Thursday, March 16, 2017

Trump Budget and Math Reality

While I supported Trump over all the alternatives, the impossible math is the only way to glimpse economic reality.  No source that I’ve seen understands where the math is headed.  And with the first cut of Trump’s budget priorities comes a focus on the way in which the impossible math is distributed, with no discussion of how impossible the math is or why.

In a nutshell the debt is growing and accumulating at twice the rate predicted by both mainstream and non-mainstream sources alike, this article will show you how to glimpse the reality of the math.
While the national debt almost doubled under eight years of Obama administration going from $10.02 trillion to $19.95 trillion (it was far worse than this in reality, we’ll cover that later).  This 99% growth in just eight years means that the national debt effectively doubled in just eight years.   That’s terrible, but most people are projecting the same $1.25 trillion growth per year for the next eight years, or a total growth that will equal another $10 trillion.  That is NOT math reality.  

The reality is that regardless of who is president, the math must double again in the next eight years in order to achieve the same rate of growth!  $20 trillion, not just another paltry $10!  In other words, at the end of eight more years, the end of 2024, the national debt will likely stand at $40 trillion, not the projected $30 trillion. If that RATE of growth is not maintained, then what do you suppose will happen to the economy, knowing that all our money is DEBT?

But why is it that nobody can do a projection that matches reality?

Reality does not exist in ANY mainstream media.  The mainstream media is 90% fake, every bit of that is designed to fill our heads with a story-line that manipulates and enslaves us, robbing us of our productivity and holding back the advancement of humanity.  The 10% that is real is obscured by the majority 90% spin.  If you incorporate their narrative, you will consume unfit foods, unfit water and drinks, drugs, medicines, and vaccines that will make it impossible for you to think clearly enough to distinguish what is real and what is not.  You will likely work in jobs that perpetuate and are dependent upon enforcing the mainstream narrative (most people do not realize the part they play).

The internet is the ONLY place that reality exists.  But you must be able to think and filter knowledge clearly in order to see it.  Most people have not been taught to THINK.  To filter correctly you must intensely focus on each subject looking for inconsistencies.  Thinking is a process of removing inconsistencies until you have a clear, consistent, and simple picture in which all the pieces fit together without conflict.  You will not even find reality in a modern library; it, too, is filled with nonsensical thinking that has been poisoned by corrupted mainstream science and ideology.

Here’s an important truth that you must understand before discussing the impossible math that underlies our economy:

EQUITY:  An increase or a decrease in equity (stocks) primarily affects the person who owns it.  Thus, if the stock market falls the individuals who own it are negatively impacted, but the wealth effect is very narrow.  Equity is a one person transaction.  The person who holds equity cannot default, they can only lose their investment thus the ripple effect of lost equity is small.  If you were to lose all your equity holdings, no one will come after you for payment, you will be angry with those managing the companies you owned, but there is no recourse.

DEBT:  Debt, on the other hand, is a two person transaction.  When a debt is created there is always a person who is on the other side of the transaction.  If the person who owes the money, the debtor, defaults, then the person who loaned the money will come after your assets to recoup losses.  THIS IS WHY DEBT MATTERS, and equity doesn’t.  Wars are fought over debt, not equity.  The entanglement of debt across nations means when debts cannot be repaid, or even if faith is lost that debts can be repaid with money of value, then emotional anger ensues.  We are riddled with more debt, by far, than at any other point in history.  It matters.  Those who ignore it are ignorant of history, and believe that the math is fantasy.  The math of debt is NOT FANTASY, it is real and is woven into the people on both sides of the debt transaction.

DERIVATIVES:  Derivatives that are based upon debt (sliced and diced), leverage the debt (leverage upon leverage) and obscure reality.  But the underlying debts still exist, even if created under an improper rule-of-law as most modern debts are.  Derivatives not based on debt are fantasy, they are not reality, but like debt their impacts are entangled beyond just one person or entity.  In that regard derivatives also matter, they represent systemic risk.

To get a glimpse of how mainstream “authority figures” deny the reality of debt, please view the following example, although from 2008 is still valid as mainstream Keynesian psychopathic gibberish:

The deluded thinking is, that no matter what, more debt can be produced, thus default will never occur.  And that government debt is somehow magically different because it’s backed with nuclear warheads, oh, and the ability to tax the living heck out of you and me.  Not mentioned is how insane and absolutely ridiculous it is that our unsovereign government borrows money from PRIVATE individuals and uses our tax money (productive effort) to pay those privileged private individuals interest.

One of the reasons people are not correctly projecting the RATE of growth into the future is that most people’s minds do not understand, and have not been trained, to comprehend the exponential function.  To which I am reposting the following video from Dr. Bartlett, I highly suggest that you review the first 15 minutes so that you can visualize the exponential math that I’m referring to:

Dr. Bartlett’s rule of 70 is the same as the more common “rule of 72” except that he rounded the number to make the math easier.

So, to see the doubling time of our current account deficit we need only look at the past eight years, because the deficit almost exactly doubled in the past eight years.  If you divide 70 by 8, then you will find that the past eight year doubling equates to an annual growth rate of 8.75% per year!

And that’s exactly the rate at which our federal debt is growing.  Our “money” is debt, and thus this portion of “money” is inflating at the rate of 8.75% per year.  Here’s how you can see into the future…

If that rate is maintained, then in the next 8 years our debt will DOUBLE again.  From $20 trillion, to $40 trillion.  Again, the mainstream assumption is that our debt only continues to grow at the current per year dollar amount of $1.25 trillion per year, but that is NOT the case.

Should the 8.75% growth rate of debt not continue, then growth will slow and the real economy will turn more negative than it is already.  So another doubling does not have to happen, but there are consequences if it does not under the current criminal central debt as money system.

If, however, the growth rate continues to escalate as it has been, then a crackup boom is likely.  A crackup boom results in things close to the production of money rising in value, while those further away stagnate.  So things like stocks, gold, silver, Bitcoin all get speculated higher, while food and necessities get more expensive relative to stagnant incomes.

A real economy that is not saturated with debt actually does grow when debt is added to it.  That was the industrial revolution in the United States.  Since 2008 we have been in a state of macroeconomic debt saturation where the return on more debt is negative:

Chart of the Century - Diminishing Productivity of Debt
You may recognize that Diminishing Returns chart from my articles on the “Chart of the Century” back in 2010.  Below is an updated version of that chart directly from the Fed now that they publish charts that can reproduce using their statistics (total debt figures ended in 2015 in this series):

Diminishing Productivity of Debt through 2015
Note that in the Diminishing Returns chart above that the rise seen in 2010 is due to the FED taking on $4.5 trillion onto their balance sheet!  That debt would have otherwise been added to our national debt, thus the stated $20 trillion is actually $24.5 trillion today!  Cough, cough.  Of course it’s much worse than that, but let’s ignore unfunded liabilities and all the other giant sums hidden under ginormous carpets.

Here is a chart of the FED’s Balance Sheet:

FED's Balance Sheet
Of the above $4.5 trillion, below is the portion that is just mortgage backed securities on the FED’s Balance Sheet:

Mortgage Backed Securities on the FED's Balance Sheet
Of course the FED did this to prevent collapse.  What QE did was to temporarily unsaturate the debt, thus the spike in the 2010 Diminishing Returns Chart.  By simply moving that debt from a current payable to an even more distant payable (an "asset" on the FED's balance sheet), it created more room for debt to be pushed into the economy, mathematically.  QE was the most effective tool to date for modulating the saturation point of debt within the economy.  BUT, we are now back into full on saturation where adding debt creates negative growth, not positive growth.

And so, the game of private central bankers modulating the economy with tricks continues for now.  They steal our productivity while the impossible math continues to become even more impossible.  If the FED begins to reduce their balance sheet, look out below.  If they feel the need to increase their balance sheet, look out above. 

When does the music end?  It ends when the people are no longer willing to tolerate giving so much of their productive effort to a criminal enterprise.  In the meantime, look for the next economic blackmail to come soon, very soon.