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  • Danny B
    The party is quickly winding down

    In other news, investor sentiment has turned dark. Previously, every dip was bought by the FED and investors were encouraged to pile in on top. The FED always has your back. Earnings are weak. Stocks have only risen because of free money pumped into buybacks. People like Stockman have clearly pointed out that all of this is fake. The minute that the FED quits buying, investors (gamblers) know that the party is over.

    Intravenous Viagra in the stock market has come to an end and everybody is assessing the situation.

    "Plot 50 years of official national debt on a log scale. The trend is unmistakable. National debt has increased exponentially 8% – 9% per year. National debt doubles every eight to nine years."
    There are a LOT of parasites to be nourished.
    So, the FED insists on 2% per year currency inflation. But, the parasite load grows much faster than 2%. They suck up to the State and use regulatory capture to ensure that the blood keeps flowing. 8% – 9% per year. has become problematic.

    4/26 Momo massacre – “follow-leader” strategy suffers outflows – Zero Hedge
    We don't want no stinking outflows.
    4/26 Peter Schiff: why own US stocks? – Seeking Alpha
    We don't want no stinking traitors.
    4/25 CME Fedwatch has 48% chance of at least four hikes in 2018 – Mish The plan is to attract foreign capital with higher interest rates. Those same higher interest rates WILL wipe out most corporate and consumer and Gov debt.

    4/26 Sprott’s Craig Hemke: The soaring dollar crushes the commodity rally – GATA
    The crushing has only just begun.,
    4/26 You’re not crazy for doubting establishment war narratives – Medium
    You're both crazy and stupid to believe any of it.
    4/26 Russia to send advanced anti-aircraft missiles to Syria – Zero Hedge
    Israel says that sending good missiles is a prohibited red line.
    Russia Starts Production Of S-400s for Turkey

    ‘Someone’ Is Jamming US Gunships Over Syria!
    4/26 First drone warship joins navy; nearly every element classified – CNBC

    Do not worry! I'm sure that the Russians can't possibly jam the drone ship.
    4/24 Global solar PV installations to surpass 104GW in 2018 – Greentech Media
    What about my oil wells?
    4/26 Ex-Clinton ‘ethics’ aide resigns after taped tirade at cops – Zero Hedge
    How can you say Clinton and ethics in the same sentence?
    4/26 The great exodus out of America’s blue cities – Hill
    I wonder why ???

    4/26 Ethereum: stick a fork in it – Mish
    4/25 Why bitcoin works – Medium

    Blockchain, YES.... Crypto, No.

    Leave a comment:

  • Danny B
    Fitts and the entrenched corruption

    Socialism is free money for the poor and fascism is free money for the rich. Since many of the poor actually do productive work, free money tends to actually reduce economic activity. Finland has just abandoned their experiment with passing out a basic income. If the people in the lower loop stop working, everything comes to a stop in the upper loop.

    The upper loop of parasites must continually invent ways to siphon off the wealth of the actual producers. There is no such thing as an honest parasite so, the wealth must be stolen outright or, through corruption. The upper loop works full time to create all-pervasive corruption. Most of this corruption is hidden away in State documents, rather than out in the open.

    We all know that the illegal drug industry has been vertically integrated by the bankers. The State helps out by using the CIA and military to protect drug crops. When the Taliban stopped the growing of opiate poppies in Afghanistan, the U.S. invaded within a few months.
    What about the other end of the equation? We spend more money per prisoner than we do per pupil. Law enforcement and the prison/court system is extremely expensive.

    Catherine Austin Fitts developed software to bring ALL of this corruption out in the open. I hope that you can read this article in it's entirety.
    I found it linked to another article.

    Leave a comment:

  • Danny B
    Hang the politicians next to the bankers

    Venezuela had a great economy when oil was very high. They should have tailored their spending to their income. Oil prices fell and they continued to spend. How much do they spend?
    "The government insists education remains a priority and says that 75 percent of the national budget goes to the social sector."
    Armstrong said that it would all blow when the dollar got too strong.
    " The Bloomberg Dollar Spot Index rose 0.4 percent to the highest in almost 15 weeks.
    The euro declined 0.5 percent to $1.2172, the weakest in almost 15 weeks.
    The British pound decreased 0.3 percent to $1.3933, touching the the weakest level in almost six weeks.
    The Japanese yen dipped 0.5 percent to 109.34 per dollar, after hitting the weakest in 11 weeks with its sixth straight decline. "

    Armstrong writes with much trepidation about common, old stories of bankers hanging from lamp posts. It will eventually come out that the worst screwing that Americans received was when congress overturned the Glass-Steagal act. The graham-leachy act handed all your money over to the bankers to gamble with. Here is the vote on the act.
    This calls for 90 more lamp posts. They certainly were enthusiastic about giving away YOUR money.

    Everybody is looking at the 10 year bonds. Apparently, the 2 year bonds are in even more trouble.

    Leave a comment:

  • Danny B
    Shoot the politicians first

    All quiet with the same old problems getting a bit bigger.
    "According to the Federal Reserve, pensions — public and private combined — were roughly 27% underfunded as of last year."
    Daily Reckoning contributor Charles Hugh Smith:
    " Corrupt politicos promised the moon to public employees, and now the fiscal chickens of insolvency are coming home to roost."

    As the late Canadian Prime Minister Mackenzie King styled it:
    “The politician’s promises of yesterday are the taxes of today.”
    Zero Hedge’s pseudonymous Tyler Durden:
    Funds collected from taxpaying Americans will be spent to satisfy the ridiculous retirement promises and obligations made over the past few decades, and while the immediate recipients of the funds, i.e., those looking at near-term retirement, will be made whole, everyone else, i.e., taxpayers, will lose."
    "Politicians promise… taxpayers pay."

    Politicians make promises that they will never have to pay for personally.
    Politicians start wars that they will never personally have to fight.
    With no risk and no accountability, what else do you expect?

    So, we have hit a peak and, there is nowhere to go except down.

    Dollar bonds,
    You can see why a stronger dollar will wipe this out.

    4/25 China prepares to mass produce hypersonic vehicles – Zero Hedge This is great news. M.A.D. without nukes. Nothing can be protected. This brings us that much closer to peace. Even the S-300 could bring peace.

    Leave a comment:

  • Danny B
    Time runs short, russia buys even more gold

    Surging oil prices to enrich sovereign wealth funds: JPM
    Benefits will fall more to stocks than bonds, euro than dollar

    Right, all the oil producers are going to jump into the stock and bond markets.
    4/24 Russia buys 300,000 ounces of gold in March – GoldCore
    This is from Russia Today. I'm sure that they are going to jump into stocks.
    Nobody is going to buy the Euro. Even Draghi has admitted that growth has stopped,
    Russia produces 240 tons of gold per year. They still went out and bought 10 tons more.

    Leave a comment:

  • Danny B
    Winding down,,, interest expenses,,, tax cuts

    In summer of 2005, I ended up with a lot of time on my hands. Reading on the net about our financial situation / future, I came to the conclusion that America was going to crash relatively soon. I stocked up on grains & stuff and knuckled down to a job
    Like MANY other would be preppers and prognosticators, I did an unrealistic time compression. After a few years of reading, I concluded that there would be some years before thins got really bad. Living in L.A. I wanted to know when the next big earthquake would be. That would definitely upset my plans. There are only 4 roads into L.A. and all of them have high bridges on them. I was here for the '71 San Fernando earthquake and , it was a real mess.
    I left the day before the Northridge Quake but, came back the same day. Again, a real mess.
    Since a big earthquake would really mess up my plans, I made a trip to Scotland on the off chance that Swein Macdonald, the highland seer could tell me when the big one would hit. Swein was quite famous for calling the London Daily Mail and telling them that an oil tanker was going to run aground in Scotland. 10? days later, it did just that. I paid my 15 quid and listened to him. Must have been an off-day.
    While visiting Viewhill, Ardgay, Sutherland, I went to the pub and talked to the men at the bar. They told me that Swein was nothing compared to his father. He could find anything or anybody that was lost, etc. It was very interesting to consider that second-sight could be inherited.

    As the years go by, we tend to think that the financial problems will eventually blow over. Nothing has happened yet. This is only true if you happen to still have a job and your health. What is approaching is a sovereign debt default. Pox Americana is at war with other central banks, most notable the European Central Bank. Because the eurozone project was so ill-conceived, the Euro currency is ripe for a good, old stab-in-the-back.
    The EU banks report about $1trillion in non-performing loans.
    "In other words, the ECB will assume that the environment which started in 2016 with the ECB's launch of its corporate QE, and which pushed yields and spreads to record low levels, will persist indefinitely, even as the ECB itself also admits it will soon start tightening financial conditions, resulting in chaos in the bond market, a surge in defaults and hundreds of billions in more NPLs."
    The BOJ and ECB continue to talk tightening. I haven't seen much.
    Here are some comments from the article.
    The ECB Reserve Requirement is 1%.
    This means that if Europe hits an iceberg, then 99% of the passengers are going for a swim.…

    The 800lb gorilla in the room is the squillions in QE junk bonds Draghi has acquired at taxpayer expense.
    When the SHTF, he'll be hanging from a lamp post.

    ...the squillions in QE junk bonds...

    Funny how few people, even among those who pay attention to such matters, actually realize that this is the problem, and it's utterly insurmountable. I continue to laugh at the financial gurus screaming "Oh noes!!! It's the big one!!!" because it isn't time yet. However, the question is most definitely when, not if.

    And folks wonder what Brexit is all about! The perpetual fratricide in Europe is just being played out in yet another arena.
    Now go back to putting money into your 401K asap......
    ROTFLMAO (rolling on the floor laughing my a** off).
    It isn't 'your' 401k or 'your' money. It's the bank's money and you are merely a very junior and unimportant unsecured creditor.

    They haven't for the past decade. One would think that the loan loss ratio would have fallen significantly in the 10 years since the financial crisis and that the loss provision would increase but it hasn't.
    In the US, banks had a delinquency rate of 7.5% in 2009, at the end of March 2018 it is 1.82% across all banks in the US across all products. And 80% of the loss has already been provisioned.

    The above it true. Loan losses in American banks are VERY low because all the bad loans were stuffed into Freddie and Fanny. So, American banks will survive but, Freddie and Fanny will go up Like Krakatoa.

    Here is Paul Craig Roberts to give you some kind of feeling for timing. I'll print excerpts but, you should read the whole thing.
    "In the wee hours this AM, the yield on the 10-year treasury note hit 2.993%. That's close enough for gubermint work to say that the big 3.00% inflection point has now been tripped. And it means, in turn, that the end days of the Bubble Finance era have well and truly commenced."
    "there has been no acceleration in the main street economy---just the rigor mortis spasms of a stock market that has been endlessly juiced with cheap debt."
    "Thus, since the pre-crisis peak in Q3 2007 nonfinancial corporate sector value added is up by 34%, but corporate debt securities outstanding have risen by 85%; and the overwhelming share of that massive debt increase was used to fund financial engineering, not productive assets and future earnings growth."
    "during the past 10 years, net value added generated by US nonfinancial corporations rose by just $2 trillion (from $6.1 trillion to $8.1 trillion per annum), whereas corporate debt rose by nearly $3 trillion (from $3.3 trillion to $6.1 trillion)"
    "That's because the share shrinking effect of stock buybacks and largely cash M&A deals is going to dramatically abate, while interest expense per share is fixing to soar.

    On the first point, there were 264 billion S&P 500 (ex-financials) shares outstanding at the pre-crisis peak in 2007 compared to only 239 billion or 10% less at the end of 2017. Accordingly, upwards of one-third of the gain in per share earnings during the last decade was owing to share shrinkage, not aggregate profits growth"
    "Secondly, even if the 10-year UST rate settles at only 3.75% and the rest of the yield curve rises accordingly, it will have the effect of increasing pre-tax interest expense for the S&P 500 by about $44 per share; and thanks to the new 21% tax rate, that will show up as a $35 per share hit to EPS."

    "And we have no doubt that the stock option obsessed occupants of the corporate C-suites will again make haste to throw labor, inventories and fixed assets overboard with malice aforethought once the market breaks, and earnings are hit with the headwinds of rising interest expense and FX impacts.

    To be sure, the usual suspects are again out in force on bubblevision offering a way out. Their response to today's 3.00% moment of clarity is that the Fed is on the verge of making a great "mistake", and that Powell and his Posse will see the error of their ways before it is too late."

    "Here is just one example of why the Keynesian consensus at the Fed and on Wall Street is missing the forest for the trees. To wit, we have now completed a full-10 year span since the Q4 2007 pre-crisis peak, and real GDP growth has averaged a mere 1.43% per annum gain.

    But that's not the half of it. The cumulative gain over that 10-year period amounts to 15.3%, but that was accompanied by a mere 0.5% gain in industrial production, and a 5% drop in the output of manufactured goods.

    What saved the day for even the tepid gains in real GDP was soaring increases in government transfer payments and health care spending---with the latter growing by 29% in real terms over the same period."
    "So after the deficit broke toward 10% of GDP in the fall of 1981, he (Reagan) reluctantly signed three consecutive tax increase bills in 1982-1984 that saved the day by recouping 40% of the revenue lost in his treasured tax cut of 1981."
    Contra Corner » The Delusions of MAGA And The Return Of Honest Bond Yields, Part 4
    EVERY segment of the American economy is flat in it's back. Tax increases at this point would just add poison.

    Leave a comment:

  • Danny B
    Attracting capital to tax havens

    Armstrong, "There are already 13 nations in default of their national debts. If interest rates go up 1%, we will see another almost 30 join the default list. Take interest rates up 2.5%, and the list will soar to probably 100 nations in default.

    The first crack in the world monetary system will ONLY be caused by a strong dollar – not a weaker one. First, you get the dollar rally, then you get the dollar collapse. So keep this in mind. If you buy gold and then see a decline, will you panic and sell the bottom, which is typical? That becomes the game.

    There are other places to have dollar accounts. But the USA is not part of the reporting system back to Europe. Most other places are. The USA has become the new tax haven for the world – not American unfortunately."
    America created FACTA where all other States must report the bank accounts back to American tax authorities. At the same time, America does NOT report foreign earnings to overseas tax authorities. This makes America a tax haven. The rise of the dollar will blow up many $trillions of dollar-denominated debt.

    Here is an interesting graph of interest rates,
    As interest rates rise, the defaults kick in. Then, the contagion kicks in.

    Leave a comment:

  • Danny B
    Blocking price discovery for as long as possible

    In the dot-com bubble, people threw money at anything and everything. When confidence was lost, price discovery set in. In the 2007 crash houses became too bubbly. The cost of a house must be relative to the wages in the same area. When everything threatened to bottom out, the State, in the form of Freddie and Fannie, bought up (guaranteed) everything to create price support until private investors could be enticed to buy the orphaned houses. The liar -loans blew up. Naturally, the banks couldn't be expected to take the hit.
    "The bad loans in the states were really dumped into Freddie Mac, is a public government-sponsored enterprise created in 1970 to expand the secondary market for mortgages. The main difference between Fannie and Freddie boils down to who they buy mortgages from. Fannie Mae primarily purchases mortgage loans from commercial banks, while Freddie Mac primarily buys mortgages from smaller banks that are often called “thrift” banks.
    The bad real estate loans were stuffed into Fannie and Freddie so the bad debt was not in the banks."

    The banks "earn" the fees and, shuffle off the loan to either the State or, shmuck investors. It never occurred to the banks that the State might go broke from all that bad paper. ALL States eventually go broke.

    The high-wage structure left the country but, the bankers didn't want the price structure to go away. They could not allow the markets to do honest price discovery. History shows that true price discovery eventually returns.

    "The Draghis of the world will continue to believe they are in control until they are not. At first, some people will start taking out their money while it’s still there, and then after that the rest will trample over each other in a bloody stampede on the way to the exits trying to save what’s left. After the first $100 trillion is gone, we’ll be able to survey the terrain, but by then we won’t, because we’ll be too busy trying to save ourselves.

    And I know you’ve heard this before, and I know central banks bought us 10 years of respite. But it was all fake. They had to pile on insane amounts of debt on your heads, kill off your pension systems and make markets a meaningless term, to achieve that respite. "
    "The resulting malinvestment is piling up like underbrush in a forest where fires have been suppressed for too long. And when a fire does break out it will be one for the history books. "
    4/23 10-year Treasury yield nears 3%, a level that could shock the markets – CNBC Give it a few more tenths of a point,,, maybe 3.4

    Here is an article talking about how Germany has brought ALL of it's gold back to home soil. Look at the picture and tell me if the bars all look clearly to be copper.
    4/23 Venezuela will be out of gold in one year – Zero Hedge YES, but, they have 297 billion barrels of oil.
    4/23 Japan needs ‘strong accommodative’ monetary policy ‘for some time’ – CNBC

    "According to a Citibank report from 2016, the 20 largest OECD countries alone have a US$78 trillion shortfall in funding pay-as-you-go and defined benefit public pensions’ obligations. This shortfall is far from trivial. It is equivalent to about 1.8 times the value of these countries’ collective national debt. "
    You Canadians get honorable mention for increasingly using your house for an ATM, Canadian household debt hits $1.8 trillion as global watchdog warns ..
    Federal “Market Debt” First Exceeded $1 Trillion Six Years Ago Under ... Ottawa

    "The bad real estate loans were stuffed into Fannie and Freddie so the bad debt was not in the banks. In Europe, the bad loans are still on the books of the banks. Hence, the European banking crisis was not been addressed and this is the primary difference between American v Europe."

    "This is the CIVIL UNREST that will rise up around the West as socialism continues to collapse. The taxes must rise and the benefits must decline and even that will not keep the social systems in place for more than two years. We will have to face a complete revision of the monetary system. How that is approached will determine if we have violent confrontations with government and the rich are dragged from their homes and hanged as has so often taken place in the past."

    "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 ... them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered"
    For The First Time Ever, Millennials With Student Debt Have Negative Net Wealth
    For the first time, young adults age 25 to 34 with college degrees and student loans have a median net wealth of negative $1,900, said the advocacy group.

    The report states that this lost generation had a positive net wealth of $9,000 in 2013,
    The debt MUST grow for the financial sector to survive. As households cut back, the State jumped in,
    The World Bank wants more bucks to pass around. U.S. and Russia said NO.
    Finland is going to give up on basic Income.
    An interesting article by PCR, on race and, erasing history.

    Leave a comment:

  • Danny B
    ZIRP accelerates the pension crisis

    "The net interest payments will exceed the spending on defense in 2023 and it will exceed all non-defense spending by 2025. "
    "Economically, you need free markets to further society. It is human ingenuity that creates progress allowing individuals to have ideas and act on them "
    "Socialism is collapsing because the system was never designed properly and politicians will always pursue their own self-interest. As pensions collapse so will socialism."

    4/22 Visualizing the pension time bomb: $400 trillion by 2050 – Zero Hedge
    Demographics is destiny. Too many people are retiring for the system to survive.
    4/22 ‘Silver tsunami’ hits as pension costs devour CA school budgets – SFChronicle
    Cyber crime seems to pay well,
    The "impossible trinity" precludes have an international currency AND capital controls. The Petro-Yuan is therefore deeply flawed,

    North Korea has quieted down and now, Tehran is ready to rock.

    Looting the Pension Funds: How Wall Street Robs Public Workers ...
    Millions face PENSION CRISIS: Britons are warned YOU are NOT saving enough to live
    Huge pension fund deficits are a global crisis in waiting
    Last edited by Danny B; 04-23-2018, 11:30 PM. Reason: bum url

    Leave a comment:

  • Danny B
    The price of war,,,, and everything else

    Historically, all prices were set in the marketplace. You had to actually have something of value to trade for what you wanted. This includes the price of credit. Here is a graph of historic interest rates for the last 5,000 years. No can do. The url is about 500 lines.
    Rates have come way down over the centuries. When money had intrinsic value, people loaned it very carefully. Bankers who loan thin-air money don't have any skin in the game and, don't fear losses. Distorting the price of money distorts all other prices. There is a constant need for currency inflation because there is a constant need for free money to support the non-producing class. The creation of a Central Bank was a way to institutionalize sure and steady currency inflation. They were originally created to provide the State with war financing.

    The average person just wants to survive and, enjoy life. The average State has the mentality of a parasite and, wants to control everything in sight. It wants to steal from everyone in sight. The priorities of the State are far removed from the priorities of the average person. Look at the Amish community to get an idea of what the basic requirements are for the average human. Look at Monaco to get an idea of what the basic requirements are for the very rich.
    These 2 groups buy the necessities & luxuries of life. They have no interest in bombs, rockets and missiles.
    The demands of the state are completely at odds with the necessities of society. Yet, the State promotes the idea that the State and society are completely inter-dependent.

    The State uses the CB to distort the price of money and therefore, EVERYTHING else. ALL of this is done in an effort to control it's serfs and wage war. Prices are set in the marketplace. There is little to NO demand for war. It is only a small segment of the controllers who are buyers for war. We are held in thrall to pay for something for which we have no need, nor desire.
    A good article on prices,

    Leave a comment:

  • Danny B
    Locking down the banking system

    Turkey is just one of many States that wants it's gold back on home ground.

    "Once physical cash is gone, your liberty is gone because government can easily monitor and freeze all digital payments. The only recourse for the Chinese people once their cash is gone will be physical gold and silver.
    This brings me to what I’ve warned about for years…
    It’s what I call “ice-nine.” This refers to government’s ability to lock down the financial system in the next global crisis. And it won’t be just China."
    "Money printing won’t be an option, because central banks have printed too much already. Any more money printing would trigger a complete loss of confidence in fiat money and a mad scramble for hard assets."
    Very short-sighted. Creating pixilated debt money (credit) is NOT the same as printing bills.

    "Instead of money printing, central banks and governments plan to lock down the system and not let investors get their money out.
    This will begin with money market funds and then spread quickly to bank accounts, ATMs and stock exchanges until the entire system is frozen.
    Then an international monetary conference will be convened to create a new global monetary standard, probably based on special drawing rights (SDRs), which will be printed by the trillions and handed out to governments to gradually reliquify the system."
    He just can't get the stupid SDR out of his head. NOBODY wants anything to do with the STUPID SDR from the IMF.

    "A few years ago, the SEC changed the rules so that U.S. money market funds can suspend redemptions. Recently, China announced that it would follow suit and allow its money market funds to also suspend redemptions.

    Those laws say the bank owns your deposited money, not you. Wait...what ... Your deposit is actually an unsecured loan to the bank with all the problems of counterparty risk! Instead"
    You get the idea. when the black swan goes SPLAT, the banks won't even open. The money-markets will go dark. YOU will hit the road.
    If you have cash at home, you will have 2-3 days to get to a rural area.

    Here are a few vids,
    Just so you don't worry, "More than 47,000 millionaires collected Social Security benefits in 2010, a year when 7.2% of those collecting Social Security reported income above $100,000."

    Armstrong, " He suggested that to prevent a collapse, the government would mandate that retirement accounts hold a certain percentage in government bonds. It will be a way to tax or force a purchase of debt"
    "The huge crisis is in Europe. Many nations already mandate the majority of pensions must invest in government bonds. Even the US Social Security system is 100% in government bonds. The problem is that interest rates are at historic lows. Pensions need 7% to 8% on to remain solvent. Forcing 100% of all pensions into government bonds will not prevent the crisis coming. The pensions will still collapse."
    " Despite the fact that the currencies of China and Russia during the communist period were not free markets, communism still collapsed. You cannot prevent the economy from ignoring the economics of reality. Regulation will always fail."

    Leave a comment:

  • Danny B
    Survival and the debt of nations

    Man has a "million" years of experience trying to survive. We almost didn't make it.
    All other offshoots died out, most recently, Neanderthal.
    Survival is in our blood so, so is competition. We compete to pass on our genetic lineage. We focus on the family, tribe and clan. A nation is an artificial construct / agglomeration.
    "The concept of the nation state came about with the Treaty of Westphalia in 1648, something that everybody only vaguely remembers from a college history class."
    "Why was it so important? It redirected the concept of “loyalty” away from an individual—a prince or a king—to the State itself. A geographical area now wasn’t so much the possession of a ruler, as a possession of a State. This really got the concept of nationalism going; nationalism is just tribalism writ large.

    That’s how the concept was born. But the idea of a nation state is coming to an end. Now almost anybody can go almost anywhere thanks to jet travel; you’re no longer married to one place, like a medieval serf. "
    "So, first, people realized that it’s completely ridiculous and dysfunctional to be loyal to some thug who, through an accident of birth or through military competence, set himself up as a prince. Now they’re discovering that it’s equally stupid to be loyal to a government that’s running a country."
    "The nation state is now an anachronism, and going out of business. It’s dysfunctional, destructive, and serves less and less of a useful purpose. All it does is tax, regulate, persecute, and conduct wars. People got a bit of a scare a couple weeks ago when it looked like the US might start a nuclear war with the North Koreans, or the Russians. Perhaps they’ll threaten China next. That’s all State-on-State action."
    "But a lot of people conflate the increase in standards of living with the growth of governments. Governments have grown not because they created new wealth, but because they’ve confiscated wealth and used it against their subjects.

    But now most of them are bankrupt—even though they’ve taken taxes from trivial levels to monstrous levels. Even with the huge additional amounts they’ve stolen by inflating their currencies, they’re still bankrupt. I suspect we’re reaching the end game"
    "Central banks and commercial banks are essentially Ponzi schemes, and engines of inflation. It’s a major reason the rich are getting richer—which is OK, except that today it’s at the expense of the middle class.

    This is all going to blow up. And the next crisis will be one for the record books. It will start as a monetary crisis, but will turn into an economic, political, social, and military crisis. You can be sure the US Government will be involved in everything, dragging its subjects with it, like it or not."
    "Well, the declining U.S. Empire will likely confront the rising Chinese Empire. The US still has a very powerful military. The chances are it will use it while it’s still on top. Or a small war could break out anywhere in the world, and escalate. Things could get out of control very quickly. Remember, Black Swans aren’t things you don’t expect. They’re things that you don’t know even exist."

    Socialism is the firewall between the non-producers AND, Darwinian pressures. All gov is socialist because it does redistribution.
    Armstrong, "What it appears to be is the destruction of the West’s economy. This seems to be connected largely to the collapse of socialism and government promises. "
    " It even appears that many governments are deliberately trying to instigate a war that they can use as an excuse to suspend debt payments which would allow them to deny their fiscal mismanagement for decades."
    "Anyone with half a brain can see something is seriously wrong that the national debts just keep growing and we borrow money endlessly with no intention of paying anything back. You have to be a full moron to have created such a system that never ends. Even without war, we are headed into a Sovereign Debt Crisis which is inevitable."

    "As interest rates rise, we are on schedule for a real explosion in debt. The higher the debt to GDP rises, the greater the risk that the debt will force higher taxes resulting in lower economic growth. "

    Not having the reserve currency credit card, the Union of Soviet Socialist Republics collapsed financially. The USSA motored on a bit longer. FED GOV writes 80 million checks a month. The debt is rising as much as $1.7 billion a day. The banks want to drive up interest rates to get more spread on deposits. Rising interest rates will bankrupt more than 50% of businesses,,, depending on how high they go. The banks have to be painfully shorted-sighted to push up rates.

    Leave a comment:

  • Danny B
    FED, god of the bankers,,,Shrinking GDP

    Keep in mind that the FED is an instrument of the bankers. It will always intercede for the best interests of the bankers.
    "larmed commentators warn that global debt levels have reached $233 trillion, more than three times global GDP, and that much of that debt is at variable rates pegged either to the Fed’s interbank lending rate or to LIBOR. Raising rates further could push governments, businesses and homeowners over the edge. In its Global Financial Stability report in April 2017, the International Monetary Fund warned that projected interest rises could throw 22 percent of U.S. corporations into default."

    "Fed has announced it will be dumping its government bonds acquired through quantitative easing at the rate of $600 billion annually. It will sell $2.7 trillion in federal securities at the rate of $50 billion monthly beginning in October. Along with a government budget deficit of $1.2 trillion, that’s nearly $2 trillion in new government debt that will need financing annually.

    If the Fed follows through with its plans, projections are that by 2027, U.S. taxpayers will owe $1 trillion annually just in interest on the federal debt."
    "Where will this money come from? Even crippling taxes, wholesale privatization of public assets and elimination of social services will not cover the bill."
    "the monetarist dictum that “inflation is always and everywhere a monetary phenomenon”: Inflation is always caused by “too much money chasing too few goods.”
    There are no "goods" in the bond market.
    "the Fed has been using this excuse since 2012, citing one “transitory factor” after another, from temporary movements in oil prices to declining import prices and dollar strength, to falling energy prices, to changes in wireless plans and prescription drugs. The excuse is wearing thin."
    " Over the last two years, leading up to and continuing through the Fed’s tightening cycle, nominal GDP growth averaged just over 3 percent, "

    Side note
    FED GOV spends 24% of the gdp with borrowed money. What do you suppose will happen if they stop?
    "“Surging LIBOR, Once a Red Flag, Is Now a Cash Machine for Banks.” He wrote:

    The largest U.S. lenders could each make at least $1 billion in additional pretax profit in 2018 from a jump in the London interbank offered rate for dollars,"
    " They are funding much of their operations through deposits, and the average rate paid by the largest U.S. banks on their deposits climbed only about 0.1 percent last year, despite a 0.75 percent rise in the Fed funds rate."
    " JPMorgan Chase & Co., the biggest U.S. bank, said in its 2017 annual report that $122 billion of wholesale loans were at variable rates. Assuming those were all indexed to Libor, the 1.19 percentage-point increase in the rate in the past year would mean $1.45 billion in additional income.

    Raising the Fed funds rate can be the same sort of cash cow for U.S. banks. According to a December 2016 Wall Street Journal article titled “Banks’ Interest-Rate Dreams Coming True”:
    Yep, pay nothing on deposits regardless how high the FED interest rate goes.
    "major banks have also been publishing regular updates on how well they would do if interest rates suddenly surged upward. … Bank of America … says a 1-percentage-point rise in short-term rates would add $3.29 billion. "
    "All 12 Federal Reserve Banks are corporations, the stock of which is 100 percent owned by the banks in their districts; and New York is the district of Wall Street"
    So, ARMs are going to go crazy.

    "actual GDP has declined an average 7.45% each year since 2007?
    And if that artificial stimulus is removed?:"
    The economy requires constant injections of debt to sustain the appearance of growth.

    But if that debt only burdens the economy without producing any authentic bang…
    Is it not better to stop now, before the tiger grows larger — and hungrier?
    Maybe the time has finally come to let the tiger go.
    Our only advice is this:
    Be prepared to run… and pray…
    So, what happens if the whole country runs out of money?

    Central Bank bubbles,
    Good article on declining liquidity,

    During the good times, the State promised good public pensions. People figured that they no longer needed to save for retirement. After all, the GOV was taking their money and investing it for their future retirement. Well, the good times ended when America lost it's post-war lock on manufacturing. The pensions are still there but, the funds are gone. The income from new workers is too small. The blob State has some real gold-plated pensions and there just isn't enough money to pay for them.

    Cut pensions and, you get a riot,
    "employees will now have to contribute 7 percent of their salary to social security, up from a current 6.25 percent.
    Employers will have to contribute 22.5 percent of salaries from a current 19 percent.
    Pensioners will also have 5 percent of their pension taken out to be used for medical expenses. "
    Every extra dollar taken in taxes reduces the productive economy.

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  • Danny B
    Late credit cycle,,, liar loans,,, inflation

    Where to start,,, What to cover?
    For starters, look at this graph,
    Just in case that you believe that we are in some kind of linear zone of stability, rather than in a cycle. We're coming to the end of a credit cycle.
    Everybody is starting to face this fact.
    "warned that the credit cycle is on its last legs, noting that "in our view, a key driver is simply that global liquidity conditions are tightening, and markets are coming to the realisation that the process will be rocky."
    "The bank also made a rare timing forecast of when it expects it to crack:

    "Morgan Stanley concluded that "evidence is mounting that spreads have hit cycle tights – in other words, that bigger fundamental challenges in credit are 6-12 months away, not 2-3 years down the road."
    " Late-cycle returns: asset returns YTD (annualized): commodities 23%, equities 5%, bonds 4%, cash 1%, US dollar -9%...“late-cycle” price action...last time asset performance ranked this way was 2007."

    "lessons of the 2008 financial crisis“:
    “The shareholders got bailed out. The boards of directors got bailed out. Management got bailed out. So from their perspective, there was no crisis.” “No other industry is levered likely the banking industry,” Kashkari said. "
    "While I agree with Kashkari that Wall Street is forgetting the lessons of the 2008 financial crisis (and is participating in the development of another dangerous economic bubble), he seems to be absolving the Federal Reserve of its massive responsibility for inflating the mid-2000s U.S. housing and credit bubble as well as the current “Everything Bubble”
    It wasn't the FED that made $trillions in liar loans. The Graham-Leachy bill allowed the banks to take all your money and loan it out. No qualified borrowers?? No problem, give them the money anyway.

    "This was a reference to a time-honored banker adage, now mostly forgotten after nearly nine years of easy money: Bad deals are made in good times." "Chapter 11 bankruptcies spiked 63% in March from a year ago "

    Armstrong on inflation.
    "The assumption that an increase in the money supply is the root of all inflation is simply a theory that does not stack up to history. "
    "Therefore, all the research that I have conducted demonstrates that inflation is by no means tied to the increase in the money supply, which is the entire reason nations borrow today. They think borrowing rather than printing is less inflationary. That is not true if the debt can be used as money."
    He is on shaky ground here because he compares debt-money to gold -silver money.
    "At times, the national debt of just about every major nation today has reached 70% of which is attributed to accumulative interest expenditures. As interest rates rise, the national debts will explode and because of this bogus theory of inflation tied to an increase in money supply, they will then raise taxes to try to reduce deficits. This will further create a Great Depression as deflation surges."
    "The ECB has engaged in quantitative easing for nearly 10 years without producing corresponding inflation"
    The monetary inflation is stuck in the upper loop. Specifically, in the bond market.

    "Typically, inflation unfolds when there is CONFIDENCE in the future. Hyperinflation takes place when CONFIDENCE in government collapses. We are dead center. There is no real CONFIDENCE in the future so people are spending less and saving more"
    This is sloppy thinking. There are 2 types of (price) inflation.
    There are two main types of inflation: demand pull and cost push. Fueled by income and strong consumer demand, demand-pull inflation occurs when the economy demands more goods and services than are available. Cost-push inflation happens when the demand for goods increases because production costs rise to the point where fewer goods can be produced.
    People are NOT saving more. They have maxed out their credit cards.

    "What government refuses to look at is the bottom line. The more they raise taxes, the less disposable income the individual has in every class. "

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  • Danny B
    Fiscal gap,,, yield curve,,,smoke and BS

    There is definitely a lot going on but, it is difficult to see past the fog of BS. When Trump tries to make America first, he is forcing globalism out of the top spot. The globalists don't like this. They will break and ignore ANY law if it helps to bring down Trump.

    The British House of Lords is making a big move to rescind Brexit. European socialism is crashing so, the answer is to raise taxes.

    The person who produces a good or service wants to protect and store the value of his labor. The person who produces nothing of value must steal from the producer. Paper money is the vehicle for this theft. Socialism is an organizational tool to do this most effectively.
    The socialists in Venezuela put their cronies in charge of the oil industry,,, ejecting the experts. Unfortunately for the Venezuelans, the price of oil fell badly. The socialists failed to pay the oil workers and, they hyper-inflated the money supply. The results were predictable.

    "the IMF again recommended that countries raise taxes and lower public spending to decrease annual borrowing and get the burden of debt on a firmly downward path now that there is no need for fiscal stimulus."
    "In fact, reading the IMF report between the lines, it is nothing more than advance scapegoating for the inevitable global debt crisis that is coming, and which not even the IMF is hiding any more. What is most comical - if completely expected - is that the IMF is now blaming it all on Trump: not on generations of economists who steered the world to the point where there is more than $3 of debt for every $1 of GDP, and not on central bankers who flooded the world with debt so that the richest 0.01% can be richer than their wildest dream. Nope: it's all Trump's fault."
    "The IMF said that the interest burden has doubled in the past ten years to close to 20% of taxes,"

    The IMF makes no mention of the fact that; the giga-tons of liquidity pumped out by the private banks is what got us to this point. The State did it's share of borrowing megatons of debt to buy votes and make wars.
    The private sector was offered credit that it did not merit. They act surprised when the defaults hit.
    The Global Economy Is Slowing, Credit Card Defaults Hit 6 Year High…. Saxo: The Word Economies Are Synchronically… Falling! – Investment Watch Blog

    The worker wants to store the value of his labor. The parasite uses debt-money to steal it. This only works if the producer pays back the loan. The money-renting business got too crowded and, many debt creators loaned to people who could not repay. The mother of all defaults will be when the State can't repay.
    Armstrong, "Trump is misguided on Trade, as every other politician has been since World War II. That has awakened the sleeping giant of China, whose debt to GDP exceeded 250% going into the end of 2017 compared to 103.7% for the USA going into the end of 2017."
    Ben Carson’s claim that the U.S. owes $211 trillion beyond the reported federal debt
    The more complicated figure he cites in his ad is the $213 trillion “fiscal gap” Carson claims is in addition to the $18 trillion debt. This figure comes from a Boston University economics professor, Laurence Kotlikoff, who put the number at $210 trillion, $3 trillion less than Carson’s figure.

    "Take for example the estimate of the fiscal gap, which increased by one-third from 2015 to 2016.

    The fiscal gap is a key snapshot of the government's financial health that estimates the tax increases and spending cuts required to maintain the current ratio of national debt to GDP. That's a more meaningful number than the national debt alone because it also takes into account money coming into the government's coffers, and the implications on future public policy."
    "If entitlement obligations were counted, the true national debt figure would actually be around $100 trillion, as opposed to the government's current $20 trillion figure. The more holistic $100 trillion number breaks down to a $308,000 burden for every American taxpayer. These bills are real, and they'll come due one day."
    So, cut out all entitlements and, we'll be good.

    Here is a graph of the yield curve. Every time that it collapses, we get a recession.
    You can get a feel for where we are now,

    The crash is blamed on the failure of capitalism or the failure of democracy.
    The pundits wouldn't dream of blaming it on low wages and automation.

    4/19 China air force again circles Taiwan in ‘sacred mission’ – Reuters 3 guesses what they have in mind.
    4/19 Apple jitters mount on concerns of waning smartphone demand – Bloomberg
    No kidding. maybe that is because we are getting ripped off.
    4/19 10-year Treasury yield tops 2.9% on better-than-expected economic data – CNBC
    4/19 Store closures set to accelerate this year, warns Bloomberg – Financial Sense

    More on global growth. Use ... control +... to make the tiny text larger.

    "improving confidence has pushed leverage back to record levels, investors carry the highest levels of risk assets since the turn of the century, and yield spreads remain near record lows. It certainly seems as “things are as good as they can get.”
    "The U.S. economy remains in robust shape, with growth in GDP, industrial production, and investment holding up well. In tandem with strong consumer confidence and employment growth"
    "For investors, when things are “as good as they can get,” that is the point where something has historically gone wrong. It is always an unexpected, unanticipated event that causes a revulsion of risk assets across markets."

    "In 1960, Robert Triffin brilliantly argued that ever-accumulating trade deficits, the flaw of hosting the reserve currency and the result of Bretton Woods, may help economic growth in the short run but would kill it in the long run."
    "We believe the financial crisis of 2008 was likely an important warning that years of accumulating deficits and debts associated with maintaining the world’s reserve currency may finally be reaching their tipping point. Despite the last nine years of outsized fiscal spending and unprecedented monetary stimulus, economic growth is well below the pace of recoveries of years past. In fact, as shown below, starting in 2009 the cumulative amount of new federal debt surpassed the cumulative amount of GDP growth going back to 1967. Said differently, if it were not for a significant and consistent federal deficit, GDP would have been negative every year since the 2008 financial crisis. "

    VERY good article explaining the relationship between the reserve currency, Bretton Woods, gold, and the dollar.

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