Guest Post by Paul Craig Roberts
The answer to the question is “YES.” The large bailed-out creditors will end up with the property of the non-bailed-out debtors who are being pushed deeper into debt with “bail-out loans” and fees and penalties for missed debt payments. Write-offs for the One Percent, and more indebtedness for everyone else.
Turn your mind to the economy. The US has a work force of 164,000,000. The unemployment forecast from the work closedowns is 30%. That would mean 49,000,000 people who are potential rioters. (We are half way there with today’s report of a 16% unemployment rate with 22 million unemployed). Many of these people were already living paycheck to paycheck, could not raise $400, and their debts leave them no discretionary income. As they could barely service their debts when employed, how do they service them when unemployed and when their small businesses are closed and incurring costs but have no revenues? Loans further indebt them. The cash payouts to the unemployed might cover food and housing but will not service their debts.
Fast food franchises and stores in malls are saying they are not paying their rents for three months. Mall owners won’t be able to pay their creditors. The bailout works for no one except those who caused the problem. As they are being bailed out, they will have the money to buy up or foreclose on the bankrupted businesses. More property will be concentrated in fewer hands.
The bail-out scheme concocted by the New York banks and Trump’s Treasury Secretary, who earned the name “the foreclosure king” during his Wall Street career, leaves creditors whole and debtors deeper in debt.
The more debt is concentrated in fewer hands and the more indebted everyone else becomes, the less consumer purchasing power there is to drive the economy. The foreclosed assets become less valuable as their profitability declines with consumer purchasing power.
The destruction of the US economy has been underway since global corporations moved middle class jobs offshore. It has been underway since the financial sector diverted a larger share of consumer income to the service of debt. It has been underway since corporations invested their profits in buying back their own shares instead of expanding their production capabilities. It has been underway since Quantitative Easing inflated stock and bond prices beyond realistic values. It has been going on since the rules against concentration were set aside and the Glass-Steagall Act was repealed. It has been going on since endless wars crowded out infrastructure investment and social safety net expansion.
Is this a plot or stupidity? Whatever the answer, the economy is being destroyed.
The economic problem is that private sector debt, both personal and corporate, is too great to be paid. This problem existed prior to the closedown. The closedown means that there is even less income with which to service the unsustainable level of debt. This is not a problem that can be fixed with more debt.
The problem is that banks lend to finance the purchase of existing financial assets, not to exand the economy’s productive potential.
The problem is that corporations use their profits and borrow money in order to buy back their own equity instead of investing in their businesses. The executives indebt the corporations while decapitalizing them, and they are rewarded for doing so with “performance bonuses.”
The problem is that global corporations thinking short-term moved high-productivity, high-value-added US jobs to Asia, thus reducing earned income in the US, impairing state and local tax base, and causing the Federal Reserve to substitute a growth in consumer debt in place of the lost consumer income growth.
The people in charge of the fix are only fixing it for themselves and in a short-sighted way. There is only one way to fix the situation, and that is to write down private sector debts to levels that can be serviced. As the creditors are being bailed out regardless, their loan losses don’t matter.
The bank and corporate bailouts are an opportunity to fix the economy in other important ways. In effect, the bailouts amount to nationalization. The government should accept the ownership that it is purchasing. Then the government can break up the “banks too big to fail” and separate investment from commercial banking without having to pass new Glass-Steagall legislation and without having to battle against financial lobbying in Congress. Once broken up, the banks could be sold off. This would take enormous vulnerability out of the financial system and restore financial competition. With corporations in government hands, the jobs could be brought home from overseas. The middle class would be restored.
These measures together with a debt writedown would restore consumer purchasing power. Pent-up demand would propel the economy to higher growth as occurred following World War II.
This is a real solution to a real problem. But with the One Percent in charge of the problem, we are not going to get a real solution. We are going to get more money used to push up prices of financial assets and paper over unsustainable debt and a dying economy with an artificially-inflated stock market.
The elite have failed us too many times. It is time to dethrone them.
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PCR laid it out plain and simple for anyone to understand.
All this is being brought to the people by the Fed Gov and their partner in crime the Federal Reserve. The banks are their agents in the financial scheme and the corporations are the soon to be declared winners.
There’s only one way to undo this. The Fed Gov needs to disappear along with the Federal Reserve and real money needs to be brought back instead of bullshit currency. The mega banks and mega corporations need to be broken up so that here are at least 10 roughly equal size competitors for any given product or service. The Fed Gov’s monopoly must end along with the corporate monopoly they’ve so carefully crafted over decades.
Let the states become countries and we’ll have 50 experiments going on to see who has the best ideas on how to run things.
Real money and a new set of rules won’t fix and damn thing if you reinstall the same Godless liars and Communists.
Let the states become countries- good grief.
“It is time to dethrone them”
It is going to happen anyway. They have created a problem they cannot control. They now have all the money and all the assets.
Their greed has overcome their common sense.
Now the starving population will be coming after them.
Wall Street and the financial sector has become an abomination before God.
Thunderbird,
The FED is more powerful than ever. They are in complete control. You are the one who has no control. You control nothing of importance. Who exactly is “going after them “?
I’m sorry but you got only the abomination part correct. I’m not trying to bust your chops or be argumentative, just telling you like it is.
Steve
I believe in God. I believe in what is written in the Gospel of Jesus Christ and the wisdom in the Old Testament.
The FED is not of God. They have built a tower unto themselves that is only of their own understanding. This tower is now crashing. Their understanding is finite; not infinite. No matter how powerful you may think they are; by their own works they have created a flawed system. It is failing.
Notice how around the world populations are protesting against their own governments?
The failure of this system is going to set people free. True people have nothing left of this world. So perhaps many will turn back to God.
The feudal system of the past consisted of illiterate people who did not have the ability to think critically and see a way out of their slavery to their rich masters. Today is different. Even at the time of the revolutionary war in this country many were illiterate but it was the literate small percentage that inspired the masses to revolt against tyranny.
It will be the same today.
Have faith in your fellow man. There are enough of us to make a difference. God did not create this world…Man did. Have you read anywhere in history where man’s creations have lasted? Just like the light of the moon is reflected light from the Sun so is the intellect reflected light from God. Without nourishment from God the intellect breaks down and insanity enters in.
The men running this world are Godless. Their light is dimming.
The second revolution is coming. This time it will be world wide.
The revolution has been cancelled due to lack of interest.
Spoken like someone that is use to giving up Steve.
CW,
Know yourself and the enemy and you need not fear an encounter. Sun Tze (sp?) said something to that effect.
From one phrase you know me and my abilities- amazing! Got any lottery numbers you’re willing to share? Didn’t think so.
T-Bird
Sorry, nobodys going after them. Not nobody, not no way, not no how. We are a nation of Eunuchs.
Fleabaggs
No one is going after them. Their tower is collapsing. They won’t recover.
I saw a lofty tower extending from earth to heaven; its golden crowned summit reached beyond the clouds. All round it black night reigned and thunder rumbled.
Suddenly the heavens opened, a thunder-clap shook the whole earth, and lightning struck the summit of the tower and felled the golden crown. A tongue of fire shot from heaven and the whole tower became filled with fire and smoke. Then I beheld the builders of the tower fall headlong to the ground.
And the voice said:
“The building of the tower was begun by the disciples of the great master in order to have a constant reminder of the Master’s teaching that the true tower must be built in one’s own soul, that in the tower built by hands there can be no mysteries, that no one can ascend to Heaven by treading stone steps.
The tower should warn the people not to believe in it. It should serve as a reminder of the inner Temple and as a protection against the outer; it should be a lighthouse, in a dangerous place where men have often been wrecked and where ships should not go.
But by and by the disciples forgot the true covenant of the Master and what the tower symbolized, and began to believe in the tower of stone, they had built, and to teach others to so believe. They began to say that in this tower there is power, mystery and the spirit of the Master, that the tower itself is holy and that it is built for the coming Master according to his covenant and his will. And so they waited in the tower for the Master. Others did not believe this, or interpreted it differently. Then began the disputes about the rights of the summit. Quarrels started, Our Master, your Master, was said; our tower, your tower. And the disciples ceased to understand each other. Their tongues had become confused.
You understand the meaning here? They had begun to think that this is the tower of the Master, that he builds it through them, and that it must and, indeed, can be built up to heaven.
And you see how heaven responded?
The Tower
This is an old story. But it is just as true for financial towers.
Their financial tower is collapsing right in front of us. We should be glad. Remember there is a God in heaven and he is the one that has the power. They only have their own human understanding which is nothing because everything in this world is mirage and lasts for a short duration.
Yes God will certainly bring them all down at the appointed time. Thank God for God. I was referring to Americans. By the time a few americans rebel it will be too late.
“there is a God in heaven and he is the one that has the power.”
He does. We don’t. Because there is no “we”. This is a nation filled with sheep eager for the slaughter.
Trust in God. Do His will. Pray. Hope. Be charitable.
But, do not trust in a nation of sheeple (sleeple?).
The revolution has been cancelled due to lack of interest.
The word. Again. It’s being used more and more.
Ni!
Best article he’s ever written.. and didn’t even mention the insouciant or Israel sarc/.
PS: Glad he mentioned commercial real estate which is about to go the way of the housing market in 2008/09. Empty strip malls will be the new norm. At least there will be plenty of parking.
Assets are moving East because the US is tapped out. There is basically no more room for debt expansion here. (((They))) see billions of Chinese with low to no debts. (((They))) can grow $trillions in new debt for those lucky Asians. The US can dry up and blow away for all (((they))) care. There are new sheep to shear out east.
More like (((they))) will meet their match.
…” separate investment from commercial banking without having to pass new Glass-Steagall legislation and without having to battle against financial lobbying in Congress.”
And what will stop the commercial banks from again delving into investments without law/regs to prevent it?
Limited licenses?
Like breaking up ‘Ma Bell. Won’t they eventually will consolidate again?
The problem isn’t that we don’t have enough regulation; it’s that the whole system is based on fraud. The Fed creates fake “money” out of thin air. That “money” becomes the basis for fractional reserve banks to create even more “money” out of thin air. That isn’t wealth, but it allows the privileged elites to take actual wealth away from everybody else. PCR is right about that much.
Where he and a lot of “analysts” screw up is thinking we just need to tinker around the edges and put the right people in charge and everything will be OK. Wrong!
Real free market capitalism is self-correcting and needs no laws other than those against force and fraud. The very worst of these is the fraud of creating fiat money and calling it wealth.
Try this thought experiment (seriously, don’t really do this): get a good color laser printer and start printing your own FRNs. Now YOU are a Wall Street banker. YOU are creating wealth in the sense that you can now buy all the real toys that you want. See how easy that is? The only problem is that there are laws against this fraud when it’s YOU doing it. If the same laws that would put you away were used against the people defrauding us now, we wouldn’t be in this mess.
To make matters worse, PCR and others like him call this fraudulent fiat money banking system “capitalism”, then screech that it has failed us and needs to be abandoned. Real capitalism uses only real money, which historically is gold and silver. Those work for a lot of reasons, but ultimately the main reason is that governments and banks can’t create it at their whim.
An interesting aside is that Spain came pretty close to creating money when she started to bring shiploads of gold back from the New World. This actually caused inflation (that is, the money supply grew more rapidly than the economy could handle, but still much less than fiat currencies are inflated now). Instead of Spain becoming the richest country in the world through gold (real money) inflation, she became just another failed empire on the ash heap of history.
Now, we’ve got “elites” with PHDs claiming it will be different this time: they are smart enough to inflate the fake fiat money supply and truly make us rich. If it couldn’t be done with gold, what are bits of paper going to do for us?
Feudalism is correct. By December it will be complete. Nice to know he plagiarized my comments here on TBP, I guess He’s a reader. His solution won’t cut it though.
He refuses to name the new Monarchs and Feudal Barrons though. There will be three Empires with one Cabal to rule them all. The financial capitols will be London and Shanghai.
I suggest you read “Dis-United Nations” by Peter Zeihan. His take is backed by much research. I tend to agree more with him than your scenario. His book came out in March 2020 and can be purchased at Barns & Noble bookstore.
So is my opinion. I’m not smart enough to come up with this stuff on my own. I have been following the money for 50 years and following the bible for 40. I don’t insist you agree though. The more input the better. My goal is to be provacative enough to make someone think and perhaps start doing some research. Where God leads them with it is not my business b ecause it would just give me a bigger head.
In a perfect world, the solution would be for people to only transact in gold and silver, and not use the fake FRN dollars. Then the Fed Gov would have virtually no power. For practical reasons, I think cryptocurrencies are the way to go. There are currently 5000+ ones to choose from. If everyone used one, any one of the more popular ones that are interchangeable, the Federal Reserve would lose almost all of its power in no time.
If anyone has a better solution, feel free to promote it.
The problem with crypto is the NWO owns the fiber, satalites, switches, and internet providers in addition to being able to block or decrypt encrypted content.
Encryption can’t be blocked. That being said, the only way to stop crypto is to shut down the internet.
But I am putting my money where my mouth is. I am saving in gold, silver, platinum, and cryptos. I also have a small orchard and working on both a garden and indoor hydroponics. In the fall, working on the armory.
If the host doesn’t recognize the code it can be blocked. In addition, by owning the net lock stock and barrel they can simply insist you use their code.
Check out the Free Gold theory. You will save in gold and use fiat for transactions. There will be no crossover of the two except that the strength and stability of each fiat will be measured against gold. Central Banks will hold gold reserves to backstop and instill confidence in their currency. It sounds feasible.
I would say that the Fed and fractional reserve banking is not the problem.
It’s the type and quality of the capital being formed.
Would anyone argue that lending to yoga studios is the same as an oil refinery?
So much of what banks lend to at the end of a cycle is junk. And when all these small worthless businesses go bust who will buy them?
Robert’s Nationialization scheme disincentives private risks capital through expropriation.
We need to zero out capital gains .
Even if this system was honest, a fundamental problem is the money is created when debt is granted but the interest on the debt is not. This creates the absolute necessity to keep expanding the debt to pay the interest due and this game of musical chairs always crashes. It has been kept going this time around quite a long time.
We probably need to nationalize more businesses so that we get a true communism-fascism rather than the horrible feudal-fascism.
https://www.change.org/p/michigan-state-house-impeach-governor-whitmer?recruiter=1075132779&utm_source=share_petition&utm_medium=twitter&utm_campaign=psf_combo_share_initial&recruited_by_id=b86208d0-7d11-11ea-857c-5b92b8f609be
He makes a great point about the central banks having their cake and eating it too. If they’re being bailed out, then in turn that debt should be canceled out. Imagine waking up one morning and getting an email from your mortgage company telling you that your principal is now 1/2 as much. Or student loans. Or car payments, credit cards, lines of credit, etc.
I agree with PCR, that’s what needs to happen.
That punishes savers.
Gibs me dat.
“There is only one way to fix the situation, and that is to write down private sector debts to levels that can be serviced. As the creditors are being bailed out regardless, their loan losses don’t matter.”
Oh logic, nowadays, so gauche.
How do you navigate the website? Cannot find the “read more” Any hints?