Insider
by
Chris Martenson
Executive Summary
- Understanding the details of the Ka-POOM! theory
- The end game: hyperinflation
- Transitioning to tangible (vs paper) assets
- The critical importance of timing as things switch from deflation to runaway inflation
If you have not yet read Part 1: When This All Blows Up, available free to all readers, please click here to read it first.
Ka-POOM!
Now it’s time to revisit the Ka-POOM theory which posits that bubbles will be blown, then they will deflate (or threaten to, more precisely), and that will then be met with more money printing. Our view is that this cycle will continue until the entire system is utterly ruined, the underlying currencies destroyed.
What the 2008 financial crisis made clear is that when natural market forces work to purge the oversupply of poor-quality debt from the system. The bad mortgages (think subprime), the bad sovereign debts (think Greece), and the loan portfolios of over-extended financial institutions (think Citibank) represented ‘poor quality debt.’ When the market (finally) figured out that those debts would never be repaid at face value, or perhaps at all, turmoil erupted.
During times like these a vicious sequence begins: the market demands higher interest rates for the increased risks it sees. This makes debts harder to service, ultimately triggering defaults, which only compounds the difficulties as interest costs and defaults spiral ever upwards until the system is purged. Think of it as nature’s way of removing bad credit from the world, the way a lion chases the lamest antelope first.
Because in our fiat currency system ‘all money is loaned into existence’ (see chapters 7 and 8 of The Crash Course on-line video series), during periods of high debt default, the money supply shrinks. Money is created when a loan is made and, conversely, money disappears when a debt defaults (or is paid back). This is the textbook definition of deflation—a common symptom of which is falling prices the cause of which is that there’s just less money (and/or credit) available to chase goods and services.
As a reminder, money is a claim on real wealth and debt is a claim on future money. All that happens when we borrow more and more is that we push our problems of paying for what we want out into the future. Which means that…
The Ka-POOM! Survival Guide
PREVIEW by Chris MartensonExecutive Summary
- Understanding the details of the Ka-POOM! theory
- The end game: hyperinflation
- Transitioning to tangible (vs paper) assets
- The critical importance of timing as things switch from deflation to runaway inflation
If you have not yet read Part 1: When This All Blows Up, available free to all readers, please click here to read it first.
Ka-POOM!
Now it’s time to revisit the Ka-POOM theory which posits that bubbles will be blown, then they will deflate (or threaten to, more precisely), and that will then be met with more money printing. Our view is that this cycle will continue until the entire system is utterly ruined, the underlying currencies destroyed.
What the 2008 financial crisis made clear is that when natural market forces work to purge the oversupply of poor-quality debt from the system. The bad mortgages (think subprime), the bad sovereign debts (think Greece), and the loan portfolios of over-extended financial institutions (think Citibank) represented ‘poor quality debt.’ When the market (finally) figured out that those debts would never be repaid at face value, or perhaps at all, turmoil erupted.
During times like these a vicious sequence begins: the market demands higher interest rates for the increased risks it sees. This makes debts harder to service, ultimately triggering defaults, which only compounds the difficulties as interest costs and defaults spiral ever upwards until the system is purged. Think of it as nature’s way of removing bad credit from the world, the way a lion chases the lamest antelope first.
Because in our fiat currency system ‘all money is loaned into existence’ (see chapters 7 and 8 of The Crash Course on-line video series), during periods of high debt default, the money supply shrinks. Money is created when a loan is made and, conversely, money disappears when a debt defaults (or is paid back). This is the textbook definition of deflation—a common symptom of which is falling prices the cause of which is that there’s just less money (and/or credit) available to chase goods and services.
As a reminder, money is a claim on real wealth and debt is a claim on future money. All that happens when we borrow more and more is that we push our problems of paying for what we want out into the future. Which means that…
by
Chris Martenson
Executive Summary
- There are too many claims on real wealth
- Our currency has a destiny with the dustbin
- When money dies, real wealth remains
- How to ensure you're on the winning side of the Great Wealth Transfer
If you have not yet read Part 1: The Coming Great Wealth Transfer, available free to all readers, please click here to read it first.
Financial Repression is really just a stalling tactic designed to slowly take your purchasing power and help bail out an over-indebted system. It works best when there’s wage inflation to help soften the blows; but there hasn’t been any of that in a long time, so the average household is just being crushed — a situation easily confirmed in the observed elevated suicide rates, record opioid addiction levels and overdose rates, and ultra-low levels of job satisfaction.
The main driver of the coming Wealth Transfer is rooted in the concept of too much money. And debt. They’re the same thing, as we have a debt-based money system. That is, our money is created through the issuance of debt. One begets the other. So we can track either (preferably both) to understand what’s really happening.
We do this here at Peak Prosperity because we very much want you to be on the right side of the Wealth Transfer. Our goal is to educate, so that you can make informed decisions about how to best position yourself. [Fun Fact: the root of ‘educate’ is the word ‘educe’ which means ‘to bring out.’ So for us, ‘educate’ does not mean to hand facts over for later recall, but rather it is a two-way process by which we can together bring out something that was hidden before and share that in common].
So, as we being to dig into the details here, take a moment to revisit our short Crash Course video chapters on money and money creation (at banks and The Fed). With that grounding, we can dive right into the role of money in an economy.
Remember, money and debt have no intrinsic value. They only have value because we all agree that they do. Money (and debt) has no intrinsic value beyond what we humans agree it has. Money is a social agreement.
A $20 bill has value because you and I agree that it does. Why we agree is because a $20 bill can do something for us. We can walk into a store and buy real things we need with it, therefore it has utility. If we couldn’t walk into a store and do anything with the money, then it would have no value at all.
For example, what do you think would happen if…
Winning The Great Wealth Transfer
PREVIEW by Chris MartensonExecutive Summary
- There are too many claims on real wealth
- Our currency has a destiny with the dustbin
- When money dies, real wealth remains
- How to ensure you're on the winning side of the Great Wealth Transfer
If you have not yet read Part 1: The Coming Great Wealth Transfer, available free to all readers, please click here to read it first.
Financial Repression is really just a stalling tactic designed to slowly take your purchasing power and help bail out an over-indebted system. It works best when there’s wage inflation to help soften the blows; but there hasn’t been any of that in a long time, so the average household is just being crushed — a situation easily confirmed in the observed elevated suicide rates, record opioid addiction levels and overdose rates, and ultra-low levels of job satisfaction.
The main driver of the coming Wealth Transfer is rooted in the concept of too much money. And debt. They’re the same thing, as we have a debt-based money system. That is, our money is created through the issuance of debt. One begets the other. So we can track either (preferably both) to understand what’s really happening.
We do this here at Peak Prosperity because we very much want you to be on the right side of the Wealth Transfer. Our goal is to educate, so that you can make informed decisions about how to best position yourself. [Fun Fact: the root of ‘educate’ is the word ‘educe’ which means ‘to bring out.’ So for us, ‘educate’ does not mean to hand facts over for later recall, but rather it is a two-way process by which we can together bring out something that was hidden before and share that in common].
So, as we being to dig into the details here, take a moment to revisit our short Crash Course video chapters on money and money creation (at banks and The Fed). With that grounding, we can dive right into the role of money in an economy.
Remember, money and debt have no intrinsic value. They only have value because we all agree that they do. Money (and debt) has no intrinsic value beyond what we humans agree it has. Money is a social agreement.
A $20 bill has value because you and I agree that it does. Why we agree is because a $20 bill can do something for us. We can walk into a store and buy real things we need with it, therefore it has utility. If we couldn’t walk into a store and do anything with the money, then it would have no value at all.
For example, what do you think would happen if…
by
Chris Martenson
Executive Summary
- How overvalued is the system?
- The biggest errors that got us to this point
- What to expect during the big reset
- Taking necessary action
If you have not yet read Part 1: The Mother Of All Financial Bubbles, It's Time To Worryavailable free to all readers, please click here to read it first.
What will the coming reset look like when it finally arrives?
This is the operative question everybody should be asking themselves because, believe me, the bankers and politicians are already frantically at work on the only question they care about: Who, instead of us, is going to eat the losses?
Let me be clear. The coming reset is going to be very, very painful. Part of me just wants to rip the proverbial Band-Aid off and get on with it, yet part of me dreads what’s coming and is in no hurry to see it arrive. Talk about being ambivalent!
The big picture looks like this: Ray Dialo’s firm Bridgewater Associates, a mega-money management firm, put together the below chart of the IOUs of the US (most other countries look the same, so feel free to extrapolate for Japan, or most of the EU, or the UK).
There are, simply, too many promises that cannot be kept. At a recent ICV wealth conference (just this week) one of the speakers was a man named Bradley Belt, former executive director of the Pension Benefit Guaranty Corporation (PBGC).
I asked him if there were any possible solutions to the staggering risks posed by the data in this chart. And who, if anyone, is working on them?
He answered that…
How Bad Will It Get?
PREVIEW by Chris MartensonExecutive Summary
- How overvalued is the system?
- The biggest errors that got us to this point
- What to expect during the big reset
- Taking necessary action
If you have not yet read Part 1: The Mother Of All Financial Bubbles, It's Time To Worryavailable free to all readers, please click here to read it first.
What will the coming reset look like when it finally arrives?
This is the operative question everybody should be asking themselves because, believe me, the bankers and politicians are already frantically at work on the only question they care about: Who, instead of us, is going to eat the losses?
Let me be clear. The coming reset is going to be very, very painful. Part of me just wants to rip the proverbial Band-Aid off and get on with it, yet part of me dreads what’s coming and is in no hurry to see it arrive. Talk about being ambivalent!
The big picture looks like this: Ray Dialo’s firm Bridgewater Associates, a mega-money management firm, put together the below chart of the IOUs of the US (most other countries look the same, so feel free to extrapolate for Japan, or most of the EU, or the UK).
There are, simply, too many promises that cannot be kept. At a recent ICV wealth conference (just this week) one of the speakers was a man named Bradley Belt, former executive director of the Pension Benefit Guaranty Corporation (PBGC).
I asked him if there were any possible solutions to the staggering risks posed by the data in this chart. And who, if anyone, is working on them?
He answered that…
by
charleshughsmith
Executive Summary
- Why the woes of the middle class will worsen from here
- The tax-burdened middle class vs the "dependent" class that pays no taxes
- The pinched middle class vs the gluttonous plutocrats
- How the many ensuing class wars will end
If you have not yet read Part 1: The Coming Class Wars, It's Time To Worry available free to all readers, please click here to read it first.
In Part 1, we briefly surveyed the nature of class war in advanced capitalism, starting with the Marxist analysis that such conflict was inevitable. We then moved to the present: the Grand Truce that produced the middle class is eroding, social mobility is declining, and a sharp economic and cultural chasm has opened between the unprotected working class and the protected upper-middle class.
Why Is the Middle Class Eroding?
The big question is: why is the middle class eroding? Why is the longstanding accord between labor and capital breaking down?
Peter Turchin’s recent book Ages of Discord sheds light on the historical context. History’s economic and social cycles can be divided into two fundamental phases: integrative eras in which cooperation between competing forces is rewarded and disintegrative eras in which cooperation dissolves into conflict and discord.
Turchin’s analysis identifies three key drivers of social and economic disintegration:
1. An over-supply of labor that suppresses real (inflation-adjusted) wages
2. An overproduction of parasitic (unproductive) Elites
3. A deterioration in central state finances (over-indebtedness, declining tax revenues, increase in state dependents, fiscal burdens of war, etc.)
It’s clear that globalization, open immigration and automation are generating an oversupply of labor that is suppressing wages, especially for the lower-skilled work force (the working class).
The entitled upper-middle class that expects…
The Class War Playbook
PREVIEW by charleshughsmithExecutive Summary
- Why the woes of the middle class will worsen from here
- The tax-burdened middle class vs the "dependent" class that pays no taxes
- The pinched middle class vs the gluttonous plutocrats
- How the many ensuing class wars will end
If you have not yet read Part 1: The Coming Class Wars, It's Time To Worry available free to all readers, please click here to read it first.
In Part 1, we briefly surveyed the nature of class war in advanced capitalism, starting with the Marxist analysis that such conflict was inevitable. We then moved to the present: the Grand Truce that produced the middle class is eroding, social mobility is declining, and a sharp economic and cultural chasm has opened between the unprotected working class and the protected upper-middle class.
Why Is the Middle Class Eroding?
The big question is: why is the middle class eroding? Why is the longstanding accord between labor and capital breaking down?
Peter Turchin’s recent book Ages of Discord sheds light on the historical context. History’s economic and social cycles can be divided into two fundamental phases: integrative eras in which cooperation between competing forces is rewarded and disintegrative eras in which cooperation dissolves into conflict and discord.
Turchin’s analysis identifies three key drivers of social and economic disintegration:
1. An over-supply of labor that suppresses real (inflation-adjusted) wages
2. An overproduction of parasitic (unproductive) Elites
3. A deterioration in central state finances (over-indebtedness, declining tax revenues, increase in state dependents, fiscal burdens of war, etc.)
It’s clear that globalization, open immigration and automation are generating an oversupply of labor that is suppressing wages, especially for the lower-skilled work force (the working class).
The entitled upper-middle class that expects…
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