Economic pressures

[Danny B]

Deflation and comparison to GD I

"The world has finally woken up to the possibility of a Japan-style deflation in Europe -- years after the writing was already on the wall."
Europe: The ONE Economic Comparison That Must Not Be Named... Was Just Named | Elliott Wave International | Safehaven.com

Comparison graphs; http://images.newsmax.com/email/parallel.jpg
Economists Caution: Prepare for 'Massive Wealth Destruction'

[Danny B]

Deflation and the Ice Age

While everyone knows that fracking is a short-lived plan, it is better than no plan at all. America is posed to surpass Saudi Arabia at oil volume. This is very good news.
The U.S. dollar has had great stability for many years. Many States and banks have issued loans in foreign countries that are denominated in U.S. dollars. Most of the world is printing currency with wild abandon. The FED has been the laggard of the group. We encouraged the world to print til all the trees were gone. The Rest Of the World needs lots of dollars to service dollar denominated debt. While the FED is doing stealth QE, it is still printing less than other States.
The R.O.W. is starved for dollars to service loans.
Deflation is defined as a diminishment of the currency AND credit supply. Japan has been in deflation for many years. Europe will follow.

"Investors are beginning to realise that contrary to their confident actions and assurances, the Fed and the ECB have failed to prevent a dreaded replay of Japan’s deflationary template a decade earlier in the West. "
"The Japanese yen goes into freefall. China’s fragile economy tips over the edge. A wave of profit-crushing deflation comes washing over the U.S. and Europe. Investors panic."
"That’s the view of perennial pessimist Albert Edwards. The London-based analyst and his team at investment bank Societe Generale SA have been ranked No. 1 for global strategy in surveys by Thomson Reuters Extel every year since 2007"
"Another associated element of the Ice Age we also saw in Japan is that with each cyclical upturn, equity investors have assumed with child-like innocence, that central banks have somehow ‘fixed’ the problem and we were back in a self-sustaining recovery. Those hopes would only be crushed as the next cyclical downturn took inflation, bond yields and equity valuations to new destructive lows. In the Ice Age, hope is the biggest enemy."

"Down the line, the insane debt levels all around the globe will do in everyone. That goes for, in order of appearance, Japan, Europe, China and the USA. An order that can still be shaken up by various kinds of unrest and other black swans."
"“The whole notion of devaluing the currency has been a bad policy,” Robert Sinche, a global strategist at Pierpont Securities, said."
Yup, and we got everybody to do just that.
The US Dollar Is About To Inflict Carnage All Around The Planet - The Automatic Earth

We will have deflation because there will be less money to go around. As manufacturers face lower volume, they will raise prices to maintain profitability. Energy is the master resource. If energy prices rise, many other prices will rise even though we are in deflation. The fact that America is pumping a lot of oil should help keep oil prices down somewhat. The oil producers are allowed to export refined products but, not crude oil.
Since solar power is making great inroads into profitability for electric utilities, they are raising electricity prices. They are cutting back on maintenance of transmission lines.

The FED printed $ trillions to offset the $trillions not available from banks. There will come a point where they can no longer do this. There is also the problem that so few people are credit worthy. There is no demand for bank credit.
We will go into massive deflation and the economy will freeze up because credit and credit-worthiness have frozen up.

[Danny B]

Keynes and Hayek

John Maynard Keynes thought up up and wrote about his ideas for an economic system. Bankers, bureaucrats and beggars, being non-producers thought his system great. In a free-market system, the producers receive the profits for their labors. With a Keynesian system, the proceeds are distributed to everyone based on their needs. WHO decides who gets how much?
Well, power corrupts and the most sociopathic person usually rises to the top of control. That is usually the person with the most tolerance for collateral damage. So, there is generally a psychopath or sociopath running the show.
Bill Clinton comes to mind; THE CLINTON BODY-COUNT
Democracy is a thing of the past. Here is a short quote on that subject.
"A consultation over the summer on the trespass law found that 99% of the 40,000 people who responded objected to the changes. But government officials said they would go ahead with the law change, as “no issues have been identified".....

Collectivism requires that something other than the free-market makes the decisions as far as distribution. The small problem is that collectivism is a distribution system and NOT a production system.
Hayek wrote several articles and books ripping the Keynesian system.
"Another way of expressing this is that, in Hayek's view, the unique characteristic of an advanced civilization is that no one mind (or group of minds) controls or directs it."
"The complexity of social and economic activity will make it impossible for any individual to master the information necessary to coordinating the members of the group. "
"The very complexity that makes it impossible to know all the information required to guide society, Hayek reasoned, makes it equally impossible to judge the "justice" or "worthiness" of an individual's total actions. As a result, the popular call for "social," or "distributive," justice is inapplicable in a free society."
"To attempt to distribute income shares by "deservedness" would require the government to establish some overarching standard for disbursing "social justice," and would necessitate an economic system in which that government had the authority and the power to investigate, measure and judge each person's "right" to a share of the society's wealth." - See more at: The Daily Bell - F. A. Hayek and the Nobel Prize
Socialism might sound like a good idea,, to some. BUT, it demands a command economy,,,, run by psychopaths.
The "Fair Share Law" https://www.youtube.com/watch?v=KR3MgIPxb38

Since we can't currently pay all the money that the non-producers require, they will need the wages of our children to maintain their lifestyle. https://www.youtube.com/watch?v=MqoGORXAv2o

[Danny B]

GOV buying up everything

The FED has been buying mortgage backed securities to support real estate. The FED has been buying treasury bonds to hold down interest rates and support FED GOV. The Plunge Protection Team has been buying equities by the $ billions. Plunge Protection Team (PPT) Definition | Investopedia
The FED has backed student loans and goosed them up to over a $ trillion. The FED is now backing car loans so that dealers don't ask any stupid questions like,,,, do you have any income?
The FED is pumping so much money into stock markets that NOBODY has any idea of accurate valuation.
102 million Americans no longer in the work force. Consumption is crashed and yet, stocks are rising. They are rising because so much wet-ink money is being forced into the markets. The Imminent Demise Of The American Economy - The Automatic Earth
Japan is like the corpse in "Weekend at Bernies II" They keep pumping in blood to re-animate the corpse. Italy is hopeless. France is tragic.

You work to obtain currency. Many of the non-producers just print it and mix it with the currency you had to work for. As many millions stop working, the non-producers had to put the printing presses into overdrive.
The bankers and bureaucrats would like to believe that the system can operate just on currency without any actual wealth. It doesn't work that way in the long run.

[Danny B]

Triffin's delema and the eventual collapse

America has the reserve currency.. De Gaulle called this an "exorbitant privilege". Robert Triffin suggested that the reserve currency status was a trap. He suggested that; as countries became more wealthy, they would demand more and more of the reserve currency. How The Triffin Dilemma Affects Currencies
Hugo Salinas Price wrote that America didn't need industry because it could just print money to buy what it wanted. It looks like all of this is true.
I found an EXCELLENT article explaining most every facet.

The bankers pushed us out of gold convertibility to make a massive killing with inflation but, "Keynes recognized that once the reserve currency was no longer constrained by gold convertibility, the world needed an alternative way to prevent destabilizing imbalances from developing."
"The Journal of Post Keynesian Economics (“Systemic equilibrium in a Bretton Woods II-type international monetary system”) which explains why currency war is really a battle over where to assign excess savings, and must lead to unemployment in the country whose assets are most assiduously collected by central banks. "
That would be America

"The mechanics of the reserve currency system preempt these funds’ ready availability for “the maintenance of industry.” The mechanics of the dollar as a reserve asset, therefore, finance bigger government while insidiously preempting productivity, jobs, and equitable prosperity."
That would be America
"Once the world went off gold, it cannot be a surprise that it lost the discipline imposed by gold. Keynes tried but failed to create an alternative form of discipline, but one way or the other it must be re-established."
The whole system is severely destabilized. Only gold can bring a return of discipline.
Are We Starting to See Why Its Really the Exorbitant “Burden� | Michael Pettis | FINANCIAL SENSE

[Danny B]

Gold and interest rates

Larry Summers paper in 1988 with Barsky re. Gibson's Paradox found that rising rising interest rates associated with rising gold prices - Summers had awareness of inter-relationship of gold and interest rates

http://www.nowandfutures.com/downloa...ard_gibson.pdf
4. TBTF banks are levered 15:1 and will not allow organized write-down of outstanding debt as writing-down their assets by more than 6.7% would result in bankruptcy of the TBTF banks that control the economic and monetary system and central banks.
15---1 is optimistic
Fix Gold, Collapse the World | David Jensen | Safehaven.com

The monetary authorities of the world are parasites. You can't really blame them for trying the same failed policies over and over.
"The IMF finally had a "duh" moment in what should have been obvious years ago. The IMF finally realizes that almost zero borrowing costs has encouraged speculation rather than a hoped-for pick up in investment."

Read more at Mish's Global Economic Trend Analysis: IMF Warns of Financial Crisis, Admits Low Interest Rates Spurred Asset Speculation Not Investment
Where the Money Went

Junk bond speculation
Stock market speculation
Stock market buybacks at ludicrous prices
Robots in lieu of hiring
Free profit for banks thanks to interest on "excess reserves"
Private equity firms buying up houses
In Europe, banks loaded up on their own allegedly risk-free bonds
In China, property bubbles and profitless SOEs


Where the Money Didn't Go

Higher wages
Infrastructure
Investment

[Danny B]

Keynesian failure

We are cursed with the Keynesian economic system because it shifts the greatest power to the non-producers. They are ALWAYS in favor of collectivism.
The collectivists can't defend their position so, "An ethical person - like a politician, banker or lawyer - may know right from wrong, but unlike many of them, a moral person lives it. "Marx and Engels never tried to refute their opponents with argument. They insulted, ridiculed, derided, slandered, and traduced them, and in their use of these methods their followers are not less expert. Their polemic is directed never against the argument of the opponent, but always against his person."
"Professor Jeff Herbener takes on the best-selling economics textbook of all time from an Austrian, free-market perspective"
https://www.youtube.com/watch?v=os8iV4_76TI
Financial and regulatory capture of academia ensures that academia continues to repeat the necessary lies.

[Danny B]

Employment, robots and consumption

Germany, historically never had a minimum wage. Germany, historically had high employment. Germany recently instituted a minimum wage. Germany recently had a spike in unemployment. Here is a chart showing Euro area wages compared to Chinese wages. http://www.bls.gov/ILC/chinachart2.png
Manufacturing is the primary value-added industry. Capital flows to low-wage workforces to pay back the greatest return. The high-wage worker must work harder and harder to compete.
This graph is titled, "American manufacturing renaissance" http://www.contrarianprofits.com/wp-...Employment.jpg
Obviously, it does not show a renaissance in wages.

Here is a graph of Chinese graduates, http://si.wsj.net/public/resources/i...0821160908.jpg
Here is a graph of their unemployment rates. http://fm.cnbc.com/applications/cnbc...IGI%20EDU3.jpg
A general comparison of America and China; China v the US: how the superpowers compare | News | theguardian.com
Part of this is, of course, a big lie. American GDP is negative. Money created out of thin air is counted as GDP. In the case of GOV, it is counted once when it is printed and once again when it is spent. American GDP is about negative 6%.
Employment flows to the lowest wage producer,,, often, a robot. "According to a translated page from the Chinese site Techweb, each robot costs between $20,000 to $25,000, which is over three times the average salary of one worker."
Workers are now in open competition with robots for jobs. https://chinadigitaltimes.net/2014/1...-hp-order-cut/

"Last year, there were 21 robots for every 10,000 workers in China, compared with a global average of 55. Japan has 339 robots for every 10,000 workers; Germany has 251."

Read more: China Is Buying Robots Like There's No Tomorrow - Business Insider
Germany and Japan both have a shrinking population. "Germany already welcomes anywhere from 100,000 to 200,000 immigrants every year, but the German population is shrinking anyway"
As the demographic crash gets worse, there are fewer and fewer workers to support the elderly non-workers. The workers are replaced by robots.
Robots don't contribute to the tax base nor, do they consume.
As the world slides toward lower and lower wages and lower and lower worker participation rates, there is less and less consumptive power.
Keynesian economics demands an endless growth is consumption and credit.

"With few high paying jobs, there will be less people able to buy goods. Sure, a few robotics corporations and software companies will create a new generation of trillionaires, but the number of consumers with middle class purchasing power will diminish. People will sense that purchasing power is dropping and consumer confidence will also decrease. Eventually all the wealth will be consolidated in a relative few, but with no one to sell to, those wealthy will struggle as the economy continues to wither."

"Ford speaks of ‘recapturing wages’ by imposing capital/labor taxes on industries as they automate, and value added taxes to goods as they become cheaper. These taxes should not be large enough to discourage automation, but they could (Ford proposes) provide revenue for a new kind of job.

Ford’s ‘virtual jobs’ are incentivised programs that would reward people for pursuits such as education, civic service, journalism, and environmental responsibility. These jobs would be paid for by the state through the revenue gained through recaptured wages. "
Martin Ford Asks: Will Automation Lead to Economic Collapse? | Singularity Hub

The CFR proposed that every American household be sent a check for ? $ 80,000. Employment has crashed for everyone but the lowest paid workers. The proposal is an acknowledgement that the situation is not going to get any better.

[Danny B]

Every Euro that goes into energy consumption is a Euro that doesn't go into other segments of the economy. Here is a graph of carbon energy production; http://crudeoilpeak.info/wp-content/...01_Oct2013.jpg
Here is a graph of GDP; http://www.globalwood.org/market/tim...3/aaw20405.jpg
Europe can't compete with low-wage producers. Super Mario Draghi seems to believe that he can print his way to prosperity. This didn't work for Shinzano Abe and it won't work for super Mario.
"Of course, the most important issue that is not being discussed by the WSJ, or economists anywhere for that matter, is that Abenomics, whether in Japan or Europe, is merely applying more of the same policies that resulted in a worldwide financial crisis in the first place."
"What should happen, is what we have advocated from the start: a fresh start liquidation of the massive debt overhang. That, however, will not happen in the current system as a global debt restructuring would also wipe out the equity tranche, those trillions of the legacy “uber-wealth” class.

Which means there are just two options for the world’s (central) bankers: hyperinflation, i.e. helicopter money, and war. Both are getting closer with every passing day."
After Abenomics Failed In Japan, It Is About To Be Tried In Europe | ETF DAILY NEWS - Part 2
There is a third option. INVOLUNTARY debt restructuring.

[Danny B]

Falling price of oil

As you all know, oil prices are falling hard. This isn't the first time. As you all know, the Wolfowitz doctrine demands that America have no competitors.

"From a March 2009 Stanford University working paper:

The timeline of the collapse of the Soviet Union can be traced to September 13, 1985. On this date, Sheikh Ahmed Zaki Yamani, the minister of oil of Saudi Arabia, declared that the monarchy had decided to alter its oil policy radically. The Saudis stopped protecting oil prices, and Saudi Arabia regained is share in the world market. During the next six months, oil production in Saudi Arabia increased fourfold while oil prices in collapsed by approximately the same amount in real terms. As a result, the Soviet Union lost approximately $20 billion per year, money without which the country simply could not survive.

World oil prices collapsed from $76 per barrel in 1982 to $20 a barrel in 1986. Desperate for hard currency, and to cover its growing trade deficit, the Soviet Union increased its debt burden considerably. It finally ran out of loan prospects from commercial banks abroad. The head of the State Planning Committee, Yuri Maslyukov, warned that the situation would lead the system to collapse."
Are Falling Oil Prices a US Weapon to Defeat Iran, Russia and ISIS? » Plan B Economics

Well, it's happening again; http://www.zerohedge.com/news/2014-1...on-hits-europe
America is trying to attack Russia by economic means. Russia is at the center of the anti-dollar group. Russia must be attacked. Same for Iran.
American shale oil producers will be ruined too. Reportedly the shale producers have a $ 500 billion loss,,, so far. Imagine throwing a Molotov cocktail on your own boots.

[Danny B]

No more funny money to pay for imports

The Industrial Revolution created enormous wealth that had to be stored. Previously, it had been stored in gold. The bankers successfully pushed gold to the background so that they could push their paper.... in the West. They couldn't fool the older cultures in the East so easily. Because of Bretton Woods, the U. S. dollar became the reserve currency. Most States bought dollar instruments as savings. Since there was a constant demand for dollars as wealth storage, America was able to print dollars to pay for imports. We didn't need to produce, we could just print.
Power corrupts and corrupt Americans gave the world quite a thrashing. Foreigners quit buying long bonds from the U.S. Treasury. Consequently. America needs to rollover about $ 7 trillion every year of short bonds.

The FED is buying about 80% of new issuance. OK, so the FED keeps things rolling along,,, after a fashion. The criminals in the District of Corruption are doing a LOT of damage around the world. The R.O.W. has had enough. We owe them a LOT of money and they are ready to cut their losses. They hope to stop accepting any U.S. paper for their exports.
They plan to cut us off from their exports unless we pay in gold. America is only 4% of the world population. I suspect that the R.O.W. can get along without us. https://www.youtube.com/watch?v=dWvAx-mrngA

Saudi seems to have lowered their oil price to crash U.S. oil producers. It won't be very hard to do. Then, we will NEED to import lots of oil. I guess we will have to pry open FT. Knox and start sending the gold to the oil producers.
The guy who is in charge of gold security at Ft. Knox said that he is quite sure that all the gold is there. He put a very special tape on the door and,,, it is still there.
It seems that others are worried about a collapse;
“Very interestingly BIS (Bank of International Settlements) about a month ago issued a warning of systemic risk. They said that the system is getting dangerously close to collapse. A few weeks later the IMF issued a similar one. And then last week G-20 finance ministers meeting at Australia issued a warning. What was the last time you saw the three most powerful multilateral financial bodies BIS, IMF and G-20 issued warnings. I have never seen it before. They are telling you it is going to collapse. "
Hey, maybe they are all wrong. The End of Life As We Know It - Ready or Not
The economy collapsed in 2008. It was given a TEMPORARY reprieve. It is in FAR worse shape now. Are You Ready For Round Two Of The Financial Crisis? | Gold Eagle
A little ebola thrown into the mix will make it even more interesting;
An Ebola Outbreak Would Be Advantageous For Globalists

[Danny B]

A new week with new warnings

BUY STOCKS ! GET RICH ! ENSURE YOUR RETIREMENT ! That is the story that Wall St. has pushed historically. There is another side to this. Wall St. takes 2/3 of your 401k. PBS Drops Another Bombshell: Wall Street Is Gobbling Up Two-Thirds of Your 401(k)
They charge fees until the cows come home. If there aren't enough legitimate fees, they "churn" things to generate more fees. Lawsuit Stunner: Half of Futures Trades in Chicago Are Illegal Wash Trades
Yields have gone negative on all bonds up to the 3 year. Investors claim that when they go negative on the 4 years note, it will all be over. http://www.zerohedge.com/sites/defau...1015_tape3.jpg Hellifiknow. Everything from the 2 year to the 30 year are crashing. http://www.zerohedge.com/news/2014-1...r-tantrum-lows

The B.I.S. has come out with another warning. BIS warns on 'violent' reversal of global markets - Telegraph
AEP says that the central bankers can NEVER stop printing new money. World economy so damaged it may need permanent QE - Telegraph
Our deflationary crash is getting worse. This vid has a pretty clear explanation. https://www.youtube.com/watch?v=b3-vwYJiD8g
In the vid, the author claims that as deflation gets worse, the CBs will unleash an enormous torrent of new money and create hyperinflation. Dunno. The FED already created about $ 27 trillion. They weren't able to get much in the way of general inflation. They inflated the stock market but, even that is dropping. 68% of stocks are below their 200 day moving average.

The FDIC recently held a big meting with the FED and Treasury, et al to discuss what to do if a too big to fail bank actually failed.
Soros sold all his stocks in CITI, J.P. Morgan and B of A. George Soros Tells America To Take Their Money Out of the Banks Before It Is too Late | Dave Hodges – The Common Sense Show
Consumption is falling. The slowdown in sales of crude oil has prompted Saudi Arabia to lower prices. That will very quickly threaten the profits of the U.S. Frackers. Oil Bear Market to Eviscerate the American Fracking Boom? | Wolf Street Just another day in a volatile economy.

[Danny B]

The FED vs the Euro

There are so many variables and long term effects that it is very hard to get a clear picture.
On July 11, 1971, the British ambassador notified the U.S. treasurer that Britain was going to drop in and pick up about 3400 tons of U.S. gold,,, they didn't want our paper any more. On July 15, 1971, Nixon closed the gold window. Documents 158 through 174
The London bankers made sure that Nixon got the boot.

This one event was the major event of the post-war era. This one event was what prompted Ron Paul to go into politics. It also cause the smart financial people to have heart attacks. They knew that inflation and war would be the result. They knew that the U.S. dollar would crash as ALL fiat currencies had crashed. They got their heads together and designed the Euro currency. It needed time to be introduced and accepted. They went ahead and introduced a currency union without having a political union. This had always failed previously but, they were desperate and running out of time. The Euro had a floating gold backing and they hoped that it would be good enough when the dollar failed.
The Europeans, et al bought stinky U.S. debt to try to support the system until an alternative currency could be introduced and accepted.
Neither the FED nor the dollar intended to go quietly into the night. Several Goldman Sachs people were positioned to run various European CBs. As in Greece, they hid away excess debt until it blew the system. The FED was at war with the Euro. The U.S. dollar has infested the European system. They have hundreds of $ billions of dollar-denominated debt. The need dollars from the FED. The FED will pick a time to pull out the rug.

Reportedly, the original plan was to let the FED and the dollar die a natural death and have the SDR from the IMF replace it. That is what Jim Rickards is pushing. But, there is a new player who wants in on the action. It is the BRICS development bank. The "S" is for South Africa. 50% of the gold in the world has been taken out of the Witwatersrand area. The BRICS development bank wants to move back to gold rather than the SDR.
It is possible that the BRICS are playing along with the IMF and BIS until they get established. I found a comprehensive article on the subject.
Mainstream globalist propaganda reveals East/West conflict is a farce (Update 1) | RedefiningGod.com
If Germany aligns with the BRICS, the rest of Europe will join in. Europe needs dollars but, they aren't going to freeze all winter to get them.

The FED is trying to buy time to continue the obliteration of every country in the Middle-East who might possibly contest with israel. The sooner the FED collapses, the sooner the fighting will stop.

[Danny B]

$ 80 oil

Hmmm, this is a surprise, " Saudi officials have been signalling that they are prepared to see prices sink to as low as $80 per barrel at least for a year or two" Here is a graph of the break even price of oil for various states; http://static.guim.co.uk/ni/14133914...prices_WEB.svg
1--2 years of $ 80 oil will collapse the economies of several States. Recession in Russia, revolt in Venezuela? The knock-on effects of tumbling oil prices | World news | The Guardian
"President Vladimir Putin said Friday that world economy will collapse if oil prices remain at $80 per barrel."
Putin: Global Economy Will Collapse if Oil Prices Remain at $80 per Barrel | World | RIA Novosti

A good graph on income growth; http://www.rense.com/general96/Rense..._m303538cc.png
Keynesianism In Three Charts The middle class is still slip-sliding away.

[Danny B]

HFT and circuit breakers

The stock market is expected to have a major correction before too long. GOV is propping it up but, that can't go on forever.
Zero Hedge;
1) Corporate debt is back to 2007 PEAK levels.

2) Stock buybacks are back to 2007 PEAK levels.

3) Investor bullishness is back to 2007 PEAK levels.

4) Margin debt (money borrowed to buy stocks) is at 2007 PEAK levels.

As more and more trading is done by computers, volatility has risen. The SEC has mandated "circuit breakers". Pretty interesting. http://www.cnbc.com/id/44059883
All this trading is far too fast for humans; "E-Mini S&P 500 down approximately 3% in just four minutes from the beginning of 2:41 pm through the end of 2:44 pm."
"Between 2:45:13 and 2:45:27, HFTs traded over 27,000 contracts, which accounted for about 49 percent of the total trading volume"
"At 2:45:28 pm, trading on the E-Mini was paused for five seconds"
"When trading resumed at 2:45:33 pm, prices stabilized and shortly thereafter, the E-Mini began to recover,"
2010 Flash Crash - Wikipedia, the free encyclopedia