Economic pressures

[Danny B]

GOV default and preserving the power of the "elites"

The FED bought $ trillions of GOV debt and the economy is too weak for the treasury to ever pay it back. The same story is happening in Japan.
"Last week, Bloomberg reported in depth on Japan’s miraculous diminishing debt load. Turns out, despite a steady rise in government borrowing, the burden of repayment is diminished because the buyer of 90 per cent of that debt is the Bank of Japan.

This has serious implications for Canadian investors, yet the full significance has not yet been thoroughly unpacked by media. My bet is most analysts and economists are aghast at this admission by a G7 government that debt could just be summarily forgiven. It suggests the notion of liability in credit does not apply to government, or its associated (yet private, to varying degree) central banks. "
"But it’s really quite simple.

The single most important rule upon which our global debt-driven economic growth equation is dependent is that debt is repaid. If it isn’t, assets are confiscated. Just like if you don’t keep up with the mortgage payments on your house, you lose it. But what happens when the biggest creditor is also the debtor? The entire debtor/creditor relationship is rendered nonsensical."
Bank of Japan?s sovereign debt endgame is the naked emperor | Financial Post
The primary bond dealers in Japan are stuck with a ton of negative-yield bonds and, they want out. "It's A Seismic Shift" - Japan's Biggest Bank To Quit As JGB Primary Dealer | Zero Hedge

So, what does the future hold for GOV debt?
https://mises.org/blog/course-us-gov...fault-its-debt

Marc Faber Says All Governments Will Eventually Default! | Benzinga

FDR defaulted when he revalued gold. Nixon was inclined to revalue gold but, instead, closed the gold window. Summer of '71, gold was leaving the treasury at the rate of 100 tons a week. When there was 8,045 tons left, the British ambassador informed the treasury that Great Britain was going to stop by and take 1/3 of it. 4 days later, Nixon closed the gold window. Another debt default.

Pox Americana managed to slide by for a few more decades by having the dollar linked to crude oil. That is now falling apart and currencies are in limbo.
Western sovereign debt is going up in flames. China and Brazil are trying to compete in who can have the largest bonfire.

Interest-income is the only thing that keeps the debt bubble inflated. BUT, the prime rate appears to be locked to the population of 15---64 year olds. Anywhere that the population of main consumers is falling, the interest rate is stuck in the basement. There is an enormous "bubble" of hot money circling the globe like Voldemort's ghost looking for something to give it a tangible body. It alternatively touches down into commodities or bonds or high-yield debt or equities or RE or some other investment that depends on a consumer to make payments.
Eventually, it will face the prospect of total evaporation. There is a fair possibility that it will move into gold to avoid turning to smoke. It will touch down into whatever the rich universally value.

There are the rich and powerful who just want to get richer. There are the rich and powerful who want to control everything and everybody.

"We’ve replaced growth with debt, because that is the only way to keep the -illusion of- the politico-economic system going, and thereby the only way for the incumbent powers to cling on to that power.

And that is where the danger lies. It’s not just that the vast majority of westerners will become much poorer than they are now, they will be forced to face powers-that-be that face the threat of seeing their powers -both political and economic- slip sliding away and themselves heading towards some sort of Marie-Antoinette model.

The elites-that-be are not going to take that lying down. They will cling to their statuses for -literally- dear life. That right there is the biggest threat we all face (including them). It would be wise to recognize all these things for what they really are, not for what all these people try to make you believe they are. Dead seriously: playtime is over. The elites-that-be are ready and willing to ritually sacrifice you and your children. Because it’s the only way they can cling on to their positions. And their own very lives."
The Only Thing That Grows Is Debt - The Automatic Earth

[Danny B]

Collectivism

Hundreds of years ago, the immigrants that Came to America came here to WORK and create a new life. Since America was not a monarchy, there was more respect for private property. This induced almost everybody to work as hard as possible and get as rich as possible. This country was founded as a democratic republic. The founding fathers knew that a democracy lasts 150 years on average until it is bankrupted by too many demands for free stuff.
"A republic,,, if you can keep it." Well, the 17th amendment and many other actions have brought us a democracy. We face bankruptcy,,, as expected.
The demands of the free-$hit army always overload the productivity of the rest. This is described as an aberration but, it is just human nature for a large number of people.

Psychiatrist: Leftists are mentally ill

'Strikingly irrational beliefs and emotions' cited by clinical psychotherapist
Veteran psychiatrist makes the case that the mental-emotional world of leftists is actually tantamount to a mental disorder.

For more than 40 years, Lyle Rossiter Jr. MD, has diagnosed and treated over 1,500 patients as a board-certified clinical psychiatrist and examined more than 2,700 civil and criminal cases, both state and federal, as a forensic psychiatrist retained by numerous public offices, courts and private attorneys. He received his medical and psychiatric training at the University of Chicago.
"Based on strikingly irrational beliefs and emotions, modern liberals relentlessly undermine the most important principles on which our freedoms were founded," says Rossiter. "Like spoiled, angry children, they rebel against the normal responsibilities of adulthood and demand that a parental government meet their needs from cradle to grave."

"A social scientist who understands human nature will not dismiss the vital roles of free choice, voluntary cooperation and moral integrity - as liberals do,"
"A political leader who understands human nature will not ignore individual differences in talent, drive, personal appeal and work ethic, and then try to impose economic and social equality on the population - as liberals do."

"A legislator who understands human nature will not create an environment of rules which over-regulates and overtaxes the nation's citizens, corrupts their character and reduces them to wards of the state - as liberals do."

Rossiter says the liberal agenda preys on weakness and feelings of inferiority in the population by:

creating and reinforcing perceptions of victimization;
satisfying infantile claims to entitlement, indulgence and compensation;
augmenting primitive feelings of envy;
rejecting the sovereignty of the individual, subordinating him to the will of the government
"The roots of liberalism - and its associated madness - can be clearly identified by understanding how children develop from infancy to adulthood and how distorted development produces the irrational beliefs of the liberal mind," he says.

"When the modern liberal mind whines about imaginary victims, rages against imaginary villains, and seeks above all else to run the lives of persons competent to run their own lives, the neurosis of the liberal mind becomes painfully obvious."

The outcome of the French Revolution was decidedly socialist. The French GOV spends 57% of the GDP. American GOV spends 24% of GDP but, faces unfunded liabilities of $ 100---215 trillion. The Argentines, like the Greeks
just love to get GOV support. “Most Argentines receive entitlements, but as Cristina ruins the economy further, the entitlements get smaller and smaller. So, they’re angry "
Predicting the Efficacy of a Coming Revolution | Zero Hedge
The attacks on Trump supporters say a lot about just who is in the free-$hit army. There is no limit to how much the army wants and expects; Commissioner says fraud from Obamaphone program approaching $500 million | Washington Examiner
Like Argentina, the economy continues to shrink, 7. News that U.S. retail store closings are up a whopping 33% from a year ago – and adding insult to injury, a Washington D.C. survey concluded that half of all employers in the area have reduced employee hours in response to minimum wage increases" - See more at: THE MOST INSANE, DESTRUCTIVE CENTRAL BANK SCHEME TO DATE – STARTED YESTERDAY - The Daily Coin | If you've got gold, you've got money


Collectivism seems like a good idea but, human nature always causes it to crash and burn. At the same time, unemployment money and welfare rot the brain. How does one separate those who are motivated and want to work from those who have NO interest in ever being productive. The free-market for labor seems to be the only place that this is effected.

Mother Nature supports those creature who are best adapted to their environment. Socialism saddles the best to uplift the lesser and the worst. Socialism does not respect private property. Socialism negates competition.

Churchill, “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.” Capitalism is not the perfect system BUT, human nature is NOT the best operating system.

[Danny B]

Mega defaults all around, the hints are flying

The basics;
"1. Interest rates went to zero because economic growth went to zero."
"wages in the US, which was once the world’s largest economy, have been stagnant for generations. In response, the Federal Reserve has been continuously reducing interest rates, until they hit zero in 2008"
"2. Once you are faced with a continuously shrinking economy, just holding interest rates at zero is not sufficient to forestall financial collapse. The interest rates must go negative."
"energy companies in the US are a few months away from having to spend their entire revenue on interest payments. The solution, of course, is to allow them to roll over their debt at zero percent, and if you want them to ever start drilling again (their production has been falling by around 10% annualized) then please make that interest rate negative.

3. Are you starting to see how this works? Whereas before you had to be careful about taking on debt, and had to have a plan for how you will repay it, with negative interest rates that is simply not a consideration. If your debt pays you, then more debt is always better than less debt. It no longer matters that the economy continuously shrinks because now you can get paid just for twiddling your thumbs!"
ClubOrlov: The Money Cult Very strange idea / plan "They keep the credit bubble going a little longer by paying people to borrow money.

It's very simple, our economy has run out of growth momentum, oftwominds-Charles Hugh Smith: Pity Poor China: There's No Easy Fix to the S-Curve The economy was stalling out and everything was financialized to provide more juice. How much juice???
It Took $10 In New Debt To Create $1 Of Growth In The First Quarter | Zero Hedge

"They" seem to be stimulating the borrowers by giving the free+ money. BUT, they are killing every lender / investor who depends on interest-income. It remains to be seen just how long this can go on. Bill Gross: $10 trillion negative yield 'supernova' will 'explode'

GOV is pumping $ trillions into the markets to try to retain confidence but, there is the Tobin Q to consider, Despite "The Biggest F##king Bailout Ever" This Analyst Says S&P Will Drop 80% | Zero Hedge

"After recent (and in some cases very dramatic) bearish conversions by the likes of JPM, BofA, Citi and UBS, the only bank that steadfastly held a bullish view on stocks during the recent market squeeze higher was Goldman Sachs.

Not any more.

On Thursday, Goldman strategist David Kostin appeared on CNBC, where he too join the bearish crowd and said that based on the threat of margin collapse" ,,,, http://www.zerohedge.com/news/2016-0...ge-drop-market

" global bank lending to China crashed by one full quarter. . In total, cross-border banking liquidity decreased by $651 billion to $26.4 trillion." http://www.theepochtimes.com/n3/2086...ancial-system/
About that $ 26.4 trillion,,, there is a problem.
"Washington may be forced to renege on its huge debt to Beijing under catastrophic circumstances, says the former head of the Bank of England Mervyn King. He suggests governments could mitigate risk by diversifying their assets. " “Of course the US would not want to renege on its debts, but if some awful conflagration occurred, then all China’s assets in the US might be annulled,”
https://www.rt.com/business/345982-c...t-mervyn-king/
It sounds like the plan is already on the menu.
First, the former head of the BIS talked about the necessity of a debt jubilee and now Mervyn King is talking about a debt cancellation with China. the jubilee would shaft the central banks. There is going to be a whole lot of shafting going on.
" on April 28, the bull market in U.S. stocks became the second-longest of all time." Yep, slash interest rates and stocks will go up. http://www.valuewalk.com/2016/06/int...st-level-ever/

With ZIRP & NIRP, the FED manages to squeeze out another drop of productivity out of one sector of the producing economy. At the same tiome, it completely wipes out the credit structure and interest income.

[Danny B]

The anatomy of the great reset

Will the banks crash first? Will GOV crash first? What will the crash look/unfold like? Can the banks keep their doors open even if they are insolvent and/or illiquid? The banks aren't doing too well. Tyler Durden Blog | European Banks Are Crashing | Talkmarkets

How do you preserve your savings when EVERYONE is trying to steal them? A paper, unbacked fiat currency is just a "packet" of information that tells others that you have been productive. When GOV over-prints a currency to tell others that GOV has been productive, it destroys confidence. People try to flee to a currency that hasn't been over-printed. How Would You Survive Hyperinflation in Venezuela? | Ready Nutrition
Just 2 years can make a big difference; Venezuela: A Prepper's Nightmare Come to Life | Ready Nutrition

Paper currency is an important medium of exchange and people will hold on to whatever currency commands the most confidence. Former FED chairman Fischer was asked; "Fisher’s most telling comment came during the Q&A session when he was asked how his personal portfolio was positioned. Fisher’s response: “In the fetal position.”
"Moreover, he also said that “all my very rich friends are hoarding cash.”

Not some, not many. All."
"For the sake of Fisher's friends we hope the cash they are hoarding is physical, and not of the electronic variety. After all, as Greece has shown vividly, it would only take the flick of a switch for the government to lock up, or Corzine, some or all of the $10+ trillion in bank deposits. And ultimately, since helicopter money is coming, even that physical cash will soon be worthless courtesy of near-infinite dilute"
Former Fed President: "All My Very Rich Friends Are Hoarding Cash" | Zero Hedge

[Danny B]

Public employees don't want to be affected by the economic downturn

Arkansas spends $ 36,475 to maintain one mile of two-lane highway for one year. New Jersey spends $ 1,102,343 to maintain one mile of two-lane high way for one year. The bloated public jobs system demands a bloated pension system. That more-or-less works while the economy is expanding. The economy is shrinking. Largest NJ Public Employee Pensions Bankrupt, Moody's Report Says | People's Pundit Daily

Previously, many State and local GOV entities made a lot of money by confiscating the property of anybody convicted in the drug business. They have fought long and hard to prevent the legalization of pot. It is expensive to get a drug conviction so, they have streamlined the process;
"Now, the Oklahoma Highway Patrol has a device that also allows them to seize money on prepaid cards.
It's called an ERAD, or Electronic Recovery and Access to Data machine"
"Here's how it works. If a trooper suspects a person may have money tied to some type of crime, the highway patrol can scan and seize money from prepaid cards. OHP stresses troopers do not do this during all traffic stops, only situations where they believe there is probable cause. "

""If you can prove can prove that you have a legitimate reason to have that money it will be given back to you. And we've done that in the past," Vincent said about any money seized.

State Sen. Kyle Loveless, R-Oklahoma City, said that removes due process and the belief that a suspect is presumed innocent until proven guilty. He said we've already seen cases in Oklahoma where police are abusing the system. " NO, they wouldn't do that.
You may be innocent but, your cash is guilty.

"Let’s say a state trooper suspects or just thinks you may have money tied to any sort of crime. He can now scan any cards you have and seize the money in your wallet. He does not have to charge you with a crime. There is no right to remain silent, for he is not charging you. He is after all your money because the governments is broke."
"They pretend the money committed the crime – not you." "Oklahoma police can outright seize everything you have from debit cards to bank accounts on a traffic stop without any criminal charges being filed."
https://www.armstrongeconomics.com/i...harges-at-all/

"Anything of value that is stored in a safe-deposit box is now considered money laundering. Governments want their taxes and all the laws are changing to ensure they get their money." https://www.armstrongeconomics.com/w...ing-for-money/

"Almost a year after California lawmakers rejected legislation that would restrict police departments’ ability to take cars, cash, homes and other property from suspected criminals without a conviction" Of course they rejected it.
"Before that vote, nearly every district attorney in the state signed a letter against the measure. Numerous police chiefs and sheriffs did the same." Yep, no matter how much the economy shrinks, they want the gravy train to continue. Will California stop police from taking people's property without a criminal conviction? - LA Times

"Right before we were directed into this mob this group of Trump supporters was thanking the police for being there. This is a generally pro-law enforcement crowd. It’s not a knock on police in general but in this specific instance it’s shocking to see 250 of them lined up and not lifting a finger to help hundreds of victims. " "The lawyer said San Jose police FORCED the Trump supporters to walk THROUGH the gauntlet of violent anti-Trump thugs."
San Jose Victim’s Lawyer; Police Forced Trump Supporters to Walk THROUGH MIDDLE OF MOB (VIDEO)

Evidently, public employees don't want to see Trump elected.
This isn't just a local problem. The G-20; "blaming the private sector for not paying enough taxes for them to squander. They issued their Financial Action Task Force on Money Laundering (FATF), which is really the directive to hunt down money globally for taxes."
"Additionally, they employ negative interest rates without realizing that they are wiping out pensions, life insurance companies, and accelerating unfunded pensions in government. Their solution? More taxes. They actually laid it out in the Finance Minister & Central Banker"
https://www.armstrongeconomics.com/w...their-failure/
The simple fact is; every additional $1 dollar in taxes results in a $3 shrinkage of the economy. GOV is the new "highwayman". https://www.washingtonpost.com/news/...did-last-year/

They take it by any means possible, legal or not.

[Danny B]

Unfolding Brexit sham,,,, equities peak

The next big thing on the horizon is Brexit. "Leave" is far ahead in the polls but, Scottish independence votes showed us that Stalin was right when he said, "it doesn't matter how you vote, it only matters who counts the votes." The Scots got the shaft, How Scottish Independence Was Stolen - Educate Inspire Change

Part of the reason for WW II was that German productivity buried the English,,, they lost market share. The current Eurozone arrangement is very beneficial to Germany and they don't want it to end. They weren't worried about Greece leaving the EU but, they want Britain to stay; Germany Panics Over Brexit - Largest Newspaper Begs Brits "Please Don't Go" | Zero Hedge

George Soros is spending a great deal of money to increase the flow of refugees into Europe. At the same time, he is betting that, that same flow will destroy the Eurozone. Soros Bets Against Europe While Funding The Mass Migration He Admits Will 'Collapse' The EU
"The reports come in the wake of an exposé of Soros-funded efforts to keep refugees flowing into the U.S."
" Mr. Soros is also helping underwrite “jailbreak” efforts to release as many convicted felons from prison as possible in America, at the same time he pushes to open U.S. borders even wider to criminal illegal aliens and a poorly screened potential security threats.

So. Having now driven a rash of race-baiting riots, illegal immigration, anti-cop carping and Willie Horton-style prison policies and the inevitable crime wave that follows, and the potential for open-borders terrorism, "
" In particular, he says that the Brexit would spell the end of the EU."
Soros is a very busy guy.
I'm sure that we will hear a lot more about Brexit in the coming week.
Soros Buying Gold On BREXIT, EU ?Collapse? Risk | Zero Hedge

Equities; "The excellent folks at Advisor Perspectives highlight the Fed’s Labour Market Conditions Index as suggesting a recession is imminent (the cumulative peak is an average of 9 months ahead of the start of recession and we are now four months beyond a peak. "
'CONDITION RED ALERT' recession is imminent - Business Insider
We’re Rich! We’re Rich! Are Inflated Asset Prices Like Real Wealth? (SA)
• ECB Corporate Bond-Buying Program Makes Up Almost 1 In 5 Trades (CNBC)
• The Pension Bubble: How The Defaults Will Occur (PD)
So, there are a lot of people who are temporarily rich.

6/12 The Fed must attack low inflation – Bloomberg Maybe they should attack low wages.

[Ruphus]

Inflation and deflation

In a positive interest rate environment the currency naturally must become inflated. In a negative interest rate environment currency must naturally become deflated. The rest of the world is deflating their currency to prevent hyperinflation from money printing. The US is not, but why?

All foreign money is abandoning their government bonds for US bonds. This strengthens the dollar vs other currency and allows the US to keep positive rates and print money I'm guessing.

[Danny B]

Running the presses to pay the investors and bureaucrats who don't actually produce a

Many years ago, John Doe built a widget. He figured his costs and added a bit of profit and sold it. Much later, some corporate lawyer came up with the idea of "performance pricing". The demanded price would be as high as possible with no relation to actual cost. Under a gold standard, the money supply rises about 3% a year. This wasn't enough to pay for the highly inflated prices demanded by the corporatocracy. The gold standard was tossed and the printing presses went into hyperdrive.

This allowed for enormous growth in the class of people who called themselves "investors". The money bubble flowed from the FED to the treasury to the primary dealers to the bond market to the investors to the borrowers. Since the borrowers had access to more funds, the sellers just kept raising the prices. Because of the reserve currency status of the U.S. dollar, prices rose more in America than most other places. The price for housing in America is legendary. The same is true for education. The schools just demanded more and more money from their victims. This allowed them to pay huge salaries to legions of bureaucrats. The teachers don't get the money. The GOV made money available for education so, the price went sky-high. These Debt Slaves are the Government’s Largest Asset Class, and it will Haunt the Economy for Years | Wolf Street

All this bubble money went into everything except wages. Credit terms were stretched out over and over to compensate for falling purchasing power.

This "investor class" has made a LOT of money but, most of it is expressed / denominated as debt that requires future collection,,,, from unemployed people. The bubble shifted from one class to another. German 10 year bunds are at negative interest rates because nobody trusts the ECB. Investors would prefer to be in tangibles but, they already blew that niche all to hell.
6/15 Worst commodity returns in 80 years – MarketWatch
6/15 Smart money dumps most stocks since April – Talk Markets

The FED has to buy new U.S. Treasury bond issuance because nobody has confidence in U.S. GOV.
The bubble flowed into China but, has since flowed out because of a lack of confidence. Chinese Private Investment Is Crashing
6/14 The global economy almost collapsed twice in last 18 years – Schiff Gold Maybe the third time is the charm

Volume is WAY down on the stock market so, it is easy to manipulate. The numbers go up but, nobody believes it. The VIX is the "fear index" and it is rising. Tyler Durden Blog | VIX Soars Most In 10 Months As Stocks Dump, Gold Jumps | Talkmarkets

[Danny B]

Vote Brexit,,, break the super-state

The French GOV spends 57% of the GDP. This tends to hold wages higher. The French are rioting in the streets at the prospect of GOV money being reduced. Violence sparks in Paris protests as 1000's protest against labour reforms  | Daily Mail Online
They don't want labor reforms where it would be easier to fire people.

Socialism is un-earned gains for the poor. Fascism is un-earned gains for the rich. The Eurozone is a pure fascist overlay on European States to drive down wages and costs. There is to be NO DEMOCRACY in the Eurozone. It was shoved down everybody's throat.
Pritchard lays it ALL out. It's pure fascism led by people like Tusk; Brexit vote is about the supremacy of Parliament and nothing else: Why I am voting to leave the EU
The fear mongers are hard at work.
• Donald Tusk: Brexit Could Destroy Western Political Civilisation (BBC)
• Dutch PM Says He’s ‘Totally Against Referendums’ (EuA)

This problem may seem remote and unimportant to Americans. Our masters and overseers are hard at work to end ALL representation. Hard at work to compress all of the world into one super-state.
The U.S.S.R. was a super-state,,, until it failed. Now, they are trying to force a super-state on the Europeans. BREXIT needs a HUGE majority to (hopefully) prevent vote fraud. The overlay of the European Union on top of the existing governance reduced European GDP by 20 %. That 20% went to pay salaries for more bureaucrats. Heaven forbid that they should be replaced by computers.

[Danny B]

Peak family,,, peak credit,,, peak growth

Without the "governor" of gold, the bankers and GOV were able to grossly inflate the money supply. Naturally, wages didn't keep up. Women had to enter the workplace to make ends meet for the family. Family size and cohesiveness suffered. Our new-found poverty reduced population growth and economic growth. Our souther border was thrown open to make up for lost population growth. BUT, this also depressed wages. Our low-wage competitors did the same. As our purchasing power fell, jobs were outsourced to lower the labor cost,,, and final prices. The prices went down but, so did our national purchasing power.
Labor's share of GDP just kept falling. The impoverished youth are unable to find employment and start families. The West has HIGHLY inflated prices and shrinking wages. The money supply rose at three times that the economy grew. It is currently at ten times. It takes $ 10 of new money to create $ 1 of growth.
Our entire system is built on a foundation of growth. 150,000 young people a month try to enter the workforce. BUT, 102 million of working age are not in the work force. 51% of Americans receive a check from GOV BUT;
6/15 Financial markets beg US, Europe, and Japan to run bigger deficits – Vox

The entire financial system has lived and grown for limitless money inflation. This has come to an end and there is no plan "B" to fall back on. GOV (the CBs) are buying all the stocks and bonds because nobody has any confidence in all the rigged markets. The CBs are running out of steam because money printing has it's limits.

Here is the central bank asset graph; http://www.oftwominds.com/photos2016...-sheet6-16.png
Charles Hugh Smith writes about "The Pathology of Power" oftwominds-Charles Hugh Smith: Pity the Poor Central Bankers: Playing Masters of the Universe Is No Longer Fun
The economy was floating on bloated financial markets. When wages and consumption went away, there was nothing but money printing to float them. That is why they are demanding that GOV spend lots more money.
The law of supply-and-demand applies to money and credit. They have run out of demand.
"The trouble is this. Once people have run out of savings and wage growth, and you have piled trillions in low to zero rate loans onto every person and corporation in the world willing to borrow–you run out of takers. "
Brexit Vote Is Only the Beginning | Danielle Park | FINANCIAL SENSE
"Economic reality hits at the end of the credit line. And the world is there today.

The bankers and product sellers cannot defy math forever. After 30 years of ‘add debt and stir’, we have come to the end of the credit road."

6/15 ‘No interest rate rise before 2020’, as limp inflation, Brexit clouds gather – Telegraph Imagine that. For the next 4 years ALL the funds will have to survive with no interest income.
We have reached "peak credit" and debt saturation.

[Danny B]

The Taylor Rule

We are currently suffering under the economic guidance of J.M. Keynes. BUT, he wasn't the only feces-for-brains economist. Say's Law is a good example;
"Say's law, or the law of markets, found in classical economics, states that aggregate production necessarily creates an equal quantity of aggregate demand." Funny, there is no mention of wages and purchasing power.

These various "laws" devised by deluded people in academia have little bearing on the real economy. The INVESTORS are the one that deal with reality and are more likely to devise accurate rules and interpretations.

John Taylor, "The Taylor rule debuted in 1993 and continues to grow in its appeal thanks to the simplicity with which it can be executed. Though Taylor engaged the mandatory calculus to build his model, the inputs are elegant in their straightforward real world ease of application. At the risk of being overly simplistic, the Fed should set interest rates based on targeted vs actual employment and inflation levels; an ideal interest rate is consistent with full employment which is theoretically in sync with potential economic output."
The Vanity Of Central Bankers And The Common Sense Rule | Zero Hedge

Observation shows that the prime interest rate is driven or hindered by the number of 15---64 year olds. The number of consumers directly affects market activity. Not a big surprise. It's not just the number though. They must have jobs. This seems pretty obvious also. Our monetary wizards in the Eccles building are entranced with all their models and can't be bothered with the real world.

"Let’s consider the two primary factors that impact the U.S. consumer: jobs and income."
" U.S. consumer debt is on pace to surpass $1 trillion this year — the first time we’ve reached that level since the financial crisis. This isn’t mortgages or auto loans and leases. This is revolving debt, such as credit cards.
Real, median household income in America, per the St. Louis Fed, is down more than 6% since just before the financial crisis.

And, so, we now come to the big head-scratcher: How can a consumer class buoyed by crummy jobs, tepid income growth and median household income that’s in retreat be approaching $1 trillion in revolving debt?

There can only be three possibilities. The American consumer is either:

1. Struggling and making ends meet on the good graces of MasterCard and American Express;
2. Back to living aspirationally by whipping out the plastic and borrowing from their home equity;
3. Both.
"When the consumer finally taps out — a day that’s not far away — then what?"
Collapse of the American Consumer

[wayne.ct]

Physics, Models and Reality

Probably 1 percent or less of the population understand the relatively abstract concepts around physics, chemistry, economics, money and there are many other such ideas. Do this one percent even understand ONE of these fields? Each of these fields has one or more models which they use constantly. Whether you believe me or not, for each one that understands there are probably two or three that think they understand but really do not understand. On top of that, there is the question of whether or not these people understand the faith and trust they put in their models. A few are able to take a step back and say they are able to see the divide between the model and the reality of how things really work. Does this or that individual person consider what they consider to be the true reality? Do they put more faith in the model or in reality itself? Do they consider the model and the reality to be one and the same? I assert they are not identical, they are not one, they are not the same. The notion that we somehow OUGHT to trust the model and ignore the reality is vacuous. It is not thoughtful and it is not reasonable. Reality is about to rise up and squash the error-compromised models. If you have eyes to see this you will readily see that too many people are willing to trust the models and encourage other people to trust the models when the models are not trustworthy.

[wayne.ct]

It's broken

The economic system of models is broken. The majority don't care or don't understand. They will all suffer. We will likely suffer, too.

[Danny B]

Faux economic gods

Wayne, very good information. Too many people are immersed in that river in Egypt,,,,deNile.
It is often said, "you can avoid reality but, you can't avoid the effects of ignoring reality."
I can walk into a room and cut loose with a big fart and clear the room. I can clear it even faster by talking about the economic situation. We crashed in 2008 from predictable circumstances. These circumstances were held at bay for a few years but, they never went away.
15 Facts About The Imploding U.S. Economy That The Mainstream Media Doesn?t Want You To See

There is no escaping the fact that the financial system is inextricably tied to consumption. The bankers tried to get lift-off from the world of consumers but, they never achieved escape velocity. They are about to do a SPECTACULAR re-entry. The $ 10 trillion (and growing) of NIRP bonds is expected to create a supernova I like the imagery.
Consumption and the consumer are the gods of the economy, NOT the financiers. The population of 15---64 year olds is the driver of everything. Their numbers are falling and we are entering The Demographic Ice Age.
There is NO escape. Hambone's stuff: Why This Time is Completely, Utterly, Totally Different...Like the Difference between a Hurricane and an Ice Age

The bureaucrats with their deep belief in everything that they absorbed while in academia are destroying the world by trying to bend economic reality. They want to create a sinecure for endless legions of bureaucrats;
si·ne·cure
ˈsīnəˌkyo͝or,ˈsi-/
noun
noun: sinecure; plural noun: sinecures

a position requiring little or no work but giving the holder status or financial benefit.
synonyms: easy job, cushy job, soft option;

The parasites of all stripes are running the show. The psychopaths have risen to positions of power. https://www.youtube.com/watch?v=abfVSddVbII

[Danny B]

The effect of Brexit

I want to continue to write about Brexit. It may be the straw that destroys all remaining confidence. The bureaucrats and kleptocrats created the European Union in such a manner that there was no going back,,, no plan "B". In 2009, they created a tentative "Plan B".
The British are getting a clear view of just how bad "remain" would be. They want out, https://mishtalk.com/2016/06/16/mass...rious-trouble/
There is NO doubt that Brexit would roil the markets enormously; What The First 100 Days After Brexit Would Look Like | Zero Hedge

6/17 “Creditism” and the death of capitalism, part I – Daily Reckoning
6/17 When are people going to wake up? – Schiff Gold
6/17 The confidence game – McAlvany ICA
6/17 China’s debt is 250% of GDP and ‘could be fatal’ – Guardian
6/16 China dumping more than Treasuries as U.S. stocks join fire sale – GATA
6/17 Foreign selling of U.S. Treasuries in April was most since 1978 – Reuters
6/17 Currency traders flee euro, pound as Brexit fear fuels haven bid – Bloomberg
6/17 Switzerland withdraws longstanding application to join EU – RT No Koolaide for the Swiss
What you are seeing is wild swings as capital tries to flee the burning building. Gold doesn't burn.

I post on the Drive on Wood forum. Collapse came up on passing. One writer in the midwest wrote, "it's CRAZY to think that GOV isn't going to come around and take care of things/us".

GOV has created this enormous "dependency class" that it can no longer afford or care for. "They" are dancing as fast as they can but, the music is soon to stop. Peter Schiff Warns: "The Whole Economy Has Imploded... Collapse Is Coming" | Zero Hedge

Agenda 21 would have all of us in the cities because that is the best control scenario. BUT, it is the worst survival scenario.