It is obvious that the Deep State’s power is growing. The Deep State of big government and big business with all its regulations, rules, and special favors for cronies in a position to get them, there is nothing new about this. There are secrets. There are dark crimes. But most of what happens in the Deep State takes place in plain sight of everyone.
The best explanation for this phenomenon was probably given by Vilfredo Pareto, the great Italian engineer and economist at the University of Lausanne in the early 20th century. Pareto noted that power and wealth were never evenly or randomly distributed. Instead, a few wily “foxes” always rose to the top, no matter what kind of political system you had.
Mathematician Benoit Mandelbrot describes Pareto’s principle: At the bottom of the Wealth curve, he wrote, Men and women starve and children die young. In the broad middle of the curve all is turmoil and motion: people rising and falling, climbing by talent or luck and falling by alcoholism, tuberculosis and other kinds of unfitness. At the very narrow top sit the elite of the elite, who control wealth and power for a time – until they are unseated through revolution or upheaval by a new aristocratic class.
There is no progress in human history. Democracy is a fraud. Human nature is primitive, emotional, unyielding. The smarter, abler, stronger, and shrewder take the lion’s share. Foxes, fascists, and those on the “inside” of the Deep State use Pareto’s thoughts to justify themselves. Over time, they take over more and more public policies and institutions, using them to shift money from the people who earn it to the Washington elite, Wall Street insiders, and well-connected parasites all over the planet.
Several whistleblowers have tried everything, including suing the government and pushing a constitutional amendment requiring balanced federal budgets, to inhibit the Deep State’s outright control of its citizenry but after a decade of trying during the 70’s all those who tried realized it was hopeless. They soon found out the waste they rallied against was the lifeblood of the system itself!
In 1995, “The Agora”, a private research outfit set up to present different points of view, hired former CIA (Central Intelligence Agency) director Bill Colby as a consultant. Bill was one of the most careful and prudent men on the planet. He had won the Silver Star twice. He had parachuted twice behind enemy lines in WWII.
He had run the CIA’s Saigon headquarters in Vietnam and then directed the controversial Phoenix program. And, of course, he had run the CIA for two and a half tumultuous years.
They were tumultuous because members of Congress, led by Senator Frank Church, wanted to know what the CIA was up to. Colby told the truth, which is rarely a good idea in Washington. Colby got fired.
The Agora had turned to Colby to try to understand what was going wrong in Washington offering financial analysis to everyday Americans and what they needed to know because the public was not getting answers from the mainstream media. As Colby himself pointed out, the CIA had its “own men” in the media at that time. “Just open your eyes and follow the money” he said.
But Colby’s own eyes closed forever just weeks after he began consulting for The Agora. On May 6, 1996, Colby’s body was found, half floating in the marshes at Rock Point, Maryland. The local coroner ruled it an accident. Maybe. But it was not like Bill Colby to get up in the middle of his dinner and go for a moonlight canoe ride, alone, without his life preserver. And there was no believable explanation for why his body should wash up, 9 days after he went missing, at a place that was contrary to the currents in that area of the Chesapeake Bay.
In his death, probably more even than in his life, Bill Colby helped us to understand how the system worked. He did not have to reveal any secrets. As he said, we just had to open our eyes and follow the money.
The system? I’m talking about the way important decisions are made… and by whom… and why. Yes, there is a Congress, an executive branch headed by the President, and a court system too. And yes, they are important parts of the puzzle.
But there is a lot more. I’m talking about the group of insiders who have real power in Washington and America. Some are elected officials. But most are not.
Some live in Washington. But many do not. Some are Americans. But there are many foreigners too – from all over the world.
It sounds sinister. It sounds like a conspiracy. And yes, with so much at stake, it is no surprise that this group has its enforcers and its thugs. But most of it takes place in plain view. By consensus, not force. As Bill Colby said, all you have to do is open your eyes to see it.
This group of “insiders” known as the Deep State seized economic control of America more than 40 years ago and continue to hijack America’s middle class wealth today. But there is much more.
What really happened to Bill Colby? What was his connection to the powerful Deep State and what was the Deep State’s connection to the assassination of JFK?
What is the “Achilles Heel” of this group of Deep State insiders? It is a fatal flaw in our money system that may soon lead to a complete worldwide government financial and economic breakdown.
Your job, your pension, your savings, your stocks and bonds, your Social Security, your medical care… even your house… could all be wiped away in this coming financial crisis! These are strong claims.
It hardly matters what our “trusted leaders” think. The handwriting is already on the wall. The worldwide financial system cannot be saved. It will blow up…maybe very soon.
Let us begin with the most basic facts. From the end of WWII until the mid-‘70s, almost everyone in America got richer. Then, something changed. After the ‘70s, only the elite got richer and the rest of the U.S. citizenry went deeper and deeper into debt and earning less money as the economy began to slow down. What could possibly cause such a thing?
At the peak of two thousand years of progress… with more than 15 million PhDs… 25,000 universities… trillions of dollars’ worth of capital… mind boggling technological advances… and almost all the world’s knowledge available at everyone’s fingertips on the internet, why would growth stall? How could most people get poorer… even without a depression? And this happened even as the authorities and central bankers ‘stimulated’ the economy with more money and credit than ever before in history.
So who’s behind these changes? And how are they going to cause a complete worldwide financial collapse? First, let us circle back to ex-CIA director, Bill Colby.
To understand why the future in America is so predictable, we need only take a glimpse into our recent past collecting the memories of Bill Colby and then connect the dots of the 2016 U.S. Presidential race. Donald Trump pledged to shake things up, as did the newly elected, non-politician, President Macron of France. Could Trump and Macron put a brake on the system that was destroying the U.S. and western world economies and the middle class?
At the time of Colby’s death, in 1996, the incident was brushed off by those in control inside the Deep State. They said spies made enemies and one of them must have whacked Colby. Since then, our view of ‘the Deep State system’ has become clearer. Now we have a clearer idea of who those enemies of Colby were and why they might have wanted him out of the way.
Unlike his predecessor, Colby cooperated with the U.S. Congress’ Church Commission investigating the Nixon Watergate break in. But then, Colby fired James Angleton. Angleton is a legendary figure in the intelligence community.
This is where several dots need to be connected.
In 1963, Angleton went on the hunt for imbedded Soviet agents. The hunt got to be a bit of a mania, and may have led Mr. Angleton off the rails. We do not know for sure, but it was alleged that Angleton was involved with Lee Harvey Oswald and that Angleton kept a rogue group of assassins ready to do his dirty work.
When John F. Kennedy was murdered, fingers pointed in Angleton’s direction. A Soviet defector, Yuri Nosenko, claimed to have worked with Oswald in Moscow and claimed to have information that implicated Angleton. Lawyer Mark Lane was more direct, accusing Angleton of conspiring with assassins to kill Kennedy. There is no further knowledge of this other than what you have been told here. Like so many stories from the intelligence agencies, there is a counter-claim for every claim, and a double agent for every loyal one. You never know what to believe.
But we do know that Kennedy died less than 3 years after President Dwight D. “Ike” Eisenhower warned of a behind-the-scenes shift in Washington DC that had “grave implications” for America. On January 17, 1961, after 46 years in public service, Ike delivered his farewell address to the American people.
Ike referenced the 3 wars America had just fought. He expressed pride in America’s strength and wished the best for his successor, John F. Kennedy. But Ike also issued an unprecedented warning that almost no one paid attention to at the time. He exposed a group of unelected insiders that threatened to take full control of the U.S. government. He revealed the dark side of American power…a shadow government.
In 1961, General Eisenhower continued his prescient warning:
The potential for the disastrous rise of misplaced power exists and will persist.”
Just three days after Ike’s farewell speech, John Fitzgerald Kennedy was inaugurated as the 35th President of the United States. Kennedy took Eisenhower’s farewell warning seriously, and took to rein in this unelected cabal of powerful insiders.
JFK even wanted to disband a major part of the shadow government for good before they grew too powerful. Following Eisenhower’s warning, he threatened to,
“Splinter them into a thousand pieces and scatter them into the winds…” Soon after, JFK was assassinated. There are many controversies around JFK’s murder. Who did it? Why? We do not know. But we do know that, 10 years later, Bill Colby fired Angleton and seemed to be dismantling the rogue elements of the CIA from the inside.
Then, Colby was abruptly relieved of his post in what was called the “Halloween Massacre” in 1975. He and Defense Secretary James Schlesinger were replaced by two people considered more ‘reliable’ assets – Donald Rumsfeld at the Defense Department and George H.W. Bush at the CIA.
All we know for sure is that, since then, no other president and no other CIA director has dared challenge what has been called the “Deep State”… the Parasitocracy… or the Kleptocracy. These words all refer to the same thing – the people who have real power in Washington and America.
But these cloak and dagger stories are not really of interest to us in themselves. They show the reach and ruthlessness of the Deep State’s enforcers. And they suggest that no one politician – even a president – is likely to be able to make substantial changes in the way the country is run.
In fact, a half-century after the Kennedy assassination the insider elite is now so well established at every level of government and in every major industry, there would be no need to assassinate a President. The revolution has already happened. Congress, the administration, the Pentagon, the intelligence agencies, the medical sector, education, Wall Street – it is all under Deep State control. There is no further need for violence.
If a true reformer were elected, neither Congress nor the bureaucracy would support his proposals. The mainstream press would sneer at them. And university professors – especially Ph.D. economists – would oppose them. And experts from tax-exempt think tanks would explain all the reasons why they were ill advised and unworkable.
When Eisenhower warned about the military-industrial complex he was referring to what he knew best – the Pentagon bureaucracy and the companies that depend on military contracts for their revenues.
But today, there is a much larger “complex” of public agencies, elected representatives, private businesses, global banks, universities, non-profit and do-gooder organizations. Consider Tim Geithner, President Obama’s former Treasury Secretary. His biggest accomplishment? The 2008 bailout of Wall Street.
During the 2008 “taxpayer financial bailout” of the U.S. banking system, instead of allowing big bankers to get what they deserved…or even throwing CEOs in jail… Geithner was the guy who helped take $350 billion from U.S. taxpayers and put it in the pockets of America’s biggest financial institutions. After leaving the Treasury Department, was he blacklisted? Investigated? Shamed? No, he was rewarded…
Geithner received an offer to work at Warbarg Pincus, one of the world’s most successful private equity firms.
Robert Rubin, one of Geithner’s mentors, is another example. After leaving his post at the Clinton White House as Treasury Secretary, he worked as a “senior counselor” at Citigroup from 2007 to 2009. During that two-year period, the Treasury Department—headed up by his protégé Geithner—bailed out Citigroup with taxpayer funds. Rubin personally walked away with $126 million. This sort of ‘you scratch my back and I’ll scratch yours’ takes place throughout the whole system.
As Colby said, “Open your eyes,” and you will see an entire system… of bankers, politicians, military contractors, consultants, non-profit organizations, universities, media, Wall Street… all cross-wired to make sure that the rich and powerful get richer and more powerful.
Despite The Agora’s efforts to put checks and balances on the federal government, it kept growing at a relentless, ruthless pace. And the line that separated the private and public sectors continued to fade.
Typically, Deep State insiders represent large, established businesses and industry groups. Simply look at where the lobbying money goes, big pharma, oil, gas, education, etc. Clinton ran on getting rid of lobbyists but they actually increased their numbers and spending power during the Clinton Presidency. Take a look at the lobbying dollars America’s biggest industries spend to gain influence.
But no industry has done better than Wall Street. The big banks have grown bigger and bigger, while bank regulation has squeezed out competition. Over the last 5 years, more than 190 banks have closed. Only 4 new ones have been started.
In those banks that have remained, the five biggest ones now make up fully half of the entire industry. These big banks have been considered so important that in the crisis of 2008-2009 they were judged “too big to fail.” They could engage in all the risky speculation they wanted. They could pay out enormous salaries and bonuses…
…and no matter how reckless, irresponsible and incompetent they were – the government would save them. Not a single banker lost his job. Not even a week’s salary was given up. Guess what kind of company is number 1 in terms of federal lobbying? A bank.
And guess which industry also has the most people revolving through the doors of government? In fact, a single large financial group – Goldman Sachs – has an astonishing reach throughout the top ranks of governments all over the world, including:
-The European Central Bank (bank President Mario Draghi used to be vice chairman of Goldman Sachs International)
-U.S. Federal Reserve, New York branch (William Dudley is the head of the Fed’s largest member bank and also spent 21 years at Goldman Sachs)
-Bank of England (Governor Mark Carney spent 13 years at Goldman)
-National Government of Greece (Former Prime Minister Lucas Papademos was an adviser at Goldman)
-Italian Government (former Prime Minister Mario Monti used to be an adviser to Goldman)
-U.S Intelligence Oversight Board (Stephen Friedman served on this board for George W. Bush and also spent 30 years at Goldman Sachs)
-The Egyptian Government (Ziad Ahmed Bahaa-Eldin served as Deputy Prime Minister of Egypt and was also an “adviser” at Goldman)
-The Czech Republic Government (Vladimír Dlouhý was the nation’s first Minister of Industry and Trade and was also an advisor to Goldman Sachs)
-Swedish Government (Erik Åsbrink was Sweden’s Minister for Finance and was also an international advisor for Goldman Sachs)
-The U.S. State Department (Robert Zoellick, a former Goldman Managing Director, was the U.S. Deputy Secretary of State from 2005-2006)
-The U.S. Treasury Department (Two Goldman alums—Robert Rubin and Hank Paulson—served as Treasury Secretaries)
-Australia’s Central Bank (Ian Macfarlane was the head of the bank for ten years and also was an advisor to Goldman Sachs)
-White House (former chief of staff Joshua Bolten served as Goldman’s Executive Director of legal and government affairs from ’94-’99)
But, with Wall Street, there’s more going on than just old-fashioned corruption and a ‘revolving door.’ Much more. The big banks control the vital juice – the credit – that makes the whole system work. As we already know by the 2008 financial meltdown, this credit brought the entire system – our whole economy – to the brink of an inevitable collapse leading to what will be sooner or later be a future worldwide government financial collapse.
Most people will not be prepared for what is coming even when it is a simple matter of common sense that danger is near. In 1987, The Agora predicted the fall of the Soviet Union when few other people did. At that time our politicians in Washington had amassed huge weapons stockpiles to guard against what they thought was superior Soviet technology.
The famous “Team B” report commissioned by the CIA years earlier had claimed the Soviet economy was booming… that they were capable of mass-producing bombers and missiles and that they would not hesitate to attack America.
Yet, in 1987 The Agora contradicted the CIA and wrote:
We have no doubt that sooner or later, but probably sooner, many of the characteristic features of the Soviet system… will be abandoned… To put it simply, communism is in its twilight.” Sure enough, two years later the Soviet empire started to break apart. By 1991 it was all over, yet scholars and politicians here in the U.S. had been unwilling to believe it was possible.
Even a report commissioned by the CIA – and approved by George H.W. Bush – had warned about Russia’s economic and military strength. People just could not imagine that a world superpower would suddenly become irrelevant.
Just as people could not believe that Japan would ever break down… or that the tech boom would ever stop… or that housing prices would fall. The publishing network at “The Agora” has tracked nearly every great world event of the past 3 decades.
Even after 9/11 the CIA requested copies of a note The Agora had sent to subscribers warning about trouble ahead for America. And years before that, the CIA actually tried to convince those in charge at The Agora to use The Agora as a front for their international operations but The Agora declined the CIA’s invitation.
And there is a very good reason why human beings are so resistant to the notion that things can and will change, often in ways you never expect. You see, human beings need to believe that things will happen more or less as they always have.
That the sun will come up every morning… that plants will grow… that the rains will come. Lawyers call this “willful blindness”… psychologists call it the “normalcy bias”
Today, we are seeing the same “willful blindness” here in America. Almost no one is willing to face up to the facts – that the America we live in today is not the same as the one we grew up in. It has changed and at the heart of the change is a revolutionary new money system printed out of thin air backed by credit which is nothing more than the good faith word of governments worldwide and a system that enriches America’s Deep State at the expense of nearly everyone else.
Sunday, August 15, 1971 was the day it all changed. At 9 p.m. that day, Richard Nixon appeared on live, primetime TV and told the world that the U.S. dollar would no longer be backed by gold. From that moment on, the whole world’s money system was different. The U.S. dollar began losing purchasing power from the moment Nixon made that announcement.
This event—now known as the “Nixon Shock”—affected everyone in America.
Decades later, we are still reeling from it. That single event sent the world’s currency markets and global economy into a tailspin. And this is a big part of the reason why a home that cost $25,000 in 1971 costs $256,000 today.
Every money-related event since then… and the state of the world’s economy today… can somehow be traced back to that one announcement. For the first time in 2500 years, real money was out. Debt was in.
Most of the world’s economists, including Nobel Prize winners, have no idea what is really going on. They mistakenly think the problems we face today are caused by capitalism.
But here is what is really going on. The first thing to understand is what money is.
You could have a pile of money. It would not matter if they were dollars… euros… or gold. Imagine you were at the North Pole. If there was nothing to buy with it, you would be out of luck. Money is not wealth. It just measures wealth… like a clock measures time.
We know that a clock is not time. You cannot add time simply by painting an extra hour onto the face of your clock. Also, you have to understand that ‘money’ is not money just because the government says so. At the height of Zimbabwe’s hyperinflation in 2006, the government of that country printed up 100 trillion dollar notes and called it ‘money.’ It was the legal tender of the country. By law, it was the one and only money that people were allowed to use. And yet, it was not really money in any meaningful sense.
Real money has three major attributes: it lets you buy things (transactions)… it records and reports what things are worth (information)… and it allows you to store wealth in a convenient form (wealth preservation). The Zimbabwe dollar, like Venezuelan Bolivars today, would not do any of those things. It could not be used to buy anything – there was nothing much left to buy. The prices it reported changed by the minute… and were astronomical. And it was no store of value (or wealth); whatever it might still be worth on the day you got it would disappear within minutes.
So you see right away how ‘stimulating’ an economy by giving it more of this kind of money is a fraud. Money is only valuable or useful when it fulfills its role as money. Real wealth is made real by its connection to what it can buy… that is, what has been produced. It is what you can buy with money that counts not the money itself.
You hear economists say that a “high expensive dollar” is good… or a “low inexpensive yen” is bad. It is nonsense. The one and only thing you want from money is that it be honest. Like a clock, you just want it to tell you the right time.
Money must connect to the real economy, where goods and services are actually produced.
If the economy produces more… you want your money to buy more. If the economy produces less, you want your money to tell you the truth; your money becomes less valuable as output falls. But in 1971, Richard Nixon – advised by the ‘monetarist’ Milton Friedman – made a fateful error. He cut the dollar loose from the real economy.
The important thing is that gold connected the dollar to the real world of savings, investment, and wealth. Take away the gold backing, and things start to get loosey-goosey.
And here’s something else the Deep State elite refuse to admit. In an honest money system, debt is limited. You cannot borrow if there is nothing to lend. Gold is limited. Time is limited. The real world is limited. And savings are limited too. In an honest system, you cannot lend out money without saving it. So debt cannot get out of control.
The level of debt to goods and services (GDP) was fairly constant after WWII until about 1995. Then, debt soared. The pre-1971 system kept money connected to the real economy – with a chain of gold. After 1971, the sky was the limit. The new system created a new form of money – fake money, based on debt and credit, not on accumulated wealth.
It passed this fake money off as though it were savings. You no longer had to earn and save wealth, in other words. If you wanted more money to spend, you could just borrow it. Newly printed money enters the economy as credit.
Our post-1971 money system is based on fake money that represents no wealth and measures wealth badly. New printed money enters the economy as credit and the credit industry (Wall Street) has privileged access to it. The workingman still has to earn his money, selling his work by the hour. But Wall Street… and elite borrowers connected to the Deep State Establishment… get credit money without breaking a sweat or watching the clock.
This leaves more of this new money concentrated in and around the credit industry… pushing up asset prices… raising salaries and bonuses in the financial sector… and making the rich (those who own financial assets) much richer.
Credit helped the middle class raise its living standards, even as earnings stagnated. But it also raised debt levels throughout the economy. And that made it possible for the average American family to spend American money that Americans never earned and buy products Americans never made. Instead, Walmart’s shelves were stocked with goods ‘Made in China.’ The middle class lost income as factories, jobs, and earnings moved overseas. Debt stayed at home.
All of these things are fairly well known. People complain about inequality and globalization, but most of the real problem is right here in the money system itself. This system is doomed. Debt cannot grow faster than income forever. When debt contracts, as it must, the whole structure of debt-supported stocks, bonds, businesses, lifestyles, retirements, and living standards will collapse. It is inevitable. Unavoidable.
That’s why America’s insiders have gone to extremes to protect this system of debt growth. But they’re failing. In 1987, 1991, 1996, 2001, and 2008, the U.S. Federal Reserve manipulated interest rates to prevent economic collapse. Again, twice this century, the economy has tried to correct excessive debt. And each time central banks have responded with the only real tool they have – more money at lower interest rates (more debt.)
So, each time there is a problem caused by too much debt, central banks lower interest rates and add more debt. The magnitude of the real problem increases. And the eventual blow-up is delayed. In 2009, debt growth moved to the corporate sector. After 2009, a high percentage of stock market growth could be attributed more to corporate borrowing and share buy-backs by corporations.
But corporations, like consumers, are still connected to the real economy. Even at ultra-low interest rates, they still have to finance their debt. And as the world economy slows, so do their earnings. Already, over 100 brand-name U.S. corporations have borrowed too much. Without access to cheap credit many of America’s most successful and profitable corporations will go bankrupt because the bills can never come due.
Most consumers are insolvent. Corporations are no longer able to borrow at zero interest rates as they have for the past 9 years. GDP growth rates have fallen to near zero. And the whole global economy is staggering under the weight of $300 trillion of debt worldwide.
That leaves only one sector still able to borrow. It is the government, the only sector not directly connected to the real economy. Government is the last sector able to borrow because it will only go broke…if it chooses to. Otherwise, it can simply ‘print’ the money needed to make good on its financial commitments. The trouble is, it cannot control the value of the money.
Ultimately, millions of people will go broke. Trillions of dollars will disappear. Large corporations will go bankrupt. For most of us, it will not be the end of the world. But our living standards – especially for retirees – will be cut back sharply.
The key to this new system is the dollar.
If you want to understand it. As Colby said, “Just open your eyes and follow the money.” The Deep State insiders now control all major industries in the U.S. – education, medical care and drugs, think tanks, the military, major corporations, Wall Street, the press… and through global organizations like the UN, IMF, the World Bank, and others like, for example, the Clinton Foundation… they dominate much of the world. But there is one thing they can never fully control. Money.
The Deep State can print it. They can call it money. They can control the quantity and monitor prices. But they can never completely control the value of it.
That is why ‘good’ money systems – like the “Bretton Woods” gold-backed system put in place in 1944… or the pure gold-backed system that existed from the end of the Napoleonic Wars to the Great Depression of the 1930s – rely on gold.
The yellow metal ties the currency to the real economy of scarce resources and limited time. It makes sure the money does its job – providing a means of exchange, correctly reporting price changes, and storing real wealth for future use.
Without a sure connection to the real economy, any currency is bound to fail. But this new, post-1971 dollar has a particularly dangerous flaw. It is like a ‘doomsday bug’ that was built into the system from the day it was created. Serious economists worry about it… and suggest ways to deal with it. The press ignores it. And the politicians do not even know it is there. This ‘bug’ is going to bring the whole system to a crashing halt.
You will experience it in person one day when you go to your local grocery store or bank ATM to get some cash. You swipe your card. Nothing happens. Definitely strange…you figure it is probably just a computer problem at the bank.
But as you watch the evening news you realize that something big is happening. ATMs are not working. Credit and even debit cards are not working either. No one seems to know why.
Try depositing a Social Security check or take out cash of an ATM… or find out why credit cards suddenly are not working. This is not just a problem with your bank. Your whole town is essentially shut down.
You turn on the TV and all you see are the same images of closed banks… smashed store windows… and talk of some kind of “crisis”. No one really knows what is happening. But this is it… the beginning of something many of us have expected for a long time now. Except that we never really knew when… or what form it would take. And maybe you were like some afflicted with “willful blindness” who even gradually stopped believing it would ever happen at all.
Except now…it is here… you stare into the coming night, you wonder how long the food in the pantry will last… and what you might have to do if this situation does not get resolved quickly. You get your paycheck but you cannot cash it.
Every part of the aforementioned scenario was based on an actual event that every insider in the Deep State knew would happen and came very close to experiencing during the 2008 financial meltdown; a threat that even today our government and central bankers have been forced to admit is still all too real.
Former secretary of the Treasury, Tim Geithner stated, “In 2008 we came exceptionally close… you could hear the fear and the panic… because anybody living in that world at that time running a business at that time knew that they were at the edge of losing the capacity to function.”
Usually, when central banks experiment with ‘paper’ money, unbacked with gold, the results are predictable. As soon as the insiders realize they can make themselves richer simply by printing more money, the system soon blows up. They print a little. Then, they print a lot. Prices rise. And soon, inflation turns into hyperinflation, a power that not only takes away your ability to accumulate wealth but also takes away the stability you have grown accustomed to and it all disappears. But also disappearing is your very way of life… the traditions… the values… things passed down for generations.
Truckers cannot get the gas for their rigs… Grocery store shelves start to go bare… Homebuyers cannot get loans… Bonds become worthless… IRAs and 401(k)s cannot be cashed out… Stocks fall dramatically before the markets close altogether… Prices swing widely out of control…People take to the streets demanding action from the government… Strikes paralyze our industries… Rioting destroys homes, shops, even entire neighborhoods.
This is not just a financial problem. Money is more than “just information.” You can work all your life. You save your money. And you expect that money to preserve the wealth you created. If it does not, you feel (justifiably) cheated. Part of your work… your life… has been stolen from you. But it has been more than 45 years since the new money system was created. We have seen no hyperinflation in the dollar. Instead, prices have risen…but more and more slowly.
Why? The genius of the new money system was that it did not require ‘money printing.’ Money was created, not by the printing press, but via credit. This is why we have seen such an explosion in credit since 1980. The authorities did not have to print. They could allow the banks to create the biggest pile of debt the world has ever seen.
This has had two major consequences. First, it turned the monetary system into a predatory scheme – in which as much as $8 trillion of real wealth was transferred from the real economy to the Deep State Establishment. Second, it left the entire economy vulnerable to a hellish depression.
The first has already happened. And it will be partially corrected when the second happens, and asset prices collapse. But it is this second reason that has prompted this presentation. When it comes, it will be the worst financial shock ever. It may also cause widespread riots and social upheavals that are now unimaginable. Expansion always leads to contraction. Bull markets always end in bear markets. And booms always end in busts. But not all busts are the same.
In an inflationary bust – like the one in Zimbabwe – the economy collapses, but the money is still there, dumpsters full of it. In a deflationary bust – like the one we see coming – the economy collapses as the money disappears. This is the critical difference between money printing and credit money creation.
If you had bought your house with paper money, you own it. In a crisis, you can live in it… even if the price of houses gets cut in half. A credit money crisis will be very different. Like a house with a big mortgage on it, a crisis can be a catastrophe – not just for the economy, but for you personally. The house quickly turns from an asset into a liability.
Instead of enjoying a safe and secure place to live, you are paying a mortgage on a house that is only worth half what you are paying. And in a credit crisis – such as the crisis of 2008 – you may also lose your job. This is the Big Surprise you should prepare for.
It may lead (probably will) to hyperinflationary money printing later. But the initial stages of the crisis will see a deflationary collapse. Money will not be carried around in wheelbarrows. Prices will not soar, out of control. Instead, they will fall, out of control, as money disappears.
It will disappear because it was never really there in the first place. It was just credit. And credit can vanish in the blink of an eye. All it takes is a single major bank… or simply a crash in the stock market… and the contagion can spread in seconds to the rest of the economy…millions of houses could be foreclosed…
…thousands of businesses could be bankrupted…the entire credit system could seize up. A whole economy, depending on credit for nearly every transaction, will be brought to its knees when the credit fails.
That is the ‘doomsday bug,’ in a nutshell: the credit-money system is prisoner of the credit cycle. And it can turn down fast… and hard.
SUPPLMENTAL SOURCE: BILL BONNER’S DIARY OF BONNER & PARTNERS 8/12/17