Monday, August 29, 2016

Yellen: Fed Should Explore Purchasing ‘Broader Range of Assets’

Lost amidst the normal gobbledigook double speak by Fed Chair Janet Yellen at the Jackson Hole Summit last week, was a short passage which largely went unnoticed by the financial pundits more interested in short-term interest rate fluctuations (to hike or not to hike).  Here is the passage (boldface emphasis is mine):

On the monetary policy side, future policymakers might choose to consider some additional tools that have been employed by other central banks, though adding them to our toolkit would require a very careful weighing of costs and benefits and, in some cases, could require legislation. For example, future policymakers may wish to explore the possibility of purchasing a broader range of assets. Beyond that, some observers have suggested raising the FOMC’s 2 percent inflation objective or implementing policy through alternative monetary policy frameworks, such as price-level or nominal GDP targeting. I should stress, however, that the FOMC is not actively considering these additional tools and policy frameworks, although they are important subjects for research.
This key message was obscurely packed into a bunch of esoteric back filling, but more importantly hints that helicopter money is coming.  It is the last resort for desperate central banks trying to re-inflate the economy in a deflationary environment which every Keynesian economist fears.  "Broader range of assets" indicates buying not just US Treasury bonds (quantitative easing), but also equities, corporate bonds, real estate, and eventually leads to giving away free tax deductions to the masses.  Money and credit figuratively rain down at every level:  household, corporate, government.  Hence, the term "helicopter money" is coined due to the massive liquidity injected into the economy.

The problem, of course, is liquidity is not wealth.  Stimulus of this sort is nothing more than legalized counterfeiting, and no wealth is created...but that's for another discussion.

Helicopter money also ensures hyperinflation. The ol' "be careful what you wish for (targeted inflation rate)--you may get it (unintended hyperinflation)" rings true.

Shock Interview: New Black Panther Leader DESTROYS Democrat Politicians: “We’re Being Pimped Like Prostitutes And They’re The Big Pimps Pimping Us Politically”

Tuesday, August 23, 2016

Socialism: The World's Greatest Generator of Poverty

How The Fed's Facebook PR Campaign Went Terribly Wrong

Something "Unexpected" Happened When Seattle Raised The Minimum Wage

Wow, what a surprise .  The University of Washington concluded that raising minimum wages in Seattle "lowered employment rates of low-wage workers".
...the Federal Reserve Bank of San Francisco that finds that "higher minimum wage results in some job loss for the least-skilled workers—with possibly larger adverse effects than earlier research suggested."
Gee, the academics and intelligentsia are finally coming to the same conclusions the rest of us peons came to years ago.

FBI Reports Linking Hillary To Vince Foster "Suicide" Disappear From National Archives

Follow The Money Trail For Source Of "Russian Threat" Paranoia

US National Debt Clock

More people are becoming aware of the huge US debt bomb.  But what they aren't aware of is the US Treasury has issued so many USDollars that the prices for gold and silver should be astronomically higher, based on the money supply.

If not for the artificial suppression of precious metals prices by the monetary authorities and bullion banks acting on behalf of central banks, gold and silver should be $8,108/oz. and $896/oz., respectively.

Thursday, August 18, 2016

ALERT: Early Signs The Public Is Becoming More Involved In The Gold Market

I'm stoked that mainstream retail investment firm Charles Schwab issued a fairly comprehensive letter on gold investments.  However, it's understandable they offer information that is equities-centric, as they sell mostly stocks and bonds to retail investors.  In my opinion, they don't delve deep enough into the hidden dangers of un-allocated ETF's.  They don't even address the potential of markets freezing up, or issue a warning about counterparty risk.  Probably because Schwab is part of the global financial system and would be adversely impacted by a meltdown just like any other financial institution.

For instance, what happens to client accounts when investment firms collapse.  Would direct registration of share certificates be the only reliable means of owning shares of a publicly-traded company?

Also, the article barely mentions the possession of physical gold bullion as the safest vehicle of ownership.  Again, this omission is not surprising.

How the Global Elites Screws Peons (While Media Fools Cheer)

Sunday, August 14, 2016

We Are Now Only Months Away From The Worst Global Crisis In History

Chicago Records Deadliest Day In 13 Years As City Spirals Out Of Control

Finally, despite some of the most restrictive gun laws in the country, 87% of homicides were committed with firearms, up from 79% in 2010.  So how could the city that has the toughest gun laws in the country, laws described as the "closest they could get legally to a ban without a ban," also have some of the highest gun-related homicide rates?  Could it be, that criminals looking to use weapons for violence have a lower propensity to follow laws and that by banning guns you're really just taking them out of the hands of law-abiding citizens that wouldn't have used them for violence anyway?

Friday, August 12, 2016

BIS Intervenes In The Gold Market To Aid Battered Gold Shorts!

FYI, the Bank for International Settlements (BIS) is the central bank of central banks.  They pretty much dictate central bank policies around the globe, including the ECB (European), BOE (England), BOJ (Japan), Bundesbank (Germany), PBOC (China), and the Fed (United States).  They've been known to intervene in gold markets in order to "manage" the price down.

Thursday, August 11, 2016

Erdogan Threatens To Abandon US Dollar In Trade With Russia

I predict US mainstream media and the CIA will now label Erdogan a terrorist who must be taken out.  Any sovereign government leader looking for alternatives to the USDollar for cross-border trade is considered an enemy of the US State.  See Hussein and Gaddafi, former US allies before their untimely demise.  Were they evil dictators?  Absolutely.  But they were originally put into power by the US and the CIA, until they started entertaining alternatives to the petrodollar as payment for crude oil.

Also see Russia and China.  Removing their government from power is another proposition.  However, the neocon warmongers are beating the drums of war.

One simple reason why gold can still jump 50%

Is The Gold Market Really Manipulated?

This trend tells you everything you need to know about America’s future

Secret Pentagon Report Reveals US "Created" ISIS As A "Tool" To Overthrow Syria's President Assad

Any and all wars are about a land and sea grab of resources, and with the USDollar as the global reserve currency--it's all about the dollar.

Obamacare On "Verge Of Collapse" As Premiums Set To Soar Again In 2017

Wednesday, August 10, 2016

James Grant: Negative Interest Rates Will End — Badly

Pundits and laypeople alike are unable to grasp why deteriorating true economic indicators and profits are driving equities and bond markets to all-time highs (and record low or negative interest rates).

Conventional wisdom states that declining corporate profits should drive stock prices down.  Yet, equities keep achieving all-time highs. 

Perhaps, the answer is stored in the question.  Due to record low and negative interest rates, stock markets will soar as the cost of borrowing is at all-time lows.  If this sounds like a chicken-or-egg dilemma, it is.  How long this monetary rubber band can be stretched is the essential question--because it will snap at some point.

The rhetorical question can also be answered with possible solutions to this conumdrum.  If bonds continue to yield negative rates, cash becomes more valuable.  The countervailing effect is if negative rates drive up inflation, cash becomes less valuable.

What else is left if inflation causes interest rates to reverse and rise?  Financial markets would plummet if yields rise.  Physical, tangible assets become the currency of last resort.

Wednesday, August 3, 2016

Bill Gross Talks "Sex", Answers "Honestly" What Happens When The Financial System Breaks Down

When the two biggest bond investors are shunning equities and bond markets, and putting their money into tangible assets like gold, it's time to take notice.  Fixed-income markets dwarf equities, and bond investors are better predictors of the economy--even if they don't make the financial headlines like stock pickers do.

Bond investors are often labeled the smart money because they have a better track record of foretelling economic downturns, as equities analysts are understandably polyannish.

Jeff Gundlach and Bill Gross have recently turned bearish on traditional financial assets and bullish on gold.  A contrarian may hesitate in following these iconic money managers.  But sometimes investors can out-think themselves.  While these two bond kings have influence on Wall Street (despite being headquartered in southern California), the average Joe wouldn't recognize these two star fund managers from Bernie Madoff.  And that's a good thing if one is a contrarian.

Is A Ban On Gold Ownership Coming?

Bitcoin Price Crashes After Exchange Admits Security Breach, Over $60 Million Stolen

I was initially enthused by Bitcoin as an anti-dollar crypto-currency, but after researching its cyber-security issues, I became suspicious of Bitcoin's creation.  My suspicion was Satoshi Nakamoto, the alleged mythical creator of Bitcoin (whether one person or a group of hackers), could be a sub-unit of the US Treasury.

The holes in the security of Bitcoin, and the non-anonymity of the block chain header--which tracks all transactions, hinted towards a backdoor created by financial authorities to track nefarious Bitcoin holders.

Is this conspiratorial?  Yes, but who benefits by providing an alternative to the USDollar, yet still maintaining confidence in the dollar?  If gold is an undesirable alternative to the dollar, Bitcoin could be a welcome supplement to dollar hegemony for the financial status quo.

Due to the obvious risks of holding Bitcoin (it's electronic, it can be lost, it can be stolen, and competitive crypto-currencies exist--undermining its stated goal of scarcity), I subsequently couldn't endorse Bitcoin or any other crypto-currencies.

The fall of Mt. Gox raised my suspicion.  This latest theft of Bitcoin confirms my skepticism.  The fallout of this latest electronic theft is yet to be determined.  Who is legally liable?  Will insurers guarantee the losses?

At the end of the day, Bitcoin is an electronic entry, much like a bank account.  The difference is banks don't have the reserves to back up their deposits due to fractional reserve banking, which is hugely problematic despite reassurances by the financial authorities.

Ownership is 100% possession, so the ultimate safe haven currencies are still physical gold and silver.  This has been true for over 6000 years, and will continue to hold true.

Boomers Again? What Another “Scorched Earth Generation” President Means For Gold - Peter Diekmeyer

Peter Schiff: Time Is Running Out, “Crisis Worse Than 2008 Coming”

Monday, August 1, 2016

James Turk – Is History About To Repeat In The Silver Market? Plus One Of The Most Stunning Charts Of The Last Decade

Markets zig and they zag--they don't move in straight lines.  If one recalls in the book and movie The Big Short, the protagonists made the right bet in shorting (e.g. betting against) the fraudulent subprime mortgage boom in 2006.  However, they initially lost a ton of money when loans were defaulting, which should have generated profits for their short positions.  Instead, because the secondary derivatives (or "shadow") markets were grossly manipulated and illiquid, the bearish short positions against the mortgage-backed securities (CDO's) were tanking initially.

Fortunately for the protagonists, the credit default swaps (a CDS is an insurance contract betting  against the credit debt obligations) regained sanity in 2008 and soared in value when the deluge of mortgage defaults accelerated.  The underlying real estate industry took a nose dive nationwide. The CDS holders profited in the billions, far outweighing their previous losses.  In summary, the speculators (the big shorts) bet correctly, but they were early, before being proven right and profiting handsomely in the end.

One could debate that manipulated markets take time to cleanse themselves before true price discovery mechanisms bring supply and demand dynamics to rational levels.  That's theoretical.  But the pragmatic point is that speculators should have enough liquidity to outlast the transitory cycles when markets move against their positions.  In the aftermath, they will profit from the inevitable outcomes.  Profits come from being right in both direction and timing.

Likewise, for 4-plus years, precious metals have been taking a beating.  However, against a backdrop of 6000, 100, 45, or 15 years, gold and silver have outperformed equities and bonds.  More recently, the two noble metals have outperformed other assets in 2016.

Precious metals provide a counter-balance to traditional financial assets, and tend to outperform when there is distress in markets.  With equities particularly, they move up on an escalator, but plummet down violently in an elevator.  For example, the tech-heavy NASDAQ index lost 80% between its 2000 peak before bottoming out in 2003.  The S&P 500 lost approximately half its value between the 2007 peak and the 2009 bottom, when Fed Chairman Bernanke stepped in with the bank bailouts in 2008 and QE in 2009. 

Accumulators accumulating the metals on the way down have brought their average cost down as well.  And now that the precious metals asset class has rebounded, the paper profits have risen.

But that's not the point of accumulating physical precious metals: to garner "profits".  They are stores of value, not trade-able securities.  They are true buy-and-hold portfolio hedges, protecting holders against inflation--and deflation, when all other assets have uncertainty attached to them.

Yes, I mention deflation because while cash is king understandably in deflationary times, precious metals are also counter-intuitively valuable due to their durability, divisibility, portability, acceptability, and uniformity.  For these reasons, cash is a viable currency.  The fact that until now, the USDollar is also the global reserve currency creates demand for it, rendering it even more valuable.

But the winds of geopolitical change are upon us, as the dollar's perch as the reserve currency becomes increasingly perilous.  Precious metals outshine fiat currency as they are also solid stores of value, because they are limited in supply, and therefore cannot be debased by reckless currency creation from central bankers.

And be careful with unallocated gold and silver ETF's as they are merely paper promises to deliver precious metals.  They are not sufficiently backed by physical inventory.

Having said that, patience is a virtue, and the time for gold and silver to shine is upon us and will only get brighter going forward.  Continue accumulating physical precious metals.  Better yet, buy the price dips when they occur.

U.S. Military Adds Jeff Bezos and Cass Sunstein to Pentagon’s Defense Innovation Advisory Board

Conspiracy Theories, According to the Elite

This is rather chilling.

Conspiracy Theories

Cass R. Sunstein

Harvard Law School

Adrian Vermeule

Harvard Law School

January 15, 2008

Harvard Public Law Working Paper No. 08-03
U of Chicago, Public Law Working Paper No. 199
U of Chicago Law & Economics, Olin Working Paper No. 387

Many millions of people hold conspiracy theories; they believe that powerful people have worked together in order to withhold the truth about some important practice or some terrible event. A recent example is the belief, widespread in some parts of the world, that the attacks of 9/11 were carried out not by Al Qaeda, but by Israel or the United States. Those who subscribe to conspiracy theories may create serious risks, including risks of violence, and the existence of such theories raises significant challenges for policy and law. The first challenge is to understand the mechanisms by which conspiracy theories prosper; the second challenge is to understand how such theories might be undermined. Such theories typically spread as a result of identifiable cognitive blunders, operating in conjunction with informational and reputational influences. A distinctive feature of conspiracy theories is their self-sealing quality. Conspiracy theorists are not likely to be persuaded by an attempt to dispel their theories; they may even characterize that very attempt as further proof of the conspiracy. Because those who hold conspiracy theories typically suffer from a crippled epistemology, in accordance with which it is rational to hold such theories, the best response consists in cognitive infiltration of extremist groups. Various policy dilemmas, such as the question whether it is better for government to rebut conspiracy theories or to ignore them, are explored in this light.

The Burrito Index: Consumer Prices Have Soared 160% Since 2001

Hillary’s Latest Headache: Skolkovo

500 Years Of Stock Panics, Bubbles, Manias, & Meltdowns (In 1 Simple Chart)
Click on Image to Enlarge