Sunday, January 6, 2019


The stock market began to cascade downward in recent months after the Federal Reserve began another "experiment" in monetary policy by starting to unwind their balance sheet and raising interest rates at the same time. It's never happened before. Of course, we've never seen the Federal Reserve and other central banks buy $TRILLIONs of bonds, stocks or mortgages to "support markets"(bubbles) before.  And, we've never seen zero interest rates in over 5000 years of world history (and held negative or zero for so long).  Extremes of unsound money and unsound finance are leading (eventually) to catastrophe.

I said in February 2018,
It's amazing how, since abandoning sound money in 1971, it's led us down a long road to our extremely precarious state at this time. There are even more things signaling collapse, see: We're reaching, the end of a long road. I think that we're on the verge of another and worse financial crisis: the 3rd in the past 18 years. Thank your government and Central bankers.
There's likely no way out now. Normalization is probably not possible. Even a relatively small rise of interest rates to historically low rates has already resulted in a equity flash crash of over 10% a few weeks ago, wiping-out $trillions worldwide. And it's probably just starting. To be honest, no one really knows how things will play out in the coming months. There is too much money sloshing around and the Fed has started to withdraw money from the markets as they vow to continue to raise the Fed funds rate.. Yes, markets might appear to recover, then in a short period, it'll go "poof" and your money goes to "money heaven." 
When massively inflated financial markets crash, they will take the economy with it --like in 2008/20009. I'm just hoping that the world's financial system does not fail permanently this time. Keep in mind that we have about 8 years to go to complete our current Fourth Turning crisis and Western civilization is potentially at risk.
The attempt at normalization lasted only a short time. Already, in the past week, the know-nothing PhDs at the Federal Reserve said that they may have to reverse course and pause their balance sheet run-off and reverse their rate hikes --- all to keep stock market bubble going. Sure enough, markets soared. We. Must. Save. Stocks!  The truth is that, in our financialized (bubble-filled) world, severe market falls may cause a recession, not the other way around.  Thus the extreme level of market manipulation.

This recent attempt to reverse or normalize policy is a valiant attempt by old-timer Jay Powell.  But the damage and manipulation was so rampant and pervasive, that normalization may not be possible. See The US Federal Reserve is now the Root of all Evil.

Capitalism requires that poorly run, over-indebted and/or failing enterprises to fail, including banks and even governments!  That's how the system reset or refreshed. Prior to central banks, capitalism used to have short, sharp recessions/depressions which killed weak banks and companies. But it kept businessmen cautious and prudent in order to survive dangerous and sharp downturns. It made for sound business practices and prudent loan policies at banks (not bubbles).

Now our multi-decade effort to eliminate the business cycle and repeated bailouts of the well-connected by their govt cronies is not capitalism. It's corruption. It's cronyism. It's the equivalent to a "no burn policy."

For 70 years, the US forest service had a "no burn" policy of not allowing any fire on Federal lands. Then, like government often does, it lurches to a "let it burn" policy in 1989 and a good portion of Yellowstone Nat'l Park exploded in flames that year.  (I was there that year!).

I think there will be a similar conflagration at some point in the economic environment. I think it's happening now and that Powell doesn't understand that the balance sheet reductions AND the Fed Funds rate hikes are reversing abundant liquidity (tinder?) and causing the stock market declines.  These people, and basically all the people in government, don't know what they're doing. So many people in government are there because they couldn't make it in the private sector. Same for academics like all those PhDs at the Federal Reserve. They have been wrong at everything for as long as I've been alive.

This is why the founding fathers were obsessed about limiting the power of government so that the damage that these idiots can cause is inconsequential. But that's not what we have. We have huge, flailing, corrupt, incompetent government that is ruining our economy, our culture, our country and our people.  I say burn down our bloated, failing central planning bureaucracy!  In many ways, now we're not that much better than communist China! Both of us are on the verge of failure.  Add the EU to that list too.

I'm not a Republicrat or a Democan.  I'm a revolutionary-- calling for a revolution! I advocate a 50 to 60% reduction of Federal employees and eliminating and/or outsourcing and/or downsizing and/or privatizing basically every department including defense. In reality, we really need to BURN IT DOWN and start over.  This includes burning down the Federal Reserve banking system.

One way to do that would be for the President to hold the line on passing the next debt limit extension. This would simply require that the government spend only what it receives in tax revenue, ie,, NO MORE DEBT. This would require massive real budget cuts (not just reductions of projected spending growth) in everything including price reductions to drug companies, hospitals, defense contractors, etc.  I know this will never happen, but if it did it would cause a massive depression and a massive deflation of medical prices, rents, house prices, college tuition and everything else. In other words, it would be the massive reset needed to bring prices back to levels that people can afford. It's pretty obvious that a massive reset is needed since the bottom 90% of worker's wages will never catch up to gov't and Fed Reserve -induced inflation---which is what we've been seeing for decades now.  The reset will happen eventually, probably  through violent market and political convulsions.  Why?  Because what we have is unsustainable.  We're going to have a depression one way or another!!  In some respects we've been in a prolonged "depression" for 10 years already.

That's right, what this nation needs is a big fat ugly depression.  And it's just what is needed. But for it to happen, the Federal Reserve needs to be abolished NOW.  This way, they can't do all the money "printing" and helicopter money and secret bailouts that prevents a full reset, ie., a huge deflation. We cant allow the Federal bureaucracy to rescue itself at our expense!  BURN IT DOWN!