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The $2 quadrillion debt bubble will be the central bank endgame

Central bankers were handed the Midas curse half a century ago. Midas turned everything that he touched into gold– even his own food. Exactly 50 years ago (15 Aug, 1971) central bankers were handed a much worse curse by Nixon. But instead of turning everything into gold, their curse was to turn all real assets, including gold, into worthless paper, creating the perfect setup for this central bank endgame.

Nixon had of course not studied history. Because if he had, he would have understood that his lie was $100s of trillions worse than the Watergate lies:

“THE EFFECT OF TODAY’S ACTION will be to stabilise the dollar”

Hmmmmmm!

As the chart below shows the dollar has lost 98% in real terms (GOLD) since 1971. Just a one hour history lesson would have taught Nixon that no currency has ever survived in history since all leaders without fail have done what Nixon did.

Reminds me of the line in Pete Seeger’s song “Where have all the flowers gone”:

“WHEN WILL YOU EVER LEARN, WHEN WILL YOU EVER LEARN?”

The fall of the dollar after Nixon eliminated Bretton Woods.

Well, they will never learn of course. History has taught the very few who are willing to listen that there is no exception.

Every single currency throughout history has been debased until it has reached ZERO as I outlined here.

It seems incomprehensible that presidents and central bankers have not learnt they will all play the role that their predecessors have, in destroying the nations currency.

With their arrogance, they are all obviously hoping that they can pass the baton on so that it won’t happen on their watch. And because most leaders have a relatively short reign in relation to the lifespan of a currency, they often escape even though guilty.

…click on the above link to read the rest of the article…

What Are You Going To Do As Our Money Dies?

August 27, 2020

What Are You Going To Do As Our Money Dies?

Central banks are killing our currency to protect the already-rich

In our recent article It’s Time To Position For The Endgame, Chris Martenson explained how the US Federal Reserve and its sister central banks around the world have been engaged in the largest and most egregious wealth transfer in all of history — one that has been drastically exacerbated by the covid-19 pandemic.

The official response, tremendous monetary stimulus by the central banks paired with massive fiscal stimulus from national legislatures, has been pitched as “saving the system”.

Yet, in reality, it has merely served to accelerate the transfer of capital from the public into the pockets of the already-rich.

Anyone with eyes can see how the central banks have abandoned all pretense of monetary fiduciary responsibility and have simply cranked their printing presses up to “maximum”:

In concert with this surge of liquidity, national legislatures have added their own emergency measures. In the US alone, the CARES Act pushed nearly $3 trillion in fiscal stimulus into the system, and will highly likely soon be followed by another $1-3 trillion depending on which party’s bill gets passed.

Despite these staggering sums, the amount of money trickling into the average US household has been meager and is drying up.

Instead, these $trillions are mostly finding their way into the coffers and share prices of corporations. We have seen the fastest and most extreme V-shaped recovery in the history of the financial markets since the March swoon. The major indices are now back to record all-time-highs, despite the major carnage covid-19 has wreaked on the global economy.

So who benefits from that? Oh yeah, the people who own those companies. The already-rich.

Remember: 84% of all stocks are owned by the top 10% of households.

…click on the above link to read the rest of the article…

Blackrock CIO: The Endgame Is Coming And Central Banks Will Debase Everything To Spark Inflation

September 5, 2019

Blackrock CIO: The Endgame Is Coming And Central Banks Will Debase Everything To Spark Inflation

Blackrock’s Chief Investment Officer, Rick Rieder, best known perhaps for recently suggesting that the ECB should monetize stocks, writes in the Blackrock blog today and highlights the economic policy state-of-play today, and where it may lead to should economic growth falter, productivity not materialize, and populism continue to thrive.

* * *

The major global central banks continue to draw bigger guns in their battle against deflation, yet in some places, it appears to be of no avail. The fact is that the share of sovereign yields that are in negative territory keeps increasing and the average level of these interest rates becomes ever more negative. Further, quantitative easing (QE) purchases of sovereign debt have transitioned to purchases of corporate debt, and in some places equities; with inflation still elusive and improved growth prospects in question. That all leads one to wonder where (and how) these policies end? What is today’s monetary policy endgame?

Turn to economic history for perspective

In order to envision the monetary policy endgame several years (or a decade) from now, let’s start by stepping back and examining two of the foundational tenets that have driven the global economy and financial markets since the 1970s. The first principle is that the major central banks embraced a roughly 2% inflation target (implicit for the Federal Reserve since, at least, 1995 and explicitly stated since 2012), and the second factor is the end of the Bretton Woods monetary system; marking the shift away from the gold standard and into a world of fiat currency fluctuation.

…click on the above link to read the rest of the article…

What’s the End Game?

June 22, 2018

What’s the End Game?

In the rush of Trumped-up events, history — of the last month, week, hour — repeatedly gets plowed (or tweeted) under. Who can remember what happened so long ago? Perhaps it’s not surprising then that, in the wave of abuse from the president and his men (including economic adviser Larry Kudlow and trade hardliner Peter Navarro) against Canada and its prime minister, Justin Trudeau, one of the president’s earliest insults has already been washed down the memory hole into oblivion.

In a phone conversation with Trudeau on May 25th (not even a month ago, but it might as well have been the Neolithic Age), CNN reported Trump quipping: “Didn’t you guys burn down the White House?” The reference was to an event a while back — August 1814, to be exact, more than half a century before Canada existed, but who’s counting. In the war of 1812, the British did indeed burn down the White House; that was, by the way, the war in which U.S. troops invaded what would someday become Canada, a detail of little significance (and, in any case, probably the fault of the Democrats).

As so often happens these days, the president had brought up a perfectly appropriate subject, arson, even if he applied it to the wrong cast of characters. Before that May phone conversation, he had promised to exempt Canada from the steel and aluminum tariffs he was then thinking about imposing elsewhere. However, six days later, on May 31st, he suddenly imposed those very tariffs on Canada, as well as Mexico and the European Union. As is often the case with our president — you know, that guy with the yellowish-orange comb-over — the subject of burning something down, whether in Washington or elsewhere, isn’t far from his mind.

…click on the above link to read the rest of the article…

The Endgame of Financialization: Stealth Nationalization

October 14, 2017

The Endgame of Financialization: Stealth Nationalization

This is the new model of nationalization: central banks control the valuation of private-sector assets without actually having to own them lock, stock and barrel.

As you no doubt know, central banks don’t actually print money and toss it out of helicopters; they create a digital liability and use this new currency to buy assets such as bonds and stocks. Central banks have found that they can take control of the stock and bond markets by buying up as much as these markets as is necessary to force price and yield to do the central banks’ bidding.

Central Banks Have Purchased $2 Trillion In Assets In 2017. This increases their combined asset purchases above $15 trillion. A trillion here, a trillion there, and pretty soon you’re talking real money–especially if you add in assets purchased by sovereign wealth funds, dark pools acting on behalf of monetary authorities, etc.

Gordon Long and I discuss this stealth nationalization in our latest video program, The Results of Financialization: “Nationalization” (35 min):

In the old model of nationalization, governments expropriated/seized privately owned assets lock, stock and barrel. When a central state nationalized an enterprise, it took total ownership of the asset.

In today’s globalized financial world, such crude expropriation is avoided for two reasons:

1. The entire point of the dominant neoliberal / neofeudal /neocolonial model is to maintain private ownership as a means of transferring the wealth to the New Aristocracy, i.e. the financier class. Government ownership certainly conveys benefits to the some are more equal than others functionaries atop the state’s wealth-power pyramid, but it doesn’t transfer the assets’ income streams to private hands.

…click on the above link to read the rest of the article…

Greyerz – We Are Now In The Frightening Endgame

July 24, 2017

Greyerz – We Are Now In The Frightening Endgame

Today the man who has become legendary for his predictions on QE, historic moves in currencies, warned King World News that we are now in the frightening endgame.

Fear And Propaganda
Egon von Greyerz: “Stock investors are rejoicing about stock markets making new highs in many countries, totally oblivious of the risks or the reasons. It seems that this is an unstoppable rally in a “new normal” market paradigm. No major increase is expected in the inflation rate or the historically low interest rates. The present rally has lasted 8 years since the 2009 low. There is virtually no fear in the stock market so investors see no reason why this favorable climate would not continue for another 8 years at least.

Yes, of course it could. All that is needed is that governments worldwide print another $20-50 trillion at least and that global debt goes up by another $200-500 trillion…

kwn-greyerz-i-7232017

Anyone in government is incapable of telling the truth. Automatically when someone assumes an elected position their Pinocchio nose grows extremely long since their entire purpose is then to be all things to all people in order to be re-elected. This is why virtually no elected official has a backbone nor any morals or principles. Because if they had, telling the truth would make them unelectable.

Egon von Greyerz continues: “The gullibility of people today is exacerbated by the power of the internet and social media. Anything we read is accepted as fact or the truth, while a major part of it is just fake news. This is of course nothing new as it has been used by governments for centuries….click on the above link to read the rest of the article…

Where Will You Be When the End Game Begins?

June 4, 2016

WHERE WILL YOU BE WHEN THE END GAME BEGINS?

Sometime after oh dark thirty it will begin, the previously cocked trigger suddenly released to wreck havoc throughout the world’s financial system. Like an intricate and interwoven design made entirely of standing dominoes, all it takes is a slight disturbance to knock one off its base and start the cascade of toppled consequences running down the line.

With the benefit of hindsight it will be seen that the trigger itself was not the killer. Instead, sometime later, a specific projectile will be (most likely falsely) identified as the blunt instrument which tore economic flesh asunder and quickly bled the system of ‘liquidity’ faster than a slash to the femoral artery. Too late to make a difference, tourniquets will be applied to stem the red tide. Sadly, all it will accomplish is to extend economic life long enough to enable a final frenzy of looting before the bloody end.

And the totalitarian end game will have only just begun.

A socioeconomic system, if healthy and vibrant, can usually withstand extremely rough handling and even intentionally directed assault. A severed lifeline, while certainly a devastating shock to the organism, can and will be survived simply because adequate resources and flexibility remain within the structure which can be quickly marshaled while emergency repairs are made.

But a compromised entity already deathly ill, continuously pumped with toxic drugs and stimulants, stressed beyond compare by various Rube Goldberg financial devices, constantly monitored and regulated to assure compliance to artificial standards no natural system would ever adhere to, is always one disturbance away from disaster.

Thus the stage is set for the dark thirty triggering event.

…click on the above link to read the rest of the article…

Japan still leads the way towards our endgame

December 19, 2015

Japan still leads the way towards our endgame

Successful investors live by a golden rule: what the mainstream financial media talks about is not important. They focus on what they don’t hear instead. So forget about Yellen for a second. Let go of Draghi, oil, the South African rand and Syria. That’s all in the now. But investing is about the future.

We are convinced there is one proverbial elephant in the room in particular that will shape our future. And that elephant is Japan. The ‘widowmaker’ trade has been claiming financial lives for multiple decades now. That is, short JGBs, or Japanese Government Bonds, was so obvious a trade that it never worked. The 10-year yield currently trades at 0.3%, which is close to the all-time low. We’re still waiting for the shoe to drop.

Will it ever drop? We believe it will. ‘Drop’ might not be the appropriate word. The accumulation of imbalances might trigger a cascade of events that will shake the world at its core. Let’s investigate some data.

Japan’s debt-to-GDP ratio has hit a unprecedented 230%. You probably knew that. But it doesn’t keep you awake at night. We are genetically wired to focus on acute danger. If a tiger approaches us, we focus. But if stands still and doesn’t move for years, we turn around in search for other dangers. Wise investors remind themselves constantly of the tiger though. They never let their guard down.

What about the pace at which debt-to-GDP is ramping up? The budget deficit tells us all we need to know.

For six years in a row already, Japan scored around minus 8%. And given the flattish GDP, these annual percentages head straight to the public debt pile. Japan’s long term potential real GDP-growth rate is simply close to zero, given the demographics. The latest quarterly print was a minus 0.3%. This makes the debt grow even faster.

…click on the above link to read the rest of the article…

License to Kill

December 15, 2015

License to Kill

Jakub Rozalski

[This post is, once again, a rerun, but its subject seems quite timely. As you watch the political establishment in the US go through its usual antics, ask yourself: are they even capable of understanding the fact that they have already lost the empire?]

The story is the same every time: some nation, due to a confluence of lucky circumstances, becomes powerful—much more powerful than the rest—and, for a time, is dominant. But the lucky circumstances, which often amount to no more than a few advantageous quirks of geology, be it Welsh coal or West Texas oil, in due course come to an end. In the meantime, the erstwhile superpower becomes corrupted by its own power.

As the endgame approaches, those still nominally in charge of the collapsing empire resort to all sorts of desperate measures—all except one: they will refuse to ever consider the fact that their imperial superpower is at an end, and that they should change their ways accordingly. George Orwell once offered an excellent explanation for this phenomenon: as the imperial end-game approaches, it becomes a matter of imperial self-preservation to breed a special-purpose ruling class—one that is incapable of understanding that the end-game is approaching. Because, you see, if they had an inkling of what’s going on, they wouldn’t take their jobs seriously enough to keep the game going for as long as possible.

The approaching imperial collapse can be seen in the ever worsening results the empire gets for its imperial efforts. After World War II, the US was able to do a respectable job helping to rebuild Germany, along with the rest of western Europe. Japan also did rather well under US tutelage, as did South Korea after the end of fighting on the Korean peninsula.

…click on the above link to read the rest of the article…

The Economist Rings Out Cognitive Dollar Dissonance

October 11, 2015

**The Economist Rings Out Cognitive Dollar Dissonance**

Two years ago, prior to travelling to Sydney to present at the Annual Precious Metals Symposium, I prepared an article for the Gold Standard Institute Journal titled Cognitive Dollar Dissonance: Why a Global De-Leveraging Requires the De-Rating of the Dollar and the Remonetisation of Gold (see here). This article highlighted the growing inconsistency between those arguing on the one hand that the dollar’s role in international trade and finance was clearly diminishing; yet denying that it was in any danger of losing the near-exclusive monetary reserve status it has enjoyed since the 1940s.

This apparently contradictory yet mainstream thinking about the future of the international monetary system continues to the present day. Indeed, earlier this month the Economist magazine ran a special feature on fading US economic power replete with dollar dissonance. The experts cited note the accelerating trend towards bilateral trade settlement, say between Russia and China, who plan to finance their multiple ‘Silk Road’ infrastructure projects using their own currencies and their own development bank (The Asian Infrastructure Investment Bank or AIIB: See http://www.aiib.org/). They also observe that Russia, China and the other BRICS are no longer accumulating dollar reserves (although curiously overlook that they continue to accumulate gold). They acknowledge that not only the BRICS but many other countries have repeatedly expressed their desire that the current set of global monetary arrangements should be restructured in some way, although they are not always clear as to their specific preferences.

Note the sharp contrast in these two paragraphs, both on the very same page of the Economist feature:

…click on the above link to read the rest of the article…

The Curse of Totalitarianism and the Challenge of an Insurrectional Pedagogy

October 2, 2015

The Curse of Totalitarianism and the Challenge of an Insurrectional Pedagogy

Introduction

The forces of free-market fundamentalism are on the march ushering in a terrifying horizon of what Hannah Arendt once called “dark times.” Across the globe, the tension between democratic values and market fundamentalism has reached a breaking point. [1] The social contract is under assault, neo-Nazism is on the rise, right wing populism is propelling extremist political candidates and social movements into the forefront of political life, anti-immigrant sentiment is now wrapped in the poisonous logic of nationalism and exceptionalism, racism has become a mark of celebrated audacity, and a politics of disposability comes dangerously close to its endgame of extermination for those considered excess. Under such circumstances, it becomes frightfully clear that the conditions for totalitarianism and state violence are still with us smothering critical thought, social responsibility, the ethical imagination, and politics itself. As Bill Dixon observes:

[T]he totalitarian form is still with us because the all too protean origins of totalitarianism are still with us: loneliness as the normal register of social life, the frenzied lawfulness of ideological certitude, mass poverty and mass homelessness, the routine use of terror as a political instrument, and the ever growing speeds and scales of media, economics, and warfare. [2]

In the United States, the extreme right in both political parties no longer needs the comfort of a counterfeit ideology in which appeals are made to the common good, human decency, and democratic values. On the contrary, power is now concentrated in the hands of relatively few people and corporations while power is global and free from the limited politics of the democratic state. In fact, the state for all intent and purposes has become the corporate state. Dominant power is now all too visible and the policies, practices, and wrecking ball it has imposed on society appear to be largely unchecked.

…click on the above link to read the rest of the article…

Diminishing Returns on Central-Planning Policy Extremes = 2016 Crash

July 14, 2015

Diminishing Returns on Central-Planning Policy Extremes = 2016 Crash

The problem with these policy extremes is that they are so painfully visibly acts of central-planning desperation.

It is perhaps fitting that I am posting a call for a financial crisis that fails to respond to the usual central-planning manipulations on Bastille Day. There are two main lessons for the present era we can draw from the storming of the much-hated Bastille fortress-prison by a revolutionary mob in 1789 Paris:

1. The authorities can only keep a lid on a simmering stew of injustice, inequality and structural imbalances for so long before the pot boils over.

2. Last-minute baby-step reforms designed to placate the masses (i.e. simulacra reforms that are all show and no substance) cannot resolve the crisis; rather, they only reveal the full depth of the injustices, inequalities and imbalances.

We are in the endgame of central planners’ attempts to keep the lid on the simmering stew of profound imbalances that characterize the status quo. As I have described many times, Maintaining the Illusion of Stability Now Requires Ever-Greater Extremes of central-planning policies.

Mortgage/housing market melting down due to systemic fraud? Nationalize the mortgage market. This is what the federal/Federal Reserve central planners did post-2008, as 97% of all mortgages were guaranteed by federal agencies and the Fed bought $2 trillion of the $10 trillion outstanding mortgages in the U.S.–fully 20% of the entire mortgage market.

Stock market bubble popping? Ban short-selling, criminalize negative comments in the media, and withdraw half the companies on the stock exchange from trading. This is partial list of the extremes China’s central planners recently imposed in an panic-driven orgy of central-planning.

Another way to understand the increasing reliance on central-planning extremes and their declining effectiveness is diminishing returns: more treasure, capital, time, energy and labor must be expended to keep the status quo from falling off a cliff.

…click on the above link to read the rest of the article…

Our Crazy-Making Economy’s Endgame: Festering Frustration Seeking an Outlet

May 23, 2015

Our Crazy-Making Economy’s Endgame: Festering Frustration Seeking an Outlet

The consequence of policies that exacerbate injustice, inequality and double-bind demands is a madness that will find a social and economic outlet somewhere, sometime.

We all know crazy-makers: people who make contradictory claims about reality, who say one thing and do another, who change their stories constantly to justify their own pursuit of self-interest, who demand the impossible of others while giving themselves unlimited excuses.

When they can’t change reality to suit their purposes, they change their accounts of reality, and stick with the revised stories even when they are contradictory.

This describes the entire financial structure of the U.S.: crazy-making.

We all know the U.S. economy is diseased, and the Powers That Be are attempting to mask the sickness with contradictory accounts of reality.

To get ahead, you need a 4-year college diploma. But oops, the student debt you’ll need to shoulder acts as a brake on getting ahead. And it turns out many of those who became debt-serfs to get a diploma actually end up in jobs that don’t require a college education.

One reality–soaring student loan debt and diminishing value of the product, a college diploma–and two contradictory stories.

Systems theorist/anthropologist Gregory Bateson developed (with others) the concept of double bind, a psychological and social conflict in which contradictory demands generate a form of schizophrenia:

Unlike the usual no-win situation, the subject has difficulty in defining the exact nature of the paradoxical situation in which he or she is caught. The contradiction may be unexpressed in its immediate context and therefore invisible to external observers, only becoming evident when a prior communication is considered.

…click on the above link to read the rest of the article…

David Stockman Interview——-Kick-The-Can Economics Is Entering The End Game

May 18, 2015

David Stockman Interview——-Kick-The-Can Economics Is Entering The End Game

Today David Stockman, the man President Ronald Reagan called upon along with Dr. Paul Craig Roberts to help save the United States from disaster in 1981, warned King World News that we are now entering the “terminal phase” of the global financial system that will end in total collapse.

Eric King: “David, I wanted to get your thoughts on gold in the midst of this big deflation you think is in front of us. When you look at the collapse of 2008 – 2009, gold was one of the best performing asset classes. Gold went down but it went down much less relative to virtually everything else. Contrast that to 1973 – 1974, where we had a 47 percent stock market collapse. But during that time we had skyrocketing gold and silver. What’s in front of us because it looks like gold and silver may be ending a 4 year bear market and ready for a 1973 – 1974-style up-move?”

David Stockman: “Yes. I think the two periods are quite different. Although at the bottom it’s central bank errors that underlie each. But remember that in the 1970s we had just finally exited a semi-stable Bretton Woods Gold Exchange Standard system. There still was, at the end of the day, an anchor on the central banks that was thrown overboard by Nixon in 1971….

Continue reading the David Stockman interview below…

“So the first go-round was a rip-roaring price inflation because there had not yet been enough time under the fiat money and balance sheet expansion by the central banks to create excess capacity in the world industrial system. So as the boom in demand took off, commodity prices soared. That fed into domestic costs and labor wages in particular.

…click on the above link to read the rest of the article…

Shape Of Greek Endgame Emerges: IMF Discussed “Cyprus-Like” Plan After Tsipras Warned Of Looming Default

May 18, 2015

Shape Of Greek Endgame Emerges: IMF Discussed “Cyprus-Like” Plan After Tsipras Warned Of Looming Default

As we said over the weekend, it’s all about Riga again for Greece. EU leaders will meet on Thursday and Friday in Latvia where PM Alexis Tsipras will try to secure a more favorable outcome than did FinMin Yanis Varoufakis who, last month in Riga, reportedly did more chiding and lecturing than negotiating, a performance that may ultimately cost him his job once all is said and done. The situation is far more urgent this time around, with Greece having tapped its IMF SDR account to make a payment to the Fund and with the banking sector running dangerously low on collateral that can be pledged for emergency liquidity.

A bit more color from Deutsche Bank:

One thing that is starting to come to a head is Greece. With an EU leaders summit in Riga scheduled for Thursday and Friday, we should have a good idea of where current negotiations stand by the end of the week. Talks may well pick up in pace over the next few days with a spokesman for the Syriza party saying on Greek TV (Mega) that ‘we’re striving for a mutually beneficial agreement by Friday’ while pushing the party line that ‘our mandate from the Greek people is to reach an agreement where we stay in the euro area without harsh austerity measures’…

…click on the above link to read the rest of the article…

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