Author Archives: Doug Wakefield

Do Money Rail Lines End?


Since 1971, the world has been on the train of unlimited debt. With the US dollar being removed from its gold standard, all checks against a continuing extension of the rail lines have been removed. Unlimited debt is now the “solution” to “random” financial crises caused by too much debt. “Prosperity” has evolved into a permanent rail line, or so we are lead to believe.

What individual getting on a train in California and riding to Virginia would be surprised when told they had come to the end of the line? Would they expect someone to extend the track another hundred or two hundred miles over the Atlantic? Even if that were the case and the ride was smooth for a little longer, there would be an uneasy feeling that consequences were coming.

This is not an American view, this is a world view. Anyone taking a train into Hong Kong, Tokyo, Sydney, or Rio de Janeiro would face the same problem if those lines were extended out over the ocean.

Yet this is exactly what is embedded in the minds of the public; the longer the line can be extended, the more prosperity can come from unlimited debt and state intervention.


We know that a business or individual is not on a long-term sustainable path by taking on more and more debt to create wealth without paying down debt. So why believe that a nation can do this? Simple. Our experience.

An Italian Rail Line

For the individual reading this in 2024, you will see clearly how this story unfolded. But today, in 2016, the majority view is that global rail lines have infinite possibilities. Yet the minority voice is getting louder as the waves of problems get higher.

January news stories showed a rising level of non-performing loans in Italian Banks, loans where payments were either behind or had stopped.

This reached a level by the end of last year not seen since 1996.

Italian Bank’s Bad Loans Continue To Mount, MarketWatch, Jan 20 ’16

According to data published Tuesday by Italy’s banking lobby ABI, Italian banks’ gross bad loans, measured at their face value, stood at EUR201 billion in November, 11% higher than the same period a year prior.

Gross bad loans were 10.4% of total loans in November, the highest percentage figure since 1996.

Had the European Central Bank (big global central bank) provided bailouts for European banks before 2016? Of course, and at levels never seen in history.

Eurozone Bank Lending Slows Despite ECB’s 1 Trillion Cheap Loans, The Telegraph, April 20, 2012

ECB Poised To Launch 1 Trillion Quantitative Easing, The Guardian, January 22, 2015

So what was the solution for extending the rail lines recently?

Next Stop on the ECB Adventure: $980 Billion in Corporate Bonds, Bloomberg, March 10, 2016

Life goes on as abnormal, right? Yes, for the time being, but now without a great deal of misinformation to the public and yields plummeting so low on European government bonds that rebellion eventually comes.

Let me illustrate.

Mish Shedlock reveals one glaring problem from laying down this recent track to prosperity by the ECB. A reader of Shedlock’s writings, “Lars”, makes this observation:

The Italian central bank has under Target2 borrowed €250 billion, mainly from Bundesbank. The loan is unsecured, not a single € in collateral. The 250 billion is then lent to Italian banks, all of them insolvent. [Is the ECB Bailing Out Banks on the Sly?, Mish Shedlock, May 1 ‘16]

Will lowering borrowing costs, pushing interest rates to negative, and artificially stimulating short term rallies fix these large financial problems?

Richard Koo, Chief Economist at Nomura Securities in 2003, made it clear what needed to be done to reboot Japan’s financial institutions after years and years of constant bailouts.

BalanceSheetRecessionThe NPLs (non performing loans) should be disposed of in an orderly and predictable manner. The pace of disposal should be determined collectively by the banking authorities and the private-sector banks to ensure that the resulting deflationary impact on the economy is minimized. [Balance Sheet Recession: Japan’s Struggle With Uncharted Economics and Its Global Implications (2003), Dr. Richard Koo, pg 273]

Anyone following the headlines knows that Japan chose to bury these loans with more debt, rather than deal with this structural problem.


If we look at charts of Italian and German bond yields, we see that once these “rescue” programs STARTED, government bond yields went higher, now lower. Oops.



How can the problem of too much debt be corrected by creating trillions out of thin air to push borrowing costs to historic lows? Yes it extends the tracks, but for how long and at what long term cost? When the time comes to sell the assets the central banks are buying, who will have a few trillion lying around to buy them? Who wants bond yields at three CENTURY lows?


Shedlock presented the chart below three months ago. By using the ECB’s own data, it is clear that the 2 trillion in bailout programs announced and launched since December 2011 did not stop Spain and Italy’s banks from experiencing massive capital outflows by December 2015.

Italy’s banks experienced the highest monthly outflow of capital on record.


[Chart from Capital Flight Intensifies in Italy and Spain; Curiously, Money Flows Into French Banks, Mish Shedlock, Feb 9 ‘16]


What is very clear from Europe and Japan, is that time is running out on the use of more debt to extend the tracks without severe consequences. The public is starting to wake up to real world realities that no amount of central planning can stall. The actions of some passengers show they want to get off the train.

Italian Banks Under Pressure As Popolare di Vicenza IPO Fails, The Guardian, May 2 ‘16

Italian banking shares have come under pressure after the planned listing of regional lender Popolare di Vicenza flopped and the latest government measures aimed at tackling the sector’s bad loans fell short of expectations.

The stock market in Milan said it could not allow Popolare di Vicenza to list after investors bought just 7.7% of its €1.5 bn share issue….

Italian bank shares have lost nearly a third of their value this year due to concerns about €360 bn of bad debts accumulated during a three-year recession, while negative interest rates are also eroding bank profits.


Japan’s Negative Interest Rates Are Driving up Sales of Safes, Fortune, Feb 23 ‘16

That’s not great news for the Bank of Japan.

The Japanese are spending—but not in a way that is likely to strengthen the country’s economy.

Following the Bank of Japan’s decision to lower interest rates below zero in January, many consumers have reportedly rushed to hardware stores in search of one thing: safes.



As we continued to watch what is taking place around the world, could the day come when the Dow at 18,000 is a thing of the past, a reflection of a society that had placed its faith in an unstoppable train built on unlimited debt and central banking intervention?


“Ordinary people have the ability not to think about things they do not want to think about”  Blaise Pascal

74438614, 23/1/06, 2:44 pm, 8C, 5320x4923 (0+900), 67%, bent 5 stops, 1/60 s, R96.7, G73.4, B86.1

74438614, 23/1/06, 2:44 pm, 8C, 5320×4923 (0+900), 67%, bent 5 stops, 1/60 s, R96.7, G73.4, B86.1


A Curious Mind





A Global Currency: Peace or Pain?

For the last few years my wife and I have watched the PBS series, Downton Abbey. The final episode left us with a positive finale to the lives of many of its characters. I believe many have watched the series from remarks made over the last few years.

The series has taken us through a short but tumultuous period of British history. From the sinking of the Titanic in April 1912, WWI, the return from the war, and the roaring 20s, the attention to detail in this series has been superb in my opinion. Rather than a documentary on history with names, dates, and statistics, we have seen this period through the lives of the individual fictitious characters.


One part that rings home from my own research on the financial side of history during this period, was that the US and Europe both disconnected from their history of backing their currencies with gold, and instead devalued their currencies by printing up massive amounts of debt in order to cover their expenses during World War I. You may remember statements by Lord Grantham in episodes how the rapid rise in wage costs had lead them to lay off workers from their estate. Did you know that land prices shot through the roof in the 1910s as the Federal Reserve went into action in 1914, pouring in billions (remember that was a big number for our debt at that time) into the US and global banking system.

While the world of WWI and the 1910s and ‘20s seems like ancient history today, the role of central banks and money have been at the heart of the modern global financial system over the last century. If one seeks to understand where history has brought us and is taking us, one must understand the role of money in the hands of the central banks, the most powerful financial players in our global financial system. One must also understand the history of the world’s only international monetary unit, something most individuals do not know even exist.

The following is a very short summary of various events that prove that a global currency is in fact a development that totally changes everyone’s long term plans. It will be written in the format of diary entries from the last 12 years of my life and our history.

So hang on!

The Modern History of Global Money

Spring 2004

My first understanding of the history of a global currency came from a book written by renown monetary historian and Austrian economist, Dr. Murray Rothbard, A History of Money and Banking in the United States: The Colonial Era To World War II (2002). Below is a look at historical events that took place in 1943 and 1944:

“In the postwar planning for economic affairs, the State Department was in charge of commercial and trade policies, while the Treasury conducted the planning in the areas of money and finance. In charge of the postwar international financial planning for the Treasury was the economist Harry Dexter White….


While the White Plan envisioned a substantial amount of inflation to provide greater currency liquidity, the British responded with a Keynes Plan that was far more inflationary.

The Keynes Plan, moreover, provided for a new international monetary unit, the ‘bancor’, which could be issued by the ICU (a new entity called the International Currency Union. It was never launched) in such large amounts as to provide almost unchecked room for inflation, even in a country with a large deficit in its balance of payments….

Despite extensive concessions, there was no ‘bancor’; the US dollar fixed at $35 per gold once was now firmly established as the key currency base of the world monetary order.”

Rothbard’s book was my first step in not only understanding the foundation of a move toward a global currency in 1943 & 1944, but in truly understanding the modern history of paper money.


I would strongly encourage each of you to visit the Mises Institute’s website.

May 2006

After releasing my industry research paper on short selling, which contains interviews with world famous individuals, as I prepared for my 5th monthly issue to my investment research newsletter a very strong patriot and Christian woman called me from the Washington DC area named Joan Veon. Joan had been encouraged by a friend in 1990 to go to a world UN meeting since she was always researching and reading how material and policies developed at these major conferences was filtering down to educational and government policies around the world. She was always trying to educate her fellow Americans.

She also told me to start watching the developments in the only international monetary unit in our world today, the Special Drawing Rights established by the International Monetary Fund in 1969, just two years before the US government refused to redeem its paper currency for gold in international finance.

In April 2009 it was being introduced to the world as part of the “rescue” to the 2008 credit collapse.


April 2009

“I think a New World Order is emerging and with it, the foundations of a
new and progressive era of international cooperation. We have resolved,
that from today, we will together manage the process of globalization, to
secure responsibility from all and fairness to all, and we have agreed that
in doing so, we will build a more sustainable and more open, and a fairer
global society.” – Gordon Brown, member of the Fabian Socialist Party and Prime Minister of the UK in 2009, comments made to at a G20 Conference in London on April 2, 2009. An actual film of his remarks is linked.

World Leaders Agree On Global Response, Accord in London Quadruples Funding of IMF, but Delays Decisions on Many Divisive Issues, WSJ, April 3 ‘09

“The summit of many of the world’s leading economies in London
announced a tripling of the lending power of the International
Monetary Fund to around $750 billion.

They also unveiled a $250 billion expansion in the IMF’s reserve
currency — the special drawing right — to boost liquidity in the global financial system….”

As you can see above, the IMF’s expansion of the ONLY international monetary unit known as the Special Drawing Rights was rapidly expanded in 2009 for the first time in its 40 years of existence.

March 2011

In the spring of 2011 I posted the two research papers to my website showing an expanding  role of the Special Drawing Rights in global banking and financial markets. Clearly this international monetary unit was not going away nor merely a topic for academic eggheads.

Reserve Accumulation and International Monetary Stability, 4/13/10
Enhancing International Monetary Stability – A Role for the SDR?, 1/7/11                           International Monetary Fund. — posted on March 23 ’11

“From SDR to bancor – A limitation of the SDR (Special Drawing Rights) as discussed previously is that it is not a currency….A more ambitious reform option would be to build on the previous ideas and develop, over time, a global currency. Called, for example, bancor in honor of Keynes, such a currency could be used as a medium of exchange– an ‘outside money’ in contrast to the SDR which remains ‘inside money’.” [see pp 26 – 27 from the April  10 IMF report listed above.]

May 2014

Now we leap to the spring and summer of 2014, to examine the slow move POLITICALLY away from the US dollar as the most widely used currency in the world and frankly, at the very foundation of the substantial improvement of the American way of life since WWII.

During the spring of 2014, I started seeing our various European Allies signing major financial agreements to do business directly between the euro and pound with the Chinese renminbi. These were first in history events. These were nations that had been our allies since WWII. Now they were setting up agreements to do business directly between their currency and China’s currency, which would further reduce the need for the US dollar in global trade.

Bundesbank, PboC Sign Accord To Make Frankfurt Yuan Hub, Bloomberg, 3/28/14

Bank of England and People’s Bank of China Agree on London Yuan Clearing Hub, International Business Times, 4/1/14

2015, May and December

In 2015, China established the Asia Infrastructure Investment Bank, which some saw as a direct attempt to go head to head with the World Bank established by the West in the 1940s. Once again, European nation’s joined the AIIB in spite of pressure from the US.

Why Europe Defies the US to Join A China-Led Bank, DW, 3/18/15

“Despite US pressure to stay out, Europe’s four-largest economies, Germany, France, Britain and Italy, are set to join a China-led regional bank, seen as a potential rival to the US-based World Bank.”

China Officially Launches New Development Bank AIIB, DW, 1/17/16

“China, the world’s second largest economy, has officially launched a development bank that could complement or rival the US-backed World Bank. Regardless, it highlights China’s growing economic clout.”

Finally, we finished 2015 with another first in history, when the IMF approved inclusion of China’s renminbi currency as part of the Special Drawing Right. This is now no longer a possibility. It is now a fact.

The Renminbi Joins the IMFs SDR Basket. Now What?, The Diplomat, 12/1/15

“This is a big moment for China, but its economy still has challenges that it needs to address.”

So as we continue to watch history, unless the citizens of various nation states protest this continued rise in the only global monetary unit, it would appear that when we may find ourselves at the bottom of this current major bust like the spring of 2009, with the high probability that this global money will expand its global reach yet again.

While I see this as a direct threat to the financial sovereignty of each individual nation, the lack of understanding or discussion about this development since 2009 does not bode well for an informed public to reject this threat.

A Sad, but Curious Mind



A 4,000 Year Old Lesson: Joseph & The Costs of A State Rescue


Over the last 7 years we have watched the largest expansion of debt and the powers of central banks ever on record. Not a month goes by that I do not ponder how we could have surrendered so much authority to these entities.


After the Great Recession in 2008 one would have thought that we would have learned something about pouring trillions of cheap debt into highly leveraged financial deals as the “rescue” from the most recent financial collapse.
Yet the chart above from McKinsey Global Institute makes it clear that the financial wise men of modern finance only took us deeper into debt, making the entire global structure even more fragile.

So what could happen when we reach the bottom of the next global deflationary bust?

Rather than looking to the same group, drunk on the “eternal” riches of more power from more debt, let’s journey back almost 4,000 years to the Egyptians.


[Relief of Senwosret I, 12th Dynasty, 1961-1917 BC, The Metropolitan Museum of Art]

7 Years of Plenty, 7 Years of Famine

In the Hebrew writings of the Tanakh or Old Testament we find the story of Joseph and his interpretation of a dream by an Egyptian Pharaoh. The book of Genesis describes the dream’s meaning.

“That is the thing which I spoke unto Pharaoh: what God is about to do He hath shown unto Pharaoh. Behold, there come seven years of great plenty throughout all the land of Egypt. And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt; and the famine shall consume the land; and the plenty shall not be known in the land by reason of that famine which followeth; for it shall be very grievous.” – Genesis 41: 28-31, A Hebrew –English Bible


Whereas Joseph’s plan during the 7 years of plenty was for the Pharaoh to appoint overseers to collect 20% of the gain and store it up in the communities across Egypt in anticipation of the coming famine (Gen 41: 34-36), anyone looking at the actions of central bankers and government leaders since the Great Recession in 2008 can easily see that all “the grain” was used up and even more spent, as the public was lead to embrace the idea that the borrower is not the lender’s slave, but the basis of “experiencing” prosperity!

Famine? Pain? You must be joking; debt based money could always be created at a moments notice to overcome such obstacles, and without long term consequences. Right?

With global markets hitting record highs in 2014 and 2015, the real lesson we need to consider today, is what we could learn from the actions of the Egyptians and surrounding people as the famine changed their lives.

1) They first ran out of money to buy back the grain collected by the Pharaoh during the years of plenty.

“There was no food, however, in the whole region because the famine was severe; both Egypt and Canaan wasted away because of the famine. Joseph collected all the money that was to be found in Egypt and Canaan in payment for the grain they were buying, and he brought it to Pharaoh’s palace. When the money of the people of Egypt and Canaan was gone, all Egypt came to Joseph and said, ‘Give us food. Why should we die before your eyes? Our money is all gone.'” – Gen. 47: 13-15, NIV

As this headline from 2008 reminds us, our money today is really credit. When things get tough, credit tightens, meaning there is less available from the banks.

U.S. Banks Tighten Lending Standards, NY Times, January 7, 2008

2) As a solution to this financial crisis during the famine, Joseph established plan #2, and the people sold their livestock, or what we might see today as the businesses of the people.

“’Then bring your livestock,’ said Joseph. ‘I will sell you food in exchange for your livestock, since your money is gone.’ So they brought their livestock to Joseph, and he gave them food in exchange for their horses, their sheep and goats, their cattle and donkeys. And he brought them through that year with food in exchange for all their livestock.” – Gen. 47:16-17, NIV


While the Dow and S&P 500 stand at almost the same level they did when arriving here for the 1st time in history last December, giving the impression that American business is healthy, the chart above reflects the fact that the risk from bankruptcy has climbed for 2 years and is already at late 2008 levels (the sampling is based on 10,000 US businesses).

Clearly, the illusion from Wall Street is not reflecting the reality of Main Street. Based on the Wall Street view, we have not even started “the financial famine” yet.

But based on the rising risk of bankruptcies, the state will gain less and less from Main Street businesses in the period ahead. In fact, if more emphasis had been placed on start up and small businesses in the last 7 years, rather than pouring debt into larger global corporations so they could inflate their stock through constant buybacks, the economy would be healthier today. In other words, we would have had more stored up to cushion the severe slowdown that must come from all the money spent on the now even larger debt loads worldwide.

3) When the year was over, the people returned to “the state”, seeking another solution.

“When that year was over, they came to him the following year and said, ‘We cannot hide from our lord the fact that since our money is gone and our livestock belongs to you, there is nothing left for our lord except our bodies and our land. Why should we perish before your eyes—we and our land as well? Buy us and our land in exchange for food, and we with our land will be in bondage to Pharaoh. Give us seed so that we may live and not die, and that the land may not become desolate.’” – Gen. 47:18-19, NIV

4) And another solution to purchase food was found.

“So Joseph bought all the land in Egypt for Pharaoh. The Egyptians, one and all, sold their fields, because the famine was too severe for them. The land became Pharaoh’s, and Joseph reduced the people to servitude, from one end of Egypt to the other.


So Joseph bought all the land in Egypt for Pharaoh. The Egyptians, one and all, sold their fields, because the famine was too severe for them. The land became Pharaoh’s, and Joseph reduced the people to servitude, from one end of Egypt to the other.


Joseph said to the people, ‘Now that I have bought you and your land today for Pharaoh, here is seed for you so you can plant the ground. But when the crop comes in, give a fifth of it to Pharaoh. The other four-fifths you may keep as seed for the fields and as food for yourselves and your households and your children.’” – Gen 47:20-24

Today, it is impossible for most Americans to consider being in a situation where even buying food would require selling assets and working in servitude to the state just to survive. Yet, whereas the average American spends approximately 6% of their budget today on food, the average Iranian, Indian, and Chinese spends about 25% on food, and the average Russian and Indonesian spends about 33%. For this reason, when their currencies plummet in value against the US dollar or other major currencies, it can place the people of those nations under extreme stress, and working under very harsh conditions are expected as part of surviving in that environment.

The US Spends Less on Food Than Any Other Country In The World, International Business Times, January 23, 2014

Food Prices in Russia Soar As Ruble Tumbles Further, The Moscow Times, Dec 16, 2014

Of course demographic changes like shown in the headline below remind Americans that finding money for some of our most basic needs is becoming more and more difficult.

Record 94,610,000 Americans Not In Labor Force, Breitbart, Oct 2, 2015

One of the most sobering documents I have examined in the 10 years of researching global markets and the global economy, is the US State Department’s annual Trafficking in Persons Report. As the global economy continues to slow from the largest and fastest increase of debt in world history, even more painful stories will follow. Labor conditions are already abominable in various nations around the world today, much like the sons of Israel experienced under the Egyptians a few centuries after Joseph had died. I hate to think how global working conditions could deteriorate even more.

Let’s return to the famine that struck Egypt and Canaan.

At the end of this period of time the people were now in bondage to “the state”. The people had sold everything to “the state” in order to buy food. Because they had food, “the state” had rescued them from the famine.

In Genesis 47:25, the people saw their current juncture as a good thing, much like the public at large has seen deep interest rate cuts and massive bailouts as policies that “returned things to normal”.

“’You have saved our lives,’ they said. ‘May we find favor in the eyes of our lord; we will be in bondage to Pharaoh.'”

The problem, like parts of today’s world, was that people had given up their money, their businesses, their private property, and agreed to work for the state, paying the Pharaoh 20% of what they earned and keeping the remaining 80% for their daily needs.

Happy Ending?

“No one was unhappy in my days, not even in the years of famine, for I had tilled all the fields of the Nome of Mah…thus I prolonged the life of its inhabitants and preserved the food which it produced.” – Ameni, a providential governor under Senwosret I

As anyone knows from reading the book of Genesis and Exodus, the descendants of Jacob (Israel)[Gen 35:10] prospered during the famine while raising their livestock in Goshen [Gen 45:1, 47:6,11, & 27] , land given them by Pharaoh, a few centuries later the Egyptians felt threatened by them, and work conditions for the descendants of Israel became very hard and like slaves.

“Now a new king arose over Egypt, who did not know Joseph. He said to his people, ‘Behold, the people of the sons of Israel are more and mightier than we. Come, let us deal wisely with them, or else they will multiply and in the event of war, they will also join themselves to those who hate us, and fight against us and depart from the land.’ So they appointed taskmasters over them to afflict them with hard labor. And they built for Pharaoh storage cities, Pithom and Raamses…. The Egyptians compelled the sons of Israel to labor rigorously; and they made their lives bitter with hard labor in mortar and bricks and at all kinds of labor in the field, all their labors which they rigorously imposed on them.” – Exodus 1: 8-11, 13-14, NASB

So with today’s financial bubbles starting to burst worldwide since 2014, while the “overseers” of modern finance continue promising even deeper negative interest rates or more intervention into our economic life and markets, we have come to a point in history where the “years of plenty” illusion is quickly running out of steam.


As the financial famine continues setting in, will we turn to answers outside the gods of modern Keynesian finance and unlimited debt solutions of the past? Once everyone knows we are at another major crisis, what will we be willing to sell or pledge to the state in order to stop the pain? As power centralizes at the global level, will we eventually say, “You saved our lives”? At what costs to us and future generations?

One World, One Bank, One Currency, Daily Reckoning, Addison Wiggins, Oct 1, 2014

In Joseph’s time the people came to see the Pharaoh and “the state” as the only solution to their situation. John’s writing in Revelations seems to reveal that the past could have a connection to the future.

“And he causes all, the small and the great, and the rich and the poor, and the free men and the slaves, to be given a mark on their right hand or on their forehead, and he provides that no one will be able to buy or to sell, except the one who has the mark, either the name of the beast or the number of his name.” – Revelations 13:16-17

Since 2008, the powers of central bankers and governments have only grown, thus whether seeking funds from the state through social safety nets or the greatest intervention by central banks into financial markets ever seen, we have already watched the public at large accept that this form of financial socialism has brought things back to “normal”.

However giving over so much power to this small group has reduced our motivation to seek solutions at the individual and local level. The national and global level has become the highest authority in the life of the people. Could this worldwide story be headed into a time of bondage as well?


A Skeptical Mind



Bridging the Great Monetary Divide


[The chart above is found on page 9 of Mat McCracken’s piece, The Imminent Financial Reckoning, linked at the end of my August post. The chart was originally released in the Quarterly Journal of Economics.]

Do you notice that the only time in the last century when the top 1% earned more as a percentage of the total nation than they did in 2012 was in 1928?

We all know what happened shortly thereafter, when the U.S. experienced the collapse of its stock market and financial institutions and the Dow plunged from its 1929 high of 380.33 (9/3) to its 1929 low of 198.69 (11/13) in less than 3 months. As the history books make clear for anyone studying this period, this 181.64 point drop (48%) was the beginning of the Great Depression. *

Eventually, tens of millions of lives would be changed by this global deflationary depression, the Dow continuing to collapse until its 1932 low of 41.22 (7/8), producing an 89% loss.

But I believe my fellow Americans not only were challenged with the extreme financial and economic conditions, but could see no way out of their current condition without the rapid expansion of the powers of the state. In other words, in the 1930s, the idea of “big government and big debt are needed in a crisis” took root. People started looking more to the state than each other and the Divine.

Now let’s jump forward to lessons we could have been learning these last few years, yet in a world of hurry, hurry, more, more, the idea of a massive expansion of debt and the powers of central banks in our markets seems to have gone unnoticed by the majority of the public. It is if we can not change it, why learn about it or consider the serious of all of these red flags popping up everywhere.

Yet anyone watching current events and history can see that these topics are not going away. There will be consequences.

In 2015, the income and wealth disparity has become a major topic again, due to the tens of trillions in debt that central banks around the world have poured into the global financial system in an attempt to “inflate our way out” of the problems created from the collapse of the last debt fueled bubble collapse in 2008. The issue is not a Democrat or Republican one, since it impacts all Americans, and frankly, the entire global economy.

Ted Cruz Says Top 1 Percent Earn More of National Income Than Any Year Since 1928, Politifact, Jan 30 ‘15

“…Cruz drew his comparison to 1928 from a report by the Pew Research Center citing research by Emmanuel Saez, a University of California, Berkeley economics professor who studies wealth and income inequality.

Saez helps steer the World Top Incomes Database, sponsored by the Paris School of Economics, a research center and conglomerate of French universities.”

And the problem is not merely income disparity, but wealth disparity as well. Once again, I am not promoting or seeking a big government/big bank/big debt solution, since this theme has gone on for decades and the problem only continues to worsen during every subsequent boom.

I believe the answers lie at the local and individual level, and a reboot like the year of Jubilee that the Jews were given in Deuteronomy 25 over 3,000 years ago.

I do not see this as a solution today, since the public at large, even the church, seem to start discussions of global finance at the big bank (central banks)/big government level, so that when the next “crisis is an opportunity” comes, the public should continue to seek answers from the state which has become our “god”.

“But don’t we need more government and central banking assistance?”

Let’s stop and look at the amount of wealth in the world today, backed by historic levels of debt.

A new report on the concentration of wealth was released last week by the Swiss Bank, Credit Suisse. The report states that of $250 trillion in global assets (backed by more than $200 trillion in global debt), the top 1% own 50%, and the bottom 50% own less than 1%.

To say there is no money to solve massive humanitarian needs without more government and more debt is totally insane from looking at these numbers. In my opinion, it comes from redefining human life as a greater investment than material gains, once again, something I do not see changing until another collapse into the tens of trillions in global asset values.

Consider the charts below and comments, pulled from the recent article, Top 1 Percent Own More Than Half of 1 Percent of Wealth (Global Research, Oct 14, 2015). The flood of debt worldwide from central banks since 2008 has done nothing to change these dangerous societal trends.



Whether the publication is seen as a supporter of socialism or capitalism, both discuss the same Credit Suisse data and see a problem.

The Top 1% Now Owns Half The World’s Wealth, Fortune, Oct 14, 2015

“Credit Suisse says wealth inequality was actually falling before the financial crisis but has increased every year since 2008. The U.S. created 903 new millionaires between the 2014 and 2015 report, while median wealth has stagnated. Globally the number of millionaires fell, though the strength of the U.S. dollar is cited as the biggest contributing factor to that statistic.”

Going Global Or Local: Could We See Both In the Period Ahead?

David Rothkopf, a global insider and CFR member, released the book, Superclass: The Global Power Elite and the World They Are Making, in 2008. According to Rothkopf, to be super rich in the world today takes a global view, and one that rises above such things like national sovereignty and country loyalty.

“ They will feel more affinity to their fellow global conversationalists thatn to those of their countrymen who are not yet part of the global conversation.” – Walter Wriston, former CEO of Citibank in his book, The Twilight of Sovereignty (pg 11)


“Their loyalties – if the term is not itself anachronistic in this context – are international rather than regional, national or local. They have more in common with their counterparts in Brussels or Hong Kong than with the masses of Americans not yet plugged into the network of global communications.” – Christopher Leach in his book, The Revolt of the Elites (pg 11)

As the bust phase in financial history sets in, the world will change for everyone, whether super rich, rich, middle class, or poor. If we are going to keep our civility and “love thy neighbor as thyself” is to be a part of our society, we must know our neighbors and demonstrate true compassion for people of all backgrounds and cultures around us, and that may mean doing things outside of our comfort zones.

For me personally, these ideas, written during the 1st century and taken from the pages of the New Testament, inspire me to consider human life as more important than material gains in the period ahead. It also reminds me how there are examples from that period that are highly relevant to our world today. I hope they touch your heart, no matter where your faith lies.

“ Greater love has no man than this, that one down his life for his friends” – John 15:13


“…and they began selling their property and possessions and were sharing them with all, as anyone might have need. Day by day continuing with one mind in the temple, and breaking bread from house to house, they were taking their meals together with gladness and sincerity of heart, praising God and having favor with all the people.” – Acts 2:45-47


“Now, brethren, we wish to make known to you the grace of God which has been given in the churches of Macedonia, that in a great ordeal of affliction their abundance of joy and their deep poverty overflowed in the wealth of their liberality. For I testify that according to their ability, and beyond their ability, they gave of their own accord, begging us with much urging for the favor of participation in the support of the saints…


For if the readiness is present, it is acceptable according to what a person has, not according to what he does not have. For this is not for the ease of others and for your affliction, but by way of equality at this present time your abundance being a supply for their need, so that their abundance also may become a supply for your need, that there may be equality; as it is written, “HE WHO gathered MUCH DID NOT HAVE TOO MUCH, AND HE WHO gathered LITTLE HAD NO LACK. (Exodus 16:18) II Corinthians 8:1-4; 12-15

A Curious Mind, Desirous of A Compassionate Heart

  • Check out the history of all closing prices in the Dow Jones Industrial Average from October 7, 1896 to the present at Measuring
  • Another source is the 2012 study, Pulling Apart, which examines income disparity across states between 1917 and 2011. The research was assembled by the Economic Policy Institute and the Center on Budget and Policy Priorities. (Once again, I believe the only sustainable solutions are ones that return power to the states and local communities, not an expansion of powers at the global level. A debt based money can only continue to lead to even greater crises in the years ahead, not less. The Special Drawing Rights, the international monetary unit backed by the International Monetary Fund, was expanded 8 fold in 2009 in response to the 2008 crisis. Clearly world financial leaders are expecting a massive change at the currency level as a “solution” to the next major crisis. This is why local community solutions will become very important in the period ahead.)

Please “Assist” My Investments

SustainableBy the year 2024, I am certain no one will think it odd for massive sums of debt to lead to enormously negative consequences across societies. By then, history will be replete with stories from this period. However, after living through the largest growth in global debt in a 6 year period, it seems that most either do not know, or want to consider, how much the nations of the world are depending on central banks to always be ready to pour trillions of debt on top of current levels, thus somehow keeping things “normal”.

Of course, anyone willing to look at world markets from a historical basis understands that what the world has seen since 2008, has never happened at these extremes. To believe that this level of “assistance” has brought things back to “normal”, is to defy the lessons on debt from history.

Look at the chart that opens this piece. Remember the launching of the internet in the 1990s and the explosion in tech and telecom stocks from the late ’90s? From the low in 1994 to the high in 2000, the S&P 500 – a collection of 500 of the largest companies based in America – climbed 1117 points, or 250%. During that time, the national debt grew by $1.16 trillion.

Now look at what has taken place between the 2009 low (March) and 2015 high in the S&P 500 (May). Regarding points gained, this widely used stock yardstick gained 1468 points, adding 31% more than the amount produced in the late ‘90s. However, percentage wise, it was actually 12% less than the late ‘90s run.

But all investors should be focused not on what was made in stock gains, but the skyrocketing costs of “stimulus” added to the US national debt during this period. In the recent 6 year run, the US national debt soared $7.2 trillion, compared to $1.16 trillion during the 6 year run in the late 90s, an increase of 519% over the previous bull market run!

Now THAT is a whale of a lot of “assisting”.

Without the Federal Reserve’s QE I, II, and III, to “stimulate” the markets that were suppose to then stimulate the economy, the debt levels would have never risen this fast.


Enjoy the Party Today; the Hangover Can Always Be Stalled… Right?

Most of 2015 we watched the Dow vacillate up and down through its 18,000 level. While the Federal Reserve’s QEIII had stopped last October, there was the belief that the the Bank of Japan and the European Central Bank could pick up the slack this year.This proved to be the case into Q2 in their markets, but the Dow and S&P 500 had been stalling around 18,000 and 2,100 respectively all year.

With major problems hitting China (Q2 ’15), the world’s front runner in increasing its own debt levels, as well as the impact of Greece on the EU, the global slowdown finally caught up with the computer algorithms two weeks ago in global financial markets.

“Kick the can” abruptly fell into a large pothole. The “riskless” market feeling that tens of millions of investors had grown accustomed to, suddenly became the “risk full” market where investors headed for exits quickly, making record redemptions.

‘Total Risk Surrender’: Record 29.5 Billion Yanked From Stock Funds, Morningstar, 8/28/15

Even now, many articles are explaining this as another computer glitch, rather than the normal pattern among human beings that understand that after “all time high” headlines, must come the bust phase, thus seek to sell rather than ride markets back to their third major bottom since 2000.


The major central banks in this global drama – the Bank of Japan, Federal Reserve, European Central Bank and People’s Bank of China – have fostered a more than 40% increase in global debt levels since 2007 as the “solution” to the 2008 debt crisis. Why would we NOT expect serious consequences across every aspect of our societies from this global financial bubble, like what we saw from the 2008 bust?


Thinking and Acting Outside the Box

The problem with mania markets, especially where the state supports wild speculation that can not be sustained, is that history is replete with stories of financial leaders and insiders selling out at the top.

Sadly, the “it’s only a pullback”, and the “recovery” after two 50% plus declines in the S&P 500 since 2000, has tens of millions of retail investors and advisors caught up in the myth that somehow, someway, “the stock market” will always come back to these levels and climb higher. The fact that Greenspan cut rates to 1% in 2003 to create the largest housing bubble in American history seems to be of no importance to one’s personal investment plans. The fact that Bernanke and Yellen have kept a zero interest rate policy in place since December 2008, pouring more cheap debt into the system that at anytime since the nation was founded in the 1700s, seems to be something we don’t even consider when talking about personal or business financial goals over the next 5 to 10 years.

I have often wondered why so few Americans even discuss where the nation is headed financially when discussing their own finances and plans.



Make Changes & Prepare for the Bust; Help Yourself and Others

It should also be clear for anyone concerned about their finances, that when a weekly record is made in redemptions from US equity funds only one month after the highest level on record was made in the NASDAQ, that seeking to learn what the big money has been doing recently would be prudent for the smaller and less informed investors.

Hedge Funds Gear Up For Another Big Short; Some Money Managers Are Looking To Profit From Potential Trouble At Some “Alternative” Mutual Funds and Bond ETFs, WSJ, 7/21/15

Billionaire Stanley Drunkenmiller Loads Up On Gold, Makes It His Largest Position For First Time Ever, Zero Hedge, 8/16/15

What good will it do as trillions in capital are lost again by retail investors and more conventional strategies, while capital continues concentrating in the hands of tiny fraction of the world? Is this really progress? If smaller investors are willing to change, and prepare for the bust rather than merely ride it to the bottom again, would this not be a better option for them and their community?

New Oxfam Report Says Half of Global Wealth Held by the 1%, The Guardian, 1/19/15

No, Billionaires Don’t Drive Economic Growth – and Crony Billionaires Strangle It, The Guardian, 7/15/15

With so much money getting ready to be moved from smaller investors yet again, providing less funds to be spent across our economy, I hope you will share this article with anyone willing to think outside the box. Time is quickly running out to bury our heads in the proverbial sand.

If history repeats itself once again, the uber-wealthy (0.5%) will merely protect or grow their wealth in the bust phase ahead, while tens of millions of smaller investors will watch what they have vanish, placing their hopes on yet one more rescue by the hands of central bankers. If only we could see the value of investing in lives as even more critical to our nation as investing in “assisted” markets.

Americans Not In Labor Force Exceed 93 Million for First Time; 62.7% Labor Force Participation Matches 37-Year Low, CNS News, 4/3/15

“And his master praised the unrighteous manager because he had acted shrewdly; for the sons of this age are more shrewd in relation to their own kind than the sons of light. And I say to you, make friends for yourselves by means of the wealth of unrighteousness, so that when it fails, they will receive you into the eternal dwellings.” – Luke 16:8-9

I believe in the period ahead, we will all want to know that there are others around us who would be willing to make sacrifices for us and they know the same from us.

“Greater love has no one than this, that one lay down his life for his friends” – John 15:13

  • On August 24, 2015, the Dow dropped 1,089 points, surpassing the May 6, 2010 flash crash. Because of the extraordinary financial period we are watching, I have linked an interesting piece written by a colleague. Whether you agree or disagree with his conclusions, I believe you will find the piece fascinating when considering the unique period in financial history we are all living through. Click here to read, The Imminent Financial Reckoning, released on August 25, 2015.

A Curious Mind


Optimism Didn’t Help Greeks or Chinese


If you are reading this in 2024, you will wonder why we ignored so many warnings and so much history. Hopefully, this will help you understand 2015.

I am an American. In my country, nothing is sought more in our society than optimism. We buy books, go to seminars, and entertain ourselves in the pursuit of optimistic experiences. At first glance, this appears like a very good trend. Solomon wrote 3,000 years ago about the importance of hope and optimism when he stated, “A joyful heart is good medicine, but a broken spirit dries up the bones”.

But what if we are faced with world trends around us that can not be solved merely by the power of positive thinking. What if the fuel to this optimism, money, continues to move in a direction where there is less of it for everyone; either because of fewer jobs, or because we enter a period when financial assets deflate because creating trillions more in debt has reached its limits?

No matter how much our minds conceive and believe, we will have to live through a period with less, not more.

In the global financial world, there are two trends that continue warning us all that we are coming into such a period. Yet we seem so focused on the near term experience, that we even now fail to realize that the idea of “unlimited money” based on “unlimited debt” was never a sustainable path. Eventually, “all time high” stock headlines based on “all time low” borrowing costs must stop and change directions.

Google’s 16% Leap Lifts NASDAQ To New High, USA Today, 7/7/15

German Bund Yields Tumble Toward Zero Amid ECB Stimulus, Greece Jitters, WSJ, 4/16/15


Warning From the Top of the Financial World


Recently, the highest authority in the financial world, the Bank of International Settlements, released these comments in their 85th annual report on June 28th:

“Interest rates have never been so low for so long…Between December 2014 and end-May 2015, on average around $2 trillion in global long-term sovereign debt, much of it issued by euro area sovereigns, was trading at negative yields…. Such yields are unprecedented. Policy rates are even lower than at the peak of the Great Financial Crisis in both nominal and real terms…. There is something deeply troubling when the unthinkable threatens to become routine.


The economies hit by a balance sheet recession are still struggling to return to healthy expansion…


Domestic policy regimes have been too narrowly concerned with stabilizing short-term output and inflation and have lost sight of slower-moving but more costly financial booms and busts…Short term gain risks being bought at the cost of long – term pain.”[Bold my own]

Now I ask you, did that sound positive? Any student of market history, whether they are a curious teenager or global central banker, can learn about booms and busts dating back to the establishment of the Amsterdam Exchange in 1610, and the Dutch Tulip Bulb Mania that peaked in February 1637. The problem today is not a lack of information on history, but our desire to ignore it.

Moving on. Consider this news headline. Is it merely theatrics, or do the actual words from the BIS report reveal a landscape that is extremely high in risks to all investors….you know, something that would be considered “negative”.


The World Is Defenseless Against the New Financial Crisis, Warns BIS, UK Telegraph, 6/28/15


So why don’t more individuals, whether inside the financial industry or the public at large, discuss why governments reaching “lowest in history” borrowing costs alongside stock investors embracing “all time highs”, is not sustainable. Why are “bearish” market pundits, the highest authority in the global financial system, and history itself being ignored by the majority in 2015?

Easy. The experience of rising equity markets, and central planners intervening to make certain stocks “never” decline again, has created the illusion of ”all gains, no pain”. Is it that hard to see where this is going next?



The Dam Story

In 2006, I read a book called Collapse: How Societies Choose to Fail or Succeed (2005) by Dr. Jared Diamond, Professor of Geology at UCLA. While his work is on systemic risks to the environment, I believe you will see how this story could apply to our human desire to have financial stability, even to the point of ignoring repeated systemic warnings that will bring changes for ALL of us.

Collapse_book“Consider a narrow river valley below a high dam, such that if the dam burst, the resulting flood of water would drown people for a considerable distance downstream. When attitude pollsters ask people downstream of the dam how concerned they are about the dam’s bursting, it’s not surprising that fear of a dam burst is lowest far downstream, and increases among residents increasingly close to the dam. Surprisingly though, after you get to just a few miles below the dam, where fear of the dam’s breaking is found to be the highest, the concern then falls off to zero as you approach closer to the dam! That is, the people living immediately under the dam, the ones most certain to be drowned in a dam burst, profess unconcern. That’s because of psychological denial: the only way of preserving one’s sanity while looking up every day at the dam is to deny the possibility that it could burst.


If something that you perceive arouses in you a painful emotion, you may subconsciously suppress or deny your perception in order to avoid the unbearable pain, even though the practical results of ignoring your perception may prove ultimately disastrous. The emotions most often responsible are terror, anxiety, and grief.” [pgs 435 & 436]

Is there any sign of a dam or two breaking in the financial world? Anyone keeping up with current developments in the world of money immediately brings to mind the recent stories on Greece and China.


Let’s investigate these two stories; a lock down of a country’s banking system and wiping out 20% -35% of a nation’s stock wealth in less than 2 months.

In both cases, what has just financially hammered the lives of tens of millions of people, are stories where these same individuals had warnings for years, then months leading up to recent events.


Greeks Being Warned

Greek Bank Run Continues: Greek Domestic Deposits Lowest in Decade, Forbes, 5/30/15

“The standard view of the Greek debt crisis is that all everyone has to do is agree upon the reform program and that will be that. And that’s a reasonable enough view except that there’s one other thing that could happen. The Greek banks could run out of money….

Deposits at Greek banks are at their lowest level in more than 10 years amid broad concerns about the country’s economic prospects that have hammered shares in Greek lenders this year.”


Greeks Shocked; How Could This Happen?

Greek Banks Prepare to Plan To Raid Deposits to Avert Collapse, Financial Times, 7/4/15

“Greek banks are preparing contingency plans for a possible “bail-in” of depositors amid fears the country is heading for financial collapse, bankers and businesspeople with knowledge of the measures said on Friday.

The plans, which call for a “haircut” of at least 30 per cent on deposits above €8,000, sketch out an increasingly likely scenario for at least one bank, the sources said.

A Greek bail-in could resemble the rescue plan agreed by Cyprus in 2013, when customers’ funds were seized to shore up the banks, with a haircut imposed on uninsured deposits over €100,000.”

Greek Banks Set To Open Again on Monday – But ATM Limits To Stay, The Daily Express, 7/17/15

“The banks have been shut since June 29 after capital controls were put in place to stop the Greek financial institutions collapsing over fears that the country could crash out of the eurozone.

Cash points have been running with withdrawal limits of €60 and money cannot be transferred in or out of the country….

The bailout proposes Greek tax hikes, pension reforms and tighter supervision of the government’s finances in return for €86billion (£61bn) of cash.

The measures are more severe than those rejected by Greeks in a national referendum a little ever a week ago and condemn the country to years of economic woe.”



Chinese Being Warned

China Investors: Stock Market Fever, Financial Times, 4/10/15

“Retail money is pouring into tech st0cks and other ‘concepts’ = and the buoyant mood is spreading.

Sun Shuming could barely contain his joy. With one hand holding aloft a glass of champagne and the other making a thumbs-up sign, Mr. Sun beamed as a bank of cameraman snapped away on the floor of the Hong Kong exchange. Shares in GF Securities, the brokerage he runs, had just jumped 40 per cent within moments of going public on Friday morning.”

Chart Of the Day: Over 4 Million New Chinese Trading Accounts Opened Last Week, Zero Hedge, 4/28/15



Chinese Shocked; How Could This Happen?

The Really Worrying Crisis is Happening in China, Not Greece, UK Telegraph,7/9/15

While all Western eyes remain firmly focused on Greece, a potentially much more significant financial crisis is developing on the other side of world. In some quarters, it’s already being called China’s 1929 – the year of the most infamous stock market crash in history and the start of the economic catastrophe of the Great Depression.

In any normal summer, a 30 percent fall in the Chinese stock market – a loss of value roughly equivalent to the UK’s entire economic output last year – after an ascent which had seen share prices more than double within the space of a year would have been front page news across the globe….

The parallels with 1929 are, on the face of it, uncanny. After more than a decade of frantic growth, extraordinary wealth creation and excess, both economies – America in 1929 and China today – are at roughly similar stages of economic development. Both these booms, moreover, are in part explained by extremely rapid credit growth. Indeed, China’s credit boom dwarfs that of even the “roaring Twenties”. Borrowed money, or margin investing, played a major role in both these outbreaks of speculative excess….

China Makes Selling for Big Investors Illegal, Zero Hedge, 7/8/15

Having corralled selling by the National Social Security fund earlier this week and after discouraging local reporters from mentioning selling in the press, China has now made it illegal for big investors to dump shares over the next six months.



A Lesson for Everyone, Whether Big Investor or Small Depositor

The answer is clear for everyone. We like our lives and world to be neat and orderly. We like to look ahead, and see a nothing on the tracks.

Yet, either from our own life, or that of others, we know this is not the real world. We know this is not what history teaches. Greece and China are merely part of a series of whistles being blown off in the distance, warning of changes to come.


We have watched as billions surpass trillions then top 200 trillion in global debt. As stocks and bonds have soared since 2008, central planning pundits have promised that by creating more pressure on the global system from rising debt levels, the dam was actually getting stronger. The 2008 “financial flood” that destroyed $60 trillion globally, well, those problems have been corrected.

A nation’s banking system being closed to its depositors and tens of millions of investors watching their stock holdings get cut 20-35% in the last 2 months are warning us that relying on a smooth impregnable global interconnected system to always be ready to support our plans in the future, is a totally fallacious idea.

There is no “hold on and eventually the world comes around to our desires”.

Whether cracks in the dam, or wealth in the electronic casino that can vanish by the trillions in weeks, when a system under enormous pressure finally breaks, it can prove very unforgiving.


We have been here before. We would like to ignore painful money bedtime stories and the history we have already lived through. But even a search engine will not let us forget our past anymore.

Rush on Northern Rock Continues, BBC News, 9/15/07

“The rush of customers taking money out of Northern Rock continued for a second day on Saturday, amid concerns over its emergency Bank of England loan.
Banking sources suggest that on Friday alone clients pulled out £1bn – or 4-5% of retail deposits.”

“Do not store up for yourselves treasures on earth, where moths and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves do not break in or steal; for where your treasure is, there your heart will be also.” – Matthew 6:19-21

“While they were saying, ‘Peace and safety!’, then destruction will come upon them suddenly like labor pains upon a woman with child, and they will not escape.” – I Thessalonians 5:3

A Curious Mind






The Unlimited Mammon Master

Money“No one can serve two masters; for either he will hate the one and love the other, or else he will be loyal to the one and despise the other. You cannot serve God and mammon.” – Matthew 6:24 , NKJV

To The World of 2024,

In 2010, I wrote a public article titled, John’s Economic Worldview. In the opening pages, I discussed what is known as one’s worldview. Every individual has one, whether they can describe it or not.

The following are four traits of one’s worldview, as presented by Belgium philosopher, Leo Apostel:

1. A futurology – “Where are we headed?”
2. Values and ethics – “What should we do?”
3. A methodology – “How shall we attain our goals?”
4. A theory of knowledge – “What is true and false?”

Since 2010, I have watched with frustration and yet fascination, at how much “faith” most Americans place in our money, a substance that all major nations have been creating through the expansion of their debt loads since the US removed the dollar from the gold exchange standard in 1971. Most individuals have little or no understanding of the history of money, or the fact that the more money is created, the larger the debt load and the greater the drag on the entire economy long term.

Thus, the question, “Where are we headed?”, is most often based on one’s personal experience, rather than a close examination of the history of money.

Since the historical data is the same for every person, and modern money is created by the expansion of debt, let’s take a quick look at the question “How shall we attain our goals?”, and how this has worked since WWII.

Getting Rich Quickly By Rapidly Going into Debt

When my father returned from WWII in 1945, the US national debt stood at $250 billion. It would continue to rise, reaching $394 billion in 1971. During this 26 year period, the United States would exchange its gold for any nation desiring to exchange their U.S. dollars for our gold.

However, as of August 1971, this option was closed to every nation worldwide, and the world’s major industrial powers were no longer willing to exchange their paper money for the gold they were holding. This had NEVER happened in history prior to 1971.

From that point on, it was paper debt based money for paper debt based money, controlled at the highest levels by the most powerful central banks in the world.

Between 1971 and 2000 – the top of the first stock/debt bubble – the US national debt grew by $5,206 billion (1,321%) to reach $5,600 billion.

Remember, under the gold exchange standard between 1945 and 1971 (26 years), the US national debt only grew by $144 billion or 57%. Once the gold exchange standard was removed, the US national debt exploded $5,206 billion (1,321%) in 29 years!

Now what individual or corporate leader would say that growing their debt by 51% is WORSE than growing it by 1,321%? Yet as a society all of this new debt had to go some place, and thus became the fuel to inflate prices everywhere.

For those who had wealth, the new debt became the most powerful source for growing that wealth. How could devaluing our money be bad? For those who did not have wealth, or whose lives were impacted by loss of capital and/or job, the rise in prices caused by this new debt which was devaluing their money moved them more and more down the economic food chain.

Record 93,175,000 Americans Not In the Labor Force, Breitbart, April 3 ’15

The answer to the question, “Where are we headed?” should have seemed obvious in 2000. It should be even more so in 2015, when the US national debt has more than tripled from 5.6 trillion in 2000 to 18.1 trillion today.

However, it wasn’t then, and isn’t today. While most individuals would never encourage an individual or company to rapidly grow their debts in order to become richer, our “faith” in unlimited national debt as the basis for unlimited money boggles the mind.

Once again, our main barometer seems to return to our own personal experience, versus the financial history of the entire nation.

Two Bubbles Popped; Waiting for Third One


As more and more debt can give an individual an image of wealth, without examining the growing debt levels, one is never looking at the entire picture. The same for a nation.

The chart above uses two metrics; the stock wealth, based on the value of the market capital of the Wilshire 5,000 at any given time – the broadest measure of publicly traded US stock wealth, and the national debt of the United States.

While an individual or group of individuals can say that they are wealthier today than in 2000, comparing the wealth/debt ratio based on these two variables, we find that the stock to debt ratios are substantially lower today than they were 15 years ago in 2000.

By asking the question, “ How do we attain our goals?”, we must differentiate between short term and long-term views. Twice since 2000, US stock bubbles have burst, completely wiping out wealth that took years to build. NEVER since 2000 has the amount of debt carried by the nation gone down. ALWAYS, the solution for a market decline was cut interest rates and print up more money (i.e. debt) to kick start the “recovery”. With 2015 being the seventh year of a zero interest rate policy by the Federal Reserve, cutting rates is out of the question for future slowdowns.



Andrew Carnegie and Jesus

In 2003, a friend suggested I read the book, The Call: Finding and Fulfilling The Central Purpose of Your Life (1998), by Os Guinness. Guinness challenges his readers through the lens of two lives in the chapter, More, More, Faster, Faster.

The first is Andrew Carnegie, one of the wealthiest men in American history.

Andrew Carnegie wrote this famous memorandum in 1868, when he was thirty-three and stuffed it away in a drawer: ‘Man must have an idol – the amassing of wealth is one of the worst species of idolatry – no idol is more debasing than the idol of money.’
But in 1905, President Theodore Roosevelt wrote reluctantly of Carnegie himself, ‘I tried hard to like Carnegie, but it was pretty difficult. There is no type of man for whom I feel a more contemptuous abhorrence than for one who makes a God of mere money- making.’

The second was a closer examination of the words Jesus presented in the Sermon on the Mount, specifically Matthew 6:24, as stated at the opening of this post:

“Jesus’ use of Mammon (Aramaic for wealth) is unique – he gave it a strength and precision that the word never had before. He did not usually personify things, let alone deify them. And neither the Jews nor the nearby pagans knew a god by this name. But what Jesus says in speaking of Mammon is that money is a power – and not in a vague sense, as in the “force” of words. Rather, money is a power in the sense that it is an active agent with decisive spiritual power and is never neutral. It is a power before we use it, not simply as we use it or whether we use it well or badly.
As such, Mammon is a genuine rival to God.”

In 1906, Frederic Clemson Howe published his short work, The Confessions of a Monopolist. Howe, more than a century ago, could see the power of money, a power that could certainly rise to god like status over men and women.

“Long before my election to the Senate I learned two things pretty thoroughly. One was, if you want to get rich – that is, very rich – in this world make Society work for you. Not a handful of men, not even such an army as the Steel Trust employs, but Society itself. The other thing was, that this can only be done by making a business of politics. The two things run together and cannot be separated. You cannot get very rich any other way.”

It would appear that we have created the tools, where the idea of “unlimited debt based money” coupled with computers trading at the speed of light, have truly given individuals the sense that they have attained god-like status, and Mammon has provided a sense of power like nothing else. Yet that concentration of power, has already proven to be a huge negative at the societal level…. and we are still today watching financial markets recording “highest in history” price levels!


The Results of Unlimited Mammon

Virtu’s Second Attempt At Going Public Reveals Why FX Trading Is Now Impossible, Zero Hedge, April 6, ’15

“As Virtu Financial (a high frequency computer trading firm) stated (shortly before its IPO went public April 2015), ‘The overall breadth and diversity of our market making activities, together with our real-time risk management strategy and technology, have enabled us to have only one overall losing day during 1,485 trading days.’
As we reported back in February, ‘not only did Virtu not have a trading day loss in all of 2014, but on its “worst” trading day, the firm made “only” $800,000 to $1,000,000.’”

5 Big Banks Pay $5.4 Billion for Rigging Currencies, CNN Money, May 20 ’15

“U.S. regulators hit five global banks with $5.4 billion in penalties Wednesday for trying to rig foreign currency markets in their favor.
Citigroup (C), Barclays (BCS), JP Morgan Chase (JPM), and Royal Bank of Scotland (RBSPF) were fined more than $2.5 billion by the U.S. after pleading guilty to conspiring to manipulate the price of dollars and euros…
The first four banks operated what they described as ‘The Cartel’ from as early as 2007, using online chatrooms and coded language to influence the twice-daily setting of benchmarks in an effort to increase their profits.”

Is it possible that Mammon has become the number one god we turn to daily, and if so, could there be severe consequences at the global level in the years ahead from placing so much trust in wealth that depends on ever larger amounts of debt?

Richest 1% To Own More Than Rest of World, Oxfam Says, BBC News, Jan 19 ‘15

Goldman Sachs Warns “Too Much Debt” Threatens World Economy, Zero Hedge, May 29, ’15

Keynes“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate secretly and unobserved, an important part of the wealth of their citizens….As inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and lottery.” The Economic Consequences of Peace (1919) John Maynard Keynes, pg 233]

“I think, increasingly, they (central bankers) are discomforted. More than anything else I think it’s not just the ex central bankers but increasingly the people that are still holding the levers. They are starting to ask whether they have somehow been backed into a place where they don’t really want to be. Now, I agree with you, Sean, that there’s an element in everybody, although some more than others, where they’re glad to be looked upon as the saviours of the day. But I rather sense that an increasingly large number of central banks are actually looking at what is going on and saying ‘We are being asked to do something that is effectively impossible.'” [William White, former economic advisor to the Bank of International Settlements, in an interview with Sean Corrigan, Chief Strategiest for UK based Hinde Capital, The Road To Nowhere, An Interview with William White, Page 1, The Hindesight Letters, March 2015, pg 5]


“You shall have no other gods before Me.” Exodus 20:3

I wonder how individuals and societies will change their views toward debt based money by 2024?


A Curious Mind,

When Water Goes, Life Changes

To the World of 2024,

It is my hope and prayer that if you are reading my thoughts from April 2015 in 2024, that another crisis in my country and world today will have been resolved. This problem has been building over years, but in the last few has grown to one of the worst crisis of our day.

The crisis; the global supply of fresh water is in decline. This is not impacting merely third world nations, but my country, the United States.

California, THE most populous states in the US, has just issued its first executive order on mandatory water restrictions across the state due to one of the worst droughts on record.

California orders first-ever mandatory water reductions, USA Today, April 1, 2015

California Gov. Jerry Brown announced a sweeping executive order Wednesday that imposes mandatory water restrictions across the state as California copes with a historic drought and water shortage…He stood in a brown patch of Sierra Nevada that should be buried in snow to announce a broad-based initiative to reduce water use by 25%, or 1.5 million acre-feet, over the next nine months. ‘It’s a different world,’ Brown said. ‘We have to act differently.’


This is not a problem, that like the stock market, can be manipulated away temporarily with the assistance of high-speed computer algorithms trading S&P futures by central bankers in order to maintain the image of “invincibility”. This problem has been building for years, and must be addressed now because of a REAL shrinkage of water across California. In fact, the United States Drought Monitor makes it clear that while California is at the epicenter of this problem, there are several others states in the US that have large areas experiencing extreme drought conditions as well.



While individuals living in the U.S. outside of California may be tempted to think that this enormous problem will not touch their own lives, the following stats make it clear that California’s drought has far reaching implications for the U.S. food supply.

California Is Turning Back Into A Desert And There Are No Contingency Plans, The Economic Collapse, March 15, 2015

The truth is that this is a crisis for all of us, because an enormous amount of our fresh produce is grown in the state.

As I discussed in a previous article, the rest of the nation is very heavily dependent on the fruits and vegetables grown in California. The following numbers represent California’s contribution to our overall production:

99 percent of the artichokes, 44 percent of asparagus, two-thirds of carrots, half of bell peppers, 89 percent of cauliflower, 94 percent of broccoli, 95 percent of celery, 90 percent of the leaf lettuce, 83 percent of fresh spinach, a third of the fresh tomatoes, 86 percent of lemons, 90 percent of avocados, 84 percent of peaches, 88 percent of fresh strawberries, 97 percent of fresh plums.

Without the agricultural production of the state of California, we are in a massive amount of trouble.

This article from The New Yorker titled, California: Paradise Burning, was released last September. The pictures are extremely poignant, reminiscent of the 1930s.

Since 2012, California has been suffering through a historically severe drought. For the farmers of the Central Valley, which is, as Dana Goodyear writes in this week’s issue, “the country’s fruit basket, salad bowl, and dairy case,” the future seems especially bleak. Wells have gone dry, orchards have been left to perish, and those who came to California to work the fields stand idle.

This is expected to be California’s hottest year on record. Towns in the north are running out of water; the south has been asked to conserve. In the Central Valley, farmwork has dried up with the water supply.



[Source – The Dry Land, The New Yorker]

In the spring of 2010, I wrote an article tracing the history of our growing national debt. The article was titled, A Simple But Painful Lesson. While I was working on the article, a friend of mine who grew up during the Dust Bowl of the 1930s, gave me the book, The Worst Hard Time: The Untold Story of Those Who Survived The Great American Dust Bowl.

As we live out our busy lives with little thought of system wide problems, taking for granted that everything from our financial assets to our gas, food, and water will always be there on time when we need it, it certainly seems like this quote attributed to Mark Twain from the 19th century is extremely pertinent to us in 2015: “History doesn’t repeat itself, but it does rhyme.”

TheWorstHardTime.1930The stock market crashed on October 29, 1929, a Tuesday, the most disastrous session on Wall Street to date in a month of turmoil. Investors were relieved at the end of the trading day. ‘RALLY AT CLOSE CHEERS BROKERS; BANKERS OPTIMISTIC’ was part of the three-stack headline in the next day’s New York Times….On the High Plains, the Wall Street gyrations were a distant noise. The crash hurt rich people, city slickers, all those swells and dandies. It could not reach the last frontier of American farming …The newspaper in Boise City boasted that the ripple of the crash never touched the Panhandle in 1929. Instead, with record harvest, a new railroad, and even dreams of a skyscraper in town, the paper said, ‘Our ship is coming in.’

While prairie families may not have owned stock, they did own wheat, and it was starting to follow the course of the equities market. On Wall Street, people put 10 percent down to borrow against the future growth of a stock; in Kansas a dryland wheat farmer did the same thing – gambling on grain. The 1928 crop had come in okay, the price holding at $1 a bushel at the end of the year. Most people had anticipated $1.50 wheat; some even talked of the $2 yield they had been getting at the start of the decade. There was a drought elsewhere, covering Maryland and the Carolinas all the way to Arkansas, that should have pushed up prices. [pgs 73 and 74]

Frankly, to write about the serious nature of the water shortage in California and other parts of the nation right now, or how this will alter the nations food supply, it is as hard for me to fathom as the lives of those who lived through the Dust Bowl of the 1930s. I am still isolated from these issues today, as my daily life allows me to find food at numerous grocers, and water is in abundant supply here in North Texas.

Yet whether farmers in 1929 or recent years, these realities are very real and personal.

From reading and writing so much history over the last decade, I am very aware that I would be extremely foolish if I thought that the world around me was not going to change, and change drastically.

On the other side of the world, water has continued to become an extremely critical and shrinking resource for both the Jews and Arabs in the Middle East. Whether Syria, Jordon, and Israel depending on the limited resources from the Jordan River, or Turkey, Syria, and Iraq depending on the limited resources of the Tigris and Euphrates, the life giving force of water continues to shrink in quantity, placing entire populations under extreme pressure.

I wonder as I look at the world as it exist today, about a world in the future where water is far more abundant.

“And it shall to pass in that day, that living waters shall go out from Jerusalem: half of them toward the eastern sea, and half of them toward the western sea; in summer and winter it shall be.” [Zechariah 14:8, A Hebrew English Bible according to the Masoretic Text]

“He [GOD] will wipe every tear from their eyes. There will be no more death or mourning or crying or pain, for the old order of things has passed away.” [Revelations 21:4, New International Version of the Bible]

A Curious Mind

A Centrally Planned Sex and Financial Life

To the World of 2024,

Today, March 18, 2015, the Federal Reserve is making another announcement. Everywhere in the financial world the debate is between whether interest rates will be raised or stay the same. I believe by 2024 this will seem ridiculous. To think that one organization carried so much power over the financial well being of so many lives. However, today is has been accepted as financially “normal” by the majority.

Today it would seem that societies around the world have embraced this idea, that centrally planning everything from our money to our sex lives has become the standard.

You may think I jest, but read on.

Recently, I came across the following headline from Bloomberg:

The Japanese Government Is Trying To Figure Out How To Get Its People To Have More Sex, Bloomberg, Jan 25 ‘15

Now I ask you, have the political leaders of Japan gone mad? How far will the role of government reach in Japan? Since they have been hyper printing their currency, the yen, over the last three years, shouldn’t politicians be more concerned about the Bank of Japan wrecking their own economy than sending out surveys or doing interviews with groups to make sure their citizens are having enough sex?

Of course, the real concern of the government is the birthrate, which is falling fast:

“The birthrate is falling fast. By 2060, the population is expected to go down by a third, and, by 2100, if trends continue, by 61 percent. In 2011, sales of adult diapers in Japan exceeded those of baby diapers. It’s an urgent national problem: there isn’t enough procreation.”

So is it any wonder that one of the solutions for this is a tax. Yes, a tax.

“Morinaga Takuro, an economic analyst and TV personality, believes this has something to do with attractiveness. He has suggested a ‘handsome tax’: ‘If we impose a handsome tax on men who look good to correct the injustice only slightly, then it will become easier for ugly men to find love, and the number of people getting married will increase.’”

Fortunately, I am not an ugly man, or at least my wife doesn’t think so. But neither am I handsome enough to fall into the “handsome tax” group.

Like the US, Europe, or other nations following the “centrally planned life” model, the Japanese government wants their citizens to know, that money will be spent to find a solution, as though spending money by a government always leads to a solution.

“Whatever the case, it’s an urgent government concern. In 2014, aware of the dangers of becoming a nation of old folks, Prime Minister Shinzo Abe set aside a 3 billion yen ($30 million) for programs aimed at boosting the birthrate, including matchmaking programs.”

Could these studies and programs be taking attention away from the fact that the government has become the “buyer of last resort” for its own stock market – a symbol of “economic growth and opportunity” – literally by printing up trillions in yen solely for the purpose of buying their own government bonds and stock funds?

World’s heaviest burden: Japan’s Debt Tops 1 Quadrillion Yen,
RT, Aug 9 ‘13


Plunge Protection Team Exposed: Bank of Japan Stepped In a Stunning 143 Times to Buy Stocks, Prevent Drops, Zero Hedge, March 11 ’15

“Since (Bank of Japan) Gov. Haruhiko Kuroda took office in March 2013 and introduced monetary easing of what he called a “different dimension,” the central bank has sharply increased its buying of baskets of stocks known as exchange-traded funds. By directly underpinning the market, officials have tried to encourage private investors to follow suit and put more money in stocks in the hope of stimulating the economy and increasing inflation.

HelpingHandDuring the past two years, the central bank entered the stock market roughly once every three days, picking up a total of ¥2.8 trillion ($23 billion) of ETFs that track Japan’s major stock indexes, according to Bank of Japan records. That distinguishes it from the U.S. Federal Reserve and European Central Bank, both of which have bought bonds to pump up the economy but haven’t directly bought stocks.”[Original source was from the article, BOJ Helps Tokyo Stocks To Soar: Some Within Bank Worry Over Growing Role in Market, WSJ, March 11, 2015]

The speed of change in the world around us today should be alarming. Yet it would appear that since 2008, whether in Japan, or my country, America, that as long as one’s life is moving along a somewhat predictable path, that the massive increase and intervention by the state (central bankers) in financial markets, or “unlimited” ways to spend money fixing society (politicians), is merely accepted as normal, or at least not with any severe backlash.

Yes it has been this way for years and years, but the speed of change that has taken place since 2008, and especially since 2013, makes it clear that these patterns in markets and society are like the declining birthrate in Japan, totally unsustainable.

The comments in William Pesek’s recent book,Japanization.WilliamPesek Japanization: What the World Can Learn from Japan’s Lost Decades (2014), make it clear that epoch changes are coming much faster, larger, and sooner, than the policies implemented to date by central bankers and national politicians to “fix the problem”:

“Only 1.2 million Japanese turned 20 (in 2012), half as many as in 1970 – a reminder that the population is shrinking as the national debt surges…


Takeshi Fujimaki, a former adviser to billionaire George Soros, is bracing for a fiscal crisis sometime before the Tokyo Olympics. That risk drove him to recently run for an upper house of parliament seat, which he won. ‘I decided to become a politician because I think a financial crisis will come sooner or later,’ Fujimaki said. ‘This total debt will continue to increase. I don’t think Japan can survive until 2020.’


Japan’s debt is approaching 250 percent of GDP. The nation will spend 22.2 trillion yen servicing its debt in the fiscal year begun in April 2013, accounting for more than half of total tax revenue and occupying about 24 percent of the government’s budget.”

Today, it seems that the number one value in society is optimism. I consider myself an optimistic person. But I also believe that when we are facing such incredibly serious social issues like the ones taking place in the world around us, that we must start talking among each other about these serious issues, and seeking answers at the family and local community level, rather than abdicating our sex life and financial futures to the policies being created at the national and international level. Yes these central planners can tap into this “unlimited source of ‘free money'”, but when seen through lessons already written from the story of “unlimited debt to fund unlimited spending by the state” , we know that it has always proven to be an unsustainable path.

It is now March 2015, and the drug of “all time highs” in global wealth indicators seems to have pushed posts like this one to the backburner. But I have also observed a growing crowd that is very concerned about where this is leading all of us, to me, a positive step in the right direction.

We will see where this story in history takes us, as we continue to watch.

A Curious Mind

  • You are encouraged to read my recent public article, Free Money; What Could Go Wrong? It provides financial charts of the Japanese Nikkei, the longest DEFLATING stock market pattern in modern history (its all time high taking place on January 3, 1990), and the explosion of assets on the Bank of Japan’s balance sheet since 2012, caused by their current attempts to literally buy up their sovereign bonds and their stock market. Just google the title to find it on the web.

Seeking Answers; Seeking Rest

To the World of 2024,
2015 is the 150th anniversary of the end of the Civil War. Several years ago, my wife and I watched a 9-part documentary by Ken Burns on this painful period in American history. One thing that made the soldiers and their families come alive for me, were the many letters that had survived from that period to our own.


The letters between the battlefront and the home described a life very different from my own. The seriousness of life was not how I grew up in a middle class American family. Yet the personal letters made it clear that families and soldiers knew how fragile life was during those years in America.

At the end of 2014, a friend of mine sent me a copy of a prayer he had written. While it may sound out of place for my America at the close of 2014 with the Dow breaking 18,000 for the first time ever and so much emphasis on our comforts today, his prayer touched my own heart as I pondered headlines that continue pouring in week after week, pointing to a time where deeper thoughts across my nation and world of a more serious nature could become more common.

O Lord My God, Answer Me

Lord I cry out to You. Hear me O Lord, Unto You O Lord I call. O Lord hear my prayer, receive my voice with mercy. When I call upon You O Lord, Hear me.

Let my prayer arise, as incense in Your sight. Let the lifting of my hands be like an evening sacrifice. O hear me, Lord, hear me O my Lord.

Dark, dismal thoughts fill my days, and confounding fears dwell deep within my troubled heart.

Answer me, O LORD, answer me, give heed to the voice of my supplications!

My soul is like withering grass, in misery,my minutes pass, my days are consumed like smoke.

Answer me, O LORD, hast Thou not built a throne of grace to hear when sinners cry?

Sharp reproaches wound my ears, and refuse to give my spirit rest.

Answer me, For You are patient, generous in mercy, rich in compassion, loving and just.


My cup is bitter and full of tears, my daily bread unpleasant to my taste.

Answer me, I know You won’t delay the appointed hour of your mercy and grace.

Incline Your ear, O Lord, and answer me; For I am afflicted and needy.

Answer me when I call. You have relieved me in my distress; Be gracious to me once more and hear my prayer.

In the day of my trouble I shall call upon You alone, For only You will hear me.

Answer me when I call, save your servant who trusts only in you.

Preserve me, save me, Be gracious to me, O Lord,

Answer me, Be abundant in loving kindness when l call upon You.

manprayingYou, Lord, are good, and ready to forgive, I lift up my soul.

Answer me, And I will glorify Your name forever.

You alone O Lord, have helped me and comforted me.

Answer me, For You are patient, generous in mercy, rich in compassion, loving and just.

Consider and answer me, O LORD my God. Answer me quickly, LORD; my spirit fails. Do not hide your face from me. I wait and hope only in You, O Lord; You will answer, O Lord my God. God knows his own and hears their cry and fills their tongues with praise. Holy, Mighty, Immortal God have mercy on me.

Glory to the Father and the Son and the Holy Spirit. Now and forever.


A Mind with Much to Ponder