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  • Domestic & international monetary war

    The myth of the perpetually growing economy is giving way to the reality that we are nearing the end of the credit cycle. Even Alphabet had a big earnings miss. Much of the fortunes of the upper loop are tied to the earnings of the lower loop. The lower loop, in both numbers and earnings, is shrinking away. So, what solutions are offered from the upper loop?
    Chamber of Commerce Demands More Immigration: ‘U.S. Is Out of People’
    Bring in several million new welfare cases will just shift the financial burden to the State. And, the State is already broke.

    Q for Armstrong, "QUESTION: Martin, if Europe and Japan have destroyed their bond markets, would it be a good idea for them to get the government out of the bond market and have short term rates be floating in the free market?
    "Get the government out of the bond market?" That's like saying, get the Pope out of religion.

    Answer, "ANSWER: What will happen is that there is already unfolding a bifurcation in interest rates with a widening spread between real rates (Private Sector) and government. If they allow government rates to float, that means they must abandon QE."
    This is denial writ large. In the last several years, the CBs pumped out / in $247 trillion. GOV has no intention of going back to the old days when it had to entice bond buyers.
    "Neither the BoJ nor the ECB is ready to admit total failure. This means that the entire Keynesian-Monetarist tools have failed and they have no economic theory upon which to manage the economy. That means the government cannot control the economy and therein lies the denial of power."
    I wouldn't jump to this conclusion too quickly. Regulatory capture will go into reverse when the State is desperate to survive.

    India hasn't really lowered their fertility rate and, problems are developing.
    "In India, the Indian Railways posted 90,000 job vacancies. 28 million candidates applied, "
    The Indian GOV is trying to squeeze out every rupee that ic can find.

    Smith writes about the wind-down of the credit cycle.
    "Both new households and new businesses are in secular decline. Goosing the stock market and GDP doesn't change this reality.
    Better guides to expansion than GDP are sales volumes, prices, profits, wage increases and sustained rises in new enterprises and households. All of these measures of expansion are stagnant, indicating that monetary and fiscal stimulus are no longer moving the needle.
    New households and enterprises drive expansion. New households buy homes, furniture, home improvements, appliances and so on, while new businesses buy equipment, hire workers and sign on professional services such as accounting, insurance, etc.
    Young people loaded down with student loans don't do any of the above.

    Rising prices are also classic late-cycle signs. To make a buck, everyone has to raise prices and cut what they can, and rising prices impacts sales.
    The first doubts triggered the decline from October to December, and the sharp rebound this year once the Federal Reserve signaled "we'll do whatever it takes" is very typical of the late-cycle topping process: price sags as doubts emerge about the ageing expansion,"

    Globalized capital flows were necessary for globalization. Co-ordination by various CBs was also necessary and, co-ordinated by the BIS. We made war on any State that was not a member of the BIS because we didn't want any holdout upsetting the global apple cart. It was also necessary to make a war on gold by creating the paper-gold market.
    This globally synchronized inflation / regulation created a worldwide credit bubble that was supposed to be universal and, self-sustaining.
    As we see in the EU, Greece is not the same as Germany. The same is true for many States. Globalization only benefited 6 States. How can the world reconcile vast differences in productivity with a one-size-fits-all monetary system?
    It turns out that you can't. But, since everything is connected and synchronized, The meltdown of the weakest economies injects contagion into the stronger economies.

    "Let’s not forget how easy it is to get a big GDP print when you’re running the biggest deficits in history.

    So what’s the real story. Well, as always, it’s the dollar, stupid, as I said yesterday over at Money & Markets. The dollar synthetic short thanks to that decade of cheap access to them has created a monster not only in emerging markets per normal, but also in developed markets as well."
    "The problem now is that both the pound and euro have broken down out of their ranges and are threatening free fall. "
    MAGA baby!
    "This wasn’t supposed to happen with the European Union winning the Battle of Brexit by keeping the U.K. locked into its death spiral like a peregrine falcon hanging onto a wolverine and getting torn to shreds."
    "A decade of zero-bound and/or negative-bound interest rates have so thoroughly screwed up the market for dollars globally that any small shift in perceived dollar liquidity results in massive volatility."
    About that dollar liquidity.

    "Dollar liquidity is falling rapidly as bank reserves are increasingly becoming more illiquid; needed to cover collateral liabilities."
    WAIT, the Chinese need dollars to service dollar-denominated debt.
    "And to make matters worse currency in circulation has expanded 50% in the past seven years, in case you’re wondering where all the stagflation is coming from."
    Banks don't hold currency.

    "The banks wouldn’t be hitting the reverse repo window or holding huge balances with the Treasury dept. if there wasn’t trouble"
    The banks are in trouble.
    "In the two weeks prior to earnings the banks would go to the Fed and park a few hundred billion to dress up their balance sheets to report earnings and then drain it out. "
    "the offshore dollar liquidity system, spasmed last May and hasn’t recovered."
    "Even China has a dollar problem now, apparently. "
    "Most importantly this trend is starting to go parabolic and coincides with this week’s breakout of the USDX and the breakdown of the euro and British pound to new lows."
    All those dollar-denominated loans need to be serviced and, there is great demand. This raises the dollar and makes it increasingly difficult to find them. The longer we hold off QE (or hide it), the more that the dollar crashes other currencies.

    "Trump and his torturer-in-chief John Bolton are only adding fuel to this fire with their insane foreign policy. Weaponizing the use of the dollar which forms the backbone of your empire will eventually cause that dollar to spike, as it is right now."
    "Trump, Bolton and Mnuchin feel now is the time to tighten pressure until ‘the pips squeak,’ as Bolton recently put it. But don’t worry, it won’t be his fault when a spiking U.S. dollar boomerangs back on an over-leveraged U.S. economy in ways they can’t conceive of."
    That "boomerang" is going to wipe out Europe before it returns here.


    • Unfolding monetary destruction of Europe,,, MMt tug-o-war

      Impending poverty has made enemies out of former friends. This is NOT true of Russia because they already had their crash. No, Europe is in the hot seat today.
      Armstrong, "Unlike the Bank of Japan and the European Central Bank, the US bond market is the only thing trading. The Fed is not trapped as are the other central banks. At some point, the Fed will be obligated to raise rates to fight against the asset bubble, but that will then attract even more capital and push the BoJ and ECB over the edge."
      Side note, 5/01 Trump calls on Fed to cut rates by 1%, urges more quantitative easing – CNBC
      Armstrong, "Keep in mind that ONLY a rising dollar compel monetary reform in the USA. During 1934 Roosevelt devalued the dollar and in 1985 they created the G5 to stage an organized group to manipulate the dollar lower. All those people touting gold will rally and the dollar will crumble are clueless. A lower dollar will increase corporate profits and reduce trade deficits. ONLY a higher dollar will break the monetary system."

      Armstrong wants to see "monetary reform." I suspect that he means, "America living within it's means."
      5/01 Schumer: Trump, Democrats agreed $2 trillion needed for infrastructure – CNBC
      We/ they can't very well borrow this from the private investors. They pulled out a long time ago. Everything is being financed by printing. So, everybody is in agreement. We'll just print our way to prosperity.
      The longer we wait to do this, the worse it will be for Europe.

      Armstrong, "ANSWER: The contagion will last probably 2 years at best. There was such a contagion during the Great Depression."

      Armstrong, "ANSWER: The basis upon which MMT has emerged is actually logical for those who lack the understanding of how to conduct research. Since QE has lasted in Europe for 10 years+ without success in creating inflation, they take this as proof that the government can just print without concern of inflation. Money has value only because it is legal tender. I have written about this subject before – MMT.

      I will address this in a detailed report because all economic models have now failed. This is part of the Great Unknown we have entered in Economic Theory. Central Banks are without a map and are now lost in the wilderness."

      So, we have this impending / emerging tug-o-war. The State wants to take over money creation. The bankers like it he way that it is now. ALL new money is funnelled through them. They always get a cut. U.S. FED GOV is facing $213 trillion in unfunded liabilities. (Kotlikoff) 51% of Americans receive a check from GOV.
      FED GOV can default on the bond market OR, FED GOV can default on 150 million Americans.
      Both parties want to spend lots of money on infrastructure. The money is NOT there. All the fresh money was pumped into the upper loop and caused great inflation of paper wealth. BUT, the money is stuck there. It isn't circulating . It isn't doing any good for the majority of people. MMT would inject money into the lower loop to make up for what is missing.
      The heavens will be resounding with the warnings of INFLATION. If the money is paid out for WORK DONE, it will bring back a balance back between the upper & lower loops.
      Trump has attacked globalism. The money earmarked for the infrastructure will be less likely to flow to China and outsourcing as globalism is curtailed.
      Japan spent a gazillion dollars on infrastructure without creating noticeable inflation.
      The upper loop likes monetary inflation because they get the money first. They are always ahead of price inflation. What they really don't like is, wage inflation. They don't seem to catch on to the fact that consumption is crashing because they have directly caused a crash in purchasing power.

      Armstrong clearly shows that QE did not cause inflation. What he ignores is; it offset crashing deflation brought on by automation and the spread of the global mean wage.


      • Something wicked this way comes-MMT

        Armstrong on the tug-o-war.
        "Quantitative Easing has so destroyed the Keynesian model that there is now no other alternative for central banks to control the economy. If they raise rates, the budget explodes. We are witnessing the end of Keynesian.Monetarist theory."
        So, move on to MMT
        "You mentioned in a 2016 blog post that “We will probably see the end of this Social Security program by 2021.772 (October 9, 2021)”
        "ANSWER: I do not see this unfolding as a default. They will have to revise the system one way or another. There is more likely to be a huge split in interest rates from the private sector compared to the public at the federal level. "
        NOPE. one rate to find them,,, one rate to bind them.

        "As I have stated before, I tried to work with Congress back in the ’90s in reforming Social Security transforming it into a wealth fund that was allocated out among managers. The Democrats would not vote for it so this is why Social Security today cannot survive. It invests 100% in government bonds"
        SO, the DEMs are responsible for ensuring that war funding was a priority above future SS solvency?
        "What we face now is the collapse of Social Security because it is restricted to buying only government debt "
        "The way they default is reducing payments and the payments will not be enough to sustain themselves. Look at Venezuela. They honor their pensions, but what you get today will buy only a cup of coffee."
        My, won't that reduce consumption and commerce.

        "The likelihood of Social Security remaining as it is today is ZERO. Private sector rates will rise v manipulated government rates. We have entered into the Great Unknown economically. The Quantitative Easing of the Bank of Japan and the Europeans Central Bank have wiped out the free markets and ended government borrowing as a viable free market. The far more interesting aspect of interest rates will become the spread between corporate and public at the federal level."
        Armstrong has NO imagination if he believes that FED GOV will not be able to create a work-around for the reluctance of private money to buy GOV bonds.

        5/01 Zero percent of elite commentators oppose regime change in Venezuela – FAIR
        Oil has a way of changing people's perspective and morality.
        5/01 Wall Street puts nearly $2 billion in American politics in 2016-18 cycle – OFS
        You can buy a LOT of politicians for $2 billion.
        5/01 Without record pollution credits Tesla would have lost $918 million in Q1 – Wolf Street
        5/01 The curious case of rising fuel prices and shrinking inflation – Real Investment Advice
        Sure thing dude.

        5/02 The best setup for commodities in half a century – Casey Research
        WHILE consumption is falling. Sure thing dude.
        5/02 U.S. college grads feel their grip on middle class loosening – Japan Times
        No kidding. 1/3 of them live in their parent's basement.
        5/01 Student loan debt has topped $1.47 trillion – AV Press
        5/02 By 2024, all US debt issuance will be used to pay for interest on debt – ZH
        Another reason to stiff the bankers.
        5/02 Fed signals neither a rate hike nor a cut is likely soon – AP
        The paralysis of a deer in the headlights.
        Lastly, Steven Spielberg Calls for Mandatory Holocaust Indoctrination in US Schools


        • The fed is dead

          Old Central Bank Collapse- New Economy Coming



          • The red dragon brings us MMT

            That's a good one BroMikey. Trump is old and, a billionaire. What could you possibly bribe him with?

            Ray Dalio runs the largest bond fund in the world.
            Ray Dalio had a program written up for his fund. AI makes ALL decisions.
            Here is what Ray Dalio has to say about the future;
            Dalio: "Like It Or Not" Central Banking Is On Its Way Out; MMT Will "Inevitably" Replace It
            He must have been reading this blog.
            "Dalio's essay appeared to set off a wave of wealthy capitalists talking about how "capitalism is broken", placing him at the forefront of a trend that could have profound implications for American politics as Wall Street struggles to confront the rise of populism on the right and the left."
            "This time around, Dalio argued that, whether we like it or not, the US will eventually be forced to embrace MMT, this has become "inevitable," he said. Central banking as we know it (which, thanks to rampant money printing in the post-crisis paradigm, has already moved closer to the MMTers ideal) is doomed to eventually collapse under its own weight and unpopularity. In other words, sooner or later, the people will demand MMT, once inequality gets bad enough. "
            So, what constitutes "bad enough"?

            "Once the public has accepted that money printing and interest-rate cuts aren't doing enough to distribute wealth more equally (as we've pointed out many times, the Fed's unprecedented post-crisis easing has been the primary driver in the expansion of economic inequality that Dalio finds so troubling), policy makers will be forced to accept "monetary policy 3" - or MMT."
            "Accept", nope, embrace. It is their salaries that are on the line.

            "hat is because it won’t be effective in producing money and credit growth (i.e., spending power) and it won’t be effective in getting it in the hands of most people to increase their productivity and prosperity. Hence I believe we will have to go to Monetary Policy 3, "
            "It is inevitable that this shift will happen because it is inevitable that central bankers will want to ease when interest rates are pinned at 0% and when quantitative easing will be ineffective in achieving the goal. "
            Classic QE is a mechanism of pumping money into the private banks so that WE can borrow it and spend it. I guess that the idea of mass default never entered their minds.

            "Dalio recommended a closer collaboration between fiscal policy and monetary policy. Now, he's taken that a step further and advocated placing the monetary policy reins into the hands of elected officials (one of the key tenents of MMT).

            For what it's worth, Dalio acknowledges that this could present a conflict, and that if we embrace MMT, it will need to be done in a way that limits the control of politicians to enact self-serving policies (something that, as far as we can tell, would be extremely difficult)"

            So, where did all of this come from? China and India set the global mean wage. But, that isn't the end of it.
            Notice how all the CBs are stuck on ZIRP?
            Fracking has lost $200 billion and, nobody is crying.
            The West is stuck on ZIRP. WHY?
            Subsidies and interest-free loans in China rule the day. Our finance costs are very HIGH. 50% of the cost of everything that you buy is for finance. 19% for trash collection and, 87% for public housing. Apparently, China has set the global interest rate.
            The west has flooded the system with hundreds of $trillions,,,,, and still expects all this liquidity to earn interest.

            China flooded the system with hundreds of $trillions BUT, it went into productivity and NOT into instruments. Much of the liquidity was channelled into state owned enterprises.. All the profits that accrued to the banks here, were sucked into the state in China. We hear endless claims that china is going to blow at any moment. Here is an article on the SOEs and the money that flows through them.

            "About $151.1 billion was channelled to SOEs, 95 percent of which were operating at a loss.

            Measuring the true cost of government subsidies is difficult in any circumstance. It’s particularly difficult in the case of China owing to a lack of transparency and data that is unreported, misreported, or otherwise unverifiable. Significantly, subsidies also take the form of free or low-cost loans and artificially cheap raw materials, components, energy, and land, avenues for delivering cost savings and capital that are perniciously hard to track."

            So, the West has high finance costs and, the East holds them down. The West is constantly talking about ZIRP & NIRP. CHINA implements a form of subsidies that could easily pass for MMT. The West can't compete because of it's high overhead / finance costs. The West needs to clobber the bankers to be competitive in global markets.
            This is Keynesian "euthanasia of the rentier".


            • The China detonator,,, shadow banking,,, no money anywhere

              There is a lot going on in many areas. China is center stage for many people.
              "In the decade prior to the crisis, the region saw substantial inward capital flows, so much so that countries such as Malaysia, the Philippines and Indonesia ran significant deficits on their balance of payments. This conflicted with the US’s trade balance, which was beginning to deteriorate. The solution was the collapse of the South-east Asia investment story, which stimulated the re-allocation of investment resources in favour of the dollar and America.

              Qiao Liang cites a number of other examples from the Latin-American crisis in the early-1980s to Ukraine, whose yellow revolution reversed investment flows into Central Europe."
              "If Qiao Liang were to comment, doubtless his conclusion would be that America will increase its attack on China to precipitate disinvestment and reallocation to the dollar. And so, the attacks have begun; first by trying to break Huawei. "
              "Bass fails to mention that a collapse in property prices and the banking system is unlikely to be confined to Hong Kong. Central banks have made significant progress in ensuring all banking systems are tied into the same credit cycle. Unwittingly, they have simply guaranteed that the next credit crisis will hit everyone at the same time. It won’t be just Hong Kong, but the EU, Japan, Britain and America. Everyone will be in difficulty to a greater or lesser extent. "
              "Far more important are the consequences of the cyber and financial war being pursued against China and Russia, its close ally, by the American deep state. Under President Trump it was accelerated by his trade tariff policies, which are fundamentally an attack on China’s economy. "

              The cheerleaders are out in force but, the reality is dreadful.

              India Boycotting China's Belt and Road Project Due to 'Sovereignty Concerns'
              Somebody must have whispered in their ear.
              "In my 30 years of studying Bubbles, a few things have become clear – I would argue indisputable: They always burst. During the Bubble, virtually everyone dismisses Bubble analysis, instead believing the boom is well-founded and sustainable. The pain on the downside is proportional to the excesses during the preceding boom. "
              "There’s no sound reason to believe China has discovered some magic formula for escaping the downside. Rather, there’s every reason these days to contemplate what a bursting Chinese Bubble will mean to China and the rest of the world. And I find it very intriguing that there is absolutely no mention of China in all the discussion of inflation and Fed policy."

              "I would strongly argue that the historic Chinese Bubble has been the most perilous consequence of Bernanke’s zero rates/QE, Draghi’s “whatever it takes,” Kuroda’s “QE infinity,” and, more generally, the most aggressive and protracted synchronized global monetary stimulus imaginable. In many respects, China has become the epicenter of the now decade long global government finance Bubble. Today, no market – sovereign debt, equities, corporate credit, commodities, currencies and derivatives – is immune to the Virulent China Syndrome."
              "The China Bubble has altered global inflation dynamics – it has fundamentally changed geopolitics and the world order. It has certainly played a prevailing role in a global backdrop promoting asset inflation at the expense of wages – "

              " In short, China has become the Global Poster Child for Unsound “Money” - with incredibly far-reaching consequences."
              "How much speculative leverage has accumulated in Chinese Credit over the past decade? I have a difficult time believing it’s not History’s Greatest “Carry Trade”. Chinese banks and corporations are estimated to have borrowed more than $3.0 TN in dollar-denominated liabilities. In January, a Bloomberg article (Christopher Balding) pointed to $1.2 TN of Chinese dollar debt that would need to be rolled over during 2019."
              Credit Bubble Bulletin : Weekly Commentary: Transitory Histrionics

              "Goldman Sachs Bank USA, a taxpayer backstopped bank that is Federally-insured by the Federal Deposit Insurance Corporation (FDIC), has 354 percent total credit exposure to capital. The bank has $32.5 billion in risk-based capital versus $40.3 trillion in notional (face amount) in derivatives."
              Fed's Powell Says Financial Risks Are “Moderate”; These Charts Don’t Agree
              5/04 Canadian oil driller abruptly shuts down, abandons 4,700 wells – Oil Price
              5/03 Global foreign direct investment flows collapse – Wolf Street
              5/03 Feeding frenzy – Seven Figure Publishing

              So, various states are getting ready to demote their Central Banks in favor of MMT. This would reflect on ALL GOV bonds. Russia already had their crash and, is ion very good shape financially. They have quite a bit of income from oil & gas. They don't want to lock it up in any kind of paper because they see the crash looming. They have a better idea.

              Here is a quote from Marriner C. Eccles. FED chairman

              "If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash, or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless situation is almost incredible — but there it is."

              "Yesterday we argued the Federal Reserve cannot even define money… much less measure it to any reasonable satisfaction.
              Today we venture upon a heresy deeper still — that central bank “monetary” policy has no actual existence.
              No money stands beneath it, behind it, beside it."
              "Monetary policy has been quite intentionally stripped of money. Banks evolved and there was really no easy way to define money beyond a certain point (in the ’60s), so economists just gave up trying… "
              "Money is debt in today’s world. Debt represents a claim upon the future. The Federal Reserve is a vast engine of debt, a menace.
              That the Federal Reserve and all central banks are largely powerless…"

              "There is no money in monetary policy; it is entirely psychology.
              What about quantitative easing? Was it not about “printing money”"
              "But if not the central banks… who or what is central?

              Who, then, is running monetary policy?
              The Shadow Banking System
              You will find the answer in the shadows, says Snider — the shadow banking system.
              The shadow banking system?
              That is the deeply interconnected network of banking institutions that operate outside direct control of central banks.
              They include the large banks and their offshore units.
              This shadow banking system extends through Europe, the Caribbean and Asia, the world over.
              In 2017, the Bank for International Settlements — the central bank of central banks — estimated $13 trillion to $14 trillion dwell within the shadow system."

              "Where do asset bubbles come from, asks Snider? “They came from the shadows” is his answer — including the U.S. housing bubble:"
              "So what we’re describing here is almost an entire massive complete system… that existed offshore and wholesale, in the shadows, because there was no regulatory authority… no government authority over the conduct of this system. It was essentially a self-contained system that operated beyond the reach of everybody."


              • QE to MMT,,, contagion risk,,,, gold

                It's pretty quiet at the moment. We seem to be in a transition where bankrupt nations abandon QE in favor of MMT. This is a not surprising response to the poverty that has been brought on us by crony capitalism. Here is a vid of a 12 y.o. Canadian girl perfectly explaining how Canada was very prosperous. The bankers convinced the GOV to give up their national bank in favor of a Central Bank.
                Victoria Grant shows the numbers. Canada was very prosperous until it got a Central Bank. The story of the FED is similar,,, not the same. Canada did not go around the world trashing dozens of nations for profit.

                The vid is from 6 years ago. Not surprisingly, Canada has not switched back to a public bank. Canada is still deep in debt.
                JFK threatened the survival of the FED by printing U.S. notes,,, as opposed to FRNs. He was killed just a few months later. LBJ stopped the printing 11 days after his death. POX Americana has been going around the globe for years, trouncing any nation that is not a member of the BIS.
                North Korea is not listed on Wikipedia. In 2000 CE, Afghanistan, Iraq, Sudan, Libya, Cuba, North Korea, and Iran were listed as not having a central bank.
                Well, shoot. They should get a war to convince them.

                The CBs have bankrupted the world. Any effort to oust them using MMT will be quite a fight.

                The economist Lawrence Lindsey served on the Board of Governors of the Federal Reserve in 1991-1997, and was the Director of the National Economic Council in 2001-2002 under George W. Bush. In 2007, Lindsey reportedly called himself: a card-carrying member of the brotherhood of international central bankers, and once a member always a member; all for one, and one for all. In 2011 (while the dollar was dropping badly in value) he said: "I'm sure we'll do it again [the gold standard]," adding, "probably in the next ten years.""

                "The daily mine production of gold is $329 million. But the gross daily trading volume in the gold market is $280 billion according to the World Gold Council. So the daily gold trading is 850x the daily production. Most of that trading is done by the bullion banks and not the Comex or other futures exchanges. You don’t need to be an expert in trading to figure out that a market that every day turns over 850x the daily production of the underlying commodity is massively manipulated. Also, trading of that magnitude has nothing to do with physical gold but clearly has a much darker purpose. Surprisingly as the chart below shows, daily gold trading is 2x the trading in S&P stocks."

                Why a 60-65% market loss would be run-of-the-mill – Hussman

                Everybody and their brother has been juicing up the markets to keep confidence going. There is great risk that our lack of a permanent money supply will cause a situation where a fall just won't stop. How do you buy imports if your currency and bond markets have been trashed. That is why China and Russia have maxed out their gold supply.

                The BIS has brought STRONG control and STRONG centralization. At the same time, this has brought the possibility of equally STRONG contagion.

                When Iraq had a forced currency changeover, we flew in 747s loaded with the new currency. Any kind of currency collapse in a big, developed nation would require some very strange programs.
                If all the bond markets die in unison, paper money will be the only thing moving. I expect that the bankers will rebel and trash the system if they can't prevent MMT.


                • Core competency

                  One more journey forward or backward

                  Core Competency

                  This is chilling! These numbers are prima facie evidence as to why every president that we have had in our lifetime was incapable of running the country successfully. I submit that even with 50% having been in business, it is simply not enough for our country’s problems to be addressed with solutions that work. And here we are today, with Trump running against a flock of RATs any one of whom would make things even worse. I hope you are including DJT in your daily prayers, because if he fails to be President for the next six years, we may never be the same again at any time in the future save an armed revolution, and today, even that would be an iffy proposition.

                  These numbers help explain why these last eight years were disastrous for the USA. I read the last item and then looked at Trump's Cabinet. No wonder Washington, DC is in a turmoil. Trump's picks are bosses who expect their employees to work. These are Eye Opening Numbers. This is what bothers a lot of people about Trump. He won't accept a can't do attitude, or inexperienced, incompetent performance. He will get results; it just might not be smooth or pretty.

                  Here are some amazing stats: Make sure you read to the bottom. An eye opener!

                  1. These 10 States now have more people on welfare than they do employed!

                  New Mexico
                  New York
                  Maine, and
                  South Carolina

                  2. Last month, the Senate Budget Committee reports that in fiscal year 2012, between food stamps, housing support, child care, Medicaid and other benefits, the average U.S. Household below the poverty line received $168.00 a day in government support. What's the problem with that much support? Well the average household income in America is just over $50,000, which averages out to $137.13 a day.

                  To put it another way, being on welfare now pays the equivalent of $30.00 an hour for 40 hour week, while the average job pays $24.00 an hour.

                  3. Check the last set of statistics!!

                  The percentage of each past president's cabinet who had worked in the private business sector prior to their appointment to the cabinet. You know what the private business sector is: A real-life business not a government job.

                  Here are the percentages:

                  38% T. Roosevelt
                  40% Taft
                  52% Wilson
                  49% Harding
                  48% Coolidge
                  42% Hoover
                  50% F. D. Roosevelt
                  50% Truman
                  57% Eisenhower
                  30% Kennedy
                  47% Johnson
                  53% Nixon
                  42% Ford
                  32% Carter
                  56% Reagan
                  51% GH Bush
                  39% Clinton
                  55% GW Bush
                  8% Obama
                  90% Trump

                  This helps explain the bias, if not the incompetence, of the last administration: ONLY 8% of them have ever worked in private business!

                  That's right! Only eight percent - the least, by far of the last 19 presidents! And these people tried to tell our corporations how to run their businesses?

                  How could Obama, president of a major nation and society, the one with the most successful economic system in world history, stand and talk about business when he's never worked for one? Or about jobs when he has never really had one? And, when it's the same for 92% of his senior staff and closest advisers? They spent most of their time in academia, government, and/or non-profit jobs or as "community organizers."


                  • The company store

                    We all know that we are getting poorer. The mechanisms that are used to fleece us are clearly explained here.
                    Trump and company did a tax break to juice the economy a bit.
                    Downside revisions have wiped out the benefits of the tax cut.
                    "Despite the rise in expected earnings in 2020, the peaks of those expectations (which are predictably about 33% too high currently) are all lower than the 2018 earnings peaks."

                    5/05 Dow futures drop 400 points after China tariffs – CNBC
                    5/05 US China trade talks hit snag, Trump raising tariffs – CNBC
                    5/05 A $300 billion blowup has traders bracing for war in Washington – Bloomberg

                    Trump doesn't want a deal,,, he wants a meltdown.
                    5/05 Trump’s economy is roaring. Will it carry him in 2020? – NBC News
                    Yep, that's the big question.
                    The Chapwood Index,,, the true cost of living.
                    Welcome To Chapwood IndexThe Real Cost Of Living Increase Index - Chapwood Index - The Real Cost of Living Increase Index Vs Consumer Price Index
                    A quick note on how to tell if your bank is safe.

                    Just in case that you had illusions that the system is fair;


                    • Armstrong,control-alt-delete,,, Trump as China's executioner,, too many cars

                      Armstrong just had his world economic conference.
                      "we have entered the Great Unknown where Keynesian Economics has crumbled to dust. We have to reassess the future and how this will unfold as the central banks are beside themselves in many countries and the contagion of Quantitative Easing combined with Negative Interest rates has completely altered the economy "
                      He is trying to do accurate predictions but, the roadmap is unclear.
                      Armstrong, " Civilization becomes the key to advancement."
                      "What then happens is the government becomes corrupt and greedy. Once you reach that stage, people begin to leave the main centers. In the case of Rome, it peaked around 180 AD with a population of about 1 million and it collapsed to just 15,000. As people fled the cities due to corruption, "
                      "Government smelled the money and began to tax. This led to the first tax rebellions during the 1300s. The first peasant tax uprising over taxation was in France during 1358. This was followed by a similar uprising against taxation in England"

                      "The bottom line is always the same. The taxation and rule of law have collapsed and moved into the same position that threatens the break-up of nations, once again, as has every empire to date."
                      "The various governments will collapse for they have abused their power and are unsustainable. Society will have to go through a readjustment on a major scale.

                      It is not all doom and gloom. This is also a fantastic opportunity to hit the control-alt-delete button and begin anew."
                      Imagine that you are a deep sea diver in a suit with a hose going up to a compressor on the boat. The crew send down a message,, They are going to change out the compressor for a much better one. You will get more and more-dependable air.
                      Our system is just TOO COMPLEX to have major interruptions.

                      "More than 4.2 million new cars are stacked up unsold as of this month – which is an alarming half-million more cars than were stacked up guess when?"
                      "In the early spring of 2007 – just before the bird chirped. Not long after, he hit the floor.

                      Once again, people have abruptly stopped buying new cars. The question is – why?
                      The answer’s pretty obvious, then and now.
                      People can’t afford to buy them."
                      "At any rate, the privately-owned banking cartel which controls the country’s finances – the “Federal” Reserve – “fixed” the problem by flooding the economy with free money. That is to say, with more debt – but at low or even no interest."
                      "Unaffordable cars – gas guzzling and otherwise – were made to seem “affordable” by adding two or three years to the duration of the loan"

                      "Demand for new cars was “stimulated” . . . by destroying as many used cars as possible. This was the infamous Cash For Clunkers program. While some of the cars were indeed “clunkers” – old and nearly worn out – most were merely paid-for."
                      "They had many years of useful life left to go, but the problem – for the banking cartel and the government – was that no payments were being made on them."
                      "Interest rates can’t be kept low to no anymore because the flood of new money via the Fed dilutes the value of the money already there; in order to make money on devalued money, one must charge interest that makes up for the depreciation of the loaned sum."

                      It's the same story all around. The currency inflation forced by the upper loop made our wages inadequate. So, they extended out the terms of our loans. When that became inadequate, they forced down the interest rates to keep us buying. Now, they aren't making any earnings.

                      O.T. wash it or,,, lose it.

                      5/05 US China trade talks hit snag, Trump raising tariffs – CNBC
                      5/06 China considers cancelling trade talks with U.S. – Reuters
                      5/06 Oil prices tumble by more than 2 pct after Trump announces China tariffs – NASDAQ
                      5/06 Asia stocks fall on trade turmoil – CNBC
                      5/05 Dow futures drop 400 points after China tariffs – CNBC

                      As I mentioned before, Trump wants a meltdown, NOT an agreement to maintain the status quo.

                      "The past year has been immensely successful for the war industry, according to data from the Stockholm International Peace Research Institute (SIPRI). According to its newest report, released on Monday, global military spending went up 2.6 percent to reach its highest level since at least 1988, when researchers began tracking the data."

                      HRC has no future as a singer,
                      Youtube does censorship,,,, youtube loses money.


                      • All the numbers,,,paving the way for MMT

                        Sometimes I find an article that doesn't need any explaining and, I don't have to excerpt because it is all good info. Here is that article.
                        The Crash In US Economic Fundamentals Is Accelerating

                        FED GOV is broke. The pension funds are broke. The middle class is broke. Just about everybody is broke. Much as the bankers like having all the money, they are getting worried. In previous decades, there were a lot of bankers who were hung from lamp posts. Our society and economy is SO complex and integrated that it can't take any major speedbumps. FED GOV is spending 30% of GDP. They pretend that somebody,,,, anybody is buying all this debt issuance. They need a new plan that doesn't depend on such a high degree of lying.

                        "In the next recession, US rates will fall 100bps quickly. Then go to zero. And after that, we’ll just have to see what direction we go,” he said, “But that’s probably to MMT.”
                        "MMT is entirely valid and has been embraced by Japan, even if they don’t call it by name,” said the CIO. Japan’s debt to GDP ratio stands at nearly 250%, but the central bank owns half of it and continues buying. Overnight interest rates are -0.10%, 10yr bond yields are -0.06%, the currency is stable and there’s barely any inflation. “Lots of people scoff at MMT because they think it’s the equivalent of opening Pandora’s box. "

                        There are 2 kinds of price inflation. One of them is related to demand. If the population in japan is falling, what does that do to demand.

                        “In Japan, they chose to suppress inflation to protect older people,” continued the CIO. “The older Japanese own the property and assets. So they’ve made the younger people have to work harder to buy these things from them.” That’s what the rentier class in every society has always done and will always do. “Japan could have made different policy choices as they deployed MMT. But the economic structure they chose has protected the status quo, while getting the most work out of young people. That’s how the world generally works.”

                        “One of the neat things about the past decade is that capital markets subsidized innovation,” said the CIO. “I no longer own a car. I pay $6 to get home and apologize to my driver that it’s such a cheap ride. But he says: No sweat, I get a $100 bonus for every 10 rides.” It’s great for consumers today but long-term value-destructive for suppliers of capital, even though equity markets don’t reflect that destruction now. “
                        Side note, Uber's Big Problem: It's A Zombie Corporation That Can't Make Any ...
                        ' “Maybe in a couple years Uber will only burn $2bln, then $1bln, then autonomous will arrive and they’ll burn $15bln.” That’s what the transition will look like. "
                        “So here we are now, and where’s the road to profitability? Not clear. So to profit in this next phase, you’ll need the vision to see who will actually make money.”"

                        As Armstrong said, there is NO roadmap for the future.
                        There are lots of proposals to get money to the middle class so that they can survive to spend another day.
                        Universal basic income would just send out checks to everybody regardless of their present situation.
                        There is a proposal for the FED to just credit everybody'd account with $80,000 or so.
                        I suspect that the banks would like to see this situation resolved with banks still in the driver's seat.

                        5/06 Federal lending to insolvent pension plans is code for bailout – Real Clear Markets
                        There are just too many insolvent pension funds.
                        Trump Says 10% China Tariff Rising To 25% On Friday Another $325 Billion In Goods To Be Taxed
                        No more Mr. Nice Guy. MAGA,,,,over China's dead body.
                        5/06 Asia stocks fall on trade turmoil – CNBC MAGA
                        5/06 Chinese yuan tumbles as Donald Trump threatens trade tariffs – CNBC just a coincidence.

                        5/06 A banner year for crypto theft, raking in $1.2 billion – SafeHaven Crime has always paid.
                        Here is a very short-sighted article that is very well written, though inacurate.
                        5/06 Two U.S. warships sail in disputed South China Sea – Reuters
                        I'm sure that this will help with the trade negotiations.


                        • Recapitalization scuttled or no?

                          We are at a point where the bankers realize that the lower loop must be recapitalized. NOT like last time. TARP was money given to the bankers so that they could LEND it to us. Nobody was credit worthy. Didn't work.
                          This time, it will be free money to the lower loop. The upper loop already got their free money. Some flavor of MMT or UBI will be pushed out. The bankers are going to try to remain in the catbird seat,,, whatever that is. NO debt-money system can survive a shrinkage in new debt creation. The lower loop can't manage it so, for the moment, the State is growing the debt bubble. This has become more obviously, a short term fix.
                          As the State forces ZIRP and NIRP, it DOES reduce the cost of servicing State debt but, at the same time, it wipes out everything else.

                          MMT is the only thing that would allow the State to continue business as usual,,, the welfare state. BUT, there is another aspect.
                          If you search on,,, forced population reduction, it returns 182 million.
                          If you search on,,,Can't afford to have a child, it returns 133 million.

                          Japan shows the way when it comes to MMT to alleviate the demographic crash.
                          The mentality of having kids has definitely changed.
                          'Babies? An impossible dream': the millennials priced out of families
                          PSA: Millennials Feel Like Kids Because We Can't Afford To Be Adults
                          Why do people who can't afford kids make babies? - Quora
                          More women say they can't afford kids because of their student loans

                          So, what do the bankers have to say?
                          Why You Can't Afford To Hold Off On Having Kids - Forbes

                          Even the MGTOW movement is aimed at a reduction of population. The world is constantly hit by tainted vaccines.
                          So, the State and the bankers want more kids. Lots of other powers are working at reducing population.
                          Will the lower loop be recapitalized?
                          Will this recapitalization be scuttled to accomplish population reduction?


                          • The Iran show,,, the recession started last december

                            5/06 Bolton: US to deploy carrier, bombers to Middle East in Iran warning – CNBC
                            5/07 Four B-52 bombers deployed to deter “possible attack” by Iran – ZH

                            Just imagine what would happen if Iran were attacked. Iran says that it can close the Straights of Hormuz for months. CENTCOM says that they could open it in a few days.
                            In the last episode, the Suez canal was closed for 8 years All Iran has to do is fire on one tanker. Insurance rates will go so high that no oil will pass through. Iran has over 1/4 million heavy missiles. They say that they are attacked, they know exactly who to attack.
                            21 million barrels a day flow through Hormuz and Bab el-Mandab.
                            Iran could completely destroy Kharg island and cripple Saudi oil production for years.
                            In short, they could cut off oil to much of the world.
                            More than 100 million tons of oil are shipped each day by tankers.
                            I suppose that Pox Americana could attack Iran. When the first bomb hits, I'll be GONE.

                            5/06 Elon Musk owes $507 million to banks helping Tesla raise capital – Japan Today
                            5/07 Tesla may be about to lose a key group of investors – CNBC

                            Apparently, faith in renewables has been lost,

                            Here is a page of charts. Evidently, the recession started in December when The FED tightened.
                            5/07 US/China trade issues create shockwave around the globe – Technical Traders MAGA
                            The Daily Reckoning writes about the seriousness of the trade war. i expect it to all blow up.
                            5/07 Lyft reports large losses in Q1 2019 earnings – CNBC Losing money just like Uber.
                            5/07 Jeffrey Gundlach says the national debt is ‘totally out of control’ – CNBC
                            SOMEBODY has to feed the credit bubble.
                            Turkey may soon destabilize European banks.

                            5/07 EU slashes growth forecasts for Germany — again – CNBC
                            WAIT, Germany is the engine that pulls Europe.
                            Paul Craig Roberts goes into the details of a Debt Jubilee.
                            5/07 When Deutsche Bank’s crisis becomes our crisis – American Conservative
                            Their derviative book was bigger than the entire GDP of Germany.
                            Kunstler is just a ray of sunshine

                            "Making Sense of the $1.25 Trillion National Security State Budget
                            By William D. Hartung and Mandy Smithberger

                            In its latest budget request, the Trump administration is asking for a near-record $750 billion for the Pentagon and related defense activities, an astonishing figure by any measure. If passed by Congress, it will, in fact, be one of the largest military budgets in American history, "
                            The other side of the coin,,, this is a jobs program. It's not like we are going to pay off the debt.


                            • The debt merry-go-round is speeding up and, passengers will soon fly off

                              FED GOV is desperately trying to extend the good times until after the election. The plunge protection team Is hard at work to hold off defaults and, pump up what's left of the economy.
                              5/06 Federal lending to insolvent pension plans is code for bailout – Real Clear Markets
                              The problem is; there are just too many bubbles to keep all of them inflated.
                              Trump is full of hope that China and Asia blow up first. He wouldn't mind if Europe blew first also.

                              There are $bazillions in junk bonds. Same is true for junk loans to these same corporations.
                              "Called leveraged loans, these are loans made by banks to companies with weak balance sheets – defined as debt exceeding six times EBITDA, the broadest measure of cash flow.

                              The dynamic with leveraged loans is the same as with junk bonds (and margin debt, mortgages and car loans), which is to say the longer an economic expansion lasts, the more willing the markets are to fund the sketchier borrows in a given category. Which creates an unstable sector, which leads to a crisis as soon as the economy turns down, and so on. "
                              The financials are burdened by the necessity of making the bubble grow no matter how credit worthy the borrower is.
                              "In the Fed’s most recent report on potential sources of instability, leveraged loans earned a place of honor by clocking a 20% increase in the past year, combined with “rapid growth of less-regulated private credit and a weakening of underwriting standards.”"
                              Standards,,, we don't need no stinkin standards.

                              "As the following chart illustrates, outstanding leveraged loans have blown past their 2008 record highs and are now approaching twice that level. "
                              If junk bonds slip down a notch, the big funds must offload them. Corporations are loading up on new debt / loans to service old debt. They are most likely using the loans to pay dividends too.

                              "“Borrowing by businesses is historically high … with the most rapid increases in debt concentrated among the riskiest firms amid signs of deteriorating credit standards,” noted the Fed.

                              Soaring debt raises the vulnerability of corporations as a whole, especially when they’re running up against trade wars, disorderly Brexit negotiations, political turmoil in the US and slowing growth in Europe."
                              COME ON, november 2020.
                              "Experts without a sense of history (or, more frequently, with a desire to keep the profitable deals flowing) are quoted in the media touting this combination of high yields and low risk (a 2% default rate!) as an opportunity for pension funds and other yield-hungry buyers to generate outsized returns. The marks take the bait and the game continues. "
                              You can thank the PPT for the 2% default rate.

                              "Until a slowing economy or sector-specific problem bursts the bubble.

                              This perfectly describes junk bonds in the late 1980s and subprime mortgages in the 2000s, with one difference: Today’s leveraged loans occupy just one of maybe a dozen pockets of extreme and growing risk that’s mostly hidden from even professional investors. Sub-prime auto loans and the bonds in which they reside, student loans, emerging market dollar-denominated debt, peripheral eurozone country (read Italy and Spain) sovereign debt, tech stocks; the list just keeps going. When one of these goes several if not all of the rest will follow, in what promises to resemble a fire in a munitions factory."
                              No mention of China. Trump is chasing them around with a torch in his hand. No, not a flashlight.

                              "As for what might start the fire, an equities bear market and/or an inverted yield curve would do nicely. And it just so happens that the Dow is down 500+ points as this is being written"
                              So, just how long can the FED, PPT and ESF keep all the plates in the air?

                              They are trying to hold off national contagion while Trump is fostering international contagion and collapse. Drop one bomb on Iran and, it's game over.
                              Armstrong, "Trump wrote on Twitter over the weekend that tariffs on $200 billion in Chinese goods could rise to 25%. He said that a 25% tariff will soon be assigned to a selection of $325 billion in presently untaxed goods.

                              The tweet sent the Dow Jones Industrial Average down sharply while the yield on the 10-year Treasury note dropped to 2.48% as investors flocked to the government-backed safe-haven."
                              Yep, suck in all the money to safe inevstments in GOV.
                              Most of you know that Germany was financially raped by the Treat of Versailles. At THAT time, Keynes said that the treaty would lead to another war. Germany has a $1 trillion account surplus. The rest of the Eurozone has a $1 trillion deficit. Everybody wants to hitch up German productivity to pull the European cart. Germany was NEVER GIVEN a vote on joining the Eurozone.
                              Is it any surprise that Germany is looking to link up with Russia. German productivity linked to Russian raw materials is what the West fears most.


                              • Bond manipulation

                                I'll start with the easy stuff.
                                5/09 Scam coin?: single address behind 50% of bitcoin cash transactions – Zero Hedge
                                5/08 Hackers steal $41 million of bitcoin from Binance crypto exchange – Reuters

                                Gundlatch says that "The other takeaway from Gundlach's presentation is implicit, not explicit: this is not a good time to be holding equities,"
                                What do you expect from the bond king?
                                He goes on "Gundlach's basic argument is that the elevated level of debt in the U.S. economy--both government and corporate debt--makes the bond markets much more vulnerable than in any time in this expansion to heightened default risk"
                                So, both stocks and bonds are unsafe.

                                "Gundlach's analysis notes a steepening in the curve between yields for the 5-year U.S. Treasury note and the 30-year U.S. Treasury bond. What does that steepening tell us?"
                                ?We need more manipulation?
                                5/08 Brainard: Fed should consider targeting longer rates in a future downturn – Reuters
                                "As Gundlach well knows, the yield curve has always flattened (and eventually inverted) prior to U.S. recessions, and then steepened as the economy recovered from those recessions. But by looking at the 5-30 spread instead of the 2-10 spread, Gundlach has noted that the yield curve is already steepening,"
                                So, flatten that sucker and all will be well,,,,, in the garden.
                                "Japan has produced no real economic growth (ex-monetary factors) in the past 25 years and Europe's economy is currently a mess with an outlook for further slowing. "
                                MAYBE this is all tied to population growth and consumption. The upper loop would like to believe that they are independent of trifles like consumption.

                                Here is ONE paragraph from Armstrong that you must read over and over until you factor it into everything.

                                "The ostensible purpose of stimulus was and always is to benefit the economy. Following the passage of the Full Employment Act of 1978 stimulus became an every year phenomenon. There has never been a chance that government stimulus of an economy would be of benefit. Yet, Americans of every socioeconomic class have chosen to believe stimulus was good and necessary.

                                The two major ways stimulus destroys an economy are through preventing markets from clearing and by replacing price as the means of rationing goods and services. Economic intervention did not begin in 2008 with the financial crisis. Intervention has been ongoing since the Reagan administration. We have had right at 40 years of economic intervention. That means something other than price has been used to ration resources for 40 years. It also means the process of out with the old and in with the new has been displaced. A mis-allocation of resources is not visible to the eye but it is there."
                                We NEEDED all those wars.
                                Your Punishment For Believing Lies | Fantasy Free Economics

                                Hello Mr. Armstrong;
                                "Rome was fantastic!. I find it very interesting that you hold the conference on the dates when the markets hit their peak and I come back and Monday we start the decline that you cautioned us that we could see at the conference.
                                ANSWER: Yes, I do time the conferences around the cycles. That gives us something to talk about. They are simply points where the human emotions shift. This pull back is necessary for we are treading water (i.e. time) until the consolidation is complete in order to produce the next phase."

                                5/08 China defaults hit record in 2018. 2019 pace is triple that – Bloomberg MAGA, baby.
                                5/09 Does Venezuela merit nuclear war? – Newsmax who is STUPID enough to even consider this?
                                Here is a graph of the Shanghai Index.
                                Trump is stepping over dead bodies.

                                "Americans must realize that the solution to the puzzle is hiding in plain sight. Nationalism is back as a burning issue not because of modern demagoguery or ancient hatreds but because of the triumph of digital technology over everyday life.
                                Dehumanization Versus Self-Rule

                                In the United States and around the world, the digital age is forcing a new choice between two types of governance—one nationalist, the other imperial. While both carry risks, only one is compatible with constitutional government and the central claims of the Declaration of Independence."
                                Rense, Theresa May Faces Tory Ultimatum: Pick Your Resignation Date Or We Will