No announcement yet.

Economic pressures

  • Filter
  • Time
  • Show
Clear All
new posts

  • Continued

    "Speculators may do no harm," John Maynard Keynes once hypothesized, "as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation." Which is precisely what had happened by 2007: Atop the tsunami of European and Asian profits rushing into Wall Street, bankers built oversized bubbles of exotic forms of private debt that, at some point, acquired the properties of private money. In their minds

    When these bubbles burst in 2008, the recycling loop sustaining globalization was broken – despite energetic money printing by central banks and the Chinese government's breathtaking credit and investment spree. U.S. deficits, even after returning to their pre-2007 levels, could no longer stabilize globalization. The reason? Socialist largesse for the few Crony capitalism– plus ruthless market forces for the many – damaged aggregate demand, repressed entrepreneurs' sales expectations, restricted investment in productive jobs, diminished earnings for the many and, presto, confirmed the entrepreneurs' pessimism. Adding more liquidity to such a mix makes not an iota of difference, as the problem is not a dearth of liquidity but a dearth of demand. True, the capital bubble did nothing for wages

    Wall Street, Wal-Mart and walled citizens – those were globalization's symbolic foundations. Today, all three have become a drag on it. Banks are failing to maintain the capital movements that globalization used to reply upon, as total financial movements across the globe are less than a fourth of what they were in early 2007. Wal-Mart, whose ideology of cheapness symbolized the devaluation of labour and the gutting of traditional local businesses, is itself being squeezed by the Amazon model, whose ultimate effect is a further shrinking of overall spending. And the walls that were the nasty underbelly of the "global village" are now a source of political discontent, exposing the absurdity of a system that promotes the free movement of money and trucks while people remain fenced in. Over-simplification

    Looking at the world from an Archimedean distance, globalization has been caught in a steel trap of its own making. Its crisis is due to too much money in the wrong hands. Humanity's accumulated savings per capita are at the highest level in history. All in the hands of people who can't actually spend it. However, our investment levels (especially in the things humanity needs, such as green energy) are particularly low. In the United States, massive sums are accumulating in the accounts of companies and people with no use for them, while those without prospects or good jobs are immersed in mountains of debt.
    In China, savings approaching half of all income sit side by side with the largest credit bubble imaginable. Europe is even worse: There are countries with gigantic trade surpluses but nowhere to invest them domestically (Germany and the Netherlands), countries with deficits and no capacity to invest in badly needed labour and capital (Italy, Spain, Greece) and a euro zone unable to mediate between the two types of countries because it lacks the federal-like institutions that could do this.
    Won't work
    And if these discontents were not enough, there is also the rise of the machines. By 2020, almost half the professions in Europe and North America will be susceptible to automation. Robots require a few highly paid designers and operators but may replace millions. This generates labour shortages and labour gluts in the same city at the same time. The middle class is in for another hollowing out, wage inequality is about to rise again in the richer countries, while developing countries will soon realize that having large young populations offers no respite from poverty: With robots getting smarter and cheaper, deglobalization takes over, and countries such as Nigeria, the Philippines and South Africa will bear the brunt of relocalization (especially with the evolution of 3-D printing).

    Is it any wonder that parochialism, nativism and xenophobia are rearing their ugly heads everywhere? Rather than focusing on the role of Facebook, Russia or some unexplained, newfangled fear of the "foreigner," the so-called liberal establishment (which is neither liberal nor particularly well-established, judging by recent electoral results in Europe and the United States) should look instead at globalization's rotting foundations, which render it unsustainable.

    But if globalization is no longer viable, what's next? The answer offered by the so-called alt-right, the xenophobes and those who invest in militant parochialism is clear: Return to the bosom of the nation-state, surround yourselves with electrified fences and cut deals between the newly walled realms on the basis of national interest and relative brute strength. The fact that this nightmare is presented as a dream is yet another failure of globalization: Mr. Trump is a symptom of Barack Obama's failure to live up to the expectations he had cultivated among the victims of globalization and its 2008 spasm.
    Lest we forget, our problems are global. Like climate change, they demand local action but also a level of international co-operation not seen since Bretton Woods. Neither North America nor Europe nor China can solve them in isolation or even via trade deals. Nothing short of a new Bretton Woods system can deal with tax injustice, the dearth of good jobs, wage stagnation, public and personal debt, low investment in things we desperately need, too much spending on things that are bad for us, increasing depravity in a world awash with cash, robots that are marginalizing an increasing section of our work forces, prohibitively expensive education that the many need to compete with the robots, etc.
    Robots work for free,,, you don't compete with them.

    National solutions, to be implemented under the deception of "getting our country back" and behind strengthened border fences, are bound to yield further discontent, as they enable our oligarchs-without-borders to strike trade agreements that condemn the many to a race to the bottom while securing their loot in offshore havens.

    Our solutions, therefore, must be global, too. But to be so, they must undermine at once globalization and parochialism – both the right of capital to move about unimpeded and the fences that stop people and commodities from moving about the planet. In short, our solutions must be internationalist. And the goals of an International New Deal are pressing.

    First, we need higher wages everywhere, supported by trade agreements and conditions that prevent the Uberization of waged labour domestically. Not going to happen

    Tax havens are crying out for international harmonization, including a simple commitment to deny companies registered in offshore tax havens legal protection of their property rights.

    We desperately need a green-energy union focusing on common environmental standards, with the active support of public investment and central banks.

    We should create a New Bretton Woods system that recalibrates our financial infrastructure, with one umbrella digital currency in which all trade is denominated in a manner that curtails destabilizing trade surpluses and deficits.
    A one-world digital currency is a "bridge to far". There are just TOO MANY hackers. There are just too many States that would demand to have control over issuance. gold will be drug in out of the shadows once again. Trade surpluses are created by HARD WORK. The Greeks and Italians have never had trade surpluses. As long as we consider all people to be equal, there can never be one financial system for all.

    And we need a universal basic dividend that would be administered by the New Bretton Woods institutions and funded by a percentage of big tech shares deposited in a world wealth fund.
    UBI would motivate too many people to stop working. It would ruin most people.
    The financial genie needs to be put back in its bottle, with capital controls domestically and globally to be imposed by co-ordinated action in the Americas, Europe and Asia. Money must be democratized and internationally managed in a manner that shrinks both trade deficits and surpluses. The robots must become humanity's slaves, a feat that requires common ownership, at least partly. Yanis is brilliant but, he has too little understanding of human nature.

    All this sounds utopian. But no more so than the idea that the globalization of the 1990s can be maintained in the 21st century or replaced profitably for the majority by a revived nationalism.

    Who should pursue this internationalist agenda? Progressives from Europe and North America have a duty to start the ball rolling, courtesy of our collective failure to civilize capitalism. Capitalism was civilized as long as there was a limit maintained on money creation. I have no doubt that if we embark upon this path, others in Asia, Latin America, the Middle East and Africa will soon join us. At DiEM25, the Democracy in Europe Movement that I proudly co-founded, we take this duty seriously. We are determined to take this agenda, which we refer to as the European New Deal, to voters across the continent in the May, 2019, European Parliament elections. With globalization in retreat and militant parochialism on the rise, we have a moral and political duty to do so.
    The great powers are re-arming and talking about war. There is going to have to be a LOT of death before they will talk about cooperation


    • Dollar moves,,, endless war to solidify B.I.S. / Rothschild control

      Consumer price inflation,,, probably understated.
      "Since the Global Financial Crisis the “War on Deflation” has been fought exclusively with monetary policy: 654 rate cuts since Lehman bankruptcy, $12.3tn of purchases of financial assets by global central banks, central bank balance sheets expanding to $23.4tn "
      So, "we" have this great war on deflation. The war is fought EXCLUSIVELY in the financial markets.
      "Germany’s biggest trade union, IG Metall, is threatening all-out strikes unless employers meet demands for an inflation-busting 6 per cent pay hike this year. "
      Suddenly, inflation is the huge risk that threatens euro zone stability | South China Morning Post

      The war on deflation is fought everywhere EXCEPT wages for the main body of consumers. The CBs are absolutely mystified as to why their policies are not working. ALL the markets are going up.
      The feces-for-brains are starting to notice that the markets go up exactly correlated to how much free money they are provided.
      Plant a garden.

      Armstrong said that the dollar would fall and everybody would pile into the Euro. Then, the dollar would rise and wipe out everything. The dollar IS falling. Most of this is driven from moves from China.
      Treasury paper is not looking to good either,

      The oil companies are being sued for causing climate change. The research is out there that definitively proves that ALL their precious models are garbage. The oil companies could easily assemble the research and blow the "anthropogenic" people out of the water. The U.N. has come out and revealed that global warming is a scam to shift money from rich (not really) countries to poor countries.

      AI marches on and humans get squeezed more every day. NOBODY has a cure for efficiency so, NOBODY talks about the problem.

      Pox Americana is rattling sabers at a few selected countries.
      "In the year of 2000 there were eight countries without a Rothschild owned or controlled Central Bank:

      North Korea
      The only countries left in 2003 without a Central Bank owned or controlled by the Rothschild Family were:

      North Korea
      The only countries left in 2017 without a Central Bank owned or controlled by the Rothschild Family are:

      North Korea
      Cuba doesn't have any resources so, we leave it alone. North Korea has $15 trillion in rare earths. Afghanistan has $ 15 trillion in valuable minerals AND, the U.S. generals say that we will be in Afghanistan for the next 50 years.
      Syria has LOTS of oil that the chosenites want. They also want to block the Russian oil & gas pipelines from going through Syria to Europe.
      Iran is the big deal. They have lots of oil and lots of missiles. They also aspire to be a regional leader.
      We bluster around and send in lots of battleships and armaments to scare these States into compliance. BUT, China is building a military base in Afghanistan,,,, Russia and Iran have bases in Syria. Pox Americana says that they will be in Syria indefinitely,,, fighting terrorists.

      So, the West wages unending war for the London Bankers,,, not to mention, Tel Aviv.
      The East has developed banking systems to side-step the Rothschild systems. The West has produced TONS of liquidity to substitute for confidence. The East has bought TONS of gold to augment
      confidence. Eventually, this will have a huge effect on interest rates.
      Meanwhile in Russia; "President Putin has been under heavy pressure from outside and inside: Western sanctions and intended oil price crash. Despite efforts by the Rothschild-controlled Central Bank of Russia (hereafter referred to as CBR) and the use of dozens of billions of foreign exchange reserves – the value of the ruble against the dollar has, therefore ,declined by 39% during the past few years."

      "Under the Constitution, the CBR belongs to a foreign State – the City of London – and is taking orders from London and Washington’s controlled IMF. CBR can only print money corresponding to its cash in foreign currency, that being the dollar"
      "Moreover, President Putin is under pressure from the West, which wants to overthrow and replace him with Western-minded puppet oligarchs. Thus, the US ambassador to Moscow, John F.Tefft, is said to have made it very clear in this statement: “We will displace Putin from office and install our own people as leaders of the Russian government.” It was reported that Tefft even mentioned the appointed ministers by name!"

      " The Central Bank of Russia is a member of the BIS."
      "Moscow Times has been quoted by stating that President Putin has been under tremendous internal and external pressure to the extent that he must become “another Stalin“ in order for him and for Russia to survive the Western isolation efforts and the economic war currently waged on Russia. This means a final (staged) breach with the Rothschilds crime syndicate via Washington– after the first schism due to the Khodorkovsky - Yukos share confiscation by President Putin."
      "Ever emboldened by its totally illegal regime change policies in Iraq, Egypt, Libya, Syria, Ukraine, etc., Washington and its allies are now foolishly pursuing the same in Russia."

      You get the idea. We make war on any State that isn't under Rothschild control. The East has built "mechanisms" like the AIIB, etc to escape the control of SWIFT, IMF World Bank, etc. Pox Americana is holding a summit to decide what to do in the case of North Korea. Russia and China have been excluded from this summit. Dangerous times !!!
      Fulford claims that the missile attack on Hawaii was real and, was a false-flag attack to start the war with Korea.
      Tel Aviv has openly attacked the Russian base in Syria. Things are getting desperate in the war to maintain Rothschild control. Several years ago, there was a staged attack on American forces near Iran to provoke a war there.

      "some Bush advisers secretly wanted an excuse to attack Iran. “They intend to be as provocative as possible and make the Iranians do something [America] would be forced to retaliate for,” she told Newsweek."
      "CentCom Commander Fallon: Attack On Iran ‘Will Not Happen On My Watch"

      How far will the war-mongers go in their efforts to bring Rothschild control to the mineral of Central Asia,,, the RE in N.K.,,,, the oil in Iran and Russia? The drone attack on the Russian base was stopped. How many false-flag attacks can be neutralized?


      • Has the rollover started?

        Armstrong's model is a confidence model. Mountains of credit require mountains of confidence. Here is one of his entries showing exact correlation between his predictions and, actual values.
        The CBs bought confidence and stability with tons of liquidity. They may be able to produce unlimited liquidity but, this eventually no longer translates to unlimited confidence. It appears that markets are starting to roll over.

        There are other factors to puncture confidence.
        GS is eating feces in the commodity markets,
        The Chinese credit rating agency has downgraded U.S. GOV credit,
        Armstrong says that this is a farce because we have no intention of paying it off anyway.

        "Excluding the tech mania of 2000, today stocks are more highly-valued than at any other time during the past 140 years, even including the peak at the end of the Roaring 1920s."
        "The Dow zipped from 25,000 to 26,000 in just seven trading days, its fastest 1,000 points ever."
        What could possibly go wrong?

        "As it turned out, the reason behind the crash was that the investment banks’ fancy trading algorithms had gone completely haywire.

        Several of the largest banks had developed autonomous software that was capable of trading billions of dollars without the need for human beings.

        And at 2:45PM that day, their software started to fail… inexplicably selling stocks to the point that prices collapsed nearly 10% in minutes."
        Student loans,

        "For the first time ever in its almost 90-year history, the S&P 500 rose every month in 2017."
        And as Mike pointed out in his 2018 predictions, the CAPE (Cyclically Adjusted Price-Earnings) ratio has now matched its 1999 level, the second highest reading in over 100 years of data. The CAPE now has a higher reading only in 1929.
        "Mike Maloney believes this is the year overvalued stocks begin their descent. If he’s right, the decline could be higher than the historical average, since this is the second longest bull market in history. "


        • Financial cocaine? Viagra? from China

          The markets ALWAYS peak and cycle. Investors ALWAYS seem to believe that the good times will go on without interruption.
          "Bets that the S&P 500 will rise still further have gotten so intense that one has to pay a huge premium for CALL options"

          So, will the markets continue to rise? We definitely are in a melt-up but, how much longer will it last? Who / what is fuelling the melt-up?

          "These investigators have discovered that any liquidity reductions to date have been vastly offset by large liquidity additions from elsewhere.
          But where?
          Emerging markets… led by China."
          "Zero Hedge reminds us that last week China reported its foreign exchange reserves recorded their 11th consecutive monthly increase.
          In December, Chinese reserves increased $20.7 billion alone… and totaled $129 billion for the year.
          “Against that background,” affirm Citi’s arson investigators, “it is no surprise that equity markets have been so well supported…”
          "In February 2016, the world’s central bankers hied themselves to the fair city of Shanghai.
          Their purpose, says Jim Rickards, was to weaken the Chinese yuan without appearing to do so…
          The previous two occasions when China devalued (August 2015 and January 2016), the U.S. stock market took violent staggers."

          "The solution, says Jim, was a stealth devaluation…
          The dollar would weaken under the Shanghai Accord.
          And since it is pegged (softly) to the dollar, so would the yuan:"
          "The Chinese central bank subsequently unleashed a torrent of liquidity into the market.
          And since the Shanghai Accord of February 2016… the S&P has finished in the green a record 21 of 22 months."
          "It again appears to be China’s stealthy asset purchases across global capital markets that has resulted in the market melt-up observed in the end of 2017 and start of 2018."
          "Will (mainly) Chinese liquidity infusions continue outpacing projected balance sheet reductions by the Fed and ECB?"

          It was well known that the PBOC was printing more than the BOJ, FED and ECB combined. It should come as no surprise that much of this flowed into exterior markets. It had to flow somewhere. Markets are now dependent on the Chinese printing press. The FED and ECB are talking about reducing asset purchases. They haven't done much yet. So, pretty much all markets are expected to keep rising "forever" on Chinese liquidity.
          China was sequentially raped by the West. Eventually, they may return the "favor". 他妈的你 Tā mā de nǐ

          "The chart below shows the CAPE from 1870 to 2017. Two conclusions emerge immediately. The CAPE today is at the same level as in 1929 just before the crash that started the Great Depression. The second is that the CAPE is higher today than it was just before the Panic of 2008."
          Big Thanks to the Chinese printing press.
          "But today’s CAPE ratio is 182% of the median ratio of the past 137-years.

          Given the mean-reverting nature of stock prices, the ratio is sending up storm warnings even if we cannot be sure exactly where and when the hurricane will come ashore." PARTY ON !
          "Some bubbles are driven by narrative, and others by cheap credit. Narrative bubbles and credit bubbles burst for different reasons at different times. The difference is critical in knowing what to look for when you time bubbles, and for understanding who gets hurt when they burst."

          This is a pretty good article for understanding bubbles.

          Previously, the FED was pedal-to-the-metal to save Western banks when the production-consumption cycle crashed too much to continue to support them. The FED printed to save the financial system. The PBOC prints to keep the lower loop producing and working.
          There is a $1 trillion a year capital outflow from that they "try" to staunch. Add to that China’s foreign exchange buying spree of 2017. China is buying tons of gold to stabilize their currency system. At the same time, they are pumping $trillions into Western markets.
          Western markets have lapped up these $trillions and ,,,, are betting that they won't stop.


          • How high can we get before it all turns to smoke?

            China is in a game of "chicken" blowing bubbles in the West, in the belief that; when the default cascade hits, their gold will save them where our monumental BS will let us down. The capital outflows combined with their huge purchases of foreign currency have inflated the snot out of western asset markets. Investors (muppets) in the Western markets believe that these valuations will continue to go up and up. It doesn't matter how high they are already. They will rise forever.

            "This next chart, from Doug Short, shows that investors today are employing more leverage than ever before. Even when you adjust margin debt for the overall size of the economy it’s at a new record high and, to my knowledge, this doesn’t include the asset-backed loans at major financial firms which have become so popular in recent years."
            So, investors have been given an intravenous drip of monetary viagra / cocaine that has brought them a feeling of euphoria that will never end. The more leverage they apply, the richer they get.

            "Finally, from a technical standpoint, the monthly RSI reading of the Dow Jones Industrial Average shows the stock market is now more overbought than at any other time during the entire history of this index which was created way back in 1896 (chart via"
            I suspect that this cocaine is going to decompose into fentanyl.

            "An extremely elevated CAPE is mainly a U.S. phenomenon. While our investors are paying $33 for $1 in earnings, Canadians pay $20, Germans $19, and the British $14, and that’s not counting many emerging markets in the low teens."
            Ah yes,,,, the Chinese have specifically targeted the markets of the Great Satan
            at this point, my computer completely froze up.

            "This improved version of the CAPE ratio (improved because it has a greater negative correlation with future 12-year returns) shows equity valuations have now surpassed both the dotcom mania peak in 2000 and the 1929 mania peak."
            "This is an earnings driven rally, and the best is yet to come."

            But is it? Kalesnik cites several reasons why the “new era” of earnings is a myth." "Kalesnik states that although total earnings track GDP over long periods, earning-per-share trail by a wide margin."
            " Because of the widespread dilution, Research Affiliates reckons that since 1871, EPS has risen around 1.5% a year in real terms, lagging total earnings by around 2 points."
            "According to Research Affiliates’ findings, the rule reliably applies to EPS. Long periods of fast EPS growth are usually followed by extended stretches of sub-par performance. Over the period from 1871 to October of 2017, Research Affiliates found that on average, after EPS had expanded by 10% a year in real terms for a decade, it posted 0 annual increases over the following 10 years. And horrible stretches of 5% earnings declines gave way to glorious interludes of 4.5% expansion."
            CAPE Fear: Wall Street Is Ignoring High Price-Earnings Ratios | Fortune

            The FED printed to save corporate America. China came along and threw more gasoline on the fire. ZIRP drove all the money out of savings and, into risky investments. Like the dotcom crash, investors throw money at anything that they see. With ZIRP, the banks saved about $ 400 billion a year in un-paid interest on savings. The holders of those savings moved further and further out on the risk scale because that giant wave of liquidity diluted earnings of everything. All of this speculation served to move earnings forward in time. The CBs are trying to hold back the eventual return to the mean.
            Unlimited printing is following down a road of diminishing returns. The ECB and BOJ have backed off the gas a bit but, not the FED. The PBOC is backing off a bit on domestic credit but, still pumping liquidity into foreign currency reserves. All this monetary Viagra has served to hold off the financial orgasm for many years.
            The cocaine effect has erased all worry in the investors.

            "Thus it is fair to say that this is now the most overvalued, overbullish and overbought stock market of all time."
            "From another perspective, it’s pretty well acknowledged by economists that total earnings (from which EPS are derived and on which they depend) can’t in the long-term outpace the overall economy. "
            We don't need no stinkin long-term.
            1/18 Stock market optimism hits highest level since crash of 1987 – Zero Hedge PARTY ON!
            1/18 4 Social Security statistics that are actually scary – Zero Hedge Wait til they become every day reality.
            1/18 New Jersey governor ignores pension crisis, wants more spending – New American New Jersey,,, why doesn't this surprise me?

            1/18 Ripple co-founder loses $44 billion on paper – CNBC
            1/18 Why cryptocurrencies lost a stunning $370 billion in 10 days – MarketWatch
            Too much volatility for most investors.

            The effect of the crash will bring portfolio reductions of about 50--90% of value. It will depend on individual portfolios. Since leverage is at all-time peaks, everyone will get a margin call. Since savings are at an all-time low, these calls won't be met. The only thing that will sell with be gold. This will tend to drive the price of gold lower. BUT, so many people have paper gold that just can't be converted or sold. Nobody except Buffet will be able to raise cash to meet margin calls and buy distressed assets.

            When the margin calls break, the exchanges will crash. This will freeze up ALL credit. Most assets are leveraged so high, it will take a long time to sort out who really owns them. Armstrong said to have 1 month of cash / expenses on hand. The CBs have managed to pull consumption forward from at least 10 years in the future. Hussman says that stock market returns will be zero for the 10 years following the great unwind.


            • Mixed news

              Chinese mobile payments are 90 times the size of American mobile payments.
              When shipping was containerized, it threw all of our manufacturing into global low-wage competition. Just how low are those wages?
              "The top 1% of Indian adults, a rich enclave of 8 million inhabitants making at least $20,000 a year, equates to roughly Hong Kong in terms of population and average income.
              The next 9% are like to central Europe, in the middle of the global wealth pack.
              The next 40% of India’s population neatly mirrors its combined South Asian poor neighbors, Bangladesh and Pakistan.
              The remaining half-billion or so are on a par with the most destitute bits of Africa."

              1/19 China’s local government debt growth almost doubles in 2017 – Economic Times
              1/18 Australian household debt-to-income ‘one of the highest in the world’ – AFR
              1/18 All eyes on the 10y treasury blowing above 2.60% – Zero Hedge 1% higher and it blows corporate America out of the water.
              1/17 How coal dies — super cheap renewables plus battery storage – Think Progress
              1/19 Trump says solar tariff decision coming soon – Reuters They shouldn't try to save coal.
              1/17 Police arrest more people for marijuana use than for all violent crimes – WaPo
              Northern California’s Calaveras County Votes To Ban Weed

              Had to do it,,, the lawyers were losing money.
              1/18 German far-right “reich citizens” organize militia – Zero Hedge So, is Merkel finally happy?

              1/19 Hackers have stolen about 14% of digital currencies – GATA
              1/19 Bitcoin investors seek refuge from volatility in gold – manual
              1/19 Craig Hemke: Comex positioning indicates gold smash imminent – GATA


              • Taxing,,, not taxing,,, how long can it go on?

                Jim Willie predicted that we would see QE to infinity. A LOT of funds and investors have gone broke betting that this expansion would stop at some point. They were correct on their idea but, wrong on the timing. The FED inflated the upper loop in hopes that some of it will flow into the lower loop. This has happened to the prices in the lower loop,,,, just not to the wages. There is a cement ceiling on wages imposed by the R.O.W.
                America was destined to morph from a high-wage & high-price economy to a low-wage & low-price economy.

                To hold back nationwide default, the FED pumped liquidity into every nook and cranny. All this was done to preserve the perceived value of the nation's capital. This has worked to gloss-over a bankrupt nation. Only 2 companies have AAA rated credit. 10% of companies don't have any earnings. About 50% of companies would go bust if interest rates rise to historical norms. The FED knows that they are doing great damage to the economy with QE.
                They initially wanted to save the financial system. But now, they are trying to save everything; capital, credit, manufacturing, AND the State.
                With close to 100 million NOT in the labor force, just how viable is the U.S. economy?

                The Chinese said that America's breaking of the Bretton Woods agreement was the most momentous thing that we have done,,, more-so than the world wars. Here is a chart of the money supply.
                Since the money supply went up commensurate with the national debt, you can well imagine that the State was doing a lot of the spending.
                Manufacturing is the prime value-added industry. Government is mostly parasitic. Manufacturing jobs peaked in June of 1979. Since then GOV employment has continued to grow.

                "There were 21,995,000 employed by federal, state and local government in the United States in August, 2015 according to BLS. "
                The latest tax plan has reduced the tax income to FED GOV even more. FED GOV is piling on ever-greater piles of bond sales.The FED says that they are going to reduce purchase of Treasury paper.

                Traditionally, the State always tried conquest and theft to keep State coffers full of gold and silver. Here is a good article from Armstrong on the hunt of taxes.
                This hunt for taxes causes capital to go into hiding.
                1/15 EU to target UK tax haven territories as trade negotiations begin – Independent Was Brexit an excuse to go after all the British controlled tax havens?

                Currently, gold is not valuable enough to make it worth confiscating. States everywhere are on a hunt for every dime that they can steal. Civil Asset Forfeiture has brought in a couple of $billion but, the State always needs more. The non-producing people vote to live as well as the producers. This takes a lot of money. Since it is not available as taxes, it must be printed.
                45% of Americans pay no taxes. 51% of Americans receive a check from GOV. Marxist Obummer kicked things into a higher gear.

                "The more any government interferes with the free markets, the greater the risk that your funds will be frozen and you will not be able to trade."
                "We are bringing this model back into play because there are rising concerns among our European clients that if they hedge against the decline of the Euro and government bonds in the EU when the collapse unfolds, they will be targeted for undermining the government. "
                "With the hostility in Europe eliminating the ability to short government bonds in a pathetic attempt to prevent the collapse of the EU bond market,,,"

                "This is the rise in the stock market and the shift of capital from government bonds to equities. This will all end in a monetary crisis event perhaps as soon as 2021."
                A lot of politicians bought a lot of votes because they had a printing press in their back pockets. By squeezing gold out of the system, they were able to be a LOT more generous to the voters. Now, the State is trying to prolong it's generosity. Armstrong predicts a shift out of public debt. This has already happened, in that nobody wants to buy treasury bonds. The FED does forward currency swaps and other schemes to keep State debt from vaporizing. The State is making ever-greater demands from the bond markets. The presses must run ever-faster.

                Armstrong, "This is simply how Empires, Nations, and Citystates collapse. They are always the same – a constant search for more power to retain their control. Then it all snaps. That comes typically when a government can no longer feed its own workforce to keep the people in check."
                "What most people do not know about history is the fall of government typically comes from tax rebellions."
                "raised taxes excessively setting in motion the collapse in VELOCITY of money once again as people hoarded their wealth creating the essential element to the destruction of an economy as you see in Europe today. Once capital begins to hoard and hide from the government tax collectors, the beginning of the end appears."

                OK, so, taxes are not going up in America. At the same time, national income is going down. EVERYTHING is being carried by the printing press.


                • Deflation,,, pulling in more muppets

                  The private banks create most of the money supply. They create the principle but, not the interest amount. That sum must come out of new loans. The Central Banks are deathly afraid of deflation. The CB tops-off the system with free money to ensure that there is enough money in the system to service the debt. This money was pumped into every corporate nook and cranny. Banks hold a few $trillion of excess reserves. Corporations are buying back their stock. Some of this flow into the upper loop has recycled back to the State as taxes.
                  100% of stock gains are from free money. The corporations shouldn't complain about the taxes because, it was free money to begin with. Just the same, the fought for a tax reduction. They also admitted that none of them would plow this newly saved money back into spending, hiring and R&D.

                  This money is frozen OUT of the circulating economy. Deflation of the money supply. There are supposed to be about $23---27 trillion in tax havens. This too is money outside of circulation. Deflation should be defined as a reduction in the circulating supply of money. The CB is "pushing on a string" in trying to inflate away the debt. Corporate debt, for the most part, is money pulled out of circulation. As the "money" supply is growing, the velocity is falling. As consumption crashes, more money is sidelined because it can't be put to work in the lower loop. The FED is deathly afraid of both deflation AND wage increases. They focus on creating price inflation while fighting wage inflation.
                  As long as the Central Bank is owned by private banks, they will always bring about their own demise.

                  Passive investment funds substitute diligence with diversification. Everybody is locked in to the same algorithms. They bet on the whole spectrum figuring that the whole market can't possibly go down.
                  Passive investing boom creates a frightening risk, Morgan Stanley says
                  Hidden Trigger For Another (Flash) Crash: Passive Investing - Forbes
                  The hidden dangers of passive investing - Financial Times
                  The trap of passive investing - Business Insider
                  The Worst-Case Scenario for Passive Investing (Part I) - Bloomberg

                  Warnings from Morgan Stanley, Forbes, Business insider and Bloomberg. Of course, you can ignore them. They're all idiots.

                  "Mutual funds and ETFs that focus on stocks garnered $58 billion in fresh money during the period that ended Wednesday, "
                  "New money didn't just go into exchange-traded funds that passively track market indexes like the S&P 500 and Dow industrials."
                  "U.S. funds showed the strongest money gains with $6.4 billion for the week"
                  "The latest Investors Intelligence poll of professional newsletter editors saw bulls outnumber bears by 66.7 percent to 12.7 percent, the biggest spread since April 1986"
                  What caused Black Monday, the stock market crash of 1987 ...
                  "Mutual funds and ETFs that focus on stocks garnered $58 billion in fresh money during the period that ended Wednesday,"

                  So, does this qualify as a "melt-up?"
                  "US stocks will likely run higher for another 11 years, Wall Street's Tom Lee says
                  Thomas Lee, head of research at Fundstrat Global Advisors, says Friday on CNBC's "Halftime Report" that he and the firm's technical strategist think stocks peak in 2029. "

                  The attraction of the black hole of greed is impossible to resist. When the event-horizon is reached, ALL those algos will react at once.


                  • How to inspire a nightmare

                    Read Kunstler before you go to bed.
                    Fever Pitch - Kunstler


                    • Shutdown

                      EVERYBODY knew that "they" would always come to a last minute deal and avoid a shutdown,,,, like always.
                      "In a late-night vote, Senate Democrats joined to block a bill that would have kept the government running until mid-February. The shutdown is only the fourth government closure in a quarter-century. It will only partially curb government operations.

                      Uniformed service members, health inspectors, and law enforcement officers are set to work without pay. "
                      If no deal is brokered by Monday, hundreds of thousands of federal employees are set to be furloughed."
                      Government braces for shutdown as Senate fails to meet deadline for spending deal | Fox News

                      Trump Tells Fox - Shutdowns Are President’s Fault
                      Wallace - If There Is A Shutdown, It Will Last A While


                      • Weakening dollar,,, BLINDED by cocaine/viagra

                        Meltup news. Michael Ballanger,
                        "I was taught by the Jesuits years ago that what creates inflation is rapidly escalating growth in money velocity, a far more potent inflation barometer than the growth of money supply. Velocity is how fast money is turning over while money supply is the total amount issued. If the total amount issued sits in savings accounts or gold, it is a depressant upon activity because there are reduced transactions. "
                        "the Citigroup Panic/Euphoria Model—and it now resides squarely in "euphoria" mode,"

                        The least ugly house on the block.
                        The US dollar index may crash. Yep, it might. But vs. what?

                        Please don't tell me the dollar will crash vs Bitcoin. Bitcoin is too small to matter.
                        Besides, that "crash" if you wish to label it as such, has already occurred. Bitcoin is now highly likely to crash vs the dollar.

                        Crash vs. What Major Currency?

                        The European banking system and Target2 system are insolvent.
                        The Chinese banking system is insolvent.
                        Chinese State Owned Enterprises (SOEs) are insolvent.
                        It takes massive amounts of debt for China to grow. China has one of the world's largest property bubbles.
                        The US has a debt problem. But Japan's and China's are worse. The demographics in Europe, Japan, and China are also worse than in the US.
                        The Yen and Japan's 20-year QE experiment are accidents waiting to happen."
                        "OK the US dollar "may" crash. But if you are predicting that, please tell us against what. "

                        " The U.S. dollar just had its worst year in 14 years.
                        Last year, the U.S. Dollar Index (DXY) fell 10%. This index tracks the dollar’s performance against a basket of currencies.
                        Now, I realize this might not sound like a big deal. But it was the index’s worst annual performance since 2003.
                        A 10% decline is basically the equivalent of a crash for a major currency like the dollar."
                        "You can see the euro’s up 17% over the past year."

                        Armstrong said that the dollar would go down, and then, turn. Since the Euro is up and the dollar is down, everyone will pile in to Euros. Just like they are rushing into stocks now, they will rush into the Euro.

                        “The job market ended the year strongly. Robust Christmas sales prompted retailers and delivery services to add to their payrolls. The tight labor market will get even tighter, raising the specter that it will overheat.”
                        "Most Districts cited on-going labor market tightness and challenges finding qualified workers across skills and sectors, which, in some instances, was described as constraining growth."
                        NO problem. They will train dishwashers to write code.
                        The "tight" labor theory concern is that employees will job hop, demanding higher and higher wages, which in turn will push up inflation forcing the Fed to hike rates more than it wants to."

                        Hourly wage growth,
                        Good graphs,

                        S&P 3 year earning growth, -3.84%
                        OK, so, the current meltup is justified b y the strong growth in earnings.
                        Price-to-earnings, "The current ratio of CAPE to GDP growth of 19.77 has far surpassed the 1999 peak and all points back to at least 1950. At the current level, it is over three times the average for the last 66 years. "
                        EVERYONE is piling in to stocks for fear of missing out. They justify this with projections of future earnings. Passive investment funds are a means to invest without doing anydue diligence into earnings or fundamentals. Capital inflows to funds show that people have just thrown caution to the wind because they KNOW that they are going to get rich.

                        Pox Americana is rattling sabers all over the world because it makes them rich.


                        • Choked out by WalMart

                          Well, the big boys pulled out of bitcoin and left everyone else holding the bag. 1/21 Your cryptocurrency masters getting hilariously rich, and you’re not – Medium
                          J.P. Morgan says that the big money players in the stock markets are soon to do the same.
                 When peak euphoria and stupidity are reached, the smart money will pull out. Financial coitus interruptus
                          Figure 5 shows the disparity between actual GDP growth and the S&P.
                          Figure 30 financials shows that the banks haven't made any money since the 2008 crash.

                          I can't excerpt this. It is just TOO good.
                          I built a wood-gas truck. From this article, it shows 21 oil & gas companies that have a P/E of over 190 including Haliburton.

                          Here is a longish article on worldwide credit. Much of the first part is quite interesting. I'll just do one excerpt.
                          "Chinese exports were up 10.9% in December. China ran a $54.69 billion trade surplus in December, the largest since January 2016. Foreign reserves rose to a larger-than-expected $3.140 TN, the highest level in 16 months."
                          The Chinese load up on foreign currency,,, mostly U.S. dollars. This pumps up the American credit bubble. The British destroyed China by forcing the opium trade on the emperor. The Chinese are pumping up the West with monetary cocaine / Viagra.
                          Credit Bubble Bulletin : Weekly Commentary: You Can Only Worry For So Long

                          “Even though the FOMC has raised its target range for the federal funds rate by 125 basis points over the past two years, financial conditions today are easier than when we started to remove monetary policy accommodation.” Force fed from China.
                          The FED says that they are going to have to put on the brakes because unemployment is SO low.

                          Investors believe that the markets will go up forever. Here is a graph.
                          "Consider the psychology in play: central bankers have sought to convince private-sector players that central banks will never let markets decline, and so the smart strategy was to buy the dips, and buy every new high–in essence buy, buy, buy and don’t bother hedging long positions, as there was no need to squander money on hedges against declines that would never happen.
                          Now the central banks are facing runaway asset bubbles that are the direct consequence of their promoting the belief that “central banks will never let markets go down.”
                          The FED got this started and the PBOC is keeping it rolling.
                          Once again, we see that international capital flows must be taken into account.


                          • Will the State use the Blockchain to end banking?

                            This post is about a new subject that I am trying to grasp,,, as far as the possibilities and probabilities.
                            1. The State never willingly gives up control.
                            2. Computers are very good at keeping track of everything.

                            The G-30 published a 100 page document on a study of Central Banking. In the Synopsis page, they state, "Central banks were first established in the 17th century, with the primary purpose of providing war finance to governments"
                            Originally, the King couldn't start a war if he couldn't pay for it. Often, he could get the bankers to loan the money for war. It made sense to loan money to both sides so that the bank would always get repaid. At times, State finances weren't great enough for war and, the State went off the gold standard to expand the currency supply. War is good business for bankers because a leader will spend whatever is required to ensure victory.
                            "President Lincoln needed money to finance the War from the North. The Bankers were going to charge him 24% to 36% interest."

                            Lincoln turned down the N.Y. bankers and printed "greenbacks" to finance the war. After the Battle of Bull Run, the South was just a few miles from D.C and could have easily taken it. But, the bankers wanted to prolong the war. They also didn't want the North to lose.

                            Banks & war,,, they go hand-in-hand. BUT, the State and the banks have an uneasy alliance.
                            "The War of 1812 proved a financial catastrophe for the United States. One of the main reasons financing the war proved difficult and costly for the United States is that few preparations had been made prior to a declaration of war in June of 1812. Another factor was the dissolution of the national bank, the charter for which expired in 1811"
                            GOV killed the national bank in 1811 and got a war in 1812. Later, Andrew Jackson killed the Central Bank in 1833.
                            What if the State could somehow operate independent of the banking system?

                            Natalya Kaspersky
                            "Bitcoin is a project of American intelligence agencies, which was designed to provide quick funding for US, British and Canadian intelligence activities in different countries. [The technology] is 'privatized,' just like the Internet, GPS and TOR. In fact, it is dollar 2.0. "

                            "I used to think “fintech” meant the end of physical cash - replaced by mobile payments platforms owned by big multinational firms and currently led by China, in established currencies regulated by national governments and international agreements.

                            I now wonder whether the ultimate fusion of technology and finance will mean “the end of money,” at least as we have known it for the last millennium."
                            "Dimon’s first point was that “blockchain” — a globally distributed ledger of financial transactions made secure by advanced cryptography and competition among “miners” (computers competing to execute and record transactions, and being compensated for doing so) — has massive upside. But to become central to mainstream commerce, blockchain will have to lose its unregulated open source roots"

                            "All are powerful indicators that the leading edge of “conventional” finance is taking very seriously the prospects for very radical financial innovation."
                            "Finance meets technology, harnessing the combined power of Wall Street and Silicon Valley. Not only the end of cash, but also the end of money. That is the prospect and potential of fintech"
                            The Banking Mafia loves a "cashless society" when they have the TOTAL Control & Records of ALL financial operations as well as total control (allowing or denying) of every single individual activity. If the nodes in the blockchain are all controlled by the banks you not only have one currency but one central authority.

                            OK, so, the State never shrinks. Many millions of bureaucrats want to continue to draw salaries. Since the State is not a producer, it must take from the actual producers. The bank is not a producer so, it must take from the actual producer. Who has the guns? Who has an absolute control structure?

                            I think Lynette Zang may be onto something with this ACC chain. Just as your car, your trailer, your boat, your house, your business etc are already on the IRS and property tax records, these will be recorded onto digital centralized blockchain or hashgraph ledgers whether you like it or not. You will only get digital currency "credits" for these on the "government digital ledger" if you have physical assets, former fiat currency you have turned in Indian Rupee style, stock certificates, social security benefits, pensions or even surrendered physical gold and silver that have been entered on the ledger. If you don't list these, then guess what, no digital currency credits for you, and you won't be able to buy anything, because you will be "digitally broke."

                            Indeed, we may wind up going to the extremes: local barter vs new world order digital currency. But the bottom line, this digital currency will have to be backed by something, as simple unbacked fiat currency dies a slow death, and you, the peon, will bear the burden of providing the GOV with proof of your assets if you want to partake in the new digital world. Welcome to the new world of ultra control.
                            Lynette Zang has several interesting vids.

                            Everything that might be of value to the State is registered to your SS number. Previously, it was impossible for the State to keep track of EVERYTHING. Is the State creating a situation where it no longer needs the bankers?
                            Martin Armstrong's program, Socrates writes it's own reports without any human intervention or prompting. War is very inefficient but, profitable to the bankers. Will an AI-controlled financial system do away with war because it is so inefficient?

                            The State will have to come up with some EXTREMELY innovative solutions to deal with the problems that will show up after the default cascade. Granted, politicians are the worst people to run a State. While there are a lot of forces trying to greatly diminish the population, this would completely erase the State as we know it. We are rapidly falling into global cooling with the crop losses and plagues that are attendant.
                            Will the State erase the banking system in the face of great adversity to maintain the power of the State?

                            How will the State react when money stops working?


                            • Capital flight = deflation,,, Cryptocoin, not yet

                              "So The S&P has NEVER been this over-valued, NEVER been this overbought, and NEVER gone this long without even a minor correction."
                              New money is flowing in by the $billions every week.
                              The Chinese are a VERY recent arrival on the investment scene. They just are NOT sophisticated enough to resist gambling with ponzi schemes. They are getting taken to the cleaners.

                              Many of them don't trust the government, Over Half of Chinese Millionaires Are Thinking About Leaving China - The Sounding Line
                              Then, there is Europe.
                              2012 IMF warns of threat to EU banks from capital flight | Business
                              2012 IMF warns eurozone on capital flight - Financial Times
                              2016 Capital Flight in Eurozone Continues | MishTalk
                              2017Eurozone Capital Flight Intensifies: Target2 Imbalances Widen Again ...
                              2018 Banking union is not enough to save the eurozone - Financial Times
                              Eurozone inflation falls further below central bank target -

                              Capital flight is responsible to a great degree for the inflation in American asset markets.
                              Martin Armstrong – Down 39000 or Higher! « Financial Survival Network
                              There is always a possibility that asset markets can go further up into the stratosphere. Bankers wanted global capital markets with no impediments. The PBOC has created more new debt than the ECB and BOJ put together. The flip side of capital flight is; DEFLATION. Globalism has benefited just 6 States. Much the same, unlimited capital flows have had negative effects on all but a few States.
                              Armstrong talks vaguely abut a new "Bretton Woods." This would take unprecedented cooperation. Pox Americana isn't going to cooperate with anybody.

                              1/22 IMF calls for global coordination on potential bitcoin regulation – Strategic Coin
                              1/22 U.S. rating agency to issue cryptocurrency grades Wednesday – Bitcoin
                              1/22 The bull and the bear case for cryptocurrencies – Forbes

                              Bitcoin is just a bunch of nonsense.
                              1/19 Hackers have stolen about 14% of digital currencies – GATA
                              As long as the State wants access to EVERYTHING, crypto has no future.
                              1/10 FBI chief calls unbreakable encryption ‘urgent public safety issue’ – Reuters
                              The NCS itself was hacked. How safe is your cryptocoin?
                              1/22 15 year old hacker impersonated CIA director in massive data breach – Zero Hedge

                              The blockchain has great possibilities. Some of the crypto coins have good possibilities.
                              1/20 Menacing malware shows the dangers of industrial system sabotage – Wired
                              1/17 Trust war: dangerous trends in cyber conflict – War on the Rocks
                              1/16 The future of high-tech espionage – Wired

                              Untraceable stores-of-value have no future if they exist ONLY in cyberspace.


                              • Trust,,, the dollar is still king

                                Trust moves along with confidence.
                                "This year, however, the gap all but vanished, with trust in government in particular plummeting 30 percentage points among the informed public. America is now home to the least-trusting informed public of the 28 countries that the firm surveyed,"
                                Here is a graph that shows stocks vs CPI, GDP, wages and salaries. The stock market has outrun ALL of them.

                                The writer seems to think that this is proof of impending doom. The bonehead makes NO MENTION of cross-border capital flows. His site is called "Real Investment Advice"

                                Jim Willie, "community of nations works to avoid the King Dollar." "broadbased dumping of USTreasury Bonds "
                                Armstrong, "China reduced its holdings by 1% or $ 12.6 billion to $ 1,176.6 trillion and Japan reduced its positions by $10 billion to $ 1,084 trillion. I seriously doubt that the foreign US bondholders slightly reducing their holdings in November by 0.1% to $ 6,343 trillion qualifies as “dumping” dollar debt."

                                Armstrong, "The dollar is used worldwide because it is trusted while other countries routinely cancel currencies. India made headlines last year cancelling their high denomination notes overnight. This may force people to pay their taxes and prevent them from hoarding cash. But it is also why the US Treasury and Board of Governor’s staffs estimate that nearly 60% of all U.S. banknotes in circulation, or close to $500 billion, is held outside the United States. "
                                "There was a 1996 article on this, they called the Money Plane when everyday, planes full of $100 bills were flying to Russia. They were shipping $100 million per day. This is why the dollar is the world’s RESERVE CURRENCY. The majority of it is used outside the country because everyone else cancels their currency routinely. The US currency has NEVER been cancelled so the very first note from 1863 can still be spent"

                                Notice that the Russian Mafia ONLY wanted paper. There is a HUGE difference between paper currency and paper bonds. Here is a pic of a stash of cash from a Colombian drug lord.
                                He reported a shrinkage from decomposition, etc of about 10%. He could have converted it to gold but, the paper dollar is more widely accepted than gold. While dollar notes are widely accepted, dollar bonds are NOT. The Italian Mafia has printed up hundreds of them. Each one is tracked and registered with the Treasury.
                                The paper dollar has the advantage of longevity over every? other currency. Not sure about the Swiss Franc. When U.S. GOV goes flat broke, the paper dollar will still be the premium paper instrument. U.S. bonds will be a different story.

                                1/22 Inequality gap widens as 42 people hold same wealth as 3.7bn poorest – Guardian
                                1/22 More than 10% of $3.7 billion raised in ICOs has been stolen – Reuters