SBSS 27. How Money Dies

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.  Ludwig von Mises.

Our entire way of life is based off of a debt based currency that must create more debt every year in excess of the debt AND interest accrued the year before.  This is because every dollar that comes into existence is a debt with a certain amount of interest attached on to it.  When debt is created, money is created.  When debt is paid off, money is destroyed.  The real trick is that the money that is owed for the interest does not exist, since only the principle of the loan is put into the economy.  The ONLY way this interest can be paid is by more debt being created to pay the previous debt AND interest.  This is why we have an ever expanding debt that cannot stop.
“In the end we are all dead.”  John Maynard Keynes
The dollar collapse is a mathematically inevitable event.  It will also be the largest single event of human history.  At some point the debt incurred will be more than the real economy can bear and there will be a default of non payment.  Or the other way to default, is that we constantly print more money to keep the system going, that we eventually destroy the value of the currency and people lose faith in it, which leads to a rush out of it and into hyper inflationary depression.  One key aspect of this default is that Nations that owe the debts to foreigners simply default on the debt like Greece will eventually do.  But those nations like ours, that print our own debt based currency, have every single time, paid the debt with increasingly worth less currency to the point that we reach a hyper inflation.  

 When one realizes this foundation of our entire way of life has cancer  the debt, the dollar, the economy, the stocks, the real estate, the pensions, our entire current, unsustainable way of life ends.  
We can at this late date have a deflationary crash or a hyper inflationary depression, nothing is written in stone.  We can have a deflationary depression if the politicians stop creating more debt and refuse to raise the debt ceiling.  With no more debt coming into the system, we would have the mother-of-all margin calls the world over almost immediately.  The highly leveraged world of banking would be forced to de-leverage to meet their debt obligations.  This would seize the markets and the economy as a whole and it would happen all in a matter of a few days.
Austerity is another way a deflation can happen.  When nations restrict the amount of money spent into the economy by cutting services and payments, it limits the amount of money in circulation.  Since the interest money is still sucking from the real economy, and there is no money coming back in as this deflationary action on the economy grinds to a halt and those most dependent upon those payments will be screaming the loudest.  The masses will beg and fight for more spending and eventually the politicians cave and give the masses what they want, more money.  

Every country that engages in austerity will abandon it as political pressure grows and the fact that with less government money in the system, the more the Keynesian parasitical system collapses. Tax revenues shrink faster than the spending cuts and this will increase the deficits.  This is a ploy that the bankers benefit from because austerity really means sacrificing the masses lives, so that the bankers portfolios can perform.  The politicians play this dangerous gambit because they want the people to beg them for more money.  The game they play with the whiff of deflation and then opening up the money spigots is a very successful dialectic that has empowered this parasitical ruling class for ages.

We could also have a deflationary depression if a nation like Greece defaults and the ECB does not flood the system with more Euros to cover the losses in the system.   By Greece defaulting on their debts, the banking system would seize up as banks become blatantly insolvent, as the equity in their positions are destroyed.  This again would force everyone to sell their assets in a cascading mess to cover their loses.  The deflation in the system is the most immediate and destructive choice.  It is easy to find who caused it and it is difficult for people’s confidence to return after it starts.  This is why the Fed and the ECB have been furiously working on acronym schemes like QE 1 and 2 Operation Twist and LTRO  and the secretive $16 Trillion Dollar slush funds to support the insolvent zombie banks and the system they hold up.  Once the ECB starts covering the losses in the banking system this will give cover to all other Western Central banks to print as these currencies fall relative to another.  Trillions will start flowing and the world will be rocked as it was in 2008 but this time it will not be billion dollar institutions that are broken, it is trillion dollar nations and quadrillion dollar markets.

14 comments to SBSS 27. How Money Dies

  • David baker

    Great stuff,,the big finish,i like this in a nut shell vid ,

  • john

    very interesting week and very interesting times. it appears that this is a control take down of PMs for the next round of QE3. however, none of us no and we are really just speculators at the end of the day.

    only time will tell.

  • urban sling-bow

    My financial collapse clock has been stuck at 23.59hrs since just before Christmas (I really did think a bank holiday would be called during this western down time).

    I am glad my clock has stopped as I do not wish for a collapse (anyone who understands how bad things could get never would).

    I am however concerned that, although we have all been granted some extra time to prepare for the ‘controlled demolition’ of the western global finance (or the uncontrolled collapse from its own weight and corruption), the western governments are also preparing – but not in a good way.

    Wearing my tin-foil-hat and looking through some very dark glasses, I have noticed creeping encirclement (around the world – in Europe and the UK, nor just the US, and Canada) of major cities / highly populated regions.

    I have noticed ‘road works’ and other ‘work’ taking place at certain key sites (such as highway choke points in both towns and cities, and at transport hubs).

    I have noticed the movement of NATO military assets ‘inwards’.

    I have noticed the uparming / militarisation of the Police throughout the West (even the normally unarmed British police have been issued with modern G36 assault rifles).

    I have noticed the extended powers of both the Police and Military at home, and even new laws legalising the use of brutality (and even deadly force).

    I could go on.

    With my tin-foil-hat and shades still on, a collapse scenario would offer a once in a lifetime opportunity for a coordinated power grab by the NWO elitists (who currently hold office in much of the western world). I was particularly concerned to see the Olympic games security operation, initially because I suspected the military and police were being set up for a false flag type attack (the Brits have moved an assault landing vessel (helicopter carrier) up the river Thames into the centre of London, along with the first units of a 13000 strong military task force:

    However comparing the situation in London with that of other major cities around the world, my overactive imagination has brought forward thoughts of a co-ordinated military take over / marshall law / coup of western civilian government to be co-ordinated with the collapse.

    Perhaps I am on to something, perhaps I just need to lie down……..

  • urban sling-bow

    New Alert from Pastor Lindsey Williams: The Derivative market is coming down this year (and fiat currencies with it). Expect a bank holiday soon.

    Part 1:

    Part 2:

  • VIPER131

    urban sling-bow –

    Not trying to simplify this to much but EXPECT THE UNEXPECTED!!! Then when the unexpected happens – you won’t be surprised.

    The circuit breakers in the Anglo-American Empire control room are popping. The rate at which they are popping is increasing.

    The problem is that we like to think linearly – if this, then that. This will not work. Because in this control room there is no way to determine which order the circuit breakers are going to pop.

    The order of the dissociation of our current paradigm can be any order — with each order completely representing an entirely independent outcome:
    a. Martial Law and orderly collapse,
    b. chaotic collapse with a disorderly martial law,
    c. no martial law and a high speed vector into World War 3(against BRICS),
    d. currency collapse – no martial law – short term chaos — depression
    e. military coup/federal government reformation IAW US Constitution,
    f. Military Coup,
    g. Collapse
    h. Civil War between States Rights and Janet Napolitano’s Nazi DHS (just followin’ orders ma’am).
    i. It is conceivable the puppetmaster’s own the BRIICS – so our society will be destroyed, the wealth transferred out, and now they own everything entirely.
    ….. and so on and ao on and ao on… (you get the drift)….

    Who Friggin’ knows — one thing for sure: In 10 – 12 years those still around will be saying to themselves ‘wow, that was insane, did not see that coming’, and will probably be in awe of the changes that will have taken place.

    Prepare for you and your family’s personal safety (guns/ammo/equipment/bugout).
    Prepare for you and your family’s well being (supplies/food/water/etc).
    If you have any finances leftover – preserve your assets with PM’s. (again who knows.

    Just expect the unexpected — one more bailout plan, then another bailout plan… blah blah. We are just so used to quick endings – one hour episodes that solves everything that our linear thinking works in this manner.

    The system could implode tomorrow, next week, Christmas, Next year, or even three years from now. Depending on family economics = for some families the collapse has already happened and for others life is still great since the tsunami has not hit them personally.

    The only time that counts is this – if you wake up at 8am and everything hasn’t broken down – be thankful and continue in your preparations. I thank my stars that the system didn’t blow back in 2008. I wasn’t even aware of the corruption/manipulation involved in things. Thankfully I am now aware and becoming prepared. Each day is a baby step for me – since I don’t have massive wealth to acquire everything at once. I am thankful for every day.

    Again – who knows. Expect the unexpected!!!! Let nothing surprise you!!!

    Not sure if this helps or not!!!

    • urban sling-bow

      > VIPER131,

      Yes, your reply does help – thankyou.

      I too am thankful the system did not go down in 2008 – I was fast asleep then and would have been ‘ground up for beef with the rest of the herd’ if it went down back then.

      I have only really woken up enough to get my butt moving within the last 12 months. I thank God that I have at least been woken up in time to make some basic preparations (very basic and very limited due to severe lack of funds).

      I have decided that my family and I will ‘bug in’, and have tried to plan accordingly. I have concentrated on family water filtration, purification, and storage, canned and sealed food supplies (just one weeks worth for each member at the moment), essential day to day consumables (hygine & sanitation), cooking supplies, lighting, and most recently x2 slingbows and x2 crossbows to help protect what we have (firearms are prohibited where I live and my Wife would never have one in the house anyway). I also have a few ounces of Silver (just in case).

      Every day I get up and still see ‘normality’ out the window I am thankful. I’ve got another day to do more prepping – although I do sometimes feel foolish that I did not see this coming earlier.

      I will also take on board your comment ‘expect the unexpected’.

      Hopefully this will be a slow-burn collapse and the western world will not decend into some kind of Orwellian nightmare, but I dont hold out too much hope due to the large numbers still asleep.

      I will also take on board your comment ‘expect the unexpected’.

      My regards to you and yours.

  • SilverEagle

    I try to read everyday. A wealth of knowledge by readers and JW Rawles. I have shopped both online and locally for gear, supplies, etc. One site I recently discover that has some great prices on items is You get a 20% discount on the published prices if you set up an account. It can be a false name, screen name, etc. But the bulk food prices are some of the best on the web, low shipping and quick turn around.

    • urban sling-bow

      Thanks for the links. I’ve just a look at survivalblog and was impressed. I’ve bookmarked it for a return visit.

  • picomanning

    In H G Wells The Time Machine there were two kinds of mankind. The Eloi and the Morlocks. The Eloi were naive ideologues who trusted the kindness of nature and enjoyed their oblivion of death. The Morlocks maintained the Eloi epistomology for personal reasons. They ate Eloi.
    Have you sensed the separation of American political humanity lately?
    Tax payers are Eloi. The Morlocks are sculpting our politicians. They are the big banks and big corporations. Our currency fails with every added billion of debt. The culmination of the separation of the economic species will be the total destruction of our currency. Starvation and chaos will be the sign. And the contollers of government will be as much the union leaders as corporate leaders and political leaders. Their leadership will be inspired by the instinct to survive as well as possible. They will then decide to be controllers rather than controlled. Have no doubt, the vast majority will be utterly controlled. Iron fisted rationing must be implemented to stop the starvation and chaos relulting from a useless currency. There is no alternative currency. Marshall Law can be considered a certainty. That time will come when the last straw of debt breaks the American camel’s back. Keyesians don’t understand the relationship between spending and wealth creation. They pretend it’s all the same. The wine of our wealth is being diluted by that ignorance. As long as it spends, it’s money to them. But they must also ignore the proportion of debt to income. If you did that in your personal lives you’d be an idiot. A stupid fringgin jerk. Yet in the bizzaro world of fiat money you can be Alice, or Thor, or anything exciting, adventurous, or fine. Fiat currency is substantiated by the full ego and faith in the ego of the Uninted States Government of the greatest most brilliant fantastic nation that God ever blessed! And that is the inherent substance of the paper money in your wallets.However, will other nations always see it this way? This is how it will go. Currencies in the developed world are ALL fiat currencies. They will each devalue to gain trading advantage as they discover that their economies require trading advantage to keep their populations working. This will be a price war of currencies out of necessity. Not being adequate and to portect political positions debt will still continue to grow. We have entered into this chain reaction of failure. There’s honestly no escape. Only severe government spending cuts AND severe regulation loosening can have a chance to save us now. But that truth goes against every political and Keynesian practice. As humans in an emergeny crisis political compromises will guarantee the eventual national gnashing of teeth. Have mercy on the young and elderly who will be virtually helpless. Marshall Law and totalitaian rule will improvise to ration food and survival.
    Think in terms of personal items you’d want if you went on a one year camping expedition. Think of the tools you’d have to have if you had to grow food, or hunt for food. Think of where you’d live if you had to live this way. What about others? How close would you want to be to large populations if you managed to obtain food? There’s a lot to think about. Let me warn you. Invest in your insurance to survive. You have little to lose, everything to gain.

  • Kudos for a fine feature.

    Though it is unlikely that your neighborhood will be the epicenter of a natural or manmade catastrophe, your proximity to freeways and intrstate highways puts you in the crosshairs of mass evacuations.

    Be aware-be prepared!

    Right on Silver Shield – WRITE ON!

    Respectfully, Yoda

  • John Maynard Keynes said ‘In the LONG RUN, we are all dead’.

  • Keythong

    It looks like Spain could be the last straw if the Ponzi-debt Cajas collapse, cannot be bailed out, and Spain crashes. Don’t be fooled by the Champagne Socialist win in France, the Hard Right National French Party has growing youth support too which could make life very interesting in France and the EU given they want to kick out all foreigners including the EU!

    I have plenty of PMs, and some survival supplies, but hope that governments wake up in-time to the fact that no amount of banker support is worth the chaos which will come and the nationalist vengeance which will follow, if they don’t get some backbone and properly restructure the whole financial system to the Banksters’ disadvantage.

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