There’s A Lot Less Real Money Out There

A while back, I made a prediction that something bad was going to happen before the end of 2011.  I think the recent stock market plunge qualifies as “something bad.”  Where have all the trillions of dollars gone from the stock market?  I think Wall Street is up to its old tricks and harvested the public’s hard earned 401-k money—again.  The stock market has been an awful place for the “buy and hold” investor to park his money for the past 11 years.  The little guy has been fleeced time and again by the short selling sharks.  Back in June, James Howard Kunstler wrote a piece on his blog (Kunstler.com) that ended with this statement: “Bernanke, Obama, Geithner are powerless against the dark lurking churn, though they can easily make it worse. What a summer we’re in for. Get out of the stock market.” (Click here for the complete original post.)   How can they make it worse?  Print lots of money and bail out their friends.   Telling people to get out of the market was a stellar call.  Mr. Kunstler is today’s guest writer, and according to him, things are going to get a lot worse before they get better.  Please enjoy his excellent post.—Greg Hunter–

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Change You Don’t Have to Believe In

By James Howard Kunstler

Guest Writer for USAWatchdog.com

A waterfall of woe broke over all the realms of money last week – including especially the realm where we determine just what money is supposed to mean – and a lot of folks barely made it to a rooftop, or a floating log, or some scrap of high ground, where they sit wet and shivering, expecting to get slammed again. The torrent of events is still flowing and there are countless dangerous objects bobbing in it. Remember what that in-rushing ocean was like in the Fukushima tsunami? A wall of miso soup strewn with Toyotas and houses instead of squid rings and fish balls. Try swimming in that. (Try swimming in your Cuisinart on the guacamole setting.)

Europe is telling itself one cockamamie story after another. We’ve got a rescue fund! Only it has no money! But we will bail out Italy nonetheless! But Italy is too big to bail out – and we tried stuffing it under the carpet, but there’s no more room with Greece, Ireland, and Portugal already suffocating in there. The whole G-20 is yakking on the phone as I write, hatching fresh cockamamie stories. Oh, now it looks like the European Central Bank will ride to the rescue with a dispatch satchel full of good intentions. They said the same thing last time, a month or so ago, when a caryatid fell on Greece’s head. They are not so sure what money is either. Is a bond like money? Maybe not so much anymore. A stock portfolio? Feh! A Euro? The damned thing is starting to look like a ball-and-chain custom-crafted to weigh down Germans. (And, let’s face it: they never did pay any of us for World War Two, really, except what they had to fork over to get the communist side of their own country out of hock. Their guilt-o-meter is still buzzing, I’m sure.) All I know is I hope the whole gang printed up some fresh lira, francs, marks, drachma, pesetas, punts, and whatnot. It would be nice to go back to one of these cute places some day at a discount.

Did you admire Standard and Poor’s sly, Friday night downgrade of the United States Treasury bond rating? I was probably the only one in the whole country besides Anderson Cooper not out eating something bigger than my own head at Applebees, or watching the “Footwear Clearance” show over on the Shopping Network. However, I’m not the only one in America asking where do these S and P punks get off downgrading US bonds when three years ago they wore out their Triple-A rubber stamps on the cartloads of stinking offal that Angelo Mozillo and other mortgage rustlers were pawning off as bond-fodder on every Frankenstein “investment opportunity” pumped out of the Wall Street CDO mills. Government officials were righteously seething over S and P’s chutzpah, but I suppose when they tried to ring-up Eric Holder over at the DOJ they got connected to some call center in Uttar Pradesh where a friendly fellow named “Dale” picked up. China’s government-run newspaper virtually spanked the US: “Learn (thwack) to live (thwack) within (thwack) your (thwack) means!”

I’m not convinced that the US bond rating will even matter that much because nobody knows what anything is worth anymore – especially when governments teeter and the folks in the public square (or the parking lot in America’s case), start yelling for blood. Merkel, Sarkozy, Berlusconi, Zapatero, will soon be swept away by that selfsame rolling torrent of dreck-strewn woe – in their case a bouillabaisse – while poor Obama looks like one of those hapless, floating creatures in the second-to-last scene of O Brother, Where Art Thou. Even the gold bugs are scared the price will collapse in a debt deflation, or that the federal government will slap a giant extra-special punitive capital gains tax on precious metal sales, or will try to confiscate it from the public altogether like Franklin Roosevelt did – though, given the vast arsenals of private firearms across this land, and the martial spirit lingering in many pissed-off factions of the Tea Party ilk, nothing would invite a revolution, or civil war, or civic upheaval as surely as trying to snatch folks’ gold. As a capital preservation refuge, I’m sympathetic to gold, of course, though not so much to buggery.

Everybody is broke now: national treasuries, giant banks, pension funds, insurance companies. The wonder so far is that credit default swaps have not yet been triggered by interest rate changes or some other silly shit, but when that comes to pass there is no way the counterparties can settle their contracts. Ruin will thunder through the financial system like winged death. Everybody is broke and there’s a lot less real “money” (whatever it is) out there. Everybody’s quailing at the prospect of QE 3, in all its cosmic futility. The United States has already half killed itself at the Golden Corral steam-table of deep-fried debt. I guess we could go all the way and shoot what remains of the dollar in its pitiful, lolling head.

There is a welling recognition that the dice have been cast and the world has rolled snake eyes. The casino is on fire and a flash flood is boiling down the strip. It’s no fun running to the exits only to find the revolving doors already eyeball deep in dirty water. America gibbers to itself but nobody has a clue. I’ll try to help: this is a compressive financial and economic contraction (one is money, the other is activity). Late-summer storm that it is, it looks to be intensifying. Everything that’s super-big is going down sooner or later. The exact sequence of failures is unpredictable. But you can be sure Nature is telling you to get local, get smaller, get finer, downscale, solidify your friendships, and drop your stupid grandiose fantasies about running Wal-Mart on algae. This is change you don’t have to believe in, because it is about to jump up and bite you on the lips.

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Mr. Kunstler is a prolific and talented author.  Some of his recent books include: “The Witch of Hebron,” World made by Hand,” and “The Long Emergency.” To check out Mr. Kunstler’s bio (click here.) To go to his website (click here.)

Comments
  1. Art Barnes

    Greg, to real to be funny.

  2. Bobby

    Greg, if you put 100,000 in the S&P 500 in 1998, and figuring in 2.4 avg annual inflation for that thirteen year period, your investment in todays money, would be roughly about 73,000 and some change. There is a old East Texas saying, you have to get the Hogs out of the Creek for the Water to clear.

    • Greg

      Thank you Bobby, The only people making money in the market are the sharks if Wall Street.
      Greg

  3. Herman Gerbils

    The American economy is a house of cards, built on a foundation of debt and speculation and fueled by consumption levels that cannot be sustained. I have been saying that for about 20 yrs, but since I am in building maintenance,not finance,nobody listened to me.

  4. Jerry

    There was a time when the true values taught in the Constitution and Bill of Rights were admired more than collecting as much as you can of the counterfeit, phoney, worthless, fractional reserve, paper money the FED printed. The chase and race to keep up with the Jones mentality had gripped the homeland with the central bakers plan to dangle the carrot of easy money and credit in front of our noses. Lots of folks forgot that the family, freedom,liberty and the God given right to be happy were the true values in our lives. Thomas Jefferson also warned not only us, but the world that a central bank controlling the money supply would leave us homeless and penniless in the land that our forefathers conquered. The ruthless banker Baron Nathan Mayer Rothschild once said “I care not what puppet is placed on the throne of England to rule the empire…the man that controls Britain’s money supply controls the British empire, and I control the money supply. His descendents are the richest people in the world and part owner of the Federal Reserve Bank here in America, and all other central banks around the world. Yes they are the central bank that Jefferson warned us of. I’m not surprised we are in this sorry state, we let it happen, by letting them control the money supply. The old boom and bust cycle is the Rothschild plan to ever increase their personal wealth, while taking ours away.

  5. g. johnson

    it appears that mr. kunstler has had some awakenings since his blithering psychobabble diatribe back on may 17 when he attributed everything going wrong to the “fact” that peak oil is real. (i am still banging my head on the table over that one.

    “get local, get smaller, get finer, downscale, solidify your friendships, and drop your stupid grandiose fantasies about running Wal-Mart on algae.” sage advice and definitely on the right track.

    so, how many of you have cut up your credit cards, moved your money out of the big bank and put it in a small local bank or (better yet) credit union? yeah, i thought so.

    you may have noticed that europe is beginning to explode. torches and pitchforks are becoming the order of the day,

    you also may have notice the prime minister of great britain standing before the cameras telling the world that the police will be given a blank check for anything and everything that they need to bring the masses back into control. and you may have noticed that while he was demonizing those masses, he never once even vaguely alluded to the possibility that the masses were angry for a good reason nor ever once alluded to the possibility that the british government may have any kind of share in the blame.

    while the sky appears to be falling, there is opportunity afoot. for the true demons among us are being exposed for what they are. for all their ill gotten riches, they are the worst of the worst among us.

    time to treat them accordingly.

    • Greg

      Good stuff G. Johnson!! Thank you.
      Greg

  6. Bob

    If everyone is a investor somebody got to get the cream first. A investor should find local companies that opens it’s book to you and you as a investor have some understanding of what they are producing. It’s simple to me that something has to be produce and sold to have a return. Some middle men are needed but to many of them is a inflation making system. Simple is better always has been always will be. These sharks that trade are after the investors money not after the profit of the companies who grows and produce. This insanity won’t last much longer because the producers can afford these top feeders anymore because the buyers of there produce are tap out and have nothing left to invest to the top feeders. People can make all this like some big complicated BS but that’s just a smoke screen. I always start with the idea of a new town starting to grow and once the town is health and producing the feeder [Bankers an Lawyers] start to show up. I new this old sawmill owner and he said after so many years he had all the money he could use and the rest of his life was spend producing jobs for the mill workers not profit. Some of his lumber was bullheads but that’s how the old boys did things.

  7. Davis

    It only a matter of time before the parasites begin feeding on each other.

    I am, as always quite bemused by the “tax the rich” crowd. It’s kind of like watching a burned out hippie sitting cross legged on the sidewalk, hands on his knees palms up, rocking back and forth and chanting “tax the rich, tax the rich” over and over like it were some Tibetan mantra. They have no concept of the actual numbers we are dealing with. All they know is that their would-be political idols are saying it and its emotionally satisfying to be sticking it to someone else. Fact is, if the government could take 100% of the income of that top 5% of earners they so loath, it still would not be enough to balance the bloated federal budget. And then what? Come the next tax year that 5% is nowhere to be found to be taxed. They have packed their bags, closed their factories and shops and are gone. Be it to Switzerland or New Zealand or Gault’s Gulch, where ever, it won’t matter. Yes maybe they will have to pay high taxes those places as well, but they won’t be faced with an insane government capable of neither rational thought or honest decision. Then what will the “tax the rich” crowd do? That top 5% and their 50% of the tax revenue will be gone forever and government spending won’t have dropped a dime. So instead of “borrowing” (printing from thin air) 40% of the budget, government will be printing up 80% or 90% of the budget. Ask your “tax the rich” friends just how well they think that will work out.

    What these people don’t understand is that the issue is not how much tax the top 5% pays or does not pay, but HOW that top 1/10 of 1%, the super rich, the banking and financial elite, accumulate wealth. As long as they are allowed to continue to accumulate through manipulation of markets rather than generating wealth through production, they will remain being nothing more than a engorged and massive leach attached to the jugular vein of the economy, sapping it’s life blood to pay their outrageous salaries and yearend bonuses. What matters is how Congress has succumbed to the pressure from the Treasury and the banks to grant “most favored nation” status to nations like China and Russia and others not because they have any intention of trading fairly, but because the banks and trading houses take a cut out of each and every currency exchange. Tthis particular bit of detritus is sold to us under the premise that it doesn’t matter that our trading “partners” are putting their self-interest first, the United States must be seen as being “fair” in our dealings with other nation regardless of any detriment to our economy, security and well being as a sovereign state. Excuse me while I roll up my pant legs. It has nothing to do with trade or with fairness; it has everything to do with how much the elites can suck out of each and every transaction.
    And just like with any other parasitic infection as the host grows weaker and less able to sustain the parasites, they begin to feed on each other as well. In the last crisis we had the sacrificing of Bear Sterns and Lehman Brothers, this time it looks like the formerly “all powerful” Bank of America is about to be splayed across the already bloody stone alter. While their banking brothers hold its limbs in anticipation of tearing them off, the High Priest of JP Morgan is set to plunge in the ragged obsidian dagger, cut out its still beating heart. Holding it up before the gasping crowd B of A will be condemned as having been not quite quick enough to hide their fraud in the mortgage mess. The High Priest and his minions will then devour what is left of the corpse, kick a few millions or a billion or two to the government in penance for B of A’s “crimes.” With their own culpability at least for the moment deflected upon B of A, they will then be left, not so surprisingly, even “Too Bigger and Too Fatter To Fail.”

    Unless and until we break the power of the banks to create the nation’s currency as an instrument of debt owed to them, unless and until we stop their interdiction into every conceivable transaction, unless and until the politicians are broken of their addiction to financing their campaigns with these gangsters pocket change, things will not improve, they will only get worse, no matter who gets “elected.”

    • sharonsj

      Davis, you are merely parroting a Republican talking point (that taking all the money the rich have won’t mathematically solve the problem). It’s another misleading catch phrase that continues to protect the rich from having to pay up. As long as companies like ExxonMobil don’t pay one cent in Federal taxes, the revolution is just around the corner. And it won’t be the rich eating each other, it will be the poor destroying the ones left standing.

  8. Jeff S.

    Absolutely brilliant! Pretty damn funny, too. Mr. Kuntser’s website is now bookmarked and in the power rotation of my daily required reading along with USAWatchdog.com.

    • Greg

      Thank you Jeff S.
      Greg

  9. MasterLuke

    There may not be a lot of real money out there but there’s a lot of real idiots out there.

    On Yahoo today I saw “That Mark Cuban predicted the market crash”

    Apparently Mark Cuban is a prophet now! He is apparently the soul predictor of this recession. Why?, well because hes F**king mark cuban. Nevermind people like Greg Hunter or John Williams from shadowstats, including people from other “real news sites”. This is something like Al Gore inventing the internet.

    Thanks Greg for keeping the Real in “Real News” because I can’t stand the rest of it.

    “http://www.thepostgame.com/blog/daily-take/201108/did-mark-cuban-predict-market-crash”

    • Greg

      Thank you Mastrer Luke for the comment and support!
      Greg

  10. M SMITH

    Greg, this will sound harsh, but the damn truth be told we are screwed!

    What the primary dealers(JPM) have not already took from the older retiree’s, 401K’s, any damn thing you may think of & they are not finished yet! Look at what the CME group did today changing the rules right in the middle of the game, screwing the little guys again while the bankers bookies push their PC buttons to rake in more profits on paper backed by nothing but damn lies they dream up & sell because those that were put in charge(CFTC) to keep a market place free of crime chose not to do their jobs! The CFTC must have a lot to show for a investigation over 3 years old! But do they even care, they are getting well paid by the tax payers who they betray. Our court system is a joke, they know where their bread & butter comes from, tax payers be damn it matters not if the bankers are running a scam, just like Armstrong said, ‘these crooks own the day.’

    S&P will be made to answer in front of a bunch of clueless members of congress covered by our great MSM as the wealth of our nation is passed through the back doors of the family owned banks, off to their foreign accounts held off shore.

    In my opinion, we should take our Military & send in our best to the place they call the BIS & do like the old days, after doing some major ass kicking, bring back all the spoils that was took by force from every American over the last 100 plus years. These families think they are above any laws, made by men. They have no regards for the laws GOD gave men to follow, so should we give any mercy to a group of families who hide behind their ill gotten well protected estates, all built by the blood & wealth of the rest of the world. It’s time to stop the in fighting in the USA & see who the real enemies are & go after them, not like these made bull crap Ben Laden stuff. Their names are easy to find, it’s time the world knew the truth & where the real Evil comes from & where they hide! I know many say the way wars our fought have changed, well we still bury our young people & they bury theirs, it’s time to go after the top den of snakes, would you not agree?

    They broke our laws, stole our children’s future through Legislation that was all UNCONSTITUTIONIAL & congress knew it! “if you don’t believe it then read the trans scripts of the 16th Amendment” http://www.apfm.net/Doc-100_bankruptcy20.htm, if it was never Ratified by the States, the Federal Reserves Collecting of Taxes through the IRS is a illegal operation & should be addressed & since congress won’t do it, a third party shall arise to do so!

    If this sounds harsh, wait until we see the same of whats happening in London spread across America, the damage has already been done & we can’t hide from it no more, the longer we wait the deeper the pain. Obama sets clueless of what is doing & do you trust a man with our Military armed with nukes? Ron Paul was right all alone, but being kept from the for front of any stage by his fellow congress people & the MSM has led us all down this rats hole & I afraid the real bad stuff has yet to begin. May GOD be with you all!

  11. Brad

    Greg:

    Great selection! Mr. Kunstler’s article is one of the most elegant and conscise editorial pieces that I’ve read in regards to exactly where it is that we are headed, and I’ve read quite a few. It’s a breath of fresh air from all the technical reports. He didn’t use one number or one graph and yet, expelled the same data nonetheless. I don’t know if it could have been penned any better.

    • Greg

      Thank you Brad and Michael!!
      greg

      • Oldguy

        Greg,
        Talk about market manipulation….WOW! Back in ’29, there were three dips and spikes. The fourth dip was a doozy. It just dawned on me that I have been staring at my monitor screaming how stupid Obama and his gang of thieves are, but I realized they’re walking away with the loot while we do the paying them after being robbed. Now I ask myself, who’s the stupid one. I’m Confused….Oldguy

        • Greg

          OG,
          Don’t be confused. It is all about Wall Street rigging the game and making the money.
          Greg

  12. Michael

    Well, you can always depend on Mr. Kunstler for an uplifting, almost joyful essay bordering on the spiritual. (Wish I had one of those little Emoticons here)
    And he certainly does have a wonderful way with words.

    Seriously, I often find his dark and forboding writing strangely attractive. I especially enjoyed his novel “World Made By Hand”, although it took me a few days to shake off my gloom. His play “Big Slide” is also very worthwhile.

    Unfortunately, much of his writing, like the essay/rant at hand, is right on. Thanks for printing it.

  13. Fluffy

    I heard you on Brad & Brit this morning. Is there a podcast/archive of the show available? Thanks,

    • Greg

      Fluffy,
      Not on this site but I’ll bet you can find something on the 101.1 site. Thank you for listening this morning.
      Greg

  14. iknowbetter

    A little off topic… and this may be a bit late, but all of your readers who missed “Dylan Ratigan, Mad as Hell: His Epic “Network” Moment” should view it and ask again “why there’s a lot less Real money out there.”

    http://www.dylanratigan.com/2011/08/09/dylan-ratigan-mad-as-hell-his-epic-network-moment/

    Kudos to Kuntsler. Somehow he fell off my radar. So little time, too many websites.

    …ikb

    • Greg

      Thank you IKB and Diane.
      Greg

  15. Diane Carol Mark

    Greg,
    My favorite line from the article is:

    “Government officials were righteously seething over S and P’s chutzpah, but I suppose when they tried to ring-up Eric Holder over at the DOJ they got connected to some call center in Uttar Pradesh where a friendly fellow named ‘Dale’ picked up.”

    Thanks for the laughs,
    :) Diane

  16. Kevin

    “But you can be sure Nature is telling you to get local, get smaller, get finer, downscale, solidify your friendships, and drop your stupid grandiose fantasies about running Wal-Mart on algae. This is change you don’t have to believe in, because it is about to jump up and bite you on the lips.”

    I find these statements simply amazing coming from the lips of Mr. Kunstler. So…Mr. Kunstler you’ve jumped the fence into reality and joined the truth parade? Only if you’d made such statements circa 2007/2008 instead of harping on about peak oil…and other ridiculous things. Welcome to the club.

    But your use of upper-cap “Nature” tells me that if circumstances change, you’d most likely flip on a dime. (Silver dime?)

    I refuse carbon-taxing servitude…and being held in eternal bondage to banksters for the very right to breathe. Capisce?

    “Rightful liberty is unobstructed action according to our will, within limits drawn around us by the equal rights of others. I do not add ‘within the limits of the law’ because law is often but the tyrant’s will, and always so when it violates the rights of the individual.” — Thomas Jefferson

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