Economics

Economics
Max and Stacy give you all the financial news you need as the Global Insurrection Against Banker Occupation gathers pace. Occupy Wall Street, Crash JP Morgan, Buy Silver and DEFINITELY visit MaxKeiser.com!
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Bitcoin loses $2 Billion in Market Cap due to forking; Ethereum capitalizes on Bitcoin’s Loss

17-Mar-2017

In the past three days, Bitcoin prices have plummeted from over $1,200 to $1,100 with clear signs of onset of bearish behavior owing to a strong fundamental factor. The market cap of the cryptocurrency dropped from over $20 Billion to $18 Billion in the past three days owing to the drastic fall in prices. While the market is in a strong uptrend on a long term time frame, this might very well be a major blow to the trend and might shadow the Bitcoin markets with bearishness. The influencing fundamental is the Bitcoin forking problem that has had negative impact on the prices in the past.

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When Money Is “Free,” Discipline Evaporates; When Discipline Evaporates, Decisions Are Disastrous

17-Mar-2017

Whatever is free is squandered. When water is free, it’s freely wasted. When electricity is free, there’s no motivation to use it wisely.

The same principle holds true for money. If money is free, or nearly free, there is no motivation to invest it wisely, or consider the opportunity costs of spending it versus investing it or preserving it as savings.

Money that can be borrowed for next to nothing is essentially “free” because the costs of interest are negligible. Money that can be borrowed in virtually unlimited quantities is also “free,” as whatever funds are squandered or lost to malinvestment can be easily replaced with more borrowed money.

Nothing enduringly productive can be built without discipline and a steady focus on the bottom line of production costs, revenues, overhead expenses and opportunity costs, i.e. what else could have been done with this capital and labor?

These dynamics are scale-invariant, meaning they apply to individuals and households as well as to companies, institutions and nation-states.

Thus we see the same poor results in trust-funders whose income is “free” (pouring in monthly whether the individual was productive or not) and national governments that can simply borrow another trillion dollars (or $10 trillion, hey why not?) when they’ve squandered all the tax revenues.

We intuitively grasp the necessity of discipline to corral impulses and desires that are self-destructive in the longer term. Eating chocolate cake and ice cream might appeal to our immediate cravings, but longer term the consequences of unbridled consumption of this kind of sweets are dire.

We also grasp the role discipline plays in learning difficult subjects/tasks and in accomplishing long-term, often arduous projects.

If there is any commonality to genius, it is a prodigious work ethic based on a highly disciplined schedule of daily productive effort.

All of which leads us to ask: what precisely have we accomplished by borrowing and blowing $9 trillion in additional national debt over the past eight years?With interest rates near-zero and the credit line of the nation essentially unlimited–recall that the central bank created $3.5 trillion of money out of thin air and used much of it to buy federal bonds–there was no need for any difficult choices or trade-offs–that is, discipline.

The trillions could be borrowed from future taxpayers painlessly, and squandered on propping up unaffordable entitlements and programs that were each immune to discipline.

So a pharmaceutical company raises the cost of a pinworm medication from $3 to $600. When money can be borrowed in endless quantities for “free,” there’s no need to ask if this predatory piracy is justified or necessary for the good of the nation; just borrow another trillion to pay for Medicare and Medicaid costs that are largely skims, scams, fraud or unproductive paper-shuffling.

As long as the money spigot is “free,” there’s no need to ask why the F-35 fighter aircraft is four times as costly as the aircraft it replaces.

As long as the money is “free,” why should any politico risk telling a National Security agency such as the CIA “no more money for your agency until you can account for the tens of billions you’re spending on gosh knows what.”

Lowering interest rates to near-zero has reduced the need for fiscal-political discipline to near-zero. Politicos of all stripes are only too willing to borrow trillions from future generations–why not borrow and blow the money now to assure my re-election, and let future taxpayers figure out what to do about the crushing burden of debt we’re leaving them?

High interest rates were basically the only mechanism of discipline imposed on short-term, free-spending politicos. Once the cost of interest was reduced to signal noise, politicos were freed of the burdens of discipline: of having to reckon the burdens of future interest, of opportunity costs, of trade-offs and the difference between productive investments and cronyist pork-barrel spending on marginal (but highly profitable) “infrastructure.”

How disciplined will your gambling be in the casino when all your losses are covered by future taxpayers? Why hold back from risky gambles when any losses will be paid by others? Go head and gamble wildly–any lucky wins will be yours to keep, and all the losses will be covered by nameless others.

This is how “free money” leads to disastrous decisions. With the need for discipline eliminated, there’s no motivation not to gamble wildly, fund every special interest group’s demand, and grease the palms of every insider, every crony and every oligarch.

This is how a great nation will self-destruct. The only possible output of a system lacking any discipline is self-destruction.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print). For more, please visit the OTM essentials website.

Jim Willie Issues ALERT: Path to Global Currency Reset Begins HERE AND NOW

17-Mar-2017

Something BIG is Afoot in Shanghai.  
The Chinese Have CHANGED THE GAME Suddenly.  The Jig Is Up.
From the Chinese Reaction in the Gold Market, Expect the Path to the Global Currency RESET to be Entered HERE AND NOW WITH URGENCY:

A contact at Evolution Consulting has reported that his best contact notified him that VIPs are being invited to take tours of the Shanghai Gold Exchange operation. This man was among one of the guests. These tours are not being arranged in some congenial welcoming event, not at all. Rather they are informational and official in granted preview. They are almost surely being staged to inform the opposition that it is all over for them now. With a cherry on top, the VIP guests were required to pay for the tour. The above juicy tidbit was provided by a client, passing the word along. Something big is afoot.

CHINA CHANGED POSITION

China seems to have changed its position toward aggressive in the gold market introduction with gusto and emphasis. Conclude easily that where there is smoke, there is fire, and the heat will be on physical gold metal demand in Asia. In turn the pressure will be put on the USDollar, whose custodians are not honorable and for perhaps the last time, have betrayed the Chinese. Lower USDollar valuation combined with already chronic low bond yield could have turned the Chinese hostile in the wake of the USFed rate hike. The Jackass raises the conjecture (stronger and more classy than guess) that the USGovt and its bankster masters lied to China about a rate hike, and the Chinese are very angry.

The sleazy central banker crew defaulted on the gold lease from 1999, evident in 2014. The same sleazy vile crew have used tricks like bank derivatives to create phony bond demand, tricks like Reverse REPO to undo the last rate hike by ramping up to dangerous levels the bond leverage, alongside massive bond default on legacy bonds from nearly a century ago. The fact that a bond is old does not invalidate the bond’s integrity and requirement for honoring it. The criminal central banker crew in all likelihood stole at least $3 trillion in Saudi USTBonds as well, which serve as ESFund core. China has probably seen enough, and will proceed with the Global Currency RESET. Their nation is under stress, and the imposition of the Gold Standard should right their course well enough, even if it derails the United States to the point of entry into the Third World.

Click Here To Continue Jim Willie’s Hat Trick Letter:

Gold Cup – Horse Racing’s Greatest Show, Gambling and ‘Going for Gold’

17-Mar-2017

– Gold Cup at Cheltenham – Most important event on horse racing calendar

– Gold Cup trophy contains 10 ounces of gold

– Today’s prize is worth over £9,000 in gold terms

– £600 million bets on horses, 220,000 pints of Guinness will be drunk, 9 tonnes of potato eaten

– Gold constantly and universally awarded as top prize

– Ultimate prize to award our heroes as early as 408 BC

– Humanity recognises it as very rare and very valuable

– Gold a great prize and a good bet but works best as hedge and a safe haven

– Better to take a ‘punt’ on gold than the horses

Cheltenham Gold Cup – Wikipedia

This week 65,000 people have been gathering in Cheltenham for one of the most important events on the horse racing calendar, the world famous Cheltenham Festival and the Gold Cup race.

Over 25 races will be raced over the four day gathering with £4,305,000 of prize money will be handed out this week at Cheltenham Festival.

The Cheltenham Gold Cup is the most famous race of the festival and happens on the final day of the four-day event. The Gold Cup is the most prestigious of the most prestigious of all National Hunt events and it is sometimes referred to as the Blue Riband of horse jump-racing.

The race takes place over 3 miles 2½ furlongs (5,331 m) and includes 22 fences to be jumped.

The prize? 10 ounces of gold and £575,000. The prize for those who turn up to watch the world famous event? The chance to experience the excitement and fun of race day and likely lose a few bob – with a massive £600 million staked on the outcome of the races. The bookie always wins … well nearly always.

10 ounces of gold and over half-a-billion British pounds of cash surrounding one event. What does this say about the state of our economy today and how we award our sporting heroes?

Read full story here…

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Bitcoin Bull Watch™

17-Mar-2017
Real bitcoin market value reporting & opinion for long term bitcoin investors. Weekly.

Download all the issues here for FREE

[KR1045] Keiser Report: Jon Corzine’s Big, Bad Bond Bet

16-Mar-2017

We discuss the lawsuit by the administrator of MF Global against PwC for, ultimately, Jon Corzine’s big, bad European bond bet. In the second half Max interviews Charles Hugh Smith of OfTwoMinds.com about whether or not the Federal Reserve Bank has already lost control.

Now That Everyone’s Been Pushed into Risky Assets…

16-Mar-2017

If we had to summarize what’s happened in eight years of “recovery,” we could start with this: everyone’s been pushed into risky assets while being told risk has been transformed from something to avoid (by buying risk-off assets) to something you chase to score essentially guaranteed gains (by buying risk-on assets).

The successful strategy for eight years has been buy the dips because risk-on assets always recover and hit new highs: housing, stocks, bonds, bat guano futures–you name it.

Those who bought the dip in hot housing markets have seen spectacular gains since 2011. Those who bought every dip in the stock market have been richly rewarded, and those buying bonds expecting declining yields have until recently logged reliable gains.

The only asset class that’s lower than it was in 2011 is the classic risk-off asset: precious metals.

Investors who avoided risk-on assets–stocks, bonds, REITs (real estate investment trusts) and housing in hot markets–have been clubbed, while those who piled on the leverage to buy every dip have been richly rewarded.

Those who bet volatility–once a fairly reliable reflection of risk–would finally rise have been wiped out. By historical measures, risk has fallen to levels not seen since… well, just before the last Global Financial Meltdown.

Globally, financially assets have soared from a 2008 low around $222 trillion to over $300 trillion. Even in today’s financially jaded world, $80 trillion is an impressive number: over 4 times America’s GDP of $18 trillion annually, and roughly equal to global GDP.

This benign confidence that risk has been sidelined is the result of central bank policy: by flooding the financial markets with liquidity and credit, and by buying trillions of dollars of bonds and other risk-on assets, central banks have sent a simple message: we will never let risk-on assets decline for long, so buy the dips.

This has worked brilliantly, as private-sector investors buy every dip, relieving the central banks of doing more than simply maintaining their existing policy of buying $200 billion every month:

There are a few flies in the ointment of this wonderful risk-on era. Interest rates are starting to click higher here and there, potentially signaling the end of a 30-year bond Bull market.

Corporate profits have slumped or stagnated, removing the bullish prop of higher earnings.

Full-time jobs, the backbone of household income and income security, have finally edged above their 2008 level–but the gains are exceedingly modest, and far below historic trends.

What’s actually happened over the past eight years is this: risk has not been vanquished– it’s just been shoved out of sight. To unwary observers, the absence of risk supports the rosy view that risk has been eliminated by central bank policies.

But what if risk has not been disappeared, and is piling up out of sight? A funny thing happened on the way to a low-risk environment: loans in default (non-performing loans) didn’t suddenly become performing loans. Over-leveraged players didn’t suddenly become deleveraged. Nearly empty shopping malls did not become more valuable as their revenues and profits plummeted.

All these real-world financial factors are like dead wood piling up on the forest floor. A random lightning strike will ignite this dead wood at some point, and central banks may find they have nothing in hand to extinguish the conflagration but a leaking canister of gasoline.

Now that everyone’s been pushed into risk-on assets, it might be a good time to look at the dead wood that’s been piling higher for eight long years.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Check out both of my new books, Inequality and the Collapse of Privilege($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform($3.95 Kindle, $8.95 print). For more, please visit the OTM essentials website.

Gold Up 1.8%, Silver Up 2.6% After Dovish Fed Signals Slow Rate Rises

16-Mar-2017

– Gold up 1.8%, silver up 2.6% – Fed signals slow rate rises
– Dollar sells off as Fed raises 0.25% to target range of 0.75 percent to 1 percent on inflation outlook and “ebullient” stocks
– Gold’s biggest 1 day percentage gain since September 2016
– Fed raises rates for only the third time since crisis
– Fade out Fed “jibber jabber” and focus on still ultra low rates (see chart)

– Rising rates bullish for gold as seen in 1970s and 2003 to 2007 (see table)
– Silver rose 26% in 2003, 14% in 2004, 29% in 2005 and 46.6% in 2006
– Raise is too little, too late … Dovish Fed creating asset bubbles

– Dutch pro EU government have marginal win and populist Wilders does not see gains expected
– Pro-EU Dijsselbloem PvdA party likely biggest losers – risking his position as head of  Eurogroup of Euro zone’s finance ministers
– Europeans will continue to reject increasingly undemocratic federal EU super state and risk of contagion remains high

– Geopolitical risk in form of Brexit talks and French elections seeing safe haven demand in UK, France and other EU countries

Gold in USD – 24 Hours

Gold rallied 1.8 percent yesterday as the U.S. Federal Reserve raised interest rates by an expected 25 basis points for the second time in three months.

Spot gold maintained those gains and moved as high as $1,228/oz overnight in Asia and gold has consolidated on those gains in European trading.

Gold had its biggest one-day jump since September. The Fed said in its policy statement that further hikes would only be “gradual,” with officials sticking to their outlook for two more rate hikes this year and three more in 2018.

Fed raises rates for the third time since crisis
Source: Newsreportonline.com

Silver rose 2.6 percent to $17.31 an ounce and traded another 1% in trading this morning to $17.50 an ounce. Platinum was up 2.8 percent at $965 per ounce while palladium was up 2.5 percent at $771 an ounce.

The Fed remains ‘dovish’ and signaled just three more rate hikes in 2017 as expected. They attempted to appear hawkish and suggested they would increase interest rates three times in 2017.

It is worth remembering that they promised three rate hikes for 2016 and yet only one rate hike materialised. We expect given the fragile nature of the so called economic recovery that this will be the case again.

Read full story here…

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Is the Apptrade ITO following the same path as Snapchat IPO?

16-Mar-2017

Following the recent Snapchat IPO having skyrocketed to a $32 billion market capitalization, technology investors worldwide have had their eyes opened wide to just how profitable mobile apps can be. Meanwhile, trends in blockchain technology have been innovating the way investment is taking place, with increasingly more startup companies turning to crypto-token-based crowdfunding solutions for simplifying fundraising for budding entrepreneurs while providing non-conventional opportunities for smaller investors to get in on profiting from potentially-disruptive business models. At the convergence of these two trends of mobile apps and crypto-crowdfunding, has come a new US-based venture: Apptrade.

Aiming to become the “Kickstarter for apps on the Blockchain,” Apptrade recently launched a crowdfunding campaign to generate the capital to build a platform supporting the funding, development and marketing of a curated selection of mobile apps. Issuing investors royalty-backed tokens to share in profits from multiple portfolios of apps – the basic premise of Apptrade is to serve as a “stock market of apps” using a SaaS (software as a service) platform.

For app developers seeking capital to build out their ideas for the newest, hottest apps – whether mobile applications, music and digital art programs, games, ebooks, or other digital media – Apptrade could potentially prove a simplified vehicle for accessing funds through networks directly supporting their vision. Bringing together a diverse group of developers for mutual benefit, app creators & publishers are able to launch their own portfolios of up to 100 apps per portfolio or join others to raise both awareness and revenue for their applications without creating debt or giving up equity. The business model fundamentally differs from conventional crowdfunding by collaborative funding going towards supporting multiple rather than single projects per campaign. Every portfolio designed to ensure all included apps are supporting the one another through regularly scheduled updates, cross-promotion, and high quality standards – and a number of strategies have been planned, including coordinated launches, app flipping, deep linking, portfolio leagues, and branding partnerships. As such, potential advantages of the model extend far beyond just the funding component – providing players with a rich ecosystem of resources.

In addition to serving as a platform enabling investment in portfolios of apps, Apptrade is also an agent for publishers of digital content – representing developers and their apps across a network of parties interested in purchasing successful apps. Actively promoting within finance communities to foster an awareness of apps as alternative assets, app developers and publishers may also leverage the platform as an outlet to sell their apps to private buyers – with Apptrade receiving brokerage commissions on apps incubated through their respective portfolios once the digital properties are sold, as well as earning fees when funds are raised through the sale of portfolio tokens.

While investors in individual portfolio tokens are to share in the project earnings for their portfolios, Apptrade itself is currently raising funds for its initial development through an Initial Token Offering (ITO), open to public investors. Currently in stage 2, Apptrade tokens – “APPX” – are being offered at a 25% discount and can be purchased with a number of cryptocurrencies such as BTC, ETH, DASH, and others as well as standard fiat currencies. Though Apptrade is raising capital from private investors as well, the APPX token will be used to perpetually raise the funds needed to maintain the scaling of Apptrade platform expenses while granting sponsors exclusive revenue-sharing opportunities with risk well-diversified through robust portfolios of up to 100 applications each. The platform also shall provide market analytics tools for sponsors to analyze trends, the portfolios’ economic trajectories, and relevant data to assist investment decisions – all while automating the funding allocations and revenue splits via coded smart contracts for each portfolio amongst its projects and token holders accordingly (minus publishers maintaining responsibility for transferring their share of profits back to Apptrade for the corresponding distribution.)

Portfolio tokens will be hosted as separate autonomous entities on a public ledger on the decentralized cryptocurrency exchange, OpenLedger DEX, by Denmark-based allying partnership entity, OpenLedger Apptrade Aps. According to ApptradeLLC founder, Daniel Pineda,

“With the transparency and security of the OpenLedger, Apptrade can fully embrace this new form of collaborative marketing and funding. If one or a few of the brands go viral and become hits, it should put eyes on the rest of the brands in the group. Our mission is to improve access to value for content creators worldwide.”

With much of the technological component operating on autopilot, much of Apptrade’s human capital is likely to be focused in growing the network. Both on the sides of growing their portfolios and educating capital communities on the structure of the investment model, there’s much work ahead for the venture to lay the foundations necessary to execute its vision – including establishing both a centralized and decentralized team of brand ambassadors and app brokers bringing new developers onto the portfolios, finding potential sponsors, and providing transparency on the conceptual model of tradable royalty streams from digital goods.

Could Apptrade succeed in turning app portfolios into a wide-accepted and traded alternative asset class into their own, outperforming the usual ROIs of stocks, real estate, and other popular investment vehicles? Time – and the market – will tell exactly how well this innovative fusion of crypto-based, diversified app portfolio crowdfunding/investing shall fare. Still yet to transition successfully from idea to proof-of-concept in a young blockchain space, there are, of course, no guarantees it is a business model that will stand the test of shifting market tides. However, OpenLedger CEO, Ronny Boesing, is optimistic for the partnership:

“Apptrade’s venture is an innovation in investment finance, one that could have fascinating results for the future of fundraising in general. As crowdsales and their ITOs have transformed cryptocurrency investing, Apptrade FPOs and digitally shared reserves will transform the app investment market in a spectacular fashion.”

For more information on Apptrade, visit www.apptrade.io or view their open-access 49-page strategic overview at https://ito.apptrade.io/docs/so.pdf

More information on partnering OpenLedger is also available at www.openledger.info

Contrarian Trading Practices with an Eye to Easier Profits

15-Mar-2017

Fed chair, Janet Yellen is expected to act decisively on Wednesday, 15 March 2017. On that date, the Fed will have concluded its 2-day meeting of FOMC members. At the heart of the meeting is the state of the US economy and whether the Fed can adopt monetary policy to stabilize and strengthen the status quo. Recall that the Fed has several overarching objectives as it plots out its monetary policy agenda. Foremost among them are price stability, and full employment. To achieve these objectives, the Fed must adopt policies that help to grow the economy without allowing it to overheat. An overheating of the economy takes place when aggregate demand exceeds aggregate supply.

Currency Traders Back the Greenback

Excess demand is a feature of the current US economy, and that’s precisely why the Fed is looking to put the brakes on to prevent inflation from rising too quickly. The Fed has been targeting an inflation rate of 2%, and we are rapidly approaching that level. As a trader, there are many reasons to be excited about Fed policy. For starters, a rate hike (increase to the Federal Funds Rate) will boost the attractiveness of the US economy to foreigners. This will mean capital inflows will take place at a rapid rate. Foreign currency such as the GBP, EUR, JPY, ZAR, CNY, and others will be sold en masse to purchase USD. Naturally, greater demand for the greenback will result in a sharply appreciating currency, coupled with reciprocal declines in competing currencies.

Wall Street Bulls are Charging

As far as trading activity goes, Wall Street indices are faring well. The Dow Jones Industrial Average is hovering around the record-shattering 21,000 level, the NASDAQ Composite Index is at 5,853.77, and the S&P 500 index is at 2,373.75. These levels are phenomenal. In fact, the 1-year performance of major US bourses is up between 18.58% and 24.33% overall. Across the Atlantic, only the FTSE 100 index and the DAX can claim similar gains. The FTSE (the UK premier index) is up 18.72% over 1 year, while the German DAX is up 22.31%. How will these indices be affected by a rate hike in the US? This is an important question to ask as a trader, and one that warrants careful analysis of the most appropriate binary options strategy . As a contrarian investment vehicle, the binary route allows traders to simply forecast the direction of price movement of currency pairs, indices, commodities or assets. Instead of profiting off the nominal increases or decreases, only the right direction is required to lock in fixed gains.

What are the chances of a Fed rate hike in March?

While nobody can predict with 100% certainty what Fed chair Janet Yellen will announce on Wednesday, 15 March, the consensus is that she will pull the trigger. Fed chair Yellen has been dropping hints about how strong the US economy is, and the need to bolster economic performance with stabilizing monetary policy. The days of accommodation appear to be well behind us. This means that further cuts the interest rate are going to be replaced by increasing interest rates and a tightening of monetary policy. No further bond or asset purchases are on the horizon in the US. This means we are going to see Fed policy targeting a stabilization of monetary policy with interest rates moving up 25-basis points in the region of 0.75% – 1.00%.

When the Financial Times conducted a survey on raising interest rates, the majority of those polled expected the Fed to act by June 2017 at the very latest, with a large number anticipating a May rate hike and a smaller number anticipating a March rate hike. When it comes to the federal funds rate by the end of next year, many are expecting the FFR to be 2.625%, with a median FFR of 2.125%. As a trader, this news is a godsend. First of all, it should be used to maximum effect on banking and financial stocks which will balloon out of control with higher interest rates. Additionally, demand for the USD will increase and commodities like gold will likely take a hit from a stronger greenback and higher interest rates.

Why Fragmentation Is the Solution, Not the Problem

15-Mar-2017

The fragmentation of political consensus (i.e. the consent of the citizenry) is presented by the Powers That Be and their media servants as being a disaster.The implicit fear is real enough: how can we rule the entire nation-empire if it fragments?

As I noted the other day, fragmentation terrifies the Establishment of racketeers and insiders, for when the centrally-enforced rentier skims and scams collapse, those who own and control the rentier skims, scams and rackets will lose the source of their wealth and power.

To understand why fragmentation is the solution rather than the problem, we have to look at how power is leveraged in centralized government. Let’s take the recent increase in a common pinworm treatment from $3 to $600: Pinworm prescription jumps from $3 to up to $600 a pill (via J.F.).

In a top-down, centralized hierarchy of political power (i.e. the central state), the pharmaceutical company only needs to lobby a few authorities in the central state to impose its rentier skim/scam on the entire nation.

Lobbying/bribing a relative handful of federal officials and elected representatives is remarkably inexpensive: a financier or corporation only needs to focus on these few key players, and smoothing the PR pathway via a highly concentrated corporate media.

A mere $5 million spent in the right places guarantees $100 million in future profits– profits earned not from open competition in a transparent market, but profits plundered as rentier skims: the product didn’t get any better or effective when the price leaped from $3 to $600, and competition was squelched by regulatory capture and high barriers to entry.

Now imagine if the pharmaceutical company had to lobby/bribe officials in each of America’s 3,142 counties to impose its rapacious rentier skim on the populace of each county. The lobbying/bribing effort will be orders of magnitude more costly and complex, and the national corporate media is less effective at the local level, where community groups and local media have some influence.

If we look at the source of the 2008 Global Financial Meltdown, we find that the centralization of capital and power were the primary enablers of the meltdown. If the financial system were composed of 1,200 local banks, each of which had to comply with local and state regulations instead of five behemoth banks that had the capital and klout to buy Washington D.C.’s approval of their leverage and shady dealings, some hundreds of the smaller banks might have failed–but the system would have survived.

Those banks that played fast and loose with derivatives and subprime mortgages would have reaped what they had sown and been liquidated. Investors in those banks’ bonds and stocks would have been wiped out. Losses would have been taken by those who had taken the risks, bad debts would have been written off and lessons would have been learned.

Instead, the five big banks and a handful of other monstrous financial entities were able to cry, “If you don’t save us, we’ll take the entire system down with us!” A system that prohibited the concentration of centralized capital and power would never have been in a position to be blackmailed by the Too Big To Fail predatory parasites.

We live in an incredibly diverse nation and world. Fragmentation serves this world better than centralized power, which as I explain in my short booksInequality and the Collapse of Privilege and Why Our Status Quo Failed and Is Beyond Reform, is breeds corruption, self-serving bureaucracies, insider rackets, cronyism and rentier skims as the only possible output of the system.

If we want a resilient, flexible, low-cost system, we must replace the centralized system of enforced consent and artificial consensus with a fragmented, transparent one of smaller scaled, competing organizations of governance, capital and enterprise.

The intrinsic limits of a corrupt, inefficient and rigged-to-serve-the-few-at -the-expense- of-the-many centralized pyramid of power and wealth is why centralization is the problem rather than the solution:

Transparent fragmentation is the solution. Only those who will lose their share of the rentier skims, scams and rackets are afraid of history’s trajectory away from centralization. When something no longer works, it goes away: it costs more to maintain than its output is worth.

As its defenders tax the system to protect what no longer works (except for them, of course), the slide to oblivion accelerates as the system breaks down under the collective weight of all the skims, scams and rackets benefiting the few at the expense of the many.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Check out both of my new books, Inequality and the Collapse of Privilege($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform($3.95 Kindle, $8.95 print). For more, please visit the OTM essentials website.

“Ryancare” Dead on Arrival: Can We Please Now Try Single Payer?

15-Mar-2017

The Canadian plan also helps Canadians live longer and healthier than Americans. . . . We need, as a nation, to reexamine the single-payer plan, as many individual states are doing.

— Donald Trump, The America We Deserve (2000)

The new American Health Care Act has been unveiled, and critics are calling it more flawed even than the Obamacare it was meant to replace. Dubbed “Ryancare” or “Trumpcare” (over the objection of White House staff), the Republican health care bill is under attack from left and right, with even conservative leaders calling it “Obamacare Lite”, “bad policy”, a “warmed-over substitute,” and “dead on arrival.”

The problem for both administrations is that they have been trying to fund a bloated, inefficient, and overpriced medical system with scarce taxpayer funds, without capping its costs. US healthcare costs in 2016 averaged $10,345 per person, for a total of $3.35 trillion dollars, a full 18 percent of the entire economy, twice as much as in other industrialized countries.

Ross Perot, who ran for president in 1992, had the right idea: he said all we have to do is to look at other countries that have better health care at lower cost and copy them.

So which industrialized countries do it better than the US? The answer is, all of them. They all not only provide healthcare for the entire population at about half the cost, but they get better health outcomes than in the US. Their citizens have longer lifespans, fewer infant mortalities and less chronic disease.

President Trump, who is all about getting the most bang for the buck, should love that.

Hard to Argue with Success

The secret to the success of these more efficient systems is that they control medical costs. According to T. R. Reid in The Healing of America, they follow one of three models: the “Bismarck model” established in Germany, in which health providers and insurers are private but insurers are not allowed to make a profit; the “Beveridge model” adopted in Britain, where most healthcare providers work as government employees and the government acts as the single payer for all health services; and the Canadian model, a single-payer system in which the healthcare providers are mostly private.

A single government payer can negotiate much lower drug prices – about half what we pay in the US – and lower hospital prices. Single-payer is also much easier to administer. Cutting out the paperwork can save 30 percent on the cost of insurance. According to a May 2016 post by Physicians for a National Health Program:

Per capita, the U.S. spends three times as much for health care as the U.K., whose taxpayer-funded National Health Service provides health care to citizens without additional charges or co-pays. In 2013, U.S. taxpayers footed the bill for 64.3 percent of U.S. health care — about $1.9 trillion. Yet in the U.S. nearly 30 million of our citizens still lack any form of insurance coverage.

The for-profit U.S. health care system is corrupt, dysfunctional and deadly. In Canada, only 1.5 percent of health care costs are devoted to administration of its single-payer system. In the U.S., 31 percent of health care expenditures flow to the private insurance industry. Americans pay far more for prescription drugs. Last year, CNN reported, Americans paid nearly 10 times as much for prescription Nexium as it cost in the Netherlands.

Single payer, or Medicare for All, is the system proposed in 2016 by Democratic candidate Bernie Sanders. It is also the system endorsed by Donald Trump in his book The America We Deserve. Mr. Trump confirmed his admiration for that approach in January 2015, when he said on David Letterman:

A friend of mine was in Scotland recently. He got very, very sick. They took him by ambulance and he was there for four days. He was really in trouble, and they released him and he said, ‘Where do I pay?’ And they said, ‘There’s no charge.’ Not only that, he said it was like great doctors, great care. I mean we could have a great system in this country.

Contrary to the claims of its opponents, the single-payer plan of Bernie Sanders would not have been unaffordable. Rather, according to research by University of Massachusetts Amherst Professor Gerald Friedman, it would have generated substantial savings for the government:

Under the single-payer system envisioned by “The Expanded & Improved Medicare For All Act” (H.R. 676), the U.S. could save $592 billion – $476 billion by eliminating administrative waste associated with the private insurance industry and $116 billion by reducing drug prices . . . .

According to OECD health data, in 2013 the British were getting their healthcare for $3,364 per capita annually; the Germans for $4,920; the French for $4,361; and the Japanese for $3,713. The tab for Americans was $9,086, at least double the others. With single-payer at the OECD average of $3,661 and a population of 322 million, we should be able to cover all our healthcare for under $1.2 trillion annually – well under half what we are paying now.

The Problem Is Not Just the High Cost of Insurance

That is true in theory; but governments at all levels in the US already spend $1.6 trillion for healthcare, which goes mainly to Medicare and Medicaid and covers only 17 percent of the population. Where is the discrepancy?

For one thing, Medicare and Medicaid are more expensive than they need to be, because the US government has been prevented from negotiating drug and hospital costs. In January, a bill put forth by Sen. Sanders to allow the importation of cheaper prescription drugs from Canada was voted down. Sanders is now planning to introduce a bill to allow Medicare to negotiate drug prices, for which he is hoping for the support of the president. Trump indicated throughout his presidential campaign that he would support negotiating drug prices; and in January, he said that the pharmaceutical industry is “getting away with murder” because of what it charges the government. As observed by Ronnie Cummins, International Director of the Organic Consumers Association, in February 2017:

. . . [B]ig pharmaceutical companies, for-profit hospitals and health insurers are allowed to jack up their profit margins at will. . . . Simply giving everyone access to Big Pharma’s overpriced drugs, and corporate hospitals’ profit-at-any-cost tests and treatment, will result in little more than soaring healthcare costs, with uninsured and insured alike remaining sick or becoming even sicker.

Besides the unnecessarily high cost of drugs, the US medical system is prone to over-diagnosing and over-treating. The Congressional Budget Office says that up to 30 percent of the health care in the US is unnecessary. We use more medical technology then in other countries, including more expensive diagnostic equipment. The equipment must be used in order to recoup its costs. Unnecessary testing and treatment can create new health problems, requiring yet more treatment, further driving up medical bills.

Drug companies are driven by profit, and their market is sickness – a market they have little incentive to shrink. There is not much profit to be extracted from quick, effective cures. The money is in the drugs that have to be taken for 30 years, killing us slowly. And they are killing us. Pharmaceutical drugs taken as prescribed are the fourth leading cause of US deaths, after heart disease, cancer and stroke.

The US is the only industrialized country besides New Zealand that allows drug companies to advertise pharmaceuticals. Big Pharma spends more on lobbying than any other US industry, and it spends more than $5 billion a year on advertising. Lured by drug advertising, Americans are popping pills they don’t need, with side effects that are creating problems where none existed before. Americans compose only 5 percent of the world’s population, yet we consume fully 50 percent of Big Pharma’s drugs and 80 percent of the world’s pain pills. We not only take more drugs (measured in grams of active ingredient) than people in most other countries, but we have the highest use of new prescription drugs, which have a 1 in 5 chance of causing serious adverse reactions after they have been approved.

The US death toll from prescription drugs taken as prescribed is now 128,000 per year. As Jon Rappaport observes, with those results Big Pharma should be under criminal investigation. But the legal drug industry has grown too powerful for that. According to Dr. Marcia Angell, former editor in chief of the New England Journal of Medicine, writing in 2002:

The combined profits for the ten drug companies in the Fortune 500 ($35.9 billion) were more than the profits for all the other 490 businesses put together ($33.7 billion). Over the past two decades the pharmaceutical industry has [become] a marketing machine to sell drugs of dubious benefit, [using] its wealth and power to co-opt every institution that might stand in its way, including the US Congress, the FDA, academic medical centers, and the medical profession itself.

It’s Just Good Business

US healthcare costs are projected to grow at 6 percent a year over the next decade. The result could be to bankrupt not only millions of consumers but the entire federal government.

Obamacare has not worked, and Ryancare is not likely to work. As demonstrated in many other industrialized countries, single-payer delivers better health care at half the cost that Americans are paying now.

Winston Churchill is said to have quipped, “You can always count on the Americans to do the right thing after they have tried everything else.” We need to try a thrifty version of Medicare for all, with negotiated prices for drugs, hospitals and diagnostic equipment.

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Most Overvalued Stock Market On Record — Worse Than 1929?

15-Mar-2017

Stock Market Most Overvalued On Record — Worse Than 1929?

The US stock market today has never been more dangerous and overvalued, according to respected Wall Street market analyst John Hussman.

Indeed, Hussman goes as far as to say that “this is the most dangerous and overvalued stock market on record — worse than 2007, worse than 2000, even worse than 1929” as reported by Marketwatch.

For some months now, Hussman of Hussman Funds’ has been warning in his research that investors are ignoring extremely high stock market valuations and are being lulled into a false sense of security by central bank liquidity, massive quantitative easing and zero percent and negative interest rates.

Hussman begins his latest research note by quoting the late, great Sir John Templeton:

“Bull markets are born on pessimism, grow on scepticism, mature on optimism, and die on euphoria.”

He then warns

“A week ago, bullish sentiment among investment advisers soared to the highest level in 30 years (Investor’s Intelligence), joined last week by a 16-year high in consumer confidence. When one recognises that the prior peak in bullish sentiment corresponds to the 1987 market extreme, and the prior peak in consumer confidence corresponds to the 2000 bubble, Sir Templeton’s words take on both relevance and urgency.”

Hussman advises investors become more defensive, because the market could be about to enter a brutal bear market as seen throughout history.

Read full story here…

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Hackers Stole My Phone Number – A Personal Story

14-Mar-2017

On March 3rd, at approximately 9pm, hackers stole my phone number. I didn’t become aware of this until a little more than 24 hours later, but hacking attempts on my other accounts began right away. Prior to this nightmarish experience, I had never heard of this happening to anyone else; however, in the days that followed I quickly became aware of its rapidly growing popularity and frightening ease of execution. Pulling off this attack requires virtually no technical skills, rather it relies entirely on social engineering, persistence, and an incompetent telecom employee. If this can happen to me, it can happen to virtually anybody.

The 48 hour period beginning at around 5am on March 4th was one of the most trying, confusing and frightening of my life. At that point, my wife and I had been up pretty much all night due to our son being in the midst of a horrible sleep regression. In fact, his crying was so hysterical I ended up calling our pediatrician’s office to ensure he wasn’t suffering from something more serious. I was going on two hours of sleep, the sun was about to rise and I was dealing with an inconsolable child. I thought things couldn’t get much worse. Boy was I wrong.

Read more here.

Are Cities the Incubators of Decentralized Solutions?

14-Mar-2017

In yesterday’s entry, I suggested that rather than bemoan the inevitable failure of centralized “fixes,” let’s turn our efforts to the real solutions: decentralized, networked, localized. To commentators such as Richard Florida, decentralized, networked, localized describes cities.

He describes the transition from central states imposing solutions to cities being the incubators of solutions as The Most Disruptive Transformation in History: How the clustering of knowledge lays bare the need to devolve power from the nation-state to the city.

Florida has authored three books on the increasing concentration of the “creative class” and capital in urban zones–cities and their surrounding satellite cities, suburbs and exurbs: The Rise of the Creative Class and Who’s Your City?: How the Creative Economy Is Making Where to Live the Most Important Decision of Your Life.

More recently, he addressed the soaring costs of living in these urban area in The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class—and What We Can Do About It.

Florida’s main thesis is straightforward: solutions are coming from city governments, institutions and enterprises, not central states. Since the world’s populace has rapidly urbanized, this transformation affects the majority of people in both the developed and developing worlds.

I’ve often written about the need to move from centralization to decentralization: centralized command-and-control mechanisms are optimized for the economy and society of the late 1940s – early 1960s, not the economy/society of today that is being creatively disrupted by the 4th Industrial Revolution (digital communications, software, automation, robotics, Internet).

Florida’s premise makes a great deal of common-sense, for the basic reason that different cities face different problems (or different versions of the same problem), and each regional mega-city is embedded in a different state and economy.

Cities also have different resources and dominant political cultures.

In effect, devolving political power to cities would enable a suite of local solutions rather than a single “fix” imposed by a topdown centralized authority.

This article illustrates the spectrum of cities (the categories are somewhat arbitrary, of course): The Megacity Economy: How Seven Types Of Global Cities Stack Up.

To understand why the city may be the ideal political-social-economic unit to manage successful adaptation, look at these three maps of the U.S. The first reflects the GDP generated within each county; the second shows real growth in GDP by region, and the third displays the wages of the so-called “creative class”–those with high-demand skillsets, education and experience.

The spikes reflect enormous concentrations of GDP. This concentrated creation of goods and services generates jobs and wealth, and that attracts capital and talent. These are self-reinforcing, as capital and talent drive wealth/value creation and thus GDP.

Unsurprisingly, there is significant overlap between regions with high GDP and strong GDP expansion. The engines of growth attract capital and talent.

Those urban regions that pursue decentralized, networked, localized solutions will prosper as the adaptive advantages of these principles pay self-reinforcing dividends.

Those urban regions that pursue the hierarchical, one “solution” fits all, high-cost bureaucratic model of central states will sink into the same cesspool of corruption, cronyism, sclerosis and failure to adapt that characterize central states.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print). For more, please visit the OTM essentials website.

[KR1044] Keiser Report: Bloodletting Among Retailers

14-Mar-2017

We discuss the tripling of the Chinese banking system and the last quarter sharp decline in the EU, Japan’s and America’s bank assets signalling ‘financial crisis’ on the horizon? In the second half, Max continues his interview with Wolf Richter of WolfStreet.com about the bloodletting among retailers and how long before the bankruptcies begin.

EU Crisis Is Existential – Importance of Tomorrow’s Vote

14-Mar-2017

EU Crisis Becoming Existential… Dutch Vote Tomorrow and Why It Matters

The leader of the National Front in France, Marine Le Pen, has hailed Britain’s decision to leave the EU – and has called for France to hold a similar referendum

The EU is facing an existential crisis and does not look like it will survive the massive political and financial challenges it is faced with. This has ramifications for investors in the EU itself and globally as the collapse of one of the world’s largest trading blocs will badly impact already fragile global economic growth and increasingly “frothy” looking financial markets – particularly stock and bond markets.

The existential crisis facing the EU, the Dutch elections tomorrow and the coming elections in France and Germany and the risks increasingly likely EU contagion poses to Asian economies and the global economy is considered by True Wealth’s Kim Iskyan today:

Tomorrow, parliamentary elections in the Netherlands mark the first of several important votes in EU member countries that will dictate the future of the continent.

After the Netherlands, France has a presidential election late next month (and likely in a run-off election in early May). Germany follows with presidential elections in September, followed by general elections in Italy in early 2018. All four countries are founding members of the EU. And in each case, there is a chance that an anti-EU party takes power, with potentially enormous consequences for the future of the EU.

Emboldened by the Brexit referendum and the election of U.S. President Donald Trump, right-wing parties have surged in popularity all across the continent. After years of déjà-vu episodes of debt crises, now much of the EU is in the midst of a populist backlash over concerns about immigration, refugees and terrorism. The prospect that anti-EU parties will assume power in countries that are the historical bedrock of the EU is a serious threat to the 28-member political and economic union – and also globalisation itself.

Read full story here…

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Solutions Abound–on the Local Level

13-Mar-2017

Those looking for centralized solutions to healthcare, jobs and other “macro-problems” will suffer inevitable disappointment. The era in which further centralization provided the “solution” has passed: additional centralization (Medicare for All, No Child Left Behind, federal job training, Universal Basic Income, central banking “free money for financiers”, etc.) have all entered Diminishing Returns.

The systemic costs of centralization–corruption, cronyism, soaring prices, declining quality, over-reach, insider rackets, regulatory capture by corporations and oligarchs– are soaring as the benefits of centralization plummet.

ObamaCare was the penultimate flowering of centralization: every self-serving healthcare cartel and racket had a say in the centralized sausage-making, and the results were entirely predictable: highly profitable to the healthcare cartels and rackets, and soaring costs that rendered the program unaffordable.

ObamaCare institutionalized staggering distortions, profiteering and injustices, as those who didn’t qualify for a subsidy were ripped off to pay for all the skims and scams: meds that went from $3 to $600 overnight, etc.

All the sound and fury around a centralized one-size-fits-all “solution” signifies nothing–the solution is decentralized and local, not federal.

Centralization of power, capital and control paid big dividends early on–central governments corralled the productive elements of the nation to wage wars, and capitalists forged immensely profitable integrated supply chains that fed centralized production facilities in which iron ore entered the plant and finished automobiles exited.

The benefits of centralization outpaced the costs: this was the boost phase:

The returns on centralization diminished in the waning years of the 20th century, and are now in free-fall. Whatever has been centralized–federal jobs training, federal takeover of the mortgage market, federal takeover of student loans/debt-serfdom, central bank policies that favored the super-wealthy at the expense of the bottom 95%– have been disastrous wastes of irreplaceable time and political/financial capital.

Fragmentation is feared by the Establishment of rackets and insiders for the very reason that fragmentation is the solution. Who loses when people wake up and abandon the centralized rentier skims, scams and rackets? Those who own and control the rentier skims, scams and rackets.

Solutions abound, but they are at the local level: cities, towns, counties, communities and neighborhoods.

Rather than bemoan the inevitable failure of centralized “fixes,” let’s turn our attention and efforts to the real solutions: decentralized, networked, localized.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print). For more, please visit the OTM essentials website.

Digital Gold – For Now Caveat Emptor

13-Mar-2017

Digital Gold On The Blockchain – For Now Caveat Emptor

– Bitcoin surpasses gold price – a psychological and arbitrary headline 

– Royal Mint blockchain gold asks you to trust in the UK government

– Royal Canadian Mint and GoldMoney blockchain product asks you to trust in government and the technology, servers, websites etc of the providers

– Invest in a gold mine using cryptocurrency – but wait until 2022 for your gold and trust the miners that it is there

– Blockchain and gold will likely make a “good team”, but they’re not ready yet


Are we nearly there yet? Gold on the blockchain.

In the last few weeks there have been significant developments in the world of gold, digital gold, blockchain and bitcoin. Those who have expressed an interest in gold investment, may have received articles from friends and family about how bitcoin prices reached parity with the yellow metal.

We have long argued that bitcoin and gold should be seen as complementary assets. But not everyone agrees and it doesn’t make a good story. Given bitcoin was first touted, and still is by some, as ‘digital gold’ or ‘as good as gold, but better’ then it has been inevitable that each time there is a significant movement in the bitcoin price then the media starts once again to pitch them against one another in a simplistic ‘cash of the currency titans’ narrative.

Below, we ask if there should be all this hype when a digital currency reaches parity with gold, and what this means for blockchain products such as the Royal Mint’s RMG or OzcoinGold which is purporting to be the first gold-backed cryptocurrency – fyi – there have been many attempts.

Ultimately it comes down to investing in and legally own a piece of gold that will serve your portfolio in the same way it has served millions of people in years gone by – as an asset that is a form of financial insurance, that cannot be devalued by central banks and will not be confiscated whether through bail-ins or more forceful means.

If using gold, blockchain and bitcoin together means that investors’ portfolios can meet the above criteria then we are on the dawn of something very exciting, but as you will see from the below, we don’t believe that we are quite there yet.

Read full story here…

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