It has been long known that copy cats walk among us. Some try to emulate role models that perform good deeds in society. Sadly, some copy cats perform evil like serial killers. Experience is a great educator and I came across something recently that alarms me.
Before I get into that episode I saw two popular reality TV shows that foster the same ideas as my interaction story.
Survivor and Big Brother:
Are you aware of these two highly rated TV shows? Do you watch them? As a disclaimer I only watched the first season of Survivor and I turned off the TV with Big Brother after five minutes.
With that said, I offer you a new vision or one that you may have already grasped concerning the fundamentals to these shows. It is basically the same principal for both. It is this: competition for a money prize by eliminating contestants in weekly events. Sounds fair, but it isn't.
What happens in these reality shows is sick and dangerous to society as a whole. In Survivor, people are stranded on an island with only the clothes on their back. They must survive the elements and yet, still compete to win by being the last person standing.
In this phony world the physically weak, those with no leadership abilities and or, poor mental capacity ban together to vote off the island anyone who is stronger, smarter and a leader. Anyone who offers their experience, especially older contestants. They are out even before the first vote. They put a target on anyone who wins a competition or demonstrates ability. In the first episode of Survivor, an older man found all the other helpless contestants water. He made fire with his glasses and he reminded those who slept close to the water that high tide is unknown. It would be best to sleep high in a tree. He was correct on all accounts. He was the first voted off the island.
In Big Brother the contestants are confined to a house with no outside contact during the eliminating process. The person who can cook, clean up and help run the house smoothly will always be the first kicked out of the house by the lazy, inept and slower IQs.
Do you see what these TV producers are pushing? All you a low achiever. All those who don't understand how true wealth is accumulated, but has a big mouth. All of you get together and vote out or shutout the competition. Anyone can say free education for all! Free medical or basic income for all! Whatever the issue. It does not matter. What matters is how can you do it so that it is cost effective and self sustaining? That is how you make a difference!
Anyway, back to the real world. I was planning a vacation to Europe. I went online to do price comparisons. I came across the best price offered by Aeroflot. I never heard of that airline. It is a Russian carrier. I'm not prejudiced against the Russians. In fact I always wanted to see their country and meet their people. It won't happen!
After I purchased the ticket, a note flashed on my screen. In order to board the plane from New York with a stopover in Moscow and then, on to Rome, I would have to get a Visa. Dear Reader, this is no fill-out the application on the internet. You need to submit the reason for landing in Moscow and the commissioner will determine either yes or no with a possible fee to this application. Get Real!
There is no way in hell that I will submit to this procedure. It is a barrier placed by paranoid people to shutout the possible goodwill by human contact. This is the small, weak and mentally challenged keeping out the dangers of the sharing of cultures with respect for each other. Now, I do not know if the US imposes the same barriers to Russian tourists. However, since our paranoid military has so much influence in our government, I fear it is like a tit-for-tat game. This is not good for peace.
Recently, the Doomsday Clock was in the news. The time is two minutes to mid-night. People, with these type of actions by government, the time just moved to 1 minute and 59 seconds.
P.S. This might be my last post as Google is closing the door to free speech as they claim not enough interest. Thank you Dear Readers for your loyalty even if you disagreed with me. Hopefully, some day my book will be published, Evolution of Democracy - look for it.
Wednesday, February 6, 2019
Wednesday, January 30, 2019
Facts: Fiat Has Failed and Fed Will Stall
I begin by reminding you of the rules and regulations concerning unemployment. To register to collect unemployment benefits, a worker must have at minimum 26 consecutive weeks of work. The past few weeks 700,000 retail workers were let go, pink slip, adios amigo! They will not be counted in the weekly report. They are seasonal, Christmas help. The point shows many aspects of our economy. The BLS says unemployment claims hit a fifty year low last week, but this fact shows there are many people out there willing to work. They are just tired of part-time employment. This is only retail. How many other work fields utilize seasonal help. There are many, especially agriculture. We have a lot of unemployed people, but they are not counted because they do not fall into the Department of Labor rules and regulations.
Money Facts
How about the saga of the furloughed government workers? I bring them up because federal workers are at middle class level. All their whining and crying due to the loss of one or two paychecks and they cannot afford to live. It is a reflection of the American mentality. They cannot control spending. They do not save for a rainy day. They do not know how to manage money. Very sad, indeed. Keep in mind that they represent the middle class. What about low wage earners like the 700,000 laid of seasonal help? There are many culprits as to why our basic citizen cannot make ends meet. Look at our so-called leadership! The government has run deficits since Bill Clinton was in office. Before that, you have to go to the Kennedy administration. The problem is the government just prints more money and you and I do not have that privilege. This is not a piece that will direct you to a money guru for advice, but look at our currency itself. It is the chief reason why as a society we are losing the middle class, the American Dream and our way of life. Simple: It is fiat money.
.65 cents an hour
Yes. That figure was the minimum wage at one time. Funny thing, people got buy because our way of life was much stronger. A gallon of gas was .30 cents or less. A teenager could find summer employment and the money he SAVED was enough to cover a local college come the Fall. However, our immoral government leaders kept spending like for the military and every year that they spent more than revenues, our dollar became less in value. In fact, since the Federal Reserve started in 1913, our dollar has lost 95% of its value. That is what fiat money does to a society. Here is another fact. There has never been a government who has succeeded using fiat currency. They all end in collapse. Hey, federal workers, did you read that? Understand it? This period of work without pay will happen again and again. Start saving for those rainy days.
Anyway, the Federal Reserve has its motives in greed. This greed leads to wealth which leads to power. This is why this group of unelected private bankers are for the banking industry. Congress violated the constitution by giving away its right to manage our currency and that currency should be backed by gold. Gold keeps government from running deficits. It also protects our standard of living. Our currency no longer has this solid foundation. It is just military strength behind the economy. The cost of fiat money has to get cheaper and cheaper because the debt it has created is larger and larger.
Some Aspects
Our national deficit keeps growing. Let me show you the recent trend. It is alarming! In 2009 the US debt was 60% of GDP. In ten years that deficit has grown another 40% to 104% of everything of value that is produced in our country. Could you live by spending and owing 104% of your income?
Of course, not. This point reflects the true danger of fiat money. It is easy to print, but difficult to pay. This is why the Fed cannot raise interest rates beyond 3.5% because our nation could not service the debt without raising taxes. If you want a poster child for a government that taxes everything, look at France. The French impose a 45% tax rate and tax anything and everything in society and still, the government is in debt with no money for stimulus projects.
How about the consumer? If you combine credit cards, auto loans, and student debt, it is now up 25% in the last five years to $4 trillion. The price of products, shelter and healthcare rise faster and higher than our wages. We always need more money because the value of our currency keeps declining. In many locations people need to use 50% of their income for rent. There is no discretionary money left on the table. A recent report reveals that 42% of Americans have no savings for retirement. The list is as long as the immigration line. The money tree that once was America is barren of green leaves.
A related point to this is student loans are defaulting at higher rate than mortgage defaults in 2007 and more than all junk mortgages in 2007.
How about corporate leadership? I should say, so-called leadership. Corporate debt is $9 trillion and rising. Within those borrowings is iconic brand names like GE, IBM and AT&T. Their rated bonds are BBB and falling. The biggest evil here is derivatives. Collateral debt obligations in 2007 was $61 trillion. They are now over $120 trillion. Fiat money numbers grow exponentially and the reality will dawn on the market place that they will not be repaid. This also means a day of reckoning and possible collapse of our currency which will lead to a collapse of our economy and depression.
By the way, China is even worse than us. Their debt in 2000 was $2 trillion. Today, it is up 2000% to $40 trillion or off the charts!
Fiat money is a failure and the Fed cannot raise rates. Fiat money can only continue this game by getting cheaper even negative. When the music of manipulation stops, you better have some gold under the last seat. End the Fed!
Money Facts
How about the saga of the furloughed government workers? I bring them up because federal workers are at middle class level. All their whining and crying due to the loss of one or two paychecks and they cannot afford to live. It is a reflection of the American mentality. They cannot control spending. They do not save for a rainy day. They do not know how to manage money. Very sad, indeed. Keep in mind that they represent the middle class. What about low wage earners like the 700,000 laid of seasonal help? There are many culprits as to why our basic citizen cannot make ends meet. Look at our so-called leadership! The government has run deficits since Bill Clinton was in office. Before that, you have to go to the Kennedy administration. The problem is the government just prints more money and you and I do not have that privilege. This is not a piece that will direct you to a money guru for advice, but look at our currency itself. It is the chief reason why as a society we are losing the middle class, the American Dream and our way of life. Simple: It is fiat money.
.65 cents an hour
Yes. That figure was the minimum wage at one time. Funny thing, people got buy because our way of life was much stronger. A gallon of gas was .30 cents or less. A teenager could find summer employment and the money he SAVED was enough to cover a local college come the Fall. However, our immoral government leaders kept spending like for the military and every year that they spent more than revenues, our dollar became less in value. In fact, since the Federal Reserve started in 1913, our dollar has lost 95% of its value. That is what fiat money does to a society. Here is another fact. There has never been a government who has succeeded using fiat currency. They all end in collapse. Hey, federal workers, did you read that? Understand it? This period of work without pay will happen again and again. Start saving for those rainy days.
Anyway, the Federal Reserve has its motives in greed. This greed leads to wealth which leads to power. This is why this group of unelected private bankers are for the banking industry. Congress violated the constitution by giving away its right to manage our currency and that currency should be backed by gold. Gold keeps government from running deficits. It also protects our standard of living. Our currency no longer has this solid foundation. It is just military strength behind the economy. The cost of fiat money has to get cheaper and cheaper because the debt it has created is larger and larger.
Some Aspects
Our national deficit keeps growing. Let me show you the recent trend. It is alarming! In 2009 the US debt was 60% of GDP. In ten years that deficit has grown another 40% to 104% of everything of value that is produced in our country. Could you live by spending and owing 104% of your income?
Of course, not. This point reflects the true danger of fiat money. It is easy to print, but difficult to pay. This is why the Fed cannot raise interest rates beyond 3.5% because our nation could not service the debt without raising taxes. If you want a poster child for a government that taxes everything, look at France. The French impose a 45% tax rate and tax anything and everything in society and still, the government is in debt with no money for stimulus projects.
How about the consumer? If you combine credit cards, auto loans, and student debt, it is now up 25% in the last five years to $4 trillion. The price of products, shelter and healthcare rise faster and higher than our wages. We always need more money because the value of our currency keeps declining. In many locations people need to use 50% of their income for rent. There is no discretionary money left on the table. A recent report reveals that 42% of Americans have no savings for retirement. The list is as long as the immigration line. The money tree that once was America is barren of green leaves.
A related point to this is student loans are defaulting at higher rate than mortgage defaults in 2007 and more than all junk mortgages in 2007.
How about corporate leadership? I should say, so-called leadership. Corporate debt is $9 trillion and rising. Within those borrowings is iconic brand names like GE, IBM and AT&T. Their rated bonds are BBB and falling. The biggest evil here is derivatives. Collateral debt obligations in 2007 was $61 trillion. They are now over $120 trillion. Fiat money numbers grow exponentially and the reality will dawn on the market place that they will not be repaid. This also means a day of reckoning and possible collapse of our currency which will lead to a collapse of our economy and depression.
By the way, China is even worse than us. Their debt in 2000 was $2 trillion. Today, it is up 2000% to $40 trillion or off the charts!
Fiat money is a failure and the Fed cannot raise rates. Fiat money can only continue this game by getting cheaper even negative. When the music of manipulation stops, you better have some gold under the last seat. End the Fed!
Wednesday, January 23, 2019
Odds and Ends: January 2019
The stock market has rebounded, but it has reached the 50% Fibonacci retracement level. This is the point where everyone at Evolution of Democracy sees as a consolidation point. The tell sign has been the trading volume, which has declined with each increment upward. The market will be continually effected by news, especially dealing with the trade tensions with China and the UK Brexit in Europe. With that said, the quarterly earnings reports have begun. The banks were first up and the overall results have been to the upside.
Firm Results Outlook
*Citi Group> posted better than expected, but cost cuts were the reason. Fed dependent
*J.P. Morgan>had earnings miss, but better trading improved bottom line. upbeat
*Wells Fargo>also missed, but the buyback of shares improved bottom line. Court costs are up.
*B of A> beat on earnings and revenue. upbeat
*Goldman Sachs> solid earnings, but still has Malaysian issue. upbeat
*Morgan Stanley>profit fell below expectations. Fed dependent
Note: the 6 biggest banks pulled in $100 billion in profits in 2018.
Large Regionals
*US Bank> profit up big(10%). upbeat
*BB&T> solid quarter. upbeat
*American Express>record quarter lowered expectation
*Capital One>missed numbers Fed dependent
I will add this very important point that was reported recently. World debt is $340 trillion which is more than 3x the total of the world's GDP. Look at this another way. According to bank lending standards to qualify for a home loan mortgage, the world could not meet the standards for a home loan. We are floating on debt like the pollution floating around in a circle in the Pacific Ocean. This is not healthy and very dangerous.
Housing
Treasury secretary, Steven Mnuchin stated that he has President Trump's blessing to work out a plan to make the government mortgage companies, Fannie Mae and Freddie Mac, private concerns. I don't see it happening.
The housing market itself has shown declines in sales for 5 straight months, but looking closer reveals a more serious problem. The percentage declines for the last three months is very scary. They are -16%, -19% and -18%.
In a related report, it is noted that severe weather could cause the next housing crisis. The report uses the latest causalities in Houston and locations in California that suffered with wildfires. Houston is a strong market with a strong economy and still it suffered many foreclosures. It is too soon to evaluate California, but there point is valid. Your neighborhood could become a ghost village due to weather and calamities.
In still another related story the on-going drama around PG&E, the very large California utility. Reports are surfacing pointing to the utility for causing a few of the wildfires within the state. The stock has plunged. It is getting worse. Shareholders could be wiped out as the utility says that it will seek bankruptcy protection. Funny, your business is dying You are facing bankruptcy and that is your salvation? Only in America. Anyway, the market cap is $3.8B and the bond holders have $30 billion in notes, but the future liabilities are estimated at $40 billion. Now, there are many institutions holding these bonds and I'm sure some have protection like with derivatives. Can you see where this is going? This will cause a domino of losses and this story is just beginning. Yowza!
Auto
Ford will build an electric F-truck series model with more power than its current gas version.
Goodyear missed on earnings and declining sales continues a negative trend.
Tesla will cut workers as well as GM, but European firms are expanding in the US. I should say the South which is anti union. My southern buddies will regret that point some day.
I give credit and a shout out to Jeep which is expanding and in the Motor City. Good for them!
OIL
OPEC reported its largest monthly drop in exports. They are going to the playbook of supply and demand. They have succeeded in getting the price of oil up. Eventually, this will hit the US consumer in higher gasoline prices. At the moment, I see a consolidation of gains with Iran being a very important cog in the future price of the commodity.
To me, the above are the most important aspects to our economy and global concerns. The January barometer looks good, but the legacy behind it was wrong for 2018. I prefer the Super Bowl theory.
By the way, Happy Birthday to JFL!
Firm Results Outlook
*Citi Group> posted better than expected, but cost cuts were the reason. Fed dependent
*J.P. Morgan>had earnings miss, but better trading improved bottom line. upbeat
*Wells Fargo>also missed, but the buyback of shares improved bottom line. Court costs are up.
*B of A> beat on earnings and revenue. upbeat
*Goldman Sachs> solid earnings, but still has Malaysian issue. upbeat
*Morgan Stanley>profit fell below expectations. Fed dependent
Note: the 6 biggest banks pulled in $100 billion in profits in 2018.
Large Regionals
*US Bank> profit up big(10%). upbeat
*BB&T> solid quarter. upbeat
*American Express>record quarter lowered expectation
*Capital One>missed numbers Fed dependent
I will add this very important point that was reported recently. World debt is $340 trillion which is more than 3x the total of the world's GDP. Look at this another way. According to bank lending standards to qualify for a home loan mortgage, the world could not meet the standards for a home loan. We are floating on debt like the pollution floating around in a circle in the Pacific Ocean. This is not healthy and very dangerous.
Housing
Treasury secretary, Steven Mnuchin stated that he has President Trump's blessing to work out a plan to make the government mortgage companies, Fannie Mae and Freddie Mac, private concerns. I don't see it happening.
The housing market itself has shown declines in sales for 5 straight months, but looking closer reveals a more serious problem. The percentage declines for the last three months is very scary. They are -16%, -19% and -18%.
In a related report, it is noted that severe weather could cause the next housing crisis. The report uses the latest causalities in Houston and locations in California that suffered with wildfires. Houston is a strong market with a strong economy and still it suffered many foreclosures. It is too soon to evaluate California, but there point is valid. Your neighborhood could become a ghost village due to weather and calamities.
In still another related story the on-going drama around PG&E, the very large California utility. Reports are surfacing pointing to the utility for causing a few of the wildfires within the state. The stock has plunged. It is getting worse. Shareholders could be wiped out as the utility says that it will seek bankruptcy protection. Funny, your business is dying You are facing bankruptcy and that is your salvation? Only in America. Anyway, the market cap is $3.8B and the bond holders have $30 billion in notes, but the future liabilities are estimated at $40 billion. Now, there are many institutions holding these bonds and I'm sure some have protection like with derivatives. Can you see where this is going? This will cause a domino of losses and this story is just beginning. Yowza!
Auto
Ford will build an electric F-truck series model with more power than its current gas version.
Goodyear missed on earnings and declining sales continues a negative trend.
Tesla will cut workers as well as GM, but European firms are expanding in the US. I should say the South which is anti union. My southern buddies will regret that point some day.
I give credit and a shout out to Jeep which is expanding and in the Motor City. Good for them!
OIL
OPEC reported its largest monthly drop in exports. They are going to the playbook of supply and demand. They have succeeded in getting the price of oil up. Eventually, this will hit the US consumer in higher gasoline prices. At the moment, I see a consolidation of gains with Iran being a very important cog in the future price of the commodity.
To me, the above are the most important aspects to our economy and global concerns. The January barometer looks good, but the legacy behind it was wrong for 2018. I prefer the Super Bowl theory.
By the way, Happy Birthday to JFL!
Wednesday, January 16, 2019
Retail Gloom
The shills were out in the media just before Halloween. They were barking up retail stocks. The spiel stated that with a strong economy and low unemployment, holiday sales in retail would soar. They threw out stats and charts with some claiming a 10% rise from the previous year.
Then, came Black Friday after Thanksgiving. Foot traffic was strong, but shoppers were comparing prices to online deals. Some stores posted higher sales from a year ago, however the real season was still to come. When that weekend ended, we had...
Cyber Monday
It set a record. Reports showed that for the first time, e-commerce(103m) surpassed retail outlets(102m). The writing was on the subway walls. As noted by Sebastian, shoppers can always save on taxes by purchasing online. This is an unfair advantage over retail. Congress gave the internet a chance to grow, but it is time for it to stand on its own merits.
In addition, many retail outlets are providing extra savings on products from their own online service. This is like shooting your own foot. Nevertheless, the old saying holds, "If you can't beat them, join them."
Bottom line: Holiday sales were up 6.7% to over $715 billion. This is up 3.7% from 2017.
From any perspective the costumed barkers in October appeared to be correct in their call, but their mask cannot hide the truth.
Although total sales were up for the season, most of the gains fell to online activity. Internet sales in 2017 was $106 billion. This year they rose over $122 billion. This is what makes up the sales increase for 2018. Sadly, retail sales fell 6.7% in the week before Christmas. Foot traffic was worse. It fell 10.4% and with good weather in most of the nation.
The following stock price comparisons from prior to the holiday season and into today, reveals sales results as reflected in the valuation of the company. Please note, this is only a sample.
Firm/symbol Date of stock price Todays price
*Walmart(WMT) $105 in November $94.
*Macy's(M) $38 in November $25.
*Target(TGT) $87 in October $69.
*Kohl's(KSS) $82 in November $67.
*Bed, Bath, Beyond(BBBY) $19 in October(Note large gap, too) $15
*Best Buy(BBY) $80 in September $56.
Amazon(AMZN) $2,050 in September >had a low at $1310, now $1640.
In addition to the price action in Amazon, it is reported that they claim 55% of all online sales. This is not good for the industry as a whole.
As you can readily see the price action for all retail companies is downward. Not good. Bad news likes company and we have many retail firms announcing store closings. Leading the infamous group is Sears. The firm is in bankruptcy court. It does not look good for this iconic firm. J.C. Penny's is right behind Sears. Also giving pink slips is Chico's and Game Stop.
Then, there is warning announcements from Apple, FedEx, Samsung, and Barnes and Noble. An analyst just downgraded the Gap. With each passing day more negative news hits the airwaves. Not good. Then, least I forget, the government shutdown.
Gov't Shutdown
This effects so many aspects to our society that it makes one realize how much socialism constitutes a high percentage in our so-called free enterprise, capitalist system.
We have over 800,000 federal employees without a paycheck. This won't help retail or the economy.
Food stamps is now called SNAP and it distributes to 12% of the population who are now, hungry.
Some home loans will not be able to close. Small Business will not assist small business. How about auto loans? FAA to certify new airplanes? Contractors with ties to government projects? After you read this, other agencies will come to mind. Not good for the economy and not good to have so much of the economy attributed to government. President Trump has ordered all government workers back to work during this shutdown period. This will push gov't workers to form a union and even if that effort fails, serious backlash will rise up at some point.
Global
In Europe, Germany is warning of a slower GDP for the quarter. If the leader is weak, the chain cannot be too strong. Keep in mind that the "yellow vest" protest in France is entering its 9th week with no end in sight. What started out as a protest to losing a fuel subsidy is now being directed at the French president. This action has hurt the GPD of the EU.
In the UK their government rejected Prime Minister May's Brexit plan. She will turn to the EU, but they will definitely not help her cause. It appears that Sebastian's prediction to doing nothing is correct. It also means like I said that the powers-to-be will let you vote, but never fulfill any chance that they do not accept. Democracy in name, but oligarchy in nature.
In China, many agencies have warned with many citing the tension with the US over trade. By the way, all those possible tariffs taxes won't be good for the price of retail products or the US consumer, although I am for tariffs to protect American industry. It appears that the trade talks have not reached any new developments.
New Problem
Returns! People return items and some cash in gift cards. The problem is growing for retail with storage of returned items. In the past most of it went to auctions, but even that outlet is at capacity. Keep in mind what was once considered a sale, is now no longer a sale. It is a loss under liabilities. Not good.
All in all Sebastian's call is looking good for a dangerous period in the US economy beginning around the Ides of March.
Then, came Black Friday after Thanksgiving. Foot traffic was strong, but shoppers were comparing prices to online deals. Some stores posted higher sales from a year ago, however the real season was still to come. When that weekend ended, we had...
Cyber Monday
It set a record. Reports showed that for the first time, e-commerce(103m) surpassed retail outlets(102m). The writing was on the subway walls. As noted by Sebastian, shoppers can always save on taxes by purchasing online. This is an unfair advantage over retail. Congress gave the internet a chance to grow, but it is time for it to stand on its own merits.
In addition, many retail outlets are providing extra savings on products from their own online service. This is like shooting your own foot. Nevertheless, the old saying holds, "If you can't beat them, join them."
Bottom line: Holiday sales were up 6.7% to over $715 billion. This is up 3.7% from 2017.
From any perspective the costumed barkers in October appeared to be correct in their call, but their mask cannot hide the truth.
Although total sales were up for the season, most of the gains fell to online activity. Internet sales in 2017 was $106 billion. This year they rose over $122 billion. This is what makes up the sales increase for 2018. Sadly, retail sales fell 6.7% in the week before Christmas. Foot traffic was worse. It fell 10.4% and with good weather in most of the nation.
The following stock price comparisons from prior to the holiday season and into today, reveals sales results as reflected in the valuation of the company. Please note, this is only a sample.
Firm/symbol Date of stock price Todays price
*Walmart(WMT) $105 in November $94.
*Macy's(M) $38 in November $25.
*Target(TGT) $87 in October $69.
*Kohl's(KSS) $82 in November $67.
*Bed, Bath, Beyond(BBBY) $19 in October(Note large gap, too) $15
*Best Buy(BBY) $80 in September $56.
Amazon(AMZN) $2,050 in September >had a low at $1310, now $1640.
In addition to the price action in Amazon, it is reported that they claim 55% of all online sales. This is not good for the industry as a whole.
As you can readily see the price action for all retail companies is downward. Not good. Bad news likes company and we have many retail firms announcing store closings. Leading the infamous group is Sears. The firm is in bankruptcy court. It does not look good for this iconic firm. J.C. Penny's is right behind Sears. Also giving pink slips is Chico's and Game Stop.
Then, there is warning announcements from Apple, FedEx, Samsung, and Barnes and Noble. An analyst just downgraded the Gap. With each passing day more negative news hits the airwaves. Not good. Then, least I forget, the government shutdown.
Gov't Shutdown
This effects so many aspects to our society that it makes one realize how much socialism constitutes a high percentage in our so-called free enterprise, capitalist system.
We have over 800,000 federal employees without a paycheck. This won't help retail or the economy.
Food stamps is now called SNAP and it distributes to 12% of the population who are now, hungry.
Some home loans will not be able to close. Small Business will not assist small business. How about auto loans? FAA to certify new airplanes? Contractors with ties to government projects? After you read this, other agencies will come to mind. Not good for the economy and not good to have so much of the economy attributed to government. President Trump has ordered all government workers back to work during this shutdown period. This will push gov't workers to form a union and even if that effort fails, serious backlash will rise up at some point.
Global
In Europe, Germany is warning of a slower GDP for the quarter. If the leader is weak, the chain cannot be too strong. Keep in mind that the "yellow vest" protest in France is entering its 9th week with no end in sight. What started out as a protest to losing a fuel subsidy is now being directed at the French president. This action has hurt the GPD of the EU.
In the UK their government rejected Prime Minister May's Brexit plan. She will turn to the EU, but they will definitely not help her cause. It appears that Sebastian's prediction to doing nothing is correct. It also means like I said that the powers-to-be will let you vote, but never fulfill any chance that they do not accept. Democracy in name, but oligarchy in nature.
In China, many agencies have warned with many citing the tension with the US over trade. By the way, all those possible tariffs taxes won't be good for the price of retail products or the US consumer, although I am for tariffs to protect American industry. It appears that the trade talks have not reached any new developments.
New Problem
Returns! People return items and some cash in gift cards. The problem is growing for retail with storage of returned items. In the past most of it went to auctions, but even that outlet is at capacity. Keep in mind what was once considered a sale, is now no longer a sale. It is a loss under liabilities. Not good.
All in all Sebastian's call is looking good for a dangerous period in the US economy beginning around the Ides of March.
Wednesday, January 9, 2019
Forecast: 2019
Milton Friedman claimed that a government will revert to the norm six months after a newly elected president. They will oppose his policies if they are counter to the status quo interests. I guess Milton never met Donald Trump. President Trump has fired staff and shown antagonism for opposing parties who do not accept his views. The focal point on domestic policy is the Border Wall. The issue on trade effects global trading.
President Trump has displayed to opposing parties by shutting down the government, his determination and resolution. This is important because it tells the Chinese that he is serious and he is in it for the long haul. On the latter I hope he is sincere. Personally, I would ban trade with China because they have demonstrated ill will. They force exporting companies to reveal all their data on their products. Then, they steal ideas to develop competing products. They disrespect patents and "clone" products. They substitute cheaper ingredients in licensing agreements. They place high tariffs on items that they cannot manufacture to close off competition. All of the above and more is why the leadership of China is nothing more than thugs in international dealings.
Bottom line: The two focal points listed above will determine the outlook for 2019. With that said the market will be range bound until March. If a new trade deal is made with China, the market will get a relief rally and then, look to fundamentals. The fundamentals at this point remain strong and contrary to Sebastian, I see an up year in the economy, but I agree with him, dark clouds are forming.
First Dark Cloud:
The Fed. No one will say it because the truth will destroy the economy. The truth is that fiat money is a complete failure. The Federal Reserve could never raise interest rates close to what was once normal. Just the thought of rates approaching 3.75% sends the market down on an express elevator. All of our governments - local, state and national are suffering from debt due to easy money. The unspoken realization scares the hell out of all elected leaders. Our national debt grows at twice the level as does our economy. If we had normal interest rates our national debt would double and the global community would seek a new reserve currency. If that ever happens, our economy would implode. The hated, barbaric relic of gold kept government in check as well as the banking industry and the military. Those two joined forces for self interest to get us off the gold standard. The accumulated wealth of our great nation took a long time to use up, but it is almost empty. The killing of the middle class is the reflection of the empty vault of the nation's wealth.
Internal conflict: Jay Powell could be fired. The market will be fearful of this happening. He has already come out saying that the Fed has no preset formula to raise rates. Two months ago, he said that there would be three hikes in 2019. Then, he revised that call down to two increases. Now, he says maybe just one. He will pause for his job. Two other governors of the reserve, Kaplan and Williams stated that it is best to pause or even cut the rate. This, dear reader is further proof of the failure of fiat money. The economy is suppose to be fully recovered and even with low interest rates, it cannot get out of its own way.
Housing and other clouds
This is the most important aspect within our economy. Single family home sales are down, but multifamily housing continues to grow. This trend will continue. More and more citizens will become economic prisoners to rentals. Housing prices will return to normal growth rates of 2% to 3%. Rents will rise. In some cities rents consume 50% of tenants income. This is not sustainable for an economy. You saw the riots in France when fuel subsidies was eliminated. We will have the same type of backlash here in the US over renting and housing costs. Also, note, James Stack who called the housing recession of 2008, is on record as seeing the same bubble bursting again in housing.
Autos
Sales of autos reached 17.2 million for 2018. This is a record because the industry eclipsed 17m for four straight years. The Japanese are worried by the number four. I do not see a fifth year of over 17m sales. The market will slow, however the impact of electric vehicles will begin to have an effect. The oil industry will not see a growth year due to the emergence of electric cars. A quick thinking politician will try to get a name for himself by calling for recharging stations on interstate highways.
Banks
The shills will say that the industry will grow by double digits. They do every year. They point to the aspect that banks make money even in this low interest rate level. Banking will face the growing competition of internet banking and I see them offering similar perks to stem this competition. They have the Fed backing them up. They will maintain their status and power.
International banks are not as strong as US banks, however they are connected in this interconnected world. Derivatives could cause a global liquidity crisis to which no bank is safe. This fear only gets worse with time.
Healthcare
This is a growing field due to demographics. The concern will be Obamacare and health insurance. President Trump may make a deal with the Democrats on passing the new NAFTA deal and the Border Wall and allow Obamacare to continue. In any event prices will rise for medicine and insurance and yet, this inflationary aspect will never enter into the lingo of the Fed.
Energy
Oil prices will continue to drift lower until the end of January. If you recall, Sebastian informed you of this price action as he said to find a low price oil firm and get some shares before the OPEC oil cuts begin to raise the price of oil. I see oil returning to $60 by April. As stated above, the growth in electric vehicles will put a cap on oil prices.
Utilities
The industry is changing. More and more utility companies are dropping coal. Nuclear lobbyist are always in the mix, but everyone on this blog is against nuclear energy. The impact of solar and wind is growing and they will continue to grow. Stocks in this segment will be appealing as the Fed pauses their interest rate hikes.
Airlines
The industry will get more fliers and the firms that have forward looking fuel contracts will do the best. This could be the last good year for awhile for the industry.
Consumer Staples - Retail
They remain constant with steady growth due to population growth. The problems will be in distribution. Many retail locations will close as more malls and shopping centers fall into bankruptcy. The continued growth in ecommerce will stall as taxation of internet sales becomes law of the land. The general population will realize the importance of their local shopping centers. Amazon will see their growth rate slow.
All in all the stock market should find its footing and I believe it will have a good year even though volatile for a period of time. This will be the last year of the bull market as 2020 will be a major transitioning year for the US and our economy.
President Trump has displayed to opposing parties by shutting down the government, his determination and resolution. This is important because it tells the Chinese that he is serious and he is in it for the long haul. On the latter I hope he is sincere. Personally, I would ban trade with China because they have demonstrated ill will. They force exporting companies to reveal all their data on their products. Then, they steal ideas to develop competing products. They disrespect patents and "clone" products. They substitute cheaper ingredients in licensing agreements. They place high tariffs on items that they cannot manufacture to close off competition. All of the above and more is why the leadership of China is nothing more than thugs in international dealings.
Bottom line: The two focal points listed above will determine the outlook for 2019. With that said the market will be range bound until March. If a new trade deal is made with China, the market will get a relief rally and then, look to fundamentals. The fundamentals at this point remain strong and contrary to Sebastian, I see an up year in the economy, but I agree with him, dark clouds are forming.
First Dark Cloud:
The Fed. No one will say it because the truth will destroy the economy. The truth is that fiat money is a complete failure. The Federal Reserve could never raise interest rates close to what was once normal. Just the thought of rates approaching 3.75% sends the market down on an express elevator. All of our governments - local, state and national are suffering from debt due to easy money. The unspoken realization scares the hell out of all elected leaders. Our national debt grows at twice the level as does our economy. If we had normal interest rates our national debt would double and the global community would seek a new reserve currency. If that ever happens, our economy would implode. The hated, barbaric relic of gold kept government in check as well as the banking industry and the military. Those two joined forces for self interest to get us off the gold standard. The accumulated wealth of our great nation took a long time to use up, but it is almost empty. The killing of the middle class is the reflection of the empty vault of the nation's wealth.
Internal conflict: Jay Powell could be fired. The market will be fearful of this happening. He has already come out saying that the Fed has no preset formula to raise rates. Two months ago, he said that there would be three hikes in 2019. Then, he revised that call down to two increases. Now, he says maybe just one. He will pause for his job. Two other governors of the reserve, Kaplan and Williams stated that it is best to pause or even cut the rate. This, dear reader is further proof of the failure of fiat money. The economy is suppose to be fully recovered and even with low interest rates, it cannot get out of its own way.
Housing and other clouds
This is the most important aspect within our economy. Single family home sales are down, but multifamily housing continues to grow. This trend will continue. More and more citizens will become economic prisoners to rentals. Housing prices will return to normal growth rates of 2% to 3%. Rents will rise. In some cities rents consume 50% of tenants income. This is not sustainable for an economy. You saw the riots in France when fuel subsidies was eliminated. We will have the same type of backlash here in the US over renting and housing costs. Also, note, James Stack who called the housing recession of 2008, is on record as seeing the same bubble bursting again in housing.
Autos
Sales of autos reached 17.2 million for 2018. This is a record because the industry eclipsed 17m for four straight years. The Japanese are worried by the number four. I do not see a fifth year of over 17m sales. The market will slow, however the impact of electric vehicles will begin to have an effect. The oil industry will not see a growth year due to the emergence of electric cars. A quick thinking politician will try to get a name for himself by calling for recharging stations on interstate highways.
Banks
The shills will say that the industry will grow by double digits. They do every year. They point to the aspect that banks make money even in this low interest rate level. Banking will face the growing competition of internet banking and I see them offering similar perks to stem this competition. They have the Fed backing them up. They will maintain their status and power.
International banks are not as strong as US banks, however they are connected in this interconnected world. Derivatives could cause a global liquidity crisis to which no bank is safe. This fear only gets worse with time.
Healthcare
This is a growing field due to demographics. The concern will be Obamacare and health insurance. President Trump may make a deal with the Democrats on passing the new NAFTA deal and the Border Wall and allow Obamacare to continue. In any event prices will rise for medicine and insurance and yet, this inflationary aspect will never enter into the lingo of the Fed.
Energy
Oil prices will continue to drift lower until the end of January. If you recall, Sebastian informed you of this price action as he said to find a low price oil firm and get some shares before the OPEC oil cuts begin to raise the price of oil. I see oil returning to $60 by April. As stated above, the growth in electric vehicles will put a cap on oil prices.
Utilities
The industry is changing. More and more utility companies are dropping coal. Nuclear lobbyist are always in the mix, but everyone on this blog is against nuclear energy. The impact of solar and wind is growing and they will continue to grow. Stocks in this segment will be appealing as the Fed pauses their interest rate hikes.
Airlines
The industry will get more fliers and the firms that have forward looking fuel contracts will do the best. This could be the last good year for awhile for the industry.
Consumer Staples - Retail
They remain constant with steady growth due to population growth. The problems will be in distribution. Many retail locations will close as more malls and shopping centers fall into bankruptcy. The continued growth in ecommerce will stall as taxation of internet sales becomes law of the land. The general population will realize the importance of their local shopping centers. Amazon will see their growth rate slow.
All in all the stock market should find its footing and I believe it will have a good year even though volatile for a period of time. This will be the last year of the bull market as 2020 will be a major transitioning year for the US and our economy.
Wednesday, January 2, 2019
Is It Better To Buy Or Rent?
This stupid question gets circulation every once in a while. Generally, it surfaces when indicators suggest that renting is a better choice than ownership. I ask, do you want your ceiling to be another man's floor? If you like to play music loud, at least once in a while, do you relish someone pounding on your walls to turn it down? Do you like it when your landlord always says manana to repairs? How about this? The only correspondence you receive from the owners of the property is a rent hike? Your new neighbors are gang related, racists or possible terrorists? You are nervous about letting your kids walk to school as this once nice neighborhood is now part of the "hood."
If you save, your thriftiness is rewarded with shelter that you choose. If you have to rent, economics chooses your shelter.
The intrinsic message of the American dream is social mobility and owning your own home. Wasn't it one of the founders who said, "A man's home is his castle?" Doesn't matter. There is no comparison in the argument whether to rent or buy. However, there is a time and place for everything. According to a report by Florida Atlantic University, we are in one of those periods where it is financially better to rent than to buy.
From the period of 2010 to 2017 rents on a national average, rose by 4%. In many locations it was higher. During the same recovery period after the financial crisis of 2008, homes rose by double digits. The main driver for homes was the stimulus of super low interest rates and HARP loans for people who had purchased previously at a higher mortgage rate. One must also consider that homes devalued with the crisis. There was a large pool of homes offered at low prices. Together, low rates and affordability made housing a strong buy. The problem for housing is the stimulus of low mortgage rates is ending. One could make an argument that interest rates are still low if you compare to historical norms. I'm in the corner that says interest rates is a form of financial manipulation. Interest rates insure banking of profits. I am not against profits, but there is a difference between a yacht and a row boat. Anyway, the combination of higher interest rates and the rising price of homes has ended the affordability factor. Together, the end of low interest rates and affordability as well as the business cycle is indicating that if one was considering to buy a home at this point, you may want to adjust your timing to the economy. In addition to those fundamental factors many locations in the country for various reasons still face a crisis in housing. If you live in one of these 50 cities, it is definitely better to rent, while keeping an eye open for a deal on a home purchase. The top ten will appear at the bottom of this piece. The main culprit is underwater mortgages.
What is the economy of housing...you ask?
According to FAU, now is a better time to rent. Housing developers have avoided entry level homes for years because it was more profitable to work the high level market. There is a limited supply of these homes on the market. Since the value of all homes has risen substantially, a pause in price acceleration is expected. One reason will be the effect of higher mortgage rates. This presents an obstacle to housing. On the flip side to ownership is the rental market. Housing developers have over built this side of the market. New projects include underground parking and roof top play areas or dog walks. Older residential buildings cannot raise rents as tenants are leaving for the "come-ons" in new locations. To maintain full occupancy landlords are putting off rent increases as the glut of rental units rises. There is a battle for tenants and smart consumers could seek a long term lease with no rental hikes. Sebastian likes to add that this business cycle is ending to which will cause cheaper rentals. FAU says, renters could put this savings into the rising stock market or other investments as they wait and save a down payment. The wait is until housing becomes more affordable. The housing internet leader, Zillow agrees that in the near term, renting offers a better deal. They remind would be buyers that taxes on homes is rising while at the same time the federal government and some state governments are limiting the housing interest deduction. Renting frees you from repairs and new projects that offer perks like parking, dog walks or no rental increases make renting very attractive. Housing is always subject to local situations. For the residents of Denver and Dallas, renting is stronger than buying. This poses a real problem for owners who want to sell. If there are no buyers in the store, you will be out of business. Nationally, the high end market is seeing declines in pricing for the first time as evident in San Francisco and New York. Seattle, K.C. and Portland are experiencing rental gluts and as a result, rents are declining. This is spreading. With a glut on the rental side, housing will face a strong obstacle to maintain value. This is why Zillow sees renting in the short term as the best choice, but they agree with me that owning a home in the long run is the best possible choice a consumer could make.
10 Crisis Housing Cities
As promised, if you live in one of these cities, it is way better to rent than own. Keep in mind that real estate is always regional as the mantra is, "location, location, location." Always do a quick internet check for real estate outlook in your area before making a decision. Countdown to worst:
10)New Orleans 5)Detroit
9) Cleveland 4)Chicago
8) Memphis 3)Birmingham
7) Columbus 2)Toledo
6) Baltimore 1) Newark
If you save, your thriftiness is rewarded with shelter that you choose. If you have to rent, economics chooses your shelter.
The intrinsic message of the American dream is social mobility and owning your own home. Wasn't it one of the founders who said, "A man's home is his castle?" Doesn't matter. There is no comparison in the argument whether to rent or buy. However, there is a time and place for everything. According to a report by Florida Atlantic University, we are in one of those periods where it is financially better to rent than to buy.
From the period of 2010 to 2017 rents on a national average, rose by 4%. In many locations it was higher. During the same recovery period after the financial crisis of 2008, homes rose by double digits. The main driver for homes was the stimulus of super low interest rates and HARP loans for people who had purchased previously at a higher mortgage rate. One must also consider that homes devalued with the crisis. There was a large pool of homes offered at low prices. Together, low rates and affordability made housing a strong buy. The problem for housing is the stimulus of low mortgage rates is ending. One could make an argument that interest rates are still low if you compare to historical norms. I'm in the corner that says interest rates is a form of financial manipulation. Interest rates insure banking of profits. I am not against profits, but there is a difference between a yacht and a row boat. Anyway, the combination of higher interest rates and the rising price of homes has ended the affordability factor. Together, the end of low interest rates and affordability as well as the business cycle is indicating that if one was considering to buy a home at this point, you may want to adjust your timing to the economy. In addition to those fundamental factors many locations in the country for various reasons still face a crisis in housing. If you live in one of these 50 cities, it is definitely better to rent, while keeping an eye open for a deal on a home purchase. The top ten will appear at the bottom of this piece. The main culprit is underwater mortgages.
What is the economy of housing...you ask?
According to FAU, now is a better time to rent. Housing developers have avoided entry level homes for years because it was more profitable to work the high level market. There is a limited supply of these homes on the market. Since the value of all homes has risen substantially, a pause in price acceleration is expected. One reason will be the effect of higher mortgage rates. This presents an obstacle to housing. On the flip side to ownership is the rental market. Housing developers have over built this side of the market. New projects include underground parking and roof top play areas or dog walks. Older residential buildings cannot raise rents as tenants are leaving for the "come-ons" in new locations. To maintain full occupancy landlords are putting off rent increases as the glut of rental units rises. There is a battle for tenants and smart consumers could seek a long term lease with no rental hikes. Sebastian likes to add that this business cycle is ending to which will cause cheaper rentals. FAU says, renters could put this savings into the rising stock market or other investments as they wait and save a down payment. The wait is until housing becomes more affordable. The housing internet leader, Zillow agrees that in the near term, renting offers a better deal. They remind would be buyers that taxes on homes is rising while at the same time the federal government and some state governments are limiting the housing interest deduction. Renting frees you from repairs and new projects that offer perks like parking, dog walks or no rental increases make renting very attractive. Housing is always subject to local situations. For the residents of Denver and Dallas, renting is stronger than buying. This poses a real problem for owners who want to sell. If there are no buyers in the store, you will be out of business. Nationally, the high end market is seeing declines in pricing for the first time as evident in San Francisco and New York. Seattle, K.C. and Portland are experiencing rental gluts and as a result, rents are declining. This is spreading. With a glut on the rental side, housing will face a strong obstacle to maintain value. This is why Zillow sees renting in the short term as the best choice, but they agree with me that owning a home in the long run is the best possible choice a consumer could make.
10 Crisis Housing Cities
As promised, if you live in one of these cities, it is way better to rent than own. Keep in mind that real estate is always regional as the mantra is, "location, location, location." Always do a quick internet check for real estate outlook in your area before making a decision. Countdown to worst:
10)New Orleans 5)Detroit
9) Cleveland 4)Chicago
8) Memphis 3)Birmingham
7) Columbus 2)Toledo
6) Baltimore 1) Newark
Wednesday, December 26, 2018
The Fed and Independence
It was conceded by the stock market a half a year ago that the December 2018 meeting of the Federal Reserve would end in another rate hike. Somewhere along time and space, the stock market caught a cold from the usual. This is unusual due to the nature of the market. It looks beyond the daily news to a minimum of six months out in the time continuum. However, the extremes began to show their differentiation as time moved along. The outlook of six months ago and how it is today is vastly different. The Masters of the Universe are blinking with doubt. This is a serious problem when the currency is based on faith and nothing else.
Usual Suspects
The tariff talk became an actual tariff. The tit-for-tat escalated the tension. The market began to sneeze until the virus became a cold. The reason that the remedies could not fight off the on coming cold was the bacteria of a government shut-down. The awareness of the magnitude of our outstanding debt and how it would grow in interest payments due to the policy of the Fed who is seeking to return to normalize interest rates. Greed became fear. This internal shakeup caused the cells to weaken and the virus won the battle between the red and blue cells. The virus will hit all alike.
There are other influences in the environment which allowed the virus bacteria to grow like the immigration problem like the war on drugs like the actual wars in the Middle East and the distance of elected officials to the public.
Europe
In Europe the "populist" movement is gaining traction while at the same time the EU is facing a crisis with Brexit. I think the results of no action with Brexit will stimulate the populist movement. People will take a hard line against their governments who do not fulfill the will of the people. This is a slow boiling pot. The immediate condition of the EU is being determined by its central bank. Mario Draghi, the President of the ECB has stated no more stimulus. Then, he added the present allocation of medicine will last until the summer of 2019. The head of the IMF, Lagarde stated the global economy will slow in 2019. The two agencies reminded everyone of their independence in policy.
Back to the Fed
The wording of the last meeting by the Fed had its chairperson state that his committee felt the gradual rate hike policy would slow even further in the future. The chair, Jerome Powell who took office in February of this year and who was appointed by President Trump, reiterated the importance of the aspect that the Federal Reserve is an independent body from politics. According to the chairman, this is the cornerstone of the Federal Reserve.
This is a lie as the Federal Reserve as a concept was pushed by bankers and it is run by bankers with the unwritten premise to protect the banking system. It is socialism for the industry, but step away from that fact to the current dialogue - its independence.
This is another lie. The chairman is appointed by the president with the backing of the senate. This point is the weak link in democracy. The Senate is composed of millionaires and rarely do they ever do something for the people. The president gets to choose a nominee from people who express similar believes in how to achieve economic success. This person has set ideas. If a different political president was in office, that person might seek a nominee with different beliefs. You can see this more clearly with the other weak link in democracy - the Supreme Court.
You appoint a racist. You get separate but equal. You appoint a more liberal chair and separate but equal is unconstitutional. So, to say that Powell is independent is misinformation. His baggage is his beliefs. His reflection to slow the pace of rate hikes is appeasement to his boss.
So, when Powell raised the interest rates he got the ire of the president. President Trump has stated his opposition to higher rates and he even stated that maybe his choice to run the Fed was a mistake. The following day, the New York Fed Governor, John Williams declared that maybe the Fed should pause on rate hikes. Dear Reader, the New York Fed Governor is the most important member of the committee. More N.Y. Fed representatives become the chairman than any other region. Williams is singing the "Donald's" song. Since President Trump's administration is clouded with musical chairs in the executive branch, this change in position is a possibility. With that said, there are already a host of economic scholars(professional students) declaring this change in the chair of the Fed will spin the market into chaos and then, sink the economy.
It appears that Sebastian's prediction to fear the Ides of March as pertaining to our economy is looking to be correct. Sebastian thinks that fiat money is the root cause of all our economic problems. Consider how the stock market is reacting to the idea of this long played out return to a normal interest rate. It can't handle it! Fiat money was so easy to print, but the reality of the debt financing is overwhelming. At normal interest rates the economy will implode. The only true independent policy is a policy based on a currency that has its cornerstone in strength. That strength is written into our constitution. It is GOLD.
If you spend more than you collect, your currency will decline. You will get inflation. Gold keeps politicians honest and bankers in check. It forces them to spend wisely and to live within your means. This is the only true independent policy. Everything else is a lie.
Usual Suspects
The tariff talk became an actual tariff. The tit-for-tat escalated the tension. The market began to sneeze until the virus became a cold. The reason that the remedies could not fight off the on coming cold was the bacteria of a government shut-down. The awareness of the magnitude of our outstanding debt and how it would grow in interest payments due to the policy of the Fed who is seeking to return to normalize interest rates. Greed became fear. This internal shakeup caused the cells to weaken and the virus won the battle between the red and blue cells. The virus will hit all alike.
There are other influences in the environment which allowed the virus bacteria to grow like the immigration problem like the war on drugs like the actual wars in the Middle East and the distance of elected officials to the public.
Europe
In Europe the "populist" movement is gaining traction while at the same time the EU is facing a crisis with Brexit. I think the results of no action with Brexit will stimulate the populist movement. People will take a hard line against their governments who do not fulfill the will of the people. This is a slow boiling pot. The immediate condition of the EU is being determined by its central bank. Mario Draghi, the President of the ECB has stated no more stimulus. Then, he added the present allocation of medicine will last until the summer of 2019. The head of the IMF, Lagarde stated the global economy will slow in 2019. The two agencies reminded everyone of their independence in policy.
Back to the Fed
The wording of the last meeting by the Fed had its chairperson state that his committee felt the gradual rate hike policy would slow even further in the future. The chair, Jerome Powell who took office in February of this year and who was appointed by President Trump, reiterated the importance of the aspect that the Federal Reserve is an independent body from politics. According to the chairman, this is the cornerstone of the Federal Reserve.
This is a lie as the Federal Reserve as a concept was pushed by bankers and it is run by bankers with the unwritten premise to protect the banking system. It is socialism for the industry, but step away from that fact to the current dialogue - its independence.
This is another lie. The chairman is appointed by the president with the backing of the senate. This point is the weak link in democracy. The Senate is composed of millionaires and rarely do they ever do something for the people. The president gets to choose a nominee from people who express similar believes in how to achieve economic success. This person has set ideas. If a different political president was in office, that person might seek a nominee with different beliefs. You can see this more clearly with the other weak link in democracy - the Supreme Court.
You appoint a racist. You get separate but equal. You appoint a more liberal chair and separate but equal is unconstitutional. So, to say that Powell is independent is misinformation. His baggage is his beliefs. His reflection to slow the pace of rate hikes is appeasement to his boss.
So, when Powell raised the interest rates he got the ire of the president. President Trump has stated his opposition to higher rates and he even stated that maybe his choice to run the Fed was a mistake. The following day, the New York Fed Governor, John Williams declared that maybe the Fed should pause on rate hikes. Dear Reader, the New York Fed Governor is the most important member of the committee. More N.Y. Fed representatives become the chairman than any other region. Williams is singing the "Donald's" song. Since President Trump's administration is clouded with musical chairs in the executive branch, this change in position is a possibility. With that said, there are already a host of economic scholars(professional students) declaring this change in the chair of the Fed will spin the market into chaos and then, sink the economy.
It appears that Sebastian's prediction to fear the Ides of March as pertaining to our economy is looking to be correct. Sebastian thinks that fiat money is the root cause of all our economic problems. Consider how the stock market is reacting to the idea of this long played out return to a normal interest rate. It can't handle it! Fiat money was so easy to print, but the reality of the debt financing is overwhelming. At normal interest rates the economy will implode. The only true independent policy is a policy based on a currency that has its cornerstone in strength. That strength is written into our constitution. It is GOLD.
If you spend more than you collect, your currency will decline. You will get inflation. Gold keeps politicians honest and bankers in check. It forces them to spend wisely and to live within your means. This is the only true independent policy. Everything else is a lie.
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