America (and the world at large) are in the midst of an entirely predictable demographically-driven crisis, between an economic/financial system requiring infinite growth and a very finite human/physical world. This mismatch will only become more acute for decades to come. As the growth of demand is decelerating, central banks are using interest rate policy cuts to encourage higher consumption via greater leverage/debt. Federal debt is soaring absent the economic (and tax revenue) growth to accompany this deluge of debt. I will show that the primary purchasing sources of that debt have turned to net sellers…and that into this breach, the Fed has thrust itself as the buyer (counterfeiter) of last resort.
The result is likely to be a Minsky Melt-Up…and then the fall that typically follows.
First, by year end 2020 (estimated below), federal debt will almost surely cross $28 trillion while GDP will collapse in Q2 with likely recovery through Q3/Q4. The outcome will be a debt to GDP ratio likely around 140%…smashing the WWII previous high water mark. Noteworthy also in the chart below are the new standards of ZIRP and reliance on the Federal Reserve balance sheet (QE) to maintain zero percent interest rates.
Since 2008, public (marketable) federal debt has nearly quadrupled, up by $14.7 trillion. Social Security and like Intragovernmental trust fund holdings have risen $1.8 trillion. The Federal Reserve balance sheet has increased by 8x’s, up by $6.3 trillion. In fact, most simply, it is the Federal Reserve using it’s balance sheet as the substitute for the demographically decelerating IG purchasing. As the IG holdings will only continue to decline due to the unfunded liabilities (and with it the primary source of Treasury buying for decades turns to a decade of Treasury selling), the Fed’s balance sheet will rise inversely to avoid an interest rate Armageddon.
To underscore the Fed’s role as buyer of last resort, below are the four classes of Treasury buyers/holders. I split the change in holdings by group, per period:
2009 through ’14…the QE years (everybody buys…especially Fed, Foreigners)
2015 through ’19…the QT years (IG and especially domestic sources do the buying, Fed sells, foreigners pass)
January through May, 2020…the p(l)andemic 5 months (IG sells, foreigners pass, Fed goes wild w/ a domestic assist (unfortunately, Treasury Bulletin for 2020 won’t be available for a while to detail who exactly those domestic buyers of 0.6% yielding 10 year and 1.2% yielding 30 year bonds were))
While the Federal Reserve has decreed the Federal Funds rate to be zero and undertaken QE to distort rates, Congress has understood this zero interest rate policy to mean “free” money since the interest rates are so low. The Federal Reserve’s actions have destroyed Congress’ primary role of compromise, striking a balance between spending and taxation. For those that wonder why “fiscal conservatism” died, it was the Federal Reserve that killed it.
Ok, let’s focus on the Fed’s balance sheet. The Fed is presently slamming on the brakes on it’s QE Corona-virus operation, from a peak purchase of $585 billion weekly to “just” $68 billion this week. And the Fed is communicating they will continue to slow their purchasing. Chart below shows the Fed balance sheet (red line) and weekly change (black columns) since 2008. I assume the Fed will continue tapering their purchases through year end 2020, ending the year with a balance sheet of something like $8.3 trillion (adding about $4.5 trillion since QT ended in September 2019, or a 220% increase of it’s balance sheet in 15 months time).
The Fed truly distorted the interest rates of Treasuries with it’s massive purchases in such a short period. Given the duration and laddering of bonds, only a relatively small percentage is available at any certain time so the size and suddenness of the Fed purchases overwhelmed the Treasury market.
T-Bills
During QE Corona-Virus, the Fed has thus far purchased $587 billion in T-Bills…in fact even this week, the Fed did most of its ongoing buying here, adding an additional $33 billion in T-Bills (effectively further steeping the curve between short and long duration rates).
The nearly $600 billion in freshly conjured demand collapsed the short end of the curve (3 month T-Bill shown below) to zero. But despite the enormous Fed purchasing, the natural rate is likely significantly higher than 0.2%…and without ongoing Fed subjugation, rates will continue to rise.
Notes (1yr-5yr Duration)
From the completion of QT to present, the Fed has purchased $750 billion in shorter duration Notes…but the buying has ceased, as the holdings have stalled for nearly a month now.
Again, the Fed has distorted the free market setting of rates with it’s conjured money but rates are turning upward and as the supply of new and rollover Notes continues, the absence of demand typically results in rising rates.
Notes (5yr to 10yr Duration)
Below, longer duration Fed held Notes. The $470 billion rise in Fed holdings since the end of QT is hard to miss…but equally important is the decelerating purchasing of more debt and the Fed signaling it will only continue at low levels of purchasing.
Since the overwhelming flood of Fed purchasing has subsided, the all important 10 year Treasury rate is suddenly rising…like an inflatable held down underwater. The Fed has temporarily distorted the free market rates of Notes with it’s conjured money. However, rates are turning upward and as the supply of new and rollover Notes continues, the absence of demand typically results in rising rates…as we are now seeing. The impact of a fast rising 10 year (the foundation of the 30 year mortgage rate) would rapidly push mortgage rates on primary and commercial real estate to significantly higher levels…and crush a housing led “v-shaped” recovery meme?!?
Bonds
The Fed purchased $312 billion of Treasury Bonds since QT was abandoned. Given the much smaller quantity outstanding of long bonds, this represented more than 10% of all marketable long bonds in just a few months time, increasing the Fed’s total long bond holdings to nearly 35% of marketable.
The Fed’s action of plunging the 30 year rate to nearly 1% was a deformation of incredible proportion…but just as incredible would be the rate counter reaction upward absent the Fed’s ongoing bid.
Excess Reserves vs. Monetization
Is the Fed about to back off and let the “free-market” determine Treasury interest rates? Not likely, the Fed no longer (if ever) believes in free market price discovery. So, best to check the Fed’s balance sheet split between the portion held in large banks as excess reserves and the portion moving directly into the economy/financial system (monetization). When the Fed began QE, Ben Bernanke then stated the Fed would not monetize the debt and that the Fed conjured dollars would be held essentially inert as excess reserves…and then subsequently be removed via quantitative tightening. This was a bald faced lie then and is even more laughable now. During the initial stages of QE, about 2/3rds of the Federal Reserve newly created dollars were held as excess reserves (+$2.7 T) while (+$1.2 T) moved into the financial system.
And the impact of monetization on asset prices (showing Wilshire 5000, representing all publicly held US equities).
Focusing on monetization since QE ended in late 2014 through the present…a strong correlation should be noted between the rising quantity of monetization (post QE) and asset valuations.
During the last cycle (post QE) the Fed raised IOER’s alongside the FFR%, essentially paying banks not to loan money, paying them for taking no risk. This time, the Fed is offering essentially no payment on the excess reserves, encouraging banks to employ those reserves…and that is exactly what I anticipate we will see. The chart below details the IOER’s (interest paid on excess reserves, held at the largest of banks) versus the excess reserves and monetization. The Fed continuing QE alongside declining excess reserves, will push the quantity of monetization into orbit.
If the excess reserves decline and the correlations hold (both as expected)…all those freshly conjured dollars will be in frantic search for a leveraged home via loans and/or asset purchase…and look out as assets explode higher on a wave of “legal” counterfeit Fed cash. Perhaps there will be some sort of quid pro quo, by which the largest banks maintain the Treasury bid while simultaneously leveraging up…or perhaps the Fed will double down it’s Treasury purchasing, otherwise rates will soar alongside equities?
And just so we are clear, this surge in asset prices will benefit a small minority of Americans and actively harm the vast majority via costs of living surging versus significant unemployment and flat wages. Wonder how that will go over as 2020 is likely to only get a whole lot more “interesting”!?!
via ZeroHedge News https://ift.tt/37aw38H Tyler Durden
Car Plows Protesters In Brooklyn, Anarchists Attack Children’s Hospital During 12th Night Of “Largely Peaceful” Protests Tyler Durden
Sun, 06/07/2020 – 10:34
Following another night of demonstrations across the US, and increasingly around the world, the NYT reported that “tens of thousands gathered in big cities like New York and Seattle and small towns like Vidor, Texas, and Marion, Ohio — in swelling crowds that have been multiethnic, spanning generations and overwhelmingly peaceful.”
Though we’re not 100% certain about that last bit, it’s definitely notable that the protest movement has spread from Europe, Australia and New Zealand on to Asia, Africa and elsewhere, as thousands around the world support American protesters with shows of “solidarity”.
Meanwhile, the coronavirus death toll in the US quietly surpassed 110,000 last night.
Though the outbreak has slowed to a crawl in many former hot spots like New York, elsewhere, signs of incipient outbreaks have begun to emerge.
Across New York City, peaceful demonstrators defied an 8 pm curfew as the NYPD mostly stepped aside, following a week of optically-terrible videos showing cops beating on kneeling protesters, badly injuring elderly protesters, and shooting journalists with “non-lethal” rounds. The police allowed the marches to continue long into the night, and in the morning, Mayor de Blasio tweeted that he would be lifting the curfew after seeing “the very best of our city”.
New York City: We are lifting the curfew, effective immediately. Yesterday and last night we saw the very best of our city.
Tomorrow we take the first big step to restart. Keep staying safe. Keep looking out for each other.
Meanwhile, readers of the Wall Street Journal were greeting Sunday morning with a push alert heralding the results of the latest public opinion poll showing that Americans – by a 2-1 margin – are more troubled by the actions of the police in the killing of George Floyd and the ensuing protests,
Among Democrats, an overwhelming majority (more than 80%) support police reform, while, possibly for the first time, a majority of Republicans (52%) said they are also more troubled by the actions of the police. Though the partisan divide remains stark, it shows that the demonstrators have been largely successful in their goal of swaying public opinion.
What’s more: 80% of respondents said that – between the virus and the protests – their country is spinning out of control.
Americans by a 2-to-1 margin are more troubled by the actions of police in the killing of George Floyd than by violence at some protests, and an overwhelming majority, 80%, feel that the country is spiraling out of control, according to a new Wall Street Journal/NBC News poll.
The poll also reveals striking partisan divides in how Americans view a pair of unfolding national crises, including the unrest sparked by the killing of Mr. Floyd, the black Minneapolis man who was in police custody, and the coronavirus pandemic, responsible for more than 109,000 fatalities in the U.S.
Already, crowds have gathered in central Rome on Sunday morning for another day of demonstrations in London and other cities, as crowds chanted “Black lives matter” and “No justice, no peace,” thousands of people swelled Rome’s Piazza del Popolo, and in London, thousands gathered in several places. On Sunday morning, London Mayor Sadiq Khan praised the protesters, and denounced a “tiny minority” who resorted to violence.
The vast majority of protestors in London were peaceful. But this vital cause was badly let down by a tiny minority who turned violent. This is simply not acceptable, will not be tolerated and will not win the lasting and necessary change we desperately need to see. 2/3
As more members of the far-left abandon the push for police reform in favor of police abolition, President Trump has latched on to these claims and seized the opportunity to tarnish Biden using his increasing deference to the Democratic party’s progressive wing.
Not only will Sleepy Joe Biden DEFUND THE POLICE, but he will DEFUND OUR MILITARY! He has no choice, the Dems are controlled by the Radical Left.
Meanwhile, one California man – a purported “deescalation expert” – sustained a potentially life-changing injury after police appeared to shoot him in the groin with a rubber bullet, necessitating emergency surgery.
A California man who has worked to help improve relations between the San Jose Police Department and people of color learned that he may not be able to have children after an officer shot him with a rubber bullet during a protest.
While attending a protest in San Jose on May 29, the man, Derrick Sanderlin, worked to prevent rising tensions and calm demonstrators and the police alike, he said in an interview this weekend.
While the mainstream press mostly brushed them aside, this weekend’s demonstrations were unfortunately pockmarked by violence perpetrated by deranged anarchists, who attacked a children’s hospital in Houston.
Threats to burn down areas have been an unfortunate feature of many live-tv news interviews over the past 2 weeks, and Saturday night was no exception.
PROTESTER THREATENS TO BURN THE DIAMOND DISTRICT IN NYC WITH GASOLINE ON LIVE TVpic.twitter.com/qDxwzTksFs
On Friday, the Bureau Of Labor Statistics released the widely expected employment report for May. Despite continued weekly jobless claims over the last month exceeding more than 8-million, the BLS reported an increase of more than 2.5 million jobs in May. The unemployment rate came in at just 13.3% well below the consensus estimates of 17-19%.
Both of these numbers were historical records surpassing any period back to the “Great Depression.”
Let’s start by taking a look at the raw numbers from the BLS.
From May 2019 to May 2020:
The civilian population grew by just 1.186 million.(This is a historically slow growth rate for the population which speaks to the demographic problem.)
The labor force shrank by 4.555 million.(We assume these people no longer want to work.)
The number of employed individuals fell by 19.602 million.
The number of unemployed persons rose by 15,047 million.
Again, these are numbers never before seen in history.
Importantly, the drop in the unemployment rate is due specifically to the substantial drop in the labor force. Since February, 6.3 million people have decided they no longer wanted to work, according to the BLS. Such is substantially more than would be expected even based on the large increase in unemployment.
Therefore, if we adjust for the labor force, and count the extra 4.9 million people who were “not at work for other reasons,” the “realistic unemployment rate”was 17.1 percent in May.
While that number is down from April, it is still higher than any other unemployment rate in over 70 years. (But the 13.3% number was as well.)
“There were also a large number of workers who were classified as employed but absent from work. As was the case in March and April, household survey interviewers were instructed to classify employed persons absent from work due to coronavirus-related business closures as unemployed on temporary layoff.
However, not all such workers were so classified.
If the workers who were recorded as employed but absent from work…had been classified as unemployed on temporary layoff, the overall unemployment rate would have been about 3 percentage points higher than reported (on a not seasonally adjusted basis).
In other words, the unemployment rate was 16.3% even using their own data, which suggests the number of unemployed is closer to 26 million.
But this isn’t a new problem suggesting unemployment numbers have been in error for quite some time. To wit from the BLS:
“BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address the issue. However, according to the usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.”
The Missing Millions
Once we assume this error in counting as been prevalent, understanding the massive gap between the BLS numbers and reality begins to crystallize.
Since the beginning of the last economic expansion, the working-age population has grown by 25.3 million while employment has fallen by 1.14 million through May. As the BLS confirms above, there are over 26 million who are “missing” due to the manner in which employment is calculated.
What is crucially important to the economy is full-time employment which is what creates enough income to expand economic growth. The number of full-time employees to the working-age population is at 44.81% which is not high enough to support economic growth.
Then, of course, it is also hard to square the BLS claim that a record number (345,000) of small businesses were opened during the month of May when the entire economy was shutdown. The birth/death adjustment is a complete guess by the BLS and heavily flawed. Over the last decade it has added millions of jobs to the employment data even as business creation has fallen.
While the market rallied sharply on Friday due to the “better than expected” number, investors may be getting too far ahead of themselves in the short-term.
The data will be heavily revised over the months ahead, but markets don’t care much about revisions.
What the market does care about, ultimately, is earnings.
Investors Are Too Optimistic
There are several measures of optimism we can look at which have historically corresponded with short-term market peaks and corrections.
Currently, non-commercial speculators are carrying the one of the largest net-short positions on the S&P 500 in recent history. While such positioning doesn’t necessarily mean the market will crash, it has historically aligned with short-term peaks and bear markets.
The total put-call ratio all suggests similar positioning. With investors getting extremely aggressive by buying call options, the ratio is back to more extreme elevations. The last time the put-call ratio was this elevated was in January.
The issue at hand is the markets have priced in a “V-shaped” recovery which is well ahead of what the economic data suggests. Such was seen in Friday’s employment report fiasco.
Technical Review Of The Market
Regardless, the markets are bullish biased and we must be respectful of that reality. As noted in last week’s report:
“No matter how you want to slice the data, the markets are back to more egregious overbought conditions on a short-term basis.”
The break above the 200-dma set the bulls in motion and triggered a parabolic advance in the market over the last week. Given the market is now pushing a 3-standard deviation move to the upside, with indicators very overbought, a short-term corrective action is likely.(Note the market was just 3-standard deviations BELOW the 50-dma in March.)
Also, as noted previously, with 95% of stocks now trading above the 50-dma, such has historically signaled short-term corrections to resolve the overbought conditions. Currently, while the market has been rising, the number of stocks above their 50-dma has stalled at one of the highest levels in a decade. Watch for a deterioration in the percentage to signal an upcoming correction.
Lastly, all of the overbought/sold indicators have aligned, along with the vast majority of stocks being above the 50-dma. As noted by the red circles below, every measure is in, or exceeding, historical overbought conditions. Such also suggests a correction is likely in the short-term which will provide a better opportunity to increase exposure accordingly.
The Recovery Trade
Lastly, the market has rallied over the past week on “better than expected” economic data which supports hope of a “V-shaped” economic recovery. However, as noted by the Citi Economic Surprise Index, that is likely to change over the next month as data begins to disappoint. Peaks in the surprise index have coincided with short-term corrections, or more, in the market.
With “coronavirus cases” likely to rise sharply following Memorial Day celebrations and recent crowded protests, the risk of disappointment has risen.
This has been an exceptionally rally. All of our equity positions are now extremely stretched and overbought. Conversely, all of our hedges VERY oversold.
Caution is advised.
Updating Risk Ranges
As I wrote previously, the break above the 200-dma had changed the complexion of the market.
“If the markets can break above the 200-dma, and maintain that level, it would suggest the bull market is back in play. Such would change the focus from a retest of previous support to a push back to all-time highs.
While such would be hard to believe, given the economic devastation currently at hand, technically, it would suggest the decline in March was only a ‘correction’ and not the beginning of a ‘bear market.’”
The rally this past week now confirms the selloff in March was a “correction” and not a “bear market.” Such has important considerations in allocation models and portfolio positioning.
In corrections, recoveries back to previous highs are the norm as the bullish trend of the market continues. During bear markets, expect rallies to fail and price trends to change to negative. While it certainly seemed that was the case in March, given the severity of the decline, the rapid recovery has changed the narrative.
However, even as we update the risk/reward trading ranges, the probabilities still remain negative. With the market very overbought short-term (orange indicator in the background), downside risk outweighs the upside return in the short-term.
With the S&P 500 is now only 5% from all-time highs, all measures are now based against that advance. A breakout to all-time highs, should such occur, will reset all parameters. We have assigned probabilities to pullback ranges short-term.
-6.6% to the 200-dma vs. +5% to all-time highs. Negative (70% probability)
-11.2% to the 50-dma vs. +5% to all-time highs. Negative (20%)
-14.4% to previous consolidation lows vs. +5% to all-time highs. Negative (5%)
-18.3% to March bounce peak vs. +5% to all-time highs. Negative (5%)
While the negative risk/reward dynamics are evident, the more negative outcomes are becoming less probabilistic. However, a deeper correction becomes possible on a longer-term basis, given the deviation in prices from the underlying fundamentals.
I understand if this seems confusing, but it is the difference between chasing markets short-term versus longer-term outcomes for portfolios. This analysis is part of our thought process as we continue to weigh “equity risk” within our portfolios.
We Like Bonds
The important point is that we are balancing increases in exposure to defensive positioning. In a “risk-off” rotation money will flow into bonds from equities, which will shield the portfolio from a decline. Given bonds are deeply oversold, versus a grossly overbought market, that rotation is likely coming sooner rather than later.
(As opposed to the S&P 500, bonds are more than 3-standard deviations oversold and on Friday began a reversal rally. We recently added to our positions to take advantage of a risk rotation.)
Obviously, we don’t care for the risk/reward of the market currently. As such, we suspect a better opportunity to increase equity risk will come later this summer.
“Our goal is to win a war, and we may need to lose a few battles in the interim.
Yes, we want to make money, but it is even more important not to lose it. If the market continues to mount even higher, we will likely lag. The stocks we own will become fully valued, and we’ll sell them. If our cash balances continue to rise, then they will. We are not going to sacrifice our standards and thus let our portfolio be a byproduct of forced or irrational decisions.
We are willing to lose a few battles, but those losses will be necessary to win the war. Timing the market is an impossible endeavor. We don’t know anyone who has done it successfully on a consistent and repeated basis. In the short run, stock market movements are completely random – as random as you’re trying to guess the next card at the blackjack table.” – Vitaliy Katsenelson
I agree, and while such may be the case for the moment, markets like this have a nasty habit of delivering unpleasant surprises. We are in this to win the “war.”
But I will be honest; I don’t like losing battles even for the best of reasons.
via ZeroHedge News https://ift.tt/3dI5x8W Tyler Durden
A Quarter Of Americans Skipped Meals Or Relied On Food Banks During Virus Lockdowns Tyler Durden
Sun, 06/07/2020 – 09:55
As the economy slips into recession, driven by high unemployment, not seen since the 1930s, a quarter of Americans have skipped meals or relied on charity or government food programs since February, according to Kaiser Family Foundation’s May Tracking Poll survey of over 1,100 US adults (conducted between May 13-18).
“One in four Americans (26%) say they or a member of their household have skipped meals or relied on charity or government food programs since February, including 14% who say they have reduced the size of meals or skipped meals because there wasn’t enough money for food, 13% who have visited a food bank or pantry for meals, and 13% who have applied for or received SNAP benefits,” the survey said.
Figure 7: One-Fourth Say They Have Skipped Meals, Visited A Food Bank, Or Have Applied For Or Received SNAP Benefits Since February
One in six (16%) Americans said skipping meals or relying on charity or government for food was due to the devastating impacts from months of lockdowns that left them financially paralyzed. With very little savings and insurmountable debts, the economic hardships of the downturn are already starting to be realized. Many folks fell into instant poverty and will be financially ruined for the next several years; hence, why universal basic income is coming. A further 10% of respondents said food security issues developed well before the pandemic.
Figure 8: One In Six Say They Have Skipped Meals, Visited A Food Bank, Or Applied For Or Received SNAP Due To Impacts Of Coronavirus
A third (34%) of Americans said they or their spouse experienced a job loss or reduced hours, resulting in declining income, making it harder for them to feed their families. Among this group, 38% said they skipped meals or relied on charity or government food programs since February.
Racial groups and economic status played a huge part in who went hungry. Large shares of blacks, Hispanics, and lower-income households were hit the hardest:
“Black and Latino adults and those with lower incomes appear to be harder hit. About four in ten Black adults (45%) and Latinos (39%) say they have skipped meals or relied on charity or government food programs since February, including three in ten Black adults and about a quarter (26%) of Hispanics who say their experiences were directly related to the financial impact of coronavirus. Among those in households with an annual income under $40,000, nearly half (48%) say they have skipped meals or relied on charity or government food programs, including one-quarter who attribute this to coronavirus and a similar share (23%) who say they were already skipping meals or relying on food programs before the pandemic hit,” the survey said.
Figure 9: Large Shares Of Blacks, Hispanics, And Lower-Income Households Report Skipping Meals, Relying On Charity Due To The Coronavirus
In a separate report, we noted as many as 33% of those who filed for unemployment benefits as a result of virus-related job losses, have still not been paid out.
Recall, policymakers responded to the virus outbreak by offering $600 per week more in unemployment than usual. The goal was to keep food on tables and prevent social unrest.
Broke and hungry, millions of Americans flooded flood banks across the country in the last several months, in some cases, overburdening the entire food bank system:
We also said this on April 8: “A perfect storm is brewing deep in America, one where overwhelmed food bank networks could see supply chain disruptions that could trigger food shortages in various low-income regions, that would undoubtedly leave many people hangry – and possibly incite social unrest.”
A nation, where its working-poor is entirely broke and hungry, and even some of these folks are on the streets rioting across the country, certainly doesn’t bode well for those who believe a V-shaped recovery in the economy can be seen in the second half.
via ZeroHedge News https://ift.tt/2ME3JlM Tyler Durden
In the over 30 years I’ve known him, my respect—and liking—for Frank Giustra has only grown. Not just because he’s a world-class businessman, having built Yorkton Securities into a powerhouse, and then founding Lionsgate Entertainment. More relevant to this interview, he’s a first-rate judge of the markets—one of the best I’ve ever met at seeing turning points and understanding trends.
He’s one of the few financiers in the “Master of the Universe” class that understands gold and economics. Frank knows what he’s talking about. I suggest you read this closely.
International Man:
Last time around, the Fed was able to paper over the crisis and create a ten-year bull market in stocks. Is the Fed out of ammo this time?
Frank Giustra:
They are, but that won’t stop them, and they’ll call it something else—helicopter money or Modern Monetary Theory (MMT).
In the last cycle, it was QE. It wasn’t printing money; it was QE because it sounded better. It was much more calming and elegant to call it that. It almost rolled off your tongue.
They will never call it money printing.
The new and popular handle is Modern Monetary Theory. But it’s the same old Ponzi scheme. It’s still plain old money printing.
MMT is designed to create demand through money printing, with the idea that you can tax that later as you reach full capacity. But it makes some very naive assumptions about the way politicians operate. It would never work, and the money printing will leave you on the same path as previous disaster stories. Math is math. It’s impervious to bullshit.
If you’re printing too much money, it’s going to influence inflation. We’ve already seen it with asset inflation over the last ten years. Inflation didn’t go into the CPI but went into various asset classes instead.
As you know, Doug Casey has been writing about this topic for 40 years. I started writing about it 20 years ago. It’s become a fascination for me.
Let’s look at how things evolved.
It all started with Alan Greenspan. He was the one who ushered in the era of pleasing markets with free money or easy money.
He was the first to bail out markets at every crisis and the markets cheered him on.
Greenspan was the one that set the stage for the 2008 crisis. Ben Bernanke set the stage for what we’re facing now.
All they’ve done is encourage debt and speculation. And to a great extent, the markets still believe the Fed can continue to fix the mess they created.
I am absolutely stunned gold is still trading at these levels. Don’t people realize where we are heading?
International Man:
Do you think negative nominal interest rates are coming to the U.S.? If so, what do you think the effects will be?
Frank Giustra:
So far, the Fed has been very reluctant to talk about introducing negative rates.
As hopeless as they are, I think they understand what that would mean if the U.S. went into negative rate territory.
But Trump is a bully. If he sees the economy still floundering between now and November, he’s going to push and bully.
He will likely get his way because the Fed is not truly independent. That idea went out the window long ago. It all started with Greenspan. It was gradual in the beginning, but eventually, it became clear that the separation between church and state was gone. Fiscal and monetary policy work in tandem. It’s one big happy gravy train for the markets.
I believe if the economy does what I think it will do, Trump might get his way.
International Man:
Negative interest rates incentivize bad behavior. Savers will be decimated, and borrowers will be rewarded.
What do you think the effects of that would be?
Frank Giustra:
It’s true what you say about the savers. Unfortunately for them, they are not the ones that influence policy. Wall Street alone has that power.
Savers will certainly get screwed in the end and eventually the speculators will also. They think this party will never end, but they are delusional. It will end.
Delusion is firmly engrained in the investor psyche.
Wall Street pushes for this continued bad behavior. They throw a hissy fit when they don’t see enough easy credit, and they always seem to get what they want.
International Man:
What do you think the role of gold will be as the international monetary system evolves?
Frank Giustra:
It is tough to say.
I don’t think we’ll ever go back to a a strict gold standard. That’s just not going to happen.
I believe one of two things may happen. The replacement of the U.S. dollar might end up being some kind of trading unit, a combination of a number of currencies, perhaps with some commodity basket as backing.
Or, we may end up with regional currency units that represent trading blocks. Perhaps, Asia as one and the West as another. It’s hard to say.
However this plays out, it will be messy. We live in a fractured world. There is no leadership or common ground. In this environment, it’s hard to see how there will be any consensus to replace the dollar. But, it will happen somehow, however messy. I just hope it’s peaceful.
International Man:
The point you made about trading blocks in interesting.
Countries like China and Russia are buying substantial amounts of gold.
In a world where fiat currencies aren’t trusted by anybody, do you think that gold will play a role in building trust between countries?
Frank Giustra:
It’s already playing a role.
They are worried about the weaponization of the U.S. dollar. This concerns not only adversaries like China and Russia, but traditional allies like Europe as well.
Their central banks have been buyers of gold for a very long time. I think they’re buying it because they have to de-dollarize. They’re worried about having too many dollars, especially China.
Gold is the only currency that’s not paper. It’s trusted globally by central banks. The mere fact that central banks hold it as part of their reserves and that many continue to buy it on a regular basis has to tell you something about its value.
Wall Street has mostly ignored gold in the past as an important component of investment portfolios. I say, watch what they do not what they say. Look at central bank behaviour.
Follow the money.
International Man:
Recently, we’ve seen gold break through to multi-year highs. What do you think comes next in this gold bull market, and where do you think it’s ultimately going?
Frank Giustra:
I’ve never made a prediction on the gold price. I will always say it’s going higher if I believe it’s going higher.
I think that this time, it is going a lot higher, and I will say that much. Where it goes is anybody’s guess.
But I’ll tell you one thing—and I’ve been saying this for the last 12 months.
This phase of the gold bull market—which started last year—is the third and final wave of the bull market that started in 2001, and this one’s going to be a tsunami.
This time, gold will really break out and go to a number that most investors can’t begin to imagine.
The eventual gold price is also a function of how long it will take for high or hyperinflation to kick in and what happens in the period before it does.
Will we see currency wars? A depression? We are entering scary times.
And I mean the real stuff when it comes to gold. Personally, I don’t trust gold ETFs
When the proverbial poop hits the fan, I believe governments will go to any length to protect their currency. They won’t let you find a place to hide. They will freeze bank accounts and prevent you from exchanging your dollars into other currencies or gold.
We have seen this many times before in other countries and even in the U.S.; in 1933, it became illegal for American citizens to own gold, and that law remained in place for almost 40 years. And and these type of protective measures will happen again, in some shape or form.
In essence, they will prevent you from trying to protect your savings. Sounds horrible, but it happens over and over again. That’s why you need to own some physical gold.
Again, I can’t tell you exactly how this plays out and how high gold will run. I don’t have a crystal ball. But I do have history books.
International Man:
How do average people manage their risk in an environment like this?
Frank Giustra:
It’s tough. I think about this question a lot.
Until the dust settles, I’d say stick with cash and gold.
Unless it’s gold stocks, I’m not in the market. I think the market is still ridiculously overpriced, given what’s happening in the real economy.
The only reason the stock market is still overpriced is because the Fed continues to print free money, which allows speculation to continue at a feverish pace.
I just don’t see where the earnings are going to come from. I think that reality is going to set in—probably in the fall or next year.
Cash is always useful to buy things; invest because there is no way to know when exactly hyperinflation will set in and you need cash to buy things if they get really cheap. Timing is everything.
I try to keep things simple.
You will never outsmart the market in the short term, but the probability that things will get very bad is pretty high up on the bell curve. Buy gold, and keep your powder dry and pray.
The ripple effects of the government lockdown are only stating to take shape. That’s not to mention the unprecedented amount of money the that is being pumped into every corner of the economy by the Federal Reserve. That’s exactly why New York Times best-selling author Doug Casey just released an urgent new PDF titled Guide to Surviving and Thriving During an Economic Collapse. It explains what’s to come and exactly what you should do to protect yourself. Click here to get it now.
via ZeroHedge News https://ift.tt/2UiQWZX Tyler Durden
Couples “Should Wear Masks During Sex” In COVID World, ‘Experts’ Advise Tyler Durden
Sun, 06/07/2020 – 08:45
Researchers at Harvard University examined the probabilities of contracting COVID-19 during sex. And to lower transmission risk, they determined people engaged in lovemaking should wear masks and avoid kissing.
The research, titled “Sexual Health in the SARS-CoV-2 Era,” was published in the Annals of Internal Medicine last month, describes new “guidance on how to address sexual health and activity” during the pandemic.” It recommends people must wear a mask for the most dangerous sexual scenario: Sex with those who’ve not quarantined.
Sexual Practices During the SARS-CoV-2 Era and Patient Resources
Sexual Health in the SARS-CoV-2 Era
Sex puts people within close proximity, so both individuals would likely be exposed to droplets like coughs, sneezes, and spit. At the same time, 35% of COVID-19 carriers are asymptomatic, which means sex could spread the highly contagious respiratory illness.
Guidelines for sex, in a post-corona world, have been limited. Oregon and New York City health departments published coronavirus sex guides and visuals showing people how to have sex with social distancing in mind.
Oregon Health Department Guidelines For Sex In COVID World
h/t Oregon Health Department Guidelines For Sex In COVID World
Harvard’s research is some of the first guidelines of safe sex during the pandemic. While kissing should be avoided, it also warned against oral-to-anal acts because anything that involves spit and human stool could lead to virus spreading.
“Until this is clarified, urine should also be considered potentially infectious. SARS-CoV-2 RNA has been detected in stool samples, raising concern for fecal–oral transmission (7). It is not clear, however, whether viral RNA detected in stool is capable of causing productive infection. Moreover, these data are moot, given that any in-person contact results in substantial risk for disease transmission owing to the virus’ stability on common surfaces and propensity to propagate in the oropharynx and respiratory tract,” researchers said.
Sex between people who’ve isolated together still presents some risk, though it’s much safer than someone who has been out of quarantine. The researchers said the safest approach to sexual activity in a pandemic is to practice abstinence. Another option, they said, is masturbation.
“Masturbation is an additional safe recommendation for patients to meet their sexual needs without the risk for SARS-CoV-2 infection,” they said.
“Bill’s [Bill Gates] father was once the head of Planned Parenthood. He comes from a eugenics background. Gates frets about world population growth. Is it any wonder he pushes Monsanto’s GMO food as well as harmful vaccines?”
via ZeroHedge News https://ift.tt/3f30KPF Tyler Durden
A new theory regarding the true identity of anonymous Bitcoin creator Satoshi Nakamoto has emerged from an extremely unlikely source. Enter the Escobar family and their story about Yasutaka Nakamoto.
The story goes like this: Yasutaka Nakamoto was a high-ranking engineer for Pacific West Airlines who worked for Colombian drug lord Pablo Escobar, smuggling drugs into the US from South America. Yasutaka disappeared completely from public view in 1992 after surviving an assassination attempt by his former employer. He then resurfaced years later to create and launch Bitcoin. He is also supposedly the brother of Dorian Satoshi Nakamoto.
At least that’s the story told to Cointelegraph by Olof Gustaffson, CEO of Escobar Inc, the multinational holding company associated with Colombian drug lord Pablo Escobar. Gustaffson is a 27-year-old Swedish entrepreneur who started his first business at age 13. By the time he was 21, he had become CEO of the Escobars’ multinational conglomerate based in Medellín, Colombia.
Why are we hearing this story now?
In a recent phone call with Cointelegraph, Gustaffson — right-hand man to Pablo’s brother Robert — relayed this fantastical version of events in an effort, he says, to silence some of the furor created by self-proclaimed Satoshi Nakamoto, Craig S. Wright.
According to Gustafsson, Yasutaka’s position as a head engineer for Pacific West Airlines made him the perfect insider for Pablo Escobar’s drug-smuggling operations. Where commercial pilot Barry Seal (played by Tom Cruise in the film American Made) had previously delivered drugs for Escobar, Yasutaka could continue carrying the torch, thanks largely to the unrestricted access afforded him in his role at the airline, says Gustafsson.
Gustafsson goes on to claim that Yasutaka’s experience with microprocessors and semiconductors supplied him with a base of technical knowledge which he would later apply to the world’s first cryptocurrency. According to Gustafsson, Yasutaka was a renegade — wild enough to work for Pablo Escobar but stubborn enough to never pledge his loyalty.
Yasutaka’s public profile
Only one public mention of any Yasutaka Nakamoto can be found online. Gustafsson directed us to a Los Angeles Times article from Oct 1. 1992, which tells the story of Hughes Aircraft Co. employee Yasutaka A. Nakamoto, who emerged unscathed after finding a pipe-bomb in his car while parked at work. The article states:
“Hughes employee Yasutaka A. Nakamoto, 39, at first thought his car had been burglarized because the window had been broken, Sgt. Andy Gonis said. He then found the device under the seat.”
As per policy, police refused to give out any further details about the bomb. They also refused to speculate as to why an aircraft engineer would find himself the target of a car bombing.
This assassination attempt marked the end of a fruitful period of drug-running collaboration for Nakamoto and Escobar, says Gustafsson. It also marked the last time Yasutaka Nakamoto was ever heard from.
Escobar Inc. is a many-headed hydra that’s dabbled in Bitcoin
Escobar Inc. has already dipped its toe into the cryptocurrency world. In 2018, Roberto Escobar launched “Diet Bitcoin,” a fork of the Bitcoin blockchain that eventually relocated to Ethereum’s ERC-20 architecture in 2019. But the company also excels at provocative publicity.
In 2016, Escobar started a GoFundMe campaign that sought to raise $50 million to accelerate the impeachment of Donald Trump. Roberto Escobar claimed to have information crucial to Robert Mueller’s investigation. The GoFundMe page was removed by the fundraising company due to a lack of clarity about how the funds were being allocated. It raised over $10 million in 10 hours before the campaign was shut down.
The same year, Escobar threatened Netflix with a $1 billion lawsuit over what he claimed were inaccurate depictions of his persona in the hit series Narcos. Roberto Escobar also demanded the right to edit subsequent seasons of the show himself.
In previous years, Roberto Escobar has claimed Satoshi approached him personally for help in building Bitcoin. Other times, Escobar has claimed that Satoshi was really a cipher for the CIA and the U.S government.
The Escobar Bitcoin trademark dispute
In 2019 this reporter revealed Gustafsson and Escobar to be the former owners of the Bitcoin trademark, registered with the United States Patent and Trademark Office.
Self-proclaimed Satoshi Nakamoto Craig Wright made headlines in 2019 when he staked his own claim with the USPTO for Bitcoin’s naming rights. After failing to respond to Wright’s claim in the allotted six-month time period, Gustafsson’s UK-based company, Coin Legal Ltd., lost control of the Bitcoin trademark.
Now the pendulum appears to have swung back the other way. The latest filings on the USPTO website show Bitcoin’s naming rights to be back under control of Coin Legal Ltd. The latest changes to the filing were made as recently as April 14. 2020, and a review process is underway at this very moment.
Like every theory about Satoshi’s identity to emerge in recent years, the story of Yasutaka Nakamoto remains light on evidence and credibility. The only person who could contest or corroborate this Bitcoin creation story would be Dorian Satoshi Nakamoto, who Gustafsson claims is Yasutaka’s brother.
The return of Dorian Nakamoto
Dorian Nakamoto was the subject of a brief but intense period of speculation in 2014 after a Newsweek reporter published claims that he was the “face behind Bitcoin.” Before eventually denying any involvement with Bitcoin, Dorian initially told reporters he was “no longer involved in that,” and that he couldn’t discuss it.
Gustafsson points to this Whitepages entry for a Dorian S. Nakamoto, which aligns with Dorian’s age and area of residence. The same entry lists six relatives, one of them Yasutaka A. Nakamoto. According to Gustafsson, this is the Nakamoto everyone has been looking for. He said:
“We believe his middle name is Akiko, and that he later went by the name Akiko. A man by the name Akiko was registered at the address of Dorian in California.”
That’s possibly corroborated by a US phonebook search which lists four of Dorian’s same relatives for one Akiko Nakamoto. The Whitepages listing for Yasutaka A. Nakamoto also shows he lived at the same address as Dorian.
But such listings don’t amount to conclusive proof, and could potentially be manipulated by unrelated third parties.
More posthumous credit for creating Bitcoin?
Gustafsson contends that Dorian knew all about Yasutaka’s involvement with Bitcoin, and that Dorian himself had travelled to Colombia to conduct business with Roberto Escobar in 2014, in the wake of Yasutaka’s disappearance after the carbomb-at-work incident.
This version of Satoshi, if true, can now only take posthumous credit for his invention. Gustafsson claims creating Bitcoin was one of Yasutaka’s final acts before passing away in the early 2010’s. Meanwhile, after years of harassment following the discredited Newsweek article, Dorian Nakamoto has urged Bitcoiners and cryptocurrency enthusiasts to leave him alone. Although standard journalistic practice would dictate reaching out to Dorian Nakamoto in this instance, Cointelegraph instead aims to respect Dorian’s wishes and has not contacted him.
When asked why he had come forth with this information now, Gustafsson said, “Roberto believes it is important to set the record straight.”
via ZeroHedge News https://ift.tt/3cGJz4Q Tyler Durden
Trump Lashes Out Over Lagging NATO Spending – Pulls 9,500 Troops From Germany Tyler Durden
Sun, 06/07/2020 – 07:35
Opinion polls in Germany have long shown that at least a near-majority of its public actually prefers US troops to leave, so despite US-Germany tensions reaching the point of White House ordering significant troop reductions from the country after a decades-long build up as part of Cold War era deals, we don’t expect they’ll be missed among the German public at least.
On Friday President Trump directed the Pentagon to withdraw 9,500 US troops from Germany by September, following years of the administration severely criticizing lack of enough military spending from its European ally.
Via Reuters
The reduction will result in a new “cap” of 25,000 maximum troop levels in the country. The WSJ notes that “Under current practice, overall troop levels can rise to as high as 52,000 as units rotate in and out or take part in training exercises.”
It’s being seen as Trump’s latest “lashing out” regarding the largely failed NATO goal of spending 2% of GDP on defense. An unnamed senior German defense official told WSJ, “We always knew Trump would lash out when he is under pressure domestically, but we thought he would first pull out of Afghanistan.”
The official added: “This move will not help friends of the U.S. in Germany who are working hard to preserve the trans-Atlantic relationship, but it will boost the anti-American sentiment that has been spreading here.”
And on Saturday lawmakers from Chancellor Angela Merkel’s ruling conservative bloc went on the attack:
“The plans once again show that the Trump administration is neglecting an elementary leadership task: the involvement of alliance partners in decision-making processes,” Johann Wadephul, foreign policy spokesman for the CDU/CSU parliamentary group, told Reuters.
All NATO partners benefited from the cohesion of the alliance, and only Russia and China gain from discord, Wadephul said, adding: “This should be given more attention in Washington”.
Wadephul also spoke of a “further wake-up call” to Europeans to position themselves better in terms of security policy.
Trump is making good on prior threats meant to pressure Germany to pay more for NATO as a condition for keeping a large American military troop presence.
But it will be interesting to see how far it goes, given that Germany is a major training hub for US forces across Europe and beyond – all of which is rumored to be on the chopping block as part of the pressure campaign on the NATO ally. Even US Africa Command is headquartered in Germany.
via ZeroHedge News https://ift.tt/3eZoUL7 Tyler Durden
The European Commission against Racism and Intolerance (ECRI) recently published its sixth monitoring report on Switzerland.
ECRI is the human rights monitoring body of the Council of Europe — not to be confused with the European Union. The Council of Europe calls itself the “continent’s leading human rights organization.”
ECRI was founded in 1994 by the heads of state of the Council of Europe with the mandate, among other things, to “review member States’ legislation, policies and other measures to combat racism, xenophobia, antisemitism and intolerance, and their effectiveness”.
The organization is composed of “members designated by their governments… on the basis of their in-depth knowledge in the field of combating intolerance”. They should have … expertise in dealing with racism… and intolerance. ECRI’s members are nominated in their personal capacity and act as independent members”.
ECRI’s monitoring of Switzerland, since its first report about the country was published in 1998, is an illustrative example of the organization’s persistent efforts — and considerable success — over the past two decades in limiting free speech in Europe.
Already in its first report, in 1998, ECRI, despite admitting that “a decrease in manifestations of racism and intolerance has been noted over the last 2-3 years” and that “overt manifestations of [racial prejudice and xenophobia] are rather rare,” told the Swiss media to promote specific narratives:
“It would seem necessary to make the mass media in Switzerland aware of their responsibilities concerning the problems of racism and intolerance …initiatives for combating racism and intolerance by the mass media (eg by presenting some positive cases of a fruitful co-existence between different groups)… are to be encouraged….Codes of conduct in the various media professions, whereby the media practices self-regulation, would seem most desirable”.
Two years later, in its second report on the country, the organization still conceded that, “open manifestations of racism are quite rare in Switzerland.” Nevertheless, ECRI was “concerned that a climate of intolerance or xenophobia towards non-citizens and those who are different from the native Swiss population appears to persist”. No substantial documentation was offered as basis for the allegation — ECRI even criticized in the same report that “little information is systematically collected in Switzerland regarding the extent of racism and discrimination” — but none seemed to be needed, as ECRI’s motivation appeared to be political:
“There still seems to lack [sic] an acceptance of Switzerland as a truly multi-cultural society whose members may feel a sense of Swiss identity alongside another cultural or ethnic identity”.
Throughout the years, ECRI has stressed the media’s central role in promoting specific, politicized agendas. In 2009, in its fourth report, the organization called for the introduction of what is by now a prevalent European practice, especially in Sweden, of not mentioning the ethnic origins of criminals:
“A widespread and recurring problem in the Swiss media is the practice of mentioning the origin of a person suspected or convicted of a criminal offence even when this information is irrelevant. With a concern for transparency, the police admittedly give the media ‘objective’ information on suspects, including their age and nationality, which the media pass on without always questioning its relevance. In some cases, however, this approach seems much harder to justify…”
By 2014, the concept of “hate speech” had found its way into ECRI’s fifth country report on Switzerland:
“Muslims, Black people, the Yenish and the Roma perceive a considerable deterioration of their situation and of the political climate. Refugees, cross-border workers and lesbian, gay, bisexual and transgender (LGBT) persons are also the targets of hate speech. In particular, the Democratic Union of the Centre (UDC) party, which remains the largest at federal level (scoring 26.6% of the vote in 2011), has continued to use extremely intolerant images and language…”
In the same report, the organization also addressed what it saw as insufficient judicial crackdowns on hate speech:
“ECRI considers that the authorities, in particular the prosecution services, should adopt a zero tolerance attitude in respect of all racist statements by politicians… The more freedom politicians are given to make racist statements with impunity, the fewer scruples members of the general public will have about making racist comments…”
Once again, ECRI focused on the media:
“ECRI recommends that the Swiss authorities develop an action plan in close cooperation with media representatives…to tackle the established routines … that can lead media coverage… to have a stigmatising effect on vulnerable groups, in particular Roma and people of colour…”
The organization, however, noted with satisfaction that its earlier recommendations had been followed:
“ECRI is pleased to note that a number of online newspapers have adopted self-regulatory measures, such as more systematic moderation of comments, abolition of anonymity for posters and the automatic closure of the accounts of persons who resort to racist discourse”.
On the other hand, ECRI was unhappy that “the follow-up given by the authorities to complaints concerning racist comments on the Internet was still inadequate”. It recommended that “the Swiss authorities give one or more police units… responsibility for actively combating hate speech on the Internet…”
ECRI’s curious battle to limit free speech, especially that of the media, continues. In its sixth and most recent country report on Switzerland, ECRI berated the media for focusing too much on news items such as the construction of minarets or radicalization, deeming it “intolerant discourse against Muslims”:
“ECRI… notes a sharp rise in intolerant discourse against Muslims particularly in the media. This is believed to be linked to legislation or legislative proposals that affect Muslims in particular… a study which was carried out by the University of Zurich from 2014-2017 on the quality of media coverage of Swiss Muslims in 18 print media outlets… noted that 25% of articles concerned religious symbols in the public space (such as the construction of minarets or wearing the headscarf or Burqa) and 21% concerned radicalisation, while only 2% reported on the daily life of Muslims and 2% covered successful integration… The reporting predominantly condemned a lack of will to integrate and a tendency to radicalisation among Muslims and called for more controls and sanctions. Another study …showed that 85% of Muslim respondents experienced the representation of Islam in the media as rather or very negative. Further, 88% were particularly clear on the responsibility of the media for the deteriorated attitude of non-Muslims towards Muslims”.
The organization said that:
“… states should raise awareness of the dangers posed by hate speech… by combating misinformation, negative stereotyping and stigmatisation; developing educational programmes for children and youth, public officials and the general public; supporting NGOs and equality bodies working to combat hate speech; and encouraging speedy reactions by public figures to hate speech”.
The organization emphasized self-regulation as the “appropriate” approach to “tackling hate speech” especially through the application of “codes of conduct”, and even regulation in some cases, which they believe should apply to both politicians and the media:
“ECRI considers that the use of self-regulation can be an appropriate and effective approach to tackling hate speech…. parliaments, political parties, business organisations, cultural and sport associations… should make it clear that the use of hate speech…is unacceptable and take action to prevent and sanction such use. ECRI specifically stresses the importance of codes of conduct in self-regulatory schemes…political leaders and members of parliament should… adopt relevant codes of conduct. Regarding the media and Internet, where the vast majority of hate speech is generated… ECRI recommends both regulation and self-regulation…”
ECRI noted that Swiss journalists already have a code in place that states that they “must avoid any allusion by text, image or sound to a person’s ethnic or national origin, religion, gender, sexual orientation as well as to any illness or physical or mental handicap that could be discriminatory in character.”
As for the Internet, ECRI noted that Swiss authorities had informed the organization that they were “seeking cooperation with relevant Internet service providers to improve the identification of authors of hate speech and to have such content removed as quickly as possible…”
ECRI has done a good job helping Europeans kill free speech.
via ZeroHedge News https://ift.tt/2Y7DAAV Tyler Durden
I have lived in the United States for a total of 24 years and I have witnessed many crises over this long period, but what is taking place today is truly unique and much more serious than any previous crisis I can recall.
And to explain my point, I would like to begin by saying what I believe the riots we are seeing taking place in hundreds of US cities are not about. They are not about:
Racism or “White privilege”
Police violence
Social alienation and despair
Poverty
Trump
The liberals pouring fuel on social fires
The infighting of the US elites/deep state
They are not about any of these because they encompass all of these issues, and more.
It is important to always keep in mind the distinction between the concepts of “cause” and “pretext”. And while it is true that all the factors listed above are real (at least to some degree, and without looking at the distinction between cause and effect), none of them are the true cause of what we are witnessing. At most, the above are pretexts, triggers if you want, but the real cause of what is taking place today is the systemic collapse of the US society.
The next thing which we must also keep in mind is that evidence of correlation is not evidence of causality. Take, for example, this article from CNN entitled “US black-white inequality in 6 stark charts” which completely conflates the two concepts and which includes the following sentence (stress added) “Those disparities exist because of a long history of policies that excluded and exploited black Americans, said Valerie Wilson, director of the program on race, ethnicity and the economy at the Economic Policy Institute, a left-leaning group.” The word “because” clearly point to a causality, yet absolutely nothing in the article or data support this. The US media is chock-full of such conflations of correlation and causality, yet it is rarely denounced.
For a society, any society, to function a number of factors that make up the social contract need to be present. The exact list that make up these factors will depend on each individual country, but they would typically include some kind of social consensus, the acceptance by most people of the legitimacy of the government and its institutions, often a unifying ideology or, at least, common values, the presence of a stable middle-class, the reasonable hope for a functioning “social life”, educational institutions etc. Finally, and cynically, it always helps the ruling elites if they can provide enough circuses (TV) and bread (food) to most citizens. This is even true of so-called authoritarian/totalitarian societies which, contrary to the liberal myth, typically do enjoy the support of a large segment of the population (if only because these regimes are often more capable of providing for the basic needs of society).
Right now, I would argue that the US government has almost completely lost its ability to deliver any of those factors, or act to repair the broken social contract. In fact, what we can observe is the exact opposite: the US society is highly divided, as is the US ruling class (which is even more important). Not only that, but ever since the election of Trump, all the vociferous Trump-haters have been undermining the legitimacy not only of Trump himself, but of the political system which made his election possible. I have been saying that for years: by saying “not my President” the Trump-haters have de-legitimized not only Trump personally, but also de-legitimized the Executive branch as such.
This is an absolutely amazing phenomenon: while for almost four years Trump has been destroying the US Empire externally, Trump-haters spent the same four years destroying the US from the inside! If we look past the (largely fictional) differences between the Republicrats and the Demolicans we can see that they operate like a demolition tag-team of sorts and while they hate each other with a passion, they both contribute to bringing down both the Empire and the United States. For anybody who has studied dialectics this would be very predictable but, alas, dialectics are not taught anymore, hence the stunned “deer in the headlights” look on the faces of most people today.
Finally, it is pretty clear that for all its disclaimers about supporting only the “peaceful protestors” and its condemnation of the “out of town looters”, most of the US media (as well as the alt media) is completely unable to give a moral/ethical evaluation of what is taking place. What I mean by this is the following:
By repeating mantras about how “Black anger is legitimate” the US liberal media is basically placing a seal of approval on the violence and looting. After all, if Black “anger” is legitimate, and if “White privilege” is real, then it is quite “understandable” that this “anger” “sometimes” “boils over” and leads to “regrettable” “excesses”. Just take a look at this image of Biden kneeling down before a Black demonstrator:
Of course, Biden and his supporters will claim that Biden was only kneeling before a cute little girl and her peacefully protesting father, but when combined with the attacks against Trump’s “law and order” rhetoric by Biden and his supporters (including four former US Presidents!), I believe that these kinds of photo-ops are sending a very different message: keep “protesting” as we are on your side which, coming from a guy like Biden, the ultimate symbol of the 1%er elites and a perfect example of “White privilege”, just goes to show that the hypocrisy of US politicians really knows no bounds or limits.
I have to note here that these riots also represent a potential danger for both factions of the Uniparty in power: for the Demolicans the riots probably represent the very last chance to prevent a Trump-reelection, but if the Demolicans are too obvious in support of the riots, then it could backfire against them and turn all the frightened “law and order” types against them. But if they do not support the riots, then the Demolicans will alienate their core constituency (a hodgepodge of various “minorities” pushing their narrow identity-politics agenda). Likewise, for Trump this is an opportunity to show his “law and order” credentials and promise the White people and the relatively fewer Blacks of his base that he will protect them. However, if he is too direct about this and if Trump orders what might be seen by many as unfair or excessive force (of which there has been a lot almost everywhere), then he risks pushing many moderate Republicrats over the edge and side with the Demolicans (or, at least, withhold their vote). In other words, both factions of the Uniparty feel that the riots are both an opportunity and a threat and this is why neither faction can come out and speak truthfully about the real causes of the riots.
The exact same message of weakness and even submissive impotence is, I believe, sent every time a cop kneels when confronting even peaceful demonstrators like on this photo. While this might be intended as a message of compassion, and maybe even an apology, the only thing the rioters will see here is a powerful sign of surrender of the local authorities and I find that extremely dangerous.
Yes, there are plenty of racist, violent and otherwise incompetent cops in the USA. And yes, many of my Black friends reported feeling singled out and treated rudely by cops. But having extensively traveled the world, I want to assure you that the US most definitely does not have the worst cops out there. In fact, I believe that most US cops are decent people. Much more importantly, these cops are the “thin blue line” which protects society against criminals. And while I do believe that US policemen ought to be better educated, better trained, better led and better supervised, I also realize that there is also no short term alternative to them. It is all very fine to dream about educated, peaceful and non-racist cops, but if you remove the existing police force from the equation, there are no other alternatives (the national guard or the regular armed forces do not qualify and don’t have the correct training to deal with civilians anyway), especially in those states which have successfully killed the 2nd Amendment by means of what I call “death by a thousand regulatory cuts” (including NY and NJ).
Then there is what Solzhenitsyn called the “decline of courage” in the West: the vast majority US politicians have basically lost the ability to criticize Blacks, even when it is quite obvious that many of the current problems of the Black population of the US are created by Blacks themselves: I think of the truly vulgar, obscene and overall disgusting “rap culture” with which most Black youth are now “educated” in since early childhood or how many Black youth have been brainwashed into considering gang members and street prostitutes as the measure of what “looking cool” looks like in terms of clothes, language and overall behavior. I believe that it is pretty obvious to any person who lived in the US that Blacks are very often (mostly?) the cause of their own misery: I can tell you that my Jamaican and Sub-Saharan African friends (who live in the USA) have told me many times that a) they think that US Blacks have opportunities which they would never have in Africa or Jamaica and that b) local Blacks often resent Africans and Jamaican Blacks because the latter do so much better in the US society. I can also testify to the fact that I have seen a lot of anti-Latino feelings from US Blacks. As for how Blacks often feel about Asians, all we need to do is remember the LA riots in 1992. Finally, I do believe that many (most?) people in the US know that the strongest and most frequent form of racism in the US will be anti-White, especially from politically engaged Blacks.
I can personally attest that there is plenty of anti-White racism in the USA. Not only did I experience it myself (I lived in Washington, DC from 1986-1991), but it has been amply documented by people like Colin Flaherty whose books “White Girl Bleed A Lot: The Return of Racial Violence to America and How the Media Ignore It” and “Knockout Game a Lie?: Awww, Hell No!” are excellent primers on Black on White violence and racism. Yet, anybody daring to suggest that US Blacks themselves are at least partially responsible for their own plight will immediately be labeled a “racist”.
To those of you who live outside the USA, I would recommend this simple thought experiment: just take 20-30 minutes and watch the footage of BOTH the “peaceful protests” AND “the violent riots” and look carefully not only at what the folks you see in the footage are wearing, but also how they speak, how they act, what they say and how they say it and ask yourself a simple question: would you want to hire any of these guys and pay them a decent salary? I very much doubt that many of you would. Frankly, most of these rioters are unhirable, and “racism” has nothing to do with this.
The fact is that what is sometimes called the “MTV culture” is, in reality, nothing else than a systematic glorification of criminal mayhem. Forget about rap hits like the famous “Fuk Da Police” or “Kill d’White People“, I would argue that 99% of rap is a glorification of all the worst problems of Black communities in the US (drugs, violence, promiscuous sex, objectification of women, alcoholism, glorification of criminal behavior in the streets and in prisons, etc.). Yet most US politicians seem to be paralyzed and feel the need to pretend like they are absolutely charmed by this so-called “Black culture”. But it is even worse than that.
Combine an emasculated ruling polity which does not dare to call a stone a stone and which promotes a (pretend) “culture” which glorifies violence and hatred against all non-criminals, including law abiding Black who are called “Toms” and who are also singled out as in this “beautiful” rap which includes the following “verses”: “Then you got niggas that’s blacker then the night, Running around town saying their best friends are white, Niggas like that are gonna hang up from a tree, And burn them up alive and let everybody see” (check out this “beautiful” rap here and for the full lyrics, a truly fascinating read, here). Next, throw in a completely dysfunctional state which is owned and operated by a tiny gang of obscenely rich narcissistic bastards (of all races, very much including Blacks), add to it a total absence of any real social opportunities, then toss in the COVID pandemic and the worst recession in US history with record high levels of unemployment even among those who would be employable (folks with dropped down pants, excessive tattoos, past felony convictions and a comprehensively non-professional attitude would not even get a job even if the economy was booming). Then, you get a relatively localized “spark” (like the murder of George Floyd by a gang of arrogant imbeciles in uniform) to start a fire which will instantly spread throughout the entire country, especially since there are so many other groups besides Blacks who want to “piggyback” their personal agenda on top of the one of Black Lives Matter or Antifa (I am, of course, referring to the real cornucopia of Trump-haters which never accepted his election).
Conclusion 1: this is not the US version of the Gilets Jaunes!
Some might be tempted to say that what we are seeing in the US is a US version of the French Gilets Jaunes. I assure you that it is not. For one thing, the Gilets Jaunes had a pretty clear political program. US rioters do not. Next, the Gilets Jaunes were mostly peaceful and much of the violence was instigated by the French police forces (including the use of fake rioters). While there are definitely peaceful protesters in the USA, neither BLM or AntiFa have truly denounced the riots (and why should they when the US media and politicians don’t have the courage to do that either?). Finally, the French ruling classes and media did not show the kind of “understanding” of the riots which did take place although Macron did pose with two “gangstas” in an effort to look “cool” (which failed):
Not only Biden, in Europe too…
Conclusion 2: this is not a revolution or a civil war
Some are now fantasizing that what we are witnessing today is either a revolution or a civil war. I believe that this is neither.
For a revolution to take place there must be a force capable of changing not the person(s) in power, but fundamentally change the regime, the polity, itself and replacing it with another one. Declaring that “Black lives matter” or looting stores or even demanding that the police be defunded, does not have this kind of potential capability.
For a civil war to take place you need at least two sides, each with a clearly identifiable political agenda. Since the real power in the US is hidden from the public awareness, there is no potential for a “the people vs the rulers” kind of civil war in the US. A “Right/Conservative vs Left/Liberal” civil war is also not possible, because both the US Right and the US Left are, in reality controlled by a deep state which is neither liberal nor conservative. Finally, a “rematch” between North and South is not possible either because the modern US is not really split along North/South lines anymore. In terms of geography, there is somewhat of a “Big cities vs rural USA” split, but it takes place in both the north and the south of the country. Instead, what we do observe is a social breakup of the US into “zones” some of which will be doing much better than others (big cities with a strong Black population fare the worst, mostly White small towns fare best; that is even true within the same state). In some of these zones, we will see more of this kind of acts of self-protection:
This kind of confrontations, even if they are not violent, are yet another illustration of the state being simply unable to take charge and protect the people.
Conclusion 3: this is an insurrection which has initiated the systemic collapse of the US society
I call what is happening today an insurrection: a violent revolt or rebellion against the authorities as such. When you burn a police precinct you do not “protest” against the actions of a few cops, no, what you are doing is expelling the cops from your neighborhood (I know that personally. In Argentina I lived in a suburb of Buenos-Aires in which the police station was attacked so often that it closed and was never rebuilt). And since in a civilized society the state should have the monopoly on the (legal) use of force, you are basically rejecting the authority and legitimacy of the state which operates the police force. This insurrection is most unlikely to remove Trump from office (hence it is not a coup or a revolution), but the anti-Trump faction of the ruling elites have now clearly adopted the strategy of “worse is better” simply because they realize that these riots are probably their last chance to blame it all on Trump (and Russia, why not?!) and maybe, just maybe, defeat him in November.
Right now all we see can only be called a mob-rule (technically referred to as an “ochlocracy“). But mobs, no matter how violent, rarely succeed in achieving tangible political results as they act ‘against something’ and not ‘for something’. This is why the real (behind-the-scenes) ruling classes need to instrumentalize this mob-induced insurrection to their political advantage. So far, I would say that neither the Demolicans nor the Republicrats have succeeded in this. But there is a very long and potentially extremely dangerous summer ahead and this might well change.
Irrespective of whether either faction will succeed in instrumentalizing the riots, what we are seeing today is a systemic collapse of the US society. That is not to say that the US will disappear, not at all. But just like it took the Soviet Union a decade or more to fully collapse (roughly from 1983-1993), it will take the US many years to fully crash. And just like a New Russia eventually began taking form in 1999, there will be a New US coming out of the current collapse. Total and final collapses are very rare, mostly they just initiate a lengthy and potentially very dangerous transformation process, the outcome of which is almost impossible to predict.
However, just as the Russian people had to stop kidding themselves with silly dreams about “democracy” and had to tackle the real problems of Russia, so will the people of the US have to find the courage to deal with their real problems, frontally and deliberately. If they fail to do that, the country will most likely simple further disintegrate into numerous and mutually hostile entities.
