The cause of this crisis is the attachment of interest to the medium of exchange or yield. Everything else is an effect...
Everything has been done in a desperate search to obtain more yield...
Commercial banks lend money they don't have to people that want money they don't have.
Save it up...can't wait?
Well then a commercial bank will advance you your future income to spend in the present.
Lets say $200,000...by creating an asset of $200,000 and a liability of $200,000
Which increases the money supply of the USA by $200,000 until you make your first payment of principle and interest...the asset and liability shrink by the amount of principle...the money returns into thin air/the money supply shrinks by that amount...and the bank keeps the interest...
That's why mortages are so important to the system...Because they allow the money supply to expand and stay expanded for a long term.
As defaults rise from exhausted consumers no longer willing or able to service previously manufactured debt...the banks are forced to keep cranking up yields to make up the difference...Eventually to maximum potential according to the rules in the Terms and Conditions of the credit cards.
The companies just reclass the cardholders into universal default and crank yields up.
At some point they will have to stop all credit cards since people will just be maxing them out as the whole thing caves in with no possible way or desire to pay.
Once consumers can no longer request commerical banks to manufacture the required amount of new money to service the existence of the previously manufactured money...game over.
All that a compounding interest system can do is inflate to maximum potential and implode...period end of story...
Attaching interest to money is taking more than you give.
It's the same as cutting down trees faster than they regrow...it's inevitable that you will run out of trees and if your civilization needs the trees to sustain it's continued operation...It stops to operate.
The top lives off the yield from the bottom
When the bottom can no longer supply the top with the required yield...game over.
Simple...
The whole system implodes...
Because there is no way to sustain a system that constantly demands more and more and more...or a system that cuts down trees faster than they regrow.
The system you see in operation right now is the same system that has been in operation for centuries...
The compounding interest commercial banking system
The only difference is what the currencies are made out of...
The top owns all the money in circulation...and when the supply of gold and silver was utilized to its maximum potential...the owners of the money supply system changed the way it operated to keep it operational.
The top own the food distribution networks as well...So when they ran out of gold and silver to construct money out of to pay the labor they issued money constructed out of different materials...and said use that to buy bread...or die.
It's an absolute capitalist hierarchial food powered make work enterprise.
The top is the employer and all below are the bottom and the employees...
The top lives off the yield from the bottom.
A recession is the beginning of a deflation...or a transformation of a boom into a bust. It's up to consumers to reflate out of a deflation...If they can't because they are exhausted...
It's game over...there is nothing the Government can do to postpone the inevitable implosion for much longer.
A compounding interest commercial banking system can only inflate greater than previous inflation to maximum potential and then when maximum potential is reached...the system begins inflating less than previous inflation to maximum potential.
The deflation will continue until maximum potential is reached.
Basically from 1929 to 1944-46 was the inflate less than previous inflation phase that followed the last inflate greater than previous inflation phase 1919-1929
This boom is 6 times longer than the previous boom...1929-1933 was the only time in the last 100 years in the USA where there was any visible deflation.
A little deflation is like nerve gas to a compounding interest commercial banking system.
You need to pay a bill but the money supply has deflated to the point that you are a quarter short.
You will default.
Really go out and try to buy things and refuse to pay the full price...Say but I don't have that much money...You will not be able to buy anything...unless the supply of money you have increases somehow or the prices of the stuff you are buying drop.
That's what happens when consumers can no longer request the commercial banking system to manufacture the needed amount of new money to sustain the required inflation of the system.
You all want more and more and more...Where is this magic well of never ending fulfillment located?
It does not exist...Once the maximum potential of your demands for more and more and more is reached...
The mass delusion you all have deeply fallen in love with all these decades is shattered...
Basically when you attach interest to let's say Gold...the more Gold you need to service it year after year.
Let's say total supply of GOLD in the economy is 100 million ounces.
And the richest person has 10,000 ounces and keeps lending them out year after year at 10%
And passes on the "business" to his decendants and one day one of his decendants 97 years later is owed 103,535,780.16 ounces of gold from a supply of 100,000,000 ounces
Lets say that Gold mines produce 5% more a year
Then he would only OWN half the entire money supply and be renting it out after 97 years.
And that's just one person...imagine if all of you try to obtain yields...then everyone will be in debt to everyone else...
Imagine 10 Rich people doing the above...
Then it's 74 years to own half the money supply.
Well that process was done centuries ago and the owners of the money supply then did as they needed to sustain the rent payments...Fractional reserve banking was the solution...
Most don't know how a credit system actually functions...and that it's a compounding interest commercial banking system that sustains the modern technological version of the absolute capitalist hierachial food powered make work enterprise.
The compounding interest commercial banking system has been in operation for 600 years.
Without it...press the rewind button back to pre 19th century...or more.
But the double entry accounting technique that is key to the system was being used 1000 years ago...So go back that far to escape so called fractional reserve banking.
Autonomous absolute capitalist drones...Have reached their maximum potential to request commercial banks to manufacture the required amount of new money to service the continued existance of the previously requested money...Causing them to rapidly transform from assets into unfundable liabilities...
It's the consumer...the Consumers power this by requesting commercial banks to manufacture more new money...as soon as consumer consumption of real estate reached maximum potential in 2006 and began slowing revolving credit or credit card debt growth began to accelerate.
As the real estate sector topped and began heading down late 2007 the growth rate of the money supply began to rapidly decelerate.
The sub primes was the system scraping the bottom of the barrel searching for more yield to postpone the inevitable defeat.
Without those sub primes...money supply growth would have collapsed sooner...and this would have all been heading to the basement a year or so ago...
And it's game over...
Currently...Nothing really bad has happened...The downward plunge has not even started...all that you see happening is due to the yearly growth rate of the money supply dropping to 5.1% from 9.7%
Asia and the Middle East
Are already slowing down on the way to implosion...Just watch China and India go poof and Dubai go bye bye...When there is not enough US consumer inflation flooding the world to hide all the so called corruption in their systems and those idiots are saying effects are the cause...lol
Drop to your knees and pray for a miracle...Because soon the Just think positive ignore the negative religion is going to die in a fit of exquisite agony and the hyperinflationary messiah is going to be exposed as a false profit.
The number 1 consumer of Brazil's exports is the USA
The number 3 consumer of Argentina's exports is The USA
The number 1 consumer of Argentina exports is Brazil
Total trade between Argentina and Brazil is 22.7 Billion dollars...
It's pretty insignificant.
Reguardless...once the USA caves in US consumers will stop consuming Imports from the rest of the world...Brazil will cave in and Argentina will finish imploding to oblivion...
The USA is either the Number consumer of a countries imports or the number one consumer of their imports has the USA as their number one consumer.
Globally.
All these clowns have been crying for years about escape from the USA and none of them can because as soon as they begin...their economies crumble.
You either pull a North Korea or stfu.
Argentina is still alive because the top jumped in to to buy up the firesale...but when the top caves in...there will be no way to stop the cave in and Argentina will resume or basically finish off imploding to oblivion.
Like in the markets when the price collapses and then rallies...Argentina has just been rallying...
They are DOA...
Brazil is dependant upon the USA to consume its exports and Argentina is dependant upon Brazil.
Brazil goes poof...When the USA goes poof.
In 1944 the system was set up so that the USA was the demand and the rest of the world the supply and since then the world has become more and more dependant on the USA not less...
And it's too bad you can't deal with it but that's what was done back in 1944...and when the USA which is the demand of the global economy goes poof...the supply is toast.
Just like back in when the British consumer was the demand the British pound was the global trade medium of exchange...pre 1929.
Well it will be far worse...Because that bubble inflated for 10 years during the roaring 20's...this current one that you have no ability to comprehend is over 6 decades old...or the roaring 6 decades.
Just sit back and watch...not long at all now...
Russia?
Had the rest of the world to sustain it...or actually loot it/buy it up at firesale prices.
This time around...the top is going to cave in...there is going to be nothing to stop implosion to oblivion.
All the so called economic hijinx of the past 60 years were nothing...total jokes...minor occurrences.
yawn.
You all believe the Government or powers that be has/have some kind of magic powers...they don't of course and never did...
And you all have a front row seat for the revelation...
Imagine back in the old days when no one could see the hurricane coming and it looked just like any other storm...
And it just keeps getting worse and worse and worse...
That's exactly what you all (everyone on Earth) are in right now...
In the credit cycle consumers become exhausted and slow down and deflate into a recession on the way to implosion...Then they become desperate and speed up and reflate out...yay.
This exhaustion desperation cycle continues and each reflation out the consumers are in more debt than when they entered...
Eventually they maxout and no longer have an ability to reflate out then the next time they enter a recession...
They don't escape...
Thanks for showing up to planet Earth
All everyone has to do is cashout refinance and reflate out of this hole like last time...
Need a real estate sector that is not collapsing and rates on the 10 year treasury below 2.5% and..."massive volume"...but hard to get that volume when last recession the household debt to income ratio was 80% and now it's 120% and then factor in that since basically 2006 when Housing was topping and beginning to cave the credit card debt began increasing significantly faster meaning people have been making up alot of the difference using credit cards for almost 2 years now.
In 2007 US consumers were requesting commercial banks to manufacture on average 12 Billion dollars of new money/debt per day...
But by late 2007 and up until now the US consumer has slowed their requests for commercial banks to manufacture money...the daily rate of growth of the money supply/total debt has dropped by 42%...the most in 62 years...
That's kinda why you see all this stuff that needs 12 Billion a day to sustain inflation deflating now that only 6.99 Billion a day of new money/debt is being requested by consumers to be manufactured by commercial banks.
The Federal government BORROWS money from the money supply of the USA...By issuing Treasuries...
Money supply 51 Trillion...Public debt...lets say 9.5 Trillion...
Treasury sells 500 Billion dollars worth of treasuries into the market/money supply to borrow 500 billion of it...
Money supply 51 Trillion...Public debt...10 Trillion.
The money supply did not increase at all.
How is issuing 700 billion dollars of treasuries hyperinflationary?
Just since the start of the year the US economy is short 1.4 Trillion Dollars.
It's why banks are going bankrupt and Wall Street is tanking...
Consumers have since late 2007 slowed their requests for commercial banks to manufacture more new money basically by the greatest amount in 62 years.
Because they have maxed out and can no longer request commercial banks to manufacture the required amount of new money to service the continued existence of the previously requested money.
If production is not cut faster than demand drops...there is not going to be price inflation...
Everyone is in debt up to their eyeballs and will glut the market with firesaled inventory trying to get out/escape/avoid default.
It's consumers requesting commercial banks to manufacture new money that has been the cause of all the monetary inflation in the USA...For the past 64 years.
Basically for the USA's entire history...Except for the Greenbacks of the civil war.
The national debt is just the money the US Government has borrowed from the 51 Trillion dollar money supply of the USA but since the system in the USA is a credit system...the 51 Trillion dollars is also the total consumer debt currently outstanding.
In 2000 the money supply or total debt of the USA was 27.1 Trillion and the amount of the Public debt or the amount that the Government borrowed of the 27.1 Trillion was...5.7 Trillion or 21% of the money supply
from then to now....US consumers have requested the commercial banking system to manufacture another 23.9 Trillion dollars of new money or debt
While the US Government has borrowed another 4.4 Trillion of the money supply or total debt for a total public debt of 10.1 Trillion or only 19.8% of the money supply or total debt of 51 Trillion dollars
Now, the Treasury issues treasuries in the amount of 700 Billion
First off the commercial banking system is where all the money creation takes place...
Consumers request commercial banks to manufacture money...
Like let's say you want to buy a house but don't have $200,000...Well then if you are able to service a loan of $200,000 then the bank sucks $200,000 of future income foward for to you blow right now...
Poof the Money supply of the USA just increased by $200,000
The money supply of the USA is currently 51 Trillion Dollars.
The Treasury offers X amount dollars worth of treasuries in exchange for X amount dollars of the 51 Trillion dollar money supply of the USA.
If they need money.
But as far as I can tell the Treasury is exchanging Treasuries or perfoming debt for assets that have collapsed in price and are basically non performing debt.
So nothing much would happen except an increase of the public debt ultimately and the cost to service 700 billion at current yields is under $200 per worker per year.
But this so called bail out is not going to prevent the implosion from happening...at best postpone it a bit longer
The FED didnt keep rates artificially low...
Consumers did...
Consumers request commercial banks to manufacture money...that money then is blown into the economy and ultimately finds its way into the bond markets...
If the supply of bonds is growing slower than the consumers are requesting commercial banks to manufacture money...the Bonds will be bid up and yields will drop.
A cycle forms in all credit systems...desperate consumers cause a spike of liquidity to flow into bond markets which causes bonds to be bid up and yields down...but once consumers become exhausted the flow of liquidity slows and the bonds are bid down with yields rising.
The FED measures this and follows along...the consumers dictate the bond markets...
The FED's ability to engineer short term rates is almost non existent and its ability to engineer long term rates is limited.
There's a chart showing that the bond markets move before the FED does...due to the above mentioned desperation exhaustion wave.
I doubt these so called economists even look at relevant data...somewhere along the line somebody said...the FED sets rates...and he believed it and never ever in his life checked to see if it was true.
Because it's all a lie...
The problem is consumer exhaustion...
All the money in circulation minus the coinage of the USA or 51 Trillion dollars was created by consumers requesting commercial banks to manufacture it...
By creating an asset and a liability...
Let's say for a house that the buyer needs $200,000 for...well if the bank thinks the person can service it...they increase the money supply of the USA by $200,000
That's where money comes from...that's how it works.
And consumers have been due to the collapse of the real estate sector in the USA 2006 slowing their requests for commercial banks to manufacture more new money.
The daily growth rate of the money supply...or total debt went from 12 Billion dollars a day in late 2007 to 6.99 Billion a day currently.
A 42% drop in the rate of growth...the largest in 62 years.
The banks have an unlimted ability to manufacture more new money but US consumers have a limited ability to request the banks to manufacture it and service it.
You think the economy is based on banks lending to each other?
They are not lending "excess reserves" to each other because they know that the US consumer is maxed out.
The only lending they are talking about is overnight lending.
"In the United States, the federal funds rate is the interest rate at which private depository institutions (mostly banks) lend balances (federal funds) at the Federal Reserve to other depository institutions, usually overnight"
"Federal funds are overnight borrowings by banks to maintain their bank reserves at the Federal Reserve. Banks keep reserves at Federal Reserve Banks to meet their reserve requirements and to clear financial transactions. Transactions in the federal funds market enable depository institutions with reserve balances in excess of reserve requirements to lend reserves to institutions with reserve deficiencies. These loans are usually made for 1 day only, i.e. "overnight." The interest rate at which these deals are done is called the federal funds rate."
It's overnight lending...between banks in the FEDERAL RESERVE SYSTEM.
There are 8,437 FDIC Insured Institutions
2,451 are commercial banks that are in the FEDERAL RESERVE system and are FEDERAL RESERVE MEMBER BANKS
Another 4,731 commercial banks...are not members of the FEDERAL RESERVE System.
826 savings associations that are not members of the FEDERAL RESERVE system
"A savings and loan association, also known as a thrift, is a financial institution that specializes in accepting savings deposits and making mortgage loans. The term is mainly used in the United States; similar institutions in the United Kingdom, Ireland and some Commonwealth countries include building societies and trustee savings banks."
419 savings banks...that are not members of teh FEDERAL RESERVE system.
11 insured U.S. branch of a foreign chartered institution...Not members of the FEDERAL RESERVE system
Of the 8,437 FDIC Insured Institutions operating in the USA only 29% are even in the FEDERAL RESERVE system as member banks.
All the largest commercial banks of course are member banks...
All the banks outside of the big money centers are not "jammed" up
They are not lending to each other because they all know consumers are exhausted...or NOT BORROWING.
Big money center banks basically borrow from the FED short term at wholesale rates and lend to Consumers long term at retail rates.
But if there are not enough consumers willing and able to sign on the dotted line for enough to make a profit.
Game over.
Again 10.1 trillion is just the public debt...The amount of the money supply the Federal Government has "borrowed"
All the money in circulation got there by consumers requesting commercial banks to manufacture it...so it's all debt.
An the money supply or total debt is 51 Trillion dollars...right...now.
The cost to pay the interest due on the 51 Trillion dollars is hidden in the cost of everything...
but since the public debt is borrowed from the money supply...technically the population owes 51 Trillion + the public debt.
Lets say the 51 Trillion was paid off...There would be no more money except the coinage left...
But the entire public debt would still exist. And there isn't Trillions of dollars worth of change...
That's why money is not made out of gold and silver anymore...Impossible to keep up with demand.
Best kind of money is worthless money...that way people are constantly trying to get rid of it...
Once every one starts saving it up...It doesn't circulate unless it has to...
Every country on Earth has the exact same set up...all their money supplies are debt and their public debts are borrowed by the Government from the money supply.
China, India...the EU..etc you name it...All in debt up to the eyeballs and totally oblivious...billions of oblivious drones that haven't the foggiest clue how the compounding interest commercial banking system operates.
Once the USA caves the entire global system will implode and mind boggling chaos will erupt in every country on Earth.
There are 154 million workers in the USA roughly and that works out to about 60.8 Trillion dollars of total debt the population is servicing day in a day out.
Or about $394,805 per worker.
Except the public debt is special...there is no real requirement to pay principal so it's just a small interest payment per year ultimately...of $3,200 or so per worker on 10 Trillion dollars at 5% and the current treasury rates are lower than 5%.
Consumers sustain the banks...
The problem right now is that consumers are exhausted and are either unwilling or unable to request the commercial banks to manufacture the required amount of new money to service the continued existence of the previously requested money.
That's the cause of the credit crunch.
The slaves have basically been slaved to the point that they are finished...
The mark to market problem is another case of an effect being sold to the oblivious masses as the cause.
The exhausted consumer is the cause of the mark to market problem.
False information basically causes mental damage...
The USA is just the brawn of the Global empire...the brains are in Europe...looking helpless and innocent.
The top maintains their position by giving the bottom what they want...Or at least what they think they want when you factor in all the anti-American social engineering that has been taking place outside the USA for decades and the high level that is currently evident inside the USA lately.
The top never ever planned to sustain this all...it was doomed to implode...so when you all destroy it...you will get what you want...At least you will think you are...
It's how social engineering/brainwashing works.
The Internet was created by DARPA...
The Defense Advanced Research Projects Agency.
Free speech?
First off you are singing like canaries...far easier to identify and locate potential threats when they foolishly think they are safe.
Second Rebroadcasting...mass social engineering each other.
The top controls everything...the top allowed the Interent...It's their tool...they handed it to you all...for free at first to get you all hooked then they started charging...
You all didn't create it.
Who taught you how to read?...do math?...write?
Think?
The top.
When are all you idiots going to stop the talking and start the walking...
Look in the mirror to find your greatest enemy.
4 comments:
Amazing to think all the money supply is nothing more than what has been hocked to banks. I never thought of it that way, but it couldn't come from anywhere else. I debate this printing idea all the time, as they keep talking about the Fed printing on boards where I post. I know that the Fed acquires its own deposits in return for funds and cash and in fact draws its own interest, thus being a drain on the financial position of those engaged in banking enterprises. The Fed and paper money has merely let this game go on longer. You have really thought this thing out Hyper to the point that you have down what I have to think about, though I have thought about some of it in other terms. I have been thinking for years about how you would operate a government owned banking system, where fractional reserve wasn't allowed, interest was used in place of taxes and all capital speculation was done outside of the government banking system on a dollar for dollar basis. The real problem is making a cycle from where we stand today into such a system. It is clear the government could just take all the bank assets and also the liabilities and not pay any interest, aka what they are kind of doing with the $700 billion. Of course, this would piss off a lot of people who think they run things.
On a deeper basis, I figured out a few years back that much of the environmental abuse was due to trying to get more money to keep the system going. It is clear to me we are raping the land, not so much for a standard of living as for cashflow to keep the money game going. There is so much less that mankind could be using on a day to day basis that once this thing implodes, we are probably going to see occur. I have known for a few years that oil prices went down because the countries needed the cash flow to service debt. This was especially true of Mexico and some of the higher population regions. The resources of the world cannot keep up with this constant demand to service debt. It is totally out of the question that the economies expand at a sufficient rate to get this ball rolling if for no other reason than the natural resources aren't presently there in sufficient enough quantities to do so. Petroleum is at near maximum capacity and even a much higher price wouldn't push the short term capacity to a point where expansion could do something to add and sustain more debt. The same is true of metals and most likely the capacity of the atmosphere to handle the pollution we are seeing out of manufacturing. Maybe nature conspires to save the world in more ways than one.
One of the things I find interesting is the inflation link to population growth. That also makes sense and the expansion to maximum potential then implode could mean the human race could approach extinction pretty fast. It could be nothing more than a trend, as the population of the world serves a purpose in and amongst itself. Fewer qualified people to man anything could turn the ball backwards, just as imploding credit and shortages of minerals to expand can do so, as labor is the third component along with money and commodities.
CBS 60 Mins had a good program on Sunday showing how they were insuring risk by calling it swaps in order to avoid regulation. Someone needs to go to jail. They were talking about this shadow market of upwards of 60 Trillion. This practice needs to be outlawed or regulated now. It was the core reason the banking system failed. It was bad enough you had the greed in the lenders/borrowers. Yes the ignorant borrowers are the problem also, buying houses hoping to flip and got flopped. They had no equity, just had to walk away and ruin their name for 7-10yrs. Initial lenders already sold the junkie mortages off to bigger banks. Then you had all the investment banks creating this swap crap and folks were betting on home values going up and trying to make money out of thin air.....
"Yes the ignorant borrowers are the problem also, buying houses hoping to flip and got flopped."
Couldn't agree more.
Hypertiger is the Rev Jim Jones of doomsday economics. He (she)? IT??? Has recruited an army of brainless disciples who continuously regurgitate HT mantras “Top Sucks from the bottom” “Morons” “Absolute Capitalism”…
It not that I mind at all except HT has been feeding his followers with the laced-Kool-Aid assumption that it will all end in a deflationary collapse. HT is ignoring many key economic fundamentals and is thus placing his followers in dire peril.
I highly recommend that all the HT followers start to think for themselves – or you will get caught on the beach when the Hyper-Inflationary Tsunami hits…
You have been warned…
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