- The Current Big Lie Is…
Authored by Eric Zuesse via The Strategic Culture Foundation,
The Big Lie today is as enormous as, and potentially far more harmful than, any Big Lie throughout history has been; and, it will be exposed fully here, and will be documented even more fully, by means of the links that are provided in this summary of it. (This Big Lie is certainly important enough for that care, because if the lie is continued unexposed, that massive fraud will produce World War III, a world-destroying nuclear war, perhaps even soon.) So, this will be only a summary of it, but a completely documented summary — not a mere ‘exposé’ that’s expected to be believed because it is already generally suspected or thought to be the case, but, instead, something that's presented in the expectation that the key facts of the case have, to the contrary, been so effectively hidden from the public, as to make necessary here the providing of full documentation of it, for anyone who wants to delve more deeply into this ongoing rape of history — the super-dangerous Big Lie that’s ongoing right now.
This Big Lie today, which is to be described here, is the lie, upon the basis of which the Cold War against the dictatorial communistic USS.R. — which Cold War had been such a boost to US weapons-makers such as Lockheed Martin while it lasted — actually became restored in 2014, and continues today, as, this time, not a ‘cold’ but a hot war, by the US and its allies, all united together (for the benefit of the owners of their international corporations, and especially of the big US arms-suppliers) against democratic post-communist Russia (which gets blamed for trying to defend itself, at every step of the way that it does so). This increasingly hot war started in early 2014 (after at least three years of advance-preparation of it by the US Administration of American President Barack Obama), in Ukraine (formerly a part of the USS.R.), when a CIA coup that was perpetrated under the cover of ‘democracy’ demonstrations, against the democratically elected Ukrainian President, Viktor Yanukovych — when this CIA coup installed there, in Ukraine, a rabidly anti-Russian government, bordering Russia. That is certainly a provocation to war, just as would be the case if instead Russia had overthrown Mexico’s government and installed there a rabidly anti-US regime.
In this Big Lie, which reigns today and is almost universally believed in the US to be true, that bloody coup in Ukraine is simply ignored, and instead the focus is placed upon the peaceful and voluntary breakaway of Crimea from Ukraine, which breakaway actually resulted directly from that coup, which was the real precipitating-event for ’the new Cold War’ — the basis of the US-and-allied economic sanctions against Russia, and for the massing of NATO troops and weapons onto Russia’s borders, ready to invade Russia. (How would Americans feel if the Russian government did all of that, to us?)
The Big Lie today is this: that the reason for the economic sanctions against Russia, is that ‘Putin’ or Russia ‘stole’ or ‘conquered’ or ‘seized’ the Crimea region of Ukraine.
The Big Truth, about the matter, is that US President Obama conquered Ukraine itself (all of it), via a February 2014 CIA coup that he had secretly started planning by no later than 2011, which on 20 February 2014 culminated with the violent overthrow of the democratically elected President of Ukraine, Yanukovych, who had won 90% of the votes in the far-eastern Donbass area of Ukraine, and 75% of the votes in the far-southern Crimea area of Ukraine, both of which intensely pro-Yanukovych regions refused to be ruled by the Obama-appointed rulers — the hard-right, fascist and rabidly anti-Russian, team that the Obama regime imposed upon Ukraine, after Obama’s agent Victoria Nuland told Obama’s Ambassador to Ukraine on 4 February 2014, that «Yats» (Arseniy Yatenyuk), a hard-right and even racist anti-Russian Ukrainian politician, was to become appointed to run the country as soon as the coup would be over, which happened 23 days later (and Yatsenyuk did then receive the appointment and establish very hard-right anti-Russian policies — including massacres of ethnic Russians in Ukraine).
The legalities of the situation are as heinous on America’s side as the moralities are; and, yet, America’s vassal-states, in the EU and elsewhere, slavishly honor Obama’s sanctions against the victim-nation here, Russia (even while acknowledging that the residents of Crimea are overwhelmingly supportive of having separated themselves from Ukraine and grateful to Russia for now protecting them against the rabidly anti-Crimean US-imposed rulers of Ukraine). Furthermore: by no later than 26 February 2014, the leaders of the EU knew that the ‘revolution on the Maidan’ had, in fact, been a brutal coup, nothing at all ‘democratic’ — but decided to ignore that fact. So, they too are culpable in this, though not nearly to the extent that Obama is.
On Friday 21 July 2017, the anti-Russian Reuters ‘news’ (propaganda) agency headlined «Crimean scandal prompts Siemens to retreat from Russian energy» and reported that, «Germany's Siemens tried to distance itself from a Crimean sanctions scandal on Friday, halting deliveries of power equipment to Russian state-controlled customers and reviewing supply deals. The industrial group said it now had credible evidence that all four gas turbines it delivered a year ago for a project in southern Russia had been illegally moved to Crimea, confirming a series of Reuters reports». The false underlying assumption in this propaganda-article was that the «scandal» it refers to had been initiated and perpetrated by Russia, not by the United States government (which initiated the sanctions against Russia, which Siemens and Russia are now being punished for). The Wikipedia propaganda site says in its article «Russian financial crisis (2014–2017)» that «The financial crisis in Russia in 2014-2015 was the result of the collapse of the Russian ruble beginning in the second half of 2014» and barely even mentions the economic sanctions, other than to say, «The second [reason for it] is the result of international economic sanctions imposed on Russia following Russia's annexation of Crimea and the Russian military intervention in Ukraine» — implying, but not stating, that Russia had started that war — which just happened to be on its doorstep, not on the doorstep of the US — as if Mexico had been taken over by an enemy nation and the people of America were being threatened, which is what this takeover by the US government was equivalent to for the Russian people: a very real and grave national-security threat to them.
The Reuters article simply ignored the fact that Ukraine had been seized by Obama, and it simply presumed that Crimea (and also Donbass) had been seized by Putin. (Furthermore, the appeal by Donbass to become a part of Russia, was declined by Putin on 17 September 2014. But, still, the lie is also being pumped by pro-US-regime ’news’media, that Russia is trying to steal Donbass from Ukraine’s government. The US team’s lying is beyond bizarre. Sometimes, by their using carefully veiled language to deceive without outright asserting their lies, they implicitly blame Russia regarding the impasse in Donbass, even three years after Putin said no to that appeal by the residents of Donbass. And, still: Russia, which had — despite the Obama regime’s refusal to participate — signed and even had helped set up the Minsk agreements to settle the war in Donbass, gets blamed in the US-allied press for what are actually Ukraine’s refusal to honor the commitments it had signed to there. As usual, the victims get blamed. And the Trump Administration says that «there should be no sanctions relief until Russia meets its obligations under the Minsk agreements». No good deed will go unpunished — ever.)
Nor has Reuters (nor the rest of the US regime’s press) reported that a power-struggle is now occurring in the post-coup Ukraine, between the overt nazis (or racist-fascists) there, and the post-coup (that’s the fascist but not outright nazi) elected government (in elections that excluded non-fascists). The fascists, whom the current US regime supports, are being attacked by the nazis. The nazis are being led by Dmitriy Yarosh, whose followers are unabashedly nazis and often even boldly flash German Nazi Party insignia. The US Obama regime was one of only three governments throughout the world that voted against a resolution that had been introduced in the United Nations condemning fascism, racism and denial of the Holocaust. The two other pro-Nazi nations were Ukraine, whose US-installed regime felt the resolution to be personally offensive even though it wasn’t specific to Ukraine and didn’t even mention Ukraine, and the other country was Canada, which is a US vassal-nation and also has a powerful community of Ukrainian Nazis who escaped Ukraine right after WW II ended in 1945. Canada’s current Foreign Minister, appointed by the Liberal Party’s Prime Minister Justin Trudeau, is Chrystia Freeland, a racist-fascist who is proud of her Nazi grandparents and who championed in Canada the fascist takeover of Ukraine.
When the International Criminal Court issued, on 14 November 2016, its annual «Report on Preliminary Examination Activities», it included, on pages 34-43, a section on «Ukraine,» but considered only accusations that the Obama-installed Ukrainian government had lodged against Russia, and none of the demonstrated crimes (which are amply documented in the links herein), including the illegal coup, that the Obama regime had, in fact, perpetrated against not only the people of Ukraine, but the people of Russia next door; and the discussion by the ICC did not (such as an influential but grossly false Forbes article six days later headlined and yet provided no documentation for, «International Criminal Court: Russia's Invasion Of Ukraine Is A 'Crime,' Not A Civil War») even allege that any «crime» had been committed by any party; but, nonetheless, the Russian government (which had never ratified the treaty that established the Court) condemned the report as being «one-sided,» which was an understatement, because the report included many gross falsehoods, outright lies, such as (and I boldface the falsehood):
«At the time of the start of the events that are the subject of the Office’s preliminary examination, the democratically-elected Government of Ukraine was dominated by the Party of Regions, led by President at the time, Viktor Yanukovych. The Maidan protests were prompted by the decision of the Ukrainian Government on 21 November 2013 not to sign an Association Agreement with the European Union».
As I and others have documented, the overthrow of Ukraine’s democratically elected President started well before that time, and the coup even was already being organized inside the US Embassy there by no later than 1 March 2013; and the US State Department had begun its work to prepare it, no later than 2011 — it didn’t simply ‘happen’. And it certainly wasn’t ‘democratic’; it ended whatever democracy Ukraine had. Furthermore, Yanukovych’s turn-down of the EU’s offer was, itself, a part of the Obama regime’s plan: Yanukovych had turned it down because the Ukrainian Academy of Science’s analysis of the EU’s offer (which had been prepared in accord with the US government’s urgings) had concluded that to accept the deal would produce losses for Ukraine of $160 billion.
This is the Big Lie straight out of hell, because, unless the United States acknowledges publicly that it has been lying, and that the anti-Russia sanctions that the US initiated, are based on that lie and should therefore never even have been imposed (and should not be honored anywhere), there will be war between Russia and the US. Either those sanctions will be entirely lifted, or else nuclear war will inevitably result, because Russia will not forever tolerate having its economy squeezed to death on the basis of a clear lie. But how can such sanctions be ended unless the perpetrator — here, clearly, the US — publicly acknowledges that former US President Barack Obama, and his Administration, lied through their teeth, in order to impose them, in the first place? The US government would need to renounce, to the entire world, that former US President. Or else, WW III would seem to be well-nigh inevitable. This is an extremely serious matter, which isn’t so much as even being discussed — much less, debated. WW III could result from it, but it is entirely ignored. The Big Lie just continues to be promoted, instead of exposed.
Back on 20 February 2015, I headlined «Crimea: Was It Seized by Russia, or Did Russia Block Its Seizure by the US?» and, in the years since, the documentation that it was Obama not Putin who initiated (perpetrated) the new ‘Cold War’, has only increased. But the ‘news’media hide this fact (just as they hid that article), because they exist in order to pump the Big Lie, not to puncture it. (And, of course, that also is why they won’t publish this, though it, too, is sent to all of them free-of-charge to publish.)
Donald Trump condemns many of his predecessor’s actions and decisions and statements; but, on this one, which is the most important of them all and is blatantly a fraud (the blame for the entire catastrophe in Ukraine), Trump remains alternately supportive, and noncommittal, regarding Obama’s most enormous Big Lie. Now, after half a year in office, does he even care — or does he instead simply lack the courage?
It is clear what a real leader would do — expose and renounce that biggest of all Big Lies. Only a coward would not.
- Visualizing What Energy Sources Power The World?
There are many types of maps out there, but one of the most telling ones is a simple satellite image of the Earth at night. As 's Jeff Desjardins writes, on these powerful images, the darkness is a blank canvas for the bright city lights that represent the vast extent of human geography. The bright spots help us understand the distribution of population, as well as what areas of the world are generally wealthier and more urban. Meanwhile, the big dark spots – such as over the wilderness in northern Canada, the Amazon basin, or in Niger – show areas that are not densely populated or more rural.
Here’s one image based on this principle. It comes from NASA, and is a composite made from 400 separate satellite images from 2012:
How Are These Lights Powered?
But what if we could differentiate, by “shutting off” lights that are powered by certain electricity sources?
Today’s visualizations come from a nifty interactive website put together by GoCompare.com, and they breakdown the world’s electricity by source: fossil fuels, renewables, or nuclear fission.
Fossil Fuels
To start, here are the places on Earth that are powered by fossil fuels.
(Click image to see larger version)
Globally, fossil fuels represent about two-thirds of electricity usage. It’s also worth noting that fossil fuels also make up the majority of non-electrical sources needed for things like automobiles, aircraft, and ships, which are not shown on the map.
For further interest, we have previously shown the evolution over time of total U.S. energy usage, as well as a detailed breakdown of current U.S. usage – both which are still dominated by fossil fuels such as oil, natural gas, and coal.
Nuclear Only
Here are the places on Earth powered by nuclear fission.
(Click image to see larger version)
Nuclear makes up about 10% of all global electricity usage – and France is the world’s most reliant country, getting about 74% of its power mix from nuclear. Also noteworthy is Japan, which has switched its major electrical source from nuclear to fossil fuels since the Fukushima incident in 2011.
Nuclear is a major source of energy in the rest of Europe as well.
Belgium (51%), Sweden (43%), Hungary (51%), Slovakia (55%), Czech Republic (35%), Slovenia (33%), Ukraine (43%), and Finland (33%) all draw significant amounts of their electricity from nuclear reactors.
Renewables
Last, but not least, are renewables.
(Click image to see larger version)
It’s important to remember here that hydroelectricity is the largest renewable energy source by far, and that countries like Canada and Brazil rely on hydro extensively.
Outside of hydro, Italy is a leader in solar generation (6% of all electricity). Meanwhile, just eight countries host over 80% of all installed wind power: France, Canada, United Kingdom, Spain, India, Germany, USA, and China.
Finally, it’s worth noting that there are four smaller countries that get all, or nearly all, of their electricity from renewable sources. Those include Iceland (72% hydro, 28% geothermal), Albania (100% hydro), Paraguay (100% hydro), and Norway (97% hydro, 2% fossil fuels, and 1% other).
- Bitcoin (BTC/USD) Consolidating Near All-Time High Ahead of Aug 1 Fork
Bitcoin (BTC/USD) Weekly/Daily
Bitcoin (BTC/USD) slid yesterday on more profittaking, and now sits just above where it had broken above the daily chart’s downchannel resistance. On the weekly chart, with last week’s massive rally, the BTC/USD appears potentially to be in the late stages of a bullish flag pattern. With the August 1st fork looming, and daily RSI, Stochastics and MACD tiring, BTC/USD can be expected to continue consolidating today ahead of this key date. Although the negative weekly MACD crossover has proved a false signal for now, longer term bulls will want to see the weekly MACD cross back positively. Odds are quite good that a sustainable longer term BTC/USD bottom was found last week, especially with ETH/USD having rebounded off the key 61.8% Fib retrace of its rally since the beginning of the year.
Ethereum (ETH/USD) Weekly/Daily
Ethereum (ETH/USD) slid yesterday on more profittaking, and now sits near where it had broken above the daily chart’s downchannel resistance. Although still vulnerable in the next several weeks to more downside as the weekly MACD remains in the early stages of a negative crossover, odds are quite good though that downside ahead of the Aug 1 Bitcoin (BTC/USD) fork will be limited to the 61.8% Fib retrace of the rally from the beginning of the year, or to the low 2 weeks ago. The strong BTC/USD rally last week will continue providing some psychological support to ETH/USD, and key for ETH/USD bulls will be whether BTC/USD can break above what appears to be bull flag resistance (on its weekly chart).
- Paul Craig Roberts On "The Conspiracy To Remove Trump From The Presidency"
Authored by Paul Craig Roberts,
US intelligence services, the Democratic Party, some Republicans including members of President Trump’s own government, and the presstitute US media are conspiring against American democracy and the President of the United States.
MEMORANDUM FOR: The President
FROM: Veteran Intelligence Professionals for Sanity (VIPS)
SUBJECT: Was the “Russian Hack” an Inside Job?
Executive Summary
Forensic studies of “Russian hacking” into Democratic National Committee computers last year reveal that on July 5, 2016, data was leaked (not hacked) by a person with physical access to DNC computers, and then doctored to incriminate Russia.
After examining metadata from the “Guccifer 2.0” July 5, 2016 intrusion into the DNC server, independent cyber investigators have concluded that an insider copied DNC data onto an external storage device, and that “telltale signs” implicating Russia were then inserted.
Key among the findings of the independent forensic investigations is the conclusion that the DNC data was copied onto a storage device at a speed that far exceeds an Internet capability for a remote hack. Of equal importance, the forensics show that the copying and doctoring were performed on the East coast of the U.S. Thus far, mainstream media have ignored the findings of these independent studies [see here and here].
Independent analyst Skip Folden, a retired IBM Program Manager for Information Technology US, who examined the recent forensic findings, is a co-author of this Memorandum. He has drafted a more detailed technical report titled “Cyber-Forensic Investigation of ‘Russian Hack’ and Missing Intelligence Community Disclaimers,” and sent it to the offices of the Special Counsel and the Attorney General. VIPS member William Binney, a former Technical Director at the National Security Agency, and other senior NSA “alumni” in VIPS attest to the professionalism of the independent forensic findings.
The recent forensic studies fill in a critical gap. Why the FBI neglected to perform any independent forensics on the original “Guccifer 2.0” material remains a mystery – as does the lack of any sign that the “hand-picked analysts” from the FBI, CIA, and NSA, who wrote the “Intelligence Community Assessment” dated January 6, 2017, gave any attention to forensics.
NOTE: There has been so much conflation of charges about hacking that we wish to make very clear the primary focus of this Memorandum. We focus specifically on the July 5, 2016 alleged Guccifer 2.0 “hack” of the DNC server. In earlier VIPS memoranda we addressed the lack of any evidence connecting the Guccifer 2.0 alleged hacks and WikiLeaks, and we asked President Obama specifically to disclose any evidence that WikiLeaks received DNC data from the Russians [see here and here].
Addressing this point at his last press conference (January 18), he described “the conclusions of the intelligence community” as “not conclusive,” even though the Intelligence Community Assessment of January 6 expressed “high confidence” that Russian intelligence “relayed material it acquired from the DNC … to WikiLeaks.”
Obama’s admission came as no surprise to us. It has long been clear to us that the reason the U.S. government lacks conclusive evidence of a transfer of a “Russian hack” to WikiLeaks is because there was no such transfer. Based mostly on the cumulatively unique technical experience of our ex-NSA colleagues, we have been saying for almost a year that the DNC data reached WikiLeaks via a copy/leak by a DNC insider (but almost certainly not the same person who copied DNC data on July 5, 2016).
From the information available, we conclude that the same inside-DNC, copy/leak process was used at two different times, by two different entities, for two distinctly different purposes:
-(1) an inside leak to WikiLeaks before Julian Assange announced on June 12, 2016, that he had DNC documents and planned to publish them (which he did on July 22) – the presumed objective being to expose strong DNC bias toward the Clinton candidacy; and
-(2) a separate leak on July 5, 2016, to pre-emptively taint anything WikiLeaks might later publish by “showing” it came from a “Russian hack.”
* * *
Unlike the CIA, NSA, and FBI, the veteran intelligence professionals performed forensic investigations. They found conclusive evidence that the alleged “Guccifer 2.0” July 5, 2016 intrusion into the DNC server [these are the emails that show the DNC working for Hillary against Sanders] was not hacked but leaked.
The leaked documents were copied onto an external storage device and doctored with a cut-and-paste job to implicate Russia as having hacked the documents.
In other words, the alleged hack was instead a copy from the inside that was subsequently doctored to reflect Russian origin.
The veteran intelligence professionals surmise that this was done in order to focus attention away from the embarrassing content of the emails, placing attention instead on “Russian interference in the US presidential election.”
As I see it, the success of this false and orchestrated story of Russian hacking, for which not a scrap of evidence exists, revealed to the military/security complex the opportunity to remove Trump and thus protect the oversized budget and power of the military/security complex that is threatened by Trump’s intention to normalize relations with Russia.
It revealed to the Hillary forces the opportunity to vindicate themselves with the argument that Russia stole the election for Trump.
It revealed to Israel the opportunity to put an end to Trump’s withdrawal of US interference in the Middle East, thus enabling Israel to continue to use the US military to clear away obstacles to Israeli expansion.
It provided the presstitutes, who hate Trump and “the deplorables” who elected him, with a headline story for months and months to be followed in their expectations with the story of Trump’s removal from the presidency.
The retired intelligence professionals are too circumspect to tell President Trump outright that a conspiracy is underway to remove him from office whether by impeachment or assassination by a right-wing “lone nut” enraged at the traitorous president, but this does seem to be the message between the lines. As I have provided the link to the letter, you can read it and come to your own conclusion.
- Singapore Startup Launches Cryptocurrency Debit Card
A Singapore startup called TenX has designed a Visa card capable of debiting users’ cryptocurrency wallets, allowing them to pay for goods at brick-and-motor merchants with bitcoin, Ethereum and a handful of other digital currencies, according to Bloomberg.
The question now is: Will anybody use it?
TenX’s business model is straightforward: It allows its users to pay for goods in a given fiat currency, then “instantly converts” cryptocurrency from their wallet into the amount needed to cover the transaction.
To be sure, this isn’t the first digital-currency debt card: Two other startups, CryptoPay and Xapo, are selling similar products that focus exclusively on bitcoin. Being limited to bitcoin is obviously problematic for traders who don’t want to miss out on a single tick of the broad-based crypto rally, which Goldman believes will carry BTC to the moon (or at least to $3,600) by year’s end. But TenX’s promise of “instantaneous conversion” is already tempting users. The company says it’s processing 100,000 transactions a month, which is significant, considering bitcoin and Ethereum combined have a market capitalization of about $60 billion. The owners of most of this wealth treat it like an investment, not a system for payments – and it’s that attitude that TenX will likely find to be the biggest obstacle in its quest to 100x its current volume to $100 million a month.
Another flaw: Transactions are capped at $2,000 a year – though users can apply for a higher limit if they undergo identify verification, something that crypto enthusiasts might balk at. And with bitcoin’s future far from assured, picking the right mix of cryptocurrencies presents another business risk.
“TenX’s bid to make digital currencies easier to spend comes amid massive volatility and infighting within the cryptocurrency community. Bitcoin, the most popular, slumped after reaching a record in June amid concerns about a split in two, only to recover as fears faded. The company has built an app that serves as a digital wallet connected to the Visa card so that when it’s swiped at a cafe or restaurant, the merchant is paid in local currency and the users’ crypto account is debited.”
Despite its purported ease of use, even company officials admit that the network undergirding its system is complex – perhaps unnecessarily so. But on top of the 2% transaction fee it collects from merchants, customers only pay a 15 to 20 basis point conversion fee levied by the exchange.
“’You’re mixing two worlds that are night and day,” co-founder Julian Hosp said in an interview. ‘When the user spends the cryptocurrency, we have to instantly switch these currencies to fiat and pay to Visa straight away. It’s a lot of pathways.’
Hosp said transactions are processed immediately and it doesn’t impose any charges on top of the conversion fee that is set by cryptocurrency exchanges, which typically is 0.15 to 0.2 percent. The card now supports eight digital currencies, including the lesser-known dash and augur, and aims to offer about 11 of them by the end of the year.”
TenX, like all companies working on payments solutions involving cryptocurrency, also risks being pushed out of the market by a larger rival with deeper pockets and more entrenched connections in the payments space.
“'TenX has an advantage in moving early, but the startup can expect competition in the future from major financial institutions and venture capitalists with deeper pockets and direct access to clients and databases,' said Mati Greenspan, a Tel Aviv, Israel-based analyst at social trading platform eToro.
‘It’s an incredible concept,’ said Greenspan. ‘At the end of the day, it’s going to depend a lot on customer relations. Are they meeting the customers’ expectations? Can somebody else do it better?’”
Last month, the firm raised $80 million worth of Ethereum through an initial coin offering. It plans to spend half of that money to expand, and the other half to launch its own digital-currency exchange. Before that, it raised $120,000 from angel investors and $1 million Fenbushi Capital, which lists Ethereum creator Vitalik Buterin as a general partner.
- Bogus Fed Research Claim: "Gold Standard Didn't Really Tame Inflation"
Authored by Mike Shedlock via MishTalk.com,
The Wall Street Journal reports Gold Standard Didn’t Really Tame Inflation, New Research Says.
The research was by St. Louis Fed economist Fernando Martin. Curiously, his study precisely shows that the gold standard did indeed tame inflation.
Let’s investigate Martin’s bogus claim and his peculiar logic in making it.
In his email to the WSJ, Martin stated: “Most of the price increase in the period starting with World War II is due to two specific episodes.”
WWII was the first episode and the “1970s inflation episode was unambiguously the result of Fed policy blunders.” Supposedly, “the lessons learned from the experience helped central bankers start a multi-decadelong effort to lower inflation to historically low levels.”
I cannot tell if the second set of quotes is the WSJ view or Martin’s.
Martin’s Peculiar Logic
Here is Martin’s peculiar logic in explaining why the gold standard does not work: “You can still have high inflation with a metallic standard” because history shows governments regularly go off such regimes.
Got that? The gold standard won’t tame inflation because … the government won’t stick with it!
This is what constitutes critical research and absurd posting of said research by the Wall Street Journal.
CPI Since US Founding
Policy Error by the Fed
The article cited a “policy error” by the Fed as the cause of the stagflation period.
Actually, the policy error was Nixon closing the gold window on August 15, 1971, ending convertibility of gold for dollars. Our balance of trade soon went haywire, as did the explosion of credit and debt.
Balance of Trade
Total Credit
Median Home Prices
The preceding three slides from my June 24, Venture Alliance group presentation.
Not Properly Counting Inflation
The Fed does not count asset bubbles including housing in its absurd measure of inflation.
Moreover, Martin conveniently overlooks the Great Recession and all of the damage it did while the Fed was allegedly providing “stable inflation”.
Economic Challenge to Keynesians
Of all the widely believed but patently false economic beliefs is the absurd notion that falling consumer prices are bad for the economy and something must be done about them.
I have commented on this many times and have been vindicated not only by sound economic theory but also by actual historical examples.
- My article Deflation Bonanza! (And the Fool’s Mission to Stop It) has a good synopsis.
- My Challenge to Keynesians “Prove Rising Prices Provide an Overall Economic Benefit” has gone unanswered.
There is no answer because history and logic both show that concerns over consumer price deflation are seriously misplaced.
BIS Deflation Study
The BIS did a historical study and found routine deflation was not any problem at all.
“Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the study.
It’s asset bubble deflation that is damaging. When asset bubbles burst, debt deflation results.
Central banks’ seriously misguided attempts to defeat routine consumer price deflation is what fuels the destructive asset bubbles that eventually collapse.
For a discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?
Meanwhile, economically illiterate writers bemoan deflation, as do most economists and central banks. The final irony in this ridiculous mix is central bank policies stimulate massive wealth inequality fueled by soaring stock prices.
Deflation on Deck?
Is deflation on deck? Yes, asset deflation, a very destructive kind of deflation. When it happens, please thank the Fed for low inflation and volatility suppression.
Full Presentation
Click here to view my entire Venture Alliance Presentation, 38 slides in all.
Also, please consider Secular Disinflationary Trend Hits New Highs: Deflation on Deck? What’s That Mean for Gold?
- Bill Gross: A Recession Would "Probably Do The Economy Some Good"
Janus Portfolio Manager and purported “bond king” Bill Gross appeared on “Bloomberg Markets” to discuss his latest investor letter, in which he criticized loose-money policies of the world’s central banks, comparing them to gluttons who’ve feasted on bonds.
The unprecedented stimulus measures adopted by the Federal Reserve, the European Central Bank, the Bank of Japan and others have created distortions in markets, rendering widely followed historical models like the Philips Curve and Taylor rule useless, Gross said.
Because of the central banks’ bond-buying binge, which created $5 trillion of negative yielding sovereign debt, Gross said the yield curve my not need to flatten as much – i.e. short-term rates may not need to rise as aggressively – to trigger a slowdown in growth or even a recession.
“I still think interest rates should be raised to a more normal level in order to favor business models that are currently being hurt like pension funds and insurance companies and so on,” Gross said.
Counterintuitively, a slowdown might have more long-term benefits for the US economy than maintaining the status quo, according to Gross, who cited Joseph Schumpeter's theory about "creative destruction."
“I simply warned that based upon our historical knowledge of yield curve flattening between 3-month Treasuries and 10 year Treasuries we may not have to flatten as much as historically in order to produce a growth slowdown or a recession. I actually think that a slowdown or a recession would probably do the economy some good. You clear out some of the dead wood and you prevent forest fires. It’s the same with concepts such as Schumpeter’s creative destruction, or Minsky's conclusions from five or ten years ago,”
Hyman Minsky, an economist who spent his entire life in obscurity, but whose research found renewed relevance after the financial crisis, has been dead since 1996. But his "Minsky moment" theory – a study of how excessive debt levels can trigger an abrupt crash in asset valuations – has found renewed relevance.
As Gross explained in his letter, in an economy with record levels of corporate and consumer debt, the cost of short term financing shouldn’t need to rise to the level of a 10-year Treasury note to trigger a recession. Indeed, “proportionality” would suggest that short-term interest rates only need to increase modestly to trigger a marked slowdown in growth.
"Most destructive leverage – as witnessed with the pre-Lehman subprime mortgages – occurs at the short end of the yield curve as the cost of monthly interest payments increase significantly to debt holders. While governments and the U.S. Treasury can afford the additional expense, levered corporations and individuals in many cases cannot…But since the Great Recession, more highly levered corporations, and in many cases, indebted individuals with floating rate student loans now exceeding $1 trillion, cannot cover the increased expense, resulting in reduced investment, consumption and ultimate default. Commonsensically, a more highly levered economy is more growth sensitive to using short term interest rates and a flat yield curve, which historically has coincided with the onset of a recession."
In his letter, Gross argued that the Fed should proceed with caution. This fall, not only will investors be grappling with rising rates and the beginning of the Fed’s balance-sheet unwind, but a looming battle over raising the debt ceiling is already promising to inject more volatility into markets.
In a sign of investor dread surrounding the looming debt-ceiling battle, Treasuries expected to mature in mid-October have risen markedly in recent weeks, causing the 3mo-6mo curve to invert. The CBO has said the Treasury will run out of cash around then. Another sign that investors are worried about the short-term outlook for credit was Monday’s 3-month bill auction, which surprised the market with the highest yield since 2008.
Investors will hear more from the Fed tomorrow after the close of its two-day July policy meeting. Since there’s no press conference scheduled, investors will be on the lookout for clues surrounding the balance sheet.
- "If The VIX Goes Bananas" This Is What It Will Look Like
From Chris Metli of Morgan Stanley
If the VIX Goes Bananas, this is What it Might Look Like
It’s easy to become numb to the low volatility environment and the risks it presents. While trying to pick a trough in vol has been a fool’s errand, focusing on the risks resulting from vol being so low is not. Low volatility has produced a regime where the risks are asymmetric and negatively convex, so being prepared for an unwind is critical. This is not a call that vol is about to spike, but you need a plan if it does.
This note details how a short vol unwind might develop. A violent rise in volatility could be driven by just a 3% to 4% one-day S&P 500 selloff. Right now the risk is greatest in the VIX complex, and demand for VIX futures from three main sources could result in 100,000 contracts ($100mm vega) to buy in a down 3.5% SPX move. For context VIX futures ADV over the last year is 230,000 (although has risen to as high as 700,000 in big selloffs).
It’s important to note that this only happens if there is a large 1-day move lower in equities starting when VIX is very low – a slower drawdown, or a selloff from higher starting levels of vol, would not create as much demand. The biggest S&P 500 selloff when VIX was less than 12 was 3.5% (Feb 2007), so this type of move would be on par with the worst-case historical move for a low vol environment.
Why highlight this now? Simply because as volatility goes lower, these risks rise. In April and May QDS acknowledged that the short vol base was large, but viewed the risk as manageable (‘Keep Calm and Carry On’). In June the team’s stance on volatility turned neutral. And since then volatility levels have only gone lower.
What happens if the S&P 500 were to fall 3.5% today?
1) First, the VIX could rise as much as 12 points. When volatility is low it tends to move a lot for a given change in the S&P 500. That effect is likely to be exacerbated now because a) skew is steep (and VIX rolls up the skew in a selloff) and b) many players in the VIX market are short. Taking these dynamics into account QDS estimates VIX could rise ~12 points for a 3.5% 1-day decline in SPX.
If VIX rises 12 points, 1-month VIX futures are likely up 5.5 points, a ~50% increase. The 1-day percentage change is a big deal in the VIX complex because the levered and inverse VIX ETFs and ETNs rebalance daily based on the percentage change, and some of the thresholds for forced unwinds are based on the percentage change. This is why lower vol creates higher risk.
2) In a 50% increase in VIX futures, the levered and inverse VIX ETFs and ETNs need to buy ~70,000 VIX futures to rebalance their portfolios and maintain target exposures (this estimate is net of redemptions – long vol ETPs are generally sold by their holders as vol rises, offsetting the levered rebalance). While these flows likely occur near the close, the dynamic is well known, and many traders will bring forward those flows to the middle of the day.
3) A VIX futures level in the high teens (up from 11 – 12 now) means dealers get short VIX call gamma. There has been considerable buying of VIX calls and call spreads, with much of the hedging flow in the last month focused on VIX (instead of SPX). As VIX futures rise, dealers will get more and more short delta, which needs to be hedged by buying VIX futures. In a 3.5% SPX selloff QDS estimates there could be 25,000 VIX futures to buy from dealers hedging.
4) If VIX futures approach +100% in a single day, there is a risk that the providers of inverse VIX ETPs cover the VIX futures that they sold to hedge the products. This is because there is a mismatch in the hedge if VIX futures rise more than 100% – the inverse ETPs can’t go below zero (-100%) but the loss on a short VIX futures position can be more than -100%.
There are two inverse ETPs that sell the front of the VIX futures curve – XIV (an ETN) and SVXY (an ETF). For XIV (holding ~73,000 contracts short) the prospectus indicates that it will unwind if the NAV falls more than 80% intraday, with investors receiving the end of day value. Given this is a known threshold, anything close to a +80% move in VIX futures would likely trigger buying (by the ETN provider and/or market participants) in anticipation of the unwind. Note that because XIV is an ETN, investors receive the theoretical value of the index based on its rules, not what the provider actually trades.
SVXY (holding ~37,000 contracts short) does not have a set threshold to unwind according to its prospectus. That said VIX futures currently have a margin requirement of ~45% of notional for the average of the front two contracts, and any decline in value of the inverse ETPs to those levels could trigger a rapid forced unwind. Note that SVXY is an ETF, so the NAV is based on the actual holdings of the fund at the end of the day.
5) The 2nd derivative impacts are likely large. An overnight gap higher that doesn’t give investors the opportunity to hedge is the worst case. Consider if there is an overnight gap in VIX futures of +150% (VIX futures to ~29, VIX to 35+):
- The holders of the inverse ETPs lose the $1.4bn as the AUM of inverse ETPs goes to zero.
- The providers (hedge counterparties / clearers) of the ETPs lose $600mm due to the mismatched hedge if VIX futures more than double.
- Investors that sold long vol ETPs against short vol ETPs (a somewhat common carry trade) have the same unhedged gap risk in a +100% VIX futures move as the ETP providers. Assuming they are 20% of the shorts in the inverse ETPs (a guess) – they lose $250mm.
- Dealers who can’t hedge their delta on the way up could lose $500mm on our estimates.
- Hedge funds who are short VIX futures ($250mm vega on just the short leg per CFTC) playing the rolldown trade lose over $4bn.
- Investors who are wrong way in VXX, SVXY, and UVXY options could lose hundreds of millions – estimating loss here is hard, but assuming 20% of the open interest is wrong way, the loss would be ~$1bn.
- Investors who have sold vol in other forms (options, variance, etc.) would take losses and likely look to cover as well.
With a buyer for every seller someone is making this money too, and some of the above could be hedged as well. But the point is that when there are losses, ‘sell what you can’ will take over and drive further supply. While the point of max pain in volatility would likely be the first day of the spike, the knock on effects could mean equity markets take longer to recover.
6) Adding to the pain – on days after the initial shock – would be the flow from annuity and risk parity deleveraging. Both of those investors are slow by comparison to the VIX market – annuities will sell over several days, starting the day after a selloff. Risk parity funds are more discretionary, and the supply could come over a matter of weeks. But given high leverage resulting from the low vol environment, their potential supply is large and could prolong any downturn.
Investors have been crying wolf about the VIX complex for years, and have been wrong so far. And it’s important to note that the odds are still heavily stacked against the above scenario playing out and the most likely scenario is still a graceful unwind of the short vol trade:
- If volatility is just a little bit higher, the unwind potential is much less – there needs to be a shock when volatility starts at these very low levels
- The unwind in VIX only happens in a 1-day gap lower in stocks – a slow bleed would not create as much supply
- History suggests a gap from low vol levels is unlikely: the biggest selloff in S&P 500 when VIX was less than 12 was -3.5%, and -2.2% when VIX was less than 11, not enough to trigger this type of unwind. That -2.2% selloff occurred on Feb 4th 1994 when the Fed raised interest rates – bond volatility remains the major risk factor.
- Investors are still not all-in on stocks, with exposures moderate and many hiding out in defensives and Tech – raising the bar for a big selloff in stocks
- Active manager performance this year has been strong, meaning funds are less likely to become forced sellers of positions, which helps keeps volatility tame and can limit the speed of a selloff
- Correlation remains low due to both fundamentals and positioning, and for the index to sell off sharply it would need to rise
The point is simply that if there is an external market shock that nobody is prepared for (and this likely coincides with a selloff across asset classes), the risks of a quick unwind are higher than in the past. QDS favors staying long equities, but does not view the risk / reward on simply selling volatility as attractive anymore. Instead consider:
- Replacing long stock with S&P 500 upside calls that look very cheap given low volatility – buy the SPX Dec 2550 call (30^) for ~1% (sub-9% implied vol)
- Buying VIX puts instead of selling VIX futures to collect rolldown – buy the VIX Sept 10.5 put for $0.25, which offers attractive leverage if futures roll down to current spot levels of VIX with a 9 handle.
- Hedging this potential tail event with OTM VIX calls – buy the Sept 20 calls (17^) for $0.45. VIX calls are not cheap by any measure, but they are reasonably priced given these potential risks, and for those that see a shock occurring in the next few months VIX calls are the best hedge.
- Pat Buchanan Asks "Are America's Wars 'Just And Moral'?"
Authored by Patrick Buchanan via Buchanan.org,
“One knowledgeable official estimates that the CIA-backed fighters may have killed or wounded 100,000 Syrian soldiers and their allies,” writes columnist David Ignatius.
Given that Syria’s prewar population was not 10 percent of ours, this is the equivalent of a million dead and wounded Americans. What justifies America’s participation in this slaughter?
Columnist Eric Margolis summarizes the successes of the six-year civil war to overthrow President Bashar Assad.
“The result of the western-engendered carnage in Syria was horrendous: at least 475,000 dead, 5 million Syrian refugees driven into exile in neighboring states (Turkey alone hosts three million), and another 6 million internally displaced. … 11 million Syrians … driven from their homes into wretched living conditions and near famine.
“Two of Syria’s greatest and oldest cities, Damascus and Aleppo, have been pounded into ruins. Jihadist massacres and Russian and American air strikes have ravaged once beautiful, relatively prosperous Syria. Its ancient Christian peoples are fleeing for their lives before US and Saudi takfiri religious fanatics.”
Realizing the futility of U.S. policy, President Trump is cutting aid to the rebels. And the War Party is beside itself. Says The Wall Street Journal:
“The only way to reach an acceptable diplomatic solution is if Iran and Russia feel they are paying too high a price for their Syria sojourn. This means more support for Mr. Assad’s enemies, not cutting them off without notice. And it means building up a Middle East coalition willing to fight Islamic State and resist Iran. The U.S. should also consider enforcing ‘safe zones’ in Syria for anti-Assad forces.”
Yet, fighting ISIS and al-Qaida in Syria, while bleeding the Assad-Iran-Russia-Hezbollah victors, is a formula for endless war and unending terrors visited upon the Syrian people.
What injury did the Assad regime, in power for half a century and having never attacked us, inflict to justify what we have helped to do to that country?
Is this war moral by our own standards?
We overthrew Saddam Hussein in 2003 and Moammar Gadhafi in 2012. Yet, the fighting, killing and dying in both countries have not ceased. Estimates of the Iraq civilian and military dead run into the hundreds of thousands.
Still, the worst humanitarian disaster may be unfolding in Yemen.
After the Houthis overthrew the Saudi-backed regime and took over the country, the Saudis in 2015 persuaded the United States to support its air strikes, invasion and blockade.
By January 2016, the U.N. estimated a Yemeni civilian death toll of 10,000, with 40,000 wounded. However, the blockade of Yemen, which imports 90 percent of its food, has caused a crisis of malnutrition and impending famine that threatens millions of the poorest people in the Arab world with starvation.
No matter how objectionable we found these dictators, what vital interests of ours were so imperiled by the continued rule of Saddam, Assad, Gadhafi and the Houthis that they would justify what we have done to the peoples of those countries?
“They make a desert and call it peace,” Calgacus said of the Romans he fought in the first century. Will that be our epitaph?
Among the principles for a just war, it must be waged as a last resort, to address a wrong suffered, and by a legitimate authority. Deaths of civilians are justified only if they are unavoidable victims of a deliberate attack on a military target.
The wars in Syria, Libya and Yemen were never authorized by Congress. The civilian dead, wounded and uprooted in Syria, and the malnourished millions in Yemen, represent a moral cost that seems far beyond any proportional moral gain from those conflicts.
In which of the countries we have attacked or invaded in this century — Afghanistan, Iraq, Syria, Libya, Yemen — are the people better off than they were before we came?
And we wonder why they hate us.
“Those to whom evil is done/Do evil in return,” wrote W. H. Auden in “September 1, 1939.” As the peoples of Syria and the other broken and bleeding countries of the Middle East flee to Europe and America, will not some come with revenge on their minds and hatred in their hearts?
Meanwhile, as the Americans bomb across the Middle East, China rises. She began the century with a GDP smaller than Italy’s and now has an economy that rivals our own.
She has become the world’s first manufacturing power, laid claim to the islands of the East and South China seas, and told America to keep her warships out of the Taiwan Strait.
Xi Jinping has launched a “One Belt, One Road” policy to finance trade ports and depots alongside the military and naval bases being established in Central and South Asia.
Meanwhile, the Americans, $20 trillion in debt, running $800 billion trade deficits, unable to fix their health care system, reform their tax code, or fund an infrastructure program, prepare to fight new Middle East war.
Whom the Gods would destroy…
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