I just had a diabolical thought - run while you can, you've been warned.

[osan]

So the Fed prints up about 2 trillion dollars and gives in away in the various versions of QE.

The ostensible reason for this is that the money would be recirculated into the economy and get things going.

That hasn't happened. This raises several questions:

1. Was that money even "issued" as claimed?
2. How would we know, either way? All we have is Their word.
3. Assuming it was issued, what happened to it?
4. If it is not circulating, where is it?
5. Why isn't it circulating?

I was musing randomly on this while putting the chickens to bed about an hour ago when a very unpleasant thought occurred to me. If the banks are sitting on these massive cash assets, what is the purpose of having them? It occurred to me that several things may be afoot.

Many speak of runaway inflation, but I have a far darker and more disturbingly dangerous speculation to offer. If we assume that the assets exist and are stockpiled and that their purpose is to be ready when the economy starts heading into the tank for real, the banks will be ready to buy up REAL assets with the fake money they hold. Desperate and often shit-scared people about to lose it all will be relieved to be spared the worst of their grim possibilities under such conditions, grateful fort he bailout even if it is $0.05 on the dollar. I can see ownership of houses, for example, transferring to banks and those institutions allowing the former owners to remain as renters, even at reasonable rates. They are responsible for all upkeep, taxes, and so forth while the banks reap untold billions in rents. It is a perfect world for Themme.

Now here is the diabolical part: everyone is predicting hyperinflation to set in, but I am speculating that this may not happen. Hyperinflation will torpedo Themme as well as us and Theye do not want to bear that cost. Only we are to be beaten. What if the trillions out there exist only as a safety cushion of cash for just in case scenarios? What if Theye endeavor to buy up real assets with as few fakes as possible? Yes, that make the standard sense, but there would be an even more sinister ulterior motive: to prevent hyperinflation.

OK, so now let us say that 50% of all housing has been repossessed in the USA and people are paying rent to the banks in order not to live under bridges. Hyperinflation would relieve the debt of the remaining 50%, assuming salaries tracked inflation in some reasonable measure, which it would basically have to in order to avoid complete collapse and civil war, which would threaten Theire hegemony.

After the assets were harvested for this cycle, whatever money remains in the stockpile is repatriated to the Fed. It never hits the economy, no hyper currency inflation - just price inflation to some tolerable limit. People are beaten down ever more , more fail and sell out for pennies on the dollar, receive no "relief" through the devaluation of their outstanding debts and remain beholden as conditions further deteriorate.

The overall result is this: the standard of living of Americans is adjusted drastically downward precisely because of the failure to inflate our way out of debt. This fits perfectly with the socialistic notion of "economic equality". Rather than raising the tides of other nations to meet our standards of wealth, our tides are lowered to match their standards of poverty. It achieves the goal of equality not by edification but through economic destruction of the proud. There is nothing in socialist doctrine of which I am aware that specifies economic equality as referring to being equally prosperous. It can just as readily mean being equally impoverished and that is precisely what Theye want. This goal is power play 101. The strategy and tactics, however, are post-doctoral level genius.

This increases the zero-sum proportion of wealth into Theire hands while the rest of us lose BIG TIME. Theye gain, we lose enormously. The world becomes conceptually similar in depiction as that of the FW Murnau film "Metropolis" (1925, silent) with the elite living on the surface in a material paradise while the rest live in the subterranean city, working the machinery until they drop dead.

I may be completely off the mark on this one, but it seems that the prevention of currency inflation could only stand to profit Themme greatly. Also consider the psychological aspects of this. Hyperinflation is being predicted in many corners and it is closely related to the evil Fed and associated with malicious intentions. But if that fails to materialize, the "conspiracy nuts" are discredited. When this artifice becomes accepted as the organic result of natural market forces in the hopelessly flawed "free market capitalist" system, people will be more likely to bond together and look to the wise elders of government, the infallible experts, to come up with the answers and of course those will be waiting in the wings. No civil unrest. No rioting. No insurrection. No call to account for Themme. Just save us so we don't go hungry.

"We will save you and all will "prosper", but you must accept these changes. Sign here." That will be the end of it all.

Any opinions on this?

EDIT: I was asked, "why you use Themme for them"? This is my new convention for referring to those who employ the imprimatur of the phony baloney "state" to violate our natural freedoms. This includes "Theye", "Theire", "Themme". Many often complain about references to "them", "they", etc., asking "who are 'they'?" Well, now people will know... in time. I seriously suggest people adopt this convention for the reason stated. Also, it is superior to "government" and "the state" because neither of those reference anything specific or even extant. These new terms, however, do because they refer to any and all individuals who act under such false authority and presume such authority to violate one's inalienable rights.

 

[Zippyjuan]

1.Was that money even "issued" as claimed?
2.How would we know, either way? All we have is Their word.
3.Assuming it was issued, what happened to it?
4.If it is not circulating, where is it?
5.Why isn't it circulating?

Right now a lot of it is sitting around doing nothing. Banks have $1.6 trillion in excess reserves parked at the Federal Reserve earning one quarter of one percent interest. This does not count any reserves they have in their own vaults or books. Before any QE or the current crisis excess reserves used to be basically zero. It has to be borrowed and spent to be circulating and have any impact on prices.

 

[Seraphim]

What you described is stagflation - which I have pegged as the most probable outcome and the evidence suggestions that is already the case.

 

[Zippyjuan]

Stagnant we have with the very slowly growing economy but I don't think we have enough price inflation to say we have stagflation.

 

[osan]

What you described is stagflation - which I have pegged as the most probable outcome and the evidence suggestions that is already the case.

No - stagflation is the opposite. Stagnant economy with high inflation. This is stagnation with little inflation. A very different animal because the fixed debt keeps you buried as asset values tumble. It is artificially instigated deflation of asset values with mild proce inflation and little to no currency inflation. This, I believe, is unprecedented... at least at the scale that this promises.

 

[dancjm]

I don't agree with his politics, but I think Tony Benn is right on the money, this is the reason things are going the way they are.

 

[TheTexan]

Right now a lot of it is sitting around doing nothing. Banks have $1.6 trillion in excess reserves parked at the Federal Reserve earning one quarter of one percent interest. This does not count any reserves they have in their own vaults or books. Before any QE or the current crisis excess reserves used to be basically zero. It has to be borrowed and spent to be circulating and have any impact on prices.

It also has to be borrowed and spent for it to have any effect on the economy, right? So what's the point, other than of course making bankers rich?

About the only thing it seems to be doing right now is a) recapitalizing the banks through IOER, b) storing inflation to be released at a later date

 

[Michigan11]

Interesting thread.

I personally see no growth in this economy, unless you are looking at just pure numbers in a big corporation or one company gaining while their competitor goes out of business.

I hear the job market is horrible. There are lots of low wage jobs, but nothing much besides that.

I see basic goods "slowly" increasing.

In other words I think the original post nailed it, basically standards of living are decreasing dramatically, and some are still unaffected yet aren't necessarrily increasing their net worth. There are always exceptions. This economy has brought many to their knees and many more are nearly there. Interesting times.

 

[TheTexan]

Now here is the diabolical part: everyone is predicting hyperinflation to set in, but I am speculating that this may not happen. Hyperinflation will torpedo Themme as well as us and Theye do not want to bear that cost. Only we are to be beaten. What if the trillions out there exist only as a safety cushion of cash for just in case scenarios? What if Theye endeavor to buy up real assets with as few fakes as possible? Yes, that make the standard sense, but there would be an even more sinister ulterior motive: to prevent hyperinflation.

I'm not so sure They can prevent hyperinflation. They can certainly cause it... but not prevent it. If They do not cause the hyperinflation, some central bank in Europe, China, or anywhere really, will dump the dollar and do it for Them.

 

[ClydeCoulter]

What effect would the new way GDP is calculated have on your hypotheses (see thread, Peter Schiff)?

btw: thanks for sharing your thoughts on this.

 

[PaulConventionWV]

So the Fed prints up about 2 trillion dollars and gives in away in the various versions of QE.

The ostensible reason for this is that the money would be recirculated into the economy and get things going.

That hasn't happened. This raises several questions:

1. Was that money even "issued" as claimed?
2. How would we know, either way? All we have is Their word.
3. Assuming it was issued, what happened to it?
4. If it is not circulating, where is it?
5. Why isn't it circulating?

I was musing randomly on this while putting the chickens to bed about an hour ago when a very unpleasant thought occurred to me. If the banks are sitting on these massive cash assets, what is the purpose of having them? It occurred to me that several things may be afoot.

Many speak of runaway inflation, but I have a far darker and more disturbingly dangerous speculation to offer. If we assume that the assets exist and are stockpiled and that their purpose is to be ready when the economy starts heading into the tank for real, the banks will be ready to buy up REAL assets with the fake money they hold. Desperate and often shit-scared people about to lose it all will be relieved to be spared the worst of their grim possibilities under such conditions, grateful fort he bailout even if it is $0.05 on the dollar. I can see ownership of houses, for example, transferring to banks and those institutions allowing the former owners to remain as renters, even at reasonable rates. They are responsible for all upkeep, taxes, and so forth while the banks reap untold billions in rents. It is a perfect world for Themme.

Now here is the diabolical part: everyone is predicting hyperinflation to set in, but I am speculating that this may not happen. Hyperinflation will torpedo Themme as well as us and Theye do not want to bear that cost. Only we are to be beaten. What if the trillions out there exist only as a safety cushion of cash for just in case scenarios? What if Theye endeavor to buy up real assets with as few fakes as possible? Yes, that make the standard sense, but there would be an even more sinister ulterior motive: to prevent hyperinflation.

OK, so now let us say that 50% of all housing has been repossessed in the USA and people are paying rent to the banks in order not to live under bridges. Hyperinflation would relieve the debt of the remaining 50%, assuming salaries tracked inflation in some reasonable measure, which it would basically have to in order to avoid complete collapse and civil war, which would threaten Theire hegemony.

After the assets were harvested for this cycle, whatever money remains in the stockpile is repatriated to the Fed. It never hits the economy, no hyper currency inflation - just price inflation to some tolerable limit. People are beaten down ever more , more fail and sell out for pennies on the dollar, receive no "relief" through the devaluation of their outstanding debts and remain beholden as conditions further deteriorate.

The overall result is this: the standard of living of Americans is adjusted drastically downward precisely because of the failure to inflate our way out of debt. This fits perfectly with the socialistic notion of "economic equality". Rather than raising the tides of other nations to meet our standards of wealth, our tides are lowered to match their standards of poverty. It achieves the goal of equality not by edification but through economic destruction of the proud. There is nothing in socialist doctrine of which I am aware that specifies economic equality as referring to being equally prosperous. It can just as readily mean being equally impoverished and that is precisely what Theye want. This goal is power play 101. The strategy and tactics, however, are post-doctoral level genius.

This increases the zero-sum proportion of wealth into Theire hands while the rest of us lose BIG TIME. Theye gain, we lose enormously. The world becomes conceptually similar in depiction as that of the FW Murnau film "Metropolis" (1925, silent) with the elite living on the surface in a material paradise while the rest live in the subterranean city, working the machinery until they drop dead.

I may be completely off the mark on this one, but it seems that the prevention of currency inflation could only stand to profit Themme greatly. Also consider the psychological aspects of this. Hyperinflation is being predicted in many corners and it is closely related to the evil Fed and associated with malicious intentions. But if that fails to materialize, the "conspiracy nuts" are discredited. When this artifice becomes accepted as the organic result of natural market forces in the hopelessly flawed "free market capitalist" system, people will be more likely to bond together and look to the wise elders of government, the infallible experts, to come up with the answers and of course those will be waiting in the wings. No civil unrest. No rioting. No insurrection. No call to account for Themme. Just save us so we don't go hungry.

"We will save you and all will "prosper", but you must accept these changes. Sign here." That will be the end of it all.

Any opinions on this?

Yes! I have had this same suspicion for a long time, but I didn't quite know how to put it into words. I have long suspected that hyperinflation wouldn't come as soon as many people thought it would, if it came at all. The gradual decline of the standard of living is their goal, and that's why I've never relied on the idea that my debts would be practically erased by hyperinflation, as many people have said. I just knew they wouldn't allow that to happen. Kudos to you for painting that vivid picture. It's all too clear now.

 

[seapilot]

Has hyperinflation occurred in a purely electron currency environment? The amount of paper currency is very low vs electronic currency. Imagine if everyone could only use paper currency for transactions instead. There would be massive deflation and the banks would run out of notes and coins overnight. We are in uncharted waters IMO.

 

[oyarde]

I tend to agree with Osan's premise that the intention is to buy real assets later with the bullshit money.It is the only conclusion that makes sense to me..... I am glad I do not think of these things while feeding chickens

 

[thoughtomator]

The bulk of the printed money went to the banks to cover their losses on bad loans, largely from the housing bubble. It's replacement reserve money for the capital that was obliterated during the post-bubble crash, replacement that was needed by the banks who would otherwise be insolvent and unable to continue to operate.

In the absence of this printed money we'd be undergoing a significant (and very healthy) period of deflation and bad-loan clearance right now.

 

[bbjaylive]

Right now a lot of it is sitting around doing nothing. Banks have $1.6 trillion in excess reserves parked at the Federal Reserve earning one quarter of one percent interest. This does not count any reserves they have in their own vaults or books. Before any QE or the current crisis excess reserves used to be basically zero. It has to be borrowed and spent to be circulating and have any impact on prices.

Yep, exactly. The QE is just accumulating as reserves.

However, the reserves aren't going to be borrowed as banks don't actually lend reserves. That's right, QE is and always was going to do JACK **** for the economy.

 

[Seraphim]

The price of most necessities are going up a lot. Official CPI numbers include electronics etc - keeping the official inflation numbers down, but for the working class and poor the cost of living is going up substantially.

I maintain that we are already in stagflation and the worst of it is yet to come.

No - stagflation is the opposite. Stagnant economy with high inflation. This is stagnation with little inflation. A very different animal because the fixed debt keeps you buried as asset values tumble. It is artificially instigated deflation of asset values with mild proce inflation and little to no currency inflation. This, I believe, is unprecedented... at least at the scale that this promises.

 

[WhistlinDave]

So... As a former real estate agent who actually managed, listed, and sold REO (foreclosure) properties for the banks, I can tell you, they do everything possible right now to avoid having more real assets (properties) on their books.

They don't want to own and manage property, which is why they're willing to write off bad debt in a short sale and/or do loan modifications to keep people in their homes. (The term "short sale" comes from it being a "short payoff" -- the lender forgives the part of the mortgage that you're unable to pay off when you sell, because the property value now is too low to sell and pay it all off.)

They still take a big loss whether it's a short sale or a foreclosure, but they prefer short sales as the lesser of two evils because they do not want another asset on their books. When foreclosure is unavoidable, just as soon as they foreclose, they want that property sold ASAP.

Banks want money; they do not want lots of hard assets that have to be managed.

I'm not saying this will never change, but I'm having a hard time wrapping my mind around why the banks would suddenly have a 180 degree reversal of their long standing philosophy of not wanting a glut of numerous hard assets.

Also -- with regard to hyperinflation, if that isn't coming at some point, and the inevitable rioting that is expected to accompany it, then I wonder what other scenario(s) the Federal government is planning for with their stockpiling of hollow point and sniper rifle ammunition. Ever since I found out about this scenario of the dollar losing its status as the world's reserve currency, I have just assumed that was the reason for the ammo purchases and also the means by which they will be instituting a degree of martial law across the land when it happens.

Thoughts?

 

[MoneyWhereMyMouthIs2]

I tend to agree with Osan's premise that the intention is to buy real assets later with the bullshit money.It is the only conclusion that makes sense to me..... I am glad I do not think of these things while feeding chickens

That's exactly what the US did with china. That's why china kept talking as if they had an interest in us monetary policy. It is because they do, since they have a bunch of electronic blips or paper, that they traded tangible goods for.

Anyone with paper better be buying real assets now. Seems time is running out.

 

[Dianne]

I am sooooooooooooooooooo ready to escape this country... When elected officials run more chit up their nose than I do ....I'm gone... I'm out of here....

Take me to ecuador ............. please? Anyone know anyone in Ecuador...I'm ready to denounce ... private message me, if you are living or breathing in Ecaudor ... I can't leave this hell hole, called United States of America fast enough ...

 

[freedomordeath]

The Armish anyone, start using gold and silver, lets start living free instead of worrying about these FED criminals.