Well here we go again listening to all the amazing scientists explain to us why we can now increase rates with the strengthening dollar, and again for the third or maybe fourth time this year they are predicting a rate hike. Mainly we see bull markets smashing up the prices, and an appreciation of the US dollar. This is showing economists that the economy is in an upward swing. In a sense there is “economic growth” occurring in the United States, and the Chinese markets have stabilized. At least that is what they say. Unemployment rates are low, Chinese liquidation is halted, and everything seems to be great with the american assault on thrift.
First of all the unemployment rates are dropping and the economy is “expanding”. However, there has not been any actual job growth since the recession. Rather, the dropping of the unemployment is just a re-alignment of workers in response to the inflationary measures to combat the recession. After the Chinese dollar dump there was an influx of inflationary prices for the Chinese markets, not any stable growth. With the excess reserves the United States fed initially bought back debt from overseas and by doing so it appreciated the value of the dollar, as compared to the euro. This is why the prices have been rising in certain indexes that accept currency baskets for shares. This is not any actual growth, this is market reaction to inflationary signs of adjustment due to the massive devaluation of the Chinese bull, now bearish, market.
So, then, what does that tell us? We are seeing a shift of growth into full time work from part time work and this should not be happening. Especially with wage hikes, and with obamacare regulations. Since full time job growth is rising, it means labor is transitioning. However, labor is transitioning to full time work, while the regulations are calling for more part time work. This means that we are witnessing a transition of the labor market, which occurs during an inflationary boom. When the market feels inflationary pressure it expands, not in a “market oriented” fashion based on the outcome of the market but an artificial price increase. That price increase is unsustainable because the markets have been continually propped up by global policy, and the when the prices fully re-aligns to what the market actually calls for it will collapse from the pressure of the over bloated full time industry.
This is the sign of a coming recession, no matter what other scientists say. Remember, recessions happen when no one expects it. So diversify your currency, brace for the worse because probably after the holidays, and after the Chinese lift their security restraints, the market will fight back with vengeance and we will be moving into the “next recession”, completely oblivious to the fact we never fully recovered from the last.
Does the functionality of the market even matter to our leading bureaucrats, or is it just another tool to lie about, and to blame for, when their programs of corruption do not reach the outcome they intended. Bernie Sanders made some interesting remarks during the democratic debate in regards to the growth of income inequality, and reasoned as to why monopolized theft (taxation) was necessary to dismantle the rapid growth of income inequality in the United States.
Well let’s take a minute and look at the reasons as to why income inequality has grown so rapidly in the past 40 years. We see a trend in the 1970s of the top wealth earners growth in regards of real wealth, rather the middle and lower class wages tend to stagnate. This occurs around the year 1976, as the top one percent start taking more and more. As for many members of society that lack an understanding in economic theory, it is very easy to fall into the Sanders slip as to why this is occurring, I.E. capitalism. Sanders makes a true assessment in regards to the cronyism that is coming out of Washington, and he definitely knows that special interest in Washington is a major key factor in the growth of income inequality. However, where does Sanders collapse? When he makes the statement that capitalism is the vessel for the rising trend of cronyism, and not statism.
In 1976 the United States officially changed its definition as to what the dollar was, I.E. no longer redeemable in gold. This meant that the central bank of the United States could now expand the dollar supply without any negative effects, besides of course the forced redemption to be paid by taxes and the robbery of the public wealth. When the central bank expands the money supply, without any specie backing, the public is now responsible for the debt that goes into the the monetary expansion, and they pay for through forms of income taxation as well as price inflation. Meaning, initially the expansion of a fiat currency depresses the standard of living for the public while increases the wealth of who that monetary expansion went to in the first place.
So, is it really any unjustifiable assumption to make when faced with why income inequality is becoming more rampant. It is not due to capitalism, rather just the opposite. It is due to governmental subsidies to the rich through monetary policies that are only possible by the theft of the majority public. So why, then, is Bernie Sanders blaming private property? His tax proposal is going to target hedge fund managers wealth, and force them to pay for public schooling for the majority of the United States. In a sense, all he is going to do is force the hedge funds to relocate their assets, increase state brainwashing facilities (public schools), increase the cost of living through heavily rampant taxation, increase outsourced business, etc etc. In a sense, Bernie Sanders will be levying socialist dependency reforms (nanny state policies) and subsidize the lower class into being duped by his policies, and dismantle the upper class while retaining the profit for the elite party leaders, i.e. Bernie Sanders.
Rather, in his quest to target the source of income inequality, the big banks he suggested that the banks were not too big to fail and that needs to stop. Indeed, no bank should be too big to fail, no bank should have absolute market power. Then why did Bernie dismantle the Audit The Fed bill? Is Bernie Sanders being authentic in his quest to dismantle mega banks, or is he just another demagogue that will destroy our rights, trample our liberties, and expand the very vessel that has been the cause of income inequality. The Federal Reserve system.
Major holders of US Debt, China, Russia, And Brazil have been massively liquidating US debt in what is reported as the biggest decline of US debt since “1978”. This means that other countries are initially dumping the dollar, which could be a strategic ploy by the BRICS banks. In a sense, these massive holders of debt were soaking up all the inflation the dollar devaluation has spurred, and retrospectively now amongst market slowdowns they are dumping the dollar in an attempt to increase yield returns with their domestic currency. In a sense we are seeing a global tightening of fiscal policy in response to the over devaluation, rather the United States is expanding.
However, mainstream economists are arguing that there are no market signs to even put on the breaks of expansionary policy, considering we are not seeing signs of growth it means that we need to continue to expand the money supply to stimulate the market contraction of 07 still to this day. Regardless of the ineptness of understanding markets or how they work, these economists do not even realize that we are facing a contractionary economy because we have devalued our dollar for far too long.
While initially boosting fiat paper currency and enacting an overvalued exchange rate we have created a currency bubble, and the foreign countries see this as true. So, with this historic dollar dump can it spark the stages of an overvalued currency bubble to pop? In a sense, considering we are now expanding the money supply at such a rapid pace, and yet we can no longer look at global markets to soak up the inflation of the dollar, this petrodollar will begin contract.
As we started last week, we saw an increase in the NYSE index. This means that rather than a liquidation of domestic companies we are seeing a rise in asset prices. Is this rise in asset prices due to the dumping of the dollar? Is it due to the 0% rate change by Janet Yellen? Well, its probably a mixture of both, in a sense when these major inflation soaking countries turn around and liquidate their US debt, that debt must go somewhere. When that debt started hitting the NYSE it caused a surge of asset prices, and with that surge companies will now be soaking up the inflation of the central banks reckless printing, as opposed to foreign countries. In a sense, the already overinflated assets inside the NYSE, the ones that were in the process of liquidating the bad assets are now soaking up more inflation, and ultimately doing the opposite of what the market should do.
This means, the stock market is yet again going into another hike in its index, then will turn around and we will see a massive liquidation in assets. As for China, it is a smart move to liquidate US bonds, however they are now taking the yuan they received from the US bond liquidation and attempting to now boost up the Shanghai Index, in a way to attempt to trick the traders of the shanghai composite. This will cause the Shanghai prices to rise while the government boosts up the prices, however, in the next few months the chinese markets will take a massive hit once the security controls are lifted. When this massive hit happens, we will see an export of capital from Shanghai, and an inflow of capital to other countries.
Many a free marketeer has made projections as to when this bubble infested economy may implode. Some rely on the weakening purchasing power in the world’s currencies as central banks devalue their currencies at an ever accelerating rate. Others look eastward as China begins to compete with the western central banking status quo. We see an emerging Shanghai Gold Exchange that will become the physical counter to the COMEX’s paper gold. The Asian Infrastructure Investment Bank (AIIB) which will be diametrically opposed to the IMF’s regime of extortion. An ever faltering Eurozone with Greece only being the salad before the main course. All of this may be true, but others are looking internally at the banking system itself. As a wise investor once said, “History may not repeat, but it does rhyme. In market terms, it tends to rhyme every seven years.” Let us not forget the catalyst that brought about the 2008 Financial Crisis, Lehman Brothers.
More exactly let us look at Deutsche Bank. The fly in the banking regime’s ointment of bail outs, equity and derivative purchases and quantitative easing has been in the Eurozone’s strongest economy all along. Deutsche Bank has been compared to Lehman Brothers on many levels, mainly because of it’s huge exposure to derivatives. With more than $75 trillion in derivative bets, it out paces a giant like JP Morgan by $5 trillion and the German GDP by twenty times. Many market analysts believe Deutsche Bank’s exposure is being severely understated. As Dave Kranzler of Investment Research Dynamics pointed out, DB isn’t like Lehman before the 2008 blow-up, it’s more like 2008 x 10. Deutsche Bank has declared an asset value of $1.5 trillion on top of $67 billion of net worth. A large portion of its assets are in loans and investment vehicles that are connected to Glencore (in trouble), Volkswagen (in trouble), the energy sector (in decline) and hard hit emerging market companies. If Deutsche Bank missed the actual market value of these assets by a simple 5%, its total net worth will be wiped out. For more on this listen to the podcast, “Deutsche Bank and the Coming Global Financial Catastrophe”.
If Deutsche Bank begins to falter the need for the ECB to create Euros will accelerate at an alarming rate. Think Wiemar. The Federal Reserve will probably be called upon for an emergency rescue as all of these zombie banks are being kept alive from the same beating heart. Think about those four words that killed capitalism, “Too Big To Fail”. The cascade of failures will be reminiscent of 2008, but much worse. In 2008 the middle class was wiped out, this implosion will wipe out the investor class. Once the dust settles only a handful of criminals will be left with all of any wealth that may be left after a global reset.
China is hedging its bet on its heavy gold and silver position. They hope as the west’s fiat regime descends into a fiery hell, the markets will turn east for a rescue and some simulation of sanity. But the western central banking power elite will not simply “let” a failure occur. Tensions in the middle east and Eurasia are a foreshadow that these crazies are gearing up for global war. Do not be surprised if a false flag event happens just as the markets begin to falter. Many Keynesian economists believe that a war spending regime could rescue a failing economy. They wrongly assumed WWII ended the Great Depression. Actually, as economist Robert Higgs pointed out in his book, “Depression, War and Cold War” the increase in private sector investment after the war is what ended the Great Depression. But governments rarely let facts influence their decisions when it comes to war.
In concluding, lets not ignore the aforementioned problems with the economy. That is, the currency wars, growing welfare dependency, distortions and manipulations in the investment markets and so on. These are all relevant and are cracks in the foundation of this shaky house of cards. Deutsche Bank still looms large as the biggest blip on the radar at this time. Never underestimate the level of incompetence of these elitists. In 2014, Deutsche Bank hired Tom Humphrey, a two decade executive at Lehman Brothers Holdings, Inc. to head the German’s investment-banking and securities business in North America. See, we’re all in good hands.