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Friday, November 30, 2018

What Hyperinflation Looks Like in Venezuela First Hand, On the Ground

If you know anything about the crisis in Venezuela, you’ve most likely seen the work of Meridith Kohut, an independent photojournalist based in Caracas.

Meridith, who frequently photographs for The Times, has taken some of the most haunting images to come out of the country as its economy has spiraled deeper into chaos.

There was the baby boy who died of heart failure caused by extreme malnutrition, his father weeping over the coffin. The emaciated patients locked in isolation cells at an underfunded psychiatric ward. 

The street protesters in gas masks hurling Molotov cocktails at security forces. Meridith’s photos, at once unsettling and illuminating, offer a window into the daily struggles of Venezuelans.

This month Meridith, 35, was one of four female journalists around the world to be honored by the International Women’s Media Foundation with a Courage in Journalism Award. In a recent interview, she spoke about the challenges of reporting in Venezuela, the global resonance of her work and what she wishes readers knew...


Mike Maloney: I Found A New Recession Indicator That Says LOOK OUT BELOW


Mike Maloney was excited. It was our weekly company meeting, and he interrupted it to tell us all about a new recession indicator he’d just discovered. 

In fact, he said it is “one of the most reliable indicators of a pending recession I have ever come across.” And that’s the basis of his just-released video, "I Found a Brand New Recession Indicator and It Says Look Out Below!" 

He showed us a series of charts, some of which were highlighted in his Early Warning Webinar. T

hey include the Wilshire 5000 Index, the US monetary base, and the federal government’s tax receipts. And it is the correlation of those charts that formed the basis of what Mike calls the “financialization of government.” And then he showed us a new indicator that has a strong track record of predicting recessions. It works like this… 

Since 2000, the data show that tax revenues fall when the stock market falls. In other words, a rising stock market feeds higher and higher tax receipts to the government. 

If tax revenues fall, however, federal income declines, because less tax on capital gains come in. And this leads to an expansion in the deficit. You’d think the government would be better prepared for this reality, but they never are because they never plan on a recession. 

So when the stock market inevitably crashes, the government reacts by lowering interest rates, printing money, or expanding government programs – all of which, of course, grow the deficit even larger. 

But where the story gets very interesting is when Mike compares tax revenue to the timeline of past recessions, particularly tax receipts on corporate income. 

You might think that tax revenues would fall after a recession starts – but what the data show is that tax revenue in most cases has fallen before a recession. 

As Mike shows, in 14 of the last 17 times that corporate tax receipts have begun to roll over and decline, a recession started not long after. In other words… 

A drop in corporate tax receipts has frequently predicted a recession. And guess what? Corporate tax revenue has started to fall. 

Given how high the stock market has climbed, this source of tax revenue will drop hard when the stock market crashes. Indeed, the second-longest bull market in stocks could mean a bigger crash than normal and a nastier recession than many expect.

- Source

Thursday, November 29, 2018

Perpetual Surveillance: Your Smart City Knows More About You Than Your Mother Does


Dr. Oscar Gandy joins the commentary to discuss: TGI: Transactional-Generated Information - the fuel for AI control. Artificial Intelligence: “It’s time to come to terms with the machine” Dr. Oscar Gandy, Author of “The Panoptic Sort: A Political Economy Of Personal Information”: Functioning in a completely monitored environment...


Tuesday, November 27, 2018

A Golden Renaissance

The Battles for Civilization

There is the freedom of speech battle, with the forces of darkness advancing all over. For example, in Pakistan, there are killings of journalists. Saudi Arabia apparently had journalist Khashoggi killed. New Zealand now can force travellers to provide the password to their phones so the government can go through all your data, presumably including your gmail, Onedrive, Evernote, and WhatsApp. China is now developing a “social credit” system, to centrally plan the economy and control citizen behavior. Canada has made it a crime to call someone by the wrong gender pronoun. Even in the US, whose First Amendment has (mostly) stood as a bulwark against censorship now has a president who threatens antitrust action against Amazon, because its CEO Jeff Bezos owns the Washington Post, which prints things he does not like. On college campuses, professors are harassed if they say one thing that the professional sensitives are sensitive to. If a controversial speaker is invited, he risks an angry mob coming to disrupt his talk (or worse).

Then, there is the nearly-over war against patients’ rights to purchase health care services from the provider of their own choosing, and health care professionals’ right to sell services to patients at a price they prefer. In the US, insurance companies are still forced (as under Obamacare) to provide insurance to anyone who applies, even those who have pre-existing conditions. This would be like forcing home insurance companies to issue policies to people whose houses are currently on fire. It is not insurance, but an unfunded welfare program.

The use of practical energy sources is in the battle for its life. Germany and Japan are de-nuclearizing. Other countries flirt with taxes designed, not to raise revenue, but to reduce the use of fossil fuels. While many may go along with this, thinking it’s OK to pay another 50 cents a gallon for gasoline, this will not be nearly enough to force large numbers of people to do without. Gasoline for driving to work and oil for heating homes has a highly inelastic demand. The price would have to rise enough to force people to change their lifestyles, abandoning their spacious houses in the suburbs to crowd into tiny urban apartments. In Europe this month, Keith saw petrol around $8 a gallon. And they use so much fossil fuels that more taxes are demanded to reduce carbon dioxide much further.

Few Want a Free Market in Money

And don’t even get us started on money. Even otherwise-free-market economists, and even wealthy entrepreneurs and business leaders, are for a properly managed irredeemable currency. One prominent person who is all of the above recently declared that if the Fed adopted GDP targeting (it currently does its central planning based on inflation and unemployment) it would end the business cycle! He did not want to hear anything about GDP being an invalid measure, about eating the seed corn, declining marginal productivity of debt, etc. If you break a window, it does add to GDP. This is not a recommendation to break windows. It is a damning indictment of GDP as a measure.

Where tyranny, socialism, and central planning (we repeat ourselves) are on the rise, not only liberty and human happiness wither, but so does the ability of people to coordinate their productive activities. A major theme of Keith’s dissertation is that government intervention promises improved outcomes, but always reduces coordination.

Others, especially Ayn Rand, have noted that socialism sets man against man. They can no longer cooperate to enrich each other. So they are forced to squabble to loot each other through the apparatus of the state.

This is a formula for misery even in a primitive agricultural economy. Wherever it has been adopted, it has been lethal not just to those who think independently, but even to millions of loyal supporters of the regime. The death toll of the socialist regimes of the 20 th century—both international and national, i.e. communist and fascist—was in the hundreds of millions.
Trust is Delicate

It is also a formula to destroy trust between people. Trust is a necessary element for people to coordinate their activities, especially over time. There could be no mass produced food, much less computer chips, without both banking and equities markets.

In a world where no one trusts anyone else, everyone hoards their favorite commodity at home. They fear to give it to a fraudulent bank who will steal it. So, instead of financing business, production, inventory, trade, and entrepreneurialism, they simply accumulate salt or silver or gold.

This is a picture of a miserably poor society, composed of small farm villages where life is barely above subsistence. And businesses are nothing more than a one- or two-man workshop. Think of Medieval Europe prior to the Italian Renaissance.

What is now called the developing world is significantly better off than this. That’s because developed markets have produced goods that are so cheap that even laborers in India, even farmers squatting in a rice paddy can afford mobile phones (though not plumbing or toilets). Life all over the world will degrade back to the level of poverty that long prevailed—if the lights go out in the West.

Many in the gold community wish for everyone to dump their savings and investments, buy gold and silver metal, and take the metal home to put it under the mattress. It is true that, if even a small percentage of people did this, the prices of gold and silver would skyrocket. These gold owners focus on this, but not on what we describe above. We have said before that they should be careful what they wish for, so we will not dwell on that point further here. We have a different point to make today.

For the reasons of creeping central planning, socialism, government intervention in all markets, and artificial conflicts of interest between groups, there is a worldwide megatrend of declining trust. Keith describes a collapse in trust as one of the eight indicators of financial implosion in his dissertation: “(8) the willingness of people to trust one another falls to zero.”

This trend necessarily occurs so long as government interferes with production, and renders people less and less able to coordinate. Much has been written about how the banks privatize gains and socialize losses. Deposit insurance, not to mention central bank lenders-of-last-resort, provide a moral hazard to ignore risk and bet big with Other People’s Money. More recently, they are starting to enact policies that provide for bail-ins. This is when depositors lose their deposits and instead get (possibly worthless) shares in the bank.

Rational Response to Irrational Social System

Something makes our mission, to reverse the trend and save civilization, damnably frustrating. That is, it’s an entirely rational response of the individual to withdraw his trust when others demonstrate they are untrustworthy. It is entirely rational to withdraw his capital when counterparties demonstrate they are putting it at undue risk, or paying insufficient or negative real returns.

As an aside, by real return, we do not mean measuring the consumer price index and subtracting from the interest rate. Prices are measured in money. Money cannot be measured in prices. If you empty a bag of gummy bears, and line them up, you can measure the line with a steel meter stick, e.g. 500mm. You cannot invert this and say the meter stick is two bags-of-gummy-bears long.

We measure real returns in money terms—i.e. gold. If you have $1,200 and earn 3% interest on, then at the end of a year you have $1,236. However, if the gold price goes to $2,472 (we do not predict this, but for sake of easy math), then you have gone from 1oz of gold capital to 0.5oz. You have lost 50%. You would have been (far) better off, to have a gold Krugerrand under the mattress.

We won’t even talk about having gold vs. being an involuntary volunteer for a bail-in.

So how do you fix a problem caused by people rationally responding to the perverse incentives imposed by an irrational system? You must offer them different incentives. You must appeal to their rationality, to their self-interest to trust, to invest.

- Source, Sprott Money

Saturday, November 24, 2018

Erik Townsend: No End In Sight To This US Dollar Rally?


Jason Burack of Wall St for Main St interviewed returning guest, former software and technology entrepreneur, hedge fund manager and host of the popular Macro Voices Podcast for sophisticated investors, Erik Townsend.


Thursday, November 22, 2018

Will Lower Oil Prices Cause A lot of Damage to the Markets and Global Economy?


Jason talks about the oil market and many stock charts start to crack now in many different industries along with interesting current events.


Wednesday, November 21, 2018

Does China Have Enough Gold to Move Toward Hard Currency?

We can be reasonably certain that Chinese government officials approaching middle age have been heavily westernised through their education. Nowhere is this likely to matter more than in the fields of finance and economics. 

In these disciplines there is perhaps a division between them and the old guard, exemplified and fronted by President Xi. The grey-beards who guide the National Peoples Congress are aging, and the brightest and best of their successors understand economic analysis differently, having been tutored in Western universities.

It has not yet been a noticeable problem in the current, relatively stable economic and financial environment. Quiet evolution is rarely disruptive of the status quo, and so long as it reflects the changes in society generally, the machinery of government will chug on. But when (it is never “if”) the next global credit crisis develops, China’s ability to handle it could be badly compromised.

This article thinks through the next credit crisis from China’s point of view. Given early signals from the state of the credit cycle in America and from growing instability in global financial markets, the timing could be suddenly relevant. China must embrace sound money as her escape route from a disintegrating global fiat-money system, but to do so she will have to discard the neo-Keynesian economics of the West, which she has adopted as the mainspring of her own economic advancement.

With Western-educated economists imbedded in China’s administration, has China retained the collective nous to understand the flaws, limitations and dangers of the West’s fiat money system? Can she build on the benefits of the sound-money approach which led her to accumulate gold, and to encourage her citizens to do so as well?

China’s economic advisors will have to display the courage to drop the misguided economic policies and faux statistics by which she will continue to be judged by her Western peers. If she faces up to the challenge, China should emerge from the next credit crisis in a significantly stronger position than the West, for which such a radical change in economic thinking undertaken willingly is impossible to imagine.

- Source, Mises

Monday, November 19, 2018

American Bread and Circus


The world over, central banks are going to keep pursuing their doomed-from-the-start debt-addicted policies until something breaks. All because if they told the truth, if they told their citizens that they needed to immediately begin a prolonged period of extreme austerity to pay for things other people have already enjoyed, they would definitely not get reelected.

So they will issue still more debt until that tipping point when the world realizes that debt is worthless. It always comes. It is the fate of all fiat currency.

The lessons of such a profound event will be generation-defining, as the lessons of The Great Depression were for my grandmother, whose experience informed every decision she made thereafter. Nothing was too small to repurpose, nothing was worthless…because she remembered a time when that was true in her own life, and understood, deeply and personally, that it was a reality that could return.

Imagining a day when all the dollars you have in the bank or stock market or stuffed under your mattress are nearly worthless overnight, victim to a hyper inflationary nightmare, is extremely difficult.

Investors, during times of global stock market uncertainty, still flock en masse into the seeming safe harbor of the US dollar. And there, bathed in the pacifying security of the full faith and credit of the US government, the only thing standing behind that dollar, they wait out the storm.

This has worked, time and time again. And it will. Until it won’t.


Saturday, November 17, 2018

Alasdair MacLeod: China to Adopt Gold Standard?


The coming credit crisis will be the catalyst for China to adopt gold into their monetary system, says Alasdair MacLeod of Gold Money. The coming credit crisis will hurt China's economy the worst, MacLeod says. 

He proposes that China should issue a perpetual bond. The coupon on that bond would be payable in Yuan or gold at the users choice. If this were to happen, it would undermine the Dollar and send gold higher. 

Why does MacLeod believe China is headed toward a gold standard? He gives many reasons including: China has been acquiring gold, is the largest gold miner in the world, doesn't allow gold to leave, and has the biggest physical gold delivery market.


Friday, November 16, 2018

David Kranzler: Economic Crisis Approaching Fast


The Dow and the S&P 500 could be cut in half and they would still be overvalued, Fund Manager Dave Kranzler tells Silver Doctors. 

Kranzler thinks the fundamentals are showing the economy is headed south more quickly than many people are expecting. Kranzler estimates that the 2019 fiscal deficit could end up as high as $1.8 trillion, the largest in history. 

In that case, interest rates would need to move higher, he says. The housing market is starting to collapse, Kranzler says. 

Reports are showing that real estate sales all over the country all falling.


Thursday, November 15, 2018

Voter Fraud Before, During and After the Midterm Elections


Radio host Dr. Dave Janda says the midterm elections are far from over. 

Janda says, “There was voter fraud before, during and after the midterm elections. My sources say there was a staggering amount of voting machines that were impounded Monday night before the election on Tuesday because they had pre-set votes in them. 

This involved voting machines in all 50 states. Trump had teams out there making sure of the integrity of the vote. That is just some of the voter fraud before the elections.

There are a lot of federal officials on the ground. I think this is going to go by the way of the Jill Stein recount event.” 

Meaning, massive voter fraud will be uncovered in multiple locations across America.

- Source, USA Watchdog

Tuesday, November 13, 2018

Doug Casey: Most Mining Stocks Are Just Crap, Except These Ones


Doug Casey, founder of Casey Research, prefer the royalty streaming companies over traditional miners. 

In an interview with Kitco News on the sidelines of the Silver & Gold Summit in San Francisco, Casey said that he likes dividends in miners. 

“Now is an excellent time to buy into the mining business, even though it is the worst business in the world from a business point of view. 

It is a crappy, 19th century, choo-choo train business but the good news is that when these stocks are cheap and everybody hates them, these stocks are explosive on the upside,” he said.

- Source, Kitco News

Saturday, November 10, 2018

Why Precious Metals In Your IRA? Gold, Silver, US Dollar Market Update


Why Precious Metals in your IRA? We recap the price movements of gold, silver, platinum, palladium, the US Dollar Index, The Euro, DOW Jones Industrial, & more in this week's Golden Rule Radio.


Friday, November 9, 2018

Jim Acosta Loses WH Press Pass, Pretends this Violates the First Amendment


The MSM have become the enemy of the free people and have fully moved into tabloid status. 

CNN is outraged by the White House for kicking out Jim Acosta, after his rude and violent behavior. 

Fortunately, they lose more and more power with each and every day that passes by.

- Video Source, Styxhexenhammer

Wednesday, November 7, 2018

Is China Now One Giant Credit Ponzi and Money Laundering Scheme?


Jason talks about how China has probably overplayed its hand in the last 10 years with a giant, out of control credit bubble that is now over $40 trillion dollars in size!


Monday, November 5, 2018

Was Nothing Learned From 2008 Financial Crisis? Have Worse Mistakes Been Made Since Then?


Dan says that not only has nothing been learned from the 2008 financial crisis but that worse mistakes have been made by central banks, politicians and central planners in the 10 years since the crisis! 

Jason also asks Dan about his Real Vision TV round table discussion a few months ago with Grant Williams and Simon Mikhailovich. 

To wrap up the interview, Jason asks Dan about if the gold price can go much lower and about his views on gold miners.


Hidden Secrets of Money: The Fall of Empires, Rome vs USA


In episode 9 of Hidden Secrets of Money, Mike Maloney draws eerie parallels to the misguided leaders and monetary policies that doomed civilizations from Ancient Rome to modern-day America. 

Can President Trump save America? 

Will the Federal Reserve Board be able to pull off yet another round of extremist interference and postpone a crisis? Find out how Mike he believes it will play out.

- Source, Gold Silver

Friday, November 2, 2018

US trade gap widens, deficit with China rises to record high

The U.S. trade deficit rose to a seven-month high in September as imports surged to a record high amid strong domestic demand, offsetting a rebound in exports.

The Commerce Department said on Friday the trade gap increased 1.3 percent to $54.0 billion, widening for a fourth straight month. Data for August was revised to show the trade deficit rising to $53.3 billion instead of the previously reported $53.2 billion.

The trade deficit continues to deteriorate despite the Trump administration’s protectionist trade policy, which has left the United States locked in a bitter trade war with China as well as tit-for-tat tariffs with other trade partners, including the European Union, Canada and Mexico.

The politically sensitive goods trade deficit with China jumped 4.3 percent to a record high of $40.2 billion in September. Economists polled by Reuters had forecast the overall trade deficit rising to $53.6 billion in September.

When adjusted for inflation, the goods trade gap increased to an all-time high of $87.0 billion in September from $86.3 billion in August.

The government reported last week that the trade deficit subtracted 1.78 percentage points from gross domestic product in the third quarter. That was the most since the second quarter of 1985 and reversed the 1.22 percentage points contribution in the April-June period.

In September, imports of goods and services increased 1.5 percent to $266.6 billion, an all-time high. Imports of capital goods such as telecommunications equipment, civilian aircraft engines and computers were the highest on record.

There were also increases in imports of toys, cell phones, apparel and household goods.

Exports of goods and services rose 1.5 percent to $212.6 billion in September. Exports were lifted by shipments of industrial supplies and materials, which were the highest on record. Soybean exports decreased by $0.7 billion in September.

- Source, Reuters