Debt Bubble(s) and the Digitization Of All Trade

By PBS

What we have is a debt bubble. The rising debt is the stimulus funding the rally on Wall Street. QE1, QE2, QE3, Operation Twist, bailouts, handouts, and now $85 billion injected into the system every month. Hmm, I wonder if there is a coincidence between enormous debt creation and 43 new highs in the Dow this year?

No, the stock market is not in a bubble. It is reacting normally to new injections of cash and buyers. The debt bubble, however, is a different matter. These things end badly, historically. Eventually, somebody has to pay the Piper.

The stock market is up, while the economy isn’t. Since the stock market is supposed to reflect the economy, it looks a bit overvalued.

There is also a good reason for over-valuation: the cheap money policy by the Fed means that there is no money in bonds, so many investors have loaded up on stocks, which drives their price up.

The NASDAQ and Russell 2000 are in bubbles right now. Once the fed starts increasing its interest rate, the stock market will drop like a rock.

David Stockman, former director of the Office of Management and Budget under President Reagan, says America has become addicted to debt and that there’s no way to avoid catastrophe.

David Stockman: I think everybody in this generation, and I’m the leading edge of the baby boom — I was born in 1946 — has benefited from a 30-year explosion of debt, which created temporary but unsustainable economic prosperity and a financialization of the system through lower, and lower, and lower interest rates that has created massive rewards to speculation but not real investments so I benefited from it. Almost everyone who has been in the market has benefited but they didn’t earn it.

David Stockman: No. One of the things I say in my book is we need a wealth tax that on a one-time basis is going to take back at least some small fraction of the great windfall that the upper 1 percent, or 5 percent and pay down the government debt, pay back the federal debt because we can’t put this on the next generation or they’re going to be buried paying taxes.

David Stockman: I wouldn’t do it. I think it’s a very dangerous place to be at the present time. In fact, the stock market today is almost identical to where it was in October 2007 and then there was a $7 trillion crash and before that in March 2000. In other words, the stock market today is identical to where it was 13 years ago and we’ve had two massive crashes in between. The middle class has been invited to come and buy stocks and get sheared like so many sheep. They’ve done it twice and I certainly hope they’re not lured into this again because it’s not sustainable because our economy really is failing. Yes, in the short run it’s recovered, or recreated jobs that existed in 2005. You know, the number of jobs today is the same as it was in 2005.

David Stockman: There was a massive bubble in Japan. Half the real estate value in the world in 1989 was in Japan. It crashed. Real estate in Japan has been declining ever since. It’s one of the great deformations, malinvestments, that’s ever occurred in world history. The stock market in Japan was half the world market and where has the Japan economy gone since the 1990s? Nowhere. They’ve been struggling for two decades in the aftermath of a massive bubble that’s collapsed. They’ve tried to work their way out of it by printing even more money and it hasn’t worked. Now, I’m saying this is what all the central banks are doing. There is no honest interest rate in the world today.

David Stockman: The problem is that you’re creating a system of bubble finance where interest rates are so low that people can speculate. An asset value goes up. You put it up as collateral. You borrow against it. You buy more of the asset. You then take the rising asset. You borrow against it again. This is the nature of what’s going on in the world. This isn’t an excess of real savings. This is an excess of artificial credit that’s being fueled by all the central banks.

David Stockman: Because, you’re in a race to the bottom by all the central banks in the world that are expanding their balance sheets at rates that have never been seen before. This money is not leaving the financial markets. All of the liquidity the Fed has pumped in, this balance sheet has gone from $800 billion to $3.2 trillion in just a few years, all of that liquidity is just circulating through the canyons of Wall Street. A lot of it comes back as excess reserves in the banking system which gets deposited at the Fed. It doesn’t go into credit on Main Street because Main Street is already saturated with debt. But, it does suppress interest rates and it makes gambling highly rewarding. When you put interest rates at zero, you’ll buy anything that’s going up and fund it with zero cost money. You will buy anything with a yield and fund it 98 percent, $0.98 on the dollar with zero cost money. So what this is, is a gambler’s dream. The 1 percent are just laughing all the way to the bank.

David Stockman: I think we’re so addicted to bubble finance at the Fed that they can’t get out of the corner they painted themselves into. I think the Fed is making federal debt so cheap that Congress has no interest, Washington has no incentive to ever face up to our massive fiscal gap that is going to grow, and grow as we go forward in time and so we have a paralyzed system.

David Stockman: Well, a lot of people said in 1999, “Yeah, maybe there’s a little bit of froth out there.” But, you don’t understand this time is different and then within three months, devastating collapse. Remember they called it the “Goldilocks Economy” in late 2007/2008? You had the Chairman of the Council of Economic Advisors saying, “No recession in sight anywhere,” in June. Okay, so no one sees it coming until suddenly there is an event, a black swan, something unexpected or unpredicted that tells everybody that the emperor is naked. You know who is naked? The Fed. They’re running a con game.

via David Stockman: We’re Blind to the Debt Bubble | Making Sen$e | PBS NewsHour | PBS.

Economic Collapse and the Digitization Of All Trade By Brandon Smith Alt-Market

People need to understand the threat is at their doorstep. It’s not a few years off or a decade away; it’s here now. We are right in the middle of collapse.

The appearance of prosperity means nothing if the fundamentals do not support the optimism. That is to say, a bullish stock market, a high dollar index and a low unemployment percentage mean nothing if such stats are generated by false methods and fiat.

I relate these points because the future I am about to suggest here might sound outlandish to some, because it is so contrary to the “official” accounting of our current financial world.

The stock market, the greatest false indicator of all time, is on the verge of implosion; and the banking elites are positioning themselves to avoid blame for this implosion while the rest of us are being sold on the most elaborate recovery con-game ever conceived.

The globalists have stretched the whole of the world thin.  They have removed almost every pillar of support from the edifice around us, and like a giant game of Jenga, are waiting for the final piece to be removed, causing the teetering structure to crumble.  Once this calamity occurs, they will call it a random act of fate, or a mathematical inevitability of an overly complex system.  They will say that they are not to blame.  That we were in the midst of “recovery”.  That they could not have seen it coming.

Their solution will be predictable.

In our highly interdependent system in the West in which more than 80 percent of the population has been domesticated and is psychologically incapable of self-reliance, it is very likely that a disruption of normal supply chains and services would result in considerable poverty and death. Such a threat would invariably lead frightened and unprepared people to demand increased government controls so that they can return to the level of comfort they have grown accustomed to.

The elites will argue that the banks and bankers are not necessarily to blame. Rather, they will accuse the “system” of being too complex and chaotic, leaving itself open to greed, stupidity and overall unconscious sabotage. The fact that the crisis was engineered from the very beginning will never be mentioned.

The more independent elements within any system, the more chance there is for unpredictable events that lead to supposed disaster. Ostensibly, the solution would be to streamline all systems and remove the free-radicals. That is to say, complete centralization is the answer. What a surprise.

What this means on a micro-level is the activation of bail-ins; that is to say, the legalized confiscation of bank accounts, pension funds, stock holdings, etc. as a method for prolonging a collapse event. We have seen this already to some extent in Europe, and it will happen in the U.S..

While the initial scenario we face in America will be one of stagflation, many necessities and the means to produce those necessities will skyrocket in cost.  There may not be inflation in every sector of the economy because imploding demand could offset some of the effects of falling currency value, but there will be extreme inflation in the areas that hurt common people most.

Digitization Of All Trade 

Despite all the failings and control mechanisms involved in fiat money, there are still worse systems to be had. Last month more than 100 executives from the world’s largest financial institutions met privately at the Times Square office of Nasdaq Inc. to discuss the future of money; more specifically a software apparatus called “Blockchain.” The goal is to implement Blockchain as a medium to fully digitize monetary transactions around the world and in a way that is traceable and foolproof. In other words, the goal is put an end to all transactions involving physical cash.

The establishment of a cashless society would mark the end of all privacy in trade. Even supposedly anti-centralization digital currencies like Bitcoin are hindered by the blockchain feature, which requires the tracking of ALL transactions in order for the currency to function. While methods for anonymity could be argued, the fact of the matter is, digital currency by its very nature is a destroyer of the truly private trade offered by cash and barter. When all trade is tracked, and all savings digitized, whoever owns the keys to the core of the blockchain will have the power to wreak havoc on the life of any participant at will.

To be sure, the “blockchain” that the elites have in mind will never allow for anonymous transactions, because digital currency is not about anonymity or “convenience,” it is about control.

Corrupt government is the tool by which globalists can extort goods and labor from a population as well as exert force to subdue rebellion.  It is highly unlikely that the global reset will result in a collapse of government.  On the contrary, it is usually during economic collapse that governments grow in power to the point of totalitarianism.  There will always be a new currency mechanism or financial structure to replace the old, and the globalists will always have a way to pay off armies and useful idiots to do their bidding.  No one should be counting on the idea that the elites face collapse as we face collapse.  This is naive.  The elites created the collapse; they plan to be ready to use it to their advantage.

Eventually, they will also have to limit or outlaw barter and alternative currencies in order for the digitized economy to work.

This is the age old strategy of Centralization; to remove all choices within a system, by force or manipulation, until the masses think they have nothing left but the choices the elites give them.  It is the bread and butter of elitist institutions like Rand Corporation, and is at the core of the push for globalization.

With almost every major economy on the globe on the verge of collapse and most now desperately inflating, taxing, or outright stealing in order to hide their situation, with multiple tinderbox environments being facilitated in the Pacific with China, North Korea, and Japan, and in the Middle East and Africa with Egypt, Syria, Iran, Pakistan, Yemen, Mali, etc., there is no doubt that we are living in a linchpin-rich era.  It is inevitable that one or more of these explosive tension points will erupt and cause a chain reaction around the planet.  The linchpin and the chain reaction will become the focus of our epoch, rather than the men who made them possible in the first place.

Each major global hot-spot today can easily be linked back to the designs of international corporate and banking interests and the puppet governments they use as messengers.

Governments of America, Russia and China are actually complicit in the formation of a global currency and global government controlled by the IMF.

China in particular has loudly pronounced a need for a global currency system to replace the dollar, and they have suggested that this system be controlled by the IMF:

The world economic crisis shows the “inherent vulnerabilities and systemic risks in the existing international monetary system,” Gov. Zhou Xiaochuan said in an essay released Monday by the bank. He recommended creating a currency made up of a basket of global currencies and controlled by the International Monetary Fund and said it would help “to achieve the objective of safeguarding global economic and financial stability.”

China is NOT anti-establishment or anti-new world order, nor is Russia. American opposition to the NWO is a lie. Period. In fact, the BRICS have argued only for greater inclusion in the IMF system and have no intention of developing a legitimate alternative to “Western” globalization. If you do not understand that the BRICS are part of the NWO, not opposed to it, then you do not understand a thing. Continue reading: ActivistPost

How much does the US owe? By Christopher R Rice

The year was 1982 and America was the largest creditor nation on earth. By 2005, the U.S. was the largest debtor nation on earth. In 1980, the national debt had yet to eclipse the $1 trillion mark and had accumulated around $850 billion during the first 204 years of this republic.

By 2007 or 24 years later, our debt had risen to more than $7 trillion and continues straight up. Today, The U.S. government reports its debt at more than 19 trillion dollars, China alone purchases in excess of $1 billion per day of our debt. Japan owns billions and billions of U.S. debt instruments as do the Arabs and so on. But, these are reasonable countries and I believe that they would understand that we are broke and just forgive all of those billions; right after we gave them California and Yellowstone Park.

So far, I have been talking about funded debt. Unfunded debt is $205 trillion at current levels…and rising hourly. This is the figure that the CBO does not want the general public, meaning the financial media, to be aware of. This is the debt that we owe to ourselves in the way of Medicare, Social Security, government retirements and so on. In other words, promises that can’t be kept and so they won’t. As a reminder, the unfunded debt is greater than the total wealth of all American households. Many people want to blame one administration or another because that’s easy. It isn’t true, it’s not any one administration, the system isn’t broke, it’s rigged.

AMERICAN’S are BEING ROBBED (and this has only been accelerated under Trump)

The U.S. was the largest creditor in the world. Now the debt is in the trillions of dollars. Trillions of dollars transferred from the worlds richest and most powerful country. This is a form of destructive economic management at a level of graft and corruption that has NO parallel. There’s nothing comparable to that in history.

It’s not the result of mysterious global forces, or technology, or China, or structural problems concerning the skills and education of our workforce.  Rather, it is the direct result of policy choices made by Democrats and Republicans alike.

The bailouts resurrected high finance and the inequality it inevitably spawns. Instead of putting our foot back on the neck of finance, we’re talking about slashing social programs. Rather than dramatically increasing taxes on the super-rich through a wealth tax, we’re debating how to slash Social Security and Medicare benefits.

The U.S. policy (includes tax policy, financial deregulation, trade policy, anti-labor policy, and much more.) for the past 30 years has been aggressively dedicated to shifting income share away from the poor and middle class and into the pockets of the already rich.

During an era in which the rich were getting richer anyway, we deliberately set out to reduce their tax burdens so that they could become even richer.

In 2010, the top hedge fund manager earned as much in one HOUR as the average (median) family earned in 47 YEARS.

The top 25 hedge fund managers in 2010 earned as much as 658,000 entry level teachers.

In 1970 the top 100 CEOs made $40 for every dollar earned by the average worker. By 2006, the CEOs received $1,723 for every worker dollar.

As Citizens for Tax Justice and USPIRG reported, 280 large and profitable corporations contributed $216 million to Congressional campaigns over four election cycles and got nearly a quarter of a trillion dollars in tax breaks.

That’s a terrific investment for them – a return of more than a thousand to one – but it’s a bad deal for the American people.

The official, or “statutory,” corporate tax rate is 35 percent. But the actual rate paid by American corporations is only 12 percent, less than that paid by many middle-class Americans.

In fact, US Corporations pay less tax as a percentage of the GDP than corporations in Canada. Or Japan, South Korea, Norway, Luxembourg, New Zealand, Israel, the Czech Republic, Sweden, Belgium, Switzerland, the United Kingdom, Denmark, Finland, and Italy.

(Source: OECD StatsExtract interactive database.)

Tax breaks for Exxon Mobil: $4.1 billion between 2008 and 2010. The company paid no taxes at all in 2009.

In 2010, corporate giant GE made a profit of $14.2 billion but it paid not a penny in taxes because the bulk of those profits, some $9 billion, were offshore. In fact, GE got a $3.2 billion tax benefit.

The 10 most profitable U.S. companies paid an average federal tax rate of just 9 percent last year. The group includes heavyweights Exxon Mobil, Apple, Microsoft, JPMorgan Chase and General Electric.

Trump’s tax cuts: massive cuts for the 1%

Trump’s tax cuts will exacerbate America’s already chronic income inequality. Trump’s “tax reform” and deregulation do not benefit the public. They only benefit big companies that can afford high-priced lobbyists.

Contrary to the promised “peace dividend,” the U.S. has maintained its military arsenal and used it to enforce its agenda with successive and intensifying military interventions–from the use of conventional troops in Iraq, to “humanitarian intervention” in Haiti, to Obama’s drone wars in Central Asia.

Inequality in America grows more extreme each day. Even the great financial crash didn’t derail this trend. The richest 400 Americans, for example, increased their wealth by 54 percent between 2005 and 2010, while the median middle-class family saw its wealth decline by 35 percent.

“The Trump tax plan is heavily, heavily, skewed to the most wealthy, who receive huge savings,” said Lily Batchelder, a law professor and tax expert at New York University. “At the same time, millions of low-income families – particularly single-parent households – will see an increase.”

32% of African American families will see a tax increase compared with 19% of whites, this is mostly due to African American families being more likely to share the burden of childcare within the family and hence not benefit as much from Trump childcare credits.

While the poor will see tax increases, the Tax Policy Center research said the rich will receive big tax cuts that get even bigger as you work up the income scale. The top 20% of earners receive an average annual tax cut of $16,660 compared with an overall average cut of $2,940.

The richest 1% collect 47% of all the tax cuts – an average saving of $214,000.

The tax savings of the super-rich will increase further in future, with the 0.1%’s estimated 2025 tax bill to fall by $1.5m.

“Listening to Trump’s rhetoric, most Americans probably don’t realize at all the impact of Trump’s tax cuts,” Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy (ITEP) said. “Any way you slice it, the very best-off Americans will be the only beneficiaries.

Deficits are going much higher—and this time, there’s no recession. In fact, the economy’s in good shape. Still, the tax cuts signed by President Trump at the end of 2017, along with a big new boost in military and domestic spending, will send annual deficits soaring to close to $1 trillion in 2018, and probably beyond $1 trillion in 2019 and 2020.

Rising federal debt threatens to choke economic growth within a decade, beginning a death spiral that will sap revenue from government programs even as demands grow, forcing the government to borrow even more, Congress‘ budget watchdog said in a frightening report.

The CBO said federal debt is poised to rise to record levels when measured against the size of the U.S. economy, matching the amount accrued at the end of World War II. But the government quickly paid off that debt and entered decades of prosperity, whereas the current pace suggests unsustainable debt levels for the foreseeable future.

On a per capital basis, the national debt amounted to $19,948 per person in 2000, and $43,733 in 2010. By 2019, it will be around $68,000 per person.

We’ve allowed our country to be taken from us, for the benefit of the few and the total decimation of the vast many.

As things stand now, with federal taxes, state taxes, county tax, sales tax, property taxes, car tax, gas tax, phone taxes, etc. “They” take 4 months of our wages every year in taxes. For that kind of money we should have the best schools on the planet, right? But every year 30 to 50% of our kids get left behind. Let me repeat, taxes take 4 months of your wages away from you every year. That’s true under Republicans or Democrats!

It really doesn’t matter who wins in November because our government is no longer “of the people, for the people, by the people” and neither candidate plans to return our rights to us. Our rights were not won because some Congressmen or woman wrote them down in a law. Our rights were won by struggle. And we can only regain our rights and our country through struggle.

We can not vote ourselves out of this mess. Only militant, 24/7 wide-spread non-violent resistance can save liberty and freedom from the dystopia that Washington has created in order that a handful of mega-billionaires can enjoy lording over the planet.

Speak Truth to Power. Join the Fight. Spread the Word.

One of the most effective ways to take action is to raise awareness around these issues. And it won’t cost you a dime. Simply re post this link into your social media accounts, leave in comments and email the link to your friends.

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