US can’t afford peace with Russia

With hundreds of trillions of dollars on the line, the US media is beating the drum on the 70-year-old plus Russia is bad narrative.

The entire military-industrial complex was built on that premise that we had to go toe-to-toe with Russia on every aircraft, tank and nuclear missile — even if the East did not have that weapon.

What will happen if the Bogey Man is not so bad after all.

Now along comes President Trump to stick a pin in that idea and it unleashes forces from the left and right beholden to escalating defense budgets and growing military bases in their districts.

Peace is too costly to break out across the US visa vis Russia. We need that 70-year-old premise that NATO and containment are what the world needs.

Of course Trump will survive the onslaught of criticism, however threatening to take the milk and honey away from the defense contractors and intelligence agencies is quite another matter.

It was JFK who threatened to break up the intelligence agencies –most notably the CIA — into pieces in 1963 that may have played a part in his assassination.

Let’s hope nothing untoward happens again.


2016 sowed the seeds of change. Now what?

As 2016 draws to a close, I am one who thinks the year has been monumental for the change it will bring to the world both economically and politically in the near future.

Historians will begin to see the import probably ten years from now, but the seeds were sown for a dramatic shift towards nationalistic politics in an attempt to pull these economies out of the decade-long malaise.

You could start with Iceland’s treatment of bankers and the enormous debt the island nation took on to pull itself out of the financial crisis as the possible ignition switch.

Then in 2016 you have Brexit. The surprising vote from the UK, where the British people approved the leaving of the European Union. Whether it was right or wrong, the exit party played on the fact that the unelected EU regulators had too much control over their daily lives.

The fear that Brussels could dictate policy more than Parliament, played to the voter fears that hordes of immigrants would be coming ashore because of these continental dictates.

Brexit — you could say — greased the skids for President-elect Donald Trump’s win over Hillary Clinton. Trump’s focus on keeping jobs in America and draining the swamp of life-long political hacks directing policy regardless of who occupied the White House, also resonated with voters in the same way as the British felt with Brussels.

History tells us that a turn to nationalism is generally seen as a negative, as countries turn to look inside generally leads to bellicose attitudes by the leadership. However most of the nationalistic warring leaders are far left-wing politicians.

Over the last 75 years with Germany, Russia and China the moves towards a socialistic society have had dramatic effects on their people and for the planet. Generally speaking a right-wing leadership takes on a globalist view, so these moves under the UK with Prime Minister Theresa May and in the US under a Republican Trump is something of an anomaly.

How 2017 will play out with all the developments, which happen this year is still too early to tell, but as the Chinese proverb states: May you live in interesting times, seems to have come to fruition.

War as an economic theory

So here’s the US in no-man’s land.

While all around us are falling economically, the Fed defiantly stands on its Dec. rate hike.

Never mind that the most relevant measure of that strength — GDP — was just lowered to 1.9% from 2.5% for Q4 by the Atlanta Fed’s GDPNow.

We are in no-man’s land, because the Fed and just about every other economist can’t cite one monetary or economic theory that hasn’t been perverted by the Fed’s actions over the last 7 years.

Being at zero for so long (with untold liquidity being injected) has taken the market out of its primary function: allocation of capital and risk. And since that injected liquidity will never be sterilized (allowed to be circulated into the overall economy) there cannot be any meaningful growth.

My biggest fear is that the Fed and Treasury officials look to the later half of the 1930s and see anemic growth despite huge capital injections into make-work projects and say the only way we can extract ourselves from this malaise is to create a war to lift all boats.

Let’s face it, these people are clearly out of ideas on what to do. Other nations are clearly thinking the same way as China takes control of islands in the South China Sea and Russia puts its troops and planes into Syria.

Unlike the run up to WWII, today’s war would not have the economic boom (battleship and tank manufacturing), by nature of how it would be fought, but that would not stop the military-industrial complex from making the money grab that has gone to Wall Street for the past 7 years.

Given the debt spiral and currency wars over the last decade, I would be surprised if China, Russia or the US did not have the war card on the table should the global economy turn to another Great Recession.

The real deflate-gate saga

Tom Brady’s football was better inflated than this global economy.

Every day this week we have seen a sovereign nation cheapen its currency.

Russia today cut its interest rate by 2 percentage points to “ease” inflation fears. Not sure how a rate cut can subdue inflation, but leave that as it may.

Since the Swiss moved the franc off the euro peg, 10 countries (I may have missed one so forgive me, but its the trend, not specifics) have altered monetary policy to alter their currency.

There is not a major economic power on this globe that is seeing inflation fear. The deflation stagnation spiral is rearing its head across the globe as growth continues to slow.

The price of crude is the first indication of slowing growth. It has little to do with a glut of new sources coming online and everything to do with lack of demand.

The US 10-year note at 1.7% yield is low because we are the “cleanest dirty shirt”? No we are the high on the street. Germany, UK, Japan are lower in yield. Even Italy, Greece and Spain are lower.

The US GDP for Q4 2014 comes in at 2.6%, which means for all of 2014 the economy grew at 2.4%. That’s pretty anemic given the amount of funds injected into THE BANKS, not the economy in 2014.

There is far less likelihood that the Fed can move off the patience platform anytime soon given a holiday quarter at 2.6% after QE4 wound down. No escape velocity to this number. US can’t stand on its own without ZIRP.

Dollar To Donut


Rumblings from Russia two weeks ago about scrapping the dollar as the global reserve currency were largely ignored. Putin’s comments were taken as a wounded bear needing higher oil prices not afforded by the weak greenback.

On Tuesday, a Chinese central banker called on G20 participants to look at creating an international reserve currency. This is the second warning shot fired by Chinese officials speaking of fears regarding Uncle Sam’s ability to keep its preeminence in global currency markets.

The fact that these ideas are being voiced –– albeit from China and Russia –– signal an urgent reaction to Fed chief Ben Bernanke’s plan to begin purchasing Treasury notes today. Global bankers see the move as inflationary, which would cheapen the dollar and therefore reduce foreign investors Treasury holdings.

President Barack Obama, Treasury Secretary Tim Geithner and Bernanke all came out yesterday to reject the idea of a global currency.

As I have stated, an Uber currency during this global recession cripples the participating countries’ ability to adjust its trade balances by depreciating its currency. For this reason I foresee the euro as being in trouble later this year, when Germany finds its trade gap growing against other countries due to the mounting “beggar thy nation” currency moves.

The yuan, China’s currency, may be used as a regional currency for Asia, but China’s saber rattling does little for its large investment in US government assets.

Chinese Premier Wen Jiabao last month asked that the US “to guarantee the safety of China’s assets.” China’s US debt holdings climbed 46 percent last year and now stand at about $740 billion, according Treasury. China is the biggest holder of our debt.

G-20 leaders will gather in London on April 2 to forge a common response to the financial crisis that has spawned a global recession. The summit is to discuss proposals for reforms of the International Monetary Fund.

New World Order theorists see this as a move toward the endgame of a global government. This unified currency call along with calls for international financial governance panels overseeing markets and risk give the NWO theorists plenty of ammunition.

Gold prices should be soaring. The $50 price move on the news of Bernanke’s treasury purchases is an indication of the inflationary fears. The following days move down in gold pricing was very perplexing to say the least.

Gold proponents see manipulation of gold prices through government interventions into the market, whether it’s through direct sales or through the ETF.

Monday’s Dow Jones industrial average’s 500-point move created a short squeeze that had gold prices reeling as investors scrambled to cover short positions.

Some of the gold moves can be explained like the above. Other moves cannot be so. With dollar depreciation and talk of a global currency should give major price support for gold.

Every T –– as in trillion –– in the headlines coming out of Washington should move gold higher, hence my call for $1,500 by years’ end.

2nd Horse Of The Apocalypse

The British government’s debt offering yesterday could not attract enough buyers to cover the offering.

All gilts (UK bonds) slumped after demand at an auction of bonds fell short of the amount offered, the first time the Treasury failed to attract enough bids at a sale of regular debt in 14 years.

Investors bid for 1.63 billion pounds ($2.4 billion) of the 40-year securities, less than the 1.75 billion pounds of 4.25 percent notes slated for sale, the government said last night in London.

For more on Wall and Washington and the cratering economy see: