dana west
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Sep-16-2002
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Message #113397 posted by dana west (Info) March 18, 2008 04:27:27 ET
I think this is a really good article!.?/?
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Stagflation/Hyperinflation Or
Just The End Of
Your Way Of Life?
By Craig Harris
3-15-8
I haven't wri tten anything for public consumption in a while, because
I've been busy living in what I like to call, "the real world" and
making my living by trading my own money. That's what I do these
days. I'm a fly on the wall with electronic access to the dens of
thieves.
If I come out on top then I transfer those digits for things I need.
Yes I'm still long gold from $290, and crude from $60 but whatever,
I've been doing ok. I've been doing ok that is, if the money I have
was worth what it used to be, but it isn't. So rather than just slap
a label on what it is when words have already arguably lost their
meaning, let's discuss it.
I am personally more concerned about quality of life issues than I am
about money given the current circumstances.
The last time when I wrote publicly, I was talking about the decline
of the empire and the end of the pre eminence of the US dollar...war,
that sort of thing.
So that's what's going on now, what I was talking about then.
The US is currently in what I like to call a period of "decay". It is
in a period of decay in every possible way. If you live in the real
world like I do, it is evident. If you consume a diet of the
corporate media cheerleading squad, then yo u don't live in the real
world and it could be difficult for us to communicate during the rest
of this essay. We've got people charged with cleaning up the corrupt
broken system going out with an $80,000 hooker bill and being
replaced by a bli nd man. The current El Presidente is a wind-up doll
for a bunch that should all be in orange jumpsuits. It would be
comical if it weren't so sad to watch it all go down. It is a modern
day tragedy being played out in real time in the context of a giant
government/corporate media theatre production.
It's amazing to me how people who are into politics or religion or
whatever will violently oppose some opinions, when people simply
report the facts they see around them. Anyway, again... another
subject. Politics and religion are both the same thing. They are both
simply effective methods to control large masses of people. I just
figured that one out not too long ago when I was into my learning the
history of the world project. It has always been that way and always
will be.
So anyway, that's all I do to make my living. I assimilate the facts
I see around me and invest accordingly. I keep a diary of what I
think and why, and I even publish it. If I'm right I make money and
if I'm wrong I lose money. I like it that way. It keeps me honest.
That's one reason I don't write a lot publicly these days. It is
becoming increasingly difficult for people who live in the real world
to communicate with those who don't, and there is an increasing
number of those who don't just simply because most people believe
what they are told and the lies they are being told are now
monumental. Astronomical in size. That's one of those universal rules
about human b eings; the majority will always go along with whatever
you tell them. That's just the way it always has been and always will
be. All good propagandists know that.
For those who do think for themselves and live in the real world
however, everything that is happening today has been entirely
predictable and even expected. I mean, the corporate media will say
"no one ever saw this" or "they never saw that" and really the case
is they just choose not to have those people appear. That's a whole
subject in itself however.
I was noting to my subscribers the other evening that if you take a
look at a picture of a pump price for gas from ten years ago until
now, that's around an 18% increase annualized every year for ten
years. All the other prices in the real world have risen at
commensurate levels like healthcare and all the big items people like
me in the real world need to spend money on.
Furthermore, if you plot energy in the last five years, the numbers
are b igger. If you plot the last two the numbers are bigger yet. The
last one, bigger yet. So what we have here in the real world are
prices accelerating at an ever-increasing double-digit rate. Call
that what you want. We have real wages basically co nstant and good
jobs are harder to come by. We have a middle class that is going
away. We have the majority of the citizens having their wealth, if
they still have any, confiscated due to the ravages of inflation, or
with toxic financial contact with the healthcare/pharma, legal or
government money machines. So in the "not real world" big brother and
his corporate media outlets wants you to believe that there really
hasn't been much inflation or any significant changes to the status
quo, and that lie is so big that you may even believe it.
So if you do, then you don't live in the real world and we cannot
communicate effectively because what you think you know is the
product of a corporate boardroom. What I know is the pro duct of
living.
The other big thing that has happened since I last wrote is that the
guys on Wall Street figured out how to loan a bunch of money to
people that had no ability or even real desire to repay that money
except for the fact tha t house prices were sure to go ever higher
which is the definition of a mania. So working through a little bit
of that math, with an estimated 30% of homeowners currently upside
down on their mortgages, that works out to around ten trillion
do llars of real estate still to be walked away from according to
simple math and a few basic assumptions I worked out the other night.
In the "not real world" they have told you from the outset that first
there was no real estate bubble, then that there might have been one,
then that it would be over quickly and now they aren't sure when it
will be over and the PR firms are busy working on what to tell you
next.
It's not going to be over any time soon. The big question in my mind
i s whether the whole thing is about to go kaput or if we are just
going to witness a continuous decay as the wealth shifts into a very
small percentage of the population... as the middle class flames out.
Again, that is a subject in itself. That i s the subject of the
Straussian nightmare; a change in the form of government that is
pitched as the same thing as the old government.
So on top of this Wall Street genius of loaning money to people who
could not pay, you have the cure for al l this mess being printing
more money (creating more debt). So they're going to fix a problem of
too much debt by creating more debt. Perfect. They're even monetizing
it by taking nearly worthless debt for brand new money created with
the push of a button and an organized media campaign to tell you what
they did and why it was good and why it was not monetization or
covert nationalization of the banking system. It is what it is, call
it what you want.
So the idea is that by pushin g buttons you can cure these ills, but
the reality is that big pile of new money is diluting the old money
and sending the US dollar into the toilet. I mean, they're pitching
it as all good, and what's left of the free markets are in sharp
dis agreement with the party line.
Now; the only reason the USA has gotten away with the idea that this
balance sheet was compatible with the idea of being the world's
reserve currency was that the USA was the global kingpin, the Mac
daddy... unt il the empire did what all empires do and that's get too
big for their britches.
Then they always start going off expanding the empire into places
that are too expensive to maintain, imposing their will on people who
don't want their will imp osed on, and then that all gets so expensive
and they start making so many enemies they start going bankrupt.
That's what always happens. It always does. That's probably another
one of those human nature things.
So in the real world right now, we have a situation where the banks
are bankrupt, the government is bankrupt, the people are bankrupt,
and the cure for this is to lower interest rates and create more
money (debt) by pushing a button... diluting the value of the money
further and causing everything we have going on now. It all makes
sense here in the real world. All the pieces to the puzzle fit and
none don't.
So is this stagflation or is this hyperinflation? Well, I'm not
carrying a wheelbarrow around with my money in it yet, but I do know
the prices and costs of everything I need to live are going up at an
ever-increasing rate.
The shape of that curve is a polynomial consistent with ever
accelerating inflation which some would call hyperinflation. I know
that if I earn a 20% return, then I might be keeping up with the
increase in the costs of everything I need to maintain my personal
status quo. If you can balance a checkbook and multiply, then you
know. If you are one of the ones who believe everything you're told,
then you have to not believe your lying eyes or not be able to
balance a checkbook.
When the cure for all problems can only be to lower interest rates
and dilute the supply of the money by creating more money, then that
is a vicious cycle consistent with acceleration or hyperinflation.
I really don't like it when people casually compare what is going on
right now to 1929, because in 1929 the cure was basically to spend
less and now the cure is basically to spend more. Even worse, being
the geniuses we are, we figured out a way to amplify spending, called
derivatives. They're based on the real thing but amplifiedlike 100
times. So we've already been doing the "cure" for so long that maybe
the patient is no longer responding?
So what we are currently seeing, in both gold and crude oil is a loss
of confidence. It's a loss of confidence that this whole thing makes
any sense.
It's a loss of confidence in the absurd idea that y ou can create
wealth by pushing a button. Since this whole thing now relies solely
on confidence and not any intrinsic value, commodities, especially
gold and crude oil, are acting as alternative wealth storage devices
to paper currency.
If you have a bushel of corn, then you know what that is. You can eat
it, or do a bunch of other stuff with it. With a piece of paper with
a picture and official looking numbers on it, well you aren't as sure
as you were yesterday what you can do with that. There will be no run
on the banks this time around, because the banks can always be
refilled with ever more worthless money. Instead of a run on the
banks, there will be a run on the dollar. A run on the dollar (or run
into commodit ies) is the modern equivalent to a run on the banks back
then, for the reasons I'll get into shortly.
So there is a loss of confidence roughly equal to people's confidence
in the government and the banking system. This decreased confidence
is fueled by the fact that they are creating too much money. The idea
with fiat money is that you only grow the amount of it as the total
output of the economy increases otherwise you are diluting it. The
thought experiment for that goes like this. You have one giant pile
of stuff, and one giant pile of money. Right now there is enough
money so that one-dollar gets one pound of stuff. Now, if you double
the amount of that money, then it takes two dollars to equal one
pound of that stuff. Unless the pound of stuff doubles in size, you
have just caused 100% price inflation. So, operations like just
zapping a half a trillion or so into existence out of thin air means
just a bigger pile of money going after the same amount of stuff. So
that's what we have going on now. These are financial engineering
acts of desperation to save a system by giving it more of what got it
to this point in the first place... debt. So when regular people like
me think about that, they think, that doesn't make any sense, and
they lose confidence.
That's in the real world. On TV things are still good though. So if
you don't like what you're reading here, then go turn on the TV.
You'll feel better.
I hate to simplify things too much, but this is the reason Mr.
Greenspan called gold the conscience of the central bankers back in
the 60's before he lost his mind or whatever happened. Maybe he
couldn't resist the power of the ring or something... I don't know.
Anyway, it's their conscience because they can't just zap gold into
existence with the stroke of a pen.
Guess what? They can zap money into existence now. Poof - you've got
money.
Any amount you want. That's why this is fundamentally different from
the great depression. This time, they can just increase the giant
pile of money. they can just drop it out of helicopters if they have
to. They even said so... and it isn't going to buy as much stuff. It
doesn't already.
So you still have t he same basic problem from a human standpoint.
That's the really interesting thing. In other words, whether you have
a deflation like in the 30's or an inflation like now, the people
suffer similar effects. It's hard to find a job, you can't make ends
meet, city and government functions and services are understaffed and
underfunded, and you are hungry. They are both a state of decay. Both
usually end in war too.
The last one did. This one is different however in a lot of ways...
a nd it's much more serious. It is fundamentally different because it
is the end of the world's first experiment in government by the
people and it has been replaced by something new.
So if you're into labels, then maybe you can find a label for w hat to
call this. I like to quote Lenin on that:
"Fascism is capitalism in decay." -Vladimir Lenin
So I really don't want to get into all that implies in a short essay,
but I will condense it all and say the US is in a state of decay.
Political, socioeconomic, leadership, influence, status, any label
you can think of.
The US is losing power and influence in the world, and it only has 5%
of the world's populationand they're all bankrupt. I like to think of
it like a continuum from the US coming out on top after WWII to a
banana republic run by El Presidente. That's what I call them now,
whoever he or she is, El Presidente because that's what they are. A
corporate spokesman who is put there, bought and paid for by Acme
corp.
The country has lost its way and is increasingly operating at the
whim of the corporate lobbyists and special interests that own the
politicians as the stench of it all starts to smell so foul that even
the corporate media disinform ation campaign can't convince your lying
eyes. It is not what it appears to be. It is Rome circa 400's. It has
already bankrupted itself policing an unsustainably large global
empire. You have to live through the decline.
So that all gets int o people living in the real world versus those
who are not. Again, it's safe to say that the world is voting with
its dollars... and the 5% of the world's population are going down
hard on 95% leverage. They aren't going to like it either.
Tune in next time to hear which states secede first.
Mar 14, 2008
Craig Harris
a
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