Posted at 7:00 PM (CST) by & filed under Jim's Mailbox.

Jim,

Wow! the Oracle from the Fed, Janet Yellen, trying to keep the natives from getting too restless.

CIGA Larry M

Fed holds off on interest rate hike, downgrades economic forecast
By JM PUZZANGHERA

Federal Reserve policymakers on Wednesday kept the central bank’s benchmark short-term interest rate near zero, opting against the first increase since 2006 after determining the economy still isn’t strong enough to handle it.

Fed officials sharply downgraded their economic forecast for this year. They projected the economy would grow between 1.8% and 2% this year, well below the range of 2.3% to 2.7% in its last forecast in March.

If they’re correct, annual growth would be the worst since 2011 and would be far from the breakout performance some economists had hoped for this year.

In a statement after its two-day policymaking meeting, Fed officials said the economy “has been expanding moderately” after having improved little during the first quarter.

While the housing market “has shown some improvement,” central bank policymakers said exports and investments by businesses have been soft.

More…

Jim,

This is a extremely important turn of events.

One must understand…

At some point, with interest rates now near zero, banks will soon charge you to keep your money there! Citizens will then be better off keeping their cash under a mattress.

To avoid this, the US will ban cash.

Our policy in the US is now "saving is evil, spending all you have is good." If you don’t have all your savings in your bank account, then you may be taxed to death on it, forcing you to spend!

In addition, banning cash will make it easier to confiscate your savings in a monetary crisis.

Germany appears to be the sole holdout.

CIGA Wolfgang R

Bundesbank Chief Says "Nein" To Cash Ban
Submitted by Tyler Durden on 06/17/2015 09:29 -0400

Last month, the calls for a cashless society got a bit louder when Peter Bofinger, a member of the German Council Of Economic Experts and a prominent Keynesian economist in a land where sound money policies generally predominate, called coins and bills “an anachronism” that limits the influence of central banks. Bofinger’s comments come on the heels of a growing chorus of cash abolitionists including Harvard economist Ken Rogoff and Citi’s Willem Buiter. Why a cashless society you ask? Here’s a brief refresher:

The collective actions of the world’s most influential central banks have done wonders when it comes to inflating asset bubbles but have done very little to revive robust economic growth. In fact, far from smoothing out the business cycle and resuscitating DM demand, post-crisis monetary policy has actually had the exact opposite effect: it has set the stage for an even more spectacular collapse while simultaneously creating a worldwide deflationary supply glut. At this stage, a sane person might be tempted to call it a day on the monetary experiments, especially considering that the limits have been reached. That is, there are literally no more assets to buy and rates have hit the effective lower bound where rational actors will eschew bank deposits in favor of the mattress. But not so fast. The world could always ban cash because if you eliminate physical currency and force people to use a debit card linked to a government controlled bank account for all transactions, you can effectively centrally plan everything. Consumers not spending? No problem. Just tax their excess account balance. Economy overheating? Again, no problem. Raise the interest paid on account holdings to encourage people to stop spending.

On the heels of Bofinger’s comments we said the following: “Paging Mr. Weidmann, your countrymen are going Keynesian crazy.”

Lo and behold, Weidmann has indeed entered the debate and unsurprisingly, he is not a fan of the cash ban calls. FAZ has more (via Google translate):

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Posted at 10:27 AM (CST) by & filed under USAWatchdog.com.

By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

John Embry, Senior Investment Strategist at Sprott Asset Management, says there is no doubt another financial calamity is coming.  In fact, Embry says, “It’s unavoidable.  It’s inevitable is the word I would use.  There is no getting out of it.  If you thought 2008 was bad, and I thought it was terrible, this time, there is no ammunition left.  You can’t take interest rates any lower.  All you can do is print even more money.  That really didn’t work the last time.  The safety nets are largely gone if we do run into something untoward, and it could be fairly soon.  I don’t think there is really anything left to stave it off.  I don’t think they will refuel the period from 2015 to 2020 like they did after 2008.  I think it will be much uglier than that.”

One thing that could touch off the next meltdown is the Greek debt crisis.  Embry contends, “I think it is extraordinarily serious because there is no palatable solution.  Why I say there is no palatable solution is, theoretically, if you loan people money, I think it is incumbent on you to make sure they can pay you back.  In this instant, the Europeans put more and more debt on the backs of the Greeks to keep them current.  Now, when it has become obvious that they are utterly insolvent, they just can’t sort of dismiss them easily.  This paper is all through the European system.  I believe there are a lot of credit default swaps written on it too.  If the Greeks walked away from this and essentially default on the paper, I think this is a major story.  The fact that they are trying to down play it probably speaks to the fact that it is a major story.  I think there is a possibility of a Greek exit (from the EU) and if that happens, we are going to be facing an awful lot of financial chaos.”

Embry goes on to explain, “To me, I can see just two avenues at this point.  You can have a hard debt deflation where you clean the debt out of the system like we did in the 1930’s, but look what that cost us–years of depression and a great world war.  The other alternative, and they apparently are going down that path as we speak, is to just keep printing enough money to keep everything afloat.  But if you do that long enough, you are headed for a currency debacle and probably some sort of hyperinflation.  Either scenario, the endgame is not good.  We are buying time right now, but we are not correcting anything.”

So, do the powers that be just gun it and run it until it blows up?  Embry says, “That is without question.  These are smart people, they have made some mistakes, but they are basically smart people.  They recognize that we are beyond the pale, and the economies are extraordinarily weak because of the excessive debt loads. . . . You see more and more warnings from people who are part of the system.  They know full well there is no easy solution; so, consequently, they are starting to tell the public the truth a bit.”

How will gold and silver do in the next meltdown?  Embry contends, “I find stocks severely overvalued, and I find bonds more overvalued, and I would lump urban real estate into that category as well.  So, traditional assets are extremely overvalued.  To me, the two really undervalued assets are gold and silver.  They are significantly undervalued and everybody hates them. . . . Embry goes on to charge, “I would say gold and silver are as cheap as they were when gold was $250 an ounce and silver was $5 per ounce.  They are the cheapest assets on the planet.”

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Posted at 3:47 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Mr. Williams shares the following with us.

- Greater-Than-Expected Decline in May Housing Starts, but the Highly-Unstable Series Continued Its Smoothed Pattern of Low-Level Stagnation 
- Surge in May Building Permits Was Due Entirely to Distortions from Annualized Multiple-Unit Data in the Northeast

"No. 728: May Housing Starts"
Web-page: http://www.shadowstats.com

Posted at 10:11 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

The latest from John Williams’ www.ShadowStats.com

- It Still Looks a Lot Like a "New" Recession
- Production Contracted in First-Quarter 2015; Second-Quarter Production Contraction Now Is a Virtual Certainty
- Longest String of No Monthly Growth, and Worst Annual and Quarterly Production Activity Since the Economic Collapse
- May PPI Surge of 0.55% Reflected Some Catch-Up Reporting

"No. 727: May Industrial Production and the Produce Price Index (PPI)"
Web-page: http://www.shadowstats.com

 

Jim Sinclair’s Commentary

This is satire from the Onion, but interesting in its subject matter of those that poke fun for a living.

Experts Say Best Option Now Is Keeping Nation As Comfortable As Possible Till End
NEWS June 9, 2015
Vol 51 Issue 23    News · Death

WASHINGTON—Saying there were no other options remaining and that continued intervention would only prolong the nation’s suffering, experts concluded Tuesday that the best course of action is to keep the United States as comfortable as possible until the end.

According to those familiar with its condition, the country’s long, painful decline over the past several decades has made it clear that the most compassionate choice at this juncture is to do whatever is possible to ensure America is at ease during its last moments.

“We need to accept the fact that the U.S. doesn’t have long—simply helping it pass that time in comfort is the humane thing to do,” said economist Danielle Martin, speaking on behalf of a large group of experts ranging from sociologists and historians to lawmakers and environmentalists, all of whom confirmed they had “done everything [they] could.” “Attempting to stabilize the country in its current enfeebled state would not only be extremely expensive, but it would also cause unnecessary agony as it enters this final stage. With how hard the nation is struggling to perform even basic functions, letting it meet its end naturally is the merciful decision here.”

“We just need to remember all the good times we had. Like the moon landing—that was really nice, wasn’t it?”

Added Martin: “At the end of the day, it’s nearly 240 years old—what can you reasonably expect?”

Others agreed with Martin, saying that, with America having gradually become a weak, almost unrecognizable shadow of its former self, the priority now should be ensuring that it is given whatever palliative support it needs and using the remaining time to put the nation’s affairs in order.

Sources also emphasized that citizens who have not already begun to emotionally prepare themselves for the country’s demise should begin to do so.

“At a time like this, it’s completely understandable to wish for some kind of 11th-hour miracle, but expecting the U.S. to somehow magically return to the way it was in its prime isn’t healthy or realistic,” said Georgetown University researcher Andrew Fischer, who later stressed that just because the nation still has “the occasional good day,” this should not cause anyone to get their hopes up for a sudden recovery. “It’s important to manage expectations and realize that sometime very soon, we’re all going to have to say goodbye.”

“We just need to remember all the good times we had,” Fischer continued. “Like the moon landing—that was really nice, wasn’t it?”

More…

Posted at 11:53 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

As the West becomes less the engine of economic progress the BRICS rise.

BRICS Central Bank experts meet in Turkey to finalise joint Monetary Fund
June 14, 2015, 5:55 am

BRICS central banks experts are holding a two-day meet for drafting an operating agreement on the BRICS Contingency Reserve Arrangement (CRA) this weekend.

Officials from the five BRICS countries are meeting in Bodrum, Turkey on Saturday and Sunday to finalise the joint monetary fund ahead of the 7th Leaders Summit in Russia. Russia’s Vladimir Putin, China’s Xi Jinping, Jacob Zuma from South Africa, Brazilian President Dilma Rousseff and India’s Narendra Modi will meet for the Summit on 8-9 July in Ufa.

The $100 billion CRA was agreed at a BRICS summit in Fortaleza in July last year. China contributed $41 billion to the capital stock; India, Brazil and Russia each paid in $18 billion, and South Africa’s share is $5 billion.

The reserve fund will provide liquidity support to member countries in response to short-term balance of payments problems.

The CRA is meant to provide an alternative to International Monetary Fund’s emergency lending. In the CRA, emergency loans of up to 30 percent of a member nation’s contribution will be decided by a simple majority. Bigger loans will require the consent of all CRA members.

Meanwhile, the $100 billion development bank, funded by BRICS countries, will offer loans to other middle- and low-income countries.

Membership of the BRICS Bank will be open to all members of the United Nations, subject to agreement from the bank’s board of governors, China’s Vice Finance Minister Shi Yaobin said last week.

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Posted at 8:09 PM (CST) by & filed under In The News.

Writing’s On The Wall: Texas Pulls $1 Billion In Gold From NY Fed, Makes It "Non-Confiscatable"
Tyler Durden on 06/13/2015 17:00 -0400

The lack of faith in central bank trustworthiness is spreading. First Germany, then Holland, and Austria, and now – as we noted was possible previously – Texas has enacted a Bill to repatriate $1 billion of gold from The NY Fed’s vaults to a newly established state gold bullion depository…"People have this image of Texas as big and powerful … so for a lot of people, this is exactly where they would want to go with their gold," and the Bill includes a section to prevent forced seizure from the Federal Government.

From 2011:

"The University of Texas Investment Management Co., the second-largest U.S. academic endowment, took delivery of almost $1 billion in gold bullion and is storing the bars in a New York vault, according to the fund’s board."

The decision to turn the fund’s investment into gold bars was influenced by Kyle Bass, a Dallas hedge fund manager and member of the endowment’s board, Zimmerman said at its annual meeting on April 14. Bass made $500 million on the U.S. subprime-mortgage collapse.

“Central banks are printing more money than they ever have, so what’s the value of money in terms of purchases of goods and services,” Bass said yesterday in a telephone interview. “I look at gold as just another currency that they can’t print any more of.”

And now, after we noted the possibility previously, as The Epoch Times reports, Texas Governor Greg Abbott signed a bill into law on Friday, June 12, that will allow Texas to build a gold and silver bullion depository. In addition, Texas will repatriate $1 billion worth of bullion from the Federal Reserve in New York to the new facility once completed.

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Posted at 11:10 AM (CST) by & filed under Bill Holter.

Dear CIGAs,

My last piece was quite long and involved, some liked it and "got it", others not so much. The breaking of confidence was the point I was trying to get to. I intend to try again with this writing but from a different viewpoint. Today, rather than continuing to hammer away at the fraud, collusion, and upside down logic of global politics, economics and finance, let’s look at a real world case. I received a rather long note from a reader earlier this week who was visiting of all places …Zimbabwe! I did not ask "why" he was visiting and can only imagine, but in light of where "we are going" it is fortuitous for us to have a pair of boots on the ground! The following is "the heart" of what he wrote. Please read this twice so it really sets in, I will comment afterward and hopefully this exercise will "make you think".

—————————–

…First Hand from Zimbabwe;

"Yes, they try to sell you their funny colored money with lots of zeros on it ROFL. They seem offended when you decline their offers. I told the guy I bought some off of ebay, and got the "deer in headlights" look back. I just moved on.

Anyway, met a guy who was friendly so started chatting.

This is first hand from someone who grew up here, born here, lived through the hyperinflation, had a real job, parents, house, savings, etc. I just asked him things point blank: what happened and what did you do during that period just to see what reality was.

His parents were pretty well off, brits of course, retired (or very close) for a normal Zimbabwean. Considerable savings. Not a mil USD (equivalent) but up there ($250K-$500K’ish I think in hard savings).

He said: "They went from set for life here in Zim to not being able to afford a loaf of bread in 2 days." (these were his exact words, not mine, not a paraphrase, the exact statement, I remember it clear as day, and this was only 2 hrs ago).

The first question of course I followed with was: Um, why they didn’t buy gold? And here you have the story:

He said his parents were very conservative and placed complete trust in the system and the gov. It would never even occur to them to do something like that, and he said they said it would be way way too risky to do something like that (not because it was illegal or anything, but because gold was viewed as risky, asset wise!).

He said he might (!!) do gold next time. His first response was he’ll buy a few barrels of oil and keep them in his back yard to sell/barter LOL. Seriously. But he said, yeah, gold would be worth doing next time. I honestly don’t think that this option had occurred to him yet even to this very day, until I asked him this question. That’s just the feeling I got, as he had to pause like he was thinking about do the head nod (thinking, thinking….) what I just said before he answered.

So even now, if it happened AGAIN, the people would not necessarily turn to gold (wow, wow, and wow!). They would all instead INSTANTLY convert everything (it seemed he was indicating) into dollars to be safe! (another wow, wow, and wow)!

I told him the USD was likely on it’s way towards hyper’ing also. He seemed quite (totally) surprised. He said, he thought the EUR was headed that way, but not the USD. It seems that Zimbabwe feels the dollar is now, and always, solid as a rock."

—————————–

First, please remember this was a conversation with just one person so it is by no means even a "sampling". It was however a conversation with someone "who had something …and lost it all". The story is important in my opinion for several reasons I will touch on.

"Mathematically", the U.S. dollar is headed for the inferno of hyperinflation. There is no argument on this point from anyone with intelligence. Even Harry Dent and Martin Armstrong the most staunch "deflationists" around admit the final chapter is that of wildly high gold prices (which means a breakdown of confidence in the dollar). The difference between "them and us" is "how" we get there? I believe we have already been witnessing the "squeeze" and run into the dollar as a "safe haven", they see it as a continuing and future event.

The absolute most important thing to take from our reader’s comments is this line He said: "They went from set for life here in Zim to not being able to afford a loaf of bread in 2 days." Yes I know, something in your gut is telling you "but we aren’t Zimbabwe", the U.S. is far more sophisticated, has the greatest military in the world and of course the "it can never happen here" syndrome is chirping in the back of your mind. Let me say this, "NO, we are not Zimbabwe, what a shame!". I might have lost or confused you here and I’ll get to this in a moment.

"Banana Republicland" (debt to GDP ratios of 100% or more) is now occupied by a large percentage of the world’s sovereign nations. The U.S. has more than a 100% debt to GDP ratio just using "funded" or on books debt. The ratio goes ballistic and out of control when you add in "guarantees and future obligations". After researching the Zimbabwe situation, their debt to GDP number was not greater than Japan’s currently and approximately (180%) equal to that of Greece …with Italy slightly behind. My point is this, the debt to GDP ratio in the U.S. when everything is included is some God awful number, maybe 500% or even multiples more! I have news for you, we are already Zimbabwe on STEROIDS! Before commenting further, I will refute the obvious, "but the U.S. has the strongest military in the world …probably yes, but we are stretched out with many various "scopes" targeted at us. The days of "forcing" the dollar on the rest of the world are waning very quickly! World War 3 will be our main concern should the U.S. try to "force" dollar dominance. All you need to do is look around, the ROW is and has been angered by our "forcing" the use of dollars. They have been reacting by doing trade to the EXCLUSION of the dollar. The days where our military could foist the dollar on the world are over!

I mentioned above, "it is a shame we are NOT Zimbabwe", can you guess why? Because the U.S. still "has" (or believes it does) mass wealth. Yes we have really split into the have’s and have not’s as the middle class has been attacked and fallen into the have not category but …our living standard is far advanced from Zimbabwe’s in general. We have more to lose. In other words, "it is better to have never had than to fall from grace". Zimbabweans lost their savings, on average their "fall" in living standards is miniscule to an event like that happening in the U.S.. Not to mention the unrest and riots we will see when people who were previously "entitled" …wake up to nothing! As an analogy, their fall was off the bottom rung, ours from a skyscraper! A very timely side note, while writing this article, the Zimbabwe dollar will officially "go away" http://www.zerohedge.com/news/2015-06-11/zimbabwe-demonetizes-offers-us5-175-quadrillion-zim-dollarshttp://www.zerohedge.com/news/2015-06-11/zimbabwe-demonetizes-offers-us5-175-quadrillion-zim-dollars

I also found it curious that this person had not "figured out" gold and to this day still has a feeling of "risk" when it comes to the metal. Stepping back for a moment, why do you suppose invading forces ALWAYS steal their captor’s gold rather than the currency and the plates to make the currency? Please don’t tell me I am living in Roman times, or the Middle Ages, or Napoleonic times. I am not even living in WW I or II times, as recently as the last several years, Iraqi, Ukrainian, Greek and Libyan gold has ALL been pilfered! Ask yourself this question, if the U.S. was invaded, would our conquerors steal our dollars or break into our vaults in search of gold (maybe to a very bad and empty surprise?)?

Please think this through for yourself, can we in the U.S. and the West in general wake up to closed markets and panic conditions? Do you really believe paper currency will become more valuable (for more than a week or two) if the debt markets and derivatives are closed with no bids? Do you really believe gold and silver will be "offered" in any fashion except maybe for something you have as barter? I still cannot get over the deflationists argument the dollar will strengthen in this scenario. The killer question of course is this, where exactly should (can) we store all of these valuable notes and digits "safely"? I suspect there will be a run on wheel barrows and those old "Radio Flyer" wagons will actually again have a function beyond their antique value!

Regards, Bill Holter
Holter-Sinclair collaboration
Comments welcome! [email protected]