US Dollar Hegemony and the Anglo-American Empire

The current global monetary-financial-economic paradigm we operate within, is fast reaching a conclusion. The United States reserve currency hegemony, essentially created by a petrodollar relationship established in the 70’s between the United States and Saudi Arabia, is being tested on multiple fronts. If China and Russia manage to create a viable alternative to the USD in global trade, then the Anglo-American empire is dead. Therefore, it must maintain USD hegemony to continue to finance its war apparatus.

It shouldn’t come as a surprise to learn the U.S. is running budget deficits financed by the creation of U.S. treasuries. Additionally,  investors bought these ‘safe’ assets, as they are backed by the U.S. taxpayer. However, China and other major purchasers are tiring of these debt-securities. Cheap finance may soon end, along with the secular bull market in bonds. If investors liquidate their holdings, and create massive downward momentum, it would spell the end. Therefore, the Federal Reserve would likely step in and expand its balance sheet.

The FED already has roughly 4.5 trillion dollars of nominal value on its balance sheet, and there is no reason why it couldn’t start directly monetizing the debt of the U.S government. The U.S. government debt ceiling has been raised to twenty trillion, not to mention the unfunded liabilities that are estimated to be around 40-60 trillion. The empire is facing major challenges, some it created itself. On one hand, it slowly gutted its manufacturing sector by taking advantage of liberal trade policies and invested in low-wage economies to generate value for stockholders. This moved jobs, GDP, human capital, and other positive externalities offshore. And on the other hand, it used substantial resources to dominate and subjugate various economies and countries with its enormous military and influence. The opportunity cost of maintaining the futile empire is unimaginable. The rent-seeking parasites and their myopic obsession with wealth aggregation has drained the fabric of society. All the empire has, is it’s ability to push its debt onto others. It must keep the USD favorable or implode.

The colossal derivatives quagmire, leveraged from U.S treasuries etc, is used to manipulate and play the futures markets. The price of gold is being manipulated by naked short selling paper gold contracts onto the market. Suppression of the gold price is favorable, however, to China, Russia, India, etc. They are importing on a large scale and keeping internal production. They are hedging for a collapse. They don’t want to be just holding paper and worthless claims to paper when the music stops. Gold is liquid and has no counter-party risk. It is superior to other commodities.

With the Federal reserve rate at essentially 0%, the ending of the secular bull market in bonds, QE(x), ZIRP, NIRP, malinvestment, worsening demographics, peak private debt and consumption, war, hyper-leveraged zombie banks, intellectually dishonest and corrupt leadership, bloated incoherent bureaucracies, it is only a matter of time before the USD is put on the pile of other failed currencies. There is no other way. They could let the financial/monetary system and the empire collapse, along with their precious paper wealth, employment rates, and initiate an epic depression, or they can inflate the debt away and eventually kill the dollar and the empire. Bad news either way. So, kicking the can will be the option taken. With the FED jaw-boning the market, and having not raised rates for seven years, it is a dubious idea to think they would suddenly become responsible. Neo-Keynesian economic thinking is reaching the end of the line. The FED will expand its balance sheet, NIRP will likely be initiated, savers will be killed. It is an illusion. One day soon, the great deleveraging will happen. No amount of easing or manipulation can continue into perpetuity. For every single action, there is an equal and opposite reaction.

A geopolitical transformation is taking place. Will the U.S. throw in the towel, or will it rampage into oblivion? I can’t forsee. But I get the feeling the whole world will receive a free lesson in economics that they won’t be able to ignore.

Economic Reality: Neo-Keynesian Experiment on Death Bed

“Ignorance is refuge from reality. Willful ignorance is refuge from reason”. – Anonymous

INFANTILE OBSESSIONS WITH FAIRNESS

Wealth and income inequality are neither abnormal nor abhorrent. The tug of war between labor and capital is normal and equilibrium seeking. Excessive regulation distorts the mechanism.

CAN YOU SAY ZIRP, NIRP?

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1997-2014

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2008-2014

The Federal funds rate has been set at 0.25% for over the past 5 years. When the current bubble bursts, the interest rate can’t go down much further and still be positive. The ECB is currently at 0.05%. Hmmm, who will win the race? The Bank of Japan is already at 0.00%. I guess it is the winner. I foresee potential for negative interest rates. This is when you pay the bank interest to look after your money, which only exists in physical form at around 2% anyways. The rest is just data stored on a computer. They don’t need to rent warehouses or have massive vaults to store cash. It doesn’t exist in that form. It’s digital now. Perhaps some deposit haircuts are around the corner. Bail-ins are supposedly the next big thing. The banks close for a bank holiday, and open up with less of your money. Sound good?  ZIRP and NIRP, they are acronyms of the hard working saving class, right?

Now lets look at the S&P 500. Has that reached nominal values higher than the last two previous bubbles? Oh good it has. The current bubble is quite ambitious. I guess now is really a great time to sell if you haven’t just entered the market.

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Perhaps the Dow Jones Industrial Average hasn’t fallen victim to the interest rates. Nope, it appears it is just as ambitious as the S&P 500. How far will it go? It will continue to rise and make us all rich right? CEO’s must be loving their executive compensation. Stock buy backs are so in right now.

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The NASDAQ took quite a beating when the Dotcom bubble burst. But don’t worry, it is trying hard to get back to where it once was. It’s all about market capitalization right?

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China doesn’t really have a stock market. I think its citizens don’t trust it. Instead, they like real estate bubbles. Japan likes QE. Europe isn’t even bothering to replace its citizens anymore. Demographics have gotten ugly. The U.S prints money and lives off its exorbitant privilege to pay its bills. Nothing quite like having the worlds reserve currency. Thank you House of Saud! But the tide is turning. Gold is being sucked into a giant vortex in Asia. It stops off at Switzerland though to be processed before making its final stop in Asia. Yes, the world is about to experience another financial crisis. But when?

Look at the trend for 10 year treasury notes. They have been trending downward for sometime huh. No wonder the U.S government has been able to spend $100’s of billions on war every year. Force projection doesn’t come cheap. Still, better to destabilize the Middle East than to invest in your nations infrastructure. Actually, just print more food stamps. Go hard or go home!

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Allow me to make some predictions. At least then I can gauge how accurate I was at the time of writing this blog. In a years time, so, by the 2nd of November, 2015, GMT, the next global financial crisis will have hit.

Sell sell sell!

– U.S stock markets take a tumble. S&P500 at 700, DJIA 6000, NASDAQ 1400

– US Federal funds rate. Damn, umm, take it to NIRP. Bail ins. Gotta kill the savers right!

Bull

What?

Gold, Silver, Bitcoin, Litecoin, Water

Perfect moral hazard – Privatizing gains, externalizing costs

“All the world’s a stage, and all the men and women merely players.”

What version of capitalism places zombie financial institutions on life-support using super cheap liquidity pumped into the zombies’ veins via central banks?

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The Long and the Short of it

So, the major banks, central banks, and government haven’t been prudent. Hell, they haven’t even been incompetent. In my opinion, they have been about as responsible as a group of children guarding a room full of other peoples candy. The oversight being the children’s parents, whom only bother to look in periodically, and then only occasionally fining each child 5 pieces of candy for every time they were caught misappropriating the candy, just so they appear to be doing their job.

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The banking system a few years ago

When the banks ran out of candy and could no longer hide it, the government burst into action to keep these failed institutions alive by filling them back up with candy. The great bail out of 2008. The government simply used the candy taken from the people, to keep specific candy shops in business. They were just to big to let fail. So it seemed like business as usual. All was well again in the land of cognitive dissonance. Until… Cyprus ran out of candy. Out of nowhere, candy vanished from Cyprus, and their major banks were looking likely to fall. BitCandy rose in value suddenly, and candy stores went on holiday. People were disenchanted once again, but this time it was different. The concept of candy haircuts was posited in the media for all. It would only be about 1 or 2%, the Cypriots were told. Only the final figure was officially 47.5%. although in reality it may even be more. Depositors in Laiki bank and the Bank of Cyprus have been taken for a ride on the chicanery train. That was the time for the Cypriots to disembark the system, take control and purge their system of this toxic candy, and repopulate their government. I guess they shrugged it off. As, the haircut was only for uninsured deposits over 100,000. Nobody went hungry this time.

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The banking system today, circa 2014

Today it’s better than ever. Citizens of some European countries have become enlightened, and forced their respective governments to concede that their golden chocolate bars, that they had faithfully entrusted with the United States of America and Great Britain, had undergone rehypothecation, and been sold to someone else, and someone else, and someone else again. The game of musical chairs must eventually stop. Ten players and one chair. Who will be left with the golden chocolate bars, who will be left with IOU’s? Golden chocolate in all shapes and forms, is being sucked into Switzerland for refining, Eastward bound. The Chinese have a love affair for golden chocolate, and like to put it into deep storage. The Indians prefer to wear it on their body for adornment. Europeans and North Americans prefer to have their gold rehypothecated and sold, and vanished, and gone to someone else. I would have to say, with all the economic uncertainty, and endemic financial manipulation, I would be getting my hands on these golden chocolate bars, and as many as I could carry. Not just for capital gain and the short term, but for the purpose of owning a true and tested form of money. If the supply of gold doubled each year, it would eventually become as common as sand on a beach, and nobody would be interested in it. Apart from its metallurgic qualities, if nobody were to accept it as a form of payment, it may as well stay underground. But that is not the case. In fact, Asia seems more than happy to accrue physical, and the price is still low. Why?

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Deleveraging of the toxic debt candy

It is no secret that major Western banks are leveraged to the eyeballs, are insolvent, and along with central banks are inflating financial assets and buying securities, keeping the game of musical chairs going for the top 10% or so who own stocks and these assets. The “foodstamp” zombies are growing concurrently too. The wealth divide is wider than ever. So when the music does stop, as it inevitably does, what does the picture look like? For the poor huddled masses, the picture looks fairly similar. For the working poor, they will join the foodstamp zombies. I’d say that most will be in for shock. Especially the rich. The 1% or so will probably be fine. They will have their wealth safely tucked away from inflated and dangerous paper assets. Gold, land, fine art. Traditional avenues of wealth preservation. Probably they will expand their wealth, as they buy up assets and land at rock bottom prices, when the rest of the population is selling and heavily disenchanted. Oh well. Better luck next time.

THERE IS AN ALTERNATIVE TO FRACTIONAL RESERVE BANKING

The Paradigm is Changing

Current monetary policy is inimical to our interests. Do we have the mental fortitude to make the change, and mitigate potential consequences. It is a troubling subject. I imagine most politicians wouldn’t dare talk about it. Therefore, the current system is broken. It must be changed…

A few notable quotes from history.

“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”

“The banks do create money. They have been doing it for a long time, but they didn’t realise it, and they did not admit it. Very few did. You will find it in all sorts of documents, financial textbooks, etc. But in the intervening years, and we must be perfectly frank about these things, there has been a development of thought, until today I doubt very much whether you would get many prominent bankers to attempt to deny that banks create it.” H W White, Chairman of the Associated Banks of New Zealand, to the New Zealand Monetary Commission, 1955.

WEALTH CONCENTRATION

How is there such massive concentration of wealth into the hands of so few, while the majority shares in so little. In the US, the bottom 80% of the population owns 7% of the wealth. The top 1% of the population owns %40 of the wealth. Some people are so poor and uneducated that life is just a struggle to stay alive, eat, and generally survive. Civil disobedience would obviously benefit them immensely if they could organize and protest. They have the least to lose, and time to spare. The other slice of the poor, the working poor, people with 3 jobs and up to their eyeballs in debt, don’t have the time to protest and engage in civil disobedience. So, what about the middle class. I’m not really sure what that means. The middle class is only marginally better off than the lower class. The only difference being that someone with a full time job doesn’t have much time, while the jobless do. So, who is going to change the system, if the people most affected by the inequity are either too ignorant or busy to bother engaging in civil disobedience. Answer. Nobody.

INFLATION, INCOME TAX, INTEREST

Conventional dogma would have society believe that in order to start climbing up the ladder of prosperity, we need to borrow money to get an education so we can be employable. Once we have found a job, we will start paying income tax, even payed as it is earnt (P.A.Y.E). Eventually we will borrow again at interest, but this time for a home. Thoughts of whether the real estate market is overvalued and perhaps in a bubble, rarely enters the equation. After all, we have been taught by society to follow this path. It is normal, conventional, and acceptable, right? We chase capital gains in real estate, we know little else. We feel safe that real estate will provide us with the wealth we seek. Are you familiar with the price/rent ratio?

WHERE DO WE GET THESE IDEAS?

There is such a great volume of disinformation and lunacy bombarding our minds as though it were the absolute truth, as though it wasn’t just the self serving dogma that benefits a certain few. This dogma arrives from many sources, the main stream media, conventional education, friends and family members that propagate this ignorance.

CURRENCIES AND MONETARY SUPPLY

Lets focus on an issue of great importance, but yet an issue so uniquely misunderstood. Does society truly benefit from the Fractional Reserve Banking system and the private banking sector that creates debt for the masses by way of inflationary fractional reserve loans and interest, or a positive reserve banking system that benefits the taxpayers, the very people who end up paying the interest on the national debt. We have the right to a system that benefits mankind, not just the bankers. The IRS came into being the same year as the Federal Reserve Act of 1913. There is no need for a government to issue securities in exchange for debt. Conversely, there would no longer be such a great need for many burdensome taxes that plague society today, most infamously the income tax. P.A.Y.E!

Currencies are based on confidence and have taken many forms over the ages. The English used “Talley” sticks as their currency from approximately 1100 AD to the early 1800’s. The Talley Stick incidentally, was a very successful form of currency, that was not only difficult to counterfeit, but most notably kept the English out of debt up until the point the Bank of England was created, consequently marking the beginning of their national debt. Fiat currencies are a form of currency that has no backing of gold or other tangible resource, just the confidence of its people. The most famous example being the United States Dollar, the current global reserve currency. In reality, bills and coins only count for a very small percentage of money that is actually in supply, since most money exists as figures in our bank accounts, with no actual reserve in the bank that it is placed with, as the majority of the money supply has been created out of thin air*. Digital currencies, such as BitCoin, are new to the stage, and have some very interesting fundamentals. All things considered, we should be asking ourselves this question – whom should be entrusted to issue currency, and if at interest?

There is simply no need to exchange taxpayer backed government securities for debt. The government in question could supply money to the marketplace, not just by way of fiscal stimulation, by way of monetary policy and interest free deposits issued to the government by an independent and fully transparent domestic organization, working at the public’s behest.  Since the national currency would no longer be created out of debt, and hence bears no interest to be paid to the issuer, there no longer needs to be scarcity of money and the boom and bust cycles that go with it. If money becomes scarce, businesses start closing, foreclosures become common, and in severe cases, food goes uneaten. It is not that the farms cease producing, the sun stops shining or the soil ceases to be fertile. The capacity is there, just the loans have ceased to be issued in the current system, and people don’t have money to spend, so the market ceases to supply the goods and services. But why does the currency need to enter the system as debt that generates interest payments to the issuer? It simply doesn’t need to be this way.

CAUSE AND EFFECT: FRACTIONAL RESERVE BANKING AND INFLATION

Just like any currency, inflation can be disastrous. There are examples throughout history of this. Fractional Reserve Banking is quite inflationary in nature. How many bubbles can you name that have popped over the past decades? Why do I get the feeling that the GFC of 2008 was just the beginning, not the end? A well managed positive reserve banking system offers more advantages. It’s that simple! For far too long the current banking system and the private super wealthy stockholders have gotten away with this gross fraud at our expense. The current system has held governments and their respective populations at the mercy of debt since at least the creation of the Bank of England, and been an unnecessary burden upon the average worker in the form of excessive taxation.

It must end. And with your help, it will… I 100% recommend you acquire a copy of ” The Web of Debt” by Ellen Hodgson Brown. It will lift the veil on this subject forever.

If you think what I have stated is crazy, then I suggest you click on the following link – http://www.positivemoney.org.nz/

If you enjoyed this, please don’t forget to share on your social media, or the word will not spread.

* Comprehending fractional reserve banking is confusing, as it has been worded in order to confuse. Modern Money Mechanics, written by the Federal Reserve Bank of Chicago in the 1960’s, explains the process in Fed Speak.

CENTRAL BANKS, CHEAP CREDIT, AND NAKED CORRUPTION

“We cannot solve our problems with the same thinking we used when we created them.” Albert Einstein

The world is currently awash with cheap credit. When the credit tap is turned off, all that will be left is a bathtub full of debt. – Anonymous

WHERE ARE THESE BUBBLES?

The majority of financial transactions that take place today are electronic. Fiat currency is fast becoming obsolete. Honest money has not been used as currency for a while now. Central banks such as the European Central Bank, the Federal Reserve Bank of America, and the Bank of Japan, have interest rates at or near zero percent. This basically translates into super cheap borrowing for connected financial institutions. This cheap credit is obviously creating bubbles, so I guess the question is; how big are these bubbles and what markets are they in? Since I’m not able to borrow trillions of dollars to speculate and manipulate markets and economies on leverage, I’m guessing neither are you. That leaves the connected criminal elite of bankers and their cronies whom I imagine are the primary benefactors of all this quantitative easing, and super low interest rate lunacy. The largest American and European banks have enormous derivative exposure on their books. With this much leverage, they need to perpetually inflate the value of the assets they are tied up in. Additionally, they continually need fresh credit. The credit is created, and lent to the borrower. When the music stops however, shit will hit the fan. Bail outs were used before, however, bail ins are currently more fashionable. Heads they win, tails I lose. How does this end? The bubble will burst. Plain and simple. It is pure madness. Whether these colossal bubbles pop first or the United States dollar inflates into oblivion beforehand, I can only speculate. The outcome is a little easier to predict, however.

Below are two very interesting links that help visualize this madness

http://demonocracy.info/infographics/usa/federal_reserve-qe3/money_printing-2012-2013.html
http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html

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WHAT IS THE FALLOUT OF THIS MADNESS?

Firstly, I will ask you a question. What is the value to the globalists and the criminal elite that are engineering social and economic collapse?  Will a new global currency be ushered in? Will countries need to sell off their assets, and cede sovereignty. It is hard to imagine the fallout and chaos that would ensue, as most people haven’t experienced this in their lifetime, coupled with normalcy bias, helping people to interpret warnings in the most optimistic way possible, or seizing on any ambiguities to infer a less serious situation.

People generally don’t live in the countryside in a mufti-generational home, where the the extended family grows food and helps each other to survive. People in the city simply lack the resources to cultivate enough food to sustain themselves and are totally dependent on energy from the grid. If the power was turned off, this would collapse society faster than a lack of food. People in cities are near helpless. However the collapse arrives, whether all at once, or piece meal, the goal is to put the excess population into camps. Total global domination. Of course for the authoritarian soldier ants that will herd the population into these camps, they will need a good story to follow. So a good story will be told. All that is required to temporarily subdue rationality is fear.

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SHIFTING THE PARADIGM

If people start to wake up, and by our good graces manage to boot the corrupt out of power and into a jail cell, we still need to learn how to better coexist with each other, and the ecosystem. Regardless of who is in power, we can’t continue to pollute en-mass, over-fish, deforest, and consume exponentially. The stress put on our environment would lead to a catastrophe somewhere down the line. We have a chance to change today. To cast off the old paradigm, and start thinking about a world where we are not debt fueled consumption addicts, escaping our sorry lives into alcohol and television at the end of the day. We need to get back to the roots. A good start would be to produce food locally. Eating healthy unprocessed nutrient rich foods. Develop a sense of community. There are enough educated intelligent loving people out there to lead the way. We need to let the spirit of giving and joy takeover. These simple pleasures are free. Obviously this type of thinking is alien to most people today. This is unfortunate because change will come swiftly and powerfully. Species either adapt or perish. Will mankind wake up in time, or will we be herded into camps? We have the capacity to make the changes. Do we have the will? In my opinion, we would need to be shaken to our core to understand the importance of coexisting with nature harmoniously. As long as peoples lifestyles aren’t affected, they will continue to ignore the warning signs. Some people don’t want to know. They think ignorance is bliss. But ignorance is futile. Knowledge is power.