QE 4: Folks, This Ain't Normal

You said,

i tell you this plan can work.
OK... I am an engineer as well, and I manage engineers.  I am also a truth seeker in these monetary waters.  So I get the part where the FED sends the interest on the balance sheet back to the Treasury, and I assume this is your justification for things working out.  And you admit that there is inflation to come.  My question to you is, when the inflation comes, how will the FED control it?  No matter how much of the deficit spending the FED monetizes.. if every holder of US debt wants to sell at the same time, the FED will not be able to control that.  As well, once the confidence in US debt is lost, so goes confidence in the dollar, and all those petro/reserve currency dollars spread all over the world start coming home, and fast.  What then?  How will this scenario in any way resemble, "working out" ?  Why has this business of money-for-nothing money printing never "worked out" before?  If you are going to start using monetary aggregates in your justification... you should do a little research on the one that measures all money, including "Euro" dollars.. or dollars abroad... oops, they stopped publishing M3 in 2006.    


Earlier you talked about private capital and gov't funding… you don't know what you are talking about.  The gov't is funded by tax dollars… our problem is that we can't live within our freaking means… that is the solution, period.             

ao, you pretty well covered everything. Hey, are there specs on how to make that tin foil hat? I'm in Brother.Happy Holidays

The resource based economy, as put forward by Jacque Fresco, a self-taught engineer, resolves these issues as well as the monetary one. Science has answers, but, institutions can't implement the steps that would make them obsolete.

then we just have environmental degredation, resource depletion, and climate change to worry about.  one less thing.
The resource based economy, as put forward by Jacque Fresco, a self-taught engineer, resolves these issues as well as the monetary one. Science has answers, but, institutions can't implement the steps that would make them obsolete.
There has been extensive discussion on this issue, Jacque Fresco, Peter Joseph, etc. in the past … ad nauseum.  Check the friendly archives and pllleeeaaaassssseeeeee, let's not go there again.  Science appears to have the answers but, in fact, doesn't.  When there is a working, successful model, then, and only then, could you claim any kind of success … and that's not gonna happen. 
"… it's all happened before and it'll happen again …"

Back in the 80s when I was in college, my advisor was Tom McGuire, one of the leading health economists in the country. He was dismayed with the condition of the health field then, I can only wonder what he thinks now. Too much beauracracy is involved in medicine and too much control is in the hands of the insurance companies (with government policy being written by them). I have many friends that are doctors and I hear the same concerns. Keep up the good fight!!
Thank You

 PCMcGee wrote:
"Science has answers, but, institutions can't implement the steps that would make them obsolete."
People had the answers well before science was invented.  I love and value science as much as anyone and as much as any other subject, but I don't value it more than any other subject. That is where I differ from most. I am often labeled a science and technology basher by those that don't understand my position.  Unfortunately, this is part of the social myth/narrative that has gone awry. As the saying goes, if all you see in your toolbox is a hammer, everything looks like a nail. This quote keeps coming up in these conversations for good reason. Science and Technology alone will not solve this EEE predicament. It can share equally in how we reshape our way of thinking going forward.
Engineers in this thread, please read Willem Vanderburg's "Our War on Ourselves." He has a PhD in engineering from MIT as well in the social sciences. He is the Director of Technology and Social Development at Univ. of Toronto. He shows in the book how today's engineers are some of the worst at seeing outside of their disciplinary silos. He argues that engineers continue to design within circular end-of-pipe solution models which continue to create and perpetuate the predicaments we are facing, i.e. too often engineers look only at the "facts" that exist within their engineering models.
Saying that we have to live within our means doesn't address the paradox of thrift in the current economic models. Doesn't the fiat currency economic model depend on ever expanding debt? Living within our means, i.e. spending less than we make, would cause this model to collapes. One of the most common narratives we live by, but I don't hear from posters is that of "if you work hard in this country/world you will succeed." That is another narrative that is built into the system. Many of us took loans out to buy houses, cars, etc. with the expectation that if we worked hard, whether in conjunction with educating ourselves or not, that our incomes would eventually catch up. We have to "pay our dues" in the beginning don't we? Taking a loan is a risk, but the narrative implied is "if you work hard you will be able to repay it." We must remember this is the narrative banks live by and promote. This narrative became exaggerated by the banks through the mechanism of advertising and because of their participation in derivatives. The narrative was fraudulantly distorted making it difficult for most individuals to sort out what was manageable. Many went to the bank and asked "what can I afford?" This is and was a part of the social contract between the rich and poor. A contract that is now under attack primarily from the elite class (hence…the poor are just lazy and would rather mooch off the system). The poor and uneducated rely on those above to be honest and genuinely care for them.
Isn't this "work hard" part of the narrative that makes the "free market" model work? Unfortunately, I'm seeing more and more people to whom this doesn't apply. I see people in their 50s that have lots of experience and wisdom in their fields, they have worked hard, but they are often being passed up by employers for "easier to work with" cheaper kids in their 20s. I also see many of those in their 20s coming out of college with debt that they will not be able to repay, and they can't find a job. 
So, to talk in terms of monetary procedural models says nothing about the underlying narratives that are collapsing. This monetary policy is only as good as the "faith" that exists within it. So we can talk about this and that technical model, but if the faith on which they are built collapses, well, we have to have a different conversation.
Thank You

Gillbilly said,

Saying that we have to live within our means doesn't address the paradox of thrift in the current economic models. Doesn't the fiat currency economic model depend on ever expanding debt? Living within our means, i.e. spending less than we make, would cause this model to collapes.

While I have to agree with you that the system, as being run by the modern FED, is acting like the entire model would collapse if debt did not continue increasing, by hook or by crook...I don't think this is strickly true.. it's just a matter of who eats the losses.  The secret to this modern painless era is of course to make sure that there is a constant uplift from inflation to aid in times of low or no-organic growth.. this new era can be seen very clearly on Doug Short's wonderful chart;


This modern era also encompasses the period of the last four decades that Chris points out where debt has grown with an exponential curve fit (correlation coefficient) of 0.99!  I think the two charts are telling the same story from different angles - the banishment of deflation and the enablement of continuous debt growth. It is also true that the timeframe Chris points to corresponds to the pure fiat portion of our monetary history… so Gillbilly's point is not without support from the data.     

With a FED/Gov't unwilling to allow any major TBTF institution to go under, and unwilling to allow the interest rate mechanism to impose it's usual cruel discipline(see Greece)… something will have to give ultimately.  I believe that something will be the currency.   

Ao, your post is a breath of fresh air and has allowed me to momentarily lift up my tin foil hat to get some much needed circulation underneath You have nailed it with your most excellent writing, mirroring many of my own thoughts, which have largely been kept to myself. It is bad enough being looked upon as being a bit paranoid for doing some prepping. But to voice some of these kind of thoughts would have my friends and family wondering if they should be giving me a gift certificate to the looney tunes hotel for Christmas!
So, with tin foil hat firmly in place again, I have always wondered…
About Facebook and Google, with the thinking that, especially in the case of Facebook, hmmm, how convenient to have all this personal data in one big pot for Big Brother data mining. It would not surprise me one iota if the CIA was the seed and ongoing support behind both of them. What a brilliant manipulation to get info on the people ("sheeple")! I don't do Facebook myself, never have, and I am just absolutely and continuously stunned/shocked/amazed by the info that people put on there.
Another thing that I have always wondered about are flu pandemics and how the sheeple have reacted to them. In Canada the craziness set in after a seemingly healthy 12 year old boy in Toronto died of the H!N1 flu (2009 I think). In the ensuing panic, there was a mass rush to get innoculated, with allegations of queue jumping by people with money. I read that about 40% of the population ended up getting flu shots. That is a whack of people. As there has long been speculation, at least in the tin foil hat circles, that there will be some eventual population control, I thought hmmm… how convenient is this - masses of un-questioning people stampeding to be injected with god knows what?!?
I have no doubt that we are monitored in far more insidious ways that we like to imagine, just as I have no doubt that TPTB are doing things that would horrify the sheeple. But as long as the herd is passive and complacent, numbed with their focus on consumerism and the inane programming on the boob-tube, they do not have to worry about being found out.
Okay, time to shift out of my conspiracy thinking mode and into my baking Christmas cookie mode, which is much more pleasant!

I just realized that your response was a question, not a statement.  I apologize if my response was terse.  But what I said holds true.  The interest is supposedly paid back from the Fed, but it's all smoke and mirrors, as the Fed is a  for profit (and power) organization.

Because our loss of liberties is simple fact, not fiction.


Top U.S. intelligence officials gathered in the White House Situation Room in March to debate a controversial proposal. Counterterrorism officials wanted to create a government dragnet, sweeping up millions of records about U.S. citizens—even people suspected of no crime.

Not everyone was on board. “This is a sea change in the way that the government interacts with the general public,” Mary Ellen Callahan, chief privacy officer of the Department of Homeland Security, argued in the meeting, according to people familiar with the discussions.

A week later, the attorney general signed the changes into effect.

Thanks for the justice Holder.

The rules now allow the little-known National Counterterrorism Center to examine the government files of U.S. citizens for possible criminal behavior, even if there is no reason to suspect them. That is a departure from past practice, which barred the agency from storing information about ordinary Americans unless a person was a terror suspect or related to an investigation.

I know, I know.... you only have to worry if your a bad guy.    


Amen Jim.

Isn't that a favorite line?  As we know, the problem is good guys can be bad guys to bad guys.
My response to that line is, tell that to the Jews who lived in the Warsaw ghetto.

It could be argued that some countries have been in a currecy war for decades with the casualty being American manufacturing. China has pegged it's currecy and massively subsidises industries and some products. The price of gasoline is fixed in china for example. QE can be seen as a reply to decades of currency manipulation in other nations.
The positive benefits of inflating away debts are that your exports are cheaper on the world market, imports are more expensive to bring in from other countries. The labour force in the USA is becoming relatively cheaper. There will be a point at which they have inflated away enough debt, and made the cost of producing in the US cheap enough to stimulate a revival in manufacturing.

I can see the economic argument about what they are doing and it makes a certain kind of sense.

On the other hand the costs would be deflating away the value of any savings and punishing fiscally prudent people. The real problem is in making sure they don't create hyperinflation, only time will tell. For what it is worth all my savings are in gold, I just don't trust someone who didn't see the problem coming years ago.

There is a reason Harry Truman asked for a one armed economist.

The real secret that needs to get out is that we have the power.  Get out of this system now.  Lead a dual life as a way of exiting, one foot in and one foot out, as a transition.  We know what we need to do.  The current system, as so well articulated by most of the posts, is parasitical.  That is both its strength and its weakness.  It generates nothing on its own, it is dependent on us.  Stop feeding it.  Even discussing it in this  much depth sucks your life energy from you.  If we need to collectively blow off steam, by all means let it rip, but lets not stop there.
Natural systems by there nature are abundant and self healing. Mechanistic, reductionist, cartesian systems invented by man are limiting and self destructive.  Gillbilly, I totally understand where you are coming from.  I am not antiscience either, but sometimes come off that way.  The survival instinct is useful part of human consciousness, but if you live there all the time and someone cuts you off in traffic and you see that as a threat to your survival, that will have disasterous effects on your life and the life of others. The knowledge of science has it critical and useful place, but it is not a substitute for wisdom.

AO your lengthy "tin foil hat" rant is all true.  The frustration of keeping a secret can drive one crazy, but we need to let it go, let the dead bury the dead.  Give life to those that are living.

hi Jim, i mean by private funding that treasuries are purchased like any other financial instrument, and classically they have been purchased by private individuals.  but my point is that the government borrowing money from anyone to pay the current account is a rediculous plan, deferring inflation but making it worse because of interest payments.now imagine the gov just printing whatever it doesnt collect in taxes to cover the current account.  then there is no need to even keep track of "debt" per se–there is no debt.  there is inflation, which essentially takes value from all dollar denominated savings to pay for the gov account. 
so here is what i think bernanke, and at this point almost all the central bankers, are thinking.  the inflation caused by printing (or the shell game between the CBs and the gov treasuries, which in the end is the same thing) is measured against the entire dollar denominated equity, not just m2, not just dollar bills in circulation, etc.  in fact most of the "money" in circulation has been generated by loans from banks, and this is a huymongous amount of $$.  so 85 billion is small compared to that.  so right now the governments can print and cause very little inflation, and eliminate the investors buying soveriegn debt, which is a good thing.  the money will never be repaid, it is printed.  so they can get away with this for quite a while.

…nor have any real explanation been given as to how this is even possible. Chris said: If you had told me 4 years ago (?) that we would have printed what we have that he thought you" would be nuts"! Does this mean that if asked the same question four years ago what percentage he or any expert would give to High or Hyperinflation would be 90% as Chris (I believe, so please correct me if I am wrong) now gives, and that the 10% would have profitted handsomely as they were right, and the answer would have been YES, to higher inflation. So we do the same thing again for the next four years does this mean 90% Hyperinflation? Hell, I love Chris, and I believe the numbers would suggest that this would be realistic but it may be that we are wrong. I am trying very hard Folks to watch very carefully that I DON"T get hung up on what I think will be the case but what IS the case. What iIS the case is we have doubled our monetary base and we ARE going or are in a RECESSION. World Wide!!! Obviously "WRONG" is a relative term as we have been very profittable in all things Preparations and Resiliency. My point is that we would have all expected much higher Inflation than we have had to date. As we monetize the Baby Boomers to the tune of 80 to 100 Trillion dollars strongly suggest that we go HyperInflation but we won't be allowed to do that so where this goes is still a guess. If retirement is changed to 75 then this problem goes buy, buy and that will mean what exactly?
 We will continue this stock buy back plan with the FED buying back the Debt of all distressed assets to make the banks balance sheets whole where the banks then buy treasuries. No money enters or leaves the system as the banks are not lending a darn thing, and business are building nothing as there is no demand, and the consumer pays down debt with lower and lower wages. Plus are about to get really slammed with taxes from Obama care to any other kind of tax that the State and Federal Government can conjure up to balance the books. That is not a receipe for Inflation Folks.

Some think housing has bottomed and I call Bullshit on that theory. Until the workers are paid a living wage or housing falls to the point where the wage earners can afford, and are secure in their current jobs, that this housing beast is foreplay to the next serious down turn, and more and more of these good Folks struggling just to hang on finally relent and bankrupts in mass their entire debt problems. It is so easy to do that resisting this tactical move will be hard indeed. This will occur the more the good Folks out there realize that the FED cannot provide enough money to keep things as they have. So far each and every QE has had the shelf life of raw meet left in the sun for 24 hours. All of this and more will feed a negative feedback loop until balance is restored. Balance will always get restored come what may. 

We look now at the reality of all that printing and we still have the FED in full frontal battle with Deflation. They are losing Folks. We will have a Recession. The U.S. is now in negotiations to raise taxes and cut spending, and this is by definition, Deflationary. Europe, Japan are in a serious Deflationary cycle that risk a world wide Depression as both systems are unsustainable, and neither will be capable of righting their respective ships. China is just a Rich kid who doesn't consume anything, and have very little value to the world, especially when the world requires nothing from them today. The DRYS indicate no commerce/trade, and train traffic is minimal.

We have a long way to fall yet as the purchases made from the future get used up. I know, absolutely, positively, that I can live on what I have right now, in my home. I can purchase for some time yet items used instead of new, and not have to buy a thing but the essentials for the next 20 years. I have all the materials for repairs for the rest of my life as just inventory I took with me into retirement.

Retirement consists of working harder at this (learning markets and world events) than I ever had to physically working. I just can put more hours in as this is less taxing. For me this is just history in the making, and a blip when recorded and read years from now. My guess is the history books will read of this time and chuckle as we will win this battle and thus write the books. 

I think that wanting Inflation so BAD that we are missing terrific opportunities to play parts of the market for great gains, and I for one will NOT allow myself to tow the line because of something that was suppose to happen, hasn't. That too is a TELL, and next up is a Recession, and perhaps a horrible one. NO ONE KNOWS but the trend suggests that the FED is out of options. Muddle through would be great are my thoughts.

In all of our history we printed paper in such large amounts that we doubled the current output in just 4 years! We have 3% Inflation!! with a Deflationary event days away. That is truly a shocker, and the why of that is pretty important to understand. I know what SGS follows but reality and what should be are obviously two different beasts.

I would like the Professor to step back, take the numbers of 4 years ago then add the new money added to the system in the last 4 years and guess estimate the Inflation and Gold price today. I would venture the numbers would be quite large in Inflation and Gold prices, and he would have been wrong, we would have been wrong, we ARE WRONG! Maybe not tomorrow but maybe tomorrow too. We have all I suppose benefitted from the stock market and Gold rising. We have benefitted from our Preparations and are more Resilient so we have done great. We are NOT NUTS, if anything we are exceptionallt bright are my thoughts. In all of this turmoil I have NEVER enjoyed myself more, valued more, walked out of my front door with a greater sense to life. This is really terrific stuff Folks. It really is. I DO NOT wear a foiled hat either as I want all of my senses overloaded as it excites the hell out of me. Endorphines are a rushing through me that I couldn't imagine ever being more alive. I want what happens to happen come what may, and I want to fight the good fight.

Inflation in our future, you would think, but maybe not. We will have Inflation that's a given but high Inflation, Hyperinflation? Are you sure? Are we sure? Today it is Recession and Deflation, and I say those with GOLD, physical GOLD will NOT have the stones to hold when this next RECESSION rears its ugly head. Plenty of opportunity lies ahead for those who wait. In saying all of this I have decided that GOLD is just my insurance because I refuse to have a catastrophic claim against my dollars destroy me. So just a good business decision. I will hold, and besides Gold has to drop considerably for me to lose at this point. Perhaps the new trend will be defined at some point where selling or buying more will be crystal clear.

We throw around "The Sheeple" rather loosely around here sometimes, and I get this, and have used the phrase myself. However, and to be clear, I have way more faith in the American people, and that includes my Brothers and Sisters in arms that defending the Constitution of the United States is a serious DNA marker, and that we as a people WILL right the ship at some point in the future. It doesn't have to be perfect as it never has been but we will get this beast/ship righted. Those who wish to leave please do so but don't worry about shutting the lights off, I'll tend to that, and those like me. My guess, there's allot like me (for those who leave, please DO NOT take this personal as we are allowed to do as we wish, no problem. I could give a shit).

I now live in a farming community but this is evident all over America. The cemetery plot facing Main St. U.S.A. In these plots are boys and girls who gave their lives for their country, and an ideal for over 200 hundred years. and we are the greatest single country the world has ever known. We are the military and economic might of the world still. All because "We The People" have made this so. That is a trend I don't see changing any time soon. Civil War, World Wars, Depressions, Recessions, natural catastrophes, our racial problems, and the Mighty Mississippi actually stopping and going the other way has NOT changed what we all are, FREEDOM fighters to our core, problem solvers, and good Folks that can get ugly when affronted by anyone who wishes to change these very basic values. We have been complacent many times before just like we are today but we worked it out. Again, "what are you prepared to do"?, that is the most important question we all face going forward. It may cost you your life but the banner you represent will be picked up by the next soldier of Freedom and carried along until this soldier falls and then at some point you raise that banner of victory. Those days may lay ahead of us and it is now we decide. Some will leave, and that's cool but many will stay, and that is righteous, my kinda Folks.

It is unimportant for anyone to respond to my posting as history has yet to be written, and until it is, there really is NO arguing anything. I think, you think, doesn't matter one tiny bit. All that matters is living life itself. Preparations and Resiliency are two words I believe in very much. They just make sense no matter what may come. Gold and Dollars are money and I suspect will be for many years to come so having both are a must. I just keep thinking about our National Debt and the fact that we are borroughing 40 plus cents on the dollar to pay bills and this Fiscal Cliff is just a down payment to getting our finances in order. It is going badly and it represents a smidge of what will have to be accomplished. Will it end up Inflation or Deflation? Hell, Europe and Japan scares the hell out of me more than anything, and these two economies could implode at any moment, and I have to believe this to be Deflationary in spite of anything we try to do. Still, if wages stay low and falling, and they are, then Deflation it is, and that is the trend right now soooo I protect my Dollars. I will short Oil, and hold my PM's, and maintain no Debt but my mortgage, and I reserve to change my mind at a moments notice as that appears to be where we are and that is that.

Folks, I read how nationally born citizens who were born in America has to pay taxes, and on the surface that is just so unfair. So, lets just say this person lives in China and the State Controlled Military goes all nuts on the citizenry, who the hell do you think will be the first in line at the nearest American Embassy to get his or her ass out of that country on the dime of the American tax payer? You betcha, RED and WHITE and BLUE will be screamed out, God Bless America will be sang loud and clear, and the American flag will be present just to save their lives. What is that worth, your life? 

67 days before catchers and pitchers report.

Happy Holidays Folks



…and just how bad will this be? Who defaults, when, and how quickly? Does it really go mainstream and the periphery bankrupts in droves? Does the FED have the tools to fight what is coming? Will they be late? Round two is a very real possibility as compared to 2008 is just a guess but a serious guess. 90% probability and how bad? Some think S&P 400 and Janjuah thinks S&P 800. My guess, YES, lower from here, much lower, and the market usually over corrects to the top and the bottom. It isn't going up and I give that a 95% chance but I could be wrong.

Be safe Folks

Happy Holidays


Bob, I love your posts. You always write with such passion! I love my country too but as you know there are many countries doing a lot of things better than we are. We also can't forget the U.S. has been the greatest pillager of the earth, therefore the biggest contributor to the 3Es predicament. I just wrote a new pledge of allegiance. I figure it's alright to do so since the original pledge was written by a flag salesman with the intent of selling flags. I apologize if anyone takes offense. This is partly humor, but who knows, maybe it'll go viral. 
I pledge allegiance to Planet Earth, To creatures great and small
And to the environment for which sustains
One World, we shall guard, indivisibly, with liberty and justice for all
Thank You

NJINEAR… you are just rehashing the argument that MMT'ers make to have the Gov't exercise the ability to create debt-free money… Platinum coins… blah, blah, blah.  Such a scheme, I believe, would end in tears even more quickly I think than having the printing press in the hands of the FED, who prints at interest.  This has been discussed here before…   

…and one week before Christmas I have but one thing in this world I care about, that makes EVERYTHING I do worthwhile and hopeful. I cannot acknowledge how others live their lives poorly as they are sowing the seeds of their destruction, and may very well take me with them but I can go kicking and screaming. I intend to.
Here's what I'm talking about, so enjoy.


I signed your pledge Gillbilly (thumbs up) and am committed to recycle and take care as you have pledged. This has been an ongoing delight of my Wife and I, the very least we can do.

I love you all as a Man does a fellow human being.

Happy Holidays


Oh yeah, The Temptations. I'll make you a deal. If and when we have a Peak Pros. holiday party, I will provide the live music. You won't be disappointed. Happy Holidays!Thank You