U.S. Economic Death Spiral Into the Second Great Depression


Economics / Great Depression II

Bernanke’s Unstoppable, Self Reinforcing, Negative-Feedback-Loop

Our economic death spiral into the Second Great Depression
Wracked up by both parties over many decades our debt has evolved into a yearly deficit that can no longer be serviced with tax revenue and borrowing.

To avoid default Ben Bernanke chose to monetize the un-payable portion of our deficit. Each month about 100 billion dollars are created out of thin air to cover our government’s bills.

This has set forth an unstoppable, self reinforcing, negative-feedback-loop whereby:

1.Debt monetization (printing money out of thin air to cover the portion of governments spending not satisfied by tax revenue and borrowing) reduces the value of the dollar.
2.The debt monetization triggers dollars to flow out of bonds and into commodities.
3.This increases demand, commodity prices rise.
4.As commodities make their way into the supply chains businesses and consumers realize higher prices.
5.Since globalization has caused wages to stagnate at 1970 levels, and with 23% unemployment, businesses try to eat increases, this in turn reduces hiring, causes layoffs and kills expansion.
6.Consumers reduce their purchases, case in point: Wal-Mart is losing market share to the Dollar Store – that right there spells retail health (read: it’s terminal).
7.Nations whose citizens spend 32%-52% of their entire budget on food are especially affected.
8.In those nations where citizens spend 32%-52% of total their income on food; food riots erupt, social unrest breaks out, governments topple.
9.Geographically speaking, many of these nations are in the Middle East where about a third of the world’s oil supply comes from – so oil production is adversely affected, the price of oil increases. Drastically increases. The empire must then send in troops and warships to protect oil assets from being wiped off the map.
10.Oil is an integral part of everything from farming to manufacturing to transportation, therfore the prices of all goods and services rise.
11.This of course creates more stress on our economy, which drives tax revenues down, whic creates a greater deficit, which causes idtiot Ben to lean on the print button and monetize even more debt.
12.Like an infinite loop in some errant computer code we go back to #1 above and iterate back through this unstoppable, self reinforcing, negatively-insane-Ben Bernanke-code that we call a negative self reinforcing feedback loop.
Bernanke’s Crimes Against Humanity
Exporting Higher Food Prices to Poor Nations:
The price of grain and many other foor comodities are set in US Dollars. Creating more dollars reduces the dollars purchasing power. Creating more dollars makes investors flee securities and rush to hard assets, like grain, corn, soy, oil, cotton, coffee, sugar and so on.

In Tunisia on December 17, 2010 a 26-year-old man who tried to supported his family by selling fruits and vegetables doused himself in paint thinner and set himself on fire in front of a local municipal office.

Police had confiscated his produce cart, the cart he needed to earn a living in order to feed his family. With rising prices he coldn’t afford a permit. They also beat him when he objected. Local officials then refused listen to him.

His desperation highlighted the public’s frustration over living standards and increasingly higher food prices which accounted for 32.4% of their entire earnings.

A month later the ruler of Tunisia was gone, its government collapsed.

Now it is Libya’s turn.

In Lybia 37.2% of a families budget goes to food.

Many other oil producing nations have citizens who face the same income to food budget ratios. Map of many of the countries that are experiencing protests.

Organic bond sales have been anemic. Money is flowing out of securities and into commodities. Bernanke’s plan to have Quantitative Easing reduce interest rates has so far been a failure because of these outflows. That was Bernanke’s first mistake.

Rising commodity prices, which for the most part peg global food prices was his second misstake.

Actually, if you count: Bear Stearns, the housing bubble, subprime contageon, unemployment contageon and recesion contageon they are respectively Bernanke’s 6th and 7th blunders. Add to that the fact that he is following the steps that Greenspan used to explain how Great Depression One was created and it soon becomes apparant that Ben Bernanke is, without a doubt, the worlds biggest economic imbicile and shouldn’t be allowed to balance a checkbook – let alone run the world’s (now thanks to him and Greenspan) third largest economy.

Bernanke couldn’t find cause and effect in a dictionary. He is an economic moron, and a master of global disaster. The only bigger fools are our leaders who:

1.Haven’t fired him.
2.Still listen to him.
Now we have 2008 redux. Commodity prices and oil prices are headed up. Will they crash or will the dollar crash? If commodity prices and oil prices crash again this time I’ll be surprised if money flows into securities again. The dollar is no longer looked at as secure now that Bernanke is monetizing the debt.

The gig is up, the game is almost over.

When High Frequency Algorithmic Trading (insider trading) became responsible for 70% of stock trades I tossed the term “stock market” out of my vocabulary and replaced it with “rigged casino.”

When Bernanke began monetizing insane amounts of money the term “Bond Vigilantes” got tossed into that same trash heap. “Bond Vigilantes” are like ants with Bernanke counterfeiting over a trillion a year.

There are no more Bond Vigilantes.

Ben Bernanke IS the bond market and so far he hasn’t even stepped in enough to keep yields down, but he’ll have to.

It is not the smartest or the fittest that survive, it is those who notice change first.

Ben Bernanke cannot stop Quantitative Easing. Stopping the monetization of debt means that the United States of America defaults on its obligations. That’s right, the government stops sending out Social Security payments, government workers stop getting checks, companies who do business with the government stop getting paid, Medicare stops – well, you get the picture.

The other fallacy is that we can make cuts and balance this mess. When 23% of the deficit is debt service and 57% goes to keeping grandma eating. With those two facts in mind, we quickly realize that the deficit can’t be cut. Not without default and total restructuring.

Debt is monetized when the Fed creates money with a computer and credits the Treasury Department for the Bonds it “purchased”. The treasury takes this “money” and pays the government’s bills so it can stay open. So those thinking there is no velocity may want to think that through again.

With 23% unemployment and with 43 million Americans on Food Stamps and a 1.5 trillion dollar deficit the Fed can not let interest rates rise. Rising interest rates would create massive deficit pain and inflict more debt servicing nightmares. There will be no Paul Volckler’s this time. Bernanke will – en-masse – drive bond prices back up and rates back down by creating massive fake demand for bonds at auction when interest rates get too out of hand.

When he does that the value of our dollar will really tank, investors will step up their continued flight to safety by purchasing commodities and commodity prices will increase even more. Higher oil prices will likely cause investors to flee the stock market, but with thin volume and 70% HFAT who knows what the rigged casino will do. They’ve made a sincere joke of the market, which for people in retirement with funds chained to the rigged house — well this is nothing but a sorrowful situation.

Saudi’s king is buying time on his remaining years – he’s 87 – by handing money out. Like the fine ZeroHedge piece said:

“Unfortunately for Saudi, Bahrain tried this and failed. Also, once you start down this path, there is no turning back, as people demand more and more.”

China is faced with its Jasmine protest.

Bernanke, the other central banks, our leaders and the leaders of the rest of the world still have time to exit this endless loop. Just about every country is broke and needs to re-value their dollar and let the people, the local and state and federal governments get out of debt.

The concern I have is that other countries may exit the loop by announcing a new world reserve currency, which may be composed of one or several [other] currencies – all but ours – or with ours being a fraction of the total reserve.

“If” (please read: When) the United States loses the reserve currency its printing and current debt levels will equate to an ugly and very weak exchange rate. In short, food priced in some other currency will leave us looking like Libya.

You can go back through thousands of years of economic history and realize one fact: No country has ever printed their way to prosperity, all who have tried have wound up in hyperinflation, war or demise. How a guy can teach himself calculis, get into Harvard, become a professor at Princeton and NOT understand that – well it totally defies logic. The idiot was asked about the one time in our history that we had no debt. (Please don’t think we balanced the budget during the Clinton years – for you can’t debt (apply IOU’s in the Social Security Trust Fund) as income.) Andrew Jackson balanced the budget and wiped away our debt by using non debt based money. Bernanke was asked about this during a recent hearing and he scoffed at it – his merit? Because it happened before the Civil War.

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3 Responses to “U.S. Economic Death Spiral Into the Second Great Depression”

  1. […] U.S. Economic Death Spiral Into the Second Great Depression (xkorpion.wordpress.com) […]

  2. conspiracy research database…

    U.S. Economic Death Spiral Into the Second Great Depression « Media Guerrilla…

  3. Yes, this is a request, not an actual question, but I want intelligent input.

    I honestly want to hear legit, backed up reasons on why he is negative, not biased loads of heaping ****, because any retard can give me those. In advance to the expected answers I’m sure to get, I’ll refute them ahead of time so I don’t have to hear them. Here’s the “criteria”, if you will.
    1) Don’t talk about stem cell research, that is exceptionally beneficial to curing multiple diseases and disorders.

    2) Don’t talk about the whole gay marriage issue one way or another, it’s a hot topic, it’s not important with the war, health care, and economic problems, and honestly, it should be legalized because it does not ******* matter AT ALL, society isn’t affected by it. (I’m only aknowledging on previous experience)

    3) Pulling out of the wars is not here either, sorry, but no, a war is only beneficial to us when we’re constantly producing new weapons and such, and since our fighting force is so elite that we don’t lose so many tanks/helicopters/etc. it has few positives

    4) Finally, economics. If you talk about it, it has to be logical. I’m going to shoot down all the main complaints that I hear frequently right here right now.

    A) He’s employed conservative tactics, modeled after previous Republican presidents for the most part – meaning supply-side economics/reaganomics/trickle-down economics – which is essentially providing businesses with the cash in the hopes that it “trickles down” to the consumers, who reinvest in the market. That tactic has been employed by presidents like Coolidge and Reagan

    B) The DOW has gone up to over 10,000, so he’s hasn’t HURT the economy, but he has likely also had a hand in the revival, and here’s why-

    A main principal of economics

    C) Yes, the amount spent was excessive, but necessary. To pull out of the recession money had to be spent, and with one of this magnitude, it was the best way to do it, to reduce inflation and turn it into the new depression, because a recession is simply a “light depression” because one eventually can turn into a depression. And by spending it through conservative tactics, don’t you think that would please his conservative opponents?

    D) Now to economic terminology and his/government’s effect on the economy:

    for anyone who has studied Economics, Aggregate Demand should be familiar, so let’s breeze through this:

    Aggregate Demand (aka ALL demand) is fueled by 4 things: C + I + G + NX

    C: Consumption, by consumers, pretty self explanatory
    I: Investment, by businesses, again self explanatory
    G: Governemnt Spending, which became a concept after the Great Depression, and what put forth by Keynes. Keynes basically esatblished that in order for an ecnonmy in a downward spiral of decreasing consumption and investment, government spending was required to “divert the hurt” and pull the economy away from the “Keynesian Range” of the Aggregate Supply curve( of the graphed data) In today’s economy, governemnt spending may have saved us once again, as it usually does
    NX: Net Exports, considering America has few left, or at least, that anyone else wants to buy, it isn’t really a factor anymore

    So with that, we can assume that Obama’s G picked up the slack of the falling C and I, and NX stayed in the corner where it’s been since our industries became inferior to foreigners who made better products.

    THERE, so if you can argue with all of that, then you’re allowed to post

    5) Health-care is up for grabs, just not the bullshit about death panels, because if you believe in crap like that, you need to seriously consider thinking logically. Why a public option is bad or good is fine with me

    6) About the bipartisanship thing – he tried, he really did, but with Republicans filibustering, Democrats bitching – as it always is, reversing the parties when necessary, there wasn’t really a freaking point anymore was there?

    After that is all out of the way, let’s get some actual arguements on why he’s bad, not a bunch of bitching on how “he’s ruined the country in ways I can’t understand or explain, but he’s the worst!”

    P.S. I may sound pro-Obama, but I’m neutral, just so that can be established right now

    P.S.S. no Alex Jones references, the man is full of it, if you want the “truth” he preaches go to somewhere like Zeitgeist, because Alex Jones is like Glenn Beck of conspiracies – emotional and intentionally evoking fear and frenzy

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