Tuesday, July 28, 2015

Milking China

As regular visits reveal, my opinion of Damon Vrabel's grasp on the economic realities of globalism is quite strong. His prescience leaves us with many observations that have stood the test of time (5 years might as well be a century in HFT terms). He gives us such insights as:
The ultimate rulers are the most senior private capital pools in the world who use the (primary) dealers as capital laundering machines and who create their desired framework through the central banks, IMF, BIS, and political institutions like the European Union and G20.
Since WWII, their desired framework has been to fuel global empire by milking the US population through the debt-dollar system centered around the Fed. Now that the US has been milked dry, things are shifting to a new milking center for the 21st century–China.
Though written in 2010, if you cannot see clear evidence of the above today, then you need to "turn off and tune out" to the mainstream feel-good fantasy outlets of the US ministry of propaganda, and their "recovery" happy-talk. This is not to say that one must dwell on the negative persistently, but rather, one must accept reality, and prepare for what that reality portends.

Clearly we see the BRICs doing exactly this. Accepting the reality of their status in the system, and preparing a parallel system to escape into as a new currency regime and banking framework unfolds.

We can also give a nod to the tinfoil brigade and their fascination with the Rothschild's role in all this. The Roths do indeed represent senior capital of a high order, and today's system is indeed an outgrowth of the Brothers explanation to their New York agents regarding the "tremendous (systemic) advantage" of debt-based senior capital - which "not one man in a thousand" can comprehend as being inimical to his own interests.

But such an advantage is not perpetually sustainable, as FOFOA explains so simply, yet brilliantly in Metamorphosis.
Debt is unstable because it is entered into (created) so lightly, and it is based on the assumption of a fixed future performance by an entity or individual. An assumption that is currently proving to be flawed during an economic contraction.
A system that is built upon equity positions is much more stable, as equity agreements are entered into with much more gravity. If both parties share in the risks and rewards of future performance they will take everything more seriously. Also, equity agreements are based on the flexible assumption of variable future performance! A much more realistic assumption.
How relevant to the strategy of the BRICS, as they cautiously play the impact of ever so gradually withdrawing from the failing system, knowing full well the impact of such withdrawal upon the assumption of variable future performance (tied to the current FX regime).

Read all you can about China and Russia's ambitious energy infrastructure deals (as with Africa and South America) as well as the BRICs parallel IMF, AIDB, World Bank and SWIFT systems. Tell me now, do these sound as though they are based on the variable of future equity stakes, or the implied performance and sustainability of debt?

This essential restructuring of trade agreements is much more important than most give credit for. As we see it, it is an indirect form of systemic default, such that "debt" as the foundation of bilateral trade is truly repudiated. And equity staking, as in "equal partnerships", is employed instead. The idiotic sanctions imposed upon these ideological differences only served to cement the transition.

As for the reaction from senior capital pools, they too play both ends against the middle. We need look no further than to the ancient banking practices of the Middle Kingdoms (that which instills the true "terror" in the Western definition of terrorism) to understand globalism's nod to Shari'a finance. As ancient lessons in debt and usury instruct, we can no more magically perpetuate debt as a focal point wealth reserve (despite all efforts of central banks to accomplish this alchemy) than we can turn base metal into gold. Both have been tried many times throughout the centuries. Many times!

Some have FAITH that the masses can remain enslaved within a global "debt plantation" for as long as debt serves "the hand that gives". Others know that change is a part of life itself, and for life to go on, change will come, as it must. Both understand the tradition of GOLD, by its very definition, in the next transition from promises to substance.

Or, as Another so wisely once said. "Derivatives will be paid in derivatives". May I paraphrase as "promises will be paid in promises"? This of course is already well under way. The falling knife to catch is the value as it evaporates. As paper gold edges toward $800, the metal itself will go into hiding ... even in quantities suited to the little people.

This we learn from the flower of understanding.


  1. The Hebrew Scriptures, or the Old Testament (as Christians often call them) clearly condemn usury. Yet this prohibition is either ignored or explained away by Jews and Christians alike. I wish the "flower of understanding" had bloomed for me much sooner (although for me the blossom is just beginning to bud), "Another" and his friends are good trail guides. Your own "thoughts" R, are much appreciated. I was wondering if, rather than waTch this unsustainable debt system fall, they will try to save it by canceling so much, like a debt jubilee, in order to keep it going, is such an approach even possible?

  2. I think it is not only possible, but happening all around us. Much non-systemic debt (strategic defaults on home loans for example) is cancelled, and eventually the banks will claim their distressed collateral, but not much effort or attention is paid to these collectively. Systemic defaults are precarious as they impact credibility and confidence much higher up the food chain.