Did you know Dr. Frankenstein created a monster that stays alive to this day by eating zombies? Neither did the zombies. Neither, apparently, did Dr. Frankenstein. In fact, the zombies, being braindead as zombies are, do not realize that they are also keeping alive the diabolical doctor who made the monster that is eating them.
This little article, however, is going to tell you how all of that has become the strange case of the world as we all know it today. And, at the end of the article, I’m going to give everyone access to the first “Patron Post” I wrote as my thank-you to supporters who chose to keep this blog alive at the close of last year. That post was titled “2019 Economic Headwinds Look Like Storm of the Century.”
Before I do, I want to recap 2019 by shining a light on the occulted diabolical nature of the single most important economic event this past year … so that you can read the article in an appropriate frame of mind. You would not, after all, watch a horror movie without first turning out the lights to set the mood. In this case, however, I must also turn on a single small lamp to shine a light on the face of the monster hidden the dark corner of the banking world. Then we will be ready to review the article in context of all that transpired.
One purpose I had for laying out what I thought would be the prevailing headwinds in 2019 was, of course, to help people realize what they should keep their eyes on for their own sakes. That may or may not give them information they factor into investment decisions, but investments decisions are not at all what this blog is about. Investment decisions depend on personal tax considerations, appetite for risk and prosperity versus safety and security, which changes with age in life, and all kinds of other factors.
My main purpose, henceforth, was and is to develop my continuing saga about the Great Recession in which Dr. Frankenstein — Dr. Fed Frankenstein, to be precise — created the monster that still ravages the earth to this day and to lay out the completely predictable death of Dr. Fed’s monster for the dismal comfort of those the dred doctor pretends to be curing with his gift of reincarnate life that is eating away at them, limb by wasting limb.
You see, I was almost certain 2019 would eventually become the big year to prove out this central theme of my past decade of writing, a period which I have devoted to covering the life of the resuscitated monster and its demi-creator. To put it in the doctor’s own technical terms, the Fed’s failure at its “balance sheet unwind” would become, in my terms, the “Great Recovery Rewind” toward the end of the year, establishing once and for all that Fed Frankenstein did not ever create self-sustaining life.
With that certainty burning in my fevered mind, the one point I continued to drum home throughout the year that followed this January, 2018, post of which I am writing, was the development that would impact us all by the time the Fed’s tightening of the rack on which its recovery monster was bedded came to a scheduled close at the end the summer of 2018.
In anticipation of your reading the full tome, I present you with a summary sample of the pre-gloom enlightenment you are about to receive:
The Fed’s Great Recovery Rewind tightens to breaking point: The ultimate downdraft for the entire global economy is the Fed’s balance-sheet unwind. If you get that, you’re ahead of the Fed because they clearly don’t, and neither do market analysts or most economists. The Great Rewind is far more significant than the Fed’s targeted interest rates, which really have just been playing catch up to what the zapping out of existence of fiat money is doing….As money disappears from the monetary system, we see those pumped-up bank reserves insidiously collapsing, as shown in the chart below. These reserves were supposed to be our insurance against another banking blowout like the last one. They are down now by a trillion dollars since their high in the fall of 2014.
At the end of summer what, in fact, we got was exactly such a banking reserve blowout — a supernova of a monster in the financial universe in that it has already expanded into a half-trillion-dollar fix, and we don’t yet know if that is the end of it. It burst into view before all mankind when very few, except the fortunate forewarned here and in a few haunts elsewhere, expected it. It jolted even the unready Dr. Fed into rapidly taking his balance sheet right back to where it was before he began foolishly tightening the screws on his weak mirage of a recovery. As my evidence of the alacrity with which the foul doctor has had to respond, note that he is now running backward twice as fast as he originally walked down that slope of reducing reserves on his balance sheet.
To me, this theme is the most important economic lesson of the past year because … if the citizenry in the United States doesn’t learn that Heir Frankenstein really does not know what he is doing, all of us are going to endlessly redream this nightmare after every economic collapse. The Repo Crisis of 2019 proves that Dr. Fed’s recovery plan is more like a Ponzi scheme than a recovery, and it proves there is no exit in what he has planned unless you help make one for him. Until this all blows up spectacularly, I doubt we’ll get enough people awake to help make any useful change.
It is like a Ponzi scheme in that a Ponzi scheme is a trick that only keeps working so long as someone keeps feeding it. The principal schemer must reinvest all the money made from one round of beguiled investors in targeted payouts to show unreal investor gains in order to attract a larger round of suckers to buy in to the next round until he’s rinsed and repeated the cycle enough to where he is ready to run with all the spoils.
Dr. Fed isn’t looking for a new and bigger round of suckers because he already has the whole world in his circle of influence, as I shall soon describe in morbid detail; but his Frankensteinian recovery plan of energizing the dead into new life is like a Ponzi scheme in that the plan will be discovered as a fraud as soon Dr. Fed (aided by his central colleagues around the world) stops creating bigger rounds of new money in order to keep energizing the scheme so that it wiggles and leaps, appearing to live on its own, which, in fact, it does not. Do not fall for his sly machinations.
True recoveries, like true living creatures, sustain themselves. That’s why they are called “recoveries.” The dying recover to live on their own. You give some necessary artificial life support to the patient temporarily until his or her own body heals to the extent that it can live a happy life on its own. The mission is accomplished only if you can remove the life support one day, and the patient thrives.
Dr. Fed’s patient, who collapsed in The Great Recession, remains moribund, requiring full life support a full decade after Dr. Fed’s monstrous recovery program began. I raise as my proof against Dr. Fed, the year 2019. The overarching theme of importance that must be recognized if we are ever to enjoy true economic vitality is that 2019 proved the Fed’s operations have created nothing that should ever live in this world. The mock recovery of the corpse that fell to the ground in the Great Recession remains utterly dependent on forever FedMed and functions nothing like the real economy this nation enjoyed for hundreds of years, even with its many ups and downs. This one dances only because it gets sparked by Dr. Fed’s various apparatuses from time to time.
The hard evidence is this: We got to see Fed Frankenstein pull out the last feeding tube in the summer of 2019, and shortly thereafter the financial system went into paroxysms that were completely predictable long in advance by anyone understanding the galvanic wizardry behind Dr. Fed’s whole life-giving deception. Ever since then, the financial quacks who work with Dr. Fed have been scurrying all over his O.R. to get their braindead, stitched-together patient, who looks more like a crazy quilt of flesh than a person, settled back down by stuffing the tubes back up its nose and down its throat and into its lungs in order to bring food and oxygen supply back to where everything was before these madcap medics attempted to pull the tubes and prove their monster could live on its own. They proved it cannot. Period.
They have tried to pull the curtain around their present operations to obscure their scurrying by telling the world they are not doing what they are now doing. “Do not look behind the curtain. This is not QE.”
The desperate attempt by these financial frauds to save this flopping body of gel that remains of a once strong economy is intended to convince us that the Frankenstein Fed has not eviscerated all of us. You see, the dirty secret is that we are the braindead patient on Dr. Fed’s operating table, and we are watching all of this as an out-of-body experience. There is the twist in my tale, but there is one more tale to tell.
We — meaning the collective populace of the United States — are braindead because WE have fully the authority to stop this unholy doctor, but we (as a collective) are in a coma allowing it to happen. You see, the other dirty little secret that is evading our collective mind is that Dr. Fed Frankenstein, himself, is only kept alive by the patient he is operating on! We could pull his plug in a heartbeat if we wanted to, but we’re so afraid we’ll die on the table without his help that we keep letting him conduct his filthy experiments all over our body politic. We do not arise from the table and take action against the mad doctor, lest his own death brings our own … and it very well might, so utterly dependent upon him have we allowed ourselves to become that who is there left can save us?
The fact of our deathlike state can be seen in the how we still flop on the table after an entire decade of this grotesque experimentation. We saw stocks crash and the bond market start to collapse as soon as Dr. Fed was fully engaged in ripping out the tubes. Now we see this Mephistopheles of mad medicine scrambling to repair the damage he and his hunched-over assistants brought to their own fake recovery, adding back the oxygen of interest cuts and pumping new food into the system via constantly increasing doses of new quantitative easing. So, our own quantitative wheezing goes on forever in order for Fed & Fiends to maintain the illusion of having fixed us, but we are as far from fixed as ever! My friends, we have never been so sadly sick as we are now; but zombies do not know they are the walking dead.
Why has it all turned out this way? Why so easily predictable if so unseen by many? Because plainly (to those few cells who are not comatose) you cannot heal something without surgery aimed at removing its actual internal cancers entirely. You cannot pump blood into a debt tumor and feed it to help it grow it much bigger bubble and think that’s going to solve debt cancer. You’re saving the tumor, not the patient. You cannot stitch together two failing banks that are too big to fail and not create a bigger monster, even if that somehow keeps the dead one alive. It only turns the two into a bigger, more hideous beast. What Dr. Fed did was stitch one dead body to the unhealthy body of another, creating a Siamese twin that drags along and lives off of one head! That was, in fact, the Fed solution time and again, and the whole of US citizenry watched it happen to us, and said, “We hope this works.” (Well, collectively we did!)
Why would it? How could it? Who could ever hope that, except those in denial of the foul condition of their own fetid flesh?
These things should be obvious, but we, as a collective of barely jiggling cells, lay in our coma on the table and watched all of this continue for years from outside of our body. Why else would any of us have ever believed that sewing together two or more banks that were too big to fail would somehow save us from the peril of having banks that are too big to fail fall on us? It’s ludicrous. We’re going to be saved now by creating a worse situation for later? You have to be braindead to buy into such a scheme, but buy into it we did for ten years. (Not you, but we, the collective. Some of us brain cells recognize this problem, but obviously most do not, or this would not be happening to us. Those that do are trying to wake the rest of the brain cells from this morbid slumber before it is too late, but many of us fear it already is too late.)
The Fed’s fix was to feed the cancerous banking cells and let the rest of the body starve. In other words, feed the billionaires more billions, and promise that a little trickle of the blood being pumped into those large tumors will somehow leak out to feed the rest of the body. What we now have become is a grotesque wobbling blob of cancer masses on the table that is an embarrassment to ourselves as a once-great nation because anything that once resembled healthy free markets has atrophied almost completely. Fed & Co. has to keep feeding the cancer cells to keep them living enough for the occasional spark of electricity to make them bounce and look alive because the real market-based economy shriveled to almost nothing years ago. The cancer is just about all that is left of us.
The evidence of this outcome is that corporations have to keep feeding their own stocks with stock buybacks financed by the Fed’s cheap money to billionaires because actual revenue growth from middle-class customers died on the operating table. Their stocks are going up, but their vital signs have been going down for a long time. The Fed feeds the whole world with its dollars, yet the whole world economy is collapsing. US banks have to keep feeding their government’s wobbling fat cells by buying up greater and greater rounds of government debt, which requires Dr. Fed to keep soaking that debt up because its own member banks are becoming so bloated with government treasuries they are reluctant to take treasuries as collateral for overnight repo loans any longer. They are stuffed with treasuries but short on cash used to buy those treasuries — a burden laid upon them. The whole world has been reduced to a quivering mass of cancer cells as purple as my prose and tubes all with connections to back Fed Labs. Similar situations have developed throughout the world.
Why would it fail? How could we know? Because of one primary reason that history should have taught us all — centrally planned economies with their manipulated markets have never been the ones in which human beings thrive. The central geniuses, no matter which human beings you choose (or which ones anoint themselves), do not ever have the brain power (and never will) to manage something as intricately complex as a national economy. Think about it. The Fed has been desperately trying to drive stock and bond markets forever upward. What if those market’s smartest course was to go down for awhile, but the Fed just wouldn’t let it happen because it doesn’t want that? Going down is what the Great Recession accomplished.
Our goal from there should have been cutting out all the cancer and corruption and fixing regulations that were stripped away, putting bad debts to death, etc., but not juicing up markets to try to fake life and pretend that it was still going on just because we can zap the blob on the table with some lightning and make it jump and quiver! Markets went down because they were too high to be supported by economic fundamentals in the first place.
Houses, for example, priced at their peak, were not affordable under wages that had long failed to rise. More of the trickle-down economics that hadn’t gotten wages to rise any in the past score of years certainly was not going to do so in the next ten! Yet, that’s what we bought into! Capital-gains tax cuts that hadn’t built any factories in the US, as we continually witnessed a net outflow to every other part of the world, certainly were not going to turn life around here in these United States! These things should have been obvious!
We needed major economic repairs. We opted for fake life, instead! We never never woke up. We’ve been lying on the operating table for ten years, but we’re afraid we’ll die without Dr. Fed.
Humans seem to think life needs their centralized control, but it does not. No group of humans should ever be given the level of economic control that we continually give to Dr. Fed and his assistants. There is certainly a place for regulations and regulatory agencies to establish and maintain level and fair playing fields among corrupt human beings. In fact, the tear-down of Glass-Steagall, which largely kept banks out of stock markets, remains a huge part of the problem; but there is no place for regulators to be the leaders playing the markets in order to run them in certain directions that the leaders feel is right for everyone because they fear pain, too, especially when you give these regulators the ability to create infinite amounts of cash as they see fit. With the ability to zap infinite cash into being on a computer chip and the ability to play in markets via your member banks, you can corner and control every market that uses your electrical currency.
The Fed has engineered the biggest monstrosity you could ever hope not to see, and my goal is to try to get people to wake up and see what they don’t want to see (and to support your arguments in the same battle) so we collectively stop giving the Fed the power to do what it keeps doing because it is still We The People in this democracy that keep electing two parties who both equally assure the Federal Reserve’s role in doing all of this!