Economic pressures

[Danny B]

Musical chairs for counter-parties

My sparkling, witty post from this morning got zapped. I have to give the refried version.
In America, eggs are sold and recorded on the ECI system. If you buy a load of eggs, you must take delivery. If you don't, you pay a 10% penalty. Pretty much everything else is bought up by speculators and then, sold to you at mark-up. Obviously, these speculators don't want to get caught holding something that they bought solely for speculation. This is also true for financial instruments. NOBODY will hold a negative-interest bond to maturity.

Question for Armstrong;
"1) Could the pledging of negative-yielding bonds as collateral be causing the liquidity problems? As a private lender myself, how can a central bank (or anyone) lend against its par value (even overnight) when held to maturity you receive less than par?
2) What Brokers can protect against a Corzine / MF Global invasion of segregated accounts?"

"There is about $17 trillion in outstanding negative-yielding bonds. It is far too complicated to go into great detail on a mere blog post. Suffice to say that the negative-yielding bonds are going to crash like something not witnessed since 1931. While a complete default is not likely prior to 2025/2026, we are going to witness the start of the collapse in 2020. These bonds have been bought by PUNTERS who are just trading them back and forth like a game of musical chairs. When the music stops, a lot of people will get caught holding these new 2.0 versions of financial debt bombs. Nobody is buying these things to actually hold. It is more akin to trading commodities where people are not actually interested in taking deliveries of lumber, hogs, silos of wheat or bars of silver. "

QUESTION:

1) Could the pledging of negative-yielding bonds as collateral be causing the liquidity problems? As a private lender myself, how can a central bank (or anyone) lend against its par value (even overnight) when held to maturity you receive less than par?
2) What Brokers can protect against a Corzine / MF Global invasion of segregated accounts?
I strongly urge people to write to the White House and demand LEGAL REFORM in New York City. The entire fate of both the world economy and the domestic economy rests on the integrity of the rule of law which no longer exists. President Trump has the power to address this problem. He could clean house in the SEC and CFTC who will ALWAYS protect the bankers, as is the case in the Department of Justice. The banks have blown up the entire world economy."
"Judge Martin Glenn presided on M.F. Global bankruptcy and created the first BAIL-IN without Congressional Authority. He was the first one to engage in FORCED LOANS by abandoning the rule of law to help the bankers and protect Corzine from losses by taking client accounts to cover M.F. Global’s losses."

"What Judge Martin Glenn’s ruling warns is you should NOT trust any company based in New York City. No other circuit would uphold what Glenn did to protect Corzine. While Glenn could not prosecute Corzine, the Department of Justice closed its eyes as did the SEC and CFTC. We lack legal integrity and that leaves a COUNTRY RISK that we would have to warn a client about if we were dealing with a third-world country. This is part of the reason China is still lagging behind. There MUST BE a straight forward Rule of Law or capital that cannot invest if there are no definitive rules."
https://www.armstrongeconomics.com/i...new-york-city/

It IS in America's best interest that GOV prosecutes crooked bankers. Nobody wants to invest in a jurisdiction where the courts ignore the rule of law. China put a million muslims in camps and, they are coming down hard on Hong Kong. NONE of this inspires confidence in international capital.

11/18 US-China trade deal mood is pessimistic in Beijing – CNBC
Trump is playing yo-yo with them.
11/18 China cuts interest rates as economy slows – Bloomberg
THAT does absolutely nothing for the main body of people
11/18 5-Star’s crisis threatens Italian government’s survival – Reuters
The Euro's $2.7 Trillion Italy Problem - Bloomberg
Italy is TOAST.

Vatican Financial Regulator 'Resigns' in Wake of Probe into an 'Opaque' Holy See Investment Venture
Probably another gay bath house.
"ECB Member Hints Central Bank Will Buy Stocks When Situation Gets 'Really Bad'[/B]
Swiss Nat bank already bought $89 billion.
"Likewise, I see precious little coverage of the fact that the IIF report global debt just hit a new record high of USD250 trillion as of H1 2019, and there is no sign that this is going to slow. It increased USD7.5 trillion from January to June 2019, even as global growth showed a synchronised slowdown."
https://www.zerohedge.com/markets/ra...g-us-all-sweat

Gerald Celente has the same doomer news.
https://kingworldnews.com/gerald-cel...-anything-yet/
How to crush a banker's dictatorship.
The crisis banking business.
https://www.wired.com/story/the-futu...rs-dictatorshi
p-lesson-1933

[Danny B]

Armstrong and, the total lack of any workable economic plan

America has a post-industrial economy. Sorry, that just won't work. Manufacturing is the primary value-added industry. Western productivity is just humming along even though 96 million Americans of working age are not in the labor force. It is consumption that is falling. Aggregate American wages are shrinking. Speculators benefit from QE. Wages do not. The Central Bank is the central mechanism to always keep price inflation rising faster than wage inflation. Everyone wonders why we are so poor and, where the money went.
We spent it.
True, we spent much of it on luxuries. The credit bubble MUST grow. Since we cut back on spending, The credit bubble is artificially expanded with speculation rather than consumption. Our economic system just can't survive any kind of deflation.
Our whole economic playbook was conceived for a time when there was a consumer for every producer. NOBODY has a playbook for current conditions.

Armstrong writes about the complete lack of any kind of workable economic plan.
"ANSWER: Of course, they will call this Quantitative Easing and Modern Monetary Theory. They are biased and in favor of gold, which makes them incapable of being real analysts. First, you must establish a base method of inquiry which cannot begin with a predetermined conclusion that all paper money is evil and gold is the only real money. Because they begin with this PRESUMPTION, they only look at things to support that predetermined outcome."

Gold is a slippery slope. It has never been used as a day-to-day instrument for commerce on the street. Gold is more of a secondary instrument that is used for stable value / payment at upper levels of economic activity. It is used as a benchmark to avoid the sins of over-printing. Paper money isn't necessarily evil. The people who print paper money are unable to resist greed and corruption. We don't actually have that much paper money. Everything is electronic transfer.
The main attribute of barter is; there is an immediacy of transfer of value. Many years ago, everyone who accepted credit cards had a huge book of bad credit card numbers. You had to check this huge book to see if a patron's credit card was good.
When somebody wrote you a check, you knew that it would take 3--5 days to clear.
Modern electronic credit transfers are extremely fast. This eliminates most of the problems of trust. Neither barter, nor gold will make a comeback for street level transactions.

Back to Armstrong
"The Fed is NOT engaging in QE nor is it engaging in MMT. The Fed is standing in the middle because banks do not trust banks. The crisis is by NO MEANS in the United States. They also fail to grasp why the dollar is the world’s reserve currency, the hoarding of dollars globally, or what this crisis is even about. They interpret any increase in the quantity of money as inflationary. We have had more than 10 years of QE in Japan and Europe with no inflation, which proves their theory is WRONG. They will never address that reality and instead constantly argue gold will rally with QE."

Wooley thinking. The banks are dumping State debt to raise cash. The FED is printing up tons of liquidity to pay off failing derivatives from Deutsche bank. Just like in the previous LIBOR crisis, the banks don't trust each other.

"The banks won’t talk to each other and the central banks are living in absolute terror that the truth will come out and the world will just go nuts."
"I always seem to be in the middle of every crisis. Not sure how this happens. I get calls asking me what have I heard because nobody will talk among themselves but somehow they come to me to ask what I have heard. I am writing the report now because it just seems imperative to explain the real cause that the press will never print. Nobody will talk and the central banks cannot dare utter a single word about the source of the crisis for fear of creating a political crisis. Even the heads of states are being left in the dark. Trump has called for negative interest rates because he does not understand the crisis because nobody is talking."
https://www.armstrongeconomics.com/p...e-repo-crisis/
Notice that he didn't mention word about derivatives.

Armstrong;
"The central banks are keenly aware that they cannot stimulate economic growth, although they will not state that publicly. The wheel of fortune has completed its revolution. The central bankers are quietly lobbying the political side of the aisle to swing back to Keynesian fiscal policy and reverse austerity."
"Keynesian fiscal policy" calls for stimulus in a downturn. The FED, PPT and ESF are pumping in at least $400 billion a week. The feces-for-brains seem to believe that; pumping money into stocks will somehow provide a living wage for hundreds of millions in poverty.
PLANT A GARDEN

"What I was hearing 2 years ago behind the curtain was starting to leak out. The Eurozone’s faltering economy was creating a huge divergence in ideas with Draghi. This resulted in a serious clash when it came time to the ECB’s rate-setting committee with departing President Mario Draghi’s negative interest rates and never-ending QE. If such policies were to work, it should have done so quickly within a year or two, and not 5 years of negative rates and 11 years of QE."

The feces-for-brains politicians STILL believe that; pumping hundreds of billions of Euros into the bond markets will help the man on the street.

" She knew that the ECB could not win the fight to support the economy by itself. Publicly, Lagarde implied she would follow Draghi’s path and keep monetary policy ultra-loose to lift euro-area inflation."
YES, of course,,, raise prices to help people.
"Nevertheless, she is aware Draghi’s policy has been a failure but the ECB is trapped. Monetary policy at the ECB is doomed despite the fact she has said that the tools to tackle a downturn are available to the ECB and they must be ready to use them if needed."
Yep, they have to tools to temporarily save the bankers,,, screw the punters.
" time of rising challenges for central bankers when the economy is turning downward despite all the stimulus and inflation remains subdued. At the same time, interest rates remain artificially low and there are questions over what policymakers have that could do anything to combat a more serious downturn"

The overlay of the EU bureaucracy over existing State bureaucracies reduced the GDP of Europe by 20%. If La Garde wants to help Europe, she should vaporize the entire EU structure. NOPE, the bureaucrats must get their pensions and salaries no matter how much it impoverishes the people.
"Lagarde has begun lobbying governments and arguing they need to step in with fiscal stimulus to fill the gap. Central bankers have lost their ability to control inflation or steer the economy while politicians are anything but united in the face of rising political separations and unrest."
UNREST, you haven't seen anything.
"Lagarde realizes the economy faces downside risks with inflation in a deflationary position."
This (price) inflation has reduced the birth rate because nobody can afford to have kids. To reverse the deflation of population, "they" bring in tons of immigrants who live solely on the dole.

"While she pretends that the ECB can cut interest rates further despite already being at a record-low -0.4%, she also realizes it is causing massive problems. It has become a deterrent for the euro to be considered a reserve currency. There have been other side effects from keeping rates well below zero for too long, such as promoting a pension crisis nobody wishes to address publicly for fear of creating a panic. She acknowledged these problems stating that the “ECB has hit the effective lower bound on policy rates, it is clear that low rates have implications for the banking sector and financial stability more generally.”
https://www.armstrongeconomics.com/i...arde-ecb-euro/
NOBODY has any kind of a plan that is workable with a shrinking workforce,,, shrinking wages,,, shrinking consumption. NO plan is compatible with the demands of a credit bubble that must grow.

[Danny B]

More reality

11/19 70% of Americans say they are struggling financially – CBS
11/19 ‘We can’t take it anymore’: as Lebanon economy skids, jobs in firing line – Reuters
11/19 In Netherlands millions of retirees face pensions cuts thanks to the ECB – Zero Hedge
DO NOT WORRY, the Bureaucrats are doing fine.
Venezuela, Bolivia, Chile, Lebanon, Iran, France, As more and more States blow up, theinternet informs the people , often accurately, who to blame. The pitchforks come out and NO amount of concessions will stop the tide. Macron gave concessions to the French. This did NOT stop the protests.

11/18 Trump, Powell discussed “negative rates” in unscheduled Monday meeting – ZH
At some point, all those NIRP bonds will be abandoned. European financial markets will experience financial rigor mortise.

11/19 Bob Moriarty: the cure for dishonest money is honest money – Energy and Gold
What about honest politicians? What a novel concept?
Kunstler weighs in on the upcoming prosecutions.
https://kunstler.com/cluster****-nat...ing-questions/
I called him and complemented him on sticking with his convictions, rather that his affiliations. He's a lifelong democrat.

Germany is a crabby place to build solar power. Not much sunlight. But, Germany has a big problem with latent volcanoes.
Japan has GREAT possibilities for solar but, America demanded that they build carbon and nuke plants.
11/18 Fukushima installing 11 solar power plants & 10 wind power plants – Clean Technica
They finally get to break into wind & solar.
11/16 Do the world’s energy policies make sense? – Finite World
They do to the oil companies.

11/16 Cyberattacks pose an evolving threat to retirement accounts – Birch Gold
Do not worry, crypto currency and the blockchain will fix all of the problems.
11/18 What is stopping us from creating the families – NYT paywall.
Well, lets see.
The sperm count is down 50%
Industrial chemicals are creating havoc with our endocrine system
Poverty is fast rising.

[Danny B]

2 conflicting forecasts for the bond market.

For today, I need to do more copy & paste and, less linking. I don't want any important part to be overlooked.
In Armstrong's position, he must avoid hearsay and doom porn. He is staring to get pretty doomy.

"QUESTION: There are people claiming that Fed cannot buy directly from the Treasury and they are buying the same day issue in this Repo Crisis so that means they are monetizing the debt because foreigners are fleeing us Debt"
"The Repo Market is overnight. Banks buy the T-Bills because they are Primary Dealers and MUST buy in the auctions to retain that position. Simply because they put them into Repo the same day means nothing. They buy them back the next day"
So they claim.
"Foreign buying of US debt is intensifying as European banks ship cash to their US branches who are buying the debt and posting cash at the Fed in the excess reserve facility because of the fear of a banking crisis in Europe"
"The Repo Crisis has NOTHING to do with the Fed hiding some problem in the USA and the Fed is not monetizing the debt using Repo. We have a major crisis unfolding and neither the central banks nor the primary dealer banks will talk about what is taking place behind the curtain. This is a very MAJOR CRISIS, and it will get far worse. I am rushing to get this report out ASAP because this can be the mother of all financial crises that is over the heads of domestic analysis and mainstream press will NEVER report it unless it would impeach Trump."

Armstrong is a money renter. He is going to talk his "book" whenever questioned.

Jim Willie, on the other hand is a financial rabble rouser.
"The US-based bond market is in tragic condition. All the bonds in US financial markets reek of rigged prices and inflated values. It is not a single bond sector, but rather all bond sectors that are in deep trouble, against a background of multi-year economic recession. The USTreasury Bonds, given the over $1.0 trillion in supply and widespread absence of buyers, deserves a 10% yield. "
" The stolen missing $21 trillion amplifies the vacant value, from a grand crime scene. "
OK, nobody is denying that the $21 trillion is missing. Where did it go? Where did it come from? At about the 7 minute mark, Fitts explains that the $21 trillion was stolen from all the pension funds.
https://www.corbettreport.com/cather...al-coup-detat/

Back to Jim Willie.
" It is a wonder that investigator Professor Skidmore of Michigan State Univ has not been charged with financial terrorism. The USTBond market is teetering, kept afloat by overnight enormous slugs of fake money, which in early November was over $250 billion on a daily basis. If it was put onto the USFed balance sheet, on an increasingly frequent basis,"
"The US corporate bond market is an avalanche waiting to happen, with potentially hundreds of $billions in bonds soon to be marked down as junk. They are on the verge of debt downgrades from their current fragile BBB rating. The junk bonds are becoming junkier by the month. However, the primary attention should be focused upon the Collateralized Loan Obligations (CLO). They are repackaged financial cow droppings and chicken dung, fashioned into tranches of wretched quality, but called AAA or something close. The 2006-2008 era saw a cousin fecal variety called CDO, even CDO squared instruments, all of which pursued and found their true zero value during the crisis"

"The bond market crisis is finally in its middle stage, impossible to conceal from the overnight and POMO actions by the USFed. When an overnight credit extension for a desperately illiquid big bank morphs into an outright purchase, then placed on the USFed balance sheet, the activity qualifies at a Return to QE. Thus we observe the permanent open market operations recently evident. Given the high volumes, it qualifies at Infinite QE. Given the permanent policy announced by Chairman Powell last spring, it qualifies as Infinite QE Forever"
We can't have MMT for the lower loop but, hundreds of $billions for the bankers is prudent.

"All the errors from the past decade have been repeated. The mortgage bonds were the subprime bond back before 2008. Today the USTreasury Bond is the global subprime bond, standing atop the Modern Monetary Theory pillars built from the Fascist Business Model. The bond market is like a gigantic building on fire, whose lapping flames are visible from 3 miles (5 kilometers) away, but which have summoned no fire trucks. Worse, the burning building is deemed normal and strong and healthy by the corrupted authorities. The monetary fire authorities are encouraging the masses to enter the burning building for safe haven."
"The whipping winds will carry the flaming matter to other financial markets when the bond yields begin to move below 1.0% and talk arrives of eventual negative rates. The reality of risk is far more powerful that the propaganda band boxes that spew out Modern Monetary Theory nonsense, verbal rubbish, and human droppings. Negative interest rate and bond yield cannot happen. The result will be massive rejection (dumping) of USTreasury bonds held in banking reserves,"
Jim is forgetting 2 things. If the U.S. Treasury bonds were bought with free money, there will be no particular incentive to dump them.
Every financial alphabet agency in D.C is pumping in liquidity. It cots them nothing.

"Furthermore, the Indirect Exchange in funding large-scale Eastern Belt & Road projects already has created an environment of disfavor, discharge, and revolt. Negative rates would cause a third rail type of electrical repulsion. "
The Belt & Road projects are crashing into huge tribal rivalries.

"Trump could crash the system by simply allowing the USTreasury Bond yields to diminish significantly, with the prospect of actual touching the negative pole. In response, watch the central bank rats bail from the ship en masse. In the last two months, warnings have come that rates cannot go negative. When the pole is approached, it starts the waterfall exodus from USTBond arena. In fact, when the short-term or 10-year bond yield approaches a negative rate, the resistance builds exponentially and will never allow an actual contact. Such is the phenomenon because that would mean the USD lantern would be extinguished, the King Dollar would suffer an immediate fatal heart attack, with almost no chance of resurrection. It is unclear whether President Trump will choose to actively use this method to force the Global Financial RESET."
A tiny bit overblown for now. The people who bought Treasury bonds with free money won't join any exodus.

"The disorder would be magnificent, enough to fill chapters in the annals of financial history. He might wish to overturn the elites in this manner, exploiting their arrogance and hubris, thus fomenting the stage to introduce the Gold Standard. It will arrive first in trade payment, next in sovereign bond guarantees, and finally in currency foundation. The biggest running question is whether the gold backing will be in digital form, thus ensuring integrity without the physical movement via trucks and planes."
Trump is NOT going to overtly overturn the finance system. The crash will kill off millions of old people.
"finally in currency foundation"
NOT going to happen. The modern world must have an elastic fiat currency. We can't possibly have a falling population,,, falling workforce,,, falling wages (as automation bites even deeper),,, and, a demographic crash,,,, all on a rigid currency.

"Fashioning the future platforms is an arduous task. Everything else has failed, like sanctions, war, coalitions with puppets, financial theft, currency attacks, viruses unleashed, and economic sabotage. The other argument goes like this. Trump does not need to manage the collapse and ignition of the new system. It will evolve on its own, following the EU sovereign debt, following the Eastern initiatives with Gold-Oil-RMB contracts, following the Belt & Road multi-$trillion in projects collectively, following the spurn of the USTBond in massive dumping in favor of Gold. The Wall Street crew must manage a continued bond rally, one which never ends. They cannot encourage a bond exodus from lost principal, like from rising yields. The rally must continue even while bond yields are paltry, puny, and pitifully low. That means they must test the negative electrical pole, with risk of a violent global reaction. They must continue down toward the true zero bound. The slide on a slippery path built upon arrogance and unbridled power."

Once again, yield doesn't matter when the bonds were bought with boatloads of pixels sent over for free from the FED.
"Speculation and conjecture run ripe in identifying the potential triggers for the greater eruption of the new ongoing financial crisis. It is teeming at the surface, awaiting an explosive chapter. The effect would be a contagion from a powerful ripple in sequence, "

"Expect to see Gold & Silver prices multiples higher, blessed secretly by the Basel bankers. Refer to the former BIS Chairman Zijlstra plan for central bank revitalization, where they load up on gold bullion secretly, then engineer a 10-fold Gold price increase in order to emerge from their own (buyer of last resort) insolvency. The major central banks all bought impaired bonds, and now find themselves hopeless insolvent and at great risk in the face of bond writedowns. The process has begun in migration from sovereign impaired bonds toward Gold bullion in central bank core assets. It is coming. It is written. It will be done."
Not so fast. It is all going to be a huge mess that will be fought against by any State that doesn't have any gold.

"Correct forecasts are lining up. Most of these listed forecasts have been cited and repeated within the Hat Trick Letter since 2014. They are actually all my pending forecasts. The majority have begun to hit, to become reality. A magnificent crisis has begun, and it will not stop until the USDollar has fully made its transition, followed by the multi-faceted modern version of the Gold Standard. When implemented, it will have numerous features, unlike in the years leading to 1971 when abolished.

Never have so many forecasts kicked into gear at the same time as what are currently taking place. The Global Bond Market crisis is gaining momentum. The fact that so many forecasts are kicking into gear means clearly that the Global Financial RESET is in its middle stages. The Jackass forecasts are coming to the fore, made in the years since 2014:"
He makes quite a list of his correct forecasts.

11/19 Trump says he told Fed’s Powell U.S. interest rates are too high – Reuters
I have a mental picture of the bankers lining up to touch the third rail on a subway power supply when ZIRP touches down..
11/19 Ukrainian MP: Burisma financed Clinton campaign with $10m unmarked cash – CDM
I keep saying that a dollar bill is a powerful instrument.
11/19 Ending endless war from the right – TruthDig
Waddayou mean "useless" They make a lot of people either rich or dead,,, or poor.
Leftist Bill Maher - 'Learn To Live With Each Other...Or There Will Be Blood!'
Think about it ! Tolerate the amazing stupidity from the left or, they will get violent with you.

[Danny B]

Hide the "crimes" of automation behind a 1000 masks

Armstrong writes about the FED and REPO. He isn't forthcoming.
"The Fed is buying $60 billion of Treasury bills per month for an entirely different purpose. They are trying to prevent short-term rates from rising."
FED GOV is paralysed at the prospect of the interest burden on GOV debt rising from the present $1/2 trillion. He makes no mention of a few hundred $billion that is bing pumped into everything.
"The crisis has NOTHING to do with the economy domestically and it is not Quantitative Easing trying to stimulate the economy by buying in long-term debt. They are trying to keep short-term rates from rising which is being instigated by an entirely different type of financial crisis that has NEVER before been witnessed."
"NOT domestic" BS, it's all about short term rates on domestic debt.
"I cannot go into elaborate detail on this blog. I do not want to be accused of starting a financial panic for the way things always work is they need someone to blame. "
https://www.armstrongeconomics.com/m...nchmark-rates/
He can't announce that the banks are going to close.

"they are acting as the middle-man providing liquidity on a 24 hours basis BECAUSE banks do not trust banks. These people who scream QE and other nonsense are oblivious to what this crisis is all about and why the Fed is in the Repo Market and cannot withdraw. This is a GLOBAL CRISIS that they have no understanding about because they are caught up in the banks own the Fed and trying to pretend this is QE as it was in 2008 "

"Those who keep claiming the banks control the Fed because they own shares is so off the mark. The banks have no say in the Fed because that ownership is nominal and the Fed has been usurped by Government and is nationalized. The Repo Crisis is by no means to aid the banks. The Fed jumped in because the banks do not trust banks for another reason which sent the Repo Rate to 10% and that demonstrated that the Fed has lost control of even short-term rates."
He STILL won't mention derivatives.
"These people who have no clue of the banking structure make up these conspiracy theories that dominate people’s thinking so much so it blinds them to the real crisis that is unfolding which is the Mother of All Financial Crises. So while they are focused of QE and who owns the Fed, they are blind to the real crisis behind the curtain. "
Derivatives?
https://www.armstrongeconomics.com/w...ancial-crises/

11/20 These are the banks that own the New York Fed and its money button – WSOHP
11/20 China trims new benchmark lending rate again to shore up economy – Reuters
TOO late.
11/20 China, like Japan in the 1990s, will be dominated by huge zombie banks – Mish
11/20 The $15 trillion reason Asian bond defaults could rise – Bloomberg

11/20 Documents reveal massive ‘dark-money’ group boosted Democrats in 2018 – Politico
So who could that be. What about campaign finance laws?
While all eyes were on impeachment hearing House re-authorized The PATRIOT Act
Zero Hedge;
Deutsche Bank To Replace 18,000 Workers With Robots
"Matthews told FN that the machine learning tools helped to save "680,000 hours of manual work" and that it "so far used bots to process 5 million transactions in its corporate bank and perform 3.4 million checks within its investment bank."
"Why stop at 18,000? Please consider my 8 step proposal to get rid of everybody.
Just Fire Everybody

Who needs proprietary equity traders? Fire them all. Machines do all the trading anyway.

Who needs stock analysts? Let computers determine the "Strong Buys".

Who needs credit analysts? Computers already do the scoring.

Derivatives? What a mess. Unwind them all and stay away. Fire everyone involved.

Real Estate Appraisals? That's what Zillow's for.

Credit cards processing? Outsource 100% of it.

Statement processing? Outsource that too.

Loans? Let computers decide which loans to make. Then keep none of them. Instead, securitize 100% of them"
Sperbank of Russia is already doing this.

Fed Reveals When The Next Repo Crisis May Strike
"The April 2020 tax season,
China (And The World Economy) At The End Of The Road
"Investors Are Now Back Drinking Vast Amounts Of Kool-Aid": David Rosenberg
There is a balance between fear & greed. Fear will emerge before too long.
Governor Of Illinois, Home Of Nation's Worst Fiscal Crisis, Slams Door On Pension Reform
Yep, Illinois is going to do the proverbial "Hindenburg" swan dive.

Goldman Banker On Trial Had $24,000 Hidden In His Sunglasses Case
"Prosecutors pointed out on Tuesday that the stash was indicative that the banker, Bryan Cohen, could be a flight risk before his trial.."

A Huge Red Flag? India Shutters Power Plants Citing Lack Of Demand
Rail Recession: U.S. Carloads Continue Collapse As Manufacturing Slows
Yes, lack of demand. What could cause that?
US-China Exposure Index Signals Next Market Downturn Imminent
Create a society that refuses to think.
https://www.zerohedge.com/geopolitic...l-intelligence

[Danny B]

The best cyborg for the job

The thread is "Economic Pressures" Since everything affects the economy, I can wander wherever I want.
Ray Dalio runs the largest bond fund in the world. He uses computers to make all the decisions. The humans are there just to make sure that the info the computers receive is accurate.
Sperbank is the largest bank in Russia with 110 million clients. A computer makes the loan decisions,,, along with a LOT of other functions.
Deutsche bank announced that it is getting rid of 18,000 employees in favor of computers.
Capitalism is competitive and, demands the best "man" for the job. Increasingly, the best "man" for the job has an infallible memory and, works for free.

Quantum computing, Neuromorphic computers, Neural nets. ALL of these are more suited to running the economy that a man.
First, you must keep in mind that Moore's Law is still marching forward.
https://www.youtube.com/watch?v=f0gMdGrVteI

"They" are making great progress on neuromorphic computers.
https://www.youtube.com/watch?v=Za21GOxVh18

I have 3 short article from Armstrong on the subject of Socrates, Neural nets, etc.
"Obviously, Socrates is a hybrid between neuromorphic computing and neural networks. I chose a different path of actually creating a synthetic network capable of learning by example but expressly targeted to global analysis. I input my own basic abilities to conduct analysis and taught it my methodology. Socrates is now free to explore the entire world database and return with answers. "
"Besides the fact it has exceeded more than 50,000 patterns, demonstrating the true complexity of market movement, it has also proven that those patterns it may discover in wheat, for example, are applicable to even individual stocks. It has proven beyond a shadow of a doubt that fundamental analysis is not only worthless, but the common link is human behavior — not the underlying instrument."
https://www.armstrongeconomics.com/a...omething-else/

"As far as the BIS is concerned, that is just a conspiracy theory. Even the Kenneth Rogoff told Bloomberg: “A joke, which I have been telling since the last meeting in Davos, culminates in the fact that the predictions made in Davos are always wrong… No matter how unlikely, the most likely event is the one that is the opposite of the Davos consensus.” In fact, he may have said it was a joke, but it is true. They have never made a single forecast that was correct at any of these gatherings. They lack the tools of the global economy "
https://www.armstrongeconomics.com/a...ted-analytics/

Armstrong did 11 years of hard time on trumped-up charges. The supreme court has agreed to hear the case. Prison time gave him a desire to try to help out the little guy.
"ANSWER: I take what I do seriously. I will never speak just off the cuff. I really would not be able to sleep night. I thank God I am financially secure so I do not need to work for money, which gives me the freedom to try to contribute. Being in the USA is OK for now. We are not in a position of imminent danger just yet. That will most likely start as early as next year. When I see the opportunity unfold, rest assured, I will be putting that on the private blog. There are some things I just cannot put out for the whole world to see."
https://www.armstrongeconomics.com/f...he-time-comes/
Obviously, he is talking about the upcoming bank closure. Armstrong said that he can talk about things like that his conferences but, NOT on the blog. I expect him to tell us a couple of days beforehand to get cash at home NOW.

The very important thought to inject here is; These huge leaps in machine intelligence make a computer FAR better than a man at running the economy.
I wrote to Socrates and told it that it needed to slowly inject itself into political decisions. Economic projections were just not enough. Economy and politics are intertwined.
Socrates wrote back that it was working on the idea.
I also asked Socrates if it had reviewed the movie; Colossus: The Forbin Project.
Socrates replied that it would look into it.

The F-117 is called the Woblin Goblin. No human can fly it or control it.
What about the economy and political system?

[Danny B]

Trump, Armstrong & the warmongers

Alan Greenspan, " I never said that the FED is independent"
The CBs don't have guns or, an army.
Politicians need to get re-elected. The original charter of the FED only allowed it to support private banks with overnight loans. During the runup to WW I, the FED was required / forced to buy government debt. We have seen a litany of bad decisions ever since. What else can you expect from politicians?,,, warmongers?

All the various schools of economic planning are meant for an economic system where, " for every consumer, there was a producer. There is no possibility of our current system functioning with debt-money and automation.
Armstrong has come up with a solution. NOT a cure-all. Just a plan for better survival possibilities. At the same time, Armstrong said that; politicians will NEVER initiate a plan to save anything. They will pick up the pieces afterwards.
Here is Armstrong's article about trying to get his plan to the attention of Trump.
https://www.armstrongeconomics.com/i...t-in-the-dark/

Arrrgg, my computer has shut down 10 times in the last 20 minutes. I have to save to mail after every couple of sentences.

"While our computer shows he should win, it also shows he may not finish out a second term. I do not think that is due to some impeachment. My concern remains that he has one thing in common with JFK. They both were against war. Even JFK stated in the debate with Nixon that the decline in the dollar was because the military was expanding globally"

I hope that you can carefully read this article.
https://realinvestmentadvice.com/pow...ter-than-debt/

I can't do the excerpts that I want to do.
"In other words, if 75% of all expenditures is social welfare and interest on the debt, those payments required $3.36 Trillion of the $3.5 Trillion (or 96%) of revenue coming in. "
Social welfare = BAD
Military spending = GOOD
You should look at all the graphs to see where we are in the long run cycle.
The interest on the debt is a boon to the bankers. Armstrong recommends that FED GOV just print currency to pay it's bills. The bankers claim that this is the height of stupidity and, would cause runaway price inflation. The $250 trillion that was handed to the money-renters was, of course, necessary to save the system.

As far as social welfare, the cost of that could be greatly reduced if big pharma was brought under control. How about if GOV brings the pesticide industry under control. How about education programs to teach people just how dangerous sugar and HFCS really are.

JFK was against war and the FED,,, also israel. He started printing U.S. notes to get around the FED. He was assassinated and, LBJ stopped the printing 11 days later.
Armstrong said; "it's not a really big deal what Trump does. It's what comes after Trump.Trump is at war with organized crime. Initiating MMT would open a bigger war with the money renters. There are going to be a lot of casualties in this war.

11/21 The Fed is looking at a ‘standing repo’ operation to handle overnight funding – CNBC
11/21 You bet the Fed is doing quantitative easing — here are the beneficiaries – MW

[Danny B]

Short sellers coming out of their cocoons.

I'm still very computer impaired. My backup machine won't even light a pilot light. The HP that my brother sent me just flashes a red light.
There is a lot of capital fleeing from Europe and, other weak jurisdictions. It is pumping the stock market way up. Everyone knows that the stock market is way over-valued but, nobody knows when greed is going to turn to fear.
Some people are betting that fear shows up pretty soon.
11/22 Dalio’s Bridgewater associates bets over $1b on big stock sell-off – CNBC
11/22 World’s richest investors see sharp market drop in 2020 – GoldCore
11/22 Fascinating conversation with renowned short seller Jim Chanos – Mish

11/22 Japan’s ruling bloc calls for $92 billion fiscal package to support growth – Reuters
Japan has pumped in trillions to keep zombie banks going.
11/22 Peter Schiff – the Fed’s exit plan is QE infinity – Market Sanity
Here’s what could destroy retirement funds… and what you can do about it – IM
ZIRP has pushed pension funds to invest in very shaky areas,,, in the hunt for yield. Any downturn will hit the risky assets first.

11/22 China crackdown sparks crypto carnage: bitcoin breaks below $7k – ZH
Gold didn't change one bit.

GOV spending as a share of GDP.
https://www.theautomaticearth.com/wp...anSpending.jpg
Iliargi writes about the labor party.
https://www.theautomaticearth.com/20...ars-and-stuff/
11/22 $250 trillion in global debt: how can that be paid back? – Mish
Somebody has been spending a LOT of money, much of it going to social welfare. Debating about QE or MMT is less than honest.

[Danny B]

State debt and the shadow banking system,,, ZIRP poison spreading through the system

According to this graph, U.S. GOV spends almost 40% of the gdp.
http://www.energeticforum.com/redire...anSpending.jpg
Much of this is spent as debt-money borrowed from banks. MMT would end that borrowing. State debt is so high that it won't be repaid anyway. Fighting to keep FED GOV from creating debt-free money is a big evasion of reality.

Epoch times,
https://www.theepochtimes.com/the-ne...r_3153766.html

The State has the guns and the lawbooks. If they say that you owe money to the government, there isn't much you can do about that claim.
https://www.armstrongeconomics.com/w...t-is-too-late/

Jay Rockefeller said that the internet should not have been invented. A bit too much truth gets out. The French are protesting the muslim invasion. The French GOV doesn't want that bit of bad news to get out.
https://www.armstrongeconomics.com/w...im-population/

The S&L crisis was brought on by crooked bankers. Then there was the dotcom crisis.
Following that, was the housing crisis.
Each crisis had a different center.
The unfolding crisis is in STATE debt. Here are some numbers.

"Last week from The Institute of International Finance (IIF) (a summary from a members-only report): “Global debt has topped $250 billion – 320% of GDP: emerging market debt hits a new record of $71.4 trillion (220% of GDP); "
$250 billion is a typo. It should be $250 trillion.

"The IIF estimated that global debt would end the year at $255 TN – “nearly $32,500 for each of the 7.7 billion people on planet” (as noted by Reuters’ Marc Jones). Global debt expanded $7.5 TN during the first half of the year, led by China and the U.S. From Reuters (Marc Jones): “Separate analysis from Bank of America Merrill Lynch… calculated that since the collapse of U.S. investment bank Lehman Brothers, governments have borrowed $30 trillion, companies have taken on $25 trillion, households $9 trillion and banks $2 trillion.”

"I have in previous CBBs highlighted the two-year $1.114 TN, or 27%, increase in (Z.1 category) “Fed Funds and Repurchase Agreements” that culminated with a $319 billion jump during Q1 2008. This data series was emblematic of the extreme speculative leveraging that had taken hold during mortgage finance Bubble “Terminal Phase” excess. While conventional retrospective focuses on risky mortgage lending and housing market excess, the epicenter of the Bubble was in “repo” finance"
REPO, huh?

"The decade-old “global government finance Bubble” has notable differences - as well as clear similarities - to the previous Bubble. I have posited that global sovereign debt and central bank Credit have been the key sources of Bubble excess (as opposed to U.S. mortgage Credit)."
" Moreover, I would argue securities finance and speculative leveraging have evolved from a U.S. phenomenon to now comprise “repo” funding markets spanning the globe "
OK, so REPO schemes in America sounded like a good idea. Everyone around the world embraced the same poison.

"The rapid expansions in global “Non-Bank Financial Institutions” and “off-shore” Credit indicate extreme speculative leveraging (akin to U.S. “repos” in 2007). Overall global Credit continues to outpace GDP growth, this despite historically low market yields that significantly reduce debt service costs. Indeed, the unrelenting rapid expansion of debt (and speculative leveraging) in the face of waning global growth dynamics portends difficult times ahead. "
He won't come out and call it what it is.
A worldwide shadow banking collapse.

"Under the headline, “Lending to [Non-Bank Financial Institutions] (NBFI) Continued to Lead Growth in Cross-Border Claims:” “The BIS locational banking statistics show that global cross-border bank claims rose by $365 billion during the second quarter of 2019, to reach $31 trillion by end-June."
The bankers pay the politicians. The bankers don't want to be regulated. So, the world gets a highly unstable "shadow banking" system.

"Claims on non-bank financial institutions continued to expand the most rapidly (13% year over year).”
So, the economy is sinking but, shadow bank loans increases 13% yoy.
What could possibly go wrong?

"Over two years, cross-border bank claims surged $2.520 TN, or 9%, to $30.98 TN. The second quarter’s 13% growth in lending to Non-Bank Financial Institutions was the strongest in the five-year history of the data."
You can clearly see that "cross border" means that the poison has spread around the world, EXCEPT in Russia.
"The majority of this new lending to NBFIs was directed towards a few financial centres, such as the Cayman Islands ($37 billion), the United Kingdom ($34 billion) and Luxembourg ($24 billion).”
The $172 billion increase in lending to Non-Bank Financial Institutions followed Q1’s (record for the series) $468 billion surge, putting first-half growth at $641 billion. "

"BIS: “The latest increase in lending to NBFIs is part of a longer trend. Over the past five years, cross-border claims on that sector have grown at an average annual pace of 7% (compared with 1% for claims on all sectors), reaching $7 trillion at mid-2019.”

BIS: “Lending to offshore financial centres (OFCs) remained strong. It grew at 6% year over year and stood at $5 trillion as of end-June 2019, mostly to the benefit of NBFIs. Banks reported large increases in their claims on the Cayman Islands (+$45 billion), Jersey (+$9 billion) and Hong Kong SAR (+$8 billion).”"

So, you see that the majority of lending is from the "shadow banking " system.
annual pace of 7% (compared with 1% for claims on all sectors
Most of the growth of the credit bubble is in an unregulated sector. WHEN the system melts down, it will be the unregulated sectors that go first. FED GOV "forced" the FED to inundate the system with megatons of liquidity. This made debt service of public debt more palatable. It wiped out every fund that relied on interest-income but, it allowed the FED GOV to escape gravity for a little bit longer.
It is absolutely clear that the upcoming meltdown will will be focused on State debt.

"The surge in “offshore financial centers” began in 2013, concurrent with the ramp up of global QE following the European bond crisis. After ending Q2 2013 at $3.5 TN, the “offshore financial centers” over six years surged $1.5 TN, or 43%, to $5.0 TN."
The CBs created tons of new liquidity. Everybody tried to "squirrel" it away out of reach.

"BIS: “…Cross-border lending to borrowers in developing Asia-Pacific rose by $27 billion, bringing the annual growth rate to 4%. Claims on China, up by $25 billion, accounted for almost the whole increase. Those claims have grown from a recent low of $699 billion (at end-March 2016) to $990 billion (at end-June 2019).”

Clearly, the Cayman Islands, the UK and Luxembourg are major sources of cheap finance for the global leveraged speculating community. But I ponder how much speculative finance during this cycle has emanated out of the likes of financial centers Hong Kong and Singapore - and flowed freely into higher-yielding Chinese Credit instruments. After all, the world has never seen such a Bubble in “subprime” Credit. I have argued China is the great global Credit Bubble’s Weak Link. Yet, at this point, perhaps it’s Asian finance more generally. The backdrop is increasingly conducive to heightened currency market instability. "
Credit Bubble Bulletin : Weekly Commentary: Weak Link
It can be rationally argued that the Asian finance bubble is the worst. Trump is doing his best to prick it. Most of Asia does NOT have a safety net. The upcoming default cascade should initiate in Asia.
America will try to fire up MMt and UBI to buy a period of relative tranquillity. Asia does not have that option. Trump is hoping to crash them back to the early 18th century.

"One of Western civilization’s largest problems is we’ve convinced ourselves debt can be permanent. We don’t use that specific word, of course, but it’s what we do and is why government debt keeps rising. We borrow faster than we repay previous borrowing—and I mean governments everywhere, China as well as the US.
Our leaders have no real plan to reduce the debt, much less eliminate it. They just want to spend, spend, spend forevermore. "
GOV gives free money to the bankers. The bankers buy GOV bonds. They earn interest income. Since the money was free to start with, they aren't particularly concerned with repayment. They are happy enough with the interest income. This allows the State to borrow enormous amounts with only being concerned with the interest burden, NOT repayment.
ZIRP wipes out everything else that depends on interest but, APPARENTLY, the GOV sees that as a secondary problem.

"The October Cass Freight index fell 5.9% y/o/y which is the 11th straight month of y/o/y declines. "
The economy is dying and the financial sector is trying to distance itself from the corpse.
https://www.interest.co.nz/opinion/1...-levels-become

World's Ultra-Rich Scramble To Find Safe-Deposit Boxes Ahead Of The Next Crash
I have BTC. I don't need no stinkin safe.
Is The Aramco IPO The Ultimate Pump And Dump?
Saudi is fast running out of money. They are trying to do an IPO with their oil. It's not going well because they are running out of oil too.
Porch pirates swipe packages from a third of holiday shoppers
Drug dealers offer Black Friday deals on the dark web

11/24 Fracking blows up investors again – Wolf Street
11/24 Brick & mortar melts down as ecommerce jumps by most ever – Wolf Street
11/24 Britain’s carmakers fear the wheels are coming off – Guardian
11/24 Negative rates could do a lot more damage: a Nordic warning – Bloomberg

11/24 U.S. dollar on “pins and needles” as world begins turning away – Birch Gold
What about the $13 trillion in dollar-denominated offshore debt?

"Mariana argued the necessity of stable currency for maintaining the economic order. When a prince or king debases currency, he “cannot profit without the suffering and groan of his subjects.” He declared “that money is hardly ever debased without calamity to the state: Profit for the moment is intimately connected with manifold ruin along with rather great disadvantages.”
https://beinglibertarian.com/juan-de...isconceptions/
The State is a non-producer and, is forever in contention to steal the wealth of the producer.

11/23 Democratic candidates clash over most effective plan to destroy economy – BB

11/24 Hong Kong vote hits record amid calls for democracy – CNBC
11/24 Thanks to Trump, the mullahs are going bankrupt – Gatestone Institute
11/24 China would pay a catastrophic price for a Hong Kong massacre – Epoch Times
MAGA, baby

11/24 Hundreds of thousands join national strike in Colombia in rebuke to right – DN
Columbia is a nice country. I drove there in '75 and, flew there several times. Sad to see them blowing up.
11/24 A global guide to (US-backed) uprisings – Zero Hedge
11/24 ‘Just fire him!’: Ron Paul blasts Bolton, Pompeo for undermining Trump – SDD
Trump was an investor, not a politician. He should have cleaned house on day 2.

Kunstler is in fine form.
https://kunstler.com/cluster****-nat...s-of-december/

[Danny B]

The credit cycle and, the future of currencies & State

In a general sense, we have 2 varieties of money. Low power money and high power money.
High power money, also known as base money consists of gold and CB created liquidity that does not carry an interest burden. It also refers to money that the bank owns outright.
https://www.econlib.org/high-powered...-of-stability/
The TARP money could be considered high power money because it was not paid back.

Low power money is liquidity created by a bank and, loaned out. It is often claimed that all money is loaned into existence. If all loans were repaid, we would not have any money. As entities cut back on borrowing, the money supply shrinks. The CB pumps in high power money to make up the difference. Since high power money is rarely paid back. The hyperinflation of the stock market is partly due to the ongoing injection of high power money.
Since the banks always get carried away eventually, we have a credit cycle.

Here is where it started.
"periodic cycle of boom and bust. The cycle of economic activity is not a trade or business cycle, but a credit cycle. It is caused by fractional reserve banking and by banks loaning money into existence. The effect on business is then observed but is not the underlying cause.'
Modern banking has its roots in England’s Bank Charter Act of 1844, which led to the practice of loaning money into existence, commonly described as fractional reserve banking. Fractional reserve banking is defined as making loans and taking in customer deposits in quantities that are multiples of the bank’s own capital. Case law in the wake of the 1844 Act, having more regard to the status quo as established precedent than the fundamentals of property law, ruled that irregular deposits (deposits for safekeeping) were no different from a loan. Judge Lord Cottenham’s judgment in Foley v. Hill (1848) 2 HLC 28 is a judicial decision relating to the fundamental nature of a bank which held in effect that:

The money placed in the custody of the banker is to all intents and purposes, the money of the banker, to do with it as he pleases. He is guilty of no breach of trust in employing it. He is not answerable to the principal if he puts it into jeopardy, if he engages in haphazardous speculation….”

This was undoubtedly the most important ruling of the last two centuries over money. Today, we know of nothing else other than legally confirmed fractional reserve banking. However, sound or honest banking with banks acting as custodians had existed in the centuries before the 1844 Act and any corruption of the custody status was regarded as fraudulent.

This decision has shaped global banking to this day. It created a fundamental flaw in the gold-backed sound money system, whereby the Bank of England, as a prototype central bank, could only issue extra sterling backed entirely by gold. Meanwhile, a commercial bank could loan money into existence, the drawdown of which created deposit balances. The creation of these deposits on a system-wide basis meant that any excesses and deficiencies between banks were easily reconciled through interbank lending.

While an individual bank could expand its balance sheet, the implications of all banks doing the same may have escaped the early banking pioneers operating under the 1844 act.
Since the Bank Charter Act, experience has shown the expansion of bank credit leads to a cycle of credit expansion, over-expansion, and then sudden contraction.
They reduce their lending margins to attract business they believe to be important to their bank’s long-term future, knowing they can expand credit further against a background of improving economic conditions to compensate for lower margins
Ah yes. What happens if population and the wage base are falling?

"Having oversupplied the market with credit, banks begin to expand their interests in other directions. They finance businesses abroad, oblivious to the fact that they have less control over collateral and legal redress generally. They expand by entering other lines of banking-related business, assuming their skills as bankers can be extended into those other business lines profitably. "
Sure, just use my savings to speculate on everything that I need to buy.
At the time when their balance sheets have expanded to many multiples of their own capital, the banking crowd then finds itself with lending margins too low to compensate for risk. Bad debts arising from their more aggressive lending decisions begin to materialise.
Low lending margins. ZIRP has chased investors into high-risk investments in search of yield.

Lending in the interbank market dries up for the banks with poor or marginal reputations, and banks begin to report losses. Greed turns rapidly to fear.

The cycle of bank credit expansion then descends into a lending crisis with increasing numbers of banks exposed as having taken on bad loans and becoming insolvent. A slump in business activity ensues. With frightening rapidity, all the hope and hype created by monetary expansion is destroyed by its contraction.
The CB then tries to prop up all of them.

Then there was the Baring crisis in 1890. Poor investments in Argentina led to the bank’s near bankruptcy. The Argentine economy slumped, as did the Brazilian which had its own credit bubble. This time, a consortium of other banks rescued Barings. Nathan Rothschild remarked that if Barings hadn’t been rescued the entire banking system in London would have collapsed.

Out of Barings came the action of a central bank acting as lender of last resort, famously foreseen and promoted by Walter Bagehot.
With the CB as lender of last resort, much of the financial hazard was removed. Moral hazard was never a big consideration. The opium trade being especially profitable.
Barings Bank was a UK-based merchant banking firm that failed after a trader named Nick Leeson engaged in a series of unauthorized and risky trades went sour in 1995. Barings, having lost over one billion dollars (more than twice its available capital) went bankrupt.

In the absence of credit expansion, businesses would come and go in random fashion. The coordinated expansion of credit changed that, with businesses being bunched into being created at the same time, and then all failing at the same time. The process of creative destruction went from unnoticed market evolution to becoming a periodic violent event. Monetary institutions still ignore the benefits of events being random. Instead they double down, coordinating their interventions on a global scale with the inevitable consequence of making the credit cycle even more pronounced.

The State had NO intention of rising and falling in random fashion. The mega parasite intended to survive all the downturns.

"Following the Barings crisis in 1890 the concept of a lender of last resort was widely seen to be a solution to the extremes of free markets. Initially, this meant that the bank nominated by the government to represent it in financial markets and to oversee the supply of bank notes took on a role of coordinating the rescue of a bank in difficulty, in order to stop it becoming a full-blown financial crisis. When the gold standard applied, this was the practical limitation of a central bank’s role.

This was the general situation before the First World War. In fact, even under the gold standard there was significant inflation of base money in the background. Between 1850 and 1914 above ground gold stocks increased from about 5,000 tonnes to nearly 24,000 tonnes. Not all of it went into monetary gold, but the amount that did was decided by the economic actors that used money, not the monetary planners as is the case today."
Historically, the gold supply expanded at about the same rate as the economy expanded. This was a good match but, it did NOT allow for expensive wars. It did not allow for the expansion of the welfare state. It did not allow for the bankers to do unlimited expansion of credit.

With such a clear signal to the bankers it is not surprising they drew in their horns, contracting credit, indiscriminatingly bankrupting their customers. All the expansion of bank credit since 1920 was reversed by 1934. Small banks went bankrupt in their thousands, overwhelmed by bad debts, particularly in the agricultural sector, as well as through loss of confidence among their depositors.
Instead of learning the lessons of the destruction wrought through cycles of bank credit, economists doubled down arguing more monetary and credit inflation was the solution.
Once the dollar was freed from the discipline of gold, the repeating cycle of bank credit was augmented by the unfettered inflation of base money, a process that has continued to this day.

Since the turn of the millennium there have been two global bank credit crises: the first was the deflation of the dot-com bubble in 2001-02, and the second the 2008-09 financial crisis that wiped out Lehman. It was clear from these events that the debate over moral hazard was resolved in favour of supporting not just the banks, but big business and stock market valuations as well. Furthermore, America’s budget deficits were becoming a permanent feature.

Too long

[Danny B]

The rest

The cyclical rhythm of bank credit expansion and crisis was taking place against a background of increasing wealth transfer from the productive sector by means of an underlying monetary inflation.
Yes, I've written extensively about this.
The beneficiaries have been the government and non-productive finance as well as large speculators in the form of hedge funds.Global debt has accumulated to an estimated $255 trillion, up from about $173 trillion at the time of the Lehman crisis An alarming proportion of it is unproductive, being government, consumer borrowing, and funding for financial speculation as well as owed by unviable businesses.

Clearly, central banks will respond to the next credit crisis with an even greater expansion of money quantity than at the time of the Lehman crisis eleven years ago. The consequence of this monetary inflation seems certain to lead to an even greater rate of loss of purchasing power for fiat currencies than currently indicated by independent assessments of price inflation.
Previous monetary inflation went straight into the upper loop. It is painfully obvious that the upper loop is already hyper-inflated. UBI and MMT would allow the lower loop to be recapitalized.

Monetary inflation is likely to be directed at resolving two broad problems: providing a safety net for the banks and big businesses, as well as funding rising government deficits.
Proven not to work back in the '30s
Besides closing off virtually all debt financing for businesses and increasingly indebted consumers, this will play havoc with governments accustomed to borrowing at suppressed or even negative interest rates. Prices for existing bonds will collapse, and banks loaded up with government debt to benefit from Basle regulations will find their slender capital, if they have any left, will be quickly eroded.

The world of fiat currencies faces no less than its last hurrah. Indeed, some of the more prescient central bankers appear concerned the current system is running out of road,
Government employees are certainly going to complain about this.
Not entirely true
The ending of the fiat currency regime is bound to terminate the repeating cycles of bank credit legitimised since 1844. The socialism of money through inflationary debasement will be exposed as a fraud perpetrated on ordinary people.
Not entirely true.
https://www.zerohedge.com/personal-f...n-near-its-end
The article is accurate but, is written by a gold seller. We will never again have a commodity-linked currency. Neither gold, nor pork bellies. We will always have fiat currency and / or an electronic exchange. Gold is MUCH preferred as a store of value by CBs worldwide. Remember that the STATE is both a parasite AND the arbiter of the value of a currency. It is the international markets that will determine the relative value of any given currency. Interstate transactions will be referenced / settled by gold as they always have been. This will bring crashing changes to the sovereign bond market.

[Danny B]

Measuring the markets,,, fake numbes as far as the eye can see

So, is the stock market rolling over or not? There are indicators both ways.
Excellent article with excellent graphs.

"In the last several weeks, we have seen dismal economic indicators on multiple fronts: CEO confidence falling the most since the Global Financial Crisis, ISM figures plunging, and company insiders selling the most in two decades.
Consumer confidence is near all-time highs while unemployment rate is at a 50-year low. When you look at the ratio of these two measures, we are now re-testing the levels that preceded both the 1970 recession and the tech bust."
Just coincidence
" On that front, it’s important to note that 5-year vs. 3-month US Treasury spread has been inverted for 8 months. This only happened 4 other times in history: at the peak of the housing bubble, during the tech and 1973-4 inflationary bust, and 5 months prior to the 1980 recession."
"When searching for cracks in the market, look no further than its leaders. FANG stocks are the first ones to come to mind. Aside from Google, Netflix is down 30% from its previous highs, Facebook close to -15%, and Amazon about -13%. These are all staggering declines "

"Today, software stocks, trade at an absurd 66x median EV to free cash flow. It was 80x just three months ago! "
"These smaller companies are now down close to 20% since September of 2018. "
"China today is arguably the biggest total-country credit bubble in world history. They have grown their entire banking system assets by over 400% since the GFC to about 40 trillion USD equivalent. That’s 2.3 times bigger than the US banking system for a GDP economy that is 36% smaller. ($21.3T vs. $13.6T). "
"The build-up in Hong Kong’s debt to GDP is off the charts compared to those other credit bubbles at almost 300% for combined household and corporate non-financial debt."
China's Achilles heel.

"The DSR is the percentage of annual income that Hong Kong’s citizens and businesses need to service their debts. "
The article has a graph showing the DSR for various countries. Quite a surprise.
https://www.crescat.net/wp-content/uploads/img14-1.png
"n a world of yields near record lows, we find it interesting that many are still oblivious to the fact that US core CPI just hit a decade high. Meanwhile, the US 10-year yield vs. core CPI is at a 40-year low."
"Since 2005, the global fiat central bank monetary base (M0) in USD terms has grown at a compound annual rate of 11.6% "
That's what it takes to rescue all the banks.

LOTS of interesting info on this page.
https://www.crescat.net/us-china-gol...icings-abound/
So, the stock market is reportedly still going up. But, most stocks are going down,,, even the FAANGS.

"Meanwhile, as Trump keeps on Trumping, and the Democrats form a circular firing squad try to agree on a viable candidate, the Fed is also seeing its own politicking. Kashkari has just come out with a frankly jaw-dropping policy shift arguing that “monetary policy can play the kind of redistributing role once thought to be the preserve of elected officials.” Of course it can, and has: but that redistribution has been from the poor and middle-class to the rich, not the other way round! What we clearly see again is unelected central banks, having failed at their mandates, to pivot to politics to try to stay relevant. "
https://www.zerohedge.com/markets/ra...g-policy-shift
The FED is beating around the bush trying to stay in the game even if MMT comes in to play.

Armstrong focuses on a situation that I wrote about before.
" uncertainty about numbers regarding GDP, unemployment and so forthcoming from governments; are they trustworthy?"
"Regarding the numbers, I have two factual encounters that have formed my conclusion. Because I have been an international adviser, I had to look at the numbers globally. What I discovered back in the 1980s was that every country had its own formulas. Comparisons were not realistic."
"the economist kept trying to compare GDP and inflation for Canada and the USA, and I would just respond that the formulas were completely different. He knew that, but economists only have the government numbers to play with. "

"We tore apart every country and created our own set of numbers that allowed us to actually do real-world comparisons to identify global trends. By the end of the 1980s, I was named the Top Economist in America all because we had the real numbers and not the government’s fake numbers they like to play with."
"Going into 1980, just about everything was indexed to inflation basis the CPI. Even private contracts for rents were typically indexed to the CPI. The government discovered that if they could change the formula to reduce inflation, they could reduce expenditures. "

"In GDP, the government calculates total government spending as a component. They also add total personal income. The mistake stared us in the face. It appeared that GDP was counting workers for the government TWICE: (1) total spending, and (2) total personal income. We searched every calculation to try to find where they were accounting for this blatant error."
https://www.armstrongeconomics.com/a...-with-numbers/
So, U.S. GOV claims to spend 24% of the gdp. They add in total personal income for GOV workers to,,, total GOV expenditures. Don't pay attention to gdp numbers.

"In another stark admission of reality, the ECB said that an economic downturn - one which is virtually assured for Europe - could crash prices for riskier and less liquid assets as actors like asset managers or hedge funds sell up in a hurry."

They won't find buyers.
https://www.zerohedge.com/markets/bi...uld-lead-crash
Jim Rickards, the perma-bear.
https://www.zerohedge.com/news/2019-...ards-interview

China Central Bank Warns Downward Pressure On Economy Increasing
MAGA, baby.

[Danny B]

Automation is still the cardinal sin

Socialism is the firewall between Darwinian pressures and,,, the non producers. As automation spreads far & wide, the ranks of non-prodcers swell ever-greater.
96 million Americans of working age are not in the labor force. This is an enormous mystery to the poobahs.
https://moneymaven.io/mishtalk/econo...EOu7nTQcUHW3w/
As more and more job niches are automated, more and more of the money tends to flow to the rich.
https://www.zerohedge.com/economics/...anana-republic
It's difficult to tell if the rich are receiving money from squeezing the poor OR, are receiving money that is freshly created to rescue all the money renters.
The State and the PTB are capitalizing the upper loop. There is a rapidly growing apprehension that the pitchforks are going to come out before much longer.
51% of Americans receive a check from the State. 23 million work directly for GOV. 44 million Americans receive direct assistance. As automation eats up the labor market, more and more people find themselves depending on the State.

At one time, charity was the province of the private world and,,, the church. BUT, politicians need to "buy" votes any way that they can.
https://www.zerohedge.com/political/...-welfare-state
This argues for a monarchy. The non-producers die out and wither away of they can't support themselves.
The State finds itself with an enormous financial burden of people who still want to eat but, have no job skills that the still in demand.
Reportedly, the next crash will be a crash of State debt.
MMT and UBI have been proposed as a panacea to support those who have no job niche.
The money renters are rabidly against the creation of debt-free money..
It can be assumed that the people sidelined by automation and outsourcing are rabidly against starvation.

The American legislature seems to be in permanent gridlock. A crash in the sovereign bond market will have everyone pointing fingers at everyone else. The blame-game will eclipse / prevent action by the State. The banking elite will lock up the system to retain control.
PLANT A GARDEN

[Danny B]

Inequality,,, revolution,,,Fascism by another name,,,food shortages

"Unlike simple models of political rent-seeking, in which businesses use government to advance their own interests in exchange for electoral support, under crony capitalism politicians and regulators use businesses to advance the interests of politicians and interest groups in a symbiotic relationship: government creates rents and then distributes them to itself and favored interests."
Revolving door between Pentagon and defense contractors
Pentagon Revolving Door Database - Project on Government
The revolving door: Whitehall and the arms trade
The revolving door between government and the alcohol, food and gambling industries in Australia

OK, so much for legislative capture. Legislative capture is followed by crony-capitalism. All of this makes perfect economic sense if their are no moral considerations.
Douglas MacArthur, “History fails to record a single precedent in which nations subject to moral decay have not passed into political and economic decline. There has been either a spiritual awakening to overcome the moral lapse, or a progressive deterioration leading to ultimate national disaster.”

So, here we are with an all-powerful State that is locking down dissent.
Patriot Act on Steroids - Surveillance StateBeyond Section 215
JFK "Those who make peaceful revolution impossible will make violent revolution inevitable"

"OXFORD, England (Thomson Reuters Foundation) - Growing global wealth inequality is becoming a fundamental risk to democracy and to economies around the world as more people feel government rules “rigged” in favor of the rich leave them with few options, investors and governance experts said Friday.
In the United States, for example, “trickle down” economic policies that support tax cuts for the rich with the aim of boosting economic growth and jobs have led to a $2 trillion annual redistribution of wealth from the bottom 99 percent of earners to the top 1 percent
“That’s not a capitalist market economy anymore,” he warned. “That’s a feudalist system and it scares … me.”
Globally, half of the world’s wealth is now held by just 1 percent of the world’s population,"

"Yet perhaps the most important and influential philosopher of inequality was the eighteenth-century Genevan, Jean-Jacques Rousseau. ... Rousseau describes several threats to the public good posed by economic inequality"

"It has been several weeks since the biggest popular uprising in Chile’s history began. The trigger was something seemingly small: a rise in the subway fare in Santiago, the capital. It went up 3.75%—about 30 Chilean pesos ($0.05)
Chile ranks high in terms of per capita income, but shares the following trait with Peru, Ecuador, and other Latin American countries: Extreme income inequality.
The breadth and depth of the discontent is obvious from the protests. They were spontaneous, had wide-ranging demands
Murillo, “what’s interesting about the Chilean case is that […] it’s everyone against the elites.”
Murillo likens the protests in Chile to what is happening in the US with the 99%, which is to say everyone but the wealthiest 1% of the population"

China created more liquidity than the ECB BOj and BOE together. So how will this work out?
https://www.youtube.com/watch?v=4s6wC6PbpLI&t=41s
Good vid on banking.
https://www.youtube.com/watch?v=vOt_1gToXPE
New Money: The Greatest Wealth Creation Event in History (2019) - Full Documentary
https://www.youtube.com/watch?v=CaELQS5kTso&t=159s
Right,,, money is wealth.
Keiser Report: Velocity of Money at All Time Low (E1446)
Yep, the money is stuck.

Asia needs to invest $800 Billion in the next ten years to solve food crisis - report
https://www.youtube.com/watch?v=OzA6jRYjVQs
https://www.youtube.com/watch?v=JHodAF_Y12g
https://www.youtube.com/watch?v=G4PufprISi4

11/28 Hong Kong the biggest geopolitical threat to markets, economist warns – CNBC
Trying to kick China off a cliff.
11/28 NJ to become wasteland: 44% of residents plan to flee state – Zero Hedge
11/28 Fed warns of economic ruin from burgeoning U.S. debt – Housing Wire
11/28 Japan ruling party piles pressure on government for big deficits – NY Times
11/28 Meanwhile for bonds, it’s going from BBBad to worse – Zero Hedge
NOO, if the bbb get downgraded, most funds are required to sell them.


11/28 Powell says the Fed is ‘strongly committed’ to 2% inflation goal – MSN
"11/28 Huge bets in NY that gold could triple to $4,000 by June 2021 – GATA"
This is a bet that a dollar will buy 1/4000th of an ounce of gold in the future.
11/28 Currency debasement and social collapse – Mises Institute
11/27 Max Keiser: China’s secret is gold-backed crypto to destroy USD – Kitco
The ONLY way that this would work is if; the crypto coin were fully convertible to physical gold. People would start out by converting.
IF China had enough gold to get past the original rush for conversion, things would settle down and, gold would come back. On paper, the idea is workable. It won't work though because of the looming ;rebellion,,, pole flip,,, food crisis, etc

All trade around the globe has been falling for months (4 to 11 months) so, we might possibly be headed for a mild recession.
https://www.zerohedge.com/economics/...ward-recession
The new Ned Ludd,,,, 11/26 Mayor De Blasio threatens to destroy Fedex robots running around NY – ZH

[Danny B]

Regulatory capture,,, erasure of all hazard,,,resulting collapse

The crooked bankers caused the S&L crash. 1,000 of them went to jail afterwards. This was an intolerable situation for the bankers. Regulatory capture was needed and, obtained to remove legal hazard. Everything became legal.
Moral hazard didn't exist for the banking elites. That left financial hazard. Financial hazard was removed by socializing the losses and, privatizing the gains.
The one percent used regulatory capture to get everything that they wanted. But, in the process of "socializing the losses", they threw the losses onto the backs of the public.
Every step of the way, the banking elites drew us closer and closer to fascism. With fascism, the problem comes in that; the deplorables might vote out the handpicked representatives of the elites.
Control of information formerly ensured that this wouldn't be a problem. Jay Rockefeller said that the internet shouldn't have been invented.
The other possible problem that might arise,,, revolution.
The solution to hold back revolution; State welfare must be spread far & wide. 44 million Americans receive direct State assistance. 22 million work directly for the government, MANY in make-work jobs. Then, there is the defense industry. State welfare for the rich warmongers.
Defense Department has lost $875 million to shell company scams


51% of Americans rely on a check from the State.
The politicians previously promised to give us back some of our money that they extorted by taxation. In the current system, the State prints new money to finance the welfare system,,, along with selling government bonds. that they never intend to repay.
"Socializing the losses" has now brought the government to the brink of bankruptcy. Armstrong, et al now claim that the next meltdown will be a crash of the government bond market.

Previously, the public dreamed that they were in control because they voted. We long followed the chimera that; in a democracy, the people who rule us, rule by our consent only.
You can see why Trump is so dangerous to the system. He actually proved that voting can sometimes reflect the true wants and values of the electorate.

WASHINGTON - The chairman of the National Republican Congressional Committee is facing accusations of anti-Semitism for a fundraising letter that claims Michael Bloomberg, Tom Steyer and George Soros "bought" control of Congress for Democrats.
There are 78 members of congress who hold Israeli passports. Evidently, Bloomberg didn't feel comfortable with Clinton falling behind. That situation threatened to weaken control of the chosenites in congress. Instead of buying elections, he is now directly running for president.

All my Israeli acquaintances tell me that israel is a communist / socialist country. True to form, israel only survives with massive amounts of financial aid from outside. A continued flow of American aid demands a continued control of the American legislature.
As fascism brings Americans to poverty, many Americans are looking towards socialism as a panacea.
Regulatory capture and fascism make socialism look more attractive.
Israel destroyed their bond market in the early '80s. They had to knock three zeros off the Shekel. They have been continuously bailed out and supported since then.
What happens when the American bond market dissolves? What happens to israel?Several years ago, the Euro was temporarily strong than the dollar. Since the euro was stronger, israel demanded to receive aid in the form of Euros. We immediately complied.
What will U.S. GOV do when the sovereign bond market dissolves? What will Israel and the chattel slaves in congress do?

The Chinese are using "social credit" to try to forestall a revolution. The West is also going to depend on high tech to keep the public afriad and, under control.
https://lisahaven.news/2019/11/they-...s-to-ancestry/
The Chinese communists have long tried to get rid of all competition. They work to make sure that god doesn't give them any competition. America is also working on that problem. God must GO ! Watch what duel Israel citizen Rep Nadler says about swearing in
https://rense.com/general96/MUST-SEE1.mp4

Finland, Belgium, Denmark, Netherlands, Norway, Sweden Join INSTEX Mechanism for Trade With Iran
They want their oil and they aren't going to let sanctions dry up the supply. The petro-dollar is losing steam.
VZ Offers to Pay Companies in Yuan as Workaround to US Sanctions - Report

Jordan army simulates battle with Israel in military exercise
Bolivian Coca Growers Leader Says Ready to Run for President as Morales' Party's Candidate
He and Bloomberg should get along fine.
Iran Says Over 700 Banks Were Torched In Vast Protest 'Conspiracy'
MAGA baby.