Tag Archives: Modern Money Theory
Interview: The Real Rate of Inflation
Armstrong Economics Blog/Armstrong in the Media Re-Posted May 13, 2023 by Martin Armstrong
The Gold Crash & Our Fate
Armstrong Economics Blog/ECM Re-Posted May 19, 2023 by Martin Armstrong
COMMENT: Marty; Socrates is absolutely amazing. At the start of the year, you showed April as a key turning point in gold followed by May June. The weekly array projected this was the week for the Directional Change. There is nobody with a system like this, which brings to mind its forecasts for war. Ukrainians are out of their mind to go against the trend. They never even considered what if they lose. It seems like a fool’s bet. This not about just occupying the Donbas which has always been Russian. This is about destroying Russia. They should listen to Socrates to save their own country.
Thank you so much for bringing Socrates to the public rather than just institutions.
ANSWER: I know. These forecasts are not my personal opinion. When you put the entire world together, the trend becomes obvious. Just as I said Ukraine needs to lose to save the world, I also know that we will not all escape the end conclusion. Just as a Serb assassinated the Archduke in Sariavo which began World War I, this entire region is notorious for personal grudges and hatreds that draw in the entire world.
Schwab may have taken our forecast for 2032 and rephrased it as his Great Reset and is hoping to push the falling tree into his direction, that too will fail. But between here and 2032, we are entering a phase of chaos and havoc. I wish I could prevent it, but that is just our fate.
Ukrainian Ancient Coin brings more than $5 million at Auction Today
Armstrong Economics Blog/Ancient History Re-Posted May 18, 2023 by Martin Armstrong
The Balkck Sea Trade – Tauric Chersonesus, Panticapaeum.
This is probably the finest known Gold Stater (circa 350-300AD) of Panticapaeum, which was the most powerful city in the Tauric Chersonesus with deep involvement in the lucrative Black Sea grain trade for even back then, Ukraine was a major bread-basket in the ancient world as well. This coin is featuring the facing and bearded head of Pan, with the reverse of a Griffin standing left. The griffin type probably alludes to the mythical composite creatures who were believed to guard the gold found in the mountains of Scythia. The Greeks were wonderful storytellers with vivid imaginations. Herodotus describes the griffins as neighbors to the Arimaspi, a northern people each possessing a single eye in the center of their foreheads, who made constant attempts to steal the gold (4.13.1). Pliny the Elder, who accepted the story at face value, expanded it to note that the griffins made their nests in burrows in the ground which contained gold nuggets and it was these that the Arimaspi tried to take while the griffins were merely defending their eggs and young (HN 7.2, 10.70).
The providence of this coin dates back to Ex F. Schlessinger XI, 1934, and it was sold as the Russian Hermitage duplicates part II, lot 102. It was then sold in the New York XXVII, sale of 2012, where it was featured on the cover. Previously privately purchased from Bank Leu in 1991 in Switzerland. This coin is extremely rare with only a handful known at best. It’s artistic design is considered to be unsurpassed. This is probably the finest known. It sold at auction back in 2012 for $325.000 + 20%
This coin just sold today in Zurich, Switzerland for 4,400,000 CHF + 20% Commission fee. In US dollars, that is $4,862,787 +20% = $5,834,400. This was about 1500% rise in just about 10 years. In all honesty, I have collected ancient coins since I was probably 12 years old. The field of ancient coins has expanded worldwide with major collectors from China to Russia. This coin was estimated at $1,250,000. The sale continues tomorrow with the Roman. I am truly shellshocked by the prices everything is selling for these days. As I have said, ancient coins are a worldwide market unlike particular national coins which fetch the highest prices in their home country.
Ground Reports – What is Your Experience With Prices of “Processed Goods” at Stores?
Posted originally on the CTH on May 13, 2023 | Sundance
Recently I went to the supermarket to pick up some general provisions. Given the nature of previously predicted food price increases, and proactive measures to mitigate the predictable prices, I haven’t needed to purchase basic foodstuffs in a while. Yikes! The prices… Wow.
Since we originally warned in ’21 about the waves of food price inflation that were coming, the prices have more than tripled on many food commodities. That part is not as surprising in current review; however, the prices of processed foodstuffs is, well, quite frankly astounding.
I am left to wonder how working-class people are able to afford the jaw dropping price increases in highly processed food products like condiments (mayo, ketchup, mustard, etc), and even coffee and milk. I knew the processing costs would drive those prices, but the scale is just astounding.
Beyond the foodstuff, what was truly stunning was the current price of non-food items at the store. Items like chemical cleaners, soaps, aluminum foil, trash bags, Styrofoam products, ziploc bags, paper goods, etc. I mean seriously, $8 for a box of trash bags, good grief.
After a review of the non-food item prices, I went back to the recent BLS report [DATA HERE] to look at the producer price index to see if the data reflected the scale of the processing cost that I was reviewing across a broad spectrum of goods.
Are consumers getting gouged by manufacturers who are taking advantage of the price shock inside the ongoing inflation?
Or are the processing costs, mostly driven by energy price increases, really that big a factor in the end product as it is generated?
In the topline final demand Producer Price Index [Table A above] you can see how we are cycling through the second wave of inflation that hit in the spring of 2022. The rate of price increase is lower, but the prices are still rising. That means the prior massive price increase is now baked into the product, and the current price will never decline. Instead, it will just increase at a slower rate than before.
However, that’s not the full story… and that is not the data I was most curious about.
The intermediate product costs are really where the story is found.
Table B [DATA HERE] Tells us a remarkable story.
Raw materials (unprocessed goods) are essentially in a deflationary status [-19.2% in April]. Meaning demand for the raw material has dropped well below the available supply. However, look at how much of the deflationary price is consumed in the processing of the raw materials.
A full 16% is consumed by processing cost increases [energy, physical plant, transit, production costs etc]. That is remarkable.
A random example might be citric acid. The price of the citrus base drops 19.2%, but the processing of the base into the intermediate good phase chews up 16% of the drop in raw material price and exits processing only 3.2% lower in price than a year prior.
Another example might be found in plastics. The petroleum base, and/or a combination of each material additive, might be 19.2% lower than prior year, but processing negates the lower raw material price, and exits into intermediate essentially even -.04, and then toward the ending +2.3% final demand change in the rate of price increase.
The PPI data is essentially showing the flow of costs of production as reflected in the impact during processing. We can assume mostly increases in energy, transport and distribution costs to bring the raw material forward to final good status.
Key takeaway, the demand side of the raw material is diminished. There is less raw material demand. However, processing costs are continuing to drive the final production price of goods that head into the hands of wholesalers who then bring the product to market.
The outcome of this are the prices of processed goods as noted in the products on the shelves.
QUESTION: Are you noticing rather remarkable price increases in non-food goods during your store visits?
The 12 Caesars
Armstong Economics Blog/Hoards Re-Posted May 13, 2023 by Martin Armstrong
As far as the 12 Caesars are concerned, I am doing my best to assemble a few sets. These are not easy to put together. Nevertheless, I am giving it a shot to see what I can do that would be reasonably priced, under that $100k people ask on the market. I believe reasonably excellent VF/XF sets for around $50,000. But this is not something that quantity exists. This is very hard to assemble. I’m still trying to fill in some gaps. They will be presented in a nice wooden case.
The California Contagion – PacWest Teters on Becoming the Next Regional Bank to Collapse as Regional Banking Stocks Continue Severe Drops
Posted originally on the CTH on May 4, 2023 | Sundance
According to those who relish the Cloward-Piven strategy, things are proceeding swimmingly.
…”As long as the decisionmakers continue doing the things that are creating the crisis, the crisis will continue.”
Federal Reserve Chairman Jerome Powell said yesterday the “U.S banking system is sound and resilient,” insert uncomfortable snicker here. However, uncertainty is continuing to pummel the banking industry, despite assurances from the Fed, Treasury, FDIC financial regulators and bankers such as Jamie Dimon who are all saying there is no crisis in the banking industry.
If you want to know the big picture source of the uncertainty, it’s the great pretending. The average person can sense something is wrong, and the person who pays attention has the experience of institutional lying over the past several years. The last ten years of lying and pretending has created the biggest collapse in institutional trust in U.S. history.
Russians interfered with the election – trust us. Stick this needle in your arm, it’s safe – trust us. The FBI are the good guys – trust us. Biden won more votes – trust us. This inflation is merely transitory – trust us.
See the problem?
So, when the same voices shout, “the banking industry is sound, trust us,” well,… yeah, that suspicious cat sense that’s on high alert isn’t buying the chorus.
Reasonably intelligent people who accept things as they are, not as they would have us pretend them to be, can see the core connection to the World Economic Forum, Central Banks, and western globalist policy to change the entire dynamic of economics and finance around the “Climate Change” agenda, or Build Back Better, or Green New Deal.
Overlay that commonsense and pragmatic outlook with the logical consequences of the activity, and this banking collapse issue is a self-fulfilling prophecy. As long as the decision makers continue doing the things that are creating the crisis, the crisis will continue.
(Via Wall Street Journal) – Regional-bank stocks tumbled Thursday despite assurances from the Federal Reserve that the banking system is on solid footing.
PacWest Bancorp PACW -47.04%decrease; red down pointing triangle, which has been hit hard since the collapses of several banks, dropped by about 40%. The stock started falling in after-hours trading Wednesday evening, after a report that it was considering selling itself.
PacWest said in a statement after midnight Eastern Time Thursday that its core customer deposits were up since the end of the first quarter, and that it hadn’t experienced any unusual deposit flows since the collapse of First Republic.
[…] Investors have been wondering how much further the problems in regional-banking could spread, and whether they will spill over to the broader economy. Some analysts said the decline in PacWest and others reflected the market’s tendency to view news as categorically good or bad, rather than worries about PacWest specifically. Western Alliance, another bank whose stock has been hit hard, fell by about 35%.
[…] Regional banks, as major lenders to businesses and families across the U.S., also tend to fall when investors are expecting a recession. The 10-year Treasury yield slipped this week, and Brent crude hit a 52-week low on Wednesday.
[…] On Wednesday afternoon, the Fed said the U.S. banking system “is sound and resilient,” echoing language from its March statement. Fed Chair Jerome Powell added then that deposit flows at banks had eased and that this week’s seizure and sale of First Republic should further stabilize the industry.
[…] PacWest shares were recently trading around $3.70, putting them on track for their lowest close on record. The stock has now lost some 85% of its value since March 8, the day that SVB spooked bank investors by announcing a loss and a planned capital raise.
Many of PacWest’s customers are tied to technology startups—a tightknit clientele that pulled from high-balance accounts en masse at Silicon Valley Bank before it failed. (more)
First Quarter GDP +1.1% Reflects Military Spending on Ukraine War, and Drop in Domestic Investment Along with Inventories
Posted originally on the conservative tree house on April 27, 2023 | Sundance
The Bureau of Economic Analysis (BEA) released their first quarter estimate of economic growth [DATA HERE] and the result of 1.1% growth shows how the U.S. economy has become dependent on government spending money we don’t have. The Gross Domestic Product (GDP) calculation is a valuation of all goods and services created within the U.S. economy, minus the value of goods and services imported.
Keep in mind that all calculations are in dollar terms. Personal consumption expenditure (PCE) prices increased 4.2% in the first quarter after increasing 3.7% in the fourth quarter. Excluding food and energy, the PCE “core” price index increased 4.9% after increasing 4.4%. Two-thirds of the increased spending on goods was driven by higher prices, only one third by consumers purchasing more stuff.
Looking at Table 2 (the percentage change by sector) the increase in prices provided 2.48% lift to the GDP but the actual purchasing of goods only delivered 1.45%. Meanwhile the decline in inventories subtracted 2.26% from the GDP, a major factor, and domestic investment has dropped subtracting 2.34%.
Government expenditures (+0.81) drove more than 70% of the total GDP growth as national defense spending (Ukraine War) was a major federal component. The local and state government spending increase was driven by higher wage rates. Don’t forget there’s $2.2 trillion in Inflation Reduction Act (Green New Deal) spending that is also within the economy.
Overall, this is a dark picture. Inflation is still raging. Inventories are dropping as consumer purchasing is squeezed, and replacements goods are not being manufactured. Companies are tightening their belts. The federal government is spending to try and assist the economy, but the private sector is contracting economic activity.
When households evaluate their checkbooks, a Biden administration claim of a growing economy falls flat – because the only part of the economy that is growing is the part that fuels the energy and security needs of Europe. Main Street USA is suffering through the massive inflation that Joe Biden has created, and purchases of anything other than necessities have come to a near halt.
Chrysler Cutting 3,500 Union Auto Jobs
Posted originally on the CTH on April 26, 2023 | Sundance | 187 Comments
Earlier GM cut 5,000 salaried workers and several hundred hourly jobs. Ford previously announced it would cut a total of 3,000 salaried and contract jobs, mostly in North America and India. Now, today, Chrysler parent company Stellantis announces 3,500 auto sector job cuts.
Stellantis owns the Jeep, Ram, Chrysler, Dodge and Fiat brands. Apparently, there is something in the U.S. economy that’s happening despite the great pretending….
Biden in Michigan, speaking to auto-workers, 2020
WASHINGTON, April 25 (Reuters) – Chrysler-parent Stellantis NV (STLAM.MI) wants to cut approximately 3,500 hourly U.S. jobs and is offering voluntary exit packages, according to a United Auto Workers union letter made public Tuesday.
The automaker is looking to reduce its hourly workforce offering incentive packages that include $50,000 payments for workers hired before 2007, UAW Local 1264 said in a letter dated Monday posted on its Facebook page.
Stellantis spokeswoman Jodi Tinson declined to comment. A person briefed on the matter said the figure might be lower than the figure cited in the UAW letter.
In late February, Stellantis indefinitely halted operations at an assembly plant in Illinois, citing rising costs of electric vehicle production.
The action impacted about 1,350 workers at the Belvidere, Illinois, plant that built the Jeep Cherokee SUV and resulted in indefinite layoffs. The automaker has warned it may not resume operations as it considers other options. (read more)
The Investment Recovery Act (IRA), aka “the green new deal” multitrillion spending bill, was supposed to enhance autoworkers. Funny how the exact opposite happens.
The incentive packages outlined in the UAW Local 1264 letter included the following details:
- Incentive Package for Retirement: $50,000 for seniority members hired prior to the 2007 agreement.
- Voluntary Termination of Employment Program: guaranteed lumpsum benefit payment and is applicable to employees with at least 1 year seniority.
Overall govt spending and regulatory controls drove inflation for these past two years. The ‘demand side’ was blamed, despite the lack of demand. I will be proven right when history is concluded with this. Interest rates were raised by central banks in an effort to support the policies that are driving ‘supply side’ inflation, not demand side.
Energy policy was/is crushing the consumer by driving up the cost of all goods and services. To support the overall goal of changing global energy resource and development (a false and controlled global operation), central banks raised interest rates. Various western economies, including our own, have been pushed deeper into a state of contraction by central banks crushing consumer demand, and eliminating investment via increased borrowing costs.
In short, the goal was/is to lower energy consumption by shrinking the economic activity. This, according to the BBB plan, was needed at the same time as energy development was reduced.
These economic outcomes are not organic, they are all being controlled by collective western government agreement.
The Great De-Dollarization Fraud of a Lifetime
Armstrong Economics Blog/USD $ Re-Posted Apr 24, 2023 by Martin Armstrong
COMMENT: Marty; I was in a board meeting and I just wanted to let you know one guy who is there simply because his family had a stake in the company with zero worldly experience, started ranting about the end of the dollar he probably read on that biased _____________________. I asked this fool, should we then move all our company funds to Russia or China since Brazil is too small of an economy? Should we stop dealing with Americans? He had no response.
Separating a fool from his money seems to be a never-ending fact about humanity.
You are the only sane one out there these days
REPLY: I know what you mean. The people promoting this BRICS nonsense have no understanding of the real world. Institutions cannot park billions in Brazil, China, or Russia. Especially in the face of war. The reason the Euro has failed as a serious reserve currency is that there is NO NATIONAL EURO DEBT! Institutions have to still jockey between the various risks of each country and all the Euro did was transfer the foreign exchange risk to the bond market. Sorry, I just do not see where the dollar is in some state of collapse.
When they came to me to create the Euro, I warned them that there would be no single interest rate without the consolidation of the debt. But Kohl never allowed the German people to vote on joining the Euro, so he would not allow the consolidation of the debt. I was told then that they just had to get the Euro started and they would worry about consolidating the debts later. Of course, that never came. Hence, the volatility in FX simply moved to the debt market. The bottom line – the US dollar is still the ONLY place for major institutions to park money – PERIOD! They are not buying Brazil, China, or Russia.
World Trade as a percent of total world GDP PEAKED in 2008 at 61%. It has been in a bear market that will not bottom before 31.4 years taking us into 2040. The sanctions on Russia have divided the world economy and killed SWIFT but it has also ended globalization. To think that the BRICS can replace the dollar with ZERO capacity for international capital to park in such markets is the delusion of absolute fools. China will surpass the USA, but only after 2032.
So here we go again. This nonsense is leading unsuspecting people to follow the piper to divest of dollars and move into what exactly? Most of this is propagated by the gold bugs who will NEVER listen. They hate the dollar because they think gold will rise then. What kind of a world will exist if their doom and gloom were a reality? You might not have any place to spend your wealth. I own gold NOT as an investment, but because of its neutrality.
There is such a major fraud going on with digital currencies with people reporting that the latest scam is using social media to tell people to transfer all their cash to a digital wallet, and BTW – here is the link! If you believe that one, perhaps you would like to buy the Brooklyn Bridge. NYC has a deficit and they will sell it for all the money in your savings. Wake up!