The game is up when everyone knows the only way out is printing money, because then everyone knows inflation is coming, and the bun-fight begins. Everyone wants the wage rise, the payment now, and to buy the commodities that they won’t be able to afford tomorrow. Price tags begin that rising spiral. I don’t think we are on the verge just yet, but it can’t be that far when someone like Murdoch is broadcasting it.
Rupert Murdoch tweets:
@rupertmurdoch
Governments worldwide have borrowed 100 trillion last ten years. Defaults inevitable sometime soon. Means crash, hurting rich and poor.
@rupertmurdoch
Of course markets stay high with central banks printing huge sums, inflating everything except jobs.
The only question that matters then, is are they “printing”, and how long have we got?
US Money Base Figures
This is the US money base, starting in 1918.
You can see the moment Lehman Brothers went under. It’s that “bend”.
..
That graph again, logarithmically, so we can put the last 90 years in perspective. Remember the oil crisis, the Vietnam War, the 1987 crash, LTCM, and the dot com burst? They don’t rate.
The depression and World War II — they did rate — and you can see below, that this latest “bump” is… err, steeper. (Don’t we all feel good about that eh?) If you are looking at these graphs for the first time and feeling queasy, good news, you might be sane. If you wonder why I’m not leaping up and down, pointing out that the current monetary hiccup is worse than World War II fergoodnesssake, where some 400,000 US citizens died, it’s only because we’ve been watching this trainwreck for three years. (See Helicopter Ben at work, Nov 2008)
..
The money base is made up of the deposits of commercial banks in central bank accounts plus actual dollar notes and coins floating around in circulation. Over time the commercial banking system amplifies this “base money” by creating and lending out “bank money”, usual by a factor of 10 -20. Bank money is the stuff in bank accounts at commercial banks, what the public knows as money but that the banks call “credit” (and yes the word “credit” has other meanings too). (Under the old fractional reserve system the ratio of base to bank money was usually a fairly simple 10 to 1, but the under the Basel Accords, which have governed western banking since around 1990, the reserve fractions are not as relevant as the amount of bank capital, the quality of loans, and the amount of deposits. In addition, the practice of “retail sweep” has rendered the reserve requirements mainly toothless since the early 1990s.)
As this extra base money gradually feeds out into the system, it is allowing commercial banks to make more loans (which they do by simply changing the number in a bank account, thereby creating more bank money, and simultaneously writing down a matching liability on their balance sheet e.g. your house deed).
Here is a graph of US M2, a broader aggregate of money supply. It has that exponential look, don’t you think?
..
…
Make no mistake, there will be dire economic consequences. It’s going to be nasty, and not just for the U.S. Global trouble-makers will attempt to capitalize on the chaos.
Money as we know it will soon cease to mean anything. Borrow big to buy gold or other commodities such as food that you can store for the long term.
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Gold is going to be about as much use as carbon credits in a real financial armageddon, the world and it’s population has moved on from the 1930’s crash. Gold is as good a hockey stick you will find anywhere and any way most of the trading in gold today is paper/electronic based.
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I was talking about physical gold, of course. Don’t have anything to do with the “financial” world — it’s a house of cards. Except for one thing: borrow big and buy now!
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And get physical hold of your gold, and get it assayed.
There is a lot of gold “bullion” coming out of China that isn’t solid gold
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From where did China buy it?
http://www.dailypaul.com/121542/fake-gold-in-fort-knox-millions-of-bars-5-mil-per-bar
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Good advice but first, get a physical hold on food*. Gold makes very thin soup.
*6 months of food minimum. A year would be better. Include sanitation supplies and water as well. Hide it well or be able to defend it against those whom will be envious. John Brooks and MattB will likely be calling when times get tough.
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John Brooks and MattB will be unprepared as they can’t imagine a problem that can’t be solved with more Government.
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Prepared is a relative term. What it means depends on how long the crisis lasts. And frankly, I don’t know how to stockpile and then defend enough supplies to last as long as a real collapse will require.
About gold — a friend has done some investigation into what’s going on in the hardest hit parts of the U.S. and it isn’t gold being used, it’s barter. Have something you can exchange with others for things they have that you need.
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Yep, solid gold. Silver too. But only the real thing, paper is just, well, poo tickets. An ounce of silver has always been enough to buy a good shirt, since Adam was a boy. Pretty much inflation proof.
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I think that this chart takes on a whole new dimension in light of the monetary base charts Jo presents…
The marginal productivity of debt is in the toilet and getting worse…
For every $ added to the US economy in Debt. GDP is going backwards.
The USA doesn’t have the productivity from new debt to repay it.
Simplified?… They have borrowed $100k to buy that new house. Not only has the house gone down in value, meaning they now owe more then the house is worth, they have to work more hours for the same or less income. Productivity is evaporating.
At some point this is going to end. Not because policy will change. Because it will simply end.
That’s when you get a heap of people lining up that banks, lining up for social security, asking “What the hell happened”?
Explainations of the Marginal Productivity of Debt can be found here and here or just Search Engine it.
Which ever way you look at it, the west is in trouble!
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The timing of the tweet seems more like a subtle financial media threat than a reality check. Rightly or wrongly Murdoch is looking for a bigger story than himself right now. The total currency in circulation equates to $10,000 per person in the USA. This was always going to happen as a result of QE. Murdoch is under severe pressure right now.
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I hate to piddle on your parade Mike BUT:
National Debt per taxpayer is $138,327 per Citizen $50,092
Personal Debt per Citizen is $50,896
Assets per Citizen $266,449
Liability per taxpayer $1,045,665 (includes Social Security, Prescription Drugs, Medicare and Unfunded liabilities)
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Wouldn’t you want to go in hiding if your name is Michael Mann, embarrassing enough to be found out about creating a bogus hockey stick graph about temperatures, but now people in all sorts of disciplines poke fun at it and use it in their presentations. Head under the pillow for a while.
As Mike above says, the timing is an issue. Murdoch will do anything at the moment to divert attention.
We are no way out of the financial woods yet and time will tell if the US action of QE was right for them or if the EU approach will work for their members.
One thing is for certain and that is that democracy as a political institution needs an adjustment. People suffer from this “what more can the government give me” attitude and as we get richer we want ever more. More infrastructure, more health services, more schools, more ………. . Then those who are long term unemployed want more money for doing nothing, People lobby their politicians for a new school, road whatever and what does he/she do? Wanting to be re elected for job security sake they start lobbying the purse string department, convince other party members ( it brings us votes) etc. No one asks if we can afford it, nothing to do with that we can always raise taxes. The non producing part of society do not seem to get it that there is a fine line not to be crossed.
They build their own empires and then get society to pay for it.
So the benefits are raised, schools are built, roads are laid.
No politician has ever said about any idea, or at least not publicly, “great idea, it will cost $500 million, where shall we cut to be able to afford this”.
If it can win the next election it is a winner, the next generation can pay for it.
Of course the opposition may voice disagreement but that has more to do with the fact that they know that if it comes through they will not win the next election, the argument is sold in a different way of course.
Governments need to stop spending tomorrow’s projected earnings today. Like in business there is no certainty about those earnings. The bureaucrats might have a job for life and therefore can spend their private earnings on the basis of being almost 100% certain of what they will earn next year, the rest of society does not work like that. (including the elected lot although they usually get a cosy job somewhere if not elected)
What is spend today should be the money earned yesterday.
And yes for major projects you borrow or build a public/private partnership, charge the user, whatever. But you base it on what you have in the bank and can afford. On top of that a buffer needs to be created in case the tax take drops in a few years from today. So you can keep paying the interest on the loan without straight away having to slash services.
You can now see the mirror image of your own life. There is no difference between how you should run your own finances and how the government should run theirs. Except if at home the kids ask for a new computer you don’t have to worry about the next election you can tell them to go and play outside and you will still be their parent tomorrow. Any person who gives in too much to impulsive buying will end up like the governments of today, in the financial crap.
The banks are nowhere near as lenient with the private person as they are with the government, they will bankrupt you in the blink of an eye.
And that is another part of the problem, there is no accountability on those who approve the spending, they are elected and the worst that can happen is they get not elected next time. They do not get declared bankrupt themselves for approving that $500 million upgrade to buy votes. The whole population does.
As a population we can do well to stop always asking for more of everything from the government, just because we can and we can vote you out especially if the other mob shouts that they will spend if elected. Those approving, i.e. the politicians, should become accountable for spending decisions, that will stop a lot of them to even try to get into office, they simply would not have the balls.
The bureaucrats should get more power to block spending where it is not fiscally prudent, much like the Reserve Banks are independent, the purse should be too.
The revenue is to be set by the elected lot, so they can not go crazy with taxes without fear of loosing their job, the spending approvals should be done with strict guidelines by non elected officials and reward them well for staying within those limits. Those in that job won’t be popular but they don’t have to worry about that and elections, they can concentrate on keeping the finances in balance. Those heading the RB’s are often not popular either.
In the mean time we all go cap in hand to China to help us out of the financial you know what.
And we all know what that can mean for democracy.
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Joe Hockey said exactly this the other day about the NDIS, and the dumbass MSM caned him for it.
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I meant “No politician has ever said about any idea, or at least not publicly, “great idea, it will cost $500 million, where shall we cut to be able to afford this”.”
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Jake,
the banks are less likely to lend money if there is a chance they won’t get it back, with interest.
With the European system of welfare states gradually collapsing into default, or heavy devaluation of their currency (via ‘printing money’) then the banks will be very reluctant to lend to them. So the welfare states are going to be cut back, until the taxes raised can pay for it. But most European countries in trouble have high taxation already. Among other things, this means that the various bureaucracies are going to be cut.
The notion that bureaucrats will act as a break on spending is romantic nonsense. (This isn’t to say that most Civil Servants aren’t more responsible than most politicians). The current setup rewards them for spending. Larger departments hence higher salaries, more influence, more power. If a Department underspends (saves money) it is penalised the next year.
Do read C. Northcote Parkinson – The Law and the Profits which foretold all this in 1959.
What is needed (as he claims) is a different approach to
a) spending. That cuts in taxes are claimed as “giving away money” are based on the socialist idea that everything belongs to the State.
b) budgetting. That existing spending justifies continuing expenditure and the confusion of mixing Capital and recurrent spending.
I expect his phrase about “National budgets which would disgrace a third rate dog racing firm, being solemnly presented to the Nation”, may become relevant in the near future.
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It should by now have become apparent that the principle of governments spending money they don’t have does not work in the long run.
In most companies you don’t let the sales people control the expenses, they have a habit of overspending. To a large degree they control the income though.
Politicians are the cheerleaders, the sales people.
Except there is a limit to how much income they can generate, the tax take. Too high a tax rate and the economy will collapse, lowering the rate too much can lead to further inflation. The latter is not too much of a problem if it would be a totally closed economy but not many countries are.
User pays is a great principle and argument to reduce tax and then let the individual pay for those services he/she needs. No problem for those that have the financial discipline but sadly a large part of society would spend the “tax saving” and then when they need that particular service don’t have the money to pay for it.
(Where else do we see that? )
You are absolutely right that bureaucrats are paid in relation to the size of the empire they create. School principals, mayors you name them are all paid on the size of their organization, city whatever.
We also all know what happens with people that are paid based on the profit they generate. If you can’t increase sales (tax income) you have to slash spending which usually means that the infrastructure of the organization is in urgent need of repair in 10 years or so and it will cost much more to repair than to maintain.
So that is not a great one either for the long run. It usually works well for the individual’s bonuses but the long term shareholders (the people) suffer the consequences.
If the politicians can’t control the government spending as they all want to be cheerleader, and lets face it it is easy to spend someone else’s money, something needs to change.
Because, as you rightly say, the banks will stop lending if they can’t get their money back. People will stop buying government bonds for the same reason.
So we can change the political system or we can change the spending structure.
I can well be very off key here but I fail to see that the people would want to see other then democratic election systems in those countries where there is one. The only way to do that is in an un-democratic way.
Going back to the 1800’s as some people seem to have in mind is not going to solve anything either as the same principles would still apply with the same government structure. (And more then half the world population would need to starve before we can support the remainder with food. But that is collateral damage it seems)
Is it romantic nonsense that non politicians should control the spending? Perhaps. They control the Reserve Banks in most if not all democracies and generally do a good job.
But time has proven that it is definitely romantic nonsense to think that elected members whose livelihood depends on being elected again have the will to control the spending in the current form of western democracy. And the pressure to spend is only going to grow.
Your solution?
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Looking at that graph, I see Michael Mann has moved into economics too.
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Oh yes. He is a Mann of many Talents.
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now we need mea culpas from the rest of the MSM for doing precisely the same for years:
(WITH THE OFFENDING PIC)2 May: Brisbane Times: Judy Prisk: Misleading smoke gets in public’s eyes
Several times in past months the Herald has used photographs of steam rising from power station chimneys with captions or subheads intimating that the steam was a polluting pall.
The most recent example was on the cover of BusinessDay on April 17. The photo, taken at Bayswater power station in July last year, shows funnels of dark steam silhouetted against white clouds and a blue sky…
First, the photographer did not manipulate the image in any way. He says he shot a series of four in the middle of the day using F22, which means a small aperture made the images razor sharp. And the reason he stopped to take the pics on the way to another job was because the scene looked so unusual. He presumes the darkness of the vapour was because it was heavy with moisture.
Second, and for me the most galling, is that the photographer had clearly written in his attached caption: ”Please note that it is NOT smoke coming out of the stacks, it is steam.”
Many readers feel the Herald and The Sun-Herald do not publish enough alternative opinions and stories on climate change and global warming, that they have formed an opinion and will stick with it. If you read the Herald’s editorials, there appears little doubt that it has accepted the scientific consensus on the effects of carbon pollution on climate: there has been a gradual warming of the planet. The Sun-Herald leans that way, too. So when those who question the climate-change science see what they consider examples of the ”old trick” referred to by the reader, they feel their concerns are justified.
The decision to use the image with such a misleading subhead was a poor one, and one which drew a message from the editor to ensure it did not recur. Although it was not the first time it has happened, hopefully it will be the last…
http://www.brisbanetimes.com.au/national/misleading-smoke-gets-in-publics-eyes-20120501-1xwzs.html
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There has been a proposal floated in Ireland. The govt can issue Irish Tax Bonds. This paper can be used to pay taxes. All govt payments for pensions civil service wages etc are paid in cash and Tax Bonds in proportion to the Govt debt. The tax bonds can be traded like money. This separates the entitlement/tax churn from real money (Euro) and allows the necessary inflation to take place.
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Easing monetary policy and/or printing money was only ever going to buy some time to allow for the system issues to be addressed.
Unfortunately, bugger all has been done to correct the systemic issues. Aparently that requires intelligent leadership -which the world seems to lack everywhere (I think except sweden?)
It’s really pathetic how most of the Keynes followers cling to his theories like they apply when the system has been fundamentally broken.
We’re heading on 4 years since the GFC could no longer be hidden. And still, I see no action to correct the root causes. Just a lot of talk, spin and Bullshit form people who are utterly incompetent due to their obsession with their own quest for power.
TBH, this sort of meltdown was almost inevitable when the Baby boomers started to hit retirement. All we can do is try to shake it all out of the system to provide opportunities for the children who are currently toddlers.
That’s right folks, roll up your sleeves so todays toddlers can have a crack of the whip.
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True, on paper. But many of the Boomers don’t plan to retire, as such. They may leave their current employer (or be thrown out), but they are a generation of natural entrepreneurs – the last generation who learnt real Math, real Science, real History, and real Geography. They were the last Real Generation.
They will simply do other stuff, rather than get bored. Most of the stuff will be for themselves, but a lot will still be contributed back to the community.
The Boomers were also the generation that commercialised computing. They know how that stuff works. Some of them built empires in their garage.
If I am right, you can expect a rise in the rate of user software that helps people grow their own food, for example. I have already seen one iPhone app that helps you manage soil acidity in a home garden.
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Rereke,
I sense a bit of defensiveness of the Baby boomers, so let me clarify. I am not talking about the qualities of the baby boomers, because for every positive, unfortunately there are many negatives – dope smoking, the environmental movement etc etc.
The issue at hand is the sheer number of baby boomers. Demographically it was always going to be an issue – when they entered the workforce and now when they exit it – whether it’s by retirement, ill health or whatever.
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But Madjak, don’t you think that the exodus from the workforce by a whole bunch of cashed up self-interested baby boomers will be a huge economic stimulus as they all go out into the world spending money? They will be travelling and eating and entertaining. I’d see a big growth in all those service industries that provide the kinds of things retired baby boomers will want. And as they age, think about the opportunities in assistance and health services?
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Graeme,
Some industries will do well, that’s for sure.
Many many years ago, I was attending a finance lecture at Uni in NZ. The lecturer summed it up realy well in the first 5 minutes of his lecture:
L: So are you Young ‘uns all clocking up those student loans
* a general grumble from the audience *
L: Good, because you guys are going to pay for my retirement.
The problem is that in many countries, the baby boomers are far from being cashed up. Take NZ as an example, there are many BB with no savings for retirement. The lucky ones will have to eat their houses. Some think they’re hansel and Gretel.
I know I’ll get cained over this, but there is a very significant chunk of the BB generation who have been negligent with their forward planning. For most of the countries that had some government run schemes for retirement are finding that the war chest is gone. All used to prop up the perception of wealth.
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MadJak,
you say here:
and I agree with you totally.
I’ve used the analogy here at this site before, relating back to my first weeks in the RAAF when as a group of 15/16 year olds, we were spoken to by an Insurance salesman. We were on $21 a fortnight gross, and he offered us a policy for around $2 a fortnight.
The paid up value of our contributions would have been around $2500, and we would get a return of around $5500, (er before tax) which in 1967 was around a third to a half the cost of a house, or as us guys saw it, two Holdens with the lot.
It would have matured in around 1997, and would have been virtually worthless by that point, but in 1967, to young guys getting paid a pittance, that was a fortune.
Same with my RAAF Super. 25 years, for what was virtually equal only to the Pension, and now much much less than a full couples Pension in total.
Super NOW looks like a fortune, but when it comes time to actually live off it, not so.
Also, think of those self funded retirees who put away enough to get by comfortably on in their old age when it matured. Now, with falling interest rates, some of those are even becoming eligible for a part pension, just to get by on.
And if you put aside more, the rules are changed, and I’ve lost count of how many times those Super rules have changed over the years.
The idea was to introduce large super so the governments wouldn’t have such a huge Pension outlay.
Now super is just a cash cow, and on so many fronts, none of those being for the person actually contributing.
Tony.
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TonyFromOZ,
I agree with your agree. Todays comparison is when lehman bros imploded. I had moved my super into cash 6 weeks beforehand. I watched other people stay the course and get wiped out.
Todays environment is about losing less money than the jones’ and making money slowly.
It will remain that way until the systemic issues are resolved.
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Madjak
Sweden hit the wall a lot sooner. The official share of GDP going to the Gov. in 1980 (thereabouts) was 65%. The place was collapsing and was only kept going by allowing a hugh black economy.
They fiddled around for some years then their currency collapsed, so they had to reform. Even so, they are currently spending 52.5% of GDP, Tax 47.9. A better choice would be Norway where spending is 40.2% of GDP from tax of 42.1% leaving a budget surplus. Australia is at 34.3% spending from tax of 30.8% leaving a budget deficit (but Australia is understated because of the various States). Still, the Carbon Tax will put us up into the “big League”.
Note: Chile, China, Hong Kong, India, Singapore, Taiwan all 21% or below (no welfare state but booming economies).
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I divide people into Savers and Spenders, plus a few peculiar ones who live as trolls.
The spenders cannot see money, or what looks like money, without thinking what they can spend it on. When I was on a body corporate we had to elect a new committee. We had $3000 in the bank, $10,000+ levies, and looking forward to over $21000 expenditure. (This put us in the top third of Body Corps in Sydney for careful management).
2 years later we had $9000 in the bank and levies covered expenditure. Immediately some people wanted money spent on this or that which wasn’t needed, but just because the money was there.
They can’t help themselves.
When my father “retired” (along with a number of others, my mother was speaking to another wife who was referring to the super payout “all that money, we’ll have a new car, a boat, an overseas trip etc”. When my mother pointed out that that was “all the money coming in for your future” she said her eyes were blank, she just couldn’t understand at all. There was money, you spent it.
You may not have met many like this, they tend to congregate in the Public Service, schools and, apart from your lecturer, in Universities. Somewhere there is a hugh pot of money, just waiting to be spent on what THEY want, hence the greenies belief that “renewable energy” is easily affordable.
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I know people like this. As soon as there is any money – any at all – it is spent. Gadgets, trips, whatever – they’ll buy anything.
For them, it doesn’t even have to be cash in the bank. A pre-approved credit card is also money to be spent.
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“Think You Have Money In The Bank – Think Again”
http://barnabyisright.com/
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Kevin,
The fallacy of Barnaby’s argument is to say that only printed money is money. People who make this argument misunderstand the value of money. The only value money has is to make transactions possible and cheaper than any other alternative method (such as barter). If a person accepts a bank transfer (binary digits in Barnaby’s argument) for goods and/or services, then it is money because it has facilitated the transaction to occur. Ongoing wealth is about transactions not about stuff. A poor economy is one with fewer transactions and a rich economy is one with more transactions. These binary digits allow transactions to occur which is what creates wealth.
The underlying value of an economy at any point in time (using money as a unit of measure, nothing more) is the total value of the tangible stuff (infrastructure, housing, machines, etc) plus the total value of the intangible stuff (skills, knowledge, creative works, etc). That is never taken into account by those who point at the seeming gulf between the printed money (bits of paper and not any more “valuable” than binary digits), recorded money and the amount of gold and other precious metals the economy may contain.
Don’t get me wrong I think we are going in a bad direction and a very nasty correction is coming, but Barnaby and his ilk are just as much being alarmist as the climate alarmists are about CO2 and with the same type of flawed logic.
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Truthseeker,
The way I see it is if Julia shuts down coal powered electricity generators then the only time your ‘money’ will be visible will be while the Sun shines. Or to put it another way if the plug is pulled out of the socket or the computers ‘go down’then your un real electronic digits disappear. What value then have the electronic digits at interest, newly created out of thin air, against your sweat and blood, and your real estate that is promised, when begging the Bank for a loan.
The sites name has given the impression that the author is Barnaby Joyce,but no,he did not author the article.
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Kevin,
The ruinous energy policy of this government is not related to money and is entirely off-topic. Also, banks have multiple back-up systems with their own back-up power supplies to keep the data that makes them rich, so a loss of electricity generation is going to have a much larger economic effect than it is for the keeping of banking records.
It really does not matter who wrote the article, the logic is still wrong and Barnaby is putting is approval on it by posting it.
Money has no value. It is a unit of measure for value.
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“Social Credit” (an old political party) called it “the money trick”. In the thirties, when Henry Ford was a good friend of Adolf Hitler, Ford once said “if the population suddenly understood the banking system, there would be a revolution the very next day”. (or words to that effect). Back when a group of unscrupulous bankers convinced Woodrow Wilson to establish the private for profit Federal Reserve Board, one of the Rockefellers quipped “not one in a million will understand the motive” (or words to that effect). Theft is by definition an asset transfer under force or threat of force. Tax is an asset transfer under force or threat of force. The government taxes you in a myriad of ways, but the most destructive way is by debasing the currency via the fractional banking system and printing via the central bank. The forces at work have the very same masters that foster the AGW panic. One of the Rothchilds remarked “he who owns the gold makes the rules”. Control of your energy through this carbon tax scam is the biggest rort in history. To understand money, one of the best of the Austrian School of economics I know if is Antel Fekete . Once you think of precious metals as money, you realise that it is the fiat currencies that are being devalued; not the price of precious metals increasing. We have a well known Austrian right here in Australia named Steve Keene at the U of Western Sydney. It is indeed a shame that so few people realise that we are under the same threat that we were between 1939 and 1945, and for the same reasons. It’s just that the enemy has discovered it doesn’t need to use violence because it is the enemy within. No fiat currency in human history has existed for more than 200 years.
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I’m not too worried as I’ve converted all my cash to baby seal skins.
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I’m more into baby seal eyes myself.
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My wife has a lovely baby seal eye necklace and ear ring set that I harvested myself at the last clubbing season.
She will be wearing them to the James Delingpole event tonight. Me? I will be sporting my new whaleskin bespoke suit complete with tiger fang cufflinks.
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Save some whales for me
I hear they taste yummy
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I’ve been watching that graph rise over the last 3 years and it never ceases to terrify me. There will be a price to pay for this, but I don’t think anyone really knows what it will be. If economists all beleived credit default swaps were actually risk free, there is no way they can figure out this monster.
What is really interesting is that we only print 3% of our currency today, the rest is nothing but digital ones-and-zeros. No wonder printing huge amounts of money is so easy.
Money is really nothing.
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The price to pay will be war.
Why do I say that – the most likely outcome will be a US Dollar monetary system collapse and reset, the war will be fought to determine who owns the soverign power of “Defining the Currency”, for the next reserve currency.
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I well remember a comment of former treasurer Dr.Jim Cairns when the Whitlam Government was in it’s death throes, to the effect that “if we run out of money we’ll just print more”!
On a trip home from one of his many overseas jaunts, Whitlam sacked Cairns for a series of indiscretions.
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I started to laugh as I read this ….reflecting on our ABC and our politicians. Wasn’t Barnaby Joyce slammed all round as mad when he raised this incy wincy inconvenient truth!.
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Malinvestments such as the ABC can only occur in the context of a unsound monetary system such as the current world wide $Dollar Ponzi. It is quite impossible for the rusted on ABC staffers to realise their tenuous position.
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Now THAT’s a hockeystick you can believe in!
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For excellent reporting on all things economic/financial/political without being captured by the MSM visit http://www.zerohedge.com/
Also you can find excellent monetary systems analysis at http://fofoa.blogspot.com.au
Some additional comments on many things related to the above at http://gonzalolira.blogspot.com.au/
Gold and Silver Market analysis at http://www.tfmetalsreport.com/
Get some Physical Gold and Silver at the Perth Mint, http://www.perthmint.com.au/metalPrices.aspx
Cheers EW
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Look at those graphs soar! Obvious an effect of Global Warming.
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Obviously
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At least the crash should reduce CO2 emissions. And population. Seems Gaia has a hand in the economic system too.
I am joking btw. Honest I am.
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No your not. I think that’s exactly what you believe. And just like many of your fellow watermelons whose minds have been far too easily coaxed into he same virulent form of anti-humanist pagan cult worship, you just lack the courage to admit that those thoughts are in fact core tenets of your cult. So don’t be shy – some of your fellow CAGW cultists are now ‘coming out’ to declare those same sentiments as their over-riding objectives.
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So MattB – will you be in the population cull, or doing the culling?
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Matt,
No need to worry, there will always be a spot on the farm for the VW and you.
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Hey MattB the Climate isn’t reducing the population of the Planet you global warming alarmists are as quoted in the guardian and other MSM’s.
Note these words carefully MattB UK aid helps to fund forced sterilisation of India’s poor
Very nice.. and you alarmists want us deniers to be up on charges for crimes against humanity.
Stop this nonsense before it goes too far !!
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that’s pretty crazy eh
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The above graphs, are also the main reason that I think that the Globalism movement is a “dead man walking”. As it is dependent on the current monetary system for it’s existence, and the current monetary system has a lethal logic bomb in it that guarantees it’s own destruction. The logic bomb is the utility of debt/debt saturation. Since the money in existence is literally debt, and endless economic growth = endless growth of the debt, then debt saturation is inevitable, where the utility of each new dollar of debt is less than a dollar.
We have already passed the point where the utility of new debt is less than one. There is no possible recovery. The system will crash. The only real unknown is the timing. Governments will respond to the crisis by acquiring more and more debt and by printing money, and as the collapse begins to occur, with increasing totalitarianism (e.g. US patriot Act, US NDAA, etc) as they struggle to survive and remain operational. There efforts will accelerate the crash. They will resort to war to unite their populations against a “common, foreign, enemy/scapegoat, and against internal dissendents”, the rise in nationalism and ethnic identification, and the removal of financial resources will kill globalism (UN, IMF, World Bank, NGOs, etc)stone dead. The wars will be short and sharp, and then tail off into low level insurgency style violence. Some Governments will fall, and some will survive.
The most likely new totalitarian power in the world will be the US. The counter to the rise of that power will be the US states, and the possibility of a 2nd American Civil War.
Oh BTW: MMGW will cease to be a concern, as it gets drowned out by real and immediate issues.
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There is a book written by Strauss and Howe called “The Fourth Turning” written in 1996. Its predictions from then until now have been so uncannily accurate, I suggest that if you need a glimpse of likely outcomes, you need only study history. Or read teh book.
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There is a book written by Strauss and Howe called “The Fourth Turning” written in 1996. Its predictions from then until now have been so uncannily accurate, I suggest that if you need a glimpse of likely outcomes, you need only study history. Or read the book.
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A new post on zerohedge draws on some of the points that you make at http://www.zerohedge.com/news/generational-cycles-kondratieff-waves-and-credit-expansion
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so Murdoch media should be promoting Ron Paul 24/7, not Romney!
and Murdoch media could reveal all about Neil Wallis’s damage control work for UEA through Outside Organisaton, while Wallis was apparently also being paid by Met Police and News International. after all, CAGW is wasting untold billions of dollars and i’m sure the Wallis/UEA saga would be a sensation:
VIDEO: 30 April: Bloomberg: Economy Face Off: Ron Paul vs Paul Krugman (NYT)
http://www.bloomberg.com/video/91689761/
23 Sept 2011: UK Telegraph: Phone hacking: News International paid Neil Wallis while he was at Scotland Yard
Neil Wallis, the former deputy editor of the tabloid newspaper, was paid the money during late 2009 and 2010 for providing “crime exclusives” including details of Scotland Yard investigations…
http://www.telegraph.co.uk/news/uknews/phone-hacking/8785470/Phone-hacking-News-International-paid-Neil-Wallis-while-he-was-at-Scotland-Yard.html
24 April: Guardian: Leo Hickman: University of East Anglia spent £112,870 on ‘climategate’ PRUniversity forced to reveal how much it paid the Outside Organisation in wake of hacked emails furore
I asked UEA to clarify what period the Outside Organisation was employed. It said it couldn’t go into detail because it did not wish to breach the commercial confidentiality of the Outside Organisation, but it did confirm that its first meeting with the company was on 4 February, 2010, and that it “gave advice to the university during 2010”, but not beyond this period.
UEA also said that it employed the services of a separate crisis PR consultant “for a short period of time at the end of 2009 following the hacking and release of the emails”. It wouldn’t say who this was, or how much it spent doing so…
http://www.guardian.co.uk/environment/blog/2012/apr/24/uea-climate-change-email-publicity
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O/T but very topical considering the Police have just raided the offices of the HSU.
The following are excerpts from Victorian Hansard. The question all Australians should ask is why the different (or lack of) response by police and the ACTU to the Union and actions of AWU officers then, to what it has been to those in the HSU and relevant officers now?
“The institution I wish to deal with is the Australian Workers Union. The Australian Workers Union is now a super-union that resulted from the amalgamation of the AWU and the Federation of Industrial Manufacturing and Engineering Employees on 1 November 1993.
I refer you to the draft report by Coopers and Lybrand, which is addressed to the Australian Workers Union and raises major matters for the attention of the union’s committee of management. As I understand it, it is a draft report that was prepared for the head office of the AWU.
The covering letter dated April 1998 deals with matters that arose in the financial years ended 30 June 1995, 1996 and 1997.
…. (I am concerned that the processes adopted by the union raise substantial questions that should be dealt with by way of a public inquiry, if not a police investigation. Most importantly, the dispassionate draft report by the auditors indicates that the union has substantial difficulties).
I refer you, Mr Acting Speaker, to the first page of the draft report, which is the first page of the April letter, and in particular to the second paragraph, which reads:
The issues detailed in this report are considered to be the major issues which significantly impact the control environment and financial integrity of not only the head office branch — that is, the head office of the AWU — but also the union as a whole. The seriousness and magnitude of the issues we have identified have resulted in an extreme limitation in the scope of our audit, and as a consequence we propose to issue a disclaimer of opinion on the financial statements for each of the financial years presented……
It must also be noted that should this less than adequate financial environment persist, we would be required under our professional auditing and ethical standards to tender our resignation as auditors of the union.”
http://imfiplc.blogspot.com.au/2011/08/gillard-at-slater-and-gordon-awu.html
As I’ve posted before, currrent Union matters have links right back to those days and the threats of factional bloodletting, revenge and reprisal are all coming from Labor sources!
Do the research – it’s all there and absolutely fascinating!
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WTF? Keynes said this is all OK! Krugman agrees. Spain, Greece, Italy, and many stellar examples are following suit.
Just keep on paying your carbon penance……
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I believe that I am hearing sarcasm…
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I think more sardonic.
I just yesterday saw Krugman on the MSM saying that austerity was exactly the wrong thing to do. In otherwords, even with these graphs staring out at him he wants to spend more imaginary money. This from the Left side experts……
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I think most independent thinkers understand the developing maelstrom. But the hard question for those who wish to prepare as best they can is – timing. It is always timing. I know Jo that you’re placing your faith in gold but I think you might find that ‘insurance’ illusory. When the proverbial does hit the fan, the fascist governments across the world, including in Australia, will act in unison to out-law its use as legal tender, if not its outright ownership. Just as FDR did. They fear the freedom that gold extends to its owners. And the coming chaos which was put in train almost 100 years has always been about control. Total control. Totalitarianism.
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In Australia the Banking Act expressely empowers the Reserve bank of Australia to confiscate Gold http://goldchat.blogspot.com.au/2008/11/australian-gold-confiscation.html
Hence it is worthwhile diversifying into physical Silver in Australia.
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You are absolutely correct. Gold and silver have been a store of value for centuries. And fascist governments may well act in unison. However, there will always be a black market.
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I agree with Rod on this one, I also agree with Andrew with regard to the advent of tyranny. The counterpoint is that people need a medium of exchange, and even tyrants can not bend markets to their will forever.
On another note:
Suggests or implies extreme long range planning which I find hard to believe in. Might I suggest that alternatively, the various systems of control simply persist due to opportunistic efforts by those who lust for power over the rest of us, to seize rewards that will be realised within their own lifetimes. The Chaos is not typically planned in that sense, but a natural outcome of the control systems suppression of events/markets/risk that then result in a massive, and catastrophic reversion to the mean. When chaos erupts, tyrants have been know to lose their heads, and other bodily appendages as people backlash against them.
Sometimes – the chaos is planned, but then it is a direct attempt by another faction of power seekers who have a goal of destroying and then replacing a given social order. This sort of action is a chancy business as Chaos is a fickle mistress that can consume those who invoke her.
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This may be a stupid question:
Why is it stupid for the Zimbabwe government to print money to top up their coffers but incredibly wise for Western governments to do ‘quantitive easing’ (print money to top up their coffers).
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Answer: Perspective.
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For a hefty dose of common sense, econmomic responsibility and decency as opposed to the current climate of Government corruption, mismanagement, wastefulness, uncertainty and spin, see a transcript of the just-completed National Press Club address by mining magnate Twiggy Forrest.
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KeithH,
Glad you posted that. He gave Swan a mighty caning. The transcript of his answers to questions would definitely be appreciated here.
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Some might say that the Bankster crime families are using their media monopolies to spread rumours of an imminent crash of both the U.S. Dollar and the international stock markets. Recently, they have circulated ‘Global stock and credit market warnings’ through their media monopolies and guess which media would be at the head of this news? (Tweet, tweet.)
All it takes to trigger a major stock market sell-off is publishing a fear-news story. Once the world’s stock and credit markets have crashed, the price of an ounce of gold will be in the thousands. This will enable the Rothschild’s and other large gold holdings owners to buy up the world markets for a fraction of their true value. Some might say
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The dollar inflation is just another example of what happens when you rely on a closed-door consensus of political appointees instead of looking at the predictable result of applying an unsustainable idea at scale.
That’s a quote from the last link, which is recommended.
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So what advice do you all have for persons who have their small (very small) fortune with the banks?
buy real gold?
withdraw cash and keep it under the bed?
keep the gold under the bed?
What to do!
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The answer is a combination of all of the above.
You need a bit of cash. Except for dire circumstances (total currency collapse) cash is going to be accepted. But don’t keep your entire wealth in cash – it’s too risky. Inflation is like reverse interest on your holdings, and a bout of hyperinflation will chew away 50% of your cash in no time flat.
Gold is a store of value. Some physical gold and silver is money that cannot be taken away from you by accounting shenanigans. Although the governments can (and sometimes do) decide to confiscate all private gold. So it’s best to ‘lose’ it somehow.
Real assets are another store of value. Think quality real estate, agricultural land, productive equipment. These can be used to produce income, regardless of what number of zeroes can be added to the end. Of course, governments can and do confiscate these as well, if the whim takes them. You need to know which ones to buy and which ones are just trumped-up crap investments designed to be sold to people who don’t know any better. Hint: most residential properties fall into the latter.
You can also have rare collectibles. A rare Ferrari or artwork outperforms just about any financial vehicle you care to mention in the last 50 years. But you have to have either good advice or good knowledge to do well, and sometimes the price of entry is a bit steep.
I am serious when I say this, but if you know anyone from Zimbabwe (some still call it Rhodesia) it’s worth a quiet chat about how and why they left. Zimbabwe is the most modern example of what happens when a mad socialist gets control of the country. There are a lot of people living in Australia who escaped that, and lots of them lost just about everything when they had to leave.
Finally, invest in yourself. Quality financial knowledge and education. And keep an eye on where in the world you could get to if things turned bad. Know how to liquidate and move. Understand what is happening, and how to detect BS when you hear it.
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Hmmmmm.
What should we be more worried about?
1. 0.00 Degrees of global warming since 2002 (5 year running average of BOM Data)
Year Temp 5yr AVG
2002 0.46 0.40
2003 0.47 0.39
2004 0.45 0.41
2005 0.48 0.45
2006 0.43 0.46
2007 0.4 0.45
2008 0.33 0.42
2009 0.44 0.42
2010 0.47 0.41
2011 0.34 0.40
2. ONE HUNRDED TRILLION DOLLARS OF BANK “BORROWING”.
This is what ONE Trillion Dollars Looks like.
http://www.pagetutor.com/trillion/index.html
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another industry that is being destroyed by the GFC plus the invasive security measures at airports:
1 May: UK Daily Mail: U.S. launches first-ever marketing campaign to halt falling numbers of tourists
The USA has launched its first-ever marketing campaign to lure more foreign visitors from Japan, Canada and the United Kingdom…
The print, web and video ads released on Tuesday were created by Brand USA, a partnership of government agencies and private companies…
While tourism has increased globally over the last decade, the U.S. slice of those travelers has fallen, due in large part to complicated visa procedures and heightened security that followed the Sept. 11 attacks…
http://www.dailymail.co.uk/news/article-2137963/US-launches-marketing-campaign-halt-falling-numbers-tourists.html
today the Govt has announced they will be contribute tens of billions of TAXPAYERS’ money towards the following:
1 May: ABC: Tourism industry looks to reinvent itself
TICKY FULLERTON, PRESENTER: Sun, sand and surf: it’s long been the promise to overseas tourists. But visitors are staying away in droves as economic woes trouble traditional markets and the high dollar is making it tough for operators to persuade value-seeking Australians to holiday at home. The industry admits there’s an urgent need for fresh infrastructure investment to maintain Australia’s place as one of the world’s most sought-after destinations…
REBECCA NASH, REPORTER: There’s nothing particularly idyllic about the latest figures on Australia’s tourism. Overseas visitor spending hit its lowest monthly figure in four years, while at the same time Australian tourists spent a record amount offshore…
http://www.abc.net.au/news/2012-05-01/tourism-industry-looks-to-reinvent-itself/3981626?section=business
i gather we already have some kind of pat-downs at the airports, yet we know these are about to be rolled out. just great.
24 April: Australian: Annabel Hepworth: Sweaty armpits could trigger airport scanners
FULL-BODY scanners being introduced at Australia’s eight international airports could be triggered by sweaty armpits and a passenger’s posture, a counter-terrorism unit has warned…
The scanners are expected to be rolled out by July at Australia’s eight international airports…
Airport operators are pushing for greater funding for the scanners. While the government has promised $6.7 million to cover the full cost of buying the scanners, the Australian Airport Association says there could be other implementation costs.
http://www.theaustralian.com.au/news/nation/sweaty-armpits-could-trigger-airport-scanners/story-e6frg6nf-1226336628883
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oops. the billions i read about today is not all taxpayers’ money, it seems:
2 May: Herald Sun: Kellee Nolan: Australia seeks overseas tourism investment
Tourism Australia, Austrade and the federal government have teamed up to attract domestic and foreign investors, hoping to finance tourism developments around the country…
Investment projects listed include a five star hotel on the Perth waterfront, redevelopment of Melbourne’s Hotel Windsor, expansion of a nature retreat on South Australia’s Kangaroo Island, a 50-storey Gold Coast hotel, an eco-safari tent camp at Queensland’s Airlie Beach, accommodation on Aboriginal land in the Northern Territory, the $6 billion Barangaroo development on Sydney harbour and a wilderness lodge at Tasmania’s Lake St Clair.
The project has also produced a Tourism Investment Monitor, outlining tourism data to potential investors.
It says there is currently $42 billion currently committed or being considered for Australian tourism projects, but that to achieve the goal of earning $140 billion a year, more investment is needed in accommodation, transport and leisure attractions and experiences.
Tourism Minister Martin Ferguson said Australia hoped to make the most of the Asian boom by opening its tourism industry to both investors and visitors…
http://www.heraldsun.com.au/news/breaking-news/australia-seeks-overseas-tourism-investment/story-e6frf7jx-1226344982464
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Anyone who has visited the Gold Coast recently knows the last thing they need is another empty hotel.
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So what is the problem?
We need food, clothing, shelter, and we like to be entertained etc. Right now, we work providing stuff for other people, and they work providing stuff for us. Is this only sustainable because of government debt? Are somehow the goods and services we consume not real? Or if governments stop borrowing money, will these goods and services go away.
It always seems to me that democracy is not well suited to balancing budgets, because governments always want to buy your vote by spending more or reducing taxes. If we come to another boom, can we please tax it properly!
Germany had the hyper inflation of the 20s. They came out of that ok (admittedly with some rather dodgy leadership). If the monetary system is not working for us, maybe we need to change it?
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Your ignorance is astounding.
The German hyperinflation destroyed the average middle class person while leaving the titans of industry with the lot. It laid the groundwork for high unemployment and sowed the seeds of nationalism, from which national socialism grew. It directly led to the start of the second world war, which resulted in the deaths of 10s of millions of people.
The Germans, nay, the world, did categorically not come out of the German hyperinflation OK.
Again, you think monetary systems are a top-down design, which goes with your central-planning mindset, which is where you go wrong in all your thinking.
Trust me, if we had a bout of hyperinflation, you’d be one of the first to feel the pain. And you’d be the first to vote for an extreme leftwing candidate like Hitler if he promised to solve your pain and make someone pay for it.
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Thanks brc, always nice to have something explained. So how do we fix things so that the middle class don’t get ruined?
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JB – The number one way to protect the middle class is to constrain the Government.
This must be done with a constitution that articulates the soverign powers and hence takes those powers out of the hands of beaurecrats and politicians. By leaving soverign power with the government – you simply create a honeypot for power hungry psychopaths to fight over.
The soverign powers are the power to raise armies and fight wars, the power to define and collect taxes, the power to define the law and the power to define the currency.
These powers need to be explicitly articulated in the constitution. For example, define tax as a GST on everything at 20%. There are no other taxes, and therefore government (Federal & State) can’t exceed 20% of the economy. Explicity disallow the government from borrowing money, this again provides and effective constraint on government power as all government departments would have to live within yearly defined budgets. Allow the government to save money to allow for rainy day emergencies, etc…
The constitution is the document that allows the will of the people to be articulated.
You get the drift. No Government honeypot, no corruption, no capacity for tyranny, a clearly defined currency and the middle class can get on with the process of living and creating a society worth living in.
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That’s very simple John: take governments and bureaucratic planners out of the economic equation as much as possible (small Govt = no favoured interests) and leave it to the free market (= the free society) because only the free market is capable of economic calculation via price signalling. Why do panned economies awlays fail? Because they are incapable of economic calculation: meddling and interference (whether well intended or not) always leads to distortion that eventually results in severe busts because the crucial price signals and other market feedbacks have been distorted and deflected.
Society has been brainwashed by the central planners (the socialist elite) to believe that free market capitalism is responsible for the problems that they themsleves conjoured!
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Agreed, but also ridding ourselves of the welfare programs except in few cases. People are so selfish. They want to buy the fancy home that they can’t afford and then today they are in the paper complaining that Governments have stopped giving them handouts for that home loan. They want a large handout when their kids are starting school yet they don’t want to make sacrifices themselves. Then the Government gives massive handouts to people that don’t need them, starts shonky pink batts programs and gives massive handouts to fund school halls programs that gave money to schools that don’t really need a new school hall but either need it for other facilities or don’t need the money at all.
People need to learn to take care of themselves and to not rely on handouts from the Government. Governments need to stop throwing money at unnecessary programs. Unfortunately, Governments (especially conservative governments) get thrown out of office because they make hard choices about econmical decision for their state or country even though they could spend (through borrowing) more money on programs and projects which gain votes.
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Why do we discover the truth of our “capitalist” system by watching Russia Today?
Max, Stacy, and guests explain the headlines and the system in 26 minutes.
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Looks like another ‘Hockey Schtick’
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Keynes, The Economic Consequences of the Peace, chapter VI:
So has this been the intentional conspiracy that’s been floated about for a century, of ultimate control (they would be required in a post-technocratic governance)? Or, are they doing this because they genuinely believe they can manage currencies via targeted inflation, as if that would be a stablilized system? My impression is that financiers want to control as much as possible of their system, thru constant inflation as it directly correlates to monetary gain, hence profit. They are the investor class; they want a ROI. What better way than the above?
So to those worried about “the poor” and on “the left”, should ask yourselves why do you support the persons harming “the poor” thru debasement of what would be low savings, if any, and increased prices across the board.
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Keynes was bloody good.
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When the crack-up boom destroys the function of money and the economy above the level of barter, you can just imagine how worried the people are going to be about their carbon footprint in 500 years time.
The sheer criminality of government’s monopoly control of the money supply just defies belief.
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They can get away from this problem if you at the same time take away ordinary peoples buying power?
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Soooo what this really is,Is a Western economic point of no return towards a socilistic plan society?
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Capitalists really think they will benefit from a non-marked policy?
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An excellent video on Europe http://www.zerohedge.com/news/hugh-hendry-europe-you-cant-make-how-bad-it runs for just over an hour – but hits many points that are relevant to this discussion.
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They can issue all the money they want, but if no one is spending it doesn’t cause inflation. This is called “pushing on a string”. The inflation will come when Obama gets kicked out and people start spending/investing again.
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The other side of this story is the velocity of circulation. The total amount of money in circulation is MxV: the money supply M times the velocity V, which measures how many times the same dollar gets transacted in the economy. While the money supply has soared since 2008, velocity has collapsed:
Source: http://research.stlouisfed.org/fred2/series/M2V
US money velocity is now the lowest ever recorded. It has been falling pretty much all through the supposed recovery. Declining velocity represents shrinking of the overall credit system and contraction of real activity. The growth of M2 money has been undertaken to offset this and keep the economy inflated.
If growth returns to the US economy, and V begins to increase, then the risk of rapid price inflation will appear. So far there has been no inflation because there is no growth and V continues to fall.
If inflation begins to form, ordinarily the Fed would reverse the growth of the money supply by selling assets and withdrawing money from circulation. Trouble is, as a result of the 2008 financial crisis its balance sheet got loaded up with Mortgage Backed Securities, bought at par value from troubled banks but worth only a fraction of what they paid. So the Fed will not have enough assets to sell to take all that extra money out of circulation. The alternative will be to raise interest paid on excess reserves to get banks to hold money on deposit at the Fed, but that would stifle investment in the broader economy by raising borrowing rates.
So I expect there will be no inflation as long as there is no US growth. Once the US begins to grow, and velocity picks up, inflation will arise and will be very difficult for the Fed to get under control.
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