Train Wreck Coming

[Rose Garden]

"This is when you need to remember that when a nation's economy collapses, the wealth of the nation doesn't disappear, it only changes hands."

Funny, used to say this to clients in the wealth adviser portion of my career:

"Wealth is neither created nor destroyed; it merely changes hands."

You see it every day.... and that process is about to accelerate rapidly. Market contractions are more about wealth consolidation than they are about the economy. Only Tweeters think the stock market is the economy.

I don't agree with that. I don't see how anyone could say that wealth is not created or destroyed. No matter how you define wealth, the is a process of creation. If you define it by the amount of paper money you possess, you have to acknowledge that the paper is created and printed. If you define it by the number of possessions you have, those possessions are created as well. I don't see how you could possibly define wealth in a way that it can be neither created or destroyed.

[iWriteStuff]

"This is when you need to remember that when a nation's economy collapses, the wealth of the nation doesn't disappear, it only changes hands."

Funny, used to say this to clients in the wealth adviser portion of my career:

"Wealth is neither created nor destroyed; it merely changes hands."

You see it every day.... and that process is about to accelerate rapidly. Market contractions are more about wealth consolidation than they are about the economy. Only Tweeters think the stock market is the economy.

I don't agree with that. I don't see how anyone could say that wealth is not created or destroyed. No matter how you define wealth, the is a process of creation. If you define it by the amount of paper money you possess, you have to acknowledge that the paper is created and printed. If you define it by the number of possessions you have, those possessions are created as well. I don't see how you could possibly define wealth in a way that it can be neither created or destroyed.

It was more true before the "printing press" at the Fed allowed them to "create" money on a spreadsheet and send it throughout a monetary system that favors some players over others. Previous, it was a fixed system with finite "wealth" defined as "the ability to consume goods or resources". The net sum of purchasing power remained largely unchanged; it merely changed hands. The same applied in the Great Depression: wealth didn't cease to exist, it merely became more concentrated in the hands of the few. Banks called in loans - they either got their money back, or went out and repossessed property.

Nowadays, as you say, "wealth" can be created at a terminal in the Federal Reserve with a few journal entries. Whether you want to call that "wealth creation" or not is another debate. The underlying principle is that in all trades (be they in financial markets or in the purchase of consumables at a grocery market) there are winners and losers: those who end up with more at the end of the day and those who end up with less.

[Original_Intent]

"This is when you need to remember that when a nation's economy collapses, the wealth of the nation doesn't disappear, it only changes hands."

Funny, used to say this to clients in the wealth adviser portion of my career:

"Wealth is neither created nor destroyed; it merely changes hands."

You see it every day.... and that process is about to accelerate rapidly. Market contractions are more about wealth consolidation than they are about the economy. Only Tweeters think the stock market is the economy.

I don't agree with that. I don't see how anyone could say that wealth is not created or destroyed. No matter how you define wealth, the is a process of creation. If you define it by the amount of paper money you possess, you have to acknowledge that the paper is created and printed. If you define it by the number of possessions you have, those possessions are created as well. I don't see how you could possibly define wealth in a way that it can be neither created or destroyed.

This is commonly stated during a market crash that "XX trillion dollars of wealth was destroyed" due to the market correction. I think this is the context that was being used in stating that wealth is neither created nor destroyed. Certainly, in a market correction, this is true. While you may disagree as you watch your 401(k) value plummet, rest assured that there is a "winner" that balances out your loss.

[Rose Garden]

"This is when you need to remember that when a nation's economy collapses, the wealth of the nation doesn't disappear, it only changes hands."

Funny, used to say this to clients in the wealth adviser portion of my career:

"Wealth is neither created nor destroyed; it merely changes hands."

You see it every day.... and that process is about to accelerate rapidly. Market contractions are more about wealth consolidation than they are about the economy. Only Tweeters think the stock market is the economy.

I don't agree with that. I don't see how anyone could say that wealth is not created or destroyed. No matter how you define wealth, the is a process of creation. If you define it by the amount of paper money you possess, you have to acknowledge that the paper is created and printed. If you define it by the number of possessions you have, those possessions are created as well. I don't see how you could possibly define wealth in a way that it can be neither created or destroyed.

It was more true before the "printing press" at the Fed allowed them to "create" money on a spreadsheet and send it throughout a monetary system that favors some players over others. Previous, it was a fixed system with finite "wealth" defined as "the ability to consume goods or resources". The net sum of purchasing power remained largely unchanged; it merely changed hands. The same applied in the Great Depression: wealth didn't cease to exist, it merely became more concentrated in the hands of the few. Banks called in loans - they either got their money back, or went out and repossessed property.

Nowadays, as you say, "wealth" can be created at a terminal in the Federal Reserve with a few journal entries. Whether you want to call that "wealth creation" or not is another debate. The underlying principle is that in all trades (be they in financial markets or in the purchase of consumables at a grocery market) there are winners and losers: those who end up with more at the end of the day and those who end up with less.

Ah, okay. That makes more sense.

However, I see wealth as possessions more than any type of monetary exchange so I guess I still would say wealth can be created, destroyed, or be more or less, based on what commodities are being produced or not produced. Money is no good if you can't buy anything with it.

[Rose Garden]

"This is when you need to remember that when a nation's economy collapses, the wealth of the nation doesn't disappear, it only changes hands."

Funny, used to say this to clients in the wealth adviser portion of my career:

"Wealth is neither created nor destroyed; it merely changes hands."

You see it every day.... and that process is about to accelerate rapidly. Market contractions are more about wealth consolidation than they are about the economy. Only Tweeters think the stock market is the economy.

I don't agree with that. I don't see how anyone could say that wealth is not created or destroyed. No matter how you define wealth, the is a process of creation. If you define it by the amount of paper money you possess, you have to acknowledge that the paper is created and printed. If you define it by the number of possessions you have, those possessions are created as well. I don't see how you could possibly define wealth in a way that it can be neither created or destroyed.

This is commonly stated during a market crash that "XX trillion dollars of wealth was destroyed" due to the market correction. I think this is the context that was being used in stating that wealth is neither created nor destroyed. Certainly, in a market correction, this is true. While you may disagree as you watch your 401(k) value plummet, rest assured that there is a "winner" that balances out your loss.

Hence the reason why I don't have a 401(k).

[iWriteStuff]

Funny, used to say this to clients in the wealth adviser portion of my career:



You see it every day.... and that process is about to accelerate rapidly. Market contractions are more about wealth consolidation than they are about the economy. Only Tweeters think the stock market is the economy.

I don't agree with that. I don't see how anyone could say that wealth is not created or destroyed. No matter how you define wealth, the is a process of creation. If you define it by the amount of paper money you possess, you have to acknowledge that the paper is created and printed. If you define it by the number of possessions you have, those possessions are created as well. I don't see how you could possibly define wealth in a way that it can be neither created or destroyed.

This is commonly stated during a market crash that "XX trillion dollars of wealth was destroyed" due to the market correction. I think this is the context that was being used in stating that wealth is neither created nor destroyed. Certainly, in a market correction, this is true. While you may disagree as you watch your 401(k) value plummet, rest assured that there is a "winner" that balances out your loss.

Hence the reason why I don't have a 401(k).

What an interesting approach! How then do you manage to save for "retirement"? What sort of savings/investment plan do you follow? Must say I've been rather interested in that myself.

[Rose Garden]

I don't agree with that. I don't see how anyone could say that wealth is not created or destroyed. No matter how you define wealth, the is a process of creation. If you define it by the amount of paper money you possess, you have to acknowledge that the paper is created and printed. If you define it by the number of possessions you have, those possessions are created as well. I don't see how you could possibly define wealth in a way that it can be neither created or destroyed.

This is commonly stated during a market crash that "XX trillion dollars of wealth was destroyed" due to the market correction. I think this is the context that was being used in stating that wealth is neither created nor destroyed. Certainly, in a market correction, this is true. While you may disagree as you watch your 401(k) value plummet, rest assured that there is a "winner" that balances out your loss.

Hence the reason why I don't have a 401(k).

What an interesting approach! How then do you manage to save for "retirement"? What sort of savings/investment plan do you follow? Must say I've been rather interested in that myself.

Oh, dear. You are so asking the wrong person. My whole approach to life is so contrary to the norm that you'll probably never get anything from me you'd consider good advice.

My retirement plan is to teach my children (seven so far) that just as their parent's responsibility was to provide for them when they were too young to provide for themselves, it is their responsibility to see that their parents are provided for when their parents are too elderly to provide for themselves. It should be a fairly easy burden on them since they can divide the responsibility at least seven ways.

I honestly doubt 401(k)'s, social security, and all the other programs we rely on now are going to be solvent when I'm elderly so I'm relying on the old fashioned way of doing things. I feel a great deal more confidence in my approach than I do in the financial programs available to us. Those programs are causing many issues for seniors even now and their future looks dim. But I know that if my parents lost their income, I'd do everything in my power to take care of them and I trust that I can raise my children the same way.

[Silver]

This is commonly stated during a market crash that "XX trillion dollars of wealth was destroyed" due to the market correction. I think this is the context that was being used in stating that wealth is neither created nor destroyed. Certainly, in a market correction, this is true. While you may disagree as you watch your 401(k) value plummet, rest assured that there is a "winner" that balances out your loss.

Hence the reason why I don't have a 401(k).

What an interesting approach! How then do you manage to save for "retirement"? What sort of savings/investment plan do you follow? Must say I've been rather interested in that myself.

Oh, dear. You are so asking the wrong person. My whole approach to life is so contrary to the norm that you'll probably never get anything from me you'd consider good advice.

My retirement plan is to teach my children (seven so far) that just as their parent's responsibility was to provide for them when they were too young to provide for themselves, it is their responsibility to see that their parents are provided for when their parents are too elderly to provide for themselves. It should be a fairly easy burden on them since they can divide the responsibility at least seven ways.

I honestly doubt 401(k)'s, social security, and all the other programs we rely on now are going to be solvent when I'm elderly so I'm relying on the old fashioned way of doing things. I feel a great deal more confidence in my approach than I do in the financial programs available to us. Those programs are causing many issues for seniors even now and their future looks dim. But I know that if my parents lost their income, I'd do everything in my power to take care of them and I trust that I can raise my children the same way.

Meili,
Your method has thousands of years of application, while the gubmint programs like 401 ways to (kill your savings) and Social Insecurity are of a more recent vintage which can be taken away at any time. The term "austerity" has been used a lot for the Greek situation. We'll be hearing it a lot in the US soon.

[iWriteStuff]

This is commonly stated during a market crash that "XX trillion dollars of wealth was destroyed" due to the market correction. I think this is the context that was being used in stating that wealth is neither created nor destroyed. Certainly, in a market correction, this is true. While you may disagree as you watch your 401(k) value plummet, rest assured that there is a "winner" that balances out your loss.

Hence the reason why I don't have a 401(k).

What an interesting approach! How then do you manage to save for "retirement"? What sort of savings/investment plan do you follow? Must say I've been rather interested in that myself.

Oh, dear. You are so asking the wrong person. My whole approach to life is so contrary to the norm that you'll probably never get anything from me you'd consider good advice.

My retirement plan is to teach my children (seven so far) that just as their parent's responsibility was to provide for them when they were too young to provide for themselves, it is their responsibility to see that their parents are provided for when their parents are too elderly to provide for themselves. It should be a fairly easy burden on them since they can divide the responsibility at least seven ways.

I honestly doubt 401(k)'s, social security, and all the other programs we rely on now are going to be solvent when I'm elderly so I'm relying on the old fashioned way of doing things. I feel a great deal more confidence in my approach than I do in the financial programs available to us. Those programs are causing many issues for seniors even now and their future looks dim. But I know that if my parents lost their income, I'd do everything in my power to take care of them and I trust that I can raise my children the same way.

I've actually been considering modifying my approach to reduce my dependence on retirement accounts and such going forward. The thought came to me the other day that trying to pick winners/losers/safety in investments from among the many columns that build up Babylon is a fool's errand. All of Babylon will fall. Who cares if the column I choose to invest in survives better than the others when the whole thing is in ruins?

To that point, Zion. Nothing else will last.

[h_p]

I figure my chances of investing for retirement and having it pay off are about equal to my chances of being translated by then. And the latter sounds a lot more fun than the former, so hopefully I'll see you in Zion, iWS.

One thing's for certain: I won't be living on a retirement income in my old age.

[brianj]

I think the likelihood of the economy holding out until I die are so slim as to be nothing. But I also readily accept that I could be wrong and therefore I will save and invest - doing what I believe we have been counseled to do by church leaders. If I am right I will have lost the opportunity to spend that money, but until that day comes I will have the tremendous comfort and satisfaction of knowing I have been accumulating wealth to provide for my future.

If I had no savings and was totally pessimistic about the future, to the point of believing that a call-out was going to happen before summer, I would be very tempted to take out a big loan to spend on a luxury vacation traveling around the world. Eat, drink, and be merry because I won't have to pay off the loan! But what would happen if I was wrong?

[Silver]

Brandon Smith's latest article seems to fit here.

http://www.alt-market.com/articles/3145 ... ic-history

Are We Witnessing The Weirdest Moment In Economic History?
Wednesday, 08 March 2017 02:44 Brandon Smith


It is an unfortunate reality that most people tend to be oblivious to massive sea changes in geopolitics and economics. You would think that these events would catch the immediate attention of everyone as they happen, but usually it is not until they realize that the microcosm of their personal lives is subject to the consequences of the macrocosm that they wake up and take notice.

There are, however, ways to train yourself to pick up on signals within the news cycle and within political and financial rhetoric; signals that indicate a great shift is perhaps on the way. Sometimes these initial signs are subtle, sometimes they are as subtle as a feminist slut-walk. I would point out that over the next few months there are dangerous correlations so numerous and blatant in the economic sphere that I would almost rather watch a marching gaggle of frumpy feminists wearing nothing but electrical tape than bear witness to the mayhem that is about to strike the unwitting public.

What am I talking about? Well, let’s go through the list…

Federal Reserve Meeting March 14-15th

As my readers know well, I have been warning since before the election that the Fed would use a Trump presidency as an opportunity to pull the plug on near-zero interest rates and remove a primary pillar supporting stock markets — stock buybacks made possible by free overnight loans to numerous banks and corporations. Without QE and low interest rates the equities bubble will inevitably implode.

Corporate earnings certainly aren’t holding up stocks, neither is GDP or consumer spending. The Fed is the only determining factor of the ongoing bull market. Anyone who claims otherwise is probably a mainstream analyst or overzealous day trader with a vested interest in keeping the illusion going.

It is not surprising to me at all that the “rate hike odds” for March have been increased by mainstream analysts to 90% in the span of a week. I don’t know why anyone uses these arbitrary odds as an indicator of anything. I’ve been receiving emails all month asking me if I still believe the Fed will hike rates while the odds are “so low.” Look, the Fed does not make decisions at these meetings. They make decisions months in advance and the meetings are window dressing.

Too many people operate under the delusion that the central bank wants to continue propping up stocks, which is why they cannot grasp why the Fed would raise rates. In reality, the stage has been perfectly set to allow the bubble to implode. When the elites have a perfect scapegoat, they use it, and conservative movements represent that perfect scapegoat today.

The important thing to remember, though, is the timing of this particular meeting…

U.S. Debt-Ceiling Suspension Ends March 15th

So, in case you weren’t tracking the economic situation two years ago, the U.S. government almost went bust (in a sense) in 2015. The debt ceiling sets limits on how much the government can borrow to fund itself, and that limit was hit hard under the Obama administration after he managed to nearly double the national debt during his tenure. Congress passed legislation to allow borrowing to continue until March 2017, and of course, much of that capital was “borrowed” from the Federal Reserve, which, of course, creates it out of thin air. With the return of the debt ceiling, the question is — will Congress be able to extend and delay again? With Trump running on a platform of fiscal responsibility, CAN they extend again? Do they even want to, or is this an engineered crisis event?

Once again, the timing of all this is a little odd. The Fed is raising rates into the first year of the Trump presidency leaving equities increasingly open to destabilization. In addition, the government might not be able to continue borrowing from them, or there will be a renewed extension but the costs of borrowing will run much higher. In either case, this month seems to pronounce the beginning of something; a considerable move away from the standard operating procedures that the elites have been using for the past several years. With such changes come consequences, always.

Formal Initiation Of Brexit On March 15th

The skeptics have been telling me for months that even though I was right about the Brexit vote victory the elites “would never allow” the British to leave the EU. Well, it doesn’t look that way to me so far. Theresa May plans to formally notify the EU of British exit on March 15th triggering two years of negotiations which will undoubtedly send economic shock waves throughout the globe on a regular basis.

Of course the Brexit will move forward! Why not? Globalists need a continuing atmosphere of crisis to distract the masses from their great global reset, and they need multiple scapegoats for the economic disaster that their reset will cause. Enter conservative movements in Europe; once again the perfect target to pin a crisis on.

French Elections Start April 23rd, End May 7th

Yet another election in which the EU hangs in the balance. Recent polls indicate that Marine Le Pen, the designated “populist" candidate, is falling behind. I have to ask, though, have we not learned our lesson yet on the meaninglessness of political polls? I think most of us have.

I believe Le Pen will be one of the final two candidates to move on to the election in May, and though I am not as certain as I was on Brexit and Trump, I am going to go ahead and predict a Le Pen win. If there is any sizable terrorist event in the next couple of months in the EU, or expanded Muslim riots, she is a guaranteed win. This brings up the very real prospect of a “Frexit” in the near future, and analysts should expect that a Le Pen win will be met with some panic in the financial world.

Potential Italian Election Move On April 30th

The Italian political process is a little confusing to me, but what I can tell you is that this spring or early summer you will probably be hearing a lot more about it. Former Italian prime minister and current Italian Democratic Party leader Matteo Renzi is set to decide on a the date for a leadership vote, which may come as early as April 30th. The outcome of this vote will likely decide how soon the next official Italian election will take place.

The election is required to be held before May 2018, but there is increasing pressure to hold elections in 2017, perhaps even this coming summer. I would not be at all shocked to see a surprise announcement of an early Italian election after the leadership vote is held.

Why should anyone care? The consensus is that Renzi’s party will be overrun by anti-EU factions and that this may result in a kind of “Italiexit.” The outcome of Italy’s series of votes and political restructuring will have wide reaching effects on the psychology of the markets for many months to come.

German Federal Election Held September 24th

Yes, even Germany is quaking this year in the wake of a potential “populist” tsunami. Angela Merkel is exceedingly unloved by her own people lately as her approval ratings collapse. Once-silent sovereignty champions in the country are becoming more and more vocal about Merkel’s rather insane open immigration policies which were the key element that drew millions of Muslims into the EU. It was the German government’s promise of endless entitlement programs that created the incentive for the mass migration in the first place, and now, finally, the German people are fed up with the complete lack of cultural assimilation and what many see as the destruction of western values.

I do not think that Germany will abandon the supranational concept of the EU regardless of the outcome of the election, but the removal of Merkel would signal a less agreeable Germany, which would exacerbate the already tottering European Union. Meaning more economic uncertainty in 2017.

If You Thought 2016 Was Weird…

If you thought 2016 was weird, I suggest you get comfortable with the surreal because it is not going away anytime soon. 2017 is a veritable treasure trove of falling elevators, and I haven’t even covered half of the issues facing the economy this year. But what about the macro-analysis?

To summarize, it seems to me that many of these events, stacked so closely together, are not coincidental in their timing. As I have noted in articles such as The Economic End Game Explained, globalists have been openly planning for decades to set in motion a vast financial overhaul and the launch of a single global economy and currency (the seeds being planted starting in 2018). If this is still their timeline, then it would follow that they would need a series of fiscal earthquakes designed to shake up the “old world order” to make way for a “new world order.”

Perhaps each of these events will result in a “stable” outcome and there is nothing to be concerned about. That said, I don’t believe in chance. Most geopolitical outcomes are influenced by internationalist players, which makes the outcomes of these events predictable. This is what made the Brexit predictable, and it is what made Trump’s victory predictable. Everything about the confluence of political and economic events in 2017 suggests to me a festering crisis atmosphere.

As I have always said, economic collapse is a process, not a singular moment in time. This process lulls the masses into complacency. You can show them warning sign after warning sign, but most of them have no concept of what a collapse is. They are waiting for a cinematic moment of revelation, a financial explosion, when really, the whole disaster is happening in slow motion right under their noses. Economies do not explode, they drown as the water rises one inch at a time.

If you would like to support the publishing of articles like the one you have just read, visit our donations page here. We greatly appreciate your patronage.

You can contact Brandon Smith at:

[email protected]

[Spaced_Out]

"This is when you need to remember that when a nation's economy collapses, the wealth of the nation doesn't disappear, it only changes hands."

Funny, used to say this to clients in the wealth adviser portion of my career:

"Wealth is neither created nor destroyed; it merely changes hands."

You see it every day.... and that process is about to accelerate rapidly. Market contractions are more about wealth consolidation than they are about the economy. Only Tweeters think the stock market is the economy.

I don't agree with that. I don't see how anyone could say that wealth is not created or destroyed. No matter how you define wealth, the is a process of creation. If you define it by the amount of paper money you possess, you have to acknowledge that the paper is created and printed. If you define it by the number of possessions you have, those possessions are created as well. I don't see how you could possibly define wealth in a way that it can be neither created or destroyed.

This is commonly stated during a market crash that "XX trillion dollars of wealth was destroyed" due to the market correction. I think this is the context that was being used in stating that wealth is neither created nor destroyed. Certainly, in a market correction, this is true. While you may disagree as you watch your 401(k) value plummet, rest assured that there is a "winner" that balances out your loss.

O' Yeah billions upon billions of dollars is invested in oil rig drilling and various industries like IT sectors like Apple and Microsoft money spent developing systems that fail or are destroyed by a natural event like an earthquake. If one spends 2 billion dollars developing a mine then the mine fails which is quiet a common event then the money is gone. There are huge number of empty houses in the worlds big cities @#$ people speculate on house price increase, or China where there are very many empty cities that are crumbling without anyone even having used the buildings.

There is so much wastage in the world today that wealth gets destroyed very easily and soon back to the stone age.

I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones. Einstein

Every major civilisation has fails from the Moguls, Greeks, Romans etc.. it is now the Western worlds turn.

The American Empire Was Challenged On Nearly Every Front This Week
http://www.zerohedge.com/news/2017-03-0 ... front-week

See my posting: viewtopic.php?f=2&t=45095#p772197

[gclayjr]

Spaced_out,

I have found it so difficult to communicate to those with socialists inclinations that Wealth is created... it doesn't just exist... That is the key to the logical fallacy of Marxist theory and redistribution logic/

If you can figure out how to get them to understand this basic concept...please let me know.

And of course if it can be created... It can be destroyed ... or p*ssed away.

Regards,

George Clay

[iWriteStuff]

Every major civilisation has fails from the Moguls, Greeks, Romans etc.. it is now the Western worlds turn.

You forgot to mention the Muggles. Their turn is coming soon, too. ;)

[Zion2080]

I've been hearing a lot about the upcoming "debt ceiling" deadline imposed on Congress for March 15. This is the date when Congress either has to raise the debt ceiling above $20 Trillion or the United States essentially runs out of the ability to pay its bills. Initially, the apocalyptic talk about the significance of this event seemed a bit overblown to me. Congress ALWAYS raises the debt ceiling. Always. And I would give 100% odds that they do so again.

So why is this time actually different? Well, let's look at the economic calendar. March 15 also happens to be the day when the Federal Open Market Committee (commonly referred to as "The Fed") announces whether they have decided to up the interest rate. Currently, the market is factoring in a 90% chance that the Fed raises interest rates. So here we have two events coinciding on the exact same day: we will raise the interest rates AND raise the debt ceiling at the same time.

This is akin to saying we can't afford our lifestyle so we have decided both to A) increase our ability to borrow and B) increase the amount we will pay in interest to borrow more. This is insanity squared.

If a train leaving Cleveland at 90 miles an hour is headed towards Boston, at what time will the train from Boston at 90 miles an hour collide with the train from Cleveland if they are both traveling on the same track? In this case, the answer is March 15.

Have a nice day!

Ooooooh. Something bad is going to happen pretty soon! Get your families ready!

[Silver]

http://www.zerohedge.com/news/2017-03-0 ... l-purposes

Is Janet Yellen Trying to Trigger a Recession For Political Purposes?

Phoenix Capital Research's picture
Mar 8, 2017 3:12 PM

Trump might want to put a call in to Janet Yellen.

The Fed is supposed to be a neutral, independent entity. However, that myth went out the window when Bernanke “gifted” QE 3 to Obama in 2012 to aid with the latter’s re-election bid.

The Yellen Fed seems to be even more committed to defining the Fed as nothing more than a leftist establishment mechanism. Back in October when it still looked like Hillary Clinton would win the 2016 Presidential election, Yellen commented that she was considering letting the economy run “hot” meaning allowing inflation to rise without implementing additional rate hikes.

One month later, Donald Trump won the Presidency and Yellen announced she wanted to hike rates in December with three more additional hikes in 2017.

Now, 3Q16 growth was supposedly 3.5%. If that had been true, then Yes, the Fed should consider hiking.

However, since that time GDP growth has collapsed. 4Q16 growth came in at a measly 1.9%. And 1Q17 GDP growth has collapsed from a forecast of 3% in early February to 1.2% today!

And Yellen is still pushing to hike rates.

So, back in October, when the economy was supposedly growing at an annualized rate of 3.5% Yellen wanted to let the economy run “hot.” And now that the economy is growing 2% rate (and soon to be sub-1% rate based on projections) she wants to hike rates multiple times.

Let that sink in for a moment.

It is very difficult to look at the above and not come to the conclusion that Janet Yellen is actively trying to thwart the Trump Presidency. For 8 years under Obama she signed off on maintaining interest rates at zero, permitting the debt to double.

Now that Trump is in office, Yellen wants to hike rates four times in 12 months. And she’s begun worrying about debt levels in her speeches.

Seriously?

The wise thing for Trump would be to ask for Yellen’s resignation. She has completely compromised any last credibility the Fed might have. And she’s now actively pushing to hurt the economy by hiking rates at a time when growth is already rapidly slowing.

[Silver]

The article below is a bit technical, but it's good to challenge your financial status quo. Try to read it and understand how much worse off we are now with trillions more in debt. This was not done innocently.

It's 1994 Again: Why Albert Edwards Expects An Imminent "Bond Market Bloodbath"

http://www.zerohedge.com/news/2017-03-0 ... nt-9159368

Following the Trump presidential victory, two prominent macro strategists have undergone a significant change in their outlook: while David Rosenberg, who started off with a deflationary, and bearish outlook, then flipped to inflationary (and bullish), has recently once more "mean-reverted" and expects a further drop in yields as deflationary forces return, his SocGen peer, Albert Edwards - while still expecting a deflationary "ice age" in the longer-run (in case there is any confusion, he expressly states "make no mistake. Unlike most in the markets, I remain a secular bond bull and do not think this 35 year long bull bond market is over") now expects an imminent "bond rout" in the coming weeks as the Fed's rate hike cycle leads to an aggressive selloff in short- as well as long-term rates. The result will be another "central bank-inspired recession", which will lead to the convergence of yields on the 10Y US Treasury with Japanese and European bonds below zero, as the global deflationary ice age enters the final round.

Edwards' summary of his current state of mind, just as the Fed is about to make (yet another) historic mistake, is - as usual - rather picturesque:

Make no mistake. Unlike most in the markets, I remain a secular bond bull and do not think this 35 year long bull bond market is over. I believe the US Fed has created another massive credit bubble that will, when it bursts, lay the global economy very low indeed. Combine this with the problems of a Chinese economy dependent on increasingly ineffective injections of credit to produce increasingly pedestrian GDP growth and you have a right global mess. The 2007/8 Global Financial Crisis will look like a soft-landing when the Fed blows this sucker sky high. The seeds for that debacle have already been sown with the Fed having presided over one of the biggest corporate credit bubbles in US history. All that is needed now is for the Fed to sprinkle life-giving rate hikes onto these, as yet dormant, seeds of destruction. Accelerated Fed rate hikes will cause tremors in the Treasury bond markets, forcing rates up, most especially in the 2 year – just like 1994. But as yet another central bank-inspired global recession unfolds, I believe US 10y bond yields will ultimately converge with Japanese and European yields well below zero – in other words, buy 10y bonds on weakness!
And speaking of 1994, and the reason why Edwards is confident that despite the market "pricing in" the Fed's upcoming rate hikes, nobody has any clue what is about to be unleashed, the SocGen strategist reminds his clients of the Orange County "havoc" unleashed with the 1994 rate hike cycles.

For those few of us in the markets of a certain age, Orange County conjures up only one thing: 1994 goes down in infamy as one of the biggest ever bond market bloodbaths in history culminating at the end of the year with Orange County in California going bankrupt (younger clients in their late 20s will only know the OC as the mid-2000s teen programme based in Newport Beach, which I watched religiously with my then teenage son and daughter).

I remember the 1994 period as if it were yesterday (unlike yesterday itself). Despite the Fed telegraphing the series of rate hikes and market participants forecasting multiple hikes, it was most curious how the market went into total convulsion. I was chatting to my ?similarly young? colleague Kit Juckes about this and he reminded me that the whole yield curve gapped up some 50bp immediately! It was a bloodbath, especially for 2y paper.


For the benefit of readers who may have missed this particular episode in bond market history, Edwards here are some more details of how the 1993/1995 rate hike cycle flowed through to the bond market, and then promptly resulted in an inverted curve.

You really had to be there at the end of 1993 to understand just how widely expected the 4 February 25bp Fed rate hike was. I was at Kleinwort Benson back then and I remember articulating that rates could rise somewhat more than the market expected on our December 1993 macro European tour. There was no real pushback. I have managed to lose my Global Strategy Weekly files from that time to see exactly what I was saying then, but I have my yellowing press cuttings file! From the FT on 8 Feb 1994 I find this, “on Thursday (the day before the Fed’s first hike), Mr Albert Edwards of Kleinwort Benson wrote: In the US, Alan Greenspan could not have been clearer. He regards 3% as an excessively low rate which has served its purpose to eliminate the banking crisis and alleviate the credit crunch. The Fed does not care what headline inflation is, rates are heading higher. The risk is that the markets do not view a ¼% rate increase in isolation but the first in a series of tightenings, which it will be”. I was not alone in that view. It was quite common on the sell-side. What though we could not anticipate was quite how savage the bond sell-off would be.
Additionally, Edwards also shares two articles from that year, first from Fortune entitled “The Great Bond Massacre of 1994” see link, and also from December, when The New York Times analysed events surrounding the most high profile casualty of that year, namely Orange County, link. In a word the problem was leverage.

Fortune Magazine wrote in 1994, “Just as in the U.S., European bond investors were operating on lots of leverage. That made them just as vulnerable when the margin calls started to come. The result: "You had a snowballing liquidation completely out of proportion to the (economic) fundamentals," says Gilbert de Botton, chairman of Global Asset Management in London. "Both the U.S. and Europe had been overexploited by investors on margin."

“Back in New York, the report of extremely strong 6.3% real growth in the fourth quarter of last year, combined with Greenspan's well-publicized fears about incipient inflation, struck new fear into bondholders. The Clinton Administration didn't help matters. "The saber rattling over Japanese trade hurt a lot," says de Botton. "(U.S. Trade Representative) Mickey Kantor's allusions to the effect that the U.S. was not in favor of a strong dollar was an indirect source of forced selling (of U.S. bonds) by European investors." Fearing currency losses and declining bond values, foreign holders of U.S. bonds began to pull out.

“Given all the leverage in the market, it shouldn't have been surprising that long rates moved up sharply when the Fed finally began boosting short-term rates. Indeed, some members of the Open Market Committee voiced fears at the February 4 meeting that even a small increase in the Federal Funds rate could rattle the bond market. Rattle it did. The initial rise in long rates brought forth a flood of margin calls. Rather than put up more money, which many of them didn't have anyway, speculators liquidated their holdings. With individuals bailing out of bond mutual funds as well, and little or no new money coming into the market, bond prices had nowhere to go but down."
Edwards' rhetorical question, here: "Does that snippet not sound eerily reminiscent of current events?"

He also points out that while the Fed has so far hiked rates twice in the current tightening cycle, "these have become such isolated hikes that the market (Fed Fund futures strip) has lost confidence that the Fed will ever deliver their promises as represented by the Fed dots." With next week's rate hike, however, all this will change.

There is another key similarity between 2017 and 1994:

The top chart shows that back in 1994, just before the Feb 4 rate hike, 2y yields were trading some 100bp above Fed funds. That one 25bp rate hike prompted the 2y-Fed Funds spread to soar from 100bp to 250bp within the space of three months while the 10y-2y curve flattened rapidly, destroying carry-trade bets along the curve. The key similarity with 1994 is that currently US 2y yields at 1.35% still trade tightly to the current Fed Funds rate of 0.75% (see left-hand chart below). If the market really takes on board Janet Yellen?s much more aggressive rhetoric, then we could easily see 2y yields rise towards the 10y as we did in 1994. If that happens and the US 2y spread with German and Japan continues to soar (see righthand chart below), this will be like rocket fuel strengthening the US dollar


Finally, while Edwards is hardly a technician, he provides two charts to substantiate his claim that a historic bond rout may be imminent: while the right-hand chart shows that US yields have now broken out and are heading to 2.65% and then 2.85% in the short term, it is the left-hand chart that is most interesting, "showing that US 10y yields can rise all the way to 3¼% and beyond and the secular Ice Age bull market in government bonds would still be intact."



Edward's conculsion: "In 1994, it was excess leverage that broke the market, culminating in December 1994?s bankruptcy of Orange Country and also the Mexican Peso crisis in that same month (due to dollar strength). I?m going to look harder for my 1994 Global Strategy Weekly file, for despite remaining a secular bond bull, I think we are in for a rough ride - especially with equity markets at record highs."

[iWriteStuff]

http://www.zerohedge.com/news/2017-03-0 ... l-purposes

Good articles, Silver.

Personally, I've been taking the opportunity to load up on Treasuries while they were "cheap". I think the Trump Bubble (as it shall henceforth be called by all media analysts, deservedly or not) is on the verge of popping in a surge of disappointment and unmet expectations. When that happens, watch investors rush back into 10yr T bills and whatever else they can find that somewhat resembles safety. Keep in mind - the Fed, unlike a private corporation, is always solvent. This is true because they are the only organization allowed to print their own money to pay the bills.

Also shorting equities. Oil price is the canary in the coal mine. Dollar goes next. And if I'm totally wrong I'll happily own my losses (hey, they're just digits in an "account" somewhere). And if I'm right I'll cash out my winnings and buy more silver :-B

[Sandinista]

Caesar didn't heed the warnings about the "Ides of March". Maybe we can get one of you conspiracy mongers to come up with a good one about someone getting whacked on the floor of the Senate on March 15th. I predict nothing will happen, not even to "Caesar".

[Original_Intent]

There are two big events on March 15, and the fact that they coincide is even bigger.

Fed Meeting and the market has priced in a 100% certainty of a rate hike.
The debt ceiling expires, any new debt is going to cost even more to finance if the previous item occurs as expected.

[Spaced_Out]

http://www.zerohedge.com/news/2017-03-0 ... l-purposes

Is Janet Yellen Trying to Trigger a Recession For Political Purposes?

Phoenix Capital Research's picture
Mar 8, 2017 3:12 PM

Trump might want to put a call in to Janet Yellen.

The Fed is supposed to be a neutral, independent entity. However, that myth went out the window when Bernanke “gifted” QE 3 to Obama in 2012 to aid with the latter’s re-election bid.

The Yellen Fed seems to be even more committed to defining the Fed as nothing more than a leftist establishment mechanism. Back in October when it still looked like Hillary Clinton would win the 2016 Presidential election, Yellen commented that she was considering letting the economy run “hot” meaning allowing inflation to rise without implementing additional rate hikes.

One month later, Donald Trump won the Presidency and Yellen announced she wanted to hike rates in December with three more additional hikes in 2017.

Now, 3Q16 growth was supposedly 3.5%. If that had been true, then Yes, the Fed should consider hiking.

However, since that time GDP growth has collapsed. 4Q16 growth came in at a measly 1.9%. And 1Q17 GDP growth has collapsed from a forecast of 3% in early February to 1.2% today!

And Yellen is still pushing to hike rates.

So, back in October, when the economy was supposedly growing at an annualized rate of 3.5% Yellen wanted to let the economy run “hot.” And now that the economy is growing 2% rate (and soon to be sub-1% rate based on projections) she wants to hike rates multiple times.

Let that sink in for a moment.

It is very difficult to look at the above and not come to the conclusion that Janet Yellen is actively trying to thwart the Trump Presidency. For 8 years under Obama she signed off on maintaining interest rates at zero, permitting the debt to double.

Now that Trump is in office, Yellen wants to hike rates four times in 12 months. And she’s begun worrying about debt levels in her speeches.

Seriously?

The wise thing for Trump would be to ask for Yellen’s resignation. She has completely compromised any last credibility the Fed might have. And she’s now actively pushing to hurt the economy by hiking rates at a time when growth is already rapidly slowing.

There was an article just recently saying for every $4 of debt only $1 of GDP has been created. the velocity of money has crashed
it can only end badly.

[iWriteStuff]

http://www.zerohedge.com/news/2017-03-0 ... l-purposes

Is Janet Yellen Trying to Trigger a Recession For Political Purposes?

Phoenix Capital Research's picture
Mar 8, 2017 3:12 PM

Trump might want to put a call in to Janet Yellen.

The Fed is supposed to be a neutral, independent entity. However, that myth went out the window when Bernanke “gifted” QE 3 to Obama in 2012 to aid with the latter’s re-election bid.

The Yellen Fed seems to be even more committed to defining the Fed as nothing more than a leftist establishment mechanism. Back in October when it still looked like Hillary Clinton would win the 2016 Presidential election, Yellen commented that she was considering letting the economy run “hot” meaning allowing inflation to rise without implementing additional rate hikes.

One month later, Donald Trump won the Presidency and Yellen announced she wanted to hike rates in December with three more additional hikes in 2017.

Now, 3Q16 growth was supposedly 3.5%. If that had been true, then Yes, the Fed should consider hiking.

However, since that time GDP growth has collapsed. 4Q16 growth came in at a measly 1.9%. And 1Q17 GDP growth has collapsed from a forecast of 3% in early February to 1.2% today!

And Yellen is still pushing to hike rates.

So, back in October, when the economy was supposedly growing at an annualized rate of 3.5% Yellen wanted to let the economy run “hot.” And now that the economy is growing 2% rate (and soon to be sub-1% rate based on projections) she wants to hike rates multiple times.

Let that sink in for a moment.

It is very difficult to look at the above and not come to the conclusion that Janet Yellen is actively trying to thwart the Trump Presidency. For 8 years under Obama she signed off on maintaining interest rates at zero, permitting the debt to double.

Now that Trump is in office, Yellen wants to hike rates four times in 12 months. And she’s begun worrying about debt levels in her speeches.

Seriously?

The wise thing for Trump would be to ask for Yellen’s resignation. She has completely compromised any last credibility the Fed might have. And she’s now actively pushing to hurt the economy by hiking rates at a time when growth is already rapidly slowing.

There was an article just recently saying for every $4 of debt only $1 of GDP has been created. the velocity of money has crashed
it can only end badly.

I would say the real question is whether anyone feels more wealthy than they did back in 2008 when the Fed dropped rates to zero and bought every bad mortgage out there. When I talk to friends, everyone seems to be talking about how great the economy is doing under Trump. What they really mean to say is that the stock market is doing well, seeming to forget that the stock market is not the economy. Hard data keeps getting revised downward (GDP, earnings per share, growth expectations, etc), but the markets keep rising. Someone is wrong - either the hard data or the market.

I guess we'll find out eventually which one had it right.

[iWriteStuff]

Hello and Welcome to FOMC rate hike day! As a reminder, this is how a Central Bank works:

housingmarket.png (359.66 KiB) Viewed 944 times

[Silver]

Hello and Welcome to FOMC rate hike day! As a reminder, this is how a Central Bank works:

housingmarket.png

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