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The Great Inflation Lie

US Commentary

Low inflation is not good for the economy because very low inflation increases the risks of deflation, which can cause an economy to stagnate. The evidence is that falling and low inflation can be very bad for an economy.

- B.S. Bernanke, Chairman of the Federal Reserve, October 2013

The economic Revisionism above is arguably the most-evil lie being propagated in the world today. While there are numerous ways to demonstrate the economic perversions implicit in this falsehood, let’s start with one point. The Bankers who continually tell us how “good” inflation is for us never define what they mean by “inflation”.

As regular readers know; definition of terms is the starting point of all legitimate analysis. If you want your audience to understand your argument; first (obviously) you have to ensure that the audience actually comprehends the terminology which you are using.

Conversely, Con-Men have a precisely opposite modus operandi. They deliberately use terms which are poorly-defined/poorly-understood, because when doing so it’s much easier to trick and scam people. In merely explicitly defining inflation; we can reveal these banker Con-Men as the malevolent thieves which some know them to be.

Inflation (in the simplest terms) is the speed at which our money loses its value. This definition is easily proven with empirical evidence. When you go to the supermarket to buy a dozen eggs, and those eggs cost 10% (or 20%) more than they did six months ago, the eggs haven’t changed – in either quantity or quality. It is your money which has lost 10% of its value over that six-month period.

Obviously anyone with a functional mind knows that it is not “good” for our money to relentlessly lose its value; every minute of every day, every day of every month, every month of every year. Who wants the paycheque which they work so hard to earn to shrink (in actual purchasing-power) every time their receive a new one?

Our governments understand this. This is why they not only conceal the nature of inflation, they also lie about its magnitude. A particularly flagrant example of this constant lying occurred in July of last year, and has been cited in many previous commentaries.

In the same month that the World Bank was warning that global food-inflation was increasing at an annualized rate of over 100%, and governments in Asia were having an emergency-summit about this global “food-price shock”; the U.S. government was reporting (as its “broadest measurement” of inflation) a rate of literally 0%.

Assuming that the entire (gluttonous) U.S. population didn’t all stop eating for that entire month; the inflation number reported by the U.S. government that month (in this era of “globalization”) wasn’t simply a lie, it was an enormous lie. But as has been explained to readers previously; the Inflation Lie is a multi-purpose lie.

One of its primary purposes can be seen below: deceiving the Little People (the bottom-80% of the population) so that they don’t realize the speed/extent at which their paycheques have been destroyed.

 

U.S. Hyperinflation and Cultural Insanity

Gold Commentary

Hyperinflation is an insidious, economic killer. It inevitably (but insanely) creeps up on its Victims in plain sight, before decimating them with an always unexpected ambush. How can one of the most-obvious of all economic phenomena always end up as a “surprise”?

Because none of the Victims ever believe that hyperinflation is possible. Point out that the U.S. dollar has lost 98% of its value in the 100 years that the Federal Reserve has been responsible for preserving its value, and people will yawn – it’s old news. But then assert that it is about to lose the last 2% of that value, and (amazingly) the response will be laughter and/or derision.

Look at a chart showing a 98% decline in anything, and the expectation will be that the last 2% is also about to be lost. Or, in market vernacular; “the Trend is your friend.” It is irrational, bordering on insane to expect such a chart to reverse itself, or even stabilize. Indeed, it is charts of this nature which spawned the expression “past the point of no return.”

Yet when people look at charts of currencies, in this case worthless paper currencies; the mere suggestion that a currency could go to zero is a concept literally beyond the comprehension of nearly all of our populations. If a person finds it impossible to conceptually conceive of lions, then a lion could simply walk up and eat that person.

We will not/cannot protect ourselves from a “risk” which we do not believe to be within the realm of possibility. One does not take precautions to protect themselves from the “risk” of man-eating butterflies, or killer-bunnies. Thus is hyperinflation perceived by the masses: the Threat of the Killer-Bunnie.

In less-extreme forms; the inability to acknowledge/accept (obvious) reality could be described as “normalcy bias”. Because almost all Change (even large changes) is impossible to perceive in real-time; it is a common human intellectual flaw to expect tomorrow to be like today (or yesterday). A tomorrow which is not like either today or yesterday is not perceived to be within the realm of possibility.

However, with respect to hyperinflation we are not dealing with mere Normalcy Bias, but rather its substantially more-extreme cousin: Cultural Insanity. There are several empirical reasons for reaching this more dramatic diagnosis.

Obviously hyperinflation is not a Killer-Bunnie. There are numerous, documented historical examples of this economic killer. There is a very recent historical example (the Zimbabwe dollar), and there are several extremely obvious examples of hyperinflation currently in progress (Western, paper currencies).

It is normal/sane not to believe in the existence of Killer-Bunnies, unless one has read about people being devoured by Killer-Bunnies, has watched Killer-Bunnies devouring people, and is watching Killer-Bunnies devouring people. In such a reality; it would be insane not to believe in something which can (easily) be empirically perceived.

Regular readers have seen the chart below on the U.S. dollar on numerous occasions. It clearly and unequivocally depicts a hyperinflation-in-progress: a vertical line as supply (of U.S. dollars) goes to infinity. It is a fact of mathematics/economics that as the supply of anything goes to infinity its price must go to zero.

But readers will no longer see this chart in the future (unless one chooses to use an older version), because it no longer exists. Meet the new-and-improved version of this chart of the U.S. monetary base from the Federal Reserve.

 

China Moves Closer To Ending Dollar Hegemony

International Commentary

The prequel to this commentary summarized the anti-climactic ending of the U.S. Debt-Ceiling Farce, and the fraudulent non-reaction to this circus by the Western financial system in general, and Western credit-rating agencies in particular.

By its own admission; the world’s largest economy, with the world’s largest debts and largest deficits came within hours of defaulting on payments to its creditors (otherwise known as bankruptcy), and there was essentially no reaction at all from Western credit-rating agencies to this latest exercise in brinksmanship – other than mild applause.

This comes despite the fact that absolutely nothing was resolved in this episode of The Farce, and the exact same parameters have been set up by the Puppets in Washington for an exact repeat of the latest episode, in only three months time. No reaction, that is, in the West.

There was, however, reaction elsewhere in the international financial community. One (as yet) quiet Voice raised a note of discord, in contrast to the usual, expected chorus of “Don’t Worry, Be Happy” coming from the Western credit-rating agencies. A Chinese credit-rating agency, Dajong Global Credit Rating immediately cut the U.S.’s credit rating by one notch.

Naturally the (Western) Corporate Media paid minimal attention to this ratings cut, being too busy hyping the fraudulent non-reaction of Western agencies. However, this news out of China is highly significant in two respects.

First of all; the rating cut by Dajong Global did not take the U.S.’s credit rating one notch below the entirely absurd “AAA” rating bestowed upon it by the West’s charlatan-agencies. It was a reduction from “A” to “A-”, about a half-dozen notches below its lofty perch in the West. Indeed, by the time the Washington Puppets finish staging their repeat of this Farce in January/February; U.S. sovereign debt could have an international credit rating near (or at) “junk” – even if there is no default next time the Puppets play their Russian Roulette.

So first of all we see reality reflected in the credit rating of Dajong Global, and with China’s openly/official “centralized economy”; it’s widely understood that Dajong Global is speaking with the voice of China’s government.

The world’s largest debtor, with the world’s largest debts shows not the slightest inclination to even reduce its deficits (let alone reduce debt), and now it is displaying increasing and (highly-public) reticence to simply continue making payments on all that debt. Obviously a near-junk rating is the only rational rating for such a debtor.

But there is also a second, even more important facet to this melodrama which correlates to the reality/honesty reflected in the U.S. sovereign credit rating from Dajong Global (and China): increased international legitimacy (and prestige). There is an obvious agenda as Beijing slowly-but-steadily ratchets up the volume of its own international credit ratings (system) – its quest to relace the dollar as global reserve currency with the yuan.

There are three, obvious prerequisites in attempting to execute such a transition:

1) Sufficient economic mass to be able to practically supply/support a monetary base large enough to encompass most international global commerce.

2) Sufficient international financial infrastructure to regulate the flow of this currency into (and around) the global economy in a sound and orderly manner.

3) Perceived legitimacy.

   

Western Credit-Rating Fraud Exposed -- Again

US Commentary

The “good news” is that the latest Act of “The U.S. Debt-Ceiling Farce” has mercifully ended, and the curtain has come down on this puppet-theater. The bad news is that it ended (absurdly) with a mere three-month reprieve – before we get literally an instant replay of this contrived posturing and puffery.

Apart from the outrageous irresponsibility of the U.S.’s elected representatives staging these contrived “crises” (instead of doing their jobs); these quasi “shutdowns” of the U.S. government do serious short-term harm to the already-crippled U.S. economy – meaning medium- and long-term economic consequences from this staged theater. Yet as the dust settles from the latest Act; we see essentially zero reaction in the international financial community (with one, small exception).

The world’s largest economy, sitting with the largest debts and largest deficits in the History of the World openly “debates” whether or not to continue paying its bills, it ends up (supposedly) only hours away from official debt-default, and there is no reaction? Having regularly used words such as “drones” and “parrots” to characterize the ever-vigilant minions of the Western, Corporate Media; this one event alone provides absolute vindication.

During the worst days of the “Euro Debt-Crisis” (so far); European governments received regular downgrades to their sovereign debt on only the flimsiest of pretexts, sometimes due to nothing more than the (fraudulent) manipulation of credit-default swap rates on that debt (i.e. the multi-trillion dollar bets made that these governments will default on that debt).

The “insurance market” (credit default swaps) for the debt of many European debtors is greater than the actual debts themselves. The Tail does “wag the Dog” in our crime-ridden financial markets. And by fraudulently manipulating credit-default swap rates; Western banksters can (and do) manufacture downgrades on Euro economies (or vice versa) – and by doing so, they can drive interest rates to literally any number they desire…but they don’t do this in the USA.

With the U.S. government a mere hours away from debt-default, and sitting with (in actual fact) more than $200 trillion in debts/obligations; the U.S.’s Teflon, “AAA” credit rating remains intact. An economy which the Chairman of the Federal Reserve has now acknowledged is a Ponzi-scheme, retains a carved-in-stone “AAA” credit rating.

The obvious question is: would/will the U.S. economy be “downgraded” at all after it defaults on its astronomical debts and liabilities?

For those comatose members of the general public who still snicker whenever they see/hear the word “conspiracy”; spend just two minutes observing the Ultimate Accomplices of financial crime: the Western credit-rating agencies. Right up until (literally) the day after the made-in-Wall-Street U.S. housing bubble imploded; these credit rating Accomplices were rubber-stamping virtually all of the Bankster’s “securitized” mortgage-fraud products “AAA”.

This was ratings fraud: ratings agencies selling these (bogus) “AAA” ratings to Wall Street – which those Banksters then used to lure-in chumps for $trillions in securities fraud. And there wasn’t even any attempt made to hide the fraud. The ratings agencies openly acknowledged that they allowed their “clients” (the Wall Street Banksters) to tell them how to rate their fraud-products.

Not only did these (so-called) “credit rating” agencies not even employ enough staff to thoroughly/properly examine all the “products” on which they issued ratings; they openly acknowledged that they didn’t even understand some of the more convoluted Wall Street scams – and so they simply accepted the Bankster’s own explanations, essentially allowing them to “rate” their own fraud-products.

 

Countdown

Gold Commentary

Given the title of this commentary; it would be understandable if readers mistakenly assumed that this would be more yammering about the nauseating, U.S. Debt-Ceiling Farce. But that is a piece of staged theater, and this is an article about precious metals – and the two subjects have no connection.

Of course one would never realize that fact in reading the pseudo-analysis of the mainstream media. In that fantasy realm; precious metals prices jump higher or lower every time a Republican or Democrat passes wind. This is despite the fact that none of these Drones can articulate how this Farce has any relevance to the gold or silver markets.

Sure, a U.S. debt-default would be “bullish” for precious metals, but so would a million-and-one other things. “All roads lead to higher precious metals prices,” not because gold and silver occupy some divine niche in the Universe; but because of the mindless, dead-end economic policies of our Clown Politicians.

Nearly all of the economic problems across the West are caused by too much debt and too much money-printing; yet all the Clowns know how to do to “fix” our economies is to pile-on even more debt, and print-up even more paper. Indeed, what these Clowns have previously called “bail-outs” is where one of these Deadbeat Debtors is given a mountain of new debt, all of which originates out of newly-created banker-paper.

As has been explained many times in the past; with the money-printing and debt now both well past any point-of-no-return, only two outcomes are possible for our economies (and societies) – and one or both of these outcomes must occur in the near future. A familiar chart articulates this better than any words can do.

This is the money-printing which B.S. Bernanke spent six months telling the world he was going to begin to taper. A vertical line. Pedal to the metal. Yet after six (more) months of “crying Wolf”; Bernanke couldn’t bring himself to ease off the accelerator even the tiniest degree, warning the world the U.S. economy would collapse if he did so.

The U.S. economy (and with it, the other Western dominoes) has become nothing but a surreal, real-life version of the movie “Speed”. It’s not going anywhere, but it has to go there as fast as it can – or it will blow up. There are two important differences between “Speed” and the U.S. economy, however.

   

U.S. Debt-Default: Then What?

US Commentary

In my commentary earlier this week; readers were presented with the latest/newest “clue” from the Corporate Media as to where the staged shut-down of the U.S. government (via its Debt-Ceiling Farce) is leading the U.S. economy – and the global economy as a whole. Here the mainstream media was succinct and direct (for a change):

A U.S. Default Seen as Catastrophe Dwarfing Lehman’s Fall

The whole Debt-Ceiling Farce is a totally artificial, totally contrived event. As explained previously, the entire concept of a “debt ceiling” (for the world’s largest/greatest Deadbeat Debtor) is itself entirely absurd. Thus the shut-down of the U.S. government is also an artificial event, and the imminent/subsequent inducement of a U.S. debt-default (at this particular moment) would also be deliberate and artificial.

Then what?

Obviously, defaulting on its $trillions of debt would instantly make the United States potentially solvent again. But having defaulted on its old debts; new debt will not be an option for the U.S. – meaning money actually being lent to it by foreign Creditors. Simply resuming its economic Ponzi scheme, where it issues vast quantity of debt and pretends to pay for it with (worthless) paper conjured out of thin air, would also no longer be tolerated by the global financial community.

So we know that a U.S. debt-default is not “the end” of fiscal problems for the U.S., but rather the real beginning. It’s massive, structural deficit would have to be addressed; where the U.S. spends more than any nation on Earth – but refuses to tax the individuals/entities now holding all the wealth in that economy. It has no tax base.

A U.S. debt-default would not eliminate the need of that government for massive, economic reform and a complete restructuring of the tax system. Rather, it would force the U.S. government to begin that process immediately, and substantially – not just the pathetic baby-steps which these politicians have the audacity to call “deficit reduction”.

But this merely provides a taste of what is in store for the U.S. after any debt-default declaration. For many people, notably hundreds of millions of residents of other, Western deadbeat economies; what will be of most significance here is the inevitable “domino effect.”

If (when?) the hopelessly insolvent United States declares debt-default – i.e. its own bankruptcy – this will permanently/irrevocably remove the blinders from participants in our fraudulent, global debt markets. It would now be crystal-clear that “AAA” credit-ratings = “junk”.

In turn, Creditors suddenly/finally aware that they are taking a “junk” level of risk with all the money they are lending will demand “junk” interest rates – as compensation for that massive level of risk…at which point the Ponzi-scheme economies of most other Western nations would also be painfully revealed.

As with the U.S.; the only thing stopping many of these Deadbeat Debtors from being forced into immediate declarations of debt-default (bankruptcy) themselves is through paying absurdly/artificially low rates of interest on that debt. Jack-up those interest rates to real “market rates”, and watch the dominoes fall.

 

U.S. Shut-Down An Excuse For Debt-Default?

US Commentary

A question being asked more frequently than ever by informed readers is “what happens next?” This is understandable, and not a reflection of these individuals becoming either more curious or simply more obtuse.

Rather, our fraud-saturated, non-transparent economies (and markets) have grown still more opaque. This is primarily accomplished by the ever-increasing falsification of economic data; first in the U.S., and now across the Western industrialized world. Proof of this lying-with-numbers comes empirically, via our permanent, near-zero interest rates across the West.

No government in History (other than Japan) has ever taken interest rates this low for such an extended period, for one gigantic, obvious reason. A near-zero interest rate – i.e. free money – is quite obviously the most-extreme (and most-reckless) form of economic stimulus which could ever be devised…except for “QE” itself.

As has been explained previously; near-zero interest rates/free money are the economic equivalent of a defibrillator. What has happened in the U.S., and across the West after five years of continuously defibrillating these economies? Nothing.

What happened after Japan defibrillated its economy for 5 years? Nothing. So it defibrillated it for another five years, and another, and another. After a quarter-century what do we see in Japan? After twenty-five years of monetarily defibrillating its own corpse-economy; the corpse is still a corpse. What a surprise!

Five years ago; the U.S. (the ring-leader of current, Western insanity) assured the world that “it could never become another Japan”. It was correct. The U.S. (and the other Western Deadbeat Debtors) are far worse than Japan.

Japan merely defibrillated its economy with 0% interest rates, alone. The U.S. has brought the world something far, far worse: “QE” (and 0% interest rates). This is money”(?) conjured out of thin air, and (unlike all the other $trillions of near-worthless U.S. paper) all of this “QE” paper is not even “backed” by debt. It is merely Monopoly Money, in every sense of the words.

Readers need to understand that a (permanent) 0% interest rate has the effect of force-feeding huge sums of free money into an economy – hence the obvious metaphor of a defibrillator. Meanwhile, “QE” is the process of conjuring vast quantities of utterly worthless currency.

Combine the two insanities, and the product is obvious. The U.S. (and the other, Western suicide-jockeys) have been force-feeding vast quantities of totally/absolutely worthless paper into their own economies – and the global economy. It is a “Ponzi scheme” in the truest sense of that expression.

Why (ultimately) have all of these $trillions in new paper failed to “stimulate” these Western Deadbeat economies? Because you can’t stimulate economies with worthless paper.

   

Republicans: The Anti-Business Party

US Commentary

As a media entity for whom “subtlety” is generally a dirty word; Bloomberg can be remarkably indirect when tasked with delivering an unpalatable message about its Friends. After merely a few weeks of (manipulated) price-weakness in the precious metals sector; these Straight Shooters had no qualms about unequivocally declaring a “bear market” in precious metals – a message which is bluntly repeated every time it mentions the sector.

Yet whenever it attempts to describe one of the endless acts of Bankster fraud, all we get are long, meandering dialogues, where (somehow) the words “fraud” or “crime” are never, ever used. It displays a similar, mealy-mouthed reluctance to deliver the bad news about one of its “BFF’s” : the U.S. Republican Party.

The Republican Party is now the Anti-Business Party.

It’s a very simple message, yet watch how Bloomberg struggles in its own attempts to deliver that eight-word communication. We start with the headline of their new, back-stabbing missive:

Republicans Are No Longer The Party Of Business

It is a title which informs readers what the Republican Party is not, when with precisely the same number of words it could have stated what the Republican Party “is”. No nation on Earth is more binary in its thinking than the USA. “If you’re not fer us, you’re agin us.”

If one is not “left wing”, they must be “right wing” (and vice versa). It’s not simply that the Political Center does not exist in the United States, it is that it’s a concept which is beyond the comprehension of virtually the entire population. So if a particular U.S. political party is no longer “for” business, then (inevitably) it must be “against” business. Yet the closest Bloomberg gets to delivering its binary verdict is this:

They’re the party of antigovernment.”

A rather hilarious, Orwellian spin, in that the Republican Party is “government”; one half of the Two-Party Dictatorship, to be precise. Of course what Bloomberg what have liked to say is that the Republican Party is “the Party of small government”, but that’s a message which even the propagandists in the Corporate Media can no longer deliver with a straight face.

The Republican Party is the party of Big Military. The Republican Party is the party of Big Subsidies (to really Big Business) – and the big “kick-backs” that go with them. The Republican Party is the party of Big Security-Machine (i.e. “Big Brother”).

Not only does this Big Government require lots and lots of Drones, it requires gigantic amounts of tax dollars. The New Republicans love to spend money, they just hate collecting any (tax dollars) to pay for all their Big Government plans.

But don’t accept my word (or even Bloomberg’s) that the Republican Party is the Anti-Business Party. For decades, when discussing the Republican Party and the U.S. Chamber of Commerce; the phrase “two peas in a pod” would have been understatement. And the Chamber of Commerce is “business”. Yet witness the obvious displeasure (if not disgust) as Bloomberg quotes the vice-president of this mouthpiece of the business community.

A government shutdown is economically disruptive and creates more uncertainty for the U.S. economy,” says R. Bruce Josten, the Chamber’s executive vice-president of government affairs. “We’re disappointed this has happened, and we urge Congress [i.e. Republicans] and the administration to work together immediately to find a path forward on the [continuing resolution] and debt limit to remove any threat to the full faith and credit of the U.S. government.”

The business community can grin-and-bear-it with mediocre government. It can survive bad government. But it cannot survive (for long) with a totally dysfunctional government, overrun by Berserkers whose only goal is to obstruct, undermine, and sabotage. Read between the lines, and the message from the Chamber of Commerce is crystal-clear: “the Madness must end.”

 

U.S. Extend-and-Pretend: the Zombie lives!

US Commentary

Most readers are familiar with the market vernacular “extend and pretend.” It’s origins are the U.S.  commercial debt market. This is yet another U.S. Ponzi-scheme and debt-bubble being kept alive solely through pretending that most/all of the massive amounts of bad-debt in this market is still viable.

It’s a game (and a massive fraud/sham) because if these corporate Deadbeat Debtors ever had their debts closely/rationally scrutinized; their debts would not simply be rolled-over (i.e. “extended”) at artificially low rates of interest. Instead, the debt would be assessed much higher rates of interest – to reflect the serious risk of non-repayment (i.e. default).

The moment these Deadbeats were faced with legitimate interest rates on their debts; they would default like the row of Ponzi-scheme dominoes that they represent. These zombie corporations are hooked-up to the equivalent of a bond-market “respirator”: kept alive only through the totally artificial means of “extend and pretend.”

But in fact, it’s a game which has been (greatly) expanded to encompass the entire U.S. economy in a bubble of denial, and it is a multi-faceted game, at that. One facet of the national game of extend-and-pretend is very similar to the massive sham/fraud in the U.S. commercial debt market – except an order of magnitude more fraudulent.

The U.S. Treasuries market is another U.S. extend-and-pretend Ponzi-scheme, in two respects – three, if we include the fact that the U.S. economy is hopelessly insolvent, making these Treasuries near-worthless.

First there is the fact that the Federal Reserve is now effectively the only buyer of U.S. debt, and at one point earlier this year was officially buying-up Treasuries faster than the U.S. government was issuing new debt. But that only equates to “monetizing debt” (i.e. a cheque-kiting economy).

What makes this a Ponzi-scheme is that all these Treasuries are being purchased with paper simply/literally conjured out of thin air – and not even borrowed into existence, like all the previous $trillions of money-printing.

Why is this so significant? When the U.S. dollar went off the “gold standard” (i.e. it was no longer backed by anything), it ceased to be a “unit of value.” Instead, with every new USD being borrowed into existence; the U.S. dollar became a “unit of obligation” (i.e. an IOU). Clearly a unit of obligation is inferior to a unit a value, but at least (as an IOU) it can claim some intrinsic value.

But that is not the case with all these “QE” dollars being conjured into existence in the U.S. and Europe. What gives this paper value? Nothing at all. These scraps of paper have gone from being an “I-owe-you” to an “I-owe-nothing”. They are neither units of value or obligation – simply “units”. No different than Monopoly Money.

One “unit” comes off a printing press owned by Hasbro. One “unit” comes off of a printing press owned by the Federal Reserve. Both are private corporations. Neither forms of paper have any, possible intrinsic value. The (near-worthless) U.S. Treasuries market is now being totally propped-up with totally worthless paper.

But that’s only one aspect of the Treasuries market Ponzi-scheme. The other half of this fraud are the artificial interest rates, where the Fed is buying all this worthless paper at the highest prices in history. Why make the Ponzi-scheme so obvious?

   

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