The Coming Crisis

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?

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Calsdad
Calsdad
1 year ago

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.

BFYTW
BFYTW
Reply to  Calsdad
1 year ago

Really surprised that Z characterized the TARP bailouts, QE and runaway debt creation this way. Disappointing honestly.

Samuel_Adams
Member
Reply to  BFYTW
1 year ago

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…

Member
Reply to  Samuel_Adams
1 year ago

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.

Mysteerious Rooshian Vooman
Mysteerious Rooshian Vooman
Reply to  BFYTW
1 year ago

No, he said only that the Fed had provided a peaceful way forward at that time.

Citizen of a Silly Country
Citizen of a Silly Country
Reply to  thezman
1 year ago

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… Read more »

Luddite
Luddite
Reply to  Citizen of a Silly Country
1 year ago

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.

Firewire7
Firewire7
Reply to  Luddite
1 year ago

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… Read more »

Member
Reply to  Firewire7
1 year ago

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.

Epaminondas
Member
Reply to  Citizen of a Silly Country
1 year ago

And don’t forget that debt from the Bush era is still out there. It will probably never be paid down.

Mysteerious Rooshian Vooman
Mysteerious Rooshian Vooman
Reply to  Epaminondas
1 year ago

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.

Chaotic Neutral
Chaotic Neutral
Reply to  thezman
1 year ago

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?

Chaotic Neutral
Chaotic Neutral
Reply to  Chaotic Neutral
1 year ago

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

Vizzini
Member
Reply to  Chaotic Neutral
1 year ago

Not coincidentally, they’re the same people who would have lost their shirts, or are paid by them.

Trumper
Reply to  Chaotic Neutral
1 year ago

A lot of of people with expertise, and a strong vested interest in the status quo, seem to think so.

There, fify

bilejones
Member
Reply to  thezman
1 year ago

Nonsense.

Dtbb
Dtbb
Reply to  thezman
1 year ago

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.

Member
Reply to  thezman
1 year ago

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.

Citizen of a Silly Country
Citizen of a Silly Country
Reply to  Chaotic Neutral
1 year ago

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.

Epaminondas
Member
Reply to  Citizen of a Silly Country
1 year ago

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.

Citizen of a Silly Country
Citizen of a Silly Country
Reply to  Epaminondas
1 year ago

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.

bilejones
Member
Reply to  Citizen of a Silly Country
1 year ago

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.

Moe Grimm
Moe Grimm
Reply to  Chaotic Neutral
1 year ago

And precisely WHO, and with what pre-requite/s, told you this?

Joshinca
Joshinca
Reply to  thezman
1 year ago

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.

John Gritt
John Gritt
Reply to  thezman
1 year ago

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.

A.B. Prosper
A.B. Prosper
Reply to  John Gritt
1 year ago

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.

MBlanc46
Reply to  thezman
1 year ago

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.

Citizen of a Silly Country
Citizen of a Silly Country
Reply to  MBlanc46
1 year ago

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.

Moe Grimm
Moe Grimm
Reply to  Citizen of a Silly Country
1 year ago

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.

pyrrhus
pyrrhus
Reply to  thezman
1 year ago

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…

BFYTW
BFYTW
Reply to  thezman
1 year ago

“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… Read more »

Joshinca
Joshinca
Reply to  Calsdad
1 year ago

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.

JZs
JZs
Reply to  thezman
1 year ago

The only thing Fed tightening is going to do is cause deflation. Gargantuan private debt service alone augurs against any notion of hyper inflation.

Vizzini
Member
Reply to  JZs
1 year ago

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.

Vizzini
Member
Reply to  thezman
1 year ago

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.

Member
Reply to  Vizzini
1 year ago

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.

Lance_E
Member
Reply to  thezman
1 year ago

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… Read more »

A.B. Prosper
A.B. Prosper
Reply to  Lance_E
1 year ago

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.… Read more »

Member
Reply to  A.B. Prosper
1 year ago

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”.

bilejones
Member
Reply to  thezman
1 year ago

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.

Fabian_Forge
Member
Reply to  Calsdad
1 year ago

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… Read more »

Chaotic Neutral
Chaotic Neutral
Reply to  Fabian_Forge
1 year ago

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…

Chaotic Neutral
Chaotic Neutral
Reply to  Chaotic Neutral
1 year ago

Oh, am i being a moron here confusing quantitative easing with the bailout, which are separate things? Or are they related?

Samuel_Adams
Member
Reply to  Calsdad
1 year ago

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…

bilejones
Member
Reply to  Calsdad
1 year ago

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.

Sam J.
Sam J.
Reply to  bilejones
1 year ago

“…Bernanke’s solution was the most massive transfer of wealth to the bankster thieves imaginable…”

Yes.

Felix_Krull
Member
1 year ago

Epaminondas
Member
Reply to  Felix_Krull
1 year ago

Best thing you’ve said in a while.

Mcleod
Mcleod
1 year ago

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,… Read more »

Calsdad
Calsdad
Reply to  Mcleod
1 year ago

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.

Epaminondas
Member
Reply to  Calsdad
1 year ago

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.

Tim
Tim
Member
Reply to  Epaminondas
1 year ago

Along with a not so modest amount of canned goods and ammo.

Saml Adams
Saml Adams
1 year ago

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”.

Calsdad
Calsdad
Reply to  Saml Adams
1 year ago

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.

Joshinca
Joshinca
Reply to  Calsdad
1 year ago

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.

Epaminondas
Member
Reply to  Calsdad
1 year ago

The real danger of fiat currencies is the ability they provide to the financiers to buy off the politicians. We’re there.

A.B. Prosper
A.B. Prosper
Reply to  Epaminondas
1 year ago

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… Read more »

Epaminondas
Member
Reply to  A.B. Prosper
1 year ago

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.

A.B. Prosper
A.B. Prosper
Reply to  Epaminondas
1 year ago

I meant to say 1890 but you are correct about the 1965 immigration act,

Wolf Barney
Wolf Barney
1 year ago

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.

Lineman
Lineman
Reply to  Wolf Barney
1 year ago

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…

Mcleod
Mcleod
Reply to  Wolf Barney
1 year ago

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.

Chaotic Neutral
Chaotic Neutral
Reply to  Wolf Barney
1 year ago

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… Read more »

A.B. Prosper
A.B. Prosper
Reply to  Chaotic Neutral
1 year ago

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

Alzaebo
Alzaebo
Reply to  Chaotic Neutral
1 year ago

When the wool gets full, it’s time to shear the sheep! Not a flaw.

Lance_E
Member
Reply to  Wolf Barney
1 year ago

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… Read more »

Fabian_Forge
Member
Reply to  Lance_E
1 year ago

“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. “

Juri
Juri
1 year ago

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.

bad guest
bad guest
Reply to  Juri
1 year ago

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.

Juri
Juri
Reply to  bad guest
1 year ago

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 ?

TomA
TomA
1 year ago

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.

Rod1963
Rod1963
Reply to  TomA
1 year ago

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.

Guest
Guest
1 year ago

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… Read more »

bad guest
bad guest
Reply to  Guest
1 year ago

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

Guest
Guest
Reply to  bad guest
1 year ago

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?

Epaminondas
Member
Reply to  Guest
1 year ago

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.

Citizen of a Silly Country
Citizen of a Silly Country
1 year ago

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… Read more »

Lance_E
Member
Reply to  Citizen of a Silly Country
1 year ago

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.

Citizen of a Silly Country
Citizen of a Silly Country
Reply to  Lance_E
1 year ago

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.

Outis
Outis
1 year ago

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.

King Tut
King Tut
1 year ago

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.

Dutch
Dutch
Reply to  King Tut
1 year ago

That’s the attitude you see when people are convinced of the fundamental righteousness of their cause.

Joshinca
Joshinca
1 year ago

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.

Dutch
Dutch
1 year ago

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… Read more »

Alzaebo
Alzaebo
Reply to  Dutch
1 year ago

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.

bilejones
Member
Reply to  Dutch
1 year ago

Looked at Amazon’s PE recently? 374+

Sam
Sam
1 year ago

The first few paragraphs of this do not distinguish between the two Bushes, and thus confuse.

Drake
Drake
1 year ago

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.

Babe Ruthless
Babe Ruthless
1 year ago

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.

Alzaebo
Alzaebo
Reply to  Babe Ruthless
1 year ago

Who is this “we”, kemosabe?

John Gritt
John Gritt
1 year ago

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

Doug
Doug
1 year ago

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.

Ryan
Ryan
1 year ago

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.

Dutch
Dutch
Reply to  thezman
1 year ago

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.

Citizen of a Silly Country
Citizen of a Silly Country
Reply to  Dutch
1 year ago

See 1987 and portfolio insurance. Nothing new.

Ryan
Ryan
Reply to  Dutch
1 year ago

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.

Ryan
Ryan
Reply to  thezman
1 year ago

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,… Read more »

Moe Grimm
Moe Grimm
1 year ago

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… Read more »

Whiskey
Whiskey
1 year ago

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… Read more »

Citizen of a Silly Country
Citizen of a Silly Country
Reply to  Whiskey
1 year ago

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… Read more »

billrla
Member
Reply to  Citizen of a Silly Country
1 year ago

Citizen: You get it. The U.S. is headed in the same direction.

Alzaebo
Alzaebo
Reply to  Citizen of a Silly Country
1 year ago

Tax riots versus welfare riots, then.

We are between the Scylla of bust-out and the Charybdis of welfare riots.
Which way to run?

Lineman
Lineman
Reply to  Alzaebo
1 year ago


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…

Lineman
Lineman
Reply to  Whiskey
1 year ago

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…

Yves Vannes
Yves Vannes
Member
1 year ago

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… Read more »

Dutch
Dutch
Reply to  Yves Vannes
1 year ago

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.

Vizzini
Member
1 year ago

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.

Thales
Thales
1 year ago

It’s a buying opportunity. I’m expecting the S&P 500 to be trading in the 3000-3100 range next year.

Juri
Juri
Reply to  Thales
1 year ago

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

Tax Slave
1 year ago

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.

Lance_E
Member
1 year ago

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”.

A.B. Prosper
A.B. Prosper
Reply to  Lance_E
1 year ago

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… Read more »

Lineman
Lineman
Reply to  A.B. Prosper
1 year ago

@AB
Do you have a good job that pays well or are you suffering from bad wages…

A.B. Prosper
A.B. Prosper
Reply to  Lineman
1 year ago

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… Read more »

Lineman
Lineman
Reply to  A.B. Prosper
1 year ago

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…

A.B. Prosper
A.B. Prosper
Reply to  Lineman
1 year ago

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… Read more »

Max
Member
1 year ago

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… Read more »

Alzaebo
Alzaebo
Reply to  Max
1 year ago

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!

Chris_Lutz
Member
1 year ago

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.

JR Wirth
JR Wirth
1 year ago

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.

Joachim
Joachim
1 year ago

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.

Brad
Brad
1 year ago

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!

Rod1963
Rod1963
1 year ago

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.… Read more »

miforest
Member
1 year ago

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… Read more »

Mysteerious Rooshian Vooman
Mysteerious Rooshian Vooman
1 year ago

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.

Doodle Dandy
Doodle Dandy
1 year ago

Wondering if Z will do a post soon on MMT.

Random Dude on the Internet
Random Dude on the Internet
1 year ago

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… Read more »

Member
1 year ago

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

King Tut
King Tut
1 year ago
Roe vs. Godzilla
Roe vs. Godzilla
1 year ago

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.… Read more »

Tekton
Tekton
Reply to  Roe vs. Godzilla
1 year ago

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… Read more »

Dave smith
Dave smith
1 year ago

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.

Willy Nohmor
Willy Nohmor
1 year ago

Written by Michael Snyder, guest columnist

Thomas The Tinker
Thomas The Tinker
1 year ago

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..

Yellowish
Yellowish
1 year ago

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… Read more »

modsquad
modsquad
1 year ago

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… Read more »

John Pate
Member
1 year ago

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.

bpromethiusb
bpromethiusb
1 year ago

“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… Read more »

sirlancelot
sirlancelot
1 year ago

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… Read more »

bilejones
Member
Reply to  sirlancelot
1 year ago

“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.

Jonah Kyle
Jonah Kyle
1 year ago

If you aren’t prepping, you will die. If you don’t teach your children to prep, they will die.

It’s that simple.

Dan
Dan
1 year ago

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.

Paul Bonneau
1 year ago

Kicking the can down the road is a save? Even when it makes the eventual crash worse?

Thomas The Tinker
Thomas The Tinker
Reply to  Paul Bonneau
1 year ago

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…….