With the US trapped in depression, this really is starting to feel like 1932 … The US workforce shrank by 652,000 in June, one of the sharpest contractions ever. The rate of hourly earnings fell 0.1%. Wages are flirting with deflation. "The economy is still in the gravitational pull of the Great Recession," said Robert Reich (left), former US labour secretary. "All the booster rockets for getting us beyond it are failing." "Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing," he said. California is tightening faster than Greece. State workers have seen a 14% fall in earnings this year due to forced furloughs. Governor Arnold Schwarzenegger is cutting pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn) deficit. Can Illinois be far behind? The state has a deficit of $12bn and is $5bn in arrears to schools, nursing homes, child-care centers, and prisons. "It is getting worse every single day," said state comptroller Daniel Hynes. "We are not paying bills for absolutely essential services. That is obscene." Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high. Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10% of GDP. – UK Telegraph
Dominant Social Theme: We will fight through this too.
Free-Market Analysis: The power elite, it has emerged in the era of the Internet, keeps control of Western institutions and authorities via dominant social themes. These fear-based promotions literally seem to organize society and ensure that people's energy and ambitions are channeled in ways that allow for continued control and consolidation of wealth and power.
The elite's goal in our estimation is world governance and the elite has created a massive establishment of varied military, economic and sociopolitical tools to reach this goal. Chief among these tools is an economy based on "money from nothing" – fiat money – issued by powerful central banks throughout the Western world. Such fiat money causes booms and then busts that lead inevitably to more centralization of money, power and resources in the hands of the few that control these banks.
But once every 30-50 years, the creation and dissemination of fiat money causes such a large crash as to affect the entire financial system itself, not just in one or two countries, but wherever this system is in place. In some instances the damage is so bad that the currency itself can be said to have failed. In such instances, the powers-that-be scramble to print more money to give the impression that the system is solvent, when in fact it is not.
During such times, the system is actually dying but few realize the extent of its mortality because the power elite, which controls much, is continually doing what is necessary to maintain the fiction that the monetary environment remains intact, even though it is not. And during such times, the language that may be used for the unraveling could include the "D" world – Depression as opposed to the "R" word, Recession.
What is the difference between a recession and a depression? We looked it up online at "about economics" and found the following explanation: "The difference between the two terms is not very well understood for one simple reason: There is not a universally agreed upon definition. If you ask 100 different economists to define the terms recession and depression, you would get at least 100 different answers."
Of course we expected no less. If there is one area that the powers-that-be worked hard to debase in terms of language, it is economics. There is no substantive agreement on any part of economics because knowledge in these areas is continually eradicated by purposeful sophistry and energetically applied ignorance.
Here at the Bell, we will provide an answer of our own, at least for purposes of this article. A recession, as we see it, is an epoch, however brief, that involves the failure of fiat money followed by successful reinflation. A Depression can be proclaimed when reinflation fails and fails some more, leaving massive economic destruction and joblessness in its wake.
The article above, in the UK Telegraph, indicates to us that reinflation is failing. We have written about this a great deal here at the Bell. The larger economy is so distorted by all the money that has been pumped into it over the past decades that the price information provided by the free-market has been obscured and lending facilities are confused or diseased. The economy needs time to deflate and sort through the distortions.
Yes … the large and dysfunctional multinationals and world-spanning financial institutions of the West are so inefficient that many need to wither and die. Entrepreneurialism and private industry are the proximate answer. Small, efficient organizations need to take the place of large, inefficient ones, but this evolution is stymied at every turn, leaving only the alternative of stagnation, deflation and futile inflation.
One can also see in the above Telegraph article, an elite dominant social theme of sorts. The article, as all articles by this author (and others for that matter), argue for extreme amounts of money-production to offset the deflation now occurring. The fear-based promotion involves the assumption that elite central banking, if properly managed, can do the trick – and that only the wise men of central banks can accomplish this feat. Thus the analysis reinforces elite themes and, of course, central-banking money power.
We would expect no less from a mainstream paper however, even a good one. A writer for such publications who maintained regularly, as the Bell does, that central banking was the cause of the problem but not the solution, would soon have to find other employment. Yet, in fact we may be past the point where even the most frenzied money printing can do the trick, and this does happen now and again. The resultant mess may indeed be called a depression.
What is the elite to do? Ordinarily, the elite would turn to war. And not just any war. War that involves and convulses the entire society. War that so pervades the hearts and minds of individuals that there is no intellectual alternative to the action-elements that the state is demanding. But how do you create a big war without using the biggest weapons? Nuclear weapons have provided the Anglo-American axis with tremendous military advantages but these weapons have proven to have very negative effects in terms of social control. It is almost impossible to engage in old-fashioned world wars. This is a problem.
The Internet itself provides another problem in this day and age. One interviewee of the Bell's recently called the Internet a "narrowcast" instrument and this is a very clever nomenclature. Never before has humankind created a wideband broadcast that provides the minutest details of individual issues. The result has been an explosion of knowledge, and nowhere has the knowledge had more of an effect than on the political economy.
In the midst of an epochal economic downturn, the Western power elite thus finds itself bereft of its two best managerial weapons – war and control of information, and the results will be unpredictable. We have long maintained that this financial crisis will bring forth some sort of new financial system, as the old one is effectively dead (a new one hopefully based on honest money – gold and silver). But as recession gives way to depression (even if it is never officially acknowledged) the power elite will obviously struggle even harder, and the outcome is therefore uncertain.
We certainly believe that the elite hoped to take advantage of the current crisis by further centralizing financial power and by creating the beginnings of a global currency. We wonder if the elite will be able to exercise enough control to do so. We wonder if they expected this. Were they, in a sense, caught by surprise? If so, what does that mean for the average investor or individual trying to make sense of it all? These are interesting times. One needs to pay close attention.