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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

 
Best of Aubie Baltin
April 19, 2010
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THE STIMULUS AFFECT OF FIAT DOLLARS

It has been determined that the effect of a new dollar of debt today actually only produces 55 cents in economic activity (down from $2 to $1 where it used to be in the 1950’s and 60’s). So instead of stimulation, each Fiat Dollar now actually shrinks the economy. The engines of debt are totally dysfunctional as debt saturation levels have been reached: And yet they still refuse to learn as their only response continues to be to press the money creation pedal to the metal, making matters worse not better. Calling the manipulated 1% to 2% and climbing price inflation a good thing completely ignores the empirical evidence pulling the national economy apart. Its structural defects are not being repaired. Such uniform aggregate views actually point out the spectacular shortcomings of U.S. Ivy League Economists who fail to recommend any meaningful remedies and are making things worse instead of better. As I have often pointed out in the past, this actually proves the spectacular shortcomings of the Socialists Economists that are completely lost as to what to do as slowly but surely their agendas are proven not to work. But like their political patrons, the facts do not seem to play any part in their analysis.

Financial markets are not functioning properly since interventions are the norm and accounting rules have been suspended. (What are the banks’ real profits?) These rules are likely to be even further corrupted with the looming commercial real estate loan fiasco and expanding Fannie and Freddie (now that there are no longer any limits to their Government backing) may temporarily halt the slide), we have not done anything to solve our problems. This means that it is just a matter of time before one of two things happen: Either the stock and bond markets’ crash resumes until we finally hit the lows around DJII 1,000, or they keep printing money to paper it over, eventually destroying the dollar and undermining the entire economy.  The U.S. Government is printing money and monetizing debt at an unprecedented rate and yet it cannot revive the housing market, cannot revive business lending, nor bring the banks back to solvency. The continuing infusion of new “Out Of Thin Air” money will accelerate until powerful inflation that can no longer be masked, breaks loose catching the Government and the nation off guard.

 

THE U.S.A AND THE WIEMAR REPUBLIC

The parallels are absolutely shocking between the U.S. climate of 2010 and that of the infamous Weimar Republic of the 1920’s:

  • Bernanke monetizing the U.S. Government debt after the Wall Street collapse is exactly the same as the monetizing of debt by the German Government after World War I. Both debt monetizations dragged on long past their supposed initial stop-gap measure stage, but the spending and debt continued just like the insolvency of the banks and the real estate crash continues.
  • Political factions were deeply polarized then just like Democrats and Republicans are today. War Reparations were a huge factor in the German debt to cover ratio, just like Wall Street bank extortions and U.S. Government nationalizations are a huge factor in conjunction with fighting 2 wars.
  • The mass unemployment and home loss tell a tale about domestic economic and political crisis on both fronts.  Back then, they missed the connection between the continued issuance of new paper money and the rise of commodity prices amidst foreign exchange rate volatility. Just like today, Bernanke fails to comprehend the link between monetary growth and the oil, commodities, precious metals, and stock market price increases.
  • Both missed the connection between the continued issuance of new notes and foreign exchange rate volatility. There’s more but you get my point.

QUANTATIVE EASING (QE)

Talk of reducing or eliminating QE is pure wishful fantasy. There is no way that Bernanke would take a chance of tightening in this economy. QE will just be pushed further and further down the road and we will never learn. Just recall all of his wrong past pronouncements such as the contained sub-primes, the Green Shoots, the sound equity basis of Wall Street firms, etc. etc. The nation is in deep trouble and although the printing of new money has been proven to be wrong headed, it will still be urgently demanded and the printing and monetization will continue. The next round of QE in England is a certainty, (regardless of all the speeches) which will then be matched by the U.S. Threats of sovereign default and prolific money printing will spawn a global currency crisis with the U.S. Dollar at the epicenter. Major portions of debt denominated in U.S. Dollars will be determined to be next to worthless. The end result will be a U.S. Dollar collapse, an event that I have mentioned in the past that is already “Baked into the Cake”. It is only a matter of “when not if.”

So why has “It” not happened yet? Would you believe, it’s been the explosion of credit derivatives exceeding $1.4 quadrillion that has so far prevented it. But alas, that too is a GIANT BUBBLE just awaiting a rise in interest rates (which may have already begun) that will Prick the Bubble and bring the whole house of cards tumbling down. So while the back door machinations covers $ trillions of leveraged losses, the fires will soon be treated with an accelerant, as both the U.S. and UK Governments succumb to pressures and announce the second phase of QE: That will trigger the inflation that they think is so necessary, all the while vigorously denying the possibility of the hyper-inflation that will surely follow.