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From Dollar Hegemony to Global Warming: Globalization, Glyphosate and Doctrines of Consent

From Dollar Hegemony to Global Warming: Globalization, Glyphosate and Doctrines of Consent

There has been an on-going tectonic shift in the West since the abandonment of the Bretton Woods agreement in 1971. This accelerated when the USSR ended and has resulted in the ‘neoliberal globalization’ we see today.

At the same time, there has been an unprecedented campaign to re-engineer social consensus in the West. Part of this strategy, involves getting populations in Western countries to fixate on ‘global warming’, ‘gender equity’ and ‘anti-racism’: by focusing on identity politics and climate change, the devastating effects and injustices brought about by globalized capitalism and associated militarism largely remain unchallenged by the masses and stay firmly in the background.

This is the argument presented by Denis Rancourt, researcher at Ontario Civil Liberties Association, in a new report. Rancourt is a former full professor of physics at the University of Ottawa in Canada and author of ‘Geo-economics andgeo-politics drive successive eras of predatory globalization and socialengineering: Historical emergence of climate change, gender equity, andanti-racism as state doctrines’ (April 2019).

In the report, Rancourt references Michael Hudson’s 1972 book ‘Super Imperialism: The Economic Strategy of American Empire’ to help explain the key role of maintaining dollar hegemony and the importance of the petrodollar to US global dominance. Aside from the significance of oil, Rancourt argues that the US has an existential interest to ensure that opioid drugs are traded in US dollars, another major global commodity. This explains the US occupation of Afghanistan. He also pinpoints the importance of US agribusiness and the arms industry in helping to secure US geostrategic goals.

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

Gold Makes Its Grievances Heard

Gold Makes Its Grievances Heard

gold-dollar-trap

Gold is getting its revenge. Try as he might Mr. Tariff Man can’t dominate all the headlines all the time. Everyone once in a while something more important than the Trump Man-Baby Show should take center stage.

Gold has moved more than $50 in just under three trading sessions, blowing past near term resistance and, more importantly, reminding everyone just how quickly the reserve asset of the world economy can call bullshit on the proclamations and machinations of the morons who think they run the world.

You always know when you’re reaching the end of a bear market. 

Last week I tweeted out:

I think we’re reaching Peak Gold Bearishness. If the dollar is an attractive safe-haven asset, which it isn’t, just a necessary evil after a decade of ZIRP, then of course this will weigh on gold. That doesn’t mean demand isn’t there.https://seekingalpha.com/news/3467311-gold-longer-attractive-complacent-market-says-wells-fargo-analyst#email_link …25:22 PM – May 28, 2019Twitter Ads info and privacyGold no longer attractive in complacent market, says Wells Fargo analystGold prices no longer look attractive based on the way the metal has reacted to recent economic events, says Wells Fargo’s John LaForge, noting that gold’s complacent reaction to market volatility isseekingalpha.com

When an analyst at Wells is looking at the day-to-day ticker of gold looking for silly and binary safe haven arguments to warn people off of gold, I know we’re nearly there. 

This isn’t a complacent market. In fact, as I’ve pointed out in the past, it’s an incredibly volatile one. 

You don’t have to be a whiz with numbers, or worse a quant working for a central bank, to see the differences here. 

And the reason for this massive increase in volatility across all asset classes is Trump’s insistence on tariffs being the cure all for what ails America’s trade ‘imbalances.’

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

The Zeitgeist Knows

The Zeitgeist Knows


Who said the global economy was a permanent installation in the human condition? The head cheerleader was The New York Times’s Tom Friedman, with his 1999 book, The Lexus and the Olive Tree, the trumpet blast for the new order of things. Since then, we partied like it was 1999, with a few grand mal seizures of the banking system along the way, some experiments in creating failed states abroad, and the descent of America’s middle-class into a Disney version of Hieronymus Bosch’s Last Judgment — which is kind of what you see on the streets of Los Angeles these days.

Guess what: the global economy is winding down, and pretty rapidly. Trade wars are the most obvious symptom. The tensions underlying that spring from human population overshoot with its punishing externalities, resource depletion, and the perversities of money in accelerated motion, generating friction and heat. They also come from the fact that techno-industrialism was a story with a beginning, a middle, and an end — and we’re closer to the end than we are to the middle. There will be no going back to the prior party, whatever way we pretend to negotiate our way around or through these quandaries.

The USA-China romance was bound to end in divorce, which Mr. Trump is surreptitiously suing for now under the guise of a negotiated trade rebalancing. The US has got a chronic financial disease known as Triffin’s Dilemma, a set of disorders endemic to any world reserve currency. The disease initially expressed itself in President Nixon’s ditching the US dollar’s gold backing in 1971. By then, the world had noticed the dollar’s declining value trend-line, and threatened to drain Fort Knox to counter the effects of holding those dollars. Since then, all world currencies have been based on nothing but the idea that national economies would forever and always pump out more wealth.

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

That Time the Dollar Tide Went Out…

That Time the Dollar Tide Went Out…

dollar-tide-apes-trump

Welcome to the Dollar Rally to end all rallies. This week’s action in the U.S. dollar puts paid all of the moves by the Fed and the ECB over the past three months to forestall this from coming.

First it was January’s FOMC meeting where the Fed completely reversed course after a very unpopular December rate hike threw equity markets into a tailspin by Christmas.

Of course our Narcissist-in-Chief thought it was all about him and implored the Fed to stop raising rates. It was interfering with his ability to shake down the world at his sanctions and tariffs party.

But it wasn’t about him at all. It was about the Fed’s need to normalize rates into a coming global slowdown after a central-bank-induced, decade-long recovery of dubious merit. 

They’d done their job of recapitalizing the banks, somewhat, and now it was time to start trying to address the massive pension system and municipal bond crisis that was on the horizon. 

Or at least that’s what they thought.

Moreover, at some point the Fed had to show the markets something positive. That unwinding its balance sheet alongside significant shift in capital flows thanks to Trump’s tax cuts going into effect in 2019 was a signal to U.S. corporations to invest in something other than balance sheet manipulations themselves — buybacks, special dividends, etc. 

Trump can talk a good game about the ‘greatest economy evahr!’ but reality is even today’s 3.2% GDP print is marred by one-off items like an anomalous contraction of the trade deficit and huge inventory builds as Zerohedge pointed out. 

Let’s not forget how easy it is to get a big GDP print when you’re running the biggest deficits in history.

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

The US Government Debt Crisis

The US Government Debt Crisis 

This article explains why the US Government is ensnared in a debt trap from which there is no escape. Its finances are spiralling out of control. In the context of a rapidly slowing global economy, the budget deficit can only be financed by QE and bank credit expansion. Do not draw comfort from trade protectionism: it will not prevent the trade deficit increasing at the expense of domestic production, unless you believe there will be an unlikely resurgence in personal saving rates. We can now begin to see how the debt crisis will evolve, leading to the destruction of the dollar.

Introduction

At the time of writing (Thursday April 24) bond yields are crashing, the euro has broken down against the dollar and equities are hitting new highs. Obviously, equities are taking their queue from bonds. But bond yields are crashing because the global economy is sending some very worrying signals. Equity investors will be hoping monetary easing (which they now fully expect) will kick the can down the road once again and economies will continue to bubble along. They are ignoring some very basic economic facts…

Regular readers of my Insight articles will be aware of strong indications that the expansionary phase of the credit cycle is now over, and that we at grave risk of falling headlong into a global credit and systemic crisis. The underlying condition is that economic actors and their bankers accustomed to credit expansion are beginning to realise the assumptions behind their borrowing commitments earlier in the credit cycle were incorrect. 

That’s why it is a credit cycle. It is driven by prior credit expansion which corrals all producers into acting in an expansionary manner at the same time. Random activity, the condition of a true laissez-faire economy, ceases. Instead, credit conditions act on profit-seeking businesses in a state-managed context.

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

Dollar Dominance Under Multiple, Converging Threats

Dollar Dominance Under Multiple, Converging Threats

Dollar Dominance Under Multiple, Converging Threats

For years, currency analysts have looked for signs of an international monetary “reset” that would diminish the dollar’s role as the leading reserve currency and replace it with a substitute agreed upon at some Bretton Woods-style monetary conference.

That push has been accelerated by Washington’s use of the dollar as a weapon of financial warfare, including the application of sanctions. The U.S. uses the dollar strategically to reward friends and punish enemies.

The use of the dollar as a weapon is not limited to trade wars and currency wars, although the dollar is used tactically in those disputes. The dollar is much more powerful than that.

The dollar can be used for regime change by creating hyperinflation, bank runs and domestic dissent in countries targeted by the U.S. The U.S. can depose the governments of its adversaries, or at least blunt their policies without firing a shot.

But for every action, there is an equal and opposite reaction.

As the U.S. wields the dollar weapon more frequently, the rest of the world works harder to shun the dollar completely.

I’ve been warning for years about efforts of nations like Russia and China to escape what they call “dollar hegemony” and create a new financial system that does not depend on the dollar and helps them get out from under dollar-based economic sanctions.

These efforts are only increasing.

Russia has sold off almost all of its dollar-denominated U.S. Treasury securities and has reduced its dollar asset position to almost zero. It has been amassing massive quantities of gold, and has increased the gold portion of its official reserves to over 20%. Russia has almost 2,000 tonnes of gold, having more than tripled its gold reserves in the past 10 years. It has actually acquired enough gold to surpass China on the list of major holders of gold as official reserves.

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

China & Buying Gold – Why?

China & Buying Gold – Why? 

QUESTION: Mr. Armstrong; I believe you said at the WEC in 2017 that central banks will diversify and increase their gold reserves going into the currency crisis coming in 2021. China has continued to increase its gold reserves. You would please update on that development.

Thank you

PK

ANSWER: Central banks are in a very difficult position. The ECB has really put the entire world at risk. Draghi is now realizing that negative interest rates have seriously harmed the European economy and led to a major growing liquidity crisis in European banking. The euro is regarded as a time bomb for it is neither a national currency nor a stable unit of account. The failure to have consolidated the debts from the outset has simply left the euro vulnerable to separatist movements and sheer chaos.

This is what has been behind the strength in the dollar. Central banks outside Europe have been caught in this dollar vortex. They have been selling dollars and buying gold in an effort to stem the advance of the dollar. China also has a debt problem with many provinces and companies who borrowed in dollars. Here in 2019, there is $1.2 trillion in Chinese dollar borrowings that must be rolled over. There is a rising concern that this year there could be a major threat of a dollar funding crunch. The total debt issued in US dollars outside the USA approached $12 trillion at the end of 2018. That is about 50% of the US national debt. The forex risk is huge, no less the interest rate risk on top of that. The more crises we see in Europe, the greater the pressure on the dollar to rise regardless of the Fed trying to stop capital inflows by delaying raising rates.

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

The Ultimate Pivot: Saudi Betrayal of the Petrodollar

The Ultimate Pivot: Saudi Betrayal of the Petrodollar

Saudi Arabia has gone nuclear, threatening the petrodollar. Or has it?

The report from Zerohedge via Reuters that Saudi Arabia is angry with the U.S. for considering a bill exposing OPEC to U.S. antitrust law is a trial balloon.

The chances of the U.S. bill known as NOPEC coming into force are slim and Saudi Arabia would be unlikely to follow through, but the fact Riyadh is considering such a drastic step is a sign of the kingdom’s annoyance about potential U.S. legal challenges to OPEC.

If these things are so unlikely then why make the threat public? There are a number of reasons.

First, one must remember that the Saudis are hemorrhaging money. Their primary budget deficit in 2018 was around 7% of GDP. Since the 2014 crash in oil prices it has gone from almost zero sovereign debt to $180 billion in debt to finance its spending, or around 22% of GDP.

2019’s budget will be even bigger as it tries to deficit spend its way to growth. It’s needs for a higher oil price are built into their primary budget not their production costs, which are some of the lowest in the world.

Second, the Saudis finally opened up the books on Saudi-Aramco this week. And it revealed the giant is far more profitable than thought. It has is eye on acquiring stakes in some of the biggest oil and gas projects out there these past couple of years. It’s floating its first public bond to buy a stake in SABIC to get into the mid and downstream petroleum markets.

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

Where Is The World Headed?

Where Is The World Headed?

Since 2016 the United States has been in the Russiagate box, a hoax created by the US military/security complex to prevent President Trump from normalizing relations with Russia.  Normalized relations would devalue THE RUSSIAN THREAT, an orchestration that protects the $1,000 billion annual budget of the military/security complex.  

The Democratic Party, which most certainly is not democratic, supported the hoax hoping to do Trump in for their own reasons and pulled the presstitute media into the conspiracy against Trump.

Now that all the assurances from the Establishment that Trump was a traitor to America who conspired with Russian President Putin to steal the election from the killer-bitch in order that America could serve Russian interests have been exposed as lies by the Mueller report, American attention is free to take up some other nonsensical campaign. The succession of these stupidities is destroying America’s reputation.

True, some of the most crazed of the Democrats and media whores cannot let go of Russiagate.  The presstitutes are saying that Trump would be impeached for his non-crime except the unworthy Democrats had rather go back to the business of spending other people’s money.  A crazed professor or two have declared that Mueller was part of the “Trump coverup” and that Mueller needs to be investigated.  But these claims simply underline that the United States wasted three years of its existence.

Meanwhile, other countries moved on.  The Russians, for example, discovered that Washington’s sanctions had a silver lining.  Russia became more self-sufficient economically and moved out of the box of being an exporter of raw materials to the West, a box into which the Americans and the American-brainwashed Russian economics profession had put the Russian government.

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

Being and Time (And Central Banks)

BEING AND TIME (AND CENTRAL BANKS)

People value present goods more highly than future goods. For instance, an apple available today is considered more valuable than the same apple available in, say, one month. This is expressive of time preference — which is an undeniable fact, a category of human action.

The sentence “Humans act” is a logically irrefutable truth. It cannot be denied without causing a logical contradiction. By saying “Humans can not act”, you act and thus contradict your very statement.

From the true insight that humans act we can deduce that human action takes place in time. There is no timeless human action. Were it otherwise, people’s goals would be instantaneously reached, and action would be impossible — but we cannot think that we cannot act.

The market interest rate is expressive of time preference, and as such, it is also a category of human action. If determined in an unhampered market, the (natural) market interest rate denotes the discount that future goods are subject to relative to present goods.

If one US-dollar available in a year is trading at, say, 0.95 US-dollar, it means that the market interest rate is 5.0% (the calculation is: [0.95 / 1 – 1]*100).

Should people start valuing present goods more highly than future goods — which is expressive of a rise in time preference —, the discount on future goods vis-à-vis present goods and thus the market interest rate go up.

If peoples’ time preference declines, the discount on future goods vis-à-vis present goods drops, and so does the market interest rate — meaning that people wish to save more and consume less out of their current income.

The interest rate and central banking

In an unhampered market, the market interest rate reflects peoples’ time preference. Nowadays, however, the market interest rate is no longer determined in an unhampered market. It is dictated by the central bank.

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

Is Turkey “City Zero” in Global Contagion

Is Turkey “City Zero” in Global Contagion

Last year Turkey’s lira crisis quickly morphed into a Euro-zone crisis as Italian bond yields blew higher and the euro quickly reversed off a major Q1 high near $1.25.

It nearly sparked a global emerging market meltdown and subsequent melt-up in the dollar.

This week President Erdogan of Turkey banned international short-selling of the Turkish lira in response to the Federal Reserve’s complete reversal of monetary policy from its last rate hike in December.

The markets responded to the Fed with a swift and deepening of the U.S. yield curve inversion. Dollar illiquidity is unfolding right in front of our eyes. 

Turkish credit spreads, CDS rates and Turkey’s foreign exchange reserves all put under massive pressure. Unprecedented moves in were seen as the need for dollars has seized up the short end of the U.S. paper market.

Martin Armstrong talked about this yesterday:

The government [Turkey] simply trapped investors and refuses to allow transactions out of the Turkish lira. Turkey’s stand-off with investors has unnerved traders globally, pushing the world ever closer to a major FINANCIAL PANIC come this May 2019.
There is a major liquidity crisis brewing that could pop in May 2019. 

Martin’s timing models all point to May as a major turning point. And the most obvious thing occurring in May is the European Parliamentary elections which should see Euroskeptics take between 30% and 35% of seats, depending on whether Britain stands for EU elections or not.

That depends on Parliament and the EU agreeing to a longer extension of Brexit in the next two weeks.

Parliament has created “Schroedinger’s Brexit,” neither alive nor dead but definitely bottled up in a box no one dares open. And they want to keep it that way for as long as possible. Their hope is outlasting Leavers into accepting staying in the gods-forsaken fiscal and political black hole that is the European Union.

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

Capital Flows–Is a Reckoning Nigh?

CAPITAL FLOWS – IS A RECKONING NIGH?

  • Borrowing in Euros continues to rise even as the rate of US borrowing slows
  • The BIS has identified an Expansionary Lower Bound for interest rates
  • Developed economies might not be immune to the ELB
  • Demographic deflation will thwart growth for decades to come

In Macro Letter – No 108 – 18-01-2019 – A world of debt – where are the risks? I looked at the increase in debt globally, however, there has been another trend, since 2009, which is worth investigating as we consider from whence the greatest risk to global growth may hail. The BIS global liquidity indicators at end-September 2018 – released at the end of January, provides an insight: –

The annual growth rate of US dollar credit to non-bank borrowers outside the United States slowed down to 3%, compared with its most recent peak of 7% at end-2017. The outstanding stock stood at $11.5 trillion.

In contrast, euro-denominated credit to non-bank borrowers outside the euro area rose by 9% year on year, taking the outstanding stock to €3.2 trillion (equivalent to $3.7 trillion). Euro-denominated credit to non-bank borrowers located in emerging market and developing economies (EMDEs) grew even more strongly, up by 13%.

The chart below shows the slowing rate of US$ credit growth, while euro credit accelerates: –

gli1901_graph1

Source: BIS global liquidity indicators

The rising demand for Euro denominated borrowing has been in train since the end of the Great Financial Recession in 2009. Lower interest rates in the Eurozone have been a part of this process; a tendency for the Japanese Yen to rise in times of economic and geopolitical concern has no doubt helped European lenders to gain market share. This trend, however, remains over-shadowed by the sheer size of the US credit markets. The US$ has remained preeminent due to structurally higher interest rates and bond yields than Europe or Japan: investors, rather than borrowers, dictate capital flows.

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

Oil, Agriculture and Imperialism: Averting the Fast-Track to Armageddon?

Oil, Agriculture and Imperialism: Averting the Fast-Track to Armageddon?

Image source

US National Security Advisor John Bolton has more or less admitted that the ongoing destabilisation of Venezuela is about grabbing its oil. He recently stated:

We’re looking at the oil assets… We’re in conversation with major American companies now… It will make a big difference to the United States economically if we could have American oil companies really invest in and produce the oil capabilities in Venezuela.”

The US’s hand-picked supposed leader-in-waiting, Juan Guaido, aims to facilitate the processand usher in a programme of ‘mass privatisation’ and ‘hyper-capitalism’ at the behest of his coup-instigating masters in Washington, thereby destroying the socialist revolution spearheaded by the late Hugo Chavez and returning to a capitalist oligarch-controlled economic system.

One might wonder who is Bolton, or anyone in the US, to dictate and engineer what the future of another sovereign state should be. But this is what the US has been doing across the globe for decades. Its bloody imperialism, destabilisations, coups, assassinations, invasions and military interventions have been extensively documented by William Blum.

Of course, although oil is key to the current analysis of events in Venezuela, there is also the geopolitical subtext of debt, loans and Russian investment and leverage within the country. At the same time, it must be understood that US-led capitalism is experiencing a crisis of over-production: when this occurs capital needs to expand into or create new markets and this entails making countries like Venezuela bow to US hegemony and open up its economy.

For US capitalism, however, oil is certainly king. Its prosperity is maintained by oil with the dollar serving as the world reserve currency. Demand for the greenback is guaranteed as most international trade (especially and significantly oil) is carried out using the dollar. And those who move off it are usually targeted by the US (Venezuela being a case in point).

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

Goodbye to the Dollar

Goodbye to the Dollar

Mr. Fish / Truthdig

The inept and corrupt presidency of Donald Trump has unwittingly triggered the fatal blow to the American empire—the abandonment of the dollar as the world’s principal reserve currency. Nations around the globe, especially in Europe, have lost confidence in the United States to act rationally, much less lead, in issues of international finance, trade, diplomacy and war. These nations are quietly dismantling the seven-decade-old alliance with the United States and building alternative systems of bilateral trade. This reconfiguring of the world’s financial system will be fatal to the American empire, as the historian Alfred McCoy and the economist Michael Hudsonhave long pointed out. It will trigger an economic death spiral, including high inflation, which will necessitate a massive military contraction overseas and plunge the United States into a prolonged depression. Trump, rather than make America great again, has turned out, unwittingly, to be the empire’s most aggressive gravedigger.

The Trump administration has capriciously sabotaged the global institutions, including NATO, the European Union, the United Nations, the World Bank and the IMF, which provide cover and lend legitimacy to American imperialism and global economic hegemony. The American empire, as McCoy points out, was always a hybrid of past empires. It developed, he writes, “a distinctive form of global governance that incorporated aspects of antecedent empires, ancient and modern. This unique U.S. imperium was Athenian in its ability to forge coalitions among allies; Roman in its reliance on legions that occupied military bases across most of the known world; and British in its aspiration to merge culture, commerce, and alliances into a comprehensive system that covered the globe.”

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

Trump’s Brilliant Strategy to Dismember U.S. Dollar Hegemony

Trump’s Brilliant Strategy to Dismember U.S. Dollar Hegemony

The end of America’s unchallenged global economic dominance has arrived sooner than expected, thanks to the very same Neocons who gave the world the Iraq, Syria and the dirty wars in Latin America. Just as the Vietnam War drove the United States off gold by 1971, its violent regime change warfare against Venezuela and Syria – and threatening other countries with sanctions if they do not join this crusade – is driving European and other nations to create their alternative financial institutions.

This break has been building for quite some time, and was bound to occur. But who would have thought that Donald Trump would become the catalytic agent? No left-wing party, no socialist, anarchist or foreign nationalist leader anywhere in the world could have achieved what he is doing to break up the American Empire.

The Deep State is reacting with shock at how this right-wing real estate grifter has been able to drive other countries to defend themselves by dismantling the U.S.-centered world order. To rub it in, he is using Bush and Reagan-era Neocon arsonists, John Bolton and now Elliott Abrams, to fan the flames in Venezuela. It is almost like a black political comedy. The world of international diplomacy is being turned inside-out. A world where there is no longer even a pretense that we might adhere to international norms, let alone laws or treaties.

The Neocons who Trump has appointed are accomplishing what seemed unthinkable not long ago: Driving China and Russia together – the great nightmare of Henry Kissinger and Zbigniew Brzezinski. They also are driving Germany and other European countries into the Eurasian orbit, the “Heartland” nightmare of Halford Mackinder a century ago.

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

Olduvai IV: Courage
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