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Old 03-22-2018, 03:06 PM
Danny B Danny B is offline
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Location: L.A. Ca.
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The CBs arrive at the event horizon

The Central banks, especially the FED have painted themselves into a corner. Their actions have doubled the cost of everything in the West, Competition from low-wage markets like China, India, Brazil, Viet-Nam, et al has gutted the western economies. The Western CBs have bought up EVERYTHING to maintain the price structure of the financial markets.
"By 2017, the Bank of Japan was the owner of three-quarters of Japan’s exchange-traded funds, becoming the major shareholder trading in the Nikkei 225 Index."
"The Swiss National Bank is expanding its quantitative easing policy by including international investments. It is now one of Apple’s major shareholders, with a $2.8 billion investment in the company."

The CBs have tried to hold up the value of all western markets. There was much speculation as to whether or not, the FED was going to throw in the towel. They can raise rates and bring down much of the economy BUT, they will attract investment capital. I have NO idea where this capital will come to rest when the whole economy blows.
There has been endless speculation as to whether or not they will actually raise rates.
3/22 Fed raises rates 25bp – where are we in the market cycle? – CNBC
3/22 U.S. Fed may hike rates up to four times this year – Bloomberg

The FED is a slow learner. They stuck with QE in spite of the fact that it benefited the upper loop at the expense of everything else. US GOV wanted QE to inflate away the burden of debt service, hoping to get price inflation from currency inflation. Nowhere in the rule book did it mention that you can't get price inflation without a WAGE-price spiral.
The FED is taking baby steps but, it is raising. The BIS insists that the CBs must stay the course. Super Mario seems to have misplaced that memo.
The 2008 rescue was a temporary measure that was doomed to failure. It had no way to address the disparity in wages between the East and the West. It had no way to address the disparity in the cost of finance between the East and the West. As transportation and communication got ever-more cheaper, the imbalances got ever-more strained.
The corporatocracy depressed wages to maintain profits. This was short-sighted because they impoverished their customers.
The Central Bank Bubble: It Will Be Ugly - Gold Telegraph

3/22 White House to penalize China for intellectual theft – CNBC
Chinese apply for more patents than U.S., Japan, Korea, Europe ...
Dec 6, 2017

3/22 Twitter CEO says bitcoin will become world’s ‘single currency’ – Coin Telegraph
3/21 Bitcoin proving to be nothing more than a con – NY Post

3/21 U.S. mortgage refinancing drops to nine-year low as rates rise – Bloomberg No problem, the hot money pays cash.
3/21 U.S. starter homes scarcer, pricier, smaller, more run-down – Bloomberg
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Old 03-23-2018, 02:45 AM
Danny B Danny B is offline
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Creating new money proportionate to the growth in prductivity

If money is pumped in to the economy via the upper loop, the bankers and speculators are happy. If money is pumped into the economy via the lower loop in return for productive work, the welfare of the general population improves. Ben Franklin said that the colonies just printed up whatever money was needed to keep the economy circulating. Adolph Hitler instituted a program that paid for civil works and other productive enterprise. Just as Ben got a war, Adolph got a war.
Socialism never works because it kills motivation. The system used by the colonies paid people to work. You still had to be motivated. If a top-down banking system steals half of the proceeds of your labor, this too kills motivation.
With our current system, the money is pulled away from the producer and, locked away in financial instruments. In recognition of this fact, there are proposals for a universal basic income. The State and the bankers only have whatever money they can squeeze out of the productive loop. This has crashed and, they need to print up gobs of money to make up the difference. The lower loop just can't afford the upper loop. The UBI would reflate the lower loop so that the State and bankers could siphon off enough money to keep them going.

OK, how much money should be printed to reflate and maintain the lower loop?
"In the early 19th century Guernsey was mired in poverty with narrow mud roads, little employment and a declining population. The island had a debt of £19,000 which required the payment of interest amounting to £2,400 out of an income of £3,000 per annum. The Guernsey government printed £6,000, of which £4,000 was used to repair the infrastructure. Each year more money was printed which was used in maintenance and other social improvements such as colleges of education. By 1958, over £542,000 had been printed yet the island did not undergo any inflation."

"The proposal here is that currency should be directly related to the Balance of Payments (BOP), i.e. the productive capacity of the nation. Britain’s BOP was nearly 6% in deficit in 2016. For many decades it has been in deficit and yet, for the reasons mentioned above, the £Sterling has been so inflated that it is less attractive to manufacture in UK as compared with making in China or the East. If in the past, £Sterling had fallen in direct relationship to the nation’s productive capacity, the price of manufactured goods would have remained competitive and businesses would have invested in UK industries. If printing money were carried out to an uncontrolled level, the nation would be unable to afford to import essentials"

"Printing money for investment cannot be carried out indiscriminately and the establishment of a ratio between the productivity of a nation and the amount of capital growth would mean that as money was printed, the currency would be devalued. Devaluation would have the effect that inflation would rise axiomatically which would reduce imports as their costs rose. This would provide a further discipline to limit the excess printing of money."
Why it's time we manufactured money as we manufacture goods - Director of Finance Online
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Old 03-23-2018, 03:24 AM
Danny B Danny B is offline
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GS, the overlord,,, dollar shortage in Europe

"Virtually every position in the key financial markets in Europe and American are all coming from Goldman Sachs. There is something seriously wrong. Such people do not leave the highest paying jobs to work for peanuts.
There has NEVER been any investigation of former Goldman Sachs people who take strategic government positions and alter policy only to leave. Robert Rubin ushered through the repeal of Glass Steagall and then resigned. Hank Paulson saved AIG whose default would have taken down Goldman while he eliminated two top Goldman competitors over who there was the authority to bailout – Lehman and Bear. There was no authority to bailout an insurance company operating in London no less to skirt US regulation
Yet the burning question is simple. Is Goldman or its people going just too far? Their “former” people seem to be controlling the world financial system.
It seems like it’s only a matter of time before the conspiracy theories finally give up on bashing the Rothschilds and open their eyes to who really has the power to be a mover and shaker."

"This is the same reaction we should expect from Brussels and it is a serious threat to all member states to allow Brussels to create its own standing army. They will follow the same pattern and no doubt one day invade a member state that attempts to leave."

"One billionaire can purchase most of the government. The billions of dollars that the US taxpayers give to Israel each and every year purchases the rest of the government. The military/security complex, the energy, mining, and timber industries, the pharmaceuticals, agri-business, Wall Street, the big banks and all the rest make American democracy a hoax."

"European lenders are short of dollar liquidity, according to a review by Raiffeisen bank. The analysts stress that the US currency is moving back home and that is causing the deficit.

Toughening of US monetary policy, along with a sharp increase of the key rate, has ratcheted up the situation, according to McKinnon. The US Fed has been shortening the balance, withdrawing dollar liquidity out of system, pumped up after the financial crisis."
Yep, America is actively trying to crash the Euro..

3/22 White House slaps China with tariffs, “first of many” – CNBC

China opens a Yuan denominated oil futures at the end of March. America rushes to pile on a bunch of new tariffs, at the same time.
Imagine 2 people standing in a pool of gasoline,,,, both throwing lighted matches at each other.
Mr. Welby writes about consumer debt, https://www.independent.co.uk/news/b...-a8266131.html

3/22 Funding stress contagion spreads – European banks 11-month lows – Zero Hedge That's what happens when the FED sucks the dollars out of Europe.
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Old 03-23-2018, 03:25 PM
Danny B Danny B is offline
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stuffing money down a rat hole

The West, Japan, and Australia had a high standard of living. The low-wage countries pulled the rug out from under their wage structure. Automation did the same thing. The rich sucked out the money from the majority using regulatory capture. BUT, the rich can't actually spend this money. They circulate it round and round in financial instruments.
As the whole world grinds down (or up) to a global mean wage, there is little in the way of profit margins to keep the corporatocracy profitable.
The West slides down to a survival economy. Formerly, 68% of the U.S. economy was driven by the consumer.

The "elites" in the corporatocracy demand ever larger bailouts. They demand ever stronger control of the State. Goldman Sachs is trying to survive by squeezing the State ever harder. The pillage of Greece is a perfect example. When Greece could not service it's debt to private banks, Germany made good on the debts and magically made the German GOV a debt collector.
The world slides down to a survival economy. The State tries to make up the difference by injecting money into the upper loop. This has done nothing for wages so, the whole consumer economy just keeps falling.

Meanwhile, the State incurs enormous debt.
"In such a situation, Keynesian economics states:

“Government policies could be used to increase aggregate demand, thus increasing economic activity and reducing unemployment and deflation. Investment by government injects income, which results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth. The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment.”

Keynes’ was correct in his theory”

In order for government deficit spending to be effective, the “payback” from investments being made through debt must yield a higher rate of return than the debt used to fund it."
The problem is that government spending has shifted away from productive investments that create jobs (infrastructure and development) to primarily social welfare and debt service which has a negative rate of return.

According to the Center On Budget & Policy Priorities, nearly 75% of every tax dollar goes to non-productive spending. "
As long as the State injects money into the upper loop, it accomplishes noting positive for the economy.
The Debtor's Prism | RIA

Ok, so how much is the State injecting? How about $72.8 billion in 24 hours.
This unfolding trade war is still something of an enigma at this point.
Here are a series of cute graphs that show pretty well just where we are.

3/23 China intervenes in stock market after tariffs trigger rout – Bloomberg
3/23 Asian stocks slide as trade tensions escalate – CNBC

2 deaf men shooting at each other in a dark room.

Last edited by Danny B; Yesterday at 12:03 AM. Reason: ThE usual
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Old Yesterday, 05:00 AM
Danny B Danny B is offline
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 3,616
Tariffs,,, rising dollar,,, India and NPLs

The Tariffs are already creating problems. One that hasn't surfaced yet, "Trump's tariffs would automatically trigger penalties against the U.S. in the World Trade Organization (WTO), and might even lead to the WTO's collapse, ..."
These organizations—the Consumer Technology Association (CTA) and the National Retail Federation (NRF)—represent more than 40 trade groups.... think that the tariffs are going to backfire.
"Jane Foley, Senior FX Strategist at Rabobank suggests that a trade war between the world largest economies would create a whole catalogue of secondary effects that are set to resonant through most of the global economy and as a consequence they see several other currencies as more vulnerable than the USD over the medium-term."
No kidding. This is a war on the Euro.

Martin Armstrong
Bloomberg has reported that dollar bulls are nearly extinct down to just 2.3 %. The majority, which is always wrong, are all focused on the nonsense of the budget and the current account deficits.
When you actually correlate the Balance of Payments with the dollar, something amazing emerged. The dollar rises with the balance of payments going negative. Gee whiz! That is against all perpetual bear’s reasoning.
The biggest trade deficit of the USA is not with Europe, but China, who just so happens to be the LARGEST investor in US government bonds. That means they collect the lion share of interest expenditures.
The trade deficit with China (with includes interest expenditures that flow to China) stands at 123,676 billion
I have been warning countless times that the Balance of Payments is by no means simply TRADE. It includes all flows of capital outward. That includes interest.

The S&L crisis was caused by bankers making good ol boys loans to their cronies. 1,000 went to jail. New laws mean that they are no longer at risk of prosecution if they repeat this.
India is famous for corruption.
"the majority of the country’s financial institutions are government owned, with almost every public bank holding overwhelming percentages of NPAs(Non-Performing Assets). That being said, if these public sector banks faced bankruptcy it would mean a nationwide credit crunch worth 70% of the entire banking system."
"India’s infamous crony socialism has seen the federal government repeatedly bail out irresponsible, yet politically connected, industry giants after every cycle of bankruptcy, only to again recapitalize them later on."

3/24 Here’s how China could really hurt Trump in a trade war – Fortune
3/23 US stocks plunge, now in correction – CNBC
3/23 China responds to Trump tariffs with list of 128 US products to target – CNBC
3/23 Tariffs – reverse gear in the economic transmission – SWP Cayman
3/23 Rising U.S. bank funding costs: five pressure points for markets – Reuters
3/23 Half last week’s record stock inflows just got yanked back out – Bloomberg
3/23 High-yield outflows begin to take a toll on new issue market – Bloomberg

This is called volatility.
3/24 Trade swords sharpened, belly flop reporting – Mish
3/23 China intervenes in stock market after tariffs trigger rout – Bloomberg

The stock market peaked a while back. This tariff deal will probably send the markets down pretty fast. It is hard to say just when the fall will take a break.
The U.S. debt is growing by $trillions. Just how long can this go on before bond buyers abandon sovereign debt?
3/24 Edward Snowden: public ledger is bitcoin’s big flaw – Coin Desk
3/24 Bitcoin could become illegal almost everywhere – Science Alert

The Venezuelan Bolivar has lost 99.99% of it's value, Venezuela knocks three zeros off ailing currency amid hyperinflation | Gold Anti-Trust Action Committee
3/23 Should Democrats embrace the center or abandon it? – NY Times I vote for mass execution.
One from the doomers, Evolutionary dead-ends – Collapse of Industrial Civilization
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