Friday, March 4, 2016

Brazil on course for worst recession in century

Rio de Janeiro– Brazil’s economy shrank by 3.8 percent in 2015, the government said Thursday, with the biggest contraction in 25 years set to push the Latin American giant into its worst recession for more than a century.
The latest gloomy news from Brazil was no surprise, but the severity underlined the depth of problems facing President Dilma Rousseff’s government as it battles both declining economic output and 10.67 percent inflation.
The state statistics office said 2015 registered the worst single annual fall in GDP since 1990, a year when the economy dipped 4.3 percent.
With the International Monetary Fund predicting a further 3.5 percent shrinkage this year, Brazil appears to be well into a recession that would be worse than any on government record going back to 1901.
The GDP results shove Brazil into the bottom bracket for performance in Latin America, where it is easily the biggest economy. Only Venezuela, with what the IMF estimates was a 10 percent plummet in GDP, is worse off.
Leading Brazil’s slide was the industrial sector, which was down 6.2 percent in 2015. In the last quarter of 2015 the all-important mining sector was down 6.6 percent, reflecting the worldwide slump in commodity prices and demand for Brazil’s iron ore and other raw materials.
Services were down 2.7 percent for the year.
– Fall from grace –
Brazil’s ugly GDP picture is only part of a wider economic and political mess amounting to a stunning fall from grace.
The country of 204 million people was only recently being touted as the emerging markets giant that had finally found its feet — with the Olympic Games due to take place in Rio this August symbolizing that new status.
GDP grew steadily through the 2000’s, except for a dip after the last 2008 global financial meltdown, hitting 7.5 percent growth in 2010, 3.9 percent in 2011, 1.9 percent in 2012 and 3.0 percent in 2013.
The leftist government’s generous spending programs were credited with lifting millions out of severe poverty, while Chinese demand for the country’s mineral and agricultural riches paid the bills.
The party has now come to a brutal end and Rousseff — beset by an impeachment attempt and a huge, volatile corruption scandal that has sucked in many top political and business figures — appears to have few options.
On Wednesday, the Central Bank maintained its benchmark interest rate at 14.25 percent, but that has not stopped inflation hitting double digits, while unemployment is now at 7.6 percent and rising.
– How much lower? –
The slump has made Brazil increasingly toxic on the investor landscape. Last week, Moody’s became the third big credit rating agency to downgrade Brazil to junk status, warning of slow recovery and political uncertainty.
A Markit Brazil Services survey of the private sector released Thursday found a record contraction in economic activity in February, as “companies continued to link the adverse operating environment to the ongoing economic, financial and political crises.”
“The Brazilian economic downturn took a real turn for the worse in February, as the financial and political difficulties in the country drove down output and led to reduced order intakes,” said Rob Dobson, author of the report.
“The domestic market is especially weak” and “the labor market also appears to be in dire straits.”
Brazilian economists warn that 2016 could turn out to be worse than the IMF’s prediction, with the economy shrinking even more than in 2015.
“Brazil has never had such a high level of uncertainty and this is freezing everything up. There is no consumption or investment or credit with this historic level of uncertainty,” Daniel Cunha, an analyst at XP Investimentos in Sao Paulo, said.

The FDIC’s Deposit Insurance Fund Available Assets Cover LESS THAN 0.5% Of US Bank Deposits

Negative Interest Rates in the US? Just Ask the FDIC
The FDIC maintains the Deposit Insurance Fund (DIF), which is the emergency stash for nearly all bank deposits in the Land of the Free. DIF financial statements show an incredible 54% drop in cash equivalents since last year. This means the DIF’s immediate liquidity is now just 1.2% of its total assets. In other words, nearly 99% of the insurance fund is tied up in various investments that may lose substantial value in the very financial crises that they’re meant to insure.
The FDIC has stuffed much of the DIF funds in an expanding bond portfolio. Yet by its own admission, this portfolio is down $10 billion, or roughly 14%. Plus, a good chunk of that bond portfolio has been invested in securities that earn negative interest. It’s incredible; the organization insuring the US banking system has actually purchased bonds that yield negative interest!
Now, including the losses, the fair market value of the DIF is about $62 billion. That might sound like a lot of money. But total bank deposits in the US exceeds $13 trillion, according to the Federal Reserve.
This means that the DIF has net assets available to cover less than 0.5% of all bank deposits.

For starters, the fund doesn’t come close to meeting the minimum legal reserve requirement that was established by law following the Global Financial Crisis several years ago.
Even more, the FDIC states in its own report that they need TWICE the current reserve balance as “the minimum level needed to withstand future crises of the magnitude of past crises.”
Federal Deposit Insurance Corporation (FDIC): THE DEPOSIT INSURANCE FUND
The primary purposes of the Deposit Insurance Fund (DIF) are: (1) to insure the deposits and protect the depositors of insured banks and (2) to resolve failed banks. The DIF is funded mainly through quarterly assessments on insured banks, but also receives interest income on its securities. The DIF is reduced by loss provisions associated wih failed banks and by FDIC operating expenses.

Video: Keiser Report: Democracy suicide (E881, ft. Boris Johnson wig)

 In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss democracies committing suicide (as John Adams had warned) and the ominous …

Via Youtube

New all-time 2-year yield lows today in… Germany, Netherlands, Austria, Belgium…. Market continues to front run the ECB

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New all-time 2-year yield lows today in...
Market continues to front run the ECB

Capitalism Requires World War

Authored by Cathal Haughian via,
It has been our undertaking, since 2010, to chronicle our understanding of capitalism via our book The Philosophy of Capitalism. We were curious as to the underlying nature of the system which endows us, the owners of capital, with so many favours. The Saker has asked me to explain our somewhat crude statement ‘Capitalism Requires World War’.
The present showdown between West, Russia and China is the culmination of a long running saga that began with World War One. Prior to which, Capitalism was governed by the gold standard system which was international, very solid, with clear rules and had brought great prosperity: for banking Capital was scarce and so allocated carefully. World War One required debt-capitalism of the FIAT kind, a bankrupt Britain began to pass the Imperial baton to the US, which had profited by financing the war and selling munitions.
The Weimar Republic, suffering a continuation of hostilities via economic means, tried to inflate away its debts in 1919-1923 with disastrous results—hyperinflation. Then, the reintroduction of the gold standard into a world poisoned by war, reparation and debt was fated to fail and ended with a deflationary bust in the early 1930’s and WW2.
The US government gained a lot of credibility after WW2 by outlawing offensive war and funding many construction projects that helped transfer private debt to the public book. The US government’s debt exploded during the war, but it also shifted the power game away from creditors to a big debtor that had a lot of political capital. The US used her power to define the new rules of the monetary system at Bretton Woods in 1944 and to keep physical hold of gold owned by other nations.
The US jacked up tax rates on the wealthy and had a period of elevated inflation in the late 40s and into the 1950s – all of which wiped out creditors, but also ushered in a unique middle class era in the West. The US also reformed extraction centric institutions in Europe and Japan to make sure an extractive-creditor class did not hobble growth, which was easy to do because the war had wiped them out (same as in Korea).
Capital destruction in WW2 reversed the Marxist rule that the rate of profit always falls. Take any given market – say jeans. At first, all the companies make these jeans using a great deal of human labour so all the jeans are priced around the average of total social labour time required for production (some companies will charge more, some companies less).
One company then introduces a machine (costed at $n) that makes jeans using a lot less labour time. Each of these robot assisted workers is paid the same hourly rate but the production process is now far more productive. This company, ignoring the capital outlay in the machinery, will now have a much higher profit rate than the others. This will attract capital, as capital is always on the lookout for higher rates of profit. The result will be a generalisation of this new mode of production. The robot or machine will be adopted by all the other companies, as it is a more efficient way of producing jeans.
As a consequence the price of the jeans will fall, as there is an increased margin within which each market actor can undercut his fellows. One company will lower prices so as to increase market share. This new price-point will become generalised as competing companies cut their prices to defend their market share. A further n$ was invested but per unit profit margin is put under constant downward pressure, so the rate of return in productive assets tends to fall over time in a competitive market place.
Interest rates have been falling for decades in the West because interest rates must always be below the rate of return on productive investments. If interest rates are higher than the risk adjusted rate of return then the capitalist might as well keep his money in a savings account. If there is real deflation his purchasing power increases for free and if there is inflation he will park his money (plus debt) in an unproductive asset that’s price inflating, E.G. Housing. Sound familiar? Sure, there has been plenty of profit generated since 2008 but it has not been recovered from productive investments in a competitive free market place. All that profit came from bubbles in asset classes and financial schemes abetted by money printing and zero interest rates.
Thus, we know that the underlying rate of return is near zero in the West. The rate of return falls naturally, due to capital accumulation and market competition. The system is called capitalism because capital accumulates: high income economies are those with the greatest accumulation of capital per worker. The robot assisted worker enjoys a higher income as he is highly productive, partly because the robotics made some of the workers redundant and there are fewer workers to share the profit. All the high income economies have had near zero interest rates for seven years. Interest rates in Europe are even negative. How has the system remained stable for so long?
All economic growth depends on energy gain. It takes energy (drilling the oil well) to gain energy. Unlike our everyday experience whereby energy acquisition and energy expenditure can be balanced, capitalism requires an absolute net energy gain. That gain, by way of energy exchange, takes the form of tools and machines that permit an increase in productivity per work hour. Thus GDP increases, living standards improve and the debts can be repaid. Thus, oil is a strategic capitalistic resource.
US net energy gain production peaked in 1974, to be replaced by production from Saudi Arabia, which made the USA a net importer of oil for the first time. US dependence on foreign oil rose from 26% to 47% between 1985 and 1989 to hit a peak of 60% in 2006. And, tellingly, real wages peaked in 1974, levelled-off and then began to fall for most US workers. Wages have never recovered. (The decline is more severe if you don’t believe government reported inflation figures that don’t count the costof housing.)
What was the economic and political result of this decline? During the 20 years 1965-85, there were 4 recessions, 2 energy crises and wage and price controls. These were unprecedented in peacetime and The Gulf of Tonkin event led to the Vietnam War which finally required Nixon to move away from the Gold-Exchange Standard in 1971, opening the next degenerate chapter of FIAT finance up until 2008. Cutting this link to gold was cutting the external anchor impeding war and deficit spending. The promise of gold for dollars was revoked.
GDP in the US increased after 1974 but a portion of end use buying power was transferred to Saudi Arabia. They were supplying the net energy gain that was powering the US GDP increase. The working class in the US began to experience a slow real decline in living standards, as ‘their share’ of the economic pie was squeezed by the ever increasing transfer of buying power to Saudi Arabia.
The US banking and government elite responded by creating and cutting back legal and behavioral rules of a fiat based monetary system. The Chinese appreciated the long term opportunity that this presented and agreed to play ball. The USA over-produced credit money and China over-produced manufactured goods which cushioned the real decline in the buying power of America’s working class. Power relations between China and the US began to change: The Communist Party transferred value to the American consumer whilst Wall Street transferred most of the US industrial base to China. They didn’t ship the military industrial complex.
Large scale leverage meant that US consumers and businesses had the means to purchase increasingly with debt so the class war was deferred. This is how over production occurs: more is produced that is paid for not with money that represents actual realized labour time, but from future wealth, to be realised from future labour time. The Chinese labour force was producing more than it consumed.
The system has never differed from the limits laid down by the Laws of Thermodynamics. The Real economy system can never over-produce per se. The limit of production is absolute net energy gain. What is produced can be consumed. How did the Chinese produce such a super massive excess and for so long? Economic slavery can achieve radical improvements in living standards for those that benefit from ownership. Slaves don’t depreciate as they are rented and are not repaired for they replicate for free. Hundreds of millions of Chinese peasants limited their way of life and controlled their consumption in order to benefit their children. And their exploited life raised the rate of profit!
They began their long march to modern prosperity making toys, shoes, and textiles cheaper than poor women could in South Carolina or Honduras. Such factories are cheap to build and deferential, obedient and industrious peasant staff were a perfect match for work that was not dissimilar to tossing fruit into a bucket. Their legacy is the initial capital formation of modern China and one of the greatest accomplishments in human history. The Chinese didn’t use net energy gain from oil to power their super massive and sustained increase in production. They used economic slavery powered by caloric energy, exchanged from solar energy. The Chinese labour force picked the World’s low hanging fruit that didn’t need many tools or machines. Slaves don’t need tools for they are the tool.
Without a gold standard and capital ratios our form of over-production has grown enormously. The dotcom bubble was reflated through a housing bubble, which has been pumped up again by sovereign debt, printing press (QE) and central bank insolvency. The US working and middle classes have over-consumed relative to their share of the global economic pie for decades. The correction to prices (the destruction of credit money & accumulated capital) is still yet to happen. This is what has been happening since 1971 because of the growth of financialisation or monetisation.
The application of all these economic methods was justified by the political ideology of neo-Liberalism. Neo-Liberalism entails no or few capital controls, the destruction of trade unions, plundering state and public assets, importing peasants as domesticated help, and entrusting society’s value added production to The Communist Party of The People’s Republic of China.
The Chinese have many motives but their first motivation is power. Power is more important than money. If you’re rich and weak you get robbed. Russia provides illustrating stories of such: Gorbachev had received a promise from George HW Bush that the US would pay Russia approximately $400 billion over10 years as a “peace dividend” and as a tool to be utilized in the conversion of their state run to a market based economic system. The Russians believe the head of the CIA at the time, George Tenet, essentially killed the deal based on the idea that “letting the country fall apart will destroy Russia as a future military threat”. The country fell apart in 1992. Its natural assets were plundered which raised the rate of profit in the 90’s until President Putin put a stop to the robbery.
In the last analysis, the current framework of Capitalism results in labour redundancy, a falling rate of profit and ingrained trading imbalances caused by excess capacity. Under our current monopoly state capitalism a number of temporary preventive measures have evolved, including the expansion of university, military, and prison systems to warehouse new generations of labour.
Our problem is how to retain the “expected return rate” for us, the dominant class. Ultimately, there are only two large-scale solutions, which are intertwined.
One is expansion of state debt to keep “the markets” moving and transfer wealth from future generations of labour to the present dominant class.

The other is war, the consumer of last resort. Wars can burn up excess capacity, shift global markets, generate monopoly rents, and return future labour to a state of helplessness and reduced expectations. The Spanish flu killed 50-100 million people in 1918. As if this was not enough, it also took two World Wars across the 20th century and some 96 million dead to reduce unemployment and stabilize the “labour problem.”
Capitalism requires World War because Capitalism requires profit and cannot afford the unemployed. The point is capitalism could afford social democracy after the rate of profit was restored thanks to the depression of the 1930’s and the physical destruction of capital during WW2. Capitalism only produces for profit and social democracy was funded by taxing profits after WW2.
Post WW2 growth in labour productivity, due to automation, itself due to oil & gas replacing coal, meant workers could be better off. As the economic pie was growing, workers could receive the same %, and still receive a bigger slice. Wages as a % of US GDP actually increased in the period, 1945-1970. There was an increase in government spending which was being redirected in the form of redistributed incomes. Inequality will only worsen, because to make profits now we have to continually cut the cost of inputs, i.e. wages & benefits. Have we not already reached the point where large numbers of the working class can neither feed themselves nor afford a roof over their heads?13% of the UK working age population is out of work and receiving out of work benefits. A huge fraction is receiving in work benefits because low skill work now pays so little.
The underlying nature of Capitalism is cyclical. Here is how the political aspect of the cycle ends:
  • 1920s/2000s – High inequality, high banker pay, low regulation, low taxes for the wealthy, robber barons (CEOs), reckless bankers, globalisation phase
  • 1929/2008 – Wall Street crash
  • 1930s/2010s – Global recession, currency wars, trade wars, rising unemployment, nationalism and extremism
  • What comes next? – World War.
If Capitalism could speak, she would ask her older brother, Imperialism, this: “Can you solve the problem?” We are not reliving the 1930’s, the economy is now an integrated whole that encompasses the entire World. Capital has been accumulating since 1945, so under- and unemployment is a plague everywhere. How big is the problem? Official data tells us nothing, but the 47 million Americans on food aid are suggestive. That’s 1 in 7 Americans and total World population is 7 billion.
The scale of the solution is dangerous. Our probing for weakness in the South China Sea, Ukraine and Syria has awakened them to their danger.The Chinese and Russian leadershave reacted by integrating their payment systems and real economies, trading energy for manufactured goods for advanced weapon systems. As they are central players in the Shanghai Group we can assume their aim is the monetary system which is the bedrock of our Imperial power. What’s worse, they can avoid overt enemy action and simply choose to undermine “confidence” in the FIAT.
Though given the calibre of their nuclear arsenal, how can they be fought let alone defeated? Appetite preceded Reason, so Lust is hard to Reason with. But beware brother. Your Lust for Power began this saga, perhaps it’s time to Reason.

$6.4 trillion of global sovereign bonds now have a NIRP negative yield, says JPM JP Morgan

RT @ReutersJamie $6.4 trillion of global sovereign now have a negative yield, says JP Morgan

British Pension Provider Warns Of "Death Of Retirement"

British workers will have to work until they are 81 if they want to build up savings that guarantee their parents' standard of retirement, according to a new study by pension provider Royal London. Without significantly higher levels of engagement in pensions, the report concludes rather ominously, "we may be witnessing the death of retirement."
As AP reports,
The research released Wednesday comes as the British government embarks on a review of pensions that has prompted speculation it will raise the retirement age to compensate for a burgeoning older population. The retirement age for men and women is already set to rise to 66 between December 2018 and October 2020.

Royal London says changes in workplace pensions mean workers aren't saving enough to ensure they have the same kind of retirement their parents expected.
Royal London notes that changes in workplace pension provision mean that coming generations of retirees could have a radically different experience of retirement from their parents. Unless today’s workers begin to save significantly more for their later life, many will find that the quality of later life enjoyed by their parents will be unattainable unless they work well beyond traditional retirement ages.
For many people, continuing to work to these much higher ages may simply be beyond their physical capability. Without significantly higher levels of engagement in pensions, we may be witnessing the ‘death of retirement’.
Full Royal London Report below:

This is starting to look like the French Revolution, with bankers, CEOs and their favored politicians in the role of Marie Antoinette.

by John Rubino
Peggy Noonan, former Reagan administration speech writer and current Wall Street Journal pundit has, like most of her peers, been wondering what’s gotten into the unwashed masses lately that makes them such unpredictable voters. And she’s come up with a useful conclusion: The rise of Donald Trump (and similar iconoclasts in other countries) is due to the gradual division of society into the protected — that is, people who make the rules and therefore benefit from them — and the unprotected, who don’t make the rules and end up getting screwed. The latter have finally figured this out and have stopped supporting the former. Here’s her latest OpEd piece, in its entirety:

Trump and the Rise of the Unprotected: Why political professionals are struggling to make sense of the world they created.

We’re in a funny moment. Those who do politics for a living, some of them quite brilliant, are struggling to comprehend the central fact of the Republican primary race, while regular people have already absorbed what has happened and is happening. Journalists and politicos have been sharing schemes for how Marco parlays a victory out of winning nowhere, or Ted roars back, or Kasich has to finish second in Ohio. But in my experience any nonpolitical person on the street, when asked who will win, not only knows but gets a look as if you’re teasing him. Trump, they say.I had such a conversation again Tuesday with a friend who repairs shoes in a shop on Lexington Avenue. Jimmy asked me, conversationally, what was going to happen. I deflected and asked who he thinks is going to win. “Troomp!” He’s a very nice man, an elderly, old-school Italian-American, but I saw impatience flick across his face: Aren’t you supposed to know these things?
In America now only normal people are capable of seeing the obvious.
But actually that’s been true for a while, and is how we got in the position we’re in.
Last October I wrote of the five stages of Trump, based on the Kübler-Ross stages of grief: denial, anger, bargaining, depression and acceptance. Most of the professionals I know are stuck somewhere between four and five.
But I keep thinking of how Donald Trump got to be the very likely Republican nominee. There are many answers and reasons, but my thoughts keep revolving around the idea of protection. It is a theme that has been something of a preoccupation in this space over the years, but I think I am seeing it now grow into an overall political dynamic throughout the West.
There are the protected and the unprotected. The protected make public policy. The unprotected live in it. The unprotected are starting to push back, powerfully.
The protected are the accomplished, the secure, the successful—those who have power or access to it. They are protected from much of the roughness of the world. More to the point, they are protected from the world they have created. Again, they make public policy and have for some time.
I want to call them the elite to load the rhetorical dice, but let’s stick with the protected.
They are figures in government, politics and media. They live in nice neighborhoods, safe ones. Their families function, their kids go to good schools, they’ve got some money. All of these things tend to isolate them, or provide buffers. Some of them—in Washington it is important officials in the executive branch or on the Hill; in Brussels, significant figures in the European Union—literally have their own security details.
Because they are protected they feel they can do pretty much anything, impose any reality. They’re insulated from many of the effects of their own decisions.
One issue obviously roiling the U.S. and Western Europe is immigration. It is the issue of the moment, a real and concrete one but also a symbolic one: It stands for all the distance between governments and their citizens.
It is of course the issue that made Donald Trump.
Britain will probably leave the European Union over it. In truth immigration is one front in that battle, but it is the most salient because of the European refugee crisis and the failure of the protected class to address it realistically and in a way that offers safety to the unprotected.
If you are an unprotected American—one with limited resources and negligible access to power—you have absorbed some lessons from the past 20 years’ experience of illegal immigration. You know the Democrats won’t protect you and the Republicans won’t help you. Both parties refused to control the border. The Republicans were afraid of being called illiberal, racist, of losing a demographic for a generation. The Democrats wanted to keep the issue alive to use it as a wedge against the Republicans and to establish themselves as owners of the Hispanic vote.
Many Americans suffered from illegal immigration—its impact on labor markets, financial costs, crime, the sense that the rule of law was collapsing. But the protected did fine—more workers at lower wages. No effect of illegal immigration was likely to hurt them personally.
It was good for the protected. But the unprotected watched and saw. They realized the protected were not looking out for them, and they inferred that they were not looking out for the country, either.
The unprotected came to think they owed the establishment—another word for the protected—nothing, no particular loyalty, no old allegiance.
Mr. Trump came from that.
Similarly in Europe, citizens on the ground in member nations came to see the EU apparatus as a racket—an elite that operated in splendid isolation, looking after its own while looking down on the people.
In Germany the incident that tipped public opinion against Chancellor Angela Merkel’s liberal refugee policy happened on New Year’s Eve in the public square of Cologne. Packs of men said to be recent migrants groped and molested groups of young women. It was called a clash of cultures, and it was that, but it was also wholly predictable if any policy maker had cared to think about it. And it was not the protected who were the victims—not a daughter of EU officials or members of the Bundestag. It was middle- and working-class girls—the unprotected, who didn’t even immediately protest what had happened to them. They must have understood that in the general scheme of things they’re nobodies.
What marks this political moment, in Europe and the U.S., is the rise of the unprotected. It is the rise of people who don’t have all that much against those who’ve been given many blessings and seem to believe they have them not because they’re fortunate but because they’re better.
You see the dynamic in many spheres. In Hollywood, as we still call it, where they make our rough culture, they are careful to protect their own children from its ill effects. In places with failing schools, they choose not to help them through the school liberation movement—charter schools, choice, etc.—because they fear to go up against the most reactionary professional group in America, the teachers unions. They let the public schools flounder. But their children go to the best private schools.
This is a terrible feature of our age—that we are governed by protected people who don’t seem to care that much about their unprotected fellow citizens.
And a country really can’t continue this way.
In wise governments the top is attentive to the realities of the lives of normal people, and careful about their anxieties. That’s more or less how America used to be. There didn’t seem to be so much distance between the top and the bottom.
Now is seems the attitude of the top half is: You’re on your own. Get with the program, little racist.
Social philosophers are always saying the underclass must re-moralize. Maybe it is the overclass that must re-moralize.
I don’t know if the protected see how serious this moment is, or their role in it.
Noonan nails the political/social zeitgeist but for some reason misses the financial side of the phase change: Governments and other protected classes have borrowed unmanageable amounts of money and are now maintaining their power by squeezing workers and savers. Corporations lower their costs by shipping jobs overseas while governments cut their debt service by reducing (or eliminating) interest rates on the bank accounts and bond funds that once allowed savers to build capital and retirees to eat.
In this sense, QE, ZIRP and NIRP are a declaration of war on the unprotected, and as the victims figure this out they’re lining up behind to anyone who promises to 1) raise the minimum wage, limit immigration, and prevent corporations from moving jobs overseas, 2) break up big banks and jail Wall Street criminals, and 3) hand out free stuff, paid for by confiscating the ill-gotten gains of the 1%.
In the US, this produces a political campaign with Donald Trump giving voice to the darkest impulses of the electorate and both major Democratic candidates running to the left of Barak Obama.
In Europe, fringe parties of both the right and left are taking over, leading almost inevitably to a dissolution of the eurozone and a radical scale-back of the European Union. For starters.
This is starting to look like the French Revolution, with bankers, CEOs and their favored politicians in the role of Marie Antoinette.

Nabisco Workers Uprise Over Layoffs As Jobs Move To Mexico

CHICAGO — Nabisco workers on Chicago’s Southwest side protest on Wednesday over hundreds of impending layoffs.
Mondelez International plans to layoff 600 employees, and move those jobs to Mexico. 200 Nabisco workers say they have already received pink slips.
For more than a century, Nabisco has produced several popular products, like Oreos.
Negotiations between the union that represents Nabisco workers and Mondelez broke down earlier this week, and the contract has expired.

IBM Refuses To Release Layoff Numbers, Employees Described As “Massive”

(Julie Bort)  IBM handed out another batch of pink slips to workers on Wednesday, in a round of layoffs that some employees described as “massive.”
The exact size of the layoffs could not be determined, but the job cuts are part of ongoing changes to the tech company’s workforce.
IBM won’t comment on or disclose how many people it cuts except to confirm that it is continuously shedding some workers while hiring others, and to report the financial impact, both in costs and savings.
Last year, IBM hired and fired in almost equal numbers. It added 70,000 people, CEO Ginni Rometty said (including a womanwho had launched a social media campaign for IBM to hire her as the “world’s oldest intern.”)
But, according to research done by Business Insider, it chopped slightly more than 70,000 people, too.
IBM ended 2015 with a worldwide headcount of 377,757, it reported. So that’s a workforce churn of 18%.

One month severance

But the big difference with this layoff is that IBM has severely cut severance pay to one month total, no matter how many years of service the employee worked, several workers have confirmed to a Facebook page called “Watching IBM.” The page is maintained by Lee Conrad, the man who ran a former IBM employee watchdog organization called Alliance at IBM. He retired the Alliance organization last year, but through Facebook he’s still posting information from workers about layoffs and other working conditions at IBM.
Employees learned of the severance cut in January, 2016, when IBM sent out an employee document called  “About Your Benefits – Separation” which Conrad shared with Business Insider.
In the document IBM explained that its “Individual Separation Allowance Plan (ISAP) … is to provide transitional assistance to regular employees … when their employment with IBM has been terminated.” That includes if they are fired for performance issues or when their “position” is “eliminated” (aka a layoff).
The document flat-out told them that “The separation allowance payment available under the Individual Separation Allowance Plan, regardless of the circumstance under which ISAP is offered, is one month of pay.”
In previous layoffs, IBM employees could expect a severance package that paid them based on how many years they worked. According to Conrad, that pay used to be up to 23 weeks.

Other jobs?

Here’s a part of one post from an IBM worker who reported being laid off today. This person worked for IBM’s Global Technology Services division, a consulting unit with revenues that have been shrinking for years and which was down nearly 10% in fiscal 2015, IBM reported in January.
GTS has been heavy hit with these ongoing layoffs, as IBM looks to shed expenses from its shrinking businesses.
I am a GTS Strategic Outsourcing casualty of the mass firing today. My manager told me it was big and widespread, and I’d be hearing from a lot of people that will also be notified today. My official end date is May 31, 2016 (90 days) and the severance package is 1 month. I was encouraged to look for jobs inside IBM and was told that they are “plentiful” and “open”. Even if I were to believe that, I’m not sure why I would stay, looking over my shoulder every month or so waiting for the IBM axe wielders to come for me again.
An IBM official confirms that it is continuing to cut jobs in some departments while offering bountiful help-wanted listings on others.
A spokesperson sent us this statement:
“IBM is aggressively transforming its business to lead in a new era of cognitive and cloud computing. This includes remixing skills to meet client requirements. To this end, IBM hired more than 70,000 professionals in 2015, many in these key skills areas, and currently has more than 25,000 open positions.”

The government spends $1.7 billion a year on 770,000 empty buildings, and one Central Valley congressman is fed up

The federal government spends more than $1.7 billion a year to maintain 770,000 empty buildings while other agencies are leasing or buying new space, and Rep. Jeff Denham is fed up.
“This is something that hasn’t been handled in Republican or Democrat administrations because it’s too big of a bureaucracy,” Denham (R-Turlock) said in an interview in his office. “There’s no incentive for the agencies to sell.”
He said if politicians are going to talk about cutting government waste, selling empty buildings is a good start.
Denham has tried repeatedly to create a federal panel to streamline the sale of federal property. On Tuesday, the House Transportation and Infrastructure Committee unanimously approved Denham’s most recent effort. A similar Senate bill sponsored by Sen. Ron Johnson (R-Wis.) was approved by the Senate Homeland Security and Governmental Affairs Committee in December.
The seven-member commission created by Denham’s bill would have six years to review most federal property, recommend buildings to sell and suggest ways agencies could consolidate space. The White House Office of Management and Budget would review the recommendations and report to Congress on which properties to sell and why.
“We have very little communication between agencies,” Denham said. “We’ve seen agencies that will put out to bid huge pieces of property for the next big expansion, the next new thing that they need and only after it gets approved, then another agency goes 'Hey, wait a minute, we’ve got half of a building here.'"
The commission also would recommend at least five “high value” properties not listed as surplus property for sale with a combined value of at least $500 million.
The House Oversight and Government Reform Committee will review the bill before it can move to the House floor.
The federal government has tried for decades to get a handle on its hundreds of thousands of office buildings, storage warehouses, courthouses, hospitals, parking garages and other structures. In California, the federal government owned more than 271 million square feet of property in fiscal 2014, according to the General Services Administration. How much of that property is not being used is not clear.
President Bush created the Federal Real Property Council and a comprehensive property database in 2004. Beyond an annual report, the General Services Administration-maintained database is not available to the public, Congress or other federal agencies.
Under President Obama, the Office of Management and Budget has instructed agencies not to increase their total square footage of office and warehouse space beyond what existed in 2012.
Despite those efforts, the Government Accountability Office reported in June that the government continues to hold more property than it needs, leases when it would be cheaper to own and uses unreliable data to make property management decisions.
Denham’s bill would require the administration's database to be public and include details about each property's specific location, maintenance costs and use, and why the property is needed.
He pointed to the Los Angeles Federal Courthouse and the Veterans Affairs Facility in Los Angeles as examples of underused buildings. “They need to have a long-term plan of what those vacancies are going to be used for and whether or not they can combine [with] other agencies,” Denham said.
Similar legislation from Denham passed the House in 2012, but died in committee in 2013.
Denham’s earlier attempts were stymied by concerns that they would interfere with an existing requirement that before surplus federal property can be sold, regardless of type or condition, it must be offered to states, municipalities and nonprofit groups that provide services for homeless people.
A 2016 Congressional Research Service report found that could add months or years to the process.
“That was certainly a stumbling block that we had dealt with two years ago in the last Congress,” Denham said. “The way that GSA had defined this in the past, [a] homeless advocacy group could actually put a hold on any property that we were trying to sell. That created a disincentive for agencies actually trying to sell.”
Since 1987, only 122 of 40,000 screened federal properties have been transferred to homeless advocacy groups under this process, according to a June 2015 report from the U.S. Government Accountability Office.
Denham said surplus federal properties should be available to house the homeless, but the process should be easier.
Under his bill, the Department of Housing and Urban Development would decide which federal properties might be suitable and only those buildings would be offered to nonprofits, municipalities or states. It also shortens the screening and application process.
“When you’ve got a billion-dollar property, when you’ve got a heating plant in Georgetown, those are not properties that are going to be used for the homeless,” Denham said.
Several lawmakers who previously opposed the measure over concerns that it would affect homeless advocacy groups' access to surplus property have signed on as co-sponsors, including Rep. Elijah Cummings (D-Md.), the ranking Democrat on the Oversight and Government Reform Committee.
The highest-ranking Democrat on the Transportation Committee, Rep. Peter DeFazio (D-Ore.), said he and Denham spent “considerable time” negotiating details of the bill and he is "quite happy" with the final result.
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The Obama administration hasn’t taken an official stance on the bill, and opposed it in the past, but Rep. Andre Carson (D-Ind.), told committee members Wednesday that Denham’s bill lines up with the president’s efforts to reduce federal property.
Denham said the challenge at this point is getting the bill passed during a presidential election.
“We have, I think, set this bill up for success, but I think, like anything else, this is a challenging year and a challenging political climate. We still have to get it off the floor and marry it to the Senate and ask the president to sign it,” he said.
Follow @sarahdwire on Twitter.
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It’s Official: Canada Has Sold All Of Its Gold Reserves

Tyler Durden:  One month ago, when looking at the latest Canadian official international reserves, we noticed something strange: Canada had sold nearly half of its gold reserves in one month. According to the February data, total Canadian gold reserves stood at 1.7 tonnes.
That was just 0.1 per cent of the country’s total reserves, which also include foreign currency deposits and bonds.
As we noted, the decision to sell came from Finance Minister Bill Morneau’s office.
“Canada’s gold reserves belong to the Government of Canada, and are held under the name of the Minister of Finance,” explained a spokesperson for the Bank of Canada on Wednesday. “Decisions relative to gold holdings are taken by the Minister of Finance.”
Reached by Global News on Wednesday evening, a spokesperson for the finance department said the sale “was done in the normal course of business for the government. The decision to sell the gold was not tied to a specific gold price, and sales are being conducted over a long period and in a controlled manner.”
This latest sell-off is indeed part of a much longer-term pattern of moving away from gold as a government-held asset. According to economist Ian Lee of the Sprott School of Business at Carleton University, Ottawa has no real reason to keep its gold reserves other than adhering to tradition.
“Under the old system, (gold) backed up currencies,” Lee explained. “The U.S. dollar was tied to gold. One ounce was worth US$35. Then in 1971, for lots of reasons I won’t get into, Richard Nixon took the United States off the gold standard.”
Gold and dollars were interchangeable until that point, he said, but in the modern financial world, the metal is no longer considered a form of currency.  “It is a precious metal, like silver … they can be sold like any asset.”
The amount of gold the Canadian government holds has therefore been falling steadily since the mid-1960s, when over 1,000 tonnes were kept tucked away. Half of those reserves were sold by 1985, and then almost all the rest were sold through the 1990s up to 2002.
By last year, Canada’s reserves were down to just three tonnes, and the latest sales have now halved that. At the current market rate, the value of 1.7 tonnes of gold comes in at just under CAD$100 million, barely a drop in the bucket when you consider the broader scope of federal finances.
According to Lee, there may soon come a time when Canada’s gold reserves are entirely a thing of the past. There are better assets to focus on, he argued, calling the government’s decision to dump gold “wise and astute.”
* * *
Lee was right, because fast forward one month when earlier today Canada’s Department of Finance released its latest official international reserves and as of this moment it’s official - Canada has fully “broken away with tradition” and has exactly zero gold left.

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Donald Trump – Bad For Dollar, Good For Gold?

Donald Trump’s emergence as the Republican frontrunner and possible future U.S. President is causing some gold and investment analysts to suggest diversifying into gold according to the Wall Street Journal.
Donald Trump – Gage Skidmore via

From the WSJ:
The other winner from Super Tuesday could be gold.
With Donald Trump solidifying his status as the front runner in the Republican field, some investors and analysts watching from overseas say that the ascendancy of the brash New York businessman could rattle global markets as the November presidential election inches closer. Nervous investors, they say, could pile in to gold and other safe-haven assets as an insurance policy.
The journal quotes David Govett of London-based commodities broker Marex Spectron:
“The mere thought would suggest a good opportunity to buy gold,” said Mr. Govett, who heads the firm’s precious-metals trading desk.
“Who knows what could happen should he be handed the keys to the White House,” said Mr. Govett.”
James Sutton, a London-based portfolio manager on the global natural resources equities team at J.P. Morgan Asset Management concurs:
“If there’s any uncertainty regarding the U.S. election and the potential for a slightly off-center candidate, whether that be Sanders or Trump winning the election, then I can see a scenario where that’s bad for the dollar.”
It is important to note that gold’s fundamentals are very sound and the possible “Trump gold factor,” if there is one, is only one of a myriad of fundamentals that are driving the gold market.
As comprehensively notes
Following three down years, many factors have been driving gold’s resurgence in 2016:
- Geopolitical turmoil – spreading from the Middle-East into Europe and beyond – burnishing gold’s safe haven status
- Doubts about the health of the global economy and financial system and the longer-term impact of the slump in oil prices forcing investors to look for insurance policies
- Uncertainty surrounding the future of the European Union and the possible fallout from a Brexit
- Slumping stock markets around the world pushing investors into alternative assets particularly gold
- Physical gold investors jumping back into ETFs – more than wiping out all of last year’s outflows less than two months into the new year
- Skepticism about further rate hikes in the US and negative interest rate policies in a growing number of developed economies around the world lowering the opportunity costs of holding gold
- Continued central bank buying and a belief that the strengthening trend in the US dollar is over for now
- First indications that inflation may be creeping back into the financial system making gold attractive as a hedge
- A realization that gold around $1,000 an ounce represents an historical bargain buying opportunity
Uncertainty regarding the U.S. presidential election will likely aid gold. But gold’s outlook is bright whether Donald Trump, Hillary Clinton or the Messiah himself or herself becomes President.
Gold’s fundamentals are positive given the very high degree of macroeconomic, monetary, geopolitical and systemic risk in the U.S. and indeed the world today.
LBMA Gold Prices
03 Mar: USD 1,241.95, EUR 1,141.48 and GBP 882.24 per ounce
02 Mar: USD 1,229.35, EUR 1,131.53 and GBP 881.54 per ounce
01 Mar: USD 1,240.00, EUR 1,141.70 and GBP 886.09 per ounce
29 Feb: USD 1,234.15, EUR 1,131.46 and GBP 890.95 per ounce
26 Feb: USD 1,231.00, EUR 1117.58 and GBP 878.87 per ounce

Gold and Silver News and Commentary
Gold futures mark best settlement in almost 3 weeks – Marketwatch
Gold slips as risk appetite back in vogue, ETF inflows support – Reuters
India’s Love Affair With Gold Tested as Tax Fight Spurs Shutdown – Bloomberg
There’s gold in them there rivers – New high-tech search – Independent
Silver American Eagle sales still restricted by weekly allocations – Coin World
‘7 Real Risks To Your Gold Ownership’ – New Must Read Gold Guide Here
Global Central Banks Continue Longest Gold-Buying-Spree Since Vietnam War – Zero Hedge
Russia aims to overthrow dollar and West with gold – Pravda
COMEX vs Private Gold & Silver Eagle Stocks – SRSrocco Report ‏
Interest on Gold Is the New Tempest in a Teapot – Gold Seek
Silver Bullion Coin Sales Flying – Daily Coin
Read more here
Mark O'Byrne

The EU Going Quietly into the Light?

EU Flag 300
Our long-term projection models targeted March 13/14, 2016 for when the confidence in the EU would begin to crack much more profoundly among the average community. Indeed, the general view about the EU’s future has begun to plummet as reported in nearly every member state (28 in total) with the exception of just a few. The most striking statistics come from Netherlands and Germany where people are now overwhelmingly negative about the outlook of the union. Ireland is the least pessimistic, coming in at 20%, with Greece leading the pack at 63%. The pessimism in Greece has increased by 20% in the past year alone. It appears the computer has successfully targeted the correct period, but this feat was accomplished by looking at the business cycle. It is very clear that once the cycle turns down, confidence collapses.
UK - Euro Flags
In Britain, 44% of the population is against staying in the EU. Clearly, the number one issue has been the wholesale migration ushered in by Merkel in Islamic hordes. David Cameron announced the referendum would take place June 23. He initially agreed to such a vote because he never thought in a million years that the British would vote to get out. Now the polls have narrowed, and despite the media supporting Cameron and the EU, they seem unlikely to win with their brainwashing campaign to stay in Europe. Despite the fact that Cameron has been using scare tactics against his own people to stay in the EU, he has said that his authority rests on holding the vote on British membership and that does not mean winning it. Cameron has no plans to step down if the people vote for a BREXIT. The likelihood of the British votes being rigged is EXTREMELY HIGH because Brussels fears a contagion. Since the majority of member states have an extremely high pessimistic view of Brussels, you are looking at a massive loss of government jobs. So it is unlikely Brussels will simply go quietly into the light.
Categories: European Union
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Steve St. Angelo: Continued Increase in Silver Eagle Buying

by Rory, The Daily Coin
The U.S. Mint has been rationing the volume of silver eagles released to the public since July 2015. The Royal Canadian Mint has followed suit. The Australian Perth Mint, has increased their monthly production of silver coins more than two fold.
This is the backdrop which is shining a light on our broken economy. In 2008 the U.S. Mint increased their production and release of silver eagles by 50% year-over-year. Each subsequent year the U.S. Mint has reached a new high with the exception of 2012, which is okay because in 2013 the volume, not only reached a new high it was higher than 2011!!
Take a look at this chart.
There has been a dramatic upswing in the volume of silver eagles moving through the U.S. Mint that is in direct correlation to the “financial crisis” that began in 2008 and has yet to subside. The volume of American Silver Eagles almost doubled year-over-year from 2007 to 2008 and has doubled again beginning in 2011. In four short years the volume of American Silver Eagles has experienced a four-fold increase. What other product, company or anything has increased their volume four-fold in four years? I dare say, none.
The American Silver Eagle was never intended to be a hedge against a collapsing dollar, however, as people have awakened to the ongoing nightmare of Quantative Easing, an exploding federal debt and a banking system that is set up against the average citizen, silver and gold have moved into the spot light. One would think the so-called “economist” would have known, given enough time, people would begin wising up to their parlor tricks and make the appropriate changes to protect themselves.
Now these PhD economist are tossing around the thought of a cashless society and stripping us of the remnants of sovereignty we hold. Over the past two-three decades we have been slowly training ourselves to move away from hard currency and become more dependent on plastic. Through the use of debt and credit cards we rarely use cash to make large purchases. We have been told it’s not “safe” to carry large sums of cash. Which is 100% correct, if we are carrying large sums of cash and a giant sign that states “I’m carrying large sums of cash.” then it becomes extremely dangerous, otherwise, we are just another person walking down the sidewalk or wherever we find ourselves.
The hierarchy of money:
gold and silver are money, they can also be used as currency.
paper fiat currency is a representation of money
plastic digital currency is an illusion of money
The volume of investment that is currently in gold and/or silver is estimated to be less than 1% of the total volume of investments in the U.S. As we have recently documented the U.S. Mint and the Royal Canadian Mint can not keep up with the current volume of silver moving through the two largest mints in the world. What would happen if there was a very small increase of investment that was to move out of the stock or bond market and into physical gold and silver? I am not talking about a major increase – what would happen if 0.20% (20bps) of the investment total were to move towards precious metals? If they wanted to acquire silver or gold from the COMEX, forget about it. Not going to happen. Take a look:
What it comes down to is very simple – do you trust the federal government of the United States to care for your wealth? Hasn’t the federal government preformed at such a high level that people are turning to Donald Trump to take the reigns? Love or hate him, he is exposing the depth and breadth of the problems we face. When the people of this country believe a person who has filed bankruptcy, multiple times, will do a better job steering the countries policies, you know something is out of balance.
If you don’t currently hold physical precious metals, specifically gold and silver, you should ask yourself this simple question: If the dollars in my wallet and the digital blips on the screen of my computer are backed by the “full faith and confidence of the federal government” what is actually backing the currency? Lies, deceit and propaganda? Let’s not forget war, which happens to be the business model of the U.S., endless, unconstitutional wars of aggression perpetrated against anyone and everyone that doesn’t want to follow and that doesn’t want to use the USDollar.
Steve St. Angelo, SRSrocco Report and I dig into all these subjects and couple of others. In the next forty minutes you will learn about cashless society, what could potentially happen with precious metals and base metals mining in 2016 as well as discussing the details of the above charts.
MP3 for Downlaod/Listening

Always Watched, Always Monitored, Always Recorded

BALTIMORE – When we left you yesterday, we were discussing the War on Cash – the push by governments to abolish physical currency.
It is a fraud. The idea is not to fight crime or boost the economy, as its proponents claim. It is part of a bigger campaign by the Deep State to take more control over your money… and your life.
We’ll return to our theme in a moment. But first… an update on the markets and the economy.
The Attack America Never Saw Coming
Another surprise attack against the U.S. dollar is coming. And soon, too.
This attack won't be from China.
Instead, this one will hurt the worst — coming from a sworn "ally" of Americans.
Click here to view this short message on how to prepare for the next "surprise" currency move.

Trade Slump

It came out last week that world trade did indeed fall in 2015. It was the first time this had happened since 2009.
Starting at the end of last year, we began following the trains, trucks, ships, and sales of “yellow machines” – backhoes, loaders, bulldozers, etc. – and watching them all slow down.
Sure enough, they were telling us something important. Reports the Financial Times:
The value of goods that crossed international borders last year fell 14% in dollar terms.
Most notably, a decline in world trade means China is not exporting as much merchandise as before. This, we guessed, would mean a greater outflow of foreign exchange reserves from China’s central bank… and make it more difficult for it to prop up the exchange value of the renminbi.
(A country accumulates foreign exchange reserves when it exports more than it imports. In the case of China, dollars, euro, etc… flow into the country in exchange for Chinese-made goods. This foreign currency builds up as reserves at the central bank. It can then dip into this stash to buy its own currency and prop up its value.)
The Chinese government denied it. And it warned billionaire speculator George Soros not to short the renminbi. But as in the old Soviet days, no rumor is confirmed until it is officially denied.
And sure enough, yesterday’s Financial Times brought news that the renminbi was slipping:
This morning, the People’s Bank of China [China’s central bank] set the reference rate for the renminbi, around which the currency is allowed to trade, weaker by 0.17% and lower for a fifth straight session.
It was both the equal-largest depreciation and longest streak since the first week of January, when the currency’s movements spurred heightened volatility in global financial markets.
The renminbi’s weakness comes despite comments from Zhou Xiaochuan, the PBoC’s governor, at the start of the G20 finance ministers and central bankers meeting last Friday that there is “no basis for persistent renminbi deterioration.”

Cruisin’ for a Bruisin’

Back in the U.S., the Dow fell 123 points yesterday. But judging from the prices they pay, investors are still wildly optimistic.
You may recall that it was the price/earnings-to-growth ratio – or PEG ratio – that made a young portfolio manager at the Fidelity Magellan mutual fund named Peter Lynch so successful. (His fund went on to outperform the market by a whopping 13.4% a year annualized.)
The PEG ratio looks at the relationship between a stock’s price-to-earnings (P/E) ratio and the consensus forecast for earnings-per-share growth.
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According to Lynch, when a stock’s P/E ratio is equal to its growth rate – a PEG ratio of 1 – it’s fairly priced. When the ratio is high, investors are willing to pay a lot for future earnings growth.
Similarly, when the PEG ratio is low, it means investors are paying little for growth. And when it is at an all-time high – as it is now – it means investors are cruisin’ for a bruisin’.
Not that we care; we hold plenty of cash and gold in case of an emergency.

Cameras, Microphones, Sensors

So, let’s turn back to the War on Cash.
There is a battle going on between tech darling Apple and the FBI.
To fill you in… the FBI wants Apple to unlock data on an iPhone used by one of the attackers involved in the San Bernardino shootings last December.
Apple says that supplying the FBI with the information needed to unlock the data will leave all iPhone users vulnerable to hackers.
The fight concerns much more than whether the feds will be able to hack your smartphone. They will soon have access to your whole life. The New York Times explains:
Today’s smartphones hold a lot of personal data – your correspondence, your photos, your location, your dignity. But tomorrow’s devices, many of which are already around in rudimentary forms, will hold a lot more.
Consider all the technologies we think we want – not just better and more useful phones but cars that drive themselves, smart assistants you control through voice or household appliances that you can monitor and manage from afar.
Many will have cameras, microphones, and sensors gathering more data and an even more sophisticated mining effort to make sense of it all. Everyday devices will be recording and analyzing your every utterance and action.

Rats in a Cage

What would the feds do with that kind of information?
Here are the Chinese, also in yesterday’s Financial Times, giving us a heads up:
Beijing’s internet watchdog has silenced an outspoken property tycoon known as The Cannon by shutting his popular social media account…
A push of a button. And no more “illegal information that had caused a bad impact,” said the regulators.
Isn’t the Internet wonderful?
In the old days, you’d have to break into a newspaper office and smash the printing press… or get a court order to padlock the premises. Now, we have “Internet watchdogs” who just push a button.
And wouldn’t it be nice for the Deep State if all your financial information… and the control of your money… were all online too?
In Margaret Atwood’s dystopian novel The Handmaid’s Tale, a future U.S. has turned into a police state. The authorities control people with electronic money cards. Like rats in a cage, they get their rations… until the watchdogs cut them off.
If the government gets its ways, this could be the real future, not just fiction. Removing cash from the system is just one big step along the way.
But there is more to the story… much more…
Tune in tomorrow.
Further Reading: The War on Cash is a last ditch attempt by governments and central banks to keep the worldwide credit bubble inflated. But as Bill has been warning, it won’t work. Instead, it will lead to a monetary catastrophe more devastating than anything you’ve ever seen.
That’s why Bill has put together a special presentation to explain what’s going on. You can’t protect yourself from the coming collapse if you don’t understand how it will unfold. Find full details here.

Portfolio Insight


[Bill’s Note: For over a decade, value investor Chris Mayer has been one of the top-performing analysts in our business. And we’re proud to have him as the newest member of the Bonner & Partners team. Chris is working on an exciting new project for Diary  readers – code-named Bonner Private Portfolio. So, expect to hear more from him in these pages over the coming weeks.]

Last week, I traveled to St. Croix, in the U.S. Virgin Islands, with E.B. Tucker, editor of the Casey Report… to dig deeper into how this works.
We met with Warren Mosler, a legendary money manager who retired there about 13 years ago.
Mosler racked up a truly amazing track record. From 1978 through 1997, his fund was one of the top ranked in the world. And he had only one losing month – a drop of one-tenth of one percentage point.
Mosler’s secret weapon was his grasp of how the “plumbing” of the modern fiat-based money system works. His specialty was exploiting other investors’ misunderstanding of the fiat money system.
E.B. and I met Mosler for breakfast at the Tamarind Reef Resort. He had just come in from a game of tennis. He is a trim 67, friendly, and easygoing.
We talked for nearly two hours. And Mosler explained why lower rates don’t help the economy…
As he put it, lower income payments – on either bonds or bank deposits – suck money out of the economy. This is completely contrary to what most people think.
As Bill has been warning, central bankers are laboring under a dangerous myth.
They believe lower interest rates stimulate economic growth. (Bill talked about this “boneheaded” logic here.)
But the truth is that ZIRP (zero-interest-rate policy)… and now NIRP (negative-interest-rate policy)… further depress an already weak global economy.
Lower rates simply mean the private sector earns less income than before. That means less money floating around.
That’s deflationary, not inflationary.
As I told Bonner & Partners Inner Circle readers last week [paid-up subscribers can catch up here], when you realize that ultra-low… and negative… interest rates just take away people’s money, the insanity of what central banks are doing becomes apparent.
Mosler believes – and E.B. and I agree – that the world economy is on the edge of a deflationary recession.
And ZIRP and NIRP are making it worse.
Editor’s Note: This wasn’t the only insight Chris picked up in St. Croix. He also discovered Mosler’s top idea for investing in this low-rate environment – one that could give your portfolio a boost for the next two decades.
Chris will be sharing Mosler’s winning idea in a special email on Friday. To make sure you’re on Chris’s mailing list – and to stay up-to-date with all the details of his new project – follow this link.

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According to Jim Rickards, the fallout will be 525 times bigger than Enron and is sure to affect all American citizens — no matter where you live, what you do for a living or how much money you have.
The mainstream media could uncover this deception anytime now. Once that happens, it will be too late for anyone to act.
Will you be ready? Click here to find out more


If you’re not already a subscriber to Bill’s monthly publication, The Bill Bonner Letter, you’re missing out. Here’s what readers have to say about the most recent issue – which covers the major slowdown in the global economy.
Congratulations. This was a great newsletter, written so the average guy on the street (like myself) could read and understand it – just awesome – all I can say, a simple "Thank You.”
— Gordon P.
Thank you for one of, if not the best, explanations… with examples… for the layman to understand. Very helpful. Again, thanks!
— Dawn K.
Your recent letter with quotations from the past about the stock market being “casino like” was interesting and enjoyable to read.
Long ago, I asked an attorney friend that had professional dealings with the stock market his opinion about investing in it. He replied that it was like gambling and did not encourage getting involved. Even when I pressed him and suggested that knowledge can lower risk, he discouraged it and suggested I’d be better off putting money into small companies I know something about.
He continues to do very well as a venture capitalist. I have lost virtually everything in the real estate crash and now the oil-business crash. Both looked so good and did well at the time… and for a time. But like all of the TV and movie stories, where the star in the casino gets way ahead on chips but then loses everything, I waited too long to get out. Oil will come back but the real estate is gone for good.
Take it from a veteran gambler – someone who won $60 from a quarter slot machine in Reno the ONLY time he gambled in a casino, but then lost hundreds of thousands in oil and real estate investments – that careless optimism is foolish. Even the most solid looking investments MUST be carefully monitored and balanced with less risky ones.
Thanks for the great writing Bill. I look forward to much more.
— Brian B.
Don’t miss out any longer on what Bill has to say in The Bill Bonner Letter. In fact, here’s his most recent warning about a crisis that will affect your cash.

In Case You Missed It…

Yesterday, the Dow fell over 100 points. And the analysts at Dent Research say it’s just the beginning.
They’re predicting a 10,000-point drop before all is said and done. But their top expert explains how you can be one of the few to sidestep the carnage… Watch here.