Advertisements

Ron Paul & Jim Rogers: Chaos Up Ahead

Comments Off on Ron Paul & Jim Rogers: Chaos Up Ahead

Hard to argue with common sense especially from 2 heavyweights like Ron Paul and Jim Rogers in this 3 minute clip.

These are clear warnings signs that a rational person simply cannot ignore.

Bottom line, Nations are going bust. And the worse things get, the more desperate their tactics become. This isn’t the first time that the world has been in this position. This time is not different. History shows that there are serious, serious consequences to running unsustainably high debts and deficits. And those consequences have almost invariably involved pillaging people’s wealth, savings, livelihoods and liberties… either directly or indirectly.

What’s happening right now is playing out in textbook fashion. More taxes, more debt, more printing, more confiscation, less freedom. I’m not talking about the end of the world here, I’m talking about difficult times ahead, and the things that go beyond economics. It’s time to face facts and look at how society will change (and has already changed).

Many people will resist the change and instead cling desperately to the old system – the cycle of debt and consumption that provided jobs, stability, and prosperity. These people will have their lives turned upside down because that system is gone forever. And in case it still weren’t obvious, here is three minutes of clarity from Ron Paul and Jim Rogers…”I would expect that there is going to be a lot more chaos still to come.” – Ron Paul; “They won’t take our bank accounts…they will take our retirement accounts.” – Jim Rogers

Via Simon Black of Sovereign Man blog,

The world is truly an enormous place… and, despite the dearth of good news and positive trends out there, I still see a lot of amazing opportunities in my travelsBut it’s really important to remain grounded about the challenges that face us. As I pen this letter to you, in fact,

– The NSA’s Utah data center, which will intercept every phone call, email, and tweet sent across the Internet, is nearing completion.

– The Marketplace Fairness Act, which will create additional sales taxes on US-based Internet transactions, is set to pass the Senate next week.

– The government of Cyprus just passed the final bail-in measures, officially authorizing the direct confiscation of people’s savings in that country’s banking system.

– The Bank of Japan recently announced its intentions to double down on their already unprecedented money printing operations.

– Not to be outdone, the US Federal Reserve just announced that they will maintain their Quantitative Easing program, which dilutes the existing money supply by more than $1 trillion annually.

– At $16.83 trillion, the US federal debt is at a record high and set to breach $17 trillion early this summer.

– President Obama recently proposed to cap the tax deferral benefit on Individual Retirement Accounts in the Land of the Free

These are clear warnings signs that a rational person simply cannot ignore.

Bottom line, nations are going bust. And the worse things get, the more desperate their tactics become.

This isn’t the first time that the world has been in this position. This time is not different.

History shows that there are serious, serious consequences to running unsustainably high debts and deficits. And those consequences have almost invariably involved pillaging people’s wealth, savings, livelihoods and liberties… either directly or indirectly.

What’s happening right now is playing out in textbook fashion. More taxes, more debt, more printing, more confiscation, less freedom.

I’m not talking about the end of the world here, I’m talking about difficult times ahead, and the things that go beyond economics. It’s time to face facts and look at how society will change (and has already changed).

Many people will resist the change and instead cling desperately to the old system– the cycle of debt and consumption that provided jobs, stability, and prosperity. These people will have their lives turned upside down because that system is gone forever.

And in case it still weren’t obvious, I’d like to present Ron Paul and Jim Rogers, speaking together at our event in Chile a few weeks ago, with their own views on the situation.

“They won’t take our bank accounts…they will take our retirement accounts.” – Jim Rogers

“We are going to have a calamity in economics and political crises as economies worldwide are a lot weaker than they tell us.” – Ron Paul

“I would expect that there is going to be a lot more chaos still to come.” – Ron Paul

“There are so many distortions because we disobeyed economic law – no matter what Bernanke tell’s you.” – Ron Paul


“Bernanke’s whole intellectual career has been dedicated to the study of printing money.” – Jim Rogers

 


“I don’t doubt [the confiscation] at all; and they will use force and they’ll use intimidation.” – Ron Paul

Source: ZeroHedgeSovereignMan

Advertisements

Central Banking To End In Disaster

Comments Off on Central Banking To End In Disaster

Its hard to disagree with this article from MoneyWeek that central banking has been a complete disaster for mankind. But to put all the blame at the feet of central banking would be wrong. Politicians, the media and of course our own ignorance has played a major hand in where we find the global economy. The days of CBs focusing on taming inflation via interest rates is long gone. Instead we get endless bubbles, and now the biggest bubble of all the debt bubble and a big unavoidable shit pile up ahead. 

Central bankers are throwing caution to the winds

There’s a revolution going on in the central banking world.

When the cult of independent central bankers took hold, their main enemy was inflation. They all had to keep inflation rising at a gentle pace of around 2% a year.

They didn’t care about asset price inflation. The price of a house could rocket as much as it liked. And they were quite relaxed about the soaring price of energy as long as this was offset by a drop in the price of music players, for example.

All in all, they managed to stick to the inflation target pretty well. Meanwhile the economy still overheated massively, then collapsed in on itself under the weight of all the debt everyone had taken on.

CBs new recipie for success. It doesn’t involve worrying about inflation, thats just for the little people.

That approach clearly didn’t work. So what’s the new recipe for success?

The Federal Reserve in America has thrown caution over inflation to the winds. It is now emphasising employment over price changes. The Fed has become even more aggressive in its monetary policy, even as the US economy seems to be healthier than it has been in a long time.

In the UK, the Bank of England governor-in-waiting, Mark Carney, says he’s a fan of NGDP targeting. You can read more about this from my colleague Seán Keyes here: Should we replace Mervyn King with a robot? In short, it means you target a certain level of nominal economic growth. If that means tolerating inflation at 5%, while ‘real’ growth is at 0%, then so be it. In other words, it’s a way to go soft on inflation without breaking your rules.

And in Japan, the new party in power has sworn to stop deflation. The Bank of Japan may end up with a new inflation target of 2%, double its current target.

In short, central banks have decided that inflation doesn’t matter any more. Fretting about this target is holding them back from taking the decisive action needed to resuscitate our ailing economies. 2013 is going to be all about taking monetary policy to the max.

We sense disaster looming.

Central banks have a bad record – why trust them now?

Central banking might just work, if it was genuinely independent. If you had central bankers who were willing to do the whole ‘counter-cyclical’ thing, we might have a more stable economy. In other words, if central banks were willing to raise interest rates to temper booms, rather than just slash them to alleviate busts, then they might do some good.

But this is never going to happen. Central banks argue that it’s impossible to see asset bubbles inflating. This is nonsense. The fact is that they don’t care about bubbles.

All that matters to them is that the economy keeps chugging forwards. It doesn’t matter whether it’s chugging towards the promised land or towards a cliff edge – all growth is good growth. So they will never act to rein in a boom, regardless of whether it’s ‘healthy’ or not.

This is because central banks are political institutions. They are not independent. And as long as you understand this, then it’s easy to see why we’re trapped in this self-destructive cycle of bubble-blowing.

Politicians will always pursue ‘boom and bust’ policies because they always think they’ll get out on time. Voters love a boom. Taking the punch bowl away during the boom time is not the way to win votes. And by the time the bust arrives, it’ll be someone else’s problem, with any luck.

This central bank bias in favour of ‘easy’ money lies at the heart of all the bubbles we’ve seen in recent decades. The tech bubble inflated, then burst. Interest rates were slashed. The property bubble inflated, then burst. Interest rates were cut to near-zero, and central banks started buying government bonds. So we now have a bubble in government debt.

There is one thing that is more toxic for bond prices than anything else – inflation. And right on cue, across the world, central banks are falling over themselves to abandon inflation targeting.

Is there a method in their madness? Or are they just pursuing growth at any cost? Past performance is no guide to the future, we’re always told. But I think anyone who believes that central bankers are going to get it right this time is being almost deliberately naïve.

So what can you do about it? A bond market blow-up would be nothing short of disastrous for most asset classes. We can’t know when it’s going to happen. But it’s one good reason to make sure you have a well-diversified portfolio.

We’ve been knocking about some ideas for setting up a long-term, cheap-to-run, core ‘retirement’ portfolio at MoneyWeek recently. We’re looking for something that allows you to sleep at night without sacrificing a big chunk of performance.

We’ll have more details on this in the New Year, but it’s certainly made me think a lot about how investors can survive and even make money with this potential disaster looming in the background.

Loosely speaking, I’d suggest having some money in cheap stocks (Japan in particular – see here for more), very little – if any – money in bonds (except perhaps index-linkers), some gold, and a decent amount of cash. The cash is there to give you the opportunity to snap up cheap assets if and when the bubble finally bursts.

Some interesting quotes relevant to Central Banking

“It is no coincidence that the century of total war coincided with the century of central banking.”

Ron Paul

“the last duty of a central banker is to tell the public the truth.”
         – Alan Blinder (former Fed Reserve Board Vice Chairman)

Source: MoneyWeek

Global Trade Figures Slowing Down

Comments Off on Global Trade Figures Slowing Down

This week is certainly a week for a raft of economic data to be released indicating the health of the Global economy and whether we can expect an improvement or not. ZeroHedge  recently reported on a lot of negative headlines regarding global trade and with Spain’s dismal bond auction after LTRO’s have stopped doesn’t bode well. Does this point to a global collapse or more aggressive money printing to come? Recent history has always shown us that ultimately CTRL+P is the CB’s only weapon and that can’t end well.

The weakness in the markets started late last night when Australia posted a surprising second consecutive deficit of $480MM on expectations of a $1.1 billion surplus (with the previous deficit revised even higher). This is obviously quite troubling because as we pointed out 3 weeks ago when recounting the biggest Chinese trade deficit since 1989 we asked readers to “observe the following sequence of very recent headlines: “Japan trade deficit hits record“, “Australia Records First Trade Deficit in 11 Months on 8% Plunge in Exports“, “Brazil Posts First Monthly Trade Deficit in 12 Months ” then of course this: “[US] Trade deficit hits 3-year record imbalance“, and finally, as of late last night, we get the following stunning headline: “China Has Biggest Trade Shortfall Since 1989 on Europe Turmoil.” So who is exporting? Nobody knows, but everyone knows why the Aussie dollar plunged on the headline. The shock sent reverberations across Asian markets, which then spilled over into Europe. Things in Europe went from bad to worse, after Germany reported its February factory orders rose a modest 0.3% on expectations of a solid 1.5% rebound from the -1.8% drop in January. But the straw on the camel’s back was Spain trying to raise €3.5 billion in bonds outside of the LTRO’s maturity, where the results confirmed that it will be a long, hard summer for the Iberian country, which not only raised far less, or €2.6 billion, but the internals were quite atrocious, blowing up the entire Spanish bond curve, and sending Spanish CDS to the widest in over half a year.

Oil To Go Higher As $10 Trillion Printed In 2 Years

Comments Off on Oil To Go Higher As $10 Trillion Printed In 2 Years

When you see the chart below its not hard to see why oil, gold and food prices are going forever higher. $10 trillion expansion (20%) increase in money supply in two years. I wouldn’t mind but I have seen any of it. My wages haven’t increased 20%, have yours? 😉 Funny how the inflation figures don’t reflect this. This begs the question, how accurate are the inflation calculations? Ireland’s Central Statistics Office just changed the way they calculated inflation this week. 

The sad thing is the global economy has gotten worse and not better. Its obviously not just helicopter Ben who is in on the act but also BOE and ECB’s LTRO. Unfortunately we have only one solution currently i.e. CTRL+P.

Source: ZeroHedge

Euro zone – two outcomes

Comments Off on Euro zone – two outcomes

With the current demise of the Euro zone there appears to be only two outcomes

1. Eventually descends into chaos and breaks up. Euro zone countries are carrying too much debt to GDP and haven’t a hope in hell of growing their way out. 😦

2. ECB = CTRL+P. The lender of last resort prints money.

Personally I wouldn’t mind going back to the old Irish Punt but make sure you are protected by transferring your wealth into physical gold and silver. Remember the Argentina Peso dropped massively in value when they finished the peg with the dollar in 2002.

%d bloggers like this: