SPECIAL GUEST:JIM ROGERS is the author of the bestseller, Investment Biker: Around the World with Jim Rogers. His other books include Adventure Capitalist: The Ultimate Road Trip,A Gift to My Children: A Father's Lessons for Life and Investing, Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market, and A Bull in China: Investing Profitably in the World's Greatest Market. Jim grew up in Demopolis, Alabama, and got started in business at the age of five, selling peanuts. Winning a scholarship to Yale, Rogers was coxswain on the crew. Upon graduation, he attended Balliol College at Oxford. After a stint in the army, he began work on Wall Street. He cofounded the Quantum Fund, a global-investment partnership. During the next ten years, the portfolio gained more than 4,000 percent, while the S&P rose less than 50 percent. Rogers then decided to retire--at age thirty-seven--but he did not remain idle.Continuing to manage his own portfolio, Rogers served as a professor of finance at the Columbia University Graduate School of Business and as moderator of The Dreyfus Roundtable on WCBS and The Profit Motive on FNN. At the same time, he laid the groundwork for his lifelong dream, an around-the-world motorcycle trip: more than 100,000 miles across six continents. He has contributed to Fox News, Worth, CNBC and others.
JIM ROGERS talks
"Financial Repression can mean many things but basically in a nutshell it is a lack of free market finance and human activity, where the government thinks it is smarter than we are!"
"History has shown many times that we are smarter than governments, politicians and the bureaucrats - but they don't like to give up power. When they make mistakes they blame it on us and try and make us pay for it! When they see a problem arise their first instinct is to try and suppress the public and markets. They try and do things they think will make things better, but of course it doesn't, and only makes things worse!"
GOVERNMENT CONTROLS & REGULATIONS
"When problems arise they put on exchange controls which is a time honored tradition of politicians and bureaucrats to correct mistakes they have made. We will have exchange controls in the US again - no question. We already have exchange controls to some extent such as FATCA and other things to make it more and more difficult for Americans to do anything as far as finances are concerned. They will put on trade controls, tariffs quotas - they will come up with all sorts of things."
Politicians don't know what they are doing. History proves many times that politicians make things worse instead of better because what they do since they don't know anything themselves, they ask the bureaucrats how they can save themselves. The bureaucrats rush in and say "this is the way you save yourself". "It isn't your fault, it is the markets fault and those evil speculators and the people! They then come up with regulations and controls. They don't know what they are doing!"
Regarding ZIRP, Operation Twist and three rounds of Quantitative Easing, Jim Rogers predicts:
"We are going to have to pay a horrible price for yet another mistake made by the bureaucrats"
WHAT SHOULD INVESTORS BE THINKING ABOUT?
"The first thing investors should do is only do things they know a lot about! Don't listen to me or anyone else who you don't know what they are talking about. Do not so something that you yourself don't understand perfectly."
"Everyone should know about having assets outside their own country. We all have fire insurance which we hope we will never use. Look upon international diversification as a kind of insurance. ... diversify internationally.
"If you don't know about other asset classes then please, for goodness sake, learn about them because there are going to be many strange things happen in the next decade.
THE CERTAINTY OF ECONOMIC SLOWDOWN
"History shows in the US we have had economic slowdowns every four to seven years since the beginning of the republic. We are going to have them again no matter what people tell you. If someone tells you we will never have another economic slowdown - please put your money in your pocket and head as far away as you can!"
"It is going to be much, much worse than 2008. There is higher debt everywhere than previously!"
"We have never had history all the central banks printing such vast amounts of money at the same time! There is a hugh ocean of liquidity floating around out there!"
... and much more
Coming Exchange, Trade and Quota controls,
The dangers the coming Cashless Society,
The $5T Nominal Negative Interest Rate Sovereign Bonds,
The destruction of the US savings and working class,
The slowing Chinese Economy,
Why recessions are healthy. Why the avoidance of recessions leads to serious malfeasance.
The importance of investing in productive assets.
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SPECIAL GUEST : Paul Craig Roberts Ph.D. Paul Craig Roberts has had careers in scholarship and academia, journalism, public service, and business. President Reagan appointed Dr. Roberts Assistant Secretary of the Treasury for Economic Policy and he was confirmed in office by the U.S. Senate. From 1975 to 1978, Dr. Roberts served on the congressional staff where he drafted the Kemp-Roth bill and played a leading role in developing bipartisan support for a supply-side economic policy. After leaving the Treasury, he served as a consultant to the U.S. Department of Defense and the U.S. Department of Commerce.
Dr. Roberts has held academic appointments at Virginia Tech, Tulane University, University of New Mexico, Stanford University where he was Senior Research Fellow in the Hoover Institution, George Mason University where he had a joint appointment as professor of economics and professor of business administration, and Georgetown University where he held the William E. Simon Chair in Political Economy in the Center for Strategic and International Studies.
Dr. Paul Craig Roberts is extremely meticulous in examining the central problems facing America and the developed economies today. You may not like nor agree with what he says but there is little double as a former high level Treasury official, academic professor and Wall Street Journal editor, that he knows what he is talking about.
"It is going on on several fronts conducted by different people for their own agendas, though they all seem to be mutually supporting.
FINANCIALIZATION OF THE ECONOMY by the Big Banks. - "What that means is that they are converting the entirety of the economic surplus to paying interest on debt. They are draining the economy of all vitality! There is nothing left for the expansion of consumer demand, business investment and old age pensions. It expropriates the economic surplus that is created beyond the maintenance of the current living standard into interest on debt."
OFF-SHORING OF MIDDLE CLASS JOBS by Corporations & Wall Street - "What the Corporations and Wall Street have achieved by off-shoring manufacturing jobs and tradable professional job skills such as software engineering & information technology. What they have done by moving these offshore is to recreate the labor market conditions and wage exploitation of the late 19th century."
MANIPULATION OF THE BULLION MARKETS by the Futures Market Bullion Banks - "There is no free market in the futures markets. These are markets that are manipulated."
COLLUSION BETWEEN PARTICIPANTS
"I think there is a lot of collusion. For example the government colluded with the banking system in financial deregulation. For example they repealed Glass-Steagall. They expressed this absurd claim that financial markets are self regulating."
"They turned the financial system into a gambling casino where the bets are covered by the tax payer and central bank."
The cancer which started in the US Financial System has spread globally. The carriers of the cancer has been the International Banks.
WASHINGTON ANSWERS TO WALL STREET
"Some of the Financial Repression is collusion of government serving the financial interests because Wall Street is a huge supplier of political campaign funds which you are highly dependent on to get re-elected. So you answer to the donors. You don't answer to the public interest. It doesn't give you any money."
"You answer to:
The Military-Security Complex,
The Agri Business like Monsanto,
The extractive Industries (Oil, Timber, Mining)
These are the powerful interest groups that use the government to serve their interests."
THERE ARE NO LONGER COUNTERVAILING POWERS IN WASHINGTON
With the destruction of the manufacturing jobs in America through off-shoring, it has reduced the power of the unions and destroyed the Democrats independent source of campaign funds.
"You now have two parties with the same head and reporting to the same masters. There is no longer any countervailing power"
You no longer have the Democrats supporting workers against the Republicans supporting business. Both parties represent them.
"This is the reason you can't do anything about Financial Repression!"
NEO-CONSERVATIVE CONTROL OF FOREIGN POLICY - $6T TRILLION IN WAR DEBT
We have been in 14 years of wars and added $6T of national debt to finance these wars "without adding five cents of investment for the country having taken place."
"We now have the Neo-Conservatives driving the conflict with Russia (which is insane), with China (which is insane). The United States doesn't have the power to try and dominate Russia / China. Especially now that the two countries have a strategic alliance"
"You have much of the world turning away from the United States because of Washington's
Abuse of the Dollar as the World's Reserve Currency,
Abuse of the dollar based payment system,
Imposing unilateral sanctions which are acts of war,
Threatening people with expulsion from the clearance mechanism and people saying we won't have any part of this,
The BRIICS establishing their own version of the IMF,
The Impact of the Spy Scandals and people saying they will build their own internet,
All of this is not only going to effect business it is going to effect American power. It is going to start shriveling!"
"If you have these crazed Neo-Conservatives demanding control of the world, faced with declining power, you don't know what they will do! It is a very, very dangerous situation. I'm surprised it has taken the world so long to realize the threat the US poses to the rest of the world."
"The US Dollar payment system is essentially a system for looting. This, Globalization and Neo-liberal economics are tools of American economic imperialism. Countries are beginning to realize this. The looting of countries by American imperialism has now reached the point where it is turning on itself - Greece for example."
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SPECIAL GUEST: Haydon Perryman CGMAis an experienced FATCA Programme Manager, has mobilized three FATCA Programmes from scratch, including those of Lloyds Banking Group and the Investment Banking Arm of RBS. Haydon has been working on FATCA for four years. Haydon has a detailed understanding of the FATCA regulations and the practical strategies involved in ensuring an FFI meets the requirements of FATCA at an agreed level. Haydon has a wealth of industry contacts on FATCA in Banking, the Big Four and amongst Tax and Legal Advisors. Haydon’s FATCA experience spans Investment Banking, Corporate Banking and Retail Banking.
"This a modern day "Doomsday" Book, the same as William the Conqueror Implemented in 1066 after conquering England. He needed to know where the wealth was so he could tax it"
"This is Not Really About Tax There are Easier Ways to Solve Tax Tracking - Its about a Common Reporting Standard. Its about the ability to track Capital"
"FATCA is a decoy for the Common Reporting Standard"
"There is an incredibly aggressive urgency of implementation - an unprecedentedly quick agreement between 57 governments"
Either to Tax it , Expropriation it or Control Its Free Movement
"Era of Banking Secrecy is Over!"
"A Complete Misunderstanding by Banks"
NEW ACRONYMS IN THE ERA OF FINANCIAL REPRESSION
FATCA - Foreign Accounts Tax Compliance Act
GATCA - Global Account Tax Compliance "Acts"
CRS - Common Reporting Standard
IGAs - Inter Governmental Agreements on FATCA
AEOI - OECD's Automatic Exchange of Information
AML/KYC Procedures - The term “AML/KYC Procedures” means the customer due diligence procedures of a Reporting Financial Institution pursuant to the anti-money laundering or similar requirements to which such Reporting Financial Institution is subject.
There will also be considerable customer backlash to FATCA and the documentation it requires. In the age of social media this matters, if this sounds like hyperbole please have a look at this URL
At a most basic level FATCA, the IGAs and the CRS are about making tax part of standard KYC/AML procedures and then reporting, for tax purposes, to those jurisdictions, in which the account holder has tax residence or citizenship.
SPECIAL GUEST : Marc Faber, Ph.D. Editor and Publisher of “The Gloom, Boom & Doom Report” and website: www.gloomboomdoom.com.
Dr Marc Faber feels strongly that the current money printing policies "will not end well"!
He feels that:
"Governments are not smart enough to have thought the current scheme out. The professors, academics (who have never worked a day in their lives in the private sector) and central banks think by having artificially low interest rates you can solve problems. Actually, they aggravate the problems!"
"When central banks print money nothing begins to make sense!" -- "It is no longer a free market. Markets are now manipulated by governments and notably by their agents, the central bankers."
FINANCIAL REPRESSION - An "Expropriation"
"Basically what central banks have done around the world is to push interest rates to extremely low or even negative rates. I don't call it a repression. I call it an expropriation of the savers because before the intervention of the banks occurred post 2008, a saver got a decent rate of interest. Now they get nothing at all! So either they speculate or they lose purchasing power over time!"
The purchasing power of money is depreciating. Financial Repression or what Dr Faber calls "expropriation", he feels is very negative for the middle and working class.
The current government and central bank policies "are leading to huge asset bubbles in stock, real estate, commodities, collectibles, art and so forth." Inflation and Deflation work much the same way according to Marc Faber. All prices do no go up or nor decline at the same time.
"We had the collapse of the Nasdaq after March 2000. Then the Fed created the housing bubble and after it collapsed after 2007, it had a devastating impact on a very large number of households. Then in 2008 we had a commodities bubble with oil going to $147/bl and now you know where oil is trading at. Its now 1/3 of what it was at that time basically. The Money printing leads to bubbles which they deflate and hurt the majority at the expense of a few people. This is not going to help the economy in the long run - PERIOD!"
PENSION AND INSURANCE "MODELS" - In Serious Trouble
The pension plans and Insurance industry is in deep trouble. They are basically forced to speculate on something. That speculation will end very badly!
WHAT SHOULD INVESTORS DO?
Dr Faber says quite honestly,
"I am an economist, strategist and investor. The answer to the question of what should an investor do is - I DO NOT KNOW! But people expect me to know so I can tell you what I would do. In the absence of knowing precisely how the end game will be played we should invest in a diversified portfolio of different assets. Some in real estate, some in equities, some in cash & bonds, and some in precious metals."
"For an investor to not own some precious metals at this point is almost irresponsible!"
MORE QE IS COMING
"I don't believe we have currency wars but rather the central bankers, one after the other, prints in a 'round about'"
"Money printing has never ended well in history. It can postpone the problems, but it will make the end result even worse."
"I believe the Fed will intervene at some point with another round of QE!"
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LAURENCE KOTLIKOFF talks BANKING & THE "FISCAL GAP"
SPECIAL GUEST : Professor Laurence Kotlikoff, Ph.D. is a William Warren FairField Professor at Boston University, a Professor of Economics at Boston University, a Fellow of the American Academy of Arts and Sciences, a Research Associate of the National Bureau of Economic Research, a Fellow of the Econometric Society, a former Senior Economist, and on President Reagan's Council of Economic Advisers.
Professor Laurence Kotlikoff believes the current banking system needs to be restructured into "Limited Purpose Banking to remove excess leverage and opacity; that the bureaucrats are having a field day with new ineffective regulations and the US government is financially bankrupt when accounted for correctly.
To Professor Kotlikoff the Financial System needs to be understood as a Public Good. It is a market place which needs coordination and banks & financial intermediaries are there to facilitate the operation and management of that public good. Regulators are there to keep the public good working. The question is what kind of regulation do we need that will ensure the financial system keeps working.
"Today the system is in bigger danger than 2008 because fundamentally the banks are being allowed to operate with dramatically larger leverage than would keep things safe!"
Additionally, the banks are being allowed to operate with full opacity. They don't have to tell what they own in terms of assets or liabilities. Therefore depositors don't know the risk they are taking which can lead to bank runs which we saw in 2008 where banks didn't trust other banks.
"We are all set up to see this happen again because of all this leverage and opacity. The system is more fragile!"
In his book "Jimmy Stewart is Dead", Professor Kotlikoff talked about shifting from a "Faith Based" banking system to a "Show Me!" banking system where financial intermediaries disclose all the assets they are holding. Instead of borrowing money to invest in assets we can't see, they would sell shares through equity finance. They in effect would be equity financed Mutual Funds.
The purpose of "Limited Purpose Banking" which Professor Kotlikoff is proposing in his book is that all the financial middle men who are running the "public good" not be allowed to gamble with it. To most people their banking would be through:
Cash Mutual Funds - For the Payment System
Mortgage Mutual Funds - Instead of Fannie Freddie
The leveraged derivative element of the current speculative banking system would be run in a similar manner to modern parimutuel betting system polls. Dodd-Frank legislation has not made the system safer and instead sees only one regulator agency (the "Federal Financial Authority") which oversees disclosures versus 130 entities in Dodd-Frank!
THE $210 TRILLION FISCAL GAP
Economists like Professor Kotlikoff feel the 'Fiscal Gap' is what we should be measuring, not one part of it which is the National Debt. The Fiscal Gap according to the CBO is presently $210T while the National Debt approximates $13T. We are focused on the $13T but really we need to be focused on is the $210T.
Over 1200 economists and 17 Nobel Laureates have endorsed a bill that mandates that the CBO & GAO do 'Fiscal Gap' reporting to look at the big picture.. Information on this bill can be found at www.theinformact.org.
The current shortfall is 10.5% of GDP, each and every year. To offset this would require a 60% increase in taxes or for a 35% cut of all expenditures and benefits.
"The US is actually fiscally broke!"
The banks are holding a lot of the governments debt which is unpayable. Governments that cannot pay their bills print money. Eventually this inevitably leads to inflation. This will make the bonds worth less money which would highly likely put the banking system underwater.
SPECIAL GUEST : Lacy H. Hunt, Ph.D. is an internationally known economist, is Executive Vice President of Hoisington Investment Management Company, a firm that manages over $5 billion for pension funds, endowments, insurance companies and others.
Lacy Hunt is the author of two books, and numerous articles in leading magazines, periodicals and scholarly journals. Included among the publishers of his articles are. Barron’s, The Wall Street Journal, The New York Times, The Christian Science Monitor, the Journal of Finance, the Financial Analysts Journal of Portfolio Management.
Previously, he was Chief U.S. Economist for the HSBC Group, one of the world’s largest banks, Executive Vice President and Chief Economist at Fidelity Bank and Vice President for Monetary Economics at Chase Econometrics Associates, Inc. A native of Texas, Dr. Hunt has served as Senior Economist for the Federal Reserve Bank of Dallas.
Lacy Hunt and his partner Van Hoisington were called "The Henry Fords of bond investing" by Forbes Magazine. You can understand why when you listen to Dr Lacy Hunt describe the current global macro environment.
"A superficial attempt to deal with the excessive indebtedness that grips the global economy .. and in my opinion will not work!"
"Monetary Policy is not the solution here. There are Fiscal Policy solutions but they require shared sacrifice, strong leadership (something we don't have in the US or Europe - no one has) ... basically what w are trying to do is to solve an extremely over-indebted situation domestically and globally by taking on more debt and aggravating the problem "
“The current economic maladies and continuing downshift of economic activity has been the over-accumulation of debt. In many cases
"Debt funded the purchase of consumable and non-productive assets, which failed to create a future stream of revenue to repay the debt.”
“The increase since 2008 has been primarily in emerging economies. Since Debt is the acceleration of current spending in lieu of future spending.”
Impairs global activity,
Spurs dis-inflationary or deflationary trends and
Engenders instability in world financial markets.
THE CURRENCY WARS OF THE 1920’S & 1930’S
Lacy muses on the effects of debt and takes us back to the ’20s and ’30s, when there were similar problems with debt in countries that had engaged in currency wars for over a decade.
Clearly the policies of yesteryear and the present are forms of “beggar-my-neighbor” policies, which the MIT Dictionary of Modern Economics explains as follows: “Economic measures taken by one country to improve its domestic economic conditions … have adverse effects on other economies. A country may increase domestic employment by increasing exports or reducing imports by … devaluing its currency or applying tariffs, quotas, or export subsidies. The benefit which it attains is at the expense of some other country which experiences lower exports or increased imports.… Such a country may then be forced to retaliate by a similar type of measure.”
The existence of over-indebtedness, and its resulting restraint on growth and inflation, has forced governments today, as in the past, to attempt to escape these poor economic conditions by spurring their exports or taking market share from other economies. As shown above, it is a fruitless exercise with harmful side effects.
It behooves us to pay attention to Lacy since he has been one of the most accurate forecasters of interest rates for the last 20 to 30 years.
2015 -Parallels to that earlier period.
First, there is a global problem with debt and slow growth, and no country is immune.
Second, the economic problems now, like then, are more serious and are more apparent outside the United States. However, due to negative income and price effects on our trade balance, foreign problems are transmitting into the U.S. and interacting with underlying structural problems.
Third, over- indebtedness is rampant today as it was in the 1920s and 1930s.
Fourth, competitive currency devaluations are taking place today as they did in the earlier period. These are a combination of monetary and/or fiscal policy actions and also, with floating exchange rates, a consequence of shifting assessments of private participants in the markets.
“The downward pressure on global economic growth rates will remain in place in 2015. Therefore record low inflation and interest rates will continue to be made around the world in the new year, as governments utilize policies to spur growth at the expense of other regions.”
“new lows in yields in 2015 in the intermediate- and long-term maturities of U.S. Treasury securities”
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Regular Co-Host:CHARLES HUGH SMITH , Author & Publisher of OfTwoMinds.com
with Charles Hugh Smith & Gordon T Long
35 Minutes - 20 Slides
Charles Hugh Smith and Gordon T Long discuss the Currency War pressures now on China to devalue the currency. Such an event could potentially send deflation shock waves around the globe and show how impotent and precarious central bank policy has truly become.
DOMINOES ARE FALLING!
First the Russian Ruble (December),
Second the Swiss Franc (January)
Third The Danish Krona (February)
WHAT'S NEXT - As A Result of the Dollar Bull?
The Singapore Dollar?
The Hong Kong Dollar?
The Yuan Devalues (Bands Expanded)??
HAVE CENTRAL BANKERS LOST CONTROL?
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Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.
THE CONTENT OF ALL MATERIALS: SLIDE PRESENTATION AND THEIR ACCOMPANYING RECORDED AUDIO DISCUSSIONS, VIDEO PRESENTATIONS, NARRATED SLIDE PRESENTATIONS AND WEBZINES (hereinafter "The Media") ARE INTENDED FOR EDUCATIONAL PURPOSES ONLY.
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Gordon emperically recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, he encourages you confirm the facts on your own before making important investment commitments.
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