On May 25th, security researcher Jeremiah Fowler discovered an unsecured Elastic database associated with an entity in China had exposed 42.5 million records of mostly American dating app users.
Fowler noticed an I.P. address, located on a U.S. server with many of the users based in North America. He examined the sever even closer and found Chinese text inside the database that read: 模型更新完成事件已触发,同步用户到 (Google Translate: The model update completion event has been triggered, syncing to the user.)
“The strange thing about this discovery was that there were multiple dating applications all storing data inside this database,” Fowler wrote in a blog post on Security Discovery. “Upon further investigation, I was able to identify dating apps available online with the same names as those in the database.”
He said, “that despite all of them using the same database, they claim to be developed by separate companies or individuals that do not seem to match up with each other. The Whois registration for one of the sites uses what appears to be a fake address and phone number. Several of the other sites are registered private and the only way to contact them is through the app (once it is installed on your device).”
Fowler was able to find users’ real identity in a matter of minutes: “The dating applications logged and stored the user’s I.P. address, age, location, and user names,” he wrote. “Like most people, your online persona or user name is usually well crafted over time and serves as a unique cyber fingerprint.”
In an email to CyberScoop, Fowler said a sampling of 10,000 users revealed that 8,063 were Americans, 356 were from the U.K., 219 from Canada and 151 from Australia.
Approximately 42.5 million records were exposed, Fowler said. He wasn’t sure who controls the database nor its exact location. But the site’s Whois domain registration was located on a subway line in Lanzhou, China.
Dating apps mentioned in the database include a diverse range to collect as much data as possible:
Cougardating (Dating app for meeting cougars and spirited young men: according to the site)
Christiansfinder (an app for Christian singles to find ideal match online)
Mingler (interracial dating app)
Fwbs (Friends with benefits)
“T.S.” I can only speculate it is an app called “T.S.” that is a Transsexual Dating App
“I am not saying or implying that these applications or the developers behind them have any nefarious intent or functions, but any developer that goes to such great lengths to hide their identity or contact details raises my suspicions,” Fowler wrote. “Call me old fashioned, but I remain skeptical of apps that are registered from a metro station in China or anywhere else.”
Commenting on the compromised database, Nabil Hannan, managing principal, financial services, at Synopsis, told S.C. Media:
“In this particular case, there’s a lot of personal and private information that users trust dating sites with.
Although the data that was leaked did not include anything sensitive, per se, it does have usernames (from which a person’s full name can often be inferred) along with age and location information” and “may be enough to allow attackers to cause some level of damage depending on the type of information publicly available about the people whose data have been leaked.”
Fowler’s findings could be another example of Chinese hackers attempting to extract personal data from Americans.
via ZeroHedge News http://bit.ly/2HUUQmi Tyler Durden
I mean, who inspired the label on blow dryers that points out the device should not be used in the shower? And what would even be the point, barring electrocution? Why would you dry your hair while the water is spraying you?
And are there actually people who need to be cautioned not to light a candle until they remove it from the package?
Also, you know those plastic bags that hold clothing when you order it online? Who needs to be offered the sage advice that it’s not a good idea to put said bag over their head?
Maybe, with all of these warning labels, we’re rendering Darwin’s principle of natural selection invalid.
Darwin’s hypothesis states that living organisms evolve by differential survival in a world with “Malthusian” overpopulation, in which only the fittest spread their genes into future generations. By fittest we mean best adapted to the prevailing environment, and by environment we mean both the living and the nonliving environment. (source)
Before the emails roll in telling me that I “don’t science,” I’m well aware that the theory of natural selection was about genetic changes that occur over a series of generations. However, the point remains that once upon a time, being stupid got you killed. And no one got sued. The person who couldn’t figure out that some ill-conceived idea was a bad one faced the consequences. If the consequences didn’t kill them, they learned not to do the stupid thing again, making them just a teeny bit smarter and more equipped to deal with the world. Some who believe our planet is overpopulated might even argue that the obsolescence of natural selection is the root cause of the people boom.
But now, we are coddled, cautioned, and warned out of needing to think for ourselves. Another evolutionary theory says that when some trait or characteristic goes unused, it disappears after a few generations. Sort of like those cave fish that don’t have any eyes, After multiple generations deep underground in the pitch black, their eye sockets are now empty. Perhaps after multiple generations without the need for critical thought and common sense, those in “civilized societies” are going to evolve into creatures with their own empty spots where something useful was previously.
Well, here’s a warning for this article:
“WARNING: THIS ARTICLE MIGHT MAKE TOO MUCH SENSE. Since common sense is rare to the point of almost being completely extinct, the sudden appearance of it might be a little shocking. Should shock occur, please sit down and put your head between your knees, inhale through your nose and out of your mouth slowly until heart rate returns to normal. Some exclusions apply, see store for details.” ~ Melissa Melton
Now, on to some warning labels that just shouldn’t need to be…
Here are some warning labels from actual products. One must wonder about the origin of these warnings. Did they come up because someone in our litigious society actually sued a company because of an injury like the ones warned against?
Do not ingest. ~ Lava lamp
This formula may cause drowsiness, if affected do not operate heavy machinery or drive a vehicle. ~ Infant pain relief liquid
Do not attempt to stop chain with hands. ~ Chainsaw
Peel fruit from cellophane backing before eating. ~ Fruit By the Foot
Product will be hot after heating. ~ Mark and Spencer’s Bread Pudding
“Do not use orally.” ~ Toilet brush
This is not a lifesaving device. ~ Beachball
Wearing of this garment does not enable you to fly. ~ Superhero cape from a Halloween costume
Good grief. So, when the SHTF, in the midst of a warning label-free disaster, what’s going to happen to all of the people who required these labels to survive?
I’ll tell you what’s going to happen to them. You’ll have people trying to open a can of peaches with a giant butcher knife, in the process nearly removing a digit. People who are accustomed to being nannied through every step of their days will be stymied by basic survival skills like sanitation, navigation (sans GPS), and the acquisition of safe drinking water.
When I was in Bosnia recently with Selco, I was in awe of the fact that they don’t have warning labels, guard rails, or any other protective things keeping stupid people alive. He got a good laugh from my shock over the fact that a scenic lookout had no railing to keep people from plunging to their deaths.
And then there’s technology, making folks dumber…
Dumbing us down, even more, is the dependence on technology.
Don’t get me wrong, I am a chronic Googler. If I don’t know some random bit of trivia, I’m that gal typing it into a search bar at the first opportunity. “Who was the first person to…Holy cow, Google. Why would you even…Just NO.” Anyhow, back to technology. As wonderful as it is to have a world of information in a handheld device, you still have to be able to think things through for yourself.
People have become so dependent on their navigation systems that reading a physical, honest-to-goodness-piece-of-paper map has become a lost art. Not only that, but some folks rely more on their GPS than their common sense, sort of like these tourists who drove right into the Pacific Ocean because the nav system told them to.
And what about situational awareness?
That’s another skill that seems to have gone the way of the dodo. Have you ever seen a person walking down the street so engrossed in texting that they don’t even see an obstacle in their path? Sort of like this woman and the giant fountain?
What if the situation was more dangerous than falling into a giant fountain? What if you were busy texting and there was an armed robbery and you walked right into the middle of it? What if your eyes were glued to the screen and there was some unexpected wild animal, like, I dunno, a bear?
Because…that actually happened.
Self-reliance is being bred out of society
It’s fun to laugh at these examples of life in today’s America, but there’s an underlying note of impending tragedy.
With all of this constant nannying, we have a society of giant toddlers. It isn’t really their fault. They’ve become accustomed to a society in which people never have to think. They don’t have to produce food, deal with injuries, or even work for a living. Heat is the turn of a dial, entertainment doesn’t require reading skills, and products get thrown away instead of repaired. People don’t learn to predict impending danger by thinking the scenario through, and when danger does occur, they wait for heroes instead of rescuing themselves. They don’t even have to hear unpleasant things, because they can just say the magical incantation, “I’m offended” and the offensive unpleasantness is summarily banned and made illegal.
The coddling makes it even more difficult for the overprotected to accept it when something bad happens. Acceptance is the first step of surviving any disaster. I have written about the 3 steps of survival, and those steps are completely foreign to many of today’s general public.
To me, the pinnacle of preparedness is a way of thinking about pretty much everything you encounter. It’s a unique way of looking at a situation, assessing the options, and acting that defines the prepper mindset. Think about any stressful situation that has ever happened to you. Once you accepted the fact that it had happened you were able to set a course of action. Once you had definitive steps to take, you probably felt much calmer. You took control of the things you could, and you executed your plan. Only by taking that first step – accepting that this mishap had indeed occurred – could you take the next two.
Of course, a bunch of dependent dumb people are a whole lot easier to control than the critical thinkers who rely on themselves instead of Papa Government.
The difference here is pretty clear. Some of us are deliberate in our day-to-day actions, mindful of our surroundings, and possess a sensible, problem-solution mindset. But we’re in the minority. We have to face it: a survival mentality is now an anomaly. It’s all but obsolete.
We, the sturdy, practical, self-reliant folks are the mutant minority.
via ZeroHedge News http://bit.ly/2WCRP29 Tyler Durden
Chinese social media sites have been placed on a lockdown ahead of the 30th anniversary of the Tiananmen Square massacre, according to Bloomberg.
While Beijing already employs highly restrictive controls over their internet, Chinese censors typically intensify their efforts ahead of the June 4 anniversary of the bloody student protests in 1989.
This year, Tencent Holdings Ltd.’s messaging app WeChat and micro-blogging site Weibo barred users from changing their profile photos and other personal information. Video-streaming service Bilibili said it suspended real-time comments and other features for “technical upgrades.” –Bloomberg
As we noted on Sunday, Twitter voluntarily banned the accounts of hundreds, if not thousands of Chinese dissidents – explaining later that it was ‘inadvertent’ and promising to restore them.
Reacting to the crackdown, Secretary of State Mike Pompeo said in a Monday statement: “the Chinese Communist Party leadership sent tanks into Tiananmen Square to violently repress demonstrations calling for democracy, human rights and an end to rampant corruption,” adding “China’s one-party state tolerates no dissent and abuses human rights whenever it serves its interests.“
The editor-in-chief of China’s CCP mouthpiece, the Global Times tweeted in defense: “Around this time 30 years ago, clashes broke out between protesters and military on the way to Tiananmen. In the following 30 years, China has developed quickly. This glorious achievement changed how people look at Tiananmen incident.“
Tiananmen Square Beijing, 10PM, June 3. Around this time 30 years ago, clashes broke out between protesters and military on the way to Tiananmen. In the following 30 years, China has developed quickly. This glorious achievement changed how people look at Tiananmen incident. pic.twitter.com/vAdfJULpaJ
Facebook and Amazon’s insanity only seems to continue with no sign of slowing down anytime soon. Now, the two big conglomerate giants want to move into the uncharted territory of reading human emotions, both in their own ways.
Facebook wants a robot that has five senses which can read human emotions. Facebook wants “emotionally sensitive” robots that can explore the world, identify objects and people and enable its users to make more friends, Dailymail reported.
The robots would be fitted with wheels or tank-like caterpillar treads that would allow them to trundle about their environment.
Alternatively, such robots could be fitted out with drive systems that would allow them to move around underwater, fly through the air or float in space, Facebook suggest in their patent.
I am not sure why anyone would trust Facebook with data ever again, let alone biometric data, after all the numerous scandals Activist Post has documented including data mining. But to each their own I guess.
Amazon is also looking into reading human emotions in a completely different way by utilizing a voice-activated wearable device, that will sense its wearer’s state of mind by the tone of voice, Bloomberg reported.
It’s worth noting that both companies have a smart home device, and after reading this you should fear what information is being gathered by the cameras and microphones attached to those electronics … besides the typically targeted advertising to turn consumers into the product.
On the Amazon front, it seems more than likely the company will want to use this technology in a variety of different digital gadgets, ranging from personal assistants such as Alexa to new technologies that the retail giant is currently developing. Amazon has announced it’s developing a personal assistance robot, so the new emotional technology could easily be integrated into this at-home robot as a means to “serve the consumer better.” A horrifically terrifying thought indeed.
Amazon and Facebook aren’t the only companies looking into utilizing human emotions. Previously, Activist Postreported that Walmart was also looking into to monitoring your biometric data, pulse, and location from the sensors on a shopping cart handle.
This news comes as hundreds of retail stores — and soon thousands — are investigating using biometric facial recognition software FaceFirst to build a database of shoplifters to aid in the fight against theft, Activist Postreported.
FaceFirst is designed to scan faces as far as 50 to 100 feet away. As customers walk through a store entrance, the video camera captures repetitious images of each shopper and chooses the clearest one to store. The software then analyzes that image and compares it to a database of “bad customers” that the retailer has compiled; if there is a match, the software sends an alert to store employees that a “high risk” customer has entered the door.
The future of shopping seems to allude to having biometric scanners written all over it, a worrying prospect for privacy enthusiasts.
Several privacy advocate groups, attorneys, and even recently Microsoft, which also markets its own facial recognition system, have all raised concerns over the technology, pointing to issues of consent, racial profiling, and the potential to use images gathered through facial recognition cameras as evidence of criminal guilt by law enforcement.
“We don’t want to live in a world where government bureaucrats can enter in your name into a database and get a record of where you’ve been and what your financial, political, sexual, and medical associations and activities are,” Jay Stanley, an attorney with ACLU, told BuzzFeed News about the use of facial recognition cameras in retail stores.
“And we don’t want a world in which people are being stopped and hassled by authorities because they bear resemblance to some scary character.”
However, facial recognition technology currently has a lot of problems. Activist Post has also reported how Amazon’s own facial “Rekognition” software erroneously and hilariously identified 28 members of Congress as people who have been arrested for crimes.
Activist Post previously reported on another test of facial recognition technology in Britain which resulted in 35 false matches and 1 erroneous arrest. We have further reported recently on a watchdog observing UK Metropolitan Police trials. Big Brother Watch stated the technology has misidentified members of the public, including a 14-year-old black child in a school uniform who was stopped and fingerprinted by police, as potential criminals in as much as 96 percent of scans.
Meanwhile, on the other side of the pond in the U.S, the U.S. Government Accountability Office (GAO) has stated the facial recognition technology the FBI is using for the Next Generation Identification-Interstate Photo System failed privacy and accuracy tests, as Activist Postreported.
In 2018 it was reported that the FBI and other law enforcement agencies were using this same Amazon Facial Rekognition technology to sift through surveillance data.
Defense Onereports that “AI-Enabled Cameras That Detect Crime Before it Occurs Will Soon Invade the Physical World” are in the works and on display at ISC West, a recent security technology conference in Las Vegas.
Activist Post has previously reported in its own way that the rise of facial recognition technology is inevitable and, as a result, the death of one’s privacy is sure to come with it.
The fact that hundreds of retail stores want facial recognition technology is a scary thought. But combined with biometric data, that’s an even scarier prospect for our future in regards to the cart that can read a human’s emotional data including detecting stress.
While Amazon’s wearable device will be able to be used to target consumers, maybe not at first but eventually the technology pitched as “health and wellness” will be surely be used for advertising when connected to other Amazon products.
Increasingly our rights are decreasing with the help of big corporations like Amazon, Facebook, and Walmart. Our privacy is disappearing at an alarming rate in trade for convenience.
As previously written,“we are entering the Minority Report; there is no going back after this technology is public and citizens are indoctrinated that it’s ‘for their safety.’”
At that point, we are officially trading liberty and privacy for security. As Benjamin Franklin said, “Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.”
This year, Sen. Rand Paul’s effort to balance the federal budget didn’t even get a floor vote in the Republican-controlled Senate.
Paul’s so-called “Pennies Plan” failed a procedural vote on Monday evening when only 22 senators voted in favor of a cloture motion that would have brought the bill to a final vote. A majority of Republicans and all Democrats voted against proceeding to a floor vote on the bill. It’s another sign that fiscal responsibility is all but dead in Congress, even as the national debt heads toward record highs and the budget deficit approaches $1 trillion this year.
“We teach our children that money doesn’t grow on trees, and then they grow up watching politicians pretend otherwise,” Paul said before the vote. “Meanwhile, our debt soars past $22 trillion, endangers our country, and artificially limits what our nation can achieve.”
Paul’s proposal called for cutting 2 percent from all federal line items for each of the next five years and would reduce federal spending by about $11 trillion over the next decade—even though spending would rise after the first five years. It’s an adaptation of the so-called “Penny Plan” that Paul has been pushing for several years, though he now says an additional penny in cuts for every federal dollar spent is necessary to get the budget to balance.
Indeed, the gap between what the federal government spends and what it takes in is growing wider. During the first seven months of the current fiscal year, which began in October 2018, the federal government ran a $531 billion deficit. That’s a 38 percent increase over the same period of time last year.
According to an analysis from the nonpartisan Committee for a Responsible Federal Budget, about 60 percent of this year’s expected deficit is the result of policies—mostly last year’s huge increase in spending that shattered those Obama-era budget caps—put in place by current legislators and signed by the current president.
The share of debt held by the public currently stands at about 78 percent of gross domestic product (GDP), a shorthand measure of a country’s economic output in a single year. The numbers are actually worse than that, because “debt held by the public” accounts for only $15.8 trillion of the $21 trillion national debt. The rest is held by parts of the federal government, such as the Social Security trust fund.
Alarm bells are starting to sound. The Government Accountability Office (GAO) warned in April that America’s current fiscal situation is “unsustainable.” The GAO estimates that the amount of debt held by the public is on track to surpass the all-time high of 106 percent of GDP within the next 13 to 20 years.
Meanwhile, Congress seems as apathetic as ever, if not more, about the growing pile of federal debt.
Most Republicans go back to their districts and say they support balanced budgets, Paul said on the Senate floor before the vote, “but they’re not really for balanced budgets if they vote for budgets that don’t balance.”
Paul also took aim at Democrats, who he accused of pushing for pie-in-the-sky spending plans that promise everything from free college tuition to greater government spending on health care and retirement entitlements. Those proposals will add trillions of dollars to the national debt or will require massive tax hikes, Paul said.
“These proposals are ludicrous,” said Paul. “We have so much debt from what we are already trying to give you, and these people want to double, triple, and quadruple that. It’s a recipe for disaster.”
Last year, Paul was able to get the balanced budget proposal to the Senate floor after striking a deal with Senate Majority Leader Mitch McConnell (R–Ky.) during an earlier budget impasse to get the bill on the floor. Paul called that vote a “litmus test for conservatives,” and most of them failed it as the measure went down in flames, 76 to 21.
Before Monday’s vote happened, Paul predicted that not a single Democrat would vote for his proposal and more than half the Republicans wouldn’t vote for it either.
He was right.
from Latest – Reason.com http://bit.ly/2XjhOsp
via IFTTT
Yesterday, when observing the latest equity fund flows, we showed two striking charts: according to Deutsche Bank, equity funds have now seen outflows of -$132bn YTD and -$237bn since December.
This means that outflows over the last 6 months in dollar terms have now been larger than over any prior 6-month period.
There was a silver lining: while discretionary funds had continued selling stocks to satisfy redemption requests both when the S&P was at its all time highs in last April, and during the worst May for markets in decades, systematic funds had kept a far lower profile, preferring to sit on the sidelines for now.
That is changing.
Overnight, Nomura’s quant team led by Masanari Takada writes that equity long/short funds shifted to selling cyclicals (mainly tech) and buying defensives (mainly utilities and healthcare), returning once again to conservative positions as a result of sentiment once again dipping into negative territory (-1.8) on trade policy concerns which added momentum to risk-off trades.
This selling does not, however, look to have gone far enough to trigger an excessive volatility shock, with the VIX still stubbornly rangebound, as long/short funds’ selloff of cyclical stocks has been minimal compared with the selloffs in February and October 2018.
However, what has so far been a relatively tame selloff may get much worse in the coming days, as trend-following algos (CTAs and risk-parity funds) continue have now started to to sell equities. In fact, as Nomura warns, CTAs have shifted to shorting Russell 2000 futures, “and it looks like only a matter of time before they turn short on S&P 500 futures as well.“
Making matters worse is that speculators are now making trades premised on a recession in the US, and Nomura sees the risk of a further jump in volatility. And with the latest ISM manufacturing index print coming in well-below expectations and at fresh multi-year lows, this will only lend further impetus US equity bear trades.
If this were to happen, Nomura’s main focus would be whether CTAs maintain their net selling for more than seven business days after they turn short on the S&P 500. Such protracted equity selling by CTAs could imply that this is not a mere technical selling but a growing consensus among market participants that the US economy is headed for recession.
But wait, it gets worse, because as the Japanese bank notes, shifting its focus to Asian equity markets, speculators are also selling stocks at a rapid clip premised on a recession in China as well. Bear trades appear to have also been catalyzed by the Chinese manufacturing PMI falling below 50. As a result, shorting by CTAs was particularly pronounced for Hang Seng futures in Hong Kong, KOSPI 200 futures in South Korea, and TAIEX futures in Taiwan, with shorts expanding in all cases to the levels seen in January 2018.
Meanwhile, the exact opposite picture emerges in bonds, where “something akin to panic-buying of USTs and other DM government bonds.” Specifically, with 10yr UST yields now at multi-year lows around 2.07%, the end of last week and the start of this one was marked by something close to panic-buying in US and other DM bond markets, especially after FOMC voting member James Bullard suggested that the time for a rate hike is coming . As caution builds in the market regarding global economic conditions, the market also seems to be moving in ways that could force the Fed toward a precautionary rate cut.
Among short-term market participants, macro hedge funds have been buying bonds in a wide range of regions, including the US, Germany and Japan. At the same time, while bond (yield) volatility is rising, the volatility of risk assets (equity, commodities, high-yield bonds) was higher than that of investment-grade bonds throughout May. For this reason, risk-parity funds prioritized bond buying in their May rebalance. Of course, if bond volatility remains high in June, we believe risk-parity funds would likely sell some of these accumulated long bond positions
via ZeroHedge News http://bit.ly/2wCJ2hP Tyler Durden
This year, Sen. Rand Paul’s effort to balance the federal budget didn’t even get a floor vote in the Republican-controlled Senate.
Paul’s so-called “Pennies Plan” failed a procedural vote on Monday evening when only 22 senators voted in favor of a cloture motion that would have brought the bill to a final vote. A majority of Republicans and all Democrats voted against proceeding to a floor vote on the bill. It’s another sign that fiscal responsibility is all but dead in Congress, even as the national debt heads toward record highs and the budget deficit approaches $1 trillion this year.
“We teach our children that money doesn’t grow on trees, and then they grow up watching politicians pretend otherwise,” Paul said before the vote. “Meanwhile, our debt soars past $22 trillion, endangers our country, and artificially limits what our nation can achieve.”
Paul’s proposal called for cutting 2 percent from all federal line items for each of the next five years and would reduce federal spending by about $11 trillion over the next decade—even though spending would rise after the first five years. It’s an adaptation of the so-called “Penny Plan” that Paul has been pushing for several years, though he now says an additional penny in cuts for every federal dollar spent is necessary to get the budget to balance.
Indeed, the gap between what the federal government spends and what it takes in is growing wider. During the first seven months of the current fiscal year, which began in October 2018, the federal government ran a $531 billion deficit. That’s a 38 percent increase over the same period of time last year.
According to an analysis from the nonpartisan Committee for a Responsible Federal Budget, about 60 percent of this year’s expected deficit is the result of policies—mostly last year’s huge increase in spending that shattered those Obama-era budget caps—put in place by current legislators and signed by the current president.
The share of debt held by the public currently stands at about 78 percent of gross domestic product (GDP), a shorthand measure of a country’s economic output in a single year. The numbers are actually worse than that, because “debt held by the public” accounts for only $15.8 trillion of the $21 trillion national debt. The rest is held by parts of the federal government, such as the Social Security trust fund.
Alarm bells are starting to sound. The Government Accountability Office (GAO) warned in April that America’s current fiscal situation is “unsustainable.” The GAO estimates that the amount of debt held by the public is on track to surpass the all-time high of 106 percent of GDP within the next 13 to 20 years.
Meanwhile, Congress seems as apathetic as ever, if not more, about the growing pile of federal debt.
Most Republicans go back to their districts and say they support balanced budgets, Paul said on the Senate floor before the vote, “but they’re not really for balanced budgets if they vote for budgets that don’t balance.”
Paul also took aim at Democrats, who he accused of pushing for pie-in-the-sky spending plans that promise everything from free college tuition to greater government spending on health care and retirement entitlements. Those proposals will add trillions of dollars to the national debt or will require massive tax hikes, Paul said.
“These proposals are ludicrous,” said Paul. “We have so much debt from what we are already trying to give you, and these people want to double, triple, and quadruple that. It’s a recipe for disaster.”
Last year, Paul was able to get the balanced budget proposal to the Senate floor after striking a deal with Senate Majority Leader Mitch McConnell (R–Ky.) during an earlier budget impasse to get the bill on the floor. Paul called that vote a “litmus test for conservatives,” and most of them failed it as the measure went down in flames, 76 to 21.
Before Monday’s vote happened, Paul predicted that not a single Democrat would vote for his proposal and more than half the Republicans wouldn’t vote for it either.
He was right.
from Latest – Reason.com http://bit.ly/2XjhOsp
via IFTTT
The monetary system is a major component of the whole economic system. Despite that, today we take it for granted and don’t even ask ourselves how it works and if it is the best solution available or the correct way to manage things.
Even though it appears to be stable, history shows that monetary systems changed periodically in the last century (20–30 years on average).
The main difference between our current monetary system and previous monetary system is that today it is entirely based on FIAT Currency, in contrast to older monetary systems that were backed by gold.
That means that what we call money is a government-issued currency that has zero intrinsic value and is not backed by anything.
From 1971, this kind of system allows central banks to literally control the economy and opened a new chapter in the world monetary system.
In this article, I am going to briefly explain why 1971 changed everything and what are potential consequences of such a decision.
Since 1971 the world runs on FIAT currencies that are not gold-backed in any way. This changes everything.
Before digging into it, we have to review some history.
The Bretton Woods System and It’s Collapse
Towards the end of the World War II, peace was a real concern and it was clear that the world needed a new monetary system able to support the economy.
In fact, one of the major reason that led to World War II was the failure in dealing with economic problems after World War I.
Why It Was Needed And How It Worked
The Bretton Woods agreement was signed at a conference between allied nations in 1944.
Before the agreement, most countries followed the gold standard, meaning that each country guaranteed to redeem its currency into gold.
After Bretton Woods, countries agreed to exchange their currency for U.S. Dollars. Central banks committed to keep fixed exchange rates with the dollar while the U.S. committed to keep the parity between U.S. dollars and gold at 1/35 of an ounce of gold.
The dollar was backed by gold at 1/35 oz and foreign countries committed to keep fixed interest rates with the U.S. dollar
Why U.S. dollars? In those years U.S. held two-thirds of the world’s gold reserves and after the war was obviously the most influential player among nations.
This put the U.S. into a dominant position and Bretton Woods paved the way for the shift from the gold standard to the U.S. dollar standard.
The Collapse Of The System
The Bretton Wood system worked for a while and allowed for economic growth but unfortunately, a series of imbalances brought the system to its end in a matter of three decades from its inception.
Towards the 70’s United States were facing a period of stagflation, a situation where you have high inflation coupled with a recession, something very bad for the economy.
In the attempt of resolving the situation the U.S. started devaluing the dollar and kept running deficits to fund various projects.
The parity between dollar and gold was the cardinal element of the Bretton Wood system after it changed, the whole monetary agreement soon after collapsed.
Every country started quickly to redeem their devaluing dollars for gold generating a run on the U.S. gold reserves.
In response, on 15 August 1971 broke up the Bretton Woods agreement, ending the convertibility of the dollar in gold.
1971 — A New Chapter For The World
What replaced Bretton Woods and how things changed since then?
Since Nixon took the entire world out of gold in 1971, the world began this experiment of a full FIAT monetary system, backed by nothing.
Nobody knows how things will play out in the end, but the fact that this system has been running for almost 50 years now, that historically FIAT system had a 100% failure rate and that bigger and bigger imbalances are being created are factors worth considering.
To put things in perspective, once that currency is no longer commodity-backed, central banks can create as much currency as they want.
Even though this comes in handy when there is the need to fight a recession, it seems that it went out of control.
We now have a full FIAT monetary system and central banks can create as much currency as they want
This is a problem for two reasons:
The purchasing power of the currency gets progressively wiped out
The monetary expansion creates a high degree of distortion in the economy
Purchasing Power of the Currency
How do you feel when you look at this chart?
This visual representation helps to clearly understand what money printing and devaluation of currency really mean in everyday life.
Although it speaks by itself, take a moment to realize that the dollar lost 95% of its purchasing power in just 100 years.
As money printing progresses, this situation can only deteriorate and it is a problem for the individuals because it makes virtually impossible to save money.
You can’t just save you are bound to invest at least to keep the purchasing power. Giving the overall decrease in asset returns, it also forces you to go on riskier investments to have some acceptable returns.
Distortion in the Economy
This might actually be the real problem because money (or currency today) is one of the most important variables in the economic system and if it gets manipulated this doesn’t come without consequences.
To get an idea of the massive manipulation of the entire economy that is going on, start by assessing the expansion of the monetary base:
As you can see, the quantity of currency almost quintupled in a matter of a single decade and this was all currency created in order to keep the economy going.
This is crazy and while it helped to postpone a slowdown in the economy, it fostered a huge debt assumption that sooner or later will result in a burden for the economy.
The problem with this monetary system is that can’t balance the forces of the free market. The gold standard had a huge advantage over it because it was self-balancing since the overall amount of money was fixed.
Without a conscious effort to limit excesses, greater and greater imbalances start to appear, cracks start to show up and the system is under threat.
This also caused other distortions, like the push to stock market valuations that are now in bubble territory.
Take a look at this chart and realize by yourself that there is no chance that is is a coincidence. There is almost a perfect correlation between expanding the monetary base and increasing stock prices.
You can also see that as monetary policy tried to start to raise interest rates, uncertainties on the market promptly showed up and now the FED already changed its strategy.
We might see soon a new monetary expansion, the problem is that this time it would happen before a crisis and it leaves us with a huge question:
What to do then when we enter the real crisis?
Conclusion
Without any connection with a fixed quantity of gold (more in general, a “fixed quantity”), the monetary system currently has no limits for currency creation.
The fact that financial crisis is getting bigger and bigger and levels of debtare getting higher and higher is a direct consequence of money printing.
Today we find ourself with an economy that is slowing down, levels of debt never seen before, frighteningly high financial markets valuations and LESS TOOLS TO FIGHT THE NEXT CRISIS
I am not saying that money printing and fighting a recession is a bad thing by itself, but without any control, it is a real problem because it leads to the destruction of purchasing power and the generation of distortions in the economy and markets.
The point is that the economic crisis has a fundamental rebalancing role in the economy and prevent them to work doesn’t come without consequences.
It’s understandable that governments and policymakers don’t want to have a crisis while they are in charge, but forcing the economy through monetary policy to never slow down brings on the risk of afull-blown financial disaster. Something never is seen before that counts for everything that didn’t take place until today.
via ZeroHedge News http://bit.ly/30YKpFA Tyler Durden
Having survived the day’s bloodbath in US tech stocks, cryptos are crashing in the early Asian session, apparently playing catch-down to the day’s de-risking.
With Bitcoin back below $8000 and oddly attracted lower to Nasdaq’s collapse…
However, as CoinTelegraph reports,macro strategists remain bullish, despite the recent overnight crashes (many of which appear to synchronize around the Korean morning). The following factors have been mentioned in recent weeks as potential catalysts for an increase in bitcoin’s price:
The entrance of major financial institutions such as Fidelity, Etrade and TD Ameritrade.
Scheduled block reward halving of bitcoin in May 2020.
A noticeable improvement in the infrastructure supporting the asset class.
Rising institutional demand, triggering the recovery of retail interest.
Technical analysts in the crypto sector, such as Josh Rager and Cred, foresee $8,200 as a crucial support level that could prevent the asset from dropping to the $7,000 region once again.
The last time bitcoin’s price dropped below $7,000 was in a flash crash on March 17, when it fell to $6,400, triggered by the unexpected sell-off of 5,000 BTC on Bitstamp, which then led to the mass liquidation of contracts on BitMEX.
Bitcoin has since demonstrated strong momentum, with signs of “fear of missing out” (FOMO) among investors, creating a vertical rally to the upside.
Cred told Cointelegraph in an interview that, as long as the $8,200 support level is defended, a rise to $9,600 remains a realistic target and a high time frame resistance level.
“I think the vertical rally is more a sign of FOMO and disbelief as opposed to something to be inherently concerned about. I’m looking at the $9600 area as the next high time frame resistance area if price trades higher. Closer to current price (which is pulling back at the time of writing), I think losing $8200 — the level price broke out from and thus nearest support — will take us to the $7300 area. Mid $6000s remains the best and final area for longs. Losing that level and staying below $6000s would shift my bias to bearish.”
In the past month, within a 30-day span, the price of bitcoin has increased from $5,322 to over $8,700 by a staggering 54%.
Still, based on the historical performance of bitcoin and its tendency to see a major correction in the tune of 30% to 40% following a large spike in price, Cred noted that a 30% drop in the future remains a possibility.
Throughout the past three years, bitcoin has generally shown sustainable momentum, especially from 2016 to late 2017. However, it was regularly prone to relatively corrections in short time frames.
“In 2017 and years before that, Bitcoin would regularly correct circa 30% before continuing higher. I think we will see something similar, but trying to short this market presumptively is a bad play. Any significant pullback above the old $6000 floor is a dip I’m interested in buying, the closer to $6000 the better,” Cred said.
via ZeroHedge News http://bit.ly/2WHpGXw Tyler Durden
It’s starting to look a lot like Christmas, at least in markets. While Federal Reserve officials are singing in chorus that the economy is in good shape, just as they did in December, financial markets are saying otherwise. As U.S. President Donald Trump’s administration keeps throwing wrenches into the works of the economy, the markets may sell off further, forcing the Fed to change course yet again.
Recall that in December, the triple concerns about the trade war, a China slowdown and Fed policy error sent the markets reeling. These days, the trade tension has escalated and the Chinese economy is suffering from a double-dip following a recovery earlier this year. The only saving grace is that the Fed has shifted from tightening to wait-and-see. The risk, however, is that the central bank may react too slowly as the market and economy deteriorate.
Five months ago, legendary investor Stanley Druckenmiller urged the Fed not to raise rates, citing the weakness in cyclically sensitive sectors such as automakers, banks and industrial companies as a signal that something is “not right” in the economy. Today, those sectors are moving in the wrong direction again.
Goldman Sachs’ gauge of financial conditions tightened last month at a rate similar to what it did in December. While the current level is still not severe enough for the Fed to take action right away, the ongoing trade tension means that things may get worse.
Trump’s threat to impose tariffs on Mexican exports because of immigration issues means he is using U.S. imports as a weapon for both trade and political goals. Even if the latest tariffs are called off at the last minute, the threat of them won’t go unnoticed in Beijing. China may stretch the trade war out until after the 2020 elections, hoping to have someone more reasonable to deal with. Already, Beijing is laying the groundwork for counter-attacks, from blacklisting “unreliable” entities to potentially restricting rare earth exports.
It’s difficult for the Fed to cut rates preemptively based on a judgment of what Trump may tweet next. After all, data Friday showed that consumer spending and inflation were recovering before the trade tensions escalated in May.
Without a helping hand from the central bank, risky assets are likely to decline further until they hit the strike price of a Fed Put, or perhaps a Trump put, if there is one.
via ZeroHedge News http://bit.ly/2Xp6mLU Tyler Durden
