What is this a graph of?
Global warming? Runaway climate change? No. It’s the …
Adjusted Monetary Base
Source: Economic Research Federal Reserve Bank of St. Louis
The Volokh Conspiracy writes:
Perhaps less-known but more frightening is the incredible growth in the money supply over the past year or so. I first found out about this a few weeks ago in this post by Peter Robinson which links to this extraordinary graph from the St. Louis Fed. Note the 2009 figures (and below the chart you can click on it to see different benchmark comparisons).
Why has this incredible boost in the money supply had no impact? Presumably because the “velocity” of money has remained low–people and banks are hoarding money, rather than spending, borrowing, and lending it. Assuming velocity rises again, however, we may be looking at an inflationary spiral like we’ve never seen before in this country.
Peter says it well, “We’ve Never Been Here Before.”
That was the idea, wasn’t it?
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I’ve seen this graph in various forms a half dozen times since december.
The theory as I understand it — is that –in the future — when the velocity of money increases — the fed will shrink the money supply.
My understanding is further, that the country is currently still experience deflation as property values continue to decline to–at least — their historical averages.
The big wild card is fiscal policy. The concern is that fiscal policy will screw the pooch.
Biggest risk at the moment is deflation. And yes collapse in velocity is very bad news. It would be good if you put up the chart of velocity.
http://research.stlouisfed.org/publications/mt/page12.pdf
More discussion of inflation / deflation at Accrued Interest blog:
http://accruedint.blogspot.com/2009/06/smackdown-week-now-consumers-are-all.html
I am concerned about the tactic of printing money in order to buy federal treasury notes and thus buoy the price of the dollar. If memory serves me correctly, John Law tried a similar stunt of printing francs to buoy the stock price of the Company of the Indies about two hundred ninety years ago.
But then, John Law is said to have been three hundred years before his time…
…self opinion of our new President?
A couple of topics back someone posted a blurb about the FED buying up large quantities of stocks through a couple of zombie firms like Goldman-Sachs. Now that would be a serious black hole and as such could be why we are not seeing any inflationary pressure.
The thing to understand is that during the housing bubble, people essentially printed their own money by borrowing off their homes. Now that this source of money has dried up, the fed is filling that gap.
If you think about it, using a credit card expands the money supply, especially when the credit card remains unpaid and is rolled over month after month.
A massive source of the money supply, therefore, is the result of available credit, whether through home equity loans or such things as credit cards.
This graph is showing what the fed is doing in response to the sudden drop in the money supply due to the restriction of credit.
The aim is to prevent deflation, which should occur if the money supply drops.
Niall Ferguson has a show on PBS The Ascent of Money that is sort of “A History of Bubbles.” John Law’s tale figure’s prominently in episode one and two. I watched the first episode here: http://www.pbs.org/video/video/1170821435/program/1155680272
For some reason the video would not play in my Firefox browser so I opened in IE, and it worked fine. It was the first show on PBS I’ve seen in a while that did not mention global warming. On second thought, he might of mentioned it and I just filtered it out.
Short-term risk: Disinflation
Medium-term risk: Inflation
Long-term risk: Double-Dip Recession and/or Default
Deflation and inflation are purely monetary phenomenon. While the collapse of the real estate market and lending along with rising unemployment have sent prices lower, this is as a result of disinflation, not outright deflation. The velocity of money has temporarily slowed but the amount being created has simultaneously increased dramatically. The sheer volume of cash being printed and eventually spent is too great not to have an effect as the government crowds out private interests in competition for limited resources. Once monetary velocity picks up in the next 2-5 years I am convinced that we are for an economic swan dive of sorts, a huge spike in equities and commodity prices in particular and a false sense of recovery before the bottom ultimately falls out. I have zero confidence that those in the Federal Reserve and Treasury Department will ultimately be able to fully control the forces they have helped unleash and our downfall will likely manifest itself in one of two ways.
A. Double-digit interest rates, possibly in excess of 15%-20%, are put into place in order to control an inflationary spike. Taxes are raised across the board in order to pay down our monstrous new debt. These in turn crush any renewed economic activity. The United States experiences its own “lost decade” of little to no growth.
B. Afraid of stifling new growth, the Fed keeps interest rates too low for too long. Cap-and-trade drives energy prices through the roof. Extreme inflation also in excess of 15%-20% annually of the likes this country has not seen since the Civil War is realized. Congress keeps right on spending on one pork project after the other on the assumption that they can easily pay for them with more inflated dollars. The Chinese and others begin dumping our Treasuries forcing a full blown currency crisis.
Given the nature of our present leadership, at this point I am leaning toward Option B. Either of them though would probably lead to at least a partial default on our debt. As some have speculated on another of Wretchard’s recent topics, I have pretty much come to accept that America has become a socialist oligarchy. The political and economic system as it currently exists is hopelessly gamed. The latest pump-and-dump scheme will be used to buy off the elites at Goldman Sachs while the next trillion dollar entitlement program placates the undereducated masses in ACORN. The only things that will stop this are a popular uprising which completely changes the political landscape, a major war, or the aforementioned currency crisis and government default. My guess is that most of us will see all of them come to pass in some form or another before the end of our lives as the current administration is doing a bang-up job of laying the foundation for all three.
Evidence That Big Inflation Is Coming
http://tinyurl.com/munpyk
Tipping Point For US Treasuries?
http://tinyurl.com/lhs4lu
Check out Mish Shedlock on Inflation:http://globaleconomicanalysis.blogspot.com/2008/12/humpty-dumpty-on-inflation.html
Mish’s take: bad deflation until the economy comes back. Big inflation once it does. While the base money supply has gone through the roof, the M1 money multiplier has taken a huge dump. Net effect: deflation. For now. Once the banks lend that money supply, inflation will whack us good.
Add to the fact that the TARP Inspector general says the Treasury/Fed has lent out $ 23.7 trillion for TARP. Where did it all go? That’s almost double the GDP! It should show up someplace, and not just in Goldman Sucks bonuses.
In the early 1980′s I joined an international group of filmmakers, and got a chance to know a producer from Brazil during a period that country was suffering from runaway inflation.
Some of us BC readers were already more or less adults by the time of the oil embargo of 1974. I guess we were distracted from the 1979 oil crisis by the Iranian Hostage Crisis… But in Brazil, the doubling of oil prices came on top of a burgeoning trade imbalance, and ill-considered monetary policies… (I can write the words, but it doesn’t mean I understand’em.)
The upshot, as he described it, was periods during which prices were rising 200 percent in a month. Maybe not sustained like that for years at a time – some articles I’ve found peg the annual MEDIAN inflation rate at 500 percent.
He said that people had to account for that in their contracts – that is, they had to calculate how prices and production expenses would increase over the course of a production if there were delays — for instance, if a client failed to review a test and give approval to proceed to the next stage.
Obviously, this was at least partly a self perpetuating cycle, which was beyond the control of the people trapped in the swamp.
It sounds like we’re heading for that ourselves, because we have idiots at the helm.
Obama’s people don’t have the logic skills to find their way out of an open bathroom stall.
Wretchard — in your “Altitude Zero’ post I was struck by the staggering numbers on display. But what seemed to be the most astounding number of all was the $23 trillion in disappeared wealth from American households.
It seems that the relatively small increase in money supply (roughly a 150% rise from ~$800B to ~$1.8T) vs. the gargantuan hole in everyman’s asset portfolio neutralizes negative impact of the rise in money supply. Any brainiacs out there to weigh in?
What seems most salient is the further punishing effects of monetary over-supply in a down market and the commensurate destruction in wealth as a corollary of nearly zero yields on savings. Our money markets are paying between .1% and .25%, and 18-24 month CDs are going for barely over 1%. It’s hard to see how small (relatively speaking) increases in money supply can spur inflationary forces with this much wealth already gone, coupled with Komrade Obama’s wealth destroying schemes completely vaporizing trillions more as I write.
Some readers have heard stories about how the Weimar government of Germany set about to defeat the punitive reparations imposed by the victors of WWI by just printing millions and millions of deutsche marks.
No genius to this: Print lots of paper money unsupported by any additional gold or any tangible assets, and the purchasing power of the currency drops like the knickers of an amiable slattern.
Print enough and then pay off the multi-million mark reparations bill with multi-millions of deutsche marks now worth one ten-thousandth of their purchasing power at the time of the treaty.
Too bad about all those pensioner widows who now have to sell their scrawny bodies to tourists to buy a heel of bread.
The story that sticks with me is the one about the woman who carries a wicker basket full of worthless paper marks to the market. She sets the basket down for a moment to choose the turnip which her basket-full of marks will just barely purchase. When she turns back, someone has dumped the paper money on the ground and stolen her wicker basket.
Thanks, Democrats.
The scary number on this chart — for politicians at least — is the X Axis. The years 2009 and 2010 are far more worrisome then 1.8 trillion dollars– that’s just money — because they are years that cannot be credibly fobbed off on their predecessor. With each passing day the incumbents are taking increasing ownership of the economy. By year 2010 they will own it all. And some of them are showing signs of worry about what might show up on their doorstep in that fatal year. The consequences are so horrifying to contemplate I think some are in denial. “It can’t happen. It can’t happen. How could it happen?” is what is probably running through their heads. But pray tell, why can’t it happen?
There’s a physics teacher with a video on YouTube who demonstrates the conservation of energy by releasing a 200 lb pendulum an inch from his face and stands immobile waiting for its return. He knows the pendulum will never exceed its original point of departure and so, despite the seemingly irresistible onset of the huge metal mass, he doesn’t flinch when it comes back. He believes in physics, in logic and math. And it never fails him.
Now if you were a politician who could bring himself to trust logic instead of appearances, would you not be compelled to craft a strategy in anticipation of a crisis? Interestingly, I don’t see many politicians doing that, except perhaps for Sarah Palin. Their world has been so stable, so long that they can’t even imagine it cracking.
“Interestingly, I don’t see many politicians doing that, except perhaps for Sarah Palin.”
So why did it cost me $33.72 to buy Gas on Friday?
Well, to me it mean, Sarah Palin’s approval rating would go up in the next week or so…
So if someone wanted to create an interesting new index that would garner tons of attention (like Scott Rasmussen does with the Presidental Approval “index”: http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll ) …
Someone would create a website with the “Sarah Index” (based on the concept of “Economic Index”): Find a bunch of indicators, that can predict her approval rating in the future….
Like: Price of Gas, A negative function on Obama Index, etc.
Then chart them. And compare chart to reality…
Would be fascinating to do…
Anyway, charts, like the hockey stick graph, can be quite fascinating, especially when they enter a point of discontinuity, which we clearly have with money in America this last year …
Since money is faith in goverment (for example “full faith & credit of the US goverment” at banks) … Then to me the chart above is actually an input into the “trust in goverment” index.
Which means … the hockey stick chart above … inverted … predicts the Tea party Movement (i.e.: one year ago it started to predict enormous discontinuity in faith in goverment … the tea party movement is a result of that loss of faith)
Who knows what happens on the other side of the discontinuity? Political parties can get even get wiped out of existance (unlikely, but much more likely than it used to be).
#13 Wretchard,
Some fraction of our political class may indeed be suddenly considering that there might be a reality to deal with in 2010, if such is allowed to happen. Most are, however, continuing to enjoy their vacation from that reality.
But, consider the nature of that political class. They have set up a perfect economic and political storm. Every aspect of our lives that they have managed to touch, they have ruined, and if the ruin is not complete now; they are more than eager to redouble their efforts.
They, on the face of it, have two choices. They can reverse themselves really fast, admit they were wrong, and try to undo the damage and take credit for said undoing. Or they can have their collective gluteii maximus, minimus, and medialis handed to them in discrete pieces in 2010.
But actually they have a third choice. If the problem, from their point of view, is the threat of being removed from office; the most satisfactory solution in the long term is to remove the ability of us to remove them from office. Remember, we are not dealing in either party with people and institutions which have any affection for or loyalty to either the Constitution or the rule of law. This will not hold off the economic deluge that is coming. But it will add political chaos as they try to impose their permanent rule. It may be an Enabling Act, it may be a falsified and unconstitutional plebiscite like the one that Buraq’s good buddy Zelayo tried to impose on Honduras.
But in order to avoid the consequences of their actions, they may be triggering a deluge of a different order of magnitude and type. We may end up learning some of the lessons that you had to learn in the Phillipines. It is going to be a harder school than Americans can conceive.
Subotai Bahadur
o/t –but do check out the graphic atop drudge –the prez seated in front of what i guess is the healthcare logo. Observe logo. Empty-eyed. A bear. Infantilized even for a ‘toon, a little authoritarian/scary in frame-crowding proximity. Bad effect –bad taste. Who is doing the thinking over there? Are they that far out of touch?
All I know is that J curves are always followed by a collapse. If/when the turn comes and velocity picks up how does the Fed suck that money back out of the economy fast enough to prevent hyper-inflation? How high and fast do they have to jack the prime rate? When do the Chinese and the Middle Easterners stop buying treasuries?
We have either fallen into the hands of idiots or geniuses who are purposely engineering a financial and social collapse and there is no way to stop this train wreck. In God we trust all others pay in Krugerrands.
C. S. Lewis:
“We Have Cause to Be Uneasy”
“First, as to putting the clock back. Would you think I was joking if I said that you can put a clock back and that if the clock is wrong it is often a very sensible thing to do? But I would rather get away from that whole idea of clocks. We all want progress. But progress means getting nearer to the place where you want to be. And if you have taken a wrong turning, then to go forward does not get you any nearer. If you are on the wrong road, progress means doing an about turn and walking back to the right road; and in that case the man who turns back soonest is the most progressive man. We have all seen this when doing arithmetic. When I have started a sum the wrong way, the sooner I admit this and go back and start over again, the faster I shall get on. There is nothing progressive about being pigheaded and refusing to admit a mistake.”
President Obama is not a “progressive” at all. He, like the Blues Brothers, are on a mission from god…or the Penguin?
Joe Hill @ 17:
2nd issue first: There is a way to stop the train wreck. Maybe two ways. The first is to get loud and in their collective faces in DC and tell them to stop this idiocy.
1st issue: Idiots or evil geniuses? If we choose idiots then we can rid ourselves of them come 2010 & 2012. That should deal the Demoncrats a death blow for a few decades. If they are evil geniuses then 2010 will not happen. The choice will have been removed and we then resort to the various boxes that are well known. I think the last box would be the one used.
In natural or engineered systems, whenever you see operational data that looks like that the system in question usually goes “BOOM!” or “BANG!” in very short order. The end result is always catastrophic system failure.
BTW, if they are “evil geniuses” then what do you think their desired end state is supposed to be? I have my own opinion, I just want to know what others are thinking.
Wretchard, there won’t be any reckoning. America’s wealth could be reduced to the point that people starve in the streets, and NYC and DC and Dallas are nuked hulks of rubble, and the feminized Media and star system will still worship Barack Obama. The Magical Shaman set to guide us out of wickedness. Indeed much of the nation would view such events as just punishment for evil White Men existing in the first place.
As a practical matter, 2010 simply means cheat a lot, via ACORN and various mobs and phony ballots, voters, and so on to seize elections and offices. Like Chavez, Zelaya, Ahmadinejad, and now Danny Ortega. One man, one vote, one time. No one is really worried because there won’t be any more free and fair elections. The media will cheerlead the way for autocratic systems that give rigged votes of say 99.999% to Barack Obama and company. Passed down to his wife, his children, and their children.
This is because the people who will be hurt in the economy will be White Men. Who didn’t vote and won’t vote for Obama and Dems anyway. White Women, plus Blacks and Hispanics, equal 52% or so, particularly with fraud and intimidation ala the New Black Panther Party, or La Raza, or the simple expedient of Open Borders and instant voting for illegals. [Obama is now allowing any women who claim gender oppression or Domestic Violence to claim asylum in this country, first cases being Mexican women, as a means to open the borders for new instant Dem voters. As a practical matter, it means women bringing their entire families, including husbands over, after claiming asylum.]
White women of course save nurses face little economic competition from illegal aliens or insourcing/outsourcing. Obama’s taken care to spend nearly all the stimulus money on female employment and not men. Women love illegal aliens because Rosa the Illegal Alien nanny replaces “Kitchen Bitches” (ala Sandra Tsing Loh’s Atlantic Essay on why women should divorce boring beta husbands) and allows women the freedom to lead exciting fulfilled and “passionate” lives (ala Barbara Ehrenreich). It’s the dream come true for Middle/Working class White women.
Women working as teachers, social workers, environmental analysts, “green jobs coordinators,” lawyers, accountants, advertising people, will at most take a pay cut, while White Male peers are fired (fruits of Affirmative Action) and women certainly won’t suffer breadlines, homelessness, or anything of that nature. If anything widespread male unemployment and underemployment and wealth destruction are a net plus for women. Many female and female-oriented pundits eagerly await that condition. The dream of matriarchy, where women control most of the wealth, men lounge around mooching off them doing almost no work, competing violently over them, and investing nothing in women or children, occasionally forming violent militias intent on rape and pillage as in West Africa, is almost at hand. [This is why women worship the African model -- it's matriarchal.]
Dems, who depend almost entirely on the coalition of White Women plus Blacks/Hispanics (Gays are too small numerically to count outside certain cities) won’t suffer any core losses of voters that cannot be made up by voting fraud that a Dem Judiciary (also heavily Female/Non-White and filled with situational ethics folks like Sotomayor who play identity politics) and media cannot handle.
It’s why Norm Coleman lost to that clown Al Franken. Because of massive voter fraud that Reps have no recourse against: Courts are packed with identity politics, situational ethics judges (“it’s right for the Dem to win, WRONG for the evil White Male Republican to win”) who are either female or non-White or both. Rules are not made to be fair and equal rules — but to jigger the results so that the correct (Female, non-White) identities win and the incorrect (White Male) identities lose.
Which in turn creates a pressure-cooker. America is far bigger than Venezuela or Honduras, the “evil White Men” are not going away and will have no reason at all to back or care about the current system, which will be loaded against them at every turn based on their identity and the coalition of women plus non-Whites against them. Obama’s Chavez model sort of works in Venezuela because most are poor enough that any patronage will buy them. Here he proposes to make most White men poor, discriminated against, sexless (only a lucky few dominant guys have access to women), and they are the largest demographic group. Obama can’t count — he thinks advertising, which has constant Black presence, reflects reality. [Blacks are only 12.5% of the population and only about 6% of the US population is middle class Blacks.]
It’s a situation made eventually, given some trigger (Alamo like defeat in the whole of Aghanistan, nuking of US cities, imposition of Sharia, legalized polygamy, etc.) for a “Seven Days in May” outcome. Only nearly all the US Armed Forces would support it as would most men, with a feminized leadership in politics and the law for the President.
It’s clear Obama and allies want a faked-up plebiscite to make him President for Life. [Hence his support for Ahmadinejad and Zelaya and Chavez and Ortega.] Most White Women and non-Whites would eagerly support that — they are permanent winners under that outcome, most White men will fight it as they are permanent losers. There’s no room for compromise and winners destroy the losers, politically and culturally.
It’s like a pressure cooker with no steam release valve. Only an explosion that creates permanently winners and losers.
I’m pretty conservative, but sone of you guys in the comments are starting to sound paranoid, hyper-cynical, lunatic fringe. Just remember, we’re all susceptible to and must be wary of the echo chamber effect. That said, I do believe Obama is undermining the fabric of our country, just that it won’t get too dramatic til a couple of pendulum swings have taken place.
The Fed Chairman’s plan to address this problem is outlined in the link
to the WSJ editorial.
http://online.wsj.com/article/SB10001424052970203946904574300050657897992.html
Amit Green
Projecting Rasmussen’s graph it looks to me that come Sept. Obama’s spread could get to -15. His lowest Strongly Positive results will probably never go below 25% but his Strongly Negative is trending up towards 40%. A minus 15 spread could be Bingo.
Appropos of comments here by Whiskey, Robohobo and Subtotai Bahadur, I would agree that the likelyhood of catastrophic system collapse is very high, and, as Whiskey notes, the current arc that we are on is unlikely to change, not only for the reasons he states, but also because of the all-pervasive nature of the osmotic adsorption over time of the basic tenants of the left by the public at large. A good description of how this process works/plays out is to be found in an article in The American Thinker by William Staneski entitled: “The Drumbeat” back in the fall of 08 @
http://www.theamericanthinker.com/2008/09/the_drumbeat.html
I don’t know if Bernake is right. But this is what he says.
Bernanke: Fed able to foil inflation when time comes
Well, if Ben Bernanke says that the Fed’s toolbox is full of what’s needed to suck trillions of excess money out of our economy, then it must be true. Particularly because in this article his reassuring statements are corroborated by the independent geniuses at Goldman Sachs and other banks, who don’t owe their bonuses and jobs to Bernanke and Team Obama.
This is like what I imagine was the last transmission out of the control room at Chernobyl. “No worries, we have a plan for reducing the temperature of the main reactor vesse–”
Buddy@16
That is actually a halo removing operation that you see in the image. And just look at the relief on President Obama’s face when he realizes he no longer has “bear” that old thing around on his head any longer. I’m surprised it can be done so painlessly. Could they have numbed his brain first?
But, in a sense, no longer having the halo can provide him more freedom of action.
The DC Congress says health care “reform” will cost $1.3 trillion. But that just gets the camel’s nose under the tent flap. It ain’t until the camel is all the way into the tent that we really get humped.
The angry white man (AWM) won’t go quietly into the night! Besides, somebody will have to rebuild after the race riots BHO will use to try to stay in power. Women, blacks, the welfare/disability crowd, hardly, maybe the Mexicans will be of some help (they seem to do most of the construction around here) and we’ll give them a chance to stay here.
The Fed is bankrupt no matter what ol’ Ben says. And BHO has used up his political capital. He’s done, stick a fork in ‘em.
Cap and Tax, Universal Health Care, destined to fail, Obama should have done these first, but he had to many favors to pay back with the “stimulus” bills.
The USA will survive BHO, his assault on freedom and capitalism will fail, but at what a cost!
In just a couple of short years we’ll all be talking about how fast Socialism failed in the good ol’ USA.
Unless the whole SHTF nuked US cities WWIII thing comes to pass.
It is a very dangerous time right now, the USA’s enemies see us as very vulnerable, and Israel stands alone at the edge of a very deep abyss.
RE: Hockey stick
Executive Summary: Our goose is cooked.
I would hope it could be possible to aggressively oppose the Obama administration without resorting to advocating race war.
Somewhat OT, but part of the reported State of California budget deal is the reauthorization of oil drilling off the Caifornia caost. This does not appear to require federal action, unlike the blocked areas in Alaska and the Gulf.
Unless the Feds step in and impose a ban, taking back what their State colleagues gave away.
I have seen this chart as well and think that it is problematic, but there is more to it than just the chart.
There is a difference between monetary base and the money supply. the reason for the explosion in the monetary base is in large part to cover the havoc caused by Mark to Market accounting for banking securities and to cover the uncertainty premium that this Administration has caused (banking stress tests with public disclosures, etc.).
I would be much more worried if the money supply had grown a similar amount, but the money supply spiked early in the crisis (the right move by the FED) and have since come back down, again I think a correct move given some of the inflationary indicators out there.
Bob McTeer spends a good amount of time discussing this here:
http://taxesandbudget-blog.ncpa.org/the-feds-balance-sheet-and-excess-bank-reserves/
My feeling on this crisis is that it was a disguised Bank Run caused by the government created boom in housing prices and the subsequent bust. That alone was not enough to trigger the huge banking crisis, however – for instance, if a pool of mortgages fails at a 20% rate (a huge, huge rate) that does not mean that the MBS is now worth 20% of it’s original value… that mess was caused, I believe, by a combination of Mark-to-Market accounting and a Bank Run type behaviour as a result of this mess as described by Gary Gorton and Eric Falkenstein.
http://falkenblog.blogspot.com/2009/05/gary-gorton-explains-crisis.html
What’s the upshot of all this? Well, in my opinion it means we are likely in for a fairly quick recovery (which seems to be happening now) as businesses and consumers recover from the panic and as inventories draw down to normal levels – causing businesses to go back to work. However all of the “Fixes” for this problem, notably the stimulus package, have long term bad implications that will keep the recovery shallow and create difficult decisions for the future.
The takeaway lesson is to turn your dollars into solid assets. I’m seeing it here in Silicon Valley. Almost every foreclosure is bought for cash. Housing may be headed lower in REAL terms, but the nominal value of the dollar is assumed to be headed even lower.
Alexis-
There already is a race war here in LA between the Latino gangbangers and the Blacks, courtesy of the entitlement mentality of today’s American urban poor. It’s largely about who’s the top dog feeding at the public trough, with more than a little ethnic cleansing of your hood thrown in for good measure. When you take a social engineering detour off the road to America’s embrace of life, liberty and the pursuit happiness, that tribal thing comes back with a vengeance.
With less and less feed in the trough to go around , things could get very ugly. In places like LA, with it’s grossly insufficient police force and it’s perchance of coddling criminal illegals, white areas could be the next target. Throw in some Obama Force/New Black Panther/ACORN meddling and you’ve got a very nasty situation.
#30 Alexis
I have the same hope, but I am realistic enough to know that just as it only takes one side to create a war; that the nature of that war also can be determined by only one side based on its conduct.
The regime and its supporters, even before it was installed, openly declared any opposition or even difference that was not opposition but just difference, as being ascribable solely to racism. Because the word in our political culture delegitimizes any opposing point of view.
That word has been the rhetorical trump card in American politics for 40+ years. But, it may be losing its power through overuse and lack of real meaning. No matter what you do or say in life in America, if you are not 110% politically correct, you are going to be called a racist. It goes with the territory. Believing in equality, is “racist” in this country.
What eventually happens, though, is along the lines of; “OK, if defending my G-d, country, Constitution, and family is “racist”; then call me a racist, but here I stand.”.
The propaganda organs of the State [both network media and entertainment media] have already delineated any opposition to anything that the regime does as racist. The regime itself has given its public stamp of approval to armed Black gangs outside of polling places intimidating White voters to keep them from the polls. It is an indisputable fact, from the regime’s own pollsters, that over 95% of Blacks voted for Buraq Hussein Obama, mostly based on melanin content.
Whatever happens, be it electoral or otherwise, is going to have race drawn into it. It is not going to be pretty.
I’m pretty sure that most of the BC-ers have not been involved in breaking up gang fights on the streets or behind bars. Your humble servant has. Most gangs are racially based. In such a situation, when violence is in the offing except for those lucky few who are not gang members and find a chance to flee the scene of combat and hide; those who are not gang members will rally to whatever gang is their own skin color. Because that is the most obvious indicator of safety from being attacked from behind. That hope can be betrayed almost immediately after the crisis is over, but that is the way it happens until that point.
Given the collapse of the rule of law, I will leave it to others to compare and contrast our current regime; and the dynamics of gangs.
Subotai Bahadur
Whiskey, whiskey. Having worked side-by-side and been involved with women most of my adult life I can tell you with confidence that the number overriding concern of women is……..safety. Why do you think women prefer the “bad boys” over the “good guys”. Instinctively they know a bad boy will fight for them, protect them in situations that a good guy can’t or won’t. Trust me, a city or two is nuked with thousands upon thousands of women and children killed in cold blood and American women will become very Jacksonian and demand that the safety of the nation of comes first. And woe is those that stand on the other side of that issue.
The fork in the road is still ahead, when the economy picks up and the Fed has to take away the punch bowl to soak up that money.
At that point political leadership is absolutely called for, and there is none in view at the moment.
Who will let the Fed cut off the recovery even though it’s absolutely necessary.
The Fed has created money in basically three ways:
1. Creating addition reserves for banks (the traditional way)
2. Buying Treasuries to keep the auctions from failing.
3. Purchasing toxic assets.
The banks are holding onto the reserves because a) they need them because of the toxic assets in their portfolios that no one know how to price. b) after the way has acted esp. vis a vis AIG, they’re scared and don’t know what the rules are going to be day by day.
The other two actually get into circulation, and will probably generate inflation down the road.
The Fed will most likely fail at squelching inflation because:
1) the economy will still be in bad shape and trying to stop inflation will kill any recovery in progress.
2) the toxic assets they bought won’t be so easy to resell.
3) a run on the dollar will draw huge amounts of dollars from overseas, as their holders try to exchange them for real assets, the Fed can’t possibly handle this, it’s just to big.
re: #4 Steeple, that is a lovely work in snark. I love it!
#35 Subotai, masterful, as always. I’m also afraid that this is going to be one of those “heads on sticks” type of festival before it’s done. AWG is right in the fact that a collective face has been rubbed in the “racist” for way too long. The backlash is going to be nasty stuff, people do mean things when the restraints finally break.
The Depression and all it’s privations built pressure up within people until it culminated in 1941, when a target to focus the release of that pressure became apparent. The would be royalty and their vote farm cultivations could be in for a big hairy surprise.
#38 LarryD,
I see where you are coming from, but can’t accept the viewpoint for a few reasons:
– the Treasury purchases didn’t actually happen (maybe a few?). Instead, treasury money is being used to offset the paper (not real) losses on MBS’s according to Mark to Market. That is why they can pay back these loans, but are not buying back assets. Not to mention that a positive yield curve makes banking very profitable at the moment so they have cash flow and time to grow out of any problems.
– The Geithner plan (PPIP) from March was supposed to be the alternate way of doing this by allowing a government/private purchase of the assets. However, despite the braying of idiots like Stiglitz who said that the PPIP had a built in 54% return to private investors, nobody’s been buying these. A big part of this is that Banks realize that the already written down assets are a huge profit center moving forwards. If something is already written down to 20% of original value (and a loss on the books from last year) and only has a likelihood of falling to 80% of value according to all estimates.. you hold onto it and take the cash flows and the profits.
The biggest problem I see ahead is that the crazy deficit spending and the likelihood of higher taxes will make it more and more difficult for the market to suck up those extra dollars (making it harder for the FED to effectively ramp down). Add in a lot of extra government intervention in the market and the situation looks more like the 70′s than the 80′s, making a nasty combination of inflation and unemployment possible. And that’s only if the Administration stops screwing around and lets the uncertainty subside.
http://falkenblog.blogspot.com/2009/05/pipp-unpopular-stiglitz-wrong.html
( hockey stick + dollar revulsion ) * (obamanomics) = hyper-inflation.
The fuze is lit.
Charles said: “The theory as I understand it — is that –in the future — when the velocity of money increases — the fed will shrink the money supply.”
You may be right. But the only way the can shrink the money supply is to raise interest rates. Can you even imagine what kinds of interest rate increases are going to be required with this “hockey stick”?
whiskey @ 20:
Nope, this is one of the times whiskey you are seriously wrong. By that time there will have been other measures taken or people like me will have been all killed. Ain’t gonna happen.
whoa @ 21: Mmmmmm, not so much in these parts pardner. This is not the lunatic fringe. But things have gotten out of hand in the Republic or have you not noticed? When the statists control (what is the number now?), close to 30% and trending via healthcare to 50% of the economy, something is seriously out of joint.
Me @ 19:
Which I want to correct to:
hdgreene @ 27:
I LOL’ed! That was really good! And I have to agree. We have to take that critter out in the desert and kill it or it will keep trying to get in the tent.
Alexis @ 30:
Alexis, please note that no one here is advocating THAT! What we are noting is that the faster The 0bamantion goes the more it looks like ‘someone’ has declared war on the center of the Republic. Flash back to Philly on election day and the NBP thug saying what he said and now rethink what you may be accusing the folks here of. Who is going to throw the first punch? I submit it has already been thrown and it was NOT us.
Unsk @ 34″
I submit Unsk that you are not alone. Here in ‘Burque we have evidence of a large presence of MS-13. They keep things low key because this is and has always been a main stop in the pipeline to Chicago and points East. Plus we do not have that large a black population here (but that is a discussion for another day). There have more than one drive-by and execution style killing in just this last 10 period.
Subotai @ 35:
Please go find Bill Whittle’s “Tribes”. Crud, it should be in September 2005 but it is blank! Blank! [Hey, Whittle, go fix your PJM archive!]
Anyway, for Alexis, the essay cements what many of us who have served in one way or another know, “Membership in my Tribe is not free”. We have paid the price. We are the ones who run toward the accident. We are the ones who will keep trained and carry concealed because we know it is our duty to protect those around us. I could go on and on. But, I’ll stop now.
I just hope that when the effects of the “money” hockey stick come home to roost we can soften the landing.
Oh, I can well imagine alright. Having lived thru the Carter era when the prime was at 20% and banks were charging 23%+, and having a $35,000 floating-rate note that started out at 9 3/4% and “floated” to 23% before it was all over. I’ve already been partially down the road ahead once. Thank God I’m pretty much “off” the financial grid these days and bought silver at 4-5$/oz and gold at $230/oz back when the proverbial “gittin was good.”
#43 Robohobo
My online friend, I already know about Bill Whittle. And Tribes. I had a sticker made for the back of my car that says:
Be a SHEEPDOG
Live in the GREY
And every so often I get to explain and point people to Whittle.
The gangs I refer to are most definitely Pink Tribe.
He is behind in converting his archives to the new site with PJM, but he has promised to do so ASAP.
And for the record, as a retired Peace Officer, I think I am a Sheepdog. And I think my writings show my Tribe.
Alexis, he has a book:
Silent America: Essays from a Democracy at War ISBN 9780976405900 The later edition has Tribes. I recommend it to you, and to all BC-ers.
Subotai Bahadur
The first commenter here said:
1. Charles:
I’ve seen this graph in various forms a half dozen times since december.
The theory as I understand it — is that –in the future — when the velocity of money increases — the fed will shrink the money supply….
———
I cannot find enough people who agree with what this all means, neither side can clearly reason why a will become b or i will go to j. Gold has been $950 plus or minus for a while. Oil is supposed to be getting cheap.
The Chinese are buying ‘stuff’ which makes me contrarian to them. The most valuable commodity for civilization is the essence of AMERICA (caps not intended, but hopefully prescient).
If Obama and the left are seeking to control America for a generation then everyone loses. Even Russia and China. Except that erudite elites think they have special cards.
America is what we are because we……
answer
(Regular Americans, in many ways, think differently than erudite, effete, elites).
Okay, sorry, I tend to tell grandmothers how to milk ducks, as it were. Heh, I bought Whittle’s book via pre-order from the old site. It sits by my chair as a reference.
Also, Alexis, I recommend Steven Den Beste @ Chizumatic
Click on the USS Clueless archives. Den Beste retired because he got tired of arguing with those who had ID-10T errors in their operating systems. Dive in there. He brought me over to the dark side.
Oh, for Pete’s sake. Whiskey and AWM, may I suggest you get out more? I am a woman who would have crawled over broken glass to vote against Obama. I’m not particularly special, but I have read some history in my life, and done some thinking about human nature. I had Obama sussed well over a year ago, thanks in part to links and other information posted by our illustrious host and the denizens of Belmont Club and similar blogs. I believe the difference came down to whether you bought the MSM’s BS. While I will allow that I know far too many women who voted for Obama, I also know a fair number, mostly mothers of young children, who didn’t. Why? Because they want there to be an America for their kids to inherit, and they knew a phony when they saw one. Other women I know have already told me how they regret their votes for Obama (now there’s a situation where I have to pray for Christian charity!).
God forbid it comes to that, I’d be right there with Subotai and Robohobo, distributing my father’s firearms to those who can shoot better than me and blasting away with my favorite. When my glasses broke I’d re-load for those who can shoot better than me. But I don’t believe it will come to that. I think Obama and his team have been blinded by their ideology, and overestimated their strength. It is crucial for us, the self-reliant, to keep the pressure on. We stopped Jimmy Carter. We can stop Obama.
Oh, bother @ 48: Well, you are rare indeed then. Believe it. I know a female business owner who will brook NO bad word of her 0bamessiah as her business swirls the drain. She knows increased taxes are coming and still…
The Belmont Club crowd is rare indeed. I lurked at the old site for years learning as my transition from Leftist to Conservative matured. I only now feel free to comment and still get spanked regularly.
All my cousins, all their kids, and all their kid’s spouses are police officers in the same L.A. area city. Oops, no, one spouse is a firefighter. That’s SEVEN folks, two of ‘em WOMEN!
I think they were just saving money on name tags.
I have a long association with law enforcement myself. I used to date a homicide detective, until she sobered up.
But all those stories about me and the sheep are just rumors put out by my ex.
Mad Fiddler
Baaaah
Hi Richard,
Your chart of Monetary Base is a little misleading.
The total amount of money available to purchase goods is something like M2. M2 is many times larger than the monetary base. No-one shows that graph, because it has been growing about 9%/year since the crisis started, which is too boring.
It was growing much slower than that prior to the crisis because the Fed was worried about the price of oil. The crisis was brewing for a long time, but the trigger was probably the slow monetary squeeze driven by oil price fear.
The monetary base gets multiplied by bank loan operations into M2. When a crisis hits, and bank capital is destroyed, banks pull in loans, and the multiplier collapses. It can either collapse because M2 collapses – causing a great depression. Or it can collapse because the Monetary Base rapidly increases (driven by the Fed) so that total money in the system can stay level or continue increasing.
For now, the 9% increase in M2 is pretty benign. It is much lower than in the 1970s, and it is being soaked up by the populous in the form of a higher savings rate. In many ways, Bernanke would like to expand faster, but he’s held back by a juvenile congress that wishes to spend us to heaven.
Its possible that M2 can start to grow like the Monetary Base – though it certainly hasn’t started to do that. I believe that will held back by bank capital – which can only grow from profits – which haven’t been healthy with all the write-offs to date.
Japan went through a similar experience in the 1990s (which may end differently) and ended up greatly expanding monetary measures as well. Here are some of Japan’s numbers:
M2: 150% of GDP
Monetary Base: 25% of GDP
Growth (Mon Base): 5% GDP / yr.
Here are the similar numbers for us:
M2: 70% of GDP
Monetary Base: 15% of GDP
Growth (Mon Base): 7% GDP / yr.
The Growth rates are calculated by dividing announced central bank purchases by GDP. Ours is higher than Japans, but Bernanke claims he will end the program in October.
The great monetary expansion didn’t bring inflation to Japan. An aging population (to the point of death) is saving the money faster than the Japanese central bank can pump it in.
James