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In capitalist economies, capital, i.e. 'money', is created by central
banks in the form of credit; and the cost of that credit-central bank
interest rates-determines the rate of economic growth. In the end game,
however, this is not so.
In the end game, credit's expansive and inflationary incentives are offset
by the collapse of massive speculative bubbles resulting in dangerously low
levels of economic activity and a commensurate plunge in the velocity of
money.
When this happens, central banks cut interest rates hoping that cheaper
credit will revive growth. But, in the end game, attempting to revive growth
by lowering the cost of credit is like pushing on a string; a phrase
used in 1935 when Fed Governor Marriner Eccles was asked about Fed attempts
to revive the US economy.
[Fed] Governor Eccles: Under present circumstances there is very
little, if any, that can be done.
Congressman Goldsborough: You mean you cannot push on a string.
[Fed] Governor Eccles: That is a very good way to put it, one cannot push
on a string. We are in the depths of a depression and. beyond creating an
easy money situation through reduction of discount rates, there is very
little, if anything, that the reserve organization can do to bring about
recovery.
In the 1920s, excessive monetary creation by the Fed fueled an historic
stock market bubble. The greed and speculation ended on October 29, 1929 when
the bubble burst, stocks plummeted, banks closed, savings were lost and
unemployment soared-plunging the US into the Great Depression of the 1930s.
Deflationary depressions are always and everywhere a monetary
phenomenon. Excessive monetary growth creates large speculative bubbles, the
bubbles burst and economic growth collapses, even when the quantity of money
is increased. This is-always and everywhere-the cause of deflationary
depressions.
DRSchoon, Neo-Friedman Monetarism in an Age of Monetary Debasement
FUEL FOR ANOTHER DEFLATIONARY
DEPRESSION
US Money Supply, 1980 - 2012
 
PAST AND FUTURE DEPRESSIONS
In 1933 to prevent another Great Depression, the US Congress passed the
Glass-Steagall Act. By separating investment banking (leveraged betting) from
commercial banking (savings & loans), banks were legally prevented from
betting the savings of America as they had in the 1920s.
In 1933, the U.S. Congress passed the Glass-Steagall Act mandating a
separation between commercial banks, which take deposits and extend loans,
and investment banks, which underwrite, issue, and distribute stocks, bonds,
and other securities.
http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929
In 1999, in a rare bipartisan effort, a Republican Congress and a Democrat
President, Bill Clinton, repealed Glass-Steagall; allowing investment bankers
to once again place dangerously leveraged bets using America's savings in
Wall Street casinos.
Bipartisan usually means that a larger-than-usual deception is being
carried out.
George Carlin
Between 1999 and 2008, Wall Street banks again bet America's savings and
again lost-this time with dodgy bets on suspect subprime mortgages;
triggering the greatest financial crisis since the crash of 1929. Once again
banks closed, economic activity plummeted and the velocity of money plunged.
THE VELOCITY OF MONEY
THE FIVE PERCENT SOLUTION
On May 6, 2015, Stephen King, chief economist at HSBC, wrote in a note to
HSBC clients:
The world economy is like an ocean liner without lifeboats. If another
recession hits, it could be a truly titanic struggle for policy makers.
Whereas previous recoveries have enabled monetary and fiscal policymakers to
replenish their ammunition, this recovery - both in the US and elsewhere -
has been distinguished by a persistent munitions shortage. This is a major
problem. In all recessions since the 1970s, the US Fed funds rate has fallen
by a minimum of 5 percentage points. That kind of traditional stimulus is now
completely ruled out.
Stephen King, Chief Economist HSBC, http://www.businessinsider.com/hsbcs-stephen-...5#ixzz3a34a99ow
In 2006, the Fed funds rate was 5.25%. After the 2008 financial crisis,
the Fed lowered the discount rate to 0.00 - 0.25%, the 5 percentage point
traditional stimulus at which economies regain inflationary momentum.
They didn't.
We have global bond yields going back to the 16th century and only in
the 1570s and 1930s have yields been as low as they have been in recent
months.
David Rosenberg, May 6, 2015
Today, after six years of zero interest rates, the specter of another
deflationary depression is growing in every advanced, i.e. overly-indebted,
economy in the world-the US, the UK, the EU, Japan, China, etc.
Offered zero rate sovereign bonds as an investment, investors are choosing
to invest in negative rate bonds hoping against hope that central bankers can
restore the requisite balance between credit and debt necessary for their
ponzi-scheme to survive.
Arbitraging the cost of capital
doesn't work when capital is free
Central banks have now, quite literally, bet the bank. However, once
quiescent deflationary forces, awakened by the collapse of the 1990 Japanese
Nikkei, the 2000 US dot.com and 2008 US real estate bubbles, are about to be
further inflamed by the coming collapse of China's real estate and stock
market bubbles.
FUEL FOR THENEXT DEFLATIONARY
DEPRESSION
China's monetary growth
Deflationary depressions are always and everywhere a monetary
phenomenon. Excessive monetary growth creates large speculative bubbles, the
bubbles burst and economic growth collapses, even when the quantity of money
is increased. This is-always and everywhere-the cause of deflationary
depressions.
DRSchoon, Neo-Friedman Monetarism in an Age of Monetary Debasement
Hanging by a noose
Pushing on a string
Bankers wondering what
Tomorrow's going to bring
THE MOTHER OF ALL PARADIGM SHIFTS
Humanity is in the midst of a historic and momentous paradigm shift.
Governments will fall, natural disasters will increase and the present world
will pass away, paving the way for the better world to come.
DRS, target="_blank" Silver
- the Canary in the Gold Mine, April 11, 2011
.the number of natural and geophysical disasters taking place each year
is noticeably skyrocketing.In 1970, the average of natural disasters that
were reported was 78; in 2004, this number jumped to 348.
http://borgenproject.org/natural-disasters-increasing/
On May 18, 2015, Andrew Freedman wrote:
It's only May, which means the tropical cyclone season in the Northern
Hemisphere is still in its infancy. The Atlantic season doesn't officially
start until June 1, after all.Yet already, in just the first four-and-a-half
months of the year, the planet has had more Category 5 storms - the most
destructive category - than its average annual total of such powerful
tempests.
http://borgenproject.org/natural-disasters-increasing/
The increasing number of natural disasters is a part of a far larger
paradigm shift now taking place. Triggered in part by the current economic
crisis, the fundamental changes will affect political, cultural, religious
and economic institutions on a global scale.
On May 15th, Eric King interviewed David Stockman regarding the
collapse of the present monetary system and the role of gold in such times:
. when a monetary system finally fails, there will be a flight to the
only money that's left in the system and that will be gold.That will be the
hour in which the next great surge in the gold price occurs.You can't predict
the exact moment, but you can certainly have a pretty confident view of the
direction (parabolic).
The central banks are clearly destroying the monetary system that
emerged after Nixon went to Camp David in August, 1971.So here we are 45
years later and we are nearing the end of an unstable fiat central bank
driven system and the alternative is fairly obvious - at some point going
back to real money [gold].I don't think governments will do that
voluntarily, but certainly people trying to protect their wealth will.When
that happens it will trigger a huge political crisis and hopefully an
opportunity to change the regime and get back to some kind of viable and
sound financial and monetary system.
http://kingworldnews.com/david-stockman-we-are-now-entering-the-terminal-phase-of-the-global-financial-system-that-will-end-in-total-collapse/
My youtube video, target="_blank" America
2.0 - the Second Revolution, discusses America's current political
crisis and what I believe is going to happen, see target="_blank" https://www.youtube.com/watch?v=yE5JvbREc-o,
The present system is untenable and the future cannot yet be seen; and,
yet, whether we know it or not, humanity is part of something far greater
than it knows and/or believes. You can bank on it.
Buy gold, buy silver, have faith.
Darryl Robert Schoon
www.drschoon.com
www.survivethecrisis.com
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