Jim’s Mailbox

Posted at 10:00 AM (CST) by & filed under Jim's Mailbox.

True answer? Courtesy of CIGA Paula.

Bill

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CIGA Ron with another true story!

Bill

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Wolfgang,

NOTHING will matter…until all of a sudden it does!

Best,

Bill

Jim/Bill,

You can no longer make an educated judgment on the direction of any market.

Not even using technical charting or fundamental analysis. 

Hell, even macro scenarios are becoming useless.

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(As could markets today!)

Everything today is driven by computer algorithms and unless you are privy to their pre-programmed directives, you are at a disadvantage.

It’s not only the retail investor who is confronted with this dilemma, but the professional as well.  (Simply note the number major hedge funds losing money, large amounts of money, for the first time in over 15 years.  And this is in a bull market!)

Not to be left out, the Fed is also at a disadvantage.  It’s painted itself into a corner.  They’ve flooded the world with so much liquidity that numerous bubbles have formed in every market.  The danger here is these markets are no longer displaying reality.  They are at the mercy of massive cash flows.  The Fed can no longer rely on economic principles to make judgments and/or forecasts.  Everything has become distorted and historical indicators are no longer dependable.

Interest rates, for example, have lost their natural and reliable steering function and signaling properties.  They have been fully distorted by QE and left the Fed flying blind.

Looking at the massive stock and bond rallies over the past decade, you would think we are in nirvana with natural economic laws repealed.

-Supply and demand does not matter.

-Money supply does not matter.

-Revenues and profitability no longer matter.

-Credit risk has become an anachronism.

-Relevance of interest rates in interrelated markets has become obscure.

This latter point is especially important.  Mortgages may be given irresponsibly, debt accumulation by individuals and corporations alike may be falsely comforting, municipalities my feel confident in undertaking new projects based on “fantasy” interest rate levels, pension funds may be forced to undertake risk investments to maintain payouts (our first hint was in the XIV ETN collapse).  I’m sure you get the message.

Risks have become mispriced and present a clear and present danger to our entire financial system.  (refer to the 2007 MBS and CDS debacle).

There is only a one way mindset today……everything can only go up.

(Hear that, Isaac Newton?  Redo your experiments)

At least the Asian officials come right out and state their intent to support markets at all costs.  But here, in the good old U.S.A. , the retailer investor (and hedge fund) is left wondering.  People get a reassuring feeling that perhaps the Fed will protect them from any decline. 

It’s called “BTFD”.

It’s called “bad news is good news and good news is good news”. 

After all, it’s been over a decade since markets were allowed to decline.

Plunge Protection Team, Working Group on Financial Markets, 33 Maiden Lane , have all become synonymous with the Fed’s herculean efforts to defy gravity. 

But one day, out of the blue without any warning, “shit” will happen and the natural order of things will be restored.  This how being blindsided happens.

CIGA Wolfgang Rech

Robert digging a little deeper for us. He is absolutely correct with this one, the “money” does not exist…!

Bill

Bill/Jim,

Not just in Australia, but in Europe AND in the US the trend is clear, when the next banking crisis hits the banks will be on their own with no bailouts because the money is not there to do so.

Rates are rising and when the scope of the coming crisis in Europe becomes more clear, rates will skyrocket.

Smart money will move to private banks or less risking institutions like local banks or credit unions soon. Assuming it still can be moved.

https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r5989

Cheers,

Robert

CIGA Norma sends us a potential “bombshell” if they actually follow through! But we knew this already and no one dared speak of it…?

Bill

DHS To Publish Proof Of Massive Dem Voter Fraud In 2016 – Qanon
February 20, 2018

WASHINGTON, D.C. – The Director of National Intelligence (DNI) together with the Department of Homeland Security (DHS) and the FBI are planning to publish in March a study of the 2016 elections that will demonstrate massive Democratic Party voter fraud of a magnitude sufficient to have influenced election outcomes.

On Jan. 3, 2018, President Trump signed an executive order disbanding the Presidential Advisory Commission on Election Integrity, largely because states controlled by the Democrats refused to cooperate.

Many Democrats breathed a sigh of relief, thinking President Trump had given up his effort to uncover and correct the decades of Democratic Party voter fraud.

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I was just last evening thinking about crypto currency versus the dollar, both of which have zero backing.

Jim

Jim/Bill,

I agree with the notion that Venezuela’s new crypto currency is just another form of “Control Fraud”.

But let us not forget one important factor, very, very few financial instruments today are backed by an underlying commodity.

We are all familiar with….

-the Comex deception, especially with gold and silver,

-the ETF’s and ETN’s stated, but unrequired, backings,

-the crypto currencies,

-the U.S. Dollar (backed only by faith), etc.

Venezuela has used all it gold to pay maturing debt and in fact, has become an importer of oil to meet its contract obligations.

So yes, there is fraud here. Inherently, yes. But not by U.S. financial standards. In oour world, promises appear more valuable than physical security.

But the following is a bit misleading and I must take issue with it:

“The notion that China or Russia will issue a gold-backed currency attracts considerable attention, but a currency is only “backed by gold” if a foreign financial institution can convert their yuan or rubles into gold upon demand. If there is no transparent, easy mechanism for foreign holders of the currency to convert their currency into gold upon demand, then the currency isn’t actually backed by anything: it’s simply a form of control fraud.”

The new Petro Yuan, debuting on March 26 this year, IS convertible on demand into gold. It is but the first foray into a gold backed currency. And Russia is not far behind.

Binding a currency to gold reserves, and making it readily convertible, is simply a self imposed restriction on profligate spending. A hard ass budget if you will. Something America should seriously consider.

Because academicians state that such strict budgetary controls prohibits tinkering with monetary and fiscal stimuli and leaves the country to free market forces, doesn’t make it right. Free markets come with a sin wave of economic momentum. The have ups and downs. Prosperity and recessions. It’s only when the tinker begins that you encounter serious depressions. Never forget that!

Either you believe in the free market or you don’t. Make up your mind.

CIGA Wolfgang Rech

Venezuela’s New Cryptocurrency: Just Another Form Of Control Fraud
February 23, 2018

Authored by Charles Hugh Smith via OfTwoMinds blog,

If a currency can’t be converted on demand into the underlying commodity, it’s not “backed by oil,” it’s just another form of control fraud.

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image courtesy of CoinTelegraph

The broke and broken country of Venezuela appears to be the first nation-state to issue a cryptocurrency token (the petro) as a means of escaping the financial black hole that’s consuming its economy: Maduro Launches Oil-Backed Crypto “For The Welfare Of Venezuela”.

For context, here is a chart of the black market (i.e. real-world) value of the Venezuela’s fiat currency, the bolivar: a 100,000 bolivar note is worth somewhere around 40 cents USD (US dollar), i.e. near zero. (Venezuela maintains a fantasy-official USD/bolivar exchange rate that has no relation to the actual purchasing-power value of Venezuela’s fiat currency.)

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