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The Company Store

The Company Store

Leaves almost nothing to live on

In the song Sixteen Tons by Merle Travis (and made famous by Tennessee Ernie Ford), the idea of the ‘company store’ referred to a system of debt bondage that effectively trapped workers within an unfair system designed to harvest all of their labor at very low cost.

You load sixteen tons, what do you get?

Another day older and deeper in debt

Saint Peter don’t you call me ’cause I can’t go

I owe my soul to the company store

       Sixteen Tons – Merle Travis

How exactly did the company store system operate?

Under a scrip system, workers were not paid cash; rather they were paid with non-transferable credit vouchers that could be exchanged only for goods sold at the company store. This made it impossible for workers to store up cash savings.

Workers also usually lived in company-owned dormitories or houses, the rent for which was automatically deducted from their pay.

(Source – Wiki)

This model was simple enough to understand.  “Pay” your workers with scrip vouchers, then sell them your marked up goods at the company store, pocketing a nice profit. On top of that, force your employees to live in company housing, too,  also at terms very favorable to the company.

Add it all up and the workers found themselves in perpetual service to their employer. No matter how hard and long they toiled, there was nothing left for their own private benefit after all was said and done.  The company succeeded in skimming off any and all  ‘excess’ for itself.

This vast unfairness eventually led to the formation of unions as well as to regulations providing protection to the workers.

 …click on the above link to read the rest of the article…

David Stockman: The Undrainable Swamp & The Inevitable Recession

David Stockman: The Undrainable Swamp & The Inevitable Recession

What the future of the post “Peak Trump” era holds.

Love it or hate it, the potency of the Trump Administration is on the wane, soon to be stuck in the mire of the Swamp it has deepend instead of drained, while the economy falls into one hell of a recession — so claims former Regan-era Cabinet member and Congressman David Stockman.

In his new book Peak Trump, Stockman notes how the wide divergence between Trump the campaigner and Trump the president appears to be proving to be his undoing.

Rather than fight to dismantle the institutions he railed against as a candidate — most notably the Deep State and the Federal Reserve — Trump has embraced them.

Now, when this latest asset bubble bursts (and Stockman believes the markets saw their peak back in Fall 2018), Trump will ‘own’ that. Having chosen to tie his administration’s success to the rising price of the S&P 500 since taking office, he won’t be able to foist the blame of a market crash on his predecessors.

Similarly, the Deep State — especially the military industrial complex — is experiencing a bonanza under the Trump administration. As a result, the Swamp is deeper than it has ever been:

I learned a long time ago as Budget Director and even before that as a member of Congress that the real deep end of the Washington swamp is on the Pentagon side of the Potomac. What Trump has done is basically taking a defense budget at $600 billion that was already swollen with waste and extending it far beyond anything you need for a homeland defense.

I have a whole section in the book about how a homeland of defense wouldn’t cost $600 billion that he inherited or now the $700 billion that we have. $720 billion actually, that after two huge Trump increases.

 …click on the above link to read the rest of the article…

A Survival Guide For 2019

A Survival Guide For 2019

How to safely navigate the ‘Year Of Instability’ 

As the first month of the year concludes, it’s becoming clear that 2019 will be a very different kind of year.

The near-decade of ‘recovery’ following the Great Financial Crisis enjoyed a stability and tranquility that suddenly evaporated at the end of 2018.

Here in 2019, instability reigns.

The world’s central banks are absolutely panicking. After last year’s bursting of the Everything Bubble, their coordinated plans for Quantitative Tightening have been summarily thrown out the window. Suddenly, no chairman can prove himself too dovish.

Jerome Powell, the supposed hardliner among them, completely capitulated in the wake of the recent -15% tantrum in stocks, which, as Sven Henrich colorfully quipped, proved what we suspected all along:

The global tsunami of liquidity (i.e. thin-air money printing) released by the central banking cartel has been the defining trend of the past decade. It has driven, directly or indirectly, more world events than any other factor.

And one of its more notorious legacies is the massive disparity and wealth and income resulting from its favoring of the top 0.1% over everyone else. The mega-rich have seen their assets skyrocket in value, while the masses have been mercilessly squeezed between similarly rising costs of living and stagnant wages.

How have the tone-deaf politicians responded? With tax breaks for their Establishment masters and new taxes imposed on the public. As a result, populist ire is catching fire in an accelerating number of countries, which the authorities are anxious to suppress by all means to prevent it from conflagrating further — most visibly demonstrated right now by the French government’s increasingly jack-booted attempts to quash the Yellow Vest protests:

Meanwhile, two other principal drivers of the past decade’s ‘prosperity’ are also suddenly in jeopardy.

 …click on the above link to read the rest of the article…

Global Debt Surpasses 244 Trillion Dollars As “Nearly Half The World Lives On Less Than $5.50 A Day”

Global Debt Surpasses 244 Trillion Dollars As “Nearly Half The World Lives On Less Than $5.50 A Day”

The borrower is the servant of the lender, and one of the primary ways that the elite keep the rest of us subjugated is through the $244,000,000,000,000 mountain of global debt that has been accumulated.  Every single day, the benefits of our labor are going to enrich somebody else.  A portion of the taxes that are deducted from your paycheck is used to pay interest on government debt.  A portion of the profits that your company makes probably goes to servicing some form of business debt.  And most Americans are continuously making payments on their mortgages, their auto loans, their credit card balances and their student loan debts.  But most people never stop to think about who is becoming exceedingly wealthy on the other end of these transactions.  Needless to say, it isn’t the 46 percent of the global population that is living on less than $5.50 a day.

The world has never seen anything like this mountain of debt ever before, and one of the central themes of The Economic Collapse Blog is that all of this debt will ultimately destroy our society.  According to the Institute of International Finance, the total amount of global debt is now  “more than three times the size of the global economy”

The world’s debt pile is hovering near a record at $244 trillion, which is more than three times the size of the global economy, according to an analysis by the Institute of International Finance.

The global debt-to-GDP ratio exceeded 318 percent in the third quarter of last year, despite a stronger pace of economic growth, according to a report by the Washington-based IIF released on Tuesday.

…click on the above link to read the rest of the article…

Global Debt Surpasses 244 Trillion Dollars As “Nearly Half The World Lives On Less Than $5.50 A Day”

Global Debt Surpasses 244 Trillion Dollars As “Nearly Half The World Lives On Less Than $5.50 A Day”

The borrower is the servant of the lender, and one of the primary ways that the elite keep the rest of us subjugated is through the $244,000,000,000,000 mountain of global debt that has been accumulated.  Every single day, the benefits of our labor are going to enrich somebody else.  A portion of the taxes that are deducted from your paycheck is used to pay interest on government debt.  A portion of the profits that your company makes probably goes to servicing some form of business debt.  And most Americans are continuously making payments on their mortgages, their auto loans, their credit card balances and their student loan debts.  But most people never stop to think about who is becoming exceedingly wealthy on the other end of these transactions.  Needless to say, it isn’t the 46 percent of the global population that is living on less than $5.50 a day.

The world has never seen anything like this mountain of debt ever before, and one of the central themes of The Economic Collapse Blog is that all of this debt will ultimately destroy our society.  According to the Institute of International Finance, the total amount of global debt is now  “more than three times the size of the global economy”

The world’s debt pile is hovering near a record at $244 trillion, which is more than three times the size of the global economy, according to an analysis by the Institute of International Finance.

The global debt-to-GDP ratio exceeded 318 percent in the third quarter of last year, despite a stronger pace of economic growth, according to a report by the Washington-based IIF released on Tuesday.

…click on the above link to read the rest of the article…

Peter Schiff: This Is the Beginning of a Much Bigger Crisis (Video)

Peter Schiff: This Is the Beginning of a Much Bigger Crisis (Video)

Wall Street has been on a roller coaster ride over the last few months. If you listen to the pundits on the financial networks, you’ll hear the word “volatile” used over and over again. That word certainly seems to describe the current state of US stock markets and in a broader sense the economy. But during a recent interview on RT News with Rick Sanchez, Peter Schiff said it’s not that the economy is volatile. It’s actually a bubble. And we are on the verge of a bigger crisis than the one we went through in 2008.

It’s not a volatile economy, it’s a bubble economy. Thanks to the Federal Reserve, they inflated an even bigger bubble, on purpose, than the one they inflated by accident that popped in 2008. And so the economy is in much worse shape structurally today then it was before it fell apart the last time. So, this is the beginning of a much greater crisis, of a much greater recession than the one that we experienced back in 2008.”

Sanchez asked Peter what exactly the Federal Reserve did wrong. Peter said, basically, everything.

But the biggest things they did wrong were lowering interest rates down to zero, practically, and leaving them there for pretty much the entirety of the Obama presidency. And then they’ve barely raised them. They’re still at 2%, which is very low. They also did all the quantitative easing where they printed a bunch of money and bought US government bonds and mortgage bonds. That enabled the housing bubble to reflate, and that enabled the US government to go much deeper into debt. So, the government didn’t cut spending, which is what we needed. They increased spending. But it also enabled corporations to lever up and buy stocks.

…click on the above link to read the rest of the article…

Is This Downturn A Repeat of 2008?

Getty images

Is This Downturn A Repeat of 2008?

Crashes differ, so be cautious about your assumptions

Even people who don’t follow the stock market closely are aware that the global economy is weakening and appears to be heading into recession.

For those who track the stock market, the signs are ominous: the U.S. was the last major market to notch gains this year and in October the U.S. market followed the rest of the global markets into an extended slide which has yet to end.

Just as sobering, key sectors such as oil, banking and utilities have crashed with alarming ferocity, reaching oversold levels last seen in 2008 as the global financial system was melting down.

These sectors crashing sends an unmistakable signal: the global economy is heading into a potentially severe recession and assets will not be rising in value in a recessionary environment. So better to sell risk-assets like stocks now rather than later, and rotate the money into safe assets such as Treasury bonds.

And indeed, households now own more Treasuries than the Federal Reserve–a remarkable shift in risk appetite.

Many other indicators of recession are in the news: auto and home sales and global trade are all slumping.

Are we in a repeat of the global financial meltdown and recession of 2008-09? The sharp drop in equities is certainly reminiscent of 2008. Indeed, the December decline is the worst in a decade. Or are we entering a different kind of recession, the equivalent of uncharted waters?

And if we are entering a recession, what can central banks and governments do to ease the financial pain and damage? We can’t be sure of much, but we can be relatively confident central banks and states will respond to the cries to “do something.”  This poses two questions: what actions can central banks/states take, and will those policies work or will they backfire and make the recession worse?

…click on the above link to read the rest of the article…

2019: The Beginning Of The End (Free Premium Report)

2019: The Beginning Of The End (Free Premium Report)

What will happen next & what to do now

Welcome to our new readers and a very Happy New Year to everyone!

Now that it’s 2019, we’re going to start the new year here at Peak Prosperity by responding to the wishes of our premium subscribers and making our most recent premium report free to everyone.

For those unfamiliar with our work, it’s based on the idea that humanity is hurtling towards a disaster of our own making.  Several powerful and unsustainable trends are all converging towards an ever-narrowing gap in the future.

Because of this, the individual and collective choices we make today take on ever-increasing importance.  Our collective choices — around such issues as rampant money-printing by central banks, the failure to wean ourselves off of fossil fuels, and tossing an entire younger generation under the bus because that’s most convenient for an older generation afraid of living within its actual means — are all pointing to a diminshed and disappointing future. We need to make better choices that align ourselves with these (and many other) looming realities.

This is our work here at Peak Prosperity.

For ten years now, we’ve been pointing out the many predicaments society faces. And we will continue our vigilance.  No because we enjoy crisis, or that we relish delivering hard messages, but because these are the times in which we live — and those, like you, who are awake to reality, need unvarnished facts and data to make informed decisions.

So we offer to you, today, a peek behind our premium subscription curtain.  The people who subscribe to our work do so to make themselves more resilient, as well as to support Peak Prosperity financially as we carry on our mission of “Creating a world worth inheriting”, which invoves bringing difficult messages to reluctant audiences.

…click on the above link to read the rest of the article…

The Ghost Of Christmas Future

The Ghost Of Christmas Future

Here in the brief period between Christmas and New year’s, as a writer I am obligated to say happy, wishful things. I have to confess, I’m just not feeling it this year, so I’ll just do the minimum here and return to being a curmudgeon, because that’s what the times call for.

So, happy new year. I hope everything works out well for you in 2019.

There, with that behind us we can now return our attention to the true state of the world, which is deteriorating and getting worse.

For most people things will be decidedly worse, not better, as things progress along their current trajectories. The only planet we’ve got to live on is being killed by human activity and gross inattention, while economically the greatest and most ill-advised credit bubble in all of human history flirts with the sort of sudden disaster that follows shortly after the failure of one’s reserve parachute.

As I’ve often repeated, I truly wish this weren’t the case.  I don’t have a “bummer gene” that relishes bad news nor do I enjoy being “that guy” who says what no one wants to hear.

Many of you reading this know exactly what I’m talking about.  You, too, had to keep your lips zipped over the holidays lest the strained family small talk and opening of cheaply-made forgettable gifts be ruined by any talk of ‘reality’.  Sure, everyone can inwardly wince at uncle Jack’s sixth bourbon and tolerate the buffoonery and social awkwardness sure to follow because  “it’s only once a year.”

But collapsing insect populations, species loss, shrinking aquifers, and the utter betrayal of the younger generations by the “olders” running the fiscal and monetary policies of the world are not as easily dismissed. There’s no relief at the end of the day when the problem drives itself home.

…click on the above link to read the rest of the article…

Seeds of Market Collapse in the Federal Reserve’s “Autopilot” Balance Sheet Normalization

Seeds of Market Collapse in the Federal Reserve’s “Autopilot” Balance Sheet Normalization

A lot of talk last week centered around the potential for the Federal Reserve to revise their planned “normalization” of holdings on their balance sheet. In particular in the post FOMC press conference, Powell said, “I think that the runoff of the balance sheet has been smooth and has served its purpose and I don’t see us changing that,”…and then “The amount of runoff that we have had so far is pretty small and if you just run the quantitative easing models in reverse, you would get a pretty small adjustment in economic growth, and real outcomes.”

Trouble is, the correlation of changes in the Fed’s balance sheet to changes in asset prices are unambiguous that Powell is either unwittingly wrong or, more likely, knowingly collapsing an asset bubble that was in large part created by the Federal Reserve itself.

Fed Held Treasury’s
To set the table, the chart below shows the total Federal Reserve holdings of US Treasury’s (blue line) and weekly changes (yellow columns) from 2003 to present.  The August ’07 through January ’09 period is noteworthy as the only period with a like Treasury holding drawdown to what we are presently witnessing.  The subsequent highlighted areas show the periods of no growth in Treasury holdings, or most recently the outright declines.  The most recent period represents just $230 billion reduction of a proposed $1 trillion total “normalization” in Treasury holdings.
Perhaps the reason equities tanked when Powell suggested that the Fed’s plan to normalize its balance sheet was on “auto-pilot” can be seen in the chart below.  Red line is the Wilshire 5000 (representing all publicly traded US equities) and yellow columns are the weekly change in the Federal Reserve’s holdings of Treasury’s.  On the five occasions (highlighted again) since 2007 that the Fed has ceased buying or outright sold Treasury’s, the Wilshire has gone into convulsions or outright cracked lower.

 …click on the above link to read the rest of the article…

2018 Year in Review

2018 Year in Review

The year everything changed

Every year, friend-of-the-site David Collum writes a detailed “Year in Review” synopsis full of keen perspective and plenty of wit. This year’s is no exception. As with past years, he has graciously selected PeakProsperity.com as the site where it will be published in full. It’s quite longer than our usual posts, but worth the time to read in full. A downloadable pdf of the full article is available here, for those who prefer to do their power-reading offline. — cheers, Adam

David B. Collum
Betty R. Miller Professor of Chemistry and Chemical Biology – Cornell University
Email: dbc6@cornell.edu
Twitter: @DavidBCollum

“Dave: You are roundly tolerated.”

~Danielle Dimartino Booth, former Fed advisor and founder of Quill Intelligence

Introduction

Every December, I write a Year in Reviewref 1 that’s first posted on Chris Martenson & Adam Taggart’s website Peak Prosperityref 2 and later at ZeroHedge.ref 3 This is my tenth, although informal versions go back further. It always presents a host of challenging questions like, “Why the hell do I do this?” Is it because I am deeply conflicted for being a misogynist with sexual contempt—both products of the systemic normalization of toxic masculinity perpetuated by an oppressively patriarchal societal structure? No. That’s just crazy talk. More likely, narcissism and need for e-permanence deeply buried in my lizard brain demands surges of dopamine, the neurotransmitter that drives kings to conquer new lands, Jeff Bezos to make even more money, and Harvey Weinstein to do whatever that perv does. The readership has held up so far. Larry Summers said he “finished the first half.” Even as a fib that’s a dopamine cha-ching.

“If you think you are too small to make an impact, try spending the night in a room with a mosquito.”

~African proverb

…click on the above link to read the rest of the article…

Every Bubble Is In Search Of A Pin

Every Bubble Is In Search Of A Pin

The ‘Everything Bubble’ has popped

Now that the world’s central banking cartel is taking a long-overdue pause from printing money and handing it to the wealthy elite, the collection of asset price bubbles nested within the Everything Bubble are starting to burst.

The cartel (especially the ECB and the Fed) is hoping it can gently deflate these bubbles it created, but that’s a fantasy. Bubbles always burst badly; it’s their nature to do so. Economic suffering and misery always accompany their termination.

It’s said that “every bubble is in search of a pin”. History certainly shows they always manage to find one.

History also shows that after the puncturing, pundits obsess over what precise pin triggered it, as if that matters.  It doesn’t, because ’cause’ of a bubble’s bursting can be anything.  It can be a wayward comment by a finance minister, otherwise innocuous at any other time, that spooks a critical European bond market at exactly the right (wrong?) moment, triggering a runaway cascade.

Or it might be the routine bankruptcy of a small company that unexpectedly exposes an under-hedged counterparty, thereby setting off a chain reaction across the corporate bond market before the contagion quickly spreads into other key elements of the financial system.

Or perhaps it will be the US Justice Department arresting a Chinese technology executive on murky, over-reaching charges to bully an ally into accepting that unilateral US sanctions are to be abided by everyone, regardless of sovereignty.

How was it that the famous Tulip Bulb bubble came to a crashing end back in the 1600’s?  No one knows the exact moment or trigger. But we can easily imagine that in some Dutch pub on the fateful night on the Feb 3rd1637, a bidder on the most-coveted of all bulbs, the Semper Augustus, had an upset stomach and briefly grimaced when hit by a ripping gas pain:

…click on the above link to read the rest of the article…

The Primacy Of Income

The Primacy Of Income

The Era Of Gains is over

Ever since the central banks became serial bubble blowers twenty years ago, household wealth has mostly been driven by asset price inflation:

But this has been a quixotic pursuit. Created by pulling tomorrow’s prosperity into today, these asset price bubbles are unsustainable, and invariably suffer violent corrections at their end.

So far, the central banks have responded to these corrections by simply doing more of the same, just at greater and greater intensity. To keep the current Everything Bubble going, the world’s central banks have not only had to more than quintuple their collective balance sheets, but have recently had to resort to the extreme (desperate?) measure of injecting the greatest amount of liquidity ever in 2016 and 2017.

History has shown us that the height an asset bubble reaches is proportional to the damage it wreaks when it bursts. Applying this logic, the coming pop of the Everything Bubble will be devastating.

So devastating that analysts like John Hussman forecast a 0% (or worse) total market return over the next twelve years:

Moreover, the primary driver and supporter of asset price appreciation over the past seven years, central bank easing, is now gone. For the first time since the GFC, the collective central bank liquidity injection rate (the solid black line in the below chart) is now net zero.

And plans to tighten much further from here have been clearly committed and communicated to the world:

As a consequence, we fully expect yesterday’s capital gains to become tomorrow’s capital losses.  What goes up on thin-air money comes down with its removal.

And while this is going on, interest rates are suddenly exploding higher around the world after spending a decade at all-time historic lows:

…click on the above link to read the rest of the article…

Steen Jakobsen: The Four Horsemen Portend A Painful Reckoning

Steen Jakobsen: The Four Horsemen Portend A Painful Reckoning

Even the US is now ‘swimming naked’

Steen Jacobsen, Chief Economist and Chief Investment Officer of Saxo Bank sees economic slowdown ahead.

Specifically, his “Four Horseman” indicators: the drivers of economic growth, are all flashing red.

Jacobsen believes that the central banks will continue their liquidity tightening efforts for as long as they can get away with (i.e., until the financial markets start toppling over). In his opinion, they eased way too much for way too long; and the malinvestment and zombification that resulted needs to clear the system — and it will likely do so more violently and painful than the central banks will like:

I like to make things simple. Right now we have the Four Horsemen: the four drivers of the global economy. They are the quantity of money, which is falling; the price of money, which is rising; the price of energy,which is a tax on consumers and is rising; and globalization/productivity, which is falling.

So, if you look at the economy as a black box, I really don’t know what happens inside of it. But I can observe what goes into the black box: it’s these four things.

Globalization / productivity, we know that’s all about Trump, trade war and the likes. It’s not exactly improving; it’s actually worsening.

As for the quantity of money, a lot of people argue with me that the Central Banks are still expanding their balance sheets, but the fact of the matter is that the QT in terms of the U.S has been reducing the Federal Reserve balance sheet. And we have a stealth reduction of the balance sheet in terms of the Bank of Japan. The EBC would love to cut and is publicly committed to doing so. The Bank of England is doing its first hike. So the quantity of money is falling.

…click on the above link to read the rest of the article…

The Fourth Turning & War of the Worlds

THE FOURTH TURNING & WAR OF THE WORLDS

Image result for fake news cnn Image result for illegal immigrant invasion

Image result for bomb hoax Image result for fourth turning war

“In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where America will have neglected, denied, or delayed needed action.” – The Fourth Turning – Strauss & Howe

The paragraph above captures everything that has happened, is happening, and will happen during this Fourth Turning. It was written over two decades ago, but no one can deny its accuracy regarding our present situation. The spark was a financial crash. The response to the financial crash by the financial and governmental entities, along with their Deep State co-conspirators who created the financial collapse due to their greed and malfeasance, led to the incomprehensible election of Donald Trump, as the deplorables in flyover country evoked revenge upon the corrupt establishment.

The chain reaction of unyielding responses by the left and the right accelerates at a breakneck pace, with absolutely no possibility of compromise. A new emergency or winner take all battle seems to be occurring on a weekly basis, with the mid-term elections as the likely trigger for the next phase of this Fourth Turning.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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Olduvai II: Exodus
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Olduvai III: Cataclysm
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