The Trade War Distraction: Huawei And Linchpin Theory

Authored by Brandon Smith via Alt-Market.com,

Since the beginning of this year, I have been warning that trade tariffs initiated by Donald Trump would develop into a full-blown trade war with China, and perhaps other nations, and that the timing of this trade war is rather suspicious.

Suspicious how?

Almost every instance of further escalation was made by Trump around the exact time that the Federal Reserve was also making a large cut to its balance sheet or raising interest rates. Instead of focusing on the fact that extreme volatility has returned to markets because central banks are pulling the plug on life support, the mainstream media is holding up the trade war as the ultimate culprit behind the accelerating crash.

In other words, Trump’s trade war is acting as a perfect distraction from the crisis which the banking establishment has now deliberately triggered.

The initial response to my suggestion by a minority of liberty movement activists and skeptics was outright denial. Some people argued that the trade war would be over before it even began and that China would immediately capitulate in fear of losing the U.S. consumer market. Others argued that the trade war “had been started by the Chinese years ago” and Trump was simply “fighting back.”

Clearly, the trade war is not fading away as many assumed. As I predicted, it is only continuing to grow. And the notion that a trade war is necessary at this time in defense of the U.S. economy ignores certain realities. For example, the trade deficit itself was never “theft” by the Chinese, but a BARTER between the Chinese and the U.S. government and U.S. corporations. In exchange for the Chinese and other trade partners using the dollar as the world reserve currency (and petro-currency) and buying up US treasury debt, U.S. elites have arranged a deficit advantage for China. One could also add China’s cheap labor and low cost manufactured goods as part of that barter as well.

While the American working class got the short end of the stick in this deal, the government and the corporate cabal certainly benefited.

Now, if Trump had pressured corporations to bring manufacturing back to the U.S. in order to reap the rewards of his dramatic tax cuts, tariffs after the fact might make a little more sense. With production back on U.S. soil we would have more economic stability to weather future crisis events. Instead, Trump gave corporations a tax cut for nothing. And instead of using that extra capital to innovate or add value to the real economy, companies used the money to continue artificially propping up their own stock prices through stock buybacks.

It should be obvious to most people at this point that Trump has no intention of “winning” the trade war. As I noted just after the G-20 conference and the dinner negotiations with China:

“Of course, the outcome is being touted by both sides as a “win,” but it is clear that the goal was to head fake the public rather than actually resolve trade disputes. Will the 90-day delay be seen as “good for markets?” Possibly. Though, the housing market, auto market, and credit markets will continue to crash as they have been for the past few months. I expect this development might buy stocks another week of rest, but little else. As the next Fed meeting approaches this month and it becomes clear that they intend to continue hiking rates into 2019, the false optimism will fade. I also expect that negotiations with China will fall apart yet again well before the 90-day delay is over…”

The G-20 honeymoon ended even faster than I imagined.

The arrest of Chinese CFO of Huawei Technologies, Meng Wanzhou, has immediately destroyed any possibility of legitimate diplomatic negotiations going forward, and this seems to be by design.   The 90 day “truce” set apparently by verbal agreement during G-20 is likely over mere days after it started. National Security adviser and CFR ghoul John Bolton admitted in an interview with NPR that he was aware that Canada was preparing to arrest Meng at the request of the U.S. while he was eating grilled sirloin with the Chinese. The claim that Trump was not aware of the situation, to me, sounds absurd.

The detainment of Meng and the targeting of Huawei comes with a host of significant potential consequences.

First, as noted the trade truce is likely dead on arrival.  While Trump continues to claim that progress is being made and that “soybeans are being sold”, we have heard this kind of rhetoric for the past several months.  These claims are designed to produce headlines that create a steam valve for stock markets, bringing them down slowly instead of collapsing them outright.

Second, the possibility of further escalation of tariffs is much higher (U.S. farmers should not expect a reprieve anytime soon, despite rumors of “progress”).

Third, there is a chance that China will retaliate by snatching up U.S. corporate representatives (many of them just as embroiled if not more so in criminal enterprises). This is a development I realize the average liberty activist could not care less about, but the average American will see such actions as a slight by the Chinese against the U.S. as a whole. The narrative once again turns to the idea that China should be our focus rather than the banking elites.  Thus, the false East/West paradigm is further entrenched in the American mindset.

If this trend continues, the trade war will eventually expand into a war on the U.S. dollar itself, and when it does, the U.S. will suffer the worst fiscal crisis in its history. Without the world reserve status of the dollar as well as continued foreign investment in U.S. debt, what’s left of our economy will disintegrate.

Meng’s arrest is a deliberately engineered “linchpin.I have written extensively in past articles on DARPA’s “linchpin theory,” which is a kind of propaganda exercise more than a theory. According to DARPA, overly complex systems invite growing instability, and like a chain of dominoes, the smallest part of that system could be knocked over by a minor event causing a chain reaction that ends in total collapse.

Of course, this is a misrepresentation of reality. Complex systems do not invite instability, they create redundancy, making the system stronger and more resistant to disasters. Instability is actually caused by oversimplification of a system; that is to say, CENTRALIZATION is the true cause of large-scale crisis. As we have seen time and time again with globalism, the more economically interdependent and centralized the world becomes, the more vulnerable each nation is to the calamities of other nations.

DARPA loves centralization and is certainly not going to point a finger at it as the cause of global distress. And so they have created a scapegoat of decentralization through linchpin theory.

Linchpin theory also asserts another lie — the lie that most disasters are a product of “random chance.” The problem is that the only way that linchpin theory works is if disasters are created through conspiracy, not coincidence.

A system must be purposely weakened over time to the point that any crisis will translate into a collapse of the entire edifice. Central banks have done this quite expertly through the use of debt-based bubbles, followed by fiscal tightening into economic weakness. When you build up an economy like a great Jenga tower and begin pulling the most vital pieces in a calculated manner, eventually it’s going to come crashing down.

So which piece represents the supposed “linchpin” in our system today? Well, any piece might do the trick, but the arrest of a Chinese corporate executive (which the Chinese will consider hostage taking) at the very onset of a fragile trade truce is an excellent catalyst and also an excellent distraction.

As Meng sets bail awaiting trial and possible extradition, it does not matter if she leaves for China or remains to be prosecuted.

If the Chinese arrange for Meng to escape her surveillance and escape Canada, then this will be seen as damaging to trade negotiations on the American side. 

If she stays and is held up in what will be a very drawn out public trial as an example of Chinese trade villainy, this will be seen as damaging to negotiations on the Chinese side. 

Either way, the negotiations are walking dead.

But here is where we need to ask the most important question of all questions:  Who benefits?

In my article ‘The Everything Bubble: When Will It Finally Crash?’ published in September, I predicted that:

“The Fed’s neutral rate efforts suggest a turning point in late 2018 to early 2019. Balance sheet cuts are expected to increase at this time, which would also expedite a crash in existing market assets. The only question is how long can corporations sustain stock buybacks until their own debt burdens crush their efforts? With such companies highly leveraged, interest rates will determine the length of their resolve. I believe two more hikes will be their limit.

If the Fed continues on its current path the next stock crash would begin around December 2018 into the first quarter of 2019.”

The timing of the arrest of Meng coincided perfectly with the Fed’s expanded balance sheet cuts. The Fed has now shifted from $30 billion per month to $50 billion per month in dumped assets.  While Trump and the mainstream media hyper-focus on interest rates, there is little to no mention of the OTHER fiscal tightening that the Fed has undertaken.

The Fed is also set to raise interest rates to meet their neutral rate of inflation this month. This is something that has not happened in decades. And, corporate stock buybacks are dying in the last quarter of 2018, as the cost of borrowing to prop up equities is now too high. In response, stock markets are beginning to plunge, and this time there will be no significant bounce back because without Fed stimulus or buybacks, there is nothing left to keep things afloat.

To reiterate, the trade war is hitting a nexus, a point of extreme escalation just as the central bankers are about to kill the U.S. economy by tightening into economic weakness. The Meng snafu will be used by the mainstream media to draw the public’s attention away from central bank activities and toward the trade war. Everything Trump is doing is HELPING the banks to hide their culpability for the crash.

Why do the banking elites want a crash in the U.S.? There are numerous reasons and gains to be had. For an in-depth explanation, I recommend my article ‘The Economic End Game Explained.’ To summarize, globalists are setting the stage for what they often refer to as the “global economic reset.” This reset is essentially a major crisis event which will be exploited by globalists to centralize the system even further, into a one world currency and one world economy, governed by the banking elites through institutions like the IMF and the BIS.

The U.S. economy and the U.S. dollar must be diminished in order for this to happen. And with conservatives supposedly “in control” of the U.S. government and the U.S. economy at the time of the crash, guess who is slated to get the blame? I’ll give you a hint: Not the central bankers…

In the meantime, the globalists hope that the majority of the world will buy into the fallacy of linchpin theory. They hope everyone will blame decentralization and “complexity” instead of centralization and over-simplicity in the system. And it is certainly possible that the hijacking of a Chinese corporate official will be held up as one of the dominoes that started the collapse.

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Armored Truck Spills Cash On Busy Highway, Leads To Chaos, Crashes

In what can only be described as a likely preview of the next round of the Fed’s quantitative easing, an armored truck reportedly spilled cash onto Route 3 West in East Rutherford, New Jersey on Thursday morning. The incident caused drivers to promptly exit their vehicles and scramble about the highway picking up bills of all denominations.

The Brinks driver picking up cash off of the ground on Route 3

After the truck spilled cash, it caused two other vehicle crashes. Social media lit up shortly after the incident took place, showing video of drivers scrambling about the middle of an otherwise normally busy highway grabbing money off of the ground.


The driver, who was also seen on video, was one of the many running through traffic trying to collect the cash.

The East Rutherford Police then put out a Tweet stating:

“Approx 8:30am ERPD received calls of an armored truck spilling cash along Rt 3 West, motorists exited vehicles attempting to remove cash causing multiple MV Crashes. Detectives are investigating. We ask any person with info or video of this incident, call ERPD 201-438-0165″

“$5, 20, everything. Look at the accidents. Wow,” someone in the video says. 

A captain for Brinks was quoted as stating what can only be described as the incredibly obvious

“At this time it appears the armored truck had a malfunction of one of its doors causing it to become unsecured.”

East Rutherford Police Capt. Phillip Taormina told NBC News:

 “One good Samaritan had scooped up some money and handed it back to the security guard.”

The total amount of money that fell out of the Brinks truck has yet to be determined. Route 3 is an arterial road leading in and out of New York City through the Lincoln Tunnel. Additional video can be found here

Jerome Powell, Janet Yellen and Haruhiko Kuroda were all seen nearby taking notes. A request for comment from Paul Krugman has not been returned. 

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Australia’s House Of Cards Is Collapsing: Recession Coming Up

Authored by Mike Shedlock via MishTalk,

Australia’s housing collapse is now in full swing. A recession will follow shortly.

Inga Ting, Geoff Thompson and Alex McDonald provide and excellent set of graphics and information on the bursting of Australia’s housing bubble at House of Cards.

Home prices in more than four out of five council areas have reached their peak and are sliding towards an unknown nadir, according to the latest figures from property market analyst CoreLogic.

As the slump moves into its second year with little or no prospect of rebound, the downturn in capital city property markets threatens to drag down the rest of the economy.

And with a mixed outlook for the global economy, doubts are surfacing about where Australia is going to find the fuel to extend its near-record run of 27 years of unbroken economic growth.

Yearly Change in Median Dwelling Value

The graph in the article is interactive with a choice of eight cities. Sydey displayed above.

Major Declines Since 1980

Click on the graph for an even larger image.

Perth and Darwin have been clobbered. Sydney is in the works.

Every Bubble is Different

I also like this Tweet in response.

I believe this person means 2019 not 2018


Party is Over

There is no way Australia avoids a recession. I don’t care what the central bank does.

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Customs Officers Snooping Through More Travelers’ Electronic Devices Than Ever

US Customs and Border Protection officers are snooping through the contents of more travelers’ electronic devices than ever, and don’t follow protocol 67% of the time, according to a new report by the Department of Homeland Security’s internal watchdog. 

The department’s Inspector General found that there were 29,000 devices searched during “secondary” inspections in 2017 out of 397 million travelers, up from 18,400 searches the previous year on 390 million travelers – less than one percent of all people entering the United States. 

During an enhanced secondary inspection, CBP’s Office of Field Operations (OFO) can manually review information on a traveler’s electronic devices – or they can connect external equipment to copy information for uploading and analysis in CBP’s Automated Targeting System (ATS)

Unfortunately for travelers, the OFO was found to have skirted or ignored standard operating procedures during searches of electronic devices, according to the Inspector General report.

During our review of a sample of border searches of electronic devices conducted between April 2016 and July 2017, we determined that OFO did not always conduct the searches at U.S. ports of entry according to its SOPs. Specifically, because of inadequate supervision to ensure OFO officers properly documented searches, OFO cannot maintain accurate quantitative data or identify and address performance problems related to these searches. In addition, OFO officers did not consistently disconnect electronic devices, specifically cell phones, from networks before searching them because headquarters provided inconsistent guidance to the ports of entry on disabling data connections on electronic devices. OFO also did not adequately manage technology to effectively support search operations and ensure the security of data. -DHS OIG

Without disconnecting from networks before searching them, OFO officers were able to retrieve or access information stored remotely in violation of DHS policy. 

The DHS IG recommended better documentation for searches, more consistent disabling of data connections prior to searches, and the deletion of data fom thumb drives once it is no longer needed, and for the development of a system to evaluate whether their electronic surveillance techniques are working. 

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For The First Time Ever, Bank Of Canada Buys Mortgage Bonds

Three weeks ago we reported that, the Bank of Canada announced for the first time that in order to prop up the sliding Canadian housing market help increase the tradeable float of its benchmark securities, the central bank would start buying government-backed mortgage bonds, also known as Canada Mortgage Bonds which are guaranteed by Canada Mortgage and Housing Corp.

Well, it took less than a month for the BoC to execute on its intentions, because on Thursday, the central bank purchased Canada Housing Trust bonds for the first time ever, scooping up C$250 million ($187 million) of the federal agency’s C$5.5 billion five-year notes which priced today.

Canada Housing Trust, the special issuer of Canada Mortgage and Housing Corp.-backed debt, priced the 2.55% bonds due 2023 at a spread of 40.5 bps over comparable debt issued by the country’s federal treasury, National Bank Financial, the lead coordinator of the deal, said. The housing agency first offered these notes in September at a relatively narrow spread of only 31.5 basis points.

As we reported at the time, the Bank of Canada said in late November it would broaden the range of high quality assets it acquires to include purchases of government-guaranteed debt issued by federal Crown corporations. While the central bank said the expansion is “only for balance sheet management” and would give it added flexibility to offset the continued growth of bank notes, the cynical skeptics immediately accused the BoC of implicitly stepping in to prop up Canada’s deteriorating housing market.

The expansion, the BoC said, would also provide more freedom to reduce its participation in primary Canadian government bond auctions and help boost the tradeable float, supporting secondary market liquidity. Of course, if that’s the real reason, one wonders why it took the BOC ten years since the launch of global QE to expand its operation, instead of waiting until Canada had tumbled to 37th place in the latest global ranking of housing markets from commercial real estate firm Knight Frank, from fourth place in the same survey a year earlier, amid a sharp slowing in Canada’s housing market…

… coupled with the biggest annual drop in the biggest regional housing bubble, Vancouver, which just suffered its biggest annual decline since 2009.

Meanwhile, the BOC stepped in at just the right time: today’s deal marks the completion of Canada Housing Trust’s funding plan for the year. The agency has an issuance limit of C$40 billion ($30 billion) for 2018, and after today’s deal it has already priced C$39.75 billion of new bonds. In other words, courtesy of the central bank, not a concern is in sight, although one can’t help but recall that just last week the BoC said it would step in only if investor demand did no meet issuance standards. Which begs the question: what would have happened had the BOC not stepped in to complete “investor” demand for the new issue?

And now, considering that the Canadian housing market is suddenly sliding while household insolvencies and bankruptcies are soaring, we wonder if next on the BoC’s “shopping list” will be overdue credit card bills and second-lien mortgages.

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“Yes, Virginia, There Is A Deep State!”

Authored by Ray McGovern via Consortium News,

In his efforts to uncover the Iran-Contra plot and the machinations surrounding Russia-gate, Bob Parry was in the forefront of journalists exposing the inner workings of the Deep State…

A year ago yesterday, it became fully clear what was behind the feverish attempt by our intelligence agencies and their mainstream media accomplices to emasculate President Donald Trump with the Russia-gate trope.

It turned out that the objective was not only to delegitimize Trump and make it impossible for him to move toward a more decent relationship with Russia.

On December 12, 2017, it became manifestly clear that it was not only the usual suspects — the Military-Industrial-Congressional-Intelligence-Media-Academia-Think-Tank Complex, namely, the Boeings, Lockheeds, and Raytheons profiteering on high tension with Russia; not only greedy members of Congress upon whom defense contractors lavish some of their profits; not only the TV corporations controlled by those same contractors; and not only the Democrats desperately searching for a way to explain how Hillary Clinton could have lost to the buffoon we now have in the White House.

No, it was deeper than that. It turns out a huge part of the motivation behind Russia-gate was to hide how the Department of Justice, FBI, and CIA (affectionately known as the Deep State) — with their co-opted “assets” in the media — interfered in the 2016 election in a gross attempt to make sure Trump did not win.

Russia-gate: Cui Bono?

This would become crystal clear, even to cub reporters, when the text exchanges between senior FBI officials Peter Strzok and girlfriend Lisa Page were released exactly a year ago. Typically, readers of The New York Times the following day would altogether miss the importance of the text-exchanges.

Readers of Robert Parry’s article on December 13, 2017, “The Foundering Russia-gate ‘Scandal,” would be gently led to understand the importance of this critical extra dimension explaining the the media-cum-anonymous-intelligence-sources frenzied effort to push the prevailing Russia-gate narrative, and — and how captivated and unprofessional the mainstream media had become.

Bob Parry did not call me frequently to compare notes, but he did call on Dec. 12, 2017 for a sanity check on the release of the Strzok-Page texts. We agreed on their significance, and I was tempted to volunteer a draft to appear the next day. But it was clear that Bob wanted to take the lead, and it would turn out to be his last substantive piece. He had already laid the groundwork with three articles earlier that month. (All three are worth reading again. Here are the links.

Robert Parry’s obituaries in the New York Times and Washington Post

Here’s how Bob began his article on the Strzok-Page bombshell. (Not a fragment of it seemed to impact mainstream media.):

“The disclosure of fiercely anti-Trump text messages between two romantically involved senior FBI officials who played key roles in the early Russia-gate inquiry has turned the supposed Russian-election-meddling “scandal” into its own scandal, by providing evidence that some government investigators saw it as their duty to block or destroy Donald Trump’s presidency.

“As much as the U.S. mainstream media has mocked the idea that an American ‘deep state’ exists and that it has maneuvered to remove Trump from office, the text messages between senior FBI counterintelligence official Peter Strzok and senior FBI lawyer Lisa Page reveal how two high-ranking members of the government’s intelligence/legal bureaucracy saw their role as protecting the United States from an election that might elevate to the presidency someone as unfit as Trump.”

Parry’s Cri de Coeur

Fast forwarding just two weeks, Bob had a stroke on Christmas Eve, which seriously affected his eyesight. By New Year’s Eve 2017, though, he was able to “apologize” (typical Bob) to Consortium News readers for not filing for two weeks.

In January, he had additional strokes. When I visited him in the hospital, he was not himself. What is indelible in my memory, though, is the way he kept repeating from his hospital bed: “It’s too much; it’s just too much, too much.”

What was too much?

Since Bob told me how hard he had to struggle, with impaired vision, to put together his Dec. 31 piece, and since what he wrote throws such light on Bob and the prostitution of the profession he loved so much, I include a few excerpts below. (Forgive me, but I cannot, for the life of me, pare them down further.)

These paragraphs from Bob are required reading for those who want to have a some clue as to what has been going on in Washington, and the Faustian bargain Strzok — sorry, I mean struck — between the media and the Deep State. Here’s what Bob, clear-eyed, despite fuzzy eyesight, wrote:

“On Christmas Eve, I suffered a stroke that has affected my eyesight (especially my reading and thus my writing) although apparently not much else. The doctors have also been working to figure out exactly what happened since I have never had high blood pressure, I never smoked, and my recent physical found nothing out of the ordinary. Perhaps my personal slogan that ‘every day’s a work day’ had something to do with this.

“Perhaps, too, the unrelenting ugliness that has become Official Washington and national journalism was a factor. It seems that since I arrived in Washington in 1977 as a correspondent for The Associated Press, the nastiness of American democracy and journalism has gone from bad to worse. …

“More and more I would encounter policymakers, activists and, yes, journalists who cared less about a careful evaluation of the facts and logic and more about achieving a pre-ordained geopolitical result –and this loss of objective standards reached deeply into the most prestigious halls of American media. This perversion of principles –twisting information to fit a desired conclusion – became the modus vivendi of American politics and journalism. And those of us who insisted on defending the journalistic principles of skepticism and evenhandedness were increasingly shunned by our colleagues … Everything became ‘information warfare.’ …

The demonization of Russian President Vladimir Putin and Russia is just the most dangerous feature of this propaganda process – and this is where the neocons and the liberal interventionists most significantly come together. The U.S. media’s approach to Russia is now virtually 100 percent propaganda. Does any sentient human being read the New York Times’ or the Washington Post’s coverage of Russia and think that he or she is getting a neutral or unbiased treatment of the facts? … The American people and the West in general are carefully shielded from hearing the ‘other side of the story.’ Indeed to even suggest that there is another side to the story makes you a ‘Putin apologist’ or ‘Kremlin stooge.’

Western journalists now apparently see it as their patriotic duty to hide key facts that otherwise would undermine the demonizing of Putin and Russia. Ironically, many ‘liberals’ who cut their teeth on skepticism about the Cold War and the bogus justifications for the Vietnam War now insist that we must all accept whatever the U.S. intelligence community feeds us, even if we’re told to accept the assertions on faith. …

“The hatred of Trump and Putin was so intense that old-fashioned rules of journalism and fairness were brushed aside. On a personal note, I faced harsh criticism even from friends of many years for refusing to enlist in the anti-Trump ‘Resistance.’ The argument was that Trump was such a unique threat to America and the world that I should join in finding any justification for his ouster. Some people saw my insistence on the same journalistic standards that I had always employed somehow a betrayal.

“Other people, including senior editors across the mainstream media, began to treat the unproven Russia-gate allegations as flat fact. No skepticism was tolerated and mentioning the obvious bias among the never-Trumpers inside the FBI, Justice Department and intelligence community was decried as an attack on the integrity of the U.S. government’s institutions. Anti-Trump ‘progressives’ were posturing as the true patriots because of their now unquestioning acceptance of the evidence-free proclamations of the U.S. intelligence and law enforcement agencies.

“Hatred of Trump had become like some invasion of the body snatchers –or perhaps many of my journalistic colleagues had never believed in the principles of journalism that I had embraced throughout my adult life. To me, journalism wasn’t just a cover for political activism; it was a commitment to the American people and the world to tell important news stories as fully and fairly as I could; not to slant the ‘facts’ to ‘get’ some ‘bad’ political leader or ‘guide’ the public in some desired direction.”

Robert Parry, who exposed Deep State skullduggery in the Iran-Contra affair, died on January 27, 2018. Our corrupt media, though, live on in infamy. Strokes and pancreatic cancer were named as the cause. But I think Bob was also a casualty of the Faustian media/Deep State bargain. It was just “too much.”

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Tennessee Struck By The Largest Earthquake In 45 Years

In recent months, there have been massive earthquakes in Venezuela, Fiji, Italy and elsewhere. Here in North America, significant quakes have rattled Oregon, Alaska and the west coast of Mexico.

While the West Coast is notorious for its earthquakes, other portions of the US are also earthquake-prone.

Two earthquakes reported Wednesday morning in Eastern Tennessee have shocked Middle Tennesseans and were felt in Georgia, Kentucky, North Carolina, and South Carolina.

The 4.4 and 3.3 magnitude quakes had an epicenter near Decatur, Tennessee in Meigs County did no significant damage, but the fear is when will the next massive quake strike.

“A 4.4 magnitude earthquake is a reminder for people to be prepared,” said John Bobel, a public information officer for the division of emergency management in Kentucky’s Lexington-Fayette Urban County Government.

Middle Tennessee sits between two different seismic zones, the New Madrid Seismic Zone and the East Tennessee Seismic Zone. The New Madrid Seismic Zone extends from Northeastern Arkansas into West Tennessee, Southeastern Missouri, Western Kentucky, and Southern Illinois. The East Tennessee Seismic Zone extends from Northeastern Alabama into Southwestern Virginia.

Scientists have said that the New Madrid Seismic Zone and the East Tennessee Seismic Zone have unleashed major earthquakes for thousands of years: 

“On Dec. 16, 1811, the first of three major earthquakes and numerous aftershocks struck what is now known as the New Madrid Seismic Zone, a series of faults that stretch 150 miles from Cairo, Illinois, to Marked Tree, Arkansas.

Today the zone threatens Alabama, Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee. That’s a different set of faults than Wednesday’s quake in the East Tennessee Seismic Zone.

Back in 1811, New Madrid, Missouri, itself had only 400 people, St. Louis to the north had about 1,500 residents and Memphis to the south wasn’t even a twinkle in its founders’ eyes, according to the Central United States Earthquake Consortium. Damage was reported as far away as Charleston, South Carolina, and the District of Columbia; and the quakes, estimated at 7.5 to 7.7 magnitude, were felt more than 1,000 miles away in Connecticut.”

According to TransRe, an international reinsurance organization, there are more than 11 million people living in the New Madrid Seismic Zone.

“The big thing we prepare for is with New Madrid,” Bobel said.

“Depending on the significance of an earthquake, Memphis, Tennessee, would be gone; St. Louis would be wrecked.”

The Louisville Courier-Journal said the New Madrid quakes of 1811 and 1812 were almost 2,000 times more powerful than Wednesday’s 4.4 shockwaves and released almost 90,000 times more energy, according to the U.S. Geological Survey’s earthquake calculator.

It is not a matter of if, but when the big quake strikes. The damage in the fault zone area could be devastating: “Anything west of I-65, infrastructure would be severely damaged,” Bobel said of the interstate that bisects Kentucky and Tennessee. “The ground could even liquify and turn to mud,” which happened in 1811 and 1812.

The America Earthquake Center at the University of Illinois estimated that in 2008, a 7.7 magnitude quake along the New Madrid Fault could trigger widespread damage:

“250,000 buildings moderately or severely damaged, more than 260,000 people displaced, significantly more than 60,000 injuries and fatalities, total direct economic losses surpassing $56 billion, $64 billion today when adjusted for inflation. Kentucky would have the next most significant damage, totaling $45 billion, $52 billion today.” 

Depending on where the exact epicenter of the quake is, “areas within the NMSZ would experience widespread and catastrophic physical damage, negative social impacts, and economic losses,” the Federal Emergency Management Agency said in 2008.

Seismologists warned that the New Madrid Seismic Zone has a 25% to 40% chance of producing the next big quake within the next five decades, according to Lexington-Fayette Urban County Government. 

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After Russia Collusion Theory Falls Flat, Mueller Turns To Middle East In Search Of Trump “Gotcha”

The Mueller investigation – originally launched to determine whether Donald Trump or members of his campaign colluded with Russia to win the 2016 US election, has resulted in dozens of indictments and least eight guilty pleas or convictions – yet notably missing are any indictments related to Russian collusion with the Trump campaign

With the Russian horse long dead yet still subject to regular beatings, Mueller will now turn his attention to Middle Eastern countries’ attempts to influence American elections, according to the Daily Beast, citing three sources familiar with this aspect of the probe who have said that related court filings are set to drop in early 2019. 

While one part of the Mueller team has indicted Russian spies and troll-masters, another cadre has been spending its time focusing on how Middle Eastern countries pushed cash to Washington politicos in an attempt to sway policy under President Trump’s administration. Various witnesses affiliated with the Trump campaign have been questioned about their conversations with deeply connected individuals from the United Arab Emirates, Saudi Arabia, and Israel, according to people familiar with the probe. Topics in those meetings ranged from the use of social-media manipulation to help install Trump in the White House to the overthrow of the regime in Iran. –Daily Beast

Cooperating witnesses have reportedly told the special counsel’s office information about foreigners’ plans to help Trump beat Hillary Clinton in 2016, while Mueller’s team has been mulling whether to issue new charges on this side of the investigation according to two sources with knowledge of the probe. 

“If this is going to be unveiled, this would be like the surfacing of the submarine but on the other plank which we haven’t seen,” said former US attorney Harry Litman. “I guess what Mueller has to date has turned out to be pretty rich and detailed and more than we anticipated. This could turn out to be a rich part of the overall story.”

The Beast suggests that former National Security Adviser Michael Flynn – who sat for 19 interviews with Mueller’s team – has provided the special counsel information that may help with the new phase of the investigation. 

In often-heavily redacted court documents made public over the last two weeks, the Special Counsel’s Office hinted at ways in which Flynn helped with its investigation into links between Trumpworld figures and the Russian government.

But Flynn was also involved in conversations with representatives and influential individuals from other foreign governments, including the UAE, Saudi Arabia, and Israel—encounters The Daily Beast has reported over the last several months. Flynn’s cooperation with Mueller could bring new details about the scope of the special counsel’s probe into how individuals from those countries offered not only to help Trump win the presidential election, but also how they sought to influence foreign policy in the early days of the administration. –Daily Beast

The Beast notes that it’s unclear exactly how this aspect of Mueller’s investigation overlaps with his mandate from the Justice Department to investigate Russian collusion – however that hasn’t stopped him from pursuing Paul Manafort over his work in Ukraine, or Michael Cohen’s tax fraud, for example. It’s clear Mueller is able to investigate whatever he pleases. 

Mueller also has the jurisdiction to “investigate and prosecute federal crimes committed in the course of, and with intent to interfere with, the special counsel’s investigation, such as perjury, obstruction of justice, destruction of evidence, and intimidation of witnesses,” according to the code. –Daily Beast

“For something like this to happen, Mueller would have needed to get approval from [Deputy Attorney General Rod] Rosenstein for this,” said Litman. “It’s not really in the original grant of jurisdiction and it appears then that he made his case to Rosenstein some time ago and that Rosenstein agreed.”

Mueller has also reportedly been investigating several meetings involving Lebanese-American businessman and UAE emissary George Nader – who helped arrange a meeting between Blackwater founder and Trump ally Erik Prince and Kirill Dmitriev – head of one of Russia’s sovereign wealth funds. Nader also acted as a go-between of sorts between various Gulf State government representatives, one “well-connected Israeli,” and Trump’s team. Nader has been working with Mueller’s office since March, however it is unknown what information, if any, he has provided. 

In one August 2016 meeting, first reported by The New York Times and later confirmed by The Daily Beast, Nader told the room that the crown princes of both Saudi Arabia and the UAE were eager to help Trump win the election. Also ready to lend his services was Joel Zamel, a self-styled Mark Zuckerberg of the national-security world with deep ties to Israeli intelligence. Zamel had already been in close contact with the Trump team because one of his companies, Psy Group, had drawn up a plan to use social-media manipulation to help Trump clinch the Republican nomination. The company sent former senior campaign aide Rick Gates that proposal. –Daily Beast

Zamel and Psy Group had more extensive links to the Trump campaign than previously reported, according to the Beast’s November reporting. Former employees claim that at least two other individuals from Trump’s team reached out to the firm during the campaign. 

Notably, Zamel “remained close to the Trump team throughout the election and into the transition,” after having been introduced to the campaign through Nader – who Zamel in turn met through former Dick Cheney aide John Hannah – another target of Mueller’s probe. 

Zamel assisted the Trump team right after the election – even crafting a regime change roadmap for Iran. Nader, meanwhile, was promoting a plan to economically sabotage Tehran – ostensibly a scheme by the Saudi and Emiratis to convince the incoming Trump administration to act against Qatar and Iran – their top regional competitors. 

The New York Times reported this year that Nader worked with Republican fundraiser Elliott Broidy to urge the White House to take an aggressive stance against the two countries.,” according to the Beast

Mueller has also probed Nader’s role in the January 2017 Seychelles meeting between Prince and Dmitriev, CEO of the Russian Direct Investment Fund. In his House testimony, Prince said the meeting was a chance encounter and the two met to talk about trade and mineral wealth. But prosecutors this year received evidence that showed the meeting was premeditated. Communications reviewed by The Daily Beast reflect that narrative.

A memo shows the two spoke about a range of topics, including peace between Ukraine and Russia, military operations in Syria, investment in the Midwest, and nuclear weapons. Although RDIF is under U.S. sanctions, it was and is still legal for U.S. individuals to meet with Dmitriev, and, in some circumstances, do business with the fund. –Daily Beast

Whatever direction Mueller takes next, we’re sure it will conveniently cast a perpetual shadow of doubt over Donald Trump right into the 2020 election and beyond. 

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Offshore Gold Storage “For When The US Govt Decides You Shouldn’t Own It”

Via InternationalMan.com,

“If your gold is outside the US, it gives you another degree of insulation should the United States decide that you shouldn’t own it – it’s not a reportable asset.”

– Doug Casey, May 2017

I’ve been a holder of gold since the 1970’s. At that time, I was purchasing gold and silver for business reasons and found that, as the price was steadily increasing, I’d be wise to buy more than I needed immediately, as I’d most certainly profit from it in the near future.

At that time, I was buying most of my precious metals in Hatton Garden, the centre for physical metals usage in London and, in talking with my more experienced associates there, I learned that gold doesn’t just make pretty jewellery, it has, for over 5000 years, served as man’s best economic insurance policy.

Since the creation of the first fiat currency in China, ca. 600 AD, governments have had the annoying habit of creating fiat currencies. It has taken many forms, including tobacco, shells, cattle, even tulips in 17th Century Holland.

Over the centuries there have been countless fiat currencies. Most of them have been paper currencies and, with the exception of the present-day fiat currencies, all have eventually become worth exactly zero.

Not a very good track record and, in my estimation, those fiat currencies that still exist will also come to an end, possibly soon. But whenever a fiat currency has come to an end, gold has retained its lustre and saved the day, providing a solid means to store wealth. Although governments and bankers have done all they can to discredit gold and discourage its use, gold invariably outlives them all. Whenever history has seen periods of dramatic overreach by banks and/or governments, gold once again re-establishes the very definition of money.

Today, we’re passing through one of these eras of overreach and, not surprisingly, those who are farsighted, are quietly building up their store of gold, to protect them when the latest form of fiat currency joins the rest that have collapsed over the centuries.

But, having realized the need to own gold and then beginning to build up a portfolio, the holder asks himself, “Where should I keep it?” The obvious answer is at home, or somewhere very close, so that he may get to it easily, if need be. During good economic times, this may well mean in a safe deposit box in a bank, but in times like the present, when governments (the EU, US and Canada, amongst others) have recently passed laws allowing banks to confiscate deposits and raid safe deposit boxes, the last choice for safe storage would be a bank.

This leads us to the “at home” option. This is actually a good one. If you have a yard where neither dogs nor gardeners tend to dig holes, “midnight gardening” can indeed be a good solution for small amounts of gold storage. Or, for a neater and more easily accessible solution, a home safe might work well. (You would, of course, want it to be well-concealed and you’d need to install it yourself, or the installers might get ideas.)

But, when turbulent times come, as they have recently, this only works well if you own a small amount of gold, say ten ounces or less. If you hold more at home, you run into the problem of governments. In 1933, US President Franklin Roosevelt demanded that all gold be turned in to the government. He subsequently revalued it and, in doing so, robbed its rightful owners of a 69% increase in their wealth.

Unfortunately, since we know that the EU, US and Canada have all passed confiscation laws, those jurisdictions are no longer safe places to store wealth. Ten ounces of gold may be regarded as an emergency stash but, beyond that, another jurisdiction is needed – one that’s not threatened by confiscation laws.

What I’ve recommended to investors for decades is to first choose the best jurisdiction that’s relatively near to you, then pick the safest storage facility within that jurisdiction.

Recently, I’ve been asked more and more often to get specific and open up about my personal preferred facilities. I’d rather describe the benefits and pitfalls and leave the investor to do his own homework, but as a result of increasing requests, these are my personal preferences:

If you’re in Europe, Austria is a good choice and Das Safe is an excellent depository. In Asia, Singapore is an excellent jurisdiction and The Safe House is an exceptional choice.

However, the Western Hemisphere is a different story. There are quite a few excellent depositories in the US and Canada, but, as stated above, I no longer regard these jurisdictions as safe. In my travels elsewhere in the hemisphere, I’ve been disappointed to find that, whilst there are jurisdictions that are safer than North America, the depositories there leave a great deal to be desired. (On one occasion, in Uruguay, I took one look at the outside of the depository’s building and never even bothered to go in. Although it was considered the premier facility there, it didn’t come close to my expectations.) Others, such as those in Panama, have been similarly disappointing.

What the depositor should be after is a facility that’s heavily reinforced on all six sides (meaning that the ceiling and foundation must be just as impenetrable as the walls). In addition, it would need a Class III bullion vault – the equal of the best bank vaults. In addition, it should have multiple security doors and man-traps leading to the vault, assuring that no one who enters can make a dash for the exit. This virtually eliminates the temptation for theft.

Unfortunately, to my present knowledge, there’s only one depository in the Western Hemisphere that ticks all the boxes. Or perhaps I should put that another way: Fortunately, there is one depository in the Western Hemisphere that ticks all the boxes.

That depository is Strategic Wealth Preservation (SWP) in the Cayman Islands. Most importantly, it’s located in an exceptional jurisdiction as regards wealth safety. And, by this I mean:

  • No direct taxation of any kind. No taxes or duties that apply to the purchase, ownership, storage or sales of precious metals. No capital gains tax; no inheritance tax. No sales tax. No VAT.

  • World-class financial system to provide auxiliary services.

  • Stable government with consistent history for economic stability that caters to international investors.

  • Minimal wealth legislation and regulation, to assure a minimum of red tape in processing purchases, sales, transfers and shipment of metals.

Secondly, SWP ticks all the boxes as to being a top bullion storage facility. Further, the SWP contracts were designed to take the best from each of the world’s other depositories, having been vetted by one of the world’s most respected gold analysts (who, possibly not coincidentally, became the first depositor). Also, it’s only an hour by air from the US.

It’s also essential that your deposit is fully insured and that the storage be fully documented, allocated and segregated, as in the photo below of an incoming deposit:

For Americans, an offshore gold IRA is becoming an essential and SWP has an excellent gold IRA.

Over the past decades that I’ve been advising people on geographical economic diversification, I’ve often said that the coming events themselves are relatively easy to predict, but the timing is not. To me, the one clearest indicator of timeframe is that, the closer a crash gets, the more events will increase in both frequency and magnitude. Based upon that premise, we’re drawing quite close to the first of the crashes, as we’re now seeing significant events almost daily.

This tells us that our time is limited and that our long-term plans for wealth preservation need to be in place now. Whatever choice the reader makes to safeguard his wealth, he will need to do it very soon. Time is very clearly running out.

*  *  *

Clearly, there are many strange things afoot in the world. Distortions of markets, distortions of culture. It’s wise to wonder what’s going to happen, and to take advantage of growth while also being prepared for crisis. How will you protect yourself in the next crisis? See our PDF guide that will show you exactly how. Click here to download it now.

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The BOJ Faces An Unexpected Problem: Record Demand For Japanese Bonds

Once upon a time, the most popular “widowmaker” trade was being short Japanese bonds as a result of prevailing conventional wisdom that there is no way Japan’s demographically doomed society and stagnant economy can sustain interest rates near zero. 

Not anymore. In fact, according to the latest data from Japan’s Ministry of Finance compiled by Bloomberg, the “widowmaker” trade has been flipped on its head, as global investors just can’t get enough of Japanese bonds and in the week ended Dec. 7, foreign investors bought a net 1.72 trillion yen (or $15.2BN) in Japanese bonds, the most on record (the data starts in January 2005) and a third straight week of purchases.

How is this possible: why would any investor choose to buy Japanese bonds which yield just around 0.05%, when one can easily purchase US 10Y Treasurys at a yield of roughly 2.90%? Simple: currency hedging, because as the chart below shows, when eliminating currency risk (i.e. FX hedging) for the 10Y US in either euros or yen, the yield on 10Y paper drops well into negative territory as a result of the sharp yield different on the short end.

Then there is the general risk-aversion sentiment prevailing on trade desks, and which makes for a very strong argument why global funds are buying JGBs, said Stephen Innes, head of Asia-Pacific trading at Oanda. “When markets are risk averse, haven assets like the Japanese yen do well, and that risk off has added some flavor for their bonds too.”

Ironically, this sudden burst in JGB appetite is also mucking up the Bank of Japan’s own plans to modestly steepen its own yield curve (but not too much): recall that earlier this year, the BOJ tweaked its yield-curve control policy to embrace a wider range for 10-year yields (from 0-0.1% to 0-0.2%). And yet after yields initially popped higher, they’ve since sunk back toward zero amid the global debt rally that has pushed tens of billions of government debt once again back into negative yielding territory.

And yet, the BOJ remains trapped, because as much as it would like to provide a kicker to Japan’s long-suffering banks which have had a flat Net Interest Margin curve for years, any move to taper purchases further could revive questions about policy makers seeking to exit from mega-stimulus mode, and not only result in turmoil for the bond market but spur an unwelcome appreciation in the yen.

Still, in the global tightening context, Kuroda’s central bank is the one central bank that isn’t currently looking at official quantitative tightening, even if the BOJ is clearly, if unofficially, tapering its bond purchases, and according to Bloomberg the world’s second-largest debt market has seen the central bank slow down the year-on-year increase in its bond holdings by an average 3.2% per month in 2018; at this pace, the stockpile would rise just 26 trillion yen ($230 billion) over 2019, the smallest increase since it began quantitative easing in April 2013.

None of the above is formal policy however: “the BOJ has also drawn a line in the sand in terms of allowing yields to leak higher — given they’ve doubled down on their bond buying, there’s relative stability in the market,” said Tano Pelosi, a portfolio manager at Antares Capital in Sydney. “In a world with a lot of uncertainty, that can be attractive to some global investors.”

And since on an FX-hedged basis one may as well buy JGBs over US Treasuries, foreigners have no qualms about buying Japanese paper, especially since the BOJ will keep its 10-year yields in a range around zero percent for the foreseeable future and beyond.

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