Financial Reserve

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iWriteStuff
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Re: Financial Reserve

Postby iWriteStuff » Fri Dec 09, 2016 2:32 pm

brianj wrote:
Silver wrote:Nothing has been right since that fateful trip to Jekyll Island. I was being somewhat facetious in asking about timing. The reason for the stock market crash in 1929 is easy to pinpoint in retrospect. The banks loaned and loaned and loaned money. People thought they could borrow forever so borrow they did and bought stocks on margin. Then one day the banks decided it was time to buy stocks on the cheap and they stopped loaning. The rush for the exits was brutal.
I understand these days banks can loan out ten times what's deposited in their accounts. You put $1000 into an account and the bank can loan out $10,000. Some of that money is deposited with banks to create an even greater ratio than 10:1 of loans to deposits.

When President Bush proclaimed some banks are too big to fail I was offended. No business is too big to fail, and letting a business fail will make room for new businesses to fill the consumer need. But in retrospect I think that protecting those banks was a way of protecting the banking industry, which is too big to fail. When the banking industry collapses, the entire economy will collapse.
Enter the Goldman Sachs White House to the rescue!

Seriously, either Trump is expecting a huge economic war (followed by actual war), or he just loves Goldman Sachs so much he had to "collect them all!"
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"The interesting thing about our age is that not many people are really fooled – we are going into perdition with our eyes open; the separation of the tares and the wheat is to be strictly a free-will affair."

Hugh Nibley

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Silver
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Re: Financial Reserve

Postby Silver » Fri Dec 09, 2016 3:55 pm

brianj wrote:
Silver wrote:Nothing has been right since that fateful trip to Jekyll Island. I was being somewhat facetious in asking about timing. The reason for the stock market crash in 1929 is easy to pinpoint in retrospect. The banks loaned and loaned and loaned money. People thought they could borrow forever so borrow they did and bought stocks on margin. Then one day the banks decided it was time to buy stocks on the cheap and they stopped loaning. The rush for the exits was brutal.
I understand these days banks can loan out ten times what's deposited in their accounts. You put $1000 into an account and the bank can loan out $10,000. Some of that money is deposited with banks to create an even greater ratio than 10:1 of loans to deposits.

When President Bush proclaimed some banks are too big to fail I was offended. No business is too big to fail, and letting a business fail will make room for new businesses to fill the consumer need. But in retrospect I think that protecting those banks was a way of protecting the banking industry, which is too big to fail. When the banking industry collapses, the entire economy will collapse.
Good comments. Perhaps you'd like to read this short article about fractional reserve banking. https://en.wikipedia.org/wiki/Fractiona ... ve_banking" onclick="window.open(this.href);return false;
As a prophet reveals the truth it divides the people. (T)he worldly either want to close the mouth of the prophet, or else act as if the prophet didn’t exist, rather than repent of their sins. Popularity is never a test of truth. Ezra Taft Benson

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Re: Financial Reserve

Postby Silver » Mon Dec 12, 2016 8:21 am

http://www.zerohedge.com/news/2016-12-1 ... r-50-years" onclick="window.open(this.href);return false;

With the Dow Jones just a handful of gamma imbalance rips away from 20,000, the CIO of One River Asset Management, Eric Peters, shares some critical perspective on the market's recent euphoric surge, going so far as to brand what is going on as America's "Massive Policy Error", the biggest in the past 50 years.

His thoughs are presented below, framed in his typical "anecdotal" way.

Anecdote

“America’s Massive Policy Error,” said the CIO. “That’s the title of the book someone will write in ten years about what’s happening today.” Never in economic history has a government implemented a fiscal stimulus of this size at full employment.

“The Trump team and economic elites believe that anemic corporate capital expenditure is the root cause of today’s lackluster growth.” It’s not that simple.

If credit to first-time homebuyers hadn’t been cut off post-2008, and state and local governments had spent as generously as they had after every other crisis, this recovery would have been like all others.

“People think that if only we cut taxes, kill Obamacare, and build some bridges, then American CEOs will start spending. That’s nonsense.” Ageing demographics, slowing population growth, and massive economy-wide debts have left CEOs unenthusiastic about expanding productive capacity.

“You make the most money in macro investing when there are policy errors and this will be the biggest one in 50yrs. These guys are going to crash the economy.” But not yet. First the anticipation of higher borrowing and rising growth expectations will widen interest rate differentials. Which will lift the dollar. But unlike recent episodes of dollar strength, this one will be accompanied by higher equities as investors ignore tightening financial conditions because they expect offsetting tax cuts and infrastructure spending.

Emboldened by higher equity prices, bond bears will push yields higher, lifting the dollar further, validating people’s belief in a strong economy in the kind of reflexive loop that Soros described in The Alchemy of Finance - the kind that drives extreme macro trends.

“This will be like the 1985 dollar super-spike. And the Fed will eventually be forced to follow the steepening yield curve, hiking rates aggressively, tightening the debt noose, killing the economy. Then rates will collapse, crushing the dollar.”
As a prophet reveals the truth it divides the people. (T)he worldly either want to close the mouth of the prophet, or else act as if the prophet didn’t exist, rather than repent of their sins. Popularity is never a test of truth. Ezra Taft Benson

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dlbww
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Re: Financial Reserve

Postby dlbww » Mon Dec 12, 2016 9:12 am

Silver wrote:http://www.zerohedge.com/news/2016-12-1 ... r-50-years

With the Dow Jones just a handful of gamma imbalance rips away from 20,000, the CIO of One River Asset Management, Eric Peters, shares some critical perspective on the market's recent euphoric surge, going so far as to brand what is going on as America's "Massive Policy Error", the biggest in the past 50 years.

His thoughs are presented below, framed in his typical "anecdotal" way.

Anecdote

“America’s Massive Policy Error,” said the CIO. “That’s the title of the book someone will write in ten years about what’s happening today.” Never in economic history has a government implemented a fiscal stimulus of this size at full employment.

“The Trump team and economic elites believe that anemic corporate capital expenditure is the root cause of today’s lackluster growth.” It’s not that simple.

If credit to first-time homebuyers hadn’t been cut off post-2008, and state and local governments had spent as generously as they had after every other crisis, this recovery would have been like all others.

“People think that if only we cut taxes, kill Obamacare, and build some bridges, then American CEOs will start spending. That’s nonsense.” Ageing demographics, slowing population growth, and massive economy-wide debts have left CEOs unenthusiastic about expanding productive capacity.

“You make the most money in macro investing when there are policy errors and this will be the biggest one in 50yrs. These guys are going to crash the economy.” But not yet. First the anticipation of higher borrowing and rising growth expectations will widen interest rate differentials. Which will lift the dollar. But unlike recent episodes of dollar strength, this one will be accompanied by higher equities as investors ignore tightening financial conditions because they expect offsetting tax cuts and infrastructure spending.

Emboldened by higher equity prices, bond bears will push yields higher, lifting the dollar further, validating people’s belief in a strong economy in the kind of reflexive loop that Soros described in The Alchemy of Finance - the kind that drives extreme macro trends.

“This will be like the 1985 dollar super-spike. And the Fed will eventually be forced to follow the steepening yield curve, hiking rates aggressively, tightening the debt noose, killing the economy. Then rates will collapse, crushing the dollar.”
I think Eric Peters is mostly right with his forecast. This should give you a good idea of how (you choose) to approach this scenario.

And you really need to get out of bonds if you are holding them in your portfolio (see: http://www.zerohedge.com/news/2016-12-1 ... h-30-highs" onclick="window.open(this.href);return false;). More than a year ago there was a discussion on this forum about the stock market collapsing (didn't happen). I mentioned that IMO there would be no collapse in equities, that the next collapse would be in the bond market. The bond market is much larger than the equities market. That's your G20 moment, your #@!*& moment when you realize you should have reduced your debt load and bought down.

To reiterate what I've said previously I think we see the EU coming apart, the $EURO collapsing, then the Japanese $YEN, then the $USD. As the $USD rises it will be hard for manufacturers to sell their products (and a devaluation could occur). And developing countries will have a very hard time (read default) paying back their debts procured in $USD's.

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iWriteStuff
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Re: Financial Reserve

Postby iWriteStuff » Tue Dec 13, 2016 8:35 am

dlbww wrote:http://www.zerohedge.com/news/2016-12-1 ... r-50-years

I think Eric Peters is mostly right with his forecast. This should give you a good idea of how (you choose) to approach this scenario.

And you really need to get out of bonds if you are holding them in your portfolio (see: http://www.zerohedge.com/news/2016-12-1 ... h-30-highs" onclick="window.open(this.href);return false;). More than a year ago there was a discussion on this forum about the stock market collapsing (didn't happen). I mentioned that IMO there would be no collapse in equities, that the next collapse would be in the bond market. The bond market is much larger than the equities market. That's your G20 moment, your #@!*& moment when you realize you should have reduced your debt load and bought down.

To reiterate what I've said previously I think we see the EU coming apart, the $EURO collapsing, then the Japanese $YEN, then the $USD. As the $USD rises it will be hard for manufacturers to sell their products (and a devaluation could occur). And developing countries will have a very hard time (read default) paying back their debts procured in $USD's.
So the $60k question: where do YOU think you should put your money?
"The interesting thing about our age is that not many people are really fooled – we are going into perdition with our eyes open; the separation of the tares and the wheat is to be strictly a free-will affair."

Hugh Nibley

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Mark
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Re: Financial Reserve

Postby Mark » Tue Dec 13, 2016 11:48 am

iWriteStuff wrote:
dlbww wrote:http://www.zerohedge.com/news/2016-12-1 ... r-50-years

I think Eric Peters is mostly right with his forecast. This should give you a good idea of how (you choose) to approach this scenario.

And you really need to get out of bonds if you are holding them in your portfolio (see: http://www.zerohedge.com/news/2016-12-1 ... h-30-highs" onclick="window.open(this.href);return false;). More than a year ago there was a discussion on this forum about the stock market collapsing (didn't happen). I mentioned that IMO there would be no collapse in equities, that the next collapse would be in the bond market. The bond market is much larger than the equities market. That's your G20 moment, your #@!*& moment when you realize you should have reduced your debt load and bought down.

To reiterate what I've said previously I think we see the EU coming apart, the $EURO collapsing, then the Japanese $YEN, then the $USD. As the $USD rises it will be hard for manufacturers to sell their products (and a devaluation could occur). And developing countries will have a very hard time (read default) paying back their debts procured in $USD's.
So the $60k question: where do YOU think you should put your money?

Now that's scary! I just finished putting 60k aside for a cash reserve. You must be psychic iwrite. I better pay attention. :)) Actually I told dlbww years ago that when the collapse occurs I want to be his neighbor to enjoy the bounties of his harvest he has been reaping over the past few years. He still hasn't responded to that request. :-s
You are a true nothing Mark.

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Re: Financial Reserve

Postby dlbww » Tue Dec 13, 2016 12:28 pm

iWriteStuff wrote:
dlbww wrote:http://www.zerohedge.com/news/2016-12-1 ... r-50-years

I think Eric Peters is mostly right with his forecast. This should give you a good idea of how (you choose) to approach this scenario.

And you really need to get out of bonds if you are holding them in your portfolio (see: http://www.zerohedge.com/news/2016-12-1 ... h-30-highs" onclick="window.open(this.href);return false;). More than a year ago there was a discussion on this forum about the stock market collapsing (didn't happen). I mentioned that IMO there would be no collapse in equities, that the next collapse would be in the bond market. The bond market is much larger than the equities market. That's your G20 moment, your #@!*& moment when you realize you should have reduced your debt load and bought down.

To reiterate what I've said previously I think we see the EU coming apart, the $EURO collapsing, then the Japanese $YEN, then the $USD. As the $USD rises it will be hard for manufacturers to sell their products (and a devaluation could occur). And developing countries will have a very hard time (read default) paying back their debts procured in $USD's.
So the $60k question: where do YOU think you should put your money?
Well you're certainly not the only person thinking about that considering the volatility of the markets, failing pension funds, rising taxation, the general feeling of uncertainty that pervades the masses, etc.

This scripture comes to mind: "For I will, saith the Lord, that they shall hide up their treasures unto me; and cursed be they who hide not up their treasures unto me; for none hideth up their treasures unto me save it be the righteous; and he that hideth not up his treasures unto me, cursed is he, and also the treasure, and none shall redeem it because of the curse of the land." (Helaman 13:19) And I think within that scripture is the key to your question (which I'm still trying to figure out myself).

I think we are going to be seeing capital move from one asset class to another very quickly (no asset class will be safe). This will create wild swings in the market. e.g. gold stocks had a good move over the past year but now they're in a correction mode (Armstrong says gold's heading back down to $1000/oz.).

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Re: Financial Reserve

Postby iWriteStuff » Tue Dec 13, 2016 12:59 pm

dlbww wrote:
iWriteStuff wrote:
dlbww wrote:http://www.zerohedge.com/news/2016-12-1 ... r-50-years

I think Eric Peters is mostly right with his forecast. This should give you a good idea of how (you choose) to approach this scenario.

And you really need to get out of bonds if you are holding them in your portfolio (see: http://www.zerohedge.com/news/2016-12-1 ... h-30-highs" onclick="window.open(this.href);return false;). More than a year ago there was a discussion on this forum about the stock market collapsing (didn't happen). I mentioned that IMO there would be no collapse in equities, that the next collapse would be in the bond market. The bond market is much larger than the equities market. That's your G20 moment, your #@!*& moment when you realize you should have reduced your debt load and bought down.

To reiterate what I've said previously I think we see the EU coming apart, the $EURO collapsing, then the Japanese $YEN, then the $USD. As the $USD rises it will be hard for manufacturers to sell their products (and a devaluation could occur). And developing countries will have a very hard time (read default) paying back their debts procured in $USD's.
So the $60k question: where do YOU think you should put your money?
Well you're certainly not the only person thinking about that considering the volatility of the markets, failing pension funds, rising taxation, the general feeling of uncertainty that pervades the masses, etc.

This scripture comes to mind: "For I will, saith the Lord, that they shall hide up their treasures unto me; and cursed be they who hide not up their treasures unto me; for none hideth up their treasures unto me save it be the righteous; and he that hideth not up his treasures unto me, cursed is he, and also the treasure, and none shall redeem it because of the curse of the land." (Helaman 13:19) And I think within that scripture is the key to your question (which I'm still trying to figure out myself).

I think we are going to be seeing capital move from one asset class to another very quickly (no asset class will be safe). This will create wild swings in the market. e.g. gold stocks had a good move over the past year but now they're in a correction mode (Armstrong says gold's heading back down to $1000/oz.).
Didn't Armstrong also predict that "they" would assassinate Trump if it looked like he would win?

http://www.silverdoctors.com/headlines/ ... ald-trump/" onclick="window.open(this.href);return false;

And that the DOW would hit 40k?

http://www.silverdoctors.com/headlines/ ... armstrong/" onclick="window.open(this.href);return false;

And that the Brexit vote would fail?

http://www.silverdoctors.com/headlines/ ... -be-fixed/" onclick="window.open(this.href);return false;

And last year he was saying that gold is going to $5,000/oz, not below $1,000/oz as he says this year:

http://www.silverdoctors.com/gold/gold- ... per-ounce/" onclick="window.open(this.href);return false;

In short, I'm not terribly convinced he's any better than any other analyst out there.....
"The interesting thing about our age is that not many people are really fooled – we are going into perdition with our eyes open; the separation of the tares and the wheat is to be strictly a free-will affair."

Hugh Nibley

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dlbww
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Re: Financial Reserve

Postby dlbww » Tue Dec 13, 2016 1:24 pm

Armstrong has his own opinions (and he posts them in this blog) and he has his computer model. You need to distinguish between the two. e.g. he thought the Brexit vote would fail but 3 out of 4 models that his computer ran said Brexit would win. He said "they" would try and do anything/everything to prevent Trump getting elected, his computer model doesn't forecast that stuff. I follow his model for investment advice, his opinions are just that, his opinions.

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Re: Financial Reserve

Postby iWriteStuff » Tue Dec 13, 2016 1:35 pm

I can't forecast the future, especially not with the FOMC up on deck tomorrow. But I can say this - when things are most uncertain, I take chips off the table. Moving positions to cash again today after a tidy little profit. I've got some long positions I'll keep open, but the volatility I'm expecting tomorrow isn't the kind of thing I want to encounter without a bit of dry powder on hand to buy dips.
"The interesting thing about our age is that not many people are really fooled – we are going into perdition with our eyes open; the separation of the tares and the wheat is to be strictly a free-will affair."

Hugh Nibley

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Re: Financial Reserve

Postby dlbww » Wed Dec 14, 2016 12:04 am

I don't think any decision the FOMC makes is going to change the direction of bonds or equities, I think it's too late, I think Mr. Market will decide that on his own. I think every investor has his own strategy, my strategy is to follow people who are smarter than myself that have a lot more experience and a lot more time to spend watching BNN (Canadian Business News Network). And rule number 1 and 2 of investing have been drilled into my head by one of those more experienced investors; rule no. 1, never lose money, rule no. 2, never forget rule no.1. There that's it there's my investment strategy.

And just so you know I'm not adverse to investing in the gold market, I just sold off most of my paper gold holdings and took my profits. The Farmer's Almanac said we would get a cold winter (looks like they're right), combine that with low rig count, low natgas prices, tax loss selling, a beaten down natgas stock and .... natgas is my new gold (at least until the end of February).

However the $60K question is still a perplexing one ("where should you put your money?"). I suppose we could narrow down the list by first stating where (IMO) we should not invest money currently. That would be residential real estate in the suburbs, $CDN currency (for my fellow Canadians on this forum; I think it's heading much lower as the $USD rises), the bond market (bonds lose value as interest rates rise), the gold market (unless you're a perma-bull; gold will decline as the $USD rises), etc.

And so where should you put your money? Pay off/down the mortgage (rising interest rates are going to cost you), invest in things that you buy every day that keep going up in price like food, or things that could become scarce or valuable in the future that could be traded for things you might need that you forgot to stock up on, invest in yourself (take some courses, broaden your education, learn a new skill or trade), start your own business, etc. Perhaps invest in a dividend paying oil stock so when the prices start rising again your dividend can help offset the price at the pump; the world still runs on oil, about 100 million barrels of the stuff each and every day and climbing. And you thought we were going green. That's just a lie the establishment tells people to make them feel good.

That's my partial list. Hope it helped.

https://www.armstrongeconomics.com/mark ... r-14-2016/" onclick="window.open(this.href);return false;
https://www.armstrongeconomics.com/worl ... d-in-2014/" onclick="window.open(this.href);return false;

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Re: Financial Reserve

Postby Silver » Thu Dec 15, 2016 10:01 am

Now is a great time to buy some really nice elements to add to your financial reserve.

https://www.providentmetals.com/" onclick="window.open(this.href);return false;
As a prophet reveals the truth it divides the people. (T)he worldly either want to close the mouth of the prophet, or else act as if the prophet didn’t exist, rather than repent of their sins. Popularity is never a test of truth. Ezra Taft Benson

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Re: Financial Reserve

Postby iWriteStuff » Thu Dec 15, 2016 2:46 pm

Silver wrote:Now is a great time to buy some really nice elements to add to your financial reserve.

https://www.providentmetals.com/" onclick="window.open(this.href);return false;
Remember when I said we had another 5% to go?

I hate being right.

Bargain time at the bullion shop though!
"The interesting thing about our age is that not many people are really fooled – we are going into perdition with our eyes open; the separation of the tares and the wheat is to be strictly a free-will affair."

Hugh Nibley

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Re: Financial Reserve

Postby Silver » Thu Dec 15, 2016 9:14 pm

If you want to protect your financial reserve, diversification is a good concept to practice. Ask yourself:

How reliant am I on a fiat currency that is currently the world reserve currency?

What will happen to the value of your assets and your income stream if the US$ loses its world reserve currency status?

What do I know about current sales trends of US Government debt?

Here's some concerning news:
http://www.zerohedge.com/news/2016-12-1 ... illion-us-" onclick="window.open(this.href);return false;

One month ago, when we last looked at the Fed's update of Treasuries held in custody, we noted something troubling: the number had continued to drop sharply, declining by another $14 billion in one week, and pushing the total amount of custodial paper to $2.788 trillion, the lowest since 2012. One month later, we refresh this chart and find that in last week's update, there is finally some good news: foreign central banks finally bought some US paper held in the Fed's custody account, which following months of liquidation, rose over the past two weeks by $23 billion, the biggest two-week advance since November of 2016, pushing the total amount of custodial paper to $2.816 trillion, the highest since early October.



That was the good news, and we use the term loosely in as much as the custody account can be used as a proxy of foreign buying, which according to most rates watchers, it can.

The bad news came out with the release of latest monthly Treasury International Capital data for the month of October, which showed that the troubling trend presented one month ago, has accelerated to an unprecedented degree.

Recall that in mid-November, we reported that in the latest 12 months we observed a record $375 billion in Treasury selling by foreign central banks in the period August 2015-September 2016, something unprecedented in size.

Fast forward to today when in the latest monthly update for the month of October, we find that what until a month ago was "merely" a record $375 billion in offshore central bank sales in the LTM period ending September 30 has, one month later, risen to a new all time high $403 billion in Treasuries sold in the past 12 months.

As the chart below shows, there has never been such an aggressive selling of US Treasuries over a 12 month period in history.



The biggest seller, and keep in mind that TIC data is on a market-price adjusted basis, was once again was China, which in October "sold" a record $41 billion in US paper (the actual underlying number while different, as this particular series is adjusted for Mark to Market variations, will be similar), and a massive $125 billion in the last 4 months, bringing its total Treasury holdings to just $1.116 trillion, the lowest amount of US paper held by Beijing since 2010. In the process, China has now been overtaken by Japan for the top US creditor position in terms of total holdings with $1.132 trillion, for just the second time.



It wasn't just China: Belgium, which has long been rumored to be the venue where China's keeps its "secret" offshore Treasury holdings couretsy of Euroclear, also dumped its TSY holdings, and in October its stated holdings (which again have to be adjusted for MTM), tumbled from $143Bn to $117Bn, the lowest since the summer of 2015.



Furthermore, as we have shown previously, when superimposing China and Belgium's holdings together, these tend to allign almost perfectly with the monthly change in Chinese reserves, which as reported before, have been declining sharply in recent months as a result of China's aggressive attempts to prevent a sharp devaluation of the Yuan. This can be seen on the chart below, and confirms that at least when it comes to China, the reason for the selling of Treasurys has been due to reserve liquidation.



As we pointed out one month ago, what has become increasingly obvious is that both foreign central banks, sovereign wealth funds, reserve managers, and virtually every other official institution in possession of US paper, is liquidating their holdings at a disturbing pace, something which in light of the recent surge in yields to over 2 year highs, appears to have been a prudent move.

In some cases, like China, this is to offset devaluation pressure; in others such as Saudi Arabia and other petroleum exporting nations, it is to provide the funds needed to offset the drop in the petrodollar, and to backstop the country's soaring budget deficit. In all cases, it may suggest concerns about a spike in future debt issuance by the US, especially now under the pro-fiscal stimulus Trump administration.

So who are they selling to? The answer, at least until August, was private demand, in other words just like in the stock market the retail investor is the final bagholder, so when it comes to US Treasuries, "private investors" both foreign and domestic are soaking up hundreds of billions in central bank holdings. As we said two months ago when we observed this great rotation in Treasuries out of official holders into private hands, "we wonder if they would [keep buying] knowing who is selling to them." Well, last month this changed, and after private investors had been happily snapping up bonds for 4 straight months, in September "other foreign investors" sold a whopping $31 billion, bringing the total outflow between public and private foreign holdings to $76.6 billion, the second highest number on record. In October, while foreign official entities sold another $45 billion, at least the pace of selling by private entities moderated somewhat, to "only" $18.3 billion.

Meanwhile, while just four months ago yields had tumbled to near all time lows, suddenly the picture is inverted, and long-yields are surging on concerns that not only will the ECB and the BOJ soon taper their purchases of the long end, but that Donald Trump is about to unleash a $1 trillion debt tsunami at a time when the Fed will not be available to monetize it, now that the Fed is again hiking rates.

While it is unclear under what conditions foreign buyers may come back - after all TSY rates have already jumped high enough to where US paper should be more than attractive to foreign official institutions - one thing is clear: as of this moment the selling strike not only continues but is accelerating, and should the foreign liquidation of Treasuries fail to slow, Yellen will soon have to plan how to not only abort the current rate experiment which continues to pressure yields higher around the globe, but to start thinking how to launch QE4 instead.
As a prophet reveals the truth it divides the people. (T)he worldly either want to close the mouth of the prophet, or else act as if the prophet didn’t exist, rather than repent of their sins. Popularity is never a test of truth. Ezra Taft Benson

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Re: Financial Reserve

Postby Silver » Thu Dec 15, 2016 11:15 pm

http://www.zerohedge.com/news/2016-12-1 ... your-bonds" onclick="window.open(this.href);return false;

So, Trump has won the election. Of course anything can happen between now and his presumed inauguration on January 20. Maybe the Swamp Creatures will succeed in causing a recount in so-called Purple States that could change the number of electors in Hillary’s favor. Maybe they’ll somehow influence Trump electors to vote for Hillary. None of this would have been an issue if Baby Bush II, Jeb, had been the Republican nominee, as was supposed to have happened. It all just shows what a transparent (a word these people love to use) fraud “democracy” has become.

Let the hoi polloi cast a meaningless vote, so they have the illusion of being in control. Instead of seeing themselves as subjects, they’ll think they’re “we the people,” who actually have some say in what happens. That way they’ll pay their taxes willingly, enthusiastically sign on to aggressive wars on the other side of the world against people they know nothing about, and generally do as they’re told. Because it’s supposed to be patriotic. “Democracy” is a much more effective scam for controlling the plebs than kingship or dictatorship.

That said, the Establishment, the Deep State, was genuinely shocked and appalled by Trump’s victory. As Baby Bush the First would have said, they misunderestimated how angry the average voter was. That’s because the Coastal Democratic Elite are totally out of touch with the common man. But they needn’t fret too much. They’ll be re-installed, with a vengeance, in four years.

That will likely be true for two reasons:

Simple demographics. The groups that vote Democrat (e.g., blacks, Hispanics, urban dwellers, immigrants, Millennials) are growing in numbers faster than those who vote Republican. Republicans are older people, and the Boomers (born 1946–1966) and the Silent Generation (1926–1946) are dying off. More people are moving to the cities, and that influences them to vote Democratic. More people (still, idiotically) are pursuing higher education, and that also influences them to vote Democrat.

The Greater Depression. One definition of a depression is a period of time when distortions and misallocations of capital are liquidated. A time when bubbles caused by monetary expansion are popped. A time when unsound businesses fail. I re-emphasize this because the party on whose watch it happens is automatically kicked out. So, the Democrats actually got quite lucky not to be in office when the time bomb goes off. Trump could easily go down as Herbert Hoover II.

What could change things? A serious war, much bigger than the sport wars the US is currently engaged in, is the biggest danger. That’s much less likely with Trump than Hillary, but these things have a life of their own. My guess for the next president is either a left-wing general (because Americans love and trust their military), or a left-wing populist, like Elizabeth Warren.

But that’s crystal balling at this point. Let’s proceed on the assumption Trump is actually going to be the president for at least the next four years. Although problematical, he’s a vast improvement over Hillary. What will it mean for the US and the world? More importantly, what will it mean for your personal finances and freedom? Let’s look at the possibilities.

Bonds—With bonds, we’re at the peak of the biggest financial bubble in world history. This is a very big deal.

Interest rates move in very long cycles. They went up from the mid-1940s to the early ’80s, when long-term government bonds peaked at close to 16%, and T-Bills at over 16%. I thought they hit bottom years ago, but the cycle overshot.

My guess is that they’re headed up in earnest now. And Trump, as someone who understands business (even though he doesn’t understand economics), will likely (I think…) do what he can to send them higher. Why? He understands the country needs to save, to rebuild capital. And higher rates will encourage saving and discourage debt.

The risk is that, with all the debt that’s been put on in the last decade, debtors will be hard-pressed to service it. That includes the USG with $20 trillion of on-balance-sheet debt, and a lot more in the way of off-balance-sheet debt, guarantees, and contingent liabilities. Much of it will be activated if higher rates cause a lot of defaults.

What should you do? Sell all your bonds.

Real Estate—Property, at least in the English-speaking world, floats on a sea of debt. Interest rates go up, real estate prices go down. The economy goes down, so do property prices. Add to that the aging US population, which isn’t good for property; as people age, they downsize. Add to that the fact we’re in another real estate bubble, similar to what we saw in the mid-oughts. After bonds, property is likely the worst place to be. In fact, I’ll go so far as to say the great post–World War II property boom is at an end—but that’s a subject for another time. There’s not much that Trump can do to fix this.

What should you do? Lighten up on property. Make sure any mortgages you keep are at fixed rates.

Stocks—If Trump only follows through with his promise to cut taxes, and eliminate two old regulations for every new one, it would be wonderful for the economy. But the economy and the stock market are two different things; they only correlate over the long run. I suppose he’ll follow through with his promise to build lots of new infrastructure. Government deficits will soar, and only the Fed will be on hand to buy all that new debt.

Infrastructure companies will get a fat slug of the newly printed money. But I find it hard to get enthusiastic for the stock market. In terms of dividends, P/E ratios, or book value, it’s already at one of the highest levels ever. Bear in mind that well-selected stocks can still go up, even if the market as a whole goes down.

That said, I feel more comfortable with shorts than longs at this point.

Gold and Commodities—Frankly, where do you put your money when almost everything is overpriced? Commodities are coming out of a five-year-long bear market. They’re about the only thing that’s cheap. That’s true relative to their cost of production (farmers, ranchers, and miners are breaking even, at best, all over the world). And it’s true relative to their history (they’re down 50% from the peak of 2011).

In other words, commodities are a much safer place for your capital than stocks, bonds, or real estate (excepting agricultural property) for the foreseeable future. The problem is that it’s hard to hold a carload of wheat or ten tonnes of sugar.

Remember that gold and other commodities aren’t “investments.” An investment is something that acts to create new wealth. They’re simply assets. Sometimes they can be excellent speculations. Gold, however, is money, and will remain so long after the US destroys its currency.

I recommend, therefore, that you accumulate gold and silver instead of plunging into conventional investments. Check with the dealers we list in The Gold Book to see who you prefer to work with. [Editor's note: The Gold Book is exclusive to readers of The Casey Report, which you can sign up for at the end of today's essay.] But if you don’t have a significant position in the metals already, please get going.
A final thought. It’s usually a mistake to count on any head of state to make things in a country better. It can certainly happen—as with Erhard in Germany after WW2, Pinochet in Chile, Thatcher in Britain, or even Reagan in the US. Maybe it will be true of Trump. He’s got a much stronger personality than Reagan, for openers. But the bigger and older a State gets, the harder it is to change. It’s comparable to trying to stop a fully loaded supertanker.
As a prophet reveals the truth it divides the people. (T)he worldly either want to close the mouth of the prophet, or else act as if the prophet didn’t exist, rather than repent of their sins. Popularity is never a test of truth. Ezra Taft Benson

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Re: Financial Reserve

Postby Silver » Fri Dec 16, 2016 12:07 pm

If you're new to the idea of owning precious metals you may be unaware that the prices are manipulated. Luckily, what was once done in the darkness is now shouted from the rooftops. We know the perfidy of the big banks. The banks are suppressing the price. That's right, to make paper currencies look stronger, the price of real money is squashed.

The point is that now might be a good idea for you to add a beautiful element created by Jehovah to your financial reserve.

http://www.zerohedge.com/news/2016-12-1 ... e-whack-it" onclick="window.open(this.href);return false;
As a prophet reveals the truth it divides the people. (T)he worldly either want to close the mouth of the prophet, or else act as if the prophet didn’t exist, rather than repent of their sins. Popularity is never a test of truth. Ezra Taft Benson

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Re: Financial Reserve

Postby iWriteStuff » Fri Dec 16, 2016 3:49 pm

Silver wrote:If you're new to the idea of owning precious metals you may be unaware that the prices are manipulated. Luckily, what was once done in the darkness is now shouted from the rooftops. We know the perfidy of the big banks. The banks are suppressing the price. That's right, to make paper currencies look stronger, the price of real money is squashed.

The point is that now might be a good idea for you to add a beautiful element created by Jehovah to your financial reserve.

http://www.zerohedge.com/news/2016-12-1 ... e-whack-it" onclick="window.open(this.href);return false;
Not to mention it's shiny and fun to look at, circa
imshiny.jpg
imshiny.jpg (68.96 KiB) Viewed 4659 times
"The interesting thing about our age is that not many people are really fooled – we are going into perdition with our eyes open; the separation of the tares and the wheat is to be strictly a free-will affair."

Hugh Nibley

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Re: Financial Reserve

Postby Silver » Tue Dec 20, 2016 9:14 am

An example of how badly government can mess us your lives. The danger is believing it won't happen wherever you live.

http://www.zerohedge.com/news/2016-12-2 ... lice-state" onclick="window.open(this.href);return false;

India’s Currency Ban – Part VI
India’s Prime Minister, Narendra Modi, announced on 8th November 2016 that Rs 500 (~$7.50) and Rs 1,000 (~$15) banknotes would no longer be legal tender. Linked are Part-I, Part-II, Part-III, Part-IV, and Part-V, which provide updates on the demonetization saga and how Modi is acting as a catalyst to hasten the rapid degradation of India and what remains of its institutions.
As a prophet reveals the truth it divides the people. (T)he worldly either want to close the mouth of the prophet, or else act as if the prophet didn’t exist, rather than repent of their sins. Popularity is never a test of truth. Ezra Taft Benson

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Re: Financial Reserve

Postby Silver » Tue Dec 27, 2016 1:49 pm

If the government or the elites (but I repeat myself) don't want you to have something, it's probably a good idea to own some. And look how easily they can call you a terrorist now.

http://www.zerohedge.com/news/2016-12-2 ... -financing" onclick="window.open(this.href);return false;

"Hot on the heels of China gold import restrictions, and India's demonetization and gold confiscations, The European Commission proposed tightening controls on cash and precious metals transfers from outside the EU under the guise of shutting down one route for funding of militant attacks on the continent, following the Berlin Christmas attack.

China has already begun de facto gold import restrictions, and as Jayant Bhandari detailed previously, India is experiencing a continuation of new social engineering notifications, each sabotaging wealth-creation, confiscating people’s wealth, and tyrannizing those who refuse to be a part of the herd, in the process destroying the very backbone of the economy and civilization. There are clear signs that in a very convoluted way, possession of gold for investment purposes will be made illegal. Expect capital controls to follow.

And now, as Reuters reports, it appears last Monday's attack on a Christmas market in Berlin, where 12 people were killed as a truck ploughed into a crowd, has given The European Commission just the excuse to tighten capital controls - specifically cash and precious metals - into and out of Europe.

It is part of an EU "action plan against terrorist financing" unveiled after the bombings and shootings in Paris in November 2015.

Under the new proposals, customs officials in European Union states can step up checks on cash and prepaid payment cards sent by post or in freight shipments.

Authorities will also be able to seize cash or precious metals carried by suspect individuals entering the EU.

People carrying more than 10,000 euros (8,413.56 pounds) in cash already have to declare this at customs when entering the EU. The new rules would allow authorities to seize money below that threshold "where there are suspicions of criminal activity," the EU executive commission said in a note.

EU officials said some of the recent attacks in Europe were carried out with limited funds, sometimes sent from outside the EU by criminal networks.
The Commission is also considering whether to set up an EU-focussed "terrorist finance tracking programme" along the lines of the U.S.-EU TFTP, which has long been opposed by EU lawmakers and privacy campaigners because it allows widespread checks on consumers' bank transfers.

The plan complements Commission proposals after the Paris attacks to tighten controls on virtual currencies such as bitcoin, and prepaid cards, which French authorities said were used to fund the bombings.

EU states backed these proposals on Tuesday. Under the deal, which still needs European Parliament approval, holders of prepaid cards would have to show some form of identity when they make payments of 150 euros or more.
But it gets better...

The Commission is also proposing common rules for the 28 EU countries on freezing "terrorists' financial resources" and on confiscating assets even from those thought to be connected to criminals.

So - cash, bitcoin, precious metals, and prepaid cards over $150 are all instruments of the "terrorists" and are now open to confiscation if you are a suspicious person... which, by their rhetoric, you are if you actually hold any of these assets."
As a prophet reveals the truth it divides the people. (T)he worldly either want to close the mouth of the prophet, or else act as if the prophet didn’t exist, rather than repent of their sins. Popularity is never a test of truth. Ezra Taft Benson

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Re: Financial Reserve

Postby iWriteStuff » Wed Dec 28, 2016 1:24 pm

Silver wrote: So - cash, bitcoin, precious metals, and prepaid cards over $150 are all instruments of the "terrorists" and are now open to confiscation if you are a suspicious person... which, by their rhetoric, you are if you actually hold any of these assets."
hmmmm 1) cash 2) bitcoin 3) precious metals and 4) prepaid cards. Kinda sounds like banks are a terrorist network.
"The interesting thing about our age is that not many people are really fooled – we are going into perdition with our eyes open; the separation of the tares and the wheat is to be strictly a free-will affair."

Hugh Nibley

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Re: Financial Reserve

Postby iWriteStuff » Tue Jan 03, 2017 10:00 am

holy banana oil, Silver is up 3% today! I guess the Christmas sale is over now :(

The good news is it won't be long until stocks are cheap again! :ymparty:
"The interesting thing about our age is that not many people are really fooled – we are going into perdition with our eyes open; the separation of the tares and the wheat is to be strictly a free-will affair."

Hugh Nibley

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Re: Financial Reserve

Postby iWriteStuff » Tue Jan 03, 2017 1:36 pm

dlbww wrote: And just so you know I'm not adverse to investing in the gold market, I just sold off most of my paper gold holdings and took my profits. The Farmer's Almanac said we would get a cold winter (looks like they're right), combine that with low rig count, low natgas prices, tax loss selling, a beaten down natgas stock and .... natgas is my new gold (at least until the end of February).
Curious how your natural gas holdings are doing.... Word on the street is natural gas took a beating today, down 11%. Gold and silver seem to be bucking the dollar spike and rising anyway.... Probably helped by dropping treasury yields and institutional portfolio rebalancing at year end/tax time.
"The interesting thing about our age is that not many people are really fooled – we are going into perdition with our eyes open; the separation of the tares and the wheat is to be strictly a free-will affair."

Hugh Nibley

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Re: Financial Reserve

Postby dlbww » Tue Jan 03, 2017 6:56 pm

iWriteStuff wrote:
dlbww wrote: And just so you know I'm not adverse to investing in the gold market, I just sold off most of my paper gold holdings and took my profits. The Farmer's Almanac said we would get a cold winter (looks like they're right), combine that with low rig count, low natgas prices, tax loss selling, a beaten down natgas stock and .... natgas is my new gold (at least until the end of February).
Curious how your natural gas holdings are doing.... Word on the street is natural gas took a beating today, down 11%. Gold and silver seem to be bucking the dollar spike and rising anyway.... Probably helped by dropping treasury yields and institutional portfolio rebalancing at year end/tax time.
Yeah I saw that this morning. Good thing I wasn't buying an ETF although I think natgas is going higher in the long term (see: http://business.financialpost.com/fp-co ... al-warming" onclick="window.open(this.href);return false;). I bought a beaten down single stock that looked like it was ready to rise after tax selling was done. Closed today up 34.4%, my plan is to hold it until late winter then re-evaluate (I'm looking for a double), there didn't seem to be much of a downside risk so I violated my 5% rule. If it doubles I'll sell half and hold the rest.

I still think gold has a downside risk of $1000 $USD. It will have it's day but not quite yet. Instead I invested in more lead for my main varmint rifle, I think that was a better purchase since I can always eat what I shoot. Happy New Year.

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Re: Financial Reserve

Postby dlbww » Tue Jan 03, 2017 10:54 pm

Now where are you going to park that "Financial Reserve"? https://www.armstrongeconomics.com/worl ... nic-money/" onclick="window.open(this.href);return false;

This is about taxes, nothing more. I'm starting to wonder if physical PM's even have a place in the future. The last thing governments want is a parallel system to compete with their tax everything program. And will this be a problem since gold and silver are guaranteed as legal tender under the USA constitution? Don't know. Perhaps those reserves would be better served parked in usable assets? At least in the short term as we eventually give control/power to the beast.

And I'll add this for those who have a 401K: https://www.armstrongeconomics.com/worl ... -way-2017/" onclick="window.open(this.href);return false;

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Re: Financial Reserve

Postby Silver » Wed Jan 04, 2017 3:46 pm

http://www.zerohedge.com/news/2017-01-0 ... 7-trillion" onclick="window.open(this.href);return false;

Debt isn't money although some treat it that way in spicing up their lifestyle. Pay thy debt and live, said the ancient prophet.

I'll stick with the beautiful elements from the earth as my financial reserve, even it means getting hassled by the gubmint.
As a prophet reveals the truth it divides the people. (T)he worldly either want to close the mouth of the prophet, or else act as if the prophet didn’t exist, rather than repent of their sins. Popularity is never a test of truth. Ezra Taft Benson

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Re: Financial Reserve

Postby dlbww » Tue Jan 10, 2017 9:41 am

This piece by Martin Armstrong suggests assets besides gold and silver may be a better hedge when this whole system goes down: https://www.armstrongeconomics.com/hist ... ellations/" onclick="window.open(this.href);return false;

Some of my financial reserves are in the equities market and I actively trade. Some have suggested this isn't wise and that the stock market is on the brink of collapse. I invest in commodities, banks, utility companies, mainly dividend paying stocks, etc. if all those things go to zero then the world has ended and we're back to trading food, seeds, ammunition and yes ... shovels.

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Re: Financial Reserve

Postby Silver » Tue Jan 10, 2017 10:12 am

dlbww wrote:This piece by Martin Armstrong suggests assets besides gold and silver may be a better hedge when this whole system goes down: https://www.armstrongeconomics.com/hist ... ellations/" onclick="window.open(this.href);return false;

Some of my financial reserves are in the equities market and I actively trade. Some have suggested this isn't wise and that the stock market is on the brink of collapse. I invest in commodities, banks, utility companies, mainly dividend paying stocks, etc. if all those things go to zero then the world has ended and we're back to trading food, seeds, ammunition and yes ... shovels.
I think you mean when all those things go to zero then the world has ended and we're back to trading food, seeds, ammunition and yes ... shovels.

Personally, I don't trade in stocks (or any paper/digital based) asset, but others may find it quite profitable. The Church's advice is a year of food storage. I've added a bit more to have some to share. If things are end of the world bad, then I guess we'll see if my target practice pays off.

I did like the brief history of coin debasement at the link you provided. The gubmint giveth and the gubmint taketh away.

Reminder to self: get some more shovels (and bury them so the gubmint won't confiscate them. Wait a sec, how am I going to fill in a hole with all my shovels at the bottom of the hole?)
As a prophet reveals the truth it divides the people. (T)he worldly either want to close the mouth of the prophet, or else act as if the prophet didn’t exist, rather than repent of their sins. Popularity is never a test of truth. Ezra Taft Benson

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Re: Financial Reserve

Postby brianj » Tue Jan 10, 2017 12:22 pm

Silver wrote:Reminder to self: get some more shovels (and bury them so the gubmint won't confiscate them. Wait a sec, how am I going to fill in a hole with all my shovels at the bottom of the hole?)
Simple! Bury them in the kids' sandbox in you backyard. A cheap shovel, a garden trowel, or even your hands will suffice to dig the good ones out!

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Re: Financial Reserve

Postby tribrac » Tue Jan 10, 2017 3:45 pm

Something in teh back of my mind is saying burying your treasures won't work....unless it is a sword.
Never dismiss a generous thought.

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Re: Financial Reserve

Postby Silver » Thu Jan 12, 2017 2:24 pm

India, the guinea pig

http://www.zerohedge.com/news/2017-01-1 ... ng-most-ca" onclick="window.open(this.href);return false;

Preface: Washington's Blog reached out to Dr. Haering after reading several excellent articles on India's cash ban. Dr. Haering then combined the information into a single article for us. We lightly edited the article for spelling and grammar.



By Norbert Haering, a German financial journalist, blogger and PhD economist, who received the 2007 getAbstract Best Business Book award and the 2014 prize of the German Keynes Society for economic journalism. His best-selling book (in German) “The abolition of cash and the consequences” was published in 2016. Originally published on norberthaering.de (http://norberthaering.de/en/home/27-ger ... e-in-india" onclick="window.open(this.href);return false;). Republished with permission of the author.

In early November, without warning, the Indian government declared the two largest denomination bills invalid, abolishing over 80 percent of circulating cash by value. Amidst all the commotion and outrage this caused, nobody seems to have taken note of the decisive role that Washington played in this. That is surprising, as Washington’s role has been disguised only very superficially.

U.S. President Barack Obama has declared the strategic partnership with India a priority of his foreign policy. China needs to be reined in. In the context of this partnership, the US government’s development agency USAID has negotiated cooperation agreements with the Indian ministry of finance. One of these has the declared goal to push back the use of cash in favor of digital payments in India and globally.

On November 8, Indian prime minster Narendra Modi announced that the two largest denominations of banknotes could not be used for payments any more with almost immediate effect. Owners could only recoup their value by putting them into a bank account before the short grace period expired at year end, which many people and businesses did not manage to do, due to long lines in front of banks. The amount of cash that banks were allowed to pay out to individual customers was severely restricted. Almost half of Indians have no bank account and many do not even have a bank nearby. The economy is largely cash based. Thus, a severe shortage of cash ensued. Those who suffered the most were the poorest and most vulnerable. They had additional difficulty earning their meager living in the informal sector or paying for essential goods and services like food, medicine or hospitals. Chaos and fraud reigned well into December.

Four weeks earlier

Not even four weeks before this assault on Indians, USAID had announced the establishment of “Catalyst: Inclusive Cashless Payment Partnership”, with the goal of effecting a quantum leap in cashless payment in India. The press statement of October 14 says that Catalyst “marks the next phase of partnership between USAID and Ministry of Finance to facilitate universal financial inclusion”. The statement does not show up in the list of press statements on the website of USAID (anymore?). Not even filtering statements with the word “India” would bring it up. To find it, you seem to have to know it exists, or stumble upon it in a web search. Indeed, this and other statements, which seemed rather boring before, have become a lot more interesting and revealing after November 8.

Reading the statements with hindsight it becomes obvious, that Catalyst and the partnership of USAID and the Indian Ministry of Finance, from which Catalyst originated, are little more than fronts which were used to be able to prepare the assault on all Indians using cash without arousing undue suspicion. Even the name Catalyst sounds a lot more ominous, once you know what happened on November 9.

Catalyst’s Director of Project Incubation is Alok Gupta, who used to be Chief Operating Officer of the World Resources Institute in Washington, which has USAID as one of its main sponsors. He was also an original member of the team that developed Aadhaar, the Big-Brother-like biometric identification system.

According to a report of the Indian Economic Times, USAID has committed to finance Catalyst for three years. Amounts are kept secret.

Badal Malick was Vice President of India’s most important online marketplace Snapdeal, before he was appointed as CEO of Catalyst. He commented:

“Catalyst’s mission is to solve multiple coordination problems that have blocked the penetration of digital payments among merchants and low-income consumers. We look forward to creating a sustainable and replicable model…. While there has been … a concerted push for digital payments by the government, there is still a last mile gap when it comes to merchant acceptance and coordination issues. We want to bring a holistic ecosystem approach to these problems.”

Also in September, McKinsey Global Institute issued a report titled “How digital finance could boost growth in emerging economies”. The authors acknowledged “collaboration with the Financial Services for the Poor team at the Bill & Melinda Gates Foundation”. They thanked more than ten Gates Foundation (BTCA) people for contribution to the report, including Gates Foundation’s India head Nachiket Mor, whom we will meet again later. The Gates Foundation and USAID are key members of a Better Than Cash Alliance, which we will also look at more closely. In mid-December, seemingly unfazed by ample evidence that taking away cash in India has been the exact opposite of helping the poor and promoting “financial inclusion”, McKinsey-partner Susan Lund and study contributor Laura Tyson published “The promise of digital finance”, making fantastic claims about the advantages of pushing back cash-use in favor of digital, including ten percent higher GDP for countries like India.

Ten months earlier

The multiple coordination problem and the cash-ecosystem-issue that Malick mentions had been analysed in a report that USAID commissioned in 2015 and presented in January 2016, in the context of the anti-cash partnership with the Indian Ministry of Finance. The press release on this presentation is also not in USAID’s list of press statements (anymore?). The title of the study was “Beyond Cash”.

“Merchants, like consumers, are trapped in cash ecosystems, which inhibits their interest” in digital payment it said in the report. Since few traders accept digital payments, few consumers have an interest in it, and since few consumers use digital payments, few traders have an interest in it. Given that banks and payment providers charge fees for equipment to use or even just try out digital payment, a strong external impulse is needed to achieve a level of card penetration that would create mutual interest of both sides in digital payment options.

It turned out in November that the declared “holistic ecosystem approach” to create this impulse consisted in destroying the cash-ecosystem for a limited time and to slowly dry it up later, by limiting the availability of cash from banks for individual customers. Since the assault had to be a surprise to achieve its full catalyst-results, the published Beyond-Cash-Study and the protagonists of Catalyst could not openly describe their plans. They used a clever trick to disguise them and still be able to openly do the necessary preparations, even including expert hearings. They consistently talked of a regional field experiment that they were ostensibly planning.

“The goal is to take one city and increase the digital payments 10x in six to 12 months,” said Malick less than four weeks before most cash was abolished in the whole of India. To not be limited in their preparation on one city alone, the Beyond Cash report and Catalyst kept talking about a range of regions they were examining, ostensibly in order to later decide which was the best city or region for the field experiment. Only in November did it became clear that the whole of India should be the guinea-pig-region for a global drive to end the reliance on cash. Reading a statement of Ambassador Jonathan Addleton, USAID Mission Director to India, with hindsight, it becomes clear that he stealthily announced that, when he said four weeks earlier:

“India is at the forefront of global efforts to digitize economies and create new economic opportunities that extend to hard-to-reach populations. Catalyst will support these efforts by focusing on the challenge of making everyday purchases cashless.”

Catalyst is housed at IFMR, an Indian research institute, of which Gates Foundation India’s CEO Nachiket Mor is a board member, has many US-Institutions as funders, including many members of a group called Better Thank Cash Alliance, including USAID, Gates Foundation, Ford foundation, Citi. IFMR is a member of the “Alliance for financial inclusion”, which is financed by the Gates Foundation (BTCA).

Veterans of the war on cash in action

Who are the institutions behind this decisive attack on cash? Upon the presentation of the Beyond-Cash-report, USAID declared: “Over 35 key Indian, American and international organizations have partnered with the Ministry of Finance and USAID on this initiative.” On the ominously named website http://cashlesscatalyst.org/" onclick="window.open(this.href);return false; one can see that they are mostly IT- and payment service providers who want to make money from digital payments or from the associated data generation on users. Many are veterans of what a high-ranking official of Deutsche Bundesbank called the “war of interested financial institutions on cash” (in German). They include the Better Than Cash Alliance, the Gates Foundation (Microsoft), Omidyar Network (eBay), the Dell Foundation Mastercard, Visa, Metlife Foundation.

The Better Than Cash Alliance

The Better Than Cash Alliance, which includes USAID as a member, is mentioned first for a reason. It was founded in 2012 to push back cash on a global scale. The secretariat is housed at the United Nations Capital Development Fund (UNCDP) in New York, which might have its reason in the fact that this rather poor small UN organization was glad to have the Gates Foundation in one of the two preceding years and the MasterCard Foundation in the other as its most generous donors.

The members of the Alliance are large US-Institutions which would benefit most from pushing back cash, i.e. credit card companies Mastercard and Visa, and also some U.S. institutions whose names come up a lot in books on the history of the United States intelligence services, namely Ford Foundation and USAID. A prominent member is also the Gates Foundation. Omidyar Network of eBay founder Pierre Omidyar and Citi are important contributors. Almost all of these are individually also partners in the current USAID-India-Initiative to end the reliance on cash in India and beyond. The initiative and the Catalyst program seem little more than an extended Better Than Cash Alliance, augmented by Indian and Asian organizations with a strong business interest in a much decreased use of cash.

Reserve Bank of India’s IMF-Chicago Boy

The partnership to prepare the temporary banning of most cash in India coincides roughly with the tenure of Raghuram Rajan at the helm of Reserve Bank of India from September 2013 to September 2016. Rajan (53) had been, and is now again, economics professor at the University of Chicago. From 2003 to 2006 he had been Chief Economist of the International Monetary Fund (IMF) in Washington. (This is a cv item he shares with another important warrior against cash, Ken Rogoff.) He is a member of the Group of Thirty, a rather shady organization, where high ranking representatives of the world major commercial financial institutions share their thoughts and plans with the presidents of the most important central banks, behind closed doors and with no minutes taken. It becomes increasingly clear that the Group of Thirty is one of the major coordination centers of the worldwide war on cash. Its membership includes other key warriors like Rogoff, Larry Summers and others.

Raghuram Rajan has ample reason to expect to climb further to the highest rungs in international finance and thus had good reason to play Washington’s game well. He already was a President of the American Finance Association and inaugural recipient of its Fisher-Black Prize in financial research. He won the handsomely endowed prizes of Infosys for economic research and of Deutsche Bank for financial economics as well as the Financial Times/Goldman Sachs Prize for best economics book. He was declared Indian of the year by NASSCOM and Central Banker of the year by Euromoney and by The Banker. He is considered a possible successor of Christine Lagard at the helm of the IMF, but can certainly also expect to be considered for other top jobs in international finance.

A flying-start in 2013

In 2013, the year after BTCA was founded, Rajan, former Chief Economist of the International Monetary Fund (IMF) in Washington, took over the post of Governor of the Reserve Bank of India (RBI). One of his first decisions was to set up the “Committee on Comprehensive Financial Services for Small Businesses and Low Income Households”. He put Nachiket Mor in charge of it, a banker an board-member of the RBI. In March 2016 the Gates Foundation made Mor head of its India country office. A reward?

Somewhat counterintuitively, the Mor Committee that was to foster financial inclusion of the poor and of rural areas, was heavily dominated by big finance and law firms, with a strong US bias and. Members included Vikram Pandit, former CEO Citigroup, a member of the Better Than Cash Alliance, and Bundu Ananth, President of IFMR Trust. A further member of the Mor Committee was a representative of the National Payments Corporation of India the umbrella organization of payment service providers, which aims to move India to a cashless society. Another member was credit Rating Agency CRISIL, majority-owned by the US Rating giant Standard & Poor’s.

In May 2016, RBI announced plans to print a new series of banknotes and announced in August that it had approved a design for a new 2,000 rupee note.

As a Central Bank Governor, Rajan was liked and well respected by the financial sector, but very much disliked by company people from the real (producing) sector, despite his penchant for deregulation and economic reform. The main reason was the restrictive monetary policy he introduced and staunchly defended. After he was viciously criticized from the ranks of the governing party, he declared in June that he would not seek a second term in September. Later he told the New York Times that he had wanted to stay on, but not for a whole term, and that premier Modi would not have that. A former commerce and law Minister, Mr. Swamy, said on the occasion of Rajan’s departure that it would make Indian industrialists happy:

“I certainly wanted him out, and I made it clear to the prime minister, as clear as possible…. His audience was essentially Western, and his audience in India was transplanted westernized society. People used to come in delegations to my house to urge me to do something about it.”

A disaster that had to happen

If Rajan was involved in the preparation of this assault to declare most of Indians’ banknotes illegal – and there should be little doubt about that, given his personal and institutional links and the importance of Reserve Bank of India in the provision of cash – he had ample reason to stay in the background. After all, it cannot have surprised anyone closely involved in the matter, that this would result in chaos and extreme hardship, especially for the majority of poor and rural Indians, who were flagged as the supposed beneficiaries of the badly misnamed “financial inclusion” drive. USAID and partners had analyzed the situation extensively and found in the Beyond-Cash-report that 97% of transactions were done in cash and that only 55% of Indians had a bank account. They also found that even of these bank accounts, “only 29% have been used in the last three months“.

All this was well known and made it a certainty that suddenly abolishing most cash would cause severe and even existential problems to many small traders and producers and to many people in remote regions without banks. When it did, it became obvious, how false the promise of financial inclusion by digitalization of payments and pushing back cash has always been. There simply is no other means of payment that can compete with cash in allowing everybody with such low hurdles to participate in the market economy.

However, for Visa, Mastercard and the other payment service providers, who were not affected by these existential problems of the huddled masses, the assault on cash will most likely turn out a big success, “scaling up” digital payments in the “trial region”. After this chaos and with all the losses that they had to suffer, all business people who can afford it, are likely to make sure they can accept digital payments in the future. And consumers, who are restricted in the amount of cash they can get from banks now, will use opportunities to pay with cards, much to the benefit of Visa, Mastercard and the other members of the extended Better Than Cash Alliance.

Who knew?

In a report of news agency Reuters from December named “Who knew?”, unnamed Indian official sources want to make us believe that only the prime minister himself and a handful of people, knew of the plans. The Reuters report names only one of the supposedly five who knew, a high-ranking official of the finance ministry. Tellingly, there is not a single mention of any foreign involvement, despite a formal cooperation of the finance ministry with USAID, aimed at pushing back cash in favor of digital payments. This makes the Reuters piece another piece of evidence in favor of the hypothesis that a strong and not fully legitimate force behind the brutal intervention that happened in November is being covered up.

The hypothesis that a main driver behind the demonetization were U.S. interests, does not at all imply that the Indian prime minister and other Indian constituents did not have their own interests associated with it. It is hardly possible to get the elite of a country to do something that goes against their own interests, but it is fairly easy to get them to do something that helps significant fractions of them, but hurts the majority of the people. A few possible such interests, taken from readers’ suggestions are recapitalising the public banks, which were staggering under the weight of bad loans to cronies, the interests of online payment platforms and online marketplaces as well as retail chains, which, curiously, as an Indian journalist tells me, were well supplied with cash in their in-store ATMs and benefited from the wiping out of informal competition.

Why Washington is waging a global war on cash

The business interests of the U.S. companies that dominate the global IT business and payment systems are an important reason for the zeal of the U.S. government in its push to reduce cash use worldwide, but it is not the only one and might not be the most important one. Another motive is surveillance power that goes with increased use of digital payment. U.S. intelligence organizations and IT companies together can survey all international payments done through banks and can monitor most of the general stream of digital data. Financial data tends to be the most important and valuable.

Even more importantly, the status of the dollar as the world’s currency of reference and the dominance of U.S. companies in international finance provide the US government with tremendous power over all participants in the formal non-cash financial system. It can make everybody conform to American law rather than to their local or international rules. German newspaper Frankfurter Allgemeine Zeitung has recently run a chilling story describing how that works (German). Employees of a German factoring firm doing completely legal business with Iran were put on a US terror list, which meant that they were shut off most of the financial system and even some logistics companies would not transport their furniture any more. A major German bank was forced to fire several employees upon U.S. request, who had not done anything improper or unlawful.

There are many more such examples. Every internationally active bank can be blackmailed by the U.S. government into following their orders, since revoking their license to do business in the U.S. or in dollar basically amounts to shutting them down. Just think about Deutsche Bank, which had to negotiate with the US Treasury for months whether they would have to pay a fine of 14 billion dollars and most likely go broke, or get away with seven billion and survive. If you have the power to bankrupt the largest banks even of large countries, you have power over their governments, too. This power through dominance over the financial system and the associated data is already there. The less cash there is in use, the more extensive and secure it is, as the use of cash is a major avenue for evading this power.
As a prophet reveals the truth it divides the people. (T)he worldly either want to close the mouth of the prophet, or else act as if the prophet didn’t exist, rather than repent of their sins. Popularity is never a test of truth. Ezra Taft Benson


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