The UNTAPER and Ponzi finance

Eyes wide shut!

By tedbits: The funding of moral and fiscal insolvency continues to BARRELL along.  The whole developed world is INSOLVENT and the public just muddles along as the bagman for the behavior of the very people they have placed their trust and futures in.  The vast majority of the world has bought hook line and sinker the thought that they can SOMETHING for NOTHING and are attempting to realize this dream.

They believe they can live a good life without working for it.  That they are entitled to the fruits of others labor, known throughout history as slavery, but now the word for it is FAIRNESS.  That wealth and prosperity can be printed out of thin air with no consequences to the world at large.  

They believe that you can consume more than you produce without descending into insolvency.  That you can borrow money for consumption and leave the bill for future generations to pay.  That you can steal from the public and transfer it to government, bankers and crony capitalists without destroying the fabric of the economy known as the MIDDLE CLASS.  How much pain must be generated to disabuse them of these ideas?  WE WILL FIND OUT!

To them I say they must know the first lesson in Econ 101: TANSTAAFL - There ain’t no such thing as a free lunch!  Today I am going to start off with a few quotes from Gentlemen that are widely recognized are as some of the smartest men in history.

"Paper is poverty. It is only the ghost of money, and not money itself."

Thomas Jefferson

“In the end all paper money returns to its intrinsic value: worthless”  

    Voltaire                                                                                                                                                                                                                                                                                                                                                                  

“Nations are not ruined by one act of violence, but gradually and in an almost imperceptible manner by the depreciation of their circulating currency, through excessive quantity” 

Nicholas Copernicus, 1525

“Gold is money, everything else is just credit.”  

J.P. Morgan

What is it that our leaders know that these men did not?  How is it different this time?  I will add one thing to Copernicus’ thought: It is not imperceptible anymore!

The greatest SOCIETAL and financial insolvency in history continues to MUSHROOM like a nuclear BOMBLAST.  Socialism and its handmaiden of FAKE UNSOUND money just continue to spread misery into ever widening circles.  This is redistribution of the worst sort.  

As the pain is sent to the masses, the riches are sent to the capitals and banking systems of the world to support their special interest supporters who participate in the looting in one way or another.

5,100 million ghosts are appearing every day courtesy of the bank of Japan and Federal Reserve electronic money generation.  The European Union is printing staggering amounts through their commercial banking systems but it is very hard to measure.

Presented to the world as money they are no such thing.  They are not wealth printed out of thin air.  They are theft of purchasing power out of the money most people are paid and store their wealth in.  A mugging of the public at the hands of their masters in government and in the banking systems is the result. 

Since virtually no one knows what money is, what it represents or the functions it must perform, the victims go about wondering who/what the source of their misery is.  No amount of ghosts will RESCUE the world’s economies, only the policies of solvency (producing more than you consume) will do this: rewarding hard work, prudent behavior (savings) and risk taking, ceasing the theft of private wealth through runaway taxation, regulation, and redistribution.  The odds of this are NIL so Mother Nature is in the process of teaching history’s lessons to a new generation.

The surprise decision not to taper QE infinity was a shock to the financial system.  This was a colossal failure of forward guidance which now has been revealed as nothing but HOT AIR as virtually everything presented to the public has become.  The masses live within the matrix (see the movie, it is the perfect analogy to what is unfolding) and reality has become a big lie which most live in.

The Federal Reserve cannot afford to live within the matrix; they may create it in cooperation with their associates in the main stream media, governments and banking systems.  But at this point in time they can’t take the chance of swallowing their own Kool-Aid, as it is laced with poison just like that of Jim Jones.

QE infinity has nothing to do with stimulus, never has and never will.  It is about maintaining the big lie that you can have something for nothing.  That the government can support you and provide for your needs rather you providing for yourself.  It is about maintaining the facade that the dollar and treasuries which are the reserves of the global financial system are promises which are good as GOLD.

They want to everyone to believe the US economy can generate enough economic growth and output that the owners of treasuries will get their money back with interest.  That economic recovery can take place with a country whose government is at war with its own private sector and trying to kill it.  Government never creates anything, least of all wealth and prosperity.

Wealth and prosperity come from a growing private sector.  The growth comes through hard work, investment and great ideas people’s lives get better and middle classes are built on the shoulders of the private sector.  In the developed world the private sector quit growing over a decade ago.  

All growth has come from misstated inflation, a mushrooming financial and banking system courtesy of money and debt printed out of thin air and growth of leviathan government which has masked the murder of the source of all wealth aka the private sector.  Consumption is not wealth creation but it can be presented as such by a George Orwell main stream media.

The Federal Reserve must conform to reality regardless of the words they present.  What is reality at this time?

1. The stock market is leveraged to a point that has preceded every market crash in the last 15 years (courtesy of www.dshort.com [33] , I highly recommend it):

2. A financial system which is sitting on a pile of over the counter derivatives valued at $296.8 trillion dollars,  (courtesy of www.cross-currents.net [34] ):

These derivatives are 17.6 times US GDP and 15.6 times total stock market capitalization and the banks that are counter parties to this are holding no margin to secure their counter parties along with running over 33 to 1 leverage.  A mere 2 % move against them will vaporize a years’ worth of US GDP.
 

 3. In an economy which has not grown in REAL terms after inflation for almost two decades (courtesy www.dshort.com [33] ):
 

4. Where Job growth is nothing but a POLITICAL FICTION and in REAL terms is over 22% (courtesy www.shadowstats.com [35]):

 

5. And the U.S. government is deeply insolvent where the market for its “bills of credit” also known as treasury bills and notes total over $16.9 trillion (16,900,000 million) and is going straight up:

And in GAAP (generally accepted accounting principles) is over $80 trillion ($80 million million) and the debt and future obligations is actually growing over $7 trillion ($7 million million) dollars a year.

 

As is, the central bank’s balance sheet explodes to BUY US government bonds which the private sector won’t buy:

 

6. Where the government has grown over 280% and average household earnings have grown only 24% since 1970.  It now takes $12.50 cents of new debt to create $1 dollar of GDP:

 

If this leverage fails so will the financial system and economy. 7. And where the government has become hopelessly insolvent and government spending never is controlled:

 

8. This is the face of economic sclerosis.  It is political allocation of demand and control being put in place as public serpents err servants regulate and direct business to their special interest supporters                                                               as capitalism FAILS under the central planners deadly socialist embrace.

Look how government has morphed from your servant to your master since Breton Woods II 1971.
 

UP 500% since the 1970’s

This is the face of competition, innovation, productivity and more goods and services for less money (aka capitalism) being PROHIBITED by LAW!

Notice how these totals exploded after Bretton woods II destroyed the semi sound money we had previous to August 15, 1971.  This is the destruction of CAPITALISM, creative destruction and more for less of everything you use.  It has been OUTLAWED replaced by politically regulated demand to crony capitalists who loath competition!

"A government can't control the economy without controlling people. And they know when a government sets out to do that it must use force and coercion to achieve its purpose. They also knew, those Founding Fathers, that outside of its legitimate functions, government does nothing as well or as economically as the private sector of the economy."  

Ronald Reagan [36]

Alexis deTocqueville foresaw exactly how this regulatory state would suffocate the spirit of free enterprise: "It rarely forces one to act, but it constantly opposes itself to one's acting; it does not destroy, it prevents things from being born; it does not tyrannize, it hinders, compromises, enervates, extinguishes, dazes, and finally reduces [the] nation to being nothing more than a herd of timid and industrious animals of which the government is the shepherd."  

Alexis de Tocqueville  1833

9. Volatility has been suppressed for over 58 years by negative interest rates, excess money and credit creation rather than letting nature purge the excesses;

 The red volatility that has stopped in the last 55 years HAS NOT disappeared.  But rather has been stored up and will be released at some point when the Federal Reserve and financial systems LOSE control of the markets which they manipulate with their unlimited supply of dollars, also known as IOU’s and junk bonds.
 

10. Where Unsound money has allowed for the theft of your well-being and the value of the dollars you are paid and store your wealth in while it sits in the bank APPEARING to HOLD its value:

Picture of the death of the middle class
 

Notice how the purchasing power of the dollar has declined about 80% while wages in a previous chart are up nominally 24%, do the math… 

11. And lastly and most importantly they may have lost control of the Bomb err bond markets with their forward guidance (which is blowing up in their faces like an exploding cigar) which have spawned outside down reversals on quarterly charts on virtually every bond market in the world.

"Let's be clear. We've intentionally blown the biggest government bond bubble in history," Haldane said. "We need to be vigilant to the consequences of that bubble deflating more quickly than [we] might otherwise have wanted."  

Bank of England governor Andrew Haldane 

THIS is the PRIMARY cause of their FAILURE to tighten.  This is the most frightening thing central bankers can be confronted with: Loss of control of interest rates.  The proverbial CANARIES in the coal mine keeled over WORLDWIDE!  
 

The bomber bond market charts on the longest timeframes are arrayed against them.  Hot air from Bernanke in May and June accomplished more tightening than they could conceive! 

This is Mother Nature and history versus MAN (Draghi, Bernanke, Carney, etc.).   I know who I am betting on and it isn’t Bernanke and Company.  Men will print a lot more before the global Ponzi scheme collapses on them.  THEY WILL NOT TAKE THE CHANCE of a spiral higher in interest rates.  The financial and currency systems which they control and manipulate for personal gain and plunder will be rescued at any cost, which to them is virtually NOTHING except an electronic book entry.

These reversals are the source of the emerging market routes in currency values and fixed income.  MASSIVE losses occurred on too big to fail bank balance sheets and bond inventories, just on the mentioning of the TAPER and withdrawal of LIQUIDITY and STIMULUS.

 

The CENTRAL banks (BOE, Federal Reserve, ECB, Bank of China, Swiss National Bank, and Bank of Japan) mission impossible is to stop this bull market from reversing.  The leveraged FINANCIAL ASSETS (malinvestments) in the financial and banking systems will collapse in value when interest rates rise!!!  The leverage they operate under guarantees it….

Money supply growth throughout the world’s largest economies has slowed to the point which has preceded every major financial crash in in recent history:

 

When reviewing the latest TICs data detailing flow of funds into and out of the United States, one thing stood out like a sore thumb.  The flow of funds of treasuries was negative for every central bank in the world EXCEPT JAPAN which bought approximately $70 TRILLION dollars’ worth.

Think about that, the most insolvent government in the world is FINANCING another insolvent government via what else? THE PRINTING PRESS.  That is another $70 trillion dollars of debt monetization on top of their current domestic monetization.  Once they receive the bonds which will never be repaid except from new borrowing, they then call them ASSETS.  HO HO HO

 

In conclusion:  It’s INFLATE or DIE!  The taper talk is just that: TALK.  They can NEVER withdraw the monetary heroin and I believe must step on the gas and increase money and credit creation SOON or risk the issues outlined in this commentary beginning a game of DOMINOES!  Hi ho hi ho it’s back to the printing press they MUST go.

Authors Note:  Most of the world is operating with EYES WIDE SHUT and in willful blindness for which they will pay a price.  Have you diversified into investments which have the potential to thrive regardless of what unfolds?  If not CLICK HERE and I will show you how we do so.  No one knows when the “you know what” will hit the fan.  But if you aren’t already in place it will probably too late to do so.  

Whereas G20 leaders PROCLAIM that the crisis has ended based on small economic anecdotes the insolvencies have only grown since 2008.  The printing can never end, only grow until the policies of insolvency built up over the last five decades are REPEALED and REFORMED. "When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it."          

Frederic Bastiat

The very idea that the politicians, and the banks and corporations which control them will UNDO their handiwork is a PIPEDREAM.  They have bent the developed world’s laws and institutions to their advantage, while increasingly victimizing the public and private sectors at large.  They have spent the last 5 decades TAKING control of the free world, and SUBVERTING capitalism to give it up now.   

The thought of returning freedom, undoing the centrally controlled economies massive regulatory and tax systems, and the restoring incentives to produce to the masses (the only solution) is inconceivable to them.  Those that created these problems are incapable of SOLVING them.  No amount of money printing will.   It just postpones the unfolding crisis and exasperates it.  IS YOUR PORTFOLIO PREPARED? 

The very idea that the government will shut down due to the debt limit and budget debates is a false fear.  Almost 1/3rd of the citizens of the United States depend on the government in one form or another for supplemental support of their lives or businesses.  Political suicide.  RIOTS will erupt if their checks do not arrive in the mail.  It won’t happen at this time.  If they would only PRESERVE the sequester and hopefully authorize the keystone pipeline would be a HUGE victory.

Author’s Note:  In my opinion the greatest manmade disaster and OPPORTUNITY in history and is unfolding in every corner of the world.  Are you prepared to turn it into opportunity by properly diversifying your portfolio?  Adding investments which have the potential to thrive regardless of what unfolds economically?  Hedging the printing presses impact on your paper money?  This is what I do for investors; help them diversify into investments which are created to potentially thrive. 

Via Zero Hedge