The Deep State

Posted on October 13, 2015 by MN Gordon

The Deep State
By Doug Casey, International Man

I’d like to address some aspects of the Greater Depression in this essay.

I’m here to tell you that the inevitable became reality in 2008.  We’ve had an interlude over the last few years financed by trillions of new currency units.

However, the economic clock on the wall is reading the same time as it was in 2007, and the Black Horsemen of your worst financial nightmares are about to again crash through the doors and end the party.  And this time, they won’t be riding children’s ponies, but armored Percherons.

To refresh your memory, let me recount what a depression is.

The best general definition is: A period of time when most people’s standard of living drops significantly.  By that definition, the Greater Depression started in 2008, although historians may someday say it began in 1971, when real wages started falling.

It’s also a period of time when distortions and misallocations of capital are liquidated, and when the business cycle, which is caused exclusively by currency debasement, also known as inflation, climaxes. Continue reading →

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Potato Sack Economics

Posted on October 9, 2015 by MN Gordon

Fiscal policy, as opposed to monetary policy, is more readily understood by the general populace. Income taxes, budget deficits, the national debt.  These are all tangible things the average working stiff can grasp a hold of, if they care to.

The consequences of ZIRP or QE, however, are less obvious to the casual observer.  They experience the wild booms and busts of central bank caused price distortions yet never connect the dots back to the Fed.  They may falsely condemn capitalism, and never scratch below the surface where the Fed’s money and credit games are lurking.

The industrious wage earner may also find that, despite working harder and harder, their lot in life never improves.  In fact, it may even regress.  Still, many won’t recognize heavy handed monetary policy as factors for their disappointment.

The recent college graduate, making a subsistence wage at a franchise coffee shop, buried under $50,000 in student loan debt, may be keenly aware that something is radically wrong.  How come the cost of school is at such disparity with the value it provides, they may ask? Continue reading →

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More Monetary Policy Madness

Posted on October 6, 2015 by MN Gordon

Something extraordinarily uncommon is happening.  Something that hasn’t happened since 1988…back when the U.S. federal debt was just $2.6 trillion.

According to the Institute of International Finance, wealth is not flowing into emerging markets for the first time in 27 years.  It’s flowing out.  In fact, net outflows from emerging markets are projected at $540 billion for 2015.  What’s going on?

In short, investors are pulling money out of emerging-market funds at a faster rate than money is flowing in.  Investors see stormy weather in places like China, Russia, and Brazil and are looking for safer harbors.  But that’s not the half of it.

Technically speaking, emerging market economies are on the fritz.  The MSCI Emerging Market Index is at a six year low.  What’s more, the strengthening U.S. dollar, and conversely weaker emerging market currencies, makes the dollar based debts of emerging market economies more expensive.

Emerging market economies are already overloaded with debt. Continue reading →

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Black Swan Fledgling – The Debt Crisis Takes Flight

Posted on October 2, 2015 by MN Gordon

The debt based money system plods along according to plan.  The Fed offers unlimited credit.  Public and private entities borrow and spend it.

One of the more popular delusions of contemporary culture is disbelieving the money will ever have to be repaid.  There’s no logical thesis that we are aware of to support this misconception.  But it prevails across the general populace all the same.

Day by day, however, the bills come due.  They pile up like wrecked autos on the 405 freeway.  Over the last 30 years or so they’ve stacked up beyond what the economy can possibly support.

The breaking point was reached in 2008.  We are currently living through the interim period of suspended disbelief.  Many aren’t quite ready to accept their new fate.  This wasn’t what they’d bargained for.

Scientific management of the economy, as executed by the Federal Reserve System, was supposed to perpetually inflate away each generation’s debts. Continue reading →

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