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THIS WEEK’S EDITORIAL
CRYPTO MARKET CONTRACTION — INVESTMENT CHOICES: BOOM has predicted the decline of the Crypto market in several editorials over the last 12 months and stated clearly that the total market capitalization of the entire Crypto market would fall from US$3Trillion to below US$1Trillion. It is now at $935Billion — below $1Trillion. And it has been below $1Trillion for 2 weeks, since September 14th. This is starting to look like a permanent decline in confidence. Investors in these digital commodities have been cashing out, moving back into US Dollars and other liquid, generally accepted currencies. When investors have faith in a stable future, they use conventional asset allocation strategies to preserve or grow their savings.
However, if an uncertain future becomes manifest, these choices become more critical and the minds of investors become more alert. They must choose between cash or assets (real and financial). The asset choice becomes critical to the future safety of their savings. If the banking system is trusted, then cash in the form of bank deposits is a safe haven even though it then becomes a loan to the commercial banking sector.
If the banking system is not trusted, then the investor will seek out assets where the value of savings can be preserved or boosted. In such situations, stocks tend to do well as investors show preference for owning the productive capacity of well-run companies. Bonds can also do well if investors have lost trust in their banking system, yet still trust their political system and their governments. Real assets such as property can also do well as the ultimate refuge but, again, trust in the political system and in governments is a necessary precondition.
If trust is lost in the political system, in governments and in the banking system, then investors will rush towards owning shares in well run companies that command critical, productive capacity or perhaps into precious metals and collectibles. In such situations, stock markets can rise strongly, not because of blind faith in the future but because of abject terror about the future. It is important for investors to watch closely if that train ever appears and starts to leave the station.
ANOTHER WHITEHOUSE EXECUTIVE ORDER: In the Executive Order 14067 issued by Joe Biden on March 9th 2022 — Ensuring Responsible Development of Digital Assets — the following statement was made — “We must take strong steps to reduce the risks that digital assets could pose to consumers, investors, and business protections; financial stability and financial system integrity; combating and preventing crime and illicit finance; national security; the ability to exercise human rights; financial inclusion and equity; and climate change and pollution.” It goes on to say “We must mitigate the illicit finance and national security risks posed by misuse of digital assets“.
This is clear. The President of the United States is ordering “strong steps” to reduce the risks associated with so-called “digital assets”.
BOOM does not see these products as financial assets (securities) or real assets. They are a peculiar form of asset which is better referred to as a digital or binary coded commodity. Remember, fresh air is a commodity and so are horse droppings. When something is a commodity, it may (or may not) have real value. Nonetheless, if a US President is ordering “strong steps” then only foolish investors will ignore such a warning.
The Executive Order also states “The United States derives significant economic and national security benefits from the central role that the United States dollar and United States financial institutions and markets play in the global financial system“.
This clarifies in writing that significant benefits spring to the US from the central role of the US Dollar in the global financial system and, further that it “will sustain United States financial power“.
This is exactly what the Russians and Chinese are saying. They are critical of the dominance of the US Dollar in global transactions, both for capital settlements and for trade settlements and they wish to balance this power more equitably between nations. They are also critical of the American dominated “rules based international order“, described by some cynics as “we make the rules and you follow the orders”. That is their crime in the eyes of the US. It is all about the currency and dominance. And that brings us to the war in the Ukraine.
FEAR OF WAR: What is spooking the stock markets, crypto markets and currencies? The war in Ukraine is the problem. Soon winter will be here. Within a week, Berlin will be seeing maximum temperatures of 14 degrees Celsius and minimums of 5 – 7 degrees. Snow has been reported in rural Poland already. Winter is coming fast. And Russia will not supply the energy needed to heat Western European homes.
With the recent sabotage of the Nordstream Pipeline, that is now a 100% certainty. Many businesses will soon cease operations and a huge crisis will erupt upon the foolish heads of the leaders of the European Union and of NATO.
BOOM expects that Ursula Von Der Leyen and Jens Stoltenberg will soon become “persona non grata” — unwelcome in their own countries. Social turmoil will erupt. History will repeat.
Napoleon, the French General and Emperor, plus the German Nazis under Hitler both tried to wage war against Russia but encountered a worse enemy, the weather. Both were hit by terrible winters and many men died. Russia lost 20 Million in World War 2 in the battles to defeat the Nazis. The German and French armies were devastated by the cold and the resolve of the Russian people. The lesson does not seem to have been learned by Europe’s current crop of political leaders.
Vladimir Putin says that he is fighting the same Nazi enemies now in Eastern Ukraine. The lesson to learn here is this. BOOM’s advice to the leaders of Western Europe is simple — don’t repeat history. It is that simple. Peace is easily achieved right now by compromise and diplomacy.
Whoever sabotaged Nordstream must be ignored, the unelected Von Der Leyen and the unelected Stoltenberg must be silenced and replaced by pragmatic representatives of the people of Western Europe. The tide is turning and the election result last week in Italy is symptomatic of that. Peace is better than war. Lives are at stake. Power is not worth dying for, especially if that power is achieved by unelected means, is totalitarian in nature and does not respect freedom of speech, freedom of movement and freedom of choice.
Von Der Leyen and Stoltenberg speak about democracy but they are both appointed, not elected, to their positions of great power and they are showing strong tendencies towards Totalitarianism. The people will soon work that out. These unelected leaders will be forced to back down or change tack — hopefully sooner rather than later.
The uncertainty in Ukraine must be replaced by certainty. Then the whole world can breathe more easily and a return to peace and prosperity can prevail.
CURRENCIES FALL AS US DOLLAR RISES: The US Dollar continues to surge higher and higher. This is a dis-inflationary force inside the borders of the United States and an inflationary force in most other nations. The Federal Reserve in Washington DC is very happy to see this happen.
However, global economic instability will occur if the US currency continues to climb much further. Thus the Fed and its investment bank proxies will soon be forced to buy assets offshore in large volumes. In other words, they will export US Dollars in return for foreign assets and that will limit the rise and rise of the US currency relative to other currencies. They will wait for bargain-basement prices. Why? Because the US always acts in its own interests. They preach that “nations must act in their own interests”. And that especially applies to them.
The danger of a single national currency being the global “reserve currency” is always this. In uncertain, unstable situations, there is always the risk of speculative funds flooding into that currency in preference to others and especially in a full blown crisis situation, even in a perceived crisis.
BOOM is watching closely for the time when the United States adopts a “Quantitative Easing” for the world by buying offshore assets. That day will come. It will be unannounced. All asset prices will then recover. But a CPI inflation killing recession will also come. We are close now to both scenarios. By the way, which currency is rising against the US Dollar? The answer is the Russian Ruble.
UK RESTARTS QUANTITATIVE EASING – QE is back as expected by BOOM. The Bank of England has become the buyer of last resort for British Gilts (long dated sovereign, government bonds). With a weakening currency and a budget deficit to finance, they had no choice in the matter after the new UK Treasurer, Kwasi Kwarteng (full name Akwasi Addo Alfred Kwarteng ) and the new Prime Minister, Liz Truss, decided upon a “banker led growth recovery”.
Their plan is to lower taxes while not cutting government expenditure significantly. Such a plan is fraught with risk. It is dependent upon the emergence of borrowers who have strong faith in the future of the UK as a place both to live in and to invest in.
Domestic investors have to have faith that the British Government will build a stronger economy over the coming years. And they have to put their money at risk, borrowing from the commercial banking sector to expand the money supply.
Foreign investors have to have faith in the resilience of the British Pound which, at present, is continuing to fall. It has fallen by over 25 % against the US Dollar in just over 12 months.
Cutting taxes and promoting risk taking is a fine policy but this means that you must favor investors over other citizens in the long run. If the incentives to invest are insufficient, then it will fail. And the UK has a lot of non-investors to look after. There is a fine balance to be struck here.
The policy depends very much upon the increased creation of credit money finding its way into productive investments which will boost economic activity. If, instead, that fresh new money just fuels asset price inflation and rampant speculation, then the vast majority of the UK population will not benefit and will be harmed economically.
GOLD AND SILVER CRASH: Many charismatic commentators say “buy gold” in such an unstable situation as we find ourselves in today. And many people follow them into a blind faith in gold or silver.
However, looking at Continuous Contract US$ prices at the CME, the Gold price has now fallen by 20% since early March and the Silver price has fallen by 35%. It has fallen 40% since its peak price in February 2021 and Platinum has fallen by almost the same amount. Precious metals have been a terrible investment in that time frame.
ITALIAN ELECTION — BIG WIN FOR THE RIGHT: Last weekend, Italy went to the vote and the Right side of politics won convincingly. Georgia Meloni states clearly and forcefully — “I am Georgia, I am a Woman. I am a Mother. I am a Christian. I am an Italian”. She is aiming straight at the “new world order” of the Left here; a Left who have played identity politics for too long in a bid to divide and conquer the people.
Georgia states that she is for the family, for the nation state, for her female gender, for her religion, for her children. These are all the things that the Left and their WEF (World Economic Forum) “New World Order” have been seeking to destroy in western nations for 20 – 30 years. She is a defining moment in history.
This is an Anti-Transhumanism at work. And now, she will be the Prime Minister of a major nation. The technocratic, transhumanist, non-gender, non-family, non-religious “vision” of Klaus Schwab and Yuval Noah Harari now has an opponent aside from President Putin. And she will be a formidable opponent. Putin has noticed her position on these matters.
PUTIN SPEECH ON SATANISM: On Friday, Putin declared the Eastern regions of Ukraine as “part of Russia forever“. He also said “we call on the Kyiv regime to immediately stop hostilities and sit at the negotiating table“. In regard to the attack on the Nordstream pipeline, he said “It’s obvious to everyone who did it.”
But he also spoke strongly in clear reference to Georgia Meloni — “The dictatorship of the Western elite is directed against all societies, including against the peoples of those Western countries themselves. This means the total negation of the human, the overthrow of religion and traditional values as the crushing of freedom becomes to look like the opposite of religion – open Satanism,” he said.
“Do we really want to have a parent No. 1, No. 2, No. 3 instead of mom and dad in Russia? Do we want children to be told that there are other genders besides men and women? Is this the future we want for our children? For us, this is unacceptable,” the Russian president said. That sentence could have easily been spoken by Georgia Meloni.
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. SUBSCRIBE – FREE AT BOOM: http://boomfinanceandeconomics.com/#/
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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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No fear of war here…Uncle Schlomo got this.
This is one of those for whom the lost art of keel-hauling was invented …
Funny, but not… I recently read in Sean McMeekin’s history book , Stalin’s War, that the American op to turn over hundreds of thousands of Soviet prisoners captured by Germany and the several million Slavs who fought with Germany against The Soviet Union back over the Communists after the fall of Berlin was code named Operation Keelhaul. They absolutely knew…and had a good laugh, I’m sure. Eisenhower was a shit eating Bolshevik, too.
Robert Welch was right.
Oh shit…hadn’t considered this…the tit for tat over Nordstream could get really intense and Germany still freezes .
Hiroshima yielded 15 kilotons of TNT.
An LNG tanker explosion will have over 50 times the energy of the Hiroshima bomb.
“Compare this with the 130,000 cubic meters of LNG contained in a typical tanker: 3,237,472.7 MMKJ (million kilo joules) of energy, or the equivalent of 775 kilotons of TNT. (N.B. The bomb that destroyed Hiroshima yielded 15 kilotons of TNT equivalent.[6]) Keep in mind that the conflagration zone envisioned by Sandia for an LNG tanker attack extends outward for as much as three miles from the ship. In this zone, everything is exposed to searing temperatures, and all of the oxygen is consumed by the explosion, thus suffocating all living things. Beyond this zone, massive damage results from the shock wave. For cities that have large buildings with glass facades, for example, nearly universal destruction of the glass in the zone beyond three miles creates a killing field both inside and outside the structures, as glass, propelled by the shock wave propagating outward at over 775 mph from the explosion zone, is rained on citizens from above.”
[OTOH, if “somebody” fires a few missiles at an LNG tanker in the middle of the ocean, only the crew, the ship and the tanker would be lost. Once Europeans start freezing to death this winter, such crew losses will seem minimal. And it will be hard to collect evidence if the ship is blown to bits and sinks in 10,000 feet of water. After a single LNG tanker is blown up, LNG ships will rarely leave port, dramatically accelerating the global energy crisis.]
https://gab.com/Matt_Bracken/posts/109110052072975167
https://en.wikipedia.org/wiki/Halifax_Explosion
This was just a fart (2.9kT) compared to an LNG boom.
It’s long been my contention BitCoin has been a beta test for CBDCs (NSA white paper and the mysterious Satoshi Nakamoto). TPTB have evaluated it for 10 years now and as the CBCDs are rolled out BitCoin ownership will collapse by both falling prices and legislation against it as well as other digital tokens/assets.
What amazes me is the absurdities laid out by govts, WEF, CDC, FBI, GOOGLE, etc are believed by so many people.
Virtually, anything “they” pump out is believed by over 50% of the population.
“We ARE DOOMED” …..how apropos.
It’s history repeating and of course in due time it will be bloody as history has repeatedly shown.
Thanks Peter and BOOM for providing common sense, where it is so uncommon today.
I had a friend who was a commodities broker back in the late 80’s that would laugh at this. He’d say there are no bad days in the market for smart brokers. You buy on the way down and you sell on the way up. If the goal is to make money on nothing then this is the strategy you take. Kinda like day traders but on much bigger scales.
imo, as gold drops, thats the time to be buying. When it goes back up, and it will, you’ve increased the value of your wealth. If its for ‘investment’ purposes, then they are longer term investments. But if you are stupid, buying on the way up and over reach then you will lose money. Real estate is much the same, and most here already know this.
Further to the dollar and gold. The strong dollar problem reviewed.
https://goldswitzerland.com/the-feds-strong-usd-policy-a-recipe-for-systemic-implosion/
“Von Der Leyen and Stoltenberg speak about democracy but they are both appointed, not elected”
Democracy in its best form is the totalitarian tyranny of a plurality of a group.
What the NWO means when it says democracy is much worse. To the oligarchs, theirs is the only votes that count. In the NWO, your vote is being decided for you, by the centralized cabal. The 2020 election is a perfect example, but others are the censorship of media, information, and communications. People need to understand that “democracy is now the code word for totalitarian rule by the elite.
The truth of the matter is that self determination only comes from the power of he people to stand up and overthrow their oppressors. It can and will only come from violence, or the possibility of it. That is what the forefathers were trying to tell us about the tree of liberty.
The Seasons are turning and it will probably be a turning for the history books. The Nazis may be going thru Russians like crap thru a goose right now but soon they will be silent as snow; silent as the destroyed Roman Army in the German Forrest. The Nazis have run into a Mongol (Russian) Salient Trap; they went in hard like a lion…but The Russian Winter is coming and it be the Rider on the Pale Horse just like it was for Napoleon and Hitler. You can drive deep into Mother Russia but you will never pull out alive…. The dollar is gaining strength plowing under European currencies like a John Deer. Precious metal ETFs (just paper shit) are falling like Autumn leaves (just like paper stocks, bonds, etc). The contrived crooked bankster link tying real precious Metals to worthless bankister ETF paper will finally break. When FJB blew up the Nord Pipelines (imagine Russia blowing up the Alaska pipeline), he sacrificed European Goy children et all to the ZOG to freeze and starve; but the BRICS didn’t bend over ; they are meeting today to broadside torpedo the ZOG Empire of Lies in its Achilles Heal: The US dollar. Could the result be another 1976 type Embargo? Whatever, I expect the dollar to to get its just desserts and join all the rest of the worthless financial paper, maybe by Jan2023, it will become as fucked as Joe Bidens (there are two different Usurper Puppet bodies) , many Handlers, many Traitors, who will be frog marched in front of a real Republican Nuremberg Type Trial . 14 Republican Bills of Impeachment have already been submitted. That should be the Reset . The CBDC plot to enslave the World should not be allowed to happen one way or the other. Congratulations to the Iron Lady of Italy, a modern Joan of Arch.
rhs,
Nice summation. Too bad it was posted too late in the day for others to read.
Nice job.
AP- I thought your plan to bail out of the UK was ill-conceived until I didn’t. Bonds are f’d , currency f’d, citizens f’d. How fast can you pack?
The joo world order has to bust all currencies to be ready for a one world currency, our turn is forthcoming. As the Chinese say under their breath….. let it rot.