Yes I'm back, with a new name and the same old philosophy. I have been away for a long time and have been getting a lot of things in order. I am as prepared as I'm probably going to get for the coming disconnection, which is the only way I can think to describe what is coming our way(in my fair opinion OF COURSE ).....
For those that don't know me, my name is now FEELINGWEIRD... I am a long time poster here at LATOC and though many of my posts were lost in the great Jurisdoctorofdoom PURGE of the system, I think that there is still enough to glean from the nearly 3100 posts I have made over the years to prove I am no Johnny come lately to the doom game.
I ran a long string of Updates called not coincidentally "The Daily Economic Update" and it culminated late in the summer of 2008 at my own blog site(I don't have the domain name anymore, but my blog is still active) at this link.....
http://dailyeconomicupdate.wordpress.com/ . From this site alone you can see that I had a very good idea of what was coming and more importantly WHY it was coming.
I went into a long hibernation from posting for one reason and one reason only. I HAD NO IDEA WHAT HAPPENED NEXT!!! I spent so many freaking years waiting for the big oil blowup and the eventual tanking of the US economy that when it actually happened I completely freaked out and went into full time preparation mode. Well my preps are about as done as they're going to get for me and my current situation and now I have to start looking forward again. What follows (and will follow on a semi regularly basis) is my opinion of what comes next. I have given much of this a lot of thought and other parts will be PURELY stream of consciousness typing. Sometimes just typing helps me to crystallize my thoughts and take them to their logical conclusion.
So here is my overall idea of what is happening and more importantly WHAT IS TO COME... I love my analogies, so let’s just jump right into one. What happened late last year and early in this year was literally the first stages of an attempted controlled implosion. What happened last year (and in early 2009) was the pillars of the building (economy) being cut by a fast precise explosion. This is not to say this was intentional(though it very well could have been, but that is not the point here) but the pillars of this economy were cut clean though and just like a building being readied for its final demise, the actually support that makes a building a building has been fatally and irreparably CUT. When you are watching a building being demolished, it isn't all the big powerful explosions that kills the building, it is a bunch of very small explosions, some you can barely hear, that happen moments before the building is finally PUSHED over by the bigger explosions that DOOMED that building. Had the big explosion never happened, the building would still eventually FAIL and it is forever forward a dead building.
Our supports were cut in the US of A in the waning months of the Bush administration and the first few months of the new administration. When we pushed straight past ONE TRILLION DOLLARS IN DEBT in one calendar year, the supports to this economy were cut, and now we are facing the potential of MULTIPLE YEARS of TWO TRILLIONS DOLLAR PLUS DEFICITS. That is one major pillar. The other is the free fall speed of the deflationary spiral that took hold almost IMPERCEPTABLY in the summer of 2007 and has run rampant ever since (and continues to this DAY). The other is the predictable (though slow) demise of the US dollar and it place as reserve currency of the world AND MOST IMPORTANTLY AS THE ONLY CURRENCY ENERGY IS TRADED IN(that is until recently)....
Those 3 pillars (and probably more) formed the very core of our economy. ENERGY IMPORTS DENOMINATED IN US DOLLARS...LONG TERM DEFICIT SPENDING (Keynesianism, or Government Spending) and EVER INCREASING AMOUNTS OF DEBT DENOMINATED IN US DOLLARS... Those were the 3 major pillars of our economy and if you cut any one of them ALONE it would be enough to make the building unsound and could possibly topple it over. CUT ALL 3 AND THE BUILDING IS DOOMED...
That is exactly what happened over 6 months ago now. The US dollar was cut off at the knees by outgoing President Bush and cut off at the HEAD by the Obama administration. Energy was brought to a head in 2007/2008 as Demand smacked right up against Supply for the first time in history. Every nation that had oil to sell was selling it at break neck speed and STILL there was not enough. And the PURE ECONOMICS of the free market were no longer able to be sugar coated over. When demand CROSSES over supply, there is something called the DISCONNECT. A supply/demand disconnect cannot happen, there can never be more demand than supply, so something has to give and in our case it was the US economy(backed entirely by our debt based USD system) and it broke off at the waist.
What happens next in my opinion is a continuation of the Big Disconnect that started in the summer of 2007. What made sense in the past will have NO BEARING WHATSOVER ON THE FUTURE.. Did you hear that, NO BEARING... We are in uncharted waters and seeing the murky future is going to take a new set of eyes.
When the USD is finally replaced as reserve currency it will mean a wholesale re-alignment of the US economy, one that is about 30 years overdue. This disconnect was started in 1971 and once again in 1980. At each of those points, the US economy was loudly signaling that things were out of control( you could make the argument that our supports were actually cut as long ago as 1971), but through strong arm tactics and cowardly leadership, both here and abroad, the USD system was remade and all but guaranteed the result we see before us. Again in 1980, the economy was signaling that something was horribly wrong, but under Reagan/Bush it was swept under the rug under the guise of DEFICITS DON"T MATTER and the largest build out of Military AND Home front in the history of the world was put into overdrive. We went on a 30 year spending spree TO BEAT ALL SPENDING SPREES. What we did dwarfed the Great Wall of China, or the South Sea Bubble or the Tulip craze or any other possible comparison. WE REWROTE THE BOOK ON FOOLISHNESS AND WASTE!!
History I fear will judge the later decades of the American Empire very harshly and deservedly so. The Great Disconnect is upon us now, so the question begs, what does it look like? Well first of all, throw all concepts of Inflation/Deflation out the freaking window as they will not apply. Those terms work on currencies that actually have a supply/demand component to them. The USD as it stands now does not have to worry about supply/demand. Because of our reserve status the USD is FORCED INTO DEMAND without any worry. The world needs energy and other commodities and the USD denominates all major commodities thereby guaranteeing they will always be in demand. Without that FORCED demand there are so many freaking USD’s out there that inflation doesn’t even begin to describe how bad the fall out will be. There are literally 10’s of trillions of dollars waiting to come home to us and they will never be serviced if the truth be told. Like a check kiter who has written 100’s of bogus checks against a checking account with 10 bucks in it, we will be bouncing a LOT of checks in the coming years.
Once it is obvious to the rest of the world that we will no longer be servicing our debt there will be a massive break in the global system. Once USD’s are no longer exchangeable for Oil the whole USD system will seize up. This is step one in the Great Disconnect.
Once the USD is no longer convertible to Oil there will be a severely painful and potentially short period of re-alignment. If the Icelandic or Argentinean collapses are any guide, it could be as short as 3 months to as long as 1 FULL YEAR before things start to stabilize. During that time frame, commerce could literally come to a complete standstill and shelves could go empty as people panic buy anything of worth. I feel that 3 months is the more realistic scenario to plan for. The reason is that the US is too dangerous to let slide into Argentinean style disorder. The world will work quickly to renegotiate our debt and work to get imports flowing back into our system. All rules will once again be thrown out the door. A new US economic order will have to be found and it will be based on our massive ability to grow food (even if it is Petrol based, it is still not possible to do what we do in most of the rest of the world). We also have huge reserves of coal/lumber/and LABOR!! Do not underestimate the value of the American worker to the rest of the world. Though horribly overpriced over the last 4 decades, the US worker is still one of the best in the world; we will just have to learn to lower our idea of a day’s wage.
The (HOPEFULLY) 3 month of disconnect will be harsh for most and will soften most resistance to the draconian changes that will be proposed to get the US economy rolling again. You’d be amazed at how quickly people will JUMP at the prospect of working for 1/3’rd of what they made if they are allowed to stay in their homes through massive re-writing of millions of mortgages. People will still “own” their homes, but in reality the terms will be so draconian that they will probably never actually pay them off. But at least there will be some continuation of their “normality”. Imagine a 50 year old man with 3 kids now back at home with him. He is 15 years into a mortgage that, had things kept going normally, would have been paid off at the age of 65. He is now facing foreclosure and will be kicked out OR he could sign a new 50 year mortgage with drastically reduced payment, but all his equity would basically be wiped out. DOES HE TAKE THE OFFER?? My gut says YES and he takes it most gratefully, as will millions of others. Because after 3 months of hell and empty shelves and possibly even loss of major utilities for stretches at a time, he is willing to do anything to make the roller coaster STOP.
I fear that violence in the city centers will be a given and that our troops will be forced to patrol American soil in the final slap in the face of Posse Comitatus. And like the 50 year old man, these troops will do their jobs gratefully as they are fearful of losing their jobs and their pay and their homes. They know how bad things are in the “private” sector and I feel they will obey orders.
This sounds so foreign to even me as I write it, but it is the logical conclusion to the idiocy that we have brought down upon ourselves. Our system has failed, it ended a little over 2 years ago(in the summer of 2007), the pillars were cut and the building is now standing on pure INERTIA at this point, one more big push and we fall. It is just a matter of WHEN not IF at this point.
The above seems just about as FAR OUT as GM going bankrupt or the entire Global Monetary system seizing up or the government taking over Freddie and Fannie was in the Heady days of 2006 and early 2007. The idea that we’d be in a near depression in a mere 18 months was LUDICROUS to the extreme, yet IT HAPPENED. And as we look back on the last 18 to 24 months it all seemed NORMAL didn’t it?? Surreal and scary at time YES, but it just happened and we rolled with it. That is what the next 18 months will feel like, Scary and surreal at times, but for the most part it will JUST HAPPEN.
What I fear most at this point is the initial DISCONNECT of the USD system and how long that fast re-alignment takes to play out. Will it happen QUICK like the GM bankruptcy or will black swans reign down upon us all as the center refuses to hold. One way or another we will make it to the other side.
Since I cannot imagine what 18 months of pure hell would look like in this country(meaning NO system to exchange USD’s for energy and imports) I am preparing for what I HOPE is the more realistic scenario and the is the 3 month HELL that will be our national bankruptcy. Prepare for empty shelves, empty gas stations and hoarding and black markets and gouging like you wouldn’t believe. IS THIS INFLATION? IS THIS DEFLATION? Who gives a flying F***… It is not going to be pretty.
I have 3 months of food at normal consumption rates in my pantry, and probably 4 to 5 months if we used it in an emergency mode (meaning stretching every single calorie and protein). We have the ability to keep electricity in the house for about 2 to 3 weeks and after that it is dark time. But I feel that the Grid will operate, it will just not be reliable, and same goes for water and sewers and Nat Gas. They will all work, they just won’t be reliable. So you better have some alternatives in mind to get you through the down times…
I don’t come to these conclusions lightly, but I see no other way out for the US and the countries that joined in on the USD system. The Great Disconnect is coming into focus.
Feeling Weird
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