Cryptocurrencies Down into July?


COMMENT: I found it very interesting when my bank would not allow using a credit card to buy cryptocurrencies. A friend of mine in Singapore said the government there has also instructed banks not to honor cryptocurrencies. It appears that government is starting to retaliate against the cryptocurrency world and I must question its viability long-term.

DP

REPLY: Yes. This is happening around the world. The US banks of Bank Of America, Citigroup, JP Morgan, Capital One, and the Discover card, have all banned their customers from purchasing cryptocurrencies. In the UK, Lloyds banking group was the first to ban cryptocurrencies and then MBNA, Halifax, and Bank of Scotland quickly followed. According to the blockchain research firm Chainalysis,  the long-term Bitcoin holders sold at least $ 30 billion worth of Bitcoin to new speculators between December 2017 and April 2018, half of which was in December 2017 alone making this very taxable in 2018. Many cryptocurrency investors have been lulled by the claim this is outside the central banks and off the grid. There are hundreds of data sources available to governments to track payments after conversion to a hard cash they call “Fiat” currency. Anyone who had purchased cryptocurrencies using their credit cards before the banks started to ban those transactions has a clear paper record for government to track.

Downunder, the Australian Tax Office (ATO) warned crypto traders/investors that their profits from trading in the years 2017 to 2018 “will not go unnoticed” and they have come straight out and warned on their website: “Anyone involved in acquiring or selling cryptocurrency must keep records of their cryptocurrency transactions.” Virtually every government classifies cryptocurrencies as assets. Therefore, any gain relative to the hard cash or “Fiat” currency is then taxable.

I have stated before, the governments want to move to an electronic currency so everything is taxable. They have been watching the cryptocurrency world and are coming down on banks demanding information. This is what the banks are simply banning the use of their credit cards to buy cryptocurrencies. The legal costs of gathering data to prosecute people the governments will demand are causing them to simply refuse to allow customers to use their facilities. The same result took place when the US government imposed FACTA requiring foreign banks to report whatever an American does outside the country. The way to avoid any problems was simply to ban Americans from having an account overseas.

At this point in time, we do have a Directional Change in July. So we may yet see a temporary low form at that time.

Switzerland Reject “Real Money” Proposal to Eliminate Banks from Creating Electronic Money by Lending


In Switzerland, we get to see how people who are really clueless about how the economy works still manage to get outrageous referendums on the ballot. A radical plan to transform Switzerland’s financial landscape was rejected, thank God, which would have barred commercial banks from electronically creating money when they lend. These people have no idea what such a proposal would have done. Their homes would have collapsed in value for there would be no mortgages. If banks could lend only the money on deposit and you withdrew your account, then does that mean a bank would have to shut down a mortgage and throw you out of your house?

All 26 of the country’s self-governing cantons also voted against it. The supporters needed a majority from all of Switzerland’s cantons as well as a simple majority of voters to succeed in such a proposal. The very idea of introducing a “vollgeld” or “real money” system convinced voters to reject the proposals. The outcome would have created such an economic disaster Switzerland would have committed suicide and entered a complete Dark Age unto itself

Portugal


QUESTION: Can you shed any light on the history of money in Portugal. There seems to be scan discussion of this subject.

Thank you

ANSWER: The first coinage of Portugal really is Roman and it appears to be struck by the first Roman Emperor Augustus (27BC-14AD). The location of the mint was the city of Évora. Interestingly enough, the name in ancient times was Ebora, which is really Celtic which is the name of a species of tree and thus the name means “of the yew trees.” However, there is a lack of any evidence of ancient settlements prior to that of the Roman. Perhaps because any Celtic evidence lies under the city which is not accessible to archeologists.

It is generally assumed that Évora only came into being as a municipium after the Pax Romana under Octavian in 30 BC which are really the first coin evidence in the region. Yet the name implies there was Celtic activity previously. The first reference to Évora as a municipium is found in a list of cities in Hispania in the Historia Naturalis of Pliny the Elder to the year 77AD.

During the 4th and 5th centuries, the Roman mint for coinage in the Spanish/Portugees region was actually Barcino, or Barcelona. So the early coinage of Portugal appears first under Augustus and then later the coinage is all struck in Barcelonia.

In more modern times, you might be wondering where are there different references to money. There was reis and reals and gold ducketsrelate. From the 12th century, Portugal had a currency called the dinheiro (dinero). The word today means money and is taken from the Roman denariusReal meant royal, as in a royal coin, and reis was the plural of real.

Portugal’s capital is Lisbon but it did not emerge as a nation until 1143, as a result of a rebellion by Dom Afonso Henriques (Afonso I) against his own mother Teresa of León. Portugal won its independence at the Battle of São Mamede near the town of Guimarães, in June of 1128. The first coinage was that of Alfonso I (1139-1185) and it was a dinero.

Europe had silver mines, but not gold. Gold was found in Northern Africa and in Anatolia (modern Turkey). Portugal became prominent because it had trade links with the Arabs and imported gold for Europe. Therefore, during 15th and 16th centuries, Portugal emerged as a powerful nation and naval power. Famous explorers are Fernando Magellan (circumnavigated the world), Vasco da Gama (discovered the route to India) and Bartolomeu Dias (sailed around Africa). Portugal made many discoveries and established colonies all over the world. The most famous one is Brazil, but it also established colonies in Africa, such as Mozambique and Angola, and on other continents.

Portugal was actually the first global power and one of the biggest empires at that time and was, therefore, the Financial Capital of Europe. During a 1910 revolution, the rebellion against government erupted once again and overthrew the monarchy. For most of the next six decades, repressive governments ran the country. This led once again to civil unrest and a 1974 military coup installed broad democratic reforms. Finally, on January 1, 1986, Portugal became the eleventh member of the European Economic Community.

Crash & Burn & the Sixth Wave


QUESTION: Martin, as all members do, I really do thank you and appreciate you for your knowledge and insight. I am a business owner – Real Water and do approximately $10 million in annual sales right now. As a concerned citizen, I have also run for political office and was elected to the Nevada State Assembly in 2015. With Republican control, our legislature pushed through the largest tax increase in our State’s history in the name of more money for education (I led the opposition against the tax, but failed in preventing it). Of course, our latest school ratings came out and we are still ranked at the bottom – 50th. More government is NOT the solution!

I completely understand we are headed for a financial crash and burn. You have frequently stated that the only reason you are doing what you are doing is for your posterity. Other than personal preparation, extra food, don’t be in bonds, etc., what do you believe is the most beneficial thing we can do to help our country come out of the crash and burn with more freedom and limited government (like our Founders so emphatically intended) as opposed to the other potential of totalitarianism that you frequently warn us about? What is the most effective way to rally the troops so to say to help push our civilization in the proper direction?

To an elevated lifestyle,

 

ANSWER: The Government always thinks that throwing more money at something make it better. I have NEVER seen where that has EVER corrected any such trend. The problem lies in the total mismanagement. Governments are simply incapable of operating even a bubblegum machine. They completely fail to understand the economy, human nature, or society as a whole. The only way to actually correct such a problem is to privatize. That installs actual management and employees must actually perform. Government unions demand benefits and they negotiate with themselves. This is why the entire socialist agenda is collapsing.

I had a friend who was a postmaster. He had to tell an employee he would be checking on them a day before to ensure they were doing their job. The union made them provide notice so the employee would not actually be caught doing anything. This is how government unions have destroyed themselves and society. This is what we are headed into a crash and burn because governments do not respect the people and assume we are an endless supply of revenue.

All government agencies should be privatized and then the services they provide would actually work. Going to the New Jersey Division of Motor Vehicles was a case study in how not to run a government. The people were nasty, you would wait in line and they would be having a conversation with the next employee about what they would do after work and actually make you wait even 5 minutes while they did this right in front of your face. The attitude was WTF do you want now. Just absolutely nasty and hostile. No supervision and nobody even forces them to actually work. Always a horrible experience – not just one time. Ask a question and you NEVER got a straight or correct answer.

It is a structural management problem. There is no accountability and you can look at any government agency and you will see the same pattern. Increase the budget and there is NEVER any actually change. They cannot improve because there is a lack of management ability.

What does the Crash & Burn look like? It all depends upon how long we have to wait to achieve it. If we get the start of a Crash & Burn in 2021, then there is real hope of a soft-landing. If we are looking at stalling and refusing to change as taxes continue to rise, we will see that last wave of totalitarianism and then what comes AFTER 2032 is a very hard landing. That type of decline historically results in civil war and/or revolution.

All I can offer is what has happened before historically. My personal opinion would be just a guess and that is not what clients want to hear. So the sooner the better and the longer this is stalled the worse it gets.

This hostile attack against Trump is symbolic of the bureaucracy fighting to keep its power. They think if they can get Trump out of office, they will return it back to normal with a career politician. They are seriously wrong for the people voted for Trump because they are fed up with the system as is. This was not a personal popularity contest that Trump won. It is the rising tension of the people. There is no going back. This can only lead to a confrontation between the left and right. Choose where you want to live based upon the political orientation of that area. The area I live in was conservative which voted overwhelmingly for Trump. That is a bit safer than a left area for they ultimate come after you because they see you are the problem, why things are not going their way.

Euro Members to INCREASE debt before the ECB stops buying!


 

Reliable sources are reporting that the European member states are going to rush out debt to try to lock in the low-interest rates before they start to rise and the ECB is still buying very aggressively. We are likely to see new issues of debt to increase before the ECB stops buying

Is Draghi Really Ending QE?


Mario Draghi said the euro-area economy is strong enough to overcome increased risk,  and therefore this justifies the European Central Bank’s decision to end bond purchases bringing to an end a decade-long failed experiment. The truth behind this statement is starkly different than being portrayed in the press. Draghi also pledged to keep interest rates unchanged at current record lows until his personal term is finished next year. There is the contradiction for if the ECB stops buying debt, who will do so at artificially low rates of interest?

Draghi knows full well that he has utterly destroyed the bond markets in Europe. The ECB has also made it clear that they will REINVEST when the bonds previously purchased mature. The Federal Reserves has taken the opposite position and will NOT reinvest allowing their balance sheet to shrink.

If the economy is that strong, then why not end the QE right now? The fallacy here is that this has nothing to do with the economy. The ECB has simply had the member states on life-support. Interest rates will soar in Europe on long-term debt or there will be no buyers. Pension funds cannot buy 10-year bonds at even 3% when they need 8% to cover liabilities.

The statement by Draghi is creating a total paradox. You cannot keep short-term interest rates where they are and charge negative rates for deposits and simultaneously end QE and expect to sell bonds to the public at insanely low levels.

The press interprets this as the ECB with ending QE because they are “betting that the euro-area economy is robust enough to ride out an apparent slowdown amid risks including U.S. trade tariffs and nervousness that Italy’s populist government will spark another financial crisis” reported Bloomberg. What is seriously omitted here is that the member states will be UNABLE to sell long-term debt at these low levels to the private sector and the free market will send rates higher. This means that the states will have to then raise taxes to stay within the EU criteria and that will further suppress the European economy.

We are simply at the end of the road of this complete insanity. So buckle up. Get ready for the ride of a lifetime and make sure you keep your hands and feet safely inside the vehicle. Is the ECB risking a total collapse in public confidence when they discover you cannot keep rates artificially low and end QE simultaneously

Malaysia Looking to file Lawsuit Against Goldman Sachs?


May was an important turning point in Southeast Asia. The corruption that has engulfed the previous Malaysian government centered around a sovereign wealth fund involving Goldman Sachs has rocked the entire Malaysian peninsula. The national debt, which was believed to have been $170 billion, appears to be more like $250 billion of 80% if the national GDP.

Prime Minister Mahathir Mohamad was sworn in on May 10th. When his aides first entered the government offices, they were confronted with a shocking sight. There were garbage bags filled with shredded documents intermixed with left-over food half eaten thrown everywhere. It was clear, the previous government sought to destroy all the evidence of their corruption.

The new finance minister discovered computers that even the highest-ranking bureaucrats could not access. Computers were set up to prevent access by anyone other than one or two people. Evidence of massive corruption was what turned the election on May 9th, 2018.

Goldman Sachs’ role, I wrote back in 2015, has been highly criticized in the Malaysian media and political circles after it emerged that 1MDB sovereign wealth fund paid hundreds of millions of dollars to the bank for helping it raise $6.5 billion in three bond deals in 2012 and 2013. Goldman Sachs earned around $590 million in fees plus commissions and expenses from underwriting the bonds, according to Reuters. The reported fees are highly excessive, nearing 10% when such fees are typically only 1% in bond underwriting.

There is now talk about filing suit against Goldman Sachs for its role in this scandal. The likelihood of filing a lawsuit against them in New York City being successful is probably zero. They will have to deal with the most corrupt court perhaps in the world that is notorious for protecting its local banks – Southern District of New York and the Second Circuit. My recommendation is to petition the Supreme Court to bring the suit in Washington DC that they will NEVER receiver a fair trial in New York City and they should get on the phone to Donald Trump to start applying political pressure

Do We Really Borrow From Only Ourselves? Does the Debt/GDP Ratio Means Anything?


QUESTION: Mr. Armstrong, the famous economist Paul Krugman says that debt is ok when we owe it to ourselves. He calls it “deficit scolding” as he wrote in the New York Times. Would you like to comment on this statement?

GH

ANSWER: Paul Krugman seems to lack any historical understanding of how nations rise and fall. Anyone who claims debt is OK and can be infinite because “we” owe it to ourselves is clueless. He wrote in the article you referred to that “we have a more or less stable ratio of debt to GDP, and no hint of a financing problem.” The debt to GDP ratio is interesting but totally irrelevant. China’s debt to GDP stands at 250%, the USA at 103%, and Greece buckled at 186%. Obviously, this ratio is rather meaningless as a forecasting tool. I have published this chart on call money rates previously. In my studies, I quickly discovered that you cannot reduce the cause of any effect to a single issue. We can see that the peak in call money rates took place during 1899 and it was the lowest in 1929 when the Great Depression hit. You can’t even claim that if interest rates hit some magical level the stock market would crash. The world is far more complicated than just this one-dimensional approach to everything.

Capital flows were fleeing the USA in 1899 so interest rates went higher with a shortage of money. In 1929, the capital was in the USA for it rushed here because of World War I. The inflow of capital created an excess so the peak in call money rates was lower than 1899 when capital was fleeing. We even have the world of President Grover Cleveland from the Panic of 1893 commenting on the net capital outflow because of the “unsound” financial policy of the Silver Democrats.

The greatest mistake in the analysis is always trying to reduce any effect to a single cause. The world is a complex mechanism. It is indeed like a rainforest. There are countless species and each is interconnected. Exterminate one and you will find that it was the food source for another which dies. That species, in turn, was the food source for yet another and so on. The world economy is equally complex. This is why I say we are ALL CONNECTED. Create a war in one region, we may not be involved with troops, but the capital flows shift.

Everything is interconnected. There is no single cause and effect. Looking at GDP debt ratios is pointless. This is also why fundamental analysis is notoriously wrong. The majority tries to reason the future based upon this one-dimensional analysis and they NEVER got it right. I have posted this video clip of Larry Summers before. He is asked why can’t you guys ever get it right just once. His excuse is blunt. The economy is extraordinarily complex like the weather. He argues nobody can forecast the direction.

For anyone to say that debt can be infinite when we owe it just to ourselves is a fool. At times, 70% of the national debt has been accumulating interest payments. A national debt is the single greatest way we transfer wealth among citizens as well as nations. I kept yelling on Capitol Hill that Quantitative Easing would fail, it would not “stimulate” the economy for a very simple reason. The assumption that the Fed would buy 30-year bonds and then the banks would lend into real estate with lower interest rates was crazy. The debt is NOT owned by exclusively Americans. China was smart and it sold the 30-year bonds and swapped to 5-year or less paper. The money was transferred out of the country. To pretend this is a debt we “owe” ourselves is just fantasy.

Even domestically, if I am the lender and you are the borrower, then you are paying me because you borrowed the money. Your wealth is transferred to me because you could not wait to buy something for cash. Sorry, I believe Adam Smith was someone who tried to observe HOW things actually work instead of trying to support a predetermined conclusion.

Joseph T. Salerno: This is Why Socialism is a Negative Sum Game


Published on Nov 7, 2017

Joseph T. Salerno (born 1950) is an American Austrian School economist who is Professor of Economics, Chair of the economics graduate program in the Lubin School of Business at Pace University, and Academic Vice President of the Ludwig von Mises Institute. In this talk with Jeff Deist he talks about why socialism is a negative sum game. Full clip, creative common licenced: https://www.youtube.com/watch?v=HBIkj… — This channel aims at extracting central points of presentations into short clips. The topics cover the problems of leftist ideology and the consequences for society. If you like the content, subscribe to the channe

Mandatory Sick Leave for Temps, Part-Time & Just Commission Employees


The State of New Jersey just keeps making it more expensive to operate a business in the state. New Jersey has now become the 10th state to adopt mandatory paid sick leave. It goes into effect on October 29, 2018. Giving sick leave to employees has been generally a standard in America. What these new regulations do is go much further. All employees, whether temporary, part-time, full-time, salaried, hourly or paid on commission, must now accrue one hour of sick leave for every 30 hours worked. Employers may cap an employee’s sick leave accrual and use at 40 hours per benefit year.

The crazy thing is hiring a temp worker because someone else is out sick or on maternity leave now involves given such a person also gets sick leave benefits. Then the employer and employee may mutually agree to a payout in the final month of the benefit year of 50% or 100% of the employee’s unused sick time. If unused time is paid out in full, carryover is not required. If 50% is paid out, the remaining 50% will carry over. If the employee does not want to be paid out, or the employer chooses not to offer this option, all unused time will carry over up to 40 hours.
Employers may grant sick leave up front in a lump sum. When using the lump sum method, employers may either pay employees for unused sick leave at the end of the calendar year or allow carryover. With lump sum plans, whether to pay out or allow carryover is the employer’s choice – the agreement of the employee is not required. In no case will time be forfeit, unless it is in excess of the carryover limit of 40 hours.

This is now extending benefits to people who are not regular employees. Retail stores hire workers just for the Christmas season. That means they will need to account for sick leave and carry this over if the person returns for a temporary job in the future year? The accounting this imposes on small business is just insane. Of course, politicians want to pretend to be caring for the people when in fact they may be reducing job opportunities for them in the end. Automated registers are showing up everywhere. A grocery store to Home Depot have registers you scan in your own purchases, pay, and leave. The more regulations, the more we will see auto-registers expand into many retail operations to solve the rising regulation and costs.

And they wonder Why New Jersey is #2 State behind NYC with net-migration leaving and business as well?