Saturday, January 31, 2009

The Economy The Titanic & The Life Rafts of Gold & Silver

Darryl Robert Schoon
Jan 28, 2009

A lifetime is not long. It is long enough, however, to lead one to believe that life is far different than it really is.

My uncle, Bobby Schoon, grew up during the Great Depression. Born in the 1920s, the 1930s were to be far different than the previous decade. My uncle came of age when the US led the world into an economic abyss where human desperation and misery were to become commonplace, an abyss that is now about to be revisited.

For most born after the 1960s, the Great Depression was an event that had happened to a previous generation. They have no idea how an economic collapse could affect them; that no matter how much they had saved, that their savings could instantly disappear and that no matter how willing they were to work, that no work could be found.

The same conditions that led to the Great Depression in the 1930s have led us to today; and the one safeguard that was put in place in 1933 to prevent another depression, the Glass-Steagall Act, was repealed in 1999; and, with the guard rail now removed, we are again headed over another cliff into another economic abyss.

HOW FAR IS DOWN

I saw my uncle last week. Now, in his late 80s, his mind is still sharp and his observations always of interest. Our conversation moved to the current state of affairs and my belief that another Great Depression was underway.

My uncle then said:

The difference between the Depression and today is now how much people owe. Instead of owing $15 they owe $15,000; and, because they owe so much more, this time the fall is going to be greater.

And, so it is.

THEN AND NOW

The collapse of the 1920s stock market bubble in 1929 signaled the beginning of the Great Depression. The actual descent was to take four years as the depth of the depression did not begin until 1933. The same might be true today, or it might not.

This time, the beginning of the current deflationary collapse was marked not by a stock market collapse. This time, the event that signaled the current crisis was when global credit markets suddenly and unexpectedly contracted in August 2007.

The contraction of global credit markets is a far more serious event than even a stock market collapse. This is because in capitalist credit-based economies, the flow of credit is absolutely essential to all commercial activity.

In today's fiat credit-based economies, credit markets are the heart of the artificial system created by bankers. From credit markets flow the credit needed to support commerce and entrepreneurial activity now addicted to the bankers' credit. Today, credit markets are barely functioning and remain frozen.

The contraction of global credit markets was then in a very real sense, a heart attack, a heart attack from which the markets have not yet recovered; and, as with humans, the longer the recovery takes, the greater the damage and the greater the possibility of death, in this case, parcus nex, economic death.

What central bankers have been doing is credit-based CPR in an attempt to revive an increasingly moribund patient. To date, irrespective of the trillions of dollars committed and spent, their efforts have been futile. This is because even before the current heart attack, the health of the patient had been deteriorating for years.

IN THE ECONOMIC EMERGENCY ROOM

In March 2000, the stock market collapse popped a speculative bubble larger than any previous bubble. The dot.com bubble, fed by central bank credit, had taken on a life of its own in the late 1990s and by so doing threatened to take the life of the very system that had created it, the fiat credit-based system of capital (credit) markets called capitalism.

The central bankers knew the danger the system was in. They were well aware of the severe deflationary collapse of Japanese markets in 1990 and their previously smug feeling that they had relegated systemic collapse onto the scrap heap of history along with gold and the gold standard had become increasingly less certain.

The events of the next decade, the 2000s, were to demonstrate how wrong the central bankers had been and how impotent they were in battling forces they themselves had set in motion with their artificial system of credit stimulation and "control" of markets, a "control" that was to prove increasingly illusory as the decade progressed.

The strategy of central bankers was lifted from Ben Bernanke's playbook, a strategy that was based on the theory that systemic deflationary collapse could be averted by the quick availability of unlimited credit to capital markets.

Rest of story HERE.

(I think this is a very good article. and really exposes most of our real problems with the economy, and why it seems that nothing that is tried is working. It gives a brief history review since the disasterous policies of 1913, as well as recent history that involved people's decisions in the 30's, 70's, 90's, etc., with MANY OF THE SAME PEOPLE who are responsible for this mess being paraded out as our saviors! It also gives potential safeguards we can do until/if things pick back up . . .)

No comments:

Post a Comment

Sheeple



The Black Sheep tries to warn its friends with the truth it has seen, unfortunately herd mentality kicks in for the Sheeple, and they run in fear from the black sheep and keep to the safety of their flock.

Having tried to no avail to awaken his peers, the Black Sheep have no other choice but to unite with each other and escape the impending doom.

What color Sheep are you?

.





100627