The Madness Of Crowds And The Great Insanity (the coming economic collapse)

Zerohedge ^ | June 8, 2014 | Ty Andros

[Southack]

You don’t want to hear this, and you’ll likely go through the 5 stages of grief when I tell it to you, but there is no economic collapse coming in the U.S. (Europe could be different, though).

QE is winding down in the government. In the private sector, the U.S. is under-going massive economic revolutions such as:

Oilfield fracking,
Hyper-farming,
Web 3.0,
Cloud Computing/storage,
Big Data,
Entertainment Data Streaming (e.g. HBO Go and Netflix),
the private Space Race (e.g. Rutan’s Virgin Galactic and Musk’s SpaceX),
Electric cars (e.g. Tesla),
3D printing,
DNA Programming for medicine,
Genetically Modified (GM) seeds,
and Crowd-funding.

These economic revolutions are bringing vast prosperity to those involved, and they are changing the way that the world works.

Now, why do I think that you are going to go into Denial and Anger and the other stages of grief based on the good news that I point out above?

...because I think that the people who are depressed about the current economic revolutions are those who are under-employed.

No one wants to blame their self for making too little money. It’s always easier to blame the government or a “bad economy.”

Likewise, people who are under-employed think that everything costs too much. Cars are too expensive and groceries “keep going up in price.”

Sigh... You’re missing out on levels of prosperity and wealth never before glimpsed in all of History.

The article above is clueless. Anyone unfamiliar with the economic revolutions that I just listed is...clueless.

Shape up!

There’s wealth to be plundered for those who can adapt.

[RC one]

Where does the US government spend FRNs?

Wars. jet fighters and other military equipment and defense projects. welfare. various government operations. etc

That's interest the Treasury owes on bonds they sold. Not on FRNs.

The fed purchases plenty of those securities. Again, any revenue generated by bond sales represents debt to be paid by the US government and that means the US tax payers. Every dollar in circulation represents an IOU. That is the nature of our system.

No it isn't.

Your government disagrees.

In 1936, Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, stated:

"If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon."

In other words, folks, every US dollar represented in the denomination of Federal Reserve Notes, in circulation today, represents a debt owed to the Federal Reserve System. The Federal Reserve System only issues money when a rate of return is paid on that money to keep it in circulation. And so, when the Federal Reserve continues to infuse additional dollars into the monetary system, such as it is doing in amounts previously unheard of, each additional dollar in circulation yielding a return on its par value to the Federal Reserve System, that return must come from somewhere. That "somewhere' is your pocket and mine, and anyone who holds Federal Reserve dollars. Since the money to pay the interest back to the Fed System is never created, interest to the Fed System can only be paid by removing enough Fed Dollars already borrowed into circulation to pay the specified interest rate. But the principle owed is not removed! And so contrary to what one might believe, bank interest is never paid out of a debtor's assets. Bank interest is paid by borrowing more funds from the Federal Reserve. You may not be the one borrowing to pay the interest, but SOMEONE is. In this system, the American economy, over time, is being owned more and more by the Federal Reserve, and less and less by private equity.

couldn't have said it better myself.

[yorkiemom]

I don’t know about Japan’s economy. Have they been printing money or is the economy growing?

The definition of inflation is more money in the system. Which leads to higher prices. Deflation is the opposite. It’s cause and effect, but most people think the effect is the definition.

[Kartographer]

Preppers’ PING!!

Hat tip to yorkiemom for the heads-up

[bubbacluck]

Don’t forget their almost daily dire predictions of global nuclear disaster via Fukishima.

[Kartographer]

It is your choice you can prep or you can stand around on a bridge waiting for FEMA to bring you a bottle of water, a MRE, a warm blanket and a kiss for your boo-boo and maybe you can even get your picture as you stand there on the national news.

The world is dry tinder just awaiting the right spark.

So listen to what the bible says: A prudent man sees danger and takes refuge, but the simple keep going and suffer for it. NIV Proverbs 22:3

Selco covers this in this article many times people just can not except that a breakdown is occurring even as they watch it happening before their eyes. Why don’t they realize it? It’s caused by a condition called ‘Normalcy Bias’ a mental state people enter when facing a disaster.

It causes people to underestimate both the possibility of a disaster occurring and its possible effects. This often results in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of governments to include the populace in its disaster preparations. The assumption that is made in the case of the normalcy bias is that since a disaster never has occurred then it never will occur. It also results in the inability of people to cope with a disaster once it occurs. People with a normalcy bias have difficulties reacting to something they have not experienced before. People also tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.

A good article on ‘Normalcy Bias’ is on our own ChocChipCookies Blog The Survival Mom:

http://thesurvivalmom.com/2010/12/29/normalcy-bias/

You either prepare and stand on your own beholden to no one or you become dependent on others to provide your basic needs and become their ‘serf’. Me I don’t want to be beholden to anyone for providing what is needed for me and mine. I certainly don’t want to have to kiss some ‘gubberment’ third class bureaucratic to try and coax some help from them, I don’t want some ‘jack booted’ thug herding me in line and telling me where to stand, sit, eat or sleep. And last but not least I don’t want to be shut up in with a bunch of ‘zombies’ and have to worry about not only trying to get basic necessities but having to fight to keep what I manage to get.

Just getting started or an old hand you might find my Preparedness Manual helpful. You can download the manual at:

http://tomeaker.com/kart/Preparedness1j.pdf NOTE! THIS IS A FREE DOWNLOAD. I DO NOT MAKE ONE CENT OFF MY PREPAREDNESS MANUAL!

For those of you who haven’t started already it’s time to prepare almost past time maybe. You needed to be stocking up on food guns, ammo, basic household supplies like soap, papergoods, cleaning supplies, good sturdy clothes including extra socks, underwear and extra shoes and boots, cash (I myself have been putting up change for the past few years both for the metal content and the fact that using change places to make what purchases you can will move you down the the list of possible marks during shtf), tools, things you buy everyday start buying two and put one up.

As the LDS say “When the emergency is upon us the time for preparedness has past.”

Again I like to recomend FReeper’s ChocoChipCookie Blog The Survival Mom (Please Blog Police let this one slide!) Where you can get lots of useful information like:

http://thesurvivalmom.com/2011/11/20/8-morale-boosters-for-any-worst-case-scenario/

http://thesurvivalmom.com/2010/02/02/survival-priorities-the-rule-of-three/

And More

Also there is Ferfal’s Blog a survivor of Argentina’s first collapse:

http://ferfal.blogspot.com/

And there is Selco’s Blog a Bosnian War survivor at:

http://shtfschool.com/

“There is no greater disaster than to underestimate danger. Underestimation can be fatal.”

[yorkiemom]

Five....I think I have two years’ worth. And am dreading moving it cross country... but happy to move back to the U.S.

I’ll start on the rest when I get settled. And get a basement. I’ve wanted one for so long!

[Kartographer]

Fukishima heads everyday close to the edge. Unit fires still occurring thousands and thousands of radioactive water leaking out. Will it be a end of the world event? Doubtful. Will many people end up dieing early from the radiation it’s leak almost certainly.

[Toddsterpatriot]

Where does the US government spend FRNs?

Wars. jet fighters and other military equipment and defense projects. welfare. various government operations. etc

The government spends FRNs on those things? What, are you 100 years old? LOL!

The fed purchases plenty of those securities.

Your original graph didn't show that.

Every dollar in circulation represents an IOU.

Not a Treasury IOU.

If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation.

LOL! Bonds, notes and bills would allow currency in circulation without bank loans. Think commercial paper and money market accounts.

Federal Reserve Notes, in circulation today, represents a debt owed to the Federal Reserve System.

FRNs are a liability of the Fed.

The Federal Reserve System only issues money when a rate of return is paid on that money to keep it in circulation.

Maybe you can tell me the rate of return paid on my $20?

And so contrary to what one might believe, bank interest is never paid out of a debtor's assets.

That's funny. When I pay my mortgage, I pay using my assets.

couldn't have said it better myself.

That's not saying much.

[Toddsterpatriot]

I don’t know about Japan’s economy. Have they been printing money

Apparently. Yet they've suffered from deflation for decades.

The definition of inflation is more money in the system.

Not the modern definition.

[Kozak]

“Printing money doesn’t create debt.”

Wrong.
When the Fed prints money it buys US Treasuries with the made up money to cover the issue. Those treasuries eventually have to be payed back by us tax payers. That’s debt.

[AllAmericanGirl44]

bkmk

[Kozak]

See Europe.

[driftdiver]

Wow you’re smart. So what’s your take on the US economy?

[laplata]

ping (I’m curious, too).

[Toddsterpatriot]

“Printing money doesn’t create debt.”

Wrong.

LOL!

When the Fed prints money it buys US Treasuries with the made up money to cover the issue.

See, the debt existed before the money was printed. Now go forth, and correct that error.

[Toddsterpatriot]

In Europe, does “Every type of bank account [] have money withdrawn in a set schedule”?

[Toddsterpatriot]

It won’t recover until Obama [and his clueless meddling] leaves office.

[RC one]

The government spends FRNs on those things? What, are you 100 years old? LOL!

You're obfuscating the argument because you know you're wrong. Numbers on a computer screen still represent federal reserve notes and federal reserve notes, be they actual paper or characters ion a computer screen, still represent a debt owed to the federal reserve bythe US government/US taxpayers.

Being rude, dicky, and complicated doesn't make you right I'm afraid.

Your original graph didn't show that.

It wasn't intended to and that doesn't change the facts either.

couldn't have said it better myself.

That's not saying much.

Again, being rude and dicky doesn't help your case. These were the words of a former credit Manager of the Federal Reserve Bank of Atlanta, one Robert H. Hemphill. You seem to think you know more than him. I don't think you do.

The facts are clear, any and all federal reserve notes in circulation, be they actual paper notes or characters on a computer screen, represent a debt owed to the federal reserve banking cabal by the tax payers of the Unites States. All legal tender originates with the federal reserve bank and they don't just let us use it for free.

Congress requires money to pay bills. When taxes are insufficient to cover their liabilities, they issue a treasury note to the federal reserve bank WHICH IS AN IOU AND which then creates, via smoke and mirrors, circulating federal reserve notes.

This is nothing new. How it all works is well documented.

Bottom line: you're wrong.

[Kozak]

The Treasury ISSUES treasuries just for that purpose.