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THIS WEEK’S EDITORIAL
FED RAISES RATES AGAINST BOOM’S RECOMMENDATION Concerning the US Federal Reserve, BOOM wrote on July 16th, “BOOM cannot see any reason for further interest rate increases from the Federal Reserve. And companies must soon start to actively lower prices to ensure that their sales and revenues don’t start collapsing.”
However, Jerome Powell did not take the advice. The US Federal Reserve unnecessarily raised their key interest rate last week by 0.25% and so did the European Central Bank (ECB). They both continued to slam on the brakes while the car is sliding backwards towards a cliff. This is risking recession in the current circumstances. Prudence would have been a better course of action.
In both the US and in Europe, PMI (Purchasing Manager Indices) are now falling fast, suggesting a significant slowdown in CPI price pressures may be next. And demand for bank loans is also falling fast in Europe as per the ECB’s latest Bank Lending Survey while loans to the private sector in the US have been falling every month this year. This sharp drop in demand for money is ominous.
Christine Lagarde, the head of the ECB appears to now possess a magical crystal ball into the future. As she raised the interest rate, she said ““Inflation continues to decline but is still expected to remain too high for too long…Future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to the 2% medium-term target.”
Maybe she has made an effort to look into the future because of criticism that the ECB continually looks in the rear view mirror? BOOM prefers to look at the current economic facts rather than trying to envisage the future.
So, let’s look at some facts.
CHINA’s ECONOMIC RECOVERY HAS STALLED – BOOM has previously written about a leading economic indicator that has been a reliable predictive tool for China’s economy. That indicator turned upwards in early March this year following a steep decline from August last year. Since March, it rose consistently until early May. BOOM brought this to the attention of readers at the time. However, it reached a plateau during May and has now been falling for the last two months. The conclusion is that the Chinese economy seems to have lost momentum and is struggling again to recover its vitality.
Exports from China shrank 12.4% Year on Year in US Dollar terms to US$285bn in June, the steepest drop since February 2020, following a 7.5% fall in May. As China is an exporting nation, this is another indication of failure in economic momentum. However, shipments to Russia jumped by 90.9%. Thus, measuring its exports in US Dollars may now be misleading.
Imports to China declined by 6.8% Year on Year to USD215bn in June 2023, compared with market expectations of a 4.0% drop and after a 4.5% drop a month earlier. This was the fourth straight month of falling purchases. However, again, the currency being used to measure this is possibly misleading if the US Dollar is declining as a means of trade settlement.
The Chinese economy is largely a mercantile one. It depends very much on the global economy for its continued growth. BOOM is watching closely for an expected turnaround in the leading indicator and will inform readers if and when that happens.
CHINESE CBDC IS NOT POPULAR IN CHINA. On another note, the Chinese experiment with a CBDC (Central Bank Digital Currency) seems to be failing. The E-Yuan has not been adopted by many citizens. As reported by Reuters, the central bank governor, Yi Gang, recently said that total transactions settled with the E-Yuan (e-CNY) amounted to just 1.8 trillion Yuan since August last year. Expressed in US Dollars, this is equivalent to only US$257bn in just under 12 months. The Annual GDP of China is about $US18,000bn. So, this is roughly equivalent to 1.4% of total GDP transactions.
Yi Gang was attending a meeting on July 19th, organised by the Monetary Authority of Singapore. He also said that e-CNY in circulation accounted for only 0.16% of China’s M0 money supply, or cash in circulation.
These appear to be the cold hard facts concerning the Chinese Central Bank Digital Currency CBDC as reported by the head of the Peoples Bank of China.
So why do so many people in Western financial blogs and in Western mainstream media consistently report that “the Chinese CBDC has terrible social controls and has enslaved the Chinese people”?
BOOM cannot answer that question. But the answer surely involves the current fashion for paranoia and delusion in the West.
The facts tell a completely different story with the dreaded CBDC barely being used. But as the old saying goes – “don’t let the facts get in the way of a good story”.
BLINKEN, YELLEN AND NOW KISSINGER GO BEGGING – Over the last month or so, China has welcomed visits from the US Secretary of State, Anthony Blinken, the US Treasury Secretary, Janet Yellen and last week, the old warhorse of US foreign relations, Henry Kissinger, who is 100 years old. Apparently, over the last 50 years, Kissinger has made 100 trips to China so he is well known there.
Xi Jinping, the Chinese President said “The Chinese people never forget their old friends, and Sino-US relations will always be linked with the name of Henry Kissinger.” He was clearly referring to the past. Kissinger replied by saying that he was a “friend of China.”
Apparently, Kissinger was travelling as a private person according to the US State Department. If you believe that, BOOM has a bridge to sell you.
This appears to be an even more desperate attempt to patch up relations with China as the US has suddenly realised that they are fully dependent on China for many essential goods. They are also (clearly) seeking to turn China against Russia. If you think they have any chance of that, BOOM has another bridge to sell you.
Anthony Blinken chimed in nicely on a trip to Tonga last week by saying in a Press conference that China’s activities in the Pacific were “predatory” and “problematic.”
There are reports that he warned against Chinese investments, claiming Beijing was behind “some predatory economic activities, and also investments that are done in a way that can undermine good governance and promote corruption.”
This is called the pot calling the kettle black. The US is expanding its own presence via the Indo-Pacific Strategy released in February 2022 which calls for the US to expand its diplomatic and military presence in the Pacific Islands and Southeast Asia. The old saying about the goose and gander springs to mind. However, BOOM suspects that China would have thought “with friends like that who needs enemies?”
The US is desperately talking but China and Russia have stopped listening, along with many other nations who are now rapidly shifting their attention towards the economic cooperation being offered by the BRICS and the Shanghai Cooperation Organisation. The use of economic sanctions by America, the capture of offshore Russian assets, the weaponization of the US Dollar, their conduct in the Ukraine war since 2014 plus the attack on the Nordstream pipeline and recent attack on the Kerch Bridge in Crimea are taking a serious toll on the credibility of the United States in diplomatic circles.
Geopolitical reality is changing forever and America seems clueless to understand what is happening. Soon, even the people of Western Europe will wake up and force their nations away from kowtowing to US influence. BOOM thinks that will happen during the next 5 years as Europe suffers persistent economic stagnation and growing social unrest. Most of the Middle East, Africa and much of South America has already done so.
Anthony Blinken and Joe Biden will go down in history as the men who lost an Empire.
UTOPIANISM IS AN INFECTIOUS DISEASE – BOOM often refers to Utopianism as a cult or, better still, as an infectious disease that began with Thomas More 500 years ago. The Father of Utopian Socialism however was the Frenchman Charles Fourier who wrote his books and articles in the early 19th century, drawing inspiration from Thomas More’s book called “Utopia” published in 1516 in England during the reign of Henry VIII.
Fourier invented the term “Feminism”. He invented Communes. He inspired Karl Marx’s Communism and Adolf Hitler’s National Socialism. He inspired Charles Netter and Edmund James de Rothschild to found the first kibbutz, established in Tel Aviv, Palestine in 1870 as a Utopian Socialist communal farm. He wrote about climate change. In other words, Charles Fourier is the father of much more than Utopian Socialism. Way back in the early 1800’s, he literally invented all by himself many of the modern obsessions that we see around us today.
FAILED AUSTRALIAN UTOPIA IN PARAGUAY – Throughout the 19th century, there was great upheaval. People sought new homes far from the warfare, feudalism and religious persecution of the United Kingdom and Europe. One great migration was to Australia. However, 19th century Australia was a difficult place. Drought, starvation, strikes, stern colonial governments, bank failures and economic depressions all added to the mix of desperation.
One man, in western New South Wales decided that Australia was a failed British experiment. He decided to lead a Utopian Socialist adventure to South America. His name was William Lane and he was a committed socialist. He wanted to live under what he thought would be a fairer socialist or communist ideal, where everything was shared, and everybody worked for the common good. His dream was highly reminiscent of Thomas More’s Utopia “where you owned nothing, there was no money and everyone was happy” and also the Utopian Socialism of Charles Fourier.
In 1893, Lane decided to lead a group of Australian settlers all the way to Paraguay. He planned to take advantage of an offer by the Paraguayan government to give 75,000 hectares of free land to migrants. The government was attempting to repopulate Paraguay after up to 90% of the nation’s male population had been killed in a war against Brazil, Uruguay and Argentina.
However, the settlement was far from a Socialist Heaven on Earth. Lane became a dictator. He insisted on strong Christian ideals as well as socialist ideals. Despite the fact that many Paraguayan women were widows, he forbade any fraternisation between the Australian men and the Paraguayan women. He also forbade alcohol. And the environment they found themselves in was extremely harsh.
The Paraguayan “Utopia” fell apart within 3 years, just like many other Fourierist communes that had been established in many other nations during the 19th century, including the United States, the UK and Europe. Lane gave up and formed another smaller commune with more dedicated Christians. He called that Colonia Cosme but that experiment failed as well.
After 5 years of failure, William Lane left Paraguay and ended up in New Zealand working as a Right Wing journalist. He had clearly abandoned all his Utopian Socialist dreams. Many of the Australians returned to western New South Wales and their descendants are still there today, living in modern Australia.
BOOM always warns anyone who will listen to beware of idealist Utopian dreams, especially any which promise a Utopia on Earth. It is not just socialists who are infected. Americans are particularly infected with this disease, promising a Capitalist Utopia dressed up as a promise of “freedom and democracy”. Unfortunately, as the Paraguayan adventure demonstrates, such promises and endeavours often devolve towards tyranny.
BOOM’s QUANTITATIVE BOOSTING EXPLAINED: https://boomfinanceandeconomics.wordpress.com/2019/12/15/boom-as-at-15th-december-2019/ AND BOOM’s Perfect Economy: https://boomfinanceandeconomics.wordpress.com/2020/01/18/boom-as-at-19th-january-2020/
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.
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.
On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter — “In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).” Reference: https://www.bundesbank.de/en/tasks/topics/how-money-is-created-667392
The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018…“the vast bulk of broad money consists of bank deposits” “Money can be created…when financial intermediaries make loans“ – “In the first instance, the process of money creation requires a willing borrower.” “It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
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We don’t know what deals Kissinger is making with China but we do know his evil history, especially when it comes to depopulation. ( Mass-Murder )
( OPA is the Office Of Population Affairs created by Kissinger )
In making sure that the population falls in El Salvador, Ferguson said,
the OPA has learned a lot from its experiences in Vietnam. “We studied the
thing. That area was also overpopulated and a problem. We thought that
the war would lower population and we were wrong. ” Now you know
what we were really doing in Vietnam and why we were not allowed to
win According to Ferguson, the population in Vietnam increased during
the war, despite U.S. use of defoliation and a combat strategy that en-
couraged civilian casualties. Now you know why those of us in the know
consider Lt. Calley to be a scapegoat.
To reduce population “quickly,” said Ferguson “you have to pull all
the males into the fighting and kill significant numbers of fertile, child-
bearing age females.” He criticized the current civil war in El Salvador:
“You are killing a small number of males and not enough fertile females to
do the job on the population. If the war went on 30 to 40 years like this,
then you might accomplish something. Unfortunately, we don’t have too
many instances like that to study.” William Cooper
( they still love war, but maybe they have moved to clot-shots to depopulate faster )
I don’t know about that, but have you seen the prices at Arby’s? Geez Louise! I’d need a third mortgage. I’m saving up to go to McDonald’s.
Make your own hamburgers.
I visited the Voith factory in Crailsheim a number of years ago, to inspect variable speed fluid couplings that were destined to be used with the feed water pumps for a new Chinese nuclear power plant. At the time they were desperately building new factory space to cope with the demand for drive couplings for the wind turbine industry. Voith are a highly respected engineering company, no other manufacturer is capable of producing some of their products. That they are facing difficulties is a threat to global energy and transportation manufacturing supply chains.
If they’d put a couple windmills on the roof of the factory, they would have been fine, amirite? Germans are a weird mix of smart and stupid. They shut down their own nuclear plants and are now begging France for power and importing lignite from South Africa. You could not make this shit up.
Apparently France is about to start bombing for peace in Niger – their main source of Uranium. I’m sure their motivation is solely to restore democracy and has nothing to do with reinstalling their puppet in power to ensure a cheap, stable supply of uranium.
The factory is located at small town surrounded by residential property, I doubt they could get planning permission for windmills. It was the politicians that shutdown their coal and nuclear plants, that kind of stupid seems to be universal in all countries.
Seemingly the Nigerians want to align themselves with Russia instead of France. Uranium is likely the driver of this geopolitical battle, though I doubt that Russian Oligarchs will screw them any more gently than the French did.
I think people from Niger are called Nigeriens.
France is now having to buy electricity from other countries and that is why their electric rates went up and one of the reasons the Frogs are protesting inflation.
Gavin Newsome is going to be the next President of the United States. As much as I hate that, I can see it coming to be plain as day..
Biden will either take a deal to spare his son from future prosecution, or they will adjust his medication so that he has a medical episode during an appearance, severe enough to eliminate him from consideration .
Newsome will beat Kackels in the Democratic Primary, and Kennedy will run on a 3rd party ticket splitting the conservative / independent vote between him and Trump. This will have no effect on the Democrats because they all hate Kennedy, and believe he is an antivaxer, which is equal to being a heretic in the middle ages to a Democrat. Game, set, match.
Then Newsome will implement the policies of the NWO in the US the same way he did in CA… The coming depression will as bad or worse than the Great Depression, with tens of millions losing their jobs.
CBDC’s will be combined with basic income in a program to provide relief from the coming economic depression by giving people a Digital free money account that can only be spent according to government guidelines, and can be withheld if you do not comply. Welcome to Idiocracy 2.0. They can then begin population reduction through mandatory military conscription to fight the many wars they are in the process of implementing in Europe, Africa, and Asia.
How about DeSantis and Kari Lake, MTG, Getz, Tulsi Gabbard, etc. Let’s see Newsome in the debates.