We have just witnessed the
last gasp of the global economy
It
is difficult to find the motivation to write about the state of the global
economy these days, if only because there is not much left to say. I feel like
I am composing multiple obituaries for the same long-dead corpse. Most of the
liberty movement and, I suspect, a small portion of the mainstream market
understand that there is no tangible or legitimate recovery, let alone a stable
fiscal ladder to rest our feet upon. There is literally nothing left to the
financial system but false promises and ever-expanding debt. In fact, the
concept of debt creation is the only thing holding our facade of an economy
together.
You
and I probably find this rather strange. We come from a long-forgotten school
of economics, in which demand and supply actually mean something in terms of
our fiscal health. I have come across many mainstream economic acolytes and
cultists in recent months who disregard all
logic and reason, forsaking the realities of demand-based trade and immersing
themselves in a grand delusion in which central bank-generated debt and
inflation are the real source of “prosperity.” I feel sorry for them in a way
because the truth is right in front of their faces, yet they won’t see it until
they are buried alive in it.
Nothing
makes this problem more apparent than the behavior of equities in the past
month.
Stocks
are, of course, a sham of the highest magnitude; but they do still say
something about the greater truth behind our financial condition. The fact that
market traders know that
it’s all a farce and are actually banking and betting on the scam tells me
exactly how close we are to the end of the line. The recent near 10 percent
drop in the Dow Jones industrial average at the beginning of fall must have
certainly been a shock for the day-trading community, as well as mainstream
pundits. The assumption for the past few years has been that central bank
stimulus guarantees a constantly growing bull market, and to experience a considerable
decline in equities while quantitative easing was still in action was at least
a noticeable wake up call.
I
suspect that this decline in markets was not planned by the central banks and
was a stumble in their scheme to keep stocks elevated until after the QE taper
had settled. It was also a market shock I expected a little earlier, near the
end of summer to be exact. Since the drop, central banks and the mainstream
media have reacted forcefully to manipulate public perception as well as
investor optimism.
In
almost every instance of market decline, financial news group Reuters has
injected false rumors of more stimulus from the European Central Bank. This was
also the case in October as markets began to crash. These rumors were later
dashed by Financial
Times,
but not before the mere mention of more fiat stimulus from any central bank
sent stocks soaring yet again.
This
also occurred when middle management Federal Reserve policymaker John Williams hinted
in interviews
of the possibility of QE4 if the economy began to show signs of regression.
Williams, of course, has no say in the decision to reintroduce QE. But that
didn’t matter to investors, who immediately latched onto the meaningless news
like anxious children and threw their money back into stocks again.
Most
recently, Japan’s
central bank announced a sudden and surprising re-ignition of stimulus measures
to the tune of 80 trillion yen a year. The announcement once again sent global
stocks skyrocketing, even though it was a stark admission by Japan’s financial
elite that all their inflationary printing efforts for the past several years
have failed miserably.
Hopefully,
we can all see the trend taking place here. With the end of the Federal Reserve
taper now complete and with questions circling as to when interest rates will
be raised, a market volatility not seen since 2008-2009 has returned. The only measure that has
slowed the crash is the use of false news stories hinting at further stimulus,
as well as futile efforts by other central banks to pick up where the Federal
Reserve left off. This shows that the investment world is so thoroughly
addicted to QE that even the mere mention of another small fix of their
favorite drug is enough to get them out of bed and excited. They know that the
entire system is rigged by central banks, and they don’t care. In fact, they
revel in it. Their only goal is to profit on the scam for as long as humanly possible,
even though the ultimate end of the scam will mean the utter destruction of
their profits and the end of their way of life.
I
hate to use a cinema analogy for a very real threat, but investors today remind
me of Joe Pantoliano’s character in “The Matrix.” The guy is fully aware that
the Matrix is an illusion but wants to experience the pleasure of the illusion
all the same, so much so that he doesn’t mind being exploited like a slave by
the system. He is willing to sacrifice all measure of truth and even the future
just to get a taste of the fantasy again.
But
what is the reality that the central banks are trying to hide and why are they
trying to hide it? I have written about this in detail on literally hundreds of
occasions, so I will cover only the very latest news briefly here.
Global
exports and, thus, consumer demand are plunging. Germany, the only pillar left
to prop up the failing European Union, has experienced a severe decline in
exports not seen since 2009.
China,
the largest exporter and importer in the world, and Chinese companies have been
caught in a number of instances using fraudulent invoices to artificially
inflate their own export numbers, in some cases reporting 50 percent more
exported goods than had actually existed.
China’s
manufacturing has also declined for the past five months, indicating a global
slowdown.
The
Baltic Dry Index — a measure of global shipping rates for raw goods and, thus,
a measure of demand for shipping — continues to drag along near historic lows.
The
U.S. consumer (the only economic asset the U.S. has besides the dollar’s world
reserve status) has seen declines in spending as well as wages.
In
the meantime, long-term jobless Americans continue to fall off welfare rolls by
the millions, making unemployment numbers look good. But the overall future
picture look terrible as participation rates dissolve into the ether of
government statistics.
How
is such poverty being hidden? Food stamps. Plain and simple. Nearly 50 million
Americans now subsist on food stamp programs, and this number shows no signs of
dropping. In states like Illinois, two people sign up for food assistance for
every citizen who happens to find a job.
But
this is all rudimentary. Most analysts in the liberty movement agree that our
fiscal structure is on the verge of collapse; what they tend to bicker about
are how and when the structure will
collapse.
Guessing
market declines is extremely difficult. My prediction of a 10 percent drop by
the end of summer was off by three weeks. Because of the nature of QE stimulus
manipulation of the Dow, my only guide has been the reality of the Fed taper
and the fact that major banks have been relying on fed fiat to continually
cycle capital into equities through the use of low-interest loans to
corporations and the stock buyback scam. Company buybacks have given steady
boosts to the markets at least since 2008, and many corporations are using up
to 50 percent of their “profits” just to continue buying their own stocks.
This
strategy, however, is reaching a point of diminishing returns as many companies
are issuing too much debt in the process. IBM is a perfect example of a company
that has hit the ceiling on stock buybacks.
With
the taper finished and QE money drying up, it is important to ask a few
questions. For example, how are companies going to continue to accumulate
capital to dump into their own stocks if Fed money is becoming scarce and
consumer spending is in decline? And if they can’t continue stock buybacks, how
are equities markets going to stay afloat?
And
what about government debt? As it stands now, foreign interest in U.S. Treasury
bonds is waning. The vast majority of new bonds sold are short-term. Until now,
the Fed has been the primary buyer of long-term debt, snapping up 10-year bonds
from the market while other investors lose confidence in America’s ability to
pay off liabilities in the future. Now that QE is over, who is going to buy the
ever-expanding U.S. government debt? I aimed this question recently at a Fed
cultist, and his response was: “Well, obviously somebody will buy it,” though
he couldn’t specify. Investors are counting on an eventual QE4, but I think
this might also be wishful thinking.
At
the end of 2013, I predicted the Fed would indeed follow through with the taper
of QE3 and that it would drastically reduce stimulus measures. I believe this
is in preparation for a major implosion of U.S. markets in particular. The
whole point of the taper is to support the illusion that the U.S. economy has
recovered and that the Fed has accomplished its mission. When a crash does take
place, I have no doubt it will be blamed on an outside force or act of fate.
(The Ebola outbreak, which is doubling in cases every three weeks, is a perfect
possible catalyst.)
Behind
the background noise of the recovery party, international bankers are sending a
very different message about economic health.
On
the same day as the Federal Reserve announced the end of QE3, former chairman
Alan Greenspan gave a speech to the Council on Foreign Relations in which he lamented
that the QE unwind would be painful, that stimulus measures had not achieved
their goals in the past and that gold might be a good investment today.
The
International Monetary Fund and the ECB also released statements warning that
“accommodative stimulus policies” could contribute to economic volatility. That
is to say, stimulus might be setting the stage for fiscal instability. The IMF
claims that “bold action” is required to “reset” the global system.
And
the ever-present overlords at the Bank of International Settlements have posted
a stark warning about our financial future, predicting a “violent reversal” in
markets. The last time the BIS made such a prediction was in the summer of
2007, just before the derivatives crash. But this is the M.O. of the central
banks: to warn of coming calamity before the event, but not long enough before
the event to make any difference. They present themselves as prognosticators of
economic future. But in reality, they are the instigators of every disaster
they predict.
I
believe that the admissions of financial danger by internationalists, the sharp
drop in stocks at the beginning of fall and the complete disconnect between
mainstream investors and reality signal the last gasp of the global economy. I
expect increasing market instability from this point on, as well as numerous
geopolitical distractions that will be blamed for the fiscal chaos. I have left
out my explanation of the final endgame so that I can cover it more fully in my
next article. Needless to say, the coming storm is a deliberately engineered
one, meant to achieve very specific goals, including a fearful and panicked
populace, easy to manipulate as the system goes off the rails.
–Brandon Smith
Source:http://personalliberty.com/just-witnessed-last-gasp-global-economy/
Comments
Brandon Smith is spot on. I’ve been writing about this for years. There are a few bright spots. Deflation will
lower the price of everything for a while, if consumers play this right.
Government overspending should end along with government abuse. Trickle-up
redistribution of wealth should stop. Fear of the size of government debt and
the prospect of higher interest rates applied to debt interest should reduce
government spending. U.S. energy production should be unleashed along with
production in everything we produce that has a demand.
On the downside, with deflation, the price of
everything should be affected, even gold and silver. But after this phase has
passed, the focus will be the dollar and governments always. Our home values
and 401Ks balances will go back down.
The 30% bubble we’ve been carrying in the U.S. economy since 2008 will
finally deflate to reveal our real economy with a lower GDP. Quarterly GDP
percentages will be negative. We will
officially enter a long Recession.
Jobs in the financial sector will be
eliminated, but the delivery of essentials will continue. More jobless folks
will move in with relatives.
On the upside, property taxes should go back
down, saving consumers lots of money. Consumers will get a break as prices go
down. Wages won’t go up, but your dollars will go farther.
State and local governments should stop
wasting money now and cut non-critical spending. Federal grants to states should stop.
We have an opportunity to end federal abuse,
close the border, stop immigration, close unconstitutional federal agencies,
increase production and put our country back together to follow the U.S.
Constitution (as written).
Norb Leahy, Dunwoody GA Tea Party Leader
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