1. World’s Most Powerful Bank Sees Stocks Going Down 40%. We Agree.

    Doom and gloom voices are a dime-a-dozen on the web and podcasts these days. My problem with most of them is not that I disagree, but that they don’t offer any analysis to back up their claims.

    Just saying that stocks can decline 40% isn’t worth much if you can’t put that in an analytical or historical context that readers and listeners can understand and judge for themselves. At our flagship publication, Strategic Intelligence, and our other specialized newsletters, we always offer in-depth analysis, facts, figures and history to support our perspective.

    Still, independent financial writers are in the minority. Most investors get their information from mainstream Wall Street financial analysts and research reports. Those sources are always upbeat and bullish, right? Well, not exactly. 

    This article quotes Dan Pinto, the Co-President of the world’s most powerful bank, J. P. Morgan, warning that stocks could plunge 40% in a new market correction that could come sooner than later.

    It’s one thing when the independent analysts and Wall Street are on opposite sides. It’s another when both sides start to agree that a major correction is coming.

    That’s the time to take precautions by reducing equity exposure and increasing your allocations to cash, gold and Treasury notes until this new financial storm passes.

  2. The Empire Strikes Back. The U.S. Government is Taking Down Cryptos.

    I’ve been a critic of bitcoin and most (not all) cryptocurrencies for a long time. I’ve also been a critic of the cryptocurrency infrastructure of exchanges and “miners” who appear to be involved in price manipulation to draw in suckers to their pump-and-dump schemes.

    One of my specific warnings was that central banks and the G20 governments would not sit idly by and let cryptocurrencies create a medium of exchange that rivalled fiat currencies. Powerful interests don’t go down that easily and they never go down without a fight.

    Now the heat is on in crypto world. The IRS has summoned all records from certain crypto-exchanges looking for tax cheats, (and there are a lot of them). The SEC has subpoenaed scores of ICO (initial coin offering) promoters requesting books and records with a view to fraud cases and enforcement actions. And now, as reported in this article, the SEC has also notified all crypto-exchanges that they need to register as securities exchanges immediately or face fines and penalties.

    That last news caused bitcoin to hit another air pocket, dropping below the critical $9,000 level. This wave of government regulation won’t let up soon and is happening all over the world; not just in the U.S.

    In the end, some cryptocurrencies and crypto exchanges may survive as heavily regulated financial intermediaries. But if they do, what’s the difference between cryptos and the banks, brokers and exchanges they were meant to replace? There is no difference except that cryptocurrencies are slower, more expensive and more wasteful of electricity than traditional payment methods.

    Visa or MasterCard anyone?

  3. U.S. Military Fears That China Has Weaponized Money and Is on the Attack.

    In 2009, I was a facilitator and participant in the Pentagon’s first-ever financial war game. The Pentagon has done war games for decades using troops, tanks, missiles and aircraft carriers, but the 2009 war game was the first one where the weapons of choice were stocks, bonds, currencies and derivatives.

    I wrote about this financial war game at length in Chapters One and Two of my first book, Currency Wars. In that war game, we played a scenario where Russia and China acquired large amounts of gold and launched a new gold-backed currency to end the reign of King Dollar as the world’s principal reserve currency.

    Guess what? Since that war game, Russia and China have tripled their gold reserves exactly as we warned the Pentagon. Now a real world financial war is getting serious.

    As this article shows, senior U.S. military officers are warning that China is weaponizing its financial wealth and using it to gain the strategic high ground in their global effort to reduce the power of the United States. Most of China’s financial weapons come in the form of hard currency reserves accumulated though huge trade surpluses with the United States.

    President Trump is responding with tariffs and sanctions on Chinese goods to try to get that deficit under control. Better late than never. The Pentagon can always go back and look at the transcripts of the online chats from our 2009 war game to see how this will play out.

    Individuals should acquire gold to preserve wealth. So should the U.S. Treasury if they want to be prepared for the endgame in this new financial war.

  4. Here’s a Time Bomb That Will Wipe Out the Entire $400 Billion Crypto Market.

    There has been a lot of bad news on cryptocurrencies lately involving exchange fraud, hacks, and government investigations. Bitcoin dropped from $11,650 to $8,800, a 25% mini-crash, in just a few days between March 5 and March 8 based on this barrage of bad news.

    Still, all of this drama may be small potatoes compared to the one time bomb that could blow up the $400 billion market capitalization of the entire cryptocurrency market. That time bomb is called “tether.”

    Tether is not intended to go up or down in value like other cryptos. One tether (USDT) is intended to always equal one dollar (USD). When you buy USDT in exchange for USD from the Bitfinex crypto-exchange, Bitfinex says they put the dollars in a kind of escrow so they’re available when you want to cash out for dollars. In turn, the tethers are widely used in crypto-exchanges as a kind of stable value substitute.

    It’s much easier to move USDT around crypto world then to move in and out of the USD. (And don’t even ask about the tax consequences of this; that will really make your head hurt).

    As this article describes, many in crypto world are questioning the assumptions behind tether. Are the dollars really there to back them up? What if Bitfinex just issues tether to prop up their bitcoin trading without keeping the dollars in escrow? That would be tantamount to counterfeiting dollars to prop up bitcoin.

    There has been a lot of bad news about tether and Bitfinix lately. An auditor hired to provide proof of the Bitfinex claims was dumped. As of now, there is no audit.

    U.S. government agencies have subpoenaed Bitfinex and tether so presumably they’ll get to the bottom of this. Perhaps all is well. But, if tether turns out not to have the dollars behind them that they claim, it’s just a matter of time before there’s a “run on the bank” in cryptocurrencies. Tether will not be the only victim.

    Since tether is so widely used, we’ll see the entire interconnected network of crypto-currencies and crypto-exchanges come crashing down. The $400 billion market capitalization of the entire crypto-world will be mostly wiped out.

  5. Ice Nine Comes to China. Over $1 Trillion in Cash Will be Frozen in Place.

    “Ice-nine” refers to the elite policy response to the next global financial crisis. In a crisis, everyone wants liquidity.

    In the 2008 crisis, the liquidity came from trillions of dollars of currency swaps and money printing by the Fed. That won’t happen in the next crisis because the Fed never got its balance sheet back to normal from the last crisis. The Fed still has over $4 trillion of securities on its balance sheet from QE1, QE2, and QE3. They’re tapped out.

    Instead of printing money, the elites will freeze the system. First, they’ll freeze money market funds. Then when people turn to the banks, they’ll freeze bank accounts and close the banks and ATMs. Then when people start to sell stocks, they’ll freeze brokerage accounts and close the stock exchanges. Eventually the entire system will be frozen. That’s ice-nine.

    The freeze will remain in place while world leaders convene a new Bretton Woods-type international monetary conference to devise a new system. I wrote about ice-nine in Chapter One of my last book, The Road to Ruin.

    I borrowed the ice-nine idea from author Kurt Vonnegut who used it to describe a doomsday machine in his novel, Cat’s Cradle. In Vonnegut’s book, ice-nine freezes all of the water on earth and life dies out. In my book, ice-nine freezes all of the liquid assets.

    The ice-nine plan has been in preparation in the U.S. for some time. The SEC changed the rules a few years back to allow U.S. money market funds to be frozen. U.S. stock exchanges already have “circuit breakers” which will close the exchange when stocks drop more than a certain amount.

    Now, China is catching up. This article describes how China has copied the U.S. in allowing money market funds to stop redemptions over about $1,000 (a government “allowance” for gas and groceries). Other governments are doing the same thing.

    The only safe haven is in physical non-digital assets such as gold or silver.

  6. If You Don’t Have Enough Gold to Abandon the Dollar, Try Some Crypto!

    It’s no secret that Russia, China, Iran, Turkey, Venezuela and many other nations are trying to escape from the U.S. dollar payment system. The U.S. throws its weight around in geopolitics by using economic sanctions, account freezes and blacklists aimed at political rivals.

    These punitive measures are backed up by U.S. control of the global payments system. The control by the U.S. is made possible by the fact that 60% of global reserves, 85% of global payments and almost 100% of oil purchases are denominated in dollars. All dollar payments must pass through a system controlled by the U.S. Treasury, Federal Reserve and the big clearinghouse banks.

    Naturally, countries that are targets of U.S. sanctions or just want more degrees of freedom are working hard to escape from the dollar payments system. Some such as China are expanding the use of their own currencies in global trade. Others such as Russia are acquiring gold. Now a new option to escape from dollars has emerged — cryptocurrencies!

    Russia is working on a cryptoruble. Venezuela has already launched its own cryptocurrency called the “petro,” ostensibly backed by Venezuelan oil reserves. (The U.S. had already declared that transactions in petros may be illegal under U.S. law if they constitute sanctions avoidance.) The Marshall Islands, a small island nation with a dollarized money system, just announced that it is also starting a cryptocurrency alternative to the dollar. 

    This article describes the most credible and important proposed cryptocurrency issuer of all — Iran. It’s understandable that Iran wants a dollar alternative, because new sanctions are about to be imposed on Iran for violations of U.N. sanctions over its missile program. Maybe this will succeed or maybe the U.S. will try to shut it down before it gets off the ground.

    Either way, it’s an interesting case study in the larger effort by major countries to abandon the dollar.