Economic pressures

[Danny B]

The coming margin call

Investopedia;
Margin Call Definition | Investopedia
What is a 'Margin Call'
"A margin call is a broker's demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin. Margin calls occur when your account value depresses to a value calculated by the broker's particular formula.

You would receive a margin call from a broker if one or more of the securities you had bought (with borrowed money) decreased in value past a certain point. You would be forced either to deposit more money in the account or to sell off some of your assets."

FED GOV juiced the stock market every time that it started to fall. The "Greenspan put" made investors believe that they would never lose. Stocks kept going up even though earnings were flat. The institutional investors have a 1$ trillion short position against the market. If they are correct and the market falls, investors will receive a margin call. Stockman refers to the giant margin call from the sky.
The lack of a freeze in pumping oil will drive down the price. GOV? buyers have flooded the country with oil trying to maintain the demand/price. The storage is all full. Demand is still dropping. The institutional investors know this and have bet against bank solvency. The banks claim that energy is just a small fraction of their portfolios. That is like saying Your heart is just a small part of your body mass.

In the event of a turndown in the stock markets, investors must raise cash. You rarely get to sell what you want to sell. You must sell what others are buying. The great danger in blowing a bubble in the stock market is; when the air escapes, ALL stocks go down and you can't sell anything, except at a huge loss. This leaves either gold or U.S. treasuries. Since most investors don't have gold, they must dump U.S. GOV paper. We'll see.

[Danny B]

Social mobility and gold as wealth storage.

Not surprisingly, the Saudis torpedoed the oil talks. Oil producers get worst possible outcome, destroy remaining credibility – Reuters
As goes oil, so goes banking.
"Overall, Europe’s banking stocks are down 23 percent year to date and 39 percent since the peak of the market" Day Of Reckoning
4/18 Asian shares drop, crude tumbles after Doha deal fails – Yahoo!
Oxfam Expert to Sputnik: US Tax System is 'Rigged' to Help the Richest
Then, what happens? The Lesson Of Empires: Once Privilege Limits Social Mobility, Collapse Is Inevitable | Zero Hedge

The rich and powerful are doing a lot of cost-cutting to save bloated corporations and banks. BP CEO to get $3.3 million raise after 12,000 layoffs - Orrazz
What is the result of that?
‘Danger is rapidly building,’ wealthy flee cities

The S&P is about to make a big move,,, most likely down; "The Big Move" Is Coming | Zero Hedge

Many think that Saudi may crash the economy if they are forced to reveal their part in the attacks in NYC. The FED says NO. The FED says that J.P. Morgan is most likely to take down the system. Who knows? Maybe it will be China to kick things off the cliff? http://www.zerohedge.com/news/2016-0...ses-record-low

Harry Dent says that IT is coming; http://www.zerohedge.com/news/2016-0...rry-dent-warns

For thousands of yeas, the price of gold went up when interest rates fell. The "invention" of paper gold ended that link. When gold went up in the early 80s, Paul Volker raised interest rates up into the low %20s. You can bet that rates won't ever rise like that again. The West tried to banish gold from the consciousness of investors and savers. It worked for a while until the Indians and Chinese came on the scene.
Gold drains investment from the bond market. The welfare-warfare State didn't want any drain so, they invented paper gold. China does NOT have a sovereign bond market. China can well afford to see wealth stored as gold. The West shudders at the prospect.
http://www.telegraph.co.uk/business/...etary-system1/
"Countries are also acquiring gold in advance of a collapse of the international monetary system. The system has collapsed three times in the past century. Each time, major financial powers came together to write new rules.

This happened at Genoa in 1922, Bretton Woods in 1944, and the Smithsonian Institution in 1971. The international monetary system has a shelf life of about 30 years."
Negative interest rates destroying world economy – Armstrong Economics
4/18 Negative mortgage rates spread across Europe – Talk Markets
If it doesn't work,,,, keep doing it over and over.

[Danny B]

World economy is terminally broken

The profit went out of oil.... confidence in bank debt went with it. The bond market is MUCH larger but, stocks are more visible. What about confidence in the stock market?
4/19 Overvalued and underlevered – Financial Sense
4/19 By this measure, the S&P 500 is overvalued by 72% – CNBC
But, wait a minute. Stock holdings are the collateral for so many other markets.
4/19 Boston Fed says “markets are wrong,” rates are going higher – Zero Hedge OK, so they go higher. 50%? of companies go bankrupt unable to service debt.

4/19 It’s all suddenly going wrong in China’s $3 trillion bond market – Bloomberg
4/19 How China will bring all the BRICS tumbling down – Forbes
The West plans to crash the whole system down to introduce the SDR as the world reserve "note". The East plans to crash the whole system down to re-introduce gold as the world reserve store-of-value.
4/19 The global growth conundrum – Seeking Alpha How strange,,, we can't seem to get growth while wages keep sliding down.
4/18 Untried, untested, ready: remedies for the global economy – Bloomberg What could go wrong?

World economy is terminally broken after 50 years of misgovernment – 24hGold
Socialism is like; irrigation in the desert. LOTS of things grow while the water is flowing. Using credit to reach farther and farther into future earnings, GOV supports a lot of programs and people that it can't really afford. Then, the future arrives and the earnings have already been spent.

"Instead of addressing the estimated $600 billion in unfunded liabilities in California’s beleaguered public-employee pension system, Democrats in Sacramento have instead decided to “solve” a growing pension crisis in the private sector"
Now that California is bankrupt because of it's legendary generosity, it plans to suck more wealth from the private sector. California’s Pension Hubris | City Journal

https://www.youtube.com/watch?v=EmC26RuO26g
Socialism always breaks the bank.

The Morgan Report is a group that pushes silver. The worse things look, the more silver you will buy. They have a real panicky report claiming that there will be a rate hike in June;
Fellow Investor,

On Wednesday June 15, 2016 ... behind closed doors in Washington D.C. ... an event will take place that will change everything in your life.

If history serves as a guide, it will trigger outright chaos and panic in every corner of the financial world:

The first blow will hit the U.S. bond market, sending it into a fiery tailspin ...

The stock market will get hit next - unprepared investors will stand to lose more than they did in 2001 and 2008 ...

Then the fallout could spread to Main Street with millions of jobs lost, social security checks cancelled, and most of America descending into a “dark age” of depression and poverty.

So, stock up on popcorn and beer.

[Danny B]

Institutionalized fraud, lying and corruption

Charles Hugh Smith;
This can't be said politely: the entire status quo in America is a fraud. oftwominds-Charles Hugh Smith: The Entire Status Quo Is a Fraud
Kunstler; "One reason it’s difficult to comprehend discontinuity is because so many operations and institutions of daily life in America have insidiously become rackets, meaning that they are kept going only by dishonest means. If we didn’t lie to ourselves about them, they couldn’t continue."
The Elephant Cometh - KUNSTLER

• US Nonfinancial Debt Rises 3.5 Times Faster Than GDP (Mauldin) That debt is counted as wealth by those who hold it. BUT, it isn't wealth and that makes a difference.
4/19 Wall Street banking revenue is in free fall – CNBC
4/19 Goldman Sachs’ revenue slumps to lowest level in 4 years – CNBC

Ron Paul; "The no-win situation the Fed finds itself in is a sign that we are reaching the inevitable collapse of the fiat currency system. Unless immediate steps are taken to manage the transition, this collapse could usher in an economic catastrophe dwarfing the Great Depression. Therefore, those of us who know the truth must redouble our efforts to spread the ideas of liberty." I'm ON it. The Ron Paul Institute for Peace and Prosperity : What Did Fed Chairman Yellen Tell Obama?

Along with institutional corruption, we have institutional blindness; Institutionalized Lying—— Why Central Bankers Never See Bubbles | David Stockman's Contra Corner

[Danny B]

We haven't reached peak stupidity

Where to start? There are so many things going on that it is hard to know which problem will unfold first. Some problems are going to cause a cascade of other problems. In a general sense, EVERYTHING will default.
I read a lot of BS information and try not to include it here.

China;
"A 60% collapse is the minimum the Chinese should expect. But it would actually take 80% to get back to the pre-bubble values of early 2000.

This would be devastating to the Chinese. It is estimated that household wealth in China is $27.2 trillion, or about three times GDP. With 75% of that in real estate, that comes out to $20.4 trillion.

If real estate falls 60% as it did in Japan, that would mean $12.2 trillion in wealth would just disappear.

And if it falls 80%-plus due to the larger size of China’s bubble like I expect, we’re talking $16 trillion or more evaporating!"
http://etfdailynews.com/2016/04/19/t...odern-history/

Armstrong; "There will be a new base of currency and it will most likely be electronic. The reason for this is political. The USA peaked as did Britain. The financial power will move to Asia, and Europe along with the USA will crash and burn because they are caught in this fictional world created by Marx. Russia and China collapsed under Marxism. It is just our time."
https://www.armstrongeconomics.com/f...ng-transition/

• EU Has Lost Favour With Citizens, EC President Juncker Warns Maybe that is because Belgium rode roughshod on everybody's rights and welfare.
• Iran Struggles To Find Enough Ships For Oil Exports (Reuters) All the ships are full and looking for a buyer / consumer.
4/20 China’s GDP slows as ocean freight collapses – FX Street
4/20 As global steel crisis grips, China says March output was a record – Reuters WHAT are they going to do with all that steel?

4/20 This will be the largest evaporation of wealth in modern history – ETF Daily News That meshes nicely with the largest bubble in history.
4/20 Stocks are in a “far more precarious state than believed possible” – Zero Hedge Stupidity has no limits.
4/20 The chance of a Comex default… – 321Gold Somebody has to kick off the party.

[Danny B]

Squeezing the little guy until he stops reproducing

The University of California (UC) is a public university system in the U.S. state of California. The University of California's projected operating revenue for 2011-12 is $22.5B More than 800 startups with UC patents have been founded since 1980.
The UC system has $91 BILLION in cash and investments.
"There’s a tug of war between California’s governor and the president of the state’s prestigious University of California over nearly $100 million in additional state funds the university system argues it needs next year."
" If the state doesn’t pony up the extra funds, she plans to carry out tuition increases of up to 5 percent in each of three years."
Tuition has gone up at 3 times the rate of inflation,,, books, even more.

The UC system is a PUBLIC college generating a 1/2 billion a week in revenue with $ 91 billion in it's fund.
Keynes said that within 80--100 years, we would be so rich that we wouldn't need to work. Walter Burien says that there is no need at all for taxes. GOV is sitting on so much cash and investments that it doesn't need any tax income. CAFR1 Home Page

"Before the passage of the Federal Reserve Act and the creation of a central bank, in the year 1910 the national debt was 2.65 BILLION with a total debt as a percentage of GDP of 8.1%. In today’s 2015 fiscal environment, the debt was 18.14 TRILLION with a total debt as a percentage of GDP of 101.8%. "
"Here comes the hard part to accept and internalize. For the most recent entire year the U.S. Federal Tax Revenue is 3,317 Trillion with Income tax revenue receipts at 1.584 Trillion. However, the U.S. Total Interest Paid is an incomprehensible amount of 2.409 Trillion with a total debt obligation of an unfathomable and unfunded obligation of 64.756 TRILLION.

As you see the income tax, can and will never pay, for even the interest on the aggregate debt.'
Another Record Collection from Federal Taxes

"Those are simplified examples of the concept of “basis” as that term is defined in the tax code. You only get taxed on the gain or “income” over and above what you already own."
"To the extent your wage or salary is “income” at all, it is simply “gross income”. The IRS defines it as such. “The Internal Revenue Code states that “gross income means all income from whatever source derived.”
"He is paying you for the VALUE/basis of the work you provided. That value/basis IS YOUR WORK"
"You see the government tax code does not “allow” you to deduct out the value or “cost basis” of the labor you provided. It “allows” the business to deduct it when it has to pay for it, but it does not “allow” YOU to deduct it when you sell it!

Think about what that means. You created the value with your time and life and expertise, just like every other piece of work you perform. It is YOUR LIFE. But the State, in effect, claims that value for itself and makes you pay tax on it!

How? Through the POLICY DECISION to not “allow” you the deduction. It is not a mistake. It is not a misunderstanding. The state knows exactly what it is doing! "
The Personal Income tax proves that you are a serf. | THE TRUTH ABOUT THE LAW

For much of man's history, it was prohibited,, anathema to tax a man's labor. "They" couldn't allow the common man to get too rich and stop working. So, now we have a tax on everything to keep us working. The U.C. system has no need for the tuition money. Same for U.S. GOV. They don't need income tax revenues.
If you are already rich, you might get some protection; Plans to stop collecting data on wealthiest 1% in UK criticised by IFS | Politics | The Guardian

Labor is taxed as gross income. This keeps us all down if you depend on work for income. This is no accident; Oxfam Expert to Sputnik: US Tax System is 'Rigged' to Help the Richest

It keeps the poor from reproducing too fast. Now that we are reproducing too SLOW, "They" have a new problem.

[Danny B]

We need to pull away from creative destruction

The U.C. system is self-funding and doesn't need to charge tuition. They have many $ billions stashed away. The FED shoots for a 2% inflation rate. The Grace Commission reported that not one dime of our income tax money goes to support GOV. GOV prints what it wants. Besides taxes, GOV charges us fees for EVERYTHING. GOV sells mineral leases and has many other sources of income. After many decades of raking in money, GOV reports once a year how much money it's various agencies are holding. This is the yearly Comprehensive Financial Report CAFR.

The agencies hold a cumulative total of over $ 100 trillion. Much of this is in investments in productive industry. So, both big GOV and small GOV rake in a lot of money. The U.S. Treasury is what represents the wealth of the public. It is flat broke. GOV, the edifice is doing well. GOV, the people is screwed.
All those GOV investments pay off very well so, there is a constant income stream. Cumulatively, these GOV agencies own a lot of the productive economy. When we spend money, part of this money flows back to GOV through it's ownership of private enterprise.
Decades of printing money to buy up the private economy is paying off very well. Since GOV is first spender of this new money, it gets the greatest benefit.

GOV is sitting on mountains of cash and investments but, an economy only works if there is circulation. GOV withholds money from circulation to keep us poor and working. GOV circulates money by spending and creating GOV jobs. The vast general wealth that Keynes predicted must be blocked. BUT, general employment must be provided to keep us occupied and productive.

How can we continue to be productive without becoming too rich? How can GOV provide jobs and still limit productive outcomes? Easy, just pay people to do make-work. Then, there is the problem of the private economy becoming too productive and creating too much wealth.
The richer that America becomes, the more wars that it engages in. Our productivity must be bled off somewhere to keep us working.
The Report from Iron Mountain makes it VERY clear that peace is very undesirable. The threat of a common enemy is a big part of what holds the country together. The CIA is hard at work to create as many enemies as possible.
Then, the military comes in and does the follow up work. They destroy as much stuff as possible. Then, they order replacements from companies that are owned partly or wholly by GOV. War keeps the economy going and the wheels turning.
Russia and China bring the threat of world peace. A lack of big ticket wars would allow the general populace to get too rich. Creative destruction would be blocked. The F-35 may be a turkey BUT, it is an expensive turkey that employed a lot of people. Without the war industries, GOV would find it much harder to provide jobs. Do NOT worry. The neocons are hard at work starting a new cold war so that we can continue to circulate wealth via the war industries. How The American Neoconservatives Destroyed Mankind’s Hopes For Peace -- Paul Craig Roberts - PaulCraigRoberts.org

Edit; The neocons want to continue with a uni-polar world BUT;
'Russia, China and India Building Multipolar World' That Neo-Cons Don?t Get
It was Keynes who proposed constant warfare to stimulate the economy. It was Roosevelt who drug us into WW II to stimulate the economy.
We need a new operating system that doesn't embrace creative destruction just to bring jobs and circulation.

[Danny B]

FACTA, GACTA and global tax

FACTA is / was a scheme from GOV to keep capital from fleeing American banks. FACTA begot GACTA.
" Unfortunately, GATCA will likely be an irreversible reality in the not-so-distant future.
In the end, this means a permanent record of every penny you have ever earned, saved, borrowed, or spent anywhere in the world will be instantly available for analysis and scrutiny by countless government agencies, regardless of any actual or suspected wrongdoing.
But wait, there’s more!"
" Did you really think all these governments would go through all the trouble of creating the architecture to gather all this financial data… and then just sit on it?
Of course not.

They’re going to leverage the data as much as possible. This will have terrifying consequences for the individual.

It’s no secret that advocates of big government have long fantasized about creating a global tax. Whether it’s the global carbon tax, a worldwide tax on financial transactions, or a UN tax on air and sea travel, all prior attempts haven’t really worked. The infrastructure wasn’t in place.

However, that could all change with GATCA, which could ultimately make the disturbing dream of a global tax a reality." The Shocking Reason for FATCA… and What Comes Next | International Man

[Danny B]

Interest ratres will never come back,, banks can't survive

There are many claims that this crash was purposely manufactured to bring a new system. Our current system has a modicum of capitalism with a heavy overlay of socialism and fascism. The "one world" plan would decrease capitalism and increase socialism. Currently, Russia and China signed on for FACTA because they needed access to the SWIFT system. They now have their new system up and working. We'll see.

The West is trying the same tired BS to save the banks. ",,, effectively give free money to the banks to lend to the real economy. This means the banks will be receiving cash for borrowing from the central bank." The same tired BS in an economy where nobody wants to borrow. Can THIS be a game-changer for central banks?

U.S. GOV has bought up LOTS of the stock market. This raises indices but, stocks still don't have any earnings. Confidence is fast fading because stocks are so over-valued. A Wall Street Witches Brew——Hockey Sticks And Financial Engineering Games | David Stockman's Contra Corner

Everybody is nervous about the future, "That is, valuations are in the nosebleed section of history, but financial history has tumbled into the sub-basement of future possibilities."
"What we have, instead, is merely the initial shock waves from the actions of central banks which are trashing the joint. Lurking on the other side, therefore, is unfathomable risk, not extraordinary growth.

In a word, the stock market is not worth even 15X its current earnings or 1300. At length, the carbon units out there catching today’s bouncing dead cats will thank their lucky stars if their losses are only 40% from here."
On The Impossibility Of A Soft Landing | David Stockman's Contra Corner
4/21 Chinese investors dump U.S. stocks, offset by corporate buybacks – MarketWatch The FED sends money to companies to buy back their own stock. Everybody gets bonuses even though there is no commerce.

Wiki; :Inflation, which peaked at 14.8 percent in March 1980, fell below 3 percent by 1983. The Federal Reserve board led by Volcker raised the federal funds rate, which had averaged 11.2% in 1979, to a peak of 20% in June 1981.:"
Volker raised interest rates and pulled everyone out of gold. Since then, interest rates have steadily dropped. Paper gold was instituted to keep investors out of the very limited supply of physical gold. Interest rates are still dropping and there has been no big move to gold in the West. It remains to be seen just how low interest rates can go.

"Central banks’ model, as shown below, illustrates how ever-lower interest rates are used to encourage additional borrowing to drive consumption and lift asset prices; all in the hope of ultimately achieving economic growth. "
"Currently economic growth in most of the largest nations is deteriorating, and once again the central bankers are grasping for remedies. However today is different than the past. Unlike prior instances of stalled growth, the central bankers’ main policy tool, interest rates, has reached a supposed limit of zero percent."
We have had a steady decline of wages and purchasing power. The bankers have given us a steady decline of interest rates to keep us spending. This is cumulative over time and the CBs can no longer use their major tool. They can't possibly pull investors out of gold.
"A better understanding of negative rates may lead you to our opinion that the concept of a NIRP is sheer desperation akin to a last second Hail Mary pass in football, but with even lower probability of success. "
NIRP Hail Mary | Zero Hedge
The CBs used low interest rates to bring forward consumption that we could no longer afford with our global-mean wages. They have run out of steam.

The credit cycle has turned. High interest rates would act as a "detonator" for any remaining commerce.

[Danny B]

Ingo Bischoff

There is one writer who I really like. Ingo Bischoff is the President of San Francisco School of Economics. Here are a couple of his observations;
"The gold standard is only an "outworn dogma" to those who fail to be believe in "free market" distribution. John Maynard Keynes turned out to be one of those elites who believes he can mandate production and distribution. Such mandate is also known as "Socialism".

The Keynesianism is fundamental to the "Technocracy Movement" represented by the Trilateral Commission in its push for a "New World Order".

"BISCHOFF: The intrinsic value of gold is due to history...??? Gold has intrinsic value only to the extent that any other commodity has intrinsic value. As a commodity, gold served as medium of exchange centuries before it became money. Gold (electrum) first became money around 500 B.C. in Lydia.

It is the human exertion expended to mine and refine a specific amount of gold which is set as the standard value by which to determine the value of any other good or commodity.

To the extent that capital is employed to reduce human exertion in the mining or refining of gold, the value of gold specie or bullion is reduced. However, the same capital used to reduce labor (human exertion) in the mining and refining of gold, is the same capital which also reduces the labor requirement in the rest of the economy.

It is that phenomenon which renders the value of gold relatively stable over time vis-à-vis the value of other goods and commodities. It is not the "so called" intrinsic value of gold.

DB: "Why the constant misinformation about gold in the mainstream media?"

BISCHOFF: The "main stream media" is owned by the "monetary elite". If gold is the standard of value, then the redeemable currency created against 90-day "Bills of Credit" acquired by banks carries with it the value of gold. It is only workers in the productive industry which give rise to redeemable currency generation. In other words the productive workers are in charge of "money".

The "monetary elite" was finally able to gain legal status through the National Banking Acts of 1933 and 1935 to be in charge of creating irredeemable currency. By using the sale of government bonds (debt) in secondary markets, they were able to orchestrate the creation of irredeemable currency through monetizing congressional budget deficits (government debt).

Pre 1933, the prime interest rate was established by the willingness of workers to invest their gold savings in gold bonds. With the nationalization of the gold savings of the American people in 1933, the determination of the prime interest rate was no longer market based.

The NBA of 1935 transferred the fixing of the prime interest rate to the "Federal Open Market Committee" (FOMC), a body of twelve individuals belonging to the Board of Governors of the post-1935 Federal Reserve System.

The main stream media, as well as the education establishment is prompted by the "monetary elite" to down play and utterly obscure the difference between redeemable currency under the gold standard and irredeemable currency created against sovereign debt, lest the general public should catch on that it requires work to lend ownership rights to money or any other good or commodity."

[Danny B]

The downside of automation and socialism

Productive workers are the only ones who create wealth. More and more of productive work is done by automatic machinery. 102 million Americans of working age are not in the labor force. Workers pay gross tax on their labor. Machines pay no tax. Owners of those machines pay tax just on profits. The ratio between retirees and workers just goes higher and higher.
We "carbon units" have to compete with machines who pay no tax and need no salary.
We lose our jobs to competitors who are plugged in to the wall. Our cumulative consumption power is falling. The whole purpose of automation is to bring price deflation. It ALSO brings wage deflation. It destroys numerous job niches.
The PTB have determined that socialism is the answer. Socialism kills all motivation. Socialism rots the brain. The little voice inside your head tells you that you are NOTHING. We derive our self-worth and status from our employment. The ghettos and indian reservations have a huge drug and alcohol problem from people trying to silence that little voice in their heads.

Substance abuse is just a feeble attempt at suicide by people who have no center in their lives,,, no self worth. They will try anything.
Smoking Scorpions in South Asia - A Dangerous Addiction | Oddity Central - Collecting Oddities
https://www.youtube.com/watch?v=CqRbmG1edV0

[Danny B]

Socialism for the masses,, facism for the banks

Georg Wilhelm Friedrich Hegel believed that GOV should own the whole economy. Communitarianism is a 20th Century political doctrine which emphasizes the interest of communities and societies over those of the individual. Carried to it's ultimate point, GOV owns everything and the individual has no say. This looks and smells a lot like communism. A focus strictly on society is a focus strictly on needs and consumption. Productivity is pushed off to the side with "from each, as to his abilities. Human nature doesn't work that way. We produce for our direct genetic lineage,,, our clan.

GOV is hard at work trying to implement Hegel's bone-headed ideas.
"The BoJ Owns 52% Of The Entire Japanese ETF Market "
"Owning Half of Japan's ETF Market Might Not Be Enough for Kuroda"
"Federal government controlled 99.3 percent of mortgage market in 2012" "Federal Government Owns Or Guarantees 69% Of All Mortgages"

Consumption has crashed and MANY companies are close to bankruptcy. Many companies are issuing bonds just to pay off old debt that has come due. The ECB has just announced that it will buy up EVERYTHING. The bonds must be rated at least BBB- Maturities are from 6 months to 30 years. They can easily buy up the distressed debt from the frackers. 4/23 It’s a “full-scale cash crisis” in oil – Talk Markets

They are allowed to buy up to 70% of any issuance.
The SPV Loophole: Draghi Just Unleashed "QE For The Entire World"... And May Have Bailed Out US Shale | Zero Hedge

4/23 Kuroda rejects idea of helicopter money, citing legal hurdles – Bloomberg Kuroda can dish out $ trillions to banks but, not one penny to the people because of "legal hurdles".

The FED bought up all the distressed debt when housing crashed. This debt is starting to go bad; U.S. Government Is Now a Major Counterparty to Wall Street Derivatives
The FED has massacred EVERYTHING with ZIRP. They did it to save the banks. It ended up being bad for the banks in the long run. Now, they are trying to stop the damage of ZIRP without killing the banks. The Fed’s Policy Nightmare: How to Raise Rates Without Killing the Big Banks

[Danny B]

The CBs take turns on printing binges

The BOJ printed up $ trillions to buy up everything in sight. Draghi just announced that the ECB would buy up every piece of garbage that came on the market. China doesn't want to be left out.
" For one, total Chinese bank assets have inflated from about $7.0 TN to over $30 TN. Annual growth in Chinese system Credit growth (“total social financing”) expanded from about $900 billion in 2007 to 2015’s $2.35 TN"
" Building on it’s historic $1.0 TN Q1 output, China could surpass $3.0 TN of 2016 system Credit growth. For perspective, Chinese Credit growth will likely expand at least 50% more than U.S. Credit this year. Such unprecedented Credit growth in the face of a stock market collapse, sinking corporate profits and rapidly intensifying Credit deterioration is simply astounding."

"The bursting Chinese stock market Bubble spurred “whatever it takes” measures out of Beijing that must leave Draghi, Kuroda and Yellen with deep senses of envy. "
China is riding a tiger. If the tiger slows down, it will eat them.
Credit Bubble Bulletin: Weekly Commentary: More on China

The CBs can print all the money their keyboards can generate. BUT, there are other factors. The CBs can do next to nothing about employment. The fallout hits corporate earnings. Free-money to the rich has little effect on employment. When the consumer is broke and unemployed, the stress works it's way up to the upper loop of the economy.
Here is a graph of stress in 2007; http://www.financialsense.com/sites/...s-2007-top.png
The stress in 2016; http://www.financialsense.com/sites/...s-spx-2016.png

The CBs have injected about $ 200 trillion into the upper loop of the economy since 2007. They created enormous price inflation in the upper loop hoping that it would translate into a wage-price spiral that would wipe out the burden of the excessive debt. They got a price spiral in commodities that died out because of a lack of the price spiral in wages. The combination of cheap transportation with our business competitors and rapidly developing automation insured that we would have no wage inflation.

Prices fell down to earth. Wages never achieved lift-off. The debt overhang is still there with the full amount of pain because the spiral failed to materialize.

Chinese Credit growth will likely expand at least 50% more than U.S. Credit this year For years, China has bought up gold, ore concentrates and mines. They just opened the Shanghai gold fix. Apparently, they are pining their hopes on a huge rise in the price of gold after they have cornered most of the market. It looks like they are counting on a huge increase in the P.O.G. to save their financial "skin".
In the paper-gold markets, only about 4% of contracts take delivery. If the Chinese decide that the financial cliff is very near, they can just take a big position in the gold market and demand delivery. There is about 4500 tons of gold traded on paper every day. The gold isn't so much bought and sold. It is used as a value-reference for other trades. The Chinese could crash the gold market and erase the reference of value.
Some of the gold markets are leveraged past 200-1. There is no doubt that the P.O.G. will go way up when 199 people find out that they have no gold. AFTER, China gets as much gold as it can and BEFORE it's financial sector crashes, it may just crash the paper gold market to reprice gold and re-liquify it's banks.

[Danny B]

Morality and commerce.

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."

Gary North, " While representatives in the West acknowledge the importance of religion as social cement that keeps citizens obedient, they do not acknowledge the authority of God's law. There is no agreed-upon moral framework because there is no agreed-upon theological framework. There is no acknowledged god who issues his law by fiat."

"Wilhelm Röpke was not the most technically competent free market economist of our time, but he was the most accurate one. He was the one economist in the free market tradition who has forthrightly acknowledged that social theory is broader than economic theory. Economics is a subset of social theory, not the other way around. Röpke spent a great deal of time thinking about the moral foundations of the modem social order.

Adam Smith's Wealth of Nations (1776) began with a description of the output of a skilled pin maker, a traditional craftsman. Such a man could produce a dozen pins a day. But with machinery, a group of men could turn out thousands of pins. The difference is the division of labor.

The division of labor has made the West the wealthiest society in man's history. But to achieve this wealth, Röpke warned, we have surrendered our lives to the good judgement of others"
"He began his analysis with society. "We saw that an intensive economic intercourse, which involves a wide scale of division of labour and a high degree of mutual dependence of individuals, is possible only under a number of conditions, which all fall under the head of 'socio-political' integration. It is this latter which, in the last resort, sets the limits to the extent and degree of economic integration. There must be a framework of institutions and of a strong legal order, and behind them, there must be a generally observed and undisputed code of moral norms and principles of behaviour." This is not a technical issue; it is a moral issue. The division of labor did not increase in the West apart from the West's social and moral order."

"It is the moral and legal order that protects us. "In this way, it is possible to have a society in which all its members may feel sheltered in an atmosphere of mutual confidence, security and continuity."
" You can't trust the recipient. We are back to Röpke's warning about moral order and the division of labor. You can buy across borders or even across the state only because the recipient trusts your bank's promise to pay money. What if your bank is empty?

If this takes place, if you can't buy an item on a face-to-face basis, you can't buy at all. Neither can anyone else. The house of cards collapses. The base of this house of cards is the moral and legal order. "
When Money Fails

Brazil, among many other countries , is famous for corruption. As Olympics Looms, Governor Warns Rio Is "Close To Social Collapse" | Zero Hedge
So, as the moral order fails, the economy fails. Those best prepared to survive are those who are NOT dependent on division of labor.

[Danny B]

NWO, morality, confidence and gold

"Today it is another famous skeptic, SocGen's Albert Edwards who has had enough and says he feels "utterly depressed" because he has not "one scintilla of doubt that these central bankers will destroy the enfeebled world economy with their clumsy interventions and that political chaos will be the ugly result. The only people who will benefit are not investors, but anarchists who will embrace with delight the resulting chaos these policies will bring!"
Albert Edwards Finally Blows Up: "I'm Not Really Sure How Much More Of This I Can Take" | Zero Hedge
We said in 2010 when the Fed launched QE2 that the ultimate outcome would be civil (or more than civil) war"

Commodities crashed not too long ago because consumption has crashed. Money is getting desperate and pouring into,,,, commodities. Meanwhile In China, More Bubble Insanity | Zero Hedge

European banks did irresponsible lending to Greece. This is just stupidity considering the Greek history of default. Sovereign GOV relieved the banks of their failing Greek loans and then put Greece up against the wall for repayment,,, something that the private banks couldn't do. The money just isn't there in Greece and the bankers are destroying the economy.
https://goldswitzerland.com/how-long...-system-fails/

"So most central banks and sovereign governments are virtually bankrupt but so are commercial banks. Their share prices are definitively telling us that. Most major banks’ shares are down between 75% and 90% since 2007. Deutsche is down 87% and Citi 92% whilst Credit Suisse and Barclays are “only” down 78%! The massive falls in all major banks’ share prices are clearly telling us that these banks are unlikely to survive.

If we look at global company profits, they are down 20% in mature markets and 25% in emerging markets since 2014
https://goldswitzerland.com/how-long...-system-fails/

The Western ideal of a new world order has THEM in charge of the world with world socialism, ONE currency ( the SDR ) and total economic control. The Eastern ideal of a new world order is a multi-polar GOV with gold as the store-of-value. They ALL know that the transactional currency can NOT be the same as the store-of-value. The West must get rid of competitors.
"For a century, elites have worked to eliminate monetary gold, both physically and ideologically." "Despite formal convertibility of sterling to gold, the Bank of England successfully discouraged actual conversion.

Gold sovereigns were withdrawn from circulation and turned into 400-ounce bars. This form of bullion limited gold ownership to the wealthy"
China bought up all those 400 oz. bars and melted them into 1 kilo bars to ensure circulation in the general economy.
"In 1971, US President Richard Nixon ended convertibility of US dollars into gold by trading partners of the US. Closing the gold window was said by Nixon to be temporary. Forty-five years later the window is still closed.

In 1973, the G7 nations, and the IMF demonetised gold. IMF members were no longer required to hold gold reserves. Gold was now just another commodity. The view of the monetary elites was that gold was dead.

Yet, like Banquo’s ghost, gold insists on its seat at the monetary table. "
"After decades as net sellers of gold, central banks became net buyers in 2010. A scramble for gold has begun. "
"While elites disparage gold at every opportunity, they are buying it, hoarding it, and preparing for the day when one’s gold determines one’s seat at the table of systemic reform."
"A Scramble For Gold Has Begun" | Zero Hedge
There are 20,000 TONS of gold circulating in India.
When morality is gone and confidence fails, gold survives.