Economic pressures

[Danny B]

Fall of the globalist economy and rise of populism

Here is a cross-post on rising fascism as represented by globalist forces trying to lock down control and erase popular representation.
http://www.energeticforum.com/304759-post6459.html
Globalization is a story in economic failure.
The German election is history and the French election is soon.
Armstrong, "I really hope Le Pen wins because that will force Brussels to look in a mirror just once. If Macron wins, we are looking at a very hard landing for the EU next year. This will probably rise up even violently and places Europe at risk of civil war from the standpoint that Brussels has federalized Europe behind everyone’s back."
https://www.armstrongeconomics.com/i...s-of-who-wins/

I can't possibly write about the economy and ignore something like a looming civil war. The globalists federalized Europe and figured the people would just go along with it. They figured that enough immigration would break up any popular resistance. The populace would be so busy trying to protect themselves from immigrant violence that they would scream for more protection from Brussels.

The Europeans have figured out that they are being raped figuratively by Brussels at the same time that they are being raped physically by the rapefugees and economically raped by the bankers. The mask has come off. Brussels has condemned the vote in Spain.
Everybody important reads Armstrong. He predicts that capital will flee public debt. Draghi talks about reducing stimulus. The ECB already owns 40% of European bonds. Imagine what private capital flight will do to the bond market.
The globalists want a EU army to put down rising populism. Europe could burn to the ground.

[Danny B]

money, crypto, asset-class, legal-device, the law

The globalists have a plan to retain control BUT, Christine LaGarde of the IMF speculates that both the central banks and the private banks could be displaced

"Let us start with virtual currencies. To be clear, this is not about digital payments in existing currencies—through Paypal and other “e-money” providers such as Alipay in China, or M-Pesa in Kenya.
Virtual currencies are in a different category, because they provide their own unit of account and payment systems. These systems allow for peer-to-peer transactions without central clearinghouses, without central banks.
In the long run, the technology itself can replace national monies, conventional financial intermediation, and even "puts a question mark on the fractional banking model we know today."

"If privately issued virtual currencies remain risky and unstable, citizens may even call on central banks to provide digital forms of legal tender"
This article is very important as the world is slowly shifting focus on just what CAN be money. The comment section from the article is even more enlightening. I'll copy several.

naive crypt0-muppetz unable to comprehend the IMF's endgame in their SDRcoin
this IMF gambit also removes all cash from equation, and hence everything is perfectly tracked.
I don't know why they'd (the elites) need to be afraid of anything. It's much like Obamacare... designed from the beginning to usher in something far worse. It's a global financial "head fake"

The power that cryptos possess cannot be denied.

Yes it can.

Crypto currency is an asset class. National currencies are traded for crypto with an exchange rate. Crypto are an escape valve from national currencies, and cryptos have "value" due to imposed scarcity. Crypto value is largely due to their security (and scarcity) - allowing transactions to avoid taxation, and to move purchasing power around the world outside of "one world government" scrutiny.

Asset classes are not money, even if they take on a form of purchasing power. Money gets its power from the law. National monies are "good for taxes, and the payment of debts." Crypto currencies do not have any legal basis, and are not good for taxes. Good luck getting goods and services priced in a crypto unit. Money's true nature is law, and cryptos do not have legal sanction - cryptos are an asset class invented by the market.

LaGarde is a total dumba$$ if she doesn't understand that private corporate bank money gets its entire money power by law, by an act that says their "bank money notes" are good for paying all taxes and debts. Yes, the sovereign rights of the people were usurped when private banking corporations took the money power for themselves. The power of the state will step in and enforce legal contracts denominated in the national private banking unit. Cryptos are not a legal device.

LaGarde is either casting hypnosis, or is fundamentally confused on the nature of money.
Money is not an asset class. It is a legal device that is used to transact. It can transact goods and services. Or, money can be used to buy asset classes. In the case of crypto, it is bought with money via an exchange rate. Crypto is PRICED as an asset class - it is not money. Don't be cofused because crypto has purchasing power.

The works of mankind, are what mankind produces, and his product is PRICED. Prices are denominated in a legal monetary unit.

Money is related to goods and services by way of volume of said money. Too much money chasing after goods and services - inflation. Too much money chasing after asset classes e.g. crypto, makes crypto price go up.

If you store money as savings, it is not an asset. It is latent demand. Money serves both as demand in the now (for transactions in the now) and latent demand, which demands from the future.
Much of the power of crypto is founded on it's not being a legal device. It can be owned as a matter of right.
Bitcoin is being artificially manipulated to get people to put those FRNs into cyberspace where they can be taken, thus balancing all the debt that was created.
anyone who believes they will escape the taxman through Bitcoin doesn't understand the IRS.
If the IMF is interested in Crypto-currencies, it is only in order to seize control over them and assimilate them into the government / CB complex
Never forget, that (((They))) will NEVER EVER relinquish control of their Babylonian Money Magic (aka fiat currency, fiat debt, fiat credit).

Not without losing an all-out war against the People.

If they have to, they will copy and piggyback the Crypto movement, so that they can eventually roll out their own as the New FRN.

ALL of the above is highly influenced by the ability of the State to get into any computer system. As long as this is true, your money is not safe. The new quantum computers may very well change all of this.

[wayne.ct]

Fiat Money

Something that has no intrinsic value but has perceived value is known as fiat. Somebody or some institution of society authorizes and produces this fiat. E.g. it costs a few cents to produce a $20 FRN with no intrinsic value but because the restaurant perceives it has value they are willing to trade it for a meal. A middle-man perceives the bit coin has value and electronically converts some bit coin into FRN equivalent on the fly. NOT because the bit coin is scarce. It works solely because the middle-man perceives it has value. The problem in all this is two fold. Firstly, both bit coin and FRN are fiat. No intrinsic value on either side of the transaction. Secondly, without computers and the Internet the exchange is not possible. Implicitly, this only works when the infrastructure is in place. Also, where computers are involved there is no privacy or security. Lastly, there is the specter of government intrusion at some point during or after the transaction.

The last two points are not understood or appreciated by most bit coin fans. Yet these two statements are true and devastating to bit coin. In support of this claim I submit the following hypothetical but entirely plausible scenario or future case. The government exercises its overreaching power and passes legislation or regulation stating that every bit coin exchange is regulated and taxable. Anyone and everyone that is a party to any such exchange is required to pay a prescribed fee or penalty as decreed by the government or suffer accordingly. The result is an end to private bit coin as a generally accepted form of exchange. Consequentially all crypto-currency becomes a part of the government and banking cabal.

The bit coin fans think or claim that they can stay one step ahead of the government and my hypothetical scenario will never happen. Call me skeptical. It will happen much sooner than never. I think I already see the foundation being laid to put this regulation into place. If you value your privacy, don't do bit coin.

[Danny B]

Tax distribution,, ZIRP poison,,, Our turn at bat

The current deck of cards has at least a dozen jokers in it. I'm avoiding making predictions about crypto currencies.
The last couple of posts illustrate the confusion between all the things that we consider wealth, assets, money, currency and store-of-value. There are plenty of other confusing areas. Tax reform is supposed to lighten the tax burden of the middle class. C. H.Smith writes about the tax burden.

"Among the 148 million income tax filers, the bottom 53 million owed zero taxes in the most recent year (2014), and the bottom half (74 million) paid an aggregate total of just $45 billion. So let me be very clear. There was still $4 trillion left in the collective pockets of these 122 million taxpayers — even after the IRS had its way with them!
By contrast, the top 4% or 6.2 million filers paid $802 billion in Federal income taxes. That amounted to nearly 58% of total Federal income tax payments."
"2. Few commentators draw a distinction between earned income (wages and salaries)and unearned income (dividends, interest, and more broadly, rentier income streams from the ownership of productive assets."
"If we separate out these sources of income and types of wealth, we can distinguish two separate classes of high-income taxpayers"
"These high-earners are tax donkeys--they pay much of the nation's income tax but have to work hard for that privilege. "
GREAT graphs, oftwominds-Charles Hugh Smith: What If the Tax Donkeys Rebel?

"In effect, stocks are viewed as good investments because they have been going up, and the evidence that stock prices will go up is that stock prices have gone up. Every additional market advance makes stocks look even better, based on past returns. Indeed, the more extreme valuations become, the more convinced investors become that extreme valuations don’t matter.

And that’s why we’re all gonna die. "
"A similar issue confronts the argument that stock valuations can be held at permanently elevated levels so long as the Federal Reserve keeps interest rates at depressed levels. The problem here is that if investors believe that future interest rates will remain locked at these lows, it will almost certainly be because growth has failed to accelerate as well. "
ZIRP is killing, savers, hedge funds, pension funds, insurance funds and just about everything else. You just can't have it both ways.
"What investors presently take as a comfortable environment of pleasant market returns and mild volatility is actually, quietly, the single most overvalued point in the history of the U.S. stock market. "
GREAT graphs, https://www.hussmanfunds.com/wmc/wmc170925.htm

"Due to slowing illegal immigration, record low birth rates, and young adult migration...depopulation is under way for large portions of the US"
These entwined issues are driving the Federal Reserve's interest rate and monetary policies to delay the resultant economic dislocations and property value collapses in affected regions. But thanks to Japan's more advanced crisis, the Bank of Japan's full game plan (which will almost surely ultimately be the Fed's plan) for dealing with this crisis has already been revealed. Hyper-monetization.

Hyper-monetization is the outright trade of newly created digital fiat for existing assets. This simple process of perpetually reducing the quantity of assets outstanding and simultaneously increasing the supply of money available to chase the remaining assets is the plan. Hyper-monetization explains why continued unchecked appreciation of "bubbly" urban real estate is a really good bet, why financial assets will continue rising, why bond yields will continue declining...but also why the overall economic situation will only deteriorate further and faster across much of America."
GREAT graphs, https://econimica.blogspot.com/2017/...rban-rise.html
The credit bubble can never be allowed to deflate. A falling population threatens to do just that. Eventually, we will all be "Japanese" where the GOV just prints unlimited currency with no plan to pay off the debt.
GREAT graphs.

The West has promoted births in populations that do not have the resources to raise children. Non-producers tend to raise families of little non-producers. The financial burden on the State just keeps growing.
Up to 600,000 expected to apply when L.A. reopens Section 8 housing list this month after 13 years - LA Times

Armstrong, "You will notice that the collapse of communism took place all by itself with the peak of the first 8.6-year wave from the birth of this Private Wave that began in 1985.65. This current wave of 2015.75 is 25.8 years from the 1989.95 event. This is the wave that should likely begin the collapse of socialism, which I have dubbed “Big Bang”. This should culminate in a major political reform 31.4 years from 1989.95 and that will be right after the conclusion of this wave in 2020 – 2021.35."

"This is also the most dangerous part of this political transformation process historically, for government will not go quietly into the light. They will rage against the fade of the light and their power. Policy makers have promised everything yet funded nothing. It has been one scam after the next. They have used economic growth as the pretend growth that would lead to boosting living standards. Yet it has been a constant rise in taxation to fill their pockets that has reduced the living standards for the middle class."
"Russia failed to rise, as did China, for they did not invest in the economy, but rather simply relied upon its resources to bring in cash. The wealth of a nation is based upon its people – not its raw resources of commodities."
"The hyperinflationists have been dead wrong. They cannot grasp that government is not that stupid, but instead is rather evil."

"Legislation like FATCA is shrinking the world economy at an alarming rate, confirmed by the collapse in the VELOCITY of money, which is in meltdown mode. The G20 nations are now all sharing info in search of money that they can confiscate. The local police are just robbing the people; the police are no longer there to protect the people but are revenue agents with guns and wheels.

The frightening rumors coming from behind the curtain are pointing toward a real dark age of constructive communism. You will technically still own your house, but eliminating banks and taking all accounts into the management of government is their solution"
"Social programs will be sharply reduced. They assume they will be able to fund them by controlling all accounts and eliminating paper money. This is the collapse in socialism that I have been warning about. They are arming the police as effective military weapons to ensure the people do not revolt against their power. Everything they envisioned as the social fabric is coming undone because their power and position comes first."

"Government played a part too, by allowing the buildup of social entitlements to win or maintain office. "
"Europe and America depend on government, whereas in former Soviet regions people do not trust government and have learned to rely upon family.

This time the Sovereign Debt Crisis is different. In 1931 when government defaulted, they wiped out the rich and bankers. This time, pension funds and insurance companies will be undermined and that will wipe out the future for many. Those in the West will have to learn the same lessons as the people who lived under communism – It’s our turn up to bat."
https://www.armstrongeconomics.com/w...urn-up-to-bat/

[Danny B]

CITI & CDOs,,, bond shorts

Reportedly, the banks are not profitable. They have turned BACK to derivatives to appear profitable.
"The leader of this effort is none other than Citigroup (NYSE:C), which has surpassed JPMorganChase (NYSE:JPM) to become the largest derivatives shop in the world. Citi has embraced the most notorious product of the roaring 2000s, the synthetic collateralized debt obligation or “CDO” security, a product that fraudulently leverages the real world and literally caused the bank to fail a decade ago.

“It’s an astonishing comeback for the roughly $70 billion market for synthetic CDOs, which rose to infamy during the crisis and then faded into obscurity after nearly destroying the financial system,” reports Bloomberg."
What could go wrong?
https://www.theinstitutionalriskanal...inancial-Fraud
Armstrong said that public debt is going to crash.
10/03 Active bond traders have never been more short Treasurys – Zero Hedge
The treasury can only hold the sharks at bay by continuously pumping in more "money". There is always the possibility that something could go POP without warning. Remember that; if a bank goes bust, it will take your deposit to make the senior bondholders "whole". It's all legal.
Everybody else will get a haircut.
10/03 Dollar surge sends emerging currencies reeling – Reuters A high dollar makes emerging market dollar-debt unpayable.

[Danny B]

Doubt creeps in to sovereign bonds

Here is a graph of the returns on a 10 yr. Treasury note if you just continuously roll it over.
https://d33wubrfki0l68.cloudfront.ne...71003-10yr.png
"The true DANGER AHEAD lies in the universal belief that treasuries (and other sovereign fixed income) offer a perfect hedge "
"Buying sovereign bonds against your risk asset portfolio will not only fail to save you in the next market crisis, but will instead be the source of the crash."
"But the global financial system has permanently changed. Quantitative easing, negative interest rates, Central Banks with balance sheets that are 40%, 50% even 95% of GDP. If anyone claims they know how this will unwind, or that they know everything will be fine, then ignore them. This is one of the craziest monetary science experiments ever concocted."
" There you have it. Sovereign bonds, instead of being a great saviour, will instead be the cause. "
https://www.themacrotourist.com/post...-danger-ahead/

"According to the Federal Reserve’s September Z.1 Flow of Funds report, the value of US equities jumped $1.5 trillion during the second quarter to $42.2 trillion, a record 219% of GDP. "
"A report by the International Institute of Finance released in June estimated that global government, business and personal debts totaled $217 trillion earlier this year. "
"according to a World Economic Forum study, the world’s six largest pension saving systems – the US, UK, Japan, Netherlands, Canada and Australia – are expected to experience a $224 trillion funding shortfall by 2050.

Noland’s warnings come during a time of exceptional public trust in governments, central banks, regulators and other institutions. "
"Noland believes that markets will eventually seize up as in 2008."
"The practical effect will be that the Federal Reserve’s balance sheet, far from shrinking as is currently projected, could actually expand, to as high as $10 trillion and possibly more.

Noland’s track record in this respect is impressive. The last time the Fed talked about unwinding its balance sheet back in 2011, he inked a column titled “No Exit” which predicted that the policy would fail (it did), "
https://www.sprottmoney.com/Blog/an-...diekmeyer.html

The FED tried to exit in 2011. It has talked up EXIT ever since then. The Chinese central bank talks exit. Mario Draghi of the ECB continuously talk EXIT. There is no such thing as a temporary rescue of a failing business / model. The FED is charged with maintaining full employment. Globalism distorted employment to such a degree that, there is no hope in that department.
The State prints money and pushes it into the upper loop so that the bankers and bureaucrats never go broke. Subsidising parasites does very little to help the producing economy.
Benjamin Franklin and Adolph Hitler created money solely for the lower loop. The economy did VERY well.
Here is a 5 y.o. vid of a Canadian girl who talks about how Canada has been SCREWED ever since it got a C.B.
https://www.youtube.com/watch?v=Bx5Sc3vWefE
Everyone marvelled at her intelligence and perspicacity. The legislature did absolutely nothing to correct the obvious flaws in the system.

[Danny B]

Empires in their death throes

The nation Dates of rise and fall Duration in years
Assyria 859-612B.C.247
Persia 538-330B.C.208
(Cyrus and his descendants)
Greece331-100 B.C.231
(Alexander and his successors)
Roman Republic
260-27 B.C.233
Roman Empire
27B.C.-A.D.180 207
Arab Empire
A.D.634-880 246
Mameluke Empire
1250-1517 267
Ottoman Empire
1320-1570 250
Spain1500-1750 250
Romanov Russia
1682-1916 234
Britain
1700-1950 250
http://people.uncw.edu/kozloffm/glubb.pdf
This is an excellent article. I do notice that he left out the Eastern Roman Empire headquartered in Constantinople.
http://people.uncw.edu/kozloffm/glubb.pdf

Another great read; Chodorov, The rise and Fall of Society.
https://mises.org/files/rise-and-fal...token=6KespDgB

"The American empire is coming to an end. The U.S. economy is being drained by wars in the Middle East and vast military expansion around the globe.
Alfred W. McCoy writes in his book “In the Shadows of the American Century: The Rise and Decline of US Global Power,”
Empires in decay embrace an almost willful suicide. Blinded by their hubris and unable to face the reality of their diminishing power, they retreat into a fantasy world where hard and unpleasant facts no longer intrude. They replace diplomacy, multilateralism and politics with unilateral threats and the blunt instrument of war.
"This collective self-delusion saw the United States make the greatest strategic blunder in its history, one that sounded the death knell of the empire—the invasion of Afghanistan and Iraq. The architects of the war in the George W. Bush White House, and the array of useful idiots in the press and academia who were cheerleaders for it, knew very little about the countries being invaded"

In 1989, Russia collapsed. The whole world could have disarmed and enjoyed the "peace dividend". It was not to be. The neocons and various warmongers forged ahead with extending the empire. This was partly our legacy handed down from the British empire. Much more than that, it was a bloodthirsty strategy forced on us by a small bloodthirsty tribe from central Asia.
https://biblicisminstitute.wordpress...ge-of-empires/

"They assured the public that U.S. troops would be greeted by grateful Iraqis and Afghans as liberators. They promised that oil revenues would cover the cost of reconstruction. They insisted that the bold and quick military strike—“shock and awe”—would restore American hegemony in the region and dominance in the world. It did the opposite. As Zbigniew Brzezinski noted, this “unilateral war of choice against Iraq precipitated a widespread delegitimation of U.S. foreign policy.”

"While rising empires are often judicious, even rational in their application of armed force for conquest and control of overseas dominions, fading empires are inclined to ill-considered displays of power, dreaming of bold military masterstrokes that would somehow recoup lost prestige and power,” McCoy writes. “Often irrational even from an imperial point of view, these micromilitary operations can yield hemorrhaging expenditures or humiliating defeats that only accelerate the process already under way.”

"The brutality abroad is matched by a growing brutality at home. Militarized police gun down mostly unarmed, poor people of color and fill a system of penitentiaries and jails that hold a staggering 25 percent of the world’s prisoners although Americans represent only 5 percent of global population. Many of our cities are in ruins. Our public transportation system is a shambles. Our educational system is in steep decline and being privatized. Opioid addiction, suicide, mass shootings, depression and morbid obesity plague a population that has fallen into profound despair."

“The demise of the United States as the preeminent global power could come far more quickly than anyone imagines,” McCoy writes. “Despite the aura of omnipotence empires often project, most are surprisingly fragile, lacking the inherent strength of even a modest nation-state. Indeed, a glance at their history should remind us that the greatest of them are susceptible to collapse from diverse causes, with fiscal pressures usually a prime factor. "

Side note, The S&P 500 Poised To Lose $10 Trillion In Value | Zero Hedge

“So delicate is their ecology of power that, when things start to go truly wrong, empires regularly unravel with unholy speed: just a year for Portugal, two years for the Soviet Union, eight years for France, eleven years for the Ottomans, seventeen for Great Britain, and, in all likelihood, just twenty-seven years for the United States, counting from the crucial year 2003 [when the U.S. invaded Iraq],” he writes."
You can thank GWB and his cronies.

"Many of the estimated 69 empires that have existed throughout history lacked competent leadership in their decline, " Does he mean obummer?
"A discredited elite, suspicious and even paranoid in an age of decline, will see enemies everywhere. The array of instruments created for global dominance—wholesale surveillance, the evisceration of civil liberties, sophisticated torture techniques, militarized police, the massive prison system, the thousands of militarized drones and satellites—will be employed in the homeland. The empire will collapse and the nation will consume itself within our lifetimes"
https://www.truthdig.com/articles/the-end-of-empire/

[Danny B]

GDP and debt

Kissinger informed the Saudis that they WOULD sell oil only in dollars. They had no military so, they accepted the deal. America promised to protect Saudi Arabia. Since then, pox americana has stolen a huge amount of Saudi gold AND refused to liquidate a couple?$trillion in GOV bonds that Saudi holds. Saudi has just signed on with Russia to buy the Russian S-400 missile defense system. Saudi is selling oil to China in Yuan. They are going to need those S400s

"First, it's important to understand that increased GDP does not necessarily increase wealth or improve quality of life. A GDP calculation is measuring-stick for economic activity....nothing more. A GDP figure makes no representations as to the quality, efficiency or economic utility of the activity producing the GDP"
here are a few examples of things that would significantly increase GDP.

Building a Superhighway, Bridge or Bullet Train connecting two uninhabited deserts or islands. (I+G)
Building a Ghost City. (I+G)
A military build up. (I+G)
Producing millions of tons of steel and cement held in a developer's CIP inventory. (I+G+C)
Creating even more manufacturing capacity (factories and mines) for steel, cement, etc.(I)
Building infrastructure. i.e.) Public works, water, power plants, tunnels, wells, utilities etc. (I+G)
Manufacturing phones, computers, clothing and consumer goods for export. (C+NX)
"So you get the point.....although it looks good on paper, incurring debt to build/finance things that aren't economically viable, produce little (or no) economic utility or fail to generate earnings and cash flow doesn't work too well over the long haul. At some point, the lenders won't be paid back"
"Nearly 60pc of new credit this year is being used to repay old loans. It takes four times as much new credit to generate a given amount of extra of GDP as it did a decade ago. “China’s rising indebtedness has come to represent all that is disconcerting about their economy,” they said in a report entitled “The Sum of All Fears”.
"Viewed another way, when we add the current, 2016 BIS figure, roughly US$28 Trillion of China's Core Debt plus the estimated US$37 Trillion +/- of Shadow debt (RMB 253.5 Trillion), we have a Debt/PGDP ratio approaching 900% of "Productive" PGDP. The Comparable, relatively constant, US ratio (250% +/-) is shown in blue below."
China's Shadow-Lending Ecosystem Could Be As Large As $40 Trillion, PBOC Guesses | Zero Hedge
China is going to have to revalue gold MUCH higher to escape from this debt trap.

GDP minus the federal; debt, https://dailyreckoning.com/wp-conten...7_GDP-DEBT.png
"since 2008, this artificial stimulus has averaged 7.45% of GDP. The arithmetic… is quite simple; without the artificial stimulus created by spending the proceeds of newly issued Treasury bonds, our GDP has declined an average of 7.45% each year since 2007! "
"Prominent economists Carmen Reinhart and Kenneth Rogoff have shown that annual economic growth falls 2% per year when the debt-to-GDP reaches 60%.

When it hits 90%, growth is “roughly cut in half.”
When did the U.S. debt-to-GDP ratio nick 90%?
In 2010… shortly after “something broke” in the economy.
What is America’s current debt-to-GDP ratio?
About 105%.
https://dailyreckoning.com/shocking-...vernment-debt/

"People saying: this system isn’t working. We want a better one — or else we’d rather just tear it all down. Stagnation predicts right-wing swings. The harder the stagnation bites, the harder the swing. And this degree of stagnation is producing more and fiercer extremism — larger and larger groups of people saying no system, only tribalism is better than this one."
https://eand.co/the-old-world-just-d...e-15d2e46b011f


"Money cannot be “scarce” for a nation with a sovereign currency. Real resources can be scarce, not a nation’s sovereign currency. Modern Monetary Theory is based on reality, it explains how the monetary system in a nation with a sovereign currency actually functions. Most monetary theory taught in conventional economic classes is a fiction arising from carryovers from the era of the gold standard in which nations lacked a sovereign currency."
"Republicans and New Democrats “whose goal is to shrink government” will “point to deficits and debt as their proof that we cannot afford” the safety net. Of course they will. They constantly promote that propaganda."
https://renegadeinc.com/jared-bernst...gn-currencies/

[Danny B]

Mo debt,,, the pension debt pacman

"So, in less than a month, the U.S. Government public debt increased by a stunning $500 billion. Along with the half trillion Dollars worth of new public debt, the U.S. Treasury will have to pay an additional $11 billion a year in interest payments based on an average 2.2% rate."
https://srsroccoreport.com/stunning-...o-one-noticed/
"They" claim that we could never just print this money.

"Did the Fed's #2 Quit to Avoid Blame for the Coming Inflationary Storm?
by Phoenix Capital... - Oct 5, 2017 11:28 AM
Vice-Fed Chair Stanley Fischer recently resigned unexpectedly from the Federal Reserve."
Is the FED planning some drastic move that would restrict GOV spending?

"Social Security, by comparison, has a roughly 3-to-1 ratio of workers supporting retirees, but KERS’ ratio is less than 1 to 1.
" the number of retirees drawing a pension from the Kentucky Employees Retirement System (Non-Hazardous), the struggling $2.6 billion fund that serves most of state government, officially topped the number of active workers paying into it.
Read more here: Kentucky pension crisis: State retirees now outnumber workers | Lexington Herald Leader

The Illinois legislature passed a huge tax increase and then,,, ran away. https://mishtalk.com/2017/10/05/20-o...d-of-retiring/

FED GOV is broke. State gov is more broke. Municipal gov is more brokerer.
http://www.zerohedge.com/sites/defau...0JPM%202_0.JPG
"To our great 'shock', Chicago residents win the award of "most screwed" with over 60% of their tax dollars going to fund debt and pension payments. Meanwhile, there are a dozen municipalities where over 50% of their annual budgets are used just to fund the maintenance cost of past expenditures."
All this money going to debt and pension funding squeezes out all other funding. The rubber meets the road in the municipal bond market. If investors dump munis, it is all over for the cities.

The CBs are trying to hold back deflation even though wages and earning power have been severely deflated. They pump in money to try to get the credit bubble to grow. It NEVER works out the way that they had planned.
"As Wallstromg sarcastically points out, the big irony in this is that "the current monetary policy regime, which aims for "price stability", started in 1995."
http://www.zerohedge.com/sites/defau...tockholm_0.jpg

10/06 Tesla only made 260 cars last quarter—big trouble ahead – Casey Research Their market cap is larger than GM. What could possibly go wrong?
10/06 Trump expected to decertify Iran nuclear deal – Reuters They told him that there won't be any blowback.
10/06 S&P 500 sets sixth record high close on tax overhaul optimism – Reuters Nothing but blue skies ahead.

[Danny B]

Mysterious inflation

I read unimaginable amounts of BS trying to find some truth.
10/06 Tesla only made 260 cars last quarter—big trouble ahead – Casey Research
10/07 Tesla cars are flying off the lot, stock looks ready to break out – The Street
10/06 The big banks are coming for bitcoin – Zero Hedge
10/06 Banks now want a piece of bitcoin – Fortune
10/07 Rates are jumping as jobs report showed hidden signs of inflation – CNBC
10/07 BLS caught fabricating wage data – Zero Hedge
10/06 US payrolls fall 33,000 on storms, jobless rate at 4.2% – Bloomberg
10/06 What hurricane? Full-time jobs surge – Zero Hedge
You get the idea. I have to do a lot of reading.

Everyone and their uncle were predicting hyperinflation. Now, they are mystified that it hasn't appeared. The stock market is flying higher than it has before in history. It is at 2.7 times historical valuation. The dolts just refuse to look to the upper loop of the economy while looking for hyperinflation.
"Two weeks ago, Janet Yellen finally - and shockingly - admitted that neither she, nor her Fed peers, "fully understand inflation" and that the "shortfall of inflation this year is more of a mystery."
"while the Fed may have failed to stimulate inflation in real economic prices - and especially wages - it had unleashed hyperinflation in asset prices."
"while traditional inflation measures may not call for aggressive tightening, we believe high valuation (e.g. cyclically adjusted price-earnings, or CAPE, multiples above 30x) is a sign of inflation in financial assets that is hard to miss. This is the elephant in the room."
As aggregate earning power in the West crashed, the banks became insolvent. The CBs rescued the banks by pumping in boatloads of pixilated liquidity. This liquidity flowed into assets because the middle class was consumption constrained. The upper loop is busy inflating everything in sight.
"And while SocGen is battening down the hatches, the French bank is surprised by how little credibility the Fed's stated tightening intentions have in the market, because as it writes, when looking at its monetary newsflow indicator "Nobody seems to believe the Fed dots" and with good reason. To wit:" "This Is The Elephant In The Room": Even SocGen Is Now Calling It A Bubble | Zero Hedge
"And while stocks remain oblivious, expecting to be bailed out the moments there is even a 3% "crash", bonds are starting to get nervous"
Richard Koo talks about inflation, https://www.youtube.com/watch?v=8YTyJzmiHGk

Here is a comparison of the many bubbles, Infographic: The Everything Bubble Is Ready to Pop | RiskHedge

[Danny B]

We'll never know when it is time to short the market

The stock market is of secondary importance compared to the bond market. BUT, stocks are what everybody is looking at. The FOREX trades $5 trillion a day but, everybody is looking at stocks.
The stock market started flashing red back in 2014. Several fund managers jumped in to short the market. They have been skinned alive since then. Everybody who tries to short the market gets shot down.
By almost ALL indicators, the stock market is far up into nose-bleed territory. Armstrong says that it is not overbought because lots of people are still on the sidelines. He somehow ignores record valuations, record margin debt and a few other major indicators. The stock market is at new records as far as valuation but, it is not at the maximum previous duration.

"Bank of America Merrill Lynch (BofA) runs something it calls the “Sell Side Indicator.”
It is a thermometer of sorts, a thermometer of investor emotion."
"BofA claims, “It has historically been a bullish signal when Wall Street was extremely bearish, and vice versa.”
"When this BofA thermometer is one standard deviation above its four-year average, the S&P 500 declines almost half the time, according to analyst Joe Ciolli via Business Insider.

It is now nearly two standard deviations above its four-year average.
History has witnessed 13 previous price collapses, according to famous Yale economist Robert Shiller.
And he says, “The U.S. stock market today looks a lot like it did at the peak before all 13 previous price collapses.”
"If the bubble has entered its terminal phase, the past suggests it may expand miles and miles before Judgment Day.
Yes, this is the second-longest bull market in history."

"Since its beginning on March 9, 2009, the S&P 500 has risen 267.61%. It has lasted 3,108 days. But… it needs more than another 1,300 days to set the duration record and has to almost double again to rival the return of the market over the 13 years that began in 1987."
https://dailyreckoning.com/wisdom-folly-crowds/

A long article on the sheep mentality of investors, Sheep Logic - Epsilon Theory

"Worse yet, house prices across the country remain grossly inflated. In fact, they’ve far surpassed their pre-2008 housing bubble levels, according to the Case-Shiller US Home Price Index."
"Take the Barclays “Skyscraper Index,” for example. Gathering data from the past 100+ years, the index examines historical booms in large commercial construction projects (primarily skyscrapers), and their tendency to precede economic downturns."
3 Uncommon Signs That An Economic Collapse Could Happen Soon
Puerto Rico is in deep trouble, "It Will Be A Disaster": Puerto Rico To Run Out Of Cash On October 31 | Zero Hedge

"The bull market in everything is really a global realization that government is in trouble. We are looking at money getting out of banks and government to REDUCE the risk of government as we move forward. So this time it is different. Normally, we have one sector at a time in a bubble, commodities, stocks, real estate, tangible assets. We normally do not see a bull market in everything unless there is a wave of movement away from government."
https://www.armstrongeconomics.com/a...-is-different/

The EU is bust. More taxes are needed. NO problem. Just pass retroactive taxes. 15 years should do it, https://www.armstrongeconomics.com/i...-for-business/

[Danny B]

Liar loans,,,, maintaining confidence

In the run-up to the 2008 crash, FED GOV penalized banks who refused to create liar-loans. The FEDs were going to magically raise the rate of home-ownership. This would send business to the banks for purchases that were not merited by the stated wages of the borrower. The borrower could state anything that he wanted. The banks resold the loans to other investors who had not the slightest possibility of verifying the inherent risk. These investors had to take the word of the rating agencies that the loans were good.
The banks got all the up-front money. The rating agencies rationalized that the the loans deserved the same credit rating as the loan creating bank. The banks paid the rating agencies for these glowing reports. When too many NINJA borrowers sent in too much jingle-mail, the big mortgage lenders went belly-up. EVERYBODY had exposure to the credit system and, it locked up.
We can complain about greedy banks but, their greed was nothing new. When slick Willie removed Glass-Steagal, He threw all your savings into the lap of the banks. The Maestro, Greenspan argued that the banks themselves were the BEST regulators of their own business. He now laments that belief. The individual employees of the bank ran totally wild and destroyed many of their employers (banks)
You can lay the ultimate blame on the State.

When the credit markets locked up, nobody could buy anything. 1/2 of car sales were financed by lenders like GMAC that weren't banks and had no cushion.
"annual new car sales decreased by an order of magnitude, from about 16 million in 2005 to less than 10 million."
https://insight.kellogg.northwestern...cers-necessary
I remember reports of shiploads of BMWs that couldn't be unloaded at port because, there was no place to put them. Dealers had no room. I find NO mention of this in a search.
People spend money depending on how rich they feel,,, how much confidence they have in the economy. The FED is juicing the economy by $billions every day. The Central banks seem? to believe that if ;they buy hundreds of $billions in stocks, the stock market will never go down.

Here is a single chart that shows their attempts at deflation and, the likely outcome. It gives some indication of timing.
http://www.zerohedge.com/sites/defau...07_stock_0.jpg
RISK, On a reward-to-risk basis, investors have not been this 'offside' since 1994...
http://www.zerohedge.com/sites/defau...006_EOD1_0.jpg
Visualizing The Real Test For Market Bulls (In 1 Simple Chart) | Zero Hedge
The article has a load of good charts.

Here is a set of charts from the cheerleaders, https://www.bloomberg.com/news/artic...-era:thinking:
Scientific advances are bringing us price deflation in many areas. All we need now is free energy.
http://www.zerohedge.com/news/2017-1...tion-one-chart
The 25 people who brought on the financial crisis.. 2012
https://www.theguardian.com/business...heart-meltdown

[Danny B]

The shape of the coming domestic war

The Bretton Woods credit card allowed pax Americana to become pox Americana. Unearned Wealth destroys morality. All the worst people occupied the behind-the-scenes power structure. $Trillions were poured into the enterprise of thrashing the world for profit. Any State that couldn't stand up to the U.S. military was sacked and looted.
Trump might stay in Afghanistan for minerals - Business Insider
Trump's Afghanistan strategy may unlock 3 trillion in natural resources
https://www.cnbc.com

Very few States can stand up to the U.S. military. The FED and the dollar are what must be attacked to stop Tel Aviv on the Potomac. The maintenance and expansion of pox Americana depend on continued acceptance of the dollar for our imports. The West is soon to crash.
The R.O.W. is helping things along because they don't want to be looted any more.
The P.B.O.C. is hyperinflating the Chinese currency supply. BUT, all this liquidity can run where it will. The outflow from China alone is about $ 1trillion a year. Draghi claims only $60 billion a month. Kuroda (BOJ) is helping also. Hyperinflation in the asset markets is what will bring them down. There will be no credit and no trust. Only physical gold will be accepted by the East. True, they like gold very much. More importantly, America doesn't have any. The international battleground will be the oil patch.
The local battle will be between retirees and the military.

The neocons thrashed the snot out of the Middle-East. Those who have been thrashed are now flocking to the protection of Russia. Their new defense capabilities have attracted a lot of admirers.
Is This The Geopolitical Shift Of The Century? | OilPrice.com

"Government is the ultimate enforcer of promises, but we have no recourse if it chooses to break them "
"Limited though Social Security and Medicare are, we attribute one huge benefit to them: They’re guaranteed. Uncle Sam will always pay them – he promised. "
"net present value of the US government’s 75-year future liability for Social Security and Medicare. That amount exceeds the net present value of the tax revenue designated to pay those benefits by $46.7 trillion. "
"Every mathematical model of the economy’s dynamic transition path incorporates the infinite horizon fiscal gap, which is called the government’s infinite horizon intertemporal budget constraint. This constraint has to hold, which means the infinite horizon fiscal gap must be zero. Our country’s infinite horizon fiscal gap is far from zero. It would take an immediate and permanent 59 percent increase in all federal taxes or an immediate and permanent 33 cut in all federal expenditures "

"After the next recession the deficit will be $30 trillion within 4–5 years and then grow from there at a rate of anywhere from $1.5 to $2 trillion per year. "
"Many Americans think of “their” Social Security like a contract, similar to insurance benefits or personal property. The money that comes out of our paychecks is labeled FICA, which stands for Federal Insurance Contributions Act. We paid in all those years, so it’s just our own money coming back to us.

That’s a perfectly understandable viewpoint. It’s also wrong.

A 1960 Supreme Court case, Flemming vs. Nestor, ruled that Social Security is not insurance or any other kind of property. The law obligates you to make FICA “contributions.” It does not obligate the government to give you anything back."
"Notice that Larry Kotlikoff said we would need an immediate approximately 50% increase in taxes to fund our future deficits. "
Every one dollar rise in taxes results in a 3 dollar shrinkage of the producing economy. Plot THAT on a graph.
"lockbox with Social Security funds in it. That money was spent on other government programs and debts." WARS
Uncle Sam’s Unfunded Promises | Thoughts from the Frontline Investment Newsletter | Mauldin Economics

10/09 In a switch, GOP deserts its budget-cutting mantra – WaPo They have looked into the abyss and, changed their minds.
10/09 Cooking books: DOD, HUD defrauded taxpayers of $21trln 1998-2015 – Mint Press
$10 Trillion Missing From Pentagon And No One — Not Even the DoD ...
https://www.activistpost.com › Activism
The military has pi$$ed away MANY trillions of dollars. We have junk infrastructure. The military-industrial-banking complex will NOT want to shrink when fiscal reality strikes during the default cascade.
The battle lines will be between retirees and the military budget. Pox Americana will try to continue with business as usual.

[Danny B]

Volatility will returm,,,, in the form of a mushroom cloud

I tell people that want to prep to store diesel and cash. Puerto Rico is desperately short of,,, cash and diesel.
https://www.nytimes.com/2017/09/29/u...ages-cash.html

"The promise of investor nirvana where the pains of real life no longer matter. If you only pay attention to the record highs headlines it all looks rather fantastical these days."
"We find ourselves in a very unique point in history and in a world dominated by false narratives. It is a challenge to keep an analytical grip on reality"
"The $VIX’s corollary, the inverse $XIV, embarked on an explosive near one way journey since the US election coinciding with over $2 trillion central bank intervention in just the first 9 months of 2017:"
2 $trillion,,,, what could go wrong?
"Aside from the obvious artificial liquidity avalanche we’ve had speculated about the driver of all this and the answer may simply be the promise of even more free money, specifically tax cuts."
Side note, 10/09 “Tax reform is dead. Full stop”: Cowen – Zero Hedge
“What is being proposed is a pretty large expansion of our deficits,” Fink told Bloomberg TV. The plan contains up to $6 trillion in tax cuts, according to independent analysts.”
"This new administration wants massive tax cuts. This year the military budget was already increased by $80B to $700B."
"Central bankers have flat lined risk and investors have crossed to the other side expecting nirvana & free money forever."

"What would be signs of nirvana turning into a nightmare?
Keep an eye on this thin red line:"
https://northmantrader.files.wordpre...g?w=1220&h=538
It will get tested again. Currently the trend line is barely 2% below current prices and it is rising steeply.
When price breaks below this line it’s time to return to real life."
https://northmantrader.com/2017/10/08/flatliners/amp/

"According to Hyman Minsky, economic stability is not only inevitably followed by instability, it inevitably creates it. Complacent humans being what they are. If he’s right, and would anyone dare doubt it, we’re in for that mushroom cloud on the financial horizon."

"it is time to be afraid and wake up. And that is not just true for investors or traders, it’s true for ‘everyone out there’ perhaps even more. Central bank policies, QE and ultra low rates, have distorted the financial system to such an extent -ostensibly in an attempt to save it- that the depressed, compressed volatility these policies have created can only come back to life with a vengeance"
"it’s all true. Financial markets haven’t been functioning for years, and there have been no investors either, only gamblers and profiteers, as savers and pensioners have been drawn and quartered. Central bankers have eradicated price discovery, nobody knows what anything is really worth anymore, be it stocks, bonds, housing, gold, bitcoin, you name it. "

"People mistakenly think that a market’s heartbeat can be found in for instance rising stock prices, the Dow, the S&P. But that’s simply not true. The S&P is a bloated corpse increasingly filling up with gases that will eventually cause it to explode, with guts and blood and body parts and fluids flying all around."
"The US stock market’s heartbeat manifests itself in volatility, and the overall economy’s heartbeat in interest rates. Rising and falling volatility and interest rates is how we know whether a market is in good health, or even alive at all. They are its vital signs."
"The markets the central banks’ $20+ trillion QE and ZIRP have created are bloated corpses that no longer have a heartbeat. They are zombies. But markets, unlike natural bodies, won’t die, they can’t. They will instead rise from their graves and take over Wall Street, the City, and then everyone else’s street. "

"The last time the S&P 500 moved at least 4% was nearly six years ago. In fact, the S&P 500 had four consecutive days with 4% (or greater) changes in August 2011. Other than 2008 and the crash of ’87, that is the only other time since the Great Depression to see four consecutive 4% changes. That isn’t anything like today’s action."
"Natural bodies can tend towards equilibrium, i.e. death. Markets cannot. They’re doomed to flatline, and then to always come back from near death experiences. They tend to do so in violent ways though. When volatility at last returns, so will price discovery. It won’t be pretty."
https://www.theautomaticearth.com/20...nd-volatility/

Up until now, crypto currency just is NOT the answer. The State hates it and it has been hacked TOO MANY times.
https://dollarcollapse.com/cyberwar/...k-complacency/

[Danny B]

Job Loss,,,loss of confidence,,, deflation

As all of you know by now, Armstrong's main model is a model of confidence.
"Consumption was India’s big story. Its 1.3 billion population was expected to guzzle everything from iron to iPhones, driving global growth and cheering investors such as Apple Inc. and Goldman Sachs Group Inc.

For a while everything seemed smooth. Indians were the world’s most confident consumers and the $2 trillion economy was the fastest-growing big market. "
"Then, last November, Prime Minister Narendra Modi voided 86 percent of currency in circulation, worsening a slowdown that had started earlier in the year. "
"About 27 percent of Indians surveyed said incomes have fallen, pushing overall sentiment into the "pessimistic zone." Employment "has been the biggest cause of worry," the Reserve Bank of India said. Government data show food price deflation, hurting rural incomes, and supply of new houses in India’s top eight cities falling 33 percent January-September, hit by a demand slowdown, according to real estate services firm Cushman and Wakefield."
"Manufacturing jobs are forecast to fall about 30 percent this year and broader surveys show the hiring outlook is near a 12-year low. "
Even India faces low-wage competition.
"There was an absolute decline in employment between March 2014 and 2016, "perhaps happening for the first time in independent India,"
" Stressed corporates could derail the overall investment recovery for another two-to-three years, given they are using only 40 percent of capacity," Outsourced from India.
"inflation is accelerating as oil prices rise and the government already has Asia’s widest budget deficit."

Side note, "Modi went on to install the firebrand Hindu cleric Yogi Adityanath as chief minister. Adityanath responded by cancelling nearly six billion dollars’ worth of bank loans to farmers. This cancellation started off a chain of events in other states, which some estimate is likely to result in tens of billions of further debt forgiveness, raising pressure on public finances. "
https://www.bloomberg.com/news/artic...drop-in-demand

NUMEROUS writers continually call for hyperinflation....a drastic rise in the quantity of "money". BUT, the economy is in deflation. How can that be?
Tax Haven Cash Rising, Now Equal To At Least 10% Of World GDP
https://www.forbes.com That is just the money in tax havens. What about all the money that has moved into bonds? The bond market is valued at about $180 trillion.
Stocks are valued at about $68 trillion.
Stocks and corporate bonds depend on the production-consumption cycle to generate returns. If manufacturing jobs in India are expected to fall 30%, what does that imply for the rest of the world?
"using only 40 percent of capacity,"

As wages, employment and consumption continue to fall, productivity will eventually follow. The upper loop of the economy refuses to invest in productivity that is just going to be surplus from the start. The investor loop has moved their money to places that they figure are safe. This is galloping deflation in both the volume and velocity of money.
The State responds by pumping liquidity into the public bond market. Armstrong believes that the state will eventually blow itself up.

The FED printeth and, the rich squirrel it away. Yellen desperately wants inflation.
December 2016: 1.9%
January 2017: 1.9%
February 2017: 1.9%
March 2017: 1.6%
April 2017: 1.6%
May 2017: 1.5%
June 2017: 1.5%
July 2017: 1.4%
August 2017: 1.3%
"Why are Yellen and her colleagues in denial about the persistence of disinflation? Why are they insisting that an obvious trend is merely “transitory?”

The first analytic flaw is Yellen’s belief in the Phillips Curve. This model presents an inverse relationship between unemployment and inflation. As unemployment goes down, labor scarcity leads to wage increases above growth potential. This leads to inflation." Not with bogus numbers.
"he Fed assumes that because of low unemployment today, inflation must be right around the corner.

The only problem with the Phillips Curve is that it does not exist. It has no empirical support. In the late 1970s and early 1980s we had high unemployment and high inflation. Today we have low unemployment BS and low inflation. Both results are the exact opposite of what the Phillips Curve would predict."
"The Fed has created $3.5 trillion of new money since 2008, yet there has been no appreciable amount of inflation for nine years.

The cause of inflation is not money supply but psychology. It is expressed as velocity — the speed at which money is turned over through lending and spending. Velocity depends on behavioral psychology"
"Second, the September employment report came out last Friday. A Reuters survey of economists had expected the economy to add 90,000 jobs in September.

How many did it really add?
Zero. Less than zero, actually. The economy shed 33,000 jobs. "
https://dailyreckoning.com/rickards-...got-wrong-fed/