Economic pressures

[Danny B]

Phillips Curve,,, oil slowdown

Most of the various economic theories espoused by Academia are headed for the rubbish bin. There is one theory that is headed for the rubbish bin that might actually be correct.
Investopedia, "The Phillips curve is an economic concept developed by A. W. Phillips showing that inflation and unemployment have a stable and inverse relationship. The theory states that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment"
The boneheads don't define if "inflation" is currency inflation OR price inflation. They also show a painful lack of vision. Suppose that employment grows in China and falls in America?
Next on the list of stupidities is; they totally lie about unemployment in America,,, and then wonder why the Phillips Curve no longer "works"

https://mishtalk.com/2017/08/29/fed-study-shows-phillips-curve-is-useless-admitting-the-obvious/

wages

https://mishtalk.com/2017/09/07/10-year-treasury-yields-headed-to-zero-percent-saxo-bank-cio/

OK, so, the price of oil is going down, Ouch. U.S. oil companies lost $67 billion last year - Apr. 26, 2016
Big Money has lost faith in Big Oil, https://srsroccoreport.com/u-s-frack...-losing-faith/

So, the price of crude could easily collapse. There is ALREADY no profit. will the drills and pumps stop?

[Danny B]

ZIRP to save the State

There are projections of a storm-surge + tide that will reach 32 ft. in Miami.

https://www.youtube.com/watch?v=4IBx5slkkU8&t=220s

There are also 2 storms behind Irma. Lots of investors have dumped their investment in insurance companies. There will be a lot of loss. You can bet that the insurance companies will be bailed out. The individual home owner will naturally be screwed.

Strong Euro,,, weak dollar, https://www.armstrongeconomics.com/m...ro-the-dollar/

"This idea of lowering interest rates envisioned by Larry Summers, demonstrates that he knows absolutely nothing about economics. He has only read books and never rolled up his sleeves and had to work in the real world to be able to see what I am writing about. Why economic professors are ever allowed to play with the economy is beyond me. " Armstron was previously a professor at Princeton.
"Draghi tried to be as vague as possible, because he is trapped. He knows this cannot go on forever. He realizes that once he stops, the bond market crash and there is a risk that the Eurozone government are forced to pay real interest rates and that will blow out the entire EU budget system."

https://www.armstrongeconomics.com/armstrongeconomics101/economics/why-governments-expand-the-gap-between-rich-and-poor/

"This idea of lowering interest rates envisioned by Larry Summers, demonstrates that he knows absolutely nothing about economics."
"the bond market crash and there is a risk that the Eurozone government are forced to pay real interest rates and that will blow out the entire EU budget system."
Put these 2 together and something becomes obvious. ZIRP was all about rescuing GOV debt. Summers knew what he was doing. ZIRP kills everything that doesn't have a feeding tube to the FED. The feeding tube saves the banks. Every president has doubled the debt. Trump would need to pump it up to $40 trillion to be in line with his predecessors.
The prime objective is; save public debt. It doesn't matter if everything else dies on the vine. Public debt in Hartford, Conn. isn't looking too good.

https://ctmirror.org/2017/09/07/bronin-hartford-faces-insolvency-within-60-days/

Draghi can never cut back. The Italian banks will blow. The French GOV spends 57% of the GDP. Can Draghi stop buying French debt?

[Danny B]

The gold window was closed in 1971.
"Resolving the paradox boiled down to answering a very simple question: is the interest rate set by demand from the borrower based on what he is prepared to pay, or is it set by the interest rate demands of the saver, seeking a decent return on his money? The neo-classical assumption has it that in a free market it is what the saver demands to part with the temporary use of his money that controls the loan rate, and the borrower is at his mercy."
"Indeed, all the literature going back to pre-Keynesian days assumes that consumers decide interest rates by dividing consumption between what is needed today, and what should be saved for the future."

The advent of easy credit,,, the advent of social security made saving unnecessary. We spend 105% of out earnings.
"The vision of the idle rich living off the income of their capital also fuelled post-Marxian sentiment. The bias of opinion has always been against the seemingly idle saver and in favour of the industrious debtor. The saver is cast as a villain, and even central bank policy today is biased against him."
Warren Buffet has $80 billion cash sitting on the sidelines. Has he deferred consumption? What could he possibly buy?

"The assumption, that it is the saver who demands the interest rate, carried throughout the known history of economics, and finds its more recent expression with Keynes, who wanted to do away with saving altogether.ii He gave savers the epithet of rentier, an ugly word suggesting a rich man who rents out his capital, gathering in profit from the efforts of others."

These bone-headed ivory tower economists have always been simpletons. They group together low-wage and high-wage people. The people who live check-to-check have no possibility of saving. I know people who take their kids to McDonalds one a month as a special treat.
"The businessman sets the price of borrowing by having the option not to borrow. In his calculations, he will attempt to quantify his fixed and marginal costs of production, and the added productive capacity additional capital will provide. He must estimate the wholesale value of his extra production, to assess his profits, gross of interest. He is then able to judge what interest he is prepared to pay to secure the capital required for a viable proposition."

Not a single mention of consumptive power. 1/3 of companies in the Russell 2000 index are losing money. It is NOT a problem of productivity.
"Therefore, there is a link between interest rates and how money is used. The reason this did not translate into a correlation between interest rates and the rate of inflation is changes in interest rates only reflect changes in the allocation of money between immediate consumption and savings. "
ALL of the free money went to the top 5%. The CBs printed up an extra $200 trillion. They expected a trickle-down effect to the larger masses of the middle class. AT THE SAME TIME that wages were falling. This $ 200 trillion can't actually be spent into the economy. It would make price inflation that much worse,,, while wages were still falling. You could buy quite a few wars with $ 200 trillion.

"Imagine for a moment an economy without the central bank imposing interest rates on the free market, restricting itself to note issuance and being lender of last resort. If interest rates rise, it is because there are fewer savings relative to demand for investment" Yeah,, how MUCH note issuance?
"Equally, if interest rates fall, they reflect a greater relative supply of savings,(the printing press stuck in hyperdrive) and a lower proportion of income being allocated to immediate consumption." No, they reflect a runaway printing press.
"The overall quantity of money is immaterial in this relationship. If you doubled the quantity of money, so long as you double money spent both on consumption and money saved, interest rates would be unchanged"
Only if you double the money to every person,, not just the rich.Public consumption and private consumption.So, empty your pockets and hand over $ 60 trillion.

The demand for finance for public and private consumption has eclipsed corporate demand for credit. The credit bubble MUST grow or the interest to pay off previous loans won't be created.
"Allow me to print a nation's money and I care not who makes the laws."
Force me to print a nation's money and I am eventually screwed.

Trump needs to eventually double the current debt of $ 20 trillion up to,, $ 40 trillion. The "Taper Tantrum" proved that any slow down in the printing presses will allow the bubble to deflate. Draghi has very painful visions of what happens to Europe if he lets off the gas. China keeps trying to back off the printing presses,,, and then suffers heart failure. ALL of this capital creation is fungible. It moves all over the globe regardless of which CB originated it.
Capital flows,,, labor does not. 5% have benefited from QE. 6 States have benefited from globalism. The old economic theories are for simpletons and economists.

[Danny B]

Guns OR disaster relief

Well, Irma is headed up Florida to Georgia. It is the second-longest lived hurricane in history. It is moving at 9 mph to give everybody a real thrill.
"Dave told her that there was no power and no water and that Irma made Hugo and Marilyn look like a rainstorm" Caribbean Hurricane Network - stormCARIB.com - Local Reports on Tropical Systems threatening the Caribbean Islands

https://www.theautomaticearth.com/2017/09/america-cant-afford-to-rebuild/

"the Bank of England learnt that it was cheaper and less disruptive to find some way of rescuing banks that were in danger of collapsing, rather than letting them go down." IN THE SHORT TERM ONLY. Remove moral hazard and see what you get in the long term.
"You could construct a totally safe banking system but it would be unable to make much credit available to potential borrowers." ONLY TO THOSE IN THE UPPER LOOP.
"US investor optimism is at a 17-year high, the highest it has been since 2000, just as the dot-com bubble was about to burst."
Ten years since the start of the last banking crisis, we have to ask ourselves ? when will the next one happen? | The Independent

https://dailyreckoning.com/will-left-buy/

http://www.24hgold.com/english/news-gold-silver-the-coming-run-on-banks-and-pensions--dave-kranzler.aspx?article=11447516248H11690&redirect=false&contributor=Sprott+Money&mk=1

OK, so, America is flat broke. How did we get there? Remember that wealth attracts corruption. It is highly concentrated in the district of corruption,,, Tel Aviv on the Potomac. Our Bretton Woods unlimited credit card allowed Pox Americana the ability to wage war on credit. This was paid for by everyone who used oil.
Jack Ma of Alibaba said that America didn't have bullet trains because we wasted $14 trillion on wars. The war profiteers were locked in to the treasury.

Here is an article explaining that the taxpayers are going to pay $ 19 million to refurbish 50 trucks over a 3 year period.

https://en.news-front.info/2017/09/08/pentagon-buys-50-heavy-military-tactical-trucks-for-nearly-20mln/

So we are going to $ 380,000 EACH to paint them and put on new tires.
The military budget combined with the black-ops budget is over $1 trillion a year.
There will be a HUGE fight over disaster relief. There NEVER seems to be any fight over $trillion combat airplane boondoggles.

[Danny B]

The general situation

Veterans Today has a pretty good summation of all the big problems, The Hurricane of our Lives – America goes broke and nobody seems to care | Veterans Today
Excellent article from John Mauldin explaining the mechanism of how GOV always goes broke. The first part is a slow read. The Future of the Global Economy


The FED owns about 50% of domestic ETFs. We'll see just how that works out.

[Danny B]

Armstrong: fiat, confidence and legal tender

America is fast going broke. There will come a time when the ptb will have to choose between; a strong military OR domestic support / harmony.
"Nevertheless, historically, ONLY those currencies of the dominant military power have EVER been the reserve currency. So you may not want to hear about the 800 bases etc, but you cannot escape the fact that part of the reserve status of any currency is the military power."

"The strength of the dollar is based on capital flows, not trade. There has been the safe haven issue that dominated World War I and World War II because the USA really cannot be invaded. "
"But trade is a tiny fraction of international capital flows. This is why the Euro has utterly failed to become a major reserve currency "
"China must establish a solid rule of law in order to provide CONFIDENCE for foreign capital to park money in their currency. "
Excellent article, https://www.armstrongeconomics.com/m...of-the-dollar/

"China will replace the dollar but only AFTER 2032. Until then, they must still work on establishing the Rule of Law so that capital will park in yuan with confidence. Denominating oil in yuan or euro means nothing. Where will you park your cash? That remains dollars for major institutions. There is no alternative."
"Unfortunately, governments are broke. They are hunting people with any money at all and that creates a disincentive to invest, rising unemployment, and civil unrest turning the poor against the rich instead of the poor against the politicians who have created this mess."

https://www.armstrongeconomics.com/markets-by-sector/foreign-exchange/usd/am-i-certain-about-the-strong-dollar/

"ANSWER: Most money is actually created by the private sector through leverage and bank loans today. This is why when there is a crash, the contraction takes down banks for it is the leverage that collapses. When you have a debt based system, then the monetary system becomes leveraged."
"As far as legal tender is concerned, that means it is acceptable by government to pay taxes and fines. What good is it that all your money is in BitCoin and you have to pay taxes when the government does not accept it?"
"The entire system rests solely upon CONFIDENCE. You would only accept a gold coin in payment solely because you know someone else will accept it from you. With that degree of CONFIDENCE, nothing would be acceptable."
"This is why I say that the Monetary Crisis Cycle comes into play when we have a collapse in public CONFIDENCE. It really has nothing to do with the quantity of money. "

https://www.armstrongeconomics.com/markets-by-sector/foreign-exchange/usd/legal-tender-money-v-fiat/

[Danny B]

China; wages, employment, rule-of-law

China must establish a very firm rule of law to attract capital. Meanwhile, rule of law is diminishing in Amerika. GOV is seizing $billions every year on nothing but flimsy excuses. Can a Chinese communist government actually respect private property? China will crash. Will they be able to maintain order during and after the crash?
China has recently pumped in about $ 30 trillion to keep things floating. You walk into Harbor Freight Tools and marvel at the low prices. How can Chinese companies possibly make a profit with these prices. Here is a graph of free cash flow in Chinese companies.

http://thesoundingline.com/wp-content/uploads/2017/08/Chinese-Corporate-DEbt-1024x625.png

China moved >300 million peasants to the cities. They are paid very low wages so, they can eat better but, they really are not "consumers". China can not very well send them back to the countryside. The Chinese "miracle" has created an "anti-miracle" in the high-wage consumer societies. China has impoverished their best customers. Can China bleed money indefinitely? Emerging automation will tend to suppress wages around the world. Will China ever find the well-off consumes that it needs?
Chart of the Day: Putting the Chinese Corporate Debt Bubble in Perspective - The Sounding Line

[Danny B]

https://www.rt.com/usa/403118-usa-china-sanctions-north-korea/

No mention of respect for private property.
"The U.S. Dollar maintains illusionary worth, only because the central bankers are all in with their dollar dominated derivatives. Moreover, the Chinese are very much dependent upon their exports to keep their economy going. Settlement in Federal Reserve notes is crucial for the American system to keep buying from overseas.

Just the mere threat of payment in the renminbi for all the Chinese goods that Walmart imports could be devastating."
China wants to have a reserve currency

[Danny B]

Private debt in America is $60 trillion. How big an overhang is needed?

https://renegadeinc.com/none-blind-will-not-see/

John Hussman does excellent research and projections. He shows very clearly that the stock market will have zero returns for about the next 12 years. Hussman and several other writers who I read all commit the same sin. They all agree with the unemployment numbers from the BLS. Unemployment stands at 4.6%...or something like that. Many of these writers / investors mention that the labor participation rate is just around 64%.

https://tradingeconomics.com/united-states/labor-force-participation-rate

I don't see the word "consumption" squeezed in there.
"while the U.S. Bureau of Labor Statistics estimates labor force growth of just 0.3% annually in the coming years (which would be matched by similar growth in employment only if the unemployment rate does not rise from the current level of 4.3%)."

https://www.hussmanfunds.com/wmc/wmc170911.htm

About 155,000 people try to enter the labor force every month. <25%> of college grads are living in their parent's basement.
" August 2017 Unemployment Rates Notched Higher: U.3 Rose to 4.44% versus 4.35%, U.6 Rose to 8.59% versus 8.57%, and the ShadowStats-Alternate Rose to 22.2% versus 22.1%"
Commentaries by Date

95 million American workers not in US labor force - CNBC.com
So, 95,000,000 Americans not working or producing. The feces-for-brains economists wonder why actual productive gdp isn't growing.

[Danny B]

Killing Them Is Killing Us | Zero Hedge

https://www.counterpunch.org/2017/09/11/stormy-weather/

In the Dark - Kunstler

[Danny B]

Bouncing with bitcoin

[Danny B]

Mutually assured (cyber) destruction

The shock of the destruction of Hiroshima and Nagasaki led all States to avoid nuclear war. Mutually assured destruction was an all too real possibility.
John McAfee now says that there is no such thing as cyber security. He claims that any state can take down the grid of any other State. He also claims that there is no possible way to stop hackers.

https://www.youtube.com/watch?v=UVVjlYz-YeM&t=234s

The tools released from Vault 7 are out in the wild and taking down everything.

https://www.wired.com/story/encryption-backdoors-shadow-brokers-vault-7-wannacry/

We are now back to confronting mutually assured destruction from the cyber world.

https://zeltser.com/mutually-assured-destruction-in-cyberspace/

http://www.au.af.mil/au/ssq/2011/spring/crosston.pdf

https://dailyreckoning.com/another-day-another-huge-hack/

[Danny B]

The default cascade.Wages fell and the worker could not support R.E. prices. He defaulted. The banks were rescued from the pain of default but, the worker never had his wages rescued.
Prominent establishment economist William White warns ?More dangers now than 2007? |

https://www.armstrongeconomics.com/markets-by-sector/foreign-exchange/the-coming-one-world-currency/

I have a lot of doubt about the prediction of a one-world currency. Who issues it? Who sets and maintains it's value? The eurozone has proved that a single currency is a straitjacket. The transactional currency can NEVER be the store of value. FOFOA proposes that all currencies will float and gold will be the store of value. Is it possible to have one store of value at the State level and, another store of value at the personal level?
If we are to have international commerce, the store of value must be agreed on by both importers and exporters. In the East gold is rising. In the West, U.S. treasuries are falling.

Stockman says that removing the debt ceiling is a doomsday move. The debt ceiling has already been raised over 100 times. Why does he think removing the ceiling is catastrophic?

https://dailyreckoning.com/americas-fiscal-doomsday-machine/

My Two Big Bets on the Pension Crisis | International Man

[Danny B]

The recently perceived demographic crash

Continuing with cyber war. Every small player is trying to accomplish asymmetrical warfare. Instead of bombs and missiles, the competition is between brains and systems. We are losing in that department.
The American Power Grid Has Been Hacked - The Organic Prepper
We can easily be held to ransom.

Some VERY informed and important people have recently become aware of the unfolding demographic crash.

https://www.caseyresearch.com/the-most-important-chart-in-the-world/

[Danny B]

So, think about the alternative??The printing press is starting to fuse it's gears.

"With interest rates near record low levels, interest on the debt of $275 billion exceeds the total receipts from corporate income taxes. "
(Multinational corporations with profits held overseas would face a mandatory one-time tax as part of the planned Republican tax legislation, Treasury Secretary Steven Mnuchin said Wednesday. Multinationals would face mandatory tax on offshore profits, Steven Mnuchin says )

https://www.theburningplatform.com/2017/09/14/swindling-futurity/

David Stockman SCREAMS about fiscal insanity from the people in D.C. who want to do away with the debt ceiling. WHAT IS THE ALTERNATIVE?
The final solution for people without money is the usual solution, DEATH.

Here is a good article on complexity. Do you blame the snowflake OR, do you blame the avalanche? Complexity vs risk.
Could Market Complexity Trigger The Next Crash? | Zero Hedge

The State with the biggest military is generally the State with the reserve currency. That State generally goes bankrupt from trying to maintain both the military and the empire. It takes a LOT of a$$-kicking to maintain an empire.
U.S. Wars and Hostile Actions: A List – Let's Try Democracy

Just a slight $4.4 trillion accounting discrepancy As more and more States ditch the dollar, they have less and less incentive to buy American products. Venezuela is the latest. As more States shun the dollar, the FED / treasury must make up the difference. Eventually, there is less and less in the dollar-debt markets.