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C.S.
Lewis’ short but masterful The Great Divorce is about Ghosts in Hell who
journey by omnibus up through a crack in the earth to meet Solid People and
hopefully be guided into the mountains. As the Ghosts become
substantive their feet are pricked by the sharp grass. Only a few
overcome their problems and journey into the mountains while most board the
bus and shrink into oblivion as it descends back down the crack from whence
it came.
In the
financial realm, many are lured by the the derivative illusion and ensconced in a rapidly
dissipating cocoon of self-satisfied self-deception woven over their eyes and
mind leading to their faulty thinking that the way they see things is the way
things really are. Fractional reserve banks and fiat currency have
wrecked predictible havoc and mayhem on the entire world economy.
Fortunately, monetary and currency alternatives exist.
HOW TO
INTENTIONALLY CAUSE THE GREATER DEPRESSION
The Great Credit
Contraction and the accompanying liquidation of malinvestment is to be
embraced and not feared. As Murray Rothbard observed on page 18 of his
1963 America’s Great Depression, “It is true that
credit contraction may overcompensate, and, while contraction proceeds, it
may cause interest rates to be higher than free-market levels, and investment
lower than in the free market. But since contraction causes no
positive malinvestments, it will not lead to any painful period of depression
and adjustment.”
Mr.
Rothbard continues the observation that government policy can hobble the
adjustment process by: “(1) Prevent or delay liquidation, (2)
Inflate further, (3) Keep wage rates up, (4) Keep prices up, (5) Stimulate
consumption and discourage saving and (6) Subsidize unemployment.”
In the
present case, mark-to-market rules, like FAS 157, are not implemented,
delayed, ignored or willfully violated. For example, Section 132 of the
Emergency Economic Stabilization Act of 2008 is titled “Authority to
Suspend Mark-To-Market Accounting” and restates the SEC’s
authority to suspend the application of FAS 157.
The
Austrian definition of inflation is an increase in the money supply.
The Adjusted Monetary Base, the very lowest layer of power money, shows
a tremendous increase over the past couple months. The effects are most
likely masked by the tremendous slowing in the velocity of money.
In an
effort to stimulate consumption and discourage savings that will result in
keeping prices and wages high the Obama administration has unveiled a $1
trillion stimulus package. The Geithner toxic asset plan will only
serve to hasten the destruction of wealth from the economy as the system
evaporates.
Minimum wage
is set to rise for the third consecutive July. Unemployment will be
subsidized by extending benefits for 13 weeks and delaying the income tax
payments. Legacy industries, like the auto industry, are receiving
bailout money to keep wage rates up and people employed doing nothing all day
long because of the huge over capacity of automobiles.
Austan
Goolsbee, a senior Obama economic adviser, said on CBS’ Meet the Press,
“We’re out with the dithering, we’re in with a bang.”
FINANCIAL
INSANITY VIRUS EPIDEMIC OUT OF CONTROL
Well,
it is obvious that the Financial Insanity Virus epidemic is raging on Wall
Street and in Washington. They are hitting the bulls-eyes on
all six policies to hobble any potential recovery. The result will be a
lengthening and intensifying of The Great Credit Contraction and resulting Greater
Depression. Worse is that these criminal gangs costumed in government
regalia have no excuse for not knowing what the result will be.
Therefore, they are acting either with premeditation and deliberation
or with reckless disregard for the world economy and all the individuals
affected.
This
will result in a lot of economic and physical pain and misery coupled with
individual culpability. As the mentor in The Great Divorce sagely taught, “All who are
in Hell choose it. Without that self choice there could be no
Hell.” Indeed, “to be afraid of oneself is the last
horror.”
“All
Hell is smaller than one pebble of your earthly world: but it is smaller than
one atom of this world, the Real World.” The Great Credit
Contraction continues to grind while the illusions evaporate making
many organizations and institutions increasingly irrelevant. Hopefully
these soon to be worthless entities that are gluttonous parasites on the
global economy will become at the most footnotes in the annals of history.
Trace Mayer
RuntoGold.com
Trace Mayer,
J.D., holds a degree in Accounting from Brigham Young University, a law
degree from California Western School of Law and studies the Austrian school
of economics. He works as an entrepreneur, investor, journalist and monetary
scientist. He is a strong advocate of the freedom of speech, a member of the
Society of Professional Journalists and the San Diego County Bar Association.
He has appeared on ABC, NBC, BNN, many radio shows and presented at many
investment conferences throughout the world.
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