posted on Jan, 27 2014 @ 08:44 AM
Financial bubbles are created (or allowed to happen) due to intense greed and short-sighted thinking.
They inevitably burst. The federal reserve's policies have basically destroyed this county's economy multiple times. However, in the past, we had
a manufacturing base to pull us back out of it.
This time, we got nothing but a service based economy which naturally collapses when people don't have the money to go out and spend it on
We have an insanely large debt bubble which HAS to burst. It's got nowhere to go. Upping the interest rate is the pin that will pop this puppy.
Then the carnage begins.
Huge amounts of debt with no way to pay is back will kill any economy.
The Fed doesn’t talk to you or me about these things. It calls Goldman Sachs or JP Morgan. And most of the Wall Street wealth of the last 30
years has been the result of leverage (credit growth). Take away credit and easy monetary policy and a lot of very “wealthy” people suddenly are
not so wealthy.
Let me put this in terms of real job growth (created by startups) vs the “job growth” of the last five years.
According to the National Bureau of Economic Research, startups account for nearly all of the US’s net job creation (total job gains minus total
job losses). And smaller startups have a very different perspective of debt than larger more established firms.
The reason is quite simple. When a small business owner takes out a loan he or she is usually posting personal assets as collateral (a home, car or
some other item). As a result, the debt burden comes with the very real possibility of losing something of great value. And so debt is less likely to
This stands in sharp contrast to a larger firm, which can post collateral owned by the business itself (not the owners’ personal assets) and so
feels less threatened by leveraging up. Thus, in this manner, QE and other loose monetary policies maintained by the Fed favor those larger firms
rather than the real drivers of job creation: smaller firms and startups.
For this reason, the Fed’s policies, no matter what rhetoric the Fed uses, are more in favor of the stock market than the real economy. That is to
say, they are more in favor of those firms that can easily access the Fed’s near zero interest rate lending windows than those firms that are most
likely to generate jobs: smaller firms and start-ups.
This is why job growth remains anemic while the stock market has rallied to new all-time highs. This is why large investors like Bill Gross have
applauded the Fed’s policies at first (when the deleveraging was about to wipe him out in 2008), but then turned against them in the last few years
as a political move. This is why QE is so dangerous, because it increases concentration of wealth and eviscerates the middle class.
Also, keep in mind that banks are fixing to incur big losses with their derivatives gambling. Note that in late October, our Representatives quietly
voted yes to HR 992 to remove the protections that were put in place after 2008 so that the taxpayers wouldn't be on the hook for derivatives losses
for big banks. In other words, their removal of this protection is the signal that we're fixing to get screwed badly.
"This bill would effectively gut important financial reforms and put taxpayers potentially on the hook for big banks' risky behavior,"
Peterson said. "The provision is a modest measure designed to prevent the federal government for bailing out or subsidizing bank activity that is not
related to the business of banking."
Peterson also noted that under current law, banks can still perform about 90 percent of the swaps hedges they were able to perform before
"So banks can keep 90 percent in the bank," he said. "But apparently this isn't good enough for some of these big banks, which is why we're here
today with H.R. 992."
Read more: thehill.com...
Follow us: @thehill on Twitter | TheHill on Facebook
Because the financial markets are incestuous messes and are all intertangled together, they'll all go down together. Some of the weaker ones will
topple first. But make no mistake, we're going down too.
I cannot help but feel that they will take us into a major war rather than face our wrath when we wake up one day and discover that our money is
nothing but paper with a dead president on it.