Category: zerohedge

Just as we warned was probable, The PBOC sent a message loud and clear to the newly hawkish Fed following today’s surge in the dollar after the minutes were released. With the 2nd biggest daily devaluation since the August collapse, China pushed the Yuan fix against the USD down to its lowest since early February – barely above the January lows. As we warned earlier, the China-Panic trade looms loud now as turmoil appears all that is left to stop The Fed unleashing another round of liquidity-suckiong rate hikes sooner than the market wants.

All eyes have been firmly focus on the Yuan’s move against the USD but in fact the Yuan has been falling non-stop against the world’s major currencies…

The critical issue now is that the U.S. dollar is appreciating again. The
Bloomberg Dollar index is up 2.8% in the last two weeks and another 2%
wouldn’t be an unreasonable consolidation in the context of it dropping
more than 7% in the previous three months.

 

That previous dollar slide distracted from the fact that yuan depreciation never abated. Against the basket, it’s been weakening at an average rate of almost 1.2% per month for the last five months.

 

 

The market’s single-minded focus on USD/CNY is crucial and it’s also why disaster can still be averted. It will require the PBOC to temporarily suspend their yuan-weakening policy for as long as the dollar is climbing.

 

Otherwise, prepare to batten down the hatches for the coming storm.

It appears that it is the USD’s turn to face The PBOC once again… The 2nd biggest daily devaluation of the Yuan fix against the USD since August’s collapse.

Simply put, China does not want The Fed sucking the liquidity lifeline out of world markets right as it embarks on another round of desperate credit reflation.

Given The Fed’s comments today, the only excuse left for Yellen and her friends (unless they are willing to lose all credibility due to short-term fluctuations in macro-economic data from now to June meeting – as opposed to their mandated long-term view) is if markets turmoil enough to warrant some level of conservatism. As we have warned before – bullish stock market investors should be careful what they wish for – the higher stocks go, the higher the chances of rate hike, and the more likely China pre-taliates with some turmoil-inducing events to stall the unwind… the last time traders panicced about China, bad things happened to stocks…

via http://ift.tt/1OLAOtI Tyler Durden

Submitted by Eric Zuesse, investigative historian and author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

NATO Announces War Policy Against Russia

On May 18th, Britain’s Guardian headlined “West and Russia on course for war, says ex-Nato deputy commander” and reported that the former deputy commander of NATO, the former British general Sir Alexander Richard Shirreff (who was Supreme Allied Commander in Europe from 2011-2014), expressed outrage that Britain isn’t urgently preparing for war against Russia, and also reported that “He describes Russia as now the west’s most dangerous adversary and says Putin’s course can only be stopped if the west wakes up to the real possibility of war and takes urgent action.” … In a chilling scenario, he predicts that Russia, in order to escape what it believes to be encirclement by Nato, will seize territory in eastern Ukraine.” (That’s the Donbass region, where there has been a civil war.)

This encirclement by NATO is, apparently, about to be expanded: Shirreff will now be satisfied by NATO, even if not by its member the UK, of which Shirreff happens to be a citizen. New Europe bannered the same day, “NATO lays down the cards on its Russia policy”, and reported that, “In two distinct pre-ministerial press conferences on Wednesday [May 18th], the General Secretary of NATO Jens Stoltenberg and the US Ambassador to NATO, Daglas Lute, introduced the Russia agenda to be covered. Both NATO leaders said that the Accession Protocol Montenegro is signing on Thursday is a strong affirmation of NATO’s open door policy, mentioning explicitly Georgia. ‘We will continue to defend Georgia’s right to make its own decisions,’ Stoltenberg said.” Georgia is on Russia’s southwestern flank; so, it could be yet another a nuclear-missile base right on Russia’s borders, complementing Poland and the Baltics on Russia’s northwestern flank. (The U.S. itself has around 800 military bases in foreign countries, and so even Russia’s less-populous eastern regions would be able to be obliterated virtually in an instant, if the U.S. President so decides. And President Obama is already committed to the view that Russia is by far the world’s most “aggressive” enemy, more so even than international jihadists are.)

According to the New Europe report, Stoltenberg announced that where the 1997 NATO-Russia Agreement asserts that

The member States of NATO reiterate that they have no intention, no plan and no reason to deploy nuclear weapons on the territory of new members, nor any need to change any aspect of NATO’s nuclear posture or nuclear policy — and do not foresee any future need to do so. This subsumes the fact that NATO has decided that it has no intention, no plan, and no reason to establish nuclear weapon storage sites on the territory of those members, whether through the construction of new nuclear storage facilities or the adaptation of old nuclear storage facilities. Nuclear storage sites are understood to be facilities specifically designed for the stationing of nuclear weapons, and include all types of hardened above or below ground facilities (storage bunkers or vaults) designed for storing nuclear weapons.

the agreement is effectively terminated, and, “Largely as a result of the Crimean annexation, the repeated violations of the Minsk ceasefire agreement, and the demands of eastern flank member states, boots on the ground will increase considerably in the region, if not ‘substantially’,” along Russia’s northeastern flank, in Poland and the Baltics. Furthermore, “Poland has already said that it regards this agreement ‘obsolete’.” So, General Stoltenberg is taking his lead on that from the Polish government. 

According to both Russia and the separatist Donbass eastern region of the former Ukraine, the violations of the Minsk II agreement regarding Donbass are attacks by Ukrainian government forces firing into Donbass and destroying buildings and killing residents there, however NATO and other U.S. allies ignore those allegations and just insist that all violations of the Minsk II accords are to be blamed on Russia. That is also the position advanced by Shirreff, who thinks that Russia has no right to be concerned about being surrounded by NATO forces.

Consequently, regardless of whether or not the Minsk II violations are entirely, or even mainly, or even partially, due to Ukrainian firing into Donbass, NATO appears to be gearing up for its upcoming July ministerial meeting to be an official termination of its vague promises, which NATO had made in the 1997 NATO-Russia agreement (technically called the “Founding Act on Mutual Relations, Cooperation and Security between NATO and the Russian Federation signed in Paris, France, 27 May 1997”). That document said “NATO and Russia do not consider each other as adversaries. They share the goal of overcoming the vestiges of earlier confrontation and competition and of strengthening mutual trust and cooperation.” In this regard, it was — though in public and written form, instead of merely private and verbal form — similar to the promises that the West had given to Soviet then Russian President Mikhail Gorbachev in 1990, which have already been rampantly violated by the West many times and without apology. The expectation and demand is clearly that Russia must allow itself to be surrounded by NATO, and to do this without complaint, and therefore also without taking military countermeasures, which NATO would call yet more “aggression by Russia.” Any defensive moves by Russia can thus be taken by the West to be unacceptable provocation and justification for a “pre-emptive” attack against Russia by NATO. That would be World War III, and it would be based upon the same accusation against Russia that the Republican candidate for the U.S. Presidency, Mitt Romney, had stated when he was running against Barack Obama: “This is, without question, our number one geopolitical foe.” Perhaps the West here intends the final solution of the Russian problem.

via http://ift.tt/1qvbMmX Tyler Durden

The billion dollar baby has now, officially, gone bye bye.

Just when you thought that the biggest ever "multi-billion" private company that also happens to be an utter fraud, would quietly disappear before it risked attracting even more unwarranted attention from regulators, enforcers, and criminal investigators which could potentially lead to prison time for "billionaire" Elizabeth Holmes, here she comes again reminding everyone of her fallen from grace presence, in this case with what should be the terminal news for this company, namely that as the WSJ reports (and as the company confirms) Theranos has told federal health regulators that the company voided and revised two years of results from its Edison blood-testing devices and has issued tens of thousands of corrected reports to doctors and patients.

As a reminder, the basis for Theranos ludicrous $9 billion valuation which it appears was achieved without anyone doing any actual due diligence, were the "Edison" machines which were touted as revolutionary – not just by Holmes but by the fawning media and even the Clintons. Theranos has now told regulators that it threw out all Edison test results from 2014 and 2015, effectively confirming it has no proprietary technology, and also validating that its valuation should be zero.

Worse, Theranos has told regulators that it used the Edison for 12 types of tests out of more than 200 offered to consumers and stopped using the devices altogether in late June 2015. In other words, Theranos' insane "valuation" was achieved on the basis of doing only 6% of blood tests in house (all of them erroneously we now learn), and outsourcing 94% to companies whose products actually worked and many of whom likely had a far lower valuation than the one at which a bunch of idiot billionaires "valued" Holmes' worthless company.

In the process of commiting fraud and building up her valuation, Holmes repeatedly gambled with people's lives, sending them clearly wrong results. As a result some patients have received erroneous results that might have thrown off health decisions made with their doctors, the WSJ reports. All this is needed is one death and there is a criminal case.

So why come clean now?

The move is part of Theranos’s attempt to persuade the agency not to impose stiff sanctions it threatened in the aftermath of its inspection of the company’s Newark, Calif., laboratory. The voided and revised test results are one of the most dramatic steps yet taken by Theranos.

 

Company records reviewed during the inspection showed that the California lab ran about 890,000 tests a year. The inspection found that Edison machines in the lab often failed to meet the company’s own accuracy requirements.

In other words, Theranos may have put as many as 890,000 lives per year in jeopardy with its fake technology.

The good news, this is now officially game over for if not Elizabeth Holmes, then certainly her company:

“There have been massive recalls of single tests in the past, but I’m not aware of one where a company recalled the entirety of the results from its testing platform,” said Geoffrey Baird, associate professor in the department of laboratory medicine at the University of Washington in Seattle. “I believe that’s unprecedented.”

The company also commented:

In response to questions from The Wall Street Journal about the blood-test corrections, Theranos spokeswoman Brooke Buchanan said: “Excellence in quality and patient safety is our top priority and we’ve taken comprehensive corrective measures to address the issues CMS raised in their observations. As these matters are currently under review, we have no further comment at this time.”

That's rich, pardon the pun. Less rich, if only on paper, will be Holmes who will have ample opportunity to make numerous comments during trial.

* * *

Finally, the question everyone should be asking is who enabled this fraud for so many years? The simple answer: everyone, and especially those who have an agenda to conduct one endless infomercial for a product that ended up being an epic fraud. Here is a sample (courtesy of Bruce Quinn).

August 30, 2013
"Theranos: The Biggest Biotech You've Never Heard of."
San Francisco Business Times. By Ron Leuty.  Here.

September 8, 2013
"Elizabeth Holmes: The Breakthrough of Instant Diagnosis."  

Video interview with Pattie Sellers.  Here.
For further details, see here.

December 8, 2014
"Here's How the World's Youngest Self-Made Female Billionaire Shows People She's In Charge."
Business Insider.  By Richard Feloni.  Here.

December 8, 2014
"The New Yorker on the Promise, the Secrecy, and the Challenges of Super-Startup Theranos."
MedCityNews.  by Meghana Keshavan.  Here.

December 12, 2014
"Behind the Curtain at Theranos."
NBC News. (Video).  Interview with Ken Auletta.  Here.
For more detail, see here.

December 14, 2014
"Blood Test Innovation: Less Cost, No Big Needle"
Information Week/Healthcare.  By Larry Stofko.  Here.

* * *

And that, ladies and gentlemen, is how you get to be worth $9 billion on a "technology" that was nothing but fraud.

via http://ift.tt/1XB1orp Tyler Durden

The top cities are dominated by the tech community, with San Jose, CA and San Francisco, CA taking the top two spots in the overall ranking.

Here is the list of top 25 cities based on their overall ranking – Bloomberg points out that San Jose has risen from No. 7 to No. 1

As Bloomberg reports, Glassdoor Inc., a career website has published its list of the top 25 cities for jobs. Considerations that went into the ranking were salary, job satisfaction, and cost of living.

Breaking down the details, here is the list for the median salary component – again led by tech heavy cities such as San Jose and San Francisco.

Job satisfaction…

And cost of living… note how incredible the cost of living is in San Jose and San Francisco, surely indicative of the run up in tech companies over the past few years in Silicon Valley, as those high wages and overzealous cash infusions by venture capitalists led to higher cost of living.

Established tech communities such as San Jose, San Francisco, as well as up and coming tech cities such as Seattle, Boston, and Austin dominate the lists. "This demonstrates why so many people are looking to move to the San Francisco Bay area: Job satisfaction, work-life balance, and hiring opportunities are unparalleled compared to anywhere else in the country. It's not a surprise to see cities like Seattle and Austin at the top since they all have rising technology communities, great institutions for higher education and research, as well as affordable neighborhoods." said Dr. Andrew Chamberlain, chief economist at Glassdoor.

While we're happy for all of these tech heavy cities making this list, we would caution those reading not to pack up and head to the West Coast just yet. While Silicon Valley has undoubtedly had a good run, the reality is that the second great tech bubble has popped, and impacts are only just beginning to be felt.

* * *

As a refresher for those who are curious, here is a quick timeline chronicling the bursting of the second tech bubble. We first pointed out back in January of 2014 when venture capitalists first started to grow overly speculative and began to pour large sums of money into tech start-ups that the second tech bubble had arrived – at that time there were more than 30 companies in the US, Europe, and China that were valued at $1 billion or more by the private markets.

Our analysis was confirmed a year later when investment bankers had to deliver the news to Dropbox that there was no way it could IPO at its $10 billion private valuation, let alone provide any upside to recent investors.

Then in January of this year we pointed out that as markets were crashing, more and more "unicorns" (companies with a private valuation in excess of $1 billion) were going to be forced to raise capital at lower valuations, and these down rounds would eventually lead to firms having to admit that they'd have to go to market at a much more humble valuation than once thought.

Only one month later, we showed that the bursting of the bubble had made its way to the real economy by way of mass layoffs at all of these once up and coming technology companies. One executive recruiter said at the time "I think what we're seeing is bigger than a small correction. Everyone thinks it will be different this time, but it never is."

And finally, just today we reported that the aggregate of all of the aforementioned events has now made its way into Silicon Valley's real estate market. Luxury homes are now staying on the market longer, and the reality is finally starting to hit home: "The peak is behind us, and that's becoming clearer and clearer to builders and buyers" said an agent of real estate consultancy John Burns.

via http://ift.tt/1OACjoX Tyler Durden

Submitted by Brandon Smith of Alt-Market.com,

I recently received requests from two different readers, one asking for articles covering the “mindset” of globalists (why they do what they do), and another request for articles covering globalist “occultism.” I find that these two topics are very difficult to pursue with a large number of people for a few reasons:

1) Many people do not accept the reality that a group of financial elitists colluding (conspiring) to obtain total global power even exists. Therefore, in order to delve into the topic of the globalist mindset with these “skeptics,” I would first have to re-cover page after page of evidence showing that they not only exist and collude, but that they openly boast about their plans on a regular basis. This is time consuming, to say the least.

 

2) For some of the people that do eventually accept the reality of a globalist cabal, the argument eventually arises that “yes, there is collusion, but it is merely driven by greed and profit motive,” and not as nefarious as we conspiracy tin-foil mad-hatters imagine.

 

3) For others, there is a full acceptance of the reality of an organized globalist cult, but they argue that these people are simply a product of a corrupt and ill-structured socio-political system. That is to say, they think that the globalists are a symptom of the troubles that plague humanity, rather than a cause.

 

This argument is often made by people promoting their own collectivist agenda in one form or another (socialists, communists, scientific dictatorships controlled by people supposedly much smarter than the rest of us, one world-one mind spiritually unhinged theosophic weirdos, etc.). They claim a new system, their system, is the solution rather than getting rid of the globalists, which they say would only leave a “power vacuum” for more tyrants to take their place.

 

4) Finally, there are the evangelical revelations seekers obsessed with Armageddon. They fully accept that the globalists exist, that they conspire internationally to gain power and influence towards the goal of a “new world order” and that they are essentially evil minded in their intentions. However, they argue that it is either futile to fight against such people because they are supported by power from somewhere beyond, or they even argue that to fight against the globalists is wrong because it is in defiance of the plan put forward in the Bible.

So, as you can see, it is a veritable circus of horrors whenever I write on the subject of who the globalists really are and what they really want. Beyond that, it is very difficult to examine this subject matter, even with ample evidence, without coming off like a wackaloon.

It is hard enough convincing people of the obvious economic crisis facing America and the rest of the world and convincing them to put in minimal effort to prepare, let alone convincing them of the psychopathic and cult-like nature of the elite behind that crisis. In other words, if you approach someone new to this information cold and hit them right away with tales of luciferians, Washington D.C. child pedo-rings and gay romp power-club parties in the California Redwoods with a giant stone owl called “Molech,” you probably aren’t going to get your foot in the door.

That said, I’ll address the inevitable arguments above very quickly before I begin my analysis of the Globalist mind.

1) Psychopaths tend to naturally gravitate towards positions of power, and despite some foolish assumptions out there that these people are too volatile to play nice with others, they do in fact work together as long as there is a guarantee of mutual benefit.

 

Elites have conspired throughout history, this is well documented fact. I find it amazing that some folks cannot grasp the idea that they might also be conspiring today. If you need evidence of such collusion, you are welcome to read my articles The Fall Of America Signals The Rise Of The New World Order and Order Out Of Chaos: The Doctrine That Runs The World.  If you want to know where to find these people simply look at the memberships of institutions designed specifically to promote globalism – Bilderberg, the Council on Foreign Relations, Tavistock, the Trilateral Commission, The Club Of Rome, Rand Corporation, the IMF, the Bank for International Settlements, ect.  Though they often obscure their more malicious intentions, globalists are relatively easy to find.

 

One might argue that the problem of organized psychopathy cannot be dealt with unless one confronts individual psychopathy. I’m sorry to say that at least 10% of the population (according to psychologist Carl Gustav Jung) at any given time has elements of inborn latent psychopathy and at least 1% is actively psychopathic. You will NEVER remove psychopathy from humanity. It is an inborn quality. What you can do, though, is disrupt or destroy organizations of people that foster and elevate psychopaths. Organized psychopathy is the real and pressing problem.

 

2) If you need convincing that the globalists are not just “greedy capitalists” out to make a buck at the expense of the world, check out my article Global Eitism: The Character Traits Of Truly Evil People and read some of the quotes directly attributed to them. Their goal is to gain as much power over the masses as possible. They see themselves as modern Pharaohs, not as businessmen. Wealth is a side-note.

 

3) There have been only fleeting instances of societies without the all-pervasive influence of organized elitism in history. From these minor instances, though, we can see bursts of human potential, productivity and invention, as well as greater respect for inherent conscience and justice.  Sadly, no one in the past has ever taken the action of removing elitist groups entirely as a factor of influence.

 

Anyone who claims that the globalists are nothing more than a “symptom” is probably trying to sell you on an ideology rather than a real solution. The fact of the matter is, we have never lived in a world without the influence of globalist conspiracy. They are like a cancer that has turned psychopathy into a religion. Removing the globalists should be a top priority. NO system is going to succeed, regardless of how brilliantly conceived, unless the elitists are out of the picture.

 

I would even venture to say that the people who argue that the globalists are nothing more than a symptom are in fact HELPING the globalists by distracting activists away from the real task at hand. Playing at philosophy and theoretical society building will not change the existing power structure in any way, nor will it remove the muzzle of a rifle from the back of your head as you stare down at the ditch that is to become your final resting place.

 

4) The majority of the Bible is composed of stories of good standing against evil, and I simply cannot take anyone seriously who argues that the Bible demands we sit idle in the face of despotism. I don’t believe in the modernized “Left Behind” interpretations of “apocalypse” and even if I did, different groups have been saying that the end times are right around the corner for ages. Frankly, no one knows or will know if such an event of metaphysical proportions is taking place anyway.

Now, I do believe in full-spectrum crisis and societal collapse, because these events have happened over and over again and can even be reasonably predicted according to past indicators. I also believe that current events are rife with such indicators and that a collapse is taking place in stages today. I also know that there are groups of elites engineering this collapse and I know exactly why because they have openly admitted their goals (read my article The Economic End Game Explained). Apocalypse is not my concern. Right and wrong, justice and tyranny are my concerns. I’ll leave the rest to more omniscient and omnipresent beings.

The Problem We Face Is Organized Evil

Now that the above questions are out of the way we can jump into the core of the problem. And no, the core of the problem is not the “system” we live in per say, or our methodology of living and progressing as a species. Again, there are too many eggheads in the liberty movement that like to pretend they have grand and ingenious new ways of looking at the world, and if only we would just “listen to their brilliant vision” everything would change for the better. When you boil down their philosophies you often find they have no new ideas whatsoever, or that their ideas cannot be implemented because they have not dealt with the elephant in the room — the globalists.

Philosophy without tangible action and verifiable results is ultimately useless in the face of true evil. Intellectual warriors rarely win wars, but they do often die horribly as a result of their naivety and defenselessness.

To answer the question in the title of this article, yes, the globalists are in fact evil and the only misunderstandings are on the part of wide-eyed skeptics that have bought into the idea that “evil” is a moral conception created by religion rather than an inherent quality of human beings.

As Carl Jung discovered in his studies on the collective unconscious, people are born with inherent and conflicting conceptions and traits, or “dualities.” Good vs. Evil is an important duality we all come in to the world dealing with, it is not a mere product of environment or religious influence. That which is “good” is often dictated by what we call “conscience,” which again is an inherent idea or “voice,” and is only partly influenced by environment. The fact of inherent character traits and universal moral codes is present in anthropological studies as well as psychological studies beyond Jung’s very extensive work.

To define evil, we would have to look at those ideas and actions that are opposite inherent conscience. The globalists have basically constructed a festering belief system around everything that is contrary to our moral compass. I will attempt to dissect some elements of that belief system from a secular point of view. Wish me luck…

Occultism

Occultism in itself is not necessarily “evil,” it only means “secret knowledge.” But the history of occultism is plagued by rather evil deeds and attitudes. John F. Kennedy once warned of secret societies and secret proceedings, and with good reason. For thousands of years, occult groups often withheld valuable knowledge from the masses as a means to influence behavior and control the direction of society. This did not have to be “magical” knowledge, whatever that means. Usually, it was scientific or psychological knowledge.

Say for example that a group of elitists withheld detailed knowledge of an impending economic collapse because this knowledge gave them a feeling of superiority and an advantage that they could exploit to gain power over others. Often, occult knowledge, secret knowledge, is driven by the selfish desire of one group to maintain a sense of dominance over another. Is it evil to withhold knowledge that could save lives for the sake of self-elevation? I would say absolutely.

Occultism can also lead to temptations of ever increasing criminality.  If groups of people in positions of power maintain a well-oiled machine of secrecy that draws a dark curtain on their behavior, a machine that allows them to cover for each others actions to ensure no repercussions from outsiders, it is only a matter of time before the lack of transparency opens a door to greater evil.  One act of evil left unpunished tends to breed many future acts of evil practiced with impunity.

Luciferianism

So yeah, it’s almost impossible to broach this subject without sounding crazy to people who aren’t already familiar with it. But as requested, I’ll take a stab at it.

Do globalists really believe in a devil with a pitchfork and hooves and horns? I really don’t know. What I do know is that many of them believe in the ideas behind the mythology of the figure (even Saul Alinsky dedicated his book ‘Rules For Radicals’ to Lucifer).

The Lucifer mythology is one of rebellion, a rebellion against the the Christian God. But how would this translate to elitist behavior? They define inherent conscience and moral compass (checks and balances put in place by God?) as a “restriction” or imprisonment of the individual, and they seem to only esteem individuals as those seeking their own “Godhood.”

The way liberty proponents value individualism is very different from the way elitists value individualism.

Lucifer as an archetypal figure represents a rebellion against almost EVERYTHING, including nature. Of course, nature is not a toy to be played with selfishly because catastrophe inevitably results. Moral compass is a guide that keeps humanity from destroying itself, and without it civilizations fall. Luciferianism, at the very least, fosters destructive tendencies and rebellion against the very fabric of humanity. With such people at the helm of entire nations, millions if not billions of innocents will suffer in the scorched path of elites seeking to revolt against inherent moral and natural boundaries as they role play in an ignorant daydream of satanic hero worship, and this is without a doubt evil.

Do What Thou Wilt

Attributed to Aleister Crowley, a self-professed satanist, you will see this ideology pop up in globalist circles and pop-culture icons alike. Crowley apologists often argue that the quote it is taken from refers to the “law of love.” But the love of what? The love of others, or the love of one’s self? Do what thou wilt as long as it does not hurt others, or do what thou wilt regardless of the consequences?

The latter interpretation is clearly the one globalists have taken to heart. Since elitists consistently treat the lowly masses as vermin that need to be exterminated for the good of the planet (and their own amusement), I see little indication that they have the ability to conceive of love, let alone adopt a philosophy of love. Do what thou wilt, however the idea was originally intended, has become a rationale for the globalist propensity of crushing others in the name of “greatness”.

Moral Relativism

Evil people are not as immune to the judgments of others as you might think. In fact, many of them become a bit obsessive about people accepting or even praising the things they do. I can only theorize that if in their minds everyone else subscribes to an evil behavior then it is no longer evil, but normal.

Moral relativism is the act of rationalizing a destructive or evil process by claiming that a positive end result or intention washes away responsibility. The ends justify the means. Globalists could not care less about the consequences of their actions to others, but they do feel the need to justify those actions in a way that people will embrace. From my observations, the majority of globalist propaganda revolves entirely around the concept of moral relativism and the lie that good is only about perception while evil is a “gray area,” or an illusion. As Kevin Spacey says in the movie 'The Usual Suspects', “The greatest trick the devil ever pulled was convincing the world he didn’t exist…”

The Solution

As stated earlier, it really does not matter what brand of social system we implement. It really does not matter what kind of economic model we employ. It really does not matter if we somehow find a way to promote enlightened thinking on a massive scale. None of it matters if we do not also confront the organized evil of the globalist cabal.

It is interesting how many people strive so hard to avoid acknowledging the fight that is coming by clinging to the notion that the globalists are “misunderstood” or “not important” in the grand scheme of things.

While I work to promote alternative trade models through localism and alternative-security models through community preparedness teams, I also accept that these efforts are a half-measure; mere preparation for an unavoidable conflict between people who hold the contents of their conscience dear (those who view the non-aggression principle as an integral part of a free and healthy civilization), and the globalists, who hold nothing dear accept themselves, their cult and their ambitions.

Evil is a part of every human being, just as good is a part of every human being. It is a battle we all struggle with until the day we die. But organized evil is something else entirely. It is not something we have to tolerate, and it is something we can change. Until it is expunged from our society, no other solutions can be fully enacted. Therefore, the solution begins with the end of organized evil, and it is a solution I plan to enact in my own way. The solution begins with the eradication of the globalists.

via http://ift.tt/1OLm6mt Tyler Durden

Traditionally, the best way to keep track of future military deployments – absent unexpected events, of course – has been to follow key procurement contracts from the U.S. Department of Defense of mission critical offensive wartime equipment such as weapons and ammo, or, less followed, core defensive components such as kevlar, body armor and other forms of core personal protective gear. These usually take place shortly prior to major “events” involving US armed forces.

Which is why we were surprised to learn that earlier today, the US Department of Defense revealed it had placed a $93 million order for 177,000 ballistic body armor plates from the US military’s traditional supplier of protective equipment, Ceradyne which several years ago was purchased by 3M. Both production and delivery are  expected to be concluded over the next several months.

Here is the press release

Ceradyne, Inc., a 3M company, has been awarded a $92.7 million body-armor contract by Defense Logistics Agency for delivery of 177,000 pieces. The plates are designed to meet stringent performance requirements outlined by the U.S. Department of Defense. Production and deliveries are expected to begin in 2016.

For those unfamiliar, this is what Ceradyne’s body armor plate looks like.

As Ceradyne explains, body armor is worn by virtually everyone in the US armed forces.

Worn by U.S. Soldiers, Sailors, Airmen and Marines, the lightweight enhanced small arms protective inserts (ESAPI) are inserted into outer, modular tactical vests to provide torso protection against small-arms fire. These body-armor plates routinely protect U.S. armed forces in battle.

Meanwhile, 3M is delighted by the bottom line

“3M is pleased to win this contract, and we are honored to provide body armor for the U.S. military,” said Cheryl Ingstad, business manager, Advanced Ceramics Platform – Defense, 3M. “We continue to make it our mission to leverage innovation in advanced materials science and the manufacturing process to deliver highly engineered body armor that meets the exacting quality standards of the U.S. Department of Defense. We never forget that the primary purpose of every body-armor plate is to save the life of the military member who wears it.”

Ceradyne has become the go to provider to the DoD for virtually all armor-pierceing protection: it has fielded orders for hundreds of thousands of body-armor inserts and at least 100,000 enhanced combat helmets to the U.S. Armed Forces.

The last time Ceradyne announced a major ballistic armor insert contract with the Pentagon, was last October when the DoD ordered some 28,000 armor inserts for a price of $34 million. This happened just as US troops were being covertly deployed in increasing numbers to Iraq and Syria.

With this latest, and largest to date, order of bulletproof armor inserts, is the US army preparing for another major offensive, and if so where?

via http://ift.tt/27BymMz Tyler Durden

Submitted by Jeremiah Johnson (nom de plume of a retired Green Beret) via SHTFPlan.com,

The biggest problem with the Mainstream Media (MSM) is not just one that is based in objectivity.  The powers that be actually “sculpt” the media’s position and craft it to their own making, to end up being their mouthpiece at a minimum.  With the majority of news reports (mislabeled as such), the slant is no longer a balance between to opposite spectrums.  The newscasters, televised news broadcasts, the radio, and news media (newspapers, magazines, and their ilk) are no longer even platforms for the dissemination of information… they're a product; and their productivity is determined by the handlers and controllers of the media and whether it fits inside of their overall objectives.

There is a famous quote that is often overlooked:

“Power corrupts, and absolute power corrupts absolutely.”

 

-Lord Acton

The interesting thing is this quote has many applications, varied in scope and encompassing a general truism that finds use with many things…reference to power, and also to corruptibility.  What Acton was referring to, however, was actually the media.  He was heaping subtle derision about the manner in which media and news found itself kowtowing to the powers in charge…allowing those powers – king, prime ministers, and presidents – to influence the media and squelch truth and objectivity.  The media (wanting to sell newspapers and still keep a front seat press box and all access passes) traded its objectivity for lucre and position.

The problem also lies within the school system.  The public schools (as well as private) are rapidly “losing” the truth in their curriculum, which is being redacted on a daily basis.  The founders of the U.S. are portrayed in a negative light: all of their personal problems within their lives are magnified and even exacerbated.  The purpose is to destroy the United States of America in terms of perception and education, to create a shift in paradigm and public perception.

We had eight years of a Democratic administration under Clinton in which the attack on the established school curriculum, begun in the 1960’s, took root, and completely metastasized during these Obama years.  By destroying the concept of America and how she was founded, the progressives strike at the root and have a completely different tree by the time those inculcated with such fallacies reach the age of voting and earning capacity for taxation purposes.  Meanwhile, the stultified parents in the PTA meetings protest the changes in the curriculum that have already been placed in motion by federal legislation.  This is not a new concept, as illustrated with the following:

“We must start with the children – the seed corn – in order to grow them into what we wish.”

 

-Adolf Hitler speaking in the Nuremburg Rallies

This concept is what we are facing now, as we have a generation that hold these untruths to be the norm and factual.  It is a forced paradigm shift to change the concept that the youth holds of America and destroy the potential for them to develop creative thought.  The curriculum (never truly being perfect, as there is no such thing) introduced children to generalities that could be expanded upon, for the desire of pure education is to introduce evidence and facts and enable someone to draw an opinion on their own regarding the matter.

The concept of creative thought (not in reference to artists and musicians, mind you) is to allow the student to ponder the “why’s” of a matter.  Little by little this is being destroyed, but they are replacing it with a canned, sterilized curriculum that only rewards rote memory and the absorption of concepts alien to those originally in the schools.

The media, then, is to feed controlled disinformation to the entire population.  This takes the form also of a plethora of useless information, such as who won on “Star Search,” or what some celebrity is wearing in attendance at the Oscars.  All useless information that keeps everyone consuming and prevents anyone from seeing the true state of the world as it is.  The news itself cannot be used to “dupe” everyone…that is why there are alternative media sites, and other sources of information not corrupted by “the thumb of the Duke” on the reports.  Still, take Fox News as an example.

The manner in which Fox News reports is markedly different from the way it was 10 years ago.  You can see the capitulation of the newscasters as they begin to echo the platform of the establishment media, and reject objectivity and conservative programming to follow in the overall paradigm shift begun by the administration.

We see it in the schools, as an entire generation is made to not feel any true identity except some “membership in the global community,” let alone the patriotism and pride in the U.S. as a place where dissenting views by the minority is allowed, and (prior to Obamacare) a free nation where you could go about on your own and do your own thing pretty much undisturbed.

They are waiting for the generations that were brought up in an era of conservative actions and critical thought…. waiting for them to either die off or become so hopelessly outnumbered – by the new, sculpted generation, by illegal aliens, and by influx of foreign thought and systems – that the demographics all change in their favor.

The seeds have been planted.  The schools and the media are completely complicit in the destruction of this nation, along with their handlers.  It is an amazing thing that the country was so free as to allow the very people who are destroying it to come out with and force their socialist and progressive platforms on the country as a whole.  This is what is happening, and it is doubtful whether or not we will reverse the tide.  It can be done, but until then The-Powers-That-Be sculpt and form the public through the media and schools to make people into their own images, and those images are not good.

via http://ift.tt/250WeHi Tyler Durden

The non-linearity of inflation psychology and the present danger of stagflation

Submitted by John Butler at GoldMoney Inc. The full report can be accessed here. 

Introduction

Ever since the 2008-09 global financial crisis there has been a lively debate between those anticipating a prolonged deflation and those predicting a transition to inflation. In certain respects, both sides of the debate have been correct, if sometimes confusing monetary, credit and price inflation. Recent data indicate, however, that the terms of debate are now shifting decisively in favor of those expecting price inflation or, more precisely, stagflation. Not only is US core CPI trending higher; the dollar uptrend has given way to a downtrend, implying the end of low headline CPI. The result could be CPI above 4% by 2017. The psychological effect of 4%+ CPI, combined with timid action by the Federal Reserve on rates, could represent a ‘tipping-point’ in public inflation expectations. Once this occurs, there is a risk that economic behavior changes in unpredictable ways that can damage real potential economic growth. Investors should prepare accordingly.

The concept of a ‘tipping-point’ can apply to a wide range of phenomena.

One classic example is that of a crowded theatre slowly filling with smoke. At first, perhaps only one person notices the smoke and, comforted by the fact that others remain calm, remains seated, if slightly on edge. But then a handful of others also notice and become concerned. Finally, at some point, these folks stop watching the show and instead start watching each other. As the growing concern across the theatre becomes evident, someone finally makes for the exit, triggering a rush by others. Yet many of those rushing out might not have noticed any smoke. The critical point is reached not because more people notice the smoke; rather, more notice changes in others’ behavior and thus change their own.

The danger of inflation for economies and financial markets can also be understood in this way. As prices begin to creep higher, a few investors, businesses and households begin to notice. Rather than just going about their business as usual, they begin to watch the behavior of others more closely. Finally, a handful of economic agents suddenly change their behavior in a significant and highly visible way, triggering similar responses by others, who might not even have noticed that prices were rising.

What sorts of behavioral changes might those be? Perhaps investors begin to favor assets which protect against inflation. Perhaps businesses take out loans in order to finance stockpiles of inventories, in anticipation of higher prices. Perhaps consumers begin to do the same with durable household goods. By these very actions, investors, businesses and consumers all begin to reinforce a vicious inflationary circle, limiting the available market supply of broad ranges of goods and thereby driving up prices. Regardless, once the inflation tipping-point is reached, the rush to the exit–to protect against rising prices in some way–is damaging to economic efficiency, especially within the highly specialized global economy of today, implying the onset of stagflation. The consequences for potential economic growth and real (after inflation) corporate profits are strongly negative, with clear implications for financial assets.

Cast your eyes around the globe and it is clear that, in a growing number of countries, tipping points have already been reached. Indeed, stagflationary economic conditions already obtain across much of the developing world. The inflationary aspect in developing economies relates to local currency weakness. But with the dollar no longer strengthening and US core inflation having already re-established a rising trend in 2015, the stagflation is migrating from abroad to whence it in fact originated: The highly expansionary monetary policy of the US Federal Reserve, provider of much of the world’s de facto monetary base, namely US dollar reserve balances. Extrapolating these trend reversals could well carry US headline CPI to above 4% y/y by 2017.

The reality of rising consumer price inflation in the US and around much of the world shifts the terms of debate between those expecting a prolonged debt deflation and those anticipating a transition to stagflation. To understand why, let’s briefly explore the background of the inflation vs deflation debate and then return to recent developments.

First, it’s important to define inflation. In classical economics and into the early 20th century, inflation and deflation were defined as changes in central bank base money. This need not have any direct relationship with the general price level. It is the creation of commercial bank credit that expands the broad money in circulation, hence monetary inflation or deflation can also be caused by commercial banks. In fact, most money today is created by commercial rather than central banks. The term inflation, however, is now mostly used to describe changes in the price level rather than money and/or credit. Hence, we need to understand clearly the difference between monetary inflation/deflation, credit (or asset) inflation/deflation and, finally, commodity or consumer price inflation/deflation.

Credit (or asset) inflation/deflation is difficult to define precisely because there are so many different forms of credit, ranging from fractionally-reserved bank time deposits–a form of broad money–to loans, leases or other forms of secured or unsecured debt. This is made all the more complicated because banks don’t normally mark their assets to market and the so-called ‘shadow banking system’ largely relies on derivatives of various kinds for financing. Indeed, near the end of the financial crisis, regulators gave banks additional flexibility to mark assets to ‘make-believe’ rather than actual market prices. Whereas the price of a dollar is a dollar, that of a loan, a bond or other risky asset is uncertain and fluctuates with investor confidence that the issuer of the asset will be able to make the contracted interest and principal payments.1

One way to approximate growth in credit (or asset) inflation/deflation, other than to follow broad money aggregates, is simply to look at the growth in bank lending, marked as is, be it to market or make-believe. One reason why we can simplify in this way is because policy-makers in major economies have made it crystal-clear that, to the extent that financial institutions are at risk of insolvency, they will be bailed out in some fashion, such that the market price of distressed assets will never be properly marked-to-market but, rather, suddenly or gradually monetized over time. As such, it is not a great leap to assume that the growth (or shrinkage) in bank lending in general is reasonably indicative of whether credit inflation (or deflation) is taking place.2

Finally, there is commodity or consumer price inflation/deflation, normally measured by official price indices. But such indices are at best approximations and, at worst, are designed in ways which understate real world price inflation through so-called hedonic adjustments, substitution effects or by underweighting or excluding entirely volatile components such as food and energy.3

Turning now to the debate, the arguments of the deflationists have generally focused on the credit (or asset) definition of deflation. As long as credit is contracting, so the thinking goes, it matters not whether the central bank is growing the narrow money supply. Banks will simply sit on so-called ‘excess’ reserves indefinitely as the credit contraction runs its course. Therefore, central bank money creation merely stabilizes the financial system; it does not transmit into fresh credit creation or real economic activity and, therefore, does not necessarily contribute directly to commodity or consumer price inflation down the road. Certainly this seems an accurate description of what happened in 2008 and 2009. Credit markets collapsed; banks stopped lending; the Federal Reserve and other central banks created huge amounts of narrow money; yet while financial systems stabilized in the end, this narrow money did not flow into fresh credit creation, economic activity or consumer prices.

The inflationists, it would seem, were wrong, at least for a while. But to be fair, many of the inflationists focused primarily on monetary inflation, which has indeed been substantial, as pointed out above. In some cases the inflationists did predict a rapid or even simultaneous transmission from money creation into credit creation and along to commodity and consumer price inflation. Events since 2008-09 have shown this view to be false. But economic history generally as well as contemporary developments demonstrate that there is not a stable relationship over time between monetary inflation, credit inflation and commodity or consumer price inflation.

Mainstream, neo-Keynesian economics tends to place little value on monetary analysis for exactly this reason, that the link between money growth and consumer price inflation is impossible to model with reasonable accuracy and, as such, cannot usefully inform central bank monetary policy decision-making, focused as it supposedly is on maintaining a stable level of consumer prices.4 But just because something is difficult to model does not mean that it does not exist. After all, it is impossible to model precisely the ‘tipping point’ behavior of people in a crowded theatre as smoke accumulates or, alternatively, that of investors, businesses and households amidst growing evidence of rising prices. But would anyone deny that these phenomena are real and that they can pose large if unpredictable risks?

Thinking along these lines, I believe there is now ample evidence that, over the course of 2015-16, there was a transition from consumer price disinflation to inflation coinciding with the peak in dollar currency strength. As such, there is a growing risk of reaching a tipping point beyond which rising inflation expectations will fundamentally alter economic calculation and action from the largest global businesses down to the smallest households, with stagflationary economic consequences.

The evidence is thus that the entire monetary transmission mechanism, from narrow to broad money; from broad money to credit and asset growth; from credit and asset growth to commodity and consumer price inflation; is indeed functioning in a narrow sense, even if it has failed to restore sustainable economic growth. It has just taken much longer to play out than the inflationists had generally expected, at least in the US.

In this context, it is perhaps curious why the Fed remains so timid when it comes to raising interest rates. The official current Fed position is twofold: First, inflation–at least based on how they prefer to measure it–is still quite low; second, the economy appears to be cooling. Thus the Fed will most probably only raise rates slowly, if at all, over the coming months.

In my view, the real reason why the Fed continues to stoke the inflationary fire with near-zero rates has more to do with the still-perilous state of the US financial system and the massive debt overhang which, naturally, needs to be serviced. It is much easier to service a debt which is depreciating in real terms, even if it is growing in nominal terms. The Fed may claim to be aiming for just slightly higher inflation but it is possible that they are, in fact, seeking a significantly higher rate to help service the huge accumulated public and private debt burden. Only when this task is more or less complete, the Fed may raise rates sharply and perhaps even publicly admit that they made a (convenient, wink wink) ‘mistake’.

With informed observers of all kinds–investors, businesses and consumers–now beginning to smell the inflationary smoke of rising consumer price inflation, the Fed’s continuing, unwavering commitment to create inflation could at any moment lead to dramatic changes in behavior. Indeed, once the tipping point is reached, the Fed will have lost the ability to control inflation without raising interest rates to punishing levels that will cause a major recession and possibly a financial crisis greater than that which struck in 2008. Why?

Consider how rational economic agents are likely to respond to the onset of clear and present inflation. Prices are already rising and the Fed has not shown a willingness to reconsider its expansionary monetary policy. Investors, therefore, will keep right on chasing returns in asset markets, seeking to remain ahead of the inflation curve. Businesses will stockpile inventories of real assets in an attempt to do the same. Finally, households may begin to stockpile consumer goods. What will be the combined result of these activities? Well, by driving up demand for all manner of assets, and wholesale and consumer goods, they are going to exponentially reinforce the price inflation already underway. But as this sort of demand is not for consumption, but rather for stockpiling (or hoarding), it is not positive for growth but rather quite the opposite; it is, rather, economically inefficient and stagflationary. Real final consumption is not going to increase. Indeed, as prices rise, it is going to fall. (Amidst weak economic growth real wages are also likely to fall.)

The Fed, already deep into a dilemma largely of its own making, is about to find itself facing an even more unpalatable choice before long: Accommodate the surge in demand for real goods with a continuing easy money policy or, alternatively, slam on the brakes sufficiently to force an end to the incipient behavioral changes behind the growing stagflation, thereby running the risk of causing another financial crisis perhaps more severe than that of 2008-09.

So what is the Fed going to do? Take responsibility? Well that would be rather out of character given that the Fed so far has steadfastly denied any blame whatsoever for the massive credit bubble that it facilitated with a prolonged period of excessively easy monetary conditions in 2003-07. More likely, the Fed will simply hope that somehow inflation will rise moderately to a level which helps to reduce the real debt burden on the economy and then normalize policy. But if an inflation tipping point is soon reached and consumer price inflation ratchets sharply higher, no doubt the Fed will deny that such inflation is in any way a monetary phenomenon, notwithstanding the analysis above and Milton Friedman’s famous dictum to the contrary.

The Fed’s denials will by no means stop there. They will also deny that this inflation is harmful, using a range of arguments such as “Price increases are indicative of firming economic activity,” or “Recent spikes in volatile food and energy prices are isolated to those markets and not indicative of rising core inflationary pressures.” No doubt the Fed will take comfort that real wages are likely to remain stagnant or even decline amidst weak economic growth. But for people who work for a living, the combination of rising food and energy prices on the one hand and stable or declining real wages on the other will not be cause for comfort, rather the opposite.

It is easily forgotten that the global economy grew extremely rapidly in 2006 and 2007, thus entering 2008 on the verge of overheating. It is easy to attribute the sharp slowdown in economic activity in 2008 and early 2009 to the US-centric global credit crisis but history demonstrates that sharply rising commodity prices–a classic indicator of economic overheating–have preceded all major modern recessions, including those of 1973-74, 1980-82, 1991-93 and of course 2008-09. It may thus be too early for to expect a full–bore ‘stagflation’ in the US; rather, a greater degree of dollar weakness may first be required. Given recent developments, this should give investors cause for concern. As evidence piles up that one major global economy after another is slowing down, the prospect of a global recession arises. Indeed, the US equity market has long appeared an outlier in a global trend toward lower equity market valuations. Is the US equity market perhaps the last stagflation shoe to eventually drop?

Sadly, defensive investors have few options. Fleeing into bonds, when some 1/3 of the developed world bond market offers negative yields, is hardly an attractive option for preserving wealth in a rising inflation environment. The fact is, in a world of negative rates, rising price inflation and possible fiat currency devaluations or bank bail-ins, gold provides an alternative, superior store of value. While many investors consider gold and silver ideal in this regard, other commodity prices may now have bottomed and could provide additional diversification benefits. The problem with most commodities, however, is the storage costs and/or the negative carry associated with positively-sloped (contango) commodity price curves, as generally observed at present. Gold, by contrast, has storage costs that, even for highly secure storage, are close to zero.

Thinking farther ahead, I remain confident that, in the event of a general global economic slowdown, policymakers in heavily-indebted developed economies will continue to follow generally inflationary policies in order to support growth, notwithstanding the evidence, both historical and contemporary, that such policies are at best ineffective and, at worst, counterproductive. Indeed, I lean towards the latter view. Yes, a correction in equity markets may be coming in time but if sufficiently large, so is another round of fresh stimulus. Just where it is going to go, and how long it will take to get there, is anyone’s guess. But we know from where such ‘money’ is ultimately being covertly taken: The earnings and savings of working people the world over. While it is the responsibility of investors to grow wealth when conditions are favorable–and at least protect it when not–we should all remember that inflation is not merely a monetary phenomenon but, much more importantly, an immoral one.

Footnotes

1.There are even times when it is difficult to value on a bank deposit. If a bank is at risk of failure, then deposits are at risk. Even insured deposits can be difficult to value. How long until the insurance is paid out? Will interest be paid in the interim? At what rate? If an entire banking system fails, will the government really be able cover all insured deposits? If not, will the government devalue the currency? If so, by how much? Back in Q4 2008, investors were beginning to ask these sorts of questions.

2.Those familiar with the details of the credit bubble and bust of recent years are well aware that much of the bubble was not visible in traditional bank lending or balance sheet statistics but, rather, was growing within the so-called ‘shadow banking system’. Nevertheless, I believe that banking lending data are at least indicative of the direction of credit growth, if not the actual rate. More detailed analyses than that presented here are certainly possible but are unnecessary to the basic point.

3.Hedonic adjustments are intended to incorporate the impact of productivity improvements in goods. For example, if the price of a computer is unchanged over the year but the newest version is twice as fast, a hedonic adjustment would calculate that the price of the computer had in fact declined by 50%. While this sounds nice in theory, in practice it can be messy, misleading and hugely biased. For example, just because a computer is twice as powerful, does that really mean that it is twice as useful? Who is going to make that judgement? Is a car that is twice as fast twice as useful? Also, hedonic adjustments are never made in reverse. Think about rail fares for example. If rail fares are unchanged over the year but overcrowding, delays and cancellations increase by 50%, do hedonics measure this negative productivity as an increase in prices? No, they don’t. In all applications of hedonic adjustments it is always assumed that there can be only positive, not negative changes in productivity, hence the obvious and potentially large bias. 

4.While most central banks claim to pursue a policy of maintaining consumer price stability, there is substantial evidence that, in fact, this is not the key policy objective. The most obvious piece of evidence is the nearly universal poor track record of most central banks in meeting their price stability mandates. For a more thorough discussion of central banks’ policy objectives, please see the Amphora Report, A Century of Money Mischief, Vol 1/14, December 2010.

via http://ift.tt/250U3mT Gold Money

Humpday toilet humor…

Source: Townhall.com

via http://ift.tt/1OKY62Q Tyler Durden

Submitted by Jeffrey Snider via Alhambra Investment Partners,

There is a great deal that is wrong with mainstream economic commentary, starting with its unwavering devotion to orthodox economics and unshakable faith in their “stimulus.” No matter how little is actually stimulated there is never any doubt that the media will simultaneously forget the last one while lavishing praise on the next one. It is, however, the actual economic commentary itself that may be the most damaging. Because nothing works, every news story is printed from the shallowest, narrowest perspective. It is a grave disservice to the public and journalism.

As an example, on July 15, 2015, the Wall Street Journal published an article on Industrial Production that wasn’t unique or atypical. If you read these kinds of stories you find them utterly devoid of differences, so this effort was entirely symptomatic. At the time, industrial production for June 2015 was estimated to have risen 0.3% month-over-month, ending a string of six consecutive M/M declines. That fact more than the degree of the rise was cheerfully reported as if meaningful.

U.S. industrial production rose in June, a sign that the improving economy is helping the sector break out of a slump.

Industrial production, a measure of output in the manufacturing, utilities and mining sectors, rose a seasonally adjusted 0.3% from May, the Federal Reserve said Wednesday.

Even though the article noted that one month was nowhere near enough to overcome those prior declines, it didn’t matter because it was finally a plus sign conforming to the mainstream “narrative.”

The pickup comes as other measures show improvement in the economy this spring, with employment continuing to climb and wages creeping up as the labor market tightens…

“Weakness in manufacturing appears to be past its peak,” wrote Jim O’Sullivan, chief U.S. economist for High Frequency Economics in a note to clients.

If you happen to peruse similar stories on Industrial Production today, you will find no notice of those prior assurances; no stories discussing how June 2015’s single month was not, in fact, significant at all. There aren’t even any mentions that June 2015 was subsequently revised to now show a decline. This is particularly relevant to the April 2016 estimate released this morning also providing a similar and likely premature huge sigh of relief.

All that is bad enough but that isn’t even my main point of contention. It is as I indicated earlier today, that revisions in IP were not limited to monthly variations but rather to rewrite the whole idea of the recovery. At that time, the Fed estimated IP had recovered to about 5% above the prior peak in 2007. Two benchmark revisions later now claim that IP in June 2015 was instead 1% below that prior peak. Economists were basing their claims for “transitory” weakness on not just the shakiness of monthly variation but more so on a recovery that increasingly figures never to have existed. That dramatic change seems worth noting somewhere, especially as it drastically alters all economic implications going forward in this same direction. 

My emphasis on the IP subcomponent of the production of consumer goods really emphasizes this point since consumers are where this “overheating” idea intersects the supposition of “full employment.” In July 2015, the Federal Reserve figured that IP in consumer goods had “recovered” to 2% less than its prior cycle peak in 2007. The current benchmarks instead figure production levels last June were still almost 11% below last cycle. That is not a minor difference; at -2% you have a difficult time trying to argue “overheating” or “full employment”; at -11% you are deservedly laughed at while attempting to make the same case.

Mainstream economic commentary has been proceeding from false assumptions, which is really the point. With those prior benchmark estimates you may be somewhat concerned about weakness, but with the current set of IP numbers you are wholly unsurprised by it and how it would continue on the same track. Again, this is worth comprehensive exposition rather than determined silence and maybe intentional omission. It is the biggest story this century, as country after country falls into social disorder including our own, but the media sits silently stunned as to why anyone would question the economy or really economists.

The implications are no longer just about recession, though that remains as a primary risk. What this shows is an economy very much like the participation problem in labor, meaning that the Great Recession revealed economic potential much reduced by prior financialisms under the unrestrained eurodollar (Alan Greenspan’s quarter point changes to the federal funds rate counted for nothing) of the 2000’s. What should be on the front page of especially the Wall Street Journal is an honest investigation trying to determine or at least raise questions about just how much the economy has been reduced; not more blind deference to the disciples of “transitory.”

I have used Milton Friedman’s plucking model to illustrate these implications before, and I think it is useful to do so here in this context. My own concern is not just that economic potential has been shriveled but also a growing sense that there is even more to it than that.

Economists at the Fed proceeded on the assumption of what you see above, namely that the Great Recession was a very nasty cycle but a cycle nonetheless. With monetary policy clearing up any financial impediments there was every expectation that the economy would soon rejoin its prior trend even if it took a little bit longer to do so (because of, it was proposed, the lingering after-effects of the panic). Like the IP revisions or the denominator in the unemployment rate, however, that isn’t what we actually find.

Since it is 2016, now almost ten years into this “cycle” without recovery, it is quite reasonable to assume instead that it never was a cycle at all and that the economic baseline itself shifted.

That view would at least account for the economy having shrunk after the Great Recession, but it leaves unaccounted the possibility of what economic potential or trend might have been before it. Given the state of the global economy under the eurodollar standard in the mid-2000’s, we have every reason to believe that potential did not “bend” starting in 2008. In other words, the economic mirage of the middle 2000’s everywhere from the US housing bubble to the Chinese or Brazilian “miracles” was false prosperity that papered over growing global impoverishment. In that case, the stylized model of trend and cycle is more so this:

But I believe there is still another baseline scenario that also deserves consideration. While the Great Recession seems to have revealed the reduced economy and its shriveled foundation, there is still the possibility that the deep recession itself and the interaction with the lack of recovery further amplified that depressive instinct; the baseline trend also bent in 2008 even after having been pushed downward before it.  It is the only way to account for what we already see in places like Brazil, where the “dollar” derived slowdown progressed from slow and steady growth to slow and steady contraction to now steady depression. It seems as if there is no bottom.

This would propose that the Great Recession not only revealed the shrunken economy but frighteningly added its own weight to it. Unfortunately, it is an all-too-realistic scenario in a financialized economy that was once dependent upon solidly growing credit supply (which itself was dependent upon the unbroken geometric growth of credit-based “money”) for marginal expansion. As we find in Brazil, there really is no bottom in sight even though contraction has been in place for just about three years already!

The only way that happens is if actual economic potential (meaning in the real economy as opposed to some number provided by BEA or Federal Reserve statistical models) follows the path I suggest above. Brazil is admittedly a severe and extreme example, but the outlines of the US labor market and other indications of US “demand” follow the same general idea. That would mean that recession cycles lead to a ratchet effect, where after each the economy only gets worse.

This scenario would recommend that the “debate” about US or global recession is actually a secondary consideration. More attention might better be paid to understanding the true nature of the past ten years than whether or not one month of seasonally-adjusted IP, before revisions, can be endlessly extrapolated into Xanadu. What the revisions show without argument is that the US economy is and has been in serious trouble all along – that an economy that suddenly leaves 15 million out of it is not an economy anywhere close to “normal.” Where it goes from here is absolutely up for debate, but that argument doesn’t start anywhere near “full employment” or “overheating.” It is left instead trying to figure only degrees of bad and worse.

To be clear, I am not proposing that the worst case is the base case. Rather, I am only suggesting that current circumstances and more so how the economy got this way do not rule it out. It should be seriously considered rather than still more universal mainstream ignominy of “unexpected” or “transitory.”

via http://ift.tt/1U0bzCK Tyler Durden