The Simon Lectures. Series I, Part 4.

Originally published on greatawakening.win, 2022 October 3.

This is Part 4 of Series I of The Simon Lectures.

Part 3 can be found here: https://greatawakening.win/p/15JAllbd2t/the-simon-lectures--series-i-par/

Part 2 can be found here: https://greatawakening.win/p/15JAEy4lN4/the-simon-lectures--series-i-par/

Part 1 can be found here: https://greatawakening.win/p/15IrUHyPbl/the-simon-lectures--series-i-par/

To recap: (1) in Part 1, we determined that the United States federal government is insolvent, and that all of our assets bear illusory valuations, in that they’re all overvalued; (2) in Part 2 we observed (i) that the United States Dollar is backed by nothing other than the “full faith and credit” of an insolvent federal government, and (ii) that we have compelled use of the dollar by imposition of the petrodollar arrangement, thereby creating synthetic demand for the dollar in order to keep it artificially strong; and (3) in Part 3 we concluded that the artificially strong dollar has decimated the U.S. manufacturing sector, but has fueled the stratospheric growth of Wall Street.

Before launching into the substance of Part 4, I offer these remarks in clarification of this endeavor. By its nature, The Simon Lectures leap from mountaintop to mountaintop. My purpose here is to expose the prominent features making up the economic, philosophical and social lands we inhabit. So we examine summits. This may seem to suggest that the summit is the whole of the mountain, or that there is no interesting terrain interspersed between summits. Neither are true, but for the sake of focusing discussion, much is omitted. If you are occasionally thinking “that’s only half-true” or “there’s much left out” or “that’s an over-generalization” or any other similar thought, you’re probably correct, and you’ve likely identified some particular neglected inter-summit territory. I may not always respond to one of your comments, but that does not mean that I disagree with your observation or criticism. In fact, I agree with more critical comments than not, in terms of academic precision. But I enjoy an advantage in all of this: I know where the Lectures are going. And I know that occasionally something might be true but irrelevant to this line of inquiry. So I leave it out.

One more thing before we begin. Thus far, from a topical perspective, the Lectures have not ventured outside of the realm of economics. Ultimately, the Lectures venture into topics ranging from epistemology (Series II) to metaphysics (Series III). The forces that move the world do so principally, but not exclusively, through economic powers, and this makes an economic survey a logical starting point. That said, it is useful to keep in mind that, in a vacuum, the field of economics provides no more than a language through which to describe the motivations operating upon a people. It sheds no light upon the identity of those who have acted to establish such motivations, nor does it explain why they did so. Sit tight; we’re getting there.

We began Part 1 by looking at our money supply, and we will begin Part 4 the same way. Please look at Figure 1, which you may locate here: https://greatawakening.win/p/15JnPPYPZo/.

Figure 1 is self-explanatory. It depicts the liquid portion of our money supply over time – from the late 1950’s to present-day. Recalling from Part 2 that our money supply is to reflect the full faith and credit of the United States, and further recalling that this refers to our national productivity coupled together with our national capacity to borrow, I direct your attention to the portion of the graph shaded red, and I ask you to form an immediate subjective impression, before we’ve had any discussion to inform or influence your view. Let’s table discussion for just a moment. In view of this graph, do you believe that there remains any intent to preserve a linkage between our money supply and our full faith and credit? Do you believe that, going forward, the United States Dollar is intended to represent underlying value in any serious manner? Moreover, when you consider the debt we have amassed in the course of expanding our monetary supply, do you believe that our debt continues to reflect an earnest intent to repay?

Now it’s time for that discussion we tabled. Please refer to Figure 2, which you may find here: https://greatawakening.win/p/15JnPPYPZq/.

Figure 2 is identical to Figure 1, except that the shaded region has been contracted. It begins at 2008 and continues to 2020. Careful examination of the graph reveals that our pace of monetary expansion departed with past precedent in 2008. The collapse of the housing market in 2008 was seized upon as the justification for this. It would require volumes to describe with complete accuracy our response to the housing crisis. Our response was blended in terms of the particular monetary “levers” manipulated in order to bail out the banking industry. Without dissecting the response blow-by-blow, the essence is that we were sabotaged. This administration of Commie #1 (i.e., Obama) increased our national debt from $6.4T to $19.6T. At the same time, our money supply was expanded as shown in Figure 2, predominantly through the application of quantitative easing measures. An examination of quantitative easing is outside the scope of The Lectures – but you can find a useful substack on the topic (authored by one of GAW’s own, u/dominickmilford) here: https://margincaller1.substack.com/p/fed-up-words-about-qe. That said, the gist of quantitative easing as used in connection with the bailout of the banks is that the federal reserve literally created money, and used the created money to purchase securities from banks, thereby relieving them of bad debt and leaving them with money. In 2011, an audit of the federal reserve revealed that we had created over $6T in connection with the bailout, which was far more than anyone suspected. And don’t let them fool you: the easing goes on to this day.

I know your eyes are drawn to the massive spike at the very end of Figure 2 – it’s hard to ignore. But you must not let it distract you: the Obama years were pivotal. When Obama took office in 2008, the ratio of our national debt to federal tax revenues was within reason. Our tax revenues were $2.5T and our debt was $6.4T – this is a ratio of about 2.5. That’s about the generally recommended ratio of mortgage indebtedness to gross income for a family. In other words, we could afford that. Today, the ratio stands at over 7.5 – we’ve tripled the ratio. We are drowning in debt, and this is not sustainable. (In fact, we’re insolvent, as we’ve discussed in Part 1.) I don’t want to get ahead of myself, as this fact will play a large role later, but, for now, just know that Obama was the one who derailed us. He was the saboteur.

But let’s return to the topic of our money supply. When we expand it, who ends up with it? Wall Street. That’s who. As u/dominickmilford observed, there is very nearly a correlation coefficient of 1.0 when relating money expansion through quantitative easing and aggregate stock market capitalization. Without belaboring the monetary flow on a step-by-step basis, the net result is that after the money is created, it appears in the first instance on the balance sheet of U.S. banks and, from there, metastasizes throughout our economy, ultimately artificially inflating the value of every class of asset, most prominently the U.S. equities market. And who is the dominant player in the equities marketplace? Wall Street. That’s who.

Consider the assets under management of just the two largest Wall Street firms: BlockRock and Vanguard.

+------------|--------------|---------------+
|            |     2008     |     Today     |
+------------|--------------|---------------+
| BlackRock  |     $1.3T    |     $10T      |
| Vanguard.  |     $0.5T    |      $8T      |
+------------|--------------|---------------+

If these two firms allocated their assets entirely in U.S. equities (they don’t), they would hold about 75% of the entire NYSE. And 90% of their assets under management “appeared” since 2008. In other words, since we began printing money.

We are printing money and delivering it to banks, which, in turn, send it to Wall Street. And Wall Street uses that money to purchase interests in business ventures on a global basis. Ask yourself: what is the final state of this? What would be the result of all of this, if this were to be permitted to carry on for another 15 years? We become a country that makes nothing, but owns and manages everything, and uses our military might to enforce its ownership and management. Does this condition strike you as bearing some similarity to The Great Reset? (I note that the rest of the world is not free to exit this crazy ride, because they need our dollars to Purchase OPEC oil – recall Part 2.)

We have not yet arrived at a complete explanation of The Great Reset; these dynamics, alone, do not explain it, nor do they result in a world identical to the one envisioned according to that malign ambition. Hang on. We’re getting there. When we’re through with Series I, I will have so comprehensively explained the Great Reset, you will think there is nothing more to be said about the topic. But that would be wrong. This cannot be understood through economics, alone. Hence, Series II and Series III.

One more thing before I conclude. I’ve left some clues here. Some clues about what’s to come in future parts. If you’re clever – and I know you are – you’ll figure some of this out before I get there.

The takeaways from Part 4 are: (1) that Obama initiated a regimen of economic sabotage of this country; (2) that expansion of our money supply is part of that regime; (3) that the expanded money supply is being used by Wall Street to acquire business concerns on a global basis; (4) that the remainder of the world cannot “opt out” of all of this because they need our dollars to purchase OPEC oil; and (5) that big spike at the tail end of Figure 2? We’ll get to it.

Stay tuned for Part 5.

Or don’t. It’s your decision.

Ever yours, simon_says