Thursday, May 17, 2018

Christianity in Europe will eventually decline to a second-rate religion.

EU Migration Chief Say Europe Will Continue to Take Refugees “For Decades to Come”

The EU migration chief, Dimitris Avramopoulos, has demonstrated that politicians are just so out of touch with reality they are securing their own demise. Avramopoulos has made a speech that Europe is set to absorb massive waves of migration “for the decades to come” and that the EU will “never become a fortress” building walls to keep people out. He delivered this speech yesterday as the Euro broke the 118 level. By this very policy, the failed invasion of the Ottoman Empire back in 1683 has been fulfilled. Christianity in Europe will eventually decline to a second-rate religion. These people are just so far from reality refusing to admit that this decision is what is tearing the EU apart, that this refusal to admit a mistake is sealing the fate of the EU and will raise the stakes of disintegration by 2020-2021.

Monday, May 14, 2018

How the Rich Get Richer!

COMMENT: You always support the rich and never see what they do to the rest of us.
ANSWER: You simply believe the propaganda of governments. The rich get richer by INVESTING in assets. They list Bill Gates among the top in the world. Do you really think one gets rich by making more per hour than the next guy? Wealth is created through assets – not wages. The NUMBER ONEsuppressor of the people is all governments. I worked hard trying to get Social Security reformed and privatized when the Dow was 1,000 instead of 100% government bonds. I gave up. There are too many pension funds that are restricted to buying government bonds.
It is not the rich that prevent others from investing. It is always the government. If you really add up what you pay in property taxes each year and subtract that from the value of your home, you will quickly see that you probably lost money. When you sell the house, they do not count the taxes paid for decades as part of the cost.
Wealth is created by INVESTMENT – not buying bonds and certainly not by wages. Who prevents the average person from investing? It’s not Bill Gates.

Friday, May 11, 2018

You cannot play around with governments. They can change the law retroactively, do whatever they desire and will NEVER be prosecuted for even outright fraud.

Bondholder Suing Spain for the Bail-In of Banco Popular

It was only a question of when, but now those investors who lost 100% of their money in Banco Popular in Spain are filing a lawsuit demanding answers in a court filing in New York seeking information from the purchaser of the stricken bank – Banco Santander who paid just €1 to take over troubled rival Banco Popular. This entire affair demonstrates why European bank shares and bonds are FAR TOO RISKY to own. The government demands that European banks raise capital. However, if you invest in a European bank and there is a problem with more bad loans than expected, they can seize the bank and sell it for even  €1 and you have lost all rights to your investment.
I have warned many times, you cannot play around with governments. They can change the law retroactively, do whatever they desire and will NEVER be prosecuted for even outright fraud. They are the Devil and you just cannot reason with power gone crazy

The youth have turned to renting and see the dream of owning your own home as a joke after property taxes

What Really Causes Inflation & Deflation?

QUESTION: why national debts eventually default Martin to answer this question you said:
we need to introduce currency. France and Germany were less impacted by converting to the Euro than Greece, Italy, Spain, and Portugal. Why? Currency Inflation!
My question is if it is not the quantity of money that is making $1 million buy fewer Cadillacs, then what is the trigger?
Is it the national debt, being devalued by a lower dollar?
What then is causing that dollar to go lower and purchase less if not a quantity of money causing fewer goods to be chased by more money?
ANSWER: It is a combination of many trends. The idea of inflation is caused by an increase in money supply has been the one-dimensional answer. It may sound logical, but it is far from the actual cause. Inflation and Deflation are more directly impacted by the credit cycle than the creation of money by the state.

Here is a chart of M2, which includes a broader set of financial assets held principally by households. M2 consists of M1 plus: (1) savings deposits (which include money market deposit accounts, or MMDAs); (2) small-denomination time deposits (time deposits in amounts of less than $100,000); and (3) balances in retail money market mutual funds. If we look at money supply, then inflation should always exist without end. Clearly, money supply is not the only factor involved.
Here is what is known as the adjusted monetary base, which equals the sum of the monetary source base and an appropriate RAM adjustment. The adjusted monetary base is composed of the adjusted total reserves and adjusted nonborrowed reserves. When we redefine the money supply looking at the entire monetary spectrum, you get to see the Quantitative Easing and it peaked in line with the ECM.

Now let see if the money created actually made it into the economy. The Fed also created Excessive Reserves because the banks did not want to “stimulate” the economy by lending. This is why I have said the QE was an utter failure for the banks just parked the money and it was not lent out.
Now let us look at the decision making of banks. Here we can see why the banks simply parked the money at the Fed. The credit cycle comes into play and this is what more directly impacts inflation or deflation that the simple quantity of money.
We can see that the consumer delinquency rate on Consumer Loans is really the key. The idea that the Fed can stimulate the economy by handing banks more money is the most stupid idea I have ever heard. The very design of the Federal Reserve was that they would BUY commercial paper when the banks WOULD NOT to stimulate the economy directly. Then Congress instructed the Fed to buy their debt for World War I and never restored the design of the Fed. So now the Fed buys only government paper and it has lost its ability to “stimulate” the economy for this is the credit cycle which dictates inflation and deflation far more than any quantity of money theory.
When I conducted studies of interest rates relative to the stock market, I quickly discovered that the stock market ALWAYS rallied with rising rates and decline with falling rates. More importantly, it was critically influenced by international capital flows. If money was turning away from the United States, then the interest rate would move to the highest level as in 1899. When the capital flows pouring into the USA in hiding from World War I, you find the Greatest Bull Market in History with the lowest level of interest rates because the capital flowed into the USA increasing the real money supply by credit.
I have stated also many times that the domestic money supply of any nation can be increased and decreased by international capital flows. If the Chinese come and buy a piece of real estate, they bring in money for a dead asset. The seller now has money that did not exit domestically before the sale. If two Canadian sell and buy a home, nothing changes domestically. But a foreign buyer must import the cash to buy the home and thereby the available cash domestically increases with the state doing nothing. The Chinese buys dollars perhaps somewhere else which the banks create in the swap market. The government never “officially” printed anything nor did they expressly increase the money supply.
When we try to actually create a theory that one thing is the source of any effect, we always end up with egg on our face. It simply cannot be done. It is always a dance of many factors and how they come together in what combination and in what order. The Boom & Bust Cycle is far more directly impacted by the Credit Cycle than by money supply. You can create all the money you want, but if the banks will not lend and consumers will not borrow and prefer to hoard because they do not trust the future, you will be in a deflationary cycle.
When J.P. Morgan was being interrogated by the ruthless Samuel Untermyer in the Senate, the exchange showed that the government NEVER understood finance or banking. Morgan express the way banks really operate. They will not lend you a dime if they think you will default even if you have the collateral to back the loan. If you do not have faith in the borrower, you do not do business.  Remember one thing. The actual money supply is a tiny fraction of the real money supply which is created by lending. Some people BELIEVE gold is money. Other believe Bitcoin is money. So what is the definition of money? It is the broad spectrum of assets that include real estate and equities. All the studies show that if real estate is rising, spend SPEND more freely because they “feel” richer. When real estate declines, they contract in their spending.
This is why I have made it clear many times. The 2007-2009 Crash was far more devastating than the numbers show. This is why liquidity remains about 50% of 2007 level. The vast majority of homes are still worth less than they were in 2007. The average consumer does NOT “feel” richer. The youth have turned to renting and see the dream of owning your own home as a joke after property taxes for which you get no credit when you sell a house.
Welcome to the REAL WORLD!

Sunday, May 6, 2018

Argentina Raises Interest Rates to Support Currency - 4 Phases

Argentina has just raised interest rates to 40% trying to support the currency. I have explained many times that interest rates follow a BELL-CURVE and by no means are they linear. This is one of the huge problems behind attempts by central banks to manipulate the economy by impacting demand-side economics. Raising interest rates to stem inflation will work only up to a point and even that is debatable. The entire interrelationship between markets and interest rates has three main phase transitions and each depends upon the interaction with CONFIDENCE of the people in the survivability of the state.
PHASE TWO: Raising interest rates will flip the economy as Volcker did in 1981 ONLY when they exceed the expectation of profits in asset inflation provided there is CONFIDENCE that the government will survive as in the USA back in 1981 compared to Zimbabwe, Venezuela, Russia during 1917 or China back in 1949. In other words, if the nation is going into civil war, then tangible assets will collapse and the solution becomes assets flee the country.
In the case of the USA back in 1981, the high interest rates worked because we were only in Phase Two where there was no civil war or revolution so the survivability of the government did not come into question. Hence, Volcker created DELATION as capital then ran away from assets and into bonds to capture the higher interest rates. Then and only then did rates begin to decline between 1981 into 1986 reflecting the high demand for US government bonds, which in turn drove the US dollar to record highs and the British pound to $1.03 in 1985 resulting in the Plaza Accord and the creation of the G5 (now G20).
So many people want to take issue with me over how the stock market will rise with higher interest rates. It is a BELL-CURVE and you better begin to understand this. If not, just hand-over all your assets to the New York bankers now, go on welfare and just end your misery.

Here are charts of the Argentine share market the currency in terms of US dollars. You can see that the stock market offers TANGIBLE assets that rise in local currency terms because assets have an international value. Here we can see the dollar has soared against the currency and the stock market has risen in proportion the decline in the currency. I do not think there is any other way that is better to demonstrate the BELL-CURVE effect of interest rates than these two charts.
To those who doubt that the stock market can rise with rising interest rates, I really do not know what to say. Keep listening to the talking heads of TV and all the pundits who claim only gold will rise and everything else will fall to dust. Then we have the sublime blind idiots who never look outside the USA and proclaim the dollar will crash and burn not the rest of the world so buy gold and cryptocurrency you cannot spend and certainly with no power grid.
Is when no level of interest rate will save the day. Capital simply flees the political state for the risk of revolution or civil war means that tangible assets which are immovable will not hold their value such as companies and real estate. This is the period that Goldbugs envision. At that point, the value of everything will even move into the extreme PHASE FOUR where even gold will decline and the only thing to survive is food. There, the political state completely collapses and a new political government comes into being.

Wednesday, April 25, 2018

“print” living tissue

Where The Future Looks Bright

QUESTION: Do you think stem cell research will be the next advance in medicine?
ANSWER: It is a shame that much is misunderstood and has been driven offshore.  So many people think Stem Cells are taken from dead babies. They are gathered from the umbilical cord but can be extracted from your teeth or even fat tissue in your own body. But the answer is yes. Stem Cellresearch is the next generation that can really be our saving grace for the future against superbugs. They can tank you blood and create a new heart. Aside from the day when you will be able to replace organs, it is helping to shorten the 10-year cycle in the development of new drugs.
This is right on time and it should provide the next advancement in medicine providing the next way of technological advancement.  Biotech companies can also “print” living tissue using specialized 3D printers. They can print tissue that can be used to produce skin for grafts, or cartilage for joints. This is the next great advancement in medicine. One company is Aspect Biosystems, which went into partnership with Johnson & Johnson to develop 3D-printed knee meniscus tissue.
The future is not all dark and foreboding. That seems to be limited to the political-economy. In other areas, the future looks different and promising.

Tuesday, April 24, 2018

Why Parliamentary Political Systems are Dangerous

COMMENT:  Hi Martin, reading your article about the SPD imposing Marxism on Germany is horrifying. To see established political parties so greedy that they’re willing to partner with fringe parties to maintain control is nuts.
We’re currently seeing this in British Columbia where the Liberal party lost its majority due to a government formed by new Democrats and the Greens. Now, this handful of green party MLAs wield enormous powers. They’re impeding the expansion of kinder Morgan’s pipeline to Vancouver, despite FEDERAL regulatory approval.
How can so few, be so greedy, as to crush the economic activity and benefits that this creates for thousands of workers? Bring on the crash and reboot, I’m sick of this.
Mike C.
REPLY: This is what is wrong with the Parliamentary System. There should be a run-off with a second election between the two top candidates. This is what they do in France. The systems employed in most other countries allow fringe groups to get control. Do not forget that Hitler won during the 1932 German election less than 36.8%. This is what is wrong with such political systems. You would think that we have learned our lessons from the past by now.