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Trapped by Lies

Articles & Blogs - US Commentary

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I have received several comments and pieces of personal mail criticizing me for the use of “strong language”, most specifically the three words “lie”, “lying”, and “liars”. I am completely unrepentant. I find using this very specific and informative concept serves three, important analytical and/or linguistic purposes.

 

To begin with, it is an obvious theme of my writing to attempt to “shock the sheep” out of their apathy. You don't accomplish this buy using “nice” words and subtle language. Next, there are clear behavioral patterns associated with habitual lying (and habitual liars). Recognizing such patterns is a valuable analytical tool. Lastly, a concept which we can all understand is that there are consequences to lies. In the real world, while we can sometimes get away with “small” lies, and “white lies”, the big ones almost always come back to haunt us.

 

We have already seen this principle demonstrated in the “European debt crisis”, where coordinated “attacks” on European debt markets were orchestrated through more than six months of around-the-clock, U.S. propaganda – accompanied by Wall Street's economic terrorists “blowing up” the CDS (“credit default swaps”) markets of these economies, one by one.

 

An incidental consequence of this economic terrorism is that it tore down the veils on thinly-disguised accounting fraud for several European nations. What was revealed is that for a few of Europe's worst debt-offenders it may already be too late to re-establish solvency – unless and until bond-holders are willing to take a “hit” based upon recklessly extending excessive amounts of credit to debt-addicted governments. Attempting to resolve this situation through only punishing the “user” (through austerity programs), while not penalizing the “pusher” (through waiving/forgiving interest on debt) is virtually guaranteed to push the weakest of these governments into deflationary death-spirals.

 

While this very serious “drama” plays out in Europe, across the ocean, the greatest debt-liar in a world of debt-liars has not only avoided the consequences (until now) of many decades of past lies, but it has ratcheted-up the magnitude of those lies, exponentially, and then added a plethora of new fabrications. It is truly difficult to know where to begin.

 

In general terms, regular readers are familiar with my constant attacks at U.S. “economic statistics”, which have been perverted by ever-increasing distortions to the point where most are simply uncorrelated to the real world, in any way. For new readers, I will simply say that the respected U.S. economist, John Williams devotes an entire web-site to simply calculating U.S. economic statistics using the same methodology which existed decades earlier, before such statistical exaggerations had begun. The fact that this site continues to gain both stature and popularity should say much to readers.

 

On top of those “old” lies, the U.S. government has run amok – giving a whole, new meaning to the term “compulsive liar”. Here we must begin with Federal Reserve Chairman, Ben Bernanke, whose ridiculous market-pumping has dwarfed the sins of his predecessor, “Easy Al” Greenspan, and his infamous “Greenspan put”.

 

Bernanke's crimes are too numerous to list. First there was “the Goldilocks economy”: his “prediction” that the U.S. housing sector, U.S. markets, and the U.S. economy as a whole could simply keep marching higher and higher. He essentially borrowed the physics fantasy of the “perpetual-motion machine” and then expressed it in economic terms – where it is equally impossible. Thus, the model he presented was never even theoretically possible, let alone a plausible “prediction”. He has been nothing less than a direct accomplice of Wall Street in perpetrating the worst financial crime-wave in history.

 

All of his commentary since the bubbles began bursting and the fraud began seeping out are even greater fabrications than “the Goldilocks economy”. He is a clear sociopath, and even looking into his eyes sends a chill down my spine. And yet the mainstream media merely “tap dance” around Bernanke's never-ending fabrications.

 

Marc Faber coyly observed that both Greenspan and Bernanke claimed that the U.S. asset-bubbles they created were totally “invisible”, and thus impossible to “predict” - despite the army of statisticians who labour ceaselessly, just to make sure that the Chairmen of the Federal Reserve always know exactly what is taking place in the U.S. economy. Meanwhile, Faber remarked, both Greenspan and Bernanke have written recent commentaries unequivocally stating that they could “see bubbles” across an entire ocean (both the Atlantic and Pacific). Compulsive liars can be relied upon to always engage in such self-contradiction.

 

Indeed, in sopping-up huge appearance-fees for his assorted speaking engagements, Greenspan himself made the mistake of quipping that “spotting a bubble is easy, what is difficult is knowing what to do about it.” In fact, anyone with a competent understanding of economics could not possibly miss the obvious bubble-blowing which was taking place in the U.S. economy during the last decade.

 

Lowest interest rates in history. Greatest leverage in history. Easiest credit/lowest lending standards in history. A housing market which went straight up, while the (real) incomes and (real) wealth of Average Americans went steadily lower. And throughout this period, every U.S. regulator was blind, deaf, and dumb – as the largest wave of mortgage-fraud in global history sprang-up inside the U.S., and still continues to increase month-by-month. These are not “mistakes”, but rather “organized crime”.

 

Former senior banking regulator, William Black stated back in 2008 that U.S. regulators (such as the Federal Reserve) were not the incompetent buffoons they pretended to be, as they expressed their “surprise” when the largest bubble in history burst, and Wall Street's multi-trillion dollar Ponzi schemes began imploding. Rather, they were willing stooges who directly facilitated Wall Street's crime-wave.

 

By this time, the entire U.S. economy was so hopelessly over-leveraged with debt (exceeding $55 trillion), that allowing the bubbles to truly “deflate” (and allowing Wall Street's Ponzi-schemes to be totally exposed), was never an option for the inhabitants of the White House (irrespective of which branch of the two-party dictatorship they represented). Between them, Bush and Obama approved a bail-out which significantly exceeded $10 trillion in hand-outs/loans/guarantees. This exceeded the total of all other corporate bail-outs, in all the world, throughout history, combined. Indeed, the world had never seen a single bail-out exceeding 1% of that amount, ever before. This obscene, corporate welfare was “justified” 100% on the basis that the U.S. big-banks were “needed” for the U.S. economy to recover.

 

In other words, we were fed yet another version of the intellectually-bankrupt “trickle-down economics”: you give the richest people all the money, knowing that a few pennies will “trickle” out of the grasp of their greedy hands – and (accidentally) fall into the hands of the masses. While there has never been any valid example of such “voodoo economics” in economic history, conservatives still use this empty rhetoric to justify robbing-from-the-poor to give-to-the-rich.

 

In fact, as we saw, Wall Street has not used one penny of that $10+ trillion to “increase lending”. Instead, in virtually every single month since they mooched their trillions they have reduced overall lending – leading to the greatest collapse in U.S. consumer and corporate credit in history. This collapse in credit came despite the U.S. government “nationalizing” the entire U.S. mortgage market, as U.S. banks in general (and Wall Street in particular) totally abandoned U.S. homeowners.

 

Let me repeat this. The banks shamelessly lied. They took the largest mountain of corporate welfare in history – and did the exact opposite of what they said they would do. They have kept every penny of what they leeched out of the U.S. economy, and either hoarded it (i.e. loaned it back to the Fed), or they have spent in their own “proprietary”, leveraged gambling.

 

We know that the U.S. government was a willing accomplice to these lies for several reasons. They never attached any “strings” to the hand-outs, which would have forced Wall Street banks to honour their promises. They didn't even provide any “oversight” on how the $10+ trillion was being used until Americans howled in outrage, and once they finally did begin to keep track of that money, their own numbers show that the banksters clearly lied. Despite that, they have never penalized these corporate parasites for obtaining this $10+ trillion package based upon knowingly fraudulent assurances.

 

Indeed, the U.S. financial crime syndicate continues to be rewarded by the U.S. government, through continually supplying the parasites with infinite amounts of “0% loans” (i.e. free money), which will ultimately exceed the original $10 trillion. We know that at least part of the U.S. (corporate) media propaganda-machine is also an accomplice to this campaign of fraud – since it is obviously impossible for even the incompetent lackeys in the mainstream media to have failed to identify this glaring, $10+ trillion fraud/lie.

 

However, the greatest “reward” given to the Wall Street Oligarchs by the U.S. government wasn't even the $10+ trillion bail-out, it was through re-writing U.S. “accounting standards” in order to legitimize several obvious forms of accounting-fraud. This was essential, given the average leverage on the balance sheets of the Oligarchs when their Ponzi-scheme empire began to implode: 30:1.

 

As I have explained many times previously, it is simple arithmetic that (given this leverage) it only takes a decline in the underlying assets of these leveraged-bets of slightly over 3% to take the value of those bets to zero. Most of those bets (i.e. the “underlying assets”) were based upon the U.S. housing sector, and in the first collapse of the U.S. housing sector, house prices fell by 30% - roughly ten times the amount required to render Wall Street banks worthless.

 

Keep in mind that these leveraged-bets made it possible for the banksters to lose much more than 100%. As I pointed out in many previous commentaries, we caught a glimpse of the magnitude of these losses in a bankster versus bankster law-suit. In that litigation, even after Morgan Stanley had liquidated 100% of the “collateral” which supposedly “baked” the credit default swap it had issued to Citigroup, it faced a pay-out 300 times larger than its original bet.

 

That was not a “100% loss”, but rather a “30,000% loss” (not including the “collateral” which was liquidated). The credit default market alone is roughly $60 trillion in size (about the same size as the global economy). This one market (amounting to less than 1/10th of all derivatives) is large enough to bankrupt the Oligarchs, ten times over.

 

In short, even the $10 trillion bail-out package + the additional infusions of free-money (“0% loans”) couldn't possibly make these fraud-factories solvent. And obviously with these Oligarchs sitting on countless trillions of losses, the “billions” which they regularly brag about as “profits” from their crimes are little more than the proverbial “drop in the bucket”.

 

In a futile attempt to restore solvency to the Wall Street fraud-factories, the Obama regime has fabricated a “U.S. economic recovery”, to try to re-inflate this Ponzi-scheme economy. This has been done through the combination of ever more-fraudulent jobs reports from the Bureau of Labor Statistics, pumped-up GDP reports where the continued shrinkage of the U.S. economy was turned into “economic growth” simply by grossly understating inflation, and by creating a second bubble in the U.S. housing market.

 

As I stated at the beginning of this piece, the reason it is important to identify these endless acts of fraud and deception as “lies” is because lies have consequences – and it is now time to look at those consequences. The most obvious “consequences” are simply to look at how the lies influenced the behavior of various groups of “chumps”.

 

First there are state and local governments. They believed the Bernanke-lie of a “Goldilocks economy”, and committed themselves to trillions of dollars of additional future spending which they could never possibly afford, based upon that lie. They believed the Bernanke-lie of the “soft landing” too, and thus they did not begin to attempt to pare-down those bloated budgets until after their own revenues had collapses (and proved Bernanke's words to be lies).

 

Naturally, these chumps have never heard of the proverb, “Fool me once, shame on you. Fool me twice, shame on me.” After swallowing the “Goldilocks economy” and the “soft landing”, these chumps have just as willingly lapped-up the lie of the “U.S. economic recovery” - despite the fact that their revenues continue to plummet, and their “budget-gaps” (i.e. insolvency) increase by the day.

 

As I detailed in my most-recent commentary, rather than “continuing to recover”, the U.S. economy has just begun a violent crash in its next leg lower – with horrific numbers coming out day after day which are significantly worse than what was seen at the beginning of the first crash in the U.S. economy. State and local governments are utterly unprepared to absorb yet another massive plunge in their revenues – especially with the seemingly endless flow of federal dollars now virtually cut-off.

 

The same holds true for the households of Average Americans. Seduced by the words they wanted to hear “just a little longer until things get better”, Americans aborted their initial surge in personal savings, squandering precious wealth through foolhardy decisions such as the “Cash for Clunkers” purchase of un-needed vehicles, and through being conned into re-entering the death-trap known as the U.S. housing market.

 

Now we see yet another wave of unintended consequences of the campaign of lies from the U.S. government: the “revolt” by brain-dead Republican zealots. Like the state and local governments, and Average Americans, the Republican caucus has not learned its own “lesson” when it comes to putting their faith in the words of compulsive liars like Ben Bernanke and Barack Obama. They, too, have swallowed the myth of the “U.S. economic recovery”.

 

Eager to score “brownie points” with voters as yet another pointless, U.S. election looms, Republican ideological zealots have adopted the mantle of “deficit fighters”. Believing that the robust economic growth indicated by the last three U.S. GDP reports was fact rather than fantasy, they now refuse to authorize continuation of the same level of reckless spending which they had rubber-stamped for the past two decades.

 

These born-again “fiscal conservatives” have blocked extending unemployment benefits (yet again) for millions of Americans who are “one cheque” away from financial disaster. They have ended a small-business loan program that was the only, remaining source of readily available credit for U.S. small businesses (other than JP Morgan's 30%-interest, small-business “credit cards”). They have cut-off an additional, vital “pipeline” of money to U.S. state governments.

 

This is money which many states were absolutely depending upon. Indeed, of the 46 U.S. states with “budget-gaps”, many if not most of those states still have these funds “penciled-in” - even though Republicans have “killed” the extension of further aid.

 

For the last 15 months, there have been two, entirely independent “U.S. economies”. There has been the “federal economy”, where “robust economic growth” is once again fueling “record profits” for many large U.S. corporations – and nothing else matters to the mainstream media. Then there is the aggregate-economy of the 50 U.S. states, where a Greater Depression continues to intensify. Dozens of state governments, and thousands of local governments teeter closer to outright bankruptcy than at any other time in U.S. history, while massive unemployment and even more-massive “unfunded liabilities” have destroyed the balance sheets of nearly every state government.

 

Meanwhile, tens of millions of Americans face increasing despair as the worst long-term unemployment since (at least) the Great Depression has caused their own debt-mountains to implode. In an obvious double-standard, they can't simply lie to the U.S. government, hold out their hands, and receive trillions of dollars to bail them out, like a Wall Street banker can.

 

In short, decades of ever-increasing lies has trapped the U.S. government in a “corner” of its own making. It either has to acknowledge the myth of the U.S. economy, in order to get Republican “attack-dogs” to back off – and once again authorize more trillions in “easy money” (fresh off the Bernanke printing press); or, it can live with the consequences of its lies, and watch helplessly as Republican “deficit-fighting” causes the U.S. economy's $60 trillion in total public/private debt to implode like a house-of-cards in a hurricane.

 

It would be totally out of character for these compulsive liars to “live with the consequences” of their multitude of past fibs. Instead, we can expect the construction of new lies to attempt to dupe the sheep into believing that there is some rational connection between the mythical “U.S. economic recovery” which has been presented to them over and over, and the even more-savage economic collapse now underway, which has been revealed by volumes of short-term and long-term data.

 

In that respect, here is the “script” which has been tested-out by the U.S. media over the past few weeks: “the weakness in Europe is threatening the U.S. recovery”. There is neither any truth nor relevance in this particular piece of propaganda – as the U.S. economy is much weaker than any Eurozone economy and U.S. trade with Europe simply isn't of great enough significance for any “weakness” in Europe to have a significant impact on the U.S.

 

The U.S.'s largest trading partner is China (whose economy is humming along with 10% GDP growth), and its second biggest trade partner is Canada – which is also clearly emerging from recession. Indeed, the U.S. economy is a significant “drag” on the Canadian economy. Canada generally runs large trade-surpluses, but with the U.S. economy collapsing, that surplus has disappeared, and Canada (again) had a large trade-deficit in May – because the U.S. is not buying anything from Canada.

 

Reality matters little to the propaganda-machine however. Since it's unlikely to come up with a more believable script, some time in the next few weeks, expect the Obama regime to blame Europe – as it is forced to acknowledge the severe plunge in the U.S. economy.

 

There is an inevitable progression for all compulsive liars. They originally begin with credibility, and thus their first lies are believed without question. The liars then mistakenly assume that this credibility is a "constant" - and that it will never erode, no matter how frequently or egregiously they abuse the trust of others. In fact, the credibility of all liars does wane - to the point where we have someone like Marc Faber joking about the credibility of the last two Chairmen of the Federal Reserve.

 

At the same time, as the lies increase in number (and size), these lies become less and less plausible in absolute terms. Thus, we have people with less and less credibility telling lies with ever-less plausibility. The end of this melodrama is summed-up by the allegory of "The Boy Who Cried Wolf". Eventually the liars have so little credibility that nothing they say is believed - even if they should happen to speak the truth.

 

Snared by a web of deceit which it has woven itself, the U.S. government  now bears an eerie resemblance to many of the characters of Greek tragedies: able to see their own approaching demise with greater and greater clarity as time passes - while there is less and less they can do to avoid it.

 

 

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Jeff Nielson
...
written by Jeff Nielson, July 24, 2010
Lol Breezer - a plethora of "four letter words" came to mind in the milli-second it took me to get to yours: "jail".

Actually, I would be quite happy if the U.S. government would focus on just one, five-letter word: taxes.

While sending these mega-criminals to prison for a VERY long time will make Americans feel better, it won't "pay the bills" or feed their children.

All these criminals understand is money, so BEFORE we get to the point of locking them up, the tax-man should get to work. First there is the TRILLIONS they scammed over the last decade. Then there is the TRILLIONS they siphoned-out of the U.S. Treasury through the Bush tax-cuts (i.e. the ULTIMATE windfall for the wealthy).

Then there is the TRILLIONS which the private bankers of the Federal Reserve have stolen from the U.S. Treasury - giving nothing in return but scraps of paper. American history likes to make fun of how the "Indians" gave away their land for nothing but "beads and trinkets". However, Native Americans are probably making THEIR OWN jokes now, about how the "white man" traded $5 trillion for scraps of paper with ink on them.

Lastly, there are hundreds of billions MORE for the tax-man to confiscate from the ultra-rich: the grossly excessive pay-raises, "bonuses", and "golden parachutes" which these corporate pirates awarded to themselves (while corrupt boards of directors merely slept).

I guarantee that if the IRS was to take-back the (roughly) $15 TRILLION which the wealthy have plundered out of the U.S. economy (just in the last two decades) that not only would it be a far worse "punishment" than any prison sentence, but it would restore SOLVENCY to the U.S. - AND offer real hope to the average (oppressed) American.
breezer1
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written by breezer1, July 24, 2010
i would not mind more 4 letter words jeff. maybe start with jail.
Jeff Nielson
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written by Jeff Nielson, July 20, 2010
Thank you very much for the feedback! It's comments like that make it easy for us to get motivated to continue to improve our site day-by-day.
heartbone
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written by heartbone, July 20, 2010
I had to join this forum just so I could post a message of praise to you Jeff for creating such a comprehensive work.

I will have to reread it several times of course.

Truly outstanding.

Thanks for your efforts.
Jeff Nielson
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written by Jeff Nielson, July 18, 2010
Interesting comments, everyone.

I'm reluctant to give the bankers much credit for being clever - for two reasons. One, most of the scams they have been perpetrating are just more complex variations of their older scams.

On top of that, their behavior will ultimately prove self-destructive. The only question is HOW they self-destruct: will it be necessary to "pull out the guillotines" (again), or will the lawyer-vultures accomplish a metaphorical "decapitation" through the courts?
paxjds
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written by paxjds, July 18, 2010
Great response Dylan.
The Banksters when their scam went belly up on them had the audacity to get the Government/people to bail them out crying you cannot live without us by letting us go bankrupt. The most tragic thing is that we bailed them out.
Life in the world would be a much better place if the likes of JP Morgan, Goldman SACHS, AND THE FEDERAL RESERVE bank were thrown on the ashes of history. The sooner they are Overthrown, the sooner the recovery. Yes over thrown, in case the people have not realized it, they are the Puppet Masters.
Dylan
...
written by Dylan, July 18, 2010
I think the "incompetent fool" routine is just another aspect of their scam.
It works very well, as you get decent people stepping in and actually defending these front clowns,

"Whoops! there goes the economy!,

"Oh dear, we gambled all of Granny's money away in the world's biggest casino!"

"Cor Blimey! I shouldn't have sold all our gold just then should I?, but it is just a barbarous relic after all"

"Your all going to have to make some painful choices to pay back all the money we lost"

"Oh all right then, I'll have to sell another kidney, but if it will save the economy, then ok, just don't do it again..............doh!"

This policy of using endearing idiots to front a very real and deliberate strategy of wealth transfer is a clever one. When you call these puppets and their masters what they are, liars (simply the truth),the hostages turn round and start defending their kidnappers - Stockholm syndrome.

The whole ediface of fractional reserve banking is based on deception.
Derivatives (the Banksters "deriving" their wealth from us)take this deception to an unprecedented level. They are depicted as losses, but where did all this money go? Did it evaporate? Of course not. It was transferred.

Insane leverage allowed them to create deliberately toxic CDOs, which were sold on to shadow bankers, enabling them to repeat the process. They made money on these but who was left holding the bombs? Only those institutes that they knew beforehand would be bailed out, transferring losses to the public, and those institutes deemed expendable.

But the Credit Default Swaps, fraudulent insurance policies that could be purchased many times over on the same underlying asset without owning it were the real heart of this scam. Combined with insider foreknowledge of which CDOs would implode and when, it was hardly gambling, more like shooting a barn wall with a blunderbuss.

For who are the counterparties?
They are the same people who control these banks in the first place, its a diabolically clever scam in which the owners of the banks take astronomical profits from the astronomical losses that the banks incur.

They make it look as if it has blown up in their faces, but it has blown up in OUR faces and it was controlled demolition.
ecliving
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written by Jeff, July 18, 2010
Hi Jeff.

I tweeted this article, and posted it on my FB wall, so my very small sphere of influence knows about it.

This is the first time I've seen this quote. Thought you'd find it useful...

It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people's minds - Sam Adams

Keep writing like this, and you'll have an irate, tireless minority lighting fires.

Jeff (the other one)
Jeff Nielson
...
written by Jeff Nielson, July 18, 2010
Thanks for the support, Paxjds. Actually, commentaries of this nature tend not to attract as many readers as pieces with more specific topics. Personally, it's a bit disappointing - as these larger overviews generally help explain/reveal "the big picture" much better than more targeted commentaries.
paxjds
...
written by paxjds, July 17, 2010
Jeff,
You have really outdone yourself with this very excellent article. IMHO you deserve a Noble Peace Prize for Honesty in Journalism. You put the mainstream(government media)to shame with your expose's on corruption and fraud in government and the financial industry.
More and more people are starting to see the light. People are getting fed up with deficit and wasteful spending clear down to local city and county governments. The major problem as I see for real change is that too many voters have been paid off by :
1. Government jobs and perks that way exceed the private sector. These jobs include state and local governments.
2. The very large number of people on government subsidies that dont have to work due to their government checks and stamps.
3. Government taking over private sector business and companies.
4. Most of the press and the finance section are now part of government even though they claim independence.
5. Government support of unions to achieve political power.
This is therefore an approximate majority of the voters, and my guess is that they will continue to support the madness of the policies of the last 50 years. A total economic collapse with these blind and fraudulent
Kennsian idiots in control is just around the corner if not iminent.
I never would have thought that I now listen to China and Russia for scant signs of truth that we do not hear in the US anymore. China is willing to call a spade a spade with their downgrading of the US government. That shows you how bad things are here with those in power. I call the existing leaders Pathological(deadly)liars. Perhaps a book will be written called " The Fall of Pax Americana and Pathological Narcissism". You could have the book with empty pages as the Title of the Book says it all!!
You are so right with Trapped in Lies", therein lives the Narcissist since the days of ADAM, when promised power and prestige.

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