US Federal Reserve Fears Next Crash Fatal

US Federal Reserve Fears Next Crash Fatal, by John Rubino.

Every sector of the U.S. economy is so over indebted I don’t see how we go on much longer. The Fed is desperately trying to prolong this thing. We are running trillion dollar deficits now, and what that is for is to keep the system from falling apart. …

These guys don’t know exactly what’s going to happen in the next recession, but they are afraid that the system is so highly leveraged that even a garden variety three quarters of a percent of negative growth and a garden variety of 20 % drop in stock prices might be fatal. …

We would get 2008-2009 again but on steroids because the numbers are so much bigger this time around. So, they want to avoid that at all costs. …

We currently have a paper currency system. It’s also called a “fiat” money system, because money is whatever government says is money. The crucial point is that our current money has no intrinsic value — without confidence in government, it is worthless.

Fear is the enemy in a fiat currency system. Everything is based on our assumption that the guys in charge know what they are doing and that the confidence in them is good. You take that away, and they let us see them sweat, and it’s over. There is no real bottom for the dollar, euro or the yen. Their intrinsic value is zero.

When the economic players out there in the global financial system realize that the central banks of the world are out of ammo, and nothing these guys do is going to fix our problem, then all hell breaks loose.

About the riots and protests breaking out around the world:

This is happening largely because of financial mismanagement . . . . They see a corrupt elite siphoning off all the wealth in their society.

Does that sound familiar? That’s what a lot of people think of the U.S. right now. That’s in an expansion when there are jobs. So [after an economic downturn], take away a lot of those jobs, but leave that elite in place, and you have a powder keg.