Starvation is not an issue- the amount of food necessary to support every person is quite within the capacity of the US- probably the UK too. I suspect even affording three hots and a cot- is not an issue.

“Three hots and a cot for up to 25% of the population. There's enough money to do that. You won't get your Medicare or Social Security, but you will get fed and a place to sleep.”

I agree, people will go thru great hardship if they think everyone is in it together.

Look, I’ve taken a small business from here to there and I can tell you it’s difficult because every step of the way it must remain functional and stable.

Dismantling one part can only be done when you have put in place a new part for people to transition to- even then the new part has to be easier than the old.

There is not a lot of “fat left on the bone” to buffer us against mistakes on the way.

All the while, the old culture will fight to force a U turn back to a time when it was better for them. They are good at stirring up the **** and getting everyone out on strike! You constantly have to push things hard enough to get movement but not too hard to cause chaos.

A small business is one thing, but I think getting a whole country thru this is a difficult problem.

I think 18 months is ambitious, but hell I hope you are right.

Holding onto public opinion and stopping the gov. from running amok with power will be the main challenges.

Other countries have done it in the past without ruin, but this time many western countries are going to have to make this journey at the same time and starting with highly dysfunctional cultures.

I don’t think it’s the cash that’s the problem… it’s the people.
They have been trained to feign helplessness in a crisis rather than be responsible for themselves.

"I also am quite sure that most TF folks who are not gangbangers will manage many more hits than these *******s should the time come"

So there are TF folks that are gangbangers? :-)

I hate how everyone blows you whenever you write a decent ticker, Gen, but it's time for me to break out the knee pads, too, because this is seriously the best ticker I've ever read.

@ Vinster: North of Atlanta, where Deliverance was filmed...

I'm hetero. Sorry

Apparently pistols shoot better when you turn them sideways.

It all makes me very anxious.

I'm going to bed now to calm down!

You used the example of returning to 1960s & 1970s medical, wages, consumables $s. When everything returns to the mean how can we be sure we only revert to the 80s or 90s GDP and don't go back to the 60s or 70s where GDP is 1 Trillion or less. Look at the collapse in GDP from Russia, talk about scary. Now I don't think we'll be that stupid, but its possible.

Solution, Lets print money. Pay off the debt 100%. You borrowed from someone in the hope you could take advantage of us once we hit the wall, well oops too bad...Fire up the printing press and lets accept the current inflation. Pass a balanced budget amendment. Then force mark to mark and the US into a deflationary environment. But the banks into recievership and then end any that don't measure up to current on the book rules.

Follow this up with real monetary reform. Replace the US dollar as the reserve currency, with some type of Global reserve currency. Make it some type of commodity, oil, energy, gold, food whatever. Don't let any nation including our own hold the rest of the world hostage with their currency and government rampant socialism.

I think your 3 hots and a cot is a wise investment, hopefully they've done it.

My 2 cents.

You set a beautiful table with this missive KD and those who could feasted well. Its time for the desert.

No, folks, we will not do this voluntarily.
We'll do it the hard way. - Karl Denninger

Quote:

But if you need a lawyer due to being charged with a crime, you're just on the losing end of that negotiation. But government hasn't intervened to artificially raise those prices on you, as far as I can see.

People don't only need lawyers for actual crimes. They are often sued without merit. You can be right, while still needing to be able to afford being heard.

1.) Complexity in and of itself adds to cost.

2.) If a company sues you and loses they should have to pay at a minimum your legal costs, but perhaps more as a disincentive for abusing the courts. This lack of disincentive (& the ability of TBTF banks to commit perjury submitting bogus evidence en masse without punishment) certainly has in some cases moved the courts away from "interpreter of the law" to "enforcer of existing social structures, even if/where/when illegitimate."

3.) Want to dampen bogus lawsuits? Force them to have "skin in the game" by ensuring they put themselves under the same *relative* stress & damage they put others under, anyone suing must show standing & if they lose they should have to cover the greater of
- the direct cost of the legal defense against the bogus charges
- take the % of your income (or savings) you have on the line in the legal defense & if they lose they pay that % of their company income (or savings)

4.) If you don't like #3 then another way to dampen abuse of the legal system would be to have an escalating fee for filing lawsuits that you lose...first one is 10k, second one is 150k, third one is 3 million, fourth one is 40 million

*** I spent $40,000 defending myself from a bogus lawsuit from a criminal organization a few years ago. Their CEO was later jailed for committing yet more fraud in another trade a few years later, but my $40,000 was still burned.

---

awesome ticker Gen. probably the most clear & direct yet.

Quote:

*** I spent $40,000 defending myself from a bogus lawsuit from a criminal organization a few years ago. Their CEO was later jailed for committing yet more fraud in another trade a few years later, but my $40,000 was still burned.

Sorry that happened to you, but I challenge it all with the person who brings his case to the court for justice having to be on the hook should the company he's suing out-lawyer him. There are many ways to lose a lawsuit, not all of them involve being in the wrong.

How about the courts just uphold the laws that exist and bring the hammer down on companies/banks/people that use the courts in an illegal manner, such as bringing cases against people they know they have no business suing, or bringing false affidavits?

I just don't agree with loser-pays since the "loser" isn't always the party in the wrong. Lawsuits are pretty much by definition two people disagreeing about what is "right". Not all are, of course, some are obviously fought by people knowing they are wrong but this route is cheaper, or it's profitable to atleast attempt to sue, but these cases can be weeded and in some cases attorney's fees can be awarded.

We're getting off topic here, my point originally was the ticker is about the artificial increase in demand by government actions, of which lawyers aren't involved in (that I know of).

Tbesi, IMHO you're nuts.

First, "print up enough money to do that" is $25 trillion and renders the price of a gallon of gasoline right around $30. Everything else moves in tandem. The consequence of such an act would be the instantaneous destruction of 99% of the nation's people and immediate civil war. Anyone responsible for suggesting such a thing would, in my opinion, be considered FOOD once the shooting started.

You have to think things through before postulating "solutions" that will lead directly to what you claim you're afraid of!

tbesi wrote..

Solution, Lets print money. Pay off the debt 100%.

Banker. Has to be.

If you hold government bonds, you made a bad investment, the return isn't there. You are not getting 100% back.

That was absolutely wonderful Karl. Thanks for pulling the mask away from these con men, liars, and pick pockets.

Even the charity of Americans is abused by these pharmaceutical pick pockets.
Typical are some of these so called disease "charities" with their waste/mismanagement/incompetence.

During the 1990's one nationally known cancer institute (I refrain from the name for legal purposes) was paying $22.00/capsule to have an experimental drug manufactured into a capsule formulation for dosing. The pharmaceutical company doing the manufacture created the capsules for $0.12/each. I was there.

I'm sure the average person would be further outraged if he truly knew how even his goodwill was primarily feeding the greedy and doing little to help the sick through some of these institutions. These fat cat charlatans have no soul.

Quote:

I fear the establishment might see you as a threat.

Ya think?

The biggest problem IMO with the borrow/spend mentality is that it becomes habitual and sensed as an entitlement when widespread. Just look at what the FSA in Greece is doing. They want their free sandwiches and aren't going to take NO for an answer easily.

http://www.france24.com/en/20111005-gree....

I attend FIU and it is not expensive. A semester runs around 2000 for full-time. I've got academic scholarships so I haven't had to pay for my classes. I've taken out loans and my debt is very low in comparison to KD's numbers. I guess FIU is an exception though per this TICKER.

Quote:

A lot of folks just don't know or understand country living or they would know Karl is correct. Every kid over 15 in this county has a deer rifle with a scope and they know the land in a way they can travel at night. We are 90 miles north of Atlanta in the mountains. If gangbangers came up here to take food and stuff...it would be like shooting ducks in a barrel. Word would spread pretty quick...you go up there you never come back.

It might not even go well for the gangbangers in the major red state cities. There are a lot of old (and not so old) country boys that moved into and around the city for jobs.

On the other hand, they'll have complete control over the more hoplophobic areas of the country.

Fantastic Ticker Karl! Really connects the dots. Definitely one of your finest. I read the Ticker this morning and I have been thinking about it all day. I think the leverage causing prices to explode upwards is certainly correct but I am not so sure that leverage was the first step in what happened. Hear me out:

When I was in college in the mid to late 80's there wasn't gold plated dorm rooms and amenities up the wazoo and yet my tuition doubled in one year (the chalk for that blackboard must have been flown over from Europe on the Concorde one piece at a time) and more insidiously my book costs exploded by 300-400%. As I think back on it I blame it on the rent-seekers.

Why do the colleges not keep the same books year after year in subjects that change little or none at all like English or Math? Money. The students have to purchase books, the teachers pick the reading materials and they figured out that they could add to their income by writing their own textbooks. Change a few commas around every semester and there goes the used book sales and their pockets stay flush. I remember my father waving the college "guide" telling me that books "average" $230 a semester while I have my class list and the required book list and store receipt for $735 in my hand. Talk about unreality. Multiply that discrepancy by eight and it is a heck of a lot of leverage. I always have a chuckle when I hear "oldsters" talking about how they worked their way through school. As what? A union plumber? On a side note: just try and purchase $150 text books on $3.35 an hour before taxes.

Since teachers unions were allowed under Kennedy the number of employees has doubled while the student-teacher ratio is unchanged. There are more education bureaucrats in the city of Chicago school system than the entire school bureaucracy of the nation of Japan! Throw more money at 'em-it's for the children!

Why can't one fill out a will or other legal document on the computer cheaper than using a lawyer? I tried. LegalZoom cost more than an attorney. Maybe because they also have to use an attorney due to built-in unneeded complexity written in by rent-seeking lawyers? Ever seen a blank Waiver of Lien? Like that wonderful little document didn't come straight out of the file drawer of Satan.

My point is this: increased leverage was the response to a problem and did not just appear out of nowhere. It was easier to "extend and pretend" than confront all of the political forces involved and take their iron rice bowls away. The real problem was and still is sclerosis. Government and Big Business and Unions and Professions of all kinds building in as much inefficiency, sloth, anti-competitive rules, barriers to entry and plain stupidity into the system as possible to either line their pockets or work less hard or both.

More competition, simpler rules, smaller government or leverage will be back with a vengeance.

Karl - Debts 15trillion. Who do we owe that to.. foreigners. Let them dump there dollars, we could use the employment. At some point you yourself pointed out we have to solve the energy problem. This forces it front and center. People will make many concessions. We still have the military in place that buys us maybe a year, as we strategically withdraw. Until the Dollar is no longer the reserve currency foreigners can't dump as easily as most postulate. Japan needs stuff to rebuild, lets print up currency give it to them and sell them goods to rebuild. If their currency appreciates, well damn guess you'll be forced to by American.

Or is stupid paying interest on soveriegn money.

If you go back to your 1960s and add up just the interest on the debt up until now. What do you get? Answer pretty dam close to our current national debt.

Read some Armstrong. I'm probably not smart enough to explain it to you.

Big money can't move as fast as most assume or it gets destroyed.

You balance the budget and cut back all the crap and let banks go under you are combining your massive deflationary wave with a obviously infaltionary wave of paying off the debt via printing. Chances are its better than hoping your GDP doesn't collapse like Russias and destroy the currency in an ever tighting spiral.

Rjsasko -

I always tell my students that they can use older editions of textbook in the classes. Those older editions cost $20 on Amazon as opposed to $200 for the last edition. BUT, two issues: dumbass who fails the class will whine and say that he failed it because professor TOLD him to use older edition which had some problems switched around (and of course student never cared to look that up; luckily have not been sued about that yet). Second issue: sales of textbooks through university bookstores are done with 20-30% mark-up. Imagine how enthusiastic the university is to make students buy the new textbooks. Very few teachers get money from textbook sales - none where I work and if someone sells some lecture notes to students then it is probably illegal.

I've read Armstrong. He's trying to prevent the people who ****ed it up from having to eat it. He's a BANKSTER for Chrissake, what do you expect?

He's trying to find a way out of the box that doesn't involve defaulting that which cannot be paid and sticking the banksters with a smoking hole. It won't work. There's $25 trillion in excess credit in the system. If you disregard the QEx base increase (and you should, because that 'money' is pinned at The Fed in excess reserves) then this "fix" would force the value of the dollar down by a factor of 95% or more. If you don't ignore the "pinned" reserves it's only 90% Whoop-de-do - either way everyone in the nation starves instantly, everyone who has saved is rendered instantly bankrupt, and everyone with a gun who figures it out will round up every single person who recommended or acted on such an idiotic suggestion and shoot them three times - once in the foot, once to blow their genitals off, and then finally once between the eyes, right before they slather them in BBQ sauce and have them for dinner as the main course.

The alternative is to pull the supports. The losses will appear. The banks are insolvent under such a system and will flush. We can balance depositor insurance as there's enough bondholder equity to cover it. I've run the numbers. The bondholders will get ****ed (but not zeroed), the stockholders get zeroed, pensions go in the toilet. Unemployment doubles immediately and GDP contracts by 30-40%.

So now you have a GDP and economy that operates on a cash basis without financialization. Yes, it's a lot smaller, but it's not zero. The people who were over-levered go bankrupt - but once they do, the debt IS GONE! The lender goes bankrupt, but now the debt IS GONE! Prices collapse as the over-levered financialization "support" disappears from under them.

But that's all that happens. We still have the means of production. We still have the ability to grow and make things. Our food and shelter costs are low enough due to technological advancement and mechanization that we can get through that period. This would NOT be a mass-starvation event, unlike raw printing would. 1920/21 is a good model for what we'd be looking at - we had a MONSTROUS collapse in both PPI and CPI and a huge wave of unemployment but the government and Fed left it alone and the economy recovered within 18 months!

Why? Because if you DON'T trash saved wealth then capital formation RAPIDLY comes in and acts on all the opportunity - all the bankrupt shells of what was once there. The result is an insane scramble for assets by the holders of actual capital (which, incidentally, are largely ORDINARY PEOPLE - not banksters) and immediately thereafter production with those assets at a much cheaper fixed cost.

Why wouldn't banksters snap all this up? Because they're all going to go broke. Nearly all of their alleged "wealth" is a chimera; it is the product of that leverage and when it disappears they will get margin-called out of existence. They, in fact, will be some of the FIRST ones to go down the ****ter into bankruptcy court, closely followed by the common man.

But the common man had an apparent nothing. He knew - he was six months behind on his mortgage and never had equity in the place. The guy in the Hamptons? Oh, that's a different thing, isn't it? He was paper rich but in reality quite poor. He had all the trappings, but every bit of it was levered up to his neck and when it blows on him he goes from driving a Lambo to walking.

From the ashes of this, however, you get recovery.

That's creative destruction and exactly what supply and demand predict should occur. We know it is very likely to happen, because we did it once before.

Why didn't it work in 1873 or the 1930s?

That's simple - we refused to allow the market to clear and kept ****ing around with trying to prevent the default of unpayable debt. FDR was an ******* - his games with the currency massively extended and deepened the pain this nation suffered. He deserved to get the original Coinage Act's punishment for what he did.

Intentional "inflation" cannot solve the problem we have. That was what was tried in the 1930s in the raw form of debasement and again in the 1980s as more debt issuance and we now know for a fact it did not work.

Only an insane person prescribes that which has failed every time it has been attempted.

Incidentally there are things we can (and should) do at the same time we do this to soften the blow. But none are ponzi-style crap. They're all outlined in the book and they're all important as factors we need to take into account and act on at the same time so as to put in place a durable economic foundation for the future. They involve serious reforms to the rule of law, economic statistics, trade, tax policy and energy.

"It's all in there."

This should be your campaign slogan. (nudge, nudge)

"We are here because the rich and powerful demanded special protections from government that allowed them to enslave you, they enticed you into taking that first hit off the crack pipe of cheap money, and then once you were hooked good they used the jackboot of the government to screw you through changes in the law and special protections for themselves so that you could not easily escape."

OccupyLA Day 5 Update

As expected, the weather today turned downright nasty. A cold wind started overnight and became a driving rainstorm by noontime. Despite the bad weather and rising water under the tent city making for miserable conditions, the OccupyLA encampment has grown again since yesterday.



Today, the main theme de'jour was the invitation to OccupyLA to speak before a formal Los Angeles City Council meeting. Many took up the offer and went before the podium. What followed were at times emotional exchanges by both protesters and city council members themselves. Obviously, the economic meltdown has touched many across all walks of life and the mutuality is starkly evident in today's exchange.

If there was any doubt that the overriding message regarding abuses by Wall Street and the banks has been heard and understood by a fast growing mainstream, today's heartfelt stories spoken in council should erase any lingering doubt. Note: Speakers are required to give their location of residence before speaking in council. Several gave their current address as 'Spring Street', the City Hall grounds. And, they really do mean it.

See the session as it happened here. (begins about 90 mins. into the session)

http://lacity.granicus.com/MediaPlayer.p....

At the conclusion of the City Council Session, an official resolution was voted unanimously in support and outright endorsement of OccupyLA and it's message. You can see it here (.pdf):

http://clkrep.lacity.org/onlinedocs/2009....

Abit of a glitch is brewing regarding the legality of using city hall as a place of residence with the Mayor and his office questioning the issue in direct opposition to council members who have stated the protesters can stay as long as they wish.

See this writeup today in the L.A. Weekly touching upon this issue.

http://blogs.laweekly.com/informer/2011/....

Look for long-term encampment issues in the municipal code to become a sticking point in the near future to be hashed out. Not so simple a thing, considering that for years, long-term homeless have been managed through forcing a form of 'constant motion' upon homeless through the requirement to break-down and remove belongings from the street on a daily basis. Several OccupyLA speakers at the council meeting asked to be relieved from the daily 'tent cha-cha', whereas shelters must be moved onto the sidewalk by 9pm and off by 6am. The civic code may make this a problematic issue to resolve given the conflict of interests that exist between the occupiers and the long-term homeless.

That being said, there appears to an effort to secure official permits and perhaps a rewriting of the code, at least on a temporary basis, to allow the encampment to legally continue in a long-term manner.

Such are the many daily living details that confront this movement as they go though their period of adjusting to their surroundings and new relationships.


More to come soon.

Here is the Soviet Union a former world super power's GDP:

Notice it took them 14 years to get back to 1/2 their GDP at the top during super power status, with a low almost 1/6 their high in GDP.

I have no problem with most of what you responded with and agree with its application to the banks and everyday joe, ie all private debt. I agree that theoretically it could reset itself extremely fast such as you said. But to a normal level not back to our current levels. You will be destroying dollars in your deflationary environment and unless you build your system to allow leverage back in exactly like the Federated states of Russia did you will not be able to grow your way out of the current and exponentially increasing interest load. Your normalized GDP is much more likely to be half current GDP, but this is all a guess by anyone. The debt and the interest on it nationally stays in your "solution" So does the energy problem. In addition you will feed in to the desperation of the nation. As high unemployment, deflating wages, deflating asset prices crushes the American spirit with nothing to offset it.
On top of these forces our deficit is going to increase or our size of government is going to exponentially decrease as the dollar rises and the interest on the debt increases. Its great for the current generation of savers, but its awesome for the foreigners that hold a vast majority of our debt. You have created a debt slave nation that is trapped. You are going to pay interest on the national debt all while the currency is appreciating locally. Sure the "prudent saver" can afford to relocate to a different country, but talk about high probability of social collapse and/or war in the USA. Hence this is why I don't believe you can save the dollar & the Nation with a pure deflationary collapse all by itself.

You obviously haven't read much of Armstrong or you would know he hates the club as much as you. He's a trader and business owner no different than you. Yes he does advocate kicking the can, but you do need to realize that extremely quick changes can make the transition more deadly. I want something more in the middle of you two. I want to hurry up and get it over with, but with the least chance of loosing the nation, and if you don't eliminate the national debt your just spinning your wheels and kicking the can yourself.

Why do you assume trading foreign nation dollars for treasuries is insanely inflationary?
You must assume that they freak and dump the dollars sending it into a inflationary spiral.
But when you are talking about that much money, most of the large holders will be destroyed by such inflation. Of course the dollars would eventually have to come back here, driving down our unemployment at least temporarily. The trick would be removing the liquidity once it got home.

But would there be an advantage to a nation to wait to dump their dollars? If you now the US is going to intentionally go into a deflationary spiral and balance its budgets wouldn't it be wise to hold the dollar and offload them at a reasonable rate? You could monitor the target country's unemployment so as not to artificially drive the value of your dollar holding to low. If we dumped them to fast American's would be forced to consume more from at home with the dollar than buying foreign.

Our Demographics and lack of a solid energy plan is it in itself deflationary. I look for nothing more than something to offset the massive deflationary environment, and more importantly to get the debt monkey off uncle sam's back.

If we didn't have a debt and interest on that debt, I'd be 100% behind you and wouldn't suggest anything so far outside of the box.