Economic pressures

[Danny B]

Squeezing the working class shrinks real markets

The supply of gold only grows by about 2% a year.
The supply of many commodities grows relative to demand. But, commodities must be consumed to supply future demand. Housing is an area where the upper loop of money renters meets the lower loop of people who need housing. QE has distorted this by creating a demand for housing by people who don't plan to actually live in these houses. The houses aren't actually "consumed".
"the soaring home prices in major Chinese cities isn’t an accident. It’s the product of deliberate local government land policies that favor rich landlords over the average citizen."
Developers are building “ghost cities—“ vast tracts of apartment high—rises and malls that remain largely vacant because the Chinese worker can’t afford them.”

Vacant apartments belong to wealthy landlords who expect to sell them one day at higher prices."
"Meanwhile, holding apartments off the market fuels a huge housing shortage, which pushes the prices for “second-hand” houses ever higher. Shanghai’s Second-Hand House Price Index, for example, has soared from under 1000 in 2003 to around 4000 in 2017."
"Japan has already faced these problems, and it’s counting three lost decades"
https://www.forbes.com/sites/panosmo.../#727742f8ecfc
The Chinese population is rapidly shrinking.
So, the Chinese (et al) money renters have killed demand for housing at the same time that they plan to sell later at a higher price to a presumably growing market.

Here is a long article on MMT and inflation. It claims that the CB will have to create tons of money to support MMT AND tons of money to support the demands of the banks. This will supposedly destroy currencies. I suppose that this is true. So, SCREW the banks and just print for the producing economy.
https://www.goldmoney.com/research/g...-credit-crisis

Armstrong writes about the runup to the 2020 election.
" It appears that all this political obstruction and constant hatred being poured out by the press against Trump will fuel less intelligent people to see him as the Devil incarnate who must be stopped at all costs. This is not going to end nicely and the politics have crossed the line becoming more hate speech with deadly consequences. Neither side will accept the result."
I don't completely agree with this. I know somebody who is the senior IT developer at a beltway firm. He dismisses EVERYTHING that HRC has done as just being an irrelevant fable. less intelligent
" Unfortunately, our computer is forecast a sharp rise in violence in 2020."
https://www.armstrongeconomics.com/i...ical-violence/

[Danny B]

MMT does NOT increase the debt

The BS is flying thick about what a crackpot idea MMT is. Here are a couple of comments on the text of an article at Zero Hedge. The article is about how MMT ruined Zimbabwe and Venezuela and Germany.

The continued argument against MMT expressed in the above article and others of its ilk is total nonsense. Money is permissive and directive but not causative. It is the old idea of "pushing on a string" when the Fed relaxes monetary policy. You can offer money but you can't make people take it if they see no way to put it to use. But by refusing to offer money the Fed surely can shut down economic activity by denying the means of payment for worthwhile and useless investment alike.

This is the essence of the issue. So long as people have something they wish to do there will be a demand for money. The critical issue is whether the things they wish to do are worth the doing. If the things are not worth doing the money will not be wasted. Money is simply an abstraction which passes from one hand to another directing the usage of real resources. It is the real resources that will be wasted.

It is important to distinguish all expenditure and that includes expenditure under MMT as to whether it is a worthwhile expenditure of real resources or if it is not. It is clear that MMT will waste resources if wielded by irresponsible hands, but this is not a criticism of MMT. It is a criticism of governmental competence which is a different thing. Articles like the one above constantly mix competence with the theory to the detriment of the theory. This only creates disingenuous propaganda against MMT. This class of argument generally arises from those who are determined to starve the economy of sufficient aggregate demand to maintain full employment. Power comes from restricting the money supply to those who have money to loan.

It is certainly true that governments are usually in desperate need of finding money to spend when they are hell bent on spending for political motives that have no underlying value. Governments always resist stopping whatever it is they are doing because of large political constituencies that demand continuation. If they are failing they will throw whatever resources they can find into that continuation.

Restricting the use of resources is, however, no panacea. Most resources will decay if not used. Factories and equipment rust and people forget their skills as they go unused. One really does not have the option of not using resources. One must be vigilant to see they are used well and in sufficient quantity. This idea is generally ignored.

One side in this debate wants to conserve resources until paid for by equivalent value already in existence. If this were really necessary no economy could grow or shrink. In fact there could be no economies at all for all economies are called into existence out of nothing.

The idea of there always existing a preceding value is antithetical to the very concept of growth. True growth is from an accounting perspective completely ex nihilo and is validated only by producing new money to represent it. The actual increase in value occurs completely in the real sector insulated from the financial sector. It is accounted for crudely by the measure of profit. A measure which can easily be distorted by other economic and financial considerations. A concept of real profit is needed which reflects real revenue minus real cost. That real profit is then given a financial value through representation in new money. This is necessary because assigning a concept of real value over a collection of heterogeneous items independently of a concept of money is effectively impossible.

The other side is sure or pretends to be sure that whatever is done will be golden. All expenditure will produce only real profit. There are no real costs so all the money spent will create real value which is equivalent to the expenditure itself. One can write off all sunk costs at zero value. If this is true there can be no inflation. These people proceed without evidence or from outright fraud. Neither is an acceptable attitude but the first is more pernicious for it is commonly believed. The second is merely laughable.

The MMT rests upon the idea that whatever is worth doing will receive proper validation in monetary terms. The money is only there to grant permission to proceed. Violation of this idea is contrary to all sensible expenditure, not just MMT. It is also the basis of the pernicious assumption that preceding value must be offered for newly created value. The assumption exists that the offered value will be equal to the newly created value in real terms. This need not be true when money is used to equate values. It is the effort to keep it at least approximately true that is important.

The idea that we are anywhere near the full or, more importantly, the efficient use of real resources is nonsense. The government has been cooking the statistics for years. Aggregate demand has been suppressed for years. The rate of return on real investment on the whole has been suppressed. This is evident in the prevailing low interest rates which do not stimulate real investment. The idea that we are anywhere near full employment is laughable. Look to the participation rate.

Moreover, it is increasingly clear that there is very little in the US worth employing labor to do. Business can find nothing to do with the Fed's output of green but to buy back their stock. The movement to offshore investment since the 1970's is indicative of falling domestic returns. The idiocy of the Green New Deal is a major and very observable argument for the idea that the US is incapable of doing anything but waste resources. The US is determined to "save" the planet at the expense of the human race. Fracking is constantly accused of producing oil at excessive cost. Operations to loot foreign countries such as Syria and Venezuela are indicative of the mindset of government towards domestic investment. Why build it when you can steal it abroad?

No doubt MMT will be introduced for truly reprehensible motives, but that is not the fault of MMT. It is the fault of those who advocate it who would wield it irresponsibly. The greatest virtue of MMT if it survives this abuse will be to destroy the idea that equivalent value must already exist before new value is made. As stated above growth cannot occur if this point of view is strictly held. New growth is not a financial construct but comes out of labor, capital, technology and organization. Finance creates new money to represent its coming into existence and assigns a value in financial terms which can be recognized by the financial system. This number need not be correct so there can be either inflation or deflation. There is no preexisting value involved.

2nd;
The inflation in Weimar Germany was due to a triangular flow of debts incurred due to Versailles Treaty. Also, the Reichsbank was privatized under the Dawe's (an American) plan.

It was bear raiders shorting the Mark, which caused the hyperinflation. It actually took taking the Reichsbank back under government control (under the Chancellorship) to stop the hyperinflation using rentenmarks and not allowing shorts.

Whenever you do a short, you have to borrow new marks into existence i.e. they are loaned into existence against dollars, or gold or some foreign currency. This is how the new money came to be "printed." Dudley doesn't know squat.

With regards to Venezuala, it is import dependent and has dollar debts. By not allowing the sale of oil, the Venezuala loses their FX, which puts pressure on their exchange rate, which then allows it to be bear raided. Sound familiar?

Let's compare: Russia has plenty of FX, little in the way of dollar debts, and they are making stuff themselves. No way a bear raider can screw over Russia with hyperinflation, although they tried with the sanctions.



Oh and then the Zimbabwe canard. These retards always bring up Zimbabwe. Jeez. It is an African country run by Negroes. Say no more. They killed off their white farmers, and hence their money no longer matched goods and services production. They killed off their economy, so somehow that is MMT?

https://www.zerohedge.com/news/2019-...a-and-zimbabwe
The article talks about the huge and increasing debt load with MMT.
Bill Gates, who slammed MMT as "Crazy talk" saying that the theory's core principle of "not worrying about the deficit"
There is NO deficit if the treasury just prints fresh money.
But it will come and bite you. The people you owe the money to, you will have a problem." You don't owe money yo anybody. THAT is the problem for bankers.
"suggests that a government like the U.S. needn’t worry about debt at all. As long as it borrows in its own currency, there is no risk of default or bankruptcy. It can spend as much as it wants on any projects,
THEY DON'T BORROW.
Alas, there is no free lunch. For one, the economy might not have enough resources — in the form of workers and industrial capacity — to meet the combined demand from the government and the private sector. The result would be inflation, as too much money chased too few goods and services.

Fueled by income and strong consumer demand, demand-pull inflation occurs when the economy demands more goods and services than are available.
If U.S. debts were to keep growing, at some point the Fed would face a dilemma. It could increase interest rates to maintain foreign (and domestic) demand for dollar assets, at the cost of damping U.S. economic growth.
How stupid do you have to be to believe that U.S. debts will keep growing if the treasury PRINTS instead of borrowing?
The U.S. economy is operating pretty close to capacity — especially in the labor market
BS to the max.

[Danny B]

Printing ever more.,,, China going DOWN

The above cited article slamming MMT is written by FED Governor Bill Dudley.
https://www.zerohedge.com/news/2019-...a-and-zimbabwe
Ben Franklin, "We just print whatever amount of money is needed for the producing economy"
Of course, the FED prints whatever money is needed by the money renters. MMT would completely replace the FED bond market. All the people living off their portfolio have an income thinks to wet-ink money from the FED. 50% of the gains in the stock market are courtesy of the FED. In Europe, it is 100% due to the ECB. The monetary inflation flows directly into the pockets of the people who rent their money. There is NO STIMULUS for wage inflation.
There are a couple of very good charts on this page.
https://northmantrader.com/2019/02/19/the-lost-war/
We are obviously reaching a peak. Balance sheet reduction at the FED was reported to be equivalent to a 1.5% increase in the interest rate.
2/20 Blain: it feels like a liquidity storm is coming soon – Zero Hedge
2/20 Fed to end balance sheet reduction by the end of the year, minutes say CNB
The FED is trying to free up some liquidity.

Dudley lambasts MMT but, wants to do QE on a regular basis. Tell me the difference
https://www.truthdig.com/articles/th...tative-easing/

Because of technical constraints, the stock market is lined up for a 10% correction. EVERYBODY is betting that the FED will come through and pump up the markets.
https://www.zerohedge.com/news/2019-...better-deliver
The FED created quite a bump in the road in December. Reportedly, Powell got scared and backed off. What will happen this time?
https://www.forbes.com/sites/bobhabe.../#e7a09b82de4d

"China has not shown much capacity for developing high technology on its own, but it has been quite effective at stealing such technology
Unfortunately for China, this growth by theft has run its course. The U.S. and its allies, such as Canada and the EU, are taking strict steps to limit further theft "
"China assumed it was “business as usual” as it had been during the Clinton, Bush 43 and Obama administrations. China assumed it could pay lip service to trading relations and continue down its path of unfair trade practices and theft of intellectual property."
"China Large-Cap ETF (NYSE:FXI).

FXI peaked at $54.00 per share on Jan. 26, 2018, almost exactly on the day the trade wars began. The index has trended steadily downward from there to the current level of about $42.50 per share, a 21% decline with volatility along the way."
"March 1, 2019, is the deadline for the current “truce” in the trade war intended to facilitate negotiations. U.S. demands — especially in the area of verifiable limitations on the theft of U.S. intellectual property — are impossible for China to meet because it depends on such theft to advance its own economic ambitions."
"But the big issues including limits on U.S. investment in China, forced technology transfers to China and theft of intellectual property will not be resolved.

The best case is that the deadline will be extended and the trade talks will continue. The worst case is that the truce will fall apart and the U.S. will impose massive tariff increases on Chinese exports to the U.S. as planned."
Making China less great.
https://dailyreckoning.com/the-crumb...hinese-market/
https://www.zerohedge.com/news/2019-...ilize-currency
This is determined by the markets.

Apparently, lefties don't handle stress very well. It makes them crazy.
https://news.grabien.com/story-mccab...mpaign=grabien

[Danny B]

Smoke & mirrors,,, trying to kick the can a bit further

Armstrong, " in Illinois, there are more than 19,000 retired teachers who get OVER $100,000 per year in their pension"
"The government will do ANYTHING to protect itself."
OK, will GOV kill off the FED and implement MMT to keep itself going?

"Achieving success through hard work, intellectual accomplishment, or a superior product is antiquated and passé. Success is achieved through regulatory capture, bribing politicians, financial engineering schemes, monopolization of markets, and the power of propaganda."
"What leaps off the screen is how businesses are created out of thin air delivering no value to society. It’s all smoke, mirrors, and superficial virtue signaling designed to lure intellectual lightweights to pretend they are a mover and shaker in their social media driven world. "
https://www.theburningplatform.com/2...fyre-festival/

Along with the loss of morality, there is a general lack of character. Whatever we want, we want it now. If things don't go our way, we immediately get stressed out.
https://news.grabien.com/story-mccab...mpaign=grabien
We want to be happy with no effort.
https://dariusforoux.com/the-quickes...-to-happiness/

Here is an article that lists quite a few things showing that we have peaked and, are headed down.
"
Two-Year yield bottomed September 2011
Five-Year yield bottomed July 2012
Ten-Year yield bottomed July 2016
The 30+ year bond bull market is done."


A recession indicator with a perfect track record over 70 years is close to being triggered

"The unemployment rate is often called the most important barometer of a coming recession."
OK, Shadowstats shows the true unemployment rate, using the previous method for figuring this figure. It's now about 22%.
http://www.shadowstats.com/imgs/sgs-...d&t=1549031117
Alternate Unemployment Charts

Since the unemployment rate is so important, it is sure to be falsified.
"Lavorgna says there's probably just a 1 in 3 chance of a recession and he expects the unemployment rate to head lower again, not higher.
The unemployment rate, at 4 percent, is currently 30 basis points from its recent low."
GOV is having to pump in lots of liquidity to make up for a;ll the lost wages. In spite of all the printing, the markets are starting to unwind anyway.
"The unemployment rate has been a perfect forecaster of recession, and it appears to be edging closer to triggering that signal.

"It's never been wrong. It's something to watch," said Joseph Lavorgna, chief economist for the Americas at Natixis."
Because of wishful thinking, people look at the unemployment rate and ignore that 96.2 million Americans of working age are not in the labor pool.
https://www.cnbc.com/2019/02/20/a-re...triggered.html

2/21 Major Chinese port bans Australian coal imports – Bloomberg Sorry OZ, you're toast.
2/21 Shocking Philly Fed collapse: biggest drop since 2011 – Zero Hedge
"As you can see, about $3.3 trillion — or 48% of all current outstanding commercial debt — comes due by 2023. The timing could be problematic."
https://www.marketwatch.com/story/a-...ger-2019-02-20
2/21 Yield curve inverted out to seven years – Mish Bad news for bonds.
2/21 American investor Jim Rogers warns of grim future for japan – Japan Times
What do you expect when you destroy the family to prop up the banks?
2/21 US housing market in freefall as new buyers can’t afford a home – Zero Hedge
All that wet-ink money that went to money renters drove up the prices.

[Danny B]

The kids are NOT allright

Armstrong, " In Chicago, there are thousands of more retired state employees collecting pensions than active workers who are paying into it the pension funds. As reported, in a small suburban district known as the Arlington Heights Park District, there are 432 retirees collecting from that district’s pension fund with only 103 active employees paying into it."
"What is happening in Chicago is indicative of the crisis engulfing Western governments as a whole. These people always counted on an increasing supply of taxpayers. But the birthrate has dropped as well as the marriage rate"

"With over 60% of students now unable to find employment with the degrees they paid so dearly for, the future looks very bleak. They cannot buy homes because of their chronic debts. Marriage is declining and the under-30 generation has a majority that is not interested in even having children"
"The number of babies born in the United States continues to fall dramatically. The birth rate made a new record low during 2017, dropping 7% in a single year,"
"The global warming crowd should be ecstatic. They have reduced the human population growth by about 50%. The crisis now is there will be a shortage of taxpayers to fund their grand projects along with governments. Socialism cannot possibly survive when we exist to feed those in government "
https://www.armstrongeconomics.com/w...ment-pensions/
We're following the lead of Japan. For 3 decades, they have been trying to grow their economy while the population was shrinking.
The Central Bank and the private banks pump liquidity into the speculator loop to keep the monied class well supported. The resulting price inflation has priced the productive class out of the baby market. The FED finds itself locked into preserving the fortunes of the speculators.
Macron in France is the perfect example of the banking class impoverishing the common man. His answer to the growing poverty of the working class,,,, form a European army to smack down any trouble makers.
“Whiff of Grapeshot”

Armstrong has a very enlightening paragraph on the death penalty
https://www.armstrongeconomics.com/i...death-penalty/

China has gone beyond Orwell's worst nightmare.
https://www.zerohedge.com/news/2019-...edit-crackdown
I'm not so sure that this plan is going to work out very well in the long run.
2/22 U.S. Mint sells out of American Eagle coins, 6m sold ytd – Kitco

[Danny B]

Runaway debt creation

Here is a chart of interest rates, http://fm.cnbc.com/applications/cnbc...REST_RATES.png
Here is a chart of personal savings, https://si.wsj.net/public/resources/...0501170150.gif
Originally, banks would take savings and loan them out carefully to finance commercial projects that promised a return. Credit was extended for personal finance that was well qualified to repay the loan. Interest rates were driven down by the FED and people lost motivation to save. The money-renters just couldn't find enough capital to keep commercial ,loans funded. This was also true for loans to the State.

The bank regulators like the FED and SEC allowed the banks to drop their reserve requirements WAY down. The SEC allowed people to buy stocks on a very small margin. The State did away with fractional reserve money creation tied to gold. The various restrictions on debt creation were tossed out to keep the State and the money-renters well financed. This allowed the welfare-warfare State to blossom to it's current level. It also allowed the finance industry to go from 7% of the economy to ~ 40%
An ounce of gold would buy you 39$ in 1970.
Today, an ounce of gold will buy you 1350$
The southern border was left open to depress wages. Outsourcing and automation were implemented as much as possible. 95 million people of working age are not in the work force.
"The unemployment rate is often called the most important barometer of a coming recession."
This is all falsified but, how long can a recession be held at bay?

"And then Friday from the Financial Times (Sam Fleming): “Slow-inflation Conundrum Prompts Rethink at the Federal Reserve: Ten years into the recovery and with unemployment near half-century lows, the Federal Reserve’s traditional models suggest inflation should be surging. Instead, officials are grappling with unexpectedly tepid price growth"
NOBODY in the lower loop has any desire to see price inflation. The upper loop lives to see price inflation because it indicates that their portfolio will see gains.

Powell tried to initiate a controlled demolition of the markets to avoid an uncontrolled demolition. He underestimated the fragility of markets.
" The Federal Reserve’s promise in January to be ‘patient’ about further interest rate hikes, putting a three-year-old process of policy tightening on hold, calmed markets after weeks of turmoil that wiped out trillions of dollars of household wealth."
Credit Bubble Bulletin : Weekly Commentary: Dudley on Debt and MMT
"John Williams, the New York Fed president, said on Friday that persistently soft inflation readings over recent years could damage the Fed’s ability to convince the general public it will hit its 2% goal. "
The FED now plans to do targeted inflation increases to get confidence back.

So, that is the means and the history of a long sequence of price inflation.
There is no sequence of wage inflation. The banks can withhold credit but, WE can no longer withhold our labor. Finance has worked hard at destroying collective bargaining.
This slow-burn of price inflation has reduced the average consumer to poverty. The demands of the runaway State bureaucracy have also robed the working man.
" A German earning just $75,000 annually ends up in the 50% tax bracket"
https://www.armstrongeconomics.com/w...ecord-surplus/

Armstrong, " Under Marxism, we pay between 300 and 800 times more than previous historical periods of taxes. The Roman Empire had taxes that would rise from 1% to 7% — not 50%+. ALL Republics collapse into oligarchies because once one person pretends to represent many, they will NEVER put the interests of the many before themself"
Regulatory capture allowed banks and corporations to issue unlimited bonds and debt.
100% of the rise in the European stock market is due to ECB printing. 50% in the U.SD. is due to FED printing. The CBs really have no escape. Earlier Trump said the that the unemployment rate with the 95 million included was 42%. Don't forget that 22 million work for the government and GOV spends about 20% of the GDP.
Various writers speculate that investor may some day lose confidence in buying sovereign debt. That happened long ago. The FED and ESF are buying both State debt and stocks / bonds.
We'll see how much longer this can go on. The CBs flooded the world with "money" expecting it to flow into every market. So far, this is working. QE for everybody.

[Danny B]

Chartalism and Monetary circuit theory

Keynesian economics is the preferred system because it gives the most power to the State. Regulatory capture ensures that everybody with power can buy whatever regulations are necessary for them to succeed. The little guy is just a tax-donkey for the State AND an endless wallet for the oligarchs.
The current system pumps money into the economy through the bond market. It flows very well into the upper loop of finance. Since the State has quite a bit of control on the finance industry, the finance industry makes sure that money flows to the State.
The lower loop is getting increasingly impoverished. The calls for universal basic income and modern monetary theory are a response to our inability to earn a living wage.

UBI and MMT are an attempt to mitigate the effects of lifelong inflationary policies of the upper loop. Naturally MMT and UBI are soundly derided by people close the the monetary spigot. They claim that it will increase the debt ENORMOUSLY. Actually, it would decrease the debt as long as the Treasury did NOT create money for speculators. They claim that w would have terrible price inflation. The upper loop has had terrible price inflation and, nobody is complaining about that.
There are claims that UBI and MMT are just a facet of socialism. Socialism always seem to put incompetent people in charge.
https://www.youtube.com/watch?v=y-nLLlpKFvs
https://www.youtube.com/watch?v=bKhR9i5CGkA

There are alternatives to Keynesian money creation.
https://en.wikipedia.org/wiki/Monetary_circuit_theory

https://en.wikipedia.org/wiki/Chartalism
Our financial system is NOT prepared to cope with automation. Those who already have money are NOT willing to see changes that would diminish their advantage . The CBs are deathly afraid that there is no solution other than continued money pumping.

[Danny B]

Too many changes,,, too little adaptation

Charles Hugh Smith has a look at the larger problem... the system.
"The global economy is in the midst of a grand experiment pitting centralization (Central Planning) against the evolutionary model of adaptive, self-organizing networks.
As I explain in my latest book (now out as an audiobook), Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic, there's one fatal flaw in Central Planning "solutions": they run completely counter to the principles of evolution which guide all systems, natural and human.
That which is rigid and inflexible cannot adapt to rapid change, and thus it fails to adapt and vanishes from the Earth. That is the essence of evolutionary dynamics.
The most recent imputs are pole flip, climate change, runaway automation and sovereign bankruptcy.

"Central Planning is a monoculture that incentivizes self-serving corruption and propaganda.
The essence of Central Planning is coercion:
Central Planning works until it doesn't, and that moment of failure is at hand.Central Planning is in essence a vast machine of mal-investment of irreplaceable capital.
Central Planning strips out the all the core dynamics of adaptation as dangers:
Whether we acknowledge it or not, the world is placing its bets on which system will survive the coming era of destabilizing non-linear change:inflexible, opaque Central Planning or flexible, self-organizing networks of decentralized autonomy and capital.
Those who are betting on Central Planning do not understand the essential role of adaptation: what cannot adapt will die, and Central Planning is by its very nature incapable of true adaptation.
Adaptation can't be faked. Organizations that cannot adapt quickly and efficiently implode. This is a scale-invariant dynamic: the organizational size doesn't matter. Size and scale do not provide magical protection. Households, corporations, governments and empires that fail to adapt will collapse.
There is a real solution: decentralize, diversify, open the economy and society to dissent, experimentation and self-organizing networks of peers.
oftwominds-Charles Hugh Smith: Which One Wins: Central Planning or Adaptive Networks?
Here is the vid on the subject, https://www.youtube.com/watch?v=IfhX...ature=youtu.be

In Chicago, there are thousands of more retired state employees collecting pensions than active workers who are paying into it
City of Chicago :: City-Owned Historic Buildings For Sale
2/24 Illinois looks to raid private retirement accounts to solve its pension crisis – Daily Caller

Our debt;
"The U.S. government will spend $4.4 trillion in 2019, of which only $3.5 trillion will be covered by tax revenues. Of that $4.4 trillion, $2.7 trillion is spent on what is known as “mandatory spending”: Social security, Medicare, Medicaid and the like"
https://news.goldcore.com/ie/gold-bl...ebt-right-now/

Armstrong, "At the lower threshold of risk lies that reality whereby at the very minimum we are looking at the collapse of centralized governments as took place in 1989 with communism. That will result in greater separatist movements and the breakup of national states as we know it today.
So what the computer is showing is the rise in civil unrest and the risk of war. Just look at what took place at the State of the Union – there is no UNION
This is part of what the computer is forecasting – the collapse of governments as we have known.

Charles Hugh Smith on regulatory capture
oftwominds-Charles Hugh Smith: Let's Face It: The U.S. Constitution Has Failed

[Danny B]

Parkinson't Law and welfare

You should read this entire article. It shows that population growth has ended in America.
https://econimica.blogspot.com/2019/...ia-detail.html

It also shows public debt which is growing close to exponentially. The chart shows that "other" investors are buying GOV debt. This is just a continuation of an old charade claiming that on group or another is investing in FED GOV.
State employees are cannibalizing the productive economy to keep their salaries and pensions financed. Illinois stands out in that they are selling off public property to cover shortages. California continuously raises taxes for the "poor" or the "highways" or the "environment" The new taxes invariably go to support CALpers.
FED GOV has to invent imaginary investors to finance itself. After the 2007 crash, CBs pumped in $250 trillion to make sure that there would be enough liquidity to keep State debt financed. Salaries for Eurocrats in Brussels and millions of bureaucrats worldwide.

"What is fascinating about this is that Parkinson's Law, albeit having been variously formulated since its first statement in 1955, predicts that the staff within a bureaucracy will expand at a rate between 5 and 7 percent per year, “irrespective of any variation in the amount of work (if any) to be done.” Isn't it interesting that government debt falls precisely within this range? "
"From this perspective, things look quite different: the public debt in 2010 constant dollars barely budged from 1950 until 1971, when Nixon closed the gold window and decoupled the dollar from gold. Without the discipline of gold (before, if the U.S. ran up large deficits and printed money to cover them, foreign central banks could exchange the excess dollars for gold, emptying out the treasury's vault), there was no constraint on the issuance of debt and the creation of dollars and the curve began to climb to the sky, slowly at first and then at an accelerating pace. Here I've fit an exponential to the period from 1971 through 2010, and once again it fits pretty well, with a growth factor of 4.8% per year, just a tad below Parkinson's range of five to seven percent. "
https://www.fourmilab.ch/fourmilog/a...08/001328.html

I suspect that the graph of the growth in public debt is close to a proxy for the increase in jobs displaced by automation. 22.5 million "work" for the State. 95 million are not in the labor force. FED GOV is trying to float along the whole show by printing money. Efectively, this is some form of Chartalism.

Nixon closed the gold window after his predecessors fired up the welfare-warfare system .

[Danny B]

The FED funds rate

Getting a sense of the FED funds rate.
Over time, most European nations have defaulted a few times. Greece was in default for 50% of their modern history. America had never technically defaulted. It partially defaulted when it raised the price of gold vs the dollar. Because we weren't destroyed in WW II, our currency was chosen as the reserve currency. This was partially an attempt to keep any State from inflating their bond market to fund an incipient war effort. Unfortunately, it did not prevent America from inflating it's bond market for wars in Korea and Viet-Nam.
Since all the various States could only have national reserves in dollars, they had to sell stuff to America to earn these dollars. They had to undecut our prices to sell us Volkswagens and Datsuns.
This allowed us to run a huge trade deficit. But, since America had not defaulted, the dollar was very much in demand. This demand carried over into U.S. Treasury bonds.
They sold us a Datsun and,,, took the profit and bought Treasury paper.
Japan holds about $860 billion.

Because of post WW II momentum, the dollar and the FED became the premier safe investment. The FED funds rate became the benchmark for return. All other investments were rated as to risk vs the FED paper. Since the FED paper paid interest, all other interest-bearing paper was sold at a depressed rate related to risk. The long-term average for FED paper was about 5%. If you could get 5% with no risk, why buy somebody else's paper? This drove interest rates down over time. The perception of risk-free was still in effect even though American sovereign debt will never be paid back.

"Several credit rating agencies around the world have downgraded their credit ratings of the U.S. federal government, including Standard & Poor's (S&P) which reduced the country's rating from AAA (outstanding) to AA+ (excellent) on August 5, 2011"
This got S&P in hot water. GOV currently pays about $1/2 half trillion in interest.
The FED, Treasury and ESF pump liquidity into all markets to keep the perception that there is actual, legitimate confidence in all American markets. Sovereign debt is rising close to exponentially but, clandestine buying of this debt has upheld confidence so far.

U.S. debt must appear safer than other debt AND gold. Italy is hard at work to make U.S. debt look low risk. In Europe, the ECB can't easily pump in liquidity without any trace. The ECB just ended the QE that was rescuing Italian debt. One month later, they are talking about starting up QE again. In America, there are various phantoms buying sovereign debt. For the present, these phantom infusions are holding up the confidence in debt that is growing exponentially and can never be repaid.

"The German economy has come to a grinding halt, with the latest growth figures showing that it remained unchanged in the last quarter of 2018. Missing the already grim forecasts of 0.1%,"
ECB: running out of runway – Part I | Claudio Grass
"By 2019, there will be fewer Germans under 30 years old than there are Germans that are 60+ years:"
Great graph.
https://www.visualcapitalist.com/ger...hic-milestone/
The feces-for-brains German GOV brought in millions of USELESS "migrants" to try to make up for the missing German babies. It just doesn't work that way. The people have to actually be productive.

[Danny B]

January 2020 and inflation

Regulatory capture allowed the bankers to erase ALL legal and moral hazard. When the bankers blew up the system, they were given bonuses instead of jail time.
" Even after the 5 major banks plead criminally guilty, anyone else would lose their license. Not one banker who really destroyed the world economy in 2007 with their leveraged mortgage-backed securities went to jail or even lost a job. They got bonuses! The SEC said nothing."
https://www.armstrongeconomics.com/a...-with-the-sec/
Good article.

Armstrong has more to say. "politicians fail completely to comprehend the role of trade and Brussels insists upon a hard border so goods do not flow into Ireland without their share of import duty taxes," Bureaucrats live for increased taxes.
"Indeed, the fall of empires is always set in motion by the incompetence of its leaders and their self-interest that they always put before the people they call their subjects. Rome fell because every centralized form of government has failed throughout history. Every Republic collapses into an Oligarchy. Governments will NEVER take action to prevent a crisis. "
"The Economic Confidence Model turns in January 2020."
"But to trade this opportunity, DEMANDS you must have the CONFIDENCE to pull the trigger. To survive the next two years, it requires a clear understanding of how the system works"
"The failure to understand how we are all connected will result in you losing at the end of the sequence. The last domino will be your fate. Without comprehension, you will never see it coming. "

"We are preparing not merely for the adoption of MMT or Modern Money Theory. The politicians will embrace this idea as they realize they are going broke and central banks cannot save the day. The MMT promoters assume that with the expansion of Quantitative Easing and its failure to produce inflation, gives them a green light to print their way out of this mess as government assumes there will be no inflation with endless expansion of money as QE demonstrated."
Everyone with money hates MMT. It could possibly work if it weren't used to finance speculators. Don't hold your breath on that one. Socialist candidates are coming out of the woodwork like worms. MSM is embracing ALL of them,,, no matter how stupid their platform sounds.
Jewish left - Wikipedia
https://en.wikipedia.org/wiki/Jewish_left

The Jewish left consists of Jews who identify with, or support, left-wing or liberal causes, ... Jews have a rich history of involvement in anarchism, socialism, Marxism, and Western liberalism.
It is what it is. A free ride will sound very appealing to most people.
The election should be a humdinger ! Post-election should be one for the history books. turns in January 2020.

QE was targeted at the upper loop of the economy. The upper loop experienced a LOT of inflation in stocks and a few other areas. What Armstrong is implying is; MMT will cause high inflation in the lower loop when GOV tries to rescue both loops. Armstrong implies that you must have perfect timing to preserve your buying power,,,,, and then, jump back back into the markets.

"2018’s valuation records are astounding in that they show the S&P 500 to be more fundamentally over-valued than it was at the prior two historic stock market valuation peaks in 1929 and 2000, bona fide speculative manias."
Yep, inflated.
"It didn’t represent a healthy economic growth cycle, but rather an insanely irresponsible, and arguably criminal, manufactured bubble boom where central banks printed enormous amounts of money to inflate asset prices like stocks, bonds and real estate."
"Equally significant is the generational cycle. Birth rates are at a 30-year low in part because millennials are too broke and in debt to buy homes and start a family. This is now the largest voting bloc in American politics, and I highly doubt they’ll just sit around and continue to get systemically fleeced well into their 30s. This is why socialism is becoming popular."
https://libertyblitzkrieg.com/2019/0...top-the-cycle/

First posted it on Twitter, it was hailed as “stunning” and “one of the most important charts about the economy this century.”
You really should read the article.
"During the most recent 21-year period from January 1998 to December 2018, the CPI for All Items increased by exactly 56.0%"
Not true but, go on.
" Average wages have also increased more than average inflation since January 1998, by 80.2%, "
Not true, continue.
"last 21 years while average prices have increased by 56% and wages increased 80.2%
a. The greater (lower) the degree of government involvement in the provision of a good or service the greater (lower) the price increases (decreases) over time, e.g., hospital and medical costs, college tuition, childcare with both large degrees of government funding/regulation and large price increases vs. software, electronics, toys, cars and clothing with both relatively less government funding/regulation and falling prices. "
OK, so anything that the State touches gets inflated like snot.

"last 21 years while average prices have increased by 56% " This is the number presented by the State. Shadowstats has different numbers with inflation computed in a manner used previous to the bogus adjustments. For the last 10 years, inflation has been running right around 10%.
http://www.shadowstats.com/imgs/sgs-...d&t=1550066990
Alternate Inflation Charts
So, this computation of 56% price inflation in the 21 years period is all based on falsified data.
"Quotation: "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.."
Gold will eventually make some price changes, https://www.macrotrends.net/assets/i...1463161188.png

[Danny B]

The State hopes to buy a little more time with MMT

Well, it appears that GOV is working hard to legitimise MMT.
Armstrong, "We are preparing not merely for the adoption of MMT or Modern Money Theory. The politicians will embrace this idea as they realize they are going broke and central banks cannot save the day."
Why is the government going broke?
"ANSWER: It will not end well. Government employees have the defined-benefit (DB) while we get the defined-contribution (DC) plans. Most state and local government employees, actually 87% of those working full time, participate in a defined benefit (DB) pension plan. They contribute NOTHING but are guaranteed a pension on top of what they earned, plus free healthcare for life. The vast majority of those in government have NEVER had to save anything. They are there now demanding that our futures be stripped."

Powell tried to do a controlled demolition. Nope, the fragility was too great.
"It was only 60 days and 3,000 Dow Jones points ago that the POTUS threatened to fire the chairman of the U.S. Federal Reserve (Jerome Powell) and the Treasury Secretary (Steven Mnuchin), resulting in a resounding call to arms that has since added over 10% to the S&P 500 and dropped the ten-year yield from 3.25% to 2.65%. Happy, smiling faces of Wall Street gamblers and online speculators are popping up everywhere "
"It is in the derivatives that the banks are able to play their games, completely unsanctioned and totally condoned by both regulators and compliance officers."
https://www.streetwisereports.com/ar...ry-theory.html

So, private bankers own the FED and,,, the FED rescues private bankers when their gambles go bad. WE pay the price in inflation.
“We’re paddling against the current in trying to sustain public faith in the Fed.”
–Federal Reserve Chairman JEROME (JAY) POWELL

“The FOMC (Federal Open Market Committee, the Fed’s key rate-setting entity) is in panic mode now, facing the Frankenstein monster balance sheet it has created. The FOMC has come to the realization that it cannot unwind it.”
–Jones Trading’s chief strategist MIKE O’ROURKE
The FED ran it's balance sheet up to about $4.1 trillion. They have off-loaded some of that but, must now stop.
"Thanks to weakening inflation and continuing anemic growth on the Continent, rate hikes are off the table. Soon-to-be-outgoing ECB emperor chief Mario Draghi is already making noises about restarting its quantitative easing (QE) program rather than reversing it as its American counterpart, the Fed, has done. This is despite the fact that the ECB’s balance sheet—or stash of European bonds bought with pseudo-euros—is an outrageous 40% of GDP versus “only” about 20% in the case of the Fed (GDP represents a country’s total economic output). "
The ECB has FAR more transparency than the FED 40% vs 20% is the best lkie that they can get away with.

"It’s true that Europe’s chronically flaccid economic pulse has faded one more time (European economic “liveliness” almost makes a corpse look animated). As a result, the number of negative-yielding bonds (the ultimate Alice In Wonderland financial condition where borrowers charge lenders to use the latter’s money) is once again swelling. The total value of these legalized investor extortion instruments is now $11 trillion, most of them from European issuers. This is up from the trough of $6 trillion last year "
Americans are amazed that their stock market is rising. It's the capital flight, stupid.

"As the no-nonsense financial commentator Danielle DiMartino Booth, former adviser to ex-Dallas Fed president Dick Fisher, recently wrote: “Not to beat a very dead horse but negative interest rates in Japan and Europe were supposed to have generated virtuous outcomes.” (Emphasis hers.) In other words, these radical policies, that were designed to stave off the ravages of the Great Recession and stimulate healthy economic growth, continue to fail to bring home the mail. "
Not true. ALL of this printing and NIRP is done to finance the pensions and salaries of the eurocrats.
"Many pundits have reacted to this about-face angrily and are accusing Jay (not Jerome) of caving into political pressure from the meddler- (and Tweeter-)-in-chief. Others have screamed that he has done exactly what he said he wouldn’t do by trying to sooth the stock market with dovish utterances once it was down about 20% from its September peak."
Powell discovered that the slide would NOT stop until it overshot historical norms at about an 80% reduction (Hussman)

" Whenever I was asked (and often even when I wasn’t) how long the Fed would tighten, my simple answer was: “until something breaks”. It’s fair to say that a lot of things broke—make that shattered--in the financial markets "
https://blog.evergreengavekal.com/bu...-0-no-way-out/

Wall Street abandons fracking, "The Wall Street Journal reports that the shale industry only saw $22 billion in new bond and equity deals, down by more than half from 2016 levels, which was a much worse time for the market."
https://www.rt.com/business/452421-w...s-faith-shale/
"For instance, the IEA estimates that the shale industry posted cumulative negative free cash flow of over $200 billion between 2010 and 2014."

So, the more that fracking collapses, the closer we are to invading Venezuela.
In a general sense, the worst CBs are in the States with the highest pension costs. Just as QE bought a little more time,,,, NIRP and ZIRP bought a little more time,,,,, the great mass of bureaucrats and beggars hope that MMT will buy a little more time.

[Danny B]

Dismantling Pox Americana AND globalism at the same time

Donald Trump will certainly go down in history . He professed to be anti-globalism. From the evidence, it appears that he is going to blow the entire globalist system.
https://michael-hudson.com/2019/02/t...llar-hegemony/
Read the whole thing.

[Danny B]

Deep corporatocracy vs the people

This is the counterpoint to the last post.
As you know, The Report from Iron Mountain said that peace must be avoided at all costs. Keynes said that we need perpetual war to keep the economy stimulated.
Bourne, "War is the health of the State" In a collection of Bourne's essays entitled War and the Intellectuals (1964), editor Carl Resek explained the phrase's meaning. Resek wrote, "In its proper place it [the saying] meant that mindless power thrived on war because war corrupted a nation's moral fabric and especially corrupted its intellectuals."
The deep state and the corporatocracy both want endless war with all dissent locked down. They want total control of every facet of our lives. They want dissolution of all nations. Trump opposes this. The "deep corporatocracy" is warning that a dissolution of their European "construct" will bring WW III. Keep in mind that Churchill said that WW II could have been avoided but, the bankers wanted it. He also said that Germany didn't want war but, they would force one on them. WHY?
Churchill "if Germany trades again in the next 50 years, WW I will have been for nothing."
Years after destroying Germany and aiding the rise of Russia, Churchill said, We butchered the wrong pig.

"A senior European Commission economist has warned that a Third World War is an extremely “high probability” in coming years due to the disintegration of global capitalism.

In a working paper published last month, Professor Gerhard Hanappi argued that since the 2008 financial crash, the global economy has moved away from “integrated” capitalism into a “disintegrating” shift marked by the same sorts of trends which preceded previous world wars."
NOT true but, go on.
"current period is a transition from an older form of “integrating capitalism” to a new form of “disintegrating capitalism”, whose features most clearly emerged after the 2008 financial crisis."
No kidding and whose fault was that?
"For most of the twentieth century, he says, global capitalism was on an “integrating” pathway toward higher concentrations of transnational wealth. This was interrupted by the outbreaks of violent nationalism involving the two world wars. After that, a new form of “integrated capitalism” emerged based on an institutional framework that has allowed industrialised countries to avoid a world war for 70 years."
The West avoided a new WW after WW II because Europe was destroyed and nobody wanted to risk nuclear Armageddon.

"While integrated capitalism depended on a transnational institutional framework that permitted “stable exploitation on a national level”"
They inflated away our purchasing power.
" Hanappi argues that “disintegrating capitalism” sees this framework become disaggregated between the USA, Europe, Russia and China, each of which pursues new forms of hierarchical subordination of workers."
No mention of rape by the bankers.
https://medium.com/insurge-intellige...t-769487210e8f
So, BEWARE of nationalism because it will bring WW III

"Business Insider, a deficit is only as ominous as the market’s inability to buy the excess debt that’s issued along the way. INTL FCStone macro strategist Vincent Deluard has serious concerns about that. So far, foreign central banks, and the U.S.’ central bank, The Federal Reserve. Central banks have begun selling debt though, not taking on more. The Fed has slashed Treasury holdings by $260 billion since October 2017, their foreign counterparts have sold almost $1 trillion over the past four years. Deluard says that those debts will terrifyingly be picked up by retail investors and pension funds."
Nope, the phantoms are buying all of it.
http://www.24hgold.com/english/news-...Mac+Slavo&mk=1

""The wealth of another region excites their greed; and if it is weak, their lust for power as well. Nothing from the rising to the setting of the sun is enough for them. Among all others only they are compelled to attack the poor as well as the rich. Plunder, rape, and slaughter they falsely call empire; and where they make a desert, they call it peace."
Tacitus"

" “The US is also about to enter an earnings recession, ironically after one of the strongest years for corporate profits on record, the picture of American companies is not much better. Not only is an above average number of companies issuing negative EPS guidance for Q1 2019 (of the 93 companies providing official guidance, 68 or 73%, have issued negative EPS guidance), but consensus EPS for Q1 is now deep in the red. According to Factset, the average Wall Street forecast now projects Q1 earnings per share to decline by 2.7% Y/Y, worse than a consensus -0.8% forecast drop three weeks ago, and starkly lower than the +3% EPS growth expected for Q1 at the start of the year.”
All that stimulus from the FED buying stocks and, we're still crashing.
"“In a troubling twist, this EPS drop is taking place even as companies continue to buyback record amounts of stock (according to BofA’s client tracker, corporate repurchases are running 98% YTD compared to the same period last year when as a reminder, total announce buybacks topped a record $1 trillion). More perplexing is that the EPS drop will take place even as S&P500 revenue is still expected to post a solid 5.2% Y/Y growth,"
They "show" growth because of the effect of buybacks.
https://realinvestmentadvice.com/tec...-risk-vs-fomo/
So, the monetary Viagra is wearing off.

"Global debt has surged by nearly $150 trillion since 2003 and $70 trillion since 2008. As bad as the 2008 global financial crisis was, the next crisis will hit the global economy even harder simply due to the fact that an additional $70+ trillion in debt has been added."
"Growing debt burdens will stifle economic growth, which will make it even harder to grow out from under the debt. Eventually, global debt saturation will lead to a downward spiral situation in which nearly all central banks will be forced to debase (or “print”) their fiat/paper currencies at an extremely high rate in order to pay the interest on debt and to keep their economies afloat for a little while longer."
https://realinvestmentadvice.com/bal...-improvements/

"“In our view, September of 2018 marked the peak of the U.S. economic cycle. We are now seeing a typical bear market rally, and the next downward leg is likely to be just as abrupt as the first one,” Costa told MarketWatch in an interview. “It’s hard to pinpoint when exactly, but my best guess is between now and April.”
https://www.marketwatch.com/amp/stor...4-C93EF6867C21

2/28 The middle class is shrinking everywhere — in Chicago it’s almost gone – WBEZ
2/28 China factory activity sinks to 3-year low – AP
2/28 Farm loan delinquencies highest in 9 years as prices slump – AP
2/28 Global stocks sink for third day as investors temper trade optimism – Reuters
2/28 The doomsday scenario for stock and housing bubbles – Zero Hedge
2/28 “Beware the Ides of March”: Nomura sees long-awaited stock selloff – Zero Hedge
2/28 “Nobody has a freaking clue”: Big Short’s Eisman expands his Brexit short – ZH
2/28 Massive cuts to Social Security: this is the ‘wall’ Americans should worry about – MW

MOSCOW (Sputnik) - The US sanctions against Venezuelan state oil company PDVSA will become the main blow to the world's oil refining in the short term, yet it is the US refineries that will bear the brunt in the first place,
https://www.rt.com/business/452656-s...ca-anc-crisis/
South Africa soon to look like Zimbabwe.
CFR Head Pushes For War On Venezuela

[Danny B]

Pillaging the family for profit

A corporation is simply a pile of money looking to grow larger.
A family / household is simply a money losing enterprise.
As more and more things are taken over by the corporatocracy, the family is sure to lose out. Globalism is the ultimate tool of the corporatocracy. In this article, the focus is on the growth of trans-national capital.
https://medium.com/insurge-intellige...t-769487210e8f Repost.
Due to regulatory capture, the corporation is eternal and unassailable. All of this contributes to the growth in the "pile of money". So, wages are falling. Where did this "pile of money" come from?
As of 2009, the size of the worldwide bond market (total debt outstanding) is estimated at $82.2 trillion, of which the size of the outstanding U.S. bond market debt was $31.2 trillion
These bonds can be "repaid" in 2 different ways. WE work like crazy and our salaries are skimmed for repayment OR, sovereign debt is defaulted. In the last few years, the CBs have created $250 trillion in new debt,,,, mush of it to repay old debt. No telling how much longer this can go on. World leaders seem to be fin with this. Like J.M. Keynes, many of them have no children.
https://i.redd.it/004awlygovwy.jpg
Add to this, Obama and his husband. Hillary gets honorable mention because horse-face was an accident after many abortions.
The corporatocracy is anti-family in it's quest for limitless profits. Population is shrinking and the corporatocracy is surviving by sucking up wet-ink liquidity created by the CBs.

"How would you describe the social mood of the nation and world?

Would anti-Establishment, anti-status quo, and anti-globalization be a good start? How about choking on fast-rising debt? Would stagnant growth, stagnant wages be a fair description? Or how about rising wealth/income inequality? Wouldn’t rising disunity and political polarization be accurate?

These are all characteristics of the long-wave social-economic cycle that is entering the disintegrative (winter) phase. Souring social mood, loss of purchasing power, stagnating wages, rising inequality, devaluing currencies, rising debt, political polarization and elite disunity are all manifestations of this phase."
"In Fischer’s well-documented view, there is a grand cycle of prices and wages which turn on the simple but profound law of supply and demand; all else is detail.

As a people prosper and multiply, the demand for goods like food and energy outstrips supply, causing eras of rising prices."
All else is NOT detail. Not while automation is taking over.
"Long periods of stable prices (supply increases along with demand) beget rising wages and widespread prosperity"
NOT this time.
https://dailyreckoning.com/the-appro...le-has-turned/

3/01 Chinese manufacturing shrinks for third straight month in February – CNBC
Their foreign markets are shrinking. Their domestic population of workers shrinks 1 million a year.
3/01 Here’s how millennials’ $1 trillion in debt is affecting their lives – Salon
they can't afford any money-losing enterprises.
3/01 Auto loan delinquencies rise as monthly payments hit record high – CNBC
3/01 South Korea exports suffer biggest slide in nearly three years – Investing
Ah yes, $15 trillion in consumer debt is looking a bit shakey.
The banks just had their most profitable year. As the corporations "win", somebody has to lose. The family is losing. Humans were always considered a limitless renewable resource. The banks are proving this to be untrue.
There has to be a middle ground between socialism and runaway capitalism.
https://www.rt.com/business/452656-s...ca-anc-crisis/