Armstrong Economics Blog/Armstrong in the Media Re-Posted Mar 19, 2023 by Martin Armstrong
Click here to listen to my interview on 3/16/23 with World Affairs Monthly (also published on Monitoring Risk).
Interview with World Affairs Monthly
Category Corporate Donors -vs- MAGA
Toxic Currencies – Good for the Yuan
Armstrong Economics Blog/China Re-Posted Mar 14, 2023 by Martin Armstrong
The Chinese yuan has out-traded the US dollar by volume for one of the first times in recent Russian history. The dollar was king in 1991 when the Soviet Union collapsed, but that is no longer the case after Moscow branded the dollar a “toxic currency” along with the euro. Toxic currencies accounted for 87% of exports from Russia at the beginning of 2022, but this figure fell to 48% by the start of the new year. The Bank of Russia has reported that the proportion of USD/ruble pair in exchange fell to only 36% in February. The central bank is calling this a “broad structural transformation of the Russian economy.”
As “unfriendly countries” and their “toxic currencies” band together, those on the outskirts are winning. China has become the new go-to country for new trade partnerships as it bypasses Western-imposed sanctions. Toxic currencies represented 46% of imports in December 2022 but were at 65% in January 2022 before the war. In contrast, the yuan’s share rose from 4% to 23% during that time.
Those who were previously shunned from the big table are now pulling up a chair to discuss economic prospects with China. This will make it much easier to phase out toxic currencies because more people are willing to accept the yuan. The confidence in the yuan is growing. Everything occurring may seem odd, but it is precisely on target. As I mentioned in my report “China on the Rise,” China will dethrone the United States to become the world’s leading economic powerhouse by 2032. It’s just time.
BREAKING – U.S. Treasury Steps In – All SVB Depositors Will Have Access to Their Money on Monday
Posted originally on the CTH on March 12, 2023 | Sundance
BREAKING NEWS – The U.S. Treasury, Federal Reserve Board, FDIC and Joe Biden collectively announce that *all* depositors with Silicon Valley Bank (SVB) will have access to their funds – regardless of amount deposited. Also, all senior bank management has been terminated.
This announced action appears to cover those under FDIC protection ($250k or less) and those above FDIC protection (deposits greater than $250k). The only vulnerability is that SVB “shareholders and certain unsecured debtholders will not be protected.”
WASHINGTON DC – The following statement was released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg:
Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.
After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.
The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe. (LINK)
Will this action help stop any contagion related to California’s largest bank?
…The odds are, yes.
Despite Friday’s action to stop trading of FRB, with this action, I doubt First Republic Bank (FRB) is now at risk.
Congressman Michael McCaul Says Pence “Avoided a Constitutional Crisis” on January 6, 2021
Posted originally on the CTH on March 12, 2023 | Sundance
During an interview with Margaret Brennan today, Congressman Michael McCaul -another GOPe weasel – said he stands with Vice President Mike Pence in saying “they avoided a constitutional crisis” on January 6, 2021, when Congress declared an emergency session and refused to entertain any challenges to the 2020 election certification. WATCH:
[Transcript] – MARGARET BRENNAN: We turn now to the chairman of the House Foreign Affairs Committee, Texas Republican Congressman Michael McCaul.
Good morning to you, Chairman McCaul.
REPRESENTATIVE MICHAEL MCCAUL (R-Texas): Good Morning, Margaret.
MARGARET BRENNAN: I have got a lot to get to with you today.
But I want to start where I just left off with those very strong remarks from Mike Pence last night. Do you want to associate yourself with what he said?
REPRESENTATIVE MICHAEL MCCAUL: Let me just say Vice President Pence exercised moral clarity and judgment that day by doing his constitutional responsibility, authenticating the votes and counting them.
He avoided a major constitutional crisis that day. As you know, I voted for certification. That is our constitutional role not to overturn state- certified ballots. So, I agree. I mean, look, it was a dark — dark day. And I think people will be — history will judge everyone by what they did that day.
MARGARET BRENNAN: Mm-hmm.
It was a pretty strong condemnation of Donald Trump, who he hasn’t directly taken on like that before. But it’s also back in the news very much, Chairman, because it was the speaker of the House who gave those 41,000 hours of surveillance video access to FOX News, which then has used a recasting of the events, trying to sanitize it, trying to whitewash history.
Do you think it was a mistake for Republican leadership to strike this deal with Tucker Carlson? That is who Mike Pence was talking about.
REPRESENTATIVE MICHAEL MCCAUL: Well, I know Kevin McCarthy has turned all the videotape over to FOX News.
He has given me assurance he’s going to turn it over to the entire media. I think — I believe in the fourth estate, freedom of press, and I think the American people deserve to see all the footage from that day, and all the footage is not going to be tourism at the Capitol. It’s going to show a very dark, tragic day that I witnessed firsthand that included our Capitol Police being assaulted, 140 of them injured, two pipe bombs, one — one Capitol police officer killed, and a protester killed.
That’s not — that’s not a good day. And I think it should have been prevented had we had good intelligence that day beforehand. And, look, I support law enforcement. Like this D.C. crime bill we were passing, I support law enforcement everywhere, especially at the United States Capitol.
MARGARET BRENNAN: I want to ask you on the other side of an upcoming commercial break about the hearing you just held on Afghanistan.
But, before I do that, I want to quickly ask you about what we’ve been talking about, with the Treasury Secretary saying no government bailout for this Silicon Valley Bank, but they are trying to take some action.
She didn’t give a lot of detail there. I know Austin is a start-up hub in your home state of Texas. How concerned are you about spillover here?
REPRESENTATIVE REPRESENTATIVE MICHAEL MCCAUL: Yes, we do have South by Southwest this weekend, a lot of tech.
Yes, I am concerned, I hope it’s more of an isolated event, because the assets were very — it was all just technology sector and it wasn’t diversified, also, as the secretary mentioned these low interest bonds. And I think part of the problem, Margaret, is, in this inflationary time, the Reserve, Federal Reserve, now is raising interest rates, and that, I think, is part of the problem as well.
We want to make sure this is — this is an isolated event, and not a systemic event that could impact things like in 2008…
MARGARET BRENNAN: Yes.
REPRESENTATIVE MICHAEL MCCAUL: … when we did bailout the financial sector.
MARGARET BRENNAN: All right, I have got to take that break now.
And we’ll come back and continue our conversation in a moment.
(ANNOUNCEMENTS)
MARGARET BRENNAN: If you can’t watch Face the Nation live, you can set your DVR. We’re also available through our CBS and Paramount+ apps.
And we’re replayed on our CBS News Streaming Network.
(ANNOUNCEMENTS)
MARGARET BRENNAN: We will be right back with a lot more Face the Nation.
(ANNOUNCEMENTS)
MARGARET BRENNAN: Welcome back to FACE THE NATION.
We want to return now to our conversation with House Foreign Affairs Chairman Michael McCaul.
Now, Chairman, I mentioned that you held this hearing on Afghanistan this past week, and it was pretty emotional.
REP. MICHAEL MCCAUL (R-TX): Yes.
MARGARET BRENNAN: You’re really examining the chaotic withdrawal from that country. And you had a Marines Corps sergeant, injured in the suicide bombing, who testified that he was an eyewitness and he actually saw the suicide bomber before the attack. He testified he has never been interviewed as part of the U.S. investigation.
How was this overlooked?
REPRESENTATIVE MICHAEL MCCAUL: I think it’s very — well, first of all, very powerful testimony. Very emotional. But very devastating and damaging to the administration. These – these snipers and troops were put at HKIA, surrounded by the Taliban.
MARGARET BRENNAN: The airport in Kabul.
REPRESENTATIVE MICHAEL MCCAUL: They put the Taliban in — in Kabul. That’s the HKIA airport. And surrounded by the Taliban who were put in charge. And that was the first mistake in the chaos that we heard that happened that day and the State Department virtually non-existent.
I think the most dramatic thing, Margaret, was the fact that this sniper had the suicide bomber in his sights and an intelligence bulletin went out, you know, describing him. He said, this is — this meets the description, meets with the team, PSYOPS, psychological operations get together, they run this up the chain of command and the commanding officer says, I don’t have the authority. And then they said, who does have the authority for permission to engage, and the commanding officer says, I don’t know, and he never got back to them.
The point is, they could have taken out this threat. But then, when the suicide bomber went off, not only did Marine Sergeant Vargas Andrews have his leg blown off and his arm, but we had 140 Afghans killed, 13 service men and women killed.
I talked to the mother of one of the Marine sergeants.
MARGARET BRENNAN: Yes.
REPRESENTATIVE MICHAEL MCCAUL: I gave her just a hug. She was so devastated. In addition to 50 injured, including Marine Sergeant Vargas Andrews.
MARGARET BRENNAN: Yes.
REPRESENTATIVE MICHAEL MCCAUL: And it could have been avoided.
MARGARET BRENNAN: Well, to the point of how it could be avoided. You know, you – you hear it, there were intelligence failures. Events just got ahead of planning.
The State Department argues that they’ve briefed Congress more than 150 times since the withdrawal. What information do you need that you don’t have yet?
REPRESENTATIVE MICHAEL MCCAUL: Well, I think the compelling testimony we got from the sniper. We’ve never heard this before. In fact, Margaret, this is the first open hearing we’ve had on Afghanistan since the fall of Afghanistan. And I intend to move forward with this investigation. And I what to know what the commanding officer was thinking when he denied permission to take out the threat and how — what levels did it go to within the United States government? I think those are all very important questions.
And the State Department has not been compliant with our document requests. I met with the secretary. We had a very cordial conversation. Cooperation is always key. But they’re not cooperating. If he fails to cooperate with my document production request by, you know, the time he testifies on March 23rd, I am prepared to issue a subpoena.
MARGARET BRENNAN: And issue — issue a subpoena for Antony Blinken to come testify before your committee. What exactly do you think he’s withholding? What’s the documents?
REPRESENTATIVE MICHAEL MCCAUL: No, he is – he — he will be testifying, but we have an outstanding document production request that the lawyers are very combative. I think the secretary, in good faith, has told me he wants to cooperate with this investigation, be transparent to the American people, but we’re not seeing that with the lawyers handling this on the ground. So, we need these documents because a lot of this stuff, to your point, Margaret, has never been brought out to the public.
MARGARET BRENNAN: Yes. This is the dissent cable specifically that you are requesting, that is people within the State Department disagreeing with the policy that was the administration’s planning?
REPRESENTATIVE MICHAEL MCCAUL: It’s a dissent cable. The extraordinary measure to have 23 members of the State Department at the embassy dissenting with the policy.
MARGARET BRENNAN: Yes.
REPRESENTATIVE MICHAEL MCCAUL: The after action report from the ambassador. But also the plan of evacuation. Just a simple plan of evacuation. What was your plan? They have failed to deliver that to Congress. Those are three key, you know, areas that we want to see compliance with.
MARGARET BRENNAN: Yes.
All right, Congressman, we will be watching that. I know there are a number of other issues we’ll talk to you about sometime soon, including China, but I’ve got to leave it there for today. [Transcript End]
Mike Pence Blames President Trump for Events at Capitol Hill on January 6, 2021, “his reckless words endangered my family … history will hold Donald Trump accountable”
Posted originally on the CTH on March 12, 2023 | Sundance
Speaking at the Gridiron Dinner in Washington DC yesterday, former Vice President Mike Pence directly blamed President Trump for the events in Washington DC on January 6, 2021, saying:
“President Trump was wrong; I had no right to overturn the election. And his reckless words endangered my family and everyone at the Capitol that day, and I know history will hold Donald Trump accountable.” ~ Mike Pence
Be of good cheer. Despite the main takeaway being pushed by mainstream media, these remarks strike me as good news.
These remarks indicate to me that the professional Republican control officers are growing increasingly desperate as President Trump continues to command the new Republican Party. If Ron DeSantis was making ground, the professional Republican class would not be as desperate as these remarks convey. All of their collective GOPe effort isn’t working…. they are starting to reach for the kitchen sink.
WASHINGTON (AP) — Former Vice President Mike Pence on Saturday harshly criticized former President Donald Trump for his role in the Jan. 6 riot at the U.S. Capitol, widening the rift between the two men as they prepare to battle over the Republican nomination in next year’s election.
“President Trump was wrong,” Pence said during remarks at the annual white-tie Gridiron Dinner attended by politicians and journalists. “I had no right to overturn the election. And his reckless words endangered my family and everyone at the Capitol that day, and I know history will hold Donald Trump accountable.”
Pence’s remarks were the sharpest condemnation yet from the once-loyal lieutenant who has often shied away from confronting his former boss. Trump has already declared his candidacy. Pence has not, but he’s been laying the groundwork to run.
[…] With his remarks, Pence solidified his place in a broader debate within the Republican Party over how to view the attack. House Speaker Kevin McCarthy, for example, recently provided Tucker Carlson with an archive of security camera footage from Jan. 6, which the Fox News host has used to downplay the day’s events and promote conspiracy theories.
“Make no mistake about it, what happened that day was a disgrace,” Pence said in his Gridiron Dinner remarks. “And it mocks decency to portray it any other way.” (read more)
Bill Gates Interview – At Last!
Fallout from SVB Collapse Begins Sending Twitches Through Tech Sector, While Congress Meets With Treasury
Posted originally on the CTH on March 11, 2023 | Sundance
The 44-hour collapse of Silicon Valley Bank (SVB) is having some reverberations amid the tech sector as companies who carried unsecured deposits with the bank are facing an uncertain future.
Tech company Roku streaming services holds $487 million in cash reserves at SVB representing 26% of their liquid holdings. Those unsecured funds are now tenuous, depending on what steps are taken next. Additionally, Etsy an online brokering retailer for mostly independent sellers, has also run into a snag with processing disbursement payments to those same sellers. Etsy used SVB as a depository and payment transfer provider to the merchant accounts.
According to Axios, “Circle’s usd coin (USDC), the second largest stablecoin in the world” is also in a tough position “because a portion of its cash reserves were held at SVB, which the U.S. government took control of on Friday.” These and other ancillary issues are now part of a larger conversation about whether SVB is representative of a weakness that may impact other banks. However, current consensus is that a contagion effect is not expected.
SVB was exclusively a tech sector bank. Small to mid-size tech companies who relied on SVB may have some immediate issues; but the larger banking sector seems much more solid and less exposed to the long-term treasuries that SVB was holding. “People are used to having zero interest rates and easy money, and it’s gone. And there are people who will manage that well and people who will not,” former Congressional Budget Office Director Doug Holtz-Eakin said during an interview on “Cavuto Coast-to-Coast” Friday. {link}
Meanwhile, congress is meeting with treasury and FDIC officials to discuss if taxpayer intervention is needed. {insert eyeroll here}:
March 11 (Reuters) – U.S. lawmakers met with the Federal Reserve and Federal Deposit Insurance Corporation on Friday to discuss the collapse of SVB Financial Group (SIVB.O), Coindesk reported on Saturday citing a source.
Democratic U.S. Representative Maxine Waters held briefings with officials from the two regulators and the Treasury Department, hours after the startup-focused SVB’s collapse, the report said.
[…] Separately, Representative Ro Khanna said in a tweet on Friday that he reached out to both the White House and the Treasury Department to discuss the situation with the bank.
U.S. Treasury Secretary Janet Yellen on Friday met with banking regulators on the collapse of SVB, as she and the White House expressed confidence in their abilities to respond to the bank failure. (more)
Nothing makes the Nope Meter peg with greater emphasis than hearing the name Maxine Waters and bank bailout in the same sentence.
I already made my position pretty clear yesterday. NO BAILOUTS!
The tech sector has a tremendous amount of capital at hand. Let the tech companies who used SVB as a launch vehicle sell some of their own stock holdings and backstop the bank as an investment mechanism. There is no need for the U.S. taxpayer to get involved.
I am more concerned about this failure being used as a tool to initiate a conversation about digital currencies. The ‘never let a crisis go to waste‘ team, are likely chomping at the proverbial bit….
The Debt Crisis – What Really Falls to Dust?
Armstrong Economics Blog/Sovereign Debt Crisis Re-Posted Mar 9, 2023 by Martin Armstrong
QUESTION: The sales pitch seems to be that there is this $2 quadrillion in global debt that overhangs everything. Paper assets, therefore, will all implode! They seem to be saying that everything has risen due to this debt bubble and it was all created with Zero interest rates. Now that they are going up, the debt bubble will burst and everything will decline. The story seems to be that this decades-long Boom Bust cycle was created over and over by the Federal Reserve.
This seems to be like you have said, they try to reduce everything to a single cause and effect.
What really happens?
PCJ
ANSWER: These people seem to keep preaching the same story but have no historical understanding whatsoever of how the monetary system has ever worked. Their focus on the Federal Reserve shows that they are not looking at the world economy and they do not even comprehend how bad things really are outside the United States. They do not comprehend what is an interest rate. It is the compensation to a lender for his anticipation of inflation plus a profit. If I think the dollar will decline by 50%, why would I lend you dollars for a year if when you pay me back it buys half of what it did when I lent it to you?
Debt can be a performing asset. I advised many of the Takeover Boys during the 1980s. We would borrow in one currency to buy the asset in another using the computer to distinguish the long-term trends. I would not recommend that to someone just operating on a gut feeling.
We were also advising on real values, which Hollywood distorted and based the movie Wall Street with Michael Douglas and his famous speech on greed. What they did not really understand was that after a Public Wave that peaked in 1981, stocks were suppressed and the full-faith in government created the broadly supported bond market. Hence – bonds were conservative and stocks were risky. There were two aspects that were behind the entire Takeover Boom.
First, I was showing these charts and how in terms of book value, the Dow Jones bottomed in 1977. It was obvious that if you could buy a company, sell its assets, and double or triple your money, then the market was obviously not overpriced. We had forecast that the Dow was undervalued and that it would rise from the 1982 low of 769.98 and test the 2500 level in two years in 1985. Indeed, it reached 2695.47 by September 1987. We also projected that by the next decade, the Dow would test 6,000 on its next rally.
Even the press in Japan was shocked. We were also projected that Crude would fall below $10 in 1998. Indeed, that forecast was covered by Mark Pitman at Bloomberg News. It bottomed at $10.65 in 1998. In gold would forecast that it would drop to test $250 by 1999 completing a 19-year cycle low. Then gold would rally to test 1,000. Gold reached the $1,000 level by 2008. The Japanese press thought those forecasts were wild, to say the least.
The SECOND aspect of our advice to the takeover boys of the ’80s was something the press NEVER understood. We would advise borrowing in one currency for an asset in another. We were able to turn debt into a performing asset. We would make 20-40% profit on the currency alone. Often, the press would just look at the debt and not understand what we were even doing.
Most of this reasoning stems from Sir Tomas Gresham’s observations when he represented England at the Amsterdam exchange during the reign of Henry VI’s reign and debasement. As Henry debased the silver coinage as was taking place in Spain, the more they debased the coinage, the higher the inflation took place. His observation that bad money drives out the good has been grossly misunderstood. When I was growing up, they took the silver out of the coinage in 1965. People were culling out the silver showing that the debased new coinage of 1965 drove out of circulation the old silver coinage. The same thing has taken place with the copper pennings.
Because people hoard old coinage, the money supply shrinks. That then forces the government to issue far more debased coinage to compensate for the coinage that has been withdrawn from hoarding. Consequently, inflation unfolds for all tangible assets to rise in value as expressed in the newly debased coinage.
What these people always try to sell is the same old scenario that they cannot point to a single instance in history where everything collapses to dust but only gold survives. Such periods will typically result in revolution. When Caesar crossed the Rubicon, that was also all bout a debt crisis.
You must also understand that interest rates will be at their LOWEST internationally in the core economy of the Financial Capital of the World – which is the USA right now. The further you move from the center, the higher the interest rate will be. Hence, I have warned that the United States will be the LAST to fall – never the first. This is not based upon my opinion, this is simply historical fact.
We have interest rates back to 3000 BC and have studied the impact of such convulsions in economic history. As for the Debt Crisis that forced Caesar to cross the Rubicon, I suggest you read Anatomy of a Debt Crisis that appears, only Julius Caesar ever understood.
The Bottom Line is very simple. There is just no such period as people describe where everything turns to dust and only gold survives. Even if that were true, they what good would the gold do if everything else is worth ZERO? Gold would have also ZERO value since nothing would have value.
The real issue is that as government defaults unfold, tangible assets will rise in value for the amount of money in debt always dwarfs that in even the stock market. We are in a Sovereign Debt Crisis and that is very different from a private debt crisis.
Zelensky’s Corruption
Armstrongs Economics Blog/Ukraine Re-Posted Mar 9, 2023 by Martin Armstrong
Zelensky’s victory in Ukraine will be looked upon as the Judas who sold his country for a handful of silver. The corruption in Zelensky’s government is by far the greatest perhaps in the world. He is leading men and women to slaughter while half the population has fled. There is no strategic benefit to the Ukrainian people and Zelensky’s promises of ending corruption and peace with Russia for which the people voted, have been ignored.
The Ukrainian people need to rise up and save their country from total annihilation. Ukraine remains the most corrupt government in the world and they are selling the Ukrainian people for personal wealth and greed with ZERO remorse for their nation or their people. Ukrainian politicians topped all other countries for corruption and even in the Pandora Papers, 38 Ukrainian politicians have to hide cash offshore – the largest number of corrupt politicians in any other country.
The NeoNazis want everyone to think Putin is evil when they are destroying their own country and are desperately trying to drag the entire world in to destroy all Russians – their ethnic cleansing job from World War II. What is not being reported by the Western press because of Zelensky’s propaganda campaign, is that over 2.8 million “Ukrainians” have fled to Russia from the Ukrainian NeoNazis. That began when the Ukrainians massacred Russian-speaking “Ukrainians” in Odessa and burned them alive. They were beating and killing any Russian-speaking people on the streets of Odesa in May 2014 which sparked the entire separatist movement of the Donbas. Those who ran into the building for safety were burned alive.
The Ukrainian people had better rise up and overthrow Zelensky or they will not have a country left when this is over.
Centinel2012 