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- Jun 7, 2022 7:33am Jun 7, 2022 7:33am
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Pam & Russ Martens: Credit unions and banking groups warn of “devastating consequences” of a US central bank digital currency
BY DAVID HAGGITH ◆ JUNE 8, 2022
One has to wonder why the Federal Reserve, which is effectively owned by the nation’s banks in that they own each of the regional Federal Reserve banks whose presidents govern at the Fed, would want to compete in such a destructive way with its own member banks by sucking bank deposits away from individual banks. It raises a serious question about what is behind the drive to a CBDC …
by Pam Martens and Russ Martens on Wall St. on Parade:
Credit union and banking trade groups have released a joint letter to the chair and ranking member of the House Financial Services Committee, warning of “devastating consequences” if the Federal Reserve moves forward with a Central Bank Digital Currency (CBDC). The letter was sent on May 25, one day before the Committee convened a hearing on “Digital Assets and the Future of Finance: Examining the Benefits and Risks of a U.S. Central Bank Digital Currency.” That hearing took testimony from only one witness, Lael Brainard, the Vice-Chair of the Federal Reserve.
The fact that credit unions, which frequently serve unionized labor, joined with banking trade groups to sign off on the letter, lends credibility to the “devastating consequences” the letter enumerates of a Central Bank Digital Currency.
A CBDC would allow the Federal Reserve to compete for deposits with credit unions and banks. The letter correctly assesses the downside of such a move as follows:
“Private money is created through financial intermediation by banks and credit unions– the process in which financial institutions take deposits and lend out and invest those deposits. Private money is used by financial institutions to provide funding for businesses and consumers and thus supports economic growth. Introducing a CBDC would be a deliberate decision to shift some volume of private money to public money, with potentially devastating consequences for the cost and availability of credit for consumers and businesses. In sum, the savings of businesses and consumers would no longer fund the assets of banks – primarily, loans – but instead would fund the assets of the Federal Reserve – primarily securities issued by the Treasury Department, Fannie Mae, and Freddie Mac.”
In a similar vein, the letter warns:
“In effect, a CBDC will serve as an advantaged competitor to retail bank deposits that will move money away from banks and into accounts at the Federal Reserve where the funds cannot be lent back into the economy. These deposit accounts represent 71% of bank funding today. Losing this critical funding source would undermine the economics of the banking business model, severely restricting credit availability, increasing the cost of credit, and causing a slowdown in the economy. ABA estimates that even a CBDC where accounts were capped at $5,000 per ‘end user’ could result in $720 billion in deposits leaving the banking system.”
The joint letter also calls out the absurdity that the dollar is not already digitized. (Anyone who uses a “pay by phone” method to pay a monthly bill in seconds from their checking account or a debit card to pay for purchases fully appreciates how rapid and streamlined the digital dollar already is.) The credit unions and banking groups write as follows:
“Contrary to the assertions of some CBDC proponents, a U.S. CBDC is not necessary to ‘digitize the dollar,’ as the dollar functions primarily in digital form today. Commercial bank money is a digital dollar, and is currently accepted without question by businesses and consumers as a means of payment.”
In July 2019, NYU Professor and economist Nouriel Roubini also touched on the existing speed of the Visa credit card system versus digital currency in a Bloomberg News interview. Roubini stated:
“…nobody, not even this blockchain conference, accepts Bitcoin for paying for conference fees cause you can do only five transactions per second with Bitcoin. With the Visa system, you can do 25,000 transactions per second…Crypto’s nonsense. It’s a failure. Nobody’s using it for any transactions.”
One of the key concerns in Congress and at the Fed appears to be that another country, such as China, might get ahead of the U.S. in the development of their own Central Bank Digital Currency and endanger the U.S. dollar as the world’s reserve currency. At the House Financial Services Committee hearing on May 26, Fed Vice Chair Brainard testified as follows:
“The future evolution of international payments and capital flows will also influence considerations surrounding a potential U.S. CBDC. The dollar is the most widely used currency in international payments and investments, which benefits the United States by reducing transaction and borrowing costs for U.S. households, businesses, and governments. In future states where other major foreign currencies are issued in CBDC form, it is prudent to consider how the potential absence or presence of a U.S. central bank digital dollar could affect the use of the dollar in global payments. For example, the People’s Bank of China has been piloting the digital yuan, and several other foreign central banks are issuing or considering issuing their own digital currencies. A U.S. CBDC may be one potential way to ensure that people around the world who use the dollar can continue to rely on the strength and safety of the U.S. currency to transact and conduct business in the digital financial system. More broadly, it is important for the United States to play a lead role in the development of standards governing international digital finance transactions involving CBDCs consistent with the norms of privacy, accessibility, interoperability, and security.”
The credit unions and banking groups’ joint letter addressed that issue as follows:
“…a CBDC does not appear to be necessary to support the role of the U.S. dollar internationally. While many countries have experimented with a CBDC, many have focused on a wholesale model, something not contemplated by the Federal Reserve’s discussion paper. In addition, many have pulled these experiments back as the costs of implementation have become apparent. The Federal Reserve notes that the dollar’s status as the global reserve currency is driven by 1) the strength and openness of our economy, 2) the depth of our financial markets, and 3) the trust in our institutions and rule of law.”
Wall Street On Parade has been skeptical of the invisible hand(s) behind this push for a Central Bank Digital Currency at the Fed – (the Fed being the perpetual provider of bailouts to Wall Street’s casino banks) – ever since a similar invisible hand pushed Saule Omarova forward as President Biden’s nominee to head the Office of the Comptroller of the Currency, the regulator of national banks (those that operate across state lines).
In October of last year, the Vanderbilt Law Review published a 69-page paper by Omarova in which she proposed not just a Central Bank Digital Currency but a hair-raising, radical restructuring of the Fed that would include the following:
(1) Move all commercial bank deposits from commercial banks to so-called FedAccounts at the Federal Reserve;
(2) Allow the Fed, in “extreme and rare circumstances, when the Fed is unable to control inflation by raising interest rates,” to confiscate deposits from these FedAccounts in order to tighten monetary policy;
(3) Allow the most Wall Street-conflicted regional Fed bank in the country, the New York Fed, when there are “rises in market value at rates suggestive of a bubbling trend,” such as with technology stocks today, to “short these securities, thereby putting downward pressure on their prices”;
(4) Eliminate the Federal Deposit Insurance Corporation (FDIC) that insures bank deposits in the U.S. and that prevents panic runs on banks;
(5) Consolidate all bank regulatory functions at the OCC – which Omarova was nominated to head.
By early November, Omarova was facing even more controversy when it was revealed that she had called the very industry that she had been nominated to supervise the “quintessential a**hole industry” in a 2019 Canadian feature documentary. Omarova eventually withdrew her nomination after it became clear she did not have the votes to be confirmed.
You can read the joint letter from the credit union and banking groups here; Brainard’s testimony is available here.
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UN Tries to Blame Food Crisis on Putin
Blog/Geopolitical
Posted Jun 10, 2022, by Martin Armstrong
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Honestly, these lies and propaganda coming from the United States and Europe is just a slap in the face and it demonstrates that they look upon us as the BRAIN-DEAD Great Unwashed. Too stupid to understand even how to live without their orders. The Biden Administration and the EU are desperate to blame everything on Putin from inflation to food shortages. Charles Michel, president of the European Council is an absolute disgrace and if politicians could be charged with perjury for lying to the people, he would be in prison for the rest of his life.
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The food shortages and the rise in civil unrest along with authoritarianism were put out by our model in 1985 as was the forecast back then that 2016 would be the first time a third-party president could win. That was forecast decades before we even knew who it was. It was the economics that put Trump in office. I spoke to politicians after the election. They called it a fluke because they did not want to admit it was a vote against them – not for Trump as a person.
https://www.armstrongeconomics.com/w...e-2019-WEC.jpg
We also put out the forecast that BREXIT would win. Nigel Farage came as our guest speaker to our 2019 WEC in Rome and it not only called our events the “alternative to Davos” but that he had to come for we were the only ones forecasting BREXIT would win. All of these forecasts are economic-based. They are NOT my personal opinion. Historically, people vote based on their economics. Herbert Hoover was elected in 1928 and was in office only 8.6 months before the Great Depression began. It really had nothing to do with his policies. Nevertheless, the people named their shanty towns – Hooverville.
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The sheer audacity of the bald-faced lies of Charles Michel blaming “Russia alone” for the food crisis which was set in motion by the COVID lockdowns well before the Ukrainian war is simply beyond belief that he assumed we are that stupid. was responsible for the food crisis. I cannot tell you how many emails I got from farmers who had to kill even 30,000 chickens, and bury their crops, all because of the COVID lockdowns that prevented truckers from delivering food. Remember the trucker protest in Canada?
Even crude oil production in the West, aside from Ukraine, is still below pre-COVID levels because there is also this Climate Change Agenda underway which will rise energy and food prices without Ukraine. Even in Australia, they now proclaim that the Greens have the MANDATE to stop new oil and gas projects. But this is all Putin’s fault – not Western politicians be they red, blue, or green. Germany’s Green Policy has been a total failure.
Charles Michel claimed actually said: “Mr. Ambassador of the Russian Federation, let’s be honest, the Kremlin is using food supplies as a stealth missile against developing countries.” The US has clearly coordinated this line of nonsense for we see the same thing coming out on the US side. The US and the EU have coordinated to blame all their inflation problems on Putin, Russia, and the Ukrainian War which they could solve in one day as Henry Kissinger said – hone the Minsk Agreement and the people of the Donbas vote if this is about democracy v authoritarianism which is another BS ploy.
Let’s stop the propaganda. A French journalist who returned from Ukraine after arriving with volunteer fighters told broadcaster CNews that Americans are directly “in charge” of the war on the ground. The assertion was made by Le Figaro senior international correspondent Georges Malbrunot. Malbrunot said he had accompanied French volunteer fighters, two of whom had previously fought against ISIS. “I had the surprise, and so did they, to discover that to be able to enter the Ukrainian army, well it’s the Americans who are in charge,” said Malbrunot. Everyone knows this is really a war of the USA v Russia and the American neocons will fight to the death of every last Ukrainian. As long as they do not send American Troops, then it is not an act of War that only Congress can authorize – not Biden.
The Russian UN Ambassador walked out of a Security Council meeting after the European Council President accused Russia of engineering a food crisis with its war on Ukraine. Quite honestly, all the propaganda coming from Europe and the United States is so obviously intent on causing international war. They better pray that Putin survives, for the second tier of potential leaders will play real hardball. There are those who call the bluff of the EU and the US and use a tactical nuke and take out Kyiv (Russian spelling). They say: “OK! Who is next?” Three nukes would take out the entire East Coast of the USA and it would take just three to wipe out Europe. One would be sufficient to take out Britain. Perhaps you will recall that one nuclear Russian sub has 60 ready to go. Just what the hell are these people doing?
Michel also said that “The dramatic consequences of Russia’s war are spilling over across the globe This is driving up food prices, pushing people into poverty, and destabilizing entire regions,” If you are already blaming Russia for something it has not done, then they might as well do it. Cut off all grain sales to any unfriendly nation and turn off the gas for Europe and watch the civil unrest drag people like Charles Michel to the streets from his comfortable seat. Boris Johnson may have survived a No-Confidence Vote, which was a disgrace to start with, but the sheer fact that a No-Confidence Vote was brought shows the rising discontent which will burst through into civil unrest by 2023.
https://www.armstrongeconomics.com/w...very-smart.png
I have ALL the declassified documents with phone calls and notes concerning Putin, how he came to power, and how everything they say about Putin publicly today is opposite of all the declassified documents. The level of propaganda today is just off the charts. This is all a VIOLATION of international law. The UN Commission on Human Rights and internationally recognized international law expert Alfred de Zayas, who is actually absolutely correct, has said publicly that the USA should be brought before the International Court of Justice because of its sanctions policy which is illegal and has caused this entire crisis of inflation.
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President Biden used the phrase "Putin's price hike" again in a reaction to Friday's Consumer Price Index report revealing continued high inflation, showing once again that the US government believes Americans are idiots.
Reading by Tim Foley.
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- Jun 11, 2022 8:11am Jun 11, 2022 8:11am
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In the meantime, low-paid health and care workers are calling in sick because they cannot afford to fill their cars with petrol to travel to work, the head of the UK’s largest trade union has warned. Johnson said on Thursday that the UK economy was “steering into the wind” but cautioned against a “wage-price spiral”, as the cost of a tank of fuel hit a record Ł100. But his hasn’t stopped many Unions which have united calling for massive strikes this month revealing ominous signs of a return to the 1970s and a winter of discontent.
IS THIS A PERFECT STORM? Weeks ago none other than the Governor of the Bank of England, Andrew Bailey, described the situation facing the economy as “apocalyptic”. Indeed, to paraphrase the Bible referencing the four horsemen as “sword, famine, wild inflationary beast and plague”; this could well be describing the confluence of problems facing the global economy.
Reflecting these fears the markets are down overall and very jumpy as uncertainty reigns supreme. The BoE pumped nearly a trillion GBP directly into the British economy one way or another during the two years of the scamdemic. It is no surprise therefore that inflation has taken off which in my view is not going to slow down any time soon.
This has been further compounded by the Russian operation in Ukraine having disrupted the already dislocated, post-pandemic global energy and food supply chains. Thus we have the sword of Damocles hanging over the developed world because we have no idea where this is going; so is this part of the prophecy also coming true? Not only are we facing more potential plagues, according to the likes of Bill Gates and friends, but also famine especially in the emerging countries.
It appears that there is little that our leaders can do except bluster and puff up their egos as they meet secretly in posh hotels like the Bilderberg mob did last week. Whatever plans are being hatched you can be sure that we, the unwashed, will not be beneficiaries and neither will Europe as it is starved of essential oil and gas supplies whilst Russia becomes stronger because they own vast resources which US/NATO have long targeted especially after the Ukraine coup in 2014.
WHAT’s really causing all this mayhem? There are many scenarios on offer but the real culprits are hiding behind the complexities of our failing global financial system – yes you guessed right – it’s the bankers and their global supporters who are attempting to hold back the inevitable incoming tide of economic decline which the system itself has created ever since the 2008 crisis almost caused the seizure of our global credit system.
This is a highly complex scenario which few understand and which I have attempted to explain in my book referenced above. It is not a subject that most people find at all interesting but without this knowledge it is impossible to appreciate why we are facing such extremes of economic distress and what to do about it. My colleague at BOOM Economics has a short explanation which might ring a few bells:
“PROBLEMS WITH OUR VENETIAN MONEY SYSTEM: Our money system evolved in Venice 400 years ago. BOOM calls this our Venetian money system but, in fact, it evolved much earlier in history and probably in Babylon, an ancient city situated in modern day Iraq. In our Venetian money system, the money supply grows via new bank loans that are collateralized against assets. This means that asset owners can borrow more readily and at lower cost than people who don’t own any collateral assets.
It is a wealth channel — funneling fresh new money to the already wealthy for use as they see fit. If a nation is demographically expanding with increasing numbers of working people, it works well — all boats rise. But if the opposite demography happens (a falling working age population) then it can speed fresh new money preferentially into the hands of the wealthy. They subsequently become ever wealthier, until a handful of people possess most of the asset wealth. Social inequality then follows; the social fabric becomes torn, political instability follows as sure as day follows night. Feudalism and dictatorship await.
The way back to a more balanced society is to increase the proportion of cash transactions in the real economy to a much higher figure. Why? Because cash (which is interest free) is a buffer to the dominance of credit money (interest bearing). We have allowed the ratio to fall to 2 % Cash: 98% Credit in many advanced economies.
This is a very dangerous imbalance for any nation. So we simply cannot fix all of our social problems and brewing political instability until we attend to this critical issue; the secret money crisis under the surface”: https://boomfinanceandeconomics.wordpress.com/2022/06/04/problems-with-the-money-system
BUT the cause wasn’t only the trigger of 2008 because unreported in September 2019 the system suffered a further shock known in financial circles as a ‘Repo crisis’. Here is a 13 minute crash course video showing what Repo is all about (sorry about the excessive hype, I would have preferred an academic one)
Continuing this subject, a reader asked me this week: “…what is your knowledge on whether or not the banks have closed out their positions on the USD $17.66 trillion that Trump and Mnunchin printed up as part of the 2019-20 REPO? …what do you think? Is COVID just another banker scam to get free money?”
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- Jun 12, 2022 3:07am Jun 12, 2022 3:07am
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Caitlin Johnstone
Jun 12
One of the great sources of distress in people's lives is that we don't get to be the narrator of other people's stories about us. That we don't get to control what other people are thinking and saying about how we are, what we do, and the kind of person we are.
We've all been there in some way at some point.
"If he really knew me he'd like me."
"If they'd understood what I meant by that joke they wouldn't have gotten offended."
"If she could see my heart and my intentions she'd understand why I did what I did."
"No no, that's not what happened; they're getting it all wrong and it's making me look like the bad guy."
It's pretty normal to feel misunderstood or mischaracterized by the people in our lives from time to time. But there are some people who take that experience to very unhealthy extremes and respond to it in very unhealthy ways.
People with an underdeveloped sense of empathy, like those with narcissistic and antisocial personality disorders, don't experience other human beings the way normal people do. To whatever extent they lack empathy for others, they see them not as sovereign people but as tools to be used to get whatever it is they want, whether that's power, wealth, sex, respect, etc.
This view of others tends to cause people who lack empathy to become manipulative, because their interest in others is not in connecting with them and helping them but in using and exploiting them. However perceptive and clever they are will determine how skillful they can be in manipulating people toward that end.
For such individuals, the inability to narrate other people's stories for them is experienced not as a sometimes painful but necessary reality but as an intolerable obstacle which must be overcome. Finding ways to manipulate the thoughts people think in their minds about the manipulator, about themselves, and about others takes on a central role in their lives.
This is one of the ways you can spot a manipulator who lacks empathy in your life: they spend an inordinate amount of energy trying to influence your opinion of them, your opinion of others, and/or your opinion of yourself. I'm this way and I do such and such. She's such a bitch, she's always blah blah blah. You're defective in this-and-that ways. You need me for such-and-such reasons. You wronged me in such-and-such ways.
A virulent manipulator's entire social existence revolves around influencing the narratives people have about what's going on in their circle in a way that benefits the manipulator. Influencing the thoughts they think to themselves, and influencing the stories they're telling each other.
A narrative is a story. Often when people hear the word "story" they think of a whole cloth work of fiction, something made up for the amusement of others. But the overwhelming majority of the stories we experience are about our own lives and the lives of others, both in our own heads and in our conversations with people.
"Joe went to the store" is a narrative, whether Joe did in fact go to the store or not. "Joe is a jerk" is a narrative, whether the arguments for Joe being a jerk contain factual claims or not. It's a description of an occurrence or situation, whether accurate, inaccurate, or a mixture of both.
This ambiguous relationship between narrative and truth is where the manipulator lives. They spend their days weaving tall spires of language, framing reality in a way which benefits them using truth, half-truth, and falsehood as necessary. Filling people's minds with a version of the world which consistently paints them in a sympathetic light and their targets in an unsympathetic light.
Because their lives revolve around manipulation, anything which poses an obstacle to their ability to manipulate is seen as a threat. Getting caught doing something gross which would make people less likely to believe the things they say in the future. Someone noticing that they are being manipulated and refusing to believe anything the manipulator says. Or, worst of all, everyone they know starting to talk to each other about what a dishonest and untrustworthy manipulator they are.
For the manipulator, being fully seen by everyone is one of the most frightening existential threats imaginable. You'll often see them projecting this fear onto others, threatening to expose the secrets of people they don't like, because for them that's one of the most terrifying threats that can be made.
The US-centralized empire is a giant macrocosm of this entire dynamic. It pours vast amounts of energy into narrative control in the form of propaganda, censorship, Silicon Valley algorithm manipulation, and the war on journalism. It weaves nonstop narratives about how great it is and how horrible its enemies are. And it fears being seen more than anything in the world.
The vast globe-spanning power structure that is loosely centralized around the United States is a powerful military force and a powerful economic force, but its most potent weapon by far is its ability to control the narrative about what's happening in the world. The use of oligarchic media, Silicon Valley and Hollywood to manipulate public thought and thereby control the way people think, act and vote at mass scale all around the world is unlike anything ever seen in any empire in history.
Propaganda only works if you don't know it's happening. Censorship only works if it doesn't draw attention to the information being censored. The US empire's nonstop campaign to control the world's dominant narratives only works if it isn't in the spotlight of public scrutiny. This is why those who draw attention to these things are smeared, demonized, censored, marginalized, imprisoned and worse by the managers of empire.
Manipulators hate to be seen, but if you ever find yourself in a relationship with one, your ability to escape depends upon your seeing them. This extreme clash of interests often brings up white hot rage in the manipulator which can be frightening and dangerous.
And I think humanity is entering that stage of the relationship with the US empire. A manipulator who's just beginning to be seen by a few more pairs of eyes than it would like, causing flickerings of panic to begin to surface. Because once those eyes see what's hidden underneath the veil of narrative manipulation, they don't often look away. If anything, they tend to point and draw more attention to it.
It's a scary time to be alive. But it's also fascinating. Unlike anything that has ever happened on this planet before.
I look forward to finding out if we escape.
______________________
My work is entirely reader-supported, so if you enjoyed this piece please consider sharing it around, following me on Facebook, Twitter, Soundcloud or YouTube, or throwing some money into my tip jar on Ko-fi, Patreon or Paypal. If you want to read more you can buy my books. The best way to make sure you see the stuff I publish is to subscribe to the mailing list for at my website or on Substack, which will get you an email notification for everything I publish. Everyone, racist platforms excluded, has my permission to republish, use or translate any part of this work (or anything else I’ve written) in any way they like free of charge. For more info on who I am, where I stand, and what I’m trying to do with this platform, click here. All works co-authored with my American husband Tim Foley.
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Protection From a Currency Collapse
By Alasdair Macleod
Goldmoney
June 11, 2022
While markets seem becalmed, financial conditions are rapidly deteriorating. Last week Jamie Dimon of JPMorgan Chase gave the clearest of signals that bank credit is beginning to contract. Russia has consolidated its rouble, which has now become the strongest currency by far. The Fed announced the previous week that its balance sheet is in negative equity. And there’s mounting evidence that we have a nascent crack-up boom.
Russia now appears to be protecting the rouble from these developments in the West, while previously she was only attacking the dollar’s hegemony. China has yet to formulate a defensive currency policy but is likely to back the renminbi with a commodity basket, at least for foreign trade. If it is taken up more widely by the members if the Shanghai Cooperation organisation and the BRICS, the development of a new commodity-based super-currency in Central Asia could end the dollar’s global hegemony.
These are major developments. And finally, due to widespread interest in the subject, I examine the outlook for residential property values in the event of a collapse of Western fiat currencies.
The mechanics of an apocalypse
Against the grain of the establishment, for years I have been warning that the world faces a fiat currency collapse. The reasoning was and still is because that’s where monetary and economic policies are taking us. The only questions arising are whether the authorities around the world would realise the dangers of their inflationary and socialistic policies and change course (extremely unlikely) and in that absence in what form would the final crisis take.
History tells us that fiat currencies always fail, only to be replaced by Mankind’s sound money — metallic gold, and silver. And now that fiat currencies have seen a rapid debasement followed by soaring commodity and raw material prices, interest rates should be considerably higher. Yet, in the Eurozone and Japan they are still suppressed in negative territory. The reluctance of the ECB and the Bank of Japan to permit them to rise is palpable. Worse still, even with just the threat of a slowdown in the issuance of extra credit by the commercial banks, we suddenly face a sharp downturn in economic and financial activities.
Commercial banks in the Eurozone and Japan are uncomfortably leveraged and unlikely to survive the mixture of higher interest rates, contracting bank credit, and an economic downturn without being bailed out by their respective central banks. But so massive are the central banks’ own bond positions that the losses from rising yields have put them in negative equity. Even the Fed, which is in a far better position than the ECB and BOJ, has admitted unrealised losses on its bond portfolio are $330bn, wiping out its balance sheet equity six times over.
So, without the injection of huge amounts of new capital from their existing shareholders the major central banks are bust, the major commercial banks soon will be, and prices are rising uncontrollably driving interest rates and bond yields higher. And like a hole in the head, all we now need to complete the misery is a contraction in bank credit. On cue, last week we got a warning that this is also on the cards, when Jamie Dimon, boss of JPMorgan Chase, the largest commercial bank in America and the Fed’s principal conduit into the commercial banking network, upgraded his summary of the financial scene from “stormy” only nine days before, to “hurricane”. That was widely reported. Less observed were his remarks about what JPMorgan Chase was going to do about it.
Dimon went on to say the bank is preparing itself for “a non-benign environment” and “bad outcomes”.
We can be sure that the Fed will have spoken to Mr Dimon about this. JPMorgan’s chief economist, Bruce Kasman was then urgently tasked with rowing back, saying he only saw a slowdown. No matter. The signal is sent, and the damage is done.
We are unlikely to hear from Dimon on this subject again. But you can bet your bottom dollar that the cohort of international bankers around the world will have taken note, if they hadn’t already, and will be drawing in their lending horns as well.
The importance of monitoring bank credit is that when it begins to contract it always precipitates a crisis. This time the crisis revolves more around financial assets than in the past, because for the last forty years, bank credit expansion has increasingly focused not on stimulating production of real things — that has been chased overseas, but the creation of financial ephemera, such as unproductive debt, securitisations of securities, derivatives, and derivatives of derivatives. If you like, the world of unbacked currencies has generated a parallel world of purely financial assets.
This is now changing. Commodities are creeping back into the monetary system indirectly due to sanctions against the world’s largest commodities exporter, Russia. Financing for speculation is already contracting, as shown in Figure 1. Given recent equity market weakness this is hardly surprising. But it should be borne in mind that this is unlikely to be driven by speculators cleverly taking profits at the top of the bull market. It is almost certainly forced upon them by margin calls, a fate similarly suffered by punters in cryptos.
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Bank deposits, which are the other side of bank credit, make up most of the currency in circulation. Since 2008, dollar bank deposits have increased by 160% to nearly $19.5 trillion (M3 less bank notes in circulation). But there is the additional problem of shadow bank credit, which is unknowable and is likely to evaporate with falling financial asset values. And Eurodollars, which similarly are outside the money supply figures will likely contract as well.
We are now moving rapidly towards a human desire to protect what we have. This is fear, instead of the desire to make easy money, or greed. We can be reasonably certain that with the reluctance of banks to even maintain levels of bank credit the move is likely to be swift, catching the wider public unawares.
It is the stuff of an apocalypse.
A financial and economic crisis is now widely expected. Everyone I meet in finance senses the danger, without being able to put a finger on it. They are almost all talking of the authorities taking back control, perhaps of a financial reset, without knowing what that might be. But almost no one considers the possibility that this time the authorities will fail to stop a crisis before it turns our world upside down.
Nevertheless, a crisis is always a shock when it comes. But its timing is always anchored in what is happening to bank credit.
The bank credit cycle
The true role of banks in the economy is as creators of and dealers in credit. The licence granted to them by the state allows them to issue credit where none had existed before. Initially, it stimulates economic activity and is welcomed. The negative consequences only become apparent later, in the form of a fall in the expanded currency’s purchasing power, firstly on the foreign exchanges, followed in markets for industrial commodities and raw materials, and then in the domestic economy. The seeds for the subsequent downturn having been sown by the earlier expansion of credit. As night follows day it duly follows and is triggered by credit contraction. Since the end of the Napoleonic wars, this cycle of credit expansion and contraction has had a regular periodicity of about ten years —sometimes shorter, sometimes longer.
A cycle of bank credit is a more relevant description of the origin of periodic booms and slumps than describing them as a trade or business cycle, which implies that the origin is in the behaviour of banking customers rather than the banking system. How it comes about is important for an understanding of why it always leads to a contractionary crisis.
The creation of bank credit is a simple matter of double entry bookkeeping. When a bank agrees to lend to a borrower, the loan appears on the banker’s balance sheet as an asset, for which there must be a corresponding liability. This liability is the credit marked on the borrower’s deposit account which will always match the loan shown as an asset. This is a far more profitable arrangement for the bank than paying interest on term deposits to match a bank’s loan, which is the way in which banks are commonly thought to originate credit.
The relationship between his own capital and the amount of loan business that a banker undertakes is his principal consideration. By lending credit in quantities which are multiples of his own capital, he enhances the return on his equity. But he also exposes himself to a heightened risk from loan defaults. It follows that when he deems economic prospects to be good, he will lend more that he would otherwise.
But bankers though their associations and social and business interactions tend to share a common view of economic prospects at any one time. Furthermore, they have their own sources of economic intelligence, some of which is shared on an industry-wide basis. They are also competitive and prepared to undercut rivals for loan business in good times, reducing their lending rates to below where a free-market rate would perhaps otherwise be.
Being dealers in credit and not economists, they probably fail to grasp the fact that improving economic conditions — growth in Keynesian jargon — is little more than a reflection of their own credit expansion. The currency debasement from extra credit results in prices and interest rates rising, especially in fiat currencies, undermining business calculations and assumptions. Bankruptcies begin to increase as the headline below from last Monday’s Daily Telegraph shows:
https://lrc-cdn.s3.amazonaws.com/ass...om2-620x69.png
While this headline was about the UK, the same factors are evident elsewhere. No wonder Jamie Dimon is worried.
As a rule of thumb, bank credit makes up about 90% of the circulating media, the other 10% being bank notes. Today in the US, bank notes in circulation stand at $2.272 trillion, and M3 broad money, which also contains narrower forms of money stands at $21.8 trillion, so bank notes are 10.4% of the total. The ratio in December 2018 following the Lehman crisis was 10.7%, similar ratios at different stages of the credit cycle. Therefore, at all stages of the cycle, it is the balance between greed for profit and fear of losses in the bankers’ collective minds that set the prospects for boom and bust, and not an increase in the note issue.
A further consideration is the lending emphasis, whether credit has been extended primarily to manufacturers of consumer goods and providers of services to consumers, or whether credit has been extended mostly to support financial activities. Since London’s big-bang and America’s repeal of the Glass-Steagall Act, the major banks have increasingly created credit for purely financial activities, leaving credit for Main Street in the hands of smaller banks. Because credit expansion has been aimed at supporting financial activities, it has inflated financial assets values. So, while central banks have been suppressing interest rates, the major banks have created the credit for buyers of financial assets to enjoy the most dramatic, widespread, and long-lasting of investment bubbles in financial history.
Now that interest rates are on the rise, the bubble environment is over, to be replaced with a bear market. The smart money is leaving the stage, and the public faces an unwinding of the bubble. The combination of rising interest rates and contracting bank credit is as bearish as falling interest rates and the fuel of expanding bank credit were bullish. As loan collateral, banks have retained financial assets to a greater extent than in the past, and their attempts to protect themselves from losses by fire sales of stocks and bonds when they no longer cover loan obligations can only accelerate a financial market collapse.
Russia’s new priority is to escape from the West’s crisis
While the financial sanctions imposed on Russia have led to a tit-for-tat situation with Russia saying it will only accept payments in roubles from the “unfriendlies”, there can be little doubt that sanctions have come at an enormous cost to the imposers. In a recent interview, Putin correctly identified the West’s inflation problem:
“In a TV interview that followed his meeting with the African Union head Macky Sall in Sochi, Putin added that attempts to blame Ukraine’s turmoil for the West’s skyrocketing cost of living amount to avoiding responsibility. Almost all governments used the fiscal stimulus to help people and businesses affected by the Covid-19 lockdowns. Putin stressed that Russia did so “much more carefully and precisely,” without disrupting the macroeconomic picture or fuelling inflation. In the United States, by contrast, the money supply increased by 38% – or $5.9 trillion – in less than two years, in what he referred to as the ‘unprecedented output of the printing press’.”[i]
This is important. While the West’s monetary authorities and their governments have suppressed the connection between the unprecedented increase in currency and credit and the consequence for prices, if the quote above is correct, Putin has nailed it. In all logic, since the Russians clearly understand the destabilising ramifications of the West’s monetary policies, it behoves them to protect themselves from the consequences. They will not want to see the rouble sink alongside western currencies.
And indeed, the policy of tying Russian energy exports to settlements in roubles divorces the rouble from the West’s mounting financial crisis. It is further confirmation that Zoltan Pozsar’s[ii] description of a Bretton Woods 3, whereby currencies are moving from a world of financial activity towards commodity backing, is correct. It’s not just a Russian response in the context of a financial war, but now it’s a protectionist move.
Russia enjoys the position of the world’s largest exporter of energy and commodities. For the West to cut itself off from Russia may be justifiable in the narrow political context of a proxy war in Ukraine, but it is madness in the economic perspective. The other nation upon which the West heavily relies, China, has yet to formulate a proper currency policy response. But the alacrity with which China began stockpiling commodities and grains following the Fed’s reduction of interest rates to the zero bound and its increase of QE to $120bn monthly in March 2020 shows she also understands the price consequences of the West’s inflationism.
The difference between China and Russia is that while Russia is a commodity exporter, China is a commodity importer. Her currency position is therefore radically different. The Chinese advisers who have absorbed Keynesian economics will be arguing against a stronger currency relationship with the dollar, particularly at a time of a significant slowing of China’s GDP growth. They might also argue that they have preferential access to discounted Russian exports, the benefits of which would be squandered if the yuan strengthened materially. One can imagine that while Russia is certain about her “Bretton Woods 3 strategy”, China has yet to take some key decisions.
But everything is relative. It is true that China is offered substantial discounts on Russian energy and other commodities. It is in her interests to accumulate as much of Russia’s commodities as she can — particularly energy. But it must be paid for. Broadly, there are two sources of funding. China can sell down its US Treasury holdings, or alternatively issue additional renminbi. The latter seems more likely since it would keep the dollar well away from any Chinese-Russian trade settlements and could accelerate the start of a new offshore renminbi market.
All these moves are responses to a crisis brought about by Western sanctions. Given the history of price stability for energy and most other commodities measured in gold grammes, Russia’s move represents a barely transparent move away from the world of fiat and its associated financial ephemera to a proxy for a gold standard. It is a statist equivalent of the latter, whereby Russia uses commodity markets without having to deliver anything monetary. While protecting the rouble from a collapsing western currency and financial system it works for now, but it will have to evolve into a monetary system that is more secure.
One possibility might be to use the new commodity-based trade currency planned for the Eurasian Economic Union (EAEU), which is likely to rope in all the Shanghai Cooperation Organisation network, and possibly the commodity-exporting BRICS as well. It has been reported that even some Middle Eastern states have expressed interest though that’s hard to verify. In the financial war against the dollar, the announcement of the new currency’s terms would represent a significant escalation, cutting the dollar’s hegemony down at a stroke for over half the world’s population.
It would also raise a question mark over the estimated $33 trillion dollars of US financial assets and bank deposits owned by foreigners. Timing is an issue, because if the new EAEU trade currency is introduced following a crisis for the dollar, the move would be protectionist rather than aggressive, but it seems likely to trigger substantial dollar liquidation in the foreign exchanges either way.
The elephant in the currency room is gold. It is what Zoltan Pozsar of Credit Suisse terms “outside money”. That is, money which is not fiat produced by central banks by keystrokes on a computer, or by expansion of bank credit. A basket of commodities for the proposed EAEU trade currency is little more than a substitute for linking their currencies with gold.
So, why don’t Russia and China just introduce gold standards? There are probably three reasons:
- A working gold standard, by which is meant an arrangement where members of the public and foreigners can exchange currency for coin or bullion takes away control over the currency from the state and places it in the hands of the public. This is a course of action that modern governments will only consider as a last resort, given their natural reluctance to cede control and power to the people. Nowhere is this truer than of dictatorial governments such as those governing Russia and China.
- It could be argued that to introduce a working gold standard would give America power to disrupt the currency by manipulating gold prices on international markets. But it is hard to see how any such disruption would be anything other than temporary and self-defeating.
- Proceeding nakedly into a gold standard, when America has spent the last fifty years telling everyone gold is a pet rock, yet at the same time grabbing everyone else’s gold (Germany, Libya, Venezuela, Ukraine… the list is pretty much endless) is probably the financial equivalent of a nuclear escalation, only to be considered as a last resort. Clearly, it is the most sensitive subject and a frontal challenge to the dollar’s post-Bretton Woods hegemony.
The flight into real assets
While national governments are considering their position in the wake of sanctions against Russia, the status of their reserves, and how best to protect themselves in a worsening financial conflict between Anglo-Saxon led NATO and Russia, ordinary people are acting in their own interest as well.
Most of us are aware that second hand values for motor cars have soared, in many cases to levels higher than new models. The phenomenon is reported in yachts and power boats as well. And on Tuesday, it was reported that US citizens had escalated their credit card spending to unexpected heights. Is this evidence of a flight from zero-yielding bank deposits, or the emergence of wider concerns about rising prices and the need to acquire goods while they are available at anything like current prices?
When it comes to their own interests, people are not stupid. They understand that prices are rising and there is no sign of this ending. Their mantra is to buy now before prices rise further, while they can be afforded and the liquidity is to hand. While it is probably too dramatic to call this behaviour a crack-up boom, unless something is done to stop it a crack-up boom appears to be developing.
But the asset which is on many peoples’ minds is residential property. Where residential property prices are dependent on the availability and cost of mortgage finance, rising interest rates will undermine property values. Given that the loss of currencies’ purchasing power fails to be reflected yet in sufficiently high interest rates, mortgage rates for new and floating rate loans can be expected to rise substantially, driving residential property prices lower. But this assumes that a financial and currency crisis won’t occur before interest rates have risen sufficiently to discount future losses of a currency’s purchasing power.
It seems unlikely that that will happen. It is more likely that increases of not more than a few per cent will be sufficient to destabilise the West’s monetary order, with systemic risk spreading rapidly from the weakest points — the Eurozone and Japan, where interest rates rising from negative values will expose as demonstrably insolvent the ECB and the Bank of Japan, while major commercial banks in both jurisdictions are the two most highly leveraged cohorts.
That being the case, and if a banking crisis originating in a deflating financial asset bubble requires insolvent central banks to rescue commercial banks, there is a significant risk that the West’s fiat currencies could lose credibility and collapse as well. Therefore, as well as the effect of rising mortgage costs (which will probably be capped by the emerging crisis) we must consider residential property values measured in currencies which have imploded. It is not beyond the bounds of possibility that measured nominally in fiat currencies, after a brief period of uncertainty property prices might rise. A million-dollar house today might become worth many millions, but many millions might buy only a few ounces of gold.
That appears to have been the situation in 1923 Germany, reported by Stefan Zweig, the Austrian author who in his autobiography recounted that at the height of the inflation US$100 could buy you a decent town house in Berlin.[iii] It might have been several hundred million paper marks, but at the time US$100 was the equivalent of less than five ounces of gold.
Any investor in real assets such as real estate and farmland must be prepared to look through a collapse of financial asset values and a currency crisis. For a time, they will have to suffer rents which don’t cover the costs of maintaining property.
But the message from Germany in 1923 is that it is far better to hoard what the Romans told us is legally money, that is everlasting physical gold. And the lessons of history backed up by pure logic tell us loud and clear that gold is not a portfolio investment. It is no more than money. An incorruptible means of exchange to be hoarded and spent after all else has failed.
—
[i] See https://english.almayadeen.net/news/...money-printing
[ii] See https://ieo.imf.org/-/media/IEO/Imag...iii-flyer.ashx
[iii] The World of Yesterday, by Stefan Zweig.
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 Best of Alasdair Macleod
Alasdair Macleod runs FinanceAndEconomics.org, a website dedicated to sound money and demystifying finance and economics. Alasdair has a background as a stockbroker, banker and economist. He is a Senior Fellow at the GoldMoney Foundation.
Copyright Goldmoney Inc.
Previous article by Alasdair Macleod: Recession, Prices, and the Crack-Up Boom
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We talked to one of the most successful investors in the world about inflation, the debt crisis, and the decline of the American empire.
BY Zachary Crockett
NOTE: This is an edited transcript of our full podcast interview with Ray Dalio. If you prefer audio, you can listen to it in full here.
Ray Dalio is the founder and co-chief investment officer of Bridgewater, the largest hedge fund in the world. He’s one of the 100 richest people on Earth. He’s also a bestselling author.
I recently sat down with Dalio to talk about his latest book, The Changing World Order, which uses a historical lens to examine why empires rise and fall — and why the US may be showing some signs of decline.
We covered a range of topics about the economy and Dalio’s life, including:
- The 3 biggest issues America is facing right now
- What’s driving the debt crisis
- The growing wealth gap (and what we should do about it)
- Thoughts on inflation and an impending recession
- Investing during times of volatility
- Whether or not crypto can become a reserve currency
- Dalio’s worst (and best) failure as an investor
- Billionaire personality tests
- How Dalio helped McDonald’s launch chicken nuggets
The conversation below has been edited for clarity, and annotated with additional context where necessary.
***
ZACHARY CROCKETT: We are in a moment where a lot of people, particularly young folks, feel disenchanted with the American dream. You've spent a lot of time studying the markets from a historical perspective. What would you say to those of us who haven’t lived through a time quite like this before?RAY DALIO: There are three [things] that are happening in the US right now:
- First, the creation of enormous amounts of debt and the printing of a lot of money. This results in inflation, which takes buying power away from people.
- Second, internal conflicts. Political conflict between the left and the right, the haves and the have-nots, and people with different values.
- And third, a great power conflict on a global stage. In 1945, the US had 80% of the world’s gold, and we [accounted for] 50% of the world’s economy. And we had a monopoly on military power. And now that gap has narrowed.
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The Hustle
Let’s walk through each of those a little bit more, starting with debt creation. The national debt is now at $30T. It’s up $7T since 2019 alone. How did we get here?Creating credit stimulates. Whenever you get a bad situation, you get this very heavy dose of credit. But credit produces debt that builds up over a long period of time.
In recent times — first the 2008 recession and now covid — there was a desire to give people a lot of money. So they created a lot of debt as a big stimulation and printed a lot of money to make it easier to pay that debt.
Moving to internal crises, you spend a lot of time discussing class divisiveness in The Changing World Order.
During the pandemic, billionaires saw their wealth surge by 70%, to $2.1T. I think we can probably both agree that capitalism run amok is not good. In your opinion, where does the current version of capitalism fall short?
It falls short in delivering the basic results.
I’m a capitalist. I believe in capitalism. But I think everything’s got to be reformed. The bottom 60% of the population has not had a rise in per-capita income since 1980. There are big opportunity gaps in areas like education.
We’re going to need radical reforms in order to rectify that.
Well, the left wants redistribution. The right wants trickle-down policies. In your opinion, how do we fix these inequities?
I almost don’t care what’s done as long as it’s bipartisan.
The most important thing is that we have to develop a solid middle — a bipartisanship of smart people who can work together across party lines to make the reforms. We can get into a type of civil war if the two extremes are fighting. This has happened repeatedly in history.
A fairer society minimizes these conflicts.
There are smart investments that can be made. Investments in education, for example, and ensuring that no school district falls below a certain level. If you want to look at what countries did well historically, they invested in infrastructure. It’s a good investment.
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The Hustle
How about a billionaire tax?Well, I think that there needs to be a transfer of wealth. Not just a transfer of wealth, but a transfer of education and opportunities.
That’s going to have to come significantly from taxes, and the wealthy can pay for it better. So, I think that’s inevitable that that would and should come.
Now the form of the tax is a different question. How does it work? When you have a wealth tax, that requires you to be able to value all those assets. Some of those assets are not easy to value. They’re illiquid.
Inheritance taxes might be a more effective solution.
In any case, my generation has left the next generation — your generation — with a broken-down infrastructure and a lot of borrowed money. That’s a problem.
You don’t often hear that admitted aloud.
Well, it’s just a fact.
Let’s discuss your third point, which is a shift in the “world order.” You think that China may eventually usurp America as the world’s leading superpower. What indicators is this based on?
It is inevitable that China will be a comparable power. It is likely that it will pass the US, but not certain. It’ll all depend on how much the United States takes care of itself.
China has a population four times that of the US. If its per-capita income was even half that of the US, it would be twice as large economically. I first started going to China in 1984. Since then, its per-capita income has increased by 26 times.
We can’t discount China, and we know that we’re in a different world than in the early years of me growing up when the United States was the dominant power.
We’re going to have a great power conflict. And there are no courts that you go to when you have disagreements; it’s a power conflict. What matters most is power. And so we better get stronger, or expect that we have to deal with that power conflict. Ideally in a way that does not produce a military war.
China has many problems of its own: a population is aging, opaque financial markets, severe internal social and cultural injustices. Do you see these as potential threats to its rise?
China has a number of challenges.
Despite those challenges, it’s likely that they will grow at a faster pace than we will grow at because they are being very productive.
Would it really be that bad to be, say, the third or the fifth most powerful country in the world? What do you lose when you lose that top spot on the throne?
I think that top spot is way exaggerated.
To some extent, you can control things more when you’re in the top spot. But going to war and leading those wars is terribly dangerous. And maintaining that top spot is very costly. The US has bases in 70+ countries.
So yeah, being number one has its own problems.
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The Hustle
You have this interesting chart in the book that maps out the major characteristics in the rise and fall of an empire, based on 500 years of historical data. Where do you see the US right now in this cycle?The Changing World Order (Ray Dalio)
Well, I think we’re relatively late in the cycle.
We’re in the riskier part of the cycle, which is the cycle right before wars. But that doesn’t mean a war is inevitable.
Really, it all comes down to how we are with each other. The world has more resources, more wealth, than it ever had. If we work together to share of the wealth and the opportunities, you can avoid wars.
We've heard a lot of prominent voices weigh in on a possible impending recession. Jamie Dimon, the CEO of JPMorgan Chase, recently said a “hurricane” is coming. What are your thoughts on that?
I believe that we will be in a relatively extended period of stagflation.*
We have inflation, which takes buying power away. And the central bank is going to fight it by making credit less available and raising interest rates, which takes even more buying power away.
[*Stagflation: A period in which the inflation rate is high and the economic growth rate slows.]
How do you generally think about moments of volatility, like the one we’re in now, from an investing vantage point?
I would worry about holding assets that are prone to deflate.
When you hold a bond or a money market fund, you’re going to get an interest rate [that] is substantially below the inflation rate, so you’ll lose buying power. Diversify well.
[If I were] to pick countries [for foreign investments], there are three questions I’d ask:
- Is the country earning more than it’s spending?
- Does it have internal order where people are working well with each other to be productive?
- Is it at risk of being drawn into an international war?
There’s a growing movement to make bitcoin a reserve currency.* Do you see a future there?
I think bitcoin has been a tremendous accomplishment. But I don’t think central banks are going to hold it as a source of reserves.
It’s decentralized, but at the end of the day, governments can still monitor and control it. And the biggest problem with governments is that right now they have their own money problem and you can’t trust them. If bitcoin became too much of a good alternative, they’d get rid of it.
We talk a lot about bitcoin as an alternative, but its total value is relatively small [~$556B, as of publication]. I think too much is being made of it.
[*Reserve currency: A foreign currency that is held in large quantities by central banks for international transactions and investments.]
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The Hustle
All right, let’s shift to you now. There were two financial bets that you made that had a huge impact on your career. One was really bad and the other was really good.The bad: You started Bridgewater in 1975. In 1982, you incorrectly predicted the coming of an economic crisis and you pretty much lost everything. You had to borrow $4k from your dad to pay the bills. What did you take away from that experience?
Oh, it was one of the most painful experiences that happened to me. But also one of the best.
What I took away was a different way of thinking. It gave me a humility that balanced my audacity. It made me ask myself, “How do you know you're right?” And I developed a principle: Pain + Reflection = Progress.
I learned how to diversify better. I learned how to be more open-minded and [try] to have my ideas stress-tested by other people who disagree with me.
The good: you anticipated the 2008 recession and made your investors a sizable return when almost everyone else was hemorrhaging money. What did you see there that others missed?
I went back and studied history.
I studied the 1929-33 debt bubble and burst,* and I understood it mechanically. What I was seeing in 2007-08 was identical.
It’s a good example of how people can miss out on something because it never happened before in their lifetime. But by studying the past, I was able to anticipate it. Bridgewater made a lot of money when others lost a lot of money because we understood the nature of dynamics.
[*1929-33 bubble and burst: Between 1929 and 1933 (the worst years of the Great Depression), industrial production fell by 47%, GDP dropped by 30%, and unemployment soared to 20%.]
There’s a story about how you helped McDonald’s launch chicken nuggets. You were a commodities trader and an adviser early in your career. In the early ’80s, McDonald's had this new idea for a product, but there was a problem. And they came to you for help…
I had a large chicken producer as a client, and I had McDonald’s as a client. McDonald’s wanted to come out with the McNugget.
But the problem with the McNugget was if the cost of buying chicken varied a lot, they couldn’t put it on the menu. The price could go up. And they’d have big losses and then they’d either have to change the menu price, which would be a mess, or they would have to take these losses.
I knew the chicken producer. And I knew that the cost of producing a chicken is very small — it's mostly the corn and soymeal that you feed the chick.
I knew that I could hedge that by being able to buy corn and soymeal futures so that they would lock in a chicken price. So I showed the chicken producer how he could do that and then gave a fixed price to McDonald’s.
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Dalio helped McDonald’s launch their popular McNuggets (Photo by Chris Hondros/Getty Images)
You live by kind of a hyperrealist philosophy, in that most things in life are machine-like and conform to some overarching sense of order. What I find interesting about that is that your father was a jazz musician and jazz is all about breaking free from structures.What role has improvisation played in your life?
Improvisation is an expression of creativity that comes from the subconscious.
I practice transcendental meditation, which brings me into my subconscious. When I align those subconscious thoughts with what is happening in my conscious mind, it helps me make better decisions.
I carry the effects of transcendental meditation through the day. And it gives me that equanimity, that calmness, to be able to approach things in a good way so I don’t get emotionally hijacked.
You’ve met a lot of successful people in your life — heads of state, dignitaries, some of the wealthiest people on earth. Would you say there are any common traits among highly accomplished individuals that you’ve met?
Yes.
I’ve actually done personality testing* on acquaintances and friends, including Elon Musk, Bill Gates, and Reed Hastings.
A few things they have in common:
- They’re very, very, very curious, and independent thinkers.
- They’re “full range” — they’re able to go from the full range of the big picture down to the smallest detail.
- They’re both systematic and creative. Most people who are creative may not be so systematic, and most people are systematic may not be creative. They tend to be both.
- They tend to hold people accountable. They have high standards for other people. Some people would say they’re rude or abrupt.
Most people at the top of their profession made it there because they must be very smart and very capable. Of course, that enters into it. But it’s really how they deal with what they don’t know.
[*You can learn more about Dalio’s personality tests here.]
Are there any life principles that you’ve rethought lately, or that have shifted over time?
The one that comes to mind, again, is Pain + Reflection = Progress.
I lost a son. That was the most painful experience of my life. At 42, he died in an automobile accident. It was the worst thing that ever happened to me.
I reflected quite a bit on death and life, and my relationship with him.
And related to that is the serenity prayer: “Give me the serenity to accept that which I can’t control, give me the power to control that which I can, and give me the wisdom to tell the difference.”
It seems like you’ve spent a large portion of your life trying to wrangle things in and make sense of things that are uncontrollable — markets, relationships, people.
That’s right. And one of the things I’ve learned is that whatever success I’ve had in life has been more due to my knowing how to deal with what I don’t know.
I have a principle: “If you worry, you don’t have to worry. And if you don’t worry, you need to.”
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June 11, 2022
Show Trial Ratings Trainwreck Plunges Biden Approval Rating To Record Low
By: Sorcha Faal, and as reported to her Western Subscribers
A compelling new Security Council (SC) report circulating in the Kremlin today first noting State Duma Speaker Vyacheslav Volodin factually revealing the Western colonial powers are continuing to “crack under the load of sanctions imposed against Russia” over the “Special De-Nazification Operation” to liberate Ukraine, says he states that the United States itself built the conditions under which Russia and other countries can create an equal dialogue and mutually beneficial relations to create a “new G8”, with him adding that as America continues to create tension in the world while “sinking” in economic terms, this will “inevitably lead to their loss of hegemony in the world”.
While the Western colonial powers continue to crack apart and America watches its global hegemony evaporate, this report notes, Russian Central Bank chief Elvira Nabiullina just revealed: “Effects of sanctions against Russia have been less acute than expected so far”—a revelation quickly joined by the Russian Central Bank restoring interest rates to their February mark before the special operation began as inflationary risks continue to subside—in reorienting Russia away from the West yesterday it saw the first bridge completed and opened to China—while watching Russia rapidly reorient itself towards the East it caused European Union member Hungarian Prime Minister Viktor Orban to grimly warn: “If they move to introduce a gas embargo they will ruin the whole European economy”—a warning swiftly followed by the European Parliament’s president, Roberta Metsola, raising questions about how sustainable the EU bloc’s financial model is without Russia.
After the United States reported its inflation rate hit the highest level since 1981 yesterday, this report continues, it was then reported: “Western companies have racked up more than $59 billion in losses from their Russian operations, with more financial pain to come”—are self inflicted economic blows now joined by the report: “Looking at the markets we see that 2022 to date is the worst year for the DOW in history...The DOW currently is down more than 4,700 points since the beginning of the year...This decrease is greater than any year on record”—today it sees articles flooding America like “Gasoline Prices Reach $5 A Gallon Nationwide For The First Time”—all of which more than explains why it’s now being reported: “The University of Michigan’s gauge of consumer sentiment fell sharply to a record-low reading of 50.2, down from a May reading of 58.4...Economists polled by the Wall Street Journal had expected a June reading of 59...The level is comparable to the low point reached in the middle of the 1980 recession, the university said”.
As to the response by Supreme Socialist Leader Joe Biden and his demonic socialist Democrat Party to the wholesale destruction of the American economy, this report details, it’s best described in the just published article “The J6 Inquisition Is An Obvious Soviet-Style Show Trial”, wherein it reveals: “As during Communist control of Soviet Russia, the Jan. 6 Committee’s purpose is to prop up a dying, corrupt regime...The hearing possessed all the signature hallmarks of the infamous Moscow Trials nearly 100 years ago, in which opponents to Joseph Stalin’s regime were hauled before the public and charged with treason and sedition...The trials in Moscow culminated in the “Great Purge” of dissidents to the incumbent regime, with defendants given death sentences...The Jan. 6 proceedings are aimed at the ultimate purge of former President Donald Trump and his supporters, albeit through societal exile and jail sentences as opposed to execution”.
Not being told to the American people, this report continues, is that no government in the world cares about what occurred on 6 January 2021, specifically because it was a minor event whose only causality was a an unarmed protester, and in no way whatsoever actually threatened the United States—and stands in stark and vivid contrast to the socialist Democrat Party masterminded and approved leftist rampage across America in 2020 that cost dozens of lives and caused over $2-billion in property damage—a leftist rampage that, on 31 May 2020, saw it being reported: “Numerous Secret Service agents were injured, fires set by rioters blazed near the White House and authorities were searching for car bombs late Sunday”—and on that date, most concerning to world governments, was the beyond shocking report: “President Donald Trump was taken to the secure White House bunker, usually reserved for times of war or terrorist attacks, in the midst of protests and clashes close to the presidential complex’s perimeter...According to several accounts by unnamed officials, Trump spent nearly an hour sequestered in the austere suite of hardened underground rooms designed for use in grave emergencies, and in which the then vice-president, Dick Cheney, took shelter during the 9/11 attacks”.
In full agreement with the rest of the world that the socialist Democrat Party masterminded leftist rampage across America in 2020 was the true greatest threat to the United States, this report notes, are the greater masses of the American people, as now proven in the just published article “Trainwreck: Ratings Are In For Jan. 6 Committee Production”, wherein it reveals such facts like: “The evening newscasts on CBS, NBC & ABC average anywhere from 18 to 20 million viewers combined on a typical night…Those newscasts do not air in primetime…The January 6 hearings airing in primetime Thursday took in just 11+ million viewers on those three same networks”—further reveals that Fox News didn’t even air this show trial, but had the highest ratings of all cable news networks on Thursday—and in spite of non-stop favorable leftist media coverage, the day following this show trial saw it being revealed “The latest survey found that 58% of voters disapprove of Biden’s job performance and 39% approve...It marks the 46th president’s lowest approval rating and highest disapproval rating in 62 weekly surveys conducted since he took office in January 2021...For comparison, Biden’s latest numbers are worse than Donald Trump’s were at this time four years ago, when 45% approved and 52% disapproved of the former president”.
Joining the abject failure of this socialist Democrat Party trainwreck of a show trial, this report concludes, today it sees the leftist Washington Post revealing: “Ukraine is running out of ammunition as prospects dim on the battlefield...1,000 Ukrainians are being taken out of the fight every day, including those who are injured...Russia is firing as many as 50,000 artillery rounds a day into Ukrainian positions, and the Ukrainians can only hit back with around 5,000 to 6,000 rounds a day”—and whose dimming battlefield prospects for Ukraine are further revealed in the latest urgent war bulletins issued by the Ministry of Defense (MoD), the most notable of them being:
“Russian missile and artillery troops hit 62 command posts, 138 artillery firing positions, and also 303 areas of amassed Ukrainian manpower and military hardware...The artillery strikes eliminated over 350 nationalists, seven pieces of armor, two Grad multiple launch rocket systems, five field artillery guns and mortars, 16 special vehicles, and also 11 missile/artillery arms, ammunition and fuel depots”.
“Russian operational-tactical and army aviation aircraft destroyed 46 areas of amassed Ukrainian manpower and military equipment...The air strikes eliminated over 150 nationalists, six tanks, four field artillery guns and two Ukrainian Grad multiple launch rocket systems”.
“In the area of Andreevka, Kharkiv region, Russian Aerospace Forces high-precision air-launched missiles destroyed the deployment point of foreign mercenaries”.
“Russian Aerospace Forces destroyed with precision-guided missiles T-72 tanks on the outskirts of Kiev supplied to Ukraine from Eastern Europe and Units of the Donetsk People's Republic destroyed a battery of M-777 howitzers delivered to Ukraine from the United States”.
“Russian air-launched precision missiles eliminated aircraft of the Ukrainian Air Force at the Dnepr military airfield and destroyed the production capacities of the military hardware repair and recovery enterprise in the area of Kharkov...Russia’s air-launched precision missiles also struck two Ukrainian command posts, about 30 areas of amassed manpower and military equipment and five enemy artillery positions”.
“Russian air defense forces intercepted four Tochka-U tactical missiles in the areas of Popasnaya in the Lugansk People’s Republic, Ledovka and Kalinov in the Kharkov Region and three shells of the Uragan multiple launch rocket system near Malaya Kamyshevakha and Nizhny Kul in the Kharkov Region and Yakovlevka in the Donetsk People’s Republic...Russian air defense capabilities also destroyed five Ukrainian unmanned aerial vehicles in the areas of the communities of Lozovaya and Glubokoye in the Kharkov Region, Borozenskoye in the Kherson Region, Nevskoye in the Donetsk People’s Republic and Popasnaya in the Lugansk People’s Republic...Russian air defense systems also shot down a Su-25 ground attack aircraft and a MiG-29 fighter jet of the Ukrainian Air Force”.
“In total, since the beginning of the special military operation the following Ukraine targets have been destroyed by Russian military forces: 198 aircraft, 130 helicopters, 1,180 unmanned aerial vehicles, 337 anti-aircraft missile systems, 3,503 tanks and other armored combat vehicles, 506 multiple rocket launchers, 1,859 field artillery pieces and mortars, as well as 3545 units of special military vehicles”.
[Note: Some words and/or phrases appearing in quotes in this report are English language approximations of Russian words/phrases having no exact counterpart.]
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June 11, 2022 EU and US all rights reserved. Permission to use this report in its entirety is granted under the condition it is linked to its original source at WhatDoesItMean.Com. Freebase content licensed under CC-BY and GFDL.
[Note: Many governments and their intelligence services actively campaign against the information found in these reports so as not to alarm their citizens about the many catastrophic Earth changes and events to come, a stance that the Sisters of Sorcha Faal strongly disagree with in believing that it is every human being’s right to know the truth. Due to our mission’s conflicts with that of those governments, the responses of their ‘agents’ has been a longstanding misinformation/misdirection campaign designed to discredit us, and others like us, that is exampled in numerous places, including HERE.]
[Note: The WhatDoesItMean.com website was created for and donated to the Sisters of Sorcha Faal in 2003 by a small group of American computer experts led by the late global technology guru Wayne Green (1922-2013) to counter the propaganda being used by the West to promote their illegal 2003 invasion of Iraq.]
[Note: The word Kremlin (fortress inside a city) as used in this report refers to Russian citadels, including in Moscow, having cathedrals wherein female Schema monks (Orthodox nuns) reside, many of whom are devoted to the mission of the Sisters of Sorcha Faal.]
This Can’t Be Real. Alas, It Is.
A Strange Day Is Coming To America
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There is no such thing as Political Correctness here because we are here to teach and share our knowledge ALL FOR FREE until May 31, 2022, and then if you have subscribed to this thread before May 31, 2022, then you will get a FREE LIFETIME PASS to our company website.
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Markets, Central Banks, Inflation and the Chaotic Tipping Point
The number of threats facing markets; from inflation, central bank hikes, war, geopolitics, recession risks, corporate earnings and bond liquidity are legion. The big risk is they combine into a chaotic tipping point, at which moment we will just have to pick up the pieces…. Again.
Blain’s Morning Porridge, June 13 2022: Markets, Central Banks, Inflation and the Chaotic Tipping Point
“The tipping point is not a question of if, but when”
This morning: The number of threats facing markets; from inflation, central bank hikes, war, geopolitics, recession risks, corporate earnings and bond liquidity are legion. The big risk is they combine into a chaotic tipping point, at which moment we will just have to pick up the pieces…. Again.
Its Monday morning again, so time for a quick snapshot of where the merry dance of markets shall lead us this week. The sun is shining, a heat dome approaches, but I can’t help but worry about the coming storm…
The summer somnambulance should be upon us – investment desks and traders sitting back to watch their carefully composed portfolios and positions cruise through the summer before the markets get hot again in September. At least, that’s how I remember the long-balmy days of my market childhood back when I was a young banker….
Not this year. Too many fundamental tremblors threaten to rock the markets:
- Inflation, Inflation, Inflation
- Supply Chains, Covid and China
- Europe and the ECB
- Recession/stagflation
- War vs Jaw
- Central Banks tightening
- Stock Resets and Earnings
- Bond Market Meltdown
- Global Trade Reset and De-Globalisation
- The US, The Dollar and Trump
I predict a stormy Q3 – the usually calm languid dog-day markets of July and August being replaced by lumpy seas of bad numbers, grey storm skies as markets struggle with the acceleration of negative news-flow on inflation, corporate earnings, markets and increasingly wobbly politics, and few sharp pointy rocks of financial destruction.
It feels like we are spiralling into something messy.
Inflation headlines dominate this morning. As the Fed gets ready to hike rates to combat the highest inflation in 40 years, the FT reports the US is likely to plunge into recession next year, citing the FT-IGM survey of academic economists. (Really… who listens to economists?) The UK economy actually shrank in April because of surging prices hitting the economy.
It’s at times like this when markets become vulnerable to an increasingly chaotic narrative. Chaos quickly becomes chaotic as surprises and unexpected events spin up instability and feed each other. Suddenly we get the chaos moment, the tipping point, where markets jump out their expected ranges and become impossible to rationalise.
Maybe the straw that triggers the breakout will be an unexpected corporate event like a default, failed acquisition or profit warning? Maybe it will be something in Ukraine or the South China seas? Maybe it will be elsewhere completely? It will come on the back of a stream of reinforcing bad news, then another and suddenly the whole edifice of markets is on the slide. Maybe it will be something from the televised inquiry into the Jan 6th 2021 US capital riots?
It will happen, and the next day or whenever the hurly burlys done, we try to put it back together again.
As the stronger-than expected US inflation number showed on Friday, no amount of central bank steers on supposedly “transitory” inflation adjustments to the post pandemic supply chain reopening are going to steady this market. Negative news – whether its Russian gains in Ukraine, renewed lockdown in Shanghai, or the Fed tightening US rates at this week’s FOMC by 50 bp are unlikely to support markets. They are more likely to test further downside.
There is also a certain amount of hope prevalent in this market – that central banks will step into stabilise markets, to bail out crisis and restore calm in their usual way…. throwing more money via QE at an enfolding crisis. The market knows this is possible, even probable in some cases, so it is prepared and ready to buy the moment.
While the Fed will Hike on Wednesday, and the Bank of England on Thursday, the ability of the ECB to follow through with a 25 bp hike in July is being questioned around the market. Italy is seen as the crisis point – no surprise. Fragmentation – European bond yields widening dramatically to Germany, illustrating the respective and relative economic weaknesses of each nation – is the new buzz-word in Yoorp’s bond markets.
Christine Lagarde, the ECB President and French politician, has made clear “new instruments will be made available” if “fragmentation” might “prevent adequate monetary policy transmission” – which, when translated means: if Italian bond spreads widen to Germany and threaten any kind of crisis, the ECB will act to tighten them…. By reopening Italian bond buying. Whatever it takes remains just that – which rather suggests a buy European sov bonds moment is coming.
Italy bonds are currently 224 bp over Bunds. Get your buying boots ready to buy at 250.
The War in Ukraine looks stalemated, with little prospect the West will do more to supply the oomph Ukraine needs to avoid an attritional Russian win. There is an increasing sense the West’s appetite for a punishing economic war is fading – especially in Southern Europe. That wavering support will have all kinds of geopolitical consequences in terms of oil prices, growth, commodities, and the lacklustre global support vs Putin we’ve seen outside Europe and the US. (Later this week I will risk a comment on why the US is losing the plot.)
Increasingly the unwillingness of the oil producers to favour the West vs Putin highlights how the role of the US as global hegemon has broken down. Around the globe, the geopolitical trend is to look past the US and figure out the new fault-lines. Yet, the dollar remains the de-facto safe-haven trade. Last week I cited US Treasuries as the safety trade when it all goes wrong. Just how quickly could that change? When the pound sterling was knocked off the perch decades ago the dollar was the clear successor… today? Not so clear. I am favouring gold in the meantime.
In China, renewed lockdowns and the sense Covid controls have become permanent has confirmed a massive internal consumption shift has occurred. I really don’t expect to visit China any time soon, if ever again. However the XI ascendency paint it, the economy has been locked and will become increasingly internalised – and that’s just one sign of how the global economy is de-globalising.
Back in the real world of markets, I’m wondering what Q2 earnings will reveal. Just how strongly will they illustrate how inflation is beginning to snipe down retailers? How much of the pandemic economy was built on foundations of sand? (Great piece in the WSJ about how the pet-care business will prove to be a lastingly solid pandemic investment – other sectors? No so much.)
When the central banks stop buying corporate bonds, and big funds are publicly announcing they are short credit markets and long corporate default swaps, you can feel the liquidity drain out the fixed income credit market. (Fortunately, should you find yourself in need of shifting large corporate and bank debt positions – give me a call.. I have a plan. It’s as cunning as a cunning fox with a spade outside the chicken coop.)
My conclusion – whatever the market commentators are saying about a summer slowdown, don’t listen to them.
This market has so many hot-buttons with Don’t Panic printed on them, primed and ready to fire, its looking close to a chaotic breakout. Which will hurt, but spell opportunity. The problem will be acting on opportunities when a liquidity crisis in corporate bonds locks down all markets.
Remember that in market crisis its not what you want to sell, but what you can sell that matters.. (Might have to add that to my list of market mantras!)
Five Things to Read This Morning
FT – The WTO’s lonely struggle to defend global trade
FT – Rate rise prospects raise concerns for debt-laden eurozone countries
BBerg – Wall Street Executives Can’t Stop Talking About a Recession
WSJ – Earnings Are Under Threat, Another Blow to Sagging Stock Markets
Spectator – Did Rishi Sunak really make a $11 bln blunder?
Out of time and back to the day job,
Bill Blain
Strategist, economist and general dogsbody, Shard Capital
June 13, 2022
Blain’s Morning Porridge, Capitalism, central banks, corporate debt, ECB, Equities, Financial Crisis, geopolitics, Global Growth, Inflation, Market Crash, Political risk, Supply Chains
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The Benefits Of Economic Collapse
https://zh-prod-1cc738ca-7d3b-4a72-b.../picture-5.jpg
by Tyler Durden
Monday, Jun 13, 2022 - 03:30 AM
Authored by Jeff Thomas via InternationalMan.com,
I first began to predict a major economic collapse back in 1999. Although I understood that it was at least fifteen years off and possibly more, I believed that it would be wise to begin to prepare for it then, as the actual date of collapse could not be predicted. (Better to be a few years early than even one day too late.)
https://assets.zerohedge.com/s3fs-pu...?itok=pPGULozL
Not surprisingly, back then, this prediction appeared to most people to not only be unlikely, but laughable.
Today, we’re a good bit closer to the onset of an economic crisis and it now not only seems possible, but quite likely to an increasing number of those people who are paying attention.
And not surprisingly, as so many people are now realising the inevitability of such a crisis, they’re also realising that they should have been preparing for it.
Preparation for a major event such as this requires a fair bit of time and many people are belatedly coming to realise that they may be caught with their pants down when the initial crashes begin.
Whenever the inevitability of such a debacle is first recognized, the first reaction for most people is to dive into denial, saying, “It simply can’t happen.
Nobody would let it happen, because nobody benefits.”
But that’s just it. Not only does someone benefit, they’ll benefit on a grand scale.
The controllers of an economy always benefit from a collapse
In 1814, Napoleon’s army went into battle at Waterloo, Belgium. The investment moguls at Capel Court in the City of London were biting their nails with worry, as the outcome of the battle would determine stock prices. If the French won, stock prices would drop dramatically. If Britain won, prices would rise dramatically.
In those days, communication was slow. it would take considerable time for the official envoy to travel from the battlefield in Belgium to London with the news of the outcome of the battle.
England’s foremost banker, Nathan Rothschild, had sent his own messenger to Waterloo with instructions to return by the fastest possible means with the news. Consequently, Mister Rothschild received the news many hours ahead of the return by official messenger.
He then was seen at the stock exchange selling as much as he could as quickly as he could. The word went out: “Rothschild knows.” This elicited a panic and others sold as quickly as they could.
Prices plummeted quickly; then, as the official envoy from Waterloo came up the Thames, Rothschild suddenly bought heavily at a rock-bottom price. Within the hour, the envoy provided the news that Britain had won the battle and prices shot through the roof, making enormous profits for Rothschild, all within one trading day.
He later called it, “The best business I ever did.”
The above tale is one that should be committed to memory, as it informs us that those who know of an economic event will most certainly capitalise on it.
Those who pull the strings make tremendous profits by manipulating an economy over the length of prosperous times, but they make just as much in crisis periods. They simply wait until an economic collapse has been completed and the dust has settled, then they buy up the remaining companies at rock-bottom prices at a time when the average investor has been wiped out. Then, when the economy begins its recovery, they ride the next wave of prosperity.
For this reason, anyone who’s in the economic driver’s seat understands that he’s best-served by creating false prosperity, then triggering its collapse, then cashing in on the collapse.
When this realisation occurs to the average investor, he more often than not declares, “Well, if that’s true, I’m toast either way.”
But this is only true if he takes a passive role in his economic future.
You can benefit from a collapse
The Mandarin word for “crisis” also means “opportunity.”
Those who are able to understand this Chinese concept have a tremendous opportunity in terms of investment. They can recognise that the coming crisis is also an opportunity.
Yes, there will be a collapse in the stock and bond markets. These will unquestionably be deflationary events, causing asset prices to crater.
But this need not spell disaster. The game is not over, but the crisis is unquestionably a game-changer.
It’s important to bear in mind that real wealth never disappears; it merely changes hands.
To prepare for the new game, the objective would be to liquidate all or most stocks, bonds and hard assets such as real estate, in advance of a crash.
Next you would wish to expatriate the proceeds to a jurisdiction that’s less likely to be a casualty of the crisis and, hopefully, would be a net-gainer at such a time.
Like those who actually pull the strings, you’d not only avoid becoming a casualty of the economic collapse, you’d stand to gain from it.
* * *
The economic trajectory is troubling. Unfortunately, there’s little any individual can practically do to change the course of these trends in motion. The best you can and should do is to stay informed so that you can protect yourself in the best way possible, and even profit from the situation. That’s precisely why bestselling author Doug Casey just released Surviving and Thriving During an Economic Collapse an urgent new PDF report. It explains what could come next and what you can do about it so you don’t become a victim. Click here to download it now.
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Blog/Inflation
Posted Jun 13, 2022 by Martin Armstrong
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Inflation in the euro area reached a record high of 8.1% in May across the 19-member states. It is no longer possible for the European Central Bank (ECB) to release optimistic or neutral forecasts. The ECB now expects inflation to hover near 6.8% in 2022 before declining to 3.5% in 2023 and finally landing near target at 2.1% in 2024. In March, those figures were 5.1%, 2.1%, and 1.9% respectively.
Growth forecasts were also revised down to reflect a weakened economy growing by 2.8% in 2022, 2.1% in 2023, and 2.1% in 2024. “The pandemic has shown that, under stressed conditions, flexibility in the design and conduct of asset purchases has helped to counter the impaired transmission of monetary policy and made the Governing Council’s efforts to achieve its goal more effective,” Thursday’s statement said.
https://www.armstrongeconomics.com/w...es-300x208.jpg
Unfortunately, the ECB had stimulus measures in place for nearly a decade and cannot blame the pandemic or war for its failure. The ECB now plans to end its Asset Purchase Programme and will likely raise interest rates by 25 basis points this July. “If the medium-term inflation outlook persists or deteriorates, a larger increment will be appropriate at the September meeting,” the members stated. They also plan to finally raise the bank deposit rate as it now stands at -0.5%. Christine Lagarde said this figure could reach 0% by Q3.
The ECB has been operating in negative interest rate territory since 2014 and has not raised rates in 11 years. They continually fail to address the extensive debt crisis, and small rate increases will not cause a spike in demand for European bonds. As I warned, the European debt crisis is unfolding on target.
Categories: Inflation, Sovereign Debt Crisis
Tags: Asset Purchase Programme, ECB, EU, European Central Bank, European debt crisis, Inflation, Lagarde
« PRIVATE BLOG – Inflation Reality v Consensus
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Oligarchism, the Bilderberg Group and Humanity - Garland Nixon and I Discuss
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Matthew Ehret
Jun 13
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In this discussion, Garland Nixon and I discuss the top down dynamics shaping current world events, the strategic characteristic of feudal empires, the WEF as junior partner to the older Bilderberg Group and the power of Natural Law. We also unpack the fraud of green energy systems, the culture of technocratic mediocrity and much more.
Click on the image below to watch the show on Bitchute
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Or watch on Rumble here
Youtube here
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OLIGARCHISM, THE BILDERBERG GROUP AND HUMANITY - GARLAND NIXON AND MATT DISCUSS by MatthewEhret
MatthewEhret
Matthew Ehret is the Editor-in-Chief of the Canadian Patriot Review , and Senior Fellow at the American University in Moscow. He is author of the ‘Untold History of Canada’ book series and Clash of the Two Americas trilogy. In 2019 he co-founded the Montreal-based Rising Tide Foundation .
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The Dollar Crisis is Far Greater than Anyone Imagines
Blog/USD $
Posted Jun 14, 2022 by Martin Armstrong
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QUESTION: Marty, Socrates is worth its weight in something far more valuable than gold. I want to congratulate you for you are the ONLY adviser who nailed not just the cryptocurrency bloodbath, but that the dollar would rise when everyone else kept predicting it would crumble to dust. Then you warned that emerging markets would move into crisis defaulting on their debt. You said even China was in the same crisis because many borrowed in dollars since the interest rates were cheaper.
Is the dollar behind the banking crisis in China and with all the AI systems claiming a new world order, why are they failing when Socrates succeeds?
I am so grateful. I cannot tell you how much.
BME
ANSWER: I will answer the AI issue tomorrow. The dollar crisis is emerging because people do not understand capital flow analysis. They keep harping on the quantity theory of money. They assert that the more money the Fed creates, the more the dollar bust decline, and typically gold must rise. They do not understand that capital flows like water. It will always move to the lowest risk.
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https://www.armstrongeconomics.com/w...dman-Nixon.jpg
Milton Friedman came to listen to my lecture on foreign exchange in Chicago. We became friends and he explained to me that I was doing what he had only dreamed about. Yes, it was Milton who had advised Nixon on shutting down Bretton Woods and adopting a floating exchange rate system.
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While many criticize Milton, they did not really understand what he saw. In 1953, he saw that a floating exchange rates system would provide a natural check and balance against the government policies. That is why he came to listen to me. I had developed capital flow analysis which was what he envisioned would happen under a floating exchange rates system. He theorized that in 1953.
I have been called in on so many FX crises it is amazing. They were selling Swiss loans to Australians in the 1980s to save on interest rates. They never considered what would happen if the exchange rate changed and the Swiss franc rose against the A$.
Just look at these two charts. The A$ was crashing and the Swiss franc rose. The default rate on mortgages exploded and small businesses who listen to bankers pitching Swiss loans to save money lost a fortune. The same crisis took place following the Swiss/Euro Peg when that broke.
Once again, the bankers were selling mortgages in the Swiss franc in Europe to lower interest rates. I cannot tell you how many times were have been called in on major financial crises around the world all for the very same reason. People make a loan in a foreign currency to save money on the interest rate. They have NO CONCEPT that the currency can swing even 40% in a short period of time.
The Chinese Central Bank warned its provinces and corporations NOT to borrow in dollars. They understood our model and understood what happens under such a currency crisis. Nevertheless, provinces and private corporations did not listen. They succumbed to the lure of the cheap interest rate.
I had even spoken with a major company and warned them the dollar would rise and there was a serious risk in emerging markets. They were new and as you say, they listened to the majority of opinions that took the opposite forecast. Now we see bank runs in China and serious problems in emerging markets.
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- Post #10,559
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- Jun 14, 2022 7:51pm Jun 14, 2022 7:51pm
- | Commercial Member | Joined Dec 2014 | 11,705 Posts | Online Now
In this brief interview with Michael McCrae of Kitco Mining, Matterhorn Asset Management principal, Matthew Piepenburg, addresses the interacting ramifications and core themes of the 2022 market economy to date.
Matthew begins by addressing the manifold ways in which Western financial sanctions against Putin have backfired, from the slow reduction of the USD’s global neutrality and hegemony (i.e., de-dollarization) to a rising Sino-Russian alliance in trade and geopolitics.
Matthew then addresses the critical and growing dangers of global debt levels in general and broken credit markets in particular. He warns that central bankers are sending the world economy into a lose-lose scenario of historical market and inflation risk. Matthew further addresses the recent collapse in the crypto/BTC trade, which he describes as precisely that: A “trade” rather than store of value or alternative currency.
Turning toward gold, Matthew reminds that this precious metal is among one of the very few loyal and anti-fragile assets of 2022 which has protected investors from the jarring volatility otherwise symptomatic of the dying bull market in traditional risk assets—i.e., stocks, bonds and property. As for gold, Matthew explains why its bull cycle is only just beginning. Finally, when asked how investors should prepare for the volatility and markets ahead, Matthew offers insights on what assets to embrace and what strategies to avoid.
- Post #10,560
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- Jun 15, 2022 5:16am Jun 15, 2022 5:16am
- | Commercial Member | Joined Dec 2014 | 11,705 Posts | Online Now
Blog/AI Computers
Posted Jun 15, 2022 by Martin Armstrong
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Klaus Schwab’s view of the future and Artificial Intelligence is seriously flawed. He argues that the fusing of the political, physical, digital, and biological worlds will have a transformative impact on every facet of human existence. He insists that this will range from the way we live our lives, the manner in which we will work, the reconfiguration of economic models, the products we sell, and I believe his self-delusion, the power to extend our lives indefinitely. Of course, his cohort, Yuval Noah Harari, dreams of converting society into programmed robots. Meanwhile, Pfizer CEO Albert Bourla dreams of putting chips in every pill that confirms to a central database that you took his latest creation.
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Schwab’s Fourth Industrial Revolution is seriously flawed for he has no understanding of actual real AI programming. Yes, insofar as AI is concerned, I do not believe in the view that if you throw in mountains of data, somehow the computer will evolve and figure it all out and come up with a force or conclusion. They did that at IBM with Big Blue. They thought it would find the cure for cancer – it failed. There is something more that makes our brain function. It is NOT just a neural net and consciousness somehow emerges because of all the connections. Granted, they try to mimic the brain and look upon us as simply a biological lifeform without actually understanding there is something much deeper.
Perhaps the night you suddenly fell in love with your partner. You were out to dinner, and your unconscious mind actually recorded everything — the place, the food, the music, what they wore. You consciously are not actually noticing all these variables. But years later, you hear that song, taste that same food, or revisit the place. Suddenly, without even trying to remember, the event is relived. You can close your eyes and see the event as if it were a recorded movie. Our brain is actually recording everything without us even trying. Creating a neural net and dumping all this information in there does not recreate that ability.
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Sigmund Freud (1856- 1939) and Carl Gustav Jung (1875–1961) dived very deeply into the construct of the mind. Their view of our unconscious was the result of very deep self-analysis. Socrates is different. I created pathways and taught it how to analyze. I spend a lot of time self-analyzing how I would trade, and what I would look at as an international hedge fund manager. I had to understand how the mind actually worked both on the conscious and unconscious levels.
Because I knew I was not going to be a world globe trotter again, I got a dog. She has taught me about how the mind also works. She thinks. She has a strategy. She has the same range of emotions that we have from boredom to excitement. I can see her thinking. She clearly communicates through her eyes and body language. There is an innate ability to communicate with dogs that has evolved over the centuries, which is one of the primary reasons our canine-human love affair has gone on for centuries. There is a distinct dog-human interspecies understanding that is extraordinary, but it also is a glimpse into ourselves. She anticipates where I will go when I get up and will gently let me know when she is hungry. But to my astonishment, she will play ball, but then will try to make me go fetch. She would bang her bowl if it was out of the water, but then if she wanted me to stop working, she would bang the bowl because she knew that sound would cause me to come out of the office.
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There is a whole other aspect to not just our mind, but how even a dog thinks, which reveals to me that the failure in AI with machine learning is that it is one-dimensional. There is a far deeper level of activity beyond our conscious mind that they try to duplicate with neural nets. My dog has indeed reinforced my understanding of how to really construct AI, which is substantially different from the one-dimensional neural net.
My dog understands so many words that it is astonishing. I was talking with a friend and just mentioned the word “dog,” and she got up and immediately ran to the window to see what dog dared to enter her domain. If I say we are going shopping, she goes to the front door. If I say we are going to take a walk, she runs to the back door. She obviously understands far more language than I ever expected. A 2020 study by researchers at Eötvös Loránd University in Hungary discovered that, while dogs may not pick up minute details in human speech, they can, in fact, comprehend their owners’ most basic words.
What she has taught me is that even a dog has a conscious and unconscious mind. She dreams as we go. It is really amazing when you pay attention. This is just far more involved than creating a one-dimensional neural net, throwing a bunch of data in, shaking (not stirring), and hoping for the best. Their theory that accelerating the ability to calculate and adding parameters to models was not really a game-changer. The models are faster, and playing a game of chess or Jeopardy, they can beat a human because they have the ability to test every possible outcome in a few minutes. But that is the problem. They can wow everyone with speed, but they CAN NOT create something new. That was the failure of IBM’s Big Blue.
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Creativity REQUIRED imagination, and expanding the nodes and speed does not lead to imagination. Without imagination, we cannot create a real game-changer. Thus, all the AI that Schwab cheers will lead the world into his Fourth Industrial Revolution is missing the critical ingredient, which does not exist in the conscious mind but is buried in the unconscious realm where we hide our talents, dreams, and our long lost memories. This is why Socrates has provided forecasting that is even original.
So I have taken a different approach. Socrates is NOT a one-dimensional neural net. Don’t worry. It will not suddenly come alive and decide to wipe out the inferior species known as humans. But the world Schwab envisions is not real. It only leads, not to the critical ability of creativity, which exists only in freedom, but to oppression and conformity precisely as the result of Marx’s experiment we call socialism/communism. Communism collapsed because it suppressed creativity. That also necessitates FREEDOM.