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  • Danny B
    Save the banks,,, light a fuse under the 10 year note

    It's pretty quiet right now. The FED doesn't have to actively reduce it's balance sheet to set off deflation. The CBs have been buying every dip to keep investors in the market. If the FED truly wants to tamp down the fires, it only needs to ignore the dips. Historically a meltdown in the stock market took weeks or months to hit bottom. That was before algos were doing much of the trading. That was before so many trades were executed after hours.
    The FED is trying to cool down the fires without blowing up the markets. They have screwed up EVERYTHING else so, what are their chances of success?
    Crypto-coins are a creation of the NSA. Various States and many banks have banned them. They are in flame-out right now. BUT, there is a new twist. Gold backed crypto coins have appeared. EVERYBODY knows how safe gold is.
    BTW, these gold-backed crypto-coins are supposedly gold backed. They are NOT gold convertible.

    Kunstler, "The evolving matrix of rackets that prompted the 2008 debacle has only grown more elaborate and craven as the old economy of stuff dies and is replaced by a financialized economy of swindles and frauds. Almost nothing in America’s financial life is on the level anymore"
    "Erasing psychological boundaries is a dangerous thing. When the rackets finally come to grief—as they must because their operations don’t add up—and the reckoning with true price discovery commences at the macro scale, the American people will find themselves in even more distress than they’ve endured so far.
    This will be the moment when either nobody has any money, or there is plenty of worthless money for everyone. Either way, the functional bankruptcy of the nation will be complete, and nothing will work anymore, including getting enough to eat. "
    Beyond Cynicism: America Fumbles Towards Kafka’s Castle | The American Conservative
    Keep in mind that almost all of the money supply is NOT paper. Paper money will be in BIG demand when credit locks up.

    Jim Willie, "The USGovt and USFed colluded to prevent the entire set of Wall Street banks from failing like Lehman Brothers did. They all had the same ugly insolvent traits. Few tell the story correctly, but Goldman Sachs and JPMorgan suffocated Lehman to death. Lehman did not fail without help. Like Chief Justice Scalia, Lehman was suffocated in a bed of unpaid bond sales. What comes next is a nasty corrosive dangerous sequence of financial market crises, where pumped paper assets suffer notable declines. It will include the stock, bond, and currency markets. "

    "What comes next is what the Jackass has come to call the Global Systemic Lehman Event. For ten years, the Powers that Be, namely the banker cabal, have been supporting the entire global bond market in almost exactly the same manner as they supported the mortgage finance market in 2005 through 2007 before it erupted. The subprime bond market crisis of 2008 will be repeated, but on a global scale which includes major sovereign bonds. "
    "Warning signs are numerous. Consider the Money Velocity index, the flattened Treasury Yield Curve, the junk bond index, the pension fund shortfalls, the business defaults, the high leverage in big bank bond portfolios, and the growing automobile bond market travesty that features a full repeat episode of the subprime mortgage market. The USFed is more guilty of heretical monetary policy with each passing year. "

    "For the last two years, the central bank has been buying US stocks with both hands using their Wall Street partners in collusion. For the last four years, the central bank has been supporting (rigging) the Treasury Inflation Protected Securities (TIPS) bonds, in order to silence the price inflation warnings."
    "The Jackass has been adamant, and mostly (not completely) alone in heralding that the QE might be financial stimulus but it causes capital destruction in an unavoidable deadly manner. QE is wrecking the USEconomy on Main Street while providing a party-like atmosphere on Wall Street."
    "The fuse to light the financial market bonfire is the USTreasury Bond market, in particular the long-term maturity. "
    "There are no free markets anymore, not since 9/11 and the installation of the fascist bankers at the helm. They committed the terrorist crime, sacked the World Trade Center giant bank, installed the Patriot Act, captured the $700 billion TARP Fund, and have controlled the USGovt ever since. It is all a crime scene, a coup d’etat, with cover provided by the lapdog corrupted press networks."
    Technically, the coup commenced on November 22, 1963. JFK was going to end the FED and CIA. The takeover was jacked up a notch on 9/11 to further control and cement the control of the mother country.
    "We were told QE would be temporary, like for six months. The Jackass instantly declared in 2011 that it would be permanent, just like the Zero Rate Interest Rate policy"

    "The USTreasury 10-year yield is on the verge of a breakout. Interest rates are rising, and could cause tremendous damage, starting with the stock market. The USFed balance sheet is loaded for massive losses, from USTBonds bought at low rates. If and when TNX goes above 3.0% on the all-important bond yield, the S&P500 and Dow Jones Index will turn down hard and scream of a major stock market decline."
    "The Global Financial RESET will be urgently put into motion, jumping up a gear in activity and intensity. Ironically, expect in several months that the East will be invited to help stabilize matters. They will comply, but on condition the Gold Standard is re-instated."

    "The secondary pattern hit its 2.7% yield target. It is a highly reliable pattern in general. The recent move above the 2.60% key resistance level with gusto could continue to provide impetus in pushing the USTreasury 10-year yield (TNX) above the 3.0% level. That would cause severe problems"
    "The Head & Shoulders reversal target calls for an upward move in the neighborhood of 3.4% to 4.0% incredibly, as the great unwind is near, for both stocks and bonds. The more conservative 3.4% target pertains to the basic H&S pattern without considering its upward bias tilt. The more aggressive 4.0% target pertains to the more liberal interpretation "
    "Either way, the move toward the 3.5% area will cause tremendous grief and lead to significant publicity. Expect a major stock market decline, together with a major bond market decline, the worst of both worlds. Two declines simultaneously under the King Dollar banner will signal ignominious light."
    "The last time the USTreasury Yield Spread went almost totally flat was immediately before the 2007-2008 subprime mortgage crisis. It served as the key signal, and accurately so, for what was to come in the following several months. The same warning signal is now flashing red"
    US Treasury Bonds: Fuse To Light The Bonfire | Gold Eagle

    The average person does not care about bond spreads. They are all-important to the investing community. You now have something of a timeline if you watch the rise of the 10 year bond.

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  • Danny B
    Bad ideas,, bad plans,,, bad outcomes

    Thanks, Wayne. Talk is cheap and history is only a guide. Human nature doesn't change much but, new inputs from our surroundings eliminate old models. Ned Ludd was the "first" to decry automation. The birth of the AI offspring chip will bring an AI chip for EVERY application. Unfolding neural networks will bring big changes and maybe, danger.
    War will completely change,

    Hackers will flood everything. AI will tell us when we are going to die,
    Man advanced from an agrarian society to a mechanized society. If he gets displaced from participating in the industrial society, he has to revert to an agrarian society. That can't work.
    Depopulation in all it's guises is on the rise, “Funding levels are at their lowest for many years, with the Congo seeming to have ‘fallen off the map’ for many donors, at a time when we are facing vastly increased humanitarian need,”

    Krap with a capital K
    "Dallas Fed President Robert Kaplan: “If We Wait to See Actual Inflation, We’ll Be Too Late; We’ll Likely Overshoot Full Employment This Year; We Central Bankers Must Be Very Vigilant; Base Case Is For 3 Rate Hikes in 2018, Could Be More.”
    The rate hikes are simply daggers in the heart of sovereign debt. Will Trump get rid of the FED and let the Treasury do it's job?

    "When this current bubble pops, the one that I've repeatedly described as The Mother Of All Financial Bubbles, the ensuing damage will be many multiples of that caused by the bursting of the bubbles that preceded it. That’s the nature of these things: you either take your lumps when you should, or you pay a far steeper price later on."
    "In Scenario A the banks make $10 from their 1% spread on $1,000. In Scenario B they make $355 in net interest profits on your same $1,000 deposit. That's a big difference.

    But what if even that’s not enough to sate the banks' hunger for greater profit? What if the banks feel overly hamstrung by that pesky 10% reserve requirement? What if they only had to hold 5% in reserve?

    Well, then $20,000 in loans can be made against your $1,000 deposit. If we call this Scenario C (again at a 4% loan rate,) then banks can make $755 in net interest profit on the back of your $1,000 deposit. Now that’s more exciting!"
    "Each night, right before the bank's reserve snapshot is taken, all of the money in your checking account is briefly "swept" into a special sweep account which has no reserve requirements. So, when the reserve snapshot is taken for your bank, presto!, there's no money in your checking account -- so, as far the regulators are concerned, your bank need not hold any money in reserve for that account.

    And right after the reserve snapshot is taken, presto again!, your money is swept right back into your checking account."
    The FED tried raising rates in 2007. Things crashed. They are trying to raise rates now. The Site "Economica" shows good proof that the CB can't successfully raise rates when the consuming population is shrinking. We can expect another crash but, much worse, because there is so much more debt in the system.

    2/04 All the Nunes memo proves is that it was massively overhyped – Vanity Fair
    2/04 Republican memo interesting, but maybe not how GOP hoped – Buzzfeed

    The Dems would like this to go away. Like Killary once said, "what difference does it make?"
    Sorry, killing a group of U.S. military doesn't really kick of a big stink. In this case, there is far more at stake.
    "The FISA court which approved the FBI surveillance was never told that the dossier had been funded by the Democrats. This is what is classified as FRAUD UPON THE COURT.

    “Fraud upon the court” has been defined by the 7th Circuit Court of Appeals as any “attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery can not perform in the usual manner its impartial task of adjudging cases.” Kenner v. C.I.R., 387 F.3d 689 (1968); 7 Moore’s Federal Practice, 2d ed., p. 512, ś 60.23. "
    “Fraud on the court is one of the most serious violations that can occur in a court of law. If fraud on the court occurs, the effect is that the entire case is voided or cancelled. Any ruling or judgment that the court has issued will be void. "
    "Therefore, anyone who tries to hide the memo is conspiring with the FBI and that is actually a crime. We are witnessing the complete meltdown of the rule of law. CNN and the New York Times, of course, spin it to claim there is nothing really here."

    If you look at the planned borrowing numbers from FED GOV, you can see that nobody in D.C. plans to cut back. The "Crisis Manager" that Armstrong proposed is nowhere in sight.
    So, is all of this just a coincidence? It really doesn't seem that way.

    Leave a comment:

  • wayne.ct
    Interesting source material

    Thanks, you have done a great job of backing up your viewpoint.

    Leave a comment:

  • Danny B
    Brian Josephson won a Nobel prize many years ago for his work on Quantum tunnelling.
    Essentially, all members of a species are in communication / contact.
    The Princeton Egg tracks our global consciousness. The Global Consciousness Project
    So, what does that imply? "Humanity Is Descending Into Clinical Insanity"

    "social pathologies of collapse" The article goes into the many ways that we are going collectively CRAZY.
    The "Most Gruesome Symptoms" Of The Breakdown Of Society Now Manifesting
    Society Could Collapse In A Decade, Predicts Math Historian | HuffPost
    Here's How NASA Thinks Society Will Collapse - The Atlantic
    BBC - Future - How Western civilisation could collapse
    Noam Chomsky on the Breakdown of American Society and a World in ...

    We're slowing down. How important is that?
    Tainter wrote an excellent book on the fall of complex societies,
    Roberto Vaca wrote about this many years ago,
    Armstrong, "We are approaching the grave danger of a Dark Age beginning from the aftermath of 2032. Hopefully, I will be gone by then and will not have to face this horrible event"

    I keep writing about the fact that we have no cure for efficiency. Adding to the collective insanity is the knowledge that many of us may become permanently jobless.
    We're fracturing as a society where MGTOW is just one facet.
    The future is coming TOO fast for us to comprehend or adjust.
    It's going to get even faster when AI can create an AI offspring that is even faster.

    If you want to prepare, you must create an agrarian group that has nothing worth stealing. That means a long growing season with a minimum of stored food. Keep in mind that energy flows from the sun affect our health, both mental and physical. The upcoming pole flip may have us all barking at the moon.

    Armstrong, "In Britain, two out of three pension funds are in the deficit. In total, some 3,710 pension schemes are in deficit according to the Pension Protection Fund watchdog. The entire Ponzi Scheme of pension is falling apart. We need crisis management right NOW and there isn’t a hope in hell of moving to such a position of a Crisis Manager. Millions of workers around the world who believed in government are going to see their futures wiped out."
    "There is going to have to be a NEW Cabinet position with dictatorial powers as a crisis manager. If we continue to ignore this issue, we are headed into a very serious Monetary Crisis and there is NOBODY in office that even understands the threat. So individually, we must ride this wave and to survive, we simply have to comprehend the nature of the crisis. The idiots who are in power will try to raise taxes to fill a deficit for one month. They are not addressing the crisis. This cannot be fixed by raising taxes. We need real CRISIS MANAGEMENT skills and soon."
    So, idiotic lawmakers have to find somebody competent SOON, to run the whole show,,,,, Plant a garden.

    "Keep in mind that Goldman Sachs has three strategic people now in place controlling the agenda."
    GS has screwed it up EVERY time. Trump is going to get steamrollered by all of this.

    The FED dumped $18 billion in one month. How is that going to work out when the Treasury needs about a $trillion?
    "With a rag-tag Trumpian crew of ex-bankers and Goldman Sachs alumni as the only watchdogs in town, it’s time to focus, because one thing is clear: Donald Trump’s economic team is in the process of making the financial system combustible again. "
    "Despite the fact that the Republican platform in election 2016 endorsed reinstating the Glass-Steagall Act, Mnuchin made it clear that he has no intention of letting that happen."
    We're marching off the cliff,,,, arm-in-arm.

    2/02 Dow drops 666 points as interest rates shoot higher – CNBC 666?
    2/02 30-year Treasury yield tops 3% as investors see accelerating economy – CNBC
    2/02 GDPNow forecast an unbelievable 5.4%: I’ll take the under (way under) – Talk Markets I believe it. GDP is just a measure of how much money there is in the economy.
    2/02 US govt unable to service debt as interest rates surge – SRSrocco Report
    2/02 Janet Yellen hands stick of dynamite off to Jerome Powell – Seeking Alpha

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  • wayne.ct
    The nominal sticker price of tangible assets

    Originally posted by Danny B View Post
    Wayne, you can forget about CC for now.


    (2) The present war has the CIA, FBI and MSM,,, all controlled by bankers, along with a congress mostly controlled by bankers ... up against Trump.


    (3) The bankers are / were the most astute parasites. The State was equally a parasite but, not near so astute.


    (4) In the early '80s, the gold industry invented gold futures. This allowed them to sell paper gold. They inflated the gold supply 100 times over.


    (5) The banker must convert his thin-air money into tangibles if he hopes to eat.

    (6) The bankers were ... suppose to keep this on deposit at the FED to keep it from blowing up prices in the lower loop ... monetization has crossed over into the real economy.


    (7) The bankers use their thin-air money to buy tangibles. They can inflate ... The mega-parasites have "poisoned the well" by taking too much.

    Thanks for allowing me to pick your brain. I am in general agreement with you. I'm glad you agree with me on crypto. It won't go away but it won't be the cure when things collapse. And things will collapse eventually.

    (2) (3) (4) It seems to me the bankers, the State and the futures market makers are all in a similar situation, really the same situation. All these groups are, in general, trapped in a box with no way out. They are powerless to really solve the dilemma they have created and if they step out of formation they fear they will end up a pariah like Armstrong.

    (5) At the level of an individual they may decide to put 10 percent of their assets in gold, let's say. That might be permitted but this is the problem with that. They don't fear going hungry, but if the price of gold, let's say, moves up too quickly, it will crash the FRN. Then the "unwashed" masses with come at them with pitchforks. Oops, sorry, they don't own any pitchforks because they all live in cities... There is not enough tangible assets for 10 percent to move 10 percent into tangibles without upsetting the market. (They are trapped.)

    (6) So, according to your chart, the PTB are no longer marching in step and they are buying tangible assets. This will, of course, bring in uncontrollable street level inflation. People will say, "I can't pay my rent and still eat, I'll go live with Joe." That was a good graph. I hope it was a good representation of reality.

    (7) You seem to be of the opinion the game is over, the process of paying the piper is under way.

    Forewarned is forearmed!

    Leave a comment:

  • Danny B
    The curious natures of inflation

    Wayne, you can forget about CC for now. 10% of all CC exchanges take place in India. CC has been pretty much banned in India. It's not very welcome in China either. The Indian public holds about 20,000 tons of gold. The Chinese hold a lot too. Gold will be repriced before long. Over 10% of cryptos have been stolen. Crypto just won't work. I'll try to explain.

    Everyone has heard the story about the goldsmith who had the best vault in town. He rented space in his vault and gave receipts for other people's gold.
    Being human, he eventually circulated more receipts than the amount of gold he held. When he circulated receipts for gold that he didn't own, he went from being an artisan to being a banker. Banking was born out of fraud. Centuries ago, banks held savings. Bankers passed a moral judgement on prospective borrowers. Bankers brokered loans of the PMs that they held in their vaults. The gold supply grew by about 2% a year. The economy grew by about 2% a year.
    This just wasn't enough for many Prime ministers, Presidents, Kings and Popes. Rulers routinely went off the gold standard as they were ramping up for war. This made great fortunes for bankers. Since a king never had to run for election,,,, and buy votes, the bankers got rid of as many kings as they could. The bankers loaned to elected officials knowing that they would collect GREAT returns by backing corrupt leaders.

    Tsar Nicholas II wasn't corruptible so, the bankers whipped up a revolution and ended the House of Romanov. His reign saw the fall of the Russian Empire from being one of the foremost great powers of the world to economic and military collapse.
    Jews May Have Killed Russia's Last Czar Nicholas II In Ritual Murder, Investigators Claim
    Nov 29, 2017 - The head of Russia's Orthodox Church is launching an investigation into whether the last Czar of Russia, Nicholas II, and his family were victims of a ritual murder carried out by angry Jews in 1918,

    Kings had to go. They were a lot more likely to care about their country than elected leaders.
    Since the bankers never actually produced anything, they were the eternal parasite. Parasites LOVE socialism. The bankers have long lauded people like Marx. Obummer was elected by $1 billion from the bankers. The MSM praised him without limit. The bought-and-paid-for-congress gave him as much power as they could. The bankers installed Marxism in Eastern Europe until the U.S.S.R. collapse. They had a lot of influence in Chinese communism. Martin Armstrong says that; it's just our turn to get shafted by socialism. Whatever else you may think about Trump, it appears that he will go head-to-head with the communists.

    The present war has the CIA, FBI and MSM,,, all controlled by bankers, along with a congress mostly controlled by bankers , up against Trump. He is fighting a war against the forces that destroyed that destroyed the U.S.S.R.
    In his post-Versailles treatise, The Economic Consequences of the Peace, Keynes famously quoted the Bolshevik (Lenin)leader saying, perhaps apocryphally, that "the best way to destroy the capitalist system is to debauch the currency." In other words, incompetent central bankers are a communist's best friend.

    This brings us to inflation. When currency was linked by / backed by something that was tangible, it was very difficult to get much monetary inflation. When currency was backed by nothing, monetary inflation was easy to accomplish. The bankers are / were the most astute parasites. The State was equally a parasite but, not near so astute. The 2 mega-parasites ran the presses as fast as they could now that the golden chain had been removed. The number of money renters grew enormously. The money supply grew enormously. The end result was that, interest income is hard to come by.

    In the early '80s, the gold industry invented gold futures. This allowed them to sell paper gold. They inflated the gold supply 100 times over.
    Stop and think. The have inflated the snot out of everything that can be sent over a wire.
    Tangible gold, stock certificates, paper bonds, futures & options, etc haven't been inflated anything like items that are traded electronicly.
    The banker must convert his thin-air money into tangibles if he hopes to eat. The bankers were given a few $trillion as excess reserves to keep them alive. They were suppose to keep this on deposit at the FED to keep it from blowing up prices in the lower loop.
    This chart shows how monetization has crossed over into the real economy. Forget the chart. It was 200 lines of code.

    This site shows how the money has bled over into the economy.
    Armstrong, "This is warning that an uptick in rates will lead to an explosive rally in overall rates and then we will see the costs of funding explode. So buckle up – we are headed to the other side of the storm. We have been in the eye where it is calm but now we are preparing to come out and rates will move upward faster than before."

    So, the State was instrumental in driving down interest rates. This was done to keep interest expense on sovereign debt down to a minimum. But now, the money renters are losing their shirts. FED GOV plans to borrow a couple of $ trillion. The bankers are socialist and the FED is owned by bankers. Since they hate Trump with a passion, they will probably cause the interest rates to go way up.
    The bankers use their thin-air money to buy tangibles. They can inflate the snot out of everything that moves by wire. The actual supply of tangibles is shrinking. The supply of consumers is shrinking. Wages are shrinking. The credit edifice is trying to grow big enough and fast enough to make up the difference.
    Confidence shrinks with them. Confidence drives interest rates. The mega-parasites have "poisoned the well" by taking too much.

    Lenin, "By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth."

    Currency inflation is going up at the same time that wages and population are going down. Armstrong said that the currency collapse would commence in 2021.

    Leave a comment:

  • wayne.ct
    Originally posted by Danny B View Post
    Inflation is accurately described as; an increase in the money supply.


    We have 2 distinct loops of the economy. We have completely different levels of confidence between the two loops. The economy is far more susceptible to confidence than it is to the money supply.
    I can agree with you, but since I "hacked" your response you may want to add to or subtract from my understanding.

    There has been an enormous amount of inflation over the last many years and the rate of this has been accelerating. (also the rate of the rate, but I digress)

    In the general scheme of things, I am a "lower loop" sort of person, but I keep a few "hard assets" around, being that is my choice.

    Now, I like to read your posts, which I do at least once a week. The big reason is that what the upper loop tranche does certainly impacts my life and future. Eventually they will undoubtedly screw up and throw the lower loop into a major depression. This will cause hardship but also result in riots, rebellions, etc. which will impact the upper loop. This is their greatest fear. And this fear keeps them in check, for now. When Portugal sells huge low interest bonds to gullible bankers, I want to know. So, Thank-you. I am better informed.

    The UL people are all jockeying for advantage and that is the soap opera that is played on the world stage for everyone to see. Unfortunately, everyone is an actor and the truth in concealed.

    One reality that I cannot escape is this: A dollar in the UL is the same dollar in the LL. More realities? An oz of metal in the UL is the same in the LL. Same for land, skills, etc. A mountain of bonds and other paper is at the beck and call of groups and individuals and they are seeking advantages over one or the other. Even little NK is in the game. Be careful out there!

    Oh! One more comment. The currencies of the various countries can be issued at various rates and manipulated by the various actors. But, something new has arrived on the stage over the last few years to rock the boat. Namely, Crypto-currencies in all its permutations. I wish I knew the relative size of CC vs. sovereign transaction volume. As I understand it, the ratio is far less than 1:100. Is this correct? If so, it is really nothing to think about at this time.

    Leave a comment:

  • Danny B
    Moving from dangerous bonds into less dangerous stocks

    "Jeff Gundlach - who in early January joined the bearish bond chorus, announcing that a bear market would commence once the long-term trendline be broken should the 30Y rise above 2.99%..."
    Some claim that 3.5% is the start of a crash. Others claim 3%.
    He has some good graphs,

    "The single most important bond in the world is the US 10-Year Treasury bond.

    According to modern financial theory, this bond, with a duration that is meant to cover a full economic cycle, is generally considered the “risk free” rate of the return for the entire financial system.

    Corporate debt, mortgage rates, auto loans, even stock dividends are all perceived in terms of their value/risk relative to the yield on the 10-Year US Treasury bond.

    With that in mind, the yield on this bond has just broken above the trendline that has guided it lower for the last 25 years."
    When bond yields RISE as they are right now, bond prices FALL.

    And when bond prices FALL, the massive debt bubble begins to burst.

    Globally the world has added over $60 trillion in debt since 2009… and all of this was based on the assumption that bond yields were going LOWER not HIGHER
    Here is the little squiggle that indicates to some that the 10 year bond has reversed it's decline,
    John Hussman is extremely methodical. He has lots of facts and figures here to show that stocks will NOT have any earnings in the next several years.
    Armstrong, "So far, we have elected the first Daily Bearish Reversal. There are three more to go before we can say we are headed into a March low. "
    Armstrong recounts some of his earlier predictions that proved to be perfectly accurate.
    Armstrong plays his cards VERY close to his vest because his big paying subscribers don't want him giving out a bunch of info. The big funds want to be the first to the exit.
    None of the indicators point to a waterfall event in the immediate future.

    Alaska and food stamps, "In total, the program covers nearly one-third of the state's population."
    The "precariat",
    The Europeans have come out and told Uncle Sam to shove it! NO more sanctions. No sanctions on Iran and, in a big F.U to pox americana,,,,

    1/31 Market euphoria may turn to despair if 10-year yield jumps to 3% – Bloomberg Wait and see.
    1/31 Forget stocks, look at euro-bonds; they are the real problem – Tom Luongo NO ! NO!, don't look over there.
    1/31 US national debt will jump by $617 billion in 5 months – Wolf Street Buy more popcorn.
    Walmart to lay off thousands of employees | TheHill
    1/31 Private payrolls jump by 234,000, blowing past expectations: ADP – CNBC

    Armstrong wrote about the huge rotation OUT of bonds and into stocks. The State has an unquenchable appetite for MONEY. NOBODY wants to buy $617 billion in bonds from a country that is trying to cheapen it's currency. If the State does indeed default, the bloated stock market is a better bet,
    The lesser of 2 weevils.
    The Treasury will have to bump it's interest rate way up to attract legitimate buyers. That "bump" will be the death knell.

    Leave a comment:

  • Danny B

    1/31 Pimco: it’s time to start betting the other way – Finanz Und Wirtschaft
    1/31 China’s largest conglomerate is on the verge of bankruptcy – Zero Hedge
    1/31 Saving rate at 12-year low when 50% of Americans don’t have savings – Wolf Street
    1/31 China faces worse financial risk than US before global crisis – Economic Times
    1/30 Dow drops 300 points as stocks sell-off intensifies – CNBC
    1/30 World stocks sucked under by bond market breakout – Reuters
    1/30 Stock ownership rate plunges as credit card debt soars – Mish
    1/30 Trader warns: beware the “freaking people out effect” – Zero Hedge

    1/31 Crypto bloodbath amid widespread equity and bond carnage – Mish
    Armstrong gives a short account of his incarceration and torture,,, thanks to the bankers and the State.
    News on quantum encryption,.
    The future of crypto,

    Leave a comment:

  • Danny B
    Underconsumption,,,, Economica

    Here are a couple of articles that you should read in full. I won't excerpt them. They are obvious enough and, YOU are smart enough.
    We are NOT in stasis. We are NOT in recovery. There is NOTHING the State can do to increase the birth rate. Besides that, there are a lot of powerful groups pushing for a big reduction in population. Our credit system DEMANDS expansion. Not only is our domestic population, aggregate wages and consumption falling, all of the major power-brokers are trying to hold on to their power base,,, at the expense of the system.

    "When a few such deals blow up – as bubble assets always eventually do – investors will start wondering what’s going to blow up next. And they’ll find not just a few but many, many bad ideas lurking in their “low risk” accounts. The resulting stampede for the exits will look familiar to anyone who lived through the tech stock and housing busts of previous decades.

    With one big difference. This time around crappy, crazy paper is not just in tech stock and ABS portfolios. It’s everywhere. Trillions of dollars of sovereign debt will tank along with the sketchy shopping mall and emerging market infrastructure bonds. The resulting bust will be more broad-based and therefore way more interesting than anything that’s come before."

    Leverage has flowed into EVERYTHING. Default will flow out of EVERYTHING.

    Leave a comment:

  • Danny B

    Notes on underconsumption;
    "In underconsumption theory in economics, recessions and stagnation arise due to inadequate consumer demand relative to the amount produced. It means that there is an overproduction and a demand crisis.
    One of the early underconsumption theories says that because workers are paid a wage less than they produce, they cannot buy back as much as they produce. Thus, there will always be inadequate demand for the product.
    In his book Underconsumption Theories (International Publishers, 1976) Michael Bleaney defined two main elements of classical (pre-Keynesian) underconsumption theory. First, the only source of recessions, stagnation, and other aggregate demand failures was inadequate consumer demand. Second, a capitalist economy tends toward a state of persistent depression because of this.

    Falling consumer demand need not cause a recession, since other parts of aggregate demand may rise to counteract this effect. These other elements are private fixed investment in factories, machines, and housing.
    So, where did the money and wages come from to utilize these new factories, machines and housing?
    Marx, "It is sheer redundancy to say that crises are produced by the lack of paying consumption or paying consumers. The capitalist system recognizes only paying consumers.
    Marx argued that the primary source of capitalist crisis was not located in the realm of consumption, but rather, in production. In general, as Anwar Shaikh has argued, production creates the basis for consumption, because it puts purchasing power into the hands of workers and fellow capitalists. To produce anything requires the individual capitalist to buy machines (capital goods) and employ workers.
    What if the workers are robots?
    "He argues that as the capitalists compete with each other, they strive to replace human laborers with machines. This raises what Marx called "the organic composition of capital." However, capitalist profit is based upon living, not "dead" (i.e., machine) labor. Thus as the organic composition of capital rises, the rate of profit tends to fall. Eventually, this will cause a fall in the mass of profit, giving way to decline and crisis."
    Stagnant wages (relative to labor productivity) mean that working-class consumer spending also stagnates.
    "Some growth of working-class consumption occurred, but corresponded to increased indebtedness. "

    "The problem with this kind of economic boom is that it becomes increasingly unstable, somewhat akin to a bubble affecting a financial market. Eventually (in 1929), the over-investment boom ended, leaving unused industrial capacity and debt obligations,
    Second, once a recession has occurred (e.g., 1931–33), private investment can be blocked by debt, unused capacity, pessimistic expectations, and increasing social unrest. In this case, capitalists try to raise their rates of profit by cutting wages and raising labor productivity (by speeding up production). The problem is that while this may be rational for the individual, it is irrational for the capitalist class as a whole. Cutting wages relative to productivity lowers consumer demand relative to potential output. With other sources of aggregate demand blocked, this actually hurts profitability by lowering demand. Devine terms this problem the under-consumption trap.

    "the deep-rooted belief in the utility of luxury and the evil of thrift. Thrift, in fact, was regarded as the cause of unemployment, and for two reasons: in the first place, because real income was believed to diminish by the amount of money which did not enter into exchange, and secondly, because saving was believed to withdraw money from circulation."[4]
    The argument was that governmental intervention, especially spending on public works programs, was essential to restore the balance between production and consumption. The theory strongly influenced Herbert Hoover and Franklin D. Roosevelt to engage in massive public works projects.

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  • Danny B
    Kunstler, bonds

    OK, so, Treasury yields are going up,
    Kunstler, "But with benchmark ten-year bond rate nosing upward like a mole under the garden toward the 3.00 percent mark, something is going to give.

    How long do you think the equity indexes will levitate once the bond market implodes? What vaporizes with it is a lot of the collateral backing up the unprecedented margin (extra borrowed money) that this rickety tower of financial Babel is tottering on. A black hole is opening up in some sub-basement of a tower on Wall Street, and it will suck the remaining value from this asset-stripped nation into the vacuum of history like so much silage."
    "Treasury Secretary Mnuchin told the Davos crowd that the US has “a weak dollar” policy. Is that so? Just as his department is getting ready to borrow another $1.2 trillion to cover government operations in the year to come. I’m sure the world wants nothing more than to buy bucket-loads of sovereign bonds backed by a falling currency "
    Happy Landings - Kunstler

    1/29 Dow drops more than 170 points on rising rate fears – CNBC
    1/29 The ECB and the euro are the only glue holding Europe together – CNBC
    $60 billion a month buys a lot of glue.
    1/29 How long before the bond selloff slams stocks? – Zero Hedge
    1/29 US savings rate hits crisis lows amid soaring credit card debt – Zero Hedge
    We're spending ourselves down.
    1/29 A record 32% of used car trade-ins are underwater – Zero Hedge This didn't affect the value of my '82 MBZ diesel.

    1/29 Koch Brothers’ network to spend up to $400m for midterm election cycle – CNBC Elections were always for sale. They're just getting more open about it.
    1/29 Hackers are making U.S. ATMs spit out cash like slot machines – WaPo
    1/29 Mexico police find enough fentanyl to kill millions en route to US – Zero Hedge

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  • Danny B
    Sovereign debt weakening

    Well, I've written quite a bit about the stock market. Armstrong is predicting 39,000. China shows about $1 billion a year capital flight. China is creating more new credit than the FED, ECB and BOJ put together. This inspires investors to flee to a jurisdiction that has lower debt creation. The ECB is still printing $60 billion a month. Even the Swiss national bank (SNB) is buying hundreds of $millions in U.S. stocks. The investors send their capital to whatever jurisdiction appears to inflate the least. The FED publicly announced the end of QE. If you look at the stock indexes, you could easily believe that the FED, and not just cross-border capital flows was upholding the stock indexes.

    If you look at the bond markets, it is all one big farce. The BLICS never bought treasuries. The State now claims that households are buying treasuries. Remember when we used to buy U.S. Savings Bonds? Nobody is doing that any more. So, capital is fleeing to U.S. stock markets. NOBODY is fleeing to U.S. sovereign bond markets. The FED buys them under the table and out the back door.

    The stock market is important for just one reason. Many investors use the stock indexes as a barometer for the financial health of the State. These same investors also use the unemployment rate as an indication of the financial health. They can EASILY learn that close to 100 million of working age are not in the labor force. They prefer to look at the 4.1% number from the BLS. This wilful blindness will come back to haunt them. They have dumped money into passive investment funds because they are too lazy to do due diligence.

    The stock markets are a barometer of the financial health of the private sector. The sovereign bond market is a barometer of the financial health of the State. The treasury has been a serial liar about that health. NOW, the stresses are building up fast!
    "Finally, however, the era of QE and massive monetization is over and done. As the US Treasury gets set to issue upwards of $1.2 trillion of new bonds in the fiscal year (2019) starting in October and the Fed ramps its bond dumping rate to $600 billion per year, the question recurs: Who is going to buy $1.8 trillion of bonds within a 12-month period at current rates (2.65%)."
    The Treasury can conjure up imaginary buyers of U.S. debt,,, up to a point. Can the FED conjure up legitimate buyers for it's bond portfolio? The FED can buy Treasury paper with thin-air money. NOBODY but a central bank can buy FED debt with thin-air money. It isn't likely that the FED can liquidate it's portfolio.
    The bankers and the FED inflated the money supply by about 2% a year. They had to create new money to supply the liquidity for debt service. This constant 2% growth, over time, inflated the wages and prices in America to the point where we priced ourselves out of competition in foreign markets. The investor class just grew TOO BIG. The constant inflation kept them going at the cost of killing the lower loop.
    Contra Corner » The Donald’s Davos Delusions

    The Treasury Bond markets are getting quite worried.
    All the Treasury yields are going up,
    Bond yields are going up,
    The problem is; if the 10 year goes to 3.5% it will wipe out much of the markets.
    Here is a graph of CB printing,
    This is just a long-running story. EVERYBODY wanted to rent out their money. When the productive sector shrunk from the blood-sucking parasites, they cranked up the money-machine to survive.
    "World markets are like a pie crust stretched across the roof of a volcano!"

    The FED and the State are trying to inflate and have the money flow into the bond markets. "Shiller has even conceded that bond markets also fail to correlate to inflation. It is the past that rules the future."
    Armstrong, "Inflation is still relatively modest, but the job market is at its healthiest in years, and the unemployment rate is at a 17-year low. All of this baffles the analysts. They think this should lead to higher wages for workers, which could push inflation higher across the economy, but then there is the technology boom replacing workers."
    "Among the analysts at least, there is more recent optimism and more complacency after being wrong for the first 8 years."

    "This "intervention", as well as the recent retail capitulation which has seen retail investors unleashed across stock markets, buying at a pace not seen since just before both the 1987 and 2008 crash, helps explain why stocks have - for now - de-correlated from central bank balance sheets."
    "What happens next? Well, if the Citi correlation extrapolation is accurate, and historically it has been, it would imply that by mid-2019, equities are facing a nearly 50% drop to keep up with central bank asset shrinkage. "
    The CBs can't really afford to shrink their asset purchases but, they can't continue either.

    Comments, "The Fed tightening by selling off it's balance sheet will soak up dollars at a time when hundreds of billions are coming home and hundreds of billions for investment to capitalize upon the new tax reform."
    "since trumps tax "win" came after the fed shrinkage policy, one could deduct that trump covered, saved, the feds stupidity this time.

    but until I see real wage increases, all this is meaningless to the average joe blowhard, like me, as inflation is onward and upward, the real thief of any perceived gains.."
    "We said, as INFLATION is INSIDIOUS in nature because people ABSORB inflation on GOODS that they MUST have and repudiate those NOT-NEEDED new assets, like a brand new stinking car. It is slow brewed, meant to only distract and then the Government STATS show us: "OH NO, there is not ENOUGH inflation yet." This crock of **** has been brewing a long time. I track what my family spends and we are SPENDING A LOT more on daily consumables and a lot less on new Motorcycles, RV's, cars, homes, etc."
    Consumption shifts out of luxuries and resides just in necessities. Without wage inflation, there can't very well be price inflation. People just stop buying when the price goes too high.

    "The MSM is full of comments like "bringing offshore US corporate profits back to the USA" and by implication to the USD.

    Most people, including the MSM commenters, do not know that most of the so-called "offshore US corporate profits" are actually already in:
    1. USD or USD-denominated assets
    2. located in accounts in the USA

    The fact is that the so-called "offshore US corporate profits" are only just an accounting classification of the profits, NOT the physical location of the profits, so that the money/assets get subject to income tax when the money/assets are moved out of the "offshore" account and into an "onshore" account."
    "Credit is going to dry up. Mortgage interest is going to rise, and additionally millions of people won't be able to subsidize their low income with credit cards. That's why the money grubbing slave driver Trump is president. He's gonna have to deploy homeland security to beat millions of people with clubs."

    Here is a chart on debt creation,
    So, stocks are the place to be because bonds are starting to roll over. Well, stocks are doing all that great either,
    Last edited by Danny B; 01-30-2018, 03:42 AM. Reason: sbellinge

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  • Danny B
    Inflation vs confidence

    Inflation is accurately described as; an increase in the money supply. It was later amended to : an increase in the supply of money and credit. As more and more of the increase in the money supply was supplied with increased credit, the finance system became more and more dependent on confidence and sentiment. The entire upper loop is leverage to the max. The lower loop can not leverage it's wages. We can only pull future wages to the present to buy a house. The housing crash was a situation where the banks had to depend on the wages of the lower loop to stave off default in the bloated RE market. RE prices shot up at the same time that real wages slipped down.
    The CB can inflate the money supply and confidence in the upper loop. The CB can't do much to inflate wages or confidence in the lower loop. The CBs have inflated the income and spending of those in the upper loop. They can not do the same for those in the lower loop. When a bank creates money, it is creating new debt. When the FED creates money, it is debt-free. The FED tries to offset wage deflation in the lower loop by injecting free money into the upper loop. Since the upper loop is mostly superfluous, the economy doesn't lose any real productivity.
    If they injected tons of free money into the lower loop, we would quit our jobs.

    The whole idea of keeping us poor to keep us working, has hit a giant bump in the road. Automation is wiping out whole sectors of employment.
    THEN, there is the "skills gap" "The skills gap in the U.S. is substantial. The National Federation of Independent Business found that as of first-quarter 2017, 45 percent of small businesses reported that they were unable to find qualified applicants to fill job openings."
    At the same time "higher education" is turning out lots of people with no job prospects.
    We have 2 distinct loops of the economy. We have completely different levels of confidence between the two loops. The economy is far more susceptible to confidence than it is to the money supply.

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  • wayne.ct
    Definition of Inflation

    M1, M2, Real GDP and CPI Growth: 1970s vs. Now - AEI

    There are a variety of inflation measures which can basically be interpreted to mean there are an equal number of definitions of "inflation". One cannot rely on dictionaries and encyclopedias for such a thing. They don't really cover the spectrum.

    M1, M2, Mx, CPI, crude oil, nat gas, etc. can all be used as a proxy for inflation. One person's inflation could be another person's "so what?"

    The problem seems to be public perception of value in the aggregate. What one person does in opposition to the general masses cannot have much of an effect. It is when general perception shifts that the devaluation of paper money (i.e. fiat) becomes visible.

    What measure would you or someone else apply to gauge this factor? I would say this is indeed the single most important critical factor, but I am open to other views. Consumer confidence can likewise be measured in a variety of ways. The most popular measure of consumer confidence is, I am afraid, highly suspect. E.g. consumer spending is up (confidence or not confidence?) AND "savings" is down. Again, is that a sign of confidence or lack of confidence? The volume of dollar transactions is so huge that it is beyond the ability of the "average" consumer to conceive, much less understand. The consumer and producer alike behave based on their perception of value at the time a transaction is finalized. Unless there is a "shock" to the system, they continue as if everything is more or less the same as the day before.

    This is a huge momentum in the system and any true "shock" is papered over by the subservient media. At the same time, phony "shocks" are propagated ad nauseum until the population is unable to cope with the volume of "fake news". This could go on for a long time.

    What metric or set of metrics is most indicative? (In your opinion or the opinion of someone you follow?)

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