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Economists have put together models of how an economy works, but these models were developed years ago, when the world economy was far from limits. These models may have been reasonably adequate when they were developed, but there is increasing evidence that they don’t work in an economy that is reaching limits. For example, my most recent post, “Why ‘supply and demand’ doesn’t work for oil,” showed that when the world is facing the rising cost of oil extraction, “supply and demand” doesn’t work in the expected way.

In order to figure out what really does happen, we need to consider findings from a variety of different fields, including biology, physics, systems analysis, finance, and the study of past economic collapses. Since I started studying the situation in 2005, I have had the privilege of meeting many people who work in areas related to this problem.

My own background is in mathematics and actuarial science. Actuarial projections, such as those that underlying pensions and long term care policies, are one place where historical assumptions are not likely to be accurate, if an economy is reaching limits. Because of this connection to actuarial work, I have a particular interest in the problem.

How Other Species Grow

We know that other species don’t amass wealth in the way humans do. However, the number of plants or animals of a given type can grow, at least within a range. Techniques that seem to be helpful for increasing the number of a given species include:

Natural selection. With natural selection, all species have more offspring than needed to reproduce the parent. A species is able to continuously adapt to the changing environment because the best-adapted offspring tend to live.

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

Weimar Greece – The Effects of a Currency Collapse

December 8, 2015

Weimar Greece – The Effects of a Currency Collapse

Cash is a scarce commodity in Greece.

In June, Greek banks declared a surprise limitation on how much could be withdrawn from an account. At present, the government still limits the cash withdrawals of Greeks.

And, of course, this is just the most recent in a series of events that make up the cash squeeze. In response, Greeks have done what all people do when they cannot get enough currency – they improvise.

Several alternate systems for payment of goods and services have cropped up in Greece since 2010. One is TEM, which allows people to gain monetary credit on an internet site, which may then be used to pay others. Another system is the Athens Time Bank, which logs time units, allowing individuals to pay each other with their time. The services provided can be anything from language lessons to medical consultation. Other systems are popping up, as Greeks seek out any method of payment other than the euro, since they’re closed off from their own savings at the banks. As can be expected, barter is becoming more commonplace.

Greece is right where Weimar Germany was in late 1922. The 1919 Treaty of Versailles required Germany to pay reparations for WWI. At the time, Germany, having lost the war, was already on the ropes economically. The conditions of the treaty amounted to an unpayable level of debt. As it became apparent that it was impossible to pay, the allies squeezed harder. Economic conditions in Germany worsened dramatically, not unlike Greece today, and for the same reason.

Germans did their best to sidestep the economic squeeze. As the cost of goods and services was rapidly rising (on a daily basis), Germans learned that it was best to spend Reichsmarks as quickly as possible on virtually anything that was holding its value better than banknotes.

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

Peter Schiff Warns: “The Whole Economy Has Imploded… Collapse Is Coming”

December 7, 2015

Peter Schiff Warns: “The Whole Economy Has Imploded… Collapse Is Coming”

Back before 2008 Peter Schiff was harshly criticized and laughed at for his predictions about a coming economic collapse. Among other things Schiff warned that consumer spending had hit a wall, stocks were overpriced and lax credit lending practices would lead to a detonation of the banking system. Rather than heed the warnings, the biggest names in mainstream media tried to discredit him for not toeing the official narrative. Shortly thereafter, of course, Schiff was vindicated and much of the doom he had forecast came to pass.

Today, Schiff continues to argue that the economy is on a downhill trajectory and this time there’ll be no stopping it. All of the emergency measures implemented by the government following the Crash of 2008 were merely temporary stop-gaps. The light at the end of the tunnel being touted by officials as recovery, Schiff has famously said, is actually an oncoming train. And if the forecast he laid out in his latest interview is as accurate as those he shared in 2007, then the the train is about to derail.

We’re broke. We’re basically living off of debt. We’ve had a huge transformation of the American economy. Look at all the Americans now on food stamps, on disability, on unemployment.

The whole economy has imploded… the bottom hasn’t dropped out yet because we’re able to go deeper into debt. But the collapse is coming.

(Watch at Youtube)

Fundamentally, America is worse off now than it was pre-crash. With the national debt rising unabated and money being printed out of thin air without reprieve, it is only a matter of time.

Schiff notes that while government statistics claim Americans are saving again and consumers seem to be spending, the average Joe Sixpack actually has a negative net worth. But most people don’t even realize what’s happening:

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

It’s Time To Seriously Prepare For The Economic Collapse

December 3, 2015

It’s Time To Seriously Prepare For The Economic Collapse

Why We’re Sliding Towards World War

November 25, 2015

Why We’re Sliding Towards World War

Why Now?

Paul Craig Roberts – former Assistant Secretary of the Treasury under President Reagan, former editor of the Wall Street Journal, listed by Who’s Who in America as one of the 1,000 most influential political thinkers in the world, PhD economist – wrote an article about the build up of hostilities between the U.S. and Russia titled, simply: “War Is Coming”.

Similarly, Ronald Reagan’s head of the Office of Management and Budget – David Stockman – is posting pieces warning of the dispute between the U.S. and Russia leading to World War 3.

Trend forecaster Gerald Celente – who has been making some accurate financial and geopolitical predictions for decades – says WW3 will start soon.

Investment fund manager and adviser Martin Armstrong has charted the “cycles of war” back to 600 BC … and says that we’ll have major wars between now and 2020. He has written pieces recently entitled, “Why We will Go to War with Russia“, and another one saying, “Prepare for World War III“.

Investment adviser Larry Edelson – who has long studied the “cycles of war” – recently wrote:

This year … we will also be hit by another ramping up of the related war cycles.

***

All part and parcel of the rising war cycles that I’ve been warning you about, conditions that will not abate until at least the year 2020.

Former Goldman Sachs technical analyst Charles Nenner – who has made some big accurate calls, and counts major hedge funds, banks, brokerage houses, and high net worth individuals as clients – saysthere will be “a major war”, which will drive the Dow to 5,000.

Veteran investor adviser James Dines forecast a war as epochal as World Wars I and II, starting in the Middle East.

What’s causing the slide towards war? We discuss several causes below.

Debt, Economic Collapse and Distraction

Martin Armstrong – who studies cycles, and managed multi-billion dollar sovereign investment funds – argues that war plans against Syria are really about debt and spending:

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

The World Economy – A Balancing Act Soon to Collapse?

November 25, 2015

The World Economy – A Balancing Act Soon to Collapse?

COMMENT: Dear Martin,
From reading your blog and other news I can conclude that the low interest rate has failed to increase the private business activities to the level that normally would require an increase in interest rates. The arguments now are to increase interest rates to save pensions funds and to be able to reduce interest rates if we get another financial crises.
To me it look like the system is totally out of balance and have not worked like the normal capitalistic system since 2006.
Regards

REPLY: Correct. Governments have embraced Marx & Keynes because they argued that government had the RIGHT and the CAPACITY to manipulate society by the economy creating Utopia eliminating the business cycle. They create economic disasters, blame others, and then start wars to get out the mess. It is never our interests at stake – only their’s. The Free Market always wins and this age of Socialism where they decide how to spend your money (usually on themselves), is coming to an abrupt end just as did communism. This balancing act has been a disaster because they assumed they had the power to control something they have no clue about how it even functions. Sorry but Smith and Schumpeter win.

Ironically, those who lived in communist states are better equipped to survive for they simply expect nothing from government. In Europe and the USA, people stupidly believe government is there with a safety net to help them. They keep moving the age for retirement. They keep raising taxes which proves they are incapable of any fiscal management since to raise taxes means you failed to do what you promised. Indeed, like Will Rogers, one need not joke about government and politicians, all you have to do is state the facts.

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

Boundary Problems

November 24, 2015

Boundary Problems

It’s no accident that Donald Trump’s vaunted wall along the US-Mexico border became such a potent metaphor for a floundering American polity. The US has boundary problems — and not just with illegal immigrants (whoops, undocumented visitors). A mighty flux of standards and principles is symptomatic of an economy in freefall. Nothing is settled. All values are put up for re-negotiation. Steamrolling and bullying are the new fair play. Foundational ideas, such as the first amendment, erode under a flood of special pleadings. There is no center left to hold.

The latest identity politics fracas at Princeton University is instructive. Princeton students’ Black Justice League demanded both the vilification of former university president Woodrow Wilson as an arch-segregationist at the same time they demanded a segregated “cultural safe space for black students.” The pusillanimous current Princeton president, one Christopher Eisgruber, entertained their “demands” perhaps knowing that the threatened “indefinite” occupation of administration offices would be cut short by the Thanksgiving week vacation. (So far, the occupying force of the Black Justice League has not demanded delivery of free turkey and cranberry sauce — turkeys problematically have distinct regions of white and dark meat.)

The past ten days have also seen protests against free speech at snooty eastern elite Amherst College and a “white privilege retreat” at the University of Vermont for students “self-identifying as white” — why not “students of whiteness?” — with required reading on “The Invention of the White Race,” “White Privilege, Male Privilege in Race, Class, Gender,” “The Feminist Classroom,” and “The Abolition of Whiteness.”

You might whiff a general drift in all this of antagonism against people of whiteness and men in particular. Hence it’s extra-specially unfortunate that the oafish and sadistic Donald Trump is so conspicuously out there representing that identity group.

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

The “Syrian Sickness”: What Crude Oil Gives, Crude Oil Can Take Back.

November 22, 2015

The “Syrian Sickness”: What Crude Oil Gives, Crude Oil Can Take Back.

Syria is one of the greatest disasters of recent times. Here, I argue that the origins of the Syrian collapse are to be found in the economic downturn generated by the gradual depletion of the Syrian oil reserves. Crude oil had created modern Syria, crude oil has destroyed it. This phenomenon can be termed the “Syrian Sickness” and the question is: “which country will be affected next?”

Crude oil is a great source of wealth for the countries that possess it. But it is also a wealth that comes as a cycle. Normally, the cycle spans several decades, even more than a century, so that those who live through it may completely miss the fact that they are heading to the end of their wealth. The cycle is especially visible in those areas where the amount of oil is modest; then, the cycle goes faster; wealth and misery appear one after the other in a dramatic series of events.

One of these rapid cycles of growth and decline is that of Syria. It is a country that never became a major world producer, less than 1% of the world’s total production when it peaked, around 1995. (graph below, from Gail Tverberg’s blog). For the small Syrian economy, however, even this limited amount was important

The Syruan oil production went through its unavoidable cycle over a span of little more than three decade. Depletion generated progressively higher production costs and that led to a scarcity of capital investments to keep production increasing. The result was the “bell shaped” production curve that is often called the “Hubbert curve”. Eventually, around 2011, the internal consumption curve crossed the production curve and that transformed the country from an oil exporter to an oil importer. The cross-over point corresponded to the start of the civil war.

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

Oil May Plunge to $20, Signalling Economic Disaster: “The Numbers Are Dreadful And Unprecedented”

November 22, 2015

Oil May Plunge to $20, Signalling Economic Disaster: “The Numbers Are Dreadful And Unprecedented”

The price of oil has long been a key indicator of economic health and stability. And that index is tanking fast.

In the last few years, dramatic overproduction of oil has become a major tool of geopolitical conflict.

As prices have plummeted from $110/barrel to $40, Americans have tapped huge sources of fracking and flooded the market; OPEC and the Saudis have continued pumping despite dropping prices; Russia, dependent upon oil for its economy, has been under siege via sanctions and bottom-level prices; ISIS and other terror organizations are undercutting everyone with illegal oil sales and China remains large in the whole affair.

Proxy wars and threats and rumors of world war have accompanied bitter economic warfare over currencies and energy. Now, oil is at a record level of glut, and nearly every storage facility in the world is filled past capacity.

The London Telegraph reports:

The world is running out of storage facilities for surging supplies of oil and may soon exhaust tanker space offshore, raising the chances of a violent plunge in crude prices over coming weeks, experts have warned.

Goldman Sachs told clients that the increasing glut of oil on the global market […] could send prices plummeting to $20 a barrel, the so-called ‘cash cost’ that forces drillers to abandon production. “Risks of a sharp leg lower remain elevated,” it said.

[…]

It is estimated that at least 100m barrels are now being stored on tankers offshore, waiting for better prices. A queue of 39 vessels carrying 28m barrels is laid up outside the Texas port of Galveston, while the Iranians have a further 30m barrels offshore ready to sell as soon as sanctions are lifted.

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

Global Trade Just Snapped: Container Freight Rates Plummet 70% In 3 Weeks

November 21, 2015

Global Trade Just Snapped: Container Freight Rates Plummet 70% In 3 Weeks

“This market is looking like a disaster and the rates are a reflection of that,” warns one of the world’s largest shipbrokers, but while The Baltic Dry Freight Index gets all the headlines – having collapsed to all-time record lows this week – it is the spefics below that headline that are truly terrifying. At a time of typical seasonal strength for freight and thus global trade around the world, Reuters reports that spot rates for transporting containers from Asia to Northern Europe have crashed a stunning 70% in the last 3 weeks alone. This almost unprecedented divergence from seasonality has only occurred at this scale once before… 2008! “It is looking scary for the market and it doesn’t look like there is going to be any life in the market in the near term.”

Baltic Dry at record lows…

And Shanghai Containerized Freight collapsing…

As Reuters reports,

Shipping freight rates for transporting containers from ports in Asia to Northern Europe plunged by 27.9 percent to $295 per 20-foot container (TEU) in the week ending on Friday, one source with access to data from the Shanghai Containerized Freight Index told Reuters.

The drop came after spot freight rates on the world’s busiest route dropped 39.3 percent last week, and the current rates are widely seen as loss-making levels for container shipping companies.

The spot freight rates for transporting containers, carrying anything from flat-screen TVs to sportswear from Asia to Northern Europe, has fallen 70 percent in three weeks.

In the week to Friday, container freight rates fell 22.5 percent from Asia to ports in the Mediterranean, dropped 8.6 percent to ports on the U.S. West Coast and were down 8.0 percent to ports on the U.S. East Coast.

But even more concerning is this collapse is occurring just as the containerized freight industry enters its golden seasonal period…

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

If The Economy Is Fine, Why Are So Many Hedge Funds, Energy Companies And Large Retailers Imploding?

November 19, 2015

If The Economy Is Fine, Why Are So Many Hedge Funds, Energy Companies And Large Retailers Imploding?

If the U.S. economy really is in “great shape”, then why do all of the numbers keep telling us that we are in a recession? The manufacturing numbers say that we are in a recession, the trade numbers say that we are in a recession, and as you will see below the retail numbers say that we are in a recession. But just like in 2008, the Federal Reserve and our top politicians will continue to deny that a major economic downturn is happening for as long as they possibly can. In this article, I want to look at more signs that a dramatic shift is happening in our economy right now.

First of all, let’s consider what is happening to hedge funds. For many years, hedge funds had been doing extremely well, but now they are closing up shop at a pace that we haven’t seen since the last financial crisis. The following is an excerpt from a Business Insider article entitled “Hedge funds keep on imploding” that was posted on Wednesday…

BlackRock is winding down its Global Ascent Fund, a global macro hedge fund that once contained $4.6 billion in assets, according to Bloomberg’s Sabrina Willmer.

“We believe that redeeming the Global Ascent Fund was the right thing to do for our clients, given the headwinds that macro funds have faced,” a BlackRock spokeswoman told Business Insider.

The winding down of the Ascent fund is the second high-profile hedge fund closing in 24 hours. The Wall Street Journal reported Tuesday that Achievement Asset Management, a Chicago-based hedge fund, was closing.

And those are just two examples. Quite a few other prominent hedge funds have shut down recently, and many are wondering if this is just the beginning of a major “bloodbath” on Wall Street.

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

Financial Trend Analyst Warns: “This Suicide Move Will Implode The Whole Thing”

November 17, 2015

Financial Trend Analyst Warns: “This Suicide Move Will Implode The Whole Thing”

Job losses across America continue to mount, housing is topping and recent reports from some of the nation’s leading retailers show that there has been no real, sustainable recovery since the crash of 2008. This, according to trend analyst Daniel Ameduri of Future Money Trends, is why nothing the Federal Reserve does with interest rates in December will make any difference for our overall long-term prospects.

But, as Ameduri notes in a recent interview with Kerry Lutz of the Financial Survival Network, there is one particular move that would amount to nothing short of economic suicide and a rapid destabilization of the system:

I just don’t see rates going up (meaningfully) until way into the 2020’s or even the 2030’s. The biggest thing to point out to people who think that rates are going up is because that is a suicide move.

Watch the full video to learn more about the shadow statistics the government refuses to share, what to expect as these trends come to pass and how to prepare for an unprecedented financial collapse:

(Watch at Youtube)

With interest rates so low and almost into negative territory (wherein you’ll actually have to pay your bank to allow you to deposit money) any upward adjustment by the Federal Reserve will have immediate and widespread consequences.

You raise these rates just a few percentage points and all of a sudden you’re paying $600-$700 billion in interest. The important thing to point out the U.S. government generates just $2.3 trillion dollars in revenue. And if your debt interest is $700 billion, maybe even a trillion dollars in interest,that’s when the whole thing implodes.

Consider what would happen to any U.S. household that saw its monthly debt payments jump from 15% of their monthly income to 30% or more.

The financial collapse would be nearly instant.

This is exactly what we can expect should the Federal Reserve raise interest rates.

America Disregarded 4,000 Years of History In Responding to the Great Recession

November 15, 2015

America Disregarded 4,000 Years of History In Responding to the Great Recession

We’ve known for over 4,000 years that debts need to be periodically written down, or the entire economy will collapse.

After all, debt grows exponentially … while economies only grow in an s-curve.

The ancient Sumerians and Babylonians, the early Jews and Christians, the Founding Fathers of the United States and others throughout history knew that private debts had to be periodically forgiven.

Debt jubilees are a vital part of the Christian and Jewish faiths. And the first recorded word for “freedom” anywhere in the world meant “debt-freedom”.

Two prominent economists – Professor of economics and director of the Julis-Rabinowitz Center for Public Policy and Finance at Princeton University (Atif Mian), and Chicago Board of Trade Professor of Finance at the University of Chicago Booth School of Business and co-director of the Initiative on Global Markets (Amir Sufi) – wrote last year:

Debt forgiveness makes a lot of sense when the economy experiences a large-scale negative shock that is beyond the control of any one individual.

History seems to understand this lesson well. The 48th provision of the Code of Hammurabi, written more than 3,500 years ago in Mesopotamia, states that: “If any one owe a debt for a loan, and a storm prostrates the grain, or the harvest fail, or the grain does not growth for lack of water, in that year he need not give his creditor any grain, he washes his debt-tablet in water and pays no rent for this year.” The main threat to economic activity in ancient Mesopotamia was a drought, and one of the first legal codes understood that debt should be forgiven if such a negative shock occurred.

In 1819 when agricultural prices in the United States plummeted leaving farmers overly indebted and unable to pay their mortgages, politicians ran to their defense. Many state governments immediately imposed moratoria on debt payments and foreclosures.

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

Experts Fear a Stealth Crash Has Already Begun: “Risk is Flashing Red”

November 3, 2015

Experts Fear a Stealth Crash Has Already Begun: “Risk is Flashing Red”

It is more clear than ever that the Federal Reserve’s quantitative easing program will eventually bring destruction to the planet.

The world doubled down on risk after the 2008 crisis with nearly unlimited liquidity, and now debt is threatening to drown the global financial market. Cheap credit is about to saddle down those who got themselves overextended. Many private borrowers and states alike face default, bankruptcy and/or a failure to pay their obligations. Mathematically, the problem is just waiting to explode.

It is just a matter of when the music stops. But has it already?

Some are suggesting that things are already so bad that a crash has already set in, but without the headlines and fanfare.

This stealth crash is evidenced by conditions so bad they precipitate a chain reaction of further financial destruction. According to the London Guardian things are simply too far gone: “the debt levels are too high, productivity growth too weak and financial risks too threatening.”

Via the London Guardian:

A predicted global meltdown passed without event. But there are enough warning signs to suggest we are sleepwalking into another disaster

The 1st of October came and went without financial armageddon. Veteran forecaster Martin Armstrong, who accurately predicted the 1987 crash, used the same model to suggest that 1 October would be a major turning point for global markets. Some investors even put bets on it. But the passing of the predicted global crash is only good news to a point. Many indicators in global finance are pointing downwards – and some even think the crash has begun. Let’s assemble the evidence.

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

Does This ‘Elite’ Magazine Cover Predict A Major Global Event For November?

October 28, 2015

Does This ‘Elite’ Magazine Cover Predict A Major Global Event For November?

Last week highly acclaimed cyclical analyst Bo Polny warned of an imminent failure in stocks that could lead to a complete meltdown in world markets in November. As Michael Snyder recently noted, Polny has accurately predicted market movementsover the last three months, suggesting that his current cycle theory may be worth considering:

In recent months he has correctly predicted that U.S. stocks would begin to drop in July, that there would be a huge plunge in August and that that the month of September would be rather uneventful. Now he is saying that he expects “November to be a complete meltdown on the U.S. and world markets”. Just because he has been right in the past does not guarantee that he will be correct this time around, but lots of people (like me) are starting to pay attention.

Though the Fall of 2015 was forecast to be rocky for the global economy and financial markets, we have yet to see the full-on collapse that many expected. This has, in many cases, left the impression that the U.S. economy remains on solid footing. But those who follow economic news and recent financial reports from some of the world’s leading companies know different.

We may not be seeing an overt collapse of the system as we know it, but behind the scenes it is clear that we are experiencing an implosion and loss of confidence. This is apparent by the massive flight of capital from some of the world’s leading investors into safe haven assets like gold and silver. Moreover, wealthy individuals around the world are expediting their efforts to prepare for the eventuality of collapse by stockpiling food and acquiring stylish emergency shelters.

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

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