US CPI Inflation Falling — Saudi Arabia Abandons Dollar — Senator on Covid Failures and NGO Tyranny — Solar Panels of Wood (believe it or not) – [01-29-2023]

Direct from BOOM Finance and Economics at the links below

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THIS WEEK’S EDITORIAL

CPI INFLATION FALLING IN THE UNITED STATESUS CONSUMER SPENDING FALLING – GDP GROWTH WEAK: Inflation Expectations are plunging in the USA. The University of Michigan surveys consumers regularly and their latest data release shows a significant plunge in CPI inflation expectations to 3.90% for the next year. This is the lowest result since April 2021.

US Core PCE inflation, the Federal Reserve’s preferred inflation measure, was released on Friday and showed an increase of 4.4% in December. A year ago, this was at 5.4% and has fallen steadily since then. 4.4% is the smallest annual rise since October 2021 and adds fuel to BOOM’s thesis that the Fed will soon slow down its tightening of monetary policy.

US personal spending declined by 0.2% for the second consecutive month in December.  As BOOM said last week — “Consumer reluctance will do the Federal Reserve’s job for them. Interest rates set by the Fed will probably be increased again on 1st February but by a lesser amount than previously expected.”   BOOM cannot see any chance for a surprise increase beyond market expectations. The Fed will either stand firm, reduce interest rates or jawbone the prospect of future falls.

US stock and bond prices should then continue on their way higher as further fundamentals confirm the scenario of weak GDP growth combined with a hesitant consumer. Quarter on Quarter GDP Growth expanded by an annualised 2.9% in the final quarter of 2022, following a 3.2% jump in the third quarter.

The Dow Jones Stock Index rose by 1.81% last week. The S & P 500 index rose by 2.47%. The Tech heavy Nasdaq Index rose by 4.32%. When the Nasdaq is late to a party, watch out.

Since BOOM alerted readers in mid-October last year to coming strength in the US stock market, the Dow Index has risen by 17% while the S & P 500 Index has risen by 11%. The Nasdaq index has settled into a horizontal trading range since October. However, last week’s positive buyer sentiment in Nasdaq-listed stocks is a strong indicator of a return of confidence.

SAUDI ARABIA ABANDONS DOLLAR:  Saudi Arabia’s Finance Minister, Mohammed Al-Jadaan was interviewed last week and said that the kingdom is open to discussions about trade in currencies other than the US dollar.  “There are no issues with discussing how we settle our trade arrangements, whether it is in the US dollar, whether it is the euro, whether it is the Saudi riyal. I don’t think we are waving away or ruling out any discussion that will help improve the trade around the world.”

China has recently stated that it is keen to buy more oil from Saudi Arabia and that settlements in Chinese currency will grow in the future. But that is no secret.

Some commentators have rushed to print stating boldly that “this is the beginning of the end of US Dollar dominance”. Others have been more sensationalist stating “the US Dollar will now collapse” or “the Reserve Currency status of the US Dollar is lost”. BOOM disagrees with such analyses and so does the foreign exchange market. The US Dollar index traded in a fairly tight trading range throughout last week, ignoring the statements from Saudi Arabia and the sensationalist journalists.

BOOM has consistently pointed out that the so-called “Petro-Dollar” concept is a mirage. US Dollar dominance does not hinge on this so-called and much heralded “arrangement” between the US and Saudi Arabia. It is underwritten by Eurodollar volumes. Eurodollars are US dollars that exist outside of the US and outside of any direct influence from the US authorities. They reside on the balance sheets of many banks in many nations but, most importantly, on the balance sheets of tax haven banks as US Dollar denominated loans to corporate borrowers. The actual volume of Eurodollars held in such accounts is a well-kept secret but BOOM can assure readers that it is huge, measured in many Trillions of US Dollars. No other currency comes close.

Foreign exchange holdings by central banks also show that volume is what makes currencies convenient to use in trade settlements, not shady “agreements” from long past periods of Geopolitical time.

The IMF publishes “COFER” – the Currency Composition of Official Foreign Exchange Reserves. The last update was on 23rd December 2022. It showed foreign exchange allocated reserves of US$10,773 Billion ($10.77 Trillion).

  • Claims in US Dollars totalled $6,441 Billion – 60%.
  • Claims in Euro were $2,118 Billion – almost 20%.
  • Claims in Chinese Yuan were $297.8 Billion – 2.76%.
  • Claims in Japanese Yen were $566.43 Billion – 5.2%.
  • Claims in British Pounds were $497.33 Billion – 4.6%.
  • Claims in Australian Dollars were $206 Billion – almost 2%.
  • Claims in Canadian Dollars were $264 Billion – 2.45%.
  • Claims in Swiss Francs were $25 Billion – almost 0.23%.
  • Claims in Other Currencies were $356.47 Billion – 3.3%

Note the Chinese Yuan holdings – just 2.76% of total foreign exchange holdings. It is clear that the biggest threat to US Dollar Dominance is the Euro. No other currency comes close. In this game, Europe is the enemy of the US, not China. That reality has Geopolitical consequences. Note that the current threat of increased warfare and subsequent economic hardship is in Europe, not Eurasia. That fact bears some weight when considering current Geopolitical events.

SENATOR ON COVID FAILURES AND NGO TYRANNY:  A powerful statement last week came from an Australian Senator concerning governmental failures in regard to the Covid phenomenon and the creeping threat of tyranny from unelected, trans-national Non-Government Organisations, especially the World Health Organisation. Its message is applicable to all nations and is therefore reproduced here in full:

“If there has been one consistent theme of the COVID-19 pandemic, it’s that the “experts” have consistently been wrong.  Initially, the WHO failed to scrutinise China’s role in the outbreak. One can only wonder why?

Then, echoing the advice of the World Health Organisation, the experts were wrong about lockdowns, which dismantled economies and ended more lives than they saved.

They were wrong about the efficacy of masks, the dangers of COVID-19 itself, and the safety and efficacy of the mandatory mRNA injections, which don’t prevent one from catching or transmitting the virus and are linked to adverse events including myocarditis and death.

Now, the World Health Assembly, the WHO’s decision-making body, is seeking to amend its International Health Regulations, which has 194 member states including Australia and create a new international “convention, agreement or other international instrument on pandemic prevention, preparedness and response”, the so-called “Pandemic Treaty”.

These proposed amendments together with the Pandemic Treaty would grant the WHO more power over any future “global health emergencies” it declares, including a future pandemic.  I recently voiced my concerns about the WHO and the decisions that are being made behind closed doors.  Some of the proposed amendments include:

  • Erasing the words “with full respect for the dignity, human rights and fundamental freedoms of persons” and replacing them with “based on the principles of equity, inclusivity, coherence and in accordance with their common but appreciated responsibilities of the States Parties, taking into consideration their social and economic development.” (Your guess is as good as mine as to what that means).
  • Granting the WHO greater access to the personal and private data of citizens in its preparation for and response to a health emergency.
  • Potentially allowing the WHO to rely on undisclosed sources for information on health emergencies within member states and granting the WHO the authority to declare health emergencies without obtaining verification from the relevant member state.
  • Strengthening its ties to universities, government departments, and social media platforms to ensure that messaging which contradicts its perspective is censored. This even though much of what was deemed “misinformation and disinformation” by the WHO in 2020 is now accepted as fact.

The WHO has also suggested that it should be able to make recommendations to member states with respect to international travel, including the following

  • “require proof of vaccination or other prophylaxis”
  • “require vaccination or other prophylaxis”
  • place suspect persons under public health observation”
  • “implement quarantine or health measures for suspect persons”

These are sweeping, draconian proposals that, if implemented, could take us further down the totalitarian rabbit-hole.

These amendments are a power-grab, plain and simple. We must raise our collective voices on this issue, or suffer the fate of being ruled by unelected and unaccountable health “experts” with questionable ties to big pharma and foreign adverse interests such as the CCP.”

Yours sincerely,

Senator Alex Antic

SOLAR PANELS OF WOOD – BELIEVE IT OR NOT:  Some readers objected to this statement made in last week’s article “Green Energy is Not so Green”: “Do you think solar panels are “Green”?  Think again. There is nothing green about solar panels. Did you know we clear cut forests, not for panel placement but for the wood needed to produce the panels.”

It would appear that such a statement is self-evidently incorrect. However a reader sent this to BOOM:

“It is hard to believe but Solar Panel glass can be made from wood. Researchers at Stockholm’s KTH Royal Institute of Technology have created an alternative to conventional tempered glass used for solar panels. The alternative is made from wood, believe it or not. Wood-based glass involves chemically removing lignin – a brown organic substance binding the cells, fibres and vessels of plant material. When the lignin is removed, the wood becomes beautifully white. But the “glass” can then be rendered “hazy” which is perfect for solar panels. Professor Lars Berglund, from the Wallenberg Wood Science Centre, claims that wood is a good base material for solar panel glass as it is low-cost, readily available and a renewable resource.”

 

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.

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.

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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Author: Austrian Peter

Peter J. Underwood is a retired international accountant and qualified humanistic counsellor living in Bruton, UK, with his wife, Yvonne. He pursued a career as an entrepreneur and business consultant, having founded several successful businesses in the UK and South Africa His latest Substack blog describes the African concept of Ubuntu - a system of localised community support using a gift economy model.

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Ken31
Ken31

Thanks, Peter, I learned a few things.

Iska Waran
Iska Waran

Yes. Dispatches from England are great. If Georges S could give us one from France, that would be cool. FYI, Here in Minnesota, it was -8 F this morning. I prefer to think of it as 251 degrees Kelvin.

boron
boron

251°K, must be hot as blazes, better get out the sunscreen

Ghost
Ghost

Another fine lesson from you, Peter. Thanks for continuing to share your wonderful informed perspective for those of us who appreciate it.

Anonymous
Anonymous

Nice. One point I’d make about the dollar. Even if we lose reserve currency status the dollar would still be a huge proportion of world trade, just due to lingering financial obligations, call it momentum. But our power crazed leaders are willing to lead us to the brink of nuclear war because they want their great reset for their new world order.

boron
boron

agreed about the momentum, but, paranoid that I am, I get the feeling that the BRICS nations, now that they’ve seen the first sign of weakness, are going to be standing hard on the brakes

Balbinus

The antichrist will bring about the great reset. 7 years after that Jesus himself will bring about the GREAT RESET.

rhs jr
rhs jr

There are several resets. TPTB will do an economic reset called FedNow in 2023-24 (ref Rev 13:17) . FedNow replaces all currency etc with FedCoin. The 7 year Tribulation comes much later after the anti-Christ sets himself up as god in the Third Temple (yet to be built) in Jerusalem. TPTB need to read Zec 12-14 and Repent now (ie, do a personal reset per se or they will be RESET by Jesus later and they probably will not be one of the lucky 1/3).

B_MC
B_MC

US personal spending declined by 0.2% for the second consecutive month in December.

We Just Witnessed An Economic Sign That Hasn’t Happened Since The Peak Of The Great Depression In 1932

The most troubling information in the GDP report is the precipitous drop in real disposable income, which fell over $1 trillion in 2022. For context, this is the second-largest percentage drop in real disposable income ever, behind only 1932, the worst year of the Great Depression…

In December, the percentage of subprime auto borrowers who were at least 60 days late on their bills climbed to 5.67% — a major increase from a seven-year low of 2.58% in April 2021, according to Fitch Ratings. It marks the steepest rate of Americans struggling to make their car payments since the 2008 financial crisis.

We Just Witnessed An Economic Sign That Hasn’t Happened Since The Peak Of The Great Depression In 1932

Ginger
Ginger

Just had to look up about those solar panels made of wood, and here is an article from 2016. Learn something new everyday.

Solar Panel Glass Made From Wood?

Further investigation led me to a video of the first cruise ship to become completely powered by these new fangle solar panels. Believe it is the Disney “Princess Line”.

musket
musket

My father lived in Long Branch, NJ at the time this happened and watched the whole thing from the shore……..

Jdog
Jdog

I would never have believed that people could be so gullible if I were not witnessing it with my own eyes. Europe is being exploited by the US like a prostitute by their pimp. It is exactly the same game as WW1 and WW2 being replayed with the same ending. The US makes obscene profit from the war, while the Europeans are bankrupted and suffer for decades afterwards. The profits US Oil companies are reaping from selling LNG to Europe at 4X the prices they were previously paying is causing double digit inflation with no end in sight. The shuttering of factories in Europe due to the costs of energy ensures they will have to purchase more from US factories. The draining of military stockpiles ensures they will have to turn to the US military complex to rebuild those stockpiles, at whatever costs those companies decide to charge.
The US is now pushing Europe to provide tanks and jets to Ukraine, not because they will make any difference in the war, we already know they will not, but to sour relations between Europe and Russia to the point where reconciliation after the war will be difficult in the long term, and impossible in the short term, thereby locking down Europe as a dependent customer of the US for decades to come.
It is being estimated now that the economic ramifications of this war will cause 150K excess deaths in Europe due to increase costs and decreased availability of heating, cooling, food, medicine, and medical care. Add that to the cost in suffering from the economic hardships that are going to plague Europe for the next few decades and the situation becomes tragic.
It is ironic that the US was formed to eliminate feudalism, and yet has become the feudal lord over Europe. Dictating the policies of their governments, and exploiting their peoples. Whenever the US spends itself into financial trouble, it simply creates war in Europe, and steals their prosperity to pay its own debts. And somehow the people of Europe never catch on. If they did, they would realize their real enemy is Biden and not Putin.

BL
BL

Peter – I could find no reference to solar panel glass being made of wood on the internet. Where did this info originate? Interesting that it is either incorrect or has been scrubbed by the greenies. Would like to read in detail if you can provide the source.

rhs jr
rhs jr

The above experts say the public expects that Central Bank high interest rates will cause high inflation to eventually reverse and things to normalize. Normalize after a 1929 like crash? Normalize when the young adults can’t afford educations, cars, homes, marriage, etc? I’m a nobody like you but right more often than NYC experts by a Texas country mile, and I bet that everything we need and don’t have to survive will continue to inflate, and everything we have and didn’t need anyway will deflate. FJB and the MSM will tell us everything is getting better at home and abroad, and provide beautiful reporters with video to prove it, but our pocket books, stomachs and eyes will know it’s all just more liberal lies. Behind the curtains, TPTB are destroying food & fuel production, trying to turn the Ukraine into Vietnam, have a plan to crash the dollar and implement the FedNow Program to take Total Tyrannical Control of all money by Jul2024, are developing a COVID II Genocide Pogrom, and are spraying like hell trying to cause another Ice Age. Useful Idiots are the majority (Blue cities) and are being Liquidated, and I’m sick of them “dragging” us Conservatives into the pit with’em. Let’s cut the Blue cities loose and save 250 years of Rural kith and culture; what’s worth saving in big cities can relocate to small town America and everybody will be better off for it.

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