Friday, July 29, 2016

Charles Hugh Smith Thinks 
The Market Is Like A Car Flying Off A Cliff
& The Wile E. Coyote Moment Is Just Ahead
"The stock market thinks it's solidly on pavement, but in reality it's like a car flying off a cliff: the Wiley E. Coyote moment is just ahead. There's nothing but air beneath the stock market .. what is driving this expansion other than a delusional belief that profits will magically reverse and log massive gains in the second half of 2016? .. The stock market is hitting new highs for what reason? The typical answer is: more central bank stimulus is on the way, the Fed/ BoJ /Bank of China/ European Central Bank have our back, etc. .. But the reality is obvious to all: the returns on central bank stimulus have declined to near-zero. Trillions in additional stimulus are needed to just keep the delusional markets from experiencing gravity."
- Charles Hugh Smith*
link here to the reference
Dr. Marc Faber*: 
Invest 25% Of Investment Portfolios 
In Gold Bullion
Faber advises 25% of a portfolio to be allocated to gold given the very significant risks facing investors today .. gold is a "protection from a dangerous combination of tremendous government debt and massive bond-buying by central banks globally trying to fight off recession with near-zero interest rates." .. advisory note - turn volume to high for ease of listening to this podcast .. 37 minutes

Central Banks Are In A Lose-Lose Situation
Claudio Grass Interviews Ronald Stoeferle:
Incrementum's Ronald Stoeferle gives his thoughts on central banks & their artificial stimulus & negative interest rate policies .. "I have always considered it impossible to create a 'self-sustaining' economic expansion by means of the printing press. By so doing, central bankers only succeeded in suppressing symptoms, but the underlying structural problems that created the 2008 financial crisis in the first place, have only gotten worse. The primary goal, namely to stimulate the economy, has not been achieved. Low interest rates have provided artificial life support for unproductive and highly indebted companies, as well as for states .. The alarming fact is that asset prices will likely collapse if central banks cut the artificial support. High asset prices have become vital to maintaining confidence in the economy, while the majority of stock and real estate investments have been financed by cheap credit. Thus, abandoning the low interest rate policy would likely trigger a severe recession. On the other hand, continuing this policy would distort and corrode the economic structure even more, which would jeopardize the business model of pension funds, insurers and banks, and further inflate the real estate and stock market bubbles. The low interest rate policy has rendered the system profoundly fragile, with central banks virtually in a lose-lose situation."
LINK HERE to the interview transcript
Richard Duncan: 
Creditism Has Replaced Capitalism 
McAlvany Commentary .. China’s hard landing is now happening .. 0% Rates: debt can’t get much cheaper .. High asset prices are floating on a sea of fiat money .. a little over 1 hour
Richard Koo: If Helicopter Money Succeeds, 
It Will Lead To 1,500% Inflation
"Helicopter money probably marks the end of the road for believers in the omnipotence of monetary policy who have continued to press for further accommodation in the midst of a balance sheet recession, when such policies simply cannot work .. Eventually the private sector will complete its balance sheet repairs and resume borrowing. When that happens, inflation can quickly spiral out of control unless the central bank drains the liquidity it pumped into the market under quantitative easing or helicopter money. For example, excess reserves created by the Fed currently amount to some 15 times the level of statutory reserves. That implies that if businesses and households were to resume borrowing in earnest, the US money supply could balloon to 15 times its current size, sending inflation as high as 1,500%. The corresponding ratios are 28 times for Japan and Switzerland, five times for the eurozone, and 11 times for the UK. Once private-sector demand for loans recovers in these countries, confidence in the dollar, euro, and yen will plummet unless the Fed reduces excess reserves to one-fifteenth of their current level, the ECB to one-fifth, and the Bank of Japan to one-twenty-eighth."
LINK HERE to the article
The Gold Chronicles w/ Jim Rickards* Part 2
Summary history of the Bank of England .. Role of the Bank for International Settlements (BIS) .. Analysis of total debt monetization in Japan compromising Shanghai Accord .. 18 minutes

The Gold Chronicles w/ Jim Rickards* Part 1
Post Brexit analysis .. Elite economic class is forecasting substantial problems for the global economy .. 30 minutes
Is America Headed For Bankruptcy?
Martin Feldstein writes: "Two recent pieces of budget news are a grim reminder of the perilous state of fiscal policy in the United States" .. President Barack Obama’s Office of Management and Budget announced that the federal government’s deficit this fiscal year will be about $600 billion, up by $162 billion from 2015, an increase of more than 35%. & the annual Long-Term Budget Outlook produced by the Congressional Budget Office predicts that, with no change in fiscal policy, federal government debt will rise from 75% of GDP to 86% a decade from now, and then to a record 141% in 2046, near levels in Italy, Portugal, & Greece ,, Feldstein informs: "Here is an amazing and disturbing implication of the CBO’s forecast. By 2046, the projected outlays for the 'mandatory' entitlement programs (Social Security and the major health programs), plus interest on the debt, would absorb more than all of the revenue that the government would collect .. There is no way to offset the growth of the mandatory programs by slowing the growth of defense and other discretionary outlays. Total defense spending is now just 3.2% of GDP and is expected to decline to 2.6% over the next ten years and to remain at that level for the next 20 years. That would be the lowest defense share of GDP since before World War II. The same reduction is projected for all non-defense discretionary programs, also a record-low share of GDP. .. Neither of the presidential candidates has indicated either a plan or an inclination to reverse the projected rise in the national debt. But it should be a top priority for whoever moves into the White House next year. Given the need to act quickly to avoid the worst-case scenario, there is no excuse for waiting."
link here to the essay
$180 Billion QE Per Month NOW? 
Wall St For Main St on a short video about how central banks are now flooding global markets with $180 billion per month in Quantitative Easing .. 7 minutes
click to enlarge
OUTSIDE OUR BOX
How Gardening Can Improve Your Health, 
Fitness, Mood & Nutrition
Dr. Mercola special focus on the health benefits of gardening .. Health benefits associated with gardening include stress relief, improved mental health, better nutrition & exercise. Gardening actually counts as moderate-to-high-intensity exercise for both children & adults .. "Using a push mower instead of a riding mower can burn up about 300 calories. Other activities like raking, pruning, digging, planting and weeding can burn as many as 200 calories an hour .. You’ll want to spend at least 30 minutes a day gardening in order for it to provide a beneficial workout. Using manual tools rather than power tools will ensure maximum energy expenditure .. Modern living tends to sever your connection to the natural world, and many are now starting to recognize just how important a connection with the land is for health and happiness."
LINK HERE to the article
Martin Armstrong:
Negative Rates Could Push 
The Dow Up To 40,000
"In Europe, what you have is some people buying the dollar; the other side of the coin is that there is this popular belief that if they buy the German bund, when the euro crashes, they are going to get deutsche marks. So, it's just been a very prevalent view in Europe and if you look at the various debt yields throughout the Eurozone you'll see that capital is concentrating into Germany .. The net effect at least initially is to push up the dollar, and the dollar is the only place to go right now for world capital. You have to look at this from the perspective of major institutions—pension funds, insurance companies, and the like. If they want to say, 'I'm concerned here; I want to move a billion dollars.' Where can you move it to? You can't go to China; you can't go to Russia; and economies like Australia, Canada, and even the UK—they're too small. So although the U.S. has a big national debt in the $19 trillions, it's big enough that world capital can concentrate into it...so the dollar going up will probably spark the next round of world monetary reform and we're expecting that as early as 2018 but certainly no later than 2020 .. Pension funds need 8% to break even. You're talking about interest rates being negative! There is no more opportunity, effectively, to buy bonds. We have some clients that are major institutions like pension funds and they've had no choice but to follow what we've been saying. They're shifting out of government debt, selling it off and buying corporate—they need some yield. You can't be negative… so, the traditional idea of the stock market going up and looking at the P/E ratio, a company's income, etc.—no, at this stage in the game it moves to 'I just want to park my money.'”
- Martin Armstrong
link here to the reference
Common Objections To Capitalism 
Mises Media production .. Recorded at the Mises Institute in Auburn, Alabama, on 26 July 2016 .. 39 minutes
Casey Research's Doug Casey 
On Government Meddling In The Economy
Doug Casey: "Everybody believes that the institution of government is like Camelot—a wise ruler assisted by noble paladins. Maybe that meme gained traction in recent times with John Kennedy and his good-looking wife, Jackie. They looked like an ideal couple. They weren’t. But they were a lot better than what followed for the next 50 years … Government is force. The essence of government is coercion. So, people attracted to it are necessarily the wrong kind of people, coercion-oriented people .. Almost everything government does, certainly relative to the economy, creates distortions and misallocations of capital. Their inflation of the currency discourages saving and creates the business cycle .. Their actions are almost purely destructive of society. This reminds me of one definition of stupidity—it’s an unwitting tendency to self-destruction."
link here to the reference