Thoughts On Some Stuff Including Wall Street, The United States And The World Are Insolvent
We still don’t generally seem to have an appreciation of what is happening in the world. Globalization is collapsing. The virus was just the trigger. The Great Depression had a trigger far less dire than today. A small bank in Austria, Creditanstalt failed. We have a global pandemic at a time when the global economic dislocations dwarf the lead into the Great Depression.
Immediately after the 2008 collapse, I wrote that globalization was dead. Appearances can be deceiving. The economy never recovered post 2008. What did recover was the temporary illusion of wealth created by money printing around the world. That then reignited the consumption splurge and the debt needed to sustain it. The stock market rise since 2008 is exactly because there was no economic recovery. With essentially no underlying demand for investment and capital in the economy, money poured into hot assets. Or, paper assets. So, even though GDP only grew by 50% from 2009, the S&P was up 500% during that same period of time. (It’s easily explainable that the U.S. economy did not sustainably grow by 50% even though GDP showed growth. Negative productivity driving mass immigration to add to consumption, profligate money printing driving a bubble of growth, massive fraud in corporate governance and ten trillion dollars in buybacks, massive fraud in ten trillion dollars in M&A, massive inflation in paper transactions such as commercial/residential real estate, etc. It gives the appearance of prosperity. But, it is all an illusion.)
The most profound aspect of this pandemic is the decades and decades of massive corporate and political corruption and rot are being exposed. One thing that has become very apparent is that the federal government is a feeble, rotten bureaucracy that can’t get out of its own way. Both parties. All branches of the federal government. It’s that way for a reason. Because our government is captured by corporations. Government does not exist to serve the common good. Pliant, unethical toadies are chosen to serve political roles because they will do the work of our corporate masters. The only aspect of federal government that continues to work are the administrative aspects such as Medicare payments, Social Security payments and the like. Most people already knew this. But it’s an affirmation of my March 11th post where I stated politicians are pliant, vile, unethical assholes who are elected for that every reason. And, for that reason, this pandemic was likely to be bad news for the U.S.
Interestingly, many of the state governors, although often just as corrupt, have flexed their constitutional muscle and flipped the federal government the bird during this crisis. If the federal government didn’t have a monopoly on money, I have no doubt most state governments wouldn’t even listen to anything Washington says. We might want to remember that. It may be a portent of things to come. I’ve noted for a decade the U.S. could shatter into pieces. We may see those pieces in the alignments that states created to re-open their economies. These are more than just neighboring agreements that were made. They are loosely defined cultural boundaries that could form the future of new nations or geographic trading blocks if nation states disappear. The net is the parasitic economy of hierarchical institutions is under mass duress and possible collapse whether that is privately-created debt money, monopolies, corporations, political parties, parasitic aspects of academia, professional sports, prosperity preachers, corporate media, the celebrity culture or whatnot. But, it’s mostly corporations and corporate media. These hierarchies subvert democracy, subvert wealth-creation and subvert the natural rights of an egalitarian, free society.
If there is one conclusion we can draw, these parasitic hierarchies rely on surplus value for their rent extraction from frontline workers and/or consumers. This crisis will spread right up the food chain and lead to mass layoffs and income cuts in these groups of entitled thieves and Godless fukctards who never cared about anything but themselves. ANd, I know that because they never spoke out against the injustices most Americans suffer. They never spoke out because they sold themselves out for wealth and power. Just as I have said it would for the last decade.
One of the biggest cultural problems the U.S. has are loitering men. Bad news for any political or economic control system. U.S. labor participation rate after 2008 collapsed to new all-time lows for men. And it hasn’t recovered. This is a cultural nightmare for the state. Men are naturally aggressive in their primitive ego state. And, a state of fear this system and corporate capitalism requires to control the masses keeps people in that primitive ego state. Men without jobs or a future are not to be trifled with. Again, as noted on here for a long time, World War III could be humanity’s war against the state. The biggest threat to the U.S. empire is not China or anyone else. It is so dominant over the entire world that these are generally minor or controllable risks. The biggest threat to U.S. empire is tens of millions of men with no economic opportunities or futures. And, politicians can’t keep throwing men in this category into our prison population bubble. Because that is why we have a prison population bubble. It should not be a surprise that bubble started around 1980 with the election of Ronald Reagan and his free-market corporate capitalist neoliberal economic ideology. Because that was the peak of wealth creation in the U.S. And, our prison population doesn’t simply correlate to that fact. It is because of that fact. Law-and-order conservative politicians created the prison state to further their criminal economic doctrine. Just as they enforced the U.S. slave state in the 18th century.
Expect ever-rising internal violence in the U.S. (Other nations such as China, the Middle East, Europe, Brazil, India, etc.) Talks of a race war in the U.S. or whatnot, are ludicrous from my perspective. All men are brothers and that bond will be reaffirmed when they cumulatively experience the same systemic violence. (Obviously, there are bad apples everywhere including the brutal murder in Georgia. But those are the exceptions.) And, expect women to play a supporting role (even a leading role) in this violence against men. I don’t make that statement because women aren’t equals of men. That’s preposterous. I make that statement because women have husbands, sons, fathers and brothers. And, women will defend men’s honor as we’ve seen in past repressive struggles against the corporate state.
Let me get back to the main thrust of this post. Some months ago, I provided quite a few data points that the economy was already in deep trouble before this pandemic. That extends globally as well. Other parts of the world were experiencing large economic distresses before the pandemic. It’s not necessary to understand every single event, every type of financial fraud, every financial instrument that is blowing up or every economic dislocation. There are trillions of moving parts to the global economy and it’s impossible for one person to have the capacity to understand everything that is going to blow up in advance of that happening. Just one example is there are hundreds of trillions of dollars of synthetic toxicity on Wall Street.
The macro factors are all that matter. The macro factors drive the creation of that noise. It’s the macro system and its inputs and outputs that matter. Everything else is a distraction. Which is why none of my anticipated outcomes have ever changed over fifteen years on here. The macro is what matters. I could never predict a pandemic. But, I could predict specific system failures when viewing this as a complex system.
I’ve written repeatedly that we will learn the difference between money and wealth at some point. Money in our world is not democratic. It is a control system. And, the gold standard was anti-democratic and just as repressive. Democratic money is fiat money. It is abundantly available for all in society. It is not controlled by private institutions or created through debt enslavement. I have gone into substantial detail on how democratic money would work over the years. That includes the fact that it should not be controlled by politicians or private corporations. The asinine comments that people will vote to give themselves free money if turned over to democracy is even more hypocritically-ignorant when the current system is already used to grant entitlement and riches to our masters while democracy is left to rot in the hell they have created. The need for savings is not necessary with democratic money either. There’s no need to save for a rainy day because no one would ever be denied access to the wealth of society. Unless we have a natural cataclysm that destroys our ability to create and produce, that’s never going to happen. (And, resiliency could be provided to ensure those external risks are reasonably mitigated.) Relieving ourselves of grubbing for money and the endless overwork that requires would have a profoundly positive social and cultural impact. Now, that doesn’t mean everyone gets 10 TVs and shopping sprees to the mall. Those are unsustainable dynamics that are not p art of human history except for short periods of economic slavery or social pillaging. One has to relieve themselves of the ignorance of over-produced “consumption” that brainwashed capitalist consumerism has created. It means human needs are met but vacuous consumption and the endless financial chases it creates could disappear. It also doesn’t mean everyone gets the same slice of the pie. That is a decision for society to make. But it does mean that parasites are forced to clean their own toilets.
But, let’s be clear. All fiat currency is worthless. That includes democratic currency. Gold is only a “store of value” for feudal, corrupt lords who store up wealth for social domination. In other words, where there is no economic democracy. Yes, that defines the world today. Currency is not a store of value either. It is a medium of exchange for true wealth; the goods and services produced by a democratic, just and free society. The store of value is THAT society. And, private finance, shareholder-owned corporations (as defined by capitalism where elites are the shareholders.) and privately-created money are parasitic costs on that wealth. If society is rich in science, production, art, philosophy, virtue, compassion and the like, whatever happens to money or inflation or currency collapse or whatnot is essentially irrelevant. Society’s wealth still remains. And, access to it is never denied. Which is why the ancient Egyptians didn’t have and didn’t need money. Because they operated off of these concepts. The issue is the U.S. is not THAT society. Of course, most are not. There are few exceptions. Possibly small nations in Europe where compassion, sharing and stronger social bonds exist. Instead, our currency is used to subjugate and enslave the world. That includes American citizens. And, as a result, we don’t have a vibrant, science-based, creative, ethical society. We have a crumbling empire of pure rot.
With those reminders regarding money, it’s important to understand the role of the Federal Reserve. Even if it is a corrupt system. And, very arguably unconstitutional. Congress is given the responsibility to coin money. The Constitution does NOT say the Congress can outsource that responsibility of the creation of money to an anti-democratic, unelected bunch of bureaucratic half-wits doing the bidding of private corporations that then create all of our money. Then said corporations turn around and bribe politicians with democracy’s money.
The Federal Reserve does not create wealth. Nor does Wall Street. They simply oversees the availability of the medium of exchange. That’s it. I’ve noted time and again that it is a portent of coming doom when society holds finance and bankers as masters of the universe. So, when the Federal Reserve responds to crises over the last 50 years with greater and greater force, it’s not the fault of the Federal Reserve that more and more effort is required. It’s that the underlying economy is becoming more and more unstable. And, thus, it requires more and more arcane and incredibly large measures to stabilize. Our economy is on life support. The efforts to keep it alive require massive effort. I noted recently that the U.S. has spent upwards of $100 trillion or more to bail out capitalism over the last handful of decades. Again, we’ll be talking about that number and the details behind it. But, corporate capitalism is not a sustainable source of wealth. The endless socialism it requires is staggering. So, if we are going to embrace this system, that socialism should be for the common good. Not for economic half-wits, corporate bureaucrats, money masters and the like.
My point to all of this is that the Federal Reserve does not create wealth. It uses the same tools and does the same thing whether its 1950 or 2020. That it has relied on ever-increasing measures in the last forty years is what we should be focusing on. Because it’s a portent of underlying economic unsustainability.
With what I’m going to show you below, one should appreciate that the U.S. banking system is insolvent. And, it is insolvent because corporate capitalism is in systemic failure. So, when everyone notes that the Federal Reserve shouldn’t be bailing out these corporations, the alternative is 50-70% unemployment. There’s a self-destructive ignorance in this nation that rejects science and knowledge. I understand why it exists but once the system starts systemic failure, no one has any scientific ability to predict where the metastasis ends. Letting the system fail could result in tens of millions of deaths. Or more. No one knows. That is not the answer. It doesn’t absolve our government or the Federal Reserve for its involvement in this corruption. But, we need to have better answers than just let them fail because I’m not getting a bailout.
So, below is a U.S. chart that shows really all anyone needs to know as to where we are economically, to be honest. What’s happening in China or India or Europe is irrelevant. The U.S. empire leads the global economy. All others follow or serve it. All. Bar none. Literally, from a complex systems standpoint, the U.S. is the basis for macro global outcomes as it pertains to the global economy. This is a chart of the Federal Reserve’s balance sheet (red) leading into 2020. In other words, before this pandemic. And, the interest rate on ten year Treasuries. (in blue) This is publicly available data I pulled from the Federal Reserve. We can see that the Fed had about $4.4 trillion dollars of assets on its balance sheet. (Assets it has taken from Wall Street banks in return for equal allotments of dollars to maintain banking solvency and liquidity.) The size of this balance sheet is a result of the financial fraud (Which without the U.S. economy would collapse. That’s right. The U.S. economy is reliant on fraud to maintain its growth. I’d be more than happy to explain this in detail if anyone doesn’t understand that statement.) and the bailouts of 2008. The Federal Reserve has never been able to return these assets to Wall Street banks. We found out why in 2019. Because twelve years later, Wall Street is still insolvent. U.S. banks are insolvent because the U.S. economy is insolvent. And, if the U.S. is insolvent, the world is insolvent.
I’m laying this out in simple terms because I know not everyone is a central banking expert. So, in this graph, starting in 2018 the Federal Reserve attempted to get these assets off of its balance sheet. In other words, return them to Wall Street. (Because the Federal Reserve’s balance sheet should be essentially zero or close to it in a normal functioning economy.) These assets were originally exchanged for a temporary loan to Wall Street that has not been repaid for what is now twelve years. In other words, return them to banks and collect the cash the Federal Reserve is owed in return. But, what did we see that happened to ten year Treasury rates when the Federal Reserve attempted to do this last year? Ten year rates imploded, thus signaling future economic crises. Rates imploded because the Federal Reserve was trying to call in some of its loan to Wall Street and they don’t have the money to pay the Federal Reserve back. The Federal Reserve attempted to return 600 billion (from the chart) which was enough to cause the Repo crisis of 2019. In other words, the Wall Street liquidity crisis of last autumn. We see that Repo crisis on the chart below when the Federal Reserve had to then start rebuying said assets and thus injecting cash into Wall Street to avoid collapse. (The upward arrows on the chart.)
“Experts” tell us the Federal Reserve’s activity with Wall Street or dealer banks are nothing more than temporary loans and its a misnomer to call them bailouts. Because the Federal Reserve always gets its money back. Bullshit. I’ve been saying on here for the last decade that the Federal Reserve would eventually take balance sheet losses because the U.S. economy is broken. And, then the Federal Reserve will need a bailout. Well, it’s been twelve years since 2008 and the Federal Reserve’s balance sheet is now nearly $7 trillion. It’s going a lot higher. Do you think banks are ever going to pay that money back. Zero chance. In other words, the Federal Reserve has pumped $7 trillion into Wall Street since 2008 and that injection is going to be permanent. Those repurchase agreements might as well be ripped up. Because Wall Street is insolvent and can’t repay its loans. But the plutocrats on Wall Street and in corporations have minted billions personally while destroying their companies and the U.S. economy. This isn’t directly the fault of the Federal Reserve. But it certainly is the enabler. But more importantly, the federal government is the corruption through which the plutocracy operates. It’s the fault of the politicians from both parties that have failed to make the necessary reforms. Who have sold out our nation for our corporate masters. Who are obsequious, servile parasites doing the bidding of our corporate masters.
This chart is the reason why the Federal Reserve dropped its pants and responded with so many thermonuclear options last month. Because it knows what it won’t tell you. It won’t tell you because the economy is a confidence game. It knows that our financial system and economy are insolvent. And, that is why the Federal Reserve is lining up to buy every asset imaginable to mankind. Including actions not in its original charter. Including state pensions, junk bonds and the like. Because if one domino falls, the entire system could easily collapse. The. Entire. System.
As noted numerous times, the pandemic is just the trigger. The real issue is that corporate capitalism is and has been in systemic failure.
2008 was the start of a massive global economic crisis that almost certainly will result in an unprecedented global depression. And, as noted on here for a long, long time, could very well lead to the end of U.S. empire by 2022. And, will lead to massive suffering and unrest outside of the U.S. The U.S. gives financial handouts to 75% of the world’s dictators. And, runs trade deficits with the entire world. All roads lead to Rome. And, all shipping lanes lead to the U.S. If those U.S. economic or financial handouts (trade deficits are handouts) end for the rest of the world, global chaos will ensue.
On a final note, some large percentage of our economy serves no purpose at creating wealth. Zero. Tens of millions of people, (give or take) show up at a job simply to collect money to survive. Money, not wealth creation. Money. Because their masters rely on rent extraction to maintain their tyrannical entitlement. Or to serve the corporate careers of entitlement. I’ve noted many times that at some point work will be unhinged from society’s wealth creation. And, that most people do not need to work for our society to function. Are we witnessing the end of capitalism’s required overwork? The dumbing down of our society that forced everyone into corporate work regardless of what that work is? Or, whether it creates wealth or leisure that benefits society and not just those with money. In other words, because it enriches the economic aristocracy. The only way out of this mess for the establishment is to expose the fraud of our monetary and economic control system. And, to print money and place in the hands of every American who isn’t working. But, it also exposes the entire basis of corporate capitalism, poverty wages, overwork, endless taxes, private debt money and the like are all frauds.
Interestingly, during this pandemic, and even with tens and tens of millions of layoffs, we are still able to produce all of the electricity, food, shelter and basic human necessities with a small number of people. The rest of employment is nothing more than economic slavery. If society wants extravagances beyond basic needs, let each person decide what those discretionary items are, and let them work for them in employment that enriches society. Or, following personal passions of human expression. But don’t force society into corporate economic slavery so that those who overconsume to ameliorate their own inner demons can do so off of the entitlement of other’s labor.
The days of the servant economy or service economy where people work in subhuman conditions for subhuman wages to benefit those who endlessly steal their labor could very well be ending. The end of overwork. The beginning of building a culture and society that benefits everyone? And our natural world? Not an immediate outcome but definitely possible as humanity continues its awakening.
The cycle of volatility (the overarching theme on here) continues.
(Click on the chart for a larger view.)
Immediately after the 2008 collapse, I wrote that globalization was dead. Appearances can be deceiving. The economy never recovered post 2008. What did recover was the temporary illusion of wealth created by money printing around the world. That then reignited the consumption splurge and the debt needed to sustain it. The stock market rise since 2008 is exactly because there was no economic recovery. With essentially no underlying demand for investment and capital in the economy, money poured into hot assets. Or, paper assets. So, even though GDP only grew by 50% from 2009, the S&P was up 500% during that same period of time. (It’s easily explainable that the U.S. economy did not sustainably grow by 50% even though GDP showed growth. Negative productivity driving mass immigration to add to consumption, profligate money printing driving a bubble of growth, massive fraud in corporate governance and ten trillion dollars in buybacks, massive fraud in ten trillion dollars in M&A, massive inflation in paper transactions such as commercial/residential real estate, etc. It gives the appearance of prosperity. But, it is all an illusion.)
The most profound aspect of this pandemic is the decades and decades of massive corporate and political corruption and rot are being exposed. One thing that has become very apparent is that the federal government is a feeble, rotten bureaucracy that can’t get out of its own way. Both parties. All branches of the federal government. It’s that way for a reason. Because our government is captured by corporations. Government does not exist to serve the common good. Pliant, unethical toadies are chosen to serve political roles because they will do the work of our corporate masters. The only aspect of federal government that continues to work are the administrative aspects such as Medicare payments, Social Security payments and the like. Most people already knew this. But it’s an affirmation of my March 11th post where I stated politicians are pliant, vile, unethical assholes who are elected for that every reason. And, for that reason, this pandemic was likely to be bad news for the U.S.
Interestingly, many of the state governors, although often just as corrupt, have flexed their constitutional muscle and flipped the federal government the bird during this crisis. If the federal government didn’t have a monopoly on money, I have no doubt most state governments wouldn’t even listen to anything Washington says. We might want to remember that. It may be a portent of things to come. I’ve noted for a decade the U.S. could shatter into pieces. We may see those pieces in the alignments that states created to re-open their economies. These are more than just neighboring agreements that were made. They are loosely defined cultural boundaries that could form the future of new nations or geographic trading blocks if nation states disappear. The net is the parasitic economy of hierarchical institutions is under mass duress and possible collapse whether that is privately-created debt money, monopolies, corporations, political parties, parasitic aspects of academia, professional sports, prosperity preachers, corporate media, the celebrity culture or whatnot. But, it’s mostly corporations and corporate media. These hierarchies subvert democracy, subvert wealth-creation and subvert the natural rights of an egalitarian, free society.
If there is one conclusion we can draw, these parasitic hierarchies rely on surplus value for their rent extraction from frontline workers and/or consumers. This crisis will spread right up the food chain and lead to mass layoffs and income cuts in these groups of entitled thieves and Godless fukctards who never cared about anything but themselves. ANd, I know that because they never spoke out against the injustices most Americans suffer. They never spoke out because they sold themselves out for wealth and power. Just as I have said it would for the last decade.
One of the biggest cultural problems the U.S. has are loitering men. Bad news for any political or economic control system. U.S. labor participation rate after 2008 collapsed to new all-time lows for men. And it hasn’t recovered. This is a cultural nightmare for the state. Men are naturally aggressive in their primitive ego state. And, a state of fear this system and corporate capitalism requires to control the masses keeps people in that primitive ego state. Men without jobs or a future are not to be trifled with. Again, as noted on here for a long time, World War III could be humanity’s war against the state. The biggest threat to the U.S. empire is not China or anyone else. It is so dominant over the entire world that these are generally minor or controllable risks. The biggest threat to U.S. empire is tens of millions of men with no economic opportunities or futures. And, politicians can’t keep throwing men in this category into our prison population bubble. Because that is why we have a prison population bubble. It should not be a surprise that bubble started around 1980 with the election of Ronald Reagan and his free-market corporate capitalist neoliberal economic ideology. Because that was the peak of wealth creation in the U.S. And, our prison population doesn’t simply correlate to that fact. It is because of that fact. Law-and-order conservative politicians created the prison state to further their criminal economic doctrine. Just as they enforced the U.S. slave state in the 18th century.
Expect ever-rising internal violence in the U.S. (Other nations such as China, the Middle East, Europe, Brazil, India, etc.) Talks of a race war in the U.S. or whatnot, are ludicrous from my perspective. All men are brothers and that bond will be reaffirmed when they cumulatively experience the same systemic violence. (Obviously, there are bad apples everywhere including the brutal murder in Georgia. But those are the exceptions.) And, expect women to play a supporting role (even a leading role) in this violence against men. I don’t make that statement because women aren’t equals of men. That’s preposterous. I make that statement because women have husbands, sons, fathers and brothers. And, women will defend men’s honor as we’ve seen in past repressive struggles against the corporate state.
Let me get back to the main thrust of this post. Some months ago, I provided quite a few data points that the economy was already in deep trouble before this pandemic. That extends globally as well. Other parts of the world were experiencing large economic distresses before the pandemic. It’s not necessary to understand every single event, every type of financial fraud, every financial instrument that is blowing up or every economic dislocation. There are trillions of moving parts to the global economy and it’s impossible for one person to have the capacity to understand everything that is going to blow up in advance of that happening. Just one example is there are hundreds of trillions of dollars of synthetic toxicity on Wall Street.
The macro factors are all that matter. The macro factors drive the creation of that noise. It’s the macro system and its inputs and outputs that matter. Everything else is a distraction. Which is why none of my anticipated outcomes have ever changed over fifteen years on here. The macro is what matters. I could never predict a pandemic. But, I could predict specific system failures when viewing this as a complex system.
I’ve written repeatedly that we will learn the difference between money and wealth at some point. Money in our world is not democratic. It is a control system. And, the gold standard was anti-democratic and just as repressive. Democratic money is fiat money. It is abundantly available for all in society. It is not controlled by private institutions or created through debt enslavement. I have gone into substantial detail on how democratic money would work over the years. That includes the fact that it should not be controlled by politicians or private corporations. The asinine comments that people will vote to give themselves free money if turned over to democracy is even more hypocritically-ignorant when the current system is already used to grant entitlement and riches to our masters while democracy is left to rot in the hell they have created. The need for savings is not necessary with democratic money either. There’s no need to save for a rainy day because no one would ever be denied access to the wealth of society. Unless we have a natural cataclysm that destroys our ability to create and produce, that’s never going to happen. (And, resiliency could be provided to ensure those external risks are reasonably mitigated.) Relieving ourselves of grubbing for money and the endless overwork that requires would have a profoundly positive social and cultural impact. Now, that doesn’t mean everyone gets 10 TVs and shopping sprees to the mall. Those are unsustainable dynamics that are not p art of human history except for short periods of economic slavery or social pillaging. One has to relieve themselves of the ignorance of over-produced “consumption” that brainwashed capitalist consumerism has created. It means human needs are met but vacuous consumption and the endless financial chases it creates could disappear. It also doesn’t mean everyone gets the same slice of the pie. That is a decision for society to make. But it does mean that parasites are forced to clean their own toilets.
But, let’s be clear. All fiat currency is worthless. That includes democratic currency. Gold is only a “store of value” for feudal, corrupt lords who store up wealth for social domination. In other words, where there is no economic democracy. Yes, that defines the world today. Currency is not a store of value either. It is a medium of exchange for true wealth; the goods and services produced by a democratic, just and free society. The store of value is THAT society. And, private finance, shareholder-owned corporations (as defined by capitalism where elites are the shareholders.) and privately-created money are parasitic costs on that wealth. If society is rich in science, production, art, philosophy, virtue, compassion and the like, whatever happens to money or inflation or currency collapse or whatnot is essentially irrelevant. Society’s wealth still remains. And, access to it is never denied. Which is why the ancient Egyptians didn’t have and didn’t need money. Because they operated off of these concepts. The issue is the U.S. is not THAT society. Of course, most are not. There are few exceptions. Possibly small nations in Europe where compassion, sharing and stronger social bonds exist. Instead, our currency is used to subjugate and enslave the world. That includes American citizens. And, as a result, we don’t have a vibrant, science-based, creative, ethical society. We have a crumbling empire of pure rot.
With those reminders regarding money, it’s important to understand the role of the Federal Reserve. Even if it is a corrupt system. And, very arguably unconstitutional. Congress is given the responsibility to coin money. The Constitution does NOT say the Congress can outsource that responsibility of the creation of money to an anti-democratic, unelected bunch of bureaucratic half-wits doing the bidding of private corporations that then create all of our money. Then said corporations turn around and bribe politicians with democracy’s money.
The Federal Reserve does not create wealth. Nor does Wall Street. They simply oversees the availability of the medium of exchange. That’s it. I’ve noted time and again that it is a portent of coming doom when society holds finance and bankers as masters of the universe. So, when the Federal Reserve responds to crises over the last 50 years with greater and greater force, it’s not the fault of the Federal Reserve that more and more effort is required. It’s that the underlying economy is becoming more and more unstable. And, thus, it requires more and more arcane and incredibly large measures to stabilize. Our economy is on life support. The efforts to keep it alive require massive effort. I noted recently that the U.S. has spent upwards of $100 trillion or more to bail out capitalism over the last handful of decades. Again, we’ll be talking about that number and the details behind it. But, corporate capitalism is not a sustainable source of wealth. The endless socialism it requires is staggering. So, if we are going to embrace this system, that socialism should be for the common good. Not for economic half-wits, corporate bureaucrats, money masters and the like.
My point to all of this is that the Federal Reserve does not create wealth. It uses the same tools and does the same thing whether its 1950 or 2020. That it has relied on ever-increasing measures in the last forty years is what we should be focusing on. Because it’s a portent of underlying economic unsustainability.
With what I’m going to show you below, one should appreciate that the U.S. banking system is insolvent. And, it is insolvent because corporate capitalism is in systemic failure. So, when everyone notes that the Federal Reserve shouldn’t be bailing out these corporations, the alternative is 50-70% unemployment. There’s a self-destructive ignorance in this nation that rejects science and knowledge. I understand why it exists but once the system starts systemic failure, no one has any scientific ability to predict where the metastasis ends. Letting the system fail could result in tens of millions of deaths. Or more. No one knows. That is not the answer. It doesn’t absolve our government or the Federal Reserve for its involvement in this corruption. But, we need to have better answers than just let them fail because I’m not getting a bailout.
So, below is a U.S. chart that shows really all anyone needs to know as to where we are economically, to be honest. What’s happening in China or India or Europe is irrelevant. The U.S. empire leads the global economy. All others follow or serve it. All. Bar none. Literally, from a complex systems standpoint, the U.S. is the basis for macro global outcomes as it pertains to the global economy. This is a chart of the Federal Reserve’s balance sheet (red) leading into 2020. In other words, before this pandemic. And, the interest rate on ten year Treasuries. (in blue) This is publicly available data I pulled from the Federal Reserve. We can see that the Fed had about $4.4 trillion dollars of assets on its balance sheet. (Assets it has taken from Wall Street banks in return for equal allotments of dollars to maintain banking solvency and liquidity.) The size of this balance sheet is a result of the financial fraud (Which without the U.S. economy would collapse. That’s right. The U.S. economy is reliant on fraud to maintain its growth. I’d be more than happy to explain this in detail if anyone doesn’t understand that statement.) and the bailouts of 2008. The Federal Reserve has never been able to return these assets to Wall Street banks. We found out why in 2019. Because twelve years later, Wall Street is still insolvent. U.S. banks are insolvent because the U.S. economy is insolvent. And, if the U.S. is insolvent, the world is insolvent.
I’m laying this out in simple terms because I know not everyone is a central banking expert. So, in this graph, starting in 2018 the Federal Reserve attempted to get these assets off of its balance sheet. In other words, return them to Wall Street. (Because the Federal Reserve’s balance sheet should be essentially zero or close to it in a normal functioning economy.) These assets were originally exchanged for a temporary loan to Wall Street that has not been repaid for what is now twelve years. In other words, return them to banks and collect the cash the Federal Reserve is owed in return. But, what did we see that happened to ten year Treasury rates when the Federal Reserve attempted to do this last year? Ten year rates imploded, thus signaling future economic crises. Rates imploded because the Federal Reserve was trying to call in some of its loan to Wall Street and they don’t have the money to pay the Federal Reserve back. The Federal Reserve attempted to return 600 billion (from the chart) which was enough to cause the Repo crisis of 2019. In other words, the Wall Street liquidity crisis of last autumn. We see that Repo crisis on the chart below when the Federal Reserve had to then start rebuying said assets and thus injecting cash into Wall Street to avoid collapse. (The upward arrows on the chart.)
“Experts” tell us the Federal Reserve’s activity with Wall Street or dealer banks are nothing more than temporary loans and its a misnomer to call them bailouts. Because the Federal Reserve always gets its money back. Bullshit. I’ve been saying on here for the last decade that the Federal Reserve would eventually take balance sheet losses because the U.S. economy is broken. And, then the Federal Reserve will need a bailout. Well, it’s been twelve years since 2008 and the Federal Reserve’s balance sheet is now nearly $7 trillion. It’s going a lot higher. Do you think banks are ever going to pay that money back. Zero chance. In other words, the Federal Reserve has pumped $7 trillion into Wall Street since 2008 and that injection is going to be permanent. Those repurchase agreements might as well be ripped up. Because Wall Street is insolvent and can’t repay its loans. But the plutocrats on Wall Street and in corporations have minted billions personally while destroying their companies and the U.S. economy. This isn’t directly the fault of the Federal Reserve. But it certainly is the enabler. But more importantly, the federal government is the corruption through which the plutocracy operates. It’s the fault of the politicians from both parties that have failed to make the necessary reforms. Who have sold out our nation for our corporate masters. Who are obsequious, servile parasites doing the bidding of our corporate masters.
This chart is the reason why the Federal Reserve dropped its pants and responded with so many thermonuclear options last month. Because it knows what it won’t tell you. It won’t tell you because the economy is a confidence game. It knows that our financial system and economy are insolvent. And, that is why the Federal Reserve is lining up to buy every asset imaginable to mankind. Including actions not in its original charter. Including state pensions, junk bonds and the like. Because if one domino falls, the entire system could easily collapse. The. Entire. System.
As noted numerous times, the pandemic is just the trigger. The real issue is that corporate capitalism is and has been in systemic failure.
2008 was the start of a massive global economic crisis that almost certainly will result in an unprecedented global depression. And, as noted on here for a long, long time, could very well lead to the end of U.S. empire by 2022. And, will lead to massive suffering and unrest outside of the U.S. The U.S. gives financial handouts to 75% of the world’s dictators. And, runs trade deficits with the entire world. All roads lead to Rome. And, all shipping lanes lead to the U.S. If those U.S. economic or financial handouts (trade deficits are handouts) end for the rest of the world, global chaos will ensue.
On a final note, some large percentage of our economy serves no purpose at creating wealth. Zero. Tens of millions of people, (give or take) show up at a job simply to collect money to survive. Money, not wealth creation. Money. Because their masters rely on rent extraction to maintain their tyrannical entitlement. Or to serve the corporate careers of entitlement. I’ve noted many times that at some point work will be unhinged from society’s wealth creation. And, that most people do not need to work for our society to function. Are we witnessing the end of capitalism’s required overwork? The dumbing down of our society that forced everyone into corporate work regardless of what that work is? Or, whether it creates wealth or leisure that benefits society and not just those with money. In other words, because it enriches the economic aristocracy. The only way out of this mess for the establishment is to expose the fraud of our monetary and economic control system. And, to print money and place in the hands of every American who isn’t working. But, it also exposes the entire basis of corporate capitalism, poverty wages, overwork, endless taxes, private debt money and the like are all frauds.
Interestingly, during this pandemic, and even with tens and tens of millions of layoffs, we are still able to produce all of the electricity, food, shelter and basic human necessities with a small number of people. The rest of employment is nothing more than economic slavery. If society wants extravagances beyond basic needs, let each person decide what those discretionary items are, and let them work for them in employment that enriches society. Or, following personal passions of human expression. But don’t force society into corporate economic slavery so that those who overconsume to ameliorate their own inner demons can do so off of the entitlement of other’s labor.
The days of the servant economy or service economy where people work in subhuman conditions for subhuman wages to benefit those who endlessly steal their labor could very well be ending. The end of overwork. The beginning of building a culture and society that benefits everyone? And our natural world? Not an immediate outcome but definitely possible as humanity continues its awakening.
The cycle of volatility (the overarching theme on here) continues.
(Click on the chart for a larger view.)
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