Italians Protesting Against America Spy Satellites
About 1,000 people have besieged the American Military Base in Sicily demanding America get out with its huge antenna there. The protest began claiming this spy satellite is harmful to the health of the people. The police were called in to intervene had had to tear gas the protesters. Several 100 demonstrators stormed a U.S. military base in Sicily as the protest began to broaden in its grievances. The United States is being seen increasingly as causing the global economic depression thanks to the New York Banks who everyone is calling the “Untouchables” outside the USA. This has been brewing beneath the surface throughout Europe.
The revelations of the NSA since June has cast the United States in the same light as the Nazi of Germany who also hunted money of Germans outside of their country. President Obama was asked directly at a news conference on Aug 9th Friday whether Snowden was a Patriot. He said no. He then claimed he should have told people in the government and Obama now admits that perhaps the surveillance may have gone too far and he would have conducted a review where the same information would have been revealed. If that is the case, then Snowden is a Patriot. You cannot claim on one hand you would have revealed the same information and then call him a traitor.
Obama is way out of touch with the people and the world and in many places Americans just are not as welcome as they once were. This obsession with knowing everything about everybody all the time is destroying the image of the USA and the land of the free and home of the brave. This protest in Sicily is just the beginning. As the economy in Europe turns down even more, nobody blames themselves. European politicians will not blame their policies. They will point the finger at the USA and the New York Bankers Obama has shielded. That will be the easy blame-game to follow that even children revert to as always – .“I didn’t do it Mom. He did!”
In Greece, unemployment among the youth just hit 65%! At what level does Revolution come about? These politicians cannot see that they are destroying society with their antiquated policies and they have no concept how the next generation will survive. Even in the USA, kids graduating college who cannot find work in their field has hit 60% (see Forbes). They are saddled with student loans for an education that fails to prepare them for the real world. A piece of paper in basket-weaving is sufficient.
When will our politicians open their eyes and see that the trend we are headed into is a dark abyss from which there may be world war and huge unrest all because they are married to antiquated economic theories that support their egos and power. It ain’t working!
Aluminum Manipulation Leads to Lawsuits Against Goldman etc – The Days of Proprietary Trading Are
There are many lawsuits being filed against the New York Bankers for manipulating the commodities. Suits have been filed in Florida, Chicago, and New York. It is no secret that I have stood up to these people an opposed their manipulations. But this has been the name of the name in the commodity field for probably a century.
The manipulation in interest rates and the financial sector began when PhiBro took over Salomon Brothers back in 1981. They got caught manipulating the US Treasury Auctions within 10 years. That’s when Warren Buffett got involved and I believe it was PhiBro traders that drew him into the commodities playing with silver in 1993 then again in 1997-1998. The Goldbugs hated me then because if the metals go up it is always REAL and manipulations are only down. Buffett bough the silver in London so that drew down the supply in NY shifting it to London and that fact was used to get the Goldbugs to buy the high as always. But they were desperate to get me to join them fearing that Princeton was the largest adviser ever having more than $3 trillion under contract (see testimony before Congress). PhiBro floor traders walked over to my traders and showed them the Buffett orders to buy $1 billion in silver. If I say something is happening, everyone knows I have the real contacts and am not speculating unless I say I “think”.
But the New York Bankers were not satisfied with just that. They then had not merely had Glass Steagall repealed under Clinton thanks to the efforts of Goldman Sachs’ Robert Rubin, but they then had the US Federal Reserve come out in 2003 and declared that certain commodity activities were even “complementary” to financial activities and therefore permissible Wall Street bankers. Yes, the Fed endorsed the manipulations turning a blind-eye as always. Goldman Sachs, J.P. Morgan, and Morgan Stanley were the biggest players in this field. They became the most aggressive traders in physical commodities using the inside info for mining, processing, transportation, and warehousing as they had the inside trading structure to make those guaranteed trades all sealed and delivered. And you wonder why the SEC, CFTC, and the Justice Department never prosecute these people?
But the cycle has turned and they have so abused this structure of guaranteed trading so that even Ben Bernanke told Congress this has risen to a social risk for the country after the 2007 bailout. He testified July 19th, 2013 stating: “Unsafe practices by large financial institutions pose a risk not just to themselves but to the rest of society.”
Everyone is listening to the tapering. This is not even on YouTube showing it has gone over the heads of the majority. I have reported on direct sources stating to me that the Fed has been visiting the bankers and telling them in private (1) they better re-calibrate their model for their may be no flight to quality on the next down turn, and (2) that they will NOT cover trading losses again. Bernanke’s testimony is the confirmation of my direct sources from bankers what has been told to them in private. I do not make this stuff up. I do not speculate on things of this nature. You cannot do that nonsense and play with the big boys.
The financial system as we knew it is changing. It will no longer be the same and the days of proprietary trading are numbered. Their cycle of proprietary trading has come to an end and going forward, we will see how hard these banker will fall. This reminds me of Margaret Thatcher who had an instinctive gut feeling about cycles when she told me John Major and the conservatives would lose power long before there were any polls. She said to me when I asked her why: “It’s just Time”. The bankers now pose a huge “social risk” and government is starting to understand. When the economy turns down, this time the bankers may be the scapegoats. This is very much the possible case if we also see a rise in third party activity. Already many are starting to say that Ran Paul might be the best candidate for the Republican Party. Interesting when they would not allow his father’s name to be put into nomination at their last rigged convention.
New York Federal Court
So these lawsuits against the Bankers are growing in number. The problem is one filed in NYC and that was a HUGE mistake. The likely course will be to move all others to New York where the bankers control the courts. I cannot say this strong enough – STAY THE HELL OUT OF NEW YORK CITY!
Swiss want to End the 1,000SF Note
The drive to eliminate cash and move to 100% electronic money remains in full force. The Swiss are coming under pressure to eliminate the 1,000SF note from other countries fearing money can be hidden in cash avoiding taxes. The Swiss would never admit that they are doing this because of pressure, but this is what is gong on behind the curtain based upon reliable sources. In Switzerland, you can get 1,000SF from an ATM. In Paris, you cannot withdraw more than 200 euros. The French want to eliminate cash as much as possible and the USA is in the same boat.
Defining Hyperinflation – The Coming New Currency
Some define hyperinflation as merely the cumulative inflation rate over three years approaching or exceeding 100% with an annual rate above 25%. The reason I do not agree with that definition is because many countries have had brief periods of inflation at that level, survived, and even the currency lives for another day. The USA experienced about 20%+ going into 1980.
Measuring debt to GDP does not really work. The US national debt stood at $1 trillion in 1980 and it exploded during the economic collapse following 2007. You cannot truly test that before 1900 authoritatively. The hyperinflation v inflation to me is distinguished such as Germany or Zimbabwe as the end game where the currency does not survive.
If you are going to claim that 20-25% annual inflation is hyperinflation, sorry. That does NOT guarantee the collapse of a country or a currency. New Zealand saw that in the 1980s and the USA reached at least 20% in 1980.
To me, hyperinflation is the point of no return. Those countries that have entered that phase have no bond markets, have been typically revolutionary, and emerge with a new currency. Between 1360 and 1641, the currency of France was the basic unit of 1 livre tournois. The French Revolution led to a hyperinflation that forced monetary reform re-introducing (in decimal form) the French franc in 1795 with the portrait of Napoleon. The French franc remained the national currency until the introduction of the euro in 1999.
My definition of hyperinflation is one where the currency does NOT survive regardless of the rate of inflation be it 100% annually or 10,000%. The capital flows must take us to extremes on both sides in order to create the economic damage to cause change. This pendulum movement wipes out generally everyone on both sides. We can see as Europe moved into its crisis for 1931, the capital poured into the USA forcing the dollar higher. The rally in the Euro right now has been the typical false move before the storm that should not really unfold until after September. The capital inflows will send the dollar up wiping out the dollar loans exporting deflation to third world nations rolling in dollar debt, then the pendulum should swing in the opposite direction against the dollar.
This type of violent price action is what is necessary to see major political-economic reform. Will inflation in the USA then reach the 20% level? Perhaps not officially. But the chaos of shifting capital from debt to equity (Public to Private) should begin to force interest rates higher and that will then fuel the debt. As confidence declines in government debt, then and only then do we get the political-economic reform.
The hyperinflation scenario is government merely goes willy-nilly into the light printing money. We have a debt market. Government is restrained by that and cannot simply print into oblivion and yet still sell the debt. This is why government is hunting every dime they can find, raising taxes, and causing the economy to implode internationally.
Part of hyperinflation is the increase in the velocity of money because people do not hold it spending it as fast as they can get it. Right now, our problem is the opposite. The velocity has declined as has liquidity is still down by 50% and people have not been investing as they were prior to 2007. The flood of laws hunting money globally has reduced investment dramatically and this has been highly deflationary shrinking the velocity of money as well as liquidity of markets.
The only alternative for smart money is now to buy equities to get the cash out of the banks. It no longer pays to keep cash in a bank and the bank in Europe are in major trouble because their reserves are spread throughout the sovereign member bond issues. Cyprus lost because the banks held Greek sovereign debt. The EU is adopting Bail-In strategies because they do not want to PRINT money to cover losses – i.e. avoiding hyperinflation driving straight into the dark abyss of deflation and depression.
The pension funds are moving toward insolvency because the Fed has kept rates artificially low. The banks have been making a fortune paying nothing for your money but have not been lending without 100% collateral and the spread is huge paying 0.5% for 3 year CDs while asking 4% for a secured 3 year car loan. NORMALLY, the low rates should have helped the economy. But they have helped only the bankers accounting for the slow recovery.
If you cannot see why governments are turning in the opposite direction from hyperinflation and are actually destroying civilization by tearing apart the global economy reducing job growth, then I do not see what else I can say. Just sit and wait for what you prefer to think is happening rather than observe what is happening.
The end-game is clear. There will be a international monetary reform because the postwar Marxist-Keynesian system is crumbing to dust. Hyperinflation unfolds in a country with no debt markets for they are typically revolutionary that disavow the former debts of the government they have overthrown wiping out capital formation. We have debt markets and the bankers will be advising and screaming: “Are you crazy! Raise taxes and hunt everyone down for if you do not pay us, you collapse!” We are in the midst of a sovereign debt crisis. This is serious stuff. Go too far and we end up in a Mad Max event.
The current monetary system was NEVER designed. There was no Bretton Woods. This entire monetary system is a ad hoc patch-work that is far beyond anything normal. Everything will have to be restructured from the ground up. Money is electronic. They are now lobbying to Switzerland demanding they end the 1000sf notes and to stop the big notes in the Euro. They are trying to cut off all cash forcing money into the electronic world. Forget gold standards and tangible money. That is an ancient relic of the past that we will never see again. But cheer up. If money is electronic, we can also get our rights back and end taxation as well since that was needed only because money was tangible that government could not create out of thin air.
The dollar will lose its reserve status because of (1) political reasons, and (2) this results in the exportation of domestic policy objectives to the rest of the world. Russia and China will exert pressure when the time is right to kill the dollar as the reserve currency. But we have to get there first and that is not by simply printing money mindlessly. There are major political restraints both from countries like China holding US debt and bankers. What we are seeing with the Fed informing the banks they will NOT be covered for losses in proprietary trading is a MAJORstep in severing the umbilical-cord between government and its primary dealers. In Europe, proprietary trading will be outlawed.
The NEW CURRENCY will most like be an electronic reserve currency whereby each nation will still retain its own currency, but to conduct international transactions you will then convert to the reserve currency. This will be similar to a two-tier system that still isolates the domestic economy from infections internationally as the Swiss encountered with the flight from the euro. This will eliminate the dollar as the reserve currency and the new world currencies will be purely electronic.
Why people insist hyperinflation MUST take place because that is what they want to see happen is beyond me. I am only interested in how history demonstrates these trends resolve themselves for the one thing that is certain, human reaction is always the same. Hammurabi in the 18th century BC imposed wage and price controls. Athens attempted that as well.Diocletian (284-305AD) tried wage and price controls with his edict in Rome. So did Richard Nixon in 1971. Present the same situation and you will illicit the same human response no matter who is in office or what century it takes place in. Obama criticized Bush for the NSA. Now he justifies the NSA 10 fold. The king is dead. Long live the new king. It is always the same thing.
The Great Rotation – Why Stocks Are Bullish
Hand-drawn Chart Published in 1979
I have been explaining how capital shifts from Public to Private during a Private Wave investment cycle. Bond yields are way too low and risks way too high. It is now being recognized that capital is starting to shift from bonds to equities. They call this the Great Rotation. Based upon studying even the commentary in the newspapers during these periods demonstrates the thinking process fluctuates.
Interest rates decline during every recession and depression and rise during bull markets. During the 1920s, the press reported rate increases as bullish because it demonstrated people were still borrowing. When people stop borrowing, markets decline. In a Public Wave, rising interest rates are seen as bearish because the government doesn’t like what is happening not what is happening economically or why. Hence, this is the distinction between of Public and Private Wave. We are now seeing the effects of a Private Wave where people focus on the market not what government says.
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