Calling Wall Street’s banks stupid and dangerous is like calling the sun “big and warm.” It’s a clear understatement of an obvious fact. The same goes for calling Japan and China economically clueless. Their actions pretty much guarantee that they’ll ultimately enter some sort of death spiral. The Market Oracle
Numismatics 101: The Art Of Rare Coin Collecting ValueWalk Numismatics is the study or collection of currency, and in our case, rare or beautifully-crafted coins. Numismatics carry a monetary … Numismatics can increase in value over time, adding to your investment in precious metals. I was not a numismatist …
Short-term support is now broken and the Cycle Bottom support at Head & Shoulders neckline are likely to be in play. SPX is on a confirmed sell signal. Today’s action may match that of September 9. Be on the lookout for a break of the neckline near 2130.00. The Market Oracle
If you stand on a street corner proclaiming the end is near, people will laugh.
If you do the same online, you will have a career as a financial blogger.
Why is that?
Psychological studies have shown that the pain of loss is felt more strongly by people than the pleasure of gain.
Could that be it?
I am an optimist. Where does that leave me?
Deep down, at root, every coin collector has to be an optimist, don’t they?
I mean why would you begin to assemble a set of coins if doomsday was just around the corner?
Being an optimist does not mean being oblivious to world events and financial conditions. But it does mean a belief that individual actions can lead to rewards, or at the very least, mitigate undesirable outcomes.
For coin collectors, life lessons have been taught by the many coins that pass through our hands over the years.
Looking for a 1909-S VDB Lincoln cent might have been one of your first goals as a coin collector as it was mine back in the 1960s.
But failure to find one probably pushed you into other things.
A set of all common date Lincolns is basically worth face value – not much reward for all the effort.
But if you had gone on to try dimes, quarters and half dollars, even if the sets remained unfinished, you soon discovered that their silver value tended to grow over time.
This realization probably inspired an ongoing interest in precious metals markets and all things related to them.
That interest combines the optimism of a coin collector with a sensible approach to a financial life.
That 1909-S VDB might come your way eventually. Financial doomsday could arrive.
But building coin collections and investing in precious metals lead to the best of all possible outcomes.
Sooner or later you will be able to buy that first numismatic love of your life, the 1909-S VDB, with the profits from your bullion investments.
A coin collector’s optimism will then prove justified.
Buzz blogger Dave Harper has twice won the Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper “Numismatic News.”
As we enter into the last week before the end of the Jubilee Year, the National Guard has been deployed in Charlotte, North Carolina and massive military convoys have been deployed in the streets of New York City. This is a continuation of last summer’s Jade Helm seven-state military exercise that many in the area saw as a prelude to military occupation. After Jade Helm came the US Army Special Operations Command’s Unconventional Warfare Exercise 16 (UWEX 16) that ran in Texas through June. The Market Oracle
There’s definitely something in air across the western world which may not go as far as be classed as a revolution but at the very least ‘rebellion’, of where the mass of ordinary people are rebelling against the ruling establishment elite who have had an increasing grip on power through institutions and the media for at least the past 40 years as evidenced by the fact that the gap between the rich and rest has widened in virtually every year for the past 40 years, reaching levels not seen since before the second world war, ripe for rebellion even mass uprisings. The Market Oracle
Sometimes I wonder if I’m ever going to run out of new things to say about the economy. Nothing interesting has happened in a long time.
Our liquidity-drunk “markets” remain over-priced due to the chronic intervention of the global central banking cartel, which has demonstrated over and over again that it won’t tolerate even the slightest drop in asset prices.
Those familiar with my writing know I put the word “markets” in quotes because we no longer have a financial system where legitimate price discovery is a regular — or even recognizable — feature.
It’s destined to fail. What more can be said about such a flawed system?
Well, a lot as it turns out.
And failure to pay attention at this stage of economic and ecological history will prove to be exceptionally painful.
The Beginning of the End
It’s been a long 7 years for those of us who believe fundamentals matter. For quite some time they have not.
So we reality-based fundamentalists have largely been reduced to pointing at the parade of policy failures and ham-fisted market manipulations and saying, essentially, That’s just dumb.
But ‘dumb’ mistakes have become ‘stupid’, and ‘stupid’ became ‘idiotic’, and now ‘idiotic’ mistakes are piling up, accumulating into a mountain of stored potential energy that will someday topple destructively across the global markets. We’ve all known, deep down, that money printing is not the same as capital formation, and that prosperity never truly results from redistributing wealth from one group to another. And yet, far too many have been willing to play along and place their trust in the central banks.
Well, we’ve finally reached the beginning of the end.
The global experiment with our current flawed economic and monetary models are drawing to a close. The fetish worship of central banks, bankers, and banking is over.
Belief in central bank omnipotence is being chipped away at daily, as it’s becoming increasingly clear that the easing policies of the past seven years have only served to kick a can down the road — a can that can longer be kicked any further.
Once the illusion of central bank control is fully lost, the financial markets will implode in a deflationary wave that has been held at bay for far too long. Asset prices will collapse, companies will fail, and millions of jobs will be lost. People will re-discover that partying too hard for too long earns a massive hangover.
In short: There will be hell to pay.
I’m still not able to predict whether we’re a week away from this or five years. Such is the uncertain fate of living within a nested set of complex systems run by fallible humans. Complexity complicates prediction.
Though while we cannot predict exactly what will happen, to what degree it will manifest, or precisely when, we can track the ‘fingers of instability’ in the system and note that these are growing longer, and steeper. For instance, total worldwide debt is more than $60 trillion larger than it was before the 2008 financial crisis. So we can make conclusions like “larger” and “sooner” about the probability of the coming correction.
The final remaining bulwark that needs to give way before we a full-blown correction occurs is central bank credibility. The public perception of an “all-knowing, all-powerful” entity needs to be replaced by a more realistic view of what central banks actually have done, and realistically ever can do, which is a whole heck of a lot less than most currently ascribe to them.
Drop Dead, Fed
It helps to start by looking at the actual track record of the central banks over the past 20 years.
By the numbers, central banks have been little more than serial bubble blowers, which is not actually a very impressive trick at all. Dump a bunch of cheap, thin-air money into the markets and that’s pretty much what you get every time: a bubble. Or bubbles, plural (which is what we’re living with now across stocks, bonds, real estate and nearly every other financial asset class)
What the central banks claimed they were after – rapid GDP growth, a set rate of inflation and rising incomes – has not materialized in the way they hoped. After more than tripling their collective balance sheets since 2008 (an increase of nearly $12 trillion) to stimulate the world economy, global GDP growth is still stumbling along at an uninspiring 2.5% — and showing signs of slowing.
As I said: not an impressive track record. But lots of people still treat the Federal Reserve, and ECB, BoJ, BoE, etc., as if they’re doing something terribly sophisticated, important, and worthy of our admiration.
But what have they really done besides flooding the world with cheap and abundant money?
Well, for starters, they’ve created the largest wealth and income gaps on record, over-inflating financial assets and creating conditions ripe for aggressive financial engineering by corporations, both of which reward the top 1% preferentially.
In this first chart we can see the effect of three serial bubbles blown by the Fed on household income broken out by income level.
The top 1% has gotten all the gains in each of these bubbles. The only defense the Fed has is to claim that “Well, things would have been even worse for the lower 99% if we had done anything different”. But this rings as hollowly as any prove-a-negative defense.
We cannot know how things would have been different for the bottom 99% if the Fed had done things differently. But we can know, with 100% certainty, that if the Fed had not dumped money into the financial system and had not targeted rising asset prices that the incomes of the top 1% would not have skyrocketed like this.
It’s really simple: when you financialize an economy, those with the most direct access to the money in that system — which is by definition a tiny elite — are going to benefit the most.
This next chart shows the impact of the Fed’s efforts on household wealth. The bubbles are immediately obvious and I’ve labeled them as ‘unfair’ in varying proportions because nearly all of this ‘wealth’ is financial wealth held in wildly disproportionate amounts with super-heavy concentration in the very upper-most wealthy households:
And it’s not the 1% we’re talking about here, but the 0.1%. The more financialized the system, the more highly concentrated the wealth becomes.
This is not some mysterious process. Nor is it new to our era. I wrote about it in the Crash Course back in 2008 saying:
Given this tremendous [wealth] disparity, I’m reminded that Plutarch once cautioned that an imbalance between rich and poor is the oldest and most fatal ailment of all republics.
More immediately, this helps us understand why the great credit crisis of 2008 worse than expected. Just as was true of the wealth gap in the late 1920s before the onset of the great depression, the severity of a crisis does not depend on average wealth, but the distribution of the wealth.
If a large swath of the population lacks the means to weather the storm, then the storm will be longer, and harsher than otherwise would be the case.
So what does it mean that 80% of our population possesses a meager 11% of the total wealth? For one thing it means that the recent efforts by the Fed to provide massive amounts of liquidity support to the biggest and wealthiest banks at the inflationary expense of the lower classes were not only misguided, but they were cruel and unusual.
This leads to an easy prediction to make: The wealth gap in the US will hamper our recovery and deepen the downturn.
The New York Post, a Rupert Murdoch tabloid publication that isn’t likely to win a Pulitzer Prize anytime soon, splashed a full page picture of a smiling Jennifer Anniston on its Sept. 21 front cover. In the upper left-hand space it placed all-capitals text: “BRANGELINA 2004–2016.” Inside the Post were four full consecutive pages, and a half page and part of a column deeper in the newspaper, all devoted to one of the most critical social issues facing the country—Brad Pitt and Angelina Jolie are getting a divorce. The Market Oracle
Current Position of the Market SPX Long-term trend: The long-term trend is up but weakening. Potential final phase of bull market. SPX Intermediate trend: The uptrend from 1810 continues, but it has entered a corrective phase. Analysis of the short-term trend is done on a daily basis with the help of hourly charts. It is an important adjunct to the analysis of daily and weekly charts which discuss longer market trends. The Market Oracle
Numismatics 101: The Art Of Rare Coin Collecting ValueWalk Numismatics carry a monetary value and a collector value – each coin is worth more than the legal tender amount based on its rarity and how it's crafted. The coins … Numismatics can increase in value over time, adding to your investment in precious …
If black athletes in the NFL honestly think that African Americans who live under Old Glory are as ‘equally protected ‘as whites, then they should stand up during the national anthem and sing-along. But if they know that blacks aren’t getting a square deal, and that blacks can be gunned down at any time by trigger-happy cops who never face the consequences, then they owe it to themselves and their country to demand change by remaining seated. The Market Oracle
Once upon a time a revolution of lasting import took place in China: the invention of paper and the simultaneous invention of paper money. Silk products had long been used as the material on which documents and contracts could be written. The revolutionary character of paper was to be seen in the fact that it was a thousand times cheaper than silk, and it could still carry the same message just as efficiently.
The most potent message that paper was capable of carrying was the promise of the Imperial Treasury to pay the bearer a stated sum of silver coins on demand. The Treasurer, Ding, discovered that he could pay the suppliers of goods and services to the Celestial Court with such paper promises. People trusted the Treasury and accepted its promise to pay as equivalent to payment in silver coin.
Soon afterwards the Treasury ran out of free silver, as it found that all the silver coins in its coffers had been mortgaged in the form of outstanding promises. Ding refused to issue more paper money except in exchange for silver coins paid into the Treasury. In his view any other course of action would compromise not only the integrity of the promises of the Treasury but also that of all the contracts in the Celestial Empire, affecting a value far greater than the value of paper money in circulation. Contracts made by third parties in good faith would be rendered impossible of fulfillment and the standard, or measuring rod, of honest dealings among the populace would be destroyed. A decline in prosperity would follow in due course, as the cornerstone of economic well-being is the integrity of promises men live by.
But the Deputy Treasurer, Dong, was an ambitious man and he saw that Ding had painted himself into a comer. Dong threw himself at the feet of the Emperor, pleading thus: “Sire! Let me issue further promises to pay silver coins against the cutlery, candelabra, and other silverware of the Celestial Court!” The Emperor promptly fired Ding, and rewarded Dong for his resourcefulness by making him Treasurer.
Dong could not enjoy his newly found glory and power long. Other ambitious men in the Court took careful note of what happened at the Treasury. They got the ear of the Emperor in suggesting that even more paper money could be issued against silver that had not yet been brought out of the imperial mines, as well as against the silver in the Moon. Because the Moon was considered a province of the Celestial Empire, and it was thought to consist of silver 95% pure, a belief confirmed by a recent scientific study released by the Heavenly Research Council, there was a plausible case for expanding the issue of paper money. The Emperor fired Dong, and thereafter the change of the guard at the Treasury became a frequent ritual, each time a more unscrupulous adventurer succeeding a less unscrupulous one. The promises of the Treasury to pay silver coins on demand had lost all their remaining value.
In the aftermath of the depreciation of paper money a Great Cultural Revolution engulfed the Celestial Empire. People took to the streets, purged the Heavenly Research Council, and hanged all the past Treasurers on makeshift gallows erected along the Square of Heavenly Peace, stuffing their mouths with the paper promises that they had signed
Not worth a Continental
The United States, in its infancy, attempted the same process by the issuance of Continental currency. This currency collapsed in the same way as its ancestor inChina. Later, one of the greatest orators of all times, Daniel Webster, denounced irredeemable paper money on the floor of Congress in 18?2 in these words: “Of all the contrivances For cheating the laboring classes of mankind none have been more effectual than that which deludes them with paper money. Ordinary tyranny oppression, excessive taxation… these bear lightly on the happiness of the mass of the community compared with fraudulent currencies and the robberies committed by depreciated paper.” Today we reject the dictum of Daniel Webster, and indulge in the same national sin which promises to exact, some day, severe penalties for our belief that we can challenge with impunity such fundamental truths as those involved in the maintenance of standards of common honesty in the fulfillment of our promises.
The ballot box is not enough
The principle of redeemability of the currency asserts that, if a citizen believes that there is too much money in circulation, he must have the right to do something about it. He should be allowed to hoard, melt, or export the gold coins in his possession, thereby redeeming the commodity value of the monetary standard. It also asserts that the citizen should be allowed to withdraw the gold reserves which form the basis of the monetary system, to the extent of his holdings of paper money or bank deposits. When a currency is redeemable in standard gold coins, any individual disturbed by the behavior of the government or banks can attempt to protect himself by presenting for redemption such paper currency as he may command. It is this power of individuals that holds, or tends to hold, banks and government in check. Without this power the people, as individuals, are helpless insofar as control over their banks and government is concerned. The power of the ballot box provides no protection, after the government has freed itself from the obligation to redeem its promissory notes, and acquired power to expand the volume of paper money without fear of adverse public reaction. The way to government dictatorship has been opened up. Human freedom has been endangered. The variety of ways in which freedom could be impaired or destroyed is practically countless as the government takes more and more power from the people and to itself. Limited government is not possible unless the principle of redeemability of the currency is respected.
A nursery of tyranny, corruption and delusion
In his classic monograph Fiat Money Inflation in France, the distinguished scholar Andrew D, White, joint founder and first president of Cornell University, quoted Mirabeau of France as saying in 1789 that irredeemable currency is “a nursery of tyranny corruption and delusion: a veritable debauch of authority in delirium.” His contemporaries ignored the admonition, issued the assignats and the mandats – and history has attested the accuracy of Mirabeau’s prophecy.
The act of inflicting an irredeemable currency on a people is an act of dishonesty by the government, and the influence of that dishonesty spreads through an endless number of channels and in an endless number of forms to the mass of people who are then corrupted in countless ways. To use White’s words: such corruption grows “as naturally as fungus on a muck heap. It was first felt in business operations, but soon began to be seen in the legislative body and in journalism.” As to the corruption among legislators, he stated that “there was enough to cause widespread distrust, cynicism and want of faith in any patriotism or any virtue. Worse still was the breakdown of morals of the country at large, resulting from the sudden building up of ostentatious wealth and from the gambling, speculative spirit, spreading from large towns to small, and to ruraldistricts. The disgraceful result was the decay of national good faith.” White stated that “there came cheatery in the nation at large and corruption among officials and persons holding public trusts… Faith in moral considerations, or even in good impulses. yielded to general distrust. National honor was thought a fiction cherished by hypocrites. Patriotism was eaten out by cynicism.”
“It ended in the complete financial, moral and political prostration of France – a prostration from which only a Napoleon could raise it.”
White concluded, in his Fiat Money Inflation in France, that “every other attempt of the same kind in human history under whatever circumstances, has reached similar results in kind if not in degree.”
No doubt the authors of the assignat and mandat thought that they were acting on firmer scientific basis than the Treasurers of the Celestial Empire. Yet, from the perspective of the 20th* century observer, the only breakthrough was the replacement of the gallows by the more efficient guillotine.