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Old 01-04-2019, 04:10 PM
Danny B Danny B is offline
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,281
Banishing the business cycle,,,Preserving the power of the "elites"

Confidence runs in cycles.
Credit creation runs in cycles.
Economic activity runs in cycles.
1926-8 was a “Fed put”. This was an attempt to stop a normal, cyclical downtrend.
October of 1929, "We have permanently banished the business cycle and stocks are on a permanently high plateau. "
You know what happened next.
Pre-WW II, the FED bought war bonds. They were forever-after hooked up to buying federal debt. Small cyclical downtrends were smoothed out of the system. The credit cycle became a super-cycle because the buildup of bad debt was allowed to go on for a much longer time before it all blew up.
Greenspan executed the FED put to rev up the system after the 1987 crash. Naturally, the politicians thought this was great. 2 more FED heads followed the same path.
Here is a graph of gdp minus FED credit.

"I then took the GDP data and subtracted the annual federal budget deficit from the GDP. I did this because deficit spending is in essence "borrowing" prosperity from the future, either through direct government spending or through payments to states, local governments, and individuals who then go out and spend money. As we know, about 70% of GDP is consumer spending and about 60% of the federal government budget is devoted to payments directly to or for citizens. It's pretty easy to see how deficit spending artificially inflates GDP, since that borrowing leads directly to consumption which would not occur without it."
No president was willing to have the FED take away the punch bowl during his tenure. ALL credit cycles come to an end. Trump is willing to take the heat for a controlled demolition instead of letting things go uncontrolled. His corporate tax reduction made FED GOV that much weaker but, it bought some time for others to collapse first.

Smith, "Any political elite that delivers the bad news that prosperity is over risks being overthrown or voted out of office, and so the ruling elites seek to extend high returns on capital and general prosperity by any means available."
"Successful economies generate a double-bind once they reach the stagnation-decline phase: the populace (and capital) both expect strong permanent growth as a birthright, and they see the previous boost-phase and maturity phase as evidence that the economy "should" continue delivering outsized returns on capital and widespread prosperity essentially forever."
" The stagnation phase has many causes: a reduction in resources or depletion of soil/water resources; a sustained shortage of energy or a sharp rise in the cost of energy; stagnating productivity, and the rise of parasitic elites, insiders who feather their nests at the expense of the many.
All of these factors act as friction in the system, and eventually the system is unable to sustain the parasitic elites, high returns on capital and general prosperity."
That friction can be seen as the debt load and interest payments that is dragging down the system.

" You see the double-bind: the ruling class must deliver outsized returns on capital and general prosperity, and the only way they can do so is to create new money rather than new wealth, something that is beyond their power.
Depending on the wealth and productivity of the existing economy, the world may accept this new money as having value for a time. But as the need for more currency increases, ruling elites start to "print" or borrow new currency in excess of what the economy actually generates in income and value."
Been there,,, doing that.
"In developed economies, the ruling elites protect their own incomes and power, and those of capital, as the owners of capital are part of the ruling elite. The net result of this is rising income/wealth inequality as the few increase their share at the expense of the many. (Thomas Piketty characterized this process as a higher rate of return on capital than on labor.)"

" At that point the proponents and the ruling elites will be trapped: they won't be able to withdraw all the benefits ("free money") of QE for the People, nor can they reverse runaway inflation without drastically reducing the creation of currency.
Various politically expedient policies will be tried--wealth taxes, the issuance of a new currency, perhaps even a state cryptocurrency--but none of these can reverse the underlying dynamic."
oftwominds-Charles Hugh Smith: The Crisis of 2025

1/04 2019: mayhem, misallocation and mockery of true price discovery – Streetwise
1/04 Ambrose Evans-Pritchard: the euro has failed and should be abolished – GATA

The Lisbon Treaty removed sovereign power from the individual States. Brussels then set itself up to destroy the productive class to enrich the bankers.

"Varoufakis identifies true economic purpose and consequences of the EU system and the Euro in their service to giant banks HSBC Holdings, Deutsche Bank, Crédit Agricole and BNP Paribas against Greece, Ireland, Italy, Portural, Cyprs and Spain and how the EU Central bank "fixed" the debt crisis by transferring the cost of the credit collapse to the victims via austerity and deflation. Before the EU Greeks had very little debt and 90% owned their own houses. "

Democracy and prosperity were destroyed in Europe to forever put the lower loop in servitude to the upper loop. The Kalergi Plan to destroy racial unity and harmony were forced in to ensure that no political movement would have the cohesiveness to challenge the bankers. Pritchard may talk about getting rid of the Euro, but, the PTB will make that prospect as painful as possible. You saw what they did to Greece to dissuade others from breaking away. What is unfolding in Europe is , neo-feudalism.
The Italian right & left united to battle it. The French are warming up for the fight. I wish them all luck.
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