House of Cards

One of the things that was revealed in the 2008 mortgage crisis was the fragility of the global financial system. The system that was born of the Louvre Accords was supposed to be robust and resilient, unlike the previous arrangements. The masters of finance would be able to keep a steady hand on the tiller, guiding the world economy through each storm, rather than have a free-for-all ever time there was a little turmoil. Up until 2008, everyone knew something like the mortgage crisis was impossible.

A credit based financial system was supposed to get around the problem of currency devaluation to solve political problems. That’s been a problem since the advent of coinage. When the state gets in trouble, the easiest ways to solve it is to spend money on the public. Whether it was debasing the coinage or printing paper money, the solution to spending money that did not exist was the create it. That always created new and bigger problems for the society down the line.

One way of looking at the mortgage crisis is as a form of currency devaluation. The global financial system is based in credit. That’s the base unit of value. Government debt and to a slightly lesser degree, corporate debt, is the foundation of the global financial system. Government issues debt, which increases the supply of money in the system, as that debt is used as collateral in the system. Central banks can buy and sell debt to control the supply of money in the system.

What no one thought much about, it seems, is how players in the system could devalue credit, in the same way governments devalued currency. That’s exactly what the mortgage brokers were doing. By lowering credit standards for borrowing, they were debasing a fundamental unit of currency in the system. This went unnoticed for a long time until everyone started noticing at the same time. The panic to unload the debased currency – those bad mortgages – set off the mortgage crisis of 2008.

That’s something to keep in mind as the next crisis appears on the horizon. The Wall Street Journal ran a story on General Electric’s financial issues. It’s based on a report by independent watchdog Harry Markopolos, who got famous sounding the alarm over Bernie Madoff’s scheme. For those familiar with global corporate finance, it is an interesting read, as GE is the exemplar of corporate legerdemain. It is not unreasonable to say that GE exists to exploit gaps in the regulatory system.

General Electric is one of those companies that looks like one thing, but in reality is just a financial scheme masquerading as a legitimate business. For example, their stunning growth in the 1990’s was not due to great manufacturing innovation. It was the result of GE Capital, a banking arm of the company. This arm not only financed their clients, who bought GE products, it financed GE’s expansion through acquisition. Without GE Capital as its credit creation vehicle, there would be no General Electric.

When you dig through the report, there are the familiar signs from the 2008 crisis. The allegation is GE is exaggerating one side of the balance sheet and minimizing the other, in order to make its liquidity appear much higher than reality. The whole point of this is to maintain a credit rating that allows it to borrow at competitive rates. Those lenders are not all that interested in the facts behind those numbers, as they have no incentive to examine the credit worthiness of General Electric.

Now, GE is one firm and maybe this is both exaggerated and isolated. That’s not the way to bet though. One of the ignored aspects of global business is that even tech oligopolies rely on a financing arm to exist. Apple, for example, is really a hedge fund that makes phones. Braeburn Capital is a wholly owned asset management company based in Reno, Nevada. Other tech giants are far less transparent, but every bit as wedded to the credit system to maintain their positions.

In theory, having global corporations as nodes in the global credit system is not a bad thing, because it makes them easier to regulate. In reality, as we saw with the mortgage crisis and now with General Electric, it also encourages everyone to overstate their credit worthiness. It also encourages opacity. The more complex and opaque the financial statement, the more costly the audit. Again as we saw with the credit agencies in 2008, the simple answer it to take the statements at face value.

That was the other thing revealed in the mortgage crisis. The system was a black box, even to the people inside it. The decisions makers in the big banks were unaware of what was happening upstream to pollute their asset pools. Of course, they had no incentive to care, so they never looked. Those people upstream had no way of knowing what they were creating downstream, but they had no reason to care. Regulators, of course, had no skill to examine the system and they did not care either.

Global debt, which includes government, corporate and household, is now 50% higher than it was at the time of the 2008 financial crisis. Due to the massive expansion of government debt, the stated quality of the overall debt is higher than in 2008, but this assumes government never runs out of money. Given that government solvency is tied to corporate and household solvency, that’s not an indisputable assumption. All anyone can really know is the world is awash in debt at all levels.

One read of the 2008 crisis was that it was a proof of concept. Instead of the system collapsing the world into depression and war, it withstood a huge blow and slowly eased the world out of the crises. The other read is that it was a warning about the internal logic of the system. A credit based economy is a house of cards. If the wrong card falls, the whole system collapses. It could be that the warning over GE is like the warning over mortgage lending. A warning to the house of cards.


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John Smith
Member

Way to go, Z. Rabid anti-semites inbound, impact in approximately 3, 2, 1…
🙂

Member

Not faster than the rabid anti-anti-Semites.

Citizen of a Silly Country
Guest
Citizen of a Silly Country

Shoots, scores.

John Smith
Member

I stand corrected. Usually when I see posts like this, the comments fill up with yarns about the Rothchilds and cabals of fiendish joos hiding behind the scenes. But – point of order: the stage was set for the sub-prime crisis when Jimmeh Carduh decided that it was racism, and not stupidity that kept blacks from qualifying for mortgages and loans. Some of you may remember his asnine involvement in ‘Habitat For Humanity’ and similar dog and pony shows. His administration leaned heavily on the banks to begin suicidal loans programs for blacks and the economists of the day went… Read more »

Vegetius
Guest
Vegetius

Trying to separate Jews from accounting fraud is like trying to pick gnat shit out of pepper.

Member

George? George Soros? Is that you?

JR Wirth
Guest
JR Wirth

I like it when they say “joos” because they’re so used to being deleted by comment sections. Makes me laugh.

MartyEv
Guest
MartyEv

That’s very sad, what has become of the state of big companies in America. GE used to be a marquee, brand name company that stood for all things innovative and great about America. Companies and big business, before the global era, at least cared somewhat about the health and culture of their own nation before. Now its all just about creating the most profit as possible, regardless of how much pain is inflicted.

Exile
Guest

Global pirate ships. The modern market isn’t about investing in a company long term unless you’re a value/dividends guy. Sears/KMart is another now-joint American flagship Enterprise that’s been strip-mined by slimy ownership. Skin in the game is the antidote. My ideal ethnostate would outlaw the “limited liability entity” concept along with the idea of corporate personhood in general. If you invest in a company you’re on the hook for its liabilities, not just the money you put in through a string of 40 offshore holding companies or some such nonsense. Libertarians of course will squeal about the chilling effect on… Read more »

Maus
Guest
Maus

OK, but GE was a value play. P/E beaten down, long history of paying a solid dividend. Then black box financialization bullshit and now we have a crap investment that cannot really afford its one-penny-a-share dividend. Reminds me of BAC. Storied American bank, trading in mid 40s and paying a 5% dividend on the regular. Just what every portfolio needs. Then in 2008, regulators forced them to take over that nuclear turd of NINJA loans Washington Mutual. Before long BAC was trading under $3 per share and paying a penny dividend. It has clawed its way back to upper $20s… Read more »

Exile
Guest

Playing the present system without insider info or friends in high places is essentially gambling with unknown “house rules.” Investor beware and pray. Today’s financial market is the broken-home child of the managerial state divorce of ownership and accountability. We need to reconcile those parents in the sane ethnostate of the future. My state’s investors would not buy tiny pieces of vast and far away enterprises run by people they will never meet. Those wishing to invest would buy in with private finance contracts and lending – no “publically-owned” market. This would localize and down-scale investment and compliance. No limited… Read more »

Andy Texan
Guest

All the markets are fixed for the benefit of the globalist insiders. See Ann Barnhardt’s posts on the commodity markets. John Corzine is back in the game after stealing millions. No negative impact at all on his freedom.

Sam J.
Guest
Sam J.

“…John Corzine is back in the game after stealing millions…”

A good example of the power Jews have in the US. He straight up stole peoples money and used it to gamble in the market. If he would have won he would have put the profits in his pocket. He didn’t but instead of being thrown in jail nothing at all happened. Serious corruption.

Dutch
Guest
Dutch

Actually it was Angelo Mozilla and Countrywide. I had the opportunity to ask Ken Lewis about the deal in front of a room full of people, all of which knew how much the deal stank. Lewis assured me that there was no way this wouldn’t work out brilliantly. Lots of murmurs and giggles in the room.

Moran ya Simba
Guest
Moran ya Simba

I agree, GE does things that every boy loves. They build giant turbofan jet engines. That’s pretty damn cool. Apparently they are a Wall Street bank w an aircraft engine factory instead of the other way around. Sad….

Penitent Man
Guest
Penitent Man

I dont know Marty, seems a majority of these CEOs are all in on the PC and damn the profits. Could be I’m missing the strategic game and the PC thing is a mask for importing cheap labor or something.

Dunno, I never claim to be highly intelligent. I just know the number of corporations this midwit gives money to willingly is few and far between. The pozzed CEO runs their gob and I then buy things second hand. All in all it is a money saving endeavor that I know my Scots ancestors approve of.

joe
Guest
joe

Buying politicians is the best investment, in a fascist economy – ” all within the state, nothing outside”. Giving words is cheaper than cash. If you owned a company, would you dare offend the PC crowd? Not smart.

Exile
Guest

It’s wise to take a middle position on economic collapse scenarios. Z’s mentioned the “NeverBulls” before – perma-Bears who’ve predicted 10 of the last 3 recessions at ZeroHedge, complete with “Cross of Doom” graphs for midwit quants. I spent a lot of time awaiting that Apocalypse in the last 20 years and suffered financially for it (looked smart in 2001 and 2008 but that made me 90% wrong). The libertarians and GOP (same thing on economics) rely on fiscal fearmongering to sell their snake oil, and I bought in hard. I think 2008 (and the Cyprus crisis a few years… Read more »

Nunnya Bidnez, jr.
Guest
Nunnya Bidnez, jr.

” The owners of the global financial casinos will simply dip into the taxpayers till to back up their bad bets. ”

I notice Corzine is back.
When things go sideways, “borrow” your clients’ money.
Fiduciary duties be damned.

DLS
Guest
DLS

Nice post, but I would suggest a barbell not of cash and risky bets, but one of cash, real estate and index funds. I have enough in cash that I don’t mind drops in the market because I can buy in at lower levels, all the way down to a 50% market decrease. Beyond that, we are all screwed anyway.

Exile
Guest

I won’t disagree with anyone on the details. I wanted to put something out there conceptually. There are a million ways to execute the strategy and if I were sitting down to give someone actual detailed financial advice I would probably end up with something closer to what you are describing than what I was spitballing above.

Compsci
Guest
Compsci

I tend to agree, however if there is a collapse, cash would seem worthless for survival. I keep some around for short term emergencies, but long term? What are the lessons taught to us from Argentina, to Zimbabwe, to Venezuela. What retains—or increases in value—yet is liquid enough to exchange or take with you should dollars become worthless or are refused?

Exile
Guest

That’s the hard collapse scenario. Cash is still great to have in anything short of that. See my comment below re general ideas on what retains “barter” value.

Check out The Rural Ranger (https://www.amazon.com/RANGER-SUBURBAN-SURVIVAL-MANUAL-SNARES/dp/1411600738) for some good advice for harder collapse survival. I’m listening to the Audible this weekend.

Dutch
Guest
Dutch

Balvenie

Badthinker
Guest
Badthinker

Jim Beam.

dad29
Guest

Glenfittigh

Nunnya Bidnez, jr.
Guest
Nunnya Bidnez, jr.

Breyer’s

(that’s ice cream)
Mmmmmm

Gravity Denier
Guest
Gravity Denier

“What retains—or increases in value—yet is liquid enough to exchange or take with you should dollars become worthless or are refused?” I’ve thought a lot about that and am still not especially persuaded that any source of value is completely reliable. Even gold isn’t good as gold. You have to store it someplace; tell me where you can store it that’s completely safe. A vault in Switzerland? Allocated gold in the Perth Mint? Your gold won’t dissolve, but your government can negate your passport so you can’t get to the hoard. Gold coins? Silver coins? Will your grocery or shoe… Read more »

Official Bologna Tester
Guest
Official Bologna Tester

@Gravity Denier. Knowledge plus skill plus experience. If you have those, you can survive just about anywhere.

DLS
Guest
DLS

Good point. How’s that real estate and farmland working out for whites in Zimbabwe and South Africa?

Citizen of a Silly Country
Guest
Citizen of a Silly Country

Yep, watch out for the Doom and Gloomers, even the honest ones such as John Hussman, who really does great research but has been more or less wrong for a decade. Red-pilled white guys are particularly susceptible to the message. A barbell approach is a good alternative, but I’d suggest a little less concentrated and unusual investments than bitcoin or individual stocks. Just go with small/mid cap value funds for the risk side such DVP or QVAL for U.S., IVAL or a RAFI fund for international and RAFI or Cambria’s EYLD emerging markets fund. Historically, small value has the highest… Read more »

DLS
Guest
DLS

I agree. I use Vanguard ETFs due to low fees. Just 4 funds (VTI, VBR, VEU and VNQ) can give you a nice mix of total US, small value, international and real estate. You can park your cash in TIPs or s/t corporate bonds (e.g. VCSH), but I like high yield savings accounts, which are in the 2.0%-2.5% range. I also agree that 12% is the high end of expected market returns, even though there are long periods that small-cap value funds have averaged this. I would expect more like 7%-10% (nominal) over the long run, but I use the… Read more »

Citizen of a Silly Country
Guest
Citizen of a Silly Country

Vanguard was God’s gift to retail investors. Btw, I wouldn’t bank on 7% to 10% nominal from U.S. stocks over the next decade. Good bet is ~2%-3% real plus a bit of a boost from value so let’s say 3% to 4% real, 5% to 6% nominal. Just a guess.

Research Affiliates is a nice site for checking out ball park future returns estimates. Check under Asset Allocation. For small and value premium expectations, check under Smart Beta. Their estimates are reasonable.

Dutch
Guest
Dutch

John Hussman has the “what” nailed down. The “when” is the hard part.

Citizen of a Silly Country
Guest
Citizen of a Silly Country

Agreed. He’s a good researcher and respected by other researchers in the biz. That’s what makes his record so scary.

If an honest, bright guy who’s probably generally correct can be “wrong” for so long, how do you rely on any strategy.

The answer is that you can’t. Use a variety of assets (US stocks, int’l stocks, bonds, real estate, commodities, etc.) and strategies (buy and hold, trend, value, momentum, prepper, etc.).

Dutch
Guest
Dutch

Citizen, agree.

Member

Dave Ramsey is big on mutual funds and all of the same bad incentives exist for mutual funds that exist for stocks, not to mention mutual funds are just (mostly) collections of stocks anyway. If some major meltdown happens, most of the banks will go bankrupt. I agree about the gold pushers. In some cases you can find the same literal people when they were young in the 80s predicting hyperinflation in the very near future. I saw a video of Doug Casey predicting hyperinflation on some talk show where they were saying the newly elected, but not yet sworn… Read more »

Citizen of a Silly Country
Guest
Citizen of a Silly Country

Your last point is the scary one. We can diversify our portfolios all day, but even if we do a good job side-stepping the financial disaster, the government can simply change the laws and take it from us.

CAPT S
Guest
CAPT S

Your advice is excellent. I’ve been around long enough to know that “the sky is falling” crowd aren’t terribly helpful. That said, the title of this post says it all. And not to overplay on cliches, but at some point the music WILL stop. Not sure if that’s my lifetime, my kids, my grandkids. The crisis du jour prognosticators aren’t sure either. But when the music DOES stop I want my family surrounded by their own tribe, preferably ones with tools and know-how.

Member

I have heard the same about GM and Ford credit, that which keeps them afloat and in the black. Reminds me of McDonald’s statement to it’s franchises that they are not in the hamburger business but in the real estate business.

Moran ya Simba
Guest
Moran ya Simba

McDonald’s statement to it’s franchises that they are not in the hamburger business but in the real estate business.

That actually makes sense in a cynical, ‘the world is all about business’ way.

Exile
Guest

A huge (IIRC big majority) percentage of our corporate profits come from investments rather than production sales and services. That’s a “financialized” economy. That’s bad from every angle. It incentivizes the wrong priorities, encourages short-term thinking and malinvestment of time and resources, on and on. Wise men from ancient Sumeria to the present have always distinguished between productive economic activity and parasitic economic activity. Farmers producers artisans and the like who make things and employ people are producers. Parasites live by leasing and lending, profiting from mere ownership rather than productive activity Debt jubilees were an ancient Near East practice… Read more »

Badthinker
Guest
Badthinker

More conservatives need to read Belloc. “The mercy of Allah” describes exactly how modern business types operate.

Karl McHungus
Guest
Karl McHungus

not all franchise’s own the real estate they occupy.

Member

I guess that’s why those new franchisees are so eager to go to their new McDonalds in places like Moosejaw, Alaska.

dad29
Guest

Yes. And any car dealer will tell you the same: not cars, R.E.!! Same with downtown surface-parking lots, by the way.

Monsieur le Baron
Guest

The credit bubble is to a large extent driven by lots of money being printed, driving the interest rates to zero. You can get as much free money as you want… if you’re not a deplorable. When interest is high, only active, risky investments pay. Now, you can do something asinine like borrow money to buy mortgages and drink the spread. The genius economists have decided the only risk of printing money is The Big Inflation, and therefore, it is good to print as much money as possible. They pretend this is a new insight, but really, it is just… Read more »

Moran ya Simba
Guest
Moran ya Simba

GE’s slogan is ‘Imagination at Work’. That’s gotta be a cruel insider joke

Member

I like the old Dilbert, roughly “We need a slogan that shows we’re action-oriented.” “How about ‘Measure once, cut twice?'” “I like it!”

Official Bologna Tester
Guest
Official Bologna Tester

Moran ya Simba said: ” GE’s slogan is ‘Imagination at Work’. That’s gotta be a cruel insider joke.” Their slogan used to be ” We Bring Good Things to Life.” That was before they became Vulture Capitalists.

Whiskey
Guest
Whiskey

So how does the U.S. pay for a global military and 4 million immigrants a month Which Biden assures us is cheap?

The answer I get is kulaks.

Dupont Circle
Guest
Dupont Circle

Biggest part of public debt is pensions. Next, welfare. Everybody wants a free lunch.

Member

It is not just the financial system, the entire thing is held together by spit and duct tape. Any sign of inclement weather and the stores clear out in hours. Same when the EBT system goes haywire and the beneficiaries riot. Everything runs just in time and there is little room for error.

Karl McHungus
Guest
Karl McHungus

The only question I want an answer to, regarding this topic is:

inflation, or deflation

Once I know that, I know where to place my bet.

Exile
Guest

No one can credibly say with any certainty beyond educated guessing. The reason guys like Buffet and Soros get and stay rich has more to do with their ability to play the system than being witchy-good predictors of macro trends worldwide. Insider information and political access/influence matters more than smarts or ability (although those do put a ceiling on what you can accomplish). Almost everyone who gives you financial predictions with confidence has an agenda. You can try to filter for that by finding out how they’ve bet their own money, but even then their best guess is still a… Read more »

Karl McHungus
Guest
Karl McHungus

I know 🙂 If I was capable of answering that question (inflation/deflation) I wouldn’t be posting here 🙂

Citizen of a Silly Country
Guest
Citizen of a Silly Country

Buffet was an amazing stock picker when he was young. But once the amount of money he managed grew too large to invest in microcap stocks, he switched to buying value companies with a quality tilt, which would produce very good but not Buffet like returns. So how did he juice his returns?

Leverage.

He bought GEICO and used the float to lever Berkshire 50%. Buffet’s second genius (the first being his earlier stock picking) was buying his own source of margin. He also created this folksy image that garned trust among his investors allowing him to weather so really horrible times.

Nunnya Bidnez, jr.
Guest
Nunnya Bidnez, jr.

He also has political connections which ensure that insurance laws & estate laws are to his company’s benefit.

Karl McHungus
Guest
Karl McHungus

for all his money he seems like a genuinely boring twat. his imagination doesn’t extend past banging his secretary.

Citizen of a Silly Country
Guest
Citizen of a Silly Country

He likes bridge, but outside of that, he doesn’t seem like much of interesting guy. Just seems to love making money.

Monsieur le Baron
Guest

Buying value on leverage is what traditional businessmen are supposed to do. Credit lines for nobles and merchants have existed for centuries. Buffett is an honest investor.

It’s all this derivative nonsense that concerns me.

Citizen of a Silly Country
Guest
Citizen of a Silly Country

Plan for both.

Deflation use treasuries, TIPs, cash and, maybe, gold (would help in really bad times)

Inflation use commodities, gold, emerging markets, int’l RE, TIPs

Just use an all-weather type portfolio (25% cash, 25% TIPs or treasuries, 25% stocks and 25% gold/commodities/REITs) and move on with your life.

Vegetius
Guest
Vegetius

If you can afford a piece of land between San Antonio and Austin, I’d get some of that, too.

And more guns.

Karl McHungus
Guest
Karl McHungus

anyone can afford land in Texas. problem is, you can’t move it somewhere worth living.

Vegetius
Guest
Vegetius

Nobody said anything about living there. I said buy land.

Austin and San Antonio are growing towards each other, with San Marcos in the middle. In another thirty years it will be unbroken Mega Lo Mart Sprawl.

Mike Walner
Guest
Mike Walner

It’s been over one hundred degrees there for what, the last two months or so. Hot ugly scrub but with great winter weather and some nice water resources with the rivers and springs.

Maus
Guest
Maus

+1 CoSC. I have half my holdings in a Permanent Portfolio as outlined by Harry Browne (no libertarian homo). It grows slowly, think singles and doubles rather than triples and homeruns. But it really has low volatility and protects from the downside. Maybe it’s not ideal, but it provides peace of mind.

Member

You need to understand two things. 1. Inflation/deflation is entirely under Federal Reserve control. It’s not something that “just happens.” And when I say entirely, I mean entirely. If there’s a 2% inflation rate, it’s because the Fed wants a 2% inflation rate. 2. If you look at a chart of US monetary value and inflation over the history of the US (see link below), you’ll see that the Fed, since the end of the great depression, has pursued a strategy of mild, continuous inflation. The fed has only allowed very brief, mild deflation a few times since then —… Read more »

disordered deacon
Guest
disordered deacon

how long can mild inflation be sustained though? over the years, it seems not so mild anymore…

Member

If your economic growth keeps pace with your inflation rate. indefinitely. A certain amount of inflation is reasonable to account for an expanding economy. Via quantitative easing since 2008, the Fed and the US government have managed to print an enormous amount of paper without greatly raising interest rates or inflation (virtually print, not on actual presses). An economist would have to explain to me how they are managing that. I am under the impression that a lot of the money is essentially being held in a sort of limbo — the proportion that is the US govt’s debt to… Read more »

Karl McHungus
Guest
Karl McHungus

so Germany wanted hyperinflation in the 20’s?

Al from da Nort
Guest
Al from da Nort

Karl;
Yep. Enabled the Weimar Govt. to pay WWI reparations with paper. Really bad unanticipated consequences, though.

Member

As Al says, yep. Same with Venezuela. They hyperinflate as the only way to pay their obligations. Both Venezuela and Weimar Germany could have chosen not to inlfate and simply stopped paying for stuff with money they didn’t have, but doing that gets you kicked out of power faster, as it’s obvious how badly you’ve failed, and your creditors and constituents you’ve promised gibmes are the last people you want to piss off, if you’re a power-hungry politician trying to hang onto the reins of power. ETA: Greece was an interesting case. Since they don’t control their own currency, they… Read more »

Exile
Guest

Nowadays as in Venzuela, the IMF also operates as an extra offshore insurance fund to help connected elites cushion their own assets and expatriate their own cash before the hyperinflation black hole sucks the strip-mined national economy into oblivion.

vxxc💂🏻‍♂️😉
Guest

Land, guns, gold…and above all Men.
A group of like minded men.

Without which you have nothing.

Exile
Guest

Absolutely. Every person pitching in is an exponential improvement in time abilities and anti-fragility.

Official Bologna Tester
Guest
Official Bologna Tester

vxxc💂🏻‍♂️😉 said: “A group of like minded men.Without which you have nothing.” What about like-minded women? If all you have is a bunch of well armed male commrades, eventualy all you’ll get is a camp full of Spartan soldiers bangin’ each other in the ass. Never forget the White Ethno-Nationalist nookie.

Member

Women? Don’t you know?

https://youtu.be/Oo9buo9Mtos

CAPT S
Guest
CAPT S

Place your bet on yourself with a piece of land, a milk cow, a water source, a trade with all the tools, a self-built rifle, complete with reloading bench stocked with ample brass/powder/lead.

Member

My two favorite intentional errors with this kind of story: leDgerdemain and double book entry keeping. We’ve had two “Minsky moments” – the 2000 crash, the 2008 crisis. The problem is the daisy chain where entities with a few million in assets (which might not be liquid) are insuring/guaranteeing a few billion in promises. AIG was mostly a stodgy reinsurance company but one not so rogue trader in London destroyed it and the taxpayers bailed it out. I think the next minsky moment won’t be as easily or quickly solved. Eventually the debt pyramid collapses. 100% of the time. But… Read more »

Exile
Guest

It sounds like a prepper thing, but everyone really should take some of this into account and have some barter-worthy goods at hand. High utility, versatile, transportable and concealable, non-perishable. Guns & ammo. Water & food purification. Power sources (solar/renewables big here). Medicine. Having some of this kind of stuff in your trunk or house is minimal hassle and gives you options.

For less dramatic situations, keep a decent amount of cash on hand. The Cypriots who found their bank accounts frozen for weeks then coercively rationed would recommend this.

Al from da Nort
Guest
Al from da Nort

Exile;
Extra cash for the early days of disruption. Silver coins (not bullion – impossible to valuate) not gold (who could make change_?) for the intermediate period. Guns and bud’s to protect both. Gold’s OK if you want to start a bank. But if you could hope to start a bank, you don’t really need the gold.*

Long term_? Be the warlord (or in his hoard) not the helpless peasant. Depressing, but such is the history of our species.
__________________
*Gold as an inflation hedge is a different story.

CAPT S
Guest
CAPT S

I like to read your posts and then consider the previous warnings from decades (or centuries) earlier. On the problems of rampant centralization and Hamiltonian federalism I like to read Jefferson and the anti-Federalists, along with The Southern Agrarians. But now to the problems of globalism and debt-based currency … well, you’re really lifting Pandora’s box now! For this is not a 21st century concern that began in 2008, and you correctly reference that this problem has been with us from the beginning of coinage. As for American history, Andrew Jackson was our last political hero in this regard, crushing… Read more »

Exile
Guest

Amen. I’m commenting on a cellphone on a mountainside drinking coffee from a propane stove next to my backpack & tent right now. If SHTF I have enough gear in my car to get by for awhile. I’ll be in a suit in San Diego on Monday. Most of us can develop some survival/outdoor skills without going 24/7 mountain man. Useful & damned fun once you get the hang of it.

CAPT S
Guest
CAPT S

Exactly right. I’m of the firm opinion that we humans were designed/created to interact with creation … it’s why we have hobbies like hunting & camping, and why we feel invigorated after a cup of coffee on a mountainside. Money can be made in cubicles and air-conditioned offices, and it can buy you a cookie-cutter McMansion, but that ain’t living. Men that can’t do something constructive with their 5-fingered appendages are going to be in the hurt-locker when this low-intensity conflict goes hot.

Exile
Guest

That’s one of the things Steyn gets right in the America books – he had a section in one of them where he talked about being able to do something with your hands instead of just living through words and ideas. It’s very grounding. When I’m not messing around outside I like to cook because it’s so different from what I do for a living. Overspecialization especially on the intellectual side isn”t natural for us social small-group primates. Balance it out.

Range Front Fault
Guest
Range Front Fault

Have fun, Exile. Something simple. Basic Husband took his Range up mountain to decompress, enjoy 20 degrees cooler temp, roast a couple of hot doggies, sip an adult beverage and enjoy the antelope cavorting and having a Dissident Right confab of over 30 antelope-does..big buck boys… and younguns. While quietly musing, a truck bumped up the rutted dirt road and stopped, two men got out and started over, Basic Husband wandered over to Basic Gun as we assessed the men. Must assess in a nanosecond. Body language, truck and attire indicated probably not haywire. Turned out bow hunting season begins… Read more »

Dutch
Guest
Dutch

Up the hill today as we speak. Hot weather but glorious.

Member

I’ve got plenty of food moo-ing and baa-ing in the pastures just outside my yard. I worked from home nearly 20 years (with a lot of business travel mixed in) and for all that time and five years before that I started and ended every day with dirt under my fingernails. Since I retired, the routine hasn’t changed much, just minus the work-related stress in between.

Lorenzo
Guest
Lorenzo

“I’ve got plenty of food moo-ing and baa-ing in the pastures just outside my yard.”

You might be raising it only to feed the first organized mob that comes by after SHTF. The more stuff you have, the more allies you need to keep it.

Member

The neighboring farmers and people in the community will be with me. A bunch of hungry city people will regret they came out here to be eaten by the hills.

Tykebomb
Guest
Tykebomb

So, um, I’m still not entirely clear on what happened in 2008. The DR likes to say that Dubya put pressure on the banks to give loans to Hispanics to buy homes. Which led to NINA loans without any collateral. These mortgages were bought up as packages full of a massive number of mortgages by the stock market? Which created a feedback loop demanding more mortgages. But then the system collapsed, which exposed all the shady shit the eurocrats had been doing to join the eurozone. And it snowballed from there.

Is that basically it?

Exile
Guest

The banks & entire global financial industry inflated the bubble. Dems blame W, Reps blame Fannie/Freddie. Plenty of blame to go around. They’ve learned nothing from it except how willing we are to tolerate backing their bets b/c “muh global finance system.” We’ll see this again. It might not be a bad idea to leverage against bad economic conditions for 4Q 2019 into 2020 – Orange Man isn’t exactly Orange Manager and there are plenty of agendas out there foreign & domestic that would be well-served by tanking the economy during the election season. Count on the media to turn… Read more »

Vegetius
Guest
Vegetius

That is basically right but I’d add a couple of steps. First a sidenote: the extent to which shitty loans to nonwhites caused the problem is debatable – some fixate on it, but in truth it was one of several causes. That said, for purposes of outreach and propaganda, sure: it was POC’s fault. As you say, the mortgages were packaged as bonds (called CDOs) and sold, often broken up into pieces, to larger invetors, like banks, big hedgefunds and pension funds as AAA-rated investments (basically as safe as government bonds). Then these bonds were insured by instruments called credit… Read more »

Vegetius
Guest
Vegetius

>The global financial system is based in credit.

That’s the way it was before the 1970s. I think at this point it is more accurate to say that the global financial system is based on lying about credit.

>exaggerating one side of the balance sheet and minimizing the other

I think the term for this is accounting fraud. Or control fraud, per Bill Black.

JR Wirth
Guest
JR Wirth

People talk about GE being a problem, and it is. But Tesla is a pure Ponzi that lives on subsidies. A financial wreck with a 30 year old CFO who’s in over his head and likely made to sign things by filthy carney Elon Musk.

Karl McHungus
Guest
Karl McHungus

you are being too hard on Tesla. they have an important new technology that is worth supporting — up to a point. where they went wrong, IMO, is not getting established car guys in there to set up proper assembly line. they have to do a lot of hand assembly and that is what is killing them.

JR Wirth
Guest
JR Wirth

They don’t have important new technology. That’s all carnival barker Musk. They don’t have self driving, just cruise control with your hands still on the wheel (that people abuse). The whole auto-summon is a scam. It won’t get off the ground. Their R&D budget was gutted last year to keep the lights on. One recall will kill them and they have two major engineering flaws, one with overheating batteries and one with aluminum cast suspension, not to mention quality deficiencies across the board from paint to upholstery. You can go on and on. It’s not far off from bankruptcy. Not… Read more »

Vegetius
Guest
Vegetius

In the event of a downturn, we have to go over on the offensive and pin it on our enemies, not engage in autistic philosophical discussions about the nature of money as is our habit. In some places this will mean continuing the deconstruction of libertarianism, supply-side voodoo, and conservatism in general. In others, it will mean putting a face on the problem. And that face is going to be a merchant rubbing his hands together. And in a few forums it will be both of these at once. The shitlords can’t be allowed to let Trump Disappointment Syndrome keep… Read more »

Exile
Guest

As populists who put the people before Red Team/Blue Team, we’ll be the guys best positioned when the globalists slip up next. They don’t have any solutions except “bail us out b/c scary monsters.”. While we’re waiting for them to f*ck up and give us that chance, we need to keep spreading the ideas of anti-degenerate social policy and economic populism and generally build our own infrastructure. Tomorrow really does belong to us – they don’t have and would never embrace any vision of the future that doesn’t amount to putting more lipstick on the rotting pig status quo.

Vegetius
Guest
Vegetius

Agreed. If downturn happens while Trump is still in office, he should declare war on the Fed and the investment banks and tie it to Epstein, and we should support this. But if a big crash happens my guess is he’ll go along with whatever he is told to do, the way both W and Obama did. I don’t think they can rerun the fall of 2008 for two reasons. Politically, I don’t think most people on either Red or Blue will put up with another bail-out. I think that episode did more to destroy the social contract than all… Read more »

Member

The world has been in a credit bubble since at least the 1990s. 3 different bubbles in a row just doesn’t happen. When the stock market bubble popped in 1929, people learned their lesson and you didn’t see non-investors in the markets again until the 90s. You have to wonder just how much of big tech can survive outside of a bubble. YT has a business model where they upload thousands of hours of video per minute in ever higher resolution in perpetuity while also never deleting old videos or even putting them on a secondary storage system (old videos… Read more »

JR Wirth
Guest
JR Wirth

In the words of the great Andrew Mellon, Treasury Secretary in the 1920s, “liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. Purge the rottenness out of the system. High costs of living and high living will come down. … enterprising people will pick up the wrecks from less competent people.”

That’s how you solve these things. Extinguish bad debt. This literally hasn’t been done since the recession of 1981 with Volker’s interest rate spike. We have years and years of kindling.

Exile
Guest

Extinguish student loan debt. Make the private colleges eat the bad debt and public universities liquidate investments & cut bloated admin staff – no taxpayer bailouts, the banks eat the rest. Create a national bank for proles with small checking & savings accounts & get rid of FDIC.

JR Wirth
Guest
JR Wirth

Some of the fattest pigs in the country are in education, both literally and fugitively. Education has been turned into something of minimal cost (a library card) into this ridiculous behemoth. Nothing in our modern society has gone unperverted.

disordered deacon
Guest
disordered deacon

i’d argue to just return to the US Bank, which was nationally owned instead of chartered to the (((bankers))), and give proles basic cash packages there.
the elites could get some (very limited and productive) instruments too, however i’d bring back gold and silver backing for these accounts, to avoid usury. there could be middle level accounts for productive proles, specially silver backed, but again, strictly limited and productive.

Member

As I understand it, the fed has always been a (((banker))) institution. Most of the founders strongly opposed a national bank and from what I understand, there was never anything other than very short lived attempts at central banking in America before the fed.

Vegetius
Guest
Vegetius

I think this time it is going to be more like “liquidate the kulaks.”

Karl McHungus
Guest
Karl McHungus

Did the stock market crash in ’29 cause the bank failures that actually caused the depression? Genuine question.

Dutch
Guest
Dutch

The stock market crash came because too much money was borrowed on stocks to buy more stocks. Sort of a collapsing Alonzo sort of thing when the stocks couldn’t inflate any more and smart money began exiting.

The bank holiday and bank failures came later, as the reneging on debts spread from stocks to other assets as the economy slowed down, and the banks were left holding the bag. So there was a relationship, but sort of indirect and the bank failures came a few years later.

Dutch
Guest
Dutch

Ponzi, not Alonzo, damn autocorrect.

Karl McHungus
Guest
Karl McHungus

I’d like to take a small poll here,re: debt load. I have been paying down my personal debt load ASAP over the last 5 years. Goal is $0 debt within 5 more years (mortgage). Is anyone here doing the same, letting it ride, or adding more?

Member

Cash good, debt bad.

JR Wirth
Guest
JR Wirth

Zero debt is always a good thing. There are people who talk about mortgage debt being positive. Those are Kool-Aid drinkers. It’s amazing how cheap living can be when you don’t owe anyone interest. You’ll feel good when the bank owes you money. Even if it’s a nickel in this interest rate environment.

Karl McHungus
Guest
Karl McHungus

plus, the people who advocate for keeping a mortgage, never envision a day when they can’t make the payments.

John Smith
Member

Completely debt free for the last 5 years. Since then I have been stacking metals (silver, brass, and lead) and building up a supply of ready cash in case the banks choose to give their clients a hair cut a la Cypress during their debt crisis. No line of credit, credit cards paid off once a month like clockwork. I am not rich… but knock on wood – I am free.

Karl McHungus
Guest
Karl McHungus

and a little charcoal and saltpeter, to go with the lead?

Member

I have a four-year supply of precious metals held in safe locations. If the geniuses in government manage to destroy the currency, I can ride it out. It takes about four years to return to a stable currency after the shit hits the fan. If I die with precious metals in my possession, so what? I sleep well. Old Money families have three things they don’t talk about: 1) land, 2) old masters art, & 3) gold. All three are hedges against inflation.

JR Wirth
Guest
JR Wirth

This is not the first allegation made against GE’s accounting practices. A similar issue came up a couple years ago. People assume that because they’re audited by one of the big four accounting firms that everything is okay. Those firms, like the credit ratings agencies, last did their jobs in the 80’s and are now paid prostitutes who will rubber stamp anything. This is happening at the same time that banks have been disemboweling themselves of great analysts. Only the periphery short selling funds are looking into these matters, people like Jim Chanos. The system has never been so big,… Read more »

Exile
Guest

Yep. Anyone who still relies on credit rating agencies or Big Accounting learned nothing from Enron or 2008.

Al from da Nort
Guest
Al from da Nort

Exile; Agreed as a generalization. One major underlying problem is that the old accounting and financial information systems which were the basis of all investment valuations are now hopelessly behind the machinations of clever Wall St. ‘machers’. These systems were not designed for a world-wide financialized environment. The accounting profession seems unable to respond pro-actively and is constantly playing catchup, or has effectively given up.* The Western accounting systems were designed/evolved in the long era where physical production was primary: So physical production’s direct and indirect factors were what was measured. When an auditor could go and actually count the… Read more »

Gravity Denier
Guest
Gravity Denier

Good discussion about vaporware accounting. I never thought of it in those terms, but it makes sense. One more reason I’m shy about investing in “concepts,” “story stocks,” and financials that don’t actually produce anything.

Compsci
Guest
Compsci

The logical progression seems sound, but the timing? Timing seems unpredictable. Additionally, the aspect of additional expenditures via hardwired social programs (I assume that’s what you meant) also seems unpredictable. SS for example, need not be funded through borrowing, one simply trims benefits to match receipts from work force. Medicare, similarly trimmed via copay increase. Seems politically improbable, but given the growing divide between the dying off Boomers and the follow on, debt burdened, generations—who don’t particularly care about aging, fat, White guys—does not seem beyond the pale. Just a matter of pain increasing until attention is focused.

JR Wirth
Guest
JR Wirth

Social security and medicare will be able to survive with changes to those systems, but yes, there will be “death panels.” Keeping baby boomers alive at the cost of hundreds of thousands per month won’t be worth it. Also, SS would have to be radically transformed on the disability side. Everyone has a back injury these days. The big thing with SS is eliminating the cap on payroll taxes. Big tax increase for high earners.

The timing on QE4 to finance the recent treasury sales is pretty predictable.

disordered deacon
Guest
disordered deacon

one problem i see, however, with the newer and debt burdened generations, is that they tend to be less athletic, less healthy, more risk taking, and more drug taking. true, there’s a ton of gym rats and dieters (taking God knows what supplements), but many more emaciated basement dwellers and obese catpeople. ergo, maybe the debt-funded-healthcare scam will go on… or maybe, hopefully, the establishment paradigm will break in this regard too. for example, a proxy war between establishment and dissidence, is being formed between independent keto and meateaters and the general healthy omnivores – against the coming corporate plant-sugar-climate-scare-based… Read more »

JR Wirth
Guest
JR Wirth

The vast majority of Americans now believe health care is a right. So we’ll end up with “Medicare for all” but it will only pay for amputations. So we’ll be like Mexico. Guaranteed health care, that no one uses, and you go to your private doctor above the bodega and across from the lavanderia.

TomA
Guest
TomA

Trump has thwarted most of the normal gimmicks that Democrats use to steal an election, and as such they need to resort to the nuclear option if nothing else works. They played the “collapse the economy” card in 2008 to ensure that we got Obamacided in that election, and now we will see the replay. Normally they wait until a few months before an election to play this card, but desperation may trigger it sooner. Yes, the financial cancer is systemic, but the elites will never let a good crisis go to waste.

Karl McHungus
Guest
Karl McHungus

their real trick in 2008 was getting the GOP to nominate mr brain cancer as their nominee.

Jack Boniface
Guest
Jack Boniface

Ezra Pound:
With usura hath no man a house of good stone
each block cut smooth and well fitting
that design might cover their face,
with usura
hath no man a painted paradise on his church wall
harpes et luz
or where virgin receiveth message
and halo projects from incision,
with usura
seeth no man Gonzaga his heirs and his concubines
no picture is made to endure nor to live with
but it is made to sell and sell quickly
with usura, sin against nature….
https://www.poetryfoundation.org/poems/54319/canto-xlv

Karl McHungus
Guest
Karl McHungus

Pound sounds better in German 🙂

Member

Well, Pound. And look what happened to him…

disordered deacon
Guest
disordered deacon

I’d also add that the globalist position of making the dollar the global reserve currency, means that the “house of cards” system so brilliantly described by Z has to be kept propped up. For the globalist elites, they cannot just hoard gold in their tax havens, but they have to keep the game moving, buying ever-increasing Western government debt, and lending it out to the ever-more-enserfed kulaks and producer-peasants of the world. Thus the wheel keeps turning, grinding ever so loudly. Only few remaining dummy Keynesian centrists, such as the few remaining Obamaites, cheer. No way (((these aforementioned elites))) will… Read more »

Alzaebo
Guest
Alzaebo

O/T, a quick note referring to yesterday’s Z:

Why, thank you Zman, you are most considerate of your readers.

I think the flaw in the thinking of Right, Left, and Center (libertarianism) is this:

Absolutism.

Defending “principles” as if they were one’s inheritance. This ignores the large, necessarily grey area of public decency and behavior, one’s neighbors.

Thanks, readers, for the sharp, the sweet, and the savory, here in the Hunker Down era.
Must work! The Zman keeps making me late!

Exile
Guest

One of the most important points. Context and practicality are always relevant, and social animals always have to consider the desires of others. Balance is always the goal, not reaching a Platonic ideal in any one aspect of something without regard for the other moving parts.

Alzaebo
Guest
Alzaebo

Very late, but you are most gracious.
The Z-readers do make me wish I were educated.

Official Bologna Tester
Guest
Official Bologna Tester

thezman said: “By lowering credit standards for borrowing, they were debasing a fundamental unit of currency in the system. This went unnoticed for a long time until everyone started noticing at the same time. The panic to unload the debased currency – those bad mortgages – set off the mortgage crisis of 2008.” Huge piles of foreign money setting in American banks turned into massive misinvestment, including those bad mortgages. Then those bad mortgages where turned into CDOs ( Collateralized debt obligations ) and sold to investors. Then AIG, the worlds biggest insurance company at the time, decides to insure… Read more »

vxxc💂🏻‍♂️😉
Guest

Well done Z.

Bookmarked this one.

Ex-Pralite Monk
Guest
Ex-Pralite Monk

In reality, as we saw with the mortgage crisis and now with General Electric, it also encourages everyone to overstate their credit worthiness.

A similar point: the world oil economy encourages oil producers to overstate their known reserves. It’s likely that a number of oil-producing nations are almost tapped out but keep saying they have plenty of oil in order to keep their peasants from uprising.

Vegetius
Guest
Vegetius

Anybody here have their finger on the pulse in California?

My understanding is that CalPERS can’t survive a 5% hit without having to force a nasty bowlcut on all those retirees now ruining Colorado, Texas, Oregon, etc.

Official Bologna Tester
Guest
Official Bologna Tester

Vegetius said: ” Anybody here have their finger on the pulse in California? ” Here’s the site for the Mercatus Center at George Mason University on State Fiscal Rankings for 2018.
https://www.mercatus.org/statefiscalrankings
It looks to me that California will eventually go the way of Illinois.

Karl McHungus
Guest
Karl McHungus

I live in California (5th generation) and you cannot believe how fukked things are here 🙁 talk about Arkham Asylum. Calpers is Illinois ^ Illinois. No way it ever pays out for all the pensions it is supposed to support. which is fine because fukk public workers in the ass. Imagine the bloated carcass of a dead dog on the side of the road, in 120 degree heat — that is Cali.

the only good news is the the Mexicans are driving all the nigs out.

JR Wirth
Guest
JR Wirth

CA is IL, but bigger and with good weather. We will be crushed soon. CalPers has been contractually guaranteed a 7% return for years. This adds to the debt pile, which will materialize as equities go into the tank.

Karl McHungus
Guest
Karl McHungus

If Prop 13 is ever breached, look out down river!

https://www.youtube.com/watch?v=xH-_9cwdLug

Otis
Guest
Otis

You mean if it is repealed? What is the political likelihood of that happening?

Nunnya Bidnez, jr.
Guest
Nunnya Bidnez, jr.

NYC dept of Education employees have an (optional) tax-deferred annuity as part of the retirement package; they can contribute up to 25% of pre-tax salary into it.
It earns a guaranteed 7% return.
Probably not a sustainable system over the long term, but as Keynes reminds us, in the long term we’re all dead.

Rod1963
Guest
Rod1963

I have lived in CA all my life and yeah CALPERS is on borrowed time. The only thing keeping the state barely solvent along with CALPERS is the stock market. Should the market say make a serious correction the state and CALPERS go belly up. In terms of tax revenue it depends on less than 1% of the population to keep it going and most of those people are connected to Silicon Valley. And any hit to the stock valuations will cause a massive revenue loss and a set off a shit storm across the state and a chain reaction… Read more »

Dutch
Guest
Dutch

CA depends on the stock price of Google, Facebook, and Apple. Take those three out and the coast is dead. Inland, biz as usual for the most part (fingers crossed).

Official Bologna Tester
Guest
Official Bologna Tester

Dutch said: “CA depends on the stock price of Google, Facebook, and Apple. Take those three out and the coast is dead. Inland, biz as usual for the most part (fingers crossed).”

I don’t know if you’ve heard of this guy. Victor Davis Hanson. He was born in Califonia and lives in the San Joaquin Valley, Here’s his Wiki page. https://en.wikipedia.org/wiki/Victor_Davis_Hanson

He wrote a book called “Mexifornia.”

Here’s an artical intitled: “Mexifornia and the Prophetic Voice of Victor Davis Hanson.”
https://www.crisismagazine.com/2018/mexifornia-prophetic-voice-victor-davis-hanson

Dutch
Guest
Dutch

VDH is always a good read. His problem is that his neighborhood has Mexified. He would be fine in a self-supporting white neighborhood in CA (for now).

Range Front Fault
Guest
Range Front Fault

Dutch…he’s 4th generation. A statue of his grandfather in the town square. He laid his daughter to rest in the rich earth of California. His immediate family is intermarried with Hispanic. He will not leave. I expect to one day hear he was taken out on his grape growing/raisin property. It’s not about waking him up. He has clarity on these matters and is making a choice. And he is content with that choice.

Vegetius
Guest
Vegetius

Hanson is smart, good on immigration, and a fine writer.

However, he need to be bullied into his grave unless/until he apologizes for his role as an Iraq cheerleader. He was one of those Ziopuppets who tried to bullshit everyone into thinking W was some sort or Periclean man of destiny for going into Mesopotamia.

Vegetius
Guest
Vegetius

I would imagine that a one-two combination of a serious recession and capital controls in China would tank California, and then the rest of the real estate market from the Rockies to the Pacific.

Official Bologna Tester
Guest
Official Bologna Tester

Vegetius said: ” I would imagine that a one-two combination of a serious recession and capital controls in China would tank California, and then the rest of the real estate market from the Rockies to the Pacific.” Canada as well. The Chines have poured an enormous pile of cash into the North American real estate marketing. If that money goes you’ll be able to buy a three bedroom house in Vancouver for around two hundred and fifty thousand.

Rod1963
Guest
Rod1963

Had the government not bailed out Wall Street and the banks the whole system would have imploded followed by lots of violence and chaos. We came that close and it cost the tax payer trillions to bail out the super rich. Now it’s much worse, should the same sort of collapse happen. It’s doubtful we can stop it. The banks are in even worse shape today than then, who knows who badly the big investment banks and other institutions are stretched. And then there’s the stock market which is so over inflated it’s insane. The housing market isn’t far away… Read more »

Sam J.
Guest
Sam J.

“…Had the government not bailed out Wall Street and the banks the whole system would have imploded followed by lots of violence and chaos…” Is this true??? Could there be another way??? What if we took all the money the banks got at close to zero interest during the bank bail out and gave it to citizens instead? We know they gave them $16 trillion and I’ve read analyst that say the amount was closer to $29 Trillion. And these figures were from years ago. The total is bound to be much higher. At $29 Trillion and 300 million Americans… Read more »

Din C. Nuthin
Guest
Din C. Nuthin

The brilliant author of “Grant’s Interest Rate Observer”, James Grant, looked at GE’s accounting when it was still flying high, maybe 15 or 20 years ago. He found entire divisions that existed one year were gone the next, re-appearing again the following year. An entire division existed just to mine the tax code. I sold, but it’s taken a long time to reflect the fraud.

JR Wirth
Guest
JR Wirth

Grant has a great podcast by the way. It’s dry and inside the ballpark, and sells luggage 15 minutes in, as Z Man will eventually, but very good.

Member

Can’t download it though.

Official Bologna Tester
Guest
Official Bologna Tester

Here’s a short actical intitled: ” A Brief History Of U.S. Dollar Debasement.” Dated, Jan. 8, 2013
https://seekingalpha.com/article/1100331-a-brief-history-of-u-s-dollar-debasement

Here’s a little artical intitled: “Food Packaging Shrinks, Prices Stay the Same.” Dated, 8/28/08. Obviously, things have gotten way worse since then.
https://www.newsweek.com/food-packaging-shrinks-prices-stay-same-88345
There’s lots of ways we get screwed every day. One little bit at a time.

Dutch
Guest
Dutch

Think about this. The value of a trillion dollars of stock (e.g. Apple) is basically valued on the last trade. If the last trade on Apple is sharply lower (say down 10%), you just burned up about $100 billion in value. That’s the risk of paper investments, no bid, and all the value set to the mark-to-market last trade. The last 10 or 100 shares of stock traded sets the value for a trillion dollars in investments. Think about that for a minute. It’s crazy, actually. Add in a credit economy, where every piece of paper investment represents not only… Read more »

Official Bologna Tester
Guest
Official Bologna Tester

Dutch said: “Make it work for you. But variable rate debt and especially credit card debt will kill you. Finally, life is short. Enjoy it, don’t let this stuff drive you nuts. You have your own brain and your own two hands, and you can get there from where you are with some discipline.” Yah! Sensible, level headed advice. I wish I could give you a thousand up votes.

Al from da Nort
Guest
Al from da Nort

Dutch; You’re right, ‘mark-to-market’, i.e. valuing the whole outstanding balance of a security on the basis of the last day’s trading transactions, is ‘crazy’. After all, ‘everybody knows’ that were any substantial fraction of any security’s total outstanding balance to be dumped into the market at once, the price would be hammered down, maybe drastically. But, what’s the alternative_? At least this is an objective measure of value for any non-physical asset*, however imperfect. Any other measure of value is complete guesswork, based on easily manipulated assumptions with large effect, after all. BTW, one of the indirect factors in the… Read more »

Dutch
Guest
Dutch

Instead of trying to figure out what is going to happen, prepare to a point where you don’t get caught out no matter what comes down the pike. The range of near term to medium term possibilities is exceptionally broad these days.

Official Bologna Tester
Guest
Official Bologna Tester

Dutch said: “Instead of trying to figure out what is going to happen, prepare to a point where you don’t get caught out no matter what comes down the pike.” YES! Words of wisdom at last! Be the future you want to happen.

Yves Vannes
Member

The runway financialization of all aspects of society aside, the models still in use for the economy are largely false and the people still propping them up know this. The classical model of liberal capitalism still holds sway in most government and corporate circles. It still assumes that an unregulated market will work towards a sort of equilibrium point where both buyers and sellers are happy. All of the models predict this and also assume that with enough time even a disruption will right itself and again become magically path dependent towards equilibrium thanks to the invisible hand… The predictions… Read more »

Member

What sort of fantasy world do you live in?
The US and the rest of the West’s capital market are the most top-down rigged and regulated, at whim, that they have ever been,

What we are seeing is the inevitable, and long forseeable failure of policy, not of markets.
All that is in doubt is the timing, not the result.

Yves Vannes
Member

You’ve missed the whole point… From the get go A. Smith tried to glom Newtonian mechanics onto economics. And it’s been a flimflam operation ever since. Classical market dynamics is about as scientific as is Marxism. Markets are always planned. The free self regulating market is a fantasy and has always been a fantasy. If the money and credit are being controlled then the market is planned. The concept Smith built his creation around was the idea of equilibrium. It doesn’t exist in markets because different groups of people pursue different agendas in all kinds of different frames of reference.… Read more »

disordered deacon
Guest
disordered deacon

agreed. furthermore, such growth is contingent on producers wanting to continually produce something of higher value than the last, and the consumer willing to pay a higher value, which in many markets and professions is a quite limited endeavor. therefore these markets reduce themselves to trusts and governments holding the producer and the consumer hostage. so far in my limited reading, integralism works best. slow growth in very limited locally-controlled techno-elite cities, a higher proportion of landed fertile homesteads in the countryside, small nodal/factory towns, natural culling through the betas being sent to the monasteries and hospices and asylums (and… Read more »

justaguy
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justaguy

I really don’t think that “the mortgage crisis is as a form of currency devaluation” is why the 2008 financial crisis hit.

Christopher Chantrill
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Christopher Chantrill

I use the notion developed by Walter Bagehot in “Lombard Street” that to understand the credit system you must understand that loans should be properly collateralized and that debtors shoudl be able to make their payments. In 2008 as a result of decades of government policy home mortgages were undercollateralized and the debtors couldn’t make their payments. Therefore Armageddon. The problem is that ever since the Dutch invented central banking to fight their war of independence against Spain the government has been at the center of the financial system and governments have a permanent itch to misbehave. Are global corporations… Read more »

LineInTheSand
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LineInTheSand

In Covington’s novels, after the Northwest American Republic won its independence from the USA, it took steps to preclude the financialization of the economy, including outlawing the stock market.

I would modify that to allow for a stock market that traded equities but no derivatives except for futures on crops.

How would you reduce or preclude the financialization of the economy?

Rod1963
Guest
Rod1963

OT: Looks like Tucker Carlson offended Fox and the Jews with his statement that “white supremacy is a hoax”. He got a instant vacation.

The big civ nat sites went silent on this.

Even if he comes back, his stay won’t be permanent. He’s finished.

Abelard Lindsey
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Abelard Lindsey

Consider the principle of mediocrity. If GE is totally leveraged in this manner, it quite likely that most of corporate America is leveraged in such a manner. Remember the accounting scandals that emerged in the wake of Enron? I think we’re going to see a repeat of this, only on a larger, worse scale.