Thursday, August 5, 2021

WILL PRINTING HALF A QUADRILLION DOLLARS SAVE US?

by Egon von Greyerz, Gold Switzerland:

Stock investors are rejoicing about stock markets making new highs in many countries, totally oblivious of the risks or the reasons. It seems that this is an unstoppable rally in a “new normal” market paradigm. No major increase is expected in the inflation rate or the historically low interest rates. The present rally has lasted 8 years since the 2009 low. There is virtually no fear in markets so investors see no reason why this favourable climate would not continue for another 8 years at least.

Yes, of course it could. All that is needed is that governments worldwide print another $20-50 trillion at least and that global debt goes up by another $200-500 trillion.

“IF YOU TELL A BIG LIE OFTEN ENOUGH ….”

The gullibility of people today is exacerbated by the power of the internet and social media. Anything we read is accepted as fact or truth whilst a major part of it is just fake news. This is of course nothing new as it has been used by governments for centuries. Goebbels, the Nazi Propaganda Minister, who was an expert at manipulating the German people, said: “If you tell a big lie often enough and keep repeating it, people will eventually believe it.” The power of the internet and other media has facilitated spreading news and propaganda to billions of people and very few can distinguish if they hear or read “real” news or “fake” news.

Anyone in government is in capable of telling the truth. Automatically when someone assumes an elected position his Pinocchio nose grows extremely long since his entire purpose is then to be all things to all men in order to be re-elected. This is why virtually no elected official has a backbone nor any morals or principles. Because if they had, telling the truth would make them unelectable.

THE OLD STYLE HONEST BANKING IS A THING OF THE PAST

During my early professional years as a banker at the end of the 1960s and early 1970s, I spent some time with a prominent UK Merchant Bank. This is what the old-style Investment Banks used to be called before the Americans came to dominate the sector. The senior bankers used to arrive at work around 10am and then go to lunch at 1pm. The lunch would consist of at least one gin and tonic to start with and then a good three course meal with a bottle of wine or two. Afterwards some Port with cheese and maybe a beer or two at the pub to finish off. Then back to the office at around 3pm for 4-5 hours of work. And this is how the City of London would operate when it was the financial centre of the world.

Any transaction was based on a handshake and a brief contract. Lawyers played a very small role in this process. Banking was based on trust, personal relationships and high moral standards.Banks displayed total loyalty to their staff and employees did not fear for their jobs. Major deals were concluded with a minimum of legal interference and compliance hardly existed. And still there was very little deception or fraud.

Today the financial world in London and major parts of the world is dominated by the US investment banks, the US legal system and the US government. Trust and loyalty are gone. Handshakes are worth nothing. Lawyers and compliance officers dominate everything and contracts are now running to hundreds of pages. Staff fear for their jobs since the banks have no loyalty to them. The only thing that counts is short term performance. This makes staff totally disloyal too as they know they can be fired on a whim.

Investment bankers are now Masters of the Universe and as the former Goldman Sachs CEO said, “Doing god’s work”. Well, one thing is certain there is certainly no humility in the financial world today or as Michael Lewis said in his book “Liar’s Poker”, major parts of US investment banks are dominated by “Big swinging di–s”. (Bankers with very big egos.)

Read More @ GoldSwitzerland.com

Ron Rosen: The Dollar And Equities Will Plunge Together – While Gold Spikes

by John Rubino, Dollar Collapse:

The dollar has been falling lately, which isn’t what a lot of people expected with the Fed being the only major central bank that’s raising interest rates. Higher yields on dollar balances should, according to basic economics, have attracted foreign capital to Treasury paper, thus putting upward pressure on the dollar. Didn’t happen though. The dollar is down about 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} since the Fed started tightening.

Stocks, meanwhile, might reasonably have been expected to fall, as their dividend yields become less attractive relative to rising risk-free fixed income returns. Also didn’t happen. US equities are now at record levels.

As for what happens next, Ron Rosen of the Rosen Market Timing newsletter has just published some dramatic predictions. Here’s an excerpt:

This REPORT attempts to demonstrate that the day the Dollar Index crosses beneath the 91.88 level will probably be the beginning of a collapse in the stock averages and a massive rise in the precious metals complex.

The completion of the 9 year Zig-Zag correction in the Dollar Index is telling us that D-Day will take place the day that the Dollar Index crosses beneath the 91.88 low. The following is an explanation of a Zig-Zag correction.

Excerpts from the NASDQ description of a Zig–Zag correction: “Zig zags look like a lightning bolt on the chart. There are 2 rules for zig zags: 1. The sub waves of an A-B-C zig zag appear as 5-3-5 2. Wave B of the zig zag cannot retrace 100{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of Wave A – most of the time wave B retraces 38-78{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of wave A The 3 waves of the zig zag (A-B-C) subdivide as a 5-3-5 meaning the ‘A’ leg has 5 sub waves in it, the ‘B’ leg has 3 sub waves in it, and the ‘C’ leg has 5 sub waves in it. As a result of the ‘A’ and ‘C’ legs both containing 5 sub waves each, the impact of the whole zig zag structure is to be a deep retracement and recover a lot of price from the previous trend. Also, the zig zag was designed to make progress against the trend. Therefore, wave B of a zig zag can be any 3 wave pattern (including another zig zag), but wave B cannot retrace 100{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of wave A. A retracement of 99{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} is acceptable, though unlikely and progress needs to be made.”

It is as obvious as anything can be that the Dollar Index underwent a 9 year zig-zag correction that began in the June quarter of 2008. The zig-zag correction was complete at the high of 103.815.

Read More @ DollarCollapse.com

The First Pillar to Fall in the Coming Debt Crisis

by Justin Splitter, Casey Research

Americans are falling behind on their car loans at the fastest pace since the global financial crisis.

You can see what I mean below. This chart shows the percentage of auto loans that are “seriously delinquent.” These are loans that haven’t been paid in 90 days or longer.

This key ratio has been surging since late 2014. It’s now at the highest level since the 2008–2009 financial crisis.

• This is a big problem…

You see, more than one out of every three Americans has a car loan right now. Not only that, the average U.S. household owes nearly $29,000 in auto debt.

Americans have borrowed so much money that the auto loan industry is now a $1.2 trillion market. That’s 58{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} bigger than it was in 2009.

For years, investors ignored this explosion in auto loan debt. But they won’t be able to for much longer.

That’s because the auto industry is cracking before our eyes. If this continues, carmakers and auto lenders will be in serious trouble.

But you can’t ignore this just because you don’t own any car stocks. That’s because Americans don’t just have too much auto debt…

• They have too much debt, period…

And the Federal Reserve is a big reason for that.

Since 2009, the Fed has held its key interest rate near zero.

This has made it cheaper than ever to borrow money. So, naturally, Americans loaded up on debt.

During the first quarter, U.S. household borrowings hit $12.73 trillion. That’s a record high, and 5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} more debt than Americans had at the peak of the last housing bubble.

This wouldn’t be such a problem if the U.S. economy were doing well. But it’s not.

The U.S. economy is recovering at the slowest pace since World War II. Not only that, the average U.S. worker is making just 16{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} more than they were in 2009.

• The average American now has more debt than they’ll ever be able to pay off…

You can see what I mean below.

This chart compares the level of household debt with disposable income.

A high ratio means that Americans have a lot of debt relative to income. You can see that this key ratio has been soaring since 2009. It’s now at the highest level ever.

Read More @ CaseyResearch.com

Europe’s Banking Dysfunction Worsens

0

from Chris Whalen, Daily Reckoning

“While the US and the UK have been mired in political chaos this year, the EU has enjoyed improved economic conditions and some political windfalls. The question now is whether this good news will inspire long-needed EU and eurozone reforms, or merely fuel complacency – and thus set the stage for another crisis down the road.”

Philippe Legrain
Project Syndicate

This week The Institutional Risk Analyst takes a look at recent reports out of the EU regarding a proposal to “freeze” the retail accounts of failing European banks.  The original story in Reuters suggests that our friends in Europe actually think that telling the public that they will not have access to their funds, even funds covered by official deposit insurance schemes, is somehow helpful to addressing Europe’s troubled banking system.  Investors who think that Europe is close to adopting an effective approach to dealing with failing banks may want to think again.

Judging by the reaction to the story by investors and on social media, it appears that the EU has learned nothing about managing public confidence when it comes to the banking sector.  In particular, the idea that the banking public – who generally fall well-below the maximum deposit insurance limit – would ever be denied access to cash virtually ensures that deposit runs and wider contagion will occur in Europe next time a depository institution gets into trouble.

“The plan, if agreed, would contrast with legislative proposals made by the European Commission in November that aimed to strengthen supervisors’ powers to suspend withdrawals,” Reuters reports, “but excluded from the moratorium insured depositors, which under EU rules are those below 100,000 euros ($117,000).

While some Wall Street analysts are encouraging investors to jump into EU bank stocks, the fact is that there remains nearly €1 trillion in bad loans within the European banking system.  This represents 6.7{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the EU economy, according to a report and action plan considered by EU finance ministers earlier this month.  That compares with non-performing loans (NPL) ratios in the US and Japan of 1.7 per cent and 1.6 per cent of gross domestic product, respectively.

But the most basic point to make about the proposal for a “temporary” suspension of access to cash is that such moves never work.  Moratoria are part of the banking laws in Germany and many other European nations, but they are never used because once invoked the institution is dead for all practical purposes.  In Spain, for example, the government had the power to impose a temporary suspension of access to deposits in the case of Banco Popular, but did not do so because it would have killed the franchise.

Jochen Sanio, the former president of the German Federal Financial Supervisory Authority (BaFin), commented about banks subject to “temporary” deposit moratoria that “they never come back.”  Sanio, who guided Germany through the 2008 financial crisis and forced the clean-up of insolvent state-owned banks, was retired and gagged for the rest of his life for challenging Germany’s corrupt political status quo of covert bailouts.

So again, one has to wonder, why any responsible official in Europe would support the plan reported by Reuters.  As the US learned the hard way in the 1930s and with the S&L crisis in the 1980s, the lack of a robust national deposit insurance function to protect retail depositors leaves an entire society vulnerable to banks runs and debt deflation.  Until the EU is prepared to do “whatever is necessary,” to paraphrase ECB chief Mario Draghi, in order to protect retail bank depositors, the EU will remain far from being a united political economy.

Readers may recall the comments of German Chancellor Angela Merkel last Fall, when she suggested that the German government would not support Deutsche Bank AG (NYSE:DB) in the event that the institution got into financial trouble.  At the time, DB was trading at about $12 per share in New York.  We spoke about DB and the ill-considered comments made by US and German officials from Dublin on CNBC on September 30th.

At the time, we reminded investors that political officials should never talk about a depository institution while it is still open for business.  This is a basic, well-recognized rule that has been followed by prudential regulators around the world for many years.  Yet because of the popular political pressures on elected officials such as Merkel, the temptation to engage in absurd hyperbole with respect to big banks is irresistible.

We see this latest piece of news out of Europe as further evidence that there is still no political consensus about how to deal with troubled banks.  As we learned last year, Merkel could not even make positive public comments about DB for fear of committing political suicide.

The more recent bank resolutions in Spain and Italy were made to look like touch measures in public terms, even as the Rome government quietly subsidized the senior creditors of two failed banks in the Veneto.  We noted in an earlier comment, “Fade the Great Rotation into Europe,” that the EU pretends to play tough on bank rules while bailing out the senior creditors:

Read More @ DailyReckoning.com

Gold or Silver? A 2017 Perspective – Jeff Nielson

by Jeff Nielson, Sprott Money

For both novices and experienced precious metals investors, the question “gold or silver?” still has relevance today. Experienced precious metals investors have already heard that according to almost every fundamentals metric, silver is more undervalued than gold, and thus a better value for the dollar.

But these same investors have been hearing this message for many years. They look at prices today and see the silver/gold price ratio at a ludicrous level of nearly 80:1 – a ratio that has increased, not decreased in recent years. Some readers, even ardent precious metals bulls, may now have become Skeptics concerning silver.

Back in the real world, however, for more than 4,000 years the silver/gold price ratio has averaged 15:1. This reflects the supply ratio of silver to gold in the Earth’s crust: 17:1. With silver even more precious today because of its numerous, important industrial applications, and with most of the world’s silver having been literally consumed, this price ratio should be below 15:1, not at the current, insane level.

The argument in favor of silver is fundamentals based, and thus value based. For investors with limited funds or who simply seek maximum appreciation potential, silver is the clear winner. The retort from the Skeptics is obvious: if silver is such a great value, then why are prices not already reflecting this?

Regular readers know that this question has been answered before, from different perspectives, on multiple occasions.

1) We no longer have markets. Instead, a banking crime syndicate ( the One Bank ) has hijacked our markets, and replaced them with a computerized price-rigging operation .

2) Supply/demand data going back well over a decade indicates that the silver market would havealready imploded in an inventory default – unless some Secret Stockpile existed to bleed more supply into depleted warehouses.

Skeptics will consider this to represent additional ammunition.

If all markets are rigged, all of the time, the price of silver will never be allowed to rise toward its fair market value.

If some (massive) Secret Stockpile exists, the bankers and their allies will never run out of additional supply to feed onto this market.

The rebuttal to those arguments is elementary.

a) Computers can’t manufacture silver. Industrial end-users of silver can’t use the paper-called-silverwhich the bankers trade in their fraudulent ‘markets’ to manufacture their products. When the world runs out of silver, prices must rise – to whatever multiples of the current price are necessary to bring the market into surplus and stabilize the supply chain.

b) The silver market has had a continuous supply deficit for at least 30 years. All stockpiles are finite. A previous commentary has estimated that it has already taken at least one billion ounces of stockpiled silver to prevent inventory default. The possibility of stockpiles that are greatly in excess of that amount is dubious, at best.

What is a fair price for silver, today? An older piece estimated that number to be $1,000/oz (USD). But even that number is artificial, since it presumes that our paper currencies still possess value. They don’t .

So, everyone should buy (and hold) silver. Case closed? It’s not that simple. Investors in the yellow metal can supply arguments which favor gold over silver.

i) More widely recognized as “money” (especially in the Western world)

ii) More compact (more valuable), and thus

iii) More portable

iv) Stronger demand at present

Part of the reason why the One Bank has been able to pervert the price of silver to such a ridiculous extreme in its crooked ‘markets’ is through the success of its Western propaganda campaign. Silver is the Peoples’ Money . Yet most of the people in the Western world no longer even recognize silver as money.

For holders of precious metals who anticipate some crisis where we would want or need to use our bullion as money (currency), in the early days of such a crisis gold would clearly have superior liquidity. It would likely take weeks (months?) before the need for silver as money and currency would begin to filter through the psyche of Western populations.

Some especially rabid silver bulls will argue that the price of silver will (or at least should) exceed the price of gold at some point – due to the radical depletion of silver stockpiles and supply. However, even most silver bulls (this writer included) expect the price ratio to always remain in gold’s favor.

This means that for readers who have limited storage (hiding?) space, gold’s superior intrinsic value means it could be the more practical choice. Similarly, for any reader who can imagine being forced to flee their domicile, or even their jurisdiction, gold’s superior value makes it more portable.

At present prices, precious metals investors would require a suitcase full of silver to equate to a pocket full of gold. And that suitcase better be on (strong) wheels, since very few readers would be able to carry such a suitcase.

Then there is demand, which currently favors gold. What about all of silver’s “industrial demand”? The Silver Institute (a somewhat dubious source) estimates industrial demand to represent 55{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of total, annual demand (1.03 billion ounces), or roughly 570 million ounces.

However, the gold market now has an important source of demand which is lacking in the silver market:gold-hungry central banks . These are (generally) Eastern central banks who understand the paper currency Ponzi-scheme which has been created by the One Bank.

So far, 2017 is trending towards an off-year for central bank purchases, with current buying representing an annual rate of demand of only about 300 tonnes. Even then, if we factor in the supply ratio (17:1 in the Earth’s crust), this equates to just over 5,000 tonnes of annual silver demand.

Read More @ SprottMoney.com

A Quarter Trillion Dollars In US Savings Was Just “Wiped Away”

0

from ZeroHedge

As part of its historical revision to GDP, the BEA also had to adjust personal income and spending, with the full results released in today’s July report. What it revealed was striking: over the revised period, disposable personal income for US household was slashed cumulatively by over $120 billion to just under $14.4 trillion, while spending was revised higher by $105 billion, to just above $13.8 trillion. There were two immediate consequences of this result.

First, as the following table shows, while government pay has remained roughly flat over the past 3 years, growing in the mid-2{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to mid 3{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} range, wages and salaries for private workers have been steadily declining as the blue line below shows, and after hitting a 4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} Y/Y growth in February, wage growth has slumped to just 2.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in June, the lowest since January 2014 when excluding the one-time sharp swoon observed at the end of 2016.

But a more troubling aspect of today’s revision is what the drop in income and burst in spending means for the average household’s bank account: following the latest annual revision, what until last month was a 5.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} personal saving rate was revised sharply lower as a result of the ongoing downward historical adjustment to personal income and upward adjustment to spending, to only 3.8{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.

In dollar terms, this revision means that a quarter trillion dollars, or $226.3 billion, in savings was just “wiped away” from US households – if only in some computer deep in the bowels of the BEA buildings –  who as a result have that much less purchasing power, and following the revision the total personal saving in the US as calculated by the BEA is now down to only $546 billion, down from $791 billion before the revision.

Read More @ ZeroHedge.com

SENATOR LINDSAY GRAHAM: “USA IS PREPARED TO STRIKE NORTH KOREA”/GOLD UP $4.95 BUT SILVER FLAT

by Harvey Organ, Harvey Organ Blog

GOLD AND SILVER EQUITY SHARES FALL AGAIN/CHAOS RUNS SUPREME IN VENEZUELA/USA SANCTIONS ONLY MADURO SO FAR/GENERAL MOTORS REPORTS HUGE DROP IN AUTOS/ALSO USA REPORTS BIG DROP IN CONSTRUCTION SPENDING

In silver, the total open interest surprisingly  ROSE BY 862 contracts from 206,781 up to 207,643 WITH THE GOOD RISE IN PRICE THAT SILVER TOOK WITH RESPECT TO YESTERDAY’S TRADING (UP 9 CENT(S). IT SURE LOOKS LIKE BOTH THE SPECULATOR SHORTS AND THE BANKER SHORTS ARE HAVING SEVERE PROBLEMS TRYING TO COVER THEIR SHORTFALL BUT IT IS TO NO AVAIL. THE LONGS REMAIN STOIC AND NOTHING WILL BUDGE OUR SILVER LEAVES FROM DEPARTING OUR SILVER TREE. TODAY’S TRADING IS EVIDENCE OF THAT

 In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.038 BILLION TO BE EXACT or 148{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 71 NOTICE(S) FOR 355,000OZ OF SILVER

In gold, the open interest fell by 2,686 with the fall in price of gold to the tune of $1.60 yesterday.  The new OI for the gold complex rests at 436,962. Yesterday we had some banker short covering but it was minimal and this was accompanied by some longs entering the arena sensing danger due to the firing of that ICBM missile by North Korea. The shorts tried their best on the last day of options expiry to nullify any gains from option traders. The result a small open interest fall with that fall in price.

we had, ON second DAY NOTICE: 1309 notice(s) filed upon for 130,900 oz of gold.

Read More @ HarveyOrganBlog.com

Precious Metals And Bitcoin-Twin Destroyers Of The Fiat Regime, Part lll

by Andy Hoffman, Miles Franklin

After Whirlybird Janet’s “ding dong, the Fed is dead” speech 2½ weeks ago, I predicted the “final currency war” I first warned of 4½ years ago would be taken to Defcon 1 – as all Central banks aggressively respond to the America’s increasingly inflationary monetary policy; particularly, after its “low interest rate person” President installs Yellen’s replacement early next year.  And lo and behold, last night’s Royal Bank of Australia policy statement “warned” that a stronger Aussie dollar would “contribute to subdued price pressures”; as it was “weighing on the outlook for output and employment”; which in turn, would “result in a slower pick-up in economic activity and inflation than currently forecast.”  In other words, its GAME ON in the global race to debase; simultaneous with, care of the gold Cartel, the lowest-ever inflation adjusted Precious Metal prices; and plunging gold and silver  production, as Steve St. Angelo pointed out last night – of how Chilean silver production is down a stunning 32{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} year-over-year.

Irrespective, the dollar continues to plunge to lows last seen more than a year ago; as now that the “reserve currency” issuer has made it clear that additional rate hikes aren’t happening; and likely, any hope of a balance sheet “exit strategy”; essentially nothing the administrators of “lesser fiat toilet papers” say or do matters.  Which is why it was so irritating watching PM’s yesterday, amidst maniacal Cartel capping featuring the time-honored DLITG, or “don’t let it turn green” algorithm.  And thus, why Precious Metal holders (like myself) become increasingly angry with each passing day; not just for the financial damage done to us personally, but the political, economic, and social damage incurred on the “99{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528},” for the benefit of the 1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.  Which is why, per today’s second follow-up to May 2016’s “Precious Metals and Bitcoin – Twin Destroyers of the Fiat Regime,” I am so excited about the dramatic, generational impact of crypto-currency.

On the eve of this extremely important challenge for Bitcoin – i.e., the “Bitcoin Cash” hard fork that is anticipated to occur less than an hour from now, at 8:20 AM EST (ironically, the same time as the COMEX open) – I attended the Denver Bitcoin Society meetup, where I was honored to kick off the meeting with a few words.  Which were, that in my role as Marketing Director of one of the nation’s oldest, most trusted bullion dealers, I am proud to be the biggest Bitcoin advocate in the Precious Metal community.  The reason being, that Bitcoin’s technology is so powerful, it may well serve as the “straw” that finally broke the “camel’s back” of fiat currency.  Which, as you might imagine, drew a rousing round of applause; given how, like Precious Metal advocates, the principal reason Bitcoiners “hoddle” (i.e. hold) Bitcoin is its perceived ability to serve as a gold-like store of value.

Yes, on the same day “BIP 148,” or the “User Activated Soft Fork” symbolically activated – i.e., the people’s response to “big blockers”’ attempt to commandeer the network; Bitcoin Cash’s success – or more likely, failure – will in many ways, determine the pace of adoption of the real Bitcoin.  If “BCC” fails to gain traction, as I anticipate, next week’s SegWit, or Segregated Witness protocol upgrade of the real Bitcoin will likely serve as a major positive catalyst for the sound money movement – as discussed in last week’s “Bitcoin SegWit activation – the gold Cartel’s worst nightmare.”  As whether Bitcoin becomes the world’s day-to-day, utilitarian currency of choice, the trend toward decentralization as the future of monetary value will dramatically accelerate.

As I wrote in December’s “why Bitcoin will make gold and silver go up,” I (more than ever) believe the monetary disruption Bitcoin is capable of – potentially, NOW – could be so powerful, it will cause governments to refocus their manipulative efforts – from the “barbaric relics” gold and silver, to the “newfangled technology” Bitcoin.  Which, at a time when Precious Metal supply is already historically low; whilst money printing is primed for another, potentially hyper-inflationary leg higher; may well hasten the end of an increasingly “unnecessary” gold Cartel.

As, if Precious Metals’ inevitable surge is caused NOT by a catastrophic monetary event; but instead, a diversion of the powers that be’s’ attention by Bitcoin; gold and silver holders may well get to enjoy the financial windfall they’ve been waiting so long for.  Potentially, in an environment NOT characterized by economic and/or monetary disaster.  In other words, gold and silver could potentially rise five, ten, or even 20x in the “modern monetary world” due to “repricing” in a Cartel-deficient market – without catalyzing the draconian government responses that have always loomed over the sector like a sword of Damocles.  In other words, for the first time in generations, it will be acceptable to view Precious Metals as investment opportunities” – as opposed to age-old propaganda that they are only to be considered insurance against monetary cataclysm.

Read More @ MilesFranklin.com

Letters from India: How Bad Can the Crackdown on Cash and Tax Evasion Get? What’s Next?

by Mish Shedlock, Mish Talk

Reader “IB” an India businessman, writes about the crackdown on cash and tax evasion by Prime Minister Narendra Modi.

“IB” is very concerned about recent events, as well he should be.

Background for this story started on November 8, 2016, when Modi stunned the country with an announcement that 500-rupee ($7.30) and 1,000-rupee notes, which account for more than 85 percent of the money supply, would cease to be legal tender immediately. For details, please see Cash Chaos in India, 86{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of Money in Circulation Withdrawn; Cash Still King in Japan.

The crackdown on cash has hurt the poor the most, and likely the richest the least. Nonetheless, Modi has widespread popular support.

Modi’s latest set of mandates has small businessmen caught in the crossfire. Let’s tune into to an email from “IB” (India Businessman) for some details.

Hi Mish,

I am writing from Mumbai, India. I have been running a small business for a decade now. Since the business has been profitable we have also been paying tax as applicable. But with the introduction of Goods and Services Tax (GST) in India from July 1, 2017, it looks like business might start experiencing difficulties soon due to its plethora of rules, some of which are mind-bogglingly inane.

More than the tax rates, it is the implementation and the draconian measures that have been taken by the Government that has made me come to this conclusion. Given that the incumbent government has been winning elections despite steps like demonetization and the opposition is in complete disarray (Modi is a great orator), they have been emboldened to introduce measures that would be viewed as draconian by normal standards. In this context, I have to mention Modi has been able to mesmerize voters to an extent that he can make even pain appear as something that is pleasurable and he has been able to conquer state after state and has an invincible aura about him now. Such acts always bring Goebbels to my mind.

I am attaching an article that highlights three steps (of the many) that have been introduced in GST that I feel would impact businesses negatively.

Thanks for your time.

Regards,
IB

New Rules

“IB” emailed a lengthy document describing new rules. What follows is a short list of three key points that I condensed from the document.

  1. The government will not allow Input Tax Credit on GST paid to vendors if the vendors do not pay their own taxes. The issue here is the Modi is forcing the role of tax-enforcement on businesses who buy goods for resale.
  2. Tax payments are required every month. For all cash businesses, there is no problem. There is a huge problem for those who have to pay taxes on receivables, in advance, when the business owners might not even get paid. Liquidity will kill many small businesses.
  3. Modi now wants three tax filings every month plus an annual tax return making it 37 overall. Currently, businesses file service tax returns twice in a year while they pay their taxes every quarter. Now with GST, small businesses have to file 3 returns every month, month on month, year on year, with fines stipulated for non-compliance.

All Hail Modi

The Economic Times reports PM Narendra Modi steps up assault on Congress, eyes Indian supremacy

Prime Minister Narendra Modi’s ruling alliance is stepping up its assault on the opposition Congress party as it looks to expand its national dominance and moves closer to securing a majority in the upper house of parliament.

How to Destroy an Economy

This is the path that populist fools take to gain control and destroy economies.

When tax collections actually go into reverse as businesses fail, Modi will come up with another set of ill-advised reforms, perhaps a total ban on cash.

All it takes is a Congressional majority and Modi can and will do what he wants.

In all likelihood, Modi’s enemies will soon be silenced for the “good of society”.

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