1. World On Knife Edge Of Debt Crisis

    Herbert Stein, a prominent economist and adviser to presidents Richard Nixon and Gerald Ford, once remarked, “If something cannot go on forever, it will stop.”

    The fact that his remark is obvious makes it no less profound. Simple denial or wishful thinking tends to dominate economic debate.

    Stein’s remark is like a bucket of ice water in the face of those denying the reality of nonsustainability. Stein was testifying about international trade deficits when he made his statement, but it applies broadly.

    To read the rest of this article, click here.

  2. Ben Bernanke Returns Like a Zombie Who Refuses to Die

    We’ve all seen zombie movies where the good guys shoot the zombies but the zombies just keep coming because… they’re zombies!

    Market observers can’t be blamed for feeling the same way about former Fed Chair Ben Bernanke. Bernanke was Fed chair from 2006–2014 before handing over the gavel to Janet Yellen. After his term, Bernanke did not return to academia (he had been a professor at Princeton) but became affiliated with the Brookings Institution on Massachusetts Avenue in Washington, D.C. (Washington has a strange pull on people. They come from all over, but most of them never leave. It gets more like Imperial Rome every day.)

    Just when we thought that Bernanke might be buried in the D.C. swamp, never to be heard from again… he’s baaack!

    As described in this article, Bernanke gave a high-profile address to the American Economics Association at a meeting in San Diego on Jan. 4, 2020. In his address, Bernanke said the Fed has plenty of tools to fight a new recession. He included quantitative easing (QE), negative interest rates and forward guidance among the tools in the toolkit.

    Bernanke failed to mention that QE2 and QE3 did not stimulate the economy; this has been the weakest economic expansion in U.S. history. All that QE did was create asset bubbles in stocks, bonds and real estate that have yet to deflate (if we’re lucky) or crash (if we’re not).

    Negative interest rates do not encourage people to spend as Bernanke expects. Instead, people save more to make up for what the bank is confiscating as “negative” interest. That hurts growth and pushes the Fed even further away from its inflation target.

    Forward guidance lacks credibility because the Fed’s forecast record is abysmal. I’ve counted at least 13 times the Fed flip-flopped on policy because they couldn’t get the forecast right.

    At least new Fed Chair Jay Powell is a pragmatist, not an ideologue like Bernanke. Ben should go back to Brookings and stay there. He had his turn on the stage and we’re all still counting the cost.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  3. Elites Long for the Good Old Days When They Controlled the Media

    This article is titled “How Trolls Overran the Public Square.” But a better title might be, “How Globalists Lost Control of the Media.”

    The article is written by J. Bradford DeLong. Brad is one of the most prominent mainstream economists, a conventional neo-Keynesian who bows down to icons such as Paul Krugman and Larry Summers. He’s a professor at Berkeley and a former Treasury Department official in the Clinton administration.

    DeLong has not won the Nobel prize in economics (like Krugman), but he’s probably on the short list to win it one of these days. That’s not exactly an endorsement of his views considering that over one-third of the Nobel prizes in economics have been awarded for false science such as the “efficient-market hypothesis” and a capital markets allocation model based on a “risk-free rate” (there isn’t one, because no assets are risk-free).

    DeLong pretends to complain about “trolls” on Twitter and other social media channels who challenge his mainstream thinking. As he puts it, “The current public sphere does not serve us well.” That’s what DeLong says, but that’s not what he really means.

    DeLong wants a return to the media landscape of the 1960s, 1970s and 1980s. That’s when everyday citizens had no voice and communication was controlled by three TV networks (CBS, ABC and NBC) and a handful of newspapers and magazines (Time, The New York Times, The Washington Post and the Los Angeles Times).

    Those channels only allowed approved individuals to express their views. Approval was based on correct thinking (Keynes is good, Hayek is bad) and correct policies (higher taxes are good, tax cuts are bad).

    In a world like that, DeLong would have a big megaphone and no criticism. Instead, his false theories and out-of-date models are criticized all day long by creative analysts on the internet. Too bad for DeLong, but great news for the rest of us.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  4. Social Media Is Not So Social When It Comes to Donald Trump

    We all know that social media can be a jungle at times. It can be populated by experts with valuable insights and by friendly faces whose postings are helpful or at least put a smile on your face. It can also be populated by vulgarity, stupidity and trolls who insult and attack you but offer nothing positive or constructive.

    Death threats are not unusual; I know… I’ve received a few from ISIS and Iran. Still, social media (primarily Facebook, Twitter, Instagram, Snapchat, YouTube and a few other platforms) is best understood as a kind of Wild West. Anything goes… unless you’re a conservative politico.

    That’s where the censorship begins.

    Many conservative social media participants have had their accounts closed or suspended, not for threats or vulgarity but for criticism of progressive views (albeit criticism with some sharp edges). Other conservatives report being the targets of “shadow banning.” That’s where your account is open and seems to operate normally, but unbeknownst to you, much of the network is being blocked from seeing your posts and popular features such as “likes” and “retweets” are being truncated and not distributed.

    It’s like being a pro athlete who finds out the stadium is empty and no tickets are being sold.

    That’s bad enough. Now, Twitter has taken the war on conservatives a step further.

    One of the most widely followed accounts on Twitter is none other than Donald J. Trump’s, with 68 million followers. President Trump uses Twitter to announce policy initiatives and personnel changes and to offer pointed criticism of political opponents. It’s a major platform for him.

    As reported in this article, Trump recently issued a tweet that identified the so-called “whistleblower” of the Ukraine phone call that led to impeachment. That’s not as big a deal as it sounds because everyone in Washington knows who the whistleblower is (you can look his name up on the web), and he’s not even a real whistleblower because he doesn’t meet statutory requirements.

    Still, Twitter blocked Trump’s tweet. Twitter blamed a temporary system “outage,” but that claim is highly suspicious. Later, Trump’s tweet was restored, but the original account that Trump linked to had been deleted.

    No one ever said that politics was fair. But Twitter’s blatant interference in the election could have adverse consequences for the company in Trump’s second term.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  5. U.S. and Iran Have Traded Attacks, but a Full-Scale War Is Not in the Cards

    Tensions between Iran and the U.S. seemed to have eased up a little since the recent killing of Iranian terrorist Qasem Soleimani and Iran’s missile attack on U.S. bases in Iraq in retaliation.

    Of course, this could be temporary. Trump’s campaign of “maximum pressure” on Iran is having results including currency inflation, reduced revenues and a shortage of consumer goods in Iran. It also cuts Iran off from the payments system and limits its ability to finance terror in the region including Syria, Lebanon, Sinai, Iraq and Gaza.

    Iran is growing more desperate, so that means the confrontation with the U.S. is far from over. But there is a growing recognition that Iran does not want a full-scale war with the U.S. This article explains why.

    Iran’s ability to incite terror attacks and conduct hit-and-run cyberhacks is formidable. But its conventional military capability is greatly overrated.

    Iran is surrounded by U.S. and allied forces from Pakistan and Afghanistan to Kuwait, UAE, Saudi Arabia, Jordan and bases in Iraq. The U.S. may be drawing down troops in Iraq in the near future, but we have a huge troop presence in Qatar, Kuwait, UAE and Afghanistan. The U.S. could straightforwardly sink the Iranian navy, attack its missile sites, eliminate its oil industry and disable its internet and power grid and there’s almost nothing Iran could do to stop it.

    Importantly, this could be done without boots on the ground by using cruise missiles, B-52s, the aircraft carrier USS Harry S. Truman and our Cyber Command.

    So you should expect continued terror operations from Iran and the occasional display of missile attacks that do little damage. But the full-scale war markets fear is likely out of the question.

    If it happens, the Iranians would suffer catastrophic economic and infrastructure damage and possible regime change. And they know it.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  6. Jim Rickards: His Gold Price Prediction Explained

    Jim Rickards, legendary gold expert, says soon you might not be able to buy gold at any price!

    I reveal the insider information you need to understand Jim Rickards reasoning and determine if you should buy gold now or wait. And how gold could go to 100k an ounce, or more.

    Jim Rickards is the foremost expert on the price of gold, when he talks the markets listen and you should too. If you’ve followed his work you know Jim Rickards is one of the premier macro thinkers in the world.

    And if you don’t know who Jim Rickards is, you need discover his ideas right now. Understanding and listening to Jim Rickards now, could save and make you a lot of money in the future.

  7. Institutional Investors Don’t Like Gold, but the Rich Are Loading Up

    I’m sure you’ve seen plenty of billionaire hedge fund managers on business TV or streaming live from Davos. They like to discuss their investments in Apple, Amazon, Treasury notes and other stocks and bonds. They love to “talk their book” in the hope that other investors will piggyback on their trades, run up the price and produce more profits for them.

    Yet the only thing they almost never discuss in public is gold. Why have gold when stocks and bonds are so wonderful?

    Still, I worked on Wall Street and in the hedge fund industry for decades. I also lived among the players in New York and Greenwich, Connecticut at the same time. I’ve met the top hedge fund gurus in private settings. Some are clients. Some are friends.

    I’ve never met one who does not have a large hoard of physical gold stored safely in a nonbank vault. Of course, they won’t say so on TV because they don’t want to spook retail investors into dumping their stocks and bonds.

    This article makes the same point. In the article, Goldman Sachs states plainly, “If an individual is trying to minimize the risks of sanctions or wealth taxes, then buying physical gold bars and storing them in a vault, where it is more difficult for governments to reach them, makes sense.”

    I agree with that. What I don’t understand is why everyday citizens don’t do the same thing.

    If gold bullion is the go-to asset for billionaires, why don’t small investors have at least a 10% allocation to gold and silver bullion just in case? Some do, but most don’t.

    They’ll find out the hard way what individuals have learned over centuries and millennia. Gold preserves wealth; paper assets do not.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  8. Greece Is Broke and Wants Citizens to Go Broke Too With Digital Payments

    The European sovereign debt crisis raged out of control from 2010–15. In some ways, it began with the default by Dubai World on the day after Thanksgiving 2009 in the aftermath of the global financial crisis of 2008.

    The Dubai fiasco was contained, but a new crisis broke out in Europe just months later and took five years to resolve. At its height, the European crisis engulfed Ireland, Italy, Portugal, Greece and Spain.

    One by one, those individual countries got the situation under control with bank bailouts (Ireland), market discipline (Spain and Portugal) or aid from the European Central Bank (Italy). The one exception was Greece.

    There, the debt burden was so large and the political situation so fraught that a confrontation emerged that threatened to break up the EU and destabilize the euro. Greece came close to being kicked out of the EU by Germany in 2015 but then caved in to German demands and the crisis was finally resolved.

    Greece got more aid and extended debt repayment deadlines in exchange for agreement to cut its budget deficits and improve tax collections. Guess what? Greece’s idea of improving tax collections is to force citizens to use digital money instead of cash.

    That plan is described in this article. The idea is that digital payments are easier to track and digital accounts are easier to freeze and seize than cash.

    Government control won’t stop there. This is part of a broader global move to eliminate all cash so governments can control your wealth with a few keystrokes.

    The best way to fight back is not with piles of cash. That’s difficult and may soon be obsolete. The best way to fight back is with physical gold and silver bullion that cannot be digitally controlled.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  9. The IRS Is Coming for Your Cryptocurrency

    Readers know I’m not a fan of cryptocurrencies. While I recognize the potential benefits of blockchain applications for recording title in areas such as real estate, stocks and bond ownership, and while blockchains with limited participants (called “permissioned” systems) connected by common links in a single industry or supply chain can be efficient, there is still no use case for cryptocurrencies except criminal activity and tax evasion.

    I warned years ago that bitcoin would experience a super-bubble crescendo and then crash in a spectacular manner. It did. I also warned that those busy buying and selling bitcoin needed to account for any profits on their tax returns. The IRS does not recognize bitcoin as money; therefore profits on bitcoin are no different than realizing gains on the purchase and sale of stocks.

    Of course, the IRS agrees with my analysis. The IRS has already demanded books and records from major bitcoin exchanges and custodians and is issuing demand letters to bitcoin traders who failed to report gains.

    Many of these cases can be settled by paying back taxes, interest and penalties. Large players who did not report gains and seek to evade the IRS will be found eventually and some could end up in jail.

    According to this article, the IRS is now taking its enforcement efforts a step further by including a new question on Form 1040, Schedule 1. The question reads: “At any time during 2019 did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”

    If you answer “yes,” you can expect to get more questions from the IRS if you have not reported gains elsewhere on Form 1040. If you answer “no” and that’s honest, no problem. If you answer “no” but you did transact in virtual currencies such as bitcoin, then you may have committed a fraud punishable by five years in prison just by the false answer. That’s in addition to whatever you might owe on the actual transactions.

    The IRS is tightening the noose on bitcoin reporting, at least for U.S. taxpayers. Don’t kid yourself about bitcoin “anonymity.” The IRS has your number.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

     

  10. World’s Oldest Debt Relief Plan Is Coming Back

    There’s nothing new about debt. It has been around as long as money has been around, possibly longer.

    Some research shows that before money became widely used (usually in the form of gold or silver coins), merchants would exchange goods and services for promises to pay at a future date. A caravan participant might deliver goods for such a promise and then return a year later, expecting to be repaid in some mutually agreed manner possibly consisting of other goods, food and water or money.

    A “credit society” existed as long ago as the money society; growth of the two went hand in hand dating to the dawn of civilization 5,000 years ago. Of course, along with credit came bad debts when debtors found themselves overextended or illiquid.

    At times, exuberance led to excessive debt creation not just by some individuals but by a society as a whole. A debt panic could result with the same dynamics as the global financial crisis of 2008. The result could be ruined enterprises, deflation and lost wealth.

    We face the same prospect today with student loans, auto loans, credit cards, junk bonds and emerging-market debt as society did 5,000 years ago. But ancient societies had a solution as described in this article. The solution was called the “jubilee.”

    In a jubilee, a ruler or high priest simply decreed that all debts were wiped out. This enabled debtors to get back on their feet, wiped the slate clean and enabled the economy to grow again without the debt overhang. jubilees were practiced in ancient Sumer and Babylon and are specifically referred to in the Old Testament.

    One obvious objection to a jubilee is that it helps debtors and the economy, but it seems unfair to creditors. But this ignores the fact that creditors could see the jubilee coming. If a jubilee were coming every 50 years, creditors would stop making 10-year loans in year 40 and stop making two-year loans in year 48 or sooner.

    In effect, the system was self-regulating with creditors pulling in their horns ahead of the jubilee to minimize losses. There was still some friction, but on the whole it was a much better system than the panics we seem to have every 10 years or so.

    Some kind of jubilee is probably coming in the U.S. with respect to the $1.7 trillion in student loans outstanding. Losses will fall on the taxpayers (that’s you and me). But the results could be beneficial as student debtors might be able to buy houses, get married and purchase consumer non-durables.

    Alert investors stand to gain the most.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.