It Will Take 6.25 BILLION “Man Years” To Pay Off Federal Government Liabilities: “A Mathematical Impossibility”

SHTFplan
by Mac Slavo

man-years

We often hear government officials and mainstream financial pundits throwing around numbers like a billion or trillion. To most Americans these numbers are indiscernible. They are so incredibly enormous that we can’t even imagine what one billion dollars actually looks like, let alone what it takes to generate such capital. And a trillion, or better yet, the $17.9 Trillion that is our national debt? Forget about it! That’s so much money that we’re talking piles of cash the size of skyscrapers.

debt-ceiling-visualized(Via Demonocracy.info)

But even a visualization like this makes it difficult to understand how much money this actually is.

Ann Bardnhardt, who in 2011 shut the doors to her investment firm and urged her clients to withdraw their money from all markets because she says the entire system has been utterly destroyed, will blow your mind in her most recent blog post.

It turns out money the way we were taught to understand it in school isn’t really how we should be valuing economies or debt. Instead, we need to be looking at what that money represents.

How do we define the sizes of economies?  In dollars?  Nope.  These systems should be measured in terms of a transcendent, invariant unit.  Currencies are, by definition, variant, because they are constantly changing relative to one another.  This includes the dollar, which is itself measured against a BASKET of other currencies.  I propose that GDP should be measured in the unit of MAN HOURS or MAN YEARS.  $20 per hour average wage.  2000 hour average work year.  Because the buying power of an average man hour or man year shouldn’t change much at all.  Think about it.

So, if we take the latest bee-ess GDP for the former US of $16.8 trillion, and if we use an average wage of $20 per hour, or $40,000 per year, we get an economy of 840 billion man hours, or 420 million man years.

Puts a different spin on it, huh?  Now, you really want your mind blown?  Do that same calculation with the debt (now $18 trillion).  Now do it with the unfunded liabilities of the FEDGOV (conservatively $250 trillion).

450 million man years, and 6.25 billion man years respectively.

Source: Notes for Apres la Guerre Part 2: Banking and Financial Market Theory

So, when we talk about trillions of tax dollars being spent on banks or infused into shadow investment houses around the globe, we’re actually not just talking about money being stolen from one group of people that’s being distributed to another. What we’re talking about is the literal theft of our lives – our time and energy.

The unfunded liabilities are estimated at $250 trillion, or as Barnhardt noted, 6.25 Billion man years.

To put that into perspective, it will take roughly 139 million Americans working non-stop for 45 years just to cover the government’s unfunded liabilities at their current levels. 

Currently there are about 144 million working Americans with about 100 million not in the labor force for various reasons. So, just to pay off those liabilities, every single working American would have to spend the next 45 years of their lives sending 100% of their income to the government.

That’s how bad of a situation this is.

The arithmetic is clear: Repaying our national debt and unfunded liabilities is a mathematical impossibility. It will never happen.

Bardhardt understands the frustrations of many Americans who are fed up with having their livelihoods stolen on a wholesale basis by government, as well as business leaders who claim they are doing God’s work. She has a solution:

Since you’re probably sitting there thinking that people need to be executed for this mess, let me throw out an idea for how to go about meting out justice for these massive financial crimes after the war.  I would simply say that the amount of a theft should be converted to man years, and if the man years-equivalent of what was stolen is in excess of the average working life of a man, say 50 years, then the offense would be a capital offense and execution would be on the table.  For anything less than that, the man years conversion would inform the judge or jury as to incarceration terms.

So, just pulling a completely random number out of the sky, say $1.6 billion, and converting that to man years at an average wage of $40,000 per year, that is 40,000 man years, which equals exactly twelve feet of rope, which happily, can be reused an almost unlimited number of times.

corzine-et-al
Over $1.6 billion in shareholder deposits were vaporized at MF Global under the watchful eye of Former New Jersey Governor John Corzine (left). He served no prison time.

We’re talking massive amounts of time and energy here that have been pillaged from the American people, as well as tens of millions of others in Europe and Asia.

As Ann Barnhardt notes in her post, the end result can only come in the form of widespread warfare and a total collapse of the system as we have come to know it.

We are on the tail end of a paradigm built upon debt and false promises. The numbers are now so incredibly large that the trajectory is irreversible.

Our banking system, monetary dominance and geo-political influence are at a breaking point and those who want to come out the other side of the coming disaster need to be making final preparations.

The U.S. government has war-gamed and simulated these very scenarios. They know a massive economic collapse is not only on the horizon – it’s happening right now. They also know that as more people lose their jobs, homes and ability to put food on the table they’re going to come looking for someone to blame. There will be panic and violence. There will be bloodshed and war.

This is the future that awaits.

SHTFplan

From This Day Forward, We Will Watch How The Stock Market Performs Without The Fed’s Monetary Heroin

The Economic Collapse
by Michael Snyder

Money - Public DomainMark this day on your calendars.  The Dow is at 16974, the S&P 500 is at 1982 and the NASDAQ is at 4549.  From this day forward, we will be looking to see how the stock market performs without the monetary heroin that the Federal Reserve has been providing to it.  Since November 2008, the Fed has created about 3.5 trillion dollars and pumped it into the financial system.  An excellent chart illustrating this in graphic format can be found right here.  Pretty much everyone agrees that this has been a tremendous boon for the financial markets.  As you will see below, even former Fed chairman Alan Greenspan says that quantitative easing was “a terrific success” as far as boosting stock prices.  But he also says that QE has not been very helpful to the real economy at all.  In essence, the entire quantitative easing program was a massive 3.5 trillion dollar gift to Wall Street.  If that sounds unfair to you, that is because it is unfair.

So why is the Federal Reserve finally ending quantitative easing?

Well, officially the Fed says that it is because there has been so much improvement in the labor market

The Fed’s language, however, did suggest that they were getting more comfortable with the economy’s improvement. It cited “solid job gains,” citing a “substantial improvement in the outlook for the labor market,” as well as pointing out that “underutilization” of labor resources is “gradually diminishing.”

But that is not true at all.

The percentage of Americans that are working right now is about the same as it was during the depths of the last recession.  Just check out this chart…

Employment Population Ratio 2014

So there has been no “employment recovery” to speak of at all.

And as I wrote about yesterday, the percentage of Americans that are homeowners has been steadily falling throughout the quantitative easing era…

Homeownership Rate 2014

So let’s put the lie that quantitative easing helped the “real economy” to rest.  It did no such thing.

Instead, what QE did do was massively inflate stock prices.

The following is an excerpt from a Wall Street Journal report about a speech that former Fed chairman Alan Greenspan made to the Council on Foreign Relations on Wednesday

Mr. Greenspan’s comments to the Council on Foreign Relations came as Fed officials were meeting in Washington, D.C., and expected to announce within hours an end to the bond purchases.

He said the bond-buying program was ultimately a mixed bag. He said that the purchases of Treasury and mortgage-backed securities did help lift asset prices and lower borrowing costs. But it didn’t do much for the real economy.

Effective demand is dead in the water” and the effort to boost it via bond buying “has not worked,” said Mr. Greenspan. Boosting asset prices, however, has been “a terrific success.”

Moving forward, what did Greenspan tell the members of the Council on Foreign Relations that they should do with their money?

This might surprise you…

Mr. Greenspan said gold is a good place to put money these days given its value as a currency outside of the policies conducted by governments.

Wow.

It almost sounds like Greenspan has been reading the Economic Collapse Blog.

Since November 2008, every time there has been an interruption in the Fed’s quantitative easing program, the stock market has gone down substantially.

Will that happen again this time?

Well, the market is certainly primed for it.  We are repeating so many of the very same patterns that we saw just prior to the last two financial crashes.

For example, there have been three dramatic peaks in margin debt in the last twenty years.

One of those peaks came early in the year 2000 just before the dotcom bubble burst.

The second of those peaks came in the middle of 2007 just before the subprime mortgage meltdown happened.

And the third of those peaks happened earlier this year.

You can view  a chart that shows these peaks very clearly right here.

The Federal Reserve appears to be confident that the stock market will be okay without the monetary heroin that it has been supplying.

We shall see.

But it should be deeply troubling to all Americans that this unelected, unaccountable body of central bankers has far more power over our economy than anyone else does.  During election season, our politicians get up and give speeches about what they will “do for the economy”, but the truth is that they are essentially powerless compared to the immense power that the Federal Reserve wields.  Just a few choice words from Janet Yellen can cause the financial markets to rise or fall dramatically.  The same cannot be said of any U.S. Senator.

We are told that monetary policy is “too important” to be exposed to politics.

We are told that the independence of the Federal Reserve is “sacred” and must never be interfered with.

I say that is a bunch of nonsense.

No organization should have the power to print up trillions of dollars out of thin air and give it to their friends.

The Federal Reserve is completely and totally out of control, and Congress needs to start exerting power over it.

The first step is to get in there and do a comprehensive audit of the Fed’s books.  This is something that U.S. Senator Ted Cruz called for in a recent editorial for USA Today

Americans are seeing near-zero interest rates on their savings accounts while median incomes are falling, and millions of people are facing higher gas prices, food prices, electricity prices, health insurance prices. Enough is enough, the Federal Reserve needs to open its books — Americans deserve a sound and stable dollar.

Whether you agree with Ted Cruz on other issues or not, this is one issue that all Americans should be able to agree on.

If you study any of our major economic problems, usually you will find that the Federal Reserve is at the heart of that problem.

So if we ever hope to solve the issues that are plaguing our economy, the Fed is going to need to be dealt with.

Hopefully the American people will start to send more representatives to Washington D.C. that understand this.

The Economic Collapse

Crisis Governance Covers Collapsing Currency

Alt-Market
by Bob Livingston

dollar deconstruct

The world is bound up in a paper money/credit explosion that can only end badly. What it really means is impoverishment for millions of people, most of whom are totally oblivious to the roaring undercurrent.

There is little wisdom in announcing an economic crash after the fact. Yet some people get upset that I continue with ongoing warnings of a coming financial “pandemic.” Seeing the probabilities before they happen is the only prediction that is worthwhile. Afterwards is merely reporting the obvious.

I warned my readers in my monthly newsletter, “The Bob Livingston Letter” www.boblivingstonletter.com (subscription required), months before the 2008 collapse occurred. I believe we are nearing another similar event that will be deeper than the last.

My findings are that the American people don’t believe that we can have economic collapse followed by economic and social chaos. They suffer from normalcy bias. We need to pay more attention to history of the United States and the world.

The U.S. dollar is progressively buying less and less. The middle class and savers are impoverished. I often use that word, “impoverishment,” because that is exactly what has happening for 100 years, ever since the beginning of the Federal Reserve Bank in 1913.

But the process of currency destruction is getting faster and faster. This always happens in the final stages. You would think that now almost everybody could see what’s happening.

I am wondering if all the crises — ISIS, Ebola, Ukraine, etc. — are simply providing cover for the economic shock progressing daily. The savings of the working class and the middle classes are being wiped out with a ruthlessness no revolution or foreign war could equal.

While there is an ongoing accumulation of hard assets by the few who know the nature of politics, governments and history, paper money is more and more in demand by the debtor class. The “value” of financial assets is far, far larger than the dollar value of the U.S. economy. As yet, no one seems to sense the risk.

Everyone believes such pervasive nonsense touted daily about the current state of the U.S. economic financial condition. The administration puts out a false unemployment figure and papers over the growing dependence on government, the loss of jobs, the expansion of the “part-time” job base and the stock market rising on nothing more than money printing and hot air.

I don’t care how smart the professional class is, it seems that the imbalances and contradictions of the U.S. dollar and the economy are beyond their grasp… or they are perpetually lying. The people did not learn from the last economic collapse and are trusting the same group of liars who lied to them before.

As a nation, we are suffering from something akin to attention deficit disorder and living in a world where fantasy is more real than reality. We are goaded on by none other than our illustrious Federal Reserve, the banksters, the moneyed elites, the political class and the purveyors of their propaganda, the mainstream media.

Let’s draw on this quote from Edmond Burke on the subject of national debt:

When a nation is deep in debt and knows no way out, when it spends itself into deeper debt and cannot stop, the monetary authority who is seen as all-knowing will be believed on his personal account. There is no other way to avoid panic and crisis in this state of things.

The person who really commands the credit flows is your master… the master of your material possessions, the master of your souls.

We have been in an orgy of financial alchemy called quantitative easing. It has constructed financial bubbles the likes of which the world has never known. The amount of money (credit) issued over the past dozen years far exceeds the entire amount of currency printed in the history of the United States form George Washington’s inauguration to 1980.

The nature of money or credit creation is that it must move at an ever-expanding pace because a sinking debt structure needs to move faster and faster in order to remain afloat. This mania of credit creation is difficult to comprehend because there has never been anything close to it to compare it with.

As currencies collapse, credit deteriorates, political institutions lose credibility, moral degeneracy is on public display and financial activity becomes feverish and of course, the poor and the middle class are further impoverished.

And as stated above, a common feature in the collapse and those before it is the bedazzlement of the smart and actually knowledgeable people, whistling past the graveyard, while the hangman adjusts the scaffold. All is a fantasy island where only a few discover that security has become a castle of dreams. How could it be otherwise when everyone believes that debt is wealth?

Paper money is debt! All financial assets are debt. What a hot air balloon waiting for one small pin.

All the while, a small, savvy group is quietly moving from paper assets to real assets, i.e., gold, silver, gold stocks, some foreign currencies and land. These people have the vision to see the approach of political and social immorality, which will get worse and worse until the U.S. dollar collapses to near zero purchasing power.

Lest you have too much faith in the American dollar, all paper currencies in history have turned to dust. It is not a question of if, but when.

Why would anyone delay getting out of the U.S. dollar into real assets? Assuming they had a basic knowledge of financial and economic conditions, the only possible answer is they can’t believe that the U.S. dollar — and with it their savings — is headed for the dustbin of history. These are the people who form lines at the bank as the bank closes long after the last of the money is gone.

Historically, governments confiscate wealth with inflation (paper money). This is another way of saying that paper money confiscates wealth. People complain but they accept it not realizing that eventually all savings are wiped out.

Inflation in the final stages begins to take on new meaning when prices jump daily. Governments, meaning the bureaucrats and politicians, hide their theft and chicanery with printing press money. They can pay “social benefits” and create wars with paper money until the system begins to collapse.

Eventually, the printing press money loses its disguise; and governments resort to outright confiscation of wealth by one ruse or another. Remember that governments don’t produce any wealth, so they must take it from the people one way or the other. Toward the end and final destruction of the paper currency, governments use ingenious “patriotic” arguments to induce greater sacrifices by and from the people. Sound familiar?

About this time we have a flurry or mania of economic activity which really serves as a cover for the shrewder class to convert their paper money into gold, silver and other real assets. They foresee an economic collapse not yet visible to the population at large.

And what happens to all the depreciating paper money? It winds up almost exclusively in the hands of the working class. As things get increasingly dire, the people try to get more and more paper money. The debtor class has to have more and more paper money even though they know by now that it is fast becoming worthless.

Meanwhile, the social order continues breaking down. It takes immorality to entertain. And in France during the Assignat Inflation, beginning in 1789 and the early 1790s, to say that the currency was depreciating carried a four-year sentence in irons. At the time, investments in foreign countries by Frenchmen were punishable by death. Vast lands and estates of the French church were expropriated and declared “national properties.” This is the type of atmosphere that comes in a wild inflationary environment.

But we have the same thing in deflation! In 1933, in the United States, “all persons were required to deliver to the Treasurer of the United States any and all gold coin, gold bullion, and gold certificates.” Well, some actually turned in their gold.

The Senator Thomas Amendment in 1933 was passed to “transfer $200 billion from the hands of persons who now have it who did not buy it, who did not earn it, who do not deserve it, who must not retain it, back to the other side, the debtor class of the Republic, the people who owe the mass debts of the nation.” Senator Elmer Thomas first planned to confiscate bank deposits outright instead of through a banking collapse that happened anyway. This is U.S. history, my friends — only a couple of generations ago.

After the Civil War, in the South the only currency of any value was gold; but only a few perceptive insiders anticipated the carnage of the Civil War and its aftermath. Of course, as always, most of the people could not believe what was happening to the South. They were caught destitute and impoverished.

Why must the masses be face to face with crisis to illuminate their world? All I can say is that they continue to believe the lies of politicians and bureaucrats.

In time (nobody knows exactly when), the U.S. dollar will completely lose its purchasing power against hard assets, real estate, precious metals and some foreign currencies.

Inflation or deflation? Right now, the Fed is producing inflation but trying to hide it with chicanery. But without doubt, there will eventually be an economic and financial accident, which could cause a swift deflation for a time. This is exactly why we strongly recommend the holding of some emergency cash.

In summary, we recommend gold and silver coins. I like the bags of U.S. pre-1965 90 percent silver coins, as these coins are still legal tender and readily recognizable because they appear the same as the clad metal coins we have now. Accumulate some gold and silver stocks.

Hold some cash money — enough to cover about three months of bills if possible. Store at least a three-month supply of food and water and store ammo for your guns. Remember that emergencies and catastrophes come in many forms, from natural to man-caused. Try to consider as many eventualities as you can and prepare for them.

I can’t believe it, but some people still ask if they should put their coins in a bank safety deposit box. The answer is still a resounding “NO.”

Inevitably, whenever I recommend buying gold and silver, I’m asked to recommend a dealer. Your best bet, I believe, is to find a local coin dealer or gold seller who is well established, has been in the community a long time and has a good reputation with the Better Business Bureau and his customers. Buy with cash. Be careful who you tell that you have it. Store it in a safe, preferably hidden away.

Via Personal Liberty Digest

Can’t Find Any Inflation? Here’s A Place To Start

Zero Hedge

Lately, there has been much anguished consternation, especially among the tenured US economics professors (primarily those who make 6-digits or more per year) and of course, the Federal Reserve where as we revealed last week, at least 113 government workers make $250,000 (excluding bonuses) and thus all are confined within the cozy cocoon of America’s “1%ers”, about the so-called complete disappearance and collapse in inflation. So to help these ivory tower-confined individuals in their holy grail to rediscover the inflation that is more than felt by the rest of America, here are two simple charts.

And some observations of how this “non-existant” inflation is impacting the lives of ordinary people, those whose net worth does not rise by the same percentage as the Fed’s balance sheet, and thus the S&P500, and are crushed by the inequality with the Fed’s Chairmanwoman is so vocally concerned about.

Our paychecks stay the same, but the food prices keep going up,” fumed Jody O’Toole as she shopped at the Associated Supermarket at Eighth Avenue and 14th Street. “You still gotta feed your family, but meat and milk are too much.”

 

Colleen Vincent, who lives with her mother in Brooklyn, said she’s avoiding meat and sticking to canned goods and cabbage, which she turned into three meals last week.

 

“I don’t do big grocery shopping trips anymore,” said Vincent, 37. “I have to buy something that gives me more bang for my buck.

 

We used to buy beef — now it’s a special treat,” she added. “There are other things I want out of life. I don’t want to spend everything on food.”

 

Steve Gould, 68, was picking up seltzer water, bananas and yogurt and said he refuses to buy anything unless it’s on sale.

 

“I want people to stick their heads out the windows like they did in the movie ‘Network,’ and say, ‘I’m mad as hell and not going it take it anymore,’ ” Gould said.

But how is it that food inflation of over 20% in some cases is so crushing to ordinary Americans and yet the people who are tasked to isolate and remedy precisely such problems are completely oblivious to its impact?

The answer is simple: “Janet Yellen, the No. 2 at the Fed’s Board of Governors, and her husband—Nobel Prize-winning economist George Akerlof —had assets such as stocks, bond-fund shares and bank accounts valued at roughly $4.8 million to $13.2 million in 2012, according to financial disclosures released by the Fed on Tuesday.”

QE4, er D

Zero Hedge

Gold or Gunfire: Hedging Against the Collapse of the Dollar

New Eastern Outlook
by Christof Lehmann

807854A global economic collapse has become unavoidable, said former chief economist of the Bank of International Settlements (BIS) William White in response to the BIS’ quarterly report in September 2013. Experts forecast that a global economic collapse may occur, overnight, some time at the end of 2014 or in 2015. The fact that private interests are holding the U.S. Federal Reserve and the Central Bank of England as well as the Bretton Woods institutions in a state of capture makes it improbable that the governments of the USA, UK and EU could prevent a collapse.

Their policies have remained largely unchanged since early 2013, when the Deputy Governor of China’s National Bank, Yi Gang, stressed that China does not look forward to an economic war, but that it is prepared for it. BRICS member states have since then capitalized the BRICS Development Bank; the US/UK axis and the EU have launched a war of sanctions against Russia and a civil war in Ukraine. In 2014, China began opening its banking sector for foreign investments and banking at an unprecedented scale; Australia is in a quagmire between US pressure and the trend to make use of attractive and safer Chinese opportunities.

Thailand, Malaysia and other economies are increasingly encouraging their traders and investors to study the Chinese market. With the Bretton Woods system at the brink of possible collapse and conflicts looming, gold and the new gold-based economies are catching the, in some cases more, in some cases less hesitant attention of governments worldwide. The trend is, however reluctantly it is accepted, impossible to ignore. China overtook the U.S.’ as the world’s leading economy measured in buying power and is poised to become No.1 measured in GDP within a bout one year too, reports the IMF.

Avoiding Confusion of Principles. Fiat vs. Gold.

Fiat currencies are not necessarily more unstable than commodity-backed currencies. Both have advantages and disadvantages. Commodities, for example gold, have an inherent value due to the physical presence and the value of labor that has to be invested in mining and refining gold. One problem with gold is that it is as finite as other commodities and that it is not equally distributed across the globe. Gold is, in other words, no panacea against resource-driven geopolitics and conflict. Fiat currencies are, in principle, not finite. To infinitely print fiat currency without backing it with values like commodities, goods, labor force, or by means of a production potential implies that powers with greater military might may be tempted to force others to accept an, in principle, valueless fiat currency that could as well be counterfeit. The U.S., its militarily backed geopolitics and the fact that it repeatedly forced other nations like Iraq to either accept the dollar for international settlements or face war, while the U.S. is basically producing counterfeit to settle its bills; the use of euphemisms like quantitative easing to cover-up a failed counterfeit-like policy is a good example for fiat currencies inherent problems and risks.

While fiat currencies are not necessarily better or worse than gold-backed systems, the greatest problem with using fiat currencies for economic settlements between nations is rather the fact that some national banks are privately-owned; That is, that its owners are part of rogue networks which hold the government in a state of capture. The same holds true with regard to the Bretton Woods institutions like the IMF and the World Bank.

Other national economies run well on fiat currencies, provided that the national bank is actually national and that the currency is not created as debt. The current “run” for gold is, in other words, not caused by inherent and superior advantages of gold-backed economies, but rather by the conflict-based dynamics of current international politics.

An Illusion that a Market under Pressure can retain Liquidity.

The realistically pessimistic Quarterly Report of the Bank for International Settlements, in September 2013, pointed at the U.S. Federal Reserve Bank’s and European Central Bank’s quantitative easing as one of the primary factors which could cause a global economic collapse. Experts agreed that the Federal Reserve and the European Central Banks had lost control over the deluge of money and debt which they create. The BIS report noted, in so many words, that it had become impossible for the U.S. Federal Reserve and the European Central Banks to get the paste back into the tube again while the, at that time, Federal Reserve Governor Ben Bernanke continued stepping on the tube.

The former BIS Chief Economist William White warned, unequivocally, that the world is headed for an unavoidable global economic crash. White noted that the global credit bubble was about to burst and that the percentage level of extreme risk loans was at an all-times-high of 45 percent in the middle of 2013. That is, the interest for extreme risk loans was ten percent higher than it was at the onset of the global economic crisis in 2007. Speaking with The Telegraph, White added that the situation in 2013 was worse that it was prior to the crash of Lehmann Brothers. The newspaper quoted White as saying “All the previous imbalances are still there. Total public and private debt levels are 30 percent higher as a share of GDP in the advanced economies than they were then, and we have added a whole new problem with bubbles in emerging markets that are embedding in a boom bust cycle”.

White forecast that an economic collapse could come overnight, adding that the trouble is, that the U.S.’ financial policy has become unpredictable, and that it is an illusion to believe that a market under stress can retain its liquidity.

U.S. liquidity problems also became obvious in 2013, when the Federal Reserve rejected German auditors who had come to audit Germany’s gold reserves in the United States. In 2013, Germany, like many others, began hedging against the expected economic crash by attempting to repatriate the lion share of its gold reserves. The German Federal Bank and the government responded to the rejection by demanding the repatriation of the German gold from the U.S. to Germany. The U.S. responded by informing Germany that it only could deliver the gold back in portions, final delivery by 2020.

The U.S. has since begun delivering portions, but informed the German Federal Bank that it had to smelt the bars before delivery. The gold bars Germany has since received could, in other words, not be identified by the serial numbers. The re-refinement process also removed the chemical fingerprint by which the gold otherwise could have been identified as being the gold Germany had deposited in the United States. It could, in other words, just as well have received gold that was stolen from Libya in 2011.

An ironic article, entitled “Germany’s Gold and the Fed for Dummies” describes the situation by using an allegory. A biker mugs the owner of a Ferrari, crushes his bones, then steals the car, saying, “look how dangerous the world is, let me take care of that beautiful Ferrari for you”. When the owner has recovered and asks to get his car back he’s first rejected. After that, he’s allowed to see the engine, without serial number, then a steering wheel, and at the end he gets back spare parts which may, or may not come form his car. Final part plus car key to be delivered in seven years.

Needless to say that the U.S. lacks liquidity. Many analysts note that the U.S. sold off most of the gold it was supposed to keep in store for other nations. The theft could be covered up as long as it was possible to maintain the status quo of the (f)ailing Bretton Woods system.

China prepared for an Economic War.

The Deputy Governor of China’s National Bank, Yi Gang, stated earlier that year, that China was fully prepared to face a currency war, if necessary. The Chinese Xinhua news agency quoted Yi Gang as saying: “China is fully prepared in terms of monetary policies and other mechanisms, to deal with a possible currency war, and China will take full account of the quantitative easing policy conducted by the central banks of some countries”. China has since then, prudently, begun to shed U.S. dollars by using dollars to secure valuable assets in western economies, expanded the scope of its import of strategic resources, invested in partnerships to secure resources and production partnerships in Europe, Latin America, Africa, Asia, and the Middle East, and all of that at a previously unprecedented scale.

While the U.S., the United Kingdom and the EU continued their “quantitative easing”, their exit strategy to escape the looming collapse was, generally speaking, the creation of conflict as a means to perpetuate that failing glorious New American Century a little bit longer.

The US/U K’s project to prevent the building of the Iran – Iraq – Syria gas pipeline with the goal to create insecurity about the delivery of Iranian gas to Europe; The deep state involvement in manufacturing the crisis in Ukraine, aiming at the creation of insecurity about the delivery of Russian gas to Europe; The attempt to force Europe into a dependency on U.S. -American shale gas and shale oil deliveries while containing Moscow; All of the above are illegitimate responses to legitimate economic problems. They are also, responses which are inherently dangerous and inherently unlikely to result in a successful prevention or at least mitigation of a global economic meltdown and the end of the Bretton Woods monetary system.

Also in 2013, while experts warned that a global economic collapse had become unavoidable and while others already noted that the US/UK failure to win the Syria war by July 2012 would lead to a conflict in Ukraine, the BRICS member states met on the sidelines of the G20 in St. Petersburg, Russia, and agreed to establish a BRICS Development Bank as complement to the IMF and World Bank systems. In July 2014, the BRICS Development Bank was capitalized with 100 billion US dollar. Moreover, the conflict in Ukraine had brought Russia and China closer together with regard to cooperation in the economic sector, the energy sector, as well as with regard to security.

China’s Opening: Gravitating towards the New, Gold-backed Economies.

China responded to the plausibility of the global economic crash by relatively swift and comprehensive deregulation with regard to foreign investment and trade. China was, however, prudent enough to secure the State’s control over the national economy and over the currency. China’s opening did not go unnoticed. In July 2014, the Assistant Governor of the Financial Market Operations Group of the Bank of Thailand (BOT), Chantarvan Sucharitakul, for example, held a seminar for Thai investors and businessmen. Chantarvan encouraged Thai investors, saying that they should investigate the advantages of the use of the yuan in terms of payments when doing business with China. Chantarvan said:

Presently the use of the Chinese yuan in Thailand is not widespread since only 1 percent of the total14 percent of Thailand’s trade activities with China is traded by using the renminbi (RNB)… However, this rate is increasing fast, and therefore Thai investors should learn how to use the additional trading channel because the yuan’s importance and popularity will increase in the future even though it is not widely accepted and fully liberated at the moment”.

Similar developments are seen in Malaysia, Indonesia and several other Asian countries. This development does not happen without stiff U.S. resistance. Thailand went through a severe crisis in 2014, when popular opposition against the government of Yingluck Shinavatra and the government’s defiance with regard to passing an amnesty law for her brother Taksin Shinawatra developed into a protracted standoff and ultimately a majority-backed intervention by Thailand’s military. Former PM Taksin Shinawatra, who admitted that he was governing the country from abroad via his sister Yingluck, fled Thailand after he was sentenced on charges of corruption. The development was met with a failed attempt to create a civil war in Thailand, backed by Wall Street and London elites and the imposition of U.S. sanctions.

The United States as well as Wall Street and City of London lobbies are less blunt when it comes to nations like Australia. Arguably, the fact that a predominantly Caucasian populated/dominated nation like Australia is treated with a soft-power approach while the US/UK perceive it as more legitimate to attempt to subvert Thailand by means of violence is a sign of the entrenched racism that is observable in the UK as well as in the USA.

Soft power or not; U.S. pressure against Australia’s attempt to act in the best interest of Australians is putting the Australian government into a quagmire. In October 2014, Australian journalist Michelle Grattan would report that senior Australian cabinet members are believed to be divided over whether Australia should sign up to an internationally funded infrastructure development bank that China is set to launch in November 2014. Grattan noted that:

Australia has been under pressure from the United States not to participate in the new bank. … The Chinese plan is being viewed internationally in the wider geopolitical context of Chinese-US competition in the region. The Americans, who see the bank as potentially a way of China increasing its clout with countries in southeast Asia, have been strongly lobbying to keep out of it”.

China, for its part, announced that it would offer funds to underdeveloped countries in the region for projects in the energy, telecommunication and transport sectors. China stated that it will initially fund the regional development bank with 50 billion US dollar, not yuan or the renminbi.

The signals are clear. China is one of the greatest owners of U.S. debt and dollars. China is shedding the dollar as fast, and as much of it as it can without tipping the (f)ailing dollar economies over the edge. Most importantly, China is investing these dollars in the strategic development of regional partnerships by aiding the economies of weaker nations like Laos, by opening its markets for investors and traders from Thailand, Malaysia, Australia, by fostering energy and security cooperation with Russia, by using Hong Kong as the basis for its economic opening.

The 2014 conflict about political self-determination in Hong Kong must be seen within the perspective of China’s prudent, but rapid opening of its economy for foreign capital. Not unsurprisingly, it were the National Endowment for Democracy, the soft-power wing of the U.S. State Department and the CIA which supported Hong Kong’s “Occupy Central” movement.

The stage is set for a transition, whether it comes in the form of an overnight collapse or not. The one most significant driver of this transition is, arguably, not the inherent weakness of the US/U K’s and the Bretton Woods institutions debt-based monetary and economic system.

The primary driver is, arguably, the fact that the governments of countries like Venezuela, Mozambique, Laos, Myanmar, and others perceive the soft-power approach of China as much less problematic and above all much less lethal and devastating than the envisioned “New American Century”. It’s like the choice between gold and gunfire.

Dr. Christof Lehmann an independent political consultant on conflict and conflict resolution and the founder and editor in chief of nsnbc, exclusively for the online magazine “New Eastern Outlook”.

New Eastern Outlook

How Will The Stock Market React To The End Of Quantitative Easing?

The Economic Collapse
by Michael Snyder

Stock Market Crash - Public DomainIt is widely expected that the Federal Reserve is going to announce the end of quantitative easing this week.  Will this represent a major turning point for the stock market?  As you will see below, since 2008 stocks have risen dramatically throughout every stage of quantitative easing.  But when the various phases of quantitative easing have ended, stocks have always responded by declining substantially.  The only thing that caused stocks to eventually start rising again was a new round of quantitative easing.  So what will happen this time?  That is a very good question.  What we do know is that the the performance of the stock market has become completely divorced from economic reality, and in recent weeks there have been signs of market turmoil that we have not seen in years.  Could the end of quantitative easing be the thing that finally pushes the financial markets over the edge?

After all this time, many Americans still don’t understand what quantitative easing actually is.  Since the end of 2008, the Federal Reserve has injected approximately 3.5 trillion dollars into the financial system.  Of course the Federal Reserve didn’t actually have 3.5 trillion dollars.  The Fed created all of this money out of thin air and used it to buy government bonds and mortgage-backed securities.

If that sounds like “cheating” to you, that is because it is cheating.  If you or I tried to print money, we would be put in prison.  When the Federal Reserve does it, it is called “economic stimulus”.

But the overall economy has not been helped much at all.  If you doubt this, just look at these charts.

Instead, what all of this “easy money” has done is fuel the greatest stock market bubble in history.

As you can see from the chart below, every round of quantitative easing has driven the S&P 500 much higher.  And when each round of quantitative easing has finally ended, stocks have declined substantially

Chart By DayOnBay

And of course the chart above tells only part of the story.  Since April 2013, the S&P 500 has gone much higher…

S&P 500

If someone from another planet looked at that chart, they would be tempted to think that the U.S. economy must be expanding like crazy.

But of course that is not happening.

This market binge has been solely fueled by reckless money printing by the Federal Reserve.  It is not backed up by economic fundamentals in any way, shape or form.

And now that quantitative easing is ending, many are wondering if the party is over.

For example, just check out what CNN is saying about the matter…

Even in this bull market, all good things must come to an end.

The Federal Reserve is expected to close a chapter in history this week and announce the conclusion of its massive stimulus program. Known as quantitative easing, the program is widely credited with driving investors back into stocks in the aftermath of the financial crisis.

“I think to some extent quantitative easing has provided an assurance to investors that (has) kept them optimistic,” said Bruce McCain, Chief Investment Strategist of Key Private Bank in Cleveland, Ohio. “Now we’re going to have to see whether investors can ride without training wheels.”

Everyone knows that quantitative easing was a massive gift to those that own stocks.

So how will the stock market respond now that the monetary heroin is ending?

We shall see.

Meanwhile, deflationary pressures are already starting to take hold around the rest of the globe.  The following is an excerpt from a recent Reuters report

After months of focus on slack in U.S. labor markets, the Federal Reserve faces a new challenge: the possibility that weak inflation may be so firmly entrenched it upends the return to normal monetary policy.

The soft global inflation backdrop, from sliding oil prices to stagnant wages in advanced economies, has triggered debate over whether the Fed and its peers merely need to wait for a slow-motion business cycle to improve, or face a shift in the underlying nature of inflation after the global recession.

That uncertainty has become the Fed’s chief concern in recent weeks, likely to shape upcoming policy statements and delay even further the moment when interest rates, pinned near zero for nearly six years, will start rising again.

If the Federal Reserve and other global central banks were not printing money like mad, the global economy would have almost certainly entered a deflationary depression by now.

But all the Federal Reserve and other global central banks have done is put off the inevitable and make our long-term problems even worse.

Instead of fixing the fundamental problems that caused the great financial crash of 2008, the central bankers decided to try to paper over our problems instead.  They flooded the global financial system with easy money, but today our financial system is shakier than ever.

In fact, we just learned that 10 percent of the biggest banks in Europe have failed their stress tests and must raise more capital…

The European Central Bank says 13 of Europe’s 130 biggest banks have flunked an in-depth review of their finances and must increase their capital buffers against losses by 10 billion euros ($12.5 billion).

The ECB said 25 banks in all were found to need stronger buffers — but that 12 have already made up their shortfall during the months in which the ECB was carrying out its review. The remaining 13 now have two weeks to tell the ECB how they plan to increase their capital buffers.

Most people do not realize how vulnerable our financial system truly is.  It is essentially a pyramid of debt and credit that could fall apart at any time.

Right now, the “too big to fail” banks account for 42 percent of all loans and 67 percent of all banking assets in the United States.

Without those banks, we essentially do not have an economy.

But instead of being careful, those banks have taken recklessness to unprecedented heights.

At this moment, five of the “too big to fail” banks each have more than 40 trillion dollars of exposure to derivatives.

Most Americans don’t even understand what derivatives are, but when the next great financial crisis strikes we are going to be hearing a whole lot about them.

The big banks have transformed Wall Street into the biggest casino in the history of the planet, and there is no way that this is going to end well.

A great collapse is coming.

It is just a matter of time.

The Economic Collapse

Does Anyone Else Think the Stock Market Is Living on Reds, Vitamin C and Cocaine?

Washington’s Blog
by Charles Hugh Smith

This state of delusion would be amusing if it wasn’t so tragic.

The stock market’s wild swings of sentiment have got me thinking it’s living on reds, vitamin C and cocaine. This is a famous line from the Grateful Dead song Truckin’.

I’ve marked up a one-month chart of the S&P 500 (SPX) to illustrate what I mean:


Reds are slang for barbiturates, a class of depressants/sedatives (downers). Cocaine induces euphoric highs in which the cokehead feels he possesses god-like powers–for example, he might imagine he is a Federal Reserve member, or even its chairperson.

There are multiple interpretations of the role of vitamin C in the lyric, but for the purposes of the chart it serves as a modest dose of something healthy to keep the drug-ravaged market from crashing.

After multiple swings between cocaine highs brought to earth by downers, the market seems to be tripping on acid again. Though no one can know precisely what hallucinations are spinning through the manic-depressive sentiment of the market, it seems the market has responded to the withdrawal of its free-money cocaine–supplied of course by the Federal Reserve–by entering a drug-induced fantasy that everything’s been fixed in the global economy: Europe is growing again, China’s housing crisis has passed, U.S. corporate profits will feed corporate buybacks forever, and so stocks can loft higher again–a Bull Market without end.

This state of delusion would be amusing if it wasn’t so tragic. The acid will wear off soon enough, and a mega-dose of vitamin C will not be enough to restore the shattered health of a manic, drugged-out market careening between euphoria and fear.

Washington’s Blog

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