In a crisis, people either turn to their institutions or they turn to their leaders to provide a path forward through the emergency. This is especially true when the path forward is waiting out the emergency. People respect action, so they have to have faith in their leaders if the right course is patience. Alternatively, if the leaders and institutions are not up to the task, then the people turn on each other.The French Revolution is the perfect example of what happens when leaders and institutions fail in a crisis.
It has been a long time since American faced a real crisis. The closest we came to anything major was the financial crisis a decade ago. For people foolish enough to take on the crazy mortgages, it was a very real emergency, but for most people it was more of an abstraction than a real crisis. Unemployment ticked up and the stock market took a header, but it was not the Great Depression. There was a concern, for sure, that the wheels were about to come off the cart, but it never materialized.
Of course, one could say that the leaders and institutions stepped in and guided the country through the crisis. People tend not to think of the Federal Reserve as an essential institution, but it is probably the most important part of government now. The head of the central bank is every bit as important as the President. In fact, he may be more important, as we saw with Greenspan and George Bush. An overly tight monetary policy led to a slight downturn in the economy at just the right time to sink the Bush election bid.
In 2008, the world was lucky to have a Fed chairman, who had prepared his whole life for such an event, and a very weak political class. Bush was near the end of his reign and no one thought much of him anyway. Congress has not had much credibility in decades, so they could not cause too much trouble. Bernake was given the room to do what had to be done to stabilize the financial system. People can argue about the solution and various alternatives, but the Fed did provide a peaceful path forward.
The world was lucky in another way. The public was still confident in the system, even though they may not have liked many of the people in it. George Bush was down in the polls, because of the Iraq war, but people still trusted he was a good guy. The restoration of public trust during the Reagan years still cast a shadow over the Bush years. Even though Clinton had been a degenerate and Bush was an incompetent, people still thought the system was fine. They could trust the system.
That brings us to the present. Half the country voted for Trump and increasingly blames the system for blocking his efforts. The other half voted against him and increasingly suspects he is punishment for a broken system. The political class is at war with itself, as it grapples with the fact it no longer commands respect. Then there is the hidden war between the semi-permanent administrative state and the reformers in the White House and Congress. Right now, the people and institutions are not very stable.
That’s what makes the rumblings from the financial system ominous. Wall Street is not Main Street, so a year long bear market should not be overstated. The old line about the markets being predictive is nonsense. If people could see the future, there would be no stock market. The US markets went on a crazy upward run and may simply be going through a correction. Still, the housing market is heading into a recession and the economy is showing signs of a slow down, if not a recession.
None of this is cause for alarm, but what if the long prophesied collapse of the credit system is a lot closer than we know? A lot of smart people said that 2008 was one of those tremors that precedes a major earthquake. Maybe what we have been experiencing is something like the Long Depression, which ran in fits and starts for two decades. The last few years have simply been a respite and we’re about to have another serious downturn or even a panic. Will the leaders and institutions hold up?
In other words, the economic pendulum swings back and forth. That is the lesson of economic history. The salient question is whether or not the political institutions and the leaders are able to hold up as the pendulum swings. In the 19th century, Europe was convulsed with civil unrest and war as the Industrial revolution blasted through traditional institutions. In the US, the post Civil War period was relatively calm, even though the same forces were at work. The institutions and leaders held up.
Again, we really don’t know if the current system and the people in it could hold up under a real crisis. Maybe the 2008 crisis can be read as proof that the system is better than the people in it. Maybe the lessons learned from it have made the system even stronger. On the other hand, maybe the system held up up because of residual stability that has now dissipated. That’s increasingly obvious with regards to public trust. It is much lower today than it was a decade ago. Maybe the same is true of the internal stability.
The thing is though, there are a lot of signs that the people at the very top of the global system are slowly rearranging the board. For a long time, America could count on the dollar as the world reserve currency and, more important, a hungry market for US Treasuries. The system built by the American empire relies on credit to operate and the reserve credit of the world is US debt. If there is even a hint of that changing, the great crisis will be upon us. Will those institutions and people hold up?
“…In 2008, the world was lucky to have a Fed chairman, who had prepared his whole life for such an event, and a very weak political class…”
I don’t believe this. First we must understand the FED and our money supply. All money we have in the US is created by debt. This means it is IMPOSSIBLE to pay off the debt because all money is created by debt so to have more money you go deeper into debt.
On a factual actuarial basis since all money is created by the FED and it’s all debt they own everything.
I believe the banking crisis was planned. It was planned to give the banks even more control over everything. When it happened “somehow” “…550 billion dollars was being drawn out of money market accounts in the matter of an hour or two…”. I don’t think this was an accident. This exact same thing was done to several other countries. Notably Argentina and the Asian countries to crash their currencies and loot their banks.
See this video from CSPAN. A Representative in the house explained the crash, what prompted it and what they did. It’s not long and explains EXACTLY what precipitated the crisis.
https://www.youtube.com/watch?v=pD8viQ_DhS4
Listen carefully at 2:25. This is I believe a concentrated attack. It was designed to frighten the Congress to give unlimited purchasing power to the banks. It worked. It is exactly the same thing that George Sores did to the bank of England. The BOE short by Sores is what made his fortune. The USA bank short, by pulling billions from money market accounts, is I’ll bet, the foundation for a lot of other fortunes. The whole derivatives market did not crash but key portions of it did related to the housing market. Specifically the insurance on bundled housing loans. The loans were put together fraudulently and the assets values backing these loans were portrayed fraudulently.
Once they had unlimited authority they immediately started looting the treasury. Rep. Ron Paul got a limited audit from the FED many years ago and they said we funded the banks to more than 16 trillion dollars. If it was only about housing with 16 trillion dollars we could have bought EVERY family of four in this country a house of a value of over 250,000 dollars for the same interest we gave to the banks which was essentially ZERO. That would have solved in one swoop the housing crisis. Unfortunately they gave the banks all the money for the houses in the whole US plus the damn houses also.
I’ll bet you anything what they did with this money was buy all the assets of all productive businesses in the Western world. I’ll bet they own the majority of stocks in all productive business in the US and most of the farm land also. They can always out bid anyone as they have free money at zero interest to do so. If they buy a business and it makes ANY money at all they can pay the note at zero percent interest. The rest of us have to scrape and they lord over us like Kings.
We were played. Bernanke was in charge of the looting of the US.
If the banks needed to be bailed out why didn’t the Treasury demand stock in those it bailed out? Shouldn’t we own them and not them own us? At the vary least we should have had equity equal to the bad assets they dumped on us.
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Now that I’m started: the author said: “Never wrote anything to the contrary. That said, we did not have a collapse of the banking system, a great depression and massive civil unrest that would have been the result. From the point of view of the people in charge, that was a good result. Most normal people probably think it was a good result too.. I say you presume too much. Your assumptions are, in my view, wildly overstated. Bank depositors were not at risk, if the banks equity and bondholders (who knew or should have known the risk they were taking) had been wiped out, there was plenty of capital left to cover the depositors. All the Fed need do guarantee the banks stay open, bring in new management. Ohh, that is kind of what happened with GM. Why did the banks and their management get a pass?
Lets see: Bernanke’s club members took hundreds of millions off the table, when they craped out, were bailed out of their liquidity jam and left in place to do it all again. 10 years later the banking sectors debt has been transferred to the National debt. And, so here we are at full employment with a growing deficit and the house of debt we call American can’t withstand a 4% 10 year treasury bill rate. Debt is not a foundation to build on.
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The way we avoided the crisis of 2009 was not an example of strength but weakness. They broke multiple laws in the way they addressed the crisis. They violated established debt settlement in the way they handled the GM collapse. What we saw was not the system at work. It was a violation of the system in an attempt to save the system. 2009 is still happening they’ve just delayed it.
Kicking the can down the road is a save? Even when it makes the eventual crash worse?
Kicking the can down the road…. a little further… keeping the music.. the dance going a little longer….. gives all… of us time. Like the old Wizard said… “… its not how much time you have… but what you do with it…” plan wisely…….
A system based on debt…. especially ever expanding debt CANNOT last. What cannot last will not last. It MUST end….and historically that end is almost always violent. We dodged a bullet in 2008-2009. Another bullet is headed our way. Whether we dodge this one or not cannot be predicted…..but the bullets will keep coming and sooner or later….. probably sooner……a bullet will hit dead center and the economy collapses. You can ignore reality but not the consequences of ignoring reality.
If you aren’t prepping, you will die. If you don’t teach your children to prep, they will die.
It’s that simple.
I’m a simple man , no problem admitting it, but losing $40,000 back in 08 to Big Banks was not my idea of saving the country.
The bastards created the crisis and then picked my pocket to bail their asses out. Don’t need any fancy current market analysis to know the hours are longer and the pay is less.
Left the government sector thanks to insane liberal policies and quotas. Had no idea why my friends used to bitch constantly working in the private sector.
The FED saved us, indeed ! Happy to make the sacrifice so some fat cat can buy his kid a new Ferrari for Christmas.
“The FED saved us, indeed !”
Thanks for the laugh.
The Fed saved those it was created to save and the system they created.
Griffin was right.
“Bernake was given the room to do what had to be done to stabilize the financial system.”
actually, he did what was necessary to lock in money center bank profits, and socialize the losses. instead of bail-ins, we got money velocity out of the fed’s fire hose. small holders of bad debt (you and me scale) got wiped out, and most of the banks got a bye.
the net effect was to kick the real problem, mis-priced credit and “too big to fail” institutions, down the road. von mises advises that this also makes the necessary reckoning more severe. kicking the can earlier meant bailing out institutional debt holders and then rolling systemic debt up a level. we all scratched our heads in 2008, thinking “where can this possibly go?” the answer is it got rolled up to the level of sovereign debt. where can it go from here?
all the marked to model debt still being rolled over, which is technically impossible to repay, will make the coming train wreck inevitable.
the model of rolling it up suggests supranational debt, or an international monetary system, maybe debt issued in SDRs or the like. implicit in that is an acknowledgement that the US dollar is done as the reserve currency, which is where things get interesting.
the only question should that come to pass is whether it happens overnight or gradually.
Nobody knows anything. 21 Trillion Dollars is AWOL …
https://msutoday.msu.edu/news/2017/msu-scholars-find-21-trillion-in-unauthorized-government-spending-defense-department-to-conduct/
Nobody believes what the European Union publishes about its budget. As for China…
It could collapse tomorrow, it could go on forever. What really matters is that the US military straddles the world with overwhelming firepower. So long as that remains the case things will go on, more or less.
The FED is not and never has been a part of the Federal Government. It’s a privately owned, privately run institution. It’s what the Bank of England was to America in 1776.
If your profession is to create money and loan it out, then it goes without saying the more you lend—the more you earn. The trillion+ dollar bailout of financial institutions in 2008 was the end goal of the FED’s decade long policy of encouraging banks to loan as much money as possible to anyone who wanted a mortgage. The ’08 crash was intentional, as was every other crash going back to and including the Great Depression.
What is happening more red state turn into blue state permanently
Like Mexican food loving Iowa, Former McCain and currently known Feminist state Arizona
Florida or Texas aren’t safe any more, in fact many southern state aren’t safe
Yes, President Trump and republican party lower the taxes, deregulation, nominate strict-Constitutionalist Judges just other president did
Obama also nominated judge who respect constitution like “white majority do not harm minority”
Obama administration deregulate gig economy (Uber, Airbnb) and created term like “independent contractor”
Obama administration lower the taxes for people like Warren Buffett
He just used Race/Gender politics to get elected and white working class pay the prices
Like Obama Care, Section 8 housing which Policy effect the people who do not live in gated communities
Obama was actually greatest partner of Republican party and Rich people with amnesty and social reform
What Republican don’t know about is world has changed
Oh, They know about Democratic party are masters of pandering women/minority
What they don’t know about is control opposition doesn’t require anymore
Thanks to Republican didn’t stop the immigration, interbreeding
millions of Third world immigrants came to the United states every year
Them and many biracial vote Democratic party Moreover Alexandria Ocasio-Cortez/Ayanna Pressley things just proven fact that they even don’t vote White liberal anymore
Trump and Republican party will never ever talk Race and Culture issue, but rest of America such as Colored people and women will only talk Race and Culture
we are heading towards to full brown slavery
in this case, cotton field change to the corporate field and slavery will never end
Apartheid and segregation is evil when you have to be double digit IQ moron and believe corporate slavery as new Paradise on earth
A fine lot of redundent thought… Solutions… none. Would I offer one… who could there are none… Put your affairs in order… Wait… Hope this Music plays on for a good long time but by all means feel free to talk it to death..
Written by Michael Snyder, guest columnist
I don’t believe we are any closer to some terrible financial meltdown now or ten years from now.
Play the game and IF the bottom drops out pile all your mortgaged stuff in front of your mortgaged dwelling. Drop back 25 yards to prepared positions, stack magazines and fight. Don’t let some bankster and constable mess with you. That’s the only answer. You ain’t no Tom Joad cause there won’t be any place to go.
There is of course a great deal of educated commentary here about things like monetary and financial policy. These things are insightful if you are an expert working inside the machine, but it’s a little like asking a jet-engine mechanic what he does: he’ll give you a detailed description of various engine maintenance techniques, but an eight-year-old boy intuitively knows that what this guy really does is, he helps Grandpa fly from Chicago to Mom’s house for Christmas.
Similarly, if you asked a neutral space alien what is wrong with the U.S. economic situation, he’d say something like this…
1. The dollar was a very strong instrument long before Bretton Woods or reserve currency status or petrodollar status. It was not uniquely supreme, it was rivaled by the pound sterling and other instruments. But in say 1890, you bet your bippy the dollar was a swingin’ mofo.
2. The reason the dollar was so strong was not because it was backed by gold or oil. The dollar was backed by a giant population of smart, healthy, sane, well-fed, capable, energetic Christian White people, among the most inventive and industrious people in human history, who as luck would have it lived in a continent-sized fortress bounded by oceans on two sides. Abundant land, natural resources, a people smart and capable enough to steward all this stuff effectively, a lack of too many crazy historical feuds, and pretty much impossible to invade from outside. America was Europe without the crazy wars, and without the geographical trap doors leaving it vulnerable to predatory Islam and Asian and African hordes. America was quite literally the safest, richest place on Earth. THAT is what upheld the dollar. All you had to do to keep this scam running, was control your negroes sensibly and keep out the oceans of Latino paupers.
3. Naturally it didn’t take long until, somewhere on the other side of the planet, a bunch of Jews noticed this setup and cried out, “CHA-CHING!!” Frantic high-speed hand-rubbing and cash-register sound effects promptly commenced.
4. The next thing you knew, the money supply was controlled (at INTEREST!) by these people, a byzantine income tax and its very own crazy secret police force had been yoked upon the people, the courts, the press, the universities and the broadcast media were all (((in private hands))), the country was driven into (((endless debt))) to pay for the privilege of sending its own sons to die in foreign wars for the benefit of foreign people. And all the hard assets were being hoovered up for imaginary “money”. Not bad for only about 100 years’ worth of patient scheming.
5. The American (white, Christian) basis for value was production and distribution. The Jewish basis for value is arbitrage, debt slavery, extortion and rent-seeking. Anything to avoid actually having to go into the shop and build a jet engine. The economy is now almost fully financialized rather than rooted in the reality of production. Easier to skim off the top that way.
You’ll never guess what sort of a fix a neutral space alien would recommend.
Ten thumbs up bro!
One quibble tho, “as luck would have it…” It wasn’t luck, but the God of all those White people who gave us the inheritance of this land just about exactly 400 years ago now. He only wanted our gratitude and obedience. Once we failed at that, the second half of Deuteronomy 28 became inevitable.
All of the consequences you listed—though entirely real—could have been avoided if heritage Americans had carried out their end of the contract…spelled out, once again, in Deut 28. And contrary to popular belief, this covenant was not given to “JEWS” but to the children of Israel, the seed of Abraham, of whom said heritage Americans indeed are.
Look, there goes the wall.
https://apnews.com/0fcda32812024680ad98676379c47233
The 2008 crisis is probably the blue print for future crises. The elite causes the crisis then is put in charge of solving it in a manner that further enriches the elite while screwing the average person. The goal isn’t to reform the system. It is to keep the scam running and the money flowing to the right people.
If the next big crisis happens during the Trump presidency, it will be used to try and turn more Americans against populism and white man rule. Thus, it will benefit the elite In another way besides their bank accounts
I’m going to be a contrarian here and say that the US monetary policy has a long way to go before it hits crisis levels. The US can likely paper over any recession or depression for the next several decades. The US likely has the ability to demand haircuts as well and would likely get them. Another reason is that there is not a viable alternative out there. China is even on more precarious ground than the US. BRIC/BRICS is a myth that has yet to ever materialize other than fever dreams over at zerohedge.com.
I’m not saying things are fine or that we aren’t in a recession because we most definitely are. I’m just saying this is a protracted decline where it may be 100 years before we get to see Pax Americana fall apart. American prosperity peaked in the 1990s but we still have cheap energy (although the green energy hoax is seeing to that) and enough distractions and consumer goods to keep people occupied for the foreseeable future.
Wondering if Z will do a post soon on MMT.
Fortunately, when the already-underway currency crisis can no longer be ignored even by school girls at the mall., the US dollar will still be the only reliable currency in the world. Eventually, it, too, will go under, but it will be the last currency to do so. But that process *is* already underway.
So if I read this correctly , thank god wall street was given trillions to make them whole , while the rest of the economy was put into national debt hock to pay for it. I see the credit collapse as analogous to a man with gangrene in his foot. Dr. Bernanke rushed in and said ” don’t amputate below the knee to stop it , give him these pain killers so he can continue on and all will be well ” . now the gangrene of excessive debt and unfunded mandates is all the way through our leg and getting into the torso.
the rebuilding then would have been painful and there would have been losses . Today we have 7 million more illegals , the blue collar population is smaller and killing itself off with opiates and suicide by the day. A hollowed out retail sector. as well as gifts that weren’t around in 2008 Antifa and B L Matter anybody? In 2008 Europe had yet to see the flood of several million Muslims refugees . when th going gets rough there because it’s all interconnected they will not be much help.
Would anyone say our institutions today are not weaker than they were in 2008?
Early diagnosis , early treatment is the health system mantra. call me black pill but as I have had cancer , and I am glad i had it treated when it was stage 2 rather than having the symptoms treated until it became stage 4.
All Bernake did was threaten Congress with “tanks in the streets” into giving him trillions to bail out Goldman-Sachs and the other investment banks as well as BofA and other institutions.
All these institutions should have been allowed to blow up and die for the crap they pulled on the country blowing a humongous and unsustainable stock and RE bubble that G-S and others could profit from.
Yeah there would have been pain but most of the rot and insane speculation would have been cleaned out of the FIRE industry and we could have started over with a fresh slate. But no Helicopter Ben shows up, throwing trillions to the super rich to make them “whole” again., It was nothing but taxpayers subsidizing the super wealthy.
Seven trillion to the elite and horrific structural faults of many banks paper over. Boy how Wall Street loved that easy money with zero interest. Which they used to blow a new bubble that we live in today.
Now for the last decade the Fed and Congress have been kicking the can down the road through a bunch of smoke and mirrors hoping the new bubble doesn’t pop on them. Perhaps they should consider all the previous bubbles that burst: 2008, 2001, 1990’s.
Both Bush’s were very successful in election bids. Both were elected and served the maximum of two terms. WTF? (Jeb?)
And now I need a leader??? Fuck!
It’s now plain for everyone to see that Z-Man is a communist. The solution to the 2008 crisis lay only in free markets and tricorn hats. Had we been faithful to the Constitution, Ronald Reagan, shirtless and atop a white horse, would have galloped into Washington, DC and assumed control. The call of the bald eagle would have filled the skies, the boomercon rapture would have descended upon us, and Z-Man would have been left on the ash-heap of history.
The events of 2008 led to the leaders of the financial system to pump as much liquidity into the market as was needed to stabilize it. In the process they created our current zombie economy. An economy that can’t even sustain a minor interest rate hike and a balance sheet reduction of less than 1%.
Institutions will use 2008 as a playbook to do exactly the same thing. Only they will be dumping three, four, even five times the credit into the system. This is what will cause the real crisis, something far beyond control.
The thing about the 2008 crisis is that the system held up, but at the same time helped delegitimize itself. Financial institutions were so sloppy with following the law in regards to mortgages, that no one knew who owned what. Yet, no one went to jail. There were no stories of some head honchos now living on the street. You can take extraordinary measures to save the system, but the people causing the problems have to pay the price. They can’t be made whole while Joe Blow now has an underwater mortgage which he dutifully pays but gets no help.
The real unavoidable crisis involves our demographics and entitlements. We cannot afford the welfare state we have now. What happens when the bond markets finally realize that there is no plan to fix it, and cut us off?
All the cultural ills that plague us have been papered over to a certain degree with borrowed money. What happens when that comes to a head? What will white liberals do when confronted by real issues that no amount of virtue signaling will fix and tough choices have to be made? When thinking about how the future is going to shake out with respect to all the issues Z discusses, the imminent collapse of the welfare state is going to have huge effects.
At what will our elites do when it hits the fan? Call for more immigration and green energy, because they are THAT unserious, and that’s the entirety of the script.
Ha ha! “Call for more immigration and green energy, because they are THAT unserious, and that’s the entirety of the script.” Truer words were never spoken!
We borrowed from Peter to pay Paul. Great system, great leadership! Much thoughtful, very insight!
Seriously. Years of negative interest rates and trillion-dollar “stimulus” money that couldn’t even manage 2% growth most years. The word for that is not “strong”, it’s “sclerotic”.
Yep.
Wages are growth. Wages have declined by around 1% GDP every year since 1973 so your potential spending pool is lower . Wage arbitrage is a bitch.
Right now between 38 and 40% of the entire GDP is government spending and its only going to grow simply because technology , trade and immigration have gutted worker earnings
This will not improve under any normal circumstances and if society stays stable will probably get worse
Eventually the system will fail but that could be a long long way off
There are stop gap measures, make work like requiring professionals to pump gas, trade control , repatriation of migrants and an end to all cheap labor programs like H1B but even those populist changes will require a near revolution
@AB
Do you have a good job that pays well or are you suffering from bad wages…
I’m not doing as well as I’d like but the facts would remain the same if I had an 8 digit income.
Do a simple search and at best you’ll get “wage stagnation” I prefer the measure of wages as percentage GDP since it shows how much adjusted wealth we’d have as workers.
In terms of family formation this would make one earner families possible which they are basically not now.
Here is something from Brookings
https://www.brookings.edu/research/thirteen-facts-about-wage-growth/
TL:DR
After adjusting for inflation, wages are only 10 percent higher in 2017 than they were in 1973, with annual real wage growth just below 0.2 percent.[1] The U.S. economy has experienced long-term real wage stagnation and a persistent lack of economic progress for many workers.
Now adjust for the vast increase in GDP and the distribution and you tell me how much poorer workers are
Those workers are the entire non government consumer base. All of 60% of it (without consumer demand, corporations can’t spend)
The other 40% or so is government
And not there is in modernity is a huge correlation between fertility and increasing prosperity . Given the fertility slide started in 1972 before Roe V Wade and mirrors a similar slide during the Great Depression before television , computers birth control or feminism, I’d argue that there is a direct correlation but I can’t prove that
Over its history US “capital” has hated paying good wages and before automation used slavery, indentured service, child labor, prison labor , mass immigration and every other chicanery to avoid it.
This isn’t going to fly if we want a healthy society, we are going to have to pay for it one way or another. More Wages, More State or More Fucked Up pick one.
However our actions and complete failures to act suggest that nothing matters more than cheap labor and if capital could just gas and raise as zombies the entire labor pool they’d do it no matter what the long term cost
This will BTW put more and more people like Ocasio Cortez in office. She’s a sketchy character but the ones following her ?
And in case you are wondering, its not hard to fix
Repatriate some tens of millions and if that doesn’t work go work sharing, make work and if that fails automation taxes
This plus trade management will allow wages to rise and make family formation much more affordable
We’ll still need to fix marriage and child custody of course but there will be your fertility increase
And note “capital” will have to change . Too many on the Right think we must have a religious revival that will get people to act against their own economic interest so they can keep acting the way they want
Nope
Greater equality or no future.
And who are you going to trust to enact and enforce these ideas of yours…Also I think if you were making 8 figures I doubt you would be in this site let alone worried about wages… People usually only agitate for things that would directly benefit them…It’s too bad that your too busy to meet I think we would have a great discussion…
I suspect we’ll have that face to face discussion sooner or later.
Who would I trust to enact policy?
My allies. If I trust them enough to work with them to replace a crooked order possibly by force than I have to trust them to enact what I assume are things we jointly agree upon.
That said I am not anywhere near the Libertarian/ ANCAP end of the Dissident Right . I’m an authoritarian Right winger and I’m fine with giving orders or taking them and of having a State
We simply don’t have a population these days and won’t for many decades that can handle the minimalist system and all that freedom without breaking
at the lower levels we’ll get broken families, drug addicts and people behaving quite badly
At the higher levels, they’ll loot and abuse everyone in sight
for a while, until morals recover we’ll need boots on necks.
For me personally I believe a real crisis is around the corner. My hope is that it will purge the political insanity and intellectual bankruptcy that has been weighing us down for decades and come to a near-explosive head right now. I am so sick of the hysteria spewing across the Internet that this is the only solution. We need a common enemy and it’s either economic hardship or we start shooting each other.
It’s a buying opportunity. I’m expecting the S&P 500 to be trading in the 3000-3100 range next year.
You do not buy anything. You are driven to bankrupt by oligarchy.
Every last supporter of capitalism will be unemployed homeless. Capitalism works like communism. Every communist get,s sooner or later his very own year 1938. About isms, I am the supporter of fishism. There is always a bigger fish….:D
Thanks for that link to the long depression. It led me on a journey through the Coinage Act of 1873 and bimetallism. So much important stuff that doesn’t even get a sentence in high school history texts.
The response to the financial crisis was typical of what passes for leadership today, they are engaged in management, in accounting, not in politics, not in values.
The very thing that led up to that crisis is still more or less in play; in many ways things are worse, much worse. The decay of the financial system is deeply rooted in the decay of the decay of the culture. The time of throwing money here and there to stem an uprising is coming to an end. France is simply the first. Spring will see things accelerate.
This is one of the reasons Trump is failing. He’s about the business contract not the culture. On some level he understands that but he is what he is.
At least Trump recognizes the value of a contract. Most of those opposing him don’t even see that. They see an open playing field to simply scoop up what they can get their hands on, and then dare anyone to do something about it.
France is already there. It is bankrupt and cannot pay the jizya to Muslims and Africans. Hence the Green diesel taxes leaving middle and working class Whites including cops with the choice of fuel to go to work or food. And no social welfare for them.
It was never about Green virtue signaling. It was about a money grab to pay off the diverse.
France cannot simply print francs as they are in the Eurozone. They currently run a massive deficit which Italy points to in its battle with the EU and Jean Claude Juncker over its budget deficit.
The only way to pay for the diverse is some form of slavery or serfdom for 90% of Whites.
That is the crisis.
France’s deficit is only a little over 3% of gdp while it’s debt to gdp is ~100%, which isn’t great but not horrible. France’s problem is that that taxes as % of gdp is nearly 50%. (The U.S. is 25%.) France has run out of room to tax its people – and by people, I mean white people so you’re right.
It can’t increase its deficit and the ethnic French are already taxed to death. France can no longer paper over the transfer or money from whites to blacks and Muslims. Whites are refusing to be taxed more but blacks and Muslims will riot if the gov’t tries to cut back on their welfare.
Citizen: You get it. The U.S. is headed in the same direction.
Tax riots versus welfare riots, then.
We are between the Scylla of bust-out and the Charybdis of welfare riots.
Which way to run?
@Alzaebo
You go to a spot where you will have the best odds of surviving and then harden that spot even further by making it the least dependent on the outside area as possible…Then you try and recruit those around and from afar so you have a solid group of people that you can depend on…That’s the process I am working on and it’s slow going but making progress… Anyone that wants to come along side in this journey that has their head on straight is more than welcome…
The whole world would be fucked if all the white people disappeared…Everywhere would either be Central America or Africa but a whole lot worse…
I’d have rather had the opposite of the “peaceful” path forward where now (10) years hence we’d have been well on the way to those sins paid in full vs. the insolvent nation we precisely become. The “Fed”? A mistake in its formation as deadly as the war in Iraq and Bush’s “WMD” which caused thousands of lives. More, the economic crisis of 2008-? was in fact caused principally by the Community Reinvestment Act aka “CRA” instituted by the Carter administration. Most miss this fact preferring instead, although he was who he was (and is), “Bush’s Fault”. More than a significant component of the U.S. electorate was and remains as ignorant of facts as they are about the massive conspiracy committed by the Dept. of Just-Us and their armed proxy Famous But Incompetent,CIA/NSA, and clinton0bama… against this lawfully elected President Donald J. Trump. Facts re-packaged by a satanic broadcast and print institutional media. And thanks to the best “thinking” of a dazed, confused, and punch drunk electorate delivered the HoR into the hands of what will prove the most rabid cabal of leftists in American history.
I’m partial to a simpler explanation for the foreign treasury and stock sales: treasury and stock prices have been steadily increasing for a while now and they’re just taking some profits.
It could be. Most of this stuff is governed by algos. The retreat from corporate bonds is actually the more worrisome.
Most of this stuff is governed by algos. Algorithmic models tend to line up on the same side of a trade (as the inputs tend to be similar across many of the algo models), and they need counterparties to provide liquidity. The potential for the absence of a buyer, in the presence of sellers, is a completely underrated element of the financial equation. Algorithmic models can break, too, in the absence of liquidity.
See 1987 and portfolio insurance. Nothing new.
The simple existence of HFT is a liquidity destroying machine. Real people are not going to engage in hour to hour trading with the algos running around.
Consider this: Right now the corporation you’re lending money to is just going to “invest” it in buying back their own stock. Is that really a good use of your money? If you decide “hey this is dumb I should stop doing this” it’s not really a reflection of your assessment of the corporation’s credit-worthiness.
Again, can’t be sure, but after a decade of the Paul family and zero hedge predicting the coming crisis I’m a little jaded. That and there is a help wanted sign up on practically every restaurant door in my city (Houston may be an outlier, but these signs weren’t there before Trump).
The credit system is deliberately manipulated to allow the banks to foreclose periodicaly and cherry pick whatever real estate they’d like to own. The big banking famlies already own half the land in the USA and a crooked Federal Reserve system allowed them to buy it with cheap , manipulated money. This country once had money without debt. but the Fed ended that. Close the
Federal Reserve and default on funny money backed by credit.
Most do not understand the magnitude of the 2008 crash. The USA had been in a economic depression from 2008 to 2016.
The economy is at the level it was in 1973.
See the charts:
WHEN WILL THE TRUMP ECONOMY LIFT OFF? AT LEAST THE GREENSPAN-BERNANKE-YELLEN-OBAMA ECONOMIC DEPRESSION HAS COME TO AN END.
http://truedollarjournal.blogspot.com/2018/07/when-will-trump-economy-lift-off-at.html
The excellent book “Government’s End” by Jonathan Rauch argues that government necessarily becomes sclerotic and corrupt because of vested interests, and that only a catastrophe can really sweep it clean. A crisis, though very painful in the short-term, could effect the clean-out that we need to make something new in the long run.
Who is this “we”, kemosabe?
If there is a real civil war, insurgency, whatever…The whole system will get pushed over and collapse thoroughly. It’s frightening how delicate our current economic system is.
The first few paragraphs of this do not distinguish between the two Bushes, and thus confuse.
People don’t understand that the “value” of most of the things around them is one bid away from being a whole lot less. In a market economy, everything is marked to market based on that bid or last trade. Take the bid away, “and it’s gone”.
Trust and orderly markets make for constant bids. We have just about destroyed our trust in institutions of all sorts (many of them thanks to their own actions), and the expectations of an orderly market in the absence of trust is a tall order. We will get a simulacrum of an orderly market, thanks to the Fed and the Treasury, but that is not the same thing, and cannot be maintained indefinitely. Expect the devaluation of what is not necessary (which is most of it), and inflation on what people really need. In the process, the “value” of many things will be knocked way down, and the debt to assets ratio goes completely out of whack. Like the people near LAX that own a home inflated in value versus their income, the deflation of the asset is the financial coup de gras.
Take GE as an example. Too much debt for the size of the enterprise, but what put it over the edge (and will make the ultimate value of a share of GE precisely zero) is the overvaluation and devaluation of the assets of the company. In the absence of bids, there is much less value to the assets.
GE? Jeffrey Immeldt’s powerhouse?
So what you’re describing is a bust-out, eventually, of everything. The system itself is a giant bust-out.
Looked at Amazon’s PE recently? 374+
The so called “long depression” was a period of unprecedented economic growth and rising living standards. Yes a few improvident borrowers and speculators were hurt during it, but it was overwhelmingly positive for the overwhelming majority of people in the country. We should be so lucky as to live through a similar period.
Not so sure if the other half believes that Trump is punishment for a broken system. Judging by everything I read and see, they earnestly believe that if only they can find a way to get rid of the Orange Bad Man, everything will be just fine and normal service will resume.
That’s the attitude you see when people are convinced of the fundamental righteousness of their cause.
The housing market is a reflection of the times, it’s not a recession per se.
Boomers have expensive houses to sell as they move to their retirement condos, but the new Gig economy guarantees the generations behind them cannot afford boomer homes or even Gen X homes.
More importantly, Millennials don’t want to own houses (or cars for that matter). So it’s not a recession, it’s a major pivot in who has money and how those coming up the ladder want to spend theirs.
The Fed is already getting ready for the next recession. They’re pushing up interest rates for a variety of reasons, but a big one is that it’ll allow them to lower interest rates when the economy goes in the toilet.
The Fed is walking a fine line. Raise interest rates to prepare for the next downturn but don’t raise them so fast that you cause the next downturn but don’t be too slow because you know that a recession is coming. Tough job.
However, longer term, interest rates and debt to GDP will be something to watch for. You can run up a lot of debt if you don’t pay much interest. Look at Japan. But if you have debt to GDP of 100% or 150% and fed govt revenues of ~20% of GDP, you can see the havoc that even a one or two percentage point increase in interest rates will cause.
Right now, interest rates are around 2.7% on 5-year Treasuries and debt to GDP is 105%. (Yes, I know about the unfunded stuff, let’s just stick with actual debt). So real interest costs are 2.8% of GDP or ~14% of fed gov’t revenues.
Now, let’s say that we hit a recession and the govt has to borrow a ton of money – like it did in 08-09 – running debt up to 150% of GDP. Now, let’s assume that the world starts to get a bit nervous about the U.S. and demands higher real interest rates, so a nominal rate of of 5%, which isn’t actually very high at all and could a lot higher. Interest would cost 7.5% of GDP or 37.5% of gov’t revenues. Where is the gov’t going to get that money?
Around two thirds of the gov’t spending is already locked up in Social Security, Medicare, govt pensions and Medicaid. Interest on the debt would eat up the rest. If the govt didn’t want to run a deficit, it would almost have to shut down since sending checks out for SS, Medicare and pensions doesn’t take many people.
The government would need to borrow to pay for the rest of the government. Naturally, this causes the debt to increase even more, causing even higher borrowing costs. All of these interest costs would come on top of needed increased spending on boomers, which will also increase government spending.
The same debt/interest issue holds true for U.S. businesses, which have levered up since 2008.
Thankfully, U.S. consumers have reduced their debt to income to near record levels, but governments around the world and corporations have taken on huge amounts of debt.
You know what’s really good at setting prices, such as the price of future money, at exactly the level they need to be in order to match supply with demand?
Markets.
Agreed. I’m not fan of the fed in general. People talk about what it does to help in a recession (questionable) but forget that fed moves – usually easy money – is often the cause of the recession.
Markets are far better at fine tuning prices than some committee. The fed is very much like the old Soviet command economy.
I can come to no conclusion other than the Fed is deliberately raising rates and tightening liquidity to crash the markets in order to ensure that Trump loses in 2020. Inflation rates for 2017 and 2018 are approximately 2 percent, which not materially different than the average inflation rate during the Obama administration and in line with the Fed’s target inflation rate. The economy is strong and while there are signs that wage growth is (finally) picking up, there are no signs of broad-based inflation in assets or in the economy.
There is no data-based reason for the Fed to raise rates and pull liquidity at this point in time. The only rational conclusion is that the globalists who run the Fed have decided that a recession is a small price to pay to be rid of Trump. Expect the Fed to start lowering rates and introducing liquidity as soon as a globalist is back in the White House.
There will not be a dollar collapse in the lifetime of anybody reading this blog. US finances may be a car wreck, but the rest of the world’s finances are a train wreck or worse. In the next ten years many countries in Central and South America will be forced to adopt the dollar, either explicitly or implicitly by pegging their currency to the dollar. Either way, this will generate massive demand for US dollars. The Middle East and Africa won’t be far behind.
The fed is raising rates so they will have some space between the federal funds rate and zero to cut from when the recession takes hold
That doesn’t hold water. There was no sign of a recession until the Fed started raising rates and removing liquidity. The Fed is inducing a recession.
If the Fed needed space between the Fed Funds rate and zero they could have begun raising rates any time in the past 8 years. The only question is why are they doing so now, as opposed to, say, 2014?
The Fed held rates at near-zero and literally flooded the markets with free money during the entire Obama presidency. Trump takes office and they immediately reverse course. Cohencidence?
Yes, but the real damage being done to the economy is so far limited to people who have exposure to normal interest rates. Historically, our rates are not high at all. The underlying economy is doing well because Trump continues to cut unnecessary federal regulations. But high flyers on Wall Street who have counted on low rates to make their debt binge pay off are the ones who are now squealing. I think it will be good to see these guys get flushed. Serves them right. The rest of us are just fine.
The current monetary system is fueling the psuedo-affluence that infects our society and creates an artificial absence of real hardship. Here is a partial list of the handouts that government offers to anyone willing to sell their vote for the luxury of being lazy: food, housing, medical care, education, transportation, cell phone/internet, job training & make-work jobs. Is it any wonder that our “poor” are dying of obesity? A reversal via financial crash is preferable to a pandemic, but something’s gotta give.
Not for anyone. it’s only for ethnics. Whites need not apply. Those “make work” jobs? Well unless your name is Julio, Shakina or Trayvon you aren’t getting one.
And those sick fatties are a major money maker for big pharma and big medical(at taxpayer expense) so they see those sick fatties as cash cows.
This is just one of many reasons why the system is propped up. Lots of people making money off the moochers from banks, hospitals, big box stores, teachers, etc.
Russia and China preparing actively for world end scenario. The only thing what keep dollar up, is their efforts. Down there, it is almost every day talk about end of petrodollar and why they can not let it go.Considering current madness, in the major economy crisis USA can transform, to nuclear armed Antifa.
Unless one or both are prepared to run massive deficits, and sell bonds to fund them to the rest of the world, we will all be with the dollar a while longer – though it may not be anyone’s favorite currency.
That’s what the reserve currency is. A place to put your money where you can earn interest while you are holding it.
Nobody needs such thing like reserve currency. It was enforced after WW II with US military and political force and kept up with fear. Or war in case of Saddam and Qaddafi. Why should anybody need to keep his reserves in reserve currency ? Why not gold, oil, other natural resources your own money or some other country money or whatever ?
For a long time I’ve been an occasional reader of “The Housing Bubble Blog,” where each day news about the real estate market is posted, along with a lively comments section.
Prior to the bubble bursting a decade ago, the commenters there clearly saw it coming, and would ridicule the euphoric “real estate always goes up” investors, and instead looked at basic fundamentals such as median income’s relation to housing prices, and mortgages for anyone with a pulse, supply and demand, etc.
Today the chatter at the blog is sounding the same as it did back then.
And yet the majority of the sheep are still asleep and waiting to be slaughtered…I have to remind myself again and again that people that read blogs like these are a very tiny portion of the population…
The housing problem that cannot be discussed is that density would be the panacea for the high cost areas, but without freedom of association, you can’t have density.
It seems like there is a major financial crisis every ten years, since deregulation was put into play. Late 80s savings and loan, late 90s dot com bubble, 2008/9 housing bubble. We are exactly due for a crisis, heuristically speaking. It would almost seem that we are systemically being fleeced. Each decade, a new cohort builds up a retirement that we are forced by these gov 201k and tax shelters to put into the abstract financial market. Then the liquid assets are deflated by means of some leak in the system, housing, nasdaq, somewhere. I’m not claiming(nor excluding) that this is conspiratorial, but perhaps a flaw in the system.
the 19th century had bank crisis after bank crisis caused by liquidity issues.
Fiat currency and later regulation helped alleviate that
The optimum solution would have been to allow basically no immigration and move to a bimetalism but this would have meant much less corporate profits and as such big business let teh US get flooded with migrants
History may not repeat but it does rhyme
When the wool gets full, it’s time to shear the sheep! Not a flaw.
Unfortunately, part of the problem with investing and financial planning is that being early is the same as being wrong. Many people predicted the crunch, but had no idea when it would happen or exactly what conditions needed to be in place to trigger it.
It’s easy to say that winter is coming, but most people won’t listen unless you tell them the date and time of the first snowfall. They’re not entirely wrong to do so, either; it would be just as silly for us to listen to the climate alarmists when they haven’t made any accurate predictions in decades.
“Being early is the same as being wrong.” Yes. Every serious person knew that the end was nigh, but when? In the memorable words of Citibank’s Charles Prince as the housing bubble began to pop, ” As long as the music’s playing, you have to get up and dance. “
Complex systems, financial, business or societal run on trust. Just look around. That is the real price of the nonsense like Mueller and his 302s during the last twenty four hours. Those things cannot be unseen. And the price is our trust “defaults” get reset to the “Third World” setting from “First World”.
Trust = honesty (or at least some level of it)
That was the idea behind gold backed money – there was a FORCED trust , because the money actually WAS worth something.
What we have now – is not that.
And that is why the Fed exists.
What we have now for “money” is not much different from counterfeit.
The “gold standard” of international banking existed for less than a century and only because 8mperial Britain enforced it for their own advancement. They also abandoned that standard when doing so became expedient.
The real danger of fiat currencies is the ability they provide to the financiers to buy off the politicians. We’re there.
The problem is that non fiat currencies create bank panics and constant deflation as well as making export goods noncompetitive
We have surplus production galore so unless you make the economy 30’s style, 95% domestic you have a problem
You could try a gold/silver standard as Bryant suggested or hell a D&D standard gold/silver/copper but population growth and efficiency improvements can hurt that as much. The population was 1/5 that of the current era in 1980 mainly do to immigration and that means less money
It also renders the USG inflexible which if you are anti government can be a good thing however in time if crisis, you may not have time for the rottenness to be purged from the system and need spending now so people like to 40 million people using SNAP can eat
Too much currency rigidity no spending
You can’t right them off as no matter what policy choices you make, there will still be a labor surplus. well alright you could pay people not to have kids but I’ll not not even far left societies have done this.
As such in time of crisis you can teeter between a soft revolution like Roosevelt or a hard one, choose wisely because play the hard way like the game of thrones, you lose, you die.
The growing population you speak of was purposeful (1965 Immigration Act). It served the purposes of the banking/merchant class, who desire as many warm bodies as possible for no other purpose than to enrich themselves.
I meant to say 1890 but you are correct about the 1965 immigration act,
The house the old man grew up in is located near the old Douglas plant and offices not far from LAX. In today’s dollars, based on what my grandparents paid for it during the war, it should cost about $130,000.00. It recently sold for $990,000.00. Based on the tried and true 2.5 times your annual income being the max house you can afford, the person that purchased that home needs to make damn near $400,000.00 annually. Any bets on whether the people that bought that home make even half of that? Medicine, education, and housing are controlled by the federal, state, and local governments. Medicine, education, and housing are responsible for almost all of the inflation, and subsequently the debt in the United States. Who controls the debt?
What we should be seeing is real world deflation. The costs of goods, in REAL terms, falling over time due to efficiencies and technologically advances. We’ve seen it in food, and we’ve seen it in consumer goods. We are about to see it in medicine, education, and housing.
Money pumping and inflated values of everything is what underlies the globohomo order and supports it financially.
The fact that people who criticize the end result of the globohomo order and it’s effects on white society apparently have no comprehension of the financial mechanics that undergirds the clouds and holds them up – is seriously disappointing – to say the least.
It’s also a good indication that nobody is coming to save you. Despite all the flowery language and high sounding analysis.
It takes about four years after a currency collapse for another stable system to be put in place. In other words, you’d better have a plan to survive four years without access to the old currency…which will be inflated away to nothing. Best bets are land, stocks in vital companies like oil refining or power production, and precious metals.
Along with a not so modest amount of canned goods and ammo.
…
Best thing you’ve said in a while.
Massive credit creation and money pumping is not a solution for societal ills any more than massive immigration is.
Bernanke didn’t “fix” a goddam thing.
Really surprised that Z characterized the TARP bailouts, QE and runaway debt creation this way. Disappointing honestly.
That would surprise me too, since i did nothing of the sort.
It was the only way to stop a freezing of the credit markets…by which we all survive under. Don’t confuse the rightness of the action at the right time with the untenable position our government has placed us in…
They should have been allowed them to freeze, and then we could have fixed the problem. You’ve confused the role of government. The government is not an actor in these affairs, but a referee. You can make the argument that if the government had did it’s job then the crisis would never have happened, and I agree, but once it happened they had one role. They should have overseen the collapse and the clean up.
No, he said only that the Fed had provided a peaceful way forward at that time.
Never wrote anything to the contrary. That said, we did not have a collapse of the banking system, a great depression and massive civil unrest that would have been the result. From the point of view of the people in charge, that was a good result. Most normal people probably think it was a good result too.
Agreed.
’08-’09 was a systemic financial crisis, i.e. the bank system was close to collapse. That’s about as bad as it gets, and Bernanke and company stopped the train from going over the cliff.
I disagree with many of the ways that they stopped the train (and what they did afterward), but they did stop it. We were very close to short-term credit drying up and that means businesses all over the country shutting their doors. That would have led to very bad things.
Personally, I would have preferred that the fed did an orderly bankruptcy of the big banks instead of bailing many of them out and taking a lot of their debt onto the backs of taxpayers. (The fed also nursed them back to health with low interest rates on the backs of savers and taxpayers.) But it’s easy to say that from the comfort of my living room. In the middle of the battle, you have a different view.
But wouldn’t that have meant the FDIC would have been on the hook for billions in wiped-out deposit accounts? What seems to be the likely result of a TARP 2.0 will be a bail in, as already happened in Malta, that I know of, and perhaps Greece as well.
No. The assets of the failing bank , e.g. Bank of America, would be taken over by a stronger bank such as Wells Fargo.
The shareholder and bond holders of the failed banks would have their values zeroed out and many of the employees would be on the street.
But the depositors would have been o.k. Assuming the FDIC was supported by the Government, which would be easy for them to do, just by moving digits around in cyberspace.
If I recall, the Europeans did not have an FDIC-like entity at the beginning of the crisis but rushed to create one.
Exactly. What should have been a crisis for the elites became a crisis for the average. The government protected the interests of the elite class and let the masses face the repercussions. You lost your house but they didn’t lose their interest in the financial institutions.
And don’t forget that debt from the Bush era is still out there. It will probably never be paid down.
Nobody ever at any time intended to pay it off. That’s the system itself. I don’t mean simply that that’s how it works. I mean that’s what it *is*. Debts are “serviced,” yes, but payoff–that is not intended.
Are you sure about that? If Goldman Sachs and a few others went under would it have collapsed the entire banking system, or would it only have been that certain elites would have lost a lot of money?
I’m not sure, and doubt that any of us has the expertise to know, but a lot of people with (who may have) expertise seem to think otherwise
Not coincidentally, they’re the same people who would have lost their shirts, or are paid by them.
A lot of of people with expertise, and a strong vested interest in the status quo, seem to think so.
There, fify
The credit system was on the verge of collapse. Whatever the merits of a credit based economy, the credit markets freezing would have been like the power grid suddenly failing. Just as you cannot have a modern world without electricity, you cannot have this modern world without the free flow of credit and capital inside the financial system. Think of the credit system as the gyroscope of the modern society.
That does not mean the “solution” was a great idea or even a solution. it just means the fed stopped the system from collapsing and taking the rest of us with it.
Nonsense.
There sure wasn’t a lot of credit for new construction. I couldn’t find a job as a field engineer on a large project, my bread and butter, for 3, yes 3 years. The unemployment was extended thankfully, but was only 25% of what I was making. When I finally got a job on a new project the pay was one quarter less than before. Tough times indeed.
what does the average person have? A job and maybe a house and a couple of vehicles? We could have gotten by in make shift shelters eating MREs. Our lives could have gotten back on track in a few years. The elite class had something to lose. They had fortunes and institutions, and that’s what the government sought to protect. Everything the government did in the 2009 crisis was done to protect the interests of the elite.
Many, many businesses run on short-term credit. Gas stations, grocery stores, even small manufacturing. Shut down that credit and they shut their doors. That would have caused massive unemployment, massive panic and who knows what else.
Sure, in a few months, new credit suppliers would have sprung up, but the chaos caused in the interim could have sunk the economy to the point of a depression.
Yes, Bernanke saved the bacon of a lot of rich people, but he also avoided a depression. Not saying I agree with exactly how he did it, but he did do it.
A “depression” is nothing more than a recession that lingers. Recessions clear out excess exuberance and bad investment decisions made with borrowed money. Properly handled, they actually make us stronger and wiser. Propping up a corrupt banking elite only put off the day of reckoning. It has enabled the profligate, the criminal, and the foolish.
True. But there’s a lot of collateral damage as well.
The fed’s failure was not discharging the debt in the right way. Investors should have taken the haircut, not taxpayers. (The fed move the bad debt to its books.) I would have preferred an orderly bankruptcy of the Wall Street banks. But that’s easier said than done.
Nonsense. The majority of the people experienced a depression (and many still are today) The top line definition of a depression was avoided by the creation of digital money given to the .01% and with which they expanded their control and ownership of the counties real (as opposed to paper) assets.
And precisely WHO, and with what pre-requite/s, told you this?
TARP was a failure in that it protected the elites that brought on the disaster (yes that protection was a success in their own eyes). The system needed structural reform, including a purging of those running it, as happened previously in the US and more recently in other countries.
Bank credit massively collapsed. What are you talking about? US citizens and residents lived under a 16 year economic depression.
You didn’t know about it because it was papered over by a doubling of cash into circulation and a massive uptake in foodstamps and other welfare.
Damn right. The US has 40 million people getting SNAP which would be a lot of breadlines done pre food stamp style.
Half of all kids , half get free or reduced school lunches. When I was a a kid it was a tiny handful and where I grew up was far from affluent.
You’re surely right on both counts. The problem for me and many others who read your posts is that I (we) believe that the people in charge are destroying Western civilization and I (we) want them stopped. If economic collapse is the cost of stopping them, then I (we) believe that it we have to bear it. That’s perhaps a mad position, but the actions of the people in charge have driven me (us) into madness.
Actually, your position is the most sane and clear – and I kind of agree. (I wouldn’t have in 2008-09, but I do now.)
If it makes you (and me) feel any better, the fed and Congress are going to have a lot less ammunition to fight the next downturn than they did the last one. One the downside, it doesn’t look as though the next downturn will be systemic financial crisis, so it’s unlikely the we’ll be looking at a depression/society changing event. But who knows.
They have none NOW. And by the way – insofar as the “FDIC” is concerned… check your bank’s (if you use one) demand deposit$ vs. the FDIC’s reserve fund.
The problem with Bernanke’s actions was that they left no incentive to fix anything, and the same mistakes and reckless behavior have amplified since then…
“In 2008, the world was lucky to have a Fed chairman who had prepared his whole life for such an event, and a very weak political class…People can argue about the solution and various alternatives, but the Fed did provide a peaceful path forward.”
Z, instead of back-pedaling on how “lucky” we all were to have Ben Bernanke bailing out Wall Street at our expense, why don’t you just own your words. Step up to the plate, slugger. Put your big boy pants on.
The Fed’s “peaceful path forward” from 2008 – the “good result” for which we should thank Mr. Bernanke for his guidance and wisdom, is exactly why the economy is about to crash and burn in a hard landing an order of magnitude more disruptive than 2008’s private equity leverage crisis.
We now have an everything bubble, a sovereign debt crisis, and ultimately, a currency crisis about to unfold. Time will tell of course and you can venture back in a year or five to tell me I was wrong. In the meantime, I can rely on you to be clear-eyed on race-realism and culture but by God you’re naive on economics. Maybe illiterate.
The right really needs to get it very it’s obsession with a debt apocalypse. It’s not go8ng to happen. The very ipremise is obsolete. The real threat is high inflation, a threat that has not materialized yet and if many decades in the future.
To the contrary. You will not get hyper inflation with the current monetary system. The very design of the monetary system is to prevent wholesale inflation.
The only thing Fed tightening is going to do is cause deflation. Gargantuan private debt service alone augurs against any notion of hyper inflation.
We haven’t had a serious deflationary episode since the great depression. That’s part of the system design. The people/banks controlling the Fed would rather slit their own throats.
You can make an argument that a major deflationary episode would be a welcome clarifying moment, but the financial elites will do everything in their power, including confiscating your savings and throwing babies into woodchippers, to prevent that.
It’s also to prevent hyper deflation. It tries to ride on the cutting edge of mild, consistent inflation.
Over a matter of decades, the hidden tax on savings benefits investors over savers and encourages consistent monetary velocity, while slowly devaluing debt (notably, government debt).
Nobody swims in vaults full of cash a la Scrooge McDuck, because the system is designed to make it impossible to preserve wealth in that manner.
Not to say that it is a good system, but that’s what it’s intended to do.
The system is designed to allow the government to produce a near unlimited amount of money out of thin air, and later that debt disappears back into thin air. It’s all designed to facilitate government spending. The illegal drug trade has dollarized all of South America and the government gets to spend that money into existence. Economic, monetary and financial policy is all focused on that one goal.
You don’t know what you’re talking about. The “very design” of the monetary system is to prevent bank runs due to maturity transformation and fractional reserve. That is why the fed/FDIC exists. Inflation literally doesn’t enter into the equation.
The one and only reason America’s debt has not already caused hyperinflation is that foreign countries are willing to hold American dollars and bonds as a reserve currency. It’s founded on sand. If that balance shifts even slightly, liquidity disappears and inflation will skyrocket – unless austerity is imposed, in which case it will be massively deflationary.
The one thing it *isn’t* is stable. Inflation and deflation aren’t opposites the way some people think. They’re both part of the boom-bust or business cycle.
The US dollar is the reserve currency and the need for stability will trump any economic rationality. Back a decade ago the state of California handed out IOU’s and banks took them even though they were not required too.
The USG can do the same ad infinitum and truth be known you’ll be dead of old age long before a collapse
quoth Keynes
The market can stay irrational longer than you can stay solvent
Truth is hoping for a collapse is just a variant of the rescue scenario, someone, something will come along and save us.
Well no it won’t. YOU not the other guy YOU or your descendants are going to have to fix things. Right now we have a small window to make the system work and its still worth trying, Please don’t go do stupid illegal things.
Eventually though its going to come to serious matters and instead of buying guns and ammo it will be using them.
The window may open or it may have to be pried open.
What will you suffer for and what do you want enough to suffer excruciating pain for. When you figure that out, you can have it
Till than, keep calm and carry on.
I liked the scene in “The Big Short” where the autistic guy said “I was early but I wasn’t wrong”, and the SMART guy said “There’s no difference”.
You might usefully spend some time and money here: http://www.shadowstats.com/
And less parroting the drivel you are fed in the corporate media.
Bernake and company actually did save the world. There were (and are) institutions too big to fail, in the sense that their failure would lead to societal collapse and widespread misery. The bad debt was just too big for any entity (or group of entities) but the Fed to hold.
We just replicated the strategy that central bankers have often used successfully before, for example with the various sovereign debt crises. Freeze the debt, rebuild the credit and strength of private institutions, then do an orderly liquidation with prudent haircut losses.
The costs to the system are both lesser and more manageable.
Central banking is a real thing and if done well much better than the bad old days of hard money. It’s not difficult but it does require both courage and honesty. Volker and Bernake had that. Greenspan (who with the Mrs. loved to party with the other Cloud People) didn’t.
The real problem was letting the institutions get too big to fail in the first place. That would require political action for which we can no longer reasonably hope. The 2016 Republican platform called for returning Glass Steagel. No one serious believed it would happen. It didn’t. Since we didn’t learn from disaster I guess we’ll need to move on to Catastrophy.
Who could really know? It simply looks very suspicious to the little guy. They engineer all these credit default swaps, bet against their own bad investments and toxic debt to the tune of billions and then we the tax payers have to make them whole. And it’s for our own good. Seems too convenient for them. I flunked out of law school and nobody’s paying off the debt of MY mistakes…
Oh, am i being a moron here confusing quantitative easing with the bailout, which are separate things? Or are they related?
Nor is it suggested he did. He maneuvered the country to a softer landing hy providing a lot of liquidity to the markets. Keep in mind that the government’s incompetence in goosing the housing market with loose mortgages is what precipitated the crisis.
I expect the next crisis will also have the government’s fingerprints on it…
Agree.
Bernanke’s solution was the most massive transfer of wealth to the bankster thieves imaginable, and by postponing the inevitable day of reckoning increased its upcoming size by an order of magnitude.
I spent a decade on Wall St. the depth of corruption is astonishing.
“…Bernanke’s solution was the most massive transfer of wealth to the bankster thieves imaginable…”
Yes.