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  #481  
Old 11-16-2014, 04:58 PM
Danny B Danny B is offline
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The circulation and creation of high-power money

Bank loans are called "low power money". They are created out of nothing and carry an interest burden. If you borrow $ 100,000, you must repay $ 300,000. The additional $ 200,000 is not created with the original principle and must be taken from low-power funds created for later loans. It is obvious that credit must continuously expand to provide the funds to service previous loans. There can be no interruption in expansive credit creation.
When the West crashed into a low-wage competitor, employment crashed. If remunerative employment has crashed, how can credit creation continue to expand? That $ 200,000 must come from somewhere to service all the endangered debt.

The brother of low-power money is high-power money.
"For the United States, the components of high-powered money are
gold coin or certificates and other money fully backed by gold; paper
money or deposit balances not secured by gold reserves but constituting
a liability of the Treasury or (since 1915) of Federal Reserve Banks"
http://www.nber.org/chapters/c1642.pdf
In a general sense, high-power money ( base money ) is gold or GOV notes that do not carry an interest burden.

In 2008, when credit crashed, enormous amounts of debt were in danger of default. There was not enough low-power money circulating to supply the demand. The system lacked low-power money so, the difference had to be made up with high-powered money.
TARP was created so that FED money could be created to rescue endangered debt. In reality, the employment crash was hugely deflationary. TARP money could not reflate the economy if it was debt money subject to repayment on interest and principle. Senator Inhofe reported that the TARP money was not repaid. That solved the problem of how to inject high-power money into the economy when low-power money was insufficient.
Possibly, Sen Inhofe angered somebody because a plane fell out of the sky that was carrying his son.

Low-power money is highly deflationary because of the interest drain. In the good times, new credit creation supplies the funds that pay the ever-increasing interest burden. The Treasury supplies high-power money to top off the system when there are temporary hiccups in the supply of low-power money. The Western crash into a low-wage competitor is not a temporary retraction in employment. It is not a temporary retraction in the demand for new credit. The FED has only one set of tools in it's bag of tricks.
It can lower interest rates and / or inject high-power money.

In the final analysis, the lower loop of the economy must depend on employment and value-added industry to supply it's needs. Without these 2 assets, it can not escape the high deflation of the interest drain that accompanies low-power money. The upper loop of the economy can count on the injection of high-power money to sustain itself.

Previously, high-power money was created gold-backed. In today's world, high-power money is created ex nihilo much the same as low-powered money. This blurring of distinction is responsible for the blurring of inflation / deflation.
A return to gold backing for ( purportedly ) high-power money would severely reduce the ability of the PTB to create free money for themselves.
Without the limitation of gold backing, there is no limitation of "money" creation. The limitation on the creation of low-power money is the creditworthiness of the would-be receiver.
GOV and banks are non-producers and most certainly do not want their access to funds to be restrained by their creditworthiness.

This is true of all non-producers; beggars, bankers and bureaucrats. NONE of them want to be limited by their creditworthiness. They are NOT ABLE to blow a bubble in low-power money so, they blow a bubble in high-power money. The crash in the producing economy is mostly a crash caused by a low-wage competitor. This circulates in the lower loop that depends on low-power money.
Those who live in the upper loop of the economy don't wish to participate in the crash of the lower loop. They escape the crashing deflation of the lower loop by debasing / printing high-power money. Unfortunately, there is some bleed-over from the upper loop to the lower loop. All that free money has raised prices somewhat. Would-be consumers in the lower loop have cut back on consumption so, prices haven't risen as much as they could have.

None of that free money has seeped into wages because it is too convenient to just outsource or automate whenever wages are perceived as being a burden. Once again, our crash into a low-wage competitor.
The upper loop continues to party on, fueled by free money from the debasement of high-powered money.
With a slight nod to the lower loop, the upper loop engages in currency wars to try to maintain employment in the value added industries. The inflation of the currency wars diminishes the purchasing power of the lumpen in the lower loop so, it really doesn't help.
The head is surviving but, the body is decomposing. It must be time for gun control.
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  #482  
Old 11-17-2014, 03:48 AM
Danny B Danny B is offline
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Capital flight from weak banks

I'm reposting Exeter's Pyramid; http://www.moneymorning.com.au/images/mm20130104a.jpg You might have to use control + to make it larger.
It shows gold at the apex with paper notes above that.
The G20 just wound up their meeting and are determined to invest $ 2 trillion in the economy. Where do they plan to get this $ 2 trillion? Dunno

They also agreed that everybody needed to do immediate changes to their laws.
"Additionally, all member nations of the G20 will immediately submit and pass legislation that will fulfill this program, creating a new paradigm where banks no longer recognize your deposits as money, but as liabilities and securitized capital owned and controlled by the bank or institution."
"For most Americans with savings or checking accounts in federally insured banks, normal FDIC rules on deposit insurance are still in play, but anyone with over $250,000 in any one account, or held offshore, will have their money automatically subject to bankruptcy dispursements from the courts based on a much lower rank of priority, and a much lower percentage of return."
EconomicPolicyJournal.com: WARNING Bank Deposits Will Soon No Longer Be Considered Money But Paper Investments
The wanna-be consumer is debt saturated and can't buy anything. There is reportedly about $ 50 trillion sitting on the sidelines because the consumer can't consume. Apparently, the G20 leaders believe that they can "scare" this money out of the banks and into production. The Guardian claims that there is $ 32 trillion held in island bank accounts.
Check Out Who's Hiding $32 Trillion in Offshore Accounts

The latest G20 rules and the latest rules from the FSAB are all designed to address failing banks. The very wealthy and the C.I.A. will just withdraw any money in weak banks and transfer it to VERY strong banks that will not be in danger of failing. This new action from the G20 should ensure that there are runs on weak banks.

The FDIC is covering about $ 70 trillion in deposits with about $ 2.4 billion in capital. It's anybody's guess how many bank failures they can absorb. "In the late 1980s, the "deposit insurance" of the federal FSLIC [Federal Savings and Loan Insurance Corporation] was unmasked as sheer fraud."
Now you know why gold is rated above paper currency.
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  #483  
Old 11-18-2014, 03:03 AM
Danny B Danny B is offline
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Regulatory capture and short-term gains

" Corporate profits as a percentage of GNP skyrocketed from 4% to 10% in the space of six years. The banking cabal had captured the system."
"Corporate profits soared from 4.5% of GNP to an all-time high of 10.5% in the space of three years and have remained at this elevated level."

"From the end of World War II until the mid-1970s employee compensation as a percentage of GNP was consistently between 49% and 51%. "
"From the moment Nixon closed the gold window, employee compensation as percentage of GNP relentlessly declined for the next quarter of a century from 51% to 44%. "
"Their financial engineering machinations on behalf of Wall Street did nothing for the average worker on Main Street. Employee compensation as a percentage of GNP declined from 47% to 44% BEFORE the financial collapse.
Unequivocal proof that Bernanke’s sole purpose of QE and ZIRP was to benefit his Wall Street owners can be seen in the continued decline from 44% to 42% since 2008."
" When profits are at record highs and tax payments at record lows you know they have captured the system. "
WHAT THE FED HAS WROUGHT « The Burning Platform

" The main point is that housing exploded from 3 times median income to 12 times median income as a direct result of Fed policies."
The cost of an education has risen at 3 times the rate of inflation.
With regulatory capture, all controls on the upper loop of the economy were removed. BUT, the upper loop creates money and NOT wealth. The lower loop must work hard to create wealth or,,, they won't eat.
The productive loop of the economy is starved for capital, wages and consumption. Transfer payments help people survive but, the Dole is not a substitute for an economy.

The problem with ZIRP and free money is that you get addicted to it. Only THREE companies in America have AAA credit rating. If interest rates returned to their historical number of 5--6% , 50% of companies would be immediately bankrupt.
A corporation is simply a pile of money looking to grow bigger. It doesn't consider the finer points of trade. if you impoverish all your potential customers, your business dies.
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  #484  
Old 11-18-2014, 04:02 PM
Danny B Danny B is offline
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more money,,, less money

When you see silly, stupid ideas proposed by economists, you know that things are getting desperate.
"Harvard Professor Greg Mankiw wins the prize for making the most inane monetarist proposal in history. Mankiw proposed that 10% of money be made worthless every year via a lottery in which the the Fed would pull a number out of a hat each year and all currency ending in the digit drawn would immediately be worthless.
Read more at Mish's Global Economic Trend Analysis: "Debt Trap" Nonsense; Eurosceptics on Rise; Demise of the EU: "Soon There Won't be a Europe" Says Telegraph
Harvard, huh?
The Council on Foreign Relations suggests that all households be sent $ 80,000 of free money.
Mankiw wants currency destroyed,, the CFR wants money created.
Krugman said that we need an invasion from mars to put us all back to work.
Japan is nearing the event horizon; Japan's Last Stand | Michael Pento | Safehaven.com
Jim Willie claims that Japanese QE is forced by America;
Jim Willie: Fed Launches STEALTH QE4 Through TOKYO- Currency Reset & New Gold Standard Imminent! | SilverDoctors.com

The PTB have squirrelled away $ 50 trillion in "old" money and the economy is dying away for lack of wages and circulation. Their solution is to print tons of "new" money to re-inflate the system. The only way they can inflate the lower loop is to originate liar loans when everyone is debt saturated. Liar loans eventually default and the problem returns. They have resorted to inflating base money instead of bank money.
By forcing a grand reduction in wages and capital, they have placed their "old" money in jeopardy.
All those $ trillions are just digits. Worse yet, they are debt digits.
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  #485  
Old 11-20-2014, 04:09 AM
Danny B Danny B is offline
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Moral Hazard

Regulatory capture has allowed the banks to privatize gains and load the losses on the public. They can't lose so, they just gamble bigger and bigger. Like shooting caged rabbits, they have no fear of retribution. So, who gave them that protection?
The faulty factor in the banking business equation is the ultimate lack of consequences or to express that another way: imaginary limitations granted to lender's and borrower's liabilities.

This is the fault of the state. How? If I privately lend the capital to a house purchaser and they default I suffer a loss - that focuses my mind as to the real risk and consequence. If my loans to borrowers were made with capital that I did not own but was nevertheless available to me as a result of, say, my substantial and consistent business cash-flow, that would be a risky business strategy, (but I could argue I was still not actually 'trading insolvently' because the loan I had made formed an asset on my balance sheet).

How could I take such a risk (knowing if my borrower defaults I cannot pay my liabilities)? Easily if I have a state registered Limited Liability company (Ltd Co) and I measure the potential for profit exceeds the value of my Ltd Co should this loan default and my company consequently go bust (be unable to pay its creditors). Most Ltd Co's do not see this sort of prospect as making commercial sense even with their directors enjoying Limited Liability protection because they do not see the potential for sufficient return against capital available and the prospect of risk as a viable equation.

Yet banks do expose themselves to this risk. Why? Because they can create almost as much money as they require so long as they are either receiving deposits at a sufficient rate, are re-financing loans or are able to enjoy interbank lending to fund the loans they are making. And then the full risk is ultimately mitigated because the central bank will act as 'lender of last resort' should their house of cards threaten to fall. Whilst the beneficiaries of central banks are hard to identify the guarantor is not: it is the state. But what actually is 'the state'? In this the state is a conduit for the power of the forced taxation of human society.

The only viable and moral solution is to remove the forced link between the productive, wealth creation, ability of human society and the financial indemnification of all types company owners for their losses - especially banks. Bank's owners will be very focused as to the risk they are taking when they see all their private property, past and future, is at risk. Bankers want the all the reward for themselves and YOU to take all losses. Bankers have used a succession of manufactured wars to indebt states to them and to force states to allow the grant of this present banking system. They have created repeated economic bubbles and
crashes to force the state to borrow more of the money they create via the permitted wizardry of fractional-reserve-banking.

I do not object to anyone creating any sort of money, including fiat currency if that business model can be made to work or independent central banks acting as lenders of last resort, or loss insurers, to other banking business. That is their business and the business of their customers. I just object to being forced into indemnifying these business' as though they are acting for the public or as if they are public bodies. End that relationship and a durable market for the publications of currency and all banking services will rapidly emerge without public liability.

Whilst we continue to have human society controlled and bled via a 'state' we continue to allow a means for the banking money power elites to tap-in to the life-blood of humanity, through the power of state taxation, for their own gains at the cost of all others. The only enduring protection is to end the state!

If every leader, political and corporate, was totally accountable for their each-and-every action the world would be a different and better place. For one thing: no sane person would leave themselves open to such liabilities. For another: nobody could legitimately rise to such a position because the potential liabilities would exceed anybody’s ability to atone.

Why is it that the vast majority think we need a world where the few are expected to operate in such capacities; roles which clearly far exceed any person’s ability to atone. It is madness, it is the false paradigm within which the world is currently lost. It surely is one clear reason why people in such positions of power do, so frequently, abuse their office in so many ways; they know they never can be really called upon to atone for their actions.

A fellow who truly accepted full liability for every aspect of their tenure would have to act with great caution; but I fear persons of such qualities do not often rise to any such position.
EUbrainwashing: The State: An Inherently Psychopathic System.
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  #486  
Old 11-21-2014, 04:05 AM
Danny B Danny B is offline
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Bnd

"It is more profitable than Goldman Sachs Group Inc., has a better credit rating than J.P. Morgan Chase& Co. and hasn't seen profit growth drop since 2003"
"Its total assets have more than doubled"
"Return on equity, a measure of profitability, is 18.56%, about 70% higher than those at Goldman Sachs and J.P. Morgan"
Article: WSJ Reports: Bank of North Dakota Outperforms Wall Street | OpEdNews
In a radical departure from casino banking, BND won't loan money unless there is a specific revenue stream identified to repay the loan.
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  #487  
Old 11-23-2014, 04:39 PM
Danny B Danny B is offline
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SDR and gold maybe

Well, Martin Armstrong says that the major riots will start 2015.75. I'm not positive of this dating system but, I believe that this is October of 2015. Pastor Lindsey Williams says that the elites have informed him that October is when it will crash / they will crash it.

"We are not going to achieve a new world order without paying for it in blood as well as in words and money." -- Arthur Schlesinger, Jr., in Foreign Affairs (July/August 1995) "
Quotes on the New World Order

"The old world order died with the setting of that day’s sun and a new world order is being born while I speak, with birth-pangs so terrible that it seems almost incredible that life could come out of such fearful suffering and such overwhelming sorrow.”
–Nicholas Murray Butler, Union League of Philadelphia, Nov. 27, 1915
New World Order: 37 Quotes on The New World Order, One-World Government and One-World Religion | End Times Prophecy Report

About those terrible birth pangs,,, not sure that I want to be around for that.
There are many claims that America must be crashed because out "attitude" is not supportive of one-world GOV.
America has 50 states that are bound together with common GOV and a common currency. The world inprovers tried to do the same thing with Europe. They tried to force a common currency before a political union was achieved. They now admit that the knew ahead of time that it would crash. They were hoping that a COMPLETE union would rise out of the ashes. That isn't working out too well. Sarkozy now claims that the whole thing will crumble if 50% of the power is not handed back to the sovereign countries.

The PTB are trying to force a common world currency when a common European currency is unworkable. They want the Special Drawing Rights to be the universal currency.
So, what would a crash in America look like?

The year is 2024.
The global economy… and world-wide financial markets… have been all but decimated.
In 2018, the government shut the stock market down after the Dow Jones Index crashed to 3,500.
The President, with support from members of Congress and Wall Street said the shutdown would only be “temporary…”
That all things would return to “normal” soon enough…
But there was no turning back.
Once markets were closed they were never opened again. Liquid stocks were converted to private equity with no way to trade or cash out.
Everyday Americans suffered huge losses. Both in their brokerage accounts and their retirement accounts.
Along with the markets, the world-wide economy has been in a deep recession for nearly the past decade. Unemployment has skyrocketed. Commerce and trade have declined precipitously
Central banks thought they would solve the world’s economic problems simply by printing money. But that stopped working by 2018, when the Fed launched the seventh round of its money-printing program known as QE7.
Inflation quickly went to 10%... 15%... 20% and beyond before investors had time to react.
By 2019, all confidence in paper currencies had been lost.
Hyperinflation made money virtually worthless.
Everyday workers and retirees saw their savings, bank accounts, pensions and insurance policies turn to dust.
After blaming the private sector for the collapse, the government nationalized certain corporations in the name of “national economic security.”
Once vibrant private companies like Google, GE and Wal-Mart are now all government owned.
We’ve also suffered through electricity rationing, allowing us to use power only a few hours a day.
Social order has broke down. Supermarket shelves have run empty.
And wiped-out savers have broken out in money riots across the country.
Americans looted each other…vandalized government buildings… and set up black markets to barter for food, clothes and other necessities.
Local militarized police forces responded quickly on behalf of the power elites.
They cracked down on their communities using drones, armored vehicles, night vision technology, body armor and electronic surveillance.
Highway tollbooths and E-Z Pass lanes were used to spot any citizens who tried to flee by car.
Thousands of citizens were arrested and thrown in jail.
By 2020, major governments across the globe agreed to take unprecedented steps to fix the global economy.
First, they abolished most currencies, and announced a brand new international monetary system that would be based on a spooky new kind of world money.
To make their plan work, governments needed to control all alternative forms of money.
They abolished the use of cash and coin.
And after 2020, all transactions were digital and executed through a government administered system.
Sadly… as I write this letter in 2024… most Americans don’t even remember how we got here.
The entire process unfolded in small stages – like single snowflakes falling on the side of a mountainside… before an eventual avalanche.
Snowflakes so small that investors and citizens barely noticed… before it was too late.
Before the financial avalanche came crumbling down… and crushed their wealth.
Luckily, a few open-minded Americans saw the snow piling up. They were warned in advance of the coming financial avalanche. And they prepared their money… and their lives… accordingly.
America’s Spooky New Money

This is an attempt by Jim Rickards and U.S. GOV to promote the SDR as a panacea for all of our upcoming financial problems. The IMF can create SDRs by the gazillionz so, we can all be rich. This, of course puts the SDR and IMF on a collision course with gold.
U.S. GOV prints paper, dollars and bonds. The R.O.W. produces STUFF. America now has un-payable debts. We want to continue to run up the bill trading our paper for their stuff. Our benchmark for storage of wealth is more debt paper. Their benchmark for storage of wealth is gold.
Currently, there isn't enough gold to store very much wealth.
Jim Willie claims that the Chinese will eventually devalue their currency by revaluing gold. One morning, they will just claim that gold is worth double? what it was worth yesterday.
They will demand that America show it's gold before dollars are accepted at the exchange rate of the day before. America values it's gold at $ 42.22 and ounce.
There were many newspaper accounts back in the 70s talking about all the trucks hauling loads out of Ft. Knox. We Have A Right To Know | Gold Eagle
Circumstantial evidence seems to show that the only gold left is the coin melt confiscated back in the 30s.
J.P. Morgan sold the largest gold vault in the world, in New York. They sold it to the Chinese who, presumably, have something to store in it. There are reasonable claims that it is connected by tunnel to the FED gold vault.
China's Largest Conglomerate Buys Building Housing JPMorgan's Gold Vault | Zero Hedge
One would suspect that; if the JPM vault is empty, the FED vault was emptied first.
Another high level banker has been killed,,, had his throat slashed. One might suspect that gold deliveries are not fast enough for the Chinese
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  #488  
Old 11-23-2014, 10:07 PM
Danny B Danny B is offline
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Japan, China and commodities

"Having practised QE in the past, the Bank of Japan’s balance sheet was already equivalent to around 20pc of GDP, compared with 6pc at the Fed and the Bank of England. Once Lehman Brothers collapsed in 2008, the UK and US rapidly expanded base money to 25pc and 30pc of GDP by mid-2013, a fourfold and fivefold increase respectively.

Over the same period, Japan grew its central bank balance sheet to around 40pc of GDP, a twofold rise, still massive, but smaller by comparison.

Under Abe, the Bank of Japan has expanded its balance sheet from 40pc to around 50pc of GDP over about 18 months. Then, at the end of October, Abe rolled the dice again, announcing a boost to a quite incredible 70pc of GDP over the next three years."
Japanese QE tsunami risks global meltdown - Telegraph
"Japans debt to GDP is now over 240 percent. This is more than double any European nation. We all remember what happened when Greece was reported to have over 120 percent debt to GDP"
The thing to remember is that all of these leaders know that printing never works in the long run.

China also has huge problems. They printed and printed to goose the economy. They drove up the price of commodities with their insatiable demand. They have dozens of extra cities,,,, 60 million or so empty housing units,,, 60 un-needed international airports. The Chinese have very low wages and there is no demand for all this stuff that has been built. Chinese GOV just prints more money to keep building. They have finally noticed that nobody is buying. They seem to have spare productive capacity.
" China’s iron and steel industry is massively overbuilt. It has 1.1 billion tons of capacity but in the order of 600 million tons of sustainable “sell-through” demand. That is, need for steel for use in consumer products and capital replacement, not the current one-time construction binge.

Stated differently, China’s excess steel capacity is greater than the combined output of the US, Japan and the EC combined"
Sell, Sell, Sell…….The Central Bank Madmen Are Raging | David Stockman's Contra Corner
So, what kind of price can we expect to pay for steel?

Well, how about the price of oil? "If China does decelerate well below 7% in 2015, an oil price target in the $30 to $40 range is completely realistic. "
"Based on data compiled from quarterly reports, for the year ending March 31, 2014, cash from operations for 127 major oil and natural gas companies totaled $568 billion, and major uses of cash totaled $677 billion, a difference of almost $110 billion.

To fill this $110 billion hole that they’d dug in just one year, these 127 oil and gas companies went out and increased their net debt by $106 billion. But that wasn’t enough. To raise more cash, they also sold $73 billion in assets."
OK, so peak-cheap-oil is here to stay. ZIRP drove tons of speculative money into Shale / fracking. Fracking is operating at a loss.
Who's Ready For $30 Oil? - The Automatic Earth
What happens to the $ billions of junk bonds when fracking comes to a stop?

Many of the oil producing States are very generous to their nationals. Should the price of oil do a big drop, these states will have a big cash-flow problem.
Some of these States produce oil for $ 2--$15 but, need $ 60--$80--$120 to balance their budget.
If / when China crashes, demand goes down very fast. The American oil producers are operating at a loss. At some point, investors will try to unload petro junk bonds. Saudi dropped prices to raise volume when prices and demand were very weak. They wanted to keep their income constant. This only works for the lowest-cost producers. The high-cost producers are SOL.
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  #489  
Old 11-26-2014, 04:39 AM
Danny B Danny B is offline
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Economic collapse to avoid war

The PTB in the West have done their best to push gold out of Western consciousness. The rest of the world wants no part of funny paper. The Western bullion banks admitted that they sell the same ounce of gold to 100 people. The FED, et al have severely manipulated the paper P.O.G. to hold it down.
" 80 tons is equal to two weeks worth of global gold production ...sold in just 15 minutes! This is nearly 2.8 million ounces. The interesting thing is that COMEX only claims to have 865,000 ounces of gold available for delivery so more than 3 times the amount of ounces were sold in 15 minutes than is even claimed as available for delivery! "
" This has changed, just over the last 4-6 weeks, the open interest has steadily built in gold ...while continuous pressure still on the price. Before going any further, I have never seen the open interest rise to multiyear highs while the price was pushed to multi year lows in ANY commodity."

" As of this past Friday, 61,763 silver contracts are still open, this represents 308 million ounces of silver. The COMEX claims a registered (deliverable) inventory of just under 65 million ounces. With only four days left there are roughly 5 silver ounces contracted for every one ounce available!

The situation in gold has quietly become much worse than silver, there were 162,509 Dec. gold contracts open which represent over 16 million ounces of gold. The "registered" (deliverable) category at the COMEX inventory shows only 868,910 available to deliver! Do you see the problem here? There are only 4 days left until this contract goes into the delivery process, yet there are 20 ounces contracted for each ounce available!"
"Yes I understand, there are still four days left for the open interest to bleed down and roll out to the next contract month but we now stand in totally uncharted territory. Never in the past has this much open interest been still outstanding with deliverable inventory as low as it is. It is also astounding that total open interest could have risen to these levels while the price dropped. "
"Much of this gold "was once" Western gold. They have legally purchased it and in many cases sent our own dollars back to us as payment. Now, we will sit with lots and lots of dollars while they have lots and lots of gold. I believe they have now cornered both COMEX gold and silver if they choose to stand for delivery."

" In essence, if I am correct and we do see failure to deliver and a COMEX default ...the world may be a safer place! This past week for example, president Obama secretly extended our stay in Afghanistan, how will this operation be funded by a bankrupt Treasury and a central bank that issues unwanted currency? The Chinese/Russians in my opinion may be on the verge of winning a war without ever firing a shot and playing the game by our own rules! "
Is COMEX being cornered? | Gold Eagle
----------------------------------------------------------------------------------------
The important take-away here is that we are moving ever-closer to war with Ukraine and proxy war with Russia. China is farther down the list for upcoming wars. If China were to announce that they were going to double the price of gold, America would be forced to show it's stash of physical gold.
China has held huge amounts of open interest in the precious metals market for a long time. They continue to roll it over. Should they announce that they are going to stand for delivery, the COMEX will instantly default.
The Chinese can blow up COMEX at any time they want. The resulting default would blow up the LBMA, most likely. The sons of Sun Tzu can blow up the American economy any time that they want. There is a good possibility that they have accumulated 16,000 tons of gold. https://www.bullionstar.com/blog/koo...nearly-16000t/
So, while they have printed far more than the FED, they can probably circulate enough gold for the Yuan to survive the U.S. dollar.

Sun Tzu: "the best general is the general who wins the war without firing a shot". The idiots in the feral district of corruption have a plan for a new American century. The plan is comprised of pure desires without any viable strategies. They have proved this well.
There is a "window of legitimacy" connected to their machinations. They sunk the battleship Maine in Havana harbor and weren't discovered for a long time. Pearl harbor got us into the war before it was proved to be a set-up. Gulf of Tonkin took a shorter time. 9/11,, shorter yet. Weapons of mass destruction, shorter. The latest boondoggles seem to get blown out of the water in about 48 hours.
If China blows up the American economy to avoid WW III, the master manipulators will have a hard time trying to come up with a convincing lie to start a war. They have, after all, played by the rules.

I'd much rather see America driven down into the dirt that to see Russia set off their doomsday bomb.
Soviet Doomsday Device Still Armed and Ready | WIRED
The details; The Never-Tested Doomsday Bomb
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Old 11-26-2014, 05:09 AM
Danny B Danny B is offline
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Trust, survival and nationalism

The economy is winding down. There is an excess of debt and the PTB are trying to fix that with even more debt. This has happened many times before in history. Ho Hum
As the good times come to an end, we look inwards for survival. We don't trust those outside our immediate family. We have little trust for GOV.
"People no longer internalize the rules that those institutions are attempting to impose. The response is typically surveillance, coercion, and repression."
A Shrinking Trust Horizon — And Hard Times In The City
Martin Armstrong: "The economy will decline in the USA following 2015.75 and will have several important impacts that will shape our future. The Big Bang is inevitable – YES! The outcome is to be determined."

"The G20 agreement to swap all financial info to hunt down international capital is all about getting tax revenue to sustain the debt structure. There is no long-term planning here and they cannot see that they are creating the next MAJOR GREAT DEPRESSION to make all previous downturns look like speed-bumps. "
"What you have to realize is that this trend is inevitable – YES. Why? Because there can be no change without pain. It is unrealistic to expect government to simply say OMG, you are right – let’s reform! Gee, here is the power we stole unconstitutionally – sorry! My bad! Political change does not take place without pain. This is what revolution is all about."
http://www.zerohedge.com/news/2014-0...and-corruption

"If the economy turns down, you end up with people turnings again immigrants and fueling largely nationalistic trends. We saw this in the United States as it became the emerging market Sovereign State Debt Crisis of the 1839-1844 period. They more often than not omit this event from history books in the USA. But you can find old newspapers and etchings illustrating the crisis. This was a very serious economic event that destroyed the credit standing of ALL states and the Federal Government. It too was all about debt."
Expect Riots & Rise of Nationalism After 2015.75 To Pick Up Steam | Armstrong Economics
---------------------------------------------------------------------------------------
You can imagine that GOV would have a hard time meeting payroll and benefits if all credit was destroyed. Revived nationalism will turn France into one huge flambe.
All the previous years of currency inflation in America have been represented by digits, rather than currency notes. In Wiemar Germany and Zimbabwe, the inflation was represented by notes. Notes don't evaporate and the change came relatively slowly. Credit markets and digital wealth can evaporate in seconds.
The bankers are working full time at creating internal strife to keep us fighting each other. They certainly don't want up focusing on them. We'll have plenty more incidents like Ferguson Mo.
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Old 11-26-2014, 04:41 PM
Danny B Danny B is offline
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Breakdown

This is an excellent article from Automatic Earth;
Stuck In Reverse And Descending Into Trauma - The Automatic Earth
It has some quotes from Kunstler. He has a distinct style.

"What we’re seeing “out there” these days is the basic operating system of that economy trying to shake itself to pieces. The reason it has to try so hard is that the various players in the global economy game have constructed an armature of falsehood to hold it in place "

"It would be most accurate to call it fake wealth. It is not liquid at all but rather gaseous, and that is why it tends to blow “bubbles” in the places to which it flows. When the bubbles pop, the gas will tend to escape quickly and dramatically, and the ground will be littered with the pathetic broken balloons of so many hopes and dreams. All of this mighty, tragic effort to prop up a matrix of lies might have gone into a set of activities aimed at preserving the project of remaining civilized."
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Old 11-28-2014, 03:46 PM
Danny B Danny B is offline
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the 6,000 year bubble

The establishment seems to be really worried about gold and the Swiss referendum. Quoting Miguel Cervantes, " laying aside the melancholy burden of sanity, Don Quixote conceived a splendid plan".
The PTB seem to have laid aside sanity.

Gold is a fiat commodity currency (with insignificant intrinsic value).
Bitcoin is a fiat virtual peer-to-peer currency (without intrinsic value).
Gold and Bitcoin are costly to produce and store.
Gold as an asset is equivalent to shiny Bitcoin.
Central bank fiat paper currency and fiat electronic currency are socially superior to gold and Bitcoin as currencies and assets.
There is no economic or financial case for a central bank to hold any single commodity, even if this commodity had intrinsic value.
Forbidding a central bank from ever selling any gold it owns reduces the value of those gold holdings to zero

"The gold has no consumption value to the central bank. Its value is therefore zero."
" It has had positive value for nigh-on 6,000 years. That must make it the longest-lasting bubble in human history.
Yup, Citi just called gold a 6,000 year old bubble: just call it "tradition."
"The world is Keynesian. That explains why never in the history of mankind have all central banks had to coordinate all their efforts to inject trillions of liquidity in the system to keep it from collapsing on itself"
Kyle Bass, "

"Buying gold is just buying a put against the idiocy of the political cycle. It's That Simple"
http://www.zerohedge.com/news/2014-1...days-after-dut
It seems that both gold and idiocy are extremely reliable.
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Old 11-29-2014, 03:55 AM
Danny B Danny B is offline
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Faling oil profits

"Based on data compiled from quarterly reports, for the year ending March 31, 2014, cash from operations for 127 major oil and natural gas companies totalled $568 billion, and major uses of cash totalled $677 billion, a difference of almost $110 billion."
The energy producers lost a LOT of money even with oil at very high prices. A LOT of money flowed into oil investments. Peak-cheap-oil has come and gone,, actually stayed. Investors look at previous levels of consumption and believe that they can just project that forward without any blips. Falling wages and higher oil prices make this untrue. The global slowdown needs less energy. A lot of the financing for shale oil was poorly secured,, junk bonds.
Here is a graph of all the oil plays and what they cost;
http://l.yimg.com/bt/api/res/1.2/geF...1b7cfd0ac3c459
WTI oil is down 25.5% over the last 50 trading days, Oil Breaks $70 - Business Insider

Here is a graph of the stocks of the oil producers;
http://l3.yimg.com/bt/api/res/1.2/CN...ca63f8d7c5a47c

OK, so the oil majors are losing a LOT of money. Their stocks just crashed. Oil is falling rapidly. Here is a graph of the shale plays;
http://finance.yahoo.com/news/breake...162100905.html
Share value is crashing at the same time that debt needs to be serviced;
http://www.cnbc.com/id/102224363?__source=yahoo|finance|headline|headline |story&par=yahoo&doc=102224363#.
The graph of the cost of producing shale is obviously a lie. It doesn't show the all-in cost.
The energy industry previously supplied about $ 650 billion to the finance industry. Now, it is a negative $ 110 billion. OPEC is not bashful and admits that it is declaring war on U.S. shale producers.
http://finance.yahoo.com/news/inside...--finance.html
Obviously, the U.S. can't afford to let the oil producers go bankrupt. They will kick the presses into overdrive to keep them afloat. They have already started.

Ponzi: Treasury Issues $1T in New Debt in 8 Weeks—To Pay Old Debt
At the end of October, according to the Treasury’s Monthly Statement of the Public Debt, the total debt of the federal government was $17,937,160,000,000.

Of this, $5,080,104,000,000 was what the Treasury calls “intragovernmental” debt, which is money the Treasury has borrowed and spent out of trust funds theoretically set aside for other purposes—such as the Social Security Trust Fund.
----------------------------------------------------------------------------------------
So, were just a wink short of $ 18 trillion. $5 trillion has gone missing from trust funds. Ponzi: Treasury Issues $1T in New Debt in 8 Weeks—To Pay Old Debt | CNS News
Not to worry, Barry will take care of everything.
BTW, there is $ 11.25 trillion in consumer debt that has a default rate of 6.5%. That could get messy.
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Old 11-30-2014, 04:21 AM
Danny B Danny B is offline
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Swiss gold, everybody's gold

Well, the Swiss are going to vote on their gold Sunday. It will never happen because it isn't binding on GOV. Not much chance that the gold is there any way.
" According to the Federal Reserve:

"None of the gold stored in the vault belongs to the New York Fed or the Federal Reserve System. The New York Fed acts as the guardian and custodian of the gold on behalf of account holders...

"...As of 2012, the vault housed approximately 530,000 gold bars, with a combined weight of approximately 6,700 tons..."

In fact, not only does most of that gold not belong to the Federal Reserve, but only a tiny part even belongs to the USA. About 98% is the property of foreign nations."
"Eric Sprott, a well known investment advisor from Canada, scrutinized all the FT900 reports published since 1991, added up the numbers, compared them against production and consumption statistics from the CPM yearbooks, and discovered that a minimum of 4,500 tons of gold, above and beyond what the USA can produce, both from mining and recycling, have been exported since 1991!"
"There is no possible source for thousands of tons of commodity-like gold bars, EXCEPT the basement vault of the New York branch of the Federal Reserve."

From the records of the Federal Reserve meeting;
"In other words, the US Census Bureau dutifully records the gold that leaves the Federal Reserve's NY vault. But no nation, or collection of nations, has ever requested 4,500 tons of gold during the period of time in question. They exported gold that belongs to other nations. They sold this gold into the market to meet a multi-decade long perceived need by US policy-makers to flood the gold market with metal. That gold is gone forever. Given the current unavailability of physical gold, there is no feasible way bullion bankers, who probably facilitated the transactions, can ever replace it."
Gold's Price Collapse And 4,500 Tons Of Mysterious American Gold Exports...

China is bringing in about 45--50 tons every week. India is buying all they can. Russia is Buying tons. China says that it will no longer accumulate dollars. They only accept dollars if they can immediately convert them to gold.
Grandmaster Putin's Golden Trap | Gold Eagle
Does that mean that they will stop all exports when the gold runs out?
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Old 11-30-2014, 07:55 PM
Danny B Danny B is offline
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Bond and debt creation

Jim Rickards wrote a book called, "Death of Money". It would be better named, Death of the Bond Market. The bond market is in hyperinflation.
"November 24 – Bloomberg (Susanne Walker): “Even in the $100 trillion market for bonds worldwide, one of the most persistent dilemmas facing potential buyers is a dearth of supply. Demand for debt securities has surpassed issuance five times in the past seven years, according to… JPMorgan… Potential bond buyers are poised to spend $2.4 trillion next year on a net basis, while borrowers will issue an estimated $2 trillion of debt"
The Prudent Bear: The King of Dollar Pegs

Capital is leveraged up to the moon in the bond market. The printing presses are at warp speed. They can not be shut off or the credit markets will crash;
"Turn Those Machines Back On" - The Day The Bond Market Died (If Only For A Few Minutes) | Zero Hedge

OK, $ trillions in new debt is being marketed. At the same time, commodities are crashing. Consumption is down so, tangibles are falling in cost. The master resource, OIL is crashing badly. The CBs are creating debt ever-faster while the producing economy is shrinking ever-faster.
Falling consumption will meet with rising credit at an apogee that creates a crash in trust in financial markets. The CBs are printing as fast as they can because they see a cascade of default in front of them.
https://farm1.staticflickr.com/145/3...b8df1c171e.jpg
When your neck is in the hangman's noose, you don't worry about moral or fiscal hazard.
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Old 12-03-2014, 02:09 AM
Danny B Danny B is offline
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Crashing oil,,, crashing finances

The Saudis precipitated a crash in the price of oil. I suspect that they didn't think it through. The price drop has taken on a life of it's own and is falling much faster than the drop in commodities; Global Economy: Top-Down - Business Insider

This has made life very difficult in Venezuela;" Experts predict the situation in Venezuela will worsen as early as the first half of 2015."

"It will be a year of extreme scarcity," Venezuelan economist Angel Garcia Banchs said. "What's coming to Venezuela is chaos that will probably lead to barbarity and people looting. " http://www.cnbc.com/id/102227316

It appears that OPEC has killed the profitability of investors at the same time that it has dropped the price of oil. " Banks' $650bn bet on oil backfires as Brent prices slump" Banks' $650bn bet on oil backfires as Brent prices slump - Telegraph
Ron Insana says that GOV must subsidize oil frackers; Insana: US Must Shield Fracking Industry 'At All Costs'
The financial fallout from the oil crash may be worse than the oil crash itself.
David Stockman has an EXCELLENT article on "financialization". At it's simplest definition, it means; taking a safe investment and making it more profitable BUT, less safe. This has been done to oil. The profits are made outsized but, the risk is made outsized also.
The Oil-Drenched Black Swan, Part 2: The Financialization of Oil | David Stockman's Contra Corner
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Old 12-03-2014, 05:49 AM
Danny B Danny B is offline
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Funding fight

It's that time of the year,,, AGAIN. "Funding the government. The government will shut down Dec. 11 unless a funding bill is passed

Read more: Congress on the brink - Jake Sherman and John Bresnahan - POLITICO
This promises to be a nasty fight. The obummer EO is unpopular, to say the least. There is a threat to limit funding for DHS since they would be the ones to execute the EO on immigration. DHS chief: Short-term funding a 'very bad idea' - Seung Min Kim - POLITICO
Corporate taxes are at an historic low,,, the economy has crashed,,, FED GOV claims that tax collections are very high. I must have missed something. Just the same, there is going to be a big fight, mock or otherwise. The FED claims that QE has ended. Yeah, right.
The PPT and the ESF are pumping liquidity in as fast as ever. Wait and see.
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Old 12-04-2014, 02:36 AM
Danny B Danny B is offline
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Tax deposits in public banks

As everyone knows, sate and local GOV collect taxes and deposit them in a bank. The bank charges interest on loaning those funds. The bank can throw those funds around wherever they want.
North Dakota is different.
"According to an analysis done of the Bank of North Dakota by the New England Public Policy Center back in May 2011, a majority of the state bank’s deposits are from tax collections and state fees. Last year the only state bank in the nation reported out its ninth year of record profits with a total asset base of $6.1 billion. The state got a 17.6 percent rate of return on its investment."
These numbers show why establishment banking so so DOWN on state banks.
Big banks broke America: How to achieve the ultimate revenge against them now - Salon.com
That 17.6 % return is a pretty good investment.
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Old 12-04-2014, 03:54 AM
Danny B Danny B is offline
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Dollar denominated debt

I found a couple more good articles; A great article on the divergence between TLT and ELD
I’ve Been Thinking About How the Current Madness Will End | Wolf Street
" Nobody knows how (or when) it will end. Not even former Fed Chairman Alan Greenspan. I asked him these specific questions when I saw him last month at a conference in New Orleans. What he told me was frightening: He said that the central banks have no idea what they’re doing and that they will not be able to control the inflation that will inevitably result from this massive experiment."
Porter Stansberry seems to think that this will all end when emerging Markets blow all to bits.
Gross national debt is increasing $3 billion a day; US Debt Jumps $181 billion in Two Months, hits $18 Trillion | Wolf Street
The FED printed like mad after the 2008 collapse. This worked to service dollar-denominated debt in Europe. The FED is currently buying up 50% of treasury debt issuance to keep interest rates low. Since treasury bonds are used as dollars to service dollar debt, there is a shortage of dollars. The FED isn't likely to produce extra dollars to service the emerging markets so, Stansberry could very well be right.
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Old 12-04-2014, 02:42 PM
Danny B Danny B is offline
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Destruction of capital and wages by ZIRP

"Irredeemable currency is the ultimate cause of unemployment, as
the central bank's monetary policy makes the marginal productivity of labor rise, thereby making marginal wage earners dispensable"
http://www.professorfekete.com/artic...ptedInsInd.pdf
"To add insult to injury, wage earners are bombarded
by government and central bank propaganda. “Stand still little lamb, the ‘haircut’ is good for you! You will love the lower interest rate environment that is yours free of charge, courtesy of the Fed!” The truth is that, in effect, a great injustice has been inflicted on all wage earners. They have been victimized."
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Old 12-04-2014, 03:40 PM
Danny B Danny B is offline
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Bubbles and stagnation caused by too much dbt

The oil crisis has caused a financial crisis. The speed of collapse is picking up. I'll try to add articles that explain the reality of our situation.
"THE Crisis concerns the biggest bubble in financial history: the epic Bond bubble… which as it stands is north of $100 trillion… although if you include the derivatives that trade based on bonds it’s more like $500 TRILLION."
http://www.zerohedge.com/news/2014-1...s-thats-coming

This is a long, comprehensive article that covers many subjects.
"Walter Bagehot the founder of the Economist magazine and big thinker on central bank policy said a central bank should only give credit to institutions, which are solvent against first class collateral and at punishing interest rates. Today central banks give money to institutions, which are not solvent, against doubtful collateral for zero interest. This is not capitalism."
http://www.zerohedge.com/news/2014-1...ut-next-person

This is a repost of an excellent article on secular stagnation;
FOFOA
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Old 12-07-2014, 01:29 AM
Danny B Danny B is offline
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Yen, repo and gold

In the monetary plane, there is a general recognition that too much money printing never fixes a problem. Why then did Shinzano Abe print so much "money"?
"It's been 2 year since Abenomics began, and the November 20 New York Times article confirms "its failure." Since its inception:

Japan's government debt has increased to 250% of GDP
The index of Japanese industrial output is 96.8, the exact same reading as 1989
Real household income has fallen by 6%
And Japan has an 11 trillion yen trade deficit -vs.- a 5 trillion yen trade surplus in 2010"

Read more: http://www.elliottwave.com/affiliate...#ixzz3LAdH7Yx6
Follow us: @elliottwaveintl on Twitter | ElliottWaveInternational on Facebook

OK, this outcome was / is expected. Why did Abe do it? Japan was conquered, occupied and garrisoned. But, why all the printing?

"If we are correct, the liquidity in the gold market, with well over US$100.0bn of gold instruments traded daily, implies that substantial financial firepower has been required to maintain the intense pressure on the short side of the trade during the last two years. "
"If we are correct about gold being the short side of a large, leveraged long/short trade, the key question is what is on the long side of this trade?
It was almost certainly a large, liquid market too. But which one?
Here is the chart of Gold versus the Nikkei since September 2012. There is not much to see......until you invert the Nikkei axis and the remarkably close correlation becomes obvious."
http://www.zerohedge.com/sites/defau.../PM%2011_0.jpg
Abe is blowing up Japan so that the Nikkei can supply the liquidity,, through the repo market, to create an enormous short on gold.
http://www.zerohedge.com/news/2014-1...old-new-normal
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Old 12-07-2014, 02:05 AM
Danny B Danny B is offline
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Fracking financing

Here is a chart of the required price of oil to break even in the various shale plays. http://media.peakprosperity.com/imag...-12-3-2014.jpg
"Our view here at Peak Prosperity is that the days of rapid economic growth are behind us, and that if we do experience rapid growth again it is from much lower levels as we rebound from some major slump.

But to grow even more from here, even if that's just 4% annually across the globe implies that we'll find a way to fully double the entire world's consumption of resources in just the next 18 years."
Oil And The Global Slowdown | Peak Prosperity
"Unfortunately nobody - and I mean nobody - in any central bank is even remotely talking about or in any way displaying that they are even dimly aware of the role of energy in economic growth. To them it is all about the banks."
Wages are sliding towards a very low global mean. Effectively, this means that the price of energy is going up. The West is slipping down to where it's level of consumption is equal to other third-world countries.
The financial system needs growth at ANY cost. The original plan was to extend out our payment terms and have our children pay the bill.
https://www.youtube.com/watch?v=MqoGORXAv2o

This is no longer possible,,, if it ever was. U.S. aggregate wages are falling. The usual "plan A" is to inflate away the debt so that the payment isn't near so difficult. The FED is unable to create a wage-price spiral because it can't force wet-ink money into the lower loop of the economy. There is no possibility of creating high paying jobs because they would be immediately be outsourced. They have to settle for pumping money into GOV jobs. Diversions of resources to feed the mega-parasite doesn't cause inflation at this late state in the game.
We slide towards default like any other third world country run by thieves.

As fracking crashes and brings down parts of the financial system, a lot of jobs will go with it. Jobs, Shale, Debt and Minsky - The Automatic Earth

"Simply put, the sharp drop in oil revenues has knocked over a line of financial dominoes whose end is not yet in sight. "
oftwominds-Charles Hugh Smith
Keep that in mind, "NOT in sight"
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Last edited by Danny B; 12-12-2014 at 04:44 AM. Reason: added info
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  #504  
Old 12-09-2014, 04:25 AM
Danny B Danny B is offline
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oil boom and bust,, whodunit

During the construction days of the Alaska pipeline, Pastor Lindsey Williams volunteered his services to the oil barons at pipeline headquarters. They had him sit in on their meetings so he would know where things were going. He was the chaplain to the roughnecks working on the pipeline. They fed him quite a bit of information and really opened his eyes. He wrote and published a book, "The oil non-crisis". If you consider that the original GOV lease at Prudhoe was a 10 Mile by 10 mile area, you get the idea that GOV didn't want to discover too much oil. The petroleum reserves in the arctic are ENORMOUS.
Many years ago they drilled "Gull Island" and found a huge bonanza. It was capped. Williams reported this and just recently, it was uncapped.

Pastor Williams regularly carried messages that his elite friends wanted aired out. A few years ago, they told him that they were going to drive oil down to $ 25 a barrel. Against the advice of his colleagues, he reported this. It came to pass. Many firms that had contracts locked in had to declare bankruptcy.
Both GOV and the speculators make more off a barrel of oil that the oil companies do. The oil companies are losing a lot of money and are probably unhappy about that.
GOV controls the leases and the taxes. The banks have financialized energy,, inflated the price and are making a killing. Only the oil companies produce oil. They can manipulate the output. Much of the Alaskan oil has sand in it and is abrading the pipeline. The oil majors were going to put in a new pipeline and use the existing pipeline to transport natural gas. They never did it.

The oil majors crashed the price already one time. Once again, the speculators have driven up the price. An old figure that I had is that; the speculators add $ 26 per barrel. Once again, the price has been crashed down. Once again, it is trashing the speculators. This time is different. The highly leveraged and (can't lose) bets are pushed into other areas with oil profits as the base of finance. Since $ 100 oil was a sure bet, everybody took their sure-to-appear profits and invested in everything else.

A couple more headlines; "Oil drops $2 to five-year low on oversupply"
Oil drops $2 to five-year low on oversupply

"Energy companies sold $50 billion in junk bonds through October, 14% of all junk bonds issued! But junk-rated energy companies trying to raise new money to service old debt or to fund costly fracking or off-shore drilling operations are suddenly hitting resistance.

And the erstwhile booming leveraged loans, the ugly sisters of junk bonds, are causing the Fed to have conniptions"
I suspect that the buyers of these junk bonds have very little protection. So, energy companies sold junk bonds to banks.
This is how those loans are performing;
http://wolfstreet.com/wp-content/upl...3_Nov-2014.png
Oil and Gas Bloodbath Spreads to Junk Bonds, Leveraged Loans. Defaults Next | Wolf Street

From The Automatic Earth; "This is what makes the falling oil prices so dangerous. As I must have said a million times in just the past few weeks, it’s not about the energy, it’s about the money."
"Oil, Gas Bloodbath Spreads to Junk Bonds, Leveraged Loans. Defaults Next "
"Smaller drillers are in trouble. All of them had horrific single-day plunges, some over 30%, on “Black Friday” after OPEC’s Thanksgiving decision [..] Traders who tried to catch these stocks have gotten their fingers sliced off since then:

Goodrich Petroleum -88% since June. Energy XXI -86% since June. Sanchez Energy -78% since June. Oasis Petroleum -75% since July. "
"even the 43 largest, most diversified players in the energy sector that are part of the S&P 500 are grappling with the new reality: analysts chopped earnings estimates by 20.5% since September 30, according to FactSet. "
More Than A Quantum Of Fragility - The Automatic Earth
These elite friends have e-mailed Lindsey to tell him that they are going to crash the economy in October.

The Bank of international Settlements seems to be getting quite worried; " The highly abnormal is becoming uncomfortably normal. Central banks and markets have been pushing benchmark sovereign yields to extraordinary lows - unimaginable just a few years back. Three-year government bond yields are well below zero in Germany, around zero in Japan and below 1 per cent in the United States. Moreover, estimates of term premia are pointing south again, with some evolving firmly in negative territory. And as all this is happening, global growth - in inflation-adjusted terms - is close to historical averages. There is something vaguely troubling when the unthinkable becomes routine."
http://www.zerohedge.com/news/2014-1...ts-have-become

If you remember the plot line from Atlas Shrugged, Francisco d'Anconia had his own ships sunk to deprive the GOV of copper ore. At one point, the elites told Lindsey Williams that they would crash the economy when obamacare was fully implemented.
The big slowdown in China hit about the same time that fracking boomed. It boomed big enough to draw in all the hot money. The next problem is that all this volatility will keep most investors from coming back.
Armstrong says that October, 2015 is when the major riots start in America.
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Old 12-09-2014, 04:41 AM
Danny B Danny B is offline
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The Hindenburg omen,, the perquisites of blue-bloods

Her majesty's GOV of Great Britain knows that everybody will have to cut back. This includes expenditure from the public purse. The House of Commons and the House of Lords each have a catering service. It was proposed to combine them to save money. The House of Lords refused to go along, saying that they feared the quality of their champagne might suffer. The House of Lords has bought 17,000 bottles in the last 4 years.
http://i100.independent.co.uk/articl...er--gkRgp-6Cux

You wonder if it is even possible for the stock market to crash considering that the FED, ESF and PPT are pumping in $ trillions. We may soon find out.
"We Got an Official Confirmed Hindenburg Omen on December 2nd, 2014"
"This Omen has appeared before all of the stock market crashes, or panic events, of the past 30 years"
We Got an Official Confirmed Hindenburg Omen on December 2nd, 2014 | Robert McHugh | Safehaven.com
Supposedly, this Hindenburg Omen indicates a crash in the next 4 months.
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Old 12-10-2014, 03:26 AM
Danny B Danny B is offline
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The recurring Big Bang,,,, 26 years

Big Bang 2015.75 | Armstrong Economics
Surprisingly, Russia is second after America on the volume of transactions executed in the SWIFT system. They will fire up an alternative system next week to test it.
Sanctioned Russian banks begin testing national payment system next week — RT Business
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  #507  
Old 12-11-2014, 04:36 AM
Danny B Danny B is offline
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Fighting the deflation war

The bankers and GOV are hard at work to prevent deflation. They are SERIOUSLY afraid of a default. In a default, the bankers stand to lose a lot. If they can cause hyperinflation, the loss is spread to everyone who holds U.S. money or debt notes. Here are a couple of headlines on the deflation / inflation battle.
"Deflation Is Winning
And central banks are running scared"
Deflation Is Winning: Brian Pretty - PeakProsperity.com | Peak Prosperity
AND;
"Major central banks will together add almost three times more liquidity next year than they did in 2014, according to Credit Suisse Group AG analysts. "
Think Central Banks Are Done? Stimulus to Accelerate in 2015 - Bloomberg
This is an interesting battle. The FED has created something like $ 26 trillion. But, they were only able to inject it into the upper loop of the economy. The BOJ has injected a very respectable amount also. If the CBs continue to pump liquidity in to the stock market, they may get only stagflation because wages will never rise. The question is; can the feds buoy the stock market eternally?
"So many of the exact same patterns that we witnessed leading up to the financial crash of 2008 are happening again.

I have written more than 1,200 articles about the economy on my website since 2009, and right now our financial system is more primed for a crash than at any other time since I started The Economic Collapse Blog."
Not Just Oil: Guess What Happened The Last Time Commodity Prices Crashed Like This?...
OK, so we have had a "Hindenburg Omen" and a return to the 2008 conditions. Some aspects of the economy are about 5 times worse now that the weeks previous to the 2008 crash.
Just how long can the upper loop of the economy remain independent of the lower loop? How long can the upper loop continue to inflate while the lower loop is deflating? I don't have a thorough understanding of this but, I believe that leverage is the key.
If I buy something with paper dollars, they will never disappear. if I make a digital investment ( bet) with just 4% placed to secure my bet, no paper money is involved. If the debt goes bad, I get a call to make good on the bet. I have to pay up with real paper money. Digital ( prospective) money evaporated and had to be replaced with real paper money. This is deflationary. There are supposed to be 10 Quadrillion worth of contracts denominated in dollars. People spend or don't spend based on the notional value of the assets that they hold.
If the market crashes, money isn't so much destroyed as much as notional value is destroyed. The FED can pump money into stocks to resurrect the notional value that was lost in the crash. The FED can't very well pump money into commodities because the increased price will just cut back on consumption.
Oil and commodities are falling in price now and this is vaporizing hundreds of $ billions of investor money. This is deflationary. The CBs plan to pump in trillions of new currency units.
Europe complains that it has screaming deflation. If you look at the monetary base, it has risen sharply. http://upload.wikimedia.org/wikipedi...etary_base.png
The CBs can create money but, they have little control where it goes. The FED is creating about $ 3 billion a day but, it isn't actually doing any good.
Since digital money is far more subject to vaporization, through the reversal of leverage, it is far more difficult to get it to actually "stay" in the economy.
That is why the CR proposed the idea of sending everyone a check for ?$ 25,000. This is an admission that they can't create inflation with the tools that they are using now.
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  #508  
Old 12-11-2014, 04:21 PM
Danny B Danny B is offline
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Bankruptcy of the pension benefit guarantee corporation

As everyone knows, GOV bought a LOT of bullets. Who are they going to use them on? GOV is pushing through a plan to cut pensions in a big way.
Congress considers plan to allow pension plans to cut benefits for retirees - Dec. 10, 2014
Pension plans have been severely underfunded and the obvious answer is, just cut them.
The Daily Bell - So It Begins: Congress to Cut Pension Plans
A branch of GOV guarantees a huge number of plans and GOV is broke. Pension Benefit Guaranty Corp - PBGC Protects America's Pensions
The bill is being pushed through pretty fast. Is there some kind of urgency? Maybe GOV knows something that we don't know. http://www.zerohedge.com/news/2014-1...its-us-bankers
Things are really warming up with the financial crash initiated by the oil price crash. It's definitely bad news for the banks. https://www.youtube.com/watch?v=Ey20x-VlDYQ
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  #509  
Old 12-12-2014, 03:47 PM
Danny B Danny B is offline
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Fraud

"So the Fed kept filling up the punch bowl[referring to the period between 2002 and 2005] . And as opposed to going into inflation of goods prices, it went into an inflation of asset prices. That's inflation in the same way, but its not called inflation. So if the stock market goes up we don't say, 'Oh my god, there has been inflation', or if housing prices double we don't say 'oh my god, there has been this enormous inflation', we say, 'How much richer we are!' But the problem is that we are not richer, it is simply an illusion of richness."Dave Colander - Professor of Economics at Middlebury College (Money for Nothing: Inside the Federal Reserve"
http://www.bestmindsinc.com/document...w_Dec11.14.pdf

"Indeed, a study performed by Duke University found that roughly 20% of publicly traded firms manipulate their earnings to make them appear better than they really are. The folks who were surveyed for this study about this practice were the actual CFOs at the firms themselves.
The reality is that this practice is far more endemic than the 20% discovered in this study (it’s likely over 50%)."
"So… the prices of assets are fraudulent, the value of balance sheets is fraudulent, and earnings are fraudulent. This means that stock market caps, balance sheets, and income statements are all inaccurate representations of reality."
http://www.zerohedge.com/news/2014-1...em-based-fraud

The main question that occupies my brain lately is; can you create hyperinflation in a digital currency the same as you would create hyperinflation in paper currency? The FED has failed to raise wages. Considering the attraction that capital has towards global-wage-arbitrage, that isn't a surprise. Can a CB create hyperinflation if it fails to create a wage-price spiral? If you look at velocity, employment, credit and savings, the inflative actions of the FED have only created mega-stagflation. Hyperinflation seems to go hand-in-hand with WAGE and price controls.
Stockman makes a good argument that; if you inflate one area, you deflate another area. If you contrast asset prices with consumer spending, this seems true. The FED promotes credit inflation which is a zero-sum game if the producing economy does not demand credit. There is a big demand for credit in the financial industry but, they don't create anything tangible. I suspect that hyperinflation can not occur if it can't move into tangibles. The oil bubble is a good example. Ultimately, the price of oil depended on consumption. The financial industry has unlimited demand for credit because leverage is ephemeral and unlimited. We will have a cascade of credit collapse as/when valuations return to reality. I don't expect a currency collapse. When credit dies, currency is all that is left.
How It Fits Together——QE, Deflation And Malinvestment | David Stockman's Contra Corner
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  #510  
Old 12-13-2014, 05:21 AM
Danny B Danny B is offline
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Commons debate on money creation and society

At one time gold was our standard of a store of value. The bankers eventually succeeded in making debt notes a store of value. This has never worked out before and is not doing too well at the moment.
There was a debate in the house of commons on money creation. VERY few were in attendance. I found a good quote from Zac Goldsmith.
" An obvious question is: why is our economic system unconnected from the natural world? Could the reason lie in the institution of money [ ie, the unit on a scale which measures the value of things which have real value ] has been proclaimed by law to be a store of value (the thing that it measures)? No bona fide unit of measurement can store the thing that it measures.
Units of measurement are abstract concepts which ( because they are abstractions) can not store the concrete dimensions which they measure!

In this unique departure from ethical practice, the institution of money has enabled the economies of all societies who have been made dependent on money to have been disconnected from the natural world.
My understanding is that the existing amount of money (all of it repayable debt) in our world is equal to many, many times the annual production of the entire population of the planet.
Such being the case, we actually do need to start again. And we need to try to correct the social and environmental ills that our current system will leave us afflicted with.

Steven Baker (in his introductory speech) : a. after some penetrating questions, he came out with the following astonishing rhetorical question "What is money? well, I think that money is the basis of a moral existence."
"After 15 years of studying these matters, and now having made it to the treasury committee, I'm even more convinced that there is no way to change the present monetary order until the ideas behind it have been tested to destruction; and I do mean tested to destruction; and it's an extremely serious issue; but, it will not change until it becomes apparent that the ideas behind the system are not tenable."
James Goldsmith went to Eton but dropped out in 1949 aged 16, after he had bet £10 on a three-horse accumulator at Lewes, winning £8,000. With his winnings he decided that he should leave Eton immediately; in a speech at his boarding house he declared that, "a man of my means should not remain a schoolboy."
Zac Goldsmith (son)went to Eton College in Berkshire,[9] and later earned four A Levels as a student at the Cambridge Centre for Sixth-form Studies,[12] after having been expelled from Eton for possession of cannabis.[14]

This gets to the heart of the problem. If you can't offer people a safe store of value, they have no reason to produce an excess.
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