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Liquifaction: . 3: conversion of soil into a fluidlike mass during an
earthquake or other seismic event, 4: inability of flooded capital
markets to absorb additional capital without destabilizing paper assets,
e.g.stocks, bonds, currencies, etc., 5. a monetary phenomena associated with
the collapse of capital markets.
 
LIQUIFACTION AFTER 1964
ALASKAN EARTHQUAKE
Inflation is always and everywhere a monetary phenomena caused by an
increase in the money supply, the greater the increase, the greater the
inflation. If the money supply expands with sufficient rapidity, inflation
becomes hyperinflation and paper money loses all value.
CHART #1: GROWTH OF THE US MONEY
SUPPLY 1970-2015
SLOWMODERATEFAST
THE GREAT MODERATION i.e. THE GREAT DELUSION
What you don't know explains what you don't understand
In 1971, when the US ended the convertibility of the US dollar to
gold, the only limit on the bankers' ability to print money ad
infinitum-monetary gold reserves-was removed. This led to an immediate
spike in inflation ending in an inflationary surge-from 3.3% in 1971 to 14.4%
in 1980, a 436% increase. Economists called it the Great Inflation.
Paul Volker, who along with Milton Friedman advised Nixon to cut the
ties between the US dollar and gold in 1971, was forced as Fed chairman to
end the inflationary surge by raising interest rates to a
draconian 21.5 %, in 1980.
After Volker's deflationary interest rate hike, inflation would not
again be an issue despite the still expanding money supply. This anomalous
absence of inflation would give rise to the erroneous conclusion that the Fed
had somehow engineered a monetary miracle, a never-before-seen phenomena
where continuing money growth did not lead to inflation but to a period of
relative stability that economists called the Great Moderation.
The Great Moderation from the mid-1980s to 2007 was a welcome period
of relative calm after the volatility of the Great Inflation. Under the
chairmanships of Volcker (ending in 1987), Greenspan (1987-2006) and Bernanke
(starting in 2006), inflation was low and relatively stable, while the period
contained the longest economic expansion since World War II. Looking back,
economists may differ on what roles were played by the different factors in
contributing to the Great Moderation, but one thing is sure: Better monetary
policy was key.
http://www.federalreservehistory.org/Events/DetailView/65
'The Great Moderation' was, in fact, merely 'The Great Delusion'.
The absence of inflation was not due to "better monetary policy",
but to a series of cataclysmic deflationary events i.e. Volker's 21.5%
interest rates followed by the collapse of massive speculative bubbles which
unleashed powerful deflationary forces offsetting the inflationary rise in
prices that would have otherwise occurred with excessive money printing.
In 1971, global monetary aggregates, MO, totaled $8 billion; by
January 2016, global MO totaled $80.9 trillion, an astounding increase of
1,000,000 %. Such an exponential growth of the global money supply would have
either ended in extreme inflation or hyperinflation were it not for powerful
contravening deflationary forces.
After Volker's 21.5% deflationary interest rates in 1980, the next
major deflationary event was the bursting of the Japanese stock bubble on
December 31, 1989. The Japanese Nikkei fell from a high of 38,957 down
to 7,607; its collapse awakening deflationary forces not seen since 1929
crash which caused the Great Depression of the 1930s. Today, Japan is still
trapped in a moribund downward deflationary spiral.
.It has been over two decades since the popping of Japan's economic
bubble and the country is still actively battling with deflationary forces
that are so powerful that near-zero interest rates (zero-interest rate policy
or ZIRP), repeated bouts of quantitative easing (some call it "money
printing") and constant Yen-weakening currency interventions have barely
made a dent.
http://www.thebubblebubble.com/japan-bubble/
After the Nikkei's collapse, the US dot.com bubble burst in March
2000. Next, came the US real estate bubble whose collapse in 2007 lead to the
Wall Street crisis of 2008; and, in August 2011, global markets plunged when
the European sovereign debt crisis erupted.
With each bursting bubble, demand collapsed and deflation gained
additional momentum which central bankers attempted to overcome with more
credit, more monetary stimulus, e.g. QE1, QE2,QE3,and more money printing;
but despite central bank efforts to artificially induce inflation-indexed
growth with monetary policy, deflation-capitalism's fatal wasting
disease-triumphed.
.
On February 1, 2016, Professor R. Taggert Murphy, co-author with Akio
Mikuni of Japan's Policy Trap noted the global significance of Japan's
26-year losing battle with deflation:
[Japan] has increasingly come to function as a kind of canary in the
mine of the global economy. Japan was the first to demonstrate something that
is now obvious worldwide: .Monetary policy alone cannot loosen the shackles
of a deflationary trap. We have seen orgies of credit creation by the world's
leading central banks, and yet the global economy sits on the edge of a
deflationary abyss as commodity prices tumble and country after
country spirals downwards..
Rethinking Japan's
Deflation Trap: On the Failure to Reach Kuroda Haruhiko's 2% Inflation Target,
Asia-Pacific Journal, February 1, 2016
COMMODITY PRICES TUMBLE
http://wallstreetexaminer.com/2015/12/commodi...nightmare-2015/
Deflation is capitalism's fatal wasting disease, a sinkhole of
defaulting debt into which all attempts to induce inflationary-indexed demand
by monetary means-low interest rates, quantitative easing, money
printing-disappear.
In a chronic deflationary trap, accelerating money growth leads to
monetary liquefaction where asset prices-stocks, bonds, commodities, real
estate, currencies-become increasingly distorted due to increasing levels of
excess liquidity ending in the collapse of capital market, i.e. parcus nex,
economic death.
Banking is a parasite on the
body economic that eventually destroys that upon which it feeds
CENTRAL BANKERS' LAST RESORT - HELICOPTER MONEY
Let us suppose now that one day a helicopter flies over this community
and drops an additional $1,000 in bills from the sky, which is, of course,
hastily collected by members of the community. Let us suppose further that
everyone is convinced that this is a unique event which will never be
repeated. [ex falso quodlibet, i.e. from a falsehood, anything
follows]
Milton Friedman, The Optimum Quantity of Money, 1969
On April 11th former Fed Chairman Ben Bernanke in target="_blank" What
tools does the Fed have left? Part 3: Helicopter moneywrote that
Friedman's 'helicopter money' should be considered:
.Money-financed fiscal programs (MFFPs), known colloquially as
helicopter drops, are very unlikely to be needed in the United States in the
foreseeable future.However, under certain extreme circumstances-sharply
deficient aggregate demand, exhausted monetary policy, and unwillingness of
the legislature to use debt-financed fiscal policies-such programs may be the
best available alternative.
On April 12th, David Stockman, author of target="_blank" The
Great Deformation: The Corruption of Capitalism in Americaand Ronald
Reagan's former Director of the Budget posted a scathing reply:
Bernanke's
New Helicopter Money Plan - Sheer Destructive Lunacy:.Bernanke has
actually made a career out of claiming..that he alone had the insight and
acumen to diagnose the purported onrushing depression and the
"courage" to, well, run the printing presses white hot in order to
stop it in its tracks.
The fact is, Bernanke has been a charlatan and intellectual lightweight
all along--going back to his alleged scholarship on the Great Depression. He
was no such thing. He simply zeroxed Milton Friedman's mistaken theory that
the Fed failed to go on a bond-buying spree during 1930-1932 and that
this supposed error turned the post-1929 contraction into a deep,
sustained depression.
No it didn't. The 1930s depression was the consequence of 15 years of
wild credit expansion--first during the "Great War" [WWI] to
fund the massive expansion of US food and arms production and then
during the Roaring Twenties to finance the greatest capital spending binge in
history prior to that time.
The depression was not a consequence of too little money printing
during 1930-1932, but too much speculative borrowing and investment by
business and households after the Fed discovered its capacity to print
money during the war and the decade thereafter.
BERNANKE IN BLUNDERLAND
AND THE ROAD YOU'RE ON
The time has come, Bernanke said
To talk of many things
Of crashes - cash - and the lack thereof
Of inflation taking wing
And why a helicopter's needed
And why credit's no longer king
But wait a bit, the crowd did cry
We've had enough of that
The froth's too high and everywhere
And the one percent's too fat
Bernanke, however, was undeterred
Remembering Friedman's chat
That if a helicopter flew overhead
Dropping thousands from the sky
Combined, of course, with tax cuts
Then deflation would surely die
But try as they might in the real world
Those theories just don't fly
But nebbish minions with learned minds
Are not so easily persuaded
To submit to truths and light sublime
When power and fame they've wedded
So keep your counsel in these darkest of days
And watch with whom you're bedded
For the crowd you're with determines much
Whether to darkness or light you're drawn
The present world's passing away
And the coming has yet to dawn
So twixt tomorrow and today
Tread carefully the road you're on
--drschoon, 4/15/2016
THE TIME OF THE VULTURE
On April 16th, Szu Ping Chan and Ben Wrightin The Telegraph UK
wrote, target="_blank" Can
Anything Stop This Global Cycle of Doom?
The patient is in a critical condition. The International Monetary Fund
is concerned that the global economic recovery has taken too long. Kaushik
Basu, chief economist of the World Bank, says the financial crisis has left a
"festering wound" that is "refusing to heal". Growth is
too weak, resulting in the equivalent of a compromised immune system that has
left the economy vulnerable to fresh diseases.
The question now facing the global economy's physicians: is the ailment
chronic or acute?
ANSWER: It's fatal; a prognosis no one wants to hear or accept.
The most common form of
blindness is denial
Because of its ubiquity, it
is seldom seen for what it is
On April 27th, Bill Gross said, "..this quarter, for
almost the second quarter in a row, we're close to the flatline [i.e. parcus
nex, economic death] in terms of economic growth.'
In 1991, I wrote:
In times of expansion, it is to the hare the prizes go. Quick, risk
taking, and bold, his qualities are exactly suited to the times. In periods
of contraction, the tortoise is favored. Slow and conservative, quick only to
retract his vulnerable head and neck, his is the wisest bet when the slow and
sure is preferable to the quick and easy. Every so often, however, there
comes a time when neither the hare nor the tortoise is the victor. This is
when both the bear and the bull have been vanquished, when the pastures upon
which the bull once grazed are long gone and the bear's lair itself lies
buried deep beneath the rubble of economic collapse. This is the time of the
vulture, for the vulture feeds neither upon the pastures of the bull nor the
stored up wealth of the bear. The vulture feeds instead upon the blind
ignorance and denial of the ostrich. The time of the vulture is at hand.
25-years ago, a deflationary collapse greater than the Great
Depression seemed impossible; but, today, signs of such a collapse are
everywhere; obvious to all except to the ostriches still carefully picking
through the decaying remains being discharged from the bankers' charnel house
of credit and debt.
In a deflationary depression cash is king
In a runaway inflation cash is worthless
In each, gold is priceless
On April 29th, gold reached $1296.56, rising $54 (+4.26%)
in two days; in stark contrast to June 2103 when gold fell (pushed by the
paper money cartel) from $1400 to $1190 (-15 %). Today, gold is again rising
and while its trajectory is unknown, its ascent is certain. Gold was the
cotter pin in the bankers' ponzi-scheme of credit and debt. Without it, the
ponzi-scheme is collapsing.
In my new youtube series, Time
of the VultureI will review the 36 topics covered in my book,
Time of the Vulture which I wrote 10 years ago. I will discuss what happened,
what didn't happen and what is yet to happen. The first episode will be on
Fed interest rates, see https://www.youtube.com/edit?video_referre..._id=aAw8jqsfEFU
In January 2016, the crisis entered its final stage. The time of the
vulture is here, when the vulture feeds on the blind
ignorance and denial of the ostrich.
A better world will follow.
Buy gold, buy silver, have faith.
Darryl Robert Schoon
target="_blank" www.survivethecrisis.com
target="_blank" www.drschoon.com
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