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Old 01-23-2018, 03:46 PM
Danny B Danny B is offline
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Pre-globalism tax schemes that no linger work

Stockman does not like Trump and here, he writes about all the bad things that the GOP is doing. The guy is very smart but, not infallible. Heer are a few quotes.
Five shutdowns occurred while you editor was a member of the US House (1977-1981) and another six during his stint as director of OMB. The idea back then, needless to say, was that shutdowns came about mainly when anti-spenders refused to capitulate to the incessant demands of the swamp creatures for more appropriations, pork and graft.

The Donald's asinine action last fall in trigging the prospective March deportation of 700,000 Dreamers has merely created the opportunity for the xenophobic anti-immigrant faction of the GOP to take a stalled appropriations process hostage for purely partisan purposes.

That's right. There would have been absolutely nothing wrong with adding a rider to the pending CR to avoid the insanity of shipping 700,000 innocent residents----85% of whom are employed or in school----back to the "home" countries they barely remember, if at all. And all because their parents committed a misdemeanor crossing the US border decades ago in search for work; and in an economy that is now fixing to see a 10 million reduction over the next two decades in the native born workforce owing to the quasi-barren white wombs of contemporary social fashion.

I can assure you that illegally entering the country is not a misdemeanor. Stockman does make the point here that the native birth rate just isn't high enough.
,,an interim game of political chicken about 700,000 Dreamers, who at the end of the day will not be deported and who will eventually get a path to citizenship.

That's because they, and millions of more immigrants to come, comprise the only available "growth" margin for the US work force in the decades ahead; and therefore constitute the next generation of Tax Mules which will be absolutely necessary to support today's 50 million retirees.

The southern border was left open to compensate for the lack of births in the native population. Has anyone worked out how many births America needs in a fully automated "work force"?
Nor does it bear upon the current momentum-driven madness of the stock market, and especially not on the nation's $19.5 trillion economy. The impact of shutdowns in the past has been zilch, and so it likely will be again. Total BS
For crying out loud, not a single dime of the big juice from the Federal budget----entitlements, mandatory and interest expense (75% of total outlays)----will be slowed down by a nano-second owing to the "shutdown".

After all, the reason Washington is operating on its 3rd CR of the fiscal year and struggled a whole weekend to get a fourth one lasting a mere 16 days, lies in the utter irresponsibility of the Trump GOP approach to fiscal policy.

These clowns want to spend $120 billion on disaster relief without a single dime of off-setting cuts; raise defense by $80 billion when the Pentagon is already a $620 billion swamp of waste; appropriate $33 billion for an utterly idiotic Wall on the Mexican border when the problem could be solved by cancelling the $32 billion per year "War on Drugs" and putting up guest worker sign-up booths along the border.
Contra Corner » The Shutdown Scam: The GOP Is Now The Second “Government Party”

Stockman wants to see fiscal responsibility. GOV spends 24% of the GDP. What does he think will happen if GOV stops all that spending? Armstrong points out that GOV never pays off the public debt. Does it really matter if the deficit goes way up?
Meanwhile, it is not just the trillions of added red ink to fund tax cuts for corporations and the wealthy and to finance the GOP spending spree that is at issue. The GOP is proving itself to be the second pro-government party in even more insidious and craven ways.

To wit, it can no longer say with an iota of credibility that the short-term inconvenience of the shutdown is occurring in the name of 150 million current taxpayers and future generations of unborn Federal debt mules.
Will these tax mules even have a job?
To wit, the GOP is targeting $4.6 trillion of spending versus a post-tax bill revenue take which will be lucky to generate $3.4 trillion of receipts. Relative to the US economy that amounts to the absurdity of taxing 16.5% of GDP while spending 22.5%----and during month #111 thru months #123 of the current so-called business expansion.

The collapse in employment and aggregate wages has made it painfully obvious that the State can't survive on just taxes from workers. Stockman is thinking in pre-globalism strategies.
only tool left to stop the nation's fiscal doomsday machine---a government shutdown to bargain for deep spending cuts---into a complete scam and farce.

Needless to say, that's the real reason why this time is so very different. They will kick the can again on February 8 and several more times thereafter---until they run out of cash and smack into the reinstated debt ceiling of $20.44 trillion some time in March.
The Treasury will be borrowing up to $1.2 trillion on FY 2019 just as the Fed is unloading $600 billion from its bloated balance sheet.
Aside from all this, interest rates are going up. It will be increasingly expensive to service public debt. The treasury needs $trillions more at the same time that the CB intends to cut back. Every month that goes by, it will become more and more obvious that FED GOV won't be able to service the debt. It is already obvious that it can't pay it back.
Are "they" trying to create an impasse where the FED refuses to monetize U.S. treasury debt? Will this be used as an excuse for the Treasury to take over money creation?

Thomas Edison, “But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good. "
The FED GOV can't pay off the debt. FED GOV can't pay service on the debt unless the FED prints the money. FED GOV is pedal-to-the-metal in borrowing and spending. Will the default cascade be used as an excuse to rile up the "end the FED people"? Will the Treasury create some kind of crypto / blockchain organization to manage the money supply?
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Old 01-24-2018, 05:21 AM
Danny B Danny B is offline
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Rising debt service

The private banks create debt-money and, the central bank creates base-money. The CB tops-off the private banks if there isn't enough new credit created to supply the funds for debt service. The CB targets 2% a year of inflation for the money supply. The CB makes a good profit as long as the economy is expanding. If the economy contracts, the CB has to do a LOT more printing to keep to make up the difference. Base money is interest-free. The FED tries to keep that to a minimum.
Since the FED is owned by private banks, they don't want a bunch of debt-free money in the system. BUT, if the system threatens contraction / deflation, free-money is doled out to the private bankers.

Uncle Sam does not get debt-free money from the FED. Sam could just print the money but, that would leave the bankers out in the cold. So, the bankers monetize treasury bonds and send dollars to the treasury. Here is a graph of what the FED balance sheet looked like before the 2008 bank meltdown.
The FED claims that they are going to sell off this debt. If nobody wanted it when it was fresh, nobody is going to want it now. A big part of this debt is mortgage backed securities.
Nobody wants them.

The FED has $4.5 trillion is paper assets that it wants to sell but, nobody wants it. As the FED raises rates, FED GOV debt gets more and more expensive.
"Economists with Deutsche Bank expect the extra debt the Treasury must issue to fund President Donald Trump’s tax package and the amount of debt the Federal Reserve plans to redeem at maturity this year will bloat issuance to about $1tn in 2018. That’s up more than 50 per cent from a year earlier and, when coupled with a 30 per cent rise in the amount of corporate debt that’s due to mature, leaves questions of who the eventual buyer will be.“
“If demand for US fixed income doesn’t double over the coming years then US long rates will move higher, credit spreads will widen, the dollar will fall, and stocks will probably go down as foreigners move out of depreciating US assets,”

The FED must grossly increase it's QE or, nobody will buy FEDGOV debt.
“The big four US retail banks sustained a near 20 per cent jump in losses from credit cards in 2017, raising doubts about the ability of consumers to fuel economic expansion. “People are using their cards to get from pay cheque to pay cheque,” said Charles Peabody, managing director at the Washington-based investment group Compass Point. “There’s an underlying deterioration in the ability of the consumer to keep up with their debt service burden.” Recently disclosed results showed Citigroup, JPMorgan Chase, Bank of America and Wells Fargo took a combined $12.5bn hit from soured card loans last year, about $2bn more than a year ago.”
The cost of debt service is rising all around.
"Interest on debt alone was $32B for 1 month.
During the same month the year prior it was $25B:"
The debt-ceiling fight is going to flare up every few weeks. ,,,run out of cash and smack into the reinstated debt ceiling of $20.44 trillion some time in March."
Will the budget battle cause investors to get nervous about U.S. debt?

"China’s financial regulator has vowed to rescue the Chinese banking system immediately to avert a banking crisis when the bubble bursts, issuing a blanket guarantee that no major institution will be allowed to fail."
This gives them more incentive to gamble.
“We have too much debt in our system. If something bad happens, we have learned from the US financial crisis, and we will move very swiftly to contain the risk so that panic caused by a small institution does not spread,”
China promises bank rescue in next crisis as market prophets warn on rising US rates

The brightest from Harvard and Yale;
"This brings us back to the mystery of what’s driving the US stock market higher than all others. It’s not the “Trump effect,” or the effect of the recent cut in the US corporate tax rate. "
"The truth is that it is impossible to pin down the full cause of the high price of the US stock market."
NO MENTION of cross-border capital flows.

Bitcoin can become reserve asset – Epoch Times The hackers will just love that.
1/23 ‘Perfect storm’: global financial system showing danger signs – Brisbane Times OZ is hooked in pretty tight with China. They will get hit hard.
1/23 TD Ameritrade CEO warns “never seen client cash levels this low” – Zero Hedge Remember, Americans were all-in months ago. maximum leverage brings minimum cash levels. At present, the continuing levitation of prices is from investors who see American markets as being the least worst. The margin calls from hell will hit both if them.
1/23 Goldman: “risk appetite is now at its highest level on record” – Zero Hedge Yeah, we kinda figured that.
1/23 Kuroda pushes back against speculation tightening is near – Bloomberg The BOJ just talks and bounces around.
1/23 Bitcoin a ‘gift from God’ to help humanity sort out its money mess – Max Keiser

EXCELLENT article from Armstrong.
"If we had simply created the money instead of borrowing it, the national debt would be less than 50% of what it is today."
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Old 01-24-2018, 03:42 PM
Danny B Danny B is offline
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Propping up zombies to maintain employment

Snips from Brisbane.
Nine years of emergency money has had a string of perverse effects and lured emerging markets into debt dependency, without addressing the structural causes of the global disorder.
This time central banks are holding a particularly ferocious tiger by the tail. Global debt ratios have surged by a further 51 percentage points of GDP since the Lehman crisis, reaching a record 327 per cent (IIF data).
"Pharmaceutical companies are subject to laws forcing them to test for unintended consequences before they launch a drug, but central banks launched the huge social experiment of QE with carelessly little thought about the side-effects," he said.

The US Federal Reserve is already reversing bond purchases - ignoring warnings by former Fed chair Ben Bernanke - and will ratchet up the pace to $US50 billion ($62.4 billion) a month this year. It will lead to a surge in supply of US Treasury bonds just as the Trump Administration's tax and spending blitz pushes the US budget deficit toward $US1 trillion
This doesn't seem accidental.
At best, the implication is that yields on 10-year Treasuries - the world's benchmark price of money - will spike enough to send tremors through credit markets.
The latest stability report by the US Treasury's Office of Financial Research warned that a 100 basis point rate rise would slash $US1.2 trillion of value from the Barclays US Aggregate Bond Index, with further losses once junk bonds, fixed-rate mortgages, and derivatives are included.
The FED lit the fuse. 1/10 of a percent knocks off $1.2 trillion of value. The FED would like to go up another 2 1/2 to 3% Many of the derivatives are interest rate swaps. The FED wants to jack up interest rates. What is the nominal value of those interest rate swaps?
"at the end of June 2014, the total notional amount of outstanding contracts was $563 trillion"
Apparently, the FED has signed on to blow up the derivatives market.

The global fall-out could be violent. Credit in dollars beyond US jurisdiction has risen fivefold in 15 years to over $US10 trillion. "This is a very big number. As soon as the world gets into trouble, a lot of people are going to have trouble servicing that dollar debt,
While banks now have high capital buffers, the risk has migrated: to investment funds concentrated in crowded trades. The share of equities traded in "dark pools" outside the exchanges has mushroomed to 33 per cent.
1/3 of equities traded OUTSIDE of exchanges. NO circuit breakers.

RBI Capital warned in its investor letter that these funds could lead to a "liquidity crash". Deutsche Bank has advised clients to take out June 2018 "put" options on the S&P 500 - a hedge against a market slide
The great disinflation of the last three decades was essentially a global "supply shock". The opening-up of China and the fall of the Berlin Wall added 800m workers to the traded economy, depressing wages and unleashing a tsunami of cheap goods.
Most of these added workers moved from the farm to the factory. They did NOT move to the middle class when they only earned 30 bucks a month. They permanently depressed wages.
Central banks intervened "asymmetrically" with each cycle, letting booms run but stepping in with stimulus to cushion busts. The BIS says one result was to keep insolvent "zombie" companies alive and block the creative destruction that leads to rising productivity.
Productivity is NOT the problem. These zombie companies are kept alive to maintain jobs and consumption.

While higher inflation is needed in one sense to right the global ship - since it lifts nominal GDP faster, and whittles down debt - the danger is that the shock of higher rates will hit first.
We already have HIGH inflation in the upper loop. We are slowly getting price inflation in the lower loop with no offsetting wage inflation.
Central banks are now caught in a "debt trap". They cannot hold rates near zero as inflation pressures build, but they cannot easily raise rates either because it risks blowing up the system.
The upper loop was a parasite on the producing economy. EVERYBODY tried to rent out their money and the trade became too crowded. The CBs tried to save all the banks and all the investors. Free money went up by $200 trillion but, there wasn't a corresponding increase in goods and services.

Global finance has become so sensitive to monetary policy that central banks risk triggering a downturn long before they have built up the safety buffer of 400 to 500 basis points in interest rate cuts needed to fight recessions.
"We are running out of ammunition. I am afraid that at some point this is going to be resolved with a lot of debt defaults.
These boneheads are talking about a safety cushion of 1/2% buildup so that they can cut the buildup to fight the next recession.

Getting the horse before the cart.
"To have hope in our future, we must have more children."
In P.D. James’ dystopian novel “The Children of Men,” the unthinkable has happened — people have stopped having children.
Last year, the U.S. birthrate, already declining for years, hit a historic low — 1.77 per woman — largely driven by a collapse in childbearing by people of the millennial generation. The decline has been rapid. Only a decade ago it was 2.1, the rate necessary to keep a population stable.
"Demographers and social scientists have plenty of theories as to what is causing this loss of “will to breed” — delayed marriage, increased use of contraception, failure to launch, the extreme cost of higher education, public policies that are unfriendly to families, the increased secularization of society."
NO mention of the fact that it costs about $245,000 to raise ONE child, even without any college.

"Others think limits on contraception will have the same effect."
"Having children, says Emmanuel Gobry, of Ethics and Public Policy Center advocacy group, is “a signal that people are willing to commit to the most enduring responsibility on Earth, which is raising a child.”
This is true but, ONLY for responsible people.

1/24 Taunts from bulls come in: “stupid to hold cash” – Mish
Warren Buffett's $109 Billion Cash Problem: How Much Longer Will It ...

Nov 7, 2017
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Old 01-25-2018, 05:02 AM
Danny B Danny B is offline
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Unicorns and Faerie dust

I read SO much mis-information that it is stunning. There are so many writers who think that they have the answers to the big problems.
"2. If the Fed raises rates, that will draw in trillions of world capital "
"3. Enough money flowing into the U.S. will create demand for the US$, and the US$ will rise"
This will make $15 trillion in dollar-denominated foreign debt too expensive to service.
"4. The US$ rising will attract foreign buyers into U.S. investment and together the stock market will counterintuitively rise."
"5. The Fed will detect overheating and raise rates again and again in a reinforcing cycle, drawing capital to only the U.S."
Raising rates will make domestic debt service impossible.
"6. The massive investment re-industrializes the U.S. to some extent while the high US$ gives some relief to Main Street."
No it doesn't. A strong dollar makes for cheap imports.

"7. Foreign buying, better jobs, and low exchange rates hold off the housing collapse, while all the mortgage bonds are also sold overseas."
Jobs won't get better and wages won't go up.
"8. Emerging markets are hammered by the high US$ and fail, driving ever-more capital to safe havens like the US.
9. Ultimately, the U.S. does what all reserve currencies do and fails LAST."
"10. The whole world, strangled by the US and its dollar have no choice but to reject the US system entirely in private contracts and move to an alternative.

11. We now have at least three alternatives: the CIPS/Yuan banking bloc, gold, and cryptocurrencies. They aren’t exclusive: the most likely outcome is a gold-backed trading note priced in Yuan on a blockchain, perhaps in the Shanghai Exchange." Sounds plausible.
"13. The U.S., like every nation since Adam Smith, defaults on its $20T in $ debt – and all its internal consumer, corporate, and pension debt – using “hyperinflation” of the dollar. New twist is that, instead of gold, it hyperinflates vs. cryptos or the new world exchange standard as planned in 1971 and publicized in 1988."
Really stupid idea.
"14. The reset occurs, no one dies (in the U.S.), supply chains are maintained, oil flows, and the economy stops being a feral, diabolical means of theft and control and returns to being a fair, voluntary exchange. For now."
Supply chains are NOT maintained.
Then, he gives a list of 10 things that will be much improved in this brave new world.
Just like most others, he finds it very convenient to ignore reality.

Our new reality will not include "better jobs".
Self-driving cars will leave third of people unemployed | Daily Mail Online
We're going to "upskill" and "reskill" and, everybody will have a job.
So, what are all those displaced women going to do with their free time? Harvard has the answer.
Sex robots could make men obsolete | Daily Mail Online

Ray Dalio is the "bond king". He uses AI to do all the trading.
1/24 Ray Dalio sees a ‘market blowoff’ coming – CreditWritedowns
1/24 Ray Dalio says bond bear market has begun – Zero Hedge
1/24 Stocks slip from records, turn negative, as tech rolls over – CNBC
1/24 US oil prices top $65 a barrel for the first time since Dec. 2014 – CNBC

So, oil went up and bonds & stocks went down. What happens if oil goes up a LOT?
"Lukoil CEO warns against sharp growth in oil prices up to $150."
TASS: Business & Economy - Lukoil CEO warns against sharp growth in oil prices up to $150
1/24 Illinois late with more than $1b in payments in 2017 – Rock River Times Just the start.
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Old 01-25-2018, 03:31 PM
Danny B Danny B is offline
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Why Tax?,,,,, yield curve

Here is an excellent article on the role of taxes.
The State is quite worried about going broke. Armstrong makes it clear that all States eventually default. In Japan, the CB is 100% on-board with preserving the financial power of the State and will print ANY amount of bonds.
"Put another way, as far as the head of the BoJ is concerned… it doesn’t matter how much currency he prints: tens of billions of yen, hundreds of billions of yen, even trillions of yen… all that matters is where Japanese bond yields are trading.

This is the literal textbook for Central Bankers around the world: devalue your currency in order to maintain the bond bubble."
Mnuchin is talking down the dollar. Will the FED follow through and print enough to force it down? Is the recent tax cut an indication that taxing will be abandoned in favor of just printing?
The CBs MUST maintain the yield curve. BUT, "Those who have bought the long-term assuming that the short-term rate hikes will be modest for some time making a yield of about 2.65% attractive, may discover that the yield curve just may swing into a negative position again rather uncontrollably rather than intentionally."
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Old 01-26-2018, 03:36 AM
Danny B Danny B is offline
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Stockman and Price

Theoretically, the U.S. GOV has a printing press and can never default. The FED seems to be holding on tight to the control panel of the printing press. The private sector is a different story,,, same for State and local GOV. The 2008 defaults threatened to drag down the banks and the entire financial system. FED GOV is trying to use the printing press to help everybody who does NOT have one. Evidently, the FED is trying / planning to slow down the press. The FED supported the finance system when the producing economy could not. The wage and manufacturing crash ensure that the organic economy will never return to the gold old days.

The FED claims that it wants to raise rates to normal. BUT, the FED is owned by private banks. A return to 5% would set off a cascade of defaults and wipe out the private banks. The FED is like a dam on a river holding back a growing lake of bad debt. U.S. GOV debt is a big part of that lake. So, FED GOV has a printing press but, that doesn't mean that it can prevent a general default. The ZIRP that makes debt service "manageable" has also ruined every entity that depends on interest-income. By "preventing" the collapse of State debt (for now), the State has initiated the default of everybody who doesn't have their own press. ZIRP may have temporarily saved the upper loop but, it hurt all the rest.

There is a lake full of zombies that fills more everyday. The default cascade has been postponed while the lake fills more and more.
Stockman writes a very good article about the zombie pile-up. I'll do a couple of excerpts but, you should read all of it. H ereally puts the information together.

Contra Corner » Flying Blind, Part 1: How Bubble Finance Destroys Economic Efficiency And Rationality "Someday it will be recorded by historians that the turning point in modern economic history occurred when the central banks pivoted to QT under the mistaken conclusion that they had delivered the nirvana of Full Employment to main street.

No they haven't. There are 43 million food stamp recipients, 102 million adults without jobs (of which only 50 million are 65 or older), stagnant real wages, 30% lower real median household net worth (since the late 1990s), and $67 trillion of public and private debt outstanding which all suggest otherwise."
"Likewise, it now appears that Netflix will generate operating free cash flow of almost negative $9 billion over the five years ending in 2018. Yet its market cap has soared to $110 billion based on pure speculative momentum."

The CB has tried to pump in so much "money" that it HAS to flow everywhere. Lots of people don't want to go into shaky investments but, have no other choice.

Sr. Price has a good article but, you have to read it twice. The guy is really brilliant but, he sometimes is in denial of human nature.
"Such a transformation, in full concordance with the doctrines of the Austrian Schools of Economics, would immediately re-vitalize the world's economy, due to its inevitable consequences: 1. The immediate stimulation of hope for a better future, in all nations. 2. The immediate activation of all able-bodied individuals to work as hard as possible, in order to obtain the precious money of gold and silver. 3. The re-emergence of the principle which has ruled human life in all ages past: "He who does not work, shall not eat" to motivate all those who waste their lives in idleness."
"The illusions which now occupy millions of idle minds would vanish: dreams such as populating the planet Mars; inhuman fantasies to "automatize" work by means of robots, in order to eliminate human labor; vain investigations of "Artificial Intelligence", when what will be needed will be the intrinsic asset of all humans: human intelligence,"
I just don't see a rollback of automation in the future.

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Old 01-26-2018, 04:05 PM
Danny B Danny B is offline
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The decay of the sovereign bond market

Here is a graph of total public debt, https://thumbor.forbes.com/thumbor/9...%3Fwidth%3D960
Armstrong has long predicted a crash in public debt.
Spending on social programs, https://www.heritage.org/sites/defau...hart-1-825.jpg

"Among alternative analysts, cynicism runs rampant over a government shutdown. “Who cares?!” many of them will say, “Let it shut down!” But there are some concerns here, primarily the concern of full faith in U.S. debt issuance."
"this internal conflict though theatrical in nature can still produce a lack of faith in Treasury bonds and the dollar internationally. And frankly, faith is all that our economy has left to sustain itself.

If the funding battle continues with ever shorter stop gaps or with an extended period of government shutdown, there is a possibility that the largest foreign investors in U.S. debt and the dollar will begin dumping their holdings."

Jim Willie; "The magnificent event that occurred ten years ago has been called the Global Financial Crisis, centered and triggered by the Lehman Brothers failure as a firm. It was actually a suffocation event with killjob, whereby both Goldman Sachs and JPMorgan bought several $billion in Lehman mortgage bonds and never paid for them, thereby killing Lehman from a very severe sudden liquidity drain."
"This year will see sovereign bonds enter failure, in an unprecedented manner. Watch the USGovt debt and a possible restructure event (technical default). This year will see entire national banking systems enter failure, in an unprecedented manner. Watch Italy for the bank runs and collapse. "
"Three ancient empires in China, Russia, and Persia are cooperating to bring the Eurasian Trade Zone to life, in an unstoppable process. They will usher in the Gold Standard, first in trade payments, then in bank reserves, finally in currencies. The USDollar-based hegemony must be forced to yield one step at a time. "
The U.S. dollar is the unrivalled king of the currencies, in part because it has never been cancelled. The Eurasian group knows that the Yuan can never displace the dollar. They will use the "gold trade note".

"The magnificent crisis that is unfolding in this new year has been given a name by the Jackass as the Systemic Lehman Global Breakdown Event. Since the Lehman failure, all insolvent structures have become more insolvent, fortified with more leverage, flushed with more funny money, and been kept in place as the power center for the USGovt istelf. The Wall Street banks stole the $700 billion in TARP Funds as a launching pad for sacking Washington DC in a grand fascist display. The broken silos of financial corruption have grabbed political powers, and written US legislation. In the last ten years, nothing has been fixed, or event attempted toward remedy. "
"What was seen in 2008 with Lehman failure will next be seen on a systemic level, since instead of remedy, the entire system has been subjected to same abuses that led to the mortgage finance and housing bust."
The finance system became too crowded with too many people all trying to rent out their money. The bankers tried to preserve the nominal value of ALL collateral when the markets just wouldn't support said value. The organic economy is even less able to support bloated values in the face of falling wages.
"desperate set of gestures designed to sustain the power structure at the expense of the system’s integrity and viability. Instead, the central banks have gone completely insane, putting gigantic support mechanisms under the USGovt debt"
"The banker elite, with the central bank helm and their big bank servile outposts, have elevated the systemic risk to levels never seen before on the globe. They have lashed the big banks together with derivatives, ready for common fate. They have unleashed unsterilized hyper monetary inflation for six years running, and called its heresy as good. They have linked together the financial markets to the sovereign bonds"

"They have permitted the USGovt debt to go out of control, far above the annual $1.0 trillion deficit admitted. ,,,phony USTreasury Bond demand when almost no demand exists. "
"The thread to be pulled on the sweater will be the USTreasury Bond complex. It is the trigger, the fuse, the most crucial link, evident within the entire picture. For the last year, the the USTreasury Yield Curve has become much more flattened, a danger signal."
"The Jackass has maintained for a few years running that the QE experiment kills capital, renders businesses as unprofitable, and will eventually wreck the economies. It is happening in recognized fashion. As the USTreasury Bonds falter, they will take down the US stock market and other sovereign bonds. We are on the verge to see a decline in the USDollar, the USGovt debt security, and the US stock market simultaneously."
2018: Yearly Forecasts for Systemic Breakdown

Once again, we see that paper dollars are king but, sovereign dollar bonds are toilet paper.
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Old 01-27-2018, 09:08 PM
Danny B Danny B is offline
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When will the stampede start?

Where to start?
"This long-term, secular expansion of the (economic) pie naturally generated more demands for additional entitlements and rights, as the economy could clearly support the extra costs of allocating additional wealth and resources to the many. From the point of view of the few (the elites), their own wealth continued expanding, so there was little resistance to expanding retirement, education and healthcare entitlements.

But in the 21st century, the expansion of the pie stagnated, and for many, it reversed. Adjusted for real-world inflation many households have seen their net incomes and wealth decline in the past decade.

Despite the endless media rah-rah about “growth” and “recovery,” it is self-evident to anyone who bothers to look beneath the surface of this facile PR that the pie is now shrinking. This dynamic is increasing inequality rather than reducing it."
This is true to a point. Remember that most of the pie is debt notes. The pie is made of smoke.
"The unwelcome reality is that the economy is changing in fundamental ways that cannot be reversed with policy tweaks, protests or wishful thinking.

Consider the percentage of the gross domestic product (GDP) that goes to employee compensation (wages and salaried). Labor’s share of the GDP has been in a downtrend since 1970, which not coincidentally was the peak of secular productivity:"
Labor can't consume and, productivity falls. The rich can't consume anyway near commensurate with the wealth they hold. Here is the graph

Most of this inequality is TRANSIENT.
Personal savings have crashed and , everyone is living on their credit card.

"If you account for the actual inflation rate then GDP growth has been consistently around -2% since 2001. If you were to use a real economic measure like NNP instead of GDP I suspect the numbers would be even more deplorable."
"remember that during obamas last year they revised how the gdp was calculated otherwise we would have negative numbers now. gdp is a joke. they have obama care premiums in the gdp. That isn’t real. It is a tax not a product."

"markets saw a record $33.2bn inflow to equity funds this week, record $12.2bn inflow to active funds, $1.5bn into gold (50-week high)"
" broken by region, it was more of the same as U.S. equities saw $7bn of inflows, Europe $4.6bn, Japan $3.4bn; while EM funds had the 2nd best week of inflows on record at $8.1bn.
On the credit IG bond funds gain $2b in 57th straight week of inflows, HY bond funds see outflows of $2.5b, EM debt inflows $1.6b"
The article goes on to show that $BILLIONS are flowing in like water.
It is impossible for retail investors to pump that much cash into the system, so that only leaves Central Banks as the culprits.
Printing cash like a Crypto conjuring tokens out of thin air and buying assets with it.
"Bank of America Merrill Lynch's "Bull & Bear" indicator is sending a sell sign, which has been accurate 11 straight times since the firm started tracking it in 2002."

Dollar-denominated debt, https://www.armstrongeconomics.com/w...-debt-up-10-5/
"This illustrates the banking crisis that is still brewing in Europe even after nearly 10 years of quantitative easing. There is little prospect for this crisis to be fixed. All that can happen is to postpone the inevitable."
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Old 01-28-2018, 11:32 PM
Danny B Danny B is offline
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Stocks go up on unlimited pixels

1/28 Japanese cryptocurrency exchange loses over $500m to hackers – CNBC
Japan To Repay Bitcoin Owners $425 Million Stolen By Hackers

1/26 Ransomware remains weapon of choice for hackers – Silicon
You can forget about BTC for the time being.
Gold is valuable because it takes hard work to produce it. The CBs only need to click a mouse to pour $trillions into the stock and asset markets. In the case of barter, you traded one valuable item for another valuable item. In the case of early paper currencies, you traded a receipt for a valuable item for a different valuable item. The bankers started the practice of creating too many receipts. Moving forward in time, the bankers created receipts for valuable items that didn't yet exist. Since nobody knows the future, there was no limit on creating receipts. While a currency has a tenuous connection to something tangible and valuable, a GOV bond is tied to the full faith and credit of the State.
GOV debt is rated as AAA by rating agencies even though, all States eventually default. The U.S. has never cancelled it's currency but, it has devalued it compared to gold. America managed to value it's currency in oil after it lost the link to gold. More countries are pulling out of this arrangement. Nobody is buying new Treasury debt and "somebody" is monetizing it under the table.

From 1776 through 2007, the US issued just over $9 trillion in US Treasury debt to pay for stuff which "we" wanted but "we" were unwilling to tax ourselves to pay for.
From 2008-->2014, the US Treasury nearly issued as much debt as it had in the previous 230+ years.

The State claims that domestic buyers are buying most issuance, http://www.zerohedge.com/sites/defau...0407_econ2.png
"As China and the BRICS ceased net buying Treasury debt in July 2011 (and never returned), the BLICS appeared and rates went down (Detailed HERE). As the Fed ceased QE1 and all economists knew rates must rise...rates shocked 100% of economists and fell by a third. As the Fed tapered and ceased QEIII and foreigners likewise ceased buying Treasury's from '14 onward, "other" took over and rates hardly budged!?! Not exactly the hallmarks of a "free market"."
The BLS claims that unemployment is 4.1%. The FED claims that they have stopped QE.

"The U.S. ran a $71.6 billion Goods Trade Deficit in December, the largest goods deficit since July 2008’s $76.88 billion. The U.S. likely accumulated a near $550 billion Current Account Deficit in 2017
Rest of World holdings of U.S. financial asset began the nineties at $1.738 TN; closed out 2008 at $13.699 TN; and ended Q3 2017 at $26.347 TN. It’s gone rather parabolic
Credit Bubble Bulletin : Weekly Commentary: America First and the Decapitation of King Dollar

"The bull market that began in 2009, has now entered the final stage of “capitulation” as investors throw caution to the wind and charge headlong into the markets with reckless regard for the consequences."
When the CBs print free money, they don't worry about losses.
"Of course, it isn’t surprising given the massive amounts of liquidity continually injected into the financial markets and global Central Banks have now figured out that continually rising financial markets solve much of the world’s ills. Simply, with enough liquidity, you can cover up bad (credit risks) by guaranteeing holders they will never default.

"It’s genius. It’s a “no lose” investment scheme.
Unfortunately, we have seen this repeatedly in the past.
In the 1980’s it was “Portfolio Insurance” – a “no lose” investment program that eventually erupted into the crash of 1987. But not before the market went into a parabolic advance first."
"In the 1990’s – it was the dot.com phenomenon which was “obviously” a “no lose” proposition. Even after Alan Greenspan spoke of “irrational exuberance,” two years later the market went parabolic once again."
"Then in 2006-2007, banks invented the CDO-squared, a collateralized derivative obligation based on other collateralized derivative obligations. It was a genius way to invest with “no risk” because the real estate market had never crashed in history."

Keep in mind that the 10 year rate is at 2.62%.
"If interest rates go up even modestly, halfway to their normal level, you will see a collapse in the stock market,” Kenneth Rogoff.

The higher that the markets go, the closer they are to their eventual rolling over. The higher the markets go, the more uneasy people get. This is expressed by "put" options. When the markets are a sure bet, they receive lots of "call" orders. "In fact VIX and the S&P are up for 3 straight weeks - the longest streak since Feb 2013.

Typically this is interpreted negatively as it would seem people are paying up for downside protection as stocks go ever higher and ever more parabolic.

But 2018 has been anything but typical: It appears that everyone's buying calls into the rally, accelerating it in the process!"
"Thus the rise in VIX (which measures the 'around the money' implied vol of the S&P) is being driven higher by exceptional demand for calls - upside levered bets that this crazy melt-up continues"
You get the idea. The CBs not only buy stocks, they buy call options to drive up optimism. Investors forget that one of the market participants has a printing press. It remains to be seen just how far they can stretch this optimism.
Armstrong, "Additionally, the entire world is gearing up for the monetary crisis cycle. This means we are witnessing the prologue and that is the shift from public to private assets on a global scale."
It's easy to prove that the CBs are buying up most of U.S. treasury debt. It's equally easy to see that the CBs are inflating the asset markets.
Everybody is starting to focus on return of capital rather than return on capital. A lot of people read Armstrong. A lot of people can see the implied risk of sovereign debt.
Forget all the nonsense that you hear that the FED ended QE years ago. This is the same kind of BS that you hear about the unemployment rate.

So, apparently U.S. Sovereign debt is going to crash. Armstrong said that the "deep state" will bring it all down trying to hold on to power. So, who is the Deep State? Who brought us the Police state?
This is a crosspost;

The thing to keep in mind is; it takes a lot of wealth to keep America going. For the last few decades, we have substituted paper money to get wealth from the R.O.W.
"The U.S. ran a $71.6 billion Goods Trade Deficit in December,"
We have been running the printing presses in hyperdrive. All governments eventually default. It isn't likely that we can maintain our standard of living with $70 B of stuff (per month) no longer flowing into the country.
Will the CIA / FBI crash it all down trying to retain their empire? Will the police state dwindle away when GOV goes broke?
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Old 01-29-2018, 04:38 PM
wayne.ct wayne.ct is offline
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Definition of Inflation

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

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

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

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

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

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

What metric or set of metrics is most indicative? (In your opinion or the opinion of someone you follow?)
There is a reason why science has been successful and technology is widespread. Don't be afraid to do the math and apply the laws of physics.
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Old 01-29-2018, 08:38 PM
Danny B Danny B is offline
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Inflation vs confidence

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

The whole idea of keeping us poor to keep us working, has hit a giant bump in the road. Automation is wiping out whole sectors of employment.
THEN, there is the "skills gap" "The skills gap in the U.S. is substantial. The National Federation of Independent Business found that as of first-quarter 2017, 45 percent of small businesses reported that they were unable to find qualified applicants to fill job openings."
At the same time "higher education" is turning out lots of people with no job prospects.
We have 2 distinct loops of the economy. We have completely different levels of confidence between the two loops. The economy is far more susceptible to confidence than it is to the money supply.
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Old 01-30-2018, 03:25 AM
Danny B Danny B is offline
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Sovereign debt weakening

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

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

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

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

The Treasury Bond markets are getting quite worried.
All the Treasury yields are going up, https://assets.bwbx.io/images/users/...v2/1000x-1.png
Bond yields are going up, https://www.bloomberg.com/news/artic...into-overdrive
The problem is; if the 10 year goes to 3.5% it will wipe out much of the markets.
Here is a graph of CB printing, https://www.zerohedge.com/sites/defa...0macquarie.jpg
This is just a long-running story. EVERYBODY wanted to rent out their money. When the productive sector shrunk from the blood-sucking parasites, they cranked up the money-machine to survive.
"World markets are like a pie crust stretched across the roof of a volcano!"

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

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

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

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

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

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

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

Here is a chart on debt creation, https://www.peakprosperity.com/sites...1-29_650px.jpg
So, stocks are the place to be because bonds are starting to roll over. Well, stocks are doing all that great either, https://www.marketwatch.com/story/us...ry_top_stories

Last edited by Danny B; 01-30-2018 at 03:42 AM. Reason: sbellinge
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Old 01-30-2018, 04:38 AM
Danny B Danny B is offline
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Kunstler, bonds

OK, so, Treasury yields are going up, https://assets.bwbx.io/images/users/...v2/1000x-1.png
Kunstler, "But with benchmark ten-year bond rate nosing upward like a mole under the garden toward the 3.00 percent mark, something is going to give.

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

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

1/29 Koch Brothers’ network to spend up to $400m for midterm election cycle – CNBC Elections were always for sale. They're just getting more open about it.
1/29 Hackers are making U.S. ATMs spit out cash like slot machines – WaPo
1/29 Mexico police find enough fentanyl to kill millions en route to US – Zero Hedge
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Old 01-31-2018, 02:57 AM
Danny B Danny B is offline
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Notes on underconsumption;
"In underconsumption theory in economics, recessions and stagnation arise due to inadequate consumer demand relative to the amount produced. It means that there is an overproduction and a demand crisis.
One of the early underconsumption theories says that because workers are paid a wage less than they produce, they cannot buy back as much as they produce. Thus, there will always be inadequate demand for the product.
In his book Underconsumption Theories (International Publishers, 1976) Michael Bleaney defined two main elements of classical (pre-Keynesian) underconsumption theory. First, the only source of recessions, stagnation, and other aggregate demand failures was inadequate consumer demand. Second, a capitalist economy tends toward a state of persistent depression because of this.

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

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

"the deep-rooted belief in the utility of luxury and the evil of thrift. Thrift, in fact, was regarded as the cause of unemployment, and for two reasons: in the first place, because real income was believed to diminish by the amount of money which did not enter into exchange, and secondly, because saving was believed to withdraw money from circulation."[4]
The argument was that governmental intervention, especially spending on public works programs, was essential to restore the balance between production and consumption. The theory strongly influenced Herbert Hoover and Franklin D. Roosevelt to engage in massive public works projects.
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Old 01-31-2018, 04:09 AM
Danny B Danny B is offline
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Underconsumption,,,, Economica

Here are a couple of articles that you should read in full. I won't excerpt them. They are obvious enough and, YOU are smart enough.


We are NOT in stasis. We are NOT in recovery. There is NOTHING the State can do to increase the birth rate. Besides that, there are a lot of powerful groups pushing for a big reduction in population. Our credit system DEMANDS expansion. Not only is our domestic population, aggregate wages and consumption falling, all of the major power-brokers are trying to hold on to their power base,,, at the expense of the system.

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

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

Leverage has flowed into EVERYTHING. Default will flow out of EVERYTHING.
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Old 01-31-2018, 04:29 AM
Danny B Danny B is offline
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1/31 Pimco: it’s time to start betting the other way – Finanz Und Wirtschaft
1/31 China’s largest conglomerate is on the verge of bankruptcy – Zero Hedge
1/31 Saving rate at 12-year low when 50% of Americans don’t have savings – Wolf Street
1/31 China faces worse financial risk than US before global crisis – Economic Times
1/30 Dow drops 300 points as stocks sell-off intensifies – CNBC
1/30 World stocks sucked under by bond market breakout – Reuters
1/30 Stock ownership rate plunges as credit card debt soars – Mish
1/30 Trader warns: beware the “freaking people out effect” – Zero Hedge

1/31 Crypto bloodbath amid widespread equity and bond carnage – Mish
Armstrong gives a short account of his incarceration and torture,,, thanks to the bankers and the State.
News on quantum encryption,. https://www.armstrongeconomics.com/w...-cannot-break/
The future of crypto, https://www.rt.com/business/417245-c...ack-japan-nem/
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Old 02-01-2018, 04:45 AM
Danny B Danny B is offline
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Moving from dangerous bonds into less dangerous stocks

"Jeff Gundlach - who in early January joined the bearish bond chorus, announcing that a bear market would commence once the long-term trendline be broken should the 30Y rise above 2.99%..."
Some claim that 3.5% is the start of a crash. Others claim 3%.
He has some good graphs, https://www.zerohedge.com/news/2018-...ycle-investing

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

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

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

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

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

Globally the world has added over $60 trillion in debt since 2009… and all of this was based on the assumption that bond yields were going LOWER not HIGHER
Here is the little squiggle that indicates to some that the 10 year bond has reversed it's decline, https://i0.wp.com/northmantrader.com...NX-2.png?ssl=1
John Hussman is extremely methodical. He has lots of facts and figures here to show that stocks will NOT have any earnings in the next several years.
Armstrong, "So far, we have elected the first Daily Bearish Reversal. There are three more to go before we can say we are headed into a March low. "
Armstrong recounts some of his earlier predictions that proved to be perfectly accurate.
Armstrong plays his cards VERY close to his vest because his big paying subscribers don't want him giving out a bunch of info. The big funds want to be the first to the exit.
None of the indicators point to a waterfall event in the immediate future.

Alaska and food stamps, "In total, the program covers nearly one-third of the state's population."
The "precariat", https://www.zerohedge.com/news/2018-...able-heres-why
The Europeans have come out and told Uncle Sam to shove it! NO more sanctions. No sanctions on Iran and, in a big F.U to pox americana,,,, https://www.rt.com/business/417501-n...ction-germany/

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

Armstrong wrote about the huge rotation OUT of bonds and into stocks. The State has an unquenchable appetite for MONEY. NOBODY wants to buy $617 billion in bonds from a country that is trying to cheapen it's currency. If the State does indeed default, the bloated stock market is a better bet,
The lesser of 2 weevils.
The Treasury will have to bump it's interest rate way up to attract legitimate buyers. That "bump" will be the death knell.
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Old 02-01-2018, 03:11 PM
wayne.ct wayne.ct is offline
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Originally Posted by Danny B View Post
Inflation is accurately described as; an increase in the money supply.


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

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

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

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

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

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

Oh! One more comment. The currencies of the various countries can be issued at various rates and manipulated by the various actors. But, something new has arrived on the stage over the last few years to rock the boat. Namely, Crypto-currencies in all its permutations. I wish I knew the relative size of CC vs. sovereign transaction volume. As I understand it, the ratio is far less than 1:100. Is this correct? If so, it is really nothing to think about at this time.
There is a reason why science has been successful and technology is widespread. Don't be afraid to do the math and apply the laws of physics.
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Old 02-02-2018, 03:23 AM
Danny B Danny B is offline
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The curious natures of inflation

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

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

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

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

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

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

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

This site shows how the money has bled over into the economy. https://econimica.blogspot.com/2018/...iving-and.html
Armstrong, "This is warning that an uptick in rates will lead to an explosive rally in overall rates and then we will see the costs of funding explode. So buckle up – we are headed to the other side of the storm. We have been in the eye where it is calm but now we are preparing to come out and rates will move upward faster than before."

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

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

Currency inflation is going up at the same time that wages and population are going down. Armstrong said that the currency collapse would commence in 2021.
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Old 02-02-2018, 06:36 PM
wayne.ct wayne.ct is offline
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The nominal sticker price of tangible assets

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


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


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


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


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

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


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

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

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

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

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

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

Forewarned is forearmed!
There is a reason why science has been successful and technology is widespread. Don't be afraid to do the math and apply the laws of physics.
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Old 02-03-2018, 03:52 AM
Danny B Danny B is offline
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Brian Josephson won a Nobel prize many years ago for his work on Quantum tunnelling.
Essentially, all members of a species are in communication / contact.
The Princeton Egg tracks our global consciousness. The Global Consciousness Project
So, what does that imply? "Humanity Is Descending Into Clinical Insanity"

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

We're slowing down. How important is that?

Tainter wrote an excellent book on the fall of complex societies, http://wtf.tw/ref/tainter.pdf
Roberto Vaca wrote about this many years ago, https://www.goodreads.com/book/show/...oming-dark-age
Armstrong, "We are approaching the grave danger of a Dark Age beginning from the aftermath of 2032. Hopefully, I will be gone by then and will not have to face this horrible event"

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

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

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

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

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

2/02 Dow drops 666 points as interest rates shoot higher – CNBC 666?
2/02 30-year Treasury yield tops 3% as investors see accelerating economy – CNBC
2/02 GDPNow forecast an unbelievable 5.4%: I’ll take the under (way under) – Talk Markets I believe it. GDP is just a measure of how much money there is in the economy.
2/02 US govt unable to service debt as interest rates surge – SRSrocco Report
2/02 Janet Yellen hands stick of dynamite off to Jerome Powell – Seeking Alpha
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Old 02-04-2018, 02:50 AM
wayne.ct wayne.ct is offline
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Interesting source material

Thanks, you have done a great job of backing up your viewpoint.
There is a reason why science has been successful and technology is widespread. Don't be afraid to do the math and apply the laws of physics.
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Old 02-04-2018, 08:41 PM
Danny B Danny B is offline
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Bad ideas,, bad plans,,, bad outcomes

Thanks, Wayne. Talk is cheap and history is only a guide. Human nature doesn't change much but, new inputs from our surroundings eliminate old models. Ned Ludd was the "first" to decry automation. The birth of the AI offspring chip will bring an AI chip for EVERY application. Unfolding neural networks will bring big changes and maybe, danger.
War will completely change, https://www.youtube.com/watch?v=TlO2gcs1YvM&t=138s

Hackers will flood everything. AI will tell us when we are going to die, https://gizadeathstar.com/2018/01/pr...tric-id-plans/
Man advanced from an agrarian society to a mechanized society. If he gets displaced from participating in the industrial society, he has to revert to an agrarian society. That can't work.
Depopulation in all it's guises is on the rise, “Funding levels are at their lowest for many years, with the Congo seeming to have ‘fallen off the map’ for many donors, at a time when we are facing vastly increased humanitarian need,” https://www.theguardian.com/global-d...lling-violence

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

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

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

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

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

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

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

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

If you look at the planned borrowing numbers from FED GOV, you can see that nobody in D.C. plans to cut back. The "Crisis Manager" that Armstrong proposed is nowhere in sight.
So, is all of this just a coincidence? It really doesn't seem that way.
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Old 02-05-2018, 04:17 AM
Danny B Danny B is offline
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Save the banks,,, light a fuse under the 10 year note

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

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

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

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

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

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

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

The average person does not care about bond spreads. They are all-important to the investing community. You now have something of a timeline if you watch the rise of the 10 year bond.
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Old 02-05-2018, 03:39 PM
Danny B Danny B is offline
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The FED is trying to tamp down the "enthusiasm in the stock market. A stock bear market usually takes many months to bottom out. This time, all the gamblers are aware of the extreme over-valuations. Everyone knows that the algos can rush the exit far faster than they can. After hours trading is different. It matches up buy & sell orders to complete a transaction without going through the exchange. If a big group heads for the exits after-hours, they must all find a buyer. If they don't, there will be a large stack of sell orders waiting to find a buyer.
John Hussman has shown good cause to believe that the stock market will not have any earnings for the next 10--12 years. Everyone is aware that there is little attraction to buying high-priced stocks that have no earning potential.

2/05 No bounce yet in U.S. equity futures as investor anxiety grows – Bloomberg
2/05 Major indexes in Japan, South Korea, Australia and China fall – CNBC
2/05 Yellen warns investors “be careful”, but “don’t label it a bubble” – Zero Hedge
Market stumble or something more? – Real Investment Advice
The market system is tight in all directions – Fasanara
Today’s market is anything but normal – International Man

We should see very soon if the FED is going to ignite some kind of rally. Money-renting has just gotten too big. There just isn't enough demand.
The grand crowded trade of financial speculation – Credit Bubble Bulletin
This brings us to,
2/05 European markets plummet amid global selloff – CNBC
2/05 Dow falls more than 100 points as stocks resume Friday’s ugly sell-off – Bloomberg
2/05 Tesla: recalibration time – Seeking Alpha

Apparently, the State is paving the way for gold to make comeback. 2/05 Fines against bullion banks for market rigging vindicate GATA – GATA

Here is a vid explaining your future taxes, https://www.youtube.com/watch?v=MqoGORXAv2o
Here are the numbers for each worker, https://www.goldbroker.com/news/ever...5-million-1226
Armstrong is going to release his program. Will that put everybody on the same side of the boat?
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Old 02-06-2018, 02:47 PM
Danny B Danny B is offline
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Crunch time

2/06 Global sell-off continues into Asia with Japan and Hong Kong plunging – CNBC
2/06 Machines raise worries amid market rout – Barron’s
ah yes, the algos
2/06 The Fed’s dependence on stability – Real Investment Advice Pumping in $27 trillion of new debt doesn't stabilize anything.
2/06 Credit Suisse plunges on exposure to volatility ETF – Forex everyone acted like volatility would never return.
2/06 Traders panic as XIV disintegrates -90% after the close – Zero Hedge2/06 VIX at 38 is Waterloo for the beloved short volatility trade – Bloomberg

2/05 Nikkei, other Asian futures plunging – Business Insider
2/05 More than $90 billion in value wiped out from the popular ‘FANG’ tech stocks – CNBC
2/05 Dow plunges 1,000 points, S&P 500 now negative for the year – CNBC

Goldilocks has flown the coop.

2/06 As bitcoin bubble loses air, frauds and flaws rise to surface – NY Times
2/06 Bitcoin tumbles almost 20% as crypto backlash accelerates – Bloomberg
2/06 Bitcoin is dead? The blockchain didn’t get the memo – Decentralize Today
2/05 Bitcoin bloodbath builds – now among biggest crashes ever – Zero Hedge
Nuff said.

Man is second-rate when it comes to handling big-data.
2/06 Robo-advisor websites overwhelmed, crash – CNBC
But, THAT is the future.

Armstrong, "Politicians just do not get it. They have convinced themselves that they can tax whatever they desire and people have no choice but to pay. Missing in their analysis are two influences (1) people just stop earning income for it reaches a point it is not worth working anymore, and (2) you simply pick-up and leave. "
Worth reading, https://www.armstrongeconomics.com/w...previous-time/
To republicans, everyone is equal at the start of the race
To democrats, every one is equal at the end of the race.
While the dems and reps have been called 2 wings of the same bird, the republicans were a bit more likely to embrace fiscal conservatives. That was then. This is now.
"Indeed, they are the proverbial elephants in the room, thereby giving rise to a considerable irony: To wit, the GOP party of the elephant, which is supposed to be the palladium of financial rectitude in American politics, has forgotten about them completely.

For instance, in his triumphalist SOTU, the Donald didn't utter so much as a single syllable about the Fed, the budget, entitlements, the $1 trillion per year deficits looming ahead or the nation's soaring public debt. Yet after omitting virtually everything which counts, he went on to crow about how he is making America Great Again (MAGA) by making better trade deals and borrowing untold sums from future generations."
Stockman makes good points but, I suspect that Trump has something up his sleeve.
Contra Corner » Two Elephants In The Room That The GOP Has Completely Forgotten
Trump is a wily one. He may allow the system to crash and force the FED out of business. He could remodel the system on the Bank of North Dakota. This would be palatable to private banks because they could still make a profit. BND doesn't try to compete with or, exclude private banking. The (currently $450 B) interest drain would not leave GOV coffers. When interest rates rise, GOV interest debt will go up towards $1 trillion. What better time than now (shortly) to propose squeezing out the CB?

On the economy, Trump is all talk. I'm guessing that he has a plan but, it is too radical to take off the wraps now. When interest rates hit ABOUT 4%, EVERYBODY will be looking for a fall guy to pin it on AND a savior to rescue them.
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Old 02-06-2018, 03:25 PM
Danny B Danny B is offline
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The rise and fall of the nation-State

Nothing is off-topic because everything affects the economy. I'm looking at more basic problems.
Here is an article from Kunstler. He lays out the absolute disintegration of the system. He never like Trump but, he sees the systemic corruption to be far worse than anything that Trump might do.
"President Trump himself, the avatar of wished-for return to American greatness, who is looking more and more like Melville’s awful and enigmatic White Whale pursued by single-minded mad men — and, remember, despite all the bloody ire, abuse, and harrassment heaped upon him by the vengeful Ahab, Moby Dick ended up smashing the whaling ship Pequod, and swimming away to legend."
You should read all of it.
A Quandary - Kunstler

Solar power is close enough to free energy to qualify in a certain sense. It allows people to break free (to a certain degree) from the centralized control of the State. There are lots of new devices that can pull water from the air. The State is hard at work trying to cement control. Remote control of electric meters and water meters is just one facet. Brainwashing students is another facet. There are many. To a certain degree, the PTB must keep us poor to keep us working. How many people would opt out of the rat race if they could just set up a little homestead in the desert with a greenhouse and a few chickens?

The State goes to great lengths to equate itself 100% with society. Two inseparable constructs. There has been plenty written about a society without a State.
Historically, man ONLY organized himself along genetic lines. Our survival system is geared to preserve our genetic lines. Infidelity in women is bad because the man in the relationship might end up supporting somebody else’s genetic line. We organise along lines of family, tribe and clan. A nation is a completely unnatural line of organization. The current push towards socialism attempts to destroy all tribal unity. Flooding Germany, France and England with whatever trash can be found is a clear example of attacking tribal unity.
Slovakia has outright refused, Slovakia Will Build Border Wall - PM Says "We Will Never Accept a Single Muslim"
They aren't the only ones. EU to sue Poland, Hungary and Czechs for refusing refugee quotas ...
EU to sue Poland, Hungary and Czechs for refusing refugee quotas - BBC News

Japan doesn't want any foreigners and israel is deporting as many as possible.
The Kalergi plan calls for the destruction of the tribes through forced immigration. The tribes are pushing back. Everybody has high hopes for the new leader of Austria. The looming question is: Can you destroy tribal unity and still have national unity?
"This is exactly what was predicted by the early Wired founders, who extrapolated from the rise of the web to the “end of the nation-state”. Although that may be going a bit too far, it is worth noting that the nation-state, far from being the Natural State of Man, is actually a relatively recent invention. “Most theories see the nation state as a 19th-century European phenomenon, "

"Before the 19th-century, regions were defined by language, religion, ethnicity and the reach of protecting rulers, from kings and sultans to tribal chiefs. So for all but a tiny blip in humanity’s existence ( less than 200 years of our 2 million years on this planet and 6,000 years of civilization) we weren’t ruled by nation-states, and odds are that at some point in the future we won’t be either."
"But the notion of national borders and citizenship, defined by laws not ethnicity or tribal, language, religious or cultural affiliation, is both new and fragile. Indeed, it’s looking as temporary as the systems that came before it."
Good article.
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Old 02-07-2018, 03:50 PM
Danny B Danny B is offline
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Are the CBs truly tapering?

Here is a graph of the 10 year U.S. bond. https://editorial.azureedge.net/misc...9505989675.png
Keep in mind that things are predicted to blow up progressively worse when it passes 3%. So, are bonds going up because the CBs are talking up portfolio reduction OR, are they going up because fiscal stimulus is actually being cut back?
"But at 26-times GAAP earnings and 21.5-times trailing earnings--and even at 18.5-times next year’s ex-items earnings--the S&P 500 is pricing in a euphoria that is egregiously outlandish even for the carnival barkers on Wall Street.

It’s hard to come up with a better example for the market’s latest bubblelicious hysteria than Netflix. The company is projected to post operating free cash flow of about negative $9 billion over the five years ending in this year. Meanwhile, its market cap has soared well over $100 billion. At a PE ratio above 200, Netflix is burning through billions of dollars in cash each year. Yet, its billions of dollars’ worth of bonds are rated B+ by S&P. "
"Therefore, when the central bank bids disappear come this fall, the $230 trillion worth of global debt will have to stand on its own wobbly feet for the first time in many years. "
"In like manner, who is going to want to own a U.S. 10-year Note that yields 2.7% when the average was well over 7% from the years 1971-2000? Those years are the important ones to analyze because it was after the Fed closed the gold window"
"Interest rates are about to become unglued in a big way as this bond bubble explodes. Especially now that the Fed will be selling $600 billion of its balance sheet an annual rate come this fall; just as deficits climb to north of $1 trillion and the total U.S. debt has risen to 350% of GDP."

"And as risk premiums become paper thin, the stock market will fall precipitously; just as junk bond yields begin to soar. This will slam the borrowing door shut on high-yield issuances and send these debt-dependent companies into a tailspin. At the same time, every asset that was priced off of those ”risk free” sovereign bond yields, which provided countries the privilege that could only expected in the twilight zone, i.e., to make money by borrowing money,"

Carl Icahn has become a doomer, https://www.zerohedge.com/news/2018-...pay-price-1929
There has been TOO LITTLE emphasis placed on the effects of birth control.
"The population is graying quickly. The State Council said last year that about a quarter of China's population will be 60 or older by 2030, up from 13.3% in the 2010 census. Meanwhile, scrapping the one-child policy hasn't raised birth rates as high living costs deter larger families. Births fell to 17.2 million last year from 18.5 million in 2016."
PIOnline : Subscription Center

Blame it on the bots, https://sputniknews.com/business/201...t-plunge-bots/
Blame it on the drugs, http://www.thedailysheeple.com/thous...ug-test_022018
GREAT growth industry, "Sex trafficking—especially when it comes to the buying and selling of young girls—has become big business in America, the fastest growing business in organized crime and the second most-lucrative commodity traded illegally after drugs and guns.

As investigative journalist Amy Fine Collins notes, “It’s become more lucrative and much safer to sell malleable teens than drugs or guns. A pound of heroin or an AK-47 can be retailed once, but a young girl can be sold 10 to 15 times a day"
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Old 02-08-2018, 05:01 AM
Danny B Danny B is offline
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Armstrong,,,Wells Fargo on the chopping block?

Armstrong is still hard at work getting his revenge on the banks for throwing him in prison for several years. He has opened up Socrates at a level for the average investor. Remember, the banks can't make money unless somebody else loses money. About every 10 years, they take everybody to the cleaners. There is so much traffic trying to get into Socrates that ; "The Socrates site where the results are posted is on the Amazon Cloud. We had an urgent meeting today to run analysis as for why the system could not handle the massive traffic to the site over the past two days. We found out that it was pushed to 97% CPU capacity."
This is going to make it very difficult for the banks to suck in the muppets.

"So no, we cannot yet rule out a 2020 low. It all depends upon breaking 19,677.94. If that unfolds, then we are in for a major economic crisis on the Monetary Crisis Cycle going into that which began here in 2018 and goes into 2021 when it goes completely nuts. "

"And more than just coincidence on Monday that Powell was sworn in and the very same day the Dow dropped a record 1175 points.

The Fed needed to remind Trump who is in charge of the world finances so he doesn't think he is in charge of it."
Good riddance, Janet, you were a colossal failure, pt 1 – David Stockman
“Opioid Janet” got Wall St hooked on monetary heroin, pt 2 – David Stockman

The death of the “death of contagion” central bank meme – Tom Luongo Yep, volatility is back.
The FED wanted to cool down the markets but, not TOO cool.
"At one point the Dow, which represents only 30 stocks but is still a widely followed indicator, tumbled to a loss of about 1,600 points.

That’s as big of a decline as ever.
But then something happened. Someone arbitrarily and aggressively started buying stocks and halved the loss. Monday will still go down as a Wall Street massacre but that superhero buyer made it half as bloody."

The gold-price manipulators recently got taken to the cleaners. Is this a one-off deal? Is somebody trying to bring back a bit of honesty to markets? is Trump slowly draining the swamp?
Years ago, Russia defaulted on it's bonds and brought down Long term Capital Management. LTCM had 2 Nobel prize winners (economics) on it's board. They claimed that even in the whole future of the galaxy, the trades could never go bad. These huge losses threatened to bring down everything. The big banks coughed up the money to save the day,,, except for Bear Stearns. They refused. In the 2008 crash, they were eviscerated.

In the 2008 crash Lehman was killed off by Goldman Sachs and a couple of others. GS, et al refused to make bond payments that were owed and due to Lehman Bros. We had a GS guy as secretary of the treasury and he made sure that GS and a few others got money. Lehman was starved and strangled. Dick Fuld and the rest of the clowns at Lehman were CROOKED as could be. Were they killed off for this?

Moving ahead in time, Wells Fargo is a global hero when it comes to crooked business. But, times are changing,,, Maybe Trump.
Powell was sworn in AND, "Just days after the Fed slammed Wells Fargo on Janet Yellen's last day, by announcing an unprecedented enforcement action in which it prohibited the bank from "growing", effectively making it into a quasi-utility until it fixes its lacking internal control system and replaces much of its board, moments ago S&P added insult to injury by downgrading the largest US mortgage lender from A to A-, due to "Prolonged Regulatory And Governance Issues" with a Stable Outlook."
"On Feb. 2, Wells Fargo & Co. ("Wells") became subject to a consent order from the Federal Reserve that caps the company's asset growth until it further enhances its governance and compliance and risk management to the standards required by the regulator."

You can read the whole article but, it seems that somebody wants accountability.
If Wells has no asset growth, it can't really earn much. It previously laundered hundreds of $billions in drug money. This downgrade will most likely drive away investors who don't want to be caught up in big losses and possible fines for regulatory issues. Wells Fargo may be the next kill-job. CITI and GS and MS won't shed a tear.

"The Fed is already destroying money (they do this by not rolling over maturing bonds). Last week, the Fed reduced its balance sheet by $22 billion. While that doesn’t seem like much when you’re talking about a $4 trillion balance sheet, it was the Fed’s largest cut to date.

Funny how the market hit the skids just after this happened. But you haven’t heard the mainstream media mention that."
There are a LOT of people pissed off about big Pharma flooding the streets with drugs. Some professionals grabbed the head of A pharma,,, along with his wife,,,, zip tied them,,, hung them up and, strangled them.
I won't shed a tear.

"The U.S. Shale Industry hasn’t made any money producing oil since the industry took off in 2008. And it’s even worse than that. Not only have they not made any money, but they have also spent a lot of investor money (most that will never be returned) and added a massive amount of debt to their balance sheets.

According to the Financial Times article, In Charts: Has The US Shale Drilling Revolution Peaked?, they provided the following chart on the negative free cash flow in the U.S. Exploration and Production Industry:"
"Because shale energy industry is producing a grade of oil that has a very high API gravity (very light oil), we have to export more and more of it as our refiners can’t use it all. The notion that the U.S. decided to start export oil because we have become a leading oil producer is pure BOLLOCKS. The real reason the U.S. Government allowed the exporting of oil in 2015 was that our refining industry couldn’t use it all…LOL."

"There’s an old saying about attorneys. “If the facts are on your side, pound the facts into the table. If the law is on your side, pound the law into the table. If neither the facts nor the law are on your side, pound the table.” That can also apply to the California Public Employees’ Retirement System, as it pounds the table in response to a report about the way that CalPERS downplays its unfunded pension liabilities, which are obliterating local budgets."
CALPers is screaming that cities MUST raise taxes way up and give the money to CALPers.
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Old 02-08-2018, 03:56 PM
Danny B Danny B is offline
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,332
Saving the markets day by day,,, sovereign credit rating

Stock market getting smoked because inflation is coming back – Business Insider
We've seen $200 trillion of new debt pumped into the upper loop. That wasn't a problem. When a little bit of it bleeds over into the lower loop, THEN it is a problem.
2/08 US stocks fall hard at the open – CNBC cut off the heroin/Viagra cocktail and,,, see what happens. The PPT will have to ride to the rescue again today.
2/08 US 10-year Treasury yield continues rebound, nears 4-year high – CNBC This can't truly be called a rebound. More accurately, it is a suicide march.
2/07 Stocks erase sharp gains as wild ride on Wall Street continues – CNBC Hussman has shown that there will be no returns on stocks for many years. There is no reason to stay in the market.
2/07 World’s largest ETF hit by biggest four-day outflow on record – Bloomberg

2/07 Trump allies encouraging him to compromise with Robert Mueller – CNBC
Second Trump-Russia dossier being assessed by FBI | US news | The ...
Jan 30, 2018

Did you notice that; the more / longer that "they" investigate Trump, the more dirt they find on the Dems? Not just Dems, Steve Wynn is in deep do-do. The Russia investigation has poked several holes in the bottom of the swamp. Killary is more toxic that cyanide.
2/07 Jeff flake blasts Donald Trump ‘treason’ comments – Time He blasts the comments. The cites of treason still stand,,, according to U.S. law.

The U.S credit rating agencies are PAID by the companies and entities that they rate. The agencies marked giga-tons of sub-prime debt as being AAA because the companies that sold it were AAA. They claimed innocence when it All collapse in 2008.

" S&P had announced a negative outlook on the AAA rating in April 2011. The downgrade to AA+ occurred four days after the 112th United States Congress voted to raise the debt ceiling of the federal government by means of the Budget Control Act of 2011"
"Moody's first assigned the United States a AAA rating in 1917"
S&P caught a lot of flak after they downgraded U.S. debt. The agencies now know that they can downgrade anything except for sovereign debt.
Not ALL rating agencies are in America.
"Dagong Global Credit Rating Co., Ltd. (“Dagong”) has decided to downgrade both the local and foreign currency sovereign credit ratings of the United States of America (hereinafter referred to as "the United States" or “the US”) from A- to BBB +, and each with a negative outlook."
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