My colleague at BOOM Economics in Brisbane posts a weekly editorial and I have agreed with Admin to re-post it on TBP each week: Hat Tip: Gerry: http://boomfinanceandeconomics.com/#/
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THIS WEEK’S EDITORIAL
FEDERAL RESERVE WARNING ISSUED LAST THURSDAY – ASSET PRICES ARE TOO HIGH
The Federal Reserve released its semi-annual Financial Stability Report on Thursday last week. This is what the New York Times said about it —
“The report, which at times took on an ominous tone, came in contrast to the picture that Fed officials, economists and investors alike have been painting about the U.S. economy“
Here are some excerpts straight from the Report itself ….
“…should risk appetite decline from elevated levels, a broad range of asset prices could be vulnerable to large and sudden declines, which can lead to broader stress to the financial system.”
” …. many businesses and households remain under considerable strain, with job losses heavily concentrated among the most financially vulnerable, including many lower-wage workers and racial and ethnic minorities.”
- “Prices of risky assets have generally increased”
- “prices are high compared with expected cash flows”
- “risks associated with the course of the pandemic and its effects on the U.S. and foreign economies remain relatively high.”
There was also a Statement by Fed Governor Lael Brainard — she again warned about high asset prices and the excess appetite for risk:
“Vulnerabilities associated with elevated risk appetite are rising. Valuations across a range of asset classes have continued to rise from levels that were already elevated late last year. Equity indices are setting new highs, equity prices relative to forecasts of earnings are near the top of their historical distribution, and the appetite for risk has increased broadly”.
This amounts to a warning from the Fed that it will not tolerate any further stock market price madness. Take note that the warning comes after the Fed created the madness. Brainard also warned of high debt levels inside companies. After this dire warning, the stock market action was interesting to say the least on Thursday afternoon at 2.44 pm.
PLUNGE PROTECTION TEAM RESPONSE
SOMEONE RESCUED THE US STOCK MARKETS ON THURSDAY
A big buyer with a very heavy finger suddenly started buying shares:
- At exactly 2.44 PM on Thursday afternoon to stop a general decline in prices from developing further on the US stock markets. Guess who?
- At exactly 2.44 PM, the ARKK Innovation ETF (ARKK) was down 5 % on the day. Yet somehow, buyers arrived at exactly 2.44 PM and it finished the day down only 2.88 %.
- At exactly 2.44 PM, the Russell 2000 ETF (IWM) was down 1.4 % on the day. Yet somehow, buyers arrived at exactly 2.44 PM and it finished the day up by 0.09%
- At exactly 2.44 PM, the S & P 500 ETF (SPY) was up by only 0.05 % on the day. Yet somehow, buyers arrived at exactly 2.44 PM and it finished the day up by 0.8 %.
- At exactly 2.44 PM, Tesla Shares (TSLA) were down 2.26 % on the day. Yet somehow, buyers arrived at exactly 2.44 PM; it finished the day down by just 1.1 %.
You can guess what happened at 2.44 PM, who was responsible and why.
ALL CENTRAL BANKS MUST CHANGE THE MONEY SUPPLY SYSTEM.
The activities of the Federal Reserve Bank (America’s central bank) and all other central banks are no mystery. They operate in plain sight. However, contrary to popular misconception, the clients of the US central bank are not the American people. They are the US Commercial banks who desperately need CPI inflation long term to survive — to inflate away the debts they have created.
So, since formation in 1913, the Fed always, always fights against dis-inflation and deflation while simultaneously and forthrightly claiming to be “inflation fighters”. Yes, its activities reduce the purchasing power of the currency over time. Yes, it enslaves the people to debt over time. However, there is more to understand.
All money is debt and all debt is money. But the current situation in the US where the money supply is 98% debt and 2 % sovereign (cash) is an iniquitous situation. 98% credit money which bears interest charges is a massive imbalance over sovereign money (non-interest bearing). Such a situation guarantees impoverishment of most of the population over time and the development of a super wealthy class of people. That is the world we live in until it is changed to a 50:50 money world which would be much better.
Credit contracts and credit money systems are a natural function of social interaction. They are not the problem. And such systems indeed work better (for everyone) with central banks in place. The problem lies in the imbalance of power. 98% credit money is a ridiculous imbalance of power brought about by governments that don’t understand money.
We need an Electronic form of Cash (non-interest bearing sovereign money) that grows over time towards 50 % of the money supply. The banks will fight this tooth and nail. But governments and the people must carry this fight forward for any social justice to exist in the long run.
A 50:50 money world would be 50% debt money (created as bank loans) and 50% sovereign money (created as non-interest bearing debt created as a reserve asset from the banking system to the central bank and then to the government with regular pre-determined debt jubilees).
This would also add another beneficial control mechanism to money supply growth — a volume control determined by legislation and adhered to by all parties — the commercial banks, the central bank and the government. All of this can be achieved electronically on the ledgers of the banks, the central bank and the government very easily. After agreement is reached, the system could be in place within a morning.
Debt Jubilee: https://en.wikipedia.org/wiki/Debt_jubilee
BOOM designs the perfect Economy: https://boomfinanceandeconomics.wordpress.com/2020/01/18/boom-as-at-19th-january-2020/
SALK INSTITUTE RESEARCH FINDINGS: THE SPIKE PROTEIN IS A PATHOGEN (IT CAUSES DISEASE ITSELF)
The SALK Institute has determined that the Spike Protein itself of the SARS CoV2 virus causes many of Covid 19’s effects via vascular damage. Their recently published research clearly demonstrates this — vascular damage occurs without the Virus itself being present, just the Spike Protein part is enough.
SALK Institute: COVID-19 is a Vascular Disease: Coronavirus’ Spike Protein Attacks Vascular System on a Cellular Level (see Link below). The Salk Institute work is very important. Messenger RNA and Viral Vector “vaccines” create large volumes of Spike Protein fragments. If those fragments attack the endothelial layer, then we may see possibly every vaccine recipient eventually suffering from vascular disease to some degree or other. You cannot live for long with a damaged endothelial layer so any damage is a serious assault.
The endothelial layer is a special type of cell — critical — it is one cell thick and it is the barrier between the bloodstream and the body’s cells. It is the gatekeeper between our blood and our body cells.
This could result in huge numbers of people with acute and chronic cardiovascular disease. And then Autoimmune diseases will probably follow as sure as night follows day. Finally, if they are re-challenged by the virus, the recipients could also suffer from ADE/Cytokine Storm reactions resulting in death. ADE is Antibody Dependent Enhancement.
These are all worst case scenarios but they are so scary that they need to be considered. It is too early to tell if this is going to happen. The hard questions are these — do the spike protein fragments from the “vaccines” cause as much damage as the live Virus itself? Or more? Or less? And will the spike protein fragments cause long term, chronic vascular consequences? Or will they be harmless over the long term?
We just don’t know. This is a huge experiment on millions of people who have been inadequately informed of these potential risks. If the worst case scenario comes to pass, many, many millions could die from cardiovascular diseases and autoimmune responses over the next 2 – 5 years from the damage caused by the “vaccines” than have ever died from the Virus.
Virus deaths so far (but 94 % die from co-morbid conditions) = 3 Million
“Vaccine” possible deaths (worst case scenario) = HUNDREDS of Millions
Then there is the unknown aspect of the new nanoparticles in the mRNA products and their potential for damage long term. And the potential for RNA fragments in the bloodstream to cause damage long term. Nobody knows the possible adverse outcomes.
Dr Mengele, the NAZI torturer from World War 2 death camps, would be proud. We have been locked up, stopped from speaking out, stopped from travelling, denied medical therapies, censored and we are now being experimented upon.
BOOM can’t see how this differs from a NAZI concentration camp. At least they are not starving people to death? Oh sorry, they are — this excerpt is from the BOOM Editorial on 11th April — just one long month ago.
STARVATION IS THE REAL COVID CRISIS
“The Covid phenomenon is a huge threat to the global economy. It caused a massive contraction in economic activity over the last 12 months with very significant supply chain disruptions still occurring. A United Nations report at the end of 2020 estimated that 130 Million people would suffer starvation as a result. So Covid is a lightweight in the death stakes. Starvation caused by bizarre governmental over-reactions is the real problem. Of course, most of that starvation will occur in poor nations. The rich, advanced nations (and their “caring” politicians) obviously do not care about this knock-on effect.”
OK — at least they are not gassing people to death?
SALK INSTITUTE: https://scitechdaily.com/covid-19-is-a-vascular-disease-coronavirus-spike-protein-attacks-vascular-system-on-a-cellular-level/
ANOTHER SENIOR PATHOLOGIST SPEAKS OUT FROM IDAHO
- “We are in an endemic now. The pandemic is over”
- “Highest risk factors — advanced age, obesity, low vitamin D”
- “The virus is fragile and is inactivated by sunlight and ventilation. It is insanity to wear a mask outside. Masking outside is insanity”
- “We have an international pandemic of Vitamin D Deficiency”
100 MILLION DEAD IN INDIA
27,000 people die EVERY DAY in India — 100 MILLION have died in the last 10 years. No one in the media took any notice. No politician cared.
In economics, things work until they don’t. Until next week ………… Make your own conclusions, do your own research. BOOM does not offer investment advice.
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50/50 money would be better than 98/2 but that only means the day of reckoning is pushed further into the future. The ONLY money that exist without debt and interest is sovereign money issued and spent by a nations federal government. However, such a system demands and requires a civilized citizenry; how many decades must pass before we the people arrive at such an elevated station in life….
Good question Mark. Both Gerry and I do ruminate over this because any system will rely on integrity and honesty, and as you say, we may well have to wait an interminable time for this to happen. Nevertheless it must be better than what we now have?
They should be using the term currency.
So essentially a ‘do over’ to get us right back where we are, but with a lot of pain along the way. I hope for the day of ‘free gold’ and ‘free silver’, where the market sets the price of ‘money’.
http://www.plata.com.mx/enUS/More/412?idioma=2
Ah yes, that would be the day. I am with you on this one and have always favoured PMs as a sound money pot. I recommend it in my book on several occasions being an adherent to Austrian economics and a Libertarian wishing for small government, sound money and free markets. Gerry differs with me on this but we rub along.
I have several books going right now with yours being one of them, I will touch bases with you when I finish it.
So pleased to meet a reader of my work – enjoy and only too pleased to discuss it.
Money is a contract of debt — a credit contract. These exist in any primitive tribe. “I’ll help build your barn today if you help me harvest my corn crop next month”. When such contracts become many and have become generally recognized (accepted) in a social setting, the society will inevitably move towards the invention of a generally accepted, convenient currency to assist in payment settlements (consideration). A currency is money in circulation such as salt or sea shells or (later) metal coins. When metal becomes inconvenient, cloth or paper comes next, then ledgers were invented to store the promises (e.g. tally sticks) then when computers arrived, digital ledgers were invented (we have had them since the 1960’s). If it is not circulating, kept in storage, currency becomes a store of potential spending power (wealth). If a society’s money is linked to Gold (or Silver), then the price of the precious metal must be fixed against the prevailing currency. Then the only way to expand the money supply is via discovery (mining) or theft (Imperialist wars of conquest, murder and mayhem). If we ever return to a Gold backed currency, a very clever committee of economists will have to set the price of Gold from time to time. Theft, murder and mayhem will return in large volumes. Very clever economists are extremely rare, let alone a committee of many (!). Credit contracts always have a term (a period of existence) thus credit money must always have a term. Credit money is born as a contract, exists in circulation (as currency) or is fixed for a period of time (as wealth) but then it dies when the contract is completed. This is why Bitcoin or Gold can never be money — because they are not created as contracts and are limited in volume. Bitcoin cannot be destroyed, Gold can never be destroyed, thus neither can ever be money. They can only be assets — either digital assets or commodity assets. Even sovereign money (cash) is a debt from the sovereign to its citizens. That debt can be (theoretically) recalled at any time. Credit money (created as a bank loan) is interest bearing money. Cash is not. Our money now is 98% credit money and 2 % sovereign (cash). A 100 % sovereign money system is called Communism — there are no private banks and thus no creation of interest bearing money. That is what happened in the USSR. China is a mixed money system where the private credit money is private until it is public (you get the drift). We need more sovereign money (created as non interest bearing cash) to provide balance to the credit money in existence. We should strive for a 50:50 system. Banning credit money is called communism — not a good idea (eventually everybody pretends to work and the government pretends to pay them with something of “value” which they pretend is a generally accepted currency). The Debt Jubilee referred to in this week’s BOOM editorial concerns the forgiveness of debts created as Reserve Assets between the commercial banks, the central bank and the government). Reserve Assets are special assets held by banks that cannot be used to create credit contracts to banking clients. It’s simple, isn’t it ? One more thing — Money can never be “sound”. It’s value always must derive from the quality of the trust embodied in the contracts of promise. And most often, that trust must be enforced because many human beings tend to be untrustworthy if given the chance. History reveals that in all its so-called “glory”. Money is often the obsession of human beings but few make the effort to understand it.
Holy Cow!, you have won the Genius World Record for the most erroneous comments in one paragraph. I do not even know where I would start to comment on specifics and I am afraid that if I did I might compete for paragraph length.
The last sentence that you so smugly closed with
should be read by yourself while looking in a mirror so that you observe who just does not get it, BOOM, it’s you.
I am surprised The Assegai, that you differ so vehemently – may we have your take on economics and money etc, as it would be most enlightening for me. OK ,so I am a gold bug – but Gerry makes a lot of sense. We have corresponded and talked for many years now – his experience over 12+ years of money in general and investments/economics in particular lead me to believe his is correct in his thinking.
So let’s have it from you please?
AP, I don’t have the time to respond to all of the items above, but I will explain what I believe about Money and Currency. Our wealth is comprised of our time, intellect, sweat, talent, etc., we exchange those things for something that we can spend later. We want whatever we exchange our time, etc. for to maintain the value. In other words, if we exchange our time for 100 units that will buy 100 whatevers, in a year we got screwed if our 100 saved units only buy 50 whatevers.
It is important to first understand that there are distinct differences between:
1. Currency
2. Fiat Currency
3. Money
1. Currency can be anything two people want to use as an exchange.
2. Fiat Currency is a government sanctioned currency, fiat meaning so be it. There has never been an unbacked fiat currency that has not returned to its intrinsic value of ‘zero’. Fiats are a CONfidence game, they work as long as people believe they work, but they go to zero when there is lack of confidence. Fiat currencies are:
a. Unit of Account
b. Medium of Exchange
c. Portable
d. Divisible
e. Fungible (interchangable)
3. Money is items a-e noted above but includes one other extremely important one:
f. Store Of Value Over A Long Period Of Time
It is impossible for a Fiat Currency to be a ‘store of value’, and therefore it is not ‘money’. Governments are able to inflate the currency supply. As you know, a basic principle of Austrian Economics defines inflation as an increase in the currency supply without an equal wealth creation. The inflation causes the currency to devalue; therefore, it is not a store of value. In the US, this is prior to the last 5 years of trillions of dollars created from thin air, the dollar had lost 98% of its purchasing power from 1913 (creation of the fed). What does the Fed do, they inflate the currency, and thereby reduce the purchasing power of the currency. Currencies ‘steal your value’, they do not ‘store it”.
Two items that ‘store their value over long periods of time’ are gold and silver. Governments cannot create them, they cannot inflate them. People started using G/S 5000 years ago as currency, it was not yet money because it was not divisible, was different weights, was not of the same purity or fungible, but once it was uniform, it was money.
Currencies derive their value from Gold, not the other way around. I only have a US example, but prior to the Fed creation, the US Treasury issued notes which said that an equal amount of gold had been deposited and the bearer of the note could exchange the note for gold. The note was not the value, the gold was the value. If you take a shirt to the laundry, they give you a claim check, the claim check has no value, the shirt is the value. The dollar was simply a claim check for the gold.
This is all great, thank you The Assegai for spending time to explain your position and which appears to be exactly what I understood to be the case. But also so does the author of this article except that we differ on the role of gold but he has convinced me that gold, as a basis of a modern currency, will not work. The issuance of sovereign money will work if it counter-balances the issue of credit, that is 50/50, (I think that is what is proposed).
He says that not one in millions understands the role of credit in the economy and it is difficult to explain it in just a few words, as you say. I will ask if he has a site that might explain it because I too believed in what you say for most of my life!
Jubilee !!
( otherwise known as ‘you will own nothing and be happier’)
Well, not exactly Anon; This may help:
“Such jubilees were not utopian or altruistic: they were a clear-sighted recognition that to maintain social order and political stability – and protect the long-term sustainability of economic life, commerce and peaceful rule – it is necessary to stop credit systems degenerating into the enslavement of debtors by their creditors. That way lie anarchy and violence.”
https://moneyweek.com/economy/uk-economy/601055/debt-jubilee-will-our-debts-be-written-off
It could work with digital currency too I guess – but I speculate.
Did you mean Senior Pathological Liars, AP?
Well, Gerry wrote this, so I hope he will check the comments and reply. Nice one though Ghost, thank you
switzerland is canceling parts of their currency & citizens have 6 months to turn it in or lose it–
Thanks TampaRed I think you may be on to something. I will read asap but I don’t tend to follow Martin for various reasons, the least of which is time!