Category Archives: Economics

Dominos?

Posted on by

There are a number of indicators of interest to me around the world.

What You Need to Know About Evergrande

the company scrambles to find funds, construction has stalled on its projects, putting the future of the 1.4 million properties that it has committed to building in doubt. The situation has sparked protests at Evergrande headquarters in Shenzhen, China. Protestors included contractors owed money by Evergrande and those who have paid for a home that may now never be built.

One of World’s Largest Port Operators Warns Global Supply Chain ‘Crisis’ Will Last Longer Than Expected

“Regardless if it is a port, vessel, or warehouse, when one becomes impacted, it quickly results in a downward spiral as delays accumulate,” Maersk’s update reads. “We see pockets of improvements, only to get setbacks when our operations encounter new COVID-19 outbreaks and lockdowns.”

Households Brace for Higher Winter Heating Costs as Natural Gas Prices Vault

The relentless rise in natural gas prices continued on Oct. 6, highlighting the looming threat to U.S. households bracing for higher heating costs in the event of a harsh winter.

U.S. natural gas futures were up 1.11 percent at $6.312 per million British thermal units (mmBtu) in early trading on Oct. 6 after jumping around 9 percent a day earlier to settle at $6.312 per mmBtu, their highest level since 2008.

While gas prices in Europe and Asia have more than tripled this year, the United States has largely been shielded from the global crunch because of plentiful supplies. While U.S. natural gas is trading around the $6 per mmBTu mark, it’s at around $30-plus in Europe and Asia.

But experts warn the global natural gas crunch could have ripple effects, with possible impacts on households in the United States.

Those are just a sample.

Housing material is expensive and difficult to find. Labor is in short supply too.

The U.S. government is going to increase the debt even though everyone knows they can’t possibly pay off the existing debt. The situation of other governments, world wide, is not much different.

Closer to home is the drought this summer blew away the previous all time record in terms of total rainfall in Clearwater County Idaho. The yields were 1/3 to 1/2 of normal with very low quality. The drought wasn’t just local either.

It is not difficult to envision a domino effect and things go completely bonkers

Prepare appropriately. I want an underground bunker in Idaho.

Quote of the day—Per Bylund

Posted on by

Government’s track record in creating public goods that are of actual value to people and that do not waste resources is nothing short of dismal. Then add the public choice aspect to the whole thing, that politicians have their own interests and therefore may not pursue the public good even if they know it. The assumption that government will fix the economy and increase our standard of living beyond what entrepreneurs can do is unbearably naïve.

I do not think these problems matter much to proponents of MMT, however. Because it is not a theory of how the economy works and so does not concern itself with worldly things like production, innovation, entrepreneurship, scarcity (other than as potentially causing inflation), or time. It is a pseudoreligious conviction that anything is possible and that the one and only solution is always Glorious Government.

Per Bylund
September 14, 2021
The Political Alchemy Called Modern Monetary Theory
[This article is the best explanation I have read on why MMT cannot work.

Some of big takeaways not outlined in the quote above:

  • Government creation of currency is not the same as creating money.
  • Government spending diverts resources from meeting the demands of the public markets.
  • Reducing the production of goods and services in the market result in inflation.
  • Idle/unused resources are sometime idle/unused for a good reason and are best left that way for now.

Previous critiques have left me somewhat unconvinced. I was certain MMT was fatally flawed, but I couldn’t find the clear flaws and conclusively prove to myself it was a terrible disaster in the making I was certain it had to be. This article was a huge help to me.—Joe]

$1 trillion platinum coins

Posted on by

This reminds me of something:

There’s a loophole in the law that prescribes the types of coins that can legally be minted in the US, and it would allow the Treasury Department to mint a $1 trillion platinum coin, deposit it at the Federal Reserve, and then continue paying its bills as normal. This simple solution would let Congress sidestep what Rep. Bill Foster of Illinois told Insider was a “silly rule that we make up for ourselves,” which requires Congress to vote on raising the debt ceiling every time the US reaches the borrowing limit.

It’s an idea New York Rep. Jerry Nadler has long promoted. Speaker of the House Nancy Pelosi told reporters on Tuesday that Nadler raised the possibility of minting the coin in a meeting with Democrats to bypass the partisan fights on raising the debt limit. In 2013, when Republicans were refusing to raise the limit under President Barack Obama, Nadler told Insider that he was disappointed the Obama administration would rule out “one of the very few bargaining chips it has,” referring to minting the coin.

.Oh, yeah, now I remember:

I’m sure it will turn out different this time. After all, this is just a few coins distributed only to the Federal Reserve. That makes it totally different, right?

It would be more honest if they made the coins out of lead. But honesty is not their strong suit.

These people can’t be so ignorant and/or stupid so as to believe this is anything other than a means to destroying the nation. This must be a deliberate plan of destruction.

I hope they enjoy their trials.

Quote of the day—John Yarmuth

Posted on by

We are not broke as a nation. We are not bankrupt. We can’t go bankrupt. We absolutely cannot go bankrupt because we have the power to create as much money as we need to spend to serve the American people.

John Yarmuth
Chairman of the Budget Committee
U.S. Representative (D-KY)
September 9, 2021
Democrat Budget Committee Chairman: ‘We Have Power to Create as Much $$ as We Need to Spend’
[

This claim will not age well.

If this were true then why not create enough money for every person in the U.S. to have an “universal basic income” of $100K per year? Everyone, if they wanted, could just retire in comfort and live happily ever after. And why stop there? Why not create and distribute enough money for everyone on the planet to comfortably retire?

One has to conclude he is one or more of the following:

  • Incredibly Insane.
  • Incredibly stupid.
  • Incredibly evil.

Prepare appropriately.—Joe]

Quote of the day—Tom Luongo

Posted on by

The big reveal in Afghanistan is that what happened there can happen here, quickly. Those goat-herders just showed us how to defeat an Empire abroad. Now it’s time to defeat the empire within.

Tom Luongo
August 16, 2021
What If Afghanistan is More Than Just a Failed War?
[I suspect the rot is very deep and collapse could be much closer than what 99% of the people realize.—Joe]

Quote of the day—Michael Snyder

Posted on by

Congress is going to pass wild spending package after wild spending package, and the Fed is just going to continue to pump billions upon billions of fresh dollars into the financial system.

This is the greatest financial bubble in the history of the world, and it will be fascinating to watch how long it can last before it finally implodes.

Michael Snyder
August 11, 2021
I Feel Like I Am Living In Crazytown
[For certain values of “fascinating”.

Prepare appropriately.—Joe]

Quote of the day—Jim Rickards

Posted on by

The case against Bitcoin as an investable asset is long and compelling. It has no use case; there’s almost nothing you can buy with a Bitcoin, and it has no return other than higher prices based on an application of the greater fool theory.

A glance at the price chart shows it’s clearly a bubble, the worst in history, worse than NASDAQ in 2000 during the dot.com frenzy and worse than the Japanese stock market in 1989.

…

Bitcoin will never be a reserve currency because its capped issuance amount makes its price deflationary, which is unattractive to borrowers. Without a Bitcoin bond market, there can be no securities in which central banks can invest reserves.

Worse yet, the Bitcoin price is a Ponzi scheme driven by the issuance of the stable coin Tether, which has never accounted for the billions of dollars that have been taken from naïve Tether investors. That said, none of this matters.

Bitcoin has become a belief system. The true believers see what they want, hear what they want and are immune to the arguments of the non-believers.

…

Bitcoin will never displace the dollar, but it could destroy confidence in the dollar by its all-encompassing impact. This could cause social disorder and contribute to the decline of linear, rational civilization.

My solution to this conundrum is to hold physical gold. For the Bitcoin believers (and others), the solution is always… more Bitcoin.

The market is becoming unhinged. Gold can be your anchor.

Jim Rickards
March 15, 2021
The “Bros” Are Preparing Their Next Attack
[I’m not certain it is as compelling as Rickards appears to claim. And you will notice he is not consistent. He claims it has no use case but how can it “destroy confidence in the dollar by its all-encompassing impact” if it can’t be used for anything?

But I am in general agreement with him. I own zero Bitcoin. I do own some gold.—Joe]

Sign of the times

Posted on by

There is more than a little truth in this:

HerHimSelfSustaining

Quote of the day—Caroline Glick

Posted on by

The polarization of opinion on Israel that we are witnessing in American politics between Republicans who support Israel and Democrats who oppose Israel, is an expression of a much larger division within American society. The heartbreaking but undeniable fact is that today you can’t talk about “America” as a single political entity.

Today there are two Americas, and they cannot abide by one another. One America – traditional America – loves Israel and America. The other America – the New America – hates Israel and doesn’t think much of America, either.

Traditional America believes that the U.S. brought the promise of liberty to the world and that even though it is far from perfect, the United States is the greatest country in human history. In the eyes of the citizens of Traditional America, Israel is a kindred nation and the U.S.’s best friend and most valued ally in the Middle East.

New America, in contrast, believes that America was born in the sin of slavery. New Americans insist America will remain evil and an object of scorn at home and abroad so long it refuses to exchange its values of liberty, capitalism, equal opportunity and patriotism with the values of racialism and equity, socialism, equality of outcomes, and globalization. For New Americans, just as the U.S. was born in the sin of white supremacy so Israel was born in the sin of Zionism. In New America, Israel will have no right to exist so long as it clings to its Jewish national identity, refusing to become a “state of all its citizens.”

Caroline Glick
May 28, 2021
Dark Clouds: Google, Amazon, Israel and the New America
[Via email from Paul K.

In recent months, more so than in previous years, it has been made more and more clear the conflict of visions (no, not this conflict of visions) may be irreconcilable via peaceful means. One vision is of collective rights, planning, and responsibility. The other is of individual rights, planning, and responsibility.

This collective rights and collective responsibility inevitably lead to individual injustice. The process of achieving equality of outcomes because a moral imperative and an easy sale to many people. Today we have calls for reparations. Even if this were conceded it would not end. Distribution of property equally or according to need will follow. Some time after that would be the demands for retribution. And so it would continue until the final true equality is clearly in sight and a remaining majority, or powerful enough minority, put a stop true equality.

The bottom line is that achieving equality of outcomes becomes an unending task because:

Full equality comes with death. And it should come as no surprise the political left is well acquainted with death on a very large scale.

This is the unspoken promise of the collective vision. Today, the collective vision is making itself more visible and more insistent on making “progress”.

Prepare appropriately.—Joe]

Quote of the day—Jim Rickards

Posted on by

There is some part of the DNA, I don’t have it but some people do, where they just wake up in the morning and they just want to tell people what to do… You do this, do that, etc.

And there’s no end to it. Even if you agree they will have something else. I’m kinda like, just get on your bike and do what you like. I try to leave people alone.

The point being … something like COVID becomes a platform and a perfect cover and a perfect excuse for the inner neo fascist in people all over the world and those in political positions. And they cannot resist the opportunity to boss people around. And the way you do this, it’s tried and true, you put people in fear. You make people very, very, fearful. You tell them they are going to die if they don’t listen to you.

Jim Rickards
May 5, 2021

[Via The New Great Depression, with Jim Rickards.—Joe]

No surprise to me

Posted on by

After gold being below $1700 in March and now near $1900/ounce we have this:

Bitcoin, ethereum plunge as sell-off smashes crypto sector:

Bitcoin and ether tumbled on Wednesday to 3-1/2 month lows, on track to post their largest one-day loss since March last year, in the wake of China’s move a day ago to ban financial and payment institutions from providing cryptocurrency services.

At one point during the meltdown, nearly $1 trillion was wiped off the cryptocurrency’s market capitalization.

…

“Bitcoin’s sharp price drop should come as no shock to the market,” said Gavin Smith, chief executive officer of crypto consortium Panxora.

“Any asset which has risen as much as bitcoin over the past year can be expected to have pullbacks as some investors withdraw profits, like we’re currently seeing. While often a brilliant investment opportunity, traders must remember that Bitcoin is still an emerging asset class and will continue to experience large price swings,” he added.

It’s only a brilliant investment opportunity if you don’t have any moral qualms about “fleecing the sheep” and have good timing.

This is no surprise to me and apparently not Tam either.

Quote of the day—Tal Bachman

Posted on by

Wokism is now the official state religion of the United States of America.

By constitutional standards, this means something has gone wrong. The United States isn’t supposed to have a state religion. The First Amendment specifically prohibits the establishment of a state religion. Yet it now has one, and its name is Wokism.

Tal Bachman
May 7, 2021
We Have Met the Enemy, part II
[And as everyone should well know Theocracies are some of the most dangerous forms of government known. Combined with socialism/communism, as this one is, and the deadliness is indisputable.

Take appropriate action.—Joe]

Quote of the day—Scott Adams @ScottAdamsSays

Posted on by

Either national debt is not a real problem or our government knows there is an asteroid the size of Mars heading directly towards Earth so it doesn’t matter.

I have to believe one of those things is true. Otherwise we are governed by morons.

Scott Adams @ScottAdamsSays
Tweeted on May 12, 2021
[There are many more than those three options. The most obvious and likely are:

  • Our politicians are evil.
  • Our politicians are evil and/or morons.
  • Our politicians believe what morons and/or evil people tell them.

Prepare accordingly.—Joe]

Quote of the day—J.D. Tuccille

Posted on by

There really are limits to how much governments can spend without inflicting pain on the people suffering under their mismanagement. Not that the people elected to Congress and the White House have shown any signs of comprehension or concern.

Given that these are people capable of running for public office without feeling any apparent sense of shame, is it possible that they’re just too stupid to understand our reports? you can imagine CBO economists asking one another as they tossed around the idea for the recent infographic. Does anybody have any crayons?

J.D. Tuccille
May 5, 2021
Looming Budget Catastrophe in Pictures So Simple Even Congress Can Understand
[There is at least one other alternative not mentioned in the article or by the Congressional Budget Office (CBO). That alternative is that the economic destruction of our country is intentional.—Joe]

He left out a profession

Posted on by

I am quite perplexed. The first thing I thought of when I thought of the “most durable professions” isn’t even on the list:

Durable Trades: Professions That Have Stood the Test of Time for Hundreds of Years:

The top 10 durable professions, according to Groves, are:

  1. Shepherd (rancher, livestock farmer, dairyman)
  2. Farmer
  3. Midwife
  4. Gardener (arborist, vinedresser, landscaper, flower farmer)
  5. Woodworker (cabinetmaker, finish carpenter)
  6. Carpenter (a builder of structures)
  7. Painter (siding contractor, wall covering specialist)
  8. Cook (chef, caterer, restauranteur)
  9. Brewer (winemaker, distiller)
  10. Innkeeper (hotelier)

Groves follows up the top 20 list with dozens of professions that received “honorable mentions.” The author cautions that his research focused on historical data rather than projecting which professions might be important in the future. Still, the longevity of professions that made the list are certain to give the readers pause before writing off trades in favor of more modern professions.

Even if he did purposefully (it had to be on purpose, right? Who could forget it?) ignore the world’s oldest profession, it’s still an interesting list.

Existential threat to Bitcoin

Posted on by

I don’t trust the stability of Bitcoin. I trust it even less than fiat U.S. dollars. I see mining bitcoin as wasting electricity to produce… well, what does “mining” actually turn those gigawatt hours into? Isn’t it simply faith in it’s value by some subset of the worlds population? What if people start losing their faith? Doesn’t the value of Bitcoin decrease exponentially with this loss of faith? Once some sufficiently large number of people lose faith isn’t there a high likelihood of an avalanche of people losing faith? Isn’t it likely Bitcoin will go down in the history books as another Tulip bulb or Mississippi bubble?

There is also the risk of one or more countries declaring it illegal and reducing it’s trading value to near zero in that country.

It turns out there are far more subtle yet greater or equal threats to it’s value: Bitcoin’s Greatest Feature Is Also Its Existential Threat: The cryptocurrency depends on the integrity of the blockchain. But China’s censors, the FBI, or powerful corporations could fragment it into oblivion.

Quote of the day—Zuckerman, Chung, and Farrell

Posted on by

Wall Street is sifting through the aftermath of the biggest single-firm meltdown since the financial crisis. Mr. Hwang alone lost approximately $8 billion in 10 days, a person familiar with the matter said, in what traders and investors say was one of the fastest losses of such a large sum they had ever seen.

The firm’s implosion has rippled through the financial world, eroding tens of billions of dollars from the shares of media conglomerates and investment banks.

Gregory Zuckerman, Juliet Chung, and Maureen Farrell
April 1, 2021
[I”m reminded of Understanding Complexity  by Scott E. Page and similar content in RIckards’ books The Death of Money: The Coming Collapse of the International Monetary System and The New Great Depression: Winners and Losers in a Post-Pandemic World

The hidden interconnectedness of entities, the unpredictable tipping points,the emergent behavior, etc. The fragility of a critical component of all modern human society could be exposed and shattered in less than a week.

I doubt that this event is “the big one” but it reminds us there could be, and probably is, such a big one hidden in the non-linear, mostly opaque, complex, world financial system. And it probably is just a matter of time before the system implodes.—Joe]

Quote of the day—James Rickards

Posted on by

The Federal Reserve does not understand that money creation can be an irreversible process. At a certain point, confidence in money can be lost, and there is no way to reconstitute it; an entirely new system must rise in its place. A new international monetary system will rise from the ashes of the old dollar system, just as the dollar system rose from the ashes of the British Commonwealth at Bretton Woods in 1944, even before the flames of the Second World War had been extinguished.

…

When the inevitable crash came, the losses were not apportioned to those responsible—the banks and bondholders—but were passed on to the public through federal finance. From 2009 to 2012, the U.S. Treasury ran a $5 trillion cumulative deficit, and the Federal Reserve printed $1.2 trillion of new money. Similar deficit and money-printing programs were launched around the world, as derivatives creation by banks continued unabated. Only a portion of the private debt defaults were written off.
The bankers’ jobs and bonuses were preserved, but nothing was achieved for the benefit of citizens. A private debt problem had been replaced with public debt larger than the private debt had ever been. These debts are unpayable in real terms, and defaults will soon follow. The defaults by smaller nations like Greece, Cyprus, and Argentina will be through nonpayment of bonds and losses for bank depositors. Defaults for larger nations such as the United States will come from across-the-board inflation that will steal from savers, depositors, and bondholders alike.

James Rickards
2014
The Death of Money: The Coming Collapse of the International Monetary System
[I mentioned this book a month ago and said, after consuming about 25% of it, that it is a good book. I have finished the book and I stand by that assertion.—Joe]

Quote of the day—Egon von Greyerz

Posted on by

In the coming bear market for currencies and bull market for precious metals, gold and silver will not just maintain purchasing power but massively outperform and become the must have investment.

But above all, do not buy gold and silver for speculative purposes. Gold and silver is your insurance against the coming end of a monetary era when all currencies and bubble assets will implode.

Egon von Greyerz
March 24, 2021
WHY BUY GOLD WHEN THERE IS BITCOIN & TESLA
[I’ve been hearing hints of the coming collapse for 20 years now. And “it has to happen soon” since 2008.

And, of course, if you dig just the tiniest bit most people, including this guy, advocating precious metals just so happen to have some precious metals they would love to sell to you.

They may still be right. But I’m very skeptical of those who have some direct gain from people taking their advice.

And everyone who claims gold will “preserve your wealth” seem to gloss over, at best, that Roosevelt banned the private ownership of gold by executive order and got away with it. So, what’s the path to wealth preservation when your wealth is tied up in contraband?—Joe]

Quote of the day—James Rickards

Posted on by

Once the cattle (that’s us) have been herded into the digital slaughterhouse, we will be told to “use it or lose it” when it comes to our own money. In other words, either we spend the money, or the government will take it away.

Of course, the spending can be channeled into politically correct causes by excluding unpopular vendors such as gun dealers or conservative social media platforms from the payment system. This represents total domination of human behavior through world money + digital currencies + confiscation.

This is not speculation anymore; it’s happening in front of our eyes. The Great Reset is coming fast. The future is here.

The only solution is to use a non-digital, non-bank store of wealth that cannot be traced or manipulated. Given the planned dollar devaluation, it’s one more reason to own physical gold and silver.

Get it while you still can.

James Rickards
February 22, 2021
The Great Reset Is Here
[While I can see his claim is more than plausible, I’m not certain it’s as dire and certain as Rickards says it is. But, he’s far more qualified than I am to make that judgement.

I’m currently listening to his book The New Great Depression: Winners and Losers in a Post-Pandemic World which was published January 12th of this year. I suspect he will make his case for the QOTD conclusions in the latter portions of the book which I have not yet reached.—Joe]