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THIS WEEK’S EDITORIAL
US COVID NUMBERS COLLAPSING: In the United States, new cases of Covid have collapsed since January. Death numbers have also collapsed. On January 15th, just 4 short months ago, there were almost 17,000 new cases occurring per week per Million of Population. That number is now running at about 2,000 — almost a 90% decline.
The peak of weekly deaths attributed to Covid occurred on February 1st at 54 per Million. That number is now 6 per Million — again, almost a 90% decline. This is a small number of deaths which equates to 102,960 per year for the whole nation. On an average year, the total death count for all of the United States usually amounts to around 3 Million. So 102,960 is just 3.4 % of the total.
In the United States, about 200,000 people die from accidents per year on average — double the current death rate for Covid. The CDC tells us that 700,000 die from heart disease each year and 600,000 die from cancer. About 160,000 die from Stroke and 150,000 die from Chronic Lower Respiratory Diseases. Around 130,000 die from Alzheimer’s Disease and 100,000 from Diabetes. The CDC also tells us that up to 52,000 die every year from Influenza.
Respiratory viruses are a part of life. They come, they go (usually after peaking and then collapsing) and mostly during winter. Influenza kills and so do other viruses. Death is a part of Life. Perhaps we should leave it to the medical and nursing professions. Politicians, epidemiologists and public health officials have not covered themselves in glory over the last 2 years. BOOM suggests that they should turn their attention to something else where they may (perhaps) have some experience and expertise. Reference: https://www.cdc.gov/nchs/fastats/leading-causes-of-death.htm
RUBLE RISING – GAS BUYERS LINING UP: As BOOM has previously forecast, the Russian Ruble currency continues to rise against the US Dollar. Over the last 10 weeks, it has risen relentlessly. There is now much conjecture about exactly how many buyers of Russian gas in Europe are actually paying for their supplies in Rubles (or Euros). Those buyers, of course, have to open Ruble and Euro denominated accounts with the Russian bank, Gazprombank in order to make payments.
Over the last week, BOOM read reports that 10 nations had opened Gazprom accounts. Then the number reported was 20. Then a report came in that stated a total of twenty European companies had opened Gazprombank accounts, with another 14 clients applying. And late in the week, a report arrived that half of Russia’s 54 European customers had already opened accounts. Who knows the real number?
Gas supplies from Russia to Poland and Bulgaria have been stopped due to refusal to pay according to the new payment terms. And, it looks like supplies to Finland will be cut very soon for the same reason.
Meanwhile, India has decided to invest in Russian energy supply assets, buying them from departing US and European forced sellers. Saudi Arabia has been steadily investing in such assets over the last few years. It will be interesting to see if they also take this opportunity to increase their stake in the Russian oil and gas industries. BOOM expects both nations to continue to invest in future energy supplies, wherever they can gain access. Russia will welcome such investments. It’s called “taking the long term view”.
SRI LANKA ECONOMIC DISASTER: BOOM wrote about Sri Lanka in the editorial published one month ago on 17th April. The nation had defaulted on its Bond coupon payments. It was simply unable to meet the payments due in foreign currencies because of the collapse of its tourist industry from the global Covid panic. The tourists stopped coming. Sri Lanka’s foreign currency holdings were in steep decline towards zero and have presumably now reached that target.
The chief problem for the nation is that at least 50 % of its energy is sourced from external nations who expect and demand payment in currencies other than the Sri Lankan currency. It also imports specialty foods and medicines. Without imported food, energy and medicines, the nation simply cannot function at its current standard of living.
Last Tuesday, the new Prime Minister, Ranil Wickremesinghe, announced that the nation was down to its last day of petrol. Desperate times indeed. Starvation is next. And they are now officially in default on their bonds after 30 days of grace. An emergency bridging loan of US $160 million has apparently been secured from the World Bank but this will be used very quickly to buy a few more days supply of energy and food.
In BOOM’s estimation, Sri Lanka must now decide between the IMF (a $US dominated institution) and China to ensure its future. This choice is becoming a feature of the Geopolitical landscape for many third world nations. Choosing China seems to make more sense because China has close relations with Russia and Iran. Those energy super suppliers will come to Sri Lanka’s aid if China requests such aid. And Russia can also supply food and other critical commodities over the long term. Presumably, Gazprombank accounts will be utilized to make payments in any currency other than the US Dollar. Sri Lanka must choose and quickly.
CHINA ECONOMY CRASHES FROM ZERO COVID POLICIES: In last week’s editorial, BOOM wrote “China is making a big mistake. It is destroying its economy by attempting a Zero Covid policy”. Since then, the Chinese have desperately cut their mortgage loan interest rates for first-time homebuyers in a bid to stimulate the economy and data releases have shown that their economy contracted sharply in April. Unemployment numbers have surged, adding fuel to the fire. Factory output has dropped dramatically and retail sales have also fallen.
All of those numbers add up to a slowing Chinese economy and that will not help the global economy which is steadily sliding towards stagflation. Stagflation is a situation where the inflation rate is high but economic growth slows or stops growing. However, the good news is that a slowing Chinese economy will not add to the global CPI inflation outlook. And that means that CPI inflation could be transitory in the advanced economies and therefore may fall throughout the second half of 2022. Such an outcome would take a lot of pressure off central banks and significantly higher interest rates would be slowly taken off the agenda.
QUANTITATIVE BOOSTING BOOSTS THE MONEY SUPPLY: Socialism has good intentions and can generate good economic outcomes for the poor especially in feudal societies but, in the long run, ultimately, the old adage “power corrupts” comes into play and it destroys central command systems from within. Lack of productivity is then the inevitable death knell.
Radical capitalism, by comparison, dominated by banks and credit money supply, is not the answer because it inevitably ends with the vast majority of the wealth trapped by a tiny elite. Again, feudalism returns.
A balance is preferable between these two competing ideologies. Most advanced economies (including the US) have evolved towards such a balance in the real economy. But the financial system that we inherited from Babylon and Venice is designed to funnel wealth into fewer and fewer hands over time. The imbalance in control of collateral assets is inevitably the problem and, ultimately, this is the Achilles Heel of capitalist finance.
Since the great financial crisis of 2008, which was caused by banking insolvencies built on fraudulent loan books, the capitalist financial system has staggered onwards with much central bank support. However, it now needs urgent modification to prevent the return of feudalism and possibly fascism – the alliance of governments with corporations.
We now have fresh new credit money (interest bearing) making up 98% of the money supply with only 2% cash (non-interest bearing). This is dangerous to social and political stability. We need to move back towards a 50/50 balance. And that is where BOOM’s Quantitative Boosting QB reform of the money supply system comes in.
Socialism is a lie, a false promise. And so is capitalism if we continue to allow credit money to dominate over cash to such an extent as we have today. The answer lies in the middle. Extremist views of any kind are always problematic.
QB Explained: https://boomfinanceandeconomics.wordpress.com/2019/12/15/boom-as-at-15th-december-2019/
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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BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY: LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans). https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how global banking systems really work. https://www.youtube.com/watch?v=EnC1UlnFLyI
AND Watch for 4 minutes, this Bank of England explanation: Money is essential to the workings of a modern economy, but its nature has varied substantially over time. This video describes what money is today. https://www.youtube.com/watch?v=ziTE32hiWdk
Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models. EMAIL: gerry {at} boomfinanceandeconomics.com
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It appears that the whole world is but a mere ‘Monopoly’ board. We keep passing go to receive our stipend, the problem is that there are too many ‘get out of jail cards’!
Choose between China and get food and energy or the US and its bullying…decisions, decisions.
A really good discussion about European Union issues today.
Thanks Ghost – I will watch it with interest.
This week is has become pubic knowledge that the CCP has ordered manufacturers to switch from a consumer economy to a wartime economy. They will not be making items to resupply the Walmart shelves. A leaked audio tape from some podunk port city reveals some military officers discussing converting cargo ships to carry weapons and troops by his Fall. The tape and translations are available at Naturalnews.com : “Sources China preparing for D-day invasion of continental United States with forces to land on the beaches of California as Biden and Newsom serve as China’s accomplices”. I distinctly remember listening to a Prophet about 40 years ago describe the same thing in much more graphic details (minus Biden & Newsom but naming Vladimir).
Must see video at Infowas.com : “Leaked Audio Exposes China’s War Plans”. It contains a video of the tape in Chinese, an audio translation in English, a written translation in English, verified by Mike Smith’s wife who is Chinese, and an excellent interview of a real military expert by Mike Smith.
Yes rhs jr, I saw this one but I will check out the video thanks.