Denial Depressions and Hyperinflation


Like D1, we are in denial that we are in a depression.  Like D1, we are being fed happy talk and BS. However D2 has the potential to be even more devastating than D1.  The main reason for me making that assertion is that D2 is hyperinflationary and our global central banks cannot sustain printing their way out of the mess.  If you think that Zimbabwe cannot be a global phenomena, you better look closer at the reality under the spreadsheets.

Unlike today, The Great Depression of the 1930’s was deflationary.  The Consumer Price Index was at 17.3% when it began in 1929.  By 1933 it was down to 12.6%.  In other words, as the depression progressed, the cost of things dropped; what cost $1.00 in 1929 only cost 73 Cents in 1933.

If we adjust 1933 prices to a 2010 equivalent here is how things should be stacking up.

Cost of a new house 1933:  $5,750.00 (equivalent to $93,565.72 in 2010)

Cost to rent a house in 1933:  $18.00 per month (equivalent to $292.00 in 2010)

Brand New Chrysler in 1933:  $445.00 (equivalent to $7241.17 in 2010)

Gallon of gas in 1933:  10 Cents (equivalent to $1.62 in 2010)

Loaf of Bread in 1933:  7 Cents (equivalent of $1.13 in 2010)

1 Lb. Of Hamburger Meat in 1933:  11 Cents (equivalent to $1.79 in 2010)

Can of Campbell’s Vegetable Soup in 1933: 10 Cents (equivalent to $1.62 in 2010)

Dozen Eggs in 1933: 5 Cents (equivalent to 81 Cents today)

As you can readily see if all things were equivalent, we have already had a “silent” 100% inflation since about 2002!

Today’s unemployment rate is fast approaching the worst levels seen since the Great Depression.  The official unemployment rate (U3) released by the Bureau of Labor Statistics is currently at 9.9%.  This is the number often reported by the mainstream media for public consumption but is far removed from reality.

To get closer to the real number we must consult the (U6) figure that is often touted as ‘true unemployment’.  This figure adds into the equation those who fall under the contemporary definition of ‘discouraged worker’ and those who can only find ‘part-time’ work.   That number puts the ‘true unemployment’ rate at 17.2%.  But wait, there’s more!

Today’s definition of a discouraged worker is one who has not found work within the last year.  Prior to 1994, a discouraged worker was defined as one who had not found work within the last month.  That’s a big discrepancy.  If we add those lost souls back into the equation, we come up with a more realistic unemployment rate of right around 22%.  That’s just three clicks shy of the 25% often cited for the worst levels of the Great Depression in 1933. That 25% unemployment figure was reflective of all workers both on and off the farm.

When you combine these facts with the conduct of the world’s major banks and hedge funds the reality should become clear that there is a real coordinated effort to separate the entire world into a small cadre of “rich folks” and a large majority of poor folks (slaves).  Consider this.

U.S. authorities are expanding their probes of past mortgage securities deals, with New York’s attorney general opening an investigation into whether eight banks misled rating agencies, a source familiar with the matter said.  New York Attorney General Andrew Cuomo’s office on Wednesday served subpoenas on four U.S. banks and four European lenders, the source said.

Cuomo is targeting Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank, Goldman Sachs Group Inc, Morgan Stanley, UBS and Merrill Lynch, now owned by Bank of America, the source said. The investigation comes as Wall Street and major banks around the world are attracting scrutiny from regulators stemming from transactions that occurred in the run-up to the subprime mortgage meltdown and financial crisis.

The Wall Street Journal on Wednesday reported that U.S. federal prosecutors, working with securities regulators, were conducting a preliminary criminal probe into whether four banks misled investors about their roles in mortgage bond deals. The banks under early-stage criminal scrutiny are JP Morgan Chase, Citigroup, Deutsche Bank and UBS, the newspaper reported on its website, citing a person familiar with the matter. The banks have also received civil subpoenas from the U.S. Securities and Exchanges Commission as part of a sweeping investigation of banks’ selling and trading of mortgage-related deals, the report said.

A spokesman for JPMorgan told the Journal the bank had not been contacted by federal prosecutors and was not aware of any criminal investigation. The other banks either declined comment or were not immediately available. The reports come less than a month after the SEC charged Goldman Sachs with fraud over its marketing of a subprime mortgage product. Federal investigators are also probing Morgan Stanley, The Wall Street Journal reported on Wednesday. The bank’s chief executive, James Gorman, said he had no knowledge of any such investigation.

And so how is our CONgress reacting to these realities? The U.S. Senate voted unanimously to force the Federal Reserve to undergo an audit, for the first time, by Congress’ investigative arm. But the proposed legislation would only allow for a one-time examination by the Government Accountability Office that would focus on the Fed’s rescue of banks during the financial crisis of 2008.

Representative Ron Paul (R-Texas) and others have advocated for regular audits of the Fed, but just such a proposal, presented by David Vitter (R-Louisiana), was defeated on Tuesday by a vote of 62-37. Among those who voted against regular audits were the leaders of both political parties, Harry Reid (D-Nevada) and Mitch McConnell (R-Kentucky).

I think the fact that BOTH party’s leadership voted against these regular audits speaks volumes to support my contention that the congress is no longer a representative legislative body, but is instead bought and paid for by major financial interests in this country and globally.  You must keep in mind the FED is a private corporation.

When the evidence is so strong that the FED and their lack of actions were complicit in the entire series of events, how can such a reluctance of our congress to act be explained? Could it be an army of lobbyists with little suitcases shuttling in and out of every CONgressial office have anything at all to do with it?  Naw!  That’s a crazy rambling of an old fool talking.  Sorry I got carried away I guess.

To quote Keith Johnson in his recent article: “Until the American people snap out of their trance, they will refuse to believe that they are in a depression, recession, panic or crisis.  To them, it will be a loving embrace by a charismatic savior.  Only until they feel the piercing bite of cold air on their necks and the pains of an empty stomach will they finally come around to the realization that the panic is not coming—but that the panic is on!”

Underneath the apparent calm demeanor in the financial community which is really a hubristic disdain for the general public there is panic.  If the sheeple really get a scent of what is happening these jokers will have no safe place to hide.  Just a few more steps and they will have us all in the corral. Just a few more steps.

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Author: redhawk500

International business consultant, author, blogger, and student of life. After 35 years in business, trying to wake the world to a new reality. One of prosperity, abundance, and most importantly equal opportunity. it's time to redistribute wealth and power.

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