Monday, March 22, 2010

Wanna buy some Dope?

Pssst…wanna buy some Dope?

Greetings good citizen,

As one might expect, the Stock Market is (once again) drawing unwanted scrutiny as it becomes more difficult to defend what are, arguably, sky high valuations.

Um, you know, as I know, the stock market serves as the ‘parking lot’ for the wealthy, it’s were the world’s ‘pirates’ have, er, ‘dumped’ their booty for (as it has turned out) ‘safe keeping’.

So what do irrationally high stock prices tell us? It tells us the already wealthy have been ‘made whole’ by their Wall Street minions (at our expense.)

But that’s not the ‘dope’ I’m referring to in the title of this article. While surfing for today’s offering I encountered this article which invites you to join the author in ‘saving’ the US economy. (While, coincidentally, keeping the banksters whole in the process) via one ‘simple’ change…he proposes we ‘switch’ from debt backed currency to debt free currency!

The big ‘tell’ here is guess what nitwit’s ‘day gig’ is? Why, what a co-winky-dink, he’s a fucking ‘financial advisor’! (So naturally his ‘solution’ actually ‘solves’ nothing. Only some of your debt will be ‘forgiven’, er, naturally, when the cutting is done, most of you won’t ‘save’ anything. Only the people who behaved like idiots will (as they did initially) ‘make out like bandits’.)

So, wanna buy some Dope?

THE Most Important Chart of the CENTURY

[Mostly because it belabors the obvious…]

The latest U.S. Treasury Z1 Flow of Funds report was released on March 11, 2010, bringing the data current through the end of 2009. What follows is the most important chart of your lifetime. It relegates almost all modern economists and economic theory to the dustbin of history. Any economic theory, formula, or relationship that does not consider this non-linear relationship of DEBT and phase transition is destined to fail. [Not that Slick understands money better than anyone else…but we’re all entitled to our ‘opinions’. Neither of which prevents him from being a legend in his own mind!]

It explains the "jobless" recoveries of the past and how each recent economic cycle produces higher money figures, yet lower employment. It explains why we are seeing debt driven events that circle the globe. It explains the psychological uneasiness that underpins this point in history, the elephant in the room that nobody sees or can describe. [Um, does it really now ‘Fluffy?’ We all know what the real cause of our unbalanced global economy is and it don’t have dick to do with how we ‘measure’ GDP…although the reverse could be true. Which reveals a tragic hole this particular ‘genius’s’ logic.]

This is a very simple chart. [Sadly not simple enough for ‘Bobo’ to understand…] It takes the change in GDP and divides it by the change in Debt. What it shows is how much productivity is gained by infusing $1 of debt into our debt backed money system.

Back in the early 1960s a dollar of new debt added almost a dollar to the nation’s output of goods and services. As more debt enters the system the productivity gained by new debt diminishes. This produced a path that was following a diminishing line targeting ZERO in the year 2015. This meant that we could expect that each new dollar of debt added in the year 2015 would add NOTHING to our productivity. [What do you suppose accounts for this ‘relationship?’ Aren’t we actually talking about ‘productive investment?’ Why is ‘productive investment’ at or below zero already? Could it be because there isn’t any? So changing over to ‘debt free money’ changes what exactly? Wait good citizen, it gets worse! If you venture to the web page you will see that the entire process relies (once again) SOLELY on men both ‘good and true’! Like the past 230 years isn’t proof enough of just how badly that has worked out!]

Then a funny thing happened along the way. Macroeconomic DEBT SATURATION occurred causing a phase transition with our debt relationship. This is because total income can no longer support total debt. In the third quarter of 2009 each dollar of debt added produced NEGATIVE 15 cents of productivity, and at the end of 2009, each dollar of new debt now SUBTRACTS 45 cents from GDP! [This is what I was pointing to in my post titled “Ruinous Fiscal Mismanagement”, too much money chasing too little ROI. When you encounter a phenomenon like this it is as solid an indication as you can get that your monetary system has gone ‘rogue’.]

This is mathematical PROOF that debt saturation has occurred. Continuing to add debt into a saturated system, where all money is debt, leads only to future defaults and to higher unemployment. [Show of hands now, how many of you needed ‘mathematical proof’ that those who run our economy had ‘screwed the pooch?’]

This is the dilemma created by our top down debt backed money structure. Because all money is backed by a liability, and carries interest, it guarantees mathematically that there will be losers and that the system will eventually reach the natural limits, the ability of incomes to service debt. [No irony should be lost on the fact that his proposal is identical to the current system, sans the debt backing…hell, the fucker even retains ‘fractional reserves!’ (Which is total bullshit!) This also puts his ‘ignorance’ on display for all to see…sadly, most folks are so clueless when it comes to the ‘be all-end all’ that they won’t notice this glaring discrepancy.]

The data for the diminishing productivity of debt chart comes from the U.S. Treasury’s latest Z1 data, the complete report is posted below:

But you have to follow the link to read it. While most of my posts are attempts to point out (and ridicule) MSM fallacies, I only link to right wing nutjob sites to warn you away from them.

But if any of you want to join a ‘Swarm’ (of idiots) be my guest…

Um, disturbingly, the above as well as the next article were both ‘brought to you by’ The Automatic Earth.

Either Ilargi/Stoneleigh didn’t read the source material or…they’re much bigger idiots than they appear to be.

I confess myself to be ‘disappointed’.

Moving on, rather than inflict the whole…er, mediocre intro upon you, I offer the following excerpt for your consideration as it addresses a topic most of us Magpies find deeply disturbing:

So why didn't the intelligent analysts (maybe 2%) who weren't total whores of the system see that the gangsters would be able to stall off collapse for as long as they have? There are two answers that I can figure:

1. Some didn't think they had the capabilities to do so as the level of debt collapse so far exceeds sheer mass government and central bank ability to counter inflate.

2. Some didn't think that they would be so reckless. They have gambled the entire future of the world's economy to stall the collapse off for a matter of months - how many months remains to be seen. With the governments also in a debt collapse, the crash will be even more severe than it would have been otherwise.

I lean towards the second of the two explanations offered, with the caveat that I disagree with the ‘reckless’ disclaimer. What they’re doing is highly intentional and yes, the plan is to ‘maximize’ the collapse with the goal being the ‘near total’ destruction of civilization.

Naturally, most will scoff at the invocation of the ‘infamous they’…either you believe, and history has proven time and again that megalomaniacs walk among us or you don’t.

You don’t ‘need’ to believe it, that part doesn’t matter, for now anyway. Understand when something ten times worse than Hitler springs up, incredibly well-prepared, from the ashes of out shattered civilization, don’t be gulled into thinking he wasn’t there all along.

Thanks for letting me inside your head,


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