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Food Riots Continue In Sri Lanka As The Military Begins Shooting

The starving and hungry people of collapsing Sri Lanks have been rioting over the cost of food and lack of energy. As if things couldn’t get worse, the ruling class has taken to gunning down those who stand against being ruled.

People are starving and are without gas or electricity, and now they are rioting as a society completely collapses. To make matters worse, the military is gunning people down. This is a glimpse into the future here if the rulers of Western countries continue. Once they collapse it around us, we will be the ones starving while the government makes sure it can remain intact and functional. That means we’ll still get stolen from and be forced at the barrel of the fun to comply with whatever they say.

According to a report by StrangeSounds, troops fired in Visuvamadu, 365 kilometers (228 miles) north of Colombo, on Saturday night as their guard point was pelted with stones, army spokesman Nilantha Premaratne said. “A group of 20 to 30 people pelted stones and damaged an army truck,” Premaratne told the Associated FreePress.

Police said four civilians and three soldiers were wounded when the army opened fire for the first time to quell unrest linked to the worsening economic crisis.

As the pump ran out of petrol, motorists began to protest and the situation escalated into a clash with troops, police said. -Strange Sounds

Sri Lanka is suffering its worst economic crisis since “independence”, with the country unable to find dollars to import essentials, including food, fuel, and medicines. (Anyone who actually believes anyone other than the rulers are “independent” in Sri Lanka has a lot of cognitive dissonances to evaluate).

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

The Engineered Stagflationary Collapse Has Arrived – Here’s What Happens Next

The Engineered Stagflationary Collapse Has Arrived – Here’s What Happens Next

In my 16 years as an alternative economist and political writer I have spent around half that time warning that the ultimate outcome of the Federal Reserve’s stimulus model would be a stagflationary collapse. Not a deflationary collapse, or an inflationary collapse, but a stagflationary collapse. The reasons for this were very specific – Mass debt creation was being countered with MORE debt creation while many central banks have been simultaneously devaluing their currencies through QE measures. On top of that, the US is in the unique position of relying on the world reserve status of the dollar and that status is diminishing.

It was only a matter of time before the to forces of deflation and inflation met in the middle to create stagflation. In my article ‘Infrastructure Bills Do Not Lead To Recovery, Only Increased Federal Control’, published in April of 2021, I stated that:

Production of fiat money is not the same as real production within the economy… Trillions of dollars in public works programs might create more jobs, but it will also inflate prices as the dollar goes into decline. So, unless wages are adjusted constantly according to price increases, people will have jobs, but still won’t be able to afford a comfortable standard of living. This leads to stagflation, in which prices continue to rise while wages and consumption stagnate.

Another Catch-22 to consider is that if inflation becomes rampant, the Federal Reserve may be compelled (or claim they are compelled) to raise interest rates significantly in a short span of time. This means an immediate slowdown in the flow of overnight loans to major banks, an immediate slowdown in loans to large and small businesses, an immediate crash in credit options for consumers, and an overall crash in consumer spending…

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

Kim Dotcom Breaks Down the True Scale of US Government Debt

New Zealand tech CEO, Kim Dotcom did the math on the United States’ sovereign debt and he tweeted a thread about it, saying it may the most important thread that he may ever make.

Kim explains that US spending and debt have spiraled out of control and the Government can only raise the money it needs by printing more of it, which means that hyperinflation is guaranteed.

He says this has been going on for decades and there’s no way to fix it and that the US got away with this for so long, because US dollar is the world’s reserve currency. When the US Government prints trillions, it is thereby robbing Americans and the entire world in what he calls the biggest theft in history.

He says the total US debt is at $90 trillion, which together with $169 trillion in US unfunded liabilities totals $259 trillion, which is $778,000 per US citizen or $2,067,000 per US Taxpayer.

Now, the value of all US assets combined: every piece of land, real estate, all savings, all companies, everything that all citizens, businesses, entities and the state own is worth $193 trillion.

Our total debt, $259 trillion minus our total net worth, $193 trillion equals negative $66 trillion of debt and liabilities after every asset in the US has been sold off.

So even if the US could sell all assets at the current value, which is impossible, it would still be broke.

This is where the ‘Great Reset’ comes in and he asks, “Is it a controlled demolition of the global markets, economies and the world as we know it? A shift into a new dystopian future where the elites are the masters of the slaves without the cosmetics of democracy?”

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

Will the Global South break free from dollarized debt?

Will the Global South break free from dollarized debt?

In his latest book, economist Michael Hudson pits socialism against finance capitalism and tears apart the ‘dream civilization’ imposed by the 1 percent.
https://media.thecradle.co/wp-content/uploads/2022/06/IMG-20220609-WA0000.jpg

Michael Hudson’s new book on the world’s urgent global economic re-set is sure to ruffle some Atlanticist feathers.

Photo Credit: The Cradle

With The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism, Michael Hudson, one of the world’s leading independent economists, has given us arguably the ultimate handbook on where we’re at, who’s in charge, and whether we can bypass them.

Let’s jump straight into the fray. Hudson begins with an analysis of the “take the money and run” ethos, complete with de-industrialization, as 90 percent of US corporate revenue is “used to share buybacks and dividend payouts to support company stock prices.”

That represents the apex of “Finance Capitalism’s” political strategy: to “capture the public sector and shift monetary and banking power” to Wall Street, the City of London and other western financial centers.

The whole Global South will easily recognize the imperial modus operandi: “The strategy of US military and financial imperialism is to install client oligarchies and dictatorships, and arm-twist allies to join the fight against designated adversaries by subsidizing not only the empire’s costs of war-making (“defense”) but even the imperial nation’s domestic spending programs.” This is the antithesis of the multipolar world advocated by Russia and China.

In short, our current Cold War 2.0 “is basically being waged by US-centered finance capitalism backing rentier oligarchies against nations seeking to build up more widespread self-reliance and domestic prosperity.”

Hudson presciently reminds us of Aristotle, who would say that it is in the interest of financiers to wield their power against society at large: “The financial class historically has been the major beneficiary of empires by acting as collection agents.”

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

The Handbook for Debt-Soaked Nations: Lie, Print, Inflate & Finger-Point

The Handbook for Debt-Soaked Nations: Lie, Print, Inflate & Finger-Point

Below we consider the classic (and oh-so predictable) tactics of debt-soaked nations facing a showdown (corner) between tanking markets and ripping inflation.

Ultimately, I see a stagflationary end-game in which both occur, but for the near-term, prepare for more inflation, as it’s the option all debt-soaked sovereigns are eternally forced to take.

The Cruelest Month

T.S. Elliot famously described April as the cruelest month, but the recent (and ever-unfolding) events of May seem far crueler.

As we have warned from the very onset of this otherwise avoidable war in Ukraine, the backfiring of Western sanctions against Putin (de-dollarization, inflationary tailwinds and increasingly discredited central banks) were not only plain to foresee, but placed the West in an almost comical (yet tragic) scenario in which nations like Germany find themselves sending weapons to the Ukraine while simultaneously sending Rubles to Putin.

How did the world become so hypocritical, dishonest, cornered and silly?

(Cold) Economic Realism vs. (Empty) Moral Posturing

As George Washington observed in a 1770’s moment of Realpolitik candor: “Nations have no permanent friends nor permanent enemies, just permanent interests.”

Turning to 2022, the self-interested reality of Western reliance on Russian energy has made their front-page virtue signaling a bit less virtuous…

Such cold realism explains why Italian Prime Minster Draghi realistically confessed as early as May 11 that EU companies could pay for Russian gas in Rubles in the very same week German Chancellor Olaf Scholz realistically opposed any immediate halting of oil imports from Russia.

Meanwhile, by May 12, the headlines revealed that Russian oil revenues had increased YoY by 50% despite the Western “boycott.”

An equally realistic Japan, like Germany, will take its time to phase-out its dependence on Russian energy, as it, like Germany, recognizes that an immediate G-7 boycott of Russian oil and gas amounts to little more than an energy suicide pact.

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

China, U.S. lead rise in global debt to record high $305 trillion – IIF

China, U.S. lead rise in global debt to record high $305 trillion – IIF

View of the city skyline in Shanghai

A view of the city skyline in Shanghai, China February 24, 2022. Picture taken February 24, 2022. REUTERS/Aly Song

NEW YORK, May 18 (Reuters) – The world’s two largest economies borrowed the most in the first quarter as global debt rose to a record above $305 trillion, while the overall debt-to-output ratio declined, data from the Institute of International Finance showed on Wednesday.

China’s debt increased by $2.5 trillion over the first quarter and the United States added $1.5 trillion, the data showed, while total debt in the euro zone declined for a third consecutive quarter.

The analysis showed many countries, both emerging and developed, are entering a monetary tightening cycle -led by the U.S. Federal Reserve- with high levels of dollar denominated debt.

Global debt totals
Global debt totals

“As central banks move ahead with policy tightening to curb inflationary pressures, higher borrowing costs will exacerbate debt vulnerabilities,” the IIF report said.

“The impact could be more severe for those emerging market borrowers that have a less diversified investor base.”

The yield on the benchmark 10-year Treasury note has risen some 150 basis points so far this year and earlier this month hit its highest since 2018.

SOVEREIGNS BEWARE

Corporate debt outside banks and government borrowing were the largest sources of the increase in borrowing, with debt outside the financial sector rising above $236 trillion, some $40 trillion higher than two years ago when the COVID-19 pandemic hit.

Government debt has risen more slowly in the same period, but as borrowing costs rise sovereign balance sheets remain under pressure.

Government financing needs
Government financing needs

“With government financing needs still running well above the pre-pandemic levels, higher and more volatile commodity prices could force some countries to increase public spending even further to ward off social unrest,” said the IIF.

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

A Global Monetary & Commodity Inferno of Nuclear Proportions

A GLOBAL MONETARY & COMMODITY INFERNO OF NUCLEAR PROPORTIONS

When the sh-t hits the global fan, it often does it at the optimal time for the maximum amount of damage and with the worst kind of sh-t to soil the world.

For years I have been clear that the world is reaching the end of an economic, financial and monetary era which will affect mankind catastrophically for decades.

The world will obviously blame Putin for the catastrophe which will hit every corner of our planet. But we must remember that neither Putin nor Covid is the reason for the economic cataclysm that we are now approaching.

These events are catalysts which will have a major effect because they are hitting a gigantic debt bubble of a magnitude that has never been seen before in history. And it obviously takes very little to prick this epic bubble.

What is unequivocal is that all currencies will finish the 100+ year fall to ZERO in the next few yearsIt is also crystal clear that all the asset bubbles – stocks, bonds and property – will implode at the same time leading to a long and deep depression.

We had the warning in 2006-9 but central banks ignored it and just added new worthless debt to existing worthless debt to create worthless debt squared – an obvious recipe for disaster.

So as is often typical for the end of an economic era, the catalyst is totally unexpected and worse than anyone could have forecast.

WAR CYCLES

Yes, I and a few others have pointed out that we are in a war cycle currently, and recent events have clearly confirmed this and hit the world with a vengeance.

Just as nobody paid any serious attention to the warning that the Great Financial Crisis in 2006-9 gave the world, few people have taken Putin’s warnings seriously since the 2014 Maidan revolution in Ukraine.

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

Welcome to the age of cuts

Welcome to the age of cuts

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The UK government faced a barrage of criticism over its National Insurance hike this week.  The tax – which theoretically pays for public services, pensions, and benefits – was in creased last autumn, before the political class became aware of the massive increase in gas and electricity prices coming later this year.  However, with cost-push inflation rising across the economy, and with rises in local taxes due to be announced, millions of British households are facing a massive squeeze on their standard of living.  This has given more weight to the idea that government should extend its pandemic borrowing until the economy has recovered, rather than raising new taxes at this point.

It goes without saying that nobody welcomes tax increases.  Nevertheless, as a consequence of the way this currency-creation system works, the government is rapidly running out of room to manoeuvre.  In the UK, around £500bn worth of government bonds are index-linked, so that as the inflation rate rises, so the cost of servicing the debt increases.  As James Sillars at Sky News reported this week:

“Interest payments on government debt hit a record £8.1bn for the month of December because of surging inflation…  The Office for National Statistics (ONS) said the cost of servicing the country’s £2trn+ debt pile was almost 200% or £5.4bn up on December 2020.

“It is because half a trillion pounds worth of government bonds are linked to the Retail Prices Index (RPI) measure of inflation which stood at 8.4% in December – its highest level since 1991.”

The problem will worsen in the spring as the new energy price cap comes into force, and as prices continue to rise across the economy.  This sets up one of contemporary democracy’s greatest flaws.  It is precisely during inflationary periods that the people begin to demand more government spending and less taxation…

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

Response: Money and Payments: The US Dollar in the Age of Digital Transformation

Implications from the Federal Reserve’s Paper

Our first comment is that every monetary change from the Founding of America through present has been to move away from free markets, and to adulterate our currency. An analogy could be made to the Ship of Theseus, with each good plank replaced with an unsound board. A Zombie Ship of Theseus, decaying, but still afloat.

Let’s walk through the Fed’s paper. The very firstparagraphon page 1 says, “The Federal Reserve, as the nation’s central bank, works to maintain the public’s confidence by fostering monetary stability, financial stability…”

Monetary stabilityis defined as2% debasement per annum, an Orwellian twist. Andfinancial stabilityin the Fed’s regime is a myth.Interest rates shot the moon between 1947 and 1981, and since then have been falling—with volatility—into the black hole of zero.Meanwhile debt grows exponentially, and the marginal productivity of debt—how much GDP is added for each new dollar of debt—falls decade after decade. It is not only unstable, but unsustainable, heading towards an ultimate heat death of the economic universe.

“CBDC is defined as a digital liability of a central bank that is widely available to the general public.” In other words, it’s like holding a paper dollar bill except it’s digital. Which implies several things:

  • The Fed could muscle out the banks from the demand deposits business
  • The Fed could buy all the assets, which the banks now finance with demand deposits
  • Thus, money and payment services could become more socialized
  • The government could declare paper is no longer legal tender, thus forcing everyone into CBDC
  • The government could track who spends their CBDC, and what they buy
  • This spending data could be used in a social credit score system

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

Fourth Turning 2022–Bad Moon Rising (Part 2)

FOURTH TURNING 2022 – BAD MOON RISING (PART 2)

In Part 1 of this article I laid out how the global elite have used this covid flu to manipulate the weak minded into a fear induced mass psychosis as a key element in their Great Reset plan to control the world and keep you technologically enslaved under lock and key. Now I will try to decipher how this mass hysteria might play out over the course of 2022 and beyond.

“Americans today fear that linearism (alias the American Dream) has run its course. Many would welcome some enlightenment about history’s patterns and rhythms, but today’s intellectual elites offer little that’s useful. Caught between the entropy of the chaoticists and the hubris of the linearists, the American people have lost their moorings.” – Strauss & Howe – The Fourth Turning

Federal Reserve Just Declared the American Dream is Dead for Most Americans

“The most effective way to destroy people is to deny and obliterate their own understanding of their history.” ― George Orwell

The American Dream, where all Americans, no matter the circumstances of their birth, had a legitimate opportunity to live a better life than their parents, based upon their own intelligence, work ethic, and good fortune, is an illusion in today’s world. The ruling elite have stolen the wealth of the nation and its citizens. This was not an accident, but a plan implemented over many decades, accelerating after Nixon closed the gold window and opened the door to unlimited amounts of debt being created out of thin air and backed by nothing.

 

One of the Fed’s only mandates was to maintain a stable currency. Since its inception in 1913 to 2020, the USD had lost 96% of its purchasing power. The USD has lost 7.5% of its purchasing power since 2020, as Powell and his cronies have lost control of inflation.

Visualizing the Purchasing Power of the U.S. Dollar Over Time

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

#220. The human factor

#220. The human factor

CONTINUITY, CONTRACTION OR COLLAPSE

Over an extended period, but with growing intensity in recent times, there has been a discussion, here and elsewhere, about whether we can prevent economic contraction from turning into collapse.

This is part of a broader debate in which every point of view seems to begin with the letter C. The orthodox or consensus line is Continuity, meaning that the economy will continue to expand in the future as it has in the past, and is claimed still to be doing in the present. The main contrarian theme is the inevitability of Collapse. Those of us who believe even in the existence of a third possibility – Contraction – are in a tiny minority.

Of these three points of view, the only one that we can dismiss is continuity. The economic “growth” that we’re told can be extended indefinitely into the future isn’t even happening in the present.

Most – roughly two-thirds – of the reported “growth” of the past twenty years has been cosmetic. The preferred metric of gross domestic product (GDP) measures activity, not prosperity. If we inject liquidity into the system, and count the use of that liquidity as ‘activity’, we can persuade ourselves that the world economy has been growing at rates of between 3% and 3.5%.

The classic illustrative example is of a government paying one large group of workers to dig holes in the ground, and another group to fill them in again. This adds no value, of course, but it does increase activity, and therefore boosts GDP.

In this example, the obvious question is that of how the government pays for all this zero-value ‘activity’. The simple answer is to use borrowed money. Conveniently, GDP, as a measure of activity, calculates flow without reference to stock

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

2022: Energy limits are likely to push the world economy into recessionIn my view, there are three ways a growing economy can be sustained:

2022: Energy limits are likely to push the world economy into recessionIn my view, there are three ways a growing economy can be sustained:

  1. With a growing supply of cheap-to-produce energy products, matched to the economy’s energy needs.
  2. With growing debt and other indirect promises of future goods and services, such as rising asset prices.
  3. With growing complexity, such as greater mechanization of processes and supply lines that extend around the world.

All three of these approaches are reaching limits. The empty shelves some of us have been seeing recently are testimony to the fact that complexity is reaching a limit. And the growth in debt looks increasingly like a bubble that can easily be popped, perhaps by rising interest rates.

In my view, the first item listed is critical at this time: Is the supply of cheap-to-produce energy products growing fast enough to keep the world economy operating and the debt bubble inflated? My analysis suggests that it is not. There are two parts to this problem:

[a] The cost of producing fossil fuels and delivering them to where they are needed is rising rapidly because of the effects of depletion. This higher cost cannot be passed on to customers, without causing recession. Politicians will act to keep prices low for the benefit of consumers. Ultimately, these low prices will lead to falling production because of inadequate reinvestment to offset depletion.

[b] Non-fossil fuel energy products are not living up to the expectations of their developers. They are not available when they are needed, where they are needed, at a low enough cost for customers. Electricity prices don’t rise high enough to cover their true cost of production. Subsidies for wind and solar tend to drive nuclear electricity out of business, leaving an electricity situation that is worse, rather than better. Rolling blackouts can be expected to become an increasing problem.

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

Sri Lanka economists tell government to default on bond, buy food

Sri Lanka economists tell government to default on bond, buy food

$500m should be redirected to pay for fuel, medicine and other essentials, experts say

Sri Lankan rupee banknotes sit in a bucket at a fruit stall in Colombo. The country is running out of imported food, fuel, medicine and a key ingredient of milk tea.   © Reuters

COLOMBO — Sri Lanka’s top economists and business leaders are urging President Gotabaya Rajapaksa’s government to default on a debt repayment next week and to use the nation’s foreign currency reserves to buy fuel, food, medicine and other essentials.

Ajith Nivard Cabraal, governor of the Central Bank of Sri Lanka, on Jan. 5 tweeted that the CBSL has allocated $500 million for an International Sovereign Bond maturing on Tuesday. Since the announcement, many experts have come out against the allocation.

Shanta Devarajan, a former World Bank chief economist from Sri Lanka, suggested that the island’s acute shortage of foreign currency reserves is exacerbating everyday problems like long lines to buy cooking gas, rapidly rising food prices, more frequent power outages and a lack of powdered milk, a staple in a hot, tropical country where many homes do not have refrigerators and millions of people thirst for milk tea.

“This $500 million could enable people, especially poor people, to buy and cook food for themselves and their children,” Devarajan wrote in the DailyFT, a Sri Lankan newspaper. “Instead, the government is choosing to reimburse bondholders, who are hardly poor.”

Following a $1.5 billion currency swap with China, Sri Lanka in December managed to boost its reserves to $ 3.1 billion. According to Fitch Ratings, that’s just enough. The agency says Sri Lanka has $3 billion worth of foreign currency debt repayments coming due during the first quarter of this year.

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

Coming Market Madness Could Take 70 Years to Recover

COMING MARKET MADNESS COULD TAKE 70 YEARS TO RECOVER

Cervantes famous classic novel Don Quixote can in simple terms be described as a fight for liberty and freedom against oppression and against the state. This book is from 1605 and considered to be one of the best books ever written.

In the midst of market madness, risk doesn’t exist because lunatics neither see, nor worry about risk. And still, 2022 will be more about risk and survival than anything else. So I will obviously talk more about The Triumph of Survival” which I discussed in a recent piece.

“When life itself seems lunatic, who knows where madness lies.” – Don Quixote

The year 2022 will most likely be the culmination of risk. An epic risk moment in history  that very few investors will see until it is too late as they expect to be saved yet another time by the Fed and other central banks.

And why should anyone believe that 2022 will be different from any year since 2009 when this bull market started? Few investors are superstitious and therefore won’t see that 13 spectacular years in stocks and other asset markets might signify an end to the epic super bubble.

The Great Financial Crisis (GFC) in 2006-9 was never repaired. Central bankers and governments patched Humpty up with glue and tape in the form of printed trillions of dollars, euro, yen etc. But poor Humpty Dumpty was fatally injured and the intensive care he received would only give him a temporary reprieve.

When the GFC started in 2006, global debt was $120 trillion. Today we are at $300t, rising to potentially $3 quadrillion when the debt and derivative bubble finally first explodes and then implodes as I explained in my previous article.

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

Fourth Turning 2022 — Bad Moon Rising

FOURTH TURNING 2022 – BAD MOON RISING

“Try to unlearn the obsessive fear of death (and the anxious quest for death avoidance) that pervades linear thinking in nearly every modern society. The ancients knew that, without periodic decay and death, nature cannot complete its full round of biological and social change. Without plant death, weeds would strangle the forest. Without human death, memories would never die, and unbroken habits and customs would strangle civilization. Social institutions require no less. Just as floods replenish soil and fires rejuvenate forests, a Fourth Turning clears out society’s exhausted elements and creates an opportunity.” – Strauss & Howe – The Fourth Turning

Coronavirus: Is Germany doing enough to slow the outbreak? | Germany | News and in-depth reporting from Berlin and beyond | DW | 14.03.2020

“Institutions will be increasingly bossy, limiting personal freedoms, chastising bad manners, and cleansing the culture. Powerful new civic organizations will make judgments about which individual rights deserve respect and which do not. Criminal justice will become swift and rough, trampling on some innocents to protect an endangered and desperate society from those feared to be guilty. Expect a loss of personal privacy. Fourth Turnings can be dark times for the free spirit: Just as one kind of official may have new authority to do something for you, another kind—some hastily deputized magistrate—may have new authority to do something to you.” – Strauss & Howe – The Fourth Turning

It’s been almost a year since my annual look ahead at the upcoming year. Last year’s article FOURTH TURNING DETONATION was a big picture overview of where we stood during the thirteenth year of this ongoing Fourth Turning Crisis. I had given up trying to make specific predictions because the twenty-year length of a Crisis period does not lend itself to specificity within a given year. My comment at the beginning of the article was:

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

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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