Tag: finance

Via SchiffGold.com,

Last year, we reported extensively on a push toward de-dollarization by countries like Russia and China and their desire to undermine the ability of the US to weaponize the dollar as a foreign policy tool. Europe was even starting to push to dethrone the dollar as the reserve currency.

With the Federal Reserve running the dollar printing press at full speed and the US government expanding the national debt into the stratosphere, there are renewed calls for a currency to replace the dollar as the world reserve.

This week, Shanghai Gold Exchange (SGE) President Wang Zhenying called for a new super-sovereign currency to replace the greenback.

Reuters reports:

Concern has mounted among some market participants over the dollar-denominated system as the US Federal Reserve cut interest rates to near-zero and embarked on unlimited quantitative easing to contain the economic damage of the coronavirus pandemic.”

Wang said that the Fed’s monetary policy in response to COVID-19 would eventually tank the dollar even though the current crisis has triggered a scramble for greenbacks.

When the Fed turns on the liquidity tap, the US dollar will, in theory, be in a long-term depreciatory trend.”

Peter Schiff has been predicting that the dollar is going to tank for quite some time. It’s a matter of when, not if.  As the coronavirus crisis began to unfold and the Fed fired up the printing press, Peter said that with the central bank and government response to the coronavirus, hyperinflation has gone from being the worst-case scenario to the most likely scenario.

Peter has also said he thinks people will eventually start dumping dollars.

Nobody can hold dollars. Nobody can hold any bonds denominated in dollars. This is now like a game of musical chairs where nobody wants to get caught with dollars when the music stops playing.”

Wang not only expressed concern about the long-term stability of the dollar; he also echoed an oft-repeated criticism of the US controlling the reserve currency. America uses the privilege as a foreign policy tool. For instance, in 2014 and 2015, the blocked several Russian banks from SWIFT as relations between the two countries deteriorated. Last fall, the US threatened to lock China out of the dollar system if it didn’t follow UN sanctions on North Korea. Wang said this needs to end.

It is a weapon for the US, but a source of insecurity for other countries. The currency the world ultimately chooses for global trade must not be one that gives someone privilege, while exposing others to insecurity.”

A gold standard that prevented central banks from manipulating the money supply would be ideal. Peter has said that the US went off the gold standard in 1971, but he thinks the world is going to go back on it.

The days where the dollar is the reserve currency are numbered and we’re going back to basics. You know, everything old is new again. Gold was money in the past and it will be money again in the future.”

Regardless of what form it takes, it seems likely that efforts to push the dollar off its perch will only increase. The powers that be in America should be concerned about their currencies future as the world reserve. And Americans should be concerned about the future purchasing power of their dollars.

More than 200,000 people who are in the United States on an H-1B visa, which is a temporary work visa for people with specialized skills, could soon seen their status in the U.S. turn to “illegal”. 

One perfect example is Manasi Vasavada, who has worked at a NJ dental practice for almost two years. She has been on unpaid leave of absence since it closed in March. Her husband Nandan Buch is a dentist and the couple may not be able to stay in the U.S. – but can’t go back to their native India, which has also closed its borders.

Meanwhile, the couple has racked up $520,000 in student loans for advanced dental degrees in the U.S. 

“Everything is really confusing and dark right now. We don’t know where we will end up,” Vasavada told Bloomberg. 

And they are just a microcosm of the 200,000 guest workers in the U.S. that could be facing similar problems. Their legal status could be in jeopardy by the end of June and thousands more who are not seeking resident status could be forced home. About 75% of these visas go to the technology industry.

Already over 20 million Americans have lose their jobs of the last two months. But visa workers are tied to specific locations and being furloughed violates the requirements of their visas. If terminated, they have 60 days to find another job, transfer to another visa or leave the country. Even without losing their jobs, its sometimes difficult to get a visa renewal done in 60 days.

Doug Rand, who co-founded Boundless Immigration Inc., a company that helps people navigate the immigration system, called the impact of the virus a “catastrophe at a human level and an economic level.”

“It’s just a mess,” he continued.

A lobbying group that represents Apple, Amazon, Facebook, Google and Microsoft sent a letter to the State and Homeland Security departments on April 17 urging for relief for foreign born workers. The letter specifically requested a delay in work authorization expiration dates until September 10. 

The letter said: “Without action, these issues will lead to hundreds of thousands of unfilled jobs and have profound negative economic effects.”

Some companies are even choosing to furlough U.S. born workers and fire foreign employees whose visas require that they are paid. Other companies are keeping H-1B workers on staff to maintain their legal status while firing U.S. workers. 

The Trump administration, which has consistently taken a hard-line approach to immigration, has not responded to the letter yet. Non-immigrant visas have declined from 10.9 million in 2015 to 8.7 million in 2019, falling for four straight years. Last month, the administration shut down embassies and consulates with little to know guidance for people who risk losing their visas.

Meanwhile, in-person services at U.S. Citizenship and Immigration Services, are suspended until at least June 4. 

Authored by Jonathan Turley,

President Donald Trump has used the Defense Production Act to ensure beef, pork, poultry and egg plants keep operating to avoid a food shortage. 

That did not sit well with MSNBC Chris Hayes who objected to Trump using the DPA after blasting Trump for not using the DPA.  For weeks, I have been raising what I view as a widespread misconception of the DPA and its function.  This is an example of how the DPA has become part of a media mantra to suggest that the Administration refused to use the Act when it could have addressed shortfalls.  This spin redirects the primary responsibility for the failure to prepare for a pandemic from governors, who ignored years of warnings of shortfalls and lack of stored material.  There are legitimate questions about mistakes made in this pandemic but the DPA has increasingly been used in a way disconnected from factual and legal foundations.

Hayes objects that the Trump Administration failed to use the DPA to force production of ventilators and other items. However, as I have said previously, there is no reason to use the DPA if the Administration believes that companies are at maximum input.  One legitimate objection that the Administration has made about the coverage is the widespread misrepresentations of the ventilator issue.  Dr. Deborah Birx and others have noted that no one was actually denied a ventilator and that states had a surplus.  We are currently producing an astonishing level of ventilators that far exceeds our expected needs by a sizable degree.

The point is that the DPA moves away obstacles or motivates companies when needed.  If companies are cooperating and meeting maximum projections, there is no reason to use the DPA.  The Administration has used the DPA in other areas to remove or motivate.  Clearly the Administration could have used DPS on everyone and everything to negate these criticisms.  However, it would simply create new levels of bureaucratic control and serve little real purpose if the companies are responding to government demands.  In this hue and cry over the DPA, there is a lack of specifics in how these companies would increase their effort further or what contractual obstacles need to be removed.

The latest DPA is a classic use of the Act.  The country has already faced panic buying on items like toilet paper.  Much of this trend is entirely irrational.  There was no reason why toilet paper should be the focus of panic buying but the result was a real shortage.  The chances of a panic buying on food is far far more serious.  There is already a drop of 25% in the food supply from these industries.  It could drop further.  The result is a serious threat to the nation as a whole in supplying the most basic necessity for life.

What is interesting about this use of the DPA is that it may be most valued due to its impact on liability.  By being forced to stay open, the companies can claim that they were not negligent because they were compelled to operate.  The question will be whether workers can be fired for refusing to work.  They cannot be forced to do so but could face threats over a refusal to work despite the obvious risk to them.

This is a real threat to the nation.  At a time of short food supply, we are seeing tens of thousands of animals slaughtered due to the reduction in processing.  It is not just confined to these meat plants and the virus outbreak among the work force.  We are seeing food destroyed due to interruptions in the supply chain or other market problems.  This is occurring when food banks are overwhelmed.  (This is an area where the government needs to act to pay farmers to allow for donations to food banks).

I remain highly suspicious of the failure of these companies to better protect workers.  These are startling numbers of affected workers and deaths.  The obvious response of the Administration should be to follow up with a greater federal presence in the operation and safety of these plants.  The Administration needs to bring federal resources and expertise to these plants to protect workers.

However, the use of the DPA to protect the food supply is exactly the type of national emergency that the Act was designed to address. 

The MSNBC  attack reflects a curious pattern in the media where it moves effortlessly in adopting diametrically opposed positions. The only common denominator is the target of the coverage.  For months the media decried the Administration for not taking control of the pandemic and state efforts despite some of us noting that this is a primary state responsibility. Then when Trump, wrongly, claimed that he could take control, the media cried foul that this is a violation of states rights.  Likewise, the media objected that the Trump Administration was not using its authority to grab needed PPEs and other materials. However, when the Administration started to grad such material and distribute them to hot spots, the media criticized the Administration for interfering with states from getting such material.  Now the Administration is blamed for using the DPA after being chastised for not using the DPA.  The most remarkable thing about this pattern of flips is the absolute ease with which it has occurred.

None of this is meant to clear the Administration. Many questions remain about early warnings and early actions. That includes the possible use (including DPA orders) on mask and PPE production. However, there has also been some remarkable successes. FEMA and the Army Corps of Engineers have done phenomenal jobs in ramping up production and building needed beds and resources. The speed of industry and government to address new therapeutics and treatments is also amazing.  As I have said before, the need for fair coverage has never been greater.  We should not paint with too broad a brush. Much coverage remains excellent and informative.  However, there is a clear agenda or bias in some of this coverage on issues like the DPA.  This bias can become outright misinformation on legal issues in pandemic from criminal claims to constitutional criticisms.    News coverage should have greater consistency than just the target of criticism.

Despite German Chancellor Angela Merkel’s insistence that Germany proceed cautiously with its reopening, only to have the process somewhat abruptly accelerated by German industry, including the operators of the world’s biggest auto plant in Wolfsburg, Germany, the first numbers on the German reopening are in, and the results are more than a little discouraging.

German public health officials have reported an uptick in the average infection rate of the virus within Germany – a rate known as “R-naught” – that cannot be ignored. Before Germany started allowing some more stores to reopen on April 20, officials said that if the R0 rate advanced back above “1”, that some lockdown measures might need to be reimposed.

After retreating to a low of 0.7 earlier this month, R0 jumped to 0.96 on Wednesday, according to a report released by the German government. Though officials insisted that it’s still too early to say whether the decision to lift some restrictions is responsible for the uptick, it certainly would be a whole lot more convenient if it had moved the other way.

The number of new cases in Germany increased by 1,018 on Monday, capping off five straight days of decline, before bouncing to 1,144 on Tuesday.

A top disease control expert from Germany’s Robert Koch Institute, a German federal agency charged with overseeing the response, said the reproduction rate is a critical metric for measuring the effectiveness of the rollback, as well as any emerging risks.

Lothar Wieler, head of Germany’s disease control centre the Robert Koch Institute, stressed the importance of the reproduction rate. “The number should stay below one, that is the big goal,” he told a news conference.

“The further it is below one, the more secure we can feel, the more leeway we have, but there are other numbers that are also important,” he said, adding that these included the number of cases per day, and testing capacity.

He urged people to continue complying with social distancing guidelines, wearing masks on public transport and in shops, and staying at home where possible.

“Against the background of the easing (of restrictions), let’s ensure we can continue to defend this success we have achieved together,” he said.

“We don’t want the number of cases to rise again. Let’s, insofar as is possible, stay at home, let’s stick to the reduced contact.”

160,000 Germans have been infected by the coronavirus, leading to 6,000 deaths compared to more than 20,000 who have died after contracting COVID-19 in the UK.

Education ministers of Germany’s 16 federal states agreed on Tuesday that schools across the country would slowly reopen classes for all ages until the summer holidays, although pupils would have to work and learn in smaller groups.

“There will be no regular classes before the summer holidays,” said Stefanie Hubig, head of the ministerial council for education.

Retailers with floor space of up to 800 sq meters were allowed to reopen last week, along with car and bicycle dealers, and bookstores. All open retailers were required to practice strict social distancing rules, although in retrospect some may not have taken the advice seriously. 

Chancellor Angela Merkel will discuss the next steps for the easing of lockdown restrictions in a telephone conference with the state premiers on Thursday. Meanwhile, NY Gov Andrew Cuomo brought up the situation in Germany during his press conference on Wednesday, arguing that the jump in the infection rate had given him pause and was yet another reason why NY must make take an extremely measured approach.

Authored by Paul Joseph Watson via Summit News,

A new poll finds that the majority of Canadians – 60 per cent – think that when a vaccine for coronavirus becomes available it should be made mandatory.

The survey, conducted by Leger and the Association for Canadian Studies, found that “60 per cent of respondents believe people should be required to get the vaccine once it is ready.”

40 per cent think it should be voluntary.

Leger executive vice-president Christian Bourque said he was surprised support for a mandatory vaccine wasn’t even higher.

“It’s almost as if it’s seen as just another flu vaccine,” Bourque told The Canadian Press.

“I myself would have expected a higher number given the severity, given the crisis we’re in. But Canadians are kind of divided on this.”

Many experts have suggested that a vaccine may not even be successful due to the nature of the coronavirus family and the fact that it can mutate.

As we highlighted yesterday, one of the faces of Canada’s response to the coronavirus outbreak also appears to support punishing people who refuse to take the vaccine.

Canada’s current Chief Public Health Officer Theresa Tam appeared in a 2010 documentary in which she asserted that vaccine refusniks should be put under constant surveillance via electronic tagging.

“If there are people who are non-compliant, there are definitely laws and public health powers that can quarantine people in mandatory settings,” said Tam.

“It’s potential you could track people, put bracelets on their arms, have police and other set ups to ensure quarantine is undertaken,” she added.

*  *  *

My voice is being silenced by free speech-hating Silicon Valley behemoths who want me disappeared forever. It is CRUCIAL that you support me.

Please sign up for the free newsletter here. Donate to me on SubscribeStar here.

Support my sponsor – Turbo Force – a supercharged boost of clean energy without the comedown.

Detroit’s major auto manufacturers have set their eyes on a date for re-opening: May 18.

GM, Ford and Fiat are all looking to mid-May to resume production at their U.S. factors after settling on a date with the United Auto Workers and Michigan’s governor, Gretchen Whitmer, according to the Wall Street Journal. 

Last week, the UAW had raised concerns about re-opening factories early next month, stating that it wouldn’t provide enough time for the companies to develop safety protocols necessary to prevent the risk of coronavirus infection. The union remains in talks with the companies on such safety protocols and the two parties have “made progress” in recent days. 

A Ford spokeswoman said: “We are continuing to assess public health conditions, government guidelines and supplier readiness to determine when the time is right to resume production.”

The auto companies will be providing protective gear for workers when they return and will look to implement social distancing protocols in their plants. 

Governor Gretchen Whitmer extended a stay-at-home order through May 15 last week. There’s no word on whether she plans on extending the order and/or whether or not auto makers could be considered “essential” exempt businesses from any additional order.

The auto makers would use the May 18 date to re-start production at all U.S. factories, not just in Detroit, despite some states’ orders lifting sooner than May 15.

Many of the auto suppliers necessary for the automakers to restart production also remain in a state of limbo. They are unsure whether or not they will be able to legally run their assembly lines or recall workers by the time the automakers will need them too. 

Detroit has been closed since about March 20, when positive coronavirus cases began to pop up at production facilities and the rest of the country shut down. Dealerships have continued to sell vehicles using sharply reduced prices and heavy discounts. The plant shutdowns, however, have still choked off revenue due to the fact that most automakers recognize revenue after cars leave the plant, on their way to the dealership. 

Foreign automakers are looking to restart production sooner, with Toyota seeking to go back to factory work on May 4 and Honda targeting May 8. 

Over the last 6 weeks, we have been reporting on how the global auto market has been at a standstill since the world has been on coronavirus lockdown. For instance, just yesterday, we reported that auto sales and registrations in Italy were down by an astounding 98% in April. 

Authored by Jeff Deist via The Mises Institute,

Americans are uniquely privileged, to the point of simply imagining they can stay home for months and months without suffering severe economic hardship as a result. Our unique privilege is delusion, the mentality that America is rich and will remain rich without particular effort on our part. Abundance simply materializes around us, regardless of incentives, and the job of politicians is to rearrange this abundance more equitably.

Polls such as this one showing widespread American support for quarantines and business shutdowns are evidence of this American privilege. Eighty percent of respondents think shutdowns by various state governors are justified as a response to the COVID-19 virus, and one-third support extending closure for another six months! 

This reflexive and unthinking complicity from the American public is partially explained by media hype, of course, over an illness which at this writing has killed fewer than sixty thousand Americans. Fear and hysteria always sell. The press clearly wants the coronavirus to be a major event, one that unseats Trump in the fall. (For its part, the administration is doing a terrible job, starting with the awful Dr. Fauci, whom the president should have sacked months ago.) And clearly the various governors’ responses are wildly out of proportion to the actual public health threat, even if initially well intentioned due to sheer uncertainty of the virus’s lethality. 

But something far more fundamental is at work here.

American simply fail to understand, or even much think about, the fragility of distribution chains and the goods and services we rely on. Earlier this week the chairman of conglomerate Tyson Foods warned that disruptions at processing plants could create very serious shortages of beef, chicken, and pork in US grocery stores, and decimate livestock farmers. And of course this was bound to happen as the dominos fell: the shutdowns would not only impact “nonessential” goods, but everything. 

Who didn’t see this? Will it take outright food shortages to make Americans change their minds about whether the shutdown is “worth it”?

We only need look at India for an example of what business and work shutdowns create in a country without  as much existing wealth to consume, where far more people live close to the bone. The national work moratorium ordered by Prime Minister Modi has sent millions of migrant workers and unskilled laborers into very real danger of starvation. Already living hand to mouth and penniless, their jobs essentially banned, many have taken to walking hundreds of miles in 100-degree heat to their home villages—in hopes of being fed by their families. In a country with widespread poverty and depressingly little per capita capital investment, the shutdown is a death sentence for many. Without much capital accumulation, Indians have little savings and few investments to consume when income grinds to a halt. And India is hardly the only poor country at risk and needing food relief; one NGO official warns of “biblical” famines across thirty underdeveloped nations if supply chains continue to be disrupted and charitable economic aid dries up:

“We are not talking about people going to bed hungry,” he [David Beasley of the World Food Programme] told the Guardian in an interview. “We are talking about extreme conditions, emergency status—people literally marching to the brink of starvation. If we don’t get food to people, people will die.” 

This is what poverty really means: having little or no cushion of wealth for an emergency. Poverty is best defined as a lack of savings and resulting capital, leaving people totally dependent on new and consistent income to survive. It is a condition only capital accumulation can improve. And yet “capitalism” is blamed for the unfolding tragedy before us:

Will stories like this finally make Americans understand the severity of the situation? BBC images from India show the heartbreaking human toll of the unprecedented decision simply to stop human work activity due to an infectious disease. Americans should take note, and soon. 

At more than 3.1 million COVID-19 cases globally, one million of those in the United States, and the rest scattered in various concentrations across 213 countries, there’s been few places in the world left untouched by the virus. With most countries on lockdown or a society-wide economic “pause,” it might be hard to conceive that there are still entire national populations in distant corners of the globe enjoying ‘life as usual’.

In a new report Reuters has broken down the remote, far-flung, and in most instances little populated countries which thus far haven’t seen a single coronavirus case. 

“As of April 20, 2020, 213 countries and territories of the 247 recognized by the United Nations have seen at least one case of the COVID-19. Of these, 186 have also experienced local transmission — where the virus is spread amongst the local community,” Reuters says.

This leaves 34 total countries and territories yet to report a single case; however, considering North Korea – which shares borders with hard-hit China, Russia and South Korea – is among these, some instances may be the result of both under-reporting and lack of testing. “From the 213 countries that have cases, at least 162 have also confirmed at least one fatality,” Reuters adds.

Despite infecting more than 3 million people around the world, there are still 34 countries and territories that are yet to report a single case of coronavirus https://t.co/4HNxIim91v pic.twitter.com/0es9PNwSzG

— Reuters (@Reuters) April 29, 2020

* * *

Here is the list of countries & territories without any cases of COVID-19:

Latin America

• Bouvet Island
• South Georgia and the South Sandwich Islands

Asia

• North Korea
• Tajikistan
• Turkmenistan

Europe

• Aland Islands
• Channel Islands
• Svalbard and Jan Mayen Islands

Africa

• British Indian Ocean Territory
• Comoros
• French Southern Territories
• Lesotho
• Saint Helena

Oceania

• American Samoa
• Christmas Island
• Cocos (Keeling) Islands
• Cook Islands
• Heard Island and McDonald Islands
• Kiribati
• Marshall Islands
• Micronesia (Federated States of)
• Nauru
• Niue
• Norfolk Island
• Palau
• Pitcairn
• Samoa
• Solomon Islands
• Tokelau
• Tonga
• Tuvalu
• United States Minor Outlying Islands
• Vanuatu
• Wallis and Futuna Islands

Authored by Robert Aro via The Mises Institute,

The stimulus packages being handed out across this world provide us with an opportunity to document the anticapitalist process as it unfolds in real time, keeping in mind that when these inflation schemes fail, it will likely be blamed on capitalism.

My previous article discussed the $600 billion Main Street Lending Program (MSLP), which is very different from and not to be confused with the $670 billion Paycheck Protection Program (PPP). Whereas the MSLP grants between $1 million and $150 million in the form of a secured loan, the PPP only provides the lesser of $10 million and 250 percent of a borrower’s average monthly payroll costs. However, what is more concerning than the amount of the loans are the terms of the “loans.” Per the US Small Business Administration (SBA):

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll).

In what may go down in history as one of the most aptly named loan programs ever, the “Paycheck Protection Program,” appears to be living up to its moniker; but is it a “real loan” or a loan in name only? Even worse, nowhere does it say that employees must work in order to receive the money. Rather, the SBA goes on to mention that “forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels.” Thus, not only does it make sense for the entrepreneur to maintain all staff, but the entrepreneur is also incentivized to maintain existing salary amounts as well, regardless of whether the employee works or not.

A recent Washington Post article said it best, citing a legal opinion to explain that

“the company can still choose to use PPP funds to pay that employee, even if the employee is not actually performing real work.”

But that doesn’t mean the loan is designed to pay people “not to work.”

The question to consider is: should society be paying people not to work? If yes, then where should this money come from? For this program, the money will be created via deposit institutions that will provide the loans to businesses. Those deposit institutions will then be able to borrow from the Fed’s newly created Paycheck Protection Program Lending Facility (PPPLF) and exchange the PPP loan as collateral, guaranteed by the SBA.

It may seem strange that the Fed would take on a loan when that loan may be forgiven upon the debtor spending the money on payroll, but in the 31-page “Federal Register Notice: Capital Rule: Paycheck Protection Program Lending Facility and Paycheck Protection Program” it is noted that:

As a general matter, SBA guarantees are backed by the full faith and credit of the U.S. Government.

A government guarantee makes good economic sense to the Fed, which concludes in a report to Congres that:

PPP loans under the PPP are fully guaranteed as to principal and interest by the SBA, and these guaranteed loans will fully collateralize extensions of credit under the PPPLF. As a result, the Board does not expect that the PPPLF will result in losses to the Federal Reserve.

On April 16, 2020 at 9 a.m. the Fed’s loan facility opened, and at noon on the same day the SBA had already made 1,661,367 approvals. Only time will tell how much of this money will be paid back, but there seems to be little reason for anyone to offer to pay it back.

The combination of increasing the money supply in order to pay people not to produce goods or services has consequences that not a lot of people are talking about.

It flies in the face of the free market and is as nonsensical as a negative interest rate. A loan that is forgivable is unconventional to say the least, because a loan is normally defined as an amount borrowed that is expected to be paid back with interest. When a loan is given on a first-come-first-served basis for the purpose of paying people not to work and is forgivable because it’s guaranteed by the United States government, we shouldn’t call it a loan.

It may be called socialism, maybe interventionism, and some may still prefer the term statism; but one thing is certain when it comes to the Paycheck Protection Program: it’s not capitalism!