9/11 The Day America Ended

SUBHEAD: We built the Freedom Tower at the WTC site and denied ourselves the very freedom it symbolizes. 

By Juan Wilson on 11 September 2016 for Island Breath -
(http://islandbreath.blogspot.com/2016/09/911-day-america-ended.html)


Image above: WTC2, the south tower of the World Trade center, begins its collapse to the ground after being hit with commercial jet. From (https://www.pinterest.com/pin/334321972311799824/).

Conspiracy theories abound. And they are like fractal geometries. The deeper you look the more complicated they may seem.

Fractal noun
a curve or geometric figure, each part of which has the same statistical character as the whole. Fractals are useful in modeling structures (such as eroded coastlines or snowflakes) in which similar patterns recur at progressively smaller scales, and in describing partly random or chaotic phenomena such as crystal growth, fluid turbulence, and galaxy formation.

As a result I personally have found going down the rabbit hole of conspiracies useless. This began for me with the Kennedy Assassination. What I think is important is to question the 'authorized version" of evtents and to get a gist of who has benefited from the results of the disaster the conspiracy may have produced.

In the case of the 9/11 attacks on the World Trade Center and Pentagon it is clear that it was executed for the Bush regime by the Saudi Arabians.

The Bush Team (Cheney-Rumsfeld-Rice) wanted and got their excuse for an endless war for American domination in the Middle East as well as the fascist takeover the the operation of the United States. Cheney, in particular, had business interests that could take advantage of our military response to 9/11.

Freedom as individuals in America has never been more threatened by our intelligence and security services as it is today. 

Bursting Bubbles
Often not linked to the 9/11 disaster was the crash of the DotCom Bubble. The over enthusiastic investment in the burgeoning commercial possibilities of the internet at the turn of the millennium featuring startups like GeoCities.com and Pets.com went sour. It seemed the American economy had been euphoric for a business model with yet no substance.

In less than a decade the DotCom Bubble was followed by the speculative Real Estate Bubble bursting in 2008-2009. The following The Great Recession still roils through our economy. We have not recovered from that and have been floating with only our nostrils above the water on a billowing bubble of debt ($20trillion or so). It's been provided by the Central Banks by way of Quantitative Easing, Zero Interest Rate Percent loans (ZIRP) to banks and now Negative Interest Rate Percent (NIRP) bank savings accounts.

But that Debt Bubble is about to burst now. With our current economic model growth and employment cannot be restored without destroying the planet. We will now face the consequences of that with either Hillary (and the NSA) or Donald (and the KGB) at the helm.

The strategy the banksters see going forward is to get rid of the cash economy. It provides too much cover for individual freedom of trade. It denies the banks a slice of every transaction. It can't be easily confiscated or devalued. It means not every step of your life will cannot be monitored.

One Little Grid Failure

It seems pretty clear that the Power Grid and Information Networks are as vital to our continuity as a working civilization as agriculture, highways, factories and ports that are the foundation of our infrastructure.

The power and information systems have become ever more crucial to our continuity as a nation. So much so that people cannot survive without them. 

Problem is they are so delicate that minor glitches can take them down and make our live inconvenient... and major interruptions can cause widespread havoc and chaos.

The "cashless" economy the Techno-Optimists dream of seems cool. Just tapping your iPhone for a Starbuck's coffee, or whizzing through a tollbooth with your EasyPass sticker seems convenient.

The downside of such dependencies exists too. Recently I went for lunch to a Kauai Island Brewery and Grill on the south side. They have great beer and like many restaurants today use networked iPads for orders and billing. Bills are paid at the front desk on an iPad using an attached SquareUp credit card reader.

The brew pub only a few hundred yards from the main KIUC main Port Allen power plant so a power grid failure wasn't likely. However, that doesn't protect them from irregularities of the internet.

As we were coming through the  door the staff, including head waiter, were focused around the card reading iPad at the entrance. It wasn't reading cards. The place was packed and many tables were set to rollover customers.  

The staff was realizing that many might be leaving without a way to pay their bills. They were only letting in new customers who said they could pay cash. We had cash. This lasted only about five minutes but as he seated us the sweat still gleamed on the head waiters forehead.

An electronic cashless economy will not persist for very long, even if it could be deployed. It's too delicate. More likely we will over time descend from a cash economy to a trade/barter/gifting economy.

This is totally lost on most Americans today.

We are is such deep self denial that we built the "Freedom Tower" at the site of the old World Trade Center as we denied ourselves the very freedoms it supposedly symbolizes.

Decentalize Now!

There is no way off this high and fragile branch we cling to, but we must climb down from this perch or to fall to our deaths. Getting down successfully means being reliant on yourself and local resources for all necessities. But in your heart you already knew that.
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NIRP and the War on Cash

SUBHEAD: It is our duty to be informed and act to protect ourselves, our families and our communities.

By Nicole Foss on 8 September 2016 for the Automatic Earth -
(https://www.theautomaticearth.com/2016/09/negative-interest-rates-and-the-war-on-cash-4/)


Image above: Aerial photo of downtown Manhattan financial district which is home to much of the bankster and financial scam operations of our "faked" economy. From (http://www.wallpaperup.com).

This is Part 4 of a four part series entitled “Negative Interest Rates and the War on Cash”.

Original Part 1 is here: Negative Interest Rates and the War on Cash (1)
Original Part 2 is here: Negative Interest Rates and the War on Cash (2)
Original Part 3 is here: Negative Interest Rates and the War on Cash (3)
Original Part 4 is here: Negative Interest Rates and the War on Cash (4) 

In attempting to keep the credit bonanza going with their existing powers, central banks have set the global financial system up for an across-the-board asset price collapse:

QE takes away the liquidity preference choice out of the hands of the consumers, and puts it into the hands of central bankers, who through asset purchases push up asset prices even if it does so by explicitly devaluing the currency of price measurement; it also means that the failure of NIRP is — by definition — a failure of central banking, and if and when the central bank backstop of any (make that all) asset class — i.e., Q.E., is pulled away, that asset (make that all) will crash.

It is not just central banking, but also globalisation, which is demonstrably failing. Cross-border freedoms will probably be an early casualty of the war on cash, and its demise will likely come as a shock to those used to a relatively borderless world:

We have been informed with reliable sources that in Germany where Maestro was a multi-national debit card service owned by MasterCard that was founded in 1992 is seriously under attack. Maestro cards are obtained from associate banks and can be linked to the card holder’s current account, or they can be prepaid cards. Already we find such cards are being cancelled and new debit cards are being issued.
Why? The new cards cannot be used at an ATM outside of Germany to obtain cash. Any attempt to get cash can only be as an advance on a credit card….This is total insanity and we are losing absolutely everything that made society function. Once they eliminate CASH, they will have total control over who can buy or sell anything.

The same confused, greedy and corrupt central authorities which have set up the global economy for a major bust through their dysfunctional use of existing powers, are now seeking far greater central control, in what would amount to the ultimate triumph of finance over people. They are now moving to tax what ever people have left over after paying taxes. It has been tried before.

As previous historical bubbles began to collapse, central authorities attempted to increase their intrusiveness and control over the population, in order to force the inevitable losses as far down the financial foodchain as possible.

As far back as the Roman Empire, economically contractionary periods have been met with financial tyranny — increasing pressure on the populace until the system itself breaks:

Not even the death penalty was enough to enforce Diocletian’s price control edicts in the third century.

Rome squeezed the peasants in its empire so hard, that many eventually abandoned their land, reckoning that they were better off with the barbarians.

Such attempts at total financial control are exactly what one would expect at this point. A herd of financial middle men are used to being very well supported by the existing financial system, and as that system begins to break down, losing that raft of support is unacceptable.

The people at the bottom of the financial foodchain must be watched and controlled in order to make sure they are paying to support the financial centre in the manner to which it has become accustomed, even as their ability to do so is continually undermined:

An oft-overlooked benefit of cash transactions is that there is no intermediary. One party pays the other party in mutually accepted currency and not a single middleman gets to wet his beak. In a cashless society there will be nothing stopping banks or other financial mediators from taking a small piece of every single transaction.

They would also be able to use — and potentially abuse — the massive deposits of data they collect on their customers’ payment behavior. This information is of huge interest and value to retail marketing departments, other financial institutions, insurance companies, governments, secret services, and a host of other organizations…
….So in order to save a financial system that is morally beyond the pale and stopped serving the basic needs of the real economy a long time ago, governments and central banks must do away with the last remaining thing that gives people a small semblance of privacy, anonymity, and personal freedom in their increasingly controlled and surveyed lives. The biggest tragedy of all is that the governments and banks’ strongest ally in their War on Cash is the general public itself. As long as people continue to abandon the use of cash, for the sake of a few minor gains in convenience, the war on cash is already won.

Even if the ultimate failure of central control is predictable, momentum towards greater centralisation will carry forward for as long as possible, until the system can no longer function, at which point a chaotic free-for-all is likely to occur. In the meantime, the movement towards electronic money seeks to empower the surveillance state/corporatocracy enormously, providing it with the tools to observe and control virtually every aspect of people’s lives:

Governments and corporations, even that genius app developer in Russia, have one thing in common: they want to know everything. Data is power. And money. As the Snowden debacle has shown, they’re getting there. Technologies for gathering information, then hoarding it, mining it, and using it are becoming phenomenally effective and cheap.

But it’s not perfect. Video surveillance with facial-recognition isn’t everywhere just yet. Not everyone is using a smartphone. Not everyone posts the details of life on Facebook. Some recalcitrant people still pay with cash. To the greatest consternation of governments and corporations, stuff still happens that isn’t captured and stored in digital format….
….But the killer technology isn’t the elimination of cash. It’s the combination of payment data and the information stream that cellphones, particularly smartphones, deliver. Now everything is tracked neatly by a single device that transmits that data on a constant basis to a number of companies, including that genius app developer in Russia — rather than having that information spread over various banks, credit card companies, etc. who don’t always eagerly surrender that data.

Eventually, it might even eliminate the need for data brokers. At that point, a single device knows practically everything. And from there, it’s one simple step to transfer part or all of this data to any government’s data base. Opinions are divided over whom to distrust more: governments or corporations. But one thing we know: mobile payments and the elimination of cash….will also make life a lot easier for governments and corporations in their quest for the perfect surveillance society.

Dissent is increasingly being criminalised, with legitimate dissenters commonly referred to, and treated as, domestic terrorists and potentially subjected to arbitrary asset confiscation:

An important reason why the state would like to see a cashless society is that it would make it easier to seize our wealth electronically. It would be a modern-day version of FDR’s confiscation of privately-held gold in the 1930s. The state will make more and more use of “threats of terrorism” to seize financial assets. It is already talking about expanding the definition of “terrorist threat” to include critics of government like myself.

The American state already confiscates financial assets under the protection of various guises such as the PATRIOT Act. I first realized this years ago when I paid for a new car with a personal check that bounced. The car dealer informed me that the IRS had, without my knowledge, taken 20 percent of the funds that I had transferred from a mutual fund to my bank account in order to buy the car. The IRS told me that it was doing this to deter terrorism, and that I could count it toward next year’s tax bill.

 The elimination of cash in favour of official electronic money only would greatly accelerate and accentuate the ability of governments to punish those they dislike, indeed it would allow them to prevent dissenters from engaging in the most basic functions:

If all money becomes digital, it would be much easier for the government to manipulate our accounts. Indeed, numerous high-level NSA whistleblowers say that NSA spying is about crushing dissent and blackmailing opponents. not stopping terrorism.

This may sound over-the-top. but remember, the government sometimes labels its critics as “terrorists”. If the government claims the power to indefinitely detain — or even assassinate — American citizens at the whim of the executive, don’t you think that government people would be willing to shut down, or withdraw a stiff “penalty” from a dissenter’s bank account?
If society becomes cashless, dissenters can’t hide cash. All of their financial holdings would be vulnerable to an attack by the government. This would be the ultimate form of control. Because — without access to money — people couldn’t resist, couldn’t hide and couldn’t escape.

The trust that has over many years enabled the freedoms we enjoy is now disappearing rapidly, and the impact of its demise is already palpable. Citizens understandably do not trust governments and powerful corporations, which have increasingly clearly been acting in their own interests in consolidating control over claims to real resources in the hands of fewer and fewer individuals and institutions:

By far the biggest risk posed by digital alternatives to cash such as mobile money is the potential for massive concentration of financial power and the abuses and conflicts of interest that would almost certainly ensue. Naturally it goes without saying that most of the institutions that will rule the digital money space will be the very same institutions….that have already broken pretty much every rule in the financial service rule book.
They have manipulated virtually every market in existence; they have commodified and financialized pretty much every natural resource of value on this planet; and in the wake of the financial crisis they almost single-handedly caused, they have extorted billions of dollars from the pockets of their own customers and trillions from hard-up taxpayers. What about your respective government authorities? Do you trust them?…

….We are, it seems, descending into a world where new technologies threaten to put absolute power well within the grasp of a select group of individuals and organizations — individuals and organizations that have through their repeated actions betrayed just about every possible notion of mutual trust.

Governments do not trust their citizens (‘potential terrorists’) either, hence the perceived need to monitor and limit the scope of their decisions and actions.

The powers-that-be know how angry people are going to be when they realise the scale of their impending dispossession, and are acting in such a way as to (try to) limit the power of the anger that will be focused against them. It is not going to work.

Without trust we are likely to see “throwbacks to the 14th century….at the dawn of banking coming out of the Dark Ages.”. It is no coincidence that this period was also one of financial, socioeconomic and humanitarian crises, thanks to the bursting of a bubble two centuries in the making:

The 14th Century was a time of turmoil, diminished expectations, loss of confidence in institutions, and feelings of helplessness at forces beyond human control. Historian Barbara Tuchman entitled her book on this period A Distant Mirror because many of our modern problems had counterparts in the 14th Century.

Few think of the trials and tribulations of 14th century Europe as having their roots in financial collapse — they tend instead to remember famine and disease. However, the demise of what was then the world banking system was a leading indicator for what followed, as is always the case:

Six hundred and fifty years ago came the climax of the worst financial collapse in history to date. The 1930’s Great Depression was a mild and brief episode, compared to the bank crash of the 1340’s, which decimated the human population.

The crash, which peaked in A.C.E. 1345 when the world’s biggest banks went under, “led” by the Bardi and Peruzzi companies of Florence, Italy, was more than a bank crash — it was a financial disintegration….a blowup of all major banks and markets in Europe, in which, chroniclers reported, “all credit vanished together,” most trade and exchange stopped, and a catastrophic drop of the world’s population by famine and disease loomed.

As we have written many times before at The Automatic Earth, bubbles are not a new phenomenon. They have inflated and subsequently imploded since the dawn of civilisation, and are in fact en emergent property of civilisational scale. There are therefore many parallels between different historical episodes of boom and bust:

The parallels between the medieval credit crunch and our current predicament are considerable. In both cases the money supply increased in response to the expansionist pressure of unbridled optimism. In both cases the expansion proceeded to the point where a substantial overhang of credit had been created — a quantity sufficient to generate systemic risk that was not recognized at the time. In the fourteenth century, that risk was realized, as it will be again in the 21st century.

What we are experiencing now is simply the same dynamic, but turbo-charged by the availability of energy and technology that have driven our long period of socioeconomic expansion and ever-increasing complexity.

Just as in the 14th century, the cracks in the system have been visible for many years, but generally ignored. The coming credit implosion may appear to come from nowhere when it hits, but has long been foreshadowed if one knew what to look for.

Watching more and more people seeking escape routes from a doomed financial system, and the powers-that-be fighting back by closing those escape routes, all within a social matrix of collapsing trust, one cannot deny that history is about to repeat itself yet again, only on a larger scale this time.

The final gasps of a bubble economy, such as our own, are about behind-the-scenes securing of access to and ownership of real assets for the elite, through bailouts and other forms of legalized theft. As Frédéric Bastiat explained in 1848,

“When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.”

The bust which follows the last attempt to kick the can further down the road will see the vast majority of society dispossessed of what they thought they owned, their ephemeral electronic claims to underlying real wealth extinguished.

The advent of negative interest rates indicates that the endgame for the global economy is underway. In places at the peak of the bubble, negative rates drive further asset bubbles and create ever greater vulnerability to the inevitable interest rate spike and asset price collapse to come.

In Japan, at the other end of the debt deflation cycle, negative rates force people into ever more cash hoarding. Neither one of these outcomes is going to lead to recovery. Both indicate economies at breaking point. We cannot assume that current financial, economic and social structures will continue in their present form, and we need to prepare for a period of acute upheaval.

Using cash wherever possible, rather than succumbing to the convenience of electronic payments, becomes an almost revolutionary act.

So other forms of radical decentralization, which amount to opting out as much as possible from the path the powers-that-be would have us follow. It is likely to become increasingly difficult to defend our freedom and independence, but if enough people stand their ground, establishing full totalitarian control should not be possible.

To some extent, the way the war on cash plays out will depend on the timing of the coming financial implosion. The elimination of cash would take time, and only in some countries has there been enough progress away from cash that eliminating it would be at all realistic. If only a few countries tried to do so, people in those countries would be likely to use foreign currency that was still legal tender.

Cash elimination would really only work if it it were very broadly applied in enough major economies, and if a financial accident could be postponed for a few more years. As neither of these conditions is likely to be fulfilled, a cash ban is unlikely to viable.  

Governments and central banks would very much like to frighten people away from cash, but that only underlines its value under the current circumstances. Cash is king in a deflation.

The powers-that-be know that, and would like the available cash to end up concentrated in their own hands rather than spread out to act as seed capital for a bottom-up recovery.

Holding on to cash under one’s own control is still going to be a very important option for maintaining freedom of action in an uncertain future. The alternative would be to turn to hard goods (land, tools etc) from the beginning, but where there is a great deal of temporal and spatial uncertainty, this amounts to making all one’s choices up front, and choices based on incomplete information could easily turn out to be wrong.

Making such choices up front is also expensive, as prices are currently high. Of course having some hard goods is also advisable, particularly if they allow one to have some control over the essentials of one’s own existence.

It is the balance between hard goods and maintaining capital as liquidity (cash) that is important.

Where that balance lies depends very much on individual circumstances, and on location. For instance, in the European Union, where currency reissue is a very real threat in a reasonably short timeframe, opting for goods rather than cash makes more sense, unless one holds foreign currency such as Swiss francs. If one must hold euros, it would probably be advisable to hold German ones (serial numbers begin with X).

US dollars are likely to hold their value for longer than most other currencies, given the dollar’s role as the global reserve currency. Reports of its demise are premature, to put it mildly. As financial crisis picks up momentum, a flight to safety into the reserve currency is likely to pick up speed, raising the value of the dollar against other currencies.

In addition, demand for dollars will increase as debtors seek to pay down dollar-denominated debt. While all fiat currencies are ultimately vulnerable in the beggar-thy-neighbour currency wars to come, the US dollar should hold value for longer than most.

Holding cash on the sidelines while prices fall is a good strategy, so long as one does not wait too long.

The risks to holding and using cash are likely to grow over time, so it is best viewed as a short term strategy to ride out the deflationary period, where the value of credit instruments is collapsing. The purchasing power of cash will rise during this time, and previously unforeseen opportunities are likely to arise.

Ordinary people need to retain as much of their freedom of action as possible, in order for society to function through a period of economic seizure. In general, the best strategy is to hold cash until the point where the individual in question can afford to purchase the goods they require to provide for their own needs without taking on debt to do so.

Avoiding taking on debt is extremely important, as financially encumbered assets would be subject to repossession in the event of failure to meet debt obligations.

One must bear in mind, however, that after price falls, some goods may cease to be available at any price, so some essentials may need to be purchased at today’s higher prices in order to guarantee supply.

Capital preservation is an individual responsibility, and during times of deflation, capital must be preserved as liquidity.

We cannot expect either governments or private institutions to protect our interests, as both have been obviously undermining the interests of ordinary people in favor of their own for a very long time.

Indeed they seem to feel secure enough of their own consolidated control that they do not even bother to try to hide the fact any longer. It is our duty to inform ourselves and act to protect ourselves, our families and our communities. If we do not, no one else will.

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Economic collapse pushing war

SUBHEAD: The global financial situation is worse than you may think and it drives war.


By Michael Snyder on 13 July 2016 for Economic Collapse Blog -
(http://theeconomiccollapseblog.com/archives/war-is-coming-and-the-global-financial-situation-is-a-lot-worse-than-you-may-think)


Image above: A fiat money tidal wave breaks. From (http://www.theeventchronicle.com/finanace/the-banking-system-has-gone-rogue-world-economic-order-is-collapsing/).

On the surface, things seem pretty quiet in mid-July 2016.  The biggest news stories are about the speculation surrounding Donald Trump’s choice of running mate, the stock market in the U.S. keeps setting new all-time record highs, and the media seems completely obsessed with Taylor Swift’s love life.  But underneath the surface, it is a very different story.  As you will see below, the conditions for a “perfect storm” are coming together very rapidly, and the rest of 2016 promises to be much more chaotic than what we have seen so far.

Let’s start with China.  On Tuesday, an international tribunal in the Hague ruled against China’s territorial claims in the South China Sea.  The Chinese government announced ahead of time that they do not recognize the jurisdiction of the tribunal, and they have absolutely no intention of abiding by the ruling.  In fact, China is becoming even more defiant in the aftermath of this ruling.

We aren’t hearing much about it in the U.S. media, but according to international news reports Chinese president Xi Jinping has ordered the People’s Liberation Army “to prepare for combat” with the United States if the Obama administration presses China to abandon the islands that they are currently occupying in the South China Sea…

“Chinese president Xi Jinping has reportedly ordered the People’s Liberation Army to prepare for combat,” reports Arirang.com. “U.S.-based Boxun News said Tuesday that the instruction was given in case the United States takes provocative action in the waters once the ruling is made.”

A U.S. aircraft carrier and fighter jets were already sent to the region in anticipation of the ruling, with the Chinese Navy also carrying out exercises near the disputed Paracel islands.

Last October, China said it was “not frightened” to fight a war with the U.S. following an incident where the guided-missile destroyer USS Lassen violated the 12-nautical mile zone China claims around Subi and Mischief reefs in the Spratly archipelago.

Meanwhile, the relationship between the United States and Russia continues to go from bad to worse.  The installation of a missile defense system in Romania is just the latest incident that has the Russians absolutely steaming, and during a public appearance on June 17th Russian President Vladimir Putin tried to get western reporters to understand that the world is being pulled toward war…

“We know year by year what’s going to happen, and they know that we know. It’s only you that they tell tall tales to, and you buy it, and spread it to the citizens of your countries. You people in turn do not feel a sense of the impending danger – this is what worries me. How do you not understand that the world is being pulled in an irreversible direction? While they pretend that nothing is going on. I don’t know how to get through to you anymore.”

And of course the Russians have been feverishly updating and modernizing their military in preparation for a potential future conflict with the United States.  Just today we learned that the Russians are working to develop a hypersonic strategic bomber that is going to have the capability of striking targets with nuclear warheads from outer space.

Unfortunately, the Obama administration does not feel a similar sense of urgency.  The size of our strategic nuclear arsenal has declined by about 95 percent since the peak of the Cold War, and many of our installations are still actually using rotary phones and the kind of 8 inch floppy disks for computers that were widely used back in the 1970s.

But I don’t expect war with China or Russia to erupt by the end of 2016. Of much more immediate concern is what is going on in the Middle East.  The situation in Syria continues to deteriorate, but it is Israel that could soon be the center of attention.

Back in March, the Wall Street Journal reported that the Obama administration wanted to revive the peace process in the Middle East before Obama left office, and that a UN Security Council resolution that would divide the land of Israel and set the parameters for a Palestinian state was still definitely on the table…

The White House is working on plans for reviving long-stalled Middle East negotiations before President Barack Obama leaves office, including a possible United Nations Security Council resolution that would outline steps toward a deal between the Israelis and Palestinians, according to senior U.S. officials.

And just this week, the Washington Post reported that there were renewed “rumblings” about just such a resolution…

Israel is facing a restive European Union, which is backing a French initiative that seeks to outline a future peace deal by year’s end that would probably include a call for the withdrawal of Israeli troops and the creation of a Palestinian state. There are also rumblings that the U.N. Security Council might again hear resolutions about the conflict.

For years, Barack Obama has stressed the need for a Palestinian state, and now that his second term is drawing to a close he certainly realizes that this is his last chance to take action at the United Nations.  If he is going to pull the trigger and support a UN resolution formally establishing a Palestinian state, it will almost certainly happen before the election in November.  So over the coming months we will be watching these developments very carefully.

And it is interesting to note that there is an organization called “Americans For Peace Now” that is collecting signatures and strongly urging Obama to support a UN resolution of this nature.  The following comes from their official website…

Now is the time for real leadership that can revive and re-accredit the two-state solution as President Obama enters his final months in office. And he can do this – he can lay the groundwork for a two-state agreement in the future by supporting an Israeli-Palestinian two-state resolution in the United Nations Security Council.

Such a resolution would restore U.S. leadership in the Israeli-Palestinian arena. It would preserve the now-foundering two-state outcome. And it would be a gift to the next president, leaving her or him constructive options for consequential actions in the Israeli-Palestinian arena, in place of the ever-worsening, politically stalemated status quo there is today.

Sadly, a UN resolution that divides the land of Israel and that formally establishes a Palestinian state would not bring lasting peace.  Instead, it would be the biggest mistake of the Obama era, and it would set the stage for a major war between Israel and her neighbors.  This is something that I discussed during a recent televised appearance down at Morningside that you can watch right here…



Video above: Michael Snyder on Jim Bakker Show, "Global Financial Situation". From (https://youtu.be/Fd3AddxTz3w).

At the same time all of this is going on, the global economic crisis continues to escalate.  Even though U.S. financial markets are in great shape at the moment, the same cannot be said for much of the rest of the world.

Just look at the country that is hosting the Olympics this summer.  Brazil is mired in the worst economic downturn that it has seen since the Great Depression of the 1930s, and Rio de Janeiro’s governor has declared “a state of financial emergency“.

Next door, the Venezuelan economy has completely collapsed, and some people have become so desperate that they are actually hunting cats, dogs and pigeons for food.

Elsewhere, China is experiencing the worst economic downturn that they have seen in decades, the Japanese are still trying to find the end of their “lost decade”, and the banking crisis in Europe is getting worse with each passing month.

In quite a few articles recently, I have discussed the ongoing implosion of the biggest and most important bank in Germany.  But I am certainly not the only one warning about this.  In one of his recent articles, Simon Black also commented on the turmoil at “the most dangerous bank in Europe”…

Well-capitalized banks are supposed to have double-digit capital levels while making low risk investments.
Deutsche Bank, on the other hand, has a capital level of less that 3% (just like Lehman), and an incredibly risky asset base that boasts notional derivatives exposure of more than $70 trillion, roughly the size of world GDP.

But of course Deutsche Bank isn’t getting a lot of attention from the mainstream media right now because of the stunning meltdown of banks in Italy, Spain and Greece.  Here is more from Simon Black…

Italian banks are sitting on over 360 billion euros in bad loans right now and are in desperate need of a massive bailout.

IMF calculations show that Italian banks’ capital levels are among the lowest in the world, just ahead of Bangladesh.

And this doesn’t even scratch the surface of problems in other banking jurisdictions.
Spanish banks have been scrambling to raise billions in capital to cover persistent losses that still haven’t healed from the last crisis.

In Greece, over 35% of all loans in the banking system are classified as “non-performing”.

Even though U.S. stocks are doing well for the moment, the truth is that trillions of dollars of stock market wealth has been lost globally since this time last year.  If you are not familiar with what has been going on around the rest of the planet, this may come as a surprise to you.  During my recent appearance at Morningside, I shared some very startling charts which show how dramatically global markets have shifted over the past 12 months.  You can view the segment in which I shared these charts right here…


Video above: Michael Snyder on Jim Bakker Show, "War is Coming". From (https://youtu.be/au8BcoDkFsw).

I would really like it if the rest of 2016 was as quiet and peaceful as the past couple of days have been.
Unfortunately, I don’t believe that is going to be the case at all.

The storm clouds are rising and the conditions for a “perfect storm” are brewing.  Sadly, most people are not going to understand what is happening until it is far too late.

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Death to All Zombies!

SUBHEAD: Once this contagion starts burning, the people-in-charge won’t be able to quell it the way they did last time.

By James Kunstler on 27 June 2016 for Kunstler.com -
(http://kunstler.com/clusterfuck-nation/death-to-all-zombies/)


Image above: Zombie banker (zombanker) explaining capitalism. From (http://theotherdarkmeat.blogspot.com/2014/02/swagswagsswagswagswag.html).

Wait a minute. They’re already dead. Brexit just reveals that not everybody’s brains have been eaten. A viral contagion now threatens the zombified institutions of daily life, especially the workings of politics and finance.

Just as zombies exist only in the collective imagination, so do these two principal activities of society operate mainly on trust, an ephemeral product of the hive-mind.

When things fall apart in stressed complex systems, they tend to fall apart fast. It’s called phase change. Too many things in 21^st century life have depended on sheer trust that the people-in-charge know what they are doing.

That trust has subsisted on the doling out of money-from-nothing: debt, reckless bond issuance. TARP, QEs, bailouts, bail-ins, Operation Twists, Ponzi schemes… the whole sad-ass armamentarium of banking necromancy. The politicians let it get out of hand. Things that can’t go on don’t, and now they won’t.

The politics of Great Britain are now falling apart landslide-style. Since just about everybody in or near power can be blamed for the national predicament, there’s nobody to turn to, at least not yet. The Labour party just acted out The Caine Mutiny, starring Jeremy Corbyn as Captain Queeg.

The Tory Cameron gave three months notice without any plausible replacement in view. Now Cameron’s people are hinting in the media that they can just drag their feet on Brexit, that is, not do anything to enable it from actually happening for a while.

Of course, that’s what the monkeyshines of banking and finance have done: postponed the inevitable reckoning with the realities of our time: growing resource scarcity, population overshoot, climate change, ecological holocaust, and the diminishing returns of technology.

Britain illustrates the problem nicely: how to produce “wealth” without producing wealth. It’s called “the City,” their name for the little district of London that is their Wall Street.

In the absence of producing real things, the City became the driver of the UK’s economy, a ghastly parasitical organism that functioned as the central transfer station for the world’s swindles and frauds, churning the West’s dwindling residual capital into a slurry of fees, commissions, arbitrages, rigged casino bets, and rip-offs.

In the process, it enabled the European Central Bank (ECB) to run the con-job that the European Union (EU) became, with the fatal distortions of credit that have put its members into a ditch and sent the private European banks off a cliff, Thelma and Louise style.

The next stage of this protean global melodrama is what happens when currencies and interest rates become completely unglued from their assigned roles as patsies in financial racketeering.

Sooner or later we’ll know what’s going on in the vast shadowy gloaming of “derivatives,” especially the “innovative” arrangements that affect to be “insurance” against losses in currency and interest rate “positions” — bets made on the movements of these things.

When currencies rise or fall quickly, these so-called “swaps” are “triggered,” and then some hapless institution is left holding a big bag of dog-shit. A zombie is a terrible thing to behold, but a zombie holding a bag of dog-shit is like unto the end of the world.

Once this contagion starts burning, the people-in-charge won’t be able to quell it the way they did last time: by drowning it in torrents of money-from-nowhere. At least not without inducing real-deal inflation, the kind that leads to epochal ruin and more intense political upheaval: the nation-changing kind.

We’re about five minutes away from that in the USA already, with the loathsome duo of Hillary and Trump putting on a Punch and Judy show for a disgusted public.

If nothing else, Hillary and Trump represent the withering of political trust in America. The parties that spawned them are also whirling around the drain of credibility. They won’t survive in the form we knew them.

Who knows what comes out of this vacuum, what rough beast slouches towards Washington.

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The Money Cult

SUBHEAD: ZIRP and NIRP have coincided in first zero growth and now negative growth.

By Dmitry Orlov on  7 June 2016 for Club Orlov -
(http://cluborlov.blogspot.com/2016/06/the-money-cult.html)


Image above: Illustratio by Dennis Cristo of Zero Interest Rate Policy landing in catastrophic Negative Interest Rate Policy. From (http://www.silverbearcafe.com/private/10.15/recession.html).

Previously, I have written about the progression from positive interest rates to zero interest rates (since 2008) and finally to negative interest rates.

And I asked my readers a simple question: How will negative interest rates blow up the financial system? And apparently none of you knew the answer.

Now, I must confess that to start with I didn’t know the answer either, which is why I asked the question, and my first attempts at finding it were somewhat tentative. But now, having thought about it, I do seem to have found the answer, and it is that…

But first let us back up a bit and answer several preliminary questions:

1. Why did zero interest rates become necessary?
2. Why are negative interest rates now necessary? and,
3. Why are negative interest rates a really excellent idea?*

* if you ignore certain unintended consequences (which is what everyone does all the time, so let’s not worry about them just yet).

1. Interest rates went to zero because economic growth went to zero. If you are just now wondering why that happened, just google “Limits to Growth” by clicking this link. (A public notice about the scheduled end of growth has been on display at your global planning office for four decades now. It is not anyone else’s fault if people of this planet don’t take an interest in their global affairs. I mean, seriously…)

Interest rates and rates of growth are related: a positive interest rate is little more than a bet that the future is going to be bigger and more prosperous, enabling people to pay off the debts with interest. This is an obvious point: if your income increases, it becomes easier to repay your debts; if it stagnates, it becomes harder; if it shrinks, it eventually becomes impossible.

Yes, you can nitpick and split hairs, and claim that there was still some growth, but in the developed economies most of this growth has been in financial shenanigans, fueled by an explosion in debt, and most of the benefits of this last bit of growth accrued to the wealthiest 1%, and did next to nothing for anyone else. Did this growth help support a large, stable and prosperous middle class? No, it didn’t.

In fact, wages in the US, which was once the world’s largest economy, have been stagnant for generations. In response, the Federal Reserve has been continuously reducing interest rates, until they hit zero in 2008. And there they have stayed ever since. But now, it turns out, that’s not good enough. If the Federal Reserve wants to keep the party going, they have to do more, because…

2. Once you are faced with a continuously shrinking economy, just holding interest rates at zero is not sufficient to forestall financial collapse. The interest rates must go negative.

Here are just a couple of particularly striking examples.

Australia has amassed a huge pile of debt—over 120% of GDP—and most of it is mortgage debt on overvalued real estate. Now that Australia’s economy, which was driven by commodity exports to China, has tanked, a lot of this debt is being turned into interest-only loans, because Australians no longer have the money to repay any of the principal.

But what if they can’t make the interest payments either? The obvious solution is to refinance their mortgages as interest-only at zero percent; problem solved!

Of course, as conditions deteriorate further, the Australians will become unable to afford taxes and utilities. Negative interest rates to the rescue! Refinance them again at a negative rate of interest, and now the banks will pay them to live in their overpriced houses.

Another example: energy (oil and gas) companies in the US have accumulated a fantastic pile of debt. All of this money was sunk into developing marginal and very expensive resources such as shale oil and deep offshore. Since then, energy prices have fallen, making all of these investments unprofitable and dramatically reducing revenue.

As a result, energy companies in the US are a few months away from having to spend their entire revenue on interest payments. The solution, of course, is to allow them to roll over their debt at zero percent, and if you want them to ever start drilling again (their production has been falling by around 10% annualized) then please make that interest rate negative.

3. Are you starting to see how this works? Whereas before you had to be careful about taking on debt, and had to have a plan for how you will repay it, with negative interest rates that is simply not a consideration. If your debt pays you, then more debt is always better than less debt. It no longer matters that the economy continuously shrinks because now you can get paid just for twiddling your thumbs!

Image above: Chart of effective Federal Interest Rate From original article.

But are there any unintended consequences of negative interest rates? Unintended consequences are hard to think about, and most people get a headache even trying. How can it be that clean, plentiful nuclear energy will eventually pollute the whole planet with long-lived radionuclides, resulting sky-high cancer rates? How can it be that wonderful genetically modified seeds will render us sickly and infertile in just a few generations?

And how can it be that ingenious mobile computing technology has turned our children into zombies who are constantly twiddling their smartphones as they sleepwalk through life? It’s hard to think about any of this without taking some happy pills; and how can it be that taking those happy pills has… you get the idea.

The unintended consequence of negative interest rates is that they destroy money. This is true in an entirely trivial sense: if you deposit x dollars at -ρ% annual, then a year later you will only have x(1-ρ) dollars because xρ dollars has been destroyed.

(In case you prefer to count on your fingers and toes, if you deposit $10 at -10% annual, then a year later you will only have $9 because $1 has been destroyed.) But what I mean is something slightly more profound: negative interest rates erode the very concept of money.

To get at the reason for this, we have to ask a slightly more profound question: What is money? I think that money is the cult of the god Mammon. Look at the following symbols:

€ $ ¥ £
Don’t they resemble religious symbols? In fact, that’s what they are: they are symbols of faith in money. They are also units—dimensionless units, of a peculiar kind. There are quite a few dimensionless units in math and science, such as π, e, %, ppm, but they are all ratios that relate physical quantities to other, identical, physical quantities. They are dimensionless because the units cancel out.

For instance, π is the ratio between a circle’s circumference and diameter; length over length gives nothing.

But monetary quantities do not directly relate to any physical quantity at all. It can be said that some number of monetary units (let's call them "yarbles") is equivalent to some number of turnips, but that, you see, is a matter of faith.

Should the turnip farmer turn out to be an unbeliever, he would be within his rights to say, “I am not taking any of your damn yarbles!” or, if he were a polite turnip farmer, “Your money is no good here, Sir!”

Of course, if our turnip farmer were to do that, he’d land in quite a bit of trouble because, you see, the cult of Mammon is a state cult. You have no choice but to be a believer, because only by worshiping Mammon can you earn the money to pay your taxes, and if you don’t pay your taxes you get jailed.

Nor can you produce money on your own, because that right is reserved for Mammon’s high priests, the bankers.

Making your own money makes you a heretic, and gets you the modern equivalent of being burned at the stake, which is a $250,000 fine and a 20-year prison sentence.

But it goes beyond that, because the state insists that just about everything there is must be valued in units of its money. And the way everything must be valued is through a mystical legitimizing process that is central to the cult of money: Mammon’s “invisible hand” makes itself apparent within the “free market,” which is Mammon's virtual temple.

The “invisible hand” sets the price of everything as a mystical revelation and, as with any revelation, it is beyond criticism. It is a redemptive ritual, in which people acting out of their basest, most antisocial instincts—greed and fear—manage, through Mammon's divine intervention, to serve the common good.

The “free market” is also believed to have all sorts of miraculous properties, and as with all miracles it is all a matter of smoke and mirrors and suspension of disbelief.

For example, the “free market” is said to be “efficient.” But it sets the price of turnips, and the result is that fully 40% of the food in the US ends up being wasted. That’s definitely not efficient.

This sort of inefficiency can be tolerated while resources are plentiful. Should throwing away 40% of the turnips cause a shortage of turnips develop, turnip producers can grow more turnips and sell them at prices that turnip consumers can still afford. But when resources are no longer plentiful, this trick stops working, and what you end up with is something called market failure.

The current state of the global oil industry is a good example: either the price is so high that marginal consumers cannot afford it (as was the case until quite recently), or the price is so low that the marginal producers can’t break even (as is the case now).

And so a bout of supply destruction follows a bout of demand destruction, and then the pattern repeats. Everybody loses, plus this is terribly inefficient. It would be far more efficient to appoint some central planner to calculate the optimum price of oil once a month.

Then all the marginal producers would jump out the window, all the marginal consumers would slit their wrists, and equilibrium conditions would prevail.

As the oil supply dwindled (it is depleting at around 5% per year), some additional number of producers and consumers would need to sacrifice themselves for the greater good, and so on until the last barrel is produced and burned, leaving whatever producers and consumers still remained lying in pools of their own blood.

As natural resources dwindle, our faith in the cult of Mammon is being sorely tested. But what alternatives are there? Well, there is an even older, ancient cult that’s based on idolatry: the worship of precious metals. Gold has some industrial and aesthetic uses, but it is primarily useful for making a golden calf for you to worship (or, if you are former Ukrainian president Viktor Yanukovich, a golden toilet).

 Economists tell us that gold is a “pet rock” or a “barbarous relic,” and they are right, but what is one to do when there is a Götterdämmerung (twilight of the gods) going on? Nature abhors a vacuum, and in a Götterdämmerung older pagan deities sometimes emerge and demand virgin sacrifices—such as poisoning entire river ecosystems by mining gold using mercury, or squandering prodigious amounts of fossil fuels in mining, crushing and sifting through millions of tons of hard rock to get at just 3 parts per million of gold.

Negative interest rates are Mammon’s Götterdämmerung. The money cult is bolstered by the idea that its huge and all-powerful deity will be even more huge and all-powerful tomorrow; if the opposite is demonstrably the case, then people’s faith in it begins to falter and fade.

Negative interest rates are like an icy-cold bath for Mammon, causing its godhead to shrink a little more with every dip.

People see that, and think, “I don’t want to worship his shrinking yarbles.” Then they go and spend their own yarbles on anything they can find—fallow land, vacant houses, golden calves, boxes of brass knobs... They don’t bother investing their yarbles in growing turnips, because what’s the use of turnips if all you can do with them is sell them for even more shrinking yarbles?

Negative interest rates are an excellent idea—and perhaps the only way to keep the financial game going a bit longer—but, given these unintended consequences, they are also a terrible idea. The bankers know that. They want to preserve their cult’s status, and constantly talk about raising interest rates.

But they haven’t yet, because they also know that just a small increase will result in trillions of dollars of losses, triggering widespread business failures and ushering in the Greatest Great Depression Ever. This is not a problem for them to solve; this is a predicament.

They will delay and pray, and make pronouncements loaded with keywords designed to please the high-frequency trading algorithms that are in charge of artificially levitating the “free market” with judiciously timed injections of “free money.” But in the end all they can do is act brave, wait for a distraction and then… run for the exits!

And your job is to make it to the exits before they do.
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Collaspe 2016 - 21019

SUBHEAD: Change of course will crash the system, but maintaining the current course will also crash the system.

By Charles Hugh Smith on 2 June 2016 for Of Two Minds -
(http://charleshughsmith.blogspot.co.uk/2016/06/the-structure-of-collapse-2016-2019.html)


Image above: When you read this global financial collapse headline it will be too late to do anything about it. From (http://www.collapse.news/2015-09-22-entire-global-financial-system-can-go-crashing-down-with-one-small-glitch.html).

The end-state of unsustainable systems is collapse. Though collapse may appear to be sudden and chaotic, we can discern key structures that guide the processes of collapse.
Though the subject is complex enough to justify an entire shelf of books, these six dynamics are sufficient to illuminate the inevitable collapse of the status quo.

1. Doing more of what has failed spectacularly. The leaders of the status quo inevitably keep doing more of what worked in the past, even when it no longer works. Indeed, the failure only increases the leadership’s push to new extremes of what has failed spectacularly. At some point, this single-minded pursuit of failed policies speeds the system’s collapse.
   
   
2. Emergency measures become permanent policies. The status quo’s leaders expect the system to right itself once emergency measures stabilize a crisis. But broken systems cannot right themselves, and so the leadership is forced to make temporary emergency measures (such as lowering interest rates to zero) permanent policy. This increases the fragility of the system, as any attempt to end the emergency measures triggers a system-threatening crisis.
   
   
3. Diminishing returns on status quo solutions. Back when the economic tree was loaded with low-hanging fruit, solutions such as lowering interest rates had a large multiplier effect. But as the tree is stripped of fruit, the returns on these solutions diminish to zero.
   
   
4. Declining social mobility. As the economic pie shrinks, the privileged maintain or increase their share, and the slice left to the disenfranchised shrinks. As the privileged take care of their own class, there are fewer slots open for talented outsiders. The status quo is slowly starved of talent and the ranks of those opposed to the status quo swell with those denied access to the top rungs of the social mobility ladder.
   
   
5. The social order loses cohesion and shared purpose as the social-economic classes pull apart. The top of the wealth/power pyramid no longer serves in the armed forces, and withdraws from contact with the lower classes. Lacking a unifying social purpose, each class pursues its self-interests to the detriment of the nation and society as a whole.
   
   
6. Strapped for cash as tax revenues decline, the state borrows more money and devalues its currency as a means of maintaining the illusion that it can fulfill all its promises. As the purchasing power of the currency declines, people lose faith in the state’s currency. Once faith is lost, the value of the currency declines rapidly and the state’s insolvency is revealed.

Each of these dynamics is easily visible in the global status quo.

As an example of doing more of what has failed spectacularly, consider how financialization inevitably inflates speculative bubbles, which eventually crash with devastating consequences.

But since the status quo is dependent on financialization for its income, the only possible response is to increase debt and speculation—the causes of the bubble and its collapse—to inflate another bubble. In other words, do more of what failed spectacularly.

This process of doing more of what failed spectacularly appears sustainable for a time, but this superficial success masks the underlying dynamic of diminishing returns: each reflation of the failed system requires greater commitments of capital and debt.

Financialization is pushed to new unprecedented extremes, as nothing less will generate the desired bubble.

Rising costs narrow the maneuvering room left to system managers. The central bank’s suppression of interest rates is an example. As the economy falters, central banks lower interest rates and increase the credit available to the financial system.

This stimulus works well in the first downturn, but less well in the second and not at all in the third, for the simple reason that interest rates have been dropped to zero and credit has been increased to near-infinite.

The last desperate push to do more of what failed spectacularly is for central banks to lower interest rates to below-zero: it costs depositors money to leave their cash in the bank. This last-ditch policy is now firmly entrenched in Europe, and many expect it to spread around the world as central banks have exhausted less extreme policies.

The status quo’s primary imperative is self-preservation, and this imperative drives the falsification of data to sell the public on the idea that prosperity is still rising and the elites are doing an excellent job of managing the economy.

Since real reform would threaten those at the top of the wealth/power pyramid, fake reforms and fake economic data become the order of the day.

Leaders face a no-win dilemma: any change of course will crash the system, but maintaining the current course will also crash the system.

Welcome to 2016-2019.

This essay was drawn from Charles Hugh Smith's new book Why Our Status Quo Failed and Is Beyond Reform.


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Cashless NIRP economy signal

SUBHEAD: Cashless economy would let banks set negative interest rates well below -1%.

By Tyler Durden on 10 February 2016 for Zero Hedge -
(http://www.zerohedge.com/news/2016-02-10/something-very-disturbing-spotted-morgan-stanley-presentation-slide)


Image above: Morgan Stanley bank sign on headquarters building.  The company is paying a fine of $3.2 billion to end lending rpobe. See article below. From (http://www.dailynewsx.com/news/business-news/morgan-stanley-to-pay-3-2b-to-end-mortgage-probe-22761.html).

With central bankers losing credibility left and right, and failing outright to boost the "wealth effect" no matter what they throw at it, the next big question is when will central planners around the world unveil the cashless society which is a necessary and sufficient condition to a regime of global NIRP.


Image above: Chart of recent interest rates and monetary base. Click to embiggen. From original article.

And while in recent days we have seen op-eds by both Bloomberg and FT urging the banning of cash, the most disturbing development we have seen yet in the push for a cashless society has come from the following slide in a Morgan Stanley presentation, one in which the bank's head of EMEA equity research Huw van Steenis, pointed out the following...

... and added this:

One of the most surprising comments this year came from a closed session on fintech where I sat next to someone in policy circles who argued that we should move quickly to a cashless economy so that we could introduce negative rates well below 1% – as they were concerned that Larry Summers' secular stagnation was indeed playing out and we would be stuck with negative rates for a decade in Europe. They felt below (1.5)% depositors would start to hoard notes, leading to yet further complexities for monetary policy.

Consider this the latest, and loudest, warning on the road to digital fiat serfdom.

---

Morgan Stanley settles for $3.2 billion

By Daniel McDonald on 11 February 2016 for Daily Newsx
(http://www.dailynewsx.com/news/business-news/morgan-stanley-to-pay-3-2b-to-end-mortgage-probe-22761.html)

Morgan Stanley is paying $3.2 billion — the largest fine in its history — to settle claims that it sold soured mortgage-backed bonds in the run up to the financial crisis.

The Wall Street bank peddled the securities to investors even though traders knew many of the underlying home loans were underwater, according to the settlement with New York Attorney General Eric Schneiderman.

Traders openly bragged about using “magic” to make the bonds look better than they actually were, according to the settlement released on Thursday morning.

Under the terms of the deal, the state will get $550 million to help community rebuilding efforts, the AG’s office said.

“Today’s agreement is another victory in our efforts to help New Yorkers rebuild in the wake of the financial devastation caused by major banks,” Schneiderman said in a statement.

Morgan Stanley, led by CEO James Gorman, is the latest bank to get fined over the sale of busted mortgage-backed securities. Last month, Goldman Sachs paid $5 billion to settle similar charges.

Shares of Morgan Stanley were down 3.3 percent, at $21.96, on Tuesday morning amid a broader market sell-off.

The Post broke the news of the settlement ahead of the announcement.

EXCLUSIVE: NY AG Schneiderman to announce $3.2BB settlement with Morgan Stanley over RMBS. $550 going million to New York. via @KevinTDugan

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Why NIRP will fail miserably

SUBHEAD: Negative Interest Rate Policy indicates this sucker's going down, so sell everything and hoard your cash and precious metals.

By Charles Hugh Smith on 11 February 2016 for Of Two Minds -
(http://charleshughsmith.blogspot.co.uk/2016/02/why-nirp-negative-interest-rates-will.html)


Image above: Recession makes current ZIRP (zero interest rate policy) evolve into NIRP. From (http://www.newsmax.com/Finance/RobWilliams/Albert-Edwards-recession-ZIRP-NIRP/2015/09/24/id/693162/).

The last hurrah of central banks is the negative interest rate policy--NIRP. The basic idea of NIRP is to punish savers so severely that households and businesses will be compelled to go blow whatever money they have on something--what the money is squandered on is of no importance to central banks.

All that matters is that people and enterprises are forced to spend whatever cash they have rather than "hoard" it, i.e. preserve and conserve their capital.

That this is certifiably insane is self-evident. If an economy depends on bringing future spending into the present by destroying savings, that economy is doomed regardless of NIRP, for eventually the cash runs out and spending declines anyway.

But NIRP will fail completely and totally due to another dynamic-- one I addressed last month in Another Reason Why the Middle Class and the Velocity of Money Are in Terminal Decline. As correspondent Mike Fasano noted, negative interest rates force us to save even more, not less:

"People like me who have saved all their lives realize that they their savings (no matter how much) will never throw off enough money to allow retirement, unless I live off principal. This is especially so since one can reasonably expect social security to phased out, indexed out or dropped altogether. Accordingly, I realize that when I get to the point when I can no longer work, I'll be living off capital and not interest. This is an incentive to keep working and not to spend."

 If banks start charging savers interest on their cash, savers will have to save even more income to offset the additional costs imposed by central banks on their savings.

A third dynamic dooms the insane negative interest rate policy: what does it say about the stability and health of the status quo if central banks are saying the only way to save the status quo is to force everyone to empty their piggy banks and spend every last dime of cash?

What exactly are we saving by destroying savings and capital? Isn't capital the foundation of capitalism? The answer is we are saving nothng but a rotten-to-the-core, parasitic, predatory banking system, coddled and enabled by corrupt central banks and states.

What NIRP says about central banks is that they have run out of options and are now in their own end zone, heaving the final desperate Hail Mary pass that has no hope of saving them from complete and total defeat.

NIRP also says the economy that needs NIRP is sick unto death and doomed to an implosion of impaired debt, over-leveraged risk-on bets and asset bubbles generated by stock buybacks and central bank purchases of risky assets.

The central bankers are delusional if they think NIRP will inspire confidence in investors, punters, households and enterprises. Rather, NIRP signals the failure of central bank policies and the end-game of credit expansion as the solution for all economic ills.

What NIRP communicates is: this sucker's going down, so sell everything and hoard your cash and precious metals. If that's what the central banks want households and enterprises to do, NIRP will be a rip-roaring success.

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