Sunday, June 12, 2016

Gold World News Flash

Gold World News Flash


Economists DESTROY the Myth that War Is Good for the Economy

Posted: 11 Jun 2016 10:26 PM PDT

Debunking the Stubborn Myth that War Is Good for the Economy

About.com notes:

One of the more enduring myths in Western society is that wars are somehow good for the economy.

It is vital for policy-makers, economists and the public to have access to a definitive analysis to determine once and for all whether war is good or bad for the economy.

That analysis is below.

Top Economists Say War Is Bad for the Economy

Nobel prize winning economist Paul Krugman notes:

If you’re a modern, wealthy nation, however, war — even easy, victorious war — doesn’t pay. And this has been true for a long time. In his famous 1910 book “The Great Illusion,” the British journalist Norman Angell argued that “military power is socially and economically futile.” As he pointed out, in an interdependent world (which already existed in the age of steamships, railroads, and the telegraph), war would necessarily inflict severe economic harm even on the victor. Furthermore, it’s very hard to extract golden eggs from sophisticated economies without killing the goose in the process.

 

We might add that modern war is very, very expensive. For example, by any estimate the eventual costs (including things like veterans’ care) of the Iraq war will end up being well over $1 trillion, that is, many times Iraq’s entire G.D.P.

 

So the thesis of “The Great Illusion” was right: Modern nations can’t enrich themselves by waging war.

Nobel-prize winning economist Joseph Stiglitz agrees that war is bad for the economy:

Stiglitz wrote in 2003:

War is widely thought to be linked to economic good times. The second world war is often said to have brought the world out of depression, and war has since enhanced its reputation as a spur to economic growth. Some even suggest that capitalism needs wars, that without them, recession would always lurk on the horizon. Today, we know that this is nonsense. The 1990s boom showed that peace is economically far better than war. The Gulf war of 1991 demonstrated that wars can actually be bad for an economy.

Stiglitz has also said that this decade’s Iraq war has been very bad for the economy. Seethis, this and this.

Former Federal Reserve chairman Alan Greenspan also said in that war is bad for the economy. In 1991, Greenspan said that a prolonged conflict in the Middle East would hurt the economy. And he made this point again in 1999:

Societies need to buy as much military insurance as they need, but to spend more than that is to squander money that could go toward improving the productivity of the economy as a whole: with more efficient transportation systems, a better educated citizenry, and so on. This is the point that retiring Rep. Barney Frank (D-Mass.) learned back in 1999 in a House Banking Committee hearing with then-Federal Reserve Chairman Alan Greenspan. Frank asked what factors were producing our then-strong economic performance. On Greenspan’s list: “The freeing up of resources previously employed to produce military products that was brought about by the end of the Cold War.” Are you saying, Frank asked, “that dollar for dollar, military products are there as insurance … and to the extent you could put those dollars into other areas, maybe education and job trainings, maybe into transportation … that is going to have a good economic effect?” Greenspan agreed.

Economist Dean Baker notes:

It is often believed that wars and military spending increases are good for the economy. In fact, most economic models show that military spending diverts resources from productive uses, such as consumption and investment, and ultimately slows economic growth and reduces employment.

Professor Emeritus of International Relations at the American University Joshua Goldstein notes:

Recurring war has drained wealth, disrupted markets, and depressed economic growth.

 

***

 

War generally impedes economic development and undermines prosperity.

And David R. Henderson – associate professor of economics at the Naval Postgraduate School in Monterey, California and previously a senior economist with

Keiser Report: Gold Price Manipulation

Posted: 11 Jun 2016 08:30 PM PDT

from RT:

In this episode of the Keiser Report, Max and Stacy reject the idea that anyone should earn a basic guaranteed income for merely sitting on their assets. In the second half, Max and Stacy interview two precious metals analysts – Craig Hemke of TFMetalsReport.com and Andrew Maguire of AndrewMaguireGoldTrading.com. The two give their forecasts for the gold market and discuss the latest in several admitted cases of gold price manipulation.

Economic Collapse Will Serve One Purpose: "Global Governance And The Enslavement Of Mankind"

Posted: 11 Jun 2016 07:10 PM PDT

Submitted by Jeremiah Johnson (nom de plume of a retired Green Beret of the United States Army Special Forces (Airborne)) via SHTFPlan.com,

The ever-tightening noose around the neck of man shows no sign of slippage: all actions by all of the governments are anent control and dominion.  The path to global governance is plainly marked, visible through all of the turmoil.  It is that turmoil, those “incidents” that are created and fostered by the governments that enable them to further constrict the noose.  The economy plummets in Cyprus and Greece?  Time to limit the cash withdrawals.  The European banks are having a “hard time” in places such as France or Spain?  Time to pillage people’s savings and their IRA’s.

Manufactured crises are the norm, not the exception, and all of them are designed to facilitate one purpose: global governance and the enslavement of mankind.

The Bilderbergers are meeting in Germany this week.  Paul Joseph Watson of Alex Jones’ Prison Planet reported on some of the key issues they will be discussing, as such:

“…the creation of a virtual passport that web users will need to obtain before they can use many Internet services is high on the agenda.  The Internet ID will be justified under the guise of “cybersecurity” and creating a convenient method for citizens to access government services, but free speech advocates will view the proposal with deep suspicion as it would threaten online anonymity and possibly chill dissent. Services such as Facebook, YouTube and Twitter could also use the online passport to revoke posting permission if a user violates terms of agreement, another obvious threat to the free flow of information that has made the web what it is today.  Bilderberg globalists are also set to re-invigorate momentum behind another long term goal – a global tax system presided over by the UN.”

 

Bilderberg Leak: Secretive Group to Discuss Internet ID, Global Tax, By Paul Joseph Watson

These things are not new, in that they have been proposed before.  Just as with anything that is repeated long enough, however, the reiteration has dulled the senses of most.  The bad thing is that it is being acted upon.  A report by Tarun Wadwha last week described the inculcation of facial recognition software and the use of over 250 million cameras worldwide with the capability of utilizing this software.

250 million cameras.  That would equal a camera for every 30 people.

The article went on to detail how in Russia an application called FindFace has come out, the invention of two young entrepreneurs.  This application enables you to track down and identify virtually anyone; the app is building a database as we speak, and it is a matter of time before it expands outside of Russia to Europe and eventually the United States.  The article went on to detail some of the following measures used in the U.S. and Europe in the manner of the movie “Minority Report” with Tom Cruise as such:

“Microsoft Corp. has patented technology that can allow a billboard to determine who you are and show you personalized advertisements. British authorities are using facial recognition at music festivals to spot troublemakers, while brick-and-mortar stores worldwide are racing to adopt the technology to track loyal customers. Even some high schools and churches have started to use facial recognition to take attendance.”                          

source: Opinion: Facial recognition will soon end your anonymity

We see it being inserted into our society and the societies in the world: the surveillance state.  We see the deliberate and intentional collapses of the economies worldwide, the shifting of assets into the hands of those who control the strings either via legislation and “authority” (governments) or monetarily and economically (corporations and banks/bankers).  The daily decline in freedom of speech and the freedom to challenge the establishment…on anything, no matter how minute or obscure…is the rule, not the exception.

In order for the global governance to occur, each “sphere of influence” such as parallel’s Orwell’s “1984” and the super-states must control its respective sphere absolutely.  Because of the homogeneity of ethnicity that accompanies each area, overlap is not possible from a perspective of control.  But if the spheres of influence are “aligned” at least in purpose and levels of totalitarian control, then an effective balance can be maintained.  Then (to paraphrase Alinsky) it can be a matter of “organizing the organized” with “controllers” who oversee the governments/regimes of all of the spheres without any of the people (the enslaved) ever knowing.

We are heading into a very dark time…a time where technology will be used to enslave, not enlighten or uplift mankind.  The new dark ages are almost upon us.  It will require nothing less than a world war or a complete global economic collapse (orchestrated, in both cases) to destroy the last vestiges of self-governance and law that exist for us.  The time to put a stop to it is now, before the power base of the elite becomes so strong that individuals cannot withstand it.  The time to rebel against it is now, while we still have the chance before that boot tramples the face of humanity…forever.

Fabian Calvo: The Market Has The Same Look As Before The 2008 Collapse

Posted: 11 Jun 2016 07:00 PM PDT

This Won't End Well - US Asset Managers Target Australia's $1.5 Trillion Pension Funds

Posted: 11 Jun 2016 06:40 PM PDT

Hedge funds attracted a net $44 billion in assets globally last year, the smallest amount since 2012. As these increasingly desperate funds try to change that in 2016, one enormous target has been identified in Australia.

Australia has approximately USD$1.5 trillion in retirement savings, one of the largest and fastest growing pools of pension money in the world according to the WSJ. Several US asset managers are already actively working to get a foot in the door, even though management fees charged in Australia are among the world's lowest according to local lobby group Financial Services Council.

"Everyone wants to get their hands on that pie. People think there's a lot of money to be made in Australia" said Jesse Huang, director for strategic relations Boston based hedge fund PanAgora Asset Management

Other than the potential to grow AUM, the fact that Australian funds doubled their holdings of alternative assets between 2009 and 2015 has funds salivating to set up shop.

Australian funds doubled their holdings of alternative assets—ranging from venture capital and private equity to hedge-fund investments—to an average of 8% of their portfolios between 2009 and 2015, according to Morningstar. Inflows have been especially strong over the past two years. Including infrastructure and property, Australian funds now hold about 20% of their assets outside of traditional investments such as stocks, bonds and cash.

Additionally, a recent survey by State Street showed two-thirds of Australian pension funds plan to boost their exposure to hedge funds over the next three years.

Overseas funds are putting talent on the ground because Australia is "not an easy market to enter. It's complex and highly concentrated, buyers are sophisticated and competition is fierce. Players who only come here to push product are bound to fail" said Anthony James, a partner at PwC in Sydney.

Potential clients can be tough to convince said Damian Crowley, head of distribution with Pengana Capital, a boutique Sydney fund management firm, adding that some investors "think hedge funds caused the global financial crisis." Alas, if investors have that mindset now, wait until hedge funds tie up pension funds in a bunch of high risk, highly illiquid positions just as the market sells off.

MLC, one of the largest pension funds in Australia has increased its alternative exposure by nearly 40% over the past three years, most notably to PE and energy futures, but CIO Jonathan Armitage says the A$62 billion fund is "picky."

"Our starting point is deep, deep skepticism. We make sure we only buy what we understand." Armitage said

That fact that it's a tough market to enter is not deterring some firms from moving forward however. Oaktree Capital Management, who invests in commercial mortgages and distressed debt opened up a branch in Australia in March, TIAA Global Asset Management opened a Sydney office last year, and Chicago based Northern Trust also set up a Sydney office, along with a sales team in Melbourne to offer full asset-management services to pension funds.

The shift in asset allocation undoubtedly comes from the fact that safer investment strategies are no longer an option for managers trying to generate returns, thanks to central banks going absolutely insane and driving over $10 trillion of sovereign debt into negative yields (soon to be done with corporate debt as well as Mario accelerates the global collapse to light speed with the ECBs new program).

Recall that now fixed income is yielding so little, that to earn a return of 7.5% investors would have to construct a portfolio that has nearly 3x the risk than it did in 1995. This is causing pension funds to risk even more to find yield, and thus the increased allocation to alternative assets.

Hedge funds aren't just targeting the big fish of course, retail investors are also on the radar for those looking to get into Australia.

While foreign hedge funds are eager to target big institutional investors, they are also pitching hard to retail investors—in particular the growing number of Australians, nicknamed “selfies,” who manage their own pension savings. Such investors control about a third of Australia’s retirement assets.

 

PanAgora, which makes money through complex trading strategies from high-speed algorithmic trading to leveraged short selling, offers one of its funds to mom-and-pop investors here in conjunction with Pengana Capital, a boutique Sydney fund-management firm. Among the more unusual data PanAgora mines to form its trading strategy: thousands of lost-baggage claims for potential signs of poor airline management.

* * *

Ah yes, hedge funds who introduce complex trading strategies to mom and pop investors and massive pension funds - what could possibly go wrong there?

Bitcoin Spikes Above $600 - 2 Year Highs - On Sudden Massive Chinese Buying

Posted: 11 Jun 2016 06:17 PM PDT

Once again, on a Saturday night (US time), Sunday morning (China) a sudden burst of buying pressure in Bitcoin, driven by Chinese buyers, has spiked the virtual currency higher on dramatic volume. With Bitcoin now trading at its highest level since May 2014 (in Yuan), and up 250% since we first suggested this an outlet for desperate-to-leave capital outflows in September, we note that the 'arbitrage' of over 150 Yuan points to massively more demand from Chinese buyers for now.

Another weekend buying-splosion in Bitcoin by The Chinese...

 

It appears, just as we initailly warned here, that more than a few of the few hundred million Chinese have decided that the time has come to use bitcoin as the capital controls bypassing currency of choice, and decided to invest even a tiny fraction of the $22 trillion in Chinese deposits... 

 

... in bitcoin (whose total market cap at last check was just over $3 billion), sit back and watch as we witness the second coming of the bitcoin bubble, one which could make the previous all time highs in the digital currency, seems like a low print.

And once again tonight, that panic selling of Yuan for Bitcoin has sent it surging in the last few hours, now above $600...

 

This pushes Bitcoin to 2 year highs priced in USDollars...

 

And once again it appears the dominant buyer is in China (OKCoin exchange - which reportedly has 90% of global Bitcoin traffic). This is the highest 'China' Bitcoin price since May 2014

 

Notably with Bitcoin trading 4187CNY and 615USD (with USDCNY at 6.5624), China Bitcoin is trading around 150 Yuan rich to Dollar Bitcoin (once again suggesting strong demand from Chinese buyers).

Both Gold and Bitcoin have been rising since we first warned of the surge in Chinese capital outflows but the virtual currency has dramatically outperformed...

 

Charts: BitcoinWisdom

An Everyman's Guide To Understanding Cryptocurrencies

Posted: 11 Jun 2016 06:10 PM PDT

Submitted by Charles Hugh-Smith via PeakProsperity.com,

When an asset rises by almost 30% in a few weeks, it tends to attract attention.  Recently, that asset was bitcoin (BTC). The price of BTC in dollars rose from $454 on May 23 to $590 on June 6th.

When an asset doubles in a matter of a few months, it tends to attract attention.  The cryptocurrency Ether (part of the Ethereum platform) doubled from around $7 in April to roughly $14 in early June.

Are these cryptocurrencies mere fads? Or are they potentially game-changing alternatives to the conventional currencies such as the U.S. dollar, Chinese RMB, Japanese yen or European Union euro?

There’s no lack of skeptics and critics of bitcoin and other cryptocurrencies. For example, “National currencies aren’t as Centralized, and Bitcoin isn’t as Decentralized, as you think.” (Source)

There are plenty of defenders of cryptocurrencies as well, for example this response to the article above. 

The controversy is understandable; bitcoin has had a difficult adolescence. After soaring from $15 in early 2013 to over $1,000 in December 2013, the cryptocurrency crashed to $215 in early 2015 in the wake of the bankruptcy of a major exchange (Mt. Gox) that cost bitcoin investors $470 million in losses.

Yet despite concerns about security, criminal use and volatility, cryptocurrencies have proliferated at a dizzying pace, and new models such as the “smart contracts” of Ethereum have been developed.

So what are those of us who can’t follow the technical arguments supposed to make of all this? For that audience, here's my stab at making sense of the potential global role of cryptocurrencies.

Cryptocurrencies Are Digital Currencies That Are Not Issued by Governments

What’s a cryptocurrency? Wikipedia’s definition is “a medium of exchange using cryptography to secure the transactions and to control the creation of new units.” Cryptocurrencies exist only in the digital realm; there are no physical coins or paper notes.

Cryptocurrencies have no intrinsic value. They share this characteristic with fiat currencies issued by governments/central banks:

“Fiat money is currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith. Fiat is the Latin word for “it shall be.” (Source)

Though major central banks own gold, the currency they issue is not “backed by gold,” i.e. it cannot be converted into gold upon demand.

The value of fiat currency is a function of supply and demand. There are many sources of demand for currency: governments demand taxes be paid in their fiat currency, for example, and this creates demand for the currency.

There is however only two sources of supply: the central banks of nation-states (or regional unions like the Eurozone) and private banks in fractional reserve money systems that enable banks to create new money via issuing new loans.

In a fractional reserve banking system, if a bank has $10 in cash deposits (i.e. in reserve), it can issue a new loan of $100. This loan is new money that was created out of thin air. When the loan is paid in full, this new money disappears from the system.

When central banks or states issue new currency in excess of what the economy is actually producing, the supply overwhelms demand and the currency’s value (i.e. purchasing power) falls accordingly. Venezuela offers a present-day example: the official exchange rate of the Venezuelan bolivar is 10 to the U.S. dollar (USD), but the “street”/black market value is closer to 1,000 to 1 USD. (My correspondents in Venezuela report that it is illegal to post the black-market exchange rate on a website.)

Governments typically restrict alternative currencies to protect their monopoly on money issuance: residents must use the government-sanctified currency or face prosecution and prison.

The U.S. government has declared bitcoin is a commodity (i.e. property) rather than a currency. Other nations have banned bitcoin (presumably out of recognition that it is an alternative currency outside their control.)

Why does bitcoin have any value at all? There are two basic reasons:

  1. The supply is limited.  The design of bitcoin limits the total number of bitcoins to 21 million. (If you really want to know why this is so, you’ll need to understand the blockchain and bitcoin mining, topics that are beyond the scope of this article.) At present, there are over 15.5 million bitcoins in circulation, roughly three-quarters of the eventual issuance of 21 million.
  2. There is demand for bitcoin precisely because it is outside the control of governments/central banks and cannot be devalued at will by governments/central banks.

Why Fiat Currencies Are Being Devalued

Why are most governments/central banks trying to devalue/depreciate their fiat currencies? After all, devaluing the currency reduces the purchasing power of everyone who holds the currency, meaning that the currency buys fewer goods and services. This loss of purchasing power makes everyone who must use the currency poorer.

Why do governments/central banks pursue a policy that makes their citizens poorer?

There are two primary reasons why governments seek to devalue their currency:

  1. To make the nation’s exports cheaper, i.e. more competitive, in the belief that expanding exports will make the overall economy grow, despite the fact that devaluing the currency makes imports more expensive, hurting everyone who buys imports.
  2. To make it easier for debtors to service their loans. As our currency loses its value, we experience that loss of purchasing power as inflation: the prices of goods and services rises as the purchasing power of the currency declines. Governments/central banks presume that wages will rise along with the prices of goods and services. This rise in wages will make it easier for debtors to service their debts, i.e. make their monthly payments. In a system that depends on the expansion of debt to fuel consumption, making it easier to service existing debt is of critical importance: if debt becomes more difficult to service, debt expansion slows and so does consumption. As consumption slows, the economy slides into recession.

As their currency is devalued (by intention or by unintended consequences), the great problem for many people will be transferring their remaining financial wealth out of depreciating currencies into a more stable currency or into assets in a more stable nation.

The Role of Cryptocurrencies in Capital Preservation

This is where cryptocurrencies have a role that could increase as global currencies are devalued: if you can shift financial wealth out of a currency that is losing purchasing power into a cryptocurrency that is holding its own or even gaining in purchasing power, it would be irrational not to do so.

What advantage do cryptocurrencies have over other stores of value such as gold, silver or cash? All of these traditional stores of value have advantages—portability and universal recognition that they are money—but they cannot be transported across the globe quite as easily as digital currencies.

Though it is a topic of hot debate, many observers believe it is technically difficult to the point of impossibility to stop people from buying, selling and sending cryptocurrencies because currencies such as bitcoin live in a network that is scattered around the globe—a network that can be accessed by anyone with a web browser.

While local exchanges could be shut down by governments, and businesses could be prohibited from accepting cryptocurrencies, stopping people from logging onto servers sited elsewhere is a bigger challenge. (Many governments have outlawed cryptocurrencies, though their success rate in stopping their citizenry from owning/using cryptocurrencies is unknown.)

The rise in daily transactions in bitcoin suggests an expanding base of users globally.

In Part 2: Will Cryptocurrencies Soar As The Global Economy Falters? we explore the potential demand for cryptocurrencies as a means of transferring and preserving capital, and the potential impact of these capital flows on valuations of cryptocurrencies.

As governments actively devalue their currencies (thereby making everyone using the currency poorer), their citizenry with financial capital are forced to seek ways to move their at-risk wealth into other currencies or assets. And as the stability and valuations of cryptocurrencies increase, the potential for a self-reinforcing feedback loop increases: as the value of cryptocurrency rises, it attracts more capital, which pushes prices higher, and so on.

Are we in the infancy of a global stampede into cryptocurrencies?

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

 

Henry Kissinger Does The Bilderberg Walk Of Shame

Posted: 11 Jun 2016 05:30 PM PDT

Going to dinner in Castle Dresden Henry Kissinger is greeted with cries of murderer as he shambles his hefty bloated carcass across the courtyard of the Taschenbergpalais Hotel The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free...

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How Fascism Comes To America

Posted: 11 Jun 2016 05:10 PM PDT

Submitted by Doug Casey via InternationalMan.com,

I think there are really only two good reasons for having a significant amount of money: To maintain a high standard of living and to ensure your personal freedom. There are other, lesser reasons, of course, including: to prove you can do it, to compensate for failings in other things, to impress others, to leave a legacy, to help perpetuate your genes, or maybe because you just can't think of something better to do with your time.

But I'll put aside those lesser motives, which I tend to view as psychological foibles. Basically, money gives you the freedom to do what you'd like – and when, how, and with whom you prefer to do it. Money allows you to have things and do things and can even assist you to be something you want to be. Unfortunately, money is a chimera in today's world and will wind up savaging billions in the years to come.

As you know, I believe we're well into what I call The Greater Depression. A lot of people believe we're in a recovery now; I think, from a long-term point of view, that is total nonsense. We're just in the eye of the hurricane and will soon be moving into the other side of the storm. But it will be far more severe than what we saw in 2008 and 2009 and will last quite a while – perhaps for many years, depending on how stupidly the government acts.

Real Reasons for Optimism

There are reasons for optimism, of course, and at least two of them make sense.

The first is that every individual wants to improve his economic status. Many (but by no means all) of them will intuit that the surest way to do so is to produce more than they consume and save the difference. That creates capital, which can be invested in or loaned to productive enterprises. But what if outside forces make that impossible, or at least much harder than it should be?

 

The second reason for optimism is the development of technology – which is the ability to manipulate the material world to suit our desires. Scientists and engineers develop technology, and that also adds to the supply of capital. The more complex technology becomes, the more outside capital is required. But what if sufficient capital isn't generated by individuals and businesses to fund further technological advances?

There are no guarantees in life. Throughout the first several hundred thousand years of human existence, very little capital was accumulated – perhaps a few skins or arrowheads passed on to the next generation. And there was very little improvement in technology – it was many millennia between the taming of fire and, say, the invention of the bow. Things very gradually accelerated and improved, in a start-stop-start kind of way – the classical world, followed by the Dark Ages, followed by the medieval world. Finally, as we entered the industrial world 200 years ago, it looked like we were on an accelerating path to the stars. All of a sudden, life was no longer necessarily so solitary, poor, nasty, brutish, or short. I'm reasonably confident things will continue improving, possibly at an accelerating rate. But only if individuals create more capital than they consume and if enough of that capital is directed towards productive technology.

Real Reasons for Pessimism

Those are the two mainsprings of human progress: capital accumulation and technology. Unfortunately, however, that reality has become obscured by a morass of false and destructive theories, abetted by a world that's become so complex that it's too difficult for most people to sort out cause and effect. Furthermore, most people in the OECD world have become so accustomed to good times, since the end of WW2, that they think prosperity is automatic and a permanent feature of the cosmic firmament. So although I'm very optimistic, progress – certainly over the near term – isn't guaranteed.

These are the main reasons why the standard of living has been artificially high in the advanced world, but don't confuse them with the two reasons for long-term prosperity.

The first is debt. There's nothing wrong with debt in itself; lending is one way for the owner of capital to deploy it. But if a society is going to advance, debt should be largely for productive purposes, so that it's self-liquidating; and most of it would necessarily be short term.

 

But most of the scores of trillions of debt in the world today are for consumption, not production. And the debt is not only not self-liquidating, it's compounding. And most of it is long term, with no relation to any specific asset. A lender can reasonably predict the value of a short-term loan, but debt payable in 30 years is impossible to value realistically. All government debt, mortgage debt, consumer debt, and almost all student loan debt does nothing but allow borrowers to live off the capital others have accumulated. It turns the debtors into indentured servants for the indefinite future. The entire world has basically overlooked this, along with most other tenets of sound economics.

 

The second is inflation. Like debt, inflation induces people to live above their means, but its consequences are even worse, because they're indirect and delayed. If the central bank deposited $10,000 in everyone's bank account next Monday, everyone would think they were wealthier and start consuming more. This would start a business cycle. The business cycle is always the result of currency inflation, no matter how subtle or mild. And it always results in a depression. The longer an inflation goes on, the more ingrained the distortions and misallocations of capital become, and the worse the resulting depression. We've had a number of inflationary cycles since the end of the last depression in 1948. I believe we're now at the end of what might be called a super-cycle, resulting in a super-depression.

 

The third is the export of dollars. This is unique to the U.S. and is the reason the depression in the U.S. will in some ways be worse than most other places. Since the early '70s, the dollar has been used the way gold once was – it's the world's currency. The problem is that the U.S. has exported perhaps $10 trillion – but nobody knows – in exchange for good things from around the world. It was a great trade for a while. The foreigners get paper created at essentially zero cost, while Americans live high on the hog with the goodies those dollars buy.

 

But at some point quite soon, dollars won't be readily accepted, and smart foreigners will start dumping their dollars, passing the Old Maid card. Ultimately, most of the dollars will come back to the U.S., to be traded for titles to land and businesses. Americans will find that they traded their birthright for a storage unit full of TVs and assorted tchotchkes. But many foreigners will also be stuck with dollars and suffer a huge loss. It's actually a game with no winner.

What's Next

These last three factors have enabled essentially the whole world to live above its means for decades. The process has been actively facilitated by governments everywhere. People like living above their means, and governments prefer to see the masses sated.

The debt and inflation have also financed the growth of the welfare state, making a large percentage of the masses dependent, even while they've also resulted in an immense expansion in the size and power of the state over the last 60-odd years. The masses have come to think government is a magical entity that can do almost anything, including kiss the economy and make it better when the going gets tough. The type of people who are drawn to the government are eager to make the state a panacea. So they'll redouble their efforts in the fiscal and monetary areas I've described above, albeit with increasingly disastrous results.

They'll also become quite aggressive with regulations (on what you can do and say, and where your money can go) and taxes (much higher existing taxes and lots of new ones, like a national VAT and a wealth tax). And since nobody wants to take the blame for problems, they'll blame things on foreigners. Fortunately (the U.S. will think) they have a huge military and will employ it promiscuously. So the already bankrupt nations of NATO will dig the hole deeper with some serious – but distracting – new wars.

It's most unfortunate, but the U.S. and its allies will turn into authoritarian police states. Even more than they are today. Much more, actually. They'll all be perfectly fascist – private ownership of both consumer goods and the means of production topped by state control of both. Fascism operates free of underlying principles or philosophy; it's totally the whim of the people in control, and they'll prove ever more ruthless.

So where does that leave us, as far as accumulating more wealth than the average guy is concerned? I'd say it puts us in a rather troubling position. The general standard of living is going to collapse, as will your personal freedom. And if you're an upper-middle-class person (I suspect that includes most who are now reading this), you will be considered among the rich who are somehow (this is actually a complex subject worthy of discussion) responsible for the bad times and therefore liable to be eaten. The bottom line is that if you value your money and your freedom, you'll take action.

There's much, much more to be said on all this. I've said a lot on the topic over the past few years, at some length. But I thought it best to be brief here, for the purpose of emphasis. Essentially, act now, because the world's combined economic, financial, political, social, and military situation is as good as it will be for many years… and a lot better than it has any right to be.

What to Do?

No new advice here, at least as far as veteran readers are concerned. But my suspicion is that very few of you have acted, even if you understand why you should act. Peer pressure (I'm confident that you have few, if any, friends, relatives, or associates who think along these lines) and inertia are powerful forces.

That said, you should do the following:

  1. Maintain significant bank and brokerage accounts outside your home country. Consider setting up an offshore asset protection trust. These things aren't as easy to do as they used to be. But they'll likely be much less easy in the future.
  2. Make sure you have a significant portion of your wealth in precious metals and a significant part of that offshore.
  3. Buy some nice foreign real estate, ideally in a place where you wouldn't mind spending some time.
  4. Work on getting official residency in another country, as well as a second citizenship/passport. There's every advantage to doing so, and no disadvantages. That's true of all these things.

One more thing: Don't worry too much. All countries seem to go through nasty phases. Within the lifetime of most people today, we've seen it in big countries such as Russia, Germany, and China. And in scores of smaller ones – the list is too long to recount here. The good news is that things almost always get better, eventually.

Peter Schiff: Biggest Economic Shitstorm In 80 Years Is Coming!

Posted: 11 Jun 2016 05:00 PM PDT

Expert economist Peter Schiff thinks the coming collapse will be far worse than the Great Depression and you need to be prepared. Peter Schiff is a well-known commentator appearing regularly on CNBC, TechTicker and FoxNews. He is often referred to as "Doctor Doom" because of his...

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Want To Make Money Trading FX? Just Wake Up At 3AM

Posted: 11 Jun 2016 04:38 PM PDT

Countless currency traders wake up every morning with just one question: how to trade FX and make lots of money (ideally without blowing up spectacularly thanks to the 50x leverage).

As it turns out, the question may not be "how" but "when." According to research by Deutsche Bank FX, many investors do not give much thought to the timing of currency trades within the day. But they should, because intraday timing matters greatly on FX patterns. As it turns out, currencies tend to depreciate during daylight trading sessions in their own time zones. Specifically, EUR/USD (and other European currencies) falls in the London session and rises in the NY session while AUD/JPY and NZD/JPY decline in the Tokyo session and rally through the rest of the day

As to why wake up at 3am Eastern, or when the London session begins? Because that's when a clearly documented pattern of strength in the USD versus European crosses emerges, followed by a traditional subsequent reversal during the NY session, one which is worth between 2-3bp in each direction, if timed correctly. Do this a few hundred times per year with some leverage, and there's your 2 and 20 model right there.

 

So why should FX traders - especially those who wish to capitalize on EUR volatility - set their alarm for 3am? According to DB's Daniel Brehon, while university students are often night owls, as people get older and assume more responsibilities, they tend to like sleeping at night when they can. So it is not surprising that return volatility is higher for currencies during their daylight trading hours – European crosses during the London session (defined in this paper as 3-11AM EST), USD crosses in the New York session (11AM to 5PM EST) and JPY crosses in the Tokyo session (5PM to 3AM EST) as seen in Figures 1 and 2.

Deutsche then uses 30-minute currency fixings to calculate average returns throughout the day back to 2007 for G10 crosses and 2009 for most EM crosses (RUB back to 2015 and CNH since Sept 2015).

Figure 3 illustrates the average mid-market return for investors who buy USD at 12AM EST against EUR, CHF and GBP, with the 2007-16 time trend removed and carry not included. Figure 4 illustrates the same returns for EUR/GBP, EUR/NOK and EUR/SEK.

The spike in USD versus European crosses during the London session, and subsequent reversal during the NY session, is worth between 2-3bp in each direction, if timed correctly. This margin potentially exceeds spread costs in many cases for these liquid pairs. EUR-crosses follow a less clearly defined pattern, sinking slightly in the London session and rising in the NY session, most likely staying within spread costs.

But while EURUSD was the volatile FX pair of chioice when Europe was blowing up every other month in the 2011-2013 period, now it is all about the USDJPY. Here, by contrast, the dollar-yen pair tends to rise throughout the NY and London trading sessions, meaning that EUR/JPY is really what investors should own in the NY afternoon in the majors. The swing higher in EUR/JPY from 11-5PM EST, and back down from 5PM to 11AM EST, is worth 3bp in each direction on a cross that often trades 1bp wide (Figure 5). The swing on AUD/JPY and NZD/JPY is even more pronounced, falling 4bp and 5bp respectively from 5-11PM EST and rising the rest of the day (Figure 6).

DB offers several explanations this phenomenon. First, yen hedging demand may be driving those crosses lower into the Tokyo Fix. Second, investors may be bidding up these crosses into 5PM EST to capture carry, and then selling off these crosses after carry has been credited to their accounts. The latter reason may be worth 1bp but is unlikely to be dictating price action throughout the day.

Moreover, the dollar tends to perform against all major Asian currencies during the Tokyo session. Figure 7 shows a spike in USD/Asia after 5PM EST following the usual NY session dollar weakness. This pattern has been particularly strong for USD/CNH since the turmoil in August 2015, although clearly the short time frame makes this conclusion provisional at best. The euro performs well against CE3 early in the morning (e.g. CET open) then falls back, although the swing is only 2-3bp, inside spread costs (Figure 8).

But what is most likely happening is that with algos now representing such a dominant portion of FX trading, it means recurring, "self-learning" patterns are all that matters, and as more algos adapt to these recurring trends, the more pronounced they become. As such the spike in the USDJPY around the Japan open has become almost a joke among the FX trading community and yet it persists. Likewise for some of the other observations in this report.

Which doesn't mean one can't profit from frontrunning the frontrunners, aka the math PhD-modeled algorithms. Just do what they do day after day, but do it first.

Then again, as Gartman will be the first to admit, "trades work until they don't." And all that may take for these self-fulfilling patterns to fail is for them to be shown in the open, and for everyone to rush in, trying to trade ahead.

Will these chart be sufficient to end the easy pattern game in FX trading? Perhaps, at which point it will be simply time to do the opposite... until that fails too, and we are back at square one.

Are You Ready? Proof We are in the End Times! (2016)

Posted: 11 Jun 2016 04:30 PM PDT

Must Watch Entire Video! CRAZY Satanic ritual at opening tunnel ceremony. More floods and sink holes. Man claims to be a Christian while coming out as being gay! Dixie Chicks portray Trump as goat! The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists...

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PERPARE NOW! June 6 2016 Bo Polny Interview

Posted: 11 Jun 2016 03:30 PM PDT

Cycle Analyst and precious metals expert Bo Polny visits PTW this week to discuss how The Prophet Daniel's timeline points to an imminent financial crash. Bo outlines how he uses the days set forth in the warnings of Daniel to accurately forecast the tops of the gold and silver market to the day...

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Why Samsung Is Not Buying Silver - REDUX

Posted: 11 Jun 2016 03:00 PM PDT

Jeffrey Lewis

Peter Schiff -- It's Gonna Be Awful!

Posted: 11 Jun 2016 01:19 PM PDT

Big Banks Big Warning : Peter Schiff on CNBC 6/8/2016 Peter Schiff is a well-known commentator appearing regularly on CNBC, TechTicker and FoxNews. He is often referred to as "Doctor Doom" because of his bearish outlook on the economy and the U.S. Dollar in particular. Peter was one of the...

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ECONOMIC COLLAPSE DRILL? 1 WEEK into JUNE & AMERICANS HAVEN’T RECEIVED their FOOD STAMPS

Posted: 11 Jun 2016 12:00 PM PDT

ECONOMIC COLLAPSE DRILL? OVER a WEEK INTO JUNE & MANY AMERICANS STILL HAVEN'T RECEIVED THEIR FOOD STAMPS. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers , Whistelblowers , truthers...

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Annunaki - Dont Watch this Film

Posted: 11 Jun 2016 11:30 AM PDT

colloidal gold......fulminate of gold....... .... flower of life ✻☥(a fractal matrix,building by dividing by ⑦,is more than ➓ thousand years old..including the kiss of venus) is hidden more things that we can imagine from sound levitation to laser fusion reactors (using deuterium and tritium...

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Michael Tellinger New Hidden Anunnaki Origins 2016

Posted: 11 Jun 2016 11:00 AM PDT

Uncover the clues that expose humanity's true origins as Michael Tellinger reveals Anunnaki secrets hidden within ancient stone circles and artifacts. Tellinger says From the moment the Annunaki set foot upon our planet, the race was on to procure mass amounts of gold and hold as much power over...

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Jeff Nielson: Single Digit Silver, Confiscation, Golden Black Market - Rory Hall

Posted: 11 Jun 2016 11:00 AM PDT

Sprott Money

The Battle of The #Brexit: EU Referendum

Posted: 11 Jun 2016 09:12 AM PDT

Afshin Rattansi goes underground on the EU. We are joined by former Deputy Chair of the Conservative party, Nigel Evans and former Labour party whip, Steve McCabe to debate whether we would be better off in or out. The Financial Armageddon Economic Collapse Blog tracks trends and...

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ECONOMIC COLLAPSE NEWS JUNE 2016

Posted: 11 Jun 2016 09:03 AM PDT

Our Babylon world empire will fail as prophesied, and then God's only son, Jesus Christ, will reign for 1000 years before the New Heaven and the New Earth replace our current Heaven and Earth. The Bilderbergers might be used by God to organize the beginning of the seven year Tribulation, but even...

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How Lavazza turned coffee into gold

Posted: 11 Jun 2016 08:46 AM PDT

This posting includes an audio/video/photo media file: Download Now

Debt Market Flatlining: Countdown To Meltdown. By Gregory Mannarino

Posted: 11 Jun 2016 08:07 AM PDT

So it looks like Obama got a free pass with zero interest rates his whole presidency. It will be blamed on the next one in office among the sheep. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists ,...

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Why Samsung Is Not Buying Silver - REDUX

Posted: 11 Jun 2016 05:55 AM PDT

Actually… that old headline above is not quite accurate. However, the implications have not changed - and could be playing out as I write this. (Silver, despite bearish COMEX positioning, has broken out of a key moving average and seems to be accelerating…) Samsung, the giant electronics conglomerate, formed an agreement with Avino Silver and Gold Mines Ltd. in July 2015.

Breaking News And Best Of The Web

Posted: 10 Jun 2016 06:20 PM PDT

Soros and Gross turn bearish. Stocks fall, gold continues to rise. Debt, as usual, continues to grow. Corporations start selling zero-percent bonds. Clinton wins California, clinches nomination. Major US/China trade war breaking out. Global bond yields still falling, China’s debt still rising. Doug Noland’s latest Credit Bubble Bulletin and David Stockman’s proposal to fix the […]

The post Breaking News And Best Of The Web appeared first on DollarCollapse.com.

Gold Daily and Silver Weekly Charts - FOMC Next Week - Policy Error of the First Order - YTD Returns

Posted: 10 Jun 2016 01:11 PM PDT

Rick Rule – Are The Gold & Silver Markets Going To Shock Investors This Summer?

Posted: 09 Jun 2016 06:22 PM PDT

 Rick Rule

With gold and silver surging along with the U.S. dollar, today one of the wealthiest and most street-smart pros in the business spoke with King World News about the question at hand:

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