Post by stingray on Aug 15, 2015 8:08:26 GMT -5
This week I have 3 articles to share with you. My time has been limited due to a death in the family.
How it all began.........
Egon von Greyrz writes:
For a hundred years now there has been very little skill required in investing. Investors, including asset managers and bankers have been traveling on a rocket, which has gone straight up for the last century. They didn’t need any knowledge or expertise whatsoever because all that was needed was to get on board. The fuel was provided by banks and central banks, led by the Federal Reserve.
Following Meyer Amschel Rothschild's Instructions:
The bankers knew from their mentor, Meyer Amschel Rothschild, that if they had control of a nation’s money they didn’t have to worry about the laws. So they created fractional reserve banking, which in effect meant that they could expand the banks’ balance sheet infinitely, with very little capital. This fractional reserve banking involved creating money out of thin air and it was and continues to be highly inflationary because it involves leverage of 20 – 50 times. Thus, when hard earned money was deposited in a bank, bankers could print at least 10 times that deposit and then invest or lend it out for their own benefit.
This means that the depositor or saver already lost a major part of his money the day it was deposited since at least 10 times more money was created out of thin air. But as the bankers found out that their on-balance sheet lending was somewhat restricted, they created off-balance sheet derivatives and investment vehicles.
The $200 Trillion And $1.5 Quadrillion Problems:
This is how the world debt grew from virtually zero 100 years ago to $200 trillion today. And derivatives went from nothing to $1.5 quadrillion. Central banks also added fuel to the rocket by printing tens of trillions of dollars. All of this has created the most incredible journey for investors, a journey that has been exponential in its trajectory. So investing has been easy if people just jumped on the rocket because they can’t lose money. Endless credit creation and money printing has seen to that. A privileged few have become immorally rich and many more have made a lot of money. There is just one little dilemma — on the other side of the asset bubble balance sheet there is a debt of $200 trillion that can never be repaid and is barely serviceable at zero percent interest rates.
The End Of The 100 Year Bonanza
We are now at the end of this 100-year-old bonanza, but the sad thing is that the world doesn’t think it can end. In my working life I’ve experienced downturns in the economy and markets a few times — 1973, 1987, 2000 and 2008 stand out. At the time they seemed scary but investors have now learned that any correction is always temporary, so it is always right to be long both stocks and property.
So in the finance sector massive wealth has been created, not based on skill but on money creation. Imagine if some of that capital and talent had gone into the real world and created real businesses and real products. Instead of the biggest asset bubble in history we would have had a better world where real work, invention and entrepreneurship would have been rewarded.
And why it continues today........
Paul Craig Roberts, former Secretary of Treasury under Ronald Reagan:
Last Friday’s employment report was a continuation of a long string of bad news spun into good news. The media repeats two numbers as if they mean something—the monthly payroll jobs gains and the unemployment rate—and ignores the numbers that show the continuing multi-year decline in employment opportunities while the economy is allegedly recovering.
The so-called recovery is based on the U.3 measure of the unemployment rate. This measure does not include any unemployed person who has become discouraged from the inability to find a job and has not looked for a job in four weeks. The U.3 measure of unemployment only includes the still hopeful who think they will find a job.
The government has a second official measure of unemployment, U.6. This measure, seldom reported, includes among the unemployed those who have been discouraged for less than one year. This official measure is double the 5.3% U.3 measure. What does it mean that the unemployment rate is over 10% after six years of alleged economic recovery?
In 1994 the Clinton regime stopped counting long-term discouraged workers as unemployed. Clinton wanted his economy to look better than Reagan’s, so he ceased counting the long-term discouraged workers that were part of Reagan’s unemployment rate. John Williams (shadowstats.com) continues to measure the long-term discouraged with the official methodology of that time, and when these unemployed are included, the US rate of unemployment as of July 2015 is 23%, several times higher than during the recession with which Fed chairman Paul Volcker greeted the Reagan presidency.
An unemployment rate of 23% gives economic recovery a new meaning. It has been eighty-five years since the Great Depression, and the US economy is in economic recovery with an unemployment rate close to that of the Great Depression.
The labor force participation rate has declined over the “recovery” that allegedly began in June 2009 and continues today. This is highly unusual. Normally, as an economy recovers jobs rebound, and people flock into the labor force. Based on what he was told by his economic advisors, President Obama attributed the decline in the participation rate to baby boomers taking retirement. In actual fact, over the so-called recovery, job growth has been primarily among those 55 years of age and older. For example, all of the July payroll jobs gains were accounted for by those 55 and older. Those Americans of prime working age (25 to 54 years old) lost 131,000 jobs in July.
Over the previous year (July 2014 — July 2015), those in the age group 55 and older gained 1,554,000 jobs. Youth, 16-18 and 20-24, lost 887,000 and 489,000 jobs. Today there are 4,000,000 fewer jobs for Americans aged 25 to 54 than in December 2007. From 2009 to 2013, Americans in this age group were down 6,000,000 jobs. Those years of alleged economic recovery apparently bypassed Americans of prime working age. As of July 2015, the US has 27,265,000 people with part-time jobs, of whom 6,300,000 or 23% are working part-time because they cannot find full time jobs. There are 7,124,000 Americans who hold multiple part-time jobs in order to make ends meet, an increase of 337,000 from a year ago.
The young cannot form households on the basis of part-time jobs, but retirees take these jobs in order to provide the missing income on their savings from the Federal Reserve’s zero interest rate policy, which is keyed toward supporting the balance sheets of a handful of giant banks, whose executives control the US Treasury and Federal Reserve. With so many manufacturing and tradable professional skill jobs, such as software engineering, offshored to China and India, professional careers are disappearing in the US.
Once again, this is why I continue to buy physical gold and silver:
From Rick Rule:
If you look at the bigger picture, the longer term, in terms of gold and precious metals equities as a percentage of U.S. savings and investment, that peaked in 1980 at about 8 percent of total investments. That is, about 8 percent of U.S. investor savings and investments were in precious metals and precious metals securities.
The median and the mean over the ensuing three decades, the last 30 years, were around 1.5 percent, well off from the peak. Today the equivalent number is only 0.33 percent! If gold and precious metals are able to recover to just 65 percent of the three-decade median, it would result in a tripling of demand for gold and precious metals equities in the largest consumer market in the world.
How it all began.........
Egon von Greyrz writes:
For a hundred years now there has been very little skill required in investing. Investors, including asset managers and bankers have been traveling on a rocket, which has gone straight up for the last century. They didn’t need any knowledge or expertise whatsoever because all that was needed was to get on board. The fuel was provided by banks and central banks, led by the Federal Reserve.
Following Meyer Amschel Rothschild's Instructions:
The bankers knew from their mentor, Meyer Amschel Rothschild, that if they had control of a nation’s money they didn’t have to worry about the laws. So they created fractional reserve banking, which in effect meant that they could expand the banks’ balance sheet infinitely, with very little capital. This fractional reserve banking involved creating money out of thin air and it was and continues to be highly inflationary because it involves leverage of 20 – 50 times. Thus, when hard earned money was deposited in a bank, bankers could print at least 10 times that deposit and then invest or lend it out for their own benefit.
This means that the depositor or saver already lost a major part of his money the day it was deposited since at least 10 times more money was created out of thin air. But as the bankers found out that their on-balance sheet lending was somewhat restricted, they created off-balance sheet derivatives and investment vehicles.
The $200 Trillion And $1.5 Quadrillion Problems:
This is how the world debt grew from virtually zero 100 years ago to $200 trillion today. And derivatives went from nothing to $1.5 quadrillion. Central banks also added fuel to the rocket by printing tens of trillions of dollars. All of this has created the most incredible journey for investors, a journey that has been exponential in its trajectory. So investing has been easy if people just jumped on the rocket because they can’t lose money. Endless credit creation and money printing has seen to that. A privileged few have become immorally rich and many more have made a lot of money. There is just one little dilemma — on the other side of the asset bubble balance sheet there is a debt of $200 trillion that can never be repaid and is barely serviceable at zero percent interest rates.
The End Of The 100 Year Bonanza
We are now at the end of this 100-year-old bonanza, but the sad thing is that the world doesn’t think it can end. In my working life I’ve experienced downturns in the economy and markets a few times — 1973, 1987, 2000 and 2008 stand out. At the time they seemed scary but investors have now learned that any correction is always temporary, so it is always right to be long both stocks and property.
So in the finance sector massive wealth has been created, not based on skill but on money creation. Imagine if some of that capital and talent had gone into the real world and created real businesses and real products. Instead of the biggest asset bubble in history we would have had a better world where real work, invention and entrepreneurship would have been rewarded.
And why it continues today........
Paul Craig Roberts, former Secretary of Treasury under Ronald Reagan:
Last Friday’s employment report was a continuation of a long string of bad news spun into good news. The media repeats two numbers as if they mean something—the monthly payroll jobs gains and the unemployment rate—and ignores the numbers that show the continuing multi-year decline in employment opportunities while the economy is allegedly recovering.
The so-called recovery is based on the U.3 measure of the unemployment rate. This measure does not include any unemployed person who has become discouraged from the inability to find a job and has not looked for a job in four weeks. The U.3 measure of unemployment only includes the still hopeful who think they will find a job.
The government has a second official measure of unemployment, U.6. This measure, seldom reported, includes among the unemployed those who have been discouraged for less than one year. This official measure is double the 5.3% U.3 measure. What does it mean that the unemployment rate is over 10% after six years of alleged economic recovery?
In 1994 the Clinton regime stopped counting long-term discouraged workers as unemployed. Clinton wanted his economy to look better than Reagan’s, so he ceased counting the long-term discouraged workers that were part of Reagan’s unemployment rate. John Williams (shadowstats.com) continues to measure the long-term discouraged with the official methodology of that time, and when these unemployed are included, the US rate of unemployment as of July 2015 is 23%, several times higher than during the recession with which Fed chairman Paul Volcker greeted the Reagan presidency.
An unemployment rate of 23% gives economic recovery a new meaning. It has been eighty-five years since the Great Depression, and the US economy is in economic recovery with an unemployment rate close to that of the Great Depression.
The labor force participation rate has declined over the “recovery” that allegedly began in June 2009 and continues today. This is highly unusual. Normally, as an economy recovers jobs rebound, and people flock into the labor force. Based on what he was told by his economic advisors, President Obama attributed the decline in the participation rate to baby boomers taking retirement. In actual fact, over the so-called recovery, job growth has been primarily among those 55 years of age and older. For example, all of the July payroll jobs gains were accounted for by those 55 and older. Those Americans of prime working age (25 to 54 years old) lost 131,000 jobs in July.
Over the previous year (July 2014 — July 2015), those in the age group 55 and older gained 1,554,000 jobs. Youth, 16-18 and 20-24, lost 887,000 and 489,000 jobs. Today there are 4,000,000 fewer jobs for Americans aged 25 to 54 than in December 2007. From 2009 to 2013, Americans in this age group were down 6,000,000 jobs. Those years of alleged economic recovery apparently bypassed Americans of prime working age. As of July 2015, the US has 27,265,000 people with part-time jobs, of whom 6,300,000 or 23% are working part-time because they cannot find full time jobs. There are 7,124,000 Americans who hold multiple part-time jobs in order to make ends meet, an increase of 337,000 from a year ago.
The young cannot form households on the basis of part-time jobs, but retirees take these jobs in order to provide the missing income on their savings from the Federal Reserve’s zero interest rate policy, which is keyed toward supporting the balance sheets of a handful of giant banks, whose executives control the US Treasury and Federal Reserve. With so many manufacturing and tradable professional skill jobs, such as software engineering, offshored to China and India, professional careers are disappearing in the US.
Once again, this is why I continue to buy physical gold and silver:
From Rick Rule:
If you look at the bigger picture, the longer term, in terms of gold and precious metals equities as a percentage of U.S. savings and investment, that peaked in 1980 at about 8 percent of total investments. That is, about 8 percent of U.S. investor savings and investments were in precious metals and precious metals securities.
The median and the mean over the ensuing three decades, the last 30 years, were around 1.5 percent, well off from the peak. Today the equivalent number is only 0.33 percent! If gold and precious metals are able to recover to just 65 percent of the three-decade median, it would result in a tripling of demand for gold and precious metals equities in the largest consumer market in the world.