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Old 04-10-2019, 03:53 AM
Danny B Danny B is online now
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Kunstler, shame and failure

A large percentage of people in the public sector are there because they can't survive in the competitive private sector.
Now, do they come up with TERRIBLE ideas of governance because of their innate insecurity?
Do they come up with terrible ideas ofg governance because they have no understanding of human nature?
I'm going to post the entire text of an article from James Kunstler.

Cluster**** Nation
For your reading pleasure Mondays and Fridays

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How might we account for the strange melding of neuroticism and dishonesty that has gripped America’s thinking class since the ascent of Donald Trump as an epically reviled figurehead on our ship of state? It all seems to come down to shame and failure.

There is, for instance, the failure of America’s leading economic viziers to arrest the collapse of the middle class — and with it, the disintegration of families — that more than anything produced the 2016 election result. What is a bigger emergency: the destruction of all those towns, cities, and lives in flyover-land, or the S & P stock index going down twenty points?

The choice made by the “experts” the past ten years is obvious: pump the financial markets at all costs by using dishonest policy interventions which they are smart enough to know will eventually blow up the banking system. They did it to preserve their reputations long enough to retire out of their jobs. The trouble is that the damage is now so extreme that when the time comes for them to apologize it will not be enough. They will lose their freedom and perhaps their heads.

The neuroticism and dishonesty is exactly what turned two of this country’s most sacred and noble endeavors, higher education and medicine, into disgraceful rackets. Sunday night, CBS 60 Minutes covered both bases in their lead story about how the NYU medical school recently declared its program tuition-free. This great triumph was due to an enormous cash gift from one of the founders of the Home Depot company, billionaire Ken Langone. Nowhere in the broadcast did CBS raise the question as to how the cost of a degree became so outrageous in the first place. Or how Mr. Langone made his fortune by putting every local hardware store in America out of business, which enabled him to capture the annual incomes of ten thousand small business owners and their employees. NYU’s grand gesture is just a way to paper over the shame of the University executives’ role in the college loan racket that may destroy countless lives.

Neuroticism and shame is what drives identity politics with all its weird ritual persecutions and punishments. It was the thinking class that led the civil rights campaign of the 1960s. Here we are fifty years later with dozens of ruined cities, failed public school systems, and prisons stuffed with black men way out of proportion to their actual demographic in the general population (nationally 37 percent versus 13 percent). In California, it’s 29 percent while only 6 percent of the state’s male residents are African American. The favored narrative of the thinking class says that the high incarceration rate is due to unfair application of drug laws for relatively minor offenses, especially being caught holding weed.

Okay, marijuana has been legal in California for several years now. Has that altered the statistics? I guess we’ll find out soon. Is there another explanation? Perhaps disproportionate bad behavior of other kinds: assault, robbery, murder? Perhaps the result of government policies engineered by the thinking class to promote single-parent households with no fathers present for three generations now?

After all this time and all the evidence of how pernicious this condition is, why is there no debate about it? Why is the thinking class so dishonest about the most ruinous ingredient in everyday public schooling: bad behavior, violence, and constant classroom disruption. The thinking classes must be ashamed and appalled by all this, since it appears to contradict all the mighty efforts made to uplift the black underclass. And so what was the most notable response? The Obama Department of Education directed school districts to stop suspending and disciplining black kids who behaved badly because it looked bad, and that policy is still in place. How’s that working out?

The latest appeal among the thinking class to remedy these otherwise intractable and embarrassing problems is the panacea of reparations for the descendants of slaves. Of course, the money spent on social services the past half-century, if simply distributed as cash, would have made every African American a millionaire. Personally, I can’t imagine a worse way of ginning up racial animosity across America to the breaking point than these proposed reparations. We will surely hear more about this in the long slog to the 2020 elections, and it will only make the USA look more insane to the rest of the world.

The thinking class’s position on both legal and illegal immigration is possibly even more cynical — because they surely know how dishonest it is, even through the fog of self-deception. Last week California’s attorney general Xavier Becerra proposed that illegal immigration be decriminalized. Surprisingly, nobody laughed at this extraordinary exercise in casuistry. Meanwhile, the state slides into hopeless insolvency, squalor, and chaos — a reminder that people don’t necessary get what they expect, but rather what they deserve.

RussiaGate, of course, has been the most acute locus of neurotic dishonesty across this land the past two years. The primary information organs of the thinking class — The New York Times, The WashPo, CNN, MSNBC — have not only omitted to apologize for the dangerous hysteria they knowingly propagated, but they persist in supporting the matrix of fantasies at all costs in what must now be seen as a hopeless attempt to preserve their reputations and perhaps even their livelihoods. The repudiation of this nonsense by chief inquisitor Robert Mueller could not be more absolute, even if he was compelled by reality against his own wishes and instincts to do it. And now, what avenue will all this diseased animus of the thinking class go down in its destructive, shame-fueled frenzy to justify itself?
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Old 04-10-2019, 04:13 AM
Danny B Danny B is online now
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Socialism, NO,,,, socialism for bankers, YES

MMT has a lot of people scared. Here is a very deceptive article from Armstrong.
"This same mistake is leading many down the path of MMT (Modern Monetary Theory) which assumes we can just print without end and Quantitative Easing proves there will be no inflation. They are ignoring the clash between fiscal policy carried out by the government and monetary policy in the hand of the central banks. This is a major confrontation where central banks have expanded the money supply to “stimulate” inflation."
It's OK to pump money into the upper loop and inflate stock & bond markets. It just isn't OK to pump any money into the lower loop.

"Governments are obsessed with enforcing laws against tax evasion and it is destroying the world economy and creating massive deflation."
What about the $250 trillion created by GOV in the last 10 years? What about the drop in corporate taxes? What about most of the tax burden being laid on the middle class? What about the $243 billion spent by GOV just in February? GOV pumped in mega-pixels of new debt that went to the upper loop. Then, GOV squeezed some of this back out.

"Therefore, all the theories behind MMT are once again wrong for they are only looking at one side of the equation."
"Therefore, in the ’30s, Milton’s criticism of the Fed was justified because there was no massive hunt for taxes from the fiscal side. Today, we have the fiscal policies hunting capital resulting in a contraction economically (declining in investment) while you have QE just funding the government – not the private sector."
SO, stock markets are at a historical high BUT, the hot money is just funding the GOV.

Wall Street decries any thing that smells like socialism,,, almost.
Socialism for the bankers is an ongoing thing.

4/09 75,000 more stores need to close across the US, as online sales grow – CNBC
4/09 Market concentration is threatening the US economy – Project Syndicate

"Mr. Langone made his fortune by putting every local hardware store in America out of business, which enabled him to capture the annual incomes of ten thousand small business owners and their employees."
Market concentration is threatening the little guy.
Keep in mind that; if all the insects die, mankind dies shortly after.
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Old 04-10-2019, 03:10 PM
Danny B Danny B is online now
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Population deflation,,,MMT and bonds

Ageing and Asian markets.
"From Japan and South Korea to China and some parts of Southeast Asia, aging populations are about to fundamentally change societies, business strategies and government policies."
"The ageing threat has been discussed for years, but the latest signs suggest the region's worst fears are beginning to become a reality.
"I want a child," said one South Korean wife in her 30s. "But we still don't have a house, and when we think about the money, we're unable to take the plunge."
The State tries to grow the economy by pumping hot money to the speculators. The speculators drive up the price of housing out of the reach of would-be parents. There is quite a lag between cause & effect but, it is here.

"TOKYO -- The Asian century is going to be gray.

From Japan and South Korea to China and some parts of Southeast Asia, ageing populations are about to fundamentally change societies, business strategies and government policies. Moreover, the trend could tilt the regional and global power balance, as some economies are stunted while others continue to grow on the back of still-plentiful labor.

The ageing threat has been discussed for years, but the latest signs suggest the region's worst fears are beginning to become a reality.

"I want a child," said one South Korean wife in her 30s. "But we still don't have a house, and when we think about the money, we're unable to take the plunge."

Many South Koreans express similar sentiments and refrain from having children. The working-age population, ranging in age from 15 to 64, declined for the first time in 2017. Now, the total population is also projected to go into decline as early as next year, the country's statistics agency warned at the end of March.
A newborn at a hospital in Japan: As births decline, Asia is rapidly getting older. (Photo by Ken Kobayashi)

By 2065, South Korea is forecast to become the grayest developed nation.
In China, the government abolished its one-child policy in 2016, but this appears to be a case of too little, too late. Births continued to decrease in 2017 and 2018.
The number of Chinese aged 16-59 began falling in 2014, according to the United Nations."
Japan plans to lower the interest rate so that Japanese couples will have more children. Does it seem that there is a BIG disconnect between State perceptions and reality?
China "All that has contributed to soaring house and rental prices, which are pushing younger, first-time homebuyers out of the market. In recent decades, housing prices have risen nearly twice as fast as disposable income,"
"Chinese investors are inflating housing markets in the US, Canada, and Australia"
Since the land under the houses is owned by the State, it tries to inflate the price. Everybody with extra money buys up the housing to rent of resell later. High RE prices drive down birth rates. At the same time, investors are demanding these high prices never drop.
"Public anger in China spreading as property prices drop | South China ...
https://www.scmp.com › News › China › Society Oct 11, 2018 "

"Japan is farther along on this fast track to nowhere. Its population of 15- to 64-year-olds started shrinking in 1995, about the time the country descended into "lost decades" of economic stagnation and deflation. The total population has been falling since 2008.
The outlook for all three countries is grimmer still: From 2020 to 2060, working-age populations are projected to plunge 30% in Japan, 26% in South Korea and 19% in China, according to the Organization for Economic Cooperation and Development. "

"In Japan, social security outlays have ballooned over two decades, forcing the government to borrow more to keep the system going. The public debt is now more than twice the gross domestic product, making Japan the most indebted developed economy."
This is one more thing that markets can not cope with.

4/10 Schiff: democracy has failed, not capitalism – Market Sanity
CRONY capitalism has used regulatory capture to kill representative democracy.
4/10 Small businesses layoff workers to comply with minimum wage law – SHTF Plan
Crony capitalism at it's finest. The big banks want to roll back any legislation that might limit their power to gamble.
"Reform advocates have long sought to make banks smaller, and also to make sure financial companies keep depository banking and gambling activities separate. The bill proposed would represent a step back on both fronts.

Although the bill is opposed by powerful Senators like Elizabeth Warren, other influential Democrats co-sponsored it, including Heidi Heitkamp of North Dakota, Jon Tester of Montana, and Mark Warner of Virginia.

“This bill increases the risk of another taxpayer bailout, and I will continue to challenge supporters of this bill — from both parties — to explain why they stand on the side of big banks instead of working families,” said Warren."

Armstrong, "The hard landing is economic and will have its greatest impact outside the USA"
"The ECB has been on its hands and knees, pleading with the Fed not to raise rates when they will have to continue their QE programs or face sovereign debt defaults."
Armstrong expects capital inflows to U.S. equities to continue. This drains capital out of Europe. The ECB must continue with QE OR, it must implement MMT. Even that might not save them. China has a $1 trillion capital outflow per year. The outflows cause domestic deflation of the circulating money supply. Somebody has to make up the difference one way or another. Much of the outflows are tied to investor confidence that the GOV will not protect their investment.
Globalization and unlimited capital flows are a direct weapon against socialist tendencies and irresponsible governments,,,, what the bankers consider "irresponsible".
This motivates the State to escape this control. MMT completely sidelines the bond speculators. The bond speculators most definitely don't want to be sidelined. When the pension crisis really hits, there will be demands to escape the control of the bankers.
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Old 04-11-2019, 03:58 PM
Danny B Danny B is online now
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SDR,, the little train that couldn't,,, population reduction

Once again, my post got bleeped into oblivion.
The world is at a bifurcation point. Part of the PTB want global population reduction. Part want continual population growth to supply continual growth in credit and finance markets.
Armstrong decries any attempt at population reduction.
A fraction of the PTB are in the process of pushing the U.S. dollar off a cliff to usher in a one-world currency. The new one-world currency would be referenced to the special drawing rights and anchored to the blockchain.
Here is an excellent article that lays out the whole process.
Globalists Are Bringing Their One World Currency Plans Out Into The Open

The article makes NO MENTION of racism. It makes NO MENTION of human nature. Asia is the main source of population. Russia has $ 75 trillion in natural resources. No one-world currency would be viable if it weren't accepted in the East. Will the Chinese subscribe to a currency system created by their historic tormentor and enemy?
Will Russia trade their resources to the West who destroyed Russia by fomenting the Bolshevik revolution? The Chinese are quite racist,, like everyone else. Will they let the West impose a new reserve system on them that shows no particular advantage?

It is obvious that a fraction of the PTB is working on population reduction. Russia gives out free apartments and medals to couples that have lots of children. Why would Russia subscribe to a control system created by the West (SDR)
The working population of China drops by 1 million a year. I doubt that they have any interest in dropping it much faster. They rescinded their one-child policy.

The article posits that the Central Banks would create a crypto-currency referenced to the blockchain. The CBs would replace the private banks. This is obviously an attempt by the State to replace the private banks. I doubt that the idea will fly.

The State is working on absolute control.
"The company behind the creation: Bichip, state that their human implant is the first and only distance readable human microchip with internet connectivity. Originally designed to store medical data, drivers license and passport details, the newest upgrade now allows for the safe storage of cryptocurrency."
This could be the ultimate state of socialism. Every facet of your life could be monitored or deleted. This could be the ultimate state of fascism.
The chip combined with the blockchain could be used to compel you to work regardless.
The chip combined with the block chain has the power to pull your labor-value to either the rich OR the poor.
China is locking down State control with their social credit system. They are in the end-game of a MASSIVE State-sponsored misallocation of resources. China has spent enormous sums on creating a food-production infrastructure in Africa. They don'y need anything from the West. Why would they accept a credit instrument from the West?
The same is true for Russia. They don't need anything from the West.

Last edited by Danny B; 04-12-2019 at 03:12 AM. Reason: screw up
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Old 04-12-2019, 04:09 AM
Danny B Danny B is online now
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S.O.P. throwing darts at the crash-calendar

There is a general appreciation that we are getting closer to SHOWTIME.
Rolling Stone, "The federal rescue of Wall Street didn’t fix the economy – it created a permanent bailout state"
"to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash,"
" Paulson actually told members of Congress that $5.5 trillion in wealth would disappear by 2 p.m. that day unless the government took immediate action, and that the world economy would collapse “within 24 hours.”
"Can you, like, give me some money?” Sen. Sherrod Brown, a Democrat from Ohio, remembers a call with Paulson and Federal Reserve chairman Ben Bernanke. “We need $700 billion,” they told Brown, “and we need it in three days.” What’s more, the plan stipulated, Paulson could spend the money however he pleased, without review “by any court of law or any administrative agency.”"

"But within days of passage, the Fed and the Treasury unilaterally decided to abandon the planned purchase of toxic assets in favor of direct injections of billions in cash into companies like Goldman and Citigroup. Overnight"

OK, this is pretty much standard operating procedure when the banks control the State,

"Let's start with the Ray Dalio Effect, which strikes financiers who've exploited our rigged system to skim billions while creating zero goods and services or public good:"
"Meanwhile, in the real world of people creating wealth with their labor, workers' share of the national income has cratered while the financiers piled up their billions. The greatest expansion of wealth in U.S. history has created the greatest expansion of wealth inequality in U.S. history."
Standard operating procedure.
Very good article, oftwominds-Charles Hugh Smith: Blind Faith vs. the Bottom Line

4/10 American savers lost $500 billion due to low interest rates since financial crisis – CNBC
Well, we HAD to save the banks.
4/11 Baby boomers face retirement crisis — little savings, high health costs – CNBC
No interest income but, IT WAS WORTH IT.
4/11 Short-term growth policies risk new financial crisis, IMF warns – Guardian
Is the IMF r eferring to, US budget deficit hits record $234 billion in February, national debt

"Yet in their desperation central banks may have set a combustion process in motion that they can’t stop, one that may bring about even more ghastly consequences than the market troubles they sought to avert in the first place."
Yes, but, it was worth it to save the banks.
“Mr. Trump’s willingness to bend policy to please the markets is now clear — and it’s risky. In recent years the stock markets have grown larger than the economy, and they are now big enough to take the economy down with them when they deflate.“"
Trump DID inherit this problem.
GOOD graphs. "How’s this relevant? Check what happens when you combine all 3 trend lines on one chart:"

"I kid you not. Freak coincidence? I can’t say, I also can’t say if the apex will be met, but were it to get hit it would be a point of unprecedented historical confluence resistance.

The 2.618 fib and 3 historic trend lines converging at the same point in time. When?
October 2019:"

"You must understand that 75% of today’s wealth is in the hands of retirees and pre-retirees. Most have a significant portion of their money in index funds, and they’re going to see significant erosion of their retirement assets. I’m thinking especially of those depending on public pensions,"
"The Bernanke Fed’s answer was quantitative easing—essentially a way to stimulate lending at longer maturities. It had an effect but not the intended one. Instead of going to productive use, the new stimulus helped banks deleverage and public companies leverage up and repurchase their own shares, or as we will discuss below, simply buy their competition and short-circuit the “creative destruction” cycle"
"Now a Bank of America Merrill Lynch study finds roughly the same thing: 13% of developed-country public companies can’t even cover their interest payments. "

Three companies control about 80% of mobile telecoms. Three have 95% of credit cards. Four have 70% of airline flights within the U.S. Google handles 60% of search. The list goes on. (h/t The Economist)

In agriculture, four companies control 66% of U.S. hogs slaughtered in 2015, 85% of the steer, and half the chickens, according to the Department of Agriculture. (h/t Open Markets Institute)

Similarly, just four companies control 85% of U.S. corn seed sales, up from 60% in 2000, and 75% of soy bean seed, a jump from about half, the Agriculture Department says. Far larger than anyone — the American companies DowDuPont and Monsanto.

As we have reported, some economists say this concentration of market power is gumming up the economy and is largely to blame for decades of flat wages and weak productivity growth."
NO mention of weak consumption.

4/11 Prepare for $80 oil this summer as ‘wounded bulls’ rise, RBC warns – CNBC
Inflated prices are deflationary to the consuming economy.
4/11 US budget deficit running 15% higher than a year ago – AP
AND ??
4/11 Growing public pension crisis an ‘existential financial threat’ – Epoch Times
About that public pension crisis.
"the liabilities of major U.S. public pensions are up 64% since 2007 while assets are up only 30%."
"In the next bear market the pension funds that are already wildly underfunded will fall into a financial black hole from which they’ll never be able to escape.

Those states and cities – many of which are issuing bonds to cover their day-to-day expenses – will be exposed as junk credits (as Chicago was recently) and will have to either pay way up to borrow or enact some combination of tax increases (politically almost impossible) or pension benefit cuts (legally impossible in many places) which will cause chaos without fixing the underlying problem. "
"The weakest cities and the states in which they reside will be forced to default on some of their obligations, stiffing suppliers, creditors, and/or employees. This will throw the municipal bond market into chaos "
" there’s a good chance of the crisis spreading from pensions to currencies, as the world finally realizes that the bailouts are just beginning, with US states and cities soon to be followed by student loans, emerging markets, and European failed states. "
If you are a prepper, this is the most likely scenario to prepare for. If you hear about a general strike by police and fire fighters, it is time to load up the car. Bring money and a tent and,,, camp out at a national park.

Pension charts, https://www.zerohedge.com/news/2019-...sion-nightmare
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Old 04-12-2019, 02:43 PM
Danny B Danny B is online now
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There is a reason that bankers hate MMT

The assumption is made that; when city and State pension funds go broke, FED GOV will borrow tons of money and, bail them out.
4/12 Each American taxpayer would owe almost $700,000 to pay down US debt – Watchdog
The alternative would be a system-wide default.
I found an interesting Doc that I must excerpt heavily. It is too deceptive to just link to.
"Federal debt accelerations ultimately lead to lower, not higher, interest rates. Debt-funded traditional fiscal stimulus is extremely fleeting when debt levels are already inordinately high. Thus, additional and large deficits provide only transitory gains in economic activity, which are quickly followed by weaker business conditions."
Yet, long term government bond yields dropped sharply in all four
areas. This result contradicts the view that the supply
of government debt determines long-term risk-free yields. In microeconomic models and standard supply/demand analysis, increasing the issuance of debt could push yields higher. "
They keep using that term, "risk free"

"This increased debt level will weaken economic activity, thus inflation, pushing long-term yields lower, thereby continuing the now almost three-decade long trend to lower long-term Treasury yields. The empirical evidence is clear. In the past two decades, the government debt-to-GDP ratio rose by 45%, 119%, 15% and 63% in the U.S., Japan, the euro area and the U.K., respectively, unprecedented amounts for any peace time period. At the same time, government bond yields dropped 285, 235, 380 and 400 basis points, respectively (Charts 1, 2, 3, 4). Despite a current gross debt-to-GDP ratio of 106% and a CBO estimate of 110% in seven years, there are currently strong recommendations for even larger deficits and higher debt-to-GDP ratios."

Since U.S. sovereign debt is "risk free', the higher the demand, the lower the rate that it pays. The CBs world-wide pump in mega-tons of liquidity. OF COURSE it flows to risk-free investments. Since U.S. debt is more "risk free" than European or Chinese debt, US debt attracts foreign capoital inflows.
"The empirical evidence is clear. In the past two decades, the government debt-to-GDP ratio rose by 45%, 119%, 15% and 63% in the U.S., Japan, the euro area and the U.K., respectively, unprecedented amounts for any peace time period. At the same time, government bond yields dropped 285, 235, 380 and 400 basis points, respectively"

"The Brookings Paper. The Brookings study starts with the point that stimulative monetary policy options are now inefficacious. RS write that the Fed could take steps to boost private indebtedness, but this might lead to a crisis."
Sure give more lair-loans and, wait for more defaults.
"With monetary policy sidelined, RS contend that fiscal policy must do much more to contain chronically weak demand,"

Wages no longer support demand because of banker-engineered price inflation.

"Three considerations suggest the RS thesis will not work as advertised. (1) Many historical case studies, including findings from Japan and the U.S., do not support the RS thesis. (2) There exists an insufficiency of national saving (private and government combined) to fund greater deficits without sharply reducing investment in plant and equipment and/or consumer spending."
Now, we're getting somewhere. Not enough money in the system.
"This further explains the empirical truth that large government debt and indebtedness leads to lower, not higher, interest rates. Borrowing is indeed much greater, but large indebtedness eventually slows economic growth as resources are transferred from the highly productive private sector to the government sector."
NO mention of all the liquidity locked up by the banks

"Declining marginal productivity of debt. When a factor of production is overused, real GDP follows the law of diminishing returns. With debt accelerating even faster under the RS thesis, the marginal productivity of debt should contract further, creating the same pattern evident in the U.S., the U.K., Japan and China. Diminishing returns is a non-linear concept, which means more is not more, it is less. In 2017 and 2018, the GDP generating capacity of debt for all reporting countries was 17.4% lower than 10 years ago."
NO MENTION that falling productivity is caused by the fact that productivity is useless without consumption demand.

"Monetary base (mb) times the money multiplier (m). They present algebraic proof that while the Fed can influence m by changing reserve requirements, they cannot control it and thus, under existing laws, the Fed does not have the tools/mechanisms necessary to “print money”. They could and did change the level of the monetary base by purchasing U.S. and agency securities, and indeed the base quadrupled in QE 1, 2 and 3. However, they could not control m, which fell from 9 to 3, and M2 growth remained generally subdued."

The money all went into inflationary speculation, NOT into wages or consumption.
"There is currently, however, a real live proposal to make the Fed’s liabilities legal tender so that the Fed can directly fund the expenditures of the federal government – this is MMT – and it would require a change in law, i.e. a rewrite of the Federal Reserve Act."
MMT rears it's ugly head.
"This is not a theoretical exercise. Harvard
Professor Kenneth Rogoff, writing in Project-Syndicate.org (March 4, 2019), states “A number of leading U.S. progressives, who may well be in power after the 2020 elections, advocate using the Fed’s balance sheet as a cash cow to fund expansive new social programs, especially in view of current low inflation and interest rates.”
The LIE rears it's ugly head. Interest rates have noting to do with money created out of thin air. Also, this proposes that the FED create this (debt-loaded) liquidity and NOT the Treasury.

"The Treasury would issue zero maturity and zero interest rate liabilities to the Fed, who in turn, would increase the Treasury’s balances at the Federal Reserve Banks. The Treasury, in turn, could spend these deposits directly to pay for programs, personnel, "
Do you see any reason for the FED to be in the loop?
"Thus, the Fed, which is part of the government, would be funding its parent with a worthless IOU."
"There would be no real increase in services or money"
True, but, there would be a difference on where the money went.
"If the government responded by issuing more central bank legal tender, the inflationary process would become self-perpetuating, and as was the case in numerous historical instances this would lead to hyper-inflation."
Consumption and demand have flat-lined because of banker-created price inflation. Injecting debt-free money into the lower loop would bring back consumption and therefore, production. BUT, it would diminish demand for credit.

Now, we come to the big lie.
"Moreover, the central bank would have no capability of reducing the money supply. All they could offer would be the zero maturity, zero interest liabilities of the government, but there would be no buyers."
So, exactly what is a zero-interest liability?
True, there would be no buyers. There would be NO NEED for intermediaries. The money bypasses the banks.

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Old 04-12-2019, 03:05 PM
Danny B Danny B is online now
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Disfunction every where that you look

That was a difficult post copying from a PDF that had problems with columns. I had to be very careful not to lose it.
Part of the PTB see socialism as the cure for automation. That means huge wealth transfers to the non-producers.
Armstrong, "We are reaching an extremely important change in trend. You can see the pressure and all that is at stake for the EU itself has set up a site it pretends to be a Fact Checker. This is indicative of the rising tensions.

Then we have total insanity with BREXIT where Prime Minister Theresa May is really working for the EU against her own country."
"May hopes that it will come down to accepting whatever terms the EU demands. She hopes Britain will surrender all sovereignty to Brussels or accept a hard exit, which she thinks everyone would reject. She believes the choice will be a hard exit. She is pitching it as the end of the world or remain and overrule the people and democracy.

In all the years I have worked around the world with various governments and political figures, I have never seen the entire world in such total chaos.

Historically, there was always some bright spot where the sun still shined. Today, it just seems to be gray and overcast everywhere we look. We seem to be on track to fulfil our manifest destiny whichever direction that will be — toward liberty or totalitarianism"

Russia is the largest supplier of energy in the world. That means that she receives a huge amount of fiat currency in payment for this energy. She is dumping fiat currency in favor of gold.
Both Russia and China are buying LOTS of gold. Do you see any reason for them to sign on to the SDR?
4/12 Germany to halve 2019 economic growth forecast to 0.5 percent – Reuters
Obviously, this has nothing to do with falling population.
4/12 Shadow banking is now a $52 trillion risk to financial system – CNBC
BRING IT ON ! We're tired of being screwed by bankers.
4/12 “Psychologically, they’re ill-prepared” – Canadian chaos looms – Zero Hedge
Psychology is too important to be overlooked like it is.

4/11 Chinese scientists have put human brain genes in monkey – Tech Review
Hopefully, they didn't take these brain genes for lawyers or politicians.

Most production is done by automatic machines.
The blob State is sucking the producer dry.
The banks are sucking the producer dry.
There is no robot tax. The money has all flowed to the upper loop.
4/11 Elizabeth Warren wants to raise $1 trillion with 7% corporate profits tax – CNBC
Sorry, won't do.
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Old 04-13-2019, 04:12 PM
Danny B Danny B is online now
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The battle for Brexit

ALL OUT Tory Brexiteers push to get May out of No10 on Wednesday – so Britain can quit the EU at 11pm on Friday

Keep in mind that this comes from The Sun. This vid has an observation of the different people who read the different papers in Britain.
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Old 04-14-2019, 05:43 PM
Danny B Danny B is online now
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About GDP

Mnuchin 'Not Worried at All' About AI Displacing Workers - The Atlantic
Tech community "dumbfounded" by Mnuchin's dismissal of AI impact ..

"the unemployment rate is down to just 3.8%, the entire post-crisis gap between actual real GDP and the CBO estimate of potential real GDP has been eliminated,"
Hussman Funds
Paper from Harvard, "Our exploration suggests that while GDP, as currently defined, is not a comprehensive measure of welfare or even economic well-being,"

GDP is just a measure of how much money there is in the economy,,, total of goods and services.
Finance and advertising are included. So is defense spending.
Finance has grown until it is now 40% of GDP. Nothing is produced but, everything looks better if finance is included. U.S. GOV spent $243 billion in February, much of it for defense.
"GDP's inventor Simon Kuznets was adamant that his measure had nothing to do with wellbeing."
"Kuznets was uneasy about a measure that treated all production equally. He wanted to subtract, rather than add, things he considered detrimental to human wellbeing, such as arms, financial speculation and advertising. "
"From GDP’s perspective, bigger is always better. In the real world, that is not always so. When the financial sector got bigger and bigger, it ended in financial crisis. "

"Though Kuznets is credited with generating the first national income accounts, they did not reflect a method he desired to use. Kuznets wanted to create a measure that could be used to understand welfare, not simply output. He thought advertising, financial industries, speculative activities, subways, and certain types of expensive urban housing, among other things, including government spending ought not be included (p. 14). "

GDP during the war years;
Dec 31, 1944 7.95%
Dec 31, 1943 17.02%
Dec 31, 1942 18.88%
Dec 31, 1941 17.71%
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Old 04-14-2019, 07:38 PM
Danny B Danny B is online now
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The woes of Japan spreading to the R.O.W.

Here is a graph of U.S. debt.
Here is a graph of the % of the GDP that is attributed to finance.

Armstrong, "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."
"the higher the debt to GDP rises, the greater the risk that the debt will force higher taxes resulting in lower economic growth. While everyone bashes the USA because it has the largest debt, it also has the largest economy. The debt to GDP in China exceeded 250% at the end of 2017."
You can see the great temptation of MMT.

There is beginning to occur an appreciation of the effects of a falling birth rate.
"Japan experienced rapid growth following World War II as the US and others helped rebuild its economy.
This eventually led to a roaring expansion that culminated in the 1980s Japanese asset bubble, which popped in the early 1990s. There followed what came to be called the “Lost Decade.” It was really more than a decade, as the early 2000s brought only mild recovery. GDP shrank, wages fell, and asset prices dropped or went sideways at best.

The Lost Decade had monetary roots, namely the 1985 Plaza Accord that drove the yen higher and inflated the asset bubble. The Bank of Japan tried to pop the bubble with a series of rate hikes beginning in 1989. This chart shows the BOJ’s benchmark rate."
"Meanwhile, the government tried assorted fiscal policies: infrastructure projects, deregulation, tax cuts, etc. They had little effect, too. GDP growth has been stuck near zero"
No mention that population growth was stuck at zero.
"The Bank of Japan has bought every bond it can except those the government will create to fund future deficits, which is why they are buying stocks not just in Japan but in the US as well. They are trying to put yen into the system in an effort to generate inflation. It simply hasn’t worked."

"I will admit the Fed’s $4 trillion balance sheet expansion surprised me at the time. Fool me once, shame on you. We’ve now seen the new playbook. At a minimum, they will keep the balance sheet at its present, barely-diminished size and eventually add a lot more when we go into recession. I think $10 trillion is almost a sure thing by the mid-2020s, by which point we will have been through our second recession."
"The Federal Reserve holds roughly 35% (give or take) of US government debt. Can we even imagine the Federal Reserve at some point holding $20 trillion of US government debt? "
[B]So, the FED has a choice. It can hold this $10 trillion in GOV debt and, collect the interest OR, GOV can print money to pay it's bills and, bypass the FED and the bankers. [/B https://www.mauldineconomics.com/fro...ed-world-ahead

"That brings us to a new study from researchers at the University of Tokyo and Sweden’s Karolinska Institute. It finds that as of 2015, roughly a quarter of Japanese under 40 are essentially virgins. That’s up from about 20% two decades ago."
"Yet the University of Tokyo-Karolinska study is interesting on two fronts. For one thing, it notes that for young Japanese, “their lack of sexual experience may be involuntary,” citing stagnant incomes and increasingly unstable job prospects as driving the trend"
"Jim Rogers avoids Japanese debt is a mismatch posing repayment questions. Or, as he put it in November 2017: “Japan has staggering debt. They have a declining population and debt that's going through the roof. If I were a 10-year-old Japanese, I'd get myself an AK-47, and I'd leave.”

"As 2019 unfolds, Japan faces a worsening global economy. Exports have now fallen for three straight months" " It hiked sales taxes in 2014 to 8% from 5%, ostensibly to pay down debt. It backfired. A resulting recession had Tokyo upping borrowing to revive growth. Another tax increase planned for October–to 10% from 8%"
" will magically make Japan more innovative and productive. The Olympics themselves will increase English proficiency, morph Tokyo into a key financial center, catalyze startup activity, cut bureaucracy, fatten paychecks, internationalize Japan Inc."
"Nor will magical thinking prod young Japanese to date more, marry earlier and have more kids. The issue is not a lack of interest in family, connection or committed relationships. "

"The problem is rigid corporate schedules that make a reasonable life-work balance hard to achieve. It’s about exorbitant living costs, elevated stress and lower confidence in one’s future earnings potential. "
"“Parents don't have kids for lots of reasons but clearly the cost of raising them, difficulties in securing daycare combined with long working hours make having a family a tough call for increasing numbers of couples.”
Yep, no money,,,, no kids.

"For example, taxes have been rising continuously. The recent increase in consumption taxes (national sales taxes) has gotten a lot of attention. However, one of the biggest taxes in Japan is what we would call a payroll tax on income. It was apparently 14.42% for companies in 2013, and 13.94% for individuals, for a total of 28.36%. And, there is no upper limit on income.

I don’t have good data on historical payroll tax rates in Japan, but as a percentage of National Income, the revenue from the tax was 5.4% in 1970, 13.6% in 2000, and 17.1% in 2012. The consumption tax did not exist in 1988; in 1989, it was introduced at 3%. It is scheduled to rise to 10% in 2015."
And they wonder why the Japanese can't afford kids.
The solution,,, as proffered by the corporatocracy, "If Japan is going to have another period of prosperity, with a graying population, the eventual solution will be the same: to make working-age people as productive as possible."
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Old 04-15-2019, 01:33 AM
Danny B Danny B is online now
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Zombies and job niches

I've always maintained that there is NO cure for efficiency and NO way to roll back automation. From a tangential view, this becomes obvious.
FED GOV spent $243 billion in February 2019. Where did it go. What did they spend it on?
Boeing Didn't Get Any Commercial 737 Orders in March - WSJ
Lockheed Martin, Boeing get most money from federal government
OK, so, why did GOV spend it?
" a zombie company is a technical term for a business which, if it is not yet numbered among the undead, is only earning just enough cash to pay the interest on its borrowings. " But the bursting of the Japanese asset bubble changed everything. Larger companies were kept afloat by government supported banks to keep their people in work,"
"Around the world, the number of zombie companies has risen since the Financial Crisis of 2008. The Bank of International Settlements (BIS) has estimated that 10% of all US public companies can be defined as zombies."

"you might ask if zombie companies were good or even necessary for the wider economy. Employees of zombie companies would argue that they are still employed, still paying taxes and still spending in the shops."
Also, zombies are low productivity companies. With no cash to invest and hoarding skilled labour"

13% of the world's companies are 'zombies.' That's not healthy - CNN
"It started last December, when the IMF published a blog discussing the "Walking Debt: China's Zombies" (a topic we first covered in October 2015 in "More Than Half Of China's Commodity Companies Can't Pay The Interest On Their Debt"). Slamming China’s “zombies”, the IMF said they "are non-viable firms that are adding to the country’s rising corporate debt problem, and are bad business. Zombie firms are highly indebted and incur persistent losses, but continue to operate with the support of local governments or soft loans by banks—adding very little value to economic prospects."
"China's Zombie Firms Can't Lurch Forever – Foreign Policy

Mar 14, 2018 - China's Zombie Firms Can't Lurch Forever .... with the motivation to keep companies alive, their workers employed"
"They’re defined as companies that make enough revenue to service the interest on their debt, but not any profit, or (worse still) need constant cash injections to stay alive"
"The problem with zombie companies isn’t that they’re necessarily destined to fail – many are able to cover their fixed costs (including rent, payroll and suppliers) for years or even decades"
"For many large zombie companies, such as Japan’s Daiei supermarket chain, their fate is inescapable. With billions in debt and hulking corporate structures in need of an overhaul, a fast turnaround is all-but impossible. Instead, these firms lumber from repayment to repayment while enduring lengthy restructuring programmes."
Co-incidently, Japanese public debt is 260% of GDP.

You get the idea, zombie companies are certainly the walking dead BUT, they employ the living. The CBs created about $247 trillion in new liquidity since the 2008 crisis.
The 2008 crisis was brought about in America because the bottom of the economic chain ( the middle class consumer) defaulted.
The State is in a panic. The consumer ran out of money. He desperately needs a job.
The CB pumps money into the banks.
The banks pump money into zombie companies.
The zombie companies maintain jobs for their people.
This has slowed down the wholesale destruction of job niches and maintained spending of the middle class. A wholesale default of impoverished middle class people would wipe out a lot of banks. "They" are trying to stave off defaults by propping up zombie companies who have employees. What about people who don't have jobs?
Twenty-two percent of student loan borrowers fall into default
Student Loan Debt Statistics In 2018: A $1.5 Trillion Crisis - Forbes

It isn't just the West.
"Banks issued 5.81 trillion yuan (US$865 billion) of new loans between January to March, beating last year’s previous high of 4.86 trillion yuan, the People’s Bank of China said on Friday.
In March alone, banks issued 1.69 trillion yuan (US$251 billion) in loans,"
"lending, jumped to 2.86 trillion yuan (US$425 billion) last month, while the January-March amount was 8.18 trillion yuan (US$1.2 trillion), up by 2.34 trillion yuan from a year ago, the central bank data showed."
So, what did the Chinese need this "extra" 2.34 trillion yuan for?
"When China’s currency and markets faltered in late-2015/early-2016, Beijing backed away from tightening measures and was again compelled to aggressively engage the accelerator."
Ah, the tiger has an accelerator pedal.
"Why can’t extremely fast credit growth continue forever? Because at any given time there are only so many borrowers capable of paying back big loans"
Chinese banks are loaning irrespective of whether or not a customer can make repayment. The loan volume is up (2.34 trillion Yaun) because debt-rollover is more expensive than the original loan.
Trump is using the last vestiges of our Bretton Woods credit card to bludgeon the Chinese economy. By lowering the global mean wage, China has exported unemployment AND imported a default cycle.
The whole world is trying to maintain employment in the face of rising automation. Mass default and mass unemployment awaits the loser.
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Old 04-15-2019, 03:17 PM
Danny B Danny B is online now
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run the presses at hyper speed to avoid deflation

The CBs print trillions to keep people working. GOV never pays off sovereign debt so, the only cost is the interest burden. With hundreds of trillions of new liquidity sloshing around in markets worldwide, there is too much supply and, too little demand. This has driven interest rates to an effective zero of below. Gov must lie about price inflation or investors would realize that their bond investments are losing far more purchasing power than they are led to believe. ZIRP means that the State can afford to keep the zombies financed for a long time.
Various States are printing and, hopefully looking for price inflation. They are deathly afraid of deflation in any of it's guises.
4/15 Trump, despite solid U.S. growth, says Fed should fire up stimulus – Reuters
Fight off deflation at any cost.

These Chains Have Announced a Ton of Store Closings in 2019
4/13 U.S. retail stores’ planned closings already exceed 2018 total – NY Times

Deflation is closing in from all sides.
"Fed should fire up stimulus"
I guess that most people are fooled. The GDP figures are just a measure of all the money sloshing around in the upper loop.
“By one measure, the amount of investment-grade bonds has doubled to $52 trillion since the financial crisis. And yields have, on average, fallen to roughly 1.8 percent, less than half the level in 2007. If they were to rise by a mere half-percentage point, investors could be looking at almost $2 trillion in losses."

The money required to support the zombies is only tolerable with ZIRP. Otherwise, it carries too much debt load. ZIRP has wiped out anybody who depends on interest income. Banks crash without a constant infusion from the CB.
"With interest rates at or near zero, governments and corporations went on a historic borrowing binge — and investors gorged on debt that yielded little in return.

These worries aren’t new, of course, but they’ve attracted fresh attention as the amount of negative-yielding debt has climbed past $10 trillion. "
You pay the government for the privilege of guarding your money.
"The world is trapped in debt. Central bankers are trapped by the very construct they helped enable."

In it's original charter, the FED was forbidden from buying public debt. Over the decades, this prohibition has given way to a mandate. The FED MUST buy sovereign debt. They tried to sell off some of this last year. They sold off about 10% and then, the market puked. Balance sheet reduction acted the same as an interest rate hike. NO CAN DO.
It is projected that the FED balance sheet will grow to $10 trillion.
The ECB is even more trapped. The lack of a common debt market means that a few States will always be shunned by investors. The BOJ is buying up all public debt and, doesn't need investor money.
Obviously, there is a lot of temptation from the FED and ECB to emulate the BOJ. This is even greater at the PBOC. China may very well have to put the credit tiger in a cage.

Zero Hedge, Even the President is Terrified of the Dreaded "D" Word
It is claimed that MMT would create inflation. Here is what trump has to say.
4/15 Trump struggles to reshape Fed – The Hill

During wars, the GDP goes way up. This proves that the economy is NOT constrained by productivity. It is constrained by consumption. That is why various leaders push their countries into war to escape economic doldrums. The inflation policies of the bankers have now killed consumption.
BUT, as we move away from kinetic wars and into cyber wars, there is far less opportunity to run up big bills and kill lots of people. Even the kinetic wars are showing that cheap missiles are far superior to expensive navies. There is a big push to go big on space war. This is a non-starter because NOTHING can be protected.
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Old 04-16-2019, 02:55 PM
Danny B Danny B is online now
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The coming war between the upper loop and the lower loop

Automation has reduced aggregate wages and pushed money into the upper loop. The sovereign governments don't have enough money to fulfil all their promises. They want to print new money with NO debt load and, push it into the lower loop. This would end the public bond market. The finance industry depends on the pass-through of liquidity from;
FED to Gov bonds to primary dealers to retail banks to consumer loans.
MMT would short-circuit all of this. The finance industry calls this potential development a red-pill.... blue-pill moment. Naturally, their arguments are loaded with lies. MMT isn't a panacea but, there is no cure for efficiency.
If allowed to take a natural flow, the pension crisis will kill off many millions. The insolvency of SS is DIRECTLY a result of war finance. The FED GOV will use some version of MMT or Chartalism to keep this from happening.
Here is a MMT article that must be examined.

"Clearly MMT, which has actually been around for decades, is currently a hot topic at the highest levels.
what exactly is it?

The answer is complicated as there is no central MMT textbook. Neither is it an accepted school of thought within market economics, or in orthodox economics departments at universities. As such, most working economists have only a passing familiarity with the name at best, and there is misunderstanding about what MMT does and doesn’t actually encompass.
The role of taxes is to drain money out of the economy after the government has spent it in order to manage aggregate demand and keep it in line with available supply of resources.
If the economy gets overheated by inflation, the State collects taxes to cool it down. Other than this, taxes are NOT needed
"For example, if a major war were to break out tomorrow, governments would immediately run very large budget deficits without worrying about how to finance them via taxation first. History shows this to be the case. So the issue is then political: what constitutes an emergency that society should focus its resources on?"
So, if a war breaks out, this constitutes and emergency that demands lots of money. If the working class crashes, well, that's just bad luck.

"conversely, public austerity means the private sector must borrow. "
Why do you think that banks love austerity so much?
"So is MMT a “magic money tree”? No. MMT is more nuanced than that.'
"MMT also recognises there is another limit to the government’s ability to finance itself: inflation. MMT fully recognises inflation is not desirable above a certain level and once self-financed fiscal stimulus exceeds what the real economy can supply such spending would have to be cut back to avoid damaging wage-price spirals – or taxation would have to increase. "

Currently, the FED conducts "open market" operations to tune up inflation-deflation in the UPPER LOOP. MMT would do this to the lower loop.
"First, is the argument that governments cannot create money because true money is exogenous: the public being able to conjure up money is ‘voodoo’."
Yep, only the CB should be able to conjure up money
" contrast, MMT is based on chartalists such as Knapp (1925), Lerner (1943), who argue money is always a political construct. Polanyi (1944) and Graeber (2011) also demonstrate the actual historical record of money is chartalist: there was never a transition barter > gold > credit; with the exception of the gold standard (18151931) the norm across human societies has been to start with local credit, rarely repaid, in order to keep the economy moving. That is a tradition which MMT builds on.

That is also a red pill/blue pill moment for many!"
The transition to electronic money and debt creation has been extremely beneficial to banks. but, it greatly distorts all of the original rules about money
"Second is the argument that MMT is simply “Keynesian” fiscal stimulus via bond issuance renamed, already a well-established theory even if has become politically unacceptable"

Bonds demand repayment of principle and interest. MMT does NOT
"MMT notably also does not believe in the ‘loanable funds’ view that bank loans require savings first, and that banks intermediate between savers and borrowers "
THAT idea went away years ago when banks just created credit from your signature.
"Notably, while economics textbooks still teach loanable funds, the Bank of England admits this is not how money creation and banking operates – it is de novo; MMT then posits the government has greater powers of money creation than banks in this regard given public liquidity does not require a liability to be created at the same time."
ah, but that liability is the bankers salary.
"If a bond is issued under Keynesian theory then a liability and an asset are created; but that bond can be bought by the central bank with electronically ‘printed’ money and the liability de facto removed under MMT."

"Yet that leads to the third criticism, the government is not the actor that would finance itself: that role falls to the central bank. Naturally, central bank independence would have to end under MMT."
You don't even NEED the CB. The treasury takes over.
" While a dual inflation and fullemployment mandate already exists at key central banks such as the Fed, and inflation-targeting might still be built into a new MMT policy framework,"
Inflation targeting is ONLY needed to produce new money to pay off loans that are interest+principle that is greater than the money in circulation. Circulate more money.

"Fourth, and a crucial corollary, interest rates become largely irrelevant under MMT. The cost of money would not matter as much as the quantity of money (i.e., the supply of funds into the real economy fiscally). Indeed, MMT suggests that interest rates should be set to zero. "
NOOOOOOO, bankers salaries would be set to zero.
"Yet a fifth issue then emerges: how would the government yield curve respond under MMT? The curve would start very low and flat. However, what if MMT succeeds in achieving inflation? Bond yields would rise "
There would be no bond and no debt service cost.
"While the Phillips curve is broken under our present global model that strengthens capital vis-à-vis labour bargaining power, under MMT it would rapidly return. Wage inflation would then rise again "
I don't need to cite any more. The answer is simple. Do we continue with money origination being fed into the banks and upper loop OR, does money origination go straight from the Treasury to the wage earner?
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Old 04-17-2019, 02:44 AM
Danny B Danny B is online now
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China has no plan to save itself,,,Japan everywhere

Armstrong, "China has added a new fiscal stimulus package in order to prevent a sharp slowdown. Local governments will be allowed to issue up to 320 billion USD in special purpose bonds to fund infrastructure projects, which is an increase of over 59% from last year."
China Plans To Build An Astonishing 200 New Airports In The Next 15 years
China's Expensive New Airports Lack One Thing: Passengers - WSJ
Welcome to The World's Largest Ghost City: Ordos, China - Gizmodo
There may be as many as 64 million empty apartments in China;

hotels with no guests, stores with no customers and even airports with no flights. It's hard to calculate how many “ghost cities” are sitting uninhabited in China
World's biggest mall a China 'ghost town' - CNN
So, local governments are going to increase their infrastructure spending by 59%
China is long past the point of no return. The credit tiger will eat China and bring a revolution.
"Jack Ma, head of the Chinese giant Alibaba, was criticized today after stating that the 9am to 9pm working day was “blessed” claiming it was the driving force of China today."

China operates on a business plan that eschews profits in the name of unending growth. They took the jobs of their best customers and export growth fell. In the West we pay about 50% of the cost of an item is for finance. China pumps out giga-tons of money pixels and drives the cost of production-finance way down. This makes it much easier to undercut Western finance. BUT, liquidity MUST grow to keep up with debt-service costs. If exports and sales are falling, the only way to grow liquidity and pay debt service is to print new liquidity. China is growing liquidity far faster than the West. The $320 billion "for infrastructure" will just be used to rollover existing debt and prevent defaults. That is the name of the game at this point. Prevent defaults.
China was hoping to switch to a domestic consumption economy. They can only do that by raising wages. They can't afford to raise wages.

Meanwhile, the Pentagon has made confetti out of the paper trail for their spending.

"When the U.S. recession began during the global financial crisis of 2008, Bernanke promised that he would not make the same mistakes the Japanese made in the 1990s. Instead, he made every mistake the Japanese made, and the U.S. is stuck in the same place and will remain there until the Fed wakes up to its problems.

Bernanke thought that low interest rates and massive money printing would lead to lending and spending that would restore trend growth to 3.2% or higher."
"he ratio of corporate debt to U.S. GDP rose above 40 percent prior to each of the last three recessions, but this time around we have found a way to top that. According to Forbes, the ratio of nonfinancial corporate debt to U.S. GDP is now nearly 50 percent…"
We Have Seen This Happen Before The Last 3 Recessions - And Now It Is The Worst It Has Ever Been

4/16 BOJ’s Kuroda vows to patiently continue current monetary stimulus – Reuters
It's not like he has any choice.

"We get taxed on how much we earn, taxed on what we eat, taxed on what we buy, taxed on where we go, taxed on what we drive, and taxed on how much is left of our assets when we die, and yet we have no real say in how the government runs, or how our taxpayer funds are used.

Case in point: Lawmakers across the country have been acting as fronts for corporations, sponsoring more than 10,000 model laws written by corporations, industry groups and think tanks such as the American Legislative Exchange Council.

Make no mistake: this is fascism disguised as legislative expediency."
For all practical purposes, much of the world is run by organized crime. "They" just buy whatever laws they need to fleece us.
Insider trading is a serious crime and many people have been prosecuted for it. The U.S. congress voted to allow insider trading for congress people. This was a bit too blatant so, it was rescinded after a few years.
Honest government, https://www.youtube.com/watch?v=1efOs0BsE0g
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Old 04-18-2019, 02:51 PM
Danny B Danny B is online now
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Damn the torpedoes, fund the military

Here is a look at the budget; https://zh-prod-1cc738ca-7d3b-4a72-b...?itok=c0-5mjo4
“Every gun that is made, every warship launched, every rocket fired signifies in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. This is not a way of life at all in any true sense. Under the clouds of war, it is humanity hanging on a cross of iron.” ― Dwight D. Eisenhower

"It wasn’t a coincidence World War II began exactly eighty years after the onset of the American Civil War"
"We are now eighty years gone since the outset of World War II "

It's not just the White House: At Pentagon and State Dept., the press is ...
Jan 31, 2019 - Briefings are cut back and so is travel with the leaders of military and ... daily press briefing — once held literally daily — has become a hit-and-miss event. ... “Everything has changed in the Pentagon since Trump,” said Kevin ...
Trump sees war as wasteful. Why should he listen to the venom from the Pentagon on a daily basis?
Navy's $128 Billion Nuclear Sub Project Faces Audit Over "Unreliable Cost Estimates"

Bank of America makes case for oil prices above $100 per barrel
So, Pox Americana lays sanctions on oil producing nations like Venezuela, Iran and Russia. This drives up the price of oil. The price of oil goes up and, bankers make more profit. This extra profit is rolled into instruments. None of it goes to wages. Very little goes to capital improvements. So, while a high price for oil is inflationary for the bankers, it is deflationary for the lower loop.

Here is a graph of world trade, https://zh-prod-1cc738ca-7d3b-4a72-b...ade%20data.png
China is printing money to make up for lost trade. Look at the angle of the decline and you will see why China increased stimulus by 59% yoy. Trump is playing them like a yo-yo,,,,, just waiting for the string to break.

4/18 California owes $7 billion for pensions next year – Sacramento Bee
4/18 No, California’s finances are not back in black – Forbes

Armstrong, "Trump has stated that it remains an option for his administration to dump undocumented immigrants in “sanctuary cities,” namely send them all to California and let them pay for them. What is really amazing is that California can’t even manage its own state pensions. It has been secretly lobbying Washington to seize all private 401Ks and hand them to CALPERS to manage. That way, they can take the profits of private pensions and hand them to state employees"

Good article, "In “Rendezvous with Oblivion,” Frank explains how such guardians of democracy as higher education, newspapers and America’s small towns have been undermined by the moneyed professional elites cherished by the modern Democratic Party."

4/18 Luxury car-sharing service hacked; 100 Mercedes stolen – Zero Hedge
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Old 04-19-2019, 03:49 AM
Danny B Danny B is online now
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2%BS,,, the flavor of the next crash,,, look ma, no taxes.

"to avoid a potentially dangerous rise in inflation that economic theory says could result from the hot jobs market. Powell and some of his colleagues have been perplexed and perturbed by the Fed’s failure to convincingly raise inflation to its 2 percent target.
Powell’s also shown willingness to seriously consider an approach under which the central bank would seek price rises above its objective for a while. That’s fanned fears among Powell and his colleagues that companies and consumers may lose faith in the central bank’s ability to deliver 2 percent inflation.
'"The latter, price stability, is often interpreted to mean low and stable inflation. To meet the price stability objective, Federal Reserve policymakers target an inflation rate of 2 percent. ""As mentioned earlier, the FOMC interprets an inflation rate of 2 percent as consistent with price stability. As such, the FOMC adopted an explicit inflation target of 2 percent in January 2012. "

"Therefore, stating an inflation goal—and maintaining credibility with respect to that goal—helps the FOMC manage the public’s expectations when it comes to inflation. In turn, this helps in achieving price stability as per the Fed’s mandate. "
FED chair Paul Volkler, " Volcker is no stranger to presidential pressure on the Fed. ... Volcker writes that the Fed's adoption of a 2 percent inflation target in ... to achieve both full employment and stable prices, saying it causes more harm than good."
So, the bankers force prices up to maintain stable prices.

Smith, "Financial crises come in two flavors: fraud and credit-valuation over-reach. Fraud-based financial crises may differ in particulars, but they share many traits: perverse incentives are institutionalized; the perverse incentives reward figuring out how to evade oversight via fraud, embezzlement, masking risk, etc. which are soon commoditized; regulations are gutted by insider-funded lobbying; regulators fail to do their job in hopes of getting lucrative positions in the industry they're supposed to be regulating; reports of systemic, commoditized fraud are ignored because everyone's getting rich, and so on."

"The resolution has to 1) eliminate the perverse incentives that fueled the crisis; 2) institutionalize oversight that actually functions to limit dangerous excesses and 3) all the malinvestment / bad debt must be liquidated and the losses taken / distributed."
Rather than clean house, politicos bailed out the banks and regulators added new regulations that left the system essentially unchanged.
Interestingly, modern financial crises seem to oscillate between fraud and over-reach:
The dot-com meltdown arose from unprecedented extremes of overvaluation for tech companies profitable and unprofitable alike.

The brewing financial crisis will be different: the twin sins of extreme levels of debt and extreme overvaluation of assets now characterize corporate bonds, many sovereign bonds, stocks and real estate. Pretty much the only traditional assets that aren't at nosebleed levels are precious metals and bat guano. (
Extreme levels of debt and overvaluation characterize the entire global economy, and are not limited to any one nation or sector. When this crisis gathers steam, there will be few avenues of escape. Adding regulations won't stop it, adding liquidity won't stop it, waving chicken entrails and dancing won't stop it"
This graph shows the size of the pile of fuel waiting to be torched.

The joys of regulatory capture.

"60 profitable Fortune 500 companies managed to avoid all Federal Income Taxes in 2018. omputer maker International Business Machines (IBM) which earned $500 million in U.S. income and received a federal income tax rebate of $342 million. The retail giant Amazon reported $11 billion of U.S. income and claimed a federal income tax rebate of $129 million. The streaming service Netflix paid no federal income tax on $856 million of U.S. income. Beer maker Molson Coors enjoyed $1.3 billion of U.S. income in 2018 and received a federal income tax rebate of $22.9 million. Automaker General Motors reported a negative tax rate on $4.3 billion of income."
Corporate welfare for the rich.

4/18 Infrastructure or pensions – states are only choosing one – Birch Gold
I'm hitting a LOT more potholes lately.
4/18 U.S. retail sales, jobless claims data brighten economic picture – Reuters
4/18 US retail sales soared 1.6% in March – Fox News

4/18 5,994 stores already closed in 2019, blowing past 2018’s full year total – ZH
4/18 Fed may need to buy more bonds than before crisis to manage U.S. rates – Reuters
" pump in more liquidity before the election"
4/18 If Trump country soars, will the president glide to a second term? – NY Times
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Old 04-20-2019, 04:12 AM
Danny B Danny B is online now
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Chinese credit meltdown,,, chain reaction in the West,,, rigging the confidence game.

I'll skip MMT. The BS is knee deep.
China is a different story. Same amount of BS.
"Nor is it clear what can be achieved with more credit. The IMF said in its Fiscal Monitor that the country now needs 4.1 yuan of extra credit to generate one yuan of GDP growth, compared to 3.5 in 2015, and 2.5 in 2009. '
"Let us concede that Beijing has opened its fiscal floodgates to some degree over recent weeks. Broad credit grew by $US430 billion ($601 billion) in March alone. Business tax cuts were another $US300 billion. Bond issuance by local governments was pulled forward for extra impact. "
Signifying extra desperation.

"The thinking is that China will rescue Europe. Optimists are doubling down on another burst of global growth, Bear in mind that if China’s economy is a fifth or a quarter smaller than claimed it implies that the total debt ratio is not 300 per cent of GDP (IIF data) but closer to 400 per cent.
"Of course it is not true. Japan’s manufacturing exports to China fell by 9.4 per cent in March (year on year). Singapore’s shipments dropped by 8.7 per cent to China, 22 per cent to Indonesia, and 27 per cent to Taiwan. Korea’s exports are down 8.2 per cent."
"After taking on more debt in a single decade than any other country ever — in the process helping to pull the US and Europe out of the Great Recession — China recently shifted into an even higher gear, creating a world record amount of credit in the most recent reporting month. "
You can see where Chinese liquidity is important to the West.

"The 2019 growth rate would be the weakest since 2009, when the world economy shrank. It's the third time the IMF has downgraded its outlook in six months."

The U.K. is worried about credit card debt, https://www.dailymail.co.uk/news/art...ble-burst.html

The world is in the later stages of the confidence game. The Chinese are well known for being gamblers in everything.
The Chinese report that they are pumping in mega tons of liquidity.
The Japanese report that the BOJ has bought up half of the markets.
The ECB reports that it is going to resume QE

Meanwhile, the FED reports that it is shrinking it's balance sheet. Halted for the moment. There are NO reports of U.S. GOV pumping up everything in sight. The U.S. military reports that $21 trillion is unaccounted for. 10 years ago, the U.S. comptroller David Walker refused to certify that the U.S. books were accurate and honest. Where do you think that $21 trillion went? The military spent it into the economy.
The treasury gets the bills and just sends out a check. Before the spread of GOV plastic money, SS, etc, U.S. GOV was writing 80 million checks a month.
MMT would have the Treasury just write checks for all State expenses.
IF U.S. GOV was spending more than was approved in the appropriations and budget, who would know?

Exclusive: The Pentagon's Massive Accounting Fraud Exposed | The ...

Alexandria Ocasio-Cortez and the $21 trillion Pentagon accounting ...

Dec 3, 2018 - The US military budget is such a bloated monstrosity that it contains accounting ... $21 TRILLION of Pentagon financial transactions “could not be traced, .

SO, the Pentagon has spent mega-bucks into the economy with no way to track or trace it.
This money doesn't show up on official budget records. Europe, Japan and China report just how much they are pumping in. This weakens confidence in their currencies and Central Banks. China and Russia are buying gold expressly to strengthen confidence in their fiscal strength. The confidence game is growing ever-more important. The game is rigged. Uncle Sam is dealing from the bottom of the deck.

Armstrong says, "absolutely do not raise taxes on the rich."

Last edited by Danny B; 04-20-2019 at 04:13 AM. Reason: moooo
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Old 04-21-2019, 04:26 AM
Danny B Danny B is online now
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Can truckloads of pixels save the day again?

The war is between the upper loop and, the people who actually work.
“Chicago Federal Reserve President Charles Evans said on Monday that he’d be comfortable leaving interest rates alone until autumn 2020 to help ensure sustained inflation in the U.S"
“The U.S. Federal Reserve should embrace inflation above its target half the time and consider cutting rates if prices do not rise as fast as expected, a top policymaker at the central bank said"
Credit Bubble Bulletin : Weekly Commentary: Full Capitulation

"Back in 2016 the financial world was falling apart. The US dollar was spiking. Emerging market currencies were getting destroyed. The S&P 500 equities was exhibiting a classic head-and-shoulders formation, indicative of a coming plunge. The macro-economic outlook looked grim, too, with global trade slipping into contraction:
But then everything suddenly turned around, as if by magic.
Well, we now know that ‘magic’ was actually a massive quantity of monetary and fiscal stimulus pumped into the system by the world's central banking cartel.
But can they? Maybe. Or maybe not.

If the answer is “yes,” our prediction is to expect what we got last time, just taken to more extremes: a vastly wider wealth gap between the 1% and everyone else, accelerated destruction of savers and the middle classes, and anemic GDP growth coupled with explosive further growth of global debt levels.

If the answer is “no,” a massive crash of epic proportions, unlike any most of us have ever experienced, is in store. Credit bubbles are ugly beasts. They're fun while they last but devastating when they burst. The longer they carry on, the worse the crash when it comes -- this bubble has been going on for longer than most people ever could have imagined.
In 2016, there were slumping emerging markets, a slew of macro indicators pointing to a global slowdown, and equity bear markets all over the place. And then – presto! – everything reversed during one night in February 2016. It was as if nothing had ever happened.

Somehow all those fundamental macro warnings just melted away in a burst of financial market exuberance.

S&P futures took off in the overnight session between Feb 7th and the morning of February 8th as if the entire world suddenly had a change of heart:
Massive buy orders showed up in the middle of the night and it was only later that the economic data began to turn the corner.

What came first was the tremendous application of monetary, fiscal and financial stimulus. Just gobs and gobs of it. Economic recovery, such as it was, showed up later.
It didn't take long for their combined printing hit the highest run-rate of the entire crisis at $2.5 trillion dollars by mid-2016. They then kept the pedal to the metal clear through mid-2018.
But behind the scenes they were hastily, and often haphazardly, dumping the largest-ever quantity of money and credit into the system the world had ever seen
We warned that "until and unless" the world’s central banks reversed course and began printing like crazy, the vast global cesspool of over-expensive bubbly financial assets would soon undergo a painful downwards re-pricing.

And start fall they did; through September 2018 up through Christmas Eve. Then, as they have done so many times, a “miracle” bottom was formed
In Part 2: Why This Better Work, we look closely at just how awful the fast-deteriorating macroeconomic situation is. It's very bad. GDP is falling in nearly every region of the globe,

4/20 The eurozone slowdown is worse than the global one – Daniel Lacalle
4/20 Cord-cutting is quickly picking up pace – Zero Hedge
4/20 Federal gov’t financial condition worsened by $4.5 trillion in 2018 – Truth in Accounting
4/19 Crisis at China’s JPMorgan wannabe deepens on bond defaults – Bloomberg

Chinese bonds are crashing.

"Everywhere the establishment and their neoliberal policies are being rejected by the masses of working people who have only recently begun to wreak havoc on a system that has ignored them for more than 30 year"
"rump’s public approval ratings have improved, not because he has “drained the swamp” as he promised, but because he is still seen as a Washington outsider despised by the political class, the foreign policy establishment and the media. His credibility rests on the fact that he is hated by the coalition of elites who working people now regard as their sworn enemy.

The president of the prestigious Council on Foreign Relations, Richard Haass, summed up his views on the “weakening of the liberal world order” "

"What Haass is saying is that the cure for globalisation is more globalization, that the greatest threat to the liberal world order is preventing the behemoth corporations from getting more of what they want; more self-aggrandizing trade agreements, more offshoring of businesses, more outsourcing of jobs, more labor arbitrage, and more privatization of public assets and critical resources."
It’s a policy that focuses almost-exclusively on the free movement of capital in order to enrich wealthy shareholders and fatten the bottom line. The sporadic uprisings around the world– Brexit, yellow vests, emergent right wing groups– can all trace their roots back to these one-sided, corporate-friendly trade deals that have precipitated the steady slide in living standards, the shrinking of incomes, and the curtailing of crucial benefits for the great mass of working people across the US and Europe."
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Old 04-22-2019, 05:10 AM
Danny B Danny B is online now
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E. U. and China,,, ,capital flight

New debt is rising enormously. BUT, the marginal utility of new debt is falling. Traditionally, the confidence of the bond buyers is the controlling factor for bond sales. As confidence is falling, buyer demand higher interest,,, until bonds can't be sold. Since banks create money out of thin air, they aren't limited to savings. Bonds are sold because their is so much "homeless money" sloshing around. Who knows how low the utility of new debt can go?

The various States of Europe have defaulted many times. The EU is their local form of World GOV that will stop ALL bond defaults. This is the aim of the corporatocracy.
"As Nigel Farage said recently on the floor of the European Parliament, Brussels always wins.

And that’s the message Brexit is supposed to convey to everyone around Europe.

“Defy us and we will destroy you. See what we’ve done to the mighty Brits?”
"The EU elections could be an atomic bomb that atomizes the sclerotic political structure of the U.K." "We’re still seeing capital flee Europe"

"I could expand on the subject, but I trust everyone gets a sense of the mismatch in fantastical narratives, the price action in markets and the reality on the ground. If the economy is as great as markets indicate the Fed should have no problems raising rates. If the signals parts of markets send is false and the rally construct is simply based on cheap money, buybacks and a dovish Fed, then the Fed itself may have ignited the final bubble run. Out of sheer desperation no less."
"As markets are now close to all time human history highs on the heels of a dovish Fed new highs seem a lay up to embrace the bubble in full, "
The article is essentially about the mismatch between the lower loop and the bubble for the bankers.

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Old 04-23-2019, 03:51 AM
Danny B Danny B is online now
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Reportedly, stimulus actually precedes a meltdown

Fracking lost over $200 billion. Reportedly, Wall St is getting tired of this.
SHALE STOCK LOSES 99% OF ITS VALUE: Investor Warning For The Future Of The Industry?
The FED is pumping in so much money from so many avenues that it is very difficult to get a real feel for capital flows.
Here is a very interesting article showing that the FED pumped in money prior to the various crashes.

In our view, three flawed narratives are driving late-cycle euphoria in financial markets today:

1. “Central banks can always prevent a downturn in financial markets and the business cycle”;
2. “US stocks valuations remain attractive”; and
3. “Chinese stimulus and a US-China trade deal will reignite growth in the second half of 2019.”

We believe that the first two storylines are simply wrong. We show why herein. Regarding the third, in our view, China is much more likely to tank the world economy over the next several quarters than rescue it given the historic credit imbalances there, which we also explain below.
"here has been a huge misconception that global central bank liquidity is what is driving stock prices up today. Our work shows that both global M2 money supply and central bank assets have been contracting on a year-over-year basis so far in 2019. That tells us liquidity has not been the driver of the current market-top-retest rally; hope has been."
I suspect that they are reading the official figures for M2.

"starting in September 2006 led by China, global central banks increased their balance sheets by $3.9 trillion or more than 50% through March of 2009. This unprecedented level of money printing did not prevent the Global Financial Crisis. Rather it preceded and accompanied it."
Even the Fed’s QE1 which started in 2008 did not stop stocks from plunging; it only coincided with it as shown below
"As we show in the chart below, there were twelve times since 1954 (the history of the Fed Funds) that the US central bank paused its interest rate hiking cycle and then reversed it. Only three of those reversals ended in soft landings (1966, 1984, and 1995)."
! Of the nine pauses associated with market downturns and recessions, the economic contraction began an average of just five months from the date of the last rate hike. That would be next month if this is the average delay!

Lotsa good charts https://www.crescat.net/crescat-capi...etter-q1-2019/

The French GOV is in a hurry to get a European army formed. Apparently, the French police can't be depended on to murder French people.
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Old 04-23-2019, 03:09 PM
Danny B Danny B is online now
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Stopping the bankers from creating the final crash

The world is full of stupid people and many of them are drawn to politics. Besides being stupid, they always seem to have agendas to increase their own personal power and wealth. Merkel won the Kalergi prize for her destruction of Germany. May seems to be on track to do as much damage to Britain as possible. Both of them stooges to the corporatocracy that wants to destroy the States of Europe for greater profits.
So, who could arise up and galvanize the people to throw out the criminals.
Information-bandwidth limitations have made it near impossible to have a clear idea of what is going on for the average voter. The corporatocracy has worked hard to get the voters OUT of the control loop.

King Solomon is in his grave. Who could be wise enough and informed enough to come up with a viable alternative to the corporatocracy? Armstrong and his computer program, Socrates spent quite a long time doing exactly that. He is giving a presentation in Rome in May. Here is the index for his presentation. It appears to be all-encompassing.
Keep in mind that Armstrong has always taken human nature into account.

The taxes and predations form the State are usually responsible for the financial collapses. Here is a good paper on how the State plans to finance itself in the future.
"The proposal is for a central bank to divide the monetary base into two separate local currencies—cash and electronic money (e-money). E-money would be issued only electronically and would pay the policy rate of interest, and cash would have an exchange rate—the conversion rate—against e-money. This conversion rate is key to the proposal. When setting a negative interest rate on e-money, the central bank would let the conversion rate of cash in terms of e-money depreciate at the same rate as the negative interest rate on e-money. The value of cash would thereby fall in terms of e-money."

So, you would be charged interest on your cash.

"Discussion might be further enriched by the Obama administration's 2015 Economic Report of the President, which highlights the growth in middle-class incomes during the Bretton Woods system of fixed exchange rates. The report describes the period from 1948 to 1973 as the "Age of Shared Growth." The period was characterized by accelerating labor productivity, falling income inequality, and increased workforce participation. What if post-1973 productivity growth had continued at its pace from the previous 25 years? The report posits that "incomes would have been 58 percent higher in 2013" and "the median household would have had an additional $30,000 in income."

"2011 paper "Reform of the International Monetary and Financial System," published by the Bank of England, which analyzed the performance of the gold standard (1870-1913) and the Bretton Woods gold-exchange system (1948-72) relative to current monetary practices. The report concludes that today's system has performed poorly relative to prior monetary regimes,"
"The increasing financialization of gross domestic product is unhealthy because the growing size and profitability of the finance sector come at the expense of the rest of the economy and increase income inequality. When the value of money is fixed, as under a gold standard, economic growth reflects higher levels of productive output."
Judy Shelton: The case for monetary regime change | Gold Anti-Trust Action Committee
"system has performed poorly" NOT for the bankers.
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Old 04-24-2019, 02:30 PM
Danny B Danny B is online now
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Chicage and blob state pensions

I'm picking on Chicago today. That city is the avant garde of the pension crisis.
"For 169 governmental bodies, the numbers are lopsided. In some cases hundreds — and in Chicago’s case, thousands — more retirees are drawing from a fund than active workers are paying into it."
"But Moody’s Investors Service recently estimated that public pensions are underfunded by $4.4 trillion. That amount, accounts for one-fifth of national debt. "
"Since 1996, total property tax extensions in Illinois have increased 52 percent after adjusting for inflation. ' Over 6,000 local taxing districts are responsible for raising these property tax levies, " Analysis of state and local government records over the last two decades reveal most of the property tax increase between 1996 and 2016 was caused by:

State education funds being diverted to teachers’ pensions
Growth in local government employee pensions and benefits
The state’s contribution to education increased more than $5.4 billion from 1996 to 2016, an 87 percent jump. But 66 percent of that increase – $3.6 billion – went to teachers’ pensions instead of the classroom.
Chicago area drops population for fourth straight year, census data ...
"Spread out the $145 billion in overlapping government pension and retiree health care debt – from the city, the Chicago Public Schools, Cook County governments and the state – and each Chicago household is, on average, on the hook for more than $139,000 each. "
"Some New Trier Township residents were stunned to see the assessed value of their homes jump by as much as 40, 60 or even 100 percent this year."
So, if you can't legally raise tax rates, just raise assessed valuations.

Various governments everywhere plan to finance their growing horde of State employees by imposing negative interest rates. This won't work if people go to cash. That is why there is a war on cash. Now, there is pushback to the war on cash.
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Old 04-24-2019, 02:45 PM
Danny B Danny B is online now
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The next big thing, euthanasia

I needed to do a second post because of recent info from Armstrong. There is quite a conspiracy going on.
"If governments can no longer borrow from the private sector thanks to this quantitative easing and negative interest rates, then there will be nothing that remains familiar as we forge ahead.. Armstrong.
"This is why the capital flows are going crazy pouring out of Europe into US Equities. I do not think people comprehend that we are staring a crisis in the eyes that is so fundamentally changing with regard to how the world monetary system functions, "
OK, so, the CBs have destroyed the sovereign bond markets. WHY?

"There is no liquidity any more so the market is dead because of the central bank’s monetary policy.” Mr Nagai confirmed what I have been stating that “The fixed-income market is dead due to the zero interest rate.”

Both the central bank of Japan and of Europe have destroyed their respective bond markets. Looking forward, we are facing a very dark period when it comes to the ability of governments to continue to function."

Why am I the only one who makes the connection. MMT bursts out on the scene. The CBs have destroyed the sovereign bond market. The crash is assured. What solution will be demanded?
Keynes wrote about this LONG ago. If interest drain is killing the economy, get rid of interest drain.
Keynes long ago proposed Euthanasia of the rentier.
Never let a good crisis go to waste.
Everybody complains about boom & bust. So, just create a steady-state economy.

Regulatory capture by the banks has been very hard on the rest of the economic body. They were allowed to grab everything in sight. We get a crash. By popular demand, the banks get squeezed out of financial markets.
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Old 04-25-2019, 12:46 AM
Danny B Danny B is online now
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Loose cannons on the economic ship

The bankers of the world wanted instant capital transfer so that they could speculate in anything around the world. The corporatocracy wanted one-world GOV so they could dictate labor rates and, never lose a dime in the bond markets. Evidently, they weren't smart enough to see what the final result would be. Globalism has only benefited SIX nations. This just isn't good for business,,, especially if you aren't one of the six.
Trump, by his actions, has emboldened other States to try to break away. The Eurocrats want a European army to squash down any potential escapees.
They claimed, We need a European army to counter an invasion by Russia. Nigel Farage got up in the European Parliament and asked them. WHO DO YOU THINK YOU'RE KIDDING?

Another sticking point; private capital is a very large part of global liquidity. Since capital flows are mostly unrestricted, they tend to flow into jurisdictions that are undeveloped nations with LOW wages and no environmental restrictions. Capital flows out of States with high wages and expensive government.
This has hit Europe especially hard.
Armstrong, "This is why the capital flows are going crazy pouring out of Europe into US Equities."
Repost, https://www.armstrongeconomics.com/w...ncial-unknown/

So, where does this capital flow? Net inflows into the U.S.
"‘Extreme’ Stock-Valuation Gap Looms Over Gravity-Defying Rally"

Sure seems like it. $SPX and $NDX closing at all time highs, a vertical move out of the gate today and people throwing all caution to the wind chasing stocks with 80+ RSI readings. Risk assets? What are risk assets? These are risk free assets.

Post Great Depression One, the legislature heard testimony about great pools of "dark liquidity" Flowing hither and yon, destabilizing EVERYTHING. Well, the world is even more interconnected now. There is about 200 times as much hot money flowing around as during the late '20s The current great pools are the hedge funds.

The State makes the laws that govern the banks. Regulatory capture has negated much of this power. When everything blows up, the state will use it's powers for self-preservation. Remember, the FED has no army.
I believe that the CBs are soon to go into kamikaze mode. Globalism just hasn't worked out as planned.
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Old 04-26-2019, 04:20 AM
Danny B Danny B is online now
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Up a river with no boat and no paddle

ZIRP, NIRP and instant capital transfers. Rising automation and falling birth rates. This is ALL new.
Armstrong, "The term “iliad” in Greek mean a series of miseries or disastrous events and “Odyssey” meant a long wandering or voyage usually marked by many changes of fortune. Welcome to the Economic Iliad & Odyssey. What we are facing is truly extraordinary. There is absolutely NO economic theory from Adam Smith to Keynes that ever addressed negative interest rates no less sustaining such a trend. There have been four major players who ventured into the negative interest rates territory but the disasters of this policy in Europe and Japan were implemented in hopes to stimulating the economy"

The ONE thing that would stimulate large sectors of the economy would be PRICE .DEFLATION. This is the one thing that bankers fear most. They tear their hair out if they can't cause price inflation. They use our savings AND, free money to speculate and cause price inflation. We, necessarily cut back on consumption because we are income constrained. The State hopes to inflate away the pain of paying back the debt. Historically, they have inflated away 50% of the burden over time. BUT, it requires a wage-price spiral. Since China & India have used containerized shipping to take over markets, there has been no wage inflation.... NO spiral.
True price inflation is running about 10 % but, that number must be hidden so that bond buyers don't realize just how negative ZIRP really is.

The bankers have a different arrangement. The FED gave them $trillions of pixel dollars. Then, the FED said,,, leave them with us,,,, We'll pay you 2.4% interest on them. We can't have you going broke, You're too important.
Just one of the many ways that the FED channels money into the upper loop.

Armstrong, "PRIVATE BLOG: The Shift From Public to Private – US Share Market Private blog posts are exclusively available to Socrates subscribers."
ALL the losses were socialised on to the backs of the taxpayer. Sovereign debt is going up astronomically. So, naturally, money is moving to private debt. Armstrong claims that public debt will blow up but, private debt like stocks and private bonds will do OK.
FED GOV claims that it spends about 24% of the economy. But, it also has 23$? trillion that appeared but, is unaccounted for. If all confidence is lost in public debt, I seriously doubt that the stock market will be un-affected.

Armstrong, "We are now on the threshold of the most PROFOUND economic event which has never before in history ever taken place."
I doubt that he can make any accurate predictions in anything but the short term.
"This is where opinion becomes worthless. All we can do is approach this on a collective basis internationally and without bias."
He's talking about international cooperation. Currently, the Central Banks are loading up on gold. They have no intention of cooperating. There will be NO running trade deficits. International trade accounts will be closely monitored and settled monthly by physical gold exchange. The U.S. trade deficit is a leftover artefact of the Bretton Woods agreement.

Technically speaking: running on empty – Real Investment Advice
4/25 Deutsche Bank-Commerzbank merger talks collapse – CNBC

A very big deal. I guess that the White Knight didn't want to get poop on his armour.
4/25 U.S. weekly jobless claims surge – Reuters
4/25 World stocks slip, euro suffers, growth fears linger – Reuters

Growth, what growth?
4/25 $100 oil? – Seven Figure Publishing
Well shoot, let's just block Iran and Venezuela and see just how fast this puppy will go down.
[B]4/25 Dow on track for triple-digit loss after worse-than-expected 3M earnings –
4/25 Fed resigned to blowing biggest bubble ever just to extend expansion – Zero Hedge
4/25 ECB and Fed in unison: loose(r) policy here to stay – Gold Republic
4/25 BOJ commits to very low rates at least through spring 2020 – Reuters

Yes, a whole squadron of Kamikazes

4/25 U.S. dollar index hits 22-month high;
4/25 China dollar bond default tests bank guarantees for first time – Bloomberg
Yep, it is getting expensive to service dollar-denominated debt.
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Old 04-26-2019, 02:57 PM
Danny B Danny B is online now
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Everyone sees it coming

Here is a good article from John Mauldin. He lays out the numbers very well. He shows what would happen if they tried to pay the deficit with additional taxes. His conclusion.
"I predict an unprecedented crisis that will lead to the biggest wipeout of wealth in history."

A good article on youth employment.

4/26 US economy grows by 3.2% in Q1, topping expectations – CNBC
4/26 Fed finds itself trapped by rising GDP – Zero Hedge

At best, GDP is just a measure of how much money is floating around in the country. At worst, it is useless.
4/26 World trade plunging at fastest pace in decade – Bloomberg

4/26 Farage: Brexit party will use EU poll to oust ‘remain parliament’ – Guardian
4/26 ‘Brexit godfather’ Nigel Farage seeks a new political upset – Time

Thatcher managed to keep GB out of the common currency. As more Brits see the ECB crashing, they want more distance.
"Both the ECB and the BoJ are completely trapped. They have destroyed their respective bond markets meaning they can no longer even tolerate a free market with respect to interest rates. They cannot stop buying government debt for there is no bid at these rates. We are far beyond every economic theory ever contemplated. How we deal with this government-created financial crisis will be extremely interesting."

Illinois has famously high taxes. There is a way around this.
4/25 Illinois gov. JB Pritzker, first lady under investigation for property tax fraud – Mish
4/25 The budget will never balance until the wars end – American Conservative
Burke, "War is the health of the State"
Keynes,"'we need perpetual warfare to stimulate the economy"
Iron Mountain, "peace must be avoided at all costs"
Well, something has to give.

Note on global warming. If the cooling trend lasts through the rest of this year, we have definitely turned into global cooling.
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Old 04-27-2019, 02:08 AM
Danny B Danny B is online now
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Oil spike, broken CBs,,, broken everything

"The last five economic recessions all were preceded by a spike in crude oil prices."
Trump has taken a big gamble with his sanctions on Iran and Venezuela.
"This time OPEC is going to wait until Mr Trump is irreversibly committed and the market is as tight as a drum. The fiscal break-even price of oil for the Saudi regime is $US88. That is the target.
"Westbeck's Mr Le Mee says global spare capacity will fall to 1.2m barrels a day by the third quarter. This will not be enough to cover demand even if nothing goes wrong, and a great deal is likely to go wrong.
Mr Trump has taken the biggest economic gamble of his presidency. He has set in motion a potential oil crunch."
Good article.

We all hear the claim that capitalism is broken.
Central Banks Have Broken Capitalism
CBs have rescued private banks by hyper inflating the upper loop.
"In February, the staff at the International Monetary Fund published a guide to make even more negative interest rates work. Meanwhile, proponents of “modern monetary theory” argue that governments should generate money and distribute it across the economy, until it reaches full employment."
The blob State is trying to come up with a scheme to fund itself in perpetuity. It doesn't particularly care about you. C.O.L.A. to the moon.

The article comes up with 3 alternative schemes to make everything work.
"Private debt outgrew gross domestic product by four times in the U.S. since the 1960s. The Institute of International Finance says global debt stands at $243 trillion, more than three times worldwide gross domestic product.
It's an interesting read but, the 3 ideas just won't work. It would mean everybody in power would voluntarily give up power.

Nearly 102 Million Americans Do Not Have Jobs In Trump's 'Booming Economy'
America's crippling debt: Every man, woman & child owes Uncle Sam $220,000
" The spiralling US government debt is apparently much higher than the official figure of $22 trillion. The indebtedness of the American financial system has now reached $72 trillion, according to the numbers compiled by the US Fed.

The higher debt estimate includes corporate borrowings, consumer loans along with debts being added by state and local governments."
"The current US population stands at 328,675,066 according to the World Population Review. Simple calculations show that an average American owes some $220,000, while the share of a family of four is fluctuating around $880,000.'
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Old 04-28-2019, 04:44 AM
Danny B Danny B is online now
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Location: L.A. Ca.
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Gold,,, the confidence battle,,, insolvency ratio

World Gold Council: central banks buy most gold since 1967

Jan 31, 2019
World's Central Banks Want More Gold as India Joins Spree ...

4 days ago - India's central bank is likely to join counterparts in Russia and China ... The RBI may purchase 1.5 million ounces in 2019, or about 46.7 tons, ...
The private Indian gold accumulation is supposed to be 20,000 TONS.
In any kind of a meltdown, nobody will know the value of a given currency. The CBs know very well that a crash is coming. They need enough gold to pay for food & fuel.
Gold buying is increasing indicating that confidence is leaving.
"his is an orchestrated and unprecedented move by bullion banks into physical gold, the buying of which is backwashing into the synthetic markets, which in turn is increasingly exposing just how large the naked short gold bubble is. The Gold short bubble is directly proportionate to the concurrent bursting of the artificially inflated asset price bubbles."
"Both bubbles can be directly blamed on the FED and the Western cabal of global central bankers printing cash to infinity, creating a “Buy The F*cking Dip” risk environment where the only fear asset managers have had is not being on board the risk train. The general rule is that if everyone gets it wrong, no one gets fired.
So regardless of the alarm bells going off, no one dares to leave the burning building, until it is too late."

ZH "There is only one way a government funds the excess of spending over tax revenue without it being inflationary, and that is to borrow money from savers. There is a downside to this. The government bids for existing savings, including those held in pension and insurance funds, diverting them from other borrowers. In the 1980s this was described as “crowding out” other borrowers and had the effect of increasing interest rates"
Well shoot, just fire up the MMT pixel machine.

t"he other two sources of finance for high-spending governments are simply inflationary. Bank credit is expanded to finance short-term treasury bills and treasury bonds. Before 2008, a combination of savings and bank credit expansion was used to cover government funding requirements. But since the great financial crisis, money-printing by central banks through quantitative easing has opened a new avenue for government funding.| Control-P
"Notionally, quantitative easing is promoted as a monetary policy to stimulate the economy by injecting large amounts of base money into a failing banking system and allowing banks to build their reserves. But the more important effect is it permits a government to spend even more beyond its tax revenues."

"My colleague, James Turk, calculates the US Government’s insolvency ratio (the interest cost as a percentage of government revenue) to be 17.2% for the first six months of fiscal 2019.[i] In other words, for every $100 raised in taxes, $17.20 goes to pay interest. On this measure, federal government finances are already in crisis."

" To appreciate the full ramifications, we need to understand what GDP represents. GDP is simply a total of recorded qualifying transactions in the economy during a stated period, normally annual or annualised. Growth in the GDP number is not a record of anything else other than monetary inflation applied to those qualifying transactions."

"As a fix, it may temporarily benefit government finances. But it is the worst thing a government can do, because through wealth-transfer it impoverishes and destroys the non-government economy upon which the government relies for its future tax revenue. "
MMT to the rescue.
"It is an increasingly serious problem. According to the Chapwood Index[ii], price inflation on the goods and services Americans typically buy has been running at close to 10% on average in 50 major cities over the last five years. Instead, financial analysts doggedly accept government CPI statistics, which claim price inflation has averaged only 1.52% over the same timescale."

"The timing of an economic awakening is likely to be linked to the credit cycle, when public support for reflationary actions evolves from complacency to sudden concern."
51% of Americans receive a check from GOV. They will be quite concerned if the checks stop.
"The most inflationary funding mechanism is for one government department (the treasury) to issue bonds to the public and the banks, and another government department (the central bank) to buy them off the public and the banks by issuing raw currency. So as to not raise inflationary suspicions, this overtly inflationary mechanism is called quantitative easing and it is set to return big-time.

So far, QE has covered only part of the US Government’s funding requirement since the Lehman crisis. The full breakdown is shown in the following table, which incorporates both long-term and short-term debt."
"It should be noted that foreigners bought an estimated $3,611bn of Treasury debt, significantly more than US banks, funds and other US private sector investors.[iv] By mid-2018, total foreign investments in US Treasuries amounted to $6,201bn, so their holdings have more than doubled since the Lehman crisis.
"That being the case, at the same time that the US Government’s funding requirement starts increasing above forecasts, foreigners will be liquidating their Treasury holdings and selling dollars. Therefore, QE is set to become the principal funding mechanism for US Government debt."
Stop saying QE. It's MMT now.
"So long as lenders believe government finances are reasonably stable and state-issued statistics are credible, a central bank can depress borrowing costs through an expansionary monetary policy. This is the current position; but when it is no longer the case, a central bank faces an impossible task."
That is why the FED is attacking Europe, China and Japan. We want their money.

Production and imports of goods fell for the first 3 months.
"According to the government, $32 billion of goods were added to inventories this quarter, "

He wants to get re-elected.
"This week saw all-time highs in the S&P500, the Nasdaq Composite, the Nasdaq100, and the Philadelphia Semiconductor Index. Microsoft's market capitalization reached $1 TN for the first time. First quarter GDP was reported at a stronger-than-expected 3.2% pace. "

China "They have no experience with a multi-trillion (US$) money-market complex – and minimal with derivatives. Beijing has zero experience with a banking system that has inflated to about $40 TN – financing a wildly imbalanced and structurally impaired economy (not to mention fraud and malfeasance of epic proportions)"
"Keeping the historic Chinese apartment Bubble levitated will require enormous ongoing cheap Credit. Keeping the incredibly bloated Chinese corporate sector afloat will require only more ongoing cheap Credit. Ditto for the frighteningly levered local government sector. And the acute and unrelenting pressure on the banking system to support myriad Bubbles with generous lending terms will require massive unending banking balance sheet expansion. Worse yet, at this late “terminal phase” of the cycle it becomes impossible to control the flow of finance. "

Police do a night raid and kick down the door because the family had a kid who was not vaccinated.
Marking tires of parked cars is unconstitutional.

4/27 Donald Trump shows a new level of contempt for Congress – NY Times
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Old 04-28-2019, 09:10 PM
Danny B Danny B is online now
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So, who funds the State?

About 250 years ago, the sovereign States started borrowing large amounts of money from the private bankers. This process was formalized as the Sovereign bond market.
The Central Banks were first created to handle the finances of the State, primarily war finance. Various European States regularly defaulted on these bonds. Greece has spent 50% of their modern history in default. As we move forward in time, we see that, wars got more expensive and, the State needed even more money. All democracies eventually fail because the electorate discovers that they can vote for themselves the whole pie.
As more and more leaders bought votes with promises, State expenses went ever higher.
The burden of financing the welfare-warfare State was shifted to the private taxpayer.
Regulatory capture allowed corporations to avoid taxes for the most part.

This year, Americans had to work until April 15th (ironically) to pay the State's bills. These bills are just too expensive. Price inflation has gone way up but, wage inflation is lagging far behind. Wages and purchasing power have gone way down. This left very little extra money to save. The banks previously depended on savings to advance money for loans.
They were controlled by the FED requiring a reserve to be maintained to cover bank runs or bad loans. At one time, gold was the prime reserve. When banks were allowed to hold derivatives and each other's paper, there was no reserve requirement hat meant anything. Several years ago, the FED gave the banks about $2.6 trillion to hold as excess reserves. Then, they paid them interest on these reserves. The upper loop of the economy is running heavy on instruments and, LIGHT on liquidity / money. Apparently, the banks are running out of money.
A paper dollar is a bearer bond with zero maturity that, effectively, has no counterparty risk. Everything else besides precious metals is an instrument of varying fungibility. Nobody knows just what an instrument is worth if you try to trade it for cash.

Regulatory capture allowed the corporations to starve the State at the same time that State expenses have gone way up. The State hates the idea of having to work to get money from private investors. The solution; print up hundreds of $trillions so that the sovereign bond markets are destroyed.
Armstrong, "PROFOUND economic event which has never before in history ever taken place."
The State needs a money spigot that is not under the control of any private interest. It is in the State's best interests to break the current arrangement. You can bet that the State is going to look out for itself.
Jim Willie proposes that America have 2 separate dollars, A stable gold-convertible dollar for imports and, a domestic dollar that floats or sinks.
The nature of automation added to regulatory capture means that the current arrangement will come to an end.

The U.S. government has the pedal to the metal when it comes to borrowing. Ron paul wanted to audit the FED. Trump wants to annihilate it.

There is going to be a house cleaning.
4/27 Investors are falling into a false sense of security again – Daily Reckoning
4/28 Traders have never been this complacent about risk… ever – Zero Hedge
4/27 Investors are falling into a false sense of security again – Daily Reckoning

Corbyn has a PLAN. 4/28 Corbyn launches bid to declare a national climate emergency – Guardian
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Old 04-29-2019, 02:54 PM
Danny B Danny B is online now
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Who dies, bonds or stocks?... or both?

"The bottom line is that there’s been a worldwide revolution in favor of private savings and the United States is falling behind.
A far better approach is personal retirement accounts. I’ve written favorably about the Australian system, the Chilean system, the Hong Kong system, the Swiss system, the Dutch system, the Swedish system. Heck, I even like the system in the Faroe Islands.
The bottom line is that there’s been a worldwide revolution in favor of private savings and the United States is falling behind."
Social Security Is Facing a $42.1 Trillion Shortfall, Trustees Report Says
NOPE, no can do. If retirement money was held in private accounts, it would NOT be available to the State to use for countless wars. Pox Americana faces a huge funding gap in the future. 51% of Americans receive a check from GOV. FED GOV will dump the FED and emit money from the Treasury. It's trying to smooth the transition by talking up MMT to give people the idea of State emitted money for their pensions.

Armstrong, "We are facing a very interesting financial crisis that has never before been witnessed because this is how the Socialist Utopian Society will crash and burn. We are beyond all economic theories for nobody from Keynes back to Adam Smith ever contemplated what would happen with the deadly theory of Quantitative Easing constructed upon the Quantity Theory of Money.
We are simply off the charts, as they say, in terms of markets and economics. We are entering one of the most challenging periods perhaps in the history of financial and economic forecasting"
The Geat unknown ---The Bond Contagion

OK, that is straightforward enough. Armstrong has long predicted a collapse of the sovereign bond market and, a rotation into private stock & bonds.
At the moment, that is NOT what is happening.
Here is a mind-numbing technical article that has a few good points.
"One need look no further than market action in 2019 where despite fresh record highs in the S&P - mostly the product of the Fed's sudden tightening bias reversal and subsequent easing by both the US central bank and its global peers - equity outflows have hit an unprecedented pace, with continued stock upside attributable almost exclusively to stock buybacks, forced short squeezes and delta and gamma-imbalanced dealer books, where the higher equities rise, the greater the "forced chase" by dealer to keep bidding stocks even higher. Meanwhile, both institutional and retail investors have continued to flee global equities as the chart below from EPFR"

Money is fleeing equities in favor of bonds. Does that mean that Armstrong is wrong OR, does it mean that bond investors are going to get slaughtered?
"And while prior to the 2008 crisis, the "prosperity of financial sector and low volatility show high degree of coordination",
The FED has been stamping out volatility to keep the banks profitable. Eventually, volatility always returns..
"consequence of the changes in the regulatory environment and redistribution of leverage away from the financial into corporate sector, "
Yes, the corporate bond market is leveraged way up. At the same time, 15% of companies are zombies supported by free money.

"first-quarter corporate earnings started coming in better than what economists expected. Except that barely “beating expectations” is kind of pathetic when expectations are dumbed down as far as they were.'
"What does it really say that the new gauge for earnings is whether or not they are better than horrible? (Forget about growth. Earnings were actually down an average of 3% YoY, meaning they may already be deep in recession.)"
US GDP Not All it was Cracked up to be - The Great Recession Blog
"Here is something to bear in mind: Regardless of what stock averages are doing, the major corporations that are likely to be harbingers of what is coming for the general economy are foreshadowing, as I reported in my last article, darker times ahead.

Exxon, which broadly reflects the critical central role energy plays throughout our economy, just pulled a 3M face plant. These are some major downbeats. Exxon reported a MASSIVE 50% drop in profit, and that fell far short of lowered expectations. (60% drop quarter on quarter.)"
Investors are aware of the crash in fracking. They are aware that buybacks and FED money are the only things holding up equities. They are fleeing.
"Although stabilizing, in the existing paradigm, this appears to stifle growth -- by preventing bad behavior, in the economy which is dependent on financialization, the system is deprived of one of the main engines of growth."
This "growth" has nothing to do with productivity.

"boost the credit impulse that could possibly stimulate investment and in turn lead to higher productivity growth."
"However, a problem emerges, as the demand-side has to be addressed at the same time. Indeed, the new technologies that would attract investment now destroy more jobs than they create as "the old paradigm does not seem to be capable of achieving these goals"
"To Kocic, this is also the most negatively convex sector which is sensitive to spread wideners in steepening sell off. In other words, a possible wholesale downgrade to BB or lower would result in disorderly unwind of positions of the IG money managers which would be capable of raising volatility significantly. From there it would promptly spread to the rest of the market, and global economy, and lead to the next financial crisis. What happens to vol then should be clear to anyone."
The whole article is about creating volatility to return to profitability for speculators.
BUT, it glosses over the true effect of a wholesale downgrade of bbb to bb
" disorderly unwind of positions"
The junk bond market is something like 42% of the total.

"That said, to Kocic the worst case scenario, as note above, is a bear-steepener, which "is seen as tail risk that would cause the most violent repricing in credit." Which incidentally is precisely what we said one month ago, if with far fewer words in"
"violent repricing in credit"
Translation; a popping of the credit bubble.
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