Tuesday, October 7, 2008

Knock, Knock

Remember the old, silly schoolboy joke? (I'm showing my age here...)

"Knock, knock"
"Who's there?"
"Banana who?"

Replace "banana" with "deflation" these days and the joke is not so silly any more. Prices for a variety of assets and commodities are plunging almost uncontrollably now, raising the very real prospect that we are in for a long, drawn-out period of deflation. Just look at real estate, stocks, crude oil, industrial metals, agri commodities... everything is well off the highs reached a few months ago.

There is a plethora of charts around, but I find the one below particularly illuminating. It shows that shipping rates for dry bulk cargo (e.g. coal, sugar, salt, iron ore, fertilizer, etc) have collapsed by almost 50% in the last few months. Shipping is a very competitive, free-wheeling global business with minimal regulation, so what happens there is a good indicator of actual conditions in the "real" economy.

Dry Bulk Shipping Rates (Chart: Dryships)

Obviously, then, things are rather serious in the "real" economy. In a nutshell, the current crisis is destroying debt (a.k.a. money), which is perforce lowering all prices. The silliness of policymakers the world over is that they keep acting to artificially prop up asset prices, via replacing private with public debt. That's a remedy straight out of 1930's Keynesian economics, but it won't work because it can't work. There's simply way too much debt out there, compared with current earned income.

What to do? It's quite simple, really: let the debt fail and thus free the vast majority of the people from a big portion of their onerous obligations. It's going to come to that sooner or later, so better make it sooner and get it over and done with. Oh, and keep in mind the social pyramid of debt: comparatively few people are going to get hurt when debt fails. - the very wealthy. The wealth disparity has never been greater in the West, at least in modern times..

Yes, I know this is exactly opposite what Dr. Bernanke, the supposed expert on the Great Depression, advocates. But he and Secretary Paulson are dead wrong. Like all failed generals, they have prepared for and are fighting the last war, instead of the current one.


  1. It is all playing out the way Galbraith said it would in "the Great Crash".


    we have a weak dollar. How is this going to be reconciled? Will the dollar get stronger (is has over the past few days) or will we have deflation with a weak dollar?

    Will that be called inflated deflation?

  2. Dude. What has happened in the last few months. Oil has dropped $50 to the low 90s. To ship stuff you need fuel. Fuel prices have dropped. Price of shipping will drop.

  3. The level of debt repudiation you're talking about will lead to trade embargoes and asset seizures overseas. There is no way to simply let slide $6-8T of foreign debt without repercussions especially from the "richest" nation on earth; we're not talking about debt forgiveness for Haiti. The fact that massive state sanctioned fraud (SEC, OCC, S&P, etc.) was perpetrated on the rest of the world will not grease the skids of geniality.

  4. Re: shipping and fuel.

    Bunkers are not typically included in T/C rates. So...

  5. Here's how it all ties in in my opinion:
    1) The Federal government in the US is owned by multinational corporations.
    2) The US has exported the manufacturing base because it boosts corporate profits.
    3) Therefore the emphasis is on inflating asset prices since the economy has been made to depend greatly on paper assets/investments instead of real manufacturing.
    4) In turn rising asset prices induce foreign investment which in turns finances the huge deficits which this entire policy has created.

    And that is how it all used to go around full circle. Until now, when keeping asset prices inflated is no longer possible. Therefore the US is in much more trouble than ever since not enough manufacturing takes place to sustain an economy of the artificial size that had been created based on paper assets. So the economy has a lot of potential to shrink and reflect it's true size going forward I'm afraid.

  6. Hel, Do you know of , would you recommend the book "Creature from Jekyll Island"?

  7. I'm trying to understand the deflation / inflation argument.

    It seems like most non-mainstream writers are saying there will be hyper inflation.

    You and Mish seem to be the few saying the story will be deflation, e.g.:

    He says hyperinflation comes much later. If so, when?

    Most people are saying that the Fed will have to "monetize" the debt, which, I assume means "running the printing presses" and which is supposed to be inflationary.

    I also understand that if the dollar collapses in relation to other currencies absolutely EVERYTHING will go up in price. How does that phenomenon, assuming I understand it, interact with falling domestic labor demand and falling housing prices. (Mish says there has NEVER been inflation when there are falling housing prices. Could things be "different this time"?)

    Anyway, if anyone can explain some of this or point me to some good links, I would appreciate it.

  8. Here's the Mike Shedlock link again:

    Mish: What happens now?

  9. Anonymous,

    A word of caution, market timing plays are tough to win. Especially for an individual.

    A couple of things are going on simultaneously.

    1. Housing Bust
    2. Global Credit Crunch
    3. Global Equity Bust

    It's clear now that there is quite a bit of leverage-related trouble in the G7 economies. So the bad behavior that got the Finance/banking world into so much trouble isn't contained to the U.S.

    It's my guess that all three form a perfect storm that will take years to work out across the globe. How this applies to your question is that there is quite a bit of time before the scale and scope of monetizing can be estimated.

    These are separate issues from how the Fed and Treasury have screwed us all for the forseeable future. The unintended consequences of their actions haven't yet started to appear in the media, but continue to accelerate the credit/banking issues.

  10. Here's a story about the history of the shadow banking system and McCain's present-day connections to it.


  11. A dollar strengthening against the Euro makes sense only from the perspective that Europe seems to be more vulnerable since they dont have a central bank that can bail them out.

    After that what grounds would one have to argue that America is better prepared to handle an economic crisis AND a forthcoming energy crisis than is Europe?
    There is none because Europe knows how to live small and we just dont

    My prediction: the dollar will gain strenghth for the near future as Europe decides who will pony up and who wont. This will lead to infighthing which will lead to European countries going back to their own currencies at which time currency like the German Mark will end up the strongest.

    Germany may be bruised by the credit crisis but they are in a good position to lead the world in renewable energy

  12. Silly question I know, but: what exactly would happen if all debt...everywhere, were wiped out? A reset for everyone. Who would benefit? Who would suffer?
    Please allow your imagination a second to consider this. I'd be interested in any responses.

  13. This comment has been removed by the author.

  14. The crises actually will make Europe more cohesive and stronger.

    The only country that could separate from Euro is the strongest country, which is Germany. If any other would try to separate, it would cause its currency devalue in massive way. At the same time all the old loans would remain in Euros. Instantly causing their cost to multiply. And who would and at what levels lend any money to such a country. Sorry, not will happen.

    At the moment USD is benefiting from Europe's troubles and its current position as the world reserve currency. All temporary.

    Europe has public transportation, people are savers and if there is an asset bubble, it is much smaller one.

    And European politicians are much more pragmatic than their American colleagues. Much more able to do the painful decisions. (Just look at the Palin creature; only in America they elect leaders that are dumber than the electorate. She is dumber? She has to be.)

    USD will be toast yet. Everything just happens in slow motion.

    And don't mention Britain, they sail with US and sink along. Britain is not in Euro.

  15. Hell, Okie once brought up Starve the beast in another posting of yours many months ago (I forgot which one).

    While I definitely do not see a conspiracy, I do wonder if all this debt will have the effect of just this? California seems unable to make tough choices and it has an erie history of leading the rest of the U.S. by a few years

    Remember, we still have that unfunded $55 trillion Medicare liability.

    Goldie- I am not sure I agree with you (really depends on which country you are taking about). You may be able to 'make do' on less than us, but you are going to have to make do with less of an even smaller pie than before.

  16. anonymous

    People's liabilities are someone else's assets, frequently yours.

    1. Dollars go to zero.
    a. You have no credit card debt.
    b. You have no credit card.
    c. You have no mortgage.
    d. You have no house buyers.
    e. You have no college loan.
    f. You have no college endowment.
    g. etc.

    2. How to reestablish a financial system?
    a. The government prints up 1000 dollars in physical cash for everybody and your national ID card has credit card functions for another 1000 dollars.
    b. The government (using the nationalized banks) restores the working capital of all the (nationalized) companies. Business resumes their old relationships with distributors, etc.

    3. Government pensions?
    After the Second World War the German and Japanese governments had low taxes to stimulate people saving for the needed investment in repairs and reconstruction.
    They also had to be able to pay pensions for disabled, elderly, handicapped, orphans, etc.
    They just put a mortgage on every piece of real estate and structure in Germany and Japan. Germany took fifty percent. Japan went with ten percent of small pieces of land and ninety percent of large pieces of land. Japan's process worked slightly better.

    In sum, it looks like you get 90% of your social security pension invested in new dollar mortgages, and the other invested in spun off nationalized companies. Retirees will use their leisure time to vote their share proxies to run the companies that they got their ten percent of their pension invested in. They might sell or buy these shares from each other, but they can't cash out that portion of their pension fund.
    I figure they will be more interested in Dow Jones companies with dividends then 'growth', so the younger people will be using their smaller pension fund share portfolio to invest in more speculative or growing companies like the NASDAQ.

  17. Thanks for all your answers - I'm still reading and absorbing it all.

    @1:14 - I certainly appreciate the risks of market timing. However, I happen to be the de facto investment adviser for retiring parents, so a lot rests on this question, especially if we really are at risk of hyper inflation.

    @4:52 - That is an excellent question. I think in aggregate, the entire world would explode in a renaissance of productivity and creativity. I personally would suffer since I am owed a large chunk of money. Retired people who hold bonds would suffer since they are in a cash-preservation mode and probably invested in bond funds. There are a lot of facets to this scenario. Maybe you are suggesting that the tyranny of the bankers would be lifted. But the entire economy runs on credit now. What has struck me observing this entire crisis unfold is that all of the goods and services we come in to contact with daily could conceivable still be provided. It is the invisible lubricant of "liquidity" which operates behind every day reality which is out of whack. But I can imagine the tangible world operating just fine without all the debt in the world.

  18. Amazing. The first ever global depression will go down in history horribly misunderstood. What a pathetic bunch of ignorant fools we have become. Consumer junkie credit card morons. Perfect little victims. Say that reminds me.

    Don’t believe one optimistic word from any public figure about the economy or humanity in general. They are all part of the problem. Its like a game of Monopoly. In America, the richest 1% now hold ALMOST 1/2 OF ALL UNITED STATES WEALTH. Unlike ‘lesser’ estimates, this includes all stocks, bonds, cash, offshore accounts, and material assets held by America’s richest 1%. Even that filthy pig Oprah acknowledged that it was at about 50% in 2006. Naturally, she put her own ‘humanitarian’ spin on it. Calling attention to her own ‘good will’. WHAT A DISGUSTING HYPOCRITE SLOB. THE RICHEST ONE PERCENT HAVE LITERALLY MADE WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. Don’t fall for any of their ‘humanitarian’ CRAP. ITS A SHAM. THESE PEOPLE ARE CAUSING THE SAME PROBLEMS THEY PRETEND TO CARE ABOUT. Ask any professor of economics. Money does not grow on trees. The government can’t just print up more on a whim. At any given time, there is a relative limit to the wealth within ANY economy of ANY size. So when too much wealth accumulates at the top, the middle class slip further into debt and the lower class further into poverty. A similar rule applies worldwide. The world’s richest 1% now own over 40% of ALL WORLD WEALTH. This is EVEN AFTER you account for all of this ‘good will’ ‘humanitarian’ BS from celebrities and executives. ITS A SHAM. As they get richer and richer, less wealth is left circulating beneath them. This is the single greatest underlying cause for the current US recession. The middle class can no longer afford to sustain their share of the economy. Their wealth has been gradually transfered to the richest 1%. One way or another, we suffer because of their incredible greed. We are talking about TRILLIONS of dollars which have been transfered FROM US TO THEM. All over a period of about 27 years. Thats Reaganomics for you. The wealth does not ‘trickle down’ as we were told it would. It just accumulates at the top. Shrinking the middle class and expanding the lower class. Causing a domino effect of socio-economic problems. But the rich will never stop. They just keep getting richer. Leaving even less of the pie for the other 99% of us to share. At the same time, they throw back a few tax deductible crumbs and call themselves ‘humanitarians’. Cashing in on the PR and getting even richer the following year. IT CAN’T WORK THIS WAY. Their bogus efforts to make the world a better place can not possibly succeed. Any ‘humanitarian’ progress made in one area will be lost in another. EVERY SINGLE TIME. IT ABSOLUTELY CAN NOT WORK THIS WAY. This is going to end just like a game of Monopoly. The current US recession will drag on for years and lead into the worst US depression of all time. The richest 1% will live like royalty while the rest of us fight over jobs, food, and gasoline. So don’t fall for any of this PR CRAP from Hollywood, Pro Sports, and Wall Street PIGS. ITS A SHAM. Remember: They are filthy rich EVEN AFTER their tax deductible contributions. Greedy pigs. Now, we are headed for the worst economic and cultural crisis of all time. Crime, poverty, and suicide will skyrocket. SEND A “THANK YOU” NOTE TO YOUR FAVORITE MILLIONAIRE. ITS THEIR FAULT. I’m not discounting other factors like China, sub-prime, or gas prices. But all of those factors combined still pale in comparison to that HUGE transfer of wealth to the rich. Anyway, those other factors are all related and further aggrivated because of GREED. If it weren’t for the OBSCENE distribution of wealth within our country, there never would have been such a market for sub-prime to begin with. IF IT WEREN’T FOR THE OBSCENE, UNREASONABLE, AND UNJUST DISTRIBUTION OF UNITED STATES WEALTH, THERE NEVER WOULD HAVE BEEN SUCH A MARKET FOR SUB-PRIME AND THERE NEVER WOULD HAVE BEEN A COLLAPSE IN THE HOUSING MARKET. Sub-prime did not cause the problem. It only accelerated the outcome. Which by the way, was another trick whipped up by greedy bankers and executives. IT MAKES THEM RICHER. The credit industry has been ENDORSED by people like Oprah Winfrey, Ellen DeGeneres, Dr Phil, and many other celebrities. IT MAKES THEM RICHER. In fact, they specifically endorsed Countrywide by name. The same Countrywide widely responsible for predatory adjustable rate sub-prime lending and the accelerated collapse of the housing market. ENDORSED BY OPRAH WINFREY, ELLEN DEGENERES, AND DR PHIL. Now, there are commercial ties between nearly every industry and every public figure. IT MAKES THEM RICHER. It also drives up the cost for nearly every product and service on the market. So don’t fall for their ‘good will’ BS. ITS A LIE. If you fall for it, then you’re a fool. If you see any real difference between the moral character of a celebrity, politician, attorney, or executive, then you’re a fool. No offense fellow citizens. But we have been mislead by nearly every public figure. We still are. Even now, they claim to be ‘hurting’ right along with the rest of us. As if gas prices actually effect the lifestyle of a millionaire. ITS A LIE. IN 2007, THE RICHEST 1% INCREASED THEIR AVERAGE BOTTOM LINE WEALTH AGAIN. On average, they are now worth over $4,000,000 each. Thats an all time high. As a group, they are now worth well over $17,000,000,000,000. THATS WELL OVER SEVENTEEN TRILLION DOLLARS. Another all time high. Which by the way, is much more than the entire middle and lower classes combined. Also more than enough to pay off our national debt, fund the Iraq war for a decade, repair our infrastructure, and bail out the US housing market. Still think that our biggest problem is China? Think again. Its the 1% club. That means every big name celebrity, athlete, executive, entrepreneur, developer, banker, and lottery winner. Along with many attorneys, doctors, and politicians. If they are rich, then they are part of the problem. Their incredible wealth was not ‘created’, ‘generated’, grown in their back yard, or printed up on their command. It was transfered FROM US TO THEM. Directly and indirectly. Its become near impossible to spend a dollar without making some greedy pig even richer. Don’t be fooled by the occasional loss of a millionaire’s fortune. Overall, they just keep getting richer. They absolutely will not stop. Still, they have the nerve to pretend as if they care about ordinary people. ITS A LIE. NOTHING BUT CALCULATED PR CRAP. WAKE UP PEOPLE. THEIR GOAL IS TO WIN THE GAME. The 1% club will always say or do whatever it takes to get as rich as possible. Without the slightest regard for anything or anyone but themselves. Reaganomics. Their idea. Loans from China. Their idea. NAFTA. Their idea. Outsourcing. Their idea. Sub-prime. Their idea. High energy prices. Their idea. Oil ‘futures’. Their idea. Obscene health care charges. Their idea. The commercial lobbyist. Their idea. The multi-million dollar lawsuit. Their idea. The multi-million dollar endorsement deal. Their idea. $200 cell phone bills. Their idea. $200 basketball shoes. Their idea. $30 late fees. Their idea. $30 NSF fees. Their idea. $20 DVDs. Their idea. Subliminal advertising. Their idea. Brainwash plots on TV. Their idea. Vioxx, and Celebrex. Their idea. Excessive medical testing. Their idea. The MASSIVE campaign to turn every American into a brainwashed, credit card, pharmaceutical, medical testing, love-sick, celebrity junkie. Their idea. All of the above drive up the cost of living, shrink the middle class, concentrate the world’s wealth and resources, create a dominoe effect of socio-economic problems, and wreak havok on society. All of which have been CREATED AND ENDORSED by celebrities, athletes, executives, entrepreneurs, attorneys, and politicians. IT MAKES THEM RICHER. So don’t fall for any of their ‘good will’ ‘humanitarian’ BS. ITS A SHAM. NOTHING BUT TAX DEDUCTIBLE PR CRAP. In many cases, the ‘charitable’ contribution is almost entirely offset. Not to mention the opportunity to plug their name, image, product, and ‘good will’ all at once. Which is usually done just before or after the release of their latest commercial project. IT MAKES THEM RICHER. These filthy pigs even have the nerve to throw a fit and spin up a misleading defense with regard to ‘federal tax revenue’. ITS A SHAM. THEY SCREWED UP THE EQUATION TO BEGIN WITH. If the middle and lower classes had a greater share of the pie, they could easily cover a greater share of the federal tax revenue. They are held down in many ways because of greed. Wages remain stagnant for millions because the executives, celebrities, athletes, attorneys, and entrepreneurs, are paid millions. They over-sell, over-charge, under-pay, outsource, cut jobs, and benefits to increase their bottom line. As their profits rise, so do the stock values. Which are owned primarily by the richest 5%. As more United States wealth rises to the top, the middle and lower classes inevitably suffer. This reduces the potential tax reveue drawn from those brackets. At the same time, it wreaks havok on middle and lower class communities and increases the need for financial aid. Not to mention the spike in crime because of it. There is a dominoe effect to consider. IT CAN’T WORK THIS WAY. But our leaders refuse to acknowledge this. Instead they come up with one trick after another to milk the system and screw the majority. These decisions are heavily influensed by the 1% club. Every year, billions of federal tax dollars are diverted behind the scenes back to the rich and their respective industries. Loans from China have been necessary to compensate in part, for the red ink and multi-trillion dollar transfer of wealth to the rich. At the same time, the feds have been pushing more financial burden onto the states who push them lower onto the cities. Again, the hardship is felt more by the majority and less by the 1% club. The rich prefer to live in exclusive areas or upper class communities. They get the best of everything. Reliable city services, new schools, freshly paved roads, upscale parks, ect. The middle and lower class communities get little or nothing without a local tax increase. Which, they usually can’t afford. So the red ink flows followed by service cuts and lay-offs. All because of the OBSCENE distribution of bottom line wealth in this country. Anyway, when you account for all federal, state, and local taxes, the middle class actually pay about the same rate as the rich. The devil is in the details. So when people forgive the rich for their incredible greed and then praise them for paying a greater share of the FEDERAL income taxes, its like nails on a chalk board. I can not accept any theory that our economy would suffer in any way with a more reasonable distribution of wealth. Afterall, it was more reasonable 30 years ago. Before Reaganomics came along. Before GREED became such an epidemic. Before we had an army of over-paid executives, bankers, celebrities, athletes, attorneys, doctors, investors, entrepreneurs, developers, and sold-out politicians to kiss their asses. As a nation, we were in much better shape. Strong middle class, free and clear assets, lower crime rate, more widespread prosperity, stable job market, lower deficit, ect. Our economy as a whole was much more stable and prosperous for the majority. WITHOUT LOANS FROM CHINA. Now, we have a more obscene distribution of bottom line wealth than ever before. We have a sold-out government, crumbling infrastructure, energy crisis, home forclosure epidemic, credit crunch, weak US dollar, 13 figure national deficit, and 12 figure annual shortfall. The cost of living is higher than ever before. Most people can’t even afford basic health care. ALL BECAUSE OF GREED. I really don’t blame the 2nd -5th percentiles in general. No economy could ever function without some reasonable scale of personal wealth and income. But it can’t be allowed to run wild like a mad dog. ALBERT EINSTEIN TRIED TO MAKE PEOPLE UNDERSTAND. UNBRIDLED CAPITALISM ABSOLUTELY CAN NOT WORK. TOP HEAVY ECONOMIES ALWAYS COLLAPSE. Bottom line: The richest 1% will soon tank the largest economy in the world. It will be like nothing we’ve ever seen before. The American dream will be shattered. and thats just the beginning. Greed will eventually tank every major economy in the world. Causing millions to suffer and die. Oprah, Angelina, Brad, Bono, and Bill are not part of the solution. They are part of the problem. THERE IS NO SUCH THING AS A MULTI-MILLIONAIRE HUMANITARIAN. EXTREME WEALTH MAKES WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. WITHOUT WORLD PROSPERITY, THERE WILL NEVER BE WORLD PEACE OR ANYTHING EVEN CLOSE. GREED KILLS. IT WILL BE OUR DOWNFALL. Of course, the rich will throw a fit and call me a madman. Of course, they will jump to small minded conclusions about ‘jealousy’, ‘envy’, or ’socialism’. Of course, their ignorant fans will do the same. You have to expect that. But I speak the truth. If you don’t believe me, then copy this entry and run it by any professor of economics or socio-economics. Then tell a friend. Call the local radio station. Re-post this entry or put it in your own words. Be one of the first to predict the worst economic and cultural crisis of all time and explain its cause. WE ARE IN BIG TROUBLE.

    So what can we do about it? Well, not much. Unfortunately, we are stuck on a runaway train. The problem has gone unchecked for too many years. The US/global depression is comming thanks to the 1% club. It would take a massive effort by the vast majority to prevent it. Along with a voluntary sacrifice by the rich. THATS NOT GOING TO HAPPEN. But if you believe in miracles, then spend your money as wisely as possible. Especially in middle and lower class communities. Check the Fortune 500 list and limit your support of high profit/low labor industries (Hollywood, pro sports, energy, credit, pharmaceutical, cable, satelite, internet advertising, cell phone, high fashion, jewelry, ect.). Cancel all but one credit card for emergencies only. If you need a cell phone, then do your homework and find the best deal on a local pre-pay. If you want home internet access, then use the least expensive provider, and share accounts whenever possible. If you need to search, then use the less popular search engines. They usually produce the same results anyway. Don’t click on any internet ad. If you need the product or service, then look up the phone number or address and contact that business directly. Don’t pay to see any blockbuster movie. Instead, wait a few months and rent the DVD from a local store or buy it USED. If you want to see a big name game or event, then watch it in a local bar, club, or at home on network TV. Don’t buy any high end official merchendise and don’t support the high end sponsors. If its endorsed by a big name celebrity, then don’t buy it. If you can afford a new car, then make an exception for GM, Ford, and Dodge. If they don’t increase their market share soon, then a lot more people are going to get screwed out of their pensions and/or benefits. Of course, you must know by now to avoid those big trucks and SUVs unless you truly need one for its intended purpose. Don’t be ashamed to buy a foreign car if you prefer it. Afterall, those with the most fuel efficient vehicles consume a lot less foreign oil. Which accounts for a pretty big chunk of our trade deficit. Anyway, the global economy is worth supporting to some extent. Its the obscene profit margins, trade deficits, and BS from OPEC that get us into trouble. Otherwise, the global economy would be a good thing for everyone. Just keep in mind that the big 3 are struggling and they do produce a few smaller reliable cars. Don’t frequent any high end department store or any business in a newly developed upper class community. By doing so, you make developers richer and draw support away from industrial areas and away from the middle class communities. Instead, support the local retailer and the less popular shopping centers. Especially in lower or middle class communities. If you can afford to buy a home, then do so. But go smaller and less expensive. Don’t get yourself in too deep and don’t buy into the newly developed condos or gated communities. Instead, find a modest home in a building or neighborhood at least 20 years old. If you live in one of the poorer states, then try to support its economy first and foremost. Be on the lookout for commercial brainwash plots on TV. They are written into nearly every scene of nearly every show. Most cater to network sponsors and parent companies. Especially commercial health care. Big business is fine on occasion depending on the profit margins and profit sharing. Do your homework. If you want to support any legitimate charity, then do so directly. Never support any celebrity foundation. They spend most of their funding on PR campaigns, travel, and high end accomodations for themselves. Instead, go to Charitywatch.org and look up a top rated charity to support your favorite cause. In general, support the little guy as much as possible and the big guy as little as possible. Do your part to reverse the transfer of wealth away from the rich and back to the middle and lower classes. Unfortunately, there is no perfect answer. Jobs will be lost either way. Innocent children will starve and die either way. But we need to support the largest group of workers with the most reasonable profit margins. We also need to support LEGITIMATE charities (Check that list at Charitywatch.org). This is our only chance to limit the severity and/or duration of the comming US/global depression. In the meantime, don’t listen to Bernanke, Paulson, Bartiromo, Orman, Dobbs, Kramer, OReiley, or any other public figure with regard to the economy. They are all plenty smart but I swear to you that they will lie right through their rotten teeth. IT MAKES THEM RICHER. These people work for big business. The ‘experts’ they cite also work for big business. They are all motivated by their desire to accumulate more wealth. THEY WILL LIE RIGHT THROUGH THEIR ROTTEN TEETH. So don’t fall for their tricks. Instead, look at the big picture. The economic problems we face have been mounting for well over 20 years. All of them caused or aggrivated by a constant transfer of wealth from poorer to richer. Soon, it will cause the first ever GLOBAL DEPRESION. Its not brain surgery. Its simple math. Like I said, you are welcome to run this by any professor of economics or socio-economics. If thats not good enough, then look up what Einstein had to say about greed, extreme wealth, and its horrible concequences. I speak the truth. GREED KILLS. IT WILL BE OUR DOWNFALL.

    Its already underway. A massive campaign to divert our attention. Trump, Buffet, OReiley, Dobbs, Pickens, Norris, and several other well known filthy rich public figures have been running their mouths about the economy. Finally admitting a hint of severity after almost 2 years of denial. They even have the nerve to acknowledge the possibility of a US/global depression. Still, they refuse to acknowledge the single greatest underlying cause. Instead, they focus on policies, procedures, and circumstances that were born FROM the underlying cause. Dancing their way around the big picture. DON'T FALL FOR IT. Remember: Our national debt was way up BEFORE sub-prime. Consumer debt was way up BEFORE sub-prime. The cost of living was up BEFORE sub-prime. Wall Street profits were obscene BEFORE sub-prime. The middle class were loosing free and clear assets BEFORE sub-prime. Our infrastructure was in bad shape BEFORE sub-prime. Loans from China were taken out BEFORE sub-prime. The dollar was loosing value BEFORE sub-prime. So don’t let these cowardly filthy rich public figures divert your attention or limit your range of thought. THE CURRENT ECONOMIC CRISIS WAS NOT CAUSED BY A SINGLE POLICY OR PROCEDURE. IT WAS CAUSED PRIMARILY BY A MASSIVE TRANSFER OF WEALTH FROM POOR TO RICH. THIS ALSO REPRESENTS A MASSIVE CONCENTRATION OF CAPITAL WORLDWIDE. OTHERWISE, THERE WOULD NOT HAVE BEEN SUCH A MARKET FOR SUB-PRIME AND THERE WOULD NOT HAVE BEEN A GLOBAL CREDIT CRUNCH. MONEY DOES NOT GROW ON TREES AND IT DOES NOT JUST FLOAT AWAY. IT ONLY TRANSFERS FROM ONE PARTY TO ANOTHER. ALBERT EINSTEIN TRIED TO MAKE PEOPLE UNDERSTAND. GREED KILLS. IT WILL BE OUR DOWNFALL.

    A word for those who respond with the usual ‘I know more than you. Look how smart, knowledgable, and articulate I am’ crap. Let me say this in advance. I don’t claim to be an expert in this field. But I did go on record with these predictions long before any public figure uttered the word ‘recession’. If you search long enough, you will find my early postings from ‘05′ and ‘06′. Including the first draft of this rant. Since then, I’ve gone on record against people like Greenspan, Bernanke, and Paulson. So far, my predictions have been accurate. Like I said. This is not brain surgery. For the mostpart, its simple math. When you concentrate the world’s wealth, you also concentrate its capital and shrink the middle class along with the potential market for every major industry. Homes go unsold. Bills go unpaid. Banks fail. More products go unsold. Jobs are lost. More banks fail. and so on. and so on. It happened 80 years ago. It will happen again. This time on a global scale. Throughout the cycle, the rich will tighten their grip. Concentrating the world’s wealth and resources even further and ensuring the collapse of every major economy worldwide. Think it can’t happen? Think again. GREED KILLS. IT WILL BE OUR DOWNFALL.

    Another thing. I don’t want credit for any of this. Otherwise, I would have given my full name a long time ago. As far as I’m concerned, you can put this rant in your own words and take credit for all of it. I don’t care. Just spread the word. Otherwise, the greatest injustice of all time will go down in history unchecked.

    By the way. The bailout won’t work. IT WON’T WORK. The plan fails to address the fundamental problem. The middle class don’t need more credit. They need a reasonable share of the economic pie. They also need a lower cost of living and a chance to catch their breath. They need a break from all of the psychological marketing tricks and mass market BS. Most of all, they need to wake up and see the truth. GREED KILLS. IT WILL BE OUR DOWNFALL.

    To my surprise, two public figures have found the courage to acknowledge this problem to some degree. On 11.07.07 former presidential candidate Ron Paul mentioned the massive transfer of wealth from poor to rich. He also hinted at the possibility of economic collapse. He did so on 'Face the Nation'. He was blacklisted almost immediately for doing so. On 9.28.08 former secretary of labor Robert Reich refered to the obscene levels of income inequality as part of a "recipe for disaster". He mentioned the richest one percent in particular. He did so on 'Late Night With Conan OBrien'. As far as I know, Albert Einstein was the first to explain the link between extreme wealth and economic instability. He did so in 1949. He explained how the first Great Depression was actually caused by a massive transfer of wealth from poor to rich. He predicted that it would happen again. We are about to witness the first ever GLOBAL DEPRESSION. Amazing. The prosperity of an entire world is about to be compromised. Almost entirely because of greed. IT WILL BE OUR DOWNFALL.

    The point about our government printing up more money was that it can't be done "on a whim" and that there are serious concequences for doing so (weak dollar, higher gas prices, inflation). I never said that it can't be or hasn't been done at all. Afterall, those loans from china weren't infused in the form of Chinese currency. They were infused in the form of our own. Not given to the middle class but instead to the banks in the form of credit. Its done nothing but perpetuate the problem. It never has been and never will be the answer. Sorry if I wasn't explicit enough the first time. The original draft was written 2 years ago and intended to fit within 300 characters. Anyway, I'm no English major. So if any of you want to re-word this post, feel free to do so. Whatever it takes to make people understand.

  19. @Anon 12:52- I am not sure you will get much useful investing info here. It has not really been a trading-investing website (if others disagree you can chime in). I won't speak for Hell but from what I have read here, I have become convinced of deflation. Even if we get hyperinflation we will still get deflation (if such a thing is possible).

    If you are interested in trading ideas, here are a few links from traders who have their own blogs and seem to periodically read this site:






    I have no idea if they know what they are doing (though they certainly know more than I do). You are on your own (there is that existentialism again), but they do seem very interested in investments so you may find wisdom in their words... And if you do, please share it with the rest of us.

    Anon 8:10 said "So what can we do about it? Well, not much." (and a whole lot more).

    I have to agree with you- "it is what it is". Welcome to the world where evolution reigns supreme.

    Personally I choose cooperation but I understand whatever alternative you are offering is just as valid.


  20. thai,

    investment advice isn't my main interest. hyperinflation is something that would affect your daily existence.

    but i'll take a look at those sites. thanks.

  21. H:

    How does your proposed solution comport with this statement during the Hoover Administration:

    "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate"

    "It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.” -- Andrew W. Mellon

    I am wondering if there is no good way to deal with the excessive debt problem. There is the Kondratieff Cycle theory that says these things seem to be a natural event for some reason.

    Contra this with the Federal Reserve telling us that they had "solved" the business cycle. So much for that theory.