Acceleration of Conflict, Part 1

Sometimes, the principles of life seem veiled in obscurity. At other times, the demonstrations are clear. Let’s see what principles are shown by these events of just the last six or seven weeks:

July 27, 2016, Syria:

IS Suicide Attack in Mostly Kurdish Syria Town Kills 44

July 26, France:

2 Islamic State Hostage Takers Killed After Slitting Priest’s Throat In Assault On French Church

July 25, Japan and USA:

At Least 19 Killed, 45 Injured By Knife-Wielding Man In Japan

2 Killed, Up To 17 Injured In Fort Myers, Florida Nightclub Shooting

July 24, Germany (twice) and Iraq:

Attacker Dead, 10 Injured After Blast “From Explosive Device” At Major German Music Festival

21 killed in Baghdad suicide blast, weeks after deadliest in years

Machete-Wielding Syrian Refugee Kills Pregnant Woman; Injures Two In Southern German City

July 23, Afghanistan:

At Least 80 Killed After Suicide Bombing Attack In Kabul Claimed By ISIS

As a side-note, if you think Afghanistan has always been a hell-hole of conflict, here is a what it looked like around 1970: before the “great” powers decided it was an important country in their quest for domination:


July 22, Germany:

18-Year-Old German-Iranian Is Behind Munich “Shooting Rampage” Which Killed 10 Including Gunman

July 20, Ukraine:

Prominent Journalist Killed In Ukraine When Car Bomb Explodes In Broad Daylight

July 18, Germany and USA:

Axe-Wielding Afgan Refugee Shot Dead After Slashing 14 People On German Train Screaming “Allahu Akbar”

Man Dies After Being Shot In The Head At “Stop The Violence” Rally In Ohio

July 17, USA:

29-Year-Old Black Male Dead After Killing 3 Cops, Wounding 3 More In Baton Rouge “Cowardly” Ambush

July 15, France:

84 Dead, More Than 100 Injured After Truck Plows Into Crowd In Nice, France

July 14, USA:

Police Release Dramatic Footage Of Deadly Shooting Of Unarmed White Man

July 10, USA:

115 Shot This Week In Chicago As ‘Gun-Free-Zone’-City Continues Death Spiral

July 9, USA:

Two Houston Police Officers Kill Gunman Who Aimed At Cops

July 8, USA (twice):

Deadly Dallas Standoff Ends After Final Suspect Dies From Explosion; Five Policemen Killed

4 Shot, 1 Killed After Black Gunman Fires At Passing Cars On Tennessee Highway, Targeting Police, Whites

July 3, Iraq:

“It Was Like An Earthquake” – Over 91 Killed After Two ISIS Suicide Bombings Rip Through Baghdad

June 28, Turkey:

At Least 28 Killed After Suicide Attackers Set Off Blasts At Istanbul’s Ataturk Airport 

June 23, Germany:

Heavily-Armed Gunman Killed After Opening Fire In German Cinema

June 16, England:

Brexit Campaigns Suspended After British Lawmaker Shot Dead By Mentally Ill Assailant

June 14, France:

ISIS-Linked Islamist Kills Two French Policemen In Latest “Abject Act Of Terrorism”

June 13, USA:

Orlando shooting: 49 killed, shooter pledged ISIS allegiance

Yikes. These were just the “newsworthy” items that found me on the sites I typically read, I did not go out looking for them. It’s very likely that some searching would turn up more of the same, especially in the Middle East, which often receives scant treatment in the Western press. As an indication of that, according to the Washington Post:

Since the beginning of 2015, the Middle East, Africa and Asia have seen nearly 50 times more deaths from terrorism than Europe and the Americas.

The Middle East and northern Africa account for over two-thirds of terrorism deaths since January 2015, with multiple attacks occurring daily, each claiming on average at least a dozen lives.

So what principles are being demonstrated through these events? First, we are seeing:

Acceleration of insanity, which has been mentioned and documented, especially including excruciating detail of insanity in the financial world.* It is difficult to not see rampant examples of insanity on this planet at this time so that documenting them seems almost needless to say.

Next, we are seeing:

Acceleration of conflict. Conflict is on the rise in so many (all?) fields of human endeavor. We may even find ourselves in scrappy conflicts these days, even with loved ones, often with trivial causes. (We’ll talk about what to do about that in Part 2.) In public, we see political parties, and factions within political parties, at each other throats, with the factions screaming each other down at political conventions; governments seemingly at war with their own people; inter-racial hatred; religious wars;  police versus citizens; hackers waging cyber-warfare with governments, corporations, anyone; environmentalists versus resource extractors and polluters; organic growers versus Industrial Food; Big Pharma versus the alternative health care field; Monsanto versus democracy; global warming versus global cooling factions…well, it goes on and on. Read the seething Comments sections on popular internet sites…on second thought, don’t!

Acceleration of the Wheeler Cycle of War and Political Change, described here and updated here.

And because this is another principle in play:

The transition through which we and the planet are going is taking place across the energetic spectrum.

that war energy from the Cycle of War does not impact only the military and political spheres, it impacts nearly everything, as we are seeing.

Worse still, as explained in a previous post on the Cycle of War, this instance of that cycle began around October, 2014. However:

The worst part of this is: major wars begin around the cycle date, but the fighting generally builds to its greatest intensity four to six years after the start date.

So perhaps general conflict will finally peak and then start to wind down sometime between late 2018 and late 2020. Until then, the likely scenario is accelerating intensity of conflict. If things play out that way, then two other principles are being demonstrated:

  • Life moves in cycles, not straight lines.
  • Based on past repetitions, the starting points and duration of some cycles can be usefully estimated.


The Military Conflicts

What about the military aspect of this conflict energy?

Global Peace Index 2016: There are now only 10 countries in the world that are actually free from conflict

So only 10 countries can be found that are not currently somehow involved in military conflict.

Here’s an article (hat/tip to JS for the link) that appeared right at the start of this instance of the War cycle, in October, 2014:

     Pentagon readying for long war in Iraq, Syria

So much for “no boots on the ground.” You may have heard that military spending is decreasing. Of course, it isn’t true. The war profiteers show no sign of letting up:

Thanks America: Spending On Military Weapons Saw Its Largest Yearly Increase In A Decade

The world defense market climbed to $65 billion in 2015, up by $6.6 billion from 2014 the consulting company IHS Inc said in its Global Defence Trade Report. That’s the largest yearly increase in the past decade, led by Saudi purchases which jumped about 50% to $9.3 billion in 2015 according to Bloomberg.

the United States was the top weapons exporter in 2015, supplying almost $23 billion in goods and equipment, of which $8.8 billion went to the Middle East.

Yes, that’s the same Saudi Arabia that beheads more people than Daesh (IS), but it’s a US “ally” (or does that mean good weapons customer?), so few in the press will discuss it.

What are they spending all that money on?

US Has Spent $11.5 Million A Day For Past 542 Days Straight In Fight Against ISIS

After two years of bombing, the U.S. recently marked a horrendous milestone in a war with no clear end in sight. Vocativ reported that the American-led coalition in the Middle East has now dropped 50,000 bombs in the ongoing campaign against ISIS that began in August 2014.

Russia Is Developing Gliders That “Guarantee Penetration” Of Any Missile Defense System

The US is very interested in so-called directed-energy weapons:

Navy Laser Weapon System–this 1+ minute video shows the US Navy’s existing 30 kilowatt laser weapon:

But of course they are moving on to stronger versions:

Navy to Test Powerful 150-Kilowatt Laser

The U.S. Navy, which has already developed a 30-kilowatt laser that has been used operationally, will soon test a new directed energy weapon that is five times more powerful, said the vice chief of naval operations July 23.

The Office of Naval Research “will perform a shipboard test of a 150-killowatt laser weapon system in the near future,” said Adm. Bill Moran during a speech at Booz Allen Hamilton’s Directed Energy Summit, which was held in Washington, D.C.

The Navy’s 30-kilowatt laser weapon is currently onboard the USS Ponce. The system, which has been used operationally in the Persian Gulf, offers military leaders precision accuracy at a low cost, Moran said.

The laser weapon system, or LaWs, “has an extremely low-cost per engagement ratio,” he said. “We’re spending pennies on the dollars … every time we use that capability.”

While the U.S. military is developing laser weapons that can be installed on platforms across the Army, Air Force, Navy and Marine Corps, military leaders must be cognizant that potential adversaries are as well, Moran said.

“These technologies are being developed and fielded by a growing number of countries all around the world, it’s not just us,” he said. “If we don’t get ahead of that capability by our adversaries, we’re going to find ourselves in a very difficult position in the future.”

As the Navy considers its future fleet design, laser weapons must be a part of the equation, Moran said.

“If we have to continue to rely on projectiles, propellant-driven projectiles, we will run out of our ability to defend ourselves over time,” he said. “This capability in directed energy is incredibly important.”

Note the military-industrial-complex’s ever present excuse for developing deadlier weapons: if we don’t do it, somebody else will.

And of course, drones. Here’s a 6 minute video that shows how weapons are now marketed. The only thing missing is a Hollywood star or two. This one advertises the latest drone in General Atomics product line:

That video was found at Activist Post:

Global Drone Arms Race Spreading Quickly

The US wants unmanned robot fighting ships cruising the ocean for months at a time without anyone on board. The guy who runs this program calls the Earth “the battlespace”:

DARPA Unveils Plans For World’s First Flotilla Of Killer Robot Warships – “Sea Hunter”

Remember that support for all this comes from the major political parties in each country. That’s where money gets spent to assure that candidates are placed in office who will support these programs.

The US sends so much military hardware to the Middle East that there are battles where both sides have had their armaments supplied by the US. Sometimes US troops are being killed by US-made weapons. This is from one of the most conservative newspapers in the US, the Chicago Tribune, not some anti-war site:

CIA-armed militias are shooting at Pentagon-armed ones in Syria

Daesh is regularly found using US-manufactured weapons:

ISIS Is Converting 2/3 Of US Humvees Given To Iraq Into Car Bombs

Islamic State militants have not only stolen a majority of the military Humvees provided to the Iraq Security Forces (ISF) by the U.S., they are now re-purposing them into car bombs.

No one is sure where some of the arms shipments go. This is from the NY Times:

C.I.A. Arms for Syrian Rebels Supplied Black Market, Officials Say

Weapons shipped into Jordan by the Central Intelligence Agency … intended for Syrian rebels have been systematically stolen by Jordanian intelligence operatives and sold to arms merchants on the black market, according to American and Jordanian officials.

Despite all the spending, according to NPR, the US nuclear arsenal is controlled by systems with floppy disks (hat/tip to RG for the link):

Report: U.S. Nuclear System Relies On Outdated Technology Such As Floppy Disks

The U.S. nuclear weapons system still runs on a 1970s-era computing system that uses 8-inch floppy disks, according to a newly released report from the Government Accountability Office.

That’s right. It relies on memory storage that hasn’t been commonly used since the 1980s and a computing system that looks like this:

nukes-computer_custom-3a63e1e3a491a02d1115c44175aff93752086b78-s800-c85 (1)

Well that’s comforting.


Major Jockeying for Advantage

Also not at all comforting is the maneuvering and saber-rattling of the major military powers:

Tensions Between US/NATO & Russia Are Flaring Dangerously

“The US Is Sleepwalking Towards A Nuclear Confrontation”

US Sends Another 1,000 Troops To Poland As Part Of NATO Effort To Counter Russia

How The Pentagon Is Preparing For A Tank War With Russia

Putin Orders Military To “Immediately Destroy” Any Threat To Russian Forces

Obama Slams Door In Putin’s Face, Refuses To Discuss “Very Dangerous” Missile Defense System

Hacked Emails Confirm NATO Push To Provoke, Escalate Conflict With Russia

U.S. Deploys Two Aircraft Carriers To Mediterranean To “Send A Clear Message To Russia”

US, Russian Warplanes “Clash” Over Syria

US Spy Plane Disrupts Civilian Flights While Spying On Russia

NATO Says It Might Now Have Grounds To Attack Russia

Perhaps this should be prefaced with, “of course,” that is, of course there is conflict within the conflict makers:

Huge Scandal Erupts Inside NATO: Alliance Member Germany Slams NATO “Warmongering” Against Russia

NATO General Admits Russia Is Not A Threat To The Region

Over the course of the past few months, the United States has pushed NATO to build up troops on Russia’s border, held war games in its backyard, and deployed aircraft carriers to the Mediterranean. The rationale for such actions has always been very vaguely communicated, but as NATO European Command General  Philip Breedlove saidit has all been to send a signal of deterrence to Russia. However, the reality is that, according to General Petr Pavel, chairman of the NATO Military Committee, there is no intelligence that suggests Russia is planning any broad-scale aggression whatsoever.

The UK certainly doesn’t want to be left out of all the “fun”:

UK To Stockpile Tanks, Heavy Equipment Close To Russia’s Border

France, as well:

France Escalates – Sends Aircraft Carrier To Fight ISIS

The US and China are doing some serious sparring as well:

China Says Military Will “Stand Up And Use Force” If US Sends Warships To Islands

U.S. Warships Surround Disputed Chinese Waters, Prepared For War: “WWIII At Stake”

Chinese Military Vice Chairman Urges Troops to Get Ready For Combat: Xinhua

China Warns US Patrols In South China Sea Could End In “Disaster” As It Launches Navy Drills

South China Sea Tensions Surge After Taiwan Deploys Frigate, China Warns Of “Air Defense Zone”

Can it be even worse? Sure, with ominous echoes of conflicts past:

German Arms Exports Nearly Double In 2015

After a Televised Brawl, Japanese Lawmakers Vote to Allow Military to Fight Overseas

Once in awhile, someone stands up against all this:

1,400 US Mayors Just Slammed The White House For Risking Nuclear War With Russia

In a unanimous decision at their 84th annual conference, the United States Conference of Mayors (USCM) passed a resolution condemning President Barack Obama’s decision to set the U.S. on track to spend $1 trillion over the next 30 years to “maintain and modernize its nuclear bombs and warheads, production facilities, delivery systems, and command and control.”

Stay tuned for Part 2.


*Speaking of insanity in the financial world, between the European Central Bank (ECB) and the Bank of Japan (BOJ), the central banks of the world are now printing up $180 Billion per month. There are only two national governments in the world that spend that much per month, the US and China. And what are they doing with all that new money printed from nothing? Buying bonds and stocks! A billion people on the planet don’t have clean water (half the hospital beds in the world are occupied by someone with a water-borne illness) or enough food each day, not to mention reasonable health care, and these bozos are printing up money to prop up asset markets, making the rich richer, to get everyone to think that everything is OK. The BOJ is one of the Top 10 shareholders of 90% of Japanese companies and the ECB is buying bonds with negative interest rates. That’s the best thing they can think of to do with $180 Billion per month. And these are allegedly intelligent people? Sane people?


Earth changes update for 2015 and into 2016

During the first twenty days of April, there were eighteen earthquakes of magnitude 6.0 or greater, and a deadly flood almost every day.


Some people think that earthquakes measuring 6.0 are no big deal, but residents of Taiwan might disagree. A magnitude 6.4 earthquake in February killed 27, injured 500, and collapsed this 17-story apartment building:


Southern Japan had over 600 earthquakes, a volcanic eruption, and several landslides in just five days:


     6.4 quake strikes southwest Japan (photos, videos)

     Second large earthquake hits Japan measuring 5.9 in magnitude as rescuers battle to free people trapped in rubble

     Japan earthquake update:Tens of thousands flee in fear of aftershocks and volcanoes


     New powerful 7.1 magnitude earthquake strikes near Japan’s Kumamoto, tsunami warnings issued


I don’t know that anyone has yet figured this one out:

     Japanese city of Fukuoka, covered in mysterious foam after earthquake (VIDEOS)

     Update: 32 killed, 70,000 evacuated as Japan hit by 2 powerful earthquakes & devastating landslides (photos & videos)

Ecuador had the largest earthquake during this period:

     7.8 Magnitude earthquake hits Ecuador

     Ecuador quake deaths pass 500 with hundreds still missing


     Magnitude-6.1 aftershock hits Ecuador following deadly earthquake

The Pacific island Vanuatu has been hit five times by magnitude 6.0 or greater quakes in the last several days:

     7.2 magnitude quake strikes off Vanuatu islands

     Magnitude 6.9 earthquake strikes northwest of Vanuatu

     Magnitude 6.7 earthquake strikes Vanuatu; THIRD large quake in region this week

     6.0 earthquake strikes off Vanuatu coast; 4th quake in a week

     Magnitude 6.5 earthquake strikes off Vanuatu Islands; FIFTH + 6.0 quake in recent days

And deadly quakes have struck around the globe:

     Myanmar earthquake: Two killed, 70 injured in Assam

     Magnitude 6.6 earthquake strikes Afghanistan: Strong tremors felt in India and Pakistan capitals

     Magnitude 6 earthquake shakes Zamboanga, Philippines

     Strong 6.2 magnitude earthquake shakes Alaska, no tsunami warning

     6.2 magnitude earthquake strikes off coast of Guatemala

     Barbados rocked by magnitude 6.9 earthquake


In the 20th Century, there were 35 volcanic eruptions on average over the entire year; this year, there are 38 volcanoes in an active state of eruption right now! This is non-trivial. Mitch Battros posted this today:

     BREAKING NEWS: Volcanoes Responsible for Climate Change Through Much of Earth’s History

A new study in the April 22 edition of the journal ‘Science’, reveals that volcanic activity associated with the plate-tectonic movement of continents may be responsible for climatic shifts from hot to cold throughout much of Earth’s history. The study, led by researchers at The University of Texas at Austin Jackson School of Geosciences, addresses why Earth has fluctuated from periods when the planet was covered in ice to times when polar regions were ice-free…

…cooling periods tended to correlate with the assembly of Earth’s supercontinents, which was a time of diminished continental volcanism, Horton said. The warming periods correlated with continental breakup, a time of enhanced continental volcanism.

So enhanced volcanism leads not only to the melting of the icecaps and thus strongly rising sea levels–sea levels would rise over 200 feet if the icecaps melted–it is also “correlated with continental breakup. In such a situation, one would expect a big increase in earthquakes, which is occurring, as demonstrated above.

     Mexico’s Popocatépetl volcano erupts sending ash almost two miles into the sky

     Are we paying attention? 3 volcanoes erupt simultaneously on April 16, 2016: Villarrica (Chile), Mt. Cleveland (USA), Colima (Mexico)

     Yellowstone Volcano: “Whole lot a shakin’ goin’ on”


This April period has had a deadly flood somewhere in the world nearly every day. This record storm is expected to dissipate in the next couple of days:

     Cyclone Fantala: Indian Ocean’s most powerful storm on record


     28 people killed by floods in Ethiopia

     24 killed as torrential rains wreak havoc in northern Pakistan

     Update: Rains, landslides and floods kill over 200 in northern Pakistan


     Floods in Malawi leave at least 12 dead and force thousands to evacuate

     Malawi declares ‘State of Emergency’ as flooding kills dozens

     23 killed by flooding in Afghanistan


     Flooding hits Nairobi, Kenya after 96mm of rain in 6 hours

     Flooding displaces thousands after 4 days of heavy rainfall in Argentina and Uruguay

     Severe weather leaves 7 dead and over 3,000 displaced in Uruguay

     Tornado kills 4, injures hundreds in southwestern Uruguay

This was the first deadly tornado in Uruguay in 30 years…

More than 200 people suffered injuries and about 400 structures have been affected, said Uruguayan Sen. Guillermo Besozzi. Images from the city showed overturned cars piled on top of one other, shattered windows and decimated buildings…The National Institute of Meteorology has yet to determine the scale of the tornado. “There are businesses in the center of the city, completely destroyed. Schools, churches destroyed. This is something never seen before. This is something out of the normal for our country,” Besozzi said.


     Heavy rains and flooding kill 18 people, with 900 rescued from cars in Saudi Arabia

     Cars swept away as Arabian peninsula is slammed with deluges of rain and hail

     Devastating mudflow sweeps cars away and destroys shops in Jizan, Saudi Arabia

     Several killed as heavy floods hit Iran

     Flash floods kill 2 during rain storm in Oman

     Four killed as torrential rain, hailstorms lash southern China; hailstones the size of eggs hit Hunan

     Floods hit Santiago, Chile; water service to millions cut


     Houston flooding: 7 dead, 1,200 rescued — and more rain to come

     3,500 evacuated following widespread flooding in Fiji

     Record breaking rain causes flash floods in Las Vegas, over a hundred road crashes


Sinkholes are becoming so commonplace that they have been draining small lakes and ponds, and now they have drained three rivers in Mexico. The photo below shows the before-and-after of the Atoyac River:

     New sinkholes drain 2 more rivers in Mexico

     Segments of Atoyac River in Mexico disappear overnight after giant crack opens



I found nine headlines about deadly lightning strikes in April such as:

     Update: 30 killed by lightning strikes within 10 days in Bangladesh


If you find yourself in a hailstorm, take cover! These things are getting increasingly nasty:

     Hailstones the size of BASEBALLS pound Texas, smashing windows, cars and buildings



     Baseball-size hail slams Texas for second consecutive day


     4 inch hailstones damage 1,000 houses in Vietnam

     Freak hailstorm drops several inches of ice on Darjeeling, India

     Freak hailstorm strikes Saudi Arabia

Thundering Heard

Does this give you an idea of why this site is called Thundering Heard? Each heading in this post could have been shown as “Thundering Heard: Earthquakes” or “Thundering Heard: Volcanoes,” but that would have been annoying. Still, the idea is always there. There is thundering heard on the horizon across much of the energetic spectrum. Beyond earth changes, think about national politics, geopolitics, the state of the oceans, the financial system, health care, the legal system, the oil business, education, and so forth. All systems seem to be experiencing convulsions; many are being shaken to their core. We are now all accustomed to hearing words like deflation, decline, destruction, failure, and collapse in a variety of contexts.

This site tries to remind of some of these thunderings as food for thought.

As Lao Tsu said:

Trouble is easily overcome before it starts.

Part 2 will cover major developments and earth change statistics for 2015.


New Heights of Wacky

If you would like indications–some from the true but lighter side–of just how wacky things have become, read on.

We’ve all heard that 2015 Was Hottest Year in Recorded History, Scientists Say, but it’s been so warm in the UK this “winter” that:

“It’s bloomin’ incredible” say botanists: More than 600 species of British flowers were in bloom on New Year’s Day – usually it’s 20-30

Our last post described–with world trade volume collapsing–how inexpensive it has become to ship things around the globe, leading to this:

It Is Now Cheaper To Rent A Dry Bulk Tanker Than A Ferrari


From Bloomberg:

Rates for Capesize-class ships [pictured above] plummeted 92 percent since August to $1,563 a day amid slowing growth in China. That’s less than a third of the daily rate of 3,950 pounds ($5,597) to rent a Ferrari F40, the price of which has also fallen slightly in the past few years, according to Nick Hardwick, founder of

In China, these three photos from Red Ponzi Ticking show:

A full-size Chinese replica of the Pentagon. To house the Chinese military brass? Nope, it’s a shopping mall, which currently has no tenants and no customers:


Here’s a Chinese full-scale copy of the buildings of Lower Manhattan. Construction cost? $50 Billion:


But here’s what it looks like at street level, since it also has no tenants:


But these types of expenditures make it seem like the economy is humming along, that is, it’s great for the economic statistics, even if the activity makes little or no sense.

So what is a developer with no tenants to do? Apparently, take action: “This 27-storey high-rise building which was completed on November 15th 2015 was just demolished, ‘having been left unused for too long.’ ”



And from Could China’s Housing Bubble Bring Down the Global Economy?:

Many people claim the estimated 65 million empty flats held as investments by the middle and upper classes in China will be sold to new buyers in due time. But these complacent analysts overlook the grim reality that the vast majority of urban workers make around $6,000 to $10,000 annually, and a $200,000 flat is permanently out of reach.

Average flats in Beijing now cost 22X annual household income — roughly six times the income-price ratio that is sustainable (3 or 4 X income = affordable cost of a house).

Perhaps we should send that Chinese demolition crew to Vancouver. If you think you’ve seen a real estate bubble where you live, check out this one:



I hope that plastic chair is included in the price. OK, so the Canadian Dollar has lost 26% of its “value” over the last two years. But still, $2.4 million? Checking the listing, one finds:

Excellent locations within walking distance to Lord Byng Secondary, Jules Quesnel, Queen Elizabeth Elementary, West Point Grey Academy & 10th Avenue shops.

Whew, now it makes sense! And here I thought it was overvalued. Being near those 10th Avenue shops must be worth at least a million.

This month, the US bought the most military aircraft and parts since just after 9/11/2001:

USdefense aircraft and parts


I guess when the economy is tanking, what’s a government to do but buy more death machines. And they do have to put something in all those military bases out there:


In keeping with the great economic recovery meme, this is what’s happening to the formerly ever-expanding global octopus Wal-Mart:

WalMart To Fire 16,000 As It Closes 269 Stores Globally

Speaking of “always low prices”:

 This $250,000 Caterpillar Bulldozer Can Be Yours For The Low, Low Price Of $55

These normally sell new for $1 million, used for $250,000, but here’s one where the high auction bid is $50 at a site in Lousiana, USA:


And it has companions, with a high bid of $100 for this:


and this one has a high bid of $10:


I guess the oil and real estate businesses are not exactly booming in Louisiana. Though it isn’t just Louisiana. Here is a chart of worldwide sales by bulldozer-maker Caterpillar for the last six years. It shows that their sales have been declining for 36 months in a row. All of those bars, starting in 2013, that extend below the zero line (shown in the red oval) show the percentage decline in sales. And this is during the alleged “economic recovery.” I wonder what this chart will look like next time the authorities admit to the anti-recovery:

CAT retail sales nov

Here are two charts from a Jeremy Grantham article “Give Me Only Good News” in which he documents how easily manipulated and delusional Americans can be. You know how business people who call themselves “job creators” often claim that America is so much better for business than France since France is run by a bunch of socialists who are bad for business? And that “bad for business” means bad for people since only ever-expanding and profitable businesses can create jobs and grow wages for people in the long run? And people believe all that? Well here’s a chart showing what they actually mean. It shows that real (adjusted for inflation) wages in France are up 2.7-fold since 1970, whereas US real wages are actually lower than they were in 1970. Wage growth in the US badly lags that in other countries:


So, it’s good for business owners in America, not so good for the workers. Want more proof? Here’s a chart of the gini coefficient for industrialized countries. The gini coefficient measures wealth disparity, that is, it is taken as the best measure available for income inequality. Here is Grantham’s “At Least We Live in a Fair Society” delusion chart showing that only Turkey and Mexico have greater income inequality than the US, and that the US is much worse now than it was in 1980:


Speaking of easily manipulated, you know how Wall St always tells people to not worry about stock market declines, that “stocks always make money in the long run”? And most people believe it. Well here’s a chart of the stock market of Cyprus for the last nine years:



That’s a 99.986% loss, folks. One has to wonder how long the “long run” will be in Cyprus. Of course, the EU and the IMF famously “fixed” Cyprus with the first of the bank bail-ins, in which depositor money was confiscated to keep a large bank from insolvency. Good thing for non-Cypriot stock markets that there won’t be any more bank bail-ins. Oh wait: this is from EU takes six countries to court over bank bailout scheme

The EU on Thursday said it would take six member states to court for failing to implement a European-wide plan…

for bank bail-ins. (All industrialized economies now have bank bail-in rules on the books.) In other words, the authorities are trying to get ready for the inevitable next time things really hit the fan.

Sounds like a good idea. Getting ready, that is. (Side note: Getting ready takes a good deal of thought. And work. And time.)

Currently, the world is experiencing the turbulence phase in this video. Sooner or later, the bridge will collapse:






Desperate, Delusional, Deranged

Most people likely heard that on December 15, the US Federal Reserve raised interest rates for the first time in nine years. Nine years! And by a measly 1/4 of a percent. With high Madison Avenue puffery, they called this “liftoff”!  And why now? Because, they claim, finally, after telling us at the end of every year, for the last six years, that the economy would accelerate in the new year and be able to grow on its own without their “extraordinary measures” (their phrase, not mine) of support, they are declaring, like Bullwinkle, “This time for sure!

Stock markets are, of course, throwing a tantrum, off to their worst start to a new year ever, screaming, “What?! No more free money for the rich?!  You mean we’ll actually have to do something to get money, like–uuuugh–poor people do?”


(Chart source.)

Worst start ever for other countries as well, including Europe as a whole.  The 600 largest European stocks (EuroStoxx 600) are down 21% from their peak in April, officially qualifying them for a bear market. Same with China, their stocks lost 21% in the last four weeks (since the Fed raised rates) and are down 44% since their peak in June:

     China Stocks Enter Bear Market, Erasing Gains From State Rescue

Stocks in emerging market countries (Brazil, Thailand, South Korea, Malaysia, etc.) peaked in Autumn 2014 (!) and are down 36% since then. This was posted in August:

     23 Nations Around The World Where Stock Market Crashes Are Already Happening

Still, many people, especially in the US, believe we are in a global bull market in stocks; despite the fact that US smaller company stocks (Russell 2000 index) are down 22% since their peak in June, 2015. And US Transportation stocks (truckers, airlines, shippers, etc.), which are an excellent barometer of economic activity, are down 28% since their peak.

Even in the midst of this stock market tantrum, a desperate US President said last week that everything is awesome and that “Anyone claiming that America’s economy is in decline is peddling fiction.” Forget about those 45 million US residents on food stamps, and a record number of homeless children, everything is supposedly great. And there was this desperation from the Fed on Friday:

January 15 – Bloomberg (Matthew Boesler): “The U.S. economy should continue to grow faster than its potential this year, supporting further interest-rate increases by the Federal Reserve,” New York Fed President William C. Dudley said. ‘In terms of the economic outlook, the situation does not appear to have changed much since the Fed’s Dec. 15-16 meeting,’ Dudley said, in remarks prepared for a speech Friday… He added that he continues ‘to expect that the economy will expand at a pace slightly above its long-term trend in 2016…’

(Digression: Only someone involved in pseudo-scientific economics is typically deranged enough to try to explain how something can “grow faster than its potential.” Perhaps we should each send our favorite economist a dictionary.)

Why do I call these statements desperation?

For starters, the Federal Reserve’s best computer model for the economy says that the economy is growing at a 0.6% annual rate. That’s less than 1% a year, folks. In other words, stall speed.

JP Morgan says it’s less than that. They expect 0.1%:

     Recession At The Gate: JPM Cuts Q4 GDP From 1.0% To 0.1%

I’ve talked here before about the usefulness of economic statistics that governments don’t publish since the governments can’t fake them. I won’t bore you with a lot of them, but here’s one that will give you an excellent idea of the state of things. It shows, over the last 30 years, the cost to companies to transport bulks goods (wheat, copper, coal, oil, iron ore, etc.) by cargo ship around the planet:


(Chart source.)

The first thing to notice is that it costs less to ship cargo now than it has at any time in the last 30 years. And it’s cheaper by a wide margin. If the economy were doing well, cargo ships would be in high demand and charging high prices. That’s hardly the case now; quite the opposite.

Next, check that blue oval at the top of the chart. The index was over 10,000 in early 2008. That was a period of high demand for shipping. It’s useful to know that owners of large ocean-going cargo vessels currently break even when the price they can charge for shipping is between 800 and 1,000 on this index. So with shipping costs as high as they were in 2008, the owners of ships were making a LOT of money–they could charge more than 10 times their expenses for fuel, salaries, maintenance, etc. Now the price is below 400. So the ship owners lose money on every shipment. Competing owners of cargo ships continue to ship at these low prices, even though they are losing money, because they hope their competitors will go bankrupt before they do.

Why is it so cheap to ship goods around the world now? Because global trade and the global economy are tanking, and far fewer goods are being shipped than a few years back. Here’s a chart by HSBC of growth of the global economy calculated in US Dollars. Notice that the line is well below zero for 2015, just like it was in 2009:


Credit Suisse expects Brazil’s economy to have its worst downturn since 1901! That’s right, worse than the Great Depression. As shown by the chart at the link, India’s exports and imports both crashed by 25% over the last year. That’s a huge decline.

So the Fed and other cheerleaders might say: Yes, the world economy is down, but the US has “decoupled” from the world and is doing fine on its own. Well, here’s a perfect depiction of the US economy. It’s a chart of US Industrial Production over the last 45 years:


(Chart: Welcome To The Recession: Industrial Production Crashes Most In 8 Years)

Industrial Production in the US is down over the last year; there’s 1.8% less of it than a year ago. The red-shaded areas on the chart are past recessions. As the dashed line shows, whenever Industrial Production has been this low in the past, we have always already been in a recession. Always. No exceptions.

Governments (and 99 out of 100 economists) announce recessions with a huge lag time. Leading up to the announcement, just when it would help people to be battening down the hatches, they always claim everything is fine and there won’t be a recession, so we should all hold onto our stocks, hold onto our real estate, spend, borrow, and spend some more. Then the long delay in admitting to the recession allows them to say, “Yes, a recession started 10 months ago, but now it’s either over or almost over, so don’t worry, everything is fine. Spend, borrow, and spend some more.”

The Fed’s Dudley also said this week that, if the economy weakened, they would consider negative interest rates for the US. Canadian central bankers say the same. And it has worked so well in Europe! (Ha!) Europe’s delusional central bankers thought that negative interest rates would spur people and companies to save less and spend more. What actually happened?  Bank of America explained here that as rates went negative and people couldn’t earn interest on their savings, they saved more, not less. In other words, people, unlike the delusional bankers, are being logical: if they can’t earn any interest, then they have to save more for their future plans, not less. Here are the charts showing exactly this relationship (as rates go down, savings go up) for the negative rate champions Switzerland, Denmark, and Sweden:

europe savings vs rates (1)

European business also failed to fall for the negative rates trick. Instead of borrowing and spending more, they have been pulling in their horns and retiring some of their outstanding debt instead of borrowing more.

As Michael Burry of The Big Short said in his speech at UCLA:

The individual can think different and the individual can act different than those that got us all into this mess. No matter how the economic tides may sweep away the majority, an individual can stand clear.

More than ever, it is crucial to understand that “society’s sanctioned suits,” as Burry labels them so well, do not have your best interests in mind. They have their own interests in mind. Period. And their desperation, delusions, and derangements have created an inevitable economic calamity that will be the greatest in history.

Burry is right: Stand clear!


The Big Short

People told me they liked the recently-released movie The Big Short based on the book of the same name by Michael Lewis, so I did go to see it at a theater, something I’m loathe to do these days because the theaters seem determined to crush all human sensitivity out of their patrons during the overlong and overloud Coming Retractions segment that precedes the main show. Seems to me that earplugs are a better theater accessory these days than 3D glasses.

Anyway, the movie has been well-received by both critics and audiences. It is a well-crafted dramatization of the true story of a few traders who foresaw the collapse of the housing bubble and figured out how to make large profits from that event.  It shows aspects of the lead-up and crash that are not well-known by the public. And it shows the vitriol and threats directed at anyone who sees important events sooner than the general public, especially when what they see means that people are going to lose some or all of their elusive spondulix.

The main character is Michael Burry, who not only foresaw the coming real estate bubble collapse, but had a very good idea of just how devastating it would be for the economy. It’s exceedingly rare for the hero of a movie to be someone as intelligent as Burry.

But more important than the movie is what Burry is doing these days. Remember, Burry does intelligent things before the crowd. He’s a rather private fellow, but has made a few public appearances, one on 60 Minutes, and this one on Bloomberg where he talked about what he was currently buying–farmland with water on site, and gold:

Here is Burry giving a fabulous commencement speech at UCLA in 2012. Burry’s speech starts at the 2:15 into the video:

Selected quotes:

It’s an age of infinite distraction, for those so willing. You are the generation that has had instant messaging, Facebook, Twitter, an angry bird nagging your fingertips at every moment. It’s been arguably as addictive as any drug throughout history, and I do imagine, it took some terrific will power during your studies … to study.

In 2010, I published an op-ed in the New York Times posting what I thought was a valid question of the Federal Reserve, Congress, and the President. I saw the crisis coming … why did not the Fed? Never did any member of Congress, any member of government for the matter, reach out to me for an open collegial discussion on what went wrong or what could be done. Rather, within two weeks, all six of my defunct funds were audited. The Congressional Financial Finance Inquiry Commission demanded all my emails and lists of people with whom I conversed going back to 2003, and a little later the FBI showed up. A million in legal and accounting costs and thousands of hours of time wasted – all because I asked questions. It seemed they would pump me at gun point or not at all. That summer the Federal Reserve put out a paper that concluded nothing in the field of economics or finance could have predicted what happened with regards to the housing bust and subsequent economic fallout. Ben Bernanke continues to backfill this logic and I fear that history is being written wrong yet again. The ignorance is willful.

And here is an interview he gave a week ago ago:

     Michael Burry, Real-Life Market Genius From The Big Short, Thinks Another Financial Crisis Is Looming

Selected quotes:

I am shocked that executives at some of the worst lenders were not punished for what they did. But this is the nature of these things. The ones running the machine did not get punished after the dot-com bubble either — all those VCs and dot-com executives still live in their mansions lining the 280 corridor on the San Francisco peninsula. The little guy will pay for it — the small investor, the borrower. Which is why the little guy needs to be warned to be more diligent and to be more suspicious of society’s sanctioned suits offering free money. It will always be seductive, but that’s the devil that wants your soul.

The zero interest-rate policy broke the social contract for generations of hardworking Americans who saved for retirement, only to find their savings are not nearly enough. And the interest the Federal Reserve pays on the excess reserves of lending institutions … handcuffed lending to small and midsized enterprises, where the majority of job creation and upward mobility in wages occurs. Government policies and regulations in the post-crisis era have aided the hollowing-out of middle America…These changes even expanded the wealth gap by making asset owners richer at the expense of renters. Maybe there are some positive changes in there, but it seems I fail to see beyond the absurdity.

All these people found others to blame, and to that extent, an unhelpful narrative was created. Whether it’s the one percent or hedge funds or Wall Street, I do not think society is well served by failing to encourage every last American to look within.

Americans have so much natural entrepreneurial drive. The caveat is that it is technology that should be a tool making lives better in the real world, and in line with the American spirit of getting better and better at something, whether it’s curing cancer or creating a better taxi service. I am less impressed with the market values assigned to technology that enhances distraction.

So folks, do you have your farmland with water on site and some gold? Are you looking within and working like mad to avoid formidable distraction? Or are you following a path designed by what Burry calls “society’s sanctioned suits” offering free money and a million tantalizing distractions?

Who Could Have Predicted

That the Greek people would strike a major blow for light in our world! A group of people finally said NO to the reinstatement of debtor’s prisons in which entire countries are placed in such prisons by the Banker Politician Axis known in polite circles as our international financial system. The previous “bailouts” of Greece were not for Greece, they were for the bankers, the lenders:


Yet the Greek people ended up with more debt on their backs and with austerity plans from the “great minds” at the EU, ECB, and IMF that have kept their economy shrinking further each year so that it is now about 25% smaller than in was in 2006. In other words, Greece has been going backwards financially: more and more debt, smaller and smaller economy. Why should they put up with more of this? To their credit, today the people of Greece gave a resounding NO to further strangulation by the EU.

And who could have predicted:

In the late 1980’s, that Japan Inc. would not take over the world. Starting at the end of 1989, the Japanese economy was revealed to be not an invincible powerhouse but rather a real estate and stock market bubble, the collapse from which Japan is still reeling because—as pointed out repeatedly in the 1990’s and early 2000’s by pontificating central bankers from the West—the Japanese refused to bite the bullet and let the bankrupt go bankrupt and kept zombie banks alive by financial trickery, something the Western central bankers also did starting in 2008 when faced with the same bankruptcy situation of their own banks. And all central bankers (except those in Iceland: they bit the bullet and it worked out far better for them—their debts are now much smaller and their economy is larger than it was in 2007) are still doing exactly that. To keep up appearances, Japan has printed up so much money to buy so much government debt that their national debt is now 19 times annual tax revenues. (Think about that from a person’s point of view. Let’s say the person makes $50,000 per year, and they have to live off that, but they also owe 19 times that, $950,000. How can they ever pay off the debt? Even if they tried to pay off $10,000 per year, the interest on $950,000 at 3% is $28,500, so they would owe $18,500 more every year.) Gee, Japan sounds worse than Greece! Way worse. And here’s a graphic of the US government’s debt:



That looks like it’s going well! Yeah, sure, very sustainable.

And who could have predicted:

In the late 1980’s, that the USSR would collapse.  The USSR was a superpower! But it turned out that the USSR, which made most of its money from commodities such as oil, diamonds, platinum, etc., was unable to withstand the collapse in the prices of all of those commodities in the 1980’s and their entire economy collapsed, taking their overreaching political system down with it. But they hid their problems so well that the CIA incompetently thought the Russian economy was three times larger than it actually turned out to be. Either that or the CIA needed a fake “strong” enemy to boost its own budget.

In the late 1990’s, that internet stocks would collapse in 2000. It was the new paradigm! If you didn’t believe it, you “just didn’t get it.” Who could have known that Webvan,, and would go from riches to not even rags?

In 2007, that real estate prices would collapse. Real estate prices always go up, don’t you know? And they aren’t making any more land! And it’s always a good time to buy! And other lies, too! Tell all that to the 7 million households that were foreclosed upon just in the US in the last decade.

Who could have predicted those things? Well, a few people correctly predicted each of those big changes. But they were generally derided or ignored.

What’s the point of the list? Well, that things change. Sometimes they change in a big way. And sometimes in a hurry:


(Source: House-sized boulder falls on and blocks Ohio highway)

And we are living in a time about which it’s very easy to argue that we have simultaneous global bubbles in government bonds (think negative interest rates!), stocks (many indexes are higher than they were during previous peaks that were later admitted to be bubbles), and real estate. Don’t think it’s a real estate bubble? This house in San Francisco sold for $1.21 million in March:


(Source: San Francisco tech bubble spills into mega housing bubble)

And this one (just the small one with the new coat of yellow paint!) in Sydney, Australia went for the “low low price” of $840,000:



It does have one bedroom. And the bathroom is outside! Ah, the fresh air! And the neighborhood is crime-ridden! At least the one in San Francisco was in a good neighborhood, so the $1.21 million was probably for the lot, that is, the house was a knocker-downer, not a fixer-upper.

And with the exponential increase in electronic money printing by governments, it’s easy to argue for a fourth bubble, a currency bubble as well. And people and groups are now making up their own currencies: barter currencies and electronic cryptocurrencies such as Bitcoin. In fact, you can go to sites like and create your own cryptocurrency.  They claim they’ve created over 4,000 new currencies for people. This site tracks the current price of 653 new cryptocurrencies!

What will be the impact of the Greek vote? The fact that the debt of many (most!) countries is unpayable will now begin to emerge into the mass consciousness. During this latest round of negotiations between Greece and the Troika (EU, ECB, and IMF), the Greek representatives, Varoufakis and Tsipras, have repeatedly tried to explain that the debts of Greece are unpayable, that Greece needs debt relief, debt restructuring. But the Troika played hard ball and said that was out of the question, that Greece had to pay its existing debts fully. But then just over a week ago, someone leaked an internal IMF document that clearly showed that the Greeks were right, that existing Greek debts could never be paid! This allowed Tsipras to go to the people with the backing of that IMF document to urge a NO vote on more strangulation plans from the Troika. Tsipras was able to say, “See, we told you the truth. The Troika knew the truth, but lied about it. Who do you want to trust going forward?”

Italy, Spain, Portugal, and France, yes France, come immediately to mind as countries that will never be able to pay their debts. And now that the IMF has admitted the truth about Greece, they will be overrun with requests to show the same for these other countries, all of whom, like Greece, have had rising debts and contracting economies since 2007. This chart shows the 15 to 20% declines in production in Italy, Spain, and, France since 2007:


So the dominoes will now start to fall because these and many other countries have unpayable debts. People will start to understand this.

All we want is truth! Why are these so-called leaders (some of them will be shown in two bonus photos below) so afraid of truth? Well, it was explained well here last week: The truth is that these leaders sold out their own electorates, placing the bad bets of the commercial banks on the backs of their own citizens, making the bankers whole and putting their voters on the hook for unpayable debts. And all of their great plans have been complete failures–except if their plans were to pad banker bonuses. They really don’t want this to be made obvious to everyone in each of their own countries. Getting kicked out of office will be one of their lesser worries.

With the exception of the 2007 event listed above, the other events were mostly local to one country. The one in 2007 almost took down the global financial system. This current bubble-plex (multiple bubbles at once) is global in nature, and will have global systemic consequences. It involves bubbles (debt and currencies) that are the very fiber of the world financial system.  The period from September, 2015 through December, 2017 will bring deeper and more dramatic change than most people, even me, can envision. It helps a lot to be ready for change. Inside and outside, some say that preparation is everything.

What are the central banks doing about this? Well, they have been printing money to try to fill the holes that have continually been opening up in the system since 2007. What the smarter ones have also been doing since 2007 is buying gold instead of selling it:



China keeps importing around 2,000 tons of gold per year.

I sincerely hope you have been “importing” some as well.  Perhaps the US has a (war?) plan to win the game shown in the following cartoon, but at this point, it sure looks like they are losing this game in a big way:

china US currency wars

*  *  *

And as a special bonus, here is a photo of some of these world “leaders” marching “with the people” in France after the Charlie Hebdo shootings. The photos and related videos were plastered all over the mainstream media:


And here’s the reality of that “with the people” thing:


Totally staged! That’s a good description of these people: totally staged.

* * *

And since the Greek people have put me in a very pleasant frame of mind, here’s bonus #2: Make sure not to step in any sinkholes:



* * *

And Bonus #3 is a question. The winning answer will receive the first ThunderingHeardBuck created at OK, that’s a joke, but the question is very serious: It used to take generations for people to fall for the next bubble. For many decades following the Tulip Bubble or the South Sea Bubble, people were too smart to fall for a bubble. It took generations for the memory to pass. So the question is: How come we have new major bubbles every seven or so years now?

The Current System is PURPOSE-BUILT for Extreme Wealth Disparity, Draft Part 3

(Note: As explained here, this is a draft of a chapter from an upcoming book on vanquishing financial problems once and for all. Part 1 provided an overview of the structural unfairness in the system that makes extreme wealth inequality inevitable, and covered how that unfairness is implemented through money creation by banks and taxation. Part 2 covered how money loaned into existence, money designed to lose purchasing power, government borrowing, and governments borrowing their money into existence all play their part in the structural unfairness of the system. This is the final part of the chapter.)

Growth at any Cost

A major consequence of all money being loaned into existence is the growth-at-any-cost mentality that endangers the well-being of all animals and plants on this planet. Very few nations, states, businesses, and individuals are satisfied with a steady-state financial situation. Instead, we are inundated with calls by our so-called leaders for “growth, growth, growth,” chanted like a mantra.

While there is no doubt that economic booms can make people feel good about things (and about those  politicians currently in power), it is clear that governments and businesses increasingly resort to desperate tactics when growth seems insufficient and the inevitable recession or depression occurs: businesses slash their employment rolls; governments bust their budgets and borrow vast sums to fund massive “economic stimulus” programs, ignoring whether the money they borrow can ever be repaid; central banks push interest rates—the cost of borrowing (renting) money–to zero or even negative; and central banks resort to what they call quantitative easing (money printing).

The clear source of such desperation lies in the fact that money in this world is debt. If the average interest rate in the world, on all loans, is 4%, then the economy must grow sufficiently (by 4% or more) for everyone to pay back their loans plus the interest on those loans. Without such growth, there is insufficient money to pay back loans plus interest, and a negative feedback loops ensues: some people and companies can’t pay back their loans, so they default, and the money they owe literally disappears from the ledger of their lender. If they are companies, their employees lose their jobs, so the households of those employees spend less money, putting pressure on other businesses because of lost sales, leading to more layoffs and more defaults. Many who have lost their jobs are unable to pay their mortgages and the price of real estate, which is the collateral for Trillions of US Dollars in loans, decreases. It’s a vicious feedback loop, an economy in reverse, an economy that is shrinking, deflating. To defeat this deflationary trap, governments resort to lowering interest rates to ease the debt burden, and if that doesn’t work, they print money to try to replace the money that disappears when debtors default.

These strategies supporting growth are accepted by most, even some who realize that these financial tactics are unsustainable and will possibly lead to economic calamities such as governments defaulting on their debts and/or hyperinflation.

This growth-at-any-cost mentality, this quest for infinite growth, is now embedded in the system, but it conflicts with the finite resource base currently needed to enable such infinite growth, over-taxing supplies of natural resources and causing widespread environmental destruction. In our current state of human and technological development, growing economies need increasing amounts of oil, coal, natural gas, and uranium for energy; cement, copper, and lumber for construction; iron ore, steel, and a wide array of metals and chemicals for manufacturing; and fertilizers and pesticides for more food for an increasing population with increasing amounts of money to spend. Thus our often-rapacious quest–for raw materials, farmland, wildlife on land and in the sea; increasing space for housing; and the rampant use of herbicides and insecticides–robs the natural world of habitat and life, and increasingly poisons water, land, and air. Thus humanity is now the primary cause of what is shaping up as the sixth great species-extinction event in the multi-billion year history of our planet.


(Chart source.)


Some scientists think it so likely that we will destroy our own habitat, and thus our own species on Earth, that they are dedicating their life to finding other planets that could support human habitation, and devising ways to transport us there—typically only some of us.

If all money were not debt, with the ever-present pressure to pay back a loan plus interest, there would be no need for this growth-at-any-cost mentality. Economies could achieve relative stasis. As with all processes in the physical plane, the economy would be very likely to have a natural cyclical ebb and flow. And yes, some people would still seek growth, but it would not be a structural necessity of the system, that is, there would be no financial danger to the system if the economy failed to grow at all times. Thus this financial system based on money as debt is inherently unstable, and dangerous to many species, including our own.

Legal Tender Laws

The legal tender laws of nations serve to solidify the structural grip that debt-based money holds on the populace. These seemingly innocuous laws state, in the United States, for example, “United States coins and currency…are legal tender for all debts, public charges, taxes, and dues.” This means that anyone can tender (offer, that is) US Dollars to discharge any debt in the US. Any court of law considers such an offer sufficient to discharge the debt.

And while the US claims it does not force people to use US Dollars, the effect of legal tender laws is nearly that in most cases.  Let’s say you lend someone 5 ounces of gold for a year at 5% interest. At the time of the loan, the gold was priced at $1,000 per ounce. So at the end of the year, you would be owed $5,000 plus 5% interest, for a total of $5,250. In the US, after a year, the borrower could offer to discharge his or her debt for $5,250 in US Dollars even if the price of gold had doubled. This has the intended effect of making sure that people not use gold in their borrowing and lending, but use US Dollars instead.

Secondly, despite the huge moves in the relative prices of currencies today (for example, the Euro declined 25% in price versus the US Dollar from March 2014 to March 2015), the legal tender currency is assumed to have a constant value so there is no additional income tax required when someone accumulates their national currency in the year 2000 and spends it in 2015.  But if a person acquires a gold or silver coin, a foreign currency, or a bitcoin or other cryptocurrency, in the year 2000 and spends it in 2015, then this is a taxable event for income tax purposes, often at both the national and provincial/state level. The tax authorities consider accumulating and spending something other than the legal tender currency to be the acquisition and sale of an asset, and they require that people report it as such on their tax forms.

So yes, if you buy a bitcoin in January and buy a cup of coffee with a portion of that bitcoin in February, some countries require that this be reported on one’s income tax form. They want to know if you acquired that bitcoin at a lower price than it had when you spent it, in which case you owe taxes on the gain in value of that bitcoin. Certainly the same is true for the use of gold, silver, or platinum coins.  Such laws are an intentionally strong discouragement against the use of anything other than the legal tender currency issued by the government.  Perhaps even more importantly, these laws discourage transactions that take place outside of the banking system since the banks cannot take their cut from transactions that take place outside of their system.

So while countries typically claim they do not force the use of their currency, there are strong penalties for not using it, and thus gold and silver coins remain in vaults, in hiding, and do not typically compete with government fiat currency for transactions.

Governments do not want other currencies competing against their officially-sanctioned fiat currency because this would limit their ability to manipulate that currency at will, which typically means the creation of more of that currency than is prudent. Even though many become aware that their currency is losing value due to its debasement via over-printing, legal tender laws provide a level of entrapment in the government currency regime.  If people start using the currency of another nation or precious metals for transactions, this weakens the hold of the government/banking cartel that gains great advantage, as shown above, over all others by being the sole controllers of currency creation.

When legal tender laws fail to stem the tide of abandonment of a national currency due to its over-creation or due to fear that its banking system is collapsing, governments will typically impose capital controls that prohibit the movement of currency out of the country and sometimes make it illegal to convert money into or use other currencies or precious metals.  When announced, these measures are generally said to be temporary, but they often become permanent.

Government Guarantees for Banks; Derivatives

When people buy a product or service, they generally care about the quality of the vendor from whom they are buying. They want to buy from someone who stands behind their products and offers some level of quality guarantee, and who will remain in business to back that guarantee.

However, there is, again, a single business for which this is not the case: banks. Most people bank where it is most convenient for them based on the location of bank branches. Few take any interest in whether the bank is operating in a sound financial manner because they believe their deposits are covered by a government guarantee. So if the bank goes bankrupt, government deposit insurance will give them their money back.

The banks claim this is fair because, in many countries, they pay money into an insurance fund that backs people’s deposits. But these insurance funds typically have less than 1% of the deposits they are insuring. When there is a crisis of confidence in banks, that less-than-1% isn’t remotely enough to cover deposits of failing banks. But as shown during the phase of the financial crisis in 2008-2009, governments go far beyond these bank deposit insurance funds to protect banks, calling them too big to fail, and thus, money is borrowed or printed to keep the banks afloat.

This unique arrangement for banks allows them to engage in highly risky financial maneuvers that are unavailable to others.  The most egregious area for this type of behavior is in what are called derivatives.  These complex contracts provide insurance against—and allow people to gamble on for potential profit–nearly every conceivable movement of interest rates, currencies, stocks, commodities, and so forth. But because of this unique government backing, banks are allowed to sell this wide-ranging insurance with nowhere near the reserves that would be required were a regulated insurance company to sell the same coverage. Banks even sell insurance against governments going bankrupt, including their own, even though their ability to make good on such contracts could only possibly come from the government whose debts they pretend to be insuring.  To give just a hint of the size of the risk involved with these derivatives, the largest US and European banks have risk exposure to derivatives of hundreds of Trillions of US Dollars, almost ten times the size of the entire world economy.

Selling these derivatives is extremely profitable for the banks, so these absurd levels of risk are tolerated and excused away.  Many derivatives are, in fact, a blatant form of fraud since seller could not possibly make good on these contracts.  But since it is bankers who in fact write the laws for these contracts, it is all “legal.” While things are going well for the banks selling these contracts, they pull in staggering profits from this activity. When these bets go wrong, the burden of the losses is placed on the taxpayer.

To give an idea of this in numbers, as an example, at the end of 2014 in the US, the bank deposit insurance fund held $52 Billion, insuring $6,200 Billion in deposits (119 times the insurance fund), and backing $239,000 Billion In derivatives (4,596 times the insurance fund).

In addition, it is the trade in derivatives that now move prices in global markets for many commodities, including essentials such as oil, wheat, and corn. The value of trade in derivatives for a commodity can be 100 times larger than the value of trade in the actual commodity. Thus prices are often set through derivatives, not through trade of the actual physical commodity, allowing prices to be moved far from the fundamental value of the commodity, and offering opportunities for outsized profits from magnified price movements that can have severe negative effects on the producers and consumers of essential goods.

Furthermore, many derivative trades are private transactions between parties, often defined by complex contracts that are hundreds or even thousands of pages in length. Efforts to bring all of these trades into the clear light of day on public trading exchanges have been successfully resisted by the large banks, offering the potential for illegal manipulation of markets, yet another potential source of outsized profits.

Financial Domination of Politics

Increasingly, because of the need for massive campaign funds in modern electoral politics, the political class is beholden to those who provide what are politely called “donations” or “contributions” to campaign coffers, but which have become difficult to distinguish from bribes.

Increasingly, national and major state/provincial electoral politics looks like this: prospective candidates meet with extremely rich potential contributors to secure startup campaign funds and the funding promises needed to mount a full campaign. It is at this step that candidates are actually selected—often by billionaires. After this step, actual campaigns are carried forward, first among entrenched party operatives, and finally the campaign is brought to the public where many if not most people often feel like their vote–if they bother to cast it at all–is being cast for the “lesser of two evils” or for “the devil we know versus the devil we don’t.”

As an example, here is the fundraising and spending from 1989 to 2014 of a single US Senator, John McCain:



So, over the last 25 years, Senator McCain raised and spent almost a half billion US Dollars on his campaigns. And four of his five largest donors are from Wall Street. What are the odds, when any matter relevant to banking or markets arises, that McCain would listen to concerns of you or me, or even a large group of us, versus the concerns of Merrill Lynch, JP Morgan, Citigroup, and Goldman Sachs?

This close connection with contributors increasingly extinguishes differences, once in office, of the actions of the various political parties, regardless of pre-election campaign rhetoric. In other words, once in office, this political class, regardless of party affiliation, enhances the positions of those already in charge of the status quo in almost every respect because all too often, it is doing the bidding of its donors, who often provide major funding to all prominent political parties. If a prominent member of a political party challenges a funding industry, that industry will threaten the entire party with denial of funds:

     Four “Too Big to Fail/Jail” Banks Threaten to Hold Back Funds to Democrats Over Elizabeth Warren

Thus, substantial portions of the huge flow of tax money discussed above are not used to serve the people but to increase the profits of those sectors of the economy that already have sufficient funds to be among the largest of campaign donors, seriously widening wealth inequality in the society and, in effect, taking from those who have less for the benefit of those who already have much more, enabling the very rich to purchase even more political influence and to further entrench the existing political elite. Some label this “crony capitalism,” but it is not capitalism at all, it is theft and oppression by a small, oligarchic class that has learned how to manipulate the system for the personal gain of a small group.

The Revolving Door: This stranglehold on government by big-money interests is further cemented by what is called the revolving door policy. This is the movement of personnel between roles as legislators and regulators and the industries supposedly subject to the legislation and regulation. The excuse for this policy is that industries are now too complex to be regulated by those who are not industry insiders.  This enables members of an industry to write, approve as law, and enforce the legislation and regulations that are supposed to assure the fair play of those industries within the society but which instead guarantee substantive advantages and large financial flows to these industries.


Is this picture becoming clear? We have structures in the world where:

  • Banks (commercial and central) can create money with zero effort while the rest must work for it, often with great effort;
  • People are laboring under a tremendous burden of income, sales, property, and utility taxes and fees that can take 50% or more of their income; much of this tax money flows to those who have the means to strongly influence, if not outright control, government actions to assure that even more of that tax money flows in their direction;
  • Debt has become so integral in government, business, and personal financing, and in the creation of all products and infrastructure, that 30% of the price of almost all products is due to interest expenses in the supply chain; if people take on personal debt in the form of mortgages, car and student loans, or credit card debt, then their personal interest expense burden is even higher; this leads to a massive flow in interest payments paid by everyone but concentrating in the hands of a small group who use that money to buy up large portions of the productive resources of the planet;
  • Any money saved constantly loses purchasing power by design, pressuring people to spend, borrow, and to put their savings into risky assets;
  • When all money is loaned into existence, it forces organizations into a growth-at-any-cost mentality that threatens crucial natural systems that support our life;
  • People are born owing a substantial sum of money that is part of an ever-growing national debt that can never be fully repaid.
  • Ideas to undo structural unfairness are rarely even part of the political debate, and if they do surface in public, are quickly squashed by the entrenched political and financial elites.

Is it any wonder that the vast majority of people on this planet are struggling financially?  They are placed under a tremendous burden of debt and taxation from the moment they are born, and any money they save inexorably loses purchasing power.

The overall effect on people is twofold:

First, if an economy based in fairness can rightly be called the voluntary exchange of service for service among people, what people see is that some players in the economy receive a service without rendering one in return. They see that some of these players become vastly rich in the process and that they then strongly influence the political process to tilt the entire economic table even further in their direction. With such examples on full display, more and more people focus their efforts on getting something for nothing, on gaming the system rather than producing real value that they can rightfully exchange with others in the marketplace. People with money increasingly focus on making money from their money in the world’s giant financial casinos through stocks, bonds, currencies, commodities, futures, options, cryptocurrencies, and so forth.  They don’t see debt as a burden that depresses future expenditures, they see it as a way to get rich from other people’s money, and seek to qualify for as much debt as possible. A home is no longer primarily a place in which to live, it is now an asset class to be re-modeled for resale value, flipped, and borrowed against to meet expenses or to make even more money in other asset classes. People along the entire financial spectrum seek handouts from government programs and jump through hoops, sometimes less-than-legal hoops, to avoid taxes.  People see the richest using tax loopholes to pay a smaller percentage of their income in taxes than a typical worker. People see that those with money can bully the courts and regulatory systems into allowing them to get away with illegal actions—perhaps, for truly egregious actions, they receive a fine that is small compared with the profits earned from outright illegal activity–and thus clever lying becomes honored in the society.

In a society where the money is created from nothing by a small group, getting money for nothing, generally through tricks and sometimes by lying, becomes the focus of more and more people. The economy becomes an increasingly hollow competitive shell of money chasing money wherein there are always “winners and losers” rather than a vibrant, productive joint effort based on a cooperative win/win approach for all.

Second, when all money is loaned into existence and thus all money is debt, and interest must always be paid on that money, there is always a general feeling of not having enough, or a fear of perhaps not having enough right around the corner. Everyone falls in with the environment-endangering growth-at-any-cost mentality since standing still economically does not feel like a valid option to people when interest must always be paid, the paper/electronic currency constantly loses purchasing power, and taxes must be paid at every turn. This gives rise to a feeling of scarcity in a world awash in abundance and leads to the feeling that people must compete with others for scarce resources or they will die starving and penniless in the street.

IT DOES NOT HAVE TO BE THIS WAY! This is a set of structures intentionally designed by a small group of insatiably greedy conscienceless people using us and nature as cannon fodder and who have commandeered academia and the mass media to convince us that it must be this way, that in fact this way is glorious. It is not. Structural unfairness is not inevitable. We have the know-how, power, ability, and to make this world a far, far better place.

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Thank you for reading this series of posts on the structural unfairness of our current system. I look forward to your comments.