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2015-06-04 08:00 by Karl Denninger
in Editorial , 8859 references Ignore this thread
If You're Older Than 40 And Reading This... *

... you're likely to either be eating out of a dumpster in your old age or be (literally) eaten.

If you currently have counted more than 65 revolutions around the sun in your life then you may avoid this, but only through the most-macabre of means: you'll die of something else first.

Let me explain: If you're between 40 - 65 you have somewhere between 20 and 45 years remaining on this planet, statistically speaking.  Oh sure, some of you will do better, some worse, but those are the numbers.

This means you must manage at least 20 years without things going to hell if you're on the older end, and 45 years if you're on the younger.  What are the odds?

Well, the US Government (backed by the Fed) in what has been and continues to be described as a "recovery" destroyed about 6.3% of the value of the currency last year alone.  That is the value of every dollar that exists in currency and credit (that's a stunning $59 trillion dollars folks!) was impaired by 6.3%.

To put this in perspective and real dollar terms that is $3.7 trillion dollars of value destruction or approximately every penny the federal government spent.

Looked at another way the Federal Government emitted $1.08 trillion to cause that currency destruction but the reality of arithmetic turned the harm done from $1.08 trillion to $3.7 trillion, a multiplication of 3.43x!

Now let's look out 20 years.  Let's presume that this year, which the CBO and other policy people say will in time be considered a good year, is equaled every year for the next 20.  That is, we have no more bad years (of which the CBO says we will have many, starting in another 2 or 3 and continuing thereon forever!)

I'm being very optimistic in this projection, in other words.

That $59 trillion is going to have a real value of $17.3 trillion in today's dollars 20 years from now; it will have had roughly 70% of its real value literally burned to ash.

With the remaining value we will try to pay Social Security and Medicare benefits, just to name two, without which about half of the population is literally without funds -- or medical care.

Do I need to tell you how much is left in 45 years?  Ok, I will: $3.78 trillion.


If you want to know why the American consumer (that is, the common man) has watched everything go "poof" in front of them since roughly 1980, this is the reason.  Contrary to the protests raised by various people in government that "we're not really in deficit trouble" and similar nonsense this is the arithmetic that cannot be evaded; math isn't a topic of debate, it just is.

Will I be ok when this happens personally?  Maybe.  But if not that's all right; I had a pretty decent run, and if the reality of the situation is that between my attempts over the last number of years to get people to wake the fuck up and put a stop to this crap fail and I also fail to find a way to remain in reasonable comfort as my time on this planet (probably another 35 years, more or less) draws to a close I have no quarrel with the fact that I've had a good run and due to that failure to change trajectory my time has expired.

How do you feel about this?  More the point, whether you're rich, poor or somewhere in the middle unless you're ridiculously rich (as in, "have billions") having six percent of your wealth today in real terms left 45 years out means you will be eating out of a dumpster and living under a freeway overpass -- which will likely be crumbling around you in a vista something akin to "Fury Road"!

Oh, I know, you'll call me a "downer" and say that "we've always found a way", "technology will save us" or "the markets will go up monstrously and thus you'll outrun it."

Uh huh.  The markets have not outrun it from 1980 to today.  They have papered over it with more and more debt, but eventually that debt has to be paid and in the meantime it has to be serviced.  That servicing cost eats more and more of the productive output of society until it exceeds income at which point all of that hidden value destruction is revealed.

2000 and 2007 were a small piece of the overall economy and market detonating in this fashion.


Yeah, I know, housing was a big deal.  No argument.  It was much larger than the tech wreck as a percentage of the economy.

But as a percentage of the whole neither was all that large.  Fixed residential investment in 2007, that is housing, the year before it all went to hell totaled $688 billion out of $14.478 billion in GDP or 4.8% of the total.

Got that folks?  Less than 5% of the entire economy blew up everything, threatened to destroy the entire US economy and every large bank (according to Bernanke, Paulson .et.al.), caused the S&P 500 collapsing from 1576 to 660 (a loss of about 60%) and was only "arrested" by a literal doubling of federal debt and allowing banks to lie about the value of what they held, a lie that continues today.

Today, one dollar in five, or four times that much in percentage terms is spent on health care throughout the United States in a monopolist, rigged system that is more unstable by several orders of magnitude and more dependent on federal intervention and tampering with the value of our currency and credit than the housing market was!  The solution to said problem is right in front of us yet nobody will even discuss it at the political level, say much less introduce a bill.  State governments, for their part, will (if pressed) tell you there is literally no agency that does or will take up even blatant behavior that ought to be considered a criminal violation of consumer protection statutes if it occurred in the medical sector.

Medicine isn't the only place this problem exists, but it's the most-critical to resolve simply due to its size as a percentage of the economy.

I don't know how much time we have before ordinary people -- or for that matter just traders -- figure this out at a critical mass level.  I have no idea if it will come before or after the majority of the nation is scavenging dumpsters for something to eat.

But I do know the math tells me a meltdown at a scale four to five times greater than any we've seen in this nation's economic history, including 1929 and 2008, is inevitable unless we stop this and with every day that passes the amount of accumulated damage that there is no way to evade grows at an ever-increasing, indeed exponential, rate.

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Posts: 222
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"technology will save us" -

I think the opposite. Technological advances mean less humans doing work/production. What we end up with is a lot of humans reproducing with no viable means or skills to work/produce anything except in service occupations, and even that has limitations relative to how many is needed.
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Farmingdale, NY
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The government will save us.....despite ourselves.....for our own good......


Time is up.
Global Day of Jubilee is on the way - there is no other choice
I hate to burst your bubble, but there is no Santa Claus, the tooth fairy does not exist and American justice does not involve the courts.
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And probably sooner than later as the math is already catching up from what my little peeps see.. Went to the mall, an activity I despise and rarely do, and there were a lot of people walking around the shops. Operative word - waking - and few with packages of purchased goods.

Went to the vittles store, an activity I don't despise cuz' I likes to eat, and you see purchasing going on obviously. But baskets are not chock full and you see smart shopping with lots of folks only buying the BOGO or coupon items. Don't recall seeing that before.
Posts: 14212
Incept: 2007-06-26
A True American Patriot!
Philly P.a.
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Technology should have saved us. By making things more efficient and increasing productivity we should have more for less, but it was stolen. Inflation is a hidden tax and should be considered theft, but people got distracted by the shiny objects like their house increasing in value.

It's been going on for so long that it feels normal. Buy now or be priced out. Not only is it theft, but it's manipulation. How many people buy something they don't really need, but are afraid it will cost more tomorrow. The economy should be neutral to slightly deflationary due to the increases in productivity due to technology. If you need something tomorrow, you buy it tomorrow and you save today to afford it unlike what we have where he finance to buy today and pay tomorrow's price due to the financing costs.

What's worse than being over 40 is being over 40 and up to your eyeballs in debt in this situation. And god help you if you're fat or sick and dependent on the medical cartels...

I don't wish anyone dead, but I will chuckle in amusement while reading some obituaries...
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The Land That Was
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Paying for the Past | 2015 Fiscal Summit
Richard W. Fisher, Alan Greenspan, and Lawrence B. Lindsey. "Paying for the Past: How Will Rising Interest Costs Affect Economic Growth?" panel, moderated by Betty Liu. From the 2015 Fiscal Summit: Opportunity for America, held Tuesday, May 19th in Washington DC

Thanks Karl, for all you do once again, most would not be able to wade through the bullshit that is constantly thrown at us. With some insight anyone with a firing neuron can see clearly what is taking place, We have been warned, repeatedly!

"We live in a, idiocracy populated with morons." - Goldbrick
"Freedom cannot end where fear begins."
Robby Dinero
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No worries Gen. It all comes apart much sooner. What separates civil society from chaos is paper thin at this point and growing thinner each day.

For the record. I am not a doomer. I am a realist. My career is even rooted in science fact, not fiction. Unfortunately, even angle from which one analyzes our trajectory (locally, nationally, internationally), the outcome is never rosy. At least not in the mid-term. And it is not just financial. We are at a nexus of constraints. A perfect storm scenario is unfolding. In less than 10 years, the world will look nothing like it does today.
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@Centerline - I like to think the same way: not a doomer but a realist. However, saying that - the more realistic I am the more doomer I feel.
I say this based on the following:
- Exponential growth of: Debt, Healthcare + College costs
- Companies standardizing on 1-2% raises (if you have full-time employment)
- No rule of law
- No one seems to care (generally speaking)
- Too much $$ in politics
...ad nauseum

I lived in a personal bubble many years till about 2008 - those were happy ignorant days...

We're rich! We broke even! We're in the poor house...
-- Simpsons 'Enron'
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I agree that we are going to hit the wall much sooner than 20 years from now. As you know, Health Care Service Corp (Blue Cross Blue Shield NM) just filed for a 51% premium hike for all their health insurance groups encompassing individual and small business PPO policies in 2016. They *also* gutted the out of network coverage, in many cases increasing the co-insurance amount from 0% to 50% *after* the deductible. For their more popular Bronze Plan, they are hiking the annual out of network deductible from $12K/$25K to $15K/$45K. Effectively, out of network health coverage for individual families is going bye-bye.

Looking at their filing showing the increase, the problem is obvious. If you needed $500,000 heart surgery due to a pre-exisiting condition and previously could not afford to pay the bill, Obamacare was a godsend. You signed up for individual "insurance" where you could not be turned away. You gleefully paid your $12K individual deductible and then you received $500K of medical care. The BCBS pool to pay for these cases in the State of New Mexico was roughly 33,000 people. The insurer's answer to pay this bill: put the screws to everyone --hard.

The pool of uninsured individuals is going to explode next year. I might be one of them.
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I'm not concerned for myself. I have had an uphill battle with my career and social life for most of my life because my arms are not normal and its very noticable ( I don't use it as an excuse for anything, It just drives me to work harder for everything I do). I don't go around ask for sympathy or expect it. With that said,I stay concerned for my 4yr old child(who is 100% normal :) ) I know feel like I have to prepare her for whats coming much like what Sarah Conner did for John in The Terminator movies. She will learn how to be independent. She will learn multiple ways to defend herself. She will learn what to expect from people. I keep a fear in my head like a small splinter that will be with me until I pass on to the next life. I only hope I can prepare her enough.

Criminals thrive on the indulgence of Society's understanding.
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Freer state of NC
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Same here Pezhead.. 2007 was an eye opener for me when, for the first time ever, I was let go due to "the poor economy" as it was stated by my employer. I never felt such a "wtf" feeling as I did that day. From that moment on, I turned on the reality tube and turned off the unreality tube.. bubble be gone!

I felt helpless, hopeless.. then mad, then took control of it and have tried to position myself better ever since. I've never felt better, more healthy, more "in control" in my whole life and I owe a sizable chunk of that to reading Karls' posts.

Thanks Karl!

Irregular Warfare is now in play
Posts: 2031
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A True American Patriot!
San Antonio de Bexar de runover with illegals, Texas
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I have told my 3 children (23,28, 30) NOT to have any kids. Whatever they have it will take all of it to survive (if they can). Who would want to bring kids into a world already this f...ed up anyway? Can you imagine another generation or two?

They are all conservative, smart and have good jobs, but will be overwhelmed by the dumbasses and the mindless who reproduce without forethought or purpose. There is no future in America and if not in America, not in the world either.

We have tried to make it all so fair and all so equal, but nobody considered the unintended consequences of trying to fool mother nature where success if measured only by the survival of the fittest. In considerably less than 100 years, we have diluted the gene pool beyond the point of no return.

"Life is basically unfair."-JFK

Democracy is a conversation between 2 wolves & a sheep discussing what's for dinner. A Constitutional Republic is found when the sheep pulls out a gun & makes clear that his 2nd Amendment Right will be exercised should the wolves attempt to hold such a "vote."-KD 9-29-15
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Yep I prefer the term realist. And @ Shannonlk1 I am with you, I have tried and continue to try to prepare my 5 kids for a world seemingly out of control. My 2 oldest have jobs and go to school (no loans cash only), pay their rent and most expenses and I am proud of them. They are independent, take no handouts and I am fairly sure they will be able to survive where so many of their peers seem clueless and dependent on others just for the day to day living. But even so I still pray for them daily and advise them the best I can. I talk to them of these matters, others think me weird but kids need to know the truth and I don't sugarcoat it. FWIW you ain't alone and the hard work will pay off.
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Pez, same here too.

I always harbored this horrible cognitive dissonance. Drove me nuts for over a decade. 2007 was the "ah ha" moment where I realized I was not in need of reprogramming (lol), but that eventually "math" matters. My gut instincts were in fact correct. At least in a macro sense... big topic sort of stuff.

Since 2007 I have been reading every day. Learning. And interacting with other people who are able to embrace the truth, even if it challenges us, scares us, whatever.

You are so right in what you said about feeling more like a doomer for being a realist. We no doubt living in a world of socially reinforced madness. Those of us who defy the madness are the ones who are viewed as mad. ha ha. Oh well.
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I'm not planning on old age killing me.
The moment I feel my brain is starting to slip is when I take up a more dangerous lifestyle like motorcycle riding.
Heart issues run in my family anyhow.
This crash diet might buy me another decade.
Great grandpa dropped dead in a cornfield in South GA at age 73 in 1973.
Grandpa had his heart attack and quad bypass at age 64 and lived to be 72 with modern medicine.
Dad has his first heart attack at age 55 and has had another one and a stroke and is 68 now.
I'm 46 and the one decade sooner for the heart attack per generation has me living day to day and enjoying life. I do want to have a modicum of fitness like I had 12 years ago at 205 pounds and running 2 miles a day.
My kids are grown. Stepkids age 18.

Wife thinks she will get her retirement from the State Government but deep down there is doubt.

She is diabetic. Who knows which of us dies first?
When the time comes, I'm ready.
If she goes first.
I'll hold on for my kids as long as possible.
Look up Scythian culture.
The old men lead the charge, often without armour so that their sons would remember them dying a valorous death in front of them.
It increased the hatred for the enemy.

They must remember what freedom was like while they had it and who was responsible for slowly destroying it.
We were complacent too long.

Preparing to go Hunting.
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What about those UNDER 40 - specifically my 3 nieces and 9-month old nephew?

On second thought, don't answer that.

GEN 5:32,GEN 7:6, 6/17/1689, 6/17/1789, 10/13/1917, 10/13/2017 (???)
Posts: 185210
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They're fucked.

Oh wait, I missed your last line...

Civil Society requires 99%+ consent.
Stop consenting and it is forced to stop. Always.
No violence required.
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Government debt is just a ledger of wat already has been stolen. The deficit is what will be stolen this year. Soo it doesn't matter because some schmucks lost thousends of hours worth of work they were foolish enough not to leverage up and spend immediately. Who cares!
BTW don't forget private debt, same fsck'n thing. Just add it together with gov, it will end up there anyway.
Posts: 2558
Incept: 2007-09-11

Los Angeles
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Yep. Civil War II. Fought asymetrically with 4GW methods.

Ive been getting this nagging feeling that I ain't gonna live as long as my most recent ancestors. I've also come to the same conclusion as Supertruckertom; the way the Scythians did it is a decent enough way to go.

Or perhaps, to note the regrets of Mr Solzhenitsyn, rather than burn and fulminate in the camps, take a few of the state's organs with me. Ill be too old to assist in any real fighting and others have the transmission of knowledge thing covered so what else will there be for a useless old man to do...other than be a martyr when the psychopaths make that one additional fatal step..
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If I'm not careful I could have twenty more years. But my life has been hard, and that's kept me hard. I could still live in the woods if I had too, so no big deal. When my time's up it will probably be a relief.

But the kids are going to face the biggest upheaval in our History. And I know History. It breaks my heart to imagine it. They are for the most part, totally unprepared.
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United States
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They're fucked.

I can't help but think there is a substantially greater than zero chance that when the under 30ish (and especially the under 20ish) generation figures out what's been done to them, they'll solve the problem from their perspective by going logan's-run on the over 40's.
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I can't help but think there is a substantially greater than zero chance that when the under 30ish (and especially the under 20ish) generation figures out what's been done to them, they'll solve the problem from their perspective by going logan's-run on the over 40's.

That is what will happen. We've created an unsustainable ponzi scheme predicated on the young paying for the old. Health care prices will collapse, but not due to recognition of KD's points - prices will collapse due to the young shutting off the spigot.

At 20% of the economy that will be a huge restructuring which will destroy many people's lives. The old would be ok if it happened quickly as prices would become affordable, but it will be drawn out and forced by the lack of demand from those who need the care but cannot afford it.
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I'm 40.75, and I'm tired.

Broke enough, both financially and physically. A bit of a mad dash here to use up the sick care system to try and find out what is actually wrong with my body, because I know what is wrong with the finances...managed to spend about every penny I've earned the last 15 years, every savings I've managed to accumulate has been vaporized in one calamity or another. Dog sick, 2 car accidents, blah blah blah

When 2 bags of groceries never comes to less than $35, and is usually $60 (or more), along with every other input cost increase, my standard of living frankly is quite poor and a pale shadow of my parents lives, and they know this too. My Mom, as uneducated as it gets, gets it.

I have a 'good' job that pays, and I'm on the verge of simply walking out, grabbing my pension money and giving up completely. I've lost my mind, dangerously close to loosing my health, and there is absolutely ZERO substances out there I can consume to make me feel any hope whatsoever.

Might just sit this out on welfare, and when that check bounces...I'll know it is well and truly overs.

Violence isn't the answer, but it sure feels like fair retribution to me.

Carbon is a whore.
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ft collins co
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Gen wrote..
one dollar in five

That hits me right between the eyes every damn time I read it... I've been repeating it to everyone that'll listen. Unf@#$ing Real.

The more I think about our situation, the more I think MASSIVE WAR is inevitable.. I know with nukes in play the stakes are higher than they've ever been.. but I think about the shit storm that's coming our way.. it's a perfect shit storm and it's gonna erupt from all angles. There will be no place to hide.

Thanks for the amazing ticker, KD.

The unexamined life is not worth living.-Socrates
The only stable state is the one in which all men are equal before the law.-Aristotle
Liberty exists now in the spaces government has not yet chosen to occupy.-Doc Zero
I anticipate that 10 Dallas Cowboys Cheerleaders will blow me this evening.-K.D.
Posts: 1889
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Vancouver WA
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Markgoldman - "and I'm on the verge of simply walking out, grabbing my pension money and giving up completely."

Of course only YOU can make that decision, but keep in mind, (Your mother gets it) so therefor you do too, and that it, is we know what Karl and others states in this ticker is true, each day we come closer to real change take place in society. You can take this knowledge and prepare the best you can, every day you take a step forward is a step closer to the real change that truly matters to you, your personal journey.

"there is absolutely ZERO substances out there I can consume to make me feel any hope whatsoever"

On a personal level, this is something I have never understood. Where does the concept of what we consume makes us hopeful or fulfilled, come from?

You can use your skills, knowledge and time to volunteer, write your congress persons nasty letters, run for office so you can help bring a level of sensibility to this crazy mess and if that make you feel more hopeful, you can always resort to kicking puppies.....or something :p

Anyway, keep moving forward.

"It's just a shot" - Gates
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