Monday, February 6, 2017

Mish on the source of US economic problems.

As usual, Mish looks at the data and ignores the herd noise when he writes, "Following Nixon closing the gold window on August 15, 1971, credit soared out of sight to the benefit of the banks, CEOs, the already wealthy, and the politically connected....The source of global trading imbalances, soaring debt, declining real wages, and the massive rise of the 1% at the expense of the bottom 90% is Nixon closing the gold window.".  Yeah the formatting of that article is bad.  But the message is clear: when Nixon defaulted on dollar convertibility into gold, the dollar became literally worthless and everything that has happened since can be traced back to that event.

Of course, that was the main trigger.  IF you really want to know the root event that set us up for the coming collapse it was the US take over of the global money supply under Bretton Woods 1 wherein we told everyone else to forget about gold and instead just link their paper money to ours.  We in turn would link ours to gold.  But it created a single point of failure and we worked as hard as we could to abuse it in order to move the USA ahead of everyone else.  It worked.  It was a good long con.  But now everyone else has the manufacturing and we here in the US only have the consumption,  What do you think will happen when those who are sending us their goods for free (i.e. in return for debt notes that are intrinsically worthless) decide that they will keep their goods instead of sending them over?  Of course, the US will quickly try to rebuild our manufacturing base but that takes time and it takes money.  Where will it come from?  More money printing??  NOT without hyper inflating the currency folks.  The dollar was a good scam but it is not magic (although it was definitely magick).

Mish's list of things caused by removing all value from the dollar and locking it its status as fake money is only partial.  It has caused structural changes in our society.  All the dishonest liberal fakery that has come forward is a direct consequence of dishonest money.  They are linked at the hip for reasons I have explained 100 times in these pages.   The new conservative wave is going to lead to more honesty and more transparency (even if such transparency shows off our mistakes in the bright open light of day...).  Fake Mammon money cannot live in these conditions.  Sooner or later there will be a "currency event" and the US dollar will lose reserve currency status very quickly.  Many of the things that require this status, like high leverage of US banks, will collapse as a result.  When it starts it could take as short as 2 weeks or as long as 1 year to collapse (which would still be very fast).  But once it tips its hand that it has entered the collapse stage, it HAS to collapse quickly else people will be able to escape with their spending power intact and that is NOT how a Ponzi works.   The spending power of most of the participants must go to those few who exit near the top.

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