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Is The Deep State Creating Another “Crash Of 1929”?

Is The Deep State Creating Another “Crash Of 1929”? thumbnail

Regarding the Great Depression… we did it. We’re very sorry… We won’t do it again.

– Ben Bernanke


Waiting too long to begin moving toward the neutral rate could risk a nasty surprise down the roadeither too much inflation, financial instability, or both.

– Janet Yellen

In his speech above, future Federal Reserve Chairman Ben Bernanke acknowledged that, by raising interest rates, the Fed triggered the stock market crash of 1929, which heralded in the Great Depression.

Yet, in her speech above, Fed Chair Janet Yellen announced that “it makes sense” for the Fed to raise interest rates “a few times a year.” This is a concern, as economic conditions are similar to those in 1929, and a rise in interest rates may have the same effect as it did then.

So let’s back up a bit and have a look at what happened in 1929. In the run-up to the 1929 crash, the Federal Reserve raised rates to 6%, ostensibly to “limit speculation in securities markets.” As history shows, this sent economic activity south rather quickly. Countless investors, large and small, who had bought stocks on margin, would be unable to pay increased interest rates and would be forced to default. (It’s important to understand that the actual default was not necessary to crash markets. The knowledge that investors would be in trouble was sufficient to send the markets into a tailspin.)

Mister Bernanke was quite clear in 2002 when he stated that the Fed would not make the same mistake again that it made in 1929, yet, then, as now, there’s been a surprise victory by a Republican candidate for president. Then, as now, a wealthy man who had never held elective office was unexpectedly in the catbird seat and had the potential to endanger the control of the political class, at a time when that political class had been complicit in damaging the system by creating massive debt.

Then, as now, conditions were ideal for the Deep State to create a solution to all problems: An economic crash was inevitable; therefore, create a trigger for it to occur and blame the collapse on the conservative political outsider. Demonstrate to all that the collapse was due to the greed of the outsider and those who were of like mind. Use that leverage to demonstrate to the hard-hit populace that what was needed was the opposite of what the outsider had proclaimed. Recommend far greater control by a new government that was staunchly liberal—a government that would change the political landscape in such a way that all those who suffered would be saved by a benevolent collectivist government.

And, of course, when it’s stated that way, it’s an easy sell. In 2017, it will be an even easier sell than it was in 1929, as the new president has already set himself up for a fall. In his inauguration speech, he focused on a single topic—the return of power to the people and away from Washington’s bureaucracy.

Beginning by decrying Washington for what it truly is, he stated that “for too long, a small group in our nation’s capital has reaped the rewards of government while the people have borne the cost. Washington flourished—but the people did not share in its wealth.”

He then went on to describe that his presidency would bring about a metamorphosis:

I will never, ever let you down. America will start winning again, winning like never before. We will bring back our jobs. We will bring back our borders. We will bring back our wealth. And we will bring back our dreams. We will build new roads, and highways, and bridges, and airports, and tunnels, and railways all across our wonderful nation. We will get our people off of welfare and back to work—rebuilding our country with American hands and American labor… We will reinforce old alliances and form new ones—and unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth… We will not fail. Our country will thrive and prosper again.

Of course, new presidents are prone to making big promises when they first take office. However, Mister Trump has, in his brief speech, effectively declared himself the enemy of the Washington bureaucracy. In so doing, he’s left himself wide open to be the fall guy if the economy does not rebound, if the average American’s lot does not improve, and if the US does not dominate the world through an expanded military.

In short, the Deep State and their cronies, who were instrumental in creating the economic, social, and political house of cards that now exists, have the perfect opportunity to bring on the collapse and blame the new president for it.

Were Mister Trump to have honestly stated that the US is effectively a house of cards and that he’ll begin the laborious job of trying to salvage what’s left of it and begin to rebuild it, he would have provided himself with a justifiable excuse when the house of cards does collapse. However, by making such lofty claims to “Make America Great Again,” he’s lost this opportunity.

In the last year, whenever I was asked who I hoped the Americans would elect as their president, I replied, “Bernie Sanders.” To those that were shocked by this answer, I would add, “An economic collapse is inevitable. No one, no matter how capable, can prevent it. The best that can happen is that the collapse occurs under a president who’s an avowed socialist. That would ensure an eventual return to smaller government and more conservative economics.”

As unfair as it may be, a nation’s people almost always blame whoever is on watch when a collapse occurs. It matters little who or what is actually at fault. People need a “face” to vilify for the disaster and the sitting leader is almost always spontaneously chosen by a nation as that face.

And, of course, the opposing party invariably makes the most of the situation. Just as in 1929 and for years thereafter Herbert Hoover received the lion’s share of the blame for a Wall Street crash and the subsequent Great Depression, even though he was not at fault, so too will the US come to blame the new president who made promises that were far beyond what he could deliver.

The die is cast. The patsy-in-chief is now installed. The media will do all they can to discredit Mister Trump and civil unrest will be funded by his opponents. The US economy is more debt-laden than any country in the history of the world and, historically, this has always resulted in economic collapse. At present, there are scores of triggers that could bring about collapse. Any one of these black swans could do the job, but it’s entirely possible that the Federal Reserve will serve once again as the trigger, as it did in 1929.

This is unquestionably the smart way to play the game. Rather than wait for a random occurrence, if a date is set for a controlled collapse, those connected to the Deep State will have a brief time to disconnect their wealth from the system, as was done in 1929.

The trigger would be pulled by the Fed and the US economy would go down in as controlled a fashion as Building Seven in the World Trade Center.

When is this likely to occur? Herbert Hoover was given just under eight months. The date for the next collapse could be earlier or later. But the question is not when that date might be, but whether we’ve prepared ourselves for the eventuality.,

6 Comments on "Is The Deep State Creating Another “Crash Of 1929”?"

  1. onlooker on Mon, 17th Apr 2017 12:58 pm 

    Of course it is. The elites in the US and around the world know about peak oil, about climate change and everything else. Thus they know that modern industrial civilization is nearing an expiration date. So they are looting in a legalized manner, what else would you call all this fiat money/debt creation. Then by bankrupting the middle classes of the planet, they can both make out like bandits and retain their privileged status

  2. Sissyfuss on Mon, 17th Apr 2017 2:32 pm 

    A cull is needed and is about to commence.

  3. Cloggie on Mon, 17th Apr 2017 4:02 pm 

    “Make America Crash Again” (MACA) and blame it all on Trump.

    Makes sense.

  4. DerHundistlos on Mon, 17th Apr 2017 5:51 pm 

    Enough with the excuse making. The buck should stop with the commander and chief. Instead the writer suggests some undefined group of persons known as the Deep State- IOW it ain’t my fault so blame it on unicorns-is and will be responsible for all problems.

  5. Apneaman on Mon, 17th Apr 2017 7:07 pm 

    An Infinity of Futility

    “We face our ‘modern’ world still under the control of the survival instincts that were honed to perfection over millennia to cope with hazards and problems that faced our ancestors in a different age. Their dangers were real and immediate, to be dealt with on the instant. They could not concern themselves with that which might happen next week or years hence. Our prehistoric forebears were too busy sourcing sufficient energy for their living day, which was locked into the bodies of dangerous animals who were unwilling to surrender it.”

    “So we are the progeny of success: they are us, and we are they. Within us we carry the mindset of our ancestors.

    But nature still cares only that we survive the present, and our hunter gatherer instinct concurs; in evolutionary terms, action on a threat that is not imminent is a still a waste of precious energy, the fact that we have a surplus is taken as confirmation that we need do nothing, because there will always be more. That is why we perceive the dangers of climate change, overpopulation and energy depletion and our other potential problems as being beyond our event horizon, so the majority of us obey primitive instincts and ignore them.”

    “The nonsense of ‘Saudi America’ can be dismissed by pointing out that the USA produces 10Mbd of oil, but uses 18Mbd. That also exposes the fantasy of ‘making America great again’. The bridges, roads and tunnels promised in Trump’s acceptance speech cannot be built without cheap oil.”

  6. bobinget on Tue, 18th Apr 2017 11:56 am 

    Not so fast CO/2

    General Electric Co. and a Southern California utility announced yesterday that they have for the first time added batteries to a peaker plant, a tweak that could slash carbon emissions and water use while making it easier to incorporate renewable energy onto the grid.

    Peaker plants are used only when energy demand is cresting, but their energy and carbon footprint is wider than the peak. They consume lots of gas and water to start up and can spend many hours idling in standby, like a Hummer at a stoplight.

    The utility, Southern California Edison (SCE), brought 10-megawatt, 4.3-megawatt-hour battery banks online at two of its peaker plants in the Los Angeles Basin at the end of March. They are expected to lower the plants’ greenhouse gas emissions by 60 percent and save 4 million gallons of water a year.

    “It’s tremendous. It’s huge,” said Vibhu Kaushik, who heads asset management and generation strategy at SCE.

    It is also a commercial opportunity for GE, which now has a way to upsell its LM6000 gas turbine, a 50-megawatt monster that can sell for $20 million. The new gas-battery combo is known as the LM6000 Hybrid EGT and will add about $10 million to that price tag, though the price will likely drop as batteries get cheaper.

    Paul McElhinney, president and CEO for GE Power Services, said in a statement, “We worked with SCE to address a very specific need, but this solution has applications that go far beyond.”

    About 400 LM6000s are in operation worldwide and are candidates for retrofits. Likely customers include power companies in regions that, like California, are bringing record levels of intermittent renewable energy onto the grid, such as Germany and South Australia, said Stephane Cai, GE’s vice president of commercial solutions.

    Other candidates are mines and other remote industrial operations that aren’t connected to the grid. GE is already advertising the hybrid option on its website.

    GE and SCE co-developed the application and raced it through development in less than a year. Much of the urgency came from SCE, which was looking to ease its demand for natural gas in the wake of leaks at the Aliso Canyon gas storage facility, which took much of Southern California’s gas supply offline.

    For SCE, the hybrid battery-gas plants will perform several functions, Kaushik said. They could allow the peaker plant to supply power in gaps when the sun isn’t shining and the wind isn’t blowing, which is becoming an ever-larger problem in California as more and more solar and wind farms come online.

    They will also play a role in frequency regulation, which helps maintain a quality electricity supply, and in providing spinning reserves, a margin of power all plants must have on hand in case another major source goes offline.

    In some instances, Kaushik said, the batteries could carry out these jobs without ever calling on the gas turbine.

    Experts said that the approach is indeed novel.

    “We hear a lot about the need to ‘stack services’ to make batteries profitable,” wrote Sam Huntington, an energy storage analyst at IHS Markit, in an email. “Adding the avoided costs of the gas turbine to the (more conventional) revenues from frequency regulation is a clever example of that.”

    Here’s how the hybrid is meant to work. When power demand is high, such as a hot summer afternoon when everyone in Los Angeles has switched on the air conditioning, the energy-storage component of the system — a massive bank of battery cells made by Samsung — will turn on. They will supply electricity for the five to 10 minutes it takes for the gas turbine to fire up.

    While the gas turbine runs, the battery will remain mostly dormant. When electrical demand has eased, the turbine will power down — but first it will recharge the battery.

    SCE will count the battery installations as part of its contribution toward California’s muscular energy-storage mandate, which requires 1.3 gigawatts of storage to be added in the state by 2020.

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