Tag Archives: Keynesian Economics

Mar 12 2016

The Central Bankers Are Crazy & Public is Out Of Its Mind – Where’s the Beef?


Armstrong Economics Blog

Re-Posted Mar 12, 2016 by Martin Armstrong

Crazy

The central bankers are simply crazy, not evil. They are trying to steer the economy by utilizing this simpleton theory that if you make something cheaper, someone will buy it. Japanese and German cars managed to get a major foothold in the U.S. because the quality of U.S. manufacturers collapsed, thanks to unions. The socialist battle against corporations forgot something important – the ultimate decision maker is the consumer. The last American car I bought in the 1970s simply caught on fire while parked in my driveway. Another friend bought a brand-new American car and there was a terrible rattle. When they took the door panel off, there was an empty bottle of Coke inside. Cheaper does not always cut it. Gee, shall we cheer if the stock market goes down by 90%? It would be a lot cheaper. Why does the same theory not apply?

Crazy IIThen we have the trading public. If the central bankers have gone crazy with this whole negative interest rate theory, then the public is simply out of their minds. The euro rallied because Draghi cut rates further, extended the stimulus another year, increased the amount by another 33%, and then declared rates would stay there for years to come. And these insane traders cheer. Unbelievable! They are celebrating the public admission of Draghi that all his efforts to date have failed, so let’s do even more of the same. And they love this nonsense? Negative interest rates have become simply a tax on saving money and the stupid traders and media writers love it. The Fed tries to raise rates and they say – NO! This is a stunning combination of admission and stupidity that one would expect from a pretty but clueless girl and her drunk college boyfriend who can’t say no to any girl:

“I asked John if he slept with Karen and got his admittal!”

“Oh that’s cool, I think it’s probably about time you stopped drinking.”

All they see is that lower interest rates “should” stimulate but ignore the fact that they never do. They are too stupid to grasp the fact that raising taxes cannot be offset by lower interest rates. People judge everything by the bottom-line and not some crazy theory that just stupid. A simple correlation study by a high school student in math class would prove this theory does not correlate to expected outcome. And we cheer this insanity confirming our own overall stupidity and one is left wondering who is crazier? I suppose it is just that central bankers are crazy and the public, as well as the media, are just out of their minds.

It reminds me of the old TV commercial by Wendys:

Mar 12 2016

The European Refugee Crisis is Destroying Europe


Armstrong Economics Blog

Re-Posted Mar 12, 2016 by Martin Armstrong

DWN-Köln-Gewalt-1-11-2016

Ever since the Cologne sexual assaults by the refugees, things have gotten far worse in Germany. The press tends to still hide the crisis. Nevertheless, drawing only from German media reports which have made it to the public, a list documenting more than 160 instances of rape and sexual assault committed by refugees in train stations, swimming pools and other public places against victims as young as seven have been eye-opening to say the least. This is going to have a profound impact in the German elections next year but it is also tearing Europe apart and pressure builds to close borders to prevent these people from spreading out from Germany to the rest of Europe.

German Sexual Assaults

The New York-based conservative think tank Gatestone Institute has compiled a shocking list of sexual assaults and rapes by migrants in Germany in just the first two months of the year. This is stunning to put it mildly. Merkel does not appear to be able to survive this crisis.

German News-20160307 German News-20160307-2 German News-20160307-3

Then nearly everyday some knife attacks among refugees are reported in the Austrian press. We have Africans against Arabs and those from Chechnya are against Afghanistan. In Austria, the general public is becoming terrified to even walk outside in many areas.

Mar 11 2016

The ECB – A Victim of its own Ignorance?


Armstrong economics Blog

Re-Posted Mar 11, 2016 by Martin Armstrong

Heads-Tails

Mario Draghi

“Rates will stay low, very low, for a long period of time and well past the horizon of our purchases,” Draghi declared. “From today’s perspective and taking into account the support of our measures to growth and inflation, we don’t anticipate that it will be necessary to reduce rates further.” The ECB cut its main interest rates to new record lows on Thursday as they continue to move into negative territory without a clue as how to reverse the trend. Beginning in April, the ECB will buy €80 billion euros worth of bonds each month, which is an increase from the €60 billion euros presently. Draghi will keep the stimulus program running at least until March 2017. However, while he thinks simply lower interest rates will entice people to borrow, he fails to see the other side of the coin that is spinning.

Beginning in April, the ECB will buy €80 billion euros worth of bonds each month, which is an increase from the €60 billion euros presently. Draghi will keep the stimulus program running at least until March 2017. However, while he thinks simply lower interest rates will entice people to borrow, he fails to see the other side of the coin that is spinning.

Lower rates rob savers of income, destroy pension funds, and leverage the debt to a dangerous level when the trend changes. People will not borrow or spend when they have no confidence in the future and businesses will not hire or expand. You cannot stimulate the economy with lower rates while crushing it with taxes.

It is true that the economic community was expecting a rate cut and more asset purchases of government debt. However, the ECB went further this time by saying it will start buying debt issued by companies as well as governments. While that is an improvement for corporations, whom typically have to pay back their debt unlike government, there is a dark cloud behind this statement. The debt they will buy, according to reliable sources, will be riskier debt of entities (banks) that are in trouble.

Einsteing-thinking

Nothing these people can do will ever reverse the trend. They raise taxes to cover their fiscal mismanagement and then “stimulate” by employing monetary theory. They will never resolve the problem and this entire crisis will go into meltdown since governments only borrow more and never reduce debt. They have become victims of their own ignorance.

 

Mar 6 2016

Lagarde – Wants to Raise Retirement Age & Taxes to Steal More of Your Money


Armstrong Economics Blog

Re-Posted Mar 6, 2016 by Martin Armstrong

Lagarde Christine imf

Christine Lagarde remained at the IMF and one of three Troika members because she is a Socialist and on board with both raising retirement ages to cheat people out of what they planned and to raise taxes while closing all borders to the movement of capital. She is also pushing behind the curtain for the SDR to replace the dollar and then the IMF becomes the power behind a one-world currency without ever having to stand for election anywhere.
Lagarde if pitching as a priority the lifting of retirement ages to match her excuse, the increase in longevity gains. People have been taxed their whole lives and governments have squandered that money while making lavish promises. Now Lagarde was retained at the IMF because she can push the Socialist agenda which is robbing the average person while blaming the rich. She does not have to worry about elections so she can do as she likes. Then pension systems around the world world are collapsing not just due to demographics, but the stupidity of government management. Lagarde is looking to use the demographics as the excuse because government have been robbing the people all along while blaming the rich. Lagarde is looking to alter the pension systems by extending the “productive life” expectancy of individuals. Extending the retirement age will allow them to tax you longer in life while shortening your benefit period of retirement. If government was managed properly and honestly, there would be not such crisis had money actually been saved instead of spent.
Largard has been running around the world threatening all tax heavens that they would be blocked from the Swift System if they did not turnover all accounts. She even threaten the Vatican. Then she proposes broadening the tax base for consumption taxes (value-added or sales taxes), so everyone will pay a lot more including on the internet. Lagarde also wants to increase taxation of energy. She see the fall in oil as a windfall for new taxation to take prices back to their highs while enriching government.
Then she wants to improve taxation collection and proposes a tax on multinational corporations. She has supported the 2017 G20 accord to share info on everyone. Thus, Lagarde seeks to expand tax enforcement on a global scale making sure there is no place to hide. In the fiscal side, she argues that governments need to be better managed. However, she has no real suggestions how to accomplish that goal.

Beware of the IMF. They are seeking to emerge as the leader of a new one-world currency system.

Mar 6 2016

Bavarian Banks Not Depositing Money at ECB


Armstrong Economics Blog

Re-Posted Mar 6, 2016 by Martin Armstrong

ILLUSTRATION - 5000 Euro in 50-Euro-Scheinen werden am 03.02.2016 am Schalter einer Sparkasse in München (Bayern) in einer Geldzählmaschine gezählt. Foto: Matthias Balk/dpa (zu dpa «Bundesregierung wirbt für Bargeld-Limit von 5000 Euro» vom 03.02.2016) +++(c) dpa - Bildfunk+++

Bavarian banks have figured out that negative interest rates are insane. They must pay the ECB to hold their cash. They have decided it is better to store their cash and eliminate deposits at the ECB as reported by Spiegel Online. These people are just brain dead. They think negative interest rates will somehow “stimulate” the economy. No, they

Mar 4 2016

Hollande Objects to Any Special Deal for Britain to Stay in EU


Armstrong Economics Blog

Re-Posted Mar 4, 2016 by Martin Armstrong

Hollande-Francois-4

Sometimes you really have to ask: Is French President Francois Hollande simply clueless? At a European Union summit, Hollande said he opposes Britain’s demands for special treatment for its financial markets as a way to keep Britain in the bloc. Hollande has bluntly said that Britain cannot veto what happens in the Eurozone. Hollande’s socialist agenda will never yield. He is so out of touch with reality. If Britain remains in the EU, it will be the end of the financial markets in Britain. You definitely want to get your money out before you cannot. There is little doubt that Hollande will outlaw shorts, and that will destroy liquidity. This may be the final straw that diverts the financial capital of the world to Asia

Mar 4 2016

Germany on the Threshold of an Unprecedented Radicalization


Armstrong Economics Blog

Re-Posted Mar 4, 2016 by Martin Armstrong

Maassen Hans-Georg

The president of the German secret service, Hans-Georg Maassen, has come out and warned that the uncontrolled immigration has created a serious safety risk to Germany because the authorities no longer know who is in the country. If people think U.S. politics are going in the gutter, look at Germany where politicians have created a clash between polarized left and right-wing extremism. Maassen warned that an Islamist or right-wing attack in Germany could lead to an explosion of social unrest. Maassen has virtually shown that Merkel’s decisions have placed Germany at serious risk, but has also fueled the movement to end the Eurozone.

cycleofwar-2014

Merkel’s decision happened at the worst possible timing. As the European economy turns down further, the cost of the refugees will send taxes even higher. The civil unrest our model has been predicting is on schedule. It is linked to the economy and when that turns down, this cycle will turn up.

Mar 2 2016

Super Tuesday Debrief, Primary Results and Anticipated GOPe Reactions….


This is war and in war the tactical plan ends when the battle begins. So far trump is ahead but there is still a long way to go — Trump needs to win Ohio and win in Florida those are must wins and we must do everything we can to achieve that goal.

Mar 2 2016

Moody’s Warns of 30% Rise in Commodity Based Company Bankruptcies in 2016


Armstrong Economics Blog

Re-Posted Mar 2, 2016 by Martin Armstrong

gold-prospector

The Commodity industry is bracing for a high year of bankruptcy and default filings impacting mining & metals along with oil & gas. Moody’s has also warned of global speculative-grade corporate defaults will increase by more than 30% in 2016 reaching the highest level since 2009. Those interested in mining shares should pay close attention to what you are buying. Until gold crosses that key resistance, we still have only a typical 3 month reaction. A rally must extend beyond March to  be impressive.

Mar 2 2016

Moody’s Lowers Credit Rating of China to Negative from Stable


Armstron Economics Blog

Re-Posted Mar 2, 2016 by Martin Armstrong

beijing-2

Moody’s lowers outlook on China’s credit rating to negative from stable. We have been warning that our models on China indicate that the bottom in the economy does not appear likely until 2020. This should be a 13 year contraction. So far that forecast appears to be on target.