1. WILL TRUMP PUT A GOLD SUPPORTER ON THE FED BOARD? MEET JUDY SHELTON

    It’s not yet official, but the White House has indicated that it is seriously considering Judy Shelton to fill one of the vacancies on the Federal Reserve board of governors, according to this article. This would make Dr. Shelton a voting member of the Federal Open Market Committee, FOMC, which is the Fed’s interest rate-setting panel.

    Trump’s last two potential nominees, Steve Moore and Herman Cain, both failed to attract support because of some damaging personal history, but also because neither man held a Ph.D. in economics. That degree is not a precondition for Fed board membership (Jay Powell is a lawyer, not an economist), but it is considered a plus and most Fed governors and chairs do have that credential.

    Judy Shelton has the degree and was already approved by the Senate for her current development bank position. But she is encountering opposition because of her support for the consideration of the role of gold in the monetary system.

    She does not insist on a hard gold standard overnight, but there are many useful roles gold can perform as a gauge of confidence in the U.S. dollar and a check on uncontrolled monetary policy.

    As usual, this article raises many objections to a gold standard that are false. The article says that gold does not allow discretionary monetary policy because the supply of gold is “more or less fixed.” That’s false. New mining output is about 1.6% per year and the U.S. can buy all the private gold it wants if that’s needed to expand the money supply.

    This article is a case study in how even the brightest economic minds don’t understand gold. Judy Shelton does understand gold. Let’s hope she gets the job.

    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. THE RUSSIAN ENDGAME BECOMES CLEAR. CENTRAL BANK CONSIDERS GOLD-CRYPTO

    There’s nothing new about the Russian accumulation of gold bullion in their reserve position. It began in a material way in 2009 when Russia had about 600 metric tonnes of gold.

    Today, Russia has 2,183 metric tonnes, a stunning 264% increase in less than 10 years. Russia is the sixth-largest gold power in the world after the U.S., Germany, IMF, Italy and France.

    Russia’s gold hoard is over 25% of the U.S. hoard, but Russia’s economy is only 8% the size of the U.S. economy. This gives Russia a gold-to-GDP ratio over three times that of the U.S.

    While these developments are well-known, the question of why Russia is accumulating so much gold has never been answered. One reason is as a dollar hedge.

    Russia is the second-largest energy producer in the world. Most of that energy is sold for dollars. Russia can hedge potential dollar inflation by buying gold.

    Another reason has to do with the avoidance of U.S. sanctions. Gold is nondigital and does not move through electronic payments systems, so it is impossible for the U.S. to freeze on interdict.

    Yet a deeper reason is that Russia has a long-term plan to subvert the dollar’s role as the leading global reserve currency. The Russian ruble is not positioned to be a reserve currency, but a new cryptocurrency backed by gold would be a good candidate.

    This article describes how the Central Bank of Russia will consider a new study that suggests just such a gold-backed cryptocurrency to settle balance of payments among willing participants. This plan is in its preliminary stages and is a long way from reality at this point.

    Still, the Russian endgame has now been revealed. The dollar’s days as the leading reserve currency are numbered. Got gold?

    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. HILLARY FOR PRESIDENT? DON’T COUNT HER OUT. HER 2020 CAMPAIGN HAS BEGUN.

    Just the mention of Hillary Clinton running for president in 2020 is enough to get eyes rolling on both sides of the aisle. Democrats want no part of her because she lost an “easy” election in 2016 and stuck the country with Trump. Republicans are even more derisive.

    The more activist types will probably start to yell, “Lock her up!” She looks like she has no friends to support a candidacy anywhere. But don’t count her out. She does have supporters, some of whom are intensely loyal.

    She is quick to remind political types and the media that she got about 3 million more votes than Donald Trump in 2016 (true). All she needed was a few hundred thousand more votes in Wisconsin and Pennsylvania and she’d be president today. She doesn’t have to turn any Trump voters around, just increase turnout slightly to win.

    Yet hasn’t the 2020 campaign already started and left her behind? According to this article, that’s not exactly correct.

    Hillary is staging rallies that are getting large crowds and an enthusiastic response. One look at the Democratic field suggests there is room for a well-known candidate like Hillary.

    Biden has a lot of baggage from the Obama administration and some scandals of his own. He comes off as old and tired. Sanders is an anathema to mainstream Democrats because of his extreme socialist views. Warren is brainy but not well-liked. The rest are untried and are dealing in platitudes.

    Adlai Stevenson lost the presidential election in 1952 and was renominated in 1956 (he lost again). Nixon lost in 1960 and was renominated in 1968 (he won). There are many similar examples.

    If Biden loses momentum and the Democratic convention looks deadlocked, don’t be surprised if the party calls Hillary from the sidelines as their white knight. Stranger things have happened.

    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. Wall Street and the New Cold War

    The stock market seems to rise or fall almost daily based on the latest news from the front lines of the trade wars.

    When Trump threatens new tariffs and China threatens to retaliate in kind, stocks fall. When Trump delays the tariffs and China agrees to resume negotiations, stocks rise. And so it goes. It has been this way since January 2018 when the trade war began.

    The latest dust-up came late last week when Trump threatened tariffs against Mexico if it doesn’t do more to curb illegal immigration to the U.S. Markets sold off on Friday as a result, bringing a terrible May to an end. Largely due to the trade war, the stock market had its worst May in seven years.

    To read the rest of this article, click here.

    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. China Will Lose the Trade War. But They May Not Care

    The fact that China will lose the trade war with the U.S. was always a forgone conclusion. The reasons are obvious.

    Foreign trade is a much larger percentage of Chinese GDP than it is for the U.S., so a trade war was always bound to have more impact on China than the U.S. Also, China only buys about $150 billion of goods from the U.S. each year while the U.S. buys about $500 billion from China. That’s the source of the $350 billion trade deficit. This means that if China tries to match the U.S. in tariffs dollar for dollar, they run out of headroom at $150 billion while the U.S. can keep going up to $500 billion and inflict far more pain on China.

    Other forms of Chinese retaliation are mostly nonstarters. They cannot dump U.S. Treasuries without hurting their own reserve position and risking an account freeze by the U.S. China cannot turn up the pressure by stealing intellectual property because they’re already doing that to the greatest extent possible.

    The bottom line is that the U.S. will win the trade war and either China will open its markets and buy more U.S. goods or the Chinese economy will slow significantly. Still, this article suggests that the Chinese may not care.

    The Chinese leadership care first and foremost about their own leadership and the perpetuation of the Chinese Communist Party rather than the growth or welfare of their people. If the Chinese view the trade war as just one step in a protracted cold war involving trade, electronics, military assets and regional hegemony, then we’re in for a long period of contracting growth that will not be confined to China but will affect the entire world.

    That seems the most likely outcome for now. Get set for slower growth and perhaps stagflation. It could be like the late 1970s all over again.

    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. Global Warming May Be a Hoax, but It Could Still Melt Your Net Worth

    It’s almost impossible to have a rational discussion about climate change. That’s not because there is no good science and nothing to debate. It’s because the “climate change” brigades ignore science and rely on ideology, intimidation and propaganda to advance their cause.

    Here are a few simple facts to bear in mind (all backed by solid science): Of course the climate changes. Long Island Sound used to be a glacier. But it changes slowly and in ways that are difficult to predict and impossible to change.

    CO2 does not cause warming; it’s the other way around. There is some evidence that warming causes CO2 to be released. Saying CO2 causes warming is like saying umbrellas cause rain.

    Regardless, the warming trend that was observed halted in the late 1990s. Blaring headlines about “record” warm years leave out the fact that the so-called records are measured in hundredths of a percent of one degree and are within the margin of error.

    Sea levels are rising about 1.5mm per year. That’s the height of a penny viewed sideways, or about seven inches in 100 years assuming the trend doesn’t reverse (which it well may), hardly enough to inundate the New York subways or Pacific Islands (which are expanding, by the way). Sea levels rose 400 feet after the last ice age. If humans survived 400 feet, they can easily adapt to 7 inches, if that.

    Polar bear populations are expanding exponentially and the polar bears are getting fatter — hardly the forlorn portrayal in Al Gore’s phony movie An Inconvenient Truth.

    Every past prediction of climate-related doom has proved false. The new ones are no different.

    I could go on, but you get the point: The climate alarmists are perpetrating a hoax.

    If that’s true (it is), then why does this article suggest that major corporations are jumping on board the idea of a carbon tax? The reason is that they fear something much worse (such as the Green New Deal) and want to get out ahead of the problem by paying a carbon tax and otherwise laying the issue to rest.

    A carbon tax can be passed on to consumers (just like beer and cigarette taxes) without shutting down the energy industry. These companies realize that the climate change alarmists are really socialists in disguise who want to radically change capitalist economies into poverty-stricken communes.

    The carbon tax is a small price to pay to avoid the wrath of the radicals and ideologues. The only problem is that you and I will be the ones paying 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.

  7. Trump’s Enemies Will Stop at Nothing. Investors May Be the Biggest Losers

    The battle between Trump and the Democrats in the House of Representatives shows no signs of abating and is in fact getting worse.

    The House Ways and Means Committee issued a demand followed by a subpoena for Trump’s tax returns. The White House, Treasury and IRS all refused to provide the returns on the basis that the House had no legitimate legislative purpose and was only requesting the information to harass the president. That matter is currently in litigation.

    But Trump’s enemies were not prepared to wait out the litigation. As reported in this article, the Democrat-controlled legislature in New York state and Democratic Gov. Andrew Cuomo worked together to pass a new law that permits the New York tax authorities to hand over state tax returns upon the request of committees of the U.S. House.

    Since state and federal tax returns contain many similar entries, this is a backdoor way to deliver Trump’s personal tax returns to his enemies by using state returns instead of federal returns. Where there’s a will, there’s a way!

    This New York state law provision may be unconstitutional under the U.S. Constitution as an illegal “bill of attainder.” That’s a law aimed at a single individual (Trump) rather than the population as a whole. No doubt, that argument will form the basis of even more litigation.

    Even if the law is upheld, it’s a signal to investors that your tax information is not safe in New York and if you are singled out as a political enemy, you can expect the same treatment. That’s a good reason to avoid New York entirely when it comes to business expansion and new investment.

    More to the point, it shows the war between Trump and his political enemies is now at a point where the federal government has become dysfunctional. That’s a good reason to avoid stocks and risky assets while increasing allocations to cash, hard assets and private equity.

    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. The Fed’s on Hold. The Reason Is They Have No Idea What They’re Doing

    The Fed was on a tear in 2018, raising rates four times at four quarterly FOMC meetings (out of eight total) by 0.25% each time. These rate hikes came on top of “quantitative tightening,” or QT, where the Fed burned money to reduce the M0 money supply by about $500 billion, equivalent to another 1.00% in rate hikes.

    This was all done in the name of “normalization” of rates and the Fed’s balance sheet in an effort to undo the QE and ZIRP science experiments of Ben Bernanke and Janet Yellen.

    There was only one problem. By trying to normalize, the Fed almost threw the U.S. economy into a recession.

    This was one cause of the precipitous stock market decline from Oct. 1–Dec. 24, 2018. Fortunately, Jay Powell woke up out of his trance just in time (maybe) and slammed the brakes on tightening. He announced the Fed would “pause” its rate hikes and be “patient” about future rate hikes. He also announced the Fed would taper its QT and bring the tempo of balance sheet reduction to zero by September 2019.

    The pause and patience talk is Fed-speak for “We’re not raising rates for the indefinite future and we’ll let you know in advance when we change our minds.” (The Fed will do this by dropping the word “patient” from their FOMC press releases when the time comes. That’s the signal that rate hikes are back on the table. Watch for it).

    Unfortunately, the balance sheet reductions will continue for four more months, so the U.S. economy is not out of the woods yet. This article covers this ground about no planned rate hikes and continued patience. But it reveals something else.

    The Fed officials’ debate shows they really have no idea where the economy is going and, as a result, have no idea what the future path of interest rates really is. They’re wandering in the dark. That’s what happens when you manipulate markets for 10 years. There’s no way to escape the room.

    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. Rare Earths Are Not Rare but They Are Strategic. Will China Cut Them Off?

    You’ve heard about “rare earths.” These are 17 chemical elements with names including cerium, erbium, europium and other little-known metals.

    Certain rare earth minerals are formed from combinations of these rare earth elements. Despite the designation as rare earths, they are not actually that rare. In fact, some are quite plentiful in the Earth’s crust.

    Some are far more plentiful than copper. The “rare” designation comes from the fact that while they may be plentiful in quantity, they are found in extremely low concentrations. This means a huge amount of ore and expensive mining processes are needed to extract even a small amount of these substances.

    While they have had various uses over the decades, rare earths today are critical in the manufacture of fuel cells, nickel-metal hydride batteries, plasma screens, fiber optics, lasers and other high-tech applications. Electronic vehicles, mobile phones and telecommunications systems would be impossible to build without them.

    China is responsible for 90% of global production, which makes them a potent weapon in the U.S.-China trade wars. The U.S. dominates the trade wars because we import far more from China than they import from us, which means China cannot match the U.S. when it comes to tariffs.

    China cannot dump their Treasury note holdings on the markets without devaluing their own position and risking an account freeze by President Trump. As a result, China must use more unconventional weapons.

    According to this article, China is now threatening to cut off rare earth exports to major users such as Japan and South Korea, both allies of the U.S. Over time, Western powers can replace rare earths purchased from China, but there could be major manufacturing disruption in the meantime.

    This is one more example of the unintended consequences of a trade war and how the consequences cannot be limited to just adding up tariffs on one side or the other.

    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. Events Are Getting Hot in the Middle-East. Is War on the Horizon?

    The list of international strategic hot spots keeps getting longer. There is significant potential for confrontation in North Korea, the South China Sea, the Taiwan Straits, the Gaza Strip, Venezuela, Ukraine and a long list of other unstable locales.

    As reported in this article, the newest addition to the list (and one that has been there before) is Iran. The U.S. was in a financial war with Iran in 2012–13, which caused hyperinflation, bank runs and a currency collapse in Iran. Obama eased up on financial sanctions in late 2013 in exchange for Iran’s participation in seven-party talks that resulted in a deal in 2015 to limit Iran’s uranium enrichment and weapons development programs.

    Trump tore up the deal in 2017 and reimposed financial and other sanctions. Those sanctions have been increased to the point where they constitute “maximum pressure.” Iran is now in worse shape than in 2013 because they wasted the $10 billion in cash and gold that Obama gave them in 2015 on sponsoring terrorism in Gaza, Lebanon, Syria, Yemen and elsewhere.

    The Iranian people know this money was wasted and they now have less patience with their government as the effects of the new Trump sanctions grow worse. Since Iran cannot win a financial war with the U.S., they are resorting to kinetic war by attacking Saudi Arabian vessels and pipelines with drone bombs. The latest reports are that Iran has also mounted cruise missiles on small boats, which constitutes a threat to U.S. Navy aircraft carriers and cruisers in the Persian Gulf.

    It’s not clear what happens next, but escalation is likely. Investors should add Iran to their list of places that could erupt into a full-scale shooting war with extensive financial fallout.

    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.