equation is the key to the system...

All you are interested in is placing a bet at the casino based on the myth that the authorities are going to be in a position to press a button which floods the system with money allowing you to get rich...end of story...

Is it possible to start an effective hyperinflation? Yes but it leaves a paper trail right back to the culprits and the end result is a Hyperdeflationary implosion anyway...A more prudent action to take is to stage an event to blame it all on so you can more easily accept your fate...

The magical printing press is a fairy tale told to children to prevent them from having nightmares or asking adults for real answers that would only cause the child to cry.

In a debt backed by debt system the medium of exchange is debt...

Social engineering begins the moment you are born and continues round the clock day in and day out...

And deflation is not exactly the best term but it is close...Inflation is finite and fragile while deflation is infinite and indestructible...

Inflation increases, decreases and has a beginning and an end...It's a variable...Deflation does not increase decrease or have a beginning or an end...It's a constant.

An implosion is not caused by a rapid increase of deflation it is caused by a rapid decrease of inflation.

But according to all of you the FED has a magic button that when pressed alters the structure of the Universe making inflation infinite and indestructible...

That's what you actually believe...

Interest attached to the medium of exchange is the primary reason the system functions the way it does...Interest concentrates the control of the medium of exchange from the hands of the many into the hands of the few...

Fractional reserve banking is an effect of interest attached to the medium of exchange not the cause... The FED exists because of interest...

The Fed has done a good job combating Inflation...Not too much and not too little...They have basically maintained the required amount...Now the required amount is always more then the previous required amount until the required amount becomes infinite... the system destabilizes, collapses, then implodes...

The stock market...It has a powerful psychological effect...If the authorities need to sustain psychology beyond the breaking point then that is where they will do it...It's foolish to think that they will give out money for free but they can engineer the markets...

In the end since everyone is in get rich quick mode the markets will be engineered to be the get rich quick scheme of last resort before the cave in...So there should be a doomsday spike...Then the insiders will massively short it to oblivion...

Monopoly is a certainty...interest attached to the medium of exchange is the cause of fractional reserve banking not an effect of it.

It boils down to survival...I'm not a get rich quick speculator...You need an ability to survive for at least a year with no income...

I figure a significant supply of silver coins will help...But it is up to each individual to figure out what they are going to do...You have to figure it out...If I had $100,000 I would buy as many Silver Maples as $50,000 would allow in small batches.

How much do you people need? It's taken me almost 8 years to shrink my cost of existence down from $6000/month to $1,600 and I can survive on 1,000 for extended periods and nothing for six months with a goal of 1 year...

The vast majority will be forced to do what has taken me 8 years to do in the space of a couple months...

Aren't you all getting lean and mean? I seriously doubt it.

Cities are nothing more then massive debt inflated make work projects...The division of labor will rapidly collapse in the cities...Small towns with a good natural resource base would be the safest...So there is a mobility component to any plans...

It will be a replay of the great depression only far worse...

In 1930 the automobile was only a few decades old...Prior to 1900 to 4000 B.C and beyond A wagon attached to an animal or riding on the back of an animal or walking was the main mode of transport...

In a depression situation the two horse family could eat a horse...It's hard to eat a car.

The system in operation started in 1694 a National central bank...Before that the Banking system was decentralized...and it reached maximum potential the solution to perpetuate the compound interest system was centralization at a national level then to sustain it Globalization is needed...

A network of National central banks all feeding the mother bank...

1971 was when we went fully global...Once the system reaches maximum global potential thats it...to go further you need a planetary system...

Mars and Venus are less habitable then Antartica and the nearest prospects are light years away...

No more expansion...so canibalization has set in...for the past 20-30 years...

Or destabilization...next will be collapses of increasing intensity 2000-2003 was one...then the last collapse will turn into an implosion...

With the amount of monopolization prices could very well remain high for quite awhile if production is cut...

In England during the depression they dumped grain at sea attempting to ignite inflation while people starved in the streets...

The problem you are having is you are trying to find an answer for the date of collapse...who knows the exact day?

All economists do is assume that inflation will never end...Once maximum potential is reached and the compound interest equation can not be satisfied no matter what then it's game over...System implosion is inevitable...It's just a waiting game...One of the key signs that we are close is interest rates...

To satisfy the requirement of the Compound interest equation you need volume...rates can only go so low...then volume dries up and it becomes impossible to supply the required inputs needed by the compound interest equation...all the other equations also have natural finite limits and can only be bent and manipulated so much...psychology is also an equation that has finite limits it can only be bent and manipulated so much also...If not enough people sign the dotted line then the inputs required by the compound interest equation can not be obtained...

A recession or destabilization is caused when the inputs into the compound interest equation are not the required amount...the other equations are bent and manipulated to obtain the required inputs...once they are obtained then the recession ends...But that is just a postponement of the inevitable...It takes greater bending and manipulation at each postponement...until of course it becomes impossible to bend and manipulate the secondary equations any longer...Interest rates being one of the key components...rates drop in search of volume...they have a finite limit to drop...

The implosion is inevitable...

As long as you assume inflation lasts forever unbroken you will never figure it out I guess...each consumer is just an equation that has to be bent and manipulated to input the required inputs into the compound interest equation...That is why a consumer must believe that inflation lasts forever unbroken...psychology is a very important equation to be manipulated and bent. If you're worried then 50% Gold and silver 50% cash is the best bet...


A collapse will start that is what a recession is...people that have access to credit will generally max out then cave...Most of the people that are laid off will survive on credit until they find another job to service their debt or until they maxout.

In a debt backed by debt system debt is the medium of exchange and it must expand enough (New debt) to service the previous debt...or a recession will start...

Rates are key since it is impossible to drop them below zero...Ben Bernanke and Alan Greenspan know this and have stated this fact...The ability for consumers to request debt creation has a finite limit...or maximum potential...The system basically runs out of people willing or able to sign on the dotted line to request debt to be created...

Now the Government is the borrower of last resort but their distribution system is not the equal of the consumer market...basically huge wars of conquest or massive infrastructure projects or both are needed...Many Trillions of dollars of debt...

The largest debt inflationary engine on the planet is US real estate and the only way it can be sustained is if rates drop forever...Or go negative which is impossible...

It is inevitable that the volume will run out and debt inflation will turn into debt deflation...Since the medium of exchange in a debt backed by debt system is debt...the money supply will begin to shrink rapidly and unemployment will increase rapidly.

The authorities can buy time but speed kills...By the time they figure out how much time they need to buy they will be out of time...

I guess the hard part to understand is yield...If you need $1000 to pay for existence then $10,000 at 10% will do...But if rates are 1% you need to lend out $100,000...Then factor in price inflation and you need more the next time around...So lets say you need $1000 then you would have to request a bank to create $100,000 at 5% and relend it out at roughly 6%. But if you could only find takers at 4% then you are screwed...The zero barrier can't be crossed so if you need to drop rates below zero to get people to sign on the dotted line it's over...

The system is a debt backed by debt system and the medium of exchange is debt...In its paper form it is called the US dollar but it is actually a federal reserve note...Treasuries are also another form of solidified debt.

It is created when a consumer requests new debt creation from a commercial bank using previously created debt or a debt inflated asset as collateral. The FED is a facilitator. It can only service consumer requests for debt.

The US has no money supply just debt which is called Money. The total debt supply in a debt backed by debt system is the money supply. The expansion of the money (Debt) supply is by consumer request. The Federal Government is the Consumer of last resort.

In the Global system the US is the top of the debt inflationary ponzi which makes US debt the world reserve currency (Medium of exchange).

The largest debt generating engine on the Planet is the US real estate industry...

Debt and debt inflated assets like real estate and commodities like oil must perpetually inflate...To sustain it rates have to drop below zero which is impossible...

A hyperinflation is caused when those who owe have an ability to print money...The US consumer which owes 80% of all debt does not have this ability...But there are ways to start a hyperinflation and even if this route was taken it would only last 10 to 17 months...

The purpose of maintaining the required amount of debt inflation is to postpone the inevitable Hyperdeflationary implosion of the money (Debt)supply as long as possible.

The Great Depression was stopped before it ran its full course...The previous depressions were far worse events... All the authorities accomplished was a postponement of the inevitable...The Next Depression will be an extinction level economic event.

11 comments:

Anonymous said...

There is more than one way to flood the system with money.

Think creatively! See Stanford offers free tuition to low, middle-income families

Cheryl-Lynné Rose Henderson said...

As one the recipients, I am doing the happy dance!

The system has to be flooded with NEW (debt) money. Stanford's financial aid enhancements are not funded with newly created debt.

In fact, it is debt deflationary - those who previously needed student loans to attend, now won't. Parents who would have used a HELOC to pay for tuition, now won't.

The money we had saved for undergrad tuition, will instead be used for grad school. It will not be spent (although I did decide to 'splurge' and turn the heat on!).

From the email sent to parents:

"To help pay for the enhanced aid program, the university increased its endowment payout last year to 5.5 percent. It also plans to double the financial aid goal of The Stanford Challenge, its current fundraising campaign, to $200 million."

Anonymous said...

But it now puts the pressure on Public Institutions to follow suit -- may lead to a massive amount of public spending on higher education. Couple that with public spending on Universal Healthcare and investment spending on alternative energy (which I believe will come in an Obama presidency) -- this may allow this country to weather the credit unwinding.

It will also shift the wealth distribution

Anonymous said...

With the unwinding of credit, we may be able to look at interest free money. See

Comment and Critique of Congressman Ron Paul’s Statement on Competing Currencies

and the video

Tom Greco in Malaysia

Cheryl-Lynné Rose Henderson said...

"(which I believe will come in an Obama presidency)"

He is my call to win too.

Implosion is inevitable - if we're lucky those in charge will, at best, delay. I hope they're able to pull it off - I'd like a few more years...

But, it's not looking too good -

snip:

"M1 is merely physical currency, plus demand accounts. What you really need to see is M3, which includes eurodollars and repurchase agreements. (Hey, what do you know! The Fed no longer reports M3. What an astounding coincidence!).

Forget the printed dollars and focus on the rapid creation of credit by the Fed -- not actual paper dollars for the metaphorical helicopter drop, but actual credit -- and we discover an even uglier truth: The Adjusted Monetary Base (See St. Louis Fed chart below) is collapsing EVEN AS MZM GROWTH IS MOVING TO NEW HIGHS. As Bill King points out, this means that "Capital is now being destroyed faster than credit can grow."

Net net, all these liquidity injections are merely moderating the collapsing credit facilities, and not actually injecting much in the way of credit into the economy.

http://bigpicture.typepad.com/comments/2007/12/no-inflation-no.html

Anonymous said...

I have to wonder how growing a garden and trading with your nieghbors, learning to make your own stuff, eating fresh fish, doing without all the crap that is making us lazy and sick, getting more exercise by walking where you need to go and spending more time at home with your own kin can be such a dire affair. I'm documenting the whole thing so that when my great-great grandchildren ask {why?} if I'm not able to answer them myself my sons will be able to know why it happened, and the lesson will be learned, once and for all.

Cheryl-Lynné Rose Henderson said...

I guess it will be good for those who survive what's coming.

Not all of us will be in that group.

Rajiv said...

Cheryl - are you ever in the Palo Alto area?

Anonymous/Rajiv

Cheryl-Lynné Rose Henderson said...

Yes, about once a month. I was just there last weekend.

rajiv said...

It would be good to touch base and exchange ideas

I will e-mail you seperately

Etz3l said...

Brilliant!