Monday, June 23, 2014

Dow Jones Transportation Index Signaling The Systemic Failure Of Money

I wanted to put up this chart for people to think about given the hysteria we are now witnessing over stock prices.   As noted on here ad nauseam over the last nine years, the stock market has no reflection of reality and we are in the biggest financial bubble the world has ever seen.

Many people believe we are headed into a period of hyperinflation in the U.S.   As I have noted before, we are already in a period of hyperinflation and have been for decades.   The future will not be a hyperinflationary one.  It will be what happens after hyperinflation.  That will either be terminal failure of money or the terminal failure of current monetary economics replaced by something democratic and sane or a combination of both.   ie, Something like a possible terminal failure of money followed by the issuance of a new kind of money based on new methods of thought.  What we are living through is a historical moment where monetary, trade settlement and economic systems are likely all in the process of systemic if not terminal failure.   Nothing new on here.

Mind you, there are many who believe they can beat what is yet to come.  So I hear a lot of talk of where to invest your money or what to buy to protect yourself.   There are huge blind spots and ignorance driving  those beliefs (ego).   Because these  beliefs are created from within the system.  They are simply  contrasting perspectives held by those invested in the perpetuation of this system and the status quo that controls it.  What happens if money loses all value?  All money everywhere.  Or the stock market disappears?  Or nations splinter?  Or we experience some type of natural or manmade disaster on a large scale?  The list of possibilities that cannot be protected against are endless in this unique moment of time.   

Let’s break the Dow Transportation Index into two forty year cycles.  And split the 1970s down the middle to do so.   There’s a reason to consider this.  One is based on patterns carrying some degree of equilibrium that complex systems and nature appreciate.  Another is that the 1970s was a time of major shifts in the U.S. economy as many appreciate and as noted on here.  And, as such, the stock market went no where for that decade.   And, finally, as noted on here many times over the years, peak U.S. economic activity and wealth happened somewhere in the mid 1970s to around 1980.  

So, back to the Dow Transports.  From 1935 to 1975 the Dow Transports was up a little more than 1x. Since 1975 to today in 2014 it is up 64x.   That’s right.  This is not a misprint.  One time versus sixty four times over the same period of time. 

Now why is that?  Was the United States 64x more productive in the last half of the century versus the first half?  Or did our economy grow 64x larger?  Haha.  Not.  In fact, in many ways the U.S. has become less productive since 1975.  Less productive because we are a nation that rejects science from the very top be that corporations, institutionalized religion or Democratic and Republican politicians.   I’ll back that up in a later post as well. 

One must consider something else as the explanation for this massive imbalance or disequilibrium over the last eighty years.  Like possibly this dynamic is nothing other than a monetary phenomenon.  That the perception of profits, GDP growth, asset prices and such are really just an illusion.  The same illusion created by a currency experiencing massive hyperinflation.  And that means the illusion of wealth that people have today with many equity indices at all-time highs may really be nothing more than a sign of money as it has always been defined in a state of systemic failure.  Could this possibly be why central banks and politicians have literally spent more than $50 trillion attempting to save this system?  And all it does in response is continue to erode?

You have to remember something that has been noted on here time and time and time again.  It’s a concept that doesn’t get a lot of play in the propagandized dream world but others are starting to appreciate this more and more.    That is, a job is not a job is not a job.  We may have more people working today in the United States than forty years ago but nearly every single one of these jobs is in a wealth-consuming role.  ie, Rather than creating wealth, they are either destroying or consuming wealth through their work efforts.  But, they are being paid to do so.  Paid in what is the question.  If they aren’t creating wealth, then effectively they are being paid in the color of or the appearance of money.  That is, Monopoly money.  

Do you think a job enforcing debt slavery for a bank creates wealth?  No.  It creates money.  This is just one example.  Money is not wealth and we are about to learn that lesson.  And that is a two-fold statement.  One, the U.S. is rich beyond our wildest dreams and that wealth is being suppressed by capitalism and the state.  And, two, in many regards today’s money is effectively worthless.   But, the reason you don’t see it is because money everyone in the world is equally worthless.   The end of money will come some day.  A hundred years from now?  A thousand?  Sooner?  It may be sooner than most realize.   But I think it’s highly probable when that day happens it won’t be because humanity cumulatively decides it’s in our best interests to do away with money.  That is, because humanity doesn’t cumulatively benefit from money in the first place.  Nor will it be telegraphed.   It will likely come violently and very quickly.  

Something to keep in mind about the future.  Some would say that debt is money in our economy and they would be right.  The only way money is issued is by banks creating debt out of thin air.  But, it is not money itself that allows the type of inflation we have seen in the last forty years.   There are other factors involved including empire and debt.  Whether that is through a debt-based monetary system or not is irrelevant.  Debt is a primary driver for that inflation.  Debt allows prices to artificially rise substantially beyond what otherwise could ever occur without systemic failure.  So, the price of your house, the stock market and food are all a function of the same dynamics.  Enslaving people to debt has allowed corporate capitalism to raise prices (rent-seeking profit), often indiscriminately, without any concern as to sustainable supply or demand.   And to do so for decades beyond that which fundamentals ever would have allowed.  It has created the illusion of prosperity to mask the economic blight that defines the U.S. economy for most Americans. 

In other words, effectively a function of debt is the ability to raise prices beyond which otherwise would be possible.  On that note, I have noted many times that debt deflation is a myth.  The Federal Reserve is afraid that a debt unwinding will cause deflation.  I have noted that even if all of the debt in this nation or the world was wiped away, we are going to see deflation.   It’s not the debt itself that is the source of deflation.  It’s the dynamics that debt creates through the artificial ability to raise prices beyond that which economic fundamentals support. 

There is no way most people in our nation could afford anything without the debt or rent extraction dynamics of the monthly payment.  We are all slaves to a monthly payment and debt.  That includes our government.  Food, cars, education and houses should be cheaper to produce than ever.  But they aren’t.  Why is that?    The same reason the Dow Transports are up 64x in the last forty years. 

It’s all an illusion.  An illusion enforced through state violence.


Graphic of the Dow Jones Transportation Index over the last 80 years. 

posted by TimingLogic at 8:54 AM