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!
Updated: 9 hours 42 min ago

DERIVATIVES TIME BOMB SET TO BLOW! – Jim Willie

6-Apr-2017

9 Years After the Derivatives Market Came Within 60 Minutes of Taking Down the Global Financial System, Is the Derivatives Nuclear Time Bomb Once Again SET TO BLOW, Sending Gold and Silver Prices Soaring?

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The Imperial War Machine Marches Forward Under Donald Trump

6-Apr-2017

Now here’s the most disturbing aspect to all of this. Many of us assumed that anti-war protests under Trump would be far more vibrant and massive than under Hillary Clinton. This probably would’ve been the case if not for the non-stop Russia fear mongering from the corporate media and the Democratic Party, but they’ve pushed themselves into a terrible corner with horrible consequences for the rest of us.

If Trump now escalates American intervention in the Syria war, Democrats and other fake liberals will feel compelled to support this disastrous adventure because it’s against evil Russia. See how this works? You got played people.

Read the rest here.

Uncertainty and the Humility of Forecasting an Unknowable Future

5-Apr-2017

Certainty and uncertainty come in a variety of flavors. “Certainty” seems rather definite, but lurking beneath certainty is the more scientifically verifiable notion of probability: the probability of outcomes can be high enough to qualify as certain and low enough to qualify as unlikely.

We can’t know with perfect certainty that our neighbor hasn’t invented a death-ray and may decide to test it on us due to that simmering feud over his dog Fluffy’s antics on our yard.

But we can make an assessment of the probability of this occurring, and conclude the probability is low with a high degree of certainty.

This assessment should change, of course, if we hear strange noises in his shop and notice shrubs in his back yard are now charred in peculiarly symmetric circles–and we learn he previously worked at a national lab on high-energy weapons but was dismissed for pursuing crazy ideas about developing handheld death-ray devices, i.e. phasers. (Star Trek fans, please raise a cheer.)

This brings us to a critical distinction between low-probability events, i.e. known unknowns a.k.a. highly unlikely “long-tail” events, and unknown unknowns, a.k.a. “black swans” made famous by author Nassim Taleb.

What is a known unknown? Death qualifies as a known unknown: we know with a high degree of certainty that the vast majority of living things eventually die (even cancer cells die once their host dies)–but the timing of their individual natural death is inherently uncertain, due to the great number of inputs, variables and causal factors intrinsic to life.

Statistically, there is a high degree of certainty that any dynamic data series will eventually revert to the mean. Spikes in asset prices will typically drop back to the trendline, but the timing of this reversion is intrinsically uncertain due to the unpredictable interactions and feedback loops inherent in complex systems of dynamic inputs and causal factors.

Thus statisticians who are tracking a tulip-bulb (or South Seas Company) like bubble in a speculative asset can forecast the eventual collapse of the bubble, but not the date and time of the reversion.

This collapse (reversion) can be forecast with a very high degree of certainty. (If tulip bulb prices had continued rising with no reversion, tulip bulbs would now cost $1 trillion each).

There are causal mechanisms that explain this eventual collapse: the market eventually runs out of “greater fools” willing to outbid other buyers seeking to buy tulip bulbs, and sellers deciding to cash in their gains overwhelm the few buyers still in the market.

Once the speculative frenzy driven by certainty of staggering profits evaporates into a fear of equally staggering losses, the bubble loses its momentum and prices revert to the long-term trend (often after briefly falling below the mean, requiring a reversion higher).

The bubble in tulips could not be forecast like a reversion to trend. We can forecast that humanity’s attraction to speculative frenzies will not disappear, but we can’t predict the next manifestation of this human trait.

Then there are the unknown unknowns–the stuff that can’t be forecast except as a generalization, i.e. that there are unknown unknowns that will crop up with some regularity– a regularity we can’t forecast with any certainty.

All this should nurture a profound sense of humility in all who dare to forecast an inherently unpredictable future. While humans love a good speculative frenzy that promises unearned wealth for everyone who gets into the game, they also love the illusory certainty of comforting forecasts based on past trends.

Thus we are reassured by long-term forecasts that claim a high degree of certainty that our comfortable lifestyle and all the promises issued by governments and pension plans will come to fruition as promised without any untidy or distressing reversions, phase transitions, collapses triggered by highly unlikely events (those pesky known-unknowns) or even peskier unknown-unknowns).

We are now facing an unpredictable collision of these conflicting sources of certainty and uncertainty. On the one hand, we’re constantly assured our status quo is durably permanent, and all the lines that assure us all the promises that have been issued will be met without any sacrifices or disruptions have been extended with handy pencils and rulers.

But on the other hand, we’re also assured that a certain number of unlikely events will occur despite the low probability we calculate. We’re also assured that unknown-unknowns black swans) will crop up and surprise everyone from time to time.

Can both of these assurances be true? Can we be assured that the odds of something completely upsetting our apple cart of predictable comforts, entitlements, pensions, etc. are so low we needn’t worry about them, and also be assured that highly unlikely events and unanticipated events (black swans) will arise from time to time, threatening the comfortable certainty of all these systemic promises?

The answer is “yes and no.” We can say that based on current trendlines, the future should be predictable with a high degree of certainty, but these trendlines could be completely disrupted by low-probability events and/or black swans.

The question boils down to: are “current trends” the bubble equivalents of the tulip bulb craze? Please glance at this chart of skyrocketing federal debt before answering.

In essence, While we’re being reassured that all these grandiose promises are resting on trends that are as reliably predictable as the tides, the next easily predictable crisis will very likely reveal the trends are speculative bubbles that will predictably burst in a devastating reversion. The wise approach forecasting the future with a profound humility, while the soon to be bankrupted foolish are confident in their grasp of what’s knowable, unknowable and predictable.

It’s Russia, of course!!

4-Apr-2017

So now Putin is being blamed for the continued and growing popularity of Andrés Manuel López Obrador in Mexico!

Yes, indeed, first the article says Russia is responsible for Trump, Brexit, LePen, the ‘no’ vote in Italy and attempted to rig the Dutch election but those wily Dutch hand counted their votes instead! (Nothing to do with the fact that privacy activists had demonstrated how easily they were hacked and thus decisions stemmed from this).

And, in fact, it is MAX KEISER himself who is rigging the elections in Mexico by interviewing local guests who aren’t allowed on the mainstream media there!

Al que no le asusta ese submundo es a John Ackerman, el consejero más cercano de López Obrador. El conductor de RT, Max Keiser, se refiere a Ackerman como “nuestro hombre en México” (RT, 21.4.15, visible en You Tube). Ackerman se presenta, no como analista sino como representante de Morena. La primera colaboración de Ackerman en Keiser Report fue el 22 de noviembre de 2014. Al aire, Ackerman le comenta a Keiser: “Si recibiéramos el apoyo por parte de los medios internacionales, como ustedes, Morena triunfaría como Syriza y Podemos”. Por lo visto esa solicitud de apoyo se concretó pronto.

Notice also that the new paradigm is that populists are authoritarians and elites are democrats!

In Mexico:

En todos estos casos su propósito es actuar para que accedan al poder líderes populistas autoritarios.

And around the world:

Western press is now just equating populism with authoritarianism to try to remake elitism as democratic pic.twitter.com/SW1IKUV1zh

— Zaid Jilani (@ZaidJilani) April 4, 2017

And, remember, in 2020, if you don’t support Chelsea, you’ve been duped by Putin:

Dear god pic.twitter.com/3GYsaNgB9V

— Stacy Herbert (@stacyherbert) April 4, 2017

Fed Reportedly “Tired of Waiting for Inflation,” Plans to Give Every Household $1 Million in Cash

3-Apr-2017

The Federal Reserve has been trying to boost the official inflation rate for eight long years, and apparently patience with current policies is finally wearing thin.Rumor has it that the Fed is readying a new “nuclear option”: distributing $1 million to each household in the U.S.

The Fed can create any sum of dollars it chooses with a few digital keystrokes.An unidentified source at the Fed reported, “The handheld calculators at the Fed only have 12 digits, so there’s a bit of confusion about how much money we’ll have to create to give $1 million to all 100 million U.S. households. The consensus answer is $100 trillion, but they’re putting the numbers into the current econometric models to verify this.”

The basic idea is that giving each household, regardless of wealth or income, $1 million each will spur consumption so mightily that inflation will skyrocket. “What the Fed has wanted for eight long years is to generate an expectation of inflation,” our source explained, “so that consumers will spend whatever cash or credit they have now, knowing that it will buy less in the future.”

Once people expect substantial inflation, they realize the best course of action is to borrow as much money as possible now before interest rates rise–an inevitable consequence of inflationary expectations.

They also realize it’s best to buy whatever you can now before the price rises next month.

“The advocates of this program see asset prices leaping higher,” the source said. “Why would a seller of a house asking $500,000 before ther giveaway maintain an asking price of $500,000? of course the price will immediately jump to $999,000.”

Debt repayment becomes much easier with $1 million in cash. The source iside the Fed noted, “Imagine how much money the federal government is about to lose in student loan defaults. With $1 million in cash to each household, naturally the government will deduct any student loans, overdue taxes, penalties and so on up front. The banks will love this and so will the federal, state and local governments.”

Skeptics are uncertain that households will feel any motivation to pay off private debt such as home mortgages. If interest rates are set to jump higher, it makes sense to hold onto your 4% mortgage rather than pay it off.

The Fed insider noted that advocates expect a tremendous surge in big-ticket consumer durables such as RVs, muscle cars and vacation getaways. “It will be a bonanza for every company selling whatever the middle class aspires to,” the source said.

Skeptics believe the money would be better spent on rebuilding America’s crumbling infrastructure, but the Fed source said that’s already been factored in. “Every level of government can reap a fortune with consumption taxes, user fees, transfer taxes, sales taxes, you name it. With a million bucks to blow, how many people are going to complain about higher sales taxes, transfer taxes, registration fees, higher property taxes and all the other new revenue streams? Very few.”

When asked about the potential of triggering Venezuela-like hyper-inflation that ends up destroying the currency and the economy, the source demurred. “The Fed is very confident it has the tools to manage inflation as well as it managed the 2008 Global Financial Meltdown: whatever the problem may be, the solution is to create more liquidity and credit.”

So how are you going to spend/invest your $1 million?

DISCLAIMER: this essay was written in the spirit of April Fool’s Day.

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.

[KR1051] Keiser Report: Lethal Economic Shocks

31-Mar-2017

We discuss the economic shocks that are more lethal in America than anywhere else. In the second half, Max continues his conversation with Professor John Mill Ackerman about the Mexico-USA relationship in the age of Trump.

(ps – I could have sworn I already posted this? Maybe not.)

Do the Roots of Rising Inequality Go All the Way Back to the 1980s?

31-Mar-2017

I presented this chart of rising wealth inequality a number of times over the past year. Do you notice something peculiar about the inflection points in the 1980s?

Correspondent W.S. noted that the inflection point for the top .1% (late 1970s) preceded the inflection point of the bottom 90% (around 1986): both increased their share of household wealth from 1978 to 1986, and then the share of the top .1% took off, essentially tripling from 8% to over 22%, while the share of the bottom fell precipitously from 36% to 23%.

(Note that the data stops at 2012; if we extend the trends to the present, the lines have certainly crossed and the share of the .1% now exceeds that of the bottom 90%.)

So what happened between 1978 and 1986? The first phase of the financialization of the U.S. economy.

What is financialization? In a financialized economy, speculating with highly leveraged debt and exotic financial instruments is far more profitable than producing goods and services.

Financialization hollows out the productive assets of an economy by incentivizing leverage, debt, opacity, speculation, financial fraud, collusion and the perfection of crony capitalism, i.e. financial Elites’ ownership of the government’s regulatory and legislative bodies.

Here is another less pungent description via Wikipedia: “Financial leverage overrides capital (equity) and financial markets dominate traditional industrial economy and agricultural economics.”

Here is my more formal definition:

Financialization is the mass commodification of debt and debt-based financial instruments collaterized by previously low-risk assets, a pyramiding of risk and speculative gains that is only possible in a massive expansion of low-cost credit and leverage.

Another way to describe the same dynamics is: financialization results when leverage and information asymmetry replace innovation and productive investment as the source of wealth creation.

I describe the dynamics in What’s the Primary Cause of Wealth Inequality? Financialization (March 24, 2014)

Correspondent W.S. submitted commentary and references this 2005 bookFinancialization and the World Economy:

In the US “total credit market debt divided by GDP was about 1.5 from 1961 to 1981. It accelerated rapidly in the decade of the 1980s – from 1.6 in 1981 to 2.3 in 1989 – as the federal budget deficit soared, hostile takeovers and leveraged buyouts loaded corporations with debt, and household borrowing increased. Corporate and household borrowing raised indebtedness further in the 1990s; by 2001 the debt to GDP ratio was 2.8, almost double the ratio in the Golden Age. Moreover, average real interest rates have been much higher in the neoliberal era than they were in the three decades that preceeded it.

W.S. Also referenced FINANCIALIZATION OF THE ECONOMY and added this commentary:

While “bloated” conglomerates were linked by some to the sluggish performance of the American economy in the 1970s, for corporate raiders they presented a get rich quick opportunity via the “market for corporate control” (Manne 1965). Outsiders could buy the firm from its existing shareholders, fire its managers, and sell off the parts for a quick profit.

After the election of Ronald Reagan in 1980, this became possible on a grand scale due to relaxed antitrust guidelines, changes in state antitakeover laws, and financial innovations that enabled raiders to get relatively short-term financing on a large scale (Davis & Stout 1992). Within a decade, nearly one-third of the Fortune 500 largest industrial firms had been acquired or merged, often resulting in spinoffs of unrelated parts, and by 1990 American corporations were far less diversified than they had been a decade before (Davis et al 1994).

The other thing that happened in the mid-1980s was computer technology became cheap enough and powerful enough to start replacing human labor on a wider scale. Spreadsheets such as Excel became accessible to small business, and the desktop publishing combo of the Apple Macintosh and laserprinters revolutionized the cost structure of marketing.

The rise of the Internet (coupled with cheap memory and processing power) further fueled the productive expansion of digital technologies. As I describe in my book Get a Job, Build a Real Career and Defy a Bewildering Economy, these tools– which are now ubiquitous and inexpensive–enable one person today to equal the output of what once took four people to produce in the late 1980s.

In effect, labor entered an era of dynamic over-supply just as healthcare costs began to rise, making it more costly to hire workers. Some skills and trades remain scarce and thus well-paid, but as a generalization it became cheaper and more efficient to replace increasingly expensive human labor with increasingly inexpensive and powerful software and digital tools.

Unless we change the fundamental structure of the economy so that actually producing goods and services and maximizing opportunities for people is more profitable than playing financial games with phantom assets, the end-game of financialization is financial collapse.

Recent podcasts/video programs:

Deep State Fractures Under Populist Revolution (TruNews, 37:27)

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.

Bitcoin’s volatility to remain lower than Oil; turns it into a stable investable asset

31-Mar-2017

Bitcoin’s price volatility was lower than Oil price volatility in 2016. This has given Bitcoin stature of an investable asset over one of the highly traded commodities in the world.

Read More

“Trickle Down” Has Failed; Wealth and Income Have “Trickled Up” to the Top .5%

30-Mar-2017

Over the past 20 years, central banks have run a gigantic real-world experiment called “trickle-down.” The basic idea is Keynesian (i.e. the mystical and comically wrong-headed cargo-cult that has entranced the economics profession for decades): monetary stimulus (lowering interest rates to zero, juicing liquidity, quantitative easing, buying bonds and other assets– otherwise known as free money for financiers) will “trickle down” from banks, financiers and corporations who are getting the nearly free money in whatever quantities they desire to wage earners and the bottom 90% of households.

The results of the experiment are now conclusive: “trickle-down” has failed, miserably, totally, completely.

It turns out (duh!) that corporations didn’t use the central bank’s free money for financiers to increase wages; they used it to fund stock buy-backs that enriched corporate managers and major shareholders.

The central bank’s primary assumption was that inflating asset bubbles in stocks, bonds and housing would “lift all boats”–but this assumption was faulty. It turns out most of the financial wealth of the nation is held by the top 5%.

As for housing–yes, a relative few (those who happened to own modest bungalows in San Francisco, Seattle, Portland, Toronto, Vancouver, Brooklyn, etc.) on the left and right coasts have registered spectacular gains in home appreciation as the housing bubbles in these cities now dwarf the 2006-07 real estate bubble. But on average, the gains in home appreciation have barely offset the declines in real (adjusted for inflation) household income.

These charts illustrate the abject failure of the “trickle-down” economic theory.The majority of the assets that have soared in value are owned by the top 5%:

Wages as a share of GDP (gross domestic product, i.e. the nation’s total economic activity) has been declining for decades:

The only segment of households who have registered gain in real income over the past 20 years is the top 5%:

Even excluding capital gains–the source of much of the wealthiest class’s income–wealth disparity has reached astonishing asymmetries: most of the gains are flowing to the top 0.5%:

The Clinton, Bush and Obama presidencies shared one commonality: the wealth of the bottom 90% cratered in their presidencies while the wealth of the top .1% skyrocketed.

Central bank policies have generated a truly unprecedented “trickle-up” of wealth and income to the top .5%. Evidence supporting “trickle down” is nowhere to be found, at least in the real world.

Recent podcasts/video programs:

Keiser Report: Jon Corzine’s Big, Bad Bond Bet (25:43 min., 2nd half)

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.

FIREWORKS COMING FOR GOLD & SILVER! – GATA Chairman Bill Murphy

30-Mar-2017

If Silver Prices Break Through $18.50, and Then Through $21, Silver Could Start Trading “Almost Like No Other Market In History…”

 

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When the “Solutions” Become the Problems

29-Mar-2017

We are living in an interesting but by no means unique dynamic in which the solutions to problems such as slow growth and inequality have become the problems. This is a dynamic I have often discussed in various contexts. In essence, a solution that was optimized for an earlier era and situation is repeatedly applied to the present–but the present is unlike the past, and the old solution is no longer optimized to current conditions.

The old solution isn’t just a less-than-optimal solution; it actively makes the problem worse.

As a result, the old solution becomes a new problem that only exacerbates the current difficulties. The status quo strategy is not to question the efficacy of the old solution–it is to apply the old solution in heavier and heavier doses, on the theory that if only we increase the dose, it will finally resolve the problem.

Take borrowing from the future, i.e. debt, as a prime example of this dynamic.

Back when credit was scarce and expensive, unleashing a tsunami of cheap, abundant credit supercharged growth by enabling millions of people who previously had limited access to credit to suddenly borrow and spend enormous sums of cash.

This tsunami of new spending supercharged growth such that servicing the debt was easy, as incomes and wealth both expanded far beyond the cost of the new debt.

Fast-forward to today, and adding 50% of the nation’s GDP in new federal debt ($9 trillion) and trillions more in corporate and houshold debt in the past 8 years has yielded subpar growth–roughly 2% a year.

This poor response to massive floods of credit, borrowing and spending has flummoxed conventional economists, who incorrectly assumed old solutions would always work as they had in the past.

In a similar fashion, conventional economists expected fiscal stimulus to boost growth. Fiscal stimulus–one-time tax refunds, infrastructure spending, tax cuts and various forms of “helicopter money”–central banks creating money out of thin air for the government to spend or distribute–have all failed to generate the self-sustaining virtuous cycle of boosting the output of the engines of income/wealth creation.

As I noted in Fragmentation and the De-Optimization of Centralization (January 2, 2017), The 4th Industrial Revolution has de-optimized centralization. Centralized control, power and money are now the problem, not the solution.

In the past, centralizing control of industries, credit and production increased the productivity of the whole economy. But that was then, and this is now. In the current era, centralization only breeds corruption, moral hazard, revolving doors between state agencies and private industry, opaque, rigged markets, rentier cartel parasitism and state-cartel crony capitalism, in which the central state regulates industries like Big Pharma, defense weaponry, higher education and so on to benefit entrenched interests, elites and cartels.

Regulations have also slipped from being solutions to problems. Everyone weighing the costs and benefits agrees that building and zoning codes enacted at the turn of the 19th century and the beginning of the 20th century greatly reduced the health hazards posed by slums and unregulated industries. Everyone weighing the costs and benefits agrees that clean air and water regulations imposed in the early 1970s benefited the public and the nation, despite the higher costs for goods and services that industry passed down to the consumer.

Technological improvements and efficiencies offset much or all of these costs by the 1980s, and by the 1990s, technological gains were increasing the income and wealth of almost every participant in the economy.

Recently, these technological gains have become concentrated in the top 5% of wage-earners and the owners of the capital. There are several drivers for this, including proximity to cheap credit, tax evasion techniques available only to corporations and the wealthy, pay-to-play lobbying for tax breaks and regulatory barriers to competition, and so on–all the foul fruits of centralized power and the crony-capitalism it breeds.

But technology is also exacerbating the trend to a winner-take-all or winners-take-most asymmetry between the most profitable and productive and “everyone else.”

Regulations have now become burdens rather than low-cost means of improving the commons shared by all. Advocates for “tiny houses” and similar solutions to homelessness run into buzz-saws of regulations that prohibit such construction and zoning, and advocates of innovations from urban farming to crypto-currencies find regulations (often serving the interests of political donors rather than the public) are stifling innovations and efficiencies that would benefit the many rather than the few.

The regulatory agencies are prone to self-serving complexity that justified their budgets and power; as the regulations become more voluminous and arcane, “experts” in reading the runes and keeping up to date justify their big salaries and departmental budget.

The Lifecycle of Bureaucracy (December 2, 2010)

As I explain in my book Resistance, Revolution, Liberation: A Model for Positive Change, the state only knows how to expand; there is no mechanism, no institutional memory and no reward motivation to reduce the size of state power or revenues, or reduce the reach of the regulations and laws that empower the state to control virtually every aspect of life.

There are many other “solutions” that no longer solve their intended target problem but have become burdensome problems in themselves. One need only look at healthcare, higher education and weaponry acquisition programs to find hundreds of examples of perverse incentives and unintended consequences that are the direct result of anti-competitive, intentionally opaque, centralized regulations that are implicitly designed to benefit the few (wealthy political donors, lobbyists and entrenched interests) at the expense of the many who are shut out of the regulatory game.

Student loans are an excellent example of a “solution” becoming a problem itself, while the underlying problem–soaring costs for diminishing-return diplomas–rages on, enabled by the “solution”: force student debt-serfs to borrow another trillion dollars to fund sclerotic, self-serving bloated bureaucracies.

The Nearly Free University and the Emerging Economy: The Revolution in Higher Education.

Borrowing and spending $9 trillion did little but indenture future taxpayers to pay for for our massive malinvestment in diminishing-returns dead-ends.

If we look at yesterday’s chart of overlapping crises, we note each crisis began as a purported “solution.” The “solutions” are: more debt (now a problem); more centralization (now a problem); financialization (now a problem); promising more benefits to everyone (now a problem), and so on.

Real solutions are optimized for the 4th Industrial Revolution and the emerging economy, not the economy of 1946. These solutions are the opposite of all the institutional-state-cartel “solutions”: decentralize power and control, transparency rather than self-serving obfuscation; empowerment of communities rather than centralized agencies and cartels, and embracing disruptive technologies–technologies that disrupt existing rentier skims, cartel rackets, regulatory barriers, etc.

The cold truth is all these institutional-state-cartel “solutions” serve the few at the expense of the many. This is not a side-effect; it is the intended output of these “solutions.” In other words, these “solutions” work great for the parasitic few at the top skimming all the wealth, power and income, at the expense of the exploited many and the stability of the system as a whole.

Those benefiting from these destructive “solutions” may think the system can go on forever, but it cannot go on when every “solution” becomes a self-reinforcing problem that amplifies all the other systemic problems.

Recent podcasts/video programs:

Keiser Report: Jon Corzine’s Big, Bad Bond Bet (25:43 min., 2nd half)

Self-Employment & Financial Bubbles (1:26 hrs)

Charles Hugh Smith On Inequalities And The Distortions Caused By Central Bank Policies (30 min.)

Rogue Money (56:59 min.)

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.

‘Most Secure Coin In World’ ?

29-Mar-2017

– New pound coin ‘most secure coin in world’ ? 
– New British £1 coins much harder to counterfeit
– Pound coin uses “secret” cutting edge technology
– Coins uses ‘iSIS’ technology which may involve RFID tags
– Central banks, governments may be able to track coins
– Libertarians and privacy advocates will have concerns
–  “Secure coin” yes but real risk is that savings not secure due to currency debasement
– Now new risk to bank deposits as all digital wealth exposed to hacking and cyber fraud
– Sound as a pound? Safer to stick with true “coin of the realm”
– Gold and silver Sovereigns and Britannias  (VAT and CGT free) are only truly secure coins

The UK launched what is being touted as the “most secure coin in the world” yesterday – the day before Brexit day.

People have reacted with mixed emotions regarding the introduction of the newly designed pound coin which entered circulation yesterday. The new coins have been created using “cutting edge technology” by the Royal Mint

The new 12-sided coin will replace the current one, which has been in use for three decades. The current pound coin will remain legal tender alongside the new coin for just over six months until 15 October this year, after which retailers are under no obligation to accept it.

The pound coin will be harder to counterfeit. In May 2015, a survey by the Royal Mint found that some 2.5% of pound coins had been faked.

As we told Fox News SciTech correspondent James Rogers yesterday:

“The coin’s many anti-counterfeiting features are interesting and they sound like they will be quite effective. High quality forgeries can be made of most coins these days but it will be very expensive for forgers to try and mint such high quality coins that will fool the authorities.

A few coins might be “passed off” and fool the public or retailers but it would likely be few and given the degree of work and very high cost involved, it likely would not be worth the intense effort.”

The hidden high-security feature which is built into the coin itself is a well kept secret. Informed speculation is that it is some form of physical layer within the coin itself which will allow the coins to be scanned and verified in order to find fakes.

Read full story here…


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[KR1050] Keiser Report: ‘The New Detroit

28-Mar-2017

We discuss the cheap wages and crushed limbs of Alabama’s auto manufacturing boom. In the second half, Max interviews Professor John Mill Ackerman in Mexico City about what the NAFTA renegotiations might mean for Mexico and world trade and whether or not Andres Manuel Lopez Obrador could win the next elections with his anti-neoliberal economic message.

The Overlapping Crises Are Coming, Regardless of Who’s in Power

28-Mar-2017

Commentators seem split into three camps: those who see Trump as a manifestation of smouldering social/economic ills, those who see Trump and his supporters as the cause of those ills, and those who see Trump as both manifestation and cause of those ills.

I think this misses the point, which is the overlapping crises unfolding in this decade– diminishing returns on skyrocketing debts, the demographics of an aging populace, the erosion of the social contract and the profound disunity of political elites–will continue expanding and feeding on each other regardless of who is in power.

Historical analysis seems to swing between the “Big Man/Woman” narrative that views individuals as the drivers of history, and the “Big Forces/it’s all economics” narrative that sees individual leaders as secondary to the broad sweep of forces beyond the control of any individual or group.

So while the mainstream views President Lincoln as the linchpin of the Civil War–his election triggered the southern secession–from the “Big Forces/it’s all economics” view, Lincoln was no more than the match that lit a conflict that was made inevitable by forces larger than the 1860 election.

The tension between these two narratives is valuable, as history cannot be entirely reduced to individual decisions or broad forces (weather, resource depletion, financial crisis, geopolitical upheaval, demographics, plague, etc.). The dynamic interplay between the two shapes history.

Individuals do matter–but they cannot offset structural crises for long.

Which brings us to Trump. The status quo is falling apart for profoundly structural reasons: promises made when growth was robust, debt was modest, energy was cheap and abundant and the work force was far more numerous than those dependent on the central state’s “pay as you go” pension and welfare programs– these promises made in yesteryear can no longer be kept, regardless of who’s in power.

We cannot get blood out of a turnip, and those who claim we can are only exacerbating the coming crises with their fantasies and denials.

I’ve been addressing these slow-moving, inevitable crises for the past 10 years. Despite the illusion of tepid “growth” and the maintenance of the status quo, beneath the surface everything is becoming much more fragile and increasingly brittle.

Even Timothy Geithner concedes this in his recent Foreign Affairs article on how to deal with the next global financial crisis. The central banks and states have expended all their ammunition– lowering interest rates, creating money out of thin air to bolster systemic liquidity, buying bonds and other assets to prop up shaky markets, and borrowing immense sums to prop up government spending– and there is little left for the next crisis.

Why I Have to Agree with Tim Geithner on This (March 8, 2017)

And this sober view–that some additional central bank trickery can save the system in the next financial crisis–assumes things that are unlikely to be true: what if energy is no longer cheap and abundant? What if global weather isn’t conducive to grain surpluses? What if central banks buying stocks no longer props up the market? What if debt finally reaches levels that cannot be sustained?

Could Hillary, or some other leader, forestall these deeply structural crises? The short answer is no. The only thing a leader can actually do is lower expectations so the erosion of promises that cannot be kept will be accepted as inevitable, and bolster hope while demanding sacrifices of all those who have benefited from the status quo.

If we look back on great leaders who dealt with one crisis after another, we find they didn’t actually make the crises disappear; they only managed them on the margins, and spoke to the need to make sacrifices for a better future.

If we set aside the rose-colored glasses, we find that Franklin Roosevelt didn’t actually “lead the nation out of Depression.” The nation was still deeply entrenched in the Depression in 1940, after 8 years of FDR’s leadership. It took World War II and federal borrowing and spending on an unimaginable scale to extricate the U.S. from the grip of bad debt the powers that be refused to write off and the resulting stagnation.

Which brings us again to Trump. Since no one can actually resolve these overlapping crises, a focus on the individual leader’s actions is a distraction. Yes, an individual can manage the margins of crisis more or less effectively.

But overlapping mutually reinforcing crises are not a war, with a victorious and a vanquished side. As Peter Turchin and other writers I have quoted and discussed for many years have detailed, these structural trends play out regardless of policy tweaks or grand pronouncements. Leaders who manage to ease the decline or temporarily reverse it are considered successes; those who exacerbate the decline are considered failures.

Why Our Status Quo Failed and Is Beyond Reform.

No leader can reverse the dynamics of mutually reinforcing crises. No one can reverse the diminishing returns on financialization, debt, centralization, financial fakery, rentier state-cartel parasitism, or reverse the decline in paid work, the erosion of well-being and health and rising inequality.

There is no way to actually forestall the reckoning as the forces of demographics, financial predation, Imperial over-reach, soaring debts, political disunity, technology disruption and the failings of state-cartel centralization grind up the status quo.

This essay was drawn from Musings Report 5. The weekly Musings Reports are emailed exclusively to major donors and patrons ($5/month or $50 annually).

Recent podcasts/video programs:

Keiser Report: Jon Corzine’s Big, Bad Bond Bet (25:43 min., 2nd half)

Self-Employment & Financial Bubbles (1:26 hrs)

Charles Hugh Smith On Inequalities And The Distortions Caused By Central Bank Policies (30 min.)

Rogue Money (56:59 min.)

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.

Gold Bullion Coin Worth $4 Million, Stolen in Berlin Museum Heist

28-Mar-2017

– Gold coin called ‘Million Dollar Gold Coin’ or ‘Big Maple Leaf’ stolen from Berlin museum early on Monday
– World’s purest gold coin and in the Guinness Book of Records for its purity of 99999 fine gold
– Gold coin was legal tender, investment grade, bullion coin and only 7 other coins were minted
– The other ‘Million Dollar Gold Coin’ is still available for sale by GoldCore safely stored in vaults in Ottawa

– Royal Canadian Mint minted the gold coin in 2007 and carries imprint of Queen Elizabeth II
– Like all bullion coins, is worth much more than its legal tender value
– Gold should be stored in secure vaults, in safe jurisdictions such as Singapore, Hong Kong and Zurich

When debating whether or not gold has value or not, the naysayers will often argue that it is a “pet rock” and just a shiny, heavy, cumbersome piece of yellow metal that has no “intrinsic” value.

Ignoring the fact that the majority of humanity still know that gold remains great valued. Even daring thieves realise the value of gold and will go to great lengths to get their hands on it.

Yesterday morning German police received a call from Berlin’s Bode Museum saying that one of the  ‘Big Maple Leaf’ coins had been stolen over the weekend.

  • Face Value: $1,000,000
  • Composition: 99999 fine gold
  • Weight (troy oz): 3,215
  • Weight (kg): 100
  • Coins in Existence Worldwide: 5
  • Coins Currently for Sale Worldwide: 1 (Now maybe 2)

Despite the massive size of the gold coin and huge weight  – it wasn’t too big for thieves and they were more than happy to relieve the Berlin musuem of one of the their prized possessions.

The museum houses one of the world’s largest coin collections, with about 102,000 coins from ancient Greece and about 50,000 Roman coins, so why did they single out this particular one?

Read full story here….

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Why This Market Needs To Crash (And Likely Will)

26-Mar-2017

Since 2009, the central banks have unleashed over $12 Trillion in new money into the world, concentrating wealth into the hands of an elite few, while blowing asset price bubbles everywhere in the process.

Our consistent view is that price bubbles always burst. Which is why we predict the world’s financial markets will implode spectacularly from today’s heights — destroying jobs, dreams, hopes, economies and political careers alike.

When this happens, it will frighten the central bankers enough that they will respond with even more aggressive money printing — and that will then cause the entire money system to blow up.

Click here to read the full article

[KR1049] Keiser Report: Trail of ‘American carnage’

25-Mar-2017

We discuss the trail of ‘American carnage’ and how it led to a Trump presidency. In the second half, we discuss the OxyCartel pushing millions of prescription pills on small towns across the USA.

The Deep State’s Dominant Narratives and Authority Are Crumbling

24-Mar-2017

As this chart from Google Trends illustrates, interest in the Deep State has increased dramatically in 2017. The term/topic has clearly moved from the specialist realm to the mainstream. I’ve been writing about the Deep State, and specifically, the fractures in the Deep State, for years.

Amusingly, now that “Progressives” have prostituted themselves to the Security Agencies and the Neocons/Neoliberals, they are busy denying the Deep State exists. For example, There is No Deep State (The New Yorker).

In this risible view, there is no Deep State “conspiracy” (the media’s favorite term of dismissal/ridicule), just a bunch of “good German” bureaucrats industriously doing the Empire’s essential work of undermining democracies that happen not to prostrate themselves at the feet of the Empire, murdering various civilians via drone strikes, surveilling the U.S. populace, planting bugs in new iPhones, issuing fake news while denouncing anything that questions the dominant narratives as “fake news,” arranging sweetheart deals with dictators and corporations, and so on.

The New Yorker is right about one thing–the Deep State is not a “conspiracy:” it is a vast machine of control that is largely impervious to the views or demands of elected representatives or the American people. The key to understanding this social-political-economic control is to grasp that control of the narratives, expertise and authority is control of everything. Allow me to illustrate how this works.

The typical politician has a busy daily schedule of speaking at the National Motherhood and Apple Pie Day celebration, listening to the “concerns” of important corporate constituents, attending a lunch campaign fundraiser, meeting with lobbyists and party committees, being briefed by senior staff, and so on.

Senior administrators share similarly crowded schedules, minus the fundraising but adding budget meetings, reviewing employee complaints and multiple meetings with senior managers and working groups.

Both senior elected officials and senior state administrators must rely on narratives, expertise and authority because they have insufficient time and experience to do original research and assessment.

Narratives create an instant context that “makes sense” of various data points and events. Narratives distill causal factors into an explanatory story with an implicit teleology–because of this and that, the future will be thus and so.

For example: because Iraq has weapons of mass destruction (WMD), the future promises the terrible likelihood (more than a possibility, given Iraqi deployment of poison gas in the Iraq-Iran War) that America or its allies will be devastated by Iraqi weapons of mass destruction. This teleology leads to the inescapable need to eliminate Iraq’s weapons of mass destruction by any means necessary, and remove the political will to use them by removing Iraq’s leader from power.

Politicos and senior administrators rely on expertise and authority as the basis of deciding whether something is accurate and actionable. Professional specialists are assumed to have the highest available levels of expertise, and their position in institutions that embody the highest authority give their conclusions the additional weight of being authoritative. The experts’ conclusion doesn’t just carry the weight of expertise, it has been reviewed by senior officials of the institution, and so it also carries the weight of institutional authority.

So when the C.I.A. briefing by its experts claims Iraq has WMD, and the briefing includes various threads of evidence that the institution declares definitive, who is a non-expert to challenge this conclusion and teleology? On what technical basis does the skeptic reject the expertise and authority of the institution?

We can now define the Deep State with some precision. The Deep State is fundamentally the public-private centralized nodes that collect, archive and curate dominant narratives and their supporting evidence, and disseminate these narratives (and their implicit teleologies) to the public via the media and to the state agencies via formal and informal inter-departmental communication channels.

By gaining control of the narratives, evidence, curation and teleology, each node concentrates power. the power to edit out whatever bits contradict the dominant narrative is the source of power, for once the contradictory evidence is buried or expunged, it ceases to exist.

For example, the contradictory evidence in the Pentagon Papers was buried by being declared Top Secret. The bureaucratic means to bury skeptical (i.e. heretical) views or evidence are many. Sending the authors to figurative Siberia is remarkably effective, as is burying the heretical claims in a veritable mountain of data that few if any will ever survey.

Curation is a critical factor in maintaining control of the narrative and thus of control; the evidence is constantly curated to best support the chosen narrative which in turn supports the desired teleology, which then sets the agenda and the end-game.

The senior apparatchiks of the old Soviet Union were masters of curation; when a Soviet leader fell from favor, he was literally excised from the picture–his image was erased from photos.

This is how narratives are adjusted to better fit the evidence. Thus the accusation that “the Russians hacked our election” has been tabled because it simply doesn’t align with any plausible evidence. That narrative has been replaced with variants, such as “the Russians hacked the Democratic National Committee.” Now that this claim has also been shown to be false, new variants are popping up weekly, with equally poor alignment with evidence.

The primary claim of each Deep State node is that its expertise and authority cannot be questioned. In other words, while the dominant narrative can be questioned (but only cursorily, of course), the expertise and authority of the institutional node cannot be questioned.

This is why the Deep State is fracturing: the expertise and authority of its nodes are delaminating because its narratives no longer align with the evidence. If various Security Agencies sign off on the narrative that “Russia hacked our election” (a nonsense claim from the start, given the absurd imprecision of the “hacking”–hacking into what? Voting machines? Electoral tallies?), and that narrative is evidence-free and fact-free, i.e. false, then the expertise and authority of those agencies comes into legitimate question.

Once the legitimacy of the expertise and authority is questioned, control of the narrative is imperiled. The control of the narrative is control of the teleology, the agenda and the end-game–in other words, everything. If the institution loses control of the dominant narrative, it loses its hold on power.

This is why the Deep State is in turmoil–its narratives no longer make sense, or are in direct conflict with other nodes’ narratives or have been delegitimized by widening gaps between “definitive” claims and actual evidence.

There is indeed a Deep State, but its control of dominant narratives, and thus its source of control and power, is crumbling. The gap between the narratives and the evidence that supports them has widened to the point of collapse.

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MAJOR Operation Needed to Stop the Next Bank Run on Gold – London Analyst

24-Mar-2017

Can the Banksters Stop the Next BANK RUN ON GOLD??

Gold ETFs vs. Physical Gold – Dangers Of Exchange Traded Funds

24-Mar-2017

by Olivier Garret on Forbes

Gold ETFs are rising in popularity due to their convenience. They’re easy to trade, there’s no need to store anything, and no one is going to break into your house to steal your GLD shares.

But there are a lot of hidden dangers inherent in the structure and operation of gold ETFs that few investors are aware of—and these risks are more pronounced than ever, as the threat of another financial crisis is always around the corner.

Gold ETFs or gold bars? Bars including one kilo gold bar at bullion dealers Goldcore, in London, U.K. (March 11, 2010). Photographer: Chris Ratcliffe/Bloomberg

Considering the public’s waning trust in the banking system, many investors find themselves wondering how GLD stacks up to owning the real thing. When you look at both assets more closely, it’s clear that gold ETFs and gold bullion are very different investments.

Why GLD Is Not the Same as Gold

SPDR Gold Trust (GLD), the largest, most popular gold ETF, is an investment fund that holds physical gold to back its shares. The share price tracks the price of gold, and it trades like a stock, but the vast majority of investors don’t have a claim on the underlying gold.

The reason for this is that you can only request physical delivery of metal if you own a minimum of 100,000 GLD shares (most investors don’t: at $1,000 gold, 100,000 shares is more than a million dollars). Even if you do own enough shares, the GLD ETF reserves the right to settle your delivery request in cash.

So why is GLD appealing to investors if you never actually own any gold?

Read full story here…


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