Obama Yes You Can Thank You Satan Homework

Bill,

Are those in power wanting the currency to fail so they can install a new currency? Of course the new currency comes with new laws that grant privileges (that can be taken away) as opposed to rights which are ‘god’ given.

When things get bad enough ie hyperinflation, the disappearance of our savings to buy hundred dollar toilet paper, etc. it seems then we’d all be willing to accept any solution even the giving up of our rights for ‘privileges’ in order to make the pain of inflation stop.

Is this some version of what the next 5 years might bring in your opinion?

My answer:

A new currency might happen. It won’t really affect what we are facing, though. It will merely be a smoke screen. I am skeptical about hyperinflation. I have no crystal ball, but I don’t see how that could be the final outcome. Here’s what I think:

We are in a DEflationary time. Debts are either being paid off, which reduces the money supply, or are being declared unpayable, which also reduces the money supply. When a debt is made (ie, money is lent), the original money still exists, in the hands of the borrower, while new money, in the form of the IOU (bond, mortgage,  etc) now also exists. If the borrower is thought to be a good credit risk, and it is assumed that he will pay back the debt (which is what happens in normal times with most debts), the debt creates a doubling of the original amount of money that was lent: $1000 lent becomes the original $1000 plus the IOU which can now also be used as money (“I’ll give you this IOU in exchange for that item I want.”). This is how inflation happens (this is a simplification–this creation of credit money happens in many ways–this is just a simple example).

When the original debt is paid off, the IOU is then no longer worth anything (nothing is owed any longer). The extra credit money created when the debt was initiated disappears. There is another possible outcome, though. If, instead of the debt being paid, it becomes obvious that it cannot be paid–as with, for instance, all the mortgages people took out to buy houses they really couldn’t afford, or all the student loans that can’t be repaid because those who owe it can’t find work–the IOUs also become worthless. Whether an IOU is paid, or can’t be paid, it is no longer worth anything, and the credit money it represents disappears into the same thin air out of which it came.

Ordinarily, credit money is a good thing. It is, in fact, the essence of capitalism–it is the “capitalizing of an asset”. This means an asset is turned into capital. The purpose of this is to use the asset (without consumming it) to create more wealth. Wealth isn’t really the money, though (money just represents wealth). Wealth is actually more stuff–more things that make life easier: products, medicines, infrastructure, clothing, food, machines, and so on.

Before people had this idea of capitalizing assets (in the 1300s), people generally worked from sun-up to sundown just to create enough wealth (again, stuff–especially food) to stay alive. The nobility took part of that “wealth” in (supposed) exchange for protection, and also because they claimed they had a “divine right” to it. The protection, of course, was actually provided by the same people who were raising the food (the wealth) that the nobility were living off, as these serfs would be conscripted into the army whenever there was need of protection.

Once capitalism began, however, assets could be offered as collateral for money (ie, capitalizing those assets) and the money could be invested in something: ships to bring goods back from foreign lands, or the creation of a mill to create cloth, or whatever it happened to be (later, as capital formation drove the creation of machines, the whole thing accelerated and consumer goods, fuels, new technologies, medical miracles, etc, were created with this “capital”). Wealth (stuff that made life easier) was created. In fact, over the next few hundred years so much wealth was created that humans of all classes began to enjoy leisure time, medical care, paved roads, indoor plumbing, a much healthier and consistent food supply, and on and on.

This ability to capitalize assets (ie, the process of capitalism) completely changed humanity from subsistence to a whole new way of living–one most of us take for granted, since most people are largely ignorant of history, and certainly ignorant of financial history (and the progressives who now control the schools and the media and the government don’t want you to know how important capital formation is to YOUR LIFE and YOUR COMFORT–and, in fact, how important it is to the poor).

There are places in the world where many people still live at a subsistence level, of course. These places, however, are poor at least in part because they don’t have capitalism and the legal protections that allow it to operate (methods for legally transfering property, strong courts that guarantee the sanctity of contracts–so promises must be kept, even by the powerful–and “honest” money [which I will explain in a moment]). Hundreds of billions of dollars of assets, of wealth, sitting in third world countries and which common people “own” for all intents and purposes (their family has lived there for hundreds of years and cannot be evicted), cannot be capitalized. Why? Because these “owners” have no deed to the property because there is no Western system for owning and transfering property. There is no way to transfer ownership of these assets other than to informally transfer them to their children. For that reason, these assets cannot be capitalized–used to create more wealth.

The other poor places in the world have socialist economies/governments, where capital formation isn’t part of the mix: Russia, North Korea, Cuba, etc. These are the places from which people are trying to flee, in order to get into the places in the world where capital formation is allowed: The US, Singapore, Hong Kong, some countries in Europe, etc. (the list used to be longer).

I’ve gone on about capital formation at length for a reason. Capitalism grows the pie. In other words, it creates wealth. Most socialists and advocates of centralized control assume that there is a pie of a certain set size, and if someone (an individual or a country) has more pie than another, they had to have stolen it from those who have less. Though this certainly has happened in history, and no doubt still happens to some extent in some situations, most of the wealth any rich person or country has is the result of using capital to create more wealth, not from the stealing of wealth. The laws that protect private property and contracts are designed to prevent this theft, though today those guarantees are breaking down–though not from a failure of capitalism. (More about what is going on when this stealing does happen below.)

So, to get back to the deflation I was describing: As debts are either paid or acknowledged as unpayable (credit extinction), the debt side of the asset/debt relationship disappears. This is called deflation, just as the creation of the additional “money” (through credit creation) is called inflation–something that has been happening at a very high rate since we stopped backing our money with gold in the early 1970s. Today the debt has become too big to service (ie, pay the interest on and still have anything left over to live on). In that period of time a dollar has shrunk in buying power by (my educated guess–too lazy to look it up as I write this) about 1/12th. This means (assuming my guess is right) that it takes $12 to buy what $1 bought in 1970. Things don’t really cost more today–it’s more accurate to say that the money is just worth less because so much of it has been created out of thin air.

This creation of money out of thin air (the money creation I described when a debt is created) is A GOOD THING as long as the money goes into something that in turn creates wealth. If someone uses the money to start a company and create something people want, wealth is created, jobs are created, and the economy GROWS. Ideally, it grows enough to compensate for the increase in the money supply created by the debt. In that case, there is no inflation. (In actual practice, in some years there is a little bit of inflation and in others there is a little bit of deflation, so it evens out–ideally. A gold standard (again, ideally) keeps things from getting out of hand one way or the other, because people/countries have to part with gold when it does get out of hand, and this is a strong motivator–when there is a gold standard–to maintain honest [non-inflationary] money.)

If, on the other hand (and this has been happening for many years now–one of the many results of no longer backing our money with gold), the debt money goes for consumable items–items that do not generate wealth, but are simply consumed (furniture, homes, cars, stuff you put on your credit card, etc)–then you have debt that doesn’t create wealth. This debt is referred to as “non-self-liquidating debt”, because it doesn’t create the wealth that a) grows the economy, and at the same time b) provides the money to pay off the debt itself. This kind of debt does create inflation (which is why since 1970 it takes 12+ dollars to buy what could be bought then for $1). Debt that creates wealth is self-liquidating debt, because it creates enough wealth to pay off the debt, plus enough to make the creation of the company or other enterprise worth all the risk and work (ie, it makes a profit).

At any rate, in our current environment, the huge amount of accumulated debt (most of which is NOT self-liquidating) is either being paid off or found to be unpayable. This causes huge amounts of money (most of which is unpayable debt) to disappear. All the bailouts and QE 1,2,3 etc. are attempts to creates new debt to replace it, so as to avoid the deflation that naturally happens when debts go to money heaven.

Once true deflation starts it becomes a chain reaction and leads to the sorts of things that happened in the 1930s–foreclosures, massive loss of jobs, huge poverty, huge suffering (hmmm–a lot like what’s happening today). The whole society is forced to live on less while the debt is being “repaid” (all debts are repaid–if not by the borrower, then by the lender). In our current situation, stuff was created, bought, and consumed before the money was there to buy it (in otherwords, it was purchased on credit), and now, finally, the piper must be paid. When you start paying back a debt you obviously have less to live on while you’re paying it back. This is happening all over the world, and EVERYONE (save a few who have the reins of power and can use force to steal from the rest) will live at a lower standard of living. And, I would predict that this process will continue for DECADES, perhaps generations. That is how huge the debt is that must be paid (the debt is many, many times the value of EVERYTHING of value in the entire world).

Right now the powers that be are pumping more debt money into the economy (through bailouts, “quantitative easing”, etc) to try to replace what is disappearing through the disappearance of credit money, also called deflation, or deleveraging. So far those powers that be are keeping up–they are creating just enough new credit to make up for the old credit that is going to money heaven. Once deflation really gets going, though, they won’t have a prayer of keeping up. This chain reaction came within hours of being ignited in the last meltdown a few years ago, where most people lost 40% of their 401k’s. The powers that be probably won’t be able to forestall it a second time, though.

There is one hope, though–and this is the only escape for the government and the big banks who are pumping all this new debt into the economy:

If the economy GROWS (enough wealth is created that the debt can be paid), the collapse that every deflation leads to might be avoided. Unfortunately, the economy is NOT going to grow enough (if it grows at all–today’s growth is miniscule and shrinking, and may must be statistical smoke and mirrors). First, it’s very difficult for economies to grow in this environment (HUGE HUGE debt, no jobs, etc). The reality is that the economy will not grow until the debt has been “paid”–until the deleveraging, the deflation, has run its course. If we had a much smaller amount of debt–perhaps what we had 15 years ago, we MIGHT grow our way out of it. Now, it’s too late. The debt, as I said, is greater than the value of EVERYTHING. The amount of growth needed would be some truly magical growth beyond anything the world has ever seen.

And, to make matters worse, in times like these–times of increasingly negative social mood–governments become more authoritarian and LESS free market oriented. Capitalism, you may have noticed, is being blamed, demonized, restricted. The very engine that needs to be set free is fettered. More regulation and ways to block capital formation are created everyday. While Obama (to pick one example) talks about increasing jobs and growing the economy, those who are watching what he actually DOES are seeing action after action after action that blocks capitalism and the free market from working. You would think (and, as a matter of fact, I DO think) that these guys are sitting around trying to NOT grow the economy.

Finally, when government gets this large, and centralizes this much power, there are many huge international companies that line up to suck on the government power tit, which is why they CAN steal from others. Without that government power (I have said this many times on this blog) these companies a) would never have become so big, and b) would have one power, and one power only–to create and sell a product to those willing to buy it voluntarily. Unfortunately, I don’t have room here to go into the reason why this is so. Perhaps in a future post I will discuss why centralized power (not capitalism) is the source of the problems we face.

At any rate, we are faced with a HUGE, unimaginably high debt that will never be paid. It WILL disappear through non-payment. This WILL cause a massive deflation (a contraction of the money supply, as everything that really has no value, because it’s just unpayable debt, is extinguished), and no amount of government or Federal Reserve Bank creation of more credit-based funny money will help.

First, there is no way to create enough new credit money, and there is no way to actually get it into circulation in the economy. Second, even the money they are creating now is just sitting there in banks as little 1’s and 0’s in someone’s computer. This allows the banks to PRETEND that the assets they hold (all the many kinds of debt instruments that can never be paid) are actually worth something. 98% of these “assets” (“promises to pay”) will eventually be shown to be worthless. Even now, the banks don’t want to lend the funny money the Fed is creating (they just want their balance sheets to LOOK better), and in this environment there aren’t any worthy borrowers out there who want to borrow it and use it to create new companies and new wealth.

What is coming is a massive game of musical chairs, where the chairs are money. Money (and by that I mean debt instruments–someone’s promise to pay) will disappear as it becomes obvious that the promise to pay cannot be kept. 7 billion people will be scrambling for a chair as most of the chairs disappear. If you have money in a bank–which has lent out 30 times as much as they have deposits (this is called “fractional reserve banking”, and it is legal!)–and just 3% of the depositors come to the bank and ask for their money (this is called “a run on the bank”), the other 97% will get no money, no chair. In fact, long before a run happens the government will do something to make it look as if this isn’t happening. They will ration withdrawals for some other supposed reason. This same thing will happen (a failure to make good on the promise to pay) with bonds, money market funds, pensions, 401Ks, and a thousand other debt instruments.

If your “wealth” is someone’s promise to pay (and it probably is), you will quite likely be left without a chair. But don’t worry. Obama (or one of the other central planners in the world) will take care of you. At least that’s the promise. I’m a bit skeptical (based on the history of these sorts of things, and the facts of the situation today) that these guys will be able to make good on it when the time comes, though.

What’s more, historically goverments (which become quite authoritarian in such times–voters actually DEMAND more authoritarianism at such times, a form of insanity to be sure) always make whatever a prudent person would do to protect himself in such circumstances illegal. Again, I don’t have time to give lengthy examples, but I can think of two off the top of my head: hoarding cash (actual currency), or moving money out of the country, to places where it might be safer. Both of these will eventually be strongly discouraged, taxed, or outlawed. Those who move money offshore are already demonized. What’s wrong with these greedy people who don’t want to lose their money?

So here it is, in a nutshell:

1) Capitalism allows assets to be “capitalized” so they can be invested in something that creates wealth. This has raised the standard of living of humans by probably at least 100,000% since the 1400s.

2) At a certain point, the safeguards that keep this process honest are removed. Two I can think of are the creation of the Fed in 1913 (very anti-free market) and going off the gold standard in 1971. This allows legatized stealing by the government and huge corporations who ally themselves with the government.

3) The age of consumer debt (debt that creates no wealth but is just used for consumption) creates inflation, in addition to debt creation for massive government spending, destroying the value of the money and becoming a silent tax for the entire population.

4) The debt eventually becomes so large it is impossible to pay. We’re there, folks.

5) During this time the size of government increased by huge multiples, controlling decisions individuals used to make for themselves and adding layers of expensive regulations so that the entire society becomes like an afternoon at the DMV and huge corporations are allowed to grow and to use government power to legally steal.

6) Eventually the debt begins to DEflate–the game of financial musical chairs begins. During this time the whole world (since the whole world is so interconnected financially today) is forced to live at a much lower standard of living. This goes on until the debt is paid. In our case it’s going to take a L O N G time. It took about 20 years after the 1929 stock market crash. This is going to be worse–the debt is MANY times larger. MANY MANY MANY times.

7) Radicals and demagogues become mainstream and take over governments (and the media, popular culture, and the educational system) all over the world. The demagogues say, “Follow me. I know who’s to blame. Let’s get them!” Think Hitler, as one historical example. Hitler was ELECTED. In such times people admire this sort of person (at the time, Hitler was admired–only after the fact was it obvious who he really was) and want more authoritarian control (again, insanity).

8) When things hit bottom, you will hear people saying that the world is coming to an end, and that capitalism is dead (it won’t be, though–all other systems only create enough wealth for survival, and people aren’t so stupid that when this becomes apparent they won’t revert to sanity. Let’s hope we live that long.)

So what can you do? I’ve already said on this blog that we are in a car that has already been driven off the cliff, and now the people in the car are asking how to avoid the crash. There will be no avoiding of it. The car will hit the bottom of the canyon. I wish it weren’t so.

I don’t know exactly how this will play out. No one does. Everything is at best an educated guess (and, there are a lot of guesses by those who have no idea what all the variables are–uneducated guesses). In every case in history when this sort of thing has happened it has ended in a massive war. That will, no doubt, happen this time, too.

Who will be involved? There are huge tensions between European countries. There are huge tensiosn (beyond tensions, in fact) in the Middle East. There are huge tensions between China and Japan.  There are also tensions between many social groups. There is talk of states seceding from the US, just as in the American Civil War. Could there be another civil war? Nothing, at this point, would surprise me.

In the coming years those who have become dependent upon government will ultimately be stiffed as the governments fail to keep up with what they’ve promised to their dependents, who will then be extremely angry. (This is already happening, actually.) This will cause riots (or worse), as is already happening in Greece and the Middle East. The public has no idea that all of this is going to happen, or what the real cause is. They are listening to demagogues who will point them to who they “should” blame. Right now it looks like this will be “the rich”, corporations (those in league with big government deserve some of the blame), and capitalism and free markets (which doesn’t deserve the blame–it’s our straying from these two that has caused this mess). It may also be “The Jews”, as it was in the 1930s and 1940s (and in quite a few other times of negative social mood over the last few thousand years).

What can you do? Be out of debt if possible, or be prepared for the consequences of not paying your debts, whatever that turns out to be. Store some food. Have some actual cash not in a bank. Have some gold. Have a network of loved ones you can count on. Stop voting for people who are dishonestly making the debt (and the eventual consequences) bigger. Consider tapping into some of the sources of information I listed in my last few posts, so you know more about how things are unfolding. Consider what you would do if social services, utilities, and the infrastructure you count on are either temporarily out of service, or perhaps even out of service for a long time. And, please, use your Holosync. You’re going to need the awareness and higher threshold for stress Holosync creates in the coming years. In fact, it might save your life.

Quite frankly, I have no pat solution for all of this. I don’t know how it will play out, or when. I see all of this in process right now, though. I know what I’m saying here sounds really negative, and really scary. What can I say? What I know leads me to draw these conclusions. I hope I’m wrong. I don’t think I am. Whatever happens, life will go on in one way or another. The best things in life ARE free. A lot of people are going to learn to focus on those things in coming years, and less on the newest electronic toy or some other external item.

And, as life goes on in the coming years, people will need things, and you can be someone who provides those things. You can start a business, if you want to, or work for someone else who is providing things people need. You CAN create a good life, even in bad times, especially if you don’t get unconsciously caught up in herd-like negative social mood. Be like a Boy Scout. Be Prepared.

Finally, I’ve written these last 4 posts, plus this one, knowing that they might be quite unpopular with some people, on the assumption that if you’re aware of what is happening–rather than just being unconsciously swept up in it–you have more choice about whether your emotions run away with you (and you angrily follow the radicals who want to lead to you) and blindly follow the negative social mood herd. And, you may have a chance of being more prepared.

To all of you who want to attack me for posting this, save your strength. I’m not interested in having angry debates (as happened with the last several posts) with uninformed people. Don’t shoot the messenger. If you can prove to yourself that all of this is baloney, good for you. If you have legitimate questions, and can’t figure out how what I’m saying squares with something else you’re pretty sure is accurate, please ask. Ask with some respect, though. Name callers will just be deleted and banned. I don’t have time for that sort of crap. I have a lot to do, and a lot of people relying on me. I don’t have time to read angry rants or to pick apart the faulty logic of uninformed people who wouldn’t change their mind anyway no matter what I say.

You might go back and read my three posts on Going to Hell in a Handbasket, because a lot of what I said was going to happen in those posts now HAS happened, or is happening–which ought to give me some credibility. Some of the very smartest (and reasonable) people in the world see things the way I do.

I wish all of you the best. As always, be well.

Mortal Man

Produced by Sounwave

[Hook 1]
The ghost of Mandela, hope my flows they propel it
Let these words be your earth and moon
You consume every message
As I lead this army make room for mistakes and depression
And with that being said my nigga, let me ask this question:

[Bridge 1]
When shit hit the fan, is you still a fan?
When shit hit the fan (one two, one two)
When shit hit the fan, is you still a fan?
When shit hit the fan, is you still a fan?

[Hook 1]

[Bridge 2]
When shit hit the fan, is you still a fan?
When shit hit the fan, is you still a fan?
Want you look to your left and right, make sure you ask your friends
When shit hit the fan, is you still a fan?

[Verse 1]
Do you believe in me? Are you deceiving me?
Could I let you down easily, is your heart where it need to be?
Is your smile on permanent? Is your vow on lifetime?
Would you know where the sermon is if I died in this next line?
If I’m tried in a court of law, if the industry cut me off
If the government want me dead, plant cocaine in my car
Would you judge me a drug-head or see me as K. Lamar
Or question my character and degrade me on every blog
Want you to love me like Nelson, want you to hug me like Nelson
I freed you from being a slave in your mind, you’re very welcome
You tell me my song is more than a song, it’s surely a blessing
But a prophet ain’t a prophet til they ask you this question:

[Bridge 2]

[Hook 2]
The ghost of Mandela, hope my flows they propel it
Let my words be your earth and moon you consume every message
As I lead this army make room for mistakes and depression
And with that

[Verse 2]
Do you believe in me? How much you believe in her?
You think she gon’ stick around if them 25 years occur?
You think he can hold you down when you down behind bars hurt?
You think y’all on common ground if you promise to be the first? Can you be immortalised without your life being expired?
Even though you share the same blood is it worth the time?
Like who got your best interest?
Like how much are you dependent?
How clutch are the people that say they love you?
And who pretending?
How tough is your skin when they turn you in?
Do you show forgiveness?
What brush do you bend when dusting your shoulders from being offended?
What kind of den did they put you in when the lions start hissing?
What kind of bridge did they burn?
Revenge or your mind when it’s mentioned?
You wanna love like Nelson, you wanna be like Nelson
You wanna walk in his shoes but you peacemaking seldom
You wanna be remembered that delivered the message
That considered the blessing of everyone
This your lesson for everyone, say

[Bridge 2]

[Hook 3]
The voice of Mandela, hope this flow stay propellin’
Let my word be your earth and moon
You consume every message
As I lead this army make room for mistakes and depression
And if you riding with me, nigga

[Verse 3]
I been wrote off before, I got abandonment issues
I hold grudges like bad judges, don’t let me resent you
That’s not Nelson-like, want you to love me like Nelson
I went to Robben’s Island analysing, that’s where his cell is
So I could find clarity, like how much you cherish me
Is this relationship a fake or real as the heavens be?
See I got to question it all, family, friends, fans, cats, dogs
Trees, plants, grass, how the wind blow
Murphy’s Law, generation X, will I ever be your X?
Floss off a baby step, mauled by the mouth of
Pit bulls, put me under stress
Crawled under rocks, ducking y’all, it’s respect
But then tomorrow, put my back against the wall
How many leaders you said you needed then left ‘em for dead?
Is it Moses, is it Huey Newton or Detroit Red?
Is it Martin Luther, JFK, shoot or you assassin
Is it Jackie, is it Jesse, oh I know, it’s Michael Jackson, oh

[Bridge 3]
When shit hit the fan, is you still a fan?
When shit hit the fan, is you still a fan?
That nigga gave us Billie Jean, you say he touched those kids?
When shit hit the fan, is you still a fan?

[Hook 4]
The ghost of Mandela, hope my flows they propel it
Let my word be your earth and moon you consume every message
As I lead this army make room for mistakes and depression
And if you riding with me nigga, let me ask this question nigga

[Outro: Kendrick Lamar & 2Pac]

[Kendrick Lamar]
“I remember you was conflicted
Misusing your influence
Sometimes I did the same
Abusing my power, full of resentment
Resentment that turned into a deep depression
Found myself screaming in the hotel room
I didn’t wanna self destruct
The evils of Lucy was all around me
So I went running for answers
Until I came home
But that didn’t stop survivor’s guilt
Going back and forth trying to convince myself the stripes I earned
Or maybe how A-1 my foundation was
But while my loved ones was fighting the continuous war back in the city, I was entering a new one
A war that was based on apartheid and discrimination
Made me wanna go back to the city and tell the homies what I learned
The word was respect
Just because you wore a different gang colour than mine’s
Doesn’t mean I can’t respect you as a black man
Forgetting all the pain and hurt we caused each other in these streets
If I respect you, we unify and stop the enemy from killing us
But I don’t know, I’m no mortal man, maybe I’m just another nigga”

Shit and that’s all I wrote
I was gonna call it Another Nigga but, it ain’t really a poem, I just felt like it’s something you probably could relate to. Other than that, now that I finally got a chance to holla at you, I always wanted to ask you about a certain situa — , about a metaphor actually, you spoke on the ground. What you mean ‘bout that, what the ground represent?

[2Pac]
The ground is gonna open up and swallow the evil

[Kendrick Lamar]
Right

[2Pac]

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