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DEBT: PART TWO - DEBTISM  The Fed, bankers, Washington, Wall Street, and the world of spin and sell debt for overt profits and covert thefts, have the American sheeple believing in the alchemy of debt without the terrible future consequences of repayment of borrowed purchasing power. So Atocha's Supreme Law of Purchasing Power is contrary and directly contradictory to the banker's Keynesian pipedream smoked by the sheeple, of alchemy by debt. That Fed induced Keynesian madness and Orwellian doublespeak delusion of the crowds world-wide in the religious-like belief in alchemy by debt, requires much more than denial and rejection by conjecture and fiat alone. The popular Keynesian School of Economics' delusion of printing debt currency units in order to create wealth and lasting prosperity (instead of goods and services creating wealth) deserves scientific debunking by the absolutism of a step by step logical process. Hence, the necessity of the tedious nature of Part I. The purchasing power conclusions of the Debtism School of Economics are built upon accurate non-deceptive linguistics and the logical inviolate strength of Atocha's Supreme Law of Purchasing Power as a bedrock foundation. The Debtism School of Economics focuses on an analysis of debt, including the Kondratieff cycle which is a debt cycle, that is lacking with the Keynesians, the Friedmanites, and even my beloved Austrians.
Now, in Part II, we shall examine the paradoxical attitudes of bankers, and our culture, toward debt. And, in building on Part I, we shall examine how pervasive debt is today in relation to the debt build-ups in prior Kondratieff waves.
THE CULTURAL OBSCENITY OF UNDERSTANDING DEBTISM
It is the great paradox of our time, that while our culture worships the practice of debt as a religion; the concepts and the understanding of the practices of debtism, is perhaps the most obscene taboo in our culture. The debtism that we so devoutly worship and practice to such an extreme, is paradoxically such an obscene intellectual taboo that even the word "debtism" is banished from our dictionaries, our libraries, our classrooms and hence our minds and our thought processes.
I visited my public library and sought out their largest dictionary, The Random House Dictionary of the English Language- Second edition- Unabridged copyright 1987. The word "debtism" was missing.
In the same unabridged public library dictionary, I found every single slang profane word that I had ever heard. But; my 'unabridged' dictionary clearly abridged the word "debtism". Thus, one of the most culturally and politically obscene words in the English language is "debtism'. We, our children, and our children's children, must never know of that most dangerous word and its conceptual meaning. So, librarians, and dictionary writers across America and other English speaking nations, politically censor our minds and thought processes by banishing the word and concept of "debtism" from our dictionaries and our libraries. We live in a theocracy that practices the worship of one God: Debt. Yet the understanding of our debt theocracy is so secret and so taboo that only the high priests of banking, in their temple banks, are allowed access to the word, concepts, and understanding of debtism, and its consequences. The economic uses of gold and silver are the arch enemies of Keynesian unrestrained debt creation. In order to fully appreciate the merits of the economic uses of gold and silver, one needs to understand how debt works!
ORWELLIAN DOUBLESPEAK
One of the quaint perversities in the use of the English language is the practice of calling something the exact opposite of its true meaning. For example, 'sickness insurance' becomes 'health insurance'. And, in our Orwellian doublespeak, 'death insurance' becomes 'life insurance'; and, 'debtism' becomes 'capitalism', and a 'liability' becomes an 'asset'; and debt becomes a 'credit (card) account'. All the more easy to sell you and me things that are most unpleasant, when they are wrapped in words and concepts most pleasing to the mind.
So, insurance companies sell 'sickness' and 'death' insurance as 'health' and 'life' insurance. Does their health insurance guarantee the benefit that you will stay healthy? No! Does their life insurance guarantee the benefit that you will stay alive? No! But; Orwellian doublespeak helps insurance companies sell insurance. And, Orwellian doublespeak helps bankers sell and fatally encumber businesses, governments, and individuals with financially lethal debt loads from bank loans. That practice of debtism, like a predatory wolf in sheep's clothing, is masked by linguistic deceptions. 'Debtism' is falsely labeled as its opposite, 'capitalism'; and, the 'debt' of bank loans for business becomes an 'asset' (capital). In order to prevent the unmasking of the linguistic deception, the word 'debtism' is banned from our dictionaries, our classrooms, our minds, and hence our thought processes. For it is much easier for predatory bankers to sell the bank loans of debtism to the debtor if the debtor is deluded into seeing himself as a 'capitalist' engaged in 'capitalism'; instead of seeing himself as a 'debtor' engaged in financially unsound and self-destructive 'debtism'.
CAPITALISM
For illustration purposes, please permit me to revisit my business life in the 1960s and 1970s. At the time, my wife and I wanted to open a retail plant nursery in sunny South Florida. For many years, we were both full-time employed. We lived on one salary. Every year we saved the other salary as capital for our dream business. Since we could not issue shares of stock, that was the only structure of capitalism available to us. Eventually, we opened that dream plant nursery. The only debt incurred was for the raw land. Everything else we paid for with cash saved as capital earmarked for our business. We created and built ownership in a new business "chiefly" by the "extensive" use of our privately saved capital. Capitalism. Those two words, "chiefly" and "extensive", become crucial in defining the difference between capitalism and debtism.
My same library dictionary defines capitalism as "an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations". In capitalism, the INVESTMENT OF CAPITAL in a business, (and the ownership of the business), is "chiefly" by private parties.
DEBTISM
Many of our plant nursery customers had their own dreams about starting their own business. One by one, they came in and we talked entrepreneur talk. And as the would be business creators were leaving, they would frequently comment: 'Well, I am going to go to the bank and get some capital and start my own business'. WRONG! You do not get business capital from a bank. You get business debt from a bank. (The only business people who get business capital from a bank are embezzlers and bank robbers.) My would be entrepreneurial customers set out to create and build a new business "chiefly" by the "extensive" use of debt; instead of "chiefly" by the "extensive" use of capital. Thus they economically and financially practiced 'debtism' instead of 'capitalism'.
CAPITAL
Let us return to that huge public library dictionary. Capital is "the wealth, whether by money or property, owned or employed in business by an individual, firm, corporation, etc." The dictionary lists "assets" as a synonym for "capital". In accounting, "capital " is "the ASSETS (emphasis mine) remaining after the deduction of liabilities". Capital is also "the net worth of a business". Capital is assets; and, capitalism therefore involves the private use of assets.
DEBT
That same library dictionary says that debt is "a LIABILITY (emphasis mine) or obligation to pay or render something". So, based on our dictionary, capital is an "asset" and debt is a "liability". Our same dictionary defines a 'capitalist' as "a person who has capital, esp. EXTENSIVE (emphasis mine) capital invested in business enterprises". So, what could be more simple, straightforward, and logically and linguistically self-evident? Capitalsim is the use of "extensive" privately owned assets (like savings) in order to "chiefly" fund a privately owned business enterprise.
With parallel logic and linguistic consistency, a 'debtist' is one who has extensive debt. And, with parallel logic and linguistic consistency, having a business enterprise "chiefly" funded by the "extensive" use of debt is debtism. Capitalism and debtism are as opposite as 'asset' and 'liability' are opposites in accounting.
A 'credit' can be a sum of money due a person; or, the balance in one's favor in an account; or, an entry of payment or value received in an account. Most of you have plastic 'credit cards' that have nothing to do with a sum of money due you; nor, do your 'credit cards' reflect the balance in your favor in an account. A 'credit' posts assets in an account. Yet, your 'credit card' posts your debts in your 'credit card' account. So, you do not have 'credit cards'. Instead, you have 'debt cards'. Again, our language and our thought processes are linguistically corrupted so that bankers can sell more debt and collect more interest. In the Orwellian doublespeak of bankers, 'debt' becomes 'credit', an asset.
Yet, in order for bankers to better delude the people, and to sell the debts of their bank loans, our Orwellian culture renames debt (a liability) as capital (an asset), or, as a 'credit' (asset) account.. In accounting, they are opposites. How can debts which are liabilities become assets? The word, concept, and understanding of debtism becomes politically banished into a political world of forbidden knowledge; erased from our dictionaries, classrooms, minds, and thought processes. That is how in our thought processes and in our daily language, debt (a liability) becomes capital (an asset), or, a credit (asset) account; because linguistically, 'debtism' has been politically abolished.!
DEBTISM IN 'THE AGE OF DEBT'
The peoples, businesses and governments of the world have succumbed to their own greed and to the bankers lure of debt that has been linguistically disguised as 'capital' or 'credit'. Never before in the history of the world have so many people, used so much debt to borrow and spend so much purchasing power, for such a long time. In all of history; we live in a unique time that shall become defined as 'the Age of Debt'. A number of political, linguistic, structural, and technological factors have combined to give birth to a historically unprecedented mega explosion of debt created purchasing power. Certainly the political banishment of the word and concept of 'debtism' from our dictionaries, our libraries, our classrooms, our minds, and our thought processes has severely impinged the intellectual understanding and discussion of the uniqueness and destructive consequences of debtism in 'the Age of Debt'. No doubt, many of you reading this may experience some considerable difficulties in understanding solely because the linguistic contradictions of Orwellian doublespeak are so ingrained in your thought processes.
DECEPTIVE ACCOUNTING AND BUDGET PRACTICES
The deliberate banking and political concealment of debtism is not just limited to dictionaries, libraries, the 'free' financial press and media, and classrooms. Deliberately deceptive accounting practices for businesses have institutionally made rampant corporate debtism appear to be corporate capitalism. The deliberate accounting deceptions of Enron is not a unique abberation. Criminal accounting deceptions are an institutionalized component of debtism. In terms of Atocha's Supreme Law of Purchasing Power, the Enron collapse via debtism, and the liquidation of their debts in bankruptcy court, means that all of the individuals (including stockholders), businesses, and banks, who had their financial assets at risk with Enron, will suffer losses of purchasing power and reduced net worth. Yet, a Wall Street TV financial news analyst described Enron as: "a bump in the road". I hereby bestow on that news media financial analyst, Atocha's very first P. T. Barnum Award for excellence in journalism deception.
The debtist Enron corporation, and all of the other 'undiscovered' Enrons, contribute bankruptcy by bankruptcy to the destruction of our cumulative national purchasing power. The inevitable bitter fruits of financially unsound corporate debtism are now shrinking our cumulative national purchasing power toward systematic economic collapse within our debtism debt system. Past purchasing power gained by Enron debts is now current purchasing power being destroyed by the liquidation of Enron debts. The growth and collapse of Enron is an excellent example of the inevitable reckoning of Atocha's Supreme Law of Purchasing Power.
Accountants have used 'goodwill' and other accounting spin and deceptions in order to credit countless billions of imaginary dollars into 'accounting only' corporate assets. By vivid imaginations, accountants are able to deceptively turn corporate insolvency into the delusion of corporations with positive balance sheets. Private and government accountants have deluded the public by classifying future liabilities (debts) as "off-budget items". Then, there is both the Wall Street pro forma accounting; and, the Wall Street 'expectations game', that linguistically twist corporate financial disasters into 'good news' and reasons to buy stocks in terminally ill corporations. It appears that never before in the history of the world have so many people been so linguistically gullible, with so many family assets, for such a long time. 'Tell them what they want to hear and the suckers will buy'. Wherever he is, P. T. Barnum is smiling. It brings to mind the public madness of the tulip mania and the south sea bubble.
TRADITIONAL KONDRATIEFF CYCLE DEBTS
To be sure, we now face the same types of debt build-ups and defaults that have earmarked every recent Kondratieff cycle. We face widespread municipal bond defaults like we experienced in the 1930s. Current home mortgage debts will bring about waves of family homes sold on courthouse steps for taxes due; or, not much more. We also face widespread corporate bond defaults, bondholders' suits, bondholders' protective committees, the greatly increased repossession of automobiles, an ongoing economic depression in much of agriculture, exploding consumer bankruptcies brought about in large part by increasing unemployment , and widespread defaults on raw land and investment real estate. Of course, a tidal wave of debtist corporations, small and large, will go belly up; and, their stocks will become worthless. International debts will increasingly default and banks large and small will go under. All of these shall again be revisited; along with abject poverty, homelessness, helplessness, hunger, bread lines, and soup kitchens. I would strongly argue that a number of fundamental, structural, and technological circumstances are historically unique to this Kondratieff cycle; and, the cumulative loss of purchasing power from debt liquidation will be much more severe this go around than in the 1930s; or, during any prior Kondratieff cycle.
INTERNATIONAL TRADE DEBTS
When the world was on a monetary gold/silver/copper exchange standard, ships criss-crossed the seas carrying gold, silver, and copper, in order to settle international trade debts. Sailing merchant ships used chests and barrel fulls of gold, silver and copper coins in order to make purchases in foreign lands. More recently, as long as the gold window remained open, the gold exchange for trade debts; and, the quanity limitations on physical gold, were an effective restraint on cumulative trade debts.
Now, we have computer technology and the internet technology of inexpensive, instantaneous world-wide mobility of massive and complex data. Under this technological revolution, combined with the historically unprecedented monetary structure of an entire world totally dependent on fiat currencies; trade debts can accelerate toward infinity. The international trade debt restraint imposed by a finite amount of physical gold or silver (historically earlier) has been replaced by the technological capacity for almost effortless infinite computer entries for fiat debt currencies for trade debt settlements. This fiat/computer/internet combination is historically unique in international trade structure, methodology, and scope; and, it currently greatly increases the total amount of international trade debts to be liquidated, compared to prior Kondratieff waves. Increased current international trade deficits and debts to be liquidated; mandates, requires, necessitates, an unavoidable future increased destruction of purchasing power. (Atocha's Supreme Law of Purchasing Power)
BANKING DEBT CREATION
Banking generated debts, domestic as well as international, are now freed from the restraints imposed by historic deposit banking; and, freed from the restraints of a historic gold/silver exchange monetary standard. The replacement of depository banking with fractional reserve banking; combined with, the replacement of gold/silver/copper coins with computer enhanced fiat currency units , has created a multi-level pyramid of bank debts creating more debts, upon layer after layer of debts. Never before in history has the entire world embraced the essentially world-wide combination of fiat currencies and fractional reserve banking. This also, has led to historically unprecedented bank debt creation, compared to prior Kondratieff waves. As we know from Part One, currently increased bank loan debt to be liquidated; mandates, requires, and necessitates, an unavoidable future increased destruction of purchasing power.
In terms of Atocha's Supreme Law of Purchasing power, the massive bad bank loans in Japan are already negatively effecting the Japanese currency and the yen/gold price. The Japanese line up and buy physical gold as a safe investment and take it home for safe keeping. A second effect of the massive unsound Japanese bank loans, as another consequence of Atocha's Supreme Law of Purchasing Power, is the long standing Japanese economic 'recession' because of reduced cumulative national purchasing power due in part to the process of the de facto defaulted loans being actually defaulted .
The severely weakened currency and the severely weakened economy in Japan are forerunners of an increasingly severely weakened dollar and an increasingly severely weakened United States economy. That will be public reality when elaborate artificial dollar support manipulations weaken and fail; and, when the American corporations and American sheeple stop parroting the Wall Street spin and start to more forthrightly acknowledge and process the purchasing power impact from the liquidation of de facto defaulted bank loans by the sea of debtist corporations like Enron. You, the reader, can anticipate with absolute certainity the unavoidable, and most severe, economic effects of the unpayable debts held by debtist American corporations. These increasing corporate liquidations will keep causing further declines in cumulative American purchasing power as per Atocha's Supreme Law of Purchasing Power.
If, in an attempt to save themselves from increasing economic depression, the Japanese redeem their American Treasury dollar units and cause those Treasury bonds to be liquidated; either the Fed will have to monetize what can not be resold; or, they will be net paid out. We know from our bond laws in Part One, that no matter how bonds (including U. S. Treasury bonds) are liquidated, that there is a corresponding collapse in purchasing power. So from our bond laws in Part One, and from Atocha's Supreme Law of Purchasing Power, no matter how the current Japanese held United States Treasury bonds are liquidated, there will be a corresponding reduction in cumulative United States/Japanese purchasing power.
TECHNOLOGICAL DEBTISM: THE COMPUTER/INTERNET ENABLED EXPONENTIAL
EXPLOSION OF DEBT GENERATED PURCHASING POWER AND DEBT MARKETS
This current Kondratieff cycle, debt expansion has happened with such a vastness and complexity of layers of debt that old fashioned hand or mechanical adding machine calculations could not even begin to to calculate the daily changes in the data for all the different layers of debt. Also, prior to the internet technology, existing systems of communicating financial data could not even begin to communicate and distribute all of the vast supply of daily, and even minute by minute, changes in all of the different layers of debt and debt markets. Thus, computer/internet technology developed during this Kondratieff cycle, has enabled bankers to explode the vastness and complexity of debt generated purchasing power and debt markets exponentially, far beyond anything humanly possible in prior Kondratieff waves. In a very real sense, the computer, in banker's hands, will be responsible for the economic collapse of western civilization. And we know from Part One, with absolute certainity, that: "Purchasing Power Gained By Debt Creation Is Always Equaled By Purchasing Power Lost By Debt Liquidation". (Atocha's Supreme Law of Purchasing Power)
The absence of a monetary gold/silver exchange standard further freed the creation of fiat debts within a computerized/internet fractional reserve banking system. And computer/internet technology has pushed that structural freedom of debt creation exponentially far beyond any prior Kondratieff cycle. The computer/internet technological revolution has lead to a historically unprecedented debt revolution. Our debt revolution (we live in it) is an uncontrolled, and of unknown size, exponential explosion of debt creation, debt created purchasing power, and debt markets; compared to prior Kondratieff waves. All of that past, historically unprecedented, volume of purchasing power gained by an exponential explosion of debt creation will become existing purchasing power 'exponentially' destroyed by debt liquidation. (Atocha's Supreme Law of Purchasing Power) Our American economic system of technological debtism faces mankind's first computer/internet created 'exponential' implosion of loss of purchasing power; in comparison to all other prior Kondratieff cycle losses of purchasing power. Technological debtism, and not capitalism, shall create the economic collapse of western civilization.
SOLELY FIAT RESERVE CURRENCIES
For the first time in history, we have fiat currencies world-wide AND fiat reserve currencies world-wide. Let us see why the significance of this can not be overstated. Let us start with the essence of a dollar. Atocha defines a dollar as: "An IOU for an assumed and unspecificied amount of purchasing power". Or, more precisely, Atocha defines a computerized dollar as: "A computer dollar is an abstract, non-tangible, unstable, elastic unit of debt, of unknown quanity, for future implied and assumed; but unspecificied and non-guaranteed purchasing power". A dollar is a very vague debt!
Back to basics and that library dictionary. An ASSET is "a useful or desirable thing or quanity". A DEBT is "a liability or obligation to pay or render something". DOLLARS, LIKE ALL FIAT CURRENCIES, ARE DEBTS. A dollar as a debt is "a liability or obligation to pay or render something". What is a dollar apparently obligated to render? Answer: implied and assumed PURCHASING POWER. Of course we all know what eventually happens when one assumes.
Certainly, dollars as reserve currency, are assumed to be obligated to render purchasing power. That is what a reserve currency is for. That is historically what gold and silver have done as storers of value for central bank reserves, businesses and families. The purchasing power and the intrinsic value of fungible physical gold or silver can be manipulated within limits by government totalitarian measures in the historically short run. But, physical gold and silver can not be liquidated, defaulted or repudiated. Although, it can be confiscated. Gold is a tangible asset that has a constant purchasing power that it has always returned to through the centuries. Gold, in the long run, has purchasing power that can not be permanently manipulated. (Roy W. Jastram: "THE GOLDEN CONSTANT The English and American Experience, 1560-l976", 1977, John Wiley & Sons.)
The purchasing power reserves of peoples, banks, and nations of the world, are for the first time in history predominantly vague, implied, assumed, unspecificied and unsecured computerized debts of unknown quanities. All debts always get liquidated in due course. We are pregnantly ripe for the non-metallic and predominant purchasing power reserves of the nations, banks, peoples, and businesses world-wide, to be liquidated. In the history of mankind, this is a historically unprecedented scope of economic vulnerability. Historically, currency reserves were gold and silver (tangible assets), immune to global debt liquidations. Today, fiat currency reserves are conceptual electronic debts waiting to participate in this unfolding Kondratieff global debt liquidation. The historically unprecedented reality of solely fiat reserve currencies (debt) has greatly increased the amounts of debt and purchasing power to be currently liquidated, compared to prior Kondratieff waves. So, all of the purchasing power remaining, from all of the fiat debt currencies now in circulation, will be purchasing power lost with the liquidation of the debt fiat currencies. (Atocha's Supreme Law of Purchasing Power)
NIKOLAI KONDRATIEFF
The purchasing power of the average American family reached a peak in 1973. In 1812 we had a peak and collapse in commodity prices. In 1866, 54 years later, we had another peak and collapse in commodity prices. In 1920, 54 years later, we had another peak and collapse in commodity prices. In 1974, in terms of constant dollars, we had another peak and collapse of commodity prices. (THE LONG WAVE CYCLE, Nikolai Kondratieff, The Classic Work In a New Translation by Guy Daniels, Introduction by Julian M. Snyder, Richardson & Snyder, l984, Page 3) With the peak of purchasing power in 1973; and, the 54 year peak in commodity prices in l974, I then concluded that the Kondratieff upward long wave was over; and, that we had reached the Kondratieff plateau period. With the peak of precious metals prices in January, 1980, I felt that the plateau period was probably over and that we were about to enter the Kondratieff downward long wave.
ROLLOVERISM
But, clever bankers figured out how to delay the major impacts of the Kondratieff economic downward long wave: Simply keep defaulted bank loans on the books as financially sound loans and simply roll them over and over again and again. Thus, the collapse of the banking system, and the economic collapse of purchasing power from defaulted loans would be delayed and the banking system and the economy might appear to be relatively sound. Simply renew each de facto defaulted loan with a larger rollover loan that will cover the interest payments due until the time of the next rollover. In effect, the banks pay their own interest payments due them from insolvent debtors, domestic and foreign, by ever larger loans. On the books, the banks collect their interest and the loans are still financially sound. Or, so it would seem. Certainly P. T. Barnum, the bankers, and their accountants, would have you and I assume that the de facto defaulted loans were still financially sound because clever bankers paid themselves the interest payments due themselves from others.
More than twenty years of massive banking rolloverism has greatly increased the total amount of debt AFTER it had reached the point of natural Kondratieff debt liquidation at the apparent beginning of the Kondratieff downward long wave. This artifical and manipulative time-extending of the Kondratieff cycle; by banking institutionalized rolloverism of de facto defaulted loans, into ever larger loans, has also uniquely increased the amount of debt and purchasing power to be liquidated, compared to prior Kondratieff waves. As we know with absolute certainity, due to the proved theorem of Atocha's Supreme Law of Purchasing Power, increased existing debt to be liquidated, guarantees increased future purchasing power to be destroyed.
For decades, United States loans to Latin American countries have been rolled over. The crucial question on my mind about Argentina is: "Why didn't the banks just roll over the Argentina loans this time?" Who blinked on rolloverism? Argentina or the banks? And, why? Is it to make an example of Argentina after Russia? Is it to make a painful example of Argentina in order to discourage many other nations waiting in the wings and contemplating public and deliberate default on their loans? Is established rolloverism coming to an end? Behind all the public announcements, which side is really forcing an apparent end to rolloverism? If institutionalized rolloverism is coming to an end; then, either the Fed will have to help the banks behind the scenes such as by buying bad loans; or, at some point, with the end of rolloverism, the banks take a fall. Voluntary or involuntary liquidation by default of large previously rolled over loans moves us a giant step further down the road of decreased purchasing power (and decreased net worth) for the American banks, for the American economy, and for the American people, and for almost all of the other peoples; save those most wise people with 'primitive' (Ha!) self-sufficient barter economies.; according to Atocha's Supreme Law of Purchasing Power.
DERIVATIVES
Derivatives, such as commodity futures contracts, are often called a net zero sum game (exclusive of commissions). Be that as it may, derivatives are still debt killers that can slay the solvency of the largest of the large, such as LTCM and Enron. And the debt defaults of the losing derivative players ripple through the economy as the losing derivative players default on their debts to other businesses. Today, derivatives alone can blow-up debt systems and the world economy. This is because of four current characteristics of the derivative markets: 1) Extreme leverage; 2) The extreme size of single ownership of some derivative positions; and 3) The extreme volitility in derivative markets such as interest rates and foreign exchange; and 4) the extreme size of the derivatives markets- technologically enabled solely by computer/internet technology. The derivatives markets have become an ongoing game of financial 'Russian roulette' for the individuals, banks and businesses of the world. One by one, five by five, and fifty by fifty, they shall fall; until all the rest fall together.
Derivatives create extremely large and rapid transfers of wealth that enrich some and bankrupt a steady flow of others. And those individuals, banks and businesses that are bankrupted by derivatives, create waves of debt liquidation by debt defaults for themselves and for their creditors. Thus, the historically unprecedented extreme leverage, extreme size of some single ownership positions, extreme volitility of today's derivative markets, extreme sie of the markets; and, the computer/internet enabled extreme size of processing capability, also uniquely increases the amount of current debt and future purchasing power that will be liquidated this cycle, compared to prior Kondratieff waves.
THE MEGA KONDRATIEFF ECONOMIC DOWN WAVE
In this Kondratieff down wave we do not face your typical, blase, historical 1930s economic depression. Because of many historically unique factors that have expanded debt created purchasing power like never before in human economic history; we face a mega debt and purhasing power liquidation that will exponentially dwarf the debt and purchasing power liquidation of the 1930s. And the past mega purchasing power gained by past mega debt creation will be equaled by the future mega purchasing power lost by the unfolding mega debt liquidation. (Atocha's Supreme Law of Purchasing Power, proven in Part One)
At least eight major factors played important roles in uniquely increasing the current amount of debt and purchasing power to be liquidated, compared to prior Kondratieff waves. One factor is institutionalized and deliberate banking and political concealment of debtism by censored dictionaries and classrooms; and, by deceptive accounting practices such as outrageous 'goodwill credits', 'off budget debt', pro forma accounting, and the Wall Street 'estimates game'. A second factor is that international trade deficits and debts have escalated like never before because of the closing of the gold window in 1971. The historic limitations of physical gold (or silver) no longer restrain the size of international trade debts. A third major factor is that current domestic and foregin debt creation has been unleashed by the combination of fractional reserve banking and fiat debt currencies, world-wide. Such bank debt creation is no longer restrained by historic deposit banking or by a historic gold/silver exchange standard. An unprecedented fourth factor is that world-wide, today's currency reserves are fiat debt currencies, and hence for the first time, purchasing power reserves are chiefly vulnerable debt instead of default-proof assets like physical gold and silver. A fifth factor is the decades long institutionalized and deceptive debtism banking practice of rolloverism for de facto defaulted loans, thereby throwing more undefaulted dollar units into bottomless pits of defaulted dollar unit debts. Our sixth factor is the historically unprecedented extreme leverage, market size, position size, and volitility of today's derivative markets that are 'debt killers' creating ripple waves of bankrupticies which give birth to increased unemployment and increased debt liquidations by defaults in bankruptcy courts. Our seventh, and most lethal factor, is computer technology, which exponentially expands our capacity to calculate continuously revised debt data and debt markets information.. And, computer technology begot our eighth factor, internet technology; which enables the instaneous transmission world-wide of all the data for debts and debt markets. The seventh and eighth factors combine in order to create mankind's first and last Kondratieff cycle of technological debtism. For this current Kondratieff cycle we have already experienced and spent an historically unprecedented exponential explosion of purchasing power gained by unprecedented debt creation. And from the absolute certainity of Atocha's Supreme Law of Purchasing Power we know that the historically unprecedent exponential explosion of debt created spent purchasing power is about to be sucked out of the system as if by a giant cosmic vacume cleaner. Focus on the word "spent". In the hands of bankers, computer/internet technology has set the stage for the economic self-destruction of western civilization and its self-professed world dominance via technological debtism- an exact opposite of capitalism.
Perhaps we should list a ninth major factor in that legal tender laws now have created an unprecedented circumstance, whereby essentially all of the mediums of exchange of the world are fiat debt currencies. No doubt, the list of historically new debt precedents could go on and on.. Suffice it to say that the combination of Federal Reserve vastly expanded debtism, and computer/internet technology, has ushered into existance such historically unprecedented new mega quanities of debt created spent purchasing power that this Kondratieff down wave will usher in a historically unprecedented mega collapse and disappearance of spent purchasing power. How much of your current purchasing power will disappear from the value of your employment/business, your home, your investments, your other assets, and your debts receivable (such as debt currencies)? This will be no ordinary blase 1930s Kondratieff down wave.
DEBTISM
Debtism is the opposite of capitalism. The United States is no longer a capitalist nation. We absolutely, positively do not "chiefly" and "extensively" practice capitalism. Our culture and our language and our economic system has been turned upside down by our bankers and our accountants. In a covert banker's coup d' etat, capitalism and free unmanipulated markets has been largely abandoned and politically overthrown for the banker profits and thefts of manipulated technological debtism. Debtism can be viewed as the self-serving, self-enriching, practiced white-collar criminal theology of the bankers of the Federal Reserve system, and their elastic debt currency.
In America, under the Federal Reserve theology of practiced debtism, a financial liability can be an asset. This Orwellian doublethink, self-destructive, out of control, computer/internet enhanced debtism, and debt worship, shall render the world into a new prolonged dark age. Mr. Greenspan, the Pope of Debtism, and his banker cohorts are the parents of the coming Debt Dark Age. For, as a direct response to the politically revolutionary actions of the Federal Reserve in changing America from the economic system of free market capitalism, to the economic system of private banker controlled and covertly manipulated technological debtism; the current debt and purchasing power to be liquidated this Kondratieff wave is many times larger then when compared to prior Kondratieff waves. Will the economic recovery from the liquidation of our vastly historically unprecedented amounts of debt take fifty years, one hundred years, or one thousand years? Or, shall mankind descend into perpetual governmental economic totalitariansim and never economically recover to the recent standard of living? I don't know. But, you and I have had the fortune/misfortune of living through the largest binge of future spending power, by computer/internet enabled debt creation, that the world will experience for many centuries.
The involuntary debt repudiation process now unfolding lasts until essentially all of the current borrowed purchasing power is destroyed and lost by total debt repudiation or other forms of debt liquidation. This includes the final total repudiation of the debt currencies. With this final implosion/explosion sequence, we will also live through the greatest collapse of purchasing power in the economic history of the world because of the liquidation of all fiat currency debts world-wide, including the debt currencies themselves. Then, all of the fiat debt currency holders world-wide will lose their remaining assumed currency purchasing power in an event unequaled in the economic history of mankind. That is what some refer to as "the abyss". For in their very private heart of hearts, most banker's know that: "Purchasing Power Gained By Debt Creation Is Always Equaled By Purchasing Power Lost By Debt Liquidation". (Atocha's Supreme Law of Purchasing Power)
ELLIE AND RUDY ZIECH
By email, Tim Geoffrey asked me for real life examples of default and worthless currency. So let me tell you my personal memories of Ellie and Rudy Ziech, as I dedicate this series on debt to them. Ellie and Rudy were Berliners. Ellie was a beautiful, vivacious blonde. Rudy came from a family that for generations had made jewelry and crowns for the Kaiser and the royalty of Europe. The wife of the Kaiser was a close friend of Rudy's mother; and, she was Rudy's godmother when he was christened. They lived through the great German currency inflation of 1914-1923. If my hazy childhood memory serves me correctly, the German government, after the Kaiser, confiscated the family jewelry business and 'paid' for it with German bonds which became worthless. However it happened, Rudy ended up with worthless bonds for the family jewelry business. During the currency inflation they lived on a German farm as Rudy desired to be a horticulturalist. Rudy told me that the farm had a huge pile of pig iron and that the farm employees were paid in pig iron. (Not only gold and silver were prized; but, even pig iron was cherished.)
Ellie and Rudy came to Miami, Florida with the clothes on their backs. They also had a few gold crosses that Rudy's family had made for the Kaiser. These gold crosses were coated with white paint, so they were allowed to take them out of Germany because they were not recognized as gold. Rudy went to work for Little River Farms in Miami, Florida, picking strawberries on his knees. Rudy was a stoic and a proud man with dignity and command presence. After World War II, the Miami Power Squadron had a transatlantic steel hulled merchant ship. Rudy used to captain the ship on Power Squadron trips. He was college educated and a maritime Captain. His family had made jewelry for the royalty of Europe and had been close friends of the Kaiser's family. Yet, between the wars, he found himself on his knees picking strawberries in Miami, Florida.
Rudy never showed any emotion. As a small boy I could not understand how Rudy could go from family business with the royalty of Europe, to picking strawberries on his knees, and show no emotion and show no anger or bitterness. One night, Ellie and Rudy came to dinner at our house, about fifty years ago. I will never forget where everybody sat that night at the dining room table. As a curious small boy I started to verbally push Rudy that certainly he must be angry and bitter. Rudy remained his perpetual stoically calm and composed demeaner. I pushed some more: "You must be angry, you must be bitter?" Rudy broke and started crying and we could all see and feel his intense pain. I immediately realized that my verbal pushing out of curiosity was one of the cruelest things that I had ever done in my life. Rudy had lost everything except Ellie and his dignity. When Rudy lost his composure and cried, I am sure that in his eyes (but not mine) Rudy felt that he had lost his dignity. I felt ashamed for the intense pain that I had pulled out of his heart. Ellie and Rudy are "real life examples" of how bond defaults, worthless currency, and collapses in purchasing power, impact and forever change lives. For me, Ellie and Rudy provide human faces and intense emotions to all of this abstract stuff that we are talking about. Reliving that night at our dining room table, I now have tears in my eyes. My America shall soon have tens of millions of Ellie and Rudy "real life examples". And the tears shall flow in the homes, bread lines, soup kitchens, and 'vacant' lots across our land.
Prior to WWII the Nazi government offered Rudy a tremendous amount of currency, if he would return to Germany. Rudy did not go because he knew that as an experienced ship's Captain that they wanted him for the coming war. He stayed in Miami, living in a very modest home, and I recall that he eventually became the manager of Little River Farms.
It is with great sadness that I find myself as your messenger. But still, I feel privileged to be your debtism messenger instead of my being one of the banking/accounting/media progenitors of the coming Debt Dark Age.
DISCLAIMER; This article is only my humble thoughts and opinions and it is provided for intellectual stimulation only. The contents are not intended as investment advice. I am not trying to sell you the reader anything. I do hope to encourage you to expand your thought processes far beyond the politically correct spin of the media. I encourage everyone to develop their own thoughts, deeply and passionately, for we live in very troubled times. I do greatly appreciate, enjoy, and thank you for your email feedback. I respond randomly to as many individual email authors as possible. Some email authors have asked me to relate Enron, Argentina, and Japan, to Part One. In response, I have included some discussion on those three subjects, here in Part Two. Other email authors have raised the question of how to prepare for the coming consequences. In response, there will be a lengthy discussion on preparation. I deeply regret that I find myself unable to answer each and every email author individually. I sincerely apologize to many of you who have sent me outstanding detailed emails that I have been unable to individually answer. However, I will do my best to respond collectively to many of the outstanding suggestions and questions raised in your emails. So please, keep the emails coming.
'Atocha'
fhsmith@terranova.net
February 2, 2002
Copyright 1983 and 2002, Frank Smith
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