Economic pressures

[Danny B]

liquidity searching for a home,,,doomers

The CBs created endless "liquidity" and, it had to find a home. It couldn't do this in gold. The gold supply increased about 2% per year. About the same rate that the economy grew. This rate would be fine for the producing economy but, FAR too limited for the needs of the speculators. The speculators were first in line for free money and, 2% just wouldn't do. To keep pressure off of gold, "They" created paper gold in 1984. This allowed an ever-expanding "supply" of gold for the speculators. The money supply expanded at about 7% per year. The extra 5% was what was added on as currency / price inflation over the years.
Since wage inflation always lagged price inflation, the speculators were always ahead of the game. The recent liquidity expansion has gone into hyperdrive. Everything it touched inflated and then, died. EVERYTHING except for gold, depends on consumption, in the FINAL analysis.

Gold was artificially inflated like everything else. The recent hyperdrive-press action required something else to absorb the excess liquidity. Enter cryptoS There are so many of them that they can absorb an enormous amount of liquidity. BUT, that is also their weakness.
12/22 Crypto carnage continues: bitcoin down $5,000 from record highs – Zero Hedge
12/22 Is this why Charlie Lee sold his litecoin? – Tom Luongo
12/22 Bitcoin: birth of the world’s first “teal” equity? – CME Group
12/21 Bitcoin arbitrage spreads are collapsing – Zero Hedge
Crypto really does NOT lend itself to arbitrage and speculation.
12/22 Cryptocurrencies could be ‘just mining the public’ – CNBC
12/22 Equity mania reaches fever pitch – Zero Hedge THAT always happens just before the crash.

12/21 Steinhoff disintegrates – Zero Hedge First (sort of ) Many.
12/21 Subprime auto defaults are soaring – Bloomberg
12/21 UK’s Warren Buffett says it’s time to sell stocks and bonds – CNBC
12/22 Treasury yields poised to surge – Silver PhoenixJust imagine shooting a flare gun inside a fireworks factory.
12/22 BOJ keeps policy steady, Kuroda dismisses talk of early exit – Reuters NO QT for Japan. The presses will run until they melt into the earth.
Russia just bought lots of gold. Stockman says to buy gold, David Stockman Warns "Gold Is The Only Safe Asset Left" | Zero Hedge

[Danny B]

Forcing people to work, while employment is disappearing

85% of People Hate Their Jobs, Gallup Poll Says - Return to Now
https://returntonow.net/2017/09/22/8...lup-poll-says/
Sep 22, 2017 - Eighty-five percent of workers worldwide admit to hating their jobs when surveyed anonymously, according to a Gallup poll released last month. “Many people in the world hate their job and especially their boss,” the report says. Since 2000, Gallup has polled millions of employees from nearly 200 countries "

All of us have things that we would rather do than go to a job that we don't care for. We don't want to be told what to do all day.
Looming poverty forces us to go to work. Suppose everybody were given a universal basic income? We wouldn't show up for work. Due to increasing automation, hundreds of millions CAN'T show up for work.
Not So Great: 94,983,000 Americans Not in the Labor Force in May
https://www.cnsnews.com/.../not-so-g...abor-force-may
Jun 2, 2017
Unemployment is at 21.7%. http://www.shadowstats.com/imgs/sgs-...d&t=1512743154

"A landmark 2017 study even looked at the impact of just industrial robots on jobs from 1993 to 2007 and found that every new robot replaced around 5.6 workers, and every additional robot per 1,000 workers reduced the percentage of the total population employed by 0.34% and also reduced wages by 0.5%. During that 14-year period of time, the number of industrial robots quadrupled and between 360,000 and 670,000 jobs were erased. "
09/15/2017: AI could make full-time work a thing of the past
https://www.marketplace.org/.../0915...merican-work-m...
Sep 15, 2017 - 09/15/2017: AI could make full-time work a thing of the past.
The Incredible Shrinking Paycheck - Forbes
The Incredible Shrinking Pay Raise: Wages Can't Keep Up With Inflation
https://www.cnbc.com/id/48130116
Purchasing power keeps falling but, the economy MUST grow to service debt. This is papered over by the CB creating new debt-money for the State. The debt money is locked into the upper loop because the ONLY transmission mechanism is, wages. The transmission mechanism for the more well-off is, stock dividends.
The Wages for a big part of the middle class have disappeared and / or gone stagnant. The income for the upper middle class depend on dividends. ALL of these people depend on income from renting out their money. Stock dividends were previously dependent on earnings from sales.
As the wage base crashes, this is seen as falling sales, profits and dividends. This eventually shows up as falling dividends to the upper middle class. The join the ranks of the non-spenders from the lower middle class. The PTB pump up stocks to keep the upper middle class from joining the lower middle class. Valuations are at 2.7 times the historical norms. (Hussman) Armstrong says that valuations will continue to climb. As the Euro fractures, European capital joins Chinese capital in a flight to the safety of American markets. International capital flows are key to most markets.
The tax reform bill will help the banks and screw most people. Apparently, Trump is counting on the new tax laws to attract capital HERE.
https://www.armstrongeconomics.com/w...n-europe-asia/
I still can't see the DOW at 40,000 but, who knows?

The PTB try to keep us impoverished to keep us working. At the same time, automation is reducing the need for workers. The State is printing up money to try to keep things moving along.

[Danny B]

Kunstler,,, power tied to gold

Grab a snack and read a bit more from Kunstler. Make sure that you are seated.
The Darkest Hours - Kunstler
Here is a VERY interesting article on the how and why of gold manipulation.
"Please keep in mind that the control of the gold price by the deep state financial elite is not some parlor game that they play for their enjoyment; it is an absolutely critical requirement in keeping the fraudulent fiat currency counterfeiting scheme from collapsing. There are literally trillions of dollars at stake, and the entire counterfeiting scam could and almost certainly would implode if gold “went Bitcoin.”
Gold EFPs: Absolute Proof That Paper Gold Is A Fraud | Zero Hedge
It's a long article but it gives a lot of information about the power structure aside from the info on gold.

[Danny B]

Canada,,,, cyber crime,,, lacking baselines for accurate projections

Canadians spending nearly as much on marijuana as wine, shows report
12/23 Canadian housing affordability hits 27 year low – Zero Hedge
Alberta (Tar Sands Capital Of The World) Invests In 600 MW Of Wind power
Trudeau says Canada's oil sands must be phased out - Phys.org
12/23 Spending up far more than real income: per capita income stagnates – Mish No problem. We'll just spend til we default.
12/23 Bitcoin plunges 45% in 5 days… how low will it go? – SRSrocco Report
12/22 Panic selling turns into scramble buying as cryptocurrencies recover – ZH
12/23 France bans fracking and oil extraction in all of its territories – Guardian

Good article on the unfolding powers of cyber crime.
"Hiscox and Cybersecurity Ventures calculated that cybercrime cost the global economy $450 billion in 2016; they predict this number will reach $6 trillion in the next three years.
Lloyd's of London notes a single cyberattack can trigger $53 billion in economic losses, and pegs average losses after operating systems have been hacked at upwards of $29 billion.
While most people probably would regard terrorism as the greatest threat to the United States – say an attack on par with 9/11 – in fact Visual Capitalist cites a poll stating that cyberwarfare is the most threatening scenario at 45% compared to terrorism at 26.3%.
Ahead of The Herd

My brother is a senior IT development guy in a company in the beltway. I sent him a curious link. He immediately replied that he was changing ALL his passwords. I don't know enough to understand what all the fuss is all about. But, here is the link.
https://medium.com/4iqdelvedeep/1-4-...e-3131d0a1ae14
Here is a VERY off-the-wall article, https://renegadeinc.com/he-died-for-...-not-our-sins/
Here is a link to a long PDF book that is NOT POLITICALLY CORRECT. It does have a bearing on the economy of today.
https://katana17.files.wordpress.com...-roth-1934.pdf

Kunstler writes a review of the previous year. We (one sector) are living a life of deluded wealth brought on by credit creation. Kunstler writes about some aspects of the delusion.
Beyond Cynicism: America Fumbles Towards Kafka’s Castle | The American Conservative
Credit creation is the obverse side of the wage-crash coin. The bankers and corporatocracy expect to have full control of everything after the default cascade. They have the cameras and microphones and the guns,,, not to mention the lawbooks. They have already demonstrated their short-sightedness and stupidity.
The American birth rate fell so, the southern border was left open to avoid the population crash that befell Japan. We had a big influx of people who mostly had a good work ethic and a Christian background. Japan and the Soviet Union both showed that you can't have a shrinking population AND a growing market.
The Eurocrats formed the European union as a political union WITHOUT a debt union. They were warned at inception that it had NEVER previously worked. The whole thing will come crashing down. They were warned and went ahead anyway.
Hoping to copy the American experiment with importing workers from Latin America, the EU bombed MENA to chaos to supply a high number of willing refugees. This served American (israeli) interests as well to fracture ALL neighbors laying the groundwork for the unfolding "greater israel".
Equating muslim and black immigrants from States that have almost zero cohesion with immigrants from Latin America, was a big mistake. Much of the trash coming from Afghanistan, Pakistan and Somalia will NEVER contribute anything to productivity and growth. Instead, they will contribute to social and economic breakdown.
The Eurocrats made a painfully stupid move and have created a populist revolt. They assumed that erasing all democracy in Europe would allow them to dictate any terms that they desired. Poland and Hungary are at the forefront of the revolt that will eventually bring down all their twisted dreams.
TOO many of the "elites" are too distanced from the common people to judge / project what the outcome of their actions will be. Many of the politicians are former lawyers. Lawyers seem to believe that; you just pass a law and, everybody will comply. (Armstrong)
Automation is a new pressure just come on the scene. There is no baseline history on which to base projections of the outcome. Previously, mechanization had replaced people who used a lot of brawn. This was addressed many years ago. The Luddites. NOW, machines are replacing people who used their brains rather than their brawn. Armstrong's program, Socrates has NO baseline for integrating this new paradigm, NOR, the paradigm of reproductive choice. (Birth control).
I think that Socrates will be blind-sided.

[Danny B]

Year end roundup

Everybody is writing their year end thoughts. Kunstler is especially dark. Others are bogus BS to the n'th degree. Here is one that covers everything and is pretty much accurate.
https://www.peakprosperity.com/blog/...17-year-review
I'm going grocery shopping and will write more,,, after you read this.

[Danny B]

$21 trillion buys a good fleet

The day before the cruise missile hit the Pentagon, Rumsfeld announced that $2.3 trillion was missing. 49 workers from the Naval office of budget and management were working on tracking down that missing money. Their offices were in a part of the Pentagon that had recently been "hardened" to resist attack. 48 died. There was also a similar investigation in building 7 with the FBI. That was all destroyed when building 7 was "pulled".
Recently, it was reported that $21 trillion was missing. It can't actually be missing. It is unaccounted for. We all know where it went.

"A new space corps would represent more of a bureaucratic reshuffling than a major expansion of the Space Command, which currently employs about 36,000 people and is headquartered at Peterson Air Force Base in Colorado. " Air Force Space Command > Home
" Other top defense officials have argued that the Pentagon is already making a renewed effort in space and are lobbying Congress to instead provide more funding." How much more funding?
"During a briefing with reporters last week, Air Force Chief of Staff General David Goldfein said the military’s goal was to “normalize” space as a war-fighting domain"
"In an official statement of policy, the Trump administration said the creation of a space corps was “premature” and that the Defense Department was still assessing the possibility as one option in a broader reorganization."
https://www.theatlantic.com/politics...-corps/536124/

OK, so, we have a space fleet and they are trying to bring it out in the open. The missing $trillions paid for it.
Where did those $trillions come from? The "black" section of the budget wasn't big enough.
Everybody looks at the reported movements of money to & from the Treasury and FED. Nobody sees reports from the President's working group on markets or the Exchange stabilization fund. The PPT and ESF just move liquidity wherever they want.

Ben Franklin mentioned to the European bankers that the colonies just printed whatever amount of money the productive economy needed. That brought us a war from The European bankers. Adolph Hitler created money, as needed for workers and the productive economy. He too got a war from the European bankers. Churchill made it very clear that WW II was banker's war.

The "missing" $21 trillion was most likely spent INTO the productive economy for the development of the American space fleet.
https://www.theatlantic.com/politics...-corps/536124/
https://truedisclosure.org/news/sola...esent-day.html

Both Benjamin and Adolph produced money for the productive sectors of the economy. This didn't sit well with the speculators. The Pentagon is soon to be audited. It is doubtful that the funding for the space fleet will ever be itemized.
EDIT:
Gen. David Goldfein to be second Jewish US Air Force chief - Haaretz
https://www.haaretz.com › World News › Americas
Apr 27, 2016 - Gen. David Goldfein. U.S. Air Force. Gen. David Goldfein will become the second Jew to command the U.S. Air Force.

Meet the Jew who may bomb North Korea - Israel National News
www.israelnationalnews.com › All News › US & Canada
Oct 23, 2017 - Head of US Air Force General David Goldfein is responsible, among other things, for the fleet of bombers that may soon strike rogue state.

[Danny B]

Raging against the long, long night

China is hard at work to build their new prosperity. Otherwise known as the new Silk Road. They want to get lots of new people working and earning AND consuming. They have the right idea; get lots of people out of the fields,,, into the cities and, consuming like crazy. As nutrition gets better,,, as child care gets better, people become more intelligent.
Intelligent people have fewer children, preferring to attain quality over quantity.
Here are 3 articles that you can skim to get a good picture.
https://econimica.blogspot.com/2017/...ead-ahead.html
https://econimica.blogspot.com/2015/...of-global.html
https://econimica.blogspot.com/2017/...orph-into.html

Population (ex S. Africa) is falling everywhere. Our debt-money system is fracturing from the CBs trying to compensate for falling consumption with rising money printing. China has the fastest falling labor force. China has the fastest printing presses.
The demographic crash will wipe out budgets everywhere. Japan has given up on pretence and is printing with wild abandon. The FED claims to have shut down the QE machine but, we don't hear a word from the PPT and ESF. China has recently created more debt that the EU, FED and BOJ put together.

Here is a page with American debt year by year. https://www.thebalance.com/national-...events-3306287
Here is a page with births, year by year. https://www.infoplease.com/us/births...rth-rates-year
SOMETHING always precipitates a crash. Recent history clearly shows that our approaching date with poverty will bring a big shrinkage in the birth rate. The unfolding police State and control systems won't inspire people to bring children into an Orwellian world. Our fast approaching poverty won't either. Ditto for the approaching race wars.
Our current system that demands eternal growth will crash into the reality of a shrinking population and crashing consumption. In the face of runaway automation, there isn't anything "good" that the State can do.
The unfolding police State is hardly likely to inspire confidence in couples.

Kunstler writes about, "The Long Emergency". By it's very (current) nature, the State can't possibly inspire confidence.
The corporatocracy brings us rising fascism. The State brings us a socialist control system. Socialism is anti-family. The results are unfolding. When the markets crash, the demographic crash will eclipse everything else.
"He said that budget will “be a doozy” because of a projected $1 billion hole created by need to appropriate close to $1 billion to the pension funds on top of the $1.2 billion appropriated in the current budget."
http://www.themoreheadnews.com/news/...596a9b60b.html
We will see lots more of this.

[Danny B]

No jobs means no kids = no economy

Armstrong says that everything runs in cycles. Not true.
Interest rates are the lowest in 5,000 years.
The birth rate is the lowest in history.
The Amish have large families because they need the "free" labor of their children for their non-mechanized farms. In the rest of America, only 1% of the population works in agriculture. They have help.
22 Billion Energy Slaves. "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.

Agrarian societies had large families out of necessity. That necessity is no longer there. Women were pulled into the labor force by the demands of taxes, wars and parasites. This lowered the birth rate. The predations have become so great that wages are no longer adequate to support a family for many couples.
The bankers are at the head of the line for the food trough. The boomers are next in line because they were promised support til death. Those boomers who can't get support must work til they drop. This leaves fewer job niches for millennials. The millennials are living in their parent's basement. Seeing no future, they opt out of society and lose themselves in "Second Life" and VR. In Second Life, they can escape and soar with the eagles. If Second life, VR and Youtube aren't enough, they might escape to drugs. This is slow suicide,,,,, as opposed to fast suicide by one of the many popular methods.

The Polish government encourages the Poles to breed like rabbits (vid). BUT, there are 300,000 Poles in Britain attracted by employment possibilities. There is something seriously wrong with the Polish GOV if they promote reproduction in people who have no employment prospects. This is duplicated in most other developed States. They promote fecundity in jobless populations. To further prove their stupidity, several States are flooding their nations with with non-productive immigrants ,,,, to keep the productive economy going.

Creating large families out of necessity is a thing of the past. Worldwide population growth is a thing of the past. Full employment is a thing of the past. To preserve the debt bubble, the printing presses are running in hyperdrive.
Large families made sense before mechanization of production. Most of the people who do decide to have children now limit the number to two. Greece is a good example of what happens when the bankers get their way with a country.
Shock birth rates shows Greeks may be dying out over IMPOSED ...
https://www.express.co.uk › News › World
Apr 29, 2017 - Greece population birth rate crisis GETTY. Roughly a fifth of women born in the 1970s will remain childless.

This is very much in line with the desires of VHEMT but, it is very bad for the bankers.
https://rationalwiki.org/wiki/Volunt...ction_Movement
There is a dawning perception that you must have people to have an economy. "They" could cover the land with robots and produce great abundance but, for what? Stocks and bonds are claims on future productivity. What happens if there is no future consumption?

Many decades ago, the English did not allow a couple to get married until, they had a place to live. This was done to cut down on procreation of people who had inadequate support. We are in a new era where reproduction is an expensive headache and many avoid it. This is not some cyclical thing.

[Danny B]

Possibilities with AI,,Blockchain

A lot of mankind's problems are related to human nature. It is possible that AI will come up with some solutions to our problems.
Robot taught itself never seen before chess moves in hours | Daily Mail Online
"In those 240 minutes of practice, the program not only taught itself how to play but developed tactics that are unbeatably innovative — and revealed its startling ability to trounce human intelligence. Some of its winning moves had never been recorded in the 1,500 years that human brains have pitted wits across the chequered board."
"On December 6, 2017, AlphaZero took over the chess world . . . eventually solving the game and finally enslaving the human race as pets."

"Already top IT experts warn that deep-learning algorithms can run riotously out of control because we don’t know what they’re teaching themselves.
And the programs can develop distinctly worrying ideas. A system developed in America for probation services to predict the risk of parole-seekers reoffending was recently discovered to have quickly become unfairly racially biased."

Political assassination, https://www.armstrongeconomics.com/i...ove-opponents/
Socrates and BTC, https://www.armstrongeconomics.com/w...bitcoin-crash/

A very good article on integrating blockchain contracts into the existing legal system.
https://medium.com/humanizing-the-si...g-11a67c75d840
Who knows what the limits / frontiers of AI are going to be?
AI detects expressions to tell if people lie in court | Daily Mail Online
Apparently, you Aussies have developed a taste for Mexican food. https://www.digitaltrends.com/cool-t...o-australians/
12/25 Homelessness in England rises by 75% among vulnerable groups – Guardian So, bring in more Pakis and Poles and Arabs.
12/25 There’s one ledger – it’s called blockchain – GoldSeek
12/25 Ten years in, nobody has come up with a use for blockchain – Hacker Noon
12/25 ‘Bitcoin the perfect bubble, but blockchain a remarkable solution’ – Wired
12/24 Technology behind bitcoin could transform the world – Guardian

12/25 Trump is obliterating ISIS off the face of the earth – Town Hall
12/25 Japan births plunge to lowest level ever recorded – Zero Hedge Surely, there is no connection to economic factors.

Part 2 of the year in review at peak Prosperity, https://www.peakprosperity.com/blog/...-review-part-2

[Danny B]

Euthanasia,,, the China cure for debt hangover,,,BTC news

A couple of days ago, the rich were ecstatic about the tax cuts. Today is a different story.
https://www.vanityfair.com/news/2017...mic-euthanasia
China has a runaway credit system. They plan to cure the problem by allowing local GOV to greatly expand borrowing and, at the same time, remove State control.
https://www.reuters.com/article/us-c...-idUSKBN1EJ065

Good graphs but, somebody has poured molasses in my computer and I'm not going to excerpt.
https://northmantrader.com/2017/12/2...od-as-it-gets/
12/26 The bitcoin hoax – Huffington Post
12/26 Five bitcoin must reads of 2017 – Futurism
12/26 The Winklevoss twins talk bitcoin futures and fears – Fox
12/26 Bitcoin’s mysterious creator appears to be sitting on a $5.8b fortune – Yahoo!
12/26 Israeli regulator seeks to ban cryptocurrency firms from stock exchange – GATA Evidently, jewesh bankers don't like BTC.,,,, along with American and Chinese bankers.

12/26 Home prices in 80% of US cities grow twice as fast as wages – Zero Hedge That is where the hot money from the upper loop flows into the lower loop.

[Danny B]

Gann,,yield curve,,CALPERS follies,,Hussman, market psychology

The Russian Kondratief was the first person of note to talk about economic cycles.
W.D. Gann figured out the cycles many years ago and made good predictions. He doesn't have the enormous baseline that Armstrong has but, he has been pretty accurate. One little graph shows the yield curve to be trending down but, not very steeply.
https://renegadeinc.com/wp-content/u...2017/12/05.png
Pretty good read, https://renegadeinc.com/ghost-of-wd-...ash-is-coming/
The yield curve is very important, https://www.bloomberg.com/news/artic...inal-2017-push

CALPERS is $ 138 billion short. They claim that it really isn't a problem. They STILL expect to get 7% returns. They were urged to reduce that to 4%. Their reply, "CalPERS claimed that such an action “would do serious damage to many California cities, counties, other public agencies, and schools. If implemented, they would forever jeopardize the retirement security of millions of current and retired California public employees and their beneficiaries.”
The NIRP world hasn't been kind to them.
"The study cited poor fund performance, poor financial, managerial competence, politically motivated decisions, and an artificially inflated discount rate"
They are a bunch of California socialists who insisted in investing in projects that were very socially correct.
"For the 12 months ended on June 30, 2016, CalPERS investments lost 2.7 percent, or $8.2 billion. Combining the cash loss with the pension plan's failure to earn any of the 7.5 percent “assumed” investment return of $22.6 billion, the CalPERS total “actuarial investment loss” was a stunning $30.8 billion."
"an institution that lost $70 billion in the credit wipeout of 2008 and 2009"
"It’s no secret that hedge funds rank among the most expensive investment vehicles. They typically collect a performance fee, frequently 20 percent, and also take a percentage of assets under management, often 2 percent but sometimes more, even if their investments lose money. Calpers said it spent $135 million in hedge fund fees in its last fiscal year"
CalPERS Past The Point Of No Return? - ValueWalk

"Luxury spending rose 5% globally in 2017, the management consulting firm Bain & Company found. But that is a fraction of the 40% rise in net worth that people in America's top-tenth of income earners saw between 2013 and 2016, according to the Federal Reserve."
2017 was a great year to be rich - Dec. 26, 2017
You can see the problem here. The money shifts to the upper loop and, just sits there rolled over into more paper schemes. The upper loop gets more bloated. The FED must feed the credit monster because commerce is absent.
Japan urges it's companies to raise wages. Everybody is afraid to raise wages and lose market share.

Hussman, "Specifically, faced with unusual or extraordinary price advances, there is a natural tendency (particularly in the presence of crowds, feedback loops, and potential rewards) to look for explanations. The problem isn’t that logic or reason has failed, but that the inputs have been distorted, and in the attempt to justify the advance amid the speculative excitement, careful data-gathering is replaced by a tendency to confuse temporary factors for fundamental underpinnings."
Too many people pay attention to charts and not enough attention to rationale.
" The problem was that investors stopped thinking about stocks as a claim on a very, very long-term stream of discounted cash flows."
Don't forget our falling wages and falling consumptive power.
"But again, as the advance became more speculative, investors largely ignored the impact of their own speculation in producing that advance. Instead, their first impulse was again to try to justify the elevated valuations in novel ways (recall “price-to-eyeballs”). By March 2000, on the basis of historically reliable valuation measures, I projected that a retreat to normal valuations would require an -83% plunge in tech stocks. In the 19 months that followed"
Yep, hot money is driving things up. As things keep going up, more hot money flows in so that investors don't miss out.

1) Total real saving in the economy must equal total real investment in the economy;

2) For every investor who calls some security an “asset” there’s an issuer that calls that same security a “liability”;

3) The net acquisition of all securities in the economy is always precisely zero, even though the gross issuance of securities can be many times the amount of underlying saving;

4) When one nets out all the assets and liabilities in the economy, the only thing that is left – the true basis of a society’s net worth – is the stock of real investment that it has accumulated as a result of prior saving, and its unused endowment of resources. Everything else cancels out because every security represents an asset of the holder and a liability of the issuer. Securities are not net wealth.
GREAT graphs, https://www.hussmanfunds.com/comment/mmc171218/

12/27 Record high 30% of U.S. adults now live with a roommate – Zero Hedge
12/27 Case-Shiller 20-home price index just shy of 2006 bubble peak – Mish
The investor has 2 houses,,, the worker has none.
Armstrong says that the Chinese use the housing market as a bank account. There are 64 million empty buildings in China when you include commercial property. China has the fastest shrinking labor force in the world. Who is going to buy all these houses?
The BRICKS were supposed to displace the G7 as the world's leading economies. They just don't have enough internal consumption to generate the economic activity necessary.
https://www.armstrongeconomics.com/a...the-rise-fall/

12/28 5 reasons the Fed needs a bitcoin-style currency – Fortune
12/28 How the blockchain is redefining trust – Wired blockchain, YES. Bitcoin,, not really.
BTC note, http://charleshughsmith.blogspot.com...-disdains.html

[Danny B]

50 ways to default and leave your banker

2) For every investor who calls some security an “asset” there’s an issuer that calls that same security a “liability”
Lenders are so desperate to find yield in a ZIRP world that they are lending with less and less protection. The borrowers will be the ones that "walk" in the event of a problem.
https://dollarcollapse.com/debt/2007...-scam-lenders/

Ron Paul, “We’re on the verge of something like what happened in ‘89 when the Soviet system just collapsed,” he said. “I’m just hoping our system comes apart as gracefully as the Soviet system."
The Soviet system had the State owning all the housing,,,more or less. People didn't get thrown out on the street for not paying the rent. If the State bond market collapses as Armstrong predicts, it will be difficult for the State to stop mass eviction.
PressTV-US on verge of Soviet-style collapse: Ron Paul

The FED printed to save the banks. The money creeped over into housing. The State knows that it is very dangerous to reach a position where the common man can't afford housing. The State must NEVER let matters get to the point where it's people have nothing left to lose. NO law can ever be enforced in that scenario.

The U.S. is sanctioning Russia and,,, Russia is fighting back.
https://www.rt.com/business/414262-v...ussia-finance/
Pox Americana is persecuting 3 of the most prolific oil exporters, Iran, Venezuela and Russia. This, because they are trying to extricate themselves from the dollar system. As they are successful, more will join them. Eventually, America will find it hard to buy oil.

The PBOC prints money to backstop local GOV banks who have gotten in too deep. The new plan, "Central government control of the scale of local government bonds should be eliminated,"
“Eliminate central government control on the scale of local government bond issues, expand the scale of local government debt issues,” Xu wrote."
https://www.reuters.com/article/us-c...-idUSKBN1EJ065
The West has private banks creating unlimited "money".
China has public State and local banks creating unlimited "money".
It appears that the public banks can better tolerate the coming default cascade.

[Danny B]

Lefties = incompetence,,,bankers = corruption

Obummer clearly proved that lefties prefer to be surrounded by other lefties who agree with them. If you are looking for fellow lefties, start looking for brain-dead people.
Armstrong on Venezuela, "A general with no energy experience was put now in charge of the state oil company. The problem has been political arrests. (this) has witnessed a mass migration of those with talent leaving the country with incompetent management. This has resulted in the oil industry simply collapsing as production is plummeting."
https://www.armstrongeconomics.com/a...-govt-with-it/
Their economy has shrunk by 32%, https://sputniknews.com/latam/201712...uro-lost-jobs/

"The bad loan (“non-performing loan” (NPL)) crisis in Europe is well known and many have been calling for this issue to be addressed. In Italy, the bad loan crisis has reached 21% of GDP. While NPLs dropped to 4.8% of all loans in the EU as a whole during the first quarter of 2017, they remained well above 40% in Greece and Cyprus, at 18.5% in Portugal, and 14.8% in Italy according to the European Banking Authority.

Now comes the bureaucrats with zero experience to save the day – or is that to create a financial pandemic in the EU? " SNAFU
"Once again, all we have is the ECU and ECB desperately trying to prevent a banking crisis as loans in default rise. However, this project is totally incomprehensible for now a well-secured loan which does not pose any particular credit risk in traditional banking can find its collateral sold."
"This regulatory logic is just totally insane" "There is no distinguishment between fully-collateralized and non-collectible loans. Nor do bureaucrats comprehend the true meaning of a “non-performing loan” that is temporary and one that could never be repaid. Bureaucrats are not capable of understanding the economy "
https://www.armstrongeconomics.com/i...cial-pandemic/
So, given the chance, the lefties hire idiots to run the economy. Given the chance, the bankers loan money to deadbeats,,,, usually to their friends. The S&L crash was a huge case of liar-loans to friends of bank execs. 1,000 of them went to jail.

With this as background, it is a good idea to take another look at Armstrong's prediction of DOW 39,000. He is essentially predicting MASSIVE capital flight from the R.O.W. to America. We have seen that investors are willing to accept ZIRP or even NIRP to park capital in something that they believe is a safe haven. Returns on the broader stock market are slightly negative when accounting for true price inflation. Earnings are non-existent.
The CBs have force-fed liquidity into the investment market in the hopes that it will flow into every nook and cranny. Each investor will look for return to protect his investment. Since most investments yield zero, the investor must move into riskier asset classes. By this manuver, the CBs give financial support to numerous zombies that could ordinarily never attract capital.
Since the Russell and the Wilshire indexes are sinking, it is doubtful that the DOW and S&P can rise in accordance with Armstrong's predictions.

Here are a couple of articles concerning how the New tax laws will affect capital flow from Europe. Pretty dense.
https://www.zerohedge.com/news/2017-...-burns-down-eu
The new law will trend to drain capital from Europe.
"And when Apple’s Tim Cook is talking about bringing back $282 billion in capital in 2018 alone, the banks that are holding those deposits and investments as reserves are going to have to scramble to find the dollars to redeem those investments.

Does anyone think Apple draining even just $5 billion a month from the European banking system won’t have a huge effect on the health of those banks?" "They began buying after Trump was elected because, rightly, they expected a strong U.S. dollar from the policies he was promoting.

For most of 2017, up through September, the dollar was weak with the USDX dropping from above 104 to below 91, a huge decrease."
So, the bankers have burned the European very badly. The lefties intend to extract revenge from the bankers.
" €800 billion to €1 trillion euro in NPLs exist among the European banks"
"In Italy, the bad loan crisis has reached 21% of GDP. While NPLs dropped to 4.8% of all loans in the EU as a whole during the first quarter of 2017, they remained well above 40% in Greece and Cyprus, at 18.5% in Portugal, and 14.8% in Italy"
With this many NPLs, an attack on the banking system will be FATAL.

[Danny B]

QE in stealth mode

The headline numbers on unemployment are at about 4%. With just a little digging, the BLS admits that the true numbers are much higher. Investors don't want t do a little digging. The true number is about 23%.... Shadowstats.
John Hussman shows the stock market to be wildly over valued from it's historical norm. Investors have some kind of group mania that urges them to ignore the bad news and just, pile in.
Stockman, "December 1996, the NASDAQ 100 index rose from 830 to 4585 or by 450%. But the perma-bulls said not to worry"
"During those heart-stopping 30 months of free-fall, all the gains of the tech boom were wiped out in an 84% collapse of the index. Overall, the market value of household equities sank from $10.0 trillion to $4.8 trillion----a wipeout"

"During the 20 months from the July 2007 peak to the March 2009 bottom, the RUT gave it all back. And we mean every bit of it----as the index bottomed 60% lower at 340. This time the value of household equities plunged by $6 trillion, and still millions more baby-boomers were carried out of the casino on their shields never to return."
"the value of equities owned by US households exploded still higher----this time by $12.5 trillion."
"So an epochal pivot has begun----led by the Fed's committement to shrink its balance sheet at a $600 billion annual rate beginning next October. This pivot to QT (quantitative tightening) is something new under the sun and was necessitated by the radical money printing spree of the past three decades."
So, they claim.
"In the first instance, the market is not merely complacent; it is insouciant-----indulging in an eye-wide-shut orgy of recklessness that truly has no parallel, not even the mania of 1927-1929."

"ground zero of the impending bond market conflagration is FY 2019, which incepts exactly 276 days from now during the same window of time (Q4) as the Fed hits full stride on its bond dump-a-thon. Yet on top of CBO's most recent but now obsolete FY 2019 deficit deficit projection of $700 billion, the Trumpian GOP is adding $200 billion for defense, disasters, border control, ObamaCare insurance bailouts and other domestic boodle; and on top of that, now comes its vaunted front-loaded tax cut, which will rip $280 billion out of Uncle Sam's revenue collections in the same year."
"What you get is Uncle Sam fixing to sell $1.28 trillion of debt---equal to 6.2% of projected GDP---at the same time the Fed is dumping another $600 billion of existing treasury and GSE paper."
"The only other category left is foreign buyers---private investors and central banks alike---but that source of "demand" for Uncle Sam's emissions is fixing to dry-up, as well. "

"In all, what was a $1.3 trillion central bank bond purchase rate earlier this year will fade to nearly zero in 2019" So, they claim.
"Stated differently, what is "priced-in" to the world's risk asset markets is central bank footings of $22 trillion-----not the $6 trillion level prior to the financial crisis or the $17-18 trillion level now being targeted for the end of the QT/normalization campaign."
"In all, we'd say Wall Street is calling the sheep to the final slaughter. At the moment, in fact, the bleating is so loud that the gamblers are seriously debating whether the 50X gain in bitcoin in just 22 months is sustainable. "
Contra Corner » The Greatest Bubble Ever: Why You Better Believe It, Part 1

OK, so, the FED is going to stop printing. Foreign buyers are not going to buy treasuries. In 2015, there was a great drop in the purchase of U.S. treasury paper. Suddenly, the BLICS showed up to buy everything. Belgium, Luxembourg, Iceland, Cayman Islands, Switzerland.
"The US Federal Reserve is using 17 central banks working in concert through currency swaps to maintain the fraudulent monetary system, which are probably tied into Forward Rate Agreements (FRA) and Interest Rate Swap derivatives between central banks."
Belgium bought $ 420 billion even though, they didn't have ANY dollar reserves.
Exported QE Travesty: Meet the BLICS

So, while Stockman has logic on his side, the FED has corruption and a desire to survive on it's side.

12/28 Stock optimism swells as S&P 500 most overbought in 22 years – MarketWatch
12/29 US homeowners made $2 trillion on their houses in 2017 – Zero Hedge
12/28 U.S. renters paid a record high $485.6 billion in 2017 – Bloomberg
Property unaffordable for 100,000 households a year in England ..
Housing Market: Why Millennials Are Getting Priced Out - WSJ

Since the FED has purportedly stopped QE a few years ago, foreign investors are attracted to American markets. The EU banks are probably much worse than American banks so, we will see capital flight to America. As the foreign capital flows in, the banks will INDEED be stronger.

[Danny B]

Pension meltdown,,,Chinese sepuku

12/30 Commodities end 2017 with a bang in longest rally on record – Bloomberg
"Aluminum, the poster-child for hopes of a Beijing-led supply shutdown, has been piling up in Shanghai at a worrying pace. The stockpile of metal available for order has hit a record 634,000 metric tons,"
China's Commodity Beast Enters Hibernation - Bloomberg Gadfly
https://www.bloomberg.com/.../china-...-into-hibernat...
Nov 15, 2017

12/30 Only one US state pension has funded level above 50% – AI-CIO No problem. Vaccinate away the problem.

"While a public employee does have a 'vested right' to a pension, that right is only to a 'reasonable' pension — not an immutable entitlement to the most optimal formula of calculating the pension," Judge James A. Richman wrote. "
Lawsuits threaten pension cuts for California state workers
So, the State will decide if your pension is reasonable or not.

12/30 Chinese ’shadow debt’ an $18.5trln market set to collapse – Express.co.uk
"Since then, Chinese authorities have proven they are still able to control their economy. But stability has come at the cost of ever-increasing debt levels. The International Monetary Fund warned in October that China's banking sector assets have risen steadily to 310 percent of GDP from 240 percent of GDP at the end of 2012. "
https://www.cnbc.com/2017/12/28/chin...lysts-say.html

Kunstler, "You may detect that I’m not exactly a fan of the president, but I rather admire his standing up to the permanent bureaucracy that we call the Deep State, and especially its elite poobahs, who have driven this polity into a deeper ditch than the voters realize. "
"After more than a year, the RussiaGate narrative is looking like something fished out of the Goodwill Industries dumpster,"
"The Tax Plan? Real tax relief just doesn’t mean a whole lot without a reduction in the size and scale of government. Its unstated purpose is a temporary stimulant replacement for Federal Reserve money-printing."
The Year in Trump - Kunstler

Russia responds to Trump's tax plan, https://www.armstrongeconomics.com/w...mp-tax-reform/
China responds to Trump's tax plan, https://www.armstrongeconomics.com/w...ting-in-china/
So, America, Russia and China are reducing their tax receipts. The corporatocracy is foundering because consumption is crashing. The State squeezes out one more stimulus to try to save a system in terminal decline. Everything done to save the financial system is killing consumption. Giving more money to corporations is just one more negative in the negative feedback loop. NONE of the money will go into wages.

We are now starting the 2018 Outlook Report and this is going to be a shocker. We are looking at the start of a Panic Cycle Year in many markets. This warns we can see dramatic volatility that will make your nose bleed."
https://www.armstrongeconomics.com/p...utlook-report/

BECAUSE America had the reserve currency, it could print with wild abandon. BECAUSE the America dollar was the store-of-value for States, they demanded that we print with wild abandon. This gave LBJ, et al the opportunity to splurge on stupid projects like the welfare-warfare State. If foreign States wanted to have a domestic store-of-value, they had to sell us stuff for a lower price than we sold for. This demand for dollars, coupled with the requisite lower prices for stuff resulted in America running a permanent trade deficit.

In a certain sense, America was forced to go off the gold standard by the ever-increasing demand for dollars. In the mid-60s, we upshifted the printing presses. We diluted the value of the dollar because everybody was demanding them. Because of this dilution, gold was leaving the U.S. treasury at the rate of 100 tons a week in summer of '71. Nixon was forced to close the gold window. This allowed America to REALLY get the presses going.
https://www.zerohedge.com/sites/defa.../GPC122817.jpg
The Bretton Woods agreement used the U.S. dollar as a proxy for gold. The main weakness of this arrangement was; foreign States demanded a fast rising pile of dollars when the gold supply only grew at 2%. Nixon didn't really understand what the consequences would be. China has come out and said that; his actions were more momentous to the world than even the world wars.
No gold peg has EVER survived. If Nixon had a good sense of history, he would have devalued the dollar vs gold.
"Roosevelt took much greater action to end the gold standard than did Nixon when Roosevelt let the dollar "float" in 1933 to combat the shrunken monetary supply during the depression. ..."
“Most economists now agree 90 percent of the reason why the U.S. got out of the Great Depression was the break with gold,”

This ALL gets back to an immutable law. Your currency and your store-of-value can NOT be one and the same. Gresham's Law states that the strongest currency will go into hiding to serve as a store of value. Because millions of people and dozens of States HID their dollars, America was able to PRINT without a risk of hyperinflation.

The West severely manipulates the price of gold downwards so that; the dollars will continue to be hidden away as a store of value. Therefore, the East can patiently wait for the inevitable crash that will exorcise the dollar from it's status as the store-of-value. China is NOT trying to avoid a crash. China recognises both Triffin's Dilemma and Gresham's law. They would like the Yuan to be a "good" currency with wide acceptance. They know that the Yuan can never serve as a store-of-value.
Their shadow banking system is ready to blow. They propose removing all State control from the system so that it can regulate itself.
They have prepared by accumulating the long-accepted store of value,,, gold. By removing State control, they have indicated that they are ready to pull the pin on the debt hand grenade.