Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20
Global "Debt Mountain": Beware of This "New Peak" - 13th Nov 20
Overclocking Zen 3 Ryzen 5600x, 5800x, 5900x and 5950x to 4.7ghz All Cores Cinebench R20 Scores - 13th Nov 20
Is Silver Leading Bitcoin or is Bitcoin Leading Silver? - 13th Nov 20
How Elliott Waves Simplify Your Technical Analysis - 13th Nov 20
How to buy Bitcoins using debit/credit card? - 13th Nov 20
Will COVID Vaccine Kill Gold and Silver? - 12th Nov 20
Access to Critical Market Reports - 12th Nov 20
Stock Market Dow Futures Reach 30,000 on News of COVID-19 Vaccine Trials Success - 12th Nov 20
8 Terms & Conditions You Must Know Before Asking For Life Insurance Policy Quotes - 12th Nov 20
Gold Stocks Post 2020 US Election Outlook - 11th Nov 20
Champions’ League Group Stage Draw: All You Need To Know - 11th Nov 20
Stock Market Secular Trend - 11th Nov 20
Stock Market Correction Curtailed by US Election - 11th Nov 20
What Causes a Financial Bubble? - 11th Nov 20
Ryzen 9 5900X RTX 3080 - Scan.co.uk vs Overclockers.co.uk UK Custom PC System Builder Review - 10th Nov 20
Killing Driveway Weeds FAST with a Pressure Washer - Saving Block Paving from LOTS of WEEDs - 10th Nov 20
Trump Fired, Biden Hired, What Next?  - 10th Nov 20
Looking for a Personal Loan? Here Is What You Have To Know  - 10th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Triage In Financial Markets

Stock-Markets / Credit Crunch May 12, 2008 - 01:37 AM GMT

By: Darryl_R_Schoon

Stock-Markets Best Financial Markets Analysis ArticleGlobal financial markets are in extreme triage following the credit contraction of August 2007. It is believed central bankers are trying to restore markets to help the economy. In truth, they are like life insurance companies fighting to keep a wealthy patient alive so the high premiums will continue to be paid and the large death payout will be postponed.


It has been only nine months since credit markets unexpectedly froze in August 2007. The central bankers who were surprised by the summer 2007 credit contraction now hope the danger has passed. But they are about to be surprised again and soon.

We are witness to the unraveling of historic levels of debt caused by central bank issuance of debt-based money. That such issuance over three hundred years has led to trillions of dollars in constantly increasing compounding debt is not unexpected. What is also not unexpected is that someday the debt could not be repaid.

That realization is what happened in August 2007. Suddenly, buyers of debt, those in need of guaranteed downstream revenues realized $1.5 trillion of AAA rated subprime CDOs would not be repaid as expected. The consequences of that realization are now in motion.

When this happened, credit markets froze. The day of reckoning feared by kreditmeisters had arrived. Since then, central bankers have been furiously providing liquidity to banks, the intermediaries of credit, hoping to restore confidence in credit markets—but more liquidity will not restore confidence in debt any more than more money will satisfy the yearnings of the soul.

Once buyers of debt realized they could no longer trust AAA rated debt, the systemic risk to capitalism soared. The foundation of capitalism, a debt-based paper money system created by bankers, is confidence; and when a confidence game is being run, there is absolutely nothing more important than confidence.

When modern banking substituted credit driven debt-based paper money for gold and silver, every aspect of commerce was affected. Paper money with no intrinsic value, and its method of leverage, capitalism, are totally dependent on trust and confidence; and in August 2007, that confidence was shaken. Whether or not the damage is irreparable remains to be seen.

While credit driven paper money produces growth, it does so at the cost of stability. Today's multi-trillion dollar global economy is based on the banker's amalgam, an unsavory collection of credit, debt and speculative greed, a volatile combination that becomes increasingly unstable as it grows—and it has been growing now for over three hundred years.

CAPITALISM'S MINSKY MOMENT

The late economist, Hyman Minksy, is a name increasingly heard in these increasingly problematic times. Minsky's hypothesis was rather direct in its clarity, that as capital markets mature they became increasingly unstable, that over time investments become more speculative leading to heightened instability which culminates in market corrections whose severity is a function of previous excess.

Two excellent recent references to Minsky are: Thomas Tan's Introduction To Minsky Theory , see http://news.goldseek.com/GoldSeek/1210140240.php and

Doug Noland's Revisiting Financial Arbitrage Capitalism , at http://www.prudentbear.com/index.php/archive_menu?art_id=5061 . Both articles will shed light on Minsky's explanations about why markets are collapsing and will continue to do so.

Time is a key ingredient in Minsky's observations on the instability of capital markets. Capital markets came into existence in 1694 when the Bank of England, its central bank, was established. The ensuing three hundred plus years have given capital markets more than enough time to mature—and collapse. Minsky's moment, the bane of maturing markets, is now at hand.

DEBT—CURSED BE THE TIE THAT BINDS

The world is now bound as never before by the bonds of debt that cross national boundaries. Globalization is the name for the spread of England's central banking system that has given bankers increasing control over global productivity while indebting virtually all of humanity.

Capital markets built on credit and debt need to continually expand in order to service previously created compounding levels of debt. When only England was on a credit-based system, as long as England 's empire expanded its increasing debts could be absorbed; but when England 's expansion slowed, so too did its economy.

The conundrum of the necessity of continual economic expansion is now being played out on a global scale. Now, the entire world is based on England 's debt-based central banking system; and, consequently, unless the world economy continues to expand, the commensurate expanding edifice of global debt will collapse.

When global credit markets imploded in August 2007, the contraction of the world economy began. Since then, despite the best efforts of central bankers, global growth has continued to slow; and, after the present contraction has finally run its course, the world will be a far different place than it is today.

It has been only nine months since credit markets froze and uncertainty replaced the smug hubris of the world's then sanguine bankers. Only a year ago, the IMF was predicting yet another year of strong growth, now they see otherwise.

WHEN EVERYONE IS BLIND THE BLIND BELIEVE THEY CAN SEE

Today, bankers don't understand the trouble they are in because what is happening has never happened before—at least to them. The Great Depression was the last time a financial crisis happened on such a scale but the lessons of the Great Depression were those of another generation and lessons lost must be relearned by those who never knew them.

Unfortunately, we will learn the lessons together as we pay for what we collectively forgot and consciously denied. All of us, even the late comers to capital markets in Asia , are vulnerable to the sinking boat of credit and debt built by western bankers over the past three hundred years.

HOW LONG IT FLOATED

HOW QUICKLY IT SANK

In May 2008 we are at the cusp of the crisis. Those still in denial hope we are closer to its end than its beginning; but, if we are, that means the descent will be quick and brutal instead of protracted and painfully slow. Either way, the end will be the same.

The daisy chain of debt constructed by bankers has now connected all of us, the solvent and insolvent alike. Personal solvency will provide but little protection when countries, relatives, neighbors, banks, and employers and employees become insolvent. Gold and silver will be among the few lifeboats and faith will be invaluable.

Note: I will be speaking at Professor Antal E. Fekete's Session IV of Gold Standard University Live (GSUL) July 3-6, 2008 in Szombathely , Hungary . If you are interested in monetary matters and gold, the opportunity to hear Professor Fekete should not be missed. A perusal of Professor Fekete's topics may convince you to attend (see http://www.professorfekete.com/gsul.asp ). Professor Fekete, in my opinion, is a giant in a time of small men.

Darryl Robert Schoon
www.survivethecrisis.com
www.drschoon.com

About Darryl Robert Schoon
In college, I majored in political science with a focus on East Asia (B.A. University of California at Davis, 1966). My in-depth study of economics did not occur until much later.

In the 1990s, I became curious about the Great Depression and in the course of my study, I realized that most of my preconceptions about money and the economy were just that - preconceptions. I, like most others, did not really understand the nature of money and the economy. Now, I have some insights and answers about these critical matters.

In October 2005, Marshall Thurber, a close friend from law school convened The Positive Deviant Network (the PDN), a group of individuals whom Marshall believed to be "out-of-the-box" thinkers and I was asked to join. The PDN became a major catalyst in my writings on economic issues.

When I discovered others in the PDN shared my concerns about the US economy, I began writing down my thoughts. In March 2007 I presented my findings to the Positive Deviant Network in the form of an in-depth 148- page analysis, " How to Survive the Crisis and Prosper In The Process. "

The reception to my presentation, though controversial, generated a significant amount of interest; and in May 2007, "How To Survive The Crisis And Prosper In The Process" was made available at www.survivethecrisis.com and I began writing articles on economic issues.

The interest in the book and my writings has been gratifying. During its first two months, www.survivethecrisis.com was accessed by over 10,000 viewers from 93 countries. Clearly, we had struck a chord and www.drschoon.com , has been created to address this interest.

Darryl R Schoon Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules