Updating the Scam Cycle indicator

Back in 2011 I found an interesting graphic I came across on the web during my research so I used it verbatim in this post with full attribution to the original author.  Today I decided it was time for an update.  Please do compare what was going on back then to now.  Back then, Germany and France were in great shape.  They were beating up the PIIGS for being deadbeats.  At the time I posted that Germany and France were no better because they were running a vendor finance scam just like CSCO had done during dot bomb.

Since the original posting, the currency crisis countdown clock has gone from about 32 minutes after the hour to its current reading of about 40 minutes past.  Of course, this simple timing scheme forgets how time is compressed by exponential collapse but it is interesting to see how Gordon Long's event sequence has been maintained almost to the letter.  Michigan just cracked with the default of Detroit and the rest of the states listed there have cities that are considering BK as well.  Wait until LA and other major cities BK.  That's when the herd is going to start getting very nervous.

At the end of the day, this ends in a currency crisis.  I linked to the wiki for it if you want the long winded explanation of it but the short version is simple: there is a crisis of confidence in the currency.  Why does this matter?  Because the currency is worthless except for the confidence people have in it.  This too shall pass.  The delinking of the dollar from gold in 1971 made the dollar literally worthless.  People still laugh at this statement and they make (increasingly nervous it seems) fun of the whole idea.

But it is the natural and predictable end of fiat currency. Von Mises called it a "crackup boom".  There will come a time where people just don't trust the currency anymore.  They will see government mandating this and that to make you remain in it as long as possible (i.e. 401k take over, capital controls, you name it).  This is coming sure as sunrise because it's not different this time.  Only a fool thinks it's different.  Only a fool lets Bernanke take credit for seriously destabilizing the economy's long term future with his economic theory experiments.

Now is the time to get your affairs in order.  There is nothing that can be done to stop the inevitable collapse of bad debt and that is what the US and the whole world is sitting on.  Unfortunately, most of it is in the form of derivatives that are over the counter (non track-able).  So when Bernanke talks about the economy he is only talking about the part that we can see, the tip of the iceberg.  The rest of the iceberg is ready and waiting for us and we are steaming our way straight at it.