Leaked Photo Of Shackled Illegals Shows “Mass Trial” After DOJ Enacts “Zero Tolerance” Policy

A photo taken from inside a Pecos, Texas immigration court shows dozens of illegal immigrants in orange jumpsuits, standing as they await their fate in a “mass trial” designed to expedite their deportation.

The proceedings, covered by reporter Debbie Nathan of The Intercept, have sparked controversy over the Trump administration’s new “zero tolerance” policy which has led to separated families amid a report that the Department of Health and Human Services has lost track of 1,475 unaccompanied migrant children who had been placed with sponsors.

In short, prospective migrants who choose to circumvent America’s immigration laws have to weigh the risk of losing their children against the dangers of remaining in their country of origin

Each day was the same. The courtroom was filled with exhausted immigrants, with hands cuffed and shackled to their waists, their legs in chains — dozens of defendants stumbling, shuffling, clanking, and clanging in tandem. “Raise your right hand,” Morgan commanded as a translator spoke Spanish into their headphones. The shackled defendants struggled to comply.

The judge’s job is to determine if defendants understand the criminal charges against them and whether they feel they have had adequate legal representation. If they say they want to plead guilty, he asks whether they are doing so of their own free will. After that, they can make a statement — an “allocution” — and then the judge sentences them. –The Intercept

Last month Attorney General Jeff Sessions ordered a “zero tolerance” policy in which federal prosecutors are to criminally charge every single immigrant who enters the country illegally – expanding a program called Operation Streamline introduced in 2005 under the Obama administration, and facilitated the aforementioned mass trials currently in use. 

‘Today, we are here to send a message to the world: we are not going to let this country be overwhelmed… If you cross this border unlawfully, then we will prosecute you,’ said Sessions.

50,924 illegal border crossers were detained in April alone, which included 4,314 unaccompanied minors and 9,647 family units, according to data from the US Customs and Border Patrol. 

Reporting on the migrants has taken a toll on The Intercept‘s Nathan, who told Chron.com “It’s horrible, I’ve been pretty broken by all of this,” and that witnessing mass trials in Brownsville and El Paso were “some of the most upsetting things she’s witnessed during her career.” 

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Traders Add To Record Bond Shorts As Treasury Yield Curve Collapse Continues

On a week that saw Italian bond yields spike by the most on record sparking one of the biggest safe-haven bids for US Treasury bonds in years, the massively one-side shipwreck of Treasury short positions became even more one-sided-er as speculators ignored the collapsing yield curve, tumbling global economic data, and rising risk, adding to their already record long-date duration shorts…

After spiking above the critical 3.00% level the previous week, to its highest level since June 2011 – spurred by what in hindsight appears to be major rate-lock buying amid huge IG issuance; 10Y Treasury yields plunged almost 40bps in 6 days as Italian risk sparked a safe-haven bid in bods – the most dramatic rally since Brexit (June 2016).

This plunge in yields was even larger than the one that occurred in February during the XIV collapse (albeit over a slightly longer period of time)…24bps in 2 days

 

However, while June 2016’s bid for bonds sparked a major short squeeze in aggregate Treasury futures positioning, the last two weeks of massive yield compression have seen speculators adding to their already record net short positions – seemingly immune to such things as margin calls…

Levered investors (e.g. hedge funds) were the big drivers of the short as asset managers added to their net Treasury longs…

 

Interestingly, as the yield curve collapsed during the same two-week period to new 11-year flats…

Speculators added to their longest-duration shorts dramatically (both 30Y and the Ultras) while 2Y specs moved to a net bullish position (the most bullishly positioned since June 2016 – Brexit).

 

But as specs piled into long-dated duration shorts, they also unwound rate-hike bets dramatically – cutting sizes by almost half a trillion notional dollars in the last 3 weeks

 

And furthermore, as futures speculators added sheep-like to their record shorts, Treasury ETFs saw a dramatic surge in inflows as investors sought safe harbor…

“It’s definitely a flight to safety,” said Aaron Clark, portfolio manager at Boston-based GW&K Investment Management. “Some memories are fresh with Greece and the issues that Europe was having in general, and the U.S. is always a sort of quality trade in scenarios like that.”

But it is not just “flight to quality” concerns that are likely to attract flows into US Treasuries. Relative to Bunds, 10Y UST notes have never been cheaper…

And as the global economy reverses course from “synchronous recovery’ to ‘synchronous disappointment’, it appeasr the yield cuvr was right after all…

 

And finally, DoubleLine’s Jeff Gundlach’s favorite bond yield indicator is signaling more room to fall for 10Y still…

 

One wonders just what it will take to rattle the record Treasury Bond shorts?

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Traveling Transition Road: 123 Revelations From May, 2018

Authored by Doug “Uncola” Lynn via TheTollOnline.com,

For the previously unstated purpose of oppugning internet censorship, and the fact online search engines are becoming less of a trustworthy source when attempting to research past articles, a catalog of links was started by this blogger on Mayday 2018; and based upon the belief that transitions are roads to revelations.

Keep in mind the following May denouements occurred in addition to those previously delineated during the first “Seven Days in May”.

The ensuing disclosures occurred between the dates of May 8-31, 2018 and have been organized into categories for the reader’s convenience:

The American Experiment

1.) In early May, a 108 year old American tradition officially ended as the Boy Scouts of America succumbed to political correctness.

2.) A report was released showing that Illegal immigration surged 230% on southwest borderwith 75% of apprehensions being “catch-and-release”.

3.) The White House claimed apprehensions of illegal immigrants were up 50,000 for the second month in a row.

4.)  It was revealed that California’s resistance to the Trump administration included at least 32 lawsuits, including everything from health care and DACA to the border wall.

5.) Trump’s plan to cut funding to Planned Parenthood was announced.

6.)  President Trump’s poll numbers improved in spite of 90% negative coverage in the media.  In response to the apparent bias, the president threatened to “take away credentials” from TV reporters.

7.)  Because of the Tweets of Rapper, Kanye West, a small poll sampling showed support for Trump among black men doubled in one week, before radio stations began to boycott the music of Kanye West.

8.) The 44th House Republican announced plans forretirement prior to the midterms.

9.) Trump and Congress made significant progress on agenda items in spite of an obvious media blackout.

10.)  President Trump announced his intention to pardon conservative filmmaker and pundit, Dinesh D’Souza, who was convicted of a campaign finance violation by President Obama’s justice department.  Many considered the felony conviction to have been politically motivated and in response to D’Souza’s earlier film that criticized the former president.  In his statement to the press, Trump said the filmmaker was, indeed, “treated very unfairly by our government”.

 

Capitalism & Marxism

11.) Oil hit a 2018 high over $70/barrel in early May and rose to $80/barrel a few weeks later as gas prices hit $5 a gallon in New York City.

12.) Housing confidence hit a new high as home prices skyrocketed.

13.) Americans gave Trump credit for good economy, according to a CBS News Nation Tracker poll.

14.) In an April Rasmussen Poll of 1,000 U.S. voters posted on the Drudge Report on May 2, 2018:  Forty-six percent favored government guaranteed jobs for all.

15.) A Los Angeles Antifa group hung Trump in effigy and called for revolution against the capitalist state.

16.) Hungarian-American billionaire, George Soros, dropped $1.5 million in San Diego for a far-left district attorney candidate.

17.) Four socialist-backed candidates won Pennsylvania legislative primaries.

18.) Millennial candidates embraced Socialism, as Venezuela choked on it.

19.) According to a study released by the United Way ALICE Project, almost half of US families can’t afford basics like rent and food.

20.) Mortgage rates have been rising at a pace not seen in almost 50 years.

21.) The retailer Sears announced more store closings as dying shopping malls continued to die; thus “wreaking havoc on suburban America”.

 

Global Geopolitics

22.) To the dismay of globalists worldwide, President Donald Trump pulled out of the Iran Nuclear Accord.

23.) As the Trump administration cracked down on Tehran, Iran plotted with U.S. allies to skirt Trump’s new sanctions causing some to anticipate a forthcoming global showdown.

24.) President Trump welcomed home three 3 Americans freed by North Korea.

25.) After Trump’s June 7th, 2018 historic summit was set with North Korea, the Norks soon backed out for fear of becoming Muammar Gaddafi. Then Trump called off the summit after one of North Korea’s Foreign Ministry official’s called Vice President Mike Pence a political dummy.   As of this writing, it now appears the summit is back on for a later date in June.

26.) Democratic Senator and 2020 presidential hopeful, Elizabeth Warren, lamented President Donald Trump’s lack of strategy regarding North Korea and, instead, praised communist China’s “whole-of-government” strategy.

27.) NBC News reported on CIA claims that North Korea wouldn’t denuclearize but might, instead, “open a burger joint”. There was speculation the CIA leaked the report to the media in order to undermine Trump’s summit with the Norks.

28.) Ivanka Trump and Jared Kushner traveled to Israel for the opening of the new US embassy in Jerusalem.

29.) American-Hungarian globalist, George Soros, funded a campaign to nullify the Brexit vote of which he considered an example of “territorial disintegration”, and “an immensely damaging process, harmful to both sides”.

30.) The European Union vowed economic retaliation in response to Trump’s “unacceptable” steel and aluminum tariffs on the EU, Canada, and Mexico.  Canada’s Justin Trudeau also condemned the measure as “totally unacceptable” and joined Mexico in dollar-for-dollar retaliatory tariffs on various U.S. products.

 

Sex Crimes

31.) Pursuant to the #MeToo reckoning, New York state’s top prosecutor, Eric Schneiderman, resigned after being accused of physically assaulting four women.

32.) John McCain (R-AZ) admitted giving the phony Russian “Golden Shower” dossier to former FBI director James Comey.  McCain said: “Duty demanded I do it”.

33.) Disgraced movie mogul Harvey Weinstein was indicted in New York on multiple counts of rape and criminal sex acts. If found guilty, the Oscar winner could find himself behind bars for up to 25-years.

 

The President & the Porn Star

34.) Stormy Daniels’ attorney, Michael Avenatti, claimed that President Donald Trump’s personal lawyer Michael Cohen received $500,000 from a company controlled by a Russian oligarch which deposited the funds into an account for a company also used to pay off the adult film actress.  But it was the wrong Michael Cohen, and it remained “a mystery how the financial records of a completely separate Michael Cohen ended up in the “tranche of documents provided to Avenatti.”

35.) Somehow Stormy Daniels’ attorney, Michael Avenatti, obtained the e-mail records of Trump’s personal attorney, Michael Cohen, and used them to counter a claim made by Trump’s most recent lawyer, Rudy Giuliani.

36.) Questions were raised as to who was paying Michael Avenatti.

37.) Michael Avenatti threatened a defamation suit against the reporters at The Daily Caller News Foundation for accurately writing about Avenatti’s shady legal and business history.

38.) It was reported that CNN, MSNBC had Given Stormy Daniels’ Lawyer Michael Avenatti $175 Million in earned media.

39.) (Perhaps, in part, due to the excessive coverage of Stormy Daniels?)  CNN’s primetime audience has collapsed by 25% according to Nielsen Media Research.

40.) Michael Cohen’s attorneys accused Stormy Daniel’s attorney, Michael Avenatti, of professional misconduct.

41.) Michael Avenatti was ordered to pay a $10 million fine after he failed to pay $2 million to a former colleague.

42.) West Hollywood, Californicatia awarded porn star, Stormy Daniels, a key to the city for her consensual sex with president Donald Trump and then later publically punishing him for the act.

43.) It was reported that the Mayor who gave Stormy Daniels the key to his city had actually settled $500,000 sexual harassment claim in 2016.

44.) A U.S. District Judge instructed Michael Avenatti to end his “publicity tour” before the attorney could participate in Michael Cohen’s federal case.

 

The President, Lawyers, Spies, & Media Lies

45.) In response to some early and erroneous comments made Trump’s newly conscripted personal attorney, Rudy Giuliani, in early May, Trump said “great guy” Rudy would soon get his facts straight before Giuliani did, indeed, clarify his earlier statements.

46.) A federal judge overseeing Trump’s former campaign manager, Paul Manafort’s, case accused Robert Mueller’s team of lying and trying to target Trump before another U.S. district court judge rejected Manafort’s bid to dismiss Mueller indictment.

47.) Another judge denied Special Counsel Robert Mueller’s request to delay the first court hearing in a criminal case charging three Russian companies and 13 Russian citizens with using social media and other means to foment strife among Americans in advance of the 2016 U.S. presidential election.

48.) Paul Manafort accused the Mueller team of leaking but Mueller’s office opposed any hearing on leaks.

49.) It was revealed that Robert Mueller was tainted by a conflict of interest with the very Russian Oligarch who Trump was accused of collusion with previously.

50.) Two colleagues contradicted former CIA Director John Brennan’s lie that the bogus Russian “Golden Shower” dossier on Trump was not part of the official Intelligence Community Assessment on Russian interference in the 2016 election.

51.) Special Counsel Robert Mueller rejected President Trump’s request to answer questions in writing.

52.) Rudy Giuliani claimed that Robert Mueller admitted he couldn’t legally indict President Trump.

53.) Evidence surfaced that the FBI spied on Republican Presidential Candidate Donald Trump through a secret intelligence source and the Department of Justice covered up the misdeeds. Of course, the New York Times, said the spy was just an informant; and the Washington Post said the “informant” was to “protect Trump”.

54.) Inspector General, Michael Horowitz, found that the Obama’s FBI and DOJ broke the law in the Hillary Clinton e-mail probe and referred to federal prosecutor, John Huber, for criminal charges.

55.) Vice President Mike Pence called for an end to Special Counsel Robert Mueller’s year-long investigation.

56.) Special counsel Mueller began to probe donations with foreign connections to Trump’s presidential inauguration.

57.) Under pressure by congress, Mueller released an unredacted memo which revealed the scope of the Russia probe.  However, the memorandum, written by Deputy Attorney General Rod Rosenstein, was filed under seal so no one could read it.

58.) In an attempt to minimize any blowback from the forthcoming Inspector General’s report, FBI Officials admitted they spied on Donald Trump’s Presidential Campaign by means of a secret surveillance initiative code named “Crossfire Hurricane”.  Of course, instead of factually reporting on what the President of the United States has called the biggest American political scandal since Watergate, the New York Times continued to spin, enable, and downplay the government’s crimes as “missteps”, congressional and presidential allegations of “bias”, and “sound-bite-sized accusations” of “conspiracy” .

59.) In spite of the New York Times’ Error-Ridden Defense Of FBI Spying On Trump Campaign: The spying was acknowledged; as was the fear of the forthcoming Inspector General’s report and the admitted lack of evidence of Russian collusion.  The multiple, and seemingly intentional, errors in the Times’ article appeared to have been used to downplay not only the crimes perpetrated by the FBI and DoJ, but, ultimately, those of Hillary Clinton and perhaps, even, Former President Barack Hussein Obama.  The National Review’s, Andrew McCarthy put it this way :

The scandal is that the FBI, lacking the incriminating evidence needed to justify opening a criminal investigation of the Trump campaign, decided to open a counterintelligence investigation. With the blessing of the Obama White House, they took the powers that enable our government to spy on foreign adversaries and used them to spy on Americans — Americans who just happened to be their political adversaries.

The Times averts its eyes from this point — although if a Republican administration tried this sort of thing on a Democratic candidate, it would be the only point.

60.) Trump complained that the DoJ was trying to frame him, but Rudy Giuliani admitted they didn’t know if that was true.

61.) Former Director of National Intelligence, James Clapper, claimed the FBI spying on Donald Trump’s campaign was “a good thing” and Trump saying it was bigger than Watergate was “hyperbole”.

Former Director of National Intelligence James Clapper

62.) As former Director of National Intelligence, James Clapper, peddled his new book “Facts and Fears” on how Russia definitely hacked the 2016 Presidential Election, the Wall Street Journal asked: “Why does a former intelligence chief make claims he can’t back up?”.

63.) The Trump campaign mole who was activated in the FBI spy-op was outed as Stefan Halper, a 73-year-old University of Cambridge professor who was also a CIA and MI6 asset, while some claimed there was more than one mole in Trump’s campaign.

64.) In response to Trump’s ordering a DoJ investigation into the deep state’s subversive infiltration of his 2016 Presidential Campaign, former CIA Director John Brennan appealed to House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell to stop the investigation.

65.) Trump returned volley by Tweeting that former CIA Director John Brennan was a “disgrace”who was “largely responsible for the destruction of American’s faith in the Intelligence Community and in some people at the top of the FBI”.

66.) It was revealed that the mole in Trump’s campaign, Steven Halper, was paid over $1 million by the Obama administration including $411,575 that was made in two payments, and had a start date of September 26, 2016.  That date was three days after a Yahoo News article by Michael Isikoff on Trump aide, Carter Page, that the FBI later used as supporting evidence in a FISA warrant application for Page.

67.) Former Trump aide, Michael Caputo, revealed a second spy, claiming to be from the NSA, may have attempted to infiltrate Trump’s 2016 Presidential Campaign by offering Hillary Clinton’s missing e-mails.

68.) Senator Charles Grassley (R-IA) ordered the DoJ turn over unredacted text messages between FBI lovers Peter Strzok and Lisa Page because they may actually indicate the Crossfire Hurricane Spygate fiasco was run by Obama’s White House.  Grassley’s deadline was June 6, 2018.

69.) FBI agents expressed their desire for Congress to issue them subpoenas so they could reveal the crimes of former FBI Director James Comey and former Deputy FBI Director Andrew McCabe.

70.) As political leftists, and their mockingbird media, continued to accuse President Trump of interfering with their coup to replace him, the Wall Street Journal continued to inform Americans about the REAL constitutional crisis of SPYGATE.

71.) As President Donald Trump lamented the “young and beautiful lives ruined” by the phony Russian scandal, former Trump campaign aide, Carter Page, described to the New York Timeshow his life was indeed ruined.

72.) Trump accused Mueller’s team of meddling in the midterm elections and the democrats of collusion.

73.) Florida Senator, Marco Rubio, asserted the FBI was not spying on Trump, but the agents were, instead, “doing their jobs to protect America”.

74.) In “stark contrast to Trump’s public assertions”, and in apparent accord with James Clapper’s previous statements, South Carolina Republican, Trey Gowdy, claimed the “FBI acted properly” and denied any evidence that the “FBI planted spies” in Trump’s 2016 Presidential Campaign.

75.) The New York Times claimed Attorney General, Jeff Sessions, was a key witness for Special Counsel Robert Mueller’s investigation of President Trump for obstruction of justice.

76.) Trump Tweeted that he wished “he didn’t pick Sessions as attorney general”.

77.) It was reported that Special Counsel, Robert Mueller, ran up a $16 million tab in the Trump-Russia Investigation, and has budgeted another $10 million for 2019.

78.) President Donald Trump said he didn’t fire FBI Director James Comey over the Russia probe despite previously citing that as the reason, as his lawyer Rudy Giuliani called the Mueller investigation a “lynching mob”.

79.) Investigators from the District of Columbia U.S. Attorney’s Office interviewed former FBI director James Comey as part of a probe into whether his deputy, Andrew McCabe, broke the law by lying to federal agents.

 

Guns R Us

80.) The Trump administration announced plans to provide records on the Obama administration’s gun-smuggling scheme known as Fast & Furious.

81.) During the 2018 Global Week of Action Against Gun Violence held May 7-14, 2018, the United Nations pushed for international gun control.

82.) On May 16, 2018 a school resource officer confronted a gunman at Dixon High School in Illinois and “Countless lives were saved”.

83.) Two days after the Dixon, IL shooting gunfire erupted on one of Trump’s golf courses in Florida as well as at a high school in Santa Fe, Texas; where multiple people were killed.  According to CNN, it was the 22nd school shooting this year.

84.) Rep. Eric Swalwell, D-Calif., and ex-prosecutor, wrote an op-ed in USA today entitled “Ban assault weapons, buy them back, go after resisters”.

85.) Obama’s Former Education Secretary, Arne Duncan, Tweeted the radical idea that parents should pull their children out of school until elected officials pass stricter gun control laws.

86.) David Hogg, the photogenic boy wonder who became famous prior to the funerals for the victims of the Parkland Florida school shooting, demanded $1 million from the grocery store chain and a pledge of ideological fealty to the gun-control movement.   In response to the “Die-in” organized by Hogg, the grocery chain suspended all political donations.

87.) In Oklahoma City, lives were saved on May 24, 2018 when a good guy with a gun killed a bad guy with a gun who had just murdered two females.

88.) Former Congressman and presidential candidate Ron Paul claimed that “Senators Marco Rubio (R-FL) and Lindsey Graham (R-SC) were teaming up with Dianne Feinstein (D-CA) to ram through one of the “worst nationwide gun confiscation schemes ever devised”.

The gun confiscation bill, according to Paul, is designed to disarm Americans without any due process. The senators are using the recent tragic shooting in Texas as the impetus behind the law—in spite of the fact that this law would not have prevented the shooting at all.

Big Brother Cometh

89.) LenCo Armored Vehicles of Pittsfield Massachusetts expanded production to meet U.S. law enforcement demand for military-style armored vehicles.

90.) An internal video by GOOGLE was revealed that demonstrated how total data collection could reshape society.  The total data collection would be obtained through the exponential growth of sensor-enabled objects.

91.) GOOGLE employees began to quit in protest  over the company’s decision to develop a controversial drone program for the Pentagon.

92.) Even after the high ratings success of Rossanne, ABC boss Channing Dungey, no doubt upon pressure from his globalist masters, decided to censor the show by making it less politicalFortunately for the network, however, the show was cancelled due to racism after Roseanne Barr sent out a Tweet conflating former Obama advisor, Valerie Jarrett, to the Muslim Brotherhood and Planet of the Apes. Barr apologized for her comments and, in spite of widespread public support for ABC’s swift retaliation to her thoughtcrime, there were those who questioned the doublethink of the Hollywood left.

93.) The day after Rosanne Barr was fired from ABC, comedian and host of the TBS cable network’s “Full Frontal”, Samantha Bee, called Ivanka Trump a “feckless cunt” in her show’s monologue; for which she later apologized.  As of this writing, Bee still has her show and, in fact, is scheduled to be honored for her work by the Television Academy for “advancing social change”.

94.) The Pope legitimized homosexuality as being God ordained.

95.) A former advisor to both President Bill Clinton and later Hillary Clinton claimed that Robert Mueller must be stopped in order to protect us all.

96.) A columnist and practicing attorney from Pittsburgh, Pennsylvania wrote about how the FBI and CIA restarted the Cold War to protect themselves.

97.) Harvard University announced that Hillary Clinton would receive their prestigious Radcliffe Medal for her “transformative impact on society”.

98.) Democrats once again promised to impeach Trump should they win the House this fall.

99.) In the wake of FBI’s unprecedented and illegal nullification of President Donald Trump’s attorney-client privilege by raiding the offices of Trump’s personal attorney Michael Cohen, Robert Mueller successfully extorted cooperation from Cohen’s business partner, Evgeny Freidman.

100.) In response to the recent revelations of former FBI Director James Comey’s illegal actions, he expressed grave concerns for Republicans and their grandchildren.

101.) Facebook was accused of conductinmass surveillance through its apps.

102.) A federal judge ruled that Trump could not block users on his Twitter account. This, in spite of Twitter’s censorship of the independent media.

103.) Donald Trump’s 2020 campaign manager, Brad Parscale, along with Republican National Committee (RNC) Chairwoman Ronna McDaniel, have written a letter calling for the CEOs of Facebook and Twitter to address concerns over conservative censorship ahead of the 2020 electionas well as a call for transparency.

104.) United States Secretary of Defense, James Mattis, told air force graduates to prepare for war.

105.) Former President, and community activist, Barack Obama, along with his wife Michelle, contracted with Netflix, now the most valuable media company in the worldto produce films and series in order to train a new generation of young activists. Although Obama’s former National Security Agency advisor, Susan Rice, was appointed to the Netflix board of directors in March, 2018, and it was Obama’s former bundler and Ambassador to the Bahamas who helped the Obamas score the Netflix dealthe company has assured the public that the Obama productions willnot have a political slant, while, at the same time admitting: “it’s hard to argue that there’s not a left lean to the creative community.”

106.) The reporter who was spied upon by the Obama administrationpresented eight signs that the Obama administration also misused U.S. law enforcement and intelligence agencies in order tconduct a counterintelligence operation against its political opposition.

107.) Former Director of National Intelligence James Clapper called his spying on Trump “Benign Information Gathering” before claiming that Donald Trump was “Orwellian”.

108.) Hillary Clinton declared her desire to become the CEO of Facebook because the company “is the biggest news platform in the world” and she believes “it really is critical to our democracy that people get accurate information on which to make decisions”.

109.) Whistleblower Chelsea Manning warned that mass surveillance by government agencies is increasingespecially in the United States.

110.) The New York Times made up a quote from a White House officialand then doubled-down again on the lie after Trump called them out.  When the audio was later released it showed the quote, was indeed, fake news.

111.) The New York Post reported on how President Obama’s Spygate was looking a lot like Watergate.

112.) The president’s son and advisor, Donald Trump Jr., claimed conservatives were being shadow banned on Instagram.

113.) Facebook ad censors demanded the home address and driver’s license of a conservative author who wrote an Obama exposé book.

114.) American Islamic leader and black nationalist, Louis Farrakhan, claimed that “Mr. Trump is destroying every enemy that was an enemy of our rise”.

115.) Former president Obama stated “our democracy and economy won’t survive if America stays divided”.

116.) Tommy Robinson, the founder of the English Defense League, was jailed for 13 months for contempt of court for publically stating nothing that would have unfairly prejudiced the trial of Islamic pedophiles whom he was reporting on within the public domain.

117.) In a race to roll out 5G service, wireless companies in the U.S. announced plans to install 300,000 new antennas, or roughly equaling the total number of cell towers built over the past three decades.  The plans have caused “outrage” and “alarm” in response to antennas “going up around homes” as well as health concerns.

118.) It was revealed that prosecutors were to get “about 1 million items from phones”pursuant to the criminal investigation of President Trump’s former personal attorney, Michael Cohen.

119.) Right out of a “technocratic nightmare”, it was revealed that Amazon, Inc. was working with law enforcement to deploy invasive facial recognition technology.

120.) A secret Transportation Security Administration (TSA) watchlist was revealed by the New York Times, comprised of Americans who fight back against the pointless groping by “one of the most incompetent agencies on earth”.

121.) A veteran Police Officer in Florida was suspended and required to undergo “sensitivity training” for making a disparaging comment on social media about gun control advocate, David Hogg.

122.) Google listed “Nazism” as an “ideology” of the Republican Party in California.

123.) Democrats in New Jersey overrode President Trump’s repeal of the Obamacare mandate, thus forcing 78% of New Jersey households making less than $50,000 per year “to purchase health care whether they want it or not”.

Conclusion

Every journey begins with a single step, and sketches are drawn via one impression upon another. Outlines are adumbrated as silhouettes appear increasingly recognizable. Like dots on a matrix, patterns emerge and trends become apparent.

In other words, time reveals everything.

In the above transitional revelations, and according to this blogger, 40 could be considered making America (and/or the world) great again, with 8 as being neutral or questionable, and 75 as representing the ever-accelerating slide into Orwellian hell.  Of course, from the view of any political leftist, these numbers would be roughly inverted. This is because, in today’s world, heroescriminalsfactscausation, and outcomes, are defined in the minds of the beholders.

Nonetheless, the journey continues.

So whether we rise to surmount lofty mountain peaks, travel through narrow passageways and broad valleys, or descend upon the inevitable road to ruin, fasten your seat belts. It’s June.

via RSS https://ift.tt/2HgfbPm Tyler Durden

In Parting Interview, Bill Dudley Admits Why The Fed Got It All Wrong

While EU’s Jean-Claude Juncker admits to “lying, when it’s serious,” it appears America’s elites have a simple threshold for crossing the dangerous line into truth-saying – whether they are employed by the state, or not.

In the last few years for instance, since leaving office:

Former Fed Chair Alan Greenspan has confidently admitted that “Ron Paul is right, Gold is money” – the only real money – despite dismissing such a blasphemous phrase during his tenure at The Eccles Building.

“…today, there is a widespread view that the 19th century gold standard didn’t work. I think that’s like wearing the wrong size shoes and saying the shoes are uncomfortable! It wasn’t the gold standard that failed; it was politics. “

Of course, Greenspan ignores his own role in the creation of the boom-bust cycle which has doomed the world to series of ever more destructive bubbles and ultimately, hyperinflation which will likely be unlashed once the helicopter money inevitably arrives. In retrospect, the 90-year-old, who clearly is looking forward not backward, has a simple solution: the gold standard.

If we went back on the gold standard and we adhered to the actual structure of the gold standard as it exited prior to 1913, we’d be fine.  Remember that the period 1870 to 1913 was one of the most aggressive periods economically that we’ve had in the United States, and that was a golden period of the gold standard.  I’m known as a gold bug and everyone laughs at me, but why do central banks own gold now?

Greenspan was not alone.

Just a year or two after leaving office amid soaring stock markets, plunging volatility, and collapsing yield curves, former Fed head Ben Bernanke proclaimed that “there will be no interest rate normalization in his lifetime.”

Hardly fitting with a) his projections during his tenure running the world’s most powerful central bank, b) his own proclamations throughout his reign that The Fed knows what it is doing and will normalize rates ‘soon’; and most importantly c) the current ‘confident’ refrain from The Fed that rate-hike normalization.

Not exactly a great track record anyway.

And now there is Bill Dudley.

The outgoing New York Fed President sat down with Liberty Street Economics’ editor Trevor Delaney for his exit interview… and  – whether by intent or accident – Dudley let’s slip a couple of ‘truths’ that we suspect Jay Powell would rather ‘we, the people’ were not aware of.

One of the challenges going into the financial crisis, for example, if you look at the big DSGE model – dynamic stochastic general equilibrium modelit didn’t include a finance sector.

So the whole experience of what actually happened during the global financial crisis – the collapse of the financial system and that taking down the real economy – wasn’t an actual possibility within the major macro models that some economists were using to forecast the economy.

“The financial market indicators give you a lot more information about what people expect to happen tomorrow and how the economy is likely to evolve, conditioned by those economic indicators.

For twenty years now, I’ve been a big proponent of thinking about things through a prism of financial conditions. In other words, the Federal Reserve sets monetary policy, and that monetary policy sets financial conditions, and those financial conditions are what actually drive the economy.

Historically macroeconomists imagined that changes in federal funds were transmitted directly from the Fed to the macroeconomy.

But in my mind, the linkage between the federal funds rate and financial conditions is quite variable.   

So if you just focus on the federal funds rate, you’re going to, at times, make pretty bad forecasts about what’s actually going to happen in the real economy.”

Read the full transcript here…

Simplifying Dudley’s lawyerly utterances

He proclaims the “no one could have seen that coming” defense to explain The Fed’s inability to comprehend the massive bubble they had created – which led to the curtain being pulled back from the ’emerald city’ that is The Eccles Building during the Great Financial Crisis – because such an event was not even a possibility in their myopic (and now clearly proven useless) academicall-rigorous model…

And then Dudley admits that, in their attempt to rescue the world from a fate worse than death – i.e. global deflationary credit collapse and the unveiling of where asset values really lie – The Fed has lost control of its transmission mechanism through the interest rate channel and “has created a monster…”

And then, in a flourish of typical academic arrogance, Dudley points out how crucial it is to use financial market prices and indicators to inform policy decision, clearly missing the reflexive impact that Fed policy has on those very same market indicators. Just how well did the repressed and conditioned collapse of global volatility inform policy as February so rudely sparked the biggest tightening of financial conditions in history – with no apparent warnings whatsoever (that is, of course, if one ignores Minsky).

Still… having left office now, with barely a scratch on his reputation, he can rest assured that any renewed lifting of the veil and consequent collapse in asset values will have nothing to do with him… because: “there has been progress incorporating financial factors into these models. We were nowhere, now we’re probably at the first or second grade.”

Reassured much?

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It’s Now Against The Law In California To Shower And Do Laundry On The Same Day

Authored by Daisy Luther via The Organic Prepper blog,

Governor Jerry Brown is retiring but not before he passes a few draconian laws as parting gifts for California. Two bills were signed into law on Thursday of last week to “help California be better prepared for future droughts and the effects of climate change.”

The mandatory water conservation standards will be permanent, according to their wording, and not just for use in times of crisis. To make a long story short, now that these bills are law, it’s illegal to take a shower and do a load of laundry in the same day because you’ll exceed your “ration.”

Here’s the wording of the new laws.

Senate Bill 606 establishes a “governing body” to oversee all water suppliers, both private and public and will require extensive paperwork from those utility companies.

Assembly Bill 1668 is where it gets personal.  This establishes limits on indoor water usage for every person in California and the amount allowed will decrease even further over the next 12 years.

The bill, until January 1, 2025, would establish 55 gallons per capita daily as the standard for indoor residential water use, beginning January 1, 2025, would establish the greater of 52.5 gallons per capita daily or a standard recommended by the department and the board as the standard for indoor residential water use, and beginning January 1, 2030, would establish the greater of 50 gallons per capita daily or a standard recommended by the department and the board as the standard for indoor residential water use. The bill would impose civil liability for a violation of an order or regulation issued pursuant to these provisions, as specified.

If you’re wondering how the government would know how much water your family is using, the utility providers will be obligated to rat you out of face massive fines. And they’re encouraged to spy in all sorts of creative ways. They “shall use satellite imagery, site visits, or other best available technology to develop an accurate estimate of landscaped areas.”

Some analysis

Now, if you’re wondering where I get my assertion that you can’t shower and do laundry on the same day, here’s some math:

  • An 8-minute shower uses about 17 gallons of water

  • A load of laundry uses about 40 gallons of water

  • A bathtub holds 80 to 100 gallons of water

  • A dishwasher uses 6 gallons of water

There are also standards to be established for outdoor use such as landscaping, caring for livestock, and gardening, but those numbers don’t seem to be available at this time. Maybe Californians just get to wait in suspense to see if their chickens are allowed to have water on the same day as their vegetables. Back when I lived in California, we were only “allowed” to water our gardens two times per week, which, in that heat, as you can imagine, didn’t lead to very productive gardens.

Farmers on a larger scale will have to jump through numerous hoops and create water management plans which must then be approved by the people in suits because obviously, they’ll know more about the needs of crops and livestock than the farmers will

Oh, and don’t worry, rich people. There will be “provisions for swimming pools, spas, and other water features.” So you can still have your pretty fountains and pools while the rest of the peons take 2 showers a week. One might wonder if ‘variances” will apply to the wealthy for their landscaping needs.

“The State Water Resources Control Board, which will oversee local agencies’ progress, will also consider possible “variances” for some districts that need additional allowances due to specific local circumstances.” (source)

Both Brown and his most-likely successor, Gavin Newsom, want to spend $17 billion to build a tunnel that will bring water from resource-rich Northern California down to bone-dry Southern California. This means, even the parts of California that DO have water will be restricted in its use.

What if you don’t comply?

If you don’t plan to comply it’s going to be way cheaper to move. Here are the fines Californians will be looking at – and it’s not a typo – these fines are PER DAY.

(1) If the violation occurs in a critically dry year immediately preceded by two or more consecutive below normal, dry, or critically dry years or during a period for which the Governor has issued a proclamation of a state of emergency under the California Emergency Services Act (Chapter 7 (commencing with Section 8550) of Division 1 of Title 2 of the Government Code) based on drought conditions, ten thousand dollars ($10,000) for each day in which the violation occurs.

(2) For all violations other than those described in paragraph (1), one thousand dollars ($1,000) for each day in which the violation occurs.

It’s important to note that your usage is only tracked if you have municipal water. If you have a well, at this point, you will probably be okay. Back when I lived there, the idea of metering private wells and billing the owners for use had been floated around, but most people resisted and it wasn’t enforced. If you truck your water in, you can also use as much as you need to.

For years it was illegal to use greywater systems in California, despite the epic droughts. Those regulations have been loosened, however, compliance is still extremely onerous. (Get the details here.) And rainwater catchment is not only legal, it’s encouraged. In fact, there’s a ballot on the table that is a “measure to allow rainwater capture systems to be installed without counting as new construction for the purposes of reassessing property taxes.”

Don’t think this only affects California

Not only are Californians fleeing the state in droves, but there are other ways these restrictive laws can affect the rest of us directly.

  • These stringent measures set a dangerous precedent for the rest of the country.

  • There could be a shortage of food coming out of California because there isn’t enough water to produce it.

  • The food we do get from there will cost a lot more.

It’s important to pay attention to stuff like this and not shrug it off because “I don’t live in California.” In an economy such as ours, we’re all interlinked. A draconian law that gains a footing in one part of the country is much easier to pass in other parts.

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Construction Breaks Ground On Trump’s Border Wall With “Anti-Climbing Plate” In San Diego

Construction has just started on a 14-mile section of President Trump’s new border wall along the Mexico–United States border and will include “anti-climbing plates” to deter illegal border crossings.

Despite many obstacles and strong opposition from Democrats, construction of the wall started near San Diego on Friday, June 01, which is excellent news for his conservative base, in regards to border security heading into the midterm elections this fall.

John Gibbins, a freelance reporter, covering breaking news in San Diego-Baja California region, has taken a photograph of the alleged construction zone.

Another journalist captures heavy machinery at the construction area.

According to Fox 4 News, the new wall will replace 14-miles of an old, rusted metal barrier that was erected in the early 1990s from Vietnam-era scrap metal. The barrier currently stands 10-feet high, which has done very little to thwart illegal border-crossings. The new wall is a bollard-style design measuring 18 to 30 feet tall and includes “anti-climbing plates” welded on the upper half of the structure. Fox 4 News indicates that construction workers have broken ground about a half mile from the Pacific Ocean in Border Field State Park in San Diego, California, and eventually move east to the bottom of Otay Mountain in East County.

The Texas-based construction company, SLSCO, was recently awarded the $147 million construction contract to complete the 14-mile stretch. The money to build the new wall comes from the omnibus spending bill that Trump signed in March. The piece of legislation included a $1.6 billion down payment for a border wall that would extend across the nation’s southern border.

“The construction of this new substantial wall will improve overall border security, the safety and effectiveness of Border Patrol agents, the safety of the public, and will enhance the atmosphere for business and commerce in the area,” Rodney Scott, the Chief Patrol Agent for the San Diego Sector said.

Another border officer made sure to credit Trump for the new developments along the border.

“Under this President’s leadership, we have a renewed commitment to secure our border,” Ronald Vitiello, the U.S. Customs and Border Protection’s Acting Deputy Commissioner said.

“The new primary wall-project represents an important milestone in our work to secure the international border. Not only does it significantly upgrade our existing infrastructure in San Diego, it also marks the third concurrent wall project in the U.S. and reflects CBP’s unwavering commitment to secure our borders and protect our Nation,” he added.

In 2017, Customs and Border Protection seized or turned away a staggering 415,191 illegal border crossers. The Border Patrol’s San Diego Sector, which covers roughly 60-miles of Mexico–United States border, is the most active area for unlawful border crossings in the nation. Border patrol officers arrested more than 26,000 illegal immigrants and seized nearly 11,000 pounds of marijuana and 3,000 pounds of cocaine, last year alone.

While President Trump has spent much of April militarizing the southern border with troop deployment, it seems like the next step in his plan to seal off Mexico is to start the long-awaited construction of his multi-billion dollar great wall.

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The Quiet Revolution: Gold’s Monetary Rehabilitation Is Building

Authored by Alasdair Macleod via GoldMoney.com,

There is a quiet revolution taking place in the monetary vacuum that’s developing on the back of the erosion of the dollar’s hegemony. It is perhaps too early to call what’s happening to the dollar the beginning of its demise as the world’s reserve currency, but there is certainly a move away from it in Asia. And every time the Americans deploy their control over global trade settlement as a weapon against the regimes they dislike, nations who are neutral observers take note and consider how to protect themselves, “just in case.”

Vide Europe over the Iran issue. And Turkey. These are rifts in NATO. Countries in Africa, and elsewhere are now taking China’s money. And to please the Chinese, Gambia, Burkina Faso, Panama and the Dominican Republic have all recently severed diplomatic relations with Taiwan. Small fry perhaps, but a weathervane showing which way the wind is blowing.

We’ve seen Russia set up an alternative to SWIFT in order to be free from American monetary interference in pan-Asian trade. We’ve seen China take major steps to exclude the dollar from her trade as much as possible and to enhance the role of her own currency. And now we have a schism over Iran between America and the Europe it set up after WW2 through the mechanism of the CIA-controlled American Committee for United Europe in 1948.

It is unprecedented, and today America obviously cares less for her relationship with European allies than she hates Iran. There can be little doubt that America’s undeclared war against the land of Omar Khayyam is intended to undermine its economy and create the conditions for internal revolution. The Iranian rial has continued its collapse, and the theocratic government has played into US hands by shutting down “unauthorised” money-changers, with Grand Ayatollah Nasser Makarem Shirazi calling for the execution of money changers to help end the currency crisis. The black-market rate for rials has rocketed as a result, and according to Professor Steve Hanke whose department at John Hopkins University makes a study of these things, the true rate of price inflation has jumped to 74.8%.

For the ordinary Iranian, gold has always been the ultimate money, while their government’s rials are to be rapidly passed on to someone else. America’s sanctions and the government’s actions merely reinforce that message. Time will tell whether America’s attempt to undermine Iran’s theocracy succeeds, but history suggests it is unlikely. And at a national level, Iran is driven by American actions into accepting anything but dollars in payment for her oil exports. She would like euros, and given the EU is still trying to sell her capital goods, that makes sense. But no commercial bank dares facilitate payment in any currency under the threat of US sanctions and penalties.

That leaves only three possibilities beyond America’s influence: Chinese yuan, Russian roubles, and gold, all independent from the West’s banking system. It is no wonder the new yuan for oil contract in Shanghai, perhaps with a little help from China’s state-owned banks, has got off to a roaring start. We can all understand the desire to lock in oil prices for future delivery, in this case it is in return for yuan issued by the People’s Bank of China. However, in the future Iran will be able to spend the bulk of her yuan on other raw materials, using a range of yuan futures contracts as a bridge to them from her oil.

Essentially, US sanctions are forcing Iran onto a yuan standard for her foreign trade. Furthermore, China is there to pick up the pieces the West abandons because of American sanctions, driving Iran into an increasing dependency on China. The new Silk Road, the Chinese-built 200kph railway between Tehran and the eastern city of Mashad, as well as other Chinese-led rail projects are opening up Iran in a purely Eurasian context, marginalising American power. Iran’s problem with this, if there is one, is international yuan markets are not yet developed enough to make full use of hedging instruments. But Iran’s demand for sophisticated financial tools, as well as from other nations in Asia turning their backs on America, is bound to hasten their development.

I have written several times in the past about the importance of yuan-denominated deliverable gold futures in this context, and the evidence that the two markets offering these contracts, Hong Kong and Dubai, are cooperating in establishing additional vaulting facilities in China, roping in other gold centres in South-east Asia as well. In the case of gold, where physical delivery measured in tonnes is tight, the Chinese are ensuring as far as possible that deliverable liquidity will be there.

Additionally, last week the London Metal Exchange, owned by the Hong Kong Exchange and Clearing (HKEX), admitted it is considering introducing yuan contracts for base metals as well. We can safely assume that while the HKEX is an independent commercial entity, its strategic objectives are closely aligned with and encouraged by the Chinese government. Not only do the Chinese dominate gold markets in Asia, but last year HKEX successfully introduced regulated precious metal contracts in London. There can be little doubt that HKEX will be an important platform for expanding international markets for the Chinese currency. And at some time in the future, a state like Iran will be able to use not only yuan contracts to sell commodities in order to buy other commodities, but to use them as a stepping-stone to mobilise state-owned gold for payments as well.

Our topic is now moving on to gold being actively used as money instead of fiat currencies. While this point is not yet being considered by Western commentators, we can be sure it is by the forward planners in Asian governments. It’s not for nothing India is trying everything to get hold of its citizens gold. To an extent, gold is already used as money by governments, which is why they are still included in monetary reserves. But they are there as a backstop, the money of last resort, no one’s liability. What we could be seeing with the development of international yuan currency markets is a platform that links the use of gold to trade settlement.

This insight means we must look at both the Chinese and Russian policies on gold in a new light. Assumptions in the markets seem to be that China and Russia only see gold as a dollar hedge, or alternatively their accumulation of gold is either to balance the US’s holding of 8,133 tonnes, or alternatively (if you believe the American’s are lying about their reserves) Chinese and Russian gold is there to be used like a sword of Damocles held over the dollar. It would be wrong to dismiss these theories out of hand, but surely, they miss the point. You don’t carefully plan to become a dominant world power, edging out the Americans and their dollars, without careful forward planning of monetary affairs.

There is irrefutable evidence that China has been planning for a post-dollar world since shortly after her leadership threw in the towel on communism and embraced free markets. The regulations appointing the People’s Bank with sole responsibility for gold and silver date all the way back to 1983, since when we can confidently assume the PBOC has quietly accumulated gold on behalf of the state at prices that varied between $250-500 over a nineteen-year period. We know this, because in 2002 the PBOC then permitted private ownership, setting up the Shanghai Gold Exchange to facilitate physical acquisition. This would only have happened after the state had had a clear run at accumulating sufficient physical gold for its future purposes. And, as the largest gold mining nation for many years by far, with state monopolies in refining domestic production, recycling scrap and refining imported doré, there should be no doubt over her policy towards her accumulation of gold bullion.

Since 2002, the Chinese government has actively encouraged its nationals to accumulate physical gold and judging by net withdrawals from the Shanghai Gold Exchange vaults, the public possesses roughly 18,000 tonnes from more or less a standing start. My estimate for state ownership of bullion, based on contemporary prices, an analysis of capital inflows in the 1980s, followed by trade surpluses in the 1990s and before the public were permitted to buy in 2002, is approximately 20,000 tonnes. Even so, that may be not be enough gold bullion owned by the state at current prices to operate a simple gold exchange standard, being the equivalent value of ¥5.22 trillion, compared with currency in circulation of ¥7.15 trillion. For comparison, when President Roosevelt devalued the dollar to $35 in January 1934, the US Treasury held gold worth $7.44bn at the new price against currency in circulation of $5.72bn. Therefore, if the Chinese government has 20,000 tonnes, and if it is to have the same currency cover as America had on 31 January 1934, at current exchange rates gold would have to be priced at $2,317.

Russia began accumulating gold only more recently and is now aggressively building her official reserves. Whether she has accumulated bullion “off balance sheet” is not known but should not be dismissed. Based on her official reserves at 1,910 tonnes worth RUB5.0 trillion, it does not cover M0 yet (RUB8.44 trillion) but a rise in the gold price to $2,200 will do so, and a gold price of $2,860 would be required to match the Americans in 1934. In fact, for both Russia and China if gold is to have a monetary role it would have to be at a far higher price than it is today.

A scheme for linking currency to gold

Comparing the value of bullion held to the narrowest expression of money is likely to prove insufficient upon which to base a future monetary policy. But, given a good base of monetary gold, it is possible to set up arrangements to discourage redemptions of currency for physical gold when a gold exchange standard is fully implemented. The suggested arrangement that follows is based on the issuance of irredeemable government bonds with a coupon payable in either gold or currency at the owner’s choice (the gold bond). Furthermore, an issue of this sort could be used to improve government finances at the same time.

By issuing the gold bond at a discount to par, early buyers get an enhanced yield. This rewards them for buying a new instrument which has yet to gain its potential market recognition. The market price of the bond will become linked to the yield on physical gold once the conversion rate is set, with an additional margin for issuer risk. And if currency balances invested in such a bond are rewarded with a yield payable in gold, demand for currency redemptions into gold are unlikely to be significant, so long as the public has confidence in the issue and the gold exchange standard. So, a country putting its currency on a gold exchange standard should, with a correctly priced bond, minimise redemptions.

A sinking fund should be established at the same time as the bond is announced to buy physical gold to cover anticipated demand for coupons paid in gold. Some gold from reserves can be allocated for this purpose initially but additional gold should be bought to establish sufficient cover to add conviction to the scheme by winding down existing foreign currency reserves where they are unbacked by gold, immediately.

From here on, we shall assume this scheme to introduce a sound, gold-exchangeable currency is taken up by the Chinese government. Government finances can be expected to improve from the arrangement, to the extent that borrowing costs are reduced. For example, China’s 30-year bond currently yields 4.1% having been as high as 4.4% earlier this year. A gold-linked irredeemable Chinese bond, even allowing for issuer risk would probably yield no more than 3% at the outset, which is slightly less than the current yield on 1-year maturities. If it was issued with, say, a 2.25% coupon, it would be priced at 75.00, giving the attraction of a capital gain to private citizens as the risk premium on Chinese government bonds declines.

This will also lend support to the currency in the foreign exchanges. The gold bond should be listed in Shanghai, Hong Kong, Tokyo, Singapore, Dubai, London and Moscow so that sovereign wealth funds and other conservative long-term investors have ready access to it. New York is not on the list because it is Chinese policy to exclude the American banking system from her monetary affairs as much as possible, and the conflicts that necessarily would arise with the US government. Ultimately, for funds based outside America, the gold bond itself would come to be regarded as a gold substitute for investment purposes, integrating gold into both Chinese-led monetary and investment reforms.

There can be little doubt that if these measures are taken gold convertibility would rapidly promote the yuan to foreigners in Asia and beyond as an acceptable store of value in exchange for trade. In time, all foreign currency held in China’s monetary reserves not backed by gold would have to be disposed for gold or yuan, as being inconsistent with the new monetary policy. As stated above, China’s gold buying using dollars would start immediately and continue until the price of gold has risen to the point where the gold exchange rate is finally established.

Furthermore, with no final redemption on the gold bond, there would be no need to make any repayment provisions. This model is the one that was adopted by the British government for financing the Napoleonic Wars by issuing Consolidated 3% Annuities at a deep discount, so that investors providing war finance not only got an enhanced yield, but also a substantial capital gain when peacetime returned. The fortunes created on the return to peace played an important part in financing the industrial revolution in the early nineteenth century.

In this sense, there are good parallels between Britain’s war financing two hundred years ago, and China’s current position. In both cases government expenditure exceeded and exceeds respectively tax income by a significant margin, and neither were and are on a gold standard. Britain had temporarily abandoned her gold standard in the 1790s, before reinstating it a few years after Waterloo.

In China’s case, excess government expenditure is due to planned infrastructure spending, which is likely to be ongoing for at least another ten years and extending well beyond her borders. However, Chinese instigated capital expenditure throughout Asia will increasingly be covered by project financing through the Asian Infrastructure Investment Bank, releasing the Chinese government from much of the financing burden.

The British came out of the Napoleonic Wars with an estimated debt to GDP of about 260%. In cash terms it was considerably less, because the debt figure is the total of nominal debt in issue. This was the beauty of irredeemable Consols, because they never need to be repaid, which meant a more accurate debt to GDP figure was 180%. As an historical footnote, it is interesting they were repaid only recently.

China’s government debt is considerably less at just under 50%, but still rising. China is blessed with a savings rate of close to 50% of GDP as well, so further issues of a gold-linked bond into the domestic market should be heavily subscribed. Once the current expansion of infrastructure spending diminishes, the Chinese government will easily return to a budget surplus, paying down its debt more rapidly than the British did in the 1800s.

I would suggest China undertakes the monetarisation of gold in two stages. The first would be to issue the new gold loan outlined above. Proceeds of the new gold bond would be used to finance government expenditure, to purchase existing bonds in the market for cancellation, and to build a sinking fund to provide cover for future coupon demands in gold. The price relationship between coupons paid in gold and yuan will be fixed at a later date and will be the rate for the gold exchange standard once it is set. It cannot be set at the outset, because it is clear that for gold to be rehabilitated into China’s monetary system, and consequently the likelihood it will be elsewhere, will require a far higher gold price than at present. In price theory, it is the introduction of a new use that will set a higher marginal price. That will be the second step, which is announced in advance when the new gold bond is first issued but at a rate yet to be decided.

China is the ideal jurisdiction for the reintroduction of gold into a monetary system by way of a gold exchange standard. To briefly summarise:
 

  • China has been secretly accumulating gold since regulations appointed the PBOC to do so in 1983. Not only has the state accumulated significant quantities of gold, but the citizenry has as well. China and its population is therefore fully attuned to the use of gold as money.

  • The Chinese government has no need to resort to the illusory benefits of inflationary financing. Her budget deficits are the consequence of infrastructure spending, which will diminish in time, and her citizens have a savings rate of nearly 50%, which is the real engine behind her economic progress and wealth creation. Furthermore, government debt to GDP is relatively low at about 50%, and she is not burdened by the costs of a Western-style welfare state.

  • China’s success is driven by a political requirement to improve the standards of living for everyone in as many as 42 diverse ethnic groups, representing an unwritten contract between the state and its people in lieu of democracy. A gold standard and a savings vehicle that gives ordinary people a yield on gold will increase personal wealth and guarantee the cohesion and economic strength of the Chinese nation, at a time when America’s finances are relying increasingly on the destruction of private wealth through inflation. There has to be a parting of the ways for the two currencies.

  • The introduction of sound money by way of a gold exchange scheme will ensure China’s economic dominance will develop and continue for a considerable time, much as it did for Britain in the nineteenth century.

Russia is also manoeuvring towards a gold standard, which given her partnership with China at the head of the Shanghai Cooperation Organisation, will most likely build on the Chinese model. The differences are one positive and one negative. The positive is the Russian government’s finances are in excellent order, the negative is Russia has only relatively recently begun to accumulate significant gold reserves. She is therefore likely to want to accumulate more gold before embarking on a gold exchange standard and may therefore encourage China to delay her plans until she is ready.

The consequences of Asian gold exchange standards

The economic cost of a change to sound money is that the transfer of wealth from lender to borrower, which is the dominant feature of unsound money, ceases. Inevitably, overindebted businesses as likely to experience difficulties. Furthermore, Chinese exporters to countries with pure fiat currencies will have to invest in more efficient production to remain competitive.

This is less of a problem than first appears. In her current five-year plan, China is moving away from relying on competitive export models towards developing high-tech and service industries aimed at satisfying a growing middle class. Furthermore, Asia represents a new semi-captive market for China, where the yuan is likely to become the standard foreign currency.

The effect on the dollar, euro and Japanese yen could be ruinous, depending on how the relevant central banks develop their monetary policies. They would have to realise that the era of pure fiat is over, and currencies which depend entirely on confidence in their value are no longer fit for purpose. The PBOC could smoothen this process by giving the other major central banks advance notice of its intentions, to minimise the risk of bullion banks being badly wrong-footed with undeliverable bullion obligations.

In the wider context, financial markets are themselves completely wedded to neo-Keynesian economics and may take some time to adjust to why a successful gold exchange standard is a threat to unbacked fiat currencies. But by providing a globally-acceptable sound-money alternative to the current fiat money system, those that do adapt will avoid the hyperinflations that are the logical destiny for governments that rely on inflationary finance. The eventual prize will be for the Shanghai Cooperation Organisation to have two gold-backed currencies for cross-border trade for use throughout Asia, Eastern Europe, sub-Saharan Africa and parts of South America. The Middle East as well will find these currencies attractive in payment for oil, and countries that stay purely fiat will be marginalised.

Those countries whose currencies have been recently destabilised by the dollar’s rally should be among the first to realise that being tied to a Chinese-led sound money regime is a better option. In the course of only a year or two, in theory over half the world’s population could have access to a currency exchangeable for gold, or at least tied to it.

If the whole scheme of Asian revival through economic power is to progress and survive long into the future, it will be a precondition that gold is central to monetary policy. Indeed, given the increasingly certain fate for the inflationary dollar, which is likely to drag down the rest of the world with it, it should no longer be a matter of choice, only of timing. And unless the welfare-driven nations, whose governments have waxed on the destruction of their citizens’ wealth through deliberate monetary inflation reform their ways, they will deserve to slide into obscurity.

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Hedge Fund CIO: “The Long Season Of Central Bankers Has Ended”

Submitted by Eric Peters, CIO of One River Asset Management, as excerpted from his latest Weekend Notes letter.

Anecdote

Change is magnificent, he thought, along the stream. Walking. Spring had become summer, lush, in what seemed an instant, little by little, then all at once. The barren banks were now covered in green, dense bramble, concealing.

Across the world change is taking hold. For the entirety of his career, with few exceptions, the study of markets had been an examination of central bank policy. On the Chicago floor in 1989, Fed Funds had been 9.00%, nearly inconceivable now.

The first Gulf War in 1990 had been something, but politicians and politics were of no real consequence when compared to the power of paper. Greenspan lowered rates to 3% by 1993, the Savings and Loan Crisis, the recession. As the economy recovered, he lifted rates to 6.00%, bonds crashed.

And after saving Asia from its 1997 catastrophe, when their governments proved impotent, Alan rescued the US financial system from the stupid geniuses at LTCM.  But this amplified the dotcom bubble, crash.

He cut rates to 1.00%, solving a problem of his own creation. Which fueled the housing fiasco. Politicians came and went throughout, wars too, they barely mattered to markets.

Greenspan had attempted to tame the wild, and 2008 was Nature’s response. Professor Bernanke cut rates to 0%, printed, bought, and guided our every expectation. Yellen was no different really.

And the repression they sought in market volatility led to the financialization of the global economy, profound income and wealth inequality. 

Which brought forth something not seen for ages, a demand by the people for real change. For a world no longer led by bankers. For politicians to solve their problems, to sooth their fears, to address their grievances.

In the UK, America, across Europe too, Italy its latest blossom.

The long season of central bankers has ended. And politics is again ascendant, in its lush, wild tangle.

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Tommy Robinson Protests Continue For Second Week As Thousands Take To The Streets

Thousands of Tommy Robinson supporters and free speech advocates around the world took to the streets for a second week of protests against the imprisonment of the UK journalist and political activist. Robinson was arrested on May 25 outside Leeds Crown Court for reporting on a pedophile grooming trial. After a brief court proceeding in which he did not have access to his lawyer, Robinson was handed a 13-month prison sentence for violating the terms of a suspended sentence on a similar offense.

Demonstrations were held in Britain, Germany, the United States and several other countries. Around 400 people gathered outside Leeds Crown Court on Saturday for a march through the city center, while approximately 1,000 filled the streets of Manchester for a #FreeTommy demonstration, reported to have been spearheaded by the Democratic Football Lad’s Alliance.

(Photo: Joel Goodman / LNP)

Germans gathered in Nuremberg to show their support for Robinson, while a crowd also protested outside the UK embassy in Denmark:

Across the pond, a rainy Sunday protest was held outside the British Embassy in Washington DC.

Robinson was admonished last year by Judge Heather Norton for filming outside a gang rape case in Canterbury, who slapped him with a three month suspended sentence on the condition that he cease his coverage of the trials. 

you should be under no illusions that if you commit any further offence of any kind, and that would include, I would have thought a further contempt of court by similar actions, then that sentence of three months would be activated -Judge Heather Norton

“This is not about free speech, not about the freedom of the press, nor about legitimate journalism, and not about political correctness,” the judge told Robinson at the time.

Judge Geoffrey Marson QC appeared to be watching Robinson’s May arrest

Robinson’s prior offense is what gave Judge Geoffrey Marson QC justification to lock him away within hours of his arrest. Disturbingly, Marson also ordered an Orwellian media blackout – which resulted in several publications deleting their articles from the web covering Robinson’s arrest.

The reporting ban was eventually lifted.  

Pedophile grooming gangs

As we previously reported, a group of 29 defendants are being tried for historical sex offences against children, split into three trials. Robinson was arrested at the second trial, while the first is ongoing. 

Enraged Britons have been harassing the defendants as they make their way into court for the ongoing trials. 

Robinson, 35, rose to fame as a conservative activist and founder of the English Defence League in Luton, Bedfordshire in 2009. After retiring from the party in 2013, he has continued to advocate for British nationalism and against unchecked migration into Europe.

He has also taken a particular interest in the grooming gang trials – a topic seldom covered by the mainstream press, and which Robinson has been speaking out about since at least 2011. 

the whole subject is so ugly and uncomfortable that very few people care to linger over it. Robinson is an exception. For him — as he said in a 2011 interview with the BBC’s Jeremy Paxman — the “grooming gangs” issue isn’t something that afflicts some far-off towns but people in the working-class communities that he knows. And while there are journalists (notably the Times’ Andrew Norfolk) who have spent considerable time and energy bringing this appalling phenomenon to light, most of British society has turned away in a combination of embarrassment, disgust, and uncertainty about how to even talk about this. Anyone who thinks Britain is much further along with dealing with the taboo of “grooming gangs” should remember that only last year the Labour MP for Rotherham, Sarah Champion, had to leave the shadow cabinet because she accurately identified the phenomenon. –National Review 

Another large protest is scheduled for June 9th at Downing street. Follow along using Twitter hashtag #FreeTommy

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What ‘Patient Zero’ – Japan – Can Tell Us About China & The Developed World At Large

Authored Chris Hamilton via Econimica blog,

To see the future, sometimes you have to look to the past.  Japan is patient zero in the global epidemic of slowing growth and although Japan was assumed to be the emerging world power in the ’80’s, we now know better.  The title of emergent power now rests with China… and for the same reasons it didn’t work out for Japan, it won’t work out for China.  To make my case, I’ll use UN population data coupled with EIA total primary energy data (cumulative energy consumption from coal, oil, natural gas, nuclear, and renewables), plus EIA fore-ward looking forecast data (the International Energy Outlook, 2017 or IEO’17).

First, Japan.

The Japanese 15 to 60 year old population peaked in 1993 and declined over 15% by 2018.  The core population will continue falling, down 24% by 2030, and 34% by 2040.  Energy consumption growth began stalling in 1997, consumption peaked in 2006, and has declined 17% from the ’06 peak through 2015. However, the EIA estimates the falls seen since ’06 will cease shortly and energy consumption will stabilize through 2040.

The chart below breaks down the annual change in the 15 to 60 year old Japanese population versus the annual change in energy consumption.  The twin deceleration should be fairly obvious.

Below, the actual data as above versus the EIA IEO’17 forecast.  While the core population will fall at an even faster rate, the EIA forecasts energy consumption will stabilize (against all logical rationale)?!?

To round out the picture, the Japanese 15 to 60 year old population versus 60+ year old population.  All growth is currently in the 60+ population until it too is projected to peak in 2040 and begin declining.

What does this mean for China?

The Chinese 15 to 60 year old population peaked in 2011 and has fallen 2% as of 2018 but will be 10% smaller by 2030 and 16% smaller by 2040.  The EIA assumes energy consumption will continue to rise (and be 44% higher by 2040) despite the clear cases in Japan, Europe, and elsewhere that energy consumption tracks the core population…down.

Below, detailing the year over year change in the Chinese 15 to 60 year old population versus actual and EIA forecast energy consumption.  The clear deceleration as the core population has turned negative is plain to see…but as the population declines accelerate…energy consumption is forecast to be unaffected and instead continue to grow???

Rounding out the picture with the fast declining Chinese 15 to 60 year olds versus surging 60+ year olds.

As for China and Japan’s neighbor, South Korea, their 15 to 60 year old population peaked in 2014 and will be 15% smaller by 2030 and fall 25% by 2040.  Against this, EIA estimates energy consumption will rise 40% by 2040???  I’m guessing S. Korean energy consumption will shortly begin it’s secular decline.

Again, year over year change of S. Korean core population versus energy consumption.  Simply nonsensical.

South Korean 15 to 60 year old population versus 60+ year old population.

And perhaps the strangest forecast of all…Western Europe.  The declining core population and energy consumption inexplicably turn and begin rising…because?!?

The energy and population declines since ’08 are pretty hard to miss.  But somehow the EIA doesn’t see the surging population declines nor recognize the impacts on energy consumption.

And what of the state of global importers?  They are a fast declining breed among the core population which does the majority of all the shopping versus a relatively responsible and stingy surging elderly cadre.

Make of it all what you will.

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