The Daily Bell - Catherine Austin Fitts on Moral Investing and the Coming Equity 'Crash... - 1 views
www.thedailybell.com/...and-the-Coming-Equity-Crash-Up
Banksters Federal-Reserve-Bankster-Cartel Catherine-Austin-Fitts
shared by Gary Edwards on 16 Oct 13
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If you talk about legacy systems and then a breakaway civilization, the legacy systems were financed with debt and if the resources have basically been shifted out and over into "NewCo" then that's going to be an equity model. We're literally coming into what I consider to be a planetary debt for equity swap. So the question for all of us is how do we navigate the turn? When do you leave the bond market and when does the equity increase occur? We've seen North America equity markets rising and the emerging markets falling this year.
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We're seeing a tremendous divergence in the economy in North America between those portions of the economy that are adapting new technology and growing and the rest of the economy.
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The other thing I watch is what the divergence means to bond credits and to equity valuations. If you look at the indices you don't really see it. If you look inside the indices you see some enormous splits in quality and value going on.
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The slow burn is a world in which for most people income is flat or falling and expenses are steadily rising. It's a debasement scenario. And the reality is the central banks have been able to have a quite liberal monetary policy because we've been able to offset that with labor deflation. So by globalizing labor and instituting technology you have tremendous deflationary pressures, which offset very generous monetary policy.
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Starting in the '90s a decision was made to move significant amounts of capital out of existing systems in the developed world and literally trillions of dollars of financial fraud was engineered to do that. As a financial phenomenon it was quite clever and trillions have literally been moved out between the fraud and the bailouts. I think what the Fed has been doing with quantitative easing is running a shredding operation where they buy up the fraudulent mortgage securities paper and are shredding it.
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If you look at the Treasury, they've run a very tight regulatory process where that money doesn't seep out on Main Street. It's quite phenomenal the way they've managed to control it. I think one of the big questions is where is that money going to go now? It certainly looks to me like a great effort is being made to make sure it goes into equities, sort of keeps the bond market afloat and goes into equities. So I look it as a very political move.
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You can balance the budget with fiscal measures or you can balance the budget by the Fed just buying bonds and if you look at the Fed's balance sheet, I think they have a much greater capacity to buy bonds. If you look at all the money that was stolen, the breakaway civilization has plenty of money to buy bonds.
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I would say so far the Fed's policies have worked for what they're intended to do. We've moved a tremendous amount of money out of the economy. We've now basically run through the statute of limitations or done whatever management needed to cut the cords so that what I call the legacy systems can't get the money back. So the financial coup d'état has been successful and now the cover-up is pretty much over and successful.
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So now you have big decisions. You have two economies. Before this started what I call the legacy systems had $100 trillion of liabilities and $100 trillion of assets – now, I'm just pulling those numbers out of the air – and
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the coup moved $40 trillion of assets over into NewCo
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if you will. Now we've got the legacy systems trying to reconcile $60 trillion of assets to $100 trillion of liabilities and there is a long, drawn-out, grinding process by which some people will get 50 cents on the dollar, some people will get zero cents on the dollar, some people will get 100 cents on the dollar. It's just a very difficult, complex and tangled political scene as to how that's going to all happen. Meantime, NewCo, with $40 trillion dollars, is investing and going gangbusters. NewCo is enjoying an unprecedented boom, investing in lots of new technology and new frontiers, including space. So I think the next step is to manage the lowering of expectations in the legacy systems. That's basically what the administration and the Fed are going to be doing for the next couple years, is just gutting their way through retirees' disappointment.
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There are three things
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Number one, Obamacare was created to create a framework that would allow significant reduction of costs and benefits under Medicare over time and healthcare over time;
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Well, the goal of Obamacare is to control.
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number two, Obamacare was to provide much more control over both the medical establishment and the population at large;
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and then, three, to do it in a way that will protect corporate profits.
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in a relatively short period of time US Medicare expenses would be several multiplicities of the GNP.
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It's clearly a system that makes no economic sense. It's not just that people are aging. If we eat food that has little nutrition and provide healthcare in which pharmaceutical companies are allowed to charge many multiples of what they charge in other countries you're going to get a financial train wreck, which is where we're headed.
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So I think the goal was to reconcile that and do it in a way that favors corporations and control.
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If you go around the entire financial ecosystem, they're getting hit within every line by the same pro-centralization policies that ultimately go up to the same people.
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Do I think it will snuff out the recovery? No. I think it will simply destroy the economics for a whole world of people who were productive.
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I don't think the banks are fragile. What happened was they were asked to do a job, they did it and now they've taken all the fraudulent paper and sold it to the Fed or torn it up because they had so much in federal credit arbitrage earnings during this period. So I don't think they're fragile.
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So it certainly puts us in a position where the creditworthiness of a lot of sovereign debt depends on government military might and the ability to debase a variety of players.
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If you look at it across all the different tools, from fabrication technology to new composite materials to robotics to lasers, we're reaching a critical mass of the economic costs dropping and the speed of learning accelerating.
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if you want to go really fast and prototype and build out infrastructure, the best way to do it is to make capital available to early venture and start-ups.
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we, as a society, have stopped the markets from working in the start-up and the small business space.
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There's been a lot of regulation to make it easy for Wall Street to control and make it difficult for small businesses to raise and circulate liquid equity. It's one of the areas in the economy where there really has been a very serious conspiracy.
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If you look back at the history of the US stock market you'll see two huge spikes, one in the '20s, one in the '90s, both when very profound new communication and information technology came out.
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I think we're in danger of another tech bubble. If you look at who's interested in putting money in this and getting lots of prototypes, the last time they did this was in the '90s. They made a fortune on fraud and they used it not only to serve some fundamental economic purposes but they used it to drain out the pension funds and the retail investors.
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securities convertible into store credits
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Wall Street doesn't understand about crowdfunding, are the new alignments that are going to be created in terms of circulating knowledge and purchases and money between consumers and entrepreneurs and companies. It's going to create a whole new level of intimacy.
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I recommend the documentary, "The Naked Brand." It gives a good sense of the worth of that intimacy and the change from a mass media model to much more intimate relationships
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awakening of global consciousness.
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in North America there is almost an astonishing lack of transparency about how government money works within the jurisdiction for which we vote for political representation.
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So if you were going to have proper transparency in America you would have annual financial statements for your congressional district as well as for the whole country.
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Now, the government has refused since 1995, as required by law, to produce annual financial statements let alone for the places in which you're voting for jurisdiction. And if you're going to have any kind of citizenry accountability or legislator accountability you have to have that kind of transparency and the government has gone to enormous lengths to prevent that kind of transparency while pretending that we're very transparent. So the Internet is going to make it more and more difficult for that absence of transparency to continue or be justified, and that's good.
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The final thing is, of course, and readers know this if they're reading The Daily Bell, you're dealing in a system that includes a significant amount of corruption and fraud so you just need to be extremely careful about the quality of the people or the enterprises in which you invest or do business with and keep your assets fairly diversified in terms of both areas of the economy, or sectors, and places.
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That's number one.
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Number two, a lot of households have assets which represent liabilities of the legacy economy, whether Social Security, Medicare or others, and one of the things you have to understand is the politics – you need to not get trapped in the politics of stringing people out for those benefits. Do the best you can but don't get lost in the treadmill of trying to get promised benefits that may or may not come true. And to the extent that you can not get financially dependent on those benefits it would be very good.
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if you have all your assets in the legacy economy and none in the growing economy you're going to suffer.
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Take a look at different predictions that gold is going to increase significantly in value. All those predictions assume that the monetary inflation is going to spill into commodities. And what you're watching instead is the G-7 have been essentially building a corral that forces the horses to run out through the stock market. That's why I call it a crash-up.
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I think one scenario we're looking at is the possibility of a crash-up scenario where that monetary increase is funneled into the equity markets. One of the most important questions there is, can you get the global population interested in investing in equities? Because the long bond market bull is coming to a close.
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We have two choices. We can basically write down the debt and go through a huge crunch period or we can have a crash-up in the equity markets.
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Right after 9/11 – and General Wesley Clark has said this and I experienced it in my tiny little community in Tennessee – we were basically given what the battle plan was going to be – the US military taking over Eurasia. First we were going to go to Afghanistan, then we were going to go to Iraq, then we were going to go to Libya, then we were going to go to Syria and then we're going to Iran. It was all laid out for us and we seem to be following that battle plan, albeit slower than predicted at that time.
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If we're going to create a global financial system and a one-world currency, you need everybody in the central banking model. You have outliers. We seem to be bringing in all the outliers. As we do, we are trying to checkmate Russia and China within Eurasia, because I think control of Eurasia is essential for maintaining global empire.
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what we're watching is an effort to bring everybody into a centrally controlled central banking model.
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Catherine is a frequent guest on CoastToCoastAM.com, so I've come to know her well. Although this interview doesn't discuss her ability to see into the future, I know from experience that she is a real visionary hitting the mark at an astounding clip. Chalk this interview up as a must read.
