The Economic Consequences of Our Military Industrial Complex

Jeff Deist, President of the Mises Institute and Daniel McAdams, the Ron Paul Institute for Peace, weigh in on America’s self-destructive military industrial complex.

- Source, Jay Taylor Media

If The Deep State Propaganda Fails, Get Ready For The Event From Hell

The cabal (deep state) is scrambling and pushing out as much propaganda as possible. McCabe stepped down from the FBI, some are saying he was forced out, its all coming down and there is no place to hide. 

Bio-metric ids were put into the Securing America’s Future Act of 2018 which requires all American's to have their bio-metrics put into a database. North Korea allegedly says they are cancelling with South Korea because of news agencies negative view. Russia intercepts spy plane in the black sea. 

CIA designates the PKK as a terrorist group while supporting them. CNN and other corporate media outlets say we are not leaving Manbij in Syria, most likely this will happen within a couple of weeks. 

The cabal (deep state) is trying everything to distract and Q warns that if it doesn't work they will resort to an event from hell.

- Source, X22 Report

Tucker Carlson Talks with Trump Adviser Michael Caputo About Surveillance Memo Release

Tucker Carlson talks with Trump adviser Michael Caputo about the horrendous FISA memo and how it is set to be released. He states that this is a witch hunt, that will not end until it is forced to be ended.

The far left is losing control and attempting to destroy America with their bogus claims. Now the tables are turning on them and the FISA memo is about to expose them for what they are.

- Video Source

Sean Hannity Says Many More Resignations to Come at FBI in Light of Memo Release

Sean Hannity discusses the recent news that has shocked the political and financial markets. The controversial FISA memo is set to be release, much to the rejoice of liberty lovers all over.

Now, what comes next? Sean believes that many more heads are yet to roll and we are going to see mass firings within the FBI, as a great purge is performed.

- Video Source

Stefan Molyneux: The Inevitable Collapse of the US Dollar. Prepare Yourself.

While many people remain in denial, the collapse of the United States Dollar is inevitable from a mathematical standpoint. Stefan Molyneux looks at the history of the U.S. Dollar, the historical collapse of fiat currencies and things which may speed up the inevitable collapse.

- Source, Stefan Molyneux

When Global Economy Gets Hit, Silver Prices Will Explode

When troubles really hit the global economy, then expect silver prices to really take off, said Jeffrey Christian, managing partner for New York based CPM Group. “The first half of 2017 will be a continuation of sideways trading for the silver market. 

We will have to wait till 2019 to move up more sharply,” he said on the sidelines of the Vancouver Resource Investment Conference. “Problems [in the global economy] are not going to erupt in 2018-2019, at some point they will erupt maybe 2022-2024, until we see a financial crisis like 2007-2009 – when that happens the silver market has geared itself up to move not to $30 but to $40 ,” Christian forecasted. 

Gold and silver prices both hit 4.5-month highs and ended the U.S. day session moderately higher Thursday. An eroding U.S. dollar and a rallying crude oil market are bullish outside elements boosting the metals. February Comex gold was last up $7.40 an ounce at $1,363.80. March Comex silver was last up $0.136 at $17.625 an ounce.

- Source, Kitco News

A Critical Metals Deficit is Widening at an Alarming Pace

Amid the worldwide move into cryptos and the continuing interest in peak stocks, the global demand for tangible base metals like Zinc is only growing - while at the exact same time global inventories dwindle. In fact the PHYSICAL Zinc stockpile at the London Metals Exchange has done something very, very strange over the past month... so I've invited Max Porterfield, The CEO & President of Callinex Mines on the discuss all of it.

- Source, SGT Report

The Greatest Push To Start WW3 Has Just Begun

The FISA memo is about to be released and its suppose to be a shocker and Obama and the rest might be in trouble with this. By publishing the memo this could put a halt to the Mueller investigation. Jack Burman who was trying to find out who murdered Seth Rich was attacked. 

Russia reports that funds are being transferred to start riots in Russia. North Korea and South Korea cancel meeting before Olympics. The cabal is pushing its agenda in Syria, trying to get Turkey to invade, to push the conflict in Syria, to get Russia and China involved. This is greatest push we have seen to get war off the ground.

- Source, X22 Report

John Rubino: The Suddenly Weak Dollar Is Back In The Spotlight

For the past few years the “strong dollar” has been so central to the global financial story – enabling ever-lower interest rates and ever-higher financial asset prices pretty much everywhere – that it’s easy to forget how illusory “strength” is for fiat currencies.

Since mid-2017 that illusion has been evaporating, as the dollar falls (both against other fiat currencies and assets like oil, bitcoin, tech stocks and gold) and interest rates rise.

And this week the US seemed to welcome these trends:

Mnuchin comment surprises financial markets, turns dollar decline into ‘one-way bet’(CNBC) – The dollar, already on a spiral lower, sank to a three-year low after Treasury Secretary Steven Mnuchin said a weaker dollar was good for U.S. trade.

The comments depart from the strong dollar policy of Treasury secretaries before him, going back to Robert Rubin in the Clinton administration, but fit with the Trump administration’s “America first” message.

The weak dollar policy could backfire and make U.S. assets like Treasurys less appealing, and drive up the costs of foreign goods for businesses and everyday Americans.

“They basically open this up as a one-way bet for traders, and traders will keep pushing it and keep pushing it,” said one strategist.

Mnuchin’s comments echo statements by President Donald Trump, who famously helped turn a market trend of a stronger dollar last January when he said, prior to his inauguration, that the dollar was “too strong” and that U.S. companies can’t compete because of it, particularly against the Chinese. The dollar index has lost more than 10 percent since then, and after Mnuchin’s comment Wednesday morning, it sank to a new three-year low.

“Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told reporters in Davos, according to Bloomberg, adding that the currency’s short-term value is “not a concern of ours at all.”

Whether a weak dollar policy was the intended message or not, the fact that Mnuchin made the comments at a briefing at the World Economic Forum’s annual meeting in Davos, Switzerland, was not lost on the market. The forum is viewed as the bastion of globalization and free trade, while Trump officials have been or are expected to reaffirm the administration’s America first policies, seen as protectionist by some.

The dollar was already set on a downward course this year, and Mnuchin’s comments help cement that path. The euro rose to 1.23 per dollar, and yen gained about 0.8 percent Wednesday against the greenback.

Treasury Department data show that China and Japan, the two largest holders of U.S. Treasurys, reduced their holdings in November as the dollar weakened. Last month, the International Monetary Fund reported the dollar’s share of global currency reserves fell in the third quarter to 63.5 percent, its smallest since mid-2014.
What are the downsides of a weak global reserve currency? Bond market carnage for one:

Ray Dalio Says Bond Bear Market Has Begun, Expects Historic Crash(Zero Hedge) – Joining the likes of Bill Gross and Jeffrey Gundlach, and echoing his ominous crash warning to the NY Fed from October 2016, Bridgewater’s billionaire founder and CEO Ray Dalio told Bloomberg TV that the bond market has “slipped into a bear phase” and warned that a rise in yields could spark the biggest crisis for fixed-income investors in almost 40 years.

“A 1 percent rise in bond yields will produce the largest bear market in bonds that we have seen since 1980 to 1981,” Bridgewater Associates founder Dalio said in a Bloomberg TV interview in Davos on Wednesday. We’re in a bear market, he said.

However, as we explained last December, this is a low-ball estimate which “understates the potential losses” as it “does not include high-yield bonds, fixed-rate mortgages, and fixed-income derivatives”, which would suggest that the real number is likely more than double the estimated when taking into account all duration products. As a reminder, Goldman calculated the entire duration universe at $40 trillion as of the summer of 2016, resulting in $2.4 trillion in losses for a 1% move.

By now the number is far, far greater.

Gold, of course, loves this kind of thing:

Gold hits 4-month peak after US welcomes weaker dollar(CNBC) – Gold prices hit the highest in more than four months on Wednesday after a U.S. official welcomed a weaker dollar and investors sought insurance against uncertainty.

The dollar index touched fresh three-year lows after U.S. Treasury Secretary Steven Mnuchin said a softer dollar was good for the United States. A decline in the dollar makes commodities priced in the greenback cheaper for buyers using other currencies.

Spot gold was up 0.95 percent at $1,353.80 per ounce at 12:02 p.m. EST, while U.S. gold futures for February delivery climbed 1.23 percent to $1,353.20 per ounce.

“It’s the weaker dollar, it’s the inflation focus and it’s also to some extent the market is continuing to look for a hedge against a world that’s becoming incredibly complacent with stocks at record highs,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. “We’re honing in on the 2017 high around $1,357, which is going to be the next big level.”

“Global investors are also concerned about potential trade wars… which is stirring up some risk-aversion trade, so that, in turn, is supporting gold,” said Richard Xu, a fund manager at China’s biggest gold exchange-traded fund, HuaAn Gold. “I think gold prices will continue to trend higher along with other commodities, so $1,400 (an ounce) is our near-term target.”

In other precious metals, silver gained 2.14 percent to $17.41 per ounce after touching a 3-1/2-week low of $16.73 in the previous session.

- Source, John Rubino

Nomi Prins: Debt Will Eventually Destroy the Entire Financial System

Two time, best-selling author Nomi Prins says global debt levels are at record highs. Prins contends, “These are levels that they have never been, and they are all at their historic highs. That’s why debt will ultimately be the destructor of the system. 

In order for that to happen, the cheapness of money that allow states, municipalities and corporations to continue to borrow at these cheap levels has to go away. 

At some point, there will be a mistake. There might be a tiny smidge of an interest rate hike at some central bank, probably the Fed, which ripples throughout the system as a mistake, not because real growth has happened, and that’s why interest rates have been raised. 

That will incur defaults throughout the system. People will incur personal defaults, and that will cause problems in the mortgage market, then it becomes a knock-on credit crisis, and then banks start not to lend. Then we have the makings of a broad crisis.”

- Source, USA Watchdog

Trump To Embrace Nuclear First Strike, to Protect America?

President Trump's new Nuclear Posture Review is expected to call for new "low-yield" nuclear weapons and an expansion of the scenarios in which the US may use a nuclear "first strike." Is this a good idea? We discuss in today's Liberty Report...

- Source, Ron Paul's Liberty Report

Credit Markets Smile on Gold, Frown on Stocks and Bonds

Alasdair Macleod shares his well reasoned expectations for the direction of markets as well as GDP and Main Street in 2018 based on the credit cycle.

- Source, Jay Taylor Media

Are The American People Being Prepared For A Nuclear Pearl Harbor?

The DOJ unseals indictments to one individual but more are on the way. The Syrian forces have reported that the rebels have used chlorine gas. Hawaii had a scare, there was an alert sent out to the people telling them that an incoming missile was headed there way. Parents placed their children in storm drains and people panicked.

- Source, X22 Report

Robert Kiyosaki: Having Gold Near You Attracts More Wealth

Holding real gold is the best way to have steady income, says Robert Kiyosaki, best-selling author of “Rich Dad Poor Dad” and his latest book “Why The Rich Are Getting Richer.”Kiyosaki has been a self-proclaimed gold bug since 1972, and in his latest interview with Kitco News, he explained his journey with the yellow metal, from his first foray into gold when Nixon removed the dollar from the gold standard, to accumulating millions of dollars in gold today. 

“People believe what they want to believe,” Kiyosaki said, “some people believe that if you go to school you’ll be happy, or if you get married you’ll be happy….well, I don’t know about that, but gold has made me very happy.”

- Source, Kitco News

Tim Warman: Gold and Cryptos Coming Together

Tim Warman, CEO and Director Fiore Gold, has been around the block a time or two when it comes to gold discoveries. He has been directly responsible for locating 30 million ounces of gold! No small feat on such a large planet that doesn't give up secrets very easily. Tim and the teams he has worked with like Continental Gold Inc, Aurelian Resources and Dalradian, has been surrounded by world class management and exploration Teams. As a geologist, Tim, knows his rocks and where and how to find gold!

- Source, The Daily Coin

True Life Story: The Bank Made My Family Broke

Blessed with a steady professional income and carefully managed expenses, this family was getting along well - until overnight they found themselves frozen out of their bank account: without warning, WITHOUT HAVING DONE ANYTHING WRONG, and without recourse. Strapped for cash, they consumed their pantry food, and struggled to pay for groceries and even medical care. 

This unconventional true-life interview with an American mom living in Israel shows how suddenly life can turn upside down, completely outside your control. Whether due to geo-political tensions, increased restrictions (in the name of "security",) the risk of lockup of the leveraged banking system, or even natural disasters, you can lose your freedom to conduct your financial affairs in the blink of an eye. 

A grim foretaste of the cashless future we are all being ushered into yields some priceless lessons-learned.. WHAT CAN YOU DO NOW to be prepared to survive when life throws you a severe curve? Tune in and find out!

- Source, Reluctant Preppers

Anthony Milewski: 2018 Is Going to be the Year of Grid Storage

Anthony discusses Cobalt 27 and how they did well this past year. 2017 was the breakout year for the electric vehicle market, and it is accelerating faster than most analysts anticipated. He thinks a new story will emerge this year that will shape the market. This story is the concept of grid storage, which involves attaching large battery banks to the electric grid. 

All power grids globally have demand for this technology. Tesla’s grid solution in Australia has demonstrated how this technology can dramatically improve electrical systems. Grid storage applications will require a sizeable quantity of lithium ion-based batteries and will likely move towards vanadium based batteries that are in development. 

Vanadium is an interesting technology, but there are risks. If you are looking at vanadium, you may want a small speculative investment. E.V sales have continued to impress analysts. The coming quarters will likely continue to show an increasing demand for them. The nickel sector is going to be a sleeper as the market has not yet priced in this potential. 

He feels the broader equity markets will show the most gains during the first half of the year with the second half driven by quantitative easing concerns. We are still well below the peak of the last commodity supercycle. Ultimately money will flow into commodities. 

As a result, he thinks copper equities will have a big year. Automakers have a different view of the transportation market. They see Electric Vehicles as a means to bring autonomous vehicles to the marketplace. They are looking at how to get cars to drive and park themselves.

- Source, Palisade Radio

Gold and Silver Will Be Much More Relevant Than Bitcoin in 2018

Bitcoin has dominated the financial news cycle, but in the long run, this particularcryptocurrency might be more bark than bite. Although the technology of blockchain and cryptocurrencies will live on, the way the financial markets have pinpointed Bitcoin as the end-all-be-all for the complex is arguably flawed logic. The cryptocurrency idea is less than a decade old and will undoubtedly experience growing pains. Many believe Bitcoin is the start of a new era capable of changing society in a manner similar to the internet. How soon we have forgotten the struggles of technology pioneers. Remember Pets.com?

Considering the mania, it is hard to believe Bitcoin was created as an experimental currency and involves the practice of solving math equations to “mine” the asset. Since when does doing algebra instantly create a valuable asset? Further, Bitcoin was never intended to be an investment vehicle and would likely prove to be less valuable than just about any tangible asset on the planet should the world undergo a calamity. In short, its astronomical value is the result of perception not reality. This isn’t a new concept in the financial markets, but we’ve never seen emotions get this out of hand.

Some argue these characteristics are no different than those of gold; that is a reasonably true statement. I’ve always had reservations regarding the practicality of gold being an efficient medium of exchange, but the truth is it has been used by mankind for millennia. More importantly, the gold market is extremely deep. Investors in gold bullion, casual collectors, technology manufacturers, and those valuing its beauty, are all holding a piece of the pie. The Bitcoin market, on the other hand, is believed to be largely owned by roughly 1,000 market participants with uninformed retail traders scrambling to bid up the price of scraps.

Despite the excitement over Bitcoin and the widespread expectations that it is a sufficient replacement for gold, there are some serious consequences of holding Bitcoin relative to gold that the market is not currently accounting for. These security risks might be enough to counterbalance the yearning for massive gains which might never be realized due to challenges in logistics in liquidating cryptocurrency assets in an illiquid environment and a lack of regulatory safeguards. To be clear, we are not fans of big regulation in the financial industry but we’ve been around long enough to know that some common sense regulation is necessary. In our opinion, the lack of governmental control over the brokerages offering cryptocurrencies flings the door wide open to opportunity for fraud.

For instance, one of the appealing aspects of Bitcoin is the fact that it bypasses banks and other financial intermediaries. This introduces a counterparty risk that most other financial transactions and assets aren’t exposed to. There have been a handful of Bitcoin brokers leave the business due to solvency or fraud issues. Those holding Bitcoin at those particular brokerages are simply out of luck. In short, customers who wired funds to such brokers to “invest” (I use that term loosely in this instance) in Bitcoin in hopes of a get rich quick outcome, discovered their funds were used by the brokerage in other way and was gone. Even if their funds did go toward Bitcoin purchases, the assets were liquidated to satisfy priority debt holders of the firm leaving investors with either nothing to show for their efforts or initial principle or in a best-case scenario nickels and dimes on their dollar. Keep in mind, these counterparty risks apply only to those attempting to buy actual Bitcoin via the various brokerages offering the asset, it does not apply to Bitcoin futures contracts. The counterparty risks of Bitcoin do not apply to Bitcoin futures in which all transactions are guaranteed by the exchanges listing them (Chicago Mercantile Exchange and Chicago Board of Options Exchange). Nevertheless, Bitcoin futures are (at least in theory) tied to the underlying Bitcoin price itself, so although the exchange guarantees the futures market transaction itself, there is obviously no guarantee the trade will make money. In other words, the exchange ensures that speculators on both sides of the trade live up to their end of the bargain.

Also, the internet is riddled with stories of Bitcoin holders who have lost access to their Bitcoin assets due to hacked computers, compromised email accounts, or simply losing an associated pin number. Gold and silver bullion investments, on the other hand, are generally sitting in a bank safe with protections most citizens wouldn’t be capable of employing on their own. If the bank is robbed, there is likely some recourse to recoup the value whereas a Bitcoin holder digitally “robbed” of the asset will never be made whole. Accordingly, the new security risks associated with “investing” in cryptocurrency are far greater than most are willing to admit. As flawed as gold is, it has a long history of survival and relevance. That is more than we can say for Bitcoin.

Now that we’ve established that precious meals are a more legitimate asset than the existing cryptocurrencies, let’s peek into what might be in store for both gold and silver as we head into 2018. That said, we hesitate to make any bold calls in such a lengthy time horizon. A year is a long time and the fundamental backdrop can change dramatically. Recall late 2015, the stock market and most commodities were in the dumps but by early 2016 the markets were stable and in some cases roaring higher. In other words, it is important that we avoid getting sucked up into the current narrative and keep our eyes open for shifts in sentiment.

Throughout the latter part of 2017, both gold and silver waffled in price due to a lack of interest. This isn’t surprising, traders are focused on alternative assets such as Bitcoin, the stock market is performing better than nearly all periods in history, and there hasn’t been an immediate need for risk off assets in recent years. Accordingly, precious metals have fallen victim to a lack of attention and trading interest. Nevertheless, sometimes the best opportunities are in those markets the masses aren’t paying attention to. Eventually, the focus will change and investors will look toward the traditional safe-haven assets for a place to diversify. On a side note, I am the first to admit that gold and silver are generally volatile markets with little resemblance of safety but the fact remains that the value of precious metals tends to rise along with uncertainty. Given the stock market’s ability to have avoided a significant correction for over two full years, it seems likely 2018 will bring some sort of equity market pullback leaving investors yearning for alternative assets.

- Source, Kitco News

Central Banks Move on Cryptocurrencies?

Will 2018 be the year central banks start buying cryptocurrencies?

A scandalous proposition, until recently unthinkable — and officially denied at present.

Are not central banks the sworn enemies of cryptocurrencies?

But our agents report strange murmurings… and illicit rumors begin to swirl…

G7 central banks cannot presently trade cryptocurrencies.

These are the shabby dregs of the financial world. They are unwashed behind the ears… and lack the official aroma of respect.

But that may soon change…

“In 2018, things will be different,” says Eugéne Etsebeth, formerly of the South African Reserve Bank.

“G7 central banks will start buying cryptocurrencies to bolster their foreign reserves,” he affirms, concluding:

“Central bank money will pour into cryptocurrencies.”

Here is a voice not of the bitcoin glee club or the moon-mad fringe… but a former central banker… a totem of the establishment.

Our agents have also forwarded us the following dispatch, by way of Peter Smith, CEO of Blockchain:

I think this year will be the first year we start to see central banks start to hold digital currencies as part of their balance sheet.

Perhaps the rumors have authentic juice in them.

Consider…

The world’s central banks hold currency, gold, bonds, stocks, even IMF special drawing rights (SDRs).

Is bitcoin — which has now attained respectability on the futures market — any less an asset than SDRs?

SDRs, we note, may bulk large in central banks’ deliberations.

Establishment totem Etsebeth:


A turning point for G7 central banks will be when the bitcoin market capitalization exceeds the value of all SDRs that have been created and allocated to members (approximately $291 billion)…

In 2018, G7 central banks will witness bitcoin and other cryptocurrencies becoming the biggest international currency by market capitalization. This event… will make it intuitive to own cryptocurrencies as they become a de-facto investment [of central banks].

At writing, bitcoin’s market cap is $318 billion.

If SDRs’ combined value is $291 billion… has not that turning point already arrived?

Furthermore, one bitcoin currently fetches $16,703.

No stock… no bond… no ounce of gold… no other tradable asset comes within miles of it.

Which leads us to a related reason central banks could adopt cryptocurrencies in 2018…

Depreciating national currencies vis-a-vis cryptocurrencies.

Etsebeth:


Another tipping point will be the realization that the values of G7 currencies are devaluing against cryptocurrencies. The SDR and G7 country currencies will be forced to alter their foreign reserve weightings and eventually include a basket of cryptocurrencies.

Yes, just so.

But now comes your objection:

Cryptocurrencies are beyond all things else… volatile.

Bitcoin can swing — has swung — thousands of dollars in a single day.

“Stable” institutions like central banks cannot abide that whisker-whitening volatility.

Your objection is noted… and your objection is sustained.

But as noted above, bitcoin now trades on the futures market.

And the futures market often wrests order out of chaos.

James Angel of the famed Wharton School of Business:


If history is any guide, organized futures will reduce the wild volatility in bitcoin. Historically, the introduction of futures contracts has generally led to a decrease in the volatility of the underlying asset…

Futures contracts provide efficient means for purely financial players who buy when they perceive the price to be low and sell when they perceive the price to be high. This helps to stabilize market prices.

Also, a functioning futures market will attract heaps of institutional money to bitcoin.

And an expanding bitcoin market brings a stability all its own.

There’s a reason why a Coca-Cola or an Amazon or an Apple doesn’t swing hundreds of dollars per day.

Besides, if central banks add bitcoin to their reserves, powerful people have ways of… looking out for their interests.

According to the New York Post’s John Crudele, phone records from the 2008 financial crisis revealed several calls between Treasury Secretary Hank Paulson and Wall Street banks.

These calls “seemed to coincide nicely with stock market rallies.”

Assume for the moment the Federal Reserve purchases bitcoin next year or beyond.

In the event of a price collapse, might the Treasury secretary privately “suggest” that his Wall Street henchmen buy large amounts of bitcoin futures… as they likely bought S&P futures in 2008?

We speculate, of course.

And let us add that we are no bitcoin drummer.

We merely report the news… connect the dots… and try to make sense of the picture that emerges.

We will gladly take correction if our picture distorts reality.

Of course, central banks’ adoption of cryptocurrencies “will happen in the dark,” returning to our former central banker Mr. Etsebeth.

“Old habits die hard,” he concludes.

And that is precisely why nothing central banks do would surprise us… including buying cryptocurrencies… while denouncing them publicly…

- Source, Brian Maher via the Daily Reckoning

The Debt Beneath and How it Could Unhinge the Entire System

Debt is irrelevant and matters not. It’s different this time. That’s the message from politicians, markets and participants. Tax cuts pay for themselves (they do not), leverage doesn’t matter (it does) and the increased costs of servicing the debt as a result of rising rates will be offset by imaginary real wage growth to come (they won’t). But the calmest market waters in history continue to keep these illusions alive as asset prices keep levitating from record to record.

Debt does matter and it was ironically left to Janet Yellen to voice any remnant concerns about the sustainability of debt to GDP: “It’s the type of thing that should keep people awake at night” she said.

With good reason:

After all the debt burden has never been higher and rates, following years of enabling the largest debt expansion in human history, are starting to rise in the US. In the larger historic context rates are still low, but let’s be clear, they are rising:

And with rising rates come questions of the sustainability of servicing incredibly high debt loads.

The worldwide equity rally since the early 2016 lows has resulted in a massive increase in the market capitalization of global asset prices which have increased by over $25 trillion in value since then. As discussed in my 2017 Market Lessons US market capitalization is now north of 143% of US GDP.

Low rates and free money in form of global QE and now US tax cuts make it all possible and consequence free. But is it?

Let’s take a look at the leveraging game over the past 2 years since this is when the most recent rally began. And note in many cases we don’t have full 2017 data yet so I’m using the running 2 year data where I can pull it. The trend is the same: Up, up and away.

Federal debt has increased by $2.1 trillion. Different management, same result and tax cuts will leave a revenue source gap in the long term budget and will add further to the debt:

Corporate debt has increased by over $568B during the same timeframe:

Household debt has increased by $364B:

Revolving debt, you know the one subject to higher rates, is now exceeding $1 trillion, up over $100B in less than 2 years:

Student loans continue to expand unabated, up by another $166B:

And consumer loans on credit cards at commercial banks are up by another $100B since the February 2016 lows alone:

We don’t have full year end data yet, but there are indications on how the trend concluded:

“Shoppers in the U.S. racked up an average of $1,054 of debt this Christmas season — an increase of 5% over last year – 44% of shoppers racked up more than $1,000 in holiday debt, and 5% accumulated more than $5,000 in debt.”

So you see a solid portion of the GDP growth you are seeing is debt spending related. It’s not as organic as it may seem. US government deficit spending filters its way into GDP as much as consumer debt spending.

How will consumers deal with all these increases in debt? It’s a good question as real disposable income is up only $382 per capita over the same time period:

And personal interest payment obligations keep rising while the personal savings rate keeps dropping:

One more nugget: Margin debt in stock market accounts has increased by a whopping $146B since the February 2016 lows and now stands at over $580B. Graphically this looks like this:

The Fed say they are committed to reducing their balance sheet and will continue to raise rates.

Wall Street is projecting for the 10 year rate to move into the 3% range:

They’ve tried this forecast a few times before, but it has never materialized. Perhaps this time it will and, if it does, here are a couple of key questions looking at a 30 year chart:

What will the breaking of a 30 year downward trend in the 10 year do to equity prices that appear to have been entirely dependent on said downward trend?

And how will consumers sustain their debt driven spending habits as the burdens of ever higher interest payments are not a theoretical construct but a reality already knocking on the door?

The waters are calm, but they mask the real danger of the debt beneath and that is: The math doesn’t work.

- Source, Northman Trader

Inflation and Deflation Will Simultaneously Occur in 2018

Former Fed insider Danielle Booth says, along with a “bond market debacle,” the world will see inflation right along with it. Booth explains, “Look at lumber prices, look at the cost of packaging, plastics, raw materials, the producer price index is at a six year high right now. It’s called the mother of all margin squeezes. Companies are suffering. 

We have inflation. We have very real inflation, and it is hitting corporate America between the eyes. We have seen inflation happening, and we continue to see it happening, Rental inflation is off the scale. Inflation is up for 2018, and it has been up. We can have deflation and inflation at the same time. 

If all of this debt that has built up, especially for households, if they are allocating more of their income to servicing debt, then they have fewer dollars to spend on other things. 

So, you are going to have deflation and inflation at the same time.” What does the regular guy on the street do? Booth says, “Figure out a way to have exposure to precious metals. Put your bubble vision on mute. You do not have to be invested in the market. That is a fallacy. Take what you have and pay down your debts.”

- Source, Greg Hunter via USA Watchdog