Economic pressures

[Danny B]

Phillips Curve,,, oil slowdown

Most of the various economic theories espoused by Academia are headed for the rubbish bin. There is one theory that is headed for the rubbish bin that might actually be correct.
Investopedia, "The Phillips curve is an economic concept developed by A. W. Phillips showing that inflation and unemployment have a stable and inverse relationship. The theory states that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment"
The boneheads don't define if "inflation" is currency inflation OR price inflation. They also show a painful lack of vision. Suppose that employment grows in China and falls in America?
Next on the list of stupidities is; they totally lie about unemployment in America,,, and then wonder why the Phillips Curve no longer "works"
https://mishtalk.com/2017/08/29/fed-...g-the-obvious/

Equally stupid, they equate a growth in employment with an automatic growth in wages. Capital flows freely across borders. It has generously flown to low-wage producers and distorted wage levels. Academia is too stupid and lazy to try to incorporate the Philips Curve on a global basis.

In a general sense, all interest rates are tied to the rate of the 10 year treasury bond. The State drives down this rate so that it can service IT'S debt with less pain. No matter that it wipes out everybody who depends on interest income. All the funds will perish along with the investors and retirees who depend on them. We are in a deflationary spiral because of the lack of population growth and falling wages.

“10-Year Treasury Yields Headed to Zero Percent” Saxo Bank CIO" BUT, now, "they" are claiming that ZIRP isn't enough and negative rates are necessary.
"With nearly everyone, even Janet Yellen at the Fed, predicting wage-induced inflation, Jakobsen makes a bold call in the opposite direction."
"wage-induced inflation"
"Everything is deflationary: demographics, technology, energy, and the debt mountain." wages
"Meanwhile, most central banks – most prominently the Fed – continue to believe in the old-school Phillips curve model, and through this mistake, they misguide markets on both inflation and growth – a classically dogmatic, bureaucratic way of thinking whose limits in a world of ever-changing technology are obvious."
The FED has always worn blinders.
"• New call: energy prices to fall by 50% over the next 10 years."
9/07 Duke energy nixes nuclear, will amp up solar power plants in Florida – Clean Technica

Self-driving electric Ubers will definitely reduce the demand for gasoline. Who is going to rebuild the grid for all this new load? The State will eventually tax the snot out of electric cars to maintain the highway structure.
"Canada’s central bankers are clearly acting on bubbles and excess while the Fed and the European Central Bank continue to monitor the non-existent link between tight labour markets and inflation."
"What our credit impulse model says is that from the peak in Q4’16 there is a high probability of a big slowdown in the global economy 9-12 months later – so from October 2017 to March 2018."
"A push is on for electric cars in China and Europe. Even if the US lags, demand for oil will decline. Add in a global slowdown, and the price of crude could easily collapse."
https://mishtalk.com/2017/09/07/10-y...saxo-bank-cio/

OK, so, the price of oil is going down, Ouch. U.S. oil companies lost $67 billion last year - Apr. 26, 2016
Big Money has lost faith in Big Oil, https://srsroccoreport.com/u-s-frack...-losing-faith/

So, the price of crude could easily collapse. There is ALREADY no profit. will the drills and pumps stop?

[Danny B]

ZIRP to save the State

There are projections of a storm-surge + tide that will reach 32 ft. in Miami.
https://www.youtube.com/watch?v=4IBx5slkkU8&t=220s
There are also 2 storms behind Irma. Lots of investors have dumped their investment in insurance companies. There will be a lot of loss. You can bet that the insurance companies will be bailed out. The individual home owner will naturally be screwed.

Strong Euro,,, weak dollar, https://www.armstrongeconomics.com/m...ro-the-dollar/

"This idea of lowering interest rates envisioned by Larry Summers, demonstrates that he knows absolutely nothing about economics. He has only read books and never rolled up his sleeves and had to work in the real world to be able to see what I am writing about. Why economic professors are ever allowed to play with the economy is beyond me. " Armstron was previously a professor at Princeton.
"Draghi tried to be as vague as possible, because he is trapped. He knows this cannot go on forever. He realizes that once he stops, the bond market crash and there is a risk that the Eurozone government are forced to pay real interest rates and that will blow out the entire EU budget system."
https://www.armstrongeconomics.com/a...rich-and-poor/

"This idea of lowering interest rates envisioned by Larry Summers, demonstrates that he knows absolutely nothing about economics."
"the bond market crash and there is a risk that the Eurozone government are forced to pay real interest rates and that will blow out the entire EU budget system."
Put these 2 together and something becomes obvious. ZIRP was all about rescuing GOV debt. Summers knew what he was doing. ZIRP kills everything that doesn't have a feeding tube to the FED. The feeding tube saves the banks. Every president has doubled the debt. Trump would need to pump it up to $40 trillion to be in line with his predecessors.
The prime objective is; save public debt. It doesn't matter if everything else dies on the vine. Public debt in Hartford, Conn. isn't looking too good.
https://ctmirror.org/2017/09/07/bron...ithin-60-days/
Draghi can never cut back. The Italian banks will blow. The French GOV spends 57% of the GDP. Can Draghi stop buying French debt?

[Danny B]

Gibson't Paradox and all the other rules that dont hold

Now, you know all about the Phillip's curve. Next comes Gibson's Paradox.
Historically, money was saved up and channelled through the stock market to finance profitable ventures. Historically, taxes were saved up (as bonds) to finance public works. Historically money was saved up by deferring current consumption to finance some profitable enterprise. The Phillip's paradox was a "rule" during the times when money creation was limited.

"between 1750-1930, interest rates in Britain correlated with the general price level, and had no correlation with the rate of price inflation. "
"The relationship between interest rates and the general level of prices held until the 1970s. This article summarises why Gibson’s paradox functioned, why interest rates do not correlate with price inflation, and the reasons it failed to be evident after the 1970s."
The gold window was closed in 1971.
"Resolving the paradox boiled down to answering a very simple question: is the interest rate set by demand from the borrower based on what he is prepared to pay, or is it set by the interest rate demands of the saver, seeking a decent return on his money? The neo-classical assumption has it that in a free market it is what the saver demands to part with the temporary use of his money that controls the loan rate, and the borrower is at his mercy."
"Indeed, all the literature going back to pre-Keynesian days assumes that consumers decide interest rates by dividing consumption between what is needed today, and what should be saved for the future."

The advent of easy credit,,, the advent of social security made saving unnecessary. We spend 105% of out earnings.
"The vision of the idle rich living off the income of their capital also fuelled post-Marxian sentiment. The bias of opinion has always been against the seemingly idle saver and in favour of the industrious debtor. The saver is cast as a villain, and even central bank policy today is biased against him."
Warren Buffet has $80 billion cash sitting on the sidelines. Has he deferred consumption? What could he possibly buy?

"The assumption, that it is the saver who demands the interest rate, carried throughout the known history of economics, and finds its more recent expression with Keynes, who wanted to do away with saving altogether.ii He gave savers the epithet of rentier, an ugly word suggesting a rich man who rents out his capital, gathering in profit from the efforts of others."

These bone-headed ivory tower economists have always been simpletons. They group together low-wage and high-wage people. The people who live check-to-check have no possibility of saving. I know people who take their kids to McDonalds one a month as a special treat.
"The businessman sets the price of borrowing by having the option not to borrow. In his calculations, he will attempt to quantify his fixed and marginal costs of production, and the added productive capacity additional capital will provide. He must estimate the wholesale value of his extra production, to assess his profits, gross of interest. He is then able to judge what interest he is prepared to pay to secure the capital required for a viable proposition."

Not a single mention of consumptive power. 1/3 of companies in the Russell 2000 index are losing money. It is NOT a problem of productivity.
"Therefore, there is a link between interest rates and how money is used. The reason this did not translate into a correlation between interest rates and the rate of inflation is changes in interest rates only reflect changes in the allocation of money between immediate consumption and savings. "
ALL of the free money went to the top 5%. The CBs printed up an extra $200 trillion. They expected a trickle-down effect to the larger masses of the middle class. AT THE SAME TIME that wages were falling. This $ 200 trillion can't actually be spent into the economy. It would make price inflation that much worse,,, while wages were still falling. You could buy quite a few wars with $ 200 trillion.

"Imagine for a moment an economy without the central bank imposing interest rates on the free market, restricting itself to note issuance and being lender of last resort. If interest rates rise, it is because there are fewer savings relative to demand for investment" Yeah,, how MUCH note issuance?
"Equally, if interest rates fall, they reflect a greater relative supply of savings,(the printing press stuck in hyperdrive) and a lower proportion of income being allocated to immediate consumption." No, they reflect a runaway printing press.
"The overall quantity of money is immaterial in this relationship. If you doubled the quantity of money, so long as you double money spent both on consumption and money saved, interest rates would be unchanged"
Only if you double the money to every person,, not just the rich.

"So why, after over two hundred years of correlation between wholesale prices and bond yields, did it end in the early 1970s? It is obvious that the continuing rise in prices denominated in state-issued currencies, lacking the anchor of gold, could not lead to a continuing rise in interest rates. It is the reasons the relationship ended which concerns us. There were two distinct periods to consider."
"The breaking of demand for savings was the first time that Gibson’s paradox was nullified in the history of the cost of borrowing, stretching back to 1750. We then entered an era of financial revolution, where the application of capital changed from financing production to financing government deficits and personal consumption." Public consumption and private consumption.

"The use of credit was being hijacked. From London’s big bang onwards, regulation of markets evolved from private-sector associations, collectively known as self-regulatory organisations, to full government regulation. At the same time, restrictions on consumer credit were lifted, and demand for credit shifted from industrial lending and some restricted residential mortgage finance, progressively in favour of the consumer. Today, as well as mortgages, US credit card student loans and vehicle finance now total nearly $13trvi, exceeding total corporate bonds of $5.2trvii, to which must be added bank lending to non-financial corporates currently at $2.1tr.viii"
"We now have an explanation as to why Gibson’s paradox no longer holds today. It has been superseded by the predominance of financing for consumption by both consumers and government"

"Consumers who borrow are usually seeking greater satisfactions than are afforded from their income, which if they are to pay down the debt incurred requires a matching sacrifice in their satisfactions subsequently."
So, empty your pockets and hand over $ 60 trillion.
Further thoughts on Gibson’s paradox
The demand for finance for public and private consumption has eclipsed corporate demand for credit. The credit bubble MUST grow or the interest to pay off previous loans won't be created.
"Allow me to print a nation's money and I care not who makes the laws."
Force me to print a nation's money and I am eventually screwed.

Trump needs to eventually double the current debt of $ 20 trillion up to,, $ 40 trillion. The "Taper Tantrum" proved that any slow down in the printing presses will allow the bubble to deflate. Draghi has very painful visions of what happens to Europe if he lets off the gas. China keeps trying to back off the printing presses,,, and then suffers heart failure. ALL of this capital creation is fungible. It moves all over the globe regardless of which CB originated it.
Capital flows,,, labor does not. 5% have benefited from QE. 6 States have benefited from globalism. The old economic theories are for simpletons and economists.

[Danny B]

Guns OR disaster relief

Well, Irma is headed up Florida to Georgia. It is the second-longest lived hurricane in history. It is moving at 9 mph to give everybody a real thrill.
"Dave told her that there was no power and no water and that Irma made Hugo and Marilyn look like a rainstorm" Caribbean Hurricane Network - stormCARIB.com - Local Reports on Tropical Systems threatening the Caribbean Islands

Hurricane Jose may very well take out the Atlantic side of Florida while Irma takes out the gulf side. Jose could conceivably move up the eastern seaboard.
So, who is going to pay for all this?
"It took an actual fight just to push the first few billion dollars in emergency aid for Houston through Congress, with four Texan representatives voting against "
"Sure, the US has a National Flood Insurance Program, but who’s covered by it? Besides, the Program was already $24 billion in debt by 2014 largely due to hurricanes Katrina and Sandy. With total costs of Harvey estimated at $200 billion or more, and Irma threating to cause far more damage than that, where’s the money going to come from?"

"Towns, cities, states, they’re all maxed out as things are, with hugely underfunded pension obligations and crumbling infrastructure of their own. They’re going to come calling on the feds, but Washington is hitting its debt ceiling. All the numbers are stacked against any serious efforts at rebuilding whatever Harvey and Irma have blown to pieces or drowned."
"Therefore, as the gap between the “desired” living standard and disposable income expanded it led to a decrease in the personal savings rates and increase in leverage. It is a simple function of math. But the following chart shows why this has likely come to the inevitable conclusion"
"We can go on listing all the reasons why, but fact is America is in no position to rebuild. Which is a direct consequence of the fact that the entire nation has been built on credit for decades now. Which in turn makes it extremely vulnerable and fragile. Please do understand that mechanism. Every single inch of the country is in debt. America has been able to build on debt, but it can’t rebuild on it too, precisely because of that."
https://www.theautomaticearth.com/20...rd-to-rebuild/

"the Bank of England learnt that it was cheaper and less disruptive to find some way of rescuing banks that were in danger of collapsing, rather than letting them go down." IN THE SHORT TERM ONLY. Remove moral hazard and see what you get in the long term.
"You could construct a totally safe banking system but it would be unable to make much credit available to potential borrowers." ONLY TO THOSE IN THE UPPER LOOP.
"US investor optimism is at a 17-year high, the highest it has been since 2000, just as the dot-com bubble was about to burst."
Ten years since the start of the last banking crisis, we have to ask ourselves ? when will the next one happen? | The Independent

“The machines” are computers running complex trading algorithms — pre-programmed software that lets computers “think” and trade for themselves.
And they now control a third of all trading on U.S. stock exchanges."
"The Dow plunged 22% on Oct. 19, 1987 — the largest one-day market crash in history.
Brilliant, stupid computers didn’t start it.
But brilliant, stupid computers turned a down day on Wall Street into Black Monday."
"Apparently, it was a rogue algorithm that triggered the sell-off…"
"This kind of sudden, unexpected crash that seems to emerge from nowhere is entirely consistent with the predictions of complexity theory. Increasing market scale correlates with exponentially larger market collapses…"
https://dailyreckoning.com/will-left-buy/

" Harvard is trying to sell $2.5 billion in real estate and private equity investments. The move was announced in May and there have not been any material updates since then other than a quick press release in early July that an investment fund was looking at the assets offered."
This will become widespread at some point.
" I would suggest that one of the primary motivations behind the Fed/PPT’s no-longer-invisible hand propping up the stock and fixed income markets is the knowledge of the pandemonium that will ensue if the stock market were allowed to embark on a true price discovery mission. "

"ECB is seeking from the European Commission the authority to implement a moratorium on cash withdrawals from banks at its discretion."
http://www.24hgold.com/english/news-...ott+Money&mk=1

OK, so, America is flat broke. How did we get there? Remember that wealth attracts corruption. It is highly concentrated in the district of corruption,,, Tel Aviv on the Potomac. Our Bretton Woods unlimited credit card allowed Pox Americana the ability to wage war on credit. This was paid for by everyone who used oil.
Jack Ma of Alibaba said that America didn't have bullet trains because we wasted $14 trillion on wars. The war profiteers were locked in to the treasury.

Here is an article explaining that the taxpayers are going to pay $ 19 million to refurbish 50 trucks over a 3 year period.
https://en.news-front.info/2017/09/0...-nearly-20mln/
So we are going to $ 380,000 EACH to paint them and put on new tires.
The military budget combined with the black-ops budget is over $1 trillion a year.
There will be a HUGE fight over disaster relief. There NEVER seems to be any fight over $trillion combat airplane boondoggles.

[Danny B]

The general situation

Veterans Today has a pretty good summation of all the big problems, The Hurricane of our Lives – America goes broke and nobody seems to care | Veterans Today
Excellent article from John Mauldin explaining the mechanism of how GOV always goes broke. The first part is a slow read. The Future of the Global Economy

9/12 WTF chart of the day: BOJ now owns 75% of Japanese Etfs – Zero Hedge
The FED owns about 50% of domestic ETFs. We'll see just how that works out.
9/11 Australian banks sitting on A$500 billion of ‘liar loans’ – Bloomberg

[Danny B]

Armstrong: fiat, confidence and legal tender

America is fast going broke. There will come a time when the ptb will have to choose between; a strong military OR domestic support / harmony.
"Nevertheless, historically, ONLY those currencies of the dominant military power have EVER been the reserve currency. So you may not want to hear about the 800 bases etc, but you cannot escape the fact that part of the reserve status of any currency is the military power."

"The strength of the dollar is based on capital flows, not trade. There has been the safe haven issue that dominated World War I and World War II because the USA really cannot be invaded. "
"But trade is a tiny fraction of international capital flows. This is why the Euro has utterly failed to become a major reserve currency "
"China must establish a solid rule of law in order to provide CONFIDENCE for foreign capital to park money in their currency. "
Excellent article, https://www.armstrongeconomics.com/m...of-the-dollar/

"China will replace the dollar but only AFTER 2032. Until then, they must still work on establishing the Rule of Law so that capital will park in yuan with confidence. Denominating oil in yuan or euro means nothing. Where will you park your cash? That remains dollars for major institutions. There is no alternative."
"Unfortunately, governments are broke. They are hunting people with any money at all and that creates a disincentive to invest, rising unemployment, and civil unrest turning the poor against the rich instead of the poor against the politicians who have created this mess."
https://www.armstrongeconomics.com/m...strong-dollar/

"ANSWER: Most money is actually created by the private sector through leverage and bank loans today. This is why when there is a crash, the contraction takes down banks for it is the leverage that collapses. When you have a debt based system, then the monetary system becomes leveraged."
"As far as legal tender is concerned, that means it is acceptable by government to pay taxes and fines. What good is it that all your money is in BitCoin and you have to pay taxes when the government does not accept it?"
"The entire system rests solely upon CONFIDENCE. You would only accept a gold coin in payment solely because you know someone else will accept it from you. With that degree of CONFIDENCE, nothing would be acceptable."
"This is why I say that the Monetary Crisis Cycle comes into play when we have a collapse in public CONFIDENCE. It really has nothing to do with the quantity of money. "
https://www.armstrongeconomics.com/m...-money-v-fiat/

[Danny B]

China; wages, employment, rule-of-law

China must establish a very firm rule of law to attract capital. Meanwhile, rule of law is diminishing in Amerika. GOV is seizing $billions every year on nothing but flimsy excuses. Can a Chinese communist government actually respect private property? China will crash. Will they be able to maintain order during and after the crash?
China has recently pumped in about $ 30 trillion to keep things floating. You walk into Harbor Freight Tools and marvel at the low prices. How can Chinese companies possibly make a profit with these prices. Here is a graph of free cash flow in Chinese companies.
http://thesoundingline.com/wp-conten...t-1024x625.png
China moved >300 million peasants to the cities. They are paid very low wages so, they can eat better but, they really are not "consumers". China can not very well send them back to the countryside. The Chinese "miracle" has created an "anti-miracle" in the high-wage consumer societies. China has impoverished their best customers. Can China bleed money indefinitely? Emerging automation will tend to suppress wages around the world. Will China ever find the well-off consumes that it needs?
Chart of the Day: Putting the Chinese Corporate Debt Bubble in Perspective - The Sounding Line

[Danny B]

Trump rocking the Chinese boat

I do not believe that Trump and Mnuchin have the experience to run the economy. They are really rocking the Chinese boat.
"The US could impose economic sanctions on China if it does not implement the new sanctions regime against North Korea, the US Treasury Secretary has warned. Steven Mnuchin said the restrictions could involve cutting off Beijing’s access to the US financial system. "
"calling the fresh round of sanctions against Pyongyang “historic.” Mnuchin added “if China doesn’t follow these sanctions, we will put additional sanctions on them and prevent them from accessing the US and international dollar system.”

"Washington has, so far, been reluctant to impose economic sanctions on China over concerns of possible retaliatory measures from Beijing "
"Washington runs a $350 billion annual trade deficit with Beijing. China also holds $1 trillion in US debt, which amounts to 28 percent of US Treasury bills, notes and bonds held by a foreign government."
"The committee chair went on to say the US could give Chinese banks and companies “a choice between doing business with North Korea or the United States.”
https://www.rt.com/usa/403118-usa-ch...s-north-korea/

"To gauge the likelihood and timing, it is necessary to consider the typical attributes of a reserve currency and evaluate China’s progress in each of these dimensions. The factors that generally affect a currency’s reserve status includes:

• Economic size

• Macroeconomic policies

• Flexible exchange rate

• Open capital account

• Financial market development
No mention of respect for private property.
"The U.S. Dollar maintains illusionary worth, only because the central bankers are all in with their dollar dominated derivatives. Moreover, the Chinese are very much dependent upon their exports to keep their economy going. Settlement in Federal Reserve notes is crucial for the American system to keep buying from overseas.

Just the mere threat of payment in the renminbi for all the Chinese goods that Walmart imports could be devastating."
China wants to have a reserve currency

[Danny B]

95 million workers on permanent vacation

Steve Keen,
"The correlation between credit and employment is staggering—not just because it is so big (the correlation coefficient, for those who follow these things, is 0.8), but because according to mainstream economists like Ben Bernanke, the correlation should be close to zero."
"but economists turn a blind eye (and not a Nelsonian one) to this data because it doesn’t suit their preferred model of how banks operate. They model them “as if” they are intermediaries who introduce savers to borrowers, not as originators of both money and debt. "

"I don’t expect a crisis in the USA and UK in the near future, but rather stagnation like that which Japan has experienced since its “Bubble Economy” burst back in 1990. There will be revivals and reversals, but not an outright crisis because a pre-requisite for that is very high levels of credit. " Private debt in America is $60 trillion. How big an overhang is needed?
https://renegadeinc.com/none-blind-will-not-see/

John Hussman does excellent research and projections. He shows very clearly that the stock market will have zero returns for about the next 12 years. Hussman and several other writers who I read all commit the same sin. They all agree with the unemployment numbers from the BLS. Unemployment stands at 4.6%...or something like that. Many of these writers / investors mention that the labor participation rate is just around 64%.
https://tradingeconomics.com/united-...icipation-rate

"Market returns don’t just emerge from nowhere. They are driven by the sum of three factors: growth in fundamentals, income from cash distributions, and changes in valuations (the ratio of prices to fundamentals)." I don't see the word "consumption" squeezed in there.
"while the U.S. Bureau of Labor Statistics estimates labor force growth of just 0.3% annually in the coming years (which would be matched by similar growth in employment only if the unemployment rate does not rise from the current level of 4.3%)."
https://www.hussmanfunds.com/wmc/wmc170911.htm
About 155,000 people try to enter the labor force every month. <25%> of college grads are living in their parent's basement.
" August 2017 Unemployment Rates Notched Higher: U.3 Rose to 4.44% versus 4.35%, U.6 Rose to 8.59% versus 8.57%, and the ShadowStats-Alternate Rose to 22.2% versus 22.1%"
Commentaries by Date

95 million American workers not in US labor force - CNBC.com
So, 95,000,000 Americans not working or producing. The feces-for-brains economists wonder why actual productive gdp isn't growing.

[Danny B]

Killing our concience,,,, one body at a time

One last post on the social side of Pox Americana.
"It’s a vicious act of intellectual corruption to maintain that the war on terror does not create terrorists, that those killed, wounded, or displaced have no friends or family who will exact what they consider justified vengeance. The terrorism we see now is lava trickling from a volcano of hatred that has boiled, bubbled, and occasionally erupted for centuries, and will continue to do so. There will be no live and let live. Blood will have blood"
"With the US government, the figurative and literal have merged. Someone pushes a button on a drone, missile, or bomb control and murder is done in furtherance of never-ending American war. It’s as disassociated, remote, and cold-blooded as murder gets. Nevertheless, neither the murderers nor the public from which they try to hide reality will have any more success eluding the psychological turmoil and toll than the Thane of Cawdor and his lady."

"How does evil become banal? Practice, practice, practice. Killing becomes the routine, what the government does. Like many bloodthirsty, tyrannical regimes the US government has warmed up on foreigners. However, the functionaries and politicians who now push the Kill the Enemy button also push the Domestic Surveillance button. They will not hesitate to push the Enemies of the State, Mass Detention, Concentration Camp, and Execution buttons when the time is right."
"And although most people don’t make the connection, institutionalized murder is responsible for an appreciable part of the government’s $20 trillion debt and $200 trillion in unfunded promises, as well as its cronyism and corruption, loads under which the economy now strains and will finally collapse."

"Executioners have a short ‘life’. They get tired of the work. The soul sickens of it. After ten, twenty, a hundred death-rattles, the human being, however sub-human he may be, acquires, perhaps by a process of osmosis with death itself, a germ of death which enters his body and eats into him like a canker. "
Killing Them Is Killing Us | Zero Hedge
Side note; "Here and elsewhere, we are castaways amidst the hobgoblins of our own horror show. It is not only the demonic cries of over 100,000 suicides amongst Vietnam Vets and a further 25,000 ex-service men and women dead by their own hand since 2012 – from our more recent wars of empire – that we hear: the psychic airwaves tremor not only with their suffering, their sacrifices and their condemnations "
https://www.counterpunch.org/2017/09/11/stormy-weather/

"The value of money and the cost of borrowing it is about as fundamental as it gets in a so-called advanced economy. You can screw around with a lot of things running a society, but when that goes, you’re flirting seriously with anarchy. In the meantime, we’ll see how the social glue holds things together in those parts of Florida that are entering a preview of medieval attractions in the electrical blackout days ahead."
In the Dark - Kunstler

[Danny B]

Bouncing with bitcoin

9/13 Bitcoin should be valued at half of what it’s worth today – CNBC
9/13 Bitcoin tumbles after Jamie Dimon calls it a fraud – Zero Hedge
9/13 Cryptocurrencies are here to stay – Daily Reckoning
9/13 Why bitcoin is not a bubble – Bitcoin
9/13 Balance of power: want to give sanctions the slip? Buy bitcoin – Bloomberg
9/13 Collateral damage from the inevitable bitcoin crash – Forbes
9/13 Bitcoin is the ‘most crowded’ investment in the world right now – CNBC9/13 N Korea getting around sanctions by using hackers to steal bitcoin? – CNBC

[Danny B]

Mutually assured (cyber) destruction

The shock of the destruction of Hiroshima and Nagasaki led all States to avoid nuclear war. Mutually assured destruction was an all too real possibility.
John McAfee now says that there is no such thing as cyber security. He claims that any state can take down the grid of any other State. He also claims that there is no possible way to stop hackers.
https://www.youtube.com/watch?v=UVVjlYz-YeM&t=234s
The tools released from Vault 7 are out in the wild and taking down everything.
https://www.wired.com/story/encrypti...lt-7-wannacry/
We are now back to confronting mutually assured destruction from the cyber world.
https://zeltser.com/mutually-assured...in-cyberspace/
http://www.au.af.mil/au/ssq/2011/spring/crosston.pdf
https://dailyreckoning.com/another-d...her-huge-hack/

[Danny B]

White, Armstrong, Stockman

William White, " presented one of the earliest and most thoughtful warnings of the financial crisis back in 2003. Anyone with a brain ought to take him seriously"
"White, as hinted in the Economist profile, has consistently warned that the global economy stands at a precipice – that essentially the 2007 crisis was not an end but a beginning. If that stance sounds familiar, it should. It falls in line with the fourth turning analysis covered here in previous posts. Neil Howe, the author of The Fourth Turning, calls the 2007 crisis the catalyst for the protracted fourth turning now in progress and scheduled to end, by his estimate, sometime in the 2030s."

"• The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability. ."
The default cascade.
“In retrospect, central banks should have let the benign deflation of this (temporary) phase of globalisation run its course. By stoking debt bubbles, they have instead incubated what may prove to be a more malign variant, a classic 1930s-style ‘Fisherite’ debt-deflation.”
Wages fell and the worker could not support R.E. prices. He defaulted. The banks were rescued from the pain of default but, the worker never had his wages rescued.
Prominent establishment economist William White warns ?More dangers now than 2007? |

Armstrong, "Initial Considerations” IMF Discussion Note, and intends to replace the US Dollar as the global reserve currency as early as January 2018 (probably later) with its decades-old Special Drawing Rights by converting the “foreign-exchange reserve assets” into a global currency using Distributed Ledger (Blockchain) technology."
"ANSWER: No. This is really rubbish. I can’t believe how many people are writing in asking about this subject matter. Nevertheless, a new one-world currency is coming. It will be different from what anyone imagines."
"What makes the dollar the reserve currency is the national debt. It is the only game in town to park big money."
So, the CBs print up mega tons of pixels. The pixels flow into GOV debt. That’s fine if you are in the upper loop.

"The SDR cannot replace the dollar by January 2018. What a joke. Yes the IMF is making a pitch to be placed in charge of a new one-world currency. I had argued originally for the SDR back in 1980s when the IMF was a legitimate agency. Time and money has corrupted the IMF and it is now just a political ploy."
"I am preparing a special report on this which will include the whole future of block-chain. It will be ready before the WEC in November. A new one-world currency is coming. There is no doubt about that. The market forces will make that reality. That is the dollar rally – not decline."
https://www.armstrongeconomics.com/m...orld-currency/

I have a lot of doubt about the prediction of a one-world currency. Who issues it? Who sets and maintains it's value? The eurozone has proved that a single currency is a straitjacket. The transactional currency can NEVER be the store of value. FOFOA proposes that all currencies will float and gold will be the store of value. Is it possible to have one store of value at the State level and, another store of value at the personal level?
If we are to have international commerce, the store of value must be agreed on by both importers and exporters. In the East gold is rising. In the West, U.S. treasuries are falling.

Stockman says that removing the debt ceiling is a doomsday move. The debt ceiling has already been raised over 100 times. Why does he think removing the ceiling is catastrophic?
https://dailyreckoning.com/americas-...msday-machine/

"The state comptroller of Illinois—the most financially troubled state thanks to its pension crisis—summed it up well. He said: “We can’t go bankrupt and we can’t print money. Taxpayers are going to have to pay this bill.”
"Last year, Americans paid over $300 billion in property taxes. In Illinois and other states, property tax bills exceeding $10,000 per year are not uncommon."
" Greeks traditionally have always regarded property as a secure investment. But now it has become a huge millstone, given that the tax burden has increased sevenfold in the past two years alone."
" Higher taxes would make more people leave the state and actually decrease the amount collected.

This trend is already underway. More than half a million people have left Illinois over the past decade. That includes over 3,000 millionaires who’ve fled Chicago in recent months."
My Two Big Bets on the Pension Crisis | International Man

[Danny B]

The recently perceived demographic crash

Continuing with cyber war. Every small player is trying to accomplish asymmetrical warfare. Instead of bombs and missiles, the competition is between brains and systems. We are losing in that department.
The American Power Grid Has Been Hacked - The Organic Prepper
We can easily be held to ransom.

Some VERY informed and important people have recently become aware of the unfolding demographic crash.
https://www.caseyresearch.com/the-mo...-in-the-world/
"By 2050, the U.S. will have twice as many seniors as it does today.

And many of these people will retire. They’ll stop producing for the economy.

They’ll also buy fewer goods and services. That’s what happens when people retire. Seniors spend about 38% less on consumer goods and services than people in the workforce.

That’s a serious problem.

After all, consumption makes up 70% of the U.S. economy. So, the economy could take a major hit if millions of people start buying fewer goods and services. If that happens, U.S. stocks could come crashing down, too."
A sudden epiphany, Huh ?
The article is about stocks. The usual short-sighted BS. Japan has clearly proved that a State can't have an expending credit bubble with a shrinking population. It is possible but, NOT with debt money. Our debt bubble is continually pumped up to compensate for the fall in earnings and production & consumption. The State has no effective mechanism to compensate with mass default of the consumer. So, the just keep rescuing the banks.
"They’ll stop producing for the economy." No mention of the 95 million people who are not in the labor force and have " stopped producing for the economy."

[Danny B]

The new normal,, squatting over a volcano

"Yesterday the government reported a “modest” August budget deficit of $108 billion. That’s one month folks. This is another example of how the government and their mainstream media mouthpieces portray horrifically bad, extremely abnormal financial data as normal and expected. They pretend everything that has happened since 2008 is just standard operating procedure."
So, think about the alternative??
"Those in power pretend near zero interest rates eight years after the recession was supposedly over is normal. They pretend $500 billion to $1.4 trillion annual deficits are normal. They pretend 20% unemployment is really 4.4%. They pretend the stock market is at all-time highs due to an improving economy rather than central bank easy money and corporate stock buybacks. They pretend $20 trillion of debt and $200 trillion of unfunded welfare promises is no problem. "

"The $108 billion August deficit brought the year to date deficit to $674 billion. With one month left in the fiscal year, the deficit will end at approximately $750 billion. Does that strike you as normal? The propaganda media will spin this dreadful result as positive by saying it is down from $1.4 trillion in 2009."
"No one ever mentions the annual deficit in 2007 was “only” $161 billion. As a cherry on top of this mass deception, the total budget deficits reported since 2002 totalled $9.4 trillion, while the national debt rose by $13.8 trillion. Just a slight $4.4 trillion accounting discrepancy among friends."
The printing press is starting to fuse it's gears.

"With interest rates near record low levels, interest on the debt of $275 billion exceeds the total receipts from corporate income taxes. "
(Multinational corporations with profits held overseas would face a mandatory one-time tax as part of the planned Republican tax legislation, Treasury Secretary Steven Mnuchin said Wednesday. Multinationals would face mandatory tax on offshore profits, Steven Mnuchin says )

"Social Security, Medicare, Interest, and Obamacare are on automatic pilot accelerating rapidly. Congress just increased the war budget by $100 billion, because war is our main racket. Tax cuts for corporations and an infrastructure boondoggle are on the way. "
\"We know the $20 trillion debt will reach $24 trillion by the end of Trump’s first term. We know the $200 trillion of promises will not be honored. We know entitlement spending will skyrocket as Boomers retire en mass. We know the tremendously overvalued stock market, bond market and housing market will crash, ushering in part 2 of this financial crisis and triggering the worst phase of this Fourth Turning. "

"The chart below is a truth bomb obliterating the narrative. More than one in three households has $0 of savings, with 57% having less than $1,000."
https://www.theburningplatform.com/2...ling-futurity/
David Stockman SCREAMS about fiscal insanity from the people in D.C. who want to do away with the debt ceiling. WHAT IS THE ALTERNATIVE?
The final solution for people without money is the usual solution, DEATH.

Here is a good article on complexity. Do you blame the snowflake OR, do you blame the avalanche? Complexity vs risk.
Could Market Complexity Trigger The Next Crash? | Zero Hedge

The State with the biggest military is generally the State with the reserve currency. That State generally goes bankrupt from trying to maintain both the military and the empire. It takes a LOT of a$$-kicking to maintain an empire.
U.S. Wars and Hostile Actions: A List – Let's Try Democracy

Just a slight $4.4 trillion accounting discrepancy As more and more States ditch the dollar, they have less and less incentive to buy American products. Venezuela is the latest. As more States shun the dollar, the FED / treasury must make up the difference. Eventually, there is less and less in the dollar-debt markets.