International Forecaster Weekly

Monsters in Washington DC

many economists are downplaying the recession, we are contemplating financial implosion, central bank ineptness, the gutted manufacturing sector, lies about the economy from inflating the money supply and failing to talk about inflation, and what losses really represent. 

Bob Chapman | March 13, 2008

Boston gave us the "Big Dig," Socorro, New Mexico hosts the "Very Large Array," but from Wall Street and Washington, D.C. we get the "Big Lie," soon to be followed by the "Very Large Depression."  We think that most of you understand about the potential for a "Very Large Depression" which we have spoken of in several of our recent issues, but you may have been wondering about what we meant by the term: "Big Lie."  The "Big Lie" is that the recession which has been ongoing for two years and which many economists are still downplaying and are still having trouble admitting to, is just another normal, mundane downturn in what economists call the "business cycle" and that we will soon "turn the corner" and be back "in the money" after a few, or perhaps several, tough quarters.  This is the unmitigated tripe we get from our "fane-stream" media.  What planet are these morons reporting from, we ask? Certainly not from earth, because there is nothing normal or mundane about this recession.  This is a super recession on steroids.  There has been nothing like it in the past, and there is not likely to be anything like it in the future, a future that may in all likelihood include the complete and utter destruction of the worldwide financial system as engineered by the bungling Illuminati, many of whom will be destroyed by the monster which they themselves have created.  We are all about to attend an encore performance on the financial stage based on the theme from a novel by Mary Shelley entitled:  "Frankenstein."

Indeed, the current financial debacle is quite unique, very ugly and totally unprecedented.  Truly, this is a Frankenstein monster.  All of our past recessions have been caused by contractions in the money supply accompanied and partly caused by higher interest rates which were implemented to stop unacceptable levels of inflation.   This is the root cause behind the so-called "business cycle," a term which is really just a euphemism for central bank ineptness, and in the current case, central bank malevolence which is aimed at the destruction of the old system so that a new world system can be implemented in stages, starting with the regionalization of national economies, and ending with a one world government, economy, religion and sociopolitical structure which used to be called "feudalism."  You know, the system you learned in your history classes where you have "lords" and "serfs," the latter category being where virtually all of us will find ourselves if the Illuminati get their way.  The current debacle, by contrast, has arrived on the heels of an unprecedented acceleration of the money supply as evidenced by the now unpublished M3 level of over 16%, and not on the heels of a contraction in the money supply as has been the case in the past.  And while it may be true that interest rates were gradually raised over several years, which may have contributed to the current recession, the raising of rates started from the ludicrous 1% level.  The Fed thus lowered the bar on interest rates just as the Bank of Japan did when their economy tanked almost two decades ago.  Here we are eighteen years later, and a hapless Japan still has not recovered from its financial implosion.  Will we fare any better than they did?  No, it will be much worse for us.  Why?  Because unlike Japan, we have no manufacturing industry left to speak of, just for starters, not to mention that Japan now has the world's largest forex reserves, while we have the world's largest trade deficit.  This dichotomy in foreign exchange between Japan and the US has happened because Japan produces tangible goods while we shuffle paper.

So how do we end up in a rampaging recession on the heels of a 16% expansion of M3?  We'll tell you how.

  Normally, economic growth in its healthiest form is created through mining, exploration, manufacturing and technical innovation, not by the financial and services industries which produce very little of anything that has any real, lasting and tangible value.  Ideally, the money supply should be expanded to help fuel this growth in resource production, manufacturing and research, but the expansion of the money supply must occur so as to maintain the same ratio of total money supply to the overall amount of goods being produced and which are available for both business and personal consumption.  If the money supply grows at a faster rate than the rate of growth for the production of new goods due to central bank ineptness, or more likely, due to speculation fueled by the greed of the Illuminati and enabled by lax policies of co-conspirator central banks (which are owned by the Illuminati), you end up with more money chasing proportionately fewer goods.  This is where inflation comes from, and the imbalance is allowed to grow, along with Illuminist profits, until the general populace cries out.  Then comes the contraction in the money supply, once again exaggerated to produce a recession so the Illuminati can make a profit shorting everything in site as the contraction occurs.  The recession occurs because the contraction in the money supply is greater than what is needed to balance the growth in production.  And because the Illuminati know when the expansions and contractions will occur and where they will occur, they are able to make profits in any type of market, being the ultimate inside traders who never get prosecuted because they own the system.  This is how they screw the public ad infinitum.  But we digress.
  So ideally, if the money supply increases at the same rate as production, prices remain stable and so does the economy.  At least this is how it works when you have a healthy economy based on the production of resources, manufacturing and technical innovation, and a Fed with its head screwed on straight, together with financial and services industries which are proportionately smaller in terms of the percentage of the labor force employed and which are geared to support the resource, manufacturing and research industries instead of fueling speculation and creating inflationary paper profits.  Unfortunately, our manufacturing industry has been gutted by the formation of the World Trade Organization in 1995 as an enhancement to the globalist agenda for so-called free trade that was started in 1947 under the General Agreement on Tariffs and Trade, and then by NAFTA and CAFTA (giving you the "SHAFTA"), increased illegal immigration (slave labor), the sellout of union members by corrupt trade union officials and a general screwing by our various and even more corrupt Congresses and Presidential Administrations over the past 60 years.  The percentage of our work force that is engaged in manufacturing is now one third of what it was in 1950 and one half of what it was in 1970.  Admittedly, some of the percentage losses of our manufacturing labor force as a proportion of our total work force are due to increases in technology, which have reduced the number of workers necessary per unit of production.  But that being the case, where did all those profits from increased productivity go?  Certainly not into the pockets of the US work force.  No, instead the profits went to the very wealthy who own and run the big transnational corporations and to capital investments overseas in order to take advantage of slave labor rates by outsourcing jobs.  That way, our workers here in the US get to grind away at their pitiful minimum wage service jobs instead of receiving $20 to $30 per hour working at jobs in resource exploration, mining and extraction, manufacturing and research and development.  This has morphed our economy into a parody of what it once was, and is why we get a recession despite M3 growth of 16%.

You see, the only way our economy, and more importantly our disposable income, can really grow is through our financial and services industries, which is all that we really have left as a labor force.  Yes, we still have some manufacturing, but it is only about 12% of GDP and provides good-paying jobs for far fewer workers than in the past due to increases in productivity.  Total production outside of services, including manufacturing and mining, is only about 20% of GDP, with government spending contributing another 12%.  That leaves a whopping 68% of GDP for the service sector.  But the real issue of crucial importance here is not only about how much GDP is produced, but about how much of that GDP makes its way into the pockets of the US laborer/consumer as opposed to going overseas to become part of another nation's forex reserves, to finance foreign capital improvements or to line the pockets of the elitist rich.  And we can assure you that, due to rampant inflation and overstated production, the amount of GDP, which is landing in the average Joe's pockets is getting smaller with each passing minute.  Because so much of the growth burden is in the financial and services industries, and because these industries produce services which vanish after they are rendered or produce paper profits which are largely imaginary and highly inflationary, the only way we can continue to show profits and growth is by inflating the money supply and then lying about the resulting inflation.  It is all about smoke and mirrors, and is nothing short of a dog and pony show for the ignorant sheeple.

In order for the financial and services industries to grow, you must expand credit at a much more rapid pace than would be necessary if you had the benefit of real growth from an economy which has a more robust manufacturing and resource sector that produces tangible commodities and goods and includes a much greater percentage of the work force so that a much larger portion of the money produced by these industries in the form of wages from higher-paying jobs makes its way back into the local economy instead of being invested overseas through off-shoring and outsourcing.  Without this abundant credit, a services based economy will stagnate.  Credit is what greases the wheels of our commerce now more so than ever.  And in order to expand credit at the institutional level, the credit extended must generally be backed by prime (AAA) collateral.  When the bust occurred, there was a massive loss of capital in the form of equities, equities that could be used as collateral for the extension of credit.  Also the huge fees that were earned selling stocks disappeared, which destroyed earnings and growth in the financial industry.  The huge losses also put a damper on services since fewer assets means less discretionary money and less spending, especially on nonessential services, and this led to greatly reduced earnings and growth in the financial and services sector and eventually to a recession.