Mish: "Bretton Woods is on its last legs..."

As long time readers know, I am a big fan of Mike "Mish" Shedlock.  I like his no BS style and the fact that he understands that in a debt Ponzi the things that matter more than anything else are credit and debt.  Everything else is basically noise.  I also like the fact that he saw the housing bubble crash coming in advance (2006) and that he was completely unsurprised about the stock market crash that started late 2007.  He even began posting an Elliott wave "crash count" there for a couple of months that I found very entertaining.

Today Mish re-emphasized his view that China is a monster bubble whose collapse will be one for the record books.  I completely agree with that view and I have agreed with it for a long time.  New information about China's central bank taking on 15 billion USD of "assets" cemented that concept for any thinking person.  If China's central bank doesn't buy the overproduction that the Chinese government encouraged everyone to do in order to allow them to stay in power then the whole shooting match turns into, well, a shooting match.  As in politicians getting dragged through the streets by hoards of starving Chinese peasants.

But Mish went one step further and it is a big step.  He wrote, "Bretton Woods is on its last legs. What's next is unknown. It may be gold or crypto-currencies,  but it isn't the Yuan."

Read more at http://globaleconomicanalysis.blogspot.com/2014/03/monetary-smuggling-in-china-defeats.html#XDL71W3cxOrrFuKx.99

Bretton Woods is on its last legs. What's next is unknown. It may be gold or crypto-currencies,  but it isn't the Yuan
Read more at http://globaleconomicanalysis.blogspot.com/2014/03/monetary-smuggling-in-china-defeats.html#XDL71W3cxOrrFuKx.99

The part that is new is this:  Bretton Woods is on its last legs.   In other words, the fake money system that was architected by our forefathers is near collapse.   Mish has always said that at some point there would be a "currency event", but never gave more feeling for how close we might be to "some point".  That makes his statement about "last legs" very important because Mish does not write anything until there is a preponderance of data to support it.  He might have figured something out a long time ago but he keeps those things quiet until he can make a case if someone called him on it to explain his statements.  Mish is an engineer at heart (he used to write software) so I understand his built in need to be correct.  Not that he wishes he was right and goes around punishing people until they agree with him. 

No, I mean in the sense of an engineer being right by doing homework up front.  By being on top of the matter and not shooting from the hip.  By not "winging it".  The vast majority of good engineers are quite conservative.  They do not say things by chance.  They don't "do random".  This is why I think people should read a good deal into his statement.  "Last legs" is no small thing.  Now, it could last another 6 months or another 5 years and still be considered "last legs".  I would read it as meaning we are past the 90% mark and now working with the final 5-10%.  If you consider 1971 as the beginning of the end of the Bretton Woods system then that is 43 years.  So last legs could mean 18-36 months. 

I am on record several times that I think it is all done on or around 2017.  If it goes longer than that then the boomers will be able to get some value out of the system.  But it is a system that is almost devoid of value and so the value is just no there to recover.  As soon as the patsies start their run on a Ponzi, the Ponzi goes into collapse.  Not because the Ponzi operator wanted it to but because the value no longer exists in the system.  Only 1 in 1000 believes this to be true but I have known it to be true for years.  It's a debt Ponzi and there is only one way for it to end: badly. 

I was talking to a family member the other day - someone who is hard working, intelligent and successful.  He was telling me about his retirement fund and all of the diversification with stocks and ETFs and this sector and that as well as money market funds, blah blah blah.  I let this person go on for awhile and then let out the bad news: "You are not diversified at all.  All of your assets are fake paper/electronic accounting entries.  Either get out now or you will get left holding the empty bag".  The response was predictable: "It's been working so far".  Well folks, that is Patsy-ism 101:  Trends, no matter how unsustainable the math may be, must continue forever and trees grow to reach the sky, etc.  I recognize there is nothing I can do to help this person.  The brain washing is complete.  The herding instinct is too strong.  Belief in the system cannot be suspended long enough to consider the facts.  Life will have to teach a very hard lesson to this person in its own way.