Saturday 22 August 2015

Weekend Update – GNE The Final Act.



First we salute those brave, quick thinking, US Marines on the Amsterdam to Paris train who prevented a massacre yesterday. May we have more US Marines on European trains!
We hope all three countries involved know how to properly show their appreciation.


We have entered the final act of the Great Nixonian Error of fiat money (GNE,) 1971-present. The benefits of fiat money were all front loaded and long ago dissipated in sex, drugs, rock and roll, I want it now lifestyle, wars, bribes to socialist voters, unlimited unrepayable  debt, financialised casinos, and the malinvestments of China. We have entered the era where central banksters are increasingly irrelevant, out of ammo, and trapped in a mousetrap of their own making. Having let loose serial bubble Meister Greenspan in 1987, twenty years later the Orwellian financialised bubble he eventually created blew up in 2007-2008. First in 2007,  in the first bank run in the UK in 150 years, Northern Rock, and in 2008 the collapse of Bear Stearns, Merrill Lynch, AIG, Lehman Brothers, and many more too numerous to name. In response, the massed ranks of panicked central banksters, shocked at the calamity they had created, closed ranks and tried to cover up.

Balance sheets were expanded by Quantitative Easing, ZIRP introduced to steal from the thrifty, competitive devaluation was rushed out, extend and pretend brought in, mark to the model pretend valuations, and unlimited credit rushed into the casino. Seven years on, the central banksters have only a massive global stock market bubble to show for it all, and now a hard landing in China is bringing it all crashing down. The Great Deflation is already underway. My own guess is that globally we entered a new recession somewhere between June and December of 2014. The global oil glut was probably the leading indicator. Far from an excess of oil supply, my guess is that history will come to show it was a collapse in oil demand unrecognised at the time.

Simply put, China became the world’s biggest bubble ever. Another unintended consequence of the Great Nixonian Error of fiat money. The GNE had a good run, 1971 to 2015.  The Great Deflation will not last, Moses like, as long as 44 years. My guess is that it will run only 5 to 10 years. But that is bad enough. My guess is that like all troubled times past, human ingenuity, thrift, hard work and a younger generation, will be the basis of establishing the new prosperity. But we also need to end criminal central banksterism and fiat money.

We also have the added advantage that we are just at the start of our New Carbon Age of graphene and virtually unlimited, almost free solar power, and 21st century electric energy storage solutions.  Think 1884 and the invention of the practical steam turbine that ushered in the first electric age. Think 1908 “Tin Lizzie,” the motor car for the masses.  Think January 1914 and Henry Ford’s $5 a day wages.

The trick for us all now, is to get from here to there.

I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one – and enjoy with his family the blessing of hours of pleasure in God's great open spaces.

Henry Ford.



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