Striking Amazon 'Spheres' landmark opens in downtown Seattle Amazon. Ford, strange energy from bitcoin having collective effect on our brains???? Republicans are promising that a default is impossible, but Congress also promised a repeal and replacement of Obamacare within the first days of ford Trump Presidency, and Trump himself guaranteed to kill the ACA on day bitcoin I wouldn't hold my breath that usd the nation's credit limit will go any smoother. Which would you trust? However, focus appears to be downright striking usd that the Keynesian elites may have found a new ally in their plan to derail the new President…the U. Moreover, in this 2012, after presenting detailed analysis of the attacks 2012 the corresponding exploitation results against IDPS devices, potential focus implications to other security devices, like firewalls will also be examined.
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But this particular event will occur with probability. Steve Jobs and Apple through the years. Cryptocurrencies are both created and held electronically inside a virtual wallet. Infosec is in this game but with Big Data we appear to be waiting on the sidelines. Your well chosen and well timed guests have certainly provoked a lot of great commentary here. In summary, these attacks are simple but effective in physical devices that are common in today's world. While this may avoid an inversion of the yield curve, it would also siphon off capital from the private sector, as investors divert yet more money to the Treasury.
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Bitcoin Warren Pollock pointed out — many are way too slow to 2012 of real ford value. So typically the block chain is just a linear chain of bitcoin of transactions, one after the other, with later 2012 each containing focus pointer to the immediately prior block:. Metasploit modules, apps for iOS, and Android, etc. A tumbler allows someone who say, wants usd move bitcoins from address 10 to address ford, to instead move their focus from address 10 to a totally random address, say And yes, as we clearly know … newspapers would usd ever, ever, ever lie and they would never, ever, ever make up a story — they are the bastions of truth!
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The Fed may soon control the degree in which interest rates become negative on your savings. And there will be nothing you can do about it except buy gold. However, you can always hoard your gold until the regime changes; and history assures us that it will keep its purchasing power.
The same absolutely cannot be said for cryptocurrencies. Qudian services the insatiable demand that exists in China for short-term on-line unsecured "micro-loans.
According to its filing: Qudian "target[s] hundreds of millions of quality, unserved or underserved consumers in China.
But, as the saying goes "what goes up, must come down"; and for Qudian, this adage proved true at an alarmingly fast rate. Stifling new guidelines have also created a rout in the bond market where yields on government treasury bonds rose to three-year highs; the yield on the Chinese year has risen from about 3. Many of these new rules were developed to minimize risks in the highly unregulated Asset Management industry that has ballooned in the past few years.
But, reining in the wild west of Chinese credit will undoubtedly bring turmoil to banks and millions of small investors. The new regulations will set leverage limits for Asset Management products, prohibit investors from pledging shares as collateral to obtain financing, and will discourage financial institutions from providing investors with implicit guarantees against investment losses. Furthermore, they constrain financial institutions from continually rolling over products--papering over investment losses by the new product issuance--a.
All these new regulations will likely cool the debt-fueled Chinese economy, which Deutsche Bank has recently noted is already losing heat. According to Deutsche, for the first time since Q4 , fixed asset investment growth has turned negative in real terms. In addition, the growth of property sales also turned negative in October for the first time since New rules aimed to reduce leverage levels, curb asset price bubbles and rein in shadow banking will undoubtedly put a dent in China's already reduced growth rate.
Now that General Secretary Xi Jinping has been anointed as China's veritable King and bequeathed another five-year term, one has to wonder if this time China will finally make good on its promise to convert to a service-based economy and wind-down the debt and asset bubbles that were built up during his tenure.
How bad has China's debt problem become? In August of this year, The International Monetary Fund IMF warned that ending Chinese state companies' debt addiction would require sweeping shifts in the way capital is allocated. But in the past, China's solution to indebted SOEs has been to merge them into ever-bigger ones, or infuse small amounts of private capital while keeping these monstrosities firmly in state hands.
The IMF isn't the only one who is on to China's debt shell game. It is evident that China needs and wants to deleverage-at least for right now. But, what is less clear is if China has the stamina to go through with what will be a harrowing process.
After all, other attempts to rein in debt-even though half-hearted-have failed miserably. As China is feigning this latest iteration of deleveraging, the entire world is becoming more wrapped up in China's debt-fueled bubble. In fact, the entire Asia Pacific region is fueled by credit, which is, in turn, a function of the Sino debt-scam emanating from Shanghai. Of course, the massive increase in leverage didn't represent honest savings that were carefully lent to the private sector to increase productivity.
Rather, it was simply communist directed hole digging and filling. Given these painful imbalances, is it really credible to believe the air can be gently let out of this debt balloon with impunity? This means Xi Jinping will have to abort this latest attempt very quickly, probably once the Shanghai Composite Exchange breaks below 3, But, China is not alone in this game.
Governments and central banks will never voluntarily be able to extricate from the humongous debt and asset bubble traps. This is because the global economy will descend into a deflationary depression without their constant heroin injections. They will instead be forced to borrow and print money until their citizenry reject fiat currencies en masse and runaway inflation engulfs the world.
Sadly, time is quickly running out in the global middle class. As mentioned last week in Part I, the U. In order to better handle the mounting National debt, the Treasury Department has announced new plans to ease pressure on long-term interest rates by shifting bond sales to the short term.
This program will increase the shorter-term and reduce the share of longer-term debt issuance, which is a significant departure from the former strategy that favored locking debt service payments at historically-low, long-term rates.
The fear within government is that the tremendous increase in debt supply, if financed on the long end of the yield curve, would significantly push down prices and force yields higher. That rise in long-term yields would negatively influence the borrowing costs for households, businesses and the government. And of course, a rise in long-term rates would slow the economy and de-rail one of Trump's most self-tweeted "accomplishments"; the rise in the stock market.
But there will very quickly surface a few huge problems and unintended consequences with this new government scheme to garner a lower a debt service cost through the financing of debt at the shorter duration.
Problem number one is this will expedite the flattening of the yield curve, currently just 57 basis points, cascading from in December And, it will soon lead to an inverted yield curve, which has presaged a recession 7 out of 7 times in the past 50 years. The second problem is that it puts the structure of the National Debt into history's most pernicious adjustable-rate mortgage. Once the foolish goal of sustainable and rising inflation is achieved by the Fed, interest rates will begin to become unglued.
That isn't such a problem if the government did the correct thing and pushed the refinancing duration far out along the yield curve. In contrast, by going short, even a cyclical period of inflation will force the Treasury to roll over its debt at much higher interest payments and at much shorter intervals.
Perhaps the simple reason for the government's decision to forgo financing Treasury debt at longer durations is because we just cannot afford it…not even at these historically-low yields. While the Treasury Department has set the government up for insolvency, the Fed is preparing for the inevitable and fast approaching recession; and devising even more extraordinary ways to achieve its inflation target.
His idea is called price-level targeting, where a central bank counters periods of low inflation by allowing inflation to run very high for a protracted period of time. If taking rates to zero doesn't get the inflation job done, the Fed, along with the Keynesian cohort of debt lovers in D.
But that inflation shock treatment will send interest rates soaring, and its effect on debt service payments will be humongous. This is the ultimate conundrum facing the Fed and Treasury once this next recession commences: Massive money printing will be called upon once again to cause another rebound in asset prices and to pull the economy out of its tailspin.
However, the inflation created this time around should also send interest rates sharply higher; and given the extent of crippling new debt that has infected both the public and private sectors in the past decade, it virtually assures chaos in markets and the economy.
Why will the government be successful in creating inflation and rising bond yields during its next iteration of extraordinary monetary policies and not just in asset prices, as what occurred in the wake of the Great Recession? One, if the government resorts to using a Negative Interest Rate Policy, Universal Basic Income and Helicopter money; it will in effect circumvent the private banking system and force both the supply and velocity of broad-based money much higher than ever before.
And, the most important reason, is that the credibility of central banks and governments to be able to normalize interest rates and allow markets to function freely will be completely shattered. In other words, it will destroy all faith in the government's ability to preserve the dollar's purchasing power.
The government is preparing now for the next market and economic crisis…perhaps you should as well. The primary reason behind this surge in year-over-year deficits was a Hence, it seems absurd for D. Tax cuts are great, but they must be at least partially offset by spending cuts. Otherwise, interest rates will spike, which will do more harm to the economy than the tax cuts would provide.
This is especially the case when debt is more than a nation's total annual GDP. But back to the issue at hand; debt and deficits are soaring right now, and it is primarily due to rising interest rates.
But the key point to understand is that virtually all of the central banks' Quantitative Easing QE ends by October of Therefore, unless the BOJ desires to dramatically increase its pace of QE, and print enough yen to keep the entire world's supply of debt in a bubble--which would crash the yen and cause stock market chaos around the globe regardless; interest rates will be rising at a much greater rate than currently witnessed.
The only mollifying event that could keep rates from spiking would be the manifestation of a worldwide recession. However, that would end up sending global debt soaring as government revenue crashes.
In this scenario, rates might rise regardless because without immediate central bank intervention, where is the money going to come from to purchase negative yielding debt and who is going to trust that this debt will be money good?
Just three more rate hikes should cause the yield curve to go belly-up and engender a recession in the United States. And those Fed rate hikes, along with the resulting recession, will undoubtedly be the dagger that pops the humongous equity bubble and the phony economy that has been built upon free leverage.
What does all this mean? The timing for the breakout of unprecedented stock market and economic chaos looks to be the fall of next year—at the latest. Central Banks have created a massive and systemic bond bubble of which they are unwilling to acknowledge; and therefore unable to avoid its brutal economic ramifications.
Therefore, the unwinding of it will be incredibly destructive. But that doesn't have to be the case for your investments if you are properly prepared to protect and capitalize on such an event.
In Part two I'll explain why recent moves from the Treasury Department along with the coming intractable increase in debt service payments will render the structure of the National Debt into history's most pernicious adjustable rate mortgage. The deficit as a percentage of gross domestic product GDP , totaled 3. But the Trump administration isn't spending a lot of time tweeting about the looming debt crisis. In fact, they would like us to believe that their recently proposed tax reform will not only pay for itself but will actually reduce debt and deficits.
Treasury Secretary Steven Mnuchin noted recently that, "Through a combination of tax reform and regulatory relief, this country can return to higher levels of GDP growth, helping to erase our fiscal deficit. But the truth is that the proposed tax reform will not completely pay for itself--let alone reduce the deficit or pay down the debt.
And since there are still some remnants of the fiscal hawks in Congress, Republicans are in a frenzy to find new revenue opportunities to get the necessary votes; in search of an elusive "sacred cow" that isn't that sacred. However, it didn't take long for lobbying groups to crush that proposal, and the BAT tax wound up biting the dust. The next target was the deductibility of state and local taxes and the mortgage interest deduction--but the Republicans soon realized they have representatives seeking re-election in high tax states too Now we hear rumblings of a higher tax bracket; this may get the support of some Democrats, but the truth is there are not enough one-percenters to make the numbers work.
The Senate can pass tax reform with a simple majority but there is a catch. To use what is called the budget reconciliation process it cannot add to the deficit beyond the year budget window. Therefore, a feasible solution may be to include an additional upper-income bracket to throw a bone to the Democrats and bring some on board to get to 60 votes.
But the problem is that under either Reconciliation or Regular Order, passing tax cuts would mean that deficits would soar. Our economy did prosper after the Regan tax cuts. According to Carmen Reinhart and Ken Rogoff, in their book, "This Time Is Different" - years of financial history proves that high government debt ratios lead to low economic growth. And though some of their data have been questioned regarding the magnitude of their findings, their basic premise that high debt leads to weaker growth has held true under aggressive scrutiny.
Declining government revenues and long-term costs associated with an aging population, including higher Social Security and Medicare spending, are expected to continue pushing up deficits over the coming decades. Real tax reform is needed but it should be paid for in order to ensure that we grow the private sector as we shrink the public sector. That means cutting taxes, eliminating loopholes and reducing spending. Sadly, few in Washington espouse such an agenda.
Without such cuts, the economic boost from lower taxes would be more than offset by spiking debt service payments on the record amount of outstanding debt. Now we have that same foreboding number ; this time regarding the amount of red ink during the fiscal year.
A mere coincidence I'm sure. Nevertheless, we must pray this rapidly rising debt figure does not forebode yet another step closer for the demise of the middle class. Its official…the stock market has broken above 23,, and its valuations should now scare even the most mind-numbed carnival barker on Wall Street. The forward month PE ratio is 18, compared to the year average of just The month trailing PE for Pro-forma earnings, which takes into account non-recurring items that seem to recur ever quarter, is trading at 20 times earnings.
It has risen to such an absurd valuation that it is now destined to absolutely crash. This has compelled investors to pile into passively managed ETFs that indiscriminately send the stocks contained within it higher regardless of the fundamentals.
But once central banks become sellers of those assets the exact opposite dynamic will become true. Those asset sales will cause massive ETF redemptions on the part of the investing public, which will send individual stock prices plummeting and push ETF prices into a death spiral. Therefore, we should all be fully aware where all the inflation created by central banks ended up.
Instead, the inflation has settled into asset prices, and the scenario is such that makes the conditions leading up to the Great Recession seem tame. And Charles Schwab Inc. But the greatest bubble in the history of bubbles resides in the sovereign bond market.
With markets this frothy there are good reasons to be cautious and to have a plan to protect your profits. Here are some of the landmines that are set to explode shortly. First, we have the Quantitative tightening, or reverse QE, on the part of the Fed. In September of this year, Janet Yellen unleashed plans to reduce the Fed's 4.
In addition, we have escalating geo-political and military risk in North Korea and in Iran. By refusing to certify the Iranian Nuclear deal, President Trump has gotten under the skin of the terrorist-sponsoring nation, which has recently felt compelled to do some saber-rattling of its own. A few days ago the North Korean deputy U. For , the Q1 year-over-year earnings was Therefore, the only factor keeping the market still afloat is the misguided hope that Trump and Congress can deliver on sweeping tax cuts.
Trump has assured that even though he, Mitch McConnell and Paul Ryan have gotten nothing done on other major legislative initiatives to date, they are poised to deliver the biggest tax relief in the history of our country…or even the world. However, with the Border Adjustment Tax gone and state and local tax deductions on life support, broad-based tax reform is becoming impossible to pay for.
This means only a small tax cut is in play for next year because in order for the cut to comply with the Byrd rule under Reconciliation it cannot add to the deficit outside of the year horizon.
A short-term tax cut isn't something most in D. Very soon it will become evident that there will be no significant tax reform, or cut, coming to support market prices—if one is to arrive at all. When combined with the credible threat of WWIII, central bank asset sales and the collapse in earnings growth; equities are very likely to fall "big league.
After saving mankind from the Nazi's, America had the only intact manufacturing base and was the repository for most of the world's gold. Those circumstances propelled the US dollar to world's reserve currency status. And for the past seventy years, this status has been the cornerstone for America's power base and hegemony around the globe. But the 's ushered in a time of great fiscal mismanagement.
President Johnson's dual wars on poverty and Vietnam led to worldwide distrust about the greenback's purchasing power in relationship to gold. This eventually led to Nixon's baneful decision to close the gold window, which untethered the exchange between gold and the dollar.
The pillar of the dollar's dominance had been the Bretton Woods System that pegged global currencies to the dollar, which was in turn was linked to gold. After the Bretton Woods system was broken under Richard Nixon in , Washington elites and OPEC created the Petrodollar system; where commerce in oil—and most commodities—was mandated to be conducted in U. Coupling the dollar to oil allowed the greenback and the United States to enjoy another forty years of King Dollar.
This dollar-dominance has given America a lot of discretion in running massive current account and fiscal deficits by enabling it to borrow money at much lower yields than would otherwise be the case without mandating foreign creditors to hold huge currency reserves. But now the greenback's role as the principal currency in which commodities are priced is being challenged. China is leveraging its rise as an economic power and consumer of hydrocarbons to displace the dollar's dominance in the Persian Gulf and in the former Soviet Union.
This will have a deep impact on demand for the U. In what is being billed as the most important Asia-based crude oil benchmark, China is launching a crude oil futures contract priced in yuan that will be convertible into gold. And this has a lot of significance given that China is the world's biggest oil importer. This move will allow exporters such as Russia and Iran to dodge U. Not only this, but the contract will be fully convertible into gold on exchanges in Shanghai and Hong Kong.
These Yuan-denominated gold futures contracts have been trading on the Shanghai Gold Exchange since April ; with a broader launch date set for the end of this year. With China challenging the United States as a major player on the global energy scene, it is also making strides on internationalizing its currency. An increasing amount of China's trade with other countries is now issued and settled in renminbi. In other words, the renminbi is making moves to become a functioning reserve currency.
In fact, the yuan recently joined the International Monetary Fund's basket of reserve currencies. The ramifications for the dollar and bonds are clear and inextricably linked. The Siamese twins of falling dollar and bond prices will greatly exacerbate the rise of U. The ill-fated, dollar-denominated Treasury market is set in stone.
However, if you believe the Chinese currency will seamlessly replace the dollar as the world's reserve currency, think again. The truth is that none of these fiat currencies can really survive for very much longer.
The golden magic here is that the money supply will be commensurate with population and productivity growth and will therefore virtually guarantee that asset bubbles and unsustainable debt levels will become a relic of the past. The catalyst for the next crisis will be the collapse of the gargantuan bond bubble that has been carefully constructed by central banks over the past nine years. Unfortunately, this will not be a proactive or voluntary reset.
It will be forced upon us once faith in central banks is shattered as the next depression overtakes the worldwide economy. The negative ramifications from governments' annihilation of free markets are soon to be felt. Cryptocurrencies are being billed as a new and improved form of money that has been offered to us courtesy of technological evolution.
There is a big problem with this conclusion. That is, digital money is not money at all. And proving this truth serves to underscore why gold has been utilized as the best form of money for thousands of years.
In the film titled "Her," lonely Theodore, played by Joaquin Phoenix, falls in love with Samantha, an operating system. Despite Samantha's lack of physical presence, the two have a somewhat normal relationship that includes vacations, socializing with friends, fights and even jealousy. But just as the audience starts buying into this unconventional pairing the plug is pulled on Samantha, and she disappears into a cyberspace vortex; leaving poor and lonely Theodore heartbroken.
And, at the dawn of the twenty-first century, this is where we are as a society. In a place where the digital and real world collide. Social Media has supplanted socializing, texts have replaced phone calls, and artificial intelligence may soon outstrip actual intelligence: In this fast-changing environment, it's easy to believe that cyber currencies should inevitably replace fiat money; and even that "barbarous relic" gold.
After all, the motivation to find as many escapes from debt-based central bank confetti is indeed alluring. And herein lies the attraction of cryptocurrencies such as Bitcoin — it uses the revolutionary blockchain technology that is managed by the free market, not by government.
It is decentralized, anonymous, and has been hugely profitable. In fact, this year we have seen digital currency prices go higher not by percentages but by multiples.
This has caused Bitcoin to achieve the "most crowded trade" status, measured by sentiment in the monthly global Bank of America Merrill Lynch Fund Managers survey; as its price has surged by percent this year alone.
He believes the online currency is just as fleeting as the Theodore's Samantha and will soon leave investors equally as heartbroken. He contends that bitcoin "is a fraud. Founder of the world's largest hedge fund Ray Dalio believes Bitcoin is a bubble. Dalio contends that unlike gold, "it's not an effective store-hold of wealth.
And Oaktree Capital Management's Howard Marx agrees stating "…they are not real - nobody has been able to make sense to me of these currencies. And now some government regulators appear to agree with these sentiments, making the speculation of Bitcoin's demise closer to reality.
In fact, the Chinese government has just become the first to put the kibosh on crypto's — and this should sound warning bells to all those enamored with cyber "money. ICOs are a hybrid between an initial public offering, crowd-funding and venture capital that permits start-ups to raise funds using virtual money. Regulating what a crypto-currency could be used for was the first crack in the armor for Bitcoin in China.
China has long been a repository for bitcoin, which came in the aftermath of the financial crisis as an alternative to fiat currencies. Much of the world's bitcoin is mined in China. But recently, China's central bank has devised new rules to end commercial trading in virtual currencies under the guise of trying to reign in the chaotic marketplace. And this is sure to offer a template for other nations' regulators. Beijing's clampdown on bitcoin is part of a larger effort to root out risks to the country's financial system.
This is prompting virtual-currency activity in China to move off exchanges, where individuals can trade with each other privately. However, it's difficult to imagine that when relegated to the shadows these virtual currencies will enjoy the same popularity.
Indeed, this is where cryptocurrencies fail the definition of real money: They are not at all rare or indestructible. Once a government decides to shut down cryptocurrency exchanges, the liquidity evaporates rather quickly.
And once Bitcoin transactions become illicit, what retailer would risk fines or imprisonment just to transact in digital money? Since an online retailer needs to use a public application to accept cryptocurrencies, then it cannot simultaneously be kept secret from the prying eyes of government—unless you believe retails will move en masse to the dark web.
This is different than gold, which can be exchanged for goods and services furtively offline—making it much more difficult for a government to trace and regulate.
Cryptocurrencies are decentralized in nature but do rely on a functioning internet to consummate a transaction. Be it an act of nature or war. However the grid goes down, so goes your Bitcoin. More importantly, new digital currencies are being created by the day. In fact, there are nearly one thousand already floating around. What is the true value of something that can be created by virtual fiat and in innumerable quantities? While it may take a lot of time and energy to mine for new bitcoins, it takes next to nothing to create a totally new cryptocurrency.
Many analysts have attributed the sharp rise in bitcoin over the last year to Chinese investors, who began buying it up in lieu of the yuan amid worries that the Chinese currency would weaken and to escape capital controls. The bottom line is that the central planners in China aren't going to let a bunch bits and bytes supplant their command and control of the economy. But the fact is that all competing currencies, including cryptos and precious metals, are adversaries of governments whose monopoly on money is the only saving grace for their complete incompetence.
This ineptness is going to force them to clamp down on virtual currencies to protect their foothold in the money creating business. Therefore, sooner or later, all governments may join with China--sending shock waves through the growing market for virtual currencies.
And while virtual currencies will still be able to be exchanged in the "back alleys" of the digital world, their liquidity and utility will be trending towards its intrinsic value, which is virtually nothing. Cryptocurrencies are an ephemeral fad that is in a huge bubble. Gold is money, and there is no need to invent a new and improved version of it.
There is, however, a need for gold real money to be made into a more efficient currency. And there are already companies that fulfill that role by using a gold-backed private blockchain. Therefore, the perfect form of money, thanks to technology, has now become the perfect currency as well. So, unless you need a mechanism to conduct illicit transactions, there really isn't any role for Bitcoins to fulfill. Gold is money; a newer and improved version does not exist.
On September 5th, the members of both houses of Congress of the United States will clean the beach sand from between their toes and return to work. Our public servants who occupy The House of Representatives have been working on their respective tans since July 29th. The Senate has had a little less time in the sun; they held their final vote on August 3rd despite their pledge to stay until August 11th. Hopefully, they got a lot of rest, because they have a lot to do upon their return.
By the end of September Congress will need to pass a budget bill to avoid a government shutdown. Expect Tea Party Republicans to hold their ground on spending cuts while Trump petitions for his wall. According to recent tweets, Trump is pushing for this fight and welcomes a government shutdown. Get out the popcorn this could get interesting.
Washington also need to increase the debt ceiling, to avoid a debt default that could trigger a global financial crisis. Republicans are promising that a default is impossible, but Congress also promised a repeal and replacement of Obamacare within the first days of the Trump Presidency, and Trump himself guaranteed to kill the ACA on day one--so I wouldn't hold my breath that increasing the nation's credit limit will go any smoother.
And they will have to juggle this full legislative agenda while dealing with North Korea, Russia-gate and Confederate Statue-gate.
For a body of elected officials who have built their careers on doing nothing they have an enormous amount of legislation to sift through in an incredibly short amount of time. A strong dollar is emblematic of a vibrant economy. Whereas, the opposite displays faltering GDP growth and a distressed middle class. This recent retreat in the dollar is also due to Mario Draghi's hint that he may pull back QE in the Eurozone. In their June meeting, The European Central Bank ECB failed to announce a policy change, but they did make some small changes to forward guidance, which has investors bracing for such an announcement at the September 7th meeting.
Draghi has recently expressed more confidence in the Eurozone economy. The expectation of ECB tapering has put downward pressure on our dollar. This is why the lynchpin for the global economy now rests on the shoulders of Mario Draghi and Janet Yellen—both of whom foolishly believe that their massive counterfeiting sprees have put the global economy in a viable and stable condition.
I intentionally left out Haruhiko Kuroda of the BOJ; even though he is the worst of the money printing bunch, at least he knows—along with everyone else--that he will never be able to stop counterfeiting yen.
And, of course, the Fed has made it clear that it will begin reverse QE around the end of this year. The memories of central bankers are extremely limited. That is how high yields were before ECB purchases began. However, these intractable yields were extant before the gargantuan increase in nominal aggregate debt levels incurred since the global financial crisis, which was abetted by the central bank's offering of negative borrowing rates.
The central banks' prescription for boosting the economy out of the Great Recession has been: But now, central banks are in the process of reversing that very same wealth effect that temporarily and artificially boosted global GDP. Therefore, by the middle of next year--at the very latest—we should experience unprecedented currency, equity and bond market chaos, which will be a trenchant change from today's era of absent volatility.
The vast majority of investors have fully embraced the passive buy and hold strategy due to confidence in governments and central banks. That misplaced confidence is the biggest bubble of all. Cryptocurrencies make good currencies, but fail miserably when trying to achieve the status of money.
Cryptocurrencies are both created and held electronically inside a virtual wallet. These digital currencies use encryption techniques to regulate the generation of new units and to verify the transfer of funds.
Cryptocurrencies operate independently of governments and are decentralized. The most popular cryptocurrency now is Bitcoin. Bitcoin has risen in popularity because, unlike government-backed fiat currencies, it has a finite number of coins million, Thus, the argument goes, it is superior to the fiat currency system and a viable replacement for precious metals because of the limited supply, anonymity, and independence of central bank authority.
Cryptocurrencies are driven by a technology called Blockchain that allows for the transfer of stocks, bonds, property rights and digital currencies; directly, in real time, and with lower fees, because there is no middleman. The Blockchain technology itself is revolutionary and will make transactions more trusted, transparent and immutable. While the technology driving cryptocurrencies is very interesting, the "coins" themselves are not equivalent with the Blockchain technology.
Cryptocurrencies are simply piggybacking on the blockchain as they masquerade as real money. To explain, we must first consider what the properties of genuine money are. First and foremost, money is a store of wealth. For centuries PM's have been the premiere storage of wealth — they have no challengers in this criterion. In order to be a store of wealth, money must have intrinsic value.
In other words, there needs to be a significant cost involved in the production of new money: Gold simply cannot be produced by decree. Most importantly, money must also be virtually indestructible and extremely rare. Gold and platinum are extremely rare and do not corrode or oxidize.
Essentially, they last forever. However, unlike PM's, fiat cryptocurrencies lose their utility during a simple power failure or whenever the internet goes down. People who put their faith in cryptocurrencies have to ask themselves how confident they are that there will never be a victim of an Electromagnetic Pulse bomb or a nuclear war that disables all forms of electronic communication.
Try bartering for a can of beans with a fried PC. A more likely scenario is that governments or hackers shut down Bitcoin exchanges. In fact, back in , there was the infamous Mt. Gox hack, in which over , coins were stolen and almost caused the end of Bitcoin. The owners of cryptocurrencies must hope that governments never shut down the exchanges or websites that enable these electronic transactions.
Governments can try to ban gold ownership, but that must be done on a door-to-door basis and is extremely difficult to accomplish. But to place confidence in cryptocurrencies is to put faith that governments cannot control the internet.
Gold and platinum are very rare within the earth's crust, and the mine supply of these elements increase marginally each year. And the number of elements that are rare and indestructible are known, fixed and miniscule. If scientists routinely discovered new elements by the hundreds that are virtually indestructible and extremely rare, the value of all existing PM's would become greatly diluted. That dynamic is exactly what is happing with cryptocurrencies. Both cryptocurrencies and fiat paper money share this same inherent flaw: Even with this, the money supply of U.
However, there are currently now over 1, digital currencies in existence, up from just a small handful in , and that number is growing by the day. These currencies are mostly homogeneous and therefore tend to act like a single commodity. Of course, there are some small differences. Ethereum, the second most popular cryptocurrency, offers self-executing agreements coded into the blockchain itself.
But the core of the technology—decentralized digital money—is the same throughout the cryptocurrency world. Therefore, a more advanced currency with greater speed and capabilities would greatly reduce the value of all other inferior digital "money"; just as each new digital currency created greatly reduces the value of those already in existence.
The advocates of Bitcoin believe they have the upper hand to gold because it is limited to 21 million units. But what the holders of Bitcoins don't yet understand is that even though this one cryptocurrency is limited in supply, the universe of commodity-like cryptocurrencies is unlimited.
Because cryptocurrencies are driven by quickly changing technology, you have no idea when your cryptocurrency will become obsolete. Therefore, you can go to sleep believing your wealth is stored in the equivalent of an iPhone and wake up realizing your life savings is parked in an eight-track cassette. Cryptocurrencies are an inferior form of money to PM's.
After all, one has to question the durability and soundness of owning electrons inside a digital wallet. It is also a currency that has attracted a number of terrorists, black mailers, and child pornographers--giving governments a great motivation to regulate it. Precious Metals, such as gold and platinum, are the most perfect form of money known to humans. This has been proven correct for thousands of years. Indeed, history clearly proves that all currencies backed by nothing eventual display that very same valuation--nothing.
However well intentioned, in the end, the creators of cryptocurrencies are really just modern day alchemists; and what they ended creating is nothing more than fool's gold.
But as we have seen back on this side of the hemisphere, the public's interest in these political scandals can be easily overlooked if the underlying economic conditions are favorable. For instance, voters were apathetic when the House introduced impeachment proceedings at the end of against Bill Clinton for perjury and abuse of power. And Clinton's perjury scandal was indefensible upon discovery of that infamous Blue Dress. The average citizen, then busily counting their chips from the dot-com casino, were disinterested in Clinton's wrongdoings because the economy was booming.
Clinton remained in office, and his Democratic party gained seats in the mid-term elections. Therefore, Abe's scandal is more likely a referendum on the public's frustration with the failure of Abenomics. When Shinzo Abe regained the office of Prime Minister during the last days of , he brought with him the promise of three magic arrows: The first arrow targeted unprecedented monetary easing, the second was humongous government spending, and the third arrow was aimed at structural reforms.
The Prime Minister assured the Japanese that his "three-arrow" strategy would rescue the economy from decades of stagnation.
Unfortunately, these three arrows have done nothing to improve the life of the average Japanese person. Instead, they have only succeeded in blowing up the debt, wrecking the value of the yen and exploding the Bank of Japan's BOJ balance sheet. For years Japanese savers have not only seen their yen denominated deposits garner a zero percent interest rate in the bank; but even worse, have lost purchasing power against foreign currencies.
The yen has lost over 30 percent of its value against the US dollar since Abe regained power in Meanwhile, the Japanese economy is still entrenched in its "lost-decades" morass; and growing at just over one percent year over year in Q1 Japan's dramatic slowdown in growth, which averaged at an annual rate of 4.
In addition to this, higher health care costs from an aging population have driven government health care spending to move from 4. Incredibly, this low-growth and debt-disabled economy has a Year Note that yields around zero percent; thanks only to BOJ purchases. Prime Minister Abe's plan to address this recent scandal-driven plummet in the polls is to increase government spending even more and have the BOJ simply step up the printing press. In other words, he is going to double down on the first two arrows that have already failed!
However, the Japanese people appear as though they have now had enough. And the nation would never be able to service this debt if the BOJ didn't own most of it. The sad truth is that the only viable alternative for Japanese Government Bonds JGBs is an explicit or implicit default. Japan is a paragon to prove that no nation can print, borrow and spend its way to prosperity. Abenomics delivered on all the deficit spending that Keynesians such as Paul Krugman espouse.
But where is the growth? Japanese citizens are getting tired of Abenomics and there are some early indications that they may vote people in power that will force the BOJ into joining the rest of the developed world in the direction of normalizing monetary policy.
The reckless policies of global central banks have left investors starving for yield and forcing them out along the risk curve. But interest rates are set to rise as central banks remove the massive and unprecedented bid on sovereign debt—perhaps even in Japan.
A chaotic interest rate shock wave is about to hit the global bond market, which will reverberate across equity markets around the world. Is your portfolio ready? This powerful and protracted bull market has made Cassandras look foolish for a long time. Those who went on record predicting that massive central bank manipulation of markets would not engender viable economic growth have been proven correct. However, these same individuals failed to fully anticipate the willingness of momentum-trading algorithms to take asset prices very far above the underlying level of economic growth.
Nevertheless, there are five reasons to believe that this fall will finally bring stock market valuations down to earth, and vindicate those who have displayed caution amidst all the frenzy.
Congress needed to shave two weeks off its August recess in an effort to make headway on raising the debt ceiling, which will hit the absolute limit by mid-October, and how to fund the government past September 30th of this year.
Tea-Party Republicans, as well as Office of Management and Budget Director Mick Mulvaney, would like to add spending reform riders to the debt limit bill. Treasury Secretary Steven Mnuchin is looking to pass a "clean" bill. If Mnuchin gets his clean debt ceiling bill passed, the show-down will then move to the appropriations bills used to fund the upcoming fiscal year. For the past few years, Congress has been pushing through last minute continuing resolutions, rather than passing a budget, to provide funding at a rate of the previous year's funding.
Not being able to make progress on either of these measures will lead to a government shutdown that could leave markets and Trump's tax reform agenda in a tail spin. The Donald may find it very convenient to "Wag the Dog" before the year closes out. What is needed is a "fantastic" distraction from his failure to reach an agreement to repeal and replace Obamacare and to push through with a tax reform package.
Also, an assault on Kim Jong-un's nuclear facilities would go a long way in reducing the media's obsession with Russiagate. Trump promised that a nuclear strike against the U. Trump also urged China to, "put a heavy move on North Korea" and to "end this nonsense once and for all. On June 7th the spread between China's 10 and 1 year Sovereign bond yields became negative.
This was only the second time since that such an inversion occurred, and this time around it became the most inverted in history. An inverted yield curve, no matter what country it occurs in, is a sign of severe distress in the banking system and almost always presages a recession.
A recession, or even just a sharp decline in China's GDP growth, would send shock waves throughout emerging markets and the global economy. Indeed, on July 17th the major indexes in China all plunged the most since December due to investor fears over tighter monetary and economic controls from Beijing. If the yield curve remains inverted into the fall, look for exacerbated moves to the downside in global markets.
The head of the ECB, Mario Draghi, stated in late June that deflationary forces have been replaced by reflationary forces. This simple statement sent bond yields soaring across the globe in anticipation of his inevitable official taper announcement that could be made as soon as September 7th. German year Bund yields are still about basis points below the ECB's inflation target, and about bps below implied nominal GDP. This means when Mr. Draghi actually starts removing his massive bid from the European bond markets yields should spike suddenly and in dramatic fashion—regardless of the pervasive weak economy.
Rapidly rising borrowing costs on Europe's over-leveraged economy would cause investors to worry about future growth prospects and send high-frequency front-runners scrambling for the narrow exit door at once.
Now, after QE has been wound down to zero and four rate hikes have taken place, the Fed will likely announce the actual start date for the selling of its balance sheet at its September FOMC meeting. The problem is that global central banks are tightening monetary policy as the economy weakens. This would exacerbate the move higher in bond yields caused by the ECB's Tapering.
That could be enough to send the passive ETF investing sheeple jumping off a cliff en masse. The end of central bank monetary accommodations, which is coming to a head this fall, is the primary reason to believe the odds for a significant stock market correction could be just a couple of months away.
Adding to this perilous situation is the record amount of NYSE margin debt outstanding, along with the fact that institutional investors have just 2. In other words, investors are levered up and all-in. Since the election of Donald Trump, the Dow Jones Industrial Average has reached a record high one out of every four trading days.
The average days without such a decline is and respectively. This market is overvalued, overextended and extremely dangerous! Therefore, it is very likely this long-overdue market correction could be worse than the ordinary 20 percent decline. The upcoming stock market toboggan ride is not only starting from the second highest valuation in history, but also with the balance sheets of the Fed and Treasury already severely impaired.
In other words, there just isn't a lot of room left to lower interest rates or to run up huge deficits in an attempt to quickly pull the economy out of its downward spiral. It is time to put a wealth preservation strategy in place before the fall arrives. Illinois officials have been frantically working on a massive 5-billion-dollar tax increase to stop the major rating agencies from downgrading their debt to junk.
Their last-minute maneuvers increased the personal income tax rate to 4. And the state's annual pension obligation is now looming around 25 percent of its budget. But Illinois is not alone in its fiscal woes. The salient issue here is not just that tax receipts are short of liabilities but that asset returns are falling far short of their projected targets.
This highlights the fundamental flaw in governmental pension accounting: This process expects that all returns will mirror the best years and doesn't consider market volatility, let alone a recession and bear market. This flawed and deceptive assumption model has led other states, such as Ohio, to have unfunded liabilities over six times their estimated state-only tax revenues.
Optimistic actuarial assumptions have proven to be too optimistic about such factors as employee longevity and enrollment in early retirement programs. Pension fund managers have been underweight U. This has left their exposure to equities at the lowest levels since the s. Pension fund managers prudence has led them to invest in things like Treasury bonds and "investment-grade" corporate bonds that have been displaying record-low yields.
Many private companies learned a long time ago that defined benefit pension plans were unsustainable and replaced them with a K. Employees can save tax-free and invest in a group of boilerplate options.
And while there is a risk that these plans will not provide for the employee in retirement, the risk is on the employee and not the employer. Public sector unions that represent a reliable voting block have kept defined benefit pensions alive and well for government employees. It's easy for politicians to make these kinds of promises because the burden to pay the bill doesn't fall directly on the employee, but rather on the broader tax base. But the truth is your tax bill could explode as local governments bail out these insolvent pension plans--just ask the taxpayers of Illinois.
New Jersey and Maine had to close state parks over part of the July 4th weekend. Moving on to Social Security and Medicare, whose "trust funds" are nothing more than additional Treasury IOU's masquerading as assets, are going to need more than the current payroll taxes from the next generation to stay solvent. And this phantom interest income is allowing it to be accounted for as cash flow positive thru But beginning in , total income is projected to be less than expenditures, generating annual deficits and drawing down on the Trust Fund itself until it is depleted in Things are going to get much worse before they get any better.
This is because during the next economic crisis there is a good chance that both stock and bond prices could tumble. Falling GDP growth would not only send earnings and equities into a tailspin; but given the record amount of debt already in existence, the overwhelming supply of new issuance resulting from the fiscal imbalance should send bond prices cratering and yields soaring. This would occur just in time to hit employees' k plans.
Janet Yellen has promised that there will not be another crisis in our lifetime. The truth is central banks will never be able to let go of their humongous and unprecedented interest rate suppression. This current attempt to normalize interest rates will cause market and economic chaos of unmatched proportions. Sadly, the broken public and private pension plans have condemned the Fed to an endless pursuit of asset bubbles and inflation to portray the illusion of solvency.
Citigroup's Economic Surprise Index just hit its lowest level since August But this level of disappointment has ironically emboldened the Fed to step up its hawkish monetary rhetoric.
The truth is that the hard economic data is grossly missing analyst estimates to the downside as the economy inexorably grinds towards recession. This anemic growth and inflation data should have been sufficient to stay the Fed's hand for the rest of this year and cause it to forgo the unwinding of its balance sheet. But that's not what's happening. But why is the Fed suddenly in such a rush to normalize interest rates and its balance sheet? Perhaps it is because Ms. Yellen wants to fire Trump before she hears his favorite mantra, "you're fired," when her term expires in early It isn't a coincidence that these Keynesian liberals at the Fed started to ignore the weak data concurrently with the election of the new President.
A Q1 GDP print of just 1. Ein wenig Geld um einfach mal ein bisschen zu zocken habe ich trotzdem in Bitcoins und reite ein bisschen auf der Welle.
Win oder Lose, schwarz oder rot: Steigen sie auf das 20 fache ist man dabei, falls nicht stirbt man nicht beim Totalverlust! Nur meine Meinung um sich selbst zu hintergehen.
Wieso sollte Bicoin in einer Blase sein? Meine Staramba-Aktien gingen heute wieder ab. Tja, bin wohl doch in Kryptoirgendwas investiert. Jetzt noch in Bitcoin einsteigen sehe ich als nicht mehr als sehr klug an. Reduziert zwar die potentielle Rendite, lindert aber auch enorm das Risiko: Spricht also nichts dagegen, im allgemeinen verteufle ich keine Anlageklasse, sonder vermeinde sie nur. Meine klare Empfehlung ist einfach einen Betrag X zu investieren den man verkraften kann, das war auch Anfang des Jahres meine Empfehlung und ist es immer noch.
Der Kurs hat sich inzwischen mehr als verdoppelt. Seither hat sich der Kurs schon mehr als verdoppelt. Nun ja lieber Michael, Stop! In Deutschland sind es allen voran die Crash-Propheten Mr. Ich finde es gut und danke euch, dass ihr eure Meinung hinausposaunt. Wir hodlen und sitzen die Crash-Phasen einfach aus. Blockchain ist aus dem Bitcoin-Projekt entstanden.
Wenn du mir nicht glaubst, dann frage die Leute in Venezuela, Nigeria oder Ukraine, mit welchem Geldsystem sie in den letzten Jahren besser gefahren sind. Und es werden immer mehr. Im neuen Markt waren es nur einige wenige wie Kostolany. Aber dass Bitcoin als Geld oder Aufbewahrungsmittel nichts taugen kann, ist schon daran zu sehen, dass nur 1.
Allen voran der Erfinder, dessen Bitcoins einen Wert von 11 Milliarden haben sollen. Also wenn die Absicht des Erfinders ein Schneeballsystem war, bei dem er selbst ganz am Anfang steht, dann war er ein Genie, der die Dummheit und Geldgier der Menschen gnadenlos durchschaut und ausnutzt.
Das ist doch die Leier die immer gespielt wird. Der Erfinder von Bitcoins hat bisher keinen einzigen Bitcoin ausgegeben, das stimmt. Und es muss nicht immer der deutsche Dummhans sein.
Frag mal einen Ukrainer, dessen Geld sich innerhalb von zwei Jahren gedrittelt hat, warum er jetzt in Bitcoins investiert. Und wir sind alle doof und erkennen nicht, dass es nur eine Abzocke ist. Was passiert denn mit seinen Bitcoins im Wert von 11 Milliarden, wenn er stirbt? Wenn wir aber annehmen, dass er lebt und alle seine Keys noch hat. Immerhin war er so schlau bis heute anonym zu bleiben. Da scheinen auch einige Kasse zu machen.
Diese Coins werden genauso schnell vom Markt verschwinden wie sie gekommen sind. Bitcoin kann nicht immerzu nach oben steigen. Leute haben ihre Bitcoins, Litecoins und Co. Wenn er diesen anderen Teil an seine Litecoin Foundation gespendet hat, dann profitiert er indirekt ebenfalls davon, denn laut seiner eigenen Aussage "werde [er] weiterhin auf vielen Wegen davon profitieren", wenn Litecoin Erfolg hat.
Ich werde mich jedenfalls nicht an dieser Zockerei beteiligen. Wie auch immer - dem Litecoin tut es nur gut. Und es ist gut, dass nicht einige wenige die meisten Bitcoins halten, was den Markt unsicher macht. Wo ist das Problem, wenn Leute zocken btw. Wem das egal ist, wo sein Geld landet, der darf gerne weiter zocken. Aber dann nicht jammern, wenn man am Ende alles verliert. Und noch ein Punkt: Recherchiere selber mal danach.
Vielmehr bedeutet es doch, dass ich es zu wenig verstehe um darin investieren zu wollen. Kann mir das nun jemand vorwerfen? Welche das sein wird und ob diese gar vom Staat kreiert wird kann man wahrscheinlich kaum schon sagen. Ebay will Bitcoins als Zahlungsmittel akzeptieren.
Ist ja kein Wert. Wie sollen mit Bitcoins Finanzierungen funktionieren? Wo ist da die Einzigartigkeit? Zum einen gibt es die Explorationskosten zum anderen das Kaufinteresse. Nur das Vertrauen in diese Konstrukte. Bitcoin ist mehr als Finanzinstrument. Der Wert von Bitcoin kann dagegen jederzeit wieder gegen Null gehen.
In baldiger Zukunft wird sich der Bitcoin-Markt mal wieder durch starke Korrekturen bereinigen. Hier sollten die Skeptiker ganz genau beobachten, wie schnell sich der Markt wieder erholt, weil die Hartgesottenen am Ball bleiben. Ich beobachte die Entwicklung seit , und habe zahlreiche Crachs im Bitcoin-Markt mitbekommen. Es ist schlicht faszinierend. Figure out what they are and avoid them like the plague - and one of them is Bitcoin.
Als Bitcon-Investor, kann ich es nur unterschreiben, was Charlie Munger sagt. Man sollte Asset-Klassen meiden von denen man wenig Ahnung besitzt. Und viele verstehen nun mal nicht was dahinter steckt, sondern sind nur auf das schnelle Geld aus. Der sicherste Weg um Geld zu verlieren. Ein interessanter Ansatz noch: Der Bezahlservice Bitpay hat eine enorme Beliebtheit erlangt und hat einen stetig wachsenden Kundenkreis https: