Economic pressures

[Danny B]

Interest rates, fear,,, the Rubicon

Interest rates are the talk of the town.
10/08 US stocks down again on rising interest rates – CNBC
Armstrong, "What the IMF is warning about is the risk of interest rates rising and countries who have borrowed in dollars are presenting a major Emerging Market Debt Crisis. Then we have the two-fold risk is the currency and the interest rates. Many others have borrowed but with floating rates. Our model is warning that rates are going to more than DOUBLE. In the face of that probability, we are looking at a very distinct and unique type of debt crisis."

"it seems like short treasuries is the current consensus (I believe they are currently at the biggest net short position in recent history). Since most people need to be wrong, does this suggest that as global debt unwinds that perhaps US Treasuries may still have another rally in them before the final crash?"
"In the case of interest rates, the long-term is clearly staring at higher rates square in the eyes."
"We have NOT yet crossed the Rubicon in interest rates. We still have not yet elected the 4th Monthly Bearish Reversal. When we do, the 30-year will signal the debt crisis is in full gear."
"Hence, the euro looks like death warmed over, political chaos is brewing, so you have to push money out the door to other currencies. Hence, the dollar keeps rising and the political rhetoric against Trump is desperate to hide the trend that his strategies have been working on bringing capital home and renegotiating NAFTA. So with the dollar strong, euro in crisis, you have no choice but to buy Treasuries even if for short-term plays."

"Consequently, you can be correct that the long-term trend is UP UP AND AWAY for interest rates. However, the devil is lurking behind every rock along the path."
"Hence, we have not yet crossed the Rubicon. When we do, it will be time to shout very loud so our readers will hear. We can see that the chart patterns between dollars and euro in the 30-year Treasuries is as different as night and day."
EVERYBODY sees the writing on the wall as far as the Euro is concerned. As capital flees there, it leaves behind DEFLATION. The ECB prints and,,, the new money flees.
https://www.armstrongeconomics.com/m...rity-be-wrong/
As capital flees weak economies in favor of the dollar, the dollar price of gold does not rise,,, of course not. It will be later in the future when the dollar blows and gold is in demand. Still at least a couple of years.

10/08 Italy’s budget crisis flares, sending yields soaring, amid comments on euro exit – Street
Remember that Greek-bond holders took quite a haircut. Italian-bond holders will try to avoid this.
"Let’s be clear: no country in history that doesn’t control its own currency has ever had such a large debt pile. This situation is unprecedented."
" Italy is over 130%.
"European Commission President Jean-Claude Juncker called on Italy to redouble its fiscal efforts; Di Maio responded by saying the country won’t retreat on its fiscal plans.

Unless the relevant officials start communicating in a more positive and coordinated fashion, then Italian yields will continue to spiral and contagion will spread."
This is BS. The EU wants BLOOD, not communication.
"Five days ago, I wrote that the Italian debt crisis had crossed the Rubicon. It was exactly five days after Caesar’s crossing in 49 BC that the leaders of the Roman Republic fled the capital rather than making any attempt to compromise with Caesar. For the sake of more than just the Italian bond market, let’s hope we see a much more constructive reaction from today’s Italian government."
https://www.zerohedge.com/news/2018-...-unprecedented
Italian debt is 130% of gdp. They will NEVER escape,,, without default. 70% is considered the safe limit.
'We'll close our airports!' Salvini resists Germany's plans to send migrants back to Italy
Does that sound like a government that is going to back down? We shall see.

"A poll last November by J. Wallin Opinion Research showed over 86% of respondents against foreign military interventions – 57% calling military aid abroad counterproductive.
Over 70% oppose the executive taking the nation to war, urging legislation to prevent it, wanting greater congressional control over this vital issue."
https://stephenlendman.org/2018/10/a...eyre-governed/
AND, what do we get?
Chinese ‘aggressive industry’ threatens US military complex, ‘stable budget’ needed – Pentagon
https://www.rt.com/news/440511-penta...sive-industry/

Reportedly, the military has misplaced $23 trillion over the years. The Jewish Rabbi who was comptroller of the pentagon many years ago disappeared a $trillion or so. It has been downhill ever since.
Some years ago, the U.S. had some budget cutbacks. Congress tripped all over itself in it's rush to assure israel that THEY wouldn't fall victim to any cutbacks. The MICC and the war industries reign supreme regardless of how impoverished the average American might be.
We MUST have a stable budget for the military.

"Today's extreme polarization could be part of the Strauss–Howe generational theory, also known as the Fourth Turning theory, which could give way to a new era of politics once the political deadlock is over. Perhaps, maybe, that is a key indication the swamp draining is on the horizon. Turmoil is coming. Strap in."
https://www.zerohedge.com/news/2018-...-its-ever-been

[Danny B]

Treasury market BS vs population

The price of money (credit) is a big controlling factor for the economy. That is mostly related to the U.S. treasury market. I'm reading articles about the Treasury market that will make your head spin. The major factors affecting decisions at the FED are; we are at a 48 year low in unemployment.
Also, consumer sentiment is VERY high. That may be true in the beltway but, not in mainstreet.
“higher Treasury yields are reflecting a ‘remarkably positive’ economy, as Jay Powell put it"
https://www.bloombergquint.com/marke...s-2#gs.IgCcfGI

This article is loaded with LOTS of charts and technical BS.
https://www.advisorperspectives.com/...-bull-market-1
It's enough to give you a headache. The one takeaway is just one chart of interest rates.
https://www.advisorperspectives.com/...8680afb98c.png
It shows a slow march down that the CB can't escape from.
"The next recession will be a cousin of the 1937/38 recession, the first recession following the Great Depression that shocked everyone with its ferocity."
Reportedly, 5.1 million starved to death in Great Depression I
Japan clearly shows that you can not escape the economic doldrums if you have a falling population.
All the BS articles on interest rates IGNORE falling population.
https://seekingalpha.com/article/186...interest-rates

Armstrong, "Currency is the pressure value for an economy, but with Europe this is forced into the debt markets. The trend and capital flow continues in favour of the US Dollar. "
https://www.armstrongeconomics.com/m...ctober-8-2018/
The dollar is the common currency for the 50 states. The 50 States have a common debt market. The Euro is the common currency for the 28 members of the eurozone,,, minus the UK. The Eurozone does NOT have a common debt market. The European debt markets will blow to smithereens because the individual States can not devalue their currency. Not sure about the British Pound.
The death march of the euro is part of what holds up U.S. stocks.

[Danny B]

More speedbumps

Global debt just rose to over 247 trillion USD (318% of GDP).This is 96 trillion higher than a decade ago.
•Debt levels in EM’s grew from 17 trillion in 2007 to 54 trillion in 2017.
•Dollar-denominated debt issued by non-US countries rose from 10
trillion USD to 34 trillion since the GFC
Great chart, https://proxy.duckduckgo.com/iu/?u=h...5%2529.png&f=1
https://news.goldcore.com/ie/wp-cont...Oct.pdf?x78236

"Central bank policies completely distorted production capacity and global supply chains, crippling corporations with staggering debt loads and zero pricing power. Once global demand declines-- which is the inevitable result of bringing demand forward for a decade-- hyper-indebted corporations won't be able to service their debt. "
" Zombie corporations in emerging markets using currencies that are in free-fall to service USD-denominated debt are doomed.
But many of the USD-denominated loans were issued by European banks, which means they will suffer catastrophic losses as the emerging-market zombies default on their USD-denominated loans.
The defaults and currency crises in the periphery will then move into the core."
oftwominds-Charles Hugh Smith: The Global Distortions of Doom Part 1: Hyper-Indebted Zombie Corporations

Good article on corruption.
"Overall, public pension funds in the US are short $7 TRILLION on what they have promised to pay out to retirees.

If you include Social Security that amount balloons beyond $50 trillion.

And that’s just the US.

The World Economic Forum said the total global pension shortfall was $70 TRILLION in 2015. They expect it to reach $400 trillion by 2050."
https://www.zerohedge.com/news/2018-...-are-insolvent

10/09 China dumps its distressed debt on foreign investors and pensioners – Epoc
10/09 Fifth bond sale pulled as Europe’s junk bond market cracks – Zero Hedge
10/09 China must take strong stimulus measures to support growth: state media – Reuters
Sure, economic growth while the population is falling.
10/09 Beijing eases policy, yuan slides towards 10-year low – Talk Markets
10/09 China’s yuan sinks past key support level as trade war heats up – Bloomberg
China is in a debt trap that will blow up eventually.

Whenever it is quiet, I can always look for Jim Willie.
"game on for President Trump in the clean-up process of the Deep State players after over 30 years of narco-fascist administrations,
the prospects of reconstruction for the USEconomy over the next several years, the requirement to avoid a vaporization of the financial system during the transition which constitutes the Global Financial RESET "
Do you think that this reset can be brought about peacefully when the legislature is locked into a partisan battle to the death?

"The USFed has caused every financial crisis since the 1980s. Both outsourcing of US industry and QE monetary policy assure more crises. The actual price inflation is over 8%, thus the lie on GDP is over 5%, and therefore the USEconomy is stuck in a 12-year recession. The debt engine is broken, since it takes $5 in new debt to create $1 in economic activity."
"This time around the entire globe is participating with national breakdowns in the crisis. Call it the Everything Bond Bubble or the Systemic Lehman Event. The Chinese are using very clever financial tactics which include a Debt-Trap Diplomacy game, using USTBonds for extended credit."
GOLDEN JACKASS.COM - The Golden Jackass Knows Gold, Currencies & Bonds"

[Danny B]

Stocks and bonds never crash together

Corporate America borrowed about $5 trillion to do stock buybacks. This greatly raised earnings and bonuses for corporate cronies. The insiders have recently started dumping their shares. Bonds have broken out of a 30 years downtrend. Junk bonds are starting to crash.
10/10 Investors yank record cash out of stock, real estate, and muni ETFs – Bloomberg
This can be seen as deflation of the circulating money supply.
10/11 Asian stocks follow US markets down; Nikkei off 700 points – CNBC
10/10 Trump says the Fed has ‘gone crazy’ after the Dow tumbles 830 points – MW
10/10 Carnage continues after-hours – Dow down 1000 Pts – Zero Hedge
Will Powell step in?
10/10 A rare and worrisome thing: Bonds fall along with stocks – CNBC
This doesn't happen.

10/10 Has the derivatives volcano already begun to erupt? – Asia Times
10/10 Fed credit and the US money supply – the liquidity drain accelerates – Acting Man
More deflation.
10/10 From Ferrari to Ford – global auto stocks are crashing – Zero Hedge
Yep, all tied to interest rates.

10/10 Italy’s Lega popularity rises with each EU confrontation: major event coming – Mish
Lega Nord is on a roll. Evidently, they have borrowed a few hand grenades from Trump, AND, they intend to use them.
10/10 UK public finances are among weakest in the world, IMF says – Guardian
Did I mention that the UK is a pressure cooker with no pressure release?

OK, everybody is saying that stocks are going to blow. Themarkets have slipped quite a bit. Armstrong says that global capital flight will uphold American equities markets. This is going to be very interesting.

Armstrong, "the market peak on the target week in the Array of 10/01 so it is simply all about the market getting tired. The vast majority are bearish and the most fascinating thing is what happened to the Flight to Quality? Normally, the stock market crashes and you run to bonds. But if the stock market is crashing and bonds are crashing, is this a completely new type of flight?"
Stocks and bonds don't crash together. BUT, corporate America is indebted up to it's eyeballs. Public debt is indebted up to our eyeballs. Nobody wants to risk the bond market.
https://www.armstrongeconomics.com/m...make-no-sense/

"Emerging-market stocks have tumbled 4.5% in the five days last week"
"The dollar has rallied despite everyone saying it was crash. Let me make this perfectly clear: The dollar’s rally will continue overall. The Fed will continue its policy of gradual interest-rate increases at least through the end of 2019 and probably into 2020. Meanwhile, the rise in US rates will FIRST cause tremendous problems in Emerging Markets and then in Europe, followed by Japan. There is no getting away from this trend.
If everybody believes Armstrong, nobody will touch bonds. So while there is a demand for dollars to service dollar-denominated debt, there is no demand for dollar bonds.
https://www.armstrongeconomics.com/m...g-broad-trend/

Now, the NASTY part.
"There is absolutely no resolution to the great divide that has unfolded politically. The Democrats advocate violence as Hillary clearly states. She says that civility can ONLY return when the Democrats take back the government. Clearly, this is throwing down the gauntlet that it shall be their way or no way. This is the end of Democracy"
"1985, I warned that we would face a Crisis in Democracy. It would begin as the government loses power over the economy and the people, "
"The next stage is the violence"
"Hillary is effectively advocating the destruction of the United States. She has simply stated bluntly that democracy will no longer be tolerated unless the Democrats win and then subjugate the opposition. "

"We have crossed the line. There is no going back. We will now face the Decline & Fall of the United States "
https://www.armstrongeconomics.com/i...democrats-win/
10/10 Americans more radicalized than ever as the country spirals toward civil war – EOTAD
Here is a must read article. Trump has gone from hand grenades to heavy artillery. The CFR is calling for the whole world to get together and block him.
“Committee to Save the World Order,” the dynamic globalist duo argued in CFR mouthpiece Foreign Affairs that Trump was working to “upend” their precious “world order.”
https://www.thenewamerican.com/world...der-from-trump

[Danny B]

Sentiment and crashes

Short version today.
The FED pumped in tons of new liquidity to save banks and, to save valuations of everything under the sun. There is evidence that none of this can be saved on a long-term basis if population is falling. There is evidence that none of this can be saved while wages and purchasing power are falling. The FED has been carnying everything for years. Powell appears to be ending ALL of this. While it will definitely crash America, we may accrue some positive effects.

"Surely they must all have known that this wouldn’t continue?! That it’s just a matter of timing, of knowing when it would end? Oh, but that’s not really possible, is it, without the very price discovery process the Fed successfully strangulated?

Still, there must also be tons of people left thinking the Fed can kick that can six times to the moon and back, or sixty. If only because they’ve never bothered to think about price discovery, and what role it plays in the very ‘markets’ they volunteer to spend their money in."
https://www.theautomaticearth.com/20...-fed-is-crazy/

John Hussman, "Be careful to distinguish the level of valuations, which have been extreme for quite some time, from the consequences of overvaluation, which depend on surrounding market conditions. While valuations provide an enormous amount of information about long-term investment prospects, and likely downside risk over the completion of any cycle, the information from valuations is often entirely useless and even detrimental over shorter segments of the market cycle. The question isn’t whether valuations are useful, but when. "
https://www.hussmanfunds.com/comment/mc181002/

We can clearly see the economic indicators winding down. It is unknown just how this will affect investment sentiment.
https://moneymaven.io/mishtalk/econo...E2r2k2weAEWVg/

Nomi Prins has more to say on this.
https://dailyreckoning.com/pillars-d...r-of-collapse/

The "establishment" is trying to uphold investor confidence. Apparently, Zero Hedge is going the opposite direction.
10/12 “This is becoming dangerous” Morgan Stanley warns, as forced liquidations loom – ZH
10/12 Albert Edwards: “Equity investors face the Four Horsemen Of The Apocalypse” – ZH

10/12 Media suddenly starts expecting a brutal recession in 2020 – Economic Collapse

"A barrage of selling slammed stocks Wednesday on the heels of several failed bounce attempts earlier this week. As the dust finally cleared, we were left with the worst drop since the February correction.

The Dow Jones Industrial Average tumbled more than 800 points on the day to close down 3%. But once again, tech and momentum stocks absorbed some of the worst damage. The Nasdaq Composite finished the day lower by more than 4%. Many individual names fared much worse."
"As if this market meltdown wasn’t stressful enough, the president is already launching a war of words against his own Fed chair, saying the Fed has “gone crazy” by moving forward with its plan to raise rates."
https://sevenfigurepublishing.com/2018/10/11/crash-2/
EVERYBODY is a critic of the FED until they get elected to office,,,, and want to keep the party going during THEIR term.

10/12 Signs suggest China may tolerate yuan weakening past 7 per dollar – Bloomberg
There really isn't much that China can do. Their corporate sector is rapidly melting down, and everybody knows it. If they sell dollars to buy Yuan, EVERYBODY will dump their Yuan at that artificial valuation.

[Danny B]

Plodding by the milestones

Armstrong, "All the yelling and claims for gold have never changed since the 1970s. They always claim the same scenarios. Meanwhile, gold rallies and then declines. It is a commodity like every other market. It cannot absorb all the cash in the world. The bond market is 10 times that of equities and equities are several hundred times bigger than gold. "
https://www.armstrongeconomics.com/m...-it-just-died/
VERY disingenuous of him.
The stock-to-flow of gold clearly shows that gold is NOT a commodity.
https://www.goldindustrygroup.com.au...ot-a-commodity

Here is a graph of the 10 year nots, https://www.zerohedge.com/sites/defa...GPC1011183.png
"This signals a tectonic shift. Throughout the post-2008 era, anytime stocks collapsed, money rushed into bonds.

Not anymore. Indeed, the bond market is now collapsing ALONG with stocks. The yield on the most important bond in the world, the 10-Year US Treasury, has broken its multi-decade trendline."
https://www.zerohedge.com/news/2018-...ly-begun-burst
One more milestone.

The United Nations is hard at work to clearly show that they have feces-for-brains.
https://www.zerohedge.com/news/2018-...climate-change
The media is getting a jump on blaming Trump for an economic crash just in time for the 2020 elections.
https://www.zerohedge.com/news/2018-...eat-depression

10/12 Stocks could fall 40% to 50% to reach fair value: Morgan Street Capital – CNBC Ho Hum
10/12 China’s September trade surplus with U.S. widens to record $34.13 billion – Reuters
You can thank Powell for making Chinese goods more affordable.
10/12 Wells just reported the worst mortgage number since the financial crisis – ZH
Don't worry, as interest rates continue rising, mortgage will continue to crash.
10/12 Jamie Dimon warns about ‘geopolitical issues bursting all over the place’ – CNBC
He certainly did his share to bring on the crash.
10/12 Facebook hacked for millions of phone numbers and email addresses – CNBC
Even the NSA was hacked. Cyber security is a fleeting chimera.

10/12 Retirement target-date funds stung by emerging markets, U.S. bonds – Reuters
As Karen Carpenter once sung, we've only just begun.
10/12 Italian parliament approves controversial spending targets despite EU pressure – GM
OK, so, the bond market will respond. What will Italy do then?

Strange news from Greece.
"A Greece politician has demanded his country pay Greece billions in reparations for ‘loans’ extorted by the Nazis during World War 2.

Left-wing lawmaker Gregor Gysi said Berlin should take full responsibility for the actions of Hitler’s fascist regime and pay back at least £8.7billion (€10bn) to settle the outstanding debt."
https://voiceofeurope.com/2018/10/ge...ed-ww-ii-loan/

[Danny B]

How much pain will Powell allow?

You can bet that Armstrong considers the recent drop to be just a minor correction. Chris Martenson has another view.
"The central banks have distorted the processes of price discovery and market structure for so many years now, that it’s difficult to know yet whether their grip on the markets has indeed failed.
But what we know for certain is that bubbles always burst. Inevitably."
"And with that, our award for “Finally closing the barn door after the horse left 8 years ago,” goes to John Williams of the US Federal Reserve.

In my assessment, the biggest crime of the Fed was the decision under Greenspan to try to eliminate the business cycle by replacing it with a credit cycle. Here’s what that looks like in chart form:"
EXCELLENT chart, http://media.peakprosperity.com/images/Hussman-

But what we know for certain is that bubbles always burst. Inevitably. Each is built upon a fallacy; and when that finally becomes apparent to enough people, the mania ends.

And with that, our award for “Finally closing the barn door after the horse left 8 years ago,” goes to John Williams of the US Federal Reserve.
Heck, Trump was already gunning for Powell on Wednesday after just the first -3% decline:"
But if Trump was concerned on Wednesday, he must have been spitting nails on Thursday as the market carnage continued:"
Another amazing chart, http://media.peakprosperity.com/imag...2018-10-12.jpg

"It’s not a perfect detection mechanism certainly (Germany is down 4x more than Portugal?) but the pattern is more than directionally adequate. The money flood has reversed"
Stop and give this some thought. Germany is down 4X the drop of Portugal. Germany was WAY up. Portugal was not.
Now, think about gold. It hasn't gone way up because the CBs blocked it from every approach. The dollar will continue to rise (Armstrong) until it crashes in 2020? He also said that gold would see a catapult move. Don't throw your gold away.

https://www.peakprosperity.com/blog/...inally-arrived
"Whether the central banks blink here and ride to the rescue is the big question."
"the consensus is that Powell is a different animal from his predecessors. He'll tolerate quite a lot of stock weakness before he's moved to act. Is his line in the sand -20%? -30%? "
So, just how much will Trump be screaming at Powell?

"October 12 - Bloomberg (Cecile Gutscher): "Nervous money managers fled from corporate bonds like never before in an exodus that outpaced stocks. Record outflows hit funds that buy investment-grade debt…, according to Bank of America Corp. strategists citing EPFR Global data. The redemptions totaled $7.5 billion in the week through Oct. 10. By comparison, investors pulled $1.4 billion from equity portfolios during the period,"
https://creditbubblebulletin.blogspo...ng-coming.html
RUN TO CASH.

"A recent report showed that investors have the LEAST amount of cash in their investment accounts…EVER."
WAIT, what about possible margin calls?
” From the Federal Reserve’s Z.1 release, we find that U.S. Households had a reported 34.3% of their financial assets invested in the equity market as of the 2nd quarter. Outside of a slightly higher reading in the 4th quarter of 2017, that is the highest level of stock investment in the 70-plus year history of the series, other than the 1999-2000 bubble top.”
YES and when the bubble pops, they won't have a red cent to meet margin calls or even,,,, pay their bills.
https://realinvestmentadvice.com/wee...-all-in-again/

10/13 40% of the American middle class face poverty in retirement, study concludes – CNBC What will it be after the markets and pension funds crash?
10/13 Chinese car sales suffer record drop, set for historic collapse – ZH
Blame it on their ADD
10/13 Cryptocurrencies continue plunge with another $6 billion wiped out in a day – CNBC
10/13 Bitcoin is the ‘mother of all scams’, Roubini tells Congress – CNBC

[Danny B]

Credit / interest yo-yo,,,Italian bomb,,,Breakup-nation-state

Lots of notes today.
"If we look at the 180 most important economies in the world, only six have in their estimates of 2018, 2019 and 2020 an evident improvement of their fiscal and commercial imbalances. In other words, almost no government in the world plans to reduce the rate of debt increases."
https://www.dlacalle.com/en/market-c...r-the-economy/
NOBODY wants to let off the gas pedal.

"Losses will have to taken, and nose-bleed fixed-costs will have to be slashed; reality will eventually have to be dealt with."
"But everyone will resist this process because high fixed costs are the gravy train everyone depends on. Slashing fixed costs destroys the income needed to support asset valuations which are the collateral for the stupendous mountains of debt that define the U.S. economy. Once that debt is written down, the entire financial system collapses."
"If you add up all forms of debt in the United States (government, business, consumer, etc.), it comes to a grand total of more than 68 trillion dollars. Other than hyper-inflating our currency into oblivion, there is no possible way that all of that debt will ever be repaid."
You Can Kick The Can Down The Road, But Reality Will Catch Up With You Eventually

There was never enough money in the system to make all the investors and bankers happy. So, we went off the gold standard so that liquidity could grow into a giant fountain. Still, that wasn't enough for all the millions of speculators worldwide. Greenspan came up with the idea of superseding the business cycle by replacing it with the credit cycle. The markets would all be perfect and there would be no more recessions. The excesses of speculation that drove the business cycle into "small" ups and downs were replaced by enormous excesses of speculation in the credit markets. Greenspan and Bernanke thought that they could play the interest-rate yo-yo so that the economy would never stumble. Here is a graph showing just how violent this yo-yo became.
http://media.peakprosperity.com/imag...2017-12-05.jpg

Manipulation markets so that nobody ever suffers a loss may seem like a good idea on paper. The reality is; investors became ridiculously reckless when they threw other-people's-money around. Just like the dot-com bust, the money was just wasted. There was far more liquidity than there was viable investments.

"China has sold $3 billion of sovereign dollar bonds. This is only the third such move by Beijing in the last 14 years, and the first involving bonds with a 30-year maturity. "
"In the recent tat-for-tat trade punches, China stopped buying oil from the US. China’s crude oil imports from America reached an average of 334,880 barrels per day through August, making Beijing the second-largest buyer of US oil after Canada."
https://www.rt.com/business/441146-u...ds-china-sale/
China desperately needs dollar to service dollar-denominated debt.

The dollar has been rallying against the yuan since the March low here in 2018. Clearly, the dollar is going to rise further for a trade war will hurt China more so than the USA. While we see critical turning points in January and March in 2019 followed by May, we must keep in mind that this pattern of a dollar rally is impacting the entire world. Trump FAILS to understand Capital Flows and his accusations against China is manipulating its currency to beat the USA in trade is NOT justified."
"We have tremendous Panic Cycles throughout 2019 and we see even the yuan is lining up with the targets concerning BREXIT. This is by no means a Chinese manipulation. "
https://www.armstrongeconomics.com/m...forex-markets/
They have lost control.

Here is Kunstler with some gallows humor.
"Welcome to the convergence zone of the long emergency, where Murphy’s law meets the law of unintended consequences and the law of diminishing returns, the Three Amigos of collapse. "
http://kunstler.com/cluster****-nation/hammer-time/

10/14 Trump says Saudi Arabia faces ‘severe punishment’ if Khashoggi was killed – CNBC
10/14 UK drawing up list of potential Saudi sanctions targets after Khashoggi murder – Ind
This is revenge for the Las Vegas shooting.

10/14 Draghi to Rome: Don’t expect an ECB rescue if budget talks fail – CNBC
And the reality, "This is the ECB’s biggest weapon. It will try to scare everyone by allowing Italy’s fiscal position to erode quickly making it impossible for them to issue debt at sustainable yields. "
"If the Italian leadership holds the line and refuse to back down, then they call the ECB’s bluff on allowing rates to rise. The ECB has to come back in, begin buying to support the price, and the regroup for the next battle."
"That’s where this war is being waged as well as the headlines. And Salvini and Di Maio understand it. Because if they didn’t they would have already folded.

Instead they have doubled down on their opposition to Brussels and Berlin and added new vectors to their attacks."
https://www.zerohedge.com/news/2018-...-merkel-and-eu

"He said it is fair to say that the world is moving away from a centralized system.
“If we follow this trend, it should be obvious that the next step should be an even bigger break up into smaller units than the nation states. With such geopolitical fragmentation comes also the decentralization of power.”
“Our system is based on 7 percent paper notes and 93 percent digital units backed up by nothing other than central bank promises to pay back the debt in the future through inflation and taxation.”

He explained that in the Western world, the government is forcing people to give up between 35 and 65 percent of their income and to put it into mandatory vehicles such as pension funds, retirement insurance, taxes, and so on."
ANYTHING so that the blob State can continue to live the good life.
https://www.rt.com/business/422200-d...ell-euro-gold/

Doug Casey also writes on the end of the Nation-State.
https://internationalman.com/article...-nation-state/
Keep in mind that the nation-State is an artificial creation. Our number one motivation is self-survival and genetic survival. The family and clan represent the basic social-genetic unit. They are basically socialist where the producers willingly support the non-producers.
The Statists try to stretch the umbrella of socialist-genetic unselfish support over a group that is just too big and, too disparate. This is especially true if members of the group are of a different race that we consider "others".
We are BORN with this racial preference. It is part of our genetic makeup to protect and promote our genetic lineage.
Science Says Everyone's a Little Bit Racist—Even Babies | Parents
Infants show racial bias toward members of own race ... - Media Room
Obama's viral tweet is wrong: Research shows babies are totally racist
It is part of who we are.

I'm perfectly fine with the breakup of the nation-State. Decentralization of wealth, power and control would be great.
10/14 Cryptocurrencies suffer $18 billion drop in value over three days – CNBC

[Danny B]

Germany, Italy, OZ and NZ,,, criminals in your wallet

Merkel is doing her best to destroy Germany with immigration.
Armstrong, " From the outset, I warned that in an economic decline, the last thing you do is accept immigrants. This is not my opinion – it is just patterns from the past. " "Merkel has set the stage for violence in Europe and political discontent that threatens to undermine the entire EU projected." "European officials are back in the spotlight recently as the debt crisis in Italy has cast Europe directly in the eye of the storm. "
https://www.armstrongeconomics.com/i...ty-in-bavaria/
Merkel recently won the Kalergi prize for inundating Germany with stupid brown people.

The Stupid German high command DEMANDS austerity to cure the profligate ways of the rest of Europe. Never mind that austerity NEVER works.
"The European Central Bank (ECB) will NOT aid Italy with an EU rescue program if the country or its banks are in financial turmoil. The Italian government is taking the view that Italy has become an “occupied” country and that Germany has conquered Europe imposing austerity and its view of inflation upon the whole of Europe without firing a shot. "
"The EU Commission, on the other hand, is calling for less spending and the implementation of austerity as demanded by Germany. Italy is already sitting on a debt of around 131% of GDP."
Austerity never works. The horse has already left the barn. The gold standard does NOT allow the state to expand the money / bond supply without practical limit. ONLY a gold standard can prevent the problems that they are now trying futilely to address with austerity.

"But in reality, stopping the ECB’s Quantitative Easing will result in interest rates rising by at least 300% very rapidly. Italy is getting ahead of the curve BEFORE everything comes crashing down."
"This provides for a monetary policy emergency tool adopted in 2012 – called “OMT”. However, this has never been used before. The ECB, behind the curtain, fears that if they try to use this mechanism and it fails, as our model warns, then the CONFIDENCE in the entire EU system will collapse."
https://www.armstrongeconomics.com/i...e-of-collapse/

The blob State in OZ and NZ seems to have gone completely bonkers. If you have money in the bank, you are OBVIOUSLY tax cheat.
"Governments are in serious trouble and they will be raising taxes dramatically before they ever dare try to reform."
"The greed of governments in their pursuit of money is the single greatest threat to creating a Dark Age. With New Zealand imposing a $5,000 fine for just landing there and you refuse to hand over your pen and passwords to your phone for them to search"
"The Assistance and Access Bill 2018 in Australia will force Google, Apple, Facebook, and other technology groups to help Australian authorities decode certain forms of encrypted communications on their systems, or face fines of up to AU$10 million. The government says the legislation will help protect against terrorism, fraud and child abuse crimes, claiming it aims to ensure criminals “have no place to hide.”

An ABSOLUTE lie. MANY criminals hide out in official government offices.
"The problem that arises that failure to pay taxes they also call criminal. "
"Apple, FOR INSTANCE, would not be made to create a backdoor for their iMessage where every user’s encryption key is different. But the government could request access to the single encryption key for its iCloud services."
https://www.armstrongeconomics.com/w...rk-age-begins/

10/15 Disappearance of Saudi journalist could rock oil markets – Oil Price
Nobody cares about one journalist. I suspect that the incident is being leveraged to attack Mohammed bin Salman. maybe for ISIS,,, maybe for Las Vegas,,, maybe for Yemen. Dunno.
There have always been a lot of disappearances. https://www.project-syndicate.org/co...hcheva-2018-10

10/14 Violence, public anger erupts in China as home prices slide – Zero Hedge
Housing in China is a hot-button issue like guns are in America. Housing is the main store-of-value for the Chinese. If Powell doesn't print, the perceived value of stocks & bonds falls. If XI doesn't print, the perceived value of housing falls. China is trying to slow the printing.

10/14 Brexit: David Davis calls for cabinet rebellion over PM’s plan – BBC
10/14 Theresa May faces her party as a desperate gambler in hope of a break – Guardian
As Italy sets the stage for collapse of the EU, more and more Brits are thinking that an exit is a good idea.

[Danny B]

Where will you work tomorrow?

Here is an article that explains that; in the future, everything will be a service. You won't own anything.
"In The Future, You Won’t Own Anything, No Car, No Home"
https://welcome2050.com/in-the-futur...e-f374a3e8846a
Here is a vid that explains the The Collision of Demographics, Automation and Inequality
https://www.youtube.com/watch?v=K5R0xl8KdXQ&t=12s

The old cartoon series, The Jetsons.
"George Jetson's work week consist of an hour a day, two days a week. His boss is Cosmo Spacely, the bombastic owner of Spacely Space Sprockets. "
He occasionally pushes a button.

"Quis custodiet ipsos custodes? is a Latin phrase found in the work of the Roman poet Juvenal from his Satires (Satire VI, lines 347–348). It is literally translated as "Who will guard the guards themselves?",
Who will watch the watchers?
The answer is in. China uses AI to watch every movement of every person. It hasn't saturated the whole country yet but, give it time. In all the developed countries, the surveillance state is rapidly unfolding and, engulfing everything.
Once the taser was introduced, the state started using them on everybody.
https://www.youtube.com/watch?v=QkkLUP-gm4Q
The State now has much more powerful weapons.
https://www.youtube.com/watch?v=KEhmFp-Gvyc&t=83s

Everything is monitored. Everything is recorded.
We face a new world where there is almost no employment. We face a world of absolute surveillance. We face a future devoid of jobs that have any meaning.
The sovereign bond market is supposed to crash going in to 2020. (Armstrong)
FED GOV will no longer be able to provide make-work jobs to the legions of people who have no job niche in the private sector. At the same time, pensions will crash.
I suspect that very few people will want to bring children into such a brutal and controlled world.

[Danny B]

Stocks, take your choice,,, China needs an extra $6 trillion

Here is the good news on stocks.
Dow jumps more than 500 points, posts best day since March as earnings fuel rally
https://www.cnbc.com/2018/10/16/wall...-earnings.html
The article tells you how great everything is.
10/17 IBM tumbles after revenue resumes slide, EPS “beats” on ridiculous tax rate – ZH

Here is the bad news on stocks.
"We’re not particularly happy,” was the understated comment from BlackRock's Larry Fink as he reflected on the mass exodus of institutional assets under management from the world's largest asset manager."
"But the biggest drop was a $30.8 billion outflow from non-ETF equity index products..."
"As Retail was piling in (Retail and ETFs), according to Bloomberg data, Q3 marks the largest quarterly institutional index net flow change since the bad old days of 2Q 2015."
https://www.zerohedge.com/news/2018-...-exodus-stocks
Great chart, https://www.zerohedge.com/sites/defa...16_7-07-14.jpg

Here is another article of the type that I dismiss.
A full employment economy? What could possibly go wrong?
"The Bureau of Labor’s September numbers showed measured unemployment hitting a multi-decade low of 3.7%."
"It seems like the US is experiencing the proverbial “Goldilocks” economy. What could possibly go wrong?"
" the stimulus as a percentage of GDP is still relatively high, when one considers that the official unemployment rate, at 3.7%, is the lowest recorded level since 1969.

Even allowing for lower labor participation rates (which suggest that there might still be some surplus labor capacity in the US economy)"
96.2 million Americans of working age who are not in the labor force is dismissed as a bit of surplus labor capacity.

SS China resembles the Titanic steaming into a debt iceberg
"S&P Global Ratings warns that ‘off-balance-sheet borrowing’ by local governments in the country could be as high as US$5.78 trillion "
SS China resembles the Titanic steaming into a debt iceberg | Asia Times
They let State-owned companies create unlimited credit instruments. What could possibly go wrong?
10/16 China’s stock rout puts $613 billion of share pledges at risk – Bloomberg

10/17 Netflix soars after crushing subscriber estimates as it burns $10 million per day – ZH
10/17 New Hampshire’s Pension liability equals its annual government budget – Union Leader
They aren't alone.
10/16 The EU wants fiscal austerity in a sinking economy – CNBC
10/16 Bloomberg: The next financial crisis is staring us in the face – ECB

[Danny B]

What to do when there isn't enough circulating money

I'm trying to get my head wrapped around a new paradigm. Before the industrial revolution, the economy was constrained by limits to productivity. Since then, increasing automation has greatly increased productivity. We have reached a point where the production-consumption cycle is limited by consumption. To a great degree, consumption is limited by the circulating money supply.

Benjamin Franklin is referred to as, the father of paper money. We have to go back to his writings to understand the possible implementation of a paper-money system. Keep in mind that England demanded gold and silver payment for any exports to the colonies. This resulted in a widespread LACK of circulating money in the colonies.

" Franklin observes in 1729 that “we [Pennsylvanians] have already parted with our silver and gold” in trade with England, and the difference between the value of paper money and that of silver is due to “the scarcity of the latter.”
Finally, Franklin argues that “coined land” or a properly run land bank will automatically stabilize the quantity of paper money issued — never too much and never too little to carry on the province’s internal trade.
A properly run land bank will never loan more paper money than the landed security available to back it, and so the value of paper money, through this limit on its quantity, will never fall below that of land.
Before the war, the colonies sent Benjamin Franklin to England to represent their interests. Franklin was greatly surprised by the amount of poverty and high unemployment. It just didn't make sense, England was the richest country in the world but the working class was impoverished, he wrote “The streets are covered with beggars and tramps.”

He was asked why the working class in the colonies were so prosperous.

“That is simple. In the Colonies, we issue our own paper money. It is called ‘Colonial Scrip.’ We issue it in proper proportion to make the goods and pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control its purchasing power and we have no interest to pay to no one.” - Benjamin Franklin
Soon afterward, the English bankers demanded that the King and Parliament pass a law that prohibited the colonies from using their scrip money. Only gold and silver could be used which would be provided by the English bankers. This began the plague of debt based money in the colonies that had cursed the English working class.

The first law was passed in 1751, and then a harsher law was passed in 1763. Franklin claimed that within one year, the colonies were filled with unemployment and beggars, just like in England, because there was not enough money to pay for the goods and work. The money supply had been cut in half.
“It was the monetary system under which America’s Colonies flourished to such an extent that Edmund Burke was able to write about them: ‘Nothing in the history of the world resembles their progress. It was a sound and beneficial system, and its effects led to the happiness of the people."
https://www.peakprosperity.com/forum...n-hid-you/4358

We issue it in proper proportion to make the goods and pass easily from the producers to the consumers.
I see no mention of bankers. The State issued paper money in proper proportion to the goods produced. Simply put, the money was infused into the lower (productive) loop of the economy.
The 1907 Panic was created to justify the need for a Central Bank in America. We got the CB in 1913 and, a complete crash in 1929.

Federal Reserve - The Enemy of America
https://www.bibliotecapleyades.net/s...opol_fed26.htm

The Federal Reserve is NOT Your Enemy - Wealth Daily
https://www.wealthdaily.com/articles...our-enemy/8334

America's Number One Enemy: The Federal Reserve - Prepare For ...
https://prepareforchange.net/2017/05...deral-reserve/

Our Enemy The Fed | Mises Institute
https://mises.org/library/our-enemy-fed-0

Central banks are the real enemy of Americans - Winona Post > Article
http://www.winonapost.com/Article/.....y-of-Americans

Federal Reserve's Role During WWII | Federal Reserve History
https://www.federalreservehistory.or...le_during_wwii
The Federal Reserve supported the war effort in several ways – it helped finance wartime spending,

It's pretty obvious. The Federal Reserve is the friend of the very wealthy AND, the war mongers. Currently, most of the money supply is in the hands of the very rich. They can't actually do anything with all this money. They just engage in endless speculation trying to make their money pile grow. Consumption is fast falling. THAT is why the dramatic fall in the "not in the labor force" statistic is so important.
This drop in personal consumption has historically been offset by an increase in consumption from the Federal Government. The drop in consumption has become so extreme that the State can only make up the difference by running the printing presses in hyperdrive.
The MICC is running at warp 7 financed by the sovereign bond market. Armstrong said that the U.S. sovereign bond market will collapse going in to 2020.

The universal basic income plan is an attempt to infuse money into the lower loop to increase consumption. It will NOT work if it is borrowed debt money. FED money has created 95% of the upper loop living on wet-ink money. You can imagine that the people and corporations who receive this money will fight tooth & nail to keep the system going.

Robots don't pay taxes or buy consumer goods. They have no use for money. Consumption will continue to fall. More automation will be brought online to compensate for falling profit margins. People will cut back even more on childbearing. This may be a good stratagem for reducing world population but, it spells destruction for government and banking.

This brings us to the final question. What can be done about the federal reserve and the current system?
https://www.foxbusiness.com/politics...ederal-reserve

[wayne.ct]

Truth, ethics and justice

These players are dolts. They each think they are doing the right thing and they will defend their assumptions with everything at their disposal no matter whether it is in fact right or wrong. They even have the temerity to assert that their view is best for everybody when it is self serving and has a host of negative consequences. I admit I suffer from many of the same deficiencies but a big difference remains. Namely, in aggregate they have more resources than I. A huge reservoir of resources.

[Danny B]

The new masters & slaves

The good thing about slavery is; you can take all of somebody's production and, only allow them a tiny part to survive. What happens if this idea / plan is taken to extremes? What if the slave is far more qualified than the owner?
Here is the new class of slaves.
Workforce Cut from 650 to 60, Productivity Triples at Unmanned Factory
https://www.youtube.com/watch?v=EsNcoUo7MTU
Viscon Hydroponics - Fully Automated Hydroponic System - Gipmans
https://www.youtube.com/watch?v=V1PcgtWAEnU

Here is the new master.
https://www.youtube.com/watch?v=Pls_q2aQzHg&t=187s
Artificial Intelligence: Mankind's Last Invention Aperture
Artificial intelligence may replace 40% of all jobs: Bridgewater founder Ray Dalio
https://www.foxbusiness.com/markets/...nder-ray-dalio

Energy Slaves: every American has somewhere between 200 and 8,000 energy slaves
Energy Slaves: every American has somewhere between 200 and 8,000 energy slaves | Peak Energy & Resources, Climate Change, and the Preservation of Knowledge
22 Billion Energy Slaves
22billionenergyslaves.blogspot.com/
Thisness of a that: Energy Slaves

thisnessofathat.blogspot.com/2012/06/energy-slaves.html
Jun 11, 2012 - For example, it would take 11 energy slaves peddling madly simply to ... In the absence of fossil fuels, the global economy in its entirety would need approximately 66 billion 'energy slaves' to sustain itself
Garden Earth - Beyond sustainability: 250 billion energy slaves
gardenearth.blogspot.com/2011/03/250-billion-energy-slaves.html
Losing our Energy Slaves
https://damnthematrix.wordpress.com/...energy-slaves/

The coming financial collapse is unavoidable. It is caused, in great part, by a lack of jobs and wages. FED GOV spends ~34% of the GDP (Armstrong)
If / when the sovereign bond market collapses, there will be a complete reset of public spending. The productive capacity is there. The energy supply is there. The potential wages and profits are NOT there. The tax base is NOT there. Will man be forced to continue to compete with his slaves to survive? That won't work. He can't compete with AI either.

What about the birth rate? Japan hasn't yet found a solution to the problem. Will contraception be outlawed? These are not future problems. They are here now and, getting worse.

[wayne.ct]

When the rulers rule rightly the overall economy is healthy

But when they do as they are doing recently things will go downhill. Some people will follow blindly and even put up with a lot of grief in the process but this is mental abuse and insanity. We seem to be reaching the point where people are ready to rebel against the current abusive regime. Every recession seems to accompany excess industrial capacity. But, which comes first and which is the consequence? In my view, falling demand will cause product to stockpile which will cause layoffs which will cause hardship, unemployment and reduced production. That will reduce demand causing a downward spiral. What will break the cycle? My answer? Reduce the confiscatory taxes and regulations. How can that happen? Only when the corruption at the top is remedied. That could happen at any time. It only takes someone with police authority to arrest the criminal element in the structure. Do they have the spine or are they all weak, compromised and/or corrupt? How does AI fit into this picture? AI is a tool to increase productivity. It is not an independent "solution" or a means that really solves anything important. Maybe some people think we will become the slaves of the machine, but this is science fiction, in my view. Movies have scared people into believing the singularity is just around the corner and have become deluded regarding what machines can do. Machines and robots can grow lettuce but if there were no market for the produce and no way to deliver it, the machines are irrelevant or misdirected capital expense. The "central planners" can be right or wrong and if they are wrong then the economy is put at risk. Do we know where the significant imbalances are? One would be the bubble in the capital markets, stocks and bonds. I am not too worried about robots as such. I am more concerned about the mountains of money being invested in robots where the money invested will never be repaid with interest. The promise of riches coming from that industry is suspicious, in my view, because 99 percent of the investors in that industry don't really understand the risks.

Just to be clear, I consider so called big government and deficit spending to be a sub category of corruption in general. Perhaps that goes without saying. Do you honestly think that AI and automation will be the trigger that blows the economy?