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The House that Ben Built

The House that Ben Built

Yes, this collapse does portend to be far worse than the last and it’s a very different type of financial collapse too.

After credit markets froze in the subprime crash of 2008-2009 Ben Bernanke and the Fed conjured up a number of monetary tricks to keep the system afloat.  POMO, Twist, QE, TARP, repos, and currency swaps (and other monetary tricks) were used to provide liquidity to an essentially bankrupt system sporting a weaponized US dollar.[1] Even though the monetary tricks worked – or seemed to – they were based on a deeply flawed, immoral, and unlawful prospect: the privatization of profit enabled by the socialization of loss.

So the bubble that burst in 2008-2009 was simply reinflated by the Fed/Treasury with a good bit of collusion among global players… with differences to be addressed.  Trouble has been brewing among Central Banks and their dealers for years; notably HSBC, Deutsche Bank, and the Royal Bank of Scotland with many other structural defects apparent. As such monetary realists have warned for years that the coming economic collapse would be far worse than the last.

Since 2009 we’ve had trade wars, proxy wars, and punishing sanctions. Covert or overt interventionism and weaponization of the US dollar on behalf of war profiteers and economic hitmen — which Washington has blessed as being free market entrepreneurs — is not something that the rest of the world will forgive easily.

Yes, this collapse does portend to be far worse than the last and it’s a very different type of financial collapse too. The difference is remarkable in that global markets have become ever more co-dependent than they were ten years ago still largely relying on a weaponized US dollar as world reserve currency.

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

Can China Dethrone the US Dollar as Global Reserve

Can China Dethrone the US Dollar as Global Reserve

As a result of this ‘trade war’ China has let the yuan slide versus the USD which is a warning to Trump, specifically Mnuchin.

On the US dollar as reserve currency, that is a tough thing to break especially for China since the yuan is not freely convertible. China has renminbi and yuan; one they peg to the dollar and the other is circulated in China. Try converting USD to yuan in Paypal for example?  The option is not there. Payments from the west to china sellers by Paypal (for example) are only in dollars.

It is a complex subject since China is the only foreign nation with a direct link into the US Treasury for purchase of US debt instruments, bypassing the Fed’s crooked relationship with its crooked primary dealers. This is done to manage China’s global trade relationships via the value of its currency which is somewhat pegged to the dollar (even if China and Trump claim otherwise) thus evading Federal Reserve gamesmanship. That’s why Trump messing with China is so dangerous, even if China has few options right now.

As a result of this ‘trade war’ China has let the yuan slide versus the USD which is a warning to Trump, specifically Mnuchin, popularly known as one of the most slippery dealers (IndyMAC and One West) to ever walk the earth (and China knows that). China is hoping that a lower yuan will offset tariffs just as the US has ‘weaponized’ the dollar and has imposed sanctions and tariffs on China. Because the sums are so vast with China holding so much US debt, and because China depends on exports to the west, China is somewhat boxed in.

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

Ukraine’s IMF Gold and the Gold Carry Trade

Ukraine’s IMF Gold and the Gold Carry Trade

Important Tools for the Monetary Cartel

Let’s first consider a typical International Monetary Fund (IMF) loan to a sovereign in trouble, and then examine a typical gold carry trade transaction to support a sovereign arms deal. The intent is to demonstrate the importance of physical sovereign gold holdings in all forms of international trade.

Semi-failed and failed states can only exist by dealing in hard assets of real intrinsic value just as Syria, Venezuela, Iran, and Ukraine have done… and the most liquid of those hard assets is their physical gold.

Central Banks always work with the Security State apparatus when dealing with failed states and recall that the US Central Intelligence Agency funded al Qaeda and funded the war in Syria for example. Just about anything can be made to happen with funding when that funding is based on real resources. One of the most important of those resources is physical gold.

IMF Cartel Example: Ukraine

The IMF’s 2014 aid to Ukraine is based on a unique history however all IMF ‘aid’ packages are in some sense unique. Since we are highlighting the largely hitherto concealed importance of real physical gold in geo-political calculations and operations, Ukraine provides a relevant and timely example of how the banking Cartel operates with gold and may highlight that importance.

According to the 2018 Independent Transparency Index, Ukraine ranks as one of the most corrupt nations in the world. Ukraine ranks 120th out of 180 countries where the 180th – Somalia – is the most corrupt.  But all nations need funding whether corrupt or not, and Ukraine defaulted on its IMF debt in 2001 and then again in 2009 when distribution of an existing IMF loan to Ukraine was frozen.

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

Is The EIA Too Optimistic On U.S. Oil Output?

Is The EIA Too Optimistic On U.S. Oil Output?

After following the weekly production statistics avidly for some months and initially being smugly pleased by the data saying exactly what I wanted to hear, I then became completely befuddled by the data saying the opposite. I had almost reached the conclusion that the weekly production data wasn’t worth paying attention to.

I apologise to the EIA for saying that, it is a Herculean task to capture production data across the United States of America on a weekly basis and even that fleeting thought did them a disservice. But I have poked and prodded the data and I think lurking within it, like a chicken’s entrails on the altar, are the signs of what will happen in the year to come. So I have created a forecast of US production in 2016 and a forecast of how the 2015 data will eventually be revised (which is why I have titled this article a 2015 to 2017 production forecast).

This is the chart that first pleased and then befuddled me. It had pleased me to see the rapid drop off in US production, which sat well with my expectations of very high decline rates from shale oil wells, it befuddled me to see US production climb week after week, as companies cut back on investment and stacked rigs.

What I am showing in the chart above are three sets of data from the EIA, the dark blue line is made up from the weekly production estimates; the deep green is the monthly production data and the pale green is the monthly forecast production from the Short Term Energy Outlook. There is an important difference between the weekly estimates and the monthly figures. The latter get revised, the former don’t.

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

Olduvai IV: Courage
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Olduvai II: Exodus
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