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  • high-power money and socialism for the rich

    In a general sense, high-powered money is gold and bank assets. Low-power money is debt money that is owed back to somebody. There are all sorts of permutations that make up Exter's Pyramid. Low-power money is debt-money that disappears upon repayment of the loan.
    The Concept of High Powered Money
    Low-power money vanishes with the repayment of a loan and the bank is left with the interest. In the case of a default, the defaulted amount is deducted from bank assets. Since credit grew at more than three times the rate that GDP grew, there is an enormous accumulated leverage against bank assets.

    The FED sent the banks $ 2.5 trillion of excess reserves to cover contingent loan losses. They also paid them interest on the $ 2.5 trillion to give them some income. Additionally, they were give TARP money. Senator Inhoffe reports that much of the TARP money was not paid back.
    The FED holds about $4.1 trillion of treasury notes that it will supposedly sell on the open market some day. NOT LIKELY.

    Gold and all money that isn't debt-money technically becomes high-powered money. Jim Willie claims that the FED is creating $ 1 trillion every quarter to bail out various and sundry entities. One could surmise that $1 trillion is the amount needed to make good on all the defaults to keep them from becoming a cascade. At the same time, ZIRP is escalating the default rate. Much of the $ 1 trillion every quarter is pumped into the crashing energy markets. It's a safe guess that the claimed $ 4.1 trillion balance sheet of the FED is greatly understated.
    ALL of this is done to keep the derivative monster from crashing onto the scene. ZIRP is starving the whole economy at the same time that the derivative monster threatens to eat everything.
    The CB holds at bay the sister monsters of derivatives and default.

    A default on a loan means that debt-money to pay the loan is not paid. The bank must make good on the default with it's high-powered money. The negative sum of debt money vanishes the high-power money. The CB money creation used to make good on a default may very well be high-power money BUT, it is turned to smoke by the shortage of low-power money for repayment.
    The credit bubble must be ever-growing to produce the high-power money necessary to offset the destruction of high-power money caused by defaults.
    The natural rate of interest is reckoned to be close to 2%. The FED works to produce 2% inflation. Since the bankers are "first spenders", they make an exaggerated profit from a 2% overall price inflation. (Cantillion Effect).
    ALL of these monetary shenanigans eventually depend on the productive economy. The worker was flogged unmercifully to squeeze out more wealth for the bankers. Labor's share of profits crashed way down. Productivity of labor went WAY up. Wages are about where they were on 1970. The debt bubble grows furiously at the same time that the productive loop is crashing.
    The worldwide bubble of low-power money is searching for a safe haven. With the productive loop well crashed, it mostly moves into mal-investment.

    "The structural economic problems of stalled incomes, peaked debt and welfare make operational expansion i.e. sustainable growth extremely difficult, which has led to investment concentration in secondary equity markets. And that means the higher valuations simply represent higher risks.

    The offshoot is that as such a large concentration of total asset value is dependent on the market, it becomes necessary to maintain the market at all costs. The market has become too systemically important to allow it to fail. And that means policymakers have changed the function of the market. The market left to its own devices is a consequence of the underlying economy. Today, however, the market is being used as a (false) portrayal of the underlying economy. It is intentionally using the logical fallacy of confusing cause and effect.

    That is, the thermostat is no longer meant to reflect the temperature inside the house, its only use is to convince you the house is warm. That means policies are being targeted at manipulating the thermostat rather than keeping the furnace hot. The consequence is a spiralling of resource misallocation, furthering the structural breakdown of economic activity making it ever more important to keep the market looking strong. The market is no longer a market as we understand the term.
    Now The Markets Themselves Are Too Big To Fail -

    The FED is backstopping all the defaults to save the banks. The East has created a new banking union and currency bloc. At what point do they no longer need the West? The dollar is way up and making it very difficult for emerging markets to repay dollar-loans. Emerging markets are defaulting. At what point do China and Brazil decide to cut their losses and dump Western debt?


    • The difference between a SLINGSHOT and a PHASE TRANSITION is rather significant.

      Gold is kryptonite to central bankers who want NO limitations on their creation of fiat. The CBs have dumped gold as fast as they can. BUT, they were forced to do a turnaround a few years ago and start buying gold. With "Brown's Bottom" gold hit $250 and ounce. The CBs print free money to buy gold so, it really doesn't cost them. BUT, they are showing confidence in the enemy.
      Their suppression of the price of gold (price of their fiat) is well documented by GATA. Last time that they suppressed the P.O.G. the dam held for a while and then it burst with the crash of the London Gold Pool.

      The dam is close to bursting again. It could be "gentle" or it could be brutal.
      "The most bullish position for gold would not be a rally, but a SLINGSHOT to the downside FIRST. That will convince everyone it’s a bear market and then they will fight the rally exactly as they have done in the US share market. Then you will have the confirmation that it will move sharply higher. Without a SLINGSHOT, then gold must coil to create the base for a Phase Transition. We should see which will unfold by January."

      There are about 4500 tons of gold traded every day. All of it is a paper transaction with almost no delivery of physical metal. BUT, the small amount of delivered gold almost broke the COMEX and it had to get an emergency delivery from Switzerland of 50 tons. The 50 tons is a fact. Whether or not it was used to bail out the COMEX was only reported by Jim Willie. It is a completely plausible scenario.
      Should gold do a sudden rise OR fall, it will crash all the paper gold markets. The rolling contracts that comprise the 4500 tons a day will all be frozen. From that point on, precious metals will not change hands. Who knows what the final fallout will be?


      • What has everybody panicked....Fascist excesses

        GOV taxes everything except the big markets. The bankers like it that way.
        Over 30 Countries Tax Financial Speculation—Why Doesn't the US?

        Something wicked this way comes but, just what is it? "Sell Everything"... But Why: What Has The Smartest Investors So Spooked? | Zero Hedge

        Seems like quite a few people are worried about some sort of approaching event. Teleconference of East Coast Gov?t Agencies Planning Gun Confiscation Leaked « InvestmentWatch

        Mohamed El-Erian and the negative market jump. Funny that he calls it a jump and not a crash or fall. Mohamed El-Erian: Markets May Soon Face “jump conditions.” Here's Why - munKNEE

        I've written for years that the world would slide down to a global mean wage. Joseph Stiglitz now writes about the global mean wage.
        He also writes that the TTP and the TTIP are exactly the wrong moves.
        (Globalization) "they pushed for policies that restructured markets in ways that increased inequality and undermined overall economic performance; growth actually slowed as the rules of the game were rewritten to advance the interests of banks and corporations – the rich and powerful – at the expense of everyone else."
        This new fascism of the corporations has resulted in the 1% having all the money BUT, money is now debt. The 99% are now too poor to pay this debt. These hundreds of $trillions are soon to become stranded assets because that is what happens when there is debt FAR in excess of wealth.

        "They" created enormous mountains of debt money to goose the economy and get us to producing and consuming once again. Those who live off financial speculation and those who live in ivory towers seem to have forgotten that credit can carry consumption only so far. Wages are necessary. Handouts of borrowed GOV money only go so far.
        The CBs handed out free money to the upper loop. They propose free money for the lower loop.
        THAT would be a very big psychological step.
        Last edited by Danny B; 08-09-2016, 03:52 AM. Reason: misss smelling


        • No future in equities

          GOV is still cheering that the good times will go on forever. Here is a graph of the ups and downs going back to 1871;
 I should point out that this graph shows a huge stack of blue and only a small stack of red to compensate. IF you use the standard deflator, we have been in recession since 2001. We have a lot of catching up to do.

          The good times were brought on by moving consumption forward. That now-plundered future can't be expected to have any returns

          This Cycle Will End—–And Then T.I.N.A. Will Go Poof! | David Stockman's Contra Corner
          Reportedly, it will be 12 years before there are any returns on equities.
          Bonds are negative everywhere; 8/08 Bond market’s big illusion revealed as US yields turn negative – Bloomberg
          Last edited by Danny B; 08-09-2016, 03:51 AM. Reason: moar info


          • Financial levitation

            Energy is the master resource and a very big part of the financial system.

            8/09 The consequences of Big Oil’s exploding debt – Oil Price
            8/09 Morgan Stanley expects oil to hit $35 in a few weeks – Zero Hedge $40 oil is crashing everything. $35 oil will be much worse.
            "Estimates by Bloomberg have shown that oil majors have doubled their combined debts to US$138 billion since 2014. That’s also a staggering tenfold jump from the 2008 total oil major debts."
            "Another U.S. oil major, Chevron (NYSE:CVX)—which swung to a US$1.47-billion net loss in the second quarter—reported a total debt of US$ 45.085 billion as of June 30, 2016, up from US$38.549 billion at the end of December 2015, while cash and cash equivalents dropped to US$8.764 billion from US$11.022 billion. Cash flow from operations shrank to US$3.7 from US$9.5 billion." Cash burn.

            "BP saw its net debt rise to US$30.9 billion at end-June from US$24.8 billion a year earlier" ' Royal Dutch Shell (NYSE:RDS.A), which disappointed analysts with second-quarter profits missing estimates by US$1 billion. Shell’s debt surged to US$75.1 billion at end-June from US$26.624 billion at end-2015, "

            The debt of the energy sector carries over into the financial sector. It's not going to get any better in the near term, 8/09 Product glut sees Chinese crude oil imports fall to six-month low – Oil Price
            The S&P is currently at 2,181.74 BUT, Oil Says the S&P 500 is Heading to 2,050 | Zero Hedge
            Marc Faber has a different idea; 8/09 Marc Faber: S&P is set to crash 50%, giving back 5 years of gains – CNBC
            Most of the cheerleaders have thrown in the towel and shut up. Prof. Siegel of the Wharton School is still optimistic. The Prof says that everybody will soon shift their money into stocks. He drank too much koolaid.
            "And after 7 years of reaching for yield, investors now have one of their largest allocations to stocks in history. Only at the height of the dotcom bubble did households have a greater portion of their total financial assets tied up in equities than they did recently."

            EVERYBODY is warning to get out of stocks. GOV and the FED are intervening in EVERYTHING.
            "The $19.4 trillion federal debt sounds large, but it's hard to break down its impact to the individual level. According to the Census Bureau, the U.S. population at the end of 2016 should be 326.6 million. If you divide the $19.4 trillion federal debt by the population, everyone living in the U.S. owes $59,510."

            OK, so we are overdue for a huge stock correction that has been held at bay by the printing press. The big question is; how much of the market can the CB support?


            • Peak cheap oil and peak finance

              The bankers have put Greece in debtor's prison to get their pound of flesh;
              The 1% aren't feeling any pain; 'Shocking disconnect' at FTSE 100 firms as bosses get 10% pay rises | News | The Independent
              British families are in real trouble;
              The British bond market is starting to come apart; Bank Of England Suffers Stunning Failure On Second Day Of QE: "Goodness Knows What Happens Next Week" | Zero Hedge
              The Pentagon is having problems with it's ledger; Pentagon Doesn’t Know Where $6.5 Trillion Went | SorenDreier

              Martin Armstrong is adamant that we will see a collapse in public finance and a move into private markets. How can that be when consumption has crashed and stocks promise NO return for the next 12 years? The sovereign bond market is collapsing and everything is supported by the printing press. ZIRP has been financial hari-kari. As more and more markets start falling, GOV does more and more intervention. This is akin to doing cosmetic surgery on H. Clinton. At some point, it becomes a waste of time and energy.

              "The standard financial practice of investing most of one’s assets in stocks, bonds and real estate will no longer be true. What little investment strategies are left in the future will turn to PROTECTING WEALTH, rather than building wealth. The days of acquiring wealth are coming to and end… and fast."
              The article focuses on EROI.

              It is a very interesting article. If you consider that our trade deficit is $ 1.5 billion EVERY Day, you can see that energy imports are endangered by a financial collapse. The junk bond market was put over a barrel and Rogered very well to make shale oil come up out of the ground. The entire financial system that facilitated shale oil is blowing all to hell.
              "oil majors have doubled their combined debts to US$138 billion since 2014"
              $35 oil exacerbates this collapse.


              • fascism and collapse

                The Net is making for a VERY unruly populace. America was founded as a democratic-republic because democracies only last about 150 years on average. Socialism has been around for a much longer time. It's failures are well known.
                Fascism is a very recent development.
                "Fascism is arguably one of the most dangerous political ideology. Let's see why.
                Fascism is a political ideology that developed after World War I in Italy and Germany. Fascism is characterized by strong nationalism, an extreme level of authoritarianism, corporatism, militarization"
                "Finally, there is a focus on war preparation in cultural, political and economic institutions.

                Corporatism is also a part of the fascist state. Corporatism occurs when a government brings certain privileged business, labor and social groups into the government to directly participate in the formulation and implementation of policy"
                Fascism: History, Ideology, and Influence - Video & Lesson Transcript |
                Check !

                So, here we are. "extreme level of authoritarianism, corporatism, militarization" "privileged business, labor"
                Democracy isn't a perfect system. It needs to be tempered with fiscal restraint. Fascism, on the other hand, sees no reason for restraint. The bankers are crashing down one economy after another demanding austerity. This same austerity is crashing the entire economy and diminishing the riches of the bankers. Socialism concentrates on distribution and ignores productivity.
                Fascism concentrates on control and short-term profit and ignores societal health and long-term profit.

                The European Union construct as originally envisioned was a good idea. The CURRENT leaders have made it VERY clear that there can't be ANY democratic control. Typical short-term planning means that they will run the whole project into the ground.
                The Brexit Vote And Endgame Time For The EU | David Stockman's Contra Corner

                "They" wanted unlimited centralization. The backlash from the crash of unfolding fascism may very well bring complete fracture of existing States.
                EXCELLENT graphs showing the economic destruction brought by globalization.
                The West is sliding into socialism. That is VERY expensive. Social programs take 28% ?more of the US budget. Our debt is LEGENDARY. The corporatocracy is pushing fascism as a counter for developing socialism. The "entitlement" society isn't going to take this lying down.

                Chicago votes 74% Dem. The Chicago pension fund is broke. BUT, "the bill, which would reduce city contributions to the two funds at the end of this year by nearly $220 million. "
                Emanuel pension bill now in Rauner's court - Chicago Tribune
                GOV is very good at ignoring pension shortfalls. An Unsolvable Math Problem: Public Pensions Are Underfunded By As Much As $8 Trillion | Zero Hedge

                So far, the FED is producing miracles of levitation.
                "Joseph Stiglitz is concerned about why people are hostile to the idea of gigantic, impersonal and rapacious governments stealing from them while telling them what to do.

                Governments don’t work on any level. But global government is worst of all. It will deliver ruin, mass incarceration and ultimately genocide.
                Power corrupts and absolute power corrupts absolutely.
                But Stiglitz is a world famous economist, so he has better ideas. More:"

                Here is the roadmap of how you got to where you are today;
                Guess who is next; 8/10 Soaring debt has US companies as vulnerable to default as 2008 – Bloomberg

                The junk-bonds that squeezed the oil out of the Bakken and Eagle-Ford projects are coming due in the next few years. The oil is gone. The oil majors are crashing but, the debt is still there;
                Straight from the horses mouth; "Central banks were first established in the 17th century, with the primary purpose of providing war finance to governments"


                • Energy storage is killing baseline power plants

                  Martin Armstrong has his super-program, Socrates that runs 23,000 variables. I hope to juggle 10. The area that I fault Armstrong is; he doesn't give enough "weight" to birth control. There really isn't much of a historical baseline to give guidance. The demographic crash is one of the biggest factors in finance.
                  "Several decades ago, you could have had about 10 workers per retiree, but that could shrink to the point where in Italy, for example, you had three workers per retiree" More Old Than Young: A Demographic Spreads Around the Globe - Bloomberg
                  In America, only 50% of the working-age population is employed. The pension funds were toast anyway. ZIRP has made them burned toast.

                  Elon Musk invested a ton of money into his battery plant but, his batteries may be obsolete. Storage technology is moving so fast that it improves every week.
                  "Once storage costs approach $100 per kilowatt hour, there ceases to be much point in building costly 'baseload' power plants such as Hinkley Point."
                  Holy Grail of energy policy in sight as battery technology smashes the old order
                  The fallout; "China’s infrastructure investors have had a tough two weeks, with plugs being pulled on at least $15 billion of potential deals in nuclear power and electricity distribution.

                  "Britain and Australia refused to sign off on investments where state-owned Chinese companies were ready to provide much-needed funding. In both cases, the long-term utility programs were halted in the later stages, stunning participants. Those in the U.K. were all set to join a signing ceremony when the announcement came."
                  China’s $15 Billion Energy Ambitions Crushed Within Two Weeks - Bloomberg
                  This is very big news,,, BAD news for the power industry.
                  "U.K. Prime Minister Theresa May’s government is reconsidering a plan to build Britain’s first nuclear-power facility in more than 20 years."

                  "renewables generated 18pc of UK power last year, and this is expected to double by the late 2020s as wind and solar capacity reach 50 gigawatts (GW). Once the power can be stored for overnight use, there will be extended periods in the summer when no base-load is needed whatsoever.

                  Perhaps the Hinkley project still made sense in 2013 before the collapse in global energy prices and before the latest leap forward in renewable technology. It is madness today.

                  The latest report by the National Audit Office shows that the estimated subsidy for these two reactors has already jumped from Ł6bn to near Ł30bn. Hinkley Point locks Britain into a strike price of Ł92.50 per megawatt hour - adjusted for inflation, already Ł97 - and that is guaranteed for 35 years.

                  That is double the current market price of electricity. The NAO's figures show that solar will be nearer Ł60 per megawatt hour by 2025. "


                  • Blocked post

                    I'm going to cut it in half to see if it will post.
                    Wind & solar are technologies rather than fuels. They took a while to catch on but, are now on a tear. This has upset the entire financial apple cart.
                    How Long Can Economic Reality Be Ignored? -- Paul Craig Roberts -
                    “Consider, for instance, the tension between emerging economies’ demand for reserves and their fear that the main reserve currency, the dollar, may lose value—a dilemma first noted in 1947 by Robert Triffin, a Belgian economist. When the world relies on a single reserve currency, Triffin argued, that currency’s home country must issue lots of assets (usually government bonds) to lubricate global commerce and meet the demand for reserves. But the more bonds it issues, the less likely it will be to honor its debts. In the end, the world’s insatiable demand for the “risk free” reserve asset will make that asset anything but risk free. "

                    “Should government refrain from regulation (taxation), the worthlessness of the money becomes apparent and the fraud can no longer be concealed.” -- John Maynard Keynes in Consequences of Peace" Keynes advocated for perpetual war.
                    This one is going to be bad...

                    "It seems like markets are also an illusion. How else can the Dow be 63% above the 2000 high whilst the Euro Dow 50 stocks are down 45% in the same period and with Emerging Markets down 36%, Brazil and Hong Kong down 35%, Nikkei down 25% and Shanghai down 49% all since 2014-15. We live in a totally interconnected global economy but there just seems to be more skilled illusionists in the US who can defy reality. With corporate profits declining fast, with current account and budget deficits for half a century, with 95 million people not in the workforce, almost 50 million on food stamps, with Q2 GDP at 1.2% (if real inflation rate was applied GDP would be negative) and with exponentially growing debts of over $200 trillion (incl. unfunded liabilities), you wonder what US investors are smoking."

                    "Because since December 2015, the Dow is down 19% in real terms which of course is against gold. This puts the Dow/Gold ratio at 13.6. The Dow is in a long term down trend against gold since 1999 and is down 70% in 17 years. But it won’t end there, this ratio will at least reach the 1980 low of 1/1 but probably overshoot to at least 0.5/1. Will this mean gold at $10,000 and the Dow at 5,000 or will it reach Martin Armstrong’s hyperinflationary level of 40,000 Dow which would make gold at least $80,000? In either case, the Dow is likely to decline at least 95% against gold."


                    • part 2 of blocked post

                      "But the illusion doesn’t stop with stock markets. The global banking system is an even bigger illusion. The financial system was bankrupt in 2006 but governments and central banks around the world managed to patch it up by injecting $25 trillion and by allowing banks to value all toxic assets at maturity instead of at market. Here we are 10 years later and the financial system is now in a much worse state than it was in 2006. Global debt has grown exponentially since then by 65% from $140 trillion to $230 trillion.

                      And this figure doesn’t even include unfunded liabilities and derivatives of another $2 quadrillion or so. We are looking at total debt of over 30 times global GDP. But that is a false comparison. Let’s say that 5% of GDP could be saved annually to reduce debt and that would be very optimistic. Anyway, with 5% of GDP it would take over 600 years to get rid of all debt. However you calculate it, the world is bankrupt and will never repay its debts. Nor will the debt be serviced at any rate of interest above zero."

                      "The top performing banks were the Swedish ones with Swedbank and Nordea shining. This is particularly fascinating since only a few weeks ago, the regulator in Sweden, in an internal report, had expressed particular concern that Nordea was severely undercapitalised to the extent of SEK 50-80 billion. "

                      OK, this is all standard fare of a collapsing economy. Why is it collapsing. What will the outcome be?
                      "What is the long game? The globalists have openly admitted their goal in numerous mainstream publications, but my favorite example is the January 1988 issue of the Rothschild run magazine The Economist. The issue pronounces boldly that investors should “get ready for a global currency” by 2018. I examine this issue in detail in my article The Economic End Game Explained.


                      • blocked post part 3

                        The Economist article mentions the sacrifice of “some” economic sovereignty of nation states, the end of the dollar’s world reserve status and the rise of the IMF’s Special Drawing Rights basket currency mechanism as a “bridge” to a single global currency. None of these changes can be accomplished without certain parts of the world suffering severe financial instability first. "
                        "So, let’s make this crystal clear — the long game is the total and OPEN centralization of economic and geopolitical power into the hands of a select few financial elites. Not the pulling of strings behind the curtain. Not shadow governance. OPEN governance of the world by the elites, accepted or even demanded by the people."

                        "I have stated this before, but I think the idea needs repeating: The globalists need the economy to turn unstable in order to create a rationale for a centralized economic authority and a single global currency system."
                        "First, the elites need an international financial crisis to encourage the public to support a single central bank policy and authority."

                        First, the elites need an international financial crisis to encourage the public to support a single central bank policy and authority.


                        • part 4

                          I had to break it up even more.

                          Second, the elites need to remove the philosophy of conservatism as an obstacle to global collectivism and the destruction of national sovereignty. Again, conservatives will be blamed as participants and co-conspirators in the fiscal crisis, and painted as so devilish that no future generation would want to be a associated with conservative thought."
                          So, we see the champions of socialism and liberalism (Jews) working towards a worldwide financial collapse to usher in central control. The Chinese are going along with the SDR at the moment but, nobody really wants it. The media is really hammering away at Trump and I suspect that a Trump victory is NOT in their plans regardless of the claims of this article.
                          Regardless of what the PTB may believe, I don't believe that East will accept domination from the IMF created, SDR. They are risking WW III just to get away from western domination.

                          2016 Will End With Economic Instability And A Trump Presidency | Zero Hedge

                          "That said, this does not mean the elites will be ultimately successful in their endeavors. There are always unknowns to any grand scheme. As Mike Tyson famously said, “Everyone has a plan until they get punched in the mouth.” I believe the elites will be surprised by some sizable punches in the mouth. Until then, though, their current strategy appears to be running on schedule."

                          "Fourth, the elites need internal conflict within the U.S. and/or martial law in order to justify international intervention. " RIGHT, send in U.N. troops and you'll find out the meaning of the American phrase, "turkey shoot"
                          Currently, I believe that gold will win out against the SDR. The SDR has all the built-in weaknesses of fiat currency.

                          "total and OPEN centralization of economic and geopolitical power into the hands of a select few financial elites." This seems to be plan "A" in the Eurozone. After the collapse, I doubt that the tribes of Europe will be ready to embrace any kind of centralization.


                          • 1984 Victory March of the Returning Heroes of the Malabar Front



                            • Robert Service

                              The March Of The Dead Poem by Robert William Service - Poem Hunter


                              • Zero hedge

                                I really like Zero Hedge and they have a good record for accuracy. They publish anonymously so that their critics have to attack the message rather than the messenger. BUT, when I open a Zero hedge article my computer acts like this;