1. If You’re Going to Print Money, Why Not Buy Stocks While You’re at It?

    We all know that the Fed printed $3.7 trillion of new money between 2008 and 2014 under the banner of “quantitative easing,” or “QE,” as part of a failed monetary experiment by former Fed Chairman Ben Bernanke. The Fed also held interest rates at zero for seven years from 2008 to 2015 to subsidize bank earnings at the expense of everyday American savers.

    The money that was printed by the Fed was used to buy government securities, mostly U.S. Treasury notes and some government-guaranteed mortgage-backed securities. Now the Fed is slowly unwinding those two efforts by gradually raising interest rates and not purchasing new government securities when the old ones mature.

    The problem is that this process of normalizing rates and the balance sheet may not be completed in time for the next recession or market panic. In that case, the Fed may have to go back to QE.

    As this article shows, some experts are anticipating a new round of QE with a twist. Olivier Blanchard, former chief economist of the IMF, has suggested that a new round of QE could be used to buy stocks instead of U.S. Treasury notes. That policy would print money and boost the stock market at the same time.

    The Bank of Japan and the Swiss National Bank already pursue this policy of buying stocks and bonds with their printed money. Unfortunately, the evidence is that this policy is a black hole that does not boost the economy but does contribute to stock market bubbles that are impossible to unwind without a crash.

    The Fed hopes a new round of QE never comes to pass. But a recession that arrives before the Fed has raised rates enough may lead directly to that policy. If so, the stock and bond market bubbles we have today may just get bigger until they crash on their own once and for all.

    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.

  2. Think the Trade War Is Over? It’s Just Getting Started

    For months, I have listened to Wall Street analysts and the business media claim that the new U.S.-China trade war is a nonevent. They claim that Trump is not serious about seeing through on his threatened tariffs on China. They also claim that China is just posturing in its retaliation.

    The expectation is that once the threats and posturing are over, China and the U.S. will work out their differences in a moderate way and get back to the business of globalized supply chains. I’ve said all along that these mainstream analysts had it wrong. The trade war is real, it is escalating quickly and neither side seems willing to back down or de-escalate.

    This article supports my position and adds fuel to the fire. China’s trade surplus with the U.S. hit a new record in August 2018 despite tariffs that Trump has imposed since last January.

    Trump has never focused on big-picture concepts involving free trade. Instead, he focuses on numbers such as the size of the Chinese trade surplus with the U.S., currently about $300 billion per year. Trump wants that number much lower, and that is that.

    This new report moves things in the wrong direction for Trump. It’s one more reason why this trade war will intensify and get worse despite the happy talk on Wall Street.

    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. Even in a World of Media Spin, the Facts Still Matter

    We all know how the mainstream media treat Donald Trump. The coverage from The Washington Post, The New York Times, NBC and other outlets is relentlessly and exclusively negative.

    Trump gets no credit for reducing unemployment, cutting taxes, boosting growth, achieving a breakthrough with North Korea, defeating ISIS and standing up to the dictators in Syria and Venezuela. Meanwhile, Trump is hammered continually on the bogus Russia collusion story while Robert Mueller is cheered on in his fishing expedition into Trump’s personal finances and unrelated problems of Trump associates.

    The media campaign against Trump is not normal bias; it’s more like a political jihad. But this article makes the point that even a coordinated media assault can’t hide the good news forever.

    Everyday Americans know when their paychecks are getting bigger, their companies are doing better and their investments are on the rise. The ability of everyday Americans to see through the media spin will have a huge impact on the midterm elections coming up in November.

    The mainstream pundits are predicting a “blue wave” that will put the Democrats in control of the House of Representatives and lead directly to impeachment proceedings early in 2019. Perhaps. But ordinary Americans may have a surprise in store for the pundits, as they did when Donald Trump was elected in 2016.

    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. When You’re on Top, There’s Nowhere to Go But Down

    For months, the world has been witness to the ascendancy of Xi Jinping. He’s the president of China, general secretary of the Communist Party, head of the Politburo and head of the Chinese military.

    Recent party congresses have gone even further and enshrined Xi’s writings on a par with Mao Zedong and removed term limits for the president of China. This means that Xi is not limited to the traditional two five-year terms but is now a de facto president for life.

    Xi has cracked down on his enemies and has imprisoned many and sent others to reeducation camps for political indoctrination. The unlucky ones have simply disappeared and some are believed dead. With this much power, it appears from the outside that Xi is firmly in control of the world’s second-largest economy and the world’s largest population.

    The problem with this much power is that you have nowhere to go but down. Dissatisfaction is growing in China with slower growth, more bad debts, higher inflation, a declining currency and strict capital controls.

    Now Xi is caught in the crosshairs of a trade war with Donald Trump that China is certain to lose. Xi’s political enemies are becoming more outspoken and U.S. companies such as Google are being embarrassed by revelations that they are working with the Chinese Communist regime to single out dissenters so they can be arrested, tortured or killed.

    This article takes a deep dive on these negative trends for China and Xi. For now, Xi still has the situation under control. But cracks are appearing in the façade of stability and it may not be long before Xi loses what the Chinese call the “Mandate of Heaven” for the legitimacy of his regime.

    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. Even the Academic Geniuses Are Warning of a New Collapse

    Many of those who warn of near-term economic collapses or market panics are consigned to the fringes of economic analysis. The mainstream analysts at university faculties or Wall Street banks are almost unanimous in saying, “All is well.”

    Most predict years of strong growth ahead, higher stock prices and higher interest rates. Of course, these are the same people who told you Brexit would never happen and Hillary would be president and who never saw the 2008 panic coming when it was staring them in the face. That’s why it’s a big deal when a member of the economic elite breaks ranks and tells it like it is.

    Harvard Professor Kenneth Rogoff is a former chief economist at the IMF and best-selling author of several books on systemic risk and market crashes. In this article, Rogoff reviews several new books on the history of the 2008 financial panic and warns that such a panic could happen again, possibly very soon.

    When the elites warn of market crashes, the warning is often aimed not at everyday investors but at other elites so they can begin preparing for a crash before others have a chance to get out of the market.

    With Rogoff’s warning in hand, you should not be the last to be get ready. Start now to decrease equity allocations and increase your allocations to cash and gold so you can weather the coming storm.

    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. Future Financial Crises Will Be Deeper, Universa’s Spitznagel Warns

     

    The author of “The Dao of Capital”, Mark Spitznagel, speaks about the negative impact of interest rate manipulations by central banks.

  7. Don’t Miss the Signs of Another Slow-Motion Meltdown

    If you’ve ever lived through a life-threatening emergency — whether a car crash, train wreck or a steep fall (hopefully not) — you have noticed that time seems to slow down.

    You witness your personal jeopardy in slow motion. A memorable example of this is the film The Matrix, in which the hero, Neo, could dodge bullets since time moved in slow motion for him.

    To read more of this article, click here.

  8. The Fed’s Lost Opportunity to Return to Normal

    Current Fed policy will push the U.S. economy to the brink of recession, possibly by later this year. When that happens, the Fed will have to reverse course and ease monetary policy.

    Meanwhile, the economic cheerleaders recite recent GDP figures and the stimulative effects of the Trump tax cuts.

    For more of this article, click here.

  9. There’s More to Trade Wars Than Just Trade. China and U.S. Will Struggle.

    The trade war between the U.S. and China is headline news on every channel. Despite glossy analyses by the mainstream financial media, this trade war is just getting started and should be expected to get much worse before it gets better.

    Reports that Trump’s tariffs are just for show and China’s response is just posturing are nonsense. The tariffs are real, more are on the way, and the animosity level is rising. This article explores the fact that the implications of the trade war go far beyond trade.

    China will have to undertake major structural changes in its economy to offset the negative growth from reduced trade. The trade war is being viewed inside China as part of a U.S. strategy of containment similar to what was applied with success to the Soviet Union during the Cold War. This means that China must shift from an export-driven economy to a consumer-driven economy and build trade ties with South Asia and Europe to replace lost business with the U.S.

    These are huge adjustments that may take decades to implement. In the meantime, China’s slower growth could be a source of internal instability and social unrest.

    The U.S. and China are playing for high stakes. Markets are just beginning to wake up to this reality.

    Accredited investors interested in learning more about Jim Rickard’s private placement in the world’s first predictive data analytics startup that combines human and artificial intelligence with complexity science should check out his offering at Meraglim Holdings. Click the link to learn more.

  10. Is China Invincible? No, Not Even Close.

    For too long, Americans have been suffering under the myth that China is the invincible super-power of the twenty-first-century and it will surpass the U.S. in wealth and influence in a matter of just a few years. Nothing could be further from the truth.

    It is true that China is the world’s second largest economy with the largest population and an impressive record of growth over the last twenty years. Several hundred million people have been lifted from poverty to a lower middle-class existence, which is a world historical achievement. So far, so good.

    The problem is that much of this growth has been the result of investment that is a complete waste. Empty ghost cities and unnecessarily huge and elaborate transportation infrastructure is both non-sustainable and offers no future returns. Worse yet is that much of this investment was financed with debt that can never be repaid. The cheap train tickets offered on the high-speed train from Shanghai to Beijing will never pay for projects such as the Nanjing South train station along the way.

    Other features of the Chinese growth story include cronyism, corruption, bribery and extreme income inequality. China lost over $1 trillion in hard currency reserves in 2016 as it tried and failed to defend the value of its currency against the dollar. And, despite the several hundred million whose lives have improved, about 700 million still live close to absolute poverty in the countryside.

    Now, China’s growth is slowing down as supreme leader Xi Jinping tries to rein in excess borrowing and wasteful investment. Xi was recently appointed leader-for-life, but his tenure is already unraveling as slowing growth, bad debt and corruption create popular discontent. This article by leading economist Steve Hanke describes the challenges facing Xi as China goes through this transition.

    The Chinese growth story is impressive, but any comparison to the U.S. is both premature and likely not to be realized for a very long time, if ever.

    Accredited investors interested in learning more about Jim Rickard’s private placement in the world’s first predictive data analytics startup that combines human and artificial intelligence with complexity science should check out his offering at Meraglim Holdings. Click the link to learn more.