When the things that used to work no longer work, the chaos is near.

A few decades ago there was this little economic "innovator" known as LTCM (Long Term Capital Management). History would later record that a better name for the organization would have been "Leveraged Turds and Con Men".   They had discovered a formula which guaranteed them, they thought, a mechanism for reliably making small percentages of profit on bets of any size.  The details are not only not important, they are an unwanted distraction.  The important thing is that it seemed to work and so the next step to making big money was to get lots of leverage in play because a small percentage gain is still very big money when huge leverage is employed.  To make a long story short, they got away with it for awhile and just kept leveraging up until one day it exploded in their faces.  The math which had worked so well for them before suddenly stopped working.  It almost brought the global economic system down.

What in truth happened is that everyone heard about their success and scrambled to get into the act.  What this did was to distort the economics of the situation so badly that it literally changed the physics of economics, at least long enough for the whole shooting match to collapse into a stinking heap of something-for-nothing stew.  Again since "investing" is never anything more than a zero sum game, not everyone can win.  For every winner there must be a loser.  The other analogy that seems to fit, however tacky it might be, is that when all of the Asians go sight seeing to the same side of the ferry ship at once, it capsizes.  It doesn't matter that it happens with regularity.  Nobody ever seems to learn from the lessons of those who got screwed before them doing the same thing.

Whenever you hear someone talk about "financial innovation", think "fraudulent scam".  Think "something for nothing scheme which steals from workers and gives to elite bankers".  There is no new economic technology.  There is only the new twists on exploiting of the rules and the gaming of the system using loopholes that are conveniently left in place for the illuminated con men to take advantage of to the detriment of the producers of the world.  There are workers and there are parasites.  Bankers don't do any economically productive work.  Guess what that leaves?

Well don't look now but it is happening again on a grander scale.  Those trying to make something for nothing have leveraged up into the bond markets.  Yeah, they don't make much interest on a percentage basis but if you leverage up then it's still real money.  Is this starting to sound familiar??  And just like LTCM, all the con men saw the early few getting away with it and now everyone is in it up to their necks.  And so now we are hearing the bad news: the risk management techniques associated with these leverage bond purchases have stopped working.  From the article:,

"If the insatiable demand for bonds has upended the models you use to value them, you're not alone.

Just last month, researchers at the Federal Reserve Bank of New York retooled a gauge of relative yields on Treasuries, casting aside three decades of data that incorporated estimates for market rates from professional forecasters. Priya Misra, the head of U.S. rates strategy at Bank of America Corp., says a risk metric she's relied on hasn't worked since March."

Whenever you hear extreme words applied to economics like "miracle economy" or "insatiable demand" you better be thinking "leveraged bubble of massive proportions".  The problem is that these big guys are not nimble.  They cannot just change directions when they see potholes in the road.  Their machine is just too big to turn and the leverage is just too big to unwind.  Using the ship analogy, once the ship begins to list it is that much harder to run over to the other side in order to balance it out.  Some listing begets more listing until the boat capsizes.  LTCM was a fart in the wind compared to what these assoholes have conjured up this time with their something for nothing scams.  

As the leveraged debt Ponzi collapses, do not be distracted by the symptoms.  For example we will no doubt hear that if only we had put a limit on this aspect or that aspect then we could have kept the situation under control.  That is con-man talk.  That is belief that they would not find a new way to game the fraudulent money system which has so many built in loopholes BY DESIGN that they can never all be plugged.  That is belief that liars and thieves have learned their lessons and we are oh so much smarter now.  If you believe this, change your name to Mark or Patsy because you are destined to be the victim of scam after scam for the rest of your life.  

There is one thing and only one thing that will prevent them from re-creating this monster scam of a debt Ponzi again in the future after it goes bust this time: the elimination of a dishonest money supply based on fiat currency BUT MORE IMPORTANTLY the elimination of the policy of fractional reserve banking for it is the real engine of pump and dump-o-nomics.  Under this completely fraudulent system, "special" people get to leverage up and live far beyond their economic value add to society and when their leveraged scam collapses the rest of us get to eat shit pie for years.  Millions of lives are ruined.  People commit suicide and or kill others because of the hope stolen from them by briefcase bearing bastards.  

This is far beyond while collar crime.  It is a crime against the very stability of society.  If ever there was an act that should be considered treason against the people of a country, the introduction of a fraudulent money supply as was done in 1913 with the creation of the Federal Reserve should top the list.  A gold standard by itself does not fix the problem.  Not even close.  It helps, but the fiat currency really isn't the biggest part of the problem.  It's the fractional reserve credit system that is the real nuclear fuel of the global debt Ponzi.