Dislikedhttps://rabble.ca/blogs/bloggers/vie...nada-now-incur Most Canadians are not aware that, prior to 1975, the construction of major public facilities, as well as the provision and improvement of social programs, were funded by interest-free loans from the Bank of Canada. Such loans helped Canada recover from the Great Depression of the 1930s and to achieve a prompt and prosperous economic boom after the Second World War. The construction of the Trans-Canada Highway, the St. Lawrence...Ignored
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- Post #8,201
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- Apr 23, 2020 8:17am Apr 23, 2020 8:17am
- | Joined Mar 2020 | Status: Member | 96 Posts
- Post #8,202
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- Edited 8:48am Apr 23, 2020 8:32am | Edited 8:48am
- | Commercial Member | Joined Dec 2014 | 11,787 Posts
https://goldswitzerland.com/us-defic...y-coming-from/
US DEFICIT $4T & DEBT $28T – WHERE IS THE MONEY COMING FROM?
April 23, 2020
by Egon von Greyerz
Will the Coronavirus be the catalyst of not just a depression but also major reduction in global population? The growth in world population since the 1850s has been explosive. In the 1850s there were 1 billion people and today we are 7.8 billion. Although many “experts” have extrapolated the growth to 10 billion and more in coming decades, this has in my view not been based on sound reasoning. Instead, as I been writing about and discussed many times the spike in population that we have seen in the last 170 years will not end well.
Anyone who can read a chart knows that a spike on a major sample doesn’t continue straight up. And it doesn’t just correct sideways either. At some point, a spike up is always corrected by a major spike down. I talked about this in my article from April 2018. Below is an extract from this article:
WORLD POPULATION WILL DECLINE
The world has had many crises of various degrees in the past, be it the Black Death in the mid 1300s when an estimated 75 to 200 million people died in Europe and Asia. Around 50% of Europe’s population is estimated to have perished. In WWI around 20 million people died and in WWII around 60-80 million. So major catastrophes are part of history and the coming one could also see a major reduction in world population be it from economic crisis, famine, disease, social unrest or war.
From the mid 1800s to today world population has grown from 1 billion to 7.6 billion. If we look at the graph it is a straight spike up in the last 170 years. From a technical perspective, spikes up are always corrected by a spike down. We can’t tell when exactly that spike down will come but it is likely to be connected to the coming collapse of the financial system. A reduction in global population of 3-4 billion in the next few decades is a real possibility.
As I have stated in many recent articles, Coronavirus is not the reason for the downturn in the world economy that is now starting but the catalyst. I did not forecast that a pandemic would be the trigger. But in retrospect, the end of the biggest economic bubble in world history really had to come with an unexpected and unconventional catalyst.
A NEW MIRACLE PARADIGM OR A DISEASED SYSTEM?
That the world economy for the last 100 years was totally dependent on credit and printed money is not a new miracle paradigm but a the sign of diseased system.
Issuing fake money at zero cost always had to end badly. In a perverse way it is almost ironic that the trigger for ending this sick financial system would be a pandemic disease. But this is Murphy’s law. If anything can go wrong, it will go wrong in the worst possible way and at the worst time.
As I said in my article above, “So major catastrophes are part of history and the coming one could also see a major reduction in world population be it from economic crisis, famine, disease, social unrest or war.”
Now the world is in a situation when all of those factors will probably come to pass. We already have the economic crisis and we have a disease. There is not a major famine yet but this is likely to come. Social unrest and war are probable consequences of these problems. Hungry and poor people will rise against their leaders and against the elite. The differences in income and wealth between the rich and the poor have created an untenable situation. This is virtually without exception how every revolution starts.
WHERE IS THE MONEY COMING FROM
Central banks around the world are of course doing their best to stop the world from going into poverty. They are now creating unlimited amounts of money in order to assist small and big businesses as well as individuals. Everybody is expecting a handout whether it is a major US business or an unemployed individual. It is of course wonderful that everyone gets help but no one asks where is the money coming from.
Nobody worries about that THERE IS NO MONEY. The $ 100s of billions and trillions that are being given to the needy don’t exist. They are just created out of thin air. Since the crisis started in the early autumn of 2019 with the Repos, the Fed’s balance sheet has gone up by almost $3 trillion to $6.5T. But this is just the beginning. The forecast is that it will reach $9T in June and probably $12T a couple of months later.
https://goldswitzerland.com/wp-conte...ance-sheet.png
What we must remember is that this crisis didn’t start now but in 2006 when the Fed’s balance sheet was $800K. By 2012 it had gone to $3T. So in the next few months, the balance sheet will explode by 3-4x to $12T.
As I discussed in last week’s article the budget deficit will also get out of hand. In the current year the US could easily reach a deficit in excess of $4T, taking the debt to $28T. If we just go back 3 months, who would have believed a Fed balance sheet reaching $12T and a US debt of $28T? These would have been seen like preposterous fantasy figures. The problem with most forecasters and economists is that all they understand is just to extend the current trend. But they don’t even do that because if they had, they would have realised that US debt has doubled every 8 years since 1981.
So the US is likely to have a debt of $40T in 2025 but that figure is most probably much too low. Because next we are going to see failures not just in the economy but also in the financial system. At that point, the current rescue packages of $2-5T will be dwarfed by bank rescues of $10s to $100s of trillions. And when finally the derivative bubble bursts we could be into the $quadrillions. Again, most people will today consider these figures as sensational scaremongering. But that is the risk the financial system is now facing and we are now in a phase when the surprises will be much worse than anyone can imagine.
https://goldswitzerland.com/wp-conte...it-surplus.png
NOTHING WILL BE THE SAME
For decades the world has been in an Alice in Wonderland fantasy phase. It all started with private bankers taking control of the financial system in 1913 when they founded the Fed for their own benefit. For almost 60 years their power grew gradually but then in 1971 when Nixon closed the gold window, all hell broke lose.
Money printing and credit expansion have grown exponentially since that time.
The US already started what is now 60 years of deficit spending. Every single year since 1960, the US has a deficit. The Clinton surpluses in the late 1990s were all fake since debt continued to increase. Just imagine that the mighty US has lived on a lie for more than half a century. The economic miracle is not a miracle at all but just printed wealth.
Since the main aim of politicians is to buy votes, Nixon had no choice back in 1971. The US had already at that point been running a deficit for 10 years. With a gold standard, it is necessary to run an honest financial system without deficits. Otherwise you lose all your gold and the currency collapses. Since Nixon had no intention to run surpluses, he could not be tied by a gold standard and therefore abolished the gold backing of the dollar. The consequences were of course disastrous and the dollar has fallen ever since.
The chart below shows the not so mighty dollar against the Swiss franc since 1971. The dollar has so far lost 78%. The technical target tells us that the dollar will come down another 50% against the Swissy. But we shouldn’t measure currencies against each other since they will all go down to their intrinsic value of ZERO.
https://goldswitzerland.com/wp-conte...usd-vs-chf.png
Instead, if we measure the dollar against gold it is already down 98% since Nixon’s fatal decision. The remaining 2% fall to Zero is likely to happen in the next 1-4 years. But we must remember that this involves a 100% fall from today of most currencies against gold.
US DEBT FROM $800 BILLION TO $76 TRILLION WITH 60 YEARS OF DEFICITS
Since the US started running deficits in 60 years ago, total US debt has gone from $800 billion to $76 trillion today. What we are seeing is a fantasy world all built on debt, federal, state, consumer, mortgage, auto, student etc. The list is endless how to create fake wealth just based on debt.
But the US is now coming back out of the Rabbit Hole and back to reality which will be the biggest shock in history. The Coronavirus was the perfect catalyst albeit horrible. The trillions of fake money and fake assets will now implode and so will the US economy. The rest of the world will sadly follow.
What the world has experienced in the last 100 years is not real capitalism. It more resembles Voodoo capitalism. Central bankers, led by the Fed, have successfully adopted Mayer Amschel Rothschild’s philosophy: “Permit me to issue and control the money of a nation, and I care not who makes its laws.”
https://goldswitzerland.com/wp-conte.../permit-me.png
By doing this, they have put a spell on the global financial system and lumbering it with debt that could never be repaid. The beauty of having done this from the bankers point of view is that they are the only ones who can lift the spell. First they are instrumental in creating a debt infested world economy and then they are the only ones who can come to the rescue and “save” it. And in both instances they benefit greatly.
The problem is that the cure will be even worse than the original action. A best burdened world can never be saved by more debt. But this is the only remedy the central bankers know. So next we will see unlimited money printing that crushes currencies and leads to a depressionary hyperinflation.
MARKETS
In real terms all bubble assets will now crash. Real terms means in stable purchasing power and measured against gold. So we will see stocks, bonds and property decline by 90-100% against gold. In nominal terms, stocks might go up initially with hyperinflation. But that will only be illusory gains.
Stocks around the world fell initially by around 40% and have now recovered half of that fall as stock investors have been buying the dips in the hope that central banks will save them yet another time. But they will soon have their next shock. Markets could start their next leg down already in the coming week. Or it could take 2-3 weeks. What is clear is that a secular bear market has started which has a very long way to go.
GOLD – STILL MASSIVELY UNDERVALUED
For 20 years I have talked about the importance of wealth preservation in the form of physical gold. During that time gold is up 6-7 times depending on which currency you measure it in. But still, less than 0.5% of world financial assets are in gold.
Gold is still incredibly undervalued in relation to the growth of global money supply. It is still possible to get gold, but the physical market is under real pressure. The three largest refiners in the world, based in Ticino Switzerland, are now working at 30-40% capacity. So major shortages are developing. Spreads are now much higher but the price for wholesale gold is still governed by the paper market.
This is a ridiculous situation that will not last long. Both the Comex and the LBMA are under enormous pressure which soon will lead to massive delivery problems and a major price squeeze. So the window of opportunity to acquire physical gold at current prices will soon close.
Remember that gold is real physical wealth as well as insurance against a financial system that is unlikely to survive. Gold can still be bought with overvalued fiat money at prices substantially below its real value but not for much longer.
Egon von Greyerz
Founder and Managing Partner
Matterhorn Asset Management
Zurich, Switzerland
Phone: +41 44 213 62 45
Matterhorn Asset Management’s global client base strategically stores an important part of their wealth in Switzerland in physical gold and silver outside the banking system. Matterhorn Asset Management is pleased to deliver a unique and exceptional service to our highly esteemed wealth preservation clientele in over 70 countries.
GoldSwitzerland.com
Contact Us
Articles may be republished if full credits are given with a link to GoldSwitzerland.com.
Post navigation
US DEFICIT $4T & DEBT $28T – WHERE IS THE MONEY COMING FROM?
April 23, 2020
by Egon von Greyerz
Will the Coronavirus be the catalyst of not just a depression but also major reduction in global population? The growth in world population since the 1850s has been explosive. In the 1850s there were 1 billion people and today we are 7.8 billion. Although many “experts” have extrapolated the growth to 10 billion and more in coming decades, this has in my view not been based on sound reasoning. Instead, as I been writing about and discussed many times the spike in population that we have seen in the last 170 years will not end well.
Anyone who can read a chart knows that a spike on a major sample doesn’t continue straight up. And it doesn’t just correct sideways either. At some point, a spike up is always corrected by a major spike down. I talked about this in my article from April 2018. Below is an extract from this article:
WORLD POPULATION WILL DECLINE
The world has had many crises of various degrees in the past, be it the Black Death in the mid 1300s when an estimated 75 to 200 million people died in Europe and Asia. Around 50% of Europe’s population is estimated to have perished. In WWI around 20 million people died and in WWII around 60-80 million. So major catastrophes are part of history and the coming one could also see a major reduction in world population be it from economic crisis, famine, disease, social unrest or war.
From the mid 1800s to today world population has grown from 1 billion to 7.6 billion. If we look at the graph it is a straight spike up in the last 170 years. From a technical perspective, spikes up are always corrected by a spike down. We can’t tell when exactly that spike down will come but it is likely to be connected to the coming collapse of the financial system. A reduction in global population of 3-4 billion in the next few decades is a real possibility.
As I have stated in many recent articles, Coronavirus is not the reason for the downturn in the world economy that is now starting but the catalyst. I did not forecast that a pandemic would be the trigger. But in retrospect, the end of the biggest economic bubble in world history really had to come with an unexpected and unconventional catalyst.
A NEW MIRACLE PARADIGM OR A DISEASED SYSTEM?
That the world economy for the last 100 years was totally dependent on credit and printed money is not a new miracle paradigm but a the sign of diseased system.
Issuing fake money at zero cost always had to end badly. In a perverse way it is almost ironic that the trigger for ending this sick financial system would be a pandemic disease. But this is Murphy’s law. If anything can go wrong, it will go wrong in the worst possible way and at the worst time.
As I said in my article above, “So major catastrophes are part of history and the coming one could also see a major reduction in world population be it from economic crisis, famine, disease, social unrest or war.”
Now the world is in a situation when all of those factors will probably come to pass. We already have the economic crisis and we have a disease. There is not a major famine yet but this is likely to come. Social unrest and war are probable consequences of these problems. Hungry and poor people will rise against their leaders and against the elite. The differences in income and wealth between the rich and the poor have created an untenable situation. This is virtually without exception how every revolution starts.
WHERE IS THE MONEY COMING FROM
Central banks around the world are of course doing their best to stop the world from going into poverty. They are now creating unlimited amounts of money in order to assist small and big businesses as well as individuals. Everybody is expecting a handout whether it is a major US business or an unemployed individual. It is of course wonderful that everyone gets help but no one asks where is the money coming from.
Nobody worries about that THERE IS NO MONEY. The $ 100s of billions and trillions that are being given to the needy don’t exist. They are just created out of thin air. Since the crisis started in the early autumn of 2019 with the Repos, the Fed’s balance sheet has gone up by almost $3 trillion to $6.5T. But this is just the beginning. The forecast is that it will reach $9T in June and probably $12T a couple of months later.
https://goldswitzerland.com/wp-conte...ance-sheet.png
What we must remember is that this crisis didn’t start now but in 2006 when the Fed’s balance sheet was $800K. By 2012 it had gone to $3T. So in the next few months, the balance sheet will explode by 3-4x to $12T.
As I discussed in last week’s article the budget deficit will also get out of hand. In the current year the US could easily reach a deficit in excess of $4T, taking the debt to $28T. If we just go back 3 months, who would have believed a Fed balance sheet reaching $12T and a US debt of $28T? These would have been seen like preposterous fantasy figures. The problem with most forecasters and economists is that all they understand is just to extend the current trend. But they don’t even do that because if they had, they would have realised that US debt has doubled every 8 years since 1981.
So the US is likely to have a debt of $40T in 2025 but that figure is most probably much too low. Because next we are going to see failures not just in the economy but also in the financial system. At that point, the current rescue packages of $2-5T will be dwarfed by bank rescues of $10s to $100s of trillions. And when finally the derivative bubble bursts we could be into the $quadrillions. Again, most people will today consider these figures as sensational scaremongering. But that is the risk the financial system is now facing and we are now in a phase when the surprises will be much worse than anyone can imagine.
https://goldswitzerland.com/wp-conte...it-surplus.png
NOTHING WILL BE THE SAME
For decades the world has been in an Alice in Wonderland fantasy phase. It all started with private bankers taking control of the financial system in 1913 when they founded the Fed for their own benefit. For almost 60 years their power grew gradually but then in 1971 when Nixon closed the gold window, all hell broke lose.
Money printing and credit expansion have grown exponentially since that time.
The US already started what is now 60 years of deficit spending. Every single year since 1960, the US has a deficit. The Clinton surpluses in the late 1990s were all fake since debt continued to increase. Just imagine that the mighty US has lived on a lie for more than half a century. The economic miracle is not a miracle at all but just printed wealth.
Since the main aim of politicians is to buy votes, Nixon had no choice back in 1971. The US had already at that point been running a deficit for 10 years. With a gold standard, it is necessary to run an honest financial system without deficits. Otherwise you lose all your gold and the currency collapses. Since Nixon had no intention to run surpluses, he could not be tied by a gold standard and therefore abolished the gold backing of the dollar. The consequences were of course disastrous and the dollar has fallen ever since.
The chart below shows the not so mighty dollar against the Swiss franc since 1971. The dollar has so far lost 78%. The technical target tells us that the dollar will come down another 50% against the Swissy. But we shouldn’t measure currencies against each other since they will all go down to their intrinsic value of ZERO.
https://goldswitzerland.com/wp-conte...usd-vs-chf.png
Instead, if we measure the dollar against gold it is already down 98% since Nixon’s fatal decision. The remaining 2% fall to Zero is likely to happen in the next 1-4 years. But we must remember that this involves a 100% fall from today of most currencies against gold.
US DEBT FROM $800 BILLION TO $76 TRILLION WITH 60 YEARS OF DEFICITS
Since the US started running deficits in 60 years ago, total US debt has gone from $800 billion to $76 trillion today. What we are seeing is a fantasy world all built on debt, federal, state, consumer, mortgage, auto, student etc. The list is endless how to create fake wealth just based on debt.
But the US is now coming back out of the Rabbit Hole and back to reality which will be the biggest shock in history. The Coronavirus was the perfect catalyst albeit horrible. The trillions of fake money and fake assets will now implode and so will the US economy. The rest of the world will sadly follow.
What the world has experienced in the last 100 years is not real capitalism. It more resembles Voodoo capitalism. Central bankers, led by the Fed, have successfully adopted Mayer Amschel Rothschild’s philosophy: “Permit me to issue and control the money of a nation, and I care not who makes its laws.”
https://goldswitzerland.com/wp-conte.../permit-me.png
By doing this, they have put a spell on the global financial system and lumbering it with debt that could never be repaid. The beauty of having done this from the bankers point of view is that they are the only ones who can lift the spell. First they are instrumental in creating a debt infested world economy and then they are the only ones who can come to the rescue and “save” it. And in both instances they benefit greatly.
The problem is that the cure will be even worse than the original action. A best burdened world can never be saved by more debt. But this is the only remedy the central bankers know. So next we will see unlimited money printing that crushes currencies and leads to a depressionary hyperinflation.
MARKETS
In real terms all bubble assets will now crash. Real terms means in stable purchasing power and measured against gold. So we will see stocks, bonds and property decline by 90-100% against gold. In nominal terms, stocks might go up initially with hyperinflation. But that will only be illusory gains.
Stocks around the world fell initially by around 40% and have now recovered half of that fall as stock investors have been buying the dips in the hope that central banks will save them yet another time. But they will soon have their next shock. Markets could start their next leg down already in the coming week. Or it could take 2-3 weeks. What is clear is that a secular bear market has started which has a very long way to go.
GOLD – STILL MASSIVELY UNDERVALUED
For 20 years I have talked about the importance of wealth preservation in the form of physical gold. During that time gold is up 6-7 times depending on which currency you measure it in. But still, less than 0.5% of world financial assets are in gold.
Gold is still incredibly undervalued in relation to the growth of global money supply. It is still possible to get gold, but the physical market is under real pressure. The three largest refiners in the world, based in Ticino Switzerland, are now working at 30-40% capacity. So major shortages are developing. Spreads are now much higher but the price for wholesale gold is still governed by the paper market.
This is a ridiculous situation that will not last long. Both the Comex and the LBMA are under enormous pressure which soon will lead to massive delivery problems and a major price squeeze. So the window of opportunity to acquire physical gold at current prices will soon close.
Remember that gold is real physical wealth as well as insurance against a financial system that is unlikely to survive. Gold can still be bought with overvalued fiat money at prices substantially below its real value but not for much longer.
Egon von Greyerz
Founder and Managing Partner
Matterhorn Asset Management
Zurich, Switzerland
Phone: +41 44 213 62 45
Matterhorn Asset Management’s global client base strategically stores an important part of their wealth in Switzerland in physical gold and silver outside the banking system. Matterhorn Asset Management is pleased to deliver a unique and exceptional service to our highly esteemed wealth preservation clientele in over 70 countries.
GoldSwitzerland.com
Contact Us
Articles may be republished if full credits are given with a link to GoldSwitzerland.com.
Post navigation
Attached Image
- Post #8,203
- Quote
- Apr 23, 2020 11:37am Apr 23, 2020 11:37am
- | Commercial Member | Joined Dec 2014 | 11,787 Posts
https://www.zerohedge.com/economics/...ops+to+zero%29
Now that the latest initial claims reports is in the history books, revealing that a record 26.5 million people have been let go in the past five years, which is over 10 times the prior worst five-week period in the last 50-plus years...
https://zh-prod-1cc738ca-7d3b-4a72-b...es/bfm952C.jpg
Source: Bloomberg
... the most important event today is the long-awaited European Council summit which is taking place via videoconference this afternoon, where as Jim Reid writes, the big question will be over how the idea of a European Recovery Fund is financed. Yesterday, Bloomberg News reported that the Commission would propose a €2 trillion plan that would in part use the bloc’s 7-year multi-annual budget with a €300bn recovery fund included, but also establish a new temporary financing mechanism that would raise up to €320bn. However, this could prove controversial given the issuance of joint debt, to which northern member states - most notably the Netherlands and Germany - are strongly reluctant.
https://zh-prod-1cc738ca-7d3b-4a72-b...on%20conte.jpg
Commenting on today's "make or break" event, Rabobank's Michael Every recaps the above, saying that "a temporary €300bn recovery fund is being discussed along with a €200bn recovery and resilience facility, €R50bn in repurposed cohesion funds, and two €200bn funds “to protect the EU’s internal markets”. And that appears to be it, even though somehow this is €2trn in some headlines."
Alas, as with everything European, there is nothing but chaos as the world looks to Europe for some comfort. As Every continues, Italy which yesterday announced that its fiscal deficit will be 10% of GDP in 2020 even though there is precious little stimulus taking place, and which will almost certainly be downgraded to junk as soon as Friday, is now willing to avoid the debt mutualiation issue and instead favour ultra-long maturity or perpetual bond issuance, and "one wonders how the Usual Suspects in northern Europe will feel about that compromise."
But the real kicker is the following: the total confusion over what Europe hopes to actually achieve:
SIX MONTHS?! And then action on a scale that looks completely out of kilter with the economic damage being wrought. Euro-committees are all very fine and good, and I am always told they work best when in a genuine crisis (or only in a crisis) – but where is The King when you need him? He appears to have left the building.
Meanwhile, as DB's Jim Reid continues, "if we saw a full agreement today that would be a surprise but progress and something that Italy can sign up to will be the key." At the same time, DB economists do expect an eventual agreement on a recovery fund, noting that "it would be a positive surprise if the important details were agreed today, since the question of burden sharing is politically complex and the ECB’s purchases are absorbing market pressure for now."
According to them, the things to watch out for are: the size, speed and structure of the fund, even though joint bonds are unlikely for obvious reasons due to the Northern states current lack of desire to go down that route.
We’ve also seen increasing speculation around grants recently, which could be the principle means of buying solidarity, but that would also lead to tough debates around the ratio of grants to loans within the Recovery Fund and eligibility for the
Finally, here is a summary primer courtesy of RanSquawk on what to expect today, even if the most accurate expectations out of the EU summit is the usual one: disappointment.
The EU27 are poised to sign off on the plans concocted by EZ finance ministers, and brainstorm on a long-term recovery plan. Leaders have signalled a general will for a larger coordinated fiscal response, albeit views seem to differ. Officials noted that the North fears that their financial positions will be contaminated by debt mutualisation in the future due to decisions taken by the South. The European Council is expected to discuss the size of a European Recovery Fund alongside other financing tools. The virtual meeting will be chaired by EU Council President Michel at 1400BST, although the lack of detailed proposals could see another impasse or delay in talks.
EU RECOVERY FUND: The Council President said the Fund should be established as soon as possible to kick-start economy once lockdown measures are eased, but officials note of a large divide between member states on the size and whether it should consist of only grants or solely loans. Consensus on a Recovery Fund this week has been heavily downplayed, with officials pointing to more clarity in June or July. In terms of the nuances, Spain is to propose a EUR 1.5tln recovery fund backed by perpetual bonds to finance the recovery of the worst-hit countries in grants and not loans, to avoid rising debt. France has backed the principals in Spain’s proposal but noted a physical meeting will be needed for a formal decision, potentially before Summer – President Macron previously said there is no choice but to set up a joint EUR 400bln recovery fund. Sources said the European Commission is reportedly seeking EUR 320bln in the market to finance the regional recovery, whilst later reports noted that the Commission is floating a EUR 2.2tln plan for economic recovery.
EUROGROUP FALLOUT: At the Eurogroup meeting, Finance Ministers agreed on a EUR 540bln rescue package which consists of:
Now that the latest initial claims reports is in the history books, revealing that a record 26.5 million people have been let go in the past five years, which is over 10 times the prior worst five-week period in the last 50-plus years...
https://zh-prod-1cc738ca-7d3b-4a72-b...es/bfm952C.jpg
Source: Bloomberg
... the most important event today is the long-awaited European Council summit which is taking place via videoconference this afternoon, where as Jim Reid writes, the big question will be over how the idea of a European Recovery Fund is financed. Yesterday, Bloomberg News reported that the Commission would propose a €2 trillion plan that would in part use the bloc’s 7-year multi-annual budget with a €300bn recovery fund included, but also establish a new temporary financing mechanism that would raise up to €320bn. However, this could prove controversial given the issuance of joint debt, to which northern member states - most notably the Netherlands and Germany - are strongly reluctant.
https://zh-prod-1cc738ca-7d3b-4a72-b...on%20conte.jpg
Commenting on today's "make or break" event, Rabobank's Michael Every recaps the above, saying that "a temporary €300bn recovery fund is being discussed along with a €200bn recovery and resilience facility, €R50bn in repurposed cohesion funds, and two €200bn funds “to protect the EU’s internal markets”. And that appears to be it, even though somehow this is €2trn in some headlines."
Alas, as with everything European, there is nothing but chaos as the world looks to Europe for some comfort. As Every continues, Italy which yesterday announced that its fiscal deficit will be 10% of GDP in 2020 even though there is precious little stimulus taking place, and which will almost certainly be downgraded to junk as soon as Friday, is now willing to avoid the debt mutualiation issue and instead favour ultra-long maturity or perpetual bond issuance, and "one wonders how the Usual Suspects in northern Europe will feel about that compromise."
But the real kicker is the following: the total confusion over what Europe hopes to actually achieve:
I won’t allow myself to get sucked into the classic Euro game of mind-stultifying fudge, acronyms, and deck-chair rearranging. Instead, I will quote Bloomberg directly: “
The ‘roadmap’ EU Council President Charles Michel distributed to national delegations ahead of the video conference contained no details on the amount, the specific objectives, the time frame or the nature of the investment needed to get the bloc back on track. Leaders aren’t expected to reach a decision this week and a final package may not be ready for at least six months, according to a French official.”
SIX MONTHS?! And then action on a scale that looks completely out of kilter with the economic damage being wrought. Euro-committees are all very fine and good, and I am always told they work best when in a genuine crisis (or only in a crisis) – but where is The King when you need him? He appears to have left the building.
Meanwhile, as DB's Jim Reid continues, "if we saw a full agreement today that would be a surprise but progress and something that Italy can sign up to will be the key." At the same time, DB economists do expect an eventual agreement on a recovery fund, noting that "it would be a positive surprise if the important details were agreed today, since the question of burden sharing is politically complex and the ECB’s purchases are absorbing market pressure for now."
According to them, the things to watch out for are: the size, speed and structure of the fund, even though joint bonds are unlikely for obvious reasons due to the Northern states current lack of desire to go down that route.
We’ve also seen increasing speculation around grants recently, which could be the principle means of buying solidarity, but that would also lead to tough debates around the ratio of grants to loans within the Recovery Fund and eligibility for the
Finally, here is a summary primer courtesy of RanSquawk on what to expect today, even if the most accurate expectations out of the EU summit is the usual one: disappointment.
The EU27 are poised to sign off on the plans concocted by EZ finance ministers, and brainstorm on a long-term recovery plan. Leaders have signalled a general will for a larger coordinated fiscal response, albeit views seem to differ. Officials noted that the North fears that their financial positions will be contaminated by debt mutualisation in the future due to decisions taken by the South. The European Council is expected to discuss the size of a European Recovery Fund alongside other financing tools. The virtual meeting will be chaired by EU Council President Michel at 1400BST, although the lack of detailed proposals could see another impasse or delay in talks.
EU RECOVERY FUND: The Council President said the Fund should be established as soon as possible to kick-start economy once lockdown measures are eased, but officials note of a large divide between member states on the size and whether it should consist of only grants or solely loans. Consensus on a Recovery Fund this week has been heavily downplayed, with officials pointing to more clarity in June or July. In terms of the nuances, Spain is to propose a EUR 1.5tln recovery fund backed by perpetual bonds to finance the recovery of the worst-hit countries in grants and not loans, to avoid rising debt. France has backed the principals in Spain’s proposal but noted a physical meeting will be needed for a formal decision, potentially before Summer – President Macron previously said there is no choice but to set up a joint EUR 400bln recovery fund. Sources said the European Commission is reportedly seeking EUR 320bln in the market to finance the regional recovery, whilst later reports noted that the Commission is floating a EUR 2.2tln plan for economic recovery.
EUROGROUP FALLOUT: At the Eurogroup meeting, Finance Ministers agreed on a EUR 540bln rescue package which consists of:
- ESM CREDIT LINE (up to 2% of Euro Area GDP): This will be immediately available for member states with “light” conditionality. The size could be up to USD 240bln should all countries tap the maximum available. This also opens the door to Outright Monetary Transactions (OMT) by the ECB, which allows the Central Bank to purchase unlimited debt from the worst-hit regions, albeit some analysts have suggested that the OMT programme has already been made redundant by the ECB's new PEPP.
- FIRMING EIB ACTIVITIES (up to 1.6% of Euro Area GDP): The European Investment Bank could support EUR 200bln of company financings, with emphasis on SMEs.
- SHORT-TIME WORK SCHEME (0.8% of Euro Area GDP): The EUR 100bln scheme was drafted to aid protect jobs and workers hit by the pandemic in the form of loans on “favourable” terms.
CORONABOND: The common debt issuances pursued namely by Spain and Italy was not included in the Eurogroup’s draft document after experiencing pushback by several larger members, vehemently from Austria, Germany and Netherlands. However, Italy seems to be erring towards a compromise on the issue. Italian PM Conte, at a Senate hearing on Tuesday, signalled open-mindedness towards the ESM credit line and an alternative fund as a substitute to Eurobonds. Desks note that this should reduce tail risks for a roadblock.
ITALY’S DILEMMA: PM Conte set a high bar for success in negotiations for a post-virus response as domestic pressure builds at the epicentre of the European outbreak. Desks note that the PM will need a win to confine the rising Eurosceptics whilst fending off opposition parties waiting to muster support from any failures. Despite Conte’s more recent sanguine tone regarding a Coronabond compromise, participants believe the PM could be tempted to walk away from the table, having had battled for weeks on a Euro-wide debt instrument. Meanwhile, domestic pushback could arise from a compromise of just ESM lines – potentially paving a way for a change in government. It’s also worth noting that S&P will be reviewing Italy’s sovereign debt on Friday; the agency will be eyeing the outcome of negotiations. Credit Suisse believes that the survival of the Euro could be at risk if EU leaders fail to understand the difficultly in Italy’s economical and political landscapes.
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STOP LOSS NOW ENTERED along with LIMIT OUT !!!
Nothing left to do except RELAX and Smell the Roses !!!
The markets now will do their work !!!
Bruce
1
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Disliked{image} STOP LOSS NOW ENTERED along with LIMIT OUT !!! Nothing left to do except RELAX and Smell the Roses !!! The markets now will do their work !!! BruceIgnored
![](https://resources.faireconomy.media/images/emojis/64/1f609.png?v=15.1)
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Inserted Video
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http://www.whatdoesitmean.com/index3195.htm
My Dearest Friends:
For just about everyone I’ve ever known, there is a point in their past they can look back on and say “That’s when my life changed forever”, and my own moment such as this happened one summer afternoon in 1955 while attending a lecture at the University of Paris—which many of you are more familiar with its name Sorbonne, and where that day the guest lecturer was an American named Isidor Feinstein Stone—known now to history as I.F. Stone—who read excerpts from his book The Hidden History of the Korean War, 1950–51, engaged afterwards in an over 3-hour question and answer session with all of us students, and began his lecture with thundering words: “Every government is run by liars and nothing they say should be believed”.
To say that I.F. Stone was one of the most reviled, hated, loved, admired and controversial journalists of the 20th Century, doesn’t even give descriptive words such as these the justice they deserve in this sentence—because when all said about him there is to say, the indisputable fact remains that he was the greatest journalist in modern times, and his self-published newsletter I. F. Stone's Weekly the greatest news publication every printed in history.
From exposing the truth that the Korean War was deliberately caused by the United States after they provoked South Korea to launch guerilla attacks on North Korea because the Americans wanted a cold war conflict with the Soviet Union, to his being the only American journalist to challenge President Lyndon B. Johnson's account of the Gulf of Tonkin incident that started the Vietnam War, what’s most important for you to know about I.F. Stone and the never-ending historic and ground breaking news stories he wrote, is that he did them all while being cut off from the rest of the mainstream news world, as well as him being denied all access to government officials—which is why he was forced to start his own newsletter, and he wrote using two things, and two things only—his genius level ability to forensically pour over and read everything from government documents to the most minor news story, and then connect the dots of what he read with history—not just any history, but the history of FAMILIES—the most powerful and consequential to human history groups of people whom I.F. Stone said when known about explain everything that happens in our world—and should always be believed, as opposed to governments that are not families, and are all liars.
Over the past fortnight, more than 11,000 cases of dead and sick birds have been reported in Germany—cases of dead and sick birds, mostly blue tits, whose first laboratory test results of found in them a bacterial infection—not just any bacterial infection, but a very specific bacterium called Suttonella Indologenes—the most mysterious bacterium every discovered whose only known host was humans, and is assumed to be normally present in our respiratory tract—but which an equally mysterious variant of is now being found in birds—and in humans is known to cause eye infections, heart problems, and respiratory problems leading to pneumonia and ultimately death—which are, also, the exact symptoms being displayed in those infected with the COVID-19 coronavirus.
Now I’m not telling you that these thousands of mysterious bird deaths in Germany are directly related to the coronavirus, but as I.F. Stone would tell you if he was alive, this puzzle piece of information must be placed into the coronavirus file for future examination to see what picture may emerge.
Which brings me to another puzzle piece of information my Dear Sisters have placed into this coronavirus file, too—and is President Donald Trump, during this coronavirus pandemic, making overt moves to acquire Greenland—a Greenland the Vikings settled in about 1,000-years ago, and Trump has been pilloried and mocked for even thinking about, as well as his being castigated in 2018 for his saying “We should have more people from Norway”—but when following I.F. Stone’s admonition to always know this history of families when viewing such things as this, it makes sense what Trump is doing when viewed in the light of his being a direct descendent of King Hakon V of Norway, a Viking-age king who reigned from 1299 to 1319—as well as Trump being related to most Icelanders and Danish and Norwegian Royalty—whom themselves are all blood descendents of Vikings, too.
In your knowing the Norwegian Viking heritage of President Trump, it’s important that you know about a particularly time period in Norway’s history that occurred in the early 1800’s—that began in 1807 when Norway was attacked by the British Empire at the 1807 Battle of Copenhagen, which led to dire conditions and mass starvation in 1812—the ultimate result of which saw Norway, in 1814, declaring its independence and adopting a constitution based on the American model.
The constitution adopted in 1814 by Norway was created by the American Founding Father James Madison—known as the “Father of the Constitution”, who himself was a direct descendent of the European Royal Families—and like President Trump’s ancestors in Norway were under siege by the British Empire in the early 1800’s, so too was then President James Madison—who watched in horror in 1814 while British Empire military forces rampaged through Washington D.C. burning down the White House, the US Capitol, and every other building they could.
As I.F. Stone meticulously documented, and why he was so hated by the American government, the absolute worse decision ever made by the British Empire was their ransacking and burning down Washington D.C.—because it caused the United States to embark on a nearly century-and-a-half of specifically engineered wars that by the time they were done, the British Empire was nothing but a hollow shell of what it once was—and once destroyed, then saw the United States embarking on its current conquest of the rest of the world by its engineering even more wars.
Though hated and reviled by the American government its privileged elites for his exposing of who they really are and what they were doing, I.F. Stone, nevertheless, and rightfully so, was called “Washington's Conscience”—and in whose seminal work Polemics and Prophecies 1967-1970 discussing the lunacy of America’s expanding nuclear arsenal, the charade of US-Soviet disarmament talks from Kennedy to Nixon, and the interlock between the government and military contractors, cryptically opined that if the United States was ever to be saved: “A new family of Viking Kings would have to arise”—a phrase some have interpreted to mean I.F. Stone saying a group of people having Viking strength and tenacity—but many others, including myself and my Dear Sisters, have always believed meant a literally king of Viking family descent—which exactly describes President Donald Trump.
With me and my Dear Sisters being armed with the I.F. Stone admonitions to all fact finders and writers of true things saying “Every government is run by liars and nothing they say should be believed” and “The only kinds of fights worth fighting are those you're going to lose, because somebody has to fight them and lose and lose and lose until someday, somebody who believes as you do wins”, I’m sure that none of you are surprised that we are has hated, mocked and reviled as he was by those holding power—a hatred that grows by the day because on 23 January 2017, three days after President Donald Trump was sworn into office, we published the first report in our “Coronavirus Pandemic War Series” titled “President Trump Orders FBI To Conduct Massive Raid On CDC Headquarters”—followed four days later, on 27 January 2017, when we published the final report of our “Freemason Trump Series” [scroll to bottom of this page for additional reports] titled “Doomsday Warned Near As CIA Nears Open Civil War Against Freemason Leader Trump”—both of which when read completely, fully explain not only what is happening now, but why it is happening, who the ancient families are making it happen, and what the most predictable outcome will be.
As opposed to those who daily give you nothing but lies and propaganda, we’ve charted a course to keep you as informed as possible with true things—true things which, granted, at first glance appear to be outlandish and unbelievable—but when viewed over time as events unfold, and as I.F. Stone knew is always true, become more real and logical to the point one has to ask themselves why they didn’t see it for themselves.
The enormous personal cost it takes for us to do this for you can never be fully measured or accounted for, and is actually our duty to perform for you as we’re commanded by our faith to do—but the staggering monetary cost can be measured, which in no way has ever been within our meager means, and is why, once again, and as always, we humbly plead for your support today.
After all, everything we do, we do for you—and without your support our mission of truth fails—but won’t happen if everyone of you remembers in your heart the words of promise given to us by our Dear Lord that say: “Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you.”
With God,
Sister Ciara
Dublin, Ireland
23 April 2020
(Please note that those who respond to this appeal, in any amount, will receive, at no charge, Sorcha Faal’s April, 2020/May, 2020 lecture series to the Sisters of the Order titled “Total War: the Collapse of the United States and the Rise of Chaos: Part 97”. This is another one of the Sorcha Faal’s most important lectures dealing with the coming timelines of war, famine, catastrophic Earth changes and disease as predicted by ancient prophecies.)
Continue To Main News Site
Stone Cold Truth Feared By Elites Points To Viking King Trump Saving America
http://www.whatdoesitmean.com/pppz2.jpghttp://www.whatdoesitmean.com/pppz1.jpghttp://www.whatdoesitmean.com/ujk1.jpg
“Every government is run by liars and nothing they say should be believed.”
Isidor Feinstein Stone (1907-1998)—best remembered for his newsletter I. F. Stone's Weekly newsletter ranked 16th among the top hundred works of journalism in the United States, in the 20th Century, and second place among print journalism publications..
Special Report from Sister Ciara
My Dearest Friends:
For just about everyone I’ve ever known, there is a point in their past they can look back on and say “That’s when my life changed forever”, and my own moment such as this happened one summer afternoon in 1955 while attending a lecture at the University of Paris—which many of you are more familiar with its name Sorbonne, and where that day the guest lecturer was an American named Isidor Feinstein Stone—known now to history as I.F. Stone—who read excerpts from his book The Hidden History of the Korean War, 1950–51, engaged afterwards in an over 3-hour question and answer session with all of us students, and began his lecture with thundering words: “Every government is run by liars and nothing they say should be believed”.
To say that I.F. Stone was one of the most reviled, hated, loved, admired and controversial journalists of the 20th Century, doesn’t even give descriptive words such as these the justice they deserve in this sentence—because when all said about him there is to say, the indisputable fact remains that he was the greatest journalist in modern times, and his self-published newsletter I. F. Stone's Weekly the greatest news publication every printed in history.
From exposing the truth that the Korean War was deliberately caused by the United States after they provoked South Korea to launch guerilla attacks on North Korea because the Americans wanted a cold war conflict with the Soviet Union, to his being the only American journalist to challenge President Lyndon B. Johnson's account of the Gulf of Tonkin incident that started the Vietnam War, what’s most important for you to know about I.F. Stone and the never-ending historic and ground breaking news stories he wrote, is that he did them all while being cut off from the rest of the mainstream news world, as well as him being denied all access to government officials—which is why he was forced to start his own newsletter, and he wrote using two things, and two things only—his genius level ability to forensically pour over and read everything from government documents to the most minor news story, and then connect the dots of what he read with history—not just any history, but the history of FAMILIES—the most powerful and consequential to human history groups of people whom I.F. Stone said when known about explain everything that happens in our world—and should always be believed, as opposed to governments that are not families, and are all liars.
http://www.whatdoesitmean.com/stn21.jpg
Over the past fortnight, more than 11,000 cases of dead and sick birds have been reported in Germany—cases of dead and sick birds, mostly blue tits, whose first laboratory test results of found in them a bacterial infection—not just any bacterial infection, but a very specific bacterium called Suttonella Indologenes—the most mysterious bacterium every discovered whose only known host was humans, and is assumed to be normally present in our respiratory tract—but which an equally mysterious variant of is now being found in birds—and in humans is known to cause eye infections, heart problems, and respiratory problems leading to pneumonia and ultimately death—which are, also, the exact symptoms being displayed in those infected with the COVID-19 coronavirus.
Now I’m not telling you that these thousands of mysterious bird deaths in Germany are directly related to the coronavirus, but as I.F. Stone would tell you if he was alive, this puzzle piece of information must be placed into the coronavirus file for future examination to see what picture may emerge.
Which brings me to another puzzle piece of information my Dear Sisters have placed into this coronavirus file, too—and is President Donald Trump, during this coronavirus pandemic, making overt moves to acquire Greenland—a Greenland the Vikings settled in about 1,000-years ago, and Trump has been pilloried and mocked for even thinking about, as well as his being castigated in 2018 for his saying “We should have more people from Norway”—but when following I.F. Stone’s admonition to always know this history of families when viewing such things as this, it makes sense what Trump is doing when viewed in the light of his being a direct descendent of King Hakon V of Norway, a Viking-age king who reigned from 1299 to 1319—as well as Trump being related to most Icelanders and Danish and Norwegian Royalty—whom themselves are all blood descendents of Vikings, too.
In your knowing the Norwegian Viking heritage of President Trump, it’s important that you know about a particularly time period in Norway’s history that occurred in the early 1800’s—that began in 1807 when Norway was attacked by the British Empire at the 1807 Battle of Copenhagen, which led to dire conditions and mass starvation in 1812—the ultimate result of which saw Norway, in 1814, declaring its independence and adopting a constitution based on the American model.
The constitution adopted in 1814 by Norway was created by the American Founding Father James Madison—known as the “Father of the Constitution”, who himself was a direct descendent of the European Royal Families—and like President Trump’s ancestors in Norway were under siege by the British Empire in the early 1800’s, so too was then President James Madison—who watched in horror in 1814 while British Empire military forces rampaged through Washington D.C. burning down the White House, the US Capitol, and every other building they could.
http://www.whatdoesitmean.com/stn22.jpg
British Empire military forces ransack Washington D.C. and burn down White House (above) on 24 August 1814.
As I.F. Stone meticulously documented, and why he was so hated by the American government, the absolute worse decision ever made by the British Empire was their ransacking and burning down Washington D.C.—because it caused the United States to embark on a nearly century-and-a-half of specifically engineered wars that by the time they were done, the British Empire was nothing but a hollow shell of what it once was—and once destroyed, then saw the United States embarking on its current conquest of the rest of the world by its engineering even more wars.
Though hated and reviled by the American government its privileged elites for his exposing of who they really are and what they were doing, I.F. Stone, nevertheless, and rightfully so, was called “Washington's Conscience”—and in whose seminal work Polemics and Prophecies 1967-1970 discussing the lunacy of America’s expanding nuclear arsenal, the charade of US-Soviet disarmament talks from Kennedy to Nixon, and the interlock between the government and military contractors, cryptically opined that if the United States was ever to be saved: “A new family of Viking Kings would have to arise”—a phrase some have interpreted to mean I.F. Stone saying a group of people having Viking strength and tenacity—but many others, including myself and my Dear Sisters, have always believed meant a literally king of Viking family descent—which exactly describes President Donald Trump.
http://www.whatdoesitmean.com/stn23.jpg
President Donald Trump (left) ascends to power like his Viking family ancestor King Hakon V (right) to battle against the forces of evil.
With me and my Dear Sisters being armed with the I.F. Stone admonitions to all fact finders and writers of true things saying “Every government is run by liars and nothing they say should be believed” and “The only kinds of fights worth fighting are those you're going to lose, because somebody has to fight them and lose and lose and lose until someday, somebody who believes as you do wins”, I’m sure that none of you are surprised that we are has hated, mocked and reviled as he was by those holding power—a hatred that grows by the day because on 23 January 2017, three days after President Donald Trump was sworn into office, we published the first report in our “Coronavirus Pandemic War Series” titled “President Trump Orders FBI To Conduct Massive Raid On CDC Headquarters”—followed four days later, on 27 January 2017, when we published the final report of our “Freemason Trump Series” [scroll to bottom of this page for additional reports] titled “Doomsday Warned Near As CIA Nears Open Civil War Against Freemason Leader Trump”—both of which when read completely, fully explain not only what is happening now, but why it is happening, who the ancient families are making it happen, and what the most predictable outcome will be.
As opposed to those who daily give you nothing but lies and propaganda, we’ve charted a course to keep you as informed as possible with true things—true things which, granted, at first glance appear to be outlandish and unbelievable—but when viewed over time as events unfold, and as I.F. Stone knew is always true, become more real and logical to the point one has to ask themselves why they didn’t see it for themselves.
The enormous personal cost it takes for us to do this for you can never be fully measured or accounted for, and is actually our duty to perform for you as we’re commanded by our faith to do—but the staggering monetary cost can be measured, which in no way has ever been within our meager means, and is why, once again, and as always, we humbly plead for your support today.
After all, everything we do, we do for you—and without your support our mission of truth fails—but won’t happen if everyone of you remembers in your heart the words of promise given to us by our Dear Lord that say: “Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you.”
With God,
Sister Ciara
Dublin, Ireland
23 April 2020
Our needs today are dire indeed, but, if every one of you reading this gave just $20.00 today, our budget for the entire year would be met! So, before you click away, ask yourself this simple question….if your knowing the truth about what is happening now, and what will be happening in the future isn’t worth 5 US pennies a day what is?
http://www.whatdoesitmean.com/do37.jpg
(Please note that those who respond to this appeal, in any amount, will receive, at no charge, Sorcha Faal’s April, 2020/May, 2020 lecture series to the Sisters of the Order titled “Total War: the Collapse of the United States and the Rise of Chaos: Part 97”. This is another one of the Sorcha Faal’s most important lectures dealing with the coming timelines of war, famine, catastrophic Earth changes and disease as predicted by ancient prophecies.)
Continue To Main News Site
- Post #8,209
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- Apr 23, 2020 1:14pm Apr 23, 2020 1:14pm
- | Joined Mar 2020 | Status: Member | 96 Posts
Do you believe Trump is doing a good job with this virus? I myself blame the W.H.O
- Post #8,210
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- Apr 23, 2020 1:54pm Apr 23, 2020 1:54pm
- | Commercial Member | Joined Dec 2014 | 11,787 Posts
- Post #8,211
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- Edited 5:29pm Apr 23, 2020 4:43pm | Edited 5:29pm
- | Joined Mar 2020 | Status: Member | 96 Posts
Wow this is you again? You’re all over the internet buddy haha cheers! { sensitive information deleted by staff, per request }
- Post #8,212
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- Apr 23, 2020 5:38pm Apr 23, 2020 5:38pm
- | Commercial Member | Joined Dec 2014 | 11,787 Posts
DislikedWow this is you again? You’re all over the internet buddy haha cheers! { sensitive information deleted by staff, per request }Ignored
Forex Factory removed the picture. Angelo Vincenzo on my Mothers and Fathers and Aunt's memory, I will file criminal charges against you and your group.
Nothing will stop me now other than my death, G-D Forbid.
Bruce
- Post #8,213
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- Apr 23, 2020 5:39pm Apr 23, 2020 5:39pm
- | Commercial Member | Joined Dec 2014 | 11,787 Posts
Inserted Video
- Post #8,214
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- Apr 23, 2020 7:32pm Apr 23, 2020 7:32pm
- | Joined Mar 2020 | Status: Member | 96 Posts
Disliked{quote} Hello Forex Factory removed the picture. Angelo Vincenzo on my Mothers and Fathers and Aunt's memory, I will file criminal charges against you and your group. Nothing will stop me now other than my death, G-D Forbid. BruceIgnored
Carmine Polone showed me pictures of you, and the one i posted here today was not offensive. Why was it removed? You were in a picture with a good looking woman.
- Post #8,215
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- Apr 23, 2020 8:38pm Apr 23, 2020 8:38pm
- | Commercial Member | Joined Dec 2014 | 11,787 Posts
Disliked{quote} Maybe you should talk to the Vincenzo’s my name is Richard Blak 52yrs old from Detroit Michigan. Day trader as a profession. I posted here last month and i guess they were watching your posts and found me on Facebook to google search your name. Does Forex Factory know that you’re a known Con Artist in Canada? Carmine Polone showed me pictures of you, and the one i posted here today was not offensive. Why was it removed? You were in a picture with a good looking woman.Ignored
This will be my last message to you before I file a formal criminal complaint against you.
You are a liar and the proof is easy to give to the Montreal Police. You mention people that only Angelo Vincenzo knows. All the pictures are inside Facebook Messenger rooms. You have way too much information.
Just your comment that I am a known con artist is called "SLANDER AND LIBEL" and is against the rules of Forex Factory.
Carmine Polone is the name that Angelo Vincenzo uses. You must have a death wish because you will soon be arrested and charged with Criminal Harassment.
A very serious crime.
I will see you at your trial whoever you pretend to be.
https://montrealgazette.com/news/loc...zcCnj11nA0Tfeg
Your Friend and associate.
Olivier Reid, 31, was arrested Oct. 18 and charged with drug trafficking and possession of drugs with intent to traffic. His arrest came after police in N.D.G. launched an investigation on Sept. 30 into a locally reported, non-fatal drug overdose probably involving the opioid fentanyl. Police say they later discovered a link between that overdose and a second, fatal incident that occurred a few days after in the same neighbourhood.
PLEASE DO NOT POST ON MY THREAD AGAIN !!!
- Post #8,216
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- Apr 23, 2020 8:50pm Apr 23, 2020 8:50pm
- | Commercial Member | Joined Dec 2014 | 11,787 Posts
I put on two Forex trades today and just closed for profits of $6491.40 US Dollars.
That is the professional way to trade.
- Post #8,217
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- Apr 23, 2020 8:54pm Apr 23, 2020 8:54pm
- | Joined Mar 2020 | Status: Member | 96 Posts
https://ripoffscams.com/reports-file...canada/827339/
You will soon be banned from Forex Factory, Good Bye!
You will soon be banned from Forex Factory, Good Bye!
- Post #8,218
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- Apr 23, 2020 8:54pm Apr 23, 2020 8:54pm
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- Apr 23, 2020 9:44pm Apr 23, 2020 9:44pm
- | Commercial Member | Joined Dec 2014 | 11,787 Posts
https://www.goldmoney.com/research/g...HAEKu02WkTT_Vo
This article asserts that infinite money-printing is set to destroy fiat currencies far quicker than might be generally thought. This final act of monetary destruction follows a 98% loss of purchasing power for dollars since the London gold pool failed. And now the Fed and other major central banks are committing to an accelerated, infinite monetary debasement to underwrite their entire private sectors and their governments’ spending, to prop up bond markets and therefore all financial asset prices.
It repeats the mistakes of John Law in France three hundred years ago almost to the letter, but this time on a global scale. History, economic theory and even common sense tell us governments and their central banks will rapidly destroy their currencies. So that we can see how to protect ourselves from this monetary madness, we dig into history for guidance to see who benefited from the Austrian and German hyperinflations of 1922-23, and how fortunes were made and lost.
Introduction
The way inflation is commonly presented by modern economists, as a rise in the general level of prices, is incorrect. The classical, pre-Keynesian definition is that inflation is an increase in the quantity of money which can be expected to be reflected in higher prices. For consistency and to understand the theory of money and credit we must adhere strictly to the proper definition. The effect on prices is one of a number of consequences, and is not inflation.
The effect of an increase in the quantity of money and credit in circulation on prices is dependent on the aggregate human response. In a nation of savers, an increase in the money quantity is likely to add to savers’ bank balances instead of it all being spent, in which case the route to circulation favours lending for the purpose of industrial investment. Product innovation, more efficient production and competitive prices result; and a price countertrend is introduced, whereby many prices will tend to fall, despite the increase in the money-quantity.
We see this effect in electronic and other goods emanating from savings-driven economies in East Asia, notably Japan and China. But in economies where savings have been discouraged, particularly in America and the UK, there is less investment in production and a greater emphasis on imported goods. Immediate consumption dominates, and increased quantities of money in consumers’ hands inevitably lead to a rise in the general price level of commonly demanded consumer goods.
In a world-wide fiat currency collapse, different savings characteristics between nations can be expected to lead to variations in the speed and timing of the decline of purchasing power between different currencies. We address this point later in this article and the consequences thereof. But a more immediate difficulty for observers is the habit of unquestionably accepting government measures of the general level of prices and incorrectly calling it inflation.
Don’t trust government inflation statistics
The general level of prices is one of those economic concepts that cannot be measured. The policy of targeting a general level of prices through broad-based indices such as the CPI is thereby fatally flawed. The fundamental and incorrect assumption behind the concept of a consumer price index is that future demand does not vary from the historic, in other words the economy evenly rotates, and economic progress is banished from our thoughts.
Furthermore, the broader the index, the more that extraneous factors, such as import substitution undermines the statistical concept of indexing domestic consumer prices. Together with the state’s desire to reduce the apparent rate by using methods such as hedonics and product substitution, it explains why a CPI can rise at an average annual rate of just under 2% seemingly in perpetuity, while a more targeted index that focuses on everyday items, such as the Chapwood index comprised of 500 constant items, has returned an approximate 10% annual rate of price inflation for a number of years. And if you remove the distortions introduced by government statisticians over the last forty years as demonstrated by Shadowstats, you get a similar 10% approximation.
What matters more than statistics is the effect on ordinary people. In their lack of knowledge about the consequences of changes in the quantities of money and bank credit, by default they see money as a constant, an objective factor in their transactions, with all the price changes emanating from the goods and services being bought or sold. They put rising prices down to profiteering, and when they fall, particularly for goods where product innovation is a strong influence, it is either explained by cheap foreign labour or just taken for granted. There is no public understanding of how inflation undermines the money side in transactions, nor, for that matter, how inflation transfers real savings and earning power from the individual to the state, which is the unstated objective of modern monetary policies.
It is ignorance of the role of money in this regard that permits governments to finance a significant and growing portion of their spending without resorting to unpopular taxation. Government debt issuance, which masquerades as a promise to repay the money borrowed, is mostly inflationary, sourced through monetary and bank credit expansion, that is when savers do not increase their savings. And in the desire to promote current consumption, American and British nationals in particular have been encouraged to spend all their income on consumer goods instead of adding to their savings.
The recycling of capital from trade deficits into government and other securities is inflationary as well. When foreign businesses in the import trade or their governments buy a state’s government debt, the origin of their currency purchased can almost always be traced back to domestic credit expansion. American trade deficits since 1992, having accumulated to $12 trillion matches foreign ownership of the sum of US Treasuries, asset-backed securities and short-term debt almost precisely.[i]
Given proclamations by central bankers that they are about to hyperinflate, ignorance of monetary matters becomes an expensive condition. When trying to understand money, credit and how they flow, the vast majority of people find themselves in an Alice in Wonderland confusion where nothing makes sense. They are setting themselves up to lose everything they possess.
The first phase of inflation is ending
For most people the persuasive argument is empirical evidence, assuming they are prepared to look for it. We all understand that over time, our dollars, pounds and euros buy less. But despite the evidence, almost no one is really aware of the extent their fiat currencies have declined.
https://www.goldmoney.com/images/med...ls/XAU_605.png
I make no apologies for having used the chart in Figure 1 before, but it is necessary to ram the point home. Since the dollar was devalued from $35 in the late 1960s, measured against gold the dollar has retained only 2.2% of its 1969 purchasing power. Admittedly, one would expect gold’s purchasing power to gently rise over time, which has been the experience under gold standards, exaggerating the dollar’s decline.
But critics of the approach of measuring fiat currencies against gold should note that measured by broad money (M3) only 3.8% of the dollar’s 1969 purchasing power remains, and when the increase in bank reserves not in circulation is taken into account, the figure falls to 3.2%, much closer to that indicated by comparison with gold. The inclusion of bank reserves, reflected in the fiat money quantity, is illustrated in Figure 2, and shows that the increase in the money quantity has recently become vertical.
https://www.goldmoney.com/images/med...ls/xau_800.png
The rapid monetary expansion before 1 March (the most recent available underlying statistics), was before the US lockdown and has continued since. So far, this has been only Phase 1 of the decline of fiat currencies, the warm-up act for a total currency collapse, which we will call Phase 2. It is increasingly certain with every passing day that we are now embarking on that second phase, which is now the focus of this article.
The second phase – currency destruction
With the general public and virtually all the financial establishment ignorant of or blind to the inflationary situation, central banks have chosen this moment to announce unlimited monetary expansion to buy off the consequences of the coronavirus. They have committed to the virtual nationalisation of their economies, to be paid for by debauching their currencies. The process depends on public ignorance of the consequences. In all the announcements of government support for their economies and of their central banks’ monetary role, there has been virtually nothing said or written about the consequences of the monetary inflation involved.
Indeed, the only thing more astounding than the ignorance of the general public over monetary matters is the apparent ignorance of the politicians and central bankers charged with implementing monetary policy. But the brakes are now off, the chasm beckons, and the purchasing powers of fiat currencies are set to run downhill at a rapidly accelerating pace. We are now about to embark on Phase 2, when it dawns on the public that with respect to prices money is collapsing and will soon become worthless.
The process of a developing collapse of a fiat currency usually starts with foreigners reducing their exposure to it. In the case of Austria and Germany in 1922-1923, foreigners sold the crown and the paper mark respectively for dollars freely convertible into gold. In John Law’s day, it was astute speculators who could sense a failing project and whose selling of his Mississippi venture and Law’s unbacked livres for foreign currencies and specie overwhelmed Law’s plans. Today, both cross-border strategic positions and portfolio investment are stalling and threatening to reverse. Ahead of the event it is impossible to judge their sequencing; but the dollar having the role of reserve currency appears to be most exposed to foreign liquidation, with foreigners holding equities, boned, deposits and cash totalling some $25 trillion, significantly more than America’s GDP.
To address their escalating liabilities at home, foreign governments and businesses will require financial resources currently invested in US securities to be repatriated. Foreign central banks have their own economies to rescue. Businesses everywhere are suddenly facing mounting losses and have no alternative but to reduce their dollar exposure. Foreign portfolio managers are being spooked by a developing worldwide bear market and seem certain to liquidate their US holdings and their dollar positions in the coming months.
Diminishing cross-border trade and the shock of the coronavirus have fundamentally undermined demand for dollars. This is not to be confused with demand for dollar liquidity, which some say will support the dollar. Liquidity is required in all currencies, which will be satisfied by liquidation of financial assets. The ensuing collapse of financial asset values and foreign liquidation of dollars is increasingly likely because all classes of foreign investors have, until now, enjoyed the security of investing in the world’s reserve currency, while Americans have generally avoided owning foreign currencies. It is only a matter of time before this imbalance begins to undermine the dollar, and then consequences will follow.
The dollar problem has arisen partly because interest rates are too low. The comparison is not to be made against negative rates in other currencies, but in the context of the domestic US economy. From rising food prices, deteriorating government finances and falling stock prices, other factors will flow. Bond yields, which cannot fall by much, will begin to rise as the government deficit increases, particularly with foreign buyers for US Treasuries being absent. Inevitably, the Fed will then come under pressure from markets to raise interest rates. In the face of an economic slump this will be resisted, and the exchange rate will fall. As the banker of last resort for the US government, the deteriorating economy, and for the rest of the world, the Fed will not only be financing everything but forced into buying bonds the foreigners and others sell as well.
On both Wall Street and Main Street, Americans are bound to become increasingly aware of the inflationary consequences. The problem for the Fed is that there is no Plan B alternative to financing by means of inflation of money and credit, particularly in an election year.
After a persistent and unusually protracted period of monetary inflation over the last fifty years, it is increasingly likely the public will finally understand what is happening to prices. They will then begin to realise that it is excessive quantities of money in circulation that is the reason for rising prices, and that they must dispose of currency as quickly as possible for anything they want or can barter in future for something else. Empirical evidence is that this second and final phase of monetary debasement is likely to last only a matter of months.
Once this second phase starts, it is almost impossible to stop it, because the public will have lost faith not just in the currency, but in the government establishment’s monetary and economic policies as well. It ends when an unbacked fiat currency is no longer accepted as money by the public.
Currency dysphasia
In the past, an inflationary collapse has usually affected currencies in isolation; but the modern tendency for governments to coordinate their inflationary stimulations raises a new factor, of strains between currencies collapsing at the same time but at different rates.
The most notable experience of it in modern times was in several European countries following the First World war. The inflations were individual to the nations, but the cause was the same, and Austria’s inflationary collapse ran ahead of Germany’s. A passage from a man who witnessed it, the Austrian writer Stefan Zweig, in his autobiographical The World of Yesterday vividly describes the consequences:
Every hotel in Vienna was filled with these vultures [foreign tourists]; they bought everything from toothbrushes to landed estates, they mopped up private collections and antique shop stocks before their owners, in their distress, woke to how they were being plundered. Humble hotel clerks from Switzerland, stenographers from Holland would put up in the deluxe suites of the Ringstrasse hotels. Incredible as it may seem, I can vouch for it as an eyewitness that Salzburg’s first-rate Hotel de l’Europe was occupied for a period by English unemployed, who, because of Britain's generous dole were able to live more cheaply at that distinguished hostelry than in their slums at home. Whatever was not nailed down disappeared. The tidings of cheap living and cheap goods in Austria spread far and wide; greedy visitors came from Sweden from France; more Italian French Turkish and Romanian was spoken than German in Vienna's business district.[ii]
Among the Austrians impoverished in their own communities, the law-abiding starved and those prepared to break food rationing laws thrived. Savers, who had patriotically bought government bonds, lost everything. Germans from across the border, whose currency was yet to enter its final collapse, could swill six litres of Austrian beer for one of German, adding to the foreign revelry in Austria’s misery.
In our contemporary fiat collapse, differences in its rate will create similar openings for an unsettling life arbitrage. In business dealings, any vestiges of decency and compassion are early victims as those with an early understanding of the opportunities provided by a monetary collapse profit from the innocence of the ignorant. But Germany was to suffer the inflationary fate of Austria the following year. Again, from Zweig:
A pair of shoe laces cost more than a shoe had once cost, no, more than a fashionable store with two thousand pairs of shoes had cost before; to repair a broken window more than the whole house had formerly cost, a book more than the printers shop with a hundred presses. For $100 one could buy rows of six-storey houses on Kurfürstendamm and factories were to be had for the old equivalent of a wheelbarrow…
…Towering over all of them was the gigantic figure of the super-profiteer Stinnes expanding his credit and in thus exploiting the mark he bought whatever was for sale, coal mines and ships, factories and stocks, castles and country estates, actually for nothing because every payment, every promise became equal to naught. Soon a quarter of Germany was in his hands and, perversely, the masses who in Germany always became intoxicated at a success that they can see with their eyes, cheered him as a genius.
The story of Hugo Stinnes brings us back to our current situation, how markets will evolve and who will profit.
The fate of financial investments
All the intentions of providing business with credit, helicoptered money, replacing lost taxes and ensuring government is financed, can be pared down to a single policy objective: the support of financial asset values. If the markets fail, all else fails.
In today’s fiat currency world, the principal asset from which all others take their valuation is government debt. But that has run out of road, with US Treasury debt yielding less than one per cent for all but the longest maturities, and in Europe, Switzerland and Japan unnatural negative rates are common. Foreign ownership of US Treasuries and other financial assets, which has long been the counterpart of trade deficits and portfolio inflows, is now greater than the US’s GDP and will almost certainly become a source of funds for foreign governments, businesses and investment portfolios in difficulty themselves.
Commercial banks are in a mood to contract their balance sheets, initially due to liquidity constraints and now increasingly driven by abject fear. With demand for new government debt thereby limited, the Fed, together with central banks in other jurisdictions, will find that they are effectively the only significant actors on the buy side for not just government debt, but a wider range of financial assets as well.
The Fed has already stated it will offer additional support to bond markets by buying exchange traded funds invested in corporate bonds. By putting a floor under bond spreads, the Fed obviously hopes to support everything from junk to investment grade, because if it did not, spreads would blow out even more, threatening bank balance sheets which are thought to carry some $2 trillion of this debt both directly and in collateralised loan obligations.
The Fed already supports house prices by buying mortgage debt. It hopes that by preserving a wealth effect, investors will not only continue to feel well off but be encouraged to keep investing. The policy is to swamp financial markets with new money. The other side of the Fed buying financial assets of any description is the payment for them, expanding the quantity of money in circulation.
The overwhelming imperative to keep control of markets is a recipe for hyperinflation and will ultimately fail. The Fed would have us believe that the slump in business activity is only due to the coronavirus lockdown and that shortly after it ends normality will return. It will hope that we have forgotten that fully five months before the virus hit, it was forced to inject liquidity into the repo market at the rate of tens of billions every day.
The Fed’s monetary policy replicates John Law’s attempt to keep his bubble going in 1720 France. Law failed to maintain the price of just one asset, the Company of the Indies, his Mississippi venture, by printing livres to buy the shares. Within seven months the currency had collapsed and priced in worthless currency, the shares had fallen from 12,000 livres to just one or two thousand.
The principal upon which the Fed and the other major central banks are embarked is the same in every respect, but with a far larger task. The project will fail for the same reason: no one can fool all of the people all of the time. It is increasingly obvious that both the currency and financial asset values will collapse John Law-style, probably by the end of this calendar year, if precedents are any guide.
There will be economic turmoil, with businesses and their banks collapsing, for which yet more quantities of money will be required to discharge the socialistic imperative. There will be a new currency, whether it is an attempted government reset which will only delay the ending of fiat currency for a few more months, or one that evolves from gold or silver and their credible substitutes.
Those seeking to profit from the situation will emulate the Inflation King, Hugo Stinnes, who bought real, instead of financial assets. As Zweig put it in the second extract quoted above, whatever was for sale, coal mines and ships, factories and stocks, castles and country estates, actually for nothing because every payment became equal to naught. But among financial assets, there could be shares of businesses that will survive, but stock markets being dependent on fiat money will be finished. Thinking that there is some protection from inflation in equities has been true in Phase 1 of the inflationary collapse, the last fifty years to date. But in Phase 2, a sudden global collapse of the fiat currency system, financial assets are probably to be avoided.
By far the best strategy is to have sound money at the outset. When $100 could buy rows of six-storey houses on Kurfürstendamm in Berlin and factories were to be had for the old equivalent of a wheelbarrow, the dollar was gold-backed. Today, with all currencies set to collapse there are no substitutes for gold itself, the only exception being silver. A case could be made for bitcoin, and other restricted-issue distributed ledger cryptocurrencies, but is yet to be proven. The adventurous will borrow fiat to buy bullion today, in the expectation the fiat repayment will cost them nothing. And what better opportunity is the gift presented to present day inflation kings than the suppression of interest rates by central bankers.
[i] Source: US Treasury Preliminary report on foreign holdings of US securities at end-June 2019
[ii] Zweig probably erred in his description of English unemployed spending their dole in Salzburg, and his account of them is disputed by historians. More likely, they were unemployed ex-soldiers who, having survived the war, lived off their meagre savings to the best advantage. More to the point, the opportunity provided to them by the collapse of the Austrian currency could have encouraged uncouth behaviour in otherwise civilised people.
The views and opinions expressed in this article are those of the author(s) and do not reflect those of Goldmoney, unless expressly stated. The article is for general information purposes only and does not constitute either Goldmoney or the author(s) providing you with legal, financial, tax, investment, or accounting advice. You should not act or rely on any information contained in the article without first seeking independent professional advice. Care has been taken to ensure that the information in the article is reliable; however, Goldmoney does not represent that it is accurate, complete, up-to-date and/or to be taken as an indication of future results and it should not be relied upon as such. Goldmoney will not be held responsible for any claim, loss, damage, or inconvenience caused as a result of any information or opinion contained in this article and any action taken as a result of the opinions and information contained in this article is at your own risk.
This article asserts that infinite money-printing is set to destroy fiat currencies far quicker than might be generally thought. This final act of monetary destruction follows a 98% loss of purchasing power for dollars since the London gold pool failed. And now the Fed and other major central banks are committing to an accelerated, infinite monetary debasement to underwrite their entire private sectors and their governments’ spending, to prop up bond markets and therefore all financial asset prices.
It repeats the mistakes of John Law in France three hundred years ago almost to the letter, but this time on a global scale. History, economic theory and even common sense tell us governments and their central banks will rapidly destroy their currencies. So that we can see how to protect ourselves from this monetary madness, we dig into history for guidance to see who benefited from the Austrian and German hyperinflations of 1922-23, and how fortunes were made and lost.
Introduction
The way inflation is commonly presented by modern economists, as a rise in the general level of prices, is incorrect. The classical, pre-Keynesian definition is that inflation is an increase in the quantity of money which can be expected to be reflected in higher prices. For consistency and to understand the theory of money and credit we must adhere strictly to the proper definition. The effect on prices is one of a number of consequences, and is not inflation.
The effect of an increase in the quantity of money and credit in circulation on prices is dependent on the aggregate human response. In a nation of savers, an increase in the money quantity is likely to add to savers’ bank balances instead of it all being spent, in which case the route to circulation favours lending for the purpose of industrial investment. Product innovation, more efficient production and competitive prices result; and a price countertrend is introduced, whereby many prices will tend to fall, despite the increase in the money-quantity.
We see this effect in electronic and other goods emanating from savings-driven economies in East Asia, notably Japan and China. But in economies where savings have been discouraged, particularly in America and the UK, there is less investment in production and a greater emphasis on imported goods. Immediate consumption dominates, and increased quantities of money in consumers’ hands inevitably lead to a rise in the general price level of commonly demanded consumer goods.
In a world-wide fiat currency collapse, different savings characteristics between nations can be expected to lead to variations in the speed and timing of the decline of purchasing power between different currencies. We address this point later in this article and the consequences thereof. But a more immediate difficulty for observers is the habit of unquestionably accepting government measures of the general level of prices and incorrectly calling it inflation.
Don’t trust government inflation statistics
The general level of prices is one of those economic concepts that cannot be measured. The policy of targeting a general level of prices through broad-based indices such as the CPI is thereby fatally flawed. The fundamental and incorrect assumption behind the concept of a consumer price index is that future demand does not vary from the historic, in other words the economy evenly rotates, and economic progress is banished from our thoughts.
Furthermore, the broader the index, the more that extraneous factors, such as import substitution undermines the statistical concept of indexing domestic consumer prices. Together with the state’s desire to reduce the apparent rate by using methods such as hedonics and product substitution, it explains why a CPI can rise at an average annual rate of just under 2% seemingly in perpetuity, while a more targeted index that focuses on everyday items, such as the Chapwood index comprised of 500 constant items, has returned an approximate 10% annual rate of price inflation for a number of years. And if you remove the distortions introduced by government statisticians over the last forty years as demonstrated by Shadowstats, you get a similar 10% approximation.
What matters more than statistics is the effect on ordinary people. In their lack of knowledge about the consequences of changes in the quantities of money and bank credit, by default they see money as a constant, an objective factor in their transactions, with all the price changes emanating from the goods and services being bought or sold. They put rising prices down to profiteering, and when they fall, particularly for goods where product innovation is a strong influence, it is either explained by cheap foreign labour or just taken for granted. There is no public understanding of how inflation undermines the money side in transactions, nor, for that matter, how inflation transfers real savings and earning power from the individual to the state, which is the unstated objective of modern monetary policies.
It is ignorance of the role of money in this regard that permits governments to finance a significant and growing portion of their spending without resorting to unpopular taxation. Government debt issuance, which masquerades as a promise to repay the money borrowed, is mostly inflationary, sourced through monetary and bank credit expansion, that is when savers do not increase their savings. And in the desire to promote current consumption, American and British nationals in particular have been encouraged to spend all their income on consumer goods instead of adding to their savings.
The recycling of capital from trade deficits into government and other securities is inflationary as well. When foreign businesses in the import trade or their governments buy a state’s government debt, the origin of their currency purchased can almost always be traced back to domestic credit expansion. American trade deficits since 1992, having accumulated to $12 trillion matches foreign ownership of the sum of US Treasuries, asset-backed securities and short-term debt almost precisely.[i]
Given proclamations by central bankers that they are about to hyperinflate, ignorance of monetary matters becomes an expensive condition. When trying to understand money, credit and how they flow, the vast majority of people find themselves in an Alice in Wonderland confusion where nothing makes sense. They are setting themselves up to lose everything they possess.
The first phase of inflation is ending
For most people the persuasive argument is empirical evidence, assuming they are prepared to look for it. We all understand that over time, our dollars, pounds and euros buy less. But despite the evidence, almost no one is really aware of the extent their fiat currencies have declined.
https://www.goldmoney.com/images/med...ls/XAU_605.png
I make no apologies for having used the chart in Figure 1 before, but it is necessary to ram the point home. Since the dollar was devalued from $35 in the late 1960s, measured against gold the dollar has retained only 2.2% of its 1969 purchasing power. Admittedly, one would expect gold’s purchasing power to gently rise over time, which has been the experience under gold standards, exaggerating the dollar’s decline.
But critics of the approach of measuring fiat currencies against gold should note that measured by broad money (M3) only 3.8% of the dollar’s 1969 purchasing power remains, and when the increase in bank reserves not in circulation is taken into account, the figure falls to 3.2%, much closer to that indicated by comparison with gold. The inclusion of bank reserves, reflected in the fiat money quantity, is illustrated in Figure 2, and shows that the increase in the money quantity has recently become vertical.
https://www.goldmoney.com/images/med...ls/xau_800.png
The rapid monetary expansion before 1 March (the most recent available underlying statistics), was before the US lockdown and has continued since. So far, this has been only Phase 1 of the decline of fiat currencies, the warm-up act for a total currency collapse, which we will call Phase 2. It is increasingly certain with every passing day that we are now embarking on that second phase, which is now the focus of this article.
The second phase – currency destruction
With the general public and virtually all the financial establishment ignorant of or blind to the inflationary situation, central banks have chosen this moment to announce unlimited monetary expansion to buy off the consequences of the coronavirus. They have committed to the virtual nationalisation of their economies, to be paid for by debauching their currencies. The process depends on public ignorance of the consequences. In all the announcements of government support for their economies and of their central banks’ monetary role, there has been virtually nothing said or written about the consequences of the monetary inflation involved.
Indeed, the only thing more astounding than the ignorance of the general public over monetary matters is the apparent ignorance of the politicians and central bankers charged with implementing monetary policy. But the brakes are now off, the chasm beckons, and the purchasing powers of fiat currencies are set to run downhill at a rapidly accelerating pace. We are now about to embark on Phase 2, when it dawns on the public that with respect to prices money is collapsing and will soon become worthless.
The process of a developing collapse of a fiat currency usually starts with foreigners reducing their exposure to it. In the case of Austria and Germany in 1922-1923, foreigners sold the crown and the paper mark respectively for dollars freely convertible into gold. In John Law’s day, it was astute speculators who could sense a failing project and whose selling of his Mississippi venture and Law’s unbacked livres for foreign currencies and specie overwhelmed Law’s plans. Today, both cross-border strategic positions and portfolio investment are stalling and threatening to reverse. Ahead of the event it is impossible to judge their sequencing; but the dollar having the role of reserve currency appears to be most exposed to foreign liquidation, with foreigners holding equities, boned, deposits and cash totalling some $25 trillion, significantly more than America’s GDP.
To address their escalating liabilities at home, foreign governments and businesses will require financial resources currently invested in US securities to be repatriated. Foreign central banks have their own economies to rescue. Businesses everywhere are suddenly facing mounting losses and have no alternative but to reduce their dollar exposure. Foreign portfolio managers are being spooked by a developing worldwide bear market and seem certain to liquidate their US holdings and their dollar positions in the coming months.
Diminishing cross-border trade and the shock of the coronavirus have fundamentally undermined demand for dollars. This is not to be confused with demand for dollar liquidity, which some say will support the dollar. Liquidity is required in all currencies, which will be satisfied by liquidation of financial assets. The ensuing collapse of financial asset values and foreign liquidation of dollars is increasingly likely because all classes of foreign investors have, until now, enjoyed the security of investing in the world’s reserve currency, while Americans have generally avoided owning foreign currencies. It is only a matter of time before this imbalance begins to undermine the dollar, and then consequences will follow.
The dollar problem has arisen partly because interest rates are too low. The comparison is not to be made against negative rates in other currencies, but in the context of the domestic US economy. From rising food prices, deteriorating government finances and falling stock prices, other factors will flow. Bond yields, which cannot fall by much, will begin to rise as the government deficit increases, particularly with foreign buyers for US Treasuries being absent. Inevitably, the Fed will then come under pressure from markets to raise interest rates. In the face of an economic slump this will be resisted, and the exchange rate will fall. As the banker of last resort for the US government, the deteriorating economy, and for the rest of the world, the Fed will not only be financing everything but forced into buying bonds the foreigners and others sell as well.
On both Wall Street and Main Street, Americans are bound to become increasingly aware of the inflationary consequences. The problem for the Fed is that there is no Plan B alternative to financing by means of inflation of money and credit, particularly in an election year.
After a persistent and unusually protracted period of monetary inflation over the last fifty years, it is increasingly likely the public will finally understand what is happening to prices. They will then begin to realise that it is excessive quantities of money in circulation that is the reason for rising prices, and that they must dispose of currency as quickly as possible for anything they want or can barter in future for something else. Empirical evidence is that this second and final phase of monetary debasement is likely to last only a matter of months.
Once this second phase starts, it is almost impossible to stop it, because the public will have lost faith not just in the currency, but in the government establishment’s monetary and economic policies as well. It ends when an unbacked fiat currency is no longer accepted as money by the public.
Currency dysphasia
In the past, an inflationary collapse has usually affected currencies in isolation; but the modern tendency for governments to coordinate their inflationary stimulations raises a new factor, of strains between currencies collapsing at the same time but at different rates.
The most notable experience of it in modern times was in several European countries following the First World war. The inflations were individual to the nations, but the cause was the same, and Austria’s inflationary collapse ran ahead of Germany’s. A passage from a man who witnessed it, the Austrian writer Stefan Zweig, in his autobiographical The World of Yesterday vividly describes the consequences:
Every hotel in Vienna was filled with these vultures [foreign tourists]; they bought everything from toothbrushes to landed estates, they mopped up private collections and antique shop stocks before their owners, in their distress, woke to how they were being plundered. Humble hotel clerks from Switzerland, stenographers from Holland would put up in the deluxe suites of the Ringstrasse hotels. Incredible as it may seem, I can vouch for it as an eyewitness that Salzburg’s first-rate Hotel de l’Europe was occupied for a period by English unemployed, who, because of Britain's generous dole were able to live more cheaply at that distinguished hostelry than in their slums at home. Whatever was not nailed down disappeared. The tidings of cheap living and cheap goods in Austria spread far and wide; greedy visitors came from Sweden from France; more Italian French Turkish and Romanian was spoken than German in Vienna's business district.[ii]
Among the Austrians impoverished in their own communities, the law-abiding starved and those prepared to break food rationing laws thrived. Savers, who had patriotically bought government bonds, lost everything. Germans from across the border, whose currency was yet to enter its final collapse, could swill six litres of Austrian beer for one of German, adding to the foreign revelry in Austria’s misery.
In our contemporary fiat collapse, differences in its rate will create similar openings for an unsettling life arbitrage. In business dealings, any vestiges of decency and compassion are early victims as those with an early understanding of the opportunities provided by a monetary collapse profit from the innocence of the ignorant. But Germany was to suffer the inflationary fate of Austria the following year. Again, from Zweig:
A pair of shoe laces cost more than a shoe had once cost, no, more than a fashionable store with two thousand pairs of shoes had cost before; to repair a broken window more than the whole house had formerly cost, a book more than the printers shop with a hundred presses. For $100 one could buy rows of six-storey houses on Kurfürstendamm and factories were to be had for the old equivalent of a wheelbarrow…
…Towering over all of them was the gigantic figure of the super-profiteer Stinnes expanding his credit and in thus exploiting the mark he bought whatever was for sale, coal mines and ships, factories and stocks, castles and country estates, actually for nothing because every payment, every promise became equal to naught. Soon a quarter of Germany was in his hands and, perversely, the masses who in Germany always became intoxicated at a success that they can see with their eyes, cheered him as a genius.
The story of Hugo Stinnes brings us back to our current situation, how markets will evolve and who will profit.
The fate of financial investments
All the intentions of providing business with credit, helicoptered money, replacing lost taxes and ensuring government is financed, can be pared down to a single policy objective: the support of financial asset values. If the markets fail, all else fails.
In today’s fiat currency world, the principal asset from which all others take their valuation is government debt. But that has run out of road, with US Treasury debt yielding less than one per cent for all but the longest maturities, and in Europe, Switzerland and Japan unnatural negative rates are common. Foreign ownership of US Treasuries and other financial assets, which has long been the counterpart of trade deficits and portfolio inflows, is now greater than the US’s GDP and will almost certainly become a source of funds for foreign governments, businesses and investment portfolios in difficulty themselves.
Commercial banks are in a mood to contract their balance sheets, initially due to liquidity constraints and now increasingly driven by abject fear. With demand for new government debt thereby limited, the Fed, together with central banks in other jurisdictions, will find that they are effectively the only significant actors on the buy side for not just government debt, but a wider range of financial assets as well.
The Fed has already stated it will offer additional support to bond markets by buying exchange traded funds invested in corporate bonds. By putting a floor under bond spreads, the Fed obviously hopes to support everything from junk to investment grade, because if it did not, spreads would blow out even more, threatening bank balance sheets which are thought to carry some $2 trillion of this debt both directly and in collateralised loan obligations.
The Fed already supports house prices by buying mortgage debt. It hopes that by preserving a wealth effect, investors will not only continue to feel well off but be encouraged to keep investing. The policy is to swamp financial markets with new money. The other side of the Fed buying financial assets of any description is the payment for them, expanding the quantity of money in circulation.
The overwhelming imperative to keep control of markets is a recipe for hyperinflation and will ultimately fail. The Fed would have us believe that the slump in business activity is only due to the coronavirus lockdown and that shortly after it ends normality will return. It will hope that we have forgotten that fully five months before the virus hit, it was forced to inject liquidity into the repo market at the rate of tens of billions every day.
The Fed’s monetary policy replicates John Law’s attempt to keep his bubble going in 1720 France. Law failed to maintain the price of just one asset, the Company of the Indies, his Mississippi venture, by printing livres to buy the shares. Within seven months the currency had collapsed and priced in worthless currency, the shares had fallen from 12,000 livres to just one or two thousand.
The principal upon which the Fed and the other major central banks are embarked is the same in every respect, but with a far larger task. The project will fail for the same reason: no one can fool all of the people all of the time. It is increasingly obvious that both the currency and financial asset values will collapse John Law-style, probably by the end of this calendar year, if precedents are any guide.
There will be economic turmoil, with businesses and their banks collapsing, for which yet more quantities of money will be required to discharge the socialistic imperative. There will be a new currency, whether it is an attempted government reset which will only delay the ending of fiat currency for a few more months, or one that evolves from gold or silver and their credible substitutes.
Those seeking to profit from the situation will emulate the Inflation King, Hugo Stinnes, who bought real, instead of financial assets. As Zweig put it in the second extract quoted above, whatever was for sale, coal mines and ships, factories and stocks, castles and country estates, actually for nothing because every payment became equal to naught. But among financial assets, there could be shares of businesses that will survive, but stock markets being dependent on fiat money will be finished. Thinking that there is some protection from inflation in equities has been true in Phase 1 of the inflationary collapse, the last fifty years to date. But in Phase 2, a sudden global collapse of the fiat currency system, financial assets are probably to be avoided.
By far the best strategy is to have sound money at the outset. When $100 could buy rows of six-storey houses on Kurfürstendamm in Berlin and factories were to be had for the old equivalent of a wheelbarrow, the dollar was gold-backed. Today, with all currencies set to collapse there are no substitutes for gold itself, the only exception being silver. A case could be made for bitcoin, and other restricted-issue distributed ledger cryptocurrencies, but is yet to be proven. The adventurous will borrow fiat to buy bullion today, in the expectation the fiat repayment will cost them nothing. And what better opportunity is the gift presented to present day inflation kings than the suppression of interest rates by central bankers.
[i] Source: US Treasury Preliminary report on foreign holdings of US securities at end-June 2019
[ii] Zweig probably erred in his description of English unemployed spending their dole in Salzburg, and his account of them is disputed by historians. More likely, they were unemployed ex-soldiers who, having survived the war, lived off their meagre savings to the best advantage. More to the point, the opportunity provided to them by the collapse of the Austrian currency could have encouraged uncouth behaviour in otherwise civilised people.
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