October 20, 2014

The indomitable spirit is taking over

Posted in Sunday Business Post · 71 comments ·
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The traffic on Paseo de la Castellana in the centre of Madrid is backed up. This is another sign, according to Spanish commentators, that things are looking up. Just as parts of Dublin are doing well while the rest of the economy is still shuddering from the after-effects of the deepest recession in living memory, both Barcelona and the capital city of Spain are growing rapidly.

Like Dublin, there is a housing shortage in Madrid and Barcelona. This is hard to fathom after a massive property crash, but – like in Ireland – in Spain the houses were built in parts of the country where no one wanted to live.

Walking around the heart of old Madrid, the comparison between both economies is quite interesting. Politicians here in Spain are saying that the recovery is under way and the economy is growing rapidly, yet most people can’t feel this yet. But they probably will.

Like in Ireland, there is a changed mood and this will permeate through the society in time.

It is interesting how both Ireland and Spain are now regarded as doing well while Germany, where I was earlier last week, is faltering. If there was ever evidence that the eurozone is deeply dysfunctional it is the fact that the two countries that were most affected by too much lending in the boom are now recovering, while the country that most people regarded as the frugal dynamo of the continent is now faltering.

Ruling politicians in both Spain and Ireland are saying that austerity is over, which is difficult to understand when both countries still can’t pay their way in the world. If you regard running a budget deficit as an indicator that you are borrowing your living standard from someone else, then both countries’ present standards of living are rented not earned.

However, that’s not to say both economies won’t earn in the future.

What drives economics is human nature and it is very difficult to predict. The economy is an exercise in group psychology, rather than cold science. No one really knows why the economy turns and why it heads up and down. While there are some rules, most of it is impossible to predict because it is so difficult to predict how we behave.

For example, last week listening to the radio I heard one of our politicians crowing about how his policies were working and the new growth rate was evidence of this. Yet no one stopped to ask him why, just one month ago, his own government’s growth forecast was half of what it is today. If he was so confident about why his policies were so uniquely responsible for the recovery in Irish growth rates, surely his own forecast last month should have reflected that?

The truth is, when the herd moves from greed to fear, optimism to pessimism, it isn’t easy to explain. It just happens.

Humans are unbelievably irrational animals, driven by all sorts of excitements, depressions, giddiness and mood swings. Everything you do influences me, even though I don’t usually realise it. And my decisions affect you and vice versa. As JP Morgan observed: “Nothing so undermines your financial judgment as the sight of your neighbour getting rich.” Equally, nothing puts the wind up you more than hearing a good friend has been laid off.

When we are optimistic, we are impossibly so. We think nothing can go wrong. We dismiss risk as something that doesn’t happen to us and we take the plunge confidently. And optimism is infectious. We spend money we don’t have in the belief that our income is going to be bigger next year.

Humans are hard-wired optimists. It may have something to do with survival and evolution, but we must go on – and going on is driven by hope. We always think this time it’s going to be different. When we become optimistic about the economy, we behave like we are in love for the first time. We get giddy, we dispense with logic and we fall headlong into a new adventure.

We also become over-confident. Most of us inflate our abilities. For example, men everywhere inflate their intellect and social skills. We believe we are more able then we are. A recent study revealed that 95 per cent of American men believe they are in the top 20 per cent when it comes to social skills. We exaggerate in lots of areas and our belief in ourselves is where we start.

In economics, this optimism is reflected in more borrowing, more spending, more investing and more debt because we believe we are going to be richer tomorrow as a result of our own genius than we were yesterday.

Similarly, when we get depressed, we become withdrawn, self-doubting and afraid. In economics, this is reflected by a slowdown in spending and more saving.

Because my behaviour affects yours, you feel the vibes from me both on the upside and the downside.

It is almost impossible to time when human nature changes, but we know that when it does the herd can move from pessimism to optimism quickly and unexpectedly. This is what happened in Ireland and Spain. The indomitable spirit – which drives all of us forward, is taking over.

After years of savings, pent-up demand is being released – and as this happens it becomes infectious.

There are a few rules of economics, which will help us along from here.

For example, like the Spanish economy, the Irish economy is growing quite significantly, yet the global economy of which we are both a tiny part is slowing down rapidly. Europe, with which we share a currency, is facing deflation, yet Britain and the US are doing quite well. This is good news for us. We do well when Britain and the USA are doing well and when Germany is doing badly.

This is because we have lots of debts and our interest rates are set by Germany. Therefore, we need Germany to be struggling. In contrast, our two biggest trading partners are Britain and the US, so we do well when they are growing.

Germany, the dynamo of the eurozone, is slowing down, and the ECB – our central bank – is prepared to print money. This cash could well find its way into the Irish economy.

However, ultimately the recovery of the economy is about you and me and our psychology.

The economic conditions this year are not really different from last year, yet last year the economy contracted. Why was this? It was because the animal spirits were muted. Over the last few months, they’ve been let loose. What triggered that?

Hard to say, but let’s not argue against it.


  1. SMOKEY

    Most definitely to do with Irish folks pissed off at this past few years and are going for it now. Cant take any more recession talk. Hey anyone notice the pso levy on their electric bill? Seems to be a lot more than it was a few weeks back. Subscribe

  2. SMOKEY

    I monitor bills in the winter months as a service to people who have new installations of heat pumps, they have to determine whether or not the night meter, if they do no already have one, is worth getting. In most cases it is, so I noticed this on Friday with a customer. PSO levy on your electric bill is on the back, I think it has been up for a while but didn’t catch it as I have not been asked since last winter to do one of these, anyone else notice this? I should probably do a web search,…..

    • henrybarth

      The Public Service Obligation (PSO) Levy is a charge relating to the costs of purchasing peat generated electricity and the output of renewable, sustainable or alternative forms of energy purchased under various Government schemes. All electricity suppliers are obliged by government to apply these charges in the interests of security of supply and environmental protection.

      It’s set by the Commission for Energy Regulation (CER). The Public Service Obligation (PSO) Levy for electricity has increased to €5.36 per month (excluding VAT) per month from 1st October 2014. This applies to all domestic electricity customers, irrespective of supplier.

  3. Enjoy it while it lasts. The central bank printing of money world wide is money inflation. It is also inflation of debt world wide.
    Ever wonder why China now buys and absorbs the equivalent if the annual production of the total mind gold.
    Do you not think they prepare to dominate the economy of the world.
    Gold is the money of rulers. They who have the gold rule.
    JP Morgan noted also. Gold is money, all else is credit. So what has changed? All the gold is rapidly going east.
    As an aside re Germany. US sanctions on Russia are affecting Germany perhaps?

    • Daniel Waxonov

      @Tony

      The Chinese will ‘soon’ be mining Helium-3 from the moon surface Tony.That is their intention.Their mission,one of many.Helium-3 is Power,in every sense of the word and they know it.A one horse race.

      And their gold purchases are a put against toiletpaper and a Pavlovian response ( did i get it right Michael?;)) to safety amidst such global uncertainty and risk and of course their plans with world reserve currency status et cetera,et cetera.

      Imagine a currency measured in kWh …hmmmm

      and fuck JP Morgan and all that belong to him Tony.We can’t believe a single word from the forked tongue of that fiend. C’mon?

      And we won’t forget Germany’s ~3,500 tonnes of gold (~$650Billion buckaroooos) is serving it’s political purpose of keeping Angela from bolting the currency union.But she’ll have to make a move ‘soon’…go all in with Nerobama ,or fold and move to another table.It’s that stage of the game,it seems.That graph i posted earlier shows by 2020,Germany,the industrial powerhouse of Europe,will have zero,yes,zero nuclear energy.

      WTF?!!

      • The moon not being made of cheese had escaped my attention!!
        JP Morgan was quoted by our host!!
        Germany attempted to repatriate it’s gold held in new york but were presented with an agreement to return 15 tonnes a year for 7 years. In the first year(last year) only 5 tonnes was returned and there has been a deathly silence from Germany ever since.
        The US and or the bankers minions have long since, leased out, sold, swapped or otherwise encumbered all the custodial gold of any nations and all nations they were trusted by, and there is little left.
        A chunk will have gone to the Rothschilds et al and the rest to the near or far east.

        It has to be remembered that the IMF is an arm of the cabal masquerading as a world body acting in the interests of humanity. It’s policies are simply to encumber and break all countries by loading with unpayable debts in the interest of a step closer to one world government, The IMF has a large holding of gold too kindly donated by member states. i.e. it is your money given away.

        • Daniel Waxonov

          Yeah,that gold is “aaaand..it’s gone,Pouuuf”, ,but the debt remains and payable in many other ways.

          The Science of Physical Economy

          http://www.larouchepub.com/eiw/public/2009/2009_30-39/2009-36/pdf/04-128_3636.pdf

          I truly hope that link doesn’t escape anyone’s attention.

          It’s a matter of life and death.

          • To clarify, gold is an asset not a debt. It is your savings and accumulated wealth stolen when gold is stolen by chicanery and deceit.

            The debts “left behind” are the paper promises to pay. The fiat money, the futures contracts, the derivatives of all kinds.

          • Daniel Waxonov

            and also to clarify;

            So here’s our choice,imho;the continued evil hollowing of society by the Inter–Alpha banking cabals,(Brutish empire) with inevitable system collapse, or alternatively,choosing a modern,future orientated,top-down,scientifically principled economic model of Real Value,wilfully directed by our unique creativity.

            No one said it’d be easy

            Evolve, or die

          • I’d prefer no top down centralized planning. It is always a failure.

            Get rid of the controls on people and their creativity. First place to start is to get rid of the current money system of central bank ownership of the currency.

            Replace it with a free, honest system. Let the people choose (the world to become as Swiss as possible with direct democracy) gold as money if they like.

            Remove debt based servitude and replace with interest free money backed by solid assets or made of solid assets. Repeal the legal tender laws.

          • I read several pages and it reminded me of why I quit university as a mature student. The manner of delivery, of the style of writing, is contorted and obscures the kernel of relevant information contained in the lengthy sentences wrapped in suspect grammar.

            The information can be effectively delivered in a fraction of the time. I leave it to you to provide us with a precis that can present the message with 30% of the effort required to understand and to read.

            Thanks

          • Marty Vale

            How very Aristotelian of you Tony.

            Ah ha !

            http://www.youtube.com/watch?v=C31H3OULMmo

            ;)

      • France gets 85% of its power from nuclear stations. it has a low carbon footprint but everyone drives diesel powered cars!!

  4. cyberjohn

    “After years of saving” – simply not correct. Many people have been paying off debts. If some debts are paid off that is not saving. Borrowing again would be very foolish. Austerity is a very good choice. Borrowing money is very very foolish…

  5. douglaskastle

    You’re observation reminds me of the time I used to work in a petrol station that had a lotto machine. (ugh! Nearly 20 years ago, where did that time go) Any way every Wednesday and Saturday night there would be a steady stream of people usually peaking before the cut off time. When the jackpot got bigger the droves of people got bigger as well. It didn’t matter to these people that the statistical odds of winning the jackpot were bigger than getting killed on the way to purchasing the ticket, and the odds of winning actually decreased the bigger the jackpot got, because of all the extra people playing.

    I believed then and still do that the Lotto is a tax for people who are bad at maths, but this initial exposure to, as you say , the animal spirits of people, opened my eyes to how irrational people can be even at the expense of their own well being.

    The other thing I learned in the petrol station, the most important thing to people in the middle of a thunder storm … cigarettes! Queues out the door!

  6. McGoo

    >odds of winning actually decreased the bigger the jackpot got,

    Nope. The odds of having the winning combination of numbers does not change, although the chances of having to share the prize with other winners does increase as the number of players increases. The way around that is to always pick the bigger numbers (about 30) to avoid sharing with all the people who use dates (birthdays etc.)

    The Lotto isn’t totally crazy if viewed from a rational perspective. It’s just an extremely high-risk/high-return investment. Also known as gambling.

  7. CorkRob

    The odds of winning the Lotto don’t change with an increase in the number of people playing – what changes are the odds of being a single winner !

    Even though the odds are astronomical, people play because they need hope and the chance (however remote) of finding that dream is worth the investment of a few Euros.

    Eventually, someone always wins – Players just hope to be another Delores McNamara this week rather than see the “Won in Spain” report .

    As our Economy plummeted it’s been interesting to see the weekly increase in our own Lotto jackpot dwindle to less than €500k every draw – I remember when it used to be well over €1million every draw -unless The Irish Lottery have started skimming off more of the money bet on every draw, it would seem that people are diverting their cash into the Euromillions, in the hope of a bigger win and a bigger dream, but all for the same small outlay.

    Desperation will do strange things to many people and for many the daily struggle continues unabated, despite the recent positive economic results.

  8. douglaskastle

    @McGoo and @CorkRob yes that is what I meant, if I expressed it a bit inarticulately, apologies.

  9. cyberjohn

    How on gods earth has his observations of herd mentality and lack of independent thought got anything to do with the lotto? This article is about people returning to the trough to borrow money.

    My very valuable advice to people at this time in history is to avoid the trough and as the bible put it, “by the sweat of thy brow, thou shalt eat bread”. Save and live within your means as others borrow and squander setting themselves up for an almighty fall because the next credit squeeze will be accompanied with inflation and interest rates. I predicted the crash, the bottoming of bank shares, the seond crash in bank shares, and i am telling you now that the talk of recovery is a scam to get people borrowing money again. Avoid it at all costs.

    • Daniel Waxonov

      “How on gods earth has his observations of herd mentality and lack of independent thought got anything to do with the lotto? This article is about people returning to the trough to borrow money.”

      As Colin would say –”that’s just how we roll” here on DMW’s blog… our shared contributions here are sometimes a collage,a kaleidoscope of thoughts,memories,and posters having some fun using various techniques and language to communicate concepts that we might otherwise find difficult in a blog setting,and the intention isn’t to be flavour- of-the-week,with appeals to popularity,on the contrary,we try to call it as it really is ,as maybe we hope we represent one of the last bastions of truth seekers in a world dominated by MSM and our integrity is not in question, but having learned that a lot of past so-called truths,were/are actually conditioned bullsh*t ,frauds, our hard-to-contain-excitement in expressing new ideas, is not always to all people’s standards and tastes, and a shpongle type verbal gymnastics,an eclectic phantasma of video cips is not every body’s cup of tea and to each his own i say..

      but this is where different people spend some of their chill out time,,where the head space is receptive to some mental stimulation in exchanging new ideas,experiences and learn something,anything, from one another.Blogs are the pubs of a recession afterall.

      But cripes,your “How on gods earth” worries me that the idiosyncrasies,unique blends of sarcasm and pseudo-cynisism and general ebb and flow of this particular blog, might sometimes, frustratingly, escape you Cyberjohn?

      http://www.youtube.com/watch?v=XI5frPV58tY

      [ Pssst..this link has nothing on God's Earth to do with David's article ...that's,sometimes,just how we roll ;)]

      Thank you for your very valuable advice – i will take that on board and Welcome to Fight Club !

      • Good stuff Mr. bonbon. Well written.

        • Daniel Waxonov

          As i was told as a small boy [before some elocution classes] “bring your tanks to the creamery and say thanks” ;)

          • Daniel Waxonov

            In that video on fungi, Mycelium which is vital to the ecosystem on a foundational level,as is of course technology(hi-tech!)for our system of economy.While i’m certainly not in the same camp as Paul Stamets – regarding ‘sentient’ shrooms saving the world (lol),but Mycelium serves,for me anyway, as a worthwhile analogy [hopefully generating in one's mind a manifold?] for technology in society, not alone in technology’s creative discovery phase, but the crucial spread phases(like spores),and then the ability and efficiency of the people/workforce to,in turn, ingest, digest and assimilate (thro’ training and education) all hi-tech advances,that again in turn, enhances the individual’s productivity and collective’s productivity (efd),which is indispensable for any anti-entropic system ( and succsessful biosphere and society too) to thrive on this free energy.As Deco said,the Debt is the ‘drag effect’ and with that in place,we can’t achieve escape velocity.

            So a debt jubilee or more war

            Or of course Glass Steagall 2014 – the will,the strength,the strength, to do that…

          • Daniel Waxonov

            V.I. Vernadsky’s biogenic migration of atoms

            short and very very worth it

            http://larouchepac.com/vernadsky-evolution

          • Mycelium which is vital to the ecosystem on a foundational level,

            Mycelium is destroyed by round up used on gmo crops. It causes sterilization of the soil. Glycophate a constituant of round up is a deadly poison to mammals higher up the food chain. It is absorbed into the bodies and flesh and responsible for chemical imbalances that foster ill health and disease as well as sterility. Monsanto needs a class action law suit to shut them down and ban the use of this herbicide.

            https://www.google.ca/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=glycophate%20and%20dr%20mercola

            GMO should be mandatorily labelled on all GMO food and then avoided like the plague.

            We are under assault from all sides: Morally, politically, financially and medically.

    • Deco

      Correct.

      the recovery is nonsense. The debts are massive. And the debts have NOT gone away.

      • juniorjb

        A friend of mine, a film critic amongst other journalistic sidelines, once told me that if you wanted to know what was wrong with most Hollywood movies, you could look at “Loch Ness”, a film he had just viewed. In this movie a small boy invites the skeptical scientist Ted Danson to see the Monster. When Ted tells the boy that he doesn’t see it nor does he believe in it, the boy replies “You must believe in order to see”!

        • Daniel Waxonov

          Sounds about right:( Backwards,like a backwards society.

          Ironically, a ‘soul’ devouring premise,from which all that flows is tainted.

          i like to think of my youtube links as my brand of Guerilla warfare :) – Using against ‘them’ what they have used against me.

          Hollywood is an illusion !Make believe.Duality Poisoning,slow, but deadly.

          The indomitable Sgt Elias Barnes maybe says it best;

          short
          http://www.tubechop.com/watch/3776385

  10. cyberjohn

    So save even one hundred a month. Remember when you spend 100, the bank can lend 1000.

    • Adelaide

      “Remember when you spend 100, the bank can lend 1000.” Update: Fractional Reserve Banking only exists in outdated text books.

      • Please explain. Fractional reserve banking only exists in outdated text books.

        • cyberjohn

          En masse spending increases a banks capital reserves which allows it to lend more, which leads to more spending, which leads to more lending.

          Hence lets create talk of recovery which creates the confidence to borrrow.

          This creates spending and good vibes leading to more of the same in a circular motion.

          Money supply increases and it is good.

          It however is not good if you become one of the borrowers.

          I am delighted to help enlighten you further as to what i mean.

          Now i hope many understand and avoid the TRAP.

          Regards,
          j

          p.s. I did call those moments in time. There are many more coming and inflation will be the big one. Be prepared. Have cash on hand.

          • It’s not exactly an explanation of the statement above.what I was questioning was the implication that fractional reserve banking no longer existed except in outdated textbooks.

            As far as I am aware fractional reserve banking operates throughout the banking system from the central bank through to the local bank branches.

            This results in 97% or so of all loans being issued as the result of currency created out of thin air.

            Any other business would be charged with fraud. The banking system is the largest scam ever foisted on humanity and of a scale that boggles the mind. It is the singular cause for the inequality in income and wealth distribution and particularly since 1971. The year Nixon reneged on the official promise to pay and created a monetary system backed by nothing and totally unrestrained in its operations.

          • Having cash on hand when inflation hits is not a good idea. Having it invested and levered 10:1 is as your balance sheet doubles its assets in one year!! anyone for a house purchase with 10% down payment. If it is not affordable by yourself get a couple of mates to go together with.

            Better to be living 3 families to a house than remain a tenant!!?? At least there is ownership and no landlord. Of course if no-one wants to live like that you could become a landlord and get the tenant to pay for you!!

            In inflationary times one needs to own hard assets. If housing isn’t your bag then a silver or gold coin or two may be.

            whatever,,, In inflationary times the worst thing to hold in hand is cash. Even more so in hyperinflationary times.

    • Daniel Waxonov

      @cyberjohn

      Exactly! You make so much sense. Now, on another [sometimes insensitive to one's sexuality and ad hom prone] blog, your question may be met with criticism ,maybe of poor grammatical structure, lack of units, but as a newbie here, we happily overlook such semantics and embrace posts just like yours.

      Yo J,are you trying to be funny?

      1min
      http://www.youtube.com/watch?v=U1P2AUJxSZg

  11. [...] McWilliams – The Indominatable Spirit is Taking Over (Sunday Business [...]

  12. Adelaide

    “…there is a changed mood and this will permeate through the society in time.” David’s contradiction gave me a giggle. You could call it ‘Trickle Down Mood”. I look forward to this permeation, just in time for Christmas.

  13. Mike Lucey

    I can’t accept this so called economy upturn. I also fail to see how the US and UK can be seen to be doing well. Its just an illusion built on foundations of sand or FED paper!

    The news today wouldn’t instill much confidence in the ponzi scheme.

    ‘Bank Of England’s real time payment system is down’
    http://www.theguardian.com/business/live/2014/oct/20/stock-markets-recover-japan-nikkei-ftse-business-live

    The quicker we get back to some kind of a ‘real money’ system, the better for the average man on the street.

    It is interesting seeing what China is doing AND saying about some kind of a full or partial gold standard ALSO the decision the Swiss are going to make on the 30th November next, Swiss Gold Referendum.

  14. Swordfish-v- Herd

    I always thought that the long sword of this giant fish was to catch its prey and then eat it from the sword .When you think of it that is impossible .It is true that this fish does eat very small fish that swim in shoals and when he does appear the shoal tightens and does contortions en mass in unison as if all the small fish morphs into a single monster each one forming a new body part of this new animal .This giant body of flesh gyrates with many shape shifting skills. I call this The Market .

    The purpose of the sword of this fish is to swim directly against this body of lives and disect their cohesion with his sword and in doing so catches the isolated fish in its mouth directly .

    We are all animals and blood is thicker than water and our lives are precariously in danger when we sometimes least know it .Our herd instinct , spirit , collective amnesia , fear, sex etc can be liken to The Sword of Damocles and this creates The Market .

  15. Deco

    Concerning this talk of an improvement in Spain and Ireland, there are the upcoming stress tests of banks in the Eurozone.

    And they will be ugly. Even accepting the fact that they have proven to be soft tests before.

  16. Deco

    There is no serious recovery in Spain or Ireland. The debts are too large. Any improvement in income will be struggling to get above debt repayments.

    And without debt reduction, the whole things is nonsense – and liable to collapse in a heap at a week’s notice.

    http://globaleconomicanalysis.blogspot.com/2014/10/nonperforming-spanish-loans-near-all.html

  17. Thoughts on the economy with a more global outlook, but looking at regional similarities and differences.

    http://www.stratfor.com/weekly/similarities-between-germany-and-china#axzz3GhLFXSka

  18. looking at the article and the in general I am struck by the absence of any concern over the economic reality of the cascading debt amounting world wide.
    This might be seen as a tsunami. The rising tide of debts is drowning the worlds economy. this has caused concern in some places and not in others. Those living on high ground are unconcerned while those on the lowlands are affected disproportionately.

    Well just look at that the water is lower all of a sudden. The rising debt load is no problem, go out and spend. “Your spending is my income”!! However like the tsunami this is an (a debt based) illusion and while the unsuspecting play on the beach, and some from the uplands go out for a day on the beach they are about to be destroyed by the rush of the incoming flood that will sweep many away.

    Those that are aware of the signs are headed for the high ground. Others are too busy to notice.

  19. Will the Swiss vote for economic independence and national sovereignty or not.

    The poll shows it too close to call.

    http://www.goldcore.com/goldcore_blog/First_Swiss_Gold_Poll_Shows_Pro_Gold_Side_In_Lead_At_45_Percent

  20. http://pro.moneymappress.com/MMRBSLG39/EMMRQA40/?email=TONY.BROGAN2002%40gmail.com&wemail=wsii&a=8&o=82955&s=87203&u=2779195&l=424292&r=MC&g=0&h=true

    A comprehensive evaluation of the debt structure of the US and the ratio of fractional reserves re the Fed at 77:1. This type of structure is endemic around the world. anyone interested will find it worthwhile to review what Jim Richards has to say.

  21. National Inflation Association:

    “The U.S. has seen deflation during 14 or 12.1% of the last 115 years and flat prices during 8 or 7% of the last 115 years. 93 or 80.9% of the last 115 years were inflationary.

    During the 1800s, the U.S. saw deflation during 40 or 40% of 100 years and flat prices during 37 or 37% of 100 years. Only 23 or 23% of 100 years were inflationary.

    Between 1900 and 2014, real U.S. GDP was negative during 9 or 64.3% of deflationary years.

    During the 1800s, real U.S. GDP was negative during only 5 or 12.5% of deflationary years.

    Deflation was 3 1/2X more common during the 1800s than the last 115 years.

    When deflation occurs today, real GDP is 5X more likely to be negative than in the 1800s.

    Between 1800 and 1900:

    U.S. GDP per capita tripled from $90.64 per person to $272.90 per person – an increase of 201%.

    The U.S. national debt per capita only increased from $15.66 per person to $28.08 per person – an increase of 79.3%.

    U.S. GDP increased 2 1/2X faster than the U.S. national debt.

    The U.S debt/GDP ratio declined from 17.3% to 10.3%.

    The U.S. consumer price index (CPI) declined 50%.

    Between 1900 and 2014:

    U.S. GDP per capita increased 194X to $52,986 per person.

    The U.S. national debt per capita increased 1,884X to $52,891 per person.

    The U.S. national debt increased nearly 10X faster than U.S. GDP.

    The U.S debt/GDP ratio increased from 10.3% to 99.8%.

    The U.S. consumer price index (CPI) increased 1,300%.

    In the 1800s when the U.S. was on a gold standard, deflation coincided with positive real GDP growth 87.5% of the time. Deflation would occur when the production of goods was growing faster than demand. Prices would fall but America’s standard of living would rise as Americans could afford to purchase more goods/services with their income/savings. Deflation was overall very positive.

    The gold standard of the 1800s forced the U.S. government to spend within its means. After ending the gold standard, the U.S. government began to increase spending and debt levels faster than economic growth. As the debt/GDP ratio rose, it became necessary to create massive monetary inflation – just to keep the government afloat.

    Today, deflation only occurs during the collapse of an economic bubble – created by the Fed’s artificially low interest rates and artificial government stimulus. Therefore, deflation today almost always coincides with a declining GDP.

    A prolonged period of rising interest rates, deflation, and declining GDP would put the U.S. at risk of a debt default. The U.S. government is doing everything possible to avoid this, but the eventual outcome will be hyperinflation – it’s the only alternative to deflation when you have an unstable economy that desperately needs to balance itself out.”

    The indomitable spirit will be attacked by central bank inflation and hyperinflation and will resort to revolution!!??

  22. https://www.youtube.com/watch?v=Oxztrc6xBl4&index=2&list=UUhAtvq0H8Im_c6e4owfiw0A

    An account of the price setting and collusion of all markets around the world by central bankers and the governments they control. 35 minutes of well spent time to enhance your understanding of what is really going on out there.

    This is the indomitable spirit at work for the benefit of humanity!

  23. “The Fed is literally backed into a corner. They have to reflate the system yet they themselves are stretched more than any monetary entity in history. They are levered at nearly 80 to 1. This means the Fed can only withstand a 1.25% loss on total assets before their capital is wiped out. I have a question for you, do you really believe the Fed has not ALREADY lost 1.25% on total assets? Please remember, they “absorbed” the “crappy” assets after the 2008 debacle. They were buying bonds from banks in order to get the assets off of the books of the banking system …so that the system itself could pretend to still be solvent. Do you remember when some of these assets were offered for sale and the auctions immediately pulled because the bids were coming in UNDER .20 cents on the dollar? Do you suppose on their entire book of business there actually is any equity left?” Bill H

    http://blog.milesfranklin.com/the-fed-is-the-problem

  24. “Remember, it’s not our opinion that the global financial system will collapse but a mathematical fact. And whilst we hold out hope for mankind’s adaptive ability, it won’t matter a whit until we get to the “other side” of currency collapse.” –Andy Hoffman

    http://blog.milesfranklin.com/a-new-hope

    Comments on man’s indomitable spirit. Good winning over evil!

  25. http://dailyreckoning.com/a-glimpse-into-the-year-2024/

    totalitarian government will only be avoided by indomitable spirits putting up resistance now to defeat the one world government cabal

  26. cyberjohn

    Gold does nothing other than impress ones wife if it comes with a stone attached. Its a metalic substance that had value when linked to paper money. Its value now is only measured by how much fiat currency someone is willing to pay to possess it. If you owned all of if, you would basically own a big pile of metal which has no real purpose in a world that has long since moved on. Of course it has value but do not over estimate that value. It wont get you a burger in mcdonalds.

    • “Its value now is only measured by how much fiat currency someone is willing to pay to possess it.”

      Funny thing is that gold and silver as money and a store of wealth were in existence eons before paper was invented.

      Paper money came into existence as a representation of the value of the gold/silver backing it. The paper said “I promise to pay the bearer xxx on demand. So paper money was designed as an iou, a credit note. The holder of the note had in effect borrowed the use of the PM it stated on the note. i.e. the paper money was a debt or iou used in place of the money.

      Today the paper money does not promise anything or it is an empty promise (the UK 5 pounds note says I promise to pay 5 pounds, but it does not say what the 5 pounds is comprised of. It is basically fresh air)

      All fiat paper money (most of the money in the world) now represents nothing at all and is not even an IOU but a mirage. It is worth nothing. Meanwhile gold and silver still exist and when you possess some nobody owes you anything at all. No paper worthless notes of promises to pay from a bankrupt.

      We continue to use worthless paper as money out of habit and we trust the system. Until now that is. All countries are printing more and more currency to gain a trade advantage as they imagine that wealth is obtained by getting less and less for their products and services.

      When the trust in paper money runs out it will not buy you a hamberger at McDonalds or anything else either. Recently this was the case in Zambia where no paper money was accepted for food but micro grammes and grams of gold were. If you had gold you could eat. If not ,,,,too bad.

      It has always been the case that gold and silver hold their relative value against real goods where paper money is inflated to extinction.

      We are in that final phase of printing to extinction which is why gold and silver are under relentless attack from all bankers and central banks. Gold is the measuring post of the economy. Much like the measuring post in a harbour shows how much the tide has gone out lowering all boats as it goes, gold shows how low the currencies have dropped relative the the yard stick of gold.

      All currencies are engaged in a competitive devaluation. Relative to each other there is little change, the motion of waves on the water. Relative to land all have dropped. all currencies relative to gold have dropped. They will all drop until. If trust is lost watch out for the rapid abandonment of that particular currency(boat)as it has an irreparable hole and it rapidly sinks to the bottom.

      currencies will do this suddenly and it will be known as hyperinflation (the inflation is the actual printing of the money so the effects of it are inevitable) as prices go through the roof and the currency is worthless.

      Essentially paper money is still an IOU offered from a bankrupted entity. Why would you expect it to be worth anything if you know it represents a promise that can not be kept. It is an illusion, a confidence trick. Who is the sucker here.

      http://www.bloomberg.com/news/2014-10-22/currency-wars-evolve-with-goal-of-avoiding-deflation.html

    • ” Which has been safer under difficult economic and political conditions during the past 3,000 years – gold or debt based paper?”

      “Central banks “print” currency (something for nothing) and pretend that new dollars, euros, yen, and pounds are valuable. The result is more currency in circulation, higher prices, and more economic distortions.”

      http://juniormininganalyst.com/gold-or-crushing-paper-debt/

  27. Mike Lucey

    @ cyberjohn

    (Gold) “It wont get you a burger in mcdonalds” It would if I was behind the counter ;-)

  28. yet Britain and the US are doing quite well.”"

    Really??

    http://www.bullfax.com/?q=node-19-surprising-facts-about-messed-state-us-economy

    so how about these “facts”

    • From the above link

      #1 After accounting for inflation, median household income in the United States is 8 percent lower than it was when the last recession started in 2007.

      #2 The number of part-time workers in America has increased by 54 percent since the last recession began in December 2007. Meanwhile, the number of full-time jobs has dropped by more than a million over that same time period.

      #3 More than 7 million Americans that are currently working part-time jobs would actually like to have full-time jobs.

      #4 The jobs gained during this “recovery” pay an average of 23 percent less than the jobs that were lost during the last recession.

      #5 The number of unemployed workers that have completely given up looking for work is twice as high now as it was when the last recession began in December 2007.

      #6 When the last recession began, about 17 percent of all unemployed workers had been out of work for six months or longer. Today, that number sits at just above 34 percent.

      #7 Due to a lack of decent jobs, half of all college graduates are still relying on their parents financially when they are two years out of school.

      #8 According to a new method of calculating poverty devised by the U.S. Census Bureau, the state of California currently has a poverty rate of 23.4 percent.

      #9 According to the New York Times, the “typical American household” is now worth 36 percent less than it was worth a decade ago.

      #10 In 2007, the average household in the top 5 percent had 16.5 times as much wealth as the average household overall. But now the average household in the top 5 percent has 24 times as much wealth as the average household overall.

      #11 In an absolutely stunning development, the rate of small business ownership in the United States has plunged to an all-time low.

      #12 Subprime loans now make up 31 percent of all auto loans in America. Didn’t that end up really badly when the housing industry tried the same thing?

      #13 The average cost of producing a barrel of shale oil in the United States is approximately 85 dollars. Now that the price of oil is starting to slip under that number, the “shale boom” in America could turn into a bust very rapidly.

      #14 On a purchasing power basis, China now actually has a larger economy than the United States does.

      #15 It is hard to believe, but there are 49 million people that are dealing with food insecurity in America today.

      #16 There are six banks in the United States that pretty much everyone agrees fit into the “too big to fail” category. Five of them have more than 40 trillion dollars of exposure to derivatives.

      #17 The 113 top earning employees at the Federal Reserve headquarters in Washington D.C. make an average of $246,506 a year. It turns out that ruining the U.S. economy is a very lucrative profession.

      #18 We are told that the federal deficit is under control, but the truth is that the U.S. national debt increased by more than a trillion dollars during fiscal year 2014.

      #19 An astounding 40 million dollars has been spent just on vacations for Barack Obama and his family. Perhaps he figures that if we are going down as a nation anyway, he might as well enjoy the ride.

  29. cyberjohn

    So we cn all agree that we are witnessing a fake recovery whose roots sprung from pre-crash savings and that while many people have paid down debts they are beginning to save as a cultural thing. Thus, cash in circulation will dry up causing crash 2.0 in real estate beginning in retail properties and spreading then its arms out like an octupus to residentialbin Dublin as retail jobs are lost and renters leave the smoke. This process will be carbon copied in the USA and UK leading central bankers to print 2.0 and war 3.0 which will then cause oil to rocket as Iran blows up and inflation will thus rocket and the inflation plan unfolds. At least we know what lies ahead in 2018. Oh, i am right again. I just cant help it. Lets call it super in touch with reality.

  30. cyberjohn

    Apologise. I meant ‘if i am right again’.

    Buying real physical gold is a fools game because when you sell it you get back worthless dollars and have made zero. Ok so you get back more dollars than you paid but stay the same in dollar terms.

    However, you will also be due capital gains tax on the appreciation so its a real fools game.

    Gold is an asset that earns nothing.

    Regards,
    J

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