Why Money Is Worse Than Debt

Everybody has to spend energy, has to work for his living. This is true for Government as well as for the Billionaires and for the ordinary employee. Nothing – except for Sunshine and Air – comes for free. Note that today, sometimes people even pay for sunshine (vacation) and Air (airports in Venezuela). Not hard to understand that today’s fairy tale of ‘Free Fiat Money’ will have a bad ending…or is it? Few people seem to realize the dramatic situation we are in and that the denial is fed by the Propaganda sold by Politicians through the Mainstream media. The 4th generation (see Galbraith’s Age of Uncertainty) doesn’t seem to be mentally able to grasp the seriousness of the situation the world is in.
Governments and Central Banks (which are like economic Siamese twins) not only print Fiat Money but on top they make the cost to print more money, issue new debt and serve past debt ridiculously low…. In reality, Real Interest rates (nominal interest rate less real inflation rate) or the cost to issue more fiat money has even become negative. Propaganda must be extremely solid to keep such a mirage alive and absolute no accident may happen.

This post was published at GoldSilverWorlds on September 16, 2014.

Elysium

It’s no secret the rich are getting richer, and the poor poorer. Accounts of this worsening condition are stroon across mainstream media and alternative news sources alike, albeit with somewhat different storylines. Although increasingly recognizing the importance of this issue, mainstreamers, who both cater to and are controlled by the status quo, portray the condition as a result of race and education differences (which is true), and that these shortfalls should be addressed via public policy (which is not true). And by doing so, they avoid discussing the more profound problem, and the real culprits in this regard, for whom they (think they) are obliged for a living.
Here we are talking about the greedy bastards at the very top, like Warren Buffet and Bill Gates, who will do anything, including the hollowing out of the larger economy (think off-shoring, debt enslavement, destruction of the middleclass, etc.), to stay there. In the movieElysium, it was no secret that there was the very rich, and everybody else. However today, this growing reality still escapes most, not that it will matter soon. Because today’s modern empires are built on thrones of debt, meaning they are destined for the same destruction of the surfs in good time. Of course in the meantime they are going to get as much as they can, and if they have robots to control the populations at some point (through fear if not reality), there’s no telling how far the atrocities will extend. First they will use them on foreigners in the larger war machine as justification for their creation, then on us like all the other surplus hardware / ordinance being employed to control the public by increasinglymilitarized police departments across America.
Think it’s bad your liberties have been eroded? They are already killing anybody who steps out of line, with over 400 police shootings per year in the US now the norm apparently, where the robots could be used to do the things humans would object to. Obviously we are years away from this kind of thing, but if the technology were there, based on the way things are going, and in knowing whom we are dealing with, one would be foolish to discount such an outcome completely.

This post was published at GoldSeek on 15 September 2014.

Why the Markets’ Sudden Love for Mexico?

By Don Quijones, freelance writer, translator in Barcelona, Spain, but currently in Mexico. Raging Bull-Shit is his modest attempt to challenge the wishful thinking and scrub away the lathers of soft soap peddled by political and business leaders and their loyal mainstream media. This article is a Wolf Street exclusive.
If there’s one word that has dominated the post-crisis vernacular of policy makers, central bankers, economists, think tanks and establishment journalists worldwide, it is the word ‘reform.’ In the last six years of centrally planned post-crisis crisis, scores of countries have been subjected to ‘ambitious’ reform programs, largely at the insistence of reform-obsessed institutions such as the IMF.
The programs have included health reform and education reform (in both cases with a heavy emphasis on privatization and increased costs); pension reform (cuts to public pensions, hikes to the entitlement age); fiscal reform (less spending on public services, more spending on deadbeat banks – all funded, of course, by higher taxes on the middle class); and, last but not least, labor reform (making it easier for corporations to hire and fire but mainly fire). In fact, we’ve had just about every kind of reform one can possibly imagine, with one glaring exception: meaningful banking reform, for the simple reason that by now the banks are far beyond reform.
The Great Reformer
One country that has recently taken reform to an art form is Mexico. Since taking office in late 2012, President Enrique Pea Nieto has made it his mission to transform Mexico beyond all recognition. And judging by the first 21 months of his six-year mandate, he means business.

This post was published at Wolf Street on September 14, 2014.

Profits and Asset Bubbles Everywhere?

We’ve been covering the growth of asset bubbles throughout 2014 and now, as we approach the troublesome month of October, it’s a good time to reassess.
The mainstream media is filled with predictions of a “market crash” and I figure this means some sort of significant correction may be due.
There’s no denying modern markets are manipulated by a variety of factors, but the most important one is central banking itself. By printing overwhelming surges of money, good, gray bankers can create tremendous market surges that end in significant downturns.
This happened in 1929, 1987 and 2009. It could happen again but I am not so sure it will happen in 2014. At least, I am not sure we are looking at a 1929-style crash soon. For a variety of reasons, various interest groups involved with equity trading, or benefiting from it, are determined to push averages higher and higher.
In the past, we’ve offered the explanation that when the market eventually tops out, the resultant crash will give rise to a campaign for a significant equity realignment leading to a far more globalized securities system. But right now, the pace is set for higher highs, as we’ve pointed out throughout this year with our prediction of an expanding Wall Street Party.
Many scoffed but we follow elite dominant social themes and, using the VESTS model I first outlined in High Alert and expanded upon in Financial Freedom (free downloads here) to interpret their potential impact on the market, we could see the pieces being put in place for an overwhelming Wall Street run. Most importantly, Mark Carney and Janet Yellen were placed at the heads of their respective institutions – the Bank of England and the Federal Reserve – with reputations as doves, bankers focused on money printing as a solution to almost any economic problem.

This post was published at The Daily Bell on September 13, 2014.

For 90% Of Americans: There Has Been No Recovery

Every three years the Federal Reserve releases a survey of consumer finances that is a stockpile of data on everything from household net worth to incomes. The 2013 survey confirms statements I have made previously regarding the Fed’s monetary interventions leaving the majority of Americans behind:
“While the ongoing interventions by the Federal Reserve have certainly boosted asset prices higher, the only real accomplishment has been a widening of the wealth gap between the top 10% of individuals that have dollars invested in the financial markets and everyone else. What monetary interventions have failed to accomplish is an increase in production to foster higher levels of economic activity.
With the average American still living well beyond their means, the reality is that economic growth will remain mired at lower levels as savings continue to be diverted from productive investment into debt service. The issue, of course, is not just a central theme to the U. S. but to the global economy as well. After five years of excessive monetary interventions, global debt levels have yet to be resolved.”
The full report can be found here. I have selected a few of the more important charts for the purpose of this post.
While the mainstream media continues to tout that the economy is on the mend, real (inflation-adjusted) median net worth suggests that this is not the case overall.

This post was published at StreetTalkLive on 10 September 2014.

Central Banks: Divergence of Rhetoric and Reality

U. S. Economy Still Missing: 3.9 Million Prime-Age Jobs … Today’s U. S. jobs report, which showed nonfarm payrolls increasing by a meager 142,000 jobs and the unemployment rate falling 0.1 percentage point to 6.1 percent in August, will undoubtedly rekindle a familiar debate: How much more should the Federal Reserve do to put people back to work? – Bloomberg
Dominant Social Theme: The Federal Reserve needs to step up and build as many jobs as necessary.
Free-Market Analysis: Imagine taking bits of colored paper, making more of them and then waiting for jobs to appear. One has little to do with the other, but according to a steady stream of articles in Bloomberg and the rest of the mainstream media, such an act leads to an inevitable result: additional employment.
This is a kind of mass delusion, isn’t it? The printing of fiat currency does not of itself stimulate the entrepreneur, create opportunities that can be leveraged or generate companies that have the wherewithal to do so. One is a mechanical function of the printing presses. The other is the result of considerable human action and the application of ingenuity, courage and concentration.
The printed money is not provided to entrepreneurs in any case. It is funneled to a distribution channel of commercial banks. It is these banks, often with distressed balance sheets, that are to provide the mechanisms for economic growth.

This post was published at The Daily Bell on September 09, 2014.

Events Impacting The Gold And Silver Price In The Week Of September 8th

The primary focus of our website is to report on the different aspects of the gold market: fundamentals, economic and monetary analysis, basic technical analysis. Our view on the real price setting in the gold and silver market differs from the mainstream view. Price changes happen to coincide with events or announcements; mainstream media are used to report a relationship between both. However, we believe that the real price setting for the time being is taking place in the COMEX futures market. Market expert Ted Butler does an outstanding job analyzing the weekly evolution in the COMEX market and how it affects price setting.
In this article, we summarize the key events of the running week that could have an impact on the price of gold and silver price because of trading in COMEX futures.
During the previous week, between September 1st and 5th, a number of economic data and central bank announcements resulted in selling pressure in dollar denominated gold and silver:

This post was published at GoldSilverWorlds on September 8, 2014.

Paul Craig Roberts: Everything Is Totally Manipulated

The following video was published by FinanceAndLiberty.com on Sep 6, 2014
Jason Burack of Wall St for Main St interviewed former assistant US Treasury Secretary under President Reagan, former Associate Editor of the Wall Street Journal and distinguished academic and author, Dr. Paul Craig Roberts Paul also served on many boards of directors in the private sector.
During this 40 minute interview, Jason starts off by asking Paul about the US’ foreign policy and if it got more aggressive after the Soviet Union collapsed.
Dr. Roberts talks about the Wolfowitz Doctrine from the Neo-Cons and how US foreign policy has become even more aggressive towards war and expansion after the Soviet Union collapsed.
Jason and Dr. Roberts discuss the military industrial complex and Dr. Roberts talks about how and why the Soviet Union fell.
Dr. Roberts says production managers in the Soviet Union focused on beating quotas but they did not produce anything consumers wanted, there was enormous misallocation of capital and resources there and there were not any reliable pricing mechanisms for businesses and entrepreneurs to produce goods and services consumers wanted.
Next, Jason asks Paul about what’s going on in the real economy in the US and if there’s inflation.
Dr. Roberts talks about all the inflation in food, energy, etc and how the CPI was changed by politicians so cost of living adjustments (COLA) would not have to be paid out to more social security recipients.
Jason and Dr. Roberts talk about the ways the BLS continues to change the CPI and under report inflation using hedonics.
Dr. Roberts also talks about how the US economy is not creating really any full time high paying jobs. Dr. Roberts talks about offshoring/outsourcing and why he thinks the US is quickly becoming a 2rd world economy while asset bubbles are created with fiat money.
Jason and Dr. Roberts discuss restaurants and retails stores closing and why that means the economy is not recovering. Paul says the US consumer lacks any savings or discretionary income to spend money.
Finally, to wrap up the interview, Jason asks Dr. Roberts how long he thinks this asset price inflation, QE, backdoor bailouts, currency wars and the real economy in the US contracting can last while politicians, Wall St and large corporations are pure rent seekers and maintain the narrative in the mainstream media that the economy continues to improve.

WHY BURGER KING’S EXPATRIATION IS THE MORAL THING TO DO

It was announced last week that Burger King had bought a famous Canadian restaurant franchise known as Tim Horton’s to reduce the amount of taxes they “owe” to the US government. An upcry arose!
As usual the mainstream media and the people who watch it have the story totally wrong. Burger King is not giving US taxpayers a “raw deal” by looking to move abroad so as to save on profits which are not repatriated. Instead, the iconic fast food burger chain is doing the moral thing by moving its tax-base outside the war-mongering, highly socialist US federal government’s reach.
The mainstream media will never give you this side of the story. This obvious trend towards expatriation terrifies the talking heads. You have to come to alternative media sources like The Dollar Vigilante (TDV) Blog and others to get the truth. As Howard Kurtz writes at Fox News,
I feel confident in saying that most Americans are disgusted by the perfectly legal practice of US companies avoiding taxes by incorporating in another country.
If this is the case, it is because Americans love bombing other countries. They lust for blood. I can think of no other logical explanation Americans would want the machine in Washington to continue being fed. Burger King is not the first company to make the moral decision to leave the US tax farm. Many American companies are going abroad – as many as 70. These so-called “inversions”. Even the most American of investors stand behind the inversion. Iconic American billionaire, Warren Buffet, coughed up $3 billion so the hamburger chain could buy the Canadian donut outfit Tim Hortons. Buffett did this just one month after Obama denounced ‘inversion’ tactics as an ‘unpatriotic tax loophole’, ordering regulatory changes to undermine them.

This post was published at Dollar Vigilante on September 2, 2014.

Precious Metals And Internationalization Are The Antidote To The Keynesian Endgame

When looking at today’s economic situation, it is amazing how the debt situation remains underexposed. It is truly the ‘elephant in the room’. In this article we will review the most recent economic data and what that data could mean for the coming years.
When asked about his view on the economic situation, Claudio Grass, managing director of Global Gold, answered with this quote from German economist Wilhelm Rpke:
‘The theories men construct, and the words in which they are framed, often influence their mind more strongly than the facts presented by reality’.
This sentence nicely describes today’s mindset amongst most people in the Western word since we are raised in amounts to a government-controlled educational system! We are not taught to question [authority]. The problem is that the actual system we live in focuses only on the effects but never discloses the underlying causes, let alone tries to connect the dots. This research needs to be taken upon by the individual. However, research requires a healthy portion of curiosity and bravery, as well as independence and self-confidence to stand up for one’s own opinion, which will be in contrast to the story we are told by governments and the mainstream media.
Linking this view to today’s economy, it goes without saying that anyone with a basic level of curiosity can find the following data:
The U. S. currently has total debts outstanding (incl. unfunded liabilites) which are close to 900% of its GDP. America hasn’t passed a budget since April of 2009. As a country, the U. S. has had a budget deficit in 42 out of the last 47 years. The U. S. has paid 14.8% of its yearly revenue to servicing its debt (interest payments).

This post was published at GoldSilverWorlds on September 2, 2014.

Events Impacting The Gold And Silver Price In The Week Of September 1st

The primary focus of our website is to report on the different aspects of the gold market: fundamentals, economic and monetary analysis, basic technical analysis. Our view on the real price setting in the gold and silver market differs from the mainstream view. Price changes happen to coincide with events or announcements; mainstream media are used to report a relationship between both. However, we believe that the real price setting for the time being is taking place in the COMEX futures market. Market expert Ted Butler does an outstanding job analyzing the weekly evolution in the COMEX market and how it affects price setting.
In this article, we summarize the key events of the running week that could have an impact on the price of gold and silver price because of trading in COMEX futures.

This post was published at GoldSilverWorlds on September 1, 2014.

Is There Capitalism After Cronyism?

The more the Status Quo pursues the same old Keynesian Cargo Cult script of central planning and free money for financiers, the more self-liquidating the system becomes.
Judging by the mainstream media, the most pressing problems facing capitalism are:
2) the failure of laissez-faire markets to regulate their excesses, a common critique encapsulated by Paul Craig Roberts’ recent book The Failure of Laissez Faire Capitalism.
These critiques (and many similar diagnoses) reach a widely shared conclusion: capitalism must be reformed to save it from itself.
The proposed reforms align with each analyst’s basic ideological bent. Piketty’s solution to rising wealth inequality is the ultimate in statist centralization: a global wealth tax.
Roberts and others recommend reforming capitalism to embody social purpose and recognize environmental limits. Exactly how this economic reformation should be implemented is a question that sparks debates across the ideological spectrum, but the idea that capitalism can be reformed is generally accepted by left, right and libertarian alike.
Socio-economist Immanuel Wallerstein asks a larger question: can the current iteration of global capitalism be reformed, or is it poised to be replaced by some other arrangement?

This post was published at Charles Hugh Smith on SATURDAY, AUGUST 30, 2014.

“Economic Pilot in Reverse”: US Consumer Spending Unexpectedly Dips; Zero for 79

Mainstream media headlines in the last two days offer an amusing look at GDP forecasts.
GDP Stronger Than Expected
Yesterday, the Financial Times reported US Rebound Stronger than First Thought.
The US economy’s second quarter bounce was stronger than previously thought, with the official annualised growth estimate increased from 4 per cent to 4.2 per cent.
The revision is more evidence of robust underlying growth in the world’s biggest economy as it swung back from a weather affected 2.1 per cent fall in the first quarter.

This post was published at Global Economic Analysis on August 29, 2014.

“Valuation Is The Market’s Biggest Headwind”

Yesterday, as the S&P closed above 2,000 for the first time, mainstream media pundits were trotted out to proclaim that either “stocks are ‘fairly’ valued” or “stocks are cheap” and the “money on the sidelines” must come in now. Aside from the ‘idiocy’ of the last comment, we thought BMO’s Jack Ablin’s comments were of note. “Valuation is the market’s biggest headwind,’ he wrote, adding that sales ‘have to catch up’ for stocks to sustain the rally. One glimpse at the following chart and it is clear that not only are stocks “not cheap” or “not fair” they are extremely rich with the only fall-back now being that “they’re not as expensive as they were at the top of the biggest bubble in stocks ever.”

This post was published at Zero Hedge on 08/27/2014.

Is This A Gold And Silver Bear Market Or A Correction In A Secular Uptrend?

Does the following contrast sound familiar to you? Mainstream media headlines, mostly based on either mainstream economists or large financial institutions, report continuously how weak the precious metals market is; they hasten to remember readers how the bull market had burst in 2011 and that much lower prices are just around the corner. In their view, after peaking in 2011, gold and silver are in a clear bear market. On the other hand, writers and analysts that are non-mainstream (most of them non-Keynesian) consider today’s gold and silver market as a long correction in a gigantic secular uptrend; they expect (much) higher prices in the years to come. The interesting thing is that everyone is looking at the same data and charts.
The key question is whether the gold market is correcting in a secular trend or the bear market is here to stay(till the next cycle starts).
In order to answer that question, the team at ShortSideOfLong did an excellent job comparing the ongoing correction in gold and silver with previous corrections. Based on purely chart observations it seems feasible (with a high probability) to come to a reliable answer. One should note that the data in the following two charts come from the period after 1971, as that was the year when gold started to trade in a ‘free market’ (after US President Nixon closed the gold window on August 16th 1971).
The first chart shows different gold bear markets since 1971. The conclusions from the chart come from the analysts at ShortSideOfLong:

This post was published at GoldSilverWorlds on August 23, 2014

Events Impacting The Gold And Silver Price In The Week Of August 25th

Although the primary focus of this website is to report on the different aspects of the gold market (gold fundamentals as well as economic or monetary analysis), we also tend to release basic technical analysis in gold and silver. As of this week, we will also summarize the key events at the start of each week that are likely to impact the price of gold and silver price.
We hasten to add that our view on the real price setting in the gold and silver market differs from the mainstream view. Price changes happen to coincide with events or announcements; mainstream media are used to report a relationship between both. However, we believe, and owe this insight to our readers, that the real price setting for the time being is taking place in the COMEX futures market. Market expert Ted Butler does an outstanding job analyzing the weekly evolution in the COMEX market and how it affects price setting…

This post was published at GoldSilverWorlds on August 25, 2014