Category Archives: Money

Underestimating Them and Overestimating Us, by Jim Quinn

People, including SLL, have been saying a cataclysmic crisis is coming for years. It hasn’t happened yet, but that doesn’t make them wrong, just early. From Jim Quinn at theburningplatform.com:

“Do not underestimate the ‘power of underestimation’. They can’t stop you, if they don’t see you coming.” ― Izey Victoria Odiase

Image result for bernanke, yellen, powell

During the summer of 2008 I was writing articles a few times per week predicting an economic catastrophe and a banking crisis. When the biggest financial crisis since the Great Depression swept across the world, resulting in double digit unemployment, a 50% stock market crash in a matter of months, millions of home foreclosures, and the virtual insolvency of the criminal Wall Street banks, my predictions were vindicated. I was pretty smug and sure the start of this Fourth Turning would follow the path of the last Crisis, with a Greater Depression, economic disaster and war.

In the summer of 2008, the national debt stood at $9.4 trillion, which amounted to 65% of GDP. Total credit market debt peaked at $54 trillion. Consumer debt peaked at $2.7 trillion. Mortgage debt crested at $14.8 trillion. The Federal Reserve balance sheet had been static at or below $900 billion for years.

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Gold’s long-term gains have even outperformed Warren Buffett… by Simon Black

Whatever its faults, gold generally holds its purchasing power. Historically, an ounce of gold has bought a man’s suit, and it still does. From Simon Black at sovereignman.com:

Warren Buffett, despite his extraordinary investment success, has a rather famous and long-standing love/hate relationship with precious metals.

Maybe it started with his dad– Congressman Howard Buffett of Nebraska– who, as a staunch advocate for the gold standard, argued to his colleagues on Capitol Hill that “paper money systems have always wound up with collapse and economic chaos.”

Warren himself acquired a record-setting 128 million ounces of silver back in the late 1990s… which he later sold at a profit in the early 2000s.

But to listen to him talk about precious metals these days, he’s always negative.

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The Repo Market Incident May Be The Tip Of The Iceberg, by Daniel Lacalle

Unfortunately, Daniel Lacalle may be right. From Lacalle at dlacalle.com:

The Federal Reserve has injected $278 billion into the securities repurchase market for the first time. Numerous justifications have been provided to explain why this has happened and, more importantly, why it lasted for various days. The first explanation was quite simplistic: an unexpected tax payment. This made no sense. If there is ample liquidity and investors are happy to take financing positions at negative rates all over the world, the abrupt rise in repo rates would simply vanish in a few hours.

Let us start with definitions. The repo market is where borrowers seeking cash offer lenders collateral in the form of safe securities.  Repo rates are the interest rate paid to borrow cash in exchange for Treasuries for 24 hours.

Sudden bursts in the repo lending market are not unusual. What is unusual is that it takes days to normalize and even more unusual to see that the Federal Reserve needs to inject hundreds of billions in a few days to offset the unstoppable rise in short-term rates.

Because liquidity is ample, thirst for yield is enormous and financial players are financially more solvent than years ago, right? Wrong.

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Doug Casey and E.B. Tucker on the Climate Change Hoax

The climate change hoax is “supported” by a lot of junk science, junk scientific procedures, money, political opportunism, and outright lies. From Doug Casey and E.B. Tucker at caseyresearch.com:

Chris’ note: “How dare you!”

“You have stolen my dreams and my childhood with your empty words.”

On Monday, 16-year-old Swedish climate activist Greta Thunberg delivered a powerful speech to world leaders at the United Nations Global Climate Action Summit in New York.

Her message was clear. She accused them of not doing enough to save the planet.

And leading up to the summit, New York City announced that its 1.1 million public school students could skip class to join the global climate strike protests. Thousands of teenagers ended up flooding the streets of Manhattan, demanding change.

All of this kicked the climate change debate into high gear.

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David Stockman on the Coming Financial Panic and the 2020 Election

When the next financial crisis hits, there won’t be a central bank rescue. From David Stockman at internationalman.com:

International Man: We seem to be near the top of the “everything bubble.” Almost nothing is cheap… anywhere. What are your thoughts on where people should put their money for prudence and for profit?

David Stockman: I would recommend recognizing that the “everything bubble” is the most extreme, exaggerated, severe financial bubble in world history. It will inevitably collapse, and there will be massive losses, even greater than occurred in 2008 and 2001.

So, the first thing is to stay out of the casino. By that, I mean the financial-market stocks, bonds, and everything else.

These markets are so artificial. They’re just chasing what the central banks are doing. There’s no honest price discoveries or supply and demand; nobody’s discounting the future of economic growth, productivity, and investment. You’ve got the chart monkeys, 29-year-old day traders who are in charge of the market.

When the big correction comes, there are going to be massive losses, and the panic will be great. All correlations will go to 1—which means everything will fall: the good, the bad, and the indifferent.

There’s this old saying among traders that when the cops raid the house of ill repute, they carry out the good girls, the bad girls, and the piano player too. That’s essentially what’s going to happen.

You can’t be saved by picking high-yielding stocks or conservative blue chips or stocks that provide daily necessities like food—it doesn’t matter. Everything’s overpriced right now because of this huge financial distortion.

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The Great Switch: The Geo-Politics of Looming Recession, by Alastair Crooke

The US is switching roles from the world’s policeman towards unilaterally pursuing its own interests. From Alastair Crooke at strategic-culture.org:

Is the prospect of looming global recession merely an economic matter, to be discussed within the framework of the Great Financial Crisis of 2008 – which is to say, whether or not, the Central Bankers have wasted their available tools to manage it? Or, is there a wider pattern of geo-political markers that may be deduced ahead of its arrival?

Fortunately, we have some help. Adam Tooze is a prize-winning British historian, now at Columbia University, whose histories of WWII (The Wages of Destruction) – and of WWI (The Deluge) tell a story of 100 years of spiraling; ‘pass-the-parcel’ global debt; of recession (some ideologically impregnated) , and of export trade models, all of which have shaped our geo-politics. These are the same variables, of course, which happen to be very much in play today.

Tooze’s books describe the primary pattern of linked and repeating events over the two wars – yet there are other insights to be found within the primary pattern: How modes of politics were affected; how the idea of ‘empire’ metamorphosed; and how debt accumulations triggered profound shifts.

But first, as Tooze notes, the ‘pattern’ starts with Woodrow Wilson’s observation in 1916, that “Britain has the earth, and Germany wants it”. Well, actually it was also about British élite fear of rivals (i.e. Germany arising), and the fear of Britain’s élites of appearing weak. Today, it is about the American élite fearing similarly, about China, and fearing a putative Eurasian ‘empire’.

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The Battle of the ‘Flations has Begun, by Tom Luongo

Can central banks stop a deflationary tsunami? From Tom Luongo at tomluongo.me:

Inflation? Deflation? Stagflation? Consecutively? Concurrently?… or from a great height (apologies to Tom Stoppard).

We’ve reached a pivotal moment where all of the narratives of what is actually happening have come together. And it feels confusing. But it really isn’t.

The central banks have run out of room to battle deflation. QE, ZIRP, NIRP, OMT, TARGET2, QT, ZOMG, BBQSauce! It all amounts to the same thing.

How can we stuff fake money onto more fake balance sheets to maintain the illusion of price stability?

The consequences of this coordinated policy to save the banking system from itself has resulted in massive populist uprisings around the world thanks to a hollowing out of the middle class to pay for it all.

The central banks’ only move here is to inflate to the high heavens, because the civil unrest from a massive deflation would sweep them from power quicker.

For all of their faults leaders like Donald Trump, Matteo Salvini and even Boris Johnson understand that to regain the confidence of the people they will have to wrest control of their governments from the central banks and the technocratic institutions that back them.

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