Economic pressures

[Danny B]

Trade / currency wars and energy independence

Trump is talking strong protectionist measures. This will undoubtedly shrink world trade with America. (Repost) Globalisation and trade costs: 1870 to the present | VOX, CEPR?s Policy Portal
America exports a lot of stuff and a trade war would hurt exports. At the same time, Trump says that the dollar is too strong. The assumed explanation is that a strong dollar hurts the export sector. The dollar isn't actually strong. It just isn't sinking as fast as the rest. The currency war has been in full swing for years. Just look at the price of gold.
It appears that China is on the brink of a major devaluation of the Yuan. That would cause more currency flight into the dollar,,, certainly NOT into the Euro. The dollar would get stronger.

A currency war, seen from street level, is a big wage reduction for the working man. But, it initially affects the price of imports far more than the price of domestic goods. China keeps forcing the devaluation of the Yuan to keep people working. Trump wants to devalue the dollar to get people back to work.
This would improve the domestic labor picture but diminish the export dependent job sector. This would hurt our balance of trade numbers. Trump talks about big investments into the oil & gas fracking business. While fracking has gotten far more efficient, I can't see it surviving on $50 oil.
If we can't get some kind of cheap energy, we will go into even bigger deficits in our balance of trade payments.

David Stockman knows all the numbers, Trump to oversee ‘fiscal bloodbath’ instead of prosperity, says Reagan OMB director
If we had a MEG in every building, we could get oil consumption down to where it was just needed for trucks. Can a truck be powered by a MEG ? Can a bullet train be powered by a MEG?
The fact is; energy is the master resource. Our standard of living depends heavily on abundant energy, 22 Billion Energy Slaves: E is for EROEI
If Trump could pry loose FE from Livermore and Sandia, et al, he could bring back the standard of living that we enjoyed previously.

1/23 Netanyahu wants to discuss Iran ‘threat’ with Trump – BreitBart The Iran threat is their potential to sell lots of oil far cheaper than production costs in America. Same reason that Russia is such a "threat". Trump would like to bring energy independence to America. It won't happen with carbon energy. Trump has been set up as the fall guy. If he doesn't want to preside over the unravelling of America, he only has one option; cheap energy.
As energy prices climb, we fracture; As if Things Weren't Bad Enough, Russian Professor Predicts End of U.S. - WSJ

[Danny B]

Debt and more debt

The credit bubble has to keep growing. The bankers gave liar-loans to people who were debt saturated knowing that defaults would spike. Anything to keep the bubble alive for a bit more time. The bankers are also hard at work to get prudent people to spend LOTS more.
"Neither for the New York Fed whose President William Dudley, in a speech a few days ago, practically exhorted households to borrow more against the equity in their homes so that they blow this cash and drive up retail sales: “Whatever the timing, a return to a reasonable pattern of home equity extraction would be a positive development for retailers, and would provide a boost to aggregate growth,” he mused, with nostalgic thoughts of 2008.'

The article has very good info about household debt; These are the Countries with the Biggest Debt Slaves, and Americans Are Only in 10th place | Wolf Street

Gold bug article;
“The Federal debt is at $20 trillion and has been growing at the rate of 9% per year for the last 40 odd years. The forecast for the next four years is that the growth of the debt will accelerate. Total US debt is over $70 trillion or over 3.5x GDP. But that is just a fraction of the US liabilities. Unfunded liabilities are over $200 trillion."

" In 2006 US corporate debt was just over $2 trillion. Today it is more than 3x higher at $7 trillion! At the same time, cash as a percentage of corporate debt is declining and is now down to 27%."
Man Who Predicted Collapse Of Euro Against Swiss Franc Now Warns Huge Shock Will Bring The World To Its Knees | King World News

1/23 Trump warns “we are going to be imposing a very major border tax” – Zero Hedge That will definitely bring deflationary pressures.
1/23 Retail malaise puts pressure on chains to shutter more stores – Bloomberg Amazon and unemployment.
1/23 Jim Rogers says dump stocks if Trump launches trade war – MarketWatch Sadly, he has it right.
1/23 Trump to oversee ‘fiscal bloodbath’ instead of prosperity – CNBC How about if we have a bath of bloody bankers instead.

1/22 Housing bubble pops, Chinese real estate firms halt pricing data – Zero Hedge I want to see a big bang. A "pop" doesn't get it.
1/23 Germany: That “presidential speech” was a declaration of war – Zero Hedge Not completely by design but, still de facto; Germany is raping Europe. Trump is supporting anti-corporatocracy people in Europe. If the German branch of the corporatocracy wants to call it a 'war",,,

1/23 Now that Trump is president, let’s talk about Vladimir Putin – CNBC Notice that Trump isn't in any hurry to meet up with Vlad??
Russian Warplanes Fly First Joint Mission With
US Aircraft, Kremlin Says But Pentagon Denies Donald and Vlad see eye-to-eye without any face to face meetings.

The cash ban in India is making a real mess of things. India ? On a Downward Spiral |
All these pressures are deflationary on the lower loop of the economy. The CBs are trying to inflate the whole economy but, most everything flows into the upper loop.

[Danny B]

why is it that debt never goes down?

"When I say lock down, they’ll start with money market funds. I can’t think of a greater misnomer than the money market funds. People think that money market funds are money. They’re not money; they’re mutual funds regulated by the SEC. People think they can just call up their broker, sell to the money market fund and the money’s in my bank the next day."
Jim Rickards is back banging the SDR drum.
"If you lock down money market funds, people are just going to take their money out of the banks. Then you’re going to have to close the banks. Then people are going to sell their stocks, then you’re going to have to close the stock market. Every time you shut one path to liquidity, people are going to turn to another path."

"When it comes time for the IMF to issue world money (SDRs) to reliquify the world, there’s going to be a negotiation period. " "Even though they react on a case basis, it’s going to take, an estimated 3 or 4 months at least to get SDRs issued."
"Each bailout gets bigger than the one before. Each crisis gets bigger than the one before. We are now at the point where the ability of central banks to reliquify the system is in doubt "
"Central banks have printed so much money already, it’s not obvious that they can do it again from the current levels without destroying confidence in the dollar, and all major currencies."
"The IMF can flood the market, and the world with trillions of SDRs equivalent to more than trillions of dollars which is exactly how they’ll do it."

What is the point of selling your stocks if you need money and the banks are closed? Gold certainly won't save you. Only cash will work. The coming collapse of the bond market will make cash that much more valuable. The most valuable medium of exchange is the medium accepted by the largest number of people. The dollar bill is essentially a bearer bond. A treasury bond isn't fungible. Nobody wants them.
"flood the market, and the world with trillions"

The SDR isn't a currency. It's is imagined as a reserve for CBs. It can be created in unlimited quantities. It just isn't going to fly.
https://dailyreckoning.com/ice-nine-lockdown/

The blockchain presents some interesting possibilities.
https://cointelegraph.com/news/bitco...rm-larry-bates
Rick Rule says that the U.S. will devalue the dollar. Considering that $20 would previously buy one ounce of gold and now; it takes $ 1217 to buy and ounce of gold, his prediction isn't surprising.
Rick Rule Warns US Will Devalue the Dollar With 1970's Impact on Gold & Silver Prices | Silver Doctors

"As I write this article, the U.S. national debt is sitting at 19.944 trillion dollars. During Obama’s eight years, a staggering 9.3 trillion dollars was added to the national debt. When you break that number down, it comes to more than a hundred million dollars every single hour of every single day"
"The amount that was added to the national debt during his years comes to “approximately $75,129 for every person in the United States who had a full-time job in December”.
"In a previous article, I explained that government debt greatly stimulates the economy. If we had not borrowed and spent 9.3 trillion dollars over the past eight years, we would be in the worst economic depression in U.S. history right now." Now, we're in for a "worser" depression.

"Now that Donald Trump is president, he is going to have some very hard choices in front of him.

If Donald Trump and the Republicans stop borrowing and spending so much money, the economy will immediately start suffering.

But if they do continue down the same path that Obama put us on, it is a recipe for national suicide."
Trump and the Republicans stop borrowing Maybe they should just print it instead of borrowing it.
Foreigners Are Dumping U.S. Debt At A Record Pace And Our $20 Trillion National Debt Is Poised To Become A Major Crisis

Like Benjamin Franklin, Adolf Hitler instituted a program where money was created solely for the purpose accomplishing ACTUAL WORK. No money was created for speculation.
Churchill stated that WW II could have been avoided but, the bankers wanted it. It is a long story for another time.
How Hitler Tackled Unemployment

[Danny B]

When the bond market blows, just remember where the money went

Founder of Alibaba;
"Jack Ma Accuses The US Of Spending $14 Trillion On War Instead Of Its People"
" Ma said blaming China for any economic issues in the U.S. is misguided. If America is looking to blame anyone, Ma said, it should blame itself.

According to Ma, the US wasted over $14 trillion in fighting wars over the past 30 years rather than investing in infrastructure at home. "
And who was it that prompted us to fight all these wars? It is/was israel and the merchants of death. We dumped our sons & daughters and fortunes into destroying States that were NO threat to America. The war industries started a self-perpetuating business empire by blowing up anybody they could find,, to create a limitless supply of enemies.
If the enemies didn't appear formidable enough to rate as dangerous bogeymen, we manufactured false flag attacks to ensure that the bogeymen always appeared formidable.

Here we sit with our infrastructure trashed. War is good business for the war merchants,, until the State goes bust. Israel went bust in the early 80s and now, it is our turn. Everyone admits that our infrastructure is trashed.

"Democrats offer a trillion-dollar infrastructure plan" "Republicans resisted President Barack Obama’s push for an infrastructure “surge” for eight years, arguing that the federal government couldn’t afford it "
We could afford lots of expensive wars but, not infrastructure.

You must admit that ransomware is a marvelous business plan. You must admit that inciting a self-perpetuating cycle of war is a marvelous business plan. If greed is the sole and ultimate motivation, destruction of society is a good business plan.

[Danny B]

Moving from marijuana to gasoline

A society can only survive just so much parasitism.
"Of course these latest protests follow reports from last week that Mexico's drug cartels have been looting Pemex oil and gas pipelines in an effort to create their own brand new black market for petroleum products. With a modest upfront capital investment of $5,000 - $8,000, the cartels have realized they can tap directly into state-owned gas pipelines and withdraw seemingly unlimited supplies of gasoline which they then sell along the highway at a discount to official government prices. It's a win-win situation whereby the drug cartels make 100% profit margins and citizens get "cheap" fuel."

"The black market is booming. Several states experienced gasoline shortages at the end of last year as more thieves tapped into state-owned Petróleos Mexicanos (Pemex) pipelines. The pilfered fuel was sold to drivers hoping to save money. Pipeline theft in 2015 increased sevenfold, to more than 5,500 taps, from just 710 in 2010. Pemex attributes the company’s 12-year slide in crude production in part to the growth in illegal taps.
The drug cartels have turned to fuel theft as a side business worth hundreds of millions of dollars each year, and crime groups focused solely on gasoline robbery have sprung up, "

" Theft amounts to about $1 billion a year, says Luis Miguel Labardini, an energy consultant at Marcos y Asociados and senior adviser to Pemex’s chief financial officer in the 1990s. “If Pemex were a public company, they would be in financial trouble just because of the theft of fuel,” he says. “It’s that bad.”
Mexican Protesters Seize Control Of U.S. Border Crossing In Tijuana | Zero Hedge

Douglas MacArthur;
"History fails to record a single precedent in which nations subject
to moral decay have not passed into political and economic decline.
There has been either a spiritual awakening to overcome the moral lapse,
or a progressive deterioration leading to ultimate national disaster."

[Danny B]

Keeping air under the wings of the FIRE economy

Up until ~1971, the income of the bankers was directly tied to the income of the productive sector. A banker thinks about money all day and dreams about money all night. The Great Society and the war in Viet Nam cost too much for the dollar-to-gold peg to survive. Once the peg was removed, the presses went into high gear and the bankers never looked back.
The lower loop of the economy is the only sector that generates tangible wealth. The bankers had no direct access to this wealth. They had to use the inflation tax to get a cut. They were closest to the money spigot so, they always benefited from currency inflation. Wages have fallen so far in the productive sector that very little wealth is moving to the parasitic sector.

The buying power and tangible wealth of the majority of people is shrinking but, the credit bubble must grow if the upper loop is going to keep the "money" coming in. It's the same worldwide. The consumptive capacity of non-essential goods keeps falling. The productive capacity is growing by leaps and bounds. The money masters find that they must support more and more of the financial system as the middle class spends less and less.
The price inflation that bleeds over from the monetary inflation diminishes even more the velocity of money and trade in the lower loop.

The more that the upper loop prints, the slower the actual producing economy consumes. This is the negative return on additional credit. The billionaires pump their wealth into speculation because they can't actually consume commensurate with their wealth. This draws money out of circulation from the lower loop. The CBs inject additional liquidity into the upper loop believing (hoping) that it will trickle down to the lower loop.
They must be aware of the negative return but, they don't have any other game.
“We see more and more appetite by central banks for riskier strategies,” said Jean-Jacques Barberis, who manages central-bank money for Amundi, Europe’s largest asset manager."
Some people just can't seem to switch gears mentally. There is NO risk to buying risky assets if you buy them with free money.
80% Of Central Banks Plan To Buy More Stocks | Zero Hedge

The CBs rescued the upper loop when the lower loop could no longer carry the load. They didn't plan on carrying the whole finance sector forever but, we slid to a global mean wage and we never recovered our consumptive power. They rescued the banks with TARP but, it was only temporary. They tried to rescue the banks with QE but, even that has worn off. GOV tried ZIRP to carry public debt but, that has turned poisonous.
The many sectors that depend on interest-income are melting down. The CB has to print even more to rescue even more at risk of default.

The clowns at Davos seem oblivious to all this. Switzerland carries the highest private debt-to-GDP ratio in the world. Maybe, it's contagious. There is so much "noise" from the financial sector because they believe that they create actual wealth. The production-consumption cycle is measured by wages and tangibles. The upper loop deals in just speculation. The FIRE economy (finance, insurance and real estate) is booming. BUT, the overall debt is growing by 9% per year.
The FED may raise rates. Trump may start a tariff war. Debt is rising faster than exponentially. It can't survive any shocks.

The entire sector of the economy that depends on interest-income is melting down. There just isn't any way out for them; 2017’s Real Milestone (Or Why Interest Rates Can Never Go Back To Normal) - DollarCollapse.com
The rescue of the bankers and the endless wars have destroyed the system.

[Danny B]

The designated fall guy

Inflation is a huge drag on the wage earner. Inflation is what bankers live and breathe. The number of wage earners is diminishing. This necessitates more and more printing.
"The S&P 500 is up a blistering 240% from its March 2009 lows. Yet the overall economy creeps along at half-steam. The recovery — such as it is — is the weakest since the Great Depression."
“Those gains have been fueled primarily by the Federal Reserve and its reckless stimulus policies… By holding short-term interest rates near zero for seven years, the Federal Reserve has encouraged malinvestment and speculation… creating massive market distortions and imbalances.”
" We know one brilliant analyst who’s predicted, to the date, hour and minute, 11 of the past two crashes."

"Optimism? The S&P has gone 70 straight sessions without a single fall of 1% or more, and it’s working hard on 71 — its longest streak since 2006, when it hit 94, according to CNBC."
"Whatever it is, the experts will probably miss it and then explain afterward how obvious it was at the time. And here’s a prediction, sure as sugar: They’ll try to pin it all on Trump."
"The establishments (plural), the globalists, the media all loathe Trump with a passion verging on lunacy. " "Their cry will be this: “See what happens when those know-nothing, anti-globalist populists are allowed to call the shots? If we were in charge, none of this would have happened!"
https://dailyreckoning.com/second-la...ble-100-years/

[Danny B]

forget stocks

HEP and CAPE are two systems for predicting stock market returns.
"Note, though, that HEP provides nominal total returns estimates (i.e., dividends reinvested, not adjusted for inflation) rather than real total returns like those given by CAPE. Which means if we make any adjustments for expected inflation over the next decade – say an average 2% per annum, in accordance with the Fed’s target value – we’d anticipate total real returns according to HEP of around 1%.

Which is in line with our qualitatively textured CAPE forecast. From CAPE, we anticipate real returns in the 3% to 4% range, but with downside risk of something like zero real return over a decade. Our HEP forecast of 1% or so is smack dab in the middle of that range. So, with HEP’s help, we’d now refine our 10-year estimate of the S&P’s annual average real returns to something like this:

“It’s unlikely we’ll do better than 3% or 4%, and there’s a darn good chance we’ll do worse – on the order of 1% or so.”
The Single Greatest Stock Market Predictor Is... What? | FinanciaLibre
Both HEP and CAPE have long timeline history. It's a good article and probably fairly accurate.
Moving along;
"Of course, we firmly believe that stocks will remain good investments for the next several years,"
" Millennials have earned a net worth of just half of what their Boomer predecessors earned at the same age, making it even more important that they start investing for the long run NOW." People with extra money buy stocks, NOT people living in their parent's basement.
"Isaac Presley of Cordant Wealth Partners pointing out that “the median retirement savings for individuals aged 55-64 is just over $100,000" He's obviously including Bill Gates and Warren Buffet in his calculations.
Saving Retirement | Jeffrey D Saut | FINANCIAL SENSE
"A Fidelity Investments report says that 48 percent of boomers are not on track to be able to afford basic expenses in retirement. " AARP

“Ronald Reagan actually increased the public debt by $1.8 trillion, or two times more than had been generated by the first 39 presidents.”
“On March 15 a stink bomb explodes. That is the holiday on the debt ceiling. "
" don’t think the Trump administration is halfway prepared for the monsters that are in the deep.”
https://dailyreckoning.com/david-sto...scal-stimulus/

Online sales are slowly but surely eating away at bricks and mortar; Malls Owners Rush For The Exits As Mall-Backed CMBS Defaults Soar | Zero Hedge
1/25 US investors funding biggest share of national debt since 2003 – Forbes
The treasury prints bonds,,, the FED buys the bonds and gives "cash" to the treasury,,, the treasury pushes cash into stocks, etc,,,,some of this money is used to buy GOV debt.
Thomas Edison; "any Government that can create a bond can create a dollar bill". Quite true but, by creating bonds, GOV can cycle all the money though the bankers and encumber everything with interest.
GOV can just create the money needed for WORK without causing price inflation. When GOV creates all the money needed for speculation,,, to keep the bankers in high clover,, THEN we get constant inflation.
If GOV created debt-free money SOLELY for results and NOT for speculation, the economy would grow commensurate with the money supply,,, no price inflation even though there would be currency inflation.

Free money is the life-blood of the upper loop. A barrel of oil is sold 48 times before it is consumed. EXXON earns 5.5 cents per gallon of finished product. The "money" supply has been growing at 3 times the rate the productive economy has grown. (Actually more). 90% of the finance sector could just disappear and not hurt the productive sector. The consumptive sector would get hit Badly though.

Wyoming is trying to earn some cash; Wyoming Moves to Ban Wind and Solar Power for Use by Electric Utilities : Waking Times

The EU wants to go all-in on basic income. They are in dire need of debt-free money to survive. http://www.zerohedge.com/news/2017-0...t-basic-income
The corporatocracy has lost out on the TTIP and TTP that was slated to reduce wage costs and raise profit margins. How can these people be so blissfully STUPID? Survival wages KILL discretionary spending. This is proven day in and day out. Aggregate earnings go down and consumption goes down and trade goes down and finance goes down. The rentier class loves low wages because they never think it through.

They decry anything that might reduce profits; http://www.batr.org/negotium/020112.html

[Danny B]

Elastic currency is for the speculators only

In the America of 100 years ago, the mined gold supply increased by about 2% per year. The economy also grew by about 2% per year. There was no price inflation because currency growth was commensurate with actual productivity. The bankers and speculators used people's savings to speculate in the stock market. They always caused crashes in banking because the currency supply wasn't elastic enough to cover their bad bets.

The Central Bank was deemed necessary to stabilize the banking system. The CB is necessary for the speculators, NOT for the producers. Previously, all capital projects were financed with accumulated savings. War was always the biggest capital project. Before going to war, a State would go off the gold standard to make sure that it's finances would not run dry in the middle of the war.

The FED was created, ostensibly, to stabilize the banking system. It wasn't really a money-maker for the bankers who owned it. It was created in 1913. By 1920, Benjamin Strong, the head of the FED, started illegally selling U.S. Treasury notes on the secondary market at a discount. This was the start of profit generation for the FED. The "inflation tax" was paid by everyone and the FED profited. Not surprisingly, the FED got carried away and the system crashed in 1929. Benjamin Strong was never blamed and his actions were made retroactively legal. It only took 16 years for the FED to bring it all down.

FED GOV wanted a central bank to finance wars. The bankers wanted a central bank to finance speculation. Alan and Benjamin have given us both in vast quantities. Yellen is working on it too. Due to a crash in the wage base and outsourcing, the speculators are losing their debt markets.
It has taken far longer to crash the system this time because of the blessings of having the reserve currency.
The bankers are pumping liquidity into the upper loop to save the finance industry. They prefer for the liquidity to flow into things that will not inflate prices for lower loop. We see in Venezuela what happens to the cost of food when too much inflation is allowed to affect the cost of basic necessities.

The PTB would like the lower loop to remain relatively stable. Revolution is never a good idea. They pump liquidity into the upper loop to keep finance alive. They saved what could not be saved,,, in the long run. They killed all interest-income. Too much of the abundant liquidity flowed into the corporate bond and stock market. This is filtering down and wiping out sectors of the markets supported by discretionary spending.
U.S. productivity crashed but, the finance sector was rescued. The rescue is getting more expensive every day. The FED has a balance sheet total reported at $ 4.5 trillion.
The FED can't raise interest rates and expect the "saved" institutions to survive. The FED can't hold interest rates and expect the sector that depends on interest-income to survive.
If Benjamin Strong had been prosecuted back in 1920, it is possible that the FED could have been kept within it's original mandate. The speculator class, being non-producers use regulatory capture to escape the confines of an inelastic currency. So here we are.

[Danny B]

Bad economic policies = bad results,, Short Bunds

"Heyman Capital's Kyle Bass, who as we reported two weeks ago returned an impressive 25% in 2016"
"Bass said China has “recklessly built a system that’s going to need to restructure and that just so happens to be metastasizing right when Trump becomes elected. This is a fire that’s been smoldering and it’s now starting to burn, and Trump is just more gasoline."
"Bass also said that imposing tariffs on Chinese imports could have “profound consequences” for the nation’s economy, where credit over the last 18 months has grown by $6.5 trillion while deposits have grown by half of that, or just $3 trillion, "so credit is growing exponentially, China has to fund enormous moves in credit growth just to keep in roughly the same place. We call it running to stand still."

"Aside from China, Bass echoed recent favorable remarks by both Ray Dalio and Stanley Druckenmiller about the impact Trump would have on the US economy, which he said would now focus on labor over capital, and the resulting increase in capital investment could to a jump in productivity, all of which is happening near full employment" ,,, and when combined with tax repatriation, will be "extremely stimulative" but also be inflationary. "
NOT without wage inflation.

"The trade Bass may be refering to is the same "short of a lifetime" first brought up by none other than Bill Gross in April of 2015, namely shorting German bunds, and which promptly crashed just days after the Gross prediction almost two years ago. "
"It sounds that Bass now in agreement not only with Gross, but also Jeff Gundlach, who in his recent public webcasts has continued to hammer the thesis that shorting German Bunds has huge profit potential, and if indeed Bass sees the Short Bund trade as the greatest opportunity of his career"
Kyle Bass Hints What The "Greatest Trade He Has Ever Encountered" Is | Zero Hedge
What happens to the Euro if German Bunds crash?

"Johnson bemoaned the lack of a “spirit of stewardship” and openness to more aggressively redistributive tax policy among the wealthy.

“Twenty-five hedge-fund managers make more money than all of the kindergarten teachers in America combined,” he told the New Yorker. “Being one of those twenty-five doesn’t feel good. I think they’ve developed a heightened sensitivity.”

If anything, Osnos wrote, inequality is widening, noting recent statistics from the National Bureau of Economic Research that showed that while incomes for the top 1 percent of Americans have nearly tripled, half of the population was earning at the same level they did in 1980, comparing America’s wealth gap to that seen in the Democratic Republic of Congo"
https://www.ineteconomics.org/perspe...mericas-crisis
This is all an observation from a human. A corporation doesn't make these kinds of observations.

"This is where we’ve got to with neoliberalism, austerity, and rising inequality. Except for the self-correct part. Right now, instead of self-correction, we’re seeing many mainstream politicians unable to shift away from dead economics, and what seems in too many countries like the start of social breakdown."
"But then the IMF demolishes the case for neoliberalism and austerity. "
"Packed with detailed quantitative analysis it demonstrates that much of what elites have been advancing as unquestioned economics is demonstrably harmful both to economic growth and to public wellbeing."
"The paper not only demolishes neoliberal economics but also helps build the evidence base around the kinds of policies that are necessary to reduce inequality. "
"And now, in countries around the world, the lack of action in inequality is leading to a resurgence of xenophobic nationalism and the far right. Broken economics is breaking society. But too many leaders still seem trapped in the belief that there is no alternative. So let them know that today the IMF – yes, the IMF – has comprehensively set out why that broken economics must be consigned to the dustbin of history."
Austerity economics has just been smashed. By the IMF.

1/26 Investors shun Italian bonds as political outlook remains cloudy – Bloomberg So German Bunds are going to crash. Italian bonds are too risky. The Russian stock market is the only market with good returns.

“The fastest way to dismantle the EU is to continue talking about a step-by-step move towards some sort of superstate.”
https://www.armstrongeconomics.com/i...-with-destiny/
The war mongers definitely don't want to be stopped by Trump. https://www.armstrongeconomics.com/i...r-with-russia/

We've had a LONG run at inflation. Deflation always follows. https://projectchesapeake.wordpress....ry-depression/

[Danny B]

A shrinking population can not grow the credit bubble.

The FED boxed itself into a corner trying to save ALL the banks. Now, it can't raise rates and can't hold them where they are. Japan boxed itself into a corner trying to save ALL the banks even though the population is / was falling. How do you grow an economy when the population is falling?
The workforce in China is shrinking; This is how fast China's workforce is shrinking
How do you grow an economy when the workforce is shrinking? You export. Trump is going to put a bullet in China's export market. It's already lying comatose on the ground. China is pumping in $trillions trying to save the banking system even though the population and manufacturing sectors are shrinking.

Under the one-child policy, Chinese couple learned that they could have a better standard of living if they limited the number of offspring. The population is falling MUCH faster than the GOV planned. China's Self-Inflicted Demographic Disaster Is Here | The National Interest

Harry Dent;
"bubbles burst twice as fast as they grew."
"Half the crash will come in the first 3 months" Make that 3 hours.
"Germany has the worst demographics in the world" Maybe that has something to do with German Bunds
"We're going to lose another 4 1/2 % of our workforce"
https://www.youtube.com/watch?v=ooWic_HWQM8
Harry Dent talks about people pulling out of the markets. Presumably, they would move their money to the banks. BUT, the banks already have bail-in laws.

So, Trump is going to throw gasoline on the smoldering fire called China.
Yellen plans to throw cold water on Trump's plans here at home, https://www.youtube.com/watch?v=mtbPkcZpZmY

The corporatocracy was unable to increase profits as worker's wages went down. Their solution was to increase margins by lowering wages. The workers responded by doing the responsible thing and limiting family size. All organisms grow to the limits of their resources. In the case of man, we grow our families in accordance with the perceived limit to our resources.
After WW II, America had a lock on the export of manufactured goods. The lock is gone. BUT, the credit bubble demands unlimited growth.
The credit bubble will pop. Will it ever be reborn? Jim Rickards envisions it being reborn with the SDR.
The SDR isn't likely to be accepted because it is a 8astard child of the IMF and the West. We're on our third bubble. It's never been done before. The restructuring that MUST take place was never allowed to happen.

[Danny B]

Bunds, capitalism and survival

Socialism is the firewall between non-producers and Darwinian pressures. Capitalism is aligned with competition. There are plenty of non-competitive people at all levels. They get a job shuffling papers for GOV or they work for their father's company, etc. Crony-capitalism is a scheme to keep bad ideas and bad people from falling prey to the pressures of competition in a free market. Crony capitalism has given capitalism a bad name. The nut-cases have weighed in on the problem;

"The rules of the game are so stacked against the masses that this week a professor said “only all-out thermonuclear war might fundamentally reset the existing distribution of resources.”
"Capitalism’s imperative for expansion, growing profit levels, and efficiency has ultimately dehumanized our culture. "
Ah yes, efficiency,, efficiency and socialism just can't co-exist. They cry about "dehumanizing" but, they fail to point the finger at the current structure of the corporation. A corporation isn't human so, they shouldn't expect it act "human".
Environmental Collapse And The Unravelling Of Civilization » Environmental Collapse And The Unravelling Of Civilization | Geoengineering Watch

Stocks are up but, there is a cure; https://www.sovereignman.com/investi...0-crash-20733/

"Under fiscal dominance, low inflation is allowed to persist for an extended period of time. It will gradually erode the real value of the dollar and dollar-denominated Treasury debt. This is how the U.S. reduced its debt-to-GDP ratio from 1946 to 1970."
"Money printing alone does not produce inflation. The money printing must be combined with the willingness of individuals to borrow, spend and invest.

Such willingness is largely psychological — dependent on Keynes’ animal spirits. However, once expectations shift from deflationary to inflationary scenarios, they are hard to shift back again." True, just try to shift out of a deflationary mindset when employment and retail trade are crashing.
"With unemployment at post-recession lows and initial claims for unemployment benefits at all-time lows, Yellen’s analysis is that inflationary pressures from increasing wage demands are just a matter of time."
https://dailyreckoning.com/trump-yel...systemic-risk/

This summer promises to be exciting; "When Will It End?" BofAML's 10-Point Checklist | Zero Hedge

1/27 “Short the euro, collapse may come in 12 to 18 months” – Financial Sense Grundlach, Bass Gross,and Dalio all say to short German Bunds. Why would they give away a strategy unless they hope that everybody will pile in? Is this hoped to be a self-fulfilling proposition to kill the Euro and save the dollar?
1/27 Steen Jakobsen “Trump increases odds of us recession” – Mish It's that gas can that he carried around.
1/27 Japan’s budget surplus goal elusive with worsening fiscal health – Mainichi They lost their export markets and their domestic population is falling. Very strange,, they just can't seem to grow their economy.

1/27 It takes $4 of debt to create a single dollar of GDP growth in China – ValueWalk Boy, aren't they stupid. It takes over $6 in America so, we're ahead of them.
1/27 The downfall of a “yield at any price” strategy – Seeking Alpha The FED prints money to keep all the speculators going. BUT, there are few opportunities for return. The fresh money is destined to flow into BAD investments because there is too much money and too few good markets.
All the extra money causes economic shrinkage.
The money was printed to rescue bad ideas and bad investments. Fascism is "social' distribution to the rich. Just like socialism for the poor, it eventually crashes.
It's easy to say, "bad ideas and schemes should not be created and / or rescued." What about people who will never be productive? Should they and their offspring be supported in perpetuity?
In a normal society, women choose mates based on the success of the male hoping that their offspring will survive. If the women are supported by the State, they can breed recklessly and just let the State carry the burden of survival.
Mother Nature is a strict practitioner of eugenics. It is considered taboo for Man to overtly do the same thing. The State wants hordes on new bodies, imported or domestic, to keep everything going. It just isn't going to work out. The demographic crash is sweeping aside all their plans.

[Danny B]

Waning population, productivity and energy consumption

Kinda complex today. Rule number one, the credit bubble MUST grow.
The subject today is peak oil, peak cheap oil and peak population growth. Here is a good article with great graphs showing population and oil consumption.
Peak Oil Consumption Dead Ahead (But Price Is Anybody's Guess) | Zero Hedge
All the predictions change when a State has a falling population of people of consumer age. The clowns at Davos must not have gotten the memo.

There is a LOT of oil in the world,,, not necessarily in the lower 48 but, there is a LOT. This fact is becoming less and less important.
Forget Peak Oil - It's All About Peak Population Growth | Seeking Alpha
China avoided 400 million births with their one-child policy. It was necessary just to get a breather on population growth. Now, the have a falling population of workers. They are going down the same road as Japan.
Much of the world is bumping into limits of resources and reducing their population. This is anathema to the credit system.

Repost; https://www.theautomaticearth.com/20...-of-modernity/
Energy is the master resource and without cheap energy, the financial system just can't survive.

"Global exports priced in US dollars has varied directly with the price of oil. Protectionism had not kicked in yet, but it will."
Mish writes that world trade is directly linked to the price of oil. I think that he is overlooking the fall in wages but, I can't prove it.
https://mishtalk.com/2017/01/27/what...se-in-exports/

"The Dow has been on a winning streak since 2009, in the period of Obama’s two term presidency the index climbed 144%, the S&P 500 172% and the Nasdaq Composite 275%. " N.B. Obama is the first president to not have a single year of 3% growth. Could it be the FED?
"It is worth noting that Venezuela and previously Zimbabwe had the best performing stocks markets in recent years."

"When you look at the DJIA against something that has held its value, as opposed to the debased dollar and the artificially stimulated US economy, then you will see a different story.

Dow Jones Versus Gold

‘Sir Charles’ over at pricedingold.com, draws our attention to the fact that the Dow priced in gold is nowhere near its high of 1110 grams of gold (49 oz) seen in 1999 when the DJIA rose to a record of 11,700 and gold was at a record low of $240 per ounce (see chart). Last Friday, when Trump was inaugurated the Dow was at 530g (18.1 oz)."

“Breaking the 1,000 barrier in November of 1972 was an emotional moment for traders on the floor and investors around the world. It seemed to mark a new era of prosperity, even as, behind the scenes, inflation and recession were preparing to set in. At that time, Dow 1,000 USD meant Dow 482 grams of gold, and through the rest of 1972, the Dow traded between 480 and 500 grams.’

"In value terms, the 20,000 milestone means very little. In fact, in real value terms (when priced in gold) the Dow isn’t much higher than when it first hit just 1,000 back in 1972."
It wasn’t until 1973 that the strings began to unravel and both the dollar and stock market began to fall, the Dow reached its all time low of 37g (1.3oz) in 1980. Were that to happen today with the DJIA at 20,000, we would need to see gold prices surge to $15,384 per ounce."
Dow 20K ... US Debt $20 Trillion ... Trump and $15,000 Gold - GoldCore Gold Bullion Dealer

[Danny B]

PRI and drug money,, Demographic disaster

A couple of headlines;
Trump Mex Pres Talk On Phone As Tensions Rise
Mex Pres Funded By Juarez Drug Cartel
That's Why He's Against Trump Border Plan
US Merchandise Trade Deficit With Mex Nears One Trillion
Trump enraged as Mexican president meets with Meryl Streep instead – New Yorker
These Are Mexico's Top Exports | Zero Hedge

The PRI party in Mexico has reportedly been sucking up a lot of drug money. This is common knowledge in Mexico. https://www.intellihub.com/mexican-p...p-border-plan/
The former president, Vincente Fox had a twitter meltdown and said, "we're not going to pay for the phucking wall".
Two CIA Agents Arrested by Minutemen while Crossing Mexican Border with 1300 Pounds of Cocaine – World News Daily Report
The U.S. Government And The Sinaloa Cartel - Business Insider
The Mexican branch of the swamp contains a LOT of nose-candy. The wall threatens both the cartels and the main ruling party in Mexico. During the 2008 crash, the only liquidity available to the banks was the money from their drug operations.
Trump is taking on the mafia and they do a lot of killings;
"Paolo Borsellino (Italian: [ˈpaːolo borselˈliːno]; January 19, 1940 – July 19, 1992) was an Italian judge and prosecuting magistrate. He was killed by a Mafia car bomb in Palermo, 57 days after his friend and fellow Antimafia magistrate Giovanni Falcone was assassinated."
https://www.youtube.com/watch?v=FXZzCQ4_6hA
One magistrate travelled in a bullet-proof car. The mob put a long ton of explosives in a culvert under the road and got him that way.

Sr. Price writes that credit creation has gone into reverse. https://dailyreckoning.com/omen-global-collapse/

Population growth stalled but, debt creation took off to the moon. Global aggregate discretionary spending crashed. The population of 16 to 64 year olds who do most of the producing is crashing. The population of retirees who consume BUT, don't produce is growing fast. They draw-down the of finance industry from retirees is accelerating.
The draw-down (drain) of the finance industry is growing.
The over-burden of consumers who don't produce is financed by more money creation. This is all focused in the bond market.

The finance industry siphoned off our money. We cut way back on procreation. This was something that they had never seen before. They have NO solution. The youth unemployment in some European States is close to 50%. They aren't going to have children. With the number of retirees growing by leaps and bounds, there isn't going to be enough resources for everybody. The monetary drain of GOV, finance and retirees combined with our slide to a global mean wage means that responsible populations will cut back even further on procreation.

The credit system will go supernova because it depends on confidence and growth. A debt-money system is incompatible with a shrinking population. In Japan, the GOV pays for everything if a woman gets pregnant. If the State wants to stabilize the population, it has to fund responsible women who want to have children. In Russia, the State pays your mortgage if you have 3 or more children. They give you a medal if you have 6 children. Other States pay a baby-bonus.
In the U.S. we have AFDC to support children.
The population is out of balance. Even with all the chemtrails, the elderly aren't dying fast enough. Search " increasing respiratory illness".

[Danny B]

Expensive corruption

If GOV wants to spend money on infrastructure and the American people, THAT is a waste and we can't afford it. if GOV wants to spend money on the military-industrial complex, THAT is important and gets funding. Money sent overseas and money spent on the war industries is a drain on domestic finance. It does create some jobs for Americans but, much of the profit of war goes directly to the bankers.
Everything must be done so that we keep working and the banks never go broke; What if the Government had paid off Mortgages with the Bailout Funds?, page 1

Most of the government waste goes to the rich. Even the very-costly "war on poverty" was a boon to the banks because it did nothing for the poor.
"As Rector also points out, however, is that in that 50-year timespan, the poverty rate was the same that was when President Lyndon B. Johnson began the “war on poverty.”
"The U.S. Census Bureau has just released its annual poverty report,” Rector wrote. “The report claims that in 2013, 14.5 percent of Americans were poor. Remarkably, that’s almost the same poverty rate as in 1967, three years after the War on Poverty started.”
"The Lockheed Martin F-35 Stealth Fighter Jet Project: According to Reuters, the cost to build the fighter jet program is estimated to be $379 billion"

"The federal budget is currently around $3.8 trillion. If you take there are 365 days in a year, 24 hours in a day and 60 minutes in an hour, that comes to a total of 525,600 minutes per year. Divide that $3.8 trillion by 525,600 and you will find the U.S. government spends about $7.2 million per minute."
"A 2015 Government Accountability Office report estimated in 2014 the federal government made $59.9 billion in improper Medicare payments and $17.5 billion in improper Medicaid payments for a grand total of $76.4 billion"
So, who sucked up the mislaid $76.4 billion?
"That same report found that when the $76.4 billion figure was combined with 122 programs, including the EITC, that number in FY 2014 comes out to $124.7 billion in improper federal government payment, which was up from $105.8 billion a year earlier" So, who sucked up the extra $19 billion in one year?
"The U.S. Navy’s controversial Littoral Combat Ship program comes in with a price tag of $29 billion." BUT, it doesn't work.

"However, as the Washington Examiner’s Byron York pointed out, the Treasury Inspector General for Tax Administration stated, “The IRS estimates that 23.8 percent ($15.6 billion) of EITC payments were issued improperly in Fiscal Year 2015.” So, who got the $15.6 billion?
"Farm Subsidies: According to Chris Edwards of the Cato Institute, the federal government through the Department of Agriculture spends at least $25 billion on farm subsidies." This induces farmers to specifically plant crops that garner subsidies.
Ten Questionable Federal Gov't Expenditures Greater Than Trump's Border Wall - Breitbart