When the credit is flowing everyone who takes on debt is growing. That's what is so insidious about a rubber band "money" supply based on fiat currency and fractional reserve banking. It is such a liberal con game! Here's how it works: The federal reserve creates the so called monetary base and then tells banks they can create nearly limitless new currency known as credit. This credit is fractionally reserved meaning that by design there will be more debt in the economy than actual currency. This corrupt pump and dump scam always leads to the same thing: boom and bust. Bubble after bubble. Each bubble bigger than the last all leading to a final collapse which is so huge that it threatens to break up the country.
This is just what happened to the USSR in 1990. The result was that the USSR collapsed and then broke up into Russia and a bunch of x-sthans. Don't think it's possible in the USA? Think again. The only real benefit of the federal government is its ability to play Santa Claus to the states by printing up currency from thin air and distributing it to those who will do its bidding. But if ever the dollar hyperinflates again (recall Lincoln's Continental Dollar?) the federal government will lose all control over the states and I can guarantee you that some of them are going to vote to exit.
Let's say you are a conservative person who does not like debt. Well, the fake fractionally reserved money supply is going to seriously disadvantage you against your competitor who takes on lots of debt early on in order to grow. At some point, if you don't take on debt to grow you are either bought out or pushed out of the market by those that will.
Consider a conservative manufacturer of widgets who prefers to save money before expanding and improving his production capacity. How will he compete against someone who uses mounds of debt in order to buy the best equipment and the highest levels of automation? These things reduce human labor and thus his cost of operation. He then lowers his price until the honest conservative guy cannot stay in business with his higher cost overhead. So in a corrupt system you either become corrupt in order to play competitively or you stay out of the game.
Now, every game eventually ends and that includes the game of Debt Ponzi. What happens is everyone and their dog becomes massively leveraged in every way possible because that has clearly been shown to be the way to win. This how everything thinks at the peak of a Ponzi. It all just looks so perfect, so easy. How can I get out now??? Won't the train leave me standing on the platform?
The only people who are ever happy that they were part of a Ponzi are those who knew it was a Ponzi and who created an exit plan so that they would know when to get out. Then they would have a lot of nice stuff as everyone else collapses back down from whence they rose on the back of the Ponzi. In other words, most people who ride it up will not know when to get off the ride and take something off the table with them.
Dell went private following the previous market collapse and then in 2015 they took on billions in low cost debt in order to Buy EMC. Now there are apparently rumors going around that they are beginning to choke on that debt. Like someone who overspent on a college education that subsequently did not turn into a revenue stream big enough to service the debt, Dell took out a loan for EMC and now the industry suspects the revenue stream is not keeping with the debt service. You know this is the case when companies scramble to sell assets. When GE was selling everything that wasn't nailed down I was calling that out in these very pages. Any now I smell trouble at Dell as well.
Tuesday, January 30, 2018
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