John Mauldin keys on Yellen's plan to implement capital controls without even knowing he did it.

For a couple of years going, John Mauldin was talking about a "muddle through" economy.  I wrote him on several occasions and told him that muddle through was not possible when the Ponzi finally entered the collapse stage.  He returned to his senses sometime in 2009 and stopped saying "muddle through" and started using phrases that amount to "big crash", "existential risk" and other more to the point descriptions of what faces us.  Since he found sanity, I find him worth reading again.

However, every time I do I see that he skirts the main point of his own writings.  I'm not sure if he even knows he is doing it or not.  He often falls short of just saying the full truth or hitting on the main point as I explained in posts like this one and this one.  I think this is what happens to people who dive too deeply into the details too often.  They lose sight of the big picture.  By analyzing each note of the music in ridiculous and unnecessary detail, they forget that a song is playing.

True to form, Mauldin does it again in his latest post which you can read here:  Don't worry about signing up it just causes the articles to be sent to you via email and it did not result in a bunch of spam for me.   In any case, his latest email points out that the BIS (Bank for International Settlements) is starting to sound rather Austrian.  Mauldin wrote:

Read this from their [capn: the BIS] webpage introduction to the report:

To return to sustainable and balanced growth, policies need to go beyond their traditional focus on the business cycle and take a longer-term perspective – one in which the financial cycle takes centre stage. They need to address head-on the structural deficiencies and resource misallocations masked by strong financial booms and revealed only in the subsequent busts. The only source of lasting prosperity is a stronger supply side. It is essential to move away from debt as the main engine of growth.

First of all, you have to know that the BIS is a corrupt organization just like any other Keynesian something for nothing, dishonest money supply bank.  They were all behind the pump when the going was good.  This kind of new direction change is not intended for the eyes of normal people.  It is for the elite.  It is nothing more than a clear warning that peak credit has been hit and that smart con operators will begin to deleverage and get out of the Ponzi any way they can, hopefully in an orderly fashion and without alarming the chattel.  The use of fifty cent words in order to "purposefully obfuscate" (remember Greenspan's own description of "fed speak"?) the meaning of publicly announced messages is an old tool of the money elite.  In fact, it is not that different from commonly used public key encryption.   You provide a message in clear text that anyone can see but they will not understand the meaning without the secret decoder ring.  The decoder ring for the fed consists of multiple components:

• The basic understanding of what is going on; that is, that the military industrial complex is an organized crime syndicate and that the federal reserve is its economic attack dog.  Unless you understand this, none of the other components really click into place.
• Fiat currency and fractional reserve banking are the main weapons of the MIC elite against the average worker who they need in order to live but who they still despise as being a subhuman slave class.
• The whole thing is a confidence game.  The MIC is not big enough to control everyone just like the federal reserve is not big enough to control the global markets.  They are strong players and can thus appear to be in control but their scam always collapses in the end because it is a confidence game.  The con requires markets and the people to work against themselves.
• Since you can't fool all the people all the time, all cons are cyclical in nature and no it's not different this time.  The con is run, it peaks, it declines and it collapses.  The power vacuum that results lets some other con stand up in the place of the last one.  
• It is a relentless, repetitive cycle because the average person in the world is too affected by the human herding instinct which bids him/her to follow.   Power abhors a vacuum because herding species demand a leader, even if that leader is a lemming racing for the edge of the cliff.
• The con is held onto as long as possible using the following phases:
• Start of the con: promise a better future.
• Early days of the con: actually provide a service, show that following works and that "membership has benefits".
• Grow from a service organization into the central planner and controller, still benevolent at this point.
• Concentrate power and wealth by stealing from everyone within grabbing range but do it all by stealth using guile and sophistry instead of overt force.
• Then the con begins to fail.  So off come the gloves, make endless laws whereby everyone who objects with the oligarchs is a felon who can be held in indefinite detention without access to a lawyer or due process, stripped of constitutional rights by constitution deniers.
• All the force does is demoralize the herd.  Productivity falls as many of the middling producers just give up and instead of adding to the production of the herd, they become wards of the state.  The number of marginal members of the herd (AKA useless eaters) expands rapidly
• At some point, the reduced production in the face of essentially flat consumption begins to show up as shortages.  As just an example of this, 1000s of marginal people in Detroit get their water cut off for nonpayment.  As time goes on, the shortages move higher up the food chain and store shelves go empty for the middle class as well.
• At some trigger point which, while nobody can say what it will be in advance and models cannot guarantee the timing of, the herd panics and begins a stampede.
• This take the form of bank runs, riots and other civil unrest, skyrocketing crime, police hiding in the station and only responding to the calls of the very rich, etc.  Street thugs grow in power.
• In response to the panic, the powers that be implement even more laws including capital controls.
• Eventually, the currency itself collapses because the currency is the con.
• To summarize all of this in less detailed picture form, see this post.

In any case, Mauldin goes on to observe that Yellen responded to the BIS with "pound sand" indicating that she thinks she still has runway in the dollar con.  He wrote:


On July 2, two days after the release of the BIS report, Janet Yellen took the stage at the IMF conference and basically said (translated into my local Texas patois), “Kiss my grits.” She was having nothing to do with risk and productivity and spent her time defending the low-rate environment she has been fostering in the US. With just a brief hat tip to the fact that monetary policy can contribute to risk-taking by going “too far, thereby contributing to fragility in the financial system,” she proceeded to maintain that monetary policy should “focus primarily on price stability in full employment because the cost to society in terms of deviations from price stability in full employment that would arise would likely be significant.”

Mauldin went on to point out that Yellen has found a new 50 cent word and in the speech from which the above Yellen-quote was taken, she beat everyone up with it so that they know it has significance.. He wrote (yellow highlight is mine):

"When she did allude to the risk of financial instability, she hastened to say that it was not something that would require a change in monetary policy but would instead call for what she termed a “more robust macroprudential approach.” In fact she used that word macroprudential no fewer than 29 times. For those not fluent in Fedspeak, what she meant is that we can deal with financial instability through increased regulation procedures, whatever the hell that means."

And here is typical Mauldin - running the ball to the 1 yard line and then setting it down without being tackled and walking away without scoring a goal.  All you have to do is look at what other 3rd world despotic shitholes have done in the past when their money cons have been in the collapse stage and you will know what the plan for us is as well.  Its called "capital controls".   What it means is that while the herd is calm, the con men don't want to alarm anyone by telling it that the wide open spaces which it perceives is actually an illusion and that the herd is actually in a fancy economic corral.  While you will rarely see it expressed so succinctly, at the end of the day "economy" really translates into "the production-consumption cycle of the people".   Thus, an economic corral is really the controlling of these factors in such a way as to benefit the herd managers.  It is actually a form of theft of labor AKA slavery.  This is, in fact, the main purpose of having a dishonest money supply: to steal by the art of the con (i.e. with the support and help of Mark and Patsy) the labor of Mr and Ms Sheeple.

Bottom line, Yellen is planning capital controls. 

When the panic starts, she will tell you how much of your own money you can have per unit time.  By not allowing you to take your money out of banks you will thus be forced into capitalizing them while they go bankrupt or while she inflates away the purchasing power.  It is in essence an ignorance tax meted out upon sheeple who do not know what is going on. As I have written in these pages many times, in the end phases of the Ponzi, possession is 9/10ths of the law.  The con men know this and thus they will use the law in order to ensure that they end up with 9/10ths of your property.

If you have anything in a bank that is worth worrying about, I suggest you consider finding other places to store it.  The banks cannot be trusted and the math is certain about this.  The bigger they are, the more insolvent they are likely to be simply because their size (as measured by assets under management) is not a measure of their intelligence but rather of their LEVERAGE.  The fake valuation of their assets will collapse and government will try to have you make up the difference using capital controls.  This will mos def be upon us within 24 months, and possibly much sooner.