What Life Will Be Like After An Economic Collapse

If you have been waiting for a public announcement or news headline to let you know that an economic collapse has begun, you are in for the surprise of your life. If history in other countries and in Detroit, Michigan is any indication, there won’t be an announcement. An economic collapse tends to sneak up on a city, region, or country gradually over time. In some cases, the arrival of an economic collapse is so gradual that most people living in it aren’t even aware of it at first.
Things just get gradually worse, often so gradually that people and families adjust as best they can until one day they actually realize that it’s not just their home or their neighborhood that has been hit so hard financially, it’s everyone. By that time, it’s often too late to take preventative action.
In March of 2011, Detroit’s population was reported as having fallen to 713,777, the lowest it had been in a century and a full 25% drop from 2000. In December 2011, the state announced its intention to formally review Detroit’s finances. In May of 2013, almost two years later, the city is deemed ‘clearly insolvent’ and in July of 2013, the state representative filed a Chapter 9 bankruptcy petition for Motor City. Detroit became one of the biggest cities to file bankruptcy in history.
So we have only to look at what happened in Detroit, Michigan post-bankruptcy, to get an indication of what might soon be widespread across the United States and what is already widespread in countries like Brazil and Venezuela.

This post was published at Zero Hedge on Aug 28, 2016.

America The Debt Pig: We Are A ‘Buy Now, Pay Later’ Society – And ‘Pay Later’ Is Rapidly Approaching

If you really wanted to live like a millionaire, you could start doing it right now. All you have to do is to apply for as many credit cards as possible and then begin running up credit card balances like there is no tomorrow. At this point, I know what most of you are probably thinking. You are probably thinking that such a lifestyle would not last for long and that a day of reckoning would eventually come, and you would be exactly right. In fact, anyone that has ever had a tremendous amount of credit card debt knows how painful that day of reckoning can be. To mindlessly run up credit card debt is exceedingly reckless, but unfortunately that is precisely what we have been doing as a nation as a whole. We are a ‘buy now, pay later’ society, and our national day of reckoning is approaching very, very quickly.
Often we like to focus on our exploding national debt, but household debt is out of control too. In fact, the total amount of household debt in the United States is now up to a whopping 12.3 trillion dolllars…
In the second quarter, total household debt increased by $35 billion to $12.3 trillion, according to the New York Fed’s latest quarterly report on household debt. That increase was driven by two categories: auto loans and credit cards.
We throw around words like ‘trillion’ so often these days that they often start to lose their meaning. But the truth is that 12.3 trillion dollars is an astounding amount of money. It breaks down to about $38,557 for every man, woman and child in the entire country. So if you have a family of four, your share comes to a grand total of $154,231, and that doesn’t even include corporate debt, local government debt, state government debt or the gigantic debt of the federal government. That number is only for household debt, and there aren’t too many Americans that could cough up their share right at this moment.
Do you remember when I wrote about how credit card companies are specifically targeting less educated and less sophisticated consumers? Well, that is where much of the credit card debt growth has come lately. Just check out these numbers…

This post was published at The Economic Collapse Blog on August 28th, 2016.

They Are After Your Cash (And If This Happens They Will Get It)

If the IRS has its way, cash will be a thing of the past. In its place, every transaction will be digital, every purchase will leave a footprint. And it will tell your story – where you go and what you buy while you are there.
A cashless society means your bank – and the US government – controls every penny you own and every purchase you make. They can freeze your account at will, leaving you destitute with just a few taps on a keyboard.
As Ron Paul said, ‘The cashless society is the IRS’ dream: total knowledge of, and control over, the finances of every single American.’
Now you may ask, why? Simple answer, because cash is anonymous and almost impossible to track – so Uncle Sam cannot control it.
The move towards a cashless, controlled state has been in motion for decades. If you travel by air, you have experienced this first hand. ‘Cashless cabins’ are the rule on nearly all airlines. Every glass of wine, extra cushion or headset must be purchased on credit. Every transaction is tracked, every purchase made subject to interest being tacked on to the principle.
According to Fed data, digital payments have risen from just $60 billion in 2010 to an enormous $619 billion this year. Some estimates show that80% of consumer purchases in the US are now electronic. Meanwhile, payments on a mobile device are rising at an 80% growth rate, predicted to account for $503 billion by 2020.
Other governments around the globe are even closer to a cashless society. In Sweden, cash transactions now account for just 2% of the economy. Denmark, Thailand, and South Korea follow closely behind. Bankers at The Bank of England have called for the abolition of money, and Germany has proposed a severe cash restriction.
But as we’ll see in the case of Sweden, the cashless society is also used for something far scarier. By combining a cashless society and negative interest rates, they effectively flush out any hidden or saved wealth.

This post was published at Lew Rockwell on August 27, 2016.

Doug Noland’s Credit Bubble Bulletin: Yellen Unveiling, Jackson Hole 2016

‘The Global Financial Crisis and Great Recession posed daunting new challenges for central banks around the world and spurred innovations in the design, implementation, and communication of monetary policy. With the U. S. economy now nearing the Federal Reserve’s statutory goals of maximum employment and price stability, this conference provides a timely opportunity to consider how the lessons we learned are likely to influence the conduct of monetary policy in the future. The theme of the conference, ‘Designing Resilient Monetary Policy Frameworks for the Future,’ encompasses many aspects of monetary policy, from the nitty-gritty details of implementing policy in financial markets to broader questions about how policy affects the economy.’ The introduction to Janet Yellen’s speech, ‘The Federal Reserve’s Monetary Policy Toolkit: Past, Present, and Future,’ Jackson Hole, August 26, 2016
Bloomberg: ‘Yellen Says Rate-Hike Case ‘Strengthened in Recent Months.” The FT was almost identical to Bloomberg. It was hardly different at the WSJ: ‘Fed Chairwoman Janet Yellen Sees Stronger Case for Interest-Rate Increase.’ And from CNBC: ‘Yellen says a rate hike is coming – but markets say not now.’ And this from Zerohedge: ‘Best Reaction Yet: ‘Yellen Speech A Whole Lot Of Nothing.”
I have a different take: Yellen provided more content for history books. In today’s short-term focused world, analysts and pundits remain fixated on clues to the next policy move. And while Yellen included language unbecoming of ultra-dovishness for the near-term, the Fed chair’s presentation was zany-dovish for the intermediate- and longer-term.

This post was published at Wall Street Examiner on August 27, 2016.

One Striking Chart Shows Why, According to MS, The Next Global Recession Begins In China

Much has been said about China in the past year. Now, courtesy of Morgan Stanley’s Chetan Ahya, here is one additional data point revealing why China will be ground zero for the next global economic slowdown.
As Ahya notes in his Sunday Start note, “several large economies in the world including but not limited to the US, euro area, China, Japan and UK are facing the 3D challenge of demographics, debt and disinflation. Among these economies, we believe that China, which currently accounts for 18% of global GDP and 27% of global manufacturing and contributes 45% to global growth, will be the biggest drag towards lower nominal GDP growth and consequently lower expected returns.”
Surprisingly, unlike many other Chinese doomsayers, Morgan Stanley does not think the catalyst of China’s upcoming “hard landing” will be financial, or debt-related:

This post was published at Zero Hedge on Aug 28, 2016.

The inflation conundrum

As an economic term, ‘inflation’ is shorthand for ‘inflation of the money supply’.
The general public, however, usually takes it to mean ‘rising prices’ which is not surprising since one of the common effects of an increase in the money supply is higher prices. However, supporters of government policy often say, ‘If quantitative easing (QE) and its terrible twin, fractional reserve banking, are so awful, why have we got no inflation?’
To address this conundrum, there are six related factors that are noteworthy:
First, we need to be clear about the terms we are using.
Instead of talking about ‘inflation’ in the loose sense, as above, it is more accurate to speak of currency debasement, which is the real impact of fiat money creation by any means. We experience currency debasement as declining purchasing power. Two sides of the same coin: one reflects the other.
Secondly, the above question overlooks the fact that the measures used in this process are inherently unreliable. The decline in purchasing power is most evident when objectivelymeasured by reference to an essential commodity such as oil – rather than against the Consumer Prices Index (CPI). The CPI purports to reflect the prices of ingredients selected by government statisticians in what they consider to be a typical, but notional, basket of ‘consumer goods and services’. This basket, whose contents are varied periodically, results in an index that cannot be trusted as an objective barometer. It supports the wizardry of non-independent Treasury statisticians, and relates to goods that scarcely feature in your shopping basket or mine.

This post was published at Mises Canada on AUGUST 26, 2016.

Ridiculousness

We’ve often documented here the obvious Fed Goon strategy of jawboning and lies in an effort to prompt the “markets” to do what they’d like them to do. The ridiculousness of yesterday may have set a new standard by which future verbal interventions will be measured.
With some time to spare this morning, I thought I would just double back and summarize the events of yesterday:
IT WAS COMPLETE AND TOTAL BS!
So, the world waits with baited breath for Mother Fellen to give her all-important speech at Jackson Hole. The text of the speech was released and Mother began speaking at 10:00 am EDT. The headline-scanning algos had a field day for the first few minutes as the message The Fed wanted to portray was in the headlines. The Pig rallied. The USDJPY spiked. Bonds sold off sharply and gold was clipped for 1%.
But a funny thing happened on the way to the market manipulation. It took a few minutes but, eventually, some actual human beings read the body of the speech and noted that the title was deceiving. Oh sure, The Fed “stands ready to raise rates again soon” but how about the stuff about also standing ready to feed another few TRILLION into the markets at the first sign of the next crisis? Suddenly, everything reversed. The Pig fell. The USDJPY puked. Long Bond rates rallied 6 bps in a matter of minutes from 2.27% to 2.21% and gold shot from $1325 to $1344.
At that point, I was typing a new post and, rather prophetically, added this passage:
“After spiking on the initial “news” at 10:00 am, the USDJPY has fallen backward and, as you can see, it is once again clinging to the 100 level. At this point, it wouldn’t surprise me if Mother has a bud in her ear giving here tick-by-tick updates so that she can adjust her massage on the spot. Absent that, perhaps this sucker will actually finish the week perilously close to 100?”
Well, of course, Mother doesn’t have a bud in her ear as just simply sticking to and reading the prepared text is about all she can handle. So, what did The Criminals do in order to reverse the action since the weren’t getting their desired response? They immediately called up LIESman and had him interview Goon Fischer. The sycophant CNBS jumped at he opportunity to have the Fed #2 on its air and the rest is history.

This post was published at TF Metals Report on August 27, 2016.

Gold Juniors’ Q2’16 Fundamentals

The junior gold miners and explorers have soared dramatically in an amazing year, before falling hard this week. This sharp correction is doing its job in rebalancing bull-market sentiment, crushing greed and leaving traders wary of this sector. But gold juniors’ recently-released second-quarter financial and operational results prove their fundamentals are strengthening dramatically, a very bullish omen for stock prices.
The junior gold stocks are rightfully considered the Wild West of the gold sector. Most of the hundreds and hundreds of these small companies won’t prove successful. They won’t be able to secure funding to explore sufficiently, won’t be fortunate enough to find an economic deposit of gold to mine, or won’t be able to make the herculean leap from explorer to miner. The odds are stacked heavily against the gold juniors.
Nevertheless, the elite small gold explorers and miners able to overcome and grow their businesses to larger scales will see truly-enormous stock-price gains. The gold juniors are exceedingly important for the entire gold-mining industry, since they feed the critical gold-supply pipeline with new deposits and mines to offset the inexorable industry-wide depletion of current operations. Success here is radically rewarded.
Many of the world’s best junior gold miners and explorers are included in the GDXJ VanEck Vectors Junior Gold Miners ETF, this sector’s leading benchmark. GDXJ began trading in November 2009, and is the world’s second-largest gold-stock ETF after its big brother GDX which tracks larger gold miners. As of the middle of this week, GDXJ’s net assets ran about half of GDX’s. This testifies to junior golds’ popularity.
And it’s easy to understand why in 2016. Between gold stocks’ fundamentally-absurd 13.5-year secular lows in mid-January and last week, GDXJ blasted 202.5% higher in just 7.0 months! While I don’t have universal ETF data, I’d be shocked if any other sizable ETF in all the markets even came remotely close. For comparison, over essentially that same span GDX ‘only’ soared 151.2%. The juniors’ gains have been epic.

This post was published at ZEAL LLC on August 26, 2016.

Smart Money Is Turning To METALS As Bankers Print — James Gowans

The following video was published by SGTreport.com on Aug 28, 2016
James Gowans the President and CEO of Arizona Mining joins us to discuss central bank money printing, the real risk of hyperinflation of the US Dollar as we’ve seen in Venezuela and the trend of big money moving into metals mining stocks, including Zinc mining companies like Arizona Mining. Jim explains that Zinc has actually outperformed gold and silver in 2016 rising more than 40% year-to-date.
the commodities are rising fast as the decades long bond market bubble begins to deflate. This is going to translate into much higher prices for the stuff people need. Inflation… and ultimately hyperinflation as John Williams has predicted, is looking increasingly likely.

Obama’s Parting Gift: $20 Trillion In Public Debt And A Rising Budget Deficit

According to the US Treasury, on Thursday, August 25, total US public debt hit an all time high of $19.5 trillion.

This means that US debt under president Obama has nearly doubled from $10.6 trillion to $19.5 trillion: there is a good chance that on the last day of Obama’s presidency, total debt will be in the $20 trillion range.
Yet even as US debt has continued to grow, one topic which several years ago was a key political talking point – facilitating the emergence of the tea party, and even resulting in the US downgrade of 2011 – , America’s surging budget deficits, have gotten far less prominence in recent years, for one reason: the US deficit, while massive, was declining.
However, that is no longer the case, and as the CBO revealed earlier this week, as part of Obama’s parting gift to the US, not only will his successor inherit a $20 trilion mountain of debt, but also rising deficits.

This post was published at Zero Hedge on Aug 28, 2016.

49ers Fans Burn Kaepernik Jerseys After ‘Black-Oppression’-Protesting QB Refuses To Stand For National Anthem

The $120 Million-earning, ‘black’ quarterback (raised by 2 white parents) of the San Fransisco 49ers decided yesterday that in order to protest “a country that oppresses black people and people of color,” he would refuse to stand during the national anthem. Colin Kaepernick’s “sit in” has not gone down well with some of his ‘fans’ (or non-fans or other NFL players) with 49ers supporters burning his shirt and others demanding he be banned from playing in The NFL.
Kaepernick has an African American father but, after being put up for adoption, was raised by a white couple alongside their two children.

This post was published at Zero Hedge on Aug 28, 2016.

New Leak Confirms: Brussels Has Learnt Nothing from Brexit

Trying to Tax the Internet.
The European Commission seems determined to make itself even more unpopular among Europe’s disaffected public. This is just about the only conclusion that can be drawn from its latest decision to steam ahead with plans to adopt a controversial ancillary copyright law – A. K. A. snippet tax – that would open the way for Big Media in Europe to charge news aggregators and other websites a special fee for linking to their works.
The Commission has repeatedly denied that it has any intentions of introducing such a tax. Just two days ago Commissioner Ansip state unequivocally: ‘This Commission does not have any plans to tax hyperlinks.’
It was a hugely disingenuous claim, as was confirmed by the publication on Friday of a leaked draft of the Commission’s own impact assessment on the modernization of EU copyright rules.

This post was published at Wolf Street on August 28, 2016.

Dear Janet… A Memo From Millennials To The Fed

The Federal Reserve’s long-term influence hinges in part on its ability to convince millennials that its current policies can help push inflation closer to the central bank’s 2% goal. That’s not as easy as it sounds, because this cohort has both a different history and current relationship with this economic variable.

Why?
#1 – Understand the millennial experience. Since 2000 – when the youngest millennials started becoming adults – the Core PCE Price Index has averaged just 1.7% y/y. That compares to 4.3% y/y growth on average from 1965 to 2000 over the majority of baby boomers’ adulthood. We have always lived in a low-inflation world contrary to our parents.

This post was published at Zero Hedge on Aug 28, 2016.

“We Are At A Point Where The Encroachment Of Government Power Has Historically Resulted In Rebellion”

Overnight, one of our favorite hedge fund commentators, (ex) IceFarm Capital’s Michael Green, was gruesomely entertained by Ken Rogoff’s WSJ Op-Ed, pushing for a ban on $20, $50 and $100 bills, to which he – just like us – has some less than kind words.
Unlike our bemused conclusion about the idiocy of Rogoff’s latest pitch to do away with cash (something we predicted would happen years ago as banning cash is a necessary, if not sufficient, condition for NIRP to work), Green provides the following thought experiment to demonstrate just how ridiculous economic prescriptions have become:

This post was published at Zero Hedge on Aug 28, 2016.

The Deep State and the Unspeakable – Mike Lofgren

“The state within a state is hiding mostly in plain sight.
The pressure to conform to an authority figure or peer group can cause people to behave in shocking ways.
It is not too much to say that Wall Street may be the ultimate owner of the Deep State and its strategies, if for no other reason than that it has the money to reward government operatives with a second career that is lucrative beyond the dreams of avarice – certainly beyond the dreams of a salaried government employee.
The corridor between Manhattan and Washington is a well-trodden highway for the personalities we have all gotten to know in the period since the massive deregulation of Wall Street.”
Mike Lofgren

This post was published at Jesses Crossroads Cafe on 27 AUGUST 2016.

Mike Maloney: This Is The Peak

Precious metals dealer and monetary historian Mike Maloney is quite confident the liquidity-driven ‘recovery’ created by the world’s central banks is now over. In his estimation, the path ahead is one of accelerating descent into inevitable currency destruction:
What the central banks are doing has never worked and they keep on trying – you just hit that nail a little bit harder each time because it isn’t working. They have these theories and they think that the theory is correct that this – and no matter what the results are they say well, we just didn’t do enough of it. Japan has been trying this for 30 years now and it hasn’t worked. These people are just absolutely dangerous. They are going to drag the entire world economy down. You talked about the helicopter money that is now happening in Europe and so on. That is going to be coming to the United States soon. Coming to a Central Bank near you.
It always has damaging results. They don’t look at this. It is a huge wealth transfer. The immorality of an entity and everywhere I go I take a look at – when I would go speak in Singapore or Australia, New Zealand, Malaysia, Colombia, Peru doesn’t matter – Russia – everywhere I go I take a look, I go on the websites of the central bank for that country and I start gathering information. I haven’t found a central bank that is part of the government. They are all private. Here is a private entity that is allowed to create currency and now they are buying bonds from corporations? They can buy stocks. When they write a check and they buy something, currency is created and it enters circulation. A very large portion of it is Fanny Mae and Freddy Mac stuff. It is the mortgage backed securities. And so that means that they own real estate. This private corporation is able to counterfeit and purchase real estate legally. The morality of this is insane.

This post was published at PeakProsperity on August 28, 2016.

Central Banks Are Willfully Destroying This Critical Market Function

With central banks owning $25 trillion of financial assets and sovereign wealth funds owning countless trillions more, it is time to ask whether capitalism as we know it is a thing of the past.
These non-economic actors have different motivations than traditional investors who buy assets in order to earn a profit over a reasonable period of time.
Central banks are buying stocks and bonds in order to monetize government debt and keep afloat the endless Ponzi schemes required to finance massive entitlement promises to their constituents.
Sovereign wealth funds are looking for places to park their cash for extremely long periods of time and often focus on assets with trophy or strategic value.
But the most important thing these two types of buyers have in common is that they don’t have to sell, which means that their ownership can inflate the value of what they own for prolonged periods of time.
This destroys the price discovery mechanism that markets are supposed to provide. And without price discovery, markets cease to function properly.
Then the destruction starts in earnest…

This post was published at Wall Street Examiner on August 28, 2016.