Very few mainstream economists saw the last financial crisis coming, while numerous alternative media economists and noneconomsists did. The same thing will happen again with the impending financial crisis. From Brandon Smith at alt-market.com:
There is a notion within the mainstream media that certain economic indicators are unassailable; they never stop being reliable. The way they look at and report on the system is rather outdated and extremely limited in scope; showcasing and cherry picking only net-positive statistics, even if those stats don’t represent reality. The result is a kind of holographic view of the financial structure; a mirage of a healthy and vibrant foundation that simply does not exist.
This fraudulent view appeals to the masses for a time because it provides fuel for false hopes. In economics, an analyst must always account for two major factors: the hard math and human psychology. These factors tend to conflict during times when a financial bubble is present, and they tend to converge when such bubbles implode. One must never underestimate the power of public psychology, though. Even when the math is screaming that danger is present in the system, a naive and misinformed populace (coupled with central bank manipulation) can keep a dead economy in a state of profane reanimation for much longer than seems logically possible.
This magic show only lasts for so long, however, and eventually the truth strikes those with blind faith in the machine brutally and without mercy.
On the financial side of the great farce, most of the “positive” signs we see are purely debt driven. Cheap debt and credit liquidity has kept zombie banks alive for years beyond their expiration date, but it has also trickled down into main street, where we see extensive commercial retail development and a spike in employment opportunities. Of course, the box stores and construction are being undertaken by developers deep in the red, and most of the debt will not be paid off for years, if at all.
The rise in job creation extends from the retail bubble, where low wage service jobs are available in abundance, yet higher wage jobs that support families are dwindling. This explains why companies looking to fill vacant employee positions are having such a hard time. Over 95 million working-age people are unemployed in the U.S. but are not counted as unemployed by the Bureau of Labor Statistics. Millions of people who find it more profitable to stay home and collect welfare benefits than slave away in a McDonald’s or a Walmart.
The stock market itself is essentially another debt bubble, driven by corporate stock buybacks that have been funded for years by overnight loans from the Federal Reserve as well as near zero interest rates. As interest rates rise even moderately, the debt becomes unserviceable, and thus, the bull market begins to fizzle and stocks begin to plunge.
As I have covered often over the years, that which we see in the mainstream version of economic events is rarely, if ever, supported by concrete evidence. The establishment media acts not as an information source, but as a tool for encouraging public ignorance which can then be exploited to feed the broken economy for just a little while longer. I suspect some of these gatekeepers even pride themselves as “liars with a noble purpose;” the purpose being to mold perception of the system and thereby extend the life of the system. They see themselves as guardians — I see them as saboteurs.
While many in the public do not make it their ambition to become experts on the mechanics of the economy, people still tend to sense instinctively when something is broken within the fiscal environment. They may not know why there is a problem, but absurd optimism can only levitate them above the muck for so long.
Recent events are beginning to reveal the extent of the fantasy. These are issues that alternative analysts have been warning about for the better part of the past decade, but only now in the past year is this information being taken seriously.
I have seen a propaganda meme flooding onto discussion boards recently in reference to alternative economists, and it goes a little something like this: “Alternative economists are doom and gloomers that have been wrong for 10 years, but a broken clock is still right twice a day…”
I find this disinfo argument somewhat hilarious because of the extraordinary level of dishonesty inherent in it, but I also find it revealing in a way.
First, let’s be clear, if alternative economists had only been stating in some broad and unspecific way that “someday” there would be a disaster caused by an undefined “something”, then there might be basis for the argument above. This is not the case. In fact, many of us have been very specific in our predictions, in terms of how the ongoing economic downturn would develop and what catalysts would trigger the next phase of the crash.
For my part, I outlined in 2015 that the Federal Reserve would undertake a policy of interest rates hikes and fiscal tightening, and that they would pursue this action until markets, long supported by cheap debt, finally broke under the pressure. Months before Trump’s election I stated that Donald Trump would in fact be president and that the Fed would accelerate tightening during his administration. At the beginning of this year I predicted that Fed tightening would result in massive stock market reversal (worse than the 2008 crash) in 2018. In September I refined the timing of this crash to begin in the final quarter of 2018.
These are not vaporous or inconclusive statements, these are very direct predictions. And, other economists in the liberty movement have similar analysis.
The fact is, alternative economists have been RIGHT for the past 10 years and have been far ahead of the mainstream in terms of predicting fiscal trends based on real data. As I have always said, economic collapse is a process, not an event. It’s something that happens in stages or phases over time, not something that occurs overnight or in the span of a few days. People who think that a national or global disaster is a sudden and inexplicable affair watch far too much television. They also don’t understand that the historic moments of “crisis” we read about in books are the culmination of years of decline.
Most, if not all, crashes are preceded by YEARS of warning signs that should have been heeded at the time but were mostly ignored.
Throughout the 1920s, Austrian economist Ludwig Von Mises predicted the collapse of the German Mark as well as the stock market crash of 1929. In 1931, after the initial crash, he also predicted that central bank interventions through interest rate increases and other measures would prolong the disaster rather than end it. Mises saw the danger well in advance, but he was ignored until it was too late. His writings from this time period can be studied in a published collection titled ‘The Causes Of Economic Crisis‘.
Was Mises a “broken clock” that just happened to be right after years of incorrect predictions? Looking back on the complexity of the events of that era and how Mises was able to correctly outline how they would play out years ahead of time, this argument is clearly nonsense.
Before the credit crash of 2008, there were multiple alternative economists warning about the dangers of the derivatives bubble and the coinciding mortgage debt bubble. Some of them many years before the negative effects became visible in stock markets. All of them were laughed at or ignored right up until the crash, and even after it became obvious that these analysts were correct in their predictions, the mainstream still tried to snub them.
As is often the case, mainstream gatekeepers in economics promote false data as a means to “mold” public perception, thus aiding central banks and governments in inflating financial bubbles and perpetuating destructive fiscal practices. But once the fantasy comes tumbling down, they still seek to remain relevant.
They deflect blame by claiming “they had always seen the crisis coming”, or that “no one saw it coming”.
They often claim they were there, “on the front lines,” fighting to educate the masses. And sometimes this is true — the mainstream does tend to shift its rhetoric mere weeks or months before the crash happens. They were never on the front lines. They didn’t see the train wreck coming. They are Johnny-come-lately coattail riding weasels that are seeking to protect their legacies rather than protect the populace from harm.
These people downplay the work of far better men and women in the alternative field as a means to elevate themselves and their fragile reputations.
I believe the “broken clock” narrative is a coordinated disinformation campaign; an attack on analysts who, like Ludwig von Mises, have been accurately predicting the process of collapse for years. It is designed to inoculate the public to the alternative media just before they are about to be proven correct beyond a doubt. In other words, someone knows that the ongoing collapse is becoming more obvious to the public and that, by extension, alternative economists are about to gain more attention.
We can’t have that, now, can we?
If alternative economist predictions receive the attention they deserve, the risk for the establishment is that some of our solutions might be taken seriously as well. Solutions like the concept of decentralization and localization of production, a gold backed currency system, the imprisonment of the banking elites that caused the crash in the first place, etc.
When all is said and done, mainstream gatekeepers hope that the alternative media and our work will be forgotten as “doomsday ramblings;” that one time we got lucky, but that we should be dismissed otherwise. The people who work diligently in the alternative field are meant to be discouraged — to give up. We are supposed to feel like modern day Cassandras, cursed prophets that offer correct predictions of the future that no one listens to. We are supposed to throw our hands up in the air and quit.
I don’t see this 4th Gen warfare tactic as being very successful though. The establishment banks and the economists that pander to them have burned up all their goodwill and social capital. They have been wrong so much and so often that the public is looking elsewhere for their information. This has led to the explosion of interest in alternative economic analysis that is occurring today.
The broken clock lie tells me two things: One, it tells me that the system is about to fail to the point that it can no longer be covered up or denied. Two, it tells me that the establishment is worried about the amount of influence the alternative media will have as the crisis unfolds.
For the past 10 years we have been correct in our analysis, and the danger for the elites is that the wider public might find out.