Crypto-Currencies, Bitcoin, Litecoin, Alt-Coins

Donald J. Trump – The Fall Guy?

Posted on Updated on

President Donald J. Trump
Now that the furore regarding the election of Donald Trump, has died down a little, even if the American (and some of Britain’s) mainstream media are still pointing the finger of blame at that reluctant bastion of Rothschild Banking – Russia for supposedly meddling in American Politics…

I’m surprised that the Russians haven’t been accused of somehow manipulating the British electorate into voting to leave the EU. And don’t get me started on Tony Blair’s calls to “ignore the Brexit vote” in the most undemocratic statement to come out of any politician’s mouth since, Mein Kampf. But I digress…

As we settle into the dog-days of summer, and pieces of the jig-saw are given to us, we are slowly building a picture of this Brave New World, but it won’t be the New World Order, of which so many in the west have spoken in the tail end of the last millennium. When George Herbert Walker Bush talked of his New World Order. He spoke of a world in which Bankers, and those they funded were in control, a place where financial manipulation, and “fiat money” were the norm, a place controlled by the few. But this world that is being fashioned today, is by opposing forces, and the control is slowly moving east, and their ideals are in the ascendancy.

The change has been a long time coming, and those planning this takeover of the world, had almost managed it, but some of those who were not too keen on being ruled by a cabal of Banksters with Zionist tendencies, and a plan, some think,  to rid the world of 6½billion souls, decided against it.

To that end, they constructed a complete system to match the Western Banker Cabal’s.[See Pic:]Banker System -Old-versus-New

The Asian Infrastructure Investment Bank (AIIB), the People’s Bank of China (PBoC), The BRICS Bank, The Special Drawing Right (SDR) and the Shanghai Gold Exchange, are all designed to end control by those parallel systems in the west. Even the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system, has a replica – CIPS (Cross-Border Interbank Payment System) but the first thing that needs to be done, is to reconcile the global accounts. The SDR was first set up in 1969. During the 1970s, as the IMF began managing world currency flows, the SDR was a basket of five original currencies of the American Dollar, British Pound, Japanese Yen, and originally the French Franc, and German Mark. These latter two were replaced by the Euro, in 1999, and in 2016 the Chinese Renminbi also joined the fray, but China wants Gold to be part of the mix too – upto 40%.  And sitting astride this new system, the old order – The Bank of International Settlements, headquartered as it is in Switzerland.

Switzerland, independent for over 500 years, and with its mountainous land-mass impregnable to all but the most foolhardy. Every citizen is a member of the armed forces, and is required to hold firearms at home. And that’s where most of the world’s gold has been stored at some time or other, including, some say, the gold taken by Nazis during the second world war.

So, as part of this global reconciliation, all debts national and global, are to be settled. Chinese bonds issued in 1913, which were not honoured following the takeover by Chairman Mao, in Communist China. Bond Debts of the Federal Reserve issued in the 1929-36 period, for the purchase of Silver from the People’s Republic of China, Indonesian Gold, stolen from Asian nations during WWII by the Japanese; Gold perhaps taken by Germany during the Pogrom, and the Gold taken by President Ferdinand Marcos, which he found during his time in the Philippines, that was stashed there by the Japanese, and perhaps even the Gold taken from Middle-eastern nations following the American and NATO incursions into the middle-east in the last two decades. All Global debts will be reconciled, and a clean slate wiped.

But this means that America loses its “Hegemonic Power”, in the world, and has to close most of its more than 130 Armed Force bases around the world, but how will the strength of a nation’s currency be calculated. How will a country whose only export is Rice, be compared say, with a country who exports are many and varied? Those where the sweat of years of study, and foregone pleasures, to learn the intricacies and curious characteristics of the many metals and rare-earths that make up modern electronic products? And to add to this mix of uncertainties, there’s these new currencies emerging in the crypto currency world.

What of Bitcoin, Litecoin, Ethereum and the other crypto-currencies?

As things stand, the Banks, at first didn’t know what to make of crypto-currencies, and were sceptical of them. But, now some of  of the biggest U.S. and even  British Banks are trying to see where they can make use of them. this has led to a plethora of alt-coins and technologies making use of the blockchain. Barclays Bank, even used the blockchain in International Trade Finance, when it assisted in a Butter and Cheese trade, between Ireland and the Asian island nation of Seychelles worth $100,000.  The Deal according to Bill Bonner’s Agora Finance, changed 400 years of Banking supremacy, and arcane paper based systems. The deal which normally would take weeks, was settled in just 4 days. But in time, this could be reduced from circa 20 days, to just an afternoon.
So, as blockchain technology takes off, what will happen in the future. In 2016, here’s what happened…

Cryptocurrencies in 2016

Currency -Annual Gains

  1. Bitcoin               126%
  2. Ether                  741%
  3. Monero             2,759%
  4. Dash                   228%
  5. NeosCoin           7,092%
  6. MaidSafeCoin   598%
  7. ShadowCash     1,041%
  8. Coin(0)               5,047%
  9. Emercoin          143%
  10. SysCoin              1,964%
  11. Gulden               1,920%
  12. Bitcrystals         354%
  13. SIBCoin              2,649%
  14. Counterparty    178%
  15. ShadowCash     1,041%
  16. Storjcoin X        724%
  17. Nexus                 903%
  18. Potcoin               2,326%
  19. Synereo              478%
  20. LoMoCoin          309%
  21. SuperNET          148%
  22. NAV Coin            1,816%
  23. SolarCoin           389%
  24. Boolberry          549%
  25. SIBCoin               2,649%
  26. Expanse             395%
  27. Aeon                   459%
  28. BitBay                 498%
  29. CureCoin            324%
  30. Burst                   624%
  31. Viacoin               835%
  32. CloakCoin          396%
  33. CorgiCoin           11,664%

And 2017, is looking to be just as good, as every national and international financial calamity pushes more and more people into these electronic, digital currencies. As details of the Brexit, vote came through, Bitcoin rose. Venezuela’s financial mayhem? Bitcoin rose… China’s attempt to strangle Bitcoin via trading rules? You guessed it.
As money continues to flood out of China, the communist government just announced new crackdowns. It plans to limit gold imports… force Chinese companies to check with a regulator before moving $5 million overseas (it was $50 million)… and force citizens to report any money transfers over $10,000.

Banking regulators the world over, are trying to squeeze the monetary system, and like silly putty, it just emerges somewhere else, between slippery fingers. But the banks are not resting on their laurels. Nor the Venture capitalists.

Some of the top venture capitalists have invested over $1.3 billion in crypto-currency startups.  That includes people like Peter Thiel, co-founder of PayPal and the first outside investor in Facebook… Marc Andreessen – a Netscape co-founder and one of Silicon Valley’s most influential venture capitalists.  Richard Branson, Yahoo Founder Jerry Yang and Salesforce CEO Marc Benioff and Google Ventures.

Over 80% of the world’s biggest banks, including JPMorgan Chase, Barclays, Citigroup, and Goldman Sachs are starting to invest in crypto-currency technology.  JPMorgan alone is putting up as much as $9 billion.

So hear what Clif High is saying about it

So what does all this have to do with Donald J Trump?

To my mind, as we look at the U.S. and British stock-markets, we are at all time highs, and the amount of air in this bubble, is stretching the balloon to the point of the big POP…
Here Peter Schiff, who predicted the last “Great Recession” before those who are supposed to know better would admit that a recession was coming. Just months before that last recession, Ben Bernanke was telling the Americans, how great things were.

And here below, Schiff gives a little bit of history of the problems of the 1970s, and then goes on to say WHY the problems remain, and have still not been addressed, but also why the next downturn, will be as big, if not bigger, than the 1930s American depression, because the world is now so inextricably linked, in ways that it wasn’t 80 years ago. And the antidote for many Americans, is to go to Crypto-currencies. But whilst I have crypto-currencies and some PMs, I believe that ultimately, the stock-market, housing market, and bond market will fall perhaps 60-80% in two stages. first they will fall circa 25-40%, before a small recovery, then a further 30-40% taking us towards the final denouement.

And it will probably happen on Trump’s watch. THAT’s why Trump is the “Fall Guy”, and crypto and gold and silver will be the people’s saviour, as the world monetary system resets, and Gold once more becomes part of the monetary system. But silver will be what it has been for generations – millennia even – once more it will be the “people’s money”.

However, if you want to hedge your bets, and get crypto currencies… Which ones? That is a little harder to predict. No doubt Bitcoin, Litecoin and Ethereum are probable winners, though we can’t be absolutely sure, so the answer is to get several – and you can get  11 crypto-currencies – including Bitcoin and Litecoin – FREE  with daily deposits, (and learn a little more about them)

Here –>>> Https://www.qoinpro.com/.

If you like this piece, please share it, and like us on Facebook, Twitter or wherever you hang out.

Global Capitalism, in the Age of No Capital

Posted on Updated on

DollarsThis piece began out of musings on how the current world economic system, could be overturned (or if we were starting from a clean slate) beginning with a new system. to develop a system, that serves everyone.

Some people have been speaking of the end of Capitalism, as though what we have now is Capitalism.

(Like HERE in the UK Guardian)

https://www.theguardian.com/books/2015/jul/17/postcapitalism-end-of-capitalism-begun.

But, I just think many people don’t really understand what Capitalism is…

The word, “Capitalism”,  derives from the word “Capital”.  This word is just a posher, more accountant friendly version of the word for “savings”.  And to have savings, you have to have a monetary system, that means that the money in everyday use (currency) retains its value over very long periods of time, and is garnered from the excess production by workers, or businesses who save that money.

This money can then be pooled, typically by Banks in individual savings accounts, to allow larger projects to be funded, and corporations to borrow this, to grow their business, or to finance those larger projects.

Of course, there can be savings made by corporations too, who produce in excess of current demand, and this “Retained Earnings” to use accountant speak, is then available for investment in new products or services, which adds value to the business, and enriches the lives of the many.

But, going back over 45 years to the 1970s, when I was a teenager, and just starting out in life, there were two forms of accounts. The type of account where money was deposited for immediate use (a current account) and money that was “saved for a rainy day” and was typically deposited into a “Savings Account”.  In some instances, these were 90 day accounts.  These accounts paid a higher rate of interest, than normal savings accounts, which were called “time deposits”, because these funds were deposited for a period of time – in this case 90 days.

That meant that the depositor, had to give 90 days’ notice, to get access to their savings, or forfeit interest earned.

However, back on 15th August, 1971, the last link between real money (Gold and Silver) was severed, when Richard Milhous Nixon, President of the U.S., closed the “Gold Window” temporarily, which meant that foreign nations could no longer demand Gold in exchange for dollars at the Bretton Woods rate of $35.00 for 1 oz of Gold.

That day ushered in Corporataucracy, though we didn’t realise it at the time.  In a world where a Bank can just press a few keys on a computer, or have its Central Bank (owned by these ultra-large corporate banks) create funds out of thin air by “Computer Keystrokes”, or the “Printing Press”, the large corporations and governments, can borrow increasingly larger sums of currency, without others having to make those savings out of current production or consumption.   This disconnect, means that current consumption, does not have to be forgone to pay for some new project, which reduces the need for savings – but also reduces interest rates, as capital is no longer needed, but it also tends over time to lead to increasing concentration of the means of production, into the hands of those with access to this line of credit, and the desire for huge capital sums.

The rise of these mega-corporations like Apple, Google, Facebook, Uber, Walmart, and here in the UK, BAe, TESCO, Sainsbury’s, Asda, and Morrisons, have all risen, by building large concentrated infrastructure, which is capital intensive.  Most of these corporations can borrow large sums cheaply, because their revenue streams, are constant, and thus they quickly create surpluses in their respective bank accounts.

For these large corporations, that money going into their current accounts, which is vulnerable to loss – IF – their Bank has financial difficulties so needs to be used or given back to shareholders, but is vulnerable, until such time..  So for many companies, this almost forces them to invest in newer premises, and growth in newer overseas markets, to use that currency, or risk financial loss as it sits there earning next to zero interest.

The alternative would be to return that surplus to the investors, which would raise share-prices, and distribute income, but in a world where money is too cheap because it is limited only by the bank’s willingness to hit the right keys on their computers, corporations who have large and dominant shareholdings by the families that created them, have little need for raising risk capital from shareholders, and thus the risk is transferred from the company, (and its shareholders) to the lending institution, while the share price rises, increase the power and wealth of these family shareholders. VW/Audi, Porsche, TESCO, Morrisons, and Sainsbury, are all businesses, where the original family owners are still large shareholders of the business. This is particularly true where the huge sums borrowed jeopardize the stability of the Bank doing the lending and a Black Swan event places a strain on the Banking system.

This risk, is later transferred to the State as Banks use their own freely created Capital, to acquire other smaller banks, consolidating markets, and then when they become systemic, they transfer that risk to the tax-payers as they become “Too Big to Fail”, “Too Big to Jail”.

I believe, that a number of events in the economic, political and financial spheres, may be about to undermine this.

Banking – Politics – Economics –  Changes Making the World a Different Place…

The rise of Islam, as I mentioned HERE: , threatens the wider economy, as religious doctrines amongst its followers, limit the number and range of economic activities which in themselves, could destabilise the western world’s economies to the point of failure.

However, this post is about the other events.

Bullion and Bitcoin.

The last eight years, has seen the rise of Crypto-currencies, like Bitcoin, and a concern among many about the extra $3.5Trillion, put into the monetary system, by the Federal Reserve, driving the rise in demand for precious metals Gold and Silver.

Bitcoin, and other crypto-currencies, could be about to usurp the power of the Bankers (See: My Post on this topic HERE , which if it occurs, means that because the Banks can’t just lend more and more money (currency) into existence, they have to earn the trust of depositors, and use their limited funds wisely. But inevitably, these inventive Bankers will use their political influence to ensure that they get the outcome they need. Probably outlawing crypto-currency trading, and using it for certain purposes.

The East, has for the last one and a half decades, been accumulating Gold in Central Bank Vaults, while the West, has been ridding itself of this substance, that Keynes according to legend discussed as a “barbarous relic”.

However, Gold as the final arbiter of the value of money (See This:  or This – ) can stem the flow of funds to large corporations, who would have to rely on available funds from savers, and increased economic activity, would have to produce those surpluses, which means the increasingly automated world, will need more savers, driving up real wages, to buy the products and services of automation, their prices would need to be more competitive too growing sales, and as Henry Ford recognised, salaries would need to rise encouraging savings to accrue.

And for those past the first flush of youth, or perhaps in retirement, the savings rates paid would go up, and that would help those having to live on retirement incomes.

But, it might also mean,  that for the first time in a long time, America, would not be able to rampage around the world, laying down the law, and interfering in all those countries, that require expensive military hardware, that the U.S.  can just buy with the funny money, that is hot off the computer or printing presses.

Mike Maloney’s take on things is that the printing presses will drive the world to take up the SDR sooner rather than later. The SDR, for those who don’t know it, is the “Special Drawing Right”. It was first created by the IMF during the 1970s, as a certificate for a basket of the major currencies. And the Yuan, has just been added to that basket, but the Chinese are pushing to add Gold to it too, and that will drive demand for Gold.

You can see Mike Maloney with David Morgan, precious metals dealer, and financial guru, discussing matters here:

And for when this happens, Silver will ride on Gold’s coat-tails, But the rush for silver will probably overtake the price rise in gold, by a factor of 5 to 1… And this explains WHY…

Lazy Sunday Afternoon… How The Corporataucracy is Losing Its Grip

Posted on Updated on

It’s late Sunday, 26th February, and the oligarchy is fuming…

The large Corporate behemoths are concerned, because the Free Media – that’s the media, that doesn’t have corporate sponsorship, or control by the legacy media channels, are winning, and the legacy media are losing their power to control us, and that’s really pissing them off..

The old News media channels, the main-stream media, such as here in the UK – BBC, and ITN, and the 6 major U.S. news channels, are pissed off, because the so-called FAKE News channels, are in reality more in tune with what is really going on in the world, than the mainstream media channels would have you think.

For example:

Did you know that last year, President Obama and Secretary of State, John Kerry, BOTH visited Antarctica? Now why is is that news? And if not, WHY not?

So, what was the Presidential interest in Antarctica all of a sudden? Is it because back in 1512, Turkish Admiral Piri-Reis, produced a map of Antarctica, which accurately showed the land-mass including rivers and lakes under the 1 mile deep sheet of ice? Did, President Obama, want to check it out for himself – just to be sure?

Or was it because back in 1946/7 the U.S. had Operation High-jump, which was organised by Rear Admiral Richard E. Byrd, Jr., and led by Rear Admiral Richard H. Cruzen, USN, Commanding Officer, Task Force 68.

Operation High-jump commenced 26 August 1946 and ended in late February 1947. Task Force 68 included 4,700 men, 13 ships, and 33 aircraft. Operation High-jump’s primary mission was allegedly, to establish the Antarctic research base Little America IV.

High-jump’s objectives, according to the U.S. Navy report of the operation, were:

Training personnel and testing equipment in frigid conditions;
Consolidating and extending the United States’ sovereignty over the largest practicable area of the Antarctic continent (even though this was publicly denied as a goal even before the expedition ended);
Determining the feasibility of establishing, maintaining, and utilizing bases in the Antarctic and investigating possible base sites;
Developing techniques for establishing, maintaining, and utilizing air bases on ice, with particular attention to later applicability of such techniques to operations in interior Greenland, where conditions are comparable to those in the Antarctic;
Amplifying existing stores of knowledge of electromagnetic, geological, geographic, hydrographic, and meteorological propagation conditions in the area;
Supplementary objectives of the Nanook expedition (a smaller equivalent conducted off eastern Greenland). {https://en.wikipedia.org/wiki/Operation_Highjump}

However, what was the real intention of this task force? According to some reports, and at least one guarded comment by Admiral Byrd, the U.S. Task Force, was involved in a military expedition, and ultimately involved in a battle… exactly 70 years ago today.

This particular operation returned early after only two months, allegedly after having a battle with Unidentified Flying and Submersible Objects, which cost this particular task force several ships, men and aircraft.

Was this the first interstellar battle? Or where these flying machines a legacy of work done by German Researchers, who had also allegedly had contact with extra-terrestrials and fled to the Antarctic region to continue their research? This Russian video (with English sub-titles) suggests the former…

So, if the President of the U.S.A goes to Antarctica, via a stop-over in Argentina, why did this not make the evening news? And for the Secretary of State?

It has been stated by some in the Financial elite, that they fear what is coming, and that if they could, they would get “Off Planet”. In fact so many have sought hiding places in far away places such as in New Zealand, or in the Argentinian Andes. That it has driven up land and farm prices. They also have been buying gold, silver and bitcoin, in ever larger quantities, pushing prices up, and stashing large sums in currency in an attempt to minimize the worst affects of what is to come.  Some of these “preppers” have even bought space in what used to be nuclear facilities in what are known as DUMB bases (Deep Underground Military Bases) The Russians, have also allegedly provided sufficient space underground for their whole population, but the U.S. has rather selfishly, only provided sufficient space for approximately 200,000, of its population – those senior military, political and financial elites and their families. In towns near these bases, demand for essentials has sky-rocketed.

But what if any of the above is the reality, and we have been fed a lie, for 70 years, that we are alone in the Galaxy, and that the July 1947 incident in Roswell New Mexico, which was reported originally as a UFO, before it was retracted, was in fact a real inter-stellar craft (or two) that crashed and this was retrieved, along with several alien bodies?

 

We have been told it never happened? Yet the officer involved in the cover-up confided in retirement, to his son, that it really was a cover up and that it really was an extra-terrestrial craft that crashed, and elements of it were taken to PhD students in several universities to examine, in attempts to reverse engineer the technology…

What if the post WWII technological revolution that brought about the Integrated Circuit, the Ceramic silicon wafer that made the PC and smart-phone revolutions that took place 50 or so years later possible, but were in reality reverse engineered technology from alien space-craft?

What would widespread acceptance of this fact mean for established religions when their whole edifice is placed on the crucible of scientific research and found wanting? What will happen to people if the Vatican, or the Mullahs in the middle-east have to re-design their religious texts to explain the unexplainable?

We can but imagine.

But in this WooWoo world, where the previously unscientific paradigms, are over-turned as the implications of this sink in…we could see this world turned upside down, and its finances along with it

Nikola Tesla, dreamed of a world where free energy could be distributed via high-towers such as the Wardencliffe Tower, that was unintentionally funded by J.P Morgan, until he realised what Tesla was upto and had it torn down.  And extra-terrestrial space-craft, will obviously require another paradigm shift, as our oil based economy suffers its own implosion, and the financiers that funded the industry along with it…  After all… if these beings are travelling distances measured in light-years, they aren’t using rockets or burning fossil fuels…  So the oil coal and nuclear industries have much to lose from this paradigm shift…

So… get with the program…

Prepare for the change – Disclosure.

Why Bitcoin could go to $1,000,000+

Posted on Updated on

Bitcoin

Time to get your Bitcoin, Gold and Silver?

Ever since I first heard of Bitcoin, my moods have oscillated with emotional highs and lows between optimism, and pessimism. I got involved about thirty months ago, mostly out of mere curiosity.  However, I first learned of Bitcoin, about 7 years ago, and perhaps because back then, there was a lot of hype, I was highly suspicious of it. I asked myself… What was this new technology? What are its implications? What are its strengths or weaknesses? Will it succeed?

Like you I had so many questions. But I didn’t know enough to commit to it.

However, I had some experience of cryptographics when, as a former software developer, early in my studies, I wrote cryptography software using a simple alphabetic replacement system. For those not familiar with this, it was the simplest form, which involves letter substitution.

Let’s take the Alphabet.

ABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrstuvwxyz

GHIJKLMNOPQRSTUVWXYZABCDEFghijklmnopqrstuvwxyzabcdef

As you can see from the above, you can shift each letter a number of times. In the above example from A to G, from B to H, etc. etc., to encrypt or decrypt the text.

As long as you know the shift count, you can simply unscramble the text. This however would be laughed at by any modern cryptographer, worth their salt. We know which letters in the English language are used most frequently, so having a few guesses at the piece of text would quickly, reveal the key (the number of letters shifted – 6 in the above example)

During the second world war, the Germans of course used two characters to denote a character in their encrypted messages, with random coded substitution, and it wasn’t until the British managed to get hold of an Enigma machine from a captured U-boat, to send to Bletchley Park where they worked on the decryption that they were finally able to decrypt the messages, and listen in on German U-boat communications, so helping bring the war to a speedier close. And cryptography is at the heart of global communication, and Bitcoins and other Alt-Coins. It is also at the heart of Apple’s attempts to restrict U.S. authorities from gaining information from devices, that are encrypted, by fighting a court decision forcing it to build software for the authorities to allow access – Apple of course designed its software because of increasing concern at the intrusive political and authoritarian institutions of all Governments, some of whom appear to have carte-blanche access to whatever communication traverses the globe – at least according to Edward Snowden.

Lately however, I have been doing further research into Crypto-Currencies, and both the theory and the practice.

What fired my enthusiasm for this research was listening to an interview, between a sceptic, and an enthusiast.

As a result, I began looking at a number of Web-sites, and following up on this conversation. To see what’s happening in the Bitcoin and crypto-currency space. After much thought, and research, I realised that there are at least 7 Network Effects which might lead to wider acceptance:

1. Speculation –

People buying to make a fast buck. This drove early adoption, taking the price to almost $1200 at one point.

2. Merchants –

Companies accepting it for goods, simply because people hold them, and they are convertible into fiat-currency or money at known rates. In the world there are over 100,000 merchants already accepting the coins, including major providers such as Microsoft, and Target in the U.S..

3. Consumers –

These are using it because merchants are accepting it, and they are now doing so in ways that allow consumers to gain discounts of upto 35%, even on web-sites such as Amazon.

4. Miners –

There are a number of crypto-currency miners, with computing power approaching 1 Exahash, which is about the equivalent of 10,000 of the top 5 supercomputers in the world

5. Developers –

These will use the above processing power to build out the infrastructure, to produce software that is more secure than all the others and to build functionality in the hope of receiving Bitcoins or Fiat.

6. Financialisation –

The Banks and CFTC have already discussed using the Bitcoin Network and blockchain technology for transfer of financial instruments denoted in Bitcoin. And one of Max Keiser’s former regulars, decided to invest heavily in building out the technology for this process almost eliminating Brokers and brokerage fees.

7. World Reserve Currency –

IF, or rather, WHEN the US. Dollar crashes, then people will hold their reserves in an alternative or alternatives. Gold and Silver are obvious candidates, but also increasingly Bitcoin crypto-currency, is a candidate rather than some other Fiat currency, because of the current currency wars, which could turn into trade wars, and then hot wars..

This is still to happen but, the instability in the Middle-East and around Africa, is a sign of things to come.

If the price of Bitcoin, begins to rise towards, four, five, then six figures, more and more people will hold their reserves in Bitcoin, and other fiat currencies will recede in value – including other currencies such as: British Pounds, Euros, Japanese Yen et-al..

This will accelerate the acceptance and expand the wider use of crypto-currencies in general, and Bitcoin in particular. The rise of Bitcoin, and the fall of the U.S. Dollar therefore, will be as much an opinion of the dollar, as it is of Bitcoin

So, as more and more of these people and organisations, developers, merchants, financial organisations, miners and finally those who hold their nation’s reserves increase their use of Bitcoin, then the value will explode exponentially, and the price speculated in the header will be a distinct possibility.

But, the alternatives to Bitcoin – Alt-coins – and of course Gold and Silver may take up some of that slack. Gold appears to be in increasing demand, at least amongst 4 particular countries. India, China, Russia, and Turkey alone out of the world’s 200+ nations, currently (according to Mike Maloney quoting a Zerohedge article on 3/3/2016) are already consuming the entire planetary output of gold – and then some. The excess demand is currently being met by Western Central Banks reserves.

Canada which has suffered in recent months as the oil price has tanked, perhaps made pledges to its people, that were based – at least in part – on an expected almost permanent high oil price, so the fall to circa $30/bbl, and subsequent rise to around $54/bbl is causing problems for those states with Tar-sand production, which is a high production cost energy item, and thus costs may already be exceeding revenue from such operations. Those modest Canadian Gold reserves were apparently sold off in one month or less. The reserves stood at a mere 1.7 tonnes according to February 2016 reports, but by Feb 29th, the remainder was just 77 ounces, which is a pitiful amount. This is down from 1,000 tonnes that the Canadian Central Bank reported in 1965, but since the end of the Bretton Woods agreement (15/8/1971) these have been replaced by U.S. Dollars in the main. It took Canada, 20 years from 1965 to reduce those reserves by 50%, and the last 30years to rid themselves of the rest of this Keynesian Barbarous relic. Which begs the question… What will the Canadian Government use for currency/money, when the dollar collapse occurs?

But what might trigger this Tsunami? Anyone who is not a Keynesian, has to study – observe – what happens in the real world. Economics is one of those dry dusty subjects given to study by essentially – Nerds – I count myself amongst them. The original economists: Adam Smith, John Gresham, Ricardo, and the other early economists, studied markets and what happened in them. They then formulated ideas based on those observations.

But since the dawn of the Federal Reserve, and the end of WWI, economists have been looking for ways to manipulate the economy to serve politicians, who as the old saying goes – “Don’t want it to happen on my watch.” IT, being a recession or a depression.

But what causes depressions? Think about it for a second. A new idea comes along. Lots of people begin to provide that service or product. Lots of small businesses are built. Over time, these small businesses get swallowed up by competition, over decades ultimately half a dozen huge corporations provide that product or service, freeing up people to do other things – (unemployment) and concentrating the industry into a few corporate hands.

When this happens, the unemployed inventive ones with access to capital invent new products or services, to replace, or make better what went before. Perhaps even to the point where what went before, gets replaced almost completely – such as cars replacing trains, which replaced horses and canals. But for the additional products, you need additional consumers, not hundreds of millions, retiring, or on the verge of retirement, looking to save, rather than spend.

Since the end of WWII, the computer has gone through several metamorphoses – from Mainframe, to mini-computer, to PC, to Laptop, to smartphone and tablet computer. They each in their turn improved on previous designs, made them smaller, more productive, cheaper and widely available due to cost reductions.

But for industry to grow (so they can grow the share price) they need new products, new markets, or lower costs, and it is this last item, that means doing either more with the same, or the same with less that is causing the problem… As that means fewer workers. We are at one of those inflexion points. Apple, and Samsung, Sony and just a few others in China and the Far-East, now dominate the smartphone and tablet industry. HP, IBM and other American behemoths have shrunk or got out of the computer business altogether. Britain’s Computer industry has gone from a handful to one, producing designs for chips in smartphones, and tablets (but also increasingly servers for server farms).

The capital sitting in corporate bank accounts should be going into research, but research can take years to produce anything, and corporate execs need to deliver share price rises today, tomorrow, next week, next month, and at the end of the financial year. Not maybe, in three years time if the research proves fruitful. Much easier to buy up a new corporation that has already proved up the technology, and can be tacked on to existing business.

And so to force companies and large holders of capital to invest, we have the prospect and reality of NIRP – Negative Interest Rates Policy – already in place in 3 countries in Europe: Switzerland, Sweden, and Denmark. The ECB and Japan too is trying them, but none of them appear to be working to the extent they would like. In Switzerland, the Tax collecting service even told its taxpayers not to pay up-front, so that the money held on deposit at the banks wouldn’t be “charged”. This is monetary madness. Anyone with 6, 7 or 8 figures in a bank account should be worried. And those living from week to week, or month to month, will need to grow their income rapidly as the dollar declines.

JP Morgan (according to Satyajit Das, finance expert and author of “A Banquet of Consequences”) has speculated – sorry modelled – that -3% (negative 3%) might be necessary for the dollar. But with Bank notes, people can just take that cash out of the bank and keep it under the mattress so to speak. So Central Banks want to get rid of banknotes, and that is why they are starting with large denomination notes – the €500 note, the $100 bill et-al.

India has edged towards this by eliminating the 1,000 and 500 rupee notes, which in a country that still largely uses cash for transactions, and hundreds of millions still don’t have a bank account. This has led to mass demonstrations and mass hysteria. It may lead to social unrest as people rebel against this edict.

The Bankers use euphemisms, and downright lies to attempt to achieve this, but the moment that the U.S. does that, all those dollar bills overseas will return to U.S. shores, and the trickle of deals away from the dollar – the 30 countries that now have bilateral trade deals with China, Russia, India, and the middle-east, for oil, and commodities outside of the dollar, will become a flood – fleeing from the dollar. To what?

We can but speculate, but to my mind, Bitcoin will be one of them, and of course Gold and Silver. Of course, we may yet see governments attempt to outlaw the ownership of Bitcoin, Gold or Silver, just as was tried once before in 1933. THAT moment may arrive far sooner than many think.

Bitcoin – are there any drawbacks? What are the Risks? What if…?

The total number of Bitcoins is limited to 21,000,000,  so I hear, which sounds a lot, until you realise how many transactions there are in the world, and how much economic value people have added to the planet over the centuries. Money therefore is used to value those objects – Buildings, Corporations, and the time value of Labour, to all the products and services we take for granted in our modern world. So a modern money must be the measure we use to assign our value to these. IF therefore, Central Banks can just conjure up currency out of their printing presses, or computers, they are esentially stealing value to be created out of human labour. Whether that is a corporation that took 50 years to build, or it is someone’s work, the value of the currency itself therefore, should also reflect its time value to produce. THAT is why both Gold and Silver served our purposes so well over the millennia.

Think of the worldwide number of large corporations, sky-scrapers, huge mines, roads, motorways, bridges and tunnels built since the dawn of the Industrial age, together with their cost in materials, time, energy, and lives lost. That value runs into the hundreds or even thousands of trillions of U.S. dollars.

$200,000,000,000,000 – is reputedly, the total currency debt of the world – divided by 21,000,000 Bitcoins is 9,523,809.5238095 per Bitcoin, and that is in dollars alone.

This assumes that all other currencies go to zero, and we only use Bitcoin for our financial transactions.

Which means theoretically, it could go higher, when you add in Pounds, Yen, Euros, Rubles, Yuan, Dinar, Riyahls etc. etc.

Of course this is perhaps unrealistic, but not outside the bounds of possibility.

We also need to consider what are the pitfalls.

As Bitcoin is more widely adopted, over time there will be inevitable losses – people storing their coins on a smart-phone or flash-drive and losing it, or not backing it up, or finding out that electronic storage and strong magnets are not a good mix, or someone dying with their coins held in a smartphone, that no-one else knows about, which gets wiped and re-sold on, or given to a partner, relative or someone, who has no real interest in such electronic coins. There will be other ways that currency could be lost, so shrinking the pool of available coins, which might also lead people to not adopting them, out of fear of loss. There are those who speculate the earth could receive an Electro-Magnetic Pulse (EMP) which could lead to a major fault in the global telecomms infrastructure, killing digital coins – but with the Banks and Governments so keen to rid the world of ALL paper currencies, there is little choice except for those stand-bys of the last 5 millennia – Gold, Silver and Bronze.

Could Bitcoin go higher? Will it?

Could Bitcoin really go higher than the $1,000,000 speculated on? These are unknowns. The theoretical maximum of 21 million coins assumes that all the coins are mined, but which according to Trace Mayer, Bitcoin Expert, would take upto 140 years, as the mining rate halves every 4 years. The first such halving was in 2013 – Did this cause a price spike? (Basic law of Supply and Demand?) We don’t know for sure, but possibly; the next such halving is next year in 2017. It is possible that this time, people will front run it this time, to try to maximise their positions ahead of the reduction causing another price spike.

As I have said several times, there are about 80 different crypto-currencies. I hold over 10, and receive daily interest into my crypto-currency accounts – as can you (See below). I also have an app on my smartphone, in which I have deposited some of these coins to spend, with a QR Scan Code to make using them easier, just like I might with ApplePay(®) or the PayPal App and it is possible that I will be able to do this with all the others shortly.

There are already ways to exchange these different crypto-currencies, on exchange sites (listed below)

So, now do you think it is time to maybe check out this new currency system?

Where do I get Bitcoin, or these crypto-currencies?

Bitcoin, is available in so many places now it is almost impossible to recommend one or two sites over others, but the one site I do recommend, mostly because they set-up a number of crypto-currency [Alt-coin] accounts, simultaneously, for the price of an e-mail address, and you receive FREE daily deposits into them – albeit very small sums to begin with, but with loyalty bonuses, increasing with time and other ways to improve deposits. For those keen to promote or evangelise the site, additional bonuses are given in increasing amounts for more referrals.

You can earn upto 10 crypto-currencies, including Bitcoin, and Litecoin FREE at… Qoinpro.com, for the price of an e-mail address. Backing both horses in a two horse race may seem like wasting money or effort, but it depends on your view of risk…and the potential rewards. And in investing circles, NOT losing money is the first rule to financial security.

You can buy Gold and Silver with your crypto-currencies at: https://www.vaultoro.com   or with Fiat at  https://www.bitgold.com  or https://www.libertysilver.ee. At Liberty Silver, because it is based in Estonia, which does not charge V.A.T. on silver coins, as long as you purchase and arrange collection from their site (done via a courier) you can still legally buy your coins VAT free.

And you can trade between different crypto-currencies here at: https://shapeshift.io or at https://btc-e.com or even learn how to trade from your fiat to BTC here http://www.coindesk.com/information/how-can-i-buy-bitcoins/

 

 

I Will Survive – but will you?

Posted on Updated on

Apologies to Gloria Gaynor, for the title and the introduction…It has been some months since my last piece, and there’s been a lot of water under the bridge since then.

There’s a number of reasons for this, not least because I had a heart attack, followed by triple heart by-pass surgery leaving me away from a keyboard, and more interested in my own health, rather than the health of the world economy which was the main one.

But as my health improves, my interest in matters economic, political and financial return.

While the political seismic shift of the U.S.  election, and the inauguration of President Trump has left many foaming at the mouth, because of the media attention and focus on his shortcomings, rather than on their balanced interpretation of what he might bring to the presidency. There are many who see him as a racist, sexist, homophobic xenophobe, and they have little doubt that he will be one step away from being the devil incarnate.

For those away from California, the University Campuses and the metropolitan areas with their somewhat extremist liberal views, that is where jobs and dwindling incomes are the main topic of political discourse as the financialisation of the economy has meant that jobs in Fin-Tech, or Software have done rather well, while mass immigration has pegged workers incomes as a result of Mexicans and other migrants working in the grey economy, and competing for the entry level jobs that historically went to students, before they went onto the middle-management positions in well run corporations, but whereas changes in corporate management structure has meant that many of those well-paid middle-management and engineering jobs, the “high value-added” jobs, have gone with the industry outsourced to the Far-East, and the corporate profits earned overseas, held off-shore as corporation tax is now amongst the highest in the world at 35%. Apple reputedly holds over $1Billion overseas, yet borrows huge sums in the U.S. to reduce earnings and thus taxes at home.

I’ve also been researching Trump’s plans to reform the U.S. through major reformation of the U.S. tax code, which depending on his spending plans, and the revenue neutral elements of the tax code, he may or may not struggle to get through both houses.

What Trump’s victory changes most is the timing of economic collapse because his economic plan is bound to bring a temporary lift, even as it worsens some of the structural flaws. The effect of the flaws that have been written about elsewhere, will take more time to develop than the improvements, but probably not much more time.

So, let’s start with the positives:

Positive Economic Changes That Are Certain To Result From The Trump Triumph

Here is a list of economic changes, which I think are certain to bring a little boost to the US economy in 2017 and will likely delay the apocalyptic predictions:

It is certain that Trump’s tax plan will happen. While it may not happen entirely, something very close to it will certainly happen because Republicans have never seen a tax-reduction plan they didn’t like.

Republicans hold certain economic truisms as tightly as Biblical dogma: they believe tax cuts will pay for themselves and so will not create a huge worsening of the national debt. Every time they make tax cuts, they claim the cuts will stimulate investment, which will stimulate the economy, which means more businesses will produce more revenue, which means there will actually be more tax revenue, not less.

Whilst this may have been true at the end of the second world war, but before the Vietnam war, it hasn’t been true since.

They have never made tax cuts without increasing the federal deficit under any president since. This fact, however, never kills this dogmatic belief. Republicans also believe with religious fervour that targeting tax cuts to the rich in the form of corporate tax breaks and particularly capital gains cuts, will create new jobs and trickle down wealth to the middle class and the poor. The fact that real middle class wealth has stagnated or even shrunk since the mid-eighties, doesn’t seem to have registered.

Belief trumps truth. Since Reagan, when Republicans have control of the entire legislature and the executive branch [and will be changing the balance of the Supreme Court,] it is absolutely certain the world will see major tax reductions that will come as their third and greatest round of trickle-down economics. The plan coauthored by Larry Kudlow has all of his support with conservatives and Republicans, too. Even if Trump were removed from office, most of that plan would be introduced.

The stock market will rise…for a little while, at least. What we DO know from trickle-down economics is that it certainly does stimulate the stock market. The money that is saved on capital gains and corporate taxes and that is repatriated in corporate income from overseas largely goes into speculative gambling in stocks. Very little of it goes into capital formation, investment in new equipment, corporate construction or business expansion.

Even before any of Trump’s proposed changes have happened, we are witnessing how the mere hope of such changes has caused a huge jump of circa 15% in stock-market speculation (both volume and prices) as investors try to reposition themselves for this new reality. There was a brief stock market slump, once people started to question whether Trump’s plans would be enacted, but it didn’t last long because, as soon as Trump got into office, he moved rapidly via serial executive orders to start implementing many of his promises, quickly building faith that he will carry out most of them rapidly and with great determination.

It is unlikely though, that Trump’s infrastructure stimulus plan will make it off the ground in 2017. While Republicans are certain to approve tax breaks, they are not big on massive government spending increases. Trump will find some strong resistance among Republicans to his increased spending; at the same time, Democrats remember well how Republicans battled against Obama’s plans to increase infrastructure spending in order to stimulate the economy. According to junior Republicans who eventually came out against Speaker of the House John Boehner, this was partly because Boehner and the Republican old guard didn’t want Obama to get the credit for economic improvement. They put the good of their party over their nation’s good. So, Trump will likely find a lot of resistance there, too, as Democrats return this tactic.

Spending will certainly increase in one area — the military. Republicans have proven for decades that no deficit is too big if it is going toward building a stronger military especially as the media’s latest bogey-man – Vladimir Putin – receives the public ire, as they are fired up with their false agenda stories of interference in Western democratic independence.

They’ll also find support among Democrats for this, who have just as many wealthy donors in the military-industrial complex as Republicans do. They’ll also find a lot of support among the religious conservatives — because conservatives like for America to be the strongest nation on earth. Besides being macho, defense and security have a strong argument behind them in a world full of terrorists. While Trump might wish to improve relations with Russia, he will be restricted by a aggressive media. He is also antagonizing relations with China.

The US, under Obama, was already acting more aggressively in the South China Sea in order to keep China from controlling secondary trade routes. Trump will build on Obama’s lead there, and his trade battles with China may intensify conflict with China overall. Trump has stated loud and clear that the US military will be ready to look out for Japan’s national interests. At the same time, North Korea is picking a fight in order to beat its chest, which presses Trump to take some action against them. That may come about just as sanctions, but could involve some military sabre rattling or counter-measures from the US that could escalate matters. Trump will take a greater lead than Obama did against terrorists in the Middle East, as he was critical of Obama’s restrained and somewhat ineffective efforts. Expect a more aggressive anti-terrorist policy therefore. That means, as under Reagan, increased military spending will be more important than increased infrastructure spending, but military spending also stimulates the economy by creating jobs and boosting a number of major stocks. Making something to use once – such as a missile, bomb or bullet, is always though, a waste of money.

Economically, those are all strong short-term positives, regardless of what they bring further down the road. BUT… the U.S. is already in what Austrian Economists call a “crack-up boom” according to the data being collected by one commentator – Cliff High – suggesting that the economic collapse WILL happen on Trump’s watch, probably later this year. (See this:)

In spite of these certain positive economic changes for 2017, there remains a countervailing globalist force that has already presided over numerous economic failures of its own making. These people will relentlessly attack Trump, and they will seek to pin their own failing recovery on him. Such an entrenched counterforce makes it impossible to say how much temporary good Trump’s economic policies can bring. Trump starts in a world where globalists have long ruled the nation’s central bank, which they have positioned to create US economic hegemony. Trump can change that over time, but probably doesn’t have enough time before the collapse is triggered. Also, his lineup of Goldman Sachs executives in all financial offices of the US says that he won’t. Globalists are also deeply entrenched in US intelligence agencies and the military leadership, where they have engaged in relentless nation building as they seek to shape the world toward the interests of their own corporate, political and financial establishment while also working in alliance with the interests of the UK and the rest of Europe.

They will do anything they can to restrain Trump’s plans to drain the swamp in Washington as well as his plans to align with Russia on terrorism in the middle-east, and his plans to diminish nation-building efforts. How far and how quickly he can push against their resistance depends entirely on his and his followers’ ability to overcome deeply entrenched globalist powers that have steered the nations of “the West” for decades. All globalists in the world will oppose Trump.

Globalist are first trying to groom and massage Trump into their ways. They are also trying to thwart him through fake news in the media, slanted stories, political attacks, and by stirring up chaos and counter-revolution wherever possible. Even Obama has formed a foundation to try to muster as many protests against Trump as possible. And the Clinton Foundation has been behind many international wars and humanitarian crises that have been used to the ends of the U.S. (See this piece:)

To the extent those efforts fail to stop or change Trump, the financial establishment will, in the very least, try to make him the scapegoat for the failure of their past eight years of badly misguided recovery efforts.

If they cannot impeach him, as some are already working toward, the ultimate risk for Trump and his supporters is that the establishment will assassinate him. This risk is real enough. For the first time in the history of the US (that I am aware of), we witnessed the nation’s largest mainstream news source (CNN) actually releasing one of the most important non-news stories it could trump up during the inauguration, which was a “what-if” story about how US leadership roles would be assigned if Trump was assassinated on the day Obama’s leadership expired but just before Trump got inaugurated.

That such a concern made it as a main CNN story shows there are many mainstream thinkers who see assassination as a realistic possibility, not as some hysterical conspiracy theory. CNN saw it as enough of a likelihood already in the public mind to make it useful fake news (fake in the sense that it filled news time but is not news at all, but (for the moment) pure fiction that teases liberal minds with a kind of “final solution” hope). Trump is Hitler, according to liberal mass hysteria (just as much as Hillary Clinton was Hitlery to conservatives). Both sides routinely demonize their opposition. As the flagship of the liberal media, CNN planted deep the implied seed of hope that Trump might be taken care of with a final solution aimed just at him. Of course, they would deny that they were raising incendiary hopes among liberal Trump haters.

Now that the revolution and counter-revolution have begun, there is no way I can say which force will dominate by the end of 2017, given the immensity of the forces, the entrenchment of the old guard, the resolution of the Trump revolutionaries, the huge flaws existing in the US and global economies, and the economic headwinds that will hit the U.S. down the road. What I can point out is that the globalists clearly begin with the upper hand by far, and they are certainly not going to give up. In fact, they are only beginning to implement their strategies to overcome Trump because they did not believe they would lose the election.

One of the things I learned about in early 2016 was how the Federal Reserve board held two back-to-back “emergency, closed-door meetings” (as described on the Fed’s own published calendar) followed by an immediate “emergency meeting” between Fed Chair, Janet Yellen, and the President and Vice President of the United States. After those meetings, the stock crash that had begun in January and somewhat recovered in February evaporated, and stocks moved continuously toward recovering all lost ground. We were never told what any of those meetings were about, but meetings between the Fed chair and the president rarely happen, and meetings including the V.P. almost never happen. That indicates some level of emergency that the vice president also needed to be fully informed on.

It has also been my belief all along that, if Trump did win (which I believed a better likelihood than Hillary), the Federal Reserve would capitalize on it. I have no doubt that globalists have plans for every contingency. With their recovery failing again (as we saw GDP cascade in the final quarter of 2016), the establishment would be more than happy to let it crash after the election, but most likely not until after Obama was out of office and it was likely they could blame it on Trump.

I have said for years that the Fed’s “recovery” during the Obama administration can only live as long as artificial life support continues. That support still continues intensely through the Fed holding indefinitely the huge expansion of its balance sheet (which leverages out to an historically enormous pool of new money continuing to float the economy) and through the Fed’s continuance of extremely low interest rates. (While raising interest rates now, still remain the lowest they have been in modern history, outside of the Great Recession.)

I’ve believed that, if globalists got a Trump victory, they would even collapse the economy deliberately, if it were not already failing, because they would love to decapitate their newly risen opposition by making people believe that the entire global economy collapsed because of Trump’s interruption to their plans. They would hope that would slam a lid on revolutionaries against globalism, teaching them once and for all that their individualism and nationalistic, anti-socialist ways bring only rapid calamity.

I think they recognize that, if a global collapse happens on Trump’s watch, many people will look desperately for a global solution from those who appeared to be having success with restoring the economy before he came into office. Many people do not see that the Fed’s recovery was only kept alive by endless and massive administrations of artificial life support. Many people also do not see or believe that the economic flaws of the US and many other nations are fatal or even important — such as the size of national debts, the vanity of fiat currencies, the dangers of financing national debts with massive infusions of such currency. They don’t believe that expanding personal debt to individual limits leads to enslavement as does national debt — enslavement to bankers. They even believe that banks and government have done the right things to reduce the risks of another economic crisis like we had from 2007 to 2009 in the Great Recession.

In fact, the opening title to this piece was carefully chosen, because there are many like me, who have been expecting and preparing for this forthcoming collapse even as jobs have been harder to come by and incomes were reduced by mass immigration. Even my wife has had to apply for her own job, as the corporation she works for wanted to reduce the numbers in her department, all in this ever increasing effort to reduce costs, grow revenue and grow shareholder value.

But despite my best efforts to interest her in this subject matter, she continues to bury her head in the sand, just (if I can be politically incorrect for a moment) because like most women, she is more interested in personality, rather than policy, and she believes the politicians will figure it out, and she won’t have to worry about it because she can’t do anything about it anyway (so she says).

So, it will not be hard to find a majority of the populace that will join the mainstream media and the establishment politicians in blaming Trump when the entire global economy goes down the toilet. Trump’s provocative mouth, his brazen plans, his sometimes brash execution of those plans, along with his narcissism and often clownish behavior, make him a ripe target as a grand scapegoat. (I think even most conservatives would have to admit to themselves here that, if Trump were carrying out a totally liberal agenda, they would find plentiful stock for ridicule in Trump’s showy, boastful, and brash behavior. It won’t be hard for his opponents to do the same.)

So, if the establishment doesn’t assassinate him (now a mainstream idea), they will likely make him a scapegoat to carry away their own sins. All of that places the likelihood of the start of an economic collapse sometime later in 2017 as a racing certainty.

Oil, Solar, Wind and Water Don’t Mix

Posted on

2005-2015-Oil-Prices
It would seem that the Saudis want every one of their oil competitors to go bust in the attempt to tear down the shale oil revolution, only to push oil prices back up again in the future. But do they still have control of the market? Judging by the persistent weakness observed in the oil market, it seems that everything is falling apart, all around the Arabian peninsula. And given events in Nice on Thursday, and Turkey yesterday, it appears that turmoil, is extending further afield.

Oil prices have still not fully recovered from the lows seen at the peak of the financial crisis (in February of 2009). If the current trend remains in place, the market will remain subdued for an extended period. On the one hand, this maybe exactly what the Saudis, and to some extent, the Iranians, want, in order to regain their market share and push other recent entrants out of the market; on the other hand, given that the worst of the recession is behind us, with prices  now in the $50-$60 range, that would still be below marginal costs for many oil exploring areas. In fact, one could ask whether these low prices are just the result of OPEC’s output decisions or whether they hide other developments.

Saudi Arabia’s task has been easier than it could have hoped for, due to a mix of international developments. Unlike events in 2009, when oil prices were boosted by a declining US dollar driven by the FED’s massive asset purchases, now QE has for the moment ended, and the interest rates are being talked up again. Anticipation of this event alone has driven the dollar higher, although weakness of other currencies has also contributed, (Brexit, of course, making the pound particularly vulnerable) which has had a negative impact on commodity prices in general, and of course, oil in particular.

2016 – US Outlook

While a rise in US interest rates would have a direct negative impact on oil prices, the eventual effect is usually positive. The reason for this is the fact that a rate hike usually comes at times when the economy is improving and we would then see rising economic activity. This would usually come with higher aggregate demand, which would boost the appetite for energy products.

However, as suppliers attempt to increase production to fill the higher demand for their products, this may be limited as fracked wells do not respond well to just opening spigots, they require more wells, and this requires capital. So, this time, not even an improving US economy might be able to spare oil these losses. Many feel that the excess oil production has been so large for so long, with stocks piling up everywhere, that more demand will merely offset the surplus effect stemming from aggregate output. But that may be just half the story.

Back in November 2015, the IEA predicted a rise in demand for oil of less than 1% per year until circa 2020 and modest growth rates thereafter. If these predictions transpire, it may take years for the current stockpiles to normalise and, unless OPEC and the wider world cuts production, the bearish trend for oil prices may continue for years.

This bearish oil market, is the consequence of depressed demand and over-production, and may not be reversible for several reasons.

The world is in an unfavourable growth scenario, with the US running at the front of the developed world pack, but Europe is still struggling with the aftershocks of the global recession. At the same time, the threat of rate hikes in the US is hitting oil prices and leading to capital outflows in the once high-flying emerging economies.

If the number of SUVs with new more efficient engines, Toyota Priuses, Nissan Leafs and Teslas, I’ve seen locally is anything to go by, the world is moving away from its oil dependence for transport. China is no longer hungrily demanding raw materials to grow its economy, as it moves from an investment-driven economy towards a more consumer-orientated one. Given the China outlook, any change in demand is likely to be lower, and lead commodities into a further bearish market. Because the finding and extraction of raw materials takes years to achieve, past decisions to expand capacity will take time to be reversed, as countries and companies adjust to the new reality. In the meantime, prices will take care of the imbalances but huge volatility is expected. In fact Dr.Kent Moors, sees problems for the oil production companies in the U.S., for a few years yet

So these and other important shifts in the world, – Wind power, Tidal, Solar, and increased Nuclear, with increases in efficiency are all taking their toll. Faced with high oil prices and being dependent on a small group of countries, governments and companies in oil-dependent countries invested in the development of these new energy sources and improvements in the efficiency of the existing ones. Cars, household appliances, consumer gadgets et-al, today need a fraction of the energy they once did.

This means that for the oil market to remain stable and growing, needs higher global GDP growth rates than hitherto. Unlike what many predicted decades ago, it won’t be the supply side controlling this market, leading prices higher, but rather a suspicion of ever decreasing demand. Saudi Arabia may already not be in control of this market and may run into trouble, along with any other entity that is dependent on petro-dollars. Of course, the value of the dollar, as well as whether oil is marketed worldwide in dollars, will ultimately define markets. But reports of a 45% split between oil and the water that is used in the waterflood of old oil wells, is also increasing costs of extraction for Saudi fields, and thus requires a higher commodity price, to balance Saudi national budgets.

Shares in the biggest oil companies trading in the FTSE, like Royal Dutch Shell and BP, lost 40% in the last year before their bounce back in recent months. In less than a year, oil prices retreated 60% and these companies couldn’t avoid the downturn. Smaller companies, including low-cost producers face an even bleaker outlook, as share price declines have surpassed 80% in many cases. Companies operating in the shale oil revolution have been decimated and many won’t be around by year end.

2016 – OPEC Outlook

If OPEC has in the past helped to boost a number of energy alternatives and driven gains in user-efficiency (via higher oil prices), they are now contributing to the development of improved technology on the supply side, as the low price is a great incentive for the remaining companies to increase cost efficiency. A low price will certainly drive many companies towards bankruptcy, but will also force the surviving companies to become highly efficient. Oil projects in remote areas or regions with high risks (being economic, political, or of any other type) will be delayed indefinitely, but part of the shale industry in more productive areas will remain. That industry has effectively placed a cap on oil prices. OPEC won’t be able to drive prices above a certain level, because many companies would enter the market again and force prices down.

The strategy followed by Saudi Arabia has severe shortcomings. This is no longer about the shale oil industry but also about OPEC members. The high production strategy is crippling growth, leading to capital outflows and increasing budget deficits in all OPEC members. Venezuela and Angola are heading towards complete economic and social chaos, with growth spiralling down and oil income not enough to finance government spending.

2016 – Angola & Venezuela

At the beginning of 2007, one US dollar would buy 75 Angolan kwanzas. In early July this year the exchange rate stands at 1 to 165, as a result of declining oil prices. That’s a decline of 50%, but the official rate doesn’t even reflect the observed reality, which is that people aren’t able to get US dollars from banks, and instead are forced to exchange them on the streets at a rate of 1 to circa 300. Many construction companies are already shutting down their business in the country, as the government is delaying payments.

Venezuela, is in even worse shape. In 2011, the Venezuelan Bolivar was 4.3 to the USD, but today stands at circa $1:10.0(VEF). This loss of purchasing power, caused riots after Hugo Chavez died, and the oil revenues upon which the nation depended, bought less and less on world markets. Queues for such luxuries as Toilet Rolls were seen, and the Socialist miracle of Venezuela, is gone, possibly for good.

Angola and Venezuela are the weakest links in the OPEC group and are thus expected to be the first to experience a deterioration in their financial positions following oil price declines. But they won’t be alone in the medium term.

The Long and Short of the Oil Market?

Take the Saudi Arabia case, for example. The country had a debt-to-GDP ratio of less than 2% at the end of 2014 and foreign reserves of around $738 billion (at today’s exchange rate). In a country where people don’t even have any experience of taxes, there seems to be a lot of margin to drive all others bankrupt before feeling the heat. Nevertheless, the country lost $90 billion in foreign reserves in the year to October. If this pace continues, the country will run into trouble in a matter of just a few years. From a balanced budget the country is going to hit a deficit of near 20% this year and another 20% next year (as predicted by the IMF). Oil-producing countries in the Gulf are already tapping money from their sovereign wealth funds to keep afloat.

OPEC long ago shot itself in the foot and will never recover from the damage. While Saudi Arabia tries hard to bust everyone, let’s enjoy the lower oil prices as consumers. As investors, or traders, it may be time to look for something sweeter than oil like cocoa and wait for the markets to stabilise, as price declines aren’t over yet. In the meantime, perhaps time to sell any oil-holdings, and time to buy, commodities that are undervalued and thus oversold? Can you say Gold, Silver, Platinum, Palladium or Crypto Currencies?

The Eighth Wonder of the World… And a Curse.

Posted on Updated on

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” [Albert Einstein]

EyeOfTheStorm-Now

  1. 2008 – 2012
  2. 2012 – 2016
  3. 2016 – ? (2018-20?)

We are emerging from the eye of this particular storm…into more turbulent times ahead.

Uncertainty in politics, breeds uncertainty and volatility in economics and markets. People postpone major purchases until they have a clearer idea of how things will unfold. And businesses too, judge the future and make investment decisions accordingly. But the Debts built up during the 2008 crisis, have still to be repaid, and will now begin to unwind, or lead us into hyperinflation.

Having money in a bank account, that earns interest, is a distant memory for many people, as interest rates around the world have been reduced, eliminated or worse.

Britain’s and Western National Debts, have an interest charge levied on them, which is being, at least in part, controlled by the Federal Reserve, who came to Europe’s aid (again!) when it loaned $15 trillion during the heat of the last financial crisis. Britain too loaded itself up to the neck with debt, to help its banks, and latterly, International Banks from Greece, Spain, Ireland, and Portugal. and its current account is, as I have mentioned an enormous debt of — £1.7 Trillion. At a modest 0.0025% (¼%) that translates as …

Drumroll… £4,250,000,000 per year. (£4.25 billion…) However, even a modest increase to say 2% p.a. over the next 2 years, will likely kill the British economy, and with it, any hopes of a full recovery.

At 2% our debt repayments are: £34,000,000,000 – (£34 billion) enough to build approximately 50 new hospitals and staff them for a few years. Who said being a banker was easy?

But this image from Raoul Pal, tells the even bigger picture (even if it is a couple of years old).

Debt-2-GDP-Ratio

Whose debt is biggest?

The debt to GDP ratio includes pension and other obligations.  Is this why Britain’s politicians are so keen to import foreigners, to help pay off this debt?

Those savers who have worked hard all their life, and tucked away a little for their retirement, are earning precious little from their savings. Funds that perhaps they have ear-marked for a retirement home, a secure retirement future knowing that their money is safe in a Bank, or where they can get at it quickly, in the event of an emergency, to meet unexpected bills are shortly going to experience the greatest loss of value in their lives, through inflation.

In a world where money is finite: interest rates serve the function of allocating money to its competing potential users. Those that require investment money will bid for this scarce resource, driving up interest rates, in times of high demand. This rising interest rate trend signals to the business community, that there is high demand for money, and this can indicate that businesses are expanding, or that competition is increasing (usually early in the market cycle) and those who seek to spend for their current enjoyment, begin to realise that they cannot afford higher payments, and thus this slows the economy as spending is curbed.

When currency is infinite as is with Fractional Reserve Lending: the only brake on increased amounts is the Banker’s concerns as to whether they will get paid back, or not – and thus it might threaten their balance sheet. This leads to booms… and busts.

This has been the state of affairs ever since this practice was formed, but became worse when the world left the Gold Standard, and the U.S. finally severed the last remaining link to Gold on August 15th 1971, when Richard Milhous Nixon, closed the Gold Window.

Almost three years later Louise Auchincloss Boyer, fell from her 10th story window, just days after a story that she was alleged was to be the source of, that “All the Gold in Fort Knox has gone.” Her death was judged suicide… (Link: You can read the full story – Here )

Britain’s debt is even worse than I feared.

Late on Saturday night, I was researching Britain’s National Debt, and to my surprise and horror, I found it was even worse, than I suspected.

Anyone who has a mortgage, or variable rate loan, ought to be on pins and needles, as interest rates are set to rise, for a number of reasons.

Deutsche Bank’s chief economist David Folkerts-Landau just released a scathing report, aptly titled: “The ECB Must Change,” in which he calls the ECB out from a banker’s perspective, which is now eerily similar to a layman’s.

“After seven years of ever-looser monetary policy there is increasing evidence that following the current dogma, broad-based quantitative easing and negative interest rates, risks the long-term stability of the eurozone…

…Already it is clear that lower and lower interest rates and ever larger purchases are confronting the law of decreasing returns…. but the ECB’s response is to push policy to further extremes. This causes mis-allocations in the real economy that become increasingly hard to reverse without even greater pain. Savers lose, while stock and apartment owners rejoice…

Thereby ECB policy is threatening the European project as a whole for the sake of short-term financial stability…. The longer policy prevents the necessary catharsis, the more it contributes to the growth of populist or extremist politics…

A returning to market-based pricing of sovereign risk will incentivize governments to begin growth-friendly reforms and to tackle fiscal stability. Flagging the move should dampen adverse reactions in financial markets.

We believe that normalising rates would be seen as a positive signal by consumers and corporate investors. The longer the ECB persists with unconventional monetary policy, the greater the damage to the European project will be.”

Japanese Rate Rises?

And even in Japan, interest rate rises are being discussed:

Bank of Japan policy board member Takehiro Sato went public in a speech to business leaders two weeks ago. Here are some key quotes showing what amounts to complete opposition to the Bank of Japan’s current course:

“When there is a negative spread, shrinking the balance sheet, rather than expanding it, would be a reasonable business decision… leading to restraining loans to borrowers with potentially high credit costs and raising interest rates on loans to firms with poor access to finance.”

As for those borrowers, think SMEs, entrepreneurs, everyone from the middle-class down, and virtually everyone but the corporate interests that have succeeded in regulatory capture worldwide.

“A weakening of the financial intermediary functioning could affect the financial system’s resilience against shocks in times of stress.”

He also said:

“There is also the risk that financial institutions that have problems in terms of profitability or fiscal soundness will make loans and investment without adequate risk valuation… I detect a vulnerability similar to that seen before the so-called VaR (Value at Risk) shock in 2003.”

Taken together, Mr. Sato is essentially saying that negative rates are stunting the chances of economic growth, removing any chance to soften the blow when it comes, and is setting us all up for wealth destruction across the board, giving policy makers no capability to react if a downturn begins.

Japanese politicians seem to be taking the ball and running with it. A key policy chief of the opposition party is now calling for Prime Minister Abe and the BoJ to begin raising rates.

In particular, the new platform cites how these policies hurt savers, along with its failure to boost inflation, wages, and has a negative crash in trade balances.

And in America too, are Interest Rates set to rise?

Gerardo Del Real, the Outsider Club’s newest expert, is spot on on how this will pan out for the U.S. . Just last week, he had this to say, which bears repeating:

“So what to do? Understand that the big money, the portfolio managers, pension funds, and insurers cannot continue to invest exclusively in negative-yielding assets.

Understand that a trickle of the trillions they manage will work its way to the U.S. markets, the dollar, and gold. Not because they’re gold-bugs, but because they will have no choice.

Understand that of those three options — the U.S. stock market, the dollar, and gold — gold is the smallest market and therefore the most susceptible to the largest moves.

Within the gold market, the junior resource market — especially the junior gold companies — has been absolutely decimated, and provides the best risk-reward proposition.” (See my last post – Apocalypse Now)

Few people are more reviled by everyday people than bankers, and rightfully so.

They hide usury in the fine print and send Court Sherriffs to evict you from your home in their stead.

They distort and manipulate markets for their own gains, from LIBOR, to the gold fix, to silver prices, to exchange rates, and on and on.

Then, with the corruption of a wink and a nod, they use regulatory capture to remove all risk and collect cushy bailouts while manufacturing and commercial jobs disappear, wages shrink, and with it the tax base as neighborhoods fall into squalor.

Throughout the 80s, the North of England – Northumberland, Merseyside, Greater Manchester, South Wales were all hit hard as deep mined coal pits closed, and the industries that had grown up with them, went with them.

A piece written just over 100 years ago, after a Banking Panic in the U.S., brought about largely by the tactics of the Banks, and which surprisingly, our recent “Credit Crunch” appeared to be a mere replication writ large goes as below.

The writer, George Howard Earle, Jr. of the Real Estate Trust Company, in 1908 wrote:

A Central Bank as a Menace to Liberty

The solution of the problem of a central bank, with power to control the currency of the United States, to be at all adequate, must depend upon and be controlled by ultimate political principles.

The same principle that underlies the never-ending conflict between the advocates of a strong centralized government and what are called “states rights,” governs this question.

Taught in the school of experience and adversity, the early English and American patriots learned the salutary lesson that the development of peoples, as well as their happiness, depended more upon liberty – that is, the power to control and govern themselves, rather than to be controlled or governed by anybody else – than upon any other single thing; and they, therefore, in drafting our Constitution, always viewed government as an evil made necessary by the weakness and defects of human nature, and never extended it beyond that necessity.

Under the plan of freedom, of self-reliance, self-dependence, self-government, we have become the greatest, the happiest, the most powerful people of the world; but notwithstanding these proofs to justify the work of the Fathers, we have more and more concluded that we could have done a great deal better.

We are rapidly tending in the opposite direction, which must 506 inevitably destroy liberty by vesting all discretion in some form of central government, rather than in the people as individual, independent entities.

Starting with the theory that government but existed because of the defects of mankind, and was but an evil wherever it exceeded the necessity of restraining evil human tendencies, we have now reached the higher light wherein we produce schemes of regulating everything, until liberty is but a name, and we govern ourselves by theories entirely independent of the characteristics of the people to whom our systems are to apply.

It is difficult to find any one, nowadays, who has not some “counsel of perfection,” and founded on it, some theory of government that would work perfectly with a perfect race, in whom neither self-interest nor passion existed and that, consequently, did not need any government at all.

The same could be said of any central authority, whether in Britain, or further across Europe.

All control passed to others, means they will meddle. And in meddling, they will postpone the inevitable, but each time they postpone, the crisis merely gets bigger, and more unstable. Eventually, there is no-one big enough to stop it.

We will shortly find out, if this will be in the next credit crisis. Those who have salted away bit-coins, gold and silver, will fare best. Those who have borowed to feed their insatiable habit to spend, will not surprisingly, not do well.

Money, real money (Gold and Silver) takes time to make, is hewed from the ground at great expense, and whilst its value varies with the day, the month and the year, it’s value never disappears totally and increases over time – even if in fits and starts..

Credit created out of a Banker’s pen, printing plates, or these days computer, can disappear in a cloud of smoke. Over 200 currencies have disappeared since the dawn of the printing press, and fractional reserve lending, but Gold and Silver are still an ounce of Gold, and a Pound of Sterling Silver, from which Britain’s derived its name, and now our currency takes its name.

Central Bankers, therefore are more the problem, than the cure.

Here, Daniel Hannan – discusses the implications for the future with Emma Reynolds who puts forward the case to remain.. Daniel Hannan puts forward his reasons for wishing to leave.

A vote to Remain is a vote for…
Big Government
BIG Corporations
BIG Banks
and BIG BROTHER.

Britain, grew into the world’s superpower, in the 1800s, and now leader of the 64 nation Commonwealth, by extolling those things that we Brits hold dear. The law grew up from natural laws – “Common Law”, where people devised the behaviours they supported, and those they despised. Law was a higher source of guidance in man’s affairs, and it wasn’t handed down from  “on high” – i.e. from those holding the reins of power – as has been the case in most of the world – and particular the Eurasian legal systems – Roman Law, Napoleonic Law, or Regal Law.

This piece lays out the historical context.