Economic pressures

[Danny B]

Fall of the globalist economy and rise of populism

Here is a cross-post on rising fascism as represented by globalist forces trying to lock down control and erase popular representation.

http://www.energeticforum.com/304759-post6459.html

https://www.armstrongeconomics.com/international-news/politics/french-elections-a-sell-signal-long-term-for-the-eu-regardless-of-who-wins/

I can't possibly write about the economy and ignore something like a looming civil war. The globalists federalized Europe and figured the people would just go along with it. They figured that enough immigration would break up any popular resistance. The populace would be so busy trying to protect themselves from immigrant violence that they would scream for more protection from Brussels.

The Europeans have figured out that they are being raped figuratively by Brussels at the same time that they are being raped physically by the rapefugees and economically raped by the bankers. The mask has come off. Brussels has condemned the vote in Spain.
Everybody important reads Armstrong. He predicts that capital will flee public debt. Draghi talks about reducing stimulus. The ECB already owns 40% of European bonds. Imagine what private capital flight will do to the bond market.
The globalists want a EU army to put down rising populism. Europe could burn to the ground.

[Danny B]

[wayne.ct]

Fiat Money

Something that has no intrinsic value but has perceived value is known as fiat. Somebody or some institution of society authorizes and produces this fiat. E.g. it costs a few cents to produce a $20 FRN with no intrinsic value but because the restaurant perceives it has value they are willing to trade it for a meal. A middle-man perceives the bit coin has value and electronically converts some bit coin into FRN equivalent on the fly. NOT because the bit coin is scarce. It works solely because the middle-man perceives it has value. The problem in all this is two fold. Firstly, both bit coin and FRN are fiat. No intrinsic value on either side of the transaction. Secondly, without computers and the Internet the exchange is not possible. Implicitly, this only works when the infrastructure is in place. Also, where computers are involved there is no privacy or security. Lastly, there is the specter of government intrusion at some point during or after the transaction.

The last two points are not understood or appreciated by most bit coin fans. Yet these two statements are true and devastating to bit coin. In support of this claim I submit the following hypothetical but entirely plausible scenario or future case. The government exercises its overreaching power and passes legislation or regulation stating that every bit coin exchange is regulated and taxable. Anyone and everyone that is a party to any such exchange is required to pay a prescribed fee or penalty as decreed by the government or suffer accordingly. The result is an end to private bit coin as a generally accepted form of exchange. Consequentially all crypto-currency becomes a part of the government and banking cabal.

The bit coin fans think or claim that they can stay one step ahead of the government and my hypothetical scenario will never happen. Call me skeptical. It will happen much sooner than never. I think I already see the foundation being laid to put this regulation into place. If you value your privacy, don't do bit coin.

[Danny B]

oftwominds-Charles Hugh Smith: What If the Tax Donkeys Rebel?https://www.hussmanfunds.com/wmc/wmc170925.htm

"Due to slowing illegal immigration, record low birth rates, and young adult migration...depopulation is under way for large portions of the US"
These entwined issues are driving the Federal Reserve's interest rate and monetary policies to delay the resultant economic dislocations and property value collapses in affected regions. But thanks to Japan's more advanced crisis, the Bank of Japan's full game plan (which will almost surely ultimately be the Fed's plan) for dealing with this crisis has already been revealed. Hyper-monetization.

Hyper-monetization is the outright trade of newly created digital fiat for existing assets. This simple process of perpetually reducing the quantity of assets outstanding and simultaneously increasing the supply of money available to chase the remaining assets is the plan. Hyper-monetization explains why continued unchecked appreciation of "bubbly" urban real estate is a really good bet, why financial assets will continue rising, why bond yields will continue declining...but also why the overall economic situation will only deteriorate further and faster across much of America."
GREAT graphs, https://econimica.blogspot.com/2017/...rban-rise.html
The credit bubble can never be allowed to deflate. A falling population threatens to do just that. Eventually, we will all be "Japanese" where the GOV just prints unlimited currency with no plan to pay off the debt.
GREAT graphs.

The West has promoted births in populations that do not have the resources to raise children. Non-producers tend to raise families of little non-producers. The financial burden on the State just keeps growing.
Up to 600,000 expected to apply when L.A. reopens Section 8 housing list this month after 13 years - LA Times

https://www.armstrongeconomics.com/world-news/taxes/the-collapse-of-socialism-its-our-turn-up-to-bat/

[Danny B]

CITI & CDOs,,, bond shorts

Reportedly, the banks are not profitable. They have turned BACK to derivatives to appear

https://www.theinstitutionalriskanalyst.com/single-post/2017/10/01/CDO-Redux-Credit-Spreads-Financial-Fraud

Armstrong said that public debt is going to crash.

The treasury can only hold the sharks at bay by continuously pumping in more "money". There is always the possibility that something could go POP without warning. Remember that; if a bank goes bust, it will take your deposit to make the senior bondholders "whole". It's all legal.
Everybody else will get a haircut.
A high dollar makes emerging market dollar-debt unpayable.

[Danny B]

Doubt creeps in to sovereign bonds

Here is a graph of the returns on a 10 yr. Treasury note if you just continuously roll it over.

https://d33wubrfki0l68.cloudfront.net/b4e832ef8b4fd411becb509898884b033c902fb0/f96b5/img/posts/05/20171003-10yr.png

"The true DANGER AHEAD lies in the universal belief that treasuries (and other sovereign fixed income) offer a perfect hedge "
"Buying sovereign bonds against your risk asset portfolio will not only fail to save you in the next market crisis, but will instead be the source of the crash."
"But the global financial system has permanently changed. Quantitative easing, negative interest rates, Central Banks with balance sheets that are 40%, 50% even 95% of GDP. If anyone claims they know how this will unwind, or that they know everything will be fine, then ignore them. This is one of the craziest monetary science experiments ever concocted."
" There you have it. Sovereign bonds, instead of being a great saviour, will instead be the cause. "

https://www.themacrotourist.com/posts/2017/10/03/true-danger-ahead/

https://www.sprottmoney.com/Blog/an-accountant-smells-a-rat-peter-diekmeyer.html

The FED tried to exit in 2011. It has talked up EXIT ever since then. The Chinese central bank talks exit. Mario Draghi of the ECB continuously talk EXIT. There is no such thing as a temporary rescue of a failing business / model. The FED is charged with maintaining full employment. Globalism distorted employment to such a degree that, there is no hope in that department.
The State prints money and pushes it into the upper loop so that the bankers and bureaucrats never go broke. Subsidising parasites does very little to help the producing economy.
Benjamin Franklin and Adolph Hitler created money solely for the lower loop. The economy did VERY well.
Here is a 5 y.o. vid of a Canadian girl who talks about how Canada has been SCREWED ever since it got a C.B.

https://www.youtube.com/watch?v=Bx5Sc3vWefE

Everyone marvelled at her intelligence and perspicacity. The legislature did absolutely nothing to correct the obvious flaws in the system.

[Danny B]

Empires in their death throes

The nation Dates of rise and fall Duration in years
Assyria 859-612B.C.247
Persia 538-330B.C.208
(Cyrus and his descendants)
Greece331-100 B.C.231
(Alexander and his successors)
Roman Republic
260-27 B.C.233
Roman Empire
27B.C.-A.D.180 207
Arab Empire
A.D.634-880 246
Mameluke Empire
1250-1517 267
Ottoman Empire
1320-1570 250
Spain1500-1750 250
Romanov Russia
1682-1916 234
Britain
1700-1950 250

http://people.uncw.edu/kozloffm/glubb.pdf

This is an excellent article. I do notice that he left out the Eastern Roman Empire headquartered in Constantinople.

http://people.uncw.edu/kozloffm/glubb.pdf

Another great read; Chodorov, The rise and Fall of Society.

https://mises.org/files/rise-and-fall-society5pdf/download?token=6KespDgB

In 1989, Russia collapsed. The whole world could have disarmed and enjoyed the "peace dividend". It was not to be. The neocons and various warmongers forged ahead with extending the empire. This was partly our legacy handed down from the British empire. Much more than that, it was a bloodthirsty strategy forced on us by a small bloodthirsty tribe from central Asia.

https://biblicisminstitute.wordpress.com/2014/08/05/israel-the-scourge-of-empires/

Side note, The S&P 500 Poised To Lose $10 Trillion In Value | Zero HedgeYou can thank GWB and his cronies.

https://www.truthdig.com/articles/the-end-of-empire/

[Danny B]

GDP and debt

Kissinger informed the Saudis that they WOULD sell oil only in dollars. They had no military so, they accepted the deal. America promised to protect Saudi Arabia. Since then, pox americana has stolen a huge amount of Saudi gold AND refused to liquidate a couple?$trillion in GOV bonds that Saudi holds. Saudi has just signed on with Russia to buy the RussianChina's Shadow-Lending Ecosystem Could Be As Large As $40 Trillion, PBOC Guesses | Zero Hedge
China is going to have to revalue gold MUCH higher to escape from this debt trap.

GDP minus the federal; debt, https://dailyreckoning.com/wp-conten...7_GDP-DEBT.png

https://dailyreckoning.com/shocking-truth-government-debt/

https://eand.co/the-old-world-just-died-heres-how-to-build-a-new-one-15d2e46b011f

https://renegadeinc.com/jared-bernstein-not-understand-sovereign-currencies/

[Danny B]

Mo debt,,, the pension debt pacman

"So, in less than a month, the U.S. Government public debt increased by a stunning $500 billion. Along with the half trillion Dollars worth of new public debt, the U.S. Treasury will have to pay an additional $11 billion a year in interest payments based on an average 2.2% rate."

https://srsroccoreport.com/stunning-u-s-government-debt-increase-in-past-few-days-while-no-one-noticed/

"They" claim that we could never just print this money.

"Did the Fed's #2 Quit to Avoid Blame for the Coming Inflationary Storm?
by Phoenix Capital... - Oct 5, 2017 11:28 AM
Vice-Fed Chair Stanley Fischer recently resigned unexpectedly from the Federal Reserve."
Is the FED planning some drastic move that would restrict GOV spending?Kentucky pension crisis: State retirees now outnumber workers | Lexington Herald Leader

The Illinois legislature passed a huge tax increase and then,,, ran away. https://mishtalk.com/2017/10/05/20-o...d-of-retiring/

FED GOV is broke. State gov is more broke. Municipal gov is more brokerer.

http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/10/05/2017.10.05%20-%20JPM%202_0.JPG

"To our great 'shock', Chicago residents win the award of "most screwed" with over 60% of their tax dollars going to fund debt and pension payments. Meanwhile, there are a dozen municipalities where over 50% of their annual budgets are used just to fund the maintenance cost of past expenditures."
All this money going to debt and pension funding squeezes out all other funding. The rubber meets the road in the municipal bond market. If investors dump munis, it is all over for the cities.

The CBs are trying to hold back deflation even though wages and earning power have been severely deflated. They pump in money to try to get the credit bubble to grow. It NEVER works out the way that they had planned.
"As Wallstromg sarcastically points out, the big irony in this is that "the current monetary policy regime, which aims for "price stability", started in 1995."

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/10/01/real%20house%20prices%20in%20stockholm_0.jpg

Their market cap is larger than GM. What could possibly go wrong?
They told him that there won't be any blowback.
Nothing but blue skies ahead.

[Danny B]

Mysterious inflation

I read unimaginable amounts of BS trying to find some truth.

You get the idea. I have to do a lot of reading.

Everyone and their uncle were predicting hyperinflation. Now, they are mystified that it hasn't appeared. The stock market is flying higher than it has before in history. It is at 2.7 times historical valuation. The dolts just refuse to look to the upper loop of the economy while looking for hyperinflation.
"Two weeks ago, Janet Yellen finally - and shockingly - admitted that neither she, nor her Fed peers, "fully understand inflation" and that the "shortfall of inflation this year is more of a mystery."
"while the Fed may have failed to stimulate inflation in real economic prices - and especially wages - it had unleashed hyperinflation in asset prices."
"while traditional inflation measures may not call for aggressive tightening, we believe high valuation (e.g. cyclically adjusted price-earnings, or CAPE, multiples above 30x) is a sign of inflation in financial assets that is hard to miss. This is the elephant in the room."
As aggregate earning power in the West crashed, the banks became insolvent. The CBs rescued the banks by pumping in boatloads of pixilated liquidity. This liquidity flowed into assets because the middle class was consumption constrained. The upper loop is busy inflating everything in sight.
"And while SocGen is battening down the hatches, the French bank is surprised by how little credibility the Fed's stated tightening intentions have in the market, because as it writes, when looking at its monetary newsflow indicator "Nobody seems to believe the Fed dots" and with good reason. To wit:" "This Is The Elephant In The Room": Even SocGen Is Now Calling It A Bubble | Zero Hedge
"And while stocks remain oblivious, expecting to be bailed out the moments there is even a 3% "crash", bonds are starting to get nervous"
Richard Koo talks about inflation, https://www.youtube.com/watch?v=8YTyJzmiHGk

Here is a comparison of the many bubbles, Infographic: The Everything Bubble Is Ready to Pop | RiskHedge

[Danny B]

https://dailyreckoning.com/wisdom-folly-crowds/

A long article on the sheep mentality of investors, Sheep Logic - Epsilon Theory3 Uncommon Signs That An Economic Collapse Could Happen Soon
Puerto Rico is in deep trouble, "It Will Be A Disaster": Puerto Rico To Run Out Of Cash On October 31 | Zero Hedge

"The bull market in everything is really a global realization that government is in trouble. We are looking at money getting out of banks and government to REDUCE the risk of government as we move forward. So this time it is different. Normally, we have one sector at a time in a bubble, commodities, stocks, real estate, tangible assets. We normally do not see a bull market in everything unless there is a wave of movement away from government."

https://www.armstrongeconomics.com/armstrongeconomics101/understanding-cycles/the-bull-market-this-time-it-really-is-different/

The EU is bust. More taxes are needed. NO problem. Just pass retroactive taxes. 15 years should do it, https://www.armstrongeconomics.com/i...-for-business/

[Danny B]

Liar loans,,,, maintaining confidence

In the run-up to the 2008 crash, FED GOV penalized banks who refused to create liar-loans. The FEDs were going to magically raise the rate of home-ownership. This would send business to the banks for purchases that were not merited by the stated wages of the borrower. The borrower could state anything that he wanted. The banks resold the loans to other investors who had not the slightest possibility of verifying the inherent risk. These investors had to take the word of the rating agencies that the loans were good.
The banks got all the up-front money. The rating agencies rationalized that the the loans deserved the same credit rating as the loan creating bank. The banks paid the rating agencies for these glowing reports. When too many NINJA borrowers sent in too much jingle-mail, the big mortgage lenders went belly-up. EVERYBODY had exposure to the credit system and, it locked up.
We can complain about greedy banks but, their greed was nothing new. When slick Willie removed Glass-Steagal, He threw all your savings into the lap of the banks. The Maestro, Greenspan argued that the banks themselves were the BEST regulators of their own business. He now laments that belief. The individual employees of the bank ran totally wild and destroyed many of their employers (banks)
You can lay the ultimate blame on the State.

When the credit markets locked up, nobody could buy anything. 1/2 of car sales were financed by lenders like GMAC that weren't banks and had no cushion.
"annual new car sales decreased by an order of magnitude, from about 16 million in 2005 to less than 10 million."

https://insight.kellogg.northwestern.edu/article/was-the-government-bailout-of-car-financers-necessary

I remember reports of shiploads of BMWs that couldn't be unloaded at port because, there was no place to put them. Dealers had no room. I find NO mention of this in a search.
People spend money depending on how rich they feel,,, how much confidence they have in the economy. The FED is juicing the economy by $billions every day. The Central banks seem? to believe that if ;they buy hundreds of $billions in stocks, the stock market will never go down.

Here is a single chart that shows their attempts at deflation and, the likely outcome. It gives some indication of timing.

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/03/20171007_stock_0.jpg

RISK, On a reward-to-risk basis, investors have not been this 'offside' since 1994...

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/03/20171006_EOD1_0.jpg

Visualizing The Real Test For Market Bulls (In 1 Simple Chart) | Zero Hedge
The article has a load of good charts.

Here is a set of charts from the cheerleaders, https://www.bloomberg.com/news/artic...-era:thinking:
Scientific advances are bringing us price deflation in many areas. All we need now is free energy.

http://www.zerohedge.com/news/2017-10-07/wind-solar-3d-printers-led-decade-disruption-one-chart

The 25 people who brought on the financial crisis.. 2012

https://www.theguardian.com/business/2012/aug/06/financial-crisis-25-people-heart-meltdown

[Danny B]

The shape of the coming domestic war

The Bretton Woods credit card allowed pax Americana to become pox Americana. Unearned Wealth destroys morality. All the worst people occupied the behind-the-scenes power structure. $Trillions were poured into the enterprise of thrashing the world for profit. Any State that couldn't stand up to the U.S. military was sacked and looted.
Trump might stay in Afghanistan for minerals - Business Insider
Trump's Afghanistan strategy may unlock 3 trillion in natural resources
https://www.cnbc.com

Very few States can stand up to the U.S. military. The FED and the dollar are what must be attacked to stop Tel Aviv on the Potomac. The maintenance and expansion of pox Americana depend on continued acceptance of the dollar for our imports. The West is soon to crash.
The R.O.W. is helping things along because they don't want to be looted any more.
The P.B.O.C. is hyperinflating the Chinese currency supply. BUT, all this liquidity can run where it will. The outflow from China alone is about $ 1trillion a year. Draghi claims only $60 billion a month. Kuroda (BOJ) is helping also. Hyperinflation in the asset markets is what will bring them down. There will be no credit and no trust. Only physical gold will be accepted by the East. True, they like gold very much. More importantly, America doesn't have any. The international battleground will be the oil patch.
The local battle will be between retirees and the military.

The neocons thrashed the snot out of the Middle-East. Those who have been thrashed are now flocking to the protection of Russia. Their new defense capabilities have attracted a lot of admirers.
Is This The Geopolitical Shift Of The Century? | OilPrice.comEvery one dollar rise in taxes results in a 3 dollar shrinkage of the producing economy. Plot THAT on a graph.
"lockbox with Social Security funds in it. That money was spent on other government programs and debts." WARS
Uncle Sam’s Unfunded Promises | Thoughts from the Frontline Investment Newsletter | Mauldin Economics

They have looked into the abyss and, changed their minds.
https://www.activistpost.com
The military has pi$$ed away MANY trillions of dollars. We have junk infrastructure. The military-industrial-banking complex will NOT want to shrink when fiscal reality strikes during the default cascade.
The battle lines will be between retirees and the military budget. Pox Americana will try to continue with business as usual.

[Danny B]

Volatility will returm,,,, in the form of a mushroom cloud

I tell people that want to prep to store diesel and cash. Puerto Rico is desperately short of,,, cash and diesel.

https://www.nytimes.com/2017/09/29/us/puerto-rico-shortages-cash.html

https://northmantrader.files.wordpress.com/2017/10/spxred.png?w=1220&h=538

https://northmantrader.com/2017/10/08/flatliners/amp/

https://www.theautomaticearth.com/2017/10/minsky-and-volatility/

Up until now, crypto currency just is NOT the answer. The State hates it and it has been hacked TOO MANY times.

https://dollarcollapse.com/cyberwar/real-peak-complacency/

[Danny B]

fall about 30 percent this year and broader surveys show the hiring outlook is near a 12-year low. "
Even India faces low-wage competition.
"There was an absolute decline in employment between March 2014 and 2016, "perhaps happening for the first time in independent India,"
" Stressed corporates could derail the overall investment recovery for another two-to-three years, given they are using only 40 percent of capacity," Outsourced from India.Side note,

https://www.bloomberg.com/news/articles/2017-10-08/from-farms-to-factories-india-s-facing-a-risky-drop-in-demand

NUMEROUS writers continually call for hyperinflation....a drastic rise in the quantity of "money". BUT, the economy is in deflation. How can that be?
Tax Haven Cash Rising, Now Equal To At Least 10% Of World GDP
https://www.forbes.com That is just the money in tax havens. What about all the money that has moved into bonds? The bond market is valued at about $180 trillion.
Stocks are valued at about $68 trillion.
Stocks and corporate bonds depend on the production-consumption cycle to generate returns. If manufacturing jobs in India are expected to fall 30%, what does that imply for the rest of the world?
"using only 40 percent of capacity,"

As wages, employment and consumption continue to fall, productivity will eventually follow. The upper loop of the economy refuses to invest in productivity that is just going to be surplus from the start. The investor loop has moved their money to places that they figure are safe. This is galloping deflation in both the volume and velocity of money.
The State responds by pumping liquidity into the publicNot with bogus numbers.
"he Fed assumes that because of low unemployment today, inflation must be right around the corner.

The only problem with the Phillips Curve is that it does not exist. It has no empirical support. In the late 1970s and early 1980s we had high unemployment and high inflation. Today we have low unemployment BS

https://dailyreckoning.com/rickards-markets-got-wrong-fed/