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Page added on March 17, 2015
Kunstler: American Amoeba
T he money-moving world waits on tenterhooks for the Wednesday appearance of America’s oracle, Janet Yellen, to step out of her grotto and state whether or not she feels twinges of patience. Wikipedia notes that Pythia, the original priestess of Delphi “…delivered oracles in a frenzied state induced by vapors rising from a chasm in the rock, and that she spoke gibberish which priests interpreted as the enigmatic prophecies preserved in Greek literature.” Some things never change.
Patience for what? Well, whether to raise the Federal Reserve’s benchmark short-term interest rate from near-zero to something microscopically above zero. This is what the world foolishly turns on. And, of course, also some oracular hint as to whether this momentous move might occur in April, June, September, or not at all.
Some canny observers of the vaudeville that US money policy has become — namely, Jim Rickards, David Stockman, Peter Schiff — maintain that Yellen and her Fed are boxed in and can really do nothing. Their policies and interventions regarding the flows of capital have done nothing so far but disable the normal operations of markets and distort the valuation of everything, especially the cost of renting money itself — for that is what happens when you take out a loan. The net result of all that is a financial picture that no longer reflects anything truthful about the actual economy, being a trade in goods and services.
The transparent truthlessness of the Fed’s basic premises go far to explain the chasm between official policy and reality — though it does not explain the appetite for plain lying of the supposedly informed minority cohort of the public, the deciders among us in business, politics, and media. For instance, the employment numbers that came out of the federal government ten days ago saying that the jobless rate is just over 5 percent. Everybody not in a special ed class in America knows that this is a barefaced lie. But nobody except a few mavericks on the web (see above) object to it. Lesser official oracles such as The New York Times and the Wall Street Journal report the lie without reservation and it gets absorbed into the body politic like any other morsel of protoplasm into the mindless amoeba that America has become.
So far, the Fed has tried to merely chatter about the possibility of raising rates as a substitute for actually doing anything. That’s because anything more than a gesture of raising rates will blow up the lucrative carry trade arbitrage enjoyed by the banks that hold the Fed (and everybody else) hostage, as well as the artificially inflated stock markets, and the US government’s ability to service its debt. That’s a lot to blow up. The wondrous levitating S & P index is the Fed’s substitute for reality. While the public’s attention is diverted to that ongoing marvel, they fail to see the appalling instability in currencies around the world, or the booby-traps laid in bond markets everywhere, or the devastation thundering through the oil industry, and the collapse of global trade relations that Tom Friedman said would last forever.
I’m sure that on Wednesday Janet Yellen will make a big show of surgically removing the word patience. from the Fed’s so-called “guidance.” I’m inclined to predict that the Fed will make a gesture of raising the benchmark interest rate by 25 basis points or 25 measly hundredths of a percent. That will be as far as they dare go. They will make this lame gesture in the face of gales of bad news about what is really going on in a disintegrating global banking system, and also the devastation in real economic activity. Within a matter of weeks the oracle will step back out of her grotto and not only revoke the benchmark interest rate rise, but announce Quantitative Easing 4 in order to attempt to reflate the nation, gasping like a dying grunion on Redondo Beach. By then, the Fed will be completely out of cred. This will be the biggest disaster of all, since the loss of faith in august institutions will rage through every polity in the advanced economies. Nobody will believe any longer in anything they say or do, and especially the value of the papers (or digits) they denominate as money.
20 Comments on "Kunstler: American Amoeba"
Makati1 on Tue, 17th Mar 2015 6:29 am
JHK is assuming Americans even know what an amoeba is. I doubt 1 in 100 knows or cares. But they can tell you which movie starlet is pregnant to whom, or the standings of their favorite sports team for the last 20 years.
And the beat goes on…
Davy on Tue, 17th Mar 2015 7:26 am
I was on board with James in 05, 06, 07 and 08 vindicated James. The guy has a good understanding of systems dynamics and POD issues. He is well versed in Politics. The only criticism is his constant crying wolf. Yet, when the water is lapping at the top of the levee do we wait for a levee collapse or start sounding the alarm? James chose to keep the alarm bells ringing even facing constant criticism of failed predictions. Let’s face it the masses love predictions. I enjoy them. What is a few years anyway? It has only been 7 years since 08. Is the 7 year itch coming? I think so.
Simon on Tue, 17th Mar 2015 7:31 am
Currently, shale (fracked oil) is financed at near enough 0%. Allowing the production at (if not a loss) close to a loss.
If interest rates start to rise how long will the banks support the fraking (sp) industry. Interesting times
Simon
Plantagenet on Tue, 17th Mar 2015 7:45 am
The FED can’t let interest rates go up or the payments on obama’s federal debt will explode and consume the bulk of federal spending.
Davy on Tue, 17th Mar 2015 7:54 am
Planter on the global dollar front there are also consequences like FX turmoil.
Cloud9 on Tue, 17th Mar 2015 8:23 am
The Fed will print. Interest rates are a façade in the face of free money. With a mouse click student loans disappear and the revolution building in the ranks of the millennials disappears. Another mouse click and the FSA is fully funded. Another click and all the entitlements are funded. Then off to backstop the bankrupt states. It never ends. It is too easy. This will continue until free money reaches a street value of zero.
American Idiot on Tue, 17th Mar 2015 9:00 am
This Idiot Country is done.
https://www.youtube.com/watch?v=Gt5bJn6C0sU
JuanP on Tue, 17th Mar 2015 9:01 am
While economics is one of my weakest spots, I have long been of the opinion that ZIRP and QEn are here to stay until the coming American Greatest Depresion and global financial system collapse arrive in full. If they don’t keep making money and lending it for almost free to the right people, the Shale Oil boom will experience a big, permanent bust and destroy the American economy and global financial systems n the process
Am I missing something? The policies of the vast majority of governments have been to avoid, deny, and delay everything we can since before I was born.
Davy on Tue, 17th Mar 2015 10:53 am
Yea, Juan, just one addition China, Europe, and Japan are doing it. Russia is broke and being ripped apart by militarism and civil war. ME is a shambles and ready to explode. Africa, well Africa is Africa.
China is the worst of the bunch with a 25 Trillion credit creation and a significant amount of built out infrastructure that will never produce a return. Not only will it not produce a return they have destroyed their environment in the process. It is wasted development and will turn to rubble like all those fancy Greek Olympic venues we see in the news. At least China has foreign reserves and 25,000 tons of gold (so it is said). That still is a pimple on a plumber’s ass for what China faces. You can’t buy yourself out of a terminal illness.
So what we have is the two largest economies creating 40 trillion in monitarization coupled with historic low rates with both economies in a bubble. IOW casino economies practicing Ponzi economics. Japan and Europe are sick puppies trying to tag along but only making the situation worse.
What part of broke do the BAUtopians fail to get? Isn’t it obvious we are a snake eating our tail? Again all you anti-Americans, Kunstler included, this is global. Pointing fingers at the US constantly is just missing the point of the seriousness of this situation globally. There is no China Russian Phoenix rising with their other Bric buddies. This is the global system going down the pooper.
penury on Tue, 17th Mar 2015 11:45 am
I don’t think Kunstler was pointing fingers at America per se I got the impression that he was pointing fingers at all the lies being told around the world. The fact that violations of the law by connected people result in no penalties and worse are accepted as a fact of life to be celebrated is leading to a breakdown of cohesiveness in societies. A couple of examples would be the increase in police shootings of unarmed people and being revered as “American Heroes” Jon Corzine stealing a billion dollars and the “Justice” Dept deciding that there was not enough evidence to prosecute. The debacle in 2008, which resulted in the taxpayers giving the banks trillions of dollars and again there was not enough evidence to even cost the execs their bonus. It has come down to where local “police” can confisticate money found on someone if they deceide that it is more than a normal person would carry . I think Kunstler’s point is that civil society is showing decay and the rot has started at the top.
American Idiot on Tue, 17th Mar 2015 12:30 pm
Russia is about to wipe out what’s left of this shit country.
https://www.youtube.com/watch?v=9b6Px8bCha4
https://www.youtube.com/watch?v=v7QW5B5Zl0U
GregT on Tue, 17th Mar 2015 1:39 pm
If you hate your country so much American Idiot. Why not move to a better one?
Plantagenet on Tue, 17th Mar 2015 1:59 pm
@penury
Corzine is a former D Senator and D governor. You really can’t expect the O administration to prosecute one of their own.
If they indicated Corzine then they’d also have to prosecute Hillary for destroying evidence that was under supoena and had been requested under the FOIA law, and that sure isn’t going to happen.
Makati1 on Tue, 17th Mar 2015 8:03 pm
JuanP, we turned the economic corner when Nixon abolished the last tie to gold in ’71’ so they could pay for the Vietnam War. The US economic train has be racing down an ever increasingly steep decline ever since. The brakes are gone. The economy is out of control. Other countries are trying to bail off of the train before it crashes, but may not have time. We shall see.
Makati1 on Tue, 17th Mar 2015 10:29 pm
News from outside the USMSM Iron Curtain:
http://thebricspost.com/eu-allies-defy-us-to-join-china-led-asian-bank/#.VQjv8-GPyAo
“France, Germany and Italy have defied US instructions not to participate in the Bank, said UK daily, The Financial Times.
The decision of the three European countries, yet to be officially announced, came in the wake of Britain’s application last week to be a founding member of the $50 billion bank.
Meanwhile, Australian leaders have been lining up in the past few days to voice support for joining the AIIB, which marks a conspicuous U-turn from the cabinet’s previous stance….”
And the beat goes on…
Davy on Wed, 18th Mar 2015 6:38 am
Makster keep your hopium up for your new super hero of your sci-Fi drama of the destroyed evil empire and the rising Asian phoenix. This bank will be a joke just like the World Bank is a joke now. The Brics are a failure just like the west is failing. This bank is a Band-Aid on a bleeding wound that needs amputation.
Good luck Makster with your agenda. I have watched your agendist message fall apart with both China, Russia, and the other Brics. Your super heroes are falling apart along with a decaying west. Your mighty Putin is in hiding reacting like a kid with bellicose statements of a NUK readiness with the Crimea annexation. China is in its worst economic slump since 08. According to you Makster Asia and Russia were going to quickly decouple and break out of their western chains. What a laugh that is and is proving to be
Your problem Makster is a personal message does not fit into the system so you look like the typical idiot MSM of your hated evil empire. You are in reality a mirror of your hated empire. Using its tactics and its goals as your own just with a different color. You are putting lipstick on a pig Makster and looking like a fool in the process.
Folks, watch this bank fall on its face as the whole BAUtopian system falls apart and with it this mighty Mak Asian Bank. All the 25,000 tons of gold in China is going to be of little good when this shit storm hits. The Chinese can’t eat gold and they can’t buy food that a destroyed BAU cannot get to their teaming mega cities. China has destroyed it food potential post BAU for a failed western consumption model. How stupid is that now!
So Makster, your preaching decouple of Asia from a dying west is a fools game. You are nothing but an old man preaching of a foolish refuge of a false tropical paradise from a cheap condo in the heart of an overpopulated third world country. Good luck with that.
Folks, you may not like my ad-hominem criticism of the Makster but it is valid and needed. The Makster is an agendist and a propagandist just as Forbes and other idiot BAUtopian sites are we criticize here. He preaches hate and resentment. He constantly attacks me indirectly. He preaches my demise and my family’s destruction. Others here can ignore him I know better. This is how Hitler’s formed. Of course the Makster could never be a Hitler but his ideas are polluting our site like a lil Hitler would.
Makati1 on Wed, 18th Mar 2015 7:36 am
Davy, I read your rant this time because I was bored, but it had nothing new to offer. Sorry you are stuck in Missouri with a family to worry about, but that is your choice. Been there, done that. I made my choice and, so far, it seems to have been the correct one.
When the Washington instigated world war three breaks out into a hot one, I think the continental US is NOT going to avoid the civilian bloodshed and destruction of it’s cities this time.
IF, by some miracle, it doesn’t happen, the US will become a Fascist Police State in isolation from a world that hates it for the terrorist organization that it has become.
The US has nothing the world needs or even wants. It is now a 3rd world banana republic pretending to be a super power. The other 7 billion people are waking up to that fact and moving away at an ever increasing speed.
I do not hate the US, I hate what it has become. It is not the America I grew up in. Not even close. The American Dream has become the American Nightmare. A country run by billionaire psychopaths and populated by a majority of zombies.
http://www.globalresearch.ca/the-us-is-juggling-chaos-and-coordination-in-order-to-contain-china/5437115
http://www.globalresearch.ca/isolating-russia-washingtons-failed-attempt-to-exclude-russia-from-the-swift-bank-clearing-system/5436963
And the beat goes on…
Makati1 on Wed, 18th Mar 2015 7:39 am
Ah Davy, a Hillary remark, comparing me to Hitler. LMAO! Can’t you do better than that?
Davy on Wed, 18th Mar 2015 8:07 am
Makster, is that all you have is your usual lame globalresearch reruns. Please try harder. The same old worn out propaganda slogans remind me of North Korean authority’s wall art. Please show some originality.
You just said and admitted to what I have said all along. You can give a shit about your family and you are a coward to cut and run. You not only could give a shit about your family you preach their death in a NUK killing attack on the US. This type of NUK strike that somehow your Asian and Russian super heroes will survive and your tiny insignificant overpopulated P’s will prosper in. Your sci-fi fantasy does not include the concept of MAD only USAD. You expect the NUK winter in the northern hemisphere but not over Russia and China.
What a lump. What could be a lower scumbag than admitting to family desertion and preaching their demise in a NUK war? I bet your family dreads their idiot gandpappy coming back to blame and complain about how horrible the USAF is.
When I imagine you I imagine the Scrooge. A cold look with a clammy unholy complexation. I wish you would vanish into your jungle liar where you will quickly be devoured by some tropical pest or vermin. http://disney.wikia.com/wiki/File:Scrooge.jpg
Davy on Wed, 18th Mar 2015 8:16 am
Mak, I need your expert propaganda interpretations. Is this iron curtain MSM propaganda? Or is this the reality of one of your super heros?
http://www.zerohedge.com/news/2015-03-18/crash-landing-china-home-prices-plunge-fastest-pace-record-surpass-post-lehman-colla