Looking For An Accident/Black Swan

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As we begin 2014, it is important to recognize the levels of INSANITY currently existent in the world  enabling us to understand the apocryphal nature of the times we live in and prepare ourselves to meet the challenges it represents.  The world is leveraged to an extent that has never before seen in history! Debt now masquerades as NOMINAL growth and REAL growth has ceased.  Headline economic reports are now nothing more than POLITICALLY CORRECT HOAXES to FOOL the public at large and mask the betrayal of the public by the leaders who hold the reins of power.  ECONOMIC Stagnation emerged after the 2008 Global financial crisis and in real terms has NEVER ENDED!

The greatest economic, political and societal collapse in recorded history is unfolding and has been doing so ever since the final denouement of partially sound money occurred at Bretton Woods II in August 1971 – thereby allowing governments, the financial systems and elites to substitute money printed out of thin air and politically correct/corrupt legislation for sound economic policies.  This process has been unfolding for 40 years and is nearing its demise. 
 

Growth now is a function of expanding credit, financing government and consumer consumption and calling it GDP.  The developed world has become Something for nothing societies are like locusts they eat everything right down to its roots, including next year’s seed corn.  They will issue debt until it no longer can be sold. They will print money until it is no longer accepted.  This process is well established and underway (think Venezuela, Greece, Argentina, this is the future).  To illustrate the LACK of GROWTH, look at this chart of GDP from Chris Wood at CLSA and subtract the deficit:
 

Most economists are PREDICTING accelerating GDP growth in 2014; you sure wouldn’t come to that conclusion based upon median family incomes since 2008;
 

Or the crash in PERSONAL incomes over the last year
 

As you can see, the only period that compares to this CURRENT CRASH in disposable income in the last 20 years was the crash of 2007-2009.  Do you think this reflects a robust economy in 2014 as predicted by the MSM and Keynesians?  To grow the economy, we must borrow money to finance spending and report it as GDP.  DEBT MASQUERADING as GROWTH!

Now, the developed world’s economies have been hollowed out (by runaway regulation, taxes and crony capitalism) and much of the wealth creation occurs in the emerging world.  Crony capitalists and their minions in government just attack the private sector where future growth and productivity must come from.  They carve it up and destroy the future creative destruction (aka “Capitalism”) which must occur for growing middle classes and economies.  The powers that be are MINTING fire hoses of NEW money, creating at least 8000 million dollars/yen a DAY (2 million million a year or 2+ trillion per year) to support the global economy, bankrupt sovereigns and financial systems.  Very little BAD can happen when they are printing and injecting this amount of money into the financial system and government coffers on a daily/yearly basis.

“Currencies don’t float they just SINK at different rates”

- Clyde Harrison

Asset-backed economies provide the ILLUSION of growth in the developed world driven by currency depreciation (ASSET prices rise/reprice as the purchasing power of the currency they are denominated in sinks) and never-ending leverage to fund consumption and HIGHER ASSET prices.  This is insane behavior, but now is the last refuge of the powers that be.

Insanity in individuals is something rare – but in groups, parties, nations and epochs, it is the rule. 

- Friedrich Nietzsche

The crisis will GROW and GROW and continue to unfold until enough people WAKE UP and people begin to take action to preserve themselves, at which point volatility will explode.

“Men, it has been well said, think in herds. It will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”  

- Charles Mackay, Scottish journalist, circa 1841

 

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Authors note: Tedbits is global Macro analysis PURELY through the AUSTRIAN lens and when this “Pandora’s Box” series concludes I will have extracted you from the MATRIX of UNREALITY and cut through the ILLUSIONS of the Keynesian world most people live in.  YOU will KNOW the truth and SEE the unfolding collapse of the developed world unmasked from political, main stream media and monetary illusions.  In coming issues will be covering, stocks, bombs er bonds, something for nothing societies, energy and natural resources, commodities, precious metals and currencies, policies of insolvency, G-8 economies,  China, suppressed volatility, politically correct and practically incorrect economic stats, demographics, debt, deflation, inflation, etc.  All black swans: which one will land first?  Don’t miss an issue as subscriptions are free CLICK HERE.

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We are nearing the endgame of this global insanity and the opportunities are as great as the pitfalls. The unfolding CHAOS will escalate and escalate as waves of insolvency strike fiat currency and credit systems over and over until the reorganization and reset takes place in the near future as Mother Nature forces man to yield to REALITY.  A King Canute moment LOOMS!

What is the REALITY I speak of?  It can be summed up in THREE words: COMPLETE SYSTEMIC INSOLVENCY.  The world is locked into debt spirals where debt just continues to compound and growth has become a STATISTICAL fiction.   They are simply unpayable and inextinguishable PROMISES TO PAY (Bonds and the IOUS /“currencies” in which they are denominated: IOUS denominated in IOUS) at every level of Government, and the FIAT Currency and financial systems are their circulatory systems. 

Add to this the MORAL and FISCAL insolvencies which has evolved throughout the developed world governments who are SOCIALIST in everything but name only. 

“The American people will never knowingly adopt socialism. But, under the name of “liberalism,” they will adopt every fragment of the socialist program, until one day America will be a socialist nation, without knowing how it happened.”

Socialism is MISERY SPREAD WIDELY as economies collapse under its policies.  It is the transfer of wealth from the poorest (aka the private sector, individuals and small businesses in particular) among us to the central governments and their special interest constituents as THEY are the most defenseless to their policies. In other words, you and me.

“Socialism is a philosophy of failure, The creed of ignorance, and the gospel of envy, Its inherent virtue is the equal sharing of misery..”