Economic pressures

[Danny B]

What to do when the music stops .... Steve Keen

Great Depression I was blamed on various factors. Big, Bad, Bald Ben Bernanke claimed that DG I happened because the FED did not supply enough liquidity. The boneheads in D.C. allowed him to pump in unlimited liquidity and prove his theory. He crashed and burned and left the scene before the final act.
One of the blame theories for GD I was; the "dark pools of liquidity". This was before they invented the name, "hedge funds".
So much money would move around that it would super-inflate and super-deflate markets.
Once again, there are enormous amounts of hot-money that is moving around to where the central banks can NOT keep control.

"Where Will All the Money Go When All Three Market Bubbles Pop?
October 13, 2016
Since the stock, bond and real estate markets are all correlated, it's a question with no easy answer. "
"One of the consequences of eight years of central bank easing and intervention is that these asset classes are tightly correlated."
"The only asset classes that are not in bubbles don't offer yields: precious metals "
Nowhere to go. "Hot money, however, can buy precious metals, oil futures, bitcoin, etc. The problem is the markets that capital will flee once the overlapping bubbles pop are worth tens of trillions of dollars each, and the markets that are not correlated to stocks/ bonds /real estate are an order of magnitude smaller. "
Gold is the ONLY thing that does not rely on consumption.
"Since the stock, bond and real estate markets are all correlated, it's a question with no easy answer. What would $10 trillion seeking safe haven do to small asset classes such as precious metals, bitcoin, and tradable (liquid) sectors of the commodities markets?

If the bubbles in bonds, stocks and real estate all pop, what markets will be left that can absorb trillions of hot money sloshing around? the short answer is: none.

The chaos that will arise as trillions of dollars, yen, yuan and euros, etc. try to crowd through the fire exits as the asset bubbles pop will be monumental, and the the spikes in small asset class prices as the hot money floods in will be equally monumental. "
Of Two Minds - Where Will All the Money Go When All Three Market Bubbles Pop?
Commodities all eventually rely on consumption. Whenever the hot money creates a bubble, the consumers are squeezed out of the market.

Steve Keen, VERY interesting; "What mainstream economists and central banks can’t get to grips with, is that demand is declining even with both debt and GDP rising, because the turnover of existing money isn’t being recorded, just GDP. It’s time to throw away the equilibrium mathematics, Keen says, and focus on capitalism as a great disequilibrium and the adaptive, dynamic evolutionary system it is."
A renegade economist has a plan for reducing global debt | Business Insider

WSJ; A Trans-Atlantic Revolt Against Central Bankers
Future of Banking Looks Dark
America’s Dazzling Tech Boom Has a Downside: Not Enough Jobs

[Danny B]

Tinkering around with monetary policy until something blows

Government is a huge nest of bureaucrats, and bureaucrats like the status quo. BUT, this interconnected world is moving faster and faster.
Jul 30, 2016 - The European Union on Friday imposed anti-dumping tariffs on certain Chinese steel imports
10/14 Chinese state steel maker starts bankruptcy process – South China Morning Post
There are so many (supposed) economic laws that have been found to be untrue. There are some economic laws that are no longer true. For ages, savings (accumulated capital) were used for infrastructure projects.
At the root of the currency problem is an assumption on the part of central bankers that they have primacy over markets. This primacy has become increasingly evident since the breakdown of Gibson’s paradox in the 1975-1982 period, when interest rates no longer reflected demand for savings by business investors.

It is a process that cannot continue indefinitely, because, as the old adage goes, markets eventually reassert themselves. This adage is a summation of all that’s wrong with monetary and financial collectivism, the inability of central planning to allocate capital resources as efficiently as free markets.
World socialism demands that GOV create money instead of waiting for capital accumulation from savers. This capital is INVARIABLY misused.

The loss of sterling’s purchasing power against other currencies since 1 January has been the least against the headline US dollar, at 17.5%. It has been marginally worse at 19% against the euro, and considerably more against the yen and gold.
https://wealth.goldmoney.com/researc...efcode=dollarc

The central banks just figured; why wait for capital accumulation?,,, we'll just print money. This would ensure a good salary for the growing legions of bureaucrats. BUT, any time that the presses go into hyperdrive, the money is used for consumption and NOT for investment,,, it can't be paid back.

"Unwinding their balance sheets would almost certainly cause a financial detonation to dwarf 2008.

The solution? Adair Turner, former captain of the U.K.’s Financial Services Authority, has called for a state of “permanent monetization.”

The debt never goes away. It stays for good. The government just owns most of it."
As Monsieur Paul himself admits, “The whole purpose of independent central banks was to prevent governments from using monetary policy to fund its expenses or its debt, so-called monetary financing.”
The article is half lies but, it tells you the mindset of GOV. The End of the Great Experiment - The Daily Reckoning

10/14 China’s currency at six-year low causes unease across markets – Forbes Ah yes. The rising dollar makes it impossible for the Chinese to service their dollar loans.
10/14 Don’t be fooled, negative interest rates a massive failure – Wall St. Examiner Not for GOV debt.
10/14 As pound tumbles, UK faces sharp return of inflation – Reuters They are seeing PRICE inflation at the same time that they have wage deflation. They will just buy less of non-necessities.

Venezuela; " Blame for the crisis lies on 15 years of populist policies by Venezuela's government, according to Michael Henderson, lead economist at risk analysis firm Verisk Maplecroft.

"The government has scared away private enterprise and nationalized large swathes of the domestic economy leading to stagnant growth and chronic inefficiency," he told CNBC via email on Thursday."
Inflation in Venezuela seen hitting 1,500% in 2017 as crisis goes from bad to worse

Socialism demands that you print money to support the non-producers; beggars, bankers and bureaucrats. America’s debt stands at $ 20 trillion with $212 trillion in unfunded liabilities. The ratio of producers to non-producers has gotten too skewed to maintain. Low-wage competition has crashed the wage-pool. GOV responds by creating debt-money to support those who have been displaced. It has gotten in too deep and can't pay it back. It now wants the central banks to just sit on the paper and NOT liquidate it.
It has been speculated that Trump will be elected in time for the total collapse just to give capitalism a bad name. Dunno.

It has been stated that we will happily embrace the U.N. when they come in to restore order. Pb-Cu
It has been stated that the world will happily embrace the SDR when all currencies collapse.

[Danny B]

Jim Willie and the RESET

Jim Willie goes further out on a limb at predictions than anybody else. Many of his predictions take a long time to materialize. Some of his predictions never come to pass. That's OK by me.
His latest predictions are concerning the "reset" that Christine Lagarde and other called for quite a while ago. The reset hasn't yet happened. The people who export to us are doing vendor financing. They accept U.S. Treasuries as payment. They don't want U.S. Treasury notes. There will come a time when such notes are worthless.
Jim and his staff speculate that the Hanjin collapse was allowed to proceed just to bring global trade problems to a boil. What should be a simple procedure to satisfy creditors and get the containers unloaded is being blocked with HUGE problems at the ports.
I'll post some excerpts, but, you have to read the whole article to understand the underlying idea.
"World trade has fallen for the second quarter in a row. The decade of stagnation of industrial production in the United States, Japan, and European Union can be blamed on financial engineering, housing bubbles, war, and recently on destructive monetary policy in QE bond purchase program. It is not stimulus, but rather a destroyer of capital. The West contains several nations with heavy industrial emphasis, hardly advanced economies anymore. They risk a fall into the Third World from a generation of outsourcing, asset bubbles, and financial fraud, as soon as the new currency regime is installed as part of the financial RESET.

The current level for the global trade index has returned almost exactly to where it was in April 2006,

The Hanjin story sounds very shady for a number of reasons. The total debt involved is only at $5.6 billion. Nobody stops operations in a bankruptcy, since the situation worsens quickly and the creditor damage grows deeper. The banks or specialist funding companies step in quickly with an urgently needed service, to provide debtor in possession financing (DIP) funding.
Second, perhaps a plan is afoot to bring global trade and manufacturing to a halt, so that USFed can justify QE to Infinity in full bloom
The question has come to center stage. As a result of the bankruptcy process, the global supply chain stands at risk to endure an unexpected failure.

Here is the central point, perhaps a seminal event in progress with respect to the Global Financial RESET, an action done by angry Asian producers. We might be witnessing a pretext in action, to cover for the rejection of the USDollar, the refusal to accept USTreasury Bills at ports in return for cargo delivery. At risk is the stoppage of all goods shipped from Asia to the United States.
We might be seeing a trade war salvo of high order, this round led by Asia, directed at the USEconomy, forcing the RESET that Washington and Wall Street refuse to permit, refuse to initiate.
Without any hesitation or equivocation, the hangup at ports implies something particularly foreboding about the state of global finance. The DIP Financing step has been short-circuited. It smells like a coordinated operation is being carried out by Team Asia, with Hanjin a sacrificial lamb, albeit a very big lamb.

The New Scheiss Dollar will arrive in order to assure continued import supply to the USEconomy. It will be given a 30% devaluation out of the gate, then many more devaluations of similar variety. It will be devalued more and more as the bureaucrats print more and more to pay themselves.
The US must accommodate with the New Scheiss Dollar in order to assure import supply,
USTBill Rejection at Ports in Progress

[Danny B]

Forget about your pension

Waking up; https://www.rt.com/business/362618-s...t-severe-fall/
The Pound; https://www.rt.com/business/362625-p...ck-19-century/
The U.N. weighs in; https://www.rt.com/shows/boom-bust/3...-yahoo-breach/

"Populist movements have not fallen on deaf ears, with German Finance Minister Wolfgang Schaeuble noting during a panel on the global economy that: “More and more, people don’t trust their elites. They don’t trust their economic leaders, and they don’t trust their political leaders.”

Globalists are telling us what is about to happen.

I continue to hold to the position I always have — that Donald Trump is going to be ALLOWED into the White House, and that this will be a prelude to economic crisis. The stage is being set for a grand finale to our ongoing financial collapse. The great villain behind the whole disaster will be revealed, and we will be told that the villain is US."
http://www.alt-market.com/articles/3...inancial-crash

"The alarm over U.S. public pension shortfalls grows louder, which brings to mind this prescient comment from Robert Prechter's 2002 book, Conquer the Crash:

If you have a pension, you are almost surely dependent upon [securitized loans]. … In a major economic downturn, this credit structure will implode." "Many pension fund assets are far more precariously positioned today than they were before the 2007-2009 bear market. Losses are already mounting.

The publication mentions that the funding gap for public pensions in 2012 was $1.83 trillion. Today, it's an astounding $3.4 trillion, almost twice as large."
"The public-safety system has just 45 percent of the assets it needs to cover benefits, down from 64 percent at the end of 2014 and half what it was a decade ago."
Why Nervous Pensioners Are Running for the Exit | Elliott Wave International

[Danny B]

GDP-now,,, Yellen speak,,, avoiding U.S. T. bonds

Apparently, the pension funding gap has gone up since I wrote the last post.
"State public pension plans are now underfunded by nearly $5.6 trillion – an increase of almost $900 billion from State Budget Solutions’ (SBS) last comprehensive report in 2014. "
"The nationwide funding level is a mere 35 percent, which is one percentage point lower than two years ago. Combined across all states, the price tag for unfunded pension liabilities is now $17,427 for every man, woman and child in the United States."
https://www.alec.org/publication/pensiondebt2016/
While this sounds bad, this valuation is based on the current value of stocks and other assets. Should they lose value, the gap will go higher. ZIRP is killing everything.

The Atlanta Fed has come up with a tool that reports GDP in "real time". GDP now is falling fast. "The current forecast dropped to 1.9% annualized GDP growth, down from 2.1% a week ago, and down from 3.7% in early August. Over those two months, the model has cut its growth estimate in half!"
The Amazing Down Spiral of Atlanta Fed’s Q3 GDPNow Forecast | Wolf Street

We've left behind Greenspan speak and Bernanke speak and now have Yellen speak.
The Federal Reserve may need to run a "high-pressure economy" to reverse damage from the 2008-2009 crisis that depressed output, sidelined workers, and risks becoming a permanent scar,
Yellen, in a lunch address to a conference of policymakers and top academics in Boston, said the question was whether that damage can be undone "by temporarily running a 'high-pressure economy,' with robust aggregate demand and a tight labor market."
So, where is this tight labor market going to come from?
While investors by and large think the Fed is likely to raise interest rates in December this year, in a nod to the country's 5.0 percent unemployment rate
Fed's Yellen says 'high-pressure' policy may be only way back from crisis | Reuters
You should read the article so that you will be aware of the vast gulf in understanding that afflicts the FED and other ivory tower policy makers. My idea for a "high pressure economy" is; A thermobaric bomb over the District of Corruption.

10/15 China faces delicate balance between debt and growth – Financial Times No China has lit a fuse on a bomb and they don't know how long the fuse is.
10/15 New global study says US runs a big risk as long-term debt skyrockets – Fiscal Times No kidding,, how much do they pay the people who figured that out?
10/15 Bank of England will tolerate higher inflation for sake of growth – Telegraph The pound is at the lowest point in 168 years. The BOE has no choice about tolerating anything.

When you make a deposit in a bank, that money is no longer yours. You have made an unsecured loan to the bank. BUT, most banks are reported to be insolvent. The money was burned up over time to pay for expenses and defaulted loans. One gets the idea that the money is still somewhere in the banking system. We import about $45 billion a month more than we export. This is money flowing out that is usually paid as Treasury bonds. The world no longer wants our Treasury bonds. They are over-issued and the proceeds are used to blow up every State that disagrees with israel.
The problem with Treasury bonds is; how can you get rid of them? You pretty much have to invest in America by buying real estate and manufacturing facilities in trade for bonds.
The obvious solution is to just cut off trade with America so that you aren't stuck with smelly, old bonds.

[Danny B]

War Cycle, NPLs, saving the bankers

Armstrong,
"All indications are now pointing to war between the USA and Russia. It appears the powers that be in Washington fear a Trump victory and he would end nation building. The military needs to start a war now because if Trump were elected, he would not go along with this mess."
"the escalation of a collapse in the relationship forged by Reagan began with the crisis over Ukraine in 2014 precisely on target. "
"Russia invaded Syria also precisely on the very day of our turning point in the Economic Confidence Model, October 1st"
"This gives me no pleasure to see this model performing with this degree of accuracy. "
"Obviously, a war with Russia will impact European currencies and send capital fleeing to the dollar fulfilling yet another model."
https://www.armstrongeconomics.com/i...et-sad-to-say/

There is a possibility that socialism could work but, NOT with borrowed money. Europe is far more socialist than America. The banking system is heavily invested in GOV bonds. FAR more than in America. BUT, socialism is a distribution and consumption system, NOT a productivity plan.
https://www.armstrongeconomics.com/i...mpared-to-usa/

Meanwhile, the bureaucrats are trying to squeeze every last penny out of the producers. https://www.armstrongeconomics.com/w...s-time-to-die/

"TARP had no strings. They handed billions to bankers with a HOPE they might lend to the public. With interest rates at near zero, car loans are generally 2.25%. That is the biggest spread in history from a cost of funds perspective. The bankers NEVER passed on the real savings to the people."
https://www.armstrongeconomics.com/a...g-the-economy/

We lost our jobs and couldn't keep the credit bubble going. NIRP and free money kept the spread going for a while longer BUT, the only people who are borrowing are liars who will default. Italy holds the record on liars, and NPLs are at 20%.
Armstrong's models show everybody running to the U.S. dollar to flee the outrageous taxes fo the European bureaucrats. Chinese capital outflows are huge also. How will the R.O.W. service it's ~13$ trillion dollar debt when the dollar goes way up in cost? Look at what happened when the capital flowed out of Venezuela.

[Danny B]

The ongoing march towards destruction of the economy in the name of globalization

The ongoing march towards destruction of the economy in the name of globalization
Where to begin?
The FED isn't printing very many dollars. The R.O.W. has $ trillions in dollar-denominated debt that can be serviced with dollars only. As the dollar goes up, it is ever-more difficult to service the debt. The capital outflows from emerging markets make everything worse. Since debts are rolled over and never extinguished, the demand for dollars grows ever greater. The R.O.W. wants to break from the dollar BUT, they are loaded up on dollar debt. They continue to sell us stuff to service never-shrinking debt.

Here is a boneheaded article about the 3 ways to get the inflation needed to make the debt disappear?

1. “helicopter money,”
2. special drawing rights and
3. raising the price of gold.
The article DOES mention default but runs away from it as fast as possible.
We Desperately Need Higher Inflation - Here's Why and 3 Ways It Could Easily Be Accomplished - munKNEE dot.com

A few years ago, there was a crash in the money markets that resulted in about $ 5 trillion withdrawn. Congress now has a new law to stop withdrawals whenever the want. The Day Has Arrived: As Of Today Prime Money Markets Can Suspend Withdrawals - Here Are The Implications | Zero Hedge
Also, there are circuit-breakers on stock trading if the market falls to fast.

ECONOMICA has proved pretty clearly that the interest rate is tied to the population of consumers. Econimica
It makes sense because the credit system needs continual growth to service the interest charge.
WAIT, what about the one child policy in China?
"We’re all numb to the big numbers. China’s debt has rapidly inflated to over 250% of GDP (Bloomberg at 247% to end ’15 from ‘07’s 150%), in what has evolved into history’s greatest Credit Bubble. Total Social Financing, China’s aggregate of total Credit (excluding government bonds) is on pace to expand almost $3.0 TN this year. A headline from Bloomberg TV: “China’s Total Debt Grew 465% Over Past Decade”
" China’s Credit Bubble is completely out of control – and it’s become deeply systemic. We’re numb to how dangerous circumstances have become.

The banking system continues to balloon uncontrollably, as does so-called “shadow banking.” Reported bank assets have reached $30 TN, having more than tripled since 2008."
" According to Moody’s, shadow banking has expanded from from 40% to 78% of GDP - in just the past two years."
" Corporate debt has ballooned to $18 TN, or to almost 170% of GDP (from Reuters).

"Meanwhile, real estate finance is today a full-fledged “Terminal Phase” disaster in the making. Various government efforts over recent years to rein in an aged Credit cycle have failed, repeatedly shoved to the back burner by fear of an unacceptable bust." So, instead of an unacceptable bust, they will get a revolution.
Credit Bubble Bulletin: Weekly Commentary: The Perils of a Resurgent China Credit Boom

Population growth has stalled in developed countries and China and many second-tier countries. No population growth= no credit demand growth. The interest charges can never be met from the productive sector of the economy if it, and population are shrinking. The upper loop of the economy has shrunken our wages and loaded us up on GOV-bond debt in an effort to avoid default on the credit structure. Our (now diminished) wages are the source of the taxes and profits that are used to keep GOV and the financial sector alive.
As the lower loop dies, the upper loop blows an ever-greater bubble. The walls of this bubble get thinner and thinner.

“There is no growth. There hasn’t been any real growth for years. All there is left are empty hollow sunshiny S&P stock market numbers propped up with ultra-cheap debt and buybacks, and employment figures that hide untold millions hiding from the labor force. And most of all there’s debt, public as well as private, that has served to keep an illusion of growth alive and now increasingly no longer can."
“We are smack in the middle of the most important global development in decades, in some respects arguably even in centuries, a veritable revolution, which will continue to be the most important factor to shape the world for years to come, and I don’t see anybody talking about it. That has me puzzled."

“The development in question is the end of global economic growth, which will lead inexorably to the end of centralization (including globalization). It will also mean the end of the existence of most, and especially the most powerful, international institutions."
“But nobody seems to really know or understand. Which is odd, because it’s not that hard. That is, this all happens because growth is over. And if growth is over, so are expansion and centralization in all the myriad of shapes and forms they come in.”

"Central Banks can and do create money, but that is not the same as creating wealth or purchasing power. By channelling their credit creation through the intermediary of banks granting loans to their favored clients, Central Banks grant to one set of entities purchasing power – a purchasing power that must necessarily have been transferred from another set of entities within Europe (i.e. transferred from ordinary Europeans in the case of the ECB)"

"With “growth over,” so too is globalization: Even the Financial Times agrees, as its commentator Martin Wolf writes in his comment, The Tide of Globalisation is Turning: “Globalisation has at best stalled. Could it even go into reverse? Yes. It requires peace among the great powers … Does " of note; the Financial Times is a mouthpiece of the elites

" in Russia there is a group of prominent economists gathered together as the Stolypin Club, who are evincing a renewed interest in that old adversary of Adam Smith, Friedrich List(d. 1846), who evolved a “national system of political economy.”
"“If the tension between global capitalism and the nation state was one of the contradictions of Thatcherism, the conflict between globalization and democracy has undone the left. From Bill Clinton and Tony Blair onwards, the center-left embraced the project of a global free market with an enthusiasm as ardent as any on the right. If globalisation was at odds with social cohesion, society had to be re-engineered to become an adjunct of the market." Social cohesion has been re-engineered, all right. What do we end up with when the immigrant flood destroys society?
"So, to return to Ilargi’s point, that “we are smack in the middle of the most important global development in decades … and I don’t see anybody talking about it. "

"Recall, Stephen Hadley, the former U.S. National Security Adviser to President George W. Bush, warning plainly that foreign-policy experts rather should pay careful attention to the growing public anger: that “globalization was a mistake” and that “the elites have sleep-walked the [U.S.] into danger.”

"In short, if globalization is giving way to discontent, the lack of growth can undermine the whole financialized global project. Stiglitz tells us that this has been evident for the past 15 years — last month he noted that he had warned then of: “growing opposition in the developing world to globalizing reforms: It seemed a mystery: people in developing countries had been told that globalization would increase overall wellbeing."
https://www.theautomaticearth.com/20...de-discontent/

[Danny B]

The anatomy of the MOB,,,Neofeudal economy

"real estate finance is today a full-fledged “Terminal Phase” So much money flowed into China that they didn't know what to do with it. China keeps rolling the bubble from one asset class to another.
"Investment is divided into roughly 33% government infrastructure, 33% corporate capex, and 33% property investment. “Capex is now negative, and the government controls infrastructure spending, so now there’s only property investment left.” And if Beijing now limits property investment, money will leave China.
Needless to say, Beijing is rather desperate to avoid even more money leaving China, "
China is trying to push the bubble out of RE and into cars? Where The Stimulus Is Hiding: China's Fiscal Push Is Now Bigger Than After The Global Meltdown | Zero Hedge

THE MOB'
" We are currently experiencing the biggest, global-scale, financial bubble in history (the “mother of all bubbles” or MOB) and this is not a one-dimensional bubble like the “Crash of 1929”, the 2000 dot com bubble or the 2008 housing bubble: the MOB is simultaneously present in all asset classes: stocks, bonds, and real estate. Because of these properties, the MOB is both quantitatively and qualitatively in a different category than any previous bubble. "
" What also makes the MOB categorically different, besides its size and ubiquity, is its vulnerability to a massive implosion due to inherent structural defects:"
"Simply, it is a network nested inside a network. A bond selloff has high network centrality in every node, not just one, and then radiates outwardly simultaneously from each and every node — it is like every major star in a galaxy exploding at the same time. The MOB’s gargantuan size is highly appreciated but this architectural vulnerability and its detonation is an unrecognised hazard "

"Throughout history all financial bubbles have the same fate — they all collapse, sooner or later. Due to sociological phenomena, they never deflate in an orderly manner; greed and fear dominate as actors in a zero-sum mindset exit simultaneously in an attempt to maximize personal gain or mitigate losses."
"The collapse of the MOB is inevitable and is already on borrowed time; even though the consequences are dire the event itself will be an iconic anti-surprise — there is absolutely no reason that any rational person can’t see this coming."

" Because of the all-encompassing, unprecedented nature of this mega-bubble, the conditions in its aftermath are purely speculative, even defiantly unpredictable due to the number of moving parts on many levels from political quandaries to legal entanglements to impact of societal blindside. Quite possibly, this will burst a multi-century, fiat-currency based “trust bubble.” But for now, tragic complacency reigns."

"The second dominant foreground danger is also a trigger for the MOB’s collapse: a military escalation in the Syrian Conflict between the US and Russia. Americans are unaware of the dangers brewing in Syria because Western major media has not been forthcoming of the mounting perils. "
https://www.youtube.com/watch?v=oy43yskCyLQ

" Given the political atmosphere in the European Union (EU), there is a high likelihood of a disintegration of the eurozone (the 19 countries in the EU that use the euro as a common currency). "
"That’s the predicament, precisely. Obviously, this serves as an independent trigger event to burst the MOB. The collapse of the EU is presently not a risk but it is on a collision course with much greater than Russian roulette odds of dissolution."
https://medium.com/deepconnections/a...b2b#.2nz0sql3w

"I have long argued that this mode of production is fundamentally neofeudal, meaning that the few at the top of the power/wealth pyramid benefit at the expense of the many, as the entire system is structured to create and protect privilege, which I define as unearned wealth, power and benefits.

In effect, the current structure of state-finance-capitalism is an updated version of the old feudal model of landed nobility skimming rentier wealth from serfs. In the current version, the employed serfs are fragmented and politically powerless, and the rentier skim is typically financial (hence my use of the term debt-serfs).

This is the result of the dominance of finance capital over industrial capital: state-cartels such as banking, healthcare and higher education enforce pricing that extracts profits by limiting competition, and foster a dependence on debt (for housing, higher education and consumption) that effectively enforces a financial form of feudal servitude on debtors."
https://www.peakprosperity.com/blog/...ggers-collapse

Delusions and finance; https://medium.com/deepconnections/p...d52#.5g3r5b66v

10/17 Euro ‘house of cards’ to collapse, warns ECB prophet – Telegraph
10/16 Deeper and deeper in the hole: Treasury receipts up 1%, spending up 5% – Mish
10/16 Obamacare gives middle class a choice: house or health insurance – Zero Hedge
10/17 Crashing pound the best thing for Britain right now? – Business Insider
10/17 Let sterling slide – what matters now is QE – Telegraph

[Danny B]

Handouts and the wealth effect

ALL government is socialist. ALL politicians make promises that they (or their successors) can't keep or afford. U.S. unfunded debt is $ 212 trillion.
Jean Claude Junker, "We all know what to do, we just don't know how to get re-elected after we've done it."
It is very easy for GOV to initiate a handout program. Taking same program away is sudden death. Reducing entitlements is referred to as; "touching the third rail".
Entitlements wouldn't be so expensive BUT, everything has been financialized to where the cost of everything is prohibitive. "10/16 Obamacare gives middle class a choice: house or health insurance – Zero Hedge"
Add to this that the social-security fund has been drained to keep the wars going.
GOV blew ENORMOUS bubbles to create a "wealth effect" and make everybody feel prosperous. The Marxists believed (hoped) that the wealth bubble would "lift all boats". BUT, creating money is not the same as creating wealth. The feces-for-brains in academia figured that; if the bubble didn't work out, they would just inflate away the debt.
Every salvo fired in the inflationary currency wars reduced wages and cut back economic activity. The debt bubble grows ever-larger and the ability to repay it grows ever-smaller.
The Central Banks had visions of replacing the capital markets with their printing press.
Keynes dreamed of the "euthanasia of the rentier". It is becoming painfully obvious that GOV can support the economy with debt-free money but, NOT with debt money. The wealth-effect may have raised all boats but, what happens when the liquidity runs out?
5 Urgent Warnings From Big Banks That The "Economy Has Gone Suicidal" | Zero Hedge

[Danny B]

If the only tool you have is a printing press, every problem looks like deflation

The economy is comprised of so many pieces that it is impossible to keep track of all of them. GOV is trying madly to create inflation and lessen the pain of repayment of bonds.. This is a task for fools. They can't get high price inflation without a wage-price spiral.
10/18 Carney steels for inflation test as prices jump most since 2014 – Bloomberg Yeah, in FOOD!
10/18 US consumer prices rise on strong gains in gasoline, rents – CNBC
OK, so food, gas and rent are going up,,, at the same time that employment and effective purchasing power are going down.
10/18 Inflation set to rise as UK economy faces slowdown – Independent
10/18 Eurozone inflation rises in September – Euro News
10/18 The truth about inflation – Daily Reckoning
10/18 Inflation above target for five straight years and counting – Daily Reckoning

So, what happens if we spend all of our money on food, gas and rent? 10/17 Ford to idle four factories due to slowing car demand – Zero Hedge OK, forget the gasoline part. I'll get a bicycle. As the price of necessities goes higher, we cut back on discretionary spending. We work harder; Americans Work 25% More Than Europeans, Study Finds - Bloomberg

[Danny B]

Fallout from globalization

Bloomberg, of all people, weighs in on the cashless society; https://www.bloomberg.com/view/artic...creepy-fantasy
Not all aspects of the economy are in the doldrums; Guess Which Record Was Broken for the 17th Consecutive Time? – Bearing Arms
Here is a great article from Economica showing the very clear linkage between population growth and interest rates. The takeaway is; there is no possible way to raise interest rates. Econimica: The Greatest Bubble Ever...& The Federal Reserve Can't See It?!?

John Embry has an interesting view on the economy; Billionaire Eric Sprott’s Business Partner Warns The Global Monetary System Is Breathing Its Last Breaths | King World News
"According to the latest (September 2016) figures from the U.S. Bureau of Labor Statistics, every unemployed prime age man in America has three counterparts neither working nor looking for a job. Today some 7 million prime age men are neither working nor looking for work: nearly one in eight."
America's quiet catastrophe: The collapse of work for men | Fox News
No wonder it is so crowded at the beach.

[Danny B]

The antoganism between the local and the global,, Political correctness

The Marxists inflicted socialism on Eastern Europe in the form of the Union of Soviet Socialist Republic. It failed as all socialist constructs fail. Marxism ignores both economics and human nature.
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not." Earliest known appearance in print, attributed to Jefferson Democracy is socialism-lite. When it crosses over into full-on income redistribution, it is on the road to collapse.
Taking money from working people and giving it to lazy people is a sure way to take the incentive out of working. The Marxists would happily cut off your tongue for criticising this process/robbery.
https://www.youtube.com/watch?v=EjaBpVzOohs

The Marxists tried to push economic Marxism but, it failed. The next move was to create political Marxism. The Frankfurt School was the center of this effort. The Origins of Political Correctness
Obviously, the place to start is in the education of our children. "They" have been relatively successful in inculcating our children in the wonders and joys of Marxism.
You just can't make stupid and lazy people smart and successful. ~$25 trillion spent on the war on poverty,,, what did it accomplish?

The Marxists were CLEARLY warned that the European Union would fail by history, Martin Armstrong, and by many others. To be a Marxist, one needs to by both blind and, in denial.
“The European Central Bank is becoming dangerously over-extended and the whole euro project is unworkable in its current form, the founding architect of the monetary union has warned.
said Professor Otmar Issing, the ECB’s first chief economist and a towering figure in the construction of the single currency.”

"Thus the eurozone and the euro were created not for profound economic reasons but to assuage France’s perennial fear of German power.

With such origins, it is not surprising that it has not worked well."
The euro was designed to assuage French fear of German power ? no wonder it failed | The Independent
The "slacker" countries like Greece and the PIGS were locked into currency union that could never work.
The entire West is leaning towards socialism. When the jobs left, GOV printed up a storm to keep our standard of living up high. China temporarily had high employment but, the import money ran out when the West went broke. Now, China is printing up a storm.
The crash in consumption caused by low birth rate isn't something that is going to go away any time soon.

"The underlying problem can be traced back to the fact that economic interests have become increasingly global while politics, the ability to decide, remained passionately local and, as such, unable to operate effectively at the planetary level."
"Change Is As Necessary As It Is Impossible": Deutsche Bank Explains Why The World Is At A Dead End | Zero Hedge

[Danny B]

VIX and lies,,, the value of gold,,,, the bomb called China

Every day, it takes more and more reading to find articles that aren't total BS.
The (VIX) is the volatility index. (Volatility is bad). Jim Rickards;
"That mid-September peak was associated with market uncertainty involving Deutsche Bank liquidity problems, the Clinton health scare of September 11, uncertainty in the run-up to the Fed meeting on September 21, and a Trump surge prior to the first presidential debate on September 26.

All of the concerns that caused the volatility spike in mid-September have abated for the time being. Deutsche Bank appears stable, Clinton appears healthy, the Fed is on hold until December, and Trump in down in the polls."
OK, so, what happens to volatility if Trump were to do well?

It is obvious that NIRP is destroying most of the financial landscape. What happens if Rates are raised? Goldman Says U.S. Bondholders Risk a $1.1 Trillion Hit if Rates Spike - Bloomberg This simple-minded article mentions that bond holders will take a hit. It makes no mention of the capital flight that would wipe out everybody with dollar-denominated debt in foreign countries. It makes no mention that it would instantly bankrupt half of the corporations.

It is automatically assumed that; as the pension funds go broke, the taxpayer will just jump in and bail them out. The Public Pension Time Bomb Is Starting to Explode | FS Staff | FINANCIAL SENSE Ain't gonna happen.

"Larry Summers in his seminal 1985 paper with Barsky identified that the primary factor driving real gold prices was real interest rates (i.e. nominal interest rates minus the inflation rate). As inflation rises from loose central bank monetary policy, the real price of gold measured in constant dollars also rises and is the principal "tell" of those loose monetary policies. "
" But as was seen in the late 1970s, when inflation rages gold rages more. Central bankers are then forced to choose between abandonment of their paper money and bonds for real assets or to stop their money printing"

"Now, Summers and Barsky were so certain of their observation that they wrote "(t)he negative correlation between real interest rates and the real price of gold that forms the basis for our theory is a dominant feature of actual gold price fluctuations." ["Gibson's Paradox and the Gold Standard",
"The principal driver of the gold price was real interest rates -- as they collapse due to inflation, the price of gold soars. The implication is that if you would like to sustain loose monetary policy for a protracted period, it is necessary to be able to control the price of gold."


"3) Convert the world's principal gold markets from trading gold to trading paper gold thereby short-circuiting price discovery in the global gold and bond markets" "gold trading was progressively thereafter converted to paper contract trading through the creation of "unallocated gold contracts" without gold backing and price discovery was thereby thwarted as these contract claims on gold can themselves be created and traded without limit"
" By deflecting claims for gold into paper gold contracts, today there are an estimated 400 million to 600 million oz of claims for gold at the LBMA without gold backing and daily gold trading has reached 200+ million oz of gold per day"
The Rape of America -- The Core Federal Election Issue | David Jensen | Safehaven.com
The true value of gold is it's effect on interest rates.

"Our methods put the current pace of credit growth in China in a range between 19% and 20%"
"With rising central government’s contingent liability, the sovereign risks are increasing. Moody’s downgraded its outlook on Chinese government debt to negative from stable in March 2016"
" However, as banks, rating agencies, the IMF and even the G-20 admit, the days of kicking the can for China are coming to an end. What waits on the other side of that particular journey is not pleasant: either massive social revolt by China's middle class, as the government renormalizes its economy in the process hiring tens of million of (soon to be angry) workers, or it unleashes the biggest banking crisis the world has every seen: at $35 trillion in total financial assets, China's banking system is more than double the size of the US. "
China Injects Economy With A Quarter Trillion In Debt In One Month, But The Full Story Is Much Scarier | Zero Hedge
The China economy is shrinking as proved by rail-car loadings, falling import&export volume, etc. The debt is growing by 20%. What could go wrong?

Solar and wind have caused huge upsets in carbon energy and finance. Now, batteries are set to upset it again. Batteries May Trip ‘Death Spiral’ in $3.4 Trillion Credit Market - Bloomberg

[Danny B]

Keynes, nationalism and genetics

The PTB knew decades ago that automation would end employment for most people. Their solution was/is socialism. Keynes dreamed of "euthanasia of the rentier". This is in process with ZIRP, NIRP. Interest rates could only be crashed if gold were greatly suppressed. Gold was successfully suppressed (for the time being). The nightmare envisioned by Ned Ludd is coming true. Jobs are disappearing in all sectors.
GOV can no longer take up all the slack by employing all the people who can't make it in a competitive job market. The Central Banks were enlisted to provide endless liquidity to both kill the rentier and support the non-employed.
The Central Bank has been lashed to the prow of the ship-of-State as it navigates the course to our new socialist world where GOV provides everything.

The reason that socialism never works is; we have no inclination or motivation to work to support our NON-genetically related fellow man. Soros, et al would destroy all social cohesion to destroy nationalism. BUT, all politics is local. If you are starving, you don't care what happens to the people in the next county.
Even the ants support only their genetic lineage. Nationalism was always blamed as the cause of wars. This is patently untrue. Any prosperous State that had a stable population and a good standard of living had no motivation to go to war. All wars are for economic reasons or, in a few cases, for ideology.

"Today's energy supplies provide the equivalent of the work of 22 billion slaves." So says Colin Campbell, petroleum geologist and Peak Oil commentator.
Actually the true figure may be closer to 122 Billion Energy Slaves."
22 Billion Energy Slaves: Our Army of Invisible Helpers
We have a great standard of living because machines are doing all the work. We have stable populations because we have choices in procreation. As we slowly pull away from carbon energy, we will have even more stability in energy supplies.
We are in a period of great flux where the PTB are trying to institute a Keynesian-socialist nightmare to keep Darwinian pressures from eliminating the non-producers. Beggars, bankers and bureaucrats want total centralization. The productive people have always rebelled against being held in thrall to the parasites.
New technologies are constantly making it harder to create an Agenda 21 type of world.
The current battle for world socialism will fail because it runs so counter to human nature. In school, they tell our kids that they are not American citizens,, they are WORLD citizens. That isn’t going to fly for very long.

[Danny B]

Food security

"This is because the world economy is creaking under the burden of huge debts, and the only way out of it other than straightforward debt forgiveness is massive inflation to erode it. Negative real interest rates around the world have partly served to do that, but the process has been too slow as producer and consumer prices kept falling." Maybe because we don't have any money to spend?
"With inflation low for years, central banks had a relatively easy job. They could print as much money as they wanted; it only pushed up asset prices, not the prices of food, " Hello Inflation, Central Banks Salute You About those food prices. Currency inflation is slowly bleeding over to the lower loop in the form of higher prices for the things that we must have.

The crash is assured. What happens when the credit markets crash and the chain from production-to-consumption of food crashes?
https://www.goldrepublic.com/news/10-terrifying-charts
Here are the leading food importers;
World's Leading Food Importers - Business Insider
But, this doesn't tell the true story of food independence.
Food security is also tied directly to wealth. Here is a list of States where food security is sketchy, The 25 Countries That Will Be Screwed By A World Food Crisis - Business Insider
Venezuela is # 25 on the list.
Venezuela's latest cruelty: full shelves of unaffordable goods - Chicago Tribune

A Nigerian family spends 73% of it's income on food; http://www.zerohedge.com/news/2016-1...emains-unaware
Even that doesn't tell the whole story. What happens of Monsanto goes out of business? 20,000 sq. miles of American farmland has been sprayed with 2.6 billion lbs of glycophosphate. " U.S. Geological Survey, a study of pesticide and herbicide use from 1992 to 2012. During the two decades, an estimated 2.6 billion pounds of Monsanto’s glyphosate-based herbicide was used on America’s agricultural land" http://www.ezekieldiet.com/2-6-billi...icas-farmland/

This has killed the soil bacteria and made the land unsuitable for anything except Roundup-Ready seeds.
This sounds very British;
"The British East India Company’s subjugation of Bengal in 1765, ushered in an age of genocide for the next 135 years, that was unparalleled in human history.
The British Empire’s murderous policies unleashed a famine in 1770 that killed 10 million in Bengal, fully one-third of the population at that time! In subsequent years famines claimed 11 million lives in 1783; 11 million more in 1791; 1 million more in 1837; 2 million in 1860; 1 million in 1865; 1.5 million in 1868; 5.5 million in 1876; 5 million in 1896; and 1 million more in 1899. By 1900, British Empire policies had claimed over 49 million lives in India, "
http://www.larouchepub.com/eiw/publi...40-42_4024.pdf
The British managed to hold the population of India fixed for 100 years by holding rotating famines. Why do you think they built roads and railroads?