Economic pressures

[Danny B]

Reinventing Money.com
Worgl in Germany issued "labor certificates" and accomplished instant prosperity. The German Central Bank quickly ended the practice when it became apparent that it was wildly successful.

[Danny B]

I Killed The Bank ~ President Andrew Jackson: U.S. Vice President Aaron Burr Shoots A Rothschild Czar ~ Rothschild’s Son In Law Alexander Hamilton! | Political Vel Craft

Time and again, it was proved that a private central bank brings ruin and poverty.
Here we are again. We are in a depression. We can blame the FED. Since the banking industry is useless for the most part, it always tries to get absolute control,,,,, to survive. The bankers demand fascism for the finance and corporate and GOV sectors. The bankers demand socialism for the non-powerful sectors. That is you and me.
Dr. Dennis Cuddy -- The Rockefellers: Nazis or Communists? Part 2

Ellen Brown and various other people are trying to bring back public banking.
Public Banking Institute - Banking in the Public Interest

[Danny B]

labor, socialism and the economy

Socialism is always a bust. It never works because it is a distribution system, NOT a production system. It is very similar to the banking system.
The 1933 German system and the Worgl system both relied on LABOR. They can not be considered socialist because they demanded labor.... productivity.
At Worgl, currency was a measure of labor. In socialism, currency is disconnected from labor. That's why it never works.
Mondragon demands labor. Mondragon Corporation - Wikipedia, the free encyclopedia

The world economic system must be based on labor. As we get more automation, there are fewer and fewer people who actually work. "They" print enormous gobs of money so that more and more people can put their money to work for them. Paper currency is intrinsically worthless and is NOT a store of value. When the currency crashes, all those investors who put their money to work will have to do something else. I doubt that they have much to offer to the job market where everything is managed by computers.
That is a story for another day.

[Danny B]

The rich really are different

The richest woman in Australia owes her fortune to iron ore,,,,, so she believes. In truth, she owes her fortune to the consumption of iron ore The consumption of iron ore is falling. She is not happy with falling income. Her solution; she said that Australians should work for $ 2 a day like the Africans. She evidently believes that she could maintain her income level if Aussies lowered their wages.
Apparently, it never occurred to her that iron ore consumption was falling because consumers had reduced purchasing power. Her proposal would reduce consumptive power even further.

The rich are not involved in the day-to-day struggle to survive. They are involved in a day-to-day struggle to get richer. They are insulated from the people who have to struggle. They LIKE it that way. Don't worry about the losses the rich took in the 2007 crash.


"Five years after the financial crisis sent the fortunes of many in the US and around the world tumbling, the wealthiest as a group have finally gained back all that they lost.
The 400 wealthiest Americans are worth just over $2 trillion, roughly equivalent to the GDP of Russia. That is a gain of $300 billion from a year ago, and more than double a decade ago. The average net worth of list members is a staggering $5 billion, $800 million more than a year ago and also a record. "
PressTV - They're back! …and rich as they ever were

The rich used regulatory capture and the printing press to get their numbers back up to where they are happy.
Marie Antoinette famously said; "let them eat cake". Mme.Antoinette bought her cake with tax money.
The rich today buy cake with debt money. Things don't look so well. Debt-to-GDP is 30% higher today that when it was in the 2007 crash. The rich are very happy having all the money. The "others" have so little money that they don't spend it. This drops the velocity of money.

http://static5.businessinsider.com/image/51d421c1ecad04516400000d-1000-600/fredgraph-1.jpg

Debt has gone up enormously but, household income has not gone up at all.

http://4.bp.blogspot.com/-zrV1eVLtcN4/UkCIeehtk3I/AAAAAAAAXWU/EfX-clB00Vg/s400/median+household+income+2013-09-23.png

We can't possibly service the huge increase in debt. So, GOV prints to keep the rich from losing any sleep or money. BUT, what about all that printing?
It didn't work for Zimbabwe or anyone else. What is the future for FED printing? Jim Willie has this to say;



TWO HORRIBLE CHOICES FOR USFED

PLAN A: BEING IMPLEMENTED: The USFed can continue QE and its heavy volume bond monetization. Doing so will sustain the rise in the cost structures, including food prices. As a result, the national economies suffer capital destruction, a direct (but unrecognized) consequence of shrinking profit margins and shrinking disposable household income. The mainstream news and bank leadership insists on calling it stimulus, when it is the exact opposite. It is the most powerful force to destroy capital in modern world history.
The fierce recessions are assured to continue, the incomes fall, store liquidations to persist, systemic failure assured. The United States eventually will be faced with hot money exits in a very unique new development. The United States will be eventually shunned and the USDollar rejected, as global alternative to the US$-based trade will develop until a formal launch next year in 2014.
However, the US will continue its usual path of creating (boogeymen) enemies, creating new wars, blasting the propaganda networks, but deny being the cause of the broad wreckage. The destruction of the US system will not come from fast rising rates, but instead from accelerating capital destruction, job cuts, recession identified as depression.
In this Plan A scenario being adopted and embraced, the USFed will be compelled to amplify its QE bond buying volume, to lie about it, but it will be caught in the lies. The United States and the USFed will be blamed for the climax of collapses, which will occur gradually. The United States will rapidly be shunned, the USDollar rejected, and the US declared a global pariah.



PLAN B: TESTED WITH TAPER TALK TESTED, NOT TO BE DONE: The USFed could taper QE and reduce sharply the bond monetization. The results would be felt very quickly and suddenly, like what was seen in July and August. It was painful and shocking, but revealed the deep dependence upon the USFed easy money spigot, from the financial market perspective (quickly) and the economic perspective (more slowly).
The financial markets would suffer incredible declines bordering on historical events like a sequence of Black Mondays (1987) and post-Lehman crashes (2008). The surprising direct effect from a strong tapering of QE would be something never seen before in the United States history. It would cause very well publicized hot money moves out of the US financial market in addition to the emerging markets.
The global tightening would make for a global catastrophe. The investors in USTreasury Bonds would rapidly vacate the arena, since bond yields would rise quickly, putting strain on the interest rate derivative control levers to the point that the rate swaps could not prevent the rates from going up out of control.
The big US banks would unwind their leveraged USTBond carry trade, and suffer outsized losses. The rapid rise in rates would deliver a well recognized death blow to corporate paper flow, the US housing market, the US car market, and put an end to student loans. The national USEconomy would suffer from higher interest rates, the fierce recession continue.
A systemic failure would result within 12 to 18 months. The United States and the USFed would be blamed for the climax of collapses, which would occur rapidly. The United States would rapidly be shunned, the USDollar rejected, and the US declared a global pariah. Same outcome, faster pace.

Jim Willie: Flash Trading Hits USTreasury Bonds | SilverDoctors.com

[Danny B]

The coming deflation

Here are vids on the inflation-deflation debate.
Peter Schiff VS Mish Shedlock by Max Keiser - inflation VS deflation debate - YouTube
Inflation/Deflation Face-Off: Harry Dent vs. James Rickards - YouTube
Marc Faber Vs Michael Shedlock - Inflation vs Deflation Debate - YouTube
Inflation vs. Deflation: Peter Schiff and Gary Shilling Discuss, Debate and Argue - YouTube

Keep in mind that the dollar has lost 97% of it's purchasing power. Since natural gains in efficiency result in price DEFLATION, you can see that we have had long-term currency inflation.
Bernanke is printing about $ 1 trillion a year but, our debt is growing by about $ 7 trillion a year. The printing is inflationary but, we see very low price Inflation. This is because the FED is trying to offset natural deflation.

The central banks claimed that they could eliminate the business cycle. They would erase every downward trend by inflating. You can see the effect of this for the last several decades.

https://gallery.mailchimp.com/207e05a82de07fb3b63b59989/images/Picture_12.png

By taking money from producers and giving it to non-producers, productivity has been starved and GDP has fallen.

https://gallery.mailchimp.com/207e05a82de07fb3b63b59989/images/Picture_4.png

"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 "
TedBits - Newsletter[UNIQID]

Everybody is talking hyperinflation. The dollar has already been hyper-inflated. GOV is printing tons of currency to stop DEFLATION. The FED already printed $ 27 trillion but, it never really made it into the lower loop of the economy. More and more people are starting to catch on to the idea of deflation.
Deflation Will Take the Majority by Surprise
Deflation has been held at bay for the moment. BUT, debt saturation means that new currency can't move into the system in a productive manner.
Mish's Global Economic Trend Analysis: Illusion of Prosperity: Deflating the American Dream; No Recovery in "Real" IncomeWho Said The Hydra Would Take It Lying Down? | Gold Eagle

Even the Pres of the Dallas FED said that a gold standard will be forced on America. Jim Willie said that we would have severe shortages when the dollar would no longer be accepted as an international currency. One more vid.
[74] Mike Maloney on the Fed's Gold Trap and the End of the Dollar - YouTube

America has been hard at "work" to extend the reign of the dollar. America produces 138% of it's needed food supply. Canada 144%. As long as various countries need American food, they must use dollars.
NO PROBLEM... we just bomb their food production facilities.
Libya’s “Water Wars” and Gaddafi`s Great Man-Made River Project | Global Research
We also blow up their infrastructure to make sure that they need loans to rebuild. Libya needs a big loan because somebody blew up their oil income.
"Its oil output tumbled in the last year by two-thirds from levels produced before the 2011 civil war"
Times of Oman | News :: Libya seeks its first loansParadise Lost, Libyans Dream For Past - OpEd Eurasia Review

[Danny B]

http://mecometer.com/image/linechart-country-historic/italy/population-growth.png

Here is a graph of gdp

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/09/20130926_italy.jpg

"Italy will remain a country with almost twice the debt/GDP ratio as the US"
Italian GDP Slumps Fastest Since 1861's Unification | Zero Hedge

[Danny B]

The Prudent Bear: Z1 and the Doves

"Over the past year, Household Net Worth jumped $7.690 T"
When the FED forced zero interest (ZIRP), this gave bankers access to your savings for free. You lost about $ 450 billion in interest income. They used the free money for leveraged bets. There was no increase in underlying wealth.... just paper wealth. Your free money and FED free money increased their nominal wealth.

Even the business journals are warning that wealth inequality is dangerous.
Forbes; How Income Inequality Is Damaging the U.S. - Forbes
Business insider; This Is How Income Inequality Destroys Societies - Business Insider

[Danny B]

Spain

I don't want to leave out Spain. I lived in Madrid for a while and I really like the country. Here are a couple of lines from a couple of articles.
"Spain inflation near zero, retail sales still falling"
"I think price rises will remain low but without any risk of deflation,"
Falling prices and no risk of deflation. That is a pretty good trick.
Spain inflation near zero, retail sales still falling | Reuters
(Spain).." it approved changes to the pension system intended to save about 800 million euros ($1.08 billion) next year. "
So, there will be a billion less spending next year,,,, but no deflation.

http://www.nytimes.com/2013/09/28/business/international/spanish-budget-avoids-austerity-measures.html?src=recg

Spanish builders built a ton of houses and then went broke. The banks were going to go broke. Spanish GOV changed the constitution to bail out the banks.
Rajoy can talk all he wants about Madrid reducing debt. The debt, like any other boggeyman will not go away. "The second-quarter figure exceeded the Spanish government's year-end public-debt target of 91.6 percent of GDP and was up 17.2 percent relative to the close of June 2012, according to the central bank.

Central government debt rose 20.3 percent relative to the end of June 2012"
20.3% is bad enough. Then, there is the debt of the autonomous regions, "The debt of Spain's autonomous regions climbed 14.8 percent year-on-year in the second quarter,"
Spain's public debt rises to record high | Fox News Latino

[Danny B]

long term job market

Panacea home page;
"All future Jobs and careers must be relate to being ECO friendly to our environment. Children must learn this from the start"
OK, what about all these future jobs and careers? Here is a collection of quotes and cites.

"Two Billion Jobs to Disappear by 2030
By Thomas Frey

As technologies disrupt economies, jobs will disappear. But learning new skills will keep people in business.

By 2030, more than 2 billion jobs will disappear, roughly 50% of all the jobs on the planet."
September-October 2013 (Vol. 47, No. 5)

"Why one-third of hospitals will close by 2020"
Why one-third of hospitals will close by 2020

"Half of new graduates are jobless or underemployed"
Half of new graduates are jobless or underemployed – USATODAY.com

"Cisco Systems analyst Dave Evan predicts that robots with advanced artificial intelligence could one day replace most workers."
Positive Futurist - Could robots taking human jobs eliminate loans, credit checks and require a new kind of capitalism?

"Thanks to technology, companies in the Standard & Poor's 500 stock index reported one-third more profit the past year than they earned the year before the Great Recession. They've also expanded their businesses, but total employment, at 21.1 million, has declined by a half-million."
Millions Of Middle-Class Jobs Killed By Machines In Great Recession's WakeeverybodyThe Economy is Terminal-Greg Mannarino | Greg Hunter’s USAWatchdog
After the FED drove interest rates to zero, investors switched to junk-bonds in the search of yield. Junk bonds are crashing,,,, that's why they're rated JUNK.
Five Years After Lehman, BIS Ex-Chief Economist Warns "It's Worse This Time" | Zero Hedge
The BIS says that we (GOV and banks) wasted the time that was bought by all the money printing and that there will be no second chance.

http://www.bis.org/speeches/sp130623.pdf

EVERYBODY is worried.
The End of Global Banking or Worse? | Shenandoah
GOV seems to be making preparations for some kind of problems.
The Apocalypse Is Upon Us | Dave Hodges – The Common Sense Show

You know what this means. It's time to PARTY.

[Danny B]

Shutdown

This is a repost; http://www.bis.org/speeches/sp130623.pdf
The head of the BIS said that monetary policy was made super-accomidative so that GOVs would have some time to change fiscal policy. All the CBs worked together to provide liquidity to the system to get it past the 2008 crash. The head of the BIS said that monetary policy has reached it's limits. Bernanke said that monetary policy has reached it's limit and GOV needs to finally address fiscal policy.
The head of the BIS has publicly scolded GOV for not using the last 5 years to cut WAY back.
Rather than debating
when to consolidate, we should be discussing how. Policymakers
should be carefully choosing the composition of adjustment that will minimize the short-term
costs of fiscal consolidation and maximize
the boost to potential output. Successful
consolidations tend to focus on cuts, especially in government consumption and transfers,
rather than on tax increases.
Notice that he said "how", not when. He said no taxes
THIS IS ALL VERY CLEAR.
----------------------------------------------------------------------------------------
A couple of quotes;
"Our greatest concern, though, should be whether or not the establishment is ready to pull the plug on the dollar altogether, using the debt ceiling crisis as cover in order to distract away from the involvement of international banks in the overall problem."
"Sadly, a government shutdown is sizable threat to the American financial system, and few people seem to get it. Perhaps because the expectation is that any shutdown would only be a short term concern. And, this assumption might be correct"
Government Shutdown: The Next Step In The Collapse Of The Dollar? | Zero Hedge

http://economix.blogs.nytimes.com/2013/09/30/how-a-debt-ceiling-crisis-could-become-a-financial-crisis/?_r=2&

"cuts, especially in government consumption and transfers,"
I'll leave it up to you to decide what the odds are and what it means to you.

The Reps and Dems are fighting right now but, there is very little difference. It's mostly for show.

http://profitsrbetterthanwages.com/wp-content/uploads/2011/02/images-bankers-control-politician-e1298676463579.jpg

We'll know more in a week.

[Danny B]

The coming deflation +

As I already posted, the BIS wants the printing to stop. Bernanke talked about reducing printing by $10--15 billion. (Tapering). The market had a heart attack. Bernanke chose an alternative approach. In one day, he pulled out $ 58 billion. Fed Withdraws Whopping $58 Billion In Liquidity In Latest Reverse Repo Test | Zero Hedge

The economy is addicted to cheap/free money. If the central banks are indeed pulling out liquidity as demanded by the B.I.S. , we WILL see deflation. Deflation is defined as a reduction in the money and credit supply.

The markets are overheated and margin debt is above the high that crashed the market in 2008. Any withdrawal of liquidity will cause a breakdown in margin financing.
It is VERY suspicious that the FED chose to withdraw $58 billion on the day before a GOV shutdown.

[Danny B]

petrodollar; "Russia, Iran, Angola, Sudan and Venezuela have converted oil sales to China into the Chinese Yuan. Worldwide, we see more than 5 million barrels per day traded in Yuan rather than U.S. dollars."
This is the death of the dollar. Renminbi Soon to Be a Reserve Currency

NOBODY trusts politicians. It may not be logical but, everybody trusts gold. China is grabbing every kilo that they can find or buy.
How China is taking over the world with gold - The Real Asset Co
Every country that we try to trash or control is driven to trade with China. If China's currency becomes gold-convertible, the Western currencies will be shunned by all of our accumulated enemies.

As fewer countries need to hold dollars to buy oil, they will NOT rollover U.S. notes. The FED already owns about 40% of U.S. debt. As notes are redeemed, there will be a huge cash outflow.
The FED is just a group of old-money European bankers. They own the federal reserve note. It is NOT a dollar. The dollar was originally defined as; The United States dollar was defined as a unit of pure silver weighing 371 4/16th grains

The bankers have lived quite well off the FRN. I suspect that they don't want to lose it. The FED may very well refuse to print the FRN to oblivion. That might well cause some problems.

[Danny B]

Growth of GOV

Some quotes on the SIZE of GOV.

"Since the state (government) depends on the economy to generate its tax revenues, government cannot grow sustainably at a rate that exceeds the expansion of the economy. Thus we expect government to grow at around the same rate as the economy and productivity, i.e. around 60% to 75%.

But Federal government expenditures have risen by 317% and state/local government spending has leaped by 328% since 1990. In other words, government has expanded at roughly four or five times the underlying growth rate of the economy."

"How can government expand 300+% while the underlying economy that supports it expanded by 75%? Answer: borrowing money, i.e. debt--lots of it. Federal debt has skyrocketed by 600% since 1990."

"Can public and private debt expand at rates four or five times that of the underlying economy? If so, for how long?"
Guest Post: Have We Reached Peak Government? | Zero Hedge

The Grace commission reported that not one dime of tax money goes to FED GOV. I don't know if this is still true.
Walter Burien has long worked on exposing the fact that GOV owns much of the productive sector of the American economy. He has a lot of documentation and some good vids. Here is one.
Ending Taxation - The Only Game in Town - 2011 - Walter Burien - CAFR1 - YouTube

It would be a huge surprise if GOV did not own large chunks of American business. This Wiki article shows hundreds of state-owned enterprises in dozens of countries.
Government-owned corporation - Wikipedia, the free encyclopediaState-owned enterprises in the global economy: Reason for concern? | vox

[Danny B]

State employees

At the time that Greece joined the European Union, it had historically been in default for 50% of it's modern history. Not a big surprise because 1/3 of all Greeks worked for the GOV. The troika has since reduced this to about 30%. Italy, France and Germany are all above the GOV load that Greece carries. chart-of-the-day-public-sector-employment-as–of-total-employment-nov-2011

It's more difficult to tell in America. (old numbers)
"That's a total of 11,810,490 government jobs.
The total number of jobs in the U.S. in 2006 was 150,600,000, so government employment makes up 7.84% of all jobs."
" Federal Government also employed 14.6 million contractors in 2006."
What percentage of Americans are government employed

" Economic growth will be so weak for the next several years that without government support, the unemployment rate will rise to 23 percent in 2018. Since that's politically intolerable, government will continue to spend money to create jobs, he predicts, with nearly 25 million additional Americans employed as a direct outcome of government spending by 2018."
How the Government Is Swallowing the Economy - Rick Newman (usnews.com)

And how will GOV create these jobs? Here is a hint.
" New Jersey still spends dramatically more than every other state on highways, the report found, plunking down $1.1 million per mile on state roads. The second biggest spender, Florida, spends $671,000/mi., with California laying out $545,000/mi. South Carolina, by contrast, recorded the lowest expenses, spending just $34,000/mi."
(California) "spending $93,464 in administrative costs for every mile of state road. New York ($89,194), Massachusetts ($71,982), and New Jersey ($62,748) also compare poorly to states like Texas ($6,529) and Virginia ($6,370), "
Mixed results on highways | Fleet Management content from Fleet Owner

GOV is already spending money like crazy. The cost of debt service is going up MUCH faster than the GDP,,, which really isn't going up. Where will this eventually lead??? Consider Spain; "Pensions, Unemployment, Interest on Public Debt, Consume 54% of Spain's Budget
Mish's Global Economic Trend Analysis: Pensions, Unemployment, Interest on Public Debt, Consume 54% of Spain's Budget; Debt Hits 100% of GDP; Expect Plan "B" or Plan "C"

The West has huge unemployment problems with the young. Various countries have between 40---70% youth unemployment. "Case in point: the British government has just announced a new push to eliminate benefits for young people. And this is just step 1."
Government Cutting Benefits For "Generation Screwed" | Zero Hedge
Here is a list of statistics on the future possibilities for the young in the West.
30 Statistics About Americans Under The Age Of 30 That Will Blow Your Mind
The young had a lot of expectations and it is very tough on them to see everything deflated.
wait but why: Why Generation Y Yuppies Are Unhappy

There is just no money circulating in the economy and no jobs. Where did the money go?
"Sarkozy and Merkel demanded Athens to set up a separate account from which bondholders will be paid directly and will ensure that billions of euros in bailout money go directly to servicing debt, and not other government spending priorities!"
SO, the ECB prints currency that is added to Greece's debt. That currency flows to a special account in Greece where it immediately makes a U-turn and flows to European banks that made loans to a country that defaulted 50% of the time. Those loans are sacrosanct and must be paid. NO INVESTOR will lose a dime,,,, even though he loaned to a country that was always a deadbeat. The "fix" is already in place. Just like Argentina, et al, the pensions will be cancelled and the loans will be paid off.

The young are expected to work hard and pay off all this debt.

[Danny B]

The Nature of Fiat Money

"Money, for practically as long as it has existed, has been employed to realize two fundamentally different sorts of goals: production or plunder. In a market economy, private individuals routinely use monetary institutions in a cooperative way to achieve voluntary exchanges of goods and services. Political authorities, by contrast, use monetary institutions in a non-cooperative way to achieve involuntary transfers of wealth. "

"It is undoubtedly true that the fiat standard is more workable for economic planners and money managers. But this is the very reason why we prefer the gold standard. Its excellence is its unmanageability by government. And we also deny that the fiat standard, which is characterized by rapid self-destruction and has failed wherever it was tried, compares favorably on purely scientific grounds with the gold standard, which is as old as man's civilization. Out of the ashes of fiat money the gold standard always springs anew because it is no technical creation of a few expert advisers, but a social institution that flows from economic freedom and economic law.17"

Great article; Online Library of Liberty - Monetary Reform: A Bibliographical Essay by Pamela J. Brown