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: 10 hours 4 min ago

Gold Investment Is the Ultimate Guide for Tech Investors In 500 Words

18-May-2017

Gold Investment Is the Ultimate Guide for Tech Investors In 500 Words

by Jan Skoyles, Editor Mark O’Byrne

Tech is the umbrella word for all things fashionable to invest in right now. Take the recent flotation of Snap Inc. (parent company of teen and narcissists’ favourite app SnapChat), everyone wanted in on the $20 billion flotation.

Snap is likely a sign of a tech bubble that will cost a lot of savers and investors huge amounts of money … again.

Before putting your savings into the likes of SnapInc we think there are some major lessons wannabe investors need to learn. Lessons not just from experienced tech investors but also from gold investment. Lessons which should lead one to consider investing in physical, allocated, segregated gold to secure your portfolio in a world of massive financial bubbles, significant geopolitical uncertainty and huge investment hype.

Is this an investment in a product or an application?

In tech, there are two main things – the product and application.

For example, blockchain is the application, bitcoin is a product. Linux is an application, a website built using Linux is the product. Both blockchain and linux have shown they have endless use-cases and carry significant value in their fields. But the products can vary.

In a similar vein there are many different gold products, whether ETFs, digital gold, gold futures however these all rest on the application of physical gold. However there is much intermediation and they are many tech and legal layers away from the real thing.

In a world of massive technological and systemic risk – as seen this week – why not own the real thing?

Read full story here….

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Why We’re Fragmenting: The Status Quo Is Disintegrating

17-May-2017

I confess to being amused by the mainstream media’s implicit view that everything would be peachy if only Trump wasn’t president. Memo to MSM: the nation is fragmenting for reasons that have nothing to do with who’s president, or indeed, which party is the majority in Congress, who sits on the Supreme Court, or any other facet of governance.

The nation is fracturing and fragmenting because the Status Quo is failing the majority of the citizenry. The protected few are reaping all the benefits of the Status Quo, at the expense of the unprotected many.

As I have outlined many times, this unsustainable asymmetry is the only possible outcome of our socio-economic system, which is dominated by these forces:

1. Globalization–free flow of capital, labor arbitrage

2. Nearly free money from central banks for financiers and corporations

3. Pay-to-play “democracy”

4. State protected cartels that privatize gains and socialize losses

5. A system stripped of self-correcting feedback and accountability

Once you understand the inputs and structure, you realize there is no other possible output other than unsustainably expanding debt and wealth/income inequality. Policy tweaks cannot change the output; all they do is provide an illusion of reform that serves the need of those at the top to obscure the systemic injustices and unsustainability of the extractive, exploitive, predatory, parasitic system that’s enriching them.

What do people do when centralized systems fail to deliver what was promised? They fragment into smaller “tribes” and find fewer reasons to cooperate in centralized systems. As historian-economist Peter Turchin explained in his 2016 book Ages of Discord, human history manifests cycles of social disintegration and integration in which the impulse to cooperate in large social structures waxes and wanes.

Turchin identified 25-year cycles that combine into roughly 50-year cycles, comparable (though not identical with) Kondratieff’s proposed economic cycles.

These 50-year cycles are part of longer 150 to 200-year cycles that move from cooperation through an age of discord and disintegration to a new era of cooperation.

This work draws upon his previous books, including War and Peace and War: The Rise and Fall of Empires, which I referenced in Following in Ancient Rome’s Footsteps: Moral Decay, Rising Wealth Inequality (September 30, 2015) and The Lesson of Empires: Once Privilege Limits Social Mobility, Collapse Is Inevitable (April 18, 2016).

These long cycles parallel the cyclical analysis of David Hackett Fischer, whose masterwork The Great Wave: Price Revolutions and the Rhythm of History I’ve referenced many times over the years, most recently in We’ve Entered an Era of Rising Instability and Uncertainty (July 18, 2016).

Turchin’s model identifies three primary forces in these cycles:

1. An over-supply of labor that suppresses real (inflation-adjusted) wages

2. An overproduction of essentially parasitic Elites

3. A deterioration in central state finances (over-indebtedness, decline in tax revenues, increase in state dependents, fiscal burdens of war, etc.)

These combine to influence the social order, which is characterized in eras of discord by declining loyalty to self-serving special interests (disintegration) and in eras of cooperation by a willingness to compromise for the good of the entire society (integration).

As I have often explained, centralization is now a disruptive drag rather than a benefit. Centralization provided widespread gains in efficiencies in its boost phase, but now that it is sliding down the S-curve, it only benefits the few at the expense of the many.

The returns on centralization have diminished to less than zero: centralization’s primary outputs are now corruption, lack of accountability, cronyism, complexity moats and bureaucratic thickets that obscure the self-serving nature of centralized power.

State of Denial: The Economy No Longer Works As It Did in the Past (May 16, 2017)

The structural failure of our political-economic system cannot be remedied by electing a new president or swapping failed political parties. The system is disintegrating, and slapping a “reformist” coat of paint over the dryrot cannot renew the structural timbers that have rotted to their very core.

Identifying cycles can be a parlor game, but there is no denying that we’re deep into a disintegrative phase that will probably come to a head between 2021 and 2029.

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.

Trumpquake – Gold Spikes On Heavy Volume On Trump

17-May-2017

Gold prices rose for a fifth day to a two week high in early European trading on increasing U.S. political risk pertaining to the Trump Presidency and the increasing risk of impeachment and a U.S. political civil war.

Stocks and U.S. Treasury bond yields tumbled as investors moved cash into safe-haven gold amid a global market selloff.

Gold moved higher on very heavy volume yesterday and is now 1.5% higher for the week. Over one billion dollars of gold futures were bought in late afternoon trade yesterday contributing to gold’s fifth day of gains, its best run since April.

Gold’s gains may have been due to “memo gate” and allegations that President Donald Trump sought to shut down a federal investigation linked to his former National Security Adviser Michael Flynn.

Gold prices rose more than $6 an ounce in early London trading today to change hands at $1,247 per ounce, the highest level since May 3.

Concerns about political turmoil in the U.S. and poor U.S. housing data heightened risk aversion which is leading to dollar weakness.

The weaker than expected housing data added to recent negative economic data that is raising doubts over how many times the Federal Reserve will be able to raise interest rates this year.

Read full story here…

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State of Denial: The Economy No Longer Works As It Did in the Past

16-May-2017

If there is one reality that is denied or obscured by the Status Quo, it is that the economy no longer works as it did in the past. This is the fundamental economic context of our current slide into political-social disintegration.

The Status Quo narrative is: the policies that worked for the past 70 years are still working today. Boiled down to its Keynesian state-corporate essence, the Status Quo economic narrative is simple:

All we need to do to escape a “soft patch” (recession) is for governments to borrow and spend more money to temporarily boost incomes and demand until the private sector gets back on its feet and starts borrowing and spending more.

To help the private sector, central banks lower interest rates so it’s cheaper to borrow and spend.

As soon as the private-sector borrowing and spending rises, we can raise interest rates and trim state fiscal stimulus (i.e. governments borrowing and spending trillions more than they did before the recession).

But the inconvenient reality is these Keynesian policies no longer work. Fiscal stimulus (governments borrowing and spending trillions more than they did before the recession) has continued for a decade–or in Japan’s case, almost three decades.

The Keynesian gods have failed, but the worshippers of these false idols have no other form of black magic to turn to.

Why is fiscal stimulus now a permanent policy? The answer is uncomfortable: if fiscal stimulus is withdrawn (or even trimmed), the economy immediately goes into a self-reinforcing contraction.

As for near-zero interest rates: after 10 years of supposed “recovery,” central banks are terrified of pushing rates higher by quarter-point baby-steps, for the same reason that fiscal stimulus cannot be withdrawn: raising interest rates to historic norms would immediately send the economy into contraction.

So “emergency” temporary measures are now permanent life-support, lest the comatose patient expire once life support is removed. If unprecedented “emergency” measures are now permanent props required to keep stagnation from imploding into depression, then what policies are left to deal with the next (inevitable) downturn?

The problem with zero-interest rate policy (ZIRP) and fiscal stimulus is neither are remotely connected to real wealth creation, i.e. increased productivity.Printing /borrowing more money into existence does not create wealth; all the new money only increases future claims on existing productive assets.

Real wealth is generated by increasing the output of goods and services with fewer assets, less energy and less labor.

Corporations have foregone investment in favor of stock buy-backs. Much of the borrowed money has gone into unproductive housing and other asset bubbles.

As Gail Tverberg has explained, there is a collar on oil prices: if they’re too low, producers lose money and shut down higher-cost wells, crimping supply; if they’re too high, low and moderate-income households can no longer support the consumption the economy needs to keep expanding: Why We Should Be Concerned About Low Oil Prices (Our Finite World).

Cheap, abundant energy is required for expansion of borrowing, consumption and payrolls; as energy costs notch up, wages and consumption stagnate.

In effect, the conventional state/central bank policies reduce down to one simple directive: borrow from the future until “organic” (i.e. not dependent on state stimulus, self-sustaining) growth of the private sector returns.

But since productivity and average wages have declined, self-sustaining expansion is no longer the norm. Instead, every sector is borrowing from the future just to maintain the illusion of solvency and expansion. Corporations, states, central banks and households are all living off money borrowed from future earnings and taxes, or spending the gains from unsustainable asset bubbles.

The economy no longer works, and the Status Quo has no Plan B. All the Status Quo has is policies that no longer work: lowering interest rates (10 years and counting), fiscal stimulus (10 years and counting) and monetary easing/stimulus (10 years and counting).

We sense the economy is no longer working as it did in the past, but we’re too terrified to even admit this. Since there’s no conventional fix, our “leadership” acts as if everything is just fine, and authorities “adjust” measures of stagnation to appear healthy to support the illusion of solvency and expansion.

Productivity: stagnating, declining:

Personal income: stagnating, declining:

Federal debt (borrow and spend from future taxpayers)–through the roof:

Private-sector bank credit–through the roof:

Wealth inequality–through the roof:

There’s no Plan B for a state-corporate form of central-planning capitalism that is no longer functioning. The only policies available are the “emergency” ones that are now permanent life-support systems of our failed global economies.

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.

[KR1071] Keiser Report: Belt and Road initiative

16-May-2017

The trillion-dollar question: what is the Belt and Road Initiative? In the second half, Max interviews Josh Crumb of Goldmoney.com about financialization and how it got us to where we are.

Cyber Wars Could Crash Markets and Threat To Humanity – Buffett and Rickards

16-May-2017

Cyber wars are a bigger threat to humanity than nuclear weapons, the world’s richest and most famous investor Warren Buffett, presciently warned a few days ago.


“I do think that’s the number one problem with mankind,” Warren Buffett warned during Berkshire Hathaway’s annual shareholder meeting on May 6th.

“I’m very pessimistic on weapons of mass destruction generally although I don’t think that nuclear probably is quite as likely as either primarily biological and maybe cyber,” Buffett said during Berkshire Hathaway’s annual shareholders’ meeting. Unlike most of Buffett’s pronouncements, this clear and very strong warning was not reported widely.

“I don’t know that much about cyber, but I do think that’s the number one problem with mankind” said Buffett as reported by Business Insider UK.

Last year, Buffett told CNBC — cyber, nuclear, biological and chemical attacks — posed a major threat to the economic well-being of Berkshire shareholders.

Echoing Buffett’s cyber concerns, today one of the world’s leading experts on currency wars, financial warfare, cyber terrorism and cyber war, James Rickards has again warned that cyber attacks may have already compromised the U.S. national security  and could turn a “bad day on Wall Street into a full blown crash”.

According to Rickards writing in the Daily Reckoning today:

“Friday’s cyberattack just highlights the growing nature of the threat, and the need for much greater security.

WikiLeaks’ March release of 7,818 web pages, called the “Vault 7,” was a major development. This collection amounted to more than several hundred million lines of code, and gave away the entire hacking capacity of the CIA.

Read full story here

Access Award Winning Daily and Weekly Updates Here

Globalization and the Rural-Urban Divide

16-May-2017

Many pundits have commented on the remarkable asymmetry of counties won by the Democratic Party (blue counties) and in 2016 and those won by Republican Party (red counties): the Democrats won big in heavily urban counties and the Republicans won most rural counties.

This visible division prompted numerous article such as this: Cities vs. Trump: Red state, blue state? The urban-rural divide is more significant. “Like most red-state cities, Idaho’s capital is remarkably short on conservatives. Last November, while Hillary Clinton mustered only 27.5 percent of the statewide vote, she hit north of 75 percent in some of Boise’s urban precincts. Politically, the city might as well be on a different planet from towns that lie a couple of exits away.”

The article follows a simple and superficially appealing narrative: the reason for the divide is cultural: cities are liberal, the countryside is conservative.

But there must be more to the divide than values and political culture; difficult social issues like addiction that once were defined as urban problems are now rural problems: American Epidemic: The Nation’s Struggle With Opioid Addiction (34:26 min)

Correspondent Bart D. (Australia) recently submitted an insightful description of the decimation of rural economies. Though he is describing rural Australia, anecdotally I see evidence for the same trends in the U.S., Japan and Europe.

I worry that the collective memory required to nurture self-employment and self-reliance have already been lost to much of the populace.

The thing that disturbs me most about the fate of the rural region I grew up in is the huge loss of economic diversity. A list of businesses/function my childhood town used to have but now does not:

–Bank
–Post office
–Council office
–Roadworks/council depot/workshops
–Mechanics workshop
–2 small convenience stores
–A small ‘all goods’ shop (surviving as a tea/coffee and cake eatery)
–There is a tiny junior school that has been under threat of closure (lack of pupils) for the past few years.

These are the basic building blocks of an economic community. Sporting clubs have perished as have social clubs (and even the tavern is only just staying alive) as the people, and their families, who once worked these family businesses disappear into the state capital with it’s bubble priced housing and much reduced sense of community cohesion. It’s not just my home town either… there are 3 others near by that have gone the same way.

The only economic activity left is big Agri-Biz. The number of family farms has reduced by about half in the last 30 years; so the scale of operation is huge and the debt matches it. Little of the farmers’ money goes into the ‘local’ or even ‘regional’ economy. It goes to the multinationals: Bank Corp, Chemical Corp, Fertilizer Corp, Fuel Corp, Machine Corp … the economic centres for which are not even in our Nation let alone state or region.

Also worth noting that the cascade of losses was very rapid. Once we lost our council depot, the town basically withered up economically in just a few years.

We, the people, are being steadily herded into mega-cities. On the surface it seems like a voluntary migration to pursue economic opportunity… but reality is it’s forced.

Those of us that want to return to these communities to raise the next generation of kids… can’t. There are no viable economic activities to pursue… even with the alleged benefits of internet based opportunity which should make it possible to do most things from most places.

These towns all have beautiful, huge, old stone houses, with huge gardens at prices that are actually affordable to an ‘average’ wage earner… if they could find a way to make said wage living there. Instead we have to cram ourselves into bubble priced houses made of paper and fibro-cement sheeting, crammed onto tiny blocks, where you can hear your neighbours fart from opposite ends of the buildings.

We fool ourselves into believing this style of living is a choice … that we are ‘going where the opportunities are’ … but we lie to ourselves. It’s exciting for a while as a teenager, then when proper adult perspective kicks in you find yourself trapped in suburban bleakness and servitude.”

We can see the outlines of a large-scale dynamic that has hollowed out the incomes and local economies of rural regions around the world: globalization,i.e. the borderless flow of capital, credit, goods and services, a flow dominated by large corporations that work hand in glove with international institutions and governments.

This article gets close to the reality. (Note that “liberal order” doesn’t refer to political liberalism vs. conservatism, it refers to the “neoliberal order” that promotes “free trade”, borderless flows of capital, international institutions such as the World Bank, etc.) The Liberal Order Is Rigged: Fix It Now or Watch It Wither: We did not pay enough attention as capitalism hijacked globalization. Economic elites designed international institutions to serve their own interests and to create firmer links between themselves and governments. Ordinary people were left out. The time has come to acknowledge this reality and push for policies that can save the liberal order before it is too late.

The local economies in rural counties are especially vulnerable to “lower prices always” supply chains that bring in agricultural, mining and forestry products from far away at prices below domestic production costs.

When these industries are gutted by globalization’s low costs, there isn’t much of a service sector left to support employment. Rather, the service jobs in rural areas depend on the ag/ mining/ forestry jobs. When those jobs vanish, the service jobs evaporate as well.

People have to move to find jobs, and that further pressures the remaining businesses.

There is a much deeper pool of capital and service employment in cities, and so it follows that cities are where the jobs are.

Why is this so? Production and production employment are tradable (following Michael Spence’s work), meaning they can be traded on the global marketplace as interchangeable goods: a computer chip made in China and one made in Japan are interchangeable (quality may vary of course, but as long as the chips perform the same function, they’re interchangeable.)

Service sector employment is largely untradable, as getting a haircut (for example) isn’t something you can have done overseas for less money. Healthcare, education, legal services, restaurants, government–all these job-rich sectors are untradable.

The net result is globalization has an outsized impact on rural production employment and very little impact on urban untradable employment.

Although I don’t have the statistics on hand, I suspect 90% of urban employment is untradable services rather than tradable production. If employment in government, education, healthcare, legal/professional services, tourism, etc. is abundant, all those untradable jobs support a large secondary service sector of other untradable services: cafes, brewpubs, night clubs, etc.

But as the Foreign Affairs article states, this Neoliberal Order is rigged against small businesses, local production, and localized economies. Globalization sweeps all of these away as “uncompetitive.”

But the playing field was never level: the Neoliberal Corporate-State Order had all the power, and rigged the game to its own advantage.

No wonder the rural regions are rebelling–not against the cities, but against the Neoliberal Global Order that has stripped the economic diversity from rural economies.

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, $5.95 audiobook) For more, please visit the OTM essentials website.

Cyber Attacks Show Vulnerability of Digital Systems and Digital Currencies

15-May-2017

Cyber Attacks Show Vulnerability of Digital Systems and Digital Currencies

– Cyberattacks expected to spread today in “second phase”
– UK intelligence says scale of threat significant
– Microsoft slams NSA for letting hacking tools cause global malware epidemic

– Ransomware attack already crippled more than 200,000 computers in 150 countries
– 1.3 million computer systems believed to be at risk
– Europol warns many computer systems simply won’t start
– Businesses, banks and government agencies around world told to prepare
– Renault, FedEx among companies affected by cyber-attack
– Banks in China including ATMs were affected

– Hackers could shut down banks and cut off power and water supplies
– “Biggest threat to civilisation” since the Second World War – Cyber security expert
– Risks posed to digital deposits and digital wealth are the “new case for gold”

The threat posed by cyber attacks, cyber terrorism and cyber war to our increasingly complicated, technologically dependent financial system is something we have covered numerous times and becomes more clear by the day.

British and US agents have carried out mock cyber attack or ‘cyber war games’ on the Bank of England and commercial banks in the City of London and on Wall Street as part of tests on critical, but vulnerable financial infrastructure.

Should banks be hacked and customers deposit accounts compromised then the vista of potential bail ins becomes a real one. In June of 2015, JP Morgan Chase were hacked by unknown parties who stole the personal details of 83 million customers.

In July of 2014 Bloomberg reported that malware had been detected in the system of the Nasdaq exchange. Its purpose was unclear but it was believed to have been embedded there by Russian hackers.

There is also the alleged hacking of Sony Pictures by North Korea and the alleged hacking of Facebook, Instagram and Tinder. In 2012, Iran is alleged to have devastated the computer network of Saudi Aramco in a similar attack.

We can see a panorama of human activities which grow more vulnerable as hackers and cyber-warfare grow more sophisticated.

Banks have been hacked…….. (click here to continue reading) 

 

Podcast: Investing In Gold & Silver Mining Companies

14-May-2017

For precious metals investors looking to increase their exposure to this asset class beyond owning bullion or gold and silver ETFs, mining companies are a natural consideration. Their prices usually move much more dramatically in response to smaller price moves in the underlying metals they mine. In a bull market, it’s very possible for the share prices of these companies to increase by hundreds of percents within a year or two.

But there are a lot of gold and silver mining companies out there, many of which are small operators. Risk abounds in this sector. And for the past half-decade, most of these companies have been absolute widow-makers for investors. How do we identify which companies are worth considering and which should be avoided? How (if at all) should the small investor go about gaining exposure to precious metals mining companies?

Click here to listen to the podcast

[KR1070] Keiser Report: Fake Healthcare

13-May-2017

We discuss the fake legislation passing with a fake vote in the House of Representatives to repeal and replace the fake healthcare system known as ‘Obamacare’ – aka the Affordable Care Act. Max continues his interview with Dr. Cory Annis of Unorthodoc.com about the membership model of healthcare in the age of bureaucratic paper-pushing financial services masquerading as medical care.

History of Gold – How the gold

12-May-2017

History of Gold – How the gold industry has changed over 50 years


Thomson Reuters GFMS have compiled an interesting high level history of the gold industry in the last fifty years.

Topics covered and interesting historical facts to note include:

– Gold market size
– Gold mine production “peaked in 2015”
– South African production collapse from 1,000 tonnes

– South African gold was flown to London and Zurich and an airliner had its own designated landing areas at Heathrow where gold moved directly from the place to secure vaults
– It may still do – that is shrouded in secrecy!

– Political concerns in France in 1968 saw massive demand

– Strong demand in Japan in late 1980s when insurance companies were investing up to 3% of portfolios in gold
– Record demand in the wake of the financial crisis

– Investment in gold – Coin and bar demand rising globally
– Massive uptake of bullion in the Far East, especially China
– History of gold shows gold’s continuing importance as safe haven asset

Demand for physical gold investment. Source: GFMS Gold Survey

GFMS Gold Survey is recognized as an important source of information on developments in the gold market and have celebrated the Gold Survey’s 50th anniversary, by conducting a high-level look at the history of the gold market in the past half century.

Click here to continue reading…

 

Keiser So Say with Jameson Lopp

12-May-2017

A new series of behind the scenes during interview sessions and encounters with friends, acquaintances and interesting people we meet on our travels.

[KR1069] Keiser Report: Fake Powers

11-May-2017

We discuss the fake legislation passing with a fake vote in the House of Representatives to repeal and replace the fake healthcare system known as ‘Obamacare’ – aka the Affordable Care Act. In the second half, Max interviews Dr Cory Annis of Unorthodoc.com about the membership model of healthcare in the age of bureaucratic paper-pushing financial services masquerading as medicine model.

Mao and the Middle Class: What’s the Source of Political Power?

11-May-2017

The decline of middle class wealth and income is not just an economic trend–it translates directly to a decline in political power. Chairman Mao famously noted that “Political power grows out of the barrel of gun,”, but this is only true in specific circumstances, for reasons elucidated by author Edward Luttwak in his book The Grand Strategy of the Roman Empire.

Luttwak delineated the difference between force and power. Force is what grows out of a barrel of a gun: the ability to coerce people to obey commands.

Force is expensive and labor-intensive. If you want to prohibit people from using alternative currencies or making black market trades, for example, you have to literally follow every individual, as black market transactions can occur virtually anywhere by pre-arrangement.

Forcing people not to horde scarce goods is another example.

Power manifests when people willingly obey or choose to comply. Although it’s tempting to boil power down to threats of punishment/death, history offers many examples of intensive repression and threats failing to translate force into power.

Filing tax returns is an example of low-cost compliance. The IRS audits and prosecutes relatively few taxpayers for non-compliance. The vast majority of people choose to comply without being forced to do so. This leverage is power.

Power ultimately flows from the populace’s belief that the state or other authority could deploy overwhelming force if necessary. The subject populace makes a mental calculation of risk and return, and concludes that the high risks and modest gains of non-compliance make compliance the wiser, lower risk choice.

We are seeing force and power playing out in the Brexit drama. The European Union needs to punish Britain for leaving the EU, as the ability to enforce a painful punishment on any nation leaving the union will communicate (like nothing else can) that there will be a high cost to exiting the EU.

If other nations believe they will share the same fate as Britain and thus decide to stay in the EU, the EU will be manifesting power. Power is persuading people to comply without having to invest any political capital or treasure in the application of force.

If Britain exits the EU and avoids any severe financial penalty, the EU’s power will be exposed as “all snarl and no bite.” The inability to force severe punishment on Britain will reveal the limits of EU power. The realization that the EU can’t force severe punishment may well free other member states to re-calculate the risk-return of exiting the EU.

The key to voluntary compliance is the stake being held in the status quo. Those holding a major stake in the status quo–for example, homeowners with significant equity/wealth in their homes–have a much different risk-return calculus than those with very little stake in the status quo.

To quote Bob Dylan: “When you ain’t got nothing, you got nothing to lose.”

The middle class is losing its stake in the status quo, and this is loosening the state’s power over the middle class and reducing the power of the middle class, which has less motivation to comply and less motivation to fight for political influence.

The lower-income class that is dependent on state welfare benefits has a major stake in the status quo. So does the well-paid top-5% technocrat/professional class.

The middle class in between has less stake in the status quo than either the dependent bottom or the high-income top. Why bother fighting for a dwindling stake in a corrupt system? If you can’t join the high-income top 5%, then the rational choice is to opt out or slide into the lower class that qualifies for full state benefits.

As the middle class’s stake in the status quo diminishes, so does state power over the middle class. Those with less to lose will slowly stop complying or engaging in political battles (i.e. advocacy). A pox on all your houses expresses a disdain not just for the corrupt system but for the state’s power to enforce its will by threat.

This decline in the stake of the middle class is the source of profound political instability. Note how the top 1% have gained wealth, income and power, at the expense of the middle class:

Rising federal debt will eventually impact taxpayers and state dependents alike, pitting various classes against each other.

Meanwhile, the entire status quo, public and private, is being crushed by unprecedented debt loads.

Needless to say, stagnating income and soaring debt loads is not a story with a happy ending.

Force is not the same as power. If force fails to persuade, power evaporates.

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.

The End Of Money (Webinar)

11-May-2017

Today’s lofty asset prices are dependent on one thing far beyond all else: continued massive amounts of liquidity injected each and every month by the world’s central banks.

Over $12 trillion in “thin air” money has been printed up by the world’s central banks since the start of the Great Recession. And so far in 2017, a fresh $200 billion is added to the pile each month(!)

This makes the future price trajectory for stocks, bonds, real estate and nearly every other asset class more dependent on central bank policy than at any time in history. Investors need to ask: What are the central banks most likely to do next, and what will the repercussions be?

Click here to read the full article

U.S. Gold Exports To China and India Surge In 2017

11-May-2017

Gold Exports From U.S. – Something Big Is Happening


by SRSRoccoReport.com

Most Americans didn’t realize it, but something BIG changed in the U.S. gold market in the beginning of 2017.  While precious metals sentiment and buying in the U.S. has dropped off considerably in the first quarter of 2017, the East continues to acquire gold, HAND OVER FIST.

How much gold?  Well, let’s just say…. U.S. gold exports have nearly doubled during JAN-FEB 2017 versus the same period last yearTotal U.S. gold exports JAN-FEB 2017 surged to 101 metric tons (mt), compared to 56.5 mt last year.  This is quite interesting because total U.S. gold mine supply plus gold imports for JAN-FEB 2017 only equaled 80 mt.  Thus, the U.S. suffered a 21 mt gold supply deficit in the first two months of the year.  Which means, someone had to liquidate an additional 21 mt of gold from their vaults to export to the East….. where they still understand the vital role of gold as REAL MONEY.

Read full story here…

Access Award Winning Daily and Weekly Updates Here

How Higher Education Became an Obscenely Profitable Racket That Enriches the Few at the Expense of the Many (Student Debt-Serfs)

10-May-2017

“Legal” rackets have two essential components: a public-relations “cover” that obscures the racket and the mechanism that extracts the wealth from the “marks.” The Higher Education Racket qualifies on both counts:

1. The PR cover is “you all need a college diploma, and we’re here to make that happen.” Yea for more education!

2. The extraction mechanism is student loans. Here’s a chart that shows what happened relatively recently: your federal government began guaranteeing obscene profits to student-loan lenders and debt-serfdom for tens of millions of “marks” i.e. students.

Gordon Long has done some outstanding work clarifying the purposefully obscure swamp of obscene profits reaped from student debt-serfs. Gordon and I explain how the racket works in How College Has Become A Racket! (45 min. video program).

The racket’s foul core is the cartel structure of higher education: if you want a college diploma, you must satisfy a cartel member–an accredited institution.

The problem, as I elaborate in my book The Nearly Free University and the Emerging Economy: The Revolution in Higher Education, accrediting the school gives no indication to employers if the student learned anything remotely useful, or indeed, anything at all.

Consider the study Academically Adrift: Limited Learning on College Campuses which concluded that “American higher education is characterized by limited or no learning for a large proportion of students.”

While the majority of students learn little or nothing of value, the legions of overpaid administrators have expanded like rats on a verdant island (i.e. an island with unlimited money via student loans).

New Analysis Shows Problematic Boom In Higher Ed Administrators:

In all, from 1987 until 2011-12–the most recent academic year for which comparable figures are available—universities and colleges collectively added 517,636 administrators and professional employees, according to the analysis by the New England Center for Investigative Reporting.

“There’s just a mind-boggling amount of money per student that’s being spent on administration,” said Andrew Gillen, a senior researcher at the institutes. “It raises a question of priorities.”

The ratio of nonacademic employees to faculty has also doubled. There are now two nonacademic employees at public and two and a half at private universities and colleges for every one full-time, tenure-track member of the faculty.

The number of employees in central system offices has increased six-fold since 1987, and the number of administrators in them by a factor of more than 34.

Paying a bloated, overpaid-admin-heavy institution for the privilege of sitting through four years of lectures, online courses and a few labs no longer makes sense for the vast majority of students. What makes sense is dispensing with the entire bureaucracy of the cartel and costly campuses altogether, and designing directed apprenticeships which combine the best of online coursework with on-the-job training in workplaces.

The vast majority of student are better served by mastering the 8 essential skills required in the emerging economy–skills that students can acquire on their own, a process of accrediting yourself that I address in detail in Get a Job, Build a Real Career and Defy a Bewildering Economy.

Forgiving skyrocketing student debt won’t solve the real problem which is the soaring costs imposed by a cartel that is failing to prepare students for the economy of tomorrow.

As I explain in my books, the only real solution is accredit the student, not the school.

These charts illustrate the soaring costs and diminishing returns of a higher education diploma:

The yield (in earnings) on the increasingly unaffordable college degree is declining sharply:

While the higher-ed status quo is failing the students, it’s enriching itself immensely. Assistant deans of student loans and thousands of other administrators who we managed to do without a generation ago are raking in huge salaries and fat benefits/pensions.

Meanwhile, over in the financial racket that’s enabled functionaries to skim $200,000 a year for doing essentially nothing remotely related to students actually learning anything remotely applicable in the real-world economy, student loan lenders are skimming tens of billions in profits guaranteed by the taxpayers. Yes, tens of billions: $140 billion in pure guaranteed profit has been skimmed off the hapless student debt-serfs herded into the shearing machine known as higher education.

There is something Kafka-esque and Orwellian about calling this vast machine for reaping taxpayer-guaranteed obscene profits “higher education.”

I invite you to learn more about how our predatory, parasitic, neofeudal nightmare “higher education” system enriches the few at the expense of the many:

Of related interest:

Jobs data cannot prove that college is a “good investment”

Student Debt Grows Faster at Universities With Highest-Paid Leaders, Study Finds

Even the Most Educated Workers Have Declining Wages

Everything I’ve Written On Education Comes Down To Cultural Capital And Skills

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.

Art, Central Bank Debt Control and Money Versus Nature

10-May-2017

The art world and artists have in the main not addressed one of the most important issues of our time – central banks foisting debt on the people and nations of the world and thereby controlling them.

An artist who has the knowledge and courage to look at and address the world of money, the dangers of monetary policies today and currency debasement on a scale that the world has never seen before is an Irish artist called Conor Walton.

The Dream of the Central Banker (Click painting to enlarge)

In the words of Conor himself:

“This picture (see above) refers to some of the larger monetary disorders of our time.

That economists occasionally come up with naïve images to represent their ideas has been a boon to cartoonists in the financial papers, and ‘helicopter money’ is surely among the best of them.

I think it’s about time the subject received the fine-art treatment.

This picture celebrates some of the madness of our times, with its ‘heroic’ central bankers and their delusions of control.

It is part of a series of paintings loosely titled ‘Asymmetrical Warfare’.

The Joker Wins Again (Click painting to enlarge)

This phrase sums up my entire career, but it has particular relevance to this current series of works because they deal explicitly with cultural conflict, with the crises of our times – political, ecological, financial, cultural and moral – and the warped perspectives that ensue.

These paintings represent a cultural battlefield. For me, they are a way of waging a small-scale war against modernity.

About twenty years ago, in my late twenties, I came to the conclusion that I really didn’t understand how the world worked: so much of what was going on made very little sense to me, particularly in the spheres of markets and finance.

So I went ‘back to school’ and tried to fill in the gaps in my understanding and overhaul my world-view. I emerged from that overhaul a ‘Doomer’.

Read full story here…

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[KR1068] Keiser Report: Never-ending Greek bailout

9-May-2017

We discuss pledging more austerity in exchange for the never-ending Greek bailout. In the second half, Max interviews Sol Trumbo Vila about a report he co-authored entitled The Bailout Business. They discuss the Big Four audit firms and how bailout consultants are raking in big bucks from the bailout business.

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