- Are The World Elite Using A Rise In Nationalism To Reassert Globalisation?
Are The World Elite Using A Rise In Nationalism To Reassert Globalisation?
Putting yourself in the mind of someone who commits an act of illegality is perhaps the only way we can begin to understand the motivation behind the transgression. A common reflex reaction to the most heinous of crimes is to simply call for the perpetrator to be removed from society and put in prison. Out of sight, out of mind. Whilst this is not an unreasonable expectation, it does not get to the root of why he or she became a criminal.
We can take a similar stance when it comes to globalism. If a self appointed elite who permeate institutions like the Bank for International Settlements and the IMF share a desire to concentrate world power through a centralised network of global governance, rather than simply rebel against this vision is it not equally as important to try and understand the vision from the perspective of those who created it? I would argue that to comprehend the minds of global planners it is necessary to mentally place yourself into their way of thinking.
A couple of years ago I published an article called, Order Out of Chaos: A Look at the Trilateral Commission, where I examined some of the key motivations behind this particular institution’s goals. I quoted past members of the Commission openly rejecting national sovereignty and championing the interdependence of nations. One of those quotes was from Sadako Ogata, a former member of the Trilateral Commission’s Executive Committee, who at an event to mark 25 years of the institution remarked how ‘international interdependence requires new and more intensive forms of international cooperation to counteract economic and political nationalism‘.
Shortly after the Trilateral Commission was founded in 1973, one of its members, Richard Gardner, wrote an essay for Foreign Affairs magazine (the official publication of the Council on Foreign Relations). In ‘The Hard Road to World Order‘, Gardner emphasised the objective of dismantling national sovereignty:
In short, the ‘house of world order’ will have to be built from the bottom up rather than from the top down. It will look like a great ‘booming, buzzing confusion,’ to use William James’ famous description of reality, but an end run around national sovereignty, eroding it piece by piece, will accomplish much more than the old-fashioned frontal assault.
With Britain in the process of leaving the European Union, you could argue that one of the main planks of the Commission’s agenda has failed. If the global elite want the integration of European nations, and for the majority of those nations to be controlled through a centralised behemoth like the EU, surely seeing the UK become independent from the union goes against everything they believe in? Not necessarily.
Back in 2014 and before globalists began touting political protectionism / nationalism as a danger to financial stability, the Trilateral Commission published a paper called,’Credible European Governance‘. Within the paper the UK’s membership of the single market is discussed, an issue which has been central to the narrative on Brexit since the referendum:
A debate on competences has been launched by the British government on Britain’s future position in Europe where reference is made to the Single Market. Today, most EU countries accept that the euro area represents what President Van Rompuy calls the “symbolic heart of the European Union”. For the United Kingdom, the single market is the essence of the EU. Can these two visions continue to coexist within the EU, now that the euro area is surmounting its “existential crisis”?
I asked in 2017 whether this passage in particular was not only questioning the UK’s position inside the single market, but by extension it’s membership of the European Union. It was the same paper that quoted Jean Monnet, one of the founding fathers of the European Union:
People only accept change when they are faced with necessity, and only recognize necessity when crisis is upon them.
As I have discussed in previous articles, this philosophy gives credence to the theory that crisis scenarios, rather than being a detriment to the aspirations of globalists, present an opportunity to further their grip on power.
At the latter end of 2015, just months before the EU referendum, the Commission produced another paper conceived by four David Rockefeller fellows – ‘EUROPE’S NEW NORMAL: SIMULTANEOUS CRISES THAT THREATEN TO UNRAVEL THE EU‘. The authors wrote at length about the growing distrust of ‘ever closer union‘ following the European debt crisis that originated after the collapse of Lehman Brothers:
Many Europeans have come to suspect that the EU’s institutions have become overly powerful and some think that they have even used the latest crises for a further power grab.
A solution put forward by the fellows was that ‘some flow into the opposite direction might help Europeans to regain trust in the European process‘.
This was my response published back in 2017:
One interpretation of this remark is that countries be granted a platform to express their grievances with the European Union, perhaps even to the point of seeking renewed independence or opting to withdraw from the bloc altogether. From their own perspective the union desires a sharing of sovereignty rather than individual expressions of it. Therefore, a nation instigating a greater level of autonomy (dubbed protectionism / populism in some quarters) might eventually suffer lasting consequences given the steadfast and federalist nature of the supranational EU. Over time countries demonstrating more nationalistic tendencies could quite easily unravel into crisis. Especially if separation from the union results in a nation being compromised economically. In this scenario, might those same Europeans opposed to further integration become more receptive to the idea?
The ultimate question then is whether the outbreak of a ‘crisis’ is organic, in the sense that it happens beyond the control of government and globalist institutions. Or whether instances such as Brexit were designed to happen to further the agenda for more power. You may ask why the UK would be permitted to leave the EU when the objective is for ‘ever closer union‘. But without Brexit and further instances of a rise in ‘populism‘, calls for reform have no traction. Crisis must either originate or be instigated to achieve the desired response from the electorate. Calling for reform inside a vacuum of no discernible unrest on a geopolitical level leaves institutions like the EU exposed to greater scrutiny.
Moving forward to the present day, last week Chatham House published an article (Managing the rising influence of nationalism) that was part of a special report from the World Economic Forum titled, ‘Shaping a Multiconceptual World‘.
Here, Chatham House observed that ‘the process of globalization demanded that all states adapt to being part of a shared project and subject themselves to its norms and laws‘, and that ‘the European Union became the vanguard of this process of post‑nationalism.’
They identified that European identity was essentially anti-nationalist in nature. But the growth of nationalism witnessed throughout Europe over the past five years has distorted this belief. Combating it will require ‘investing over the coming years in the legitimacy of major international institutions such as the United Nations, World Trade Organization, and the International Monetary Fund.’
According to Chatham House, without investment, ‘these institutions will find they are increasingly ineffective.’ In short, the advent of a new wave of nationalism has created a narrative that global bodies will require more power to shore up both trade and economic stability now and into the future.
At the same time this article was published, it was announced at the World Economic Forum that businessman George Soros is to launch a ‘global network of higher education‘ against nationalism, with investment of $1 billion. By coincidence or otherwise, Chatham House is involved in the initiative. Here is what Soros himself said about it:
I believe that as a long-term strategy our best hope lies in access to quality education, specifically an education that reinforces the autonomy of the individual by cultivating critical thinking and emphasising academic freedom.
The tide turned against open societies after the crash of 2008 because it constituted a failure of international co-operation. This in turn led to the rise of nationalism, the great enemy of open society.
But is a resurgence of nationalism really the ‘great enemy‘ that Soros makes out, given that crisis on a global scale invariably leads to opportunity? One example is from an op-ed written by former IMF Deputy Director Mohamed A. El-Erian, who in 2017 questioned whether a rise in populism and nationalism throughout the world could be remedied by revamping the IMF’s Special Drawing Rights:
So, do today’s anti-globalisation winds – caused in part by poor global policy coordination in the context of too many years of low and insufficiently inclusive growth – create scope for enhancing the SDR’s role and potential contributions?
We have seen as well how the EU and the World Trade Organisation have presented proposals for the wide scale reformation of the WTO in the wake of renewed nationalism. And as regular readers will know, central banks led by the BIS and IMF are rapidly advancing plans to reform global payment systems and introduce digital currencies. These were not public considerations prior to the likes of Brexit. They only started to gather momentum after nationalism became a permanent fixture on the geopolitical landscape.
The overriding sentiment from globalists has been that a combination of political and economic protectionism is a direct threat to financial stability. The IMF, the BIS and the World Bank have all over recent months been ramping up warnings about the dangers of an impending economic downturn. Two weeks ago the IMF’s new Managing Director Kristalina Georgieva commented at the Peterson Institute of International Economics in Washington:
We have to learn the lessons of history while adapting them for our times. We know that excessive inequality hinders growth and hollows out a country’s foundations. It erodes trust within society and institutions. It can fuel populism and political upheaval.
As well as the IMF, the start of 2020 saw the World Bank warn of a impending global debt crisis and how persistently low interest rates might not be enough to stave off a downturn. In the autumn of 2019 the BIS warned how an unsustainable rise in leveraged loans could jeopardise the financial system. The IMF joined them a few weeks later by declaring that ‘accommodative monetary policy is supporting the economy in the near-term, but easy financial conditions are encouraging financial risk-taking and are fuelling a further build-up of vulnerabilities.’
The one issue binding all these warnings together is trade protectionism, which stems directly from the resurgence in political nationalism.
Beyond the global economic houses, France’s President Macron said in 2018 that in relation to trade conflict, ‘economic nationalism leads to war.’ BHP boss Andrew Mackenzie said in August 2019 that the rise of nationalism presented a risk to the global economy. Even China and Russia have spoken out against the build up of trade protectionism, saying it will compromise the global economy.
Now is the time to put yourself into the mind of a globalist. Whether it be the Innovation BIS 2025 project or the UN’s Agenda 2030 sustainability goals, what circumstances would benefit these people the most in furthering their ambitions? What would have to occur for the elite to gain widespread public support for policies that would fundamentally change our way of life? If an increased break out of trade protectionism and political populism triggered an economic collapse, would this impair the autonomy of global institutions? Or would it serve to reinvigorate them in the sense of scapegoating nationalism as being responsible for the rupture of the ‘rules based global order‘ founded after World War Two?
From a globalist perspective, national sovereignty – the independent nation state – has no place in an interconnected world. It is an outmoded concept. The goal is always to further centralise power. But by what means exactly?
Recall what Richard Gardner said back in 1974: ‘an end run around national sovereignty, eroding it piece by piece, will accomplish much more than the old-fashioned frontal assault.’
The institutions cited in this article are not ignorant to the plight of the global economy. The policies enacted since 2008, from near zero interest rates and trillions of dollars in quantitative easing measures to rising interest rates and quantitative tightening, has brought the financial system to where it is today. Central banks know perfectly well the effect their policies have on the health of economies, evidenced by comments from Federal Reserve chairman Jerome Powell back in 2012:
Right now, we are buying the market, effectively, and private capital will begin to leave that activity and find something else to do. So when it is time for us to sell, or even to stop buying, the response could be quite strong; there is every reason to expect a strong response.
Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.
From a UK standpoint, the country’s departure from the EU may appear on the surface to be rallying against the tide of globalism. But my concern is that globalists will successfully manage to position Brexit and the spectre of a global trade conflict as causes for an economic collapse, when in fact it is monetary policy over the last twelve years which will be the primary culprit.
Rather than heavy handedly marching into western nations and claiming their sovereignty, I would be concerned that the global elite will allow nationalist movements to fall on their own sword, and for the onset of a series of crises to consume geopolitics throughout the next decade. The job then would be to implement a whole raft of reforms and to educate the next generation on the perils of self determination.
The realisation of a ‘new world order‘ means tearing down existing structures, or at the very least jeopardising them to the point of collapse, to facilitate the new. Out of resurgent nationalism may come a swathe of centralised directives that make today’s level of globalisation seem tame by comparison.
Tyler Durden
Fri, 01/31/2020 – 23:45 - The U.S. Cities With The Most Homeless People
The U.S. Cities With The Most Homeless People
Over half a million Americans are currently homeless.
After a period of progress and decline, Statista’s Niall McCarthy notes that the U.S. homeless population has increased slightly by three percent according to a report from the Department of Housing and Urban Development. It now stands at 567,715 with 63 percent of that total living in sheltered accommodation. The national increase is primarily due to a leap in homelessness in California where it grew 16.4 percent between 2018 and 2019.
More than half of all unsheltered homeless people in the U.S. – some 53 percent – are in California. That’s nearly nine times as many as the state with the second-highest total of unsheltered homeless which is Florida.
Homelessness is primarily an urban issue and more than half of the homeless population is scattered across the country’s 50 biggest cities. Nearly a quarter of them live in just two cities – New York and Los Angeles. Despite its considerable homeless population, New York can at least claim that the vast majority of its rough sleepers are given sheltered accommodation with only 4.4 percent estimated to be living on the streets. The same cannot be said of the state of California where 71.7 percent of all homeless people are unsheltered.
The infographic below also shows the top-10 worst cities for homelessness across the U.S. with New York in first place with 78,604.
You will find more infographics at Statista
It’s important to mention that in this comparison, the data is broken down by CoC – those are Continuums of Care that are local planning bodies coordinating responses to the issue.
Los Angeles is in second place with over 56,000 while Seattle/King County comes third with 11,199.
Tyler Durden
Fri, 01/31/2020 – 23:25 - Has The FBI Been Lying About Seth Rich?
Has The FBI Been Lying About Seth Rich?
A persistent American lawyer has uncovered the undeniable fact that the FBI has been continuously lying, including giving false testimony in court, in response to Freedom of Information requests for its records on Seth Rich. The FBI has previously given affidavits that it has no records regarding Seth Rich.
A Freedom of Information request to the FBI which did not mention Seth Rich, but asked for all email correspondence between FBI Head of Counterterrorism Peter Strzok, who headed the investigation into the DNC leaks and Wikileaks, and FBI attorney Lisa Page, has revealed two pages of emails which do not merely mention Seth Rich but have “Seth Rich” as their heading. The emails were provided in, to say the least, heavily redacted form.
Before I analyse these particular emails, I should make plain that they are not the major point. The major point is that the FBI claimed it had no records mentioning Seth Rich, and these have come to light in response to a different FOIA request that was not about him. What other falsely denied documents does the FBI hold about Rich, that were not fortuitously picked up by a search for correspondence between two named individuals?
To look at the documents themselves, they have to be read from the bottom up, and they consist of a series of emails between members of the Washington Field Office of the FBI (WF in the telegrams) into which Strzok was copied in, and which he ultimately forwarded on to the lawyer Lisa Page.
The opening email, at the bottom, dated 10 August 2016 at 10.32am, precisely just one month after the murder of Seth Rich, is from the media handling department of the Washington Field Office. It references Wikileaks’ offer of a reward for information on the murder of Seth Rich, and that Assange seemed to imply Rich was the source of the DNC leaks. The media handlers are asking the operations side of the FBI field office for any information on the case. The unredacted part of the reply fits with the official narrative. The redacted individual officer is “not aware of any specific involvement” by the FBI in the Seth Rich case. But his next sentence is completely redacted. Why?
It appears that “adding” references a new person added in to the list. This appears to have not worked, and probably the same person (precisely same length of deleted name) then tries again, with “adding … for real” and blames the technology – “stupid Samsung”. The interesting point here is that the person added appears not to be in the FBI – a new redacted addressee does indeed appear, and unlike all the others does not have an FBI suffix after their deleted email address. So who are they?
(This section on “adding” was updated after commenters offered a better explanation than my original one. See first comments below).
The fourth email, at 1pm on Wednesday August 10, 2016, is much the most interesting. It is ostensibly also from the Washington Field Office, but it is from somebody using a different classified email system with a very different time and date format than the others. It is apparently from somebody more senior, as the reply to it is “will do”. And every single word of this instruction has been blanked. The final email, saying that “I squashed this with …..”, is from a new person again, with the shortest name. That phrase may only have meant I denied this to a journalist, or it may have been reporting an operational command given.
As the final act in this drama, Strzok then sent the whole thread on to the lawyer, which is why we now have it. Why?
It is perfectly possible to fill in the blanks with a conversation that completely fits the official narrative. The deletions could say this was a waste of time and the FBI was not looking at the Rich case. But in that case, the FBI would have been delighted to publish it unredacted. (The small numbers in the right hand margins supposedly detail the exception to the FOIA under which deletion was made. In almost every case they are one or other category of invasion of privacy).
And if it just all said “Assange is talking nonsense. Seth Rich is nothing to do with the FBI” then why would that have to be sent on by Strzok to the FBI lawyer?
It is of course fortunate that Strzok did forward this one email thread on to the lawyer, because that is the only reason we have seen it, as a result of an FOI(A) request for the correspondence between those two.
Finally, and perhaps this is the most important point, the FBI was at this time supposed to be in the early stages of an investigation into how the DNC emails were leaked to Wikileaks. The FBI here believed Wikileaks to be indicating the material had been leaked by Seth Rich who had then been murdered. Surely in any legitimate investigation, the investigators would have been absolutely compelled to check out the truth of this possibility, rather than treat it as a media issue?
We are asked to believe that not one of these emails says “well if the publisher of the emails says Seth Rich was the source, we had better check that out, especially as he was murdered with no sign of a suspect”. If the FBI really did not look at that, why on earth not? If the FBI genuinely, as they claim, did not even look at the murder of Seth Rich, that would surely be the most damning fact of all and reveal their “investigation” was entirely agenda driven from the start.
In June 2016 a vast cache of the DNC emails were leaked to Wikileaks. On 10 July 2016 an employee from the location of the leak was murdered without obvious motive, in an alleged street robbery in which nothing at all was stolen. Not to investigate the possibility of a link between the two incidents would be grossly negligent. It is worth adding that, contrary to a propaganda barrage, Bloomingdale where Rich was murdered is a very pleasant area of Washington DC and by no means a murder hotspot. It is also worth noting that not only is there no suspect in Seth Rich’s murder, there has never been any semblance of a serious effort to find the killer. Washington police appear perfectly happy simply to write this case off.
I anticipate two responses to this article in terms of irrelevant and illogical whataboutery:
Firstly, it is very often the case that family members are extremely resistant to the notion that the murder of a relative may have wider political implications. This is perfectly natural. The appalling grief of losing a loved one to murder is extraordinary; to reject the cognitive dissonance of having your political worldview shattered at the same time is very natural. In the case of David Kelly, of Seth Rich, and of Wille Macrae, we see families reacting with emotional hostility to the notion that the death raises wider questions. Occasionally the motive may be still more mixed, with the prior relationship between the family and the deceased subject to other strains (I am not referencing the Rich case here).
You do occasionally get particularly stout hearted family who take the opposite tack and are prepared to take on the authorities in the search for justice, of which Commander Robert Green, son of Hilda Murrell, is a worthy example.
(As an interesting aside, I just checked his name in the Wikipedia article on Hilda, which I discovered describes Tam Dalyell “hounding” Margaret Thatcher over the Belgrano and the fact that ship was steaming away from the Falklands when destroyed with massive loss of life as a “second conspiracy theory”, the first of course being the murder of Hilda Murrell. Wikipedia really has become a cesspool.)
We have powerful cultural taboos that reinforce the notion that if the family do not want the question of the death of their loved one disturbed, nobody else should bring it up. Seth Rich’s parents, David Kelly’s wife, Willie Macrae’s brother have all been deployed by the media and the powers behind them to this effect, among many other examples. This is an emotionally powerful but logically weak method of restricting enquiry.
Secondly, I do not know and I deliberately have not inquired what are the views on other subjects of either Mr Ty Clevenger, who brought his evidence and blog to my attention, or Judicial Watch, who made the FOIA request that revealed these documents. I am interested in the evidence presented both that the FBI lied, and in the documents themselves. Those who obtained the documents may, for all I know, be dedicated otter baiters or believe in stealing ice cream from children. I am referencing the evidence they have obtained in this particular case, not endorsing – or condemning – anything else in their lives or work. I really have had enough of illogical detraction by association as a way of avoiding logical argument by an absurd extension of ad hominem argument to third parties.
* * *
Unlike his adversaries including the Integrity Initiative, the 77th Brigade, Bellingcat, the Atlantic Council and hundreds of other warmongering propaganda operations, Craig’s blog has no source of state, corporate or institutional finance whatsoever. It runs entirely on voluntary subscriptions from its readers – many of whom do not necessarily agree with the every article, but welcome the alternative voice, insider information and debate. Subscriptions to keep Craig’s blog going are gratefully received.
Tyler Durden
Fri, 01/31/2020 – 23:05 - India Rejects That It Spent Years Pumping Fake GDP Data
India Rejects That It Spent Years Pumping Fake GDP Data
Just as the Indian economy expanded at a much slower pace in 2019, and electricity consumption in the country over the year plunged, there’s new criticism that Indian officials have been publishing phony economic statics to boost growth numbers.
Overinflated GDP data started to print when the country shifted to a 2011-12 base year on Jan. 30, 2015, Bloomberg noted.
However, Finance Minister Nirmala Sitharaman told Parliament on Friday that there was no “misestimation of growth” after the country overhauled the data.
“Correctly specified models that account for all unobserved differences among countries, as well as differential trends in GDP growth across countries, fail to find any misestimation of growth in India or other countries,” Sitharaman said.
“Concerns of a misestimated Indian GDP are unsubstantiated by the data and are thus unfounded.”
Harvard’s Center for International Development Arvind Subramanian argues that the overhaul overstated GDP figures by at least two percentage points from 2012 to 2017.
Fifty-one countries have also had over-estimated GDP growth since 2011, said Subramanian. Several advanced economies, including the U.K., Germany, and Singapore, have also been found to overestimate economic growth.
Prime Minister Narendra Modi rode the wave of fake GDP data from 2014 through 2017, but growth started to turn down by 2018; he has since been heavily criticized for a slumping economy.
GDP controversy has become a national topic in Indian newspapers, which is a big blow to Modi, who has promised to “Make India Great Again” with a $5 trillion economy.
“People have raised issues about the dodginess of the Indian numbers, and that is a real problem,” said Steve Hanke, a professor of applied economics at Johns Hopkins University. “Once you lose confidence in the statistical services, it creates a lot of uncertainty in the markets. From the investor’s point of view, it raises a red flag.”
India, much like China’s fake economic data, is sliding further into an economic slump, as the consequences of pumping fake GDP numbers over the years are finally being realized.
Tyler Durden
Fri, 01/31/2020 – 22:45 - Pepe Escobar: China's Virus Response Has Been "Breathtaking"
Pepe Escobar: China’s Virus Response Has Been “Breathtaking”
Authored by Pepe Escobar via The Saker blog,
Chinese President Xi Jinping is leading a scientific ‘People’s War’ against the coronavirus…
President Xi Jinping formally told WHO head Tedros Ghebreyesus, at their meeting in Beijing earlier this week, that the coronavirus epidemic “is a devil and we cannot allow the devil to hide.”
Ghebreyesus for his part could not but praise Beijing for its extremely swift, coordinated response strategy – which includes fast identification of the genome sequence. Chinese scientists have already handed over to Russian counterparts the virus genome, with snap tests able to identify it in a human body within two hours. A Russia-China vaccine is under development.
The devil, of course, is always in the details. In a matter of a few days, at the peak of the most congested travel period of the year, China did manage to quarantine an urban environment of over 56 million people, including megalopolis Wuhan and three nearby cities. This is an absolute first in terms of public health, anytime in history.
Wuhan, with a GDP growth of 8.5% a year, is a significant business center for China. It lies at the strategic crossroads of the Yangtze and Han rivers and at a railway crossroads as well – between the north-south axis linking Guangzhou to Beijing and the east-west axis linking Shanghai to Chengdu.
As premier Li Keqiang was sent to Wuhan, President Xi visited the strategic southern province of Yunnan, where he extolled the immense government apparatus to boost control and sanitary prevention mechanisms to limit propagation of the virus.
Coronavirus catches China at an extremely sensitive juncture – after the (failed) Hybrid War tactics displayed in Hong Kong; an American pro-Taiwan offensive; the trade war far from solved by a mere “phase 1” deal while more sanctions are being plotted against Huawei; and even the assassination of Maj. Gen. Qasem Soleimani, which ultimately is about targeting the expansion of the Belt and Road Initiative (BRI) in Southwest Asia (Iran-Iraq-Syria).
The Big Picture spells out Total Information War and non-stop weaponization of the China “threat” – now even metastasized, with racist overtones, as a bio-threat. So how vulnerable is China?
A people’s war
For almost five years now a maximum-security biolab has been operating in Wuhan dedicated to the study of highly pathogenic micro-organisms – set up in partnership with France after the SARS epidemic. In 2017, Nature magazine was warning about the risks of dispersion of pathogenic agents out of this lab. Yet there’s no evidence this might have happened.
In crisis management terms, President Xi has lived up to the occasion – ensuring that China fights coronavirus with nearly total transparency (after all, the internet wall remains in place). Beijing has warned the whole government apparatus in no uncertain terms not to attempt any cover-ups. A real-time webpage, in English, here, is available to everyone. Whoever is not doing enough will face serious consequences. One can imagine what awaits the party chief in Hubei, Jiang Chaoliang.
A post that went viral all over the mainland this past Sunday states, “We in Wuhan have truly entered the stage of people’s war against the new viral pneumonia”; and many people, “mainly Communist Party members” have been confirmed as “volunteers and observers according to street units.”
Crucially, the government directed everyone to install a “Wuhan Neighbors” applet downloaded from WeChat. That determines “our home’s quarantine address through satellite positioning, and then lock on our affiliated community organization and volunteers. Thenceforth, our social activities and information announcements would be connected to the system.”
Theoretically, this means that “anyone who develops a fever will report their condition through the network as soon as possible. The system will immediately provide an online diagnosis, and locate and register your quarantine address. If you need to see a doctor, your community will arrange a car to send you to the hospital through volunteers. At the same time, the system will track your progress: hospitalization, treatment at home, discharge, death, etc.”
So here we have millions of Chinese citizens totally mobilized in what’s routinely described as a “people’s war” using “high technology to fight against illness.” Millions are also drawing their own conclusions when comparing it with the use of app software to fight against the police in Hong Kong.
The biogenetic puzzle
Apart from crisis management, the speed of the Chinese scientific response has been breathtaking – and obviously not fully appreciated in an environment of Total Information War. Compare the Chinese performance with the American CDC, arguably the top infectious disease research agency in the world, with an $11 billion annual budget and 11,000 employees.
During the Ebola epidemic in West Africa in 2014 – considered a maximum urgency, and facing a virus with a 90% fatality rate – the CDC took no less than two months from getting the first patient sample to identifying the complete genomic sequence. The Chinese did it in a few days.
During the swine flu in the US in 2009 – 55 million infected Americans, 11,000 killed – the CDC took over a month and a half to come up with identification kits.
The Chinese took only one week from the first patient sample to complete, vital identification and sequencing of coronavirus. Right away, they went for publication and deposit in the genomics library for immediate access by the whole planet. Based on this sequence, Chinese biotech companies produced validated essays within a week – also a first.
And we’re not even talking about the now notorious building of a brand new state of the art hospital in Wuhan in record time just to treat victims of coronavirus. No victims will pay for their treatment. Additionally, Healthy China 2030, the reform of the health/development system, will be boosted.
Coronavirus opens a true Pandora’s box on biogenetics. Serious questions remain about experiences in vivo in which the consent of “patients” will not be required – considering the collective psychosis initially developed by Western corporate media and even the WHO around coronavirus. Coronavirus could well become a pretext for genetic experiments via vaccines.
Meanwhile, it’s always enlightening to remember Great Helmsman Mao Zedong. For Mao, the top two political variables were “independence” and “development.” That implies full sovereignty. As Xi seems determined to prove a sovereign civilization-state is able to win a scientific “people’s war,” that does not exactly spell out “vulnerability.”
Tyler Durden
Fri, 01/31/2020 – 22:25 - China's Crackdown On Pajama-Wearers Sparks Surveillance-State Backlash
China’s Crackdown On Pajama-Wearers Sparks Surveillance-State Backlash
Avid Zero Hedge readers are probably aware that the Communist Party leadership has managed to construct a surveillance apparatus in the country’s largest cities that tracks its citizens with panoptic precision. Spit your gum out on the sidewalk in Beijing, and your ‘social credit score’ – a government ‘rating’ that quantifies your obedience to laws and social customs – might take a hit.
While this system is also used for more nefarious purposes – minority Muslims in the far Western state of Xinjiang have been placed under constant surveillance as President Xi and the Party work to undermine adherence to Islam and mold the ethnic Uyghurs into obedient Communists – Beijing also uses it for more mundane purposes, like catching thieves who steal toilet paper from public restrooms.
But recently, the government triggered a rare backlash against the Chinese security state – a terrifying glimpse of how governments might leverage digital control to keep their people docile – when officials in a city in Eastern China launched a campaign to end “uncivilized behavior.”
As the New York Times tells it, this campaign was basically Rudy Giuliani’s ‘broken windows’ strategy on steroids.. And on Monday, the urban management department of Suzhou, the Chinese city of six million in Anhui Province, started the controversy by publishing photos taken by street cameras of seven young residents wearing pajamas in public.
Along with the photos, police published the names of the offenders, government ID numbers and locations where the “uncivilized behavior” took place. But residents responded that the young residents were simply being kids, and many criticized the police for their overzealousness.
According to the NYT, the backlash was a rare moment of resistance from a population that has seemingly accepted their totalitarian rulers.
Earlier, a government post on WeChat laid out the reasoning for shaming the pajama-wearers.
“Uncivilized behavior refers to when people behave and act in ways that violate public order because they lack public morals,” read a post on WeChat, a common social messaging app, which has since been deleted.
“Many people think that this is a small problem and not a big deal,” the post said. “Others believe public places are truly ‘public,’ where there is no blame, no supervision and no public pressure.”
“This has brought about a kind of complacent, undisciplined mind set,” it concluded.
While the use of facial recognition technology in security cameras remains taboo around the world, in China, it’s widely accepted. Powerful software allows the state security panopticon to quickly match offenders with their identities.
Some users of Chinese social media warned that the technology should be used cautiously.
“Facial recognition technology should be used with caution,” a user named Xiu Li De Xiao Wo wrote on Sina Weibo, a popular microblogging platform. “They should really be restricting access.”
The Suzhou ban on pajamas in public isn’t the first time Chinese authorities tried to crack down on unacceptable dress codes. Police have also cracked down on the “Beijing bikini,” a look where men roll up their shirts and bare their belly during the hot summer months.
While the debate over facial recognition tech can be light-hearted at times, reports about advances in video-tracking technology have raised fears about the government or private companies engaging in this level of extreme monitoring in the US. Last weekend, the New York Times published a blockbuster story about ClearView, a company that had invented a facial-recognition technology on par with anything used in China.
Then again, with such advanced surveillance tech at their disposal, we’re certain the Chinese authorities would have no problem identifying the source of the coronavirus outbreak, not to mention tracking all of those who might have been exposed. Though if this were true, how come so many infected victims were allowed to leave the country?
Tyler Durden
Fri, 01/31/2020 – 22:05 - 'Cancel Culture' Attacks On "White Privilege" Will Trigger Tragedy Down The Road
‘Cancel Culture’ Attacks On “White Privilege” Will Trigger Tragedy Down The Road
Authored by Robert Bridge via The Strategic Culture Foundation,
Being born White these days comes with a lot of excess baggage. Instead of each human being coming into existence with a clean slate, so to speak, a Caucasian newborn (who exactly qualifies as ‘White’ is another question) is brought into the world carrying the stain of its ancestors’ transgressions, of which, we are constantly reminded, are infinite and unforgivable.
Yes, European settlers to America were, for example, responsible for killing off a large number of the Native Indian population, as well as participating in the African slave trade. And who could forget the regrettable legacy of colonialism? At this point, I will resist the temptation to construct a scorecard based on the historical crimes of other races, many of whom were guilty of the very same crimes now being attributed to the White people.
This sudden desire among the Liberal Inquisition to settle past historical scores with the White man, who ironically has become his own burden, is already revealing itself in radical new ways. Students at prestigious Yale University, for example, will no longer be able to attend an introductory course to Western Art History due to “student uneasiness over an idealized Western “canon” — a product of an overwhelmingly white, straight, European and male cadre of artists,” reported the school’s newspaper.
Perhaps the only thing surprising about Yale’s announcement is that it came so late in the day. After all, the field of mathematics, which one would think is adequately insulated from identity politics, has been accused of being built on a purely racist foundation.
According to the new woke math currently being taught in the Seattle public school system, “Western” mathematics is being foisted upon unsuspecting students as “the only legitimate expression of mathematical identity and intelligence” in some diabolical plan to “disenfranchise people and communities of color.”
Perhaps the best evidence that there is a concerted effort to cancel the White race from recognition for their achievements can be witnessed by a simple search on Google. Type in ‘White inventors’ and fasten your seat belt. While there is no doubt that minorities have contributed many inventions over the course of the centuries, the Google results make it look like the tinkering White man, where he appears at all, is still struggling to invent the wheel. If the world’s biggest search engine were relying solely on algorithms to provide its ‘answers’ (as opposed to the deliberate meddling of a human hand) then it seems utterly impossible that renowned ‘Caucasian’ inventors, like the Wright Brothers, Henry Ford, Alexander Graham Bell, Bill Gates, Steve Jobs, Nikola Tesla, Albert Einstein, Tim Berners-Lee and Isaac Newton, to name a few, do not feature anywhere near the top of Google search results. This was a deliberate move by the Silicon Valley giant to deny White inventors their rightful place in the historical record.
Commercial break! Watch Gillette’s stomach-churning virtue-signaling video devoted to not removing whiskers from your face but the question of ‘toxic masculinity. Ask yourself what race is portrayed as the guiltiest of displaying undesirable behavior (making advances on females, for example) in society.
Equally shocking was the news that Goldman Sachs, of all companies, was jumping on the virtue signaling bandwagon in an apparent effort to put White executives in their rightful place, which increasingly is not at the top. Indeed, Goldman Sachs CEO David Solomon has a plan to save corporate America from all-male, all-white corporate boards: The investment bank will decline to take a company public unless it has at least one woman or non-white member on board.
The CBS article where this story appeared attempted to justify the move by citing a study that argues more diverse firms make “better investment decisions and scale back on aggressive risk-taking.” Well, if that were true, then Goldman Sachs would be better off asserting its commitment to the ‘free market’ as opposed to the lunatic social justice fringe. The reason is at the core of capitalist theory: those firms that fail to diversify (if it is indeed the best business model) will ultimately falter due to the market’s law of natural selection. Instead, David Solomon would rather align himself with cultural ‘progressives’ by forcefully removing White executives, many of whom are in their positions due to hard work and merit. On top of that, there is the question regarding the very constitutionality of such efforts at ‘affirmative action’ to correct perceived wrongs in the workplace.
Curb your racism, avoid yoga and dog ownership
Now, if all that were not enough, flickering in the background of these stories are vile racist ideas that would never be attributed to other peoples without massive fallout. For example, did you happen to know that White people participating in the seemingly benign discipline of yoga, an increasingly popular group activity for relieving stress and staying fit, are in reality supporting the vile white supremacist belief system?
Shreena Gandhi, a religious studies professor at Michigan State, and Lillie Wolff, a self-described “anti-racist white Jewish organizer, facilitator, and healer,” co-authored an article entitled, ‘Yoga and the Roots of Cultural Appropriation.’ In it, the very imaginative authors argue that the “modern-day trend of cultural appropriation of yoga is a continuation of white supremacy and colonialism, maintaining the pattern of white people consuming the stuff of culture that is convenient and portable…”
The madness does not stop there. Not by a long shot.
Now if, by chance, you happen to be White, as well as a yoga enthusiast AND dog owner, you may as well just surrender to your darkest demons and sign up now for the Ku Klux Klan. I am only half joking. See, because in the minds of the social justice thought police, White people who walk their dogs around the neighborhood – pooper scooper in hand – may also signify a not so harmless breed of human. That’s because White folks tend to use dog ownership as a means to achieve “reinforced boundaries” and thus their “White privileges” in their otherwise diverse neighborhoods.
“White residents of multicultural areas tend to overlook inequality in their neighborhoods,” writes Sarah Mayorga-Gallo, Assistant Professor of Sociology, University of Massachusetts Boston, who went on to identify the surprising “vehicle of racial segregation,” which just happens to be White man’s best friend, the dog.
The academic relayed the heart-wrenching story of Jerry, a black homeowner in his sixties, who chanced upon a neighborhood bakery in the town of Creekridge Park, North Carolina. He stopped to chat with some dog-owning customers, who were white, in the outdoor seating area, but the staff asked him to leave – a scenario that is played over thousands of times every day at any restaurant that has an outdoor seating area.
As Mayorga-Gallo explains it: “Jerry is a black disabled veteran who was wearing his old army uniform that day. He figures they thought he was begging for money.”
Without providing more information on Jerry of the tattered Army uniform, like, for example, if he was in fact a panhandler, Mayorga-Gallo arrives at the White-trashing conclusion she was certainly looking for: “The dogs didn’t create the interracial boundaries at the bakery, which caters to a primarily white, middle-class clientele. In fact, the dogs presented an avenue to connect black and white neighbors. But they gave bakery staff a reason to intervene, to maintain interracial boundaries.” Now had Mayorga-Gallo taken the time to conduct her own experiment, like how a restaurant staff would react to a White beggar attempting to talk to a group of paying Black customers, I think she may have been surprised at the results. Instead, we must settle for the ‘White dog owners contribute to racial segregation’ verdict.
For some readers, all of this may sound a bit trifling, insignificant and even humorous. That would be a mistake. This steady flow of articles, which attempt to portray White Americans as closet racists, could – at the very least – instill some level of hate aimed at the White population. In fact, that already seems to be happening. Meanwhile, by constantly eliminating the achievements of Whites, based on whatever explanation, or even removing them in the name of ‘diversity,’ this could also result in some sort of unintended backlash.
These non-stop efforts to characterize the U.S. White majority with racism and supremacism do not stand up to scrutiny. After all, the country fought a civil war that was at least partially aimed at ending the slave trade. Later, the country passed the Immigration and Nationality Act of 1965, which opened the floodgates to people of non-European descent. While there is still room for improvement, the race situation is nowhere near the crisis levels that the media regularly ascribes to it.
All things considered, it seems to be a recipe for disaster for the media to continually – in the tormented spirit of ‘social justice’ – to attribute racist tendencies to White Americans across the board. That is not only incredibly wrong, it is dangerous. It will end in disaster.
Tyler Durden
Fri, 01/31/2020 – 21:45 - Watch: How China Is Enforcing The Corona Quarantine By Drone
Watch: How China Is Enforcing The Corona Quarantine By Drone
China has found new ways to respond to coronavirus that has shut down at least two-thirds of its economy, taken offline some of the world’s largest manufacturing hubs, and quarantined more than 50 million people.
The country is using drones, specifically DJI drones with front-mounted speakers, to fly around towns and yell at anyone who isn’t wearing a mask.
It’s like something from a dystopian film, but essential to critical quarantine enforcement.
With confirmed cases around 10,000 in China, about 213 deaths, and tens of thousands of people with suspected coronavirus, the communist government is deploying technology to beat the “devil virus.”
“Staying at home is contributing to society,” a government official tells people in this video posted by Global Times, which slows a DJI drone with a front-mounted speaker flying around a rural countryside and urban areas yelling at anyone not wearing a virus mask.
Walking around without a protective face mask? Well, you can’t avoid these sharp-tongued drones! Many village and cities in China are using drones equipped with speakers to patrol during the #coronavirus outbreak. pic.twitter.com/ILbLmlkL9R
— Global Times (@globaltimesnews) January 31, 2020
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Gizchina.com reports that some Chinese towns are deploying agriculture drones with 5-gallon sprayers to spray disinfectant, with hopes that the virus could be eliminated.
UK researchers now suggest 75,800 people are infected in Wuhan, as compared to SARS, the infection rate of coronavirus is exceptionally high. China is using advanced technology to fight a virus that could wind up collapsing its economy.
Tyler Durden
Fri, 01/31/2020 – 21:25 - Convex Strategies: "A Certain Dichotomy Has Come To Our Attention"
Convex Strategies: “A Certain Dichotomy Has Come To Our Attention”
Submitted by Convex Strategies
A certain dichotomy has come to our attention. The whole ream of senior, past and present, central banking elites kicked off the New Year with a stream of comments about the past successes and the future challenges of monetary policy. We’ve copied in a few of their quality quotes here, but would also highly recommend that you take the time to read, in particular, Mr Bernanke’s speech/paper:
- https://www.brookings.edu/wp-content/uploads/2019/12/Bernanke_ASSA_lecture.pdf
- https://www.brookings.edu/blog/ben-bernanke/2020/01/04/the-new-tools-of-monetary-policy/
The gist is, everything they did to save the world post GFC worked. None of the nasty side-effects came to fruition, with “the possible exception of risks to financial stability”. Further, the policies have had no impact on wealth segregation, as long as you ignore asset price inflation. Nevertheless, there is only so much monetary policy can do from here, so it might require a bit more lifting from the fiscal stimulus side to finish the job.
If you don’t mind us saying – we find this laughable, naive and disingenuous.
“It’s generally true that there’s much less ammunition for all the major central banks than they previously had, and I’m of the opinion that this situation will persist for some time,” he said in an interview with the Financial Times to be published Wednesday. “It’s not clear that monetary policy would have sufficient space” if it needs to combat anything worse than a “conventional recession.”
Mark Carney, FT 8 Jan20
“I believe that for the euro area there is some risk of Japanification, but it is by no means a foregone conclusion” if it acts comprehensively to avoid a deflationary malaise, Draghi said via a video link to the conference in San Diego. “The euro area still has space to do this, but time is not infinite,” “This is why the ECB has been consistently calling for fiscal policy to play a stronger role and capitalize” on the low rates, he said.
Mario Draghi, Bloomberg 6 Jan20
“Monetary policy has a meaningful role to play, it’s unlikely to be sufficient in the years ahead,” Yellen said. It “should not be the only game in town.” “We can afford to increase federal spending and cut taxes” to support the economy in a recession even though government debt has risen sharply in recent years, the former policy maker said.
Janet Yellen, Bloomberg 6 Jan20
“There’s been a process of going through the stages of grief about a low neutral rate. These factors are basically the hand we’ve been dealt for the next five to 10 years.”
John Williams, WSJ 5 Jan20
On the other hand, the BIS, the World Bank, and the IMF released year end reports filled to the gills about the concerns of unprecedented debt expansion:
- https://www.bis.org/publ/qtrpdf/r_qt1912.pdf
- https://www.worldbank.org/en/research/publication/waves-of-debt
- https://www.imf.org/en/Publications/WP/Issues/2020/01/03/Debt-Is-Not-Free-48894
“Our results show that public debt in its various forms is the most important predictor of fiscal crises and it does matter always and everywhere.”
IMF: Debt is Not Free 3 Jan20
“The global economy has experienced four waves of debt accumulation over the past fifty years. The first three debt waves ended with financial crises in many emerging and developing economies. The latest, since 2010, has already witnessed the largest, fastest and most broad-based increase in debt in these economies. Their total debt has risen by 54 percentage points of GDP to a historic peak of almost 170 percent of GDP in 2018.”
The World Bank, Global Waves of Debt: Causes and Consequences Jan20
We are going to go out on a limb and suggest that it might be the unprecedented inflation (pun intended) of outstanding debt that the monetary policy nobility are missing in each and every of their senseless comments/arguments/conclusions. There is a reason they call end of cycle dislocations something like a “Debt Crisis” or “Credit Bubble” or “Default Cycle”, because debt is what matters! They don’t call it a “Slow Down in Productivity Crisis” or an “Asset Inflation Catastrophe” or a “Core PCE Deflator Bust”. You’ve heard us ask it over and over again – are central bankers idiots, or are they in on a wilful upward redistribution of wealth? Read through the above articles/speeches/papers from the elite of the elite in the central banking world and you will literally find not one mention of debt/credit/leverage. As always, the mention of it is so noticeable in its absence that it is hard to imagine it is anything other than intentional. They are the managers of a Ponzi scheme laying out every possible explanation other than what it actually is.
The IMF and World Bank pieces, on the other hand, focus on the actual state of the world. The World Bank piece comes with a link to a spreadsheet with the data behind their wonderful charts. What we take from these pieces, in particular the World Bank book, is that historically long periods of debt accumulation end in financial crisis, notably in Emerging and Developing Economies (EMDEs). The most recent wave of debt commenced in 2010 and now has the world at all-time unprecedented levels of debt, but what really stands out is the relative increase in debt in Emerging and Developing Economies, and specifically Private sector debt, overwhelmingly from China.
Figure 1: Global Debt
Figure 2: Debt in Advanced Economies
Figure 3: Debt in Emerging and Developing Economies
Other things that stand out – overall there has been no deleveraging post the 2007-2009 financial crisis; virtually all of the growth in accumulated debt in Advanced Economies has come from Government debt; the growth above trend of Private debt in EM, and particularly China, is prodigious. As we have discussed before, the end result of the extreme policy measure of the above noted Advanced Economy central bankers, aside from inflating asset prices in their own countries, was to drive debt accumulation into the developing world.
This leads to the problem very clearly depicted in the below graph. Despite the unprecedented expansion of debt, what some might proclaim a bringing forward of demand, growth in EMDEs continues to slow.
Figure 4: Debt to GDP vs GDP growth in Emerging and Developing Economies
This picture, naturally, looks even more extreme if we strip it down to just China. Referencing our distinguished central banking friends, maybe it’s not “secular stagnation”, but rather an excess of accumulated debt? I go back to our old Snickers bar analogy. You have to be a pretty undiscerning doctor if you think your prescription of Snickers bars, to pick up lagging energy in your patient, has nothing to do with his weight gain and subsequent increased lack of energy. Sadly, there appears to be no accountability for the monetary physicians that have orchestrated the current lack of fitness for economies.
We couldn’t help ourselves and had to include the attached link to the recently created biggest Snickers bar ever – as far as we know no central bankers were involved in the making of it!
World’s biggest Snickers bar weighs in at over 2 tons in Texas
Figure 5: Debt to GDP vs GDP growth China
As ever, we have no particular insight as to what the future holds, how or when this cycle might end. Just simply that, thus far, they all end. The accumulation of debt doesn’t, per se, tell you where or when a fire might start, but rather where a spreading fire might cause the costliest damage. Again, the next three charts from the World Bank piece show that EMDEs, and in particular China, are where the combustible material has really built up in this wave.
Figure 6: Rate of Change of Total Debt (EMDEs – Emerging Market Developing Economies)
Figure 7: Pct. Countries with Increase in Govt Debt, EMDEs
Figure 8: Pct. Countries with Increase in Private Debt, EMDEs
All of our central banking gurus commented on the need for greater fiscal policy support in their respective economies, and we touched last month on the growing mainstreaming of things like MMT, Modern Monetary Theory (neither modern nor a theory), but is that sort of thing a solution that will prevent/delay another EMDEs financial crisis at the end of this debt wave? Can EMDEs that rely on foreigners to hold a significant portion of their domestic government debt, and on foreign currency as a significant portion of the private debt, smooth away cyclical end debt instability by ever greater levels of fiscal spending? The soft-landing unicorn has been historically scarce, and the extremes of this cycle make us sceptical that this time the guys behind the curtain will pull the levers just right.
Figure 10: Volatility and Correlation Comet
Figure 11: SGD/JPY ‘Seasons’
All of this leads us, yet again, to the same question: are you sufficiently confident in your defensive strategies that you are able to take sufficient risk to benefit from years like 2019? Are you catching the spectacular compounding opportunities in the up-tail, while confidently protecting the down-tail? Nobody should be satisfied with the high correlation and low returns of absolute return hedge fund strategies. Fixed income, which had a sensational 2019, still massively underperformed equities while offering increasingly little portfolio risk mitigation benefit. Should our central banking overlords continue to extend the cycle, there is no reason why asset prices can’t continue to drive ever higher. Should they fail………
Tyler Durden
Fri, 01/31/2020 – 21:05 - Race-Baiters Ruined As Poll Shows Americans' Satisfaction With Race-Relations Jumped Since Trump Elected
Race-Baiters Ruined As Poll Shows Americans’ Satisfaction With Race-Relations Jumped Since Trump Elected
Well this doesn’t fit the mainstream media narrative…
In a poll reported by Gallup’s ‘Mood of the Nation’ this week, it turns out that Americans’ satisfaction with race relations has jumped 14% since Trump’s inauguration.
As The Daily Caller’s David Krayden notes, the numbers on race relations seemingly fly in the face of rhetoric from progressives who not only routinely label the president as a racist and is actively or passively promoting a white supremacist agenda. Democratic New Jersey Sen. Cory Booker has called the president “worse than a racist” while CNN legal analyst Jeffrey Toobin labelled Trump a racist for calling Democratic California Rep. Maxine Waters a “low IQ individual.”
When Trump criticized the infrastructure in Baltimore and said the city was “rodent-infested” House Speaker Nancy Pelosi called the comments “racist.”
Trump has consistently noted that unemployment for black and Hispanic Americans has reached an all-time low and that minorities are benefiting from the economic boom the country is experiencing.
Additionally, as Trump enters his re-election year, Americans are more positive on eight key issues than they were just before he took office in January 2017.
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Gallup records double-digit increases in public satisfaction with the nation’s economy, security from terrorism, military strength and the state of race relations.
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Satisfaction is also up by between six and nine points on crime, the position of blacks and other racial minorities, the distribution of income and wealth, and the opportunity for a person to get ahead through hard work.
Gallup has measured Americans’ satisfaction with most of these issues each year since 2001, except from 2009 to 2011, when a more limited number of issues were rated or the question was not asked.
Americans’ average satisfaction rating for the 27 issues Gallup has tracked consistently since 2001 is now 47%. This is up three points from a year ago and is the highest since the January 2005 poll.
Today’s average satisfaction is roughly on par with the level of the early 2000s. Only in 2002 was the average for this metric substantially higher than it is today. The average 53% recorded that year reflected heightened satisfaction as Americans were in full “rally around the flag” mode shortly after the 9/11 attacks.
One reason average satisfaction isn’t higher now than in 2001 is that satisfaction has since declined sharply on matters related to the performance of the federal government: the system of government and how well it works (down 25 points); the role the U.S. plays in world affairs (-18); and the size and power of the federal government (-12).
All of which suggests President Trump’s upbeat view of the nation’s economy, military strength, economic opportunity and overall quality of life will likely resonate with Americans when he delivers his State of the Union address to Congress next week.
Sadly, for one group of Americans, the address may not go down so well, as it appears Al Sharpton and his race-baiting cronies will need to work harder to divide the nation…
Tyler Durden
Fri, 01/31/2020 – 20:45 -
- Democracy And Tyranny
Democracy And Tyranny
Authored by Walter Williams via Tonwhall.com,
During President Donald J. Trump’s impeachment trial, we’ll hear a lot of talk about our rules for governing. One frequent claim is that our nation is a democracy. If we’ve become a democracy, it would represent a deep betrayal of our founders, who saw democracy as another form of tyranny. In fact, the word democracy appears nowhere in our nation’s two most fundamental documents, the Declaration of Independence and the U.S. Constitution. The founders laid the ground rules for a republic as written in the Constitution’s Article IV, Section 4, which guarantees “to every State in this Union a Republican Form of Government.”
John Adams captured the essence of the difference between a democracy and republic when he said,
“You have rights antecedent to all earthly governments; rights that cannot be repealed or restrained by human laws; rights derived from the Great Legislator of the Universe.”
Contrast the framers’ vision of a republic with that of a democracy. In a democracy, the majority rules either directly or through its elected representatives. As in a monarchy, the law is whatever the government determines it to be. Laws do not represent reason. They represent power. The restraint is upon the individual instead of the government. Unlike that envisioned under a republican form of government, rights are seen as privileges and permissions that are granted by government and can be rescinded by government.
Here are a few quotations that demonstrate the contempt that our founders held for a democracy.
James Madison, in Federalist Paper No. 10, wrote that in a pure democracy, “there is nothing to check the inducement to sacrifice the weaker party or the obnoxious individual.”
At the 1787 Constitutional Convention, Edmund Randolph said that “in tracing these evils to their origin every man had found it in the turbulence and follies of democracy.” Alexander Hamilton agreed, saying: “We are now forming a republican government. (Liberty) is found not in “the extremes of democracy but in moderate governments. … If we incline too much to democracy, we shall soon shoot into a monarchy.”
John Adams reminded us: “Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There was never a democracy yet that did not commit suicide.”
John Marshall, the highly respected fourth chief justice of the U.S. Supreme Court observed, “Between a balanced republic and a democracy, the difference is like that between order and chaos.”
Thomas Paine said, “A Democracy is the vilest form of Government there is.”
The framers gave us a Constitution replete with undemocratic mechanisms. One constitutional provision that has come in for recent criticism is the Electoral College. In their wisdom, the framers gave us the Electoral College as a means of deciding presidential elections. That means heavily populated states can’t run roughshod over small, less-populated states.
Were we to choose the president and vice president under a popular vote, the outcome of presidential races would always be decided by a few highly populated states, namely California, Texas, Florida, New York, Illinois and Pennsylvania, which contain 134.3 million people, or 41% of our population. Presidential candidates could safely ignore the interests of the citizens of Wyoming, Alaska, Vermont, North Dakota, South Dakota, Montana and Delaware. Why? They have only 5.58 million Americans, or 1.7% of the U.S. population. We would no longer be a government “of the people.” Instead, our government would be put in power by and accountable to the leaders and citizens of a few highly populated states. It would be the kind of tyranny the framers feared.
It’s Congress that poses the greatest threat to our liberties. The framers’ distrust is seen in the negative language of our Bill of Rights such as: Congress “shall not abridge, infringe, deny, disparage, and shall not be violated, nor be denied.” When we die and if at our next destination we see anything like a Bill of Rights, we know that we’re in hell because a Bill of Rights in heaven would suggest that God couldn’t be trusted.
Tyler Durden
Fri, 01/31/2020 – 20:25 - California Is Building Lots To Contain "Thousands" Living In Their Cars Across The State
California Is Building Lots To Contain “Thousands” Living In Their Cars Across The State
Today in “news you won’t hear from liberal American news organizations”, it was reported this week that “thousands” of homeless California residents are being forced to live in their cars, amidst a growing housing crisis in the state.
California accounts for nearly half of the country’s homeless population. Ah, the sweet success of high taxes and liberal policies.
Even better is the solution that some California cities are implementing to try and deal with the issue. According to a report by France 24 news, several cities are now encouraging the practice, setting up parking lots where homeless people can “more securely” spend the night.
France 24 news interviewed several people in one lot, including a deliveryman who doesn’t make enough money to rent his own apartment. “Each car represents someone’s home,” the report notes about this lot outside of San Diego.
One former homeless man, George Harris, actually turned the idea into a business, accruing 13 minivans which he has parked in various areas around Venice Beach, that he rents each for $300 per month. Each van comes with its own mattress, he told a reporter proudly.
The vans have to be moved every 3 days to avoid getting towed and Harris is actually fighting the city ordinance that requires this in order to try and get permission to keep people living in vans throughout the city. Residents throughout the city seem unamused by the practice.
“I called the police on one of his clients because the guy was defecating and urinating,” one resident said about a van parked outside of her home.
“Totally false,” Harris interrupted during the middle of her interview. “They make up stories about the van people.”
You can watch the full report here:
Tyler Durden
Fri, 01/31/2020 – 20:05 - Zerohedge Suspended On Twitter
Zerohedge Suspended On Twitter
First it was Facebook, then all of New Zealand; now Twitter has decided to suspend Zero Hedge.
Just as in the prior bans, which were eventually overturned, so in this case it is unclear what prompted Twitter’s abrupt censorship: the only notification we received from twitter was the following:
It is news to us that this website has (ever) “engaged in the targeted harassment of someone.”
What appears to have happened is that twitter received a complaint from the website best known for publishing the discredited Steele dossier when no other media outlet would touch it, and making cat slideshows of course, Buzzfeed, in which someone called Ryan Broderick writes that Zero Hedge “has released the personal information of a scientist from Wuhan, China, falsely accusing them of creating the coronavirus as a bioweapon, in a plot it said is the real-life version of the video game Resident Evil.”
I’ve reached out to Twitter for clarity on this but it looks like ZeroHedge may have been suspended following my piece about them doxing a Chinese scientist and accusing him of weaponizing the #coronavirus https://t.co/B3XXRCjJpQ pic.twitter.com/RLCR3Eg6q0
— Ryan Broderick (@broderick) January 31, 2020
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A few points: the article referenced by Buzz Feed, “Is This The Man Behind The Global Coronavirus Pandemic?”, is as the title implies, a question, and one which considering the huge significance and life or death import of the Coronavirus pandemic, has to be answered, especially since even the establishment’s Foreign Policy magazine writes bat soup, which is widely being cited and circulated by the mainstream press as the cause of the coronavirus breakout, is not the cause of the Wuhan virus. The widely read website Health.com also chimes in: “No, Coronavirus Was Not Caused by ‘Bat Soup‘”. Meanwhile, Business Insider writes “Experts think the Wuhan coronavirus jumped from bats to snakes to people. Bats have been the source of at least 4 pandemics.”
So considering that Peng Zhou, who currently works at the Wuhan Institute of Virology, is the Leader of the Bat Virus Infection and Immunization Group at the Institute, the question certainly is a reasonable one and, in a normal world, would demand an answer from the established media (assuming it wasn’t afraid of risking lucrative Chinese funding) instead of leaving it to “fringe” websites.
The impetus to ask the question if the disease originated at the Wuhan Institute of Virology is especially relevant in light of social media reports such as this one which claims to “have evidence here that the outbreak originated from Wuhan P4 Research Institute. You need to find a truly patriotic journalist to publish it to the public. You can personally trust me to provide a complete chain of evidence. Thank you.”
我这边有证据表明这次疫情来源于武汉p4研究所，需要找真正热血爱国的记者将其公布给民众，可以私信我提供完整证据链，谢谢
— 中华一番 (@BD6Fs6zVVAK4z6F) January 30, 2020
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So did we have a right to ask the question if there is an alternative version for the emergence of the Coronavirus pandemic, especially with hundreds if not thousands of lives at stake? Absolutely.
As for Broderick’s statement that Peng was “accused falsely” we wonder how he knows this: did he speak to Peng? Did he get any comments? Did he get an official denial? No, he did not: as he writes, “BuzzFeed News has reached out to the scientist, whom it is declining to name.” So, it actually turns out that it is Buzzfeed that is once again presenting a false statement as fact, something Buzzfeed has been accused of doing over and over and over.
Meanwhile, those who wonder if Dr. Zhou has any link to the possible emergence of the Coronavirus following years of experimenting with bats, we urge you to read our full article instead of relying on the hearsay of ideologically biased journalists.
Second, and contrary to the claims presented by Buzzfeed, we did not release any “personal information”: Peng Zhou (周鹏) is a public figure, and all the contact information that we presented was pulled from his publicly posted bio found on a website at the Wuhan Institute of Virology which anyone with access to the internet can pull from the following URL: http://sourcedb.whiov.cas.cn/zw/rck/201705/t20170505_4783973.html, which is also the information we used.
So about Buzzfeed’s allegation, which was adopted by Twitter, that somehow we incited “targeted abuse”, here is what we said:
Something tells us, if anyone wants to find out what really caused the coronavirus pandemic that has infected thousands of people in China and around the globe, they should probably pay Dr. Peng a visit.
To which we then added the information obtained from his own bio page on the Institute’s website:
“Or at least start with an email: Dr Peng can be reached at peng.zhou@wh.iov.cn, and his phone# is 87197311″
Are we then to understand that we have now reached a point the mere gathering of information, which our colleagues in the media may want to eventually do as thousands of people are afflicted daily by the Coronavirus, is now synonymous with “abuse and harassment”? According to Twitter, and certainly our competitors in the media, the answer is yes.
In any case, we have emailed Twitter CEO Jack Dorsey, who incidentally happens to follow zerohedge…
… for the answer. If we get one, we will promptly share it with our readers. We aren’t holding our breath, however, as we realize how important it is to today’s media giants not to ruffle too many Chinese feathers or lack losing access to the Chinese market. After all, who can forget the following report from the New York Times about another of our media competitors that several years ago was itself engaged in “doxing” us (yet oddly wasn’t suspended by Twitter):
The chairman of Bloomberg L.P. said in a speech here on Thursday that the company should have reconsidered articles that deviated from its core of coverage of business news, because they jeopardized the huge sales potential for its products in the Chinese market.
The comments by the chairman, Peter T. Grauer, represented the starkest acknowledgment yet by a senior Bloomberg executive that the ambitions of the news division should be assessed in the context of the business operation, which provides the bulk of the company’s revenue. They also signaled which of those considerations might get priority.
Acknowledging the vast size of the Chinese economy, the world’s second-biggest after that of the United States, Mr. Grauer, said, “We have to be there.”
“We have about 50 journalists in the market, primarily writing stories about the local business and economic environment,” Mr. Grauer said in response to questions after a speech at the Asia Society. “You’re all aware that every once in a while we wander a little bit away from that and write stories that we probably may have kind of rethought — should have rethought.”
Bloomberg, the financial data and news company, relies on sales of its terminals, which are ubiquitous on bankers’ desks around the world, for about 82 percent of its $8.5 billion in revenue. But sales of those terminals in China declined after the company published an article in June 2012 on the family wealth of Xi Jinping, at that time the incoming Communist Party chief. After its publication, officials ordered state enterprises not to subscribe to the service. Mr. Grauer did not specifically mention the article about Mr. Xi or any other articles.
“Being in China is very much a part of our long-term strategy and will continue to be so going forward,” Mr. Grauer said. “It occupies a lot of our thinking — Dan Doctoroff, our C.E.O.; me; Mike; and other members of our senior team.”
Some current and former Bloomberg journalists, who spoke on condition of anonymity, said they had hoped the controversy surrounding Bloomberg’s China reporting would prompt the company to reaffirm its support for investigative efforts. Mr. Grauer’s comments were met with dismay, particularly because he is regarded as close to Mr. Bloomberg and would be unlikely to voice views that were not broadly accepted at the top of the company.
Unlike Bloomberg, or anyone else in the mainstream media, we don’t plan on “rethinking” any of our articles just to curry favor with the powerful and we certainly will continue our own “investigative efforts”, even if it means we lose some of our inbound traffic.
Tyler Durden
Fri, 01/31/2020 – 19:57 - Deciphering Davos: What The International Ruling Class Have Planned For You
Deciphering Davos: What The International Ruling Class Have Planned For You
Authored by Doug Casey via InternationalMan.com,
International Man: No matter the problem, the prescription of the Davos crowd is always more welfare, more warfare, more money printing, more taxes, and of course, more centralization of power into global institutions.
What’s your take?
Doug Casey: The people who attend Davos are all welfare statists. They’re not necessarily socialists, insofar as they don’t want to see government nationalize industries. Most understand how totally dysfunctional that is and that they don’t really benefit from it. Strict socialism, defined as State ownership of the means of production, is off the table. They prefer economic fascism, where a powerful State can funnel wealth to the corporations the elite own or control. They’re happy to throw some table scraps to the unwashed masses, of course. Modern Monetary Theory (MMT) is the best way to do that.
Again, they’re not socialists. They’re welfare statists. Completely opportunistic and absolutely unprincipled. Despicable people, actually. Few are entrepreneurial, independent thinkers or free-market oriented. Those types would be disruptive at Davos, and if they’re ever invited, it would be only once.
Other than celebrities, court intellectuals, and publicity-oriented multibillionaires, the attendees are almost all bureaucrats and politicians who thrive on stolen money. But it’s no longer easily visible briefcases full of cash. That’s quaint in today’s world. They steal indirectly, by making sure they benefit from state regulations, state favors, and the inflation of the currency.
Bribes are in the form of tax-deducible donations to charitable foundations and nongovernmental organizations (NGOs). That’s not only much safer, but the money is vastly bigger, and the way it’s rigged adds to their prestige. Both making and taking a bribe disguises the miscreants as philanthropists and do-gooders when they use an NGO as a funnel.
But getting back to their economic views, they’re all for “quantitative easing.” Printing money—MMT—directly benefits the stock market. It raises corporate earnings, and much of the newly created cash directly boosts the prices of shares. It’s really sweet, if you’re an insider.
International Man: At this year’s event, climate change appears to be a big focus.
What are your thoughts on this?
Doug Casey: These fools love to talk about global warming, which they attribute to carbon dioxide. Their jets and limos are a small price to pay for the invaluable moral hectoring they give to the billions of hoi polloi.
Davos people see the common man as the real problem. And perversely, the common man believes what he’s told in the media—namely, that he is the problem. Pseudo science has become a new religion. It’s become a moral crusade against carbon, the one element that’s basic to all life; it’s now more hated than uranium, plutonium, or gold. Carbon is being pursued by a lynch mob of angry chimpanzees.
And leading the charge is Davos attendee Greta Thunberg. She’s emblematic of how thoroughly degraded this has become. Greta is a manufactured celebrity. She came out of nowhere last year; massive but completely undeserved media attention made her into one of the planet’s most famous people. It’s not just laughable, but amazing, that a high school sophomore—with no knowledge or experience—has become a world opinion leader. You may have heard her famous deranged rant, but just in case, here it is:
She has absolutely nothing going for her but things like anger, resentment, hatred, and fanaticism. No matter. The Masters of the Universe sit there as she scolds them for their evil in destroying the world and ruining her youth.
The silly little bitch is a frothing-at-the-mouth fanatic and suffers from several really severe psychological aberrations. She is to the world what Alexandria Ocasio-Cortez is to the United States. She will undoubtedly go into some multi-billion dollar NGO, where she can do a maximum of damage.
People value urgency, sincerity, and passion. Like Hitler, Mussolini, Lenin, Castro, and the like, she’s got plenty. And nobody dares say a word about it, because she’s been granted the moral high ground. This augurs very poorly for the future.
Probably the only intelligent words spoken at Davos this year came from Donald Trump, of all people, when he decried “prophets of doom,” referring to the global warming crowd.
Climate change has been around for about four billion years. And the biggest driver of it, by far, is the sun. Not carbon dioxide, a trace gas. There’s 20 times more argon, in the atmosphere. Without the sun, earth would be a ball frozen at about two degrees above absolute zero. Not counting the effects of cosmic rays, the planet’s changes in orbit and tilt, the solar system’s rotation around the galaxy, and a score of other critical factors. But these people don’t talk about that, because those things are totally and obviously beyond our control. Best to stick with carbon, which is proving helpful in controlling the masses.
International Man: Given the disastrous policies the Davos crowd has in the pipeline, what should the average person do?
Doug Casey: Treat these people with the respect they deserve—which is to say, treat them like drunks discussing the weather at a cocktail party. Davos is just a social gathering for people who have a busybody streak. It would be completely unimportant except for the fact the media says it’s important.
The only thing that surprises me about Davos is that the hustler who runs it hasn’t yet invited the Kardashians.
* * *
There’s no question the elite are eager to promote policies like negative interest rates, the abolition of cash, and mass migration. These trends are in motion, and are accelerating at a rapid rate. It’s all shaping up to be a world-class disaster… That’s exactly why New York Times bestselling author Doug Casey and his team just released an urgent new report with Doug’s top 7 predictions—including how to survive and thrive in turbulent times. Click here to download the free PDF now.
Tyler Durden
Fri, 01/31/2020 – 19:50 - Now It's 64: Wounded US Troop Count From Iran Attack Still Growing
Now It’s 64: Wounded US Troop Count From Iran Attack Still Growing
It appears these injury count updates out of the Pentagon are set to become a weekly thing. But it’s of course worth recalling it all began with a “zero” injury and casualty count. By middle of this week the count jumped up to 50 troops injured in the Jan.8 Iran ballistic missile strike on Ayn al-Asad Airbase in Iraq. As we noted Wednesday the figures went from zero to 11 to 34 to 50… and who knows where from here.
But here’s the new figure:
The Defense Department said Thursday that 14 more U.S. service members have been diagnosed with traumatic brain injury since the Iranian missile attack targeting U.S. forces at two Iraqi bases this month, bringing the total number to 64.
Pentagon briefing by Mark Esper and Gen. Mark Milley. The Pentagon said that at this point most are considered “mild traumatic brain injuries” but that the numbers are expected to grow further.
“All of those people were screened, and we’ve got a certain number, and then the number’s growing,” said Army Gen. Mark Milley, chairman of the Joint Chiefs of Staff.
The Pentagon has repeatedly claimed the “concussion-like symptoms” didn’t immediately present themselves.
In the days following the ‘retaliatory strike’ avenging the death of Gen. Qassem Soleimani, Iranian state media claimed dozens of casualties were “immediately transferred out of the airbase by helicopters.” Specifically Mehr News had claimed some 80 US troops were killed in the attack.
“He was never really the same,” she told Connecting Vets. “It was almost like I lost him in Iraq and only his body came back.” https://t.co/KrhyVc2Opl
— Jack Murphy (@JackMurphyRGR) January 31, 2020
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While the Pentagon has denied there were any troop deaths, it’s clear that injuries sustained by the missile impact were far more substantial than initial Pentagon and US administration statements.
To review, Trump’s first address to the nation following the major unprecedented attack on US forces in the wake of Soleimani’s death indicated “no casualties” and that “all is well!”. Two weeks later, the Pentagon stunned reporters by indicating 11 US troops actually suffered traumatic brain injury (TBI). In that time Trump also dismissed the reports as some troops having mere “headaches”.
The official ‘brain injury’ toll has continued to shoot up from there — it seems now on a weekly basis.
Tyler Durden
Fri, 01/31/2020 – 19:25 - How The Fed Created An Uncontrollable "Monster"
How The Fed Created An Uncontrollable “Monster”
Like Victor Frankenstein, the Fed may have created its own monster. It’s been called many things, such as Quantitative Easing (QE), QE Lite, QE/Not QE, “Organic” Balance Sheet Growth, and more…
But no matter what you choose to call it, the bottom line is this:
The Fed is growing its official balance sheet at a frantic pace to provide liquidity to various banking operations, including the repo markets.
In fact, the balance sheet has grown about $400 billion since August, as reflected in the uptick at the far right of this chart:
Along with the Fed’s decision to increase its balance sheet is a rise in risky asset prices. According to a piece at Newsmax, this is raising eyebrows:
Prices for stocks and other risky assets are also rising at a fast clip – a state of affairs that a growing chorus of investors, economists and former Fed officials say is no coincidence, and potentially a problem.
This pattern of rising prices in risky assets is similar to what happened when the Fed initiated the first three rounds of QE.
The potential problem behind a pattern like this is the “monster” that the Fed is creating. Addressing the problem means answering a critical question…
When and how does the spigot of Fed cash flow get turned off?
Peter Boockvar, chief investment officer with Bleakley Advisory Group, thinks we will have to wait and see what happens:
The risk is what happens when the Fed stops increasing their balance sheet… What will stocks do when that liquidity spigot stops? We’ll have to see.
Of course, if we “wait and see”, any potential damage to the economy will already have started.
Also keep in mind that Powell didn’t want the Fed’s “monster” to be called another round of QE, instead opting in October 2019 to label it “organic” balance sheet growth.
But it still appears way too much like another round of QE to ignore the similarities. In fact, Richard Fisher, former President of the Dallas Federal Reserve, tied the earlier round of QE to this “organic” balance sheet growth rather succinctly:
“Markets perceive things and they may perceive things different than what you intend,” Fisher said, pointing to a strong correlation between the increase in the size of the Fed’s balance sheet and the rise in stock prices.
When confronted with the problem of “when to turn the spigot off,” the current President of the Dallas Fed, Richard Kaplan, said, “It’s one of several factors that I think may be exacerbating the valuation of risky assets, so as a central banker I have to be cognizant of it.”
Other Fed officials like Neel Kashkari don’t agree, saying, “I don’t see it.”
But the lack of consensus about this “monster” the Fed may have created only adds to the uncertainty.
In 2013, the market didn’t respond well when the Fed signaled it would turn the spigot of cash flow off. According to an article at Investing.com:
Then-Fed Chairman Ben Bernanke signaled the central bank was preparing to slow the pace of its bond purchases as it wrapped up QE3.
Stocks sold off and, more importantly, bond yields rose, undoing the desired effect of the Fed’s bond purchases, said Roberto Perli, founding partner and head of global policy research at Cornerstone Macro, a research firm.
If that behavior repeats itself, who knows how that will play out? But that’s what you can expect when you’re dealing with a “monster.”
What the future holds will depend on whether this “monster” gets out of control or not.
Don’t Wait for the Fed “Monster” to Turn on the Economy
As this Fed balance sheet story plays itself out, now is an ideal time to consider making your retirement resilient to major changes in the U.S. economy.
Consider adding precious metals like gold and silver to your asset mix, which tend to perform well under uncertain conditions like those we face now.
* * *
After 8 long years of ultra-loose monetary policy from the Federal Reserve, it’s no secret that inflation is primed to soar. If your IRA or 401(k) is exposed to this threat, it’s critical to act now! That’s why thousands of Americans are moving their retirement into a Gold IRA. Learn how you can too with a free info kit on gold from Birch Gold Group. It reveals the little-known IRS Tax Law to move your IRA or 401(k) into gold. Click here to get your free Info Kit on Gold.
Tyler Durden
Fri, 01/31/2020 – 19:05 - Trump Acquittal Scheduled For Wednesday After Senate Blocks Witnesses In Impeachment Trial
Trump Acquittal Scheduled For Wednesday After Senate Blocks Witnesses In Impeachment Trial
Update (5:45 p.m.): The Senate has voted to not to call new witnesses in the impeachment of President Trump. The vote was 51 to 49.
As reported earlier, leaders from both parties agreed on a Wednesday vote to acquit or convict Trump as late as Wednesday.
Preview of Sunday morning talk shows:
Liberals, meltdown!😂 pic.twitter.com/VwDjDKojCE
— Boric Brine (@Boric_Brine) January 31, 2020
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Update (1:20 p.m.): President Trump’s impeachment trial will be extended until Wednesday according to journalist Paul Sperry and confirmed by Fox News.
BREAKING: Senate impeachment trial extended to WEDNESDAY
— Paul Sperry (@paulsperry_) January 31, 2020
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The news comes after the New York Times got some extra mileage out of John Bolton’s new book, which claims that Trump’s efforts to pressure Ukraine into investigating the Bidens began ‘earlier than known.’
Why didn’t The New York Times release this information in its initial report on Sunday when it first reported on what was allegedly in the book? https://t.co/wDyHmWNggU
— Ryan Saavedra (@RealSaavedra) January 31, 2020
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Yet, despite the pressure campaign to flip undecided Republicans to the Democrats’ demand for witnesses, holdout Sen. Lisa Murkowski is now a ‘no’ on calling witnesses, virtually ensuring President Trump will be acquitted within the next week.
BREAKING: GOP Sen. Lisa Murkowski: “I carefully considered the need for additional witnesses and documents, to cure the shortcomings of its process, but ultimately decided that I will vote against considering motions to subpoena.” https://t.co/8dPFKZkZJk pic.twitter.com/HB83VKLKcc
— ABC News (@ABC) January 31, 2020
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* * *
It looks like Hunter Biden can sleep well at night in his $12,000 per month Hollywood home after Politico reports that the GOP has enough Republican Senators to block witnesses in President Trump’s impeachment trial.
Democrats needed at least four Republicans to defect – two of which they found in Sens. Mitt Romney of Utah and Susan Collins of Maine (who was mercilessly flamed by conservatives over social media) – however an 11th hour ‘no’ decision by Lamar Alexander (R-TN) means that the decision would fall to Chief Justice John Roberts in the event of a tie. And Roberts may not even have to weigh in if the fourth potential GOP defector, Sen. Lisa Murkowski of Alaska, votes ‘no’ as well.
In a Thursday night Twitter thread, Alexander says “There is no need for more evidence to prove that the president asked Ukraine to investigate Joe Biden and his son, Hunter…” and that “the president withheld United States aid, at least in part, to pressure Ukraine to investigate the Bidens.”
Still, Alexander argues that while Trump acted inappropriately, “the Constitution does not give the Senate the power to remove the president from office and ban him from this year’s ballot simply for actions that are inappropriate.” He also reasons that “The framers believed that there should never, ever be a partisan impeachment. That is why the Constitution requires a 2/3 vote of the Senate for conviction. Yet not one House Republican voted for these articles.”
“If this shallow, hurried and wholly partisan impeachment were to succeed, it would rip the country apart, pouring gasoline on the fire of cultural divisions that already exist,” Alexander continued. “It would create the weapon of perpetual impeachment to be used against future presidents whenever the House of Representatives is of a different political party.”
The question then is not whether the president did it, but whether the United States Senate or the American people should decide what to do about what he did. 8/15
— Sen. Lamar Alexander (@SenAlexander) January 31, 2020
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While the outcome will allow Republicans to put a bow on the affair, expect Democrats and their MSM amplifiers to cry foul over the ‘rigged farce’ while parroting distributed talking points.
And while Democrats may fume over not being able to hear from John Bolton, Mick Mulvaney and other current and former White House employees regarding Trump’s conduct with Ukraine, Republicans hoping for a nervous Hunter Biden and a CIA operative ‘whistleblower’ to take the stand, will be equally disappointed.
Meanwhile, Susan Collins has taken a ration of flack over social media for essentially virtue signaling to the Democrats when she (likely) knew Alexander would be a ‘no’ – and the battle over Bolton and the Bidens was never going to happen.
It’s a ruse. I’m over her. I don’t trust her.
— PeaceLove&Outrage ☮️💕😡 (@1980Dorothy) January 31, 2020
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No one in your state is being served by dragging this out further
Do the right thing for the people, Senator
— Jack Posobiec🇺🇸 (@JackPosobiec) January 31, 2020
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The fact that Collins needed weeks of soul-searching and melodrama to decide that dorky teen Brett Kavanaugh probably didn’t mastermind a human trafficking ring was a big warning sign.
— Helsingor (@Helsingor) January 31, 2020
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EPIC FAIL!
You have FAILED in your duty to protect the constitution and 63Million people.
The fact that you felt the need to put out a statement to justify your ridiculous BS is in itself pathetic and weak!
— ☤𝓢𝒌𝓪𝓲☤ (@Ravagiing) January 31, 2020
Let’s see how Maine Republicans feel about Collins in November.
Tyler Durden
Fri, 01/31/2020 – 18:48 - Thousands Of Palestinians Clash With Police In West Bank & Jordan Over Trump's 'Peace Plan'
Thousands Of Palestinians Clash With Police In West Bank & Jordan Over Trump’s ‘Peace Plan’
Tensions in the West Bank and Jordan Valley exploded this week as angry Palestinians protesters clashed with Israeli police in the wake of President Trump unveiling his ‘deal of the century’ Mideast peace plan on Tuesday.
Thousands of Palestinians were reported in the streets Friday in the occupied West Bank and in Gaza, where Israeli security forces responded to rock throwing and burning tires with tear gas and other riot control measures. An estimated 48 Palestinians and one Israeli soldier were injured in the unrest.
Protests near Tayseer checkpoint, the Jordan Valley, the West Bank this week. Image via Mondoweiss. Some 300 also protested in front of the US Embassy in Amman, Jordan where chants of “Death to Israel” were heard. Demonstrators carried signs reading “Down with the deal of the century” and shouted further chants of “Listen, damn Trump, Palestine is not for sale,” according to The Times of Israel.
There’s been similar sporadic clashes all week especially given the White House plan gives Israel ‘annexation’ rights over at least 30% of West Bank territory. This after the Palestinian Authority (PA) and Hamas were not even privy to negotiations related to the deal, which has been rejected by both Mahmoud Abbas and Hamas.
The deal also controversially cuts Palestinians out of control over holy sites of the Old City in Jerusalem, while claiming to offer parts of the city’s eastern sector to serve as capital of a future Palestinian state, but only if certain “conditions are met” long term.
#PalestineDealRejected
Palestinians protest the Trump administration’s Deal of the Century, Northern Jordan Valley, West Bank. pic.twitter.com/SydAbROKuO— Sajjad Bhatti 🇵🇰️ (@EbnePakistan) January 30, 2020
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Other protests in neighboring Jordan, where Palestinian refugees actually far outnumber Jordanian Arabs, were said to be huge in size:
In neighboring Jordan, thousands of people took to the streets after Friday prayers to protest the plan. Jordan, a close US ally and key player in previous peace efforts, has warned Israel against annexing territory in the West Bank under the plan. Jordan and Egypt are the only two Arab countries to have signed peace agreements with Israel.
However, Israeli police reported being surprised that Friday prayers at al-Aqsa Mosque atop the Temple Mount passed without major incident. Police were prepared with significantly heightened security as over 30,000 Palestinians attended noon prayers.
Local media reports that “Besides the increased police presence around the Temple Mount, the IDF this week deployed extra troops to the West Bank and along the Gaza border out of concerns of increased violence over the US peace plan.”
NEW VIDEO: U.S. Ambassador to Israel David Friedman tells me Mideast Peace Plan means, “no retreat by the Jewish state from biblical territory.” @USAmbIsrael adds, “you’re talking about opening up the Bible, bringing it back to life in ways that…couldn’t have even imagined.” pic.twitter.com/9ZsGFrptrJ
— David Brody (@DavidBrodyCBN) January 30, 2020
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But things could be ready to come to a head over the weekend, given that Netanyahu announced this week that Israel will move forward to vote Sunday to annex some 30% of all West Bank territory.
Netanyahu said that “Israel will apply its laws to the Jordan Valley and to the Jewish communities in Judea and Samaria.”
“We will not allow this deal to pass”
Palestinians gear up for mass protests to denounce Trump’s Israel-Palestine plan, which they say is an attempt to finish off their cause. pic.twitter.com/6huGvATeiA
— Middle East Eye (@MiddleEastEye) January 28, 2020
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This means a million or so Palestinian residents could come under Israeli rule, which sparked a fierce backlash both internationally and among some members of US Congress.
If the Knesset move progresses, likely all of the West Bank and Gaza will explode in fresh popular unrest and anger.
Tyler Durden
Fri, 01/31/2020 – 18:45 - Estimating The Shape Of The Coming Crisis
Estimating The Shape Of The Coming Crisis
Authored by Alasdair Macleod via GoldMoney.com,
We don’t know what will trigger the crisis, but a likely candidate is foreign selling of US dollars combining with a collapse in the US government’s finances. Perhaps the coronavirus will turn out to be a catalyzing black swan event, but the underlying conditions for an economic and monetary crisis already exist.
This article looks at alternative outcomes. It concludes that the current situation bears a worrying resemblance to the collapse of John Law’s Mississippi scheme exactly 300 years ago. The key to understanding why this is so is because of the link forged between asset prices and fiat currencies. One fails, and they both fail, more rapidly than the most bearish bear might expect.
Introduction
Ahead of a financial event it is a matter for educated guesswork to anticipate its course. In the last few weeks increasing signs of a global recession have been observed, telling us that the credit cycle is on the turn and a systemic crisis is due shortly. Adding to our woes, the coronavirus might turn out to be a plague of biblical proportions, at least that is the way the hype is going. If so, the economic damage will be immense.
A prescient analyst might deduce that one of the following outcomes is therefore likely:
1) The playbook outcome. A few banks get into trouble and are successfully rescued. Bankers become cautious in their lending and seek to withdraw loan facilities from riskier customers. A moderate recession ensues, unemployment rises, the inflation rate declines, and central banks respond by easing monetary policy. In time, the economy steadies and begins to recover. This is the neo-Keynesian expectation of economists and monetary planners employed by central banks, their government masters and the version currently believed in financial markets.
2) A systemic breakdown. In this version, banking problems are just the start of it. After the first few banks collapse and are rescued, banking problems appear elsewhere, and it is clear the global economy is in deep trouble. In the authorities’ attempts to keep control over the situation, the expansion of base money is on a far larger scale than that witnessed following the Lehman crisis, both to fund burgeoning government deficits and to build bank reserves. After a protracted period of time, the global economy stabilises, and the immediate threat is over, at some cost to the credibility and purchasing power of currencies. A currency reset might be used in an attempt to stabilise the situation.
3) A total collapse. A systemic breakdown leads initially to lower interest rates (already in progress), and after a brief pause to a vicious bond bear market, undermining financial asset values upon which the whole fiat money edifice is based. The unbacked nature of modern fiat money then comes into play, the principal consideration being that the collapse in bank collateral values exposes the illiquidity and bankruptcy of businesses and individuals alike. Tax income evaporates, along with all credibility in the government’s unbacked money, which eventually becomes worthless.
In an attempt to divine the most likely outcome we must assess the importance of the moving parts and their likely sequencing.
Cyclical considerations
It is a mistake to regard the ending of the current credit cycle in isolation from previous cycles. In the distant past, it was valid to view the expansion of bank credit and its subsequent contraction as a purely cyclical phenomenon whereby excessive expansion is broadly wiped out by the subsequent contraction. But ever since President Hoover’s tenure, successive American governments and their central banks have attempted to contain the effects of bank credit contraction. Consequently, failures have been increasingly institutionalised.
The piling up of failures has required further evils to maintain them. Governments have taken increasing control over free markets. Regulation has severely restricted competition in all but the newest of industries, which in turn become regulated over time. Consumers have been encouraged to spend their savings and go into debt to increase immediate consumption. Trade barriers, rightly seen as contributing to the 1930s depression, have been preserved and protectionism is now weaponised.
Budget deficits, being twinned with trade deficits in savings-free economies, have also been increasing, notably for America under President Trump. The American government is in a debt trap only alleviated by the Fed’s forced suppression of borrowing costs. Increasingly, government funding is by overtly inflationary means.
The evidence and consequences of inflationary financing have been hidden from the general public because statistics, particularly price inflation estimates, have been suppressed. This has allowed governments to fund themselves by expanding money quantities without apparent consequences for the general level of prices, and at the same time to give the illusion that real GDP is positive when properly adjusted for price inflation it would be negative.
With successive cycles not being permitted to clear bad and unproductive debt, the dollar has gone from $20.77 per ounce since President Hoover’s time to nearly $1600 today. Relative to gold, that is a loss of purchasing power for the US dollar of nearly 99% over the whole epoch of non-clearing credit cycles. With increasing quantities of non-productive debt in the global economy, it is plainly naïve to think it is a process that will continue indefinitely, when the odds favouring a grand crisis, undermining the whole fiat money system, are increasing over time.
Diligent students of history will have recognised that economic and monetary systems under the control of governments have always failed, eventually. There is no reason why this one will be different; the question is not if, but when.
Monetary debasement
At the core of the government illusion of control is money. Over successive credit cycles its expansion has reflected a ratchet effect, with an underlying rate of expansion being supplemented by alternate expansions and contractions of bank credit. That was the case before the Lehman crisis. At that time the rescue of the banking system involved an unprecedented expansion of the money supply. Last year, the Fed’s attempt at reducing its balance sheet was hastily abandoned when it became clear that all the post-Lehman liquidity had simply vanished.
The fifty-year history of the money quantity is illustrated in Figure 1, which is of the fiat money quantity, a measure that includes bank reserves not in public circulation but is fiat money nonetheless.
The pre-banking crisis FMQ path had been growing at a long-term average rate of 5.9%, while the average rate of growth subsequent to it has been 9.6%. Despite the extra $5.6 trillion of money in the system arising from this divergence, there are signs of severe liquidity stresses with the Fed having to inject tens of billions of dollars daily into the banking system through repo operations. This is reflected in the sharp upturn in FMQ in recent months, visible in the chart.
It should be noted that before Lehman failed, FMQ was roughly one third of GDP; today it is three-quarters. There is therefore a substantial quantity of money in the US economy surplus to normal requirements, a factor which might be crucial to the dollar’s future.
That notwithstanding, the pressure is now on for a further increase in the acceleration of money creation, with growth in FMQ likely to rise well above 10% annualised. Instead of demands for money from the productive private sector, it has been the US Government and financial speculators who have demanded excess money in recent years. The government deficit is now officially expected to increase to over a trillion dollars while according to US Treasury TIC data foreigners appear to be losing their appetite for buying more US Treasuries.
The drain on wholesale liquidity imposed by the government’s financing demands now combine with demands on liquidity from very large hedge funds. They have provided artificial support for the dollar by gearing up their interest rate arbitrage positions, whereby they are short of euros and yen with their negative rates, and long of the dollar and short-term US government Treasury bills and bonds to capture yield differentials.
It is therefore becoming apparent that without further monetary expansion interest rates and government bond yields will rise, with devastating consequences for the US Government’s finances. The hedge funds would be forced by the banks to unwind their positions, selling dollars and buying euros and yen, for lack of available balance sheet reserves. Limited by Basel III rules, the shortage of dollar liquidity would drive up overnight interest rates at a time when the Federal Reserve Board would wish to reflate the economy.
Consequently, sub-10% annualised growth in broad money is no longer tenable, without triggering a widespread government funding and financial crisis. We now stand on the edge of an acceleration of monetary inflation, leading in time to a significant fall in the dollar’s purchasing power, measured not against other currencies facing similar difficulties, but against commodities and ultimately consumer goods and services.
Financial asset values
Central to how a financial crisis develops is the progression of asset values. Since the development of the Greenspan put in the 1980s, it has been assumed that the Fed would always put a floor under equity markets by lowering interest rates sufficiently to do so. Starting with the containment of the 1987 stock market crash, increasing numbers of methods have been deployed, including interest rate manipulation, open market operations, and quantitative easing. Changing the level of required reserves for commercial banks has also been an important monetary tool but is no longer an option due to overriding Basel III regulations for global systemically important banks. This is why the Fed removed the distinction between required and excess reserves a few years ago.
The principal method of monetary and asset price control remains reducing interest rates, and through them bond yields, thereby increasing the relative attraction of equities. But with the zero bound there is a theoretical limit to reducing interest rates, and dollar rates are already close to it as shown in Figure 2.
With the Fed Funds Rate under two per cent and the market already beginning to discount further declines, interest rate policy is unlikely to be sufficient to underwrite asset values in the next systemic and financial crisis. For this reason, many commentators think that negative rates for the dollar are increasingly likely.
That would not necessarily help stabilise the US economy, as evidence from the Eurozone’s ECB attests. Furthermore, by putting all commodities into permanent backwardation, not only would the purchasing power of the dollar be badly undermined, but so would those of the fiat currencies that take their cue from the dollar. As a matter of fact, even current Fed Funds Rates fully discount a general time preference for goods, meaning that interest rates are at zero in real terms, or even negative already. The only piece of the monetary puzzle missing is an appreciation by complacent investors of how close markets are to a currency cliff-edge.
Understanding how and why markets are on the brink of a significant erosion in the dollar’s purchasing power is crucial, because it defines the limit of how low interest rates can be pushed without triggering an immediate monetary crisis. We already know that current levels of interest rate suppression require the effect on prices to be suppressed by statistical method. Tip the relationship between fiat dollars and commodities just a little further, and the result will almost certainly become catastrophic for the dollar and all other currencies that sail with her.
If the dollar suffers this fate, then an initial dip in interest rates will be followed by a significant rise, forced on a reluctant Fed by global markets refusing to fund the US deficit and choosing to liquidate their dollar positions instead.
It would therefore appear that there are two opposing forces for investors in financial assets to consider. Currently there is a bullish hope that the current economic deterioration can be contained and an ongoing reduction in interest rates will help preserve asset values. Against that there is the threat of Fed policy failing to improve economic prospects, leading to US Treasury yields rising as markets become aware that budget deficits are spiralling out of control, to be financed entirely by monetary expansion. Muddying the waters is direct and indirect statist purchasing of equities by central banks and sovereign wealth funds, effectively binding financial assets more tightly to fiat currencies.
How the road ends
From the foregoing it should be clear that not only is there a financial and systemic crisis in the wings, but it cannot be resolved by central banks using the tools available to them. We can easily deduce that there will be the usual end of credit cycle systemic and financial problems, likely to involve the rescue of one or more major banks. Furthermore, the monetary debasement by central banks will be significantly greater than that following the Lehman crisis, not only because the scale of the banking problem is likely to involve far larger numbers, but because of the impossible position the US government finds itself in with respect to its own finances.
The cliché following the Lehman crisis was kicking the can down the road. The end of that road is no longer over the hill or around a bend but is coming into view. That being the case, we can rule out the first of the three options in the introduction to this article, the playbook outcome. That leaves either a wider systemic breakdown or a total collapse. The difference between them will require success in stemming the former from evolving into the latter.
There can be little doubt a wider systemic breakdown will lead to a fall in the purchasing powers of fiat currencies which will be impossible to conceal by statistical method. At this juncture, a political leader with a true understanding of the situation and how to resolve it will have the opportunity to do so, because the alternative to not doing so will be far worse and obvious to the wider public. But such a leader must have guts and be surrounded by others willing to take his lead. It will require the abandonment of socialising money and markets, denying responsibility for future welfare in all but the most needy cases, and a return to sound money. While things can change, there does not appear to be a ghost of a chance that such a leader exists and that he or she would be able to carry his or her colleagues.
This leaves us with the last possible outcome, a total collapse of the neo-Keynesian paradigm and its principal tool, the fiat currency.
The likely sequencing is as follows. After an initial easing of interest rates and fall in government bond yields, which is already under way, it becomes clear that the economy is in a far worse condition than previously thought, the productive sector and those employed in it having been impoverished of their income and savings through monetary inflation.
Economic recovery becomes wishful thinking, followed by a realisation that government finances are deteriorating rapidly. With savers gone and consumers maxed out, the only means of financing budget deficits is by inflationary means. The currency begins its decline in either of two ways: foreigners sell it and refuse to help finance the budget deficit, or domestic depositors decide to reduce their cash in their bank accounts and buy goods instead. In the latter case, the damage comes from the public dumping of the currency, the effects of which heavily outweigh the apparent increase in demand from the rush out of money.
If the government is lucky, its people continue to use the currency as money, despite its purchasing power continuing to decline. Even at ten times its current rate of issue seigniorage still gives the government some income. Attempts to stabilise the currency, such as by introducing price controls, only make things worse. These are the conditions that have allowed certain Latin American countries to suffer high inflation rates for prolonged periods.
Alternatively, the currency is driven towards worthlessness. We shall dismiss a comparison with Venezuela or Zimbabwe, where corruption has been a major factor. The German experience after the First World War is a better model, when inflationary financing of government spending commenced before the war and led to the final collapse of the currency in November 1923. This suggests that a final collapse reflected in the destruction of a fiat currencies will take several years to evolve. But there are differences between the European hyperinflations of nearly a hundred years ago and the situation today.
In America and Britain as well as in some Eurozone countries, the majority of bank deposits are not owed to individuals, because consumer credit predominates. With eighty per cent of employees in these countries typically living from paycheck to paycheck and credit card borrowing being the norm, there is a greater weighting of institutional deposits in today’s banking system than in the past. In the case of the US dollar, total checking and savings accounts of $12.15 trillion includes about $4 trillion of foreign-owned deposits through correspondent banks. Credit card issuers and other finance companies accumulate significant cash flows, and therefore deposits. Financial speculators, such as hedge funds in the interest arbitrage business also maintain significant balances as repo collateral.
In short, deposit holder classifications are very different from those of yesteryear, so their collective attitude to money is likely to be very different. They are not in the business of spending it on goods and do not make relative value judgements in this basic sense. They are more likely to be spooked by purely financial developments. It leads us on to consider another possibility, a John Law bubble deflation and currency collapse as the model to examine.
Law’s financing model
John Law was a prototype Keynesian, who in 1716 obtained permission from the Duc d’Orléans, acting as Regent for Louis XV in his minority, to establish the Banque Genérale in Paris’s Place de Vendome as a private bank, capitalised with discredited state debt as a basis for issuing banknotes. He took in deposits of specie, mostly gold and silver coins. By September 1716 the bank had become so successful that it was driving other bankers out of business.
The relationship between the Regent and Law was based on Law’s plan to restore royal finances which were in considerable difficulties. Put crudely, his plan was to profit from the inflation of his own notes in order to pay down the royal debts. Furthermore, by introducing modern banking into a financially backward France, the improvement in the economy from more effective monetary circulation in the form of his notes compared with clumsy coinage would also help restore the royal finances through higher tax revenues.
The use of Law’s banknotes to settle taxes ensured their circulation, and specie continued to be deposited at Banque Royale in exchange for them. In accordance with Law’s plans, Banque Genérale’s balance sheet was rapidly inflating and beginning to dominate financial affairs in Paris. Law took in more discredited state debt which promised to pay a doubtful 4%, substituting it for his own notes, paying an apparently more certain 4% and including a bonus kicker of claims on Louisiana and the Canadian fur trade in France’s American colonies.
Law’s use of discredited state debt as the foundation for his affairs had similarities with the basic functioning of today’s central banks, issuing money through quantitative easing for government debt. And it came to pass that in December 1718 Banque Generale became Banque Royale, evolving from a private bank into the state’s bank. Law now had a monopoly on France’s money.
Concurrently, Law had acquired all the rights to trade with France’s American colonies, which became the Mississippi venture. He capitalised it by the use of partly paid subscriptions which by giving quick and substantial profits to early subscribers ensured the Mississippi shares got off to a strong start, and he further used the Banque Royale’s note issues to boost share prices even further.
And so a bubble was born. But by late-1719 Law found it increasingly difficult to sustain the bubble. The best part of a billion livres had been created and spent in ramping the Mississippi shares. Following his appointment as Controller-General in 1720, he decreed that his banknotes were to be the only permitted currency except for small transactions and all old coins were to be handed in or seized. Clearly, he was plugging holes in an increasingly leaky vessel.
On 22 February 1720, the Mississippi Company and the Banque Royale merged. The King sold 100,000 shares at 9,000 livres, and the shares of the merged entities subsequently began to sink. By November that year they had fallen to 3,200 livres and many of them faced further unpaid calls. In the last three months of 1720, there was no sterling price for French livres, because Law’s notes had also collapsed in value along with the Mississippi bubble.
Today’s similarities with the Mississippi bubble
There are important similarities developing today with the events in France almost exactly three hundred years ago, the salient points being:
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Law implemented a similar inflation scheme to that proposed by Keynes. Both had an initially favourable economic impact, followed by a failure to sustain earlier promises. Having progressed through a number of credit cycles, Keynes’s scheme is yet to fully collapse.
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Law used state debt as the foundation for his scheme, as do today’s central banks. The difference is the public knew Louis XV to be bankrupt. Today, markets are yet to realise this fact about modern welfare-driven economies.
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Supported by the state, Law used the powers given to him to manipulate asset values to support his scheme, an objective now openly pursued by modern central banks and their allied sovereign wealth funds.
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In Banque Royale Law established a prototype central bank whose twin objectives were to finance government borrowing and to issue currency. The support offered to today’s commercial banking system by central banks is ultimately intended to achieve the same end.
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Law banished the circulation of specie as money and any other alternatives to his own banknotes. Today’s central banks exercise exactly the same monopolies in their respective jurisdictions.
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Law was an early user of derivatives in the form of partly paid stock and options to promote and sustain asset values. The global financial system today similarly uses derivatives to support and encourage bullish speculation in financial assets.
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By linking rising financial asset values to the purchasing power of his livre, Law ensured that the collapse of financial asset values undermined faith in the currency as well, causing it to collapse entirely in a short six-month period. Today, both central banks and sovereign wealth funds are active investors in bonds and equities, with the effect of creating a similar linkage across government bonds, equities and fiat currencies.
Given different times and different methods, there are dissimilarities between Law’s scheme and the way those of Keynes are playing out. But it is the similarities which should ring alarm bells. Critics of inflationary financing generally assume the end of a fiat currency is marked by the general public eventually discarding it. The similarities between Keynes’s and Law’s schemes suggest a different outcome.
By tying in financial asset values to currencies, if one fails the other will too. A loss of confidence in one immediately undermines the other. The sequencing is that a failure to sustain bond and equity prices occurs first, followed by their collapse, closely accompanied by the erosion of all faith in the currency.
With this framework we can propose a future for both financial markets and the dollar. The Fed in a similar role to Banque Royale continues with its attempts to manipulate US Treasury bond prices higher, and therefore equity markets, as has been the situation the case since the Greenspan put. In February 1720, the King sold 100,000 shares for 9,000 livres each, netting 900,000,000 livres. It marked the top of Law’s bubble. The question is who or what will ring the bell this time.
Today, we cannot see who outside the US banking system is going to buy ever-larger quantities of US Treasury stock, because foreigners are stalling in their appetite and domestic savers hardly exist. We should bear in mind ownership of foreign currencies is justified by trade volumes, and evidence of declining international trade firmly points to the dollar being sold. Consequently, the banks acting as agents for the Fed are going to be the only buyers, being paid by the Fed through crediting their reserves.
At the last count foreigners and their governments owned $19.4 trillion in US securities and had about $4 trillion in bank deposits. The bubble will surely burst when the dollar begins to decline against other currencies, creating doubled losses for foreign investors and a funding crisis for US government debt. With US Treasury bond yields then rising the dollar seems certain to accelerate its decline due to mounting portfolio losses faced by foreign investors.
That, perhaps, is where the similarity with the ending of Law’s scheme exists today: a combination of circumstances based on an official tie between financial assets and the fiat currency. Like the collapse of Law’s scheme, we can expect it to be measured in the soaring price of specie, physical gold and silver, and today perhaps decentralised issue-limited cryptocurrencies.
This being the case, the collapse will not be drawn out as even the most bearish bears expect but could be completed by the end of this year.
Tyler Durden
Fri, 01/31/2020 – 18:25 -
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