Saturday, February 23, 2019

Visualizing The Unparalleled Explosion In Cryptocurrencies


from Zerohedge:

After the massive Bitcoin price surge in November 2013, the popularity of launching new cryptocurrencies took off along with it.

In fact, as Visual Capitalist’s Jeff Desjardins notes, if you go back at historical snapshots around that time, you’ll see that there were literally hundreds of new coins available to mine and buy. Here’s one from November 2014 – a time when there were only 32 coins that were worth more than $1 million in market cap, and 354 coins that were worth less than $50,000, usually trading for tiny fractions of a cent.

It seems like everyone and their dog were launching cryptocurrencies back then, even if they were a longshot to materialize into anything.

Then vs. Now

Fast forward to today, and things haven’t changed much – many people and companies are still launching new cryptocurrencies through a mechanism known as an ICO (Initial Coin Offering).

The only difference?

Today, there is real money at play, and in 12 months the number of cryptocurrencies worth >$1 million has soared by 468{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. Meanwhile, the total value of all currencies together has skyrocketed by 1,466{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.

Cryptocurrency is so hot, in fact, that raising money through ICOs has become more effective than traditional early-stage angel and VC funding.

For the long-time advocates of Bitcoin and other cryptocurrencies, it is now their moment in the sun.

And with this ICO activity and a wealth of opportunities emerging, a new breed of Bitcoin millionaire has been born. Like the wealthy tech founders that exit and give back to their local startup ecosystems, these new digital tycoons are using their newfound wealth to invest in upstart crypto projects that show potential – ultimately, further enhancing the ecosystem.

Out of the Woodwork

Of course, whenever there is a massive surge in prices and speculation, there are two other players that tend to come out of the woodwork.

One is of the scammer and shyster variety, and certainly crypto-fueled scams are a concern for everyone else in the broader ecosystem.

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15 Trillion Gallons Of Keynesian Goodness?


by David Stockman, via Lew Rockwell:

If you ever wondered why our monetary central planners and their Wall Street megaphones are so clueless about the on-going deterioration of capitalist prosperity in America, look no farther than this bit of tommyrot from JPMorgan’s chief economist. Therein one Michael Feroli avers that Harvey’s estimated 15 trillion gallon deluge on Houston may appear to be crushing tens of billions of residential, commercial and industrial properties, but not really.

Alas, what finally appears to be real news from CNN is not all that. By the lights of Feroli’s economics, Harvey is a fake disaster that will lead to an increase in GDP!

As a general rule, hurricanes tend to be a short-run depressant and a medium-run boost to economic activity. Sources within the insurance industry as well as J.P. Morgan’s insurance industry research team estimate that the physical damage will be in the $10-$20 billion range…….Total damage, and total rebuilding, should be greater than this amount, as invariably there will be uninsured losses that will be repaired. Even taking this into account, we believe the overall impact on GDP in Q3 and Q4 should be positive but very small, consistent with the historical experience. For this reason, we are not changing our top-line GDP forecast.

We could send him Bastiat’s essay on the “broken window fallacy” and be done with it. After all, $30-50 billion (or even more depending on the final storm phases) of perfectly good capital stock—-drilling rigs, oil and gas platforms, refineries and chemical plants, office buildings, hotels and shopping malls, public roads and utility lines and hundreds of thousands of residences and apartment units—are being destroyed or badly impaired.

That subtracts from societal wealth pure and simple: There is no economic growth or Keynesian goodness to it!

Indeed, if that simple proposition were not true, why leave it to the chance of Mother Nature having one of her episodic hurricane tantrums? The geniuses on Capitol Hill might as well be encouraged to deploy demolition crews around the country to foster the need for vast rebuilding efforts in their wake, thereby sending the GDP growth stats soaring and Home Depot’s stock to new all-time highs.

Since we are deeply antiwar, we cannot endorse the ultimate growth tonic along these lines, as suggested this morning by Zero Hedge. But you can’t assail their logic:

……(Feroli) has proceeded straight to the “broken window fallacy” nirvana: the growth that destruction somehow always guarantees in a Keynesian world. If that was the case, why not just nuke the US and rebuild it from scratch, assuring triple digit GDP growth for decades to come.

So the reason to focus on Hurricane Harvey’s 15 trillion gallon deluge and the nattering bits of Keynesian idiocy it has elicited among Wall Street economists is that it is a metaphor for the “broken window fallacy” that lies at the heart of government and central banking policy all around the world. T0 wit, true prosperity and growth arises from gains in free market efficiency and entrepreneurial innovation, but the impact of state policy— especially its central banking branch—is everywhere and always to promote inefficiency and block innovation.

Stated differently, in the economic sphere the state is reactionary; it gets captured by lobbies and economic players with a vested interest in preserving the status quo or in artificially directing economic resources and activity toward their investments, not the best and highest uses determined by the free market.

A powerful lesson with respect to this truth is happening before our very eyes today as the Army Corps of Engineers has been forced to open the Addicks and Barker dams 17 miles west of downtown Houston and thereby knowingly and deliberately destroy potentially thousands of homes downstream. This seemingly unaccountable action is taking place because the alternative would be even worse—–namely, uncontrolled flooding in the communities around the reservoirs, which are now overflowing their banks. At one point, the water level was rising by a half of foot per hour.

Needless to say, both of these dams were constructed by Washington in the 1940s to reduce flooding along Buffalo Bayou, a narrow body of water that runs through downtown Houston, at the behest of local developers. It was part of the much larger project of channeling and dredging the bayou and turning Houston into a major deep water port via the massive Houston Ship Channel. Over the years literally tens of billions of Federal dollars have been spent to deepen the channel to 45 feet and widen it to 530 feet so that ocean-going ships and tankers can navigate 50 miles inland!

During the years since then, of course, a whole lot of “GDP” has been generated in downtown Houston owing to the perception that flooding risks had been sharply reduced, bringing billions of windfall gains to land owners and property developers who got in on the ground floor. Likewise, the massive refining and petrochemical industries berthed along the Ship Channel are there owing to the Army Corps projects, as are the fashionable communities and commercial districts that developed around the reservoir lakes.

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Russia and the Chinese Petrodollar Kill Shot

from Rogue Money:

One Two Punch: Russia’s Game Changing Intervention in the Mideast and the Failure of Engineered Lower Oil Prices to Break Moscow’s Will While Draining Saudi Coffers Forced Riyadh to Beijing Hat in Hand

China has read out an inescapable verdict on the petrodollar — it will be used less and less with each passing month in global trade, specifically transactions in petroleum that have been pegged to the greenback by agreement between Washington and its allied Persian Gulf producers led by Saudi Arabia since the 1970s. Without a radical shift that American elites appear utterly incapable of humbling themselves to achieve, China and its allies led by the Russians and Iranians’ influence will grow stronger, while Washington and its relevance will grow weaker. Washington’s failure to topple the Russian defended Assad government of Syria, a losing war of occupation for the Saudi kingdom in Yemen, and Riyadh’s humiliating failure to break the will of liquefied natural gas exporter and rival Sunni Islam patron Qatar all demonstrate that the petrodollar’s time is up.

The Increasingly Not So Subtle Saudi Shift to the Eurasian Camp, as Riyadh’s Syria and Yemen Wars Fail and the Failed Qatar Blockade Humiliates the Kingdom

““In late May, then Deputy Crown Prince Mohammad bin Salman went to Russia to discuss with President Vladimir Putin the oil market and the situation in Syria. The visit came just three weeks before Crown Prince Mohammed bin Nayef was removed and bin Salman took his position. While in Moscow, the latter said that ‘relations between Saudi Arabia and Russia are going through one of their best moments ever.’

“Two months later, Moscow and Riyadh signed a preliminary military cooperation agreement worth $3.5bn.The Saudis have requested transfer of technology to accompany the signing of the deal.” [emphasis added]”


Seeing the writing on the wall, the young and ambitious Saudi Crown Prince Mohammed has softened his hard line stance in support of the Syria jihadists while looking for a way out of the Yemen quagmire which Iranian support for the Houthis has deepened. A Saudi withdrawal from Yemen that spares the Kingdom internal revolt may be possible, but not without Riyadh making the mother of all concessions to the Eurasian giants if not the arch rival Iranians  — abandoning the petrodollar in favor of the petroyuan. A development Russia’s Deputy Foreign Minister Sergei Ryabkov warned this summer would be an inevitable consequence of the desperate, extraterritorial sanctions passed by the Congress to wreck Russian energy trade with Europe and force Europeans led by the Germans to buy expensive American LNG exports.

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How’s Socialism Doing In Venezuela?

from Freedom Outpost:

Once there was a South American country with a promising future. It had a functioning democracy, a rapidly developing economy, and a growing middle class. All the important indicators, including education, health care, and foreign investment, were pointed in the right direction.

It was far from perfect, but the mood was hopeful – and with good reason.

But now all that promise is gone. The country is a failed state, a hollowed-out shell of its former self.

Services like power and water are sporadic. The most basic consumer goods, from bread to toilet paper, are in chronically short supply.

Crime has skyrocketed.

Freedom of the press is almost non-existent.

Democracy has been replaced by a virtual dictatorship.

The country is, I’m sorry to say, my beloved Venezuela, a place in which my family has deep roots.

I can tell you what happened to it in one word: socialism.

In 1999, then-candidate for President Hugo Chavez promised to lead the people of Venezuela to a socialist paradise. His theme was “Esperanza y Cambio” – “Hope and Change”.

“Venezuela is a nation of great wealth,” Chavez said, “but it’s being stolen from its citizens by the evil capitalists and the evil corporations.”

This wrong would be righted, he assured the voters, if they elected him. And they did, to their everlasting regret.

Chavez drew inspiration from his mentor, Fidel Castro.

Like his mentor, he enjoyed giving speeches – some which lasted as many as seven hours! He even gave himself his own weekly television show where he would spontaneously break into song.

Here’s a rule: When your nation’s leader starts singing on national television, you’re in trouble.

Under Chavez, the government of Venezuela took over industry after industry.

The government, he assured everyone, would run these businesses better than private enterprise, and the profits would be “shared” by the people.

With great fanfare, he tore up contracts with multinational oil and gas companies and demanded that they pay much higher royalties.

When they refused, he told them to leave. They did.

His image was burnished by Hollywood celebrities who flocked to see the great work he was doing – taking money from the rich and giving it to the poor.

Progressive politicians from the US and Europe also praised him lavishly.

Here’s another rule: When Hollywood celebrities visit your country to praise your leader you’re in trouble.

When the leader sings on national television and is praised by Hollywood celebrities, you’re doomed.

Socialism always works in the beginning, so people are fooled…in the beginning.

It’s easy for governments to confiscate money, but eventually, there’s no more money to confiscate.

In the case of Venezuela, I mean that literally: People who could get money out of the country, did.

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China ready to crush the petrodollar and reserve currency with new oil contract backed by Yuan and gold

by Kenneth Schortgen, Daily Economist:

On Sept. 1, a new report out of Asia is signaling China is ready to make their next move against the Petrodollar, and the next step in their plans to bring about a return to gold backed finance.

According to sources, China is preparing to roll out a new oil contract that will be denominated in Yuan, and convertible with physical gold.  The collaboration will take place between the two markets of the Shanghai Gold Exchange and the Shanghai International Energy Exchange.

China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry. 

The contract could become the most important Asia-based crude oil benchmark, given that China is the world’s biggest oil importer. Crude oil is usually priced in relation to Brent or West Texas Intermediate futures, both denominated in U.S. dollars. 

China’s move will allow exporters such as Russia and Iran to circumvent U.S. sanctions by trading in yuan. To further entice trade, China says the yuan will be fully convertible into gold on exchanges in Shanghai and Hong Kong. 

“The rules of the global oil game may begin to change enormously,” said Luke Gromen, founder of U.S.-based macroeconomic research company FFTT. 

China has long wanted to reduce the dominance of the U.S. dollar in the commodities markets. Yuan-denominated gold futures have been traded on the Shanghai Gold Exchange since April 2016, and the exchange is planning to launch the product in Budapest later this year. 

Yuan-denominated gold contracts were also launched in Hong Kong in July — after two unsuccessful earlier attempts — as China seeks to internationalize its currency. The contracts have been moderately successful. 

The existence of yuan-backed oil and gold futures means that users will have the option of being paid in physical gold, said Alasdair Macleod, head of research at Goldmoney, a gold-based financial services company based in Toronto. “It is a mechanism which is likely to appeal to oil producers that prefer to avoid using dollars, and are not ready to accept that being paid in yuan for oil sales to China is a good idea either,” Macleod said. – Nikkei Asia

This plan to replace the Petrdollar has been at least four years in the making, and below is a transcript of an article I wrote back in 2013 regarding this scenario.

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Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength And The Rothschilds Get Out Of The Stock Market

by Jeff Berwick, The Dollar Vigilante:

It feels like I am having financial Déjà vu as I write yet another blog about bitcoin hitting another all-time high! This one is kind of special though!

Our favorite currency just hit $5000 USD!

And Bitcoin Cash continues to trade above $600.

Meaning, if you owned bitcoin on August 1st and haven’t sold it yet, you now have a total value of over $5,600 of bitcoin and Bitcoin Cash!

And, 82.8{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of people who own Bitcoin Cash after the August 1st fork have yet to sell their BCH.

On August 28th we wrote an article entitled “Cryptocurrencies Hit All-Time Highs, Gold Spikes Higher As Investors Flee The Stock Market” and in it we mentioned how the last ten weeks of US equity capital outflows which equated to roughly $30 billion coincided with a $47 billion capital inflow into the cryptocurrency markets.

And the precious metals continue to show strength with gold currently sitting at $1324 USD per ounce and $17.73 for gold and silver respectively.

In light of that fact, we got to thinking, what kind of capital movement is going on outside of the US stock market? It turns out, quite a bit in fact.

From Bloomberg:

“European equity funds suffered their biggest outflows in 26 weeks as a continuing rally in the euro heightened investor concerns over the region’s exporters.

Investors pulled $1.4 billion from the region’s stock funds, Bank of America Merrill Lynch said in a research report, citing EPFR Global data. That was the second consecutive week of outflows.”

It was just as we had suspected, investors are moving out of international stocks as well, which makes us wonder what they are expecting to happen? Do they foresee a large correction?

That the total market cap of cryptocurrencies sits at all-time highs around $178,134,988,499 gives us a clue that people are likely losing confidence in the fiat system and at the same time recognizing the crypto space as a great opportunity to both profit and protect themselves in the event of a crisis in fiat paper.

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The Donald’s Seinfeld Tax Plan – A Big Show About Nothing


by Davis Stockman, Daily Reckoning:

Someone should remind the Donald that he actually is President and that it’s high time he accomplished something. Anything.

Back on April 21st, for example, he promised that a core feature of his platform — a sweeping, pro-jobs tax reduction — would be soon unveiled.

Trump said the tax reform package will be introduced on “Wednesday or shortly thereafter,” just before his 100th day in office. While the president would not reveal details about the tax plan, he did say that the cuts will be “bigger I believe than any tax cut ever.”

Well, we’ve passed the eighteenth Wednesday since that promise. What was actually delivered back then, of course, was a one-page statement of vague principles, fond aspirations and apple pie.

So in Springfield, Missouri this week, the Donald is launched tax reform efforts again. And yet again the White House spin brigade has already made clear that it’s all about tone, not substance.

That is, he will orate about tax fairness and closing loopholes, but not name any. He will promise big rate reductions but not say how big and for whom. He will promise to liberate jobs by slashing the corporate tax rate without explaining exactly why that will result in more jobs rather than more stock buybacks. And there were no numbers about how the implied trillions of revenue lost over the next decade will be paid for.

Instead, Donald puckered himself up into a meld of Huey Long and Jack Kemp while preaching up a storm in favor of the “little guy”. A reference to the average worker who purportedly is being crushed by the Federal income tax and who gets tangled in the complexity of the IRS code without a high-priced tax lawyer alongside loophole-savvy financial advisors.

Accordingly, the Donald is going to “unrig” the tax code for these little guys, thereby keeping faith with the millions of dispossessed citizens of Flyover America who voted for him last November.

Except that narrative is essentially nonsense. This isn’t 1981. There is no raging inflation and bracket creep propelling the middle class into tax tyranny. In fact, owing to indexing and large increases in the standard deduction and personal exemption over the last 35 years, the income tax has essentially morphed into a Rich Man’s Levy.

The Donald’s song and dance about tax simplification and reduction comes right out of the well-thumbed GOP hymnal. It speaks little to the blue collar folks — in places like the western Pennsylvania steel country, industrial Ohio, the Michigan auto belt and the manufacturing towns of Wisconsin and Iowa — who on the margin accounted for his electoral college victory.

The Donald, Tax Plan Rhetoric and the Gong Show

Trump’s tax reform airball will promise to make filing with the IRS more palatable to tens of millions of citizens who, apparently, find it inconvenient to shell out $25 to file their Federal income tax return with TurboTax.

Among the 148 million income tax filers, the bottom 53 million owed zero taxes in the most recent year (2014), and the bottom half (74 million) paid an aggregate total of just $45 billion. That amounted to just $8 per week per filer.

If you take all filers with AGI (adjusted gross income) under $100,000 per year, you end up with 122 million taxpayers or 83{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the total. Upwards of 85{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of this group uses the standard deduction. So they are not caught up at all in the puzzle palace of IRS code that the Donald denounces.

The 122 million taxpayers — who make ends meet on less than $100,000 of income — paid a total of just $278 billion in income taxes during 2014. That was just 6.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of their $4.3 trillion of AGI.

To be very clear, there was still $4 trillion left in the collective pockets of these 122 million taxpayers — even after the IRS had its way with them!

Even if a Keynesian demand side tax cut was a good idea, which it isn’t, the fact is there is not much more that could be put “back in their pockets” by income tax cuts.

The truth is that the Laffer Curve has gone missing. At average tax rates of under 7{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, the bulk of US wage and salary workers (83{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}) are not facing prohibitive disincentives to work or production.

By contrast, the top 4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} or 6.2 million filers paid $802 billion in Federal income taxes. That amounted to nearly 58{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of total Federal income tax payments, and resulted in an average tax rate of 24{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} on the group’s $3.3 trillion of AGI.

That’s not to object to putting some of that $802 billion back into the pockets of the top 4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. Many of them are small businessmen and the proverbial” job-creators” who make the economy grow, and who also file sub-chapter S business taxes. But incentivizing the job creators in this manner should not be financed on the backs of future taxpayers via borrowing. It must be paid for with spending cuts as a first resort, and less onerous taxes — such as consumption taxes or VAT (if necessary).

The Fed vs Trump’s Tax Plan

The Fed has generated such gigantic financial bubbles and caused all financial assets to become so massively overvalued that incentives for the rich are not really in short supply.

Federal Reserve Chair, Janet Yellen and the other Keynesian economists on the Fed have generated more “trickle-down” wealth and rewards than the Gipper could ever have imagined back in 1981. The $45 trillion in household wealth gains since the 2009 bottom vastly overshadows any possible benefits from lower tax rates, even at the top of the income ladder.

Even Trump’s Goldman duo of Gary Cohn and Steven Mnuchin are saying that there will be no “net cut” for the top tier of households.

If the bottom 83{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} don’t pay much tax in the first place, and if the top 4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} who pay most of the taxes are not to be indulged for social policy/equity purposes, what’s the point of the whole income tax cut charade?

The Goldman geniuses are chasing themselves in a circle trying to cut the rates and broaden the base. But what it actually amounts to is amateurish stumbling around the K-Street corridor where every single “loophole” they propose to close is shot down.

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A2A with Chris Powell of GATA

by Turd Ferguson, TF Metals:

Chris Powell and Bill Murphy formed the Gold Anti-Trust Action Committee in 1998 and they’ve been stalwart allies in the fight against gold price suppression and manipulation ever since. What a pleasure it was today to get caught up with Chris and get his thoughts on the current state of the global market for gold.

As you listen, you’ll quickly be reminded that Chris is still one of the most informed and well-spoken advocates for our cause. Over the course of this webinar, he addresses a number of current issues including:

  • the most important lesson he’s learned in the 20 years he’s followed the gold market
  • the strange occurrence of SecTreas Mnuchin visiting Ft Knox and the equally strange television interview of Terry Duffy, the CEO of the CME Group
  • whether the US government would financially benefit from revaluing the price of gold
  • how physical demand will paly a role in finally ending the tyranny of the central banks and bullion banks
  • and much, much more!

Please be sure to give this discussion a thorough listen as you are almost certainly going to learn a few things that you didn’t previously know. And then, when you’re finished, please click over to the GATA site and send them some financial support. Their efforts are tireless and we need to ensure that they remain on our side in this fight.

Click HERE to listen.

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Michael Pento Exclusive: Gold Sniffing Out Coming Central Bank Failure; $2000+ Per Ounce?

by Mike Gleason, Money Metals:

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Coming up we’ll hear from Michael Pento of Pento Portfolio Strategies on how the broken window fallacy is now becoming a part of the narrative surrounding the terrible tragedy in the Houston area and also talks about an exciting setup he sees in the gold market and what will be the tipping point. Don’t miss another wonderful interview with Austrian economist and money manager Michael Pento, coming up after this week’s market update.

Precious metals markets enter trading for the month of September with strong upside momentum on the heels of a late summer rally.

On Monday, gold prices broke out above the $1,300 resistance level to new highs for the year. As of this Friday recording gold trades at $1,323 an ounce, up 2.4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} on the week. Gold’s gains are being confirmed by the gold mining stocks, which are now putting in their biggest weekly up moves of the summer.

Turning to the white metals, silver shows a weekly gain of 3.3{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to bring spot prices to $17.69 an ounce. Platinum poked back above the $1,000 level on Thursday and currently trades at $1,007 an ounce on the heels of this week’s 2.9{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} advance. Its sister metal palladium is up 3.9{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to $966.

Metals markets responded to the carnage inflicted by Hurricane Harvey and the inflationary implications for U.S. fiscal policy.

Lawmakers return to Capitol Hill next Tuesday. They will take up a Harvey aid bill expected to cost tens of billions of dollars. Whether it’s a clean bill or is tied to unrelated pork barrel spending or an increase in the debt limit remains to be seen.

The Treasury Department had said that the debt ceiling must be raised by September 29th. Officials now say that the deadline may move forward by a couple days because of disaster relief spending. These developments will make it more difficult for Freedom Caucus members of Congress to win any spending concessions.

President Donald Trump still intends to push for tax reform. Senate Republicans will be under tremendous pressure to deliver something on that front after they failed spectacularly on Obamacare repeal. Here’s what Trump had to say in a speech earlier this year:

Donald Trump: We need a tax code that is simple, fair, and easy to understand. That means getting rid of the loopholes and complexity that primarily benefit the wealthiest Americans and special interests. Our last major tax re-write was 31 years ago. And I am fully committed to working with Congress to get this job done, and I don’t want to be disappointed by Congress.

The President did get some good news on the economy this week. U.S. GDP growth got revised upward to a better than expected 3{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.

Good news is often interpreted by markets as bad news for metals markets. A stronger economy makes the Federal Reserve more likely to tighten monetary policy. But this week, good news was good for stocks, commodities, and precious metals.

The bad news out of Texas may have something to do with that. Given the tremendous financial stresses on millions of families who have either been impacted or flooded out of their homes, the Fed is likely to hold off on any new rate hikes or quantitative tightening for a while. Central bankers don’t want to be perceived as villains for causing rates on mortgages and home improvement loans to rise.

Yet in keeping rates artificially low, central bankers are complicit in inflating asset bubbles to dangerous proportions. The stock market certainly wouldn’t be trading where it is today without Fed stimulus. The sky high costs of health insurance and college tuitions wouldn’t be where they are now, either.

In order to help qualified students pay for the ever-rising costs of higher education, Money Metals Exchange has teamed up with the Sound Money Defense League for a scholarship fund. It is the first gold-backed scholarship of the modern era. We’re setting aside 100 ounces of physical gold for scholarships to outstanding undergraduate and graduate students who display deep understanding of economics and monetary policy.

For 2017, we will be awarding this scholarship to two incoming or current undergraduate students and to two graduate students. First place winners will receive $2,000 each, with runner ups getting $1,000.

Applicants must submit an essay that answers a specific question about free markets and sound money. Essays will be reviewed by a blue ribbon committee of professors, economists, and executives of Money Metals Exchange and the Sound Money Defense League. The application and essay must be submitted by September 30, 2017.

Click HERE to listen.

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What to Do When Government Money Goes Bad


by Greg Wilson, International Man:

First, they sold their car.

Then, they downsized from a house to a small apartment.

Next, they cut meat from their diets. And now, they skip meals to ensure survival.

This is the story of Vanessa Posada and her husband Adolfo.

They live in Venezuela. And their money simply doesn’t go that far anymore.

Falling oil prices have sent the economy into free fall. Per experts, the inflation rate is 720{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} and rising.

And today, an estimated 93{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of Venezuelans don’t have enough money to buy food.

It’s a sad story… especially considering that Vanessa did everything right.

She completed her university studies. Then she got a job as a schoolteacher. And she later got married and had a child.

But that’s not enough to save her from government money gone bad.

Consider that at the beginning of 2014, one Venezuelan bolivar equaled roughly 16 cents. Today, that bolivar will supposedly get you just 10 cents – a 38{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} decrease.

But that’s the official rate… the one no one pays attention to.

Today, one bolivar will actually get you just 0.000625 cents.

Put another way, at the beginning of 2014, you needed 6.25 bolivars to get $1. Today, using the black-market rate, you need 16,000 bolivars to get that same $1.

That means Vanessa’s bolivars are worth 99{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} less than just three years ago.

This story shows how governments can inflate a currency away. And it can leave those using that currency in a dire situation.

There’s a way Vanessa could have protected herself from government-driven inflation.

I’ll show you that in a moment. But first, don’t think it can’t happen to you.

Government Money: It’s Not Really Your Money

Venezuela is an extreme case. Folks tend to dismiss it. They think it can’t happen in their country.

But there’s no shortage of extraordinary situations going on in developed economies, too.

Take Switzerland, for example.

So far in 2017, Swiss banks have paid $1 billion just for the privilege of holding their deposits with the country’s central bank.

It’s called negative interest rate policy (NIRP). It’s an unorthodox policy designed to stoke inflation.

Swiss banks are so worried about getting their cash back, they’re willing to take less of it in the future.

If you think that’s backward, you’re right.

Ten years ago, no one even thought this was possible.

What ever happened to earning interest?

And just last month, the European Union let slip that it would freeze bank accounts if there’s a bank run.

A person familiar with the German government’s thinking recently told Reuters, “The desire is to prevent a bank run, so that when a bank is in a critical situation it is not pushed over the edge.”

The European Union wants to help failing lenders. It wants to keep banks solvent.

The only problem: It wants to use your money to do it.

The worst part is that it would be an ex parte procedure. That means without YOUR knowledge.

Per the European Commission, this would have a “surprise effect” and reduce the chance of you moving your money elsewhere.

Should this happen, we’d once again see the value of currencies inflated away.

So if you can’t trust government money, what can you trust?

Getting Out of Government Money

The solution is simple: cryptocurrencies. And the best place to start is bitcoin.

Here’s why…

You need to find a way to protect yourself so that you’re not relying solely on vulnerable paper currency.

Bitcoin isn’t owned by any government or any bank. And it has a fixed supply.

Politicians and economists can’t inflate it away.

It’s just better money.

The world is waking up to this fact. And as it does, we’re going to see capital flow out of the old, corrupt government systems and into cryptocurrencies.

In fact, it’s already happening. Just look at the chart below.

As you can see, money is flowing into the future – bitcoin.

At the start of the year, bitcoin’s market cap stood at $15.6 billion. At writing, it’s just over $70 billion – a 381{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} rise.

The trend is just getting started.

It’s time to get one foot in the door, and protect yourself in the process.

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