- How to make fireworks in your account
While most of the US population drowns in a prolonged semi-conscious state for several days, with moments of alertness (they’ll know they are alive when they see the fireworks) – the remaining force of human intelligence on the planet, spends time trying to figure out ways to break through this vast blanket of social control that’s been thrown over the population like a sticky net, which is slowly eating away at the global standard of living, overall quality, lowering human genetic value. Each day, our money is worth less and less. Why? We explain this in Splitting Pennies – Understanding Forex.
The problem with much discussion on Zero Hedge and alternative media in general, is that it lacks a conclusion and proposed solution. So, we mostly agree that the USD is toast, there’s an insurmountable debt that cannot be paid back (because in a debt-based money system, if the debt is paid off, money will cease to exist). Gold is the go to alternative to stocks & bonds which are mostly overrated – but then what? So let’s say Gold hit’s $50,000 USD per ounce. Then what? Well for one, be sure that you have some good security because in a crisis, the only real currency is accelerated lead, as elaborated here eloquently.
So what is an investor to do? Fundamental analysis of markets is impossible, because of reasons outlined well on this site:
1) Market data is manipulated heavily. By the time any investor receives market information (unless he’s paying for a front running service) one can assume it’s been seen by leading market controllers, HFTs, directors of various unsundry government organizations, and George Soros.
2) The world changes too rapidly for any fundamental strategy to play out. Too many wildcard events can derail strategies such as value investing. Brexit is a great example – and there will be many more “Brexits.”
3) Even if the above 1 & 2 didn’t exist, an investor would need a carrying broker that was fair and honest, and would provide decent execution, and not go out of business. With investing strategies such as some which are discussed on this site, this is a big issue. For example, if Gold is $50,000 let’s say that GLD goes bust, and starts a chain reaction on exchange listed ETFs and ETNs, which can’t possibly fullfill their underlying liquidity obligations even in currenct conditions, not in extreme conditions. Could it bring down some BDs with them? SIPC is limited (..and if it were a TD Ameritrade, no insurance in the world can cover it). So with such extreme strategies, counterparty risk is very large – especially in such climates that would make extreme strategies flourish. Florida residents know very well how this works, when a big Hurricane strikes, the majority of underwriters for flood & Hurricane insurance go bust (FL law or mortgage policy sometimes require residents carry “Hurricane” insurance which doesn’t cover “flood” damage). If the markets melt down, as many claim – how many brokers would go bust? How many leveraged banks? Some big banks are not looking good (such as DB – $54 – $75 Trillion derivative bomb), even in this ideal banking climate.
Hoarding a 6 month supply of food, and living in an underground bunker, is not a real solution. Having a bug out bag, ammo, gold bars & silver coins, and other paraphernalia, it’s just survival. It’s not a strategy. Keeping Gold is the investing equivalent of being a prepper. And as we’ve explained in a previous detailed article, preppers have it all wrong.
Algorithmic Trading – The New Asset Class
This is one solution – and likely will soon be an entire asset class by itself. Robo-Advisors are becoming popular in securities, but on the surface it seems they are only SAS solutions that are replacing human office workers. They are just doing the job that the office worker RIA used to do; meet with clients and build a vanilla portfolio with 20% Utilities and 50% Technology and 20% “Growth” (whatever that ever meant) and 10% Dividend stocks. Currently, HFT is dominated by large institutional players that frankly, the public knows very little about. See one example Jump Trading. The problem is their inaccessability – investors will need many millions to start (consider $50 Million, for a good start). Also, having the $50 Million doesn’t qualify you for anything. Now you’ll have to develop your own algorithms, or hire another firm to do it. But this is the equivalent of hiring a consultant to tell you what business you are in (Consultants, and lawyers, will do this for a fee).
Then there’s the world of retail algorithmic Forex, not allowed for US investors (or at least, so highly restricted and regulated it makes any normally profitable strategy, barely profitable). As this chart shows, it really is “Magic:”
The above is a real live trading account over a period of 3 years. Not likely that an investor can find such performance in stocks, or ‘robo advisors.’
The point is that an algorithm can trade any market, and if the strategy is stable, and consistent, it can deliver investment returns above and beyond the average, that are not correlated to the market – and most importantly – NOT DEPENDENT ON HUMAN BEINGS. An algorithm isn’t perfect, but it solves the basic fundamental problems of human traders. And there are thousands of them. You can even evaluate FX algorithms for free, without investing a penny. Checkout www.getfxliquidity.com as one example – there are many. To learn more about investing in Forex checkout Fortress Capital Forex here.
Algorithms give developers many abilities that simply wouldn’t be possible with human traders. Most importantly, in a sterile development environment, it’s possible to test, analyze, and optimize any trading idea relatively quickly, and then develop a robust strategy based on this process. It’s necessary to invest heavily in computing to do this, but many who have done this will offer their strategies for investors use. What’s good about this approach is that it’s an investment in a methodology, not in an asset class.
This is a fundamental mistake made by modern investors. Gold is great. But then what? During Brexit for example, it was possible to buy and sell the Great British Pound by more than 10 signficant moves, during a 10 hour period. That’s activity that an algo can capture. Just ‘investing’ in the US Dollar, or Great British Pound – is risky. If an algo is built with a robust risk management module, it’s the safest way to trade the markets. And one doesn’t need to become an expert in mathematics and algorithm development to do so – there are hundreds of algos available for use by any investor, big or small. But if one does want to take on a challenge and build his own investing system, there are literally thousands of free resources online to support that development. There’s companies that have built a business out of algorithm development. And certainly, this is only the beginning of a new blue ocean market. The reason algos are the future? Because they work. That’s all.
- U.N. Official 'Accidentally' Crushes Own Throat Right Before Testifying Against Hillary Clinton
Submitted by Mac Slavo via SHTFPlan.com,
Call it conspiracy theory, coincidence or just bad luck, but any time someone is in a position to bring down Hillary Clinton by testifying they wind up dead. In fact, there’s a long history of Clinton-related body counts, with scores of people dying under mysterious circumstances.
Perhaps the most notable is Vince Foster. Foster was a partner at Clinton’s law firm and knew the inner workings of the Clinton Machine. Police ruled that death a suicide, though it is often noted that Foster may have been suicided.
Now, another official has found himself on the wrong end of the Clintons. That John Ashe was a former President of the United Nations General Assembly highlights the fact that no one is safe once in their sights.
And as you might have guessed, there are major inconsistencies with Ashe’s death. It was not only conveniently timed because Ashe died just a few days before being set to testify against Clinton in a corruption case, but official reports indicated he died of a heart attack.
The problem, however, is that police on the scene reported Ashe died when his throat was crushed during a work-out accident.
The New York Post’s Page Six reported that after Ashe was found dead Wednesday, the U.N. claimed that he had died from a heart attack. Local police officers in Dobbs Ferry, New York, later disputed that claim, saying instead that he died from a workout accident that crushed his throat.
Adding to the mysterious nature of Ashe’s death was the fact that he had been slated to be in court Monday with his Chinese businessman co-defendant Ng Lap Seng, from whom he reportedly received over $1 billion in donations during his term as president of the U.N. General Assembly.
And then there was this: During the presidency of Bill Clinton, Seng illegally funneled several hundred thousand dollars to the Democrat National Committee.
Source: The Conservative Tribune via The Daily Sheeple
It must be coincidence, right?
If former Secret Service agent Gary Byrne is to be believed, this is business as usual for the Clintons. Excerpt via Zero Hedge:
BYRNE: I feel so strongly that people need to know the real Hillary Clinton and how dangerous she is in her behavior. She is not a leader. She is not a leader.
SEAN: She does not have the temperament?
BYRNE: She doesn’t have the temperament. She didn’t have the temperament to handle the social office when she was First Lady, she does not have the temperament.
SEAN: She’s dishonest.
BYRNE: She’s dishonest, she habitually lies, anybody that can separate themselves from their politics and review her behavior over the past 15 years…
Byrne is the author of the newly published book Crisis Of Character – a first-hand Clinton exposé.
- How To Spot A False Flag Event
A missionary friend of mine in Eastern Europe recently gave me a heads up regarding an excellent article written by Sebastian Swift entitled "5 Confirmed False Flag Operations And How To Spot Them In The Future."
Swift writes,
"The false flag phenomenon is distinctively modern and used as an ideological weapon to control populations with the fear of a manufactured enemy. They are used in ostensibly democratic systems where people believe they have inalienable rights. Such democratic systems–primarily the United States, Israel, and Great Britain–must shock people into sociopolitical and geopolitical consent and, as such, require sophisticated modern propaganda systems and advanced covert operations teams with highly proficient skills."
Here are his telltale signs of a false flag operation:
- There is an immediate comprehensive narrative, including a convenient culprit. Law enforcement, government agencies, and the mainstream media immediately proffer a narrative that completely explains the event and encourages citizens to tie their intellectual understanding of the tragedy to the emotions they experience. In his lecture at Contact in the Desert, [author and researcher] Richard Dolan noted that a distinguishing characteristic of a false flag operation is that the official narrative IS NOT questioned by the media. There are often legislative, ideological and sociopolitical power plays waiting in the wings, which the government can immediately implement.
- The official narrative has obvious domestic and geopolitical advantages for the governing body. The Bush administration used 9/11 to usher in the War on Terror, which has served as a lynchpin for countless civil liberty infringements by the national security state, including ubiquitous domestic surveillance and indefinite detention.
- The narrative behind the attack serves to leverage emotions like fear, as well as patriotism, in order to manufacture consent around a previously controversial issue. For example, many of the recent domestic terror attacks, including the Aurora [and Orlando] shooting[s], have exacerbated and reinforced advocacy of gun control legislation.
- Military training drills and police drills occur on the day of and very near the attack itself, causing confusion to obscure eye witness testimony and allowing orchestrators to plant both patsies, disinformation and backup operatives. This is no small point. An incredible percentage of major domestic or international terror attacks have involved simultaneous "training drills.” This list includes, but is not limited to, the infamous NORAD drills of 9/11, the 7/7 London Bombings, the 2011 Norway shooting, the Aurora shooting, Sandy Hook, and the Boston Marathon. Though none of the aforementioned events can be confirmed or denied without a doubt, they bear a striking resemblance to previous false flag attacks and should be looked at with an investigative eye.
It's time for those of us who have been reluctant to consider the possibility that our own government (and the governments of Israel and Great Britain) could actually be complicit in domestic terrorism in order to further a nefarious agenda to at least stop accepting the government and media’s version of these tragedies at face value. For the most part, the mainstream media is little more than a propaganda ministry for the federal government. We haven’t seen true objective investigative journalism since before the death of John F. Kennedy.
Granted, not every national tragedy is part of a government conspiracy–and there is a plethora of "conspiracy nuts" out there to whom EVERYTHING is a conspiracy and through which we must wade to try to ascertain the truth. These people make it difficult for all of us. The Internet has provided the Chicken Littles of the world with an opportunity to play journalist. And their “everything's-a-conspiracy” rants only serve to mask the true conspiracies and turn the average John Doe away from the truth. That’s why I believe that many of these “conspiracy-everywhere” Internet bloggers are actually PART OF THE CONSPIRACY. Their job is to make genuine whistleblowers and researchers look like conspiracy “kooks.” Then, of course, there are genuine kooks out there, too.
Regardless, the similarities and "coincidences" of many of these national tragedies are just too numerous for rational people to ignore. I believe Mr. Swift's analysis is very intelligent, coherent, and plausible.
Our Founding Fathers believed their government (the British Crown) was deliberately conspiring against them. Thomas Jefferson said as much in our Declaration of Independence:
“Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”
Read it again: “But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a DESIGN to reduce them under absolute Despotism . . . .” Jefferson and the rest of America’s founders believed that there was a “design” (i.e, “plot,” “scheme,” or “conspiracy,” if you please) to “reduce them under absolute Despotism.” So, if you believe that government conspiracy is only for kooks, you must include America’s Founding Fathers in that group.
Patrick Henry may have said it best:
"We are apt to shut our eyes against a painful truth, and listen to the song of that siren, till she transforms us into beasts. Is this the part of wise men, engaged in a great and arduous struggle for liberty? Are we disposed to be of the number of those who, having eyes, see not, and having ears, hear not, the things which so nearly concern their temporal salvation?
"For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth–to know the worst and to provide for it."
I submit if we deliberately "shut our eyes against a painful truth," liberty is not long for this country. And there is plenty of blame to go around.
Obviously, the “no conspiracy” group is contributing greatly to the demise of liberty by their unwillingness to even examine the evidence suggesting government conspiracies. Truly, they are shutting their eyes “against a painful truth.” And, unfortunately, this group is most prevalent among pastors, Christians, and churches.
I find it incredible that people who supposedly study their Bibles are so completely blind to government conspiracies. The Old and New Testaments are replete with examples of government conspiracies. Jewish governments, especially, were notorious for conspiring against God’s prophets in the Old Testament and against Jesus and the Apostles in the New Testament. Plus, the New Testament plainly pictures the master conspirator, Satan, as being the “god of this world” and “the prince of the power of the air.” His offer to Christ on the Mount of Temptation to give Jesus the “kingdoms of the world” was NOT challenged by the Lord. In other words, Jesus didn’t dispute the fact that Satan controls many, if not most, of the world’s governments. The Book of Ephesians warns against the conspiracy of “principalities,” “powers,” “rulers of the darkness of this world,” and “spiritual wickedness in high places.” Every Bible commentator that I respect includes wicked civil magistrates within these personages. Yet when one brings up the possibility of government conspiracies to the average church member, he or she is treated as if they have the palsy.
Nowhere is this attitude of the denial of conspiracies more evident than in the whole Muslim versus America façade. Almost no Christian leader seems to be able to see the “man behind the curtain” in this whole affair. They have absolutely NO concept of what the governments of the U.S., Great Britain, Israel, Turkey, and Saudi Arabia are surreptitiously doing to instigate and foment this “war with Islam.” (Of course, there is no war against the Islamic states of Saudi Arabia and Turkey; they are our “allies.”) Christians aren’t even willing to study the matter. Therefore, the devil–along with the evil miscreants inside Western governments that he controls–is able to go about his diabolical work completely undetected.
But, in all fairness, the “everything's-a-conspiracy” group must also share culpability in our country’s demise. There are too many professing “patriots” who seem to have no honesty or objectivity whatsoever. To them, everything government does is bad whether it is or isn’t. And, of course, they, the so-called “patriots,” can do NOTHING wrong.
For example, if a black kid in an inner city is unjustly killed by a police officer, these “patriots” say absolutely NOTHING. But if one of their “own” is justly killed by police, they scream “tyranny” and shout about the need for revolution. Such people seem to have no reasoning ability and no understanding of Natural Law. They are agenda driven as surely as are big-government toadies. In fact, some of these “patriot” Internet bloggers and radio broadcasters are no better than the mainstream media: they twist the truth in order to pander to the people who are supporting them financially. It’s not about principle; it’s not about truth; it’s not about the rule of law. It’s all about their financial success.
When we only condemn injustice committed by government, while overlooking and condoning injustice committed by so-called “patriots,” we lose all credibility and integrity. Everything is not a conspiracy. Every policeman or federal agent is not a Jackboot. Sometimes there are real acts of violence committed by real deranged criminals with no help whatsoever from anyone–including anyone in government. And sometimes there are so-called “patriots” who are themselves evil, using the freedom movement for their own ulterior purposes. And, of course, there are well-intentioned people who sometimes do very foolish and unwise things. And only foolish and unwise people would condone and support foolish and unwise actions, even if they are well-intentioned.
I totally agree with Sebastian Swift’s article that there are indeed false flag operations being perpetrated by rogue elements within government–including the governments of the United States, Great Britain, and Israel. I further agree that people need to honestly and objectively be alert for the identifying characteristics of these false flag operations. More than that, the American people need to begin holding our civil magistrates accountable for these operations, as they could not continue without the tacit support of our elected representatives and President.
But what we do NOT need are phony “patriots” who do nothing but distract, confuse, and incite by calling everything a conspiracy and who themselves are guilty of unlawful conduct–unlawful conduct as defined by God and Natural Law. (This is why the ignorance and silence of America’s pulpits is such an egregious crime: people do not even know how to discern lawful and unlawful conduct because pastors are not teaching them these Biblical Natural Law principles.) Plus, I am personally convinced that many of these hot-headed so-called “patriots” are in reality government agent provocateurs who are deliberately trying to incite real patriots into doing something stupid.
Again, I submit if we deliberately "shut our eyes against a painful truth," liberty is not long for this country. And that includes admitting when a tragedy is NOT a conspiracy. But it also means admitting when evidence suggests that it IS.
- Morgan Stanley Explains One Big Reason Why Central Planners Can't Generate Any Inflation
As China continues to weaken the Yuan, it's important to note the impact that it has on the inflation expectations of other economies, namely the US, Japan, and Europe. As central planners aggressively try to boost inflation, and in the meantime have created a stunning $11.7 trillion in negative yielding debt, China could be hindering that effort quite a bit.
As Morgan Stanley points out, CNY has weakened over the last year or so versus the Euro, Yen, and Dollar and is helping to explain the continued undershoot of inflation in Japan and Europe – and we would add in the US.
From MS
The RMB decline has materialized mainly against the EUR and even more so against the JPY. This may explain the continued undershoot of inflation in Europe and Japan.
MS goes on to note that the overcapacity in Asia (something we have discussed often) and a weaker currency will continue to lead to lower export prices, and thus dampen future inflation expectations, which can be seen in the US 5y5y inflation expectations. MS also observes that developed market inflation behavior is led by movements in Chinese prices, and the rally in global bonds will continue to push the USD higher, putting further downward pressure on prices.
Moderate US growth together with overcapacity in Asia and a weaker RMB will likely result in lower export prices from Asia. Market-based US inflation expectations are now lower than April, supported by Michigan survey data, all despite commodity prices being generally higher. Post Brexit our rates strategy team remains long duration, which is further supported by this lacklustre inflation environment. Inflation expectations might be held back by falling import prices from economies that run spare capacity. Exhibit 23 shows that the recent DM inflation behaviour was actually led by the movements in Chinese prices. The rally in global bonds, particularly in the US, may actually push USD higher as foreign investors look for places with a relatively high yield.
MS concludes by saying that deflationary pressures are likely to remain in place as overcapacity persists.
Important for the outcome is the evaluation of global deflationary pressures, which may be primarily fed from Asia. Yes, China’s PPI has improved from -5.9%Y to -2.9%Y, but RMB has declined over the past couple of quarters at an annualized rate of 11%, suggesting that import price deliveries from China are currently falling by 5%. Importantly, deflationary pressures are likely to remain in place as overcapacity persists. Take for instance the steel sector, where production capacity has increased by 35 million tons as China progressed through its recent mini-cycle.
Within the G10, Australia, New Zealand and Japan are most likely to see the most import pressure to the downside.
* * *
In summary, while Kyle Bass has the ultimate long-term endgame pegged, in the short-term, China will continue to systematically export deflation around the world, and continue to be a significant thorn in the side of central planners everywhere who are trying desperately to generate any type of meaningful inflation and salvage whatever is left of their credibility.
Source: Morgan Stanley
- America Should Exit From NATO & The National Security State
Submitted by Jacob Hornberger via The Future of Freedom Foundation,
In its reporting on Brexit, the New York Times asks an interesting question: “Is the post-1945 order imposed on the world by the United States and its allies unraveling, too?”
Hopefully, it will mean the unraveling of two of the most powerful and destructive governmental apparatuses that came out of the postwar era: NATO and the U.S. national-security state. In fact, although the mainstream media and the political establishment elites will never acknowledge it, the irony is that it is these two apparatuses that ultimately led to the Brexit vote:
The Times points out:
Refugees have poured out of Syria and Iraq. Turkey, Jordan and Lebanon have absorbed several million refugees. But it is the flow of people into the European Union that has had the greatest geopolitical impact, and helped to precipitate the British vote.
But what was it that gave rise to that massive refugee crisis?
The answer: It was the U.S. national-security state’s regime change operations in the Middle East, including NATO’s bombing campaign as part of its regime-change operation in Syria.
What did U.S. and NATO officials think — that people would simply remain where they were so that they could get blown to bits with the bombs that were being dropped on them, by the U.S. assassination program, or by the massive civil-war violence that came as a result of the U.S. and NATO regime-change operations?
People don’t ordinarily behave in that fashion. Most people prefer to live rather than die and will do anything they can to survive. That’s why those refugees fled to Europe— to escape the horrific consequences of interventionism by NATO and the U.S. national security state in the Middle East.
I wonder if deep down, those who are lamenting and groaning about the Brexit vote realize that: If there had been no U.S. invasion and occupation of Iraq, no regime change in Libya, no U.S. and NATO bombing and interventionism in Syria, there wouldn’t have been a massive refugee crisis in Europe and, almost certainly, a rejection of Brexit by a majority of British voters.
How’s that for dark irony?
Like the U.S. national-security state, NATO is a Cold-War era governmental apparatus, one whose mission was ostensibly to protect western Europe from an attack by the Soviet Union, which was America’s and Britain’s World War II partner and ally.
But as everyone knows, the Cold War ended more than 25 years ago. A question naturally arises: Why then didn’t NATO go out of existence once the Cold War was over?
The following statement by the Times perfectly reflects how the mainstream media and the political establishment elites just don’t get it:
NATO has rediscovered its purpose in the aftermath of Russia’s intervention in Ukraine. Yet the Baltic countries still worry whether the military alliance would truly defend them against Russian aggression, and the alliance has had trouble defining its role in fighting terrorism or dealing with the migrant flow.
What the Times is insinuating is that NATO is just as necessary today to protect western Europe (and now eastern Europe) from Russian aggressiveness as it was during the Cold War era.
But there is something wrong with that picture, something that the Times and the political establishment elites don’t want to focus on — that it was NATO and the U.S. national-security establishment that precipitated the crisis with Russia over Ukraine.
After the Cold War ended, not only did NATO decide to remain in existence, it began absorbing Eastern European countries that had formerly been in the Warsaw Pact. When the expansionary efforts finally reached Ukraine, NATO strived to absorb that country as well, which it came very close to doing thanks to a pro-U.S. coup that had all the earmarks of a successful CIA regime-change operation. Absorbing Ukraine into NATO would have meant U.S. bases, troops, tanks, and missiles on Russia’s border and the U.S. takeover of Russia’s longtime military base in the Crimean port of Sevastopol.
There was never any chance that Russia was going to permit that to happen, which led to Russia’s annexation of Crimea and the onset of the Ukraine crisis.
After all, imagine that the Warsaw Pact had remained in existence and had begun absorbing Cuba, Venezuela, Chile, Nicarargua, Guatemala, and Mexico, with aims of installing Russian military bases on Mexico’s border with the United States. What do you think the reaction among U.S. officials would have been to those provocative acts?
But what do we get from the mainstream media and the political establishment elites? That NATO is just an innocent party, one that is a force for good in the world, rather than a corrupt Cold War dinosaur-like apparatus whose mission is to provoke crises in order to justify its continued existence.
As I detail in my new ebook The CIA, Terrorism, and the Cold War: The Evil of the National Security State, it’s no different with the U.S. national-security apparatus that was also brought into existence to wage the Cold War against the Soviet Union and which fundamentally changed America’s government structure for the worse. After all, don’t forget: China and North Korea are national-security states as well. Totalitarian regimes are almost always national security states.
So, why did U.S. officials graft a totalitarian apparatus to America’s federal governmental structure, without even the semblance of a constitutional amendment? They said that a temporary totalitarian apparatus was necessary to wage a cold war against the Soviet Union’s and China’s totalitarian communist regimes.
In itself, that’s problematic, but one thing is certain: The Cold War is over. It ended more than a quarter-century ago. Rather than be dismantled, which is what should have happened back in 1989, the national-security state, having lost its official enemy with the end of the Cold War, decided to go into the Middle East and provoke trouble with invasions, occupations, sanctions, interventions, and regime-change operations. All that brought us anti-American terrorist attacks, the war on terrorism, a formal assassination program, a massive secret surveillance program, indefinite detention, torture, secret prison camps, and other dark things that characterize totalitarian and communist regimes.
And yet the mainstream media and the political establishment elite just don’t get it: They see the national-security state as a protector and as a force for good in the world, rather than as a major purveyor of death, destruction, crises, chaos, and loss of liberty, peace, and prosperity.
It’s time for Americans to do some real soul-searching. It’s time to do some fundamental post-World War II alterations here at home. A great place to begin would be a dismantling of both NATO and the national-security state. An American exit from these corrupt and expensive Cold War-era apparatuses would lead the way to freedom, peace, prosperity, and harmony with the world.
- More 'Transitory' Non-flation: Child Care Costs Are Soaring
As the middle class erodes in the US, we have pointed out the many things that have continued to financially squeeze what is left of The American Dream out of the average joe, from rent becoming increasingly unaffordable to healthcare premiums exploding higher. We now have another expense that is taking a toll financially on the average American family, and that is child care.
Child care expenses have climbed nearly twice as fast as overall prices since the recession ended in 2009 the WSJ reports, and coupled with lackluster wage gains, families with young children are finding themselves stretched financially.
As the WSJ points out, the cost of child care is so high that in 41 states, the cost of sending a 4 year old to full-time preschool exceeds 10% of a median family income, and full-time preschool is more expensive than the average tuition at public college in 23 states. Care for an infant even costs more than the average rent in 17 states.
Since the recession ended in 2009, the cost of child care and nursery school has increased at a 2.9% annual average, outpacing overall inflation of 1.6% during that seven year period.
According to the WSJ, it costs $245,340 to raise a child born in 2013 from birth to age 18, nearly five years worth of income for the median US household. By comparison, the cost of raising a child born in 2003 was $226,108 after adjusting for inflation.
Looking at the breakdown of costs for middle income families from 1960 to 2013, education and child care costs have exploded higher.
For Malki Karkowsky, child care costs account for almost a quarter of the family budget. Adding in rent for the family's Kensington, Md apartment, and more than half of her and her husband's month take-home pay is gone. Karkowsky has a 3 year old son and a daughter under the age of 1. "Thankfully, we can cover the cost of food and clothing, but not really the extras." Karkowsky said.
The family aspires to buy a home, but saving is difficult, even after moving to a cheaper location. The move saved $350 a month, but that doesn't even cover a week of day care.
According to the WSJ, an April Gallup poll found that 37% of Americans between 30 and 49, the age when many are raising children, said they didn't have enough money to live comfortably.
Increased costs are a struggle for many families, especially due to the fact that adjusting for inflation, incomes are barely above pre-recession levels.
Ironically, even the Federal Reserve admitted the inflation – which they can never seem to find anywhere – is higher for low income families.
From the WSJ
That presents a test for Federal Reserve officials who set economic policy based upon the average inflation rate experienced in the economy. A recent analysis by the Federal Reserve Bank of Minneapolis found that households with low incomes, more household members or older household heads experience higher inflation on average – but concluded that any given individual’s inflation rate can be several percentage points different from the average rate.
“It speaks to the challenge the Fed faces in communicating about inflation,” Minneapolis Fed Director of Research Sam Schulhofer-Wohl said. “Even if average inflation is around 2%, you have to be aware that many households face price changes that are much higher or lower than inflation.”
* * *
We're stunned that the Federal Reserve even acknowledged that inflation is out there in any form, since it continuously ignores rent, student loans, health insurance, and now child care costs. Then again, it's not likely that the Fed will stop its actions that create those situations to begin with of course.
- "Our Monetary Humpty-Dumpty Is Heading For A Great Fall" – Teetering On The Eccles Building Wall
Submitted by David Stockman via Contra Corner blog,
The Eccles Building trotted out Vice-Chairman Stanley Fischer yesterday morning. Apparently his task was to explain to any headline reading algos still tracking bubblevision that things are looking up for the US economy again and that Brexit won’t hurt much on the domestic front. As he told his fawning CNBC hostess:
“First of all, the U.S. economy since the very bad data we got in May on employment has done pretty well. Most of the incoming data looked good,” Fischer said. “Now, you can’t make a whole story out of a month and a half of data, but this is looking better than a tad before.”
You might expect something that risible from Janet Yellen – she’s just plain lost in her 50-year old Keynesian time warp. But Stanley Fischer presumably knows better, and that’s the real reason to get out of the casino.
What is happening is that after dithering for 90 months on the zero bound the Fed has run out the clock. The current business cycle expansion—as tepid as is was— is now clearly rolling over. So the Fed has no option except to sit with its eyes wide shut while desperately trying to talk-up the stock market.
And that means happy talk about the US economy, no matter how implausible or incompatible with the facts on the ground. No stock market correction or sell-off of even 5% can be tolerated at this fraught juncture.
That’s because the U.S. economy is so limp that a proper correction of the massive financial bubble the Fed and other central banks have re-inflated since March 2009 would send it careening into an outright recession. And that, in turn, would blow to smithereens all of the FOMC’s demented handiwork since September 2008, and indeed since Greenspan launched the era of Bubble Finance back in October 1987.
So when Fischer used the phrase “the incoming data looked good”, he was doing his very best impersonation of Lewis Carroll’s version of Humpty Dumpty. “Good” is exactly what our monetary politburo says it is:
“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
The fact is, the “lesses” have it by a long shot, but the Fed cannot even whisper a word about the giant risks, challenges and threats which loom all across the horizon.
So for the third time this century, a business cycle contraction will come without warning from the Fed. Once again the Kool-Aid drinking perma-bulls, day traders and robo-machines will be bloodied as they stampede for the exit ramps. But it is the main street homegamers, who have been lured back into the casino for the third time this century, that will suffer devastating losses yet another time.
Indeed, if there were even a modicum of honesty left in the Eccles Building it would be warning about the weakening trends in the US economy, not cheerleading about fleeting and superficial signs of improvement.
Likewise, it would acknowledge the drastic over-valuation of the stock, bond, real estate and other derivative financial markets and remind investors that a healthy capitalism requires a periodic purge of such excesses in order to check mis-allocation of resources and malinvestment of capital.
Most importantly, it would flat out confess the inability of monetary policy—–even its current extraordinary accommodation variant—–to ameliorate the structural and supply-side obstacles to a more robust rate of economic growth and wealth creation in the US.
In that regard, it would especially abjure the hoary notion that an excess of monetary stimulus is warranted because fiscal policy and regulators, for example, are allegedly not holding up their side of the bargain.
In fact, monetary stimulus is not the “only game in town”, as is often asserted; it’s the wrong game. Money printing is not a second best substitute for other pro-growth policies because it’s not pro-growth at all.
At best, it shifts the incidence of economy activity in time, such as when cheap mortgage rates cause housing construction to be higher today and then lower in the future when rates normalize.
But mainly monetary stimulus causes systemic mis-pricing of financial assets. It turns money and capital markets into gambling arenas where speculators capture huge unearned windfalls while the mainstream economy is deprived of growth and productivity inducing real capital investment.
Thus, instead of dispensing sunny-side agit prop Friday morning, Fischer might have noted the startling anomaly that was occurring at the very moment of his CNBC appearance.
To wit, the 10-year US Treasury note——the very benchmark of the entire global financial system—-had just kissed a record low yield of 1.38%. At the same moment, the futures market was signaling an open on the cash S&P 500 at 2110 or within 0.09% of its all-time high and at nosebleed PE ratio of 24X reported earnings.
Not in a million years would an honest, healthy, stable and sustainable free market have produced that combination. Starring at CNBC’s on set monitors, Fischer was looking at a screaming warning sign that financial markets have become radically unhinged. Starring into the cameras, he lied through his teeth in order to perpetuate the Fed’s sunny-side narrative.
Here’s the thing, however. The Fed’s primitive Keynesian models are all about quantity of economic factors and the short-run sequential change in the GDP and jobs data sets. There is not even acknowledgement of qualitative factors or how the “incoming data” aligns with historical trends.
Nor does a positive quarter purchased at the certain expense of a sharp reversal a few periods down the road get discounted. The Fed model is all about sequential GDP gains——even if there are blatant indications that they are not sustainable or compatible with the prerequisites for healthy capitalist prosperity and stability.
All of these considerations were evident in the incoming data releases on Friday and in recent days——the very items that Fischer insisted had gotten better from “a tad before”.
Booming auto sales have been a pillar of the weak overall recovery since 2009, but even they came in for June down by a sharp 4.6% from prior year at 16.7 million light vehicles. Moreover, this was a continuation of the weakening pattern since last fall, and a clear indicator that the peak sales rate for this cycle is already in:
But that’s not the half of it. Given population and household growth since the 2007 peak, 18 million units should be the floor of a healthy sustainable US economy, not a momentary peak, as is evident in the chart.
And this point is made all the more salient given the qualitative factors behind the peak levels that were achieved late last year. To wit, the entire rebound from the 2008-2009 crisis lows was funded with debt, and much of it was issued to anyone who could fog a rearview mirror.
That’s right. Since the auto cycle bottom in mid-2010, retail motor vehicle sales have rebounded at a $360 billion annual rate, whereas auto loans outstanding have risen by $355 billion.
Moreover, the apparent low default rate of recent years was self-evidently misleading in the context of Bubble Finance. Owing to the collapse of new car sales between 2007 and 2011, there has been a sharp reduction in the supply of used cars, causing the resale value of the existing fleet to steadily rise.
Rising used car prices, in turn, made it easy for even marginal consumers to refinance old loans into new vehicle purchases, thereby avoiding defaults. At the same time, artificially low interest rates enabled auto finance companies to finance loans and leases at exceedingly low but unsustainable monthly payment rates.
So the auto contribution to GDP growth during the last few years had an unsustainable “virtuous circle” character. There was no reason, therefore, to believe these gains could be replicated permanently. In fact, there was every reason to believe that the artificial Fed induced auto finance cycle would be eventually reversed, thereby generating substantial, off-setting “payback” down the road.
That risk is now materializing. The entire “virtuous” but artificial auto finance cycle is reversing as a flood of used cars—–reflecting the booming sales of the last four years—–comes into the resale market.
Consequently, used car prices are heading south, thereby undermining trade-in values and eligibility for new loans. The index of used car prices is now down 5% from its recent peak, and based on past cycles has a long way down yet to go.
Alas, downward trending used car prices will also means that default rates will be rising for the simple reason that underwater borrowers will not be able to refinance their “ride” into a new or more recent vintage used vehicle.
Likewise, new car loan and lease finance will be shrinking because the estimated “residuals” on leases and collateral value on loans will be lower. That means loan-to-car price ratios will come down—just as trade-in values on existing vehicles are also dropping. The resulting financing gap means lower sales and production rates in the auto sector.
In short, there has not been a healthy recovery of the auto industry owing to 90 months of ZIRP and the Fed’s massive money printing escapades. This misbegotten monetary stimulus has only generated a deformed auto financing cycle that is now reversing and which will soon be extracting its pound of payback.
Needless to say, Fischer eschewed the opportunity to talk soberly about the headwinds facing the strongest sector of the recent recovery. And this is only illustrative. The same can be said of housing—where cheap mortgages have raised prices far more than output of new housing—and countless others.
The recession will come, therefore, with the Fed flat-footed again and this time, out of dry powder, as well.
Indeed, so thoroughly will the Fed be discredited when the market crashes again by 40% or 50% or more, that modern Keynesian central banking will be faced with an existential crisis.
To use the metaphor, our monetary Humpty Dumpty is heading for a great fall, and all the Imperial City’s potentates and poobahs will not be able to put it together again.
And that would be a very good thing.
- "This Is The Capitulation Phase" – Why Treasury Yields Are About To Really Plunge
While mom and pop investors and BTFDers (if not so much hedge and mutual funds and other “smart money“) have been delighted by the latest V-shaped surge in stocks, it has come as we have repeatedly shown…
… at the expense of collapsing long-term yields as another central bank liquidity tsunami is priced in. In fact, early Friday both 10Y and 30Y US Treasury yields plunged to new all time lows, a signal which at any other time would suggest a deflationary tsunami is about to be unleashed, but in this case simply meant that another bout of central bank generosity was coming to prop up risky assets in the aftermath of Brexit.
The problem is that while stocks can – for now – ignore this historic divergence, which has pushed the S&P back to just shy of all time highs while bond yields are at all time lows, one major market participant can no longer pretend to not notice what is going on. We are talking about pension funds, who according to Bank of America are about to “throw in the towel” and capitulate on the de-risking of their portfolios, unleashing the next major buying spree on the long end, in the process likely pushing the 10Y to 1% or even much lower.
As BofA’s Shyam Rajan writes, bull flattening of yield curves is rarely good news to anyone – but defined benefit pension plans are most leveraged to this pain. According to the most recent Milliman estimate, the average funded ratio of the top 100 US corporate defined benefit pension plans already had dropped to 77% by end of April. Since then, 30y rates dropped another 50bp and corporate spreads have tightened. While the asset side has provided some relief given that equities are hanging on to the highs, we think it is safe to assume that funding ratios over the last month have now reached the lows seen in 2012 – a rather sobering thought given that the equity rally of 70% since then has meant nothing and has been subsumed by the rate decline. The dominant factor of pension funding gaps has been the move in rates, as Chart 2 makes clear.
According to BofA there are five reasons why capitulation is more likely now.
Talking about pension capitulation seems counterintuitive when funded ratios are at record lows on the heels of a significant decline in rates. After all, why would a pension manager hoping for mean reversion at the beginning of the year feel forced to throw in the towel at these levels? 10y rates have been here before, funding ratios have been this low before, and this is not the first time for a flight to quality out of Europe and Japan into the US. What makes this time different? We identify five reasons (three macro, two pension-specific) that make capitulation this time around much more likely:
Here are the reasons:
1. Longer term growth
The key difference from a few years ago is the formalization of the “new normal” in the markets. Global estimates of neutral real rates are much lower, the Fed’s estimate of the long-run rate has dropped nearly 100bp, and the yield curve in itself sends a bleak message (Chart 2). While in 2013, 10y rates reached similar levels and the market pushed out the Fed nearly three years, it remained optimistic for the long run. Terminal rates were priced to be north of 3.5%, with forward inflation expectations above the Fed’s target. Today, every intermediate forward beyond 3y1y is 50-200bp lower than the lowest point in 2013. There is greater understanding that the yield moves are not temporary but a glaring reflection of the new normal across the globe
2. Inflation expectations
The inflation market signals the same pessimism. Chart 4 shows inflation expectations across global markets relative to central bank inflation targets. Zero on the chart indicates that the markets on average expect the central bank to hit its inflation target over 30 years, while negative indicates a miss to the target. Among the markets that priced-in positive inflation risk premia in late 2013, almost all now project their central banks to miss their targets over 30 years.
3. The gravitational pull of negative yields
Any assumed lower bound for rates has been thrown out the window given the moves to negative rates. Nearly 33% of the BofAML Developed Market (DM) sovereign index now trades negative in yield, and the US makes up nearly half of the positive yielding assets available to investors. The long end of the US curve remains cheap to European and Japanese investors (on unhedged or partially hedged basis) who are getting pushed out of their domestic sovereign markets because of QE. Fundamentally, the macro rationale for the ECB and BoJ to stop QE is years away, and flow-wise, the safe haven scarcity problem motivating flows into the US is here to stay.
4. Variable PBGC premiums
The penalties for underfunding have increased markedly since 2012 and are scheduled to increase even more. Based on the latest budget act, for each $1,000 of underfunding, variable rate Pension benefit Guarantee Corporation (PBGC) premiums increase from $30 to $33 in 2017, $37 in 2018, and $41 in 2019. Nearly 33% of the BofAML Developed Market (DM) sovereign index now trades negative in yield Essentially, the top 100 corporate defined benefit pension plans will be paying at least ~$20bn/year in variable premiums by 2019 if current levels of underfunding remain.
5. Borrowing to solve the pension tension
The greatest impediment to pension risk transfers (used loosely as a term for offloading some or all of the pension risk to an insurance company who then fund them with annuities) is the need to raise cash to bring funding ratios to par before passing it on to the insurance company. In this regard, low corporate bond yields (and ECB corporate buying) actually could help. Consider the BofAML Corporate Master index – the effective yield of single A rated corporates is 2.52% and that of BBBs is 3.4%. The relative tradeoff now between issuing debt vs paying 3-4% of variable premiums is increasingly attractive – corporates could consider issuing debt to make pensions whole and probably come out with a net positive after tax savings on debt interest (Chart 6). While issuing debt to buyback stock has been a popular strategy, issuing debt to make pensions whole could be the next trend in fixing balance sheet risk. A broader discussion of this trade-off is beyond the scope of our piece, but it reinforces the point that despite wider funding gaps, there is likely a greater incentive or larger fear that is likely to motivate pension de-risking in the coming months.
To be sure, the current collapse in yields has precedented: in 2011, rates declined more than 100bp, curves flattened by more than 75bp, the large scale downgrade of European bonds left Treasuries as the only choice, and there was greater acceptance that 10y yields probably wouldn’t go back to 4% anytime soon. This move prompted significant pension de-risking in 2012 – evident in the two large risk transfer trades (GM and Verizon), widening long-end swap spreads, and significant increase in Treasury holdings of defined benefit pension plans (Chart 7).
As Bank of America summarizes, a capitulation at this point seems inevitable:
Today, all of the above is amplified. Treasuries make up nearly 50% of the positive-yielding DM sovereign bonds; curves are 100bp flatter; and there is a greater likelihood that 10y yields probably won’t go back to even 2.5%. We would expect a bigger capitulation by pension managers in the coming months/years.
How big of a market are we talking about here in case there indeed is a capitulation be? Well, in a word – massive. It’s a $3 trillion trade.
For the rates market, the significance of this acceptance phase by pensions cannot be understated, in our opinion. A $3 trillion industry running a $500 billion funding gap and a significant duration gap waking up to reality is likely to have major implications for the market. The nature of the de-risking is less important but could amplify the impact. In the simplest de-risking scenario, pension managers would stop underestimating the perceived lower bound for US rates and be more aggressive in using rate sell-offs to close duration gaps. In the extreme case, entire pensions could be offloaded from corporate balance sheets to insurance companies (increasingly like the UK, Exhibit 1)–generating significant demand for long-end duration during such transactions. One only needs to look at the long end of the UK rates market to see the significance of pension demand (Chart 9). Note that the UK regulation on inflation protection for pensions is more stringent, leaving the impact primarily on real yields. A similar move in the US is likely to be more evenly divided between reals and breakevens.
The final question: what will be the market impact of the capitulation:
Flatter curves, positive sign for swap spreads & long-end balance sheet trades. Ultimately, the de-risking of pensions whether via a full risk transfer or not would have significant implications for the rates market. Defined benefit pension holdings of USTs still stands at a rather low 6% of total assets (Chart 8)
- Rates: It would add to the long list of buyers (Japanese, European investors, index shorts) eager to add duration on any modest sell-off in US rates. This would limit any sell-off in rates to short-lived, positioning-led squeezes higher in yields, following which a flood of demand would take over. Active hedging by pensions also
is likely to keep receiver skew in longer tails rich. - Curve: Any sizable de-risking is likely to be a flattener. Even if corporations issue to shore up pensions, which then subsequently de-risk, the net impact would likely be a flattener, in our view. This is because issuance would be skewed toward the belly of the curve where demand dominates, while the de-risking flow happens in the long end of the curve. While this is a long-term theme, it should help our tactical flattening call on the curve.
- Spreads and strips: Long-end demand from pensions also would be the welcome sign of relief the long end of the spread and coupon-strip curve need. The lack of consistent real money demand combined with $150bn in 30y UST supply every year and lack of dealer appetite to police these relationships has in short been the primary driver of tightening of long-end spreads and cheapening of coupon strips. Some 46bp of extra yield in USTs over swaps and 25bp of extra yield in c-strips over p-strips should look extremely attractive to investors settling for below-2% yields.
What all of this means in simple, numeric terms for the two securities everyone is most familiar with, namely the 10Y and the 30%? It means look for the 10Y Treasury to drop under 1% while the 30Y plunges to 1.50% or lower, as the entire world slowly but surely turn Japanese, where incidentally, the world’s largest pension fund – the GPIF – just lost $43 billion in the past quarter as a result of the failure of Abenomics and its hail mary attempt to offset billions in underfunding using a monetary policy gimmick. Similar losses are coming to pension funds much closer to you next.
- Rates: It would add to the long list of buyers (Japanese, European investors, index shorts) eager to add duration on any modest sell-off in US rates. This would limit any sell-off in rates to short-lived, positioning-led squeezes higher in yields, following which a flood of demand would take over. Active hedging by pensions also
- When Government Controls All Wealth
Authored by Bonner & Partners' Bill Bonner (annotated by Acting-Man's Pater Tenebrarum),
Sliding Into Absurdity
Stock markets continued their rebound to almost erase all Brexit losses. London’s FTSE 100 Index is above Brexit levels but Europe’s equivalent of the Dow, the Euro Stoxx 50, remains lower.
No wonder the Dragon and his partners in crime flooded the EU banking system with “money” this past week…
Investors have realized Brexit isn’t the end of the world. First, because they think it won’t really happen. After all, elites can fix elections, buy politicians, and control public policy… surely, they can fix this!
A letter in the Financial Times reminds us that Swedish voters cast their ballots against nuclear power in 1980. The government just ignored them, doubling nuclear power generation over the next 36 years.
Second, because investors see the panic over Brexit leading to more spirited intervention by central banks! The EZ money floodgates – already wide open – are to be opened wider.
The U.S. has its QE program on hold, but Europe’s scheme is gushing like Niagara. Mario Draghi at the European Central Bank buys $90 billion a month in bonds. And he’s not only buying government bonds; he’s buying corporates, too.
Less Than Zero
In Japan, always a trendsetter, the Bank of Japan has bought so many bonds it has pushed Japanese government bond yields below zero – out to more than 45 years on the yield curve!
In other words, you can now lend to the bankrupt Japanese government until 2051 with no hope of making a single yen, nominally, on your investment. Now, with bonds stacking up in their vaults, the Japanese feds are diversifying. They’re buying exchange-traded funds (ETFs), too.
JGB weekly over the past 5 years….still a widow-maker! – click to enlarge.
Via its ETF purchases, the BoJ buys about $30 billion of Japanese stocks a year. This has made it a top 10 shareholder in about 90% of the companies listed on the country’s Nikkei 225 Index.
Apparently, the BoJ announced it would buy a particular kind of politically correct ETF, even before such an investment existed. This led to a rush to meet the demand (no matter how looney) to create exactly the ETF the Japanese feds were looking for.
So now, the phony money created by the BoJ buys phony ETFs created by the sushi equivalent of Wall Street – solely for the purpose of letting the Samurai feds put more phony money into the financial sector. The ETF then must buy politically fashionable companies, many of which probably wouldn’t exist were the fix not in so deeply.
Result? The Bank of Japan – not private investors – is the proud owner of stocks and bonds that private investors didn’t want, bought at prices they wouldn’t pay. The whole show is too goofy for words. But words are all we’ve got!
Meet Goofy.
Capitalism Without Capital
“It is just a matter of time,” says a friend writing from Switzerland, “before the feds own all our assets. They’re determined to keep prices high and they have unlimited resources.”
Yes, stocks, bonds, old copies of Mad Magazine… everything will be owned by the government. Then our liberty will be complete. We will have nothing… and nothing to lose.
We will have become what leading German post-war economist Wilhelm Röpke had anticipated: the “stable fed” animals that depend on their masters to keep them going.
Moooo!
At last, we will have the kind of capitalism another economist – Karl Marx – dreamed of: capitalism without private capital. The Deep State will control all our wealth.
We will go to college on federal loans… we will drive cars, leased of course, at federally subsidized low rates… we will live in houses mortgaged by federal mortgage lender Fannie Mae… with the mortgage rates pushed down by its fellow manipulator, Freddie Mac… we will work for companies that depend on the Fed’s EZ money financing…and, of course, our medical care will be in the hands of the feds… and our retirement finances too.
Cradle to grave – Chapter 1 to Chapter 11 – all on central bank credit.
Each dollar in the private sector is either earned or borrowed. The feds and their crony friends get their money for free. Gradually, they own more and more assets, while the rest of the people owe more and more debt.
Sacred Tether
But wait – let us look again at the maze of dots. How did this happen? Yesterday, we saw that price is not the same as value. If you want to increase prices, all you have to do is spread around some cash. Drop money from helicopters, especially in bad neighborhoods, and prices will soar. But value?
Here is where it gets interesting. Because when you drop money from helicopters, values tend to drop, too. What shoemaker will still take pride in a making a good pair of walking boots, when his money floats down from Heaven with no effort at all?
Manna from heaven… we’ll all be rich! As Keynesian economists will confirm, capital is a self-replicating blob, that only waits for us to “spend”!
What company will still sweat and strain to produce the best possible products, when its revenues no longer come from demanding customers? What analyst sharpens his pencil to find the best companies to invest in, when there is no longer any connection between money and quality performance.
In rich neighborhoods or in poor ones, giving away money causes trouble. Quality declines, as fewer and fewer people are willing to put in the time and trouble to produce it. And why should they? The ancient and sacred tether, connecting quality to wealth, effort to reward, has been severed.
Want to know why the average American man earns less today than he did 40 years ago? Want to know how the rich got so filthy rich? Want to know why, as the Financial Times put it yesterday, Hillary is afraid of a “populist contagion”?
Something went wrong along the way… but what?
The feds got out the knife in 1971. They changed the money system itself. They severed the link between gold and the dollar – and between value and price. It was so subtle almost no one objected… and so clever almost no one saw what it really meant.
It took us more than 40 years to figure it out. And even now, the dots reveal a pattern, but it is indistinct… hard to see… and easy to misinterpret. Most people see only the symptoms, the boils. the fever, the night sweats – and the daytime delusions:
The masses voting for Brexit or Donald. Interest rates falling to 5,000-year lows. The gap between rich and poor opening wider and wider. What is the cause?
Stay tuned…
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