Friday, January 10, 2014

Ignorance Is Optional


It is early January, 2014. The Fed is taking a much deserved break from their stock price ascension manipulation work while Ms. Yellen prepares to succeed Mr. Bernanke as the head of the Federal Reserve Bank. 2014 will no doubt look a lot like 2013. The Dow will rise another 20% or so - blah, blah, blah. Fourth quarter looks good as the Christmas shopping season looks like it will be strong in 2014? It will be up 3% over the previous year. How do I know? I don’t care if Walmart and Target go out of business between now and then. The regime has an economic ‘recovery’ story to sell us and reporting ebullient data supports their story. 2015? Yeah, it looks good too!

And, as I have been telling all who care to listen, the way things are going to transpire is more of the same. The Fed needs to taper their monthly QE amounts. Therefore, they will report good economic news to give them the justification to do so. Of course, the Fed drinks its own Kool-Aid and may even believe some of the non-sensical data they put out. At any rate, they will taper, the real economy will recoil, and the Fed will reverse course and un-taper. They will then report bad economic news to give them a reason to withdraw the taper and then add more to QE. This will be easy. All they have to do is let a little truth out. Presto! The Fed can raise the QE amount to $100 billion a month and stock prices will again rise to new heights! As an example, 2013 was a rather pathetic year for retailers and especially so at Christmas time. The regime, however, made sure to report that retail sales were up nicely in November. Of course, very few retailers reported anything but very sluggish sales. The regime will use the same strategy for 2014. How do they get away with it? They know the populace is ignorant.

The populace is ignorant of the Federal Reserve Bank in its existence, its function, and its evil intent. Let’s look at just one point of ignorance.

One metric the Fed uses against its ignorant subjects is the relationship between debt and GDP. The US Treasury, and by ownership, the citizens of the US, have thus far accepted over $17 trillion in debt. All this debt was necessary so the five or six largest banks in the US could avoid bankruptcy brought on by derivative gambling. Then they received the blessing of recapitalization from the monies stolen from the populace. Of course, the populace is far too ignorant to understand this simple act of pure thievery but here it is. To make sure the bankster CEOs got their multi-million dollar bonuses for bankrupting their companies, the US Treasury issued trillions in debt. The banksters got the money, the Fed got the Treasury assets, and the citizens got the debt of which they will pay for until the regime falls. Simple, right? Tell that to the average american and watch for the blank, slack-jawed stare. 

But this kind of ignorance is optional. It is by choice. It is stoked by apathy. It is encouraged by the decoy of an ever ascending Dow Jones Industrial price. But for our discussion, when does tens of trillions in debt become a problem?

The answer is never. In fact, the more debt the better! I can tell there are a few heads nodding so let me explain. I am sure that we have all heard that as long as debt does not exceed GDP by much, the debt is therefore not really a problem. US debt is indeed over $17 trillion but GDP is now over $16 trillion. This is precisely what the regime wants us to believe. But let’s depart from the diminutive intellect of the populace to explore this common ruse.

GDP is supposedly the sum of all products and services produced in an economy. Sure it is. Actually, GDP is calculated by multiplying the velocity of money times the supply of money. Money velocity is at about 1.5. That means that a dollar turns over 1.5 times in a year to buy something. In truth, money supply remains at an all-time low (as reported by the Federal Reserve) and this tells us that the health of the economy is still grave. But let’s not debate that truth yet. Let’s look at the ever ascending supply of money conjured by the Federal Reserve Bank. As I have written, the Fed does not use its own money to buy the current $75 billion in US Treasuries and agency paper every month. No, no, no. Since the US dissolved into a criminal enterprise, the Fed steals the money from the Treasury as explained in the afore mentioned paragraph. To produce the money, the Treasury creates it. The Fed’s constant thievery requires a constant printing of the currency. As 2014 begins, money supply, as reported by the Fed, stands at just over $11 trillion.

Let’s check our math. Money supply times money velocity equals GDP. Fill in the variables. $11 trillion (money supply) times 1.5 (money velocity) equals $16.5 trillion in GDP. See - that $17 trillion in debt is not a problem. Don’t be ignorant. It is optional as readers have the option of reading truth. 

The problem is that in shill economies, money supply is created from debt. Money supply and debt always rise in proportion. Let’s see how this works in reality.

Let’s say the banksters need even more money. Let’s say the US Treasury issues another $13 trillion in debt and currency. Now debt will be $30 trillion. Assuming money velocity stays the same at 1.5, GDP will rise to $36 trillion. Bring on the ignorance. Under this scenario, GDP will rise to $36 trillion and debt will rise to $30 trillion. Debt is even less problematic even as it rises as the GDP to debt ratio would fall to .83. What if debt rises to $100 trillion? Yep, even less of a problem as GDP would be measured at $150 trillion. The GDP to debt ratio would fall further to .66. Therefore, shouldn’t we try to raise debt to quintillions? Bazillion zillion? Yes, of course!! 

Need I go on? By this logic, the more debt a country assumes the better it is as GDP continues to rise and, GDP and debt stay proportionate. Now, ignorance is optional. Either we can face the truth or we can bask in ignorance. Of course, ignorance is in part what makes the Dow rise so I think we all know which we will embrace. The more debt the better. The more ignorance the better. Carry on, people. Don’t let truth and intellect stop the Fed from pilfering the US Treasury.    

Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article. 

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