I guess Obama, Pelosi, Kerry, Krugman, and Reid will blame the Tea Party extremists for the 2nd stock market crash in the last two weeks. Americans want sound bites. They want simple concepts because thinking makes their heads hurt. If you are an ignorant American, than you should stop reading now and go back to watching The View. The unravelling of the worldwide financial ponzi scheme has many tentacles and many interconnected pieces, but it all goes back to DEBT and the inability to service that debt with the cash flows being generated by governments, consumers and businesses. Here are the facts:

• Nixon closed the gold window in 1971 and unleashed a never ending torrent of fiat paper into the world.
• Politicians throughout the world, since the late 1960s, have made promises of social welfare benefits to voters in order to get elected. They didn’t worry about demographics or using complicated  mathematical concepts like multiplication and addition to figure out that the promises could never be fulfilled.
• The Federal Reserve enabled politicians to create as much debt as they wanted by methodically devaluing the USD by 90% since 1971.

• The Federal Reserve has created bubble after bubble (internet, housing, stocks) by purposely keeping interest rates below the true market rate. They have failed to regulate the banks and allowed them to leverage 30 or 40 to 1. Their own balance sheet is leveraged 55 to 1 today.
• The most critical error in this whole impending disaster was the decision to listen to the Goldman Sachs Treasury Secretary Paulson and the Princeton Keynesian economics professor Bernanke and bailout Wall Street on the backs of Main Street. We were lied to by the monied interests. The economy went into the tank anyway. The banks were saved and have paid themselves $70 billion in bonuses since they were saved.
• The Too Big To Fail Banks were not too big to fail. They should have been liquidated in an orderly manner. Their stockholders and bond holders should have been wiped out. The debt would have been written off. We would have had a one or two year deep recession.
• Instead, most of the original bad debt still sits on the books of these banks. Trillions more sit on the books of the Federal Reserve. Trillions more were added to the taxpayers’ books. The trillions of Keynesian stimulus did nothing to revive the economy.
• Shifting private debt to public debt solved nothing. Extending terms of the debt solved nothing. Taking on more debt to pay the existing debt solved nothing.
• The world is coming to the realization that no one can pay off the debt. Consumers aren’t going to pay those mortgages or those credit cards. The Greeks, Spaniards, Italians, Portugese, and Irish are not going to pay back Germany. The US is not going to pay you the Social Security and Medicare they promised you. The European banks are not going to pay back the Wall Street banks. The Fderal Reserve is never going to pay off the $2.8 trillion of debt on its balance sheet.

A ponzi scheme unravels when people realize that it is a scam and demand their money back. Except there is no money to give back. We have reached that point. The entire worldwide economic system is nothing but a Bernie Madoff ponzi scheme times 100 trillion.

The Federal Reserve will pretend to ride to the rescue. Politicians will hold press conferences and announce agreements. The MSM will pronounce that all is well. Don’t believe it. We are entering the Greater Depression, which will make the 1st one look like a walk in the park.

FOURTH TURNING PART 2