Economic pressures

[Danny B]

Will it be called revolution or civil war?

Armstrong talks civil war. What would that look like? There are about 225,000 armed federal Agents. NORTHCOM has about 80,000 soldiers already earmarked for domestic civil unrest. Military Intervention in Civil Disturbances - The Black Vault.
The police and national guard have been militarized.
"There were 13.7 million hunters in the United States over age 16 -- 12.7 million of whom used rifles, shotguns or handguns for hunting, according to the U.S. Fish and Wildlife Service.Feb 4, 2013
U.S. Gun Owners Outnumbered Hunters by 5 to 1 in 2011 - CNS News"

"According to the Congressional Research Service, there are roughly twice as many guns per capita in the United States as there were in 1968: more than 300 million guns in all.

Gun sales have increased in recent years. According to the Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. gun-makers produced nearly 11 million guns in 2013, the year after the Sandy Hook elementary school massacre. That's twice as many as they made in 2010."
" As of 2014, the VA estimates there were 22 million military veterans in the U.S. population. If you add their figures on veterans to the active personnel numbers mentioned above, 7.3 percent of all living Americans have served in the military at some point in their lives."
Any participants in action against the GOV would NOT have any protection under the Geneva convention. Whoever bought 1.2 billion rounds of hollow point ammo must have had this in the back of their minds. As a non-military combatant, you would have no protection under the U.S. constitution.

There is no possibility of martial law AND a healthy economy. That would compound the problems until no cities were left.
Good info on a sovereign citizen / Stateless person.
These Men Are Training To Put You and Your Family In a FEMA Camp - Dave Hodges - The Common Sense Show
You acknowledge your owners OR, you lose ALL rights.

[Danny B]

How long can the FED finance the whole economy?

Economics is NOT a science. The IMF learned that the hard way; IMF admits disastrous love affair with the euro and apologises for the immolation of Greece
Peter Schiff, "HERE IS THE REALITY: The world has caught on, and the jig is up. Under Obama’s stewardship, the U.S. national debt has gone from $10 Trillion, to what will be $20 Trillion by the time he leaves office, with nothing more than 100 MILLION Americans out of work, and 50 MILLION in poverty and on food stamps. That’s what cheap money bought for us. It was all “borrowed” cheap money too, making it infinitely worse, and the world is tired of lending."
"-In America today, nobody has a job in one out of every five families."
Bye Bye Middle Class: The Rate Of Homeownership In The United States Has Hit The Lowest Level Ever

So, GOV can create debt money and ever-larger deficits OR, it can print debt-free money to support those who have no job niche.

Venezuela is putting people back to work; Forbes Welcome
Evidently, American families have extra money to spend, "It says Clinton is suggesting a $350 billion hike in income taxes by limiting the itemized deductions for families, a $275 billion hike through “undefined business tax reform and a $400 billion “fairness” tax hike.
Read more at Americans ‘facing $1 trillion tax hike’ with Clinton

Socialism in Illinois; 7/29 Cook County pension liability skyrockets from $6 to $15 billion – Breitbart
7/29 We have never had so many traders saying “we are totally lost” – Zero Hedge
7/29 With some luck, Trump will destroy the republican party – Casey Research
7/29 Get ready for the nastiest, most unpredictable campaign you can imagine – McClatchy DC
First, the gloves come off,,,, then, the knives come out.

When the Bretton Woods agreement was inked, the die was cast. The dollar was linked to gold BUT, controlled by politicians. The inevitable happened. Politicians naturally inflate the supply of currency. As various States escaped the destruction and doldrums created by WW II, they bought dollars as a store of value. They demanded more and more dollars. This worked for a while until the politicians created the warfare-welfare State. We went broke and the gold left. We gave the Saudis an offer that they couldn't refuse and bought a few more decades.
The FED injected trillions into the economy via the junk-bond market and goosed domestic oil production. This worked for a while but, it upset the whole apple cart of oil stability. THAT wiped out the apple cart of financial stability by the crash of the junk-bond financing.

Investors left the bond market so, the FED bought U.S. GOV debt. Investors left stocks so, U.S. GOV bought up stocks. GOV has goosed and inflated everything that it touches. so that the upper loop doesn't lose any money on investments. This has made prices too high for those in the lower loop.
Education, Housing, health care, etc have all received huge doses of GOV money to keep them solvent when the consumer couldn't do it.
Our wages have been stagnant since 1970, so GOV prints up the difference to keep the upper loop from losing money.

We have stopped slurping up new debt-money so, GOV is proposing debt-free money from helicopters. Wait and see.

[Danny B]

Gold = no interest

Gold is considered a "dead asset" because it pays no interest. BUT, that isn't the whole story.
"As of month-end today, gold is up over 27% from its Dec-15 lows.

This a major milestone – any time gold has managed a move of at least 25% off a major low, it has continued higher every single time with incremental gains ranging from 21%-412%, with the average totaling 175%."
Gold Passes A Major Milestone | Zero Hedge

Paul Volker raised interest rates WAY up to pry investors out of gold. Yellen doesn’t have that option. In the "flight to safety" investors have pushed so much money into Treasury bonds that this has crashed yield below zero. Treasury bonds are considered zero risk even though ALL States eventually default. The problem comes in that all interest rates are indexed to the 10 year treasury note. No invest can escape the black-hole suction of the 10 year treasury. Investors move into riskier and riskier investments in a search for yield that isn't sucked down by the 10 year note.

7/30 The Fed is preparing for negative rates – Zero Hedge
Negative interest rates: necessary evil or symbol of greed? – Telegraph
7/30 Gundlach: “Sell everything, nothing here looks good” – Zero Hedge
7/30 This is everything that is wrong with negative interest rates – Business Insider
7/29 Negative interest rates: spreading like a financial cancer – Seeking Alpha

The law of supply-and-demand has caught up with credit creation. The Central Bankers have pumped out mountains of debt notes. They just won't ever be redeemed. Bernanke is pushing "perpetual bonds" where it is acknowledged that they will never be liquidated. Bonds are negative yield PLUS, the loss from price inflation.
American investors are starting to see that gold with no interest income is superior to notes with negative interest.
https://srsroccoreport.com/wp-conten...and-Montly.png

Western Central banks sold off many tons of gold in an effort to make it look bad and scare off investors. This failed for the most part because they couldn't scare off the Chinese and Indians. They created "paper gold" to massively grow and dilute the apparent supply.
The old "London Gold Pool" eventually crashed because they dealt with just physical gold. Paper gold has brought a longer life to their gold price manipulation. This is winding down as physical gold becomes more scarce.
Contrary to all of their original plans, Central Banks have started buying gold again after decades of selling.
Keep in mind that CBs have unlimited free money. They could buy tulip bulbs if they wanted. For them to buy gold, risks sending a message to investors that gold investments are a good idea.
The price of gold rises as confidence in gold rises. There is little confidence in NIRP bonds that are a loser right from the start.
Gold has decisively broken away from oil and commodities. That is because gold is NOT consumed. That gives it the greatest price stability. The stock-to-flow ration. Gold is generally an indication of the value of a currency. It is the currency that rises and falls. Gold is also an indicator of confidence in world stability.
ZIRP was a subterfuge from the CBs to drive money out of savings and into investment. This didn't work because no additional investment was necessary or viable when middle-class America lost their job. America has over 1 billion sq. ft. of empty retail space. Why bother to invest in a growing market when it just doesn’t exist?
To make matters worse, ZIRP killed all interest-income without accomplishing one shred of stimulus to the producing economy.

"As of month-end today, gold is up over 27% from its Dec-15 lows."
The institutional investors are losing lots of money every day. When they move to gold, there will be some real fireworks.

"You can't save your economy by destroying your financial system,"
"Gundlach reiterated that gold and gold miners are the best alternative to Treasuries" 'Sell everything,' DoubleLine's Gundlach says | Reuters

Edit; The Economist magazine is known as being a mouthpiece for the PTB. "Citing a 1988 cover of The Economist depicting a phoenix rising from the ashes of the U.S. dollar while wearing a gold medallion with the date 2018 stamped on it," Insider: “Very Sophisticated High Net Worth Investors Are Buying Up Physical Precious Metals� | Ready Nutrition

[Danny B]

Demographic crash,,,,, de-dollarization causes the dollar to rise

"The good news is since SS's inception in 1935, the program collected $2.9 trillion more than it paid out. The bad news is that the $2.9 trillion has already been spent." "Time's Up - The Pain Must Begin Now" | Zero Hedge
Excellent article on the demographic crash.

Population growth vs age sectors vs FED funds rate, https://econimica.blogspot.com/2016/...93149364091261

" Despite paying $81 billion in restitution & penalties, banks are still gambling with your money. Congress recently passed a new spending bill that allows banks to once again use your deposited money to bet on those insanely risky derivatives that caused the global financial collapse of 2008!"
https://www.wholesaledirectmetals.co...t=WNDsponsored

Auto loans are growing like crazy. http://wolfstreet.com/wp-content/upl...ns-2016-Q1.png
It's a huge credit bubble and it's starting to go bust; The Massive Prop Barely Holding up the US Economy Cracks | Wolf Street

"But before the reset can happen Neumeyer, who recently founded First Mining Finance and has partnered with billionaire alternative asset investors like Eric Sprott and Rick Rule, says that foreign creditors must first deleverage their U.S. dollar debt, a move that is happening right now and is evidenced by the recent strength of the U.S. dollar.

Once these U.S. debt holders unwind their positions, however, the dollar will be allowed to crash and we should prepare for a total financial, economic and monetary realignment."
"The view on the strength of the dollar recently is the fact that it’s short-term. You’ve got so much U.S. debt out there and governments are now getting rid of their U.S. debt and converting all the debt to local debt… that’s causing a huge demand for dollars in order to make that conversion, so this whole dollar rally is basically a deleveraging against the U.S. dollar… you’re not seeing that story showing up anywhere in North America."
"If Neumeyer is right, and all the signs suggest his assessment is fairly accurate, then the recent strength of the U.S. dollar will be short-lived. Once deleveraging by governments and central banks has been completed they will unleash an economic, financial and monetary storm that will change the very fabric of the global order."
http://www.shtfplan.com/headline-new...banks_04052015

[Danny B]

Links for reading

Once again, my long detailed composition disappeared. I'll just do links.
Minsky?s moment | The Economist

Credit Bubble Bulletin: Weekly Commentary: Bubble Battles

Hussman Funds - Weekly Market Comment: Impermanence and Full-Cycle Thinking - August 1, 2016

European Bank Bloodbath Destroys Stress Test Credibility | Zero Hedge

[wayne.ct]

Deleverage

"But before the reset can happen Neumeyer, who recently founded First Mining Finance and has partnered with billionaire alternative asset investors like Eric Sprott and Rick Rule, says that foreign creditors must first deleverage their U.S. dollar debt, a move that is happening right now and is evidenced by the recent strength of the U.S. dollar.

I'm curious if you could elaborate or explain the notion of deleverage in the above sentence.

These are my assumptions. A foreign creditor is an entity that has a piece of "paper" that says the entity has a "credit" in a US financial institution. They have a right to collect income in USD from the relationship. They realize that over the long term they are going to get screwed so they want to get out of the deal, i.e. collect their money in some other form, British pounds, Euros, or whatever. Are they really a creditor? If they "sell" this future income, they should get something valuable in return, perhaps some income in the form of petroleum or wheat. It seems this would have a negative effect on the strength of the USD, not a positive effect. This needs to be explained if I am to believe Neumeyer because is seems to be backward. Perhaps he really means foreign debtors. The US, i.e. the IMF, has been giving USD to foreign entities and governments, with strings attached, for years and years. They have to come up with USD to meet their obligations. To buy off their creditors they need USD, which has the effect of pushing up the value of USD. When they (eventually) balance out their obligations, credit vs. debit, they can thumb their noses at the US. Then, the USD will collapse. The US realizes this and wants to keep the USD relatively weak. That, of course, is exactly what they have been trying to do and will, it seems, continue to do.

I obviously see things my own way, but I'd like to understand it. Thanks for listening.

[Danny B]

Shunning the U.S. dollar

Because of the Bretton Woods agreement, the world became flooded with U.S. dollars. This enormous issuance created a lot of stability. No actions outside of the Federal Reserve could create much volatility. The higher the volatility of a currency, the more interest a loan originator would demand. A company could issues dollar-denominated bonds at a lower interest rate because of this stability. BANAMEX, for instance, could sell bonds paying 12% in pesos OR 4% in dollars.
"By borrowing dollars at several percentage points below the prevailing interest rate in their domestic currency, CEOs have pepped up profits in the short term."
"Dollar borrowing is everywhere, but the biggest growth has been in emerging markets. Between 2009 and 2014 the dollar-denominated debts of the developing world, in the form of both bank loans and bonds, more than doubled, from around $2 trillion to some $4.5 trillion, according to the Bank for International Settlements"
"But finance rarely offers a free lunch. The worry is that tumbling energy prices mean firms like Gazprom and Petrobras now have much lower dollar income than expected when they took on debts. Others, such as Lodha, Eskom and Yasar, have few dollar earnings. Taking on debt just before a shift in exchange rates can be painful. In 2010 a Turkish firm borrowing $10m via a ten-year bond with a 5% coupon could expect to pay 22.5m lira ($15m) over the life of the bond. But the lira is down 43% against the dollar since then (see chart 2); the payments are now over 39m lira."
Feeling green | The Economist

So, even though the U.S. dollar has great stability, the energy markets can bring great instability to everybody. The resource currencies like Venezuela and Saudi Arabia are heavily affected by the drop in oil prices. It is just below $ 40 and expected to cause further bankruptcies in oil exporters.

The problems start when there is a shortage of dollars to service dollar-denominated debt. In the 2008 crash, the FED sent a LOT of dollars to Europe to stave of defaults;
"Page 131 – The total lending for the Fed’s “broad-based emergency programs” was $16,115,000,000,000. That’s right, more than $16 trillion. The four largest recipients, Citigroup, Morgan Stanley, Merrill Lynch and Bank of America, received more than a trillion dollars each. The 5th largest recipient was Barclays PLC. The 8th was the Royal Bank of Scotland Group, PLC. The 9th was Deutsche Bank AG. The 10th was UBS AG. These four institutions each got between a quarter of a trillion and a trillion dollars. None of them is an American bank."
https://johnhively.wordpress.com/201...litical-power/

Only the FED can create dollars to service dollar-denominated debt if the market doesn't have them. For many States, this is just TOO MUCH foreign control. If the value of a currency changes after you take out a loan, you have a big problem repaying it. One solution is a "currency swap". 2 States swap currency at an agreed upon rate. Each holds the other States currency. It doesn't really cost anything. When it comes time to pay a bill, you just use your stash of foreign currency.
https://en.wikipedia.org/wiki/Intern...f_the_renminbi

China has done currency swaps with dozens of States. They bypass the dollar AND they avoid volatility in exchange rates. As new contracts are written in local currencies, dollar contracts are shunned. This gives the FED far less power when it comes to demand for dollars.

With a swap arrangement, the treasury just ticks off an amount from the total held and that is that. It isn't financed through a bank. The bigger a deal is, the less likely that a bank will be involved.
The banks seriously hate swaps AND barter BUT;
"Iran, Turkey, India, and China have suggested using the barter system in the food industry with Russia to avoid transactions in dollars,"
Just imagine, a total population of over 2.3 billion and they want to barter.

As trade shuns the dollar, States don't need to hold dollar bonds to pay for oil and other imports. They don't roll-over their treasury holdings. The FED is buying all new issuance but, they don't advertise it. The U.S. treasury has come up a bit short this quarter and they need a bit more spare change; US Treasury to Borrow More Funds Than Anticipated
Our trade deficit is $ 1.5 billion every day and I expect us to get cut off at some point. Between swaps and barter, there is far less use of the dollar. If nobody wants dollars, they will demand gold for their exports.

[Danny B]

Italian default, oil price drop,,,,Curing too much debt with even more debt.

The Italians are pretty laid back when it comes to corruption.
"The Italian banking sector has about 360 billion euros of "bad" shares, which is about 20% of the total loan portfolio. About 200 billion euros of those are "irretrievably bad,"
"The oldest Italian bank, Monte dei Paschi di Siena, is on the verge of bankruptcy, the expert said. The absolute amount of the bank's "bad" loans amounted to 47 billion euros, which is more than 40% of the loan portfolio."
Mamma Mia: Italian Banks on Verge of Collapsing Entire Eurozone Financial System
"In total, the Italian banking system has €360 billion in nonperforming loans"
"Supposedly, a €1.6 billion investment into a mezzanine tranche of Monte dei Paschi from the €5 billion Atlante (Atlas) rescue fund is all it takes to cure some €50 billion in nonperforming loans at the bank.

In total, the Italian banking system has €360 billion in nonperforming loans and Atlas is supposed to take care of the entire mess."
https://mishtalk.com/2016/08/02/euro...n-bank-rescue/

"Meeting in a location better known for its surfing and temples than debates on financial safety nets, policy makers from Switzerland to the Philippines agreed that conventional monetary policy alone is no longer enough to manage growth. "
They never mentioned automation and VERY low wages as a problem. Nor, did they mention the demographic crash.
Central Bankers Float New Currency System, Safety Net at Confab - Bloomberg

"CENTRAL BANKERS FIGHTING AN UNPRECEDENTED GLOBAL SLOWDOWN"
"Desperate attempts by both countries have been unsuccessful in altering the downward trajectory which is steadily gaining momentum."
The ECB and BOJ are pumping in $ 160 billion a month of new DEBT and they can't understand why the system is still going down. Financial Repression Authority
"In an article posted today, Fitch agreed finding that a reversion of rates to 2011 levels for $37.7 trillion worth of investment-grade sovereign bonds could drive market losses of as much as $3.8 trillion." SO, "they" can continue with ZIRP and wipe out everything under the sun that depends on interest income OR, they can wipe out every debt instrument. Fitch Sees $3.8 Trillion Of Losses For "Investment-Grade" Sovereign Bond Investors | Zero Hedge

"Overall, the price of oil has fallen a staggering 21 percent since June 8th"
"During the first four months of 2016, approximately 35,000 jobs were lost at Texas energy companies. Globally, more than 290,000 energy jobs have been lost since the price of oil started falling back in 2014." WELL, those people aren't going to be buying a lot of gasoline.
http://theeconomiccollapseblog.com/a...he-u-s-economy

8/03 Crude is going lower, and equities will follow suit: BofAML – CNBC

[Danny B]

The banks are evaporating

"They" don't want investors to lose confidence in the banks so, they kicked out 2 of the biggest banks to maintain the rosy numbers of the index.
Credit Suisse, Deutsche index exclusion another blow to European banks | GEAB
The energy markets are dragging down everything. Oil went below $ 40. Donald Trump Warns Americans To Get Out Of The Stock Market As The Dow Falls For A 7th Day In A Row

The cheerleaders are not cheering any more; https://www.rt.com/business/354246-a...stocks-market/
"European bank stocks have crashed over the past couple days. Yesterday, every major European bank stock ended the day down. Several fell more than 5%. A few plunged more than 10%."
Why These Huge Bank Stocks Could Go to Zero | Casey Research
"According to Bank of America (BAC), European banks could lose as much as €20 billion per year by 2018 if the ECB keeps rates (NIRP)

"Unbiased private-sector efforts to calculate the real rate of inflation have yielded a rate of around 7% to 13% per year, " "2. Global investors might start demanding yields on Treasury bonds that are above the real rate of inflation. If inflation is running at 7%, then bond buyers would need to earn 8% per year just to earn a real return of 1%."
"4. Any serious decline in private and state borrowing would implode the entire system. Recall that a very modest drop in new borrowing very nearly collapsed the global financial system in 2008-09, as the whole system depends on a permanently monstrous expansion of new borrowing to fund consumption, student loans, taxes, etc."
http://www.oftwominds.com/photos2016...redit1-16a.png
http://charleshughsmith.blogspot.com...ion-would.html
The four stages of monetary madness; http://www.24hgold.com/english/news-...ael+Pento&mk=1

"The General Accountability Office’s audited financial statements show that the federal government has a net worth of negative $18.2 trillion. (Yes, with a ‘t.’)

These numbers are just the tip of the iceberg of the federal government’s dismal fiscal condition. Using figures provided by the Congressional Budget Office, Bloomberg has calculated a “fiscal gap” amounting to an incredible $222 trillion." Mind the gap.
http://www.nestmann.com/will-a-globa...f#.V6NT5I9xjFY

We went off the gold standard and the money (debt) supply grew by leaps and bounds. http://davidstockmanscontracorner.co...netary-infamy/
OK, so everything is leveraged up. If credit growth is runaway, just how much money is actually in the banks? If the credit bubble gets deflated, how much is left over after the crash?
http://data.worldbank.org/indicator/FS.AST.PRVT.GD.ZS
It appears that the banks are being stripped or what little capital they previously held. Between that and non-performing loans, there is noting left but an empty building. GOV is the mega-parasite and GOV forced interest rates to ZERO. GOV is forcing the FED to create ever-growing piles of debt. What happens to the mountain of debt held by the FED if the banks close? The banks have almost no wealth left. GOV is sitting on a mountain of anti-wealth.
When the banks close, it will be shown that the systemic debt is far greater than any remaining wealth. Nobody will be making withdrawals.

[Danny B]

Margin debt has reached it's limit

We have a globalised economy with globalised wages. This can't possibly support the credit bubble. Japan is considering mandatory wage hikes. Then, what do they do when they lose market share to low-wage producers?
Japan Proposes "Wage Controls" As Abenomics' Desperation Measure | Zero Hedge
The boneheads can't seem to do anything about their falling population so, they look for other stupid solutions.

EBITDA = earnings before interest, taxes, depreciation, and amortization
" The median debt-to-EBITDA ratio of the non-financial companies in the S&P 500 has reached 2.3x, a measure unmatched since 2000, which is the earliest year that we have reliable data.

In other words, the highest in history. Here is Barclays' conclusion:

"Similar to our view on payout ratios limiting dividend growth, we believe debt-to-EBITDA has reached a point where it is becoming a constraint on additional leverage."
http://zerohedge.com/sites/default/f...%20ratio_1.jpg
Debt-To-EBITDA Ratios Are Now The Highest In History | Zero Hedge

So, what happens when companies can't leverage up any higher?
" What Happens When Rampant Asset Inflation Ends?

The collapse of asset inflation will implode all the fiscal and financial promises based on ever-inflating assets."
"As asset inflation takes off, the capital gains attract more capital (never mind if yields are low--we'll make a killing from capital gains as the asset inflates further) which creates a self-reinforcing feedback: the more assets inflate, the more attractive they become to capital seeking any kind of return."

The entire stock market is floating on margin debt.
http://www.oftwominds.com/photos2016/SPX-margin.png
"The insanity of these two strategies is no hindrance to their implementation.The collapse of asset inflation will implode all the fiscal and financial promises based on ever-inflating assets and reveal the unsustainability of the status quo's strategy of substituting debt and asset bubbles for stagnating real income." Ah yes,,, income.
oftwominds-Charles Hugh Smith: What Happens When Rampant Asset Inflation Ends?

The FED can print up a $trillion here and a $ trillion there. BUT, it can only support stock valuations to a certain point. Earnings have crashed and the PTB are running out of lipstick to put on their pig. Margin debt will crash with valuations. When $ 500 million in margin calls go out, nobody will be able to sell anything except gold. The ongoing crash in oil isn't helping the banks or the stock market.

[Danny B]

Saving the system

"Modern economists mistakenly ignore the intertemporal effects of changes in the quantity of money. When money or credit is expanded, the first receivers of it get to spend it on existing products before anyone else. Therefore, they benefit from the extra money before prices have risen to reflect its addition into general circulation. The second receivers have a similar advantage, but incrementally less so. Therefore, after this new money has progressed through many hands with a tendency to drive up prices every time, the last receivers of the additional money find that prices for nearly all goods have already risen and the purchasing power of their wages and savings has effectively fallen.

This is known as the Cantillon effect. It amounts to a wealth transfer from the poorest in society, the unskilled workers, pensioners and small savers, to the government and its agents. Bankers, licensed to produce credit out of thin air at no cost, thrive. The second receivers, the businesses that benefit from bank credit and unfunded government contracts, do almost as well. The result is government, banks and their close supporters enjoy a wealth benefit at the expense of ordinary people."

"It is therefore hardly surprising the establishment and its lobbyists strongly favour monetary expansion, but the Cantillon effect cannot be denied, in theory or empirically. It is the single most important reason why inflating money and credit will always be counterproductive. We see this effect today, with the gap between rich and poor widening dramatically. It is monetary policy that impoverishes the masses, more surely than anything else."

"Keynes’s view is consistent with the idea that it is the rentiers who set the price for money, holding the entrepreneur to ransom, when in fact it is the other way round. In a free market where interest rates are set by consenting parties, it is the entrepreneur that sets the savings rate by bidding up the interest rate. It is this phenomenon that resulted in the long-held correlation between the price level and interest rates, demonstrated in Gibson’s paradox, which Keynes, Fischer and Friedman were all unable to explain.

The fact that this correlation demonstrably existed from 1730 up to the 1970s is clear evidence that entrepreneurs were prepared to pay a rate of interest that related to the one thing they knew better than anything else, and that was the price they expected to obtain for their product in the market. There can be no other credible explanation. Equally, it shows that central bank attempts to manage price inflation by varying the interest rate are doomed to fail, because there is no natural correlation between the two. "

"For anyone interested in promoting economic progress as opposed to just growing the GDP numbers, inflating money and credit is obviously not the way to go about it. Those who do not grasp the difference between real economic progress and raising GDP are likely to persist in trying to grow GDP, putting the lessons of experience behind them."
"It is no accident that a trade deficit is often accompanied by a government budget deficit, because the latter is bound to lead to the first, assuming the savings rate remains unchanged. The reason has already been stated above: the private sector pays its bills, so trade deficits can only arise from unsound money and unfunded government deficits. "

"The neo-classical economists that populate government and central banks are finding out the hard way that their fallacies and their dishonest use of the state’s seigniorage of money and credit have lead everyone into a dead-end debt trap. They show no understanding of how they got us all here, but are becoming acutely aware of the consequences.

Unsound monetary practices favour debt financing over financing from genuine savings, because of the wealth-transfer effect that benefits debtors."
"Italy is a good example, with a youth unemployment rate of 37%. The state accounts for about 52% of GDP, and non-performing loans on the banking sector’s balance sheets are recorded at 18% of GDP. Stripping out the state, NPLs are 37.5% of private sector GDP. Those that see the Italian crisis as a banking problem miss the point. It is the Italian economy that’s the problem, and the banks are merely the prosciutto in the sandwich.

Italy is in the vanguard of welfare state failures. "
"The partying is over. The days of transferring wealth from the middle-classes and the poor through monetary debasement to benefit the welfare states, the banks and their preferred customers, are now numbered."
https://wealth.goldmoney.com/researc...efcode=dollarc

[Danny B]

Wealth transfer to the "first spenders"

It is easy to see that the "first spenders" get the most benefit from currency inflation before it becomes price inflation. Great Britain is cursed with the city of London financial center. It is a WAY oversized financial hub. The result;
"Gauged by decline in GDP, using a common international purchasing measure, dollars, no other economy in the world has shrunk even remotely as much as the UK."
"Table 1 shows that the fall in UK GDP in 2007-2010 was $562 billion compared to the next worst performing national economy, Italy, with a decline of $65 billion – i.e. the decline in UK GDP in the common measuring yardstick of dollars was more than 8 times that of the next worst performing national economy."
https://www.theautomaticearth.com/20...dis-britannia/

Ireland has big problems also; "Irish taxpayers have bailed out the banks five times since 2011," https://antoniusaquinas.com/2016/08/...onomic-crisis/
BoE plans to cut interest rates BUT, Equally, it shows that central bank attempts to manage price inflation by varying the interest rate are doomed to fail, because there is no natural correlation between the two. "
The boneheads are trying to create price inflation by means that have never worked.
The result, "8/05 UK interest rate cut is a ‘hammer blow’ for workplace pensions – Guardian" So, they continue with the wealth transfer regardless of how many people it impoverishes.
The CBs have managed to create price inflation of from 7---13%. BUT, there is no wage inflation. SO, a shrinking wage and purchasing power combined with price inflation leads to an overall reduction in economic activity. The economy shrinks but the GDP is bumped up.

EDIT; https://www.theguardian.com/commenti...-uk-households

[Danny B]

The government wants your love.

BUT, if you can't send love,,,, send money.
51% of Americans receive a check from GOV. GOV writes 80 million checks a month. THAT is quite a heavy payroll and GOV is going broke. You've heard that 45% of Americans pay no fed income tax. Keep in mind that the Grace Commission created by Ronald Rayguy reported that not one dime of federal income tax goes to support GOV.
BUT, "Tax Policy Center web site, one will find that 73.1 percent of all tax units (in 2015) do pay either federal income taxes or federal payroll taxes." "Brookings Institution found, "When looking more specifically at middle-aged workers with jobs, 96 percent paid federal income or payroll taxes"
"In recent decades, the payroll tax's share has increased from under 10 percent in the 1940s, to a peak of 42 percent during 2009:"
https://mises.org/blog/myth-half-ame...-federal-taxes
If the conclusion of the Grace Commission is still valid, your FED income tax goes directly to the FED. Payroll taxes are increasing because GOV needs more money.

"The money markets are screaming about a global shortage of dollars. " "The campaign by governments to direct financing to themselves, limiting access by the private sector."
"In the U.S., there are legal changes under way in the money markets, which is prompting money to shift from “prime” funds, which buy short-term debt issued by companies, to instead buy short-term debt issued by the U.S. Treasury." "Money funds that buy government paper are exempt from the new rules, on the basis that Treasury bills are always easy to sell and there is no risk of default. The rule makers seem to have forgotten the near default in 2010 and the downgrade of the U.S. debt rating,"
"Carmen Reinhart, a finance professor at Harvard University’s John F. Kennedy School of Government, says governments across the developed world are interfering more with private flows of cash as their financing needs soar."
Financial Repression Authority

"The U.S. fiscal year 2015 budget deficit was about $439 billion. For fiscal year 2016, the federal government is projected to run a deficit of $616 billion. The upsurge, of roughly $177 billion, amounts to about a 40 percent deficit increase from 2015 to 2016."
"To the contrary, 1.2 percent GDP growth in the face of a projected $616 billion deficit will further increase the debt as a percent of GDP."
"George W. Bush doubled the federal debt from $5 trillion to $10 trillion. Barack Obama’s on target to double the federal debt from $10 trillion to $20 trillion. It is unlikely the next president will be able to double the debt from $20 trillion to $40 trillion."
Kotlikoff 2016——Don’t Ignore The Debt! | David Stockman's Contra Corner

Starting about 17:30, Armstrong talks about GOV being completely bankrupt. https://www.youtube.com/watch?v=swwEC4Xn6Sk

FED GOV has had great luck so far at instigating war and violence all over the world to get what it wants. Apparently, it expects to do the same here in America. https://www.youtube.com/watch?v=AiE1hPHA3AE

Here is a graph of gold imports that show a sudden jump. https://srsroccoreport.com/wp-conten...and-Montly.png
Jim Willie reports that the COMEX was about to go naked and needed an emergency gold shipment. http://www.goldenjackass.com/main5.html
Jim Willie also mentioned, "prevent bank failures from lack of liquidity,"
GOV is sucking up all investment and liquidity and the banks are running dry.

Bretton Woods----reserve currency---Federal reserve--- world domination---Pox Americana---Fed chairmen, all jewish---1983 collapse of israeli bond market---jewish neo-cons = coming collapse of U.S. sovereign bond market.

Brave forecasters are starting to set a date for collapse; https://www.youtube.com/watch?v=9-nEbRcjk1U
https://www.youtube.com/watch?v=2TBV1TKSW00
https://www.youtube.com/watch?v=n_R-uINRNzk

Our entire system is dependent on uninterrupted credit growth. Interest rates and credit standards were sequentially lowered to keep the bubble inflated. The result is; we moved consumption forward to keep the bubble economy inflated. When the bubble pops, the consumption that we moved forward will "displace" most current consumption. When credit dies, it dies completely.

It's strange that we lambasted Cuba for many decades for being communist. At the SAME time, America gradually descended into socialism that can only be (temporarily) maintained by going to a full communist police State.
http://www.wakingtimes.com/2016/08/0...e6111-54347961

[Danny B]

Employment

The Central bankers are screaming that they can't do it all at supporting the economy and that GOV has to cut back. GOV claims to be spending about 24% of the GDP. It is actually far more because of the (not very) hidden purchase of stocks and bonds. GOV debt is rising by leaps and bounds. What happens to employment if GOV cuts back?

"Today we got what was called a “stellar jobs report”: Non-farm payrolls rose 255,000 in July. In the other component of the report, the household survey showed that 420,000 new jobs were created. There are now a record 123.9 million full-time jobs. " " And the unemployment rate remained stuck at 4.9%, with 7.8 million people deemed officially unemployed."

"The ShadowStats Alternate Unemployment Rate for July 2016 is 23.0%." Alternate Unemployment Charts

Continuing with the official line;
"US population on August 5, 2016, at 4:49 p.m. ET (yup, down to the minute) was 324.17 million.

That’s up from 308.76 million in April 2010. Since the darkest days of the Great Recession, the US population has grown by 15.4 million."
"In April 2010, there were 130.1 million nonfarm payrolls. In today’s July report, there were 144.4 million. Hence, 14.3 million jobs have been added to the economy over the time span, even as the total population has grown by 15.4 million. So that’s not working out very well.

On average, 205,300 jobs need to be created every month just to keep up with population growth and not allow the unemployment situation to get worse."
"The employment-population ratio always drops during recessions, but before 2001, it always climbed to higher highs during the recoveries. The 2001 recession and subsequent recovery changed this. For the first time, the ratio never fully recovered, never got even close to fully recovering. That was a new phenomenon: employment growth could no longer keep up with population growth." Maybe it was affected by outsourcing and automation.

"The Fed’s efforts were all focused exclusively on bailing out bondholders, re-inflating the stock market, re-inflating the housing market, and generally creating what had become the official Fed policy at the time, the Wealth Effect"
"But the Fed’s astounding focus on capital accelerated the already changing dynamics of the economy, at the expense of labor."
"the Employment-Population Ratio didn’t improve to any meaningful extent until 2014." When GOV got better at fudging the numbers.
"Can't explains the dichotomy: Economists, officials, politicians, and central bankers point at the millions of jobs created since the Great Recession and at the official unemployment rate which has dropped to acceptable levels"
Why this Job Market is Still Terrible: The Politically Incorrect Numbers Everyone is Hushing up | Wolf Street

[Danny B]

Oil woes... no future in England

"1. When does our credit-based financial system sputter/break down?

When the risk posed by investable assets is too high in relation to the return, Gross explained. “Not immediately, but at the margin, low/negative yielding credit is exchanged for figurative and sometimes literal gold or cash in a mattress. When it does, the system de-levers as cash at the core, or real assets like gold at the risk exterior, become the more desirable assets,” he added."
Revered Investor Bill Gross Asks And Answers 5 Questions About The U.S. Economy - Yahoo Finance
This has started to happen; It?s More Expensive To Hold Euros Than Gold ? BAML Analyst | Kitco News

Everybody knows that stocks are WAY over-valued and bound to fall; 8/07 Stocks will have a ‘waterfall decline’ in August – GoldAndOilGuy Just how high is that waterfall?

The European Union was just a huge "jobs program" for hordes of bureaucrats. It reduced the GDP of it's member States by 20%.
"Italy’s economy has been in the doldrums from years and is the same size now as it was when the Euro was first introduced more than 15 years ago. "
European Union: Mediterranean countries form anti-austerity alliance against Angela Merkel | World | News | Daily Express

There was BIG TALK about a shortage of oil that drove the price up to $50. The BS came to an end and oil is back at $ 40. The Sovereign Wealth Funds of the oil producing States have started dumping assets at a record pace to make up the difference in lost income. This dumping should depress markets but, GOV / CB buy up the slack in the stock & bond markets to keep the markets from falling.
Why Oil Under $40 Will Bring It All Down Again: That's Where SWFs Resume Liquidating | Zero Hedge
"To summarize, if oil were to drop back under $40, not only would it precipitate even more selling of oil as momentum strategies flip, but it would catalyze a liquidation by those SWFs who thought they were done selling equities, leading to a return of the same sellers that pushed the S&P back to the low 1,900s a short 6 months ago.

So for all those curious where stocks are going next, the simple answer is: keep an eye on what oil does next. "

England is crashing far worse that the EU and poverty is getting much worse. Problems are expected. https://www.theguardian.com/uk-news/...leading-expert

The EU says that Britain can't exit the EU because it owes 25 billion. Britain reportedly contributes around £136 million a week to the common European pot. https://www.rt.com/uk/354758-brexit-eu-debt-leave/
And then, there is the problem of falling income; "Helping fuel this downward economic spiral is the enduringly low oil price, which now has one-third of (North Sea) oil fields operating at a loss. " http://www.bbc.com/future/story/2016...tle-an-oil-rig

The only growth industry is a giant parasite and it is hurting Britain greatly. http://www.theinquirer.net/inquirer/...ble-to-operate