Note . . . on Tilt, a word

Note . . . on Tilt, a word to the wise

 

Japan-bonds5-13

Interest rates in Japan only have to rise from 1 percent to 3 percent to consume all Japan’s tax revenues to cover just interest on the debt.   What you’re looking at is exponential growth to a take off.

Shinzo Abe’s attempt to reflate through basically devaluation is out of character for the cautious Japanese.  More likely, Mr. Abe was chosen to be the trigger to bring down the international finance house of cards.  What economist in their right mind would seek to stimulate when their debt/GDP ratio was 230 percent. 

Was Mr. Abe asleep watching all the Quantitative Easing in the U.S. that has not restored growth?  No.  The poor fella is a poodle to the international financialistas now calling the shots around the globe.  Collapse Japan and the contagion will quickly spread producing the elixir of chaos from which will dawn a new international currency backed by commodities. 

New formula: own all the commodities and resources to control the value of money and you will rule the world.  Why certainly gold, a proxy for commodities in general, is disappearing into private storage.  Backwardation in the gold market will be the canary in the gold mine. 

This all results from a liquidity trap in which holding real money is the order of the day. 

That is, real wealth creation has been impaired by unlimited credit creation leading to the consumption of capital instead of savings and real wealth creation through investing in plant, equipment, and innovation. 

Remembering always money is simply a medium of exchange.  However, the creation of it unbacked by production and labor means the capital and labor of one country is being siphoned by the U.S. without a concomitant expenditure of labor and capital.  A classic example of unequal exchange, or getting something for nothing.

The tape worms have starved the beast, and will only later discover in autopsy the parasite that killed the victim—the international traveller. 

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Nikkei poised to break support Fear in the Japan

Nikkei poised to break support

 

Nikkei

Fear in the Japan bond market now beginning to infect Nikkei stock index.  So preoccupied with stemming a rise in interest rates, that would quickly overrun their fiscal situation, the BOJ appears to be no longer concomitantly propping up their stocks.  They are losing control if not out of control now.  I reiterate: this is a BIG DEAL.  Nikkei down 3.2 percent on the day.

How times change: Germany now the most popular

How times change: Germany now the most popular country in the world

 

According to a BBC poll, Germany once one of the most reviled countries has now become the most popular.  But what makes Germany popular now is what once made America popular—a successful economy.  Meanwhile the Zionazis in Israel have now become among the most unpopular countries.  Coming in at number 4 on the most hated list.  Good for Germany, and my own personal condemnations for the U.S. of A.  Actually the people who have overseen America’s decline are of course Zionazis sympathizers.  People who think committing international crimes like the invasion of other countries is kosher.  No matter, wars and financial predations have made the U.S. a pariah state like Germany once was.  But Germany should be held out as hope that this country can reform itself before it is too late.

The end of the line . . .

The end of the line . . . GAME OVER . . . Tilt

 

When Richard Nixon closed the gold window in 1971 and detached the dollar from the metal was the beginning of the end for America’s 240-year-old grand experiment in liberty and free markets. 

From that point forward, the central bank was empowered to create as much debt money as it wished.  When the United States rebacked its currency, it did so with oil in which oil producers promised to sell their product only in dollars.  This promise on the part of oil producers was enforced by the U.S. military.  Therefore what backs up the petrodollar is extraeconomic coercion.

In turn the dollars oil producers received for their resource were then converted into sovereign debt instruments—U.S. treasury bonds.  That propped up the value and demand for the dollar.   More importantly it created the means by which the U.S. could fund wars and military expenditures that ironed out the boom and bust cycle of production. 

The financial system muddled along until the 1990’s when Bill Clinton came to power.  At the end of his term of office two important pieces of legislation became law: the repeal of the Glass-Steagall Act and the enactment the Commodity Futures Modernization Act. 

On one hand repeal of Glass-Steagall broke the barrier between investment banking and commercial banking that had prevented risky gambling in the financial markets since the Great Depression.  The termination of Glass-Steagall now allowing commercial banks to engage in risky trades like derivatives, mortgage backed securities, and collateral debt obligations.  Concomitantly, derivatives were deregulated resulting in credit default swaps, and interest rate swaps, and naked shorting to a bank’s repertoire of bets. 

Banks essentially became gambling houses instead of vehicles for funding productive activities, innovation, and investment in plant and equipment.  And what increase in productivity occurred was not passed on to workers, so real wages have slowly declined.  The stodgy old economy of production, as opposed to the new economy of derivatives. 

While exciting, derivatives I would argue are not really productive, as in producing surplus value.  The casino being the artificial creation of unlimited credit creation and expansion of the money supply.  So while the casino expanded, production contracted.  Total notional value of derivatives is now beyond a quadrillion dollars.

There is now so much debt on the balance sheet of banks, there is not enough money in existence to retire that debt.  Meaning obviously the money will never be repaid, much of it  conjured out of thin air.  The Achilles heel of all this debt, I would argue is the amount of money parked in sovereign bonds. 

To keep the casino wheel rolling the Federal Reserve has had to print ever larger mounds of money, with ever less growth in GDP—or diminishing bang for the buck.  But all the money printing must eventually undo the bond market that does not take kindly to inflation.  So the implosion of the bond market will be catalyzed by a currency crisis.

GDP-divided-by-debt-1950s-onward

The secular trend was visible long ago

GDP/Debt

I would estimate we are about six months away from a serious currency crisis that will grip Cyprus and Japan first.  Shinzo Abe’s money printing will sooner rather than later force investors to demand a higher rate of interest for the risks of their money printing, and Japan will quickly lose control of its interest rates as Greece did.  The country being among the most indebted in the world.  Once interest rates begin to rise I think the game will be over. 

The moment Japan defaults confidence in all central banks and fiat currencies will evaporate, and will in short order infect the Eurozone before travelling like the Spanish flu to the United States.  Banks will fall like dominoes, and the change in bank rules making depositors into unsecured creditors will then kick in robbing the plebes of their savings.  Riots will ensue, but the police state and martial law have already been tested in places like Boston and Los Angeles.

To restore social order a new currency will have to be issued like the Rentenmark in Germany during the 1920s.  I’m sure this will likely result in an international currency, perhaps backed by gold, but any number of commodities can be bundled to together to back the new currency.  But like Greece for a country to be saved from the chaos, they will have to agree  to abdicate their sovereignty. 

That is no doubt why the banksters took down the gold market to provide a buying opportunity for the rich to load up on a commodity that will be used to back currencies.  What the banksters didn’t anticipate was how strong the physical market in gold would become because of their price suppression.  That is, they underestimated the intelligence of the investing plebes.

With physical gold unavailable at any price, investors will have to load up on gold shares as George Soros has done.  Gold shares now being pretty much a call option on a gold miner’s output.  Anyway keep your eyes peeled to the Japanese bond market, and prepare accordingly.  Just follow the smart money here, like Soros and Jim Rogers.  They are trading on inside information, I’m sure.

Duplicity . . .   What Mr. Obama

Duplicity . . .

 

What Mr. Obama says, and what he actually does.

“I do not believe it would be constitutional for the government to target and kill any U.S. citizen—with a drone, or a shotgun—without due process.”

In actuality Mr. Obama murdered Americans Anwar al Awlaki, Samir Khan, Abdulrahman al Awlaki, and Jude Kenan Mohammed, all without due process.  And never provided a shred of evidence to substantiate Anwar al Awlaki’s centrality or importance to Al Qaeda operations.  An organization we have regularly done business with in both Libya and Syria.

Or was it the very fact we have been using al Qaeda, and Mr. Awlaki had sensitive information about our duplicitous actions, let us say, that he had to be eliminated?  Like Tamerlan Tsarnaev, and Ibragim Todashev.

Keynesians should listen to Keynes “There is the possibility

Keynesians should listen to Keynes

 

“There is the possibility … that, after the rate of interest has fallen to a certain level, liquidity-preference may become virtually absolute in the sense that almost everyone prefers cash to holding a debt which yields so low a rate of interest. In this event the monetary authority would have lost effective control over the rate of interest.”–John Maynard Keynes, The General Theory of Employment, Interest, and Money, MacMillan & Co. Ltd. (1964), p. 207.

Yes, in fact interest rates could fall so low you might just as well hold real money, meaning gold.  This is the wrongheaded belief that monetary expansion determines prosperity.  Nonsense.  Not under capitalism.  What stimulates expenditures are profits.  It is the prospect of profits that create jobs, and when you’ve hammered the wages of workers to the level of subsistence there can be no effective demand, and therefore no prospects of profits and no expenditure of money on the part of investors.  Obamacare for example is going to hammer discretionary income again.  As the Los Angeles Times fails to recognize, people will have ephemeral health care, but lowered consumption that will affect secular employment prospects. Extending credit to provide people the wherewithal has its limits in terms of income to service said debt.  People no longer borrow to spend or to invest.  Hence, absolutely no effect to monetary stimulus, except in the grand financial casino.  To hear economists talk (e.g., Paul Krugman) you would think they were concocting policy for 16th century Spain, another society premised on consumption as opposed to production. 

The Mail bag: Flicker Fusion . . . “Wonderful

The Mail bag: Flicker Fusion . . .

 

“Wonderful post however , I was wanting to know if you could write a litte more on this subject? I’d be very grateful if you could elaborate a little bit further. Thank you! Also visit my web blog” – Gafas De Sol Oakley on Researcher has psychotic break and murders coworkers—Bourne Legacy

A reader no doubt wanted to know more about “Flicker Fusion” and James Holmes.  The main stream press purposely ignored that aspect of the James “Joker” Holmes story.  Mr. Holmes, while still in high school no less, was writing programs for Flicker Fusion.  Flicker Fusion is the illusion of the persistence of vision that turns still shots into continuous motion.  At least to sensory perception.

Remember when you were a kid, you could take a stack of blank cards and draw a dog or some other stick figure, and then alter its position slightly.  When you were done, you could then thumb through the cards producing what appeared to be motion.  This is all that motion pictures consist of.  Motion becomes continuous at about 24 frames per second.  However, this is not what interested James Holmes about Flicker Fusion, and why he was at the neuroscience center in Aurora Colorado.

The radiance of the light and rate that the frames pass by a projector lens is also associated with brain altering states of consciousness.  Which is to say with a certain cadence you can produce a hypnotic state in which alpha waves predominate.  The left brain shuts down and the right hemisphere of the brain predominates.  This is particularly true of the radiant pulsating of the television screen used to activate the more primitive limbic system where fight or flight predominates, the instincts for self preservation. 

Experimental studies in advertising and marketing also show that watching TV produces endorphins or opioids that are addictive.  A study of 132 Germans showed that the longest stretch of time the subjects could go without watching TV was about 6 months.  This is what James Holmes might have very well been conducting research into.  His research was sealed by the courts and remains unreported on to this day. 

In fact within the movie The Dark Knight Rises there are subtle subliminal messages embedded within the background of the scenes, like the fact that the name Aurora is briefly seen on a building, and the name Sandy Hook on the map of commissioner Gordon.  Aurora Colorado was of course where the Batman shooting occurred, and Sandy Hook the next mass shooting.  The latter happened at the 1 hour 58 minute mark of the The Dark Knight rises.  You could even place black panels at regular intervals on the original film print to establish the cadence or beat to produce an hypnotic state before the flickering of hidden messages.  

In the movie Enemy of the State there is also a flicker message toward the end of the movie when Gene Hackman discovers the identity of a CIA operative named Thomas Brian Reynolds.  Ever so briefly it flickers that Reynolds was born on 9/11.  This film was made in 1998.  Or even better yet, the film The Manchurian Candidate in which Lawrence Harvey plays Raymond Shaw a sleeper assassin activated by the words “the Queen of Hearts” made its debut just prior to the John F. Kennedy assassination.  Especially appropriate today since Angela Lansbury’s character Mrs. Iselin wanted to remake America into a communist society.

Now, a person from the elite I know says the latter do have a code of ethics, they will tell you about their dirty tricks before they’re unleashed upon the public.  Like in the case of the Project for a New American Century, Neo-CONS announced their plans for a series of wars before they committed them or in the case of the Sandy Hook massacre that was messaged in The Dark Knight Rises.

I seriously doubt whether the public will ever learn the truth about Mr. Holmes since an insanity plea eliminates the need for a trial and the reading into the public record of actual evidence.  Better yet, a dead man tells no tales as in the case of Sandy Hook’s Adam Lanza.  And especially in the case of Tamerlan Tsarnaev, the alleged Boston Marathon bomber, killed after being taken alive by law enforcement.  The best part being the Chicago Police Department sends 5 deterctives and a sergeant to help in the Boston investigation.  The same Chicago P.D. run by former Barack Obama chief of staff Rahm Emanuel, a veteran of the Israel Defense Force. 

What you want is a setting so you can evaluate a person’s susceptibility to hypnotic suggestion like James Holmes, identified as early as his high school years and invited to an elite science camp.  Here is Mr. Holmes at 18-years-old lecturing on “Temporal Illusion” at Miramar College in San Diego:

holmes_lede-blog480

Anyway the gold standard for such research was done by:

Herbert E. Krugman, “Brain wave Measures of Media Involvement,” Journal of Advertising Research 11.1 (1971): 3-9.

My own sense is that the government rightly saw the potential for the mass media to actually reprogram the behavior of people because of the body’s natural propensity to produce opioids under Flicker Fusion, and alter the processing of information from the left to right hemisphere of the brain.  That is, to produce a zombie nation of viewers governed by the more primitive limbic system.  Just my take on what’s been taking place in American society.  Does it work?

Have you ever witnessed Black Friday, the first shopping day after Thanksgiving?