Economic pressures

[Danny B]

Socialism, command economy and finance

It is reported in many places that this crash is deliberate to bring world socialism. We will be so SCREWED (the survivors), that we will embrace whatever system "they" offer us. That will be world GOV, the SDR and full socialism. Since socialism is a consumption system and NOT a production system, the whole big show must be run a "command" system,,, a command economy. This has never worked before. It appears that "they" believe that with enough monitoring and enough police, they can dictate every facet of our lives. The U.S.S.R collapsed for well-understood reasons. That doesn't stop Western European leaders from trying to do a repeat.
The EU exists only to become a superstate. Britain has no place in it

Socialism always breaks the bank. We are on our way.
"Or, as Bespoke Investment Group put it in a note Monday, "Both reported demand and reported supply of C&I loans are suggesting that credit will stop flowing to business from banks in the near future, if history is any guide."
The US economy is grinding to a halt - Business Insider

5/04 Private sector adds 156,000 jobs in April vs. 195,000 expected – CNBC
"Three "Reality-Check" Charts For America As Initial Jobless Claims Spike Most In 16 Months" Tyler Durden Blog | Three "Reality-Check" Charts For America As Initial Jobless Claims Spike Most In 16 Months | Talkmarkets

5/05 Debt is becoming increasingly counter-productive – Financial Survival Network
" The Red Ponzi is generating barely $1 of GDP for every $6 of new debt."
Wiki; The United States Gold Reserve Act of January 30, 1934 required that all gold and gold ... President Roosevelt was challenged with decreasing unemployment, raising wages and increasing the money supply, but was restricted by United States' ... The Gold Reserve Act also revalued the price of gold to $35 per troy ounce." ( from $ 20).
The dollar had a mandated % of gold backing. By devaluing the dollar against gold, Roosevelt was able to greatly increase the money supply.
Without gold as a "governor", the "flywheel" of "money" creation spins up until the system blows. $ 6 of debt to get $1 dollar of GDP is a pretty good illustration
Mother Nature and Uncle Darwin operate only in the private sector. The private sector demands that you be "fit".
Marxism operates in the GOV sector. If the treasury bond market collapses as predicted, the Marxists will have to find a productive niche that is in demand in the private sector. Not being particularly inclined to do honest labor, the bureaucrats are proposing a wealth tax. The following step will be confiscation of retirement accounts. GOV has already proposed converting all retirement accounts into GOV bonds.
The M.O. of GOV is "follow the money",,,, and then steal it.

[Ruphus]

housing bubble v2.0

So I have a good source on whats going on in home mortgages.

The banks are now taking more risky loans, usually that would be FHA GOV assisted loans and packaging them as less risky. Pretty much what got them in trouble the first time.

There is something called PMI (primary Mortgage Insurance) on these risky loans. It is a few hundred dollars added to the monthly payment that comes off after you pay down the principal to a particular percentage of the loan that you didn't put a down payment on.

Regular conventional loans require 20% down while FHA only requires 3%. A standard 3% down FHA loan with PMI on it has a low "value" rating when these banks attempt to package them to hedge funds, and there is a requirement of x number or A, B, C loans in a package to sell to the funds.

This sets a certain amount of risk in every package, so in theory none can fail altogether because the A,B, and C loan amount of defaults balance out in the end.

What happened last time is the banks just rated most of the loans incorrectly as A's and B's even though they weren't. Then there were more defaults on the home loans than expected and the $hit hit the fan.

So anyway what they are doing now is telling people that they can get a conventional loan with only 3% down. Basically the bank gives the buyer a higher mortgage rate like 7% and the bank pays the PMI for them. The buyer doesn't care because the monthly payment is the same. The bank can then say the loan is Grade A with no PMI, regardless that the people are more likely to default. The banks are also one day approving folks that have been foreclosed on, one day after foreclosure. The paperwork hasn't hit yet that there was a foreclosure only that the debt has been forgiven.

This $hit is going down again.

I am not a professional so any incorrect information, please correct.

[Danny B]

Ruphus, excellent info.

[Danny B]

The smart money is leaving the markets

We're nearing the end of the debt SUPER cycle. The CBs are trying to extend but, the air is leaking out of the bubble. http://www.bestmindsinc.com/document...gic_May516.pdf

CITI says that this sucker is going DOWN; "Nothing Has Been Fixed" - Citi's Five Reasons Why This Sucker Is Going Down | Zero Hedge
"because if one is buying puts on expectations of the Fed losing control, we have bad news: the market will simply be shut down and all capital flows will be halted indefinitely before true price discovery is allowed. As such those hoping to be paid when all central bank control is lost will be disappointed. It is also why none other than JPM warned last Thursday that the best option is not to bet on financial assets, either long or short, but to move into physical assets among which, JPMorgan listed, gold"

The redemptions are really starting to pick up. Everybody wants to cash-out; In Latest Blow To Hedge Funds, Largest US Life Insurer Is Redeeming Most Of Its Investments | Zero Hedge

• Japan’s Coma Economy Is A Preview For The World (GS)
• Kyle Bass Sees 30% To 40% Losses On Chinese Investments (BBG)
• Even ‘Small Crisis’ Enough To Tear EU Apart, Moody’s Warns (Tel.)
• Study: Bailouts Went To Banks, Only 5% To Greeks (Hand.)

It appears possible / plausible that a State can just print new debt to roll over old debt. There is the one nagging issue of interest. "Roughly two-fifths of new debt is swallowed by interest on existing loans; in 2014, 16% of the 1,000 biggest Chinese firms owed more in interest than they earned before tax."
The coming debt bust | The Economist
5/06 China National Rail’s debt over $600 bn – Financial Express
5/05 China to economists: bullish reports only, or else – Talk Markets
5/05 Atlas crumbles under weight of Italian banks – Mish

An outbreak of socialism;
"It was the Great Society that turned the black ink red. Prior to 1965, the United States, while it had run up plenty of debts related to war or—in the 1930s—depression, never veered far from fiscal balance. Then came the Johnson administration with its guns and butter and Medicare and Medicaid. From a fiscal balance of $6.9 trillion in 1965, this country has arrived at the previously cited $120 trillion imbalance recorded in 2014."
Jim Grant Asks When The World Will Realize "That Central Bankers Have Lost Their Marbles" | Zero Hedge

LBJ departed from a responsible budget and Nixon had to close the gold window. As soon as gold convertibility was ended, the printing presses ran at warp 7. The floodgates of redistribution were opened. Money to both rich and poor. Then, we lost our jobs to low-wage competitors. As wealth creation went down, money printing went up. ZIRP was an attempt to avoid the interest burden. BUT, ZIRP is lethal to banks, investors and the public. More ZIRP and they die. Less ZIRP and all the weak corporations die.

[BroMikey]

This is how the system has always been set up to crash.
Buy now pay later. Later never comes, just death and
an unpaid balance.

Better buy a mud hut the way things are going in the last 40yrs.

I have NEVER bought anything on credit, NEVER. I paid
cash with no interest or I didn't buy it. A house a car or
anything you want or need can be purchased this way.

Credit will eat you alive.



http://money.
howstuffworks.com/personal-finance/debt-management
/revolving-credit.htm

"Congratulations! You've been preapproved for a National Bank
Platinum Card with a credit limit of $25,000 dollars!" You consider
what you could buy with $25,000. Or how you could use it
to pay off the balance on your three other credit cards.

[Danny B]

no discretionary spending = no stock market

The mega-capitalists figured that they could make a higher margin by outsourcing our labor to cheaper markets. They didn't think it through very far. They have crashed our wages way down. This resulted in the end of discretionary spending. They brought it on themselves. As we slide down towards a global-mean wage, they lose customers. GOV tried to prop up the stock markets after the consumer had left the scene.
GOV has some ability to prop up stock and bonds BUT, NO ability to prop up wages. Consequently, stock earnings are crashed.
With earnings gone, investors have started to exit the stock market; Tyler Durden Blog | Everyone Is Selling: Largest Outflow From Stock Funds Since September 2015 | Talkmarkets

Rail traffic is down 11% from a year ago AND the Los Angeles Times is reporting that homelessness in Los Angeles increased by 11 percent last year,
Rail Traffic Depression: 292 Union Pacific Engines Are Sitting In The Arizona Desert Doing Nothing « InvestmentWatch

The simple fact is; the economy crashes without well-paid consumers doing discretionary spending.
"Chinese consumers were being counted on by the Bilderbergers to pick up the shopping slack from a stagnant West"
Chinese consumers have no extra money to consume great gobs of stuff. https://hendersonlefthook.wordpress....ionary-spiral/
"But the huge Chinese real estate bubble has burst, leaving home-owners in the world’s most populous nation upside down and shopping malls empty. Even worse, Chinese authorities will try to devalue their way out of this debt morass, just as the US has been trying to do with a lower dollar.

This is very bad news for the global economy.

A devalued yuan means Asian and African nations who export to China will lose market share in China, while manufacturers around the globe will now have to compete with even cheaper Chinese exports.

It was a currency war that precipitated the last Great Depression, as countries scrambled to make their products cheaper. By then global demand had dried up, commodity markets were torn asunder and the big money had exited global stock markets."

Saudi Arabia; "The Binladin Group, the kingdom’s largest construction company, has terminated the employment of fifty thousand foreign workers. They have been issued exit visas, which they have refused to honor. These workers will not leave without being paid back wages"
"Eighty-six percent of Saudis say that they want the water and electricity subsidies to continue. They are not prepared to let these disappear. They see this as their right. Why, they say, should an energy rich country not provide almost free energy for its subjects?"
" Saudi Arabia lost $390 billion in anticipated oil profits last year" Why Saudi Arabia Is Suddenly in Serious Trouble | Alternet
The money has flowed to the top where it can't do any good. The middle class has lost their good jobs. From Venezuela to Saudi Arabia, GOV subsidies are disappearing. The natives grow more restless.

[wayne.ct]

Zimbabwe

Zimbabwe has announced they are ready to begin issuing their own currency (again) You probably know what they have been using for currency the last 8 years, right? The elites think they know what they are doing THIS time, but the average person is not so easily fooled. They still don't trust their corrupt, overbearing, murderous, etc. "government". Of course, this is all over MSNBC, NOT. I meant, of course, the average person IN ZIMBABWE. Laugh now. It will all make sense later.

[Danny B]

please pass me some zeros

It makes sense NOW, " Reserve Bank of Zimbabwe governor Gideon Gono has moved into a 112-roomed mansion in the leafy Borrowdale estate"
2008 Zimbabwe knocks 10 zeros off currency amid world's highest inflation
2009 Zimbabwe removes 12 zeros from currency
2009 Zimbabwe to print first $100 trillion note
2015 Zimbabwe knocked three zeros off
2016 As an extreme example, consider the devaluation of the Zimbabwe ... its currency by knocking off 13 of its 17 zeros
"So, what would a Z$100 billion note buy you? About two loaves of bread (it won't even get you lunch - you'd need at least Z$250 billion for lunch.

[Danny B]

Screw the middle class, see what it gets you

5/06 Class 8 truck orders plunge 39% – Mish
5/06 Freight rail traffic plunges – 24hGold
Wait, what about the recovery? 5/06 Global recovery ‘peaked’ in 2013 and has been declining ever since – 24hGold
5/06 US crude stockpiles seen rising further to record – Bloomberg We don't need oil if the trucks and trains are parked.
"No Wonder We're Poorer: Wages' Share of GDP Has Fallen for 46 Years " What a strange coincidence. It was 46 years ago that gold-convertibility was ended and money printing took off.
Of Two Minds - No Wonder We're Poorer: Wages' Share of GDP Has Fallen for 46 Years
Here's a great graph showing How we got poorer when the golden governor was taken off currency creation; http://www.24hgold.com/english/news-...on+Hamlin&mk=1
5/06 CLSA sees China bad-loan epidemic with $1 trillion losses – Bloomberg That whack will leave a mark.

Credit creation has a positive effect to a point. After a certain point, growing debt service negates the positive effects increasing the debt. The bankers never stop short of printing just a little more to get a bunch richer.

[Danny B]

Borrowing too much

5/07 Consumer borrowing in US increases at fastest pace since 2001 – Bloomberg Consumer bankruptcies should have a 6? month lag to accompany the borrowing.
5/07 Endo re-enacts Valeant’s cliff dive – Bloomberg There will be many more.
"Illinois, New Jersey, Massachusetts, Connecticut and New York ranked at the bottom in a Mercatus Center study of states’ fiscal conditions "
“According to the latest data available, in 2014 the territory (Puerto Rico) had only $27 billion of assets available to pay bills totaling $115 billion.” “While each taxpayer in New Jersey would have to come up with $52,300 to pay the state unfunded debt, each taxpayer in Puerto Rico would have to come up with $77,500,”
"SBS estimated in 2014 that states had a total of more than $5 trillion in outstanding debt, unfunded pension liabilities and other unfunded employee benefits, with unfunded pension liabilities amounting to nearly $4 trillion of that sum."
'Financial reality is not negotiable': Puerto Rico bankruptcy could send dangerous signal to states - Watchdog.org

"For people earning between $40,000 and $100,000 (i.e. not the very poorest), 44 percent said they could not come up with $400 in an emergency (either with cash or with a credit card whose bill they could pay off within a month). Even more astonishing, 27 percent of those making more than $100,000 also could not. This is not poverty. So what is it?"
The Circles of American Financial Hell - The Atlantic

"China alone injected 1 trillion dollars of credit into their economy over the last three months to save themselves from the inevitable) and when it does the economic, social and geopolitical clock will be reset quite violently. The advanced industrialized world is going down hard." You are being redirected...

Switzerland wants to give everybody money. Why does it seem that people will just stop working? http://sputniknews.com/europe/201605...ic-income.html

Mervyn King’s starting point is that the 2008 crisis wasn’t an anomaly but the natural consequence of bad incentives that are still baked into money and banking. The limited liability of shareholders still incentivizes them to allow the banks in which they invest to take greater risks than they would if they were forced to live with not just the gains from financial risk-taking but also the losses.
King really knows his stuff. In so many words, he espouses the idea of returning to the rules of the Glass -Stegall Act. The Book That Will Save Banking From Itself - Bloomberg View
Banking is a lucrative business. Everybody piled in to make a buck. With the crash in wages, there just wasn't enough cash / business to keep them all going. They invented derivatives to generate fees. They got repeat bailouts from GOV. All the investors losses were covered by GOV. There just isn't enough business for all of them.

[Danny B]

forever stretching our trade deficit

"Since 2014 The US Has Added 450,000 Waiters And Bartenders, And No Manufacturing Workers"
Since 2014 The US Has Added 450,000 Waiters And Bartenders, And No Manufacturing Workers | Zero Hedge
Waiters don't earn much and aggregate wages have crashed down and stayed there; America Will Soon Have More Waiters And Bartenders Than Manufacturing Workers | Zero Hedge

In 1998, our trade deficit went off a cliff; http://
http://www.321gold.com/editorials/co...ad060205/1.gif
Port of L.A. inbound containers; 430,898.05
Outbound containers; 145,536.25
Empty; 215,429.30
https://www.portoflosangeles.org/maritime/stats.asp
A Third Of All Containers Shipped From Long Beach Port Are Empty
Submitted by Tyler Durden on 10/14/2015 18:16 -0400

"US Has Added 450,000 Waiters And Bartenders" Even if this were true, it would not be anything to brag about. No economy can survive by circulating internal wealth in the service economy. Our trade deficit rises by $ 1.5 billion a day. Foreign States and investors stopped buying treasury debt a long time ago. The FED is buying almost 95% of new issuance. Foreign investors don't want treasury bonds so, they don't need dollars.
All the central banks print to buy up each other's debt/bonds.

Wages crashed so, consumption crashed. It would be far worse if GOV wasn't printing money to keep things afloat. GOV runs up a big debt so, it needs ZIRP to keep interest payments under control. BUT, ZIRP wipes out the economy. The stock markets are crashing because of a lack of earnings. GOV prints lots of money to keep the stock and bond markets alive. That still doesn't fix consumption and employment.
GOV hopes to start enough wars to cut back on the oil supply and save the banks. So far, Russia and Iran won't take the bait. The neocons will start as many wars as it takes to cut back the oil supply.
America's balance of trade deficit is a huge weak point. In 2015, the United States consumed a total of 7.08 billion barrels of petroleum products, an average of about 19.4 million barrels per day. EIA
This contributes to our $ 45 billion a month trade deficit. How long can it go on?

[Danny B]

Bank stocks, Druckenmiller, Martensen

In the '60s, the CBs tried to control the price of gold. in 1968, the London Gold pool crashed because it didn't have enough physical gold for the few who took delivery. The LBMA is another attempt to control the price of gold. London is just about OUT of gold,,, again. There are over 300 owners for every bar of gold. "There is more than US$200 Billion of trading every day in unallocated (paper) gold." BUT, the gold just isn't there. http://www.gata.org/files/MylchreestReport-05-2016.pdf

• World Corporate Debt Far Exceeds Pre-Lehman Financial Bubble (IBT)
• Warnings Mount On World’s Corporate Debt, China Crisis (AEP)
• China Commodities Selloff Deepens, Steel Has Worst Week Since 2009 (R.) No buyers.
• UK Stores Post Steepest Sales Decline Since Financial Crisis (BBG) No buyers
• When Wall Street and Washington Got in Bed Together (Arnade) Fascism at it's best
• The Emerging Markets Recovery Looks Fragile (Economist) No kidding,,, Venezuela and Brazil are just one step away from revolution. China is staring into the abyss.

Financials;
Japan’s Topix Bank Stock Index sank 4.6%, with a two-week decline of 12.8% (down 32.5% y-t-d). The Topix Bank Stock index traded at 250 last summer and closed Friday at 140.
Hong Kong’s Hang Seng Financial Index fell 5.0%, with a two-week decline of 7.6%.
European bank stocks (STOXX) dropped 5.0% this week, increasing y-t-d losses to 22.2%. Italian banks were hammered 9.0%, boosting two-week declines to 10.8%. Italian bank stocks have lost 35% of their value already in 2016.
The Banks (BKX) dropped 3.2%, boosting 2016 losses to 8.4%. The broker/dealers (XBD) sank 3.5%, increasing two-week losses to 8.8% (down 12.2%). Leading on the downside, Citigroup dropped a notable 4.6% this week (down 14.3%), with Bank of America down 3.4% (16.3%), JPMorgan 2.9% (6.8%), and Goldman Sachs 3.3% (11.9%).
"As I have written repeatedly, I believe the global Bubble has been pierced. My view is that the world is in the initial stages of what will be a protracted bear market (at best)"
Credit Bubble Bulletin: Weekly Commentary: Inflection Point for EM

"hedge fund legend Stan Druckenmiller spoke" "most illustrious investing minds of any generation (with a 30% average return from 1986 through 2010) "
For Stan Druckenmiller This Is "The Endgame" - His Full 'Apocalyptic' Presentation | Zero Hedge

Chris Martensen;
"The economy no longer spins off enough surplus for the elites to take what they consider their share with enough left over for everyone else. So the wealth gap grows unchecked into politically and socially destabilizing levels."
"Those of us who can read the signs for what they are, not what we wish or believe them to be, have a special duty to first prepare ourselves for what's coming and then help others. To put on our own oxygen masks first, and then help the others around us.

For a variety of reasons, most of them rooted in archaic evolutionary brain structures, most humans are not well adapted to face change, let alone major change."
Chaos & Volatility On The Rise | Peak Prosperity

Just imagine if everybody tried to take up farming?? In the '30s, fifty% of Americans worked on the farm. Mechanization and automation displaced them. Manufacturing opened up LOTS of good paying jobs. In the last few decades, mechanization and automation have once again displaced workers. We have to employ all the displaced workers OR, they have to revert to the agrarian economy.
"There were 81,410,000 families in the United States in 2015. Of those, there were 16,060,000 families in which no member was employed, or 19.7 percent of the total."

Read more: Blog: No one works in 20% of US families
51% of Americans receive a check from GOV. Much of this is for make-work like building jet planes that can't fly. What happens to all these people if GOV goes insolvent? If / when the U.S. dollar is rejected for foreign trade, what happens to our imports. YES, U.S. GOV can print unlimited dollars BUT, it can't force foreigners to take them.

[Danny B]

Household debt, Treasury default, Mind control and Malachy

It seems that Sunday is no longer a day of rest. There is a lot going on.
"According to the most recent data from the U.S. Census Bureau, 152.9 million out of 308.9 million total Americans received some form of government entitlement benefit in the third quarter of 2012. That is 49.5% of the population" How Many Americans Are Dependent on the Federal Government?
That's just the entitlement sector, not counting the GOV employees.

Trump says that, if the economy crashes, he will discount payments of treasury debt. https://www.yahoo.com/news/experts-p...-election.html
He has a lot of people worried; Why Trump's U.S. Debt 'Default' Isn?t as Insane as It Sounds - Yahoo Finance

"The average American household has total debt of more than $90,000, which includes households that live debt free. The average household with debt owes more than $130,000." The Average American Household Owes $90,336 -- How Do You Compare? -- The Motley Fool

"The IMF and the World Bank Turn Pessimistic, Which Means We Are in Serious Trouble"
The IMF and the World Bank Turn Pessimistic, Which Means We Are in Serious Trouble

There is plenty of proof available that the economy is dying. Investors still don't react; http://www.zerohedge.com/news/2016-0...port-us-dollar

"Russia has taken a significant step which will undermine the current Wall Street oil price monopoly:
He explains that the setting of an oil benchmark price is a cornerstone of the method used by omnipotent Wall Street bankers to control world oil prices. "Oil is the world's largest commodity in dollar terms," the historian stresses.
http://www.zerohedge.com/news/2016-0...ading-platform

Debt and energy; http://oilprice.com/Energy/Energy-Ge...e-Economy.html
The control of knowledge; http://www.24hgold.com/english/news-...redirect=False

Fossil fuel and your brain; https://www.yahoo.com/tech/tesla-fou...145709267.html

"If we end up with Killary, neither the US nor the world will survive the mistake. She will be the last American president." http://www.paulcraigroberts.org/2016...craig-roberts/

"In 1139, then Archbishop Malachy went to Rome from Ireland to give an account of his affairs. While there he received a strange vision about the future that included the name of every pope, 112 in all from his time, who would rule until the end of time. We are now at the second last prophecy."
"So will Pope Francis be the last pope? The Irish seer of the 12th century has said it will be so. Time will tell."
http://www.irishcentral.com/roots/hi...237789421.html

[Danny B]

Matt King,, COMEX gold, money laundering tax haven

China was in a huge commodities boom up until a week ago. Now, it has gone bust. The massive flow of information brings changes too fast for markets to absorb or react.
Matt King; "none of this is "supposed" to be happening" - inflation and economic growth are supposed to be rising in a world as manipulated by central bankers as this one. Instead, the opposite is taking place."
Why Citi Is Worried: "This Is The Tipping Point" | Zero Hedge
EXCELLENT article.
"More than 300 economists, including Thomas Piketty, are urging world leaders at a London summit this week to recognise that there is no economic benefit to tax havens". There is PLENTY of economic benefit for the one percent
Tax havens have no economic justification, say top economists | World news | The Guardian

"Now, according to a January report in the Bloomberg financial magazine, the result is that the United States itself, in places like Reno, Nevada or South Dakota or Wyoming, are fast becoming the “new Switzerland” hot or secret money havens.

Bloomberg quotes a Zurich attorney, Peter A. Cotorceanu, a lawyer at Anaford AG, “The USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour…That ‘giant sucking sound’ you hear? It is the sound of money rushing to the USA.”

The attraction of secrecy havens inside the US comes from the fact that a very strict money reporting standard set out by the Paris-Based OECD in 2014 has not been signed by four countries: Bahrain, Nauru, Vanuatu—and, guess who…the United States."
From Golden Dollar to Petro Dollar to Narco Dollar | New Eastern Outlook
America pushed FACTA on everybody else and reserved home base as a tax haven with no reporting.
"The way is clear to make the USA the new Switzerland or Panama. Drug cartels of the world are already clearly informed and a good share of the estimated $1.6 trillion of criminal funds annually are searching new safe havens in Reno and other US hot money havens. From a golden dollar to a petro dollar to now a narco dollar"

INTERESTING article on the COMEX gold market.
"Now here's where the fraud begins. The Banks, acting in their capacity as "market makers", have a virtually unlimited power to create from thin air as many Comex paper derivative contracts as they'd like. In doing so, The Banks take the risk of being short while the Specs, in taking the other side of the trade, take the risk of being long. The fraudulent game that The Banks play is in never being forced to deliver upon of their paper obligations. The Specs simply seek gold "exposure" so they buy the paper derivative contract and The Banks sell it to them. If prices go up, the Specs make fiat and The Banks lose fiat. If prices go down, The Banks make fiat and the Specs lose fiat.

Again, though, very little physical gold is ever delivered. Thus, the only price "discovered" is the price of the derivative itself, not the actual physical metal.

Having the unlimited ability to create new contract supply gives The Banks the nearly unlimited ability to control price, too. How? Think of it this way: "

"You call up your broker at Merrill Lynch and tell him to buy you 200 shares of Coca-Cola. A market order is submitted and someone, somewhere sells their existing 200 shares of Coca-Cola to you. The supply of Coca-Cola shares is finite on any given day so price must find an equilibrium where buyers and sellers meet.

However, as we laid out at the beginning of this post, that's NOT how it works on The Comex. Oh sure, most of the volume each day is an exchange of existing contracts. However, volume is also supplied by The Banks simply creating new contracts to sell to buyers. Go back to the bullet point above. How fair and legal would it be if your broker, instead of finding a seller of existing Coca-Cola shares, decided instead to simply create some new shares out of the blue and sell them to you? You'd have your long exposure to Coke and your broker would take the risk of being short Coke.

Not only would this be patently illegal and fraudulent, think of the impact this would have on the price of the Coca-Cola shares. Since willing sellers wouldn't need to be found for new buyers, price wouldn't need to rise in order to entice sellers to sell. Your broker would simply take the risk of being short Coca-Cola, all with the hope and the plan of seeing you eventually give up and sell your Coca-Cola shares back to them, likely at a lower price and at a profit for your broker.

And, again, this is EXACTLY how The Comex operates. "
"Without having to supply any additional physical gold or other collateral, The Banks simply create new gold derivative contracts whenever demand for contracts exceeds available supply. This has the obvious effect of dampening price moves as "price" isn't forced to find a true equilibrium between buyers and sellers. And this has played out for all to see here in 2016. "

"gain, what is happening here is an overt attempt to contain and control price. If the total volume of available open interest on the Comex was anchored or tethered to a fixed amount of collateral, then the supply of derivative contracts would be relatively stable like the daily supply of available Coca-Cola shares. Instead, The Banks simply create new supply nearly every day and, in doing so, restrict and manage the daily movements of "price"
http://www.24hgold.com/english/news-...ott+Money&mk=1

Paper gold is created just like paper dollars. There are 300 owners for every ounce of gold. Should the supply run out as it did in 1968, it would be catastrophic.

[Danny B]

China is going off the edge

"China earlier this year responded to falling stock prices by borrowing a trillion dollars and spending it on commodities, boosting the prices of iron ore, oil, copper, etc.," "Instead of just accepting China’s largess and blithely assuming that all was once again well, the global financial media have chosen (for perhaps the first time ever outside of a full-on crisis) to focus on the negative aspects of rising leverage."
China Stops Trying To Fool The World; World Is Sorry
Confidence is slipping away. The cheerleaders try to use Jedi mind tricks but, they aren't Jedi.

"Since China’s economy was built to manufacture everything global growth could buy," Not true, it should read "global credit growth".
Demand for Chinese goods is dependent on credit growth. As demand falls, China drops it's prime rate. IT DOES NOT WORK. http://www.alhambrapartners.com/wp-c...ary-Policy.jpg
There WERE arguments that America would decouple from Emerging market problems. Nobody is foolish enough to believe that any more.
"That is what economists seem to be missing, as there is really no difference between -9% in exports or -2%; neither of those are +25% which is what the Chinese “need” to see in global trade terms."
http://www.alhambrapartners.com/2016...ystemic-reset/

China has admitted that there is NO way out. They have tried to get credit growth to service old debt with new debt but, it isn't working any more. Credit growth temporarily decoupled from productive growth. As the default numbers get ever-worse, it is obvious to everybody that there is a cascade of default in the future. China's Crashing - Stocks, Commodities Plunge After "Top Authority" Implies "Abandoning Loose Policy" | Zero Hedge

" The majority of analysts predict that, once the bubble bursts, China’s economy will sink into a decline similar to Japan’s situation in the 1990s."
Why China's Debt Crisis Will Differ From Japan's
Japan impoverished it's people so they stopped having kids and the population is falling. They will never escape a shrinking economy while their population is falling. China avoided 400 million births during their "one child" policy. They have managed to max-out on productivity but, consumption is lagging. The economy goes no where without consumption. GOV and corporate america have over-charged us for everything. THAT is how they have accumulated so much. At the same time, they have driven our wages down.
We respond to lower wages by cutting back on big-ticket items and only buying survival goods. The most expensive big-ticket item is, KIDS.
Until very recently, Germany never had a minimum wage. The German population has fallen for many years.

Even the Chinese want the good life. This means cutting back on kids; http://www.wsj.com/articles/chinese-...del-1450313206

The spreading global-mean-wage means that fewer people have excess income to invest. The banks see no inflows so, they pump up credit creation.