Economic pressures

[Danny B]

What changes can gold bring?

Early money was all tangible and, was a method to streamline barter. It had to have high value so that it was much easier to transport than the barter-able items. Money was always something that was rare/valuable. The invention of State-backed paper money was always a scheme to rob the producers. Tangible money was inherently stable. Their have been exceptions but, not many. Germany went off the silver standard when the Comstock Lode was discovered in Nevada.
In recent eras State paper money was always backed by guns. Barter is heavily discouraged. The IRS claims that you still owe taxes on any barter transaction.

" The godfather of modern economics, John Maynard Keynes, dismissed the concept of gold as money—the gold standard—as a “barbarous relic.” Another economics titan, Nobel Prize-winner Milton Friedman, conceded that gold is good in theory, but opposed gold in practice, arguing that a return to a gold standard is “neither desirable nor feasible.”
Both Keynes on the left and Friedman on the right got it really, horribly wrong.
The gold standard is neither barbaric nor impractical, and it is more urgently needed every day. This is because the standard of paper money is failing. It has set in motion an accelerating series of crises, each worse than the previous. The nation cannot continue to borrow to infinity, nor can the U.S. endure zero interest much longer.

Very true! I detail all the failures of the Fed in The Fed Flunks: My Speech at the New York Federal Reserve Bank "
The gold standard only works for the producers, NOT for the banks. Credit is still available but, ONLY from people who have savings. When they deposit their savings in a bank, the bank takes over the chore of verifying the safety of a prospective loan/client. The depositor is paid a fee for the rental of their money by the bank. The borrower pays a higher fee so that the bank has some profit.

The system worked very well but, it was inadequate for financing wars. How do you ascertain the credit worthiness of conducting a war? The State and the banks go happily marching off to war but, only figuratively. You and I get to face the bullets. The sons of bankers are very visibly absent from the armed forces. The war-profiteers have loaned a lot of money to the State. The State hasn't been very good at winning these wars. They blow things up but, don't get enough booty to pay the war debt.

China and Russia have a lot of gold between them. They will NOT back the Yuan with gold. They will produce gold-trade notes. They will (initially) only produce notes (gram & kilo) in direct proportion to a pool of gold. I suspect that all trade will move to the blockchain as a perfect record of transactions. Trade imbalances will be settled with gold trade notes. There will NOT be any running trade imbalances. You settle ? every quarter.
Bretton Woods allowed America to run huge trade imbalances because of dollar demand. That will come to an end. The Yuan oil market is heavily subscribed by States that are tired of Pox Americana. China and Russia have a stated objective;
TASS: World - China vows to maintain global peace, stability jointly with Russia

Trump wants to bring the military home from Syria to rebuild America. How MUCH of the military will he bring home? Will he bring back the military who are protecting the poppy crops in Afghanistan? That would allow the Taliban to RESUME the eradication of the opium business. How many bases will he close?

[Danny B]

Contracting to the core,,,Excess capital = MAL investment

The State has the biggest guns and, ultimately, the most control over disbursement of new money. The State needs to spread the money around to buy the votes of the beggars, bureaucrats and bankers. The actual producers make money honestly.
" All top 10 richest zip codes are now in one region: the Washington D.C. area. "
"Economic wealth and power is used to expand political power, further extracting the wealth of the Periphery to maintain the lifestyle of the Core. While this may seem a practical strategy, it isn’t. At one time the Periphery was creating maybe 2/3rds of the wealth of the nation, costing nothing, and that was with no more infrastructure than remains today.

"So when those places are idled, 2/3rds of the nation’s GDP also vanishes, and while the Core can maintain their lifestyle by cannibalizing the remaining energy and attention, the entire nation they are part of only becomes far poorer. "
"What happened to my community, my country, my area, and all the vital work those long-abandoned areas used to do, what happened to the massive GDP those areas used to contribute, and the answer is simple:
An organism contracts from the periphery to the core."

"This leads to the problem she highlights, which is social and political fracturing. With a majority of the wealth pulled to the Core, the Periphery withdraws its economic and social consent in a sense of unfairness that is only validated by further extractions, concentrations, and non-cooperations. "
"This can make it more difficult to run even the Core economy as disagreements develop between Core vs Periphery or entitled vs disenfranchised peoples even within the Core itself, leading to a difficulty maintaining compliance, resource supplies, disagreements on how to allocate wealth, support infrastructure, and so on. "

Nothing new; Abraham Lincoln said war was over taxes
The Civil War began because of an increasing push to place protective tariffs favoring Northern business interests and every Southern household paid the price. In 1828, northern politicians forced the south to buy goods from the north by passing federal laws that placed high taxes on goods imported from Europe. This angered many southerners,
Abraham Lincoln repeatedly stated his war was caused by taxes only

"If a compromise cannot be reached and the Core attempts to force its will via social and military force, the price of compliance becomes too high and fails, and with it, the cooperation, the social contract that makes a people or a nation one unit. It fractures, and when it does, those pieces break up and become, as he says, simpler, Less Complex societies. Less specialized, less concentrated, and less centralized, or by our modern pejorative view, “Primitive.”
Kunstler uses the term "World made by hand".
"Since large, concentrated societies contract to the Core to protect themselves and their critical assets, those in the core historically won’t offer time or resources to help anyone but themselves: the army, the police, the roads, the tax officials."
https://www.theautomaticearth.com/2018/03/the-core/

Very interesting article on the dis-solution of Venezuela, https://www.theorganicprepper.com/ve...lued-currency/
Very interesting vid on what happens when the internet goes down, Puerto Rico. https://www.youtube.com/watch?v=GjzeFOKUR04
Just in case that you have any illusions that the State is looking out for you.
https://www.zerohedge.com/news/2018-...nd-get-away-it

BTC news, https://www.zerohedge.com/news/2018-...C0%2C0%2C0%2C0

3/29 Amazon loses $53 billion in market value, FAANG’s biggest loser – Bloomberg
Stockman has some good observations on that.
"That's why Bezos can kill established businesses with impunity. The casino allows him to run a pernicious business model based on "price to destroy", rather than price for profit and a return on capital.
And why not. At the end of the mini-correction in February 2016 Amazon's market cap was $230 billion, but just 25 months later it was worth $775 billion at its March 12 peak.

That staggering $545 billion gain in market cap had absolutely nothing to do with financial performance, of course. "
You have it right there. ALL excess capital creation must flow into MAL-investment. How could it be otherwise?

" As we also recently explained, give its cloud business the most expansive PE multiple imaginable and you still have more than one-half trillion dollars of bottled air:"at how many atmospheres of pressure?
"It is not by accident that the US has 5-15 times more retail space per capita than the rest of the developed world. For instance, Australia has 16 square feet per capita and the square footage per capita for UK, France and Germany are all in the single digits.

Needless to say, after all of this cheap-finance driven excess and mal-investment, Bezos now comes in with his half-trillion dollar e-Commerce sledge-hammer and pounds the chart below to smithereens."
VERY good article, http://davidstockmanscontracorner.co...ails-an-acorn/

[Danny B]

Competing business models, China and the Anglo world

Dunno if anybody is interested but, I want to write about the Yuan-oil market. Most commodities are priced in U.S. dollars. After WW II and Breton Woods, dollars flooded the world. This was partly due to the Marshall Plan. The U.S. dollar had the most stability because it was so widely used. Both producers and speculators must have a stable currency. If not, they must raise their profit margins to compensate for unstable prices. The same is true for people who rent their money. The more stability, the less interest that they need.

China has stated off with oil because it is the most traded commodity. Russia is a willing partner, accepting Yuan for oil. China hopes to broker oil to many other States. That is why it has opened a futures market. China plans to create more Yuan-denominated markets for other commodities. At the same time, China has been plagued by widespread corruption in internal commodity markets. This doesn't inspire much confidence in would-be traders.

Here is an excellent article on the Yuan oil market.
https://www.zerohedge.com/news/2018-...-contract-gold
It speculates at great length about just how widely China can spread the Yuan. It points out that the Yuan is not a freely traded currency. China can't pry open other commodity markets if the Yuan is locked up. Here is the problem.
"The Impossible Trinity theory was advanced in the early 1960s by Nobel Prize-winning economist Robert Mundell. It says that no country can have an open capital account, a fixed exchange rate and an independent monetary policy at the same time.
You can have one or two out of three, but not all three. If you try, you will fail — markets will make sure of that."

China needs to let go of control of one of the three. This invites new problems. The Yuan could rise enough to weaken their export advantage OR, capital flight could pull money out of China. China already has about $ 1 trillion a year in capital flight. China has a tough balancing act if it hopes to be a big commodity broker AND an export powerhouse.

Jim Willie. "The view that makes sense is that Russia will set oil output policy and China will set oil payment policy, as the Saudis have found a new sponsor and protector. "
"In typical Chinese manner, they sow the seeds of commerce, which produce jobs and economic growth, leading to more wealth and a better standard of living. The US approach for too long has been to foment discord, to sell weapons, and to observe economic destruction,"
"Algeria has turned to China for development, after the IMF left the nation with poverty and debt servitude following a debt restructure. "
"A key sign of the growing trade between the two countries, Algeria uses the Yuan (RMB) currency in exchanges with China instead of the USDollar. Traders at ports cite big demand for the RMB currency. Algeria has had its fill of predatory IMF funding"

"It also devaluated its currency by 40 percent. Many Algerians correctly blamed the IMF, seeing it as a foreign tool that created poverty. But the presence of China is widely seen as beneficial for Algeria and its economy. There are 35,000 to 40,000 Chinese workers in Algeria, according to the Chinese ambassador. See Reuters (HERE). The Chinese have entered the ravaged nation of Libya. Their large oil firms will assist in reviving the Libyan production. The United States left the nation in ruins after killing its leader Qaddafi, stealing its 144 tonnes of gold,"
"Iraq to build the first of four oil refineries in the city of Fao under Chinese contractors. The ISIS asset captures have been reversed. Iraq is OPEC’s second largest oil producer, behind Saudi Arabia. The Chinese are reaching into the interior Arab region, to undermine the Petro-Dollar.

Iraq plans to build an oil refinery at the port of Fao on the Gulf with two Chinese companies, and is seeking investors to build three more large facilities. "
"The rape and pillage of Iraq by the United States is gradually coming to an end, as its leaders look to China for development. The Iraqi Reconstruction Fund set up by the USGovt was nothing more than a shell game for large US corporations to pilfer and defraud. See Jerusalem Post (HERE). In one of several agreements, a deal with China’s state-run Zhenhua Oil is set to help market Iraqi crude oil to Chinese refineries."
"China has grown to become one of the biggest oil drillers in Kuwait, with 45% share of the Kuwaiti rig market."
"Chinese carmaker Geely has nailed down a $9 billion stake in Germany's Daimler (Mercedes Benz). They already acquired Volvo for its car division."
Chinese Invade Oil Realm: PetroDollar Kill
The article goes on and on and on about Chinese deals for mutual benefit. Contrast this with the American model of thrashing everybody within reach to steal their resources.

Post WW II, America went round the world fighting communism. Communism eventually fails by itself because a command-economy always goes broke. Just the same, we fought communism. I suppose that we saved South Korea from being absorbed by China. You can see what wonderful communism did for North Korea. Somewhere along the line, we discovered that prolonging a war was very profitable for certain groups. Probably in the Korean peninsula. CERTAINLY in French Indo-China. The Viet-Nam war was kicked off after the Gulf of Tonkin incident,,, that the military recently admitted never happened.

America morphed from being the world's policeman to being the world's bully. We destroyed States right and left. If they had resources, we stole them. If they resisted, we bombed them. WHO brought about this change in mentality. WHO made America into the great satan?
England handed off the baton of empire when she could no longer pay for empire. According to Churchill, WW II was started strictly for the bankers. That would be the London Bankers. England may have handed off the baton of empire but, she retained a LOT of control through the banking system. If war made good sense to London bankers, then, it made good sense to New York bankers. War has always been profitable to a small group. China is following a strategy that is good for the much larger group. Mutual prosperity appeals to the Middle-East a lot more than unlimited drone attacks.

So, while Yuan denominated commodity markets might normally have a weak start, Pox Americana has provided a HUGE motivation for the R.O.W. to subscribe to the new market structure. The British East India Company set the pattern for State-sponsored corporate raiding. It was chartered to do just about anything,,, even to start wars. It used India for a greenhouse to produce opium to enslave China. The Chinese are locking up oil production in many areas, not just the ME. The Anglo-American juggernaut obtained oil by predation. The Chinese propose to get oil by mutually beneficial agreements.
The Chinese have a far better business model that Pox Britannia / Americana.

[Danny B]

When will the LBMA and COMEX fail?

Gold is very much maligned because it just sits there and does nothing. China is buying up mines, bullion, dore and ore concentrates. Here is a graph of the purchasing power of the dollar, http://theeconomiccollapseblog.com/w...ar-300x199.png
So, anything that appears to have price stability must be compared to gold. http://node_charts_production.s3.ama...239e019ebf.png Gold is a convenient benchmark because it doesn't get consumed. The one use of gold is for, hoarding. There are plenty of other examples to illustrate price inflation over time.
There is a long-running discussion of price vs value. Here is a long article discussing all the possibilities.
FOFOA: The Value of Gold

"Probably the most common misconception is that price and value are the same thing. They are not. They are related but different. Price can be precisely known, but true value can only be estimated or guessed. And because price changes, price is always wrong while true value is always right, even though it is unknown. So price and value are always different. Value is always either higher or lower than price."

The Bretton Woods agreement tried to bring stability to the world by locking in currency creation to a proxy for gold,,, the U.S. dollar. The agreement lasted for about 20 years. In the mid-60s, the politicians violated it. The temptation was too great for the scum of the Earth. The East wants to bring back a gold standard with no proxy and no fractional BS.

Jim Willie, "The Petro-Dollar system has stood for 45 years. It has decayed into tatters. Its derivative foundation is being liquidated, a long painstaking process. A new disruptive model was forged in 2014 when Iran sold India oil, which was paid in gold, but delivered from Turkey. Gradually emerging is the Gold Trade Note, first in oil payment then later in general payments in shipped goods. It is evolving within the Chinese market from Russian energy sales, all conducted outside the USDollar sphere."
Gold Trade Note Sighted
The news claimed that oil traders could convert their oil profits (only) into gold on the Shanghai exchange. This is true to a point. the gold MUST be sourced from outside China. The Shanghai exchange is a physical only market. The 3 biggest refiners have all signed on.
https://news.goldcore.com/us/gold-bl...ical-exchange/
That means that the gold flowing to China stays in China. This will put enormous price pressure on the LBMA and COMEX markets. They typically do about 1% physical delivery. As soon as traders start to require physical; delivery, COMEX and LBMA will dry up and blow away.
There are 15 benchmark contracts for different delivery dates between September next and March 2019.

"The Chinese are likely to ensure trading liquidity continues to build in its new oil contracts before its oil suppliers routinely use them against physical oil deliveries. Presumably, this is one reason the first delivery date is in September, while actual shipment is never more than a month or so."
" liquidity continues to build" OK, just how much of this liquidity will call on the LBMA and COMEX for physical delivery of gold?

"A new report by Thomson Reuters GFMS shows that it is one of the most leveraged financial markets with trading volumes many multiples of annual mine output.

Global trading volumes in 2014 was three times more than the 183,600 tonnes of the precious metal that have been produced in human history.

At an estimated $22 trillion trading value per year, the gold market dwarves turnover on the Dow Jones Industrial Index and that of the S&P 500 combined, German and UK government bonds and even some of the top currency pairs." 2015
"Average trading volumes for gold rank among the largest financial assets in the world. They’re actually greater than most sovereign debt markets, excluding only US Treasuries."
"Unlike sovereign debt markets, gold’s lack of credit risk allows for the gold market to get larger without any negative implications. Meanwhile, as sovereign debt markets grow, the increased credit risk dilutes the quality of the existing stock of debt.”
"The only markets comparable to gold are sovereign debt markets. This is quite significant, because sovereign debt is a very different type of asset. Debt markets are subject to downgrades in quality, risk premiums, and ultimately default.
Gold is not."
"Many dealers estimate that actual daily turnover is an absolute minimum of three times the amount of transfers reported by the LBMA and could be upwards of ten times higher. This would put global OTC trading volumes anywhere between $67 and $224 billion."
This trading volume is invisible to the average person. It is claimed that gold could never be the reserve asset because the market just isn't broad enough. At the high end of the price range, $ 81.76 trillion is traded every year. Not bad for a barbaric relic. The East has focused on concentrating as much gold as possible in just a few hands. India, Turkey, China and Russia. These 4 just need to agree to limit gold sales to DOMESTIC ONLY. When traders try to source gold for oil profits, the Western gold markets will lock up and die.
The East will unveil the gold trade notes that will be denominated by weight. Because the gold market IS very broad and deep, gold trade notes will be accepted. These notes will be widely used for trades of tangibles. Nobody can run a trade deficit.

The claim is made that the FOREX market is the most important market. It is at the moment but, it is inefficient. $Billions are lost due to speculation and fees. LOTS of people make a living doing currency speculation.
"Average spreads in the global OTC gold market range anywhere from 50 to 85 cents per ounce. Depending on the dollar price per ounce, it comes out to be around 0.04% to 0.07%"
So, you see that gold trades at the lowest fees / spread. This also means that there is no profit in gold speculation. This is the definition of stability. The physical gold will be stored in huge vaults. China bought a 1500 ton vault in London. The gold trade notes WILL be convertible. Most people will just hold the notes to avoid vaulting fees. The East couldn't introduce the gold trade note until it had enough to allow a lot of to be removed for personal hoarding.

The Yaun-oil contract platform was delayed a few times. Was that necessary to have time to accumulate a few hundred more tons of gold?

[Danny B]

The economic air is fast leaking out

More technicals;
"Julian Brigden of Macro Intelligence Two Partners reminded readers why the bear case for both bonds and equities ,,,,based on the notion that stocks and bonds can't sell off at the same time.
According to Brigden's modelling, a break above the 3.25% level on the 10-year yield would slice through its 100-month moving average - something that hasn't occurred since the mid-1980s."
"Brigden believes that a break above this level in nominal yields (while real yields remain anchored thanks to a runup in inflation) will lead to chaos in both bond and equity markets. "
"Treasury investors lost 36% of their money in real price terms. 36%. A third. And you never got it back. Never got it back. So I do think the analogy is relatively similar."
Most of the article is pure BS but, you have to take what you can get.
https://www.zerohedge.com/news/2018-...rection-stocks

"Over the past month as Libor continued its relentless upward creep and is now higher for 37 consecutive sessions, the longest streak of advances since November 2005"
The takeaway from this is; the banks don't trust each other.
https://www.zerohedge.com/news/2018-...-soaring-libor

"We're rationalizers. We try to force our perception of reality to fit our beliefs; rather than the other way around.
Which is why the vast amount of grief, angst and encroaching dread that most people feel in western cultures today is likely due to the fact that, deep down, whether we're willing to admit it to ourselves or not, everybody already knows the truth: Our way of life is unsustainable."
"The only remaining question concerns how fast the adjustment happens. Will the future be defined by a "slow burn", one that steadily degrades our living standards over generations? Or will we experience a sudden series of sharp shocks that plunge the world into chaos and conflict?"
Where the money comes from, http://media.peakprosperity.com/imag...0_11-17-33.jpg

The article is pretty good but, most of the growth is a chimera. We don't have the population growth. After the reset, things will stabilize at a lower level. If the fusor replaces fossil fuel for power generation, that will help the bio-sphere. Most of the world is working towards reducing population. Africa is a different story. They have mucked up their nest because they have a population but, NOT a society. They want to leave the sullied nest.
Over 700 million Blacks from Sub-Saharan Africa want to flee to EU & USA! – AfricanCrisis

This article is a great run-down on the whole situation. I won't excerpt it.
https://northmantrader.com/2018/03/3...arket-requiem/
Here is a long article that discuses "This was because it runs completely contrary to their theory that free trade leads to economic liberalization, which in turn leads to political liberalization."
The article is of some interest. But, just what is "political liberalization"? The economy is a business. Do you let businessmen run the economy OR, do you let liberals like Hugo Chavez run the business? There are many hard-and-fast economic rules that are mostly related to / are governed by human nature. You can't escape that.
https://angrybearblog.com/2018/03/th...usion-2-0.html

Excellent article on compounding and doubling of population, specifically in the Middle East.
https://www.zerohedge.com/news/2018-...le-east-doomed
Socialism, at it's worst, pays to bring children into this world regardless of whether or not they will have good support from the parents and/or a job niche. What does history have to say about cultures that have "unlimited" reproduction but, limited resources?
The Maya lived on a limestone peninsula with almost no mineral soil. After centuries of recurring famine and population crashes, the adopted ritual warfare to kill each other off in competing city-states.
Greece always had poor soil. They adopted teenage homosexuality to keep reproduction limited to those men who were able to support a family.
Can Africa survive with a population that doubles every <20> years? We'll soon find out.

The companies (tapeworms) who floated along in the cash stream from the FED rose higher and higher. This cash stream is closing down. Tesla is toast. Amazon has a business model that only works with free FED money. Amazon is toast. Facebook is under investigation by 32 State attorneys General.
Investor sentiment is turning fast. https://dollarcollapse.us1.list-mana...e&e=b8ad7fb68a
"ANSWER: Actually, the primary target for a peak in any Greco-Turkish war will arrive in 2022"
https://www.armstrongeconomics.com/w...it-inevitable/

[Danny B]

Armstrong and the blame game

ALL the markets have peaked and now, the blame game is starting. Armstrong stands steadfast in defending the FED. Why not? He is swimming in the free-money stream.
" The Fed’s balance sheet is a tiny fraction of the economy or the real money supply. Everyone blames the Fed for everything and they NEVER bother to look at (1) the fiscal policy of Congress, and (2) the banking system as a whole."
The bankers are in charge of their creation, the FED.
"Even if you want to scream from the top of every hill that $4 trillion worth of Fed’s Quantitative Easing was pure evil"
That $4 trillion was specifically targeted to crash interest rates and screw all funds and savers. The silver lining was; it saved the banks $400 billion a year NOT paid out as interest to savers.

"The entire Federal Reserve QE program was equal to 1/5th of the national debt. The ECB bought 40% of all public debt and the Bank of Japan bought 75% of new debt coming to the market"
ALL of this is bald-faced lies. Great Britain and the BLICS bought U.S. treasury debt that the FED financed. Armstrong has deliberately overlooked the liquidity pumped in by the ESF and PPT.

"All these people pushing the end of central banks because they are clueless about how the real world functions."
There is more to the "real world" than just the upper loop of finance.
"How can a central bank raise interest rates to fight inflation when the government is the biggest borrower in the system? The government deficits will rise because their interest expenditure will rise perpetually because they continuously roll their national debts and never pay anything off."

Yes, the State borrows. Most of this money goes into corporate welfare and pork barrel projects. The bankers start wars. The banking system creates free money. The State borrows money to fight wars. No, the State is not able to repay the money that the bankers created for free. BUT, the bankers charge $ hundreds of billions in interest.
"We are hopelessly lost and the idiots who bash the Fed are doing so much harm to society it is not even funny. The bulk of the real world money supply is created by lending on a leveraged basis. It is not money created by the Fed"
Another specious argument. The banks are regulated by the FED and SEC and other State groups. Regulatory capture insured that the banks can do what they want. The banks corrupted the State and impoverished the people. The state borrows money to support the poor.

"AT the end of 2017, total household debt exceeded $13 trillion. Total non-financial business debt stood at $6.1 trillion at the end of 2017. "
So, how did it get so high? The banks made liar-loans to deadbeats and sold the loans to investors on the secondary markets. They had no risk so, they just piled on more bad loans to generate fees. In 2007, the rating agencies rated all these liar-loans as AAA. It was just one big circle of corruption.

"The Fed’s balance sheet was $4.4 trillion of which $2.4 is US Treasuries. The national debt stood at $20.5 trillion at the end of 2017. If we look at this perspective, that means the money supply is $41.6 trillion just using the debt."
The State can't pay it's debt. This means that our MONEY SUPPLY is composed of liar loans.
"If we then add M2 (all accounts _ money market accounts) which stood at $13.8 trillion at the end of 2017, this brings us to a liquid money supply of $55.4 trillion. "
Since when is <$35 trillion> of liar loans considered to be liquid?

"Now let us add the stock market, which is liquid. That reached $30 trillion by the end of 2017.It's only liquid until too many people head for the exits.
Therefore, the liquid assets/cash position stood at $85.4 trillion at the end of 2017. Now let us add total personal real estate (homes) in the United States which stood at $31.8 trillion. If we include illiquid real estate, now we are up to $117.2 trillion. "
Sure thing, dude. Add ALL real estate to the liquid asset total.
https://www.armstrongeconomics.com/a...-the-problems/

Investor sentiment has turned, https://dollarcollapse.com/stock-pri...ogy-dark-side/
The bubbles have started popping, https://dollarcollapse.com/money-bub...big-ones-next/
4/02 ‘The gig economy’ is the new term for serfdom – TruthDig
4/02 U.S. dollar share of currency reserves hits 4-year low, IMF says – GATA Just wait til that Yuan-oil market gets going.
4/02 Gundlach calls for “massive rally in commodities” – Mish

[Danny B]

Market rollover more obvious

History shows clearly that forcing down interest rates never works in the long run. The same is true about over-issuance of currency. Bankers and bureaucrats always over-issue the currency in lieu of getting a productive job. Since the State writes the laws and has a monopoly on violence against it's "citizens", it is usually the worst at inflating the money supply.
"France reverted to paper currency in the 1930s, the paper franc. In just more than a decade, the fiat franc became devalued by 99 percent. France’s third attempt at printing worthless monopoly money proved to be a dismal failure."

The reserve-currency status of America prolonged the life of the dollar. Just the same, it seems to be winding down.
"From January 1, 2018 through March 28, 2018 (Q1), real GDP likely grew $110 billion (a 2.5% rise on an annualized basis). However, the fly in the ointment...according to the Treasury, from Jan 1, 2018 through March 28, 2018 (Q1), federal debt rose by an astounding $621 billion dollars "

"However, it gets downright miserable if you add in the massive $500 to $750 billion quarterly growth of unfunded liabilities alongside the growth in federal debt. Together, the UL's and federal debt are rising $3 to $4 trillion annually while GDP is rising around a half trillion."
Keep in mind that GDP is just a measure of money in the economy.
https://econimica.blogspot.mx/2018/0...r-america.html
Pretty good article.
Armstrong, "There is no “dollar hegemony” for that assumes that the USA is somehow imposing the dollar upon the entire world by sheer will. History shows that the USA has pursued a policy of lowering the value of the dollar for trade purposes."
NO, of course America didn't impose the dollar on the R.O.W. We just told the Saudis to sell oil in only dollars or, get wiped off the face of the earth. We blew up every state that tried to escape from this deal.

"There is no competition with the dollar and that is the problem."
The gold futures market opened in the 80s as a way to create paper gold and depress the real thing. The London Gold Pool was another mechanism that tried to suppress the price of gold,,, until it failed.
"It is coming. That will be the Monetary Crisis. But every such crisis has resulted in the dollar rising. That will bring the new monetary system. Not a lower dollar."
Armstrong predicts a total crash of U.S. sovereign debt,,, the bond market. Just HOW will the dollar survive a US GOV crash?

" the average new vehicle loan hit a record high $31,099; ii) the average loan for a used auto climbed to a record high $19,589..."
Good article on the falling auto market.
https://www.zerohedge.com/news/2018-...C0%2C0%2C0%2C2

"Even if you don’t believe the Fed’s data, the $199 TRILLION Bond Market is SCREAMING inflation.
The yield on the all-important 10-Year US Treasury has made a confirmed break above its long-term downtrend."
$199 trillion,,, You don't say!
"If these trendlines break (as I expect they will in the coming weeks) it will mark the beginning of the end for The Everything Bubble.
All told, there is over $199 trillion in debt outstanding and an additional $500+ trillion in derivatives trading based on these bond yields.
So when this bubble bursts (as all bubbles do) we will experience a crisis many magnitudes worse than 2008."
Everyone tends to do a time-compression and forecast a crash quite a bit early. BUT, the speed of communication is picking up. This speeds up the spread of contagion.

The London Interbank overnight Rate LIBOR is going up fast. Bond yields have broken the trendline and are heading up. LIBOR is going up. Trust and confidence are going down.
The Inflation “Needle” Just Touched the Everything Bubble

4/03 Goldman urges clients to start preparing for the worst – Zero Hedge LONG technical article. "when volatility rises, position sizes need to decrease to maintain the same dollar-volatility risk)"
"Position size needs to decrease." means, move closer to the exits.

"Corporate America is stuck on the sidelines as the S&P 500 Index plunges to its lowest level since early February. That’s to comply with regulations under which companies refrain from discretionary stock buybacks for about five weeks before reporting earnings through the 48 hours that follow"
4/03 Stocks lose critical buyer at worst time – Bloomberg
Until recently, buybacks were illegal because it was pure market manipulation. Buybacks upheld the indexes and, now are on hold.

4/03 Market meltdown continues: gold & silver prices disconnect – SRSrocco Report Gold and silver never had a market meltup so, they don't have a meltdown.

[Danny B]

Avoiding the dollar,,, tech wobble,,,Deflation by a change in perception

"Foreign holdings of local-currency debt of developing nations have swelled to near a record $745 billion, according to data collected by Deutsche Bank AG. With much of their buying at the expense of the greenback, according to this metric investors have never been so exposed to a sudden turnaround in the U.S. currency."
https://www.bloomberg.com/news/artic...ing-against-it

Foreign investors are buying local-currency to avoid holding dollars. NOBODY wants to hold Euros. So, what do Europeans hold?
Well it's actually 500 billion US dollars worth.
If you scoot down to table A7 on page 144 of this BIS report (152 of 358 in pdf form) you will see the reverse image of foreigners holdings of swiss francs.
The snb lends to other swiss banks who, net of intra company loans, engage in all sorts of financial transactions backed by absolutely nothing at all. Non-banks also engage in all sorts of shenanigans.
Claims in local currencies (bottom of the table) exceed liabilities in local currencies by 500 billion US dollars.
https://www.bis.org/statistics/bulle...3.pdf#page=328

Hmmm, the emerging markets have about $13 trillion in dollar-denominated debt. They need dollars to service this debt. There is going to be a squeeze somewhere.

"the Federal Reserve, through its suppression of interest rates and quantitative easing programs, combined with excessive government deficit spending, have created a new bubble of far greater proportions: government debt. Just like the housing bubble poised the greatest risks to the US economy in the late 2000s, it is government debt, and the seemingly unanswerable question of how to orderly unwind it, that pose the great risks today."
Good graph, http://thesoundingline.com/wp-conten...e-1024x678.jpg
Chart of the Day: How US Debt Has Changed - The Sounding Line
The FED is trying to carry everything.

Here is an article on tech stocks. "Netflix has achieved rapid growth and stock market riches via the incineration of cash: Free cash flow registered negative $2.02 billion in 2017,'
https://www.zerohedge.com/news/2018-...ear-mr-fantasy
"The S&P 500 index fell 2.2 percent after the first trading session in the second quarter. This was only ever worse 89 years ago, when it fell by 2.5 percent. Back then, it was a selloff that triggered the Great Depression – the worst economic crisis in US history."
https://www.rt.com/business/423030-g...stocks-plunge/

4/03 Global money supply flashes surprise slowdown warning – GATA Armstrong says that we have a couple hundred $trillion in liquidity. When confidence changes, it is no longer liquid at the price that you might desire. By definition, this is deflation. Since most of the money supply is debt and credit, any reduction in credit is a reduction in the money supply.
4/03 China’s big banks are turning to short-term financing – Bloomberg
4/04 Chinese families racking up debt on unprecedented scale – SCMP
4/04 China’s state-owned banks told to stop lending to local governments – SCMP
China has the fastest shrinking work force. China plans to morph from an export-driven economy to an internal consumption model. China has set the roof on wages for most of the world. THEY can't escape this roof. Wait and see.
4/04 Borrowers lose leverage as corporate bond buyers grab the reins – Bloomberg They can't do buybacks of stocks in the weeks leading up to earnings reports so, they're buying their own bonds instead.
4/03 China to respond to new U.S. duties with same scale, ‘intensity’ – Bloomberg
We import almost no steel from China. The biggest pork producer is Smithfield Foods of Virginia,,, owned by China. These are 2 of the main items that will have a tariff.

4/03 KY teachers voice displeasure with pension reform bill – WDRB
4/04 OK, KY public schools close as thousands of teachers walk out – NBC
Many more to come.
4/03 Murders in London overtake New York for first time since 1800 – Breitbart Naturally, it couldn't have anything to do with the muzzies.
4/04 Cellular eavesdropping devices discovered throughout DC – Zero Hedge I'm shocked ! Do you hear me?,,, SHOCKED.
4/02 US power grid vulnerable to “devastating” attack, NERC finds – Zero Hedge
4/01 A cyberattack hobbles Atlanta, and security experts shudder – NY Times Get used to it.

[Danny B]

Same old fraud,,, nobody goes to jail this time

French GOV debt is, Government Debt to GDP 97.00 The French GOV spends 56.5 % of the GDP. This is in violation of the Maastricht treaty.
"French President Emmanuel Macron has come out an made public debt one of the key points of his policy. Macron is supporting austerity "
"With Macron embracing austerity and the guidelines of the Maastricht Treaty, we are watching the gradual collapse of socialism. All the promises of government to provide the safety-net are crumbling before our eyes. Austerity supports the bondholders against the people"
https://www.armstrongeconomics.com/h...ing-austerity/
All those muzzies on the dole are going to be quite unhappy. Macron is straight out of the banking fraternity. We all knew that France would burn eventually.

"Private Equity managers were sitting on over $2.8 trillion, but are still looking to put $1 trillion of that pile that’s un-invested to work!
It used to be “corporate risk” was considered esoteric. Back in the 80s, 90s and into the 00s, most investors stuck to AAA and no lower. Now there is over $2.5 trillion of BBB rated debt – a rise of $1.2 trillion in just 5 years." Mal-investment on steroids.
4/04 Stock market pain bleeds into junk bonds – Bloomberg

“American corps have never carried so much debt (relative to GDP) before… and the overall quality of this credit has never been so low.” Guess who is holding that debt? Pension Funds, Insurance Companies….. what’s going to happen if the bubble bursts? "
https://www.zerohedge.com/news/2018-...t-know-what-it

Excellent article on margin debt. Even if you aren't clear on the importance of this debt, you can look at the benchmarks for previous crashes on the graphs. We are WAY above the previous crashes.
https://www.advisorperspectives.com/...and-the-market
One thing to focus on is; all this debt and leverage is called liquidity and wealth.

"If that statement is true, then the $2.3 trillion that the U.S. stock market vaporized over the past two months is nothing for investors to worry about. "
“Let us be clear about the magnitude of the Nasdaq collapse. The tumble has been so steep and so bloody — close to $4 trillion in market value erased in one year — that it amounts to nearly four times the carnage recorded in the October 1987 crash.” Chernow compared the Nasdaq stock market to a “lunatic control tower that directed most incoming planes to a bustling, congested airport known as the New Economy while another, depressed airport, the Old Economy, stagnated with empty runways."
“As hundreds of court cases, internal emails, and insider testimony now confirm, the dot.com bust turned collusion into an art form. None of the key culprits went to jail in that massive fraud either. Here’s how it went down:

“First, Wall Street brokerage firms issued knowingly false research reports to the public" "If the stockbroker tried to get his small client out with a profit, he was hit with a so-called ‘penalty bid,’ effectively taking away his commissions on the trade. This sent the clear warning to other stockbrokers to leave their clients in the dubious deals. Only the wealthy and elite were allowed to capture the bulk of profits on these deals."
"Executives of five telecom companies made approximately $40 million in profits from approximately 3.4 million IPO shares allocated from 1996-2001, and SSB earned over $404 million in investment banking fees from those companies during the same period.’"
We don't nee no profits,,, we have fees.
Will the Stock Market’s Tech Rout End Like the Dot.com Bust?

Excellent article on the whole picture of tariffs. https://www.theautomaticearth.com/20...akes-xi-happy/
As you all know the private banks create the bulk of the money supply in the form of credit. FED Head Marriner Eccles complained in the '30s that America had no permanent money supply. The FED creates base money but it generally goes just to member banks as bank reserves. There is no money but what the banks create as debt. This gives them a huge amount of control. If the control everything financial, you can bet that the banks will always come out on top. Sweden has pretty much gone cashless. Suddenly, alarm bells are starting to go off.
https://sorendreier.com/swedes-turn-...-cashlessness/
https://www.theguardian.com/world/20...t-cashlessness

[Danny B]

Buying real things with fake money,,, deflation waiting in the wings

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered." Jefferson
The Swedes are slowly waking up to the fact that a cashless society society means only banks create the entire money supply. Every penny you earn is controlled by some banker. There is no holding back. But, the banks have no skin in the game when they are gambling with your money. They have always proven to be reckless.

So, the CBs can create "unlimited" free money. In the name of stability, they create mountains of free money,,,, to rescue the markets, of course. If you had a free money machine, what would you do? You would go on a buying spree, of course.
"Other central banks have been busy purchasing assets, as well. Central banks have accumulated assets in excess of $21 trillion. See chart below."
So, the FED receives interest on bonds but, GOV told them to give it back.
Jan 9, 2015 - The Federal Reserve said Friday it made a record $98.7 billion in profits last year, mostly from interest on the more than $4 trillion in bonds it has
Federal Reserve to send record $98.7-billion profit to Treasury

The CBs are buying up assets all over the world. First, the CBs bought GOV bonds with free money and collected the interest. Now, they use free money to buy tangible stuff. They expect to collect earnings on all these assets for the foreseeable future.
" prop up wall-street. Waving a magic wand, central banks can make it “all better” for banks at the expense of the consumer. A fairy godmother for the rich comes in handy. The dwindling middle class is slowly sinking under the brutal economic realities of today."
"That is why the 1% love the Fed. They prosper from the Federal Reserve’s manipulation of paper while Main Street continues to struggle to hang on. The world of ZIRP enabled banks to offer cheap loans, while those same low-interest rates and low-yield bonds eroded Main Street’s assets through inflation. "

"Among the dreamers, the Swiss National Bank is one of the largest. It turned its $800 billion stock and bonds portfolio into $55 billion profit. Good banking? Not quite. While a central bank is supposed to be a regulatory agency, global central banks are becoming investors by buying up stocks and bonds, especially high-yield government bonds. How do central banks purchase these assets? By creating new money and manipulating the currency."
"Half of the global citizens do not see any increase in wealth. The capitalist system, which created wealth and prosperity for all workers is gone and has reverted to the feudal system thanks to central banks, where kings and queen bask in riches while the rest of the population struggle to find a morsel of cake to keep it alive.

Unless wealth is distributed more equitably, we may find ourselves living in a feudal system and bowing to the royalty that is the central banks."
http://www.goldtelegraph.com/rch-con...AM-502x400.png
The new feudalism.
4/05 BOJ goes on record ETF buying spree to prevent market rout – Zero Hedge
While the BOJ owns about three-quarters of Japanese ETFs

"first by inflation, then by deflation" Well, the inflation has reached a peak. The markets have peaked and, are starting to roll over. Armstrong claims that there is $ 200 trillion worth of assets. What is the true price of all this stuff if nobody has money to buy them? Powell of the FED is dialling back QE and raising interest rates. Trump seems to have started a trade war.
https://www.philstockworld.com/2018/...-strikes-back/
Various writers believe that the FED will shrink the economy is steps. They think that the FED will relent and do QE if things fall too fast / far. I don't believe that they can respond in a timely manner. I also don't believe that they can rescue all the States, banks and funds that are starting to blow.

"Chicago Public Schools teacher pension fund that showed taxpayers will owe another $1 billion to shore up that retirement account, bringing that unfunded liability to $11 billion."
" Chicago was the only region in the nation’s top 10 metro areas that experienced a decrease in population in 2017, U.S. Census Bureau numbers show. The state of Illinois is experiencing a more accelerated exodus. Taxpayers are well aware of the pension and other debts from multiple governments already hanging over them, and they’re fleeing before the avalanche."
Chicago&apos;s pension precipice: It&apos;s worse than you thought. - Chicago Tribune

4/05 Xinjiang halts all government projects as crackdown on debt gets serious – SCMP
4/05 Part V – China/Asia economic implosion on the horizon? – Technical Traders
China essentially has a public banking system where debt doesn't matter. They don't have a huge interest burden to put the brakes on new money creation. Unfortunately for them, every pisspot state official has approved TONS of new debt for their favorite cronies. They have lost control. This comes at the worst time. They want / need to internationalize the Yuan. How can they do that when millions of bureaucrats and bankers are creating new debt by the trainload? China created more new debt than America, Europe and Japan put together. China moved 300---400 million to the cities and gave them jobs financed by new money creation.
China can't very well send them back to the farm. Halting all government projects is going to put the brakes on at the same time that Trump has started a trade war.

4/05 First wave of inflation already here; the next one is the bad one – GoldSeek
It doesn't work that way. Currency inflation from the upper loop will work it's way into the lower loop. Price inflation in the lower loop will just cause the consumer to cut back. Defaults will rise. The consumer economy will just shrink even more. Ho hum
NYC is having a growing problem with the NYPD.
NYPD Cops So Bad, Lawmakers Forced to Ban Them from Having Sex With People They Arrest

[Danny B]

Dollar destruction brings deflation

Armstrong once again defends the FED. Once again, he tells half truths.
"They focus on the Fed is “owned” by the banks and merge that with elastic money and have no idea that the ownership was because the taxpayer was not going to fund a bank bailout so the banks had to put up their own money to create the Fed and pay into it to support the system."
So, let the banks fail. Just like any other business.
"The structure was changed with World War I when Congress instructed the Fed to then buy ONLY government paper. "
It does look like he is correct, https://cdn.theatlantic.com/assets/m...and-gdp-03.png
FED GOV did a lot of arm-twisting and legal changes to squeeze out war funding.
https://mises.org/library/how-fed-he...ay-world-war-i

Only 13 years after the FED was created, came the Great Depression I.
https://cdn.theatlantic.com/assets/m...-gdp-main6.png
Were the roaring '20s roaring because the FED was buying GOV debt?

"Hervé Falciani, the French-Italian former HSBC employee who blew the whistle on HSBC and 130,000 global tax evaders in 2008, has been arrested in Madrid on Tuesday in response to an arrest warrant issued by Switzerland"
"HSBC’s Swiss subsidiary routinely allowed clients to withdraw “bricks of cash,” often in foreign currencies of little use in Switzerland. It also colluded with clients to conceal undeclared “black” accounts from their domestic tax authorities and provided services to international criminals, corrupt businessmen, shady dictators and murky arms dealers.

As Falciani would soon find out, snitching on one of the world’s biggest banks and 130,000 of its richest clients does not make you a popular person in a country famed for its banking secrecy"
What do you expect from a bank correctly called, Hongkong and Shanghai Banking Corporation. Nothing honest ever came out of Hong Kong and Shanghai.
https://wolfstreet.com/2018/04/04/wo...sted-falciani/

The Greek tax man is squeezing HARD.
"Greek tax offices have seized more than than 1.72 million bank accounts in 2017, that is 12 percent more than 2016"
Greek tax offices seize more than 1.72million bank accounts in 2017
"525,758 owes up to 10 euros. "
Greek Tax Officials Plan One Million Confiscations in 2018 -
"The seizures of bank accounts, pensions and assets of more than 180,000 Greek taxpayers in 2017 didn't cut down the rising debt to the state" "Feb 23, 2018 - A million Greek taxpayers with debts to the state could see their bank accounts and deposits raided. "
It's disgusting that they squeeze the poor for owing just 10 Euros.

The FED has pretty much won the currency war with the Euro. In the 2008 crash, it shipped $20? trillion to European banks so that they wouldn't default on dollar-denominated debt. It is a different story this time.

Too much debt and not enough money remain a diagnosis for deflation and not inflation
" we need to discuss why fears of inflation persist in a world where the US central bank and the US commercial banking system are now both destroying money. When both these key engines of the reserve currency creation act to destroy money, there will ultimately be a contraction in broad money growth, the first since the 1930s, if nothing changes."
"From its peak in November 2017 the level of US bank credit, when we adjust for the systems acquisition of non-banks, has posted no growth. When a commercial banking system posts no growth in bank credit over four months, it creates no money over that period. It just so happens that this is the same four months during which the Federal Reserve has been contracting its balance sheet. Sticking to the Policy Normalisation Principles (PNP) and their addendum of June 2017, the Fed has been destroying money by shrinking its balance sheet. In the period from August 2017 to February 2018 there has been a shrinkage of US$105.2bn in commercial bank reserve balances"

"So with a commercial banking system creating no money, and a central bank destroying money, we are looking at one of the tightest monetary policies ever pursued by a central bank. "
"At this stage the distress associated with this policy seems to be falling primarily upon non-US companies that have borrowed USD." Offshore dollar debt can only be serviced by growing money creation.

"Regular readers will know that your analyst has long expected a de facto default by Turkey, enforced by an imposition of capital controls by President Erdogan. No such imposition was likely until the pain of foreign borrowing and of defending the Lira exchange rate produced bankruptcy in Turkey. That time has come. Otas, which owns 55% of Turk Telecom, has ceased paying interest on a USD denominated loan of US$4.75bn. Yildiz Holdings is seeking to restructure US$7bn of debt, which would be the largest restructuring in the history of Turkey. Bloomberg reports that in Turkey, ‘banks have been extensively restructuring loans’. Such is the pain for those who borrow USD when interest rates rise by just 150bp (1.5%)and their exchange rate devalues."

"Of course, it is not just in Turkey that the borrowers of USD are in distress. In China Anbang Insurance Group’s excessive USD debt burden has forced it into the warm and welcoming embrace of the Chinese government. HNA Group of China is ditching assets and sacking a quarter of its workforce in a desperate attempt to meet its USD debt obligations."
"Meanwhile, in Europe, the US LIBOR-OIS spread and the TED Spread have reached levels not seen since the beginning of the great financial crisis in 2007."
"As a key borrower at the short end of the Eurodollar market, banks with large USD loan books, but lacking a sufficiently large USD deposit base, are likely paying more to fund their USD lending."
"In 1Q 2015 (“Why Deflation Means Default”) The Solid Ground analysed the offshore USD loan market and concluded that the combined non-US bank USD loan book to the non-financial sector amounted to US$3.7trn. This accounts for 43% of offshore total USD credit (including bonds). That’s US$4.3trn in credit, extended by banks that have limited, if indeed any, access to USD deposits. "
The FED giveth and, the FED taketh away.
"What may be even more unpleasant is that the US Federal Reserve may not be minded to pay any attention to their distress."
"The Fed has told us that it will destroy US$380bn of high-powered money in this calendar year. Almost nobody in the financial markets takes that pledge seriously," High-powered money is money that is created by the CB and does not have to be paid back. Low-powered money is created as debt.

" While everyone agrees that the Fed’s creation of high-powered money prompted asset price inflation, nobody, it would seem, thinks the destruction of that money matters. We shall see." "We shall see. We shall see if this Federal Reserve chairman does exactly what he says he will do, or if he blinks like his predecessor did, "
"This is particularly bad news as the pain of higher US interest rates raises credit quality issues for both financial and non-financial corporations far from US shores."

Deutsches bank is close to default with $ hundreds of trillions in derivatives. Italian banks are dead men walking. The FED is on a mission to destroy European banks by cutting off dollars needed for offshore dollar loans. There is so much exposure spread around the system that no State is immune to blowback.
Excellent graph, http://www.visualcapitalist.com/visu...united-states/
The ring of fire, http://www.icis.com/blogs/chemicals-...-ring-of-fire/
The "doom loop" https://worldview.stratfor.com/artic...ne-edge-crisis

OK, so the FED shuts off external dollar liquidity. There is going to be a lot of big craters around the world.
https://www.zerohedge.com/news/2018-...n-just-ran-out
"In short, there may be a ‘Powell Put’ for the US economy, but this is not the same thing as a ‘ Powell Put’ for the US financial markets."
"What everyone needs to know is that the USD remains the world’s reserve currency, and they have stopped making more of it.

This will be very painful for the over-leveraged, and currently the most over-leveraged, already suffering, seem to be non-US corporations. "
"Then the USD will react and move higher on the international exchanges, further exacerbating the pressure on those non-US companies, particularly those in emerging markets, who are financing their USD debt burdens with non-USD cash flows."
" As the Fed’s balance sheet continues to shrink and credit creation by the commercial banks has ended, further slowing in broad money growth is coming. This slowdown in money growth combined with the likelihood of a credit event in the offshore USD credit market will mean that inflation fears can disappear rapidly. That is when the scale and attractiveness of US real rates of interest will become apparent and the USD will begin its rise."

https://www.armstrongeconomics.com/m...strong-dollar/
Posted Sep 12, 2017 by Martin Armstrong ... You stated multiple times now that 'only a rising dollar will break the world monetary system'
Looks like the path has been set.
The brave ones are even guessing a date. Michael Pento – Financial Crescendo in October of 2018
https://www.youtube.com/watch?v=IFkceczF7Hc

China has more EXCESS steel capacity than the total capacity of Europe and America combined. how can they keep employment going? Trump has kicked off a trade war that is unsettling markets. Powell has choked off external dollar flows. The emerging markets need dollars to service dollar-denominated debt. Will the trade war cut back on new dollars to the EMs? Will the rising cost of dollar debt service break the back of the EM?
Dunno but, Europe is toast in any case.

[Danny B]

The winding down of exorbitant privilege

Gresham's Law, the strongest currency goes into hiding as a store-of-value.
Triffin's Dilemma, The world demands that America print endlessly so that they can have a store of value.
U.S. Treasury Secretary, John Connally. He said to his counterparts during a Rome G-10 meeting in November 1971, shortly after the Nixon administration ended the dollar’s convertibility into gold and shifted the international monetary system into a global floating exchange rate regime that, "The dollar is our currency, but your problem.”

It has never worked out to have the transactional currency serve the function as a store-of-value. The demand for a store of value has lengthened the life of the U.S. dollar from the normal 30--40 years of the average fiat currency. We are now at 46 years.

The IMF, et al have talked about the currency reset for several years. The IMF has fronted the SDR. Just like all other currencies, the SDR is issued. The fact that it isn't a transactional currency is not important in the consideration of it's use as a store of value. Far more important is the fact that it is issued at no cost. How can something that is infinitely created serve as a store of value?
America is locked in to using the dollar that it creates in "infinite" supply. The R.O.W. views this as an "exorbitant privilege". From a historical point of view, the dollar is going down a well-travelled road to rejection. No other State wants to have the reserve currency because instantaneous capital transfers would wreak havoc with it's economy. China wants to have the premier transactional currency in it's sphere of influence.

The East isn't loading up on gold because it wants the Yuan or Rouble or Lira to be a gold-backed store of value. A currency can not be called gold-backed unless it is freely gold-convertible. Gresham's law says that you soon lose your gold. The East is loading up on gold to facilitate the shift in the perception of the change in the attitude towards "store of value".
https://www.rt.com/business/423222-s...d-india-china/

Americans don't consider gold to be a store of value. Americans are only 4% of the world's population. China had a HUGE credit inflation spike leading up to the confirmation of president Xi. China has now put on the brakes. America is raising the value of the dollar by diminishing the supply. China can't very well do the same because a strong currency would hurt exports.

"China’s move to weaken the Yuan against the US dollar is in fact a huge response to America’s resistance to reforming the international monetary framework. It’s telling American policy makers that the longer they delay acting on reforming the international monetary system, the harder and longer they are going to make it for the U.S. to climb out of their trade deficit and depreciate their currency to where they need it to be.

China has been preparing for this moment for several years by accumulating gold through its central bank"
This article is a couple years old but, still a good read, https://www.zerohedge.com/news/2015-...y-your-problem
Keep in mind that;as China weakens it's currency, it becomes MUCH more difficult to service dollar-denominated debt. As the dollar rises independent of Chinese weakening efforts, debt service becomes more expensive. China works to sell us more stuff and receive needed dollars. Trump works to buy less from China and choke off the dollar supply. The U.S. doesn't have any Yuan-denominated loans. It doesn't need Yuan like china needs dollars.

[wayne.ct]

The relationship between love, hate, inflation and deflation

It is a convenient shorthand to put people in groups and treat them as groups and not individuals, so it happens from time to time that you can refer to a group and then, without intending it, the meaning changes. I like to short change this problem of "interpretation" or meaning by the use of some basic yardsticks so that my metrics make sense to me. If I am not clear, I apologize in advance.

A "basic" yardstick that I like to apply is the love-hate yardstick or metric. It may be hard to quantify in a numeric sense but it really comes into play, in my mind, when I look at economics. My personal actions and lack thereof in the the financial realm ultimately relate to what I love and what I hate. It has to do with my preferences and pet ways of thought. I buy this item NOW or I put off buying THAT item for my own personal reasons and because of the value I place on the objects involved, namely the fiat currency at my disposal and the physical objects I need and want.

It has to do with love and hate, the two polar extremes.

Now, switching to the various "collectives" in the macro economy, some groups out there feel like they are "masters" of debt and indulge in the luxury of being in debt, either corporately or personally or individually or whatever. What is it that they "love" and what do they "hate"? They don't seem to fear the consequences of having a negative net worth. If not, what do they fear? Obviously, they have fears and hate the consequences of "those" fears. So, to quickly summarize, it is like the game of Monopoly or Careers where you have to trade Fame, Fortune, Family or what else you may have.

Bring it back to real life by considering the following: What does Soros love? What does he hate? What does Trump love? What does he hate? etc. etc.

The powers that be in charge of increasing and decreasing debt, currency, M1, M2, etc. etc. have lost control of inflation. They seem to want to avoid deflation but they can't control that either. If they can't get enough people to buy the bonds and bills and stock, the debt bubble will collapse. Result? Deflation! Why? Too many people are in debt, personal debt. They are forced to cut back their lifestyle (i.e. expenditures) because they either go bankrupt or use their discretionary income to pay off debts.

Therefore, at least for now, paper money holds its value. However, if you are smart enough to see the hazards in the current situation, you still pay off your debts and spend your money on tangibles; guns over butter.

The "upper loop" seems to maintain and express a measure of confidence or a feeling of having things under control, being "in control" at least for now. When they begin to fear the loss of control, their love for the status quo will turn to hate. Some will already have substantial tangible wealth and negligible debt. Others will be in the opposite situation. Both groups will bid up the price of real estate and hard assets. THEN is when the common citizen will realize their money is worthless paper and join the fray.

The evidence points to the ongoing movement in that direction. I.e. deflation now, inflation in the future.

On the global situation, China and Russia have been on that path for many years now and are in no mood to pull back. They will have the gold and the US will have the buildings, vehicles, mines and infrastructure to support whatever the people are willing to do (and pay for) if they are prepared. Some will suffer for lack of preparation.

This stuff about a trade war is overblown. I don't see 100 billion making much of a dent in the macro-economic picture.

Thanks for reading... Tell me where you think I might be wrong.

[Danny B]

Preparing for war OR abandoning war?

Wayne, I don't see anything wrong or incorrect about what you wrote. Though, I would add survival and procreation as motivations.

Here is a good article explaining the difference between a gold standard and a Gold exchange standard.
"Therefore, the effect of a gold exchange standard is the opposite of a gold standard. A gold standard puts the requirements for the quantity of money in circulation entirely in the hands of the market, to which the central bank mechanically responds. A gold exchange standard allows a lending central bank to inflate its money supply through inward investment"
https://www.goldmoney.com/research/g...gmrefcode=gata

A gold exchange standard depends on the honesty of politicians. History repeatedly shows that politicians or bankers of generals will jack up the money supply to create and finance wars. The Report from Iron Mountain says that peace must be avoided at all costs.
http://stopthecrime.net/docs/Report_...n_Mountain.pdf

"Throughout the last four decades there is a direct link between the actions of the Federal Reserve and the eventual economic and market outcomes due to changes in monetary policy. In every case, that outcome has been negative."
Everybody is throwing stones at the FED. It wasn't the FED that voluntarily elected to buy State debt in the run-up to WW I. Though, if truth be told, the banks made a lot of money on the world wars. The U.S. Treasury
sends over bonds to the FED to be monetized. The FED sends back money for wars.
Alan Greenspan, " I never said that the FED was independent".

All wars have been bankers wars. Is the State forcing the banks to go along? Does regulatory capture of the State by the bankers initiate wars?
This is a very good article and, you should read all of it.
The Next Crisis Will Be The Last | RIA

"According to Claudio Grass, of Precious Metal Advisory Switzerland, the total trading volume in the London Over-the-Counter (OTC) gold market is estimated at the equivalent of 1.5 million tons of gold. Only 180,000 tons of gold have actually been mined up to today."
https://www.rt.com/business/415131-g...ces-rise-2018/

The Bretton woods agreement was executed to stop competitive devaluations between various states. It had the weak point in that it was tied to a particular currency,,, the U.S. dollar. The next gold standard will not be linked to any currency. It will be a gold-trade note. It will be 100% convertible.
Credit binges are a precursor to war. Will Trump resist the temptation?
This article (repost) goes on and on about all the sectors that will need a federal bailout. Will it happen?
The Next Crisis Will Be The Last | RIA

[Danny B]

Global mean wage = no discretionary spending

Armstrong prides himself on taking every little detail into account. I disagree.
"World trade, even in nominal dollars, peak in 2008. To think that a trade war will somehow reverse the trend is rather absurd."
China impoverished their best customer and, trade is falling.
https://d33wjekvz3zs1a.cloudfront.ne...P-1024x567.jpg
"China has been turning inward building its domestic economy."
I'm not so sure of that. China has the fastest shrinking work force so, that has driven wages up a bit.
https://tradingeconomics.com/china/wages
All that hot money that the PBOC printed caused price inflation, http://3.bp.blogspot.com/-Jic9a2H8zy...ood+prices.PNG
They really haven’t gained very much.

So, have the Chinese actually benefited from having their wages grow to $3.60 an hour? They have 43 million living in dire poverty. There were 64 million empty housing units at one time. The State will by up to 24% of residential RE.
"The USA also shows that trade is about 26.57% of GDP while in China it is now about 37.05%. This continues to demonstrate that the USA has the primary economy that is holding up the world."
100% floated by credit. Americans can no longer afford to buy a trailer.
https://www.zerohedge.com/news/2018-...d-mobile-homes
"Looking at world trade as a percent of GDP around the globe reveals that Canada is 64.3%, Japan 31.23%, Mexico 78.11%, United Kingdom is 58.02%, France 60.46%, Germany is 84.26% and Norway is 67.40% with Sweden coming in at 83.70%. The European Union as a whole stands at 82.62% and the Middle East as a whole stands ar 85.74%. "
We're all going to get rich doing each other's laundry.
World trade can be closely compared to the fortunes of the West, As we slide down towards a global mean wage, trade slides down.

"This demonstrates what I have been saying all along that the US economy is holding up the world. If Americans stop buying, the world goes into a major depression. Both China and Japan are below the 40% mark showing that they have been developing a domestic market more so than Europe"
Both Japan and China have a crashing population number.
https://www.armstrongeconomics.com/w...n-a-trade-war/

Americans are not going to hold up the world economy. Consumer default has turned way up.
4/06 Part-time jobs added: 310k; full-time jobs lost: -311k – Zero Hedge

"During the Great Depression, companies tried to support the market and were buying back their shares aggressively during the crash. It not only failed to support the market, it undermined the companies themselves and many failed because they could not raise money nor borrow money as the Great Depression continued."
"None of all this support had any impact in stopping the Crash. As I have stated many times, everything is connected. If the entire market is crashing, a company trying to buy back its own shares to support its share price has NEVER worked even once in reversing the trend."
It's different this time because these companies have free money.
"The analysis being punted around is that the crash from January was caused because companies stopped buying back their own shares. The analysis claims that $4 trillion in buy-backs have taken place since 2009 and they stopped because of regs and that was the cause of the crash."
ABSOLUTE truth.
Bernanke and Yellen kept the stock market alive.

The U.S. poverty rate is about 14%. "Social Security continued to be
the most important anti-poverty program, moving 26.1 million individuals out of poverty. Refundable tax credits moved8.1 million people out of poverty "
https://www.census.gov/content/dam/C...mo/p60-261.pdf

Here is a rundown of China's options in a trade war.
https://www.zerohedge.com/news/2018-...C0%2C0%2C0%2C2