Saturday, April 4, 2009

Jesse's Café Américain - Money Talks, BS Walks

They say a picture is worth a thousand words.

Here is a picture of the US credit bubble, with the deleveraging which has just begun.

It is/was a Ponzi scheme, enabled by the advantages of controlling the reserve currency of the world, pure and simple.

It was the US dollar that was monetized, or more specifically US debt obligations, which are now substantially worthless and will have to take a significant haircut in real terms. This is similar to the Japanese experience in which they monetized their real estate.

Ironically, those expecting this deleveraging to result in a stronger dollar could not be more mistaken. The Obama Administration is scrambling to obtain relief from Europe and Asia, getting them to inflate their own currencies through 'stimulus,' in order to continue to hide the unalterable truth - the US must partially default on its debt as expressed in the dollar and the Bond.

This is the inevitable outcome of all Ponzi schemes. Several smaller, private schemes already have collapsed. The big one is yet to come down. And when it does, the foundations of democracy will shake, several governments will fall, and we will once again experience the kind of uncertainty more familiar to those who lived in the first half of the twentieth century.

The sad truth is that the Obama Administration has barely begun the real work of rebuilding the economy. Everything to date is simple looting, paper-hanging, and the rewriting of history.

Until the median wage improves significantly in real terms, and the economy is put back on a productive basis without relying on the unsupported expansion of credit, there will be no recovery, merely sound byte opportunities for the smoke and mirror crowd.

This is the reality.


Mayberry said...

That's the reason for all the "get people spending again" rhetoric. The Great Ponzi Scheme's foundation is undermined when people start saving. An economy based on real money (gold) and real production (factories/durable goods) can absorb drops in consumer spending. The economy will retract, but not collapse. It merely lies dormant until the next wave of spending/production. Kinda has a familiar ring to it, eh? Sounds like a natural cycle.......

Humble wife said...

This makes me so angry. I know that all you have written is true and it makes me sad that our economy has been sabotaged for so long.

We must be prepared as we can be.Continue writing post like this to keep us informed!

Bitmap said...

"The sad truth is that the Obama Administration has barely begun the real work of rebuilding the economy."

I think a more accurate description would be:

"The sad truth is that the Obama Administration has barely begun the real work of wrecking the economy."

The worse the economy and the worse off more people are, the more support there is for huge new government "wealth redistribution" programs.

If people believe the emergency is bad enough they will support almost anything.

Hold on to your 401k!!! I think they will be trying to grab that before long.

erniesjourney said...

The slippery slide has begun in earnest and I think that we have gone into receivorship as well. It is done. The end. Prep.

The Huffies said...

This is completely off-topic, but I just wanted you and your blog to be aware of a great deal I found...sorry I couldn't find another place to post generic comments! Anyhow, I'm not sure if you've had the chance to learn about Life Caps...the survival pill that sustains life if you can't get to food. I have a code for their products that may be of interest to your readers. The following code can be used at to receive $10 off per bottle of Life Caps. The code is: Good Life. I hope this helps someone...they have really helped me and are great for 72-hour kits and emergency supplies!