* NEW * BEDINI RPX BOOK & DVD SET: BEDINI RPX
|General Discussion Other general discussions on topics not listed above.|
unloved economists... pressures in the bond market
Somewhere, I posted a summation from Jim Rickards of exactly which economic "rules" most accurately represent true economic activity. Austrian Economics is the runner-up as far as accuracy. WAY down the list is our current body of economic "law". Not only has much of it been incorrect, much of it has been opposite of reality. The FED completely controls academia as far as remuneration and publishing go. The economists just had a big pow-wow in Chicago. The humor should NOT be lost that they had their pow-wow in a completely corrupt and bankrupt city. The corruption is, of course, centered on GOV employees. https://mishtalk.com/2017/01/09/expl...ea-one-person/
The feces-for-brains economists lament the fact that nobody listens to them. A big part of the problem is that they believe that they live in a capitalist system. It's actually crony-capitalism mixed with a good dose of socialism. They had their big Pow-wow and are now ready to lead America out of the economic dol-drums. Not surprisingly, America has lost faith in them.
"endless discussion about how to rebuild trust in the discipline."
"left many at this conference questioning their place in the world."
"But a road map for regaining trust is elusive…"
"A separate survey from Marketplace-Edison Research, conducted in October, asked U.S. adults how much they trusted data about the economy that is reported by the federal government. A quarter of respondents said they “do not trust it at all” while another 19% said they somewhat distrust it.
That is difficult to comprehend at a conference like this, where 13,000 attendees assembled for more than 500 presentations, many of which are built around findings that heavily use that government data."
Feces in the cranium syndrome.
"This year, academics are out in the cold. During the election The Wall Street Journal contacted every former member of the CEA, including those going back to President Richard Nixon. None had been tapped as an adviser to Mr. Trump’s campaign, nor did any publicly endorse him.
The president-elect is “not particularly interested in hearing from the academic economist club,” Mr. Davis said."
Academia has their collective heads up in the clouds. These clouds are brown and smelly
According to Martin Armstrong, the only people who truly understand the economy are the multi-national hedge fund managers who understand global capital flows. This makes sense because everything moves all over the globe. Academia is just too self-serving. As long as the follow the program from the FED and the bankers, they can't be counted on to have any objectivity.
The gold-bugs present a different story than the bankers but, you have to take into account that they too are biased. Just read everybody and come to whatever conclusion best seems to fit the facts.
Andy Hoffman writes very well even though he is centered on precious metals. The Death Throes Of ?Money? | SilverSeek.com
He writes about the "death of money". Money isn't likely to die as long as there is supply-and-demand for things that are needed for survival. The bond market is a different story.
Hoffman also writes about the death of the European Union. https://www.milesfranklin.com/death-...plosion-hence/
THAT is going to be very messy.
"Financial Repression – “Put inflation aboutabove? interest rates and to maintain them there” .. it’s being done by the central banks, and it could be forced by financial institutions upon investors by governments .. it’s all about governments trying to maintain & reduce the burden of government debt .. but now the need to repress is higher than after World War II, since there is also a lot of private debt as well" Financial Repression Authority
There is something like $ 13 trillion in negative-yield bonds. The bond loss is the percentage loss between inflation and yields. Normally, investors would sell the bonds and go to greener pastures. This forces the CB to raise offered rates. If there are no markets that offer a better return, investors move to gold to preserve value. It has been well-proven in the courts that precious metals have been suppressed.
If the sovereign bond markets melt down as Armstrong predicts, capital would have to move somewhere else. Stocks are over-valued by about 70% so that doesn't look good. Commodities depend on consumption from a consumer base that has falling wages.
The U.S. dollar has a great utility value because it is so widely recognised and accepted as a currency. It's pretty sucky as a store-of-value. In the role of store-of-value, gold is more widely accepted than the U.S. dollar. Turkey is the number one buyer of gold per-capita. The stash of private gold in India is about 20,000 tons. The State is adamant that all wealth remain IN the system so that the bankers and the taxman have access to it. BUT, the system just isn't that simple. If all "money" is debt money, how can it be considered wealth?
Bonds are debt-notes. Their value depends on the wealth of the State of issuance. GDP is a measure of the money in circulation at a given moment. Actual wealth is a different story. The wealth of America is falling and bond holders are scheduled for a big squeeze.
The reserve currency= slow poison
States generally go off the gold standard any time that they are planning to go to war. That way, they can wage war on their credit card. America unwisely went to war in Indo-China while it was on the gold standard. In the summer of 1971, the gold outflow from the treasury was 100 tons a week. We went off the gold standard. Great Britain passed the baton of empire to America after WW II. Out of necessity, we have stayed off the gold standard.
As explained by Triffin's dilemma, the owner of the reserve currency holds a special position in the financial world. The whole world demands that we run a trade deficit so that they can hold our bonds as a store of wealth. They have financed our war-mongers.
Bloomberg says that cheap money is here to stay, https://www.bloomberg.com/view/artic...e-here-to-stay
Mac Slavo says that cheap money is coming to an end, The Era Of Cheap Money Is Ending: "This Is The Calm Before The Storm" | Zero Hedge
The Bank of England is out to lunch,,, still. Why modern monetary policy doesn't work â€“ the models it uses are horribly out of date - MoneyWeek
Not surprisingly, internet sales and general poverty is killing retail outlets, "Sears is currently more than 1.6 billion dollars in debt, and they are losing more than a billion dollars a year. " "As you read this article, more than 95 million Americans are not in the labor force, and that number has grown by 18 percent under Barack Obama. "
It?s A Retail Apocalypse: Sears, Macy?s And The Limited Are All Closing Stores
I don't think that this is the "hope and change" that obummer had in mind.
1/10 The Mexican peso is crashing (again) to record lows – Zero Hedge I guess that they won't be able to pay for the wall.
Here is an excellent graph showing paper reserves in central banks. http://www.plata.com.mx/mplata/articulos/Res2016.png
Sr. Price writes an excellent article on the movement of wealth and currency from the reserve currency (RC) state(s) to the rest-of-the-world (ROW) States. The article is somewhat convoluted but, it is important to understand it.
"International Reserves have been falling because they are made up of Bonds issued by RC, and these bonds are being sold off for cash; the purchasers may be either the banks of the RC or the RC Central Banks. In other words, Bonds held as Reserves are being liquidated by ROW Central Banks hungry for RC cash"
This is a very important concept to understand. Cash IS in demand. Bonds are NOT in demand.
"Inflation is always and everywhere, the result of governments and their banking systems working together to increase spending; inflation can be a long drawn-out process, little noticeable by the population. Deflation on the other hand, is the result of actions on the part of the public, and deflation can take place at great speed"
"There is an undesirable consequence for the RC in doing this, because the advantage for the RC of running a permanent trade deficit with ROW brings with it the inevitable demolition of RC industry, as imports, necessarily cheaper, overwhelm local industrial activity." Check
The State can easily bring about currency inflation, usually resulting in price inflation. Currency inflation to the State is as natural as water is to a fish. The State stands at the outlet of the printing press and spends it on whatever it wants. The State controls currency inflation. The public control currency deflation. The money supply includes currency AND credit. If the public refuse to utilize credit, the State can't do much about it. Cash is a debt-note just like bonds BUT, cash can be traded in the lower loop. Bonds can only be redeemed in the upper loop.
The reserve-currency status allowed us to wage LOTS of wars. It also allowed us to shut down domestic industry. We could buy anything and pay with confetti. The reserve currency allowed us to go around the world making war on anything that moved but, it is slow poison to the producing economy. We could have done things differently and enjoyed the "Peace dividend". BUT, money corrupts and attracts the already-corrupted. We are a nation focused on endless war and maximum killing. What does that do to us as a people.
U.S. military suicides remain high for 7th year - USA Today
Soldier Suicide Statistics In Israel: More Israeli Fighters Kill Themselves Than Die In Battle
I'm sure that the psychopaths don't lose any sleep.
Latin socialism, slow meltdown of the Eurozone,, fear of the CB,, black magic
Chavez and Maduro in Venezuela showed that you can't make everybody rich by printing more money. Socialism just doesn't work that way. That's part of the reason that U.S. FED GOV only pushed "money" into the upper loop. The other problem with socialism is; the socialists tend to give jobs to their cronies regardless of their qualifications. This showed up in Venezuela where the radical lefties were given jobs running the oil industry. They screwed up so bad that oil production fell way down. It doesn’t matter that they have more oil than Saudi, they still have to get it to market.
VZ had so much income from oil that they started handing money out like it would never suffer an interruption. The interruption hit and the GOV tried to keep everything going with the printing press. Nobody wanted to export to them when they were killing their currency. While they had tons of income, they let their agricultural sector wither away. Now, they can't afford to import food. They've sold off half their gold because nobody wants Bolivars. It is fated to get worse.
Mexico has a LOT of oil but. "This deterioration is the result of “decades of bad management, lack of vision, negligence, abuse and in many cases, corruption.” The Mexican daily La Jornada went further, arguing that the company has been systematically “plundered” during successive administrations, including, of course, the current one."
"The Mexican government had used Pemex as an endless ATM, but now the oil company is stewing in a toxic mix. Read… Shrinking Oil Giant Pemex Starts 2017 on Wrong Foot"
Hideous Constellation of Threats and Challenges Facing Mexico | Wolf Street
GOV raised the price of gasoline by 20%. The result; "Hundreds of people were arrested and a handful of people killed over the past week as peaceful protests against the government’s hike of gasoline prices (by as much as 20% in some states) descended into widespread looting and rioting."
What will they do when things really get bad? The Mexicans have a basic socialist mentality. I travelled around there by road for 10 years. If you have nothing, they will generously help you out. If you have a lot more than you need, they will "share" with you. It's an attitude of cooperation that helps the survival of society. Sometimes it goes too far and the GOV expropriates a lot of private property.
The Eurocrats proposed various treaties to form the Eurozone. Lisbon, Maastricht, Rome, et al. When a State's voters rejected a treaty, they were forced to vote again and again until they got it "right". Knowing that the constriction of the Eurozone would produce more and more resentment, the Eurocrats maneuvered to squeeze out any vestiges of democracy. The whole idea was poorly conceived because it ignored human nature and precedent. So, a few years later, the problems come bubbling to the surface.
The State creates monetary inflation and the public creates monetary deflation. The investors vacillates between greed and fear. The Central bank only knows fear. Fear of deflation. The investor can lose money but, the CB can't. Every time that fear creeps up on the investor, the CB pumps more free money into the system. Out of habit, the CB tries to stop ALL cleansing of the system. BUT, debt grows too high and fast when it is compounded. http://www.plata.com.mx/mplata/articulos/Res2016.png
Gold is the governor on the system but, gold has been pushed aside.
China "won" the currency war. This causes capital flight. Fleeing capital takes along with it, CONFIDENCE. Most of what keeps the bond market going is confidence.
China's S$5.5 trillion wealth products reel as bond binge unwinds, Banking News & Top Stories - The Straits Times
"The virtually bankrupt investment banks like JP Morgan and Goldman Sachs told the Fed and thus all central bankers what they needed to do to save the system and another massive dose of Black Magic was created to the extent of around $25 trillion. This made it possible for the bankers to hold onto their global financial empire and maintain control of the money."
"Since the crisis started in 2006, global debt has gone up by 70%."
"not due to a real improvement in productivity but mainly to global debt going from virtually zero one hundred years ago, to $230 trillion today. "
"The market which has gone up a massive 35 X over a 42 year period. This is a compound annual growth rate of almost 9%. That means that on average a stock market investor has doubled his money every 8 years. "
Yeah, on the backs of out falling wages.
Recognising the demographic crash, the IRS pays you to have kids. "As one of the largest anti-poverty programs, the earned income tax credit paid out $72 million to 29 million families in 2014. In that same year, the additional child tax credit provided an additional $27 billion to 20 million families."
You would be amazed how often I find figures that are considerably OFF. I try to correct them. I didn't catch that one.
"During the 2015 tax year, the average EITC was $3,186 for a family with children (boosting wages by about $265 a month), compared with just $293 for a family without children. "
Policy Basics: The Earned Income Tax Credit | Center on Budget and Policy Priorities
million---billion,,, what's the difference?
France, the drawbacks of globalization, GOV employees
The French election is coming up and things are getting hot.
1/12 Le Pen LEADS in poll for first round of French voting – Daily Mail
1/12 French newspaper ditches polls after failing to predict Trump or Brexit – Express
1/12 Macron gives speech in English and Le Pen blows her top – Local
1/11 Le Pen says all French banks have refused to meet with her – Bloomberg
The papers have long claimed that Le Pen was un-electable because she was too far-right,,,,, hoping that it would become self-fulfilling prophecy.
She would take France OUT of the EU. France is a beautiful country with several growing islamic hell-holes.
"An estimated 40,000 cars are burned in France every year "
"Boubakeur said that 2,200 mosques are "not enough" for the "seven million Muslims living in France." He demanded that unused churches be converted into mosques."
"Those who denounce the illegal behavior of fundamentalists are more likely to be sued than the fundamentalists who behave illegally." – Marine Le Pen, "
" Figure 5 above suggests that, on average, the paychecks of workers in 2017 will tend to purchase fewer goods and services than they did in 2016 and 2015. "
"In economic language, the world economy is becoming a “Zero-sum” game. Any gain in the production of goods and services by one country is a loss to another country. Thus, it is in each country’s interest to look out for itself. This is a major change from the shift toward globalization we have experienced in recent years."
" paychecks of workers in 2017 will tend to purchase fewer goods "
1/12 BofA finds consumer spending tumbled in December – Zero Hedge
1/12 Food prices rise as inflation returns to British supermarkets – Telegraph
Yep, price inflation in necessities cuts down purchases of everything else.
1/12 Those hostile to negative rates are ‘ignorant,’ Rogoff says – Bloomberg That would include, pension funds, hedge funds, insurance funds, retirees, savers, banks, et al, et al. There are a LOT of ignorant people and institutions.
1/12 Hawaii pension fund shortfall hits $12 billion – Civil Beat
1/12 Public pensions out of control in Texas’ biggest cities – Watchdog
Chicago public employees demanded raises of from 19---26%. If you think that GOV employees are not a big part of the problem, you should do further reading. If you are a GOV employee, you are probably painfully aware that you could never survive in the private sector.
1/12 Little done to rein in China debt – MSN Try dragging your feet to stop a runaway freight train.
various headlines,,, various BS
1/12 German GDP grew 1.9% in 2016, strongest rate in five years – Economic Times That growth includes all the new money (bonds) printed.
1/12 China credit growth exceeds estimates, lending remains robust – Bloomberg Robust lending to service previous debt.
1/12 Senate opens Obamacare repeal drive with overnight marathon – CNN The fur is flying.
1/12 Massive VIX warning for all traders – Active Trading Partners VIX is the "fear index". They don't have a "greed" index.
1/12 Fiat crashes, EPA accuses carmaker of cheating emissions tests – Zero Hedge Pox Americana is looking high and low for anybody they can fine the snot out of.
1/12 Bitcoin collapses, Chinese latecomers get fleeced – Wolf Street Ah, did Chinese gold collapse?
1/12 Perils of the Icarus Trade as the world runs short of dollars – Telegraph Ah yes,, demand for cash, not for bonds.
1/12 Stocks extend losses on Trump policy disappointment – CNBC She is a tempestuous slut.
Kunstler has something to say, America Versus the Deep State - KUNSTLER
"For more than thirty years, we’ve been borrowing too much money so we can pretend to afford living in a blue-light-special demolition derby. "
Trying to force price inflation when there is no wage inflation
I still have a business card that a guy gave me in 1971, "will paint any car, any color in Urethane for $35". He painted my '65 Impala with a 2-tone fade-in of ralley green and Camaro green for $35, materials included . That was then, this is now. Motel 6 now charges more than $6.
Those closest to the money spigot have to keep the money flowing. Otherwise, their income would be commensurate with their actual contribution to productivity. This includes just about everyone in the finance industry. Of course, it includes most of GOV also.
Mish has written a good article about the subject.
"Under President Obama, the percent of income going to the top 1% went from about 18% to about 21%.
The entire jump from under 15% to 21% of income going to the top 1% occurred under Clinton and Obama.
Under Reagan, start to finish, the percent of income going to the top 1% went from about 10% to over 14%"
ALL GOV is socialist and the demands and needs of socialism grow without self-imposed limits. The only way to finance this is to pump up the banking sector and slurp up whatever can be squeezed from the bankers. Socialism is the firewall between non-producers and Darwinian pressures. Gold is "Kryptonite" to socialism because it prevents unlimited expansion of State give-aways. While a social safety net is a good idea, it ALWAYS breaks the bank eventually. Unfunded liabilities in America are about $ 213 trillion so, America has travelled down a well-worn path.
The CB inflates everything in sight until the system breaks. All socialist and democratic systems in history have crashed. The inflation from the CB eventually outruns the actual productivity of the State and the bond market blows up. All the gains from the inflation have gone to the people who already have lots of money but, the eventual losses will hit them also.
"Gold Window Synopsis
1. Total credit exploded from $1.7 trillion to $63.5 trillion at the end of 2015.
2. To service that growing pile of debt, the Fed had to keep slashing interest rates.
3. Instead of allowing consumers to benefit from technological advances that are inherently price deflationary, the Fed sought to increase inflation. This is to the benefit of the banks and already wealthy.
4. A policy of 2% inflation coupled with no restraints on trade deficits (thanks to removal of the gold window), encouraged the outsourcing of jobs.
5. After the dot-com bubble burst in 2001, the Greenspan Fed stepped on gas blowing the biggest housing bubble on record. Then the Fed bailed out the banks, the asset holders and the wealthy. This chain of events left the median person being worse off than before.
6. Given that executive pay is based on performance, rising share prices further benefited the top 1%.
7. Fed policy itself, coupled with rampant expansion of credit thanks to Nixon closing the gold window is totally responsible for the rising income inequality from 1971-present."
"There is no answer because history and logic both show that concerns over consumer price deflation are seriously misplaced.
The BIS did a study and found routine deflation was not any problem at all.
“Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the BIS study."
"A good starting point is “why” income inequality is rising as opposed to investigating ridiculous wealth-transfer schemes and government stimulus projects in a fool’s mission to fix a problem that Summers, DeLong, Bernanke, and Krugman all fail to understand."
The CBs are terrified of price deflation because the credit airplane can only stay aloft of there is systemic inflation,,, usually resulting from price inflation.
In a healthy economy, there is a natural price inflation driven by demand. In our fully automated system, there is no limit to supply so, we rarely see price inflation driven by supply constraints. To keep the credit airplane flying, the CBs must create price inflation artificially.
The "benefits" of CB inflation have only reached a small percentage of the population. The remainder of the population is experiencing WAGE deflation so, demand is shrinking.
The less we see of demand-driven price inflation, the more that the CB has to try to force artificial price inflation. They have had MAJOR successes in the upper loop. They have failed in the lower loop. As they drive up prices of basic necessities, they have driven down consumption of everything else.
As more investors abandon the bond market, the CB has to buy more and more. This extra printing leads to more price inflation in the upper loop. Part of this bleeds-over to the lower loop and diminishes the purchasing power of the bonds. The "bond vigilantes" demand higher interest. The CB prints more
to meet the higher cost of debt service.
Sliding down, Armstrong, Roberts and China
There is no shortage of BS statistics from GOV.
"However, the BEA calculates the saving rate as the difference between incomes and outlays as measured by their own assumptions for interest rates on debt, inflationary pressures on a presumed basket of goods and services and taxes. "
" What it does not measure is what individuals are actually putting into a bank saving or investment account. In other words, the savings rate is an estimate of what is ‘likely’ to be saved each month."
"As more evidence of consumer’s struggling to maintain their standard of living, while consumer credit has continued to climb, retail sales remain weak as shown below." Yep, we are increasingly living on credit.
BUT, our delinquency rate is approaching 20%.
"Not surprisingly, since the election, “expectations” of increased sales have surged. However, “actual sales” have been on the decline for several months due to the constriction of consumer demand due to increased debt and weak wage growth as noted above. "
We're slowly spending ourselves down,,, charging and defaulting all the way.
The CBs removed risk and started a big party. The party has gotten out of hand because nobody ever lost any money. They just kept gambling.
"Capitalism without bankruptcy is like Catholicism without hell. And right now, we need to audit and abolish the Fed, the Bank and the ECB, which started this mess, and slay the zombies. "
Mitchell Feierstein: Abolish central banks and slay the zombies | London Evening Standard
Rense; Beijing Warns US Only 'Large Scale War' Can Stop
China From Accessing Its South China Sea Islands
1/12 China should be barred from South China Sea islands? – Reuters
China-US WAR May Be Inevitable - Chinese Media
"China has not declared the Gulf of Mexico or the seas off the California coasts to be “areas of Chinese national interest,” but the killer witch Hillary in the regime of the Nobel Peace Laureate declared the South China Sea to be “an area of US national interest.” This is provocation beyond provocation."
Ten Aircraft Carriers Aligned in a Row -- Paul Craig Roberts - PaulCraigRoberts.org
The article has an interesting report on copper.
The BIS is buying hundreds of tons of the "barbaric relic" Gold swaps by BIS exploded in 2016 from nothing to record level | Gold Anti-Trust Action Committee
"Your liberty and human rights are in the hands of every petty government officer because they get to do whatever they desire and it has become your burden to go to court to PROVE you have any human rights. This is what happens in all republics. Whenever you have a political class, they always exert their power against the people. There is ABSOLUTELY NO HISTORICAL EXCEPTION!"
"Politicians often promote the least ethical people to various positions to ensure that they will have no loyalty, except to the person of their benefactor."
"They can say whatever they desire and the likelihood of you prevailing in a court of law is somewhere below zero. There are no fair trials. They do not exist anymore. All that is left is the Crash & Burn. Then we will get the chance to restart.
It was Ben Franklin who warned against this legal system. He proposed that the legal community should nominate all judges. They will always nominate the best so they get rid of the competition. That was the Scottish system. The Constitutional Convention overruled Franklin to ensure government would control the courts. This is what we get – total corruption and no rule of law."
Debt that won't go away,, PBGC,,Pensions WILL go away
This is what Trump inherits; http://i0.wp.com/money.visualcapital...art.png?w=1360
"Back in 1979, the debt-to-GDP ratio was a modest 31.8%, and the federal government only had an outstanding tab of $826 billion. Fast forward to today, and the perpetual borrowing has added up.
The debt-to-GDP is now 104.2%, with the total debt burden nearing the $20 trillion mark." NOT including unfunded liabilities.
"On a “per person” basis, each person in the U.S. owes $61,300 – the second highest in the world. Per taxpayer, however, that amount balloons to $167,000."
Visualizing Donald Trump's $20 Trillion Problem | Zero Hedge
1/13 Trump will soon be begging the Fed for QE4 – CNBC It's NOT that simple.
"Next up is a redo and revamp of those economic systems, but that is not going to be easy, and may not get done at all. The resistance may be too strong, warfare -economic or physical- may seem like a way out, there are many unknowns. We could, ironically, get quite far in that redo if we simply cut all the waste for our economic processes, but then again, that would have us find out that much of the system runs entirely on wasting stuff, and wasting less kills the system."
"It’s not even complicated. This week there was a report from Elevate’s Center for the New Middle Class that concluded that half of Americans, 160 million people, can’t afford to have a broken arm treated (at $1,400). And sure, you can say that perhaps that number is a bit too high, but there have been many such reports, that for instance say the majority of Americans have less than $1000 in savings, and can’t even afford a car repair."
The Economist is the mouthpiece of the elites. They are all excited that inflation is returning. They are definitely out of touch. Inflation is on the way back in the rich world, and that is good news | The Economist
Here is something that is a more accurate portrayal. The Psychology of Soft Slavery : Waking Times
Multiemployer plans are insured by the US Federal Government’s Pension Benefit Guaranty Corporation (PBGC). But PBGC is itself in danger of going broke.
"In the fiscal year 2015, PBGC paid out nearly $6 billion in benefits to participants of failed pension plans, increasing the agency’s deficit to $76 billion. The PBGC now has $164 billion in obligations and just $88 billion in assets.
When this was reported to Congress, it passed the Kline-Miller Multiemployer Pension Reform Act of 2014, allowing pension plans to ask permission to cut benefits to its plan participants."
They're not only cutting, they're actually taking back money that they paid out.
"The ripple effect could be enormous: PBGC is the ultimate backstop for some 22,000 single-employer pension plans and another 1,400 multi-employer pension plans covering 40 million participants."
Here is an important detail. "And this, remember, is happening at the tail end of a 30-year bull market in bonds and a 7-year bull market in stocks, which took the main asset classes held by pension funds to record valuation levels. So the rubber truly meets the road during the next recession when stocks will, if history is a reliable guide, drop by 20% or more (probably 50%). The current gaps in thousands of pension funds will become gaping holes"
"Unfortunately, there is as yet no known cure to this virus. ‘The WHO therefore recommends complete avoidance of “Reality” as the only effective strategy for those wishing to remain as Mainstream Economists’, Dr Cahuc concluded."
Obummercare and other gifts to the cartels
Roughly 45% of Americans don't pay any federal income taxes because they don't make enough money. As we slip farther and farther down to a global mean wage, fewer pay taxes and more are supported by GOV. 51% of Americans receive a check from GOV.
The same falling-wage problem affects the upper loop of the economy. We just don't make enough money for the finance industry to survive. The TARP money was a gift to the banks when our wages were insufficient to keep them in business. ZIRP was a huge gift to the banks because they didn't have to pay interest on the depositor's money that they held. This lost income to depositors amounted to about $ 400 billion a year. BUT, ZIRP had a poisonous side to it too.
Not only did the depositors have to go without interest-income, the banks did too. Hedge funds, pension funds and insurance companies also need interest-income to stay solvent. There is plenty of literature about the death of the pension funds. LOTS of hedge funds are closing.
What about the survival of insurance companies?
" And now, thanks to the "Affordable" Care Act, you can now be fined for not forking over whatever insane price increases the healthcare cartel decides to dream up from their government protected boardrooms."
"healthcare insurance options in many states have been vastly reduced as carriers claiming losses, while massive premium increases have been justified also on the basis of losses and reduced profits"
"top five health insurers — UnitedHealth, Anthem, Aetna, Humana and Cigna — have doled out nearly $30 billion in stock buybacks and dividends from 2013 to 2015. (The Supreme Court ruled in favor of the Affordable Care Act in 2012.)"
"Fun fact: during the first 26 years of its existence, the US income tax code grew by 104 pages. Over the past 30 years, it has grown by 50,000 pages."
"Obamacare Benchmark Premiums to Rise 25% in Sharpest Jump Yet"
"the electorate anger is that the same government that forced Obamacare on everyone is also the same government that swears that health care inflation is running at only 2.5% to 3.5% per year over the past few years"
"In total, US health care premiums have fully tripled since 1999."
Obamacare was just a big gift to the insurance companies to keep them solvent when their customers were/are all broke.
Wages have gone nowhere for the last 20 years.There is no more "fat of the land" to keep all the parasites going. Millennials earn 20% less than Boomers did at same stage of life
The State is the friend of the rich who control it. It is NOT your friend. 1/15 Fed may step in to protect corporations from Americans’ rising wages – Birch Gold
As wages in the lower loop slipped away, the upper loop was forced to print more money to keep things going in the upper loop. Here is an article with EXCELLENT graphs that make it very clear about the new "highs" that we are achaiving. RealVision's 15 "Killer Charts" For Q1 2017 | Zero Hedge
The upper loop doesn't want to shrink no matter what happens to actual wealth production by the lower loop. So, what will the result be?
1/15 Are you prepared for the great financial enema? – SRSrocco Report
1/15 What if the natural real interest rate is negative? – Seeking Alpha Yes grasshopper,,, what if population growth is negative? Ref Japan
The PTB just have no idea whatsoever of how scientific and cultural changes are going to play out. They want to maintain the status quo when, it just isn't possible. https://medium.com/abundance-insight...f74#.ls1yuvs59
1/13 The utter stupidity of the new Cold War – Zero Hedge It's not stupid if it makes money for the offence industry and their bankers.
1/15 Investors are bracing for a massive stock-market selloff – MarketWatch Don't worry, the FED will buy everything.
1/15 Be prepared for a violent Fed reversal – Daily Reckoning Are they going to cram the monetary gearbox into reverse at 60 mph to screw Trump?
1/15 6 in 10 Americans don’t have $500 in savings – CNN No problem, uncle Sam will take care of them for the rest of their lives.
Our wages went away but, the financial industry grew and grew. In the balance between greed & fear, the FED always managed to wipe out fear. With moral and financial hazard removed from the markets, money flowed into bad investments. Bad investments climb and climb. The FED has to buy up defaulting paper more and more.
Last edited by Danny B; 01-16-2017 at 03:01 AM. Reason: miss smelling
Marginal productivity of debt.,,, reproductive strategies
Retail sales have fallen to online sales. Retail banking has fallen because of online banking. http://i2.cdn.turner.com/money/dam/a...es-780x439.jpg
Wells Fargo is closing over 400 bank branches - Jan. 13, 2017
"But soon enough some banks joined the conspiracy and started sheltering the fictitious bills in their portfolio of assets. For the Acceptance House and the conspiring banks this was a lucrative business. It allowed them to pocket the spread between the higher interest rate and the lower discount rate, to which they were not entitled. They wanted to profit but without taking risks. Not only did they take no risks, neither did they provide a service to society that might have justified the profit. The business of selling fictitious bills against buying bonds is called illicit interest arbitrage."
"The speculator has no right to shift his risks onto the shoulder of society"
It won't post so, I'm going to try to break it up
"The key to understanding the problem is the marginal productivity of debt, a concept curiously missing from the vocabulary of mainstream economics. Keynesians take comfort in the fact that total debt as a percentage of total GDP is safely below 100 (no longer)in the United States while it is 100 and perhaps even more in some other countries 300% in a few). However, the significant ratio to watch is additional debt to additional GDP, or the amount of GDP contributed by the creation of $1 in new debt. It is this ratio that determines the quality of debt."
"If, as in the worst-case scenario, the ratio falls into negative territory, the message is that the economy is on a collision course and crash in imminent. Not only does more debt add nothing to the GDP, in fact, it causes economic contraction, including greater unemployment. "
"Keynesians are watching the wrong ratio, that of debt-to-GDP. No wonder they constantly go astray as they miss one danger signal after another. They are sailing in the dark with the aid of the wrong navigational equipment. "
"the marginal productivity of debt has fallen below the crucial level 1. When marginal productivity fell below $1 but was still positive, it meant that total debt (always 'net') was rising faster than GDP. For example, if the marginal productivity of debt was ½, then $2 in debt had to be incurred in order to increase the nation's output of goods and services by $1. An increase in total debt by $1 could no longer reproduce its cost in the form of an equivalent increase in the GDP. Debt lost whatever economic justification it may have once had."
"The decline in the marginal productivity of debt has continued without interruption thereafter. "
"As long debt was constrained by the centripetal force of gold in the system, tenuous though this constraint may have been, deterioration in the quality of debt was relatively slow. Quality caved in, and quantity took a flight to the stratosphere, when the centripetal force was cut and gold, the only ultimate extinguisher of debt there is, was exiled from the monetary system. Still, it took 35 years before the capital of society was eroded and consumed through a steadily deteriorating marginal productivity of debt." (Spending ourselves down)
"The year 2006 was the watershed. Late in that year the marginal productivity of debt dropped to zero and went negative for the first time ever, switching on the red alert sign to warn of an imminent economic catastrophe. Indeed, in February, 2007, the risk of debt default as measured by the skyrocketing cost of CDS (credit default swaps) exploded and, as the saying goes, the rest is history."
"Why is a negative marginal productivity of debt a sign of an imminent economic catastrophe? Because it indicates that any further increase in indebtedness would necessarily cause economic contraction."
"In view of the fact that the marginal productivity of debt is now negative we can see that the damage-control measures of the Obama administration, which are financed through creating unprecedented amounts of new debt, are counter-productive. Nay, they are the direct cause of further economic contraction of an already prostrate economy, including unemployment."
Big cracks in the system; These 8 men are richer than 3.6 billion people combined - Jan. 15, 2017
We suffered price inflation but, NO wage inflation. Home ownership is WAY down. The other big-ticket item is , children. So, we cut that out too. GOV opened the southern border because it is cheaper to poach people from a high birth-rate State than it is to grow them at home. Mexico's fertility rate dropped from 6.2 to 2.6. Most of the flow stopped. GOV pumps money into programs to help finance the production of children but, it just isn't enough.
$1/4 million to produce a child for just 17 years does NOT include higher education.
Cost of raising a child: $233,610 - Jan. 9, 2017
Apparently, GOV is experimenting with bringing in warm bodies from societies that still have a high birth rate. BUT, they have an entirely different reproduction strategy that runs counter to what rational, thinking societies use as reproduction strategy.
"There are two basic reproductive strategies according to the r/K Selection Theory.* r is the reproductive strategy used by populations with high mortality and abundant resources. The strategy is basically to reproduce as quickly as possible, with quantity over quality of offspring, and little or no parental support."
"K is the reproductive strategy used when there is competition for limited resources among members. The strategy is basically to delay reproduction, select mates carefully, and monogamy, with quality over quantity for offspring, e.g. long maturation of offspring and delayed sexual activity"
The Rabbit, the Libertarian, and the Wolf: The Truth about r/K Selection Theory – TRUTH IS JUSTICE
There must be something objectionable because I had to break it up again.
"abundant resources" is the government dole. "delayed sexual activity" certainly does NOT describe the average immigrant from islamic societies. "competition for limited resources among members." holds true for those who want to provide a good upbringing for their offspring. For those people who just want to pump out babies and abandon them, there is no great limit of resources. They just don't need as much. This mindset makes it easier for the ignorant to out-populate the thinking people. Especially when the bleeding-heart liberals support the breeders.
Keynesian economics demands an ever-growing credit bubble. Japan shows us that you must have a growing population to have growing consumption. The people who push tainted immigration into the U.S know that they won't have the trash living in their neighborhoods. They just want more warm bodies.
Bond vigilantes, dollar short-sellers,, Trump will have his hands tied
Wiki; "A bond vigilante is a bond market investor who protests monetary or fiscal policies he considers inflationary by selling bonds, thus increasing yields.
In the bond market, prices move inversely to yields. When investors perceive that inflation risk or credit risk is rising they demand higher yields to compensate for the added risk. As a result, bond prices fall and yields rise, which increases the net cost of borrowing. The term references the ability of the bond market to serve as a restraint on the government's ability to over-spend and over-borrow."
When GOV over-prints, bond investors demand more spread to compensate for lost purchasing power of their capital+interest. Historically, they would also flee into gold to preserve wealth. With the FED monetising the debt and buying treasury bill issuance, bond vigilantes have less influence. Starting in the late 70s, GOV began to manipulate the gold markets to keep investors out.
FED GOV credit markets are "worth" about $ 40 trillion dollars. The average taxpayer is on the hook for about $ 167,000. This will never be paid. It also appears that "they" can never inflate away the pain of repaying all this debt. One could speculate on a total collapse of sovereign debt as Armstrong has forecast.
Besides the bond vigilantes, there is another group that keeps a good eye of the FED flow of funds. These are the short-sellers. They have recently piled on to short-selling the dollar.
This is an excellent article and I'll link a few of the VERY interesting graphs that show a very painful reality.
Treasury Specs Are So Short, It Is Now A 4 Sigma Event | Zero Hedge
" The International Economy is burdened with all-time-record levels of both Sovereign and Business Debt. Over $150 Trillion according to the IMF. "
"As former OMB Director David Stockman puts it:
“Trump and his so-called GOP Majorities are caught in a giant inherited Debt Trap, and will therefore be foiled time and time again as they attempt to implement the big Tax Cuts and infrastructure stimulus programs that the Casino (Wall Street-ed.) has already so foolishly “priced-in.” [Emphasis added]"
" The USA’s 20 Trillion Debt Ceiling will be hit in Mid-March with dramatically negative consequences for the Markets whether it is raised or not
---And consider the Corporate Earnings Bubble. The Russell 2000 is now trading at 230 times reported Earnings!!"
"the Establishment aka The Globalist Deep State is not happy about the election of Donald Trump. As a Nationalist and Internationalist, he is not one of them and is not controlled by them. They have every reason to keep him from succeeding so they can regain power. Thus, it is likely they will use the impending Markets Collapses and Chaos as a pretext to regain Global Domination. "
http://www.24hgold.com/english/news-...eepcaster&mk=1 Lots more info.
More cool graphs;
Actually, EXCELLENT graphs.
The Yuan is caught between a rock and a rock
The FED/IMF/ dollar is stuck in a ZIRP rut that it can't escape. ZIRP kills all interest income but, an escape from ZIRP brings bankruptcy.
China has their own sort of intractable problem. China prints to save everything that it inflated. The more that it prints, the more that capital flees the country. They print to lower the Yuan and keep their export markets going. To keep the Yuan from getting too weak, they sell their dollar reserves and buy Yuan. It's a balancing act that doesn't have much of a future.
"China last devalued between December 2015 and January 2016. The result? U.S. stocks kicked off the year to their worst start ever. And that was only a 2% devaluation.
China previously devalued 4% in August 2015. That was enough to send the Dow plunging 508 points in one session — the Dow’s eighth-worst single-day crash in its history."
"China wants a weak currency to spark its export economy. Weak, yes. But not too weak"
"More capital flight out of China leads to more weakness as investors dump yuan for dollars.
So China must put a floor under the yuan to end the capital flight."
"That means the Chinese central bank been dumping dollars to steady the yuan. But here’s Catch-22: To defend the yuan, it’s been selling dollars at such a gait… that it’s burned a gaping hole through its dollar reserves. It’s unsustainable.
China’s reserves fell nearly $320 billion last year, to $3.01 trillion. That’s piled on top of a record loss of $513 billion in 2015. $3 trillion in reserves may sound like a lot. But for China, it’s less than you might think…"
"China started 2015 with about $4 trillion in hard currency reserves. About $1 trillion fled the country in 2015 and 2016 based on fears of yuan devaluation. That’s classic capital flight.
Another $1 trillion is relatively illiquid, including direct investments in mines and natural resources through sovereign wealth funds such as China Investment Corp. That’s wealth, but it’s not money that can be used in a liquidity crisis. "
"Finally, $1 trillion has to be held as a precautionary reserve to bail out China’s insolvent banks and Ponzi-style “wealth management products.” Failure to bail out the banks… could lead to social unrest that would topple Communist rule, so that won’t be allowed.
“That,” says Jim, “leaves only $1 trillion of the original $4 trillion in liquid form.” And if it keeps jettisoning dollars at this rate, “China will be devoid of useable liquid assets by late 2017.”
“History shows that weak capital controls may be worse that no controls because they send a message of ‘no confidence’ while not really stopping the outflows.”
So… If the yuan’s going to depreciate anyway and capital controls are shams, how does China manage the problem without further depleting its dollar reserves?
Just flat out devalue the yuan. That way they don’t have to keep torching dollars to try to prop it up. "
“Yuan devaluation is happening in baby steps, but that may soon turn into a one-time ‘maxi-devaluation’ of 30% or more to stop the bleeding.”
The last times China devalued 2% and 4% the stock market practically collapsed. What happens if it devalues 30%? And what if the Fed can’t pull another rabbit out of that tired old hat?"
A strong Yuan brings a crash in exports and manufacturing.
A weak Yuan brings capital flight and an eventual end to dollar reserves.
Trump has talked equal tariffs to & from China. The Chinese reply is; bring it on. Capital will flee to the best managed economy and that is NOT China.
Chinese businessmen export goods with an inflated invoice. Upon receipt, the receiver pays the agreed-upon(lower) price and deposits the difference in a foreign account for the exporter.
This difference in invoicing has moved about $ 900 billion out of China last year.
Hoffman, thermonuclear currency war, downhill in the EU
It was summer of 2005 that I concluded that we were going to crash. This came from reading the articles written by gold bugs. Gold Bugs are obviously going to write a slanted article but, that doesn’t mean that the main body does not contain any truth. There are ALWAYS other opinions for balance. The good thing about the net is; people with no financial interest in a subject can still publish. Charles Hugh Smith writes VERY well and only asks ONE DOLLAR a month for his newsletter. Needless to say, I'm not getting paid to write here.
Andy Hoffman is a gold bug BUT, he has done very well at predicting events. He has a new article that is longish but, it has a lot of important info and conclusions.
"Then, when the powers that be nearly lost control in 2011 – when it became readily apparent that their post-2008 market-saving mechanisms (like TARP) were failing, they passed the “point of no return” (in silver, in May; and in gold, in September); when they realized they must manipulate all markets, all of the time – or face a disastrous, immediate defeat at the hands of “Economic Mother Nature.”
" However, clearly Trump has taken the “final currency war” I warned of four years thermonuclear, inadvertently putting the gold and silver Cartel “on notice” that its days are numbered. "
"Chinese Premier Xi Jinping’s historic Davos speech – in which he attacked protectionism, claimed China had no intention of devaluing the Yuan (LOL, after having devalued it by 15% in the past 17 months), and claiming China would “take the gloves off”
"Throw in the fraudulent OPEC “production cut” – which with each passing day, inches closer to being “called out” – and you have the ingredients for an historic financial market “transformation” (detonation) in the coming months. "
"Thus, when Trump “shocked the world” last night by claiming the dollar is “too strong”; and to boot, slamming the Republicans’ “border adjustment tax” proposal, in lieu of the hard-coated import tariffs he favors, he for all intents and purposes took the aforementioned “final currency war” thermonuclear;"
"In other words, as I wrote last week, the death throes of “money” are becoming eminently visible – making it more and more likely that the inevitable “run” from worthless fiat; and into “priceless” Precious Metals”; is rapidly approaching "
The worthless fiat is very valuable because there there is no other viable medium of exchange. The "run" is from the bond market.
Trump Takes The Final Currency War Thermonuclear, Puts Gold Cartel On Notice! | SilverSeek.com
Here is an article about credit tightening in 1937 causing a huge contraction in the economy. These contractions are always in the upper loop and have little effect in the lower loop. The exception is; a contraction in liar-loans to people who are debt saturated. Liar-loans are in full bloom in the auto sales industry. This is part of the obummer stimulus to pave the way for Killary. If the PTB want to hand Trump a contraction, they can just stop liar loans.
2017?Shades of 1937 | Paul Kasriel | FINANCIAL SENSE
1/18 Runaway credit card debt makes 2017 look like 2007 – Financial Sense
Spanish bankers were sentenced to fines and jail time for fleecing their banks. They ignored the fines and demanded that the sentences be withdrawn. It didn't work out very well for them. Spanish bankers sent to jail in landmark ruling - The Local
The Eurozone was a BAD idea and was built on fraud. The architects ignored the debt history of the weaker States. The southern States had a long history of devaluation and default. They were locked into the strait-jacket of a common currency. The EU was to be a socialist heaven with a fascist control mechanism. Socialism always breaks the bank because of it's underlying mantra. "to each, as to his needs" ,,, From each, as to his abilities." Ignore human nature at your peril.
Euro Crisis Deepens This is an old article but, it shows that nothing has gotten better.
The economy runs in cycles but, pension managers figure that the good times will never end. The Dallas Pension Fiasco Is Just The Beginning | Zero Hedge
Understanding the effects of GOV expenditures
https://www.youtube.com/watch?v=R_AoyucDOw0 The IRS couldn't be bothered to collect taxes from the rich.
https://www.youtube.com/watch?v=YZM5hxF35No GOV paid tons of money for scanners that don't work well when dogs work VERY well.
https://www.youtube.com/watch?v=cuuRBoICEMQ Waste in Medicare
https://www.youtube.com/watch?v=U0qc0ZfXwMY $ 75 K to repair a few bicycles.
Ammo, 14 1/2 million bullets bought,,, 15 fired. https://www.youtube.com/watch?v=5REI-_WJKuY
$20 million spent on firewood for Afghans, https://www.youtube.com/watch?v=n_xsPZW5n3s
$900 billion waste in Medicare, https://www.youtube.com/watch?v=ZDszvp8_ffA
Then, it gets surreal, https://www.youtube.com/watch?v=l2d1OOjeqmU
Socialism is the firewall between Darwinian pressures and those who have no job niche in private enterprise. The more that we automate, the more people who are left out of the private sector.
GOV can print money but, it has to inject it into the economy. U.S. GOV reportedly spends 24% of the GDP. How then, to get the money from the digital printing press, into circulation in the economy.
GOV "wastes" trillions of dollars by pumping it into the economy. The money costs nothing to GOV so, why not? It employs a lot of people.
F-35 Turkey Crisis Soars To $1.5 TRILLION
F-35 Is UNFIT For Combat Ops - Pentagon This Junkpile Still Has Over 276 Defects
US Navy's newest $12.9bn supercarrier doesn't work: Most... - Daily Mail
Congress Buys the Navy a $400 Million Pork Ship - POLITICO Magazine
Almost everything FED GOV does is some kind of job program. The money costs "Nothing". The amount is added to the federal debt pile. Total outstanding federal debt is about $ 40 trillion, all included. The working classes are employed in GOV "jobs" programs. The working class people are expected to repay the federal debt with their taxes.
So where did the money come from? How is it going to be repaid?
The money was created as debt in the bond market. The bond buyers were told that it is risk-free,,, even though all States eventually default. The working poor were expected to pay this debt through taxes and currency inflation. More money printed to pay old debt. Historically, 50% of the burden of repaying the debt was erased through inflation.
GOV minimises reported inflation to keep bond buyers coming back.
"as of March 23rd 2006 the government will no longer be publishing the M3 money supply data." " M3 tracks what the big boys are doing with the money. This includes US dollars held in banks in Canada and the UK"
War is another GOV jobs program but, war is expensive, "Pentagon being unable to account for up to $8.5 trillion in taxpayer funding. "
"Alibaba'a Jack Ma Drops a Redpill in Davos: The U.S. Wasted $14 Trillion on Wars Over the Past 30 Years" http://www.zerohedge.com/news/2017-0...-past-30-years
It wasn't wasted. It killed lots of little brown men and made a lot of people rich. It furthered the interests of israel. Though, in the long term, this is doubtful.
Trump has a different idea, Trump Plans 20% Cut of Federal Work Force
Read more: https://sputniknews.com/us/201701181...ral-workforce/
There will be far less money injected into the economy. "The federal government employed 2.8 million individuals out of a total U.S. workforce of 236 million — just over 1 percent of the workforce. " Remember, 95 million of that workforce are not participating.
Trump is conditioned to run things for maximum efficiency. GOV is run for maximum in-efficiency.
The bond market is where it all comes un-glued.
Confidence and trust are extremely important for the PTB but,
The fireworks start soon.
Shrinking productive sector,,, growing parasitic structure
GOV has historically given "welfare" to people who would never make it in the private job market. GOV has historically given make-work jobs to people who were employable to some degree. For useless people with a degree, GOV employs them as bureaucrats. 1 out of 11 in the Beltway is a lawyer. The American legal system is set up specifically to employ and enrichen lawyers. Search, American rule (attorney's fees)
"countries with bigger government experienced less growth, and concluded that there would be much more prosperity if those nations merely reduced government " "general government compensation of employees grew faster than nominal GDP over the whole 2007-2014 crisis period"
"Pay for federal workers rose 53.7% between 2000 and 2008, compared to 28.5% for private sector workers.
Many of the new bureaucrats are being hired as a result of Obama's welfare-filled stimulus package, which largely repealed welfare reform."
"Earlier this year, (2009) Obama fired an inspector general, Gerald Walpin, who uncovered millions of dollars of waste and fraud in the AmeriCorps program, including by a prominent Obama supporter, endangering the Obama supporter’s ability to administer federal stimulus spending in Sacramento."
"The $9.3 trillion in deficits under Obama's budgets is twice the $4.4 trillion baseline left behind by Bush, despite at least $1.9 trillion in tax increases projected under Obama."
Socialism is expensive. https://cei.org/blog/overpaid-bureau...number-and-pay
"student,,, Loans are easily accessible for students, and universities are constantly raising rates because those loans are so easily accessible, "
Yep, GOV makes money available and the bureaucrats continually raise rates. GOV made money available for real estate and,,, prices went way up.
So, what happens when GOV blows a bubble in student loans? "latest loan total number over $1.4 trillion, rising at a pace of nearly $100 billion per year, but that the government - either on purpose or due to honest miscalculation - was not correctly accounting for the true extent of delinquencies and defaults."
"many more students have defaulted on or failed to pay back their college loans than the U.S. government previously believed."
"A spokeswoman for the Education Department said that the problem resulted from a "technical programming error.""
"How bad was the data fabrication? When The Wall Street Journal analyzed the new numbers, the data revealed that the Department previously had inflated the repayment rates for 99.8% of all colleges and trade schools in the country."
"Previously, the Department said that 67% of its students were repaying loans within seven years of entering the repayment period. That number fell to 47% after the recalculation."
US Government Caught Massively Fabricating Student Loan Default Data | Zero Hedge
The cost of an education inflated at 3 timers the rate of general inflation. Everywhere that GOV makes money available, prices shoot up.
Millions of useless bureaucrats are spending $ billions into the economy. Should the bond market blow, this will all come to an end.
And what do the bureaucrats do to justify their jobs? http://www.investors.com/politics/ed...r-on-children/
America has $ 213 trillion in unfunded liabilities. Somebody is going to get the shaft.
Puerto Rico, "The report released Tuesday reported deficits of $230 million for the island’s Education Department" http://www.theepochtimes.com/n3/2211...o-steps-taken/
Populism,,, a danger to corporatism
The Central Banks could easily produce the amount of money needed by the economy BUT, the private banks wanted a big piece of the action. The BIS pushed this worldwide; the private banks must be allowed to create the money, NOT the CB. Our wages are taxed. Our NECESSARY transaction are taxed but, their speculative transactions are NOT taxed. We vote,,, they take the shortcut and just buy politicians. WE produce, they consume. The money has gradually risen up to those who are best at siphoning off wealth.
All democracies eventually go bankrupt when the populace discovers that they can vote for themselves the whole pie. America is a democratic-republic to avoid the failings of a pure democracy (mob rule). The money powers have strangled democracy with corporatism. The pendulum has swung away from popular control. The blessing of having the reserve currency has allowed America to have a VERY generous pay scale in the public sector. This has gotten out of control and the public sector is going bankrupt. The Hegelian dialectic has come to it's eventual end.
Meanwhile, the private sector has gone broke. The triumph of corporatism over democracy has left a destroyed private sector. In response, people see that they don't really have democracy. The election of Trump was a political hand-grenade voted in by people destroyed by corporatism.
The rise of "populism" is seen as a great danger by the money powers,,, those same money powers who killed our standard of living with regulatory capture.
The money powers scream about populism and turn a blind eye to debt; http://media.wix.com/ugd/1f610b_f878...9f89a27f60.pdf
The EU is going down FAST, partly because of the enormous cost of the bureaucratic overload imposed by Brussels.
The economies of the West are crashing. The predations of the bankers and bureaucrats is just a load too heavy. Public employees are NOT embracing populism because it threatens the public food trough that sustains them. Finance sector employees are not embracing populism because populism threatens the regulatory-capture that continues crony-capitalism.
1/20 Trump and Janet Yellen look to be on a collision course – NY Times Janet better have a well-padded helmet.
1/20 Ideological civil war in Davos – Mish The PTB have barely started to get an inkling of what the problem is.
The rotten 8astards who run the EU are chitting bricks over the fact that Trump has no particular interest in talking to them. https://www.apnews.com/37402db309e0482a922fc159f4e61dd1
What's worse, Marine Le Pen was seen in Trump Tower. That piece of dung, Junker is starting to panic, Hands off EU, Trump; we don't back Ohio secession: Juncker | Reuters
Trump can spread a HUGE populist contagion around the West. The corporatists can only blame themselves for using regulatory capture to destroy democracy in the name of increased profit. Socialism and communism rise as a response to fascism. We were OK with democracy. When they murdered democracy in the name of profit and killing emergent socialism, we responded with populism. It's too late now to backtrack.
Debt saturation moves up the financial ladder
Sadly, Trump is going to rue the day that he got inspired to run for president. Many writers have opined that the PTB (who want world socialism) have allowed Trump to take the helm just before the crash to give a bad name to representative democracy. Obummer certainly had the pedal-to-the-metal before he left.
In an effort to extend-and-pretend, the State started to manipulate precious metals back in the 70s. That bought a bit of time. They eventually had to manipulate ALL markets to keep the ship-of-State off the rocks. The printing presses are running in hyperdrive. The galactic quantities of debt are driven into the system by,
The Federal Reserve board,, FED
The President's working group on markets, PPT
The exchange stabilization fund ESF
Debt saturation set in at different levels at different times.
"For the last few years, even with the U.S. trying and struggling to “play the game”, the debt structure had already begun to slow and roll over."
" As mentioned at the beginning, Richard Russell’s most famous quote was “inflate or die”. With regard to the above chart, Sir Richard was saying “inflation” (growth of debt) must either continually go up AND at an increasing rate …or it rolls over and dies. "
"Credit conditions all over the world have been tightening. The greatest fear of the Federal Reserve has always been a credit contraction that could not be reversed …their greatest fear has arrived and in spades! Please understand that “credit” affects EVERYTHING. Production, consumption and the “ability” to consume, and importantly “distribution”.
This is Sr. Price's graph of the fall in credit, https://ci3.googleusercontent.com/pr...es/grafica.png
"Looking at this graph, you will notice the parabolic move began in 1971. This was possible because “debt” had previously been constrained by the amount of purported U.S. gold holdings. De linking from gold allowed literally parabolic growth in new debt issuance. The increase in reserves really started to accelerate around the year 2000 and went vertical beginning around 2008."
The economy wanted to correct twice and the bankers and politicians wouldn't allow it.
" You see, unlike past “reflations”, there is now little to no unencumbered collateral left (even including sovereign balance sheets) anywhere in the world. The amount of existing debt (Ponzi clients) is so large, new additional debt (new Ponzi clients) has little to no effect on the entire pool. In other words, we have reached and passed the point of “debt saturation” where the ability to add meaningful debt does not exist."
Inflate or DIE! - Bill Holter | Silver Doctors
The gold standard put a limit on the growth of credit. That is a world that we can never go back to. The effects of the demographic crash and automation will demand that the State produce debt-free money OR face total disaster and revolution. U.S. GOV spends 24% of the GDP. That doesn't even include the injections from the FED, ESF and PPT. GOV is pumping in a LOT of liquidity. It is called debt-money BUT, it can never be repaid. From one point of view, it is debt-free money.
The bankers drug us down to keep the money rolling in. After they had fleeced the working man, they went after the next entity with money,,, the State. They have now bankrupted the State. ALL collateral is encumbered by paper claims. They are looking at the pension funds.
GOV is still harping on their dream of getting rid of cash. This shows just how out of touch the PTB are.
"In the today’s world, drug dealers and prostitutes accept credit cards.
No matter what you’re selling on a street corner, whether it’s hot dogs or marijuana, there are plenty of solutions (like Stripe, Square, or PayPal) to easily allow anyone to accept credit card payments.
But these intellectuals seem stuck in a Pablo Escobar fantasy that drug dealers have entire rooms filled with cash.
What Stiglitz, and perhaps many law enforcement agencies, fail to realize is that one of the biggest tools in masking illegal activity is actually Amazon.com.
Specifically, Amazon gift cards.
If you’re looking to quietly and easily pay large sums of money, even tens of thousands of dollars, you can do so with Amazon gift cards."
Nobel Prize Winner Tells Davos' Elite, US Should "Get Rid Of Currency" | Zero Hedge
If you look at ALL the numbers, the stock market is not worth the trouble, https://realinvestmentadvice.com/3-t...ly-optimistic/
"In Venezuela, political elites treated the oil industry like the parents’ credit card. They pulled out money to fund their socialist utopia, but did little to ensure the industry’s, and thus the nation’s, long-term viability. Why? Because they kept the industry’s profit for themselves, but not its losses. Those were for the Venezuelan people. "
The Truth About Venezuela's "Economic War" | Zero Hedge
Sadly, the exact same story in Mexico.
"Dargin is particularly critical of Pemex’s decline as a result of state monopoly, short-sightedness and endemic corruption. “Pemex is symbolic of what Mexico didn’t do right."
"Mexico’s oil industry was nationalised in 1938, giving Pemex monopoly over production and distribution of fuel in the country. However, over the decades, lack of investment, planning and poor management has come to erode Pemex’s production capacity, distribution and storage capacity. "
"Oil subsidies are like religion. Tinker with it and you have a volcanic eruption of anger. "
This is true of all GOV programs. Once people get used to them, they go ballistic if they end. http://www.forbes.com/sites/nishthac.../#660a466542ef
Both Mexico and Venezuela have LOTS of oil. Oil production is growing around the world. It has FALLEN by 25% in Venezuela. The socialists always seem to pass out a bit too much money and forget to maintain the wealth-producing mechanisms. Venezuela has it doubly bad. Imported food was so cheap that they let their home-grown agriculture sector wither away. Taking a clue from this, Mexico is building up their domestic agriculture sector.
Debt limits, debt clocks, math errors,
Thin-air money is pouring into everything in the upper loop. How long can it go on? The FED is buying up Treasury bonds. What is the limit that they can buy.
Same for stocks. The various CBs are buying everything in sight. How long can it go on?
" At the moment, every US citizen owes over $205,000 with $7,600 interest, with every American family owing nearly $810,000." How are we going to pay this off,, with our government pension?
"It shows that when Obama entered the Oval office in 2008, the national debt stood at $10.7 trillion. Thus, the increase is 86 percent.
By the time Donald Trumps is sworn in, the debt will have grown to almost $20 trillion." "The largest budget item is Medicare/Medicaid which has seen over $1.1 trillion added to US debt. Social Security accounted for $900 billion"
Cut them back and people will freak out and die. Don't cut them back and the bond market will blow that much sooner.
Don't forget State level debt, State of California Debt Clock
Just like Venezuela, politicians promised TOO much. As the holder of the reserve currency, we were able to extend-and-pretend longer that the rest of the States.
repost; "latest loan total number over $1.4 trillion, rising at a pace of nearly $100 billion per year, but that the government - either on purpose or due to honest miscalculation - was not correctly accounting for the true extent of delinquencies and defaults."
"A spokeswoman for the Education Department said that the problem resulted from a "technical programming error."
OK so, what else is going to come crawling out from under the rug?
"Embarrassingly, when asked about the "mistakes" that resulted in a $1.6 billion budget deficit, the Chief Deputy Director of Brown's Department of Finance could offer no other explanation than that the "math was wrong" while another spokesman admitted, “There’s no other way to describe this other than a straight up error in accounting, which we deeply regret."
California Governor Jerry Brown Admits To $1.5 Billion "Math Error" In State Budget | Zero Hedge
How much do we pay these morons who can't do simple math?
Trump is going to cut GOV expenditures way back. This will result in less money going from the bond market into the economy. The debt is rising faster than exponentially and I don't really see how this will work out.
The EU "leaders" are absolutely frantic worrying that he won't let loose enough dollars to service European dollar-denominated debt. But, since Trump said that the dollar is too strong, he will probably have to inflate to weaken it.
This is the start of a wild ride.
People who own property gain value whenever the value of the property rises. Mexico plans to tax that gain; https://www.armstrongeconomics.com/i...e-wall-mexico/
In Michigan, a guy was fined $ 128 for warming up his car. In Britain, a woman was fined 80 pounds for dumping her coffee down a drain, https://www.armstrongeconomics.com/w...ee-down-sewer/
The squeeze is on. GOV is out hunting.
War with the CIA, Waiting on the FED
Trump is going to try to rein in the CIA. The whole world is going to shake. Trumpâ€™s Declaration of War - PaulCraigRoberts.org In the meantime, the markets have rolled over. Here is a chart with lots of good graphs. http://www.yardeni.com/Pub/buybackdiv.pdf
We will soon learn if the FED is going to fight Trump and America. The next FED meeting is quite soon,
2017 FOMC Meetings
February 1 July 26
March 15 September 20
May 3 November 1
June 14 December 13
One Big, Fat, Ugly Bubble | Casey Research
"Even though most politicians, economists, and pundits in the mainstream media won’t admit it, central banks exist to help governments finance themselves, at the expense of the average man. It’s the hidden, but real, reason they exist."
1/21 Despite reforms, city and county pension funds are billions short – Voice of San Diego What reforms?
1/20 Amazon is going to kill more American jobs than China did – MarketWatch Check
1/21 Trump and a new gold-backed dollar – International Man NEVER happen.
Crashing EROI,,,, Raúl Ilargi Meijer
To write this thread, I have to read a lot of people who are smarter /more informed that I am. Here is an IMPORTANT article from Raúl Ilargi Meijer and Alistair Crooke.
Overunity has been suppressed mostly to keep the carbon energy business from crashing. Trump says that he is going to focus on oil & gas fracking. Sorry but, it's FAR too late. Fracking was a high-flyer riding on investment from the junk-bond market. The markets have rolled over and are shrinking. The carbon industry is crashing anyway. They are losing $ billions because it is too expensive to find and pump domestic oil, https://www.theautomaticearth.com/wp...-Dividends.jpg
It is just too costly to find and extract oil in the lower 48. GOV made money available for RE loans and the price of RE blew sky high. GOV made money available for student loans and the price of an education blew sky high. GOV went off the gold standard to inflate the money supply and the price of oil went sky high (concurrent with the drawdown of domestic supplies) https://www.theautomaticearth.com/wp...keOilPrice.jpg
"Well, the Hill’s Group, who are seasoned US oil industry engineers, led by B.W. Hill, tell us – following their last two years, or so, of research – that for purely thermodynamic reasons net energy delivered to the globalised industrial world (GIW) per barrel, by the oil industry (the IOCs) is rapidly trending to zero. Note that we are talking energy-cost of exploration, extraction and transport for the energy-return at final destination. We are not speaking of dollar costs, and we are speaking in aggregate."
'But as Steve St Angelo in the SRSrocco Reports states, the important thing to understand from these energy return on energy cost ratios or EROI, is that a minimum ratio value for a modern society is 20:1 (i.e. the net energy surplus available for GDP growth should be twenty times its cost of extraction). For citizens of an advanced society to enjoy a prosperous living, the EROI of energy needs to be much higher, closer to the 30:1 ratio. Well, if we look at the chart below, the U.S. oil and gas industry EROI fell below 30:1 some 46 years ago (after 1970):"
"“You will notice two important trends in the chart above. When the U.S. EROI ratio was higher than 30:1, prior to 1970, U.S. public debt did not increase all that much. However, this changed after 1970, as the EROI continued to decline, public debt increased in an exponential fashion”. (St Angelo).
In short, the question begged by the Hill’s Group research is whether the reason for the explosion of government debt since 1970 is that central bankers (unconsciously), were trying to compensate for the lack of GDP stimulus deriving from the earlier net energy surplus. In effect, they switched from flagging energy-driven growth, to the new debt-driven growth model."
"In 2016, according to Yahoo Finance, the U.S. Energy Sector paid 86% of their operating income just to service the interest on the debt (i.e. to pay for those extraction costs). We have not run out of oil. This is not what the Hill’s Group is saying. Quite the reverse. What they are saying is the surplus energy (at a ratio of now less than 10:1) that derives from the oil that we have been using (after the energy-costs expended in retrieving it) "
It is well worth reading the complete article. Trump talks carbon energy. Somebody needs to whisper in his ear about overunity. Maybe Alex Jones could do it. https://www.youtube.com/watch?v=PsAKNC8gmGA
Oil, trade and tarrifs
We spend almost as much energy to produce a barrel of oil as we get from that same barrel,,, EROI. The clowns in Davos are bewildered that their plans for globalization are just not going "according to plan". I have NO FAITH in the global brain trust if they can't figure out things that are painfully obvious to me. Ultra-cheap shipping brought us global-wage-arbitrage. The more stuff was shipped, the lower went wages,,, for the OECD. ALL of this globalization is dependent on cheap shipping and cheap oil.
"This pattern is illustrated in Figure 2. It shows the distance elasticity of trade as a function of the oil price. When the oil price is around $100 per barrel, a 10% increase in distance reduces trade by 15% (the shipping-distance elasticity is -1.5). The recent drop to $35 suggests a return to a distance elasticity of -1.35, a boon for globalisation."
"High oil prices in the future may indeed put the breaks on globalisation, as the distance elasticity of trade is higher in years of high oil prices."
The trade consequences of the oil price | VOX, CEPR?s Policy Portal
Trump proposes higher tariffs. This happened in Great Depression One in the guise of the Smoot Hawley Act. What can we expect to happen to world trade in the event of protective tariffs?
"In explaining the trade bust of the 1930s, the role of trade costs is dominant. Based on output growth alone, we would have expected world trade volumes to increase by nearly 90%. The fact that they declined by 13% highlights the critical role of the general tariff hike during the Great Depression and the collapse of the Gold Standard."
"Overall, they find that there is little systematic evidence to suggest that the maritime transport revolution was a primary driver of the late nineteenth century global trade boom. Rather, the most powerful force driving the boom was the secular rise in incomes across countries." That was then, this is now.
"Instead of transportation costs, the biggest reversal of international trade in recent history is linked to large increases in protectionist measures. The Great Depression marked the most dramatic increase in trade costs over the last 130 years. Trade costs jumped on average by 18 percentage points in the space of the three years between 1929 and 1932. This corresponds exactly to the well-documented rise of protectionist trade policy during that period."
Globalisation and trade costs: 1870 to the present | VOX, CEPR?s Policy Portal
Pulling the rug out from under the economy,,, again?
Here is a comparison between conditions in 1930 and conditions today. It doesn't really give enough weight to the question of automation.
Weekend Edition: Comparing the 1930s and Today, Part I | Casey Research
Here is a very interesting comparison between Hoover and Trump.
" Hoover, a Republican, was a rich and successful businessman with investments all over the world. He was also somewhat of an outsider, having never held elected office until he was inaugurated in March 1929.
Today, people associate him with massive infrastructure projects like the Hoover Dam, as well as the Mexican repatriation program, which deported over 500,000 illegal Mexican immigrants."
" Throughout the 1920s, the Federal Reserve’s easy money policies helped create an enormous stock market bubble. check!
In August of 1929, the Fed raised interest rates and effectively ended the easy credit.
inaugurated in March 1929.
August of 1929
Only a few months later, the bubble burst on Black Tuesday in October 1929, barely seven months after Hoover took office." Deje vu?
Trump Could Go Down as the Worst Presidentâ€¦ But It Will NOT Be His Fault | Casey Research
Marxists, Chinese policy, PISA scores, healthcare & death
You can count on the bankers to blow bubbles and eventually blow the economy. What about the Marxists.
"The Bolivarian socialists don't exactly have a strong first team when it comes to economic understanding. They actually had an economy minister for a time who refused to believe, point blank, that inflation was anything to do with money. It was just businessmen being greedy.
"Here we come to a crucial difference between American and Chinese foreign policy. Washington’s approach to maintaining the Empire has consisted of military attack, threats of military attack, military occupation, and the imposition of sanctions. These are visibly declining in effectiveness."
"Unless Washington comes up with something quick, presumably a shooting war or a trade war" Probably a trade war.
"Trump now proposes sanctions on China, having said the he would impose a tariff of forty-five percent on goods from there." "A trade war won might prove less desirable than a trade war not started. " Nobody wins.
"It is interesting to consider recent PISA scores, which measure the academic performance of school kids. Math scores in order by country: Singapore, Hongkong, Macao, Taiwan, Japan, China. The US was well below average for the countries tested, though its scores are lowered by minorities. Headline: “NY Professor Says Algebra Is Too Hard, Schools Should Drop It.” On fairness, America leads in safe spaces, trigger warnings, puzzled diversity, and whimpering Snowflakes. Watch out, Beijing."
Sidestepping the Military Leviathan - The Unz Review
Here is an article from a guy who understands the whole world.
"This is advisable from the Chinese viewpoint; for why should they sell their work to the US for a dollar that has no intrinsic value and get really nothing back for the work. China should have a car in every Chinese worker’s garage and they will become a larger producer of cars than the EU, US and Japan combined, and their own nation will keep their wealth in their own country.”
The minimum wage in China is $ 118 a month.
China Labor Stats: NationMaster.com
I keep reading the experts who make economic projections based on a high level of discretionary spending.
Hereâ€™s how the Trump presidency will play out | The Vineyard of the Saker
"The administration also admitted last year that overall healthcare spending continues to rise, surpassing $10,000 per person for the first time ever.
Then there’s a question of quality and efficiency.
In 2016, a Johns Hopkins study concluded that the number of preventable medical errors has soared in recent years and is now the third leading cause of death in the United States."
"Consider this: in the last two weeks alone, the Treasury Department has auctioned off tens of billions of dollars worth of debt in the form of 30-year bonds.
This means that a child who won’t even be born until 2030 will have some high school summer job in late 2046, and an increasing chunk of his income will be taxed to pay off the debt that Treasury Department borrowed a few days ago."
GOV unions, Crooks in office,,"kill them, kill them all"Dustin Hoffman as CaptainHook
"Approximately 85% of the state's 235,000 employees (not including higher education employees) are unionized. As the governor noted during his $83 billion budget roll-out, over the past decade pension costs for public employees increased 2,000%. State revenues increased only 24% over the same period."
"A Baron’s cover article, The $2 Trillion Hole lays out the dire dilemma.
"According to a survey last month by the Pew Center on the States, a nonpartisan research group, eight states -- Connecticut, Illinois, Kansas, Kentucky, Massachusetts, Oklahoma, Rhode Island and West Virginia -- lack funding for more than a third of their pension liabilities. Thirteen others are less than 80% funded.
According to the latest compensation survey by the Bureau of Labor Statistics, the average state and local employee out earns his counterpart in the private economy with an hourly wage of $26.11, versus $19.41. That's before benefits (pensions, health care, paid vacations and sick days and leaves) drive the disparity even higher, to $39.60 an hour for public employees and $27.42 for private workers."
Public Employee Unions Guarantee National Bankruptcy
Bill Clinton forked us good by ending Glass-Steagal. Killary forked the students real good by excluding student loans from being discharged by bankruptcy. https://www.armstrongeconomics.com/i...empt-from-law/
"Original backers of the Federal Reserve System boasted that it would prevent the financial setbacks that typically preceded recessions. There have been 19 recessions since the Fed opened its doors in January 1914. Until the 1960s, bankers dominated the Fed; since then it has been economists. The track record of this form of interventionist central planning has remained the same. "
"In this regard, it should be noted stocks have not rallied like this post election since the days of Hoover in 1928, adding some $2 trillion globally. (i.e. and we know what came after that.) What’s more, US debt credit risk spreads have also improved, however this has been at the expense of an approximate $2 trillion in fixed income losses globally, which likely hurt the average investor more than stock markets gains helped "
1928,,, wasn't that just before 1929?
"Many would argue that it was the Clinton regime (with Larry Summers in charge of economic policy) which began the transformation of the U.S. economy from what was still a relatively strong and prosperous entity into the hopelessly crippled, financial Ponzi-scheme which it has become today. It was during the Clinton years, with a Democrat at the helm of the U.S. economy that the Wall Street crime syndicate was fully unleashed upon the U.S. – and the world – through tearing up the Glass-Steagall Act (1933)."
"Not only did that crime against humanity mark the beginning of the worst financial crime spree in the history of humanity (X 100), it also marked the beginning of the financial cannibalization of the U.S. economy"
"The economic bubbles which ended up imploding during the reign of error of George Bush Jr. were all germinated during the Clinton years, with Larry Summers spreading most of the economic fertilizer, personally. "
"He spent part of that time as president of Harvard University, where his principal “accomplishment” was managing to incur a $1 billion loss for the university, in financing just $2 billion of debt. Of course that was just part of the losses he racked up while mismanaging Harvard. Altogether, Larry Summers was a $1.8 billion mistake during his short tenure as Harvard’s president. "
"Through the magic of “Reaganomics”, the world’s strongest economy managed to triple its national debt – in just eight years. Not even Larry Summers could have done that.
After Reagan the Republican drowned the U.S. in debt, and after Clinton the Democrat gutted the U.S. manufacturing base came George Bush Jr.: someone who managed to combine the mismanagement and incompetence of the Reagan and Clinton regimes. Like Ronald Reagan the “fiscal conservative”, George Bush Jr. also managed to triple the U.S. national debt (again) in just eight years."
" The velocity of money roughly translates into the “heartbeat” of an economy. What this chart clearly shows is that the U.S. economy was already several years into its present death-spiral before Barack Obama ever took his Oath of Office.
Barack Obama is a slick con-man who has spent the last eight years duping the world into believing that the deceased U.S. economy is still alive. "
The rest of the article runs down Trump. No matter that he has only been in office for a few days.
Last edited by Danny B; 01-23-2017 at 02:11 AM. Reason: missing link
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