One Response to “December 15, 2016”

1. casinobama says:

   December 16, 2016 at 8:52 am

   Look to the jackasses running Central Banks who are stuck in the Volcker lie of targeting inflation. Volcker’s inflation target approach made sense when it was implemented but it doesn’t now. At the current level of free money rates, why is there so much agonizing over 1/4 percent increases???? Folks will still buy houses, cars, toys. An increase of 1/4 percent or even 1 percent doesn’t matter to consumer demand. One need only look at Total Public US Debt for an answer to the question.

   Egotistical idiot-Greenspan kept rates at a level that fueled the dot.con nonsense of creating market value where little to no real value existed. When than bubble imploded, he cut rates and so began the the unrestrained increase in US public debt.

   Fast forward to the second Grand Theft event in 2007-2008 and the ensuing even larger bubble implosion and US public debt doubles in the 8 years to 2016.

   Egotistical idiot-Greenspan (“I have found a flaw.I don’t know how significant or permanent it is. But I have been very distressed by that fact.“) was succeeded by incompetent Bernanke who recently tried to explain why interest rates are so low in a series of four essays in his Brookings Institute blog (https://www.brookings.edu/blog/ben-bernanke/). What is striking is the conventional tone of his analysis in the light of debt levels such as we have never seen. Yeltsin is just more of Bernanke.

   Only Paul Volcker seems to see the problem: Ignoring the Debt Problem

   Our current debt may be manageable at a time of unprecedentedly low interest rates. But if we let our debt grow, and interest rates normalize, the interest burden alone would choke our budget and squeeze out other essential spending. There would be no room for the infrastructure programs and the defense rebuilding that today have wide support.

   It’s not just federal spending that would be squeezed. The projected rise in federal deficits would compete for funds in our capital markets and far outrun the private sector’s capacity to save, to finance industry and home purchases, and to invest abroad.

   Instead, we’d be dependent on foreign investors’ acquiring most of our debt — making the government dependent on the “kindness of strangers” who may not be so kind as the I.O.U.s mount up.

   But even he doesn’t entirely get it. Why do we have virtually no growth in Europe and North America when central banks have been printing money aka quantitative easing for almost a decade?????? The primary explanation is that these are mature economies. The combination of everyone having their wants and a declining birth rate means that the post-war consumer consumption-based growth economy is dead. So how does GE get 3% growth in toaster oven sales, ie, 3% corporate earnings growth, when everyone has a toaster oven? Simple. Design it to break in x time period. Notice that I did not say months or years. Since corporate earnings are net, GE must build their crapout technology in a low labour cost environment – CHINA. And China is what Volcker is talking about when he says the “kindness of strangers”.  The problem is that the exportation of jobs to China that began in the 80s has produced minimum wage service economies in North America and Europe that must buy goods and material at a cost higher than minimum wage revenue/taxes.  So no one owns anything outright but rather uses the cash-flow model with the gap being made up by borrowing and the real cost of all government programs being funded by borrowing from those that have the money – China.

   The attempts to deal with declining birth rates by allowing significant immigration from the parts of the world where there still is significant birth growth have helped but at the cost of major social stress.

   The sheeple sense that something is wrong as evidenced by Brexit and The Donald and they have stood up on their hind legs.

   So how do we deal with the debt mess? Volcker’s solution is telling. He starts out by saying

   The solutions are clear enough. A realistic approach toward the major entitlement programs is required, given that they are projected to account for all of the growth of future noninterest spending.

   Let’s stick it to the sheeple on a grand-Greece scale. That otta go down well with the sheeple. Ultimately, debt will be dealt with the way that it always has been dealt with: default. The Mortgage Bubble was larger that the Dot.Con bubble. What if the next bubble is even larger and it very likely will be because every is bigger today. At some point, the sound is not pop but rather poof and too big to fail becomes too big to bail.  And what will the next bubble be?  Housing.  And that’s why you see the valiant silliness of  Vancouver.  Housing is expensive whether you but or rent.  So one of the three essentials is in serious trouble.  And the other two are not in great shape. Food is cheap-ish and water competition is fueling protests and war.

   So what should us sheeple do? Buy/rent/sqat some land and learn to grow veggies. Invest in yourself and  learn to live in a no-growth world.