Todays Ticker from Karl Denninger.
tickerforum.org
link is to the tickerforum thread for discussion of the ticker. do ur self a favor....... read the thread after reading the daily ticker. daily..........
WARNING! do not take gold discussion there. Karl will not allow it unless it is on the gold thread only..... the forum is on his server in his house. he owns it and rules it like a dictator. just thought you should know.
Copy of ticker below
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Lyin' Bankers, Meet Mathematics by Karl Denninger
I'm referring to CHARLES EVANS, President of The Chicago Fed, JAMES BULLARD, President of The St. Louis Fed, and Janet Yellen of The San Francisco Fed, along with CHAIRMAN BERNANKE.
The former wants to "mimic" below-zero interest rates, while Bullard wants an "inflation target" and Yellen says "its worth pulling out all the stops" according to speeches today.
All are displaying absolute panic as the reality of what they have done has finally crossed their conscious barrier and is now staring them in the face.
Yellen's commentary is particularly outrageous:
“Although our economy is resilient and has bounced back quickly from downturns in the past, the financial and economic firestorm we face today poses a serious risk of an extended period of stagnation,” which may intensify financial-market conditions, Yellen, 62, said during the annual meetings of the Allied Social Science Associations and the American Economic Association.
“It’s worth pulling out all the stops to ensure those outcomes don’t occur,” she said."
Why outrageous? Because The Federal Reserve has been both complicit and actively involved in creating the mess we find ourselves in today!
Rather than come out and admit the outright stupidity that they have practiced over the previous ten years, starting most notably with Greenspan's bankrupt economic policies, they instead are desperately searching for some way to beat the laws of mathematics, lest angry crowds figure out the scam, descend on their tony little country clubs and find a new use for a 4-iron!
Every last one of these clowns is fully aware of the fact that interest is a compound function - that is, it is an exponential function.
Let me make this clear: every single person in this country who claims to have a High School Diploma should understand this without prompting.
They clearly do not, or we would have 200 million Americans literally storming every Federal Reserve Bank office and the home of every one of these "masters of the universe" and Washington DC, forcing the lot to admit to their central role in the mess we now find ourselves in and demanding that they stop it right now and instead force ALL of the bad debt out into the open where it will be either paid down or default.
Why?
Because mathematics is never wrong, whether you liked the subject or not in school, and making claims that violate the laws of mathematics is always and everywhere an act of fraud.
So here's your education folks - the education you were supposed to get in High School Algebra Class, if you were actually awake and paying attention instead of smoking pot around the corner and dreaming of that cute girl (or guy) in the next chair over.
And to you the so-called Teachers in our schools, all of you need to be fired. Every last damn one of you. Not one of your so-called "students" who doesn't get this should have passed. NOT ONE. When the history books are written on the destruction of our economy - the first part of which is happening right now - there will be a special notation made for you who failed to teach the basics of mathematics to our citizens - knowledge that, had it been actually taught according to the claims you have made over the years, would have prevented this stupidity from happening.
We're going to do this first the "hard way".
Assume 10% interest (very low on a credit card eh?) for 5 years.
MOST people in this country don't think that's so bad, because they'd only pay 50% (in total) interest on the money.
WRONG.
Here's the math:
In the first year, $100 @ 10% interest is $110.
In the second year, $110 @ 10% interest is $121 (oh oh, here it comes!)
In the third year, $121 @ 10% interest is $133.10 (heh, what's going on?)
In the fourth year, $133.10 @ 10% is $146.41 (why is my butt sore?)
In the fifth year, $146.41 @ 10% is $161.05!
And it gets worse from there. A lot worse.
Now I could sit down and do this for every year out to, oh, 20 years.
But I don't have to. See, I have this thing called a Calculator, and you probably do too. You can do this calculation for ANY interest rate over ANY number of years with just a couple of keystrokes.
Its the "Exponent" key, sometimes labeled as yx
On the HP12c, to perform this I can key in: 1.1 <ENTER> 5 yx and VOILA!
Now let's do it the "simple way" - 10% interest over 10 years. You pay "twice" for that item, right? 10% interest, 10 years, 100%. Right?
WRONG.
You pay 2.5937 times for that item, or nearly sixty percent more than a simple doubling, due to the exponential nature of interest.
Now let's take your 29% interest that the credit card companies want to charge nowadays, and figure out how badly you get screwed by that in ten years.
Ready folks? You will pay NOT roughly three times the original purchase price but rather TWELVE POINT SEVEN SIX TIMES the price.
That $10 pizza at 29% interest over 10 years will cost you ONE HUNDRED TWENTY SEVEN DOLLARS AND SIXTY CENTS, WITH ALL BUT $10 OF IT BEING INTEREST!
If you go talk to any real scientist (in any discipline) and start describing a system that is exponential but which must operate in a world (closed system) that has finite limits he will instantaneously freak out.
That is because what you have described is a system that is mathematically impossible to maintain. The exponential growth (even with a very low exponent - that is, a very low interest rate) will always eventually cause the destruction of the system.
ALWAYS.
We are simply arguing over the when the destruction takes place. We can either choose to destroy the excess debt before it reaches the critical point or that destruction will happen in a totally uncontrolled fashion and take down our economy and government.
THIS is the fallacy of The Fed's BS and games, and its the fallacy they are counting on you not to understand.
This is why none of their "money printing" can or will work because all money is in fact debt (go see the previous Ticker) and interest is an exponential function.
It is why it did not work in 2000-2003 and will not work this time. It can't work because the laws of mathematics are facts, are not subject to interpretation, and no amount of political BS, lies and jawboning change them.
Each and every one of you who claims a High School Diploma learned this stuff in school!
America: You had better wake the hell up because the longer we wait to stop this, the worse the economic collapse is going to be.
There is no possible path forward that does not involve the massive loss of jobs and wealth, but the exponential nature of ALL interest guarantees that the longer we keep screwing around the worse it will get. We must stop trying to prevent defaults - indeed, we must force inevitable defaults to take place now because that is the only way to interrupt the exponential function.
We are now choosing between amputating FINGERS and ARMS. |
