Posts Categorized: In The News

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Bill Holter’s Commentary

As per John Exter’s inverted pyramid, we shall soon learn exactly how little gold exists versus paper/debt assets blowing up and becoming worthless. 

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Great Depression to our Depression: Debt Deflation Doom Loop Lessons
May 24, 2020

We are now in the crosshairs of a mega debt deflationary bankruptcy phase.

Some of our sharpest forefathers left us illustrations to better understand how this cycle operates. It helps that many both actually lived through and studied the last one fresh off it happening. No not this fiat currency bifurcated ivory tower era thinking either ( not you bailout Bernanke).

DEBT DEFLATION BANKRUPTCY LESSONS

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Bill Holter’s Commentary

WOW, B of A now sounds like a conspiracy theorist! Did fake markets just now happen or were we tin foil hat whackos correct all along? It’s OK, you know the answer…

“Central Banks Have Created A Fake Market”: BofA Asks Why Anyone Would Expect Stocks To Trade Rationally
May 22, 2020

It’s no longer fun to be a Wall Street macro strategist.

On one hand you have to divine the future for risk assets, looking at corporate and economic fundamentals and data, and recommend “big picture” trades based on your assessment of corporate profits and interest rates which have traditionally been the two key drivers to any macro asset allocation decision. On the other, none of that matters in a time of central planning when central banks have taken over price discovery, making your job meaningless as asset prices are now a direct consequence of nothing but central bank liquidity and explicit asset backstops. As Deutsche Bank’s Stuart Sparks put it best, “These are administered markets and market outcomes will be dictated by the policy goals of the Fed and Treasury, and the tools they select to implement policy”

Not only is it not fun, there is a sense of dejected resignation (perhaps as market experts see their careers become obsolete), one which was especially palpable when reading the latest Flow Show report from BofA’s Chief Investment Strategist Michael Hartnett who writes that these are “fake markets” in which “government and corporate bond prices have been fixed by central banks…why would anyone expect stocks to price rationally?”

To be sure there is no rationality in a world in which over the past 8 weeks there has been a 38 million rise in US unemployment coupled with a $10 trillion forecast loss in global GDP in 2020/21; this however has been offset by $4 trillion of asset purchases by central banks resulting in a $15 trillion surge in global equity market cap.

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Bill Holter’s Commentary

Many say there is simply not enough gold to ever go back to a gold standard. I would correct that thinking by adding, “at the current price” there is not enough gold…but at some, higher price, there is certainly enough gold. Adding to what Erik wrote, no more new currency or debt needs to be added to the system to attain say, a gold price of $50,000 per ounce. The money supply and debt has already been created and only awaits a spark to start the huge bonfire of paper everything…!

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The United States is a Long Way from Home_002

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Bill Holter’s Commentary

Pushing on a string?

Central Banks Have Let The Genie Out Of The Bottle
May 17, 2020

(Bloomberg Opinion) — The world’s biggest economies have rolled out a plethora of monetary support measures over the past two months. If there’s one central bank that knows how hard bottling them back up will be, it’s Japan, where special operations have become a permanent fixture. Tokyo’s example suggests that policy makers will have an expansive role for years to come, particularly given the depth of the slump from the coronavirus outbreak.

Japan headed into its lockdown hobbled by poor choices, chiefly an ill-timed hike in the consumption tax at the end of 2019. Gross domestic product fell an annualized 3.4% in the first quarter from the prior three months, the government said Monday, following a drop of 7.3% from October to December. The contraction in the second quarter will be about 22%, according to economists surveyed by Bloomberg News, mirroring the scale of declines in the rest of the world.Everyone is reeling from Covid-19. What makes Japan stand out isn’t just the tax fiasco, but the long funk that preceded what’s likely to become the worst global downturn in a century. The Bank of Japan had been buttressing its economy with massive stimulus long before the Federal Reserve, Bank of England and European Central Bank embarked on a course of ultra-low interest rates and quantitative easing in the wake of the Great Recession. It took that trio a long time to withdraw their support; they had barely disembarked before the virus prompted them to dive back in.Given diminishing hopes for a rapid and vigorous bounce, it’s wishful thinking for central bankers to set expectations for a brisk exit from at least some Covid-era measures. Fed Chair Jerome Powell said in a May 13 speech that some programs will be put back in the box once the crisis has passed. He may be waiting a while, if the global financial crisis is any guide. Output is likely to remain well below pre-virus levels until at least the end of 2021.

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Bill Holter’s Commentary

And #29 is, you will not survive financially what comes…without gold or silver!

28 Reasons to Buy Physical Gold
November 22, 2017

Throughout human history, gold has constantly emerged as an unparalleled form of savings, investment and wealth preservation. Due to its unique characteristics and features, gold has inherent value and cannot be debased. When holding physical gold, there is no counterparty risk or default risk. Wealth in the form of gold can also be held and stored anonymously.

From its ability to retain its purchasing power over time, to its safe haven status in times of financial turmoil and uncertainty, to gold’s ability to diversify investment risk, there are many and varied reasons to own physical gold in the form of investment grade gold bars and gold coins.

1. Tangible with Inherent Value

Physical gold is real and tangible. It is indestructible, impossible to create artificially, and difficult to counterfeit. Mining physical gold is arduous and costly. Physical gold therefore has inherent value and worth. In contrast, paper money doesn’t have any inherent value.

2. No Counterparty Risk

Physical gold has no counterparty risk. When you hold and own gold bars and gold coins outright, there is no counterparty. In contrast, paper gold (gold futures, gold certificates, gold-backed ETFs) all involve counterparty risk.

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Bill Holter’s Commentary

Erik with some history of life, liberty, and the pursuit of happiness. Maybe his best writing yet!

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Bill Holter’s Commentary

A Friday dose of Erik for you.

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The United States Has No Leg To Stand On (On Ethics)_002

Bill Holter’s Commentary

Do you understand what this means? Please read this thoroughly twice and then sit down with your favorite adult beverage to ponder the ramifications…GOT GOLD?

Goldman Spots A Huge Problem For The Fed
May 15, 2020

Last week, the Treasury shocked the world when it announced that in the current quarter (the 3rd of the fiscal year), the US will need to sell a mindblowing, record $3 trillion (pardon, $2.999 trillion) in Treasurys to finance the US money helicopter.

Treasury issuance 5.4.2020_1

This, after selling $807 billion in the first half of the fiscal year, and another $677 billion in the quarter ending Sept 30.

And since it is just a matter of time before Congress has to pass yet another fiscal package which will be at least another trillion dollars, and up to $3 trillion if the Democrats get their wish, one can say that Guggenheim’s projection of over $5 trillion in debt issuance this calendar year will be wildly conservative.

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Bill Holter’s Commentary

We need more bailouts? Really? For those of you who believe “life” will ever return to what was considered normal…Do you understand what this chart has already told you?

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Powell Warns Of A Possible Sustained Recession From Pandemic
May 13, 2020

WASHINGTON (AP) — Federal Reserve Chair Jerome Powell warned Wednesday of the threat of a prolonged recession resulting from the viral outbreak and urged Congress and the White House to act further to prevent long-lasting economic damage.

The Fed and Congress have taken far-reaching steps to try to counter what is likely to be a severe downturn resulting from the widespread shutdown of the U.S. economy. But Powell cautioned that numerous bankruptcies among small businesses and extended unemployment for many people remain a serious risk.

“We ought to do what we can to avoid these outcomes,” Powell said.

Additional rescue aid from government spending or tax policies, though costly, would be “worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery,” he said.

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