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  1. Roger Stone, one of President Trump's earliest political advisors and a fixture on the Sunday show circuit, told NBC News' Chuck Todd that he's "prepared" to be indicted as part of Special Counsel Robert Mueller's investigation. "I am prepared should that be the case," Stone said on "Meet The Press". "But I think it just demonstrates, again, this was supposed to be about Russian collusion, and it appears to be an effort to silence or punish the president’s supporters and his advocates." "It is not inconceivable now that Mr. Mueller and his team may seek to conjure up some extraneous crime pertaining to my business, or maybe not even pertaining to the 2016 election," Stone said. "I would chalk this up to an effort to silence me." Stone, who has already testified before the House Intelligence Committee, said he has not been interviewed by Mueller. He also reiterated that Mueller's team had found "no evidence whatsoever" to connect Trump to Russia, and that it hasn't found any evidence to connect Stone to Russia, either. Regardless, Stone speculated that Mueller might try to bust him on some unrelated charges - perhaps something pertaining to his business. Continuing with his attack on Mueller, Stone said some friends and associates of his had been subpoenaed by the special counsel. He also continued to deny having a relationship with Wikileaks or with Russia, adding that he had "no advance notice of the content, source, or the exact disclosure time of the Wikileaks disclosures." View the full article
  2. Authored by Lee Friday via The Mises Institute, Living beyond our means requires us to borrow money to cover the difference between our income and our spending. Many Canadians now understand the financial consequences of this practice and regret the choices they’ve made. Unfortunately, Prime Minister Trudeau is not one of them, as evidenced by his government’s budget deficits which are further eroding the financial wellbeing of Canadians. He has broken a campaign promise, ignored basic economic principles, and seems hell-bent on setting an ignominious record. According to the Fraser Institute: "Justin Trudeau is the only prime minister in the last 120 years who has increased the federal per-person debt burden without a world war or recession to justify it." The Broken Promise The Liberals had won the 2015 federal election with a pledge to run annual shortfalls of no more than $10 billion over the first three years of their mandate, and to eliminate the deficit by 2019-20. The deficit for 2016-17, Trudeau’s first full fiscal year, was $17.8 Billion. The forecast for 2017-18 is $19.9 Billion, and for 2018-19, the forecast is $18.1 Billion. And now, from the government’s 2018 budget, we read this: While austerity can come from fiscal necessity, it should not turn into a rigid ideology about deficits that sees any investment as bad spending. The government says deficits are economically beneficial, and compares deficits to loans taken out by entrepreneurs and business owners. But here's the rub: in order to spend, the government must first raise money by taxing or borrowing (deficits). This deprives the private sector of money which would otherwise be available for businesses to borrow and invest in new production, thereby creating jobs and raising our standard of living. Moreover, government ‘borrowing and spending’ imposes a financial burden on future taxpayers who must pay pay back both the loan and the interest payments. In contrast, repayment of private business loans imposes a burden on the entrepreneurs — and because entrepreneurs are held personally liable, they are incentivized to be prudent decision makers. Politicians, on the other hand, lacking personal liability, tend to be fickle, reckless, arbitrary, and wasteful. Why Government Spending is Bad When a private business earns a profit by converting various resources (labour, raw materials etc.) into products which consumers voluntarily buy, this means it has made efficient use of the resources. Wealth is created. In contrast, a private business incurs losses when it fails to persuade consumers to voluntarily buy its products, which means it is wasting resources. If the firm cannot improve, it will discontinue operations, thereby conserving resources for entrepreneurs who can use them efficiently. Economic progress (wealth creation, rising living standards) comes from efficient allocation of resources through profitable enterprises, where consumers determine what gets produced. These are the basic economic principles which Justin Trudeau ignores. Politicians can pander to special interest groups because profit/loss calculations do not exist within government. This prevents consumers (taxpayers) from expressing their preferences as they do in the marketplace, where they "vote with their dollars." The government forces taxpayers to subsidize whatever it supplies, at a price it dictates, whether we want it or not. Thus, the government’s coercive taxing and spending tends to waste resources, which is economically counterproductive. And, as noted earlier, government spending reduces private investment. As Charles Lammam and Hugh MacIntyre wrote in the Financial Post (emphasis added): business investment in Canada has declined by a staggering 18 per cent (after accounting for inflation) since the end of the third quarter of 2014." Crucial to any plan to improve our country’s long-term economic prospects is encouraging private-sector investment, innovation and entrepreneurship … on this front, federal policy choices have been counterproductive. And Morneau’s fiscal update makes clear that the government will continue to run persistent deficits and rack up more debt, which signals potentially higher taxes in the future (since debt is simply deferred taxation), creating yet more uncertainty today among investors and entrepreneurs. … 64 per cent of CEOs said Canada’s investment climate had worsened in the last five years, noting growth in the tax and regulatory burden. Does Justin Trudeau Live in an Alternate Reality? That is the economic reality to which the Prime Minister seems oblivious. Private business investment is limited by government spending and regulations, but Trudeau’s government thinks everything is fine. From their 2018 budget, we read this: … Canadians are feeling more optimistic about the future. Everyday dreams — whether it’s paying down debt, saving for a first home or going back to school to train for a new job — are closer to reality. I’m not sure what reality Justin is living in, but here is the reality on Earth: One third of Canadians have stretched themselves so thin that they can no longer cover monthly bills and debt payments, according to a survey … Thirty-three per cent of respondents … admitted to being stretched beyond their means on a monthly basis, marking an eight-point increase since MNP's last survey in September … … almost four in 10 respondents … admitted they regret the amount of debt they've taken out in their lifetime. … Forty-two per cent of respondents … said they'll be in financial trouble if rates rise much higher. Moreover, nearly one-third said they could be forced into bankruptcy because of rising interest rates. Trudeau’s government is either out of touch with reality or they simply don’t care about economic growth and the financial plight of Canadians. Either way, the lack of personal accountability among politicians is a concern. Accountability If I break my neighbour’s window, accident or not, I pay for the replacement. The compensation comes out of my own pocket. I am accountable for my actions. If the Liberals lose the federal election next year, there are many who will say they have been held accountable for various mistakes. In fact, this is what we are always told, “If you don’t like the government, then don’t forget to vote, because this is your opportunity to hold them accountable.” Really? That’s how we define accountability in politics? Does our anger disappear simply because we kicked the bums out of office? Is it enough to see teary-eyed politicians deliver concession speeches on election night? If I walk around the neighbourhood and break all the windows in all the houses, then lose my job, do my neighbours forgive and forget? I think not. What about the financial hardship that government spending inflicts on Canadians? The private investments not made. The wealth and jobs not created. The products not manufactured. The debt incurred. These are real financial consequences which individual Canadians are forced to absorb. Who will compensate them? If politicians knew they would be held personally accountable for the damage they inflict — they would inflict far less damage. Conclusion Many ‘experts’ have encouraged the government to balance the budget, but the size of the budget is the real problem. Government spending, and taxes, must be slashed. How much? The sky is the limit. There is nothing the government does that the private sector can’t do better, at far less cost. A drastic reduction in the size and scope of government would trigger massive private investment and economic growth. But until voters learn some basic economic principles, they will continue to get the government they deserve, whether it be the Trudeau regime, or a different party of con artists. View the full article
  3. The Tokyo Electric Power Company is running out of container space to store water contaminated by tritium outside the Fukushima No. 1 nuclear power plant, and it's also running out of room for building more tanks, according to Yomiuri Shimbum, a Japanese newspaper, which is creating an intractable problem for the utility, which has been tasked with supervising the cleanup of Fukushima. The Japanese government has been desperately trying to accelerate the cleanup ahead of the upcoming 2020 Olympic Games in Tokyo - and it's a miracle it hasn't run into this issue sooner. TEPCO is still struggling with how to dispose of the tritium-tainted water. Options discussed have included dumping it into the ocean, but that proposal has angered local fishing communities. At some point, TEPCO and the government will need to make a difficult decision. Until then, ground water will continue to seep into the ruined reactor, where it becomes contaminated. Afterward, TEPCO can treat the contaminated water to purify it, but they can't remove the tritium, which is why the supply of water contaminated with tritium continues to grow. As one government official pointed out, Japan can't simply store the radioactive water forever. As of now, the company should be able to store water until 2020. Efforts have been made to increase storage capacity by constructing bigger tanks when the time comes for replacing the current ones. But a senior official of the Economy, Trade and Industry Ministry said, "Operation of tanks is close to its capacity." TEPCO plans to secure 1.37 million tons of storage capacity by the end of 2020, but it has not yet decided on a plan for after 2021. Akira Ono, chief decommissioning officer of TEPCO, said, "It is impossible to continue to store [treated water] forever." But after that, Tepco is either going to need to start releasing the tritium water into the ocean (something that has been done by many power plants, but is politically popular in Japan) or find another solution. In fact, an average of 380 trillion becquerels had been annually released into the sea across Japan during the five years before the accident. If the water from Fukushima is diluted to the point that tritium content is only 1 million becquerels per liter, which is more than 10 times higher than the national average for sea release. But if it's diluted, it can eventually be released. However, an industry report has determined that sea release would be the safest and most efficient option. Regarding disposal methods for the treated water, the industry ministry’s working group compiled a report in June 2016 that said that the method of release into the sea is the cheapest and quickest among five ideas it examined. The ideas were (1) release into the sea, (2) release by evaporation, (3) release after electrolysis, (4) burial underground and (5) injection into geological layers. After that, the industry ministry also established an expert committee to look into measures against harmful misinformation. Although a year and a half has passed since the first meeting of the committee, it has not yet reached a conclusion. At the eighth meeting of the committee held on Friday, various opinions were expressed. One expert said, "While the fishery industry [in Fukushima and other prefectures] is in the process of revival, should we dispose of [the treated water] now?" The other said, "In order to advance the decommissioning, the number of tanks should be decreased at an early date." The working group is planning to hold a public hearing to consider other methods of disposal. But if none can be found, Japan will have no choice but to dump the contaminated water into the ocean. View the full article
  4. Authored by Thomas Farnan via Townhall.com, On December 29, 2016, the Obama Administration – with three weeks remaining in its term – issued harsh sanctions against Russia over supposed election interference. Two compounds in the United States were closed and 35 Russian diplomats were ordered to leave the country. Russia responded by calling the actions “Cold War déjà vu.” In the two years that have elapsed since, it has been learned that the “intelligence” that formed the basis for the sanctions was beyond dubious. A single unverified “dossier” compiled by an ex-British spy with no discernable connections to Russia was shopped to FISA judges and the media as something real. The dossier was opposition research by the Hillary Clinton campaign, a fact that was not disclosed and actively hidden by off-the-book transactions through the law firm Perkins Coie. As a dog that chases its tail, the fake dossier was being used to cause the investigation which itself lent credibility to the notion of Russian interference. The FBI and CIA thumbed the eye of an armed nuclear state based on false intelligence. Why? The answer is now obvious: to cover up their own election year shenanigans they thought would remain forever hidden in the inevitable Hillary Clinton victory. Russian collusion had first come to the electorate’s attention in July. The DNC had lost a cache of its emails either to a phishing scheme or to a hacker. The emails showed the Clinton campaign and the DNC conspiring to fix primaries against Bernie Sanders. The outcry among Sanders supporters was sufficiently loud that DNC chairperson Debbie Wasserman Schultz resigned on the eve of the democratic convention. It was a huge scandal. To squelch it for their expected future boss Hillary Clinton, the FBI and CIA constructed a Rube Goldberg machine of “Russian collusion” to blame Trump. The FBI never bothered to test the computers for a hack. That task was left to CrowdStrike, a private contractor whose CTO and co-founder, Dmitri Alperovitch, is a Russian ex-patriot and a senior fellow at the Atlantic Council, a think tank with an anti-Russian agenda. The Atlantic Council is funded by Ukrainian billionaire Victor Pinchuk, a $10 million donor to the Clinton Foundation. The fix was in. CrowdStrike dutifully reported that the Russians were behind the hack. Lat year The Nation, a progressive publication, got a group of unaffiliated computer experts to test CrowdStrike’s hypothesis and they concluded that the email files were removed from the computer at a speed that makes an off-site download from Russia impossible. Incredibly, Trump was placed on the defensive for email leaks that showed his opponent fixing the primaries. His campaign chairman, Paul Manafort, resigned because of past dealings with Russia. Trump protested by stating the obvious: the federal government has “no idea” who was behind the hacks. The FBI and CIA called him a liar, issuing a “Joint Statement” that suggested 17 intelligence agencies agree that it was the Russians. Hillary Clinton took advantage of this “intelligence assessment” in the October debate to portray Trump as Putin’s stooge. She said, “We have 17, 17 intelligence agencies, civilian and military who have all concluded that these espionage attacks, these cyber-attacks, come from the highest levels of the Kremlin. And they are designed to influence our election. I find that deeply disturbing.” The media’s fact checkers excoriated Trump for lying. It was the ultimate campaign dirty trick: a joint operation by the intelligence agencies and the media against a political candidate. Trump won anyway against this level of cheating. It has since been learned that the “17 intelligence agencies” claptrap was always false. Powerful insiders at the FBI and CIA authored the intelligence assessment and deceptively packaged it as a consensus. By December 2016, the FBI and CIA needed something to justify their illegal wiretaps and spying. If not the quid, they at least needed the pro quo: an event that could be portrayed through a hard squint as collusion. They were not without means. They had members of Trump’s transition improperly wiretapped. If they could catch one making a concession to the Russians, they could say “gotcha” – this proves you were always in bed with them. That is when the CIA and FBI shopped their phony intelligence assessments to President Obama and he sanctioned Russia. Then they listened in on the Trump transition’s conversation with the Russian ambassador the next day. Surely General Flynn, Trump’s incoming national security advisor, would scoff at the sanctions and promise to lift them. That would be the pro quo that proved the quid. They would finally have anecdotal evidence that showed Trump delivering for Putin. General Flynn, though, was uncharacteristically noncommittal. It didn’t work. The machinations that followed, the secret memos and special counsel, the prosecution of Flynn anyway for what happened in his conversation, the whole sordid mess, is a cover-up. In the inverse logic of Russian collusion, the investigation itself supplies credibility to the collusion narrative. Any attempt to end the investigation is obstruction of justice. One person has the constitutional responsibility end this nonsense. Attorney General Jeff Sessions, who himself was duped into recusing himself by since discredited intelligence, should bow to recent disclosures of impropriety and say enough is enough. His Inspector General will be issuing a report to him sometime soon. Maybe then he will lift his recusal and start the prosecutions. People should go to jail for this. View the full article
  5. Three months ago, Goldman first among the big banks warned that the US fiscal trajectory was dire, warning that "US fiscal policy is on an unusual course" with the budget deficit expected to widen over the next few years, as a result of prior imbalances and recently enacted policies - namely Trump's dramatic fiscal stimulus - which should lead to a federal debt/GDP ratio of around 85% of GDP by 2021. This, Goldman's economists warned, stands in contrast to the typical relationship between the economic cycle and the budget balance, as shown in Exhibit 2, which shows that the US deficit should be small and shrinking, not large and growing at this stage in the business cycle when the unemployment rate is near its cyclical lows. But the biggest risk by far, according to Goldman, was the rising interest expense on the Federal Debt, which all else equal, would send the US into banana republic "uncharted territory." This is what Goldman warned back in February: ... we project that, if Congress continues to extend existing policies, including the recently enacted tax and spending legislation, federal debt will slightly exceed 100% of GDP and interest expense will rise to around 3.5% of GDP, putting the US in a worse fiscal position than the experience of the 1940s or 1990s. The bank's conclusion in February was just as dire: "the continued growth of public debt raises eventual sustainability questions if left unchecked." Of course, "sustainability questions" is a polite bank euphemism for economic and financial catastrophe. * * * Fast forward to today when, three months after its original dire assessment, Goldman doubles down and in a note assessing "what's the worst that could happen" with the US budget deficit, writes that "the US fiscal outlook is not good" and among other things, predicts that the US fiscal deficit will double from $1 trillion over the next 12 months to $2 trillion by 2028, pr a near record 7% of GDP: We project the federal deficit will increase from $825bn (4.1% of GDP) to $1,250bn (5.5% of GDP) by 2021. By 2028, we expect it to rise to $2.05 trillion (7.0% of GDP) in our baseline scenario, which assumes that expiring tax provisions will be extended and that discretionary spending, which was recently increased, will increase only slightly further in nominal terms. All else equal, Goldman's distressing forecast sees US federal debt rising to 105% of GDP in ten years, a whopping 9% higher than CBO’s latest projections. Making matters worse, that is the baseline forecast, or as analysts on the sellside call it, the optimistic outlook. As a result, as Goldman warns, while surprises are clearly possible in both directions, the bank believes "the risks are tilted in the direction of larger deficits than projected" and presents four possible alternative, and adverse, scenarios: Congress keeps revenue and discretionary spending in line with historical averages; the interest rate-growth differential worsens due to slower than expected growth; a recession; and Congress agrees on a deficit reduction package similar to the major deals of the early 1990s. Of course, while nobody wants to say it, the recession scenario is a guaranteed on as otherwise the US would have been in an expansion for nearly 20 years, or 234 consecutive months by December 31, 2018, as we calculated one month ago, with the laughable pro forma result shown below. A recession, as Goldman points out, would obviously widen the deficit and boost the debt/GDP ratio more than any of our other scenarios over the next few years. However, as report author Alec Phillips warns, "over the next ten years the outlook is worse under a low-growth scenario or continued fiscal laxity." And while a recession is a given, if nobody wants to admit it, Goldman points out that the "most striking scenario" would be the most optimistic one, where Congress enacts a deficit reduction package as large (as a share of GDP) as the largest two deficit reduction packages of the early 1990s. What is especially concerning, is that even under this best case scenario, with a budget-friendly assumption, "the deficit and debt level would still reach around 5% and 95% of GDP respectively, very close to CBO’s baseline forecast for 2028." What does all this mean in practical terms? Adding soaring deficits to rising rates, and an exponential debt issuance calendar, and you get a very troubling outcome: much higher rates, at least in the beginning, as eventually the stock market will crash, and trillions in capital flows will once again flee stocks for the "safety" of US bonds, fiscal crisis be damned. Goldman, focuses on "the beginning" part, and notes that "An expanding deficit and debt level is likely to put upward pressure on interest rates, expanding the deficit further." This also changes the sensitivity analysis between deficit and yields as follows: Building on our recent work on deficits and interest rates, our baseline scenario suggests that the widening of the deficit from 3.5% to 5% of GDP should boost 10-year yields by 30bp, other things equal, while our forecast of a chronic deficit in the range of 6-7% of GDP in the next decade would imply a cumulative boost of around 70bp over time. Of course, before everyone panic sells their duration exposure, Goldman has one big caveat: "whether such an interest rate move occurs depends in part on if market participants believe lawmakers would allow such a fiscal outcome." The problem, as Phillips conclude, "while Congress will eventually address the widening budget gap, it also seems quite likely to take longer than most market participants might expect." Here is the full assessment of what happens next from a political standpoint: Little Chance of Near-Term Fiscal Reforms Eventually, lawmakers are likely to become more sensitive to the fiscal situation and will take action to reduce the budget deficit. However, this doesn’t seem likely in the near-term, for at least two reasons. First, we will soon enter the period in the political cycle where deficit reduction measures are less common. Deficit reduction legislation is more common at the start of the four-year political cycle (1990, 1993, and 1997 marked the major deficit reduction packages of the 1990s for example) than just before a presidential election. Admittedly, the 2011 Budget Control Act that introduced the current spending caps stands as at least one exception to this pattern. Nevertheless, the odds of meaningful deficit reduction policies seem likely to decline further as the 2020 presidential election approaches. Second, there is less political consensus than usual regarding the need for reform. Only 2-3% of the public in recent polling cite the deficit as one of the most important problems facing the government, compared with levels of 15-20% during the fiscal battles of the mid-1990s or the 2011-2013 period. This could change if political leaders increase their focus on the issue, as they did during those earlier periods. However, it seems unlikely that Congress will reverse any of the recently enacted tax cuts or discretionary spending increases, which leaves entitlement spending as the only area of the budget where fiscal consolidation seems plausible over the next few years. However, the Trump Administration has not made this a priority—the President opposed cutting Medicare and Social Security spending in the 2016 campaign, though the most recent White House budget proposed modest savings in these areas—and one of the chief proponents of entitlement reform in Congress, Speaker Paul Ryan, is retiring from Congress at year end. Deficit reduction proposals do not seem likely to figure prominently in 2018 midterm election campaigns and, at least at this early stage, do not seem likely to become an important issue in the 2020 election either. This suggests that the fiscal outlook is unlikely to change substantially due to policy actions until at least 2021, leaving it dependent largely on the path of the economy until then. Said otherwise: with the 10Y now well north of 3.00%, Goldman newly reconstituted prop trading desk is buying all the paper its clients wish to sell. Trade accordingly. View the full article
  6. Authored by Caitlin Johnstone via Medium.com, If you haven’t been living in a hole in a cave with both fingers plugged into your ears, you may have noticed that an awful lot of fuss gets made about Russian propaganda and disinformation these days. Mainstream media outlets are now speaking openly about the need for governments to fight an “information war” against Russia, with headlines containing that peculiar phrase now turning up on an almost daily basis. Here’s one published today titled “Border guards detain Russian over ‘information war’ on Poland“, about a woman who is to be expelled from that country on the grounds that she “worked to consolidate pro-Russian groups in Poland in order to challenge Polish government policy on historical issues and replace it with a Russian narrative” in order to “destabilize Polish society and politics.” Here’s one published yesterday titled “Marines get new information warfare leader“, about a US Major General’s appointment to a new leadership position created “to better compete in a 21st century world.” Here’s one from the day before titled “Here’s how Sweden is preparing for an information war ahead of its general election“, about how the Swedish Security Service and Civil Contingencies Agency are “gearing up their efforts to prevent disinformation during the election campaigns.” This notion that the US and its allies are fighting against Russian “hybrid warfare” (by which they typically mean hackers and disinformation campaigns) has taken such deep root among think tanks, DC elites and intelligence/defense circles that it often gets unquestioningly passed on as fact by mass media establishment stenographers who are immersed in and chummy with those groups. The notion that these things present a real threat to the public is taken for granted to such an extent that they seldom bother to even attempt to explain to their audiences why we’re meant to be so worried about this new threat and what makes it a threat in the first place. Which is, to put it mildly, really weird. Normally when the establishment cooks up a new Official Bad Guy they spell out exactly why we’re meant to be afraid of them. Marijuana will give us reefer madness and ruin our communities. Terrorists will come to where we live and kill us because they hate our freedom. Saddam Hussein has Weapons of Mass Destruction which can be used to perpetrate another 9/11. Kim Jong Un might nuke Hawaii any second now. With this new “Russian hybrid warfare” scare, we’re not getting any of that. This notion that Russians are scheming to give westerners the wrong kinds of political opinions is presented as though having those political opinions is an inherent, intrinsic threat all on its own. The closest they typically ever get to explaining to us what makes “Russian disinformation” so threatening is that it makes us “lose trust in our institutions,” as though distrusting the CIA or the US State Department is somehow harmful and not the most logical position anyone could possibly have toward historically untrustworthy institutions. Beyond that we’re never given a specific explanation as to why this “Russian disinformation” thing is so dangerous that we need our governments to rescue us from it. Two weeks after the Atlantic Council explained to us that we need to be propagandized for our own good, Facebook announces a new partnership with the Atlantic Council to make sure we're getting the right kinds of information.https://t.co/aXwHvxdREXhttps://t.co/3CkVtvBs0s pic.twitter.com/sEz52VjNTe — Caitlin Johnstone (@caitoz) May 17, 2018 The reason we are not given a straight answer as to why we’re meant to want our institutions fighting an information war on our behalf (instead of allowing us to sort out fact from fiction on our own like adults) is because the answer is ugly. As we discussed last time, the only real power in this world is the ability to control the dominant narrative about what’s going on. The only reason government works the way it works, money operates the way it operates, and authority rests where it rests is because everyone has agreed to pretend that that’s how things are. In actuality, government, money and authority are all man-made conceptual constructs and the collective can choose to change them whenever it wants. The only reason this hasn’t happened in our deeply dysfunctional society yet is because the plutocrats who rule us have been successful in controlling the narrative. Whoever controls the narrative controls the world. This has always been the case. In many societies throughout history a guy who made alliances with the biggest, baddest group of armed thugs could take control of the narrative by killing people until the dominant narrative was switched to “That guy is our leader now; whatever he says goes.” In modern western society, the real leaders are less obvious, and the narrative is controlled by propaganda. Propaganda is what keeps Americans accepting things like the fake two-party system, growing wealth inequality, medicine money being spent on bombs to be dropped on strangers in stupid immoral wars, and a government which simultaneously creates steadily increasing secrecy privileges for itself and steadily decreasing privacy rights for its citizenry. It’s also what keeps people accepting that a dollar is worth what it’s worth, that personal property works the way it works, that the people on Capitol Hill write the rules, and that you need to behave a certain way around a police officer or he can legally kill you. And therein lies the answer to the question. You are not being protected from “disinformation” by a compassionate government who is deeply troubled to see you believing erroneous beliefs, you are being herded back toward the official narrative by a power establishment which understands that losing control of the narrative means losing power. It has nothing to do with Russia, and it has nothing to do with truth. It’s about power, and the unexpected trouble that existing power structures are having dealing with the public’s newfound ability to network and share information about what is going on in the world. Please, please, please do read this - the tip of a very sinister iceberg. I intend to write about it myself including the incredibly defensive, rude reaction of Jimmy Wales and @wikimediauk when "Philip Cross" is raised, and the bigging up of MSM figures. https://t.co/stR3wa8TQZ — Craig Murray (@CraigMurrayOrg) May 17, 2018 Until recently I haven’t been closely following the controversy between Wikipedia and popular anti-imperialist activists like John Pilger, George Galloway, Craig Murray, Neil Clark, Media Lens, Tim Hayward and Piers Robinson. Wikipedia has always been biased in favor of mainstream CNN/CIA narratives, but until recently I hadn’t seen much evidence that this was due to anything other than the fact that Wikipedia is a crowdsourced project and most people believe establishment-friendly narratives. That all changed when I read this article by Craig Murray, which is primarily what I’m interested in directing people’s attention to here. The article, and this one which prompted it by Five Filters, are definitely worth reading in their entirety, because their contents are jaw-dropping. In short there is an account which has been making edits to Wikipedia entries for many nears called Philip Cross. In the last five years this account’s operator has not taken a single day off–no weekends, holidays, nothing–and according to their time log they work extremely long hours adhering to a very strict, clockwork schedule of edits throughout the day as an ostensibly unpaid volunteer. This is bizarre enough, but the fact that this account is undeniably focusing with malicious intent on anti-imperialist activists who question establishment narratives and the fact that its behavior is being aggressively defended by Wikipedia founder Jimmy Wales means that there’s some serious fuckery afoot. “Philip Cross”, whoever or whatever that is, is absolutely head-over-heels for depraved Blairite war whore Oliver Kamm, whom Cross mentioned as a voice of authority no fewer than twelve times in an entry about the media analysis duo known collectively as Media Lens. Cross harbors a special hatred for British politician and broadcaster George Galloway, who opposed the Iraq invasion as aggressively as Oliver Kamm cheered for it, and on whose Wikipedia entry Cross has made an astonishing 1,800 edits. Updated: The Philip Cross Affair - UPDATE "Philip Cross" has not had one single day off from editing Wikipedia in almost five years. "He" has edited every single day from 29 August 2013 to 14 May 2018. Including five Christmas Days. That's 1,721 https://t.co/z5NRExlLon — Craig Murray (@CraigMurrayOrg) May 19, 2018 Despite the overwhelming evidence of constant malicious editing, as well as outright admissions of bias by the Twitter account linked to Philip Cross, Jimmy Wales has been extremely and conspicuously defensive of the account’s legitimacy while ignoring evidence provided to him. “Or, just maybe, you’re wrong,” Wales said to a Twitter user inquiring about the controversy the other day. “Show me the diffs or any evidence of any kind. The whole claim appears so far to be completely ludicrous.” “Riiiiight,” said the totally not-triggered Wales in another response. “You are really very very far from the facts of reality here. You might start with even one tiny shred of some kind of evidence, rather than just making up allegations out of thin air. But you won’t because… trolling.” “You clearly have very very little idea how it works,” Wales tweeted in another response. “If your worldview is shaped by idiotic conspiracy sites, you will have a hard time grasping reality.” As outlined in the articles by Murray and Five Filters, the evidence is there in abundance. Five Filterslays out “diffs” (editing changes) in black and white showing clear bias by the Philip Cross account, a very slanted perspective is clearly and undeniably documented, and yet Wales denies and aggressively ridicules any suggestion that something shady could be afoot. This likely means that Wales is in on whatever game the Philip Cross account is playing. Which means the entire site is likely involved in some sort of psyop by a party which stands to benefit from keeping the dominant narrative slanted in a pro-establishment direction. A 2016 Pew Research Center report found that Wikipedia was getting some 18 billion page views per month. Billion with a ‘b’. Youtube recently announced that it’s going to be showing text from Wikipedia articles on videos about conspiracy theories to help “curb fake news”. Plainly the site is extremely important in the battle for control of the narrative about what’s going on in the world. Plainly its leadership fights on one side of that battle, which happens to be the side that favors western oligarchs and intelligence agencies. How many other “Philip Cross”-like accounts are there on Wikipedia? Has the site always functioned an establishment psyop designed to manipulate public perception of existing power structures, or did that start later? I don’t know. Right now all I know is that an agenda very beneficial to the intelligence agencies, war profiteers and plutocrats of the western empire is clearly and undeniably being advanced on the site, and its founder is telling us it’s nothing. He is lying. Watch him closely. * * * Internet censorship is getting pretty bad, so best way to keep seeing my daily articles is to get on the mailing list for my website, so you’ll get an email notification for everything I publish. My articles and podcasts are entirely reader and listener-funded, so if you enjoyed this piece please consider sharing it around, liking me on Facebook, following my antics on Twitter, checking out my podcast, throwing some money into my hat on Patreon or Paypal, or buying my new bookWoke: A Field Guide for Utopia Preppers. View the full article
  7. Even though the stock market trades at near record highs, joblessness suppressed at decade lows, and corporate buybacks/profits booming via Trump’s tax reform, poverty is exploding all over America. One of the primary objectives of the Federal Reserve’s monetary policy of this past decade was to generate the “wealth effect”: by artificially driving valuations of stocks and bonds to nosebleed valuations, American households would feel more prosperous, therefore, be more inclined to borrow and spend, even if some households did not own financial instruments. In other words, a Central-Bank-free-money-anything-goes-induced ‘economic recovery’ was supposed to trigger fast-paced economic growth, as households would reignite the service-based economy. While this perception management only worked for the wealthiest households who owned financial instruments, the reckless monetary policy of the Federal Reserve created a massive problem of wealth inequality among Americans. According to a new study obtained exclusively by Axios, more than 40 percent of households cannot afford the basics of a middle-class lifestyle, including rent, transportation, childcare and a cellphone. The study, conducted by the United Way ALICE (Asset Limited, Income Constrained, Employed) Project, a nationwide effort to quantify and describe the number of households that are struggling financially, discovered “a wide band of working U.S. households that live above the official poverty line, but below the cost of paying ordinary expenses,” said Axios. Stephanie Hoopes, Ph.D., Director, United Way ALICE Project told Axios, “based on 2016 data, there were 34.7 million households in that group — double the 16.1 million that are in actual poverty.” Axios reminds us that for two-years, U.S. politics has been overwhelmed by the anger and resentment of a self-identified abandoned class of people, dubbed the “deplorables,” a group of millions of Americans who have been left behind economically and forced into poverty. According to Hoopes, the United Way research report will be fully released on Thursday, which suggests that the “deplorables” are a much larger group than many have anticipated — and growing despite the stock market trading at near record highs. Axios provides a summary of the report that will be released on Thursday: “The United Way study, to be released publicly Thursday, suggests that the economically forgotten are a far bigger group than many studies assume — and, according to Hoopes, appear to be growing larger despite the improving economy.” “The study dubs that middle group between poverty and the middle class “ALICE” families, for Asset-limited, Income-constrained, Employed. (The map below, by Axios’ Chris Canipe, depicts that state-by-state population in dark brown).” “These are households with adults who are working but earning too little — 66% of Americans earn less than $20 an hour, or about $40,000 a year if they are working full time.” Poverty vs. income-constrained households (Share Below Poverty) Poverty vs. income-constrained households (Share Below ALICE Level) Axios said when you add them to Americans living in poverty, it comes out to a stunning 51 million households. “It’s a magnitude of financial hardship that we haven’t been able to capture until now,” Hoopes said. Using 2016 data collected from the states, the study found that North Dakota has the smallest population of combined poor and ALICE families, at 32% of its households. The largest is 49%, in California, Hawaii and New Mexico. “49% is shocking. 32% is also shocking,” Hoopes said. Last month, President Trump wrote an op-ed in USA TODAY titled “America’s Economy is Back and Roaring and Its People Are Winning.” For the sake of America’s survivability, let us hope that Axios is wrong about their assessment of the middle class and Trump is right; otherwise, this is just more evidence that suggests the implosion of America’s middle class. View the full article
  8. Authored by Thorstein Polleit via The Mises Institute, On May 4 and 5, 2018, Warren E. Buffett (born 1930) and Charles T. Munger (born 1924), both already legends during their lifetime, held the annual shareholders’ meeting of Berkshire Hathaway Inc. Approximately 42,000 visitors gathered in Omaha, Nebraska, to attend the star investors’ Q&A session. Peoples’ enthusiasm is understandable: From 1965 to 2017, Buffett’s Berkshire share achieved an annual average return of 20.9 percent (after tax), while the S&P 500 returned only 9.9 percent (before taxes). Had you invested in Berkshire in 1965, today you would be pleased to see a total return of 2,404,784 percent: an investment of USD 1,000 turned into more than USD 24 million (USD 24,048,480, to be exact). In his introductory words, Buffett pointed out how important the long-term view is to achieving investment success. For example, had you invested USD 10,000 in 1942 (the year Buffett bought his first share) in a broad basket of US equities and had patiently stood by that decision, you would now own stocks with a market value of USD 51 million. With this example, Buffett also reminded the audience that investments in productive assets such as stocks can considerably gain in value over time; because in a market economy, companies typically generate a positive return on the capital employed. The profits go to the shareholders either as dividends or are reinvested by the company, in which case the shareholder benefits from the compound interest effect. Buffett compared the investment performance of corporate stocks (productive assets) with that of gold (representing unproductive assets). USD 10,000 invested in gold in 1942 would have appreciated to a mere USD 400,000, Buffett said – considerably less than a stock investment. What do you make of this comparison? To answer this question, we first need to understand what gold is from the investor’s point of view. Gold can be classified as (I) an asset, (II) a commodity, or (III) money. If you consider gold to be an asset or a commodity, you might indeed raise the question as to whether you should keep the yellow metal in your investment portfolio. But when gold is seen as a form of money, Buffett’s comparison of the performance of stocks and gold misses the point. To explain, every investor has to make the following decisions: (1) I have investible funds, and I have to decide how much of it I invest (e.g. in stocks, bonds, houses, etc.), and how much of it I keep in liquid assets (cash). (2) Once I have decided to keep X percent in cash, I have to determine which currency to choose: US dollar, euro, Japanese yen, Swiss franc – or “gold money”. If one agrees with these considerations, one can arrive now at two conclusions: (1) I do not keep cash, because stocks offer a higher return than cash. However, many people are unlikely to follow such a recommendation. They keep at least some liquidity because they have financial obligations to meet. People typically also wish to hold liquid means as a back-up for unforeseen events in the form of money. Money is the most liquid, most marketable “good”. Anyone who has money can exchange it at any time – and thus take advantage of investment opportunities that come up along the way. (2) I decide to keep at least some cash. Anyone who has near-term payment obligations in, for example, US dollar, is well advised to keep sufficient funds in US dollar. Those who opt for holding money for unexpected liquidity requirements, or for longer-term liquidity needs, must decide what type of money is suitable for this purpose. One way to do this is to form an opinion about the respective currency’s purchasing power. If Buffett shared this view, a comparison between the purchasing power of the US dollar and gold would be in order. This exercise would show that gold – in sharp contrast to the US dollar – has not only preserved its purchasing power over the past decades but even increased it. The Greenback’s purchasing power has dropped by 84 percent from January 1972 to March 2018. Even taking a short-term interest rate into account, the US dollar’s purchasing power would show an increase of no more than 47 percent. The purchasing power of gold, in contrast, has grown by 394 percent. The yellow metal has also a remarkable property that has become increasingly important for investors in recent years. The reason? The international fiat money system is getting into increasingly tricky waters – mainly because the world’s already dizzyingly high level of debt continues to rise. An investor is exposed to risks that have not existed in the decades before. Gold can help to deal with these risks. Unlike fiat money, gold cannot be devalued by central bank monetary policy. It is immune against the printing of ever greater amounts of money. Furthermore, gold does not carry a risk of default, or a counterparty risk: Bank deposits and short-term debt securities may be destroyed by bankruptcies or debt relief. However, none of this applies to gold: its market value cannot drop to zero. These two features – protection against currency devaluation and payment default – explain why people have opted, whenever they had the freedom to choose, for gold as their preferred money. Another important aspect at this point: In times of crisis, the holder of gold – if he or she has not bought it at too high a price – can have the hope that the value of gold is likely to increase and he or she can exchange gold for, for instance, shares at a significantly discounted price. This way, gold can help boost the return on investment. Inspired by Buffett’s return comparison between stocks and gold, and after giving it some further thought, one might have good reasons to come to at least the following conclusion: Gold has proven to be the better money, it has proven itself to be a better store of value than the US dollar or other fiat currencies. The two-star investors typically do beat around the bush when it comes to critical comments. For instance, Buffett told his audience once again that US Treasury bonds are a terrible investment for long-term investors. With a yield of currently 3 percent for ten-year US Treasury bonds, the return after tax is around 2.5 percent. With consumer price inflation currently around two percent, inflation-adjusted rate of return is just 0.5 percent. Buffett’s message was unequivocal: do not invest, at least not currently, in bonds. Those who had hoped that the star investor would make further critical comments on the deep-seated problems of the US dollar – which represents a fiat currency with a money supply that can be increased any time in any amount considered politically expedient – had hoped in vain. But it cannot have escaped the star investors that it’s not all sunshine and roses when it comes to the fiat US dollar. Munger, for example, bluntly stated that central banks’ low interest rate policies, in response to the 2008/2009 financial crisis, have helped boost stock prices and bring shareholders windfall profits. Quote Munger in this context: “We are all a bunch of undeserving people, and I hope we continue to be so”. Buffett and Munger share a long-term perspective. They keep pointing to the enormous increase in income that has been achieved in the US over the last decades. Compared to Buffett’s childhood days, Americans’ per capita income has increased six-fold – a most remarkable development (especially so if we factor in that the US population has grown from 123 million in 1930 to 323 million in 2016). From Buffett’s and Munger’s point of view, the US system works, both politically and economically: Everyone has benefited, the wealth growth of Americans has been much more substantial than for people elsewhere, and crises have been overcome. The two investors thus form their assessment – as many do nowadays – on factual findings, based on what the eye can see. Counterfactual outcomes – things that would have happened had a different course of action been chosen – are left out. If one takes a factual point of view, however, it is rather difficult not to see the dark side of fiat money. For instance, that fiat money fuels an incessant expansion of the state to the detriment of civil liberties; the increase of aggressive interventions around the world, all the wars causing the deaths of millions; the economic and financial crises with their adverse effects on income and living conditions of many people; and last but not least, the socially unjust distribution of income and wealth. All these bad things would undoubtedly be unthinkable under a gold-backed US dollar, at least to their current extent. The objection that the increase in the wealth of the past few decades would have been impossible without a fiat US dollar does not hold water: Economically speaking, it is wrong to think that an increase in the quantity of money, or a politically motivated lowering of the interest rate, could create prosperity. If that were the case, why not increase the quantity of money ten-, hundred-, or thousand-fold right now and thereby eradicate poverty worldwide? If zero interest rate could create wealth, why not order central banks to push all interest rates down to zero immediately? Why not enact a new law that requires zero percent interest, or abolishes it altogether? Buffett and Munger have undoubtedly given their shareholders a great opportunity to escape the vagaries of the fiat money system, to defend themselves against the central bank-induced inflation, and to also become wealthy. Unfortunately, however, the serious economic, social, and political problems that fiat money inflicts upon societies cannot be solved this way. For that reason, one should deliberately reflect Buffett’s return comparison between stocks and gold – and make oneself aware of the fact that gold can be viewed as a form of money that may even deserve to be called “the ultimate means of payment.” For the investor, there are no convincing economic reasons to discourage holding gold as a form of longer-term liquid funds – especially if the alternative is fiat money. This timeless insight was already suggested by economist Ludwig von Mises (1881-1973) in 1940: “The gold currency has been criticised for various reasons; it has been reproached for not being perfect. But nobody is in a position to tell us how something more satisfactory couId be put in place of the gold currency.” View the full article
  9. In Morgan Stanley's latest Sunday Start note, the bank's chief equity strategist, who toward the end of 2017 turned decidedly gloomy on the US stock market after being one of its biggest bulls a year earlier, said that at the beginning of 2018 his view was out of consensus: "while we agreed 2018 would be a year of robust earnings growth, we differed by arguing that risk markets would not be rewarded for it. For US equities, we envisioned flat to modest positive returns as multiple contraction offset earnings growth." And, to be sure, for a while he looked way off: as Wilson notes, "the strong start to the year made our less sanguine view look premature — or just dead wrong." Yet things quickly changed after the February volocaust, when US equity valuations corrected materially, in large part due to the forward price/earnings for the S&P 500 falling 12% from its December high, largely thanks to a surge in forecast EPS due to Trump tax reform and a record amount of projected buybacks this year, by some estimates as much as $1 trillion. And while some sectors have seen their P/Es fall by much more, the median sector P/E compression closer to 15%. As a result of the recent market volatility, Wilson says that his recent conversations with investors are not as contentious as they were in January. In fact, he is now worried that his view is simply the consensus… "perhaps implying that our call is much less likely to prove correct. This is not to say the consensus can’t be right; we note an old adage that the consensus is right 80% of the time. The problem now is that the consensus projects much more modest returns", Wilson laments. Which, of course, is bad news for investors, who actually have to do some work to generate returns and "have to rely more on idiosyncratic or tactical investment ideas rather than just being long beta." Here, Wilson notes one such idea he has recently been vocal about, namely trading a range in the S&P 500 — between 16-18x forward 12-month earnings, and points out that since January’s highs, the market has successfully tested that 16x floor four separate times. "That floor is rising with earnings estimates, and today it sits at 2625." The trading range strategy is, not surprisingly, one of Morgan Stanley's favorite, and Wilson urges clients to buy US stocks broadly when the index nears 16x... unless one of two things occurs: either 10-year rates move above 3.25%, or we get a proper growth scare for the economy and/or earnings that could push up the equity risk premium beyond 350bp. While Morgan Stanley doesn’t expect either to occur in the near term, it discussed the risk it may be wrong. This is First, while our rates strategists still expect lower 10-year Treasury yields by year-end, the recent move through 3% suggests that 10-year rates could see a technical blow-off like equities had in January. A fundamental catalyst for such an acceleration could be the next employment report if it shows further signs of strength, and if rising labor costs finally start to appear in the government statistics. We mention this specifically because more individual companies mentioned rising labor costs during 1Q earnings season than in prior quarters. Second, while we are not yet seeing evidence of falling economic growth, we expect — with near- certainty — that we will have a peak rate of change in S&P 500 y/y earnings growth by 3Q thanks to the spike created by the tax cuts. This was something we cited in our 2018 outlook and one of the primary reasons why we thought P/Es would contract. The good news is that this has already occurred. The risk for further P/E compression comes if markets start to worry that it’s not just a deceleration of growth on the backside of the peak, but an outright decline in growth. As shown in the Exhibit, consensus forecasts do not expect negative growth, but it’s worth considering the potential risk of “disappointment” later this year and in 2019, for two reasons. First, earnings growth expectations for 4Q and 2019 look high to us, given the extremely difficult comparisons created by the tax cuts. Second, even in the absence of an economic recession or material slowdown, we do see growing risk to y/y growth of consumer spending due to the extraordinary one-time boosts that began late last year — hurricane relief, tax cuts and the interest in cryptocurrency, not to mention the seeming euphoria in stock markets in January that looks unlikely to be repeated. This suggests that the difficult comparisons are not only the result of tax cuts but perhaps better top-line growth that can’t be repeated. I think it’s too early to worry about this risk today, but it’s not too early to start thinking about it and watching for signs of consumer behavior becoming more tempered. I would also throw in the price of crude oil as an important consideration, given that our economics team estimates that close to one-third of the tax cut benefit to the US consumer may have already been removed by the rise in oil and gasoline prices. The third and final risk is also the biggest, if most underappreciated of all: the so-called "Fed policy error", a fancy way of saying the Fed has tightened too much, which could wreck the 16x floor to Morgan Stanley's forecast and launch a market crash... and by the reflexivity of modern markets in which asset prices influence the economy, the next recession While Wilson concedes that it is widely acknowledged that financial conditions are tightening, there are wide-ranging opinions about how much more the Fed can tighten before it begins to really bite the economy. More interesting is the chief equity strategist's assertion that he also finds "many investors believe the Fed will pause or stop tightening to avoid a recession." Well, don't hold your breath, Wilson warns an entire generation of "traders" used to being bailed out by the Fed the moments things turn ugly and cautioning that "that’s not how it generally works once the Fed has met its economic goals and begins to tighten in earnest, a condition I believe has begun for this cycle." Wilson's summary is most troubling for those bulls - most of them - who remain confident that between the "global coordinated recovery" narrative, and the Fed stepping in to ease or inject liquidity when risk assets tumble, there is no way one can lose money being long: I don’t profess to know the answer to the question, “Has the Fed gone too far?” But, I am convinced that this can sneak up on us quickly. I also see markets sending some signals that we may be getting closer to that than the conventional wisdom might appreciate. History suggests the weakest links fall first when financial conditions tighten. On that score, some developments have raised our concerns: the top in Bitcoin last December, widening of Libor-OIS, weakness in emerging markets, led by Argentina and Turkey, the worst quarter of performance for investment grade credit in 10 years, and higher sustained volatility across all equity markets. The conclusion is hardly what one would expect from the chief equity strategist of a bank whose "job" is to comfort investor by seeing nothing but smooth skied ahead: "These signals can take years to build before an outright recession. However, one thing is clear to us — we don’t expect to return back to the tranquil environment of 2017." View the full article
  10. Authored by Alasdair Macleod via GoldMoney.com, It is a matter of personal interest that it was my uncle, Iain Macleod, who invented the term stagflation shortly before he was appointed shadow chancellor in 1965. It is no longer used in its original context. From Hansard (the official record of parliamentary debates) 17 November that year: We now have the worst of both worlds —not just inflation on the one side or stagnation on the other, but both of them together. We have a sort of "stagflation" situation and history in modern terms is indeed being made. The inflation that Iain was referring to was of wages, which were averaging an increase of 6.2%, and rising, and stagnation in production, which had declined from an index of 134 to 131. It was this divergence that gave him the opportunity to invent this portmanteau word. It has now passed into more common use to describe an economy that fails to respond to the stimulus of monetary inflation. Its use in this context is therefore different from the original. The idea that stagflation exists as an economic phenomenon is only really true for neo-Keynesians, who view inflation as economically stimulative, and its failure to stimulate perplexing. In this sense it is frequently applied to conditions today, where massive monetary stimulus does not appear, so far at least, to have brought about the economic growth that might have been expected from it. The explanation why monetary stimulus has not worked as intended is not difficult to understand, but for neo-Keynesians it is unpalatable. This article takes its cue from the misapplication of the stagflation term to explain why Keynesian stimulation of the economy is bound to fail, and symptoms commonly but incorrectly referred to today as stagflationary are simply a reflection of the costs of monetary policy imposed on ordinary people. It involves the reinstatement of Say’s law to its rightful place, not as Keynes misleadingly described it, that supply creates its own demand. It requires an understanding of why inflation destroys wealth, the opposite of the creation of wealth that a stimulus implies. And it necessitates an appreciation that GDP is no more than a misleading accounting identity covering only a minor part of the economy. I shall explain the relevance of these topics in turn, and why stagflation is an inappropriate description of some sort of intermediate condition between inflation and deflation. Say’s law According to Say’s law, we work in order to consume, which is the purpose behind the division of labour. This is self-evidently true, and it is a mystery why anyone can think otherwise. Keynes resorted to sleight of pen by giving it a definition which was wrong, mysterious and therefore hard to comprehensively criticise. However, if we return to the point Jean-Baptiste Say made over two centuries ago, there can be no doubt he was right. Even the unemployed, the retired and children are included in Say’s law, because if they don’t work, someone else has to foot the bill out of their own production. Say’s law was an insurmountable obstacle for state planners. Keynes needed to dispense with it to make room for the state to have a role intervening in our everyday affairs. Keynes denied the equation’s validity and played on our desire to believe that money rained upon us from the state is true money. Say’s law tells us this is impossible, but by establishing the independence of money from production, Keynes went even one step further, and divorced production from consumption entirely. So strong is the collective desire that this something-for-nothing formula is true, that we willingly subscribe to it. But there is a cost, which is perhaps difficult for the ordinary citizen to grasp. If the state taxes the wealthy or debauches their money to redistribute wealth, the wealth is simply dissipated to the point where it is no longer wealth. It ends up paying the bureaucrat’s salaries and being spent on welfare. When it is invested in public services, it is done so wastefully. But above all, it is the state that impoverishes its citizenry through taxes and monetary debauchment, and it is the unwritten objective of monetary policy to enrich the state. The justification for the state’s destruction of wealth relies heavily on the perception that saving plays no constructive role in creating demand, so it can and must be sacrificed. But Keynes went even further, claiming that increasing savings reduces aggregate demand which in turn lowers total saving. For Keynes, the danger is at its most acute when the economy falls into recession, when the increase in savings, driven out of consumption by fear of the future, accelerates the decline in aggregate demand, and therefore brings about a decline in savings themselves. Keynes called this the paradox of thrift. This nonsense comes from a lack of appreciation of the role of savings, which are more accurately described as deferred consumption. Money saved does not disappear, as Keynes implies. It is redirected through the financial system to investments in the means of production, made profitable by the reduction in interest rates that results from a downturn in immediate consumption. In fact, it is the accumulation of investments in production that forms the backbone of a country’s wealth and provides the higher standard of living we all aim to achieve. But no, Keynes stood this on its head and told us that money not spent on immediate consumption was a wasted resource. Keynes’s solution was to discourage savings and replace them for the purpose of funding investment with an expansion of the quantity of money, including bank credit. What he kept silent on is that the extra money dilutes the purchasing power of the existing money in circulation. And he gets away with it because of the lead time between the increase in the quantity of money and the effect on its purchasing power, which can never be pinned down through the national statistics to establish cause and effect. The Keynesian stimulus is therefore no more than a false trick, which relies on the debasement of money. You cannot claim an economic improvement when everyone pays for it through currency debasement. Its stimulation (and even that effect is debateable) is only short-term being based on monetary prestigitation, and reverses when market prices reflect the dilution of purchasing power from monetary expansion. Wealth destruction is the result It is clearly the case that a Keynesian stimulus dilutes the purchasing power of money already in existence. From this, it follows there is a transfer of wealth from those who own money. The beneficiaries are the banks who create the new money and their favoured customers who first receive it as loans, including the government. These borrowers get to spend it before prices are driven higher by the new money entering circulation. It is important to understand that monetary inflation, instead of benefiting the wider population, leaves it worse off. The process whereby this wealth transfer occurs was recognised by Richard Cantillon, a banker at the heart of the Mississippi bubble three hundred years ago. He had noticed that the influx of gold and silver from the New World into Spain had devalued their purchasing power, making goods more expensive in the ports where the gold and silver were first landed, and in the cities to which they were transported. This new money was gradually distributed as it was spent, driving up prices in the wake of the new money’s absorption. This came to be known as the Cantillon effect. For those late in receiving this new money, prices had already risen to reflect its dilution. Their savings bought less goods than they did before, but so far as their earnings were concerned, the effect was uneven. In an agricultural economy, the value of produce demanded by the early receivers would rise ahead of the new money reaching the producers more generally, while the prices of the more basic foodstuffs eaten by the country folk might remain unaffected, at least for a period of time. A modern industrial and services-based economy is very different. The wealth transfer effect on income disadvantages those on fixed salaries, whose wages buy less as a result of higher prices. It handicaps those who lack the power to demand higher wages, relative to those that do. In the UK of the 1960s, there were powerful unions, predominantly in the nationalised industries, which were able to hold the government to ransom, demanding higher wages. This was the inflation element in Iain Macleod’s stagflation. These wage rises were granted despite the decline in their collective output, the stagnation element in the production index. By turning a blind eye to the link between monetary and credit expansion and their effect on prices, Keynes would have assumed governments could contain the fallout from monetary policy. Monetary expansion then became the economic cure-all. This was only possible because Keynes had dismissed Say’s law and the cast-iron links between production and consumption were therefore removed. For the UK fifty years ago, it was a huge mistake, leading to economic underperformance, a declining currency, industrial and civil disruption, and an eventual bail-out by the IMF in 1976. Gross domestic product The third leg of our sorry tale is the shortcomings of the principal indicator of the state of the economy. GDP is a money-total of only that part of the economy specifically included. The most common measure of GDP is consumption-based, the total of goods and services sold to consumers as final products. It is obvious that savings, which are not spent on final products, deplete the GDP total, and it is therefore in the political interests of any government which measures its success by growing GDP to discourage savings. As noted above, Keynes handily provided the justification for discouraging savings with his savings paradox argument. GDP should be noted more for what it excludes rather than what it includes, and as a simple accounting identity is fine only to a point. GDP might be described on similar lines to a company’s sales figures. But if you were considering buying shares in a company, would you do so only on the basis of historical sales information? If you did you would be in the habit of losing money, because it is the profitable success of future production that matters. Yet, econometricians and Keynesians fail to make any distinction between an economy’s history and its future. They assume as a default that in aggregate we will purchase tomorrow what we bought in the past. There is no room in this approach for progress or change. For this reason, GDP is a sterile backwards-looking statistic. Furthermore, the production of all goods and services takes time between the assembly of raw materials and the final product. None of this is logged in GDP, which only records final products. In a goods-based economy, these business-to-business activities (B2B) typically represent a total figure larger than GDP, while in a services-based economy, this B2B activity is not so large because of the shorter lead-times and lower complexity to product delivery. Nonetheless, in today’s US services-oriented economy, gross output, which is essentially B2B, still totals approximately 100% of additional activity to final product GDP. The importance of B2B, which has only recently begun to be understood in the US (and unfortunately not yet elsewhere) is roughly half all non-financial economic activity in that economy and is driven by investment. In other words, B2B equates to and is additional to final consumption values represented by GDP. The only stable source of the investment that drives B2B is from savings, because bank credit fluctuates with the credit cycle. Yet Keynes dismissed savings entirely from his economic schemes, even wishing for “the euthanasia of the rentier”. There is also the financial sector, where new money, intended to inflate GDP is initially tied up. The progression of monetary inflation through to prices and wages is delayed at the outset of the credit cycle by the route which it takes. Central banks suppress interest rates to encourage the expansion of bank credit for the stimulation of both consumers and industry. Monetary policy in effect sets in motion an expansion of credit by the banks for their benefit and for that of their favoured customers, who in the earliest stages of the credit cycle are not the producers of goods and services, but other financial institutions. When confidence remains low on Main Street, on Wall Street there are clearly beneficiaries of lower interest rates. Governments, who issue bonds deemed to be riskless, take the opportunity to borrow at rates lower than free markets might otherwise demand, while owners of government bonds enjoy a significant increase in their wealth. Gradually, the wealth effect from asset inflation spreads, without at first any noticeable impact on GDP. It is only later, after bond prices have peaked, that money begins to flow in increasing quantities into the medium and smaller enterprises, which are responsible for the bulk of economic production in the private sector. Therefore, as a measure of economic activity, GDP is frankly useless and misleading. It misses B2B and financial activity entirely and is a backwards-looking statistic. It conceals the transfers of wealth that result from economic distortions, as well as the general destruction of wealth from monetary inflation. It is not qualitative, being purely a quantitative measure of money that ends up being spent by consumers and ignores losses in money’s purchasing power. Attempts to adjust GDP for inflation amount to double-counting, because if the adjustment was perfect, there would be no increase in GDP. We know this, because if we take a theoretical closed economy where everything was recorded, and the quantity of money was fixed, there cannot be any change in GDP. The fact there is a difference between nominal and inflation-adjusted GDP is down to the time taken for new money to fully enter into circulation, and because the statistical method has the watertight integrity of a sieve. Any student of monetary inflations knows that they impoverish the ordinary people. The mechanism is summarised above. To ignore this suggests the Germans in 1920-23 must have been cock-a-hoop at the stimulus of monetary inflation, and the Venezuelans today are similarly blessed. The fact remains that inflation impoverishes. If it stimulates economic activity at all, it is only a temporary effect that rigs the numbers. The pre-Keynes classical and Austrian economists, who accepted and understood Say’s law and its implications broadly understood that inflation impoverished people. It seems modern economists are blind to the point. This brings us back to the use of the stagflation term. When used to describe an economy that refuses to respond to the artificial stimulus from an increase in the quantity of money and credit, stagflation only makes descriptive sense for neo-Keynesians who fail to understand the true consequences of government interventions and deficit finances. It is not actually how the term was first used. They would be far better, if they have difficulty understanding the true effects of monetary inflation, in assessing the evidence of the effects before their eyes, instead of hijacking a term meaningless in this context. View the full article
  11. 2018 was the year hedge funds were supposed to finally outperform the S&P. Alas, as the latest Goldman Sachs hedge fund trend monitor - a survey of 848 hedge funds with $2.3 trillion of gross equity positions ($1.6 trillion long and $702 billion short) as of March 31, 2018 - that was not meant to be, and while the hedge fund hotel basket of most popular stock is just marginally outperforming the S&P YTD, both the equity hedge fund index, the composite hedge fund index, and the global macro hedge fund index are all trailing the S&P500. Again. Yet amid this chronic underperformance, we should note that less than three weeks after we reported that the Goldman Hedge Fund VIP basket was getting slammed in late April, mostly as a result of a hit to the tech sector and FAANGs, it has since recently recovered, largely thanks to the previously discussed wholesale short squeeze, mostly among tech, healthcare and energy names. Also of note: strong fundamental results did not result in strong performance: the average outperformance of stocks beating earnings estimates was less than half the typical amount. As a result, funds apparently trimmed their top positions. And so, in late April, Goldman's VIP basket of the most popular hedge fund long positions (ticker: GSTHHVIP) underperformed a basket of stocks with the highest short interest (GSTHVISP) by nearly 400 bp, lagging for six days in a row. In the last few weeks, as noted above, these favorite positions have recovered. As discussed previously, during these sharp rotations in the past month, a major short squeeze was taking place, however that failed to dent the conviction of the smart money, and "hedge fund crowding" in the most popular positions rose slightly in 1Q and remains elevated relative to history. As a result, as shown in the chart below, the average hedge fund holds 68% of its long portfolio in its top 10 positions, the highest level in two years and slightly below the record “density” of 69% in 1H 2016. Similarly, the share of S&P 500 market cap accounted for by the 10 largest index constituents has risen in recent years and now sits at 22%, modestly above the historical average but the highest share this cycle. That about covers the macro picture. What about at the micro, single-stock level? Here, too, there were some notable shifts. First, as Goldman points out, during 1Q, Facebook was the stock with the largest increase in popularity, with hedge funds viewing the stock’s volatility as a buying opportunity. As a result, 53 funds built a new position and 60 funds added to existing positions in FB, while 53 funds trimmed or dropped the stock completely during the quarter. Furthermore, at the start of 2018, Facebook ranked as #2 in Goldman VIP basket of most popular hedge fund positions. The list below shows the names with the largest net increase in fund popularity. And while the #1 stock was Amazon, it also experienced the largest drop in popularity among all stocks during 1Q. This quarter, Facebook and Amazon again appear as the top two VIP stocks, but with their relative positions flipped. AAPL, GOOGL, and NFLX also appeared among the stocks with the largest declines in popularity, even though tech stocks remain the sole "leaders" of the broader market. Which brings us to the 50 stocks that matter the most to hedge funds, i.e. the Goldman Hedge Fund VIP list, also known as the "Hedge Fund Hotel California." Finally, for those who are convinced that it's only a matter of time before a massive squeeze sends the most shorted names soaring, here is the list of the 50 stocks representing the largest short positions among hedge funds. View the full article
  12. Authored by Kayla Matthews via Hackernoon.com, The price of Bitcoin has been wildly volatile. From November to December 2017, it increased by 223 percent. It fell by 59 percent between January and February 2018, increased by 64 percent from February to March and then dropped again during March by 40 percent. While this isn’t necessarily a reason to give up on Bitcoin, it does serve as a stark warning to those who plan to invest in it. [ZH: Even though we note that Bitcoin's daily trading range has collapsed to a more reasonable level recently...] Why does this digital currency have so many ups and downs? Many of the same factors that influence changes in the value of other items affect the price of Bitcoin. Because it’s so new and different than other currencies though, many of these impacts are exaggerated. Here are five of the primary factors influencing the price of Bitcoin. 1. Supply and Demand This one will be obvious to anyone who has taken an introductory economics course. Bitcoin, like other currencies, is subject to the impacts of supply and demand. The supply of Bitcoin is analogous to that of gold. Just as there is a pre-determined amount of gold in the earth, the Bitcoin protocol has a predetermined number of Bitcoins within it. People need to mine gold to bring it into the marketplace. Similarly, people must mine Bitcoin by using computing power to solve a complex mathematical equation. When miners successfully solve this puzzle, they earn Bitcoins, which increases their supply. The demand side of the equation works the same for Bitcoin as it does for gold and other resources. The more people that want Bitcoin, the more the price of a coin increases. 2. The Media and Peers Research has shown that media coverage is one of the biggest influencers of the price of Bitcoin. The more media coverage it gets, the more people are aware of it and may invest in it. Positive media coverage typically causes price increases, while negative coverage results in drops in prices. This pattern doesn’t only apply to media. Opinions and behaviors of investors often influence the actions of their peers and, therefore, Bitcoin’s price. Similarly, when new businesses decide to take cryptocurrencies as payment, awareness, investment and prices tend to spike. More online and brick-and-mortar stores are starting to accept Bitcoin, causing more people to view it as legitimate. You can now even pay for doctor’s office visits with cryptocurrency in various places around the world. 3. Political Changes As with other currencies, political events influence the price of cryptocurrencies. However, the change in value is often opposite that of the relevant government-sponsored currency. Lack of certainty in a country’s economy causes people to put their trust in cryptocurrencies such as Bitcoin instead because it isn’t tied to any government. The 2015 economic crisis in Greece led to a surge in interest in Bitcoin from Greek traders. Similar effects occurred when Britain decided to leave the European Union and when the United States elected Donald Trump as president. 4. Changes in Government Regulation Because Bitcoin is such a novel concept, governments have struggled to determine how, and whether, to regulate it. Bitcoin isn’t tied to any government, yet regulations can directly impact how the system works. Regulatory decisions involving digital currency have led to both surges and drops in their prices. When China, the world’s biggest crypto market, cracked down on Bitcoin and shut down several coin exchanges, the price of Bitcoin fell dramatically. When the Japanese government officially recognized Bitcoin as legal tender, its price shot up over the next several months. 5. Changes to the Rules of Bitcoin No single entity controls Bitcoin, but the Bitcoin community occasionally makes decisions that affect how the system, known as a blockchain, works. Miners run the software that verifies Bitcoin transactions and, so, determine the rules of what a valid transaction is. Attempts to change these rules sometimes results in the creation of a fork, which causes the formation of two separate chains that each follow different rules. As long as there are miners willing to work on each chain, though, they are both valid. In the past, the period before a fork occurs caused uncertainty and a drop in price. Afterward, the price typically increases again. * * * Like any currency, Bitcoin has its ups and downs. Bitcoin’s changes just tend to be more extreme than other’s. While the Bitcoin market may stabilize eventually, it’s expected to remain a wild ride, at least for now. View the full article
  13. Monthly Commentary Howard Wang of Convoy Investments Tightening money supply This year has been a process of normalization in financial conditions. Below I show the estimated money supply in the US, which rose fairly steadily before we saw a spike in 2008. That spike lasted until the end of 2014, after which the Fed began to withdraw money from the system. US money supply shrank for the first time in almost a century. This chart has been the fundamental driver of asset prices over the last decade and will likely continue to drive the markets until the Fed normalizes their monetary policy. On average, more money chasing the same assets means higher prices while less money means lower prices. Below I show the relationship of growth in the US money supply to the long-term return of assets. The falling money supply since 2014 is driven by a combination of rising rates and direct unwinding of quantitative easing. Below I show the duration adjusted Fed balance sheet. I believe the trend of shrinking money supply in the system will continue for some time to come. This adjustment is a painful but necessary process for healthier markets and economies. Below I provide an update on a commentary I wrote on the subject of money supply and credit from a few years ago. * * * The price of anything is measured in the form of dollars per unit whether it is $/share, $/bond, $/house, $/barrel, etc (or whatever your base currency is). The price of everything comes down to those two things, supply of assets and the quantity of money chasing those assets. More money chasing fewer assets means higher prices, and vice versa. Asset price = quantity of money/supply of assets While there are some exceptions such as a disruption in oil production, the growth in supply of assets tends to be relatively stable in the short run. So it is changes in the quantity of money that drives short term asset swings. There are two main ways in which the quantity of money chasing an asset can change. To illustrate, I show below a simplified system with $100 in money and 2 assets, a bond and a stock. To start with, let’s say the money is evenly divided between stocks and bonds and the price of each is $50. First, money can flow from one asset to another because investor preferences change. For example, if growth numbers are bad, investors tend to incrementally move money out of stocks into safety assets like bonds. As money flows out of an asset, there are fewer dollars chasing the same supply of assets and prices fall. In contrast, as money flows into an asset, more dollars chase the same set of assets and prices rise. This effect is fairly intuitive and is what most people think of when asset prices change. I illustrate this effect below through our simple system. Second, net money can be added or taken out of the system. This concept is a bit more nebulous, but its effect has dominated the markets in recent years. For example, during the multiple rounds of quantitative easing (QE), the Fed was essentially adding money supply through printing of cash as well as lowering of interest rates to promote additional credit creation. More money supply in the system tends to be bullish on average for all assets because regardless of investor preferences, there are simply more dollars chasing the same set of assets, increasing average asset prices. Alternatively, as the Fed ended QE and began to hike rates, money was taken out of the system and fewer dollars existed and average asset prices fell. In our simplified example, QE would be akin to there being suddenly $200 in the system instead of $100. Given the same allocation between stocks and bonds, their average prices would double to $100. Our world is of course far more complex than the illustration above, but asset prices fundamentally behave in the same way. Below I show again the more complex breakdown of global assets. Asset prices can change because of 1) flows of money from one asset to another and 2) aggregate change in the total money supply. In most typical environments, it is the flow of money between assets that dominate price changes. I believe this is why most investors tend to focus on this mechanism of price changes. However, central banks have played an increasingly important role in markets by shifting the aggregate money supply. Now, both factors drive asset prices, often in opposite directions. This is part of the reason why asset movements have been more confusing than usual. In the simplified example above, if I held either a stock or a bond, I’d be affected by both the flow of money between bonds and stocks and changes in aggregate money supply in the system. However, if I held a portfolio of both assets, I would not care as much about the flow of money between bonds and stocks and I’d only be affected by changes in aggregate money supply. This is largely true of our diversified portfolio. We are relatively agnostic to the flow of money between assets. Instead, our performance is largely driven by changes in the total money supply of our system. So how would you measure money supply? When you go out and buy a house or a car, your total purchasing power is the sum of the cash you have and the credit you can call upon. Therefore, Money supply = cash + credit M1 is a measure of all physical coins and currencies as well as demand deposits and checking accounts. I use M1 as a rough proxy for cash in the system. Credit is a bit trickier but I use real interest rates as a rough proxy – as real interest rates go down, credit creation becomes easier and vice versa. Below I aggregate these two into a rough proxy of change in money supply. There are of course more sophisticated methods but this proxy will give a quick and rough overview. In 2004 and 2005, money supply in the system went down as Greenspan began to tighten. In 2008, money supply went down dramatically as banks failed and credit creation ceased up. The 3 rounds of QE in the following years saw accompanying spikes in money supply growth. In 2013, money supply dropped dramatically as Bernanke hinted at ending QE and tightening. Money supply fell in 2015 as the Fed finally tightened. Money supply continued to fall as QE tapering began in 2017. Given asset prices are driven by 1) flows between assets and 2) changes in aggregate money supply, how much does 2) drive asset pricing? Below I show the year over year change in asset prices compared to the change in money supply. The price of almost everything you can buy is somewhat correlated to the change in money supply and vice versa. Of course, sometimes 1) and 2) can drive assets in opposite directions. For example, despite a dramatic decrease in aggregate money supply in 2008, bonds rallied because so much money flew out of stocks into bonds. The relationship between a diversified basket of assets and money supply becomes clearer because you average out the confounding effects of money flows between assets. Below I show the year over year change in price of a broad basket of assets (stocks, bonds, commodities, credit, and real estate) compared to the change in money supply. As you can see, aggregate money supply is the dominant driver of average asset prices. Central banks have a far reaching impact because they control the supply of money in which everything is measured against. The force that drove virtually every asset to outperform over the last decade is now reversing. Average asset returns have been muted over the last few years and will likely persist in the near term. View the full article
  14. As we've pointed out many times before, a powerful earthquake hammering California is a geological inevitability. In the coming decades, a magnitude 7.1 or 7.3 earthquake - similar to the deadly quake that rattled central Mexico last year - would almost certainly strike a densely populated part of the state (the San Andreas fault runs through most of California, as the map below shows), potentially leading to tens if not hundreds of thousands of casualties. The local economy would lie in ruins and it would take years to for the area to recover. With this in mind, it's perhaps no surprise that government agencies, businesses and other organizations in Arizona have recognized the need to prepare. To wit, the Associated Press reports that local organizations are participate in an exercise to practice how the state would respond to a migration of 400,000 people after a catastrophic earthquake in Southern California. The Arizona Department of Emergency and Military Affairs said participants in the National Mass Care Exercise will learn how to provide food, shelter and medical services in an emergency scenario. Planning for the exercise has been underway for nearly a year, the department said. Many county, tribal and municipal emergency operations centers will practice taking in thousands of refugees during the exercise, as procedures and staff training are tested. Aside from the wildfires that have ravaged California, both the northern and southern parts of the state have been hit by a series of smaller quakes in recent months. However, the earthquake situation in California is actually more dire than most people realize. Although most Californians have experienced a small quake, most have never personally experienced a strong one. For major events, with magnitudes of 7 or greater, California is actually in an earthquake drought. Multiple segments of the expansive San Andreas Fault system are now sufficiently stressed to produce large and damaging events. View the full article
  15. Authored by Mike Shedlock via MishTalk, Earnings estimates keep rising and rising. What is everyone smoking? A Tweet to a Linked-In article by Edward Yardeni caught my eye. Yardeni asks What Are Stock Industry Analysts Smoking? I would like to try some of whatever industry analysts are smoking. You can compare my earnings forecasts to their consensus estimates on a weekly basis in YRI S&P 500 Earnings Forecast on our website. I say “tomato.” They say “tomahto.” My earnings-per-share estimate for 2018 is $155.00 (up 17.4% y/y). The analysts continue to up the ante and are currently at $160.40 (up 21.5%). My estimate for 2019 is $166.00 (up 7.1%). Theirs is $175.72 (up 9.6%). Perhaps the analysts are just high on life. Their growth estimate for next year seems too high to me since I expect 2019 earnings growth to settle back down to the historical trend of 7%. Are They All High on Life? Yardeni says "You can drive a truck between my earnings estimates and theirs." Yet he still suggests "the stock market is likely to be at new record highs by the end of this year," even with his earnings estimate. What Can Possibly Go Wrong? I guess we can throw out a recession, earnings reversion to the mean, a global slowdown, a valuation scare, or simply a valuation reversion to the mean. Asset Bubble Poised to Break Note that it has taken about $1 trillion in buybacks and dividendsjust to hold the the S&P 500 barely above breakeven on the year. Crescat Capital notes Fed Tightening Cycles Coincide With Bursting of Asset Bubbles. Yardeni is still looking up. Mirror Mirror on the Wall When asking what others are smoking, perhaps one should look into a mirror to see if they are smoking essentially the same stuff, just less of it. Addendum A reader emailed asking "what make you so sure Yardeni is wrong?" Another commented " If I had to choose between 1) a small increase in earnings and modest stock market appreciation, as Yardeni is suggesting or 2) a 60% drop over the next year, as is often referred to on this site, I would go with option 1. I do expect the economy and the market to slow a bit next year though." Actually, I am not sure of hardly anything other than the given I will someday die. Yardeni could be right. Interestingly, he is positioned well. If the stock market tanks, he can blame the earnings miss and claim he was right. As long as he is closer than the herd, he can make an "I was right" claim. History strongly suggests he will do better than the herd. Yardeni made a "cleverly safe call". In regards to 60% drop predictions, I am unaware of anyone suggesting a 60% drop in a year. Other than Prectorites calling for the DOW at 2,000 or whatever, the most bearish person I know is Hussman. But Hussman is not calling for anything specific in a year. Rather he thinks we see a 67% drop, top to bottom, occurring over an unspecified number of years. 50% or so may be more likely, or not. Everyone is guessing. Unlike some others, I have not called for a "crash". Rather, I side with Hussman that the market is ridiculously overvalued. Something like a 15% decline followed by a 5% advance, followed by a 15% decline, another 5% advance, then two consecutive 10% declines, followed by an 8% rally then a washout 15% decline is more along the lines of what I expect. That does not total 67%. But a crash (which I define as 35% in a year, totaling or 50% in 2-3 consecutive years) would not surprise me in the least. “Given rich valuations and deteriorating internals, downside risks are increasing. But finger-waving about the risks of Fed tightening or QT, after the jackweeds at the Fed encouraged THIS, imagines one can avoid the inevitable consequences of a bubble that was wholly intentional,” said John P. Hussman. View the full article