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Central Bank Crisis Expanding

Central Bank Crisis Expanding

QUESTION: Hi Marty.
You mentioned in the blog that all European sovereign debt may end up being converted into perpetual bonds. Will it be through debt mutualization or will each country have each own Consol? Could you please elaborate on how this conversion would affect pension funds, banks, social security and individual investors? Knowing that the ECB already owns 33% of all government bonds in the Euro Zone, can it (ECB) be the buyer of last resort to avoid liquidity issues for all these investors (pension funds, banks, social security and individual investors)? What would make the ECB fail?
Regards

AMD

ANSWER: They will most likely provide no warning and they will simply announce what they have done to prevent anyone from trying to liquidate. The ECB will have it as reserves so that will not change. They were rolling the debt anyway because they cannot sell it without causing interest rates to rise.

The Federal Reserve is buying up corporate bonds to the point that there is now a shortage. They are doing this in a desperate measure to try to prevent interest rates from rising, which will in turn put pressure on the ECB and Emerging Markets. This is demonstrating that the central banks are fearful of the market pushing rates higher because of CREDIT RISK.

Making Sense Of An Increasingly Insensible World

Making Sense Of An Increasingly Insensible World

Creating purpose and fulfillment within a failing system

What the heck is going on?

I hear this a lot these days. Developments are happening too quickly to process for many folks, creating a persisting cloud of confusion.

Even focusing down on any particular single event often gets nowhere because so much of what’s going on simply makes so sense

Take for example, the W.H.O. which as recently as two weeks ago recommended that only sick people should wear masks.  What? We’ve known for months that people can spread Covid-19 when they are asymptomatic.  How can a ‘sick person’ wear a mask if they are sick but even they don’t know that? It just makes no sense.  What is even going on?

Or take Jerome Powell, Chair of the Federal Reserve, who defiantly declared that the Federal Reserve “absolutely does not” contribute to the wealth inequality gap:

(Source)

Say what?

The Fed is busy buying distressed financial assets for far more than they are worth from the largest and wealthiest of stock and bondholders.  That absolutely contributes to inequality.

So does juicing the stock market, or ““market”” as I like to term it (because it’s so distorted it needs two sets of quote marks).

So does appointing Blackrock – the world’s largest private asset manager – to select which private assets should be bought with the freshly-invented currency emanating from the Fed’s electronic printing presses.  Should we really be shocked to learn that Blackrock chose their own distressed assets, like the junk bond fund JNK, for the Fed to buy first?

It’s a bald-faced lie for Jay Powell to claim anything other than the Fed is the #1 contributor to inequality.  And that’s by a country mile.

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

WTF: What The Fed?!? (Round 2)

WTF: What The Fed?!? (Round 2)

Williams, Maloney, Martenson, Smith: “Trillions more reasons to be concerned”

Back in mid-January, Grant Williams, Mike Maloney, Charles Hugh Smith, Chris Martenson and I sat down for an in-depth discussion on the dangerous distortions to financial markets and the global economy that central bank intervention is causing.

That video, titled WTF: What The Fed?!? was released soon after the US Federal Reserve had added $200 billion dollars to its balance sheet in Q4 2019. At the time, we worried so much liquidity being added to the system so quickly could recklessly exacerbate the extreme overvaluations in the markets, and further increase the instability of our over-indebted economy.

Little could we have guessed that a global pandemic would soon ensue, one that has seen the central banks collectively flood the world with an additional $4 trillion so far, with (much) more anticipated to come. Sure makes that $200 billion look pretty tiny now…

So, if this group of experts was highly concerned about systemic risk pre-coronavirus, what are they thinking now?

$Trillions in new fiat currency printed in less than 2 months. Over 36 million jobs lost. A Q1 GDP drop of -5% and a predicted Q2 drop of -42.8%. And that’s just in the US alone.

These are historically unprecedented developments on a Great Depression-level scale.

The impact of the economic production loss triggered by covid-19 will be painful and with us for years. How bad will it get? What should we expect next? And why are the current prices of financial assets so divorced from the reality of the destruction to the economy?

For these answers and more, watch this 2-minute trailer for WTF: What The Fed?!? Round 2:

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

No One Gets Out Of Here Alive

NO ONE GETS OUT OF HERE ALIVE

“The seasons of time offer no guarantees. For modern societies, no less than for all forms of life, transformative change is discontinuous. For what seems an eternity, history goes nowhere – and then it suddenly flings us forward across some vast chaos that defies any mortal effort to plan our way there. The Fourth Turning will try our souls – and the saecular rhythm tells us that much will depend on how we face up to that trial. The saeculum does not reveal whether the story will have a happy ending, but it does tell us how and when our choices will make a difference.”  – Strauss & Howe – The Fourth Turning

As we wander through the fog of history in the making, unsure who is lying and who is telling the truth, seemingly blind to what comes next, I look to previous Fourth Turnings for a map of what might materialize during the 2nd half of this current Fourth Turning. After a tumultuous, harrowing inception to this Crisis in 2008/2009, we have been told all is well and are in the midst of an eleven-year economic expansion, with the stock market hitting all-time highs.

History seemed to stop and we’ve been treading water for over a decade. Outwardly, the establishment has convinced the masses, through propaganda and money printing, the world has returned to normal and the future is bright. I haven’t bought into this provable falsehood. Looking back to the Great Depression, we can get some perspective on our current position historically.

The Dow is up 450% since its 2009 low, which is the metric used by the establishment to prove their money printing solutions have succeeded in lifting the country from the depths of despair and depression.

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

The Pandemic Isn’t Ending, It’s Just the Beginning of Global Disorder and Depression

The Pandemic Isn’t Ending, It’s Just the Beginning of Global Disorder and Depression

When you’ve been lied to, you’ve been betrayed. Betrayal has consequences.

Unsurprisingly, denying the pandemic is unstoppable and consequential is the order of the day: authorities everywhere are terrified these realities might leak through all their oh-so-obviously desperate firewalls and filters. Why are they terrified? Because they know the entire global economy, including the linchpin Chinese and U.S. economies, was extremely fragile before the pandemic arose: why else the panic-stimulus and panic-repo policies of the Federal Reserve and the People’s Bank of China in the pre-pandemic months of Q4 2019?

And so everything is covered up, and if that doesn’t work, then outright denial is the default policy. The number of cases globally is absurdly understated, the number of deaths in China is absurdly under-reported, and so on.

But the biggest denial campaign is aimed at masking the fragility of the global economy, as the only thing keeping the rickety, speculative-bubble, insolvent global economy from imploding is the belief and confidence of the masses that everything is going swimmingly, so keep on borrowing, borrowing, borrowing, buying, buying, buying and speculating, speculating, speculating.

While the real-world battle to limit the spread of the virus in China gets the headlines, the battle inside your head to maintain your confidence in the system is just as important. Economists talk about recession and depression in quantitative terms: deflation, sales, profits, employment and so on.

The key dynamic in recessions and depressions is confidence: confidence that the condo you buy today will be worth a lot more tomorrow, the business investment you make today will generate higher profits tomorrow, your job benefits will increase tomorrow, your house value will rise tomorrow, and so on.

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

VIDEO: The Fed’s Evil Juggernaut

VIDEO: The Fed’s Evil Juggernaut

Don’t let it crush your future

Juggernaut: (n) massive inexorable force, campaign, movement, or object that crushes whatever is in its path

The US Federal Reserve is once again force-feeding liquidity into the system. At its fastest rate ever.

The result? Record high stock prices whose valuations defy all logic.

What’s wrong with that? Shouldn’t we just enjoy the party and be grateful for our rising 401ks?

What’s wrong is that the Fed’s actions are dooming us. Their poisonous cocktail of endless cheap money and rock-bottom interest rates is hastening a terminal breakdown of the economy, while deliberately enriching a tiny cadre of elites to the ruin of everyone else.

Though most remain blind to this, Fed policy (and the similar ones pursued by the other major world central banks) is directly responsible for, or a major contributor to, many of the biggest challenges society is facing.

Tens of millions of Boomers who can’t afford to retire. Tens of millions of Millennials who can’t afford to purchase a home. History’s largest wealth gap between the 1% and everyone else. Relentless increases in the cost of living while real wages remain stagnant. Depletion and degradation of our key natural resources by zombie companies run without profits. We can thank the Fed for all of these ills, plus many more.

All we’re offered in return is the fake reassurance that “everything is awesome” because stocks are higher today than they were yesterday. As if that really makes a difference when the top 1% owns 50% of all stocks and the top 10% owns over 90%.

And when today’s epicly distorted markets reach their breaking point — which may be imminent given the truly manic action recently — not only will the resulting damage be commensurately epic, but it will injure the 99% FAR more than the 1% who benefitted from it.

Mass layoffs. Bankruptcies. Destroyed retirement portfolios and pensions. State and city budget crises. Higher taxes. More fees. Cancelled social services. Hollowed-out communities.

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

Surf’s Up!

Surf’s Up!

The wave of change is finally here. Are you prepared to ride it?

Nothing seems right anymore.

In whichever direction we choose to look, things are unraveling at a quickening pace.

Welcome to the Fourth Turning; and with it, a profound loss of trust in institutions and government.

Such lack of social cohesion is a hallmark of a Fourth Turning. Sadly, it’s happening at a time when society desperately needs to pull together, set aside our differences, and make some really big decisions.

Dirty Hands Everywhere

For my own part, my loss of trust in what is termed the ‘mainstream media’ (MSM) is nearly complete.  Its sins of omission and commission have piled up too high to forgive – the bank of trust I once had in it has lost every penny and is now in deep overdraft.

In my opinion its gravest sin is the willful and deliberate fracturing of society into many disparate warring camps. The MSM has a lot to answer for in that regard.

Similarly guilty is our political system.  The core power players are unable to hold each other accountable, revealing that we don’t have two parties after all, but rather a uniparty organized around power and money.

The rules are increasingly re-written to benefit a smaller and smaller group of elites at the expense of everyone else — and that’s now becoming increasingly crystal clear to the 99.9% who are getting screwed. The corrosive effects of that are going to take decades to resolve.

As a result, the social fabric is rending apart.  Stress is epidemic with more people than ever reporting being unhappy, unfulfilled, isolated and alone.  Suicide is the second leading cause of death.  It’s worse than just depression, it’s something far more insidious — it’s demoralization. There’s no hope left any more for too many of us.

A Dying Ecosphere

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

2020 Begins With A Bang (Literally)

2020 Begins With A Bang (Literally)

A heck of a lot happened this week

It sure didn’t take long for 2020 to get interesting.

Iran

The biggest development of the new year happened Thursday when the US military assassinated Qassem Soleimani, Iran’s most powerful figure after its Supreme Leader, in a surgical drone strike.

This is an extremely serious action; one that Iran is highly likely to respond forcefully against. As the world anxiously awaits what will happen next, #wwwiii suddenly is a top twitter trend.[Update: since this original publication of this article, the US has conducted further airstrikes on Iranian targets located in Iraq, Bagdad’s ‘Green Zone’ which contains the US Embassy has come under attack, and there are unconfirmed reports that US aircraft have hit Iranian targest in Syria.]

Chris has been furiously processing the news flow on this on an hour-by-hour basis in his latest post on the topic here.

If you want to better understand the context behind the current US-Iran tension as well as breaking developments from last night’s bombing and the likely repercussions, read the post and follow Chris’ updatesin its Comments section.

Gold

On Sunday, Chris released this prediction that gold was poised for a big price move. Sure enough, gold closed the week up $40/ounce, certainly helped today by the geopolitical worries escalating between the US and Iran.

The yellow metal is now up nearly $100/oz from a month ago, and over $200/oz from a year ago.

It seems to be finally emerging from its 7-year slumber. Even the long-beaten mining shares are up nicely over the past year.

The start of a new bull market in the precious metals may indeed be upon us.

WTF?! (What The Fed?!)

The first trading day of the year saw the S&P 500 close at an all-time high, suggesting that Fed liquidity was still driving the show as it did for the entirety of 2019.

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

See You on the Dark Side of the Moon

SEE YOU ON THE DARK SIDE OF THE MOON

And if the cloud bursts thunder in your ear
You shout and no one seems to hear
And if the band you’re in starts playing different tunes
I’ll see you on the dark side of the moon

Brain Damage, Pink Floyd

Image result for see you on the dark side of the moon"

And if the dam breaks open many years too soon
And if there is no room upon the hill
And if your head explodes with dark forebodings too
I’ll see you on the dark side of the moon

Brain Damage, Pink Floyd

Pink Floyd’s 1973 Dark Side of the Moon album is considered one of the greatest albums of all-time. It stayed on the Billboard 200 charts for 937 weeks. Roger Waters concept was for an album that dealt with things that “make people mad”. The Dark Side of the Moon’s themes include war, conflict, greed, the passage of time, death, and insanity, the latter inspired in part by former band member Syd Barrett’s worsening mental state.

The five tracks on each side reflect various stages of human life, beginning and ending with a heartbeat, exploring the nature of the human experience, and empathy. The themes of this album are timeless and are as germane today as they were forty-six years ago, if not more relevant. The country and world are awash in conflict, driven by the greed of evil men. Decent, law abiding, hard-working, critical thinking Americans see the world going insane as the passage of time leads towards the death of an American empire.

Waters and Gilmour lyrics have always captured the falsity of the world, whether it be the music industry, the ruling elite, educational system, politicians, the military, or our own delusions that keep us from accepting the truth. Their cynicism about our world appeals to my natural inclination towards skepticism about mankind and those constituting the invisible government, controlling the levers of our society.

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

Federal Reserve Proposes New Rule To Let Inflation Run “Hot” Ahead Of Next Recession

Federal Reserve Proposes New Rule To Let Inflation Run “Hot” Ahead Of Next Recession  

As the Federal Reserve remains unable to stoke inflation (because it refuses to measure it correctly) and refuses to factor in asset price inflation…

… it has now considered launching a new rule that would let inflation run above its 2% target to make up for lost inflation, reported the Financial Times.

Though the Fed’s policies are to protect big Wall Street banks and keep liquidity ample in the financial system, its policies have overwhelmingly created deflation through supporting zombie companies and blowing financial bubbles.

So to “make up” for lost inflation, the Fed will temporarily increase the target range above 2%, also known as “symmetric” overinflation. The policy would “make it clear that it’s acceptable that to average 2 percent, you can’t have only observations that are below 2 percent,” according to Eric Rosengren, president of the Federal Reserve Bank of Boston, who recently spoke with FT.

Fed members have expressed concerns that reverting the federal funds rate to the zero lower bound will drive inflation expectations lower, a real risk of Japanification, something Albert Edwards is especially concerned about.

Officials have also lamented that the since the fed funds rate is so low compared to history, any recession could make monetary policy ineffective, though there is always the reality that the Fed will merely unleash negative interest rates during the next recession.

Meanwhile, Fed members have been experimenting with new monetary tools ahead of the next downturn. Janet Yellen said the new rule could be like “forward guidance,” which enabled the Fed to pressure short-term interest rates lower. This eventually allowed longer-term rates to fall as well.

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

Personal Politics, Public Impeachment, Persuasion and Post-Apocalyptic Planning

Personal Politics, Public Impeachment, Persuasion and Post-Apocalyptic Planning

One of my primary concerns regarding the forthcoming economic chaos and societal breakdown is that there will be nowhere to run and nowhere to hide. As normalcy bias evaporates like tears on dehydrated sunken cheeks, hungry neighbors and pre-collapse friends and acquaintances will soon assimilate into zombie hoards and come knocking like its Halloween.

What are you going to do? Shoot them?

Regardless, saying “I told you so” or “I tried to warn you, but you didn’t listen” will not be an effective deterrent. Furthermore, the resultant chaos will also deliver local strongmen and gangs ready to thieve and plunder amidst widespread violence and starvation.

In such a scenario, any lone bananas are sure to be skinned.

Are you ready?

Because very few will have the opportunity to bug out to a remote location and surprisingly, an isolated cabin in the woods, or a fenced-off hidden homestead in a rural area may not be best after all.  Take it from Fernando Ferfal Aguirre, who survived the economic collapse in Argentina.  In his book, “Surviving the Economic Collapse”, he described geographic areas as like organisms dying; where the extremities perish first. Aguirre identifies the urban areas as the safer places to work, trade, and live; with the rural areas as targets for roving gangs to raid and set up camp out of the reach of city services, police, and fire departments.

Therefore, since we know the endgame, what if we could parlay that into building trust with others now?   Perhaps entire regions could be fortified in a balkanized America, simply by reorganizing current civil administrations.  All that would be required would be for the heads of select institutions and agencies to work in coordination, quickly, and decisively as the proverbial excrement collides into the whirling flabellum. Roving bands, gangs, cartels, and feral feds, might then decide to move on to easier targets.

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

The Federal Reserve Is Directly Monetizing US Debt

The Federal Reserve Is Directly Monetizing US Debt

In a very real way, MMT is already here

Sure, it’s not admitting to this. And it’s using several technical jinks and jives to offer a pretense that things are otherwise.

But it’s not terribly difficult to predict what’s going to happen next: the Federal Reserve will drop the secrecy and start buying US debt openly.

At a time, mind you, when US fiscal deficits are exploding and foreign buyers are heading for the exits.

How It’s Supposed to Work

Here’s how it’s supposed to work when the US government issues new debt:

  1. If the US Treasury needs to raise new funds, it announces an upcoming auction of US Treasury bills/notes/bonds.
  2. A date for the auction is set.
  3. Various participants bid for those bills/notes/bonds (including ‘regular folks’ like you and me if we’re using the government’s Treasury Direct program).
  4. At a later date, the Fed can buy those US Treasury bills/notes/bonds. The various holders of that debt submit offers to sell, and the Fed (presumably) selects the best offers on the best terms.

The Federal Reserve, under no conditions, buys Treasury paper directly.  The Federal Reserve’s own website still maintains that this is the case:

(Source)

There are two important claims plus one assertion I’ve highlighted in there, each in a different color:

  1. Yellow: Treasury securities may “only be bought and sold in the open market.”
  2. Blue: doing otherwise might compromise the independence of the Fed.
  3. Purple: the Fed mostly buys “old” securities.

So according to the Fed: it’s independent, it follows the rules set forth in the Federal Reserve Act of 1913, and it mostly buys “old” Treasury paper that the market has already properly priced in a free and fair system.

But that’s not really what’s going on…

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

The Fed is Lying to Us

The Fed is Lying to Us

“When it becomes serious, you have to lie”

The recent statements from the Federal Reserve and the other major world central banks (the ECB, BoJ, BoE and PBoC) are alarming because their actions are completely out of alignment with what they’re telling us.

Their words seek to soothe us that “everything’s fine” and the global economy is doing quite well. But their behavior reflects a desperate anxiety.

Put more frankly; we’re being lied to.

Case in point: On October 4, Federal Reserve Chairman Jerome Powell publicly claimed the US economy is “in a good place”. Yet somehow, despite the US banking system already having approximately $1.5 trillion in reserves, the Fed is suddenly pumping in an additional $60 billion per month to keep things propped up.

Do drastic, urgent measures like this reflect an economy that’s “in a good place”?

The Fed’s Rescue Was Never Real

Remember, after a full decade of providing “emergency stimulus measures” the US Federal Reserve stopped its quantitative easing program (aka, printing money) a few years back.

Mission Accomplished, it declared. We’ve saved the system.

But that cessation was meaningless. Because the European Central Bank (ECB) stepped right in to take over the Fed’s stimulus baton and started aggressively growing its own balance sheet — keeping the global pool of new money growing.

Let’s look at the data. First, we see here how the Fed indeed stopped growing its balance sheet in 2014:

And we can note other important insights in this chart.

For starters, you can clearly see how in 2008, the Fed printed up more money in just a few weeks than it had in the nearly 100 years of operations prior.

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

NY Fed Announces Extension Of Overnight Repos Until Nov 4, Will Offer 8 More Term Repos

NY Fed Announces Extension Of Overnight Repos Until Nov 4, Will Offer 8 More Term Repos

Anyone who expected that the easing of the quarter-end funding squeeze in the repo market would mean the Fed would gradually fade its interventions in the repo market, was disappointed on Friday afternoon when the NY Fed announced it would extend the duration of overnight repo operations (with a total size of $75BN) for at least another month, while also offer no less than eight 2-week term repo operations until November 4, 2019, which confirms that the funding unlocked via term repo is no longer merely a part of the quarter-end arsenal but an integral part of the Fed’s overall “temporary” open market operations… which are starting to look quite permanent.

This is the statement published moments ago by the NY Fed:

In accordance with the most recent Federal Open Market Committee (FOMC) directive, the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York will conduct a series of overnight and term repurchase agreement (repo) operations to help maintain the federal funds rate within the target range.

Effective the week of October 7, the Desk will offer term repos through the end of October as indicated in the schedule below. The Desk will continue to offer daily overnight repos for an aggregate amount of at least $75 billion each through Monday, November 4, 2019.

Securities eligible as collateral include Treasury, agency debt, and agency mortgage-backed securities. Awarded amounts may be less than the amount offered, depending on the total quantity of eligible propositions submitted. Additional details about the operations will be released each afternoon for the following day’s operation(s) on the Repurchase Agreement Operational Details webpage. The operation schedule and parameters are subject to change if market conditions warrant or should the FOMC alter its guidance to the Desk.  

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

Fourth Turning Economics

Fourth Turning Economics

“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 

Image result for total global debt 2019

The quote above captures the current Fourth Turning perfectly, even though it was written more than a decade before the 2008 financial tsunami struck. With global debt now exceeding $250 trillion, up 60% since the Crisis began, and $13 trillion of sovereign debt with negative yields, it is clear to all rational thinking individuals the next financial crisis will make 2008 look like a walk in the park. We are approaching the eleventh anniversary of this crisis period, with possibly a decade to go before a resolution.

As I was thinking about what confluence of economic factors might ignite the next bloody phase of this Fourth Turning, I realized economic factors have been the underlying cause of all four Crisis periods in American history.

Debt levels in eurozone, G7, US and Germany

The specific details of each crisis change, but economic catalysts have initiated all previous Fourth Turnings and led ultimately to bloody conflict. There is nothing in the current dynamic of this Fourth Turning which argues against a similar outcome. The immense debt, stock and real estate bubbles, created by feckless central bankers, corrupt politicians, and spineless government apparatchiks, have set the stage for the greatest financial calamity in world history.

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

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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