Wednesday, March 09, 2011

Laugh track for a funeral

The Death Watch for the U.S. (and perhaps the world) economy has become an industry. Every day brings e-mails descending like a flock of birds into my inbox, from the likes of Martin Weiss, Bill Bonner, Whiskey & Gunpowder, and Justice Litle of Taipan Publishing Group, telling me how I can get rich while everyone else is selling paperclips for the metal value and rooting for turnips. 

Those are only the e-mails. Then there are the almost countless funeral directors with blogs of their own like Karl Denninger and the editor of The Burning Platform.

It's interesting stuff, and I'd be the last to deny that dire events, economic and otherwise, are unfolding. The theme of the '90s was dumb and dumber. For the '10s, it's dire and direr. (Slight surprise: the computer's word check feature didn't balk at "direr," a word I doubt I have ever used before or heard anyone else use.)

If all the oxygen is to be sucked out in the Greater Depression, at least there's one pundit who is restocking our little space capsule with laughing gas.

Not that Jim Willie isn't serious. His analysis is about as ominous as they get these days, and that's very ominous. He's hysterical -- both in the sense of flamboyant, over the top, and wickedly satirical: a Hogarth for the new Gin Lane that is Wall Street -- and at times exceedingly funny. Which is to say, he's a prophet of doom but also a stylist. If you are the former, it's good to be the latter as well.

I'll leave this introduction (an introduction if, that is, you don't know him already) with a few quotes from his latest posting, "Hyper-inflation to Oblivion."
Capital destruction is the main byproduct of monetary inflation, a concept totally foreign to the inflation engineers at the USFed and its satellite central banks. They are agents of magnificent systemic devastation. In the wake of each QE [quantitative easing, or creating money by printing more] round are discouraged creditors who turn away in disgust. The damage and inflation feeds upon itself in stages of intense wreckage. The motive, need, and desperation for QE3 is being formed here and now, to be announced by late summer probably. Prepare for QE to infinity, endless hyper-inflation, a process that cannot be stopped, as the urgent needs grows. Any attempt to halt the process results in almost immediate total annihilation. So continuation of QE rounds serves to manage the deterioration process and guide the financial structures gradually and orderly into oblivion. ...
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Almost half of the US Gross Domestic Product is derived from financial paper shuffling, whose negative value has been clearly displayed in the form of mortgage bond wreckage, profound bond fraud, home foreclosure processing, absent home equity withdrawals, bankruptcy processing, and piles of debt that burden households. US economists fail to comprehend the entire concept of capital, this from the supposed leading capitalist nation. The banking and political leaders struggle to produce jobs without a clue of what capital is, instead seeking to put cash in consumer hands. They should pursue business formation, with capital investment, encourage risk taking, provide broad tax incentives, and lead the consumer spending process with job creation and income production. But no. They prefer QE, the accelerator that pushes the nation over the cliff. ...
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The shift to financial commodities in Gold & Silver has been even greater than for crude oil, the traditional hedge. Despite not being the leading non-financial commodity in price increase, the crude oil impact is enormous, in food production, in transportation costs, and especially in industrial feedstock costs. The result is an energy tax, compounded by a systemic cost that acts like a gigantic tax. The US Fed QE program thus imposed a significant tax increase on the entire US Economy. The entire population is aware, except for the US Fed, the Wall Street master, and banking elite. Actually, they are aware, but they cannot speak about the scourge they unleashed since they would invite criticism and turn the blame onto themselves for destroying the United States financially, economically, and systemically. The moral fiber is long gone among leaders, as the US nation is being recognized as a fraud king playpen.  
Enjoy Jim Willie's weekly funeral orations. It looks like rain, and the pallbearers are anxious to get on with their business.

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1 comment:

David said...

Decline in the US dollar, making imports more expensive, should logically make US manufacturing more attractive. (This being a *genuine* negative feedback effect--the inflationary vicious circle he describes in his first sentence is properly called a *positive* feedback loop.) And to some extent, this substitution of imports by domestic production will actually happen; however, it will be limited by the anti-manufacturing regulatory and tax climate and also to some extent by cultural factors and skill deficits.