Category Archives: Banking

No SWIFT, No Gas: Russia Responds To Western Threats As US Tries To Orchestrate Workaround, by Tyler Durden

Russia is not without economic weapons of its own, particularly if the U.S. and Europe should try to bar it from SWIFT, the international banking network. From Tyler Durden at zerohedge.com:

While the situation along the Ukrainian border appears to be deescalating – aside from US/UK’s panic coalition, a top Russian official says that if the West follows through on a threat to cut the Kremlin off from the SWIFT payment system, Europe won’t receive Russian oil, gas, or metals.

Vladimir Putin signs a natural gas pipeline in the Russian Far East city of Vladivostok on September 8, 2011. (DMITRY ASTAKHOV/AFP/Getty Images)

On Tuesday, British Prime Minister Boris Johnson said he was in discussions to ban Russia from the Swift global payments system with the United States, calling it a “very potent weapon.”

“I’m afraid it can only really be deployed with the assistance of the United States though. We are in discussions about that,” he added.

Nikolay Zhuravlev, Vice Speaker of the Federation Council, responded to Johnson’s threat – telling Russia’s state-owned TASS that Europe would suffer the consequences of such a move.

SWIFT is a settlement system, it is a service. Therefore, if Russia is disconnected from SWIFT, then we will not receive [foreign] currency, but buyers, European countries in the first place, will not receive our goods – oil, gas, metals and other important components of their imports. Do they need it? I am not sure,” said Zhuravlev – who noted that while SWIFT is convenient and fast – it’s not the only game in town when it comes to financial transactions.

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The Cult of Speculation Is a Cult of Doom, by Charles Hugh Smith

We can’t all gamble our way to prosperity. From Charles Hugh Smith at oftwominds.com:

Surely the Fed gods will affirm the cult’s most revered articles of faith. But false gods eventually fail, even the Fed.

Every once in awhile the zeitgeist sets up an either / or: either the zeitgeist is crazy or I’m crazy. (OK, let’s agree I’m crazy; see, it’s not that hard to find something to agree on, is it?)

What strikes me as crazy is the global Cult of Speculation which has recruited virtually the entire human populace in a bizarre cult in which speculating wildly is now the accepted norm, a norm papered over with fine-sounding phrases such as “investing for the future,” “hold on for dear life,” “conviction trade,” “new paradigm,” and so on, all variations on the time-honored “this time it’s different.”

But speculative frenzies that sweep up everyone with a few quatloos to place on the gaming table are not different, they are the norm. Humans love gambling, winning, windfalls, something for nothing, being ahead of the pack (“the new paradigm,” etc.) and the excitement of running with the triumphant herd, all of which are fulfilled by speculative frenzies.

All the speculative free-for-all is lighthearted fun on the way up, but there is a much bleaker reality that few are willing to recognize, much less discuss: now that the global economy is in thrall to the top 0.1% and the foundations of widespread prosperity crumble into dust, the ladder to wealth, power and prestige has few rungs left.

Most of the few remaining open slots in the top tier have already been taken by insiders and the offspring of the already-wealthy, and so the only way to get ahead is to speculate and win–not just win, but win big.

In other words, the fundamental driver of this speculative frenzy isn’t just greed, it’s desperation. For the vast majority of the world’s population, speculating and winning is their only chance to escape debt-serfdom or wage-slavery.

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A Crucial Note To Everyone In IT, by Paul Rosenberg

Yes, you do have responsibility for whatever it is you produce that allows you to earn your keep. From Paul Rosenberg at freemansperspective.com:

The central banks of the world are getting more and more serious about Central Bank Digital Currencies, CBDCs. And that means they are hiring.

Today I’m going to play the conscience of IT, and of engineering in general. That’s openly arrogant on my part, but I’m not seeing anyone else doing it, and it needs to be done. So be it.

Central Bank Digital Currencies are the most direct threat to human liberty – and to the human mind – that has ever come along. Consider, please, that they directly correspond to the “mark of the beast” in the Bible. Even if you think the Bible is foolishness, there’s no doubt that whoever wrote Revelation was a supremely imaginative and creative person… and this was the most powerful dystopian scenario they could imagine.

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Understanding the inflation problem, by Alasdair Macleod

Rising prices are not inflation. Inflation is expanding currency and bank credit, which in turn leads to rising prices. From Alasdair Macleod at goldmoney.com:

In recent weeks inflation has become a major economic concern. Nearly all the commentary emanating from monetary policy makers, economists, and the media is misguided, believing inflation is rising prices and must be addressed accordingly.

They are only the symptoms of inflation. The true cause is the expansion of currency and bank credit, which, reflected in the US dollar’s M2 money supply has increased substantially since March 2020, and now stands at nearly three times the level when Lehman failed.

After defining the differences between money, currency, and credit which together make up the media of exchange, this article explains how changes in the quantities of currency and credit translate into prices.

The solution to the inflation problem is not price controls, which are always counterproductive, but to return to a regime of sound money. This article shows what must be done to achieve this outcome and concludes that it is impossible to do so without a sufficiently serious financial and economic crisis to discredit government intervention in markets and to then allow governments to stabilise their currencies and reduce their spending to a bare minimum.

Defining inflation, money, currency, and credit[i]

A resolution of the inflation problem requires an understanding of inflation itself. It is an increase in the quantity of the media of exchange, whether it be money, currency, credit, or a combination of any or all of them. It is not a rise in the general price level. That is the consequence of inflation when the media of exchange loses purchasing power.

To avoid misunderstanding, it is important in any discussion about money to provide an accurate definition of what is money and what is not money. Let us clarify this at the outset:

That which is commonly referred to as money is more correctly any form of circulating media used for the payment of goods and services in an economy based on the division of labour. The term “circulating media” or “media of exchange” more accurately represents the common concept of money as the term is used today.

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The Greatest Crackup the World’s Ever Known, by MN Gordon

This is going to be the crackup to end all crackups. From MN Gordon at economicprism.com:

By now, anyone with half an inkling of curiosity about why prices and values don’t add up has traced the divide back to the money itself.  It’s not hard to see.

Asset prices, like houses and the major stock market indexes, have lost all visible connection with the underlying economy.  However, wage growth has stagnated; over the last 40 years low level wages have only increased by $0.32 per hour in real inflation adjusted terms.  Stocks and residential real estate, at the same time, have gone to the moon.

Even with the NASDAQ’s 11.2 percent decline from its all-time closing high set on November 19, the index is still up over 110 percent from its March 2020 low.  What will it take for the NASDAQ to crash back to earth?

Something else that has gone to the moon is government debt.  In 1980, the national debt was $908 billion.  Today it’s over $29.8 trillion.  That’s an increase of over 3,181 percent.  Over this time, however, gross domestic product (GDP) has only increased 632 percent – from $2.86 trillion to $20.94 trillion.

Of course, these are merely the facts and figures.  The effects to countless Americans are hard to measure.  But, by and large, the last 40 years have been a great disappointment for the American worker – and an absolute boon for the political elites.

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This Is Your Last Chance, Part Two, by Robert Gore

SWITZERLAND-POLITICS-ECONOMY-WEF

The biggest trend change in history.

Part One

Supposedly collectivists will reap the rewards of the only things they produce—destruction and death. After the collapse, a global collectivist government will replace the current multiplicity of collectivist governments. Most of the collapse’s survivors will become slaves living on subsistence doled out by the small aristocracy that will rule the planet. The real work will be done by artificially intelligent machines. The slaves will be pacified chemically and electronically through ubiquitous virtual reality technologies and monitored ceaselessly while the aristocrats live in unimaginable splendor. Those who resist pacification and enslavement will be “corrected,” or if that fails, murdered.

This is simply a straight line projection of the present and recent past that ignores a fully evident counter-trend still gathering steam. After a centuries-long, bull-market run, government as an institution has topped out. The plans and predictions of the global totalitarians are the overconfident rationalizations of newly minted millionaires at the top of bull markets—the “permanently high plateau” in 1929, the “new economy” in 2000, “house prices only go up” in 2007, and “the Fed’s got our backs” now.

We already have shining examples of totalitarian collectivist failure in really big countries with lots of people—the Soviet Union and Communist China. The former collapsed after tens of millions died, the latter made a mid-course correction towards more freedom after tens of millions died.

Blithering idiots attribute those failures to incomplete control by the totalitarians or claim collectivism can only work when the whole world is completely enslaved. They ignore the core quandary of collectivist control—it produces nothing. Collectivist governments steal, they don’t produce. A global collectivist government will produce exactly what the current multiplicity of collectivist governments produce: nothing. Yet, this government will supposedly build the world back better from the ashes of financial, economic, and political collapse.

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Choose One, But Only One: Defend the Billionaire’s Bubble or the U.S. Dollar and Empire, by Charles Hugh Smith

The dollar and empire come first. From Charles Hugh Smith at oftwominds.com:

The Empire is striking back, protecting what really counts, and the Billionaire Bubble sideshow is folding its tents.

One of the most enduring conceits of the modern era is that the Federal Reserve acts to goose growth and therefore employment while keeping inflation moderate (whatever that means–the definition is adjustable). This conceit is extremely handy as PR cover: the Fed really, really cares about little old us and expanding our ballooning wealth.

Nice, except it doesn’t. The Fed’s one real job is defending the U.S. dollar, which is the foundation of America’s global hegemony a.k.a. The Empire.

One thing and one thing alone enables global dominance: being able to create “money” out of thin air and use that “money” to buy real stuff in the real world. The nations that can create “money” out of thin air and trade it for magnesium, oil, semiconductors, etc. have an unbeatable advantage over nations that must actually mine gold or make something of equal value to trade for essentials.

The trick is to maintain global confidence in one’s currency. There is no one way to manage this, as confidence in a herd animal such as human beings is always contingent. Once the herd gets skittish, all bets are off.

The herd is exquisitely sensitive to movements on the edge of the herd, where threats arise. There are various tricks one can deploy to maintain confidence: pay a higher rate of interest on bonds denominated in one’s currency, so global capital flows into your currency; treat this capital well with a transparent set of tax laws and judiciary / regulatory oversight, maintain a deep pool of liquidity so capital can enter and exit without stampeding the herd, and having at least a semi-productive, diverse economy that generates goods, services and income streams to support the currency.

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This Is Your Last Chance, by Robert Gore

This is Part One, Part Two will be posted 1/21.

The indictment is long and strong. A cabal of politicians, governments, courts, medical authorities, pharmaceutical companies, multinational agencies, the mainstream media, academics, and foundations, particularly the World Economic Forum, have concocted responses to a virus and its variants that have robbed the people of rightful liberties, are a mechanism for the imposition of global totalitarianism, and have amplified rather than reduced the virus’s dangers, inflicting severe injury and death that will last years, perhaps decades, and afflict millions, if not billions, of victims (See “The Means Are The End,” Robert Gore, SLL, November 13, 2021).

This is their last chance. They can reverse course and pray to whatever demonic deity they pray to that it’s enough to prevent the retribution they deserve, or they can perish in the destruction they’ve created. They will reap what they have sown, their time is up.

This is it, the last gasp of the psychopaths who express their contempt and hatred for humanity by trying to rule it. Compulsion, not voluntary and natural cooperation. Power, pull, and politics, not incentives, competition, honest production, and value-for-value trade. From each according to his virtue to each according to his depravity.

The Last Gasp,” Robert Gore, SLL, March 24, 2020

Their time is up. This assertion may appear as recklessly foolish as Luke Skywalker’s ultimatum—“Jabba, this is your last chance, free us or die!”—did to Jabba the Hut at the Sarlacc Pit. It’s not, but to understand why requires an understanding of slow moving (on human time scale) but enormously powerful forces. Most history studies the wrong things and most predictions are straight line projections of the present and recent past.

The linchpin of history is innovation, not governments and rulers. We don’t know who ruled whom when humanity lived in caves, but we do know that someone tamed fire, someone planted seeds and cultivated them for food, and someone invented the wheel. With such steps humanity emerged from the caves and began building civilization. Even at this early stage one thing was clear: innovation creates new capabilities and opportunities and serves as the basis for further innovation.

Government is the acquisition of resources that enables those who govern to exercise control over those whom they govern. This presupposes resources, which presupposes production. Government is always subsidiary to production, yet most history focuses on the former and treats the latter as a secondary matter. This is looking down the telescope from the wrong end. Before a government can take someone must make.

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A euro catastrophe could collapse it, by Alasdair Macleod

The reckoning for a lot of bad loans is coming and it may well destroy the euro. From Alasdair Macleod at goldmoney.com:

This article looks at the situation in the euro system in the context of rising interest rates. Central to the problem is role of the ECB, which through monetary inflation embarked on a policy of transferring wealth from fiscally responsible member states to the spendthrift PIGS and France. The consequences of these policies are that the spendthrifts are now ensnared in irreversible debt traps.

Even in a Keynesian context, the ECB’s monetary policy is no longer to stimulate the economy but to keep the spendthrifts afloat. The situation has deteriorated so that Eurozone commercial banks appear to have credit restricted in New York, evidenced by the reluctance of the US banks to enter into repo transactions with them, leading to the market failure in September 2019 when the Fed had to intervene.

An examination of the numbers strongly suggests that even Eurozone banks, insurance companies and pension funds are no longer net buyers of Eurozone government debt. It could be because the terms are unattractive. But if that is the case it is an indictment of the ECB’s asset purchase programmes deliberately suppressing rates to the point where they are unattractive, even to normally compliant investors.

Consequently, without any savings offsets, the ECB has gone full Rudolf Havenstein, and is following similar inflationary policies to those that impoverished Germany’s middle classes and starved its labourers and the elderly in 1920-1923. That the German people are tolerating such an obvious destruction of their currency for the third time in a hundred years is simply astounding.

Institutionalised Madoff

Schemes to pilfer from people without their knowledge always end in disaster for the perpetrators. Central banks using their currency seigniorage are no exception. But instead of covering it up like an institutionalised Madoff[i] they use questionable science to justify their openly fraudulent behaviour. The paradox of thrift is such an example, where penalising savers by suppressing interest rates supposedly for the wider economic benefit conveniently ignores the theft involved. If you can change the way people perceive reality, you can get away with an awful lot.

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11 Reasons Why This Was Joe Biden’s Worst Week EVER, by Michael Snyder

Joe is having a tough time with this president thing. From Michael Snyder at theeconomiccollapseblog.com:

Joe Biden has had a lot of bad weeks over the last 12 months, but this week has got to take the cake.  In fact, it is hard to remember the last time that any president had a week that was this bad.  But this wasn’t supposed to happen.  Democrats were promising a return to “normalcy” after the Trump years, but instead virtually everything seems to be going wrong.  No matter where you are on the political spectrum, you should be able to admit that Joe Biden’s presidency is not going very well at all.  At this point, even many Democrats are using the word “failure” to describe Biden, and this is fueling rumors that Hillary Clinton may run again in 2024.

Yes, Biden’s presidency has been such a complete and utter disaster that the absolutely unthinkable could actually become a reality.

Just when you think that things can’t get any worse, somehow they do.  The following are 11 reasons why this was Joe Biden’s worst week ever…

#1 The OSHA Mandate

On Thursday, we learned that the U.S. Supreme Court had voted 6 to 3 to strike down Biden’s cherished OSHA vaccine mandate…

President Biden urged businesses to bring in vaccine mandates on their own and pushed states to ‘do the right thing’ after the Supreme Court voted 6-3 to block his sweeping rules on private companies in a crushing blow to his pandemic response.

The high court did however allow a vaccine mandate for employees at health care facilities receiving federal dollars to go into effect.

The OSHA mandate would have covered approximately 80 million American workers, and countless workers all over the country that would have lost their jobs under this mandate are greatly celebrating right now.

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