Wednesday, July 17, 2019

Currency exchange value dynamics

by Alasdair Macleod, GoldMoney:

In a recent article[i] I postulated that the dollar could lose all its purchasing power with a rapidity that will come as an unpleasant bombshell, even to those who already see inflation as society’s greatest problem in the future. The key to understanding why this may be so lies in human reactions to the monetary consequences of the next credit crisis. The undermining of the dollar as a currency affects all other fiat currencies, because it is the reserve currency and all financial markets use it as the pricing medium for commodities and for much of international trade.

A comprehensible analysis of currency exchange dynamics must therefore concentrate on the dollar, only bringing in the broader picture when appropriate. In this article’s context, currency exchange dynamics refers primarily to events that lead to a change in the dollar’s purchasing power. 

The dollar has suffered monetary inflation ever since the Federal Reserve Board was created, both in terms of the expansion of base money and of bank credit. The effect in terms of loss of purchasing power has so far come in two shifts. The first was in 1934, when the dollar was devalued against gold by 40%, and the second following the collapse of the London gold pool in the late 1960s, since when the dollar has lost a further 97.4%.

The precedent has therefore been set for a continuing trend, that will eventually conclude with the destruction of the current monetary system. We know this because monetary regimes come and go, leaving gold and silver as the only solid forms of money throughout human history. Therefore, the end of the dollar, along with the whole fiat currency system, just like the end of empires, is one of the monetary certainties. But only a small minority of analysts are conscious this is so and appear to assume the current monetary state will continue indefinitely. 

This article argues the end of the current monetary regime could be much closer than even the uber-bears think. If so, it will be due in part to the extraordinary circumstances currently evolving. 

Gold and silver, in terms of their purchasing power, are and always have been a safe haven from state-induced inflation and historically have remained relatively stable measured against other commodities, except in times of escalating financial violence when a credit crisis occurs. However, the quantities of fiat currencies relative to the available monetary gold are now far too large for this relative stability to continue even ahead of the next credit crisis, with gold and silver’s values having the potential to increase significantly, measured against both fiat currencies and commodities.

Potentially, fiat currencies face a perfect storm from an upcoming credit crisis, from the consequences of central banks’ misguided attempts to make the banking system catastrophe-proof, and from the spontaneous development of an alternative asset system in cryptocurrencies. 

The prospects for the dollar are already deteriorating. The US budget deficit is escalating at the most inappropriate stage of the credit cycle, leading in turn to increasing US trade deficits, and therefore net selling of yet more dollars on the foreign exchanges. Government funding through Treasury issues is set to accelerate at a time when overseas ownership of US dollar-denominated bonds, which increased while the dollar was strong, are likely to sold, now the dollar is weakening. A falling dollar means rising commodity prices on the exchanges, rising domestic inflation and a sliding bond market. The Fed, having an eye on the risks to both private sector and government debt, is likely to be too slow to counter these negative forces.

Within the credit cycle, it is always rising prices, the consequence of earlier credit expansion, that lead into the final crisis stage. To combat rising price inflation in excess of their 2% targets, central banks will be forced to increase their deposit rates, while the time-preference on loans and bonds increases at the behest of markets. 

These increases only end when the cost of financing and refinancing commercial projects exceeds the return on them, and malinvestments are revealed. At that point, escalating losses on bank loans force banks to retrench, particularly on loans for working capital. And without working capital, business failures quickly escalate.

Consumer debt is now a major factor

The sequence of events in the classic definition of a credit induced business cycle has gradually changed in one important respect. Instead of bank credit being taken up by businesses seeking to satisfy consumer demand arising from the discouragement to saving from low interest rates, marginal consumer demand has itself been bolstered by increasing levels of borrowing. This is because the wealth transfer due to monetary inflation is now severely taxing American consumers, who have abandoned savings habits and instead are borrowing to maintain their standard of living. Therefore, swings in savings rates, an important signal to businesses in the past, are not so relevant as they used to be.

When the credit crisis arrives, the composition of all that consumer debt also becomes important. At the end of 2017, US household debt stood at $13.15 trillion, and was comprised of $9.33 trillion of mortgage debt and £3.82 trillion of non-housing debt.[ii] Most of the mortgage debt is held by government agencies, taken into conservatorship by the US Treasury during the last credit crisis. We can safely assume government policy will discourage foreclosures on delinquent mortgages. That leaves non-housing debt, which is mostly not collateralised.

Therefore, when a credit crisis hits, in addition to a rapid reduction in interest rates and an expansion of base money through quantitative easing to rescue the wider economy, consumer finance companies will also need a backstop. The difference today from the last crisis is there is no reason to suppose there will be a significant collapse in residential property prices, though they may or may not be undermined to some degree by higher interest rates before the crisis arrives. That being the case and even allowing for the negative effects of losses in financial markets to consumer wealth, consumer credit seems unlikely to contract by very much, as it threatened to do at the height of the last credit crisis. Certainly, it will be the Fed’s policy to maintain consumer confidence at all times.

A further dampener is potential job losses. But here again, the Fed will almost certainly support the banks, on the understanding they don’t exacerbate the crisis by foreclosing on businesses in the general sense. After all, the Fed succeeded in stopping a financial and systemic crisis in 2008 by doing just that and is likely to feel confident today that policy is the most practical solution in a future credit crisis. Therefore, we can conclude that consumers, who are also employees, will see in aggregate little reason to reduce their spending significantly, and consumer finance companies will be encouraged to continue to offer credit. An important consequence is price inflation will continue.

Of course, we must not make light of the dangers. Unemployment will rise, as will personal bankruptcies. Banks will stop offering credit for working capital purposes for smaller businesses. That’s what happens in every credit crisis. But the point at issue is the scale of the initial effects of the crisis stage of the credit cycle, which may not be as disastrous as the mountain of outstanding debt to be unwound implies. What happens after that is another matter.

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Residents of Swedish ‘No Go Zone’ Suburbs Afraid to Leave Their Homes

by Chris Tomlinson, Breitbart:

Almost half the residents in many troubled no-go zones in Sweden say they are too afraid to leave their homes in the evening and at night due to rampant violence and criminality.

According to a survey conducted by the Swedish National Council for Crime Prevention (Brå), residents of troubled suburbs in heavily migrant populated cities like Malmö are increasingly fearful of being robbed or injured by criminals. Nearly half, 48 per cent, of respondents in the survey who live in Malmö suburbs feel that the area is too dangerous to go out at night, SVT reports.

The number of fearful residents is high in other areas of the city, the population of which, according to reports, is growing solely due to mass migration. In Northern Malmö, 36 per cent said they were afraid to go out in the evenings and in the nearby city of Lund, 22 per cent said they felt unsafe at night.

The survey also examined residents’ opinions on crime in Swedish society in general. In some areas like the city of  Ystad, 58 per cent of those surveyed complained that they had deep anxiety over the levels of criminality in their area.

Sweden’s other major cities like Stockholm and Gothenburg showed similar survey results and many in Sweden have become more concerned over the criminality in no-go suburbs despite years of reports of riots and violence.

Last month, the Moderate Party said the military should be deployed to aid police in no-go zones because police face danger when answering calls in the areas. In some cases, “youths” have purposely called emergency services to a certain area to attack them.

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“Mysterious New Derivative Whale!” (Bix Weir)

from RoadtoRoota:

An Examination Of The Leftist Cult And Their Religion

by Brandon Smith, Alt Market:

There is a common misconception among newer activists in the liberty movement that the idea of the “false left/right paradigm” means that there is no political spectrum; that the entire notion of left vs right is a fabrication. This is not exactly the case. When we talk about false paradigms in regards to politics (or geopolitics), what we are actually referring to is the elitist class, otherwise known as globalists, and the fact that they have no left or right political orientation. They do not care about Democrats or Republicans, they have no loyalty to either party. Their loyalty is to their own agenda, and they will exploit BOTH sides to get what they want whenever possible.

What Should Be Done To RINOs Like John McCain That Betray Us Over And Over Again?


by Michael Snyder, The Economic Collapse Blog

By destroying the last chance that the Republicans in the Senate had to repeal Obamacare, John McCain has ensured that he will go down in history as a backstabbing traitor that cared nothing for true conservative values.  For decades, RINOs like McCain have promised to uphold conservative values while campaigning, but once they have gotten into office they have betrayed us over and over again.  How much more are we going to take before we say enough is enough?  I hope that you will join me in my effort to remove every RINO from Congress.  What John McCain has just done should make all of us absolutely sick.  Thanks to him, Obamacare is going to remain the law of the land for the foreseeable future even though the Republicans have control of the White House, the Senate and the House of Representatives.  If I go to Washington, I am going to declare war on RINOs like McCain, but the only way that will be possible is if thousands of good conservatives help fund this campaign.  So far my campaign has created an enormous amount of buzz all over the state, but the only way that we are going to be able to capitalize on all of that buzz is if you all stand with me.

If what John McCain did on Friday does not make you angry, I am not sure what will.  Together with Lisa Murkowski of Alaska and Susan Collins of Maine, McCain killed the very last chance of repealing Obamacare in the Senate.  The following comes from the Washington Post

A convergence of contentious issues, as well as embarrassing infighting and shake-ups at the White House, have a number of Republicans suddenly in open resistance to President Trump on a number of fronts.

The most dramatic moment came in the early-morning hours Friday, when Sen. John McCain, an ailing war hero and onetime Republican presidential standard-bearer, joined two other GOP dissidents, Sens. Lisa Murkowski of Alaska and Susan Collins of Maine, to cast the deciding vote to kill a scaled-back plan to dismantle tenets of the Affordable Care Act — and with it, perhaps, Trump’s promise to repeal Obamacare.

McCain had specifically campaigned on repealing Obamacare in 2010 and in 2016.  In fact, just last year he was running campaign ads in which he boldly proclaimed that he was “leading the fight to stop Obamacare”.

Now he has done this.

And it was quite a dramatic moment when he finally cast his vote.  Some even believe that it is going to go down as the most famous “thumbs-down” in Senate history

The clerk read the Arizona senator’s surname in the microphone of the tense Senate chamber. The two words were met with silence — John McCain had stepped out of the room minutes before.

But moments later, he reappeared. By then, the alphabetical roll call had reached Sen. Gary Peters of Michigan. McCain walked over to the front of the chamber, raising his right arm. He held it up in the air until he had the attention of the clerk.

“No,” he said, with a swift thumbs-down.

In response, we need to give our own “thumbs-down” to every RINO on the federal, state and local levels all around the country.

If you are sick and tried of RINOs like McCain, then I would like to ask for your support.  My team has set up a brand new website called Help Michael Win where you can help us raise $3,000 to print more than 20,000 brochures.  We have volunteers that are ready to get brochures into the hands of potential voters, but the only way that we can do this is if the funding comes in.  If 300 of you were to donate just 10 dollars each, we will be able to meet our goal.

But if we all sit back and do nothing, RINOs such as McCain will continue to rule Washington.  Just before he cast his decisive vote, McCain actually went over to the Democrats to tell them what he was about to do.  The following comes from the Washington Post

Shuffling across the chamber, Mr. McCain convened with Democrats, informing them of his choice. “They can read my lips,” he said to laughs, fearing his hand would be tipped ahead of time from inside the gallery.

At one point, the senator joined Ms. Collins and Ms. Murkowski, telling them they had done the right thing.

“We talked about how if anyone knew about doing the right thing it was John McCain,” Ms. Collins recalled. “It was very moving.”

I am the only candidate in this race that is openly going to go to war with McCain and others like him in Congress.

Since there is no incumbent, my race is totally wide open, and it will ultimately be decided by the enthusiasm of people like you.  If everyone in my district that is familiar with my work ends up voting for me in the Republican primary next May, I will win and it won’t even be close.

I am so tired of just sitting back and doing nothing while RINOs like McCain slap us in the face over and over again, and other conservative authors feel the exact same way.  Here is just one example

“For American voters expecting their Republican-dominated House, Senate and White House to honor their years of repeal promises and actually, well, repeal Obamacare, McCain’s thumbs-down was a face-slap moment that will be remembered in history as a textbook classic case of political betrayal. McCain may feel liberated. But his name will go down in conservative history books as a traitor to the cause.”

10 Numbers That Prove That We Are Rapidly Becoming A Nation Of Government Dependents

by Michael Snyder, The Economic Collapse Blog:

As the middle class disintegrates and poverty grows, more Americans than ever are becoming dependent on the government just to survive.  Today, we live in a country where most workers do not earn enough to support a middle class family, and we are seeing the homelessness crisis spiral out of control in major cities on both coasts.  During this election cycle, many conservatives have been freaking out that an increasing number of Democrats are openly embracing socialism, but the truth is that we are already most of the way to becoming a socialist country.  In fact, as you will see below, more than half of all Americans currently receive more money from the government than they pay in taxes.  We have become absolutely addicted to government money, and this is one of the major trends that is eating away at our nation like cancer.

The Conspiracy to Remove Trump from the Presidency — Paul Craig Roberts


by Paul Craig Roberts, Paul Craig Roberts:
US intelligence services, the Democratic Party, some Republicans including members of President Trump’s own government, and the presstitute US media are conspiring against American democracy and the President of the United States.

We know this from a public letter to Trump published today, July 24, 2017, on by Veteran Intelligence Professionals for Sanity. See:

Unlike the CIA, NSA, and FBI, the veteran intelligence professionals performed forensic investigations. They found conclusive evidence that the alleged “Guccifer 2.0” July 5, 2016 intrusion into the DNC server [these are the emails that show the DNC working for Hillary against Sanders] was not hacked but leaked. The leaked documents were copied onto an external storage device and doctored with a cut-and-paste job to implicate Russia as having hacked the documents.

Investigation Shows The MMR Vaccine Was Approved Based On Small Studies Showing Disturbing Results

by Richard Enos, Collective Evolution:

  • The Facts:A FOIA request by Del Bigtree reveals that the 8 studies supporting the release of the MMR vaccine were only 6 weeks long, used only 800 children, and led to damaging respiratory and gastrointestinal illnesses to many of the children.
  • Reflect On:Are we ready to collectively deal with the implications of ongoing revelations of industry malfeasance with regards to vaccines that for some may require a shift in long-held beliefs?

The Climate Apocalypse Keeps Getting Postponed

by Lee Enochs Technocracy News:

It’s always just around the corner, but it never arrives. Prophets of climate doom like Al Gore and Alexandria Ocasio-Cortez (D-NY) are almost laughable except that so many people continue to be lured by their siren call. ⁃ TN Editor

In recent years, the controversial subject of global warming and a potential “climate disaster” has received a lot of media attention.

There are progressive politicians who are now arguing that unless profound changes in public policy are made to reduce worldwide carbon emissions, we face an impending world-wide climate related catastrophe.

Pomegranate juice could be the key to lowering bad cholesterol levels


by Ralph Flores, Natural News:

In the U.S., fall is also the time for pomegranates. While it’s known for its delicious “seeds” (which are technically called arils), it’s mostly known for being labor-intensive as the cracking open a pomegranate requires both patience and skill. Still, that shouldn’t be a reason to stop you from getting those delicious seeds, as German researchers have found that a compound in pomegranate juice can reduce the effects brought about by bad cholesterol. In their study, which appeared in Cyta – Journal of Food, the team from Friedrich-Alexander University looked at the whether pomegranate seeds, as well as olive oil and vitamin E (alpha-tocopherol), could prevent copper-induced LDL (low-density lipoprotein) oxidation.