Crypto-Currencies, Bitcoin, Litecoin, Alt-Coins

Lazy Sunday Afternoon… How The Corporataucracy is Losing Its Grip

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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+

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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?

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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

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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.

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“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.

The Changing World, and investments to watch.

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converging-virtual-reality-blockchain-technology

As the old world of manufacturing, I.T, Services and financial markets evolve, the internet has been quietly (and not so quietly) changing the way things get done, to make improvements in output, and capability possible, and this coupled with demographics, is at the root of the world’s current economic woes.

This is 1928 in market cycle terms, when the abundant supply, and low oil price justified Henry Ford in building his Model T, and the same technology was used to build his tractors, which allowed farmers to buy a tool, that freed up thousands of labourers used to manage farms and produce crops. Back then, the explosion of the tractor, led the typical farmer to lots of debt, and the bumper crops of those years led ultimately to lower agricultural prices and thus food costs, which helped cause deflation, but also made thousands of farm hands unemployed. It also allowed large crop outputs to be transported to cities nationwide, on the new trucks that were just emerging, opening up new markets.

Just as in the early millennium, the ubiquitous smart-phone changed the PC and I.T. infrastructure market, when it put essentially a PC in our pockets, with the processing power, and storage capacity of an office PC of fifteen to twenty years ago, all in a form factor that sits nicely in the palm of the hand. Yes, the screen size wasn’t as big, but the pixel size was certainly an improvement, allowing the clarity of contrast, line width, colour rendition, resolution, saturation and hue all improved to the point that watching a video on our portable handset was possible, and now a major step forward over the 640 x 480 screen images of the early PC days (so-called VGA – Video Graphics Array) of circa 1990.

The next major standard after VGA, gave us 800px by 600px, – XGA and Super VGA. Then came improvements in rapid succession, and then CDs, and DVDs, taking resolutions up to 1920 x 1200. These standards and Blue-Ray with up to 1920px by 1080px, got the viewing public used to step-wise improvements, for larger screens viewed at several metres distance across a typical front room, drawing room or Family room, depending on your social milieu. And now since TV has followed, and surpassed the PC resolution with 3840 x 2160pixels – so called 4K systems.

But every improvement gets us closer to the limits of what most people’s eyes can resolve. So now Graphics Processor Companies, such as nVidia are using the mathematical capabilities of the GPU (Graphics Processing Unit) for Quantum Computing.

A few years ago, Google purchased a company called DeepMind out of London, and DeepMind is an artificial intelligence (AI) Corporation. Now if you think back to 2011, IBM was able to beat the world champion of chess with its super-computer – Deep Blue. Steps forward in certain areas of computing have now gone exponential, and as a former software engineer, I know about the already fast pace of change in the industry.

So Deep Blue knew every possible outcome of every move. But what happened just a few weeks ago in South Korea is light-years beyond that.

DeepMind used an algorithm it developed called AlphaGo to play the Chinese game Go in South Korea with the world champion.

DeepMind’s AlphaGo artificial intelligence (A.I.) already beat the European champion last year. He was ranked 275th worldwide. The score was 5 to 0.

Now, what’s really interesting about this, is that A.I. experts did not think this was possible. They estimated that AI could not beat a human Go master for another 10 years.

These are the experts. These are the people in the industry who focus on nothing but AI. And even they did not think this could happen.

The main reason is that there are 361 opening moves in Go, compared to chess, which has 20. That puts the number of possible patterns and possible outcomes of the game into the hundreds of billions. In fact, it’s such a large number, we don’t even have the computer processing power to count all the possible outcomes, but this system beat the world champion 4-1. Everybody is completely shocked that AI basically destroyed the world champion in the most complex game on Earth… more than a decade sooner than any expert thought possible.

Cars and Trucks using these technologies are in development to make driverless vehicles a reality within 5 years for cars, and within 10 years for most heavy goods vehicles. The technology already has been tested, but like super-computers, we all haven’t got one in our pockets or homes – YET…

The vast Internet, with fibre-optics enabling communication at light-speed is changing everything. Think of all the industries being affected… TV is now almost entirely digital, Netflix is destroying the business model of cable companies. Uber, is likely going to destroy TAXI companies, Air BnB, will impact the small hotel business, Tesla is changing the automotive industry and in the process changing the energy market too. Solar, Wind, Wave and Geo-Thermal are all pressuring carbon-based energy.

So, when you couple AI, Robotics, the Internet of Things (IoT) and all the supporting industries, the next depression will happen any time soon, as we stop buying the old, and begin buying the new.  However, we will emerge in five or so year’s time into the sunlight of a brave new world. But those without high-tech skills, able to add value to these industries, will suffer, will not be employed, as AI replaces almost every menial job, and many that are currently professional level including middle-management positions, accountants and lawyers. BUT, we will also need a stable economy, with price discovery, and a world without wars and unrest.

Modern Tech – causing unrest?

Is this emerging trend part of the reason for the surge in IS membership in the middle-east?

Infographic: Why Young Arabs Think People Join The Islamic State | Statista

Robotics, Military and Civilian Drones, Artificial Intelligence (A.I.) Quantum Computing, Virtual Reality, Augmented Reality and IoT Companies, will all require hardware engineers, software engineers, chip designers, and scene designers able to transform a series of images, or video into data in computer memories. These skills will not be widely available for a few years yet, as Universities develop the knowledge and skills to pass on and develop courses in these new industries.

So, anyone acquiring these skills now, is set for a high salary, and steady work outlook, but those in the jobs that these industries will revolutionize faces an uphill battle, and loss of income. And the people most affected? The young under 25, and those who don’t have any saleable skill except in the service sector. Even mining corporations are now introducing remote sensing capital equipment, which lowers mining costs, improves output, but will unseat many in the developing world, who previously worked in mines, perhaps leading to further unrest as large numbers of unemployed miners are let loose on their nation’s streets.

Companies to watch:

Boston Dynamics
Honeywell
3M
General Dynamics Corp.
Lockheed Martin Corp.
Northrop Grumman Corp.
Thales Group
BAE Systems (Part of ESA and producer of parts for the Airbus)
Elbit Systems
Israel Aerospace Industries Ltd.
Saab
Turkish Aerospace Industries
IBM
NVidia
HP
D-Wave
Samsung
Facebook and Microsoft, who are getting more involved with hardware.
Google who bought – Oculus Rift
HTC and Sony

These are the hardware companies, but there are also software corporations, who will produce Augmented Reality, and Virtual Reality experiences – Hollywood Studios for example… That will produce Millionaires, and Billionaires.

And the experience of users in these VR worlds, is going to be enhanced as long as those users can touch and feel their environment.

Imagine climbing to the top of a virtual Everest, and picking up a handful of soft powdery snow, pressing it into a ball, using the VR gloves you’re wearing, that allows you to feel the snow, to make a VR snowball…and looking down from 28,000 feet to the valley below, launching that snowball to some climbers coming up behind you, 1,000 feet below…

Or visiting a virtual, Val d’Isere, France, in January, and skiing down slopes you wouldn’t normally dare risk, so that you can hone your technique – in August… Or going back in time to a virtual Bastille Day, to take part in a virtual peasants revolt, and watching Robespierre take his revenge on those who had gone before in power or who threatened the new republic. But I suspect, also, as before, the new tech hardware and software, will allow the porn industry to once again flourish as the new VR systems permit almost any dream to be met.

That will be VR content, or Augmented Reality, where you’re on your sofa, but using your augmented reality set, you’re at the controls in an aeroplane at 4,000 feet, feeling the plane bouncing around, in 1917, in an old Sopwith Camel, or the Fokker Tri-plane, holding a joy-stick, and flying these ancient machines, in a WWI aerial battle. And when you land, you lift the VR hood, and go inside the engine bay to fix that subtle misfire that scared the hell out of you as you were coming into land…
Sports, Training, Exercise and Games will be quantum leaps ahead of the Nintendo Wii, that got us off the sofa in our front rooms ten years ago, to play tennis against our other half.

These experiences, will be driven by the hidden technologies that will go into the devices that Samsung, Apple, Microsoft, Nintendo, Sony and Google, will supply.

Those sensors and chipsets, will make other millionaires too… Mobile sensors, (MEMS – Micro-Electronic Mechanical Systems) which know which way up they are in any of 10 different directions, and 3D stacked sensors will be part of them.
ST Microelectronics NV
Invensense Inc
Photronics Inc
AVX Corp
Oclaro Inc
Coherent Inc
IPG Photonics Corp
Vishay Intertechnology Inc
II-VI Inc
Universal Display Corp
and others of these will supply the sensors or manufacturing machinery fabrication technology and fibre-optics and laser equipment to produce elements of these new technologies.

But Blockchain technology will also change the world. In the financial world, crypto-currencies may replace fiat currencies, this will likely eliminate the need for Central Banks and the control that they exert over the rest of us. But you can bet your bottom dollar, that they will fight it tooth and nail to maintain that control, or influence what comes afterwards to ensure they’re still in charge. In fact they may have already started the fight back.

I recently learned of the Open-Ledger Project, set up by the Linux foundation, which attracted, financial institutions, technology firms, as well as two blockchain startups based in New York, Digital Asset Holdings and R3CEV, the consortium that has attracted 40 major banks, including: JP Morgan, Goldman Sachs and others. The name given to this project is the name Hyperledger.

And as I’m sure you know, Crypto-currencies use the blockchain to ensure that any currency transferred between nodes is valid. Peer reviewed. Even Law Firms might use blockchain technology to ensure contract performance, and enforce agreements. Already, Ethereum Foundation has a two year head-start almost, in building a platform for such infrastructure.

But at this juncture, BitCoin, and the other crypto-currencies perhaps offer the best opportunities… (See my previous piece -Why we could see  Bitcoin = $1,000,000)

But here are also a couple of companies to watch.

Cuvva is a startup that is using the blockchain, to buy insurance to allow someone to buy insurance on an as needed basis, rather then an annual agreement.

Helm is a financial technology firm using a database of legal compliance requirements, that allows small firms to do away with an army of lawyers.

As I learn of other companies involved, I will bring them to your attention.

Note: Any mention of the above companies is not a solicitation to buy nor financial advice. I am not an investment or financial adviser, and any mention of such companies is for general information and education purposes only.

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Investing in the Meltdown, or Melt-Up?

Posted on Updated on

As I study the markets this morning of March 22nd  – Brussels was under attack from persons unknown, though what we’ve heard so far, it suggests, it is Islamic Fundamentalists, with an axe to grind.

Don’t they realise, that they can’t expect Allah, to provide them with anything… Killing themselves and others in the process helps no-one – except maybe: politicians, security experts, the police, the military, coffin makers and funeral directors – every situation, no matter how gruesome, has its winners and losers. These Islamists have to get off their butts, and produce for the wider community, and in that process get justly rewarded in this life, rather than the next. But, societies keeping over half the population unproductive, by restricting what women can do doesn’t help either.

Unfortunately, as time goes by though, it gets harder. Most of the basic human needs have already been taken care of… Water, Food, Homes, Clothing, have been produced for humanity ever since our ancestors got busy making the agrarian society a viable proposition. The Industrial Society, took care of our transport needs, and the first dark satanic mills, spun us our yarn, and weaved our fabrics making mass produced clothing possible and cost effective.

Increased power coming from oil, allowed us to produce ever more stuff. And the improvements in logistics operations: ships, trains, cars, aeroplanes, allowed us to distribute that stuff all around the world. That’s why so many of our newly emerged adults are finding that their skills to make a coffee, or toast a spicy tea-cake are more in demand, as more things are automated, causing the number and type of job changes to escalate.

Now China has become the manufacturing powerhouse of the planet, and those I-phones, I-Pads, and other high-tech gadgets are clocking up more air-miles as fast as the world’s aircraft can carry them. But even there, the Peoples Republic of China is struggling to keep its 1.4 billion people fully occupied and quiescent.

We are fast moving to a post-industrial society, with the emergence of 3-D printers, Bio-Tech developments, and Artificial Intelligence (A.I.) being built into more and more technology, and QE to infinity won’t change that.

The demand side of the world economy, depends on sufficient income, but if people only get their income from jobs, then it is not looking good. The producers are in the ascendancy, those with more and more technology, will win out, forcing those who are less efficient and their uneconomic competitors out of business. Capital, wins out over Labour in the final analysis. And we live in a capitalist world – at least according to what I’ve read.

But, those who see the changes coming and prepare themselves accordingly, can at least make a fast buck if they take the time to study the markets as I have been doing for the past 30+ years.

Late last year we passed a major inflexion point. Several events converged to make the not too distant future uncertain. Mystic Meg, would have a field day, but we don’t have to rely on mysticism, or astrologists to see the future. All we need to do is observe society.

All western societies are getting older (meaning more of them are in, or saving for, their retirements, and therefore are, or will become net consumers.)
The people retiring, are those with the highest skill levels as a lifetime of skills are removed from the workforce. Skills that were honed and polished over almost 50 years.

Those people born in the 40s, 50s and early 60s, went to school, and trade school, did apprenticeships, engineers were trained because of several industry training bodies, and governments who made training pay – for the individual and the company. Pocket calculators didn’t exist, meaning these people learned to do and practice mental arithmetic, and even more complex maths in their heads. Grammar was drummed into them at an early age, spelling was pulled up at every opportunity as all teachers had to have excellent capabilities, and were rewarded with excellent salaries. The cream of the crop were sent to Grammar schools, and educated for Governmental Departments, Banking and Finance, the Law, Accountancy and other professions. The rest of us did Woodwork, Metalwork, Technical Drawing and learned what it was felt we might need, for the industrial manufacturing world we would enter.

But all that began to change in the 70s, as a new social agenda came through. No longer were we to be segregated into professions and trades people. No longer were we educated to be the best. Now we were being educated to be mass consumers – unthinking, and servile – dumbed down. The population by 1970, had already become 4 billion inhabitants on the planet. By 1985 this was 5 billion. It took just another 15 years to bring that to 6 billion people, and a further 12 years  to make that 7 billion. Demand for Food, Water and Clothing will grow with the population, but the ability to produce, is about to make major steps forward. Driverless cars, even trucks will reduce needs for workers, and lower costs as people perhaps opt not to buy a car, but to call one up as and when they need one. How will this affect the motor-industry when one in every 5 cars is a Google car, or a Tesla fitted with similar technology?

How will the logistics industry adapt when Amazon gets the go ahead to deliver its parcels by drone the last few hundred yards from the local service centre to the home? Who will employ all those unemployed truckers, delivery staff, and vehicle producers as demand is lowered?

Unfortunately, such changes cause major dislocations in employment demand, and those who spot the trends early can invest in the right companies.

So that brings me to the next major market change. Where will the stock markets go – the DOW, and FTSE, the CAC Index, and DAX index, the Hang Seng, or any of the so far minor indices on the bourses of India, Greece, Italy, South Africa, Brasilia or wherever in the world they are? My guess is that we are heading for a 70% fall on most of the major indices.

See this:

WhereTheDOWisHeaded-6000

The blue lines show the major channel over the last 20 years.  The thinner red lines show the minor trends, which give us a clue as to the steps I expect will happen over the next few years as the DOW reverses the trend of the last 7 years. Will it go as low as 6,000 or below?

Well, if we look back to the 1970 recessions and look at the charts there. The DOW  fell to 850, and significantly, Gold rose to match it… a 1:1 relationship existed between Gold and the DOW. But here’s where QE does have a major impact. The money supply of the U.S, has quadrupled since 2008, so…

I wouldn’t be surprised that this time when the DOW collapses, to get a potential 2:1 relationship between Gold and the DOW…Gold 12,000: DOW 6,000? Or DOW $5,000 and Gold $10,000? Though, I long ago suggested we might see $8,500 Gold. Given the amount of QE that has been introduced since 2008, we may see all that currency run to ground.

As Bill Bonner might put it: “Sell Stocks: Buy Gold.”

Of course precious metals of all colours – Silver, Palladium, and Platinum will also receive some of the fleeing capital and even Bitcoins, as my last missive suggested, but when the new economy emerges phoenix like from the ashes, where then to put your capital – if you have any left?

So, when the SHTF moment arrives… will you make money on the way down, and then on the way up?

Anyone who gets to grips with Spread-betting, Options, or reverse ETFs that make money on the way down, or who have deep pockets and even longer arms, to borrow stocks, to sell, and then buy back at the bottom (which is how many other fund managers make their funds money) will do well.

The rest? The Buy and Holders…Those whose main investment money is in their retirement fund – out of their control – they’ll be like lambs to the slaughter. Pension firms with their client’s money invested for the long term, will lose Billions.

BUT… when the tide turns, as it will, it will be the biggest buying opportunity since the 1932 bottom in the stock market, when the DOW had fallen, from its highs in 1929, peaking at 381.17 on September 3, 1929, to July 8, 1932 when it closed at 41.22 almost a 90% fall (89.19%).

Over the coming weeks, I’ll be searching for situations where those who want, can make some serious money and giving you the heads up.

W.