The Domino Effect:
I ASK THE QUESTION, HOW MUCH LONGER CAN THIS GO ON, AND A VERY SMART PERSON THAT I KNOW EXPLAINED IT IN WORDS THAT I UNDERSTAND…….THE DOMINO AFFECT.
No I don't think they can continue to put it off. I will tell you why.
Unless the agenda really is to totally destroy society and life as we know it on this planet something must be done and done quickly. Now I am going to break this up in chunks so there is not a real long pause before you get to read anything.
First let's look at what we do know as facts.
For one the commodities markets are already in a state of collapse. Iron ore cannot be sold for what it costs to produce it.
Copper cannot be sold for what it costs to produce it.
....
I ASK THE QUESTION, HOW MUCH LONGER CAN THIS GO ON, AND A VERY SMART PERSON THAT I KNOW EXPLAINED IT IN WORDS THAT I UNDERSTAND…….THE DOMINO AFFECT.
No I don't think they can continue to put it off. I will tell you why.
Unless the agenda really is to totally destroy society and life as we know it on this planet something must be done and done quickly. Now I am going to break this up in chunks so there is not a real long pause before you get to read anything.
First let's look at what we do know as facts.
For one the commodities markets are already in a state of collapse. Iron ore cannot be sold for what it costs to produce it.
Copper cannot be sold for what it costs to produce it.
....
Molybdenum cannot be sold for what it costs to produce it.
Silver cannot be sold for what it costs to produce it.
Many oil wells that have been drilled lose money with every barrel of oil produced from them at the present price. And there are many more examples of this with other similarly produced commodities.
You might say we'll what does all that mean? Well here is what it means.
If I own a piece of land or the mineral rights to a piece of land that say has iron ore on it and I have developed a mining operation on it that employs 1000 people who have congregated in a town in Montana then there are probably another thousand people needed in that town to help provide infrastructure and the basic needs of life for those 1000 miners and their families let's say each of those 2000 people are part of a family unit composed of a spouse and two children.
Now we are up to about 6000 people that are there in our Montana town that is there because a man owns the mineral rights to the iron ore in the ground who has decided it is to his benefit and profit to dig that ore out of the ground.
Now because there are 6000 people we probably need to add say another 10% more to the population for support of the additional people family member’s kids and such. So we now have an interdependent community of 6600 people working to keep each other alive and comfortable and to make a profit for the man who owns the iron ore.
There are doctors, grocery stores, clothing stores, restaurants, movie theaters, gas stations, city government and first responders. All providing foods and services to each other and all dependent on the decision of one man to continue to dig iron ore out of the ground because it is of benefit to him.
Oh and we can't forget the banks and the bankers. The banks make loans to the people in the town to get immediate meeting of needs and wants to be paid back over time and they also make loans to the man who owns the iron ore to give him liquidity to be able to take advantage of the value of the iron ore that is still in the ground giving him cash flow and leverage to be able to dig it out of the ground and realize a profit.
Now let's look at another town that is separate but related to the first town. This town exists because another man believes he can make a profit by buying iron ore from the man who digs it out of the ground and turning it into steel. So he has gone to the bankers with his idea and borrowed money and built a steel mill. That steel mill employs around 1000 employees. And you know the story. Just like the first town.
Then there is another town that is related to that town. In this town the Toyota Company has decided that they can build an automobile manufacturing plant that will be able to build cars and sell them at a profit. To build those cars they need steel so they buy it from the steel mill in the other town. And that town like the other ones has to have the entire supporting infrastructure.
And additionally that auto plant requires parts from many other companies in other towns that have companies that make those parts. As you can see there are a whole lot of interdependencies.
Now as for our attorneys factory there must be people who want to and can afford to buy cars in order for the factory to make a profit. Most people who buy cars cannot afford to pay cash for those cars so they go to the bank and borrow money to pay for them. As a result when they get their loan they can buy one of the cars rolling out of that factory and profits are generated and multiplied throughout all of the interdependent towns.
Everything is fine and everyone is making a profit. survive. Additionally because of government and banking regulations it has also become more difficult to borrow money. As a result Then one day the people who own the banks decide they want to change things up. Now this is really oversimplification of what is really going on but will illustrate what happens and how the system can break.
The bankers decide they want to increase their profit margin so they raise interest rates on the loans they make to everyone. The consumers and the business people all just got an increase in what it costs to fewer people can buy cars.
So now the man who owns the iron ore has some decisions to make because the benefit of continuing to dig iron ore out of the ground are no longer attractive to him because his costs have gone up and the steel mill is in the same mess so they told him they are not willing to pay more for the iron ore and the auto manufacturer is in the same mess and worse because less people are buying cars so they are not willing to pay more for steel.
Well the iron ore man decides it is not worth his while to continue to did iron ore out of the ground and closes his mine and lays off his 1000 workers. Wow that destroyed the economy of town number 1.
Next the steel mill cannot get the iron ore it needs to make steel so it has to layoff it's 1000 people and that is the end of the good Ole days in the steel mill town.
And then the auto factory cannot get the steel it needs to make the cars and lays off its employees. Boy what a mess. Then we have the bankers that have made all these loans. The people who borrowed the money now have no income to pay back the banks. Wow the bankers have a real problem now because all the money that people deposited with them has been loaned out and when those depositors want their money it is not there to give back.
You see the domino effect.
Silver cannot be sold for what it costs to produce it.
Many oil wells that have been drilled lose money with every barrel of oil produced from them at the present price. And there are many more examples of this with other similarly produced commodities.
You might say we'll what does all that mean? Well here is what it means.
If I own a piece of land or the mineral rights to a piece of land that say has iron ore on it and I have developed a mining operation on it that employs 1000 people who have congregated in a town in Montana then there are probably another thousand people needed in that town to help provide infrastructure and the basic needs of life for those 1000 miners and their families let's say each of those 2000 people are part of a family unit composed of a spouse and two children.
Now we are up to about 6000 people that are there in our Montana town that is there because a man owns the mineral rights to the iron ore in the ground who has decided it is to his benefit and profit to dig that ore out of the ground.
Now because there are 6000 people we probably need to add say another 10% more to the population for support of the additional people family member’s kids and such. So we now have an interdependent community of 6600 people working to keep each other alive and comfortable and to make a profit for the man who owns the iron ore.
There are doctors, grocery stores, clothing stores, restaurants, movie theaters, gas stations, city government and first responders. All providing foods and services to each other and all dependent on the decision of one man to continue to dig iron ore out of the ground because it is of benefit to him.
Oh and we can't forget the banks and the bankers. The banks make loans to the people in the town to get immediate meeting of needs and wants to be paid back over time and they also make loans to the man who owns the iron ore to give him liquidity to be able to take advantage of the value of the iron ore that is still in the ground giving him cash flow and leverage to be able to dig it out of the ground and realize a profit.
Now let's look at another town that is separate but related to the first town. This town exists because another man believes he can make a profit by buying iron ore from the man who digs it out of the ground and turning it into steel. So he has gone to the bankers with his idea and borrowed money and built a steel mill. That steel mill employs around 1000 employees. And you know the story. Just like the first town.
Then there is another town that is related to that town. In this town the Toyota Company has decided that they can build an automobile manufacturing plant that will be able to build cars and sell them at a profit. To build those cars they need steel so they buy it from the steel mill in the other town. And that town like the other ones has to have the entire supporting infrastructure.
And additionally that auto plant requires parts from many other companies in other towns that have companies that make those parts. As you can see there are a whole lot of interdependencies.
Now as for our attorneys factory there must be people who want to and can afford to buy cars in order for the factory to make a profit. Most people who buy cars cannot afford to pay cash for those cars so they go to the bank and borrow money to pay for them. As a result when they get their loan they can buy one of the cars rolling out of that factory and profits are generated and multiplied throughout all of the interdependent towns.
Everything is fine and everyone is making a profit. survive. Additionally because of government and banking regulations it has also become more difficult to borrow money. As a result Then one day the people who own the banks decide they want to change things up. Now this is really oversimplification of what is really going on but will illustrate what happens and how the system can break.
The bankers decide they want to increase their profit margin so they raise interest rates on the loans they make to everyone. The consumers and the business people all just got an increase in what it costs to fewer people can buy cars.
So now the man who owns the iron ore has some decisions to make because the benefit of continuing to dig iron ore out of the ground are no longer attractive to him because his costs have gone up and the steel mill is in the same mess so they told him they are not willing to pay more for the iron ore and the auto manufacturer is in the same mess and worse because less people are buying cars so they are not willing to pay more for steel.
Well the iron ore man decides it is not worth his while to continue to did iron ore out of the ground and closes his mine and lays off his 1000 workers. Wow that destroyed the economy of town number 1.
Next the steel mill cannot get the iron ore it needs to make steel so it has to layoff it's 1000 people and that is the end of the good Ole days in the steel mill town.
And then the auto factory cannot get the steel it needs to make the cars and lays off its employees. Boy what a mess. Then we have the bankers that have made all these loans. The people who borrowed the money now have no income to pay back the banks. Wow the bankers have a real problem now because all the money that people deposited with them has been loaned out and when those depositors want their money it is not there to give back.
You see the domino effect.
Well first the bankers say ok we will just print up more money to replace what was lost so they print up twice as many dollars as we had before which really makes each dollar worth only half of what it used to be worth but we still have the unemployment problem and people who are unemployed can't generally borrow money so the banks have a problem because they make their profit off of interest on borrowed money. This is a vicious cycle that is a death spiral.
That is where we are.
There is an end to it called total collapse. We are at the end of the game. Time is now extreamly short. This is probably over simplification and does not even scratch the surface when you expand it globally and introduce international diplomacy and politics into the equation, but it does illustrate why this can not indefinitely continue as it is without a reset and reform of the entire system.
Otherwise you will have your chicken coop in your back yard and I will have my vegetable garden in mine and you and I will be swapping vegetables for eggs and chickens. That was tried in the past but somehow I don't think it will work very well in an urban environment.
I know it was long but that is my analysis. Does it make sense?
It is happening now.
http://ift.tt/1nUSrLj
The beginning of the market lockdown because of deflation in commodities markets.
That is where we are.
There is an end to it called total collapse. We are at the end of the game. Time is now extreamly short. This is probably over simplification and does not even scratch the surface when you expand it globally and introduce international diplomacy and politics into the equation, but it does illustrate why this can not indefinitely continue as it is without a reset and reform of the entire system.
Otherwise you will have your chicken coop in your back yard and I will have my vegetable garden in mine and you and I will be swapping vegetables for eggs and chickens. That was tried in the past but somehow I don't think it will work very well in an urban environment.
I know it was long but that is my analysis. Does it make sense?
It is happening now.
http://ift.tt/1nUSrLj
The beginning of the market lockdown because of deflation in commodities markets.
via Dinar Recaps - Our Blog http://ift.tt/1PzPxWO
No comments:
Post a Comment