Governments Playing with Numbers


QUESTION: Hi Mr. Armstrong.
I’ve learned more reading your blog last 4 years than working in finance for 20 years. As you say, the average employee in finance hasn’t got a clue about what’s going on.
Question: There’s one thing that has bothered me for a long time; uncertainty about numbers regarding GDP, unemployment and so forthcoming from governments; are they trustworthy?
The reason behind the question is what happened during 2007 to 2009, where banks, rating companies as Fitch, Standard & Poor, Moodys, SEC, and all who are supposed to be reliable were lying about the real situation for several months before the bubble popped. Subprime loans didn’t get downgraded for several months even though there were severe defaults all over.
Are the key numbers revealed trustworthy when we know what the finance sector is capable of regarding lying/hiding, and now there are the government’s own bonds at stake?
Best regards
FF

ANSWER: Thank you. They just do not teach international analysis anywhere. It is the foundation of hedge fund management. It is also why we have the largest international client base anywhere. I have been asked now by three universities to teach. I just do not have the time. I keep telling myself I should do a textbook. I think I will get to do it in my next life perhaps. There never seems to be enough time.

Regarding the numbers, I have two factual encounters that have formed my conclusion. Because I have been an international adviser, I had to look at the numbers globally. What I discovered back in the 1980s was that every country had its own formulas. Comparisons were not realistic. I was asked if I would debate the top economist in Canada because my comments on economics were different from everyone else’s. I said sure. I debated him in Vancouver and it was hosted by Michael Campbell. The economist kept trying to compare GDP and inflation for Canada and the USA, and I would just respond that the formulas were completely different. He knew that, but economists only have the government numbers to play with. After I corrected him several times, he lost his cool on stage and said, “I am sick and tired of you Americans coming to Canada and telling us what to do!” At that moment, Mike Campbell stood up and ended the debate. After that, the AAP in Australia asked me if I would debate the top three economists in Australia on national TV. I said sure, why not. They all declined.

I hired a staff member, Lynn, who worked for me before she got married back in the 1980s. She was fantastic. Her job was to analyze the numbers of every country (below is one of her notes on inflation). We tore apart every country and created our own set of numbers that allowed us to actually do real-world comparisons to identify global trends. By the end of the 1980s, I was named the Top Economist in America all because we had the real numbers and not the government’s fake numbers they like to play with.

Going into 1980, just about everything was indexed to inflation basis the CPI. Even private contracts for rents were typically indexed to the CPI. The government discovered that if they could change the formula to reduce inflation, they could reduce expenditures. The CPI revisions began removing real estate and replacing it with rents on the theory that real estate was an investment — not your cost of living. They then reduced the sample to rents where they were controlled, which further reduced inflation. They have altered the number so many times that it is IMPOSSIBLE to ever get inflation based on the CPI back to the 20% level of the late 1970s.

One day Lynn came to me and asked me to review her work for she could not find a mistake that was so obvious. In GDP, the government calculates total government spending as a component. They also add total personal income. The mistake stared us in the face. It appeared that GDP was counting workers for the government TWICE: (1) total spending, and (2) total personal income. We searched every calculation to try to find where they were accounting for this blatant era. I knew the top people at the BEA (Bureau Economic Analysis) so I called, explaining the error, and asked for assistance in showing me where it was backed out. They said they would check and get back to me. Several weeks passed and no return phone call. I called my friend again. His response: “No comment.”

Using government numbers is Pandora’s Box we dare not rely on. Zeus presented Pandora a box/jar as a gift and when she opened it, sickness, death and many other unspecified evils and plagues were then released into the world. The only thing which did not escape before she tried to close it was hope.


Notes for our 1986 research project: (N.S.A = not seasonally adjusted: S.A = Seasonally adjusted)

Inflation  11/21/86

 

What to say?  US has many measures.  WSJ more or less picks up most of them but seems to emphasize s.a. change in a month.

Best to use year over year for int’l comparisons, probably.  Do we or don’t we have seasonal adjustment problems then?  IN U.S. we get month over year ago n.s.a.

What about the compound annualized rate for calculation of real interest rates? This way we’d have two forward-looking rates.  It’s probably a good idea to work with an average for three months

If we want to talk about GNP growth and consumer price inflation in the same breath, be sure the percentage changes are figured in the same direction: annualized forward, or compared with the same period in the prior year.

BLS says that to look at the trend, it’s best to look at s.a. numbers.  If we want to know about actual prices we’re paying, unadjusted numbers are best

Japan’s CPIs seems to be n.s.a.  UK RPI is n.s.a.  German cost-of-living indexes are n.s.a., but we have s.a. in Supplement on S.A. Economic Data.

Remember that consumer price inflation in Latin American countries is typically reported as changes between the current period and previous period seasonally adjusted at compound annual, rates… i.e. as forward-looking rates.  But there’s another twist. They usually say something like “bringing cumulative inflation to 67% so far in 1986.”

 

Navy SEAL Eddie Gallagher Responds to Command Targeting and President Trump Support…


Navy SEAL Eddie Gallagher has really been put into a narrow gauntlet by a military command structure that does appear to be attempting retaliation and retribution against a warrior out of spite.  It is a remarkable dynamic and very troubling to see two high ranking military leaders seeming to rebuke the civilian command structure.

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Purely my opinion; but I would feel much less nervous about the stability of our military leadership if Navy Secretary Richard Spencer and Rear Adm. Collin Green resigned.  Rogue military leadership is troubling in the framework of our constitutional Republic.

Chinese State Councillor Wang Yi: “There is no way out for the zero-sum games of the United States. Only win-win cooperation between China and the United States is the right path”…


I can’t stop laughing…. just too darned funny.  CTH has long outlined how President Trump has taken the decades-long panda-mask game/approach of Beijing and mirrored it right back upon them.  Today Chinese Coucillor Wang Yi, while delivering a strongly worded statement to G20 ministers, is positively verklempt in his open admission therein.

Our President Trump is the only person who could have delivered this wonderful outcome… well done.  Beijing is very angry about how a U.S. President is disrupting a new world economic order that China has so artfully manipulated for the past two decades.

It is simply beyond delicious.

(Reuters) – The United States is the world’s biggest source of instability and its politicians are going around the world baselessly smearing China, the Chinese government’s top diplomat said on Saturday in a stinging attack at a G20 meeting in Japan.

Relations between the world’s two largest economies have nose-dived amid a bitter trade war – which they are trying to resolve – and arguments over human rights, Hong Kong and U.S. support for Chinese-claimed Taiwan.

Meeting Dutch Foreign Minister Stef Blok on the sidelines of a G20 foreign ministers meeting in the Japanese city of Nagoya, Chinese State Councillor Wang Yi did not hold back in his criticism of the United States.

[…]  The United States has, for political purposes, used the machine of state to suppress legitimate Chinese businesses and has groundlessly laid charges against them, which is an act of bullying, he added.

“Certain U.S. politicians have smeared China everywhere in the world, but have not produced any evidence.”

The United States has also used its domestic law to “crudely interfere” in China’s internal affairs, trying to damage “one country, two systems” and Hong Kong’s stability and prosperity, he added.

[…] “There is no way out for the zero-sum games of the United States. Only win-win cooperation between China and the United States is the right path.”  (more)

How’d ya like ‘dem apples:

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Trump Under Siege: Dealing with Kim, Xi, Hong Kong, Middle East as Impeachment Rolls


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Amped up trouble with China, North Korea, Hong Kong and the Middle East, compete for President Trump’s attention even as he’s besieged daily with the impeachment inquiry that divides his friends and excites his enemies. How is Trump under siege dealing with Kim Jong Un, Xi Jinping, Israel and the rest, during the greatest crisis of his presidency? Does he look weak to our adversaries, or is he more confident than ever as he engages in a daily struggle (at least in his mind) of good versus evil? As Bill Whittle Now with Scott Ott approaches its 300th episode, we’re grateful for the Members who have made it possible for us to analyze breaking news in the context of timeless principles. They also run their own vibrant blog, and carry on vigorous civil dialogue in the Members-only comments, forum, and private messages. Explore our deep archive and find your people at https://BillWhittle.com

 

President Trump Disrupted DC’s Ability to Monetize Government…


Listening to the pearl-clutching from State Department foreign service officers; and looking at the circular laundry operation where DC politicians send taxpayer funds overseas and then use networks, friends and families to capture those same funds for their own personal financial benefit; while overlaying how much Hillary Clinton corruption the U.S. Justice Department, State Department and intelligence community hid in the 2016 election; the big picture emerges.

When politicians in Mexico or Afghanistan accept bribes we call it corruption, but when DC politicians participate in the exact same process we call it “lobbying”. It is no wonder the Clinton Foundation starts losing money as soon as the political influence over policy no longer exists. It is also no surprise why those same donors hate President Trump.

In the larger picture it is clear the Obama administration weaponized institutions of government to target their political opposition. It is also increasingly clear a Hillary Clinton administration would have further monetized the U.S. government.

President Obama’s team used the IRS, DOJ, CIA, FBI and State Dept. to target their opposition. The intelligence apparatus was weaponized; one small example that scratches the surface is the FBI/NSA FISA(702) database exploitation. Black files on DC politicians, private sector groups and individuals facilitating leverage, and we are still seeing the ramifications.

When business executive Patrick Byrne discussed his role within the “political espionage” operations, he was describing this exact process; not coincidentally he also seems to have retreated into a safe-space.

Big multinational interests, Big Pharma, Big Ag, Big Global Banking interests, etc, were exclusively supporting both President Obama and candidate Clinton. The domestic politics of the U.S. were/are tools toward an end; and, so long as the person occupying the Oval Office did not interfere with multinational objectives, they too would benefit financially.

It is also obvious the opposition to President Trump, those who are really coordinating and manipulating the grassroots sheeple, are funded by these same multinational interests.

The college kid wearing a pink pussy hat is oblivious, but the executive offices of the Deep State FBI and Intelligence Community under James Comey, Andrew McCabe, or even Christopher Wray and AG Bill Barr are not; they know.

Additionally, the current occupants must also know that we know. Likely a great many more people are aware of the bigger issues than ever before. Perhaps this explains the dynamic of DC resistance angst amid those same occupants.

Think about how much the DOJ and FBI did to protect candidate Clinton.

Obviously, in their down-time discussions, they would have discussed and recognized some benefit would be forthcoming.

No entity would go so far out on an obvious limb of corruption if they did not perceive some personal benefit on the horizon.

Think about how much leverage James Comey would have held over the institution of the Office of the President if they had succeeded. If the sum total of dirt on Trump filled a bucket, by comparison Hillary Clinton owns a landfill.

Thousands of bills written by the multinational lobbyists were awaiting her arrival. Think of the scale of multinational effort behind TPP (Asia), TTIP (Europe), Paris Climate Treaty (Global), etc. Literally tens of trillions of graft and scheme within reach of those global financial networks; at the fingertips of the multinational Big Club,… until Donald Trump.

Think of the scale of wealth headed to the top of the pyramid that President Trump halted. Domestically, all of those lobbyist-written bills worthless on November 9th, 2016. All of the DC politicians, sales people indulged to sell those bills, left teetering on the border of functional obsolescence…. It’s quite stunning to think about.

Thus, after the initial shock, all of those interests lashing out in rage; weaponizing every group they can muster. Dispatching urgency to the corporate media forces. The pure unmitigated hatred that started immediately becomes much more understandable in this context.

Years of leftist planning led to President Obama’s ability to weaponize government without being held accountable in the process. Years of assistance by corporate media allies, all building toward the same end goal. How rich would Hillary and Bill have become by simply allowing phase two, “the monetization“, to proceed?

Remarkable to contemplate.

James Comey, Andrew McCabe, Eric Holder, Loretta Lynch, John Brennan, Susan Rice, Sally Yates, Denis McDonough, Valerie Jarrett, Lisa Page, Peter Strzok and many more, including the aforementioned foreign service officers, all knew and anticipated the professional power and personal financial benefits that would have followed…

Political Espionage“….

Mr. Patrick Byrne only barely touched the flame…

It is President Trump standing at the center of the furnace.

Reuters Article Link – – Ukraine Article Link

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Nancy Pelosi Hides Behind Richard Trumka as Excuse for Not Ratifying USMCA….


The U.S. multinationals on Wall Street do not want the USMCA to pass because they don’t want President Trump to have leverage that allows him to continue the fight against China and the EU. It is a simple dynamic, USMCA ratification makes the Wall Street prior investments in China worth less.

In all of these efforts U.S. multinational corporations, big companies on Wall St, are heavily opposed to President Trump because they have invested in those overseas operations. Those companies facilitated the loss of U.S. manufacturing jobs.

Remember, in 2018 the Supreme Court ruled that non-union members cannot be forced to pay for union representation.

That decision led to AFL-CIO President Richard Trumka declaring supportin 2019 for illegal aliens having rights to U.S. jobs and collective bargaining.

There is also now a clear alignment between Wall Street multinationals, and democrats like Nancy Pelosi. Wall Street’s ability to pay Pelosi and political leadership to protect their multinational interests; in combination with corporate promises of funding to Pelosi’s party; has created the unholy alliance of united interests.

It is a political strategy and calculation for Speaker Nancy Pelosi, and Minority Leader Chuck Schumer to attempt to sink the U.S. Main Street economy. Weakening Trump’s China confrontation, blocking the USMCA, and impeding a trade agreement between the U.S. and U.K. are part of that calculation.

(Via CNBC) […]  Pelosi and Neal’s meeting with Trump’s trade representative follows talks with a key labor leader earlier this week. After a Tuesday meeting with AFL-CIO President Richard Trumka, Pelosi said, “we can reach an agreement on USMCA when the Trade Representative makes the new NAFTA agreement enforceable for America’s workers.”

Their meeting with Trumka came a day after the labor leader said “we are not there yet” on an agreement. He added that “we cannot and support any deal that does not deliver for working people.”

The Trump administration needs to submit ratifying legislation to Congress for the House to move forward with approving the agreement. Once the White House submits text, it starts a 90-day window to approve USMCA.

Mexico has ratified the agreement, while Canada has not.

Labor groups and Democrats have worried the agreement will not go far enough to boost wages in Mexico and stop U.S. companies from moving jobs south.  (read more)

President Trump Delivers Impromptu Remarks Touring New Apple Facility – Video and Transcript…


Earlier today President Trump traveled to Austin Texas to participate in the grand opening of a new Apple Inc. manufacturing facility.  President Trump has worked closely with Apple CEO Tim Cook to promote America-First manufacturing.

During the visit President Trump delivered remarks on current events and took questions from the traveling press pool.  [Partial Video and Full Transcript Below]

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[Transcript] –  THE PRESIDENT: Well, thank you very much. It’s an honor to be here. We’re seeing the beginning of a very powerful and important plant. And anybody that followed my campaign, I would always talk about Apple — that I want to see Apple building plants in the United States. And that’s what’s happening. And having — Tim Cook is somebody that I greatly respect — a great leader, a great businessman. And it’s a very special day. For me, this is a very special day.

Our country is doing well, probably better than ever before, certainly from the standpoint of the economy. And we’re in a state that I love: Texas.

And Tim has a couple of things to say, not only about this incredible product that is made right here — very, very unique product — but also about their expansion from this point forward. We’ve already done it up to here. But from this point forward. And the nice part: He doesn’t have to worry about tariffs. Because when you build in the United States, you don’t have to worry about tariffs. It sort of helps people make a decision to come in.

But he’s a very special person, as far as this country is concerned, because of the great job potential and the great job that he’s done. Apple is the first trillion-dollar company, and that was about a year ago. Now it’s about a trillion-three, I think you said. But Apple is doing fantastically well.

So we’re honored that you’re doing what you’re doing. We’re honored to be here with you at this special occasion. And we’ll be back. We’ll be back.

Thank you, Tim. Thank you very much.

MR. COOK: Thank you. I’d like to thank everybody for coming and joining us. And I particularly would like to thank President Trump, Secretary Mnuchin, and Ivanka, and the other members of the administration. I’m grateful for their support and pulling today off and getting us to — this far. It would not be possible without them.

What you’re seeing here — the product, the Mac Pro — is 15,000 times more powerful than the original Mac, and it can perform 56 trillion tasks per second. That’s 56 trillion tasks per second. It’s absolutely blow-away.

We cannot be more proud of the product. It’s an example of American design, American manufacturing, and American ingenuity. We want to thank everybody for coming.

And I turn it back to — oh, one other thing: This morning, we also announced a one-billion-dollar investment, groundbreaking — Rebecca was there with me for this — for a three-million-square-foot site in Austin, about 10 minutes or so away from here. So we view Austin as a very key place for the future of our company. It’s the second-largest site in the world for us, next to our home base in Cupertino.

So — and I’m hoping for, obviously, more investments to come. Thank you very much.

THE PRESIDENT: So Tim was saying, just a little while ago, that he’s starting this massive, new development also in Texas — Austin. But he’s also said something to me about the American economy because he’s, you know, all over the world. I would say there’s probably nobody that’s more over the world than Apple.

And what would you say about our economy compared to everybody else?

MR. COOK: I think we have the strongest economy in the world right now.

THE PRESIDENT: The strongest in the world.

Congressmen, please come over. Our great congressmen. And it’s great to have you. I just see you in the audience here.

REPRESENTATIVE CARTER: Thank you, Mr. President.

THE PRESIDENT: So if anyone has any questions, go ahead.

Steve, go ahead.

Q What did you make of Ambassador Sondland’s testimony this morning?

THE PRESIDENT: Well, I think it was fantastic. I think they have to end it now. He said there was no quid pro quo. “The President did absolutely nothing wrong.” If you look at it — I guess you’ve seen me — I took down exactly what he said. He called and he said — he asked me where we — what should he do. I said, “I want nothing.” Then I repeated it: “I want nothing. I want no quid pro quo. Tell the President” — as you know, of Ukraine — “to do the right thing.”

And then, he finished off and he said, “This is the final word from…the President of the United States.” So what did the President want? “I want nothing.” Okay? “I want nothing.”

And let me tell you, it’s a hoax. It’s a disgrace. It’s an embarrassment to our country. Nancy Pelosi has done a terrible job as Speaker. There’s never been a Speaker that’s done so little. And she’s totally incompetent. And Shift Schiff, he stands up and he tells lies all day long. And even with that — so we have no due process, we can’t have anything. And yet, not only did we win today — it’s over. And some of the fair press — of which there isn’t too much — said this thing is over.

So the President of the United States told this guy, who is no — I mean, the question I asked — and it’s the same question that a number of the congressmen have asked: Why didn’t he put this statement into his opening remarks? It’s the most important — important statement there are.

For this country, for our country to be playing this — we’re opening up massive Apple plants. We have the greatest economy in the world. We have the greatest economy that we’ve ever had in the history of our country. We have the best unemployment numbers that we’ve ever had.

But we have a fake press. We have a phony press. We don’t have freedom of the press in this country. We have a phony press. They’re dishonest, most of them. We have some fine people from — fine journalists and reporters and companies. But most of them are fake and phony. CNN, NBC, ABC, CBS, The Washington Post, New York Times — these are fake papers. They are fake press. And there is — they should be ashamed of themselves, and they hurt our country.

And, to be honest with you, I think it’s a great tribute to all of those people in swing states and all of those people in this country. We had an Electoral College — as you know, Congressman, we had a landslide — 306 to 223. We had a landslide. And they’re trying to take it away because they can’t do it fairly.

But these are bad people. Nancy Pelosi is incompetent. She’s gotten nothing done in Congress. And now, with their big star witness — this was going to be their star witness. Now, just so you know, I don’t know him very well. He’s a guy that got put there. He wasn’t even on my side. He came over to me — I didn’t even know that. He came over to me after I defeated other people. I defeated them all.

But you know what? What — what, really, we have to learn from this whole thing is the press. They ought to straighten out their act. Because we have the greatest country in the world but we have room to get even greater. But with a fake press, with the media the way it is, they should be ashamed of themselves.

Q Mr. President, have you considered taking any action against the whistleblower?

THE PRESIDENT: The whistleblower is not a whistleblower. He’s a fake. And everybody knows —

Q Would you fire the whistleblower? Or —

THE PRESIDENT: Excuse me. Everybody knows who the whistleblower is. And the whistleblower is a political operative. These gentlemen know it. He’s a political operative.

And, frankly, the IG should have never brought this. Because if he would have compared what the whistleblower said, if he would have compared it to what I said in the conversation — two conversations, really — but to what I said in the conversation with the President — who I think is a terrific person — of Ukraine, he would have said, “Well, wait a minute. The whistleblower said this.” And that wasn’t the conversation because we have the transcribed conversation.

And also, Shifty Schiff — he’s a dishonest — he’s a corrupt politician. When he imitated or tried to copy my conversation, he didn’t copy it. He made up a conversation. Went before Congress, and made up a phony conversation, just like he does every time he talks. He’s a phony. He’s a very dishonest, very corrupt politician.

So, instead of — and, look, the big upset, as you folks know, was when I released the transcript. Because I don’t like doing that because you have to keep this very, very classified and confidential when you’re speaking to heads of state. But I released it because Schiff and the whistleblower made up a phony deal.

And I’ll tell you what: You ought to be ashamed of yourself. The press should be ashamed and they ought to end the witch hunt right now.

Q What did you mean — what do you mean Zelensky should “do the right thing”?

Q Would you take some kind of action against the whistleblower?

Q When you say Zelensky should “do the right thing,” what did you mean by that?

THE PRESIDENT: I didn’t say that.

Q When you told Sondland that —

THE PRESIDENT: He’s already done the right thing, because —

Q When you told Sondland that —

THE PRESIDENT: — the President — the President — if you look — of Ukraine, and his spokesman, the Foreign Minister, they put out: “There was no pressure whatsoever.” “None whatsoever.” And you knew that. You knew that very well. But you’re fake news and you should be ashamed of yourselves, and you should change, because it’s a very bad thing for our country.

Q Do you still want Ukraine to investigate the Bidens, Mr. President?

THE PRESIDENT: The Bidens is a whole different story. When you talk about corruption, when you have a guy that made no money, his father becomes Vice President, and all of a sudden he’s getting millions and millions of dollars from Ukraine, from China, from all of these countries — you just see two of them. This guy made nothing. He got thrown out of the Navy. He couldn’t get a job. And then his father becomes Vice President and the press doesn’t want to report it because the press is dishonest.

So I think it’s a disgrace. I think the whole thing with Biden is a disgrace.

Steve, go ahead. Go ahead.

Q Should Apple be exempt from China tariffs?

THE PRESIDENT: Well, we’re looking at that. And, you know, the problem we have is you have Samsung — it’s a great company, but it’s a competitor of Apple, and it’s not fair if — because we have a trade deal with Korea. We made a great trade deal with South Korea, but we have to treat Apple on a somewhat similar basis as we treat Samsung.

Now, with all of that being said, we’re doing very nicely with China, but I like it the way it is now, because we’re taking in billions and billions of dollars, and we’re giving some of that money to farmers and others. But we are looking at Apple. When I wanted Apple to do, from day one — from before I got elected — I said, “Someday we’re going to see Apple building plants in our country, not in China.” And that’s what’s happening.

It’s all happening. It’s all the American Dream. Our country has never done better. It’s doing better than it’s ever done.

Unemployment, the lowest levels. The numbers just came out today. African American, Hispanic American, Asian American, the lowest they’ve ever had in the history of our country. So we’re very happy.

Thank you very much.

Q (Inaudible) other Apple products?

Q (Inaudible.)

THE PRESIDENT: Say it?

Q Will there be a trade deal in place before the end of the year?

THE PRESIDENT: So, I can tell you this: China would much rather make a trade deal than I would.

Q Then why haven’t they?

THE PRESIDENT: Because I haven’t wanted to do it yet.

Q And why haven’t you wanted to yet?

THE PRESIDENT: Because I don’t think they’re stepping up to the level that I want.

Q I spoke earlier today with Mr. Cook and he said, “Another round of tariffs would be bad for business. It would be bad for the United States.”

THE PRESIDENT: I know, but, you know —

Q Will the tariffs take effect —

THE PRESIDENT: Here — here’s what I say —

Q — December 15th?

THE PRESIDENT: Here’s what I say — here’s what I say: What do you know?

I put in tariffs, everyone said, “Oh, gee, you’re taking in billions — hundreds of billions of dollars we will be taking in.” And everybody said, “Oh, that’s going to be bad for the economy.” Well, as you just heard from Tim Cook, we have the strongest economy, by far, in the world, and we’re taking in billions and billions of dollars. So we’ll see what happens.

We are dealing with China. I have a great relationship with President Xi. They’re a great country, but we’re a greater country than China.

If I didn’t win, right now China would be a bigger economy than the United States. But because I won, we picked up — reported on your network — $11 trillion in worth, in value. And China has lost probably $25 trillion. We are much bigger than China right now, and we’re going to keep it that way.

Thank you all. Thank you very much.

END 4:06 P.M. CST

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Custodial Risk in New York City


QUESTION:

Hello Marty,

Your commentary and Socrates’ predictive capacity is ground-breaking. I have been following you for years. Thank you for your time and efforts.
I find it fascinating that the foretold decline of the West (by Socrates) coincides with the fourth-turning demographic study described by Strauss & Howe. Watching it unfold is causing some careful consideration and sleeplessness!

Few questions regarding the future disruption:

1) Could the pledging of negative-yielding bonds as collateral be causing the liquidity problems? As a private lender myself, how can a central bank (or anyone) lend against its par value (even overnight) when held to maturity you receive less than par?
2) What Brokers can protect against a Corzine / MF Global invasion of segregated accounts?
3) I am an Italian national. Do you think living low-key in Panama may be a way to ride out the coming chaos?

I appreciate your insights and opinion.

All the best,
JTK

ANSWER: There is about $17 trillion in outstanding negative-yielding bonds. It is far too complicated to go into great detail on a mere blog post. Suffice to say that the negative-yielding bonds are going to crash like something not witnessed since 1931. While a complete default is not likely prior to 2025/2026, we are going to witness the start of the collapse in 2020. These bonds have been bought by PUNTERS who are just trading them back and forth like a game of musical chairs. When the music stops, a lot of people will get caught holding these new 2.0 versions of financial debt bombs. Nobody is buying these things to actually hold. It is more akin to trading commodities where people are not actually interested in taking deliveries of lumber, hogs, silos of wheat or bars of silver. These are trading instruments only.

 

I strongly urge people to write to the White House and demand LEGAL REFORM in New York City. The entire fate of both the world economy and the domestic economy rests on the integrity of the rule of law which no longer exists. President Trump has the power to address this problem. He could clean house in the SEC and CFTC who will ALWAYS protect the bankers, as is the case in the Department of Justice. The banks have blown up the entire world economy. M.F. Global was using their clients’ money for its own punting and lost big time. Not a single banker was EVER changed, no less Corzine.

GlennJudge Martin Glenn presided on M.F. Global bankruptcy and created the first BAIL-IN without Congressional Authority. He was the first one to engage in FORCED LOANS by abandoning the rule of law to help the bankers and protect Corzine from losses by taking client accounts to cover M.F. Global’s losses. That is no different from what we saw in Cyprus. He simply allowed the confiscation of client funds when in fact the rule of law should have been that the bankers were responsible and M.F. Global’s losses and it should have been reversed. Never should the clients’ funds be taken for M.F. Global’s losses to the NY Bankers.

What Judge Martin Glenn’s ruling warns is you should NOT trust any company based in New York City. No other circuit would uphold what Glenn did to protect Corzine. While Glenn could not prosecute Corzine, the Department of Justice closed its eyes as did the SEC and CFTC. We lack legal integrity and that leaves a COUNTRY RISK that we would have to warn a client about if we were dealing with a third-world country. This is part of the reason China is still lagging behind. There MUST BE a straight forward Rule of Law or capital that cannot invest if there are no definitive rules.

As far as Panama is concerned, it has been one place that people have moved. Another is Thailand if you are looking at Asia