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We all knew it was coming; the alternative economic media has been warning about it for years. Eventually, monetary intervention and bailout after bailout by central banks always leads to devaluation of the currency and inflation in prices. Helicopter money always ends in disaster and at no point in history has it ever produced positive long-term results for a society.

The federal reserve has generated trillions in fiat dollars over the course of a single year (on top of the tens of trillions created in the past decade), all in the name of offsetting deflation. This deflation was NOT caused by the pandemic, it was caused by the government response to the pandemic. On top of that, the shutdowns of “non-essential businesses” and the lockdowns in general ended up being useless in slowing the spread of COVID-19.

All the information, all the facts and all the science supports the anti-lockdown crowd. Conservative run states that removed lockdowns and mandates months ago are seeing falling infection and death numbers and local businesses are on the mend. The problem is, government authorities don’t seem to care about this. It appears that their intention is to double down and continue demanding restrictions stay in place for the long haul.

In other words, they are going to FIND an excuse to keep the mandates going. If no reason exists, they will create a reason. Consider for a moment the fact that COVID-19 is mutating constantly, and like any other virus there are new strains that pop up every year. Just as we have a seasonal flu, we will probably now have seasonal COVID.

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

A dangerous misunderstanding

April 25, 2021

How much money should there be in the world? It is an interesting question; to which, at any time, there is a correct answer that is unknown to anyone. It is the amount at which money is able to perfectly perform its two key functions – being a medium of exchange and a store of value. Too little money in circulation and it would cease being a fair store of value because its value would be increasing – something that hasn’t occurred in half a century. Most often, money ceases to be a store of value on the downside – losing its value – because it is far easier for states and banks to create new currency than it is to destroy it.

In practice, whether there is too much, or not enough money in the system is largely a matter of political economy rather than science. There are two broad economic camps – Monetarists and Keynesians – which largely correspond to conservative and liberal politics. The conservative-monetarist camp has been arguing for more than a decade that there is too much money in a system which should have been allowed to fail back in 2008. The liberal-Keynesian camp in contrast, argues that the absence of productivity gains, inflation and wage growth pressure show that there is too little money in circulation.

The liberal-Keynesian camp appears to be winning the argument for now. This is because the economic fallout from the pandemic and the response to it would – at least in the short-term – have been devastating were it not for the various grants, loans, bailouts, stimulus payments and public services spending embarked upon by states and central banks around the world. Moreover, by pumping trillions of newly created dollars into the system, the Biden administration may well create a short-term post-pandemic bounce which will prevent the immediate onset of depression.

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

Is China Preparing A Gold-Backed Yuan: Beijing Greenlights Purchases Of Billions In Bullion

April 16, 2021

Is China Preparing A Gold-Backed Yuan: Beijing Greenlights Purchases Of Billions In Bullion

In 2018, the Chinese launched a gold-backed, yuan-denominated oil futures contract. These contracts were priced in yuan, but convertible to gold, raising the prospect that “the rise of the petroyuan could be the death blow for the dollar.”

Two weeks ago, The IMF reported that the global share of US-dollar-denominated exchange reserves dropped to 59.0% in the fourth quarter, according to the IMF’s COFER data released today. This matched the 25-year low of 1995.

Also last week, Peter Thiel warned “Bitcoin should also be thought [of] in part as a Chinese financial weapon against the US… It threatens fiat money, but it especially threatens the U.S. dollar.”

All of which sets the stage for the dramatic headlines that hit this morning, as Reuters reports that China has given domestic and international banks permission to import large amounts of gold into the country,

The People’s Bank of China (PBOC), the nation’s central bank, controls how much gold enters China through a system of quotas given to commercial banks.It usually allows enough metal in to satisfy local demand but sometimes restricts the flow.

In recent weeks it has given permission for large amounts of bullion to enter, the sources said.

“We had no quotas for a while. Now we are getting them … the most since 2019,”said a source at one of the banks moving gold into China.

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

War on Cash: The Next Phase

April 14, 2021

War on Cash: The Next Phase

With so much news about an economic reopening, a border crisis, massive government spending and exploding deficits, it’s easy to overlook the ongoing war on cash.

That’s a mistake because it has serious implications not only for your money, but for your privacy and personal freedom, as you’ll see today.

Cash prevents central banks from imposing negative interest rates because if they did, people would withdraw their cash from the banking system.

If they stuff their cash in a mattress, they don’t earn anything on it; that’s true. But at least they’re not losing anything on it.

Once all money is digital, you won’t have the option of withdrawing your cash and avoiding negative rates. You will be trapped in a digital pen with no way out.

What about moving your money into cryptocurrencies like Bitcoin?

Governments Won’t Surrender Their Monopoly Over Money

Let’s first understand that governments enjoy a monopoly on money creation, and they’re not about to surrender that monopoly to digital currencies like Bitcoin.

Libertarian supporters of cryptos celebrate their decentralized nature and lack of government control. Yet, their belief in the sustainability of powerful systems outside government control is naïve.

Blockchain does not exist in the ether (despite the name of one cryptocurrency), and it does not reside on Mars.

Blockchain depends on critical infrastructure, including servers, telecommunications networks, the banking system, and the power grid, all of which are subject to government control.

But governments know they cannot stop the technology platforms on which cryptocurrencies are based. The technology has come too far to turn back now.

So central governments don’t want to kill the distributed ledger technology behind cryptos. They’ve been patiently watching the technology develop and grow — so they could ultimately control it.

Anyone who controls the money controls political power, the economy, and people’s lives.

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

What Gives Value to a Currency?

April 7, 2021

What Gives Value to a Currency?

QUESTION: Hello Martin, can you explain to me how a currency would sustain value for international trade if a country, like Canada (where I live), did what you suggested and stopped issuing debt and just printed money to level that was 5% – 10% of national GDP? would it depend on the attractiveness of what a country exports eg: Canada exports oil, lumber, crops like wheat/soy/canola, minerals – both precious and functional? What would happen to a country that didn’t have exports as a significant portion of it’s GDP? I am curious about how currencies would react to your restructuring plan that eliminated the need for a country to issue debt. Thanks for all your insights and theories. Very helpful.

Trapped in Canada with an egoistic misguided Prime Minister who doesn’t appear to like Canada (he keeps telling us how awful we are) or Canadians, he prefers spending time with global elites and is following their plan even though it damages Canada pretty significantly.
MB

ANSWER: Right now, every country spends more than it takes in. The deficits are funded by selling debt, which then competes against the private sector. The interest rates rise and fall on sovereign debt based upon the confidence from one week to the next. If they stopped borrowing, then the capital investment would turn to the private sector, creating more economic growth. If income taxes were eliminated, the economy would grow based upon innovation which is what it should be driven by.

The confidence in the currency would simply depend upon the strength of the economy, as was the case for Athens and Rome in ancient times. Their coinage was imitated because they were the dominant economies of their time. The value of a currency is the strength of its economy…

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

currency, currency value, money, martin armstrong, armstrong economics, money printing, debt,

Understanding the Persecution of John Law

April 7, 2021

Understanding the Persecution of John Law

COMMENT: Hi Mr. Armstrong…..this is a surprising (to me) summary, on John Law. Every piece I ever read about him, cast him as a complete scoundrel, yet you obviously write with admiration. Just another example of history depending on someone’s perspective. You never cease to surprise. And that’s good.

REPLY: John Law was actually a brilliant man. His legacy is not so different from John Maynard Keynes. He advocated deficit spending ONLY in times of recession, but governments have spent relentlessly with deficits that never end. We call this “Keynesian economics” when in fact he never advocated such a system. Likewise, John Law never advocated what the French government did in creating the Mississippi Bubble.

It is true that John Law fled to Amsterdam, but this is when he studied real banking operations and saw that money was actually virtual. Because coins were counterfeited or their edges shaved, bank money was more valuable than coins. Once the coins were deposited, each had to be inspected. So the bank became a sort of guarantor of the validity of the coins. Here is an ancient coin from Lydia with numerous banking marks applied, verifying that the coin had been inspected by them before for the same reasons.

It was this first-hand observation that led John Law to see that money was actually virtual, whereby people preferred bank money to actual coins. John then returned to Scotland, where he published in 1705 his Money and Trade Considered, with a Proposal for Supplying the Nation with Money. Law would later publish a second edition in 1720. He attempted to use his writing to convince the Scottish Parliament to adopt his ideas about money, but they declined, giving rise to the adage that a genius is never acknowledged in his native land (i.e. Columbus, Einstein to just mention two)…

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

john law, currency, money, martin armstrong, armstrong economics, banking, banks,

US Dollar’s Status as Dominant “Global Reserve Currency” Drops to 25-Year Low

April 1, 2021

US Dollar’s Status as Dominant “Global Reserve Currency” Drops to 25-Year Low

Central banks getting nervous about the Fed’s drunken Money Printing and the US Government’s gigantic debt? But still leery of the Chinese renminbi.

The global share of US-dollar-denominated exchange reserves dropped to 59.0% in the fourth quarter, according to the IMF’s COFER data released today. This matched the 25-year low of 1995. These foreign exchange reserves are Treasury securities, US corporate bonds, US mortgage-backed securities, US Commercial Mortgage Backed Securities, etc. held by foreign central banks.

Since 2014, the dollar’s share has dropped by 7 full percentage points, from 66% to 59%, on average 1 percentage point per year. At this rate, the dollar’s share would fall below 50% over the next decade:

Not included in global foreign exchange reserves are the Fed’s own holdings of dollar-denominated assets, its $4.9 trillion in Treasury securities and $2.2 trillion in mortgage-backed securities, that it amassed as part of its QE.

The US dollar’s status as the dominant global reserve currency is a crucial enabler for the US government to keep ballooning its public debt, and for Corporate America’s relentless efforts to create the vast trade deficits by offshoring production to cheap countries, most prominently China and Mexico. They’re all counting on the willingness of other central banks to hold large amounts of dollar-denominated debt.

But it seems, central banks have been getting just a tad nervous and want to diversify their holdings – but ever so slowly, and not all of a sudden, given the magnitude of this thing, which, if mishandled, could blow over everyone’s house of cards.

20 years of decline.

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

wolfstreet, wolf richter, us dollar, world reserve currency, central banks, money printing, fed, us federal reserve, money, us debt, debt, united states

Gold Will Emerge Stronger Than Ever From the Post-Pandemic Environment: CPM Group

April 1, 2021

Gold Will Emerge Stronger Than Ever From the Post-Pandemic Environment: CPM Group

Mining Review Africa

We’ve often heard that gold is a primary beneficiary of crises unlike any other, when investors and the average person alike wondered what would happen tomorrow. Now, when at least some of the fear has diminished, CPM Group took a look at how the crisis aggravated existing problems that have been turning people to gold for decades.

In their Gold Yearbook, CPM highlighted sovereign and private debt, government deficits and loose monetary policies as the drivers that will position gold exceptionally well over the medium and long-term. The scramble for money to keep their economies afloat by both the U.S. and governments around the world have worsened these issues in monumental fashion. Growth was already contracting prior to the crisis, and CPM believes low growth could be the biggest consequence of the official sector’s liquidity rush.

With many countries appearing to adopt even more protectionist policies, CPM points to the long-standing trade conflict between the U.S. and China as something to look out for. The group also noted that many economies are projected to post a much slower recovery than that of the U.S. Regarding gold price, CPM doesn’t expect any major rushes such as the one seen last year. Instead, its analysts think investors will become more attracted to the metal over a longer period of time, slowly buying gold whenever a dip occurs. (More in line with the behavior expected of buy-and-hold investors rather than speculators’ constant turnover.)

Their sentiment agrees with many reports asserting that money managers are reassessing the traditional portfolio model and coming to view gold as a necessary inclusion…

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

birch gold group, gold, precious metals, pandemic, money, wealth, cpm,

Do You Believe in Magic?

March 30, 2021

Do You Believe in Magic?

The people pretending to run the world’s financial affairs do. The more layers of abstract game-playing they add to the existing armatures of unreality they’ve already constructed, the more certain it becomes that they will blow up all the support systems of a sunsetting hyper-tech economy that now has no safe lane to continue running in.

Virtually all the big nations are doing this now in desperation because they don’t understand that the hyper-tech economy is hostage to the deteriorating economics of energy, basically fossil fuels, and oil especially. The macro mega-system can’t grow anymore. We’re now in the de-growth phase of a dynamic that pulsates through history, as everything in the universe pulsates. We attempted to compensate for de-growth with debt, borrowing from the future.

But debt only works in the youthful growth phases of economic pulsation, when the prospect of being paid back is statistically favorable. Now in the elder de-growth phase, the prospect of paying back debts, or even servicing the interest, is statistically dismal. The amount of racked-up debt worldwide has entered the realm of the laughable. So, the roughly twenty-year experiment in Central Bank credit magic, as a replacement for true capital formation, has come to its grievous end.

Hence, America under the pretend leadership of Joe Biden ventures into the final act of this melodrama, which will end badly and probably pretty quickly. They are about to call in the financial four horsemen of apocalypse: 1) Modern Monetary Theory (MMT), 2) a command economy, 3) Universal Basic Income (UBI, “helicopter” money for the people), and 4) the “Build Back Better” infrastructure scheme.

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

money, monetary theory, modern monetary theory, debt, money printing, james howard kunstler, clusterfuck nation, magic, degrowth, growth

Money Is Made Up And We Can Change The Rules Whenever We Want

March 19, 2021

Money Is Made Up And We Can Change The Rules Whenever We Want

Have you ever noticed how online capitalism cultists who condescendingly tell socialists they “just don’t understand economics” are always unable to lucidly defend their own understanding of economics?

If you’ve never pressed such a character to clearly and concisely explain what it is you “don’t understand” using their own words, I highly recommend that you try it, because it’s one of the funniest things in the world. If you keep interrogating them about each aspect of their belief system, demanding that they explain exactly what it is they know and how they know it, they will invariably end up getting frustrated and telling you to listen to this or that economist if they don’t rage quit on you altogether first.

It’s really fascinating how consistent this experience is; talk to other online leftists about it and if they’ve ever really engaged the argument they’ll have had the same experience. Someone who truly understands something will be able to clearly and concisely tell you in their own words what they know and how they know it, and someone who strides in talking down to you about how you “don’t understand economics” is certainly claiming to know something, but when you really plunk them down and interrogate their understanding you will always find it to have been a lot of empty bluster. They don’t understand their own position, they’ve just listened to a bunch of capitalists explaining their position to them in an assertive tone and assumed it must be unassailably correct.

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

Oil and Debt: Why Our Financial System Is Unsustainable

February 25, 2021

Oil and Debt: Why Our Financial System Is Unsustainable

How much energy, water and food will the “money” created out of thin air in the future buy?

Finance is often cloaked in arcane terminology and math, but the one dynamic that governs the future is actually very simple.

Here it is: all debt is borrowed against future supplies of affordable hydrocarbons (oil, coal and natural gas). Since global economic activity is ultimately dependent on a continued abundance of affordable energy, it follows that all money borrowed against future income is actually being borrowed against future supplies of affordable energy.

Many people believe that alternative “green” energy will soon replace most or all hydrocarbon energy sources, but the chart below shows why this belief is not realistic: all the “renewable” energy sources are about 3% of all energy consumed, with hydropower providing another few percent.

There are unavoidable headwinds to this appealing fantasy:

1. All “renewable” energy is actually “replaceable” energy, per analyst Nate Hagens: every 15-25 years (or less) much or all of the alt-energy systems and structures have to be replaced, and little of the necessary mining, manufacturing and transport can be performed with the “renewable” electricity these sources generate. Virtually all the heavy lifting of these processes require hydrocarbons and especially oil.

2. Wind and solar “renewable” energy is intermittent and therefore requires changes in behavior (no clothes dryers or electric ovens used after dark, etc.) or battery storage on a scale that isn’t practical in terms of the materials required.

3. Batteries are also “replaceable” and don’t last very long. The percentage of lithium-ion batteries being recycled globally is near-zero, so all batteries end up as costly, toxic landfill.

4. Battery technologies are limited by the physics of energy storage and materials. Moving whiz-bang exotic technologies from the lab to global scales of production is non-trivial.

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

Heal the Planet for Profit – Redux

February 17, 2021

Heal the Planet for Profit – Redux

Giorgione The Tempest 1508

“Mankind’s only chance to not destroy its planet lies in diverging from all other species in that not all energy available to it, is used up as fast as possible. But that’s a big challenge. It would, speaking from a purely philosophical angle, truly separate us from nature for the first time ever, and we must wonder if that’s desirable.”

I wrote that 4 years and 2 months ago today, and I’m still thinking about it. It came to mind again, along with the article it comes from, see below, when I saw a few recent references to climate change, and to how any policy to halt it should be financed. It’s all painfully obvious.

Bill Gates, while on a virtual book tour, says governments should pay. In particular for the innovation needed. We’re going to solve it all with things we haven’t invented yet. That kind of thinking never fails to greatly boost my confidence in people and their ideas.

Overall, Gates’ words feel like a stale same old same old been there done that tone. But one thing is changing. Since Joe Biden became the most popular US president ever, according to his vote count, there is now a climate czar at the US Treasury, and a climate change team at the US Fed. Progress! At least for those seeking to use your money to solve their problems.

Bill Gates: Solving Covid Easy Compared With Climate

Mr Gates’s new book, How to Avoid a Climate Disaster, is a guide to tackling global warming. [..] Net zero is where we need to get to. This means cutting emissions to a level where any remaining greenhouse gas releases are balanced out by absorbing an equivalent amount from the atmosphere…

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

Federal Reserve & Fake Conspiracies

February 16, 2021

Federal Reserve & Fake Conspiracies

QUESTION: I found your history of the Federal Reserve very insightful which nobody else has put together. Can you explain your comment that the ECB could go bankrupt but not the Fed?

Thank you very much.

ANSWER: Here is a full set of $1 bills with each issued by its respective branch. I would like to t5han Kohn C for having this framed and sent to me as a gift. The Federal Reserve is independent whereas it has its own authority to increase or decrease its power to create elastic money. I understand that many see this as evil, but it was absolutely essential. During an economic crash, people hoard their cash and do not spend it. Consequently, banks start to fail because they lent money out long-term as in mortgages but the demands by depositors are immediate. That is why a bank would fail in the midst of a run. Its assets are tied up in loans which they then recall and cannot sell the real estate to get liquid.

Right now we have had that problem where the velocity of money has been declining from 2007 until Trump was elected, but then it took a nose-dive in a waterfall event thanks to COVID lockdowns and rising unemployment. The Fed’s “elastic” money means they can create money in electronic form purchasing in debt which in theory injects cash into the system. However, because Congress has been so corrupt, the requirement to buy government debt has not directly helped the economy as it was originally intended to do in 1913 when it would only by corporate debt. That prevented companies from going bust and laying off people because they did not have the immediate cash.

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

martin armstrong, armstrong economics, fed, us federal reserve, money printing, money, fiat currency, conspiracies

A World that Operates by Financial Cheating and Unsound Money Is Doomed

February 13, 2021

A World that Operates by Financial Cheating and Unsound Money Is Doomed

It’s all phony money but there’s no revolt yet.

Value for ValueMy friend Hugo Salinas Price wrote a short post that I agree with.

Please consider A World that Operates by Cheating Is Doomed

In ages past, gold and silver provided humanity with a system of economic co-operation among productive humans, which was fair to all participants.

With gold and silver, humans were trading value-for-value: what changed hands were amounts of physical gold or silver, or at least, Bills which were unquestioned claims upon gold or silver.

When the exchange had taken place, everyone was happy! The seller because he had gold or silver, in exchange for the goods or services he offered; and the buyer was pleased because he had the goods or services he wanted, and he got them by tendering gold or silver in exchange.

So, everyone was pleased: the buyer because he got the goods or services he wanted, in exchange for his gold or silver; and the seller was pleased because he traded the goods or services he had to offer, tor gold or silver.

Under the present monetary system, there can be no justice or “fair trading”, because all the World’s MONEY IS FAKE MONEY. No money in today’s world is gold or silver, nor does it represent an unquestioned claim upon a stated amount of gold or silver.

And a gigantic shooting war will mark the end of our times, as a result of the cheating involved – all because fake money was forced upon humanity.

No Consequences, Yet

Except in isolated hyperinflation cases, governments have learned there are no consequences to the ruling class (at least yet) for unsound money.

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

Opinion v Fact

February 10, 2021

Opinion v Fact

COMMENT: Marty,

Each day I read reports from so called reputable people expressing what they think might happen given the backdrop today. It is laughable. Most do this based on superficial analysis or cursory comparisons with things that appear to line up, appear to rhythm, to paraphrase M Twain. What a joke.

I say this here because as I relearn what I once thought I knew, analyze my mistakes using real data…it brings me back to you and your marvelous study of history, your database, which is incomparable, and your willingness…let’s call it humility, to let Socrates make the call. Just remarkable.

What this has done for me is save countless hours reading nonsense and instead focusing on the data. Not trying to push my opinions on a trade and expect the market will follow, but respect what is there and not force things. Nothing is absolute, no one is always right. But today there are so many people who are flat out wrong, who claim to be right…just give them time, it explains why the government fails repeatedly…because these are the people who, like Keynsians or socialists claim…just give it more money…it will work. Right. History always seems to tell a different story.

REPLY: Thank you. What I try to get across is what I have learned from my clients. Because I was perhaps the only international analyst in foreign exchange back in the 70s and 80s, we ended up with the largest client base that was so diverse that it compelled me to look at the world through everyone else’s eyes. I remember doing an institutional conference in Zurich probably around 1982-1983. People started flying in to attend from around the world. There were people from the USA and Canada as well as Germany who traveled to Zurich.

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

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