QUESTION: Dear Martin Could you please describe more in detail what you are expecting when talking about the breakdown of the monetary system? Will there be differences between countries like Germany and Switzerland for example? Especially regarding pension systems. I assume, there might be big differences between countries. Many thanks and best regards, R.
ANSWER: The monetary system collapsed with the winning of the American Revolution. The state currencies and the federal Continental Currency were all exchangeable to the new currency which became the U.S. dollar. There was a great disparity among the states with each being rated by the marketplace for the swap. Even when they created the Euro, there were differences between each currency.
The IMF right now is pushing very hard behind the curtain to replace the dollar with an IMF digital currency that they want to become the reserve currency. This would be EXTREMELY dangerous for the IMF is deep in corruption. The complaint of China, for example, is that the dollar is the reserve currency and they see that as a dangerous power in the hands of an adversary.
I have written much on the real problem of the dollar acting as the reserve currency and that this has thrust the Federal Reserve into the default role of the central bank of the world. The problem is all the propaganda against the Fed that is spun by the goldbugs which totally distorts the real crisis. They try to sell gold only on the quantity theory of money which dates back to the 17th century. It is so antiquated it is laughable. It is entirely domestic-focused to the exclusion of the world economy and international capital flows. Unfortunately, the Federal Reserve is also living in the past and only sees the economy in domestic terms making it Fed Policy v Fiscal Policy, over which they have no control.
Only when you understand international capital flow movement will you ever even catch a glimpse of the real world. World War I sent the capital fleeing Europe and rushing to America. Because that capital was here, it increased the domestic buying power and the Europeans made the 1920s ROAR. They were participating in the Auto-Stock-Boom.
The first G4 took place in 1927 when the other central banks argued that the US had to lower its interest rates to deflect international capital which was needed in Europe to rebuild. Indeed, the capital inflows peaked in 1927 and began to decline. But it was the Sovereign Debt Crisis of 1931 that compelled major capital outflows to cover losses at home.
Hoover explained the crisis in 1931 in his Memoirs. So to answer your question will take a major report which I intend to publish. The subject is highly complicated and there will be major divergences that people must be aware of. The bottom line is that all governments intend to default on their prior debts. That is what unfolded even with the collapse of the Continental Government after winning the American Revolution.
We see similar outcomes also in France with their Revolution. We are staring into the eyes of a major global default in debt and we are on schedule cyclically for the next sovereign default period.
There are some who are claiming that the revision of the CPI is to help the Federal Reserve stop fighting inflation. This is typical for Americans who only watch the Fed and nothing else. The formula for the CPI has been routinely altered. Real Estate used to be included but when that was rising too much, they replaced that with rents. When rents started rising, they replaced them with controlled rents.
This is NOT about helping the Fed to lower rates or stop raising rates as the majority seem to be touting. Powell is not that stupid and this will have ZERO impact on Fed decisions going forward. This is all about government spending which is a far greater problem than worrying about the pressure on the Fed. Virtually EVERY government program is automatically INDEXED to CPI. Thus, agencies’ budgets are automatically increased each year based on the CPI. Your taxes are indexed to the CPI. By reducing the CPI, they collect more taxes! There is NOBODY in Congress or at the Bureau of Labor Statistics that gives the Fed a second thought.
Even if we look at inflation using the pre-1980 formulas, the CPI is approaching 10%! When we calculate inflation by eliminating everything that is really irrelevant and focusing on food, energy, transportation, and taxation, which they do not consider at all, the reality of our number came in at 32% for 2022. That is a far cry from the official number. This is simply calculated by Socrates from an unbiased perspective.
What a new wonderful world the Biden Administration has created. Thank you, COVID & the Russian Sanctions. The largest increase we found was obvious fuel between gasoline and diesel used in trucking and homes averaging 65%+ Turning to basic food, eggs were up nearly 50%, flour rose by 25%, cooking oil 23%, butter was up 35%, Chicken by 14%, and Rice by 18%. If we throw in toothpicks, paperclips, etc, then the more we can include the lower the inflation rate. We do not include rent or real estate. Our number is far more accurate to the daily living expenses than the near 10% level of the government. They also do not include sales taxes. The national average rise in rental rates was 7.8%, in Florida it was 8.5%, and in NYC 1.5% when controlled.
When I would buy a desktop IBM XT during the 1980s, it was always about $7,000 for a top-of-the-line. Today, that cost has come down significantly. Obviously, we do not buy computers every week. Should that really be part of a formula? The BLS has made so many revisions to the CPI over the decades it is really a political tool these days.
Back in the ’90s, our staff was dissecting every statistic. We discovered that they were overstating economic growth because they counted government employees twice. The total all personal income, and then government spending. I called the head of the BLS and asked surely this had to be backed out somewhere for hiring government employees to increase GDP rather than the private sector. They reviewed it and finally just said – no comment.
The idea that this latest revision of using one year as a weight instead of two will allow the Fed to stop tightening is really the rantings of people who only look at the Fed for everything as their guidance. There is a lot more incentive behind this revision and the Fed was not a consideration.
Elizabeth Warren’s Wealth Tax is now moving forward in the leftmost Democratic States – California, Connecticut, Hawaii, Illinois, Maryland, New York, and Washington state. Naturally, Pennsylvania, Delaware, and New Jersey are paying very close attention as they lick their lips at the thought of untold billions in new revenue to cover faltering government employee pension plans caused by artificially low interest rates. Even federally, the US has bumped its head on the debt ceiling. Without question, the ceiling will have to be raised again but with a lot of pomp and circumstance and perhaps a few fistfights on the floor. Yet the primary dealers cannot handle all the debt pouring out and there is a declining appetite for anything long-term as the Bide Administration wages direct proxy war against Russia until the last Ukrainian falls on the battlefield and NATO troops then revenge their deaths.
Socialism is collapsing and governments will fight to their last breath until the politicians are dragged out and hung on the streets as is typical in such cases of economic malfeasance. What is emerging at the state level is simply versions of Warren’s Wealth Tax which will be applied to WORLDWIDE assets. The hated rich policies, who have provided all the jobs over the centuries by creating industries, are to be stripped mined.
SELL YOUR HOUSE WHILE YOU STILL CAN AND MIGRATE NOW!
Once these Wealth Taxes enter the game in 2024, that will be the peak of the ECM and only a braindead person would want to buy your house in those states! The Year 2024 will be the Decline and Fall and you better pay heed to what is unfolding on this level. The Wealth Tax will be a permanent property tax you will pay even when you are losing money. It will NOT recognize a decline in the value of assets until they are sold.
Posted originally on the CTH on January 18, 2023 | Sundance
There is something predictable about Main Street economics, eventually what you see around you overwhelms the great pretending. CTH has been outlining the state of the consumer economy in great detail for quite a while, and though it is difficult to note when the outcomes will surface, eventually they do surface. [Reminder Here]
CONTEXT. CTH outlined the moment when the purchasing power of the U.S. middle class actually began contracting. It was March and April of 2021 when that Rubicon was crossed. We saw it in the second and third quarter data from 2021, but few were willing to admit.
What changed in those two months back in ’21 was a dramatic drop in the “unit sales” of stuff within the consumer economy. The drop in unit sales was hidden because it happened simultaneously with the first wave of massive spike in prices. Prices rose so fast the sales data was giving an artificial impression of sales growth, but in the background the actual unit sales dropped. Those analysts correcting and adjusting historic data to ‘inflation adjusted terms’ are now noticing.
Additionally, and not coincidentally – because the metrics are connected, you will note this line from the Wall Street Journal review of the producer price index. “The producer-price index, which generally reflects supply conditions in the economy, rose 6.2% in December from a year earlier, the Labor Department said Wednesday, the slowest annual pace since March 2021.” In essence, the current rate of wholesale price increase on materials is now returning to the rate of price increase that happened in the period when prices spiked. Again, this is predictable.
Inflation is the measure of the ‘rate’ of price increase over time. March and April of 2021 were the beginning of the first inflationary spike.
Driven almost entirely by the supply side shock from Biden energy policy, in the subsequent 20 months the rate of price increase skyrocketed, peaked August 2022, and now the rate of increase starts returning. This does not mean price declines; this means the rate of growth in the price increase is lessening.
This is a cyclical outcome.
After 20 months of dropping unit sales, a result of massive price increases; and as the rate of inflation now starts to moderate created by the cyclical nature of it; what we now see is the inability of the price increases to continue hiding the drop in unit sales. [Background pdf Data] Total retail sales data is now exposed and that’s why we will see this increasing story about negative sales data as the inflation cycle plateaus.
(Via Wall Street Journal) – Retail spending fell in December at the sharpest pace of 2022, marking a dismal end to the holiday shopping season as rising interest rates, still-high inflation and concerns about a slowing economy pinched American consumers.
Purchases at stores, restaurants and online, declined a seasonally adjusted 1.1% in December from the prior month, the Commerce Department said Wednesday. Sales were also revised lower in November and have fallen three of the past four months.
The decline in retail spending late last year adds to signs that the U.S. economy is slowing. Hiring and wage growth eased in December, U.S. commerce with the rest of the world declined significantly in November, and existing-home sales have fallen for 10 straight months. The Federal Reserve said Wednesday that industrial production slumped in December, led by weakness in the manufacturing industry.
S&P Global downgraded its estimate for fourth-quarter economic growth by a half percentage point to a 2.3% annual rate after Wednesday’s data releases. Economists surveyed by The Wall Street Journal this month expect higher interest rates to tip the U.S. economy into a recession in the coming year.
“The lag impact of elevated inflation weighs heavily on U.S. households, it’s very clear that the median American consumer is still reeling from the loss of wages in inflation-adjusted terms,” said Joseph Brusuelas, chief economist at RSM US LLP. “We’re moving towards what I would expect to be a mild recession in 2023,” he added. (read more)
When the Baghdad Bob economic pretenders say, “mild recession,” anticipate something more akin to a mild nuclear meltdown, something with breadlines and soup kitchens.
Now, you must keep in mind that almost every financial media outlet used the same Retail Federation talking point about anticipating an 8% increase in holiday sales last year. [Reminder] Apparently, collective pretenses must be maintained. Meanwhile, news crews and camera crews were having a desperate time finding any holiday shopping to use as background footage for the claims that sales were strong. Here we are in January and the pretending has hit reality.
Negative retail sales in November and December when prices are roughly +10% over the prior year, means the unit sales collapse was far more dramatic…. Far more.
Trying to survive policy driven price increases in housing costs, energy costs, electricity costs, home heating, food and fuel costs has forced consumers to reevaluate purchasing decisions. Consumer demand for non-essential items has collapsed, and Americans are dig deep into their savings just to sustain unavoidable expenses. Eventually, pretending this is not happening is going to run into the wall of reality.
On one hand the leaders of large multinationals must pretend everything is splendid; after all, the only acceptable position they can articulate is to support interest rates being raised because demand is just too darned high…. pretending. But on the other hand – those same suppliers and multinationals are furiously trying to calculate how to avoid being stuck with billions worth of unsold inventory and idle industrial equipment.
In writing the Greatest Bull Market in History, published in 1986, I had to do all the original research. I read all the newspapers daily year after year to come to the realization that attitudes shift back and forth. It became very obvious that before FDR and the introduction of Marxism to the United States, the focus was on markets. With Roosevelt, he weaponized the Federal Reserve and just about everything else to further his agenda. Roosevelt demonized Pierre du Pont for he made a lot of money providing the weapons for World War I. Roosevelt called him the Merchant of Death, but then suddenly needed him again for World War II.
The nation is dividing significantly. This is why the United States cannot stand divided. The latest poll demonstrates that the forecast made by our computer is unsurpassed. The question presented was who is our enemy?
For Democrats, the top three results named Russia (31 percent) as our “greatest enemy,” followed by Republicans (26 percent) and China (16 percent).
For Republicans, the top three are China (35 percent), Russia (33 percent), and Democrats (12 percent).
We now are starting to see that we have an enemy within – the opposite political party. This is absolutely essential for it confirms the forecasts of our computer that have been common since our 2011 WEC.
Posted originally on the CTH on January 17, 2023 | sundance
There has always been a general shaping and interpretation surrounding economic news, specifically as it relates to the impact of pricing on consumers and corporations. However, against the backdrop of supply side inflation, the financial gaslighting from the Wall Street Journal stands out at the top.
Without pretending, and looking directly at the Main Street reality, CTH has outlined inflation as a matter of monetary and energy policy. From that standpoint the timing and scale of price increases (inflation measured over time) was predictable. Our current status is an inflationary plateau, where prices remain high but stabilize for likely two quarters.
What the Wall Street Journal outlines as a “shopper rebellion against high prices” is complete hogwash. Notice in the construct of the narrative, the demand side (consumers) is identified as the cause of diminished revenue & profits for corporations. They continue pretending that inflation was not driven by energy costs.
(WSJ) – […] Many companies raised their prices substantially last year to offset higher fuel costs and higher prices for ingredients, parts and labor. As fuel prices have dropped and pandemic supply-chain snarls have eased, some of those costs have come down.
That is a good sign for the economy. It suggests that some inflation in the past year resulted from extreme supply-demand imbalances brought on by the pandemic and the war in Ukraine and which are now fading.
Notice the transparent lack of mentioning ‘energy policy’ as the inflation driver.
[…] The study, by economists at the Federal Reserve Bank of Kansas City, found that higher markups—the gap between what a firm charges and what it costs to produce an item—were a major driver of inflation in 2021.
They concluded that companies in some cases were raising prices in 2021 in anticipation of future cost pressures, rather than because of market power or outsize demand. Andrew Glover, a senior economist at the Federal Reserve Bank of Kansas City who was involved in the study, doesn’t expect prices to fall this year, he said, but he anticipates that the pace of increase will continue to slow.
Inflation is the rate of increase over time. We have experienced two years of massive price increases. Yes, the rate of those increases will moderate, this is the plateau, but the price will never drop. The current prices are a direct result of fixed energy policy.
[…] Unit sales of food and beverages fell 3% last year, but on a dollar basis they rose 10%. That showed consumers were willing to pay higher prices for groceries but bought fewer items.
[…] “People need to eat,” said Krishnakumar Davey, a president at IRI. Shoppers are nonetheless buying less when possible and, in many cases, buying less expensive versions of necessities such as toilet paper and laundry detergent. (read more)
Meanwhile the Fed is worried that wages will be forced to increase. Here is the real worry for the Wall Street Journal, “If consumers believe high prices will persist, they could seek bigger raises, and businesses, seeing higher labor costs, could continue raising prices.” Yes, workers, forward inflation is your fault.
Government policy drives up prices, but workers needing wage increases to pay for those higher prices… well, that is not acceptable to the government, comrade proles.
COMMENT: I know you saved Mercedes making back their $1 billion lost all because they listened to the fake news about how the pound and the dollar would crumble in the face of the euro. I read the 2011 Barron’s article on your forecast. It was OK to publish that when they thought you would be wrong. Where is the follow-up when you proved to be the only one who was correct? The same can be said of the New York Times and especially Bloomberg. It is obvious that they will not report on the success of your forecasts because they are leading society at the direction of the Deep State.
Keep up the good work. We need someone independent in this time of darkening clouds.
JWN
REPLY: Let me explain something. All the hype about Bernie Madoff is also FAKE NEWS. On December 10th, 2008, Madoff’s sons Mark and Andrew covered themselves most likely at their father’s direction, and told authorities that their father had confessed to them that the asset management unit of his firm was a massive Ponzi scheme. They even supposedly told them it was “one big lie”. The next day, agents from the FBI arrested Madoff and charged him with one count of securities fraud. There was no possible way the FBI would arrest someone like that without an independent investigation.
The Securities and Exchange Commission had previously conducted numerous investigations into his business practices. Vere did ANY audit uncover such a massive fraud. It was then on March 12th, 2009, when Bernie Madoff simply pleaded guilty to 11 federal felonies and admitted to turning his wealth management business into a massive Ponzi scheme. He was not even indicted. He pled simply to what is known as an “information” so nothing was even presented to a grand jury. That is UNPRECEDENTED!
The banks all claimed that they had “no idea.” Before he died, Madoff did an interview where the headline was that the Banks had to have known. There is ABSOLUTELY no way that the banks were NOT involved or had no idea. That is legally impossible. As a client of a bank of that size especially, the bank must fill its files with KNOWN YOUR CLIENT rules.
In my case, we had companies set up for each note in Turks & Caicos. The bank actually sent someone down there to audit the legal structure behind every account. There is simply no way a bank can even claim it had no idea. That was a serious RED FLAG that the Madoff case was not what it appeared.
Everyone just skipped over the fact that the SEC conducted multiple audits and found nothing. That included looking at bank accounts and positions on hand. That did NOT add up to a PONZI scheme where you are taking money from one person to pay another which is the actual structure of Social Security. The current generation’s contributions are tasked to pay the previous generation.
Add to that, HSBC, which has been itself indicted for money laundering more than once, stood out as the largest “victim” of Madoff’s scheme – $1.5 billion. HSBC pays countless fines for every scandal they seem to be in the middle of.
In my case, the Bank said they had no idea where the money was after they stole it. How does $1 billion leave a bank without a withdrawal of some sort? Had it not been for my clients standing with me and doing what I told them to do and then sued HSBC, they would have gotten nothing, the government would have claimed I lost it all and the ban was not responsible. The government then put a gag order on me to stop me from helping my clients against the bank! If the bank was not trying to take my client’s money to cover their losses in Russia, then why put a gag order on me if the bank did not do anything wrong?
Then to hide my profits, the receiver handed the notes we issued to HSBC for them to redeem for $606 million pocketing $400 million profit stolen from my company. A former employee bumped into a former HSBC official and he asked what the hell went on. The bankers bluntly told him, the deal offered by the government was too good to pass up. When I asked a NY lawyer why no banker ever is charged or goes to jail, he laughed and said: “You don’t shit where you eat!”
Remember the 1995 collapse of the British Barings Bank because of a “rogue” trader? Nicholas William Leeson was an English former derivatives trader whose claimed fraudulent, “unauthorized and speculative trades” resulted in the 1995 collapse of Barings Bank, the United Kingdom’s oldest merchant bank. Leeson was convicted of financial crime in Singapore court and served over four years in Changi Prison. At the time, I owned a Brokerage House I was asked to bail out by the Japanese government. At our Hong Kong office, Barings wanted to open an account to trade with Leeson in charge.
I knew the corruption of the banks and if the trade went wrong, they would claim he was not authorized. That was the standard operational procedure. Knowing the inside of the industry out, I insisted on a letter from the Board of Directions expressly laying out the credit line for Leeson they requested from my company. I got the letter. So when Leeson supposedly went belly up, guess what. I was quietly paid when everyone else it was said Leeson was a rogue trader.
The New York Post journalist Isabel Vincent who wrote Gilded Lilly, the wife of Edmond Safra, had called me and asked that since I had said that Republic National Bank, Edmond Safra’s, had been illegally trading in my accounts, did I think they were laundering money for the Russian mafia “as they were doing in Madoff’s?” I said I did not know. All I could tell was there were countless errors constantly being put into my accounts and then backed out. At first, I assumed they were “parking trades” in my accounts to use my cash for their margin. Of course, if the “error” was backed out to a different account, they indeed, they were engaging in money laundering.
The court-appointed forensic accountant even wrote to the court about the unprecedented errors in the accounts. The government refused to provide account information to allow them to audit what was going on. The court-appointed counsel, David Cooper, I believe was doing everything he could to help the government cover everything up. The forensic accountant then sent letters to the Judge, and he took no action.
You now have the FTX scandal. You will see that there will NEVER be a trial that would expose all the money laundering where the Democrats had Zelensky, which supposedly needed money to defend his country and fee starving Ukrainians, hand the money to FTX who then happened to be the #2 donor to the Democrats for the midterms. Guess what! Sam Bankman-Fried was charged in the most corrupt court in the nation – the Southern District of New York. The Court of Appeals admitted on page 97 of US v Ziccehtello, that judges are altering transcripts and changing the very words spoken in court. That is 20 years in prison if you or I alter court documents. They do it all the time. When I confronted Judge Richard Owen about this practice, so many people showed up in court to see what would happen. The lawyers said you can’t accuse a federal judge of committing a crime. I said you all say they do it. They responded. Yes, but you cannot accuse them of doing it. The judge got scared and admitted it in public but claim it wasn’t material.
All the press was there AP, New York Times, Bloomberg, NT Post, you name it. NOT a single member of the press reported what took place that day. OMG! Exposing the federal courts corruption? Impossible!
If a case is a high profile, you will NEVER see the truth in the media.
Posted originally on the CTH on January 15, 2023 | sundance
Journalist Matt Taibbi appears on Sunday Morning Futures with Maria Bartiromo to discuss his findings within the ongoing review of the Twitter communication files.
As Taibbi notes, the FBI was asking for the unmasking of several thousand accounts to include usernames, use identity, ip addresses, geolocation of the account holders and other personal identification data that would normally require a search warrant. The Dept of Homeland Security (DHS), the FBI and in some cases the CIA would submit these requests and Twitter was fulfilling, albeit sometimes uncomfortable in the compliance demand. WATCH:
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If you have followed the research behind “Jack’s Magic Coffee Shop,” none of this is likely surprising. However, the ramifications and blatant violations of the fourth amendment are quite stark. It was not that long ago when you would have been accused of being a conspiracy theorist for making these now provable claims.
Mr Taibbi continues to provide the most pertinent takeaways from his reviews. And to his credit, Taibbi always notes there is a pre-filter applied to the information he is receiving; so, it’s highly likely the intelligence state is still controlling the scope of public awareness behind the justification of “national security”.
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This is a library of News Events not reported by the Main Stream Media documenting & connecting the dots on How the Obama Marxist Liberal agenda is destroying America
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