The Forecaster Got a Rating of 8.4 out of 10
The FORECASTER has received an 8.4 out of 10 rating by IMDb. This is our best shot at waking up the silent majority into seeing the world perhaps in a different light. If we can push back when the time comes, just maybe we can move more towardLIBERTY rather than more authoritarianism. Every text, phone call, and email is being stored forever. If anyone wants to know whatever about you, all they need to do is bribe someone at the NSA and they have it. Eventually, the existence of such a database should legally be subject to subpoena right down to a divorce case. That should be a good one to read when that argument is made in court. But the bottom line, why do those in government have to know everything about every single person? Are they really that paranoid as was Stalin?
I have been asked about the opening scene with the Physic Ofer Cohen. This was a total surprise. They did not tell me he was coming nor did they tell him about me. He is renown for his abilities in Asia. It was my birthday, so my assistant Danielle White hired him for a present. It was even more of a shock that they wanted to film this. Needless to say, he was truly amazing. Yes, I was skeptical. Yet impressed at the end. He is a Jewish mystic I suppose and it was not rehearsed.
Let’s hope we can open the eyes of the majority who seem to be just sleep-walking through life. I had one email insist his state government pension will be there. His argument – it’s guaranteed. How? Because politicians told him so. People do not want to even think about the possibility they were lied to. They prefer to live life just sleep-walking hoping everything will be alright. They have noPLAN-B. A good trader ALWAYS assumes he is wrong. Then you constantly check your position.
Federal Reserve Confusion
A number of people seem to be confused about why the Fed will be forced to raise rates. FIRST you must understand that theORIGINAL structure of the Fed pre-1935 was that each branch was independent. The design was initially set to be a group of banks who would pool together to stabilize the banking system as J.P. Morgan did in 1907. This is why the banks technically owned the Fed for it began as an industry pool to which they contributed, not tax-payers. To “stimulate” the economy and soften any economic down-draft, the Fed purchased corporate paper – notgovernment. This was DIRECT stimulation that would indeedPREVENT unemployment when companies could gain access to funds when banks would not lend.
Each branch was independent and would manage capital flows in its district through interest rates. If one area had too much cash, they would lower rates to deflect the capital inflows to another district whose rates were higher. So all 12 branches managed their local economies independently with the idea that capital would be attracted be higher interest rates in St Louis and move from New York if rates were lower there.
As always, it was government who cannot keep their fingers out of other people’s pockets. They alter designs for emergency reasons but never return them to the original state. The next change came for World War I. The US government needed to sell debt to pay for the war. They then ordered the Fed to buy government bonds notcorporate. This ended the Fed’s ability to DIRECTLY stimulate the economy. We are to this day plagued by this idea that Fed is now a quasi-arm of government yet owned technically by banks. It was never designed for this type of function. Politicians have screwed this up – not the bankers.
The next tinkering came in 1927. the NY Fed UNILATERALLYlowered rates to try to help Europe. The THEORY was if rates were higher in Europe, people would take their money back to Europe. This was the whole idea behind 12 branches of the Fed domestically. The European bankers convinced Benjamin Strong, head of NY Fed at that time, to lower rates in NYC to help them out. Strong agreed. However, this had the opposite effect as people saw the Fed’s actions as a confirmation that there was trouble in Europe, not just rumor.
Nonetheless, the NY Fed was then criticized for its actions in 1927 and blamed for creating the entire bull market in the USA all to accommodate Europe. This is the dominant thing today. If the Dow exploded and the Fed does nothing, they will have their heads on a silver platter. We will judge them by domestic events, not international. A crisis in Euroland is on them, not the Fed’s responsibility.
So the THEORY of capital flows and interest rates was completely different before 1935. The idea now is Europe lowers rates to stimulate borrowing even though US rates are higher. So it is all now backwards from what it was pre-1935. The Fed is NOTmoving to negative interest rate just because the former Goldman Sachs boy running the ECB is moving to negative rates thanks to Larry Summers. The spread between US 10yr and German 10yr is at historical highs of over 130 bp. This is totally just insane, but it takes all their time.
To accomplish this incomprehensible thinking process today, society’s whole ideas of how the economy works and interest rates have been inverted with Marxism. It was no longer economic driven, part of Marxism is the assumption that government is somehow in control. If they raise interest rates, on TV they will report that as the Fed does not want us to buy stocks. It is all about what government wants us to do and that is Marxist central planning control. Before 1929 in a Private Wave, the press reported rates rose so that proved there was still a bullish expectations and stocks rallied.
This is what Marxism has done to us. It inverted our thinking to the point people do not look at markets, but what does government want us to do. I was blamed for starting the take-over boom advising a lot of the take-over people in the 1980s that inspired the movie Wall Street and Barbarians at the Gate. But this Marxist thinking had gone so far you could buy a company, sell its assets, and double your money. It was just nuts. The Dow was 1,000 and our forecast was it will take off to 3,000 by the end of the decade 1989.95 and at 6,000 in the 1990′s. The Japanese reported that forecast and as it unfolded, our business in Japan expanded tremendously.
Understanding the FULL IMPACT of Marxism is critical. It was the justification that government has the capacity and ability to manipulate society. This still dominates the conspiracy thinking for to argue there is such a plot accepts Marxism as a fundamental principle. This has inverted our thinking and deflected us from reality that we are indeed our own masters. We act more like a bull in a china shop, but nonetheless, it is always a matter of just confidence. We are hard-wired like other living creatures. A herd of zebra will panic because they see others running and assume there must be some danger. Perhaps only one zebra saw a lion and he starts to run. The others run because he is running. This is the madness and delusion of crowds. We can choose to run with the herd, or rise above and understand what is really going on. It is always our choice.Negative Interest Rates – Brain-dead Thinking that Will Implode the World
The entire problem we have with this proposal of negative interest rates first put forth by Larry Summers, is that this is another means for bankers to make a fortune through theoretical stimulus that will never reach the public. This crazy idea will have aDEFLATIONARY drag on the entire economy and threaten to tear the entire system apart for it is presented on behalf of a single group – the money center banks..
The entire view of interest rates is one-sided and part of the propaganda sold to us by the press since the New Deal. The general proposition is a claim raising interest rates will be bearishfor the stock market on this one-dimensional idea that if it costs more then people will buy less. However, we put that theory to the test and it has proven to be a total fallacy. The stock market hasNEVER peaked with the same level of interest rates even twice. The bubble in 1929 took place with the lowest level of interest rates because of capital inflows into the USA whereas in 1899 rates went to nearly 200% because of capital outflows. The key is simply the spread between interest rates and expectations. If you expect to double your money in 1 year, you will pay 25%. But if you do not think you will make 1% in a year, you will not borrow at 0.5%.
Our problem is caused by academics with no trading experience, just ideas, and lawyers who think they can FORCE the people to do as they command with the threat of punishment. If they will not borrow at 0.5%, then Larry Summers pitched for the bankers as he always does. Let the bankers charge money to have an account so they will make money. They justify this by claiming making ratesNEGATIVE will simply FORCE people to invest and spend. They wipe out savings and punish people who have saved. This is looking at the world ONLY from the banker’s perspective.
This entire focus is way too narrow in its scope. What about the elderly who were told to save for their retirement? They cannot make even interest at the nominal levels. Then we have pension funds that keep 40% to 80% of their investment in “safe”government bonds that pay nothing. Most pension funds average requirement to fulfill their objective is 8%. This whole idea of negative interest rates is creating a huge pension crisis coming on the other-side of 2015.75. Mr Summers and the bankers only look at themselves and to hell with society.
Car loans, fully secured, are going for 2.29%-4% depending where you are. Considering their cost of funds is effectively ZERO, this is actually a historical high spread in profit margins for bankers. Taking rates to NEGATIVE will only result in smart money moving to equities, and dumb and dumber will just do as they are told and pay the banks to hold their money until these is none left.
Now we look at government. The deficits have not stopped. They all borrow more every year. The crisis hits because they are now addicted to low rates. What happens when rates rise? Central Banks can try to manipulate short-term rates, but they cannot manipulate long-term. That is why the Fed was buying back 30 year bonds trying to create a shortage of long-term so in theory others would lend long-term. That totally failed as everything the Fed has done. Why? Because they act ONLY indirectly and assume the banks will act as they intend. The banks have not lowered car loans or credit card fees and rates in proportion to the decline in rates at the Fed. They have pocketed the difference.
Central Banks act ONLY indirectly, and not directly. They count on banks lending. In the USA, the banks did not lend and instead they went to the Fed and demanded they be paid interest on excess reserves. The Fed complied and pays them 0.25% for excess reserves. The banks can pay ZERO and make money without risk and use the balance for trading.
This entire exercise is brain-dead and it will not end very nicely. All they are doing is wiping out pension funds and the elderly. All those years of advice save for retirement are proven to be total bullshit when banks can convince governments that people should be paying them for the privilege to trade wildly with their money. What a deal. Thank you Larry.