I just finished reading economist Michael Pento’s latest book, The Coming Bond Market Collapse. I breezed through this in short order and am somewhat disappointed he covers nothing new. In fact, Pento’s argument is likely stale material here. But his discussion does elicit some unanswered questions for me I hope to address in this thread.
The book in a nutshell: the U.S. central bank has backed itself into a corner with no way out and has no choice but to continue to inflate, prop up markets, and to monetize the debt, indefinitely, thus creating the biggest bubble to date, the U.S. debt market. The inevitable conclusion, per the laws of economics, is the collapse of the U.S. dollar. This will occur once foreign investors wise up and run for the exit, at which point the U.S. dollar will not only lose reserve currency status, but the global economy will also find itself in the throes of a hyperinflationary global depression. The only buyer of U.S. debt will then be the Federal Reserve Bank, prompting a runaway hyperinflation.
If this book were predicting geological catastrophe instead of economic ruin, it would be equivalent to the Yellow Stone super volcano erupting or the entire state of California sliding off into the Pacific Ocean after the big one.
The critique I have with the thesis (besides being two-dimensional), along with literally dozens of similar books and hundreds of similar articles I’ve read with similar theses, all of which point invariably to the collapse of the US dollar, isn’t substance. I think Pento is on target and has an accurate understanding of the problem. He cites historical precedent, has a solid grasp of economics and monetary policy (argued from the Austrian school perspective), and is even correct in assuming the logical conclusion to the time bomb is collapse. In short, the problem isn’t with the analysis… or even its logical conclusion. But all this goes almost without saying to anyone who understands economics; in other words, the Austrian school has already won this argument a long time ago….
The problem I have with his argument (and which renders its predicted outcome somewhat suspect to me) is the highly flawed premise many Austrian economists naively assume. And that is this: those silly Keynesians (and the chairman of the Federal Reserve in particular) in their blinded ideology and hubris are simply misguided. The underlying theme always assumes the Fed, in its earnest attempt at remedying the ailing economy, doesn’t fully understand what causes inflation, how to accurately measure inflation, or the real damage inflation does to the economy. In other words, Austrian economists who advance (rather obvious) remedies assume the Fed is innocently mistaken in its prescription to jump-start the economy and is merely on the wrong path to stave off the inevitable economic collapse.
In somewhat ironic fashion, if that premise were really true, the Federal Reserve would simply follow the obvious path (yes, even to Paul Krugman), which would be the Austrian remedy. The facts and remedies proposed by Pento are already well known to all serious economists and social engineers, and especially at the State level. The fact that there is even a false debate between the Austrian school and the Keynesian school is an engineered one, i.e., a generated distraction to legitimize what literally amounts to the latter being a scorched-earth monetary policy masquerading as legitimate economic theory.
The Austrian premise that the Fed doesn’t have faith in the free market’s ability to defend itself, doesn’t understand the movements in the gold price (ah, ahem… the Fed sets the gold price), that the Fed wrongly assumes all the money it pumps into the market (QE infinity) will be engaged by the consumer, that U.S. international creditors will soon have no choice but to cut up its credit cards, are all patently false. On the contrary, the Fed knows exactly what it is doing. If anything, the debate with Pento only humors the opposition, even if he and other Austrians don’t even know it.
The truth is, the Fed is proceeding accordingly in a very precise and methodical manner. Whomever it appoints as its chairman, be it Volker, Greenspan, Bernanke, or Yellen, is simply an academic sock incrementally executing the directive of the cartel’s objective, and that objective is nothing other than to concentrate the planet’s entire wealth and resources while it slowly sucks it dry, in a slow, deliberate, and vampiric manner, such that those who present remedies to the resulting paralysis and ensuing enslavement of humanity merely drag themselves into endless debate and academic quagmire. The Fed’s objective is calculably the very opposite of the underlying remedies outlined in Michael Pento’s book. It is false for him to assume otherwise; the Fed is taking the “wrong path” by careful and deliberate calculation. The fact that those who advance any argument against the Fed without grasping this broader picture (which to me seems elementary) makes me question their understanding of the probable outcome, economic laws or no economic laws.
Here are the questions I hope this thread will address and resolve. They are questions I am unsure of myself after deliberating how this is all going to go down:
The premise: The Fed can’t keep interest rates low forever or continue to monetize the debt; the laws of economics won’t permit it. Hence an imminent collapse is on the horizon.
My question (which Pento never addresses): Why not? There is still a LOT of wealth to concentrate and a lot more to siphon off, especially in North America, South America, and Europe. While admittedly much smaller and shrinking by the day, there is still a sizeable middle class in America to loot and elsewhere around the world for that matter. I’m not saying Pento is wrong, necessarily, (I actually agree with his analysis), but he doesn’t specifically address, to my satisfaction anyway, why the hell not? Why can’t they continue to tweak and to monetize and to keep bond prices high into the foreseeable future? Pento merely assumes, as a given, that the laws of economics won’t permit it. And under normal circumstances, he would be right.
All other things constant, the laws of economics, just as the laws of gravity, must necessitate a currency collapse, just as Pento says, unless one has anti-gravity technology. To wit: even as demand for U.S. debt wanes, the Fed can continue its bond purchases though its proxy banks. (Yes, this will cause more inflation, but that’s precisely the objective. Allowing the economy to expand and grow is sowing the seeds; inflation is the harvest. Enacting inflation is the mechanism that redistributes wealth from the masses to cartel).
The Fed can also continue to manipulate the price of precious metals and foreign currencies (making US debt more or less attractive); it can circumvent its proxy banks, if necessary, and directly buy US debt; it can manipulate geopolitical and/or effect false flag events (directing a flight to safety), and most importantly, it can wage highly covert global economic warfare against it chief economic foes, Russia (exporter of oil) & China (importer of oil) by directly manipulating the price of oil; the Fed also has the means (namely the U.S. military) to coerce foreign governments not named Russia or China (and maybe even Russia and China) to continue to purchase the host government’s (USA’s) debt. For the most part, all euphemisms and niceties aside, foreign demand for U.S. debt isn’t a voluntary arrangement folks; it’s a shakedown. In other words, I’m not so convinced it is as simple as “foreign governments heading for the exit,” as Pento asserts.
That said, I want to make it clear that I’m not arguing against the imminent currency collapse because of the reasons I state above; I’m just saying most of the fervent proponents of currency collapse fail to address all the covert weapons the criminals in charge could possibly employ to prolong the heist. My hunch is foreign governments can and will eventually resist the shakedown; but in my estimation global war, as in WWIII, is much more likely before a currency collapse. Then, and only then, does it seem likely to me that we will see a currency collapse. And by then such a collapse will be right on time. If we are not very careful, in other words, we could easily end up on the other side of such a global conflict with the current power brokers even more consolidated and with the maturation of the NWO well underway. We could easily see the rise of a global totalitarian fascist regime (especially after a potential post-nuclear WWIII exchange) from the scorched earth, and a new Bretton Woods arrangement, albeit with the same criminals still in charge and largely in tact, with even greater control, and right on schedule, providing the reset global financial solution of the post-WWIII global economy.
Thoughts?