[KR946] Keiser Report: Global Energy Crisis

We talk to Gregor Macdonald of Gregor.us and the TerraJoule newsletter. We discuss energy transition, San Diego’s 2035 plan, walkable cities, and urban burbs. They also examine Saudi Arabia’s plan to float Saudi Aramco and go solar.


[KR945] Keiser Report: Reality of Uncertainty

We talk to Das, author of ‘A Banquet of Consequences: The Reality of Our Unusually Uncertain Economic Future’, about the structural changes needed to halt the decline in real wages. They also discuss financialization, economic apartheid and debt jubilees.


Trump, Clinton, “Ugliest” Election Coming – Gold’s “Summer Doldrums” Prior To Resumption of Bull Market

The Trump and Clinton election is set to be one of the “ugliest” and “messiest” U.S. elections ever, astute gold analyst Frank Holmes warned this week. He believes this is a reason to own gold and will be one of the factors that will see a resumption of gold’s bull market after the summer doldrums which we explore below.

CLEVELAND, OH - JULY 21: Republican presidential candidate Donald Trump delivers a speech during the evening session on the fourth day of the Republican National Convention on July 21, 2016 at the Quicken Loans Arena in Cleveland, Ohio. Republican presidential candidate Donald Trump received the number of votes needed to secure the party's nomination. An estimated 50,000 people are expected in Cleveland, including hundreds of protesters and members of the media. The four-day Republican National Convention kicked off on July 18. (Photo by John Moore/Getty Images)

Republican presidential candidate Donald Trump delivers a speech at the Republican National Convention on July 21, 2016 (Photo by John Moore/Getty Images)

Gold is now in the “summer doldrums” prior to the seasonally stronger period of the Autumn when gold tends to perform best – especially in the month of September (see seasonal chart below). Holmes believes the bull market will resume soon due to the very strong fundamentals including “low-to-negative bond yields around the world. (Between $11 trillion and $13 trillion worth of global sovereign debt currently carries a negative yield.)” and of course heightened geopolitical risk including in the U.S.

He writes:

“Looking more Las Vegas casino than Oval Office, the stage Donald Trump delivered his nomination acceptance speech from Thursday was all gold, from the stairs to the podium, completely befitting of his showman-like style. Whether you support or oppose Trump, it’s time to face reality. This is really happening, and we should all brace ourselves for what will surely be one of America’s messiest, ugliest general election seasons.

Only time will tell which candidate will be triumphant in November, but in the meantime, one of the winners might very well be gold, which has traditionally attracted investors in times of political and economic uncertainty. In the United Kingdom, which voted one month ago to leave the European Union, gold dealers are seeing “unprecedented” demand, especially from first-time buyers. Some investors are reportedly even converting 40 to 50 percent of their net worth into bullion, though that’s not advisable. (I always suggest a 10 percent weighting, diversified in physical gold and gold mining stocks.) In Japan, where government bond yields have fallen below zero and faith in Abenomics is flagging, gold sales are soaring.

It’s not unreasonable to expect the same here in the U.S. between now and November (and beyond).”

GoldCore: Seasonality of Gold and Silver

GoldCore have long pointed out that the summer months frequently see seasonal weakness as has been the case in recent years and since gold became a traded market in 1971. Gold and silver often see periods of weakness in the summer doldrum months of May, June and July.

Gold’s traditional period of strength is from early August into the autumn and early winter. Thus, early August is generally a good time to buy after the seasonal dip.

Next week, we commence August trading and August along with September and November, are some of the best months to own gold.

Late summer, autumn and early New Year are the seasonally strong periods for the gold market due to robust physical demand internationally. This is the case especially in Asia for weddings and festivals and into year end and for Chinese New Year when voracious China stocks up on gold.

Gold’s weakest months since 1975 have been June and July. Buying gold in early August has been a good trade for most of the last 40 years and especially in the last eleven years, averaging a gain of nearly 11% in just six months after the summer low.

Thackray’s 2011 Investor’s Guide notes that the optimal period to own gold bullion is from July 12 to October 9.

Holmes is the CEO and chief investment officer of U.S. Global Investors and is one of the better gold analysts out there. He shares our view regarding the summer being an optimal time to buy gold. Read more here.


Double Down: Central Banks and the Communist Manifesto

China’s currency, the yuan, has been tumbling, and yet, investors are allegedly ‘unperturbed.’ Are these so-called investors right to put their faith in the new openness of the People’s Bank of China in managing the decline? Whilst financial journalists and the investors who read them may be ‘unperturbed,’ Chinese citizens are preparing for a massive devaluation in the yuan and we can see that in the metals markets. Double Down talks to Valentin Schmid of the Epoch Times about the chances for a big devaluation and about the relationship of central banking to the Communist Manifesto.

Click this image to listen!

Click this image to listen!


Will Any Future POTUS Matter (Other Than Launching More Wars)?

We are already experiencing the powerlessness of POTUS.

We all know the POTUS (President of the United States) has the power as Commander-in-Chief to engage the nation in senseless, costly, needless wars.We also know the POTUS has a media-saturated bully pulpit to set an agenda and fashion a cultural tone for the nation.

But beyond the power to wage war and dominate the media spotlight, does the President have the power to solve the structural problems that are eroding the nation’s economy and social contract?

This chart summarizes one such problem: wage earners are receiving a diminishing share of the nation’s output (GDP):

A second related problem is the national income that is flowing to wage earners is increasingly flowing to the top 5%:

If the president can’t solve the nation’s systemic problems, then he/she no longer matters. The President, outside of declaring war, is nothing but a source of “news” chum for the media feeding frenzy aimed at grabbing eyeballs to maximize advertising revenues for the media’s corporate owners.

Analyst Gail Tverberg explained why the political machinery of POTUS cannot change the downward trends in household earnings in a series of insightful essays, most recently Overly Simple Energy-Economy Models Give Misleading Answers.

Tverberg considers the costs of finance/debt and complex hierarchies in the matrix of energy production and consumption, and references the work of Joseph Tainter on the systemic impact of the rising cost of complexity.

In a similar vein, I have often mentioned The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization by Thomas Homer-Dixon.

In summary: successful civilizations generate sufficient surplus to invest in complex hierarchical communication-command-control mechanisms which boost productivity and generate additional surplus. The cost of these complex systems continually rises while the increases in production eventually plateau and decline in an S-Curve:

The net result is a society with higher costs and diminishing returns. Eventually the costs of maintaining the status quo exceed the benefits of maintaining the status quo hierarchy and the society decays and collapses.

My own work has focused on two dynamics of the cost of increasingly unproductive complex systems. One is privilege, which can be defined as unearned wealth and power. Privilege is by definition unproductive, and a drain on the economy and society. Once the privileged class (i.e. the protected class that shifts risks and taxes to the unprotected/non-elite classes) expands and social mobility decays, the economy collapses under the dead weight of the privileged class.

I covered the history and dynamics of this process in The Lesson of Empires: Once Privilege Limits Social Mobility, Collapse Is Inevitable (April 18, 2016).

The second dynamic is the destructive consequences of a self-serving political-financial elite that is structurally incapable of real reform because real reform will collapse the high-cost structures that enable the concentration of wealth and power.

I explain these dynamics in Why Our Status Quo Failed and Is Beyond Reform.

I know this runs counter to the media-supported delusion that POTUS is the most powerful person on Earth, but in reality it no longer matters who’s president. The inevitable collapse of a debt-based model of complexity, energy extraction and consumption is already baked in.

The only potentially positive role of any President would be to downsize the unrealistic expectations of the citizenry to align with real-world dynamics. But downsizing expectations doesn’t get you re-elected, so the political reality is that future presidents will no longer matter in terms of solving the critical problems we face in the coming decades.

We are already experiencing the powerlessness of POTUS: the campaign for the office of President has already been reduced to two poor players that strut and fret their hour upon the stage, a tale told by an idiot media, full of sound and fury, signifying nothing.

My new book is #3 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition)For more, please visit the book’s website.

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Nobody Knows Who’s Paying for the Privately Funded Democratic National Convention

Screen Shot 2016-07-28 at 6.58.37 AM

To get to the Democratic National Convention, you take the subway to the AT&T Station and walk to the Wells Fargo Center. Along the way, you’ll stroll by the Comcast Xfinity Live complex, where delegates and honored guests can booze it up. You’ll also see the “Cars Move America” exhibit, an actual showroom sponsored by Ford, GM, Toyota, and others. Finally, you’ll reach your seat and watch Democrats explain why we have to reduce the power of big corporations in America.

Party conventions have always been collection points for big money. But many major corporations sat out last week’s Republican gathering for fear of Trump contamination. There’s no such reticence here in Philadelphia; in fact, it feels like they’re making up for that lack of investment.

None of this is considered money toward the convention, which is being entirely privately funded for the first time. The donors who are actually paying for the festivities in Philly are anonymous. So God (and Debbie Wasserman Shultz) only knows where it all comes from. And clearly the DNC wants to keep it that way.  

The DNC’s host committee refuses to disclose the names despite a court order, allowing corporate benefactors to hide behind anonymity.

Read more here.

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Gold Bullion Up 1.6%, Silver Surges 3.7% After Poor U.S. Data and Dovish Fed

Gold bullion was up 1.6% and silver surged 3.7% yesterday, their second consecutive day of gains, after U.S. durable-goods orders dropped sharply, adding to speculation that Federal Reserve policy makers will maintain ultra loose monetary policies. Gold and silver consolidated on those gains in Asia and in early European trading.

Silver_Gold_Bullion_July_20162016 YTD Relative Performance

Both precious metals are set for further gains in July consolidating on the gains in the first two quarters. This is bullish from a technical, momentum and sentiment perspective.

Bookings for durable goods, goods meant to last at least three years, fell a very sharp 4 per cent in June, a bigger fall than forecast and the most since August 2014.

Gold moved higher as the Fed concluded a two-day meeting, where policy makers left interest rates unchanged claiming risks to the U.S. economy have subsided.  This means there is still the possibility of very small rate increases this year. The durable goods number though shows that the U.S. recovery remains fragile at best.

Gold has climbed 26 percent this year in dollars terms and silver by 46%. Both have seen even bigger gains in most currencies and especially sterling. This is largely due to continuing ultra loose monetary policies globally and growing concerns about the financial and economic outlook.

The Fed has indicated it will hold interest rates lower for longer. Central banks have pledged even more monetary easing amid concerns over the fallout from the U.K.’s vote to leave the European Union and geopolitical risk globally. Japan Prime Minister Shinzo Abe announced plans for even more QE – 28 trillion yen ($265 billion) to help prop up the very weak Japanese economy. Read the full post here.


A Psychiatric Diagnosis of the U.S. Market: Schizophrenic Disconnect From Reality

If you think a delusional market is healthy, it’s time for a psychiatric exam.


What diagnosis would an experienced psychiatrist offer when presented with the bizarre behavior of the U.S. stock market? We assume that the wild mood swings of greed and fear are “normal” for markets devoted to short-term profit and speculation, but the stock market’s disconnect from reality is far beyond mere mood swings.

The stock market thinks it’s solidly on pavement, but in reality it’s like a car flying off a cliff: the Wiley E. Coyote moment is just ahead. There’s nothing but air beneath the stock market.

Consider the reality of PE expansion from a price-earnings (PE) of 10 at the bottom in 2009 to 18+ today, while profits are stagnant. And what is driving this expansion other than a delusional belief that profits will magically reverse and log massive gains in the second half of 2016?

If we strip out “one-time expenses” and other accounting flim-flam, profits are plummeting. How else can we characterize this disconnect between stagnant sales (look at Apple, CAT, etc.) and “profits” that are one step away from outright fraud as anything other than delusional?

As global trade, U.S. rail traffic and other non-gameable measures of economic activity stagnate or decline, how can anyone connected to reality expect sales and profits to rise sharply?

The stock market is hitting new highs for what reason? The typical answer is: more central bank stimulus is on the way, the Fed/ BoJ /Bank of China/ European Central Bank have our back, etc. etc. etc.

But the reality is obvious to all: the returns on central bank stimulus have declined to near-zero. Trillions in additional stimulus are needed to just keep the delusional markets from experiencing gravity (see car photo above).

And how about the manic mood swings from panic in February (i.e. a whiff of reality) and the euphoria of new highs in summer? If this isn’t the acme of bipolar delusion, then what is?

Perhaps the greatest delusion is the confidence that this ephemeral bubble “wealth” is actual wealth that can be counted on to fund pensions and insurance claims in the future. Pity the deranged souls who actually believe that stock gains based on fraudulent claims of “profit” and delusional expectations of rising profits as the dollar strengthens and the global economy implodes are “wealth” that can be considered permanent.

The only possible diagnosis of this stock market behavior:

1. Patient (the U.S. stock market) is suffering a schizophrenic disconnect from reality.

2. Patient (the U.S. stock market) is suffering from bipolar mania that leads to delusional beliefs in delusional profits and delusional central bank omnipotence.

3. Patient is suffering from psychotic delusions of wealth, akin to the delusion that the patient is ruler of the world, galaxy, universe, central banks are all-powerful, etc.

If you think a delusional market is healthy, it’s time for a psychiatric exam.

My new book is #3 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition)For more, please visit the book’s website.

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Marc Faber: Invest 25% Of Investment Portfolios In Gold Bullion

Marc Faber has told advisers to invest 25% of investment portfolios in gold bullion.

The author of the Gloom, Boom & Doom Report, urged investment professionals at the CFA Institute Conference in Chicago that 25 percent of a portfolio should be allocated to gold given the very significant risks facing investors today.

The Chicago Tribune reports that Faber advised that gold is a “protection from a dangerous combination of tremendous government debt and massive bond-buying by central banks globally trying to fight off recession with near-zero interest rates.”

Faber said rates are so low that investors can’t make money in bonds so they keep buying stocks even though the prices are very inflated. Central banks want rising stock prices to make people feel wealthy and therefore spend their money, but the end result is income inequality and investor resentment, he said.

“Faber told the investment professionals gathered in Chicago that they shouldn’t be prejudiced against gold. Although the typical investment pro keeps less than 1 percent of his or her portfolio in gold, Faber suggests 25 percent. He sees it as protection from a dangerous combination of tremendous government debt and massive bond-buying by central banks globally trying to fight off recession with near-zero interest rates. Besides gold, Faber has invested in Asian real estate and some stocks and bonds.”

“It’s ludicrous to think that slashing rates will get people to spend.” When rates are low, he says, you feel insecure as savings earn nothing. So, “you save more” according to the Chicago Tribune.

Faber told GoldCore in a webinar in 2014 how he will “never sell his gold”, he buys “more every month” and he believes owning gold in vaults in Singapore “is safest.”

Webinar: Gold Bullion Stored In Singapore Is Safest – Marc Faber via Youtube

Download Guide: Essential Guide To Storing Gold In Singapore

Read More


Gotta catch em all by Sketchaganda

Tory Manifesto

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How Bitcoin is slowly replacing fiat currencies

How-Bitcoin-is-slowly-replacing-fiat-currencies

From its inception in 2009, Bitcoin has been regarded as one of the most versatile payment methods that exist in current times. It goes a long way in solving the many problems associated with moving fiat currency around the world and in the internet age, the digital currency has the potential to be accepted as a universal form of currency.

Though skeptics have long voiced their doubts about Bitcoin ever being adopted wide enough to replace‘real money’, Bitcoin’s 2016 performance has outperformed most asset classes to date. In fact, Bitcoin’s performance since inception has been nothing but stellar.

 

Bitcoin Performance

Fiat currencies are deemed acceptable if they meet the following criteria. Let us see how Bitcoin fares on these terms.

Read more ›


Why Real Reform Is Impossible: We Can’t Believe the Mighty Titanic Could Actually Sink

Why did passengers remain on the Titanic even as its bow sank deeper into the ice-cold Atlantic? They believed the experts and authorities because they wanted to believe the ship was “unsinkable.” And why did they want to believe the ship was “unsinkable”?

Two visceral realities fueled their misplaced faith in the ship’s supposed safety:

1) The warm ship seemed so mighty, and the alternative–open lifeboats drifting in the dark cold night–seemed so vulnerable, uncomfortable and risky.

2) It was much easier to believe the experts’ assurances that the ship was safe than it was to clamber into a small lifeboat and bob around the open Atlantic.

We all know which alternative turned out to be safe and which one was fatally unsafe. The apparently risky open lifeboats were the sole source of survival and the enormous, complex “unsinkable” ship sank, ending the lives of everyone who clung to the appealing fantasy that the mighty ship was too technologically advanced to sink.

We are all on a Titanic, a complex system that experts and authorities declare safe and unsinkable for all time. Our money, our government, our Social Security, our Medicare and our entire debt-based way of life is mighty and invulnerable. Those few who see the eventual need to prepare “risky” lifeboats are mocked and ridiculed.

But the status quo’s bow is already sinking into the ice-cold waters of reality.The only way the status quo can support the debt-based financial system and government that funds all these vast systems is if the economy creates 10 million more “breadwinner” jobs (in David Stockman’s definition, a job that earns enough to support a family of four) a decade.

These new jobs are needed to raise the additional $1 trillion per year in payroll and income taxes needed to keep the fiscal ship afloat, and to provide the household income needed to support trillions more in private-sector debt–new home mortgages, auto loans, student loans, credit card debt, etc.–that’s needed to support consumption.

If the status quo can’t create at least 10 million new breadwinner jobs a decade, it sinks just as surely as the Titanic, which was doomed the moment the fifth watertight compartment was ripped open by the iceberg.

And please don’t tell me we can raise $1 trillion in new annual taxes by “taxing the owners of the robots,” another “unsinkable” fantasy I dismantle in my books Why Our Status Quo Failed and Is Beyond Reform and A Radically Beneficial World.

Now that software and robotics are commoditized, the scarcity value of these tools and the goods they produce is plummeting. Take a look at profits in commoditized goods: they’re razor-thin, and getting thinner by the day. As the cost of software/automation tools drops, they become affordable to an ever-larger pool of owners/producers, which means the competition from new owners will increase until there is no profit at all.

And exactly how do you extract $1 trillion in phantom profits from “owners of robots” who happen to be overseas? The belief in “taxing the owners of robots” is identical to the doomed souls on board the Titanic believing the ship was unsinkable.

The belief in the status quo’s permanence is exactly like the belief in the Titanic’s invulnerability. The systems we depend on are so vast and seem so mighty, it doesn’t seem possible that they could unravel and fail. But their eventual unraveling and failure are already baked in and cannot be undone by the modest tweaks of what passes for “reform” in the status quo.

The financial realities of systemically stagnant jobs, incomes and tax revenues have already ripped a fatal gash below the waterline of the status quo. The bow is sinking but the parties on the First Class deck continue. The passengers in steerage are getting anxious because they see the cold water sloshing around the lower decks, but few on the upper decks care what mere steerage passengers are experiencing.

Unfortunately for those partying on the upper First Class decks, they are as doomed as the steerage passengers when the ship goes down.

As the supposedly risk-free status quo decays, the supposedly “risky” lifeboats– decentralized private-sector arrangements of multiple income streams derived from ownership of productive assets that are debt-free and not dependent on debt-based government funding or global corporate cartels–will be cooperating and collaborating with each other.

Those seeking lifeboats will benefit from the Mobile Creative credo: trust your network, not the corporation or the state.

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