The Global Monetary Reset is under way, but people have not noticed it yet. The key is the move to zero interest rates.
Yesterday's epic market surge, the biggest Dow surge since December 2011 on the back of the most violent short squeeze in three years, highlighted just why being caught wrong side in an illiquid market can be terminal to one's asset management career (especially if on margin), and thus why hedge funds are so leery of dipping more than their toe in especially on the short side, resulting in a 6th consecutive year of underperformance relative to the confidence-boosting policy tool that is the S&P. And with today's session the last Friday before Christmas week, compounded by a quadruple witching option expiration, expect even less liquidity and even more violent moves as a few E-mini oddlots take out the entire stack on either the bid or ask side. Keep an eye on the USDJPY which, now that equities have decided to ignore both HY and energy prices, is the only driver for risk left: this means the usual pre-US open upward momentum ignition rigging will be rife to set a positive tone ahead of today's session.
Simply put, the US government has reached a point of no return.
Having already raised rates and devalued the Naira (and widened its trading bands), the Nigerian currency continues to collapse to new record lows as crude crashes lower and lower. Having tumbled 11.5% since oil prices peaked, the Naira is holdinga round 184/USD - over 9% above the new peg and dramatically outside of the new trading bands of +/-5% as it seems capital flight is out of control. That is probably why, as Bloomberg reports, Finance Minister Ngozi Okonjo-Iweala has commented that Nigeria won’t resort to printing money or imprudent borrowing as it adjusts to lower prices of oil. “This is not the first time this country has gone through lower oil prices and it will not be the last,” she said - making it very clear that Nigeria is not Zimbabwe (yet).
America has created a moral hazard for all Americans in that we feel we always have a fail safe no matter what we do because we’ve always succeeded. But so too had every other great dynasty until it didn’t. If we do not force a change in our economic policies we are very close to and perhaps already past the point of no return. I have no witting quip to end this article. The economic landscape we face today is nothing short of dire. And at the risk of sounding overdramatic we either force a policy change, suffer the short term pain and restructure or we and all future generations will live in a very different America from the one our folks left us.
On October 22, 1981, the government of the United States of America accumulated an astounding $1 TRILLION in debt. At that point, it had taken the country 74,984 days (more than 205 years) to accumulate its first trillion in debt. It would take less than five years to accumulate its second trillion. And as the US government just hit $18 trillion in debt on Friday afternoon, it has taken a measly 403 days to accumulate its most recent trillion. There’s so much misinformation and propaganda about this; let’s examine some of the biggest lies out there about the US debt...
Over four centuries ago, the Dutch East India Company made history as the world’s first IPO. Known as VOC in the Netherlands, the company was one of the most successful ventures in the last several hundred years. When adjusted for inflation, its highest market capitalization would be worth over $7 TRILLION today (i.e. ten times the size of Apple).
Unvarnished analysis as if people were not stupid, easily manipulated, or subject to false consciousness.
First Germany, then the Netherlands, perhaps Switzerland this weekend, and now the French right-wing Front National, which shockingly came first in May's European parliament elections, and whose leader Marine Le Pen is currently polling in first place in a hypothetical presidential election (in both a first and run off round), ahead of president Hollande, has sent a letter to the governor of the French Central Bank, the Banque de France, demanding that France join the list of nations which have repatriated, or at least tried to, their gold.
If you could stay home and watch television, play video games and hang out with your friends all day at government expense, would you do it? Of course most Americans that collect money from the government each month are not abusing the system. Many truly are incapable of taking care of themselves, and others are just receiving government benefits (such as Social Security) that they feel that they have earned by a lifetime of hard work. But with each passing year the number of Americans jumping on board “the safety net” continues to grow rapidly, and a lot of these people should be able to take care of themselves. What would our forefathers say about us today? The following are 21 facts that prove that dependence on the government is out of control in America…
The Congressional Budget Office (CBO) just released its annual report on “The Distribution of Household Income and Federal Taxes” analyzing data through 2011 on American households. The major finding of the CBO report is that the households in the top income quintile are the real “net payers” of the US economy. The highest income quintile is basically financing the entire system of transfer payments to the bottom 60% and the entire operation of the federal government. And yet don’t we hear all the time that “the rich” aren’t paying their fair share of taxes and that they need to shoulder a greater share of the federal tax burden?
Our world, our life, has been built on debt and propaganda for many years. They have kept us from noticing how poorly we are doing. But now a third element has entered the foundation of our societies, and it’s set to eat away at everything that has – barely – kept the entire edifice from crumbling apart. Deflation.
“Taxes are what we pay for civilized society.” The famous quote by US Supreme Court Justice Oliver Wendell Holmes Jr. is inscribed above the entrance to the headquarters of the IRS. Most people don’t have a clue what he meant, or in what context the statement was made. They simply parrot it around to justify the state’s racketeering behavior. The logic is as twisted as saying “war is the price we pay for peace” or “debt is the price we pay for recovery.” They’re all logical fallacies, and assertions backed by zero objective evidence. This is not how a ‘civilized society’ conducts itself.
We often hear that if there is not enough oil at a given price, the situation will lead to substitution or to demand destruction. Because of the networked nature of the economy, this demand destruction comes about in a different way than most economists expect–it comes from fewer people having jobs with good wages. With lower wages, it also comes from less debt being available. We end up with a disparity between what consumers can afford to pay for oil, and the amount that it costs to extract the oil. This is the problem we are facing today, and it is a very difficult issue.