President Trump Delivers Remarks During Prison Reform Meeting…


While another phase of the White House remodel is underway, President Trump conducts national business from his residence in Bedminster, New Jersey.

[Transcript] Bedminister, New Jersey – THE PRESIDENT: Well, thank you very much, everybody, for being here in Bedminster. We’ve had a lot of work. We’ve done a lot of work. They’re renovating the White House. It’s a long-term project, and they approved it years ago. And I said, well, I guess this would be a good place to be in the meantime. So they’re doing a lot of work at the White House. I miss it. I would like to be there. But this is a good way of doing it.

We have some very outstanding people with us. And I’ll make a few remarks. This is largely about prison reform — and other subjects — but largely about prison reform.

So I want to thank the governors — Matt Bevin, Phil Bryant, Doug Burgum, Nathan Deal, and John Bel Edwards — for being here today. Been friends of mine. We’ve been, I could say, in wars, but we’ve been on the same side of the wars. That’s always good.

I want to thank you also to Attorney General Pam Bondi and Ken Paxton. And Ken just filed a very interesting lawsuit, which I think is going to be very successful. I hope it’s going to be successful. I also want to recognize Secretary Rick Perry and Secretary Alex Acosta. Thank you both. Rick, thank you very much.

We are doing some great things with healthcare, Alex.

SECRETARY ACOSTA: We are.

THE PRESIDENT: And you’re doing some wonderful things with energy. I hope that project comes along that we’re talking about. It’s going to help a lot of people. A lot of jobs are going to be created.

SECRETARY PERRY: Indeed.

THE PRESIDENT: So I know you’re working on it.

I look forward to hearing from each of you about your experiences with prison reform and the lessons that we’ve learned. I know how Matt, in particular, you have been working so hard. Phil, you’ve been working long and hard on it — harder than anyone would know. But I can tell you, my administration feels very, very strongly about it.

One of the single most important things we’re doing is to help former inmates in creating jobs. We’re creating so many jobs that former inmates, for the first time, are really getting a shot at it, because they’re weren’t sought and now they are being sought because our unemployment rate is so low — historically low — 50 years.

Now, our economy is booming. Businesses are hiring and recruiting workers that were previously overlooked. They’re being hired. It’s a great feeling. It’s a great thing that we’ve all accomplished. We’ve created a lot of jobs in the states. And I guess I’ve helped you a lot on a national basis.

We’ve created 3.9 million more jobs since Election Day — so almost 4 million jobs — which is unthinkable. If I would have said that during the campaign, only a few of the people around this table would have believed me. But they would have. 3.9 million jobs since Election Day. That’s pretty incredible.

We’ve added more than 400,000 manufacturing jobs since the election. Manufacturing employment is now growing faster than at any time than it has in three decades, over 30 years. Through the Pledge of America’s Workers, launched just last month, almost 5 million Americans will receive enhanced career training and opportunities.

And I want to thank Ivanka Trump for having done an incredible job on that. She’s really worked on it. It’s something very important to her.

I’ve really — and I’ve said it to a lot of people: Jared — I want to thank Jared for what’s happening on prison reform, because you’ve really been leading it. It’s something very close to your heart.

And as I’ve said before, we hire Americans. We want to hire and treat our Americans fairly. You know, for many years, jobs have been taken out of our country. We’ve lost our businesses. We’ve lost the hiring abilities that we had. Not anymore. Now those companies are coming back; they’re coming roaring back — to your state, to your state. They’re coming back faster than anyone thought even possible.

Our first duty is to our citizens, including those who have taken the wrong path but are seeking redemption and a new beginning. That’s people that have been in prison, and they come out and they’re having a hard time. They’re not having such a hard time anymore.

We’ve passed the First Step Act through the House, and we’re working very hard in the Senate to refine it and pass it into law. We think we’ll be successful in that regard. The bill expands vocational educational programs to eligible federal inmates so that more of them can learn a trade. And that’s what we’re doing. We’re teaching them trades. We’re teaching them different things that they can put into good use, and put into use to get jobs.

I recently met with Chairman Grassley and other members of Congress to discuss the bill. We also agreed that we must be tough on crime, especially on criminals and trafficking of drugs, and lots of other trafficking. We have a trafficking problem, including human trafficking. We’re very, very tough on that. And that’s going to remain tough, or even tougher.

We must strengthen community bonds with law enforcement, including cities like Chicago that have been an absolute and total disaster. We’ll be talking about Chicago today because that is something that, in terms of our nation, nobody would believe it could be happening. They had 63 incidents last weekend and 12 deaths.

That’s bad stuff happening, and probably, I guess, you have to take from the leadership. That’s called bad leadership. There’s no reason, in a million years, that something like that should be happening in Chicago.

We want every child to grow up in a safe neighborhood surrounded by families that are loving and helpful, and with a path to great education and a lifelong career.

I want to thank everybody for being here. And I think what we’ll do, while the media is here, maybe we’ll just go around the room real quickly and we’ll introduce yourselves. And these are people that have really worked hard on prison reform — and lots of other things, but on prison reform. And that’s largely what this meeting is about.

Governor? Please.

GOVERNOR DEAL: Well, thank you, Mr. President. I appreciate the opportunity to be here. We are very pleased with what’s happening in Georgia. We have seen, since I became Governor, a 10-percent decrease in violent crime in our state, a 20-percent overall decrease in crime. We have seen our African American percentage in our prison system drop significantly. Black American — black males has dropped almost 30 percent.

THE PRESIDENT: That’s great.

GOVERNOR DEAL: Black females dropped about 38.2 percent. Our African American commitments to our prison is at the lowest level it has been since 1987. And in states like ours, we have a disproportionate number of minorities in our prison versus our population as a whole.

We have found that reentry is a vital part of this. We find that — I did have a question I asked; I said, “What’s the most common characteristic of those in our prisons?” The answer was, 70 percent of them never graduated from high school.

So we immediately concentrated on that. We have significantly beefed up our GEDs. We’ve also brought a private charter school into our system to teach them, give them a real high school diploma. We found that if you give them a blue-collar skill, you reduce your recidivism rate by 24 percent. If you give them just the education of getting a high school diploma, it’s reduced by 19 percent.

So we have been very successful. We’re pleased about it. And we’re pleased to share whatever information we have that might be helpful.

THE PRESIDENT: Good. Thank you, again. Thank you very much.

Pam?

BONDI: President, Pam Bondi, Attorney General of Florida. Thank you for doing this. As a career prosecutor, you see people who go to prison and get out of prison, and can’t find a job. And how do we expect people to succeed without being able to get a job? And you were just in Tampa — thank you for that — Tampa Bay Tech, supporting jobs for young people.

And that’s what’s so important, is reentry and being able to get a job, and training people on how to be successful. And something we did in Florida shortly after I got elected was we decoupled — if you were a convicted felon, you couldn’t get an occupational license. So how do we expect you to succeed?

So thank you for everything you’re doing, Mr. President.

THE PRESIDENT: Good. Thank you, Pam. Thank you very much.

GOVERNOR EDWARDS: Mr. President, John Bel Edwards. And I will tell you, in Louisiana, we are proud of the work we’ve done. It’s been sentencing reform, prison reform, and a real focus on reentry. And for the first time in 20 years, I can tell you, Louisiana does not have the highest incarceration rate in the nation today.

THE PRESIDENT: Good. Good.

GOVERNOR EDWARDS: And it’s paying dividends for us, and we’re reinvesting the savings —

THE PRESIDENT: Who does?

GOVERNOR EDWARDS: Oklahoma.

THE PRESIDENT: Really?

GOVERNOR EDWARDS: Yes, sir. But we are reinvesting the savings into our reentry program and also into victim services. So we’re excited about what we’re doing, and we’re looking forward to sharing that with you.

THE PRESIDENT: Great. Great. Thank you very much. Thank you, John Bel.

Please, go ahead.

GOVERNOR BURGUM: Mr. President, Doug Burgum, Governor of North Dakota. Thank you for coming to North Dakota last month. Great to have you there.

THE PRESIDENT: Things are looking good, aren’t they?

GOVERNOR BURGUM: Things are looking great thanks to a lot of policies from this administration and the great Cabinet that you have.

As you know, you can’t really separate, today, prison reform and our prison situation from addiction. In North Dakota, 100 percent of the women that are incarcerated in our prison system have a disease of addiction. Eighty-five percent of the men in our prison have disease of addiction. And we can’t solve a healthcare — a chronic healthcare problem with punishment. We’ve got to solve it — treat it like a disease and solve it that way.

THE PRESIDENT: Right.

GOVERNOR BURGUM: And so I want to also thank you for the work that your administration is doing on the addiction front, because it ties directly back into this. And I think we’ve done a number of innovations we’ll be happy to share at this roundtable today. Thanks for inviting us.

THE PRESIDENT: Good. Good.

GOVERNOR BURGUM: But, you know, in the end, we’re trying to create better neighbors, not better prisoners. Ninety-eight-and-a-half percent of the people that go to prison in North Dakota end up coming back out. And so we have to — when they’re there, like the other governors have talked about it, it’s education, it’s career skills, it’s treatment. Those are the things we have to focus on. If we can do that, we can turn people’s lives around and add people to the workforce. We know we need that because we got so many jobs open in this country.

THE PRESIDENT: Thank you very much, Governor.

PAXTON: Ken Paxton, Texas Attorney General. Thank you, Mr. President. This is obviously an important issue to Texas. I think it’s an important issue to the nation. And, Jared, I appreciate your passion for this issue.

In 2007, under the leadership of, I think, the greatest governor in my lifetime, who’s now the Secretary of Energy — is that the right department? — (laughter) — and the president of our top public policy foundation, Brooke Rollins, we passed legislation similar to what Congress is now looking at that has had a dramatic impact on our own ability to take people from prison and live productive lives.

And, you know, I could cite many statistics, but we were facing — spending $2 billion, and we didn’t spend the money. We put $241 million into treatment and to helping people find jobs. We’ve expanded that since, but it’s made a tremendous difference. We have not built any more new prisons since then. We’ve actually closed eight prisons. So it’s really made a difference, and I think it can make a difference for the nation. So I look forward to continuing the discussion.

THE PRESIDENT: How are you doing with your recently filed case? How’s that looking?

PAXTON: Well, we had a hearing yesterday, and I think it went quite well. Let’s see what the judge says. But we know we’re right on the law and we’re right on the Constitution. And so we’re confident things are going to go in the right way.

THE PRESIDENT: It’s true. Okay. Thank you.

GOVERNOR BRYANT: Thank you, Mr. President. I’m Phil Bryant of Mississippi. In 2014, we began our “Right on Crime” program. We used all the things that Georgia has been successful with, and Texas. I called both of these governors and said, “Tell me how you did it.”

I’m a former law enforcement officer, and I worked undercover narcotics cases. I’ve been out there with the worst of the worst. I put a lot of people in jail, and some of it was difficult, particularly when I was state auditor and over 100 state-wide elected officials and government employees went to jail for white-collar crimes.

So we began a really strong program working with the PEW Institute of putting that workforce training program into effect, making sure we looked at addiction, mental health. Mental health challenges within the correctional facilities are obviously rampant. Also trying to make prisons a drug-free zone and a crime-free zone within that prison, so you can’t — your life can’t be threatened every day; you can’t be attacked in prison; you can’t have access to drugs and be rehabilitated.

And then finally, the faith-based organization. It takes a change of heart. I’ve been around a lot of people who are in jail, and if their hearts aren’t changed, their lives will not be changed. So prison ministries — all of those things that government doesn’t like to admit to that works —

THE PRESIDENT: Right.

GOVERNOR BRYANT: — works. And so, when we bring faith back into the prison system, prisoners have hope again. And that worked better for us than anything we could have done — another reentry program, getting them jobs, getting their driver’s license, keeping them connected with their families so that they have something to work towards when they’re getting out of prison.

And I can tell you, I had to call a lot of my Republicans into the governor’s office and convince them to vote for this bill. And they were worried it was soft on crime. They were hesitant about what they were going to tell their people back home. And I said, “You tell them to call me.” Because crime is down 6 percent. We have 3,000 less inmates. We saved $40 million since 2014. And you can do the same thing. And, Jared, thank you for your leadership.

KUSHNER: Thank you.

THE PRESIDENT: Thank you, Phil.

GOVERNOR BRYANT: Thank you, Mr. President.

THE PRESIDENT: Secretary?

SECRETARY ACOSTA: Mr. President, I’d like to make two key points. First, as you mentioned, the economy is doing incredibly well for the first time since we’ve been keeping records. We have more open jobs than we have people to fill these jobs.

THE PRESIDENT: Right.

SECRETARY ACOSTA: And so, these reentry programs are needed for the economy. We have jobs ready and waiting for individuals when they leave prison.

Second, I’d like to follow up on what some of you governors have said: These programs work. As you know, and others at the table know, I was U.S. attorney in Miami. And when you talk with the law enforcement communities, what they will tell you is that these programs foster public safety. When someone leaves prison, the best that could happen for them is for them to find a job. The best that can happen for society is for them to find a job and start contributing to society, rather than go back to the old ways of crime.

So this is very much a win-win for the individual, for the safety of the community, and for the economy of the nation. We have individuals that are going from a prison system, where the taxpayer is funding the system, to contributing members of society that are helping this economic growth.

And so we’re working with various governors. We put out a request for a proposal, and we got so many applications from various governors of programs that are very much outside the box, that — this fall, we intend to put out another request for proposals to fund another round of reentry efforts themselves.

I want to thank the governors, and I want to thank all that are working on this issue. It’s very important.

THE PRESIDENT: Well, you’ve been great, and your healthcare plan is going along beautifully. That is really doing something. It’s — are you surprised by the numbers you’re hearing?

SECRETARY ACOSTA: It is. Just this morning, I read an article mentioning a number of associations around the country — I believe one in Wisconsin, certainly one in Nevada — that are already forming these.

And just today, I was talking to some of the governors here about the various activity in their states. And so it’s moving very nicely.

THE PRESIDENT: It’s been great. Thank you, Alex, very much. Thank you.

Rick. Go ahead, Rick.

ROLLINS: Well —

SECRETARY PERRY: Why don’t you go, Brooke?

ROLLINS: I would be — thank you so much, Mr. President. We’re so happy to be here. I tell you, I am overwhelmed and so encouraged. These governors are real innovators, and they’re entrepreneurs.

And what they have done is this idea of the laboratories of democracy that, in the states, we have moved so many issues forward that now, at the federal level — which I’m so honored to become part of your team — but at the federal level, we can now see what happened in the states, what’s working, what is basically lifting people to a better life — the forgotten men and women of this country.

And having lived it, in Texas, beside these two great men for more than a decade, we’ve seen firsthand how this changes lives, how it gives people second chances, how it puts communities back together, and keeps families together. So thank you for the opportunity.

THE PRESIDENT: Thank you. Good job you’re doing.

ROLLINS: I’m glad to be here.

SECRETARY PERRY: Mr. President, thank you for bringing her onboard. I think you’re seeing, on a daily basis, what a talent she is dealing with these issues that are really important.

Two things that I want to share with the table and with you, and with the general public. And one is that it’s because of those tax policies, because of regulatory policies that you pushed through, we got more people working in America than ever before. (Applause.)

And you have to have that, because if these programs are to work when folks get out of prison, or if they don’t go to prison to begin with, then that’s our real goal.

And I want to share with these governors around here, every one of them are courageous. Because I heard it when we were doing this back in Texas, in the early and mid-2000s, that, you know, “Well, Perry, we thought you were tough on crime.” Nobody ever got me confused with being soft on crime. You know, I signed more execution orders than probably any governor in the history of this country. And that’s a sad thing, but it’s a fact.

So I’m not soft on crime. But I like to say we were smart on crime in Texas because we put these programs into place. And young people, whose lives would be destroyed if we sent them on to prison — and that’s where they really become professional criminals. And we never allowed that to happen; we gave them a second chance.

And so, Texans now really understand if we shut down eight prisons, saving some three-plus billion dollars a year in prison costs, and conservatives look at that now and go, “That was smart on crime.”

And, Pam, that’s what — that’s what people will say about you, Mr. President, is, number one, you’ve created this climate where people can have a job and have hope for the future.

And I’ll finish with this, is that you passed that piece of legislation that does — clearly reforms the prison system. And I will suggest to you, from my perspective, that sentencing reform is part of that as well.

And then you have the ability to show this country, and then these laboratories of innovation — you know, when Doug goes back up to North Dakota, and he’s puts in, for his state, the right programs, and it’s not top down, but you’ve sent the right message that, fellas, here’s the way to reform your prison system. We’re not going to be in the way. We’re not going to — we’re not going to be a hurdle for you, and you all figure out how to do it the rest of the way.

And this country can be incredibly proud of what they’re doing for the next generation of people to come along. And these governors are going to be a real key part of that.

THE PRESIDENT: Well, thank you, Rick. Very good. Thank you very much. How’s it going, energy-wise, would you say?

SECRETARY PERRY: I will tell you, I don’t know how it could be much better. (Laughter.) The people around the world, we’re selling LNG now into 30 countries on five continents.

GOVERNOR EDWARDS: A lot of it (inaudible).

SECRETARY PERRY: John, a lot out of Louisiana. Gas is headed to a lot of places.

THE PRESIDENT: That’s right.

SECRETARY PERRY: Doug, number-two oil producer in the world — or, I should say, in the United States, only behind the state of Texas. (Laughter.)

GOVERNOR BURGUM: We’re catching you.

SECRETARY PERRY: Yes, sir. (Laughter.) And we want you to. Come on. Give us your best shot.

But things are going good, sir. I mean, it is a — massive jobs being created. We got an opportunity to — you know, I don’t want to get us off track here, but oil and gas infrastructure, if there’s one thing that we, collectively — and these governors will tell you that as well — that we’ll produce it; getting it out of this country is the challenge right now.

THE PRESIDENT: Well, we’ve become, as you know, number one in the world over just the last short period of time. So we’ve made it a lot easier, and yet environmentally perfect. Environmentally, really good.

But we’ve become number one in the world, and we’re now a net exporter, which nobody thought they’d ever hear. And we’re doing a lot of good things for a lot of other countries too.

So thank you very much. You’ve done a great job. Thank you.

Matt.

GOVERNOR BEVIN: Mr. President, I just want to thank you again for convening this — not just once, not just twice, but on multiple occasions. I had a chance to meet a number of folks around this table. A comment was made early on, I think by you in your introductory comments, about the fact that this is a war where people can be lined up on the same side.

And the most powerful thing about this, and something I hope those of you in the media appreciate: I look at guys like John Bel Edwards in Louisiana. Represents a different party than I do in Kentucky, in terms of our political affiliation, but this is something that we’re very much of like mind on. And I think this transcends anything political.

And it’s — and again, I tip my hat to you for not only on this issue, but on others, bringing things to the political forefront that aren’t political, that have historically been ignored because they weren’t political and nobody got any points politically by doing them, but that they were the right thing to do.

And as some who have gone around this table have touched on, it isn’t just the fact that it’s smart on crime or that it’s financially prudent — because it is all those things — but it’s the right thing to do. Just the human dignity of giving people — this is a land of second chances and of opportunity to rebuild your life.

And you are giving us, through this conversation and the kind of things you’re pushing from the federal level, the encouragement from the bottom up to give millions and millions of Americans a chance at redemption. And it’s, I think, the greatest gift we can offer people.

And it’s something that, again, for all the economic reasons we’ve just mentioned, we desperately need. These are able-bodied men and women — 95 to 97 percent of the 2 million currently in prison are going to get out. And what are they going to do? Are we going to give them a path to stay out? Or are they going to go right back in?

And some of the things we’ve done in Kentucky is literally start training programs inside of the prison system. Because one of the things we do — I have two twins that are going off to college in the next couple of weeks — and every one of them, from the beginning they get to college, they have a guidance counselor that’s helping them chart their path.

I truly think it’s something we need to do within our prison system, because we’re spending just as much for every person in a prison system as we are for a kid in a college classroom. And why not give them a path for them personally to make sure they don’t come back to this place, but that they go out and become productive, tax-paying citizens who contribute and become good mothers and fathers and community members? These are the kind of things that this will afford us the chance to do.

And I — again, I truly appreciate this. It’s something, personally, that I have a passion for. And for you and your administration — and Jared, really, kudos to you, because you have done such a stellar job of bringing this to the forefront and gathering us together. And I’m grateful to the two of you for making this possible.

THE PRESIDENT: Well, thank you, Matt. And I have to say, we have tremendous political support. It a little bit surprises me. I thought that — when we started this journey about a year ago, I thought we would not have a lot of political support; we would have to convince people. We have great political support. You see what’s happening. People that I would least suspect are behind it 100 percent. So that’s a good thing.

Thank you all for being here. Thank you all very much. Thank you. Thank you very much.

END

Martin Armstrong – Rates are Going to Jump to 10% Instantaneously


Martin Armstrong – Rates are Going to Jump to 10% Instantaneously

Greg Hunter
Published on May 19, 2018
Where does renowned financial and geopolitical analyst Martin Armstrong see big trouble brewing? Look no further than the bond market. Armstrong explains, “The bond market is going down. . . . We’ve already started into it. . . .You have to understand both Japan and Europe have destroyed their bond markets. They have completely and utterly destroyed them. They are the buyers. That’s it. There is no pension fund that can buy 10-year paper at 1.3% when they need 8% to break even. They are locking in a 10 year loss. They can’t do it. We have been helping major funds shift into equities because it is the only place they can go. . . . Once you start seeing the cracks in Europe, you are going to see interest rates rise faster than you have ever contemplated in your life. There is nobody in their right mind that can buy an Italian bond at 1.3%. It’s just not going to happen. Once the ECB is forced to stop, those rates are going to jump to 10% instantaneously. Once it starts to crack, that’s it, it’s gone. What is going to make everyone know it is cracking is when you see rates going up dramatically, and the ECB is at a point it just can’t buy any more.”

Armstrong does not see a big War in the near term, but one is brewing in the Middle East. What Armstrong does see right now is “increasing civil unrest.”

On gold, Armstrong sees the yellow metal “fighting a stronger dollar” but predicts it will have its day sometime after 2020 to 2021.

Join Greg Hunter as he goes One-on-One with financial and geopolitical expert Martin Armstrong.

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News & Politics

READING ORWELL BACKWARDS


Bill Whittle
Published on Aug 10, 2018
The most damning indictment of socialism ever in 1948. An explanation of socialism in 1943. A call for socialism in 1937. Does reading Orwell backwards explain what draws people to it

GUIDE TO ELECTION GUIDES


Published on Aug 9, 2018

Do you know the five, or eleven, or fifteen crucial take-aways from Tuuesday’s primary elections? No? Neither do we.

The Shortage of US Dollars


What people have to understand is that the Federal Reserve is moving in the opposite direction with respect to its monetary base. The Adjusted Monetary Base is the sum of currency (including coin) in circulation outside Federal Reserve Banks and the U.S. Treasury, plus deposits held by depository institutions at Federal Reserve Banks. These data are adjusted for the effects of changes in statutory reserve requirements on the quantity of base money held by depositories. This peaked with the Economic Confidence Model turn in 2015 on October 1st. The Fed has been shrinking its balance sheet and believe it or not, there has been growing a SHORTAGE of dollars contrary to those who keep saying the world is awash with dollars so buy gold, cryptocurrencies, or whatever.

I have been stating that (1) were are in a major bull market for the dollar, and (2) it is the US economy that is supporting the world. What I mean is simply this. Everyone from China to Europe is DEPENDENT upon trade with the USA because it is the US consumer who is the marketplace. The balance of the world CANNOT win a trade war with the USA. They have focused on selling to the USA rather than developing their own domestic consumer economies. China has shifted and understood that important distinction and has indeed turned its focus to developing a domestic economy. Europe has not and it is significant to comprehend that the structure of the European Union is disastrous. They want to PRETEND to be the federalized entity of Europe, but all 28 member states must agree on trade. This PREVENTS Germany from accepting Trump’s proposal to abolish all tariffs because France will not agree to an absolute free trade and that will prevent the EU from acting in the best interest of the whole. It requires unanimous consent.

Australia has imposed a 10% tariff on anything purchased overseas and they expect foreign businesses to collect their taxes. They call it a GST, but it is imposed on all products as a protective measure they claim for local businesses. FREE TRADE is simply not feasible politically while Trump gets all the blame. The rest of the world CANNOT win a currency war. So far, our computer has been spot on. We are headed toward a monetary reset in the years ahead but to get there, we must experience a STRONG dollar – not a WEAK dollar. The sooner these pretend analysts stop the same rhetoric that stems from the broken Quantity Theory of Money, the sooner we will begin to truly understand how the economy works. Turnkey is a live example of the most vital element of all – CONFIDENCE. When that is lost, this is what produces hyperinflation – NOT the quantity of money.

There is a SHORTAGE of US dollars on the trading desks around the world – not an excess. This is also what is behind the bid.

Are Cryptocurrencies A Fictional Dream?


COMMENT: Dear Mr. Armstrong; I suppose we have to learn the hard way. Our electronic currency system crashed here in Zimbabwe. Many people were using it because of the old hyperinflation. The argument that private money would be better than government made a lot of sense here given the history. Most people were using US dollars and just about all other currencies from surrounding countries. We lived exactly the experience you have described when the confidence in government collapses. Yet now, many are wondering if this cryptocurrency is just another way to undermine the economy.

JKW

REPLY: I believe the vast majority of the world has never looked at exactly what was taking place in Zimbabwe. The new mobile money emerged as the leading transaction platform in Zimbabwe because of the previous hyperinflation. However, its weaknesses came into focus after the dominant EcoCash network in Zimbabwe collapsed for two days. Consumer businesses were left floundering in an already difficult economy. Many people were just locked out of the economy with no alternative.

EcoCash was competing against smaller platforms run by state-controlled telcos NetOne and Telecel Zimbabwe. The people preferred a privately run system the to the government. EcoCash was conducting business with more than eight million registered. It was also being used by expat Zimbabweans in South Africa and Botswana. This has obviously exposed the weakness of the electronic currency market. Take out the power grid and the economy will collapse overnight.

 

Cryptocurrencies are not a dead end. They are an asset class for now. There are a lot of problems with the technology and it would clearly make the entire economy vulnerable to a crisis in the failure of platforms or the power grid. Goldman Sachs sees the opportunity because of all the fraud. They are looking at stepping in as a CUSTODIAN because the integrity of the security behind a cryptocurrency is often questionable.

In war, you target the electricity grid as a first objective and then the total economy would collapse as well as the effort to fund a war. During a war, governments have often counterfeited each other’s currency. The British did that with American colonial currency. If they could undermine the confidence and cause hyperinflation, then funding the war effort would collapse. Today, you would do this by hacking and targeting the power grid.

In all the high-level meetings I have had about this technological innovation, the single greatest concern is would it make a nation more vulnerable during a war? Can a cyber attack simply paralyze the economy? Keep in mind that only about 4% of the economy takes place in cash. The rest is electronic deposits. Therefore, this threat is NOT limited to cryptocurrencies. It may very well be the next way to win a war. Attack the banking system and you will freeze the ability to fund a war. Don’t think they are not thinking about that right now

The Minsky Moment


A number of people have asked if I ever looked at Hyman Minsky’s concepts in forecasting the economy. Minsky’s Financial Instability Hypothesis failed not because of the fact that he attempted to interject cycles and even listened to Schumpeter, the problem was that he was an economist and not a trader. His own attempts to devise a mathematical model of his hypothesis were unsuccessful. The first of Minsky’s two papers in the AER set out a mathematical model of a financially driven trade cycle developed during his Ph.D. from Harvard in 1954 but he never attempted to develop the model further.

There have been many people who have claimed they used his model and were able to forecast the 2007 crash. I know many traders around the world in a professional capacity and I do not know ANYONE who did not see the crash coming. Being able to say this is a bubble and it will end badly was the topic of the movie The Big Short. Being able to see such a bubble is by no means unusual for many who are seasoned. I know of no profession who bought into the whole Bitcoin nonsense of how it would replace the dollar, end central banks, and start a new age all within a matter of months. The professionals just laughed because they know such a change takes decades not months.

Minsky’s observations of the Great Depression are seriously flawed. The primary problem was that they were focused domestically. They did not take into consideration the entire world economy. His hypothesis of financial instability argued that a financial crisis is endemic in capitalism because periods of economic prosperity encouraged borrowers and lenders to be progressively reckless. This excess optimism creates financial bubbles and then later busts. Therefore, capitalism is prone to move between periods of financial stability to instability. This is a type of market failure and it justifies government regulation to smooth the cycle, which is also his agreement with Keynesianism. The real cause is simply the human emotion. Women’s skirts rise and fall and men’s ties get wide and then back to thin. Fashion changes. Paintings of Paul Rubens portrayed robust women for that proved they were wealthy and could afford to eat. Skinny women were unattractive and considered to be poor. Even during the 1920s, advertisements told women how to gain weight. Today, the trend is the opposite. There is a cycle to everything.

Minsky’s Financial Instability Hypothesis is merely something that monitors domestic considerations and from that perspective, he completely failed to comprehend the Great Depression. It was far more than merely excessive debt etc. He agreed also with Galbraith who blamed corporations and never even looked out the wholesale collapse of government debt on a major worldwide scale in 1931. There was NO MENTION of the Sovereign Debt Crisis of 1931 you can read about in Herbert Hoover’s memoirs 1931.

Under Minsky’s theory, he endorses government power to smooth out the business cycle which they have never been able to do even once. Yet in all fairness to him, Minsky also believed that financial instability was a characteristic feature of capitalism as did Kondratieff yet the very institutional and policy measures introduced by governments sometimes contribute to the problem. It has become known as the Minsky Moment which is a sudden major collapse of asset values which is part of the credit cycle or business cycle. Such moments occur because long periods of prosperity and increasing value of investments lead to increasing speculation using borrowed money. Unfortunately, while it sounds authoritative, it can be applied to many periods that did not result in a major crash of the economy and can simply be confined to one market rather than the whole as was the case with the DOT.COM bubble and the Bitcoin crash. Neither produced a major depression.

NAFTA Update: President Trump Notes Progress With Mexico on Bilateral Trade – Preparing Different BiLat Terms For Canada…


Earlier today U.S. Trade Representative Robert Lighthizer messaged a warm birthday greeting to Mexican Foreign Secretary Louis Videgaray during ongoing negotiations between the U.S. and Mexican trade teams (video below).

Canada is FUBAR. No-one quite knows how FUBAR Canada is, because no-one has  followed the brilliant Wolverine crew closely enough to spot the strategy.

At the strategic direction of President Trump; and it is a really brilliant workaround strategy; the U.S. and Mexican teams are approaching the current NAFTA negotiations from a position of bilateral trade.   Trade watchers, Wall Street experts, financial pundits and the entire media apparatus are missing what Team USA are doing right in front of their faces…. they’ve obviously never followed or studied Trump’s out of the box problem solving when it comes to complex deals.

I won’t rehash the NAFTA flaws; familiar CTH readers know them well.  However, the bottom line is NAFTA is NOT, repeat N.O.T being renegotiated. I was going to remain silent, but I think it’s safe, Lighthizer is close enough to a deal to explain what’s happening.

The problems with NAFTA are systemic; and there is too much political and multinational lobbyist conniving/scheming; and too many political interests are connected to the current NAFTA.  Everyone thinks Trump is renegotiating NAFTA; that’s just what Team Wolverine want everyone to think… that allows the team maneuvering space.

After the end of Round #6 (January 2018), it was obvious to POTUS Trump a NAFTA renegotiated deal was impossible.  In March, 2018, Team Trump stealthily began moving in a different direction.  In June,2018, Canada accidentally made the admission there were no ongoing talks between the U.S. and Canada.  The reasoning is simple.

Without drawing any attention to the shift, Trump put NAFTA in the corner and began an entirely new bilateral trade discussion with Mexico. [Forgetaboudit… just leave NAFTA over there; but let people think what we are doing is NAFTA]

Instead of following customary sequential steps: (1) waiting for endless NAFTA negotiations that can never be resolved; (2) and then announcing NAFTA withdrawal; (3) and then dealing with the political and financial backlash; (4) and then beginning bilateral trade discussions, etc. etc.  Team Trump brilliantly and quietly strategized an end-around.

Team U.S.A. reversed the sequencing (but didn’t announce it).

  1. Negotiate the Mexico bilateral.
  2. Announce the Mexican bilateral agreement.
  3. Offer Canada a bilateral (slightly different terms).
  4. Announce the Canadian bilateral agreement.
  5. Dissolve NAFTA.

Instead of beginning new trade deals with NAFTA being ended, they end the new trade deals with NAFTA being ended.

Ergo, no political backlash and no political influence. By the time anyone realizes NAFTA is dead – it’s moot.  No formal exit strategy is needed because new deals are already on the books.

See the play?

Everyone thinks NAFTA is being renegotiated, it isn’t.

(Reuters) – U.S. President Donald Trump said on Friday that the United States and Mexico were making progress on a trade deal, and warned Canada he would tax their auto exports if an agreement cannot be reached with Ottawa.

“Deal with Mexico is coming along nicely. Autoworkers and farmers must be taken care of or there will be no deal. New President of Mexico has been an absolute gentleman,” Trump said on Twitter.

“Canada must wait. Their Tariffs and Trade Barriers are far too high. Will tax cars if we can’t make a deal!” he said. (read more)

Are you laughing yet?

You should be.

Few can see what he’s doing.

I just keep laughing…. this is what we get when a brilliant businessman is POTUS.

.

OK, so now we all know the secret… we can watch and laugh together.

President Trump Urges Democrats to Support Nancy Pelosi…


{{{snicker}}}  Best President Ever: