<\/p>\n
\n By Tyler Durden<\/p>\n
<\/p>\n
Today we live in a bifurcated economy: it is boom
\ntimes for some and bust times for others.<\/p>\n
<\/p>\n
Your personal situation depends largely on how close
\nyou fall on the socioeconomic spectrum to the protected elite class, towards which the
\ncentral banks are directing their money-printing firehoses.<\/p>\n
<\/p>\n
Why should we care about this bifurcation?
\nHistory.<\/p>\n
<\/p>\n
2,000 years ago, in Plutarch’s time, it was
\nalready ‘old wisdom’ that unhealthy wealth imbalances ended badly for
\nsociety.<\/p>\n
<\/p>\n
Even those near the top of the wealth pyramid
\ndon’t aspire to live surrounded by an impoverished underclass, forced to live
\nhiding behind their fortifications and guards, hoping the unrest of the masses
\ndoesn’t get any worse.<\/p>\n
<\/p>\n
But sadly, the US is not far off from this
\nfate… this is Los Angeles:<\/p>\n
<\/p>\n
The streets of San Francisco, Seattle, and a
\ngrowing number of other once-proud American cities look very similar.<\/p>\n
I care about our social stability which is why I
\nbelieve in having a strong and vibrant middle class – something the US Federal
\nReserve is working to destroy with every intervention. It has been a shameless champion
\nof the entrenched ultra-rich and powerful; at the expense of everyone else. Because of
\nthis, I’ve been a fierce critic of the Fed and its policies.<\/p>\n
<\/p>\n
Money vs Real Wealth<\/strong><\/p>\n <\/p>\n I happen to know a good deal about our current system <\/p>\n So while money isn’t “real” in <\/p>\n Money can be converted into houses. And cars. And <\/p>\n The Three Types Of Wealth<\/strong><\/p>\n <\/p>\n Going further, we can break real wealth into two <\/p>\n Secondary wealth is a finished form produced from raw <\/p>\n Tertiary wealth, on the other hand, is not actually <\/p>\n Similar to money, tertiary wealth is merely a claim <\/p>\n And debt (and bonds) is a future claim on money. And <\/p>\n It’s All About The Amount Of <\/p>\n Why is it relevant to parse these distinctions so <\/p>\n Too many claims and we call that inflation. Each <\/p>\n Deflation is when there’s overproduction, or <\/p>\n Do you get it now why we need to be very concerned <\/p>\n History is full of examples when people first forgot <\/p>\n Another such phase transition approaches. These <\/p>\n We’re facing this approaching crisis for two <\/p>\n Many of our actions are driven by the strong human <\/p>\n And as for the increased complexities, for the first <\/p>\n Instead, it is finite. And its already groaning under One can easily make the argument that 1x GDP is <\/p>\n But even for those who believe we haven’t <\/p>\n When is the right time to act as if these limits <\/p>\n It’s all they care about. And if they have to <\/p>\n The Wealth Transfer<\/strong><\/p>\n <\/p>\n With the near-inevitability of MMT (a.k.a “free <\/p>\n The basic problem is that money is not real wealth. <\/p>\n Easy: the claims on real stuff become diluted. Every <\/p>\n You might think “what a flawed plan!” but <\/p>\n Today it’s far easier to achieve the same <\/p>\n But the effect is the same as coin clipping. Each new <\/p>\n With trillions upon trillions in circulation, nobody <\/p>\n For the US, this chart explains what’s coming This is the total debts of the US, which represent <\/p>\n GDP represents, imperfectly, the ‘real What possible ways are there to resolve that chart <\/p>\n Well, we could grow GDP really, really fast for a <\/p>\n By which point the US economy alone will be 5x larger <\/p>\n However, because such tremendous growth requires <\/p>\n It’s not a good bet at all. <\/p>\n This is where the wealth transfer comes in. And you <\/p>\n Time Is Running Out<\/strong><\/p>\n <\/p>\n The end of money approaches. To quote the famous The alternative is only whether the crisis should <\/p>\n How many people reading this think that given the <\/p>\n Of course they’ll opt to print more now. Now is <\/p>\n Further, there’s nobody of any consequence who <\/p>\n Which is why we predict more printing and borrowing. <\/p>\n The world economy is performing sluggishly and <\/p>\n And, of course, more central bank interventions to <\/p>\n It will be something of a miracle if the next US <\/p>\n That moment will be referred to by the press as a <\/p>\n If an inflationary outcome does – the remaining <\/p>\n Either way, the sword will fall. And after the dust <\/p>\n The only remaining questions are whether the wealth <\/p>\n Either way, by deflation or inflation, the prudent <\/p>\n For those with money in the markets, we have an <\/p>\n We cannot possibly predict when the current <\/p>\n Further, you will know that the beneficiaries of that <\/p>\n The danger in that, of course, is if the financial <\/p>\n More and more people in the US and in other countries <\/p>\n yogaesoteric<\/strong><\/p>\n June 16, 2020<\/strong><\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" By Tyler Durden Today we live in a bifurcated economy: it is boom times for some and bust times for others. Your personal situation depends largely on how close you fall on the socioeconomic spectrum to the protected elite class, towards which the central banks are directing their money-printing firehoses. Why should we care […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[1226],"tags":[],"class_list":["post-23744","post","type-post","status-publish","format-standard","hentry","category-society-1602-en"],"_links":{"self":[{"href":"https:\/\/yogaesoteric.net\/en\/wp-json\/wp\/v2\/posts\/23744","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/yogaesoteric.net\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/yogaesoteric.net\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/yogaesoteric.net\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/yogaesoteric.net\/en\/wp-json\/wp\/v2\/comments?post=23744"}],"version-history":[{"count":0,"href":"https:\/\/yogaesoteric.net\/en\/wp-json\/wp\/v2\/posts\/23744\/revisions"}],"wp:attachment":[{"href":"https:\/\/yogaesoteric.net\/en\/wp-json\/wp\/v2\/media?parent=23744"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/yogaesoteric.net\/en\/wp-json\/wp\/v2\/categories?post=23744"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/yogaesoteric.net\/en\/wp-json\/wp\/v2\/tags?post=23744"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nof money; how it is created, how it functions, its benefits and its darker aspects. I
\nfind it critical to remember that it isn’t actually “real”. Rather, it
\nis a concept. Specifically, it’s a social contract. An agreement. Albeit one
\nenforced at the end of a gun – or, as seen here, an eviction sheriff enforcing the
\nlocal tax codes.<\/p>\n
\nitself, we value it because it is a claim on real things.
\n Having a lot of it currently entitles you to a great
\ndeal of privileges and power, which are a direct outcome of the spending of that
\nmoney.<\/p>\n
\nmassages. Also groceries, electricity, cell phone services and prescription drugs. These
\nand ten billion other things are what money allows you to buy \u2014 the things you
\nactually need or want.
\n So money is the means, but it is not the real wealth.
\n‘Real wealth’ is the things that money enables you to acquire.<\/p>\n
\ndiscrete forms. Primary wealth is the wealth of the land and its functioning ecosystems.
\nIt is clear air, fresh water, thick ore bodies, and rich soils.<\/p>\n
\nmaterials. It is primary wealth brought to market. It is fresh produce on the grocery
\nshelf, cut lumber (or even a fully-constructed building), and rolled steel in giant
\ncoils.<\/p>\n
\n“real”. But most people mistake it as a comprehensive representation of
\n“wealth”.<\/p>\n
\non primary and\/or secondary wealth. A share of General Electic a stock-based claim on
\nthe company’s means of production.<\/p>\n
\nmoney, as we know, is a claim on real things.<\/p>\n
\nClaims<\/strong><\/p>\n
\ncarefully?
\n Because there has to be a balance between the claims
\nand the wealth.<\/p>\n
\nindividual claim is reduced and diluted by every additional new claim brought into
\nbeing. Beyond a certain amount, each claim becomes increasingly worthless.<\/p>\n
\ntoo much ‘real stuff’ relative to money. Prices fall, which is a perilous
\ncondition for a debt-based money system. There needs to be ever more money to pay off
\nboth the principal and interest components of past loans, or else defaults start
\ncascading through the system.<\/p>\n
\nwith the balance between the claims and the real stuff?<\/p>\n
\nand then violently remembered these truths. Through history, the balance has swung
\nrecklessly \u2014 almost chaotically \u2014 between inflation and deflation.<\/p>\n
\nmoments are billed as periods of wealth destruction, but they actually aren’t.
\nInstead, they are periods of wealth transfers from the unaware to the observant.<\/p>\n
\nmain reasons. One, we’re repeating the forgetfulness and hubris of previous
\nsocieties. And two, the complexities of our current situation are more challenging than
\never before.<\/p>\n
\npreference to push our current problems into the future. When problems and predicaments
\nare compounding\/exponential in nature like those we’re currently facing, every
\ncan-kicking deferment only makes the pain much greater when it finally arrives.<\/p>\n
\ntime in our history as a global species, we are waking up to the fact that the world is
\nno longer our infinite treasure basket with an unlimited ability to absorb our waste
\nstreams.<\/p>\n
\nthe weight of one unit of global GDP extraction and waste. The central banks are
\ntirelessly seeking to double the size of the economy, and then double it again.<\/p>\n<\/p>\n
\nalready ‘too much’ for the planet. Disappearing fishes, soil, insects,
\nbirds, amphibians, reptiles and large animals all indicate that ‘too much’
\nwas a while ago.<\/p>\n
\nexceed the Earth’s carrying capacity yet, it’s certainly true that
\nthere’s some sort of a limit somewhere. Is it when there’s 1.5 times as much
\nconsumption and waste as today? 2 times as much? 3 times?<\/p>\n
\nmatter to our future welfare? Not now! is the rally cry of the Federal Reserve and other
\ncentral banks. Their remit begins and ends with fostering more credit growth as fast as
\npossible. Full stop.<\/p>\n
\ncontinue to throw a couple of younger generations and the entire middle-upper, middle,
\nand lower classes under their inequality-bus to achieve more growth in credit markets,
\nthen you’d better believe that’s what they’ll do.<\/p>\n
\nmoney for everybody”) the wealth transfer will kick into a higher and more obvious
\ngear when MMT arrives (as Charles Hugh Smith brilliantly summarized).
\nhttps:\/\/www.peakprosperity.com\/could-modern-monetary-theory-mmt-actually-save-
\nus\/ <\/p>\n
\nBut newly printed money has real purchasing power. What happens when purchasing power is
\nincreased but more real wealth is not auto-magically created at the same time?<\/p>\n
\nunit of money in circulation has a tiny fragment of purchasing power removed from it
\nwhen a new unit of purchasing power is created ‘out of nothing.’<\/p>\n
\nthat’s exactly wrong. That’s precisely the plan. Coin clipping was the
\nancient Roman practice of diluting the currency by recalling every coin in circulation
\n(or as many as possible), shaving off a tiny bit from each of them, and then reissuing a
\nlarger quantity of coins that each weighed a tiny bit less than before.<\/p>\n
\noutcome. New electronic digits are spewed out into the world and perhaps 0.1% of the
\npopulation could even tell you that it’s happening. Perhaps only 0.001% could tell
\nyou exactly how.<\/p>\n
\ncurrency digit launched ‘from nothing’ into circulation has immediate
\npurchasing power. By definition, all of the pre-existing currency in circulation loses a
\n‘unit-share’ as a consequence.<\/p>\n
\nreally notices. Again, that’s both the point and by design.<\/p>\n
\nin grotesque detail:<\/p>\n<\/p>\n
\nfuture claims on money \u2014 which, remember, itself is a future claim on real
\nwealth.<\/p>\n
\nstuff’ in this story. As you can plainly see, the claims (red line) are compunding
\nat a far faster pace than GDP (blue line).
\n It gets even worse \u2014 far, far worse \u2014
\nwhen we include America’s unfunded liabilities into the mix, seen here expressed
\nas a percentage of GDP:<\/p>\n<\/p>\n
\nwith people’s expectations, hopes and dreams?<\/p>\n
\nvery long time. Like 75 or even 100 more years.<\/p>\n
\nthan the entire global economy currently is. Now remember that already the Earth
\nis screaming “enough!” We can only imagine what happens if the US
\nalone becomes 5x larger than today’s entire world economy.<\/p>\n
\nenergy, a LOT of it, and because no suitable replacements for fossil fuels yet exists,
\nand because fossil fuel supplies are set to decline for reasons related to depletion and
\ngeology, that kind of 5x growth is just not likely to materialize. It’s not
\npossible; the fuel to power it isn’t there.<\/p>\n
\n So what happens when huge claims slam into physical
\nconstraints? The excess claims evaporate. As they have many times throughout
\nhistory.<\/p>\n
\nwant to be sure to be prepare for it, and on the correct side of it as it happens.<\/p>\n
\nAustrian economist Ludwig Von Mises: “There is no means of avoiding the final
\ncollapse of a boom brought about by credit expansion.<\/p>\n
\ncome sooner as the result of a voluntary abandonment of further credit expansion, or
\nlater as a final and total catastrophe of the currency system
\ninvolved.”<\/p>\n
\nchoice between dealing with unpleasant consequences now vs. printing up more money (via
\nMMT, more QE, etc.) and facing the music at a later date that there’s even any
\ncontest at all?<\/p>\n
\nnever a good time to face the music. There are delicate issues right here and now to
\nbalance. A tough moment in a trade negotiation, an election, disturbing weakness in the
\nIPO market, etc.<\/p>\n
\nhas the requisite vision or leadership to stomach such a period of tough decisions.
\nThere’s no Paul Volker at the Fed; just a bunch of clueless market-following
\npolitical animals who are afraid of any and every wiggle downwards in stock prices. They
\nare the market’s lapdogs now; completely unworthy of admiration or respect.<\/p>\n
\nEnormous new piles of money and credit will be issued, likely at ever-lower rates of
\ninterest.<\/p>\n
\nappears to be sickening further. This is due to too much debt. But no matter, the
\ncentral banker’s response is automatic: The world needs more credit at even
\ncheaper prices!<\/p>\n
\nkeep everything from falling apart. After all, the central bankers are the heroes in
\nthis story, right?<\/p>\n
\npresidential election doesn’t open the MMT floodgates, which would only accelerate
\nthe pace of currency debasement.
\n The pressure is building. Nobody knows when all of
\nthat newly-issued money and credit will have to be ‘trued up’ against the
\namount of real stuff out there. But it will. It always does.<\/p>\n
\nperiod of wealth destruction.
\n If a deflationary outcome occurs – which we
\ngive a 15% chance of happening – 401ks will be shredded, bonds will lose value,
\ndefaults will spike, stocks will crater and the dollar will spike as institutions and
\nentire countries scramble to repay their debts from a dwindling pool of money.<\/p>\n
\n85% probability – money will become worth less and less. But the press will
\nunhelpfully lament the situation as some great mystery, like rain falling from a clear
\nsky. Of course, understanding inflation is not terribly difficult, but it behooves the
\npower structure to pretend as if it were really just too difficult to comprehend.
\nInflation is always a monetary phenomenon. Too much money chasing too few goods and
\nservices.<\/p>\n
\nsettles, there will be clear winners and losers. Those with the proper framework and
\nagility will prosper. They will understand that what actually happened was that wealth
\nwas transferred from those who thought they owned it (the claimants), to those who
\nactually did (the possessors).<\/p>\n
\ntransfer comes about in the form of an inflationary destruction, like in Venezuela
\ntoday, or as a deflationary bust more in the fashion of Greece recently (which lost its
\nports, roads, and utilities to foreign banks and creditors as a consequence of running
\nup too much debt it couldn’t repay).<\/p>\n
\nfinancial responses remain the same. Own hard assets. Have multiple income streams. Be
\nable to source a percentage of your own food locally and generate your own energy at
\nhome (solar, rocket mass heaters, etc.).<\/p>\n
\nexperienced financial advisory firm we recommend that can help you navigate your
\nfinancial capital through these incredibly uncertain times.<\/p>\n
\nEverything Bubble will finally end, but when it does, you at least will not be fooled.
\nYou will have seen it coming and will know its causes. You will be among the educated
\nand alert who will know that the real wealth has merely been transferred.<\/p>\n
\nwealth transfer will almost certainly be – surprise! – the banks and other
\nfinancial elites that the Fed has so carefully enabled and protected. The winners have
\nbeen pre-selected, as have the losers.<\/p>\n
\nelites haven’t thought their cunning plan all the way through. They may not like
\nwhat follows next as an enraged populace finally wakes up to the enormous fraud that has
\nbeen perpetrated upon it.
\n We shall see.<\/p>\n
\nare waking up to the ways in which the financial and political elites have gamed and
\nrigged the system in their favor. Angry protestors are increasingly taking to the
\nstreets to voice their displeasure.<\/p>\n