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Tuesday
August 25th
2015

PETER SCHIFF talks GOLD BACKED DEBIT CARDS

Peter Schiff

 

 

 

SPECIAL GUEST: PETER SCHIFF is CEO & Chief Global Strategist of Euro Pacific Capital. Peter Schiff is one of the few non-biased investment advisors (not committed solely to the short side of the market) to have correctly called the current bear market before it began and to have positioned his clients accordingly. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned. He has been quoted in many of the nation’s leading newspapers, including The Wall Street Journal, Barron’s, Investor’s Business Daily, The Financial Times, The New York Times, The Los Angeles Times, The Washington Post, The Chicago Tribune, The Dallas Morning News, The Miami Herald, The San Francisco Chronicle, The Atlanta Journal-Constitution, The Arizona Republic, The Philadelphia Inquirer, and the Christian Science Monitor, and appears regularly on CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V. His best-selling book, “Crash Proof: How to Profit from the Coming Economic Collapse” was published by Wiley & Sons in February of 2007. His second book, “The Little Book of Bull Moves in Bear Markets: How to Keep your Portfolio Up When the Market is Down” was published by Wiley & Sons in October of 2008.

Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkeley in 1987. A financial professional for over twenty years he joined Euro Pacific in 1996 and has served as its President since January 2000. He is also Chairman of SchiffGold, a precious metals dealer based out of Manhattan. An expert on money, economic theory, and international investing, Peter is a highly recommended broker by many leading financial newsletters and investment advisory services. He is also a contributing commentator for Newsweek International and served as an economic advisor to the 2008 Ron Paul presidential campaign. He holds FINRA Series 4, 7, 24, 27, 53, 55, 63 & 65 licenses.

PETER SCHIFF talks

GOLD BACKED DEBIT CARDS

Published 08-25-15

A 21 Minute VIDEO

FINANCIAL REPRESSION

"Governments finds all sorts of ways of repressing their citizens and certainly do it for the banking system. In America today if you have a bank account you have no privacy anymore. Your banker is basically an unpaid spy working for the government trying to monitor your activities for anything suspicious so they can turn you into the government!"

"Inflation is a form of repression. If you save in the fiat currency the government creates, it will lose value over time as it orchestrates a deliberate plan of depreciation of the medium of exchange. So therefore you have continuous inflation. Of course to the extent you earn any money the government represses you by seizing a good portion of it with Income Tax, Inheritance Tax, The Payroll Tax etc. There all sorts of ways that the government seeks to repress us!"

BAIL-IN'S & A CASHLESS SOCIETY

Bail-ins are a function of government deposit schemes which really don't work! When these government insured banks fail, rather than having to just create a lot of money they will resort to the bail-in where they dispense the loses among the depositors. Actually (the later) is the right thing to do! We shouldn't have any government insurance for bank deposits! If you deposit your money in a bank and that bank fails, your deposits SHOULD BE at risk! In fact if we had deposits at risk we would have a much sounder banking system like we had before the invention of deposit insurance during the Roosevelt era!"

Peter Schiff points out that not all countries have these deposit schemes and the ones that don't have healthier banking institutions because now you have the market forces reigning in risky banking activity because "when people have to assume the risk of their deposits they do their homework! Banks then compete with each other based on SAFETY".

BITGOLD & EURO PACIFIC BANK

"I don't think bitcoin is going to work!"

"The fatal flaw of bitcoin is that there is no true intrinsic value there! There is nothing behind it, like when you have gold."

"People find it cumbersome. How do I spend my gold? It is very easy to spend it bitcoin but how do I spend gold? I solved that problem a few years ago at my bank (Euro Pacific Bank).. which is a 100% reserve bank that doesn't make any loans. We simply charge fees for our services."

"Right now our service is a prepaid service ... but what is coming is a one step process. BitGold copied what I was doing. They are now offering the same type of pre-paid debit card that I have been offering for three years."

"What I am doing, and this change will likely take place in the next 30-60 days is we will have the first true gold backed debit card!"

There is much more in this video on coming world of gold backed debit cards.

 

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Putting the Puzzle of Greece Together

 

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Monday
July 27th
2015

PUTTING THE PUZZLE OF GREECE TOGETHER

John Rubino

 

SPECIAL GUEST HOST: JOHN RUBINO, Author & Publisher of DollarCollapse.com

OPEN ACCESS

 

PUTTING THE PUZZLE OF GREECE TOGETHER

 

with John Rubino & Gordon T Long

Published 07-271-15

33 Minute Video

John Rubino and Gordon T Long discuss the current puzzling developments in Greece and the seemingly impossible choices facing the Greek people and their government.

THE ACCOUNTING CHARADE

To better understand how Greece and the EU found itself in this perplexing problem, John Rubino traces the history of Greece prior to joining the EU. John doesn't hold back in describing the manipulation of economic numbers carried out by Greece, abetted by Goldman Sachs to gain entry into the EU. Greece never met the Maastricht Treaty bar but nevertheless was granted entry. Goldman Sachs and the International Bankers were the big winners. In the short term so were the Greek people.

UNLIMITED SPENDING

John further goes on to detail how cheap money suddenly became available to Greece and the other poor peripheral countries. The exploding growth in debt to them was perceived and treated to be debt backed by the EU. John describes it as:

"It was like giving a teenager an unlimited credit card with no supervision. You should have expected nothing less!"

The situation in the EU with its peripherals was actually not to dis-similar to the bankers' "game plan" regarding US Agency debt (Fannie Mae and Freddie Mac) which were also perceived to be backed by the US government.

When these agencies got into serious financial trouble during the Financial Crisis the US government accepted the liabilities for these agencies and placed them in "conservatorship" thereby burdening US tax payers with the negligent lending practices they had callously incurred. EU tax payers are likewise being handed the bill for what can only be described as a wonderful party of staggering pension benefits and limited taxation for the Greek people and a lending bonanza for the bankers.

PARTY IS OVER AND THE HANGOVER BEGINS

The financing of the debt incurred cannot possibly be financed by Greece's economy nor absorbed by the EU, for fear that the other delinquent debtor nations will demand the same easy way out.

Of course what is happening here is the banks have made enormous profits on loans that should have never been made and are now sliding the responsibility to EU taxpayers.

Many Greeks see no real solution and therefore cash runs on the banks will continue to leave Greek banks insolvent as more money is fruitlessly pumped into them by desperate and naive EU officials.

... there is much, much more in this 33 minute video discussion.

 

 

Saturday
July 25th
2015

JEFF BERWICK talks CRYPTO CURRENCIES

Jeff Berwick

 

 

SPECIAL GUEST: JEFF BERWICK is a Canadian entrepreneur, libertarian and anarcho-capitalist activist who founded StockHouse Media Corporation in 1994, one of the most active financial website in Canada. He remained CEO until 2002. In 2013, Berwick announced plans to co-found the world's first Bitcoin automated teller machine (ATM). He presently resides in Acapulco, Mexico and is Chief Editor of THE DOLLAR VIGILANTE

 

JEFF BERWICK talks

CRYPTO CURRENCIES

 

Recorded 07-17-15

A 25 Minute Video Interview

Jeff Berwick, based in Acapulco, Mexico, has formerly been interviewed in this series (https://www.youtube.com/watch?v=O20n_oDUx54 ). He founded the StockHouse Media Corporation in 1994 and was its CEO until 2002. He is publisher of the dollar vigilante website (https://www.dollarvigilante.com/ ), which went online in 2010. Back then, he predicted the complete collapse of the US Dollar and the world financial system within the next five to ten years. He thinks that we are a lot closer now. He recently predicted a massive breakdown for September 2015 based on the seven year “Shemitah cycle“ (http://surviveshemitah.com/ ).

Jeff is concerned about the dependence of governments and financial market institutions on extremely low interest rates, even negative interest rates, which he calls “complete Keynesian insanity”. What is happening in Greece right now is just the beginning. It will eventually happen in other eurozone countries like Spain, Portugal, Italy, France and in countries all around the world, including the US.

Government debt in most countries has become so high that minor increases in the interest rate would lead to immediate default. The explicit US debt is above $18.3 trillion, as shown in the figure below. This however does not include implicit debt and liabilities that the US government has accumulated over the years, for example in the form of social security. Total debt and liabilities according to Jeff amount to $95 trillion.


     

“All it takes is, for example, for the Federal Reserve to raise interest rates by .25 per cent and they can bankrupt the entire financial system. This is where we are now. It’s been complete insanity. They tried to fix the 2008 crisis by printing money and going into more debt, which is why they got into that problem in the first place. And we are starting to see the next wave of major collapses and crises.”

As a response to the ongoing war on cash, Jeff suggests to go out of large cash holdings as soon as possible. He sees one potential solution in BitGold and even more so in Bitcoin, as a completely decentralized money and payment system. The price of bitcoin has been rising during the recent Greek crisis, whereas gold and silver have fallen. However, Jeff points out that the prices for gold and silver are systematically distorted on a “very manipulated market.”

“There is no Bitcoin office, there is no BItcoin servers. So no matter what the government does, unless they turn off the internet entirely, they can’t stop Bitcoin. That’s the beauty of Bitcoin.”

Jeff also recommends the internationalization of assets as a hedge against oppressive interventions by individual countries (suggested links: http://tdvwealthmanagement.com/ and http://tdvoffshore.com/ ).

Although Mexico is often portrayed as a dangerous third world country, Jeff can tell from personal experience that it is in many respects a better place than the US, as there is far less government involvement in private and business affairs. Mexico will nonetheless face serious problems, because of their close economic ties to the US. The collapse of the American economy will inevitably spill over to Mexico.

“But I think people here [in Mexico] are more used to it. So, for example, they had their peso collapse in the 90s and people lived through it. But Americans aren’t ready for what’s coming. They haven’t seen it in their lifetime. And as you know, half the people in the US are on government assistance now, and a lot of those are on welfare and food stamps. When those EBT cards get shut down, I wouldn’t want to be anywhere near any major population center in the US.”

Jeff generally sees potential in other Latin and South American countries like Columbia, Chile and even Nicaragua, as well as some Asian countries, but definitely not in North America, Europe, Japan or Australia, which all share the same problem: the biggest cohorts of their populations looking for  unsustainable entitlement payments in the near future. 

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Thursday
July 23rd
2015

GUILLERMO BARBA Talks w/FRA

 

 

 

 

SPECIAL GUEST: GUILLERMO BARBA is a Mexican economist and financial blogger writing for Forbes Mexico.  Barba is a follower of the Austrian school of economics.

GUILLERMO BARBA talks

FINANCIAL REPRESSION

 

Published 09-05-14

A 24 Minute PODCAST

A Mexican Economist, Guillermo Barba never heard of the Austrian school of economics until after graduating. Mexican University teaching still focuses on Marxist philosophy and Keynesian thinking. His subsequent exposure to the Austrian school of Economics was an eye opener which started him on a road which he hopes to help others in Mexico and Latin American become exposed to. He believes that the socialist thinking which South American universities are still oriented towards is one of the cancers in the world and hurting economic development.

"I became a real economist after I met the Austrian School of Economics!"

"The Austrian School has a framework to explain the current 'economic mess' in the world today!"

Barba's popular Mexican blog is focused on financial intelligence because he felt the truth was not being told and it needed to be.

FINANCIAL REPRESSION

"Mexicans know perfectly what Financial Repression means! Living in Mexico means living in the neighborhood of the United States of America. That is a lot of financial repression!"

"The entire world is suffering from Financial Repression because there are Financial Repressors. That is the problem. Who are those financial repressors? As Hugo Salinas Price told him, the entire world is controlled by a group of about 1000 people and a smaller core group control most of the decisions. Most of them are bankers"

Barba believes that t he global reserve system which is based on the US dollar "is basically a scam". According to Barba, to keep the whole system working the powers to be must get people into debt. Debt must grow exponentially.

IMPORTANCE OF SAVINGS

"Pushing people to spend and taken on debt versus savings is insane! Savings is the base and the cornerstone of development. Savings are the cornerstone of capital! The world needs capital accumulation, not debt accumulation!

"Debt accumulation is not sustainable. Capital accumulation is sustainable!"

Guillermo Barba believes the powers to be simply don't know what to do other than just 'print more money'. He also sees the US dollar getting much, much stronger as people generally won't know what to do to protect their wealth. This will offer opportunities to use inflated US dollars to buy real estates at attractive prices.

..... there is much more in this interview on the Mexican and South American economies.

 

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Friday
July 17th
2015

DAVID MORGAN Talks Silver w/FRA

David Morgan

 

 

SPECIAL GUEST: DAVID MORGAN: Seduced by silver at the tender age of 11, David Morgan started investing in the stock market while still a teenager. A precious metals aficionado armed with degrees in finance and economics as well as engineering, he created the Silver-Investor.com website and originated The Morgan Report, a monthly that covers economic news, overall financial health of the global economy, currency problems ahead and reasons for investing in precious metals.


David considers himself a big-picture macroeconomist whose main job as education—educating people about honest money and the benefits of a sound financial system—and his second job as teaching people to be patient and have conviction in their investment holdings. A dynamic, much-in-demand speaker all over the globe, David’s educational mission also makes him a prolific author having penned "Get the Skinny on Silver Investing" available as an e-book or through Amazon.com. As publisher of The Morgan Report, he has appeared on CNBC, Fox Business, and BNN in Canada. He has been interviewed by The Wall Street Journal, Futures Magazine, The Gold Report and numerous other publications. Additionally, he provides the public a tremendous amount of information by radio and writes often in the public domain.

 

DAVID MORGAN TALKS SILVER

 

Published 07-17-15

A 32 Minute Video

FINANCIAL REPRESSION

Keeping interest rates low is central to debt ridden governments surviving. Acording to David Morgan the government must keep rates low as long as possible but believes a reset of some sore is inevitable. David sees the mechanics and policies of keep rates repressed as fundamentally defining Financial Repression.

Financial Repression is like a big coffee press, pressing everything down and has suppressed the ability for us to have a free market and thereby enjoy the fruits of our intellect, labor, creativity and purpose as humans."

POTENTIAL RISING INTEREST RATES

Many believe that rising interest rates will hurt gold. David fully expects the Fed to increase rates but sees it as being nothing more that "showmanship". David suggests that:

"his experience shows that it is when REAL RATES get positive that you COULD see gold impacted from an increase in interest rates"

"What you really need to know is what are the real rates versus nominal rates which you see iin the newspapers."

GOLD-SILVER RATIO

 

The current gold-silver ratio implies to David Morgan is that silver is presently undervalued relative to gold.

According to Morgan the Gold-Silver Ratio is telling us something else that is important.

"If you have a real economy with sound money you get a deflationary trend. This means your money is worth more over time. It is beneficial to almost everybody. Silver is the best inflation edge and not the best deflation hedge. Gold is the best deflation hedge. Silver anticipated this huge inflationary environment back when QE2 was announced and moved from $26/OZ to $48/OZ. What happened was all that anticipated inflation didn't get into the market place because all the increased debt only resulted in re-liquifying the banks. They forced the money into the banking system and not out into the public sector."

David believes silver is currently a better buy than gold. He still believes silver will outperform gold.

"We are not out of the woods. There is a place for precious metals in your portfolio. 20% for "metal bugs" and 10% for the average public."

There is much, much more in this 32 minute interview with this well respected precious metals and silver expert.

 

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Thursday
July 16th
2015

JAMES TURK on FINANCIAL REPRESSION

 

James Turk

 

SPECIAL GUEST: James Turk has specialized in international banking, finance and investments since graduating in 1969 from George Washington University with a B.A. degree in International Economics. His business career began at The Chase Manhattan Bank, which included assignments in Thailand, the Philippines and Hong Kong. He subsequently joined the investment and trading company of a prominent precious metals trader based in Greenwich, Connecticut. He moved to the United Arab Emirates in December 1983 to be appointed Manager of the Commodity Department of the Abu Dhabi Investment Authority, a position he held until resigning in 1987. Since 1987 James Turk has written The Freemarket Gold & Money Report, an investment newsletter that publishes twenty issues annually. He is the author of The Illusions of Prosperity (1985), SOCIAL SECURITY Lies, Myths and Reality (1992) and several monographs and articles on money and banking. He founded GoldMoney.com based on two US patents awarded to him for digital gold currency, which enables gold to circulate efficiently as currency.

 

JAMES TURK on FINANCIAL REPRESSION

24 Minute VIDEO

With a career in International Banking, including managing the Abe Dubai Investment Authority's Commodities Portfolio, James Turk is an experienced professional who's insights should be thoughtfully considered. He feels strongly that the US needs to return to the sound money principles the framers of the US Constitution outlined and which the US has unfortunately and perilously veered away from.

FINANCIAL REPRESSION

"Financial Repression is government intervention in the market system which distorts the market's signals. .... Government intervention not only distorts the markets but in fact is counter-productive because many times it is government policies which the market are reacting to!"

Instead of changing the policies, governments try and convince the markets (through intervention) that the policies they are following are the correct ones, when in fact they are not.

James feels strongly that governments need to be outside the markets and be primarily focused on maintaining the 'rule of law' and ensuring there is a level playing field for competitive capitalism to operate on. Government intervention results in distorting that playing field to the advantage of themselves and their special interests.

"(Governments & Central Banks) are following policies that basically are not sustainable!"

"The government's 'make believe' is that they are creating wealth through creating currency and distributing it through their various programs. That is not creating wealth, but rather debasing the currency. When you debase the currency this is the worst type of financial repression because you are essentially destroying peoples ability to interact entirely voluntarily within the market place, as we fulfill our needs and wants."

UNDERSTANDING WEALTH

There is only so much wealth in world. It needs to come from somewhere if it is to be distributed in a meaningful way. James Turk believes wealth fundamentally comes in two forms: Tangible Wealth and Financial Wealth.

Financial Wealth comes with counter-party risk and the exposure to insufficient cash-flows required to support the leverage that inevitably comes with pyramiding and the interconnection of financial wealth.

James Turk believes we are presently destroying wealth. Financial Wealth gets destroyed because of the eventuality of insufficient cash-flows (Free DCF) to support the over financialization of the economy.

.... there is much, much more in this fact filled 24 minute Video.

WAR ON CASH & BAIL-INS

  • The Holy Alliance
  • Perpetuating the Welfare State
  • Why we can't trust the banking ssytem anymore.
  • How banks have become Hedge Funds versus lending institutions,
  • Why we need to separate the banks function of being a payments system versus being investment fund managers.

CRYPTO CURRENCIES

  • What is the real purpose is of money,
  • How the current environment is a historical aberration. We have moved away from a sound money system as the constitution framed.
  • Why we need to return to the wisdom of the framers of the US constititution,
  • Why Gold and Silver's proven historical track record is important.

GOLDMoney & BitGold MERGER

  • Why GoldMoney and BitGold Merged,
  • What James sees the future to be for the merger.

 

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Friday
July 10th
2015

JOSEPH SALERNO on Bail-ins & "The-War-on-Cash"

Mark O'Byrne

 

SPECIAL GUEST: Joseph T. Salerno is an Austrian School economist in the United States. He is a professor at Pace University, an editor of the Quarterly Journal of Austrian Economics, and Academic Vice President of the Mises Institute. Salerno specializes in monetary theory and policy,comparative economics, and the history of economic thought. Dr. Salerno received his Ph.D. in economics from Rutgers University. His most recent publication is Money: Sound and Unsound.

 

JOSEPH SALERNO on Bail-Ins &

"The-War-on-Cash"

 

29 Minute VIDEO

(Servitude: Impoverishment & Financial Imprisonment)

Professor Joseph Salerno is a noted Austrian Economist who spoke with the Financial Repression Authority on Financial Repression and his growing concerns with what is referred to as "the War-On-Cash", which he sees leading America and other developed countries in the wrong direction. He sees it as presently gaining momentum in senior policy levels around the world as global debt problems become more acute.

FINANCIAL REPRESSION

"A combination of Deliberate Inflation and very low Interest Rates. Interest rates which are kept low by a variety of what are called "Unconventional Monetary Policies".

"There is talk now of having:

  • Negative Nominal Rates,
  • Governments taking over Pension Funds,
  • Varies 'privileging' of government debt as part of bank capital.

... so it (Financial Repression) is a series of interferences in the financial markets by government with the end being to push interest rate lowers so they can inflate away their debt! They do that by having interest rates even lower than the rate of inflation."

"What Financial Repression does is transfer surreptitiously resources and coming wealth from savers and retirees to the government and its crony banks. I think it exists, it is dangerous and I think many people are being hurt by it!"

WAR-ON-CASH - GETTING TO NEGATIVE NOMINAL BOND RATES

Professor Salerno believes the government wants Negative Nominal Rates but as he points out: "The only way they can do that is to lock peoples deposits into the banking system - that is where the War-on-Cash comes in! They would love to restrict or even abolish the use of cash within the United States if they could. That means they would have to use deposits."

"This is another way of propping up a very unsound and dangerously flawed banking system!"

Professor Salerno has spoken out extensively on this subject, most recently at the Mises Circle event in Stamford, Connecticut

Governments, at least modern western governments, have always hated cash transactions. Cash is private, and cash is hard to tax. So politicians trump up phony reasons like drug trafficking and money laundering to win support for bad laws like the Bank Secrecy Act of 1970, which makes even small cash transactions potentially reportable to the Feds.

Today cash is under attack like never before. Ultra low interest rates are the norm for commercial bank accounts. In Europe, as the ECB ventures into negative nominal interest rates, certain banks threaten to charge customers for depositing cash. Meanwhile, certain European bonds now pay negative yields, effectively turning them into insurance products rather than financial assets. And some economists now call for the outright abolition of cash, which shows just how far some will go in their crazed belief that economic prosperity can be commanded by forcing us to spend rather than save.

The War on Cash is real, and it will intensify. 

PUBLIC FOREIFEITURE

Both bank deposits and withdrawals of cash are now carefully scrutinized by banks and police agencies across America. Safety deposit boxes are seeing increasing restrictions on what can be held in them in the way of cash. People depositing cash often find themselves facing public asset forfeitures and seizures by the police. In some cases when cleared as being innocent then have serious difficulty in getting their seized assets returned. Professor Salerno expounds on this and other troubling new developments in America.

.... there is much, much more in this fact filled 29 minute Video.

 

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Tuesday
July 7thth,
2015

GREECE: A US State & Local Government Template?

 

Charles Hugh Smith

 

 

Regular Co-Host: CHARLES HUGH SMITH , Author & Publisher of OfTwoMinds.com

 

GREECE: A US State & Local Government

Template?

 

with Charles Hugh Smith & Gordon T Long

28 Minutes - 214 Slides

Charles Hugh Smith and Gordon T Long discuss what they see as parallels between develpments in Greece and those at the State, City an local Level in the US.

What Greece and US State & Local Governments have in common is two fold:

  1. Neither can print money to bailout their proliferate and reckless spending,
  2. Neither can debase their currency in a politically stealth manner which reduces standards of livings to match mounting debt obligations.

ARE OTHER DEMOCRACIES FUNDAMENTALLY ANY DIFFERENT?

It is easy to to sit in front of our TV set and pass judgement on others without being retrospective on whether we are actually any different? Consider what placed Greece in this "no win" position?

Charles Hugh Smithn suggests Greece found itself in this purgatory of social unrest for the following reasons:

DRIVERS

1. Flaws with the Euro:

-- No fiscal integration to accompany currency integration There are no enforceable limits on state borrowing,

-- Euro removes the re-balancing mechanism of national currencies National currencies enable nations devalue their currency to correct trade imbalances

2. Trade Imbalances between Eurozone members

-- Mercantile exporting nations run enormous trade surpluses, consumerist importing nations run enormous trade deficits, and there is no mechanism for importers to fund their deficits except debt

3. The crushing burden of public and private debt in the Eurozone

-- Greek debt of 340 billion euros is just the tip of the iceberg of total Eurozone debt

4. The debt crisis is an abstraction to exporting nations (Germany, the Netherlands) and a painfully concrete downsizing to importing nations suffering from austerity and high unemployment

5. The demographics of Europe (very low birth rates, social conflicts over immigration) and stagnating employment are very negative for nations with heavy social welfare costs and rapidly aging populations

Now ask yourself: Are any of our US State and Local governments in a position that is anything different than the above?

LENDERS VERSUS BORROWERS

However, when you look at who Greece owes its 323B Euros to we don't see too many bank lenders on the list. Nor do we see too many Greek bonds held by banks and private individuals / institutions? Oh they made the loans all right and are making boatloads of interest.

What we actually see is that the debt is dominantly owed to the Troika. The EU, IMF and ECB.

Bureaucrats don't lose their pensions if things go bad. Politicians don't get claw-backs on their earnings as the peoples' representatives. The Central Bankers who have returned to academia don't lose their tenure. Its all monopoly money to them. It sure isn't to the Greeks standing in front of ATM's or pensioners being told their promises are being slashed to pay debt obligations.

The only people not involved are the depositors and taxpayers who lose everything and then are forced to make impossible decisions.

Watch Greece closely and see who is really in charge and making the demands. Be sure you don't confuse the puppet bureaucrat in front of the camera for the wizards behind the curtain!

Also remember this could be coming to America soon!

 

 

 

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Wednesday
July 1st
2015

MARK O'BYRNE on Bank Bail-Ins & the Defrauding of Depositors

Mark O'Byrne

 

SPECIAL GUEST: MARK O'BYRNE, Founder & Research Director, Goldcore. Mark O'Byrne founded GoldCore more than 10 years ago and today it has clients in over 45 countries. Mark contributes to media internationally and takes part in the Reuters, CNBC and Bloomberg gold and precious metal surveys.

 

MARK O'BYRNE on

Bank Bail-Ins & the Potential

Deceptive Defrauding of Depositors

 

43 Minute VIDEO

(Servitude: Impoverishment & Financial Imprisonment)

Mark O'Byrne feels that holding a Degree in Greek and Roman Civilization with a focus on their economic and monetary history. This gives O'Byrne insights into the cyclical nature of societies that few other writers have. It is these insights that Mark shares in this 35 minute video. Bank Bail-Ins are only a modern day indicator of financially collapsing societies. "Unfortunately, we don't learn the lessons of history to our own downfall!"

FINANCIAL REPRESSION

"Given the large amount of debt in the world today we are seeing almost 'anti-free market philosophies' whereby the governments don't like price signals and the pricing mechanism, so they are trying to repress this to repress interest rates."

"By artificially suppressing the pricing mechanism, similar to forcing an inflated beach ball under the water, it will shoot up in another direction and can go in the opposite direction to what is initially intended!"

BANK BAIL-INS

"We are told Bail-Ins are to protect the taxpayer from the government having to bail-out the banks. But the depositors are the tax payers? Bail-Ins are just to protect the Senior Secured Debt holders!"

This is wrongful deception as people belief their money is safe in the bank It is intended to protect the assets of the Senior Secured Creditors within the banks capital structure. Private individuals and depositors are not holders of Senior Secured Credit to the banks which is strictly the relm of select international banks.

CONFISCATING DEPOSITORS FUNDS MEANS DEFLATION

"If you confiscate depositors funds (in a Bail-In) you will cause deflation like you would not believe!"

If you follow Mark O'Byrne's analysis you quickly realize that Bail-Ins are both economically very dangerous and basically nothing more than regulations to protect elements of the bank financial structure. The question may be: are regulations today to protect tax payers from the banks or to protect the banks from taxpayers (depositors)?

"Maybe today we need to come to the obvious realization that the government is no longer regulating the banks, but rather the banks are regulating the government!" Gordon T Long

INTERNATIONAL DIVERSIFICATION IS THE ANSWER - While the Doors are Still Partially Open

....and much, much more in this fact filled 43 minute Video.

 

 

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Thursday
June 25th
2015

Ronald-Peter Stoeferle on

"In GOLD We TRUST"

 

Ronald-Peter Stoeferle

SPECIAL GUEST: RONALD-PETER STOEFERLE , Incrementum Liechtenstein

Prior he worked for Raiffeisen Zentralbank (RZB) in the field of Fixed Income/Credit Investments and then later on joined Erste Group Bank, covering International Equities, especially Asia. In 2006 he began writing reports on gold and gained media attention when he expected the price of gold to rise to USD 2,300/ounce when the current price was only at USD 500.His six benchmark reports called "In GOLD we TRUST" drew international coverage on CNBC, Bloomberg, the Wall Street Journal, Economist and the Financial Times. He was awarded "2nd most accurate gold analyst" by Bloomberg in 2011. He also writes reports on crude oil. Mr. Stoeferle is managing two gold mining-baskets and one basket for silver mining-equities. He studied business administration and finance at the Vienna University of Economics and the University of Illinois at Urbana-Champaign. Mr. Stoeferle is also a Chartered Market Technician (CMT) and a Certified Financial Technician (CFTe).

IN GOLD WE TRUST

41 Minute VIDEO with Slides

DOWNLOAD FULL REPORT PDF

Today, the 2015 edition of the gold report “In Gold We Trust” was launched. It is the 9th edition (read the 2013 and 2014 edition). With a global reach of some 1 million readers, it is probably the most read gold report worldwide. The In Gold We Trust 2015 is written by Ronald Stoeferle. He is the managing partner of a global fund at Incrementum AG in Liechtenstein, focused on the principles of the Austrian school of Economics.

2015 EDITION: "IN GOLD WE TRUST"

The gold price has stabilized in 2014, after its collapse in April and June of 2013. Investors' interest in the yellow metal is los. Hence, market sentiment vis-à-vis gold is standing at a multi-year low, maybe even a multi-decade low. History learns that extreme underperformance usually lasts for one year. If history is any guide, than there should be a recovery in the gold price in the foreseeable future. Even with the severe underperformance since 2013, gold is up approximately 9% per year since it started to trade freely in 1971. As seen on the next chart, depending on the currency in which it trades, the average yearly performance is excellent for investors with a long term horizon. In other words, gold does what is always has done throughout history: preserve value and purchasing power.

Preservation of wealth is the primary reason why one should hold gold nowadays. Monetary policies of central banks are extremely unusual. The U.S. Fed could be talking about “normalization,” but with 7 years at zero percent interest rates we are nowhere near “normal” conditions. The most extreme monetary conditions, today, are being seen in Japan. It is really no coincidence that the gold price in Yen is near its all time highs. The gold price in Yen is simply reacting on the extreme expansion of the monetary base by the Japanese central bank. As the next chart shows, the balance sheet of the Bank Of Japan (BOJ) is approximately 65% of the country's GDP. In other words, the assets that the BOJ is holding nears 2/3 of the total economic output of the country. When compared to other regions, it is clear that is a monstrous amount. It seems that Japan is near its endgame.

 

One of the “reasons” gold has gotten so little attention in the last two years is that investors have been focused on stock markets around the world. The U.S. stock market has seen a huge rally since October of 2012, European stocks catapulted higher when the European version of QE was announced earlier this year, Japan keeps on making multi-year highs in the wake of an ever expanding monetary policy. Meantime, however, stocks are not cheap anymore. On a historic basis, when expressed in a  price/earnings ratio according to the Shiller method, the stock market in the U.S. sits at relatively high levels (although no extremes). Although it is not given that the stock market is about to go south, there always is a possibility that the top is set in which case gold should see positive returns. As the next chart shows, during periods of the worst performance of the S&P 500, stocks and commodities have lost significant value while gold remained steady.

A correction in the stock market is certainly in the cards. Why? Because traditionally the gold/silver ratio is mostly negatively correlated with the S&P 500. In other words, as the gold/silver ratio goes down which means there is a disinflationary environment, stocks come down as well. Over the last 25 years, that correlation has held very well, but started to diverge strongly 3 years ago.

Gold is underperforming in a disinflationary environment. That has been one of the key observations in the last In Gold We Trust reports. There was enough evidence in the datapoints so far, but the most up-to-date chart says it all (see below). While the real rates were standing at -4% in 2011, they have gone up steadily since then, and are again in positive territory this year. The gold price has moved in the opposite direction in that same time period. The In Gold We Trust Report 2015 focuses, among many other things, on the correlation between the gold price and inflation expectations. Gold is an inflation sensitive asset. The U.S. 10-Year real yields provide an indication of inflation expectations. As readers can see, a strong divergence is in place since 2013, arguing for a strong revaluation of the gold price as inflation expectations are in an uptrend since then.

Suppose, however, that inflation expectations will change their trend … would that be bad for precious metals? The answer to that question is to be found in the last chart. During deflationary periods, like the ones starting in 1814 or 1864, the Great Depression of the 30ies or the financial crisis of 2008, gold did remarkably well. It is during those periods of “financial stress” that gold shows its real value, i.e. preserve wealth and provide protection against other assets.

The themes in this years 2015 "In Gold Trust Report" are the real value of gold as a financial asset and the end of gold's underperformance.

 

 

 

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Sunday
June 21st
2015

PAUL BRODSKY talks FINANCIAL REPRESSION

Paul Brodsky

 

SPECIAL GUEST: PAUL BRODSKY spent several decades trading bonds and other securities for such Wall Street firms as Drexel Burnham Lambert, Kidder Peabody, and Spyglass Capital, where he actively managed mortgage-backed derivative funds for over a decade (over 85% of investor capital in that fund was returned by June 2006, before the wide-scale credit contraction occured). He was co-founder and co-managing member of QB Asset ManagementQ which serves accredited investors. He is currently sarting a a consultative resource for professional investors, advisors and fiduciaries called Macro Allocation Inc.

 

PAUL BRODSKY talks

FINANCIAL REPRESSION

46 Minute VIDEO Interview

Paul Brodsky introduced himself as a presenter at the Park Plaza Hotel (NYC, NY) to 200 of the world's largest Institutional Investors from large Sovereign Wealth Funds, Pensions Funds, Endowments and Foundations .... "I'm Paul Brodsky, I'm a Gold Bug!" This not only took guts but serious credibility in front of an audience that doesn't consider gold in their portfolio allocation decisions. So why would he do this?

Paul had been asked to present the "Case for Gold". It was 2010 and Gold had just had a run. Though Gold had been the elephant in the room for previous 9 years , Paul surmised the organizers simply felt gold needed some sort of obligatory representation. His presentation focused on the Global Monetary System and sheepishly admits he actually never mentioned the world Gold again! This summarizes the thinking within the community of Global Managers of serious money.

Paul says he felt he got the invitation because of the thrust and struggle of QB Asset Management, the hedge fund he co-founded. It showed in Paul's writings to QB's clients while seeking the truth. He sought an understanding of Price and Value (which are often quite different) in addition to Alpha generation for clients.

FINANCIAL REPRESSION

"Its easy to think there is a grand conspiracy out there is terms of the banking system, the policy makers and politicians in the political dimension. It is very easy to draw lines between all these groups connecting them. I think what we have is a natural set of incentives that are drawn together by how the system works. For example, Politicians usually like to spend money they don't have and the banking system can let them do that! So it is a very symbiotic relationship - one feeds the other - there is little need that a word be said! There is no back room, smoke filled discussions going on."

"After the 1971 Nixon Shock, for the first time ever we had a global monetary system where there wasn't one currency that was 'hard' - that is, backed by anything scarce. What that did was make everything relative. It made currencies relative and it made financial assets relative. Ultimately it made performance relative!"

"When everything becomes relative it makes thing very easy for authorities to manage the system because there is no governor on them to bring things back into balance!"

"What was once "the role of the Fed to take away the punch bowl when the party got going", it was now the Fed that was 'spiking' the punch bowl."

FRACTIONAL RESERVE BANKING

"The system as it is constructed using fractional reserve lending and fractional reserve banking is the real 'bugaboo'!" Paul is quick to point out there are two sides to this argument. "Yes, the hard money crowd is correct - it has allowed us to spend money beyond what may be considered sound, but also this "funny money" for example helped defeat communism and helped fund the dotcom frenzy which left a technology footprint that may not have occurred as quickly without it."

"It has been a terrible flowering of baseless credit, debt that has never been extinguished. It may all come down in a Minsky like debt deflation that is ugly - or it may force the Fed and other central banks around the world to create much more base money through QE and other lines of credit that diminishes the value of not only our currency but all others - that gets us back again to relative value and performance!"

"The central banks are devaluing their currencies and devaluing against themselves in a 'tag team' manner. They are also devaluing against Production. There used to be only four ways you could get a dollar. You could produce something, you could borrow it, you could reinvest what you had already earned or you could steal it. Now banks can make money out of thin air without any discipline. There is nothing on the other side. Debt is created through the loan process and it never has to be extinquished if the monetary authority doesn't demand that."

"We have gone through this great leveraging over the last 35 years. It has been encouraged by Monetary Authorities in the US and elsewhere. Now we are at zero interest rates we can't refinance ourselves to another round of leveraging. We have to find a new outlet for credit or there is going to be some sort of reconciliation. When you ask about Financial Repression, I think it has been forced on Monetary Authorities (though its their own doing). It had to happen. It is a consequence of the past 35 years."

"I think they are boxed, as is everyone else (like the IMF) that is involved"

WHO IS GOING TO STAND UP TO THIS?

"It is also in China and Russia's interest to have a baseless currency and even fractional reserve banks. What it does is centralize power to decide what wealth looks like in their nations and economies."

"My sense is we have to accept that this is the reality. That for the first time ever .... I think there is going to be increasing coordination amongst all sorts of Monetary Authorities and the net loser is going to be the saver or pensioner in real terms. It is not necessarily a negative on equities, real estate or anything that relies on credit. It may be bullish on nominal pricing but bearish on real pricing and value. That is what Financial Repression is bring us."

.... there is much, much more in this broad ranging 46 minute interview with a very thoughtful and experienced Wall Street insider telling it the way it really is:

  • Why the death of the infamous Bond Vigilantes occurred and how they got trampled by the Fed,
  • Why we have had a slow migration from Capital producing economies to Credit producing economies or Financialism,
  • Why a policy of unsound money has allowed China and Russia to transition to modern societies without becoming militaristic,
  • Why the global over supply is driving pricing pressures and deflation,
  • The eermergence of China's new private mercantilism system,
  • The political dimension of the $555T global SWAPS market exposure.

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Saturday
June 20th,
2015

The Coming Era of PENSION POVERTY

 

Charles Hugh Smith

 

 

Regular Co-Host: CHARLES HUGH SMITH , Author & Publisher of OfTwoMinds.com

 

The Coming Era of

PENSION POVERTY

 

with Charles Hugh Smith & Gordon T Long

27 Minutes - 20 Slides

Charles Hugh Smith and Gordon T Long discuss what they see as the Coming Era of Pension Poverty.

To show why this happen, Charles and Gordon attempt to answer two questions:

  1. Why are the pensions and benefits promised to public employees unsustainable?
  2. Why is the Social Security System at risk?

Why are the pensions and benefits promised to public employees unsustainable?

1. Demographics: back in the day, there were 10 workers for every retiree. That slipped to 5 to 1, and it is now around 2 to 1: only two full-time workers for every retiree.

2. Low Yields in a ZIRP economy. Pension funds were based on a minimum annual investment return of 7% or more.  Returns of 3% or less mean the promised pensions cannot be paid out of investment earnings—they must be paid by higher taxes.

3. Increased risk of pension fund investments. Pension managers have compensated for low yields by shifting more of the fund’s capital into high-risk investments such as junk bonds as a way of capturing higher yields.  This strategy has paid off in a ‘risk-on” environment but has the potential to yield catastrophic losses in a “risk-off” downturn.

4. Many public unions have exploited the system by buying political favors. Many retire at 55 and game the pension plans to retire with 90% pay based on their last year of service, which includes huge overtime pay; questionable disability claims that make their pensions tax-free, etc.  This has changed the public employee pension plans from models of modest payouts to cash cows in which employees rake in $250,000 payouts upon retirement, are hired back as consultants (double dipping) and a host of other abuses.

5. Voters squeezed by stagnant incomes and steep increases in healthcare and educations costs cannot afford to pay higher local government taxes without crimping their consumption.  Forcing voters to pay for public pensions with sharply higher taxes will trigger a self-reinforcing recession as consumption declines lower consumption/sales taxes, lowering local government revenues despite higher taxes.

 
Why is the Social Security System at risk?

1. Social Security is “pay as you go”—the Trust Fund is a fiction, IOUs that are empty promises, not tradable securities.  The deficits in Social Security must be paid with higher taxes or by selling Treasury bonds, i.e. increasing Federal debt.

2. Demographics: there are only 2 full-time workers for every Social Security/Medicare recipient.

3. Social Security is already running deficits:

Social Security Ran $47.8B Deficit in FY 2012; Disabled Workers Hit New Record in December: 8,827,795

4. Social Security is supporting an increasing number of non-retirees, i.e. disabled.

5. Demographics: the number of baby Boomers who qualify for Social Security and Medicare is set to soar--60+ million Boomers are entering these programs while the economy only supports 115 million full-time jobs.

6. Faulty actuary assumptions.  When Social Security was established, it was assumed there would always be 5 workers for every retiree, people retired at 65 and that the average age at death was mid-to-late 60s.  The system was not set up for people retiring at 62 and living into their 80s.

 

 

 

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Thursday
June 18th
2015

MISH SHEDLOCK COMES OUT SWINGING ON: Illinois, Public Pensions and Greece

 

"Mish" Shedlock

 

SPECIAL GUEST: MIKE ("Mish") SHEDLOCK , Publisher of the Global Economic Analysis Blog.

An espoused self educated Austrian Economist,  Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Read more at http://globaleconomicanalysis.blogspot.com

 

MISH SHEDLOCK COMES OUT SWINGING ON:

State of Illinois, Public Pensions and Greece

 

30 Minute VIDEO

STATE OF ILLINOIS & CITY OF CHICAGO -Never Ending Financial Obfuscation

From Seven Illinois cities, to the City of Chicago, to the State of Illinois, Public Pensions are bringing the proud 'Land of Lincoln' to its "financial knees"!

Decades of politically expedient l promises and over generous Public Pension concessions to appease powerful public unions have left all levels of government with few financial alternatives. Many are now be forced to consider bankruptcy.

The Fourth Financial Repression Pillar of "Obfuscation" has been the practiced tactic for some time which has camouflaged this cancer. This obfuscation involved many clever accounting games which according to Mish Shedlock:

"Illinois' Pension Plans are funded on average something like 39% and of course that creates a conflict of interest after judges have ruled on Pension Plans. The courts ruled that a bill Governor Rauner signed is unconstitutional and now sends things back to the drawing board. That (the bill) was supposed to save Illinois about $2B per year. Judges were in on it, Actuaries were in on it, the Rating Agencies - everyone was in on it."

"Moody's cut Chicago's rating to junk. The City of Chicago promptly removed Moody's from rating its bonds and instead hired another third party to rate its bonds. This is "rate shop whoring" and that is what I call it! The same process goes on with "actuarial whoring" because no city wants to admit that their pensions are as underfunded as they are!"

"Many of the pensions allow workers to retire at 50 after putting in 20 years of service, or whatever the requirement was. What do they do? They retire, collect their pension and then go to work for another government agencies and accrue benefits for yet another pension! - The whole system is untenable!"

"The taxpayers in Cook County are paying 50% of the tax revenues - not for services - instead it goes towards interest and pension obligations!"

... and IT'S STEADILY GETTING WORSE!

SOARING STATE TAXES - Sacrosanct Public Pensions Are Forcing Increased State Taxes

LOCAL PROPERTY TAX INCREASES

"To shore up Chicago's Pension System they would have to hike Illinois property taxes by approximately 50%. - My (Mish's) property taxes are already $14K/year!"

City, Local & Town Taxes in America are about Property Taxes. We can expect to see and explosion going forward in property taxes to pay unfunded public pensions.

Could this be a potential Death Knell For Real Estate Prices?

Could this trigger a collapse in 'Tax Free' Muni Bond Values?

GREEK CRISIS HAS COME TO A HEAD - Public Service Pensions A Major Sticking Point

"You have to actually wonder if the Greek Government is giving Greeks time to get their money out of the banks - only the dumb money is now left?"

....and much, much more in this fast paced 30 minute Video.

 

 

 

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Tuesday
June 16th
2015

JORDAN ELISEO talks: "Dire Straits - Money For Nothing, Debt For Free"

Jordan Eliseo

 

 

SPECIAL GUEST: JORDAN ELISEO Chief Economist, ABC Bullion, Australia. Jordan Eliseo is a much sought-after and respected financial commentator and economic analyst with close to 20 years experience in the financial sector. After working for some of the biggest names in the global financial marketplace including Deutsche Bank, JP Morgan and AMP Capital, Jordan has amassed a wealth of experience analyzing investment markets. Jordan set up his own precious metal and mining fund back in 2003, when most people had never even heard of precious metal investment, and is also the founding partner of a national financial advice business, helping Australians take control of their finances and maximize their superannuation. l control of their finances. With a background in funds management and investment analysis, including coverage of some of Australia’s largest superannuation funds. 

Jordan holds a BA in Banking and International Finance from Flinders University and a Graduate Diploma in Applied Finance and Investment from FINSIA. He also holds the Diploma in Financial Planning (Financial Services) with specialist SMSF accreditation.

 

JORDAN ELISEO talks: "Dire Straits -

Money For Nothing, Debt For Free"

 

36 Minute VIDEO Interview

FINANCIAL REPRESSION

"The subsidizing of debtors and the attempt to provide essentially a fake support for asset prices - while punishing savers and mis-allocating capital!"

"In Australia we have some of the highest debt levels in the world. Some people in Australia like Financial Repression because it is making it easier for them to pay off their mortgage (or at least afford their mortgage). The flip side is retirees, or people trying to live off fixed income and the like, are finding life very very difficult now because they have taken a very significant "pay cut" on the income which they were able to earn on the capital that they had been able to save throughout their working lives."

WHAT'S DIFFERENT IN AUSTRALIA?

"Australia is effectively "catching down" to the rest of the world. - it is approximately four to five years behind western word."

"Australia was incredibly fortunate the first time around to. We had a huge stimulus from China which lead to quite literally an unprecedented boom in capital investment in our mining sector. Trades stayed incredible strong because iron ore, coal prices and even gold was supported from a long time. Also because even at this point Australia has a a government debt level that is still quite manageable".

"Imbalances have continued to build over this period and now that the mining boom is over, iron ore prices are closer to $60 dollars (not $160) and capital investment is drying up - we are finding we don't have anything to re-balance to with private debt levels preventing any real pickup in consumer spending in any meaningful way!"

"Australia is about to enter a fairly serious "lull"'

EXPECT DECLINING STANDARDS OF LIVING

The next phase in Australia that Jordan Eliseo expects "is where people begin to lose faith with Central Banks and start to more fully appreciate the complete lack of connection of what is going on in the real world / real economy and what is going on in asset / financial markets."

"I think that when that happens financial markets have a lot of "catching down" to do!"

"The road that the government and central banks have led us down is actually a road that is going in the wrong direction! Standards of living are going to continue to decline as we go down that road and it is going to be a very difficult period for investors and individuals just trying to maintain their standard of living."

WALL STREET IS DISCONNECTED FROM MAIN STREET!

"The end result of current economic policies have caused the disconnection (between Wall Street and Main Street). You can understand the emergency measures that were taken during the financial crisis but all it has done is fuel rampant asset speculation. We haven't seen any meaningful growth in corporate capital investment or a rise in full time job creation (with a real living wage)."

"If you look at what is happening around the world we are seeing the prioritization of asset speculation over actual investment. It is impacting everyone from individuals, to CEOs, to Boards in making decisions around dividends / stock buybacks versus investing in their own operating businesses!"

"People in Australia on paper are more wealthy because their house price keeps going up, but they have less money to spend because the money they earn on their term deposit & savings continues to decline!"

 

... and much, much more in this 36 minute VIDEO interview on global macro issues ...

  • Why the Central Bank play book is very clear for investors,
  • Why we will see a growing appetite for Precious Metals & why it is now imprudent not to acquire some element of precious metals within portfolios,
  • Why we have $5T in Negative Nominal Sovereign Bonds,
  • Why Superannuation is the only investment for 22M people in Australia,
  • Why lower interest rates are ahead for Australia,
  • Why Financial Diversification. Liquidity and Internationalization have become so important.

G7 EXITING - WITH MINIMAL GOLD HOLDINGS - WHY?

MEANWHILE CHINA, RUSSIA AND NON-G7 ARE ENTERING GOLD MARKET - WHY?

CHINA
RUSSIA

 

 

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Wednesday
June 10th
2015

JEAN MARIE EVEILLARD talks FINANCIAL REPRESSION

Jean Marie Eveillard

 

 

SPECIAL GUEST: JEAN MARIE EVEILLARD is a legendary French international investor who currently serves as the senior investment adviser to First Eagle Funds. Eveillard, who served more than a quarter century as a portfolio manager, was co-honored in 2001 by Morningstar, Inc. as "Stock Manager of the Year" and was a finalist for their 2009 "fund manager of the decade award for non-U.S. stocks". In 2003, the group gave him a "Fund Manager Lifetime Achievement" award.

 

JEAN MARIE EVEILLARD talks

FINANCIAL REPRESSION

27 Minute Podcast Interview

FINANCIAL REPRESSION

"One characteristic of Financial Repression is extremely low interest rates. That is what the Federal Reserve, ECB and Bank of Japan have done over the past few years in reaction to the financial crisis of 2008. They have in a sense manipulated interest rates by doing what they call Quantitative Easing, which is the purchasing by the central banks of a number of fixed income securities - in the process taking short term interest rates and long term yields down as much as possible. In doing so they are trying to encourage investors but it is of course detrimental to savers!!"

"In a way they are being pushed into equities ... the authorities have created what I think is a bubble in stocks, bonds, high end real estate and art"

REGULATORY "RING FENCING"

"By forcing the banks to inflate their capital, the banks are being forced into buying sovereign securities!".

This type of regulatory policy chicanery helps finance the growing government debt at the expense of savers, retirees and small business. Eventually sovereign economic growth is affected.

NEGATIVE UNINTENDED CONSEQUENCES

There are many unintended consequences and moral hazards of such policies. They lead to mal-investment, lack of price discovery and the mispricing of risk. Jean Marie Eveillard cites "economists have warned about potential mal-investment and today we are right there with the problem .... there is no ambiguity when they say they will do whatever it takes!"

"SAVE & INVESTMENT" VERSUS "LEND & SPEND"

"Today the emphasis of economists is to consume, versus save and invest!"

"Sustained cheap money increases supply much more than it does demand. We presently have over investment resulting in global over supply. This is not being matched by only moderate global demand based primarily on consumerism. This mismatch leads to a lack of pricing power, which eventually defeats policies of Quantitative Easing and ZIRP which were never intended by their academic architects to be sustained policies." Gordon T Long

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Tuesday
June 9th
2015

JAYANT BHANDARI talks FINANCIAL REPRESSION

Jayant Bhandari

 

 

SPECIAL GUEST: JAYANT BHANDARI is constantly traveling the world looking for investment opportunities, particularly in the natural resource sector. He advises institutional investors about his finds. Earlier, he worked for six years with US Global Investors (San Antonio, Texas), a boutique natural resource investment firm, and for one year with Casey Research. Before emigrating from India, he started and ran Indian subsidiary operations of two European companies. He still travels multiple times a year to India. He is an MBA from Manchester Business School (UK) and B. Engineering from SGSITS (India). He has written on political, economic and cultural issues for the Liberty magazine, the Mises Institute (USA), Mises Institute (Canada), Casey Research, International Man, Mining Journal, Zero Hedge, Lew Rockwell, the Dollar Vigilante, Fraser Institute, Le Québécois Libre, Mauldin Economics, Northern Miner, Mining Markets etc. He is a contributing editor of the Liberty magazine. He runs a yearly seminar in Vancouver titled Capitalism & Morality.

 

GLOBAL MINING ANALYST JAYANT BHANDARI

"ITS AN OVER SUPPLY PROBLEM!"

FINANCIAL REPRESSION

"There are two parts of the world in my opinion. One is the western developed civilization and the other is the non-western civilization. The western civilization was primarily based on reason and respect for the individual. This has considerably deteriorated over the last few decades. Increasingly the coming of the police state in particularly the USA. In the West-European part of the western civilization the regulatory controls have become particularly horrendous as well. The welfare system of these economies is deteriorating these societies now. Culturally the western civilizations are increasingly on a slippery slope."

"The non Western civilizations have adopted the consumerism and wealth creating mechanism of the western civilizations, but I am not sure they have really adopted these things properly! Democracy has not done well in these countries. As a result consumerism is making these countries very unstable. The only countries I feel relatively positive about right now are China and some of the smaller countries like Singapore, Hong Kong, Mauritius - these countries are doing very well."

HARD ASSETS & NATURAL RESOURCES

The problem is with the investors who have over-funded mining. They shouldn't have ramped up mining as much as has been done!

'The places to invest are places like Canada, Scandinavia, Australia and parts of South America. You need consistency in the political climate. You want the stability for people to invest billions of dollars in these countries."

"I don't think global demand has fallen. If you look at Iron Ore the world is using three times more Iron Ore. The world requires three times more Iron Ore than it used to 10-15 years ago. What is changed is that we have started to supply more commodities than the world demand is there for it. The problem is with the investors who have overfunded mining. They shouldn't have ramped up mining as much as has been done!

PERVASIVE GLOBAL OVER-REGULATION

"Global western economies are stagnating and this is a direct result of over regulating business in those countries."

"Businesses are suffocating in the west now. There is pretty much zero growth. You need to understand the off balance sheet liabilities these businesses have, and continue to increase. They have benefited from technological evolution and the low hanging fruit over the last twenty years." This has now changed.

The US$ shows that though the US is deteriorating according to Jayant Bhandari "it is deteriorating slower than the rest of the world!"

"Economic repression is a fact of the day everywhere in the world"

Where growth is happening it is because of increasing consumerism and this is not good for the future because growth should be happening as a result of the increase in supply of products - which would mean we should be saving more - which would mean we should be producing more than we are consuming!"

INCREASINGLY BULLISH ABOUT GOLD

"I have never been too bullish about gold but increasingly I am very bullish about gold. The reason is a lot of people misunderstand why Indians buy gold. The reason Indians and Chinese buy so much gold is that for example in India the yield on investment is negative. It pays them to invest in something that gives them positive real yield. In my view India is going to increase its consumption of gold and the Chinese will keep doing it."

"Once the US$ becomes too over-valued people will begin putting their money in precious metals!"

.... and much more in the video interview. Listen to the whole interview.

 

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Sunday
June 7th
2015

PURU SAXENA talks FINANCIAL REPRESSION

Puru Saxena

 

 

SPECIAL GUEST: PURU SAXENA is Founder and Chief Executive Officer of Puru Saxena Wealth Management in Hong Kong. Mr. Saxena has extensive investment experience and he is a registered investment advisor/money manager with the Securities & Futures Commission of Hong Kong. Highly respected in the investment management business, he is a regular guest on various media such as CNN, BBC, CNBC, Bloomberg, Reuters and a host of other channels. Furthermore, he is regularly featured in several publications such as Barron’s, Hong Kong Economic Times, South China Morning Post, Benchmark magazine, Hong Kong Business and China Daily. Mr. Saxena is also the editor of our monthly economic report – Money Matters. Our highly acclaimed publication is read by professional and retail investors in numerous countries. He first began publishing his monthly economic report in June 2000 and it has now attracted a wide following.

 

PURU SAXENA talks

FINANCIAL REPRESSION

31 Minute Video Interview

FINANCIAL REPRESSION

"We have been through a huge financial crisis in 2008 which brought the world's banking system to it knees. The US housing market was on it knees. It was the worst recession, if not depression that the US faced in a long time. It affected all the global markets. So rightly or wrongly - wrongly in my view - the central banks decided to bailout everyone in site by keeping interest rates near zero and launching Quantitative Easing programs (which is essentially bond buying or asset swapping) which is printing new money and buying toxic bonds from the banks and thereby cleaning up the banks balance sheets - making sure the banking system survives."

"In the process they have held interest rates at zero for a long long time, not only in the US, Europe and a lot of other countries in the developed world, which is penalizing the savers to the benefit of the borrowers and debtors. They are especially hurting people at retirement or close to retirement because suddenly their passive income which they had worked so hard to accumulate all their life disappears!"

"It is essentially a transfer of wealth from savers to the borrowers and debtors."

"This has managed to stabilize the system temporarily but is really not good for society!"

UNINTENDED CONSEQUENCES

"The problem is everyone has become accustomed to being bailed out! Now there is no such thing as a bankruptcy! Everyone knows (especially the banks), if they make mistakes someone will bail them out either the central banks or the government. It has increased risk taking.

"It has increased risk taking."

"I never felt QE was capable of increasing business activity because this is not really a supply side problem but a demand side problem. You have households all over the world already choking on debt. The last thing they want to do is borrow more money even if you drop rates to zero or give them money to borrow, they just are not going to do it!

A DEMAND PROBLEM

"When people ask why QE hasn't caused inflation or hyperinflation, the answer is simple: households in the west were in no position to borrow money at even zero interest rates. The aggregate demand for new debt or credit was simply not there. By swapping assets the central banks have managed to cleanup the banking system but they have not been able to ignite the risk appetite at the household level".

"We have a Demand problem, NOT a Supply Side problem!"

This is a global problem! "Even in Hong Kong, 2 years ago it was teaming with mainline Chinese tourists which now are simply not coming. Retail sales in Hong Kong have fallen significantly. Spending is hurting as the middle class has been obliterated! The rich have become richer as assets have increased and savers have been penalized. This policy of QE and Financial Repression has really helped the elite of the world - who have had access to financial leveraging."

LOW GROWTH ECONOMIC ENVIRONMENT

The core problem to Puru Saxena is:

  1. The low growth economic environment we find ourselves in,
  2. The deflationary pressures in Europe and Japan

"Historically we have seen, whenever an economy passes through an extremely slow growth, sluggish environment where there is a lack of aggregate demand and you have deflationary pressures, long term interest rates have always gone down. The tendency of long-term interest rates is to drift lower in this environment. Long-term interest rates are normally set by the rate of economic activity as well as the real rate of inflation. At the moment we don't really have much inflation or at least forces on inflation anywhere in the developed world and economic activity is zero or even negative!"

Long-term interest rates are price appropriately for the current economic activity!

There is much, much more in this 31 minute macroeconomic view of the world and the investment opportunities it presents.

 

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Tuesday
June 2nd
2015

JIM ROGERS talks FINANCIAL REPRESSION

Dr Thorsten Polleit

 

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

 

23 Minutes

FINANCIAL REPRESSION

"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?

  1. "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."
  2. "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.
  3. "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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Monday
June 1st
2015

Prof. THORSTEN POLLEIT on THE NATURAL INTEREST RATE

Dr Thorsten Polleit

 

SPECIAL GUEST: Thorsten Polleit, PhD is chief economist of the precious-metals firm Degussa and co-founder of the investment boutique Polleit & Riechert Investment Management LLP. He is honorary professor at the Frankfurt School of Finance & Management and associated scholar of the Mises Institute.

 

THE NATURAL INTEREST RATE

CANNOT BE NEGATIVE!

28 Minutes

READ FULL PAPER

The "Natural Interest Rate" Is Always Positive and Cannot Be Negative

Some economists have been arguing that the “equilibrium real interest rate” (that is the “natural interest rate” or the “originary interest rate”) has become negative, as a “secular stagnation” has allegedly caused a “savings glut.” The idea is that savings exceed investment, and that a negative real interest rate is required for bringing savings in line with investment. From the viewpoint of the Austrian school, the notion of a “negative equilibrium real interest rate” doesn’t make sense at all.

The market interest rate is the outcome of the supply of and demand for savings in the market place. It can be observed, for instance, in the deposit, bond, or loan market for different maturities and credit qualities. The originary interest rate is a category of human action, saying that acting man values goods available at present more highly than goods available in the future. In other words: Future goods trade at a price discount relative to present goods. For instance, 1 US$ available today is preferred over 1 US$ available in one year’s time.

If 1 US$ to be received in one year’s time is valued at, say, 0.909 US$, the originary rate of interest is 10 percent. (1 US$ divided by 0.909 minus 1 gives you 0.10, or 10 percent, for that matter.) 10 percent is here the originary interest rate (disregarding any other premia).

The “Originary Interest Rate” Reflects a Value Differential

The originary interest rate is expressive of a value differential, which results from so-called time-preference. The term time-preference denotes that acting man prefers an earlier satisfaction of wants over a later satisfaction of wants. Time-preference is always and everywhere positive, and so is the originary interest rate. This is, first and foremost, what common sense would tell us.

The notion that time-preference and the originary interest rate could be zero, does not only sound absurd, it is also a logical impossibility: Positive time-preference and a positive originary interest rate are logically implied in the irrefutably true “axiom of human action.”

Human action is purposive behavior, implying the use of means to achieve ends. Action requires time (it is impossible to think otherwise). Thus, time is an indispensable and scarce means for achieving ends. As such, it must be economized, which necessarily implies that an earlier satisfaction of wants is preferred over a later satisfaction of wants.

For (praxeo-)logical reasons, therefore, time preference and the originary interest rate cannot fall to zero, let alone become negative. The implications of a negative originary interest rate cannot even be conceived by the human mind: A zero originary interest rate already implies no action ever into eternity.

The End of the Market Economy

Should a central bank really succeed in making all market interest rates negative in real terms, savings and investment would come to a shrieking halt: as time preference and the originary interest rate are always positive, “capitalistic saving” — the accumulation of goods designed for improving the production process — would come to an end.

Capital consumption would ensue, throwing mankind back into poverty. It would be the end of the market economy.

The True Purpose of Negative-Interest-Rate Policy

For some reason, those who argue that the originary interest rate has become negative seem to overlook that the originary interest rate is a phenomena which is not confined to credit markets. It pervades all markets in which present goods are exchanged for future goods. For instance, the originary interest rate prevails at each stage of the economy’s time-consuming roundabout production. The originary interest rate also exists in the stock market, where investors exchange present money against a claim on future money (that is a firm’s dividend payment).

If they wanted to be consistent, the believers in a negative originary interest rate would have to call for a policy that does not only make interest rates negative in real terms in the credit market, but also in the markets for, say, stocks and housing.

However, a policy that advocates destroying firms’ values and peoples’ housing wealth wouldn’t be taken too kindly by the public at large; and those economists recommending it couldn’t expect being cheered.

The consequence of a policy of a negative real market interest rate should have become obvious by now:

It is an actually perfidious policy for debasing the real value of outstanding debt; and it is a recipe for wreaking havoc on the economy.

 

 

 

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Sunday
May 31st
2015

MARK NESTMANN on US FOREIGN INVESTMENT TAXATION

Mark Nestmann

 

SPECIAL GUEST: MARK NESTMANN: Since 1990 has helped hundreds of clients seeking wealth preservation and international tax planning solutions. He is the author of many books and reports dealing with these subjects and a popular public speaker. Beginning his career as an investigative journalist in 1983, Nestmann now serves as President of The Nestmann Group, Ltd., an international consultancy assisting individuals to achieve their wealth preservation goals. He also is the Tax and Asset Protection editor for The Sovereign Society. Nestmann divides his time between offices in Vienna, Austria and Phoenix, Arizona. In 2005, Nestmann was awarded a "Master of Law" (LL.M.) degree in international tax law at the Vienna University School of Economics and Business Administration in Vienna, Austria. Nestmann's research and thesis dealt with the subject of "exit taxes" imposed on individuals who change their tax residence from one jurisdiction to another.

MARK NESTMANN on

US FOREIGN INVESTMENT TAXATION

26 Minutes

After establishing a noted career in international investment, Mark Nestmann left the US for three years to study for his "Master of Law" (LL.M.) degree in international tax law at the Vienna University School of Economics and Business Administration in Vienna, Austria. This is an indication of the seriousness and rigor with which Mark tackles issues in International Taxation for his high net worth clients. He shared his views with the FINANCIAL REPRESSION AUTHORITY in this exclusive interview.

FOREIGN ACCOUNT TAX COMPLIANCE ACT - FATCA

Passed in 2010 and hidden as part of a "Military Pensions Act", no one fully understood what it meant or paid much attention to it.

"The Foreign Account Tax Compliance Act, is one of the most arrogant and one-sided laws ever passed by Congress. The idea behind FATCA, which Congress enacted in 2010, is simple: Demand that other countries enforce America’s imperialistic tax laws. And do so by the confiscation of foreign assets, if necessary." - Why FATCA Is a Train Wreck Waiting to Happen - Mark Nestmann

"What is happening is foreign financial institutions (which is defined very broadly in the act) under the law are required to identify their US clients and force their US clients to self identify and turn over information to the IRS."

"If the banks or countries don't comply then 30% of their US source income (and in some case 30% of source gross sales revenues) of things like stocks, bonds, CDs etc are withheld - this is a pretty big number! The only way banks can avoid the 30% withholding tax is to essentially act as unpaid IRS informants."

"Not surprisingly, FATCA and numerous other laws that require FFIs to enforce US money laundering, anti-terrorism, and securities regulations have led most of these institutions to fire their US clients. Perhaps one in 10 – and possibly fewer – non-US banks still permit US citizens or permanent residents to open accounts. That leaves little choice for Americans but to deal only with banks that have agreed to toe the IRS line." - Why FATCA Is a Train Wreck Waiting to Happen - Mark Nestmann

"Non US persons investing in the US are also effected by FATCA. If their foreign bank don't comply their US investment is whacked 30% as well - It isn't just Americas who should care about this but basically everyone in the world!"

This is not a good time to have unreported financial accounts in countries that have already signed FATCA agreements with the US, or are about to. If you’re in this situation, you might want to seriously consider retaining a tax attorney to enroll you in the IRS’s latest Offshore Voluntary Disclosure Program.

PASSIVE FOREIGN INVESTMENT COMPANY - PFIC

"PFIC is another aspect of Financial Repression and aspect of regulatory restrictions on investment choices."

"If you have an investment vehicle registered outside the US the IRS will consider it a PFIC. As an example of the way this tax is very unfavorable is that unless an offshore Mutual Fund qualifies as a US Mutual Fund when you sell it (or deemed to sell it) you have to file not only a return on the income by also a "throwback" interest charge for EVERY YEAR you held the fund. Additionally the tax rate is computed at the highest marginal rate in that year!"

"What happens is that people who held offshore mutual funds for a long period of time windup losing every penny of income in that fund because it is paid out in taxes and interest penalties."

... there is much, much more in this 26 minute video interview covering:

  • CITIZENSHIP TAXATION (including the absurdity of 1986 Tax Legislation for "Mars"??)
  • UNOFFICIAL CAPITAL CONTROLS NOW IN PLACE,
  • US 2008 "EXIT TAX" (for citizens and Green Card holders on unrealized gains),
  • INHERITANCE IRS TAX GRABS,
  • THE NEW EX-PATRIOT ACT,
  • INVESTING ABROAD,
  • THE RATE OF ACCELERATION OF RESTRICTIVE FOREIGN CHOICES FOR AMERICANS,
  • THE GROWING MOVEMENT TOWARDS SECOND CITIZENSHIP PROTECTION,
  • WHY THE LEGAL ABOLISHMENT OF CASH IS COMING.

 

 

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Friday
May 29th
2015

JOHN MAULDIN talks FINANCIAL REPRESSION w/FRA

JOHN MAULDIN

 

 

SPECIAL GUEST: JOHN MAULDIN , is the president of Millennium Wave Advisors, an investment advisory. He is also a registered representative of Millennium Wave Securities, a FINRA-registered broker-dealer. Previously, he was chief executive officer of the American Bureau of Economic Research. Each week, well over a million readers turn to John Mauldin to better understand Wall Street, global markets, and the drivers of the world economy. And for good reason. John is a renowned financial expert, a New York Times best-selling author, a pioneering online commentator, and the publisher one of the first publications to provide investors with free, unbiased information and guidance, Thoughts from the Frontline the most widely read investment newsletter in the world.

 

JOHN MAULDIN talks

FINANCIAL REPRESSION

with Gordon T Long

23 Minute VIDEO

FINANCIAL REPRESSION

My recent book 'Code Red' was really all about Financial Repression. We were talking then about Currency Wars which has come to be played out. We were talking then about Central Banks driving down interest rates on savings to force retirees and savers into other types of investment and take more risk. They want them to move more out onto the risk curve which the central bankers believe will stimulate the economy. What they don't understand is that taking it from savers, it takes it from their consumption behavor patterns."

They are robbing from Peter to pay Paul, but in this case Paul is the banks and Wall Street Interests. It is not for the guy on main street.

"When the central banks start messing around with the markets they change the price of money and it has all sorts of unintended consequences!"

SEVENTH ANNIVERSARY OF ZERO INTEREST RATES

"This period of zero interest has created an extraordinary set of malinvestments as a result of unintended consequences. One example is they have moiney real cheap for Texas oil men. When you make money cheap for Texas oil men they punch holes in the ground. They moved out 'onto the edge'. It created employment and drove rig prices up." ... "It changed behavors, it changed how we think the worrld works - we will see how it works out!

BOND LIQUIDITY CRISIS

"Investors have been moving into high yield (HY) bonds. We are issuing risky HY bonds that are much more risky than 2007 with less covenants. Its like we didn't learn anything! People feel they have to have more yeild and can't survive without it. We have bond funds where people are chasing longer duration bond funds. If interest rates on the long end of the curve grwos by 1%, these longer duration bond funds (2 of the largest funds in the world) could lose 20%. Investors in 401K's who see 20% losses will panic and hit the sell button. Becasue we wrote a bill called Dodd-Frank, which basically says you banks can't get involved in providing liquidity to this market because we don't want you to take the risk - they have shoved the risk to investors who will all try and get out the door at the same time!"

"It would not surprise me in the next crisis (and it will happen) to see the Federal Reserve step in and start directly funding Mutual Funds and ETFs trying to provide liquidity into a panicing market!"

A 'SKYROCKETING' DOLLAR

As John wrote in "code red" he sees a continuing strengthening in the US$.

"The dollar is going to get stronger than any of us can even imagine!"

"The BIS cites that emerging markets have borrowed some $9T in US$ terms." As emerging markets weaken they must pay their loans in appreciating dollars. There is presently a mad scramble ensuing to cover this carry trade. Mauldin believes it will get even worse because of Japan.

"Japan is just continuing to print money. They are just going to print more money! When that doesn't work they will print even more money. They have a sovereign debt crisis that the only way they can solve it to trash their currency and to move the debt they have generated from banks and pension funds unto the balance sheet of the central bank. That is their only solution. Today the 10 Year JGB market (it used to be one of the most liquid in the world) if the BOJ is not buying there are no trades! That is just shocking and is going to put pressures on currencies all over the world!"

"This is movie we just don't believe will end well!"

LIKELY SCENARIO

  1. A couple of contries have a major crisis,
  2. It may possibly roll from country to country,
  3. The Federal Reserve will supply SWAP lines to central banks around the world,

"Investors at this stage should start to consider what is their exit strategy!"

... and much more in the video discussion.... John gives his advise on what things invetors must now be concerned with and how they should be preparing.

 

 

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Thursday
May 28th
2015

ELLEN BROWN talks BANKING w/FRA

ELLEN BROWN

 

 

SPECIAL GUEST: ELLEN BROWN , is the founder of the Public Banking Institute and the author of a dozen books and hundreds of articles. She developed her research skills as an attorney practicing civil litigation in Los Angeles. In the best-selling Web of Debt, she turned those skills to an analysis of the Federal Reserve and “the money trust.” She showed how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back.

 

ELLEN BROWN talks

BANKING

with Gordon T Long

32 Minute VIDEO

Ellen Brown has written to popular books on banking, is the founder of the Public Banking Institute and ran for California State Treasurer in the last election. She knows a thing or two about banking. What she has to say is no pretty.

BANKING IS IN WORSE SHAPE

    1. Loans for small business is harder to get,
    2. Big Banks are lending less,
    3. Big Banks have more derivatives than ever with 98% controlled by the big 4,
    4. Small to Medium size banks are having more difficulties making loans because of Dodd-Frank and Basel III. (Rules which favor big banks).

The rules are effectively competitively disadvantaging the small to medium sized banks in favor of the banks who got us into the financial crisis in the first place and have the lobbyists to secure favorable advantages. It is the smaller to medium sized banks that have traditionally funded small business growth and innovation in America.

STEALTH BAIL-IN VERSUS BAIL-OUT PROVISIONS

In 2010 the congress moved to stop future bailouts but brought in "bail-ins". In the future if the big banks fail due to risky loans they will be forced to recapitalize themselves but with unsecured creditor funds. This means using depositor funds who are the largest unsecured creditor class of the banks. The public is generally unaware of this shift.

"Cyprus-style confiscation of depositor funds has been called the “new normal.” Bail-in policies are appearing in multiple countries directing failing TBTF banks to convert the funds of “unsecured creditors” into capital; and those creditors, it turns out, include ordinary depositors. Even “secured” creditors, including state and local governments, may be at risk. Derivatives have “super-priority” status in bankruptcy, and Dodd-Frank precludes further taxpayer bailouts. In a big derivatives bust, there may be no collateral left for the creditors who are next in line. 

WHY NEGATIVE NOMINAL BOND YIELDS?

Ellen suggests that the reason we are seeing $5T in Sovereign Bonds now trading with negative nominal yields is because the larger banks need them for collateral in the Repo market. The Fed has reduced the availability of bonds and the banks need the bonds for leverage. They simply don't mind paying a small price to obtain the lending leverage.

PROFITS IN DERIVATIVES

As Citigroup CEO Chuck Prince so infamously cited prior to the 2008 Financial Crisis, "you have to get up and dance while the music is playing!" Today Ellen believes the pursuit of yields and use of derivatives is about short term profits with little regard to the longer term issues where depositors will be on the financial hook. The banks senior secured debt holders now receiving large interest fees will once again be protected. Shareholders, depositors and those lower on the capital structure will be the losers.

OTHER SUBJECTS

  • The secretive issues with the stealth TPP (Trans-Pacific Partnership),
  • Campaign finance, big money and running for public office,
  • A public bank solutions and the North Dakota model,
  • Coming Infrastructure spending,

.... and much more in this 32 minute video.

 

 

 

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Wednesday
May 27th
2015

JOHN RICHARDON talks FATCA & US CITIZENSHIP TAXATION ABROAD

 

 

SPECIAL GUEST: JOHN RICHARDSON, is Canadian based lawyer with a specialized practice of US Taxation abroad for US Citizens. He is the publisher of the web site: citizenship solutions.ca

 

JOHN RICHARDSON talks

FATCA & US CITIZENSHIP TAXATION ABROAD

with Gordon T Long

38 Minute PODCAST

FINANCIAL REPRESSION, FATCA & US TAXATION

JOHN RICHARDSON, is Canadian based lawyer with a specialized practice of US Taxation abroad for US Citizens. He is the publisher of the web site: citizenship solutions.ca. He tackles the following head-on with "no holds barred"!

You will never view US Taxation the same after listening to this 38 minute podcast.

- How citizenship taxation has made U.S. citizenship a disability in the modern world
 
- Why renouncing U.S. citizenship is an excellent investment for "U.S. citizens" not living in the U.S.
 
- How the U.S. "Exit Tax" triggered by renouncing U.S. citizenship operates to confiscate non-U.S. assets outside the U.S.
 
- How citizenship taxation imposes a "capital tax" on any country that has U.S. citizens resident in it
 
- How FATCA allows the U.S. to increase its tax based by expanding the definition of citizenship
 
- How FATCA lowers the international standard of human rights in the world
 
- How FATCA compliance costs will keep the poor countries poor
 
- The FATCA Sanction and the "Weaponization of Finance"
 
- FATCA English and FATCA Forms
 
- Why the U.S. will always prefer FATCA to GATCA
 
- FATCA and the future of the dollar as the major world reserve currency

 

 

 

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Wednesday
May 27th
2015

 

SPECIAL GUEST HOST: John Embry & Rick Rule

 

WEBINAR

War on Cash

 

CLICK TO PLAY

 

CLICK TO PLAY

 

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Thursday
May 21st
2015

INTERPRETING THE SIGNALS

John Rubino

 

SPECIAL GUEST HOST: JOHN RUBINO, Author & Publisher of DollarCollapse.com

OPEN ACCESS

 

INTERPRETING THE SIGNALS

with John Rubino & Gordon T Long

Published 05-21-15

43 Minute Video

CONNECTED IN STRANGE WAYS?

John reviews the key messages in his latest 5 reports:

GROWTH

  • Currency War Collateral Damage: China Stops Growing, Starts Easing,
  • US Nearing a Recession, Dollar Falling Hard,

MOMENTUM

  • Canaries In The Coal Mine, Part 1: Tech High-Flyers Fall To Earth,

SENTIMENT

  • The End is Near, Part 3: Corporations are the Ultimate Dumb Money,
  • The End Is Near, Part 4: Peak Trophy Asset Inflation

INTERPRETING THE SIGNALS

Based on these reports, Gord & John then consider what underlying trends are at work and what it means going forward.

 

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Tuesday
May 19th
2015

MARK THORNTON talks FINANCIAL REPRESSION

 

 

SPECIAL GUEST: MARK THORNTON PhD, is Senior Fellow at the Mises Institute. He serves as the Book Review Editor of the Quarterly Journal of Austrian Economics. His publications include The Economics of Prohibition (1991), Tariffs, Blockades, and Inflation: The Economics of the Civil War (2004), The Quotable Mises (2005), The Bastiat Collection (2007), An Essay on Economic Theory (2010), and The Bastiat Reader (2014). Dr. Thornton served as the editor of the Austrian Economics Newsletter and was a member of the Editorial Board of the Journal of Libertarian Studies and several other academic journals. He has served as a member of the graduate faculties of Auburn University and Columbus State University. He has also taught economics at Auburn University at Montgomery and Trinity University in Texas. Mark served as Assistant Superintendent of Banking and economic adviser to Governor Fob James of Alabama (1997-1999), and he was awarded the University Research Award at Columbus State University in 2002. He is a graduate of St. Bonaventure University and received his PhD in economics from Auburn University.

 

MARK THORNTON talks

FINANCIAL REPRESSION

 

35 Minute Video Interview

FINANCIAL REPRESSION

"A financial scam of the government over the private economy ... It is aimed at taking advantage of their citizens, savers and investors."

Government authorities are:

  • Printing money,
  • Issuing enormous amounts of debt,
  • Suppressing interest rates,

.. all with the intention of exploiting the worker and inflating the value of the goods they buy, as wages fail to keep up. Savers are now receiving negative real rates of returns which is the government extracting resources for themselves at the expense of the common man.

WAGING WAR ON SAVERS

WINNERS: The policies of Financial Repression help:

  • Banks
  • Large Corporations,
  • Government,
  • Large Borrowers,

LOSERS: The losers are:

  • Savers,
  • Consumers,
  • Producers,
  • Laborers,
  • Entrepreneurs

POLICIES: The world wide economy is suffering as a result of the policies which include:

  • Inflation,
  • Zero Interest Rates
  • Quantitative Easing,
  • Heavy Regulation (Healthcare and Banks)

This is an enormous problem in the modern context.

ACCUMULATION OF DEBT

Debt levels are now at critical levels:

    • Excess accumulation of debt has become a critical burden to the productive capacity of the global economy,
    • Significant levels of global investment is presently malinvestment,
    • Excess global capacity has been used to produce none-productive assets,
    • Lack of Price Discovery and Mispricing of Risk are distorting economies and investment behavior,
    • Many parts of the economy are fragile and a recession is now knocking on the door of the US,
    • .... and more

AUSTRIAN PRESCRIPTION

    • The Federal Reserve needs to get out of the interest rate markets and allow the markets to work properly,
    • The Federal Government needs to balance budgets and cut back spending tremendously,
    • The Government needs to signal to markets participants that they are not going to see their taxes increased significantly,
    • The Government needs to demonstrate they are going to do something about the national debt and unfunded liabilities.

    These policy positions would begin to incent investment very quickly.

The Central Problem is Unsound Money

 

 

 

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Monday
May 18th
2015

JIM PUPLAVA talks

FINANCIAL REPRESSION

 

 

 

SPECIAL GUEST: JIM PUPLAVA , is the Founder, President & CEO of PFS Group. He is also the chief author and host for the Financial Sense Newshour. Puplava's website at financialsense.com was named a "supersite for alternative investing" by The Globe and Mail, Canada's largest-circulation national newspaper.”

 

JIM PUPLAVA talks

FINANCIAL REPRESSION

30 Minutes

Jim Puplava was one of the first researchers to go public with the concept of Financial Repression and the Financial Repression Authority wants to recognize him for this. After studying the writings of Rogoff & Reinhart, Jim Puplava identified shortly after the Financial Crisis the fact that policies of Financial Repression had been used after WWII with success and began writing and talking about them. He was a long voice on the subject.

The difference today and the previous situation after WWII is:

  1. The US is n o longer on Gold Standard (we now have a Global Fiat based currency system),
  2. Most developed economies have record Debt-to-GDP levels,
  3. We now have record levels of Derivative and Securitization which didn't exist after WWII,
  4. Globalization has changed the level of financial interconnections and dependency.

FINANCIAL REPRESSION

Jim Puplava suggests:

"Financial Repression in essence is a tax on savers! Savers are getting real negative interest rates (before taxes). The work of Keynes advocated robbing savers to the advantage of the government. The losers are savers while the winners are debtors and the government"

    • Winners: Debtors
    • Losers: Seniors (they are the savers)

PUBLIC IS UNKNOWINGLY CONTRIBUTING TO FINANCIAL REPRESSION

The stock market has seen a net $60-$80B go into the stock market since the rally began after the financial crisis. "The vast majority of individuals have been going into bond funds which by the way is part of the plan of Financial Suppression".

"Most investors have gone through two bear markets in the last decade where stocks lost 45%. They are now closer to retirement than they used to be and don't want to go through that again!"

As such they missed out on a historic market rally. "If they had held the course they would be ahead. The vast majority of people kept their money in savings because the headlines were scary."

"The media did an exceptionally poor job of explaining what was going on in the financial markets. Instead of telling people they needed to capture or take advantage of what Financial Repression was putting into place. Financial Repression supports growth type assets like stocks and commodities (initially coming out of 2009). This is how you re-capture (the prior market draw-downs). That is not what happened."

A BROAD RANGING DISCUSSION

The broad ranging discussion in the 35 minute interview include:

    • Market drivers of Corporate Buybacks and broad Central Bank buying,
    • Outlook for bond rates,
    • Why Warren Buffet has 90% of his investments in equities,
    • The scope of taxation on savings and what it means to future retirement planning,
    • Economic growth and top line growth is not there so corporations are doing "rational allocation of capital". This is presently driving corporate policy.
    • Fiscal Policy is missing from the governments economic agenda,
    • Critically important is the impact of demographics and changing Millennial buying patterns,
    • Financial Repression will likely go on for a couple more years before it inevitably breaks.
    • .... and more

 

 

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Wednesday
May 13th
2015

RICHARD DUNCAN talks FINANCIAL REPRESSION

 

 

 

SPECIAL GUEST: RICHARD DUNCAN , Economist, Author & Publisher of RichardDuncanEconomics.com.com

ABOUT RICHARD DUNCAN

Richard Duncan is the publisher of Macro Watch, a video-newsletter that analyzes trends in credit growth, liquidity and government policy in order to anticipate their impact on asset prices and economic growth.

He is also the author of three books on the global economic crisis.  The Dollar Crisis: Causes, Consequences, Cures (2003); The Corruption of Capitalism (2009); and, The New Depression: The Breakdown Of The Paper Money Economy (2012).

Since beginning his career as an equities analyst in Hong Kong in 1986, Richard has served as global head of investment strategy at ABN AMRO Asset Management in London, worked as a financial sector specialist for the World Bank in Washington D.C., and headed equity research departments for James Capel Securities and Salomon Brothers in Bangkok.  He also worked as a consultant for the IMF in Thailand during the Asia Crisis.

Richard has appeared frequently on CNBC, CNN, BBC and Bloomberg Television, as well as on BBC World Service Radio.

 

RICHARD DUNCAN talks

FINANCIAL REPRESSION

 

43 Minutes, 15 Slides

FINANCIAL REPRESSION

"The Policies that come under the heading of Financial Repression I look at as policies that were necessary once the global bubble began to implode in 2008. The policies the Government, the Fed, the US Treasury, and Central Banks around the world have been putting in place are emergency measures just to try and prevent the next Great Depression from occurring. When you add all these measures together it has become to be known as what is called Financial Repression. I don't think the policy makers consider nor view it as repressing anything. They view it as measures that are absolutely crucial to keep the global economy from absolutely imploding. While there are some unpleasant side effects, (like savers not earnings enough money to retire), they view the alternatives as complete economic breakdown which would be far, far worse!"

"Policy makers consider these policies as the bare minimum to prevent the global crisis from becoming the Great Depression - Part II!"

A GLOBAL BUBBLE

"We have a global bubble which started to pop in 2008, but the policy response of trillions of dollars of budget deficit, financed with trillions of dollars of new fiat money creation has succeeded in keeping the global bubble inflated. We still have a massive bubble who's natural tendency is to deflate. In order to keep it from deflating into the Great Depression policy makers have continued to inject more credit! This is what Quantitative Easing is all about."

GOVERNMENT NOW "MANAGES THE ECONOMY"

Richard Duncan's basic premise is that the government has been managing the economy since at least WWII and to make money investors must anticipate what the government is going to do next. As such he uses a framework to monitor liquidity and credit growth to see how they will impact the economy and force the government into what must be done to continue to manage the growth of the economy.

The broad ranging discussion includes:

    • Developed Economies Stealth Strategy of Government "Debt Cancellation"
    • The Potential of a Recession in 2015 /2016,
    • Expectations of a QE4
    • Reasons for $5T of Global Bonds trading at Negative Nominal Rates,
    • Global Deflation as a result of Globalization and the resulting Global Over-Production,
    • .... and more

 

 

 

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Wednesday
May 11th
2015

Egon von Greyerz on RISK & WEALTH PRESERVATION

 

 

 

SPECIAL GUEST: EGON von GREYERZ , Founder & Managing Partner, Matterhorn Asset Management AG and GOLDSwitzerland.

OPEN ACCESS

RISK & WEALTH PRESERVATION

Published 05-11-14

34 Minutes

UNDERSTANDING RISK & WEALTH PRESERVATION

"Wealth Preservation is absolutely critical for the coming years, or even decades and was we set up a special division within Matterhorn Asset Management called GoldSwitzerland to assist investors. We store primarily Gold and Silver outside the banking system in ultra secure vaults in Zurich and the Swiss Alps (which is both the largest and most secure gold vault in the world) along with Singapore and Hong Kong with clients in over 40 countries which includes individuals, family offices as well as institutional clients."

"We intentionally remove ourselves from counter-party risk. We facilitate the investment in precious metals for investors but the metals are held in the name of the investors and therefore they can go to any of the vaults directly (even without our assistance). GoldSwitzerland is the only company in the world that offers this facility where clients have numbered bars in their own name where they can go directly to the vault to inspect them or withdraw them directly."

UNPRECEDENTED GLOBAL RISK

"I believe the world is in a bigger mess than I have seen going back in history! The risks are absolutely unprecedented with virtually every major economy now bankrupt. Japan in my view will not survive as an economy and will 'sink down into the Pacific Ocean'. They are living on borrowed time and sadly at some point in time the Japanese economy will implode. Additionally we have massive problems in China where borrowing has been increased by $20T in the last few years. Europe has no solution to Greece and the Euro is the biggest problem to the world. You add to these Economic risks those of Geo-Political risk and risk is immense!"

"The Black Swans are everywhere and at some point one of them will land somewhere."

WHY GOLD AS INSURANCE?

"Throughout history gold is the only money that has actually survived. No other form of currency has survived.

VOLTAIRE: "Paper money eventually returns to it's intrinsic value of zero!"

MARK TWAIN: "Investors should worry about the return of their investment and not on the return on their investment!"

"I am not a gold bug. It is just that we decided in 2002 the world was in a mess and it was going to be in a bigger mess. Therefore people needed to invest directly in gold outside the banking system and preferably outside their own country of residence."

THIS COMPREHENSIVE 35 MINUTE VIDEO COVERS MANY ASPECTS OF PRECIOUS METALS INVESTING

.... WHICH ONLY ONE OF THE WORLD'S LEADING EXPERTS CAN OFFER

  • Paper markets are manipulated,
  • Central Banks do not have the gold they say they have because of leasing contracts,
  • Producers and refiners are at maximum production based on demand,
  • Meanwhile, Gold is trading at or near its cash cost,
  • The more government mis-manage the economy, the more important gold becomes,
  • ... and much more

 

 

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Monday
May 4th,
2015

HOW DO WE LEARN TO INNOVATE?

 

Charles Hugh Smith

 

 

Regular Co-Host: CHARLES HUGH SMITH , Author & Publisher of OfTwoMinds.com

 

with Charles Hugh Smith & Gordon T Long

32 Minutes - 24 Slides

Charles Hugh Smith and Gordon T Long discuss HOW WE LEARN TO INNOVATE.

HOW DO WE LEARN TO INNOVATE? 

INNOVATION IS EQUAL PARTS:

ATTITUDE - INTELLIGENCE - CURIOSITY - "SWEAT“

INNOVATION IS 10% INPIRATION, 90% PERSPIRATION

INNOVATION CAN BE LEARNED

Steve Jobs learned to Innovate because of:

Attitude - He had a passion for something which he felt could be and needed to be changed,

Intelligence - He wasn't a genius. Few innovators are a genius but few innovators are stupid,

Curiosity - Jobs studied calligraphy out of curiosity – It became the foundation of GUI

Sweat - Jobs was a self described "obsessive driven workaholic"

ELEMENTS OF INNOVATION

-- Innovation = solving problems,

  • Solving problems requires:
  • Deep knowledge of specific fields,
  • High level skills,
  • Experience and Cross-fertilization of different fields/skills.

-- Innovation = professional-level collaboration with other experienced people

-- Innovation = professional = accountable, good communication skills, trustworthy, able to learn new skills and fields

-- The truly disruptive innovations

• Destroy costs (50% to 90% reductions) and

• Provide goods and services that are faster, better, cheaper

APPLE - iPod, iTunes, iPad, iPhone …. Changed Industries!

 

 

 

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SEE FINANCIAL REPRESSION INTERVIEWS FOR ALL SHOWS IN THIS SERIES || SEE VIDEO ARCHIVES

 

Wednesday
April 29th
2015

GRAHAM SUMMERS TALKS FINANCIAL REPRESSION

 

GRAHAM SUMMERS

 

SPECIAL GUEST: GRAHAM SUMMERS  is the Chief Market Strategist for Phoenix Capital Research, , an independent financial research firm based in Charlottesville, VA. He writes Gain, Pains, and Capital, the firm’s FREE daily e-letter covering the equity, commodity, currency, and real estate markets. Graham  also writes Private Wealth Advisory, a weekly investment advisory devoted to helping paying clients navigate the financial markets and produce outsized returns from their investments. To whit, Graham called the 2008 Crash and was one of the few newsletter writers to produce positive gains that year. Graham Summers worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He has made presentations on investment ideas to high net worth clients in Dubai, Singapore, Zurich, Playa Del Carmen and his research has been quoted by Crain's New York Business, Money Talk Radio, Reuters, and RollingStone Magazine to name a few publications.

OPEN ACCESS

GRAHAM SUMMERS TALKS

FINANCIAL REPRESSION

Published 04-28-15

34 Minutes

FINANCIAL REPRESSION

"When I think of repression I think of the Psychological concept that repression is the suppression (or pushing back) of something that is too painful to deal with in sort of a conscious way. That is exactly what the central banks of the world have been doing essentially since 2008. What we had in 2008 was the beginning of a debt deleveraging cycle o the dreaded debt deflation. The economists often like to argue that deflation is terrible but they are being overly general because deflation is actually a wonderful thing (we all want to have things we want to buy be cheaper) but the issue for the economists or Keynesian's is 'debt deflation'".

When debt begins to deflate you run the risk of becoming insolvent particularly in the bond market.

"Because we have been in this debt leveraging cycle for over 30 years ( a bond bubble would be the simplest way of putting it) the central banks are all terrified of a bond bear market because that means that almost instantly all developed nations are bankrupt because the way they have papered over the decline in living standard is by issuing more debt. It has gotten to the point now where because we don't have the money to pay the debt back we are issuing new debt to roll over the old debt (or pay back the old debt)."

"It sounds like a Ponzi scheme and it actually is! It works relatively well while the bond or underlying asset is rising in value because the debt is getting cheaper and the yield is falling

"When it reverses if you don't have the money to pay back the bond so you start to enter a deflationary cycle which is what we had in 2008.

WATCH WHAT THE FED DOES - NOT WHAT IT SAYS

"Most of what the central banks talk about is nonsense. If you watch their actions it is about how do we stop the bond bubble from blowing up? They have done that by three ways:

  1. They cut interest rates down to zero. By doing this they made it much easier to finance debt.
  2. They began engaging in Quantitative Easing (QE). They essentially print money and buy large assets from the banks. It started out as Mortgaged Backed Securities (MBS) because they were the assets devaluing fastest. The second and third rounds were just attempts to keep the whole thing afloat. By Buying bonds you are basically broadcasting to the world I am going to be buying this asset in the near future. The most obviously trade is then for you to buy the bond before you and then turn around and sell it to you for a profit. Globally investors have essentially been front running the central banks.
  3. They suspended accounting standard. This was so banks weren't forced to sell devaluing products but could maintain using them as collateral at higher required values.

"Essentially Repression was the Central Banks trying to repress the terror of debt deflation!"

"All of this has manifested a sort of financial perversion where you seeing capital doing all sorts of crazy things and flowing into areas it would have never gone to before because risk has been so mis-priced by the market."

TROUBLING ISSUES

  • $555T INTEREST SWAPS
    • All Interest Swaps are trading "hinged" on Bond Collateral which is in a massive bubble,
    • Something may be up when the Plunge Protection Team takes up increasing residence in Chicago where Bernanke is now consulting to Citadel (the largest High Frequency Trading player in America) also in Chicago.
  • $72T SHADOW BANKING
    • The source of the 2008 Financial Crisis has mutated to new instruments to borrow short to finance Student Loans and Car Loans. The Shadow Banking Systems now "hinges" on Repos, Collateral Transformations and Rehypothecation.
  • USD CARRY BLOWING UP
    • The $9T US$ carry Trade is hinging on ~$5T in merging Markets which ar now on the wrong side of the trade as the US dollar spikes,

"When it gets serious you can expect the central bankers to lie!"

 

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Saturday
April 25th
2015

JOHN BROWNE TALKS FINANCIAL REPRESSION

 

JOHN BROWNE

 

SPECIAL GUEST: JOHN BROWNE is the Senior Market Strategist for Euro Pacific Capital, Inc. Mr. Brown is a distinguished former member of Britain's Parliament who served on the Treasury Select Committee, as Chairman of the Conservative Small Business Committee, and as a close associate of then-Prime Minister Margaret Thatcher. Among his many notable assignments, John served as a principal advisor to Mrs. Thatcher's government on issues related to the Soviet Union, and was the first to convince Thatcher of the growing stature of then Agriculture Minister Mikhail Gorbachev. As a partial result of Brown's advocacy, Thatcher famously pronounced that Gorbachev was a man the West "could do business with." A graduate of the Royal Military Academy Sandhurst, Britain's version of West Point and retired British army major, John served as a pilot, parachutist, and communications specialist in the elite Grenadiers of the Royal Guard.

In addition to careers in British politics and the military, John has a significant background, spanning some 37 years, in finance and business. After graduating from the Harvard Business School, John joined the New York firm of Morgan Stanley & Co as an investment banker. He has also worked with such firms as Barclays Bank and Citigroup. During his career he has served on the boards of numerous banks and international corporations, with a special interest in venture capital. He is a frequent guest on CNBC's Kudlow & Co. and a former contributing editor and columnist of NewsMax Media's Financial Intelligence Report and Moneynews.com. He holds FINRA series 7 & 63 licenses.

OPEN ACCESS

JOHN BROWNE TALKS

FINANCIAL REPRESSION

Published 04-27-15

40 Minutes

FINANCIAL REPRESSION

"It is the financial repression of the ordinary individual in America. It is happening through three main avenues or arteries.

  1. POLITICALLY - The government is increasing its power almost everyday and repressing the public individual and particularly the rights of the individual. Always under the guise that it to help you! Published statistics are highly questionable; growth rates, inflation rates, unemployment rates. They are confusing people and today I read how they are forcing people out of using cash!
  2. ECONOMICALLY - We have had an enormous, unprecedented injection of cash into the economy with a $3.8T QE program. Its an experiment! It was initiated in Japan where two decades ago the BOJ said it wouldn't work but the politicians insisted they do it. After two decades it still hasn't worked. We are now doing it on a grand scheme without a pilot program. It is creating a (liquidity) trap. It is a major distortion and is crushing savers.
  3. FINANCIALLY - ZIRP is (also) crushing savers! It is savings which forms investment for the future. 62% of employment comes from small businesses where formation must be incented. That needs capital from savings. This along with increasing regulation is not only killing the consumer but the incentive to start a small business which is the key to the creation of jobs, which is key to the creation of income which is then key to savings and growth in the economy. It has all been killed by these policies.

"I don't believe the central bank is necessarily evil, just unbelievably Irresponsible!

LIQUIDITY TRAP

"I think we are now seeing a situation which you could call a liquidity trap. There is so much money around that if they start to raise interest rates they are going to discourage people even more from spending. Ordinary individuals have low wages (wages have been flat for six years at least) yet taxes are going up (the number of taxes) as well as charges (licenses and fees)"

"They are pushing on a string. It isn't liquidity that matters but wages and income!"

"How does the Fed create income without just giving us cash in the post (mail) by just sending us checks?

BY DESIGN

"I'm afraid I believe at the very top it is devious! If I connect all the dots together I cannot feel it is by accident - it by design. I think the president wants to distribute American wealth around America, but even worse is to distribute American wealth around the world. Its killing the economy and its kiliing America."

"It means (eventually) everyone is going to look towards the government for solutions - that is when totalitarian governments come in (to existence)"

"The only solution is single term politicians - Turkey's don't vote for an early Thanksgiving!"

 

 

 

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Monday
April 20th
2015

DE-DOLLARIZATION

John Rubino

 

SPECIAL GUEST HOST: JOHN RUBINO, Author & Publisher of DollarCollapse.com

OPEN ACCESS

 

DE-DOLLARIZATION

with John Rubino & Gordon T Long

Published 04-20-15

35 Minute Video

IT BEGINS!

John Rubino and Gordon T Long discuss the status of global De-Dollarization within the context of three developing macro events:

  • THE ASIAN INFRASTRUCTURE INVESTMENT BANK (AIIB) “MUTINY”
  • PUTIN’S EURASIA CURRENCY PROPOSAL
  • MOUNTING PETRODOLLAR MERCANTILISM PRESSURES

It is clear from insiders that:

"China plans to push for yuan to take prominence in loans under the Asian Infrastructure Investment Bank and the Silk Road Fund. China may encourage $100b AIIB and $40b Silk Road Fund to issue loans directly in yuan or set up yuan-denominated funds under the two institutions. This is according to the people, who ask not to be identified because deliberations are private.” 

The South China Morning Post specifically reports:

Beijing will push for the yuan to be included in a basket of currencies used to denominate and settle loans from the Chinese-led Asian Infrastructure Investment Bank (AIIB), according to think tank sources.

Beijing will also encourage the AIIB and the Silk Road Fund to set up special currency funds and issue yuan-denominated loans through both institutions, the sources said.

If the US dollar is used, it weakens China’s bid for the yuan to be a global currency.

The efforts are part of a drive to internationalize the Chinese currency and come as the International Monetary Fund prepares to discuss the possible inclusion of the yuan as its fifth reserve currency and as part of the basket that forms the IMF's Special Drawing Rights.

The sources' claims appeared to be confirmed by a state media report, which said that a basket of currencies called the "AIIB CURRENCY" would most likely be adopted as the bank's currency of settlement… 

Hao Hong, chief economist and managing director of research at Bocom International, said -  China should do its best to establish the yuan as a currency for settlement and denomination.

 

PUTIN’S EURASIA CURRENCY PROPOSAL

"The time has come to start thinking about forming a currency union," Mr Putin

 

The EEU is an economic union which comprises Russia, Belarus, Kazakhstan and Armenia. Kyrgyzstan is also set to join the bloc. 

 

 

MOUNTING PETRODOLLAR MERCANTILISM PRESSURES

 

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Saturday
April 18th
2015

MISH SHEDLOCK TALKS AMERICA'S PENSION PROBLEM

 

"Mish" Shedlock

 

SPECIAL GUEST: MIKE ("Mish") SHEDLOCK , Publisher of the Global Economic Analysis Blog.

An espoused self educated Austrian Economist,  Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Read more at http://globaleconomicanalysis.blogspot.com

OPEN ACCESS

MISH SHEDLOCK TALKS

AMERICA'S PENSION PROBLEM

Published 04-18-15

Mish Shedlock talks about the magnitude of the mounting Pension Problem in America and uses his home state of Illinois as a prime example. According to a State Budget Solutions, last year’s state unfunded pensions reached an all-time high of $4.7 trillion. This funding gap state public pension plans are underfunded by $4.7 trillion, up from $4.1 trillion in 2013. Overall, the combined plans' funded status has dipped three percentage points to 36%. Split among all Americans, the unfunded liability is over $15,000 per person.

PENDING PENSION CRISIS

"Illinois Pension's in general are 39% funded! This is after this massive rally we have had since 2009 in financial assets. Some of the worst ones are only about 20% funded."

"Various cities in Illinois have problems, Chicago being one of them. The City of Chicago has a huge pension crisis right now. We have things in Illinois like "Home Rule Taxes" where cities can levy their own taxes in addition to the state. That is why we have varying sales tax that range anywhere from 6.25% to 10%, depending on locality."

"I have been working with the Illinois Policy Institute on pension and bankruptcy issues. There are a number of cities in Illinois that are ready to file bankruptcy. The problem is they can't file bankruptcy because the state doesn't allow it."

"The fundamental problem is they have made more promises than they can possibly keep!"

GAMING THE SYSTEM

The problem is "you have police and fire workers who can retire after 20 years ... and collect up to 70% of their earnings based on the 5 highest years salaries. We see a lot of pension spiking in the last few years where for example police work overtime (which counts towards their best five years) so these workers stand to collect far more in retirement (total years in retirement) than they actually ever made while working (total years worked).

"Tax payers are actually funding the employees portion of the pensions by excessive wages and direct contributions ".

"Chicago floated General Obligation Bonds to fund current expenses. That is illegal! We have bonds here in Illinois that are called tax exempt on the basis they are supposed to be funding long term infrastructure expenses that are funding short term needs."

OSCENE PROPERTY TAXES

"Taxes in Illinois are are already obscene. A homeowner on a $600,000 home can expect to pay $14-15,000 per year - every year on property taxes. Do you really own your own home in Illinois?"

"Pensions are so underfunded in Illinois that they are going to go bust in the next slowdown. I believe one (a slowdown) is on the way."

LOOMING CRISIS GLOBALLY

Negative interest rates are sweeping the globe. How will states, cities and towns fund themselves and their pension obligations in an era of potential negative nominal bond rates?

  • Returns on the heavily weighted funds' bond holdings are being potentially destroyed , while
  • State bond offerings are likely to face mounting issues around maintaining investor attraction with such monstrous overhang levels of unfunded pension liabilities.

"How will states, cities and towns fund (attract) long term assets with 15 year negative bonds?"

 

 

 

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Monday
April 6th,
2015

RICK RULE talks FINANCIAL REPRESSION

Rick Rule

 

SPECIAL GUEST: RICK RULE , is Chairman and Chief Executive Officer of Sprott US Holdings, Inc. Mr. Rule is a frequent speaker at industry conferences, and is interviewed for numerous radio, television, print and online media outlets concerning natural resource investment and industry topics. He is frequently quoted and referred by prominent natural resource oriented newsletters and advisories. Mr. Rule has a long experience in many resource sectors including agriculture, alternative energy, forestry, oil and gas, mining and water. Mr. Rule is particularly active in private placement markets, having originated and participated in hundreds of debt and equity transactions with private, pre-public and public companies.

Rick Rule is a no nonsense and frank market participant with sound commonsense from over 40 years of being part of the nature resource sector.

FINANCIAL REPRESSION

"Financial controls or 'trickery' imposed on the public by the state."

"There is certainly financial 'trickery' imposed on us by large financial institutions but they do that utilizing the state or in conjunction with the state. The practical manifestation of Financial Repression are all around us. I would suggest that a large part of the mandate of the Securities and Exchange Commission as an example is to effect barriers to entry to smaller participants in the securities business.

The most egregious forms of Financial Repression are in the first instance:

  • Tax (which many regard as slavery - I don't but regard it as extortion!)
  • The Manipulation of Interest Rates and
  • The Manipulation of the Currency."

"The interest rates payable to savers relative to the real rate of depreciation of the purchasing power of - pick one: the dollar, the euro, the yen - are despicable!"

ALAN GREENSPAN

"As recently as October last year I had the pleasure of listening to Alan Greenspan who ironically (despite the fact he is a vowed libertarian and architect of a lot of this Financial Repression) and he said something very stark too the audience! He said that a sound currency is not consistent with a representative democracy. A sound currency benefits the productive class and savers. In a representative democracy most of the people are spenders. Low interest rates and a depreciating currency aids the spenders and borrowers. It doesn't aid the savers. In that context Financial Repression is understandable and I'm afraid inevitable."

EXTRAORDINARY FAITH & "RETURN FREE RISK"

"We appear to be in a place in history and the economy where there is extraordianary faith in the big thinkers in the world - the Merkels, the Obamas, the Greenspans, the Yellens. It is partly this faith that is allowing them to keep these interest rates this low. It is a belief that the big thinkers of the world "stick handled" societies global financial crisis of 2008 and by managing the levers of the economy, managed to save us from ourselves. I would of course disagree with that diagnosis (but no one cares much what I think). I certainly believe that savers will tire of buying financial instruments that have no real yield. If you think about the value proposition as an example offered up by the bellwether savings instrument world wide (the US 10 Year Treasury) yielding 1.8%. What that means is the Fed absolutely, positively guarantees you 1.8% per year for 10 years. The difficulty I have with that is that even at their ascribed CPI inflation rate, what they are promising you is 20 basis points a year in real yield. Jim Grant famously described that as "Return Free Risk".

INVESTMENT IN LONG TERM PRODUCTIVE ASSETS

Rick Rule feels that the perverse incentives from manipulated data has resulted in a lack of investment within the US in Productive Assets that would allow the employment of technology and the real wages of workers to rise.

The reason is:

1- If you aren't seeing underlining demand and top line sales growth in your business, why would invest in productive capacity?

2- The US Tax Code is anti-growth. Depreciation schedules are much more investor friendly even in socialist countries today that in the US.

GOLD

"I don't know what is going to happen with gold short term". "What will move Gold, Silver, Platinum and Palladium are first and foremost is a reduction in confidence in the US dollar and the US 10 Year Treasury. It important to understand that gold doesn't need to win the war. It just needs to lose the war less badly!"

"Gold has performed admirably outside the US over the last year."

Gold can be seen to be already in a Bull Market globally - except in the US, as a result of a 25% rise in the US dollar.

 

 

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Wednesday
April 8th,
2015

THE NATURE OF WORK

 

Charles Hugh Smith

 

 

Regular Co-Host: CHARLES HUGH SMITH , Author & Publisher of OfTwoMinds.com

OPEN ACCESS

with Charles Hugh Smith & Gordon T Long

32 Minutes - 16 Slides

Charles Hugh Smith and Gordon T Long discuss the changing global nature of work.

INNOVATION & INTELLECTUAL CAPITAL

THE NEW OWNERSHIP SOCIETY

 

Collaboration  +  Shared Ownership of Income Streams =  New Model of Work

 

NEW COLLABORATIVE GLOBAL ENTERPRISES

SUMMARY

  • “Fewer, Smarter Workers”
  • You Must Create the Work and Own the Value Proposition
  • Innovation is Paramount

"The Web is the New “Wild West”!

 

 

 

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Monday
April 6th,
2015

LEO KOLIVAKIS talks PENSION POVERTY & INEQUALITY

Leo Kolivakis

 

 

SPECIAL GUEST: LEO KOLIVAKIS , is an independent senior pension and investment analyst having worked on both the buy and sell-side. He has researched and invested in traditional and alternative asset classes at two of the largest public pension funds in Canada, the Caisse de He has also consulted to the Treasury Board Secretariat of Canada on the governance of the Federal Public Service Pension Plan (2007) and been invited to speak at the Standing Committee on Finance (2009) and the Senate Standing Committee on Banking, Commerce and Trade (2010) to discuss Canada's pension system. Leo Kolivakis is editor and publisher the PensionPulse.blogspot.com

Leo Kolivakis brings a unique perspective to Pensions having worked on both the Buy & Sell side as a Pension Plan analyst.

TITANIC GLOBAL BATTLE

Kolivakis sees a titanic battle going on around the world between Inflation & Deflation with the world shifting due to demographics, private / public debt problems and a global jobs crisis. As a result he sees bond yields falling because it is resulting in no inflation. "The bond market is rightly concerned about tight fiscal policy and austerity in a world of low growth, low inflation (possibly deflation) for a prolonged period of time". "I am more worried about what is going on in China .. if you have a boom-bust scenario in China, the potential to import deflation (ie through lower goods prices, currency devaluation etc) is a significant concern".

PENSIONS IN PERIL

"I believe there is a Private and Public Pension Crisis in America that needs to be openly discussed by US citizens & politicians. The private savings crisis in America shows the median 401K balance is under $20,000 and somewhere around $76,000 for people 60-65 years of age. That is definitely not enough money to retire comfortably for the rest of your life!"

"In the private sector where corporations are cutting defined benefit programs and going to low cost defined contribution plans, there is another crisis happening." People are being forced to take on the responsibility of pension investment management decisions.

"Individuals are now caring the risk of their retirement!"

"What people don't realize is the shift to Defined Contributions is very deflationary. People simply don't spend as much as they do on Defined Benefits when they have known fixed incomes."

GOVERNANCE PROBLEMS

"There is a huge problem with the Public Pension Funds in the United States. The problem focuses around the governance model. It is all wrong! They have way too much political interference. They don't have proper pension fund plan managers that can take internal actions, lower the costs of the funds and ... match assets with liabilities"

"The US needs to consider privatizing Social Security and creating independent investment boards."

"What is going on in the US right now is you have a lot of investment consulting shops that are typically forcing these public pension funds to invest in very high fee, high risk private equity / hedge funds. That is fine for the Private Equity Funds and Hedge Funds but it is not in the best interest of these public pension funds. I don't think it is. As a matter of fact I know it is not!"

"The US really needs to reform its Public Pension Plans. To introduce shared risk models so that the risk of the plan is shared between the stakeholders (i.e. the employees), the government and the pension. They need to reform the governance so they start to pay the pension plan managers properly to manage more and more of the assets internally".

"Pension Investments Are Fueling Inequality! The migration of Pension Plans to Alternative Investments such as Private Equity / Hedge Funds are contributing to the growth in Inequality"

PENSION POVERTY

  1. DEFINED BENEFITS - A massive underfunding problem between $7 - $10T
  2. CONTRIBUTORY BENEFITS - Median 401K Levels of $18,400 are 'orders of magnitude' short,
  3. SELF FUNDING - IRA and Roth Plans are not earning the levels of income required for retirement. Market draw-downs have seriously impaired long term growth,
  4. SAVINGS RATES - Falling Real Disposable Income is increasingly limiting already extremely low personal savings rates.

 

 

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Tuesday
March 24th
2015

SURPRISES & DISAPPOINTMENTS BEGIN

John Rubino

 

SPECIAL GUEST HOST: JOHN RUBINO, Author & Publisher of DollarCollapse.com

OPEN ACCESS

 

SURPRISES & DISAPPOINTMENTS BEGIN!

with John Rubino & Gordon T Long

Published 03-24-15

36 Minute Video

John Rubino and Gordon T Long discuss the overwhelming number of negative economic surprises and disappointments presently occurring.

Against this backdrop within this 36 minute video, they consider what is holding the markets up, how long this is likely to continue and what to expect from the central bankers going forward.

Both are very optimistic about the future but not before the capitalist system is allowed to do its magic of clearing out malinvestment and then through price discovery and the correct pricing risk, allow investment to return and propel the global economy forward.

 

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Monday
March 23rd,
2015

GUIDO HULSMANN talks FINANCIAL REPRESSION

Guido Hulsmann

 

 

SPECIAL GUEST: Jörg Guido Hülsmann , is a professor of economics at the University of Angers in France and adherent of the Austrian School. He has edited six books and is the author of The Ethics of Money Production and Mises: The Last Knight of Liberalism. He has translated several renowned economics books into German and written many articles in English, French, and German. He is a contributor to scholarly journals such as the Quarterly Journal of Austrian EconomicsThe Independent ReviewProcesos de Mercado, and the Journal of Markets and Morality, as well as to magazines and newspapers such as La Tribune (France), Finanz und Wirtschaft (Switzerland), Le Temps(Switzerland), Wiener Zeitung (Austria), and eigentümlich frei (Germany).

Professor Hülsmann is the director of the Austrian Research Seminar in Paris.

FINANCIAL REPRESSION

"Financial Repression is the name we give to all the different government interventions in which governments seek to improve their own bargaining position with financial markets."

"As a consequence of Financial Repression (that is of government intervention) people use their savings differently than they would otherwise have used. Therefore different people benefit from those savings (most probably the government itself) to a greater extent than otherwise would have been the case."

FINANCIAL REGULATION

"The most surprising developments have been regulation, like the Dodd-Frank Act, Basel III, FATCA. They are pretty intrusive. These regulations have been sold to the public as necessary to control the financial markets, which is certainly the case but this is one side, the other is precisely the cause. Governments control the markets and can force Insurance Companies, Banks, Investment Trusts to use their funds in a certain way that governments are then ready to benefit from. This is very often at the expense of the savers."

EXPECTED TRENDS

INCREASED REGULATIONS

The amount of paperwork and red tape that will be required to comply with expanding regulations is already growing dramatically. "We already require by law in Europe, for example, for an Investment Fund to have a Risk Officer who reports directly to the Ministry of Finance. It is absolutely mind boggling and it makes it very difficult for people to continue doing business profitably - it makes it quite miserable unless you are a big firm!" "These rules boil down to squeezing all small and even medium sized businesses out of business!"

'FORCED LENDING TO THE STATE OF FORCED SAVINGS'

"I expect a trend that will become much larger and more important in the future is what I call "Forced Lending to the State of Forced Savings!" Professor Hulsmann sees Pensions as being a particularly attractive target for this sort of trend.

PRICE RIGGING

We have already seen this most evidently in the area of Precious Metals price rigging. "This is because they are the natural alternative to hold savings outside of Financial Markets and Real Estate Markets! Both are artificially bloated thanks to central bank policy."... "it is natural that people turn to Precious Metals because there is no counterparty risk".

LEGAL PRIVILEGE

"Under a fiat money standard, governments (or their central banks) may obligate themselves to bail out, with increased issues of standard money, any bank or any major bank in distress. In the late nineteenth century, the principle became accepted that the central bank must act as the "lender of last resort", which will lend money freely to banks threatened with failure. Another recent American device to abolish the confidence limitation on bank credit is "deposit insurance", whereby the government guar­antees to furnish paper money to redeem the banks’ demand li­abilities. These and similar devices remove the market brakes on rampant credit expansion.

According to Hülsmann, there are four groups of legal privileges granted by the state (usually more than one is granted):

  • Legalized Counterfeiting - the promises of banks are allowed to be more "elastic". For example, a coin marked "an ounce of gold" will be allowed to have any amount of gold or none, and can have any meaning. Banknotes were named "promises to pay", but were obscure on the details.
  • Monopoly - only some monetary products may be produced by law, like a specific metal; or only the banknotes or coins of a certain bank. This limits the freedom of choice of users of money and benefits the producers and first recipients at the detriment of others.
  • Legal Tender is a money, that must be accepted in exchanges under a predefined price. Some monies may be driven out of the market due to Gresham's Law.
  • Legalized Suspension of Payments allows banks to avoid paying their obligations, while receiving payments from their debtors. If a bank is freed from contractual obligations to redeem its money and it is also legal tender, its banknotes become genuine paper money.

With legal privileges the banks are allowed to behave more irresponsibly, which increases moral hazard.

PERMANENT POSITIVE PRICE INFLATION RATE

"Without a Fiat Currency system it is impossible to create a permanent positive price inflation rate. With the gold standard the tendency for the price level was generally deflationary... a constantly declining price levels."

"If you have declining prices then there is a very strong incentive for savers to not worry about any financial investments at all, but to just save in the form of cash ... when you have constantly increasing prices... holding cash becomes suicidal for savers. You then have only two choices. Buy Real Estate or Financial Titles. You get promises of remuneration for your savings so you are partially compensated for the lose of purchasing power."

"Deflationary Recessions are a healing process - it is what precisely gets the economy back in touch with the real world and allow you to move forward event more forcibly!

 

Please link to the page of our Austrian research seminar:

AND ask your readers to get in touch with me (jgh@guidohulsmann.com) to make a donation.

All donations are tax-deductable.

 

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Thursday
March 19th,
2015

MARSHALL AUERBACK talks FINANCIAL REPRESSION

Marshall Auerback

 

 

SPECIAL GUEST: MARSHALL AUERBACK , Director of Institutional Partnerships, Institute for New Economic Thinking. Auerback has over 20 years of experience in the investment management business. He served as a director and global portfolio strategist for the Canada-based fund management group Pinetree Capital. He also was head of economic research for Madison Street Partners, a Denver-based investment management group, and he worked as an economic consultant to PIMCO, the world’s largest bond fund management group.  In addition, Auerback is a Research Associate at the Levy Economics Institute of Bard College and a Research Fellow for the Economists for Peace and Security. (http://www.epsusa.org)

Previously, Auerback managed the Prudent Global Fixed Income Fund for David W. Tice & Associates and assisted with the management of the Prudent Bear Fund. He also worked as an international economics strategist for Veneroso Associates, which provided macroeconomic strategy to a number of leading institutional investors. Prior to that, Auerback ran an emerging markets fund for Tiedemann Investment Group in New York. He began his finance career as an investment manager at GT Management, focusing on the markets of Japan, Australia, and the Pacific Rim, while based in Hong Kong and then Tokyo.

Auerback graduated magna cum laude from Queen’s University in Canada and received a post-graduate masters degree from Oxford University.

FINANCIAL REPRESSION

"Financial Repression can be a fairly loaded word. I think you can say that anytime you have a central bank which is a monopoly of anything, which can establish a price, you can have repression. I am less concerned with the labels and more concerned with the fact that we have been in response to this unprecedented crisis, been increasingly undertaking exotic experiments on behalf of the central banks. Most notably Quantitative Easing. It has had the effect of repressing interest rates or keeping them low. This of course is great for borrowers, but has the unintended by-product of depriving people of income."

A FLAWED SYSTEM

Financial Repression is an experiment that " is flawed in terms of the economics behind it. I don't think it does much to help elevate aggregate demand (spending power) and it turns out to be a large implicit subsidy for the financial sector."

"As far as I am concerned we are already over-financed as an economy and do too much for the banks anyway. It is really a fundamentally mistaken policy approach!"

TRENDS SINCE THE FINANCIAL CRISIS

"We have had three rounds of Quantitative Easing by the Fed, we have undertaken similar policies in Japan and more recently in Europe. If you look at the impact it has been rather minimal! The Japanese economy is still pretty stagnant. The US is growing but I believe that has less to do with QE and more to do with the fact that we had a fairly robust fiscal policy response after the crisis in 2009. Likewise in Europe we have been mired in depression like numbers which is worse than anything we had in the 1930s. It hasn't worked but we keep trying it."

"The economics behind it are flawed. it is based on the notion that if a bank buys a bond and puts reserves into the banking system that somehow it can encourage the banker to lend. We actually don't lend out reserves and are only used for interbank lending amongst banks. Also lending is a two way process. You have to have a credit worthy borrower and a credit worthy lender. If you have individuals or business that are piled down with debt they may not be very credit worthy or they may be less inclined to take on more debt"

"You want to engender rising employment, rising income so people aren't as reliant on credit. I think that is the problem our system has had over the last 30 years. We have become Credit centric versus Income centric!"

"We have been conducting this 'pulmonary resuscitation' to a fundamentally dead financial system rather than use the money to revive the economy and transition it into more productive economic activity."

CONTROL FRAUD

"When you have an economy that is over financialized and banks account for a disproportionate amounts of activity, and you have a compensation incentive system that is highly dependent on share price appreciation, then you provide a very perverse incentive for business not to invest in productive business affairs but to use excessive cash to buyback shares."

"What is worse is you begin to use all sorts of accounting tricks. This is what Professor Bill Black calls 'Control Fraud' . You get a form of casino capitalism. Actually, the casinos in Las Vegas are regulated more favorably than the banks are."

PRIVATE DEBT BUILD-UP

Marshall Auerback believes we have had excessive build-up in Corporate and Household debt. "When you have a demand shock, then servicing that debt becomes a problem. You end up with a large build-up of public debt in response." Unfortunately those who benefited now want cuts to things like Medicare that were not the cause of the problem. "Its a pretty perverse example of the wrong headed people running our system."

EMPLOYMENT - JOB GUARANTEE PROGRAM

TIME FOR A NEW APPROACH ON UNEMPLOYMENT: GOVERNMENT AS EMPLOYER OF LAST RESORT  By Marshall Auerback

At 10.2%, official American unemployment is now at its highest level since 1983 (http://finance.yahoo.com/news/Jobless-rate-tops-10-pct-for-apf-563122944.html?x=0&.v=8 ). 

Nearly 16 million people can't find jobs even though we are constantly being told that the worst recession since the Great Depression has officially ended. Yet instead of trying to revive the productive economy, most of the Obama Administration’s recover efforts still remain focused on cardio-shock treatment for Wall Street. Additionally, the President still seems curiously hamstrung by his Herbert Hoover-like devotion to fiscal rectitude: he wants to spend without “adding one dime to the budget deficit”, as he announced at his Congressional address on health care in September, even though deficits are a natural consequence of slowing economic growth, falling tax revenues and higher social welfare payments. 

To all of the chicken-littles (including the President) who fret about “excessive” government spending, we would simply point out that it is far better to deploy government spending in a way which REDUCES unemployment, rather than arises as a consequence of it.  We therefore suggest a new approach:

Government as Employer of Last Resort (ELR) or a Job Guarantee program.

The U.S. Government can proceed directly to zero unemployment by hiring all of the labor that cannot find private sector employment.  Furthermore, by fixing the wage paid under this JG program at a level that does not disrupt existing labor markets, i.e., a wage level close to the existing minimum wage, substantive price stability can be expected. Other benefits could be provided, including vacation and sick leave, and contributions to Social Security and, most importantly, health care benefits, providing scope for a bottom up reform of the current patchwork health care system.

Government as employer of last resort would not be introducing another element of intrusive bureaucracy into our economy, but simply better utilizing the existing stock of unemployed, now dependent on the public purse – especially the chronically long term unemployed. The current system we have relies on unemployed labor and excess capacity to try to dampen wage and price increases; however, it pays unemployed labor for not working and allows that labor to depreciate and develop behaviors that act as a barrier to future private sector employment.  Social spending on the unemployed prevents aggregate demand from collapsing into a depression-like state, but little is done to enhance future growth and demand, which can be done via the JG by providing them with employment, greater education and higher skill levels.  

The JG program would allow for the elimination of many existing government welfare payments for anyone not specifically targeted for exemption, and would command greater political legitimacy, as society places a high value on work as the means through which individuals earn a livelihood. Minimum wage legislation would no longer be needed as it would be established via the JG. Labor would welcome the safety net of a guaranteed job, and business would recognize the benefit of a pool of available labor it could draw from at some spread to the government wage paid to JG employees. Additionally, the guaranteed public service job would be a counter- cyclical influence, automatically increasing government employment and spending as jobs were lost in the private sector, and decreasing government jobs and spending as the private sector expanded. It would therefore remain a permanent feature of our economy, in effect acting as a buffer stock to put a floor under unemployment, whilst maintaining price stability whereby government offers a fixed wage which does not “outbid” the private sector, but simply creates a stabilizing floor and thereby prevents deflation.

ELR is desired because a more or less free market system does not (and, perhaps, cannot) continuously generate true full employment.  No civilized nation should allow a large portion of its population to go without adequate food, clothing and shelter.  Best of all is that the program would be creating a stock of EMPLOYED people, rather than a buffered stock of unemployed, where social capital depletes rapidly, and several long-term social pathologies develop.  The current policies clearly are not working; it’s time to try something that can put as many Americans as possible into productive employment.

 

 

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Wednesday
March 18th,
2015

KRISTINA HOOPER talks FINANCIAL REPRESSION

Kristina Hooper

 

 

SPECIAL GUEST: KRISTINA HOOPER, CFP, CAIA, CIMA, ChFC Managing Director, US Investment Strategist, Head of US Capital Markets Research & Strategy. Kristina Hooper is a managing director, US Investment Strategist and Head of US Capital Markets Research & Strategy with Allianz Global Investors, which she joined in 1998. She provides financial professionals and their clients with updates on financial-market performance, market trends, economic trends and financial-planning concepts. Ms. Hooper has appeared on CNBC and Reuters TV and is regularly quoted in The Wall Street JournalInvestor’s Business DailyReuters and other financial-news publications. She has 18 years of investment-industry experience and previously worked in product management at UBS (formerly PaineWebber) and at MetLife. Ms. Hooper has a B.A., cum laude, from Wellesley College; a J.D. from Pace University School of Law, where she was a Trustees’ Merit Scholar; and an M.B.A. in finance from New York University’s Leonard N. Stern School of Business, where she was a Teaching Fellow in macroeconomics and organizational behavior. Ms. Hooper holds the Certified Financial Planner, Chartered Alternative Investment Analyst, Certified Investment Management Analyst and Chartered Financial Consultant designations. She is a CFA Level II candidate.


FINANCIAL REPRESSION

What is financial repression?

Government actions (lower interest rates, increased regulations, etc.) to reduce debt while maintaining inflation

Goal: Create negative real (after-inflation) returns and inflate away public debt by forcing real rates below GDP growth

Why does it matter to investors?

It’s a “stealth tax” that systematically strips wealth; “safe” investments no longer generate enough income

It rewards debtors and punishes savers—especially retirees

Financial repression: It’s happening now around the globe

A Financial Repression checklist:

  • Extremely low key interest rates and bond yields
  • Central bank purchases of government bonds
  • Political pressure on banks to purchase government bonds
  • Nationalization of select banks
  • Repression-friendly regulatory measures
  • Restrictions on foreign capital movements
  • Pension asset transfers to governments

 

 

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Tuesday
March 17th,
2015

DOUG NOLAND talks FINANCIAL REPRESSION

Doug Nolan

 

 

SPECIAL GUEST: DOUGLAS C.NOLAND , Former Vice President, Federated Income Securities Trust and serves as senior portfolio manager of Federated Prudent Bear Fund, Federated Prudent DollarBear Fund and Federated Market Opportunity Fund. Before joining Federated, Doug was employed with David Tice & Associates, Inc. where he served as an assistant portfolio manager and strategist of Prudent B F Bear Fund and Prudent Global Income Fund. He earned a bachelor’s degree in accounting and finance from the University of Oregon and a master’s of business administration from Indiana University.

 

FINANCIAL REPRESSION

"Financial Repression is fundamental to current policy to try and sustain a global credit bubble... Policies have become ever more desperate as the credit bubble has gone global! It is a matter of policy makers distorting the incentives, especially the financial incentives. It is particularly painful for savers. Policy makers want to drive money out of savers into risk markets by creating incentives for speculation and leveraging to reflate the system and generate significant credit growth."

"It is flawed economic doctrine, flawed policy making and goes back a long way."

  • After the 1987 Stock Market Crash the Greenspan Fed flooded the market with liquidity,
  • We then had the late 80's excesses and that bubble burst,
  • In the early 90;s the Greenspan Fed came in and aggressively slashed interest rates and created a steep yield curve so the banks could borrow cheap and lend dear,
  • It created leveraged speculation,
  • We have been in serial bubbles ever since then. Each gets bigger and each post reflationary effort is even more extraordinary.
  • The 'Once in 100 Year Flood' was not the 2008 Crisis. We are in an even bigger bubble now. It is a Global Bubble. It is at the heart of money and credit. When the next crisis occurs the policies of Financial Repression won't have much of an impact unfortunately.

THE MARKET BASED CREDIT SYSTEM

"Back in the 1990's I was obsessed with trying to understand how an impaired banking system from the early 1990's morphed into this new age financial system that was fueling historic prosperity and a bull market. By the late 1990's I was convinced we had fundamentally changed finance. That uniquely for the first time in history we had global credit that was unconstrained. The quality and quantity of credit was unrestrained. There was no gold standard, there was no Bretton Woods Monetary regime, there was not even any ad hoc. dollar reserve system to restrain credit. Unlike historically when credit was dominated by bank lending, this new credit that developed in the 1990's was market based - securitization, Fannie Mae, Freddie Mac, Derivatives, Wall Street Finance. I was convinced that credit which is unstable would see this new credit highly unstable."

"I believed the government would reign this credit in. I had no inkling that the government would accommodate this type of credit and use this type of credit for reflationary policy. That is really how it got away from them! Accommodating financial leveraging and speculation etc."

WE HAVE DISREGARDED THE VULNERABILITIES OF CAPITALISM

"I am very much a free market person. I want the market to dictate price. As much as possible I want the government out of it. I look at the Financial Sphere and Economic Sphere. The Financial Sphere needs to be carefully regulated. You cannot have unconstrained credit! You cannot have a Financial Sphere that inflates at a whim because that distorts the pricing mechanism."

"I fear that when the crisis collapses the system it is going to be folks like us and our listeners who will have defend Capitalism by saying:

"Capitalism wasn't to blame. It was a run away Financial Sphere and poor Policy making in managing money & credit that was the culprit!"

Capitalism is not flawed but instead has vulnerabilities. We cannot disregard these vulnerabilities. These vulnerabilities are in Credit. We have disregarded the vulnerabilities within Capitalism. We have not separated the real economy pricing mechanism which operates very differently in the Financial Sphere.

This extensive discussion covers a wide range of subjects including:

  • THE BUILD-UP OF SYSTEMIC RISK
  • A CRISIS OF CONFIDENCE IS AHEAD
  • WHY WE HAVE RECORD ARTIFICIAL HOUSEHOLD WEALTH
  • FINANCIAL FRAGILITY - As long as Credit is expanding things looks good. But it camouflages the underlying financial fragility.
  • 2008 WAS ABOUT PRIVATE CREDIT - THE NEXT CRISIS WILL BE ABOUT PUBLIC CREDIT
  • THE GLOBAL BUBBLE HAS NOW BEEN PIERCED

"You can now expect the unexpected from Policy Makers"

 

 

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Sunday
March 15th,
2015

PETER BOOCKVAR talks FINANCIAL REPRESSION

Peter Boockvar

 

 

SPECIAL GUEST: PETER BOOCKVAR Managing Director, Chief Market Analyst with The Lindsey Group, a macro economic and market research firm. Prior to joining The Lindsey Group, Peter spent a brief time at Omega Advisors, a New York based hedge fund, as a macro analyst and portfolio manager. Before this, he was a partner at Miller Tabak & Co for 18 years where he was recently the equity strategist and a portfolio manager with Miller Tabak Advisors. He joined Donaldson, Lufkin and Jenrette in 1992 in their corporate bond research department as a junior analyst. He is also president of OCLI, LLC and OCLI2, LLC, farmland real estate investment funds. He is a CNBC contributor and appears regularly on their network. Peter graduated Magna Cum Laude with a B.B.A. in Finance from George Washington University.


FINANCIAL REPRESSION

"Financial Repression is the artificial suppression of interest rates well below the rate of inflation and well below what they would be otherwise if set by the supply and demand for money. That is what should determine what the cost of money is!"

SUPPLY & DEMAND CONSEQUENCES

"The central banks are pressuring you to act today in some activity that you would otherwise have done tomorrow. They want you to buy a car today, they want you to buy a house today, they want you to buy that stock today - not tomorrow. It just pulls demand activity forward! When this begins activity in the short term accelerates both in terms of both economic activity and higher asset prices. At some point you reach a wall where you have pulled forward so much activity that you have reached the law of diminishing returns!"

"All of this has pulled forward future returns on asset prices, but that doesn't stop asset prices from going higher! ... "You get short term benefits but at the expense of long term costs. You pay for it over the long term."... "What the central bankers actually end up creating is Deflation because of the excess capacity build-up to match the artificially created demand!"

We have Deflation presently in Commodity prices but in the US we have Inflation in Professional Services.

"Central Bankers have 'mucked' up the entire concept of Supply & Demand and price discovery. All the various inputs are 'out of whack relative to where they would be historically!"

POTENTIAL FED RATE INCREASES

"This ends when Inflation actually starts to increase! When Interest Rates do start to rise and in affect take away the printing press of the central bankers. Right now Central Bankers have given themselves license to do what they want because at these low levels of inflation, but at some point the bond market is not going to be so accommodating!"

The Central Bankers are trapped in a policy they can't get out of. It is ridiculous that after 6 years of ZIRP everyone is 'freaking out' over a mere 25 basis point increase.

The Fed's academic econometric models are flashing red over labor market metrics. Therefore they will increase rates in June irrelevant of whether that is actually the right thing to do (assuming you believe the Labor numbers) . That is what guides them.

"The issue is not whether the Fed raises rates but rather the turbulence it causes and what it means to potential future rate hikes."

A MAJOR CORRECTION IS POTENTIALLY JUST BEGINNING

The combined Fed tightening and a changed earnings picture suggest the basis for rising equity markets is no longer there. The Multiple expansion game is not there.

"How far we decline I am not sure. I am not sure where the Yellen 'Put' is. It is an 'out of the money' Put but I am not sure what the strike price is! I don't know if it is 15% or 25% lower. I am pretty sure if we are down 20-25% Yellen will cut rates below where she has them after raising them in June. I would then not be surprised to see another round of QE."

AT SOME POINT THE FED WILL LOSE CONTROL

"We know the Fed lost control of commodity prices. The Fed is trying to generate inflation and commodity prices have gone the exact opposite way! At some point they are also going to lose control of stock prices."

"ECB QE was the final act of Central Bank Largesse!"

"There is literally Monetary Madness Going On!"

 

 

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Monday
March 9th,
2015

WHAT DO THE TRENDS SUGGEST?

 

Charles Hugh Smith

 

 

Regular Co-Host: CHARLES HUGH SMITH , Author & Publisher of OfTwoMinds.com

OPEN ACCESS

with Charles Hugh Smith & Gordon T Long

33 Minutes - 15 Slides

Charles Hugh Smith and Gordon T Long discuss some of the major secular trends occurring today and give their views on what they may be telling us about what might be ahead.

TECTONIC FORCES

  • Private Sector rapidly decentralizing and networking decision making,
  • Public Sector rapidly centralizing and taking more control through laws, regulations, fees, licenses and taxes.

5 TRENDS TO CONSIDER

TECHNOLOGY PRESSURES

 

GROWING DISRUPTIVE PRESSURES TO A FRAGILE SYSTEM

DISRUPTION:

  • Strengthens Robust, Decentralized Systems,
  • Breaks Fragile, Centralized Systems.

 

DESTABILIZING FORCES AT PLAY IN A FRAGILE ECONOMIC ENVIRONMENT!

 

 

 

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Sunday
March 8th,
2015

AMIN RAJAN talks INVESTING IN A DEBT-FUELLED WORLD

Amin Rajan

 

 

SPECIAL GUEST: PROF. AMIN RAJAN Chief Executive of CREATE (Centre for Research and Technology in Europe)-Research – A network of prominent researchers undertaking high level advisory assignments for governments, global banks, fund managers, multinational companies and international bodies such as the EU, OECD and ILO. He is a visiting professor at the Centre for Leadership Studies at Exeter University, and an associate fellow at Oxford University’s Said Business School. He is an expert on employment and workforce diversity and is one of the most sought after speakers on the future of work, organization and society and its leadership implications.

Prof Rajan has also acted as a senior consultant to companies such as ABN-AMRO, Aegon Group, Barclays, BlackRock, BP, BT, Citibank, Credit Suisse, Deutsche Bank, EDS, Fiat, Ford, GSK, HSBC, IBM, ING Bank, JPMorgan Asset management, Legal & General plc, Lloyds Bank, Microsoft, Morgan Stanley, Motorola, Principal Global investors, RBC Dexia, Royal Bank of Scotland, Prudential, Rolls Royce, Royal SunAlliance, T.Rowe Price, Shell, Storehouse Group and UBS.

FINANCIAL REPRESSION

"Financial Repression is a device used by governments to liquidate their debt."

Financial Repression uses low interest rates (which reduces their financing costs) and inflation (which vaporizes its debt). The Negative Real Interest Rates which the two in combination create, has in the modern era been the way governments reduced their debt burdens.

"Financial Repression brings about an arbitrary redistribution of wealth."

Today it is the governments only politically realistic option.

The critical problem is holders of fixed income debt get hurt where there is a redistribution of wealth:

  1. From Savers to Borrowers.
  2. From Pension Plans to Governments

EXPECTED DURATION

Historically we should expect Financial Repression to last anywhere from 15 to 50 Years. We are now into only the seventh year! In Prof Rajan's opinion "this show has a long shelf life and likely to run another 5 - 10 years"

 Download Report

PENSION PLANS - Entering "De-Accumulation Stage"

Aging demographics in the debt burdened developed economies is exaggerating the effects of Financial Repression because of the need for Investment Income products by retirees.

Pension Plans are now going into the "De-Accumulation Stage" where there is more money going out of the plan than is going in. Pension plans face problems of both under contribution levels and De-accumulation resulting in serious underfunding positions.

THE RETIREMENT TSUNAMI

The "Baby Boomer' Generation is in the process of retiring. There will be 78 Million in the US and 84 Million. Europe which accounts for 8% of the global population and 25% of global output accounts for a massive 48% of global welfare budgets.

The shift from Defined Benefits (DB) to Defined Contributions (DC) is about the "Personalization of Risk" so we are told, "so people can be 'empowered' and will be less dependent on their employers plans". Instead Prof Rajan argues we have "Personalization of risk has a big downside. It transfers risk from those who couldn’t manage it to those who don’t understand it!"

SOLUTIONS ALPHA

Product alpha is about beating the markets, solutions alpha is however about meeting investors’ predefined needs.

"Solutions Alpha is not about trying to beat the market nor the crowd, because these markets are going to end in tears at some stage. So when thinking about retirement think about exactly what your needs are then think about asset classes that will help you meet these needs. 'Shoot-The-Lights-Out' returns are no longer an option without huge amounts of risk!"

Solutions alpha will remain the epicenter of innovation. Solutions Alpha requires looking for asset classes that deliver:

  1. Regular Income,
  2. Inflation Protection,
  3. Low Volatility.

Examples would be Rental Real Estate, Infrastructure, Timber, Farm Land and many traditional "hard assets".

LIQUIDITY CRISIS - Volcker Rule Has it 'Preordained'

When the next market correction occurs "liquidity is going to dry up in no time at all because of the Volcker Rule. The inventories of Bonds which the Investment Banks are caring are now one-eight of what they were pre-2008. Any mass exit and there will be no liquidity and prices will drop like a stone!"

OBSERVATION

Prof. Amin Rajan observes that two paradigm changes have occurred in capitalism:

  1. Capitalism has Lost Social Expression - It is no Longer Improving and Benefiting Society as a Whole
  2. Over Financialization - Financial Engineering and Trading for Profits had taken control of Capitalism versus Investing In Productive Assets for increasing productivity. Markets no longer channel capital from savers to investments in productive assets. There are neither savers nor productive assets involved in the process but rather financialization.

 

 

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Monday
March 1st,
2015

MEB FABER talks GLOBAL VALUE

 

Mebane Faber

 

 

SPECIAL GUEST: MEBANE T. FABERChief Investment Officer and Portfolio Manager

Mr. Faber is a co-founder and the Chief Investment Officer of Cambria Investment Management.  Faber is the manager of Cambria’s ETFs, separate accounts and private investment funds for accredited investors.  Mr. Faber has authored numerous white papers and three books: Shareholder Yield, The Ivy Portfolio, and Global Value.   He is a frequent speaker and writer on investment strategies and has been featured in Barron’sThe New York Times, and The New Yorker. Mr. Faber graduated from the University of Virginia with a double major in Engineering Science and Biology.

FINANCIAL REPRESSION

"An environment where interest raters are lower than inflation and you have a low or even negative interest rate environment which helps someone and hurts someone else. It hurts savers but is good for borrowers and people who have a lot of debt. The inflation eats away at that debt. It helps someone like the US government"

"Stocks and bonds like high real interest rates. They typically don't like low or negative real interest rates". Other asset classes like gold like negative real rates and have over the last decade, but not so much over the last couple of years."

VALUE & MOMENTUM

Faber likes both value and momentum and believes they can work together as part of a global portfolio, particularly where they intersect. Cambria uses Shiller's 10 Year CAPE benchmark to look at equities. It is typically around 17 and is now around 27 in the US. It presently shows a lot of great valuations around the world however momentum has been in US stocks, bonds and real estate. "Right now we see a lot of opportunity, but particularly abroad".

THE "HOME COUNTRY" BIAS

The US is only about 50% of global market cap but most US investors have a 'hometown bias" of having 70% of their portfolio in US securities. Faber has found that it consistently ranges from as low as 65 to as high as 85%. Meanwhile, when considered on a GDP basis the US is only about a fifth to 25% and on a valuation basis is the third most expensive. This would suggest the US has a headwind, especially after a six year run. An exposure of at least half to foreign investment seems more reasonable to Meb Faber.

DEVELOPED AND EMERGING COUNTRIES

We start with a universe of about 45 countries with reasonable liquidity. One of Cambria's funds buys the eleven cheapest countries in the world. Faber's analysis suggests avoiding countries that create large bubbles can be a critically important when viewed over the longer term because of the size of the inevitable corrections."

"One of the emotional challenges and why value works is because it is hard to do."

CLASSIC MISTAKES

  1. "Not Getting Out of Your Own Way!"
    • Getting Caught Up In Performance,
    • Not Having a Plan,
    • Trying to Time Your Investments,
    • Realistic Expectations.
  2. "Not Paying Attention to Fees"
  3. "Too Wedded to An Investment Style"
    • Need to be Asset Class Agnostic

 

 

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