3.9% GDP Nonsense-Dollar Turns Sharply Soon-John Williams
By Greg Hunter On December 3, 2014
Economist John Williams is not buying the recent 3.9% GDP upward revision. Williams explains, “No one I know thinks we are growing at 3.9% other than they are trying to sell a bill of goods to the markets, specifically the currency markets. 3.9% is nonsense. You had 4.6% growth in the second quarter and 3.9% in the third. Here you had two quarters at close to 4%, and we have not seen anything like that since 2003. This is the strongest economy we have seen in 11 years, and I can tell you Main Street USA is not seeing that. . . . If you understate inflation, which the government does, you overstate inflation adjusted growth, and that is probably the biggest problem in the GDP report.”
Recently, the U.S. deficit passed the $18 trillion mark, but using honest accounting, Williams says the debt picture is much worse, “Using generally accepted accounting principles with expenses and obligations, what you are seeing is the actual deficit. Instead of being half a trillion dollars last year, it was more like $6 trillion in the same length of time. The gross federal debt right now is $18 trillion. If you add on the unfunded liabilities such as Social Security and Medicare, you are approaching $100 trillion in terms of total federal obligation. There is just no way that can be covered. . . . The government, long term, is bankrupt.”
That brings us to the U.S. dollar. Williams says, “Right now, we have a big distortion in the market, and that is the strength of the U.S. dollar. I contend the dollar should be getting much weaker, and indeed it’s going to turn very sharply very soon, and that will be an approximate trigger for a major upturn in inflation. The reason the dollar is strong right now . . . the U.S. economy is booming, if you believe the statistics. Main Street USA doesn’t believe the statistics. The rest of the world is in recession, and guess what? We’re in recession too. We’re just not reporting the numbers as accurately as the rest of the world.”
Williams has revised and pushed back his hyperinflation forecast to begin in 2015 and not this year. Williams, now, expects a big upturn in the price of gold and oil next year. Williams explains, “The issue remains the dollar. What is distorted in the system right now is the dollar’s strength. It’s the strongest it’s been in some time. It’s over stated for multiple reasons ranging from outright manipulation to overstatement of economic growth and other games that have been played. That’s going to reverse shortly. As the dollar sells off, you will see inflation pick up. Part of the reason why oil is where it is now and part of the reason why gold is where it is now is because of the dollar’s strength.”
Jim Sinclair’s Commentary
This speaks to reducing their dependency on the petro dollar.
Russia ready to continue talks with Austria, Hungary, Serbia on South Stream — envoy
December 03, 20:44 UTC+3
MOSCOW, December 3. /TASS/. Russia is ready to continue talks with Austria, Hungary and Serbia on ways out of the situation that developed as a result of the closure of the South Stream project, Russia’s Ambassador to the European Union Vladimir Chizhov said Wednesday.
“The Russian side is ready to discuss what to do next and how to overcome the situation,” Chizhov said on Rossiya 24 TV channel. “The gas pipeline thread may go in any direction from the Turkish hub.”
Russia halts South Stream project
In the current condutions, Russia cannot begin the implementation of the South Stream project, Russian President Vladimir Putin said on Monday, December 1.
“Bearing in mind the fact that we have not yet received Bulgaria’s permission, we think Russia is such conditions cannot continue this project. I mean we are to begin the construction of the pipeline system in the Black Sea. We cannot begin the construction of the seabed section until we have Bulgaria’s permit,” Putin told a news conference in Ankara.
Here’s what will get your TFSA audited by the Canada Revenue Agency
Garry Marr | December 2, 2014 | Last Updated: Dec 2 8:15 AM ET
The Canada Revenue Agency has an audit project targeting Canadians it feels are in the business of trading securities and using their tax free savings accounts to shelter the proceeds.
To determine whether something is operating as a business, the CRA typically weighs eight factors, legal sources say. And although none of the eight factors listed below may be sufficient on its own, a combination of them can lead to an audit, tax and legal experts suggest.
Ultimately, the CRA can say a taxpayer has broken the rules on a balance of probabilities and it’s up to the person to prove otherwise.
The eight factors are:
• Frequency of transactions — a history of extensive buying and selling of securities or of a quick turnover of properties
• Period of ownership — securities are usually owned only for a short period of time
Liberty Dollar founder avoids imprisonment in sentencing
Tuesday, December 2nd
Dear Friend of GATA and Gold:
We have it only through a reliable intermediary that Liberty Dollar founder Bernard von Not Haus, convicted rather strangely almost four years ago of counterfeiting for issuing silver coins worth more than the originals they were supposed to be imitating, received a lenient sentence today from Judge Richard Voorhees in U.S. District Court for the Western District of North Carolina — six months of home confinement and three years of probation.
It’s said that the judge observed that von Not Haus’ motivation with the Liberty Dollar was philosophical rather than criminal. It’s also said that the judge ordered the federal government to return to its owners the millions of dollars of metal held by Liberty Dollar for its clients.
A lawyer representing GATA appeared in court today to argue for leniency for von Not Haus.
More as it becomes available.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Join GATA here:
Mines and Money London
Business Design Centre
London, England, U.K.
Monday-Friday, December 1-5, 2014
American, Georgian & Lithuanian get key jobs in Ukraine’s new govt
Published time: December 02, 2014 22:49
Edited time: December 03, 2014 11:45
The natives of the US, Georgia and Lithuania were hastily granted Ukrainian citizenship in order to become key ministers in the new government of Ukraine, which was approved by the country’s parliament on Tuesday.
President Poroshenko has also announced he will sign a decree to grant citizenship to foreigners fighting on Kiev’s side in the east of the country.
Natalie Jaresko of the US, who currently heads the Kiev-based Horizon Capital investment fund, will take reigns at the Ukrainian Finance Ministry.
In 1992-1995, Jaresko served as the first Chief of the Economic Section of the US Embassy in Ukraine.
Before that she occupied several economic positions in the US State Department, according to Horizon Capital website.
The position of health minister went to Aleksandr Kvitashvili, who occupied a similar post in the Georgian government in 2009-2012.
Accident at largest nuclear power plant in Europe revealed by Ukraine PM
Published time: December 03, 2014 11:15
Edited time: December 03, 2014 14:22
There has been an accident at a nuclear plant in the southeast of Ukraine, Prime Minister Arseny Yatsenyuk has revealed during the first session of his new Cabinet.
A minor accident occurred at Zaporozhskaya nuclear plant, the largest in Europe, last Friday, according to the facility’s website. A reactor was switched off and put to maintenance as a result.
The incident was not made public until Wednesday, when PM Yatsenyuk asked the energy minister to report on what happened and how the ministry is handling the situation.
Ukraine’s energy minister, Vladimir Demchyshyn, said that the accident posed no risk.
"There is no threat … there are no problems with the reactors," Demchyshyn said at briefing, adding the accident affected the power output system and "in no way" was linked to power production itself.
Demchyshyn said that the reactor would be restarted December 5.
ISM Services Surges To 4th Highest On Record (As Services PMI Plummets)
Submitted by Tyler Durden on 12/03/2014 10:08 -0500
On the heels of 5 months of weakness in Services PMI, and 2 months of weakness in ISM Services, it only makes sense that ISM’s Services print would massively beat expectations at 59.3 (against 57.5). All ISM subindices rose – apart from employment (which dropped to 4 months lows)! Just 15 minutes after one survey indicates a drastic slowdown in domestic demand for services, another one says it has almost never been better…
Huge beat in ISM Services…
What a difference 15 minutes makes…
Here is the full breakdown of the components: magically, and totally unlike that "other" ISM, virtually everything improved except for employment, which as we now know, has been improving purely due to lower wages, something which in an objective world would impact manufacturing survey responses, if not in a goalseeked new normal.
This is what a selection of cherrypicked responses had to say:
· "Business is good with new technology and products." (Information)
· "General uptick in demand/spending." (Finance & Insurance)
· "We are experiencing downward pricing pressures on the price of natural gas as a result of the lower energy prices being driven by OPEC’s lower oil prices." (Mining)
· "Food cost continues to be a challenge due to cost of goods increases. Beef, produce and turkey markets remain high. Chicken, pork and eggs, although year-over-year are higher; prices have fallen from one month ago." (Accommodation & Food Services)
· "Business is strong. Many new accounts want to be implemented before year-end so cost reductions can be included." (Professional, Scientific & Technical Services)
· "We are looking forward to a strong holiday season." (Retail Trade)
· "We are still seeing continued momentum month-over-month with the strongest area being government accounts." (Wholesale Trade)
Perhaps the only informative datapoint is that the saline IV solution shortage which started almost a year ago (as we reported previously) continues:
B-Dud Explains The Fed’s Economic Coup—-Or Why Every Asset Price Is Manipulated
by David Stockman • December 3, 2014
Keynesian economists are annoying enough when they are pitching inflated financial assets on Wall Street or the supposed curative powers of fiscal deficits on Capitol Hill. But they become positively dangerous when they populate the Eccles Building and usurp control of the nation’s capital and money markets lock, stock and barrel in the name of “monetary accommodation”.
Needless to say, the Fed is presently over-run with Keynesian money printers led by Janet Yellen and Stanley Fischer. Both of these famous PhDs are actually proponents of a primitive macroeconomic doctrine that should be called “bathtub economics”. In their wisdom, these doctors of economics have simply postulated that the nation’s economic output “should” be at aggregate levels which far exceed current production, and that the resulting shortfall from “potential” output, incomes and jobs is due to insufficient “aggregate demand”.
This purported “output gap” is conveniently self-serving. It has been interpreted to mean that the Fed has a plenary mission to fill-up the nation’s economic bathtub by generating sufficient incremental aggregate demand to off-set the shortfall. This demand plugging function, in turn, is to be accomplished by the constant intervention of the Fed’s open market desk into money and capital markets. So doing, it is empowered to manipulate, massage, twist, bend and pump any financial variable that in its wisdom is deemed to influence the transmission of its monetary policy (i.e.”aggregate demand” stimulus) into the real economy.
Except this is all a fiction. There is no such economic ether called “aggregate demand”; it is an utterly artificial construct of Keynesian economic models. What actually exists out in the real main street economy is nothing more than the total spending by households and businesses; and the latter does not pre-exist as an independent variable. Instead, it is derived from either current income or from incremental borrowing—that is, extending the pre-existing leverage ratio of business and household balance sheets to steadily higher levels.
But here’s the thing. The Fed can do only do two concrete things to influence these income and credit sources of spending—–both of which are unsustainable, dangerous and an assault on free market capitalism’s capacity to generate growth and wealth. It can induce households to consume a higher fraction of current income by radically suppressing interest rates on liquid savings. And it can inject reserves into the financial system to induce higher levels of credit creation.