The bank of England's models predict that their policies will result in economic disaster.

John Mauldin's latest email is a real eye opener and you absolutely must read it and understand it carefully if you have even a modicum of common sense.  Keep in mind that Mauldin used to write about a “muddle through” economy.  I wrote him several times explaining that he was wrong about that (I BCCed a large audience of friends and family on those emails).  I warned him that the math of the situation would not allow for simple "muddle through" and that he was significantly understating the problems.   About 9 months after I wrote him for the 3^rd time on this matter he stopped mentioning "muddle through" in his weekly emails and there has not been a peep about it since.  John Mauldin has awakened from his sheeple trance.

Please read Mauldin’s article (link above) in full even if some of it might not be immediately understood.   There is one item which he discusses briefly that I want to fully decode for you up front since it is critically important to understand.  The topic revolves around a chart that came from the central bank of England.  I’ve copied it here for you to look at as you read and consider my explanation of it:

       If you study this chart carefully you will see some very strange things.  First, let me summarize the obvious.  The chart is divided into two “phases” by the vertical dotted line.  To the left is the so called Impact Phase and to the right is the Adjustment Phase.  You can think of these as the party and the hangover phases (respectively) if you like because that is a close analogy.

      During the party, the government prints up loads of money in order to goose the GDP.  Inflation of the money supply occurs, but is relatively muted (at least as compared to what will occur later on during the Adjustment/hangover phase).  During this happy "Impact Phase", a little bit of money printing drives everything up: asset prices (i.e. stocks, bonds, real estate), the real GDP and consumer demand for consumer goods.  Consumer prices remain muted.  All of these things add up to happiness all around, at least for a period of time.  Everyone seems to get something out of it and so nobody really complains.  Except Ron Paul of course who warns that this is an artificial situation.  It is not unlike the high felt by a drug addict.    On the right hand side of the chart is the adjustment phase where the reversion to the mean occurs.  The dotted line that separates the two is not explained by Mauldin so I will tell you:  it represents a so called "currency event". 

·         The term Currency Event is elite-speak for “the patsies suddenly become wise to the con”.  Von Misses described in words exactly what this chart is showing: a collapse in real GDP, a massive rise in demand even in light of rising prices.  He called it a “crackup boom”.  The crackup boom has some very strange characteristics, all of which you can see in the bank of England's model chart:

• Upon entry into the Adjustment Phase, the government is suddenly no longer able to increase the money supply which effectively flat lines.  Recall that the money supply is made up of the monetary base and of all outstanding debt and that debt is an order of magnitude or more larger than the monetary base is.  That flat line represents the inability to drive more credit into the economy.  There are several reasons why this can happen but the most obvious one is that interest rates suddenly begin to skyrocket.  This is known as "the central bank losing control of the government bond market".
• You know that high interest rates are involved because asset prices begin to collapse.  Most assets, including real estate, stocks and bonds are bought on massive credit.  This is only possible in a low interest rate environment.  When rates go up dramatically, asset prices get creamed simply because nobody can afford to take on debt which must be repaid at high interest rates. 
• In addition, the chart shows a trio of strange coincidence: nominal consumer demand and consumer prices rapidly increase while real GDP decreases.  To top it off, prices continue to rise even after inflation (the increase in money supply) begins to fall!!  To people who do not understand money or the economy (i.e. Keynesians), this will seem an impossible combination.  We've all heard that the cure to high prices is high prices.  In other words, high prices are supposed to quench demand.  But this chart shows demand increasing despite massively rising consumer prices.  Additionally, real GDP peaks and rolls over big time while these other metrics are rising.  In fact, the Bank of England model shows real GDP collapsing by 2/3.  That would take our $16 trillion in GDP down to about $5.5 trillion.   WOAH!  Talk about a greater depression!!  Common wisdom says that real GDP will go up when prices are high and consumer demand is high.  Common wisdom becomes debunked during the Adjustment Phase.
• The secret to understanding what is going on here is to understand that our money is in fact already worthless.  This is fact, not hyperbole.  Un-backed currency has no intrinsic value, period.  And I mean zero value.  The only reason it can still be traded for goods and services is that people haven't figured out en masse yet that it is in fact worthless.  They believe it has value because an authority figure (the US government) says it does even though said government already defaulted on gold convertibility several decades ago.  Think of it as a sort of economic flywheel.  Something as important as the dollar used to be does not just die out so quickly.  You can see this kind of thing happening in the stock market from time to time as well.  A company will go bankrupt but traders will continue trading its stock (albeit at less than $1 per share) for many months after the shares are effectively unbacked by the bankrupt company.  I did not say this was smart, I just stated that it happens.  The US dollar is a bankrupt currency that people continue to trade as if it had value (commodity backing) simply because they don't know what else to do. 
• I'll say it again.  Our money literally is worthless.  It has zero intrinsic value.  The king has no clothing but few have awakened from their herding enough to notice.  The massive rise in consumer prices shown above does not happen because consumer goods suddenly become more valuable but rather because people start to figure out that green paper is not actually money but rather that it is a scam to fool the simple minded, the hard headed, and the ignorant.  In response to their new awakening, they begin to adjust to this new perception by hoarding consumer goods.  That is why consumer demand goes up in spite of higher prices.   People lose faith in the paper money and so they trade it for anything (and I mean anything) that they can find out of fear of being left holding a worthless wad of paper.  The currency is passed around like a hot potato.  The velocity of money skyrockets.
• During the adjustment phase, anything that you would normally buy on credit will plummet in value because there will either be no credit available or sky high interest rates that make credit unaffordable.  Anything you would buy with cash goes up (the chart uses consumer goods as a proxy for this including food, clothing, energy, etc.) because the cash is worth less than before simply because people lose confidence in it as a store of value.  The patsies wake up and the herd panics as a result.   When confidence collapses, so will the currency.  

I want to reiterate the fact that my above dissertation is not a statement of my opinion.  The chart which the discussion revolves around comes from the Bank of England. This is according to a very well known and prominent economist, John Mauldin.  The decoding of it comes right straight from Ludwig von Misses' description of a Crackup Boom.  

I also want to state that the existence of this chart proves that the bankers are not idiots or fools.  They are some of the smartest people on the planet even if they have no moral values.  What is about to unfold was easily foreseeable in advance.  Given this, one has to ask why they did it.  

I personally think (and this is conjecture) that they seek a depopulation event.  When the GDP crashes by the kind of percentage points modeled in the chart, chaos will result.  It will make the LA riots look like a picnic, and it will be widespread.  Every major city will be affected.  At a time when record numbers of people are dependent upon government services for their very survival, said services will collapse as the con men go running to their shelters known as D.U.M.B.S.  You and I are not invited to accompany them.  

Given that it is completely predictable that massive chaos and violence would result, I have to believe that those of us left to fend for ourselves are meant to shoot it out.  Perhaps this is why Hollywood is feeding the public so many World War Z type zombie apocalypse movies these days?  Anyone who scrapes by long enough will see the con men re-emerge and claim to be the government, hoping to pick up where they left off.  Again, Hollywood helps us down this thinking with recent TV shows like Revolution.   As for depopulation target, the Georgia Guide Stones suggest that they seek to depopulate to about 500 million people globally.  These stones were erected in 1980 when global population was already 4.5 billion.  In other words, this was not a suggestion to limit further growth.  It was a depopulation warning.  Today the global population has reached 7 billion.  You do the math.