Economic pressures

[Danny B]

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

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

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

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

The chaos that will arise as trillions of dollars, yen, yuan and euros, etc. try to crowd through the fire exits as the asset bubbles pop will be monumental, and the the spikes in small asset class prices as the hot money floods in will be equally monumental. "
Of Two Minds - Where Will All the Money Go When All Three Market Bubbles Pop?A renegade economist has a plan for reducing global debt | Business Insider

[Danny B]

Tinkering around with monetary policy until something blows

Government is a huge nest of bureaucrats, and bureaucrats like the status quo. BUT, this interconnected world is moving faster and faster.

There are so many (supposed) economic laws that have been found to be untrue. There are some economic laws that are no longer true. For ages, savings (accumulated capital) were used for infrastructure projects.

World socialism demands that GOV create money instead of waiting for capital accumulation from savers. This capital is INVARIABLY misused.

https://wealth.goldmoney.com/research/goldmoney-insights/how-not-to-manage-a-currency?gmrefcode=dollarc

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


The article is half lies but, it tells you the mindset of GOV. The End of the Great Experiment - The Daily Reckoning

Ah yes. The rising dollar makes it impossible for the Chinese to service their dollar loans.
Not for GOV debt.
They are seeing PRICE inflation at the same time that they have wage deflation. They will just buy less of non-necessities.

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

"The government has scared away private enterprise and nationalized large swathes of the domestic economy leading to stagnant growth and chronic inefficiency," he told CNBC via email on Thursday."
Inflation in Venezuela seen hitting 1,500% in 2017 as crisis goes from bad to worsePb-Cu
It has been stated that the world will happily embrace the SDR when all currencies collapse.

[Danny B]

Jim Willie and the RESET

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

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

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

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

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

[Danny B]

Forget about your pension

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

http://www.alt-market.com/articles/3034-global-elites-are-getting-ready-to-blame-you-for-the-coming-financial-crash

Why Nervous Pensioners Are Running for the Exit | Elliott Wave International

[Danny B]

https://www.alec.org/publication/pensiondebt2016/

While this sounds bad, this valuation is based on the current value of stocks and other assets. Should they lose value, the gap will go higher. ZIRP is killing everything.

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

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

No China has lit a fuse on a bomb and they don't know how long the fuse is.
No kidding,, how much do they pay the people who figured that out?
The pound is at the lowest point in 168 years. The BOE has no choice about tolerating anything.

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

[Danny B]

War Cycle, NPLs, saving the bankers

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

https://www.armstrongeconomics.com/international-news/north_america/americas-current-economy/war-cycle-of-target-sad-to-say/

There is a possibility that socialism could work but, NOT with borrowed money. Europe is far more socialist than America. The banking system is heavily invested in GOV bonds. FAR more than in America. BUT, socialism is a distribution and consumption system, NOT a productivity plan.

https://www.armstrongeconomics.com/international-news/europes-current-economy/european-banks-have-10x-nonperforming-loans-compared-to-usa/

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

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

https://www.armstrongeconomics.com/armstrongeconomics101/ai-computers/can-a-computer-really-beat-humans-in-running-the-economy/

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

[Danny B]

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

The ongoing march towards destruction of the economy in the name of globalizationWe Desperately Need Higher Inflation - Here's Why and 3 Ways It Could Easily Be Accomplished - munKNEE dot.com

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

ECONOMICA has proved pretty clearly that the interest rate is tied to the population of consumers. Econimica
It makes sense because the credit system needs continual growth to service the interest charge.
WAIT, what about the one childSo, instead of an unacceptable bust, they will get a revolution.
Credit Bubble Bulletin: Weekly Commentary: The Perils of a Resurgent China Credit Boomof note; the Financial Times is a mouthpiece of the elites

" in Russia there is a group of prominent economists gathered together as the Stolypin Club, who are evincing a renewed interest in that old adversary of Adam Smith, Friedrich ListSocial cohesion has been re-engineered, all right. What do we end up with when the immigrant flood destroys society?

https://www.theautomaticearth.com/2016/10/alastair-crooke-end-of-growth-sparks-wide-discontent/

[Danny B]

Where The Stimulus Is Hiding: China's Fiscal Push Is Now Bigger Than After The Global Meltdown | Zero Hedge

https://www.youtube.com/watch?v=oy43yskCyLQ

https://medium.com/deepconnections/a-synthesis-of-the-worlds-most-dangerous-systemic-risks-for-the-week-ending-october-14-2016-192b329f5b2b#.2nz0sql3w

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

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

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

https://www.peakprosperity.com/blog/101795/what-triggers-collapse

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

[Danny B]

5 Urgent Warnings From Big Banks That The "Economy Has Gone Suicidal" | Zero Hedge

[Danny B]

Yeah, in FOOD! OK, forget the gasoline part. I'll get a bicycle. As the price of necessities goes higher, we cut back on discretionary spending. We work harder; Americans Work 25% More Than Europeans, Study Finds - Bloomberg

[Danny B]

Fallout from globalization

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

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

[Danny B]

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

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

https://www.youtube.com/watch?v=EjaBpVzOohs

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

The Marxists were CLEARLY warned that the European Union would fail by history, Martin Armstrong, and by many others. To be a Marxist, one needs to by both blind and, in denial.

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

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

[Danny B]

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

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

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

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

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

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

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


"3) Convert the world's principal gold markets from trading gold to trading paper gold thereby short-circuiting price discovery in the global gold and bond markets" "gold trading was progressively thereafter converted to paper contract trading through the creation of "unallocated gold contracts" without gold backing and price discovery was thereby thwarted as these contract claims on gold can themselves be created and traded without limit"
" By deflecting claims for gold into paper gold contracts, today there are an estimated 400 million to 600 million oz of claims for gold at the LBMA without gold backing and daily gold trading has reached 200+ million oz of gold per day"
The Rape of America -- The Core Federal Election Issue | David Jensen | Safehaven.com
The true value of gold is it's effect on interest rates.China Injects Economy With A Quarter Trillion In Debt In One Month, But The Full Story Is Much Scarier | Zero Hedge
The China economy is shrinking as proved by rail-car loadings, falling import&export volume, etc. The debt is growing by 20%. What could go wrong?

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

[Danny B]

Keynes, nationalism and genetics

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

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

"Today's energy supplies provide the equivalent of the work of 22 billion slaves." So says Colin Campbell, petroleum geologist and Peak Oil commentator.
Actually the true figure may be closer to 122 Billion Energy Slaves."
22 Billion Energy Slaves: Our Army of Invisible Helpers
We have a great standard of living because machines are doing all the work. We have stable populations because we have choices in procreation. As we slowly pull away from carbon energy, we will have even more stability in energy supplies.
We are in a period of great flux where the PTB are trying to institute a Keynesian-socialist nightmare to keep Darwinian pressures from eliminating the non-producers. Beggars, bankers and bureaucrats want total centralization. The productive people have always rebelled against being held in thrall to the parasites.
New technologies are constantly making it harder to create an Agenda 21

[Danny B]

Food security

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

The crash is assured. What happens when the credit markets crash and the chain from production-to-consumption of food crashes?

https://www.goldrepublic.com/news/10-terrifying-charts

Here are the leading food importers;
World's Leading Food Importers - Business Insider
But, this doesn't tell the true story of food independence.
Food security is also tied directly to wealth. Here is a list of States where food security is sketchy, The 25 Countries That Will Be Screwed By A World Food Crisis - Business Insider
Venezuela is # 25 on the list.
Venezuela's latest cruelty: full shelves of unaffordable goods - Chicago Tribune

A Nigerian family spends 73% of it's income on food; http://www.zerohedge.com/news/2016-1...emains-unawarehttp://www.ezekieldiet.com/2-6-billi...icas-farmland/

This has killed the soil bacteria and made the land unsuitable for anything except Roundup-Ready

http://www.larouchepub.com/eiw/public/2013/eirv40n24-20130614/40-42_4024.pdf

The British managed to hold the population of India fixed for 100 years by holding rotating famines. Why do you think they built roads and railroads?