COMMENT: Is American finally waking up? EVERYTHING this kid said is correct. EVERY GODD@MN WORD. Yet Most Americans have been asleep for too long and allowed the systematic destruction of their country to continue – while they watched Monday Night Football, or American Idol. The time is up. The complete and utter destruction of our Nation is at hand. And the politicians and bankers conspired in backrooms to make it happen. The question is now, what are WE going to do about it?
“With all the mess going on at the moment, I thought it was worth while stepping back a little and trying to look at the bigger picture.” So begins Andy Lees’ latest must read letter to clients whch explains succinctly virtually the entire story of where we were, how we got to where are now, how the current trajectory is unsustainable, why due to decades of capital misallocation anything that the Fed does now is essentially irrelevant, why our untenable debt pile does nothing but perpetuate an unsustainable ponzi scheme which will result in an unseen explosion in the true cost of capital: gold, and why the bond market will eventually, and inevitably, force an epic repricing in the cost of non-gold capital absent the arrival of the deux ex machina of real, actionable innovation that the Fed, and all global central planners, keep hoping for. Because the longer we keep plugging away with that worthless substitute, financial innovation, which is anything but, the greater the final collapse. Andy’s conclusion: “Until the debt is cleared and capital starts to be properly allocated, economic growth per unit of additional debt will continue to sour. Until we get some real breakthrough technology, requiring large amounts of capital to both innovate and then roll out, we have no chance of supporting the economy.” Too bad than that this absolutely spot on observation reflect precisely the opposite of what the Fed is pursuing.
Why are we here: simple – years of central planning resulting in the greatest experiment in capital misallocation in history.
We are in this mess because of excessive leverage and excessive consumption, financed by excessively cheap real capital – (not just Bernanke & Greenspan but further back to the end of the gold standard, and in fact even before that as it was this misallocation of capital that forced us off the gold standard in the first place). If capital had been allocated productively, then by definition debt would fall as a percentage of GDP. Total debt may rise, but efficient allocation of capital would always mean the economy would grow faster than the debt as it means you are making a positive rather than negative real return on that capital.
Whichever way you look at it, capital has been massively misallocated for years.
Corporate profits… or massive debt-funded ponzi scheme?
How can that be when corporates report massive profits? The profits are based on paying their workers a salary that meant they could only buy the goods they made by borrowing; in other words, a massive unsustainable ponzi scheme that could only ever end up with default. Without the household debt accumulation, there would be no market to sell their products to, and without paying the workers sufficient, the debt would always have to default.
This required a massive increase in financial innovation to keep the illusion of corporate profitability alive – (household debt was a way of delaying putting the true costs through the corporate P&L account and recognising the costs). Financial sector innovation is itself another form of capital misallocation, taxing people away from real innovation – (to keep the illusion alive, an ever greater percentage of economic output had to be allocated to this illusion machine) – helping add to the resource constraint we are in today.
If financial innovation, which we have so much of is not needed, what is the right kind? And why is it so sorely missing.
(AB note: The World Global Settlement Funds, referenced on this page, should not be confused with the SG World Trust. The World Global Settlement Funds have in excess of $47 trillion to disburse to 140 nations across the globe. This due and lawful disbursement has been blocked by the Washington DC private corporationfor more than three decades. The SG World Trust is much bigger, and older, than The World Global Settlement Funds.)
On the evening of Thursday 28th July 2011, Barack Obama, the President of the United States, informed the World Court at The Hague that as long as he was President, he would not sign off on the World Global Settlement Funds. More background here (28.07.11).
Obama’s refusal to lawfully execute his responsibilities in this specific followed upon the wide circulation of a letter dated 7th July 2011, from Lindell Bonney to Dana Wilcox (full text here). The financial data set out in this letter showed that the US income taxes expected to be paid to the US Treasury from just four of the World Global Settlement Fund-related recipient-paymasters would amount to a sum in excess of $11 trillion. This would be sufficient to pay off most of the US national deficit and would pump-prime the US Dollar Refunding Program.
This executive refusal to sign further delayed the due and lawful disbursement of The World Global Settlement Funds ($47 trillion), the implementation of the US Dollar Refunding Project ($10 trillion), the long-agreed global debt jubilee (universal debt forgiveness), and the introduction of the new precious metals-backed international currencies.
The text linked above is a letter dated the 17th June 2011 from Pasadena Attorney Al Clifton Hodges to the Chinese government through the Chinese Ambassador to the United States,
The direct Chinese involvement in the internal finances of the US dates from 2009 when a $47 trillion Lien against the US Treasury and the US Federal Reserve Board was taken out by élite monetary interests in the UK and China. More here(18.06.11).—>
Stocks plunge as worries about global growth cause traders to dump stocks and seek safety. Gold briefly tops $1,680 but falls back. Treasury yields fall as the dollar rises.
Stocks plunged, with the Dow Jones Industrial Average ($INDU -4.31%) tumbling 513 points, their worst one-day loss since December 2008 and ninth-worst point loss, as investors worried that the U.S. economy may be slipping back into a recession. The overall market carnage wiped out all of the 2011 gains for the major averages.
The market rout was prompted in part by concerns that the Federal Reserve won’t try to boost the economy again and the prospects of little — if any — help on the way from the federal government. A huge concern was what Friday’s big jobs report will say. In addition, there were deep fears about the health of the European financial system; stocks on the continent fell sharply. Stocks in Brazil were down nearly 6%.
With today’s losses, the market is now in a correction, with the Dow,Standard & Poor’s 500 Index ($INX -4.78%) and the Nasdaq Composite Index ($COMPX -5.08%) all down more than 11% from the closing highs for 2011, reached on April 29. Nearly all of the declines for the indexes have come since July 21; the Dow’s loss in that time is about 1,340 points.
Gold briefly surged above $1,680 an ounce for the first time and then sold off, and crude oil dropped below $88 a barrel for the first time since mid-February.
The Dow closed down 513 points, or 4.3%, to 11,384. The S&P 500 was off 60 points, or 4.8%, to 1,200, its lowest level since Nov. 30, 2010. The Nasdaq was off 137 points, or 5.1%, to 2,556, its lowest level since Dec. 1, 2010. TheNasdaq 100 Index ($NDX -4.57%) was down 106 points, or 4.6%, to 2,207.
A picture from the gold vault of the Federal Reserve Bank of New York (Photo credit: Wikipedia)
Chart 1
Federal Reserve Directors: A Study of Corporate and Banking Influence
Published 1976
Chart 1 reveals the linear connection between the Rothschilds and the Bank of England, and the London banking houses which ultimately control the Federal Reserve Banks through their stockholdings of bank stock and their subsidiary firms in New York. The two principal Rothschild representatives in New York, J. P. Morgan Co., and Kuhn,Loeb & Co. were the firms which set up the Jekyll Island Conference at which the Federal Reserve Act was drafted, who directed the subsequent successful campaign to have the plan enacted into law by Congress, and who purchased the controlling amounts of stock in the Federal Reserve Bank of New York in 1914. These firms had their principal officers appointed to the Federal Reserve Board of Governors and the Federal Advisory Council in 1914. In 1914 a few families (blood or business related) owning controlling stock in existing banks (such as in New York City) caused those banks to purchase controlling shares in the Federal Reserve regional banks. Examination of the charts and text in the House Banking Committee Staff Report of August, 1976 and the current stockholders list of the 12 regional Federal Reserve Banks show this same family control.
The majority of today’s daily is devoted to Ranting Andy in the LeMetropole Café section. Don’t miss it. I have a few rants of my own, below.
Yesterday, Cactus Jack sent me an email. It was titled“Never sell America Short. God Bless America.” He sent me the link to a parade, recently held in Grand Rapids, MI where the town’s people came out in number singing and dancing in the streets to the song “American Pie.” The outing was a rebuttal to an article that implied the city of Grand Rapids was dying. Here is the link, if you are interested:
It was all very uplifting and amusing, but very, very naive.
Jack is a heck of a guy – he is a real optimist and a real American. He has lived his entire life, all 75 years of it, in affluence. He grew up with money, he made big money and his friends and family all live the high life. I can’t really fault him for seeing the bright side when that is all he has ever known.
I really want Jack to be right. I too love this great country. But a small group of very greedy and powerful men and women who populate Wall Street and Washington DC have set us all up for one massive failure. It is unfair to lay all of the blame on the bankers, brokers and politicians for without the indirect help of the masses, this could never have happened. The past several generations of Americans have allowed the American Dream to fade. I fear we have become a nation of under-educated, over-fed, lazy uninvolved people. Not everyone, but enough of the population to allow the current state of affairs to have happened.
Too many Americans refuse to get off their fat behinds and turn off Oprah or Judge Judy or Dancing With The Stars. Too many Americans honestly believe we can change things – all we have to do is vote for Obama. Or all we have to do is not vote for Obama. I’ve got news for you – Democrats or Republicans, Liberals or Conservatives, none of them have the answers anymore. All they care about is to spend enough of our tax dollars to stay in office, or get elected. We will get what we deserve. Those of us who do care, and even write about it, are greatly outnumbered by the masses that are addicted to their next welfare check, their super-sized McDonalds and their next trip to Wal-Mart.
June 18 2011: Pensions borrowed (plundered) from heavily, nobody wants QE3, debt used to wage war, Fed Chair Bernanke acts like an elitist, a short term debt limit to deal with, a Greek default could bring the Euro down, a disease of debt, IMF pessimistic.
As far as we can discern the US Treasury thus far has spent and borrowed about $100 billion from the federal pension accounts. Unless there is a vote on the cash debt extension prior to August 2nd, government will probably have borrowed some $250 billion to $300 billion. The Treasury is paying virtually no interest on this debt. Three-month Treasury bills are currently yielding zero percent. Our question is how will the funds be generated to fulfill the Treasury’s obligation to the pension fund? What happens if on August 2nd if legislation is not passed? Does this go on forever? We will keep you apprised on new developments.
The current situation regarding the state of recovery in the US has turned from precarious to dismal and as we predicted a year ago May we will have to be treated to QE3 something no one really wants, but as we said before it is inevitable. The Fed and their controllers, the member bank owners of the Fed, know the present approach doesn’t work and it is only a matter of time, as a result of their policies, when more stimulus will be needed, which in turn leads to more inflation.
On a secluded estate in England, a small group from the elite UK think-tank, The Royal Society, are openly discussing control over the planet’s weather. The Orwellian nature of the discussion is stunning, as this select group seemingly wrings their hands over how to delegate the proper authority to research such godlike power. They begin by asking a rhetorical question, “Who decides?”
In a candid AP story, the entire agenda is laid bare as we are treated to a session that is “generally off the record.” This is the grand rollout to be sure: from research to implementation, they announce much of what is already provably in the works, as well as the road toward a future of unthinkable control by an inner circle of ideologues with the task to “save the planet.”
History is full of these great “experts” who have taken on the burden of saving the rest of us. Elites throughout the ages have insisted that the common man or woman is simply not up to the task . . . if left to our own devices, we might just destroy the place. So, let’s first recap how these elite thinkers have done so far based on the key indicators of human prosperity.
The American banking system is based on pure faith. Usually when the topic comes up in conversation I will ask someone if they know what backs the green cash in their wallet. One of the common responses is “there is gold in Fort Knox” or another typical response is that it is backed by U.S. assets. Unfortunately both of these answers are incorrect. In fact all of our money deposited in the banking system is backed by the pure faith in our U.S. government. Now for decades this implicit belief was fine because we actually were a creditor and exporter nation. We also had a higher savings rate. Today we have a system where we continually spend more than we produce and expect this dynamic to somehow function long term as if we found an endless well of Kool-Aid. The Federal Deposit Insurance Corporation (FDIC) insures each individual account up to $250,000. Given that one in three Americans has zero dollars to their name and most others have a sum nowhere close to this amount, many go forward with an unstated faith in the system. However the FDIC Deposit Insurance Fund is largely running on fumes. This shouldn’t be such a big issue aside from the fact that the American banking system has over $7 trillion in deposits.
Chris Martenson: Welcome to another ChrisMartenson.com podcast. I am your host, Chris Martenson, and today we have the pleasure of speaking with Addison Wiggin, executive publisher of Agora Financial, LLC, the independent economic forecasting and financial research firm he runs with Bill Bonner. Agora’s wide-ranging operations include the influential econoblog, The Daily Reckoning, bestselling publications such as Financial Reckoning DayFallout, and The New Empire of Debt both of which Addison coauthored with Bill.
These books were quite influential on me and my thinking which is why you can find both of them in the Essential Books page of my website. Addison was executive producer and co-writer of the highly acclaimed documentary I.O.U.S.A, and if you haven’t seen it, you should. It’s just fantastic. So I owe a personal debt of gratitude here to Addison as well for penning the excellent forward to my new book, The Crash Course: The Unsustainable Future of our Economy, Energy, and the Environment. Addison, you’re a man of many talents. I’m delighted to have you here today.
Addison Wiggin: Well thanks for having me, Chris. I’m happy to be here.
Chris Martenson: Oh, it’s just excellent to have you. So for many years now you’ve been prolific in your efforts to wake up the investing public to the risks that lie ahead. Your books,The Demise of the Dollar, Empire of Debt, Financial Reckoning Day, your movie, I.O.U.S.A. which I just mentioned, all predicted a future that is increasingly now unfolding before our eyes. I’m wondering if you’re experiencing some emotional conflict here like I am. Your predictions have become soundly validated yet that means the dire outcome you feared is arriving. What’s it like for you to be at this time in history?
Addison Wiggin: Well it is kind of an interesting time because we had gotten used to, for well over a decade, being mocked by people in the mainstream press and even people in my own family were skeptical of the approach that we were taking to the market which by and large looked at a mounting pile of debt at all levels of society, not just the big fiscal problem in Washington. As we state in I.O.U.S.A, many Americans have been following the bad example set by their federal government, and they had been spending more than they take in and making up the difference on credit.
And it had become a way of life. One way of saying it is that “saving” used to mean that you would put away some money for a rainy day. But in our consumer culture it had become not how much you saved to invest and engage in some kind of productive capacity, but how much less you were going to spend on something that you were going to buy anyway. And that entire mentality permeated our culture, really starting in the ‘80s but getting worse and worse until there’s a whole generation of Americans today that don’t understand the very nature of capitalism: the savings and investment that led to the United States being one of the more prosperous countries the world has ever known.
And a lot of the work that we’ve put into the books and certainly The Daily Reckoning, which is a look at the markets and what’s happening in politics on a daily basis, we trace the influence of that mindset and what the likely outcome is. And when we were looking back even right at the end of the tech wreck, 2001-2002, the federal and fiscal response to a collapsing stock market just looked like it was going to kick the can down the road a little bit and create even more problems. But we foresaw and forecasted many of the things that became big problems in the early 2000s.
