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Sunday
January 25th
2015

CHAOTIC TURMOIL: Its Actually Logical If You look Closely!

 

John Rubino

 

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

OPEN ACCESS

 

CHAOTIC TURMOIL: Its Actually Logical

If You Look Closely!

Published 01-26-15

30 Minutes

John Rubino feels "the economic policy around the world is not sustainable. They only have one tool which is easy money which they must do more and more of it over time to maintain normality in the world. At some point they run out of the ability to create more currency and monetize more debt. The debt that is required becomes overwhelming and the system spins out of control We are seeing the early stages of that now with all sorts of crazy volatility springing up in places around the world where no one suspected."

"The Central Banks of the World are Beginning to lose control of the process!"

MAKING SENSE OF IT ALL

John tries to make sense of what appears to be unrelated chaotic events. He tackles the most recent four:

1)  ECB & Quantitative Easing Announcement

2)  SNB Abruptly Unpegging the Franc

3)  The Global Energy Shocker

4)  Gold's Sudden Movement

 

 

ECB & QUANTITATIVE EASING ANNOUNCEMENT

"The Eurozone is in danger of breaking apart and falling into deflation which is a disaster for an over indebted economy!"

SNB ABRUPTLY UNPEGGING THE FRANC

"Switzerland is a very small country but a very big story. This is the first central bank to opt-out of the currency war! Basically, they surrendered but it yet has to be determined if you can surrender in these currency wars?"

THE GLOBAL ENERGY PRICE SHOCKER

"The US employment gains associated with the Shale Oil boom are gong to be reversed out... as are the junk bonds which will be the 'sub-prime mortgages' of this bubble ... on balance the US is gong to be hurt more by falling oil prices"

GOLD'S SUDDEN MOVEMENT

"The point is coming where everyone figures this out and doesn't want to hold the currencies anymore. You are seeing this in the behavior of gold in the crisis economies .. Russia and Euros"

WHAT IS OCCURRING

A SHAKEN BELIEF IN THE OMNIPOTENCE OF THE CENTRAL BANKS BEING ALL POWERFUL AND THAT THEY CAN BE TRUSTED!

 

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Saturday
January 24th,
2015

CHARLES BIDERMAN talks FINANCIAL REPRESSION

Charles Biderman

 

 

SPECIAL GUEST : Charles Biderman is the Founder and Chief Executive Officer of TrimTabs Investment Research, Inc., an independent investment research firm based in Sausalito, CA that specializes in publishing detailed daily coverage of stock market liquidity. He is interviewed regularly on CNBC and Bloomberg TV and is quoted frequently in the financial media, including Barron's Magazine, the Wall Street Journal, Forbes, and Investor's Business Daily. He is the author ofTrimTabs Investing: Using Liquidity Theory to Beat the Stock Market (John Wiley & Sons, 2005). He holds a B.A. from Brooklyn College and an M.B.A. from Harvard Business School.

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30 Minutes

A seasoned professional, Charles Biderman points out that when you create money, you create debt. When that debt goes to front run demand you will face the problems we are now facing in the energy industry with supply or ghost cities in China. Zero interest rates has brought forward demand which is now resulting in commodity deflation. "There is now no relationship between the economy and the stock market because of zero interest rate policies!".

FINANCIAL REPRESSION

"The markets are rigged by the central bank policy of zero interest rates. To the extent the markets are rigged we don't have free markets. That would be Financial Repression!"

A 'NO GROWTH' WORLD

"We are in a no growth world. We have governments in the US, Europe,Japan and China that are anti-growth, anti-free market growth. On the other hand we have central banks that are committed to creating as much money as is necessary to keep stock markets as high as they can be even though we have a total disconnect between the economy and the markets. The only reason the markets are doing as well as they are doing (both equity and bonds) is because of zero interest rates. In essence free money from the central banks!"

"The zero interest rate policy of the global central banks is creating a global recession, not a global recovery!"

"Remember, this whole free money binge was to be a bridge over the downturn so the economy would recover. But when you have no-growth, anti-growth policies in place prohibiting real economic growth you are going to have no growth and higher prices."

NO-GROWTH, ANTI-GROWTH POLICIES

  POPULATION GROWTH NEW JOB GROWTH %  
Clinton
75%
 
Bush
25%
 
Obama
16M
2M
12.5%
* Mostly Part Time Jobs

The US needs to grow at close to 10% a year to fund the current debt and entitlement obligations. Charles feels it is obvious that his is not going to happen. "The US is bankrupt! .... like Vallejo, CA we will be forced to restructure!"

"The central banks have no clue what they are doing .. at some point the people will realize the emperor has no clothes and the US debt is not worth the paper it is written on!"

 

 

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Thursday
January 22nd
2015

JOIN THE STUDENT LOAND DEBT JUBILEE

 

Gordon T Long

 

SPECIAL GUEST: Financial Survival Network Radio

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JOIN THE STUDENT LOAN DEBT JUBILEE

with Kerry Lutz & Gordon T Long

AUDO ONLY: 24 Minutes

From the Financial Survival Network:

Gordon T. Long  joined us today. In our last discussion, we talked about the continued decline in credit quality across the nation and the world. Now Gordon has uncovered a new wrinkle in student loan debt. Much of it is being deferred or forebearanced under various government programs, all under the radar screen. We also discussed the reason that QE failed in the US, Japan and elsewhere, and why it will fail in the EU. QE cannot create new demand, it can only move up future demand to the present. Also discussed the buck, the Euro, the Franc the peg and more.

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Monday
January 19th,
2015

Steve Keen talks FINANCIAL REPRESSION

Steve Keen

 

 

SPECIAL GUEST : STEVE KEEN is an Australian economist and author. He was formerly an associate professor of economics at University of Western Sydney. Currently, he is a Fellow at the Centre for Policy Development, and Professor and Head of the School of Economics, History and Politics at Kingston University in London.

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30 Minutes

THE ART OF GETTING AN EDUCATION IN ECONOMICS

Professor Steve Keen has found that top flight universities are dominated by very narrow, doctrinaire teaching. This stylized view has resulted in critics of this view only getting jobs in low ranking university. With pride Steve Keen puts his latest university in that camp. "If you want a good education in Economics, you don't go to a good university. The wider range of thought and diverse analytics is found at the lower ranking university. Kingston University is one of those classic university!"

FINANCIAL REPRESSION

He does not consider himself an Austrian Economist though he sees it has a number of key tenets that 85% of the economist aren't aware.

He sees Financial Repression as more about the size of the debt burden within an economy which drives the behavior of central banks. It is about the excess weight of private debt crushing the economy. Everything else is a result of this."

The results include the "badly thought out Quantitative Easing response to a crisis which they caused by effectively ignoring the growth in private sector debt, but aren't even aware that this is the cause of the crisis." "Very few banks have any real clue of what they are doing. If you doubt this, all you have to do is read the minutes of the Federal Reserve. They wouldn't dare make them up because it makes them look like a bunch of fools who have no idea what is happening."

Obviously this sort of view does not make Professor Keen popular with the establishment, seeking prestigious and lucrative government and teaching positions.

QE IS NOT MONEY PRINTING!

Irving Fishers explanation of where the Great Depression evolved from was the level and growth of private debt along with too low a rate of inflation. Prof Keen is of this school in which reducing this debt will only result in further falling economic growth. Former Fed Chairman and expert on the Great Depression did not believe this. Professor Keen considers Bernanke's argument against this a "load of waffle!". "It is completely naive to the role of banks in the economy!"

Professor lays out why he was able to warn of the coming 2008 Financial Crisis an why he does not feel the current "revival' can last anymore than 5 years before the same sort of thing occurs.

MODERN DEBT JUBILEE

This interview is worth listening to simply for Professor Keens concept of Modern Debt Jubilee and the Syrian history of successfully doing this every 49 years. You may not agree with his view but it an interesting history lesson of how this worked prior to the advent of central banking.

Many may also agree with his views and the discussion on why the Euro was always a mistake as will be Draghi's expected upcoming QE announcment. Few will likely also disagree with Professor Keen that moden central banking do not properly understand the role of banks, money, debt and capitalism.

Steve's closing advise: "Don't trust the economists!!"

 

 

 

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Friday
January 16th,
2015

Martin Armstrong talks FINANCIAL REPRESSION

Martin Armstrong

 

 

SPECIAL GUEST : Martin Arthur Armstrong is the former Chairman of Princeton Economics International Ltd. He is best known for his economic predictions based on the Economic Confidence Model, which he developed. In September 1999, Armstrong faced prosecution by the Securities and Exchange Commission and the Commodity Futures Trading Commission for fraud. During the trial, Armstrong was imprisoned for over seven years for civil contempt of court, one of the longest-running cases of civil contempt in American legal history. In August 2006, Armstrong pleaded guilty to one count of conspiracy to commit fraud, and began a five-year sentence.

 

OPEN ACCESS

28 Minutes

With a history of being primarily a currency forecasting consultant to institutions such as government and large corporations, Martin Armstrong has been advising since the 1974 recession (which was caused by currency) and every crisis since.

FINANCIAL REPRESSION

"What it really is, is a power struggle where we go through cycles where people have confidence in the people, then government. It oscillates back and forth and now we are in a phase we can call the 'Private Sector Phase', where people are questioning government."

"Repression comes in when it is about whatever it takes to maintain power! Largely it is about the fact they are going broke because they have promised all sorts of pensions, and these sorts of things, but they have not funded them!"

GOVERNMENT COMPETENCE

"There is no conspiracy .. it is much worse .. it is really the 'Keystone Cops'! ... government creates the illusion it is in control, but it isn't in control!"

"People give government and politicians way too much credit. They assume they actually know what they are doing! ... what people don't understand about governments is that we have academics advising and primarily lawyers running the government, with few with any experience or understanding of economics. We should hire traders who at least have some experience!"

"They just don't understand. There is no design. Everything has been very 'ad hoc. Its really about the spoils.... giving it to family and friends!"

"If you look at the debt since 1950, you will see that 70% of the national debt is accumulated interest. It didn't go to provide schools and roads and things of this nature. The whole socialist idea is complete nonsense!"

'NO PEG HAS EVER LASTED'

The EU, EURO and the recent removal of the Swiss Franc Euro peg are examples of the fundamental problems with government. Martin has consulted to various EU and Swiss authorities since 1998. He is miffed at what he has witnessed but it is no different than has sees everywhere else.

WE ARE IN A DEBT BUBBLE

"We are not facing a stock market crash, we are facing a bond market crash! That is far worse"

"What people don't realize is that the US Great Depression was a sovereign debt crisis. All of Europe defaulted and went into a moratorium, South America defaulted for about the fourth time and China defaulted. You halt capital formation and that is what a bond crash does. In the great Depression everyone lost. That is what we are facing!"

"We are in a period where on a global scale, capital doesn't know where to go and the culprit is government. We are in period where there is going to be more confidence to buy bonds such as General Motors than that of any government! There is a substantial difference between Private and Public Debt"

RISING TAXES ARE DEFLATIONARY

Martin believes there is an extremely serious tax problem, especially at the municipal level due to unfunded pensions and obligations. Because wages are not rising in the USA, this is now acting in a deflationary fashion.

 

 

 

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Saturday
January 10th,
2015

Robert Wenzel talks FINANCIAL REPRESSION

Robert Wenzel

 

 

SPECIAL GUEST : ROBERT WENZEL  is editor & publisher of EconomicPolicyJournal.com and of Target Liberty. He also hosts the weekly podcast The Robert Wenzel Show. His guests on the show have included, Jesse VenturaRoger Stone, James AltucherDavid StockmanGuy Kawasaki,Oliver StoneJudge Andrew NapolitanoSteve ForbesPeter Schiff and Gary Johnson.

He is author of The Fed Flunks: My Speech at the New York Federal Reserve Bank and the soon to be published, Always Fighting for Freedom: The Early Wenzel.

 

OPEN ACCESS

39 Minutes

Long time Austrian School Economist and Libertarian with a professional background in Wall Street Finance, Robert Wenzel warned of the 2007-2008 Financial Crisis in his book: The Fed Flunks: My Speech at the New York Federal Reserve Bank and was subsequently asked to Washington and the Federal Reserve to detail how he knew where "I really gave it to them!!"

FINANCIAL REPRESSION

He sees the central banks of the world and the Federal Reserve as manipulating the economy through interest rates and flows of funds which makes it very difficult for the individual to make money consistently which represses everyone but gives a major advantage to Wall Street. Much of this is done through restrictive regulations where the "devil is in the details". Very few really understand the significance of the "details".

Active in Silicon Valley, Robert Wenzel has seen closeup how the 'regulatory details' offer major advantage which give staggering advantage and financial gain to the few, but disadvantage or competitively impede many in their business enterprise. Though Robert Wenzel does not use the term he describes the workings of Crony Capitalism which Macro Analytics has chronicled in many previous videos.

"It is a rigged system where they simply write regulations when things go off the rails for them!"

What this means is it is now making it almost impossible for the average person and small business entrepreneur to survive and prosper.

"THE WORST GET TO THE TOP"

When asked how informed politicians are of what is going on, Wenzel is reminded of Nobel Laureate Economist, Fredrich von Hayeks writings in the "Road to Serfdom" that:

"The worse get to the top"

They are willing to say and do anything to get to the top. These are the ones that know what is going on. A lot of elected politicians simply don't know what is going on and are marginalized. As in the world of finance, "bad money forces out good money".

"INFLATION & INTEREST RATE SURPRISES AHEAD"

Wenzel believes the Fed's stated inflation target of 2% is in actuality 3%. Until this level is achieved the Fed is not going to let up. Unfortunately because of the economic lags and distortions in the signals, Wenzel sees it getting out of control resulting in inflation levels not seen since the late 1970's. Having presented at the Federal Reserve, Wenzel says:

"The Fed is surprisingly unaware of anything outside of money printing! ... It is stunning how off the page they are and how they have no clue, as evident in the Fed minutes where they don't even mention the money supply!"

 

 

 

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Friday
January 9th,
2015

Dominic Frisby talks FINANCIAL REPRESSION

 

Dominic Frisby

 

 

SPECIAL GUEST : DOMINIC FRISBY , Comedian & Financial Author.

A comedian 
ʻViciously funny and inventive,ʼ The Guardian; ʻMasterful,ʼ Evening Standard; ʻGreat comedy talent,ʼChortle. I am resident MC at Londonʼs oldest comedy venue, Downstairs At The Kingʼs Head, and have performed many full-length shows – both straight stand-up and character comedy. (Read some reviews).

A writer...
His book, Life After The State, (‘Extraordinary’, James Harding, director of BBC News; ‘Incredibly thought-provoking,’ Al Murray; ‘Brilliant,’ Steve Baker, MP) has nothing to do with comedy. It is a deadly serious dismantling of the way society is run. I am currently working on a second – Bitcoin – the Future of Money?

Dominic co-wrote and narrated the acclaimed documentary about the global financial crisis, The Four Horsemen – 1.25 million hits and counting(‘Excellent writing and narration from DF’ Front Row). I write a weekly investment column for Moneyweek about gold and finance

OPEN ACCESS

27 Minutes

Now 45 years old and having been a comedian since his mid twenties, Dominic Frisby got interested in Economics and Finance in 2005 prior to the Financial Crisis. He subsequently became a devout Gold Bug and follower of Austrian Economics and Sound Money when he decided he needed to manage his money himself.

He concluded that:

"Money should be independent. The role of money is to be a medium of exchange, a store of wealth and a unit of account. But instead Money has become a political tool. The mixing of money and politics is very dangerous!"

Dominic feels strongly that many of our basic daily terminologies such as inflation, capitalism and socialism have become corrupted in their meaning and usage. The same is true for "money". "All of this has distorted people's behavior in an almost corrupt way" which he describes as only a comedian can.

 

DEBT BOMB - The Global Financial Crisis Stripped Bare by Dominic Frisby

FINANCIAL REPRESSION

Dominic Frisby defines Financial Repression as:

"The Government manipulation of money in order to achieve a specific goal. The current goal is to bailout the financial system for the excesses it created in the lead up to the 2008 Financial Crisis and also to bailout themselves."

"Governments have spend way more than they have earned and now have debt that is unpayable and the way they are paying it back is through manipulation, which other people call Financial Repression."

WHAT THE FUTURE HOLDS

"This will go on for my life time and my children's life time .... until something else happens". Frisby says "don't shot the messenger but our leaders have gotten away with it so far and history shows leaders have always played tricks with money and debt". "Financial Repression will always exist as long as we have leaders, just like sinning will always exist - you just have to accept it!".

SOCIAL GOVERNMENT ENTITLEMENTS

The government according to Dominic Frisby, who has spent his life within the UK's social entitlement program, should have nothing to do with Healthcare, Education and Welfare. "All of this doesn't need to be as expensive as it is!"

"We need less state, more market and more ... 'people'!"

CONCLUSION

"We need to question everything, including the questioners questions and their dogma"

 

 

 

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Wednesday
January 7th,
2015

2015 GLOBAL THEMES - Achilles Heel of Deflation

 

Charles Hugh Smith

 

 

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

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with Charles Hugh Smith & Gordon T Long

27 Minutes - 32 Slides

Charles Hugh Smith and Gordon T Long discuss the Achilles Heel of Central Bank Policy: Deflation. They feel it will be a central theme in 2015 and will foster new central policy initiatives which the financial markets will react violently to.

DEFLATION

Charles Hugh Smith defines Deflation in a different manner than most which leads to some very interesting perspectives and conclusions.

"Any increase in the purchasing power of nominal wages".

  • The rise of software, robotics and global wage arbitrage is resulting in wages not rising along with prices. As a result, everyone who depends on earned income is getting poorer.
  • For the actual real-world the result of central banks easing, money pumping and zero interest rates is Deflation.
  • Central bank easing and zero-interest rate policy (ZIRP) fuel over-capacity which leads to declining prices: deflation with a capital D.
  • Central bank easing and zero-interest rate policy (ZIRP) additionally fuels malinvestment which leads to over valued collateral and an eventual collateral collapse as NPL (non-performing loans) debt cannot to "rolled" (i.e. no one no longer wants to risk financing)

EXCESS INFLATION

Inflation creation when the business cycle needs to contract.

i.e. 2% targets during systemic deleveraging.

  • This is because the Prime Directive of central banks is to make it ever easier to service yesterday's debt.
  • Excessive inflation results from central banks being forced to push negative real interest rates too low (to protect debt holders) relative to real economic expansion and capital wealth creation.

PURCHASING POWER

The store of Purchasing Power is true WEALTH which governments are transferring.

  • All the phantom collateral constructed with mal-invested free money for financiers will eventually implode.

Easy Credit Creates Excess Supply & Demand Which Eventually Reaches Equilibrium

  • BROUGHT FORWARD DEMAND WHICH THEN LEAVES A DEMAND RATE VACUUM
  • INFLATION REDUCES REAL DISPOSABLE INCOME WHICH FURTHER REDUCES DEMAND

== > THE GLOBALIZATION TRAP

 

 

 

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Saturday
December 27th
2014

Ronald-Peter Stoeferle on FINANCIAL REPRESSION

 

Ronald-Peter Stoeferle

SPECIAL GUEST: RONALD-PETER STOEFERLE , Incrementum Liechtenstein

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

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Published 12-27-14

39 Minutes with Slides

Ronald-Peter Stoeferle is a noted Austrian economist and money manager who believes strongly that “we should expect that financial repression as well as wealth taxes in various facets which will increasingly gain in importance in coming years". He believes "this to be a disastrous strategy, as the redistribution will merely buy time, while the structural problems remain unsolved.”

A NEW MONETARY REGIME

Since 1971 we have had a new monetary era or regime that has directed massive debt induced growth which has been doubling every 10 years. The system presently wants and needs to deleverage but the political pressures don't allow for central bankers and politicians to let this happen. What we have instead is policy induced inflation pressures creating monetary tectonic pressures.

AUSTRIAN INVESTING

Ronald-Peter Stoeferle and the team at Incrementum LI are developing a new approach which they refer to as Austrian Investing which combines the Macro views of the Austrian School of Economics with Asset Management. Their latest book "Austrian Investing between Inflation & Deflation (presently available in German only) shows how grasping the consequences of the interplay between inflation and deflation will be crucial for prudent investors. Investors should prepare for both scenarios - inflation and deflation.

Followers of the Austrian School have been extremely successful at anticipating major economic events like the Great Depression and the Housing Bubble.

    • Monetary Policy - The Starting Point
    • Macro Orientation - Most Important today
    • Top-Down
    • Understanding that central bankers & politicians cannot control the dynamics of inflation.

It is important to realize that radical monetary interventions will not lead to self-sustained recovery but to further turmoil in the financial markets.

AUSTRIAN INVESTING REQUIRES PROPRIETARY INFLATION INDICATORS

Understanding the Monetary Tectonic forces of Inflation and Deflation is critical to investment success. As such Incrementum LI uses their "Incrementum Inflation Signal Indicator". Since August it has been signalling massive Disinflation / Deflation which has shifted their portfolio allocations.

Private Investors should watch the Gold-Silver Ratio closely.

Incrementum believes we presently have a "Bull market in Greed and a Bear Market in Fear" which will resolve itself with Gold being one of the big winner and moving to $2300 US/Oz. The recent weakness in Gold is due to:

    • Disinflation and rising real interest rates,
    • Partly declining money supply (especially in the ECB),
    • Very weak commodity prices,
    • Record high short positions,
    • Rising opportunity cost of owning gold due to the rally in equities,
    • Tightening credit standards,
    • Increasingly negative analyst opinions,
    • Firmer US$ based on confidence in the US Economic outlook,
    • A high level of conviction in the ability of central bankers to "get it right".

Most, if not all, of these false premises or signals will soon begin cyclically reversing.

"Financial repression is ultimately a government imposed transfer of wealth.”

 

 

 

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Wednesday
December 17th
2014

DAVID STOCKMAN on FINANCIAL REPRESSION

DAVID STOCKMAN

 

SPECIAL GUEST: DAVID STOCKMAN , David Stockman is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street.

OPEN ACCESS

Published 12-17-14

PODCAST - 38 Minutes

CROMNIBUS

We interrupted David Stockman in Aspen where he was just finishing an article concerning the Cromnibus Bill which the Senate having passed was forwarding to the White House. You can easily sense the annoyance in David's tone about yet another "abomination" out of Washington of a $1.1T, 1600 page Bill and no one given the time to even read it. "Pork and earmarks" were blatantly evident and tacked all over it. As a former Washington insider he is very clear on what is wrong in Washington.

It seemed very appropriate to ask David on this day to talk with us about Financial Repression!

FINANCIAL REPRESSION

"Honest interest rates and financial asset prices come about from price discovery in the free market owing to the interplay of supply and demand for savings, borrowing and other forms of investment in the marketplace. The opposite of that is the regime we have today which I call the regime of financial repression.

It is characterized by Dishonest or false prices that are not set by the market but are administered by the central bank under the doctrine of ZIRP, QE, wealth effect and all of the other artifices they have invented to justify intervention in the heart of the financial market day-in and day-out! Capitalism cannot function efficiently nor can the economy grow at a healthy sustainable, balanced rate if you do not have a free market within the capital markets or money markets. It is at the very heart of the capitalist enterprise. Today we do not have that! We have absolute Financial Repression!

BANKS HAVE BECOME WARDS OF THE STATE

"We have a problem with the banking system in this country today and that is because banks as they now exist and function are not free market institutions by any shape, form, function or form of imagination! They are essentially wards of the state"

Stockman believes they would not exist in their current form nor would they take the kinds of risk they take if it were not for:

  • The $9T of government deposit insurance,
  • Access to the Fed's discount window,
  • Banking licenses from the state which therefore shield them from the claims they would be exposed to otherwise.

The resulting level of malinvestment and market distortions will soon come to an end when we again have realistic price discovery. He believes it is "only a matter of time before we have another more cataclysmic financial meltdown" due to the sheer weight of speculation in this central bank, bubble driven era which is now occurring.

This is an unusually insightful discussion with someone that understands how tenuous the capitalist system is when mis-pricing of risk occurs through policies of Financial Repression and 78 continuous months of free money.

 

 

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Tuesday
December 16th
2014

Egon von Greyerz on THE SWISS GOLD REFERENDUM

 

 

 

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

OPEN ACCESS

 

Published 12-16-14

29 Minutes

Lesson Learned:

"You can't fight the Elite! When they decide they will beat you, they will beat you -- eventually however they will fail!"

Interview with Egon von Greyerz of Matterhorn Asset Management .. on the recent Swiss Gold Initiative vote:

"The whole of the elite were against us. Now, we thought the people, the Swiss people, would be on our side because the Swiss people understand the importance of gold. They were clearly influenced by the massive campaign of the government and of the central bank. The losses for the Swiss National Bank could have been very serious, and that’s why they were quite desperate to stop this initiative."

What are the ramifications now?

"Switzerland now has to print money. The currency is only backed by 7% gold, and now they have a free-for-all to print more money .. this, of course, will be very bullish for gold because it won’t be just Switzerland. Virtually, every country in the world will start printing money." 

Internal Memo from Jomas Thordan, President of the National Bank

Written December 1st, 2014 by 
Categories: All publicationsEgon's Publications
Tags: 

The below memo could have been written by Thomas Jordan, president of the SNB.

Internal Memo National Bank

From: Jomas Thordan, President

To: The Board of Directors

Date: December 1, 2014

I have been quite concerned about the outcome of the Gold Initiative referendum. That is why I have been in the media virtually every day for the last few weeks. I know that the National Bank should not conduct a campaign during a referendum of this kind but since it was a matter of national importance I had no other choice.

As you know, until 1999 we had over 40% gold backing in our balance sheet. At the time it was thought that this amount of gold was critical for the stability of the National Bank and our national currency. But fortunately we managed to change the constitution which allowed us to sell more than half of the nation’s gold at the bottom of the market. We have been bloody lucky fortunate that the Bank’s reputation was intact after this decision which cost our nation 30 Billion. It was clearly incompetent unlucky to sell the gold at the lows but market timing has never been our strong point.

I am extremely pleased that 77% of the voters agreed with my propaganda statements that gold plays no role in modern banking. Gold is a relic of the past. We can’t print gold and that is a major disadvantage when we want to manipulate manage our currency and financial markets. Our principles for managing the National Bank are now laid down by the Federal Reserve and ultimately Goldman Sachs. Here at the Bank we fully subscribe to the statement of the wise Mayer Amshel Rotschild: “Give me control of a nation’s money and I care not who make its laws.”

So fortunately we don’t have to buy any more gold and we should probably consider selling the 1,000 tons we may still own since it serves no purpose and has no yield. That would also give us ammunition to buy more euros.

The one concern that I would like to share with the board is our currency position. As you are well aware, we have printed over 400 billion and bought mainly assets in euros but also in other currencies in order to hold the peg above 1.20. We are all aware that printed pieces of paper are not really worth anything but since we are a national bank, we can just tell the people that it is real money. Fortunately they are foolish wise enough to believe us.

The reason I have been so nervous about the referendum is that the Bank is now sitting on the biggest speculative currency position of any major central bank in the world. Our balance sheet of 522 Billion is over 80% of GDP which is an extremely dangerous position for our country. It is virtually impossible to get out of this massive position without a loss of 10s of Billions or even as much as 100 Billion. Obviously the people would ultimately pay for this loss.

The 1.20 peg is artificial and throughout history no currency peg has ever held in the longer term. Over time currency rates always reflect economic and monetary differences between countries. Since our economy, for a while at least, is likely to continue to be stronger than the weak eurozone, our home currency will naturally outperform the euro. We are of course extremely grateful that the voters listened to our propaganda information during the campaign and rejected the Gold Initiative. But sadly the Bank’s problems are not over.

This peg was critical to save the bankers banks that had lent massive amounts of our national currency to mainly Eastern European banks. So now we are totally linked with the eurozone and at some point we should perhaps discuss to make this permanent. There are of course disadvantages to be tied to a very weak currency. Everything we buy in the shops is now more expensive. Also, we could be dragged down by euroland and end up with the same economic disaster they are in. But fortunately the people don’t understand these major drawbacks.

But the biggest problem with taking the euro as our currency is that the Bank would lose its ability to beirresponsible independent. The ECB would take over and we would lose all our power to print money.

Therefore I recommend to the Board that we stay as we are. But that still gives us the headache of our 470 billion speculative currency position. This is a timebomb and we know we will never be able to extract from it without very major losses. Hopefully the current board will have retired from the National Bank before this happens so a new board can be blamed for it.

Finally I would like to thank the Board for their support of my actions. The Bank now retains total “control of the Nation’s money” which is comforting.

Jomas Thordan

President

P.S. The above is a fictional account of events and any connection to a real situation is purely coincidental.

 

On November 30th the Swiss voted on:

  1. Returning their national gold which is held abroad back to Switzerland
  2. Requiring the Swiss National Bank to hold 20% of their assets in physical gold
  3. Prohibiting further gold sales

Money printing SNBSo why was this referendum so important?  Because Switzerland has, for hundreds of years,  been a bastion of sound monetary policy and low inflation. But this has gradually changed in the last 100 years since the creation of the Fed in the US and especially during the past 15 years when the Swiss government quietly removed the 40% gold backing from the revised Federal Constitution which was adopted by popular vote in 1999.

No paper currency has ever survived throughout history in its original form. And the Swiss Franc from having been a strong currency is now in the process of being slowly destroyed by the recent policies of the Swiss National Bank (SNB).
Since 2008 the SNB’s balance sheet has expanded 5 times from CHF 100 Billion to CHF 500 Billion. So Switzerland has printed around 400 Billion Swiss Francs in the last 6 years in order to hold its currency down against the Euro and other currencies. CHF 400 Billion is around 2/3 of GDP.

This means that Switzerland has printed more money, relatively, than any major country in the world in the last 6 years.

Why this change of policy?

For a very long time, the Swiss Franc appreciated against most currencies and Switzerland prospered with a strong economy, strong currency and lower inflation than most major countries. It is of course a fallacy to believe that a weak currency benefits a country when Switzerland has proved that the opposite is the case.

Between 1970 and 2008 the Swiss Franc appreciated by 330% to the dollar and 57% to the DM/Euro. So for almost 40 years a very strong Swiss currency went hand in hand with a strong economy. In spite of this proven success, the new guard in the SNB decided to abandon proven successful policies and print money like most other countries.

To tie the Swiss Franc to a weak currency like the Euro and a very weak economic area like the Eurozone is a recipe for disaster.  To align your country to a failed political and economic experiment can only lead to failure.

Swiss Banks – Highly leveraged

But it is not only the SNB that is now following unsound policies but so are the big Swiss banks. From an equity ratio of 15-20% 100 years ago, the big Swiss banks are now down to 2-3.5% (note: because the basis of calculation changed after 2007 it is difficult to make an exact comparison).  This means that the big Swiss banks have a leverage ratio of 30-50. Thus a loss in their loan book of 2-3% would be enough to wipe out the entire bank. It is virtually certain that when interest rates go up, the Swiss banks will have losses on the balance sheet or on derivatives that are considerably higher than 2-3%.

The SNB and the Swiss banks are already too big to save in relation to the size of the Swiss economy. Continued expansion of the balance sheets of the SNB and the Swiss banks is likely to lead to a very vulnerable positon for the Swiss economy and currency. With another crisis like in 2007-9, the SNB would have to print unlimited amounts of money which would destroy the value of the Swiss Franc, leading to high inflation or even hyperinflation. With both the SNB and the Swiss banks on a dangerous path, Switzerland now has the unique opportunity to return to a sound financial system that has been their trademark for centuries.

 

 

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Thurssday
December 11th
2014

ANDREW SHENG on FINANCIAL REPRESSION

ANDREW SHENG

 

SPECIAL GUEST: ANDREW SHENG , Distinguished Fellow of the Fung Global Institute and a member of the UNEP Advisory Council on Sustainable Finance, is a former chairman of the Hong Kong Securities and Futures Commission, and is currently an adjunct professor at Tsinghua University in Beijing. His latest book is From Asian to Global Financial Crisis.

OPEN ACCESS

Published 12-11-14

29 Minutes

Andrew Sheng has spent his career in Asia as a central banker and regulator. He summarizes the current global situation as developed economies simply "kicking the can down the road" to avoid the painful and inevitable structural changes that must lie ahead. "There are no free lunches. Avoidance will only make it more expenses and painful later on!" He quotes former Treasury Secretary Larry Summers on this subject; "do you want your teeth pulled out slowly or very quickly?" Sheng concludes "we are going to have a long tooth ache for a very long time to come!"

FINANCIAL REPRESSION

Sheng describes what he refers to as the "Financial Repression Tax":

"Governments (via regulated banks) will pay depositors very low rates, sometimes below inflation rates in order to fund the budget. The result is what is known as a Financial Repression Tax. This represses the financial system. The biggest payers of the Financial Repression Tax become the pension funds, insurance companies and long term savers."

"Besides the government tax, this effectively also allows the rich & privileged to borrow from the poor! Rich countries are borrowing from the poorer countries"

AVOIDING DAY OF INEVITABILITY OF STRUCTURAL ADJUSTMENT

"As long as central bankers are printing we have a 'paper economy' not a real economy. That is where Financial Repression really harms the system"

SOURCE OF GROWING GLOBAL INEQUALITY

Sheng feels strongly that the inevitable outcome of broad based Financial Repression is and has become global inequality. "Quantitative Easing and the 'leveraged play' around the world is worsening inequality".

THE MARKET IS NOW POLICY DRIVEN

Sheng also believes the free market is presently not allowed to operate. Markets are highly distorted from trillions of dollars of 'pumping'.

"People equate finance with debt. Debt is about risk shifting and not about risk sharing! We presently have things backward. If you think of the real economy as the horse, and finance as the cart; what we have today is the cart in front of the horse!"

CONSEQUENCES OF FINANCIAL REPRESSION POLICIES

Andrew Sheng believes we are headed for another crisis. Common sense could help fix the problems but he feels common sense appears not to be so common, especially when politics in involved.

This interview touches a broad range of the fallout from Financial Repression; from how the US Fed is now locked into low interest rates, the 'hot money' US Dollar Carry Trade and why lenders are more concerned about balance sheet repair than investment.

 

 

 

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Saturday
December 13th
2014

GORDON T LONG on FINANCIAL REPRESSION

GORDON T LONG

 

Wall St For Main St Interview: GORDON T LONG .

OPEN ACCESS

Governments & Central Banks 
Are 'All In' on Financial Repression

Published 12-13-14

PODCAST - 65 Minutes

Wall St For Main St interviews Gordon T Long on:

  • Financial Repression,
    • Why the U.S., Japan, UK & the EU all want it,
    • Why it's about to go global for every country as many developing countries are looking to create their own version of capital controls similar to FACTA for U.S. citizens.
  • Discussion on oil prices,
    • oil price manipulation & OPEC,
  • Swiss Gold Referendum Failure,
  • Where the new investment opportunities are.

A broad discussion of the current state of affairs in Macro conomics, Political Economics and Geo-Economics.

 

 

 

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Wednesday
December 10th
2014

SIMON BLACK on FINANCIAL REPRESSION

SIMON BLACK

 

SPECIAL GUEST: SIMON BLACK , is the publisher of SovereignMan.com and “Sovereign Man: Confidential” - An International Investment Intelligence Service. A graduate of West Point he served tours of duty in the middle east as an intelligence officer before beginning SovereignMan.com. He has visited over 116 countries and visits 40-50 countries annually looking for investment solutions to suit the realities of today's increasing government regulations and restrictions.

OPEN ACCESS

Published 12-10-14

PODCAST - 29 Minutes

FINANCIAL REPRESSION

"Financial Repression is Theft. It is a very clever, cunning deceitful form of theft. Governments are stealing purchasing power and essentially defaulting on their obligation to maintain a sound currency."

"Presently in many cases you have to pay a bankrupt government for the privilege of loaning them money! Negative real interest rates is covert theft"

Simon believes that the mentality of many governments has shifted from an 'abundance mentality' to a negative 'scarcity mentality' that has left them chasing innocent, harmless people around the world (ie witness FATCA and the avalanche of renouncing citizenship) versus trying to attract productive people, being more competitive and "making the pie bigger". This is no longer the thinking that the US was founded on.

THE SOVEREIGN MAN APPROACH

The problem we’re facing is the fragility and danger that comes from massive centralization of economic and political power. The solution then, is to decentralize.

This strategy of diversifying aspects of your life across the globe is called Internationalization, and that’s what Sovereign Man's Six Pillars of Self Reliance are about.

The SIX PILLARS OF SELF RELIANCE - Financial sovereignty in the 21st century

    1. Move your money to safety - Foreign banking
    2. Establish new roots abroad - Second residence and second passport
    3. Don’t bet your life on a single currency - Alternative stores of value
    4. Rely on yourself - Personal resilience in a fragile world
    5. Grow your wealth - Entrepreneurship and private investments
    6. Protect what you hold dear - Asset protection and privacy

INTELLIGENCE SERVICE

Sovereign Man: Confidential is an intelligence service, which provides people with the resources and contacts they need to be able to make the right decisions regarding their life and their assets. The only intelligence service that works with the sole goal of increasing freedom. Rational solutions that make sense no matter what around the globe for securing your life, liberty and pursuit of happiness.

Agricultural Land Corporation (ALC)- A   substantial agricultural business in Chile which acquires, develops, and operates very high quality and productive agricultural property. It’s a tremendously exciting project, because as Simon himself has written, agriculture might very well be the smartest investment of the decade.

Sovereign Valley Organic wine and produce in Chile - Sovereign Man’s private farm in central Chile produces vast quantities of agricultural produce, including fruits, vegetables, nuts, eggs, meat, and wine.

 

 

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Monday
December 8th,
2014

THE OIL-DRENCHED BLACK SWAN

 

Charles Hugh Smith

 

 

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

OPEN ACCESS

with Charles Hugh Smith & Gordon T Long

28 Minutes

Charles Hugh Smith and Gordon T Long discuss the dramatic impacts the recent fall in energy prices is having and will have on global financial markets.

 

SITUATIONAL ANALYSIS

The impact of lower oil is financial, political and geopolitical. 

Lower oil revenues will impact:

      • Oil-exporters’ revenues,
      • Monetary policy of central banks,
      • Trade flows and
      • Global financial markets.

Lower state revenues will pressure:

      • Oil-dependent governments such as Russia, Venezuela and Iran, and
      • Destabilize the geopolitical order as weakened oil exporters sink into recession or political turmoil.

REDUCED GLOBAL LIQUIDITY FLOWS

FOUR LIKELY CAUSES

    1. Shale Oil,
    2. Weak Global Demand,
    3. A Geo-Political Clash,
    4. Financialization of Oil

 

CONSEQUENCES OF $68/BL OIL (Richard Duncan's "Liqudity Gauge" Watch)

  1. CONSUMER "TAX CUT": Consumers will be better off. Lower gasoline prices will be like a tax cut for the middle class, who will be able to spend more on other goods.
  2. SMALLER US TRADE DEFICIT: The US trade deficit will become smaller as the cost of oil imports falls (although this will be partially offset since Americans are likely to use their savings from a lower gasoline bill to buy more consumer goods made overseas). A lower trade deficit will boost GDP.
  3. SHIFT IN CENTRAL BANK STANCES: Lower oil prices will mean more downward pressure on consumer prices and a greater risk of deflation. The fear of deflation is likely to cause the Fed and the Bank of England to delay their plans to increase interest rates, while it may force the European Central Bank and the Bank of Japan to accelerate their asset purchases.
  4. LOWER SOVEREIGN BOND YIELDS: In most countries, government bond yields have already fallen in response to the increasing disinflationary/deflationary pressures that will result from lower oil prices. Government bond yields in a number of European countries fell to record lows last week.
  5. SOVEREIGN FISCAL PRESSURES: The finances of the oil exporting countries will suffer. The currencies of Russia, Norway, Venezuela and Nigeria have already fallen significantly, reflecting the deterioration in those countries’ economic prospects.
  6. PRODUCTION BREAKEVEN COSTS: Lower oil prices are likely to put some high cost producers out of business. Canadian oil sands look particularly vulnerable. Some of the marginal shale oil producers in the US may also go to the wall. As bankruptcies occur, defaults on energy junk bonds are likely to rise significantly. At this stage, I don’t believe that the losses in the junk bond market will be significant enough to cause a new financial sector crisis. Nor do I believe that so many wells will shut down in the United States that US oil production will begin to fall. Production costs have been falling rapidly and are likely to continue falling. Oil prices will have to fall considerably further before most of the new shale oil production becomes unprofitable. Of course, the possibility that oil will fall much further can’t be ruled out. It was $20 per barrel not all that long ago.
  7. REDUCED CAPITAL FLOWS: Finally, the reduction in the US trade deficit will mean a reduction in capital inflows into the US. (Capital inflows are the mirror image of the Current Account Deficit, since every country’s balance of payments must balance.) The reduction in capital inflows will reduce the upward pressure on US asset prices that has come from this source in the past.

 

 

 

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Saturday
December 6th
2014

NICK GIAMBRUNO on FINANCIAL REPRESSION

NICK GIAMBRUNO

 

SPECIAL GUEST: NICK GIAMBRUNO , Nick is senior editor at InternationalMan.com (Casey Research), where he writes about offshore banking, second passports, surviving an economic collapse, offshore trusts and companies, geopolitics and crisis investing, among other topics.

OPEN ACCESS

 

Nick Giambruno has a long-held passion for internationalization. He has lived in Europe and worked in the Middle East, most recently in Beirut and Dubai, where he covered regional banks and other companies for an investment bank. He is a published author focusing on international diversification strategies that help people reduce their dependence on any one country. This is a strategy that Doug Casey helped pioneer and makes it very difficult for any government to control one's destiny. In short, Nick's objective is to help people make the most of their personal freedom and financial opportunity around the world. Nick is a CFA charterholder and holds a bachelor's degree in finance, summa cum laude. He is senior editor at InternationalMan.com, where he writes about offshore banking, second passports, surviving an economic collapse, offshore trusts and companies, geopolitics and crisis investing, among other topics.

Published 12-06-14

25 Minutes

FINANCIAL REPRESSION

"Financial Repression is Financial Authoritarianism.

It is not only repressing financial aspects of people's lives but all aspects of life and when you consider the amount of power that is wielded through Financial Repression, it is more accurate to call it Financial Authoritarianism!"

SOURCE OF FINANCIAL REPRESSION

Financial Repression is needed to help governments finance their debt, where the impedence comes from the level of government spending. Since almost all countries use a central banking model and fiat currencies this allows Financial Repression to exist. It gives the government the tools to implement Financial Repression which it wouldn't otherwise have in a SOUND MONEY System.

"The lynchpin of how Financial Repression is implemented is the Central Banking Model "

"What is fundamentally wrong with this is that it allows the government to take something (that something being Purchasing Power) that is not theirs, without people knowing. You learn in kindergarden that you don't take something that is not yours but that is exactly what they are doing!"

FATCA - FOREIGN ACCOUNTS TAX COMPLIANCE ACT

One of the most egregious examples of Financial Repression in the international arena is FATCA and the soon to be unleashed GATCA. The Foreign Account Tax Compliance Act (FATCA) effectively begins the process of ring fencing investors options through nothing more than a stealth form of capital controls.

The real issue to banks around the world is:

  1. Cost of Compliance
  2. Draconian penalties if even an honest mistake is made.

Therefore they don't want American accounts which is making it horrendously difficult for Americans to now live and operate abroad. FATCA has laid the foundation for GATCA in 2018 which is part of the end game for global taxation.

Like Financial Repression FATCA (and GATCA) is devious and not upfront with the American people. FATCA is a blatant example of "government for the government by the government" versus a constitution based upon "a government for the people by the people"!

Learn more about FATCA / GATCA and more as Casey Research's "International Man" talks what Financial Repression means around the world.

 

 

 

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