Money Flow Trading Method along with Risk Management

https://www.zerohedge.com/markets/ba...-mergers-ahead

Bank Stocks Puke As Yellen Reportedly Warns Of 'More Mergers' Ahead
https://zh-prod-1cc738ca-7d3b-4a72-b.../picture-5.jpg

BY TYLER DURDEN

FRIDAY, MAY 19, 2023 - 11:23 AM

Amid a major short-squeeze which has lifted the regional bank stocks almost 10% this week - the best week since Nov 2020 - CNN is reporting that during Thursday’s meeting with the CEOs of large banks, Treasury Secretary Janet Yellen told executives that more bank mergers may be necessary as the industry continues to navigate through a crisis, two people familiar with the matter told CNN.

Yellen echoed remarks from US regulators who have said there may be bank mergers in the current environment, one person familiar with the matter said.

Additionally, this is nothing new as during an interview with Reuters this week, Yellen said a certain degree of consolidation in the regional and mid-size banking sector could occur.

Yellen urges Congress to help developing nations.

“This might be an environment in which we’re going to see more mergers, and you know, that’s something I think the regulators will be open to, if it occurs,” Yellen told Reuters.

Roughly translated that means expect more imminent bank failures.

“Consolidation is inevitable,” said Ed Mills, Washington policy analyst at Raymond James.
“The progressive backlash is the Catch-22.”
Overall, regional banks took an immediate hit...
https://assets.zerohedge.com/s3fs-pu...?itok=NhU9y8Th

With some of the more headline-worthy names really hammered...
https://assets.zerohedge.com/s3fs-pu...?itok=eYpGWUeY
Interestingly,the readout provided by the Treasury Department following that meeting noted that Yellen addressed the banking stress, reaffirming the “strength and soundness of the US banking system” and thanking the bankers for “their leadership and support.” But that readout did not mention discussion of bank mergers.

However, sources tell CNN that bank mergers were discussed during Yellen’s meeting with bank CEOs.
And this came at the very second when Fed Chair Powell was reassuring the public that the US banking system was "strong and resilient".

This really isn't rocket science: you want your QT? Then get ready for another $2 trillion in deposit "impairments" (bank failures) https://t.co/LX0lCzJDpp
— zerohedge (@zerohedge) May 19, 2023

GREAT FOREX TRADING DAY - WHERE ARE ALL MY STUDENTS AT THE MOMENT. IT IS SO EASY TO TRADE WHEN YOU KNOW HOW and you INVEST YOUR TIME

WWW.AVIELFOREXLEARNINGEDGE.COM

https://0901.nccdn.net/4_2/000/000/038/2d3/forex.png
As an experienced forex trader and educator, I have helped many people learn how to trade forex successfully and earn a lot of money. My comprehensive approach to trading combines fundamental and technical analysis with risk management strategies to identify profitable trading opportunities.

If you're interested in learning forex trading and earning a lot of money, my 90-day season course is the perfect place to start. This course covers everything from the basics of forex trading to advanced strategies for maximizing your profits. Best of all, for a limited time, I'm offering a 50% discount on the course fee.

During the 90-day season course, you'll learn how to read and analyze charts, identify trends and patterns, and use technical indicators to make informed trading decisions. You'll also learn how to manage your risk and minimize losses, so that you can maximize your profits.

One of the most important things you'll learn during the course is the psychology of trading. Trading forex can be stressful and emotional, and it's essential to develop a mindset that allows you to stay calm and focused under pressure. I'll teach you proven techniques for managing your emotions and staying disciplined, so that you can make rational, well-informed trading decisions.
In addition to the 90-day season course, I also offer a range of other educational resources, including webinars, coaching programs, and one-on-one mentoring. Whether you're a beginner or an experienced trader, my goal is to help you achieve success in forex trading and reach your financial goals.

If you're ready to learn forex trading from an experienced professional and start earning a lot of money, sign up for my 90-day season course today. With the 50% discount, you'll get all the knowledge and skills you need to become a successful forex trader at a fraction of the usual cost.

APPLY FOR THE COURSE

Send E Transfer for $125.00 Canadian dollars to [i][u][email protected][/u][/i] {opening special offer}
and join the course.







CONTACTS

Contact us any time - we look forward to meeting you!

WWW.AVIELFOREXLEARNINGEDGE.COM

Each day around 8:30 AM to 9:30 AM Eastern Standard Time, I determine whether we have RISK ON or RISK OFF.

There is no indicator that can do this just as no technical indicator can effectively predict what will happen moment to moment as one MAJOR fundamental fact whether GEOPOLITICAL or FINANCIAL or now SUPPLY CHAIN or some New Covid 19 variant can cause the markets to go down 1000 points as the Dow 30 has been doing recently and will continue to do.

That is why my Unique Method of Forex trading developed during 2003 when I started trading Forex and later on during 2012 when I added to my business model and started teaching my unique 100% proven method of Money Flow trading.

It is no longer possible to trade without a STOP LOSS PERIOD.

Having a STOP LOSS of fewer than 100 PIPS is not a good strategy. That leads me to explain why most of the 95% of all Retail Forex Traders lose. They trade with small amounts of money and SCALP which makes it almost impossible to make profits over a period of one year because of the VIOLENT NATURE of the swings in the Asset Classes caused by world changing events.

Each Forex Trade that you do should not risk more than 2% of your trading Capital and that is based on trading Capital of $50,000 US Dollars INITIALLY learning on a $50,000 US Funds Demo account just as I did for a period of three years before I made my first Real Funds Trade.

PLEASE GO WITH THE MONEY FLOW

Let us review what we teach and why it works if YOU WORK.

Without your WORK then you are just wasting your time and probably your money.

There is no such thing as Political Correctness here because we are here to teach and share our knowledge.


SO.... going back to our winning FORMULA for FOREX SUCCESS.

20% of the SUCCESS is yourself the Forex Trader.

20% of the SUCCESS is your EDGE which we teach you and that is Money Flow Trading.

20% of the SUCCESS is control of your RISK (Your hard earned money) Our UNIQUE RISK MANAGEMENT allows you to trade without worry, fear and greed. Of course we want to make sure that you have the right qualities to be a winning Forex Trader so our course is for a period of three months, so we can teach you the right trading methods and we can see your results and make adjustments without your FEAR OF LOSS of Real Money.


20% of the SUCCESS is using and understanding the USE of Technical Indicators which include not only the common ones. It includes the understanding of Supply and Demand. Support and Resistance and the use of Pivot Points which you can see each day on our daily charts that cover ALL our Trade Plans which we also help you develop and explain WHY. These are our Winning Trade Plans that we review every three months or earlier if circumstances in the markets require that.

20% of the SUCCESS is the FUNDAMENTALS, which are much more than Data Releases each day around the world. It includes reports and articles extremely well researched as you can clearly see from this article that explains why the TREND in the Equity Markets especially in North America is DOWN. By understanding the difference between PERCEPTIONS (MARKETS) and REALITY, you then have a good handle on REALITY before the MASSES do and you are not surprised when events eventually unfold.

When successful traders aren't trading, they are researching, developing, and innovating. When unsuccessful traders aren't trading, they're staring at screens and forcing trades. There is nothing better for trading psychology than being at the cutting edge of a growing business.

What makes a trader successful is discipline: doing the right thing with fidelity. What keeps a trader successful is innovation: doing new things and turning them into disciplines.

Thursday, September 25, 2014
A Preview of Trading Psychology 2.0: From Best Practices to Best Processes
http://2.bp.blogspot.com/-4zHYD5MY44...teenbarger.jpg

One of the great disappointments I encounter when I read writings on the topic of trading psychology is that they invariably touch upon the same themes: discipline, controlling emotions, etc. Having worked with traders and portfolio managers for over a decade now, there is so much more to the psychology of trading than "sticking to your process" that I decided I had to write a book about what I was experiencing but wasn't reading. The title reflects that interest: Trading Psychology 2.0: From Best Practices to Best Processes.

I think Ted Hayes hit on something important in his recent interview. He pointed out that the personality traits relevant to success among early career traders are different from those that generate success for experienced ones. Perhaps so much writing concerns discipline and emotional control, because those are the dominant concerns of the new traders who buy the books, haunt the websites, and seek the help.

At several of the firms where I work, no one even gets an interview unless they have years of experience managing significant capital with a solid track record of profitability and risk management. So by the time those traders join the firm, discipline and emotional control are not screaming priorities. Instead, they deal with other challenges. In Trading Psychology 2.0, I refer to these challenges by A-B-C:


* Adapting to changing markets
* Building on strengths
* Creating creativity

In adapting to different markets by leveraging their strengths and generating new ideas, successful market participants are not so different from successful businesses in fast-changing industries, such as technology or social media. When markets change from year to year, stasis is a formula for failure. The successful trader, like the successful tech firm, must constantly innovate. Moreover, once traders generate those innovations, they must turn best practices--what they do that is successful--and turn them into robust, best processes.

I think this is very, very important: What makes a trader successful is discipline: doing the right thing with fidelity. What keeps a trader successful is innovation: doing new things and turning them into disciplines. Conscientiousness makes for success, but it is openness that makes for adaptation. Trading psychology as a field has done a fine job of articulating the importance of discipline. My hope is that the new book will broaden the discussion to include a research-informed look at mastering change and innovation.

In order to be able to help you better it is VERY IMPORTANT that you share your thoughts and your QUESTIONS.


For further information please send me an email to [email protected]

5 Minute Chart of Dow 30

https://finviz.com/futures_charts.ashx?t=YM&p=m5

Ladies & Gentlemen

Everyday between Monday and Friday we have a horse race in the Forex markets. We at Aviel Forex Learning Edge Corporation have the photo finish of each day's races before the race actually starts so that is our explanation of why my Forex trading account opened on January 12, 2023 has such incredible results.

Please sign up for our 90 day Forex trading course and enjoy 90 days of fun while you learn each day how to become a professional Forex trader.

5 Minute Chart of Dow 30

https://finviz.com/futures_charts.ashx?t=YM&p=m5

Watch the same pattern between 2:00 AM Eastern Standard Time and 6:00 AM Eastern Standard Time.

It is just like knowing the results each day Monday to Friday of a Horse Race before the race is run.

Major Fortunes are made however no need to bet on a horse race or gamble with your hard-earned money. Just sign up for our 90-day Forex trading Course and let our top-notch team assist you to earn profits on a daily basis following our unique Forex teaching methods.

Our corporation website is WWW.AVIELFOREXLEARNINGEDGE.COM

Each day around 8:30 AM to 9:30 AM Eastern Standard Time, I determine whether we have RISK ON or RISK OFF.

There is no indicator that can do this just as no technical indicator can effectively predict what will happen moment to moment as one MAJOR fundamental fact whether GEOPOLITICAL or FINANCIAL or now SUPPLY CHAIN or some New Covid 19 variant can cause the markets to go down 1000 points as the Dow 30 has been doing recently and will continue to do.

That is why my Unique Method of Forex trading developed during 2003 when I started trading Forex and later on during 2012 when I added to my business model and started teaching my unique 100% proven method of Money Flow trading.

It is no longer possible to trade without a STOP LOSS PERIOD.

Having a STOP LOSS of fewer than 100 PIPS is not a good strategy. That leads me to explain why most of the 95% of all Retail Forex Traders lose. They trade with small amounts of money and SCALP which makes it almost impossible to make profits over a period of one year because of the VIOLENT NATURE of the swings in the Asset Classes caused by world changing events.

Each Forex Trade that you do should not risk more than 2% of your trading Capital and that is based on trading Capital of $50,000 US Dollars INITIALLY learning on a $50,000 US Funds Demo account just as I did for a period of three years before I made my first Real Funds Trade.

PLEASE GO WITH THE MONEY FLOW

Let us review what we teach and why it works if YOU WORK.

Without your WORK then you are just wasting your time and probably your money.

There is no such thing as Political Correctness here because we are here to teach and share our knowledge.


SO.... going back to our winning FORMULA for FOREX SUCCESS.

20% of the SUCCESS is yourself the Forex Trader.

20% of the SUCCESS is your EDGE which we teach you and that is Money Flow Trading.

20% of the SUCCESS is control of your RISK (Your hard earned money) Our UNIQUE RISK MANAGEMENT allows you to trade without worry, fear and greed. Of course we want to make sure that you have the right qualities to be a winning Forex Trader so our course is for a period of three months, so we can teach you the right trading methods and we can see your results and make adjustments without your FEAR OF LOSS of Real Money.


20% of the SUCCESS is using and understanding the USE of Technical Indicators which include not only the common ones. It includes the understanding of Supply and Demand. Support and Resistance and the use of Pivot Points which you can see each day on our daily charts that cover ALL our Trade Plans which we also help you develop and explain WHY. These are our Winning Trade Plans that we review every three months or earlier if circumstances in the markets require that.

20% of the SUCCESS is the FUNDAMENTALS, which are much more than Data Releases each day around the world. It includes reports and articles extremely well researched as you can clearly see from this article that explains why the TREND in the Equity Markets especially in North America is DOWN. By understanding the difference between PERCEPTIONS (MARKETS) and REALITY, you then have a good handle on REALITY before the MASSES do and you are not surprised when events eventually unfold.

When successful traders aren't trading, they are researching, developing, and innovating. When unsuccessful traders aren't trading, they're staring at screens and forcing trades. There is nothing better for trading psychology than being at the cutting edge of a growing business.

What makes a trader successful is discipline: doing the right thing with fidelity. What keeps a trader successful is innovation: doing new things and turning them into disciplines.


I think this is very, very important: What makes a trader successful is discipline: doing the right thing with fidelity. What keeps a trader successful is innovation: doing new things and turning them into disciplines. Conscientiousness makes for success, but it is openness that makes for adaptation. Trading psychology as a field has done a fine job of articulating the importance of discipline. My hope is that the new book will broaden the discussion to include a research-informed look at mastering change and innovation.

In order to be able to help you better it is VERY IMPORTANT that you share your thoughts and your QUESTIONS.


For further information please send me an email to [email protected]

http://www.avielforexlearningedge.co...l#testimonials

TESTIMONIALS


"After the first meeting, I turned my financials over to AVIEL FOREX LEARNING EDGE. They go above and beyond."
Daniel Gates


https://0901.nccdn.net/4_2/000/000/038/2d3/forex.png

As an experienced forex trader and educator, I have helped many people learn how to trade forex successfully and earn a lot of money. My comprehensive approach to trading combines fundamental and technical analysis with risk management strategies to identify profitable trading opportunities.

If you're interested in learning forex trading and earning a lot of money, my 90-day season course is the perfect place to start. This course covers everything from the basics of forex trading to advanced strategies for maximizing your profits. Best of all, for a limited time, I'm offering a 50% discount on the course fee.

During the 90-day course, you'll learn how to read and analyze charts, identify trends and patterns, and use technical indicators to make informed trading decisions. You'll also learn how to manage your risk and minimize losses, so that you can maximize your profits.

One of the most important things you'll learn during the course is the psychology of trading. Trading forex can be stressful and emotional, and it's essential to develop a mindset that allows you to stay calm and focused under pressure. I'll teach you proven techniques for managing your emotions and staying disciplined, so that you can make rational, well-informed trading decisions.

In addition to the 90-day course, I also offer a range of other educational resources, including webinars, coaching programs, and one-on-one mentoring. Whether you're a beginner or an experienced trader, my goal is to help you achieve success in forex trading and reach your financial goals.

If you're ready to learn forex trading from an experienced professional and start earning a lot of money, sign up for my 90-day season course today. With the 50% discount, you'll get all the knowledge and skills you need to become a successful forex trader at a fraction of the usual cost.

APPLY FOR THE COURSE

Send E Transfer for $125.00 Canadian dollars to [i][u][email protected][/u][/i] {opening special offer}
and join the course.


CONTACTS

Contact us any time - we look forward to meeting you!

[email protected]

https://mishtalk.com/economics/debt-...deal-by-june-1

Debt Ceiling Talks Stall, Little Chance of Congressional Deal by June 1
Debt ceiling talks between House republican and democrats stalled on Friday and may not resume this weekend. But when is the real X-date?

https://mishtalk.com/.image/c_limit%...the-x-date.png

Republican Walk Out of Talks
Because of the time it takes a bill to get through the House and Senate, prospects of meeting a hoped for agreement by June 1 date are dwindling.
On Thursday, House speaker Kevin McCarthy said “I see the path that we can come to an agreement.”
Sentiment changed overnight.
Today, CNBC reports Republicans walk out of debt ceiling talks, say White House isn’t being ‘reasonable’.
“Until people are willing to have reasonable conversations about how you can actually move forward and do the right thing, then we’re not gonna sit here and talk to ourselves,” Rep. Garret Graves, R-La., told reporters.
“We decided to press pause because it’s just not productive,” he added. Graves said he did not know if talks would resume this weekend.


‘We’re Not There’: Negotiators Pause Debt-Ceiling Talks
The Wall Street Journal reports ‘We’re Not There’: Negotiators Pause Debt-Ceiling Talks
The top negotiator to House Speaker Kevin McCarthy (R., Calif.) said that the latest conversations had yielded no progress.
“We’re not there,” said Rep. Garret Graves (R., La.) as he left a meeting with White House officials. “We’ve decided to press pause because it’s just not productive.” Asked if he would be meeting again over the weekend in person, Graves said “I’m not sure right now.”
“The House passed a strong bill. It has great savings in it. And it’s responsible and it puts us on a path to bend the curve,” Graves said. “Until people are willing to have reasonable conversations about how you can actually move forward and do the right thing, then we’re not going to sit here and talk to ourselves,” said Graves, who was flanked by Rep. Patrick McHenry (R., N.C.).
Minutes earlier, White House adviser Steve Ricchetti and Office of Management and Budget Director Shalanda Young had left the meeting without saying when they planned to restart conversations. “Playing by ear,” Ricchetti said in response to a question about whether there would be more meetings Friday.

https://www.hussmanfunds.com/comment/mc230519/

Money, Banking, and Markets – Connecting the Dots

https://www.hussmanfunds.com/wp-cont...utton60x60.jpg

https://www.hussmanfunds.com/wp-cont..._thumbnail.jpg

John P. Hussman, Ph.D.
President, Hussman Investment Trust

May 2023

The basic thesis of gestalt theory might be formulated thus: there are contexts in which what is happening in the whole cannot be deduced from the characteristics of the separate pieces.
– Max Wertheimer

Most of us spent moments of our childhood, crayon in hand, connecting numbered dots that gradually revealed a picture that we couldn’t deduce simply by looking at the separate dots. With experience, we got better at looking at those isolated dots and mentally connecting them into a coherent “gestalt.”

The problem is that when we were kids looking at dots, we knew they were supposed to be connected, so we understood that there was a complete picture behind them. As investors, unfortunately, we forget. We see the Federal Reserve pursuing a deranged monetary policy to one side, an emerging banking crisis to the other, a potential recession on the horizon, massive Federal debt over yonder mountain, market valuations still piercing the clouds, an ocean of market cap that we count as a pool of “wealth,” record corporate profits paving the street of gold behind us, and rising labor costs underfoot, yet we may look at each of these as separate pieces, not realizing that they’re all connected parts of a single, coherent picture.

Worse, without an understanding of how each dot is connected, we may fall prey to tortured theories and verbal arguments that transform the actual picture into a distorted and incoherent mess, where fuzzy logic and superstition connects the dots, rather than clear lines of thought and evidence.

For example, investors are often told that the trillions of dollars of quantitative easing “supported” the economy by encouraging bank lending. They might be surprised to learn that despite the most aggressive monetary policy in U.S. history, commercial bank lending since 2008 has grown at just 3.4% annually, easily the slowest rate in data since 1947.

Investors are often told that there is an enormous amount of “money on the sidelines” just waiting to go “into” the stock market. Yet they don’t seem to recognize that all that money is there because the Fed put it there (by buying government debt securities and paying for them by creating dollars). Nor do they seem to recognize that the instant a buyer puts a dollar “into” the stock market, a seller takes that dollar right back “out”; that every dollar, once created by the Federal Reserve, must be held by someone, as a dollar, and as nothing other than a dollar, until the Federal Reserve retires it.

Even members of the Federal Reserve itself don’t seem to understand that the reason the banking system is bloated with $8 trillion in uninsured deposits is because the Federal Reserve put those deposits there. They don’t seem to connect the dots between a decade of zero interest rate policy and the yield-seeking speculation that encouraged banks to reach for Treasury securities to get a “pickup” in yield, just as investors did with mortgage securities prior to the global financial crisis. They don’t seem to realize that we’ve got an emerging banking crisis coupled with preposterous stock market valuations and downside risk – not because there is too little Fed liquidity, but because there is too much.

The objective of this month’s comment is to connect the dots. We’re going to stare at some charts, together, examining the dots underneath, and the connections between them. By the end of this comment, if I’ve done my job, you’ll have a much deeper appreciation for the big picture.

Building a bank
The primary assets of a bank are loans, securities, and cash reserves.
The primary liabilities of a bank are deposits and borrowings (debt).

If you take the assets and subtract the liabilities, what’s left is “equity capital,” which belongs to the shareholders.

Let’s build a bank from the ground up. First, we’ll get some startup capital from investors. In return, we’ll issue some stock shares. Next, we’ll borrow some money by issuing bonds (debt). Finally, we’ll open our doors and take deposits from customers. The cash we’ve received from investors, bondholders, and depositors goes on the asset side of our balance sheet. On the other side, we have “deposit liabilities” because we owe our depositors money, we have “debt liabilities” because we owe our bondholders money, and what’s left is “equity,” which is owned by our stockholders.

Now we’ve got to figure out how to use our assets. If we lend some of our cash to Charlie, a borrower who wants to build a house, our bank now owns an IOU from Charlie (in this case a mortgage), and the cash goes to Charlie’s bank. While bank lending is sometimes described as “creating money,” our bank has actually only intermediated money. There’s no more cash than there was before. It’s just that some of our customer deposits are now backed by a new mortgage security rather than cash, and the cash has gone to Charlie’s bank. Charlie’s bank now holds that cash as an “asset,” and owes a new “deposit liability” to Charlie. In the banking system as a whole, loans have increased (Charlie’s mortgage), and deposits have increased by the same amount (Charlie’s deposit). Across history, deposits and loans in the banking system grew hand-in-hand, until the Fed launched quantitative easing in 2008.

Our bank could also use the money on the asset side of our balance sheet to buy some securities, like Treasury bonds. These will fluctuate in value, of course, so we’d better be sure that we’ve got enough capital to absorb losses, while still honoring our liabilities to depositors and bondholders. Banks are subject to capital requirements for exactly that reason.

How does Federal Reserve’s policy of quantitative easing affect the banking system? The mechanics are very straightforward. The Federal Reserve buys interest-bearing government securities – mainly Treasury and mortgage bonds – that were previously held by the public, and it pays for those bonds by creating its own liabilities called “reserves.” Those reserves are credited to the bank account of the seller. So, every time the Fed “expands its balance sheet” by purchasing a bond, someone ends up with a fresh bank deposit, backed by newly created reserves.

Taken together, what we’ve just described for one bank is also true for the banking system as a whole. The chart below contains an enormous amount of information, but it’s really just what’s described above. My hope is that the chart helps to understand how various parts of the banking system are related. The assets are mainly loans, securities, and cash reserves. The liabilities are mainly deposits (owed to depositors), borrowings (owed to the Fed), and debt (owed to bondholders).
https://www.hussmanfunds.com/wp-cont.../mc230519a.png

Notice what’s happened to the U.S. banking system since 2008. The total size of the banking system has more than doubled. But look at the composition. Deposit liabilities of banks have exploded, not because of new lending, but instead because of an explosion of cash, mainly reserves created by the Fed.

Before 2008, the amount of deposits in the banking system grew hand-in-hand with the amount of loans made by the banking system. Not anymore. The primary achievement of quantitative easing has been to force trillions of deposits into the banking system, backed not by loans, but by Fed-created cash reserves.

For most of the period since 2008, those reserves earned zero interest. As investors attempted to get rid of their zero-interest deposits, they chased every kind of speculative asset in a frantic attempt to earn something more than zero. But the iron law of equilibrium is that every security, including Fed-created liquidity, must be held by someone at every moment in time, from the moment it is issued until the moment it is retired. With very speculative transaction, each dollar of Fed liquidity would feel its heart skip a beat, imagining that this time, it might finally be transformed into a more desirable asset. Yet every night, it would look in the mirror, and realize that it was still itself, only in some strange new investor’s home.

How the Fed balance sheet works
Now let’s look at the picture from the Federal Reserve’s point of view. The asset side of the Fed’s balance sheet consists mainly of Treasury securities and U.S. agency debt, such as government-backed mortgage bonds. Prior to 2008, the liabilities of the Federal Reserve were almost entirely comprised of currency in circulation (see the top line of any dollar bill in your wallet), plus a relatively small quantity of reserves that were created by the Fed and held by banks. In 2008, total bank reserves amounted to a modest $8 billion. In 2021, thanks to QE, total bank reserves peaked at over $4 trillion. Meanwhile, the amount of currency in circulation has more than doubled.

The Fed is also the “bank” of the U.S. Treasury, so when people pay taxes and buy newly issued government bonds, the proceeds are held in the “Treasury General Account” (an asset of the Treasury, and a deposit liability of the Fed). When you pay your taxes, your bank transfers reserves to the Treasury General Account. Bank reserves go down, and the TGA goes up.

Since 2008, quantitative easing has turned this rather simple balance sheet into a deranged spectacle, requiring more and more special “facilities” to hold it together. For example, because reserves are cash (technically, they’re mainly electronic cash, passing from bank to bank without any movement of physical currency), they historically have not earned any interest. As I detailed in last month’s comment, Fabricated Fairy Tales and Section 2A, there is a well-defined relationship between Fed liabilities (as a share of GDP) and the level of short-term interest rates. Once the amount of Fed-created reserves reaches about 16% of GDP, it’s simply more cash than the economy needs. People frantically try to get rid of it, which reliably drives interest rates to zero. As a result, the only way the Fed has been able to set an interest rate target above zero in the past two years has been to explicitly pay interest to banks, currently 5.1% annually, on those reserves.

That, in turn, requires another special “facility.” See, if banks are being paid interest on their cash without passing it on to their depositors, people tend to move the deposits to money market funds. The money market funds aren’t banks, so unless they hold the funds as bank deposits, they’ll chase yield in short-term securities like Treasury bills, driving market interest rates below the Federal Reserve’s target. As a result, the can’t maintain its interest rate target without somehow stopping that yield-seeking behavior. Since the Fed can’t legally pay interest to money market funds, and refuses to manage interest rates by changing the size of its balance sheet (as it did for all of history prior to 2008), it has created a new “overnight reverse repurchase facility,” where the Fed sells one of its own securities overnight to the money market fund, and takes the cash overnight from the money market fund, and then buys the security back the next morning at a slightly higher price, resulting in a little gain to the money market fund. It’s as ridiculous and contorted as it sounds.

The chart below puts all of this together. On the asset side, the Fed holds mainly Treasury and U.S. government agency debt. On the liability side, the Fed’s primary obligations are: a) reserves created by the Fed and held by banks as cash; b) liquidity created by the Fed and held in money market funds, on which the Fed pays interest using overnight “reverse repurchase” transactions; c) currency in circulation created by the Fed; and d) the Treasury general account, comprising bank deposits transferred to the Treasury by taxpayers and bond buyers, and held on account with the Fed.
https://www.hussmanfunds.com/wp-cont.../mc230519b.png

You’ll notice that there’s a slight difference between the assets of the Fed and the primary liabilities I’ve described above. That difference, as I simultaneously hold back laughter and tears, is what the Fed reports as “capital.” But see, the Fed books the securities it holds at “amortized cost” – which gradually moves their prices toward face value as the securities mature, regardless of the actual market value of those securities. If the Fed was to value its assets at actual market value, its balance sheet would be deeply insolvent.

The chart below presents what we estimate the Federal Reserve’s cumulative position would look like if the securities held by the Fed were booked at market value – even giving the Fed the benefit of every dollar of interest that it has returned to the Treasury since QE began in 2008. In practice, since that interest has already been paid over to the Treasury, the Fed’s actual balance sheet is roughly $1.5 trillion in the hole. All the Federal Reserve’s short-lived capital gains have been wiped out, along with all of the interest income since 2008. The overall position is slightly better than a few months ago, thanks to a modest retreat in long-term interest rates.

When you consider the exploding amount of securities held on bank balance sheets as “held to maturity” (which basically stands for “marked-to-model” or “valued at amortized cost”), you get a sense of what the Fed has quietly done to the financial system through a decade of Fed-induced yield-seeking speculation, followed by rate hikes in response to inflationary pressures.
https://www.hussmanfunds.com/wp-cont.../mc230519c.png

Notice the slight stabilization in recent months, as Treasury bond yields have retreated from their highs. My impression is that the recent stabilization of banking strains reflects, and is dependent on, the same retreat in long-term yields.

The risk, of course, is that long-term interest rates turn higher again. On that note, it’s worth observing that the yield curve is steeply inverted here, with long-term yields well below short-term yields. Historically, the weighted average of core inflation, nominal GDP growth, and T-bill yields has acted as something of a lower bound for long-term bond yields. Indeed, in market cycles across history, the entire total return of Treasury bonds – over-and-above T-bill returns – has accrued when bond yields were above the red benchmark in the chart below. The takeaway here is that depressed long-term bond yields already assume and rely on the expectation that inflation and nominal GDP growth will quickly subside, and that the Fed will be cutting rates in no time. Any surprise in this trajectory could be troublesome.
https://www.hussmanfunds.com/wp-cont.../mc230519d.png

While the Fed is able to obscure its capital losses by valuing its assets at cost, there’s one item the Fed isn’t able to completely bury in its balance sheet accounting. That’s the deficit that it has been running by paying interest of 5.1% to banks and money market funds on liquidity it created when it bought bonds yielding an average of only 2.5%. Normally, when the Fed receives interest on the bonds it holds, it transfers that interest back to the Treasury for public benefit (though with the arrogance to call them “profits”). Now that the Fed is paying banks more interest than it receives – another cost the public bears for the Fed’s luxuriously deranged balance sheet – the Fed is essentially creating money (a liability to the Fed) without any backing by a corresponding asset.

The resulting deficit will be recovered by the Fed over time, by retaining interest that it receives on its government bond holdings, rather than transferring it to the Treasury for public benefit. In the meantime, having created government liabilities with no corresponding asset in hand, the Fed has invented a phantom accounting entry on its balance sheet called a “deferred asset.” As Ben Bernanke cryptically explained to Congress years ago [brackets mine]: “It is an asset in the sense that it embodies a future benefit [to the Fed] that will be realized as a reduction of future cash outflows [to the public]”
https://www.hussmanfunds.com/wp-cont.../mc230519e.png

Create it here, it shows up there
Now let’s examine how the Federal Reserve’s balance sheet interacts with commercial bank balance sheets. This part may look a bit like magic, but it’s the consequence of equilibrium – the fact that every security that is created also must be held by someone at every point in time.

As we’ve seen, most of the explosion in U.S. commercial bank deposits since 2008 is not the result of loan growth, but instead the result of cash reserves forced into the banking system by the Federal Reserve. The chart below illustrates what’s going on. The green line shows the Fed balance sheet (total assets). The blue line shows total deposits in U.S. commercial banks over-and-above the amount of loans made by those banks – what I call “excess” deposits. In what form do banks hold those excess deposits? Look at the red line. Those deposits are primarily held as cash (reserves created by the Fed), and a smaller amount as securities (mainly Treasury debt). Look at those lines prior to 2008, and the reckless explosion of excess deposits forced into the banking system by the Fed – backed not by new bank loans, but instead by unnecessary cash reserves and security holdings. If this policy doesn’t deserve to be characterized as “deranged,” I don’t know what does.

https://www.hussmanfunds.com/wp-cont.../mc230519f.png

One might imagine that even though bank lending since 2008 has grown at the slowest rate in history, at least the unprecedented policy of zero interest rates engineered by the Fed must have “stimulated” unusually strong investment in factories, equipment, housing, and other productive economic activities; that it must have done something other than to fuel yield-seeking financial speculation.

One would be wrong. Even at the peak of the recent cycle, net domestic investment as a share of GDP stood at levels that marked the lows of previous economic cycles.
https://www.hussmanfunds.com/wp-cont.../mc230519g.png

One might imagine that at least these excess deposits must be insured by the FDIC, which would reduce the risk of bank runs. Again, one would be wrong. The table below is from the Quarterly Banking Profile of the FDIC. Notice that in the fourth quarter of 2022, the U.S. banking system had domestic deposits of nearly $18 trillion. Yet only about $10 trillion of those deposits were insured. The excess deposits are there because the Fed put trillions of dollars of needless reserves there. Those excess deposits are so far beyond the amount needed for bank lending, and so far beyond normal cash holdings of the public, that they wildly exceed FDIC insurance limits.

They’re also captive in the banking system unless they are withdrawn as currency or transferred to money market funds on reverse-repo with the Fed.
https://www.hussmanfunds.com/wp-cont.../mc230519h.png

When all those reserves were earning zero, banks were encouraged to reach for yield by extending their maturities in hope of getting some amount of return in presumably “safe” Treasury securities, with the extra benefit that Treasuries are assigned zero weight when computing risk-based capital requirements. Quantitative easing didn’t encourage greater bank lending. It encouraged greater bank speculation in securities.
https://www.hussmanfunds.com/wp-cont.../mc230519j.png

If anyone is surprised that uninsured bank depositors are now making runs on banks that have significant amounts of exposure to Treasury securities, they’re not connecting the dots.

Before the bubble bursts
The information contained in earnings, balance sheets, and economic releases is only a fraction of what is known by others. The action of prices and trading volume reveals other important information that traders are willing to back with real money. This is why trend uniformity is so crucial to our Market Climate approach. Historically, when trend uniformity has been positive, stocks have generally ignored overvaluation, no matter how extreme. When the market loses that uniformity, valuations often matter suddenly and with a vengeance. This is a lesson best learned before a crash rather than after one.
– John P. Hussman, Ph.D., October 3, 2000

One of the best indications of the speculative willingness of investors is the ‘uniformity’ of positive market action across a broad range of internals. Probably the most important aspect of last week’s decline was the decisive negative shift in these measures. Since early October of last year, I have at least generally been able to say in these weekly comments that “market action is favorable on the basis of price trends and other market internals.” Now, it also happens that once the market reaches overvalued, overbought and overbullish conditions, stocks have historically lagged Treasury bills, on average, even when those internals have been positive (a fact which kept us hedged). Still, the favorable market internals did tell us that investors were still willing to speculate, however abruptly that willingness might end. Evidently, it just ended, and the reversal is broad-based.
– John P. Hussman, Ph.D., July 30, 2007

I’ve opened this section with quotes from the 2000 and 2007 market peaks to emphasize three essential points.

First, it’s critical for investors to distinguish between extreme valuations and immediate consequences. If rich valuations alone were sufficient to drive the equity market lower, it would have been impossible for valuations to reach speculative extremes like 1929, 2000, 2007, and 2022, because prices would have collapsed from much lesser valuations. While valuations hold enormous sway over long-term returns and the extent of market losses over the complete market cycle, investor psychology – speculation versus risk-aversion – holds enormous sway over outcomes during shorter segments of the market cycle.

Second, our most reliable gauge of speculation versus risk-aversion is the uniformity of market internals across thousands of individual stocks, industries, sectors, and security-types, including debt securities of varying creditworthiness. The chart below presents the cumulative total return of the S&P 500 in periods where our measures of market internals have been favorable, accruing Treasury bill interest otherwise. The chart is historical, does not represent any investment portfolio, does not reflect valuations or other features of our investment approach, and is not an assurance of future outcomes.

https://www.hussmanfunds.com/wp-cont.../mc230519k.png

Third, it’s important to recall that the Federal Reserve eased interest rates persistently and aggressively the whole way through the 2000-2002 and 2007-2009 collapses. It is constantly repeated on CNBC and elsewhere that investors should be aggressively positioned in stocks, in advance of a “pivot” by the Fed to lower interest rates. It seems to escape investors that while the Fed “pivot” on January 3, 2001 was greeted by investors with a 5% advance in the S&P 500, the market would extend that advance by less than 2% over the next few weeks, followed by a 43% plunge. Likewise, the “pivot” on September 18, 2007 was greeted with an advance of nearly 3% in the S&P 500, but again, after extending that advance by less than 3% over the next few weeks, the S&P 500 plunged by 55%, with the Fed easing the whole time. See, when investors are risk-averse, they treat safe liquidity as a desirable asset rather than an inferior one, so creating more of the stuff doesn’t support speculation or stock prices. Easy money only reliably supports stocks when Fed easing is joined by favorable internals.

At the 2007 peak, I noted the presence of “overvalued, overbought, overbullish” conditions. Historically, these syndromes acted as a reliable signal that speculation had reached its limits. In my view, the most dramatic way that quantitative easing changed market behavior was to destroy those “limits.” In the face of the relentless monetary activism and zero-interest rate policies of the Federal Reserve, investors were bombarded by one message: “There is no alternative” (TINA) but to speculate, regardless of extreme valuations. As a result, our bearish response to historically reliable “limits” became useless and even detrimental. In 2017, we abandoned our bearish response to those limits in periods when our measures of market internals remain favorable. As I’ve noted previously, we’ve made additional adaptations, particularly in late 2021, that restore the strategic flexibility that we enjoyed in decades of market cycles prior to the Fed’s deranged experiment since 2008.

Regardless of the level of valuations, an improvement in the uniformity of market internals would defer our presently bearish outlook.

For now, without that sort of improvement, I continue to view stock market conditions as a “trap door” situation. The increasingly ragged behavior of market internals is most clearly evident in the recent performance gap between the broad market and very large capitalization glamour stocks. For example, the Russell 2000 Index is nearly unchanged year-to-date, as is the index of equal-weighted S&P 500 components. While the capitalization-weighted S&P 500 has advanced, the year-to-date gain is attributable to the very largest components.

It’s tempting to observe the market advance since October and imagine that neither valuations nor internals matter. But look carefully at the 2000-2002 and 2007-2009 collapses. Both included several extended bear market rallies (which is how I would characterize the advance since October) with no sustained improvement in our gauge of internals. When extreme valuations are joined by ragged internals, the collapses come seemingly out of nowhere – the phrase “trap door” is intentional.

The upshot here is that valuations have enormous impact over long-term and full cycle outcomes, while internals matter over shorter segments of the market cycle. When unfavorable valuations are joined by unfavorable internals, Fed easing doesn’t reliably support the market. Conversely, the strongest return/risk profiles for the market typically emerge when reasonable valuations are joined by favorable market internals, particularly amid Fed easing. We’re nowhere close to that point, but I expect we will be over the completion of this cycle.

Valuations, representative fundamentals, and profit margins
The chart below updates the valuation measure that we find best correlated with actual subsequent market returns in complete cycles across history. It shows the market capitalization of nonfinancial companies divided by their gross value-added, including our estimate of foreign revenues. In effect, MarketCap/GVA acts as a broad, apples-to-apples price/revenue ratio for nonfinancial corporations. At present, this measure is higher than at any point in history prior to October 2020, except for a few months surrounding the 1929 market peak, and two weeks in April 1930 that marked the peak of the post-crash rebound.
https://www.hussmanfunds.com/wp-cont.../mc230519m.png

The scatter below shows MarketCap/GVA versus actual subsequent 12-year S&P 500 average annual nominal total returns, in data since 1928. We associate the current level of valuations with likely S&P 500 total returns averaging about -2% annually over the coming 12 years. As I showed last month, we also associate current valuations with a potential market loss on the order of -60% over the completion of this cycle. I know that seems preposterous, but that’s a reflection of preposterous speculation generated by more than a decade of preposterous monetary policy.
https://www.hussmanfunds.com/wp-cont.../mc230519n.png

Keep in mind that a valuation ratio is nothing more than shorthand for a proper discounted cash flow analysis. If investors want anything from the denominator, it is for that denominator to be representative and proportional to decades and decades of future cash flows that can be expected from stocks over time. It is a very bad habit of Wall Street to value stocks on the basis of a single year of earnings, without considering how variable corporate profit margins are over time. The main drivers of corporate profit margins, even in recent years, are not mysterious. As I detailed in Headed for the Tail, two of the factors best correlated with profit margins are unit labor costs as a share of output prices, and Baa corporate bond yields. Neither of these are permanent, and both have become increasingly hostile to earnings in recent quarters.

The chart below shows unit labor costs as a share of output prices (ULC/GDP deflator) on an inverted scale, along with nonfinancial corporate profit margins. Notice that there are two enormous outliers in the data. One preceded the global financial crisis, and was driven by spending by consumers – not out of labor income, but out of equity cashed out of their mortgages amid a Fed-induced housing bubble. The recent outlier was driven by trillions of dollars in pandemic deficits, which boosted corporate profits first directly through PPP subsidies, and later indirectly as households spent down their own surpluses.
https://www.hussmanfunds.com/wp-cont.../mc230519p.png

A quick note on how government deficits are related to corporate profits (more dots connecting). Every deficit of government results in a mirror image surplus in other sectors – households, businesses, and foreign trading partners – where their income exceeds their consumption and net investment in U.S. goods and services. Moreover, the savings that result from those surpluses must, in equilibrium, be held in precisely the same liabilities that the government issued in order to finance the deficit. This isn’t a theory – it’s an accounting identity. Saying that the government ran massive pandemic deficits is identical to saying that the private sector accumulated massive surpluses, and now holds those surpluses in the form of government liabilities: Treasury securities, and bank deposits backed by Fed-created reserves.
https://www.hussmanfunds.com/wp-cont.../mc230519q.png

The chart below shows the combined impact of real unit labor costs and Baa bond yields on S&P 500 operating profit margins. Given that pandemic deficits are behind us, there is a strong likelihood that profit margins will gradually (or perhaps suddenly) align with the much more normal levels now suggested by these factors. In the chart below, current data correspond to an S&P 500 operating profit margin of about 8.7% in the coming year (though margins often fall well below the red fitted line during recessions). Instead, investors are currently pricing stocks based on the expectation that today’s operating margin of 11.3% will increase to about 12.5% a year from now. That would push the S&P 500 operating margin just shy of the highest extreme in history, exceeded only by the margins observed at the early-2022 market peak. We’ll take the under.
https://www.hussmanfunds.com/wp-cont.../mc230519r.png

Take those conventional beliefs with a side of data

It ain’t what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so.
– Josh Billings (with variants attributed to Artemus Ward, Mark Twain, and Will Rogers)

As a follow-up to last month’s market comment, Fabricated Fairy Tales and Section 2A, the charts below come from the category “Things the Fed and Wall Street believe that aren’t true” – joining other topics discussed in that comment, such as the misconstrued “Phillips Curve” and the questionable “stimulative” impact of quantitative easing.

While it seems to be “common knowledge” that rate hikes cause recessions, and recessions cause inflation to collapse, the relationships between interest rates hikes, unemployment, and general price inflation are remarkably weak and unreliable – certainly not enough to form an operational toolkit.

A few charts may encourage you to request an extra side of data before you swallow conventional beliefs whole. The chart below shows inflation in the Federal Reserve’s preferred inflation measure, reflecting the core personal consumption expenditure (PCE) price index, excluding inflation in food and energy prices. The horizontal axis is the number of months from the beginning of each recession since 1957. The bright red line shows the median trajectory of core inflation, and the bright blue line shows the average trajectory. Notice how flat these lines are during the two years following the start of a recession. It’s simply not true that recessions, on average, bring about a collapse in the rate of core inflation.

Given that the current year-over-year rate of core PCE inflation is 5.5%, it’s notable that the only recessions that brought core PCE inflation below 5% within 24 months were also recessions that started with core PCE inflation below 5%. Of course, this instance may be different, particularly given that the Fed has done a great deal to contribute to a likely banking and financial crisis (and those do tend to reduce inflation by increasing the demand for safe liquidity). Still, the relationship between recessions and declining core inflation is surprisingly weak.
https://www.hussmanfunds.com/wp-cont.../mc230519s.png

The chart below shows a similar profile for the core consumer price index (CPI).
https://www.hussmanfunds.com/wp-cont.../mc230519t.png

My impression is that much of the belief regarding recessions and inflation is driven by the behavior of headline inflation, including food and energy. It’s true that recessions tend to hold down increases in food and energy prices (though even that wasn’t true in the 1973-74 recession). But it should be clear that a handful of instances are responsible for the common belief that recessions crush inflation: specifically, the global financial crisis, and the twin recessions in 1979 and 1981 that emerged after Paul Volcker reduced the Fed’s balance sheet to the lowest share of GDP in U.S. history.
https://www.hussmanfunds.com/wp-cont.../mc230519u.png

In my view, inflation isn’t brought under control by throwing the economy into recession, but by restoring monetary credibility. Credibility, in turn, is created by following systematic policy, and most importantly, by ensuring that financial quantities are kept in line with real economic quantities.

Think about it. When the Federal Reserve follows deranged and unsystematic policies, what happens? The quantity of monetary liabilities becomes misaligned with the quantity of real output. The quantity of deposits in the banking system becomes misaligned with the quantity of bank lending, as we saw earlier. Speculation causes the quantity of market capitalization – the blotches of ink and pixels on computer screens that people count as “wealth” – to become misaligned with the cash flows available to service that market capitalization.

Once unsystematic policy causes a misalignment of financial quantities and real economic quantities, how are they realigned? It’s not a surprise: inflation, bond losses, bank failures, pension crises, stock market collapse, debt default, dismal long-term returns. Too much money chasing too few goods. Too much market capitalization with too few cash flows to service it. One way or another, the two are brought back into alignment. Why? Because the economic quantities can’t properly service the bloated and misaligned financial quantities. It happens every time.

It’s happened throughout financial history. This shouldn’t be so hard to understand. After more than a decade of deranged policy, the idea that more of these outcomes lie ahead shouldn’t be surprising.

Systematic monetary policy means a framework where tools such as the level of the Fed funds rate and the size of the Federal Reserve’s balance sheet maintain a reasonably stable and predictable relationship with observable economic data such as output, inflation, employment, and the ‘gap’ between real gross domestic product and its estimated full-employment potential. Departures from systematic monetary policy distort behavior in ways that cause misalignments between financial quantities and real economic quantities, and as a result, they invariably produce damage as the two are ultimately realigned.

Systematic policy recognizes that the ‘Phillips Curve’ is an observation about the relationship between unemployment and real wages, not a ‘tradeoff’ that can be manipulated. It recognizes that suppressing interest rates and drowning banks in liquidity has weak and unreliable effects on real economic activity and employment, but massive effects on financial speculation and resulting instability.

Systematic policy is content to align monetary aggregates with output aggregates. Systematic policy is content to set interest rate targets based on reasonable policy benchmarks informed by observable economic variables. Systematic policy is content to achieve those targets by modestly changing the ratio of base money to GDP.
– John P. Hussman, Ph.D., April 2023, Fabricated Fairy Tales and Section 2A

The only way to obtain a clear picture of the economy and the financial markets is to connect the dots that link them together – to understand that if you create it here, it shows up there. Every financial security that is issued has to be held by someone until it is retired, and the returns on that asset will ultimately be determined by the cash flows available to service that security. Every dollar of Fed liquidity that is created has to be held by someone, in that form, until it is retired. The deficits of government show up in the portfolios of investors, either as Treasury securities or (if the Fed purchases those securities and creates reserves) bank deposits and money market balances. The “cash on the sidelines” that analysts constantly gurgle about is there because the Fed put it there, and it will stay there, in that form, until the Fed shrinks its balance sheet. At least the Fed is paying 5.1% interest on it, at public expense. Whether your bank passes that on to you is another story.

The greater the misalignment between financial quantities and economic quantities, the more distorted and grotesque the whole picture becomes, particularly if nobody carefully connects the dots. Unfortunately, investors and policy makers repeatedly insist on learning that the hard way.

Once unsystematic policy causes a misalignment of financial quantities and real economic quantities, how are they realigned? It’s not a surprise: inflation, bond losses, bank failures, pension crises, stock market collapse, debt default, dismal long-term returns. Too much money chasing too few goods. Too much market capitalization with too few cash flows to service it. One way or another, the two are brought back into alignment. Why? Because the real economic quantities can’t properly service the bloated and misaligned financial quantities. It happens every time. It’s happened throughout financial history. This shouldn’t be so hard to understand. After more than a decade of deranged policy, the idea that more of these outcomes lie ahead shouldn’t be surprising.

Finally, a quick plug for our free, spam-free mailing list (you can subscribe at the bottom of this comment). Particularly in “compressed” market conditions where prospective return or risk have changed significantly, I sometimes issue interim comments. We use our mailing list to quickly share information, like this comment, white papers, and special updates. Given the value that I place on keeping our loyal followers informed, I’d prefer you didn’t miss those.

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Interview: Martin Armstrong on Why the CBDC Will Fail and a Great Depression is About to Begin

Blog/Armstrong in the Media

Posted May 20, 2023 by Martin Armstrong

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1. Dec 26, 2016 12:31pm

1. https://assets.faireconomy.media/nfs...ar392875_2.gif BenjaminIs
2. | Commercial Member | Joined Dec 2014 | 10,245 Posts | Online Now

Quoting KeepCalmfx
Hi Benjamin Not sure if you received my emails? On post 37 there is a different email address to post nr. 416. I opened my demo account through www.fxcm.com, not sure if it is FXCM "UK" demo account? Username: D102740704001 I have sent my password to you. I am very familiar with MT4's platform to trade, FXCM, don't make use of MT4?
Dear KeepCalmfx

Thank you for your reply and from the Username D102740704001 it appears that your $50,000 US funds demo account was opened with FXCM UK.

FXCM UK and all other FXCM platforms are different from MT4 which I cannot use with my method. Also the main reason that I teach using a $50,000 US Funds demo account is because this way I REMOVE the FEAR since it is a demo account and I can teach you good habits. Then because of the Nature of my Risk Management Method you CANNOT trade or put anymore CAPITAL in other than the MAXIMUM of $10,000 US dollars of $50,000 US or 20% of the total funds.

I am not managing $5,000,000 US Dollars as yet however when I practised for exactly 56 days , I never used more than $1,000,000 US of the total funds. I did 1804 Forex trades in the 56 days and I got my demo account to over $7,500,000 US Dollars.

I will check my messages now and log onto your FXCM UK account. You have made a good start. Thank you. Please do not be shy in posting more questions as that is the only way to learn.


Benjaminis

https://mises.org/wire/bank-england-...-theyre-poorer

Bank of England Economist: Britons Need to Accept That They’re Poorer

1. https://cdn.mises.org/styles/slidesh...?itok=aFGx2Q-W

TAGS Central BanksInflationMonetary Policy

05/19/2023J.R. MacLeod

Speaking on a Columbia University Law School podcast, the chief economist of the Bank of England, Huw Pill, said Britons “need to accept” that they have been made poorer by the inflation perpetrated by the central bank. Price inflation today is a result of the record money creation by central banks, especially in the West, from 2020 onward. This was rationalized and justified by the mainstream narrative on covid.

The following are choice comments from the podcast.

If the cost of what you’re buying has gone up compared to what you’re selling, you’re going to be worse off.
So somehow in the UK, someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether higher wages or passing the energy costs through on to customers.

And what we’re facing now is that reluctance to accept that, yes, we’re all worse off, and we all have to take our share.
Instead, [people] try and pass that cost on to one of our compatriots, saying “we’ll be all right, but they will have to take our share too.”

That pass the parcel game that’s going on here . . . that game is generating inflation, and that part of inflation can persist.
These are similar to comments made last year by Bank of England governor Andrew Bailey, who said that workers should not request significant pay rises, as he believes that these requests are the main cause of rising prices.

Speaking on the podcast, Pill repeatedly castigated Russia, saying that a large amount of recent price inflation was caused by Russia cutting off natural gas supplies for enemy states, with the resultant diminished supply pushing up prices in relation to largely unchanged levels of demand. While this assessment is correct in economic terms with respect to energy prices, with the main source of energy for the United Kingdom being natural gas, Pill’s perspective is an example of the ruling class trying to unfairly shift blame onto Vladimir Putin. Why would Putin continue to supply gas in markets controlled by governments who have explicitly declared that they want regime change in Russia?

And research has demonstrated that the Ukraine war was largely caused by the neoconservative foreign policy elite. The costs of opposing Russia were predictable. Ordinary people in the West have no tangible interest, and gain no direct benefit, in opposing Russia. Meanwhile, they bear all the costs, and the neocons who are the true interested party in the conflict are hardly struggling to pay their bills.

Most people wouldn’t choose struggling to pay essential bills even if the seemingly impossible goal of overthrowing Putin could be achieved. Or at least they wouldn’t without copious amounts of propaganda from a closed media network lying to them about the inevitable trade-offs required.

Pill’s “pass the parcel” nonsense exists in a similar vein of attempting to blame the masses for the negative effects of ruling-class policy. On top of that, it is an attempt to make the effects of inflation even worse than they must be.
There is no economic benefit to artificially creating money. An increase in wealth is an increase in real goods and services available. This is unrelated to an increase in paper or digital money.

Inflation can never be neutral because the first people to receive the new money do so at the old purchasing power, and it is their spending of the new money which drives up prices and reduces the purchasing power per unit as the increased supply of money works its way throughout the economy.

Inflation inevitably distorts the capital structure, as the increased supply of money means projects that previously couldn’t secure loans can now do so. Because the businesses that obtain the new money have bad fundamentals, they will inevitably fail when conditions change, having absorbed scarce productive capacity in the meantime.

Any inflation-induced boom will be followed by a bust caused by the same initial inflation. It would be too inexact to say, “One step forward, two steps back.” But short of finding an exact ratio, we can say that inflation must leave an economy worse off in the creation of real wealth than if it had never taken place. This whole fiasco is essentially England’s top economist admitting that inflation makes nearly everyone worse off, though apparently, they’re just supposed to accept it.

However, a bout of inflation does eventually work its way throughout the economy, since money touches every sector as it circulates. Assuming the creation of new money ceases, we should end up with a situation where we have a similar amount of goods and services available, and a similar level of purchasing power for the average wage, but just with everything denominated higher. This would still be bad economic policy because the financial elite would still have gained additional purchasing power at everyone else’s expense, and the business cycle effects of inflation always occur.

But Pill and Bailey are attempting to use misplaced appeals to guilt and patriotism to make inflation even worse for ordinary people than it must be. We are not all worse off; those who received the new money first gained purchasing power, which was promptly converted out of cash into hard assets. Preventing a general rise in prices won’t stop inflation, which already happened when the new money was created.

Wherever this new money was spent (chiefly property) will see a rise in prices. Everyone still must spend more money on these goods, but without a general rise in prices most people don’t have more money coming in. Without a general rise in prices more of the new money also stays in the hands of those who obtained it first, and it retains more of its purchasing power for them. So, what Pill and Bailey want is for the elite to get money for nothing, yet not have to spend more on wages, suppliers, and business costs.
Whoever creates and obtains the new money first wins; inflation is a negative-sum game, and you have to try to keep up as best you can. Nobody likes paying higher prices, but if the ruling class cared about that, along with fairness, rules of the game, the average standard of living, and a healthy national economy, they wouldn’t have inflated in the first place.

By trying to prevent the general rise in prices, Bailey and Pill are trying to trick people into helping those who don’t need any help. Whether it’s related to Ukraine or central banking, blame for price inflation lies squarely with the Western ruling class.
Author:

J.R. MacLeod

You need to have the discipline to post here at least once a day. You also need to not fall in the trap of never entering a stop loss.

I have traded without stop losses and only because of my Forex trading skills being at the highest level trading real funds can it be done by myself. However as my good friend and mentor Fred Sheiner taught me to trade without a stop loss is not acceptable because it will lead to severe drawdowns.

When I first started trading cash on March 9, 2006 at Trade Freedom in Montreal and traded under LPOA for 5 or 6 clients until early June 2006, I never had even one trading loss. I doubled the original Forex trading capital from over $100,000 US dollars to $225,000 US dollars in 3 months. I got my first large client with Cyber Planet on October 2, 2006 and my starting cash capital was $100,000 US dollars. In those days I traded mainly EUR/USD and EUR/JPY and USD/JPY.

We did not have CFD's in those days. Contracts for Difference.

I did 1502 Forex trades for Jason Budavitch who was the President of Cyber Planet in Hong Kong. My first 672 Forex trades were all done without one loss. I brought the account up to just under $120,000 US dollars in just 35 trading days ending on November 7, 2006.

A 20% profit in 35 days when I was just staring out after actual demo trading with Saxo Bank and others for 3 years before I made my first cash trade on March 9, 2006.

I started the thread on Forex Factory on December 3, 2016 in order to PROVE to myself that I could actually teach some retail Forex traders to earn a minimum of 5% a month. In the last two years because of the opportunity to trade CFD's such as Dow 30 and SP500 short and Gold and Silver long the opportunity to make 25% to 50% monthly for skilled Forex traders with good discipline and good work ethics and strong mental balance is now very possible.

Look at what I have written on my company website. Take the 30 minutes or so to read all the information that I have put on my company website then post any questions that you have.

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Each day around 8:30 AM to 9:30 AM Eastern Standard Time, I determine whether we have RISK ON or RISK OFF.

There is no indicator that can do this just as no technical indicator can effectively predict what will happen moment to moment as one MAJOR fundamental fact whether GEOPOLITICAL or FINANCIAL or now SUPPLY CHAIN or some New Covid 19 variant can cause the markets to go down 1000 points as the Dow 30 has been doing recently and will continue to do.

That is why my Unique Method of Forex trading developed during 2003 when I started trading Forex and later on during 2012 when I added to my business model and started teaching my unique 100% proven method of Money Flow trading.

It is no longer possible to trade without a STOP LOSS PERIOD.

Having a STOP LOSS of fewer than 100 PIPS is not a good strategy. That leads me to explain why most of the 95% of all Retail Forex Traders lose. They trade with small amounts of money and SCALP which makes it almost impossible to make profits over a period of one year because of the VIOLENT NATURE of the swings in the Asset Classes caused by world changing events.

Each Forex Trade that you do should not risk more than 2% of your trading Capital and that is based on trading Capital of $50,000 US Dollars INITIALLY learning on a $50,000 US Funds Demo account just as I did for a period of three years before I made my first Real Funds Trade.

PLEASE GO WITH THE MONEY FLOW

Let us review what we teach and why it works if YOU WORK.

Without your WORK then you are just wasting your time and probably your money.

There is no such thing as Political Correctness here because we are here to teach and share our knowledge.


SO.... going back to our winning FORMULA for FOREX SUCCESS.

20% of the SUCCESS is yourself the Forex Trader.

20% of the SUCCESS is your EDGE which we teach you and that is Money Flow Trading.

20% of the SUCCESS is control of your RISK (Your hard earned money) Our UNIQUE RISK MANAGEMENT allows you to trade without worry, fear and greed. Of course we want to make sure that you have the right qualities to be a winning Forex Trader so our course is for a period of three months, so we can teach you the right trading methods and we can see your results and make adjustments without your FEAR OF LOSS of Real Money.


20% of the SUCCESS is using and understanding the USE of Technical Indicators which include not only the common ones. It includes the understanding of Supply and Demand. Support and Resistance and the use of Pivot Points which you can see each day on our daily charts that cover ALL our Trade Plans which we also help you develop and explain WHY. These are our Winning Trade Plans that we review every three months or earlier if circumstances in the markets require that.

20% of the SUCCESS is the FUNDAMENTALS, which are much more than Data Releases each day around the world. It includes reports and articles extremely well researched as you can clearly see from this article that explains why the TREND in the Equity Markets especially in North America is DOWN. By understanding the difference between PERCEPTIONS (MARKETS) and REALITY, you then have a good handle on REALITY before the MASSES do and you are not surprised when events eventually unfold.

When successful traders aren't trading, they are researching, developing, and innovating. When unsuccessful traders aren't trading, they're staring at screens and forcing trades. There is nothing better for trading psychology than being at the cutting edge of a growing business.

What makes a trader successful is discipline: doing the right thing with fidelity. What keeps a trader successful is innovation: doing new things and turning them into disciplines.

One of the great disappointments I encounter when I read writings on the topic of trading psychology is that they invariably touch upon the same themes: discipline, controlling emotions, etc. Having worked with traders and portfolio managers for over a decade now, there is so much more to the psychology of trading than "sticking to your process" that I decided I had to write a book about what I was experiencing but wasn't reading. The title reflects that interest: Trading Psychology 2.0: From Best Practices to Best Processes.

I think Ted Hayes hit on something important in his recent interview. He pointed out that the personality traits relevant to success among early career traders are different from those that generate success for experienced ones. Perhaps so much writing concerns discipline and emotional control, because those are the dominant concerns of the new traders who buy the books, haunt the websites, and seek the help.

At several of the firms where I work, no one even gets an interview unless they have years of experience managing significant capital with a solid track record of profitability and risk management. So by the time those traders join the firm, discipline and emotional control are not screaming priorities. Instead, they deal with other challenges. In Trading Psychology 2.0, I refer to these challenges by A-B-C:


* Adapting to changing markets
* Building on strengths
* Creating creativity

In adapting to different markets by leveraging their strengths and generating new ideas, successful market participants are not so different from successful businesses in fast-changing industries, such as technology or social media. When markets change from year to year, stasis is a formula for failure. The successful trader, like the successful tech firm, must constantly innovate. Moreover, once traders generate those innovations, they must turn best practices--what they do that is successful--and turn them into robust, best processes.

I think this is very, very important: What makes a trader successful is discipline: doing the right thing with fidelity. What keeps a trader successful is innovation: doing new things and turning them into disciplines. Conscientiousness makes for success, but it is openness that makes for adaptation. Trading psychology as a field has done a fine job of articulating the importance of discipline. My hope is that the new book will broaden the discussion to include a research-informed look at mastering change and innovation.

In order to be able to help you better it is VERY IMPORTANT that you share your thoughts and your QUESTIONS.


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As an experienced forex trader and educator, I have helped many people learn how to trade forex successfully and earn a lot of money. My comprehensive approach to trading combines fundamental and technical analysis with risk management strategies to identify profitable trading opportunities.

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Our relationship with government starts at the moment of our conception and lasts until our death. This cradle to grave approach of telling other people how to live is ingrained in our physiological development and creates dependence. When a child is born in modern times it will eventually follow the rules of government instead of its parents and parents are having whatever say so in their children's lives slowly stripped away by the state.

If you're wondering why we live in a society full of infants, ignorant and emotional people who will take or accept what's purposefully stuck in front of their faces, its because of how we manage our society. But the state doesn't look at it that way, they look at the world as theirs to manage, us included. That's not public service, that's not representation, that's management.

For those who have children in the American school systems I hope you are the types of parents mine were. When I realized that academics was not the route I wanted to pursue in life my relationship suffered with my folks suffered because they would tell me how the system works, that you just need that piece of paper, you need a backup plan in order to live a more comfortable life. They were right.

In a system that asks for you to prove to the state and corporations your worth and intelligence through a series of tests I was more interested in playing power chords and finding a cheap PA System to start a band. I wanted nothing to do with school. I knew I was being held there against my will and I realized that it was the law that was keeping me there.

I grew up with truly incredible parents and grandparents that kept the world open for me to discover on my own and in my own way. It gave me an advantage socially in classrooms because I always felt that I was on the outside (and sometimes literally) of the classroom. I was what I would call self aware at a very young age. I knew that I thought differently than my peers. Like I always had a conversation going with myself when others seemed to be just following the teacher's orders. Certain teachers recognized this and encouraged it and others had to deal with the ramifications of having a child in their class that was not only uninterested in what they were teaching but also finding entertainment in becoming a disturbance.

I got kicked out of class a lot in my first few years at school. Spent half of first grade in some sort of form of detention. Had my desk moved into the hallway outside of the class but would still find a way to disrupt the teacher. Even if they stuck me in other rooms, they couldn't lock me in so I would leave and go back and disturb the class some more. I would really get a kick out of my friend in class joining me in making crazy noises or pretending to be characters from Ghostbusters or Thundercats.

As my experience with education progressed I would always seem to squeak by though because I somehow absorbed enough knowledge in my life that I could pass all the tests and move on...until high school at least.

High school was a completely different animal. Now the type of behavior I exhibited in first grade was not going to be tolerated at all. Fighting with the other kids, sometimes because I was bullied, sometimes because I wanted to be in the air conditioned In-School Suspension Room was out too. The principal I had was a former cop and would call the boys in blue on ya if you acted out like that. Probably ship you off to some sort of institution that would make my high school look like a party. Luckily for me, I had my parents to keep me in line just enough to survive the system and I got out of it relatively unscathed and unscarred.

Not all who go through the process of education, whose brain for whatever reason doesn't fit within the rigid requirements of our Corporatist Indoctrination System, are fortunate enough to ever leave it or survive it.

Some of the friends I met in detention were there because their parents were not good to them. Some had some real issues that they turned to drugs to cope with. Some of those people are dead now. I'm grateful to have something in my life that guided me away from that fate.

I would grow to understand that there was more than just the education system that kept people in a mental box. Working in various industries would show me that the indoctrination people receive from that impressionable age is still working. It works when they elect our representation too.

I was blessed to have the system fail me. I was never meant to fit within its machinery and I was even more blessed to have a family that put up with it. For those that didn't have that kind of patience and understanding from their parents, or no parents at all, the cold walls of some kind of institution or even death was the other option.

People like myself, who didn't belong in such places as government schools and its other offshoots, can look back now and see that we had it better than the kids today. Because now the State's claim to you is asserted even harder by our society. Parents around the country are having their children taken from them in one way or another. Even if its just to brainwash them into being another blind obedient follower, it is unnatural and a sin to take such minds and abuse them the way they do.

The state ain't your mommy and daddy, and if you don't have a good family, life is gonna be soo much harder. But even in those terrible circumstances you can still find a was to succeed on your own terms if you seek out what your purpose here on this earth truly is and that to me is something that is discovered not given. Go exploring, have adventures, have a conversation with yourself, and come up with a better way to live than as a captive in this world.

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Dollar Woes to Debt Denial: The USA Is Screwed

By Matthew Piepenburg

Below, we see why the USA is screwed.

De-Dollarization: Downplaying the Obvious

De-Dollarization is a real, all too real trend, though it is both fascinating and disturbing to see what is otherwise so obvious being deliberately down-played, excused or ignored from the top down.

But then again, the laundry list of ignored facts and open lies from the top down to hide hard truths in everything from inflation data to recessionary debt traps is nothing new.

Instead, such propaganda replacing blunt transparency is the new normal (and classic trick) for all historical endings to debt-soaked (and failing) nations/systems and their fork-tongued (i.e., guilty) policy makers.
Read this article


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In this discussion between Egon von Greyerz and Alasdair Macleod, on the state of the current banking system and the…
Watch this video ►

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A DISORDERLY RESET WITH GOLD REVALUED BY MULTIPLES
by Egon von Greyerz
Tectonic shifts lie ahead. These will involve a US and European debt crisis ending in a debt collapse, a precipitous…
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Egon von Greyerz
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About Matterhorn Asset Management
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Dollar Woes to Debt Denial: The USA Is Screwed
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By Matthew Piepenburg
May 21, 2023

Below, we see why the USA is screwed.

De-Dollarization: Downplaying the Obvious
De-Dollarization is a real, all too real trend, though it is both fascinating and disturbing to see what is otherwise so obvious being deliberately down-played, excused or ignored from the top down.

But then again, the laundry list of ignored facts and open lies from the top down to hide hard truths in everything from inflation data to recessionary debt traps is nothing new.
Instead, such propaganda replacing blunt transparency is the new normal (and classic trick) for all historical endings to debt-soaked (and failing) nations/systems and their fork-tongued (i.e., guilty) policy makers.

Slow & Steady
De-Dollarization, of course, is a gradual rather than over-night process.
Its origins stem from 1) years of exporting USD inflation overseas (to the painful detriment of friend and foe alike) and 2) the insanely stupid decision to weaponize the world reserve currency (i.e., USD) subsequent to a border war between two local tyrants in the Ukraine.

Whether or not you buy into the Western “media’s” narrative which categorizes Putin as Hitler 2.0 and Zelensky as a modern George Washington, the weaponization of the USD (and freezing of FX reserves) has made an already dollar-tired globe even more distrusting of Uncle Sam’s currency and IOUs.

This trend is confirmed by the profound dumping of USTs throughout 2022 and the undeniable trend among the BRICS (and the 36 other nations) to deliberately seek bilateral trade agreements and settlements outside of the USD.

Furthermore, with Saudi talking to China and Iran, and with China talking to Mexico, Russia and just about everyone else, it’s fairly clear that a move away from the once sacred petrodollar (Pakistan now seeking Russian oil in Yuan) is no longer just the fantasy of conveniently eliminated folks like Saddam Hussein or Muammar Gaddafi…
As I discussed here and here, the petrodollar is under threat, which means longer-term demand for the USD is equally so.

But the USD Still Has Legs—For Now…
That said, there’s also no denying that the USD is still very strong, very important and very much in demand.
After all, and despite welching in 1971 on its 1944 promise to be gold-backed, the USD is still the world reserve currency.
With over 40% of global debt instruments denominated in Greenbacks and over 60% of the reservoir of global currencies composed of USDs, this reserve status (and hence forced demand) aint going anywhere too soon.

Furthermore, and as I have written and agreed, the so-called “milk-shake theory” is not altogether wrong.
That is, demand for USDs (and USTs) within the tangled and levered web of US derivative and Euro Dollar markets is baked into a system which will take years (not days) to unravel, monetize or replace, and this sure as heck won’t be orderly, global nor overnight.

Then Comes Change, Pain and Open Denial
But let’s get real: The days of the USD as a trusted payment system or hegemonic power broker are unwinding right before our very eyes.

And the best way to see the truth of this reality is to catalogue the ever-expanding list of lies from the big boys and their complicit, media ja-sagenders (“yes-sayers”) desperately trying to deny the same.
At first, for example, the centralized economists were blaming de-dollarization and CNY energy transactions on the Russian sanctions.
Gee. Go figure?

Thereafter, the economists said de-dollarization is just the result of Emerging Market (EM) countries momentarily running out of (in fact they’re intentionally dumping) USD reserves.

Western “experts” are trying to convince themselves and the rest of the world that EM nations will implode unless they eventually acquire more USTs and USDs to buy energy.
What these experts are failing to see (or say), however, is that many of those countries are already beginning to buy that energy outside of the USD…

Folks, de-dollarization in global commodity markets is happening already, and will accelerate rather than fade away into some fantasy image of how the “West was Won,” for as argued elsewhere, the West is already losing.
Facts Are Stubborn Things

As for the list of nations, both big and small, de-dollarizing right before our watering eyes, just consider, well…China, Russia, India, Pakistan, Ghana, Bolivia…
Even the world’s largest hardwood pulp producer, Suzano SA, is in talks with China to trade its commodity in CNY.
This transition from a weaponized USD to an expanding CNY is not just the sensationalism of fiat-haters but the hard math of real events and data, which the following chart of the Renminbi Globalization Index (up 26% in 2022) makes all too clear…
https://goldswitzerland.com/wp-conte...5/image-14.png

The undeniable trend and rise (which is not the same as “hegemony”) of the CNY is certainly not good news for the fiat-all-too-fiat USD, who is less and less the prettiest girl at the dance.

As trust/demand in the USD falls, so too does its purchasing power, which may explain why China, at the very same time its trade power increases, is simultaneously growing its gold reserves in anticipation for what it knows is coming but what the West still refuses to see, namely: The slow-drip neutering of Uncle Sam’s fiat currency.
See the trend folks?

We Told You So
See why picking a currency-for-energy war against Russia (the world’s biggest commodity exporter and a nuclear power in bed with China, the world’s biggest factory owner and a nuclear power) may have been a bad idea?
As we warned literally from day-1 of the sanctions, this was obviously not the same as picking a sanction fight with say, Iran or Venezuela…

Nope. This scale of this was far more dangerous, and the avoidable casualties still piling up in the West’s proxy war (on Ukrainian soil/rubble) are not just soldiers and civilians, but Greenbacks too.
This was foreseeable.

Even Obama foresaw it in 2015:
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Clearly, Biden’s handlers, however, didn’t see it in 2022.
https://goldswitzerland.com/wp-conte...5/image-16.png


They wanted to play war rather than sound economics, and the end result will be a loss of both.

As for the USD: Volatility Before Debasement
As for the fate and price of the USD near-term and long-term, the move will be volatile rather than in a straight line north or south.
The USD can still go higher, much higher, as fewer Greenbacks overseas still face large debt payments.
Ultimately, however, Uncle Sam’s own twin deficits and schoolyard of children masquerading as House Members/”leaders” will deficit spend the USA into a debt spiral whose only “cure” is more mouse-clicked and debased dollars along side more unloved and over-issued USTs (IOUs).

Thereafter, the up and down moves of the USD will eventually just sink, Titanic-like, in one direction as ever-more USD’s collide with a growing debt iceberg.

As argued so many times, but worth repeating: The last bubble to die in a debt-soaked regime is always the currency. Even the increasingly unloved world reserve currency will be no exception to the laws of over-supply and decreasing demand.
Between now and then, all we can expect are more lies from on high and more centralized controls masquerading as efficient payment systems and national emergencies blamed on Eastern bad guys and bat-made (?) virusesrather than the bathroom mirrors of our central planners (happy idiots?).

All Good Until Things Break
We have always warned that Powell’s rate hikes (too much, too fast, too late) would be too expensive for Uncle Sam, and would thus break things here and abroad—from repo markets, gilt markets and Treasury markets to a US fiscal implosion and dying regional banks.

Next to implode are the labor markets.
Six decades of data confirm that rising rates always break things.
But when you place such rising rates into the context of the greatest debt crisis in US (as well as global) history, the “breaking” gets really ugly.

Until the Fed supplies more inflationary liquidity (fiat-fantasy money), the dual forces of a hawkish Powell and a de-dollarizing yet milk-shake world means the USD could rise and squeeze out the dollar short traders nearer term.

Anything but “Softish”
Ultimately, however, and after enough smaller banks have been murdered (more will die) and after the UST market has suffered all it can suffer, too much will break at once, and it won’t be soft, or even “softish.”
This is not fable but fact. The only “tool” the centralizers will have left is more synthetic, fiat (and inflationary) liquidity on demand.
This trend is simple: Uncle Sam is broke and his only solution is a money printer.

In short, a counterfeit answer to a real cancer.
Don’t believe me?
Just ask the US Treasury Dept.

More Ignored Math from DC
The latest TBAC (Treasury Borrowing Advisory Committee) confirms the US has already deficit spent $2.060T in fiscal 1H23, the interest expense alone of which is 101% of tax receipts.

This effectively puts the USA into a red-zone of imbalance reminiscent of the COVID crisis, only this time they don’t have COVID to blame for a debt addiction that was in play long before Fauci stained our screens or Powell printed more money post-March-of-2020 than was produced in the entire compounded history of our nation.

The TBAC report further indicated that projected US Federal deficits for 2023 to 2025 have risen by 30-50% in just the last 90 days…
And folks, the only way to pay for this embarrassing bar tab in DC is either more open QE (mouse-clicked trillions) and/or a much, much, much weaker USD to inflate away this debt as we head simultaneously into the mother of all recessions.
Such a crisis, of course, could be preceded by temporary (relative, rather than inherent) spikes in the USD until more UST supply/liquidity weakens the Greenback and sends gold higher, regardless of the USD’s relative strength and then subsequent weakness.

Meanwhile the Propaganda from On-High Continues
As I’ve said in interview after interview, you know things are getting really bad when comforting words and de-contextualized data increasingly replace simple (but scary) math.

At $95+T in public, household and corporate debt, the US has irreversibly passed the Rubicon of any easy solutions.
As Egon von Greyerz makes abundantly clear week after week, the US in general and the Fed in particular have irrevocably cornered themselves.

Stated otherwise: The USA is screwed.
DC has to chose between saving its “system” (of insider/TBTF banks, self-interested politicos–from the Maoist “woke” to the neocon “dark” and Wall Street Socialism) or destroying its currency.

Needless to say, it’s ultimately the currency that will fall on the sword for this now openly corrupt and pathetic “system.”
But again, rather than confess their own sins, the message is always “be calm and carry on.”
The Latest Fantasy Chart
Take, for example, the latest puff-tweet regarding Bloomberg’s “US Economic Surprise Index” which paints an oh-so rosy picture of the US economy rising at the fastest pace in over a year.
https://goldswitzerland.com/wp-conte...5/image-17.png

But as far smarter folks than me (i.e., Luke Gromen) will remind, this so-called data is ignoring a few contextual elephants in the room…

Context Helps
First, the above “good news” ignores a US debt/GDP ratio of 125%, a deficits/GDP ratio of 8% and government spending at 25% of GDP.
Secondly, US Government Outlays (i.e., deficit spending) has been growing at 30% for five of the last seven months.
Spending rates like this have only occurred twice in the last four decades, namely: 1) during the height of the COVID hysteria and 2) during the height of the 2008 GFC.

So, despite the “good news” in puff-charts above, the pundits are ignoring the fact that Uncle Sam (and his mis-fit children in the House of [lobbied] “Representatives”) are spending as if the USA is already in the eye of a financial storm.
And yet we haven’t even seen the recession officially hit or labor and risk markets tank, YET.
Imagine the spending when things get officially far worse than today—and they will; it’s now mathematical.

Out of Sight, Out of (Our) Mind
Sadly, however, very few investors are seeing the bigger picture and the wandering elephants.
In the interim: 1) the military industrial complex will create more profits and jobs here and more casualties overseas; and 2) deficit spending will keep unemployment in check (for now) and GDP “stable” until 3) its deficits (and debts) cancerously metastasize within a nation frog-boiling in debt and fractured by manufactured identity politics over transgender beer ads and slavery reparations from the 1860’s.

Such “woke” trends are ironic, given the fact that middleclass Americans of all colors, sexualities, “privileges” or political bends are already unknowing slaves/serfs in a modern feudalism of fake capitalism fighting against the bogus (yet SJW) “equity” euphemism of a woke (but hidden) re-distribution of social “shares” smacking of modern yet genuine Marxism.

Slowly, Then All at Once
And amidst all this distraction, division and in-fighting, the reality of rising rates colliding into historically unprecedented debt levels will just crush all stripes of Americans in the same manner Hemingway described poverty: “Slowly, then all at once.”
As Egon has often told me: Be careful what you wish for or already know.

Gold will inevitably go higher as the rest of the nation/world slides into its foreseeable debt trap and fiat end-game.
This may be obviously good for gold; but it will be at the expense of so much else, as the disorder ahead is neither fun nor pretty.
And it’s only just beginning…

https://www.zerohedge.com/geopolitic...ooking-ukraine

Seymour Hersh: 'Something Else Is Cooking' In Ukraine

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BY TYLER DURDEN

MONDAY, MAY 22, 2023 - 04:15 AM

Authored by Seymour Hersh, via Scheerpost,
This story is a follow up to Seymour Hersh’s original report on the Nord Stream pipeline sabotage.
Sign up at seymourhersh.substack.com so you can support Sy Hersh’s work

Last Saturday the Washington Post published an exposé of classified American intelligence documents showing that Ukrainian President Volodymyr Zelensky, working behind the back of the Biden White House, pushed hard earlier this year for an expanded series of missile attacks inside Russia. The documents were part of a large cache of classified materials posted online by an Air Force enlisted man now in custody. A senior official of the Biden administration, asked by the Post for comment on the newly revealed intelligence, said that Zelensky has never violated his pledge never to use American weapons to strike inside Russia. In the view of the White House, Zelensky can do no wrong.

Zelensky’s desire to take the war to Russia may not be clear to the president and senior foreign policy aides in the White House, but it is to those in the American intelligence community who have found it difficult to get their intelligence and their assessments a hearing in the Oval Office. Meanwhile, the slaughter in the city of Bakhmut continues. It is similar in idiocy, if not in numbers, to the slaughter in Verdun and the Somme during World War I. The men in charge of today’s war—in Moscow, Kiev, and Washington—have shown no interest even in temporary ceasefire talks that could serve as a prelude to something permanent. The talk now is only about the possibilities of a late spring or summer offensive by either party.

But something else is cooking, as some in the American intelligence community know and have reported in secret, at the instigation of government officials at various levels in Poland, Hungary, Lithuania, Estonia, Czechoslovakia, and Latvia. These countries are all allies of Ukraine and declared enemies of Vladimir Putin.

This group is led by Poland, whose leadership no longer fears the Russian army because its performance in Ukraine has left the glow of its success at Stalingrad during the Second World War in tatters. It has been quietly urging Zelensky to find a way to end the war—even by resigning himself, if necessary—and to allow the process of rebuilding his nation to get under way.

Zelensky is not budging, according to intercepts and other data known inside the Central Intelligence Agency, but he is beginning to lose the private support of his neighbors.
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One of the driving forces for the quiet European talks with Zelensky has been the more than five million Ukrainians fleeing from the war who have crossed the country’s borders and have registered with its neighbors under an EU agreement for temporary protection that includes residency rights, access to the labor market, housing, social welfare assistance, and medical care.

An assessment published by the UN High Commissioner for Refugees reports that the estimate excludes roughly 3 million Ukrainian refugees who escaped from the war zone without a visa into any of the 27 European nations that have abolished border control between each other under the Schengen agreement. Ukraine, though not in the EU, now enjoys all the benefits of the Schengen pact. A few nations, exhausted by the 15-month war, have reintroduced some forms of border control, but the regional refugee crisis will not be resolved until there is a formal peace agreement.

The UNHRC reports that free travel from Ukraine into the Baltic states and EU states in Western Europe “makes it particularly difficult to determine exactly how many Ukrainians have reached the EU in the last few months, and where they are now.” The report says the “vast majority” of the Ukrainian refugees are women and children, and one third of them are under the age of eighteen. Seventy-three per cent of the refugees of working age are women, many with children.

A February analysis of the European refugee issue by the Council on Foreign Relations found that “tens of billions of dollars” in humanitarian aid were poured into Ukraine’s neighbors during the war’s first year.
“As the conflict enters its second year with no end in sight,” the report says, “experts worry that host countries are growing fatigued.”
Weeks ago I learned that the American intelligence community was aware that some officials in Western Europe and the Baltic states want the war between Ukraine and Russia to end.

These officials have concluded that it is time for Zelensky to “come around” and seek a settlement. A knowledgeable American official told me that some in the leadership in Hungary and Poland were among those working together to get Ukraine involved in serious talks with Moscow. “Hungary is a big player in this and so are Poland and Germany, and they are working to get Zelensky to come around,” the American official said. The European leaders have made it clear that “Zelensky can keep what he’s got”—a villa in Italy and interests in offshore bank accounts—“if he works up a peace deal even if he’s got to be paid off, if it’s the only way to get a deal.”

So far, the official said, Zelensky has rejected such advice and ignored offers of large sums of money to ease his retreat to an estate he owns in Italy. There is no support in the Biden Administration for any settlement that involves Zelensky’s departure, and the leadership in France and England “are too beholden” to Biden to contemplate such a scenario. There is a reality that some elements in the American intelligence community can’t ignore, the official said, even if the White House is ignoring it: “Ukraine is running out of money and it is known that the next four or months are critical. And Eastern Europeans are talking about a deal.” The issue for them, the official told me, “is how to get the United States to stop supporting Zelensky,” The White House support goes beyond the needs of the war: “We are paying all of the retirement funds—the 401k’s—for Ukraine.”
And Zelensky wants more, the official said.

“Zelensky is telling us that if you want to win the war you’ve got to give me more money and more stuff. He tells us, ‘I’ve got to pay off the generals.’ He’s telling us”—if he is forced out of office—“he’s going to the highest bidder. He’d rather go to Italy than stay and possibly get killed by his own people.”

“All of this talk is being reported and is now flying around inside the American intelligence community, but, as usual,” the official said, “it’s not clear to the intelligence community what the president and his foreign policy aides in the White House know of the reality” of the European discussion about finding a way to end the war.

“We are still training Ukrainians how to fly our F-16s that will be shot down by Russia as soon as they get into the war zone. The mainstream press is dedicated to Biden and the war and Biden is still talking about the Great Satan in Moscow while the Russian economy is doing great. Putin can stay where he is”—in power—“despite his failure to wipe Ukraine off the map as an independent state. And he thought he would win the war with just one airborne division”—a sardonic reference to Russia’s failed effort in the first days of the war to seize a vital airport by parachuting in an attack force.

“Europe’s problem,” the official said, in terms of getting a quick settlement to the war, “is that the White House wants Zelensky to survive while there are others”—in Russia and in some European capitals—“who say Zelensky has got to go, no matter what,”

It’s not clear that this understanding has gotten to the Oval Office. I have been told that some of the better intelligence about the war does not reach the president, through no fault of those who prepare the often contrary assessments. Biden is said to rely on briefings and other materials prepared by Avril Haines, director of National Intelligence, since the Biden Administration came into office. She has spent much of her career working for Secretary of State Anthony Blinken, whose ties to Biden and agreement with him on matters pertaining to Russia and China go back decades.

The one saving grace for some in the community, I have been told, has been CIA Director William Burns.
Burns was ambassador to Russia and deputy secretary of State and is seen as someone “who has come around” in opposition to some of the White House’s foreign policy follies. “He doesn’t want to be a rat on a sinking ship,” the official told me.

On the other hand, I have been told, it’s not clear to those in the CIA who prepare the President’s Daily Brief that Joe Biden is a regular reader of their intelligence summary. The document is usually three pages. Decades ago I was told—by someone who begged me not to write about it at the time—that Ronald Reagan rarely read the PDB until Colin Powell, then in the White House, began reading it to a video recorder. The tape would then be played for the president. It’s unclear who, if anyone, might take the initiative as Biden’s Colin Powell.

* * *

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Good morning

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https://www.howardlindzon.com/p/mome...go-price-truth

Momentum Monday - YES The Is A Debt Threat ...YES Stocks Still Can Go Up ...The Price Is The Truth
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Howard Lindzon

May 22, 2023



As a reminder, Marketsmith (by Investor’s Business Daily) is a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

Happy Monday…
As always, Ivanhoff and I get together over Zoom to tour the markets and cover what we are seeing in price acton and momentum.
The Nasdaq is at 13 month highs and the headlines could not be gloomier. Two things can be true…America can be imploding and we all may die because of AI, but stocks can go up (I guess that is 3 things). I have been harping on this for months, but the headlines will stay terrible for a long time. The debt ceiling, shitty Presidents and government leaders, expensive homes, expensive stocks, personal debt rising while we kick the can down the road on student debt yada yada yada and TRUE.

BUT, all of old media and most of new media is ‘all in’ on clicks that breed fear and anxiety. You do not get clicks by telling people to stay 100 percent invested and to turn off all news.

There are 50,000 Jim Cramer’s in 2023 with traffic that Jim Cramer 1.0 wishes he had. Most are focused on ‘them’ winning which means you may enjoy following them for a while, but eventually you will be disappointed as only they win. Two people I actually respect love AI and differ on the future of America. Stan Druckenmiller is worried and Stevie Cohen is bullish…
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Stevie Cohen
I believe in fundamentals, but the price is the truth. The trust is that tech stocks prices are rising. The question over the next few weeks and months is do tech prices catch ‘down’ to a slowing consumer, weak retail, bad banks which is pressuring credit, bad real estate. If I knew I would tell you.
Please do watch this weeks episode right here on YouTube. It is easy to subscribe and if you do every Sunday you will get an alert when we post the show to YouTube.

Here are Ivanhoff’s thoughts:
A few times every single year, market conditions are ripe to extract extraordinary returns while you can risk very little. They usually last a few weeks before trading profitably becomes significantly more challenging. Recognizing those special times is a valuable skill because they can account for more than 90% of our returns for the year. There are times to go long, times to go short, times to go fishing, and times to really get aggressive in the market. The opportunities that the market offered in the past two weeks were exceptional. Driven by the A.I. frenzy, stocks like NVDA, AMD, NFLX, GOOGL, AMZN, META, and MSFT made remarkable short-term moves.

Those names offer all the liquidity in the world and one can easily build a sizable option position in them. Risk very little to make a lot. I managed to participate in some of those setups but I certainly wasn’t as aggressive as I should’ve been. I took partial profits too soon and I didn’t add to my winners. Maybe it is my traveling through Europe. Maybe, I didn’t recognize how special those opportunities were because I paid too much attention to scary macro rhetoric about the debt ceiling, recession, the Fed, small caps, and weak market breadth. Or maybe, hindsight is 20/20. I’d like to believe that proper preparation which includes staying in the right mindset can make a big difference.

Last week, we finally saw the rally spilling beyond mega-caps. Semiconductors had one of their best weeks this year. SMH closed at new 52-week highs. Stocks like MU, RMBS, and LRCX had major breakouts and followed through. Software stocks also made outstanding moves: NOW, SPLK, GLBE, NET, SMAR, etc. What’s interesting is that all that tech strength happened in the face of rapidly rising interest rates and the US Dollar. Those used to be major headwinds for stocks last year. It seems correlations and narratives have changed this time, at least for now.

The most important question is what’s next. No one knows with certainty, of course. My understanding is that all of a sudden many of the recent leaders are looking extended and I wouldn’t be surprised if we see some form of consolidation. They can either pull back toward their 10, 20, and 50-day moving averages or go sideways in a tight range until another catalyst appears. If this is a real breakout in QQQ, we should see money flowing into other stocks.

NVDA has been the top stock of 2023, riding on the coattails of A.I. It’s priced to perfection so I don’t expect a big upside surprise. Any potential dip will likely be bought as many institutions view it as a long-term A.I. play and some haven’t built their positions in it. It is expensive by many measures but sometimes perceived scarcity is much more important than valuation.

Some other great market reads this week…

The Rotation Report this week was awesome with ‘God’s Bubble’ .

Charlie’s ‘this week in charts’ is a must read this week. Charlie covers all the conflicting data and feelings.
Have a great week.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here.