Ramblings

[arminius]

Democrats set to control FDIC after Trump-appointed chair steps down

Setting up the next big deregulatory steal, aren't they.

 

[BarnacleBob]

Setting up the next big deregulatory steal, aren't they.

 

[BarnacleBob]

 

[BarnacleBob]

The $94 Trillion World Economy in One Chart... Russia looks like a real threat! NOT....

Visualizing the $94 Trillion World Economy in One Chart

Which countries and regions contribute the most to the world economy? In this infographic, we break down all $94 trillion of global GDP by country.

www.visualcapitalist.com

 

[Casey Jones]

Setting up the next big deregulatory steal, aren't they.

The next steal, anyway.

How's that regulation thingy working with ACA/HusseinKair, with its inserted "mandates" for "CDC Protocols" and demands they be followed? How's all that regulation working, stopping the Pfizer killers from testing their sick poison goo on a completely hypnotized public?

As a rule, our solutions generally lie in less government, not more. Yes, Big Pharma will still have sick ideas. In an open exchange of ideas, they can be called to account.

 

[Scorpio]

record number amerikans quit their jobs in Nov

4.5M

by communist news business center

 

[BarnacleBob]

record number amerikans quit their jobs in Nov

4.5M

by communist news business center

Did they quit do to vax death, injury or retirement? Hmmm... If the jab is in fact killing in great numbers, it will be interesting to see how MSM spins it.

 

[Scorpio]

nope,

they quit because they were tired of putting up with 'the man'

they are all trading chitcoin now,
gonna be rich I tell ya

RICH!

I ain't a workin' no mo'
I ain't a workin' no mo'

That is fo sho'

I ain't a workin' no mo'

....................

 

[Scorpio]

I is gonna be so rich I am going to be gettin' those 24 pac thingies,

No more of dos' 12 packs for me I tell ya,

No uhhh uhhh

Gonna be livin' the good life

 

[D-FENZ]

nope,

they quit because they were tired of putting up with 'the man'

they are all trading chitcoin now,
gonna be rich I tell ya

RICH!

I ain't a workin' no mo'
I ain't a workin' no mo'

That is fo sho'

I ain't a workin' no mo'

....................

Almost precisely the same sentiment in the 1630s before it all fell apart. Speculators quit their day jobs en masse. The Viceroy bulb was the big dog, but the craze eventually spread to all flavors of tulips, even hyacinths. Sure, flowers are still a thing and the Dutch are still out front, but the price has come down dramatically to say the least.

History doesn't repeat itself, but it often rhymes ~ Mark Twain

 

[hammerhead]

I is gonna be so rich I am going to be gettin' those 24 pac thingies,

No more of dos' 12 packs for me I tell ya,

No uhhh uhhh

Gonna be livin' the good life

Spark one up.

 

[Scorpio]

for your viewing pleasure,
chart of who owns what ie assets of the upper crust vs the lower

 

[solarion]

As many suspected, the richest few have been feasting off those in the financial middle for some while. A process that has clearly accelerated since the "great recession" and has increased significantly since the plandemic. The upwardly mobile in the middle class tend to be small businesses owners...and they're being crushed by lockdowns and regulatory burdens...to the benefit of the super rich.

 

[Scorpio]

so the fed head is on speaking in a confirm hearing,

and of course these poli morons are questioning the trading in the markets by their members
yet no one questions any of these senators about their market activities

he stated any trouble ahead his first 'tool' is to lower rates, even though he does not have much room with rates already historically low,
he said the 2nd go to would be 'asset repurchase'

 

[BarnacleBob]

so the fed head is on speaking in a confirm hearing,

and of course these poli morons are questioning the trading in the markets by their members
yet no one questions any of these senators about their market activities

he stated any trouble ahead his first 'tool' is to lower rates, even though he does not have much room with rates already historically low,
he said the 2nd go to would be 'asset repurchase'

I have arrived to the conclusion that with .gov of every stripe owning 70+ percent of the markets, the Fed Reserve, ESF, PPT, CFTC, SEC, FBI, DOJ, etc. et al are all agencies devoted to protecting .govs financial assets & positions... secondly the Fed et al are preventing obsolete zombie corporations from devaluing to their true economic positions & financial valuations... by this means there are no haircuts or losses in .gov portfolio values... these agencies are designed to prevent any move back towards equalibrium or any delevering... of course many of these agencies are tasked with preventing the hedge funds & other independent financial operators from gaining advantage over .gov investments... they call it unfair advantage when in reality, it is .gov operators who utilize unfair advantage thru insider trading, etc...

 

[Casey Jones]

he stated any trouble ahead his first 'tool' is to lower rates, even though he does not have much room with rates already historically low,

We're already in de-facto negative rates.

When the rate is 1 percent and price rises ("inflation," a misuse of the term) are at 16 percent (real figures, not the government doctored stats) we have a true negative rate of 15 percent a year.

I guess that's not enough for Powell...who figures himself a big, important **CENTRAL BANKER** but in fact is just a puppet of the puppet, pResident Pantload.

 

[BarnacleBob]

We're already in de-facto negative rates.

When the rate is 1 percent and price rises ("inflation," a misuse of the term) are at 16 percent (real figures, not the government doctored stats) we have a true negative rate of 15 percent a year.

I guess that's not enough for Powell...who figures himself a big, important **CENTRAL BANKER** but in fact is just a puppet of the puppet, pResident Pantload.

Powells job and the function of the FOMC is to serve & protect .gov assets by all means necessary... the ESF & PPT are specialized agencies that perform the same functions in the various markets, the ESF defends currency & credit while the PPT manipulates the stock indices.

They could care less about the private markets except when it benefits .gov investments... the entire 401k and pension scheme contributions etc. operate to provide .gov financial assets with inflated notional values... the billions in private weekly inflows boosts stock & bond values per supply & demand fundamentals....

 

[BarnacleBob]

 

[Scorpio]

Wharton Professor of Finance,

Stocks are real assets, get out of paper ie bonds

Inflation is a comin'

Think of that though, stocks are real assets, and bonds are paper

 

[Casey Jones]

Stocks are claims of ownership.

Subject to the courts and the Rule of Law.

And shareholders' interest can be overridden with major shareholders' or consortium's votes.

As Sears Holdings' former shareholders can attest to.

Another example: Burlington Northern Santa Fe Railroad Company was purchased by Berkshire Hathaway, a decade ago. BH started buying in, slowly, in the open market; than arranged arbitrage with varous investment banks, and then IIRC made a tender offer. Subject to withdrawl at any time, which, once they got 51 percent, they did withdraw.

With a voting majority, they voted a merger into Berkshire Hathaway, and the remaining shareholders were to be paid in BH stock.

Fair? BNSF was a very profitable railroad and paying significant dividends. Berkshire Hathaway is owned by Buffet and Munger in the majority, and pays NO dividends. Those two run it like a hobby, and reinvest profits.

All the BNSF shareholders who missed the tender offer, now have non-performing stock. And essentially no say-so about the company's operations.

 

[BarnacleBob]

Wharton Professor of Finance,

Stocks are real assets, get out of paper ie bonds

Inflation is a comin'

Think of that though, stocks are real assets, and bonds are paper

What a moron! Another dellusional useless Marxist intellectual that thinks he understands the financial & economic systems.... No wonder students cannot repay their student loans, their degrees & teachings are worthless in the real world....

 

[BarnacleBob]

Stocks are claims of ownership.

Subject to the courts and the Rule of Law.

And shareholders' interest can be overridden with major shareholders' or consortium's votes.

As Sears Holdings' former shareholders can attest to.

Another example: Burlington Northern Santa Fe Railroad Company was purchased by Berkshire Hathaway, a decade ago. BH started buying in, slowly, in the open market; than arranged arbitrage with varous investment banks, and then IIRC made a tender offer. Subject to withdrawl at any time, which, once they got 51 percent, they did withdraw.

With a voting majority, they voted a merger into Berkshire Hathaway, and the remaining shareholders were to be paid in BH stock.

Fair? BNSF was a very profitable railroad and paying significant dividends. Berkshire Hathaway is owned by Buffet and Munger in the majority, and pays NO dividends. Those two run it like a hobby, and reinvest profits.

All the BNSF shareholders who missed the tender offer, now have non-performing stock. And essentially no say-so about the company's operations.

No, a common stock is a CLAIM upon a SHARE of any profits the corp derives, a BOND is a CLAIM upon the tangible assets of the bond issuer... if the corp goes bust, the shares are worthless, while a bondholder posesses a lien on the collateral for his investment, i.e. all the assets the corp owns.

Big difference between stocks & bonds!

 

[Casey Jones]

No, a common stock is a CLAIM upon a SHARE of any profits the corp derives, a BOND is a CLAIM upon the tangible assets of the bond issuer... if the corp goes bust, the shares are worthless, while a bondholder posesses a lien on the collateral for his investment, i.e. all the assets the corp owns.

Big difference between stocks & bonds!

A lot depends on the corporation's charter, identifying shareholder rights by stock class; as well as incorporation laws where the corporation filed.

But...no. Shareholders own the company. They can and do vote to merge; to sell to competitors or other tender offers; to hire and fire directors. Dividends are declared by the directors, but their seats are at the pleasure of shareholders.

Now, a lot depends on the articles of incorporation. In Ford, Class B stock is ONLY issued to direct descendants of Henry or William Ford; and Class B shareholders can vote to override any general vote by Class A shareholders. That wouldn't fly in any state today; but Ford remains grandfathered. If/when (I'd say WHEN) they go bankrupt, that's all in the can, if they're reorganized as an independent company.

But, in a conventional setting, the shareholders are the owners. Why do they lose in a bankruptcy? Because the corporation is insolvent. So creditors take it away, intact or in pieces, depending on the plan promulgated by the Receiver and approved by Probate Court. Just as you get nothing if you file for bankruptcy and the bank takes your house, shareholders get nothing once the property and patents and successful parts of the business are sold to others.

 

[BarnacleBob]

Canada drops vaccine mandate for its truckers after pressure from industry

Canada drops vaccine mandate for its truckers after pressure from industry

HEALTH-CORONAVIRUS/CANADA-TRUCKERS (UPDATE 2, PIX):UPDATE 2-Canada drops vaccine mandate for its truckers after pressure from industry

news.trust.org

 

[Casey Jones]

That's how you know it's all about public health (NOT!)

When the government knuckles under and gives carve-outs for well-lobbied or strategically-important groups, factions, occupations.

 

[JayDubya]

The Fiscal & Monetary Cliffs Have Arrived

https://www.silverbearcafe.com/private/01.22/cliffs.html

According to Doug Ramsey of the Leuthold Group, 334 companies trading on the New York Stock Exchange recently hit a 52-week low, more than double the amount that marked new one-year highs. That’s happened only three other times in history — all of them occurring in December 1999.

How did we get back to the precipice of the year 2000, where tech stocks plunged 80% and the S&P 500 lost 50% of its value over the ensuing two years? Well, start off with the fact that the amount of new money created by our central bank in the past 14 years is $8 trillion. That, by the way, is an increase in base money supply only and does not include all of the new money created by our debt-based monetary system. So, from 1913 to 2008, the Fed created $800 billion. And, it took from 2008 until today—just 14 years–for it to have created $8.8 trillion in base money supply. Is there really any wonder why inflation has now become a salient issue, especially for the middle and lower classes, and why the stock market is now set up for a meltdown similar to the NASDAQ collapse of two decades ago?

Some might claim that the bubble in the stock market was much different in 2000 than it is today. They are correct. The overvaluation 22 years ago pales in comparison to today. With its record high P/S ratio of 3.5, as opposed to just 1.8 back in 2000. And the mind-numbing record high 210% TMC/GDP ratio, which is an incredible 68 percentage points ahead of where it ascended to 22 years ago.

Ok, so the stock market is much more expensive today than at any other time in history, but what will the catalyst be to set it tumbling off the cliff? Last week I talked about the monetary cliff coming in the next two months. To review: The Fed will wind down its record-breaking $120 billion per month counterfeiting scheme to zero dollars in that timeframe. This Q.E. involved the process of handing newly created money to banks, consumers, and businesses to boost consumption. But by ending this flow of new money, the Fed will also end its tacit support for the municipal bond market, primary dealers, money market mutual funds, REPO market, International SWAP lines, ETF market, primary and secondary corporate debt markets, commercial paper market, and support for student, auto and credit card loans. All of which were directly supported by Jerome Powell’s with the Fed’s latest Q.E. program.

But it doesn’t end there. Mr. Powell cannot be content with just ending Q.E., not with CPI running at 6.8%! Therefore, very soon after Q.E. is terminated, interest rates are heading higher, and the balance sheet of the Fed must start shrinking. However, an occasional 25-bps rate hike here or there won’t cut it. He has to hike rates by 680-bps just to get to a zero percent real Fed Funds Rate. Now, of course, Powell doesn’t intend to hike monetary policy that much because he is fully aware it would collapse the whole artificial market construct well before he gets anywhere close to that level. But the point here is that the FOMC has lost the luxury of being able to delay and dither as it has in the past because inflation is running at a 40-year high. Hence, the Fed will need to hike rates rather aggressively until inflation, the economy, or asset prices come crashing down. But since all three are so closely linked together, they will likely all cascade simultaneously.

And, now this week, I want to shed some new light on the concurrent fiscal cliff and shoot a hole through Wall Street’s excess savings B.S.As most of you are already aware, I’ve been pretty clear about the negative consumption effects that will result from the ending of $6 trillion in government handouts over the previous two years. This massive and unprecedented largess caused the savings rate in the U.S. to jump from 7.8% in January 2020 to 33.8% by April of the same year. However, that savings rate has now collapsed back down to 6.9%—below its pre-pandemic level. But what about the stash of savings consumers are sitting on that is supposed to carry GDP ever-higher this year?

Well, it appears that the rainy day fund is dwindling quickly. According to the N.Y. Times and Moody’s Analytics, the excess savings among many working- and middle-class households could be exhausted as soon as early 2022. This would not only reduce their financial cushions but also potentially affect the economy since consumer spending has risen to become nearly 70% of GDP.

We have already seen multiple pandemic-era federal aid programs expire last September, including the massive federal supplement to unemployment benefits. Now, with the Expanded Child Income tax credit having expired, which gave up to $300 per child under 6, and up to $250 per child ages 7 to 17 over the period from July to December, the fiscal challenges have become salient for many Americans.

But what about that pile of savings? Estimates are that it now amounts to around $2.0 trillion (8.5% of GDP). It’s mostly in the hands of the very rich, who are savers and have a much lower marginal propensity to consume than those in the middle and lower classes. According to a study from Oxford Economics, 80% of that savings is in the hands of the top 20% of earners, and 42% went to the top 1%. Again, this is important because it is the middle and lower classes that are responsible for the majority of consumption. So, how is this economically-crucial cohort doing? Well, in addition to getting hurt by inflation and falling real wages, they are running out of their stimulus hoard quickly. According to a recent study done by JP Morgan Chase, households making $68,896 per year or less only have an extra $517 in their checking accounts on average compared with their pre-pandemic level. As unimpressive as that sounds, add in the fact that people don’t eat into their savings with the same zeal that they spend a fresh government handout, and you can see that so-called “mountain of savings” Wall Street loves to tout isn’t much more than a molehill.

When you factor in the massive fiscal and monetary cliffs together with the most overvalued stock market in history, you have the recipe for potential unprecedented stock market chaos, which should be front-end loaded in ‘22. If your retirement savings is with a deep state of Wall Street firm, you hold some mix of stocks and bonds that is set on autopilot. Their fate should be the same as the Hindenburg and Titanic.

 

[JayDubya]

Janet Yellen's Poison Pill Tax Gambit May Soon Explode Into a Huge Trade War

https://www.silverbearcafe.com/private/01.22/poisonpill.html

Janet Yellen worked out a tax deal with the EU last April hoping to force Congress to approve Build Back Better. Guess what?

Poison Pill Set to Backfire

To understands what’s happening we need to go back to the beginning. In April of 2021 Treasury Secretary Janet Yellen worked out a tax deal with the EU.

Both the EU and the US want global minimum taxes and the deal Yellen worked out with the EU would heavily penalize US corporations if Congress did not pass Build Back Better.

Congress didn’t and here were are.

Biden’s Country-by-Country Tax Canard

Please consider the April 15, 2021 article Biden’s Country-by-Country Tax Canard.

Under the 2017 tax reform, American companies pay U.S. tax on global profits as those profits arise each year. This is done largely via the global intangible low-tax income, or Gilti, regime that imposes an effective tax rate of at least 13.125% on overseas profits arising especially from intellectual property held by offshore subsidiaries. The Biden plan would increase the Gilti tax rate to a statutory 21% (and an effective 26.25% after accounting for quirky tax mechanics).
But wait, there’s more. The Biden plan also would overhaul how companies calculate Gilti liability. Currently companies aggregate overseas earnings, losses and foreign tax credits in various markets into a single global calculation. The Biden plan would go country-by-country, meaning that for each jurisdiction in which a company does business it would have to compute its Gilti taxable profit, work out any local tax credits, and then figure the tax due.
Country-by-country reporting would introduce vast new complexity into the tax code. Even with modern computing power, running Gilti calculations in individual jurisdictions would be complex and expensive. Enforcement would be difficult because the volume of documentation would drown tax bureaucrats.
Country-by-country reporting also threatens to make overseas investment uneconomical. A flaw in the 2017 version of Gilti—which the Biden plan leaves in place—is that it doesn’t allow companies to carry losses forward or back.
Under Gilti, if an American company starts a new subsidiary in high-tax Italy that makes losses its first few years, that company still will owe tax in the subsidiary’s first profitable year. The partial solution in 2017 was to allow companies to calculate Gilti on a global basis, so profits in some places would offset losses in others.
The Biden plan’s country-by-country reporting removes that mitigation. It would tax profits that don’t exist in an economic sense, because Gilti would sometimes apply on “profits” that only recoup earlier losses. And companies would have to pay astronomical sums to their accountants for the pleasure.

Yellen’s Global Tax Railroad

Next please consider the WSJ October 21, 2021 article Yellen’s Global Tax Railroad.

Amid media fretting about Democratic disarray in Congress, don’t underestimate the party’s determination to ram something into law. Consider the Biden Administration’s plan to force tax increases through a skeptical Congress by exploiting global tax negotiations.
Treasury Secretary Janet Yellen this summer sidestepped a long bipartisan consensus to sign up the U.S. for a radical overhaul of corporate tax rules. Negotiated at the Organization for Economic Cooperation and Development, the agreement would revamp how tax jurisdiction is set for the world’s largest companies (mainly American tech firms), and also introduce a 15% minimum global tax rate.
Ms. Yellen thinks she’s found a way to railroad Congress. A sticking point in the OECD talks had been whether other countries would treat America’s Gilti as equivalent to the global minimum tax even though the fine print is different. Without this equivalent treatment, U.S. companies could be subject to double taxation.
The latest OECD deal offers to treat Gilti as equivalent, but it specifies in the same paragraph that the OECD’s minimum tax is designed to be applied “on a jurisdictional basis.” Translation: The global minimum tax will be calculated country-by-country, and Congress had better fall into line if it wants America’s Gilti tax to count.
The goal appears to be to put Congress in a bind. If the global OECD pact goes ahead and Congress doesn’t adopt the Administration’s country-by-country rule, it will subject American companies to ruinously high taxation abroad.
By agreeing to this language at the OECD, Ms. Yellen is helping other governments hold Congress hostage until Ms. Yellen extracts the Gilti changes she wants lawmakers to pass.

Yellen’s Global-Tax Zombie Lives

Today the WSJ reports Yellen’s Global-Tax Zombie Lives

The Biden Administration’s Build Back Better spending extravaganza may be on life support, but some of its tax-raising gimmicks may survive.
Last year she [Yellen] broke a long bipartisan consensus to endorse new global tax rules under negotiation at the Organization for Economic Cooperation and Development, including a 15% global minimum tax on large companies.
This was supposed to be a threat from Ms. Yellen to Congress: Implement Democrats’ Gilti changes, or else. Congress has balked at changing Gilti, but now Ms. Yellen’s “or else” is arriving courtesy of the European Union.
EU bureaucrats last month released their draft directive instructing the 27 EU countries on how to implement the OECD minimum tax in domestic laws. The draft specifies that to count as equivalent to the minimum tax, a foreign government’s (read: America’s) global tax regime must be calculated on a country-by-country basis. And if Europe doesn’t treat Gilti as equivalent to its own minimum tax, U.S. companies could get taxed twice, paying both Gilti and the European minimum levy.

Fair Taxation Proposal

Last month, the EU bureaucrats did what what Yellen asked. Here is their Fair Taxation Proposal

The directive we are putting forward will ensure that the new 15% minimum effective tax rate for large companies will be applied in a way that is fully compatible with EU law. We will follow up with a second directive next summer to implement the other pillar of the agreement, on the reallocation of taxing rights, once the related multilateral convention has been signed. The European Commission worked hard to facilitate this deal and I am proud that today we are at the vanguard of its global rollout.”
The proposed rules will apply to any large group, both domestic and international, including the financial sector, with combined financial revenues of more than €750 million a year, and with either a parent company or a subsidiary situated in an EU Member State.

Inquiring minds may also wish to look at the Fair Taxation Tax Sheet or the Fair Taxation Q&A.

Oops, the EU Went Along, Now What?

Yellen pressured the EU to adopt a poison pill to Yellen's liking and the EU went along.

Now what?

Now the US hopes the "progress" bogs down in EU bureaucracy. The EU's flawed structure is such that trade deals can go years or decades without approval.

But in this instance a global minimum tax is just what the EU wants.

And look at that €750 million a year base target.

It was set to specifically include large US corporations, especially US technology companies while avoiding taxes on small EU startups.

Trade wars loom if this goes through as Yellen foolishly requested.

 

[JayDubya]

Coming Market Madness Could Take 70 Years To Recover From

https://www.silverbearcafe.com/private/01.22/madness.html

Cervantes famous classic novel Don Quixote can in simple terms be described as a fight for liberty and freedom against oppression and against the state. This book is from 1605 and considered to be one of the best books ever written.

In the midst of market madness, risk doesn’t exist because lunatics neither see, nor worry about risk. And still, 2022 will be more about risk and survival than anything else. So I will obviously talk more about “The Triumph of Survival” which I discussed in a recent piece.

“When life itself seems lunatic, who knows where madness lies.” – Don Quixote

The year 2022 will most likely be the culmination of risk. An epic risk moment in history that very few investors will see until it is too late as they expect to be saved yet another time by the Fed and other central banks.

And why should anyone believe that 2022 will be different from any year since 2009 when this bull market started? Few investors are superstitious and therefore won’t see that 13 spectacular years in stocks and other asset markets might signify an end to the epic super bubble.

The Great Financial Crisis (GFC) in 2006-9 was never repaired. Central bankers and governments patched Humpty up with glue and tape in the form of printed trillions of dollars, euro, yen etc. But poor Humpty Dumpty was fatally injured and the intensive care he received would only give him a temporary reprieve.

When the GFC started in 2006, global debt was $120 trillion. Today we are at $300t, rising to potentially $3 quadrillion when the debt and derivative bubble finally first explodes and then implodes as I explained in my previous article.

It is amazing what fake money made of just air can achieve. Even better of course is that the central banks have manipulated interest rates to ZERO or below which means the debt is issued at zero or even negative cost.

INVESTORS HAVE FOUND SHANGRI-LA​

Investors now believe they are in Shangri-La where markets can only go up and they can live in eternal bliss. Few understand that the increase in global debt since 2006 of $180t is what has fuelled investment markets.

Just look at these increases in the stock indices since 2008:

Nasdaq up 16X

S&P up 7x

Dow up 6X

And there are of course even more spectacular gains in stocks like:

Tesla up 352X or Apple up 62X.

These type of gains have very little to do with skilful investment, but mainly with a herd that has more money than sense fuelled by paper money printed at zero cost.

To call the end of a secular bull market is a mug’s game. And there is nothing that stops this bubble from growing bigger. But we must remember that the bigger it grows, the greater the risk is of it totally wiping out gains not just since 2009 but also since the early 1980s when the current bull market started.

The problem is also that it will be impossible for the majority of investors to get out. Initially they will believe that it is just another correction like in 2020, 2007, 2000, 1987 etc. So greed will stop them from getting out.

But then as the fall continues and fear sets in, investors will set a limit higher up where they intend to get out. And when the market never gets there, the scared investor will continue to set limits that are never reached until the market reaches the bottom at 80-95% from the top.

And thus paper fortunes will be wiped out. We must also remember that it can take a painstakingly long time before the market recovers to the high in real terms.

As Ray Dalio shows in the chart below, the 1929 high in the Dow was not even recovered in real terms by the mid 1960s. Finally it was surpassed in 2000.

This means that it took 70 years to recover in real terms! So investors might have to wait until 2090 to recover the current highs after the coming fall.

So looking at the chart, the market is now at a similar overvalued level it was in 1929, 1972 and 2000.

Thus the risk is as great as at some historical tops in the last 100 years.

THE EPIC BUBBLE MIGHT NOT RECOVER UNTIL 2090

The chart below shows that the 1929 top in the Dow was not reached in real terms until 2000.

How many investors are prepared to take the risk of a say 90% fall like in 1929-32 and not recover in real terms until by 2090!

Again, I repeat that this is not a forecast. But it is an epic warning that risk in investment markets are now at a level that investors should avoid.

I fear that sadly very few investors will heed this risk warning.

DON QUIXOTE WOULD HAVE FOUGHT WOKENESS

As the world is being ever more oppressed and controlled by the state, Cervantes’ message in Don Quixote could not be more appropriate.

I am quite convinced that Don Quixote would also have fought against the wokeness that today has become the guideline not only for human behaviour but also for justice.

In the UK last week, a court acquitted four people accused of pulling down a statue of a historical figure who had been a major benefactor of the city of Bristol. Yes, he had made money on the slave trade in the late 1600s but where do we stop rewriting history?

With today’s woke interpretation of history, virtually every historical king, emperor, government leader, general or businessman, to mention a few, should be put on trial even if they are all dead.

For example, Great Britain, France, Spain were all part of invading North America killing a major part of the Indian population and taking their land. So if we rewrite history, shouldn’t all these Europeans as well as the Africans be pulled out of North America and the land handed bank to the Indians.

The same goes for South America of course. The Spanish and the Portuguese must all return and give the land back.

And where do we stop? We should really go back to the Han Dynasty, the Roman, the Mongol, the Ottoman, Spanish, Russian or British Empires.

Why just deal with the slave trade in Africa when all these empires ransacked and conquered major land areas, took slaves and stole the riches of the countries they invaded. In a woke and fair world, all these actions must be reversed too.

If the world decides to rewrite history, it must be done properly with major restitutions. There must of course be a UN Commission, and EU Commission and many more to deal with this properly.

As Don Quixote said: “Who knows where madness lies”.

EASY MONEY MADNESS

But it is most probably the total market Madness in the financial world which will have the biggest effect on the world economy in 2022 and onwards.

As I have pointed out many times, the US has not had a budget surplus since 1930 with the exception of a couple of years in the 1940s and 50s. The Clinton surpluses were fake as debt still increased.

But the money and market Madness started in the 1970s after Nixon couldn’t make ends meet and closed the gold window. The US federal debt in 1971 was $400 billion. Since then the US debt has grown by an average of 9% per year. This means that the US debt has doubled every 8 years since 1971. We can actually go back 90 years to 1931 and find that US debt since then has doubled every 8.3 years.

What a remarkable record of total mismanagement of the US economy for a century!

The US has not had to build an empire in the conventional way by conquering other countries. Instead the combination of a reserve currency, money printing and a strong military power has given the US global power and a global financial empire.

Even worse, since the sinister smart coup by private bankers in 1913 to take control of the creation of money, the US Federal debt has gone from $1 billion to almost $30 trillion.

As Mayer Amschel Rothschild poignantly stated in 1838:

“Permit me to issue and control the money of a nation and I care not who makes its laws”.

And that is exactly what some powerful bankers and a senator decided on Jekyll Island in 1910 when they conspired to take over the US money system through the creation of the Fed which was founded in 1913.

Ever since that time the bankers have helped themselves from the self-filling honeypot.

Controlling the Fed has given the bankers an unlimited supply of money and credit to finance their activities. They have used this to acquire assets around the world as well as power. As is the general rule today, debt is never repaid since new debt always makes the old debt insignificant as the currency is constantly debased with all the new money issued.

The debt issued was not only used for the direct financial gain of the bankers. No debt buys enormous power and by creating money to finance profligate governments, the bankers are also buying power and controlling the politicians.

What a wonderful position as Rothschild made clear almost 200 years ago.

I COME IN A WORLD OF IRON TO MAKE A WORLD OF GOLD – Don Quixote

This was the ambitious goal of Don Quixote.

But he didn’t succeed and today’s bankers have a totally different goal which is to make a world of fiat money. And they have been spectacularly successful at it.

But the investors who wish to survive the coming global economic debacle must heed Don Quixote’s words and turn their paper assets into physical gold.

Stocks, bonds and property in coming years will lose at least 90% in real terms against gold.

Gold in US dollars started a bull market in 2001 as the chart below shows. Since then, gold is up every year (sideways 2018) until 2021 when we saw a small correction. Gold’s up cycles normally last at least 10 years. This means that the current leg of the bull market in gold should last at least until 2026 and potentially extend beyond that.

As I regularly point out, gold is extremely cheap in relation to the growth in US money supply.

Gold is today as cheap as it was in 1970 at $35 and as cheap as in 2000 at $290.

Thus the upside potential for gold is multiples of the current price, especially since the currency debasement will accelerate due to accelerated money printing.

Gold is the king of wealth preservation and should be held in physical form outside the banking system.

Silver is likely to go up 2-3 times as fast as gold and is therefore a fantastic speculative investment as long as it is held in physical form. The risk of holding paper silver is massive since there is virtually no physical silver available. But due to the volatility of silver, investors should hold a much smaller percentage of their financial assets in silver than in gold.

In summary, 2022 could be the year when investors’ wealth turns into ashes, or for the prudent investor, turns into solid gains in gold and silver.


Egon von Greyerz
Founder and Managing Partner
Matterhorn Asset Management
Zurich, Switzerland

 

[JayDubya]

And one more.....

Inflation is Just Getting Started – Got Gold? Silver?

https://www.silverbearcafe.com/private/01.22/started.html

A portion of the commentary below is from the latest issue of the Mining Stock Journal. Recent trading action in gold, silver and the mining stocks lead me to believe that a major move in the precious metals sector may have started. You can learn more about my newsletter by following this link: Mining Stock Journal information

The nature of inflation is widely misunderstood and misinterpreted. “Inflation” and “currency devaluation” are tautological – they are two phrases that mean the same thing. When the money supply increases at rate that is greater than the wealth output of an economic system, it reduces the value of each marginal dollar created (for the pedants, I’m not going to delve into the difference between bank reserve creation and money supply – the two are inextricably linked). Dollar devaluation has been occurring since the early 1970’s. The value of the dollar relative to gold (real money) has declined 98%. In 1971 $40,000 would buy a 4,000 square foot home in a good suburb. Now it takes $700,000 on average to buy that same home.

Price inflation is the evidence of currency devaluation. The CPI is not a real measure of price inflation. The CPI is methodically massaged – starting with the Arthur Burns Federal Reserve (it was his idea) – to hide the real degree of currency devaluation from all of the money that has been printed since 1971. The CPI report is little more than a tool for political propaganda. In addition, the Fed has made the public’s ability to measure the money supply considerably more difficult over the past 15 years. In 2006 the Bernanke Fed stopped reporting M3, the most accurate measure of the money supply. You can’t see M3 past March 2006. Why? Early in 2021, the Fed changed definitions of M1 and M2. Why? The Fed has done this to disguise the true amount of money supply that has been created over time.

The M2 money supply has increased at annualized rate of 20.2% Since February 2020. The M2 measurement is now 90% of GDP vs 44.4% at the beginning of 2000. Going into 2022, gold is considerably mispriced relative to the amount of currency that has been printed. And silver, at a gold/silver ratio of 79, is extraordinarily mispriced vs gold. Now that the Fed seems intent on tightening its monetary policy per the FOMC meeting minutes released last week, what happens to the price of gold when the Fed begins a rate hike cycle? I’ve mentioned this is the past, but Adam Hamilton, who publishes his Zeal Intelligence newsletter, did a statistical study which concluded that some of gold’s best rate of return periods going back to 1971 have occurred when the Fed goes into a rate hike cycle. The chart I prepared shows this:

Contrary to the mainstream narrative – seeded in ignorance, I might add – that gold moves inversely with interest rates, in the modern fiat monetary system gold rises when the Fed hikes the Fed funds rate. I’m sure you can find Hamilton’s piece using Google to get numerical specifics.

The rationale behind this is that, in every instance, when the Fed finally acknowledges that price inflation is a problem that needs to addressed with tighter monetary policy, flight to safety money moves into gold because the market has determined that the Fed is way behind the inflation curve and the start of a rate hike cycle is the signal to the market that inflation is going to get worse. Furthermore, the Fed will not act quickly enough to get ahead of the problem.

Since the 1990’s, the Fed tends to start an interest rate hike cycle at a time when the economy is already rolling over. Gold’s price rise along with the Fed funds rate is the expectation that the Fed will have to cut its rate hike cycle well short of plan in an effort to re-stimulate the economy. You can see that in the chart above in which each rate hike cycle since the mid-1980’s gets shorter then is abandoned and reversed at a lower Fed funds rate.

To the extent that there’s weakness in the precious metals sector connected to the Fed’s shifting policy stance and the resultant blood bath in the stock market, I expect the weakness to be short-lived and the dynamic reflected in the chart above will kick-in. I also think that a severe economic recession will force the Fed to abandon its tightening stance by mid-2022 and resume its money printing and near-ZIRP monetary policies. This will serve as rocket fuel for the precious metals sector.

 

[solarion]

Last year's data, but interesting imo as it's counter to fed money supply charts and was seemingly flashing recession warnings several months ago. Now of course Powell is claiming a recession may be necessary to get control on "inflation"(which is really price inflation). All while the fed is still continuing to stimulate with asset purchases and hasn't budged on rates within their control.

Money Supply Growth Dropped in May to a 15-Month Low | Ryan McMaken

Money supply growth slowed again in May, falling for the third month in a row, and to a 15-month low. That is, money supply growth in the US has come down from its unprecedented levels, and if the current trend continues will be returning to more "normal" levels.

mises.org

Of course if you subtract the CPlie from GDP "growth" there's been a recession underway for awhile, but that's too much common sense for the fed goons.

 

[Uglytruth]

Of course if you subtract the CPlie from GDP "growth" there's been a recession underway for awhile, but that's too much common sense for the fed goons.

They are "experts!

 

[BarnacleBob]

 

[madhu]

Wall street is probably not getting any more free money from the gov. No more or decreased rate of monetizing the debt. Bit coin deflating, oil is going up every day. GM stock has been going down every day, no institutional bid?
nasdaq below 200 day moving average. Some days there are huge moves in individual stocks, but not much change on Dow/ nasdaq
Guess no one cares. It’s all about perception.

 

[gringott]

The end game approaches.

 

[BackwardsEngineeer]

Yesterdays current mortgage rates... for anyone keeping track of the next housing debacle this should have your spider senses tingling... and just why would jumbo loans be so much cheaper than conforming... ? Discount points rising as are other bank fees..

Conforming​

Loan Type​	MI Type​	Interest Rate​	Discount Points​	APR​
Conforming 30-year Fixed		3.625%	0.375	3.682%
Conforming 15-year Fixed		2.875%	0.375	2.976%
Conforming 7-year/6-month ARM		3.125%	0.250	2.967%
Conforming 10-year/6-month ARM		3.250%	0.250	3.099%

Jumbo​

Loan Type​	MI Type​	Interest Rate​	Discount Points​	APR​
Jumbo 30-year Fixed		3.125%	0.375	3.184%
Jumbo 15-year Fixed		3.000%	0.250	3.089%
Jumbo 7-year/6-month ARM		2.625%	0.375	2.750%
Jumbo 10-year/6-month ARM		2.750%	0.500	2.817%

 

[gringott]

mooooooooooooooo0000000000000000000ooooooooooooOOOOOOOOOOOOOOOO!

 

[BarnacleBob]

 

[Scorpio]

too funny,

right on cue, with a fed meeting up discussing pace of int rate increases,

the markets tank overall as they await the results of the fed tomorrow and weds,

only real problem with it is metals and crypts both getting caught up in the fun, and moving hard down again as they to ride the wave

 

[BarnacleBob]

 

[Scorpio]

pretty comical stuff

fed head is on the tele flat telling everyone that inflation is a problem, what it is way above trend, that they will be raising rates soon, and so on

and yet, metals are getting hammered with the commentary

what a joke

one of the primary motivations to buy and hold these metals was for these exact circumstances,

excessive printing,
inflation above norm,
fiscal uncertainty
geopolitical risks,

checking every box, and yet metals nose dive

even more laughable are the miners,