Register

Peak Oil is You


Donate Bitcoins ;-) or Paypal :-)


Page added on July 7, 2018

Bookmark and Share

Inflation Rearing Its Ugly Head

Inflation Rearing Its Ugly Head thumbnail

The world of finance and investment, as always, faces many uncertainties. The US economy is booming, say some, and others warn that money supply growth has slowed, raising fears of impending deflation. We fret about the banks, with a well-known systemically-important European name in difficulties. We worry about the disintegration of the Eurozone, with record imbalances and a significant member, Italy, digging in its heels. China’s stock market, we are told, is now officially in bear market territory. Will others follow? But there is one thing that’s so far been widely ignored and that’s inflation.

More correctly, it is the officially recorded rate of increase in prices that’s been ignored. Inflation proper has already occurred through the expansion of the quantity of money and credit following the Lehman crisis ten years ago. The rate of expansion of money and credit has now slowed and that is what now causes concern to the monetarists. But it is what happens to prices that should concern us, because an increase in price inflation violates the stated targets of the Fed. An increase in the general level of prices is confirmation that the purchasing power of a currency is sliding.

According to the official inflation rate, the US’s CPI-U, it is already running significantly above target at 2.8% as of May. Oil prices are rising. Brent (which my colleague Stefan Wieler tells me sets gasoline and diesel prices) is now nearly $80 a barrel. That has risen 62% since last June. If the US economy continues to grow the Fed will have to put up interest rates to slow things down. If it doesn’t, as money-supply followers fear, the Fed may still be forced to put up interest rates to contain price inflation.

It is too simplistic to argue that a slowing of money supply growth removes the inflation threat. In this article, I explain why, and postulate that the next credit crisis will be the beginning of the end for unbacked fiat currencies.

The fictions behind price inflation

The CPI-U statistic is an attempt to measure changes in the general price level, defined as the price of a basket of goods and services purchased by urban consumers. The concept is flawed from the outset, because it is trying to measure the unmeasurable. Its mythical Mr or Mrs Average doesn’t exist. Not only is the general price level different for each individual and household, but you cannot ignore different classes, professions, locations, cultural and personal preferences, and assume they can be averaged into something meaningful. We can talk vaguely about the general level of prices, but that does not mean it can or should be measured. Averaging is simply an inappropriate construction abused by mathematical economists.

There is also a fundamental and important dynamic issue, ignored by economic statisticians. You cannot capture economic progress with statistics, let alone averages. The ever-present change in the human condition is the result of an unquantifiable interaction between consumers and producers. What a consumer bought several months ago, which is the basis for statistical information, can be no more than an historical curiosity. It does not tell us what he or she is buying today or will buy tomorrow. Nor can the statisticians possibly make the value judgements that lead consumers to switch brands or buy different things altogether. In short, even if there was a theoretically justifiable price index, it measures the wrong thing.

The statisticians are simply peddling a myth, which leaves it wide open to abuse. The myth-makers, so long as the myths are believed, control the narrative. It is in the interests of the statisticians’ paymasters, the state, to see price inflation under-recorded, so it should be no surprise that independent attempts to record price inflation put it far higher.

Independent estimates suggest that a price inflation rate of around 10%, depending on the urban location, is a more truthful assessment.[i] If this was officially admitted, the continuing impoverishment of the ordinary American would be exposed, because the GDP deflator would be large enough to record an economy continually contracting in real terms. And this appears to have been the situation since the Lehman crisis, as well as in many of the years preceding it.

You cannot, year in year out, take wealth away from consumers without crippling the economy. A continual economic contraction, which is the inevitable result of monetary debasement. It can never be officially admitted, least of all by the Fed, which has total responsibility for the currency and the banking system. The Fed does not produce official price inflation estimates, which is the responsibility of the Bureau of Economic Affairs, so the Fed conveniently hides behind another government department.

But if the Fed did admit to this statistical cover-up, what could it do? The whole concept of monetary stimulation would quickly unravel, and the debate would almost certainly move away from policies that rely on monetary smoke and mirrors towards the reintroduction of sound money. The Fed would be out of a job.

However, the government now depends on inflationary financing to cover persistent budget deficits, if not directly, then indirectly through the expansion of bank credit to finance the acquisition of government bonds. In the short term, President Trump has made things worse by raising the budget deficit even further, which will be financed through more monetary inflation. And in the long term the obligations of increasing welfare costs will ensure accelerating monetary inflation ad infinitum is required to pay the government’s excess spending.

So, we can say with confidence that the purpose of monetary policy has quietly changed from what is commonly stated, that is to foster the health of the US economy. Instead it is to ensure government spending can proceed without interruption and without asking the people’s representatives permission to raise taxes.

Supply-side and time factors

The conventional neo-Keynesian view of price inflation is that rising prices are driven by excess demand. In other words, an economy that grows too fast leads to increasing demand for the factors of production.

This approach wrongly plays down the role of money. If the quantity of money is fixed, the increased demand for some factors of production can only be met by reduced demand for other factors of production. If the quantity of money and credit is increased the redistribution of factors of production is impaired, and common factors are bid up to the extent the extra money is available. The source of higher prices is clearly the extra money.

When a central bank, like the Fed, creates money and encourages the expansion of credit, it takes time for this extra money to work through the system. It is deployed initially in the financial, as opposed to the productive side of the economy. This is because monetary inflation is initially directed at the banks to stabilise their balance sheets. And once the immediate crisis is passed, the banks continue to extend credit to the government at suppressed interest rates by buying its bonds. Suppressed interest rates and therefore bond yields lead to a bull market in equities, encouraging credit-backed speculation. Bank credit is then increasingly extended to businesses and also to consumers through credit card and mortgage debt. At this point, price inflation then begins to be a problem.

The eighteenth-century banker and economist Richard Cantillon was the first to describe how the new money gradually disperses through the economy, raising prices in its wake. To his analysis we must in modern times add the course it takes through financial markets to impact the non-financial economy.

The time taken for new money and credit to be absorbed into the economy governs the length of the period that separates successive credit crises. Cantillon also made the central point that the gainers are those that get the new money to spend first, while the losers are those who find prices have risen before they get their hands on the new money. In effect, wealth is transferred from the latter to the former.

This wealth transfer benefits the government, the banks, and the banks’ favoured customers through the transfer of wealth from mostly blue-collar workers, the unemployed, retirees and those on fixed wages. The self-serving nature of the Cantillon effect is bound to influence monetary policy-makers in their understanding of the effects of their monetary policies. Blinded by self-interest and the interests of those near to them, they fail to understand exactly how the creation of extra money actually creates widespread poverty.

Monetary creation manifestly benefits the parties that control and advise the Fed, giving it and its epigones the rosy glow of institutional comfort and superiority. Everyone around it parties on the new money. And the licences to create it out of thin air given to the commercial banks are exploited by them to the full. They are temperamentally opposed to withdrawing the stimulus. It is hardly surprising the neo-Keynesians, with their flexible economic beliefs, no longer believe in only stimulating the economy to bring it out of recession. Instead they continue to stimulate it into the next credit crisis, as the ECB and the Bank of Japan currently illustrate, because everyone in the monetary establish wants the party to continue.

The link between monetary inflation and prices

There is no mathematical formula for the link between monetary inflation and prices. For modern economists, it comes down to their fluid mainstream opinion. Milton Friedman famously said, “Inflation is always and everywhere a monetary phenomenon”, but not everyone shares his conclusion. Central bankers note Friedman’s dictum but ignore it in favour of their ad hoc interpretation of the effects of monetary policy. The result is that in the absence of a sound understanding of the relationship between money, prices and asset prices, they always end up shutting stable doors after a new financial crisis overwhelms them.

It is a policy that always fails. Central bankers think the difficulty arises in the private sector, so they address what they see as evolving market-related risks. They fail fully to understand it emanates from their own monetary policies. Besides going against the grain of their own vested interests, convincing central bankers otherwise is made doubly difficult because there is no empirical proof that links the quantity of money in circulation with prices.

Logically, Friedman was correct. If you have more money chasing the same quantity of goods, its purchasing power will fall. That was the lesson of sound money, when it was beyond the reach of government creation and interference. The purchasing power of both sound and unsound money also vary due to changes in the general level of liquidity desired by consumers.

However, widespread use of sound money, gold or silver, also ensured that the price effect of changes in a localised desire for monetary liquidity were minimised through price arbitrage, so in those circumstances, the relationship between the quantity of money and the general price level was plain to see and unarguable. Unbacked national currencies do not share this characteristic, and their purchasing power is dependent only partly on changes in their quantity, being hostage to consumers’ collective desire to hold their own state’s legal tender. In other words, if consumers collectively reject their government’s currency, it loses all value as a medium of exchange.

In effect, there are two vectors at work, changes in the quantity and changes in the desire to hold currency. They can work in opposition, or together. Given the quantities of new currency and credit issued since the Lehman crisis, there appears to be a degree of cancelling out between the two forces, with the effects of a dramatic increase in the quantity of money being partially offset by a willingness to hold larger balances. The result is the dollar’s purchasing power has not fallen as much as might be expected, though as was discussed earlier in this article, the fall in the dollar’s purchasing power has been significantly greater than official inflation figures admit.

It is very likely that people and businesses in the US have been persuaded to hold onto cash balances and deposits at the banks by misleading official inflation figures. If the authorities had admitted to rates of price inflation are closer to the figures from Shadowstats and the Chapwood index, consumer behaviour would probably have been markedly different, with consumers reducing their exposure to a more obviously declining dollar.

In that event, both the effect of a massively increased supply of broad money combined with falling public confidence in the currency would almost certainly have worked together to rapidly undermine the dollar’s purchasing power. All experience tells us that unless a loss of confidence in the currency is nipped in the bud by a pre-emptive and significant increase in interest rates, a currency’s descent towards destruction can rapidly escalate. Doing it too late or not enough merely undermines confidence even more.

The issue of confidence poses yet another problem for the Fed. The extent to which currency values depend on misleading statistics represents a great and growing danger for future monetary policy, when statistical manipulation by the state is finally revealed to the disgust of the general public.

The dollar has nowhere to hide in the next credit crisis

The history of successive credit cycles shows that the general level of prices rises as a result of earlier monetary expansion. Inevitably, a central bank is belatedly forced to raise its interest rates, because the market demands it does so by no longer accepting the suppression of time-preference values.[ii]

Higher interest rates expose the miscalculations of the business community as a whole in their individual assessments for allocating capital. A slump in business activity ensues, and the banks, which are highly-geared intermediaries between lenders and borrowers, rapidly become insolvent. A credit crisis then swiftly develops into a systemic crisis for the banking system.

In the past, the encashment of bank deposits has been the way in which individuals tried to protect themselves from a bank’s insolvency. This created a demand for physical cash, which helped support the currency’s value through the systemic crisis. However, this prop for confidence in the currency in a crisis has now been effectively removed.

Central banks regard the right of the general public to encash their deposits as a hinderance to their attempts to stop banks failing. Since the 1990s, governments have gradually restricted public ownership of cash, accusing cash hoarders of criminal activities and tax evasion. More recently, they have moved towards banning cash altogether, assisted by the spread of contactless cards and other forms of electronic transfer.

The removal of the physical cash alternative forces a worried depositor to redeposit money from his bank into another bank he deems safer. The central bank can compensate for the loss of deposits in a bank which has lost its depositors’ confidence by recycling the surplus deposits accumulating in the other banks. It allows the central bank to rescue ailing banks behind closed doors, instead of having to deal with the contagious loss of public confidence that goes with an old-fashioned run on a bank. That is probably the overriding reason why central banks want to do away with cash.

Now let us make the reasonable assumption that the next credit crisis is worse than the last: that is, after all, the established trend. An ordinary saver is locked into the system and unable to demand cash to escape the risk of being a creditor to his bank and the banking system generally. His only remedy is to reduce his exposure to bank deposits by buying something, thereby giving the systemic and currency headaches to someone else. It is easy to envisage a situation where the marginal sellers of a currency held in bank deposits drive its purchasing power rapidly lower. All that is needed is an absence of buyers, or put another way, a reluctance to sell assets seen as preferred to owning the currency.

But what is safe to buy? Failing business models mean that non-financial assets fall in value and residential property prices, which are set by the interest cost and availability of mortgages, are likely to be in a state of collapse, at least initially. Equities will reflect these collapsing values as well. Government bonds are a traditional safe-haven asset, but government finances are certain to face a crisis with budget deficits rocketing out of control.

Prescient investors and savers are likely to anticipate these dangers in advance of the credit crisis itself and take avoiding action. That is how markets function. Now that the cash alternative has been effectively closed down, the only assets for which deposits are likely to be encashed in advance of the crisis are precious metals and cryptocurrencies. Therefore, it seems likely that safe-haven demand escaping falling currencies will initially benefit these asset classes. They will be, as the cliché has it, the canary in the coal mine.

Are we heading for the last conventional credit crisis?

This article has highlighted the deceitfulness of official US price statistics, and the way they have been used to fool both markets and consumers. The Fed’s monetary policies are founded on quicksand and could face a different set of challenges from the last credit crisis: a general loss of public confidence in the Fed itself.

In the Lehman crisis, we looked to the Fed to rescue us from a complete systemic collapse. It succeeded by doubling base money in a year from September 2008, eventually increasing it nearly five times over the following five years. The fiat money quantity (FMQ), which includes all dollar fiat money and credit (both in circulation and reserves), increased threefold from $5.4 trillion to $15.6 trillion. These are measures of the massive monetary expansion, whose price effects have been successfully concealed by official statistics. The whole process of rescuing the economy from the last banking crisis and making it appear to recover has been a truly extraordinary deception.

When one stops admiring the undoubted skill the monetary authorities have displayed in managing all our expectations, there are bound to be doubts. The Fed appears to be normalising its balance sheet, presumably so it can do it all over again. But the ratio of FMQ to GDP was 33% in 2007 before the Lehman crisis, and is at a staggering 80% today. On any measure, we are moving towards the next credit crisis with far too many dollars in issue relative to the size of the US economy.

When the next credit crisis hits us, the Fed is likely to find it impossible to expand its balance sheet and support both the banks and the government’s finances through QE in the way it did last time, without undermining the purchasing power of the dollar. A crisis that is demonstrably caused by an unbearable burden of debt cannot continually be resolved by offering yet more credit. Last time it worked without undermining the currency, next time we cannot be so sure. But the Fed has no other remedy.

The next credit crisis could therefore be the last faced by today’s fiat currency and banking system, if the debasement of currency required to prevent a debt meltdown brings forward the destruction of the dollar and all other currencies that are linked to it. The credit cycle will therefore cease. We should shed no tears for its ending, but our rejoicing must be ameliorated by the political and economic consequences that follow.

The end of fiat money may not happen immediately, because the general public can be expected to hang on to the fond illusion their dollars will always be valid as a medium of exchange before finally abandoning all hope for it. That has been the experience of documented inflations in the fiat currency age, from the European hyperinflations in the early 1920s onwards. And since all currencies are in the same unbacked fiat-currency boat, the purchasing power for them is likely to collapse as well, unless individual central banks introduce credible gold convertibility.

We have well-documented individual monetary collapses, even regional ones such as those that followed after the First World War in Europe. In Austria it ended four years after the war, in Germany five. But a transcontinental monetary crisis leading to the end of the global fiat currency regime takes us all into unknown territory, whose timing and progression, if it occurs, is hard to estimate.

My best guess for the timing of the next credit crisis remains later this year, perhaps the first half of 2019 at the latest. The short time that is left is the consequence of the enormous monetary debasement throughout the credit cycle not just in the US but globally as well. And the small amount of headroom for interest rates before the crisis is triggered, due to the accumulation of unproductive debt since the last crisis.

Total fiat currency destruction should take at least a further year or two, perhaps three from there. But first things first: the current phase of the credit cycle must evolve into a credit crisis before we can feel our way through its developing consequences.

Alasdair Macleod ,  GoldMoney.com



112 Comments on "Inflation Rearing Its Ugly Head"

  1. MASTERMIND on Sat, 7th Jul 2018 6:31 pm 

    And what causes inflation? High oil prices..

  2. MASTERMIND on Sat, 7th Jul 2018 6:38 pm 

    Protesters confront Mitch McConnell over immigration in Louisville

    https://www.usatoday.com/story/news/nation-now/2018/07/07/mitch-mcconnell-confronted-louisville-protesters-saturday/765771002/

    This is what happens when you rig elections for the elites..

    Just wait till the oil starts to run out..

    The elites are trapped like rats..

  3. Makati1 on Sat, 7th Jul 2018 7:02 pm 

    Inflation is only becoming more obvious with incomes falling. Real Us inflation has been 4%, or more for decades. Not the ~2% the government lies tell you in the MSM. The new way of calculation inflation is to omit FOOD and ENERGY (gasoline). Try living without both. LOL

    http://www.shadowstats.com/alternate_data/inflation-charts

    At 4%+, the cost of living doubles in <18 years. So, since 2000, the cost of living has doubled. Has your income doubled in the same time? Now you know why you feel pinched and why there are so many drug deaths and suicides.

    Inflation hit 12% in 1975 and 14% in 1980. At that rate, cost of living would double in less than five years. It appears to be returning. Are YOU prepared?

    BTW: "…unless individual central banks introduce credible gold convertibility." For instance, China and Russia who are already preparing a gold backed trading system.

  4. Davy on Sat, 7th Jul 2018 7:04 pm 

    “China and Russia who are already preparing a gold backed trading system.”

    any references for that statement 3rd world?

  5. Makati1 on Sat, 7th Jul 2018 7:08 pm 

    Many Davy, but if you were paying attention to reality and current events over the past year you would already know it is true. Use you search engine and look it up yourself. If you know how. I’m not your servant.

    Hint: “China’s gold backed currency”

  6. Davy on Sat, 7th Jul 2018 7:10 pm 

    I agree 3rd world, they need more gold to be ready to pay for the cleanup of a busted financial system.
    “China Threatened By “Vicious Circle Of Panic Selling” From Marketwide Margin Call”
    https://tinyurl.com/ycuqcfum

    “In short, as prices drop ever lower, Chinese regulators are stretching the rules hoping that the current wave of selling ebbs and prices rebound from levels that would have already triggered forced liquidations. Or, as Morgan Stanley writes, China is doing everything in its power “to maintain stability of capital markets and avoid a vicious circle of default and panic selling, causing markets to spiral down further.”

  7. Davy on Sat, 7th Jul 2018 7:12 pm 

    “Hint: “China’s gold backed currency”

    Hint: it is not gold backed 3rd world except in your fantasy world

  8. Makati1 on Sat, 7th Jul 2018 7:43 pm 

    Davy, you still refuse to see the real reason or facts, that the Us PTB are taking down the financial system to level the playing field for a one world system and China is preparing the new gold backed system so it does not go down with the Us. Your Sinophobia indoctrination is obvious. The Us is good at brainwashing.

    The Us has no gold. It has been selling it constantly to pay debts. THAT is why there is never going to be a public auditing of any Us gold. There is none. Or so little that it doesn’t count. Whereas, China may have as much as 30,000 tons according to some estimates. Russia, Iran, India and some EU countries are building their gold supplies for the coming change. We now see 3rd world America for what it is. A has-been empire in collapse.

    Slip slidin’…

  9. MASTERMIND on Sat, 7th Jul 2018 7:43 pm 

    Alex Jones belongs to a long line of shrill, right-wing male hysterics

    http://www.latimes.com/opinion/op-ed/la-oe-heffernan-20180707-story.html

  10. Makati1 on Sat, 7th Jul 2018 7:49 pm 

    BTW Davy: I thought that Zero Hedge was propaganda? Faux news? Well, most of its own articles are that. But they give a good “other side” to the picture.

    The Us wants so much for China to go down that you will NEVER get a positive article about China from ANY Us MSM source. Never. Of course, the Us is the one that is failing and they want someone else to blame. Typical American reaction to their own failures.

    I hope the Us collapse comes tomorrow. I’m prepared. Are YOU? LMAO

  11. Outcast_Searcher on Sat, 7th Jul 2018 7:50 pm 

    GoldMoney.com wound up about 2.8% inflation, and calling for dollar destruction.

    Gee, why am I not surprised? A marketer talking his own book!

  12. Davy on Sat, 7th Jul 2018 7:53 pm 

    “Davy, you still refuse to see the real reason or facts, that the Us PTB are taking down the financial system to level the playing field for a one world system”
    There is no evidence of that 3rd world. That is just conspiracy thinking’

    “China is preparing the new gold backed system so it does not go down with the Us.”
    There is no evidence of a gold backed system. They are stockpiling gold but that does not imply a gold back system.

    “Your Sinophobia indoctrination is obvious. The Us is good at brainwashing.”
    Pricking nonsense

    “The Us has no gold.”
    You have no evidence of that

    “It has been selling it constantly to pay debts.”
    Do you have any references?

    “THAT is why there is never going to be a public auditing of any Us gold.”
    Who says there needs to be a public audit?

    “ There is none. Or so little that it doesn’t count. Whereas, China may have as much as 30,000 tons “
    30,000…LMFAO

    according to some estimates. Russia, Iran, India and some EU countries are building their gold supplies for the coming change.
    Do you have those “some estimates”?

    “We now see 3rd world America for what it is. A has-been empire in collapse.”
    nonsense

    “Slip slidin’…”
    Worn out expression 3rd world

  13. Outcast_Searcher on Sat, 7th Jul 2018 7:54 pm 

    When interest rates were near zero and inflation ran below 2% in the US, the doomers were calling for catastrophe.

    Now that it looks like we might be returning to normal inflation, which implies more normal interest rates (since the marketplace WILL compensate by the people buying debt for interest payments) — what are the doomers going to call for? Catastrophe, even though that’s more like BAU since the 40’s.

    Of course, fast crash doomers always call for imminent catastrophe for decade after decade (without success), and then wonder why most people aren’t listening to them any more.

  14. MASTERMIND on Sat, 7th Jul 2018 7:55 pm 

    Outcast

    The Fed says inflation is low but you don’t agree. Here’s why you both might be right
    http://www.latimes.com/business/la-fi-inflation-consumers-20161017-snap-story.html

  15. Davy on Sat, 7th Jul 2018 7:57 pm 

    “BTW Davy: I thought that Zero Hedge was propaganda?”
    According to your buddy grehgiee it is.

    “I hope the Us collapse comes tomorrow. “
    No shit, 3rd world, you have only been saying this constantly for 7 years now. I think most of us get it.

    “I’m prepared. Are YOU? LMAO”
    With you approaching 80 in a 3rd world country with no support network I sure hope you are prepared.

  16. MASTERMIND on Sat, 7th Jul 2018 8:00 pm 

    Outcast

    Every major monthly US government economic report – employment, GDP, inflation – is little more than a fraudulent propaganda tool used to distort reality for the dual purpose of supporting the political and monetary system – both of which are collapsing – and attempting to convince the public that the economy is in good shape..

    https://imgur.com/a/pYxKa

  17. fagkiller on Sat, 7th Jul 2018 9:40 pm 

    Speaking of ugly head. MM how come you aren’t getting busy giving head to you brother Apneaman? Stop wasting time and space on this site.

  18. print baby print on Sun, 8th Jul 2018 12:56 am 

    Very good article as Mack said nicely just look around you fuck the eia fed bla bla bla sheets But Mak this time I am on Davy side No way that China can have gold backed currency it must come to big monetary base shrinkig , but they are great as a socitey even usa couldnt destroy them and their comunisam and make them ‘ a giant banana republic’ but they as well need war to clear up the mess because they too became capitalist , and just to be clear comunisam is not good and the capitalisam is not god some kind of swedish wealfere state is good

  19. MASTERMIND on Sun, 8th Jul 2018 1:24 am 

    Clogg

    This is what we are going to do to your sister

    https://i.redd.it/0rrh7qtd0n811.jpg

    LMFaO!

  20. MASTERMIND on Sun, 8th Jul 2018 1:29 am 

    Madkat

    Nobody wants the stupid Yuan..You dont know shit about currencies..The only challenge the dollar has is the euro..But with all the far right lunatics coming to power their..The dollar really has no challenger and will be the worlds reserve currency until the collapse..

  21. Makati1 on Sun, 8th Jul 2018 3:07 am 

    Well, yes, until the collapse…maybe tomorrow? But then the gold backed yuan will be king and you will live in a 3rd world banana police state, or worse. I won’t. I’ll live in a country that is friendly with China and Russia and will continue trade. Not so for what is left of the Us. Denial does not change the future, MM.

  22. Cloggie on Sun, 8th Jul 2018 3:26 am 

    The only challenge the dollar has is the euro..But with all the far right lunatics coming to power there..The dollar really has no challenger and will be the worlds reserve currency until the collapse..

    If “far right lunatics” prevail in Europe and parts of America, the euro might come to the “KKK-Mississippi bassin” as well.

    Putin-Russia already expressed interest in the euro:

    http://www.spiegel.de/international/europe/from-lisbon-to-vladivostok-putin-envisions-a-russia-eu-free-trade-zone-a-731109.html

    Russian Prime Minister Vladimir Putin would like to see a free trade agreement between the European Union and Russia. In a Thursday editorial for a German newspaper, he describes his vision of “a unified continental market with a capacity worth trillions of euros.”

    [violins please…]

    The euro, the “currency of the white race”.

  23. deadly on Sun, 8th Jul 2018 3:44 am 

    Your deposits should equal your monthly payments to pay your bills.

    Not another reason to have money in a bank.

    A minimum balance anywhere between zero and one hundred is ok.

    People don’t have money in savings because the banks charge a negative interest rate, you lose money when you try to save at a bank.

    The banks, all of them, no longer can be trusted. I haven’t trusted banks ever since I made my first deposit to open an account.

    They will take your money and make you think they deserve it.

    Might as well keep it in your pocket. Provides the cash flow you need, the banks take it all.

  24. print baby print on Sun, 8th Jul 2018 4:21 am 

    wright deadly, what about swiss franck why nobody mention it ? Everybody has some gold there they are the world vault

  25. Davy on Sun, 8th Jul 2018 4:59 am 

    “Print…maybe you too should read more outside the US MSM?”
    3rd world, I challenge you to take each and every one of your empty references and show the content that fits your assertion. Let’s see the points that you so nakedly present. There is no gold back Yuan. The mechanics of it are not there and the trend is not there. It is a figment of your imagination for years now.

  26. Davy on Sun, 8th Jul 2018 5:05 am 

    “Putin-Russia already expressed interest in the euro: http://www.spiegel.de/international/europe/from-lisbon-to-vladivostok-putin-envisions-a-russia-eu-free-trade-zone-a-731109.html”

    Neder, you do realize the date on your reference, right? Much has changed since 2010

    Drum roll……..
    November 25, 2010

    Wink wink

  27. Cloggie on Sun, 8th Jul 2018 5:20 am 

    Neder, you do realize the date on your reference, right? Much has changed since 2010

    Putin has not changed one iota. Great leaders do not change their minds on grand strategy over night.

    https://documents1940.wordpress.com/2018/05/10/boreas-rising-paris-berlin-moscow/

    https://documents1940.wordpress.com/2018/03/20/vladimir-putin-about-german-russian-reconciliation/

    *** AFTER *** Euro-Maidan (2014):

    https://documents1940.wordpress.com/2017/12/03/paris-berlin-moscow/

    Putin is putting his cards on the European populists and the end of empire and Russia ascending to become a major European power.

  28. Davy on Sun, 8th Jul 2018 5:36 am 

    Much has changed since 2010 neder, be honest. Putin is much more Asia oriented these days. Europe is not politically stable and unified enough for a grand strategy. Give it a rest.

  29. print baby print on Sun, 8th Jul 2018 5:58 am 

    rint…maybe you too should read more outside the US MSM?”
    3rd world, I challenge you to take each and every one of your empty references and show the content that fits your assertion. Let’s see the points that you so nakedly present. There is no gold back Yuan. The mechanics of it are not there and the trend is not there. It is a figment of your imagination for years now.
    Davy you didnt red well I told mak that will not be gold yuan

  30. print baby print on Sun, 8th Jul 2018 6:05 am 

    loggie gave you a lot of references , I dont give so much of them because the truth is always somewhere in between so I make my own conclusions if it is allowed to do so, but I read a lot of story and I can smell a bul shit form a mile away

  31. Davy on Sun, 8th Jul 2018 6:24 am 

    Sorry, print, I actually addressed that to 3rd world and not you. I guess you misread it.

  32. print baby print on Sun, 8th Jul 2018 6:34 am 

    yes could be my english is bad sorry

  33. JuanP on Sun, 8th Jul 2018 6:46 am 

    The US Dollar has lost 75% of its value in relation to gold since 2000. I think it will end up losing more than 99.99%. The only question is how long will that take. It is only a matter of time. It is not smart to put all your eggs in one basket. People with wealth should diversify their investments, particularly by investing in real assets rather than paper. This, of course, is not possible for the many who are struggling to get by.

  34. Makati1 on Sun, 8th Jul 2018 7:16 am 

    JuanP, yes, real things are better than faux paper. Gold, Silver, land, trade goods, etc. Paper is just that, paper. Only good to start fires with.

  35. Makati1 on Sun, 8th Jul 2018 7:22 am 

    Again Davy, I didn’t see your answer to my last question re: ZH …

    BTW: I am much better prepared than you will EVER be. And 74 is hardly “approaching 80 which I expect to pass and get to at least 90+. I do not have your mental problems. You will likely never even get to 60.

    Meanwhile I will watch the Us sink into the sunset, never to rise again, enjoying the Ps and freedom. Another thing you will never enjoy. LMAO

  36. Go Speed Racer on Sun, 8th Jul 2018 7:24 am 

    Alex Jones
    & Rush Limbaugh,
    nominate for Supreme Court.

    Justice Limbaugh, and Justice Jones
    will hear your case.

  37. Davy on Sun, 8th Jul 2018 7:50 am 

    Put your glasses on 3rd world because it is there.

  38. Davy on Sun, 8th Jul 2018 7:54 am 

    Bony Juan, do you have a reference for your assertion of gold/dollar value change since 2000? Your extremist opinion does not count as financial fact.

  39. Cloggie on Sun, 8th Jul 2018 8:01 am 

    “I can smell a bul shit form a mile away”

    You’re employed in the agricultural sector, I take it, print baby print?

  40. twocats on Sun, 8th Jul 2018 8:44 am 

    inflation for peoples’ largest expenditures like rent are rising at closer to 5 or 6% if you live anywhere except Wichita KS or Lexington KY.

    https://www.zerohedge.com/news/2018-07-07/us-rents-rise-all-time-highs-gains-small-cities-lead-way

    the problem with the monetary acceleration of low interest rates and vast credit expansion is that its not going equally to all parts of the economy. the vast majority see absolutely nothing, and are falling behind inflation in terms of wage growth and have few assets, while the top few percent are scrambling to position themselves to be a bucket/sink for the flows of hot money.

    its complete anarchy of production with little regard to anything beyond the next few years. I love that Midland TX is up almost 40% rent inflation. this is to bilk those dumb-ass truck drivers who come out to Permian to make a good salary only to give it all up in rent, drugs and prostitutes. we are destroying the planet for that precious cycle to continue.

  41. print baby print on Sun, 8th Jul 2018 9:52 am 

    Clogi, you are good I must admit very good observation very good hahahhaha. I own a bulls farm

  42. MASTERMIND on Sun, 8th Jul 2018 10:31 am 

    Madeleine Albright: ‘The things that are happening are genuinely, seriously bad’

    The former US secretary of state decries the global rise of authoritarianism in her new book, Fascism: A Warning, and talks about Trump, Putin and the ‘tragedy’ of Brexit.

    https://www.theguardian.com/books/2018/jul/08/madeleine-albright-fascism-is-not-an-ideology-its-a-method-interview-fascism-a-warning

  43. rockman on Sun, 8th Jul 2018 12:19 pm 

    Outcast – What folks outside the petroleum industry don’t understand (especially those that consider themselves “experts”) is that when times are good and drilling activity is high even successful companies increase their debt loads. It is relatively rare for a good drilling project to return 100% of its investment in 12 months or less. A 24 month (and even a 36 month) “payout” can generate an acceptable rate of return. Consider a more common and easily understood investment: the stock market. Who wouldn’t go into debt and borrow $100,000 (if they had could) and buy stock they knew was going pay $200,000 of dividends over the next 24 months…EVEN IF THE STOCK WERE WORTH NOTHING IN 2 YEARS? So what company wouldn’t borrow $10 million to drill a well that produced $20 million in net revenue over the next 24 months even if the well were 100% depleted after 2 years? The interest on that $10 million would be insignificant to the $10 million in gain, wouldn’t it? But that company still initially added $10 million in debt to its books.

    The problem folks have with seeing this in the dynamics of a public oil company is that never see the economic profile of individual investments. They just see the aggregate of many projects over many years. And that is further clouded by the impact of the tax laws companies use to reduce those burdens. But trust me: every pubco I worked for knew their individual dogs from the winners. Often the basis for raises and promotions. As well as terminations.
    Outcast – Interesting that so few recognize the positive effects of inflation. Yes, there are some. First, folks complain about income stagnation. It’s as if they expect big raises from a company that’s selling its products for little more then it was in past years. What do they expect companies to do: reduce their profits by paying higher salaries. Even worse when deflation hits a company: not only no big salary increase: some folks lose 100% of their income…they get fired. The recent huge deflation in oil prices and subsequent lose of hundreds of thousands of good paying jobs is a perfect example. Many oil patch hands would have been glad for a 20% reduction in salary let alone a small % increase.

    Second, every happy with the low rate of no risk saving account raise your hands. Thought so. LOL. And how many are happy with the nice returns they’ve seen on their stocks? Does anyone think as much capital would have flooded the stock market had then been much better savings rates available?

    And then there’s the age old benefit of borrowing during periods of higher inflation: monies paid back are “worth less” than the monies borrowed. Think of the huge plus for the US govt on long term debt like 10 to 20 year bonds. A big reason (among others) for the ever increasing US govt debt IN REAL DOLLARS.

    Yes: bad news and GOOD NEWS about any significant increase in inflation. For the individual it depends on where they are in the economic pecking order. Great news for the Rockman who has no debt and borrows ZERO % of new debt…including credit card. And buys little beyond the basic necessities. And now semi-retired at 67 would love to see a big increase in no risk savings where should have 100% of his monies. OTOH a 25 yo lives in a very different world. Especially if he hasn’t gotten a raise since graduating college. But some 25 yo’s…not all.

  44. JuanP on Sun, 8th Jul 2018 5:39 pm 

    Delusional Davy “Bony Juan, do you have a reference for your assertion of gold/dollar value change since 2000? Your extremist opinion does …”
    Well, I would have expected an expert in economics and finance like you to have been able to google the price of gold in dollars. Most elementary school children can do that, exceptionalist! LOL!

  45. Davy on Sun, 8th Jul 2018 5:44 pm 

    bonehead, I am not saying you are right or wrong. What I am saying is this:

    “The US Dollar has lost 75% of its value in relation to gold since 2000”

    is not supported by fact based evidence in your comment. If you are going to act smart be smart.

  46. Makati1 on Sun, 8th Jul 2018 6:13 pm 

    1 oz gold in 2000 = ~$386.

    1 oz gold today = ~$1,335.

    $386 in 2018 dollars = ~$575./oz.

    http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart
    https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=386.00&year1=200001&year2=201805

    That indicates the loss of dollar value vs gold. The difference would be much greater if the Us would let the gold price float. The dollar is about worthless. And much less if the inflation was honestly reported. ALL manipulations to try to save the USD and the Empire, but failing.

    Slip slidin’…

    Do the math

  47. Davy on Sun, 8th Jul 2018 6:31 pm 

    “That indicates the loss of dollar value vs gold.”

    No it doesn’t. It shows the value of gold in dollars.
    Jan 1980 gold is at $2192
    Nov 1970 gold is $233

    “Do the math and stop the agenda packing”

  48. JuanP on Sun, 8th Jul 2018 6:40 pm 

    Delusional Davy keeps denying the truth and moving the goal posts as usual. What about the value of gold and dollars from 1950 to today then, exceptionalist?

  49. Makati1 on Sun, 8th Jul 2018 6:43 pm 

    Davy, it indicates the value of REAL money, not the toilet paper the Us passes off for money. For someone claiming to be an economist, you are failing badly.

    Slip slidin’…down that slippery slope to insanity. “Going postal” in your future Davy? I see it coming. Frustrating that you cannot reach out and hit me isn’t it? LMAO

Leave a Reply

Your email address will not be published. Required fields are marked *