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  • Danny B
    All the arguments against MMT

    That disappeared article has made a reappearance.

    "While adherents strenuously profess that MMT is subtler and more complex than this, its main selling point is that governments need not tax or borrow in order to spend — they can just create money out of thin air. A few computer keystrokes and everyone gets health insurance, student debt disappears, and we can save the climate too, without all that messy class conflict."
    "As Wray put it, “The government does not ‘need’ the ‘public’s money’ in order to spend; rather the public needs the ‘government’s money’ in order to pay taxes. Once this is understood, it becomes clear that neither taxes nor government bonds ‘finance’ government spending.”
    "Kelton’s paper foreshadowed what would become a trademark of MMT writing: detailed accounting exercises designed to show what happens, mechanically speaking, when the government spends money. These are mobilized to ask “why should the government take from the private sector the money . . . that it alone is capable of creating? "
    Sorry, the vast majority of liquidity is created by financial institutions. Only recently, has The FED balance sheet bloated up into the $ trillions.

    " Indeed, the entire process of taxing and spending must, as a matter of logic, have begun with the government first creating (and spending) new government money.” Government is as a God, giving economic life through spending: until it spends, we have no money. "
    Nope, it's private institutions.
    "Absent from Kelton’s paper, Wray’s book, and much of the subsequent MMT literature, is any sense of what money means in the private economy, where workers labor and capitalists profit from their toil and compete with each other to maximize that profit, a complex network of social relations mediated by money."
    This may all be true but, those who rent their money add nothing to productivity.

    "Knapp argues that the state names the currency by law, and by the practice of only accepting tax payments denominated in that currency. This doctrine, known as chartalism, is in one sense incontrovertible; states feel very strongly about their currency and punish people who counterfeit it. You must pay taxes in the official currency or you will go to jail. No modern country not in crisis would tolerate multiple currencies circulating in its borders "
    "The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for a national government"
    "That brings us to the next problem: inflation. When the printing presses run freely, it’s not only reactionaries who think that runs the risk of spiraling prices. As I was researching this piece, many people to whom I described MMT, from Democrats to Marxists, brought it up as a worry. MMTers are coy about the topic"
    Inflation is where the great debate takes off. Zimbabwe inflated the snot out of their currency to pay GOVERNMENT WORKERS.

    "The standard view of the Weimer inflation is that the German economy, severely damaged by World War I and forced to make huge reparations payments to the victors, wasn’t up to the task — it just didn’t have the productive capacity, and its citizens were both unwilling and unable to pay the necessary taxes. So instead the government just printed money and spent it"
    The external drain mandated by the agreement dictated at Versailles. Once agian, State drain.
    "government just printed money and spent it, not only to pay its own bills, but to support bank lending to the private sector"
    STRAIGHT to the upper loop.
    "Wray’s explanation of the Weimar hyperinflation, one of the most dazzling of all time, is odd. The deficits, Wray explained in his book, were caused by the inflation, not the other way around."
    Yep, money sent to the upper loop.
    " Endogenous money theorists, in contrast, believe that money creation is driven by demand for credit coming from private actors, like businesses and consumers. "
    When crashing wages crashed demand in the private sector, the State took over borrowing to save the banks.
    "In normal times, the central bank injects enough money into the system to keep the wheels of commerce spinning, but it’s not what generates the spin. The work of production and distribution does that."
    The FED's balance sheet has always been tiny . It is the private banks that "inject" money into the economy.
    “Now that we all agree that government expenditure can maintain employment we should argue about what the expenditure should be for.”
    WAR, of course. What a stupid question.

    MMT "Keystrokes will save the Earth! Except they won’t. We need a wholesale revamping of our energy and transportation systems, the spatial organization of our cities, and the fundamental processes of industrial and agricultural production. To do that, we need to step on private capital’s freedom of investment, which strikes at the heart of ruling-class power."
    No mention that war is most profitable.
    "AOC’s defenders quickly noted, correctly (as she herself had earlier), that no one asks that question when it comes to funding the Pentagon"

    'Acritical part of the MMT agenda is a job guarantee (JG), a policy under which the federal government becomes the employer of last resort (ELR). Unlike MMT’s monetary theorizing, the JG has nothing to do with the school’s core chartalist concept, and it deals directly with a crucial aspect of the real economy, namely the labor market. With a JG, the chronically unemployed could find decent work, and the temporarily unemployed would be accommodated until they find permanent work."
    They will NOT find decent work.
    "At recent levels of US unemployment, Tcherneva estimates 10–15 million people could be employed in a JG program"

    "These disruptions would all be good for the working class, but to the bosses they’d look like quasi-revolutionary acts. When I interviewed Kshama Sawant, the socialist member of the Seattle city council who put a $15 minimum wage at the core of her agenda, in 2015, I asked her how she dealt with how system-challenging it was; she didn’t retreat. She said it was “an all-out class battle” — and if the system can’t pay, which it has a very hard time doing, that becomes a tool for showing that system is bad. "
    Yep, the system is BAD. There is just no solution for growing automation.
    "And if we had a political movement strong enough to force full-employment policies on the state, then why stop with a mere JG"
    These people toss around words like "job guarantee" like a stroke of the pen will create jobs. It will never happen.

    "If you ask, “Do you really believe the government doesn’t need to tax or borrow to spend,” which is something they frequently do argue, they’ll deny it. When questioned by a sympathetic Ryan Grim of the Intercept about what happens when the government spends without taxing or borrowing (something the United States never does, but bracket that for now), Kelton says it depends on who gets the money"
    if it goes, once again, to the upper loop, it will just bring more price inflation.
    "If rich people get it, they’d probably save it. If poor people get it, “they’d spend it into the economy.”
    Lula tried this in Brazil and, it worked very well.

    "Or is it that we shouldn’t worry about deficits at all? Kelton, asked about the Trump tax cuts, said she was ready for Tax Cuts 2.0. So, should we then not worry about the rising ratio of federal debt to GDP that comes with big deficits, and the increased share of spending devoted to debt service (which is a gift to bondholders, who are mostly quite rich)? Will there never be a point at which even the US government might find it hard to float new bonds to pay off the old ones and finance fresh spending? "
    There is NO ratio of federal debt to GDP. The new liquidity is created ex nihilo.
    " Debt, as the late sociologist James O’Connor said, increases capital’s power over the state: a government that is not pursuing market-friendly policies will find it hard to get a loan. Is that not a concern? Could we solve that problem by just Debt, as the late sociologist James O’Connor said, increases capital’s power over the state: a government that is not pursuing market-friendly policies will find it hard to get a loan. Is that not a concern? Could we solve that problem by just having the Fed buy the bonds? Aside from the fact that that’s technically illegal, isn’t it a few steps down the road to Weimar? At what point would debt become worrisome? As with inflation, MMTers just never say. Aside from the fact that that’s technically illegal, isn’t it a few steps down the road to Weimar? At what point would debt become worrisome? As with inflation, MMTers just never say."
    just having the Fed buy the bonds? NO FED and NO bonds
    As far as inflation, does the money go to the upper loop OR , does it go to the consumptive loop?

    "Congress can pass any budget it chooses, and our government already pays for everything by creating new money.” But the government doesn’t do that. It spends only money gotten from tax revenues or bond sales."
    "the government cannot spend via keystrokes money created out of thin air."
    when public pensions crash, you will hear a whole new story.
    "The major problems at the fiscal level are what we spend money on and what we don’t. If anything, we’re closer to terminal now than we were fifty years ago, when Martin Luther King Jr said, “a nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.”

    "More broadly, we have a private economy driven by exploitation, overwork, asset stripping, and ecological destruction. MMT has little or nothing on offer to fight any of this. The job guarantee is a contribution, though a flawed one, and it’s not at the core of the theory, which proceeds from the keystroke fantasy. That fantasy looks like a weak response to decades of anti-tax mania coming from the Right, which has left many liberals looking for an easy way out. It would be sad to see the socialist left, which looks stronger than it has in decades, fall for this snake oil. It’s a phantasm, a late-imperial fever dream, not a serious economic policy."

    OK, there you have it. A long, detailed authoritarian analysis showing that MMT is bunk. We can not let the Treasury create money as needed for the producing economy. We must continue to pay the bankers 1/2 trillion a year to use our own money. We must spend a $1 trillion plus for wars everywhere.
    " asset stripping and ecological destruction. MMT has little or nothing on offer to fight any of this."
    Not true. The ecological destruction is due in large part to an effort to liquidate tangibles to support enormously bloated credit schemes. Cut down all the Redwoods so that you have tangible collateral that you can leverage to do a hostile takeover of a company that you plan to asset strip. Sears is a prime example.
    The arguments against MMT are loaded with lies and ignorance. They keep using words like debt and deficit. Nothing of the sort would be created. THAT is very worrying to those who rent their money. It certainly isn't perfect. Crony capitalism has brought us to the brink of destruction . NOTHING other than MMT can hold back the pension crisis until the time when the elderly can die a natural death.
    In Weimar Germany, the elderly were wiped out by price inflation. They would take their life savings and buy a great meal. Then, they would turn on the gas and go to sleep.

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  • Danny B
    inflate to survive,,,MMT to the rescue,,,falling consumption

    China tried to crash the party. They industrialized in record time. They had to print more that all the other CBs combined.
    Here is a long technical paper showing that they can't stop printing. China created a fake economy that can never stand on it's own. Their greatest fear, DEFLATION.
    "Behind everything is the same thing. Keynes was right. Inflation is one monetary evil, but its twin is far, far worse. At least with inflation things are moving, Chinese peasants are progressed up into the middle class even if it is more expensive when they get there."

    "Deflation, however, is when everything stops; Dante’s Hell was freezing cold. It doesn’t have to be all at once like in the early thirties, this can be a prolonged affair dragging out across more years than anyone cares to remember. The frog isn’t being slowly boiled, it is being progressively frozen. It is now almost completely frigid, too cold to be able to leap out of the icy water. Stuck here without any other options, it must conserve its energy as best it can and hope that it can somehow survive.

    If given a choice, you pick the heat of high inflation over this every day of the week; until you realize it isn’t your choice. It never really was."
    Great graph, https://zh-prod-1cc738ca-7d3b-4a72-b...?itok=1nTmYMnr

    Armstrong, "We are all connected. There is no possible way for any country to move counter-trend to the whole. The European Central Bank and the Bank of Japan have destroyed their bond markets. Their stupid idea of Quantitative Easing and lowering rates to zero and negative was under their theory that people would borrow if it was cheap enough. Over the years, I have received calls from banks asking me if I wanted to borrow money. They call because we run high cash balances and have no debt. They always want to lend money to people who do not need it,"
    "But I am talking about borrowing to expand or buy some business. That is what the Central Banks failed to grasp. If there is no CONFIDENCE in the future, you will not borrow at any rate."
    Not completely true. U.S. consumer debt is about $13 trillion. Plenty of people have no plan to pay off their debts.
    "As far as the US Federal Reserve, its holding of federal debt is under 20% of the $22 trillion and 30% of the debt is held by foreign governments with 28% held by interagency. The US could not be saved if the Fed tore up its bonds. It is not enough."
    "The pension funds are also linked to government debt. Defaulting on government debt would wipe out all pension funds. The interconnectivity is not considered by so many who summarily assume we can just tear it all up."
    That's where MMT comes in.

    "They will raise taxes dramatically trying to survive. But governments cannot avoid their collapse for nobody is willing to step up and take decisions for the long-term.
    Do not worry, I am sure that when the time comes, the Dems and Reps will work together very closely to bring it all under control.

    The bond market is the big kahuna, not the stock market. GOV pushes everybody to focus on the stock market because it is more easily manipulated. Capitalization of the stock market is $40 trillion but, nobody seems to be nervous.
    BUT, the stock market eventually depends on consumption. Earnings have been heavily falsified by buybacks but, eventually earnings must fall in accordance with consumption. Consumer debt is about $13 trillion but, even the deadbeats are maxxed out.
    Rising interest rates are wiping out consumption.

    Leave a comment:

  • Danny B
    Production there,,, consumption here

    I planned to write extensively about the article from Jacobin magazine.
    I can't seem to access it now.
    I read a lot of writers who seem to get so many things wrong. They look at facts, figures and graphs. It seems that the view from the ivory tower or the penthouse or Statehouse misses a lot of components.
    Most of the poverty in the world is due to the fact that different nations entered the Industrial Revolution at different times. Everybody wants modern conveniences but, an underdeveloped country must sell natural resources and / or cheap labor to buy manufactured products that it doesn't produce at home.

    One of the biggest things that the pundits miss; it is very common to have production in one area AND consumption in another.
    Close to 143 million Americans aged 16 and older commute to work each day. That's about 45% of the population that's on the move at any given time.
    It takes workers about 25.4 minutes on average to get where they're going
    the 10.8 million workers whose trip lasts an hour or more.
    Each year, an estimated 3.3 million Americans face a daily one-way commute of 50 miles or longer. Combined, they make the trip roughly 329 million times annually.
    Seven percent of workers have a commute of 100 to 124 miles while 6% go anywhere from 125 to 199 miles one-way.

    Global shipping costs have fallen
    This creates even more mobility for manufacturing. Capital and manufacturing can move easily. George Soros seems to believe that labor should be able to move equally easy. At first view, this is great for the corporatocracy. It can drive labor down to starvation level
    China destroyed the wages of their best customers. Now, they want to switch over to domestic consumption. They made attempts to dismount from the credit tiger but, soon gave up. Their working population is shrinking by 1 million a year. Consumption is down worldwide. The CBs try to stimulate the economy by pumping liquidity into the upper loop. The plan is for the banks to loan this new liquidity into the lower loop. This new liquidity has no legitimate takers .
    "the current market capitalization of U.S. corporate equities now stands at $40 trillion, twice the level of U.S. Gross Domestic Product – the highest multiple in history"

    This monetary inflation of the upper loop bled into the lower loop. The general idea of MMT is to recapitalize the lower loop. There is talk of free college and free Medicare for all.
    STRANGE, the biggest crash on the horizon is a crash of pensions. Nobody mentions that. Professor Kotlikoff reckons that the unfunded liabilities in America are $ 213 trillion,,,, more or less.
    U.S. GOV debt is growing amazingly fast. It hopes to legitimise MMT and get rid of the FED.

    3/05 If central banks are the only game in town, we’ve lost – Bloomberg
    3/05 Fed’s “wealth effect” enriches the haves at the expense of the young – CHS
    3/05 Retail apocalypse heating up in 2019. the major stores on deathwatch – Money
    3/05 The stock market and the economy are telling two different stories – CNBC

    Desperation everywhere.
    3/05 China to slash taxes, boost lending to prop up slowing economy – Reuters
    3/05 States consider asset transfers as way to shore up plan funding – Pensions
    3/05 “Every indicator is blinking red” – Aussie PMI plunges to record low – Zero Hedge

    3/05 There are more $100 bills in circulation than $1 bills, and it makes no cents – WaPo

    Gresham's Law says that people will hold the premier currency as a store-of-value.
    3/05 China signals loosening of property curbs as Xi’s mantra omitted – Bloomberg
    Xi wants to be in control for several more years. He has had to jump back on the tiger to keep employment from crashing.
    The monetary inflation that bled over to the lower loop means that the middle class no longer receives a "living Wage". 51% of Americans receive a check from GOV. GOV needs MMT to keep those checks rolling

    Leave a comment:

  • Danny B
    MMT and peak humans

    The overlay of the EU bureaucracy over the considerable, already existing State bureaucracy reduced the GDP of the European Union by 20%. Over 22 million work for GOV in America. This does NOT take into account all the millions of lawyers and accountants who are employed to assure compliance with State mandates. The Federal government can create new money to pay the bureaucrats. Lower levels of GOV can't do this. The lower levels of GOV squeeze the working class in 2 ways. First, they tax the snot out out of the productive class. Second, they squeeze us for every penny they can get by way of fees and fines. They have over $200 trillion stashed away in their piggy bank.

    FED GOV spends about 24% of the GDP into the economy with money collected mostly from taxes. Personal taxes run close to 50%.

    In the last several years, there have been few legitimate buyers of Treasury bonds. As a general rule, every additional $1 of taxes reduces the economy by $3. FED GOV is loathe to raise taxes. They can't raise taxes and nobody wants to buy bonds. So, the Treasury just prints new money to finance the FED GOV. It appears that FED GOV now wants to do this out in the open. That is why we hear all this talk of MMT.
    Here is a LONG article laying out the possibilities and ramifications.
    I'll comment later.

    As a counterpoint, here is another article that lays out some serious considerations that are rarely mentioned.
    If you read these 2 articles, you will see that we are approaching a nexus that includes;
    A rise in State-created "jobs"
    A fall in the birth rate
    A rise in automation
    A rise in the % of people who are unemployable
    A rise in State debt to employ people who have no skills that are in demand in the private sector

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  • Danny B
    More of the same

    China is rolling over badly. They can never get off the credit tiger.
    3/04 China encourages ‘shadow’ lending to boost growth – CNBC
    3/04 US and China in ‘final stages’ of trade deal talks – CNBC

    Trump will blow them up no matter what.
    For the last 150 years, we have worked hard to create labor-saving devices. We have had great success.
    Charles Hug smith has all the numbers that you need to know.
    oftwominds-Charles Hugh Smith: What Killed the Middle Class?
    The Baaken is producing more wastewarer than oil.
    "But, that 35.4 million barrels of oil came at a much higher wastewater production cost. How much? How about 22% more wastewater, or 49 million barrels:"
    Shale oil is crashing. They NEVER made a profit.

    The December 2018 stock crash has been tough on pensions.
    Julius Malema has evidently been smoking Fairy dust.
    18 signs for the economy
    The U.S. army just received a ransom of 50 tons of gold.

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  • Danny B
    Past-peak economy rolling over

    The corporation is anti family. How could it be otherwise?
    S&P 500's Biggest Pension Plans Face $382 Billion Funding Gap

    If the richest corporations care little for their employees, you can bet that they care even less for the health of families.

    3/01 Fed’s Powell: ‘muted’ inflation gives room for wages to rise – Reuters
    3/01 Gap, Victoria’s Secret, Tesla: 4,300 store closures already announced – CNBC

    So, tell me more about supply & demand for labor.
    3/02 Who reaps the gains (asset bubbles) and who eats the losses (stagnating wages) – CHS
    How many guesses do i get?
    3/02 GDP crash: Goldman, Atlanta & NY Feds see Q1 GDP tumble below 1% – ZH
    Remember that GOV spending is counted towards GDP. GOV claims to spend about 24% of GDP. Money out the back door by means of the FED and ESF and PPT brings the total much higher.
    3/02 Soaring Canadian insolvencies cripple local banks – Zero Hedge Get used to it.
    3/01 “There’s no money” – has China’s shadow-debt reckoning finally arrived? – ZH
    China has mad a few attempts to regain control of finance. They freak out when the see the result of just a small decline in GOV liquidity.
    3/01 US personal income posts first drop in over three years – CNBC Big surprise.
    3/01 1 in 5 corporations say China has stolen their IP in the last year – CNBC
    Trump will run them through the wringer.
    3/01 Chinese manufacturing shrinks for third straight month in February – CNBC
    Like everybody else, they run the printing press at hyperspeed to keep employment going.
    Brexit is getting close,

    Leave a comment:

  • Danny B
    Pillaging the family for profit

    A corporation is simply a pile of money looking to grow larger.
    A family / household is simply a money losing enterprise.
    As more and more things are taken over by the corporatocracy, the family is sure to lose out. Globalism is the ultimate tool of the corporatocracy. In this article, the focus is on the growth of trans-national capital. Repost.
    Due to regulatory capture, the corporation is eternal and unassailable. All of this contributes to the growth in the "pile of money". So, wages are falling. Where did this "pile of money" come from?
    As of 2009, the size of the worldwide bond market (total debt outstanding) is estimated at $82.2 trillion, of which the size of the outstanding U.S. bond market debt was $31.2 trillion
    These bonds can be "repaid" in 2 different ways. WE work like crazy and our salaries are skimmed for repayment OR, sovereign debt is defaulted. In the last few years, the CBs have created $250 trillion in new debt,,,, mush of it to repay old debt. No telling how much longer this can go on. World leaders seem to be fin with this. Like J.M. Keynes, many of them have no children.
    Add to this, Obama and his husband. Hillary gets honorable mention because horse-face was an accident after many abortions.
    The corporatocracy is anti-family in it's quest for limitless profits. Population is shrinking and the corporatocracy is surviving by sucking up wet-ink liquidity created by the CBs.

    "How would you describe the social mood of the nation and world?

    Would anti-Establishment, anti-status quo, and anti-globalization be a good start? How about choking on fast-rising debt? Would stagnant growth, stagnant wages be a fair description? Or how about rising wealth/income inequality? Wouldn’t rising disunity and political polarization be accurate?

    These are all characteristics of the long-wave social-economic cycle that is entering the disintegrative (winter) phase. Souring social mood, loss of purchasing power, stagnating wages, rising inequality, devaluing currencies, rising debt, political polarization and elite disunity are all manifestations of this phase."
    "In Fischer’s well-documented view, there is a grand cycle of prices and wages which turn on the simple but profound law of supply and demand; all else is detail.

    As a people prosper and multiply, the demand for goods like food and energy outstrips supply, causing eras of rising prices."
    All else is NOT detail. Not while automation is taking over.
    "Long periods of stable prices (supply increases along with demand) beget rising wages and widespread prosperity"
    NOT this time.

    3/01 Chinese manufacturing shrinks for third straight month in February – CNBC
    Their foreign markets are shrinking. Their domestic population of workers shrinks 1 million a year.
    3/01 Here’s how millennials’ $1 trillion in debt is affecting their lives – Salon
    they can't afford any money-losing enterprises.
    3/01 Auto loan delinquencies rise as monthly payments hit record high – CNBC
    3/01 South Korea exports suffer biggest slide in nearly three years – Investing

    Ah yes, $15 trillion in consumer debt is looking a bit shakey.
    The banks just had their most profitable year. As the corporations "win", somebody has to lose. The family is losing. Humans were always considered a limitless renewable resource. The banks are proving this to be untrue.
    There has to be a middle ground between socialism and runaway capitalism.

    Leave a comment:

  • Danny B
    Deep corporatocracy vs the people

    This is the counterpoint to the last post.
    As you know, The Report from Iron Mountain said that peace must be avoided at all costs. Keynes said that we need perpetual war to keep the economy stimulated.
    Bourne, "War is the health of the State" In a collection of Bourne's essays entitled War and the Intellectuals (1964), editor Carl Resek explained the phrase's meaning. Resek wrote, "In its proper place it [the saying] meant that mindless power thrived on war because war corrupted a nation's moral fabric and especially corrupted its intellectuals."
    The deep state and the corporatocracy both want endless war with all dissent locked down. They want total control of every facet of our lives. They want dissolution of all nations. Trump opposes this. The "deep corporatocracy" is warning that a dissolution of their European "construct" will bring WW III. Keep in mind that Churchill said that WW II could have been avoided but, the bankers wanted it. He also said that Germany didn't want war but, they would force one on them. WHY?
    Churchill "if Germany trades again in the next 50 years, WW I will have been for nothing."
    Years after destroying Germany and aiding the rise of Russia, Churchill said, We butchered the wrong pig.

    "A senior European Commission economist has warned that a Third World War is an extremely “high probability” in coming years due to the disintegration of global capitalism.

    In a working paper published last month, Professor Gerhard Hanappi argued that since the 2008 financial crash, the global economy has moved away from “integrated” capitalism into a “disintegrating” shift marked by the same sorts of trends which preceded previous world wars."
    NOT true but, go on.
    "current period is a transition from an older form of “integrating capitalism” to a new form of “disintegrating capitalism”, whose features most clearly emerged after the 2008 financial crisis."
    No kidding and whose fault was that?
    "For most of the twentieth century, he says, global capitalism was on an “integrating” pathway toward higher concentrations of transnational wealth. This was interrupted by the outbreaks of violent nationalism involving the two world wars. After that, a new form of “integrated capitalism” emerged based on an institutional framework that has allowed industrialised countries to avoid a world war for 70 years."
    The West avoided a new WW after WW II because Europe was destroyed and nobody wanted to risk nuclear Armageddon.

    "While integrated capitalism depended on a transnational institutional framework that permitted “stable exploitation on a national level”"
    They inflated away our purchasing power.
    " Hanappi argues that “disintegrating capitalism” sees this framework become disaggregated between the USA, Europe, Russia and China, each of which pursues new forms of hierarchical subordination of workers."
    No mention of rape by the bankers.
    So, BEWARE of nationalism because it will bring WW III

    "Business Insider, a deficit is only as ominous as the market’s inability to buy the excess debt that’s issued along the way. INTL FCStone macro strategist Vincent Deluard has serious concerns about that. So far, foreign central banks, and the U.S.’ central bank, The Federal Reserve. Central banks have begun selling debt though, not taking on more. The Fed has slashed Treasury holdings by $260 billion since October 2017, their foreign counterparts have sold almost $1 trillion over the past four years. Deluard says that those debts will terrifyingly be picked up by retail investors and pension funds."
    Nope, the phantoms are buying all of it.

    ""The wealth of another region excites their greed; and if it is weak, their lust for power as well. Nothing from the rising to the setting of the sun is enough for them. Among all others only they are compelled to attack the poor as well as the rich. Plunder, rape, and slaughter they falsely call empire; and where they make a desert, they call it peace."

    " “The US is also about to enter an earnings recession, ironically after one of the strongest years for corporate profits on record, the picture of American companies is not much better. Not only is an above average number of companies issuing negative EPS guidance for Q1 2019 (of the 93 companies providing official guidance, 68 or 73%, have issued negative EPS guidance), but consensus EPS for Q1 is now deep in the red. According to Factset, the average Wall Street forecast now projects Q1 earnings per share to decline by 2.7% Y/Y, worse than a consensus -0.8% forecast drop three weeks ago, and starkly lower than the +3% EPS growth expected for Q1 at the start of the year.”
    All that stimulus from the FED buying stocks and, we're still crashing.
    "“In a troubling twist, this EPS drop is taking place even as companies continue to buyback record amounts of stock (according to BofA’s client tracker, corporate repurchases are running 98% YTD compared to the same period last year when as a reminder, total announce buybacks topped a record $1 trillion). More perplexing is that the EPS drop will take place even as S&P500 revenue is still expected to post a solid 5.2% Y/Y growth,"
    They "show" growth because of the effect of buybacks.
    So, the monetary Viagra is wearing off.

    "Global debt has surged by nearly $150 trillion since 2003 and $70 trillion since 2008. As bad as the 2008 global financial crisis was, the next crisis will hit the global economy even harder simply due to the fact that an additional $70+ trillion in debt has been added."
    "Growing debt burdens will stifle economic growth, which will make it even harder to grow out from under the debt. Eventually, global debt saturation will lead to a downward spiral situation in which nearly all central banks will be forced to debase (or “print”) their fiat/paper currencies at an extremely high rate in order to pay the interest on debt and to keep their economies afloat for a little while longer."

    "“In our view, September of 2018 marked the peak of the U.S. economic cycle. We are now seeing a typical bear market rally, and the next downward leg is likely to be just as abrupt as the first one,” Costa told MarketWatch in an interview. “It’s hard to pinpoint when exactly, but my best guess is between now and April.”

    2/28 The middle class is shrinking everywhere — in Chicago it’s almost gone – WBEZ
    2/28 China factory activity sinks to 3-year low – AP
    2/28 Farm loan delinquencies highest in 9 years as prices slump – AP
    2/28 Global stocks sink for third day as investors temper trade optimism – Reuters

    2/28 The doomsday scenario for stock and housing bubbles – Zero Hedge
    2/28 “Beware the Ides of March”: Nomura sees long-awaited stock selloff – Zero Hedge
    2/28 “Nobody has a freaking clue”: Big Short’s Eisman expands his Brexit short – ZH
    2/28 Massive cuts to Social Security: this is the ‘wall’ Americans should worry about – MW

    MOSCOW (Sputnik) - The US sanctions against Venezuelan state oil company PDVSA will become the main blow to the world's oil refining in the short term, yet it is the US refineries that will bear the brunt in the first place,

    South Africa soon to look like Zimbabwe.
    CFR Head Pushes For War On Venezuela

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  • Danny B
    Dismantling Pox Americana AND globalism at the same time

    Donald Trump will certainly go down in history . He professed to be anti-globalism. From the evidence, it appears that he is going to blow the entire globalist system.
    Read the whole thing.

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  • Danny B
    The State hopes to buy a little more time with MMT

    Well, it appears that GOV is working hard to legitimise MMT.
    Armstrong, "We are preparing not merely for the adoption of MMT or Modern Money Theory. The politicians will embrace this idea as they realize they are going broke and central banks cannot save the day."
    Why is the government going broke?
    "ANSWER: It will not end well. Government employees have the defined-benefit (DB) while we get the defined-contribution (DC) plans. Most state and local government employees, actually 87% of those working full time, participate in a defined benefit (DB) pension plan. They contribute NOTHING but are guaranteed a pension on top of what they earned, plus free healthcare for life. The vast majority of those in government have NEVER had to save anything. They are there now demanding that our futures be stripped."

    Powell tried to do a controlled demolition. Nope, the fragility was too great.
    "It was only 60 days and 3,000 Dow Jones points ago that the POTUS threatened to fire the chairman of the U.S. Federal Reserve (Jerome Powell) and the Treasury Secretary (Steven Mnuchin), resulting in a resounding call to arms that has since added over 10% to the S&P 500 and dropped the ten-year yield from 3.25% to 2.65%. Happy, smiling faces of Wall Street gamblers and online speculators are popping up everywhere "
    "It is in the derivatives that the banks are able to play their games, completely unsanctioned and totally condoned by both regulators and compliance officers."

    So, private bankers own the FED and,,, the FED rescues private bankers when their gambles go bad. WE pay the price in inflation.
    “We’re paddling against the current in trying to sustain public faith in the Fed.”
    –Federal Reserve Chairman JEROME (JAY) POWELL

    “The FOMC (Federal Open Market Committee, the Fed’s key rate-setting entity) is in panic mode now, facing the Frankenstein monster balance sheet it has created. The FOMC has come to the realization that it cannot unwind it.”
    –Jones Trading’s chief strategist MIKE O’ROURKE
    The FED ran it's balance sheet up to about $4.1 trillion. They have off-loaded some of that but, must now stop.
    "Thanks to weakening inflation and continuing anemic growth on the Continent, rate hikes are off the table. Soon-to-be-outgoing ECB emperor chief Mario Draghi is already making noises about restarting its quantitative easing (QE) program rather than reversing it as its American counterpart, the Fed, has done. This is despite the fact that the ECB’s balance sheet—or stash of European bonds bought with pseudo-euros—is an outrageous 40% of GDP versus “only” about 20% in the case of the Fed (GDP represents a country’s total economic output). "
    The ECB has FAR more transparency than the FED 40% vs 20% is the best lkie that they can get away with.

    "It’s true that Europe’s chronically flaccid economic pulse has faded one more time (European economic “liveliness” almost makes a corpse look animated). As a result, the number of negative-yielding bonds (the ultimate Alice In Wonderland financial condition where borrowers charge lenders to use the latter’s money) is once again swelling. The total value of these legalized investor extortion instruments is now $11 trillion, most of them from European issuers. This is up from the trough of $6 trillion last year "
    Americans are amazed that their stock market is rising. It's the capital flight, stupid.

    "As the no-nonsense financial commentator Danielle DiMartino Booth, former adviser to ex-Dallas Fed president Dick Fisher, recently wrote: “Not to beat a very dead horse but negative interest rates in Japan and Europe were supposed to have generated virtuous outcomes.” (Emphasis hers.) In other words, these radical policies, that were designed to stave off the ravages of the Great Recession and stimulate healthy economic growth, continue to fail to bring home the mail. "
    Not true. ALL of this printing and NIRP is done to finance the pensions and salaries of the eurocrats.
    "Many pundits have reacted to this about-face angrily and are accusing Jay (not Jerome) of caving into political pressure from the meddler- (and Tweeter-)-in-chief. Others have screamed that he has done exactly what he said he wouldn’t do by trying to sooth the stock market with dovish utterances once it was down about 20% from its September peak."
    Powell discovered that the slide would NOT stop until it overshot historical norms at about an 80% reduction (Hussman)

    " Whenever I was asked (and often even when I wasn’t) how long the Fed would tighten, my simple answer was: “until something breaks”. It’s fair to say that a lot of things broke—make that shattered--in the financial markets "

    Wall Street abandons fracking, "The Wall Street Journal reports that the shale industry only saw $22 billion in new bond and equity deals, down by more than half from 2016 levels, which was a much worse time for the market."
    "For instance, the IEA estimates that the shale industry posted cumulative negative free cash flow of over $200 billion between 2010 and 2014."

    So, the more that fracking collapses, the closer we are to invading Venezuela.
    In a general sense, the worst CBs are in the States with the highest pension costs. Just as QE bought a little more time,,,, NIRP and ZIRP bought a little more time,,,,, the great mass of bureaucrats and beggars hope that MMT will buy a little more time.

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  • Danny B
    January 2020 and inflation

    Regulatory capture allowed the bankers to erase ALL legal and moral hazard. When the bankers blew up the system, they were given bonuses instead of jail time.
    " Even after the 5 major banks plead criminally guilty, anyone else would lose their license. Not one banker who really destroyed the world economy in 2007 with their leveraged mortgage-backed securities went to jail or even lost a job. They got bonuses! The SEC said nothing."
    Good article.

    Armstrong has more to say. "politicians fail completely to comprehend the role of trade and Brussels insists upon a hard border so goods do not flow into Ireland without their share of import duty taxes," Bureaucrats live for increased taxes.
    "Indeed, the fall of empires is always set in motion by the incompetence of its leaders and their self-interest that they always put before the people they call their subjects. Rome fell because every centralized form of government has failed throughout history. Every Republic collapses into an Oligarchy. Governments will NEVER take action to prevent a crisis. "
    "The Economic Confidence Model turns in January 2020."
    "But to trade this opportunity, DEMANDS you must have the CONFIDENCE to pull the trigger. To survive the next two years, it requires a clear understanding of how the system works"
    "The failure to understand how we are all connected will result in you losing at the end of the sequence. The last domino will be your fate. Without comprehension, you will never see it coming. "

    "We are preparing not merely for the adoption of MMT or Modern Money Theory. The politicians will embrace this idea as they realize they are going broke and central banks cannot save the day. The MMT promoters assume that with the expansion of Quantitative Easing and its failure to produce inflation, gives them a green light to print their way out of this mess as government assumes there will be no inflation with endless expansion of money as QE demonstrated."
    Everyone with money hates MMT. It could possibly work if it weren't used to finance speculators. Don't hold your breath on that one. Socialist candidates are coming out of the woodwork like worms. MSM is embracing ALL of them,,, no matter how stupid their platform sounds.
    Jewish left - Wikipedia

    The Jewish left consists of Jews who identify with, or support, left-wing or liberal causes, ... Jews have a rich history of involvement in anarchism, socialism, Marxism, and Western liberalism.

    It is what it is. A free ride will sound very appealing to most people.
    The election should be a humdinger ! Post-election should be one for the history books. turns in January 2020.

    QE was targeted at the upper loop of the economy. The upper loop experienced a LOT of inflation in stocks and a few other areas. What Armstrong is implying is; MMT will cause high inflation in the lower loop when GOV tries to rescue both loops. Armstrong implies that you must have perfect timing to preserve your buying power,,,,, and then, jump back back into the markets.

    "2018’s valuation records are astounding in that they show the S&P 500 to be more fundamentally over-valued than it was at the prior two historic stock market valuation peaks in 1929 and 2000, bona fide speculative manias."
    Yep, inflated.
    "It didn’t represent a healthy economic growth cycle, but rather an insanely irresponsible, and arguably criminal, manufactured bubble boom where central banks printed enormous amounts of money to inflate asset prices like stocks, bonds and real estate."
    "Equally significant is the generational cycle. Birth rates are at a 30-year low in part because millennials are too broke and in debt to buy homes and start a family. This is now the largest voting bloc in American politics, and I highly doubt they’ll just sit around and continue to get systemically fleeced well into their 30s. This is why socialism is becoming popular."

    First posted it on Twitter, it was hailed as “stunning” and “one of the most important charts about the economy this century.”
    You really should read the article.
    "During the most recent 21-year period from January 1998 to December 2018, the CPI for All Items increased by exactly 56.0%"
    Not true but, go on.
    " Average wages have also increased more than average inflation since January 1998, by 80.2%, "
    Not true, continue.
    "last 21 years while average prices have increased by 56% and wages increased 80.2%
    a. The greater (lower) the degree of government involvement in the provision of a good or service the greater (lower) the price increases (decreases) over time, e.g., hospital and medical costs, college tuition, childcare with both large degrees of government funding/regulation and large price increases vs. software, electronics, toys, cars and clothing with both relatively less government funding/regulation and falling prices. "
    OK, so anything that the State touches gets inflated like snot.

    "last 21 years while average prices have increased by 56% " This is the number presented by the State. Shadowstats has different numbers with inflation computed in a manner used previous to the bogus adjustments. For the last 10 years, inflation has been running right around 10%.
    Alternate Inflation Charts
    So, this computation of 56% price inflation in the 21 years period is all based on falsified data.
    "Quotation: "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.."
    Gold will eventually make some price changes,

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  • Danny B
    The FED funds rate

    Getting a sense of the FED funds rate.
    Over time, most European nations have defaulted a few times. Greece was in default for 50% of their modern history. America had never technically defaulted. It partially defaulted when it raised the price of gold vs the dollar. Because we weren't destroyed in WW II, our currency was chosen as the reserve currency. This was partially an attempt to keep any State from inflating their bond market to fund an incipient war effort. Unfortunately, it did not prevent America from inflating it's bond market for wars in Korea and Viet-Nam.
    Since all the various States could only have national reserves in dollars, they had to sell stuff to America to earn these dollars. They had to undecut our prices to sell us Volkswagens and Datsuns.
    This allowed us to run a huge trade deficit. But, since America had not defaulted, the dollar was very much in demand. This demand carried over into U.S. Treasury bonds.
    They sold us a Datsun and,,, took the profit and bought Treasury paper.
    Japan holds about $860 billion.

    Because of post WW II momentum, the dollar and the FED became the premier safe investment. The FED funds rate became the benchmark for return. All other investments were rated as to risk vs the FED paper. Since the FED paper paid interest, all other interest-bearing paper was sold at a depressed rate related to risk. The long-term average for FED paper was about 5%. If you could get 5% with no risk, why buy somebody else's paper? This drove interest rates down over time. The perception of risk-free was still in effect even though American sovereign debt will never be paid back.

    "Several credit rating agencies around the world have downgraded their credit ratings of the U.S. federal government, including Standard & Poor's (S&P) which reduced the country's rating from AAA (outstanding) to AA+ (excellent) on August 5, 2011"
    This got S&P in hot water. GOV currently pays about $1/2 half trillion in interest.
    The FED, Treasury and ESF pump liquidity into all markets to keep the perception that there is actual, legitimate confidence in all American markets. Sovereign debt is rising close to exponentially but, clandestine buying of this debt has upheld confidence so far.

    U.S. debt must appear safer than other debt AND gold. Italy is hard at work to make U.S. debt look low risk. In Europe, the ECB can't easily pump in liquidity without any trace. The ECB just ended the QE that was rescuing Italian debt. One month later, they are talking about starting up QE again. In America, there are various phantoms buying sovereign debt. For the present, these phantom infusions are holding up the confidence in debt that is growing exponentially and can never be repaid.

    "The German economy has come to a grinding halt, with the latest growth figures showing that it remained unchanged in the last quarter of 2018. Missing the already grim forecasts of 0.1%,"
    ECB: running out of runway – Part I | Claudio Grass
    "By 2019, there will be fewer Germans under 30 years old than there are Germans that are 60+ years:"
    Great graph.
    The feces-for-brains German GOV brought in millions of USELESS "migrants" to try to make up for the missing German babies. It just doesn't work that way. The people have to actually be productive.

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  • Danny B
    Parkinson't Law and welfare

    You should read this entire article. It shows that population growth has ended in America.

    It also shows public debt which is growing close to exponentially. The chart shows that "other" investors are buying GOV debt. This is just a continuation of an old charade claiming that on group or another is investing in FED GOV.
    State employees are cannibalizing the productive economy to keep their salaries and pensions financed. Illinois stands out in that they are selling off public property to cover shortages. California continuously raises taxes for the "poor" or the "highways" or the "environment" The new taxes invariably go to support CALpers.
    FED GOV has to invent imaginary investors to finance itself. After the 2007 crash, CBs pumped in $250 trillion to make sure that there would be enough liquidity to keep State debt financed. Salaries for Eurocrats in Brussels and millions of bureaucrats worldwide.

    "What is fascinating about this is that Parkinson's Law, albeit having been variously formulated since its first statement in 1955, predicts that the staff within a bureaucracy will expand at a rate between 5 and 7 percent per year, “irrespective of any variation in the amount of work (if any) to be done.” Isn't it interesting that government debt falls precisely within this range? "
    "From this perspective, things look quite different: the public debt in 2010 constant dollars barely budged from 1950 until 1971, when Nixon closed the gold window and decoupled the dollar from gold. Without the discipline of gold (before, if the U.S. ran up large deficits and printed money to cover them, foreign central banks could exchange the excess dollars for gold, emptying out the treasury's vault), there was no constraint on the issuance of debt and the creation of dollars and the curve began to climb to the sky, slowly at first and then at an accelerating pace. Here I've fit an exponential to the period from 1971 through 2010, and once again it fits pretty well, with a growth factor of 4.8% per year, just a tad below Parkinson's range of five to seven percent. "

    I suspect that the graph of the growth in public debt is close to a proxy for the increase in jobs displaced by automation. 22.5 million "work" for the State. 95 million are not in the labor force. FED GOV is trying to float along the whole show by printing money. Efectively, this is some form of Chartalism.

    Nixon closed the gold window after his predecessors fired up the welfare-warfare system .

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  • Danny B
    Too many changes,,, too little adaptation

    Charles Hugh Smith has a look at the larger problem... the system.
    "The global economy is in the midst of a grand experiment pitting centralization (Central Planning) against the evolutionary model of adaptive, self-organizing networks.
    As I explain in my latest book (now out as an audiobook), Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic, there's one fatal flaw in Central Planning "solutions": they run completely counter to the principles of evolution which guide all systems, natural and human.
    That which is rigid and inflexible cannot adapt to rapid change, and thus it fails to adapt and vanishes from the Earth. That is the essence of evolutionary dynamics.
    The most recent imputs are pole flip, climate change, runaway automation and sovereign bankruptcy.

    "Central Planning is a monoculture that incentivizes self-serving corruption and propaganda.
    The essence of Central Planning is coercion:
    Central Planning works until it doesn't, and that moment of failure is at hand.Central Planning is in essence a vast machine of mal-investment of irreplaceable capital.
    Central Planning strips out the all the core dynamics of adaptation as dangers:
    Whether we acknowledge it or not, the world is placing its bets on which system will survive the coming era of destabilizing non-linear change:inflexible, opaque Central Planning or flexible, self-organizing networks of decentralized autonomy and capital.
    Those who are betting on Central Planning do not understand the essential role of adaptation: what cannot adapt will die, and Central Planning is by its very nature incapable of true adaptation.
    Adaptation can't be faked. Organizations that cannot adapt quickly and efficiently implode. This is a scale-invariant dynamic: the organizational size doesn't matter. Size and scale do not provide magical protection. Households, corporations, governments and empires that fail to adapt will collapse.
    There is a real solution: decentralize, diversify, open the economy and society to dissent, experimentation and self-organizing networks of peers.
    oftwominds-Charles Hugh Smith: Which One Wins: Central Planning or Adaptive Networks?
    Here is the vid on the subject,

    In Chicago, there are thousands of more retired state employees collecting pensions than active workers who are paying into it
    City of Chicago :: City-Owned Historic Buildings For Sale
    2/24 Illinois looks to raid private retirement accounts to solve its pension crisis – Daily Caller

    Our debt;
    "The U.S. government will spend $4.4 trillion in 2019, of which only $3.5 trillion will be covered by tax revenues. Of that $4.4 trillion, $2.7 trillion is spent on what is known as “mandatory spending”: Social security, Medicare, Medicaid and the like"

    Armstrong, "At the lower threshold of risk lies that reality whereby at the very minimum we are looking at the collapse of centralized governments as took place in 1989 with communism. That will result in greater separatist movements and the breakup of national states as we know it today.
    So what the computer is showing is the rise in civil unrest and the risk of war. Just look at what took place at the State of the Union – there is no UNION
    This is part of what the computer is forecasting – the collapse of governments as we have known.

    Charles Hugh Smith on regulatory capture
    oftwominds-Charles Hugh Smith: Let's Face It: The U.S. Constitution Has Failed

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  • Danny B
    Chartalism and Monetary circuit theory

    Keynesian economics is the preferred system because it gives the most power to the State. Regulatory capture ensures that everybody with power can buy whatever regulations are necessary for them to succeed. The little guy is just a tax-donkey for the State AND an endless wallet for the oligarchs.
    The current system pumps money into the economy through the bond market. It flows very well into the upper loop of finance. Since the State has quite a bit of control on the finance industry, the finance industry makes sure that money flows to the State.
    The lower loop is getting increasingly impoverished. The calls for universal basic income and modern monetary theory are a response to our inability to earn a living wage.

    UBI and MMT are an attempt to mitigate the effects of lifelong inflationary policies of the upper loop. Naturally MMT and UBI are soundly derided by people close the the monetary spigot. They claim that it will increase the debt ENORMOUSLY. Actually, it would decrease the debt as long as the Treasury did NOT create money for speculators. They claim that w would have terrible price inflation. The upper loop has had terrible price inflation and, nobody is complaining about that.
    There are claims that UBI and MMT are just a facet of socialism. Socialism always seem to put incompetent people in charge.

    There are alternatives to Keynesian money creation.
    Our financial system is NOT prepared to cope with automation. Those who already have money are NOT willing to see changes that would diminish their advantage . The CBs are deathly afraid that there is no solution other than continued money pumping.

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