Category Archives: Money

Save, Invest, Speculate, Trade or Gamble? by Doug Casey

The way you deploy your money will determine the quality of your retirement and probably the rest of your life as well. From Doug Casey at internationalman.com:

save, invest

For some time, I’ve been saying that the economy is in the “eye of the storm” and that when it emerged, the weather would be far rougher than in 2008. The trillions of currency units created since 2007, combined with artificially suppressed interest rates, have papered over the situation. But only temporarily. When the economy goes into the trailing edge of the hurricane, the storm will be much different, much worse, and much longer lasting than what we experienced in 2008 and 2009.

In some ways, the immediate and direct effects of this money creation appear beneficial. For instance, by not only averting a sharp complete collapse of financial markets and the banking system, but by taking the stock market to unprecedented highs. It’s allowed individuals and governments to borrow more, and live even further above their means. It may even create what’s known as a “crack-up boom”.

However, a competent economist (as distinguished from a political apologist, many of whom masquerade as economists) will correctly assess the current prosperity as an illusion. They’ll recognize it as, at best, a natural cyclical upturn – a “dead cat bounce.”

What we’re really interested in, however, are not the immediate and direct effects of QE— “Quantitative Easing”, and ZIRP—Zero Interest Rate Policy. As much as I love the way they fabricate these acronyms and euphemisms, what we’re really interested in is their indirect and delayed effects. In particular, how do we profit from them? What is likely to happen next in the economy? Which markets are likely to go up, and which are likely to go down?

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Federal Cash For Illinois Is Vastly More Than Commonly Reported: $138 Billion And Counting, by Mark Glennon

Illinois lawmakers say they are now on a sound fiscal path, but that only comes after the state received huge grants from Uncle Sugar. From Mark Glennon at wirepoints.org:

We finally have a more comprehensive tally of the grotesquely oversized federal assistance dispensed under the guise of pandemic relief. It’s from CRFB, the Committee for a Responsible Federal Budget, and it’s broken down by states. It obliterates claims made by Illinois lawmakers that they’ve put this state on a sound fiscal path. Illinois, instead, was temporarily bailed out.

The total amount committed or disbursed to public and private sector recipients in Illinois is $138 billion and growing, the CRFB shows. Another $24 billion is allowed for Illinois under federal legislation already passed.

The current total of $138 billion may even shock many who have been following the federal bailout. That’s because most reporting to date has focused only on the direct aid to the state under the recent American Rescue Plan Act, which was only $8.1 billion. CRFB’s $138 billion total state aid includes distributed aid to both the public and private sector across Illinois:

    • Loan and Grant Programs: $63.5 billion
    • State & Local Funding: $16.2 billion
    • Income Support: $24.3 billion
    • Direct Payments: $10.0 billion
    • Health Spending: $7.86 billion
    • Other Spending: $4.01 billion
    • Administrative: $5.95 billion
    • Lending Facilities: $4.04 billion
    • Other Loan Purchase Programs: $1.59 billion

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Who Stole the People’s Money? by Philip Giraldi

The stuff that goes in Washington, sub rosa and out of sight, is nowhere near as disturbing as the crimes that are transacted right out in the open. From Philip Giraldi at unz.com:

You might well ask why the world’s most expensive army can’t fight

Too many American politicians at all levels of government have come to believe that your money is their money. Federal, state and local tax rates are set annually and often arbitrarily based on the issues that elected officials and tax managers consider to be important. Input from the public is basically unwelcome except at election time but, even then, the breakdown of dollars and cents that will be coming out of one’s pocket is rarely under discussion.

It is past time to consider what the pie in the sky being proposed by the Democrats, since they are currently in power, will actually cost the American taxpayer. Bear in mind, that Democratic Party proposals that are now being floated are directed at certain constituencies that the party is seeking to weld into an unbeatable coalition that will defy all Republican attempts to recover either Congress or the Presidency. Similar activity is taking place at the state and local level. There is no consideration of the fact that government, at least theoretically, is intended to benefit all of the citizenry, not a select portion thereof that will henceforth be required to deliver the vote loyally. Politicians who manipulate the system with that in mind should be sent to jail, but alas, in the US system no one is ever punished, even if they start a war under false premises as did former President George W Bush and his apparatchiks.

Under the Democrats, the entire process whereby the spoils derived from being power are distributed is being driven by social engineering, i.e. race and gender. One of President Joe Biden’s first moves upon taking office was to propose special payments and other incentives for black farmers, who, his administration argued, had been disadvantaged because they had been systematically denied loans for many years. It should seem outrageous that federal tax dollars were to be used to support only one racial group, but not a single Democrat appeared to be disturbed. Fortunately, a federal court ruled favorably in a case brought by a white farmer claiming that racially directed government assistance is unconstitutional as it violates the “equal protection under the law” principle. The Democrats are, however, continuing to push for their program of tying blacks firmly into their coalition, even if it means creating a system that is manifestly and even transparently unfair.

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Protect Yourself From Inflation, by Bill Bonner

Somebody is always going to be on the losing end of inflation, but it doesn’t have to be you. From Bill Bonner at rogueeconomics.com:

The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislatures.

– Legendary value investor, Warren Buffett,
in Fortune magazine, 1977

YOUGHAL, IRELAND – Yesterday, a dear reader asked how the average Joe can “get a leg up” in a dangerous and difficult world?

It won’t be easy.

Here’s the latest mouthful from Bloomberg:

Fed Officials Rattle Rate-Hike Saber as Price Pressures Surprise

What Bloomberg is trying to say is that the Federal Reserve is hinting that it might… possibly… perhaps… raise rates.

Wednesday’s Fed forecast suggested that two increases are likely in 2023; none before. In other words, it said nothing.

It could raise rates twice… three times… four times… even 10 times… and still be well below the level of consumer price increases.

Which is to say, the Fed is now “behind the curve”… following the trend of events, not leading it… and hopelessly stuck in an Inflate and Die trap.

But that is just to say that the “average Joe” should prepare now: Consumer prices will probably continue to rise. And if not now… later.

Price Crime

So let’s look at the leg we’re trying to get up.

Most people get their income from selling their time. A man with a backhoe can dig a trench faster than 10 men with shovels. The capital – the backhoe – is what makes a man’s time more valuable.

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Peace-Washing: Is a Network of Major Donors Neutralizing Activism in the Peace Movement? by Dave Lindorff

If you’re opposed to a political movement’s aims become its financial Sugar Daddy. Before you know it that movement will be singing your tune. From Dave Lindorff at consortiumnews.com:

We’re now in a situation where many ostensible “peace” groups seem tied to the Democratic Party while the Biden administration pursues militaristic policies, writes Dave Lindorff. 

Jan. 4, 2020, protest in Washington, D.C. against President Donald Trump’s ordering of the assassination of Qasem Soleimani, Iran’s top general, and others in a drone strike near the Baghdad airport. (Stephen Melkisethian, Flickr, CC BY-NC-ND 2.0)

During the four years of the Trump administration, resistance and even revolutionary talk were in the air as organizations with names like The Resistance and Our Revolution brought together liberals, Democrats of all stripes and Sandernistas, all opposed to President Donald Trump and to Trumpism in all its manifestations. 

When it came to matters of war and peace, virtually everything Trump did internationally — his fawningly friendly relations with Russian President Vladimir Putin, Chinese President Xi Jinping and North Korean leader Kim Jong-un, his Tomahawk cruise missile attacks on Syria, his coziness with Israeli Prime Minister Benjamin Netanyahu, his ordering of a drone assassination of Iranian Gen. Qasem Soleimani, his massive military budgets — was criticized mercilessly by progressives, the liberal establishment and groups in the Democratic mainstream. 

With the arrival of the Biden presidency, the dynamics have changed dramatically. Consider the liberal response to the Biden transition team floating Michèle Flournoy’s name as a potential secretary of defense. Instead of outrage at the idea of someone who had spent the previous four years helping arms contractors win business with the Trump Pentagon and who is an advocate for tough, even aggressive stances towards Russia, China and Iran, we saw an open letter of support signed by 29 key people active in the peace and arms-control arena

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‘Are You on the Take?’ by John Stossel

New Jersey is corrupt. Who knew? From John Stossel at theburningplatform.com:

'Are You on the Take?'

Home prices keep climbing. It’s another reason to let people build housing.

But corrupt politicians sometimes prevent that.

The little town of Edgewater, New Jersey, sits right across the Hudson River from Manhattan. A developer, Maxal Group, bought a dumpsite there and proposed building more than a thousand new waterfront apartments.

Why? The development would generate $12 million a year in taxes for Edgewater. To please the politicians, Maxal even offered to build parks and a school at no cost.

But Edgewater Mayor Michael McPartland and his town council rejected the parks, school and extra tax revenue.

Instead, they spent tax money on lawyers to try to seize the property using eminent domain law. They claimed they wanted to use site to park garbage trucks.

Why would they do this? So garbage could have a beautiful view of Manhattan’s skyline?

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Suffering a sea-change, by Alasdair Macleod

When interest rates really start to reflect the ongoing monetary inflation, it will blow the prices of most financial assets out of the water. From Alasdair Macleod at goldmoney.com:

here is an established theoretical relationship between bonds and equities which provides a framework for the future performance of financial assets. It would be a mistake to ignore it, ahead of the forthcoming rise in global interest rates.

Price inflation is roaring, and so far, central banks are in denial. But it is increasingly difficult to see how monetary policy planners can extend the suppression of interest rates for much longer. There can only be one outcome: markets, that is to say prices determined by non-state actors, will force central banks to capitulate on interest rates in the summer.

Hardly noticed, China is deliberately putting the brakes on its economy, which will cause an inflationary dollar to collapse, unless the US defends it by putting up interest rates. Deliberate? Almost certainly, as part of its strategy, China is taking the financial war with the US into the foreign exchanges.

Bond yields will rise, with the US Treasury 10-year bond leaving a 2% yield far behind. Equity markets will sense the danger, and it might turn out that the month of May marks a peak in financial asset values — following cryptocurrencies into substantial bear markets.

Introduction

There is an old stock market adage that you should sell in May and go away. It has already proved its worth in the case of cryptocurrencies, with Bitcoin more than halving at one point, and Ethereum losing 57% between 10—19 May. A sea-change in cryptocurrencies’ market sentiment has taken place.

As for equities, it could also turn out that 10 May, which so far has marked the S&P 500 Index’s high point, will mark the beginning of their decline. But it’s too soon to tell. However, we do know that following the unprecedented dilution of the major currencies’ purchasing power since March 2020 commodity prices have increased substantially, global logistics are fouled up and consumer prices are rapidly rising everywhere, a combination of events which is bound to lead to higher interest rates. But as is usually the case in times like these, central bankers and market bulls are wishing this reality away.

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Money As the Greater Depression Deepens, by Doug Casey

Own physical gold and silver not as a speculation against increasingly worthless currencies, but because they are real money. From Doug Casey at internationalman.com:

money

We talk a lot in these pages about what to do with one’s money, but I question whether most subscribers (forget about the public at large) have an adequate grasp of the basics. Without it, much of what we say may seem capricious or outlandish, crazy ideas readers tolerate only because we’ve been so right about the big trends. But the basics in speculating and investing are like the basics in martial arts: Just remembering them isn’t enough; they need to be second nature. That means reviewing and practicing over and over.

It’s not an accident that we usually make good investment calls; the selections arise from a constant awareness of the basics. So I want to briefly review those fundamentals. Let’s start with gold. We’re very gold-oriented around here.

You undoubtedly have a good position in gold. Many of your friends are aware that you’re a gold bug, and more than a few of them question your wisdom. Are you able to give them a succinct and cogent explanation not just for why gold is cyclically a good speculation, but why it’s money? I’ll wager the answer in many cases is, “No.”

I say that because when I give a speech, I often offer a prize to the audience member who can tell me the five classical reasons gold is the best money. Quickly now; what are they? Can’t recall them? Read on, and this time, burn them into your memory.

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“No 90-year old ever complained about being too healthy. . .” by Simon Black

There are some things you can’t have too much of. From Simon Black at sovereignman.com:

“No 90-year old ever complained about being too healthy,” my friend Dr. Michael Bilof joked to me over lunch on Saturday.

Mike is a vascular and bariatric surgeon, as well as an anti-aging expert. And he’d just given us a really interesting presentation about how to prolong both quantity AND quality of life; he called it “How to live to 100… without feeling like 100.”

This was at the annual meeting of the Atlas 400 that took place over the weekend in beautiful Park City, Utah.

I’m on the board of Atlas, so it’s my duty to attend– I flew up and back just for the weekend.

But even without being on the board, I wouldn’t dream of missing it. I’ve attended every annual meeting since the inception of the club more than a decade ago… primarily because the members are all so great, and because I learn so much.

Dr. Mike was one of the speakers, along with Professor Peter Turchin– a highly cited researcher who studies the collapse of empires and complex civilizations.

Prof. Turchin’s extensive research showed us that western civilization has entered a new crisis era that could easily last a decade or more, just like in the US in the 1860s and early 1960s.

I’ll have more about his conclusions in a future letter because they’re highly intriguing and will likely affect us all. But I want to get back to Mike for now, and I think you’ll see why in a moment.

Dr. Mike’s presentation on wellness and longevity was grounded in multi-disciplinary medical science, biochemistry, and common sense. And it was truly insightful.

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David Rosenberg: “A Whole Bunch Of People Are Really, Really Wrong” About Inflation, by Tyler Durden

The consensus is for further increases in inflation, and SLL is part of that consensus. However, SLL is always interested in views that challenge the consensus. From Tyler Durden at zerohedge.com:

With so much focus on the macro environment as stocks struggle to return to their all-time highs, MacroVoices invited seasoned Wall Street economist David Rosenberg, the chief economist and chief strategist of Rosenberg Research, on the show this week to discus the market’s topic du jour: inflation, and whether or not it will be “transitory,” like the Federal Reserve says.

What followed was a thorough critique from Rosenberg, who just a couple of months ago was warning that rising Treasury yields would soon push the market to a “breaking point,” of what he sees as flaws in the market’s pricing of lasting inflationary pressures.

Instead, Rosenberg essentially agrees with Fed Chairman Jerome Powell that the recent acceleration in inflation seen in April will be temporary.

What’s going on isn’t a fundamental “regime shift”, but rather a “pendulum” swinging back to the opposite extreme following the sudden deflationary demand shock caused by the pandemic. We had three consecutive months of negative CPI prints last year, Rosenberg pointed out. To offset all that, April saw the biggest MoM jump in consumer prices since 1981.

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