Tag Archives: stock bubble

Fake Economic News + Overvalued Stocks = Recipe For Market Disaster

Think you know what will happen this year?  What would you have said to me on January 1st last year if I told you:  ” the S&P 500 would hit several new all-time years this year and Donald Trump will be elected President?”

Craig “Turd Ferguson” Hemke invited me on to his “A2A” webinar with his subscribers last week.  We had a spirited and (I think) entertaining discussion about abundance of fake economic news that permeates the financial media, the true state of the U.S. economy and the growing risks to the stock market.  And of course we chatted about precious metals an mining stocks.

And of course his subscribers had some interesting and thought-provoking questions. You can listen to our conversation here:  A2A with Dave Kranzler and you can access Turd’s webite here:  TFMetals Report.

Goldman to Trump: Situation Assessment, Government Bail-ins, Precious Metals Threat: Systemic Collapse

A guest post from Stewart Dougherty. Stewart included some thoughts in his email to me that I thought should be shared as a preface to his essay:

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Hi Dave:
Some pretty heady stuff, particularly the part about the Fed’s balance sheet being a lie. (I am 100% convinced of this, but cannot prove it, at least not yet.) And remember, Bernanke was caught issuing $10 trillion in swaps to foreign banks, all of which was supposed to remain a complete secret. It is not as if they haven’t been caught doing what I am saying they are still doing, to an even larger degree.

I’ve stated that the “conversation” is imagined, intuited and fictional, so the small living parts of the shredded Constitution might actually protect my freedom of speech; wouldn’t that be amazing.

I believe “government bail-ins” is fresh terminology … people hear about bank bail-ins all the time … but they don’t hear about government bail-ins, which are going to affect far more people and are inevitable. (As I’ll explain in Part 2, government bail-ins are not going to be about taxes … tax increases are too slow, and oftentimes don’t even work.) Since it’s new, the term government bail-ins might gain a lot of attention.

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Despite Goldman’s avid support for Hillary Clinton, fewer than three weeks after the election, Gary Cohn, the number two executive at Goldman Sachs met privately at Trump Tower with the President-elect. Ten days later, he was named to one of the most powerful financial positions in the world, Director of the National Economic Council of the United States of America.

As they say, knowledge is power, and power is knowledge; both open doors, ears and minds when they decide to. What could Cohn have said to Trump that resulted in his near-immediate hire? Using the Inferential Analytics methodology, we have synthesized a message a visitor of Cohn’s stature might have conveyed to Trump on November 29, 2016. And while it is inferred, intuited and fictional, the following transcript is deeply grounded in the nation’s current and prospective fiscal, financial, monetary and economic situation.

The Visitor: “I appreciate your invitation and it is a pleasure to meet with you today. Permit me to convey Lloyd’s congratulations. He would like to assure you that you have Goldman’s full support going forward.

“Our time is short, so I will give you a very high level situation assessment. Thousands of person hours and millions of dollars’ worth of research and analysis stand behind each of the themes I will touch on, and we can provide additional details if you wish. As one of the U.S. government’s closest financial allies for decades, particularly when it comes to the placement of the nation’s sovereign debt, we have a deep understanding of the financial dynamics at work. When I use the term “we,” it is because Goldman and the United States government have been close business partners for many years.

“As you correctly stated to the American people during your campaign, the situation is not good. It is containable at this time, but only if we continue to run substantial deficits and create large sums of new dollars, in other words, debt. With all due respect, we believe the U.S. government is going to need our help as never before in the coming months and years.

“I will briefly touch on nine topics. There are others we could discuss, but these tell the most important part of the tale. They are: 1) Deficits; 2) Debt; 3) Reporting; 4) War; 5) Perception; 6) Stocks; 7) Money Creation; 8) Currency; and, 9) Precious Metals.

“As you may know, I started my financial career as a Comex trader, and Lloyd began his as a gold dealer at J. Aron, which was acquired by Goldman. We both have extensive experience in the Precious Metals markets, and believe they are going to be of incalculable significance in the near future. I will review this topic later.

“All I ask is that you not shoot the messenger. Much of what I tell you is troubling.

“First, the deficits are structurally non-containable. The OMB itself confirms this, projecting escalating deficits for the next 50 years, with not one year of surplus during that entire time. The aggregate deficit during the next decade alone will be at least $10 trillion. If there is a slowdown or recession, it will be greater or even much greater. The deficits can only be reined by a massive political reset and wholesale reneging on the entire social contract, including Medicare, Social Security, public pensions and welfare. Such a reset would result in an economic collapse. Therefore, it is not feasible, although it could be forced upon us by endogenous or exogenous events that would take the situation out of our hands.

“The debt has gone vertical, rising from $10 to $20 trillion in eight years. Obama created more debt than all other presidents in the previous 230 years, combined. This amount does not include the federal government’s net, unfunded liabilities, which are an additional $150+ trillion, and growing by trillions per year on a GAAP accounting basis. Please understand that his shadow, unfunded debt is net of projected tax receipts; in other words, it is completely out of control.

“Debt is now increasing at an accelerating rate, with $1.4 trillion added last year alone. This debt can never be paid in future dollars having value anywhere even close to today’s, but for now at least, we are still able to peddle it. We do know that for us to successfully distribute the debt in the future, interest rates will have to go higher, which will compound the fundamental deficit and debt problems. Otherwise, we will have to print money on a scale never before seen, which will further damage the value of the dollar. There is a limit to how badly currencies can be damaged; they can and do go into freefall. Several are, as we speak.

“The so-called economic recovery has been false. The Obama administration, with the full support of the Fed created $10 trillion in counterfeit dollars and threw them at the economy, funding everything including non-stop wars, Food Stamps, a vast expansion of government, subsidized Obamacare, solar panel cronies, fund-raising and golf trips, you name it. It’s all included in the nation’s deliberately and, frankly, fraudulently inflated GDP. We understand; it had to be done, and we helped make it happen by being expert debt pushers.

“Some like to think that we can grow our way out of the deficits and debt, but our analysis disagrees. Assume 4% GDP growth. Given an $18 trillion economy (ours is not, as explained above, but let’s say it is), 4% growth means a GDP increase of $720 billion in Year 1. Let’s say the federal government is able to collect in taxes 25% of the gross GDP increase, a wildly optimistic assumption. That would produce $180 billion in incremental revenue. But the structural deficits, as reflected by the increases in debt, exceed $1 trillion per year. Even 4% GDP growth will hardly make a dent in the fiscal hemorrhaging. And to prime the pump for such growth, the government will have to spend a few hundred billion dollars per year on infrastructure spending and the like. This will fully negate the incremental taxes. So we have to dig a deeper fiscal hole for the privilege of digging an ever deeper fiscal hole.

“This leads to topic #3, Reporting. At this point, out of necessity, virtually every government economic statistic ranges from being “massaged” to outright false. GDP is particularly misleading. If we deducted government deficit spending and the multiplier effects it creates, the United States economy would immediately collapse. If that were to happen, we cannot credibly forecast a scenario that would restore it to growth. Economically, it would constitute an existential event.

“Obviously, we cannot openly admit the reality of the situation, or even let it become known. Therefore, the government must doctor the reports. Given the interrelationships among economic reports, we now have to lie about everything. If we just lied about certain metrics, say, GDP and employment, then the other metrics, if not similarly fabricated, would contradict the fabricated reports. We would be unable to explain the inconsistencies and contradictions. We have to lie about unemployment, GDP growth, retail sales, wages, money supply, the cost of Obamacare subsidies, current deficits, current debt, the true fiscal trajectory of Medicare, Medicaid and Social Security, government pension underfunding, projected deficits and debt, and all the rest. When it comes to false reporting, we’re in a box; there’s no alternative to it.

“This is one reason why the Alternative Media are so dangerous to us, and why we need to eliminate them. There are many talented analysts in that domain. They know the truth, and that we’re not telling it. The fact is that fake news comes from us, not them, as they are revealing to a growing army of citizens.

“In addition to false reporting, there is War. War is just like the Fed; it is never audited. This deliberate lack of oversight is how $6 trillion can go missing at the Army, alone. The Army’s missing funds are a small portion of the total amount that has disappeared into the military spending vortex. War spending is critical to topline GDP, and we can play a lot of non-detectible games with it. The saying, “War is the health of the state,” was coined for us. If we stopped fighting wars, GDP would crater. Wars are a necessary constant going forward, even if we have to invent them.

“This brings us to Perception, one of the most important factors of all. In reality, the economy and dollar have become a confidence game. We know that if confidence in an inherently dysfunctional system is lost, only a reset plus time can restore it. But as we discussed earlier, a reset is socially, politically and economically impossible. If the 200,000,000 U.S. citizens currently dependent upon the government to some degree were deprived of even a fraction of their payments, economic and social entropy would result. In fact, the people want more, not less. Free college; free or massively subsidized health care; a $15 minimum wage; the list goes on. Politicians have told them they can have these things, so there is a vast disconnect between popular expectations and fiscal reality.

“Stock market indices are one of the few tools we can use to create positive perceptions. We have successfully created a false perception of economic health by taking stocks to new highs. We have also deliberately engineered a “wealth effect,” which has artificially spurred spending and GDP, and boosted the so-called “animal spirits.” Doing these things has disguised reality and bought us a lot of time.

“But the real reasons we have manipulated stock markets higher go further. First, without a levitated stock market, the pension funds would collapse. Which would ripple through the economy in a massively destructive way.

“Second, federal, state and local governments need the capital gains-related tax revenue produced by the artificially propped-up stock markets. Dow 20,000 will produce a 2017 tax windfall, which is required to offset the damaged economy’s tax shortfalls. The stock markets are a crucial money machine when it comes to tax generation.

“Now to money creation, which takes us deep into the Dark Side. To fund the massive deficits and levitate the stock market, we have had to create trillions of new dollars. But if the actual amount were revealed, confidence in and the value of the dollar would collapse. So we have to lie about this, too. The Fed’s balance sheet is actually trillions more dollars than what is reported.

“We inject newly digitized currency into the system by crediting trusted, proven collaborators such as the BOE, BOJ and Bank of Israel with dollar amounts that can range into the trillions, depending upon circumstances. These collaborators use a portion of these credits to buy our stocks and bonds, in accordance with strict timing, allocation and dollar amount instructions. They funnel the remainder of the funds to trusted, third-party actors, including hedge funds, merchant banks and dark pool operators, providing them, too, with specific deployment instructions. Therefore, the buying comes from many different markets and locations, which makes it look normal and legitimate.

“What exists is a small club of trusted players who deploy enormous sums of money, all of it counterfeit and undocumented, to support the positive perception, healthy GDP and strong stock market agendas. This money costs our partners nothing; we create it for them, out of nothing. The fact is that management of the dollar is far more clandestine than any of the operations conducted by the CIA or NSA, and the Fed is the most secretive and sophisticated intelligence agency on earth. Geo-financial hegemony is its mission, and dollars are its spies, operating, misdirecting and deceiving from the shadows every minute of every day, all over the world.

“While a large and increasing number of citizens now demonstrate broad skepticism about government institutions, they still have blind faith in the statistics reported by the Fed. Which is upside down, because the Fed’s figures are the most dishonest of them all. It proves the power of propaganda, particularly when billions of dollars are spent on it. If the Fed were subject to audit, which of course it deliberately and necessarily is not, none of this would be possible. And if the true size, composition and deployment of the Fed’s balance sheet were known, the entire global financial system would implode.

“That is the situation, in a nutshell. As you can see, it is fragile and untenable. We can continue to manage it in the current context, but if the context were to change, even in small ways, it could all come down. We have to prevent that at any cost because if it does come down, even our most sophisticated computer simulations cannot posit a scenario by which it could be propped back up.

There is a subtle knock on the office door. Trump realizes he is out of time. He says to his guest, “I understand what you have said, and need you to come back and finish.” They arrange for the visitor to return in three days, December 2nd. Trump asks, “So we can move as fast as possible then, please give me a brief outline of what we will discuss.”

The visitor responds: “Most people do not think about these issues at all, but the sophisticated ones do. We have deliberately misdirected that cohort’s attention. We have distracted them with talk of bank bail-ins and other financial gossip to keep their thinking off of what is actually a much more profound and necessary outcome: government bail-ins. We have before us a complex, four dimensional puzzle, in which the puzzle pieces represent events wrapped in time. Both the controlling elite and the people are putting the puzzle pieces in place as fast as they can, because they know their futures depend on it. The side that first completes and comprehends the puzzle will win; the other side will lose. Two of the most important puzzle pieces are currency and precious metals, both swaddled in time. Which is running out for one side or the other.”

[To be continued in Part 2]

Stewart Dougherty is the creator of Inferential Analytics (IA), a forecasting method that applies to events proprietary, time-tested principles of human instinct, desire and action. In his view, forecasting methods not fundamentally based upon principles of human action are unlikely to be reliable over time. He is a graduate of Tufts University (BA) and Harvard Business School (MBA), is a 35+ year veteran of the business trenches and has developed IA over a period of 15+ years.

It’s A Retail Sales Train Wreck

The Census Bureau reported that its advance estimates of retail sales for November show a .1% gain from October and a 3.8% gain over November 2015. Wall St. was forecasting a .4% gain. Oops. But there’s a bigger problem with that headline report of a .1% increase in retail sales for November:   it’s based on guesstimates by the Census Bureau for the largest retails sales categories.

If you go through the data tables that accompany the headline retails sales report – LINK – you’ll see asterisks in the “not adjusted” data for November in most of the business categories. In a footnote the CB discloses that, “Advance estimates are not available for this kind of business.”  Most people who see the headline news reports, or hear the news “soundbytes” on tv, do not realize that the retail  sales number is an “estimate.”

On an inflation-adjusted basis, the .1% “gain” reported for November is a decline.  Most are not aware of that fact as well.  Also, the .8% gain reported for October was revised down to a .6% gain.  It is highly probable that November’s number will be revised to negative when December’s retail sales report hits in January.  But the revision for November is typically not reported at all.

According to a research piece published by Cowen & Co. on December 14th, mall traffic fell 6.4% in November from October and December month-to-date traffic was down 9.9%. Granted, there’s no question that some portion of that mall traffic has shifted to buying online for its holiday purchases. However, even with the growth in online retail sales, e-commerce accounts for less than 10% of total retail sales (the Census Bureau estimated e-commerce represented 7.7% of total sales in Q3 2016.

I have no doubt that the Government’s Census Bureau is going to put forth its best effort to manipulate the sales data it collects in order to present a positive light on December and holiday sales this year. However, the actual reports coming from the retailers themselves reflects a retail environment in which the stores are fiercely competing for a “shrinking pie” of consumer disposable income.

Restoration Hardware stock did an 18% cliff-dive two weeks ago when it reported its Q3 earnings.   Over the last six trading days, the XRT retail ETF is down 4.2%.  It was down every day last week despite the SPX and Dow hitting new all-time highs.

In the latest Short Seller’s Journal released Sunday evening, I dive into the retail sales numbers in-depth and present a lot more information which should satisfy proof of concept that this year’s holiday retails sales will be a complete disaster.  Note:  I have no doubt the Census Bureau and industry promotion organizations will manipulate the data for the holiday season in order to report positive sales results.  But the reality check will come from the companies themselves, which have a harder time faking the numbers.

I present several retail-related short ideas in the latest SSJ, including options trading suggestions.  On of the ideas is already down 1.3% today.  You can access these ideas plus in-depth data and analysis using this link:  Short Seller’s Journal.   SSJ is a monthly subscription.  New issues are published weekly and there’s no minimum time commitment.

Historic Market Blow-Up Is Brewing

I was chatting with a good friend who works at a pension fund. He said that pensions are historically overweighted in stocks right now. But it looks like the latest push higher in the stock market is coming from hedge funds, who apparently missed a large portion of the “Trump rally.”   We determined that the best reason to invest in stocks for both pension and hedge funds is “to avoid looking like an idiot.”

That’s it – that’s the “fundamental” justification for investing in stocks right now is because everyone else is and if your portfolio on Dec 31 is underweighted in stocks you’ll look like an idiot.

That stocks are more overvalued now than at any time in history except maybe 1999 is unequivocally undebatable.  However, if the GAAP accounting standards in force in 1999 were applied to current earnings, both the Dow and S&P 500 would be at record valuation levels.   I discuss this in more detail in the latest Short Seller’s Journal.

So, chasing stocks higher to avoid looking like a moron makes a lot of sense, right? Currently I can’t find evidence that the Fed is printing money to fuel this stock market so I have to believe that it has relaxed credit standards to enable banks, hedge funds and mutual funds (yes, many mutual funds now have the ability to tap credit lines) to borrow money with which to chase stocks.

Debt/credit behaves just like printed money until the debt has be repaid.  So creating credit is de facto printing.  But, what happens when debt defaults begin to pick up?  This is beginning to happen now in mortgage, auto and credit card debt.  Again, I provide proof of concept in the Short Seller’s Journal.

This is perhaps the most dangerous market – both stocks and bonds – in history.  It’s the largest money bubble in history that has been blown by the Fed, in conjunction with the ECB, BoE, BoJ and PBoC.   Silver Doctors/News Doctors invited me on to its Metals & Markets weekly podcast to discuss why 2017 could witness an historic market collapse:

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The Consumer Is Broke: “Restaurant Sales Worst Since July”

At -1.3 percent, disappointing restaurant sales growth in November was the ninth consecutive month of negative same-store sales; and the worst sales growth since July…Same-store sales for third and fourth quarters, at the end of November, are both -1.1 percent.Black Box Intelligence

That’s the restaurant industry.  Here’s a retail sales report from Dollar General, which would represent about 40-50% income and spending demographic:

Interestingly, we talk to our consumers each and every quarter through panel data as well as we bring them in and talk to them in general and I can tell you as late as mid third quarter, they were telling us that their sentiment – feeling – is even more dire than it was in previous quarters in early 2016  – Dollar General CEO in response to an analyst question on the quarterly earnings conference call.

Granted, DG’s core customer is low-income. However, as more Americans slide into the “low income” segment, it will affect overall retail sales, especially with regard to disposable income. My point here is that, despite the sense of “hope” signaled by the “Trump rally,” in general the average American is not feeling optimistic about the economy and I believe this will translate into a poor holiday season for both retailers and the overall economy. – Short Seller’s Journal, Dec 4 issue

Retail sales this holiday season are going to be abysmal.  Everyone with whom I’ve chatted who’s been out holiday shopping – I mean everyone – has commented on how eerily quiet the stores are this year.

The Census Bureau and the National Retail Federation will issue phony sales reports that will be contradicted by the actual sales reports from and guidance from retailers.  This report written by NY Post editor, John Crudele, outlines the methodology by which the Census Bureau manipulates the monthly retail sales reports:

Halfway down the page is a listing for Health and Personal Care Stores. It had a 7.6 percent increase in October. But underneath that calculation, there are no data, only an asterisk. That’s explained in the footnote to mean “advance estimates are not available for this kind of business.”

So how did Census determine that there was a 7.6 percent increase in Health and Personal Care Stores when the only category listed doesn’t provide data? “Furniture and home furnishing stores” also had a 3.4 percent sales increase. But, again, Census came up with a calculation despite no data.  – John Crudele on October retail sales report

If you pull up the actual retail sales report issued by the Census Bureau, you’ll see that several categories are “asterisked,” meaning the CB imputed its own estimate for October retails sales for that category.  In other words, about half the reported headline number is made up.

Restoration Hardware’s earnings report yesterday is an example.  The stock is down 18% after missing Wall Street’s earnings estimates – badly – and issuing dismal guidance on holiday sales and its outlook for 2017.

The point here is that the average household real disposable income is declining. As such, the average consumer is choking on debt, Obamacare premium increases, and the spiraling cost of everyday living – especially those households with children.

Despite a stock market that is going parabolic and in the final stages of a blow-off top, several of my stock picks in the weekly Short Seller’s Journal have provided profitable trades since August (some have not, to be fair).   One retailer in particular dropped 20% after I presented it in August and is now back up to the price at which I recommended shorting it.  I will be discussing this stock as a great short idea in this week’s issue.  You can access the SSJ using this link:  Short Seller’s Journal.

Payment terms are monthly and you can cancel at any time.  The SSJ issues are weekly and delve in-depth into economic data and analysis that you will not necessarily find on in the mainstream or alternative media.

Party Like It’s 1999: The Stock Market Is A Propaganda Tool

The degree and level of propaganda now flowing from the Establishment and the Establishment-controlled mainstream media is on par with that of the old Soviet Politburo or German Third Reich.   In fact, I’d confidently propose that this point is incontestable.

With modern technology and regulations which have made Fed operations and accountability tragically opaque, I have zero doubt that the Fed and the Government have managed to turn the stock market into another propaganda tool.  Studies have shown that, over the short term, the direction of the stock market and consumer sentiment measures are highly correlated.

Thus, pushing the stock market a lot higher is a mechanism that can be used to influence the public’s sentiment and willingness to spend.  This is critical after an election in which the political party controlling Capitol Hill changes and – more important – during the holiday shopping season.

Without question the U.S. economy is beginning to quickly crumble.  If you “peel away” the manipulative techniques applied to the economic reporting it reveals that every segment of the economy is now contracting.  Even the factory orders report for October released  yesterday – which showed a 2.7% gain over September – is still down 2.3% YTD vs the same YTD period in 2015.  Strip away the transportation component and it’s down 2.7%.

With interest rates on the long end up over 100 basis points in a very short period of time, the Fed’s balance sheet has taken a big hit. It currently owns over $4 trillion in Treasuries and mortgage securities. Assuming an average duration of 10 years on its holdings, the market value of the Fed’s balance sheet has dropped 8.4%, or approximately $320 billion. As of this past Thursday, the Fed’s balance sheet showed $46 billion in book equity. If the Fed were forced to mark-to-market its fixed income holdings, the Fed’s net worth would be significantly negative – close to $300 billion negative. Think about that: the only thing backing the value of the U.S. dollar right now is the U.S. military and a Central Bank with a massive negative net worth.  – excerpt from IRD’s latest Short Seller’s Journal

Market intervention in this manner is an attempt to convince the public that the economic system is healthy and will be even healthier in the future.  As such it’s another subtle propaganda tool – a perception management device.   If the Fed were step away from the market, the stock market would rapidly re-price to reflect the true underlying economic reality.  In short, stocks would crash and concomitantly gold and silver would soar.

The Fed injected billions into the system in late 1999 ahead of Greenspan’s Y2k scare. It led to the biggest stock market blow-off top of all-time.The current market is quite similar, only the economic and financial fundamentals underlying both the public and private sectors of the system are far worse than they were in 1999.

The ONLY thing that can explain the move in the stock market since around 2:00 a.m. EST after the election is massive Fed stimulus in some form – either direct cash injections done in a format that won’t show up on the Fed’s balance sheet or a massive spike up in the availability of short term credit lines made available to banks and extended to hedge funds. There is no other explanation.

Today for example, the stock market is spiking higher AND bond prices are higher/yields lower. This makes absolutely no sense and can only be explained by official intervention of some sort.

Gold and silver will “sniff” this out and at some point I expect to see gold begin to move a lot higher and the dollar sell-off precipitously. I also expect that the Chinese are going to send their response to Trump’s inimical overtures on Twitter by accelerating their sale of U.S. Treasuries.

lf the same GAAP accounting standards used in 1999 to measure corporate earnings – the standards having been relaxed more almost every year since 2000 to enable companies to report higher GAAP earnings – were applied to today’s earnings numbers, we would see that the current stock market is by far the most overvalued in history.

This will not end well.

Orwell’s “Thought Police” In Real-Time

“Fake news” accusations, preposterously manipulated Government economic reports (like today’s employment report), stock market intervention, interest rate and precious metals manipulation – these are all varying forms of propaganda tools that are implemented in an attempt to shape and control the public’s perception of events.  They are tools used to distort reality for the purpose of influencing the individual’s thought formulation.   It’s right out of Orwell’s playbook.

Elijah Johnson on behalf of Silver Doctors invited to me discuss the Government/elitists efforts to restrict free speech and to harness the public’s perception of reality.  While you may or may not be pleased with the President-elect, his surprise win over Clinton offers a ray of hope that the population at large is rejecting the movement toward Governmental totalitarianism:

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The U.S. Government Pollinates “Fake News”

The widespread, systematic implementation of propaganda dates back to at least the World War 1 era when Edward Bernays – the nephew of Sigmund Freud and the Father of Propaganda – began working with Woodrow Wilson. The dissemination and proliferation of “fake news” for the purpose of “thought control” is a form a fascism that is seeded in the Totalitarian creep that is engulfing the U.S. political system.

The commentary published by John Whitehead of the The Rutherford Institute is a must-read in order to put the “fake news” problem into its proper context.

[T]the “news” we receive is routinely manufactured, manipulated and made-to-order by government agents. Not when six corporations control 90% of the media in America. And not when, as Davies laments, “news organizations which might otherwise have exposed the truth were themselves part of the abuse, and so they kept silent, indulging in a comic parody of misreporting, hiding the emerging scandal from their readers like a Victorian nanny covering the children’s eyes from an accident in the street.”

The Pentagon has now designated “information operations” as its fifth “core competency” alongside land, sea, air and special forces. Since October 2006, every brigade, division and corps in the US military has had its own “psyop” element producing output for local media. This military activity is linked to the State Department’s campaign of “public diplomacy” which includes funding radio stations and news websites.

You can read the rest of this here:  When It Comes To Fake News, The Government Is The Biggest Culprit

The manipulation of economic data and the markets is yet another insidious form of propaganda and implementation of political/economic control.  I’ve detailed ad nauseum evidence of the fraudulent economic data across a wide range of Government reports – employment, GDP, housing, inflation, etc.

This is going to get worse regardless of who or which party occupies the White House.  It’s about control and power.  Ultimately the Government has no control over the laws of economics.  When the majority of the population feels the pain of economic distress in spite of the misleadingly optimistic economic reports, the Government has no choice but to implement control policies in order to maintain its power.

There is nothing we can do about this but you can prepare accordingly if you at least recognize the truth.  If you want to see who this plays out, I would suggest re-reading “1984” and “Atlas Shrugged.”

Trump Is Already Betraying His Voters

Posted from St. Martin (the French side, of course!).  I kind of expected this to happen, as close friends and colleagues can attest.  Trump is not only NOT going “drain the swamp,” he’s populating it with a different breed of swamp monster.   His choice for AG is a red-neck, right-wing senator from Alabama who, 80 years ago, would have been a member of the inner circle of the Third Reich.  Ditto for the names that have been floated for Secretary of State.  As for Treasury Secretary, the names floated for the position bear the unmistakable mark of the Wall Street beast:  $6$6$6.  They are every bit as vile,  if not worse, than the thieves that moved through there the last 12 years.  Jamie Dimon?  Steve Mnuchin?  Give me an F-ing break.

It is what it is.  Out with the old, in with new old.   James Kunstler penned another epic post that deserves a thorough perusal:

For all practical purposes, both traditional parties have blown themselves up. The Democratic Party morphed from the party of thinking people to the party of the thought police, and for that alone they deserve to be flushed down the soil pipe of history where the feckless Whigs went before them. The Republicans have floundered in their own Special Olympics of the Mind for decades, too, so it’s understandable that they have fallen hostage to such a rank outsider as Trump, so cavalier with the party’s dumb-ass shibboleths. It remains to be seen whether the party becomes a vengeful, hybrid monster with an orange head, or a bridge back to reality. I give the latter outcome a low percentage chance.

For the rest of this, click here:  Boo Hoo – America Didn’t Get What It Expected

The stock market continued a stunning move higher last week despite evidence of
widespread financial market turmoil signaled by the bond and currency markets globally.
With evidence mounting everyday that the U.S. economy continues to deteriorate, the
behavior of the U.S. stock market can only be explained as being a product of the enormous pool of liquidity created by the Fed – printed money plus rampant credit availability – that piled into any and all stocks moving higher. This will ultimately turn into a momentum move in the other direction that will inflict serious damage on the system.   – Excerpt from the latest Short Seller’s Journal

 

Does Gold & Silver Care Who Wins?

Short answer:   No.

A local financial advisor texted me today asking what I thought gold would do if Hillary wins today. Obviously he’s been reading the pedestrian analysis on the topic that has flooded the mainstream media.

But gold doesn’t care who wins.  The United States is beset with unsolvable financial and economic issues that will require a systemic reset.  The amount of funded Treasury debt outstanding since Obama took office has doubled to $20 trillion.  So much for his claim that he reduced the spending deficit.  But the result would have been the same if McCain had won in 2008 or if Romney had won in 2012.

Stocks and bonds are historically overvalued.  While the accounting standards have been substantially liberalized thereby enabling companies to artificially boost earnings with gimmicks, using comparable accounting rules to compare now to any other market top in history would show that current valuation ratios are significantly higher than at any other time in the history of U.S. markets.   The bond argument is easy:  interest rates are at or near all-time lows.  Rates can only go higher which means bond prices can only go lower (unless artificially taken negative by the Fed, which would cause gold to go parabolic) .

With fiat paper assets at historically overvalued levels, gold and silver are highly undervalued relative to financial assets and in relation to the quantity of paper money, where the quantity paper money is currency issued plus credit outstanding.  The latter is included because debt functions exactly like currency until it’s repaid.  Guess what?  This country has not reduced the cumulative public and private debt outstanding in the post-World War Two period.  The small “blip” indicating overall debt declined in 2010 reflects massive banking sector write-offs and debt-forgiveness, both of which were monetized by the Fed.  As long as the level of debt increases, credit outstanding needs to be included in the money supply.

The bottom line is that gold is going to move much higher in value relative to the dollar regardless of which candidate or which party controls the political process.  The laws of nature and economics remain constant throughout history.   When the Central Bank and Government market intervention eventually fails and these laws reassert their force – which they always do – the “money” that floods out of stocks and bonds will flood into physical gold silver.

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