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Austerity or Hyperinflation. Which is the Precursor to Revolution?

October 5, 2015

Austerity or Hyperinflation. Which is the Precursor to Revolution?

Bastille-DAY

QUESTION: Mr, Armstrong;

I recently read an article claiming to be a case study that it was somehow the French hyperinflation that led to the revolution. It seems that as you say they are again mixing facts to support a rise in gold with hyperinflation. I am a collector of French monetary history and the paper money came after the revolution not before. Unquestionably, there was austerity prior to the revolution and that seems to be repeating in Europe once again. Would you care to comment on this issue for it seems they are distorting history once again to sell gold.

Your debut here in Paris was super. It has really made some impact starting a discussion.

PV

Assignat_de_5_livres_(de_la_République)

ANSWER: Yes you are correct. The French hyperinflation came after the French Revolution for they defaulted on their national debts accumulated by the crown and then confiscated the property of the Catholic Church to try to back their post-revolutionary currency. The nation went into hyperinflation because the revolution defaulted on all prior debt and they were then hunting the rich, taking everything they had, and beheaded them. This was not an atmosphere that promotes CONFIDENCE.

These people try to claim the hyperinflation is caused by paper money rather than revolution which results in hunting the rich. The German hyperinflation was the same sequence. It was a communist revolution in 1918 which also defaulted on the national debt of the prior government. It is not the paper money, it is the default that distinguishes both hyperinflation events for CONFIDENCE simply collapses and the economy implodes. By attributing this to “fiat” paper they then assume that we must go into hyperinflation simply because we too have paper money. That is just an unsupported analysis which distorts the entire sequence of events. This analysis is highly dangerous and amounts to consumer fraud.

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

“Everyone’s Praying But No One’s Believing” – The ‘Fed Put’ Is Dead

September 26, 2015

“Everyone’s Praying But No One’s Believing” – The ‘Fed Put’ Is Dead

Chalk Outline

Yellen’s detailed speech initially triggered an out-sized market reaction.  Unfortunately, it was mainly due to shallow market depth and weak-hand positions. The ‘risk-on’ trades that ensued seem driven by positional unwinds from short-term traders. These markets will likely reverse back to lower prices once those initial trades are digested. 

Yellen’s speech should quickly begin to hurt over-priced financial assets. The stellar performance of financial prices over the past several years has primarily been driven by central bank accommodation. The double digit average returns (15%+) of the S&P 500 from 2009-2014 was not driven by economic strength, but rather by massive global central bank actions. There is simply a poor correlation between economic activity and the S&P 500 in any given year.

Since the Fed’s balance sheet flat-lined in 2014 (with the policy rate locked at 0%) risk assets have chopped side-ways-to-lower.  Therefore, a sooner (than priced-in) removal of accommodation should be hurting, not helping, risk assets.

The looming 2015 rate hike, threatened by Yellen and other FOMC members, is desirable and plausible in their eyes due to several factors:

1)  confidence that the US economy is on firmer footing and has moved materially away from crisis conditions;

2) a sense of desire and urgency to move off the ‘zero lower bound’;

3) anxiety about not having any ammunition during the next economic downturn;

4) fear of missing the business cycle and with it the opportunity to move off of zero rates, and;

5) as stated in Yellen’s speech, the potential that holding rates too low for too long “could encourage excessive leverage and other forms of inappropriate risk-taking that might undermine financial stability”.

Yellen’s speech was the first time I can ever remember a Federal Reserve Chairperson commenting that inappropriate risk-taking might be undermining financial stability.  This is explicit confirmation that the Fed’s aim of lifting asset prices in the hopes they bolster broader economic activity has reached the end of its useful life.  Barring a financial or economic disaster, the ‘Fed put’ has been put out to pasture.

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

 

Gold – Follow the Yellow Brick Road?

September 12, 2015

Gold – Follow the Yellow Brick Road?

The following is a veritable tour de force by Nicole Foss on the value of gold in a crashing economy, for different people in different circumstances.

Nicole Foss: In light of the rapidly-propagating loss of confidence, and consequent shift to deflation, with falling prices across the board as a result, it is appropriate to review our stance on gold. The yellow metal is often perceived as a panacea – a safe haven guarding against all manner of potential financial disruption. It has long been our stance at the Automatic Earth that this is far too simplistic a position to take. We live in a complex world for which there are no simple one-dimensional solutions. It is important to distinguish between the markets for paper gold and for physical gold, and to understand the risks inherent in gold ownership in order to manage them. As we wrote back in 2009:

Firstly, the goldbugs are right that physical gold is real money (unlike paper gold, which is just another Ponzi scheme). It has held its value for thousands of years and will continue to do so over the long term. However, that does not mean that gold prices cannot fall or that purchasing gold now is the right way for everyone to preserve capital….People’s circumstances are different. Those circumstances determine their freedom of action, both now and in the future.

Bubble Dynamics

It is our view that (paper) gold has been in a bubble which peaked in 2011, along with the rest of the commodity complex. It has been subjected to the same dynamic as other commodities, which have collectively lost touch with their own fundamentals as they have become increasingly over-financialized. Financialization moves the dynamics into the virtual world, while simultaneously subjecting them to perverse incentives. Substantial price movements having at best a tenuous connection with actual supply and demand are the result.

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

 

 

 

Burdened by debt and slipping behind, survey respondents say

September 9, 2015

Burdened by debt and slipping behind, survey respondents say

48% said they might be in trouble if a single paycheque was delayed

Many working Canadians feel overwhelmed by debt and more than half of them say they would have difficulty if they missed a paycheque.

They also are losing confidence in the economy, with only 33 per cent of respondents to a survey saying they expect things to get better next year.

That sense of slipping behind comes from a survey of 3,605 working Canadians who completed a poll given to them by members of the Canadian Payroll Association with whom they work. The survey was administered between June 29 and Aug. 7 and designed by Framework Partners using a sample adjusted geographically to mirror a representative sample of working Canadians.

It has been performed annually by the CPA for the past seven years. The CPA says a definitive margin of error cannot be expressed.

Across the country, 48 per cent responded that it would be somewhat difficult or very difficult to meet their financial obligations if a paycheque was delayed by a single week.

Just 24 per cent thought they could come up with $2,000 to cover an emergency, such as critical home or car repairs.

Overwhelmed with debt

About 16 per cent of respondents agreed or strongly agreed they were overwhelmed with debt. The average debt balance for a Canadian consumer, excluding mortgages, was $21,028 in the second quarter of 2015, according to credit monitoring agency TransUnion.

Consumer debt includes car loans, credit cards and lines of credit. In the CPA survey, 19 per cent admitted they had credit card debt and 16 per cent said they have debt on a line of credit.

The money worries are playing havoc with their savings.

About 47 per cent of those surveyed said they save less than five per cent of their pay.

 

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

Collapse, Part 4: Loss of Faith in Public Institutions

June 25, 2015

Collapse, Part 4: Loss of Faith in Public Institutions 

Public institutions are now devoted to serving their own vested interests or the interests of private financial Elites.

Though we may think of collapse in terms of ATMs not working and rampaging mobs, collapse actually starts with the intangible loss of faith in public institutions:elected officials, law enforcement, the justice system and the agencies of financial regulation (anti-trust, etc.).

Unsurprisingly to those who discern the structural rot of the status quo,Americans No Longer Believe In Their Institutions:

“Americans’ confidence in most major U.S. institutions remains below the historical average for each one,” a Gallup spokesman said in a news release. All in all, it’s a picture of a nation discouraged about its present and worried about its future, and highly doubtful that its institutions can pull America out of its trough.

Only 8 percent have confidence in Congress, the lowest of all institutions rated. No wonder, given the Congressional credo that we have to pass this bill to find out what’s in it. The latest monstrosity that is cloaked in secrecy and mumbo-jumbo is the Trans-Pacific Partnership (TPP), which Ellen Brown rightly describes as Straight out of Alice in Wonderland:

The terms of the TPP and the TiSA are so secret that drafts of the negotiations are to remain classified for four years or five years, respectively, after the deals have been passed into law. How can laws be enforced against people and governments who are not allowed to know what was negotiated?

If the Trans-Pacific Partnership is so good for the average American, then why not let us read it and be persuaded by the document itself? Instead, the vast machinery of the American central state is devoted to maintaining the secrecy of the bill and crushing all opposition with threats that are no longer even veiled.

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

 

 

“The System is Broken”: Americans No Longer Believe In Its Institutions

June 19, 2015

“The System is Broken”: Americans No Longer Believe In Its Institutions

trust-no-one

It’s not difficult to see that the foundation is crumbling…

A new Gallup poll has found that already low “confidence” in our system of government, our economy, the media, banking, big business, religious institutions and watchdogs is further eroding.

“Americans’ confidence in most major U.S. institutions remains below the historical average for each one,” a Gallup spokesman said in a news release.

[…]

All in all, it’s a picture of a nation discouraged about its present and worried about its future, and highly doubtful that its institutions can pull America out of its trough.

There is plenty of good reason, with evidence uncovered daily, weekly and consistently throughout the years of the hypocrisy and failures of government, the failed promises of politicians, the lies and spin of the mainstream media and newspapers, the greed and exploitation of the financial sector and the “just us” mentality of above-the-law enforcers who are supposed to uphold justice.

Just check out how little faith remains in the structure of, well, just about any institution in America, by the numbers:

Only 8 percent have confidence in Congress, down by 16 points from a long-term average of 24 percent – the lowest of all institutions rated.

33 percent have confidence in the presidency, a drop from a historical average of 43 percent.

32 percent have confidence in the Supreme Court, down from 44.

28 percent have confidence in banks, down from 40 percent.

21 percent have confidence in big business, down from 24 percent.

24 percent have confidence in organized labor, down from 26.

24 percent have confidence in newspapers, down from 32 percent.

21 percent have confidence in television news, down from 30 percent.

52 percent of Americans […] are confident in the police [57 percent historically]

What else can be said, but that the system is broken?

 

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

If Your BS Detector Isn’t Shrieking, It’s Broken

June 9, 2015

If Your BS Detector Isn’t Shrieking, It’s Broken

Wishing it was true doesn’t make it true–it makes you a chump who fell for the con.

Once upon a time in America, no adult could survive without possessing a finely tuned BS detector. Herman Melville masterfully captured America’s fascination with cons and con artists in his 1857 classic The Confidence-Man, which I discussed in The Con in Confidence (October 4, 2006).

An essential component of the American ethos is: don’t be a chump. Don’t fall for the con. And if you do, it’s your own fault. The Wild West wasn’t just thieves shooting people in the back (your classic “gunfight” in the real West)–it was a simmering stew of con artists, flim-flammers and grifters exploiting the naive, the trusting and the credulous.

 

The employment/unemployment statistics are obviously BS. 93 million people aren’t even counted any more–they’re statistical zombies, no longer among the living workforce. If the unemployment rate were calculated on the number of full-time jobs and the true workforce (everyone ages 18 – 70 that isn’t institutionalized or in prison), the unemployment rate would not be the absurdly delusional 5.6% claimed by the bureaucratic con artists.We now inhabit a world where virtually everything is a con. That “organic” produce from some other country–did anyone test the soil the produce grew in? It could be loaded with heavy metals and be certified “organic” because no pesticides were used during production. But what about last year? And the year before? What’s in the water used to irrigate the crops?

The corrupts-everything-it-touches bribe vacuum known as Hillary Clinton is still disgracing the national stage, 24 years after she first displayed her con-artist colors. Hillary’s most enduring accomplishment is the Clinton Foundation–a glorification of bribery, chicanery, flim-flam and cons so outrageously perfected that it serves up examples of every con known to humanity in one form or another.

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

 

 

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