To be able to understand the current economic picture you must be able to understand the current economic system at its base level...
The system in place since 1971 when the US ran out of Gold and could not meet its obligations under the system in place at the time which was the Bretton Woods Gold backed fractional reserve banking system - The name of the system in place for the last 37 years is The Floating Exchange Rate Debt Backed By Debt Fractional Reserve Banking System… Instead of a Gold fractional reserve it has become a debt based fractional reserve…Debt backing debt…
The cash money supply is about 3% of the total amount of debt in circulation…
97% of the pay checks handed out every Friday in the US are a combination of old debt and newly created debt… Only 3% of a paycheck is actually backed by currency.
The money supply is debt
What is debt? It is money created out of thin air, with compound interest that is not created but is attached and is destroying its existence, by commercial banks…It is created at the request of consumers by the signing of a contract to pay it back plus interest over a period of time…
In order for the money supply to be stable or growing new debt creation must be equal or greater than the previously created debt…at the very minimum enough new debt must be created to at least equal the compound interest payment due on the previously created debt.
Debt must inflate forever to maintain the money supply…
The federal funds rate is at 2.25%; it is what the FED charges as interest when commercial banks borrow money from them to use as a Fractional debt base to inflate debt enough so that the demand for debt by consumers can be met and or marketed to them.
The current problem in The Floating exchange rate debt backed by debt fractional reserve banking system which has been in operation for 37 years is that Debt has not been inflating fast enough to be self sustaining and the growth in debt has been flattening out or becoming stagnant… A sign of impending debt deflation…
There is a slight problem...0...zero is the theoretical limit that rates can be dropped to produce or entice consumers to borrow or increase debt demand enough to slow or stop debt deflation… But rates can only go so low, commercial banks need enough interest income to meet operating expenses...
The Floating exchange rate debt backed by debt fractional reserve banking system… in 3 easy steps...
Step 1 Inflate debt destroy savings
Once new debt creation is less than the cost of maintaining the previously created debt then you move to step 2
Step 2 Deflate debt destroy equity
If you can not reflate the debt supply by lowering interest rates to produce exponential debt inflation greater than debt deflationary forces then a hyperdeflationary implosion results leading to step 3
Step 3 Bankruptcy,collapse and consolidation...
The Floating exchange rate debt backed by debt fractional reserve banking system has bought about 37 years worth of time and is in its terminal phase…
Step 2 is what the FED has been trying to prevent from happening since 2000. The US economy has not even really begun to go down compared to what is just around the corner. It is a not seen in living memory kind of event...
Consumers borrowing money is what determines the amount of dollars in the system. Is the government borrowing the money and buying a house for you or are you the one doing the borrowing? Consumer demand for debt is what determines inflation and deflation.
The cause for debt inflation is increased demand for debt… The cause for debt deflation is reduced demand for debt...
The current system is fueled by debt inflation...someone somewhere in the system has to go into debt in order to sustain debt inflation which is the fuel the system runs on...Operating expenses are mostly composed of previously created debt and profits are composed of mostly newly created debt...
Current income is previously created debt and future income is newly created debt...
A consumer's maximum potential for servicing future income which is debt is dependant on what his current income is which is previously created debt...The consumer has a finite ability to produce debt inflation which fuels the current system or the "inflationary psychology."
Once the system approaches the maximum potential for consumer debt inflation, profits dry up and unemployment starts rising...Lowering interest rates entices and helps consumers to increase borrowing...
If the money supply can not be expanded enough then profits vanish...The money supply of the US is composed of 3% Cash and coin and 97% debt...The only way to maintain a stable or expanding money supply based on a debt backed fractional reserve is debt inflation or the creation of greater quantities of new debt than the previously created quantities...
Failure to do so means that the debt supply will begin shrinking and if the previously created debt base needs greater debt creation to service it but the new debt creation is not greater then there is no way to service the existing debt and cascading defaults snowball into a hyperdeflationary implosion of debt...a shrinkage of the working money/debt supply...
It's happened 100's of times in the past...
All recessions are the beginning of this process but with cuts to interest rates and the lowering of lending standards the inflationary forces overtake deflationary forces and there is a "recovery."
The US is now basically at the end of the line because it can't drop interest rates past zero to inflate debt...
The jig is almost up...it is apparent that the system is finished.
Hyperinflation?
There is no wage inflation so there is not going to be hyperinflation.
Price is a function of supply and demand...The cartels can reduce supply as demand drops...
But at some point even the cartels will be forced to either declare bankruptcy to balance the books or increase supply faster and faster to balance the books.
Then declare bankruptcy to balance the books.
Here it is again for those who have forgot or haven't seen it...
Stages of a compounding interest system...
1.Inflation of debt and the destruction of savings...
2.Deflation of debt and the destruction of equity...
3.Bankruptcy of the banks...Collapse of the economy/division of labor and the consolidation of power...
Then after the dust settles and order is restored we go back to number 1 full force after a generation or 2.
Or we suffer a complete breakdown and it takes far longer.
After 50 years we are sinking into number 2.
The Current banking system is an absolute capitalist system which is incompatible with social capitalist thought...
That is why absolute capitalism is so profitable...
You are a slave to absolute capitalists...
To a banker you are just a debt sponge who has a potential for profit extraction until you die, not a human being...
All the current social capitalist programs are doomed and are always doomed because they always depend on an absolute capitalist banking system to be sustained which is impossible in the long run...
And as long as you and everyone else continue to ignore the mechanics of the banking system you will be slaves... whether you think so or not...
Whine and cry all you want about various political beliefs...Ultimately absolute capitalism is the only system dictating your future. If you don't change the economic system you can not escape Absolute Capitalism...
Which is what you ultimately want...is it not?
Capitalism is basic human instinct so it is not doomed until I guess all life on the planet is wiped out including microscopic life. Capitalism is a word which very few people understand...it is just a battle cry or slogan used by the ignorant...
Fractional reserve banking is a fraud...were you able to break free from your programming you would see this...
You refuse to want to know that you are a dupe...it is that simple..there is no way to hold your hand or candy coat it...
I don't really care what the socialist argument is there is no way to prevent capitalism other than putting a gun in your mouth and pulling the trigger...
It does not matter what political system or religious ideology is layered over top of capitalism the fact remains that the only way to become rich is to make someone poor...
The current fractional reserve system has, barring some miracle, reached its maximum potential to inflate debt which is the fuel which drives the system...the lifestyle enjoyed currently is sustained by debt inflation which, since the maximum has already been reached, is in a final blow off of desperation...
Once again here is the the basic mechanics of debt backed by debt fractional reserve banking...One day you might get it...
Stage 1 of debt backed by debt fractional reserve banking is...
Inflation of debt and the destruction of savings...
Once debt inflation reaches it's maximum potential then...
Stage 2 of debt backed by debt fractional reserve banking is...
Deflation of debt and the destruction of Equity...
Once it reaches its maximum potential then a hyperdeflationary implosion of debt is the result which leads to...
Stage 3 of debt backed by debt fractional reserve banking...
Bankruptcy of the banks, collapse of the economy, and consolidation of power...
It's as simple as 1,2,3... denial and ignorance is what prevents the vast majority from seeing how simple it really is...
Maybe mathematically is simpler...
A simple program of fractional reserve banking...
Just so you know current consumer income is mostly composed of previously created debt and future consumer income is composed mostly of new consumer debt creation by the consumer him, her, or itself (Governments and corporations) or another consumer in the system...
New debt is created based on current income which is mostly previously created debt and all debt creation is by the request of the consumer from commercial banks...
So in the below program the creation of new debt is at the request of the consumers from commercial banks based on the previously created debt income of the consumer including corporations and government...
Start {Of slavery}
100 Inflate Debt {request the creation of new DEBT}
200 IF Compound Interest & payment <= New DEBT Creation then go to 100 else go to 300
300 Deflate Old Debt {Default on, Reduce Interest rates/refinance, or reduce regulations}
400 If New Debt Creation = 0 go to 600
500 IF Compound Interest & payment > New DEBT Creation then go to 300 else go to 100
600 "Bank"ruptcy
700 Go to 100
End. {of slavery}
End of program will never come... Until the program is destroyed or changed.
Now you know more than an economist...
There it is... try and refute me all you want...when the Ponzi scheme collapses the right will blame the left and the left will blame the right...the owners will just laugh...
Lord Rees-Mogg believes that poor people of dark skin are the cause of all problems...
"The world of economics has gotten so dizzy that it scarcely makes any sense to a sober man. Or one who cannot tolerate contradictions. The U.S. is now more dependent on foreign lending than any nation ever was. And yet, it offers lenders a rate of interest that is less than the current inflation rate. And still the foreigners lend!"
Have to because their economies are fueled by US consumer requested debt...
If rates in the US rise...Debt inflation slows and US consumers have no ability to afford to consume imports anymore...System implodes...poof
Rates have to keep being engineered lower and lower or the Jigs up...zero is it...
How much volume (US consumers signing on the dotted line to authorize the creation of debt) do you need to turn a profit at 0% profit a year?
If the average rate now is 5% at 2.5% you need twice the volume at 1% you need 5 times the volume...at 10% you need half the volume...
It won't be pretty when half the consumers in the US are thrown up against a wall and shot...When they refuse to or can't pay because they will refuse to or can't request any more debt to be created to pay to support the lifestyles of the rich and famous any longer.
It never fails to amaze me that the people who depend upon the sacrifice of the sheeple to support them think that when the sheeple cave in that they are somehow going to escape the consequences...
Like Ben can just turn on the sheeple press and pump out a whole bunch of debt free victims for the top to sink their fangs into once the current crop is sucked dry of their life force...
Owe no man anything but to love him, The borrower is the servant of the lender. If it is a sin to collect usury, it is also a sin to pay it. {! John 3:4}
ReplyDeleteHyper T-
ReplyDeleteAs impressed as I am with your over all grasp of the pure math of the compound interest based system and it's ultimate implosion, I have to say that when you say things like the following it makes me cringe a bit.
"It does not matter what political system or religious ideology is layered over top of capitalism the fact remains that the only way to become rich is to make someone poor..."
Perhaps I misunderstand but wouldn't giving someone a job that has none, potentially help them out of poverty?
They may never be as successful as the employer but perhaps they "succeed" to a some what lesser degree.
these guys are short sellers and they are about to feel the short squeeze.... they are going to pop like Ketchup packages in the hot sun under the big fat foot of surging stocks.... Bulls win, No more Joe Kennedys
ReplyDeletePlease...I have pondered it long enough...
ReplyDeleteThe only way to become rich is to take more than you give...
Work hard and provide me with with enough food to sustain my existance for two days and I will gladly give you enough food to sustain your existance for 1 day...
Just do as I command and supply me with two dollars and I will surely compensate you for your labor by paying you 1 dollar.
Now imagine helping 100 people "escape poverty"
Every day the wonderful employer gets enough food to sustain their existance for 100 days and the employees obtain enough to sustain theirs for 1...Don't like the "exchange for mutual benift"?
Go on strike after 3 days of labor and you'll be starving while the employer has 300 days of food...
Or 100's of dollars to your 1.
Don't like poverty?
Well I have something better...slavery...
Better than starving to death...
But Hyper I don't think I'm a slave...
Yes after 1000's of years the top has done a pretty good good job of convincing you all to worship the top and crap on all those below you all holding you up...
One day maybe you will succeed to a somewhat lesser degree.
For you shall eat the labor of your hands; happy you shall be, and it shall be well with thee.
ReplyDeletekinda Messianicdruid.
ReplyDeleteYour quote needs to be better...
What is usury?
Taking more than you give...
I will lend you 100 silver coins as long as you give me back 105 silver coins at the end of the year.
Is a prime example of taking more than you give...
chopping down trees faster than they regrow is also an example of usury.
Consuming food faster than it is produced/aquired/grown is also another example.
If you consume food faster than it is produced/aquired/grown or cut down trees faster than they grow...and are dependant upon food and/or wood to sustain your continued existance for as long as possible...
When you reach maximum potential and run out of food and/or wood...your existance will cease.
The surface of the planet is coated with the ruins of civilizations that have discovered and rediscovered the negatve consequences of Usury when the positive consequences can no longer be sustained.
Again...Human beings have no power to make or break LAW...
There is no way to take more than you give forever...Sure you can certainly attempt to...like Human beings have been for 1000's of years with the same logical conclusion every time...
You can attempt to make or break LAW...
But you all never will...It's impossible.
Civilization as you comprened it and it exists now and as it's always existed for the past 6000 years of recorded history has unfortunately been attempting to make or break LAW.
this current itteration is just as inevitably doomed as all the others that have ever existed.
All that Human beings have the power to do is make or break rules and call them LAW...
But if the rule (Or a rule called LAW) attempts to break LAW...then LAW will break the rule.
LAW does not need policemen and soldiers to enfore LAW
Only rules made by human beings depend upon human beings to supply them with power to sustain their continued existance.
Below another example of USURY.
All money is decreed money...fiat...
The top says this is money...Or else...period end of story....
You Farmer are on the Land owned by the LORD of the land and will pay tribute to the LORD of 1 Gold coin a year...
Where do I get this GOLD coin?
You can take one short ton of grain to the grainery of the LORD and there you will be given a GOLD coin for it and then you can give the gold coin to the servant of the LORD...
What if I refuse?
Then the LORD will drive you from the Land that the LORD is the LORD of...
There you go an abundant supply of free food to power your wildest hopes and dreams...Lies and delusions...
22 And The LORD said, Behold! The man has become as one of Us, to know good and evil. And now, lest he put forth his hand and also take from the Tree of Life, and eat, and live forever,
23 The LORD sent him out of the garden of Eden to till the ground out of which he was taken.
24 And He drove the man out. And He lodged the cherubs at the east of the Garden of Eden, and the flaming sword whirling around to guard the way of the Tree of Life.
Well what is done with all that Food the tillers of the LORD's land give the LORD as Tribute?
It powers the Absolute capitalist Hierarchial food powered make work enterprise...
The city state...Or Civilization...
Usury powers the thing you all popped out of thin air into and are in right now...
The top took more than they gave and invested that power into the construction of educational instutions...
That taught you all HOW TO READ, WRITE, DO MATH, HOW TO THINK.
I'm not a short seller...I detest all speculators equally...
ReplyDeleteThe top does all teh buying and selling anyways...the bottom can only speculate reguadless.
in the end when the top has sucked the bottom dry and the bottom can no longer support the continued inflation of the tops holdings...they will all short sell the bottom to oblivion.
Joe Kennedy didn't win the game because he was smart or played his cards right...He was a servant that the master decided to reward by telling him when to short.
All trading at the top is insider trading...
Thanks for all HyperTiger. Nice blog.
ReplyDeleteOne issue I have to bring up about hyperinflation.
In Weimar we had hyperinflation resulting from an unbacked currency printed with abandon to cover rising debts. The stock values went up several quadrillion times... which seems like a nice profit except that the value of money decreased by many times more than that!
So any unbacked currency that is printed to chase down debts will go that way won't it?
I don't see what will stop the dollar from going along on it's well defined pattern of devaluation over the last 100-years. Will it suddenly STOP devaluing and START revaluing? No. It will go to zero value through hyperinflation and then remonetization.
Can there really be any other scenario other than a zero value currency through hyperinflation?
Harare and Johannesburg - The Zimbabwe Stock Exchange (ZSE) grew by a record 322,111 percent in 2007, reports said Tuesday. By close of trade on Monday, the industrial index gained almost 4 percent to 1,911,538,281.84 points, although trading was mixed, the state-controlled Herald said.
ReplyDeleteI had no idea that Zimbabwe was such a powerhouse!
ReplyDeleteI assume the punch line which you did not tell us, is that inflation is running a good deal ahead of the percentage stock market gains which you mention.
Yep!
ReplyDeleteReserve Bank Of Zimbabwe Reckons 2007 Inflation Totaled 24,000%
26 December 2007
The Reserve Bank of Zimbabwe has estimated that inflation over the past 12 months has totaled 24,000%, compared with its last estimated of 14,000% in October, this in a circular sent to financial institutions to help them close their 2007 books.
Zimbabwe's Central Statistical Office stopped providing data on inflation in September saying it could not find prices for key goods because they were not on store shelves. But the Reserve bank came up with the estimate for the use of financial institutions and publicly trade companies in drawing up their financial accounts for the year.
A memo leaked from the central bank told institutions and companies that "you are hereby advised to use the 24,059 percent year-on-year inflation figure for November in the compilation of financial results for the period ending December 2007."
Recent estimates of Zimbabwean inflation by independent economists have tended to run quite a bit higher, ranging from 50,000% to 100,000%.
Economist Prosper Chitambara told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that the central bank estimate of 24,000% is "conservative."
But economist Eric Bloch, who has been a consultant to the central bank, said he reckons the 12-month inflation rate to be around 25,000%.
An IMF official recently said Zimbabwe was heading down the same path as Weimar Germany, though if the more pessimistic current estimates are correct, the country has already exceeded the Weimar peak of 32,400% attained in 1923. However, it has a ways yet to go to match Yugoslavia's 1994 rate of 313 million percent (both figures cited by monetary expert Steve Hanke in Forbes in June 2007).
http://voanews.com/english/archive/2007-12/2007-12-26-voa42.cfm?CFID=32528125&CFTOKEN=20556839
"One day maybe you will succeed to a somewhat lesser degree."
ReplyDeleteYou must be a Brit with wit like that.
Very nice
You missed the whole thing Ark. The Fed don't print money and give it away to pay bills. The Fed takes assets of banks in exchange for currency and liquidity into the system. Germany printed marks to buy dollars to pay to France. They had nothing for the printed marks. The Fed owns the country and indirectly the world.
ReplyDeleteAs far as what Hyper says about markets? I did a lot of study about markets for a few years and what I found what the masses had nothing to do with markets except that as a group they got fleeced. The stock exchange is a slow motion crap table. A few can win, but most get slaughtered and the top calls game up. It is widely known that less than 2% control 95% of the wealth in the US and the world. The 98% that control the other 5% delude themselves into thinking they can do anything or influence the markets. We only pay to play, they get paid to play. When factoring the 2% or so that own the 95%, I would venture that 2% of them probably control about 90% of the 95%. To wit, there were something like 90,000 people estimated to have a $20 million net worth in something I read. A guy with $20 billion has as much as 1000 of the $20 millionaires. So Bill Gates covers about 2000 of the 90,000 by himself. 2% of the 90,000 would be 1800. Buffett covers another 2000 $20 million. The rich guy in Mexico another 2000. I would venture 80% of the 90,000 have less than $30 million. That leaves about 18,000 in the top 20% of the 90,000. 1% of the world is 60 million people. 1% of 60 million is 600,000 people. So about 3/10,000 of 1% of the world has a really nice slice of it. If you live in a city of 1 million people, that is about 3 people fit that mold on the world average. Since the US is richer than about 95% of the rest of the world, that would allow for maybe 60 guys per million people having more than $30,000,000. 330 people having a solid net of more than $30 million is probably not too far out on the limb for where I live. Only 2 or 3 families here would I put in the hierarchy of the world potentially. But, there are no royalty