The Path by Which We Got Here

It wasn’t just COVID that got us down the road to ruin. Because many think we are in what looks like a post-apocalyptic world of rubble only because of COVID or because of Trump, I decided now would be a good time to summarize how predictably the Fed’s Great Recovery and Great Rewind got us here.

Now that we see the Fed has become too impotent to even risk acting, lest it prove its impotence before the entire world, let us look at how predictable every step down our road to economic ruin has been. This blog has proven that by laying out each turn before we got to it so that, when we got where we are now, we could tell how we did and how one could see it coming.

Lessons On Inflation From The Past

By Alasdair Macleod – Re-Blogged From Gold Eagle

This article examines two inflationary experiences in the past in an attempt to predict the likely outcome of today’s monetary policies. The German hyperinflation of 1923 demonstrated that it took surprisingly little monetary inflation to collapse the purchasing power of the paper mark. This is relevant to the fate of the “whatever it takes” inflationary policies of today’s governments and their central banks. The management of John Law’s Mississippi bubble, when he used paper money to rig the market is precisely what central bank policy is aimed at achieving today. By binding the fate of the currency to that of financial assets, as John Law proved, it is the currency that is destroyed.

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Dark Years And Fourth Turning

By Egon von Greyerz – Re-Blogged From Gold Eagle

In an ephemeral world, few things survive. I am not talking about species or human beings whose existence on earth is also transitory. Instead I am referring to social and financial systems which are now coming to an end.

In July 2009 I wrote an article called The Dark Years Are Here. It was reprinted again in September 2018.

Here is an extract from my original article:

“The Dark Years will be extremely severe for most countries both financially and socially. In many countries in the Western world there will be a severe depression and it will be the end of the welfare state. Most private and state pension schemes are also likely to collapse. It will be a worldwide depression but some countries may only have a deep recession. There will be famine, homelessness and misery resulting in social as well as political unrest. Different type of government leaders and regimes are likely to result from this.
How long will the Dark Years last? There is a book called ”The Fourth Turning” written by Neil Howe.

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Central Banking Cartel Promises ZIRP Until At Least 2023

By Mike Gleason – Re-Blogged From Gold Eagle

Gold and silver investors who were hoping Wednesday’s FOMC meeting would be a catalyst for a major breakout move were largely disappointed.

The metals complex didn’t see an immediate boost from the Federal Reserve’s dovish policy meeting. Still, the central bank’s commitment to an accommodative monetary policy is set to play out not just over the course of a week, but of years to come.

On Wednesday, the Federal Reserve announced it would continue to hold its benchmark interest rate near zero. That came as no surprise.

However, the extent of the Fed’s commitment to avoid any rate hikes in the future raised the eyebrows of many veteran observers of monetary policy. Not only did members of the central banking cartel vow to keep rates down for the remainder of the year. They also signaled there would be no rate hikes in 2021.

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China Is Killing The Dollar

By Alasdair Macleod – Re-Blogged From GoldMoney

In the wake of the Fed’s promise of 23 March to print money without limit in order to rescue the covid-stricken US economy, China changed its policy of importing industrial materials to a more aggressive stance. In examining the rationale behind this move, this article concludes that while there are sound geopolitical reasons behind it the monetary effect will be to drive down the dollar’s purchasing power, and that this is already happening. More recently, a veiled threat has emerged that China could dump all her US Treasury and agency bonds if the relationship with America deteriorates further. This appears to be a cover for China to reduce her dollar exposure more aggressively. The consequences are a primal threat to the Fed’s policy of escalating monetary policy while maintaining the dollar’s status in the foreign exchanges.

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Overvalued Stocks Head Into The Bunker

By Michael Pento – Re-Blogged From Silver Phoenix

The overvaluation of stocks relative to the economy has placed them in such rarefied space that the market is subject to dramatic and sudden air pockets. Our Inflation Deflation and Economic Cycle model is built to identify both cyclical and secular bear markets and protect and profit from them.

However, what it cannot do, nor can anyone else, is anticipate every short-term selloff in stocks. While the IDEC strategy protects and profits from bear markets, it also tends to soften the blow from short-term selloffs and prevents us from panicking at the bottom of every brief correction. This was the case in the latest plunge that started on September 3rd and lasted just three brutal days.

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US Share Plunge

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

The U.S. stock market plunged last week. Will gold follow suit?

Last week, the U.S. stock market has seen strong selling activity. The S&P 500 Index has declined about 7 percent from its peak, while the Nasdaq Composite Index plunged more than 10 percent (entering a correction territory), below 11,000, as the chart below shows. It was the tech sector’s worst drop since the end of March, if not the quickest correction ever.

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Inflation, Deflation And Other Fallacies

By Alasdair Macleod – Re-Blogged From Gold Eagle

There can be little doubt that macroeconomic policies are failing around the world. The fallacies being exposed are so entrenched that there are bound to be twists and turns yet to come.

This article explains the fallacies behind inflation, deflation, economic performance and interest rates. They arise from the modern states’ overriding determination to access the wealth of its electorate instead of being driven by a genuine and considered concern for its welfare. Monetary inflation, which has become runaway, transfers wealth to the state from producers and consumers, and is about to accelerate. Everything about macroeconomics is now with that single economically destructive objective in mind.

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Arrival Of The Epocalypse And The 2020 Stock Market Meltdowns

By David Haggith – Re-Blogged From Gold Eagle

I just finished with one of my readers, Bob Unger, and I thought Bob’s questions led to a well-rounded expression of how, over the past two years, our economy got to the collapse we are in now, how predictable the Federal Reserve’s policy changes and failures were, why economic recovery has stalled, and why the stock market was certain to crash twice this year, including why the second crash would likely hit around September.

I’ve found Bob’s interviews with others interesting, so I recommend checking out his YouTube page. I had no idea where the interview below would go, but it wound up encapsulating my main themes for the past two years:

MarketWatch

(Other interviews I’ve done are linked in the right side bar where I usually just let people stumble onto them on their own.)

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Inflation By Fiat

By Michael Pento – Re-Blogged From Silver Phoenix

The Fed has now officially changed its inflation target from 2%, to one that averages above 2% in order to compensate for the years where inflation was below its target. First off, the Fed has a horrific track record with meeting its first and primary mandate of stable prices. Then, in the wake of the Great Recession, it redefined stable prices as 2% inflation—even though that means the dollar’s purchasing power gets cut in half in 36 years. Now, following his latest Jackson Hole speech, Chair Powell has adopted a new definition of stable prices; one where its new mandate will be to bring inflation above 2% with the same degree and duration in which it has fallen short of its 2% target.

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China Unloads Dollars As Gold Price Tests Support

By Stefan Gleason – Re-Blogged From Gold Eagle

Since posting new record highs in early August, the gold market has consolidated above $1,900/oz support.

A close below the $1,900 level would carry bearish implications for the near term.

Alternatively, a move back above $2,000/oz would likely be followed through to the upside with a rally to fresh highs. Silver, in turn, could be expected to run to new multi-year highs above $30/oz.

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Inflation — Running Out Of Road

By Alasdair Macleod – Re-Blogged From Gold Eagle

If you think that price inflation runs at about 1.6% you have fallen for the BLS’s CPI myth. Two independent analysts using different methods — the Chapwood Index and Shadowstats.com — prove that prices are rising at a far faster rate, more like 10% annually and have been doing so since 2010.

This article discusses the consequences of price inflation suppression, particularly in the light of Jerome Powell’s Jackson Hole speech when he downgraded the importance of price inflation in the Fed’s policy objectives in favour of targeting employment.

It concludes that the reconciliation between the BLS CPI figure and the true rate of price inflation is inevitable and will be catastrophic for the Fed’s policy of suppressing interest rates, its maximisation of the “wealth effect” of inflated financial asset prices, and for the dollar itself.

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Stock Market’s Caged Bear About To Rattle Himself Loose!

By David Haggith – Re-Blogged From Silver Phoenix

I’ve been saying the stock market will take a turn for the worst sometime between mid-August and October. Numerous market metrics now show a market that looks ready to turn over. The bear may soon be back in charge.

The futility of trying to stop the stampeding herd and the Fed fallacy

When I pointed out last January that the market was more perilously overpriced than ever and imminently ready to crash, the stock market took one of its most spectacular dives in history just a month later. (See: “Stock Market More Overpriced and Perilous Than Anytime in History.”)

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Fed Embraces Higher Inflation

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

Fed adopts a new strategy that opens the door for higher inflation. The change is fundamentally positive for gold prices.

So, it happened! In line with market expectations, the Fed has changed its monetary policy framework into a more dovish one! This is something we warned our Readers in our last Fundamental Gold Report:

the Fed could change how it defines and achieves its inflation goal, trying, for example, to achieve its inflation target as an average over a longer time period rather than on an annual basis.

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Fed Chairman Powell Is Vowing to Wreck the Currency

By Mike Gleason – Re-Blogged From Gold Eagle

As the Federal Reserve embarks on a new campaign to raise inflation rates, markets may be in for a change in character.

On Wednesday, Fed Chairman Jerome Powell announced that the central bank would be targeting an inflation “average” of 2%. By the Fed’s measures, inflation has been running below 2% in recent years. So, getting to a 2% average in the years ahead will require above 2% inflation for a significant period.

Here’s Powell attempting to explain himself from central bankers’ virtual Jackson Hole conference:

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The Federal Reserve vs. Judy Shelton And Gold

By Kelsey Williams – Re-Blogged From Gold Eagle

Those in favor of Judy Shelton’s approval by Congress, pursuant to her nomination to the Federal Reserve Board Of Governors, should not be surprised by the torrent of criticism directed at her.

A letter published and signed by former Federal Reserve officials and staffers called on the Senate to reject her nomination, stating that “Ms. Shelton’s views are so extreme and ill-considered as to be an unnecessary distraction from the tasks at hand…”

Her “extreme” views were referred to in a general statement of condemnation:

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Space Oddity And Helicopter Money

By Egon von Greyerz – Re-Blogged From Gold Eagle

The Economy Needs More Than A Vaccine

By Michael Pento – Re-Blogged From Silver Phoenix

The hype and hope being promulgated by Wall Street and D.C. is that the imminent and well-advertised approval of vaccines will bring the economy back to what they characterize as its pre-pandemic state of health. However, even if these prophylactics are very efficient in controlling the pandemic and lead the economy back to “normal”, the state of the economy was anything but normal and healthy prior to the Wuhan outbreak.

The year over year change in GDP in the fourth quarter of 2020 from the trailing 12 months was just 2.3%. Admittedly, this wasn’t indicative of a terrible economy; but it also was very far from what many have portrayed as the best economy anyone has ever seen on the planet. Most importantly, to even get to that rather pedestrian level of just trend GDP growth for the year, the Fed had to slash interest rates three times in the five months prior to the start of 2020. And, please also remember that the Fed felt it necessary to return to Quantitative Easing (QE) in order to re-liquify the entire banking system and save the markets from crashing.

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Economic Data Suggests Reopening, not Recovery

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

Retail sales growth has slowed down. What does it mean for the U.S. economy and the gold market? Retail sales increased 1.2 percent in July. The growth was worse than expected, which hit the U.S. stock market. As the chart below shows, the number was also much weaker than in the two previous months (8.4 percent gain in June and 18.3 percent jump in May), when it seemed that the economy started to rebound.

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Denial Dominates the Dummies

One of my reasons I started this website years ago was to counter all the denial that I saw in the mainstream media about how long and deep the problems from the Great Financial Crisis would be and about how we were failing in every way to resolve the greed, decay and especially faulty thinking that would assure our next collapse would be even greater than the Great Recession.

Today, the same lame thinking still dominates, but not just in the media. It’s pervasive in the general public, too. Of course, it is particularly prevalent among high-flying stock investors, who actually think because stocks can float above it all, the world must be doing fine.

New Sound Money Caucus Launched On Capitol Hill

By JP Cortez – Re-Blogged From Gold Eagle

As the federal government continues to bailout the economy and markets by creating trillions of unbacked pieces of paper and electronic digits, a handful of Congressmen hope to shine a new spotlight on the devastating effects of this runaway financial profligacy.

Congressman Warren Davidson (R-OH) recently announced the creation of the Congressional Sound Money Caucus. According to Congressman Davidson’s office, the caucus exists to promote sound fiscal and monetary policy in the United States with the goal of preserving the purchasing power of the U.S. Federal Reserve Note.

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Five Post-Covid Trends

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

The disruptions caused by the pandemic of Covid-19 forced people, companies, governments, and organizations to challenge their basis assumptions about their ways of life and conduct. Some of them might be trivial such as more frequent and thorough hand-washing, but others are much more important, amongst them putting more emphasis on health that came suddenly under threat and social relationships that were so missing during the quarantine. So, the key question is when the epidemic is fully contained, what will be the “new normal” – and how it will affect the gold market?

The first characteristic feature of the post-pandemic world will be more people working and getting things done from home. The digital transformation has already started before the coronavirus jumped on human beings, but the Covid-19 epidemic has accelerated its pace, with further expansion in videoconferencing, online teaching, e-commerce, telemedicine, and fintech. After all these long years, it turned out that all these boring meetings really could have been e-mails or chats via Zoom, Skype or Teams. What does it mean for the economy and society?

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An Unexpected Systemic Crisis Is For Sure

Alasdair Macleod – Re-Blogged From Gold Eagle

Downturns in bank credit expansion always lead to systemic problems. We are on the edge of such a downturn, which thanks to everyone’s focus on the coronavirus, is unexpected.

We can now identify 23 March as the date when markets stopped worrying about deflation and realised that monetary inflation is the certain outlook. That day, the Fed promised unlimited monetary stimulus for both consumers and businesses, and the dollar began to fall.

The commercial banks everywhere are massively leveraged and their exposure to bad debts and a cyclical banking crisis is now certain to wipe many of them out. In this article we look at the global systemically important banks — the G-SIBs — as proxy for all commercial banks and identify the ones most at risk on a market-based analysis.

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Silver Purchasing Power Or Perverse Incentives?

By Keith Weiner – Re-Blogged From Silver Phoenix

On Monday, the price of silver continued its epic skyrocket. We say this without hyperbole, this kind of price action does not happen every day. Or every year. It occurs perhaps once a decade. And the same can be said for Monetary Metals writing so many articles about silver in the span of a week!

So we wrote yet another article, showing that the fundamentals are keeping up, even though the price was rising (the hallmark of the last decade has been that rising abundance occurs with rising price—price brings more metal out of private hoards).

But before it could go live (it was written Monday night), the price was already moving down. And, holy cow, did it move down!

From $29, it dropped to under $25. About -14%.

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US In Long-term Economic Decline

By David Haggith – Re-Blogged From Gold Eagle

Measured by the common man, we’re on the road to ruin. The US has been in decline for decades, but you can’t see that by looking at stocks. You can’t tell it from those who lie about the economy to make their living, but look at long-term real numbers, and you see an empire in decline that just got its wobbly legs kicked out by COVID-19.

The clamor of false profits

Listen to the kinds of false narratives being spun to claim the economy is largely recovering. Call it the relentless and unrealistic belief in a V-shaped recovery narrative or whatever you want to call it, but the nonsense is still flourishing, though not the economy.

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How Does The Yellow Metal Fit The Corona World?

For a long time, pundits talked excitedly about the rapid, V-shaped recovery. I never shared this view, finding it too optimistic and without basis in reality. Like Jeff Goldblum in Jurassic Park, I hate being right all the time, but it really seems that I was right about this issue. According to the July World Flash report by IHS Markit, we can read that “the new wave of infections has reduced the probability of a V-shaped cycle (…) and increased the risk of a double-dip recession (W-shaped cycle).

The problem is the rising number of Covid-19 infections in large economies such as Brazil, India, or the United States, as the chart below shows (there is also the resurgence in cases in other countries, such as Australia or Japan, although the absolute numbers of infections are smaller).

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Has The Fed Let The Inflation Genie Out Of The Bottle?

By Stefan Gleason – Re-Blogged From Gold Eagle

The dramatic ascent of precious metals markets this summer reflects what could be just the start of a longer-term decline and fall in the Federal Reserve Note’s value and status.

With gold prices surpassing $2,000/oz recently, the monetary metal has now made new all-time highs versus all the world’s major fiat currencies. Gold is, as former Federal Reserve chairman Alan Greenspan has acknowledged, the “ultimate money.”

The Fed, by contrast, is the ultimate inflator.

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How Long Can Fed Cancel Gravity?

By Rick Ackerman – Re-Blogged From Silver Phoenix

True enough, statistically speaking. But the hardships of being jobless will be more easily borne by millions of Americans to the extent they are cushioned by generous checks from The Government. The handouts have in fact been so unstinting that two-thirds of those laid off due to the pandemic are eligible for benefits that exceed what they made working .

Look Ma, No Taxes!

Ordinarily, we might infer that it is deflationary for unemployment checks to be used to retire debt. But because no taxes have been levied to pay for the benefits, and because the benefits will decrease the burden of debt for millions of down-and-out workers, the net economic result is neither inflationary nor deflationary, at least for now. Factor in the bullish effect stimulus has had on the stock market, and inflation wins out, just as the Fed had intended. How long can the central bank continue to cancel gravity? It’s impossible to say, although we do know that the felicitous effects of helicopter money cannot last indefinitely.

We also know that every penny of it will have to be paid by someone at some point. Hyperinflation or deflation are the only conceivable avenues to achieve this, but it would be overly optimistic to assume we will have a choice. Politicians will always opt for the former, but they should have noticed by now that the trillions they have shot at the problem so far have inflated only stock prices. Judging from the headlines, one might infer that most of these pandering fools actually believe that Fed alchemy is an actual example of free lunch and that the bull market will continue indefinitely. The alternative is too scary to ponder — not just for politicians, but for all of us.

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Rising Gold = Higher Future Bond Yields

By Mark J Lundeen – Re-Blogged From Gold Eagle

The Dow Jones continues in an annoyingly tedious manner, where it refuses to go up or down as it hugs on to its BEV -10% line for dear life in the BEV chart below.  It’s been this way for over a month.  So we continue watching the Dow Jones’ BEV -5% and -15% lines, to see which the Dow Jones crosses through first.

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Precious Metals Landmine…

By Michael Ballanger – Re-Blogged From Gold Eagle

The US Dollar Wants YOU!

Before I begin this weekly missive (which is being penned on a Wednesday due to my impending cruise to the northern habitats of Georgian Bay), I need to present one quote that for me summarizes everything there is to know about risk management in the capital markets universe:

It Ain’t What You Don’t Know That Gets You Into Trouble.

It’s What You Know for Sure That Just Ain’t So (Mark Twain)

“Government Sachs” Is Worried About the Federal Reserve Note

By Mike Gleason – Re-Blogged From Gold Eagle

As July comes to a close, the gold price is up better than 9% for the month and has advanced nearly 30% for the year.

Gold’s record-setting rise has been driven by Federal Reserve stimulus, dollar weakness, and strong safe-haven investment demand. Even the Wall Street-centric financial media is taking note:

Financial News Anchor #1: Gold is shining once again, this morning. The spot price is touching all-time highs, as the dollar index sits around a two-year low.

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Gold Stocks’ Autumn Rally 5

By Adam Hamilton – Re-Blogged From Gold Eagle

The gold miners’ stocks have rocketed higher this summer, smashing out of their usual summer-doldrums sideways grind. That atypical strength has been driven by gold steadily marching to major new secular highs, fueled by strong investment demand. This has carried gold stocks and the metal they mine back to their traditional strong season, which begins with robust autumn rallies usually accelerating in late summers.

Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year. While seasonality doesn’t drive price action, it quantifies annually-repeating behavior driven by sentiment, technicals, and fundamentals. We humans are creatures of habit and herd, which naturally colors our trading decisions. The calendar year’s passage affects the timing and intensity of buying and selling.

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Explaining The Credit Cycle

By Alasdair Macleod – Re-Blogged From GoldMoney

This article summarises why the credit cycle leads to alternate booms and slumps. It is only with this in mind that they can be properly understood as current economic conditions evolve.

The reader is taken through three monetary models: a fixed money economy, one governed by changes in bank credit, and finally the consequences of central bank intervention.

Classical economics provided the basis for an understanding of the effects of bank credit expansion. The theory, embodied in the division of labour, eluded Keynes, who was determined to justify an interventionist role in the economy for the state.

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You Could Get Mad as Hell and Just Not Take This Anymore!

It’s time to show you’re Fed up! Get mad as hell! Don’t take this any more! Scorch the earth with your rage! Yell from the rooftops! Stick your head out the window and scream! Fight the economic injustice that serves the rich! Kick political asses, and kick them hard! Don’t just whine, do something about it!

Ten commandments to show you’re Fed up!

1) End manipulated markets by taking away the Fed’s mandate to create sound employment, The addition of this mandate gave the Federal Reserve way too much economic power! Denude the Federal Reserve back to its one original mandate — maintaining a stable money supply.

The Express Train To Insolvency

By GE Christenson – Re-Blogged From Gold Eagle

·     Gold reached $1,800, close to its all-time high of $1,923.

·     Silver reached $19, a long way from its high of $50.

·     The NASDAQ hit another new high.

·     Tesla closed on July 10 at $1,544, a new high. Tesla looked outrageously high at $1,200.

Now  the bubble has blown even larger.

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Gold And Silver Very Overbought

By Adam Hamilton – Re-Blogged From Gold Eagle

Both gold and silver surged dramatically higher this past week, propelled by torrents of investment capital deluging in.  The resulting major new highs are really exciting, unleashing widespread fear-of-missing-out buying.  But the precious metals’ blistering jumps have left them very overbought.  They have come so far so fast they are at and above technical extremes that have proven unsustainable.  So caution is in order here.

Gold and silver are powering higher on balance in secular bull markets that have been running for years.  And their fundamental underpinnings are stronger than ever.  The Fed’s astoundingly-epic money printing since mid-March’s stock panic has catapulted stock markets to dangerous bubble valuations.  And the vast majority of investors have yet to diversify their stock-heavy portfolios with counter-moving precious metals.

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Goldman’s Stacks of Gold

Goldman Sachs, JPMorgan, and BlackRock Financial Management are stacking up wealth like never before, thanks to the Great Recession 2.0, a.k.a. the Second Great Depression. Yet, the Fed maintains its recovery plans do not create wealth disparity.

Fed-hawk Ron Paul wrote this week,

Federal Reserve Chair Jerome Powell and San Francisco Fed President Mary Daly both recently denied that the Federal Reserve’s policies create economic inequality. Unfortunately for Powell, Daly, and other Fed promoters, a cursory look at the Fed’s operations shows that the central bank is the leading cause of economic inequality….

The Pound’s Future In A Dollar Collapse

By Alasdair Macleod – Re-Blogged From GoldMoney

In recent articles for Goldmoney I have pointed out the dollar’s vulnerability to a final collapse in its purchasing power. This article focuses on the factors that will determine the future for sterling.

Sterling is exceptionally vulnerable to a systemic banking crisis, with European banks being the most highly geared of the GSIBs. The UK Government, in opting to side with America and cut ties with China, has probably thrown away the one significant chance it has of not seeing sterling collapse with the dollar.

A possible salvation might be to hang onto Germany’s coattails if it leaves a sinking euro to form a hard currency bloc of its own, given her substantial gold reserves. But for now, that has to be a long shot.

And lastly, in common with the Fed and ECB, the Bank of England has taken for itself more power in monetary matters than the politicians are truly aware of, being generally clueless about money.

Conclusion: the pound is unlikely to survive a dollar collapse, which for any serious student of money, is becoming a certainty.

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Think Deficits Are Bad Now? You Ain’t Seen Nothin’ Yet

The U.S. government was on track for a $1 trillion deficit this fiscal year, even before coronavirus. That’s the kind of budget deficits one would expect to see during a major economic downturn. The federal government has only run deficits over $1 trillion in four fiscal years, all during the Great Recession. The U.S. was on that path before the recent coronavirus economic upheaval even while Trump called “the greatest economy in the history of America.”

And now it looks like the U.S. is on the cusp of a legitimate economic crisis.

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Fiscal Cliffs and the Self-Destructing Treasury

We can all be very confident that there will be no change to monetary policy for a very, very long time. But there is a fiscal cliff coming—and indeed has already begun.

It is clear that Mr. Powell is all-in on his unlimited QE and ZIRP. And, that he is “not even thinking about thinking about raising interest rates.” Therefore, the stock market does not have to worry about a contraction in the rate of money printing any time soon. However, equities could soon plunge due to the crash in the amount of fiscal support offered to the economy.

  • Last month, the auto-loan and credit-card forbearance period ended
  • On July 1, state and local government budget cuts kicked into high gear, as the $330 billion in aid already dispensed has been wasted

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How Deep Is Your Depression?

By David Haggith – Re-Blogged From Gold Eagle

We are nearing that mid-point in July when I said we would start to see the news turn from euphoria-inducing reopening positives to depression-developing realism.

Speaking of stock-market bulls who are stampeding uphill on the euphoria side, I wrote,

Right now the farce is with them — reopening has arrived! And these stupid people will believe that means they were right about the “V,” virtually assuring they continue to bet the market up for a little while…. The reopening means economic statistics will improve rapidly. That will give a lot of stupid people many reasons to believe they were right to think the obliterated economy would experience a V-shaped recovery.

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The New Deal Is A Bad Old Deal

By Alasdair Macleod – Re-Blogged From Gold Eagle

So far, the current economic situation, together with the response by major governments, compares with the run-in to the depression of the 1930s. Yet to come in the repetitious credit cycle is the collapse in financial asset values and a banking crisis.

When the scale of the banking crisis is known the scale of monetary inflation involved will become more obvious. But in the politics of it, Trump is being set up as the equivalent of Herbert Hoover, and presumably Joe Biden, if he is well advised, will soon campaign as a latter-day Roosevelt. In Britain, Boris Johnson has already called for a modern “new deal”, and in his “Hundred Days” his Chancellor is delivering it.

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The Bizarre Mathematics Of How Negative Interest Rates Create Stratospheric Profits

[This is a very different article from what I usually post. If you think, as I do, that negative interest rates are coming to the US, this article can show you how to make ‘Windfall Profits” from that abomination. Please take the extra effort to understand what the author is telling you.  –Bob]
Daniel R. Amerman, CFA – Re-Blogged From Gold Eagle

There is an increasingly good chance that the United States could end up following Europe and Japan, and that the Federal Reserve could use its vast powers of monetary creation to force a move to negative interest rates.

If that deeply unnatural event happens, it will invert and distort the very foundations of investment pricing, in ways that are little understood by most investors today.

It will also – for a time – create an unnatural source of profits that most investors have no idea about, because it has never happened before in the United States (and is still in the early stages in the United Kingdom).

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Prices Are Going To Rise…And Fast!

With stockmarkets barely ruffled, few are thinking beyond the very short-term and they are mostly guessing anyway. Other than possibly the very short-term as we emerge from lockdowns, the economic situation is actually dire, and any hope of a V-shaped recovery is wishful thinking or just brokers’ propaganda. But for now, monetary policy is to buy off all reality by printing money without limit and almost no one is thinking about the consequences.

Transmitting money into the real economy is proving difficult, with banks wanting to reduce their balance sheets, and very reluctant to expand credit. Furthermore, banks are weaker today than ahead of the last credit crisis, and payment failures on the June quarter-day just passed could trigger a systemic crisis before this month is out.

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Gold and COVID-19

[Here’s a post from a guy I read occasionally. His style (to say the least) is quite over-the-top. Believe what you choose and discard the rest.  –Bob]

By Jim Willie – Re-Blogged From Gold Eagle

The entire global financial structure is in the process of faltering, breaking, and crumbling. It is better described as sabotage by the Globalist cabal in league with their fascist partners. As the entire economy fractures, as all debt faces failure, as most assets break down, as countless households struggle, the King Dollar faces a certain sunset, true safe haven will be uniformly sought. Correspondingly, the Gold price is ready to launch onward and upward. It will light the fuse on the Silver price in sequence. Demand will skyrocket, while supply has been limited. Behold the greatest fraud and hoax in the history of mankind behind the corona virus. It is named after the Queen of England, a primary funding partner. She filed a corona virus patent in December 2018, from engineered creation. The COVID-19 entity is far more a fascist project to force political change than actually a virus at all. The disease is a mirage, and exaggerated agent of deep fear and fright. Let it be known that not 5% of the population know what a virus is, how it works, the method to identify, or the best prevention. Ignorance is a great ally to the global cabal.

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Gold Summer Doldrums 3

By Adam Hamilton – Re-Blogged From Gold Eagle

Gold, silver, and their miners’ stocks suffer their weakest seasonals of the year in early summers.  With traders’ attention normally diverted to vacations and summer fun, interest in and demand for precious metals usually wane.  Without outsized investment demand, gold tends to drift sideways dragging silver and miners’ stocks with it.  Feared as the summer doldrums, sometimes unusual catalysts short-circuit them.

This doldrums term is very apt for gold’s summer predicament.  It describes a zone in the world’s oceans surrounding the equator.  There hot air is constantly rising, creating long-lived low-pressure areas.  They are often calm, with little or no prevailing winds.  History is full of accounts of sailing ships getting trapped in this zone for days or weeks, unable to make headway.  The doldrums were murder on ships’ morale.

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Trampoline Cliff Diving

By Michael Pento – Re-Blogged From Pentoport

We start this week’s commentary with some rather depressing news from Reuters:

The ratio of downgrades to upgrades in the credit ratings of leveraged loans has spiked to a record level, five times above that hit during the last global financial crisis, reflecting the unprecedented stress in risky assets due to the coronavirus pandemic. Leveraged loans, which are loans taken out by companies that have very high levels of debt, usually with non-investment grade credit ratings–tend to be used by private equity firms as a way to fund acquisitions of such companies. The U.S. leveraged lending market has grown to more than $2 trillion, up 80% since the early 2010s, according to credit rating agency Moody’s Investors Service.

Add in the $1.2 trillion junk bond market and the $3.2 trillion in BBB debt, which is just barely above the junk category, and you end up with nearly six and a half-trillion dollars’ worth of corporate debt that is primed for varying degrees of default. The catalyst for this default is the worst economy since the Great Depression.

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How The Fed Gets Away With Ripping Off Ordinary Americans

By Clint Siegner – Re-Blogged From Gold Eagle

The Federal Reserve has printed trillions of dollars without generating runaway price inflation through the use of a neat trick.

The privately owned bank cartel shovels the bulk of the money to Wall Street banks and not to the public at large. Instead of millions of Americans rushing out to bid up prices on consumer goods, a relative handful of bankers is using the free money to bid up asset prices and then pay themselves huge performance bonuses.

Decline of the U.S. Dollar Could Happen at ‘Warp Speed’

Stephen Roach, a Yale University senior fellow and former Morgan Stanley Asia chairman, tells MarketWatch that his forecast for a sharp deterioration of the U.S. dollar could be a very near-term phenomenon, not an event that looms off in the distance.

“I do think it’s something that happens sooner rather than later,” the economist told MarketWatch during a Monday-afternoon interview.

His comments come as the financial expert has been warning for weeks of an epic downturn of the buck that could signal the end of the hegemony of the greenback as a reserve currency — an event that would ripple through global financial markets.

Stephen Roach

IMF Downgrades Outlook for Global Economy

[The Recession was caused partly by the COVID Pandemic, partly from the lockdowns put in place in over 40 US States, and partly by the economic troubles starting before that (eg. the REPO Rate crisis). These IMF forecasts likely are too optimistic.  –Bob]

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