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Category Archives: Economic collapse

Economics: Science or Séance?


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Janet Yellen calls Federal Reserve meeting to order

Jim Cramer is a former hedge fund manager and best-selling author. He’s the host of CNBC’s Mad Money TV show and a co-founder of TheStreet, Inc.

According to CNBC, with oil prices on the rise, Cramer recently used technician Carolyn Boroden’s charts to try to determine,

[W]hether the uptick in crude oil prices is just a one-off [an aberration or anomaly] or if it’s time to get bullish.”

Note that when it comes to investing in crude oil, Cramer apparently sees just two choices:

1) Stand pat since the rising price is a “one-off” and nothing major is really happening; or,

2) Jump in with both feet since the oil market is really changing to become significantly bullish.

However, there’s a third possibility that Cramer has ignored but others who invest in crude oil should consider: while crude oil’s near-term price is volatile and might go up or down, crude oil’s mid- to long-term price might be falling.

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Silver’s Future


CrystalBall1NEWSMAX reports that in A.D. 2012, America’s largest investment bank (JPMorgan Chase & Co.) held 5 million ounces of silver. Today, JPM holds a staggering 91.5 million ounces of silver! In just 5 years, JPM increased their stockpile 1700%.

In the first three months of A.D. 2017, JPM reportedly purchased 9.4 million ounces of silver. That’s an average purchase of over 3 million ounces per month. JPM clearly believes that silver’s price will rise.

Since A.D. 2000, silver has enjoyed an average annual growth of 10%. Plus, we know that silver can go to $48 per ounce, as it did in 1980 and 2011.”

More, since 2000, silver supplies have been in a deficit every single year. That means the supply of silver has not kept up with the growing demand for over 17 years and is unlikely to do so in the foreseeable future. Diminished supplies coupled with growing demand means higher prices.

Financial expert John Rubino believes that silver could exceed $100 per ounce. According to Rubino, the silver market is so small that if even a relatively modest amount of currency (“a few tens of billions of dollars”) flows into the silver market, the price of silver could start jumping by “$5 or $10 per ounce per day”.

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Consumer Confidence Foretells Economic Crash?


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Consumer Confidence

 

Anyone who stops to think about it knows that the fundamental strategy for generating investment profits is to buy an investment when the price is low and sell when that investment’s price is high. The name of that strategy is “buy-low/sell-high”. The difference between the “buy low” price (say, $100) and the “sell high” price (say $300) is the measure of the profit ($200, in this example) made on the investment.

No one seeking investment profits can refute the “buy-low/sell-high” strategy. On considering that strategy, virtually everyone will say, “Well, of course,” or “Obviously” or even “Well, duh”.

However, the buy-low/sell-high” strategy isn’t as simple as it sounds. There’s a problem: investors like to behave like herd animals. We are generally and genetically afraid to act independently. We feel more comfortable believing someone else (especially an “expert”) than we do in trusting our own eyes and ears. Insofar as that tendency is prevalent, investors are prone to ignore the buy-low/sell-high strategy and instead “buy high” (when virtually everyone is buying and says “now’s the time to buy”) and “sell low” (when virtually everyone is selling at a low price). This “sell-low/buy-high” strategy is a sure formula for going broke. I.e., most investors tend to “buy high” (when the investment’s price is $300) and “sell low” (when the price is $100) and thereby suffer a $200 loss.

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What Can’t Be Paid, Won’t Be Paid


National Debt Creditors About to Lose their Assets [courtesy Google Image]

National Debt Creditors About to Lose their Assets
[courtesy Google Image]

I’ve argued for five years that the U.S. National Debt is too great to ever be repaid in full, or even by half.  My personal guesstimate is that at least 80%–and probably 90%–of the National Debt will inevitably be repudiated.  That repudiation will take the form of hyperinflation, express repudiation (“Sorry, boys–but we’re too broke to pay that debt.”), or perhaps even WWIII (a good war could wipe out virtually all memory and enforce-ability of the National Debt.).

Here’s a graphic that illustrates my argument.  If you take a few minutes to view the graphic, you’ll see the size of the U.S. National Debt is:

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1. Larger than the 500 largest public companies in America;

2. Larger than all assets managed by the world’s top seven money managers;

3.  25X larger than all global oil exports in 2015;

4. 155x larger than all gold mined globally in a year; and, my personal favorite:

5. Larger than all of the world’s physical currency, gold, silver, and bitcoin combined.
In other words, there’s not enough actual money and currency in the world to repay the U.S. National Debt.
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The Only Question


$20 TRILLION National Debt! [courtesy Google Images]

$20 TRILLION National Debt!
[courtesy Google Images]

On September 30th, A.D. 2016, the U.S. government closed out the 2016 fiscal year with an “official” National Debt of $19,573,444,713,936.79.

Makes me laugh.

Government can calculate the U.S. National Debt to the penny. How responsible!

And yet, government has no idea what happened to $6.5 trillion that was given to the Pentagon and subsequently disappeared.

In any case, the National Debt grew by $1,422,827,047,452.46 ($1.4 trillion) in fiscal 2016. That averaged out to over $100 billion in deficit spending per month.

That annual deficit spending increase has been a de facto $12,000 subsidy for every American household.

The fiscal 2016 deficit spending (debt) amounts to roughly 7.5% of the entire US economy. Without that 7.5% in debt-based “stimulation,” where do you suppose the economy would be right now?

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Promises, Promises


What Can't Be Paid, Won't be Paid [courtesy Google Images]

What Can’t Be Paid,
Won’t be Paid
[courtesy Google Images]

Last month (July), AFP published an article entitled “Japan PM unveils $266 bn stimulus plan to boost economy”. According to that article,

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Japan’s government and central bank have come under increasing pressure to do more for the economy.

“Therefore, [in July] Japan’s government announced a stimulus package worth more than 28 trillion yen ($266 billion) in its latest attempt to fire up the lukewarm economy . . . .”

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By itself, $266 billion in government stimulus doesn’t strike me as significant. Back around 2008-2009, the U.S. government injected $800 billion into the U.S. economy under QE1. Later, under QE3, the government injected $80 billion per month (almost $1 trillion per year) into the economy. These injections may have postponed a U.S. economic depression, but they didn’t generate much of an economic recovery.

Given that Japan is the world’s third largest economy, I don’t expect $266 billion (just one-third of the $800 billion injected during the U.S. QE1) to have much more effect on Japan’s economy than QE1 had on the U.S. economy.

This implies that Prime Minister Abe’s proposed “stimulus package” is more of a gesture to “do something” rather than a real economic remedy for the stagnating Japanese economy.

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Monetary Madness Part II—Perpetual Bonds


The Cure of Economic Calamity: Looney Tune Economics [courtesy Google Images]

The Cure for Economic Calamity:
Looney Tune Economics
[courtesy Google Images]

As seen in the previous article, the total value of negative-interest rate bonds has jumped from nothing to $13 trillion in just two years.

Although governments issuing negative interest rates bonds don’t have to pay interest on those bonds, they still have to repay most of the principal.

What a bummer. Wouldn’t it be great if someone invented a government bond that not only didn’t have to pay interest (as with negative interest rate bonds) but also didn’t even have to repay the principal?

Well, folks, they appear to have done just that. They’re called “perpetual bonds”. They’re hot off the press, and the concept seems straight out of Looney Tunes.

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Last month, Gold-Eagle.com published an article entitled “Gold and the Perpetual Bonds Era”. The subject was “perpetual bonds”–a concept I’d heard of for the first time only about a week earlier.

Judging from what I’d already heard and the Gold-Eagle article, it’s apparent that “perpetual bonds” are—like “consumerism,” debt-based currency, sub-prime loans, fractional reserve banking, deficit financing, negative interest rates, market manipulation, and “helicopter money”—just another manifestation of the madness that’s inherent in the concept of fiat, debt-based currency—and of government’s desperation to do something, try anything, that might work to avoid or postpone a coming economic collapse.

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