{"id":953,"date":"2013-02-17T00:26:35","date_gmt":"2013-02-17T00:26:35","guid":{"rendered":"http:\/\/www.economicfractalist.com\/blog\/?p=953"},"modified":"2013-02-17T13:32:45","modified_gmt":"2013-02-17T13:32:45","slug":"the-derivative-economy-the-quantum-collaspe","status":"publish","type":"post","link":"http:\/\/www.economicfractalist.com\/blog\/2013\/02\/17\/the-derivative-economy-the-quantum-collaspe\/","title":{"rendered":"The Real Citizen Economy Verses the Wall Street Central Banker Derivative Equity ZIRP Bubble Economy: Toward A Qualitative Understanding of The Global Macroeconomic Quantum Asset-Debt System Collapse"},"content":{"rendered":"

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The key to having a qualitative wherewithal about the\u00a0 large scale functioning of the US macroeconomy is understanding that it is, at its consumer citizen foundation, at its 1:1 leveraged foundation,\u00a0 primarily a forward consumption based system. In the elementary citizen economy, future earnings of private citizens\u00a0 are the collateral traded against the real time possession\/use of assets or services. Homes and automobiles are generally solid collateral.<\/div>\n
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In the financial industry world\u00a0 colluded with former Fed Chairman (who apparently uses the logic that because the equity market valuations \u00a0are leading indicators (they are) of economic activity that if the equities are OK, then the economy is OK) the derivative\u00a0 leverage is 1:10 1:30 and the collateralize assets are murky and amorphous and when the leverage \u00a0causes extreme Asset-Debt excessive forward consumption, debtor population depletion, overproduction, and overvaluation, collapse occurs with the above FRED chart consequences.<\/div>\n
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What are the limitations in the asset-debt macroeconomic system\u00a0 caused by the total US accumulative debt vice concurrent GDP growth on further citizen based and business based forward consumption growth?\u00a0 A\u00a0 look at a window of\u00a0 5 year periods of history since 1980 of US debt growth cumulativelly relative to GDP growth which services the debt may be\u00a0 instructive.<\/div>\n
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The total US debt and GDP growth is in trillions<\/strong> of\u00a0 same year US dollars.<\/div>\n
\u00a0 Total Accumulative US Debt in 5 year increments in same year dollars<\/strong><\/div>\n

19- \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 80\u00a0\u00a0 \u00a0 \u00a0 85\u00a0\u00a0\u00a0 \u00a0\u00a0 90\u00a0\u00a0 \u00a0\u00a0 95\u00a0\u00a0 20- 00\u00a0\u00a0\u00a0 \u00a0 05 \u00a0 \u00a0\u00a0 08\u00a0\u00a0\u00a0 \u00a0 10\u00a0\u00a0\u00a0 \u00a0\u00a0 12 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<\/strong>Total\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/strong>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<\/strong>Debt(T)\u00a0 \u00a0 \u00a0 \u00a0\u00a0 4.8 \u00a0\u00a0\u00a0\u00a0 8.6 \u00a0\u00a0\u00a0 13.6 \u00a0 18.7 \u00a0 \u00a0 27.2 \u00a0 42.1 \u00a0\u00a0 53.2\u00a0\u00a0\u00a0 53.2 \u00a0 \u00a0 55.4<\/strong><\/wbr><\/wbr><\/p>\n<\/div>\n<\/div>\n

%5yr\u00a0\u00a0 delta(D)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/strong>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a008-12D \u00a0\u00a0\u00a0 <\/strong>
\n\u00a0debt growth \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 80\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 60\u00a0\u00a0\u00a0\u00a0 \u00a0 40\u00a0\u00a0\u00a0 \u00a0 \u00a0 50\u00a0\u00a0\u00a0\u00a0 \u00a0 50\u00a0\u00a0\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0 25\u00a0 \u00a0 \u00a0\u00a0 03<\/strong><\/wbr><\/p>\n

<\/strong>\u00a0US GDP \u00a0by 5 year increments in same year dollars(2008 bubble peak included) \u00a0 1977 to 1985 to 1997 represented doubling of US GDP in same year dollars<\/strong><\/p>\n<\/div>\n

\u00a02Q19- \u00a0 \u00a0 \u00a0 77\u00a0\u00a0 80\u00a0\u00a0 \u00a0 85\u00a0\u00a0\u00a0 \u00a0 90\u00a0\u00a0 \u00a0 95\u00a0\u00a0 97 \u00a0 00\u00a0\u00a0\u00a0 \u00a0 05 \u00a0 \u00a0\u00a0 08\u00a0\u00a0\u00a0 \u00a0 10\u00a0\u00a0\u00a0\u00a0 \u00a0 12<\/strong><\/div>\n
US GDP<\/strong><\/div>\n
year $(T) \u00a0 2.1\u00a0 2.4\u00a0\u00a0 4.2\u00a0\u00a0\u00a0\u00a0 5.8\u00a0\u00a0\u00a0\u00a0 7.3\u00a0 8.4\u00a0 9.8 \u00a0\u00a0\u00a0 12.3\u00a0\u00a0\u00a0 14.4\u00a0 14.4 \u00a0\u00a0 15.5<\/strong><\/div>\n
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Notice that since 1980, total US Debt in same year dollars has increased 1150% while Total GDP has increased by only 600% and with a smaller base 2.4 vice 4.8T.\u00a0 While total US debt doubled by about 27T from 2000 to 2008, total GDP increased by only 40% and with a smaller base – by only 4.6T: a 4.6T GDP increase to cover 27 trillion of new debt. Since 2008 total debt has increased by 2T while GDP has increased by 1.1T using the 2Q 2012 as an annual average.<\/div>\n
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It could be explained that all of the new 1.1T GDP increase in the last 4 years was dependent on ‘QE’ black box, a euphemism for the Central Bank placing 2.5T on its books to keep the real economy alive. Nearly all of this QE money could be considered defacto \u00a0as paid out directly in the form of\u00a0 SS checks, medicare payments, military checks, defense contractor jobs, federal employee salaries, welfare checks, et. al.\u00a0 supporting directly the real citizen economy.<\/div>\n
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Otherwise considered,\u00a0 1% of the interest on the \u00a050T\u00a0 represents 500 billion. This is about the same amount that the Central Bank’s QE program’s have been lending per year to Congress to continue to fund a non-sequestered, \u00a0central bank-maintained, \u00a0asymptotically-saturated asset-debt macroeconomy.<\/p>\n<\/div>\n

The citizens benefit by continued employment and obviously the elite creditors and owner’s of the 50T of debt benefit by continued payment. Concern for the US Bond rating is identical to the concern of honoring the Elite’s 50T of debt assets.<\/p>\n<\/div>\n

And otherwise considered, all of the net US tiny 3 percent debt growth from 2008 to 2013\u00a0 could be attributed to congressional incurred debt and the Central Bank’s exhilo creation on their books of 2.5 trillion dollars and likely other\u00a0 zero sum currency\/bond exchanges with other central banks.<\/p>\n<\/div>\n

This exhihilo creation of money happened because mathematically it had to happen.<\/div>\n
System interest rates cannot increase appreciably because the saturated asset-debt macroeconomic system mathematically can not allow it and can not pay it.<\/div>\n<\/div>\n

Sequestration will not happen because the asset debt system mathematically will not allow the US politicians allow it to happen.<\/p>\n<\/div>\n

Can the citizen consumer based forward consumption economy grow itself out of this 50 T dollar of system debt – all of which is based ultimately a real citizen consumer economy.<\/p>\n<\/div>\n

Look at the 1980 numbers the 2008 peak numbers and Q3 2012 numbers of US relative group debt.<\/p>\n<\/div>\n

Cumulative and Individual group debt.<\/div>\n
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1980\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2008\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Q3 2012<\/p>\n<\/div>\n

Total(T) \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0 4.8\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 53\u00a0\u00a0 (10x) \u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0 55
\nCongressional S\/F \u00a0\u00a0\u00a0\u00a0 1.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 9.3\u00a0\u00a0\u00a0 (9x) \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 14.3<\/div>\n

Citizen\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 13.7\u00a0\u00a0\u00a0 (9x) \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0 12.9
\n<\/wbr><\/p>\n<\/div>\n

Corporate\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 11.5\u00a0\u00a0\u00a0 (8x) \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0 12.1<\/p>\n<\/div>\n

Financial Industry\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 0.6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 17.1\u00a0\u00a0\u00a0 30x) \u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0 13.8<\/p>\n<\/div>\n

Foreign\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 0.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1.7\u00a0\u00a0\u00a0\u00a0 (9x) \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0 \u00a0 2.3<\/p>\n

Who are the counterparties to this debt? Who owns the 55 trillion dollars of obligation? \u00a0Those who would like continued interest payments on the principal.<\/p>\n

Is the math possible for the real citizen based US GDP 15-16T economy to grow itself out of the shadow of the growth of US’s 1980 4.8T total debt, and, in particular, the Financial\u00a0 Industry’s bubble contribution, to the 1150 increase in US total debt to the 2012 \u00a055T, while the US economy’s GDP in same year dollars has increased from 4.8T in 1980 by only 600% \u00a0now at 15.5T in 2012.<\/p>\n

And here is the answer, the rub, the paradox, the saturation asymptote of the citizen-based forward consumption Asset-Debt Macroeconomic System ….<\/strong><\/p>\n

… in a forward based citizen consumer economy the only way to grow\u00a0 the economy is to increase the citizen debt load (or congressional debt load) by further borrowing against future earnings.<\/em><\/strong><\/p>\n<\/div>\n

That consumer borrowing population is simply depleted…<\/strong><\/p>\n

Even with Central Bank QE assistance, the necessary solution to this asset-debt system conundrum is partial debt default and asset devaluation.\u00a0<\/strong><\/p>\n

Part of the default at some point in the future, will be the erasure, the debt jubilee on the Central Bank’s black box holdings. \u00a0For those who \u00a0think the Federal Reserve’s 500 billion per annum QE action will result in inflation, think of the 55 T total debt sink sucking 500 billion, 1 trillion, 1.5T, 2T dollars out of the system each year at 1,2,3 and 4 per cent interest rates.<\/strong><\/em><\/p>\n<\/div>\n

In the next weeks and months as the asset-debt system mathematically implodes , the above qualitative information may frame a basis for a better understanding about what is happening.<\/strong><\/p>\n<\/div>\n

The Pattern Science of The Asset Debt Macroeconomic System<\/strong><\/p>\n

It is, however, in the asset-debt system’s exquisitely precise\u00a0 time based quantum valuation saturation curves of the US composite equity, east and west major nation composite equity, and commodity asset classes and, oppositionally, the countervailing US hegemonic debt futures and yes the rising US dollar where the footprints of Asset-Debt Saturation Macroeconomics can easily be observed demonstrating a highly organized quantum pattern of the system’s weaker assets’ devaluations – as bad debt which can not be mathematically repaid in a consumer job-earnings collateral forward based and asset saturated economy – undergoes necessary and inevitable default.<\/strong><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The key to having a qualitative wherewithal about the\u00a0 large scale functioning of the US macroeconomy is understanding that it is, at its consumer citizen foundation, at its 1:1 leveraged foundation,\u00a0 primarily a forward consumption based system. In the elementary citizen economy, future earnings of private citizens\u00a0 are the collateral traded against the real time … Continue reading The Real Citizen Economy Verses the Wall Street Central Banker Derivative Equity ZIRP Bubble Economy: Toward A Qualitative Understanding of The Global Macroeconomic Quantum Asset-Debt System Collapse<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-953","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"http:\/\/www.economicfractalist.com\/blog\/wp-json\/wp\/v2\/posts\/953","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.economicfractalist.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.economicfractalist.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.economicfractalist.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.economicfractalist.com\/blog\/wp-json\/wp\/v2\/comments?post=953"}],"version-history":[{"count":14,"href":"http:\/\/www.economicfractalist.com\/blog\/wp-json\/wp\/v2\/posts\/953\/revisions"}],"predecessor-version":[{"id":992,"href":"http:\/\/www.economicfractalist.com\/blog\/wp-json\/wp\/v2\/posts\/953\/revisions\/992"}],"wp:attachment":[{"href":"http:\/\/www.economicfractalist.com\/blog\/wp-json\/wp\/v2\/media?parent=953"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.economicfractalist.com\/blog\/wp-json\/wp\/v2\/categories?post=953"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.economicfractalist.com\/blog\/wp-json\/wp\/v2\/tags?post=953"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}