Sunday, May 25, 2008

The Final Monetization

May 25, 2008

Published on: |

Debt is control only when it is collectible.
If the debtor has the legal or other means to resist
"repayment", debt is meaningless.

I've been thinking of this editorial opening for quite some time. I wanted it to reflect on my stance and pursuit to help Humanity at my own level. Bad economics being a great source of divide, I suddenly recalled the story of two pals of mine, in their late 40s, who might be heading for a divorce as I type this. Three years ago, their goal was to pay back these (damn) credit cards and they fully succeeded. They are not financially secure according to the mainstream standards: they live from paycheck to paycheck, even though being practically debt-free, and have a 401k (which could evaporate at any moment in a stock market crash). However for now is not bad at all considering that 80% of Americans have debts up to their eyeballs -- the U.S Treasury included.

So what happened? Well, at the beginning of the housing boom, they didn't have enough for a down payment and the husband lamented, thinking that he was about to miss the American Dream. There was also lots of peer pressure since he works in an environment of highly paid executives representing the top 15% of the society and of which he doesn't belong to. It soon became an obsession: home ownership would never be for him. He was born a failure. The despair surely got worse when in the midst of the boom-mania, he was strolling down the streets with his wife looking at the new condos being built. Mesmerized and with a sad smile he explained for how much money those apartments were sold or flipped, assessing restlessly the equity lost for not taking part in this mega-speculation that was supposed to be endless.

From the beginning, she didn't buy the exuberance and it turns out that current events prove her right. Today the stories about the housing market are unraveling, although the media are still gravely underreporting the situation. So, every time her husband was hypnotizing himself with ever-increasing home prices, she made a duty to lecture him and email him as many enlightening pundit's views as possible to make her point. Even GE's Immelt declared Housing Great Depression a reality. In despair she then armed herself with the U.S Constitution, which prohibits central banking as drafted by the Framers... The attempts to make her husband come to his senses remained futile. Her 'out of control greed' theory was first ignored then mocked and badly trashed. Remembering dotcom bubble stories, she wondered if the housing-mania was not mind-controlling him in the same way.

The justified gloom and doom data forwarded to him daily got on his nerves. He became irate, accused her of being obsessed with 'an economic end of days'. He used guilt in turn, adding that if they couldn't afford to buy a home, it was because of a lack of income whatsoever. The blame went on and on: instead of studying newspapers data, she should use her energy to come up with real solutions to earn more instead. Feeling rejected and misunderstood, bitterness fed her motivation to make her husband comprehend the dangers of denial.

His obsessions versus hers quickly became a philosophical issue; and this is precisely why they see a counselor today. It is very likely that the housing mania was a mere catalyst after all. Of course, they could have had enough for a down payment if not having maxed out their credit cards in the first place... but it recently surfaced that predatory practices are too pervasive in the 'plastic industry'. Likewise, your life can easily become hell if you are not fully informed. They simply racked up so much credit card debt because companies had raised their debt ceiling systematically over a 5 year-period. To be fair, she remained more or less 3 years without a steady income, but nonetheless this didn't prevent them from changing their spending habits. Until reality hit her like a freight train 5 years ago, they had copycatted the widespread mantra of 'shopping til you drop'.

"When you're in a hole, stop digging." David
Walker, former U.S. Comptroller General and star of
the documentary ,I.O.U.S.A

ps: if you have similar stories to share, I'd be pleased to hear from you.

Greed Run Amok
There are many columnists and bloggers out there doing an excellent job at reporting the real numbers and which guide my rational musings and insights. In this time and place, my task is to connect the dots. So now let's delve into the heart of utterly staggering matters, which, I hope, will be the centerpiece of the next intellectual revolution so desperately needed.

How will it end: with deflation or hyperinflation? Although there are two trains of thoughts debating those different outcomes, for the common man it doesn't really matter anymore. It is going to be wrenching beyond belief. Period. When economic laws are skewed, the rest generally follows. Average people do not know how easy it is to abuse their emotions with fraudulent economics and turn them into puppets at their own expenses. As an example I will cite the inflation quagmire, which shows that middle class income has regressed since the late 70's. To be more specific, the real median family income more than doubled from the late 1940s to the late ’70s. It has risen less than 25% in the three decades since. People work more and more - for less and less. Meanwhile the political leaders swear in the name of democracy, vow to fight unemployment, protect women's rights and implement social programs for the poor. Alas, it is now proven that numbers speak stronger than words. As you read this, people are barely surviving on credit cards to meet basic daily expenses. This ticking 'Time Bomb' may soon be soon the ground for a credit card national relief campaign arguing in favor of another government intervention.

"Other sources of money for a lot of Americans are
drying up," said Dick Reed, regional counseling manager
of Consumer Credit Counseling Service of Greater Atlanta,
who sees more clients with mounting credit card debts
these days. "Consumers just don't have a place to go
to get money. They are digging themselves into a deeper
hole not only to pay for normal living expenses, but to
make minimum payments on outstanding debt." - CNN/May 9

Yet voters blatantly choose to ignore the warnings... Candidates' Economic Plans Don't Add Up an ABC headline reads. The rampant economic illiteracy took them a step closer to the abyss as the dreadful 'stimulus' check appears to cost more than it's worth. The Economic crisis is ruining people's lives, the media has failed to tell the full story, explains Danny Schechter whose investigation corroborates that of Joseph Mason, an associate professor of finance at Drexel University's LeBow College of Business, who sees more bank failure ahead:

"At this point in the crisis, you can't stop
bank failures... You move through the problem.
You don't avoid the problem. It's too late to wait
and hope that things get better

Greed has indeed run amok at all levels of the global pyramid, hence the trickiness to explain what is really going on. Take the housing madness for example: the buyers would have done everything they could to get a piece of the pie. And this is something brokers grasped quickly. In turn brokers pushed more borrowers to lie (and they are still at it), Lenders were prompted to mislead and ratings Agencies became paralyzed by the potential economic damages. We may curse white-collar crime as much as we can, but it should be acknowledged that it all starts with the consumers and a 'contagion' that begins with an epidemic of 'Cheap Money'. The financial elites are well aware of this and under the guise to save their shareholders, they have just to come up with a speech in favor of economic stability and the financially illiterate crowds applaud. In other words, millions of taxpayers who didn't know anything about these complex and fraudulent securities (that imploded along with the U.S. housing market) are now mainly own them. If those assets lose more value, taxpayers stand also to lose a greater purchasing power - talk about a rescue plan!

The tally could rise further if another
bank finds itself in trouble, or if the U.S.
government steps in to prop up another malfunctioning
credit sector, such as student loans. "Taxpayers are on
the hook if it goes badly," said John Cochrane, a finance
professor at the University of Chicago's business school.
"We've been doing that for a century." - Reuters/April 4

Although the tide is changing, it remains to be seen how far lawsuits can go, the probe at Moody's could lead to something revealing. If such an institution is being investigated for having awarded incorrect triple-A ratings to billions of dollars whose value come close to the near junk status, it is time to leave the Titanic. If you are a little skeptical, just know that we're only one quarter through the sub-prime crisis and that the threat of Alt-A that is at least three times bigger than sub-prime. Sleep tight?!

Anyone starting to investigate the global monetary system honestly will notice at first glance that there is indeed something repellent to the mind. Just kind of like an intuitive or esoteric impression to say the least. But it is the main task of the Keynesian alchemy to appear magical to the neophytes - and to discourage them at the same time. Fractional banking represents a system as a convoluted web where the blame games rule. Although the culprits are countless, the least culpable ones remain the central bankers, which are given the status of sainthood. When things go bad, they quickly apologize about their human imperfect nature. In other words, our financial matrix is a regulatory illusion . It is like Greenspan confessing to being unable to recognize market bubbles until they have popped, but that it is the Fed's role is to mop up after bubbles burst. Meanwhile their 'errors' impoverish and kill millions of people on a regular basis. How will Greenspan be judged when masses will finally hold him responsible for the disappearing $6 trillion in housing wealth threatening the hedge funds and derivatives with reactions in chain of multi-systemic implosions?

For the investors, the buck stops with taxpayers and in their minds, bailouts will continue when needed. But among the insiders, it is the 'Great Depression Part II'. Bonuses will be slashed by up to 90% this year. Many of those brokers and bankers who have lived beyond their means will have to let their Mac Mansions go. Boston financial research firm Celent LLC predicted at least 200,000 banking job cuts nationwide over the next 12 to 18 months. In the immediate future 36,000 lay-offs threaten Wall Street alone! Wait until you see Manhattan after the elections, the city that never sleeps will have to purge its excesses. I am willing to bet with you that thousands of retailers, restaurants will have to file for bankruptcy. Starbucks already feels the pinch, blames the meltdown of housing market for its bleak outlook.

The very scary thought is that the majority of the population is unaware that the Fed. Reserve has run out of ammunitions. John Crudele from the NYPost summarized the numbers pretty well. He noticed that the Commerce department reported the same 0.6% growth reported for the fourth quarter of last year while showing the real inflation disaster, asserting that the economy is contracting since the last quarter of 2007! Additionally, if you recall, a previous column of mine (Global Junkification) also mentioned why this monetary expansion is being more than offset by credit contraction.

Central Banks cannot keep up with the billions being erased from their books as the many other sub-banks are tightening lending. The other day the Bank of England reminded banks to lend while the Building society mortgage loans had fallen 68% as of May 3rd. How realistic could it be, as the British population has more debts than the country's gross domestic product? By comparison in the United States, personal and mortgage debts amounts to $13.8TN, slightly less than the country's $14TN G.D.P, the NYTimes stated last March ... The two countries, once considered as the wealthiest in the world, are just doomed to default. Duh!!!

We currently live in a world that is so illusory and treacherous that it is barely comprehensible for anyone who hasn't attended a sound money crash course to start with. Last month, for example, people were mesmerized by the Bernanke throwing money at the bankers - to bail them out - in order to save the world from collapse. It is not without a reason that contrarian press nicknamed Greenspan' successor as 'Helicopter Ben' since the day he advocated for the rescue of the system with "helicopters stuffed with money". The global slump of 2008-09 has begun as poison spreads, as Ambrose Evans-Pritchard puts it. According to him, there will be no "reset Armageddon". But what exactly one or two years difference does it make considering that the least alarmist reports point to a debacle around 2010. The upcoming mega monetary contraction is unstoppable. "The Great Depression? We did it... very sorry, won't do it again", Copter Ben acknowledged in 2002.

Fortunately on, we can see that not all the citizens are clueless and ask themselves why should taxpayers have to bailout reckless lenders and borrowers? All this monetary infusion isn't free: Congress has concocted a $3,000 tax hike per household for the 2009 Federal Budget. The Heritage Foundation says that it completely ignores the impending explosion of Social Security, Medicare, and Medicaid costs. So if the outcome remains as dire, why this increase? It is just like the so-called tax rebate, which is a debt in itself and thus bears interest, in due time it will also add to the already out-of-control inflationary pressures. As of May 12, the WPost investigated the growing deficits that threaten pensions, mentioning a shortfall that could soon run into trillions of dollars:

State governments alone have reported they are already
confronting a deficit of at least $750 billion to cover
the cost of the retirement benefits they have promised.
But that figure likely underestimates the actual shortfall
because of the range of methods they use to make their
calculations, including practices that have been barred
in the private sector for decades...

The Superclass Wants You Poor And Stupid:
Since my previous column, the world has witnessed several tideal waves of near-apocalyptic news but in the wake of the Bear Stearns demise the common man exuded a sigh of relief when hearing that the monetary powers did what they had to do to prevent the world economy from going under. Two days after the intervention (which was decided during a luncheon at the New York Fed before the rescue), the pump and dump machine allowed the Dow to shoot up more than 400pts in one session. In the news, financial journalists marveled at the resilience of the stock market players rallying on optimism that the crisis had hit a bottom and that the housing market is on its way to recover.

Like I have said countless of times, there is no place to hide anymore. The three Credit Rating Agencies and The Securities and Exchange Commission, SEC, have joined the rank of the most machiavellian and infamous organizations on earth. First, MarketWatch reported as of 04/23 a fact that have kept many awake at might among the "Superclass". You see, this super-cop organization dismissed a congressional request to divulge why it cut off an investigation into whether Bear Stearns Cos. hurt investors by improperly determining the value of complex debt instruments. Then you have Roger Lowenstein who wrote an outraging overview shredding the light on S&P, Moody and Fitch and why their (intended) failures to protect consumers and investors alike. On the top of that, it now appears that financial institutions have 'enormous losses' from bad loans they haven't yet recognized -- ?!

"Superclass: The Global Power Elite and the World They Are Making" is also the title of a book written by David Rothkopf who has identified "just over 6,000" people who match his definition of the superclass (with the help of his researchers)- and described its ability to rule the lives of billions of people worldwide. That very Superclass operates now like a giga-world mob enterprise readying itself for the 'final monetization' which about transferring most of the wealth into their hands. How did they succeed, would you ask? That is quite simple to be honest: they only have to validate the fidelity of their shareholders with profitable returns, and this in turn ensures their positions at the top of the world food chain. Doing just that is enough to give conspiracy theories credibility since it is the power game that coordinates and aligns their moves'.

The words 'conspiracy theories' no longer are regarded as a terminology for wackos, even the Middlebury College (video), and the Carnegie Endowment For Peace are welcoming D. Rothkopf's lectures about the world power structure. It goes without saying that having a superclass member among one's pals, can be extremely beneficial. So it shouldn't come as a surprise to read in the London Times (as of April 27) that the richest 1,000 people in Britain saw their wealth quadruple under the 11 years of Labour's regulation. It is useful to mention that the Labour is left-leaning party. Incredible, isn't it?

If on one hand most political agendas inherently bank on a fear factor, on the other hand, and oddly enough, 'The sky is falling' does not sell well among consumers and the politicians alike. The first because they are confident in the powers-that-be (TPTB); and the latter because they cannot acknowledge the facts without running the risk to see their lies exposed, so they are systematically prepared to obfuscate data. While social upheavals are scary to foresee for the majority, the experimented readers today have become survivalists. They know that times are about to change radically - and forever. To put this in perspective, several weeks ago, a relative even called me a 'parrot' for agreeing with such dire predictions. I shook my head in disbelief and wondered if the all the gloom and doom in the Universe was not rather the result of denial rather than fear. That something very bad is going to happen to the world economy is shared by so many mainstream pundits -- but even the 'Superclass mogul Soros' (who warned that a 'systemic failure' may be upon us) is being shrugged at.

Take the global food crisis for example and whose ramifications are so diverse that the root causes are never truly considered. While 'The Last Bite' is an interesting read, it doesn't link the impact of debts which is highly inflationary and thus skews production/demand alike in a way that is difficult to diagnose. That is called the 'wonders' of Keynesian economics. In my editorial 'Hey Buddy, Can You Spare $ 1,000tn', I mentioned the current global leverage is more than 4 times the world's GDP. Talk of banking interests running wild and eating ALL profits. Now let's throw into the mix the 'buy low, sell high' mantra and we have the recipe for Armageddon-like food shortages. Ellen Brown wrote an excellent piece which will help grasp how and why speculating on food is in fact betting on hunger! Another unintended consequence is that it could backlash severely under the pressure of protectionist measures that would only make the matters worse. The 'velocity of monetary interactions' makes it impossible for the big bureaucracies to adjust... So was globalization a Decree Mass Death by Starvation all about?

The Money Cartel Inflicts Absolute Misery
One of the greatest ironies is the governor of the Bank of England criticizing the remuneration and bonuses offered by London-based financial institutions. This statement could fit any world Financial Mecca. But playing casino with whatever we value the dearest for the sake of unlimited enrichment creates awful wealth gaps turning humanitarian organizations into 'useless and corrupted enterprises'. To make a point, let's consider the following stories of Chinese children sold "like cabbages" into slavery ... and the race for biofuels killing wildlife - Hey Al Gore, Greenpeace and U.N, where art thou?

And they are still at it. More recently, Goldman forecast crude-oil price to spike up to $141, and JPMorgan bets on $200. Yep folks, they are blowing an oil bubble. The Money Cartel (bourses, ethanol and oil and gas companies) wants you to think that that we are running out of oil. Now if you are pro-peak oil, what do you think of this: OTC says that $100TN is needed to rebuild energy. So not only our lives were in the hands of 'smart guys' who obviously failed to adapt very badly and who now want us to pay for their missteps that are going to squeeze our wallets until the last drop? There is no other definition for this than 'modern serfdom'.

At the best that the peak-oil exists or not is irrelevant because the Solar Revolution and the end of 'Big Energy' are right around the corner. The Money Cartel is dying but going to take us with it. History could repeat itself again and engineer and new Feudal Superclass if events and their causes are not interpreted properly. Sure, after having read this column some still may think that the world will never change and that rich people are in fact much happier than poor people... but how happy could one be in a world where only 10% of the population depend on economic slavery?

Global financial markets have become “a monster” that “must be put back in its place”, the German president has said, comparing bankers with alchemists who were responsible for “massive destruction of assets”.... “The complexity of financial products and the possibility to carry out huge leveraged trades with little [of their] own capital have allowed the monster to grow…also responsible [is] the grotesquely high compensation of individual finance managers.”... ( 05/15)

The problem, you see, is that the top 10% represent those people and their closest cheerleaders. How would the crowd react when hearing that the farm subsidies given to Paris Hilton and her family contribute to the deep impoverishment of developing countries? .. so what do we do now?

As it stands, there are four vital arguments against government that have to be dealt with if we really want a better world. Maybe at some point when people will have understood that power and money are tricks to keep masses enslaved, that Mother Nature has made sure to set a ceiling to power and wealth, all of which makes it impossible to take over unethically, maybe... the abolition of money as a concept will appear as the only viable solution. Until then, we'll have to endure the 'Final Monetization' and abandon Mankind to its own destiny.


At 10:29 PM , Blogger yogamom said...

Blowing an oil bubble? The solar revolution? Are you a geologist, or a person that knows anything about sience at all? Peak oil is not about "running out" of oil. The convergence of over population, peak oil and climate change are mathmatical, scientific facts that are complex and rarely looked into let alone understood by those that are in the "economic" studies. While I am in total agreence about the crappy superclass pushing around all us little worker bees, I think you should maybe do some research and see if there are any credable ways to discount this earthly phenomenon we've coined "peak oil". In true kindness and concern, you seem to be highly intelligent, I emplore you to look into this further. Thank you for your time.

At 2:08 AM , Blogger SB Kayser said...

thanks for dropping by. I am NOT a pro-peak oil theorist... we are NOT running out of oil. At the best it is a man-made shortage (thus fake) linked to unlimited greed -


At 3:58 PM , Blogger Major Zed said...

Did you even read yogamom's comment? Peak Oil theory is NOT about running out of oil. Clearly you do not even understand the theory, so your dismissal of it without factual basis is irrelevant.

Why don't you head over to Jim Puplava's Financial Sense site. He follows Austrian economics, he is a libertarian, but unlike you he has read dozens of books about the energy industry and he has been writing and speaking about Peak Oil for *years*.

At 9:03 AM , Blogger SB Kayser said...

Did you even read yogamom's comment? Peak Oil theory is NOT about running out of oil

RE: hello... peak oil means peak production (no matter the so many reasons behind it), and as described by the mainstream consensus. I know the site you mention though and it is a great site.

But further, did you read me? I do not endorse anything that is taking the oil production and industry into account because the Oil Era is coming to an end. Period. I look beyond that: nanotech, solar, etc... so based on that, everything said will be proven wrong eventually.

If you are posting just for the sake of bashing, please find another blog.

JUST google "Engines Of Creation" by Dexter, it is a free e-book, which will explain you why the oil era is going to take us down with it as new powerful energies are being discovered.

At 1:54 PM , Blogger Unknown said...

Well, SB, your blunt calling a debt-spade a debt-spade is remarkable once again! And the UN-DEBT.NET is remarkable, too, even though I'd prefer to see an alphabetical order there.

Just thought I'd let you know that in the UK I'm targeting the Treasury Select Committee with an online petition. Ironically, it is on

The "End the Fed" demos are very promising since they are accompanied with web activities. So let's see where and how evolution will take us.

With best wishes for more and more power to your blogging elbows,

Organiser, Forum for Stable Currencies

At 1:32 PM , Anonymous Anonymous said...

Bank of America and Mr. Higgins missing $millions, It can happen to you, my fellow Americans

More info:


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